{
  "title": "Japan: Financial Sector Assessment Program-Technical Note on Financial Supervision and Regulation of Climate Related Issues",
  "publication": "IMF Staff Country Reports, May 13, 2024",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2024/05/10/japan-financial-sector-assessment-program-technical-note-on-financial-supervision-and-548825",
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  "summary": "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.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Publication date: May 13, 2024\n- This technical note examines financial supervision and regulation of climate-related issues in Japan, focusing on implications for banks and insurers as the country transitions to a net zero economy.\n- Japan's transition requires the decarbonization of high-greenhouse gas intensive industrial sectors such as steel.\n- The Japanese authorities have been undertaking a number of climate-related activities relevant to banks and insurers.\n- Japan is leading the way in the implementation of climate-related disclosures."
    },
    {
      "heading": "Key findings",
      "content": "- Banks and insurers have identified transition and physical risks as potential sources of:\n  - increasing credit risk\n  - market risk\n  - liquidity risk\n  - operational risk\n  - reputational risk\n- 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.\n- 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."
    },
    {
      "heading": "Implications and analytical emphasis",
      "content": "- The note emphasizes the need for supervisory frameworks to integrate climate-related considerations into routine supervision of banks and insurers.\n- Attention is drawn to the systemic challenge posed by decarbonizing high-emission industrial sectors (example given: steel) for financial sector resilience and exposure profiling."
    },
    {
      "heading": "Policy recommendations (implicit in findings)",
      "content": "- Develop and implement a systematic approach for FSA supervisory interactions to address climate issues with banks and insurers.\n- Ensure financial institutions adopt the Climate Guidance expectations to support clients’ and investees’ transition responses, thereby managing climate-related financial risks.\n- Continue advancing climate-related disclosures to support transparency and risk assessment across the financial sector."
    },
    {
      "heading": "Metadata and publication identifiers",
      "content": "- Pages: 37\n- Volume: 2024\n- Issue: 117\n- Series: Country Report No. 2024/117\n- DOI: https://doi.org/10.5089/9798400274862.002\n- Stock No: 1JPNEA2024009\n- ISBN: 9798400274862\n- ISSN: 1934-7685\n\nInternational Monetary Fund. \"Japan: Financial Sector Assessment Program-Technical Note on Financial Supervision and Regulation of Climate Related Issues\", IMF Staff Country Reports 2024, 117 (2024), May 13, 2024.\n\n---\n\n Content in this bundle\n\n- Japan’s climate-related risks and policy responses\n  - Japan’s climate-related risks and policy responses (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Japan’s climate-related risks and policy responses (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: May 13, 2024",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9798400274862.002",
    "Publication date: May 13, 2024",
    "This technical note examines financial supervision and regulation of climate-related issues in Japan, focusing on implications for banks and insurers as the country transitions to a net zero economy.",
    "Japan's transition requires the decarbonization of high-greenhouse gas intensive industrial sectors such as steel.",
    "The Japanese authorities have been undertaking a number of climate-related activities relevant to banks and insurers.",
    "Japan is leading the way in the implementation of climate-related disclosures.",
    "Banks and insurers have identified transition and physical risks as potential sources of:",
    "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.",
    "The note emphasizes the need for supervisory frameworks to integrate climate-related considerations into routine supervision of banks and insurers.",
    "Attention is drawn to the systemic challenge posed by decarbonizing high-emission industrial sectors (example given: steel) for financial sector resilience and exposure profiling.",
    "Develop and implement a systematic approach for FSA supervisory interactions to address climate issues with banks and insurers.",
    "Ensure financial institutions adopt the Climate Guidance expectations to support clients’ and investees’ transition responses, thereby managing climate-related financial risks.",
    "Continue advancing climate-related disclosures to support transparency and risk assessment across the financial sector.",
    "Pages: 37",
    "Volume: 2024",
    "Issue: 117",
    "Series: Country Report No. 2024/117",
    "DOI: https://doi.org/10.5089/9798400274862.002",
    "Stock No: 1JPNEA2024009",
    "ISBN: 9798400274862",
    "ISSN: 1934-7685",
    "**Japan’s climate-related risks and policy responses**"
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