Green Bond Guidelines 2017 were developed by the Ministry of the Environment of Japan in March 2017, with the aim of ensuring the credibility of the environmental benefits of Green Bonds while reducing the cost and administrative burden on issuers and promoting the use of Green Bonds in Japan. Since then, the Green Bond Guidelines have been updated in 2020, 2022 and 2024.

Since the 2020 edition, the Guidelines have also referred to Sustainability Bonds, stating that the Guidelines also apply to Sustainability Bonds that have green characteristics. In 2022, the Sustainability-Linked Bond Guidelines were established. The Green Bond and Sustainability-Linked Bond Guidelines 2024 underwent a major structural review, with a clear distinction made between the literal translation of the principles and the guidance section for Japanese market participants. The principles section has been made clearer to show that it is aligned with the international principles of the ICMA. The guidance section of the Guidelines provides issuers, investors, and other market participants with further explanation to enhance their understanding and offers illustrative examples of specific approaches and interpretations tailored to Japan‘s bond market.

The Green Bond and Sustainability-Linked Bond GuidelinesPDF were established and revised in alignment with international principles by ICMA. The Guidelines seek to expand Green Bond and Sustainability-Linked Bond issuance while keeping in mind the prevention of “greenwashing” (proclaiming to be “green” despite offering no environmental benefits or failing to allocate proceeds appropriately to Green Projects).

Basic Concepts of the Green Bond Guidelines

  • Ideally, the Green Bond market is to be developed through interaction based on sufficient information between issuers and investors. Classifying the expected elements of Green Bonds in the Guidelines establishes the foundation for interactions between the issuers and investors.
  • It is important for both issuers and investors to maintain the credibility of Green Bonds in both the market and society. In particular, it is extremely important to prevent bonds that engage in “greenwashing” from being issued and invested in as Green Bonds in the market.
  • Consistency with the internationally accepted Green Bond Principles is ensured.
  • It is important for issuers to disclose relevant information, and for investors and others to use that information in making assessments. Consequently, market discipline can be exercised to avoid “greenwashing” while securing the diversity of the approaches of issuers.

Elements that Green Bonds are expected to incorporate, along with examples of possible approaches, are organized into four levels ("should," "recommend," “encourage” and "to be considered") to serve as an indicator of applicability.