• facebook
  • youtube

Impact Investing in Japan

Key Issues and Future of Impact Investing

Current Issues

Although impact investing continues to grow around the world, efforts have only just begun in Japan.
There are three shortfalls around impact investing in Japan:
(1) lack of recognition and understanding,
(2) lack of players
(3) lack of social infrastructure.
These three shortfalls result in lack of cases of impact investing. Therefore, they must be resolved by enhancing cooperation and collaboration with various stakeholders in the future.

Three shortfalls around impact investing

(Source) Proposal for the Expansion of Impact Investing 2019

Required Ecosystem for Impact Investing

In order to resolve three shortfalls and to further expand and mature impact investing in Japan, it is essential to enhance and develop the ecosystem for impact investing.

Ecosystem for impact investing consists of the following players.

  • Investors who invest in financial products and provide financial support based on risk tolerance
  • Financial intermediaries that develop, sell, act as an intermediary for products related to impact investing, and execute such investments
  • Non-financial intermediaries that assume responsibility for providing support and assessment of entities engaged in impact investing
  • Investees including companies and entrepreneurs to develop businesses with intention to expand social and economic value
  • National and local governments, media, and universities and academic institutions that assume responsibility for market formation and building foundation for growth

The enhancement of each of these players both quantitatively and qualitatively is essential for the further enhancement of impact investing in Japan *Note 1

Ecosystem and players of impact investing, and image of their
expected roles

(Source) Proposal for the Expansion of Impact Investing 2019

Note 1 Ecosystem for impact investing is considered to be a process by which impact investing, which is one of the most important tools to drive a shift in the way finance works and promote solving social issues, and which also encompasses ideas toward new capitalism, grows with diverse players working together as well as a reciprocal and mutually beneficial relationship between the players of impact investing itself.

Eight Key Initiatives to Expand Impact Investing

GSG-NAB Japan has formulated a theory of change *Note 2 for the expansion of impact investing. The theory of change presents a hypothesis based on the vision and key initiatives to achieve such vision, as well as the causal relationship among the key initiatives.

The following eight initiatives are necessary to realize an ecosystem for impact investing.

Key Initiatives to Realize an Ecosystem for Impact Investing
  • Improving investment literacy
  • Expanding financial products and financing channels
  • Enhancing the provision of information to investors and promoting changes in investors’ behavior
  • Creating opportunities for entities to grow and enhancing organizations and institutions that support it
  • Establishing and spreading methods of social impact measurement
  • Enhancing conceptualization of impact investing and maintaining its quality
  • Creating a framework for social implementation and dissemination
  • Enhancing links among various players and promoting community building

* Please see “ Proposal for the Expansion of Impact Investing 2019 Executive Summary ” for further details.

Note 2 Theory of Change is a framework to capture a structural understanding of social issues and to discuss about efficient usages of limited resources, availability of external resources and key collaboration required to tackle targeted social issue.

Follow us on SNS

  • facebook
  • youtube