Welcome to the Refinitiv LPC/IFR Japan ESG Roundtable. The event, held online on October 27, drew strong interest with more than 700 market participants registering to view and listen to the webcast. Representatives from the three Japanese mega banks – Mizuho Bank, MUFG and Sumitomo Mitsui Banking Corp – a couple of borrowers and a ratings agency made up the panel to discuss the trends and outlook for environmental, social and governance financings, with a particular focus on loans.
Welcome to the Refinitiv LPC/IFR Japan ESG Roundtable. The event, held online on October 27, drew strong interest with more than 700 market participants registering to view and listen to the webcast. Representatives from the three Japanese mega banks – Mizuho Bank, MUFG and Sumitomo Mitsui Banking Corp – a couple of borrowers and a ratings agency made up the panel to discuss the trends and outlook for environmental, social and governance financings, with a particular focus on loans.
Green and ESG-related loans have gained momentum globally among borrowers, investors and lenders in recent years since the Green Loan Principles and the Sustainability-Linked Loan Principles were issued in 2018 and 2019, respectively, to establish frameworks for these sustainable finance products.
NYK Line, a Tokyo-listed shipping company represented by one of the panellists, was the first borrower in Japan to sign a green syndicated loan when it closed a ¥9bn (US$81m) facility in March 2019. The company also holds the distinction of being the first in the country to complete a sustainability-linked loan in November the same year via a ¥50bn borrowing.
In July, M&C Tottori Hydro Power, a unit of another panellist Marubeni, raised a ¥23.3bn private finance initiative loan, of which ¥15.7bn was Japan’s first green loan for hydro power projects.
While ESG-related loan volume in Japan rose to US$2.4bn in 2020, the market is still in its infancy and much smaller and less developed than its bond counterpart. ESG loans also make up a very small portion of the US$200bn in total domestic syndicated loans volume, including non-ESG-related deals.
The ESG loan market in Japan is expected to continue to grow rapidly, especially after prime minister Yoshihide Suga announced in late October the “aim to realise a decarbonised society” by 2050. A greater number and diversity of borrowers and investors are expected to play a part in Japan’s aim to become carbon-neutral in 30 years.
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