JAPAN Trends and Developments Contributed by: Reiko Yoshida, City-Yuwa Partners
practices that systematically incorporate non-financial information into investment decision-making, com - monly referred to as ESG investment, have become widely established. In 2006, the Principles for Responsible Investment (PRI) were launched at the initiative of the United Nations Secretary-General, to encourage investors to integrate environmental, social and governance considerations into their investment processes and adopt a long-term perspective. Since then, the PRI have gained broad international support, particularly among institutional investors, and have become an established reference framework guiding investment behaviour through the incorporation of ESG factors. In Japan, the signing of the PRI in 2015 by the Govern - ment Pension Investment Fund (GPIF), Japan’s pen - sion fund and one of the world’s largest institutional investors, marked an important step in recognising the significance of non-financial information in investment decisions. In this context, companies have increas - ingly been expected to provide appropriate disclosure and explanation of ESG-related non-financial informa - tion to stakeholders. Accordingly, efforts to reduce GHG emissions are not limited to compliance with international regulatory requirements, but are also closely linked to the evalua - tion of corporate value through non-financial informa - tion. In the field of international shipping, such efforts have come to be regarded as an important considera - tion in medium- to long-term management strategies and the enhancement of corporate value. Against this background, the discussion below intro - duces transition-linked loans in the maritime sector, proceeding on the premise of the transition finance framework developed in Japan and progressively refined through practical application. Transition finance in Japan In Japan, guidelines have been issued setting out the general approach to transition finance in the form of the Basic Guidelines on Climate Transition Finance (the “Guidelines”). The Guidelines were published in May 2021 by the Financial Services Agency, the Min - istry of Economy, Trade and Industry, and the Minis -
try of the Environment of Japan, and were revised in March 2025. According to the Guidelines, transition finance refers to financial instruments intended to support compa - nies addressing climate change through initiatives to reduce GHG emissions in line with long-term strate - gies aimed at achieving a decarbonised society. The purpose of transition finance is to provide finan - cial support for transition-related initiatives in sectors where achieving decarbonisation “in one stroke” (that is, in a single step) is difficult from both technological and cost perspectives. Such initiatives include steady efforts such as energy efficiency improvements and fuel switching, as well as long-term research and development facilitating the transition to a low-carbon economy. The Guidelines are formulated with due regard to con - sistency with the Climate Transition Finance Hand - book published by the International Capital Market Association (ICMA). In this respect, the Guidelines emphasise the importance for issuers and borrow - ers to address the following key elements, for which enhanced disclosure is encouraged: • the issuer’s climate transition strategy and govern - ance; • the materiality of climate transition to the issuer’s business model; • a science-based climate transition strategy, includ - ing clearly defined targets and pathways; and • transparency in implementation, including ongoing monitoring and disclosure. By contrast, at the level of the international financial market as a whole, as noted in the Guide to Transition Loans published in October 2025 by the Loan Mar - ket Association (LMA), the Asia Pacific Loan Market Association (APLMA) and the Loan Syndications and Trading Association (LSTA), there remain inconsistent definitions and applications of transition finance. In light of this international context, this chapter of the guide proceeds on the basis of the transition finance framework developed in Japan and introduces tran - sition-linked loans in the maritime sector.
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