With investor interest in sustainable finance growing globally, Japan is encountering a rare opportunity to turn Tokyo into one of the leading green financial hubs in Asia.

Since the 1980s, Japan has been struggling to transform Tokyo as one of the top global financial centers. Proponents, even today, claim that Tokyo deserves this status due to the sheer size of its economy and stock markets, as well as the international status of the Japanese yen.

But Japan’s advantages have eroded over time. China became the second largest economy after the United States in 2010, and is expected to surpass the United States in the next decade or so. The Tokyo Stock Exchange has been lagging behind several stock exchanges in mainland China and Hong Kong in terms of market capitalization, while the top two positions continue to be dominated by the New York Stock Exchange and NASDAQ.