Japan’s largest ¥20trn of sovereign ESG-related bonds issuance was late for the members of G7. Although the country was one of the largest issuers. Prime Minister Fumio Kishida announced this move. It actually notes a reversal of the administration’s previous skepticism towards ESG bonds. Plus, it also marks the ew supply source on sovereign. The U.S. joined the grouping but the country has not yet started the market.
Speculations began to rise.
The Biden administration has signaled a policy to pivot from Trump era. The country also rejoined the Paris Agreement on Climate Change. However the U.S. Treasury has yet to start on ESG-sovereign bonds. It is so different from Japan, the Ministry of Finance Masato Kanda seems to be doubting green and other bonds on ESG. The ministry did not mention any potential ESG-related bonds. He believed that putting ESG bonds separately from conventional Japanese sovereign bonds meant the ESG bonds would be less efficient. Plus, the cost could be more expensive since the liquidity is lower.
Kanda added his complaint by saying that outsiders elsewhere might even choose which Japan’s region expenditures are able to do green bonds refinancing. Although he has a little concern about ESG bonds, he is aware of the energy-related causes during the Ukraine invasion. This situation of course allows Japan to shift from fossil fuels. Thus, Kashida is now pouring ¥150trn for public and private sector investment for the future to really achieve net-zero emissions.
In this case, what he meant as green economy transition bonds must be able to contribute at least 15% of the total. Although it is not certain whether this bond would be called green bonds or transition bonds. The government would determine the program details this summer. There has been a rumor about the inclusion of nuclear power in the framework.
