Japanese regulator to toughen stance on greenwashing

Japan’s regulators will step up scrutiny of financial products claiming to be environmentally friendly and look out for “greenwashing,” according to the new head of its financial watchdog.

“It’s necessary to establish a framework to verify the eligibility of products that relate to environmental, social and governance (ESG) issues…That’s one of our priorities for this current year,” Junichi Nakajima, who became the commissioner of the Financial Services Agency last month, said in an interview.

The new verification system should be equivalent to the international standard level, he added.

The comments by Nakajima come as global regulators have been trying to protect investors from greenwashing.

When issuing ESG-related products, it has become common for Japanese companies to obtain certification from private rating institutions such as Rating and Investment Information (R&I) and Japan Credit Rating Agency.

From the perspective of customer protection, Nakajima said, there should be a separate organisation that would give additional certification to make such products more legitimate as ESG.