Press Release

October 02, 2023
  • Minister's Secretariat

Compilation of the Paper Titled “Addressing the Challenges of Financed Emissions”

In October 2023, the Japan Public and Private Working Group on Financed Emissions to Promote Transition Finance compiled a paper titled “Addressing the Challenges of Financed Emissions.” and the Ministry of the Environment (MOE) hereby releases the paper.


In order to achieve 2050 carbon neutrality, it is essential to provide finance for the transition of hard-to-abate sectors which face technological or economic difficulties in decarbonizing in one step (transition finance). Japan has led the world in creating an environment to promote transition finance by formulating basic guidelines, developing sector-specific technology roadmaps, and supporting the creation of model cases.
International financial alliances such as Glasgow Financial Alliance for Net Zero (GFANZ), endorsed by major financial institutions, require ambitious targets for financial institutions to reduce their emissions to net zero, including the indirect emissions come from their borrowers/investees (financed emissions).
Some financial institutions may refrain from financing hard-to-abate sectors based on their concern of a temporary increase in financed emissions, which could result in hindering the transition of such sectors.
With this problem awareness, MOE, METI, and FSA, in February 2023, jointly established the “Japan Public and Private Working Group on Financed Emissions to Promote Transition Finance” ("working group"), consisting of 10 members from globally-operating financial institutions and other entities (see the Appendix), under the Taskforce on Preparation of the Environment for Effective Transition Finance.
The working group examined and discussed possible solutions to the challenges above, including effective approaches to the specific calculation and disclosure of financed emissions, and the utilization of indicators other than financed emissions, and compiled discussion results into a paper titled “Addressing the Challenges of Financed Emissions.”


This paper organizes the role of financial institutions in achieving carbon neutrality and the characteristics of financed emissions, and, based on these, it presents possible solutions to the challenges of financed emissions by categorizing such solutions into the two groups of (1) approaches on calculation and disclosure of financed emissions and (2) use of multiple metrics, which are expected to help readers to appropriately evaluate and promote financing towards innovation and transition efforts by hard-to-abate sectors.


Environment and Economy Division, Minister's Secretariat, Ministry of the Environment
Representative number
Direct number
HIRAO Yoshihide
Senior Coordinator for Financial Markets Planning
Deputy Director
KODAKA Daisuke
Deputy Director
Environmental Specialist