The Ministry of the Environment, in an effort to enhance creditability in the environmental impact of Green Loans and to help improve borrowers’ sustainability through financing, first developed the Green Loan and Sustainability-Linked Loan Guidelines in 2020 to increase Green Loans in Japan. The Guidelines were developed and updated in 2022, in light of the market and in accordance with the international principles by the Asia Pacific Loan Market Association (APLMA), the Loan Market Association (LMA), and the Loan Syndications and Trading Association (LSTA), which are widely accepted in the international sustainable loan market.

The Green Loan and Sustainability-Linked Loan Guidelines 2024PDF 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 LMA, etc. The guidance section provides borrowers, lenders, and other market participants with further explanations to enhance their understanding and offers illustrative examples of specific approaches and interpretations tailored to Japan's loan market to support decision-making regarding Green Loans and Sustainability-Linked Loans.

At the same time, the Guidelines seek to prevent "greenwashing" in loans (loans labelled as "green" despite offering no environmental benefits or failing to allocate proceeds appropriately to Green Projects).

Green Loan and Sustainability-Linked Loan Guidelines 2024PDF