Rising Sun, Hidden Stories

    The elated mood from my recent expedition to PRI-land-Japan is fading as rapidly as the milder effects of a westward jet lag1. I reckon I should be getting a move on deciphering those cryptic notes from the conference and untangling ideas and impressions from numerous meetings and discussions before committing them to oblivion. Also, some good old-fashioned fact-checking is in order after a week of speeches and statements supported at most by anecdotal evidence.

    It is time, therefore, to dig a little deeper into the Japanese sustainability story. After all, as compelling as the dignitaries attending PRI in Person in Tokyo sounded in their attempts to promote the country of the rising sun as a champion of the green transformation, I did hear some distinct rumbling in the background as well.

    A hot topic mentioned frequently between the sessions, albeit in hushed tones, so as not to spoil the festive mood or cause our gracious hosts to lose face, was that of coal.

    Japan’s GX push, an ambitious investment roadmap for 150 trillion yen of public-private financing over the next ten years to transform various industrial sectors to achieve carbon neutrality and contribute to the energy transition in Asia, is indeed impressive. Yet, the fact remains that the country, which draws nearly a third of its electric power supply from coal, stubbornly refuses to phase out the world’s dirtiest energy source over the next seven years. At a meeting of the G7 environment ministers in lovely Sapporo earlier this year, the host country was the only one not to commit to bringing its coal usage down to zero by 2030.

    Japan, of course, has plenty of good excuses for clinging to coal. The island nation’s geographic isolation, mountainous terrain, deep sea waters and annual typhoon season are all credible hurdles to a speedy building of renewable energy sources. Add to that a severe case of energy anxiety, exacerbated by the triple meltdown at the Fukushima Daichi nuclear power plant, which is still fresh in the collective memory. What you get is as many as 40 new coal plants constructed in Japan since 2011.

    Japanese politicians are aware of exactly how bad this looks. So, they bet massively on mitigation technologies, from carbon capture to ammonia and green hydrogen. Only to attract additional criticism, as it turns out. “This approach promotes uncertain future technology options with limited feasibility while delaying the clear-cut policy actions required now to phase out coal power plants,” claim the authors of a recent report.

    I was, therefore, glad when several institutional investors who had come to Tokyo for the conference confessed to skipping some of the cheery plenary sessions, missing an opportunity to see the Japanese Prime Minister in person or hear a message directly from the megacity’s governor. Instead, they opted to visit companies and talk to members of parliament, engaging on the more pressing issues at hand, sensitive as they might be for the host country.

    And, speaking of sensitive topics, Japan has much to prove regarding gender equality, too. Showcasing a few successful female leaders at a sustainability gathering is fine, yet the overall picture is rather embarrassing. According to the World Economic Forum’s 2023 gender gap report, Japan ranks 125th out of 146 countries, doing particularly badly in economic participation and political empowerment. This week, Japanese media had the perfect occasion to pick up the issue of the country’s persistent pay and employment gender gaps, citing the research of Claudia Goldin, who has just been awarded the Nobel Memorial Prize in Economic Sciences.

    Another topic for responsible investors to engage on, perhaps?

    1. Did you know that your circadian rhythm is less confused if you travel westward? According to scientists, this is because travelling west ‘prolongs’ the body clock’s experience of its normal day-night cycle, and the normal tendency of the body clock in most of us is slightly longer than 24 hours.

    Image courtesy of Krzysztof Kowalik on Unsplash
    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.

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