Japan’s ESG-related loan reaches the highest quarterly tally in early 2022 brightening the financing market prospect. ESG loans almost tripled in three months from $2.76bn to $6.46. The number of deals are also skyrocketing from 16 to 36, said Refinitiv LPC data. This good news means another boost faster this month due to Bank of Japan Covid-19 loan operations. It leads the new prospect to Japan’s financial scheme.
More domestic lenders will get cheap credit by accessing an ESG funding road the central bank launched last year. The goal is leading Japan to be carbon-neutral by 2050. Munehiro Goda, a senior vice president at Sumitomo Mitsui Banking argues that Bank of Japan Covid-19 operations offer zero interest rate. It leads more lenders to participate in the green operations.
Goda added that the Bank of Japan’s sustainable scheme heats Japanese banks with the Task Force on Climate-related Financial Disclosures (TCFD). So, to be TCFD-compliant is a requirement under a sustainable scheme. It offers lenders in Japan long-term loans at zero interest. It is for on-lending through green and sustainability-linked loans and bonds.
This financial scheme would continue until the 2030 fiscal year. Currently, a third of Japan’s regional banks are TCFD-compliant. Last month ESG loans injected bigger loan sizes from individuals to the larger scale. Covid-19 crisis was severe last year. But this year, people are showing a great interest in sustainability efforts.
Furthermore, Tomoko Hirabayashi, joint general manager of syndicated finance at Mizuho Bank, believes that previously people had questions about sustainability financing. But currently, in face of environmental concern, people have no choice but to do it. Therefore, active borrowers are more involved than ever before.
