Monday, September 27, 2021 | The Japan Times | 7

sustainable japan

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produced by The Japan Times CubeLDP seeks Japanese voice in formulating ESG rules
ESG Talk
TOMOKO KAICHICONTRIBUTING WRITER

The Treasury and Finance Division ofJapan’s ruling Liberal Democratic Party
has made recommendations to promote
investment and loans that support a sustainable society and economic growth, or
what is known as sustainable finance. The
move is aimed at leading domestic discussions in a systematic manner and helping make Japan and Asia’s perspectives
be reflected on the international stage, asefforts to design regulatory infrastructure
and rules on businesses’ disclosure of environmental, social and governance (ESG)
information are being led by the EuropeanUnion.
Keisuke Suzuki, a Lower House memberof the LDP who led the initiative to create
the party’s recommendations, said this is“a very important year for the creation ofinternational rules.” He added, “And it’s thelast chance for Japan to get involved in theprocess to formulate these rules.”The initial motivating force for the LDP’srecommendations was an accelerationin discussions on information disclosure,
led by the Task Force on Climate-related
Financial Disclosures, in response to investor shortsightedness known as “quarterlycapitalism” that emerged after the global
financial crisis in 2008, and also to a heightened sense of crisis about the risk of thedevastating impact that climate change

might have on businesses. At that time, the“need to, in a sense, redefine capitalism” on
the basis of long-term revenue began to beasserted, according to Suzuki.

of greening may completely change in fiveyears or 10 years from the present,” Suzuki
said. “The government needs to, for example, call for the inclusion of timelines in thescope of evaluations.”
Suzuki also referred to a recent increase
in attention on a form of financing that
supports the phased reduction of greenhouse gas emissions, known as transition
finance. Although acknowledging that it
will provide necessary support especiallyfor emerging Asian nations that are still ina growth phase, Suzuki warned that it also
“may be used as an excuse in an advanced
economy like Japan” for slow progress
toward decarbonization.

Quantifying future risks

In recent years, the international financial
industry has shared a growing perceptionthat nonfinancial information — including
how businesses address ESG issues, including climate change — is very importantin judging long-term revenue, value andbusiness sustainability. While the concept
of corporate social responsibility, which
attracted attention in the early 2000s, isoften discussed in the context of contributing to society, Suzuki said that sustainablefinance and ESG investment, in which businesses’ long-term profits or future earnings
are quantified and evaluated, are “similar
but different.”
Taking account of these, the LDP recommendations reconfirmed that the disclosure of information — mainly nonfinancial,including businesses’ sustainability overthe long term and their sensitivity to various risks — is essential. The recommendations included a call for Japan to become
actively involved in the process of formulating international disclosure rules, andproposed to include a call for businesses todisclose such information in Japan’s corporate governance code and begin discussions
on ways to eventually make such disclosure mandatory for businesses. In responseto the recommendations, the revised
corporate governance code, which took
Suzuki served as viceconsul at the Consulate General of Japan in
New York andworked on loan at theMinistry of Health,
Labor and Welfare. Heretired as a government official in 2005.
HIROMICHI MATONO

Changing industrial structure

HIROMICHI MATONO

effect this past June, introduced new provisions on climate change risks and corporategovernance. In addition, the recommendations sorted out the roles that should beplayed by financial institutions, the financial watchdog and the central bank, pointing out that it is important in Japan, where
indirect financing plays a relatively largerole, for financial institutions to conduct
stress tests in a steadfast manner and for thecentral bank to monitor them.

