A policy recommendation report published by the Financial Services Agency (FSA) regarding the "Summary of the Fifth Report of the Expert Meeting on Sustainable Finance." With the subtitle "Toward Expanding Investment Opportunities for a Wider Range of Investors," it proposes specific measures to enhance awareness and understanding among individual investors who prefer sustainability investments and to expand investment opportunities.
Key Points
1. Report Overview
- Issuing Organization: Financial Services Agency (FSA)
- Publication Date: June 30, 2025
- Chair: Takeshi Mizuguchi (President, Takasaki City University of Economics)
- Meeting Period: 5 sessions from October 2024
- Subtitle: Toward Expanding Investment Opportunities for a Wider Range of Investors
- Positioning: Collaboration with the Asset Management Nation Realization Plan
2. Significance of Promoting Sustainable Finance
Social Necessity
- Response to Climate Change and Other Issues:
- Close relationship between social/environmental issues and economic activities
- Transition to new industrial and social structures
- Essential need for further expansion of private funding
- Impact on Financial System:
- Reduction of systemic risks
- Ensuring long-term financial stability
- Foundation for sustainable economic growth
Significance for Investors
- Universal Owner Perspective:
- Improvement of overall portfolio risk-return
- Enhancement of long-term investment value
- Strengthening the foundation of economic activities
- Individual Investor Values:
- Growing awareness of social contribution
- Investment choices based on values
- Responsibility to future generations
3. Changes in International Situations and Japan's Position
- Trends in Europe and the US:
- Strengthening of regulations and disclosure requirements
- Greenwashing countermeasures
- Establishment of classification systems (taxonomies)
- Japan's Characteristics:
- Emphasis on voluntary initiatives
- Phased approach
- Harmony with practical operations
- Pursuit of Uniqueness:
- Japanese-style sustainable finance
- Emphasis on transition
- Consideration for SMEs
4. Analysis of Individual Investors' Current Status
Characteristics by Age Group
- Distribution of Interest:
- Higher interest with increasing age
- Preference not limited to young people but also among middle-aged and elderly
- Potential exists across all generations
- Awareness Challenges:
- Half of each age group is unaware
- Gap between awareness and practice
- Lack of information as the main factor
Investment Intentions and Impediments
- Investment Intentions:
- Half of non-investors "want to invest"
- Large potential demand
- Importance of providing opportunities
- Main Impediments:
- "Don't know how to invest" is the biggest reason
- Concerns about returns
- Difficulty in product selection
5. Initiatives to Improve Awareness and Understanding
Enhancement of Information Provision
- Basic Information:
- Concept of sustainable finance
- Social significance of investment
- Specific effects and results
- Practical Information:
- Explanation of investment methods
- Points for product selection
- Risk-return considerations
Education and Awareness Activities
- Integration into Financial Education:
- Development in school education
- Workplace training
- Lifelong learning programs
- Media Utilization:
- Easy-to-understand explanations
- Introduction of success stories
- Information dissemination by experts
6. Current Status and Challenges of Sustainability Investment Products
International Product Classification
- EU and UK Examples:
- Clear classification criteria
- Standardization of disclosure requirements
- Strengthening investor protection
- Applicability in Japan:
- Awareness and understanding as prerequisites
- Consideration of phased introduction
- Consideration of practical burden
Direction for Product Composition and Provision
- Response to Investor Needs:
- Social contribution-focused type
- Return-focused type
- Balanced type
- Innovation in Explanation Content:
- Approach by preference type
- Clear statement of specific contributions
- Explanation of long-term value
7. Response to Diversity of Investment Preferences
Sustainability Issue Contribution-Focused Group
- Characteristics: Prioritizing social impact
- Information Sought:
- Specific environmental and social effects
- Investee's initiatives
- Measurement and reporting of results
- Product Design: Impact investment type products
Medium to Long-term Return-Focused Group
- Characteristics: Balance between economic returns and social value
- Information Sought:
- Relationship between ESG factors and returns
- Risk-adjusted returns
- Long-term performance records
- Product Design: ESG integration type
8. Future Policy Responses
Short-term Measures
- Awareness Enhancement Campaign:
- Government-industry association collaboration
- Unified message dissemination
- Accessible information provision
- Implementation of Demonstration Projects:
- Pilot programs
- Effect measurement
- Best practice sharing
Medium to Long-term Considerations
- Product Classification System:
- Monitoring international trends
- Consideration of Japanese version classification
- Possibility of phased introduction
- Infrastructure Development:
- Development of disclosure standards
- Utilization of third-party evaluation
- Construction of digital infrastructure
9. Expectations for Each Stakeholder
Financial Institutions
- Accurate understanding of customer needs
- Easy-to-understand product explanations
- Continuous follow-up
Institutional Investors
- Strengthening stewardship activities
- Providing insights for individual products
- Contributing to sound market development
Companies
- Enhancement of sustainability information
- Clarification of long-term strategies
- Dialogue with stakeholders
10. Conclusion and Future Outlook
This report focuses on developing the new frontier of individual investors in promoting sustainable finance. Starting with improving awareness and understanding, it recommends expanding the base of the sustainable finance market by providing investment opportunities according to investors' diverse preferences.
The FSA plans to support the proactive efforts of each economic entity while contributing to the construction of a sustainable society and economy through the realization of medium to long-term investment returns and enhancement of corporate value. Going forward, the development of specific measures based on the recommendations of this report and continuous monitoring and improvement are expected.