Corporate Japan steps up disclosure of Climate Change risks

The article discusses how Japanese companies are forming an alliance this month to disclose risks posed by climate change to their businesses. This move seeks to attract long-term investors as environmental criteria is rapidly becoming a more important factor for institutional investors to allocate their capital. Companies that neglect environmental policies seem to be having trouble attracting more investors. According to the article, businesses will lead on communicating climate-related risks and management strategies, and investors will use the information to judge companies' long-term growth prospects. It seems to me that these businesses are not just doing this to tackle climate change and ensure a stable future, but also because by tackling climate change and resorting to things like cleaner energy, they will generate new opportunities for long-term growth.

The alliance will support proposals by the Task Force on Climate-related Financial Disclosures, a task force that has gained support from roughly 600 companies worldwide, with nearly 100 companies from this Japanese group. The goal of this task force is to make the dangers of climate change more visible, setting up dialogues between companies and investors to explore long-term climate change scenarios.

The increased concern over climate change and its effects on businesses and Japan in general is likely due to a rise in more climate-change related dangers. For example, increased frequency and intensity of strong typhoons and other extreme weather events has brought about massive damages, and will continue to do so at an increasing rate. Less directly, a rise in temperature has lead to a greater incidence of heat illnesses and just generally disrupting comfortable human living conditions. There is also concern that the impact of climate change in different parts of the world may affect Japan's economy through supply chains.

Despite the positive outlook coming from this newly formed corporate group, climate change is still a massive issue worldwide and in Japan. With Japan's very limited supply of natural resources, discussion of energy resources tend to dominate politics, with not much focus on climate change at the moment. Most of Japan still relies on fossil fuels for their energy, with the government invisioning that fossil fuels will make up 56 percent of the Japanese energy mix, more than nuclear (20-22 percent) and renwable (22-24 percent) capacity combined. Public concern over the safety of nuclear power, especially following the Fukushima disaster, is preventing Japan from making any strides in that sector.

This alliance, at least in the article, doesn't seem to be directly pushing its members to tackle climate change, but rather be more transparent about their contribution to it. I think that as climate change increasingly affects businesses and the economy, we will see more responses like this from businesses and government to tackle climate change effectively. However, I worry if it may be too late by then.


Additional Sources:
- http://www.env.go.jp/earth/tekiou/pamph2018_full_Eng.pdf
-  https://asia.nikkei.com/Opinion/Japan-and-climate-change-leader-turned-laggard