The Japanese central bank is planning to offer zero-interest long-term financing to banks that finance energy transition efforts by Japanese companies towards achieving the country's decarbonisation goal by 2050.
The Bank of Japan (BOJ) today outlined its new climate funding scheme planned for a launch later this year. The BOJ under the scheme will back-finance Japanese financial institutions that extend funding to energy transition projects via green loans and bonds, sustainability-linked loans and bonds with performance targets related to climate change efforts and transition finance, it said.
The scheme is planned to last until the end of March 2031. Eligible financial institutions are expected to disclose a certain level of information on their climate change efforts, the bank said.
The BOJ added it will purchase foreign currency-denominated green bonds issued by foreign governments and institutions using its foreign reserves as part of efforts to tackle global warming. It will also strengthen co-operative efforts with other central banks to promote investment in climate-related financial products, such as green bonds.
More Japanese firms are considering resorting to sustainable finance tools to push energy transition in a move also backed by the Japanese government. Shipping firm NYK Line earlier this month announced a plan to issue the country's first transition bonds to raise around ¥20bn ($182mn) for investment in climate transition efforts, including development of zero emissions vessels.
The BOJ has followed a growing movement among central banks to take action to combat climate change. The European Central Bank last week said it will shift its asset-purchase stimulus programme away from heavy carbon-emitting companies and further incorporate climate change considerations into its monetary policy.
The BOJ today revised downwards an economic growth forecast to 3.8pc for the April 2021-March 2022 fiscal year compared with a previous forecast of 4pc, citing the extended impact of the Covid-19 pandemic. But the bank has revised up its growth forecast for 2022-23 to 2.7pc from an earlier 2.4pc projection.