Criteria that respect variation

Suzuki spoke of “taxonomy,” an area where
the EU leads, in explaining why Japan
should be involved in formulating interna-Locally active vineyards face
impacts of global climate change

tional rules. Taxonomy is, for example, asystem of organizing economic activities
based on whether they are environmentally friendly. It can provide important criteria for evaluating investment decisions
but risks creating inequality if it fails to take
into account circumstances that differ fromcountry to country.
As an island nation, Japan has largely
self-contained power grids. It also has more
old, established companies than startups.
Because of these characteristics, there is an
overall tendency for Japan to be cautious at
first about energy-related changes but thenquick to embrace them once they begin to
be adopted. “The evaluation of the progress

Suzuki said a key issue for the Japanese
economy is to find ways to change its
durables-driven industrial structure, inview of the current rapid diversification ofconsumer needs. “What the government
should do is to paint a vision to be realized
in 10 years or 15 years, for example, andwork out rules for encouraging (industries)
to transition to it,” Suzuki said. “It should
work to help the appropriate innovations
to emerge by showing the direction to
encourage changes, creating an appropriate
market and creating appropriate investment flows.”“In preparing the recommendations, weaimed to cause changes in awareness aboutthat,” he added.
Suzuki believes a key to Japan’s growthis to find ways to channel human resources
and funds to areas that have growthpotential. “This is the case for the world ofinvestment, but we have entered an age inwhich people choose businesses, instead of
businesses choosing people,” Suzuki said,“and in that sense, too, companies must
disclose information.” He expressed hopes
for changes at Japanese companies in termsof employment, work styles and salarysystems, not just the way they disclose
information.

Keisuke Suzuki is a House of Representatives
member and the director of the Liberal Democratic Party’s Treasury and Finance Division.
HIROMICHI MATONO

Accelerating efforts on rules

Lastly, Suzuki predicted that efforts led
by Europe to work out international rules
may suddenly accelerate, as the next summits of the Group of Seven leading industrial nations and the Group of 20 leadingrich and developing nations will take placein Europe and the 2021 United Nations
Climate Change Conference will begin in
Britain at the end of October, in addition
to the fact that the effort to create global
standards for ESG information disclosure
is led by the London-headquartered International Financial Reporting Standards
Foundation, which establishes international accounting standards.
“This is going to be a crucial year” thatwill decide whether Japan can have its
views reflected, he said. “In order for Japanto remain one of the leaders among Asiannations, it is essential for it to represent thevoices of island countries in Asia and thePacific Ocean at international conferences,and that’s the role it is expected to play,”
Suzuki said. “I hope to keep that in mind in
fulfilling our responsibilities in the work tocreate (ESG-related) rules.”
The ESG Talk series are interviews with business leaders
who are active proponents ofESG investing and practices
in Japan.

Times Gallery

Satoyama~AuthenticJapan
MAIKO MURAOKACONTRIBUTING WRITER

Japan may not be recognized as a major
grape- or wine-producing country, but
actually there are vineyards and wineries
all along the archipelago.
The 19th Satoyama Cafe, an online talksession organized by the Japan Times
Satoyama Consortium, invited panelists
from wineries from three very different
regions to discuss how they make grape
and wine production a sustainable business and how they are coping with climate change.
Coco Farm and Winery in Tochigi Prefecture began as a vineyard that a teacher
of a special class mainly for mentally challenged junior high school students started
with his students in the 1950s in the hopethat the outdoor labor would bring out
their enthusiasm and give them satisfaction. About a decade later, Kokoromi
Gakuen, a social welfare corporation thatserves as a facility for the mentally challenged of all ages, was established. Thefacility, together with its users, manages
the vineyard. After another decade or so,
the winery was launched, using grapes
purchased from Kokoromi Gakuen.
Chieko Ikegami, a daughter of theteacher and now the senior managing
director of the winery, said: “We don’t
use herbicides because we don’t want todeprive the workers of their jobs. As aresult, many plants grow, bugs and birds

Sun Mamoru Winery’s vineyards stretch
across the Shimokita Peninsula.
SUN MAMORU WINERY

The Albanian Olympic Team poses at the 2020 Tokyo Olympic Games.
EMBASSY OF ALBANIA

