In June 2021, Tokyo Stock Exchange published the new revision of Japan's Corporate Governance Code, which asks Prime Market-listed companies to disclose climate-related information using TCFD. Japan Exchange Group is working with the government, regulators and investors to support listed companies starting or improving their climate-related disclosure.

In the past year, governments looking for ways to achieve their climate-change goals have begun to recognize the importance of climate-related disclosure by companies.  The Recommendations of the Financial Stability Board's Task Force for Climate-related Financial Disclosures (TCFD), which have been in use by companies and investors since their publication in 2017, are now accepted by policy-makers as the most effective current framework for this, and are being explicitly included in some countries' rules and regulations.  In Japan, while use of the TCFD Recommendations has been encouraged by the financial industry and the government for some time, the new addition of TCFD disclosure to the Corporate Governance Code promises to greatly increase the breadth and quality of climate-related disclosure from Japanese listed companies.  Japan Exchange Group, Inc. (JPX) is working to help listed companies with their efforts in this area. 

The TCFD Recommendations were picked up by some larger companies in Japan soon after publication, but their use expanded rapidly when the Ministry of Economy, Trade and Industry (METI), along with other policymakers such as the Financial Services Agency (FSA) and the Ministry of Environment (MoE), began actively encouraging it from mid-2018.  The Government Pension Investment Fund, the largest asset owner in Japan, also began to promote TCFD around this time.  In May 2019, a TCFD Consortium was formed with the backing of METI, MoE and the FSA, bringing together institutional investors, listed companies and other related parties (including JPX) to further discussion on effective and efficient disclosure of climate-related information and its use by investors.  The Consortium has created two guidance documents: the TCFD Guidance 2.0, aimed at companies using TCFD for disclosure, and the Green Investment Guidance, aimed at investors who use this disclosure.  As a result of all this, the number of organizations announcing support for the TCFD Recommendations reached 401 as of May 2021 – the most of any single country in the world.  JPX announced its support in October 2018.  In contrast with other countries, the majority of Japan's TCFD supporters are corporates rather than financial institutions.

While TCFD-based disclosure itself has been slower to get off the ground, the situation is improving.  Among listed companies surveyed by the Life Insurance Association of Japan in 2020¹, 21% replied that they are already disclosing based on TCFD (up from 8% in 2019), with another 40% considering disclosure. 

On June 11, 2021, based on recommendations from a Council of Experts and a public consultation, Tokyo Stock Exchange (TSE) published the latest revision of Japan's Corporate Governance Code, compliance with which is required as part of the TSE listing rules (on a comply or explain basis).  The revised version states that companies listed on the Prime Market (which will be created with the market structure overhaul in April 2022) should "collect and analyze the necessary data on the impact of climate change-related risks and earning opportunities on their business activities and profits, and enhance the quality and quantity of disclosure based on the TCFD recommendations… or an equivalent framework."²  As the Prime Market is likely to include many more companies than are currently disclosing using TCFD, this is expected to massively increase the breadth and quality of TCFD disclosure across Japanese listed companies.

¹ Initiatives by Life Insurers to Reinvigorate the Equity Market and Achieve a Sustainable Society through Asset Management, April 16, 2021

² Japan's Corporate Governance Code, June 11, 2021

As part of its work to encourage ESG investment in Japan, JPX is providing support to companies which are looking to begin or improve their TCFD-based disclosure.  The Japanese-language JPX ESG Knowledge Hub, launched in November 2020 (, includes a page introducing the TCFD Recommendations and related activity within Japan, including guidance documents on the use of TCFD produced by the TCFD Consortium, MoE and others.  Among its online seminars, two in particular focus specifically on TCFD: one from the perspective of the government, explaining how TCFD disclosure can help with wider government policy on climate change, and one focusing more on disclosure from a company perspective.  JPX plans to add more TCFD-themed content to the Knowledge Hub going forward.

JPX is also in the process of carrying out a study into the current state of TCFD-based disclosure in Japan, which is planned for publication this Autumn.  A clearer view of the current situation should help companies, investors and others to better understand what is needed for improvements.

In addition, JPX holds ad-hoc seminars for listed companies and investors on the theme of TCFD.  On April 28, 2021, just after the recommendations for the Corporate Governance Code review had been announced, JPX and the FSA held an online event on the theme of "TCFD Disclosure and Transition Finance (Toward Carbon Neutral in 2050)".  The first session saw speakers from METI, the FSA and MoE discuss TCFD disclosure and transition finance in the context of achieving carbon neutrality in Japan, while at the second, speakers from CDP, the Central Research Institute of Electric Power Industry, Tokio Marine Holdings, and Mitsubishi Corporation discussed the latest debate around using TCFD to set KPIs (key performance indicators) for measuring low-carbon transitions in listed companies and financial institutions.  A representative from JPX also introduced JPX's own TCFD-related activity.  Demonstrating the wide appetite for information on TCFD in Japan at the moment, over 700 people from listed companies, investors and others joined live and hundreds more have since watched on demand.  The first session of the event is available to view in English from the below link.

The other sessions and each speaker's slides are available in Japanese here:

JPX will continue to work with the government, regulators, investors and others to provide help and guidance to listed companies starting or improving their climate-related disclosure, not just among Prime Market-listed companies but across the size spectrum.  With the Japanese government pledging carbon neutrality by 2050, we hope that better climate-related disclosure can contribute to efforts to achieve this.