Nippon Life Insurance has introduced new guidelines for providing transition finance loans to steelmakers and utilities.
These guidelines aim to serve as a standard for Japanese lenders and businesses.
According to Reuters, the initiative aligns with Japan’s goal to achieve carbon neutrality by 2050, despite the country’s significant dependence on high-emission industries such as shipping, chemicals, and steel.
Transition finance is designed to help these sectors move towards more sustainable operations, although the lack of clear definitions has sparked concerns that it might allow ongoing high-emission practices.
The new guidelines from Nippon Life include specific quantitative criteria to determine if a company or project complies with the Paris Agreement on climate change and is eligible for transition finance loans. They focus on evaluating the long-term strategies of companies for transitioning to greener operations.
“As Japanese utilities and steelmakers operate globally, their transition strategies have come under scrutiny on whether they are green or not,” said Yasutoshi Miyamoto, general manager of Nippon Life’s finance and investment planning department, as reported by Reuters. “We hope the guidelines can serve as a tool for them to explain their approach to investors.”
These guidelines are now in effect for all investments and loans made by Nippon Life. This initiative is part of broader government efforts to enhance Japan’s transition finance market, which includes plans to issue approximately 20 trillion yen in climate transition bonds over the next 10 years to stimulate private-sector investment.
Nippon Life recently agreed to buy American International Group’s (AIG) Corebridge stake for US$3.8 billion. The stake represents 20% of Corebridge’s shares.
Following the transaction, the group will retain a 9.9% shareholding in Corebridge for at least two years after closing.
“Nippon Life is well known in the financial services industry for its leadership in the Japanese insurance market and is globally recognised for its strong performance and corporate reputation,” said AIG chair and chief executive Peter Zaffino. “We are pleased to have Nippon Life become a strategic partner to Corebridge and believe that they will add meaningful value as an investor.
“I have significant respect for President [Hiroshi] Shimizu and admire his visionary leadership of Nippon Life, which is well known for its impressive capabilities and the high quality of services and benefits it provides to 15 million clients.”
