Japan
Photo by Jezael Melgoza on Unsplash
Turning cheap talk into action
One of the world’s most densely populated and urbanised countries, Japan is a highly advanced democratic economy boasting low crime, low unemployment, low poverty and some of the highest standards of living on the planet – as well as the highest life expectancy.
Rapid growth in manufacturing, electronics, automotives, and services over the second half of the 20th century created a remarkable and sustained post-war boom. Inside four decades, Japan went from the ashes of war to become a high-tech manufacturing powerhouse with the world’s third-largest GDP.
In the 1980s this dizzying growth, combined with reckless lending and cheap credit, helped to inflate a massive asset bubble with land and stock prices tripling over the course of the decade. When the bubble finally burst in late 1991 the Japanese economy entered a protracted slump from which it is still working to recover. Stagnant GDP, deflation, shrinking household incomes and declining labour productivity have haunted Japanese policymakers ever since - even as living standards have remained high.
To counter this prolonged stagnation, Japan has pumped huge amounts of stimulus spending into the economy and maintained interest rates at near zero. The impact of these policies has been unclear: consumer spending has been propped up, but by 2019 national debt had ballooned to some 235% of GDP. Nevertheless, Japan’s unorthodox approach in many ways foreshadowed global responses to the 2008 and COVID-19 recessions: quantitative easing, zero interest rates, and massive state stimulus.
When it comes to making the transition to a green economy, then, Japan is hardly starting from a position of strength. Two main policy programmes guide Japan’s path to a sustainable economic future. Firstly, the “Green Growth Strategy Through Achieving Carbon Neutrality in 2050” sets out the roadmap to net zero across 14 detailed sectoral plans, while the 2016 “Plan for Global Warming Countermeasures” sets out investment, monitoring and evaluation mechanisms, as well as incentives for tech and innovation.
When initially passed, the Plan for Global Warming Countermeasures was far from impressive; however, over the last few years Japan has significantly upgraded its climate and environmental ambitions, with a new commitment to net zero by 2050 announced in October 2020. Existing policies are insufficient to meet this goal, and so Japan will need to significantly ramp up its carbon pricing programmes and renewable energy targets in the immediate future.
Regarding the “fair” part of a green and fair economy, however, it could be argued that Japan is a world leader. Inequality is amongst the lowest in the developed world, with Japan’s wealthiest citizens a lot less well-off than their foreign peers; in 2012, for example, the top 1% of Japanese households earned about $240,000, compared to $1,264,065 in the US. The country has exceptionally low levels of crime, a strong history of active labour unions, and a large cooperative sector. And despite close to three decades of economic stagnation Japan’s political and social culture has remained largely consensual – avoiding the kind of bitter partisanship and populism seen abroad.
There are some important caveats to be made here, however. The Japan as a country is ethnically homogenous, with non-Japanese making up barely 2% of the population, and deeply traditional: a reliance on families rather than the state to provide a social safety net entrenches gender inequality in particular, and contributes to child poverty, and long working hours, all of which are well above OECD averages. Integration of social policies - that could uphold an inclusive and just transition - into Japan's green transition is also relatively lacking. Perhaps a Japanese green recovery could finally break the shackles of thirty years of an economy on pause.
Photo by Jezael Melgoza on Unsplash
Policy Scores
Last updated 18 Dec 2025
Governance
National Green Economy Planning
Japan’s overarching “Green Transformation (GX)” policy package—set out by Cabinet decision in February 2023 and updated through 2024–2025—provides the national pathway to a net-zero economy by 2050, linking climate targets to industrial and fiscal tools. Core pillars include: (i) the GX Basic Policy (Cabinet decision) that operationalises the 2050 neutrality goal and the 2030 NDC (-46% from 2013, with efforts toward -50%), (ii) the GX Promotion Act (Act on the Promotion of Smooth Transition to a Decarbonized, Growth-Oriented Economic Structure), amended in May 2025, enabling a national GX-ETS to become mandatory from FY2026, and (iii) financing via GX Economy Transition Bonds (planned JPY 20 trillion over 10 years; ~JPY 3 trillion issued in FY2023–2024). Sectoral plans remain anchored by the Sixth Strategic Energy Plan (2021) and the government’s Long-term Strategy under the Paris Agreement. Implementation is increasingly rule-based (ETS compliance design under way), but parts of the policy mix (e.g., exact cap-setting and credit limits) are still being finalised ahead of the mandatory ETS phase.
Japan’s overarching “Green Transformation (GX)” policy package—set out by Cabinet decision in February 2023 and updated through 2024–2025—provides the national pathway to a net-zero economy by 2050, linking climate targets to industrial and fiscal tools. Core pillars include: (i) the GX Basic Policy (Cabinet decision) that operationalