Promotion of green finance

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Some progressJICA issues ‘socially responsible investment’ bonds and is a member of the Green Finance Network in Japan.

Explanation

Green Bonds

JICA does not issue green bonds. Instead, according to the Director of Capital Markets in the Treasury Department of JICA, the bonds issued by JICA are recognised as Socially Responsible Investment (SRI), a quality that JICA always makes clear to its investors. However, it is likely that some of JICA’s SDG-aligned bonds could be certifiable as green or climate bonds.

In 2018, JICA became the first entity to have its issuances listed on the Tokyo Pro-Bond Market – a dedicated platform for green and social bonds launched in January 2018. JICA is also member of the Green Finance Network in Japan.

Recently JICA has launched the Sustainable Finance Framework with the Sumitomo Mitsui Banking Corporation. This applies guidance for joint projects. However, a third party opinion of the framework by the Japan Research Institute is unclear if coal fired power generation is allowed, if supercritical technology is used.

There is no public information on JICA’s engagement on green finance issues outside of Japan.

Greening the System

Internationally, JICA works with the Japan Exchange Group, building technical cooperation to foster bond markets in developing regions. This work is welcomed, but it is unclear how this includes green bonds and fosters a finance shift in those regions toward greener activities.

JICA should both internally adopt and externally promote the disclosure of climate-related financial risks according to TCFD recommendations, along with risk management strategies including shifting from high-carbon or climate-vulnerable activities to less risky options. JICA should engage with the consortium of Japanese companies supporting the TCFD, which replaced the TCFD study group established in 2018 by Japan’s Ministry of Economy, Trade and Industry (METI). Such engagements could further JICA’s understanding of its own climate-related financial risks, as well as improve its sense of how to promote disclosures in developing-country markets. It is noted that both the Development Bank of Japan and Japan Bank for International Cooperation are listed as TCFD supporters but JICA is not.

Last Update: July 2021