Koichiro Miyahara is President & CEO of Tokyo Stock Exchange (TSE) and Executive Officer & Director of Japan Exchange Group (JPX). He writes about efforts at JPX to move Japan’s securities markets toward sustainability.
This is Part 2 of the article.
3. JPX's initiatives in ESG investment: ESG-related products
The second pillar of our ESG investment initiatives is the publication and listing of ESG-related products. JPX calculates and publishes ESG-related stock price indices, and list ESG-related ETFs, infrastructure funds, and green and social bonds.
We currently publish two ESG-related stock price indices focusing on governance, one index that factors in capex and investment in human capital, six environmental indices, and another general ESG index.
From this ESG index lineup, the S&P/JPX Carbon Efficient Index, which was jointly developed by JPX, Tokyo Stock Exchange and S&P Dow Jones Indices, was adopted by GPIF as one of its global environmental stock indices.
Among listed products, we currently offer 17 ESG-related ETFs in our market.
One new segment of our market is represented by six infrastructure funds. These funds represent investment firms or investment trusts that invest in certain infrastructure assets, such as solar or other renewable energy power plants, power grids and ports. The funds gather investments from investors and distribute the profits derived from their infrastructure assets as dividends.
Recognizing the global growth in green and social bonds, we launched a dedicated disclosure platform for TOKYO PRO-BOND Market in January 2018. Available to issuers on TOKYO PRO-BOND Market, our Green and Social Bonds Platform welcomed its first social bond in June 2018 with JICA, one of Japan's leading international aid organizations, posting information on its bonds. This first social bond was followed by two more listings by JICA in September and December.
In addition to our domestic market initiatives, JPX signed on the Sustainable Stock Exchanges initiative inDecember 2017, joining a worldwide network of exchanges pursuing sustainable investment and promoting ESG-disclosure as a means ofgrowing corporate value.
JPX also established a Sustainability Committee in July 2018. Headed by Group CEO Kiyota and myself as the deputy head, the committee drives sustainability initiatives across the corporate group.
To that end, in October we lent our support to the Task Force on Climate-related Financial Disclosures (TCFD) led by the Financial Stability Board (FSB).
In November, we welcomed TCFD Chair Mark Carney, who is also Governor of the Bank of England, to discuss promoting the TCFD as well as climate-related and other financial disclosures with GPIF and other TCFD backers from the financial sector. Currently, 56 Japanese companies and organizations have expressed their support for the TCFD, accounting for about 10% of all TCFD supporters across the world.
In Japan, our Financial Services Agency clearly states in its policy that it will cooperate with other government agencies to support financial institutions and companies in performing disclosure aligned with the recommendation of the TCFD. The Ministry of Economy, Trade and Industry also compiled and released its TCFD Guidance in December 2018.
Together, these constitute a concerted effort of the private and public sectors to establish the TCFD in Japan.
JPX is committed to promote sustainability throughout Japanese markets. Our ongoing initiatives will continue to advance ESG-related investment, transparency and government reform. Through our effort, the global financial community will understand that sustainability has taken root in Japan.
About JPX's sustainability: https://www.jpx.co.jp/english/corporate/sustainability/index.html