Monthly News and Views Asia #JapanFinance

The latest sustainability policy and regulatory news from Asia

The month that was

The US’s disruptive impact on the global sustainability agenda is starting to emerge in Asia’s second-biggest economy: Japan.

In the wake of major Wall Street giants leaving the Net Zero Banking Alliance last year, five Japanese banks followed suit last month, with the first, Sumitomo Mitsui Financial Group, leaving on March 5.

Yet, during the same month, the Sustainability Standards Board of Japan released its inaugural sustainability disclosure standards, as shareholder climate activism begins to bear fruit in the country.

Japanese banks leave NZBA

The first Japanese bank to join the NZBA, Mitsubishi UFJ Financial Group, left the UN-founded alliance on March 27, joining SMFG, Nomura Holdings and Japanese agricultural bank Norinchukin, which left earlier in the month, according to a Japan Times report. The Mizuho Financial Group left on March 31.

The NZBA confirmed the departure of all five banks in a statement to Sustainable Views. The alliance has a total of 129 member banks, with Sumitomo Mitsui Trust Group its last remaining Japanese concern.

MUFG, which is also the country’s largest bank, was a founding member of the NZBA’s steering group.

Eri Watanabe, senior Japan energy finance campaigner at advocacy group Market Forces, wrote that the country’s banks are engaged in a “dangerous gamble” by dropping net zero commitments.

“If Japan’s banks fail to adhere to their net zero commitments and continue supporting companies expanding oil, gas and coal businesses, they jeopardise their bottom lines, their reputations and send damaging signals to the markets they wish to serve,” she said.

Market Forces and others filed shareholder resolutions at some of the country’s biggest banks last year, requiring that they disclose climate-related information on how they will meet their net zero commitments.

With a slew of North American and now Japanese banks leaving the NZBA, the alliance is set to be largely led by European lenders.

“NZBA remains the largest global initiative specifically focused on supporting climate mitigation action by banks and is uniquely placed to help banks navigate the net zero transition,” a spokesperson told Sustainable Views.

“The focus of NZBA remains to support members’ efforts to finance the transition to a net zero emissions economy,” they continued.

Fresh sustainability disclosure standards

While Japan’s banks have been pulling back on climate issues, the Sustainability Standards Board of Japan unveiled new sustainability disclosure standards on March 5 for listed companies.

The SSBJ was created in 2022, with a mandate to create standards that correspond with the International Sustainability Standards Board’s framework, which comprises the IFRS S1 and S2 standards.

It has published three standards: an “application standard”, which sets out the basic requirements for preparing sustainability-related financial disclosures; a “general standard”, covering disclosures on sustainability risks and opportunities; and a “climate standard”, which covers climate-related disclosures.

Japan had already established some basic rules for corporate sustainability reporting. In 2023, its Financial Services Agency mandated sustainability disclosure in statutory annual reports for all listed companies, but it did not prescribe specific standards.

The SSBJ said it has developed these more detailed standards on the basis they will “eventually be required” by all listed companies on the prime market of the Tokyo Stock Exchange — but they are not mandatory at present.

“We hope many entities apply SSBJ standards, and we welcome any feedback from entities that have applied SSBJ standards,” chair Yasunobu Kawanishi said in a statement.

Malaysia’s CCUS BILL

Elsewhere, the upper house of the Malaysian parliament, the “Dewan Negara”, passed the carbon capture, utilisation and storage bill 2025 after its third hearing on March 25, according to a briefing note by law firm Pinsent Masons.

The bill sets out a high-level regulatory framework for the implementation of CCUS in Peninsular Malaysia and the island of Labuan, while other Malaysian territories such as Sarawak and Sabah are not included, the note said.

While light on details, the CCUS bill lays out requirements for the licensing of various carbon-related activities — including owning or operating a carbon capture installation; importing and transporting carbon dioxide; and operating an onshore or offshore storage site. More details on the bill can be found in an official document from the Malaysian parliament.

Malaysian economy minister Datuk Seri Rafizi Ramli has previously said the development of the CCUS industry in the country could generate up to $250bn in projected income over the next 30 years.

Greenwashing fine in Australia

Meanwhile, the Federal Court of Australia ordered Active Super, one of the country’s superannuation funds, to pay a A$10.5mn ($6.7mn) penalty for misleading investors over sustainability claimsrevealed a notice from the Australian Securities and Investments Commission.

The court had found in June last year that Active Super had transgressed the law after it invested in securities that it said had been restricted by its environmental, social and governance screenings.

“This is a significant penalty that sends a strong message to companies making sustainable investment claims that those claims need to reflect the true position,” Asic deputy chair Sarah Court said in a statement.

This is Asic’s third greenwashing action after it strengthened its stance against greenwashing.

Total superannuation assets were A$4.2tn at the end of last year, according to the Association of Superannuation Funds of Australia.