Japan: Financial Sector Assessment Program-Technical Note on Financial Supervision and Regulation of Climate Related Issues

International Monetary Fund

No 2024/117, IMF Staff Country Reports from International Monetary Fund

Abstract: This paper presents a technical note on Financial Supervision and Regulation of Climate Related issues in Japan. Japan's transition to a net zero economy requires the decarbonization of high-greenhouse gas intensive industrial sectors such as steel. The Japanese authorities have been working on a number of climate-related activities relevant to banks and insurers. Banks and insurers have identified transition and physical risks as potential sources of increasing credit risk, market risk, liquidity risk, operational risk, and reputational risk. Discussions with Financial Services Agency (FSA) supervisory staff revealed that there is yet to be a systematic approach to addressing climate issues in regular supervisory interactions with banks and insurers. The Climate Guidance sets out the FSA’s expectations for financial institutions to support clients’ and investees’ responses to climate change in order to manage financial institutions’ climate-related risks. Japan is leading the way in the implementation of climate-related disclosures.

Keywords: scenario analysis; Japan FSAP; BOJ initiative; TCFD disclosure; FSAP finding; Climate change; Insurance companies; Climate finance; Financial stability assessment; Global (search for similar items in EconPapers)
Pages: 37
Date: 2024-05-13
New Economics Papers: this item is included in nep-ene and nep-env
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