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Eiichiro Adachi: Significance and Prospect of Sustainable Finance

Time: 2021-11-24 16:24 Print

Recently, Mr. Eiichiro Adachi, Managing Director of Japan Research Institute (JRI) of Sumitomo Mitsui Banking Corporation (SMBC), Head of the Institute for Future Social Value, and renowned Japanese scholar in environmental management, environmental finance and sustainable finance, gave a lecture themed "Significance and Prospect of Sustainable Finance" at Tsinghua PBCSF Online. 

The lecture focuses on the evolution of green finance to sustainable finance, China's contribution to sustainable finance, the main areas of interests in Japan regarding sustainable finance, such as transition finance and social bonds, and the possible China-Japan cooperation.

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Eiichiro Adachi introduced that in the early stage, green finance mainly focused on environmental issues. However, through continuous development, the concept of green finance gradually expanded to sustainable finance, covering an increasing number of areas. He further reviewed the development of sustainable finance in Japan and China's contribution to sustainable finance. He explained the necessity to move from green finance to sustainable finance, and described the work and achievements of the Japanese government and companies in sustainable finance from a social perspective. According to Eiichiro Adachi, one of the key features of green finance in Japan is taking the corporate resilience as the criterion for judging their financial status. Japan attaches great importance to companies' disaster prevention capabilities and sustainability, and the health conditions of employees in order to support the economic development of companies. Moreover, in October 2021, Japan announced the guidelines for social bonds to specify the purposes and the principles of Japanese social bonds.

Eiichiro Adachi also introduced the Japan’s Report proposed by the Expert Panel on Sustainable Finance in June early this year. The report clarifies the responsibilities of trustees, and proposes relevant initiatives to stimulate private capital investment and prevent misuse of capital. It emphasizes publicity of and support for those who need to be invested and funded. The report also presents criteria for classifying sustainable economic activities, said Eiichiro Adachi. He suggested that Japan should closely follow the progress on the classification criteria globally and participate in the discussions on Sustainable Finance (IPSF) on related matters in due course. The report recommends the methods for financial institutions to address climate change risks and the measures for improving the financial system.

At the end of the lecture, Eiichiro Adachi answered questions regarding Japan’s sustainable finance, including the categories of Japan’s green taxonomy; the current status of the climate stress test; development trend of mandatory policies; support policies for green finance and SMBC's outlook on achieving the goal of "reducing its credit balance to coal-fired power generation to zero by 2040".

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Eiichiro Adachi Gave the Speech