Japan hopes climate transition bonds draw more foreign investors - Nikkei Asia
Japan hopes climate transition bonds draw more foreign investors - Nikkei Asia
TOKYO -- Japan successfully finished selling the first batch of the world's first sovereign climate transition bonds on Tuesday, but attracting foreign investment remains an agenda for the nation to lead the market for the nascent financing tool, according to experts.
The so-called GX bonds -- from the Japanese shorthand for "green transformation" -- are a type of transition bonds that are aimed at channeling more money into activities that do not narrowly qualify as "green" but are expected to help create decarbonized, climate-resilient societies by cutting carbon emissions in the long term.
Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”