New consortium to accelerate climate-related corporate disclosures in Japan

A consortium designed to facilitate corporate information disclosures on climate change was launched Monday — a move aimed at encouraging financial institutions to make investments based on climate risks.

The body is expected to provide financial institutions with better access to information on how the businesses they plan to invest in will affect climate change.

"Growth of ESG (environmental, social and governance) investment has been remarkable in recent years ... the global capital flow is about to change drastically," Kunio Ito, a professor at Hitotsubashi University and one of the founders of the consortium, said during the launch event in Tokyo.

The 2015 Paris agreement has encouraged financial institutions to evaluate how climate change would affect the businesses they are investing in, Ito said.

Following a request from the Group of 20 financial leaders, the Financial Stability Board, an international organization that monitors global financial systems, established in 2015 the Task Force on Climate-related Financial Disclosures (TCFD) to look into climate risks.

As of Monday, the new Japanese organization had 164 company members, making it the world's biggest TCFD-supporting consortium.

Still, critics claim that companies are not providing enough information, with many complaining of the cost.

Discussions on the matter between companies and financial institutions, expected to take place monthly or bimonthly, will be based on recommendations from the TCFD. The consortium will draft a guideline for financial institutions by October.

The TCFD recommendations compiled in 2017 are mainly built around four themes — governance, strategy, risk management, and metrics and targets. Last December, an industry ministry panel drafted a guideline on how companies should disclose climate-related information.

The consortium has four other founders — Keidanren Chairman Hiroaki Nakanishi, Mitsubishi Corp. President Takehiko Kakiuchi, Japanese Bankers Association Chairman Makoto Takashima and Tokio Marine Holdings Inc. Chairman Shuzo Sumi.