2023.12.4 Mon.

16:15 - 17:30

Financing the transition of high-emitting industries

Organizer

Glasgow Financial Alliance for Net Zero (GFANZ)

Seminar abstract

Abstract

Accelerating the financing of high-emitting sectors' decarbonization while ensuring its credibility are essential in achieving the net-zero future. With this imperative in mind, since its inception in June 2023, the core working group of GFANZ's Japan chapter, comprising practioners from Japanese financial institutions, has been extensively deliberating on how to support the net zero transition in high-emission sectors in Japan and globally. In this seminar, GFANZ's Japanese Chapter will present its "guardrails" that financial institutions could consider when financing high-emitting sectors. Moreover, the leaders from financial institutions, the real economy, and government, will discuss the challenges associated with financing the transition of high-emitting industries, evaluate the practicality of the "guardrails" proposed by GFANZ's Japanese Chapter, and discuss potential collaborations and the respective roles of all stakeholders in this critical endeavor.

Program

Opening address -5 min-

Mary L. Schapiro Vice Chair, GFANZ

Presentation -10 min-

Chikako Matsumoto Executive Officer, Sumitomo Mitsui Trust Holdings, Inc.

Panel discussion -60 min-

• Seiji Inagaki Director, Chair of the Board, The Dai-ichi Life Insurance Company, Limited.
• Masamichi Kono Senior Advisor, Mitsubishi UFJ Financial Group, Inc
• Takeshi Hashimoto CEO, Mitsui O.S.K. Lines, Ltd.
• Yutaka Matsuzawa Vice-Minister for Global Environmental Affairs, Ministry of the Environment, Government of Japan
• Tiza Mafira Director, CLIMATE POLICY INITIATIVE
• Yuki Yasui Managing Director, Asia Pacific Network, GFANZ

Speakers

In-person

• Mary L. Schapiro / Vice Chair, GFANZ
• Chikako Matsumoto / Executive Officer, Sumitomo Mitsui Trust Holdings, Inc.
• Seiji Inagaki / Director, Chair of the Board, The Dai-ichi Life Insurance Company, Limited.
• Masamichi Kono / Senior Advisor, Mitsubishi UFJ Financial Group, Inc.
• Takeshi Hashimoto / Mitsui O.S.K. Lines, Ltd. CEO
• Yutaka Matsuzawa / Vice-Minister for Global Environmental Affairs, Ministry of the Environment, Government of Japan
• Tiza Mafira / Director, CLIMATE POLICY INITIATIVE
• Yuki Yasui / Managing Director, Asia Pacific Network, GFANZ

Related Links

• Presentation material
• [For reference]Scaling Transition Finance and Real-economy Decarbonization, Supplement to the 2022 Net-zero Transition Plans report (December 2023)

Session Summary

In this session, there were opening speeches, presentations, and panel discussions on the theme of "Financing the transition of high-emitting industries". In the presentation, the GFANZ Japan Chapter discussed the need for supporting "Transitional Activities" to encourage transition in high-emission industries and presented credibility guardrails for implementing meaningful financing towards transitioning to Net Zero. The panel discussion was joined by representatives from Dai-ichi Life, MUFG, Mitsui O.S.K. Lines, the Ministry of Environment, and CPI. The panel discussed the challenges and effectiveness of the guardrails proposed by GFANZ Japan Chapter for financing high-emission industry transitions, as well as the roles and the potential of cooperation among stakeholders to realize decarbonization in these industries.
Issues identified by the panelists include a lack of influence by financial institutions over clients, the need to ensure economic viability of transitions towards net-zero, and a reliance on as yet undeveloped technologies for achieving net-zero.
The effectiveness of GFANZ Japan Chapter's proposed guardrails was recognized as beneficial for evaluating investment of clients, but panelists pointed out challenges such as a lack of credible sector-specific pathways and the need for the establishment and enforcement of phase-out plans to reduce lock-in risks. From an international perspective, many aspects of the guradrails proposed by the GFANZ Japan Chapter align with efforts in CPI and ASEAN, confirming they are globally applicable.
The role of Japan was stressed in realizing Asia's transition, and the effort of phasing out transitional activities will need to be shared cooperatively between the industrial, governmental, and financial sectors to achieve net-zero. It was affirmed that all stakeholders need to work together.

Message and Results

• To achieve the 1.5℃ goal, it is necessary not only to finance green industries but also to support the transition of brown industries.
• The transition from brown industries requires guardrails proposed by the GFANZ Japan Chapter to ensure credibility and meangingfulness of "transitional activities" while being inclusive in financing the transtion.
• To aim for decarbonization of brown industries and achieve the 1.5℃ target, it is necessary that industry, government, and financial institutions act together.