Climate action

  • The BoJ’s climate response financing operations provide zero-interest loans to banks supporting the low-carbon transition.

  • The BoJ is developing a pilot climate scenario analysis exercise for the largest financial institutions.

  • Banks and investors are required to publish TCFD-aligned disclosures.

Climate inaction

  • The Bank of Japan’s monetary policy operations strongly support fossil fuel finance, according to a report by Oil Change International.

  • Japan has not yet made climate risk disclosures mandatory, although the country’s Financial Services Authority has said it will do so for the biggest firms in 2022.

  • The BoJ has not made adjustments to its capital requirements or collateral frameworks to specifically account for climate risks.

How the Bank of Japan stacks up

Rank Country Aggregate Score (out of 130) Grade (A+ to F) Research and Advocacy (out of 10) Monetary Policy (out of 50) Financial Policy (out of 50) Leading by Example (out of 20)
9 JapanJapan 25 D 10 6 6 3

Central Bank/Supervisor

Bank of Japan and Financial Services Authority Japan

More info


Research & Advocacy

10 out of 10

High-impact

  • N/A

Medium-impact

  • BoJ and FSA are members of NGFS

Low-impact

Monetary Policy

6 out of 50

High-impact

  • N/A

Medium-impact

Low-impact

  • Loan Support Program offers loans at below market rate to financial institutions to support priority lending sectors including environment business (downgraded from medium impact as the wording is vague and the ‘environment’ portion of this has effectively been replaced by the scheme above)

Financial Policy

6 out of 50

High-impact

  • N/A

Medium-impact

  • FSA guidance toward green sectors (formal commitment – referred to here)

  • Mandatory climate risk disclosure (under discussion – referred to here)

Low-impact

Leading by Example

3 out of 20

High-impact

  • N/A

Medium-impact

  • N/A

Low-impact

  • BoJ holds seminars for financial institutions covering various topics including SDGs and ESG

  • BoJ set up the Climate Coordination Hub to co-ordinate bank wide initiatives on climate change

  • BoJ invests in the Asian Bond Fund launched by EMEAP, aiming to catalyze further deepening of the local currency-denominated green bond market and BoJ will purchase foreign currency denominated green bonds

  • BoJ will disclose of own climate risks (formal commitment)

What steps are missing in the Bank of Japan toolbox to address climate risk?

Civil society expects the bank to do the following:

  • Exclude fossil fuels from all of its asset purchases, including its corporate bond purchase programme.

  • Develop and publish a robust sustainable finance taxonomy.

  • Discourage fossil fuel finance through reserves requirements and/or collateral frameworks.

  • Require firms to publish plans outlining how they will align their businesses with Japan’s climate goals, including its target of reaching net zero by 2050.