On Friday 18 June 2021, most financial media in Japan just reported that the Bank of Japan, the central bank of the country announced its first investment fund for efforts to address climate change, as the government works towards its new target of reaching carbon neutrality by 2050.
Until then we did not find much news concerning BOJ to be green, since the bank was supposed to stay neutral on social issues which was assumed to include the climate change. Did the bank really turn green? If so, what was the reason?
Due to the fact that the bank management has not taken any leading role to redirect financial policy which stresses climate change mitigation, e.g. ‘carbon neutral 2050’, the market’s reaction stayed rather quiet, somewhat to be within the ‘business-as-usual’ sort of response.
If the same happened in Europe, It would completely have been the other way round to start from a loud announcement by the President Ursula Von Der Leyen, followed by the detailed reactions by the European Central Bank. As a matter of fact, the bank says, “Through our strategy review, we will determine where and how the issue of climate change and the fight against climate change can actually have an impact on our policies.”, on their website (https://www.ecb.europa.eu/ecb/climate/html/index.en.html ).
We hardly find similar message by the BOJ (https://www.boj.or.jp/ ), which does not necessarily mean that the bank has been either passive or reluctant to go for it, but the announcement without tangible declaration to tackle the climate change must have weakened political effect which could have been delivered to those who had been concerned.
It has been recognized that BOJ seldom puts out political messages toward the market, which is good, so long as the bank can stay credible by keeping a constant position rather permanently. However, the issue of climate change is different, at least in appearance to be far more serious than what it used to be thought of. Not just CO2, but possibly with stranded assets of conventional industries, e.g. mining, metal production, large scale manufacturing and energy sector all over the world. Even bio-diversity has been hooked up with, which makes the concern more serious.
Unlike official agencies in Europe, once if the position is fixed, Japanese agencies tend to stay perverse. Climate change was a small but important issue, probably some 15 years ago. Now the same became quite serious and even critical, but the status shall remain unchanged, most probably because of Japanese way of work.