JAPAN is prone to fads—usually in fancy desserts or fashion ripe for Instagram. A less photogenic one has hit finance: investing in assets screened for ESG (environmental, social and governance) factors. In 2014-16 funds invested in ESG assets grew faster in Japan than anywhere else (and not just because of better reporting and a low base).
Today Japan’s sustainable-investment balance is $474bn, or some 3.4% of the country’s total managed assets—low compared with Europe or America, but high for Asia. The shift is driven from the top down, rather than, as elsewhere, by ethically minded individual investors.
When he returned to power in 2012 with a plan to revitalise the economy Shinzo Abe, Japan’s prime minister, wanted to reform Japan’s conservative business culture. A code for institutional investors was introduced in 2014, followed by one on corporate governance a year later. The government’s aim is not only to get firms to distribute some of their vast piles...Continue reading
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