Japanese Industry Groups and Climate Policy

How Japan’s Industrial Sectors are Positioned on Paris-aligned Climate Policy

November 2022



Ambitious and Paris-aligned climate and energy policy in Japan continues to be held back by powerful business groups representing heavy industry, particularly the Japan Iron and Steel Federation (JISF), the Federation of Electric Power Companies (FEPC) and the Japan Automobile Manufacturers Association (JAMA). These groups, along with the Japan Business Federation, Keidanren dominate Japan's climate agenda and through their staunch opposition to policies like carbon taxation and continued support of thermal fossil power appear disconnected from their own statements supporting the government's 2050 net zero target.

This report updates a report from InfluenceMap released in 2020, Japanese Industry Groups and Climate Policy and also launches the Corporate Climate Policy Engagement – the Japan Platform, a continuously updated tool designed to facilitate positive climate policy engagement for Japan.

  • While interests of the heavy industry are prevailing through their strategic policy engagement, they are increasingly at odds with the climate goals and strategies of most of corporate Japan, as represented by such sectors as healthcare, retail, finance, and consumer goods. These sectors make up more than 70% of Japan's economy and employment compared to less than 15% for the heavy industrial sectors whose voice on climate continues to prevail in policy formulation.

  • To make corporate policy engagement in Japan on climate policy more representative of the broader economy, reform will likely be needed in how industry associations are represented in the policy making process and indeed, internally within the Japan Business Federation. Importantly, industry associations representing key economic sectors like retail, financial services, logistics, construction and real estate should be more actively engaged on a range of climate-related policy streams to express their positions and climate goals more clearly.

  • While most policy engagement in Japan is conducted through the large trade groups, an increasing number of individual large companies are becoming more active in positive policy engagement, notably Softbank Group and Takeda Pharmaceutical.

  • There are signs of progress with the positive Japan Corporate Leaders Partnership (JCLP)'s growing membership and promotion of greater ambition on GHG emission targets, strong renewable energy targets and regulations, as well as emissions trading and carbon tax for Japan. Likewise, the Real Estate Association of Japan is pushing for government policy around low carbon / efficient buildings and the Japan Association of Corporate Executives (Keizai Doyukai), a group representing the voice of CEOs, has articulated the need for greater ambition in the renewable targets in the Strategic Energy Plan.

  • These are the findings of InfluenceMap’s Japan research program, the results of which are consolidated in Climate Policy Engagement – the Japan Platform. This represents the only comprehensive database of climate policy influencing within Japan and is used by investors, civil society groups, the media, policy makers and companies themselves to track and engage positively with climate and energy policy. The platform covers 50 of the most important industry groups and 20 largest companies in Japan. It tracks their positions on emerging strands of climate / energy policy including carbon taxation, energy targets and low carbon electricity policy.

  • The findings will be of interest for global investors in Japanese companies, concerned that they are delaying needed climate policy action from the Japanese government. They will also be concerned that Japanese companies in the power, automotive and heavy industry sectors may not be adequately prepared for an energy transition away from fossil fuels. Investor concern is expressed by investor coalitions (e.g. the UN PRI) and realized in the Climate Action 100+ stewardship process which has prioritized policy engagement. Ten Japanese companies are in the target list for this process, including key automakers.

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