Setouchi Jozojo’s main building was designedby architect Daisuke Sugawara on the site of aformer shipyard. SETOUCHI JOZOJO

fly around, and a new job is created: chasing such creatures away.” Their way of“not fighting with nature, but being awarethat humans are part of nature” is also
embodied in how they make their wines.
“We use basically wild yeasts because different kinds of yeasts become active foreach fermenting stages, making each wine
unique,” she said.
Sun Mamoru Winery was the firstcompany in Aomori Prefecture to growgrapes and make wine. The city of Mutsu,
which is home to the winery, is located at
the northernmost tip of Honshu, wherePacific easterlies called yamase can bringcold weather that damages crops. However, the winery’s vineyard, which wasgoing to be used as a golf course, is locatedon the south side of the Osorezan mountain range, which blocks the wind.
Once it won a prize in a national winecompetition and was publicized in a local
newspaper, its wines started to sell andbe recognized locally. Not only that, but
farms struggling with issues such as a lackof successors or unsold fruit started toseek support from the winery. “We don’twant to say we cannot help without trying,” said Yoshihisa Kitamura, the representative director of the winery. “Nowwe are even engaged in livestock farming
because a livestock farm in the neighborhood had unused facilities because there
aren’t enough people to run the wholeplace anymore,” he said, stressing thatsomeone has to pass on the accumulated
know-how for the future of the livestockindustry.
Setouchi Jozojo, a winery in Hiroshima
Prefecture, also aims to solve regionalissues with local residents through mak-Members of the embassy of Iraq pose with Iraqi athletes who participated in the Tokyo 2020 Paralympic Games. EMBASSY OF IRAQ

The Petit Manseng vineyard, seen from CocoFarm Cafe COCO FARM & WINERYing wine. In one example, it purchases
local grapes that used to go to waste
because grapes were grown only as offerings in the summer Bon festival, and theleftovers were not sold after that. “We
used burned cedar boards for the walls ofour winery building, opened in April thisyear. Burned cedar is a traditional building
material used for houses in the neighboring coastal area, which we wanted to preserve,” said Yuya Ohta, the representative
director of the winery.
They also renovated a traditional house,built in the Edo Period, to use as theirshop. They use grapes grown in several
local vineyards to make wine and buy
local apples to make cider, and in addition
the winery’s restaurant serves delicacies
made with vegetables from local farms.
These three wineries, though lying indifferent regions, all face the impacts ofclimate change and extreme weather. Thisyear Coco Farm and Winery suffered damage from a hailstorm, and Sun Mamoru
experienced unprecedented torrential
rain that caused severe damage to Mutsu.
Both wineries have been researching andchanging the kinds of grapes they grow tokeep pace as the climate changes. Setouchi Jozojo is shifting to renewable energy,
and its restaurant aims to achieve zerowaste. Their efforts to make both regions
and businesses sustainable will continue.
This section highlights the environment
and a sustainable society.
For more information on
Satoyama, ESG and SDGissues, please visit
www. sustainable.japan
times.com

Bolivian Charged’Affaires Natalia
Salazar, staff members Sergio Estradaand Mitsu Miura andSecond SecretaryGabriela Duranattend the raising of
the Bolivian flag andsinging of thenational anthem tocelebrate the 196th
anniversary ofBolivian independence on Aug. 6.

Volunteers remove
trash from Makuhari
Beach on Tokyo Bay
in Chiba Prefecture
in a cleanup organized by the NPO
Uminari on July 25.

EMBASSY OF BOLIVIA

UMINARI

Serbian Ambassador Aleksandra Kovac meets with Kintaro Izumida,
vice president of Nidec Corp., which has invested in Serbia, to discuss
further economic cooperation on Sept. 7. EMBASSY OF SERBIA

PAGE: 7Jarman International organized a livestream by YouTubers John Daub(left) and Cody Mizuno from Tokyo Station’s Japan Rail Cafe, introducing the world of ramen in the Tohoku region. JARMAN INTERNATIONAL