Japan on the Way to Sustainable Development: Green Financing

The problem of environmental conservation remains one of the most urgent both for individual countries and on the global scale. Japan deservedly occupies a high place among the nations that have achieved notable success in creating environmentally decent living conditions for their citizens – both living and future generations.

However, already in the 1980s–1990s, with the expansion of the scale of environmental impact and changes in the requirements of citizens to the state of the environment, the very concept of environmental quality expanded and became more complex. In these conditions, it was necessary to revise the concept of environmental regulation, including its financial and economic foundations, both at the national and international level.

In this article, the author attempts to analyze the model of circulating and ecological economy – a large-scale and multi-level concept of national environmental policy, “combining actions to achieve a sustainable future”. The main distinguishing feature of the current stage of solving environmental problems is the focus on the use of built-in regulatory mechanisms. The modern concept of Japan’s environmental policy is based on the principle of partnership of all stakeholders, which implies joint responsibility (including financial responsibility) of business, the state, and society, changing the behavioral models of all actors, people’s lifestyle, and the system of state regulation.

The main attention of the study is paid to the formation of a modern model of environmental policy financing. The author concludes that, nowadays, the very concept of financing this policy in its traditional sense is becoming a thing of the past: now we are talking about a system of multi-channel financing for environmentally sustainable development. The article analyzes the main components of this system, reveals the features of investment and credit activities of state and semi-state banks, corporations, and foundations, as well as the corporate sector in the field of green financing, examines the problems of greening the tax system, as well as the practice of applying the principles of responsible investment (ESG-investment) in Japan, including the development of the “green bonds” market, which is becoming an increasingly dynamic segment of green finance.

Despite the active efforts of the government and society towards building an eco-friendly, sustainable society and economy, the transition of the entire economy to an environmentally sustainable development model and the transformation of business models face serious problems, many of which are objective in nature. In particular, this applies to the problem of stopping financing energy companies, which can lead to the opposite result and make it impossible for them to reduce their СО² emissions.

In general, as the author summarizes, a number of facts indicate that the Japanese government demonstrates a fairly flexible approach to financing the policy of transition to a low- and carbon-free society and countering climate change. In the governmental, financial, and industrial circles of Japan, the problem of green financing and specific ways and deadlines for building a carbon-free economy continues to be debatable while there is a consensus on the need for such a transition.

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