Japan’s Nippon Life Insurance announces new transition finance guidelines
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Japan’s Nippon Life Insurance announced guidelines for offering transition finance loans to steelmakers and utilities, aiming to set a standard for local lenders and businesses.
This reflects Japan’s drive toward carbon neutrality by 2050, prioritizing transition finance due to its economy’s reliance on polluting sectors like shipping, chemicals, and steel.
Transition finance seeks to provide funding for high-emission firms to transition to more sustainable practices.
However, disagreement over terminology has led to concerns that it might enable polluting companies to maintain their current operations.
“As Japanese utilities and steelmakers operate globally, their transition strategies have come under scrutiny on whether they are green or not,” Yasutoshi Miyamoto, general manager at Nippon Life’s finance and investment planning department, told a news conference.
Also read: Hong Kong may mandate green taxonomy for banks to enhance sustainable finance
“We hope the guidelines can serve as a tool for them to explain their approach to investors,” Miyamoto added.
The guidelines are immediately applicable to investments and loans provided by Nippon Life Insurance. This action aligns with government initiatives to grow Japan’s transition finance sector.
Within the guidelines, Nippon Life Insurance has established specific criteria, including quantitative measurements, to evaluate whether a company or its projects align with the standards outlined in the Paris Agreement on climate change.
These criteria are crucial for determining eligibility for transition finance loans.
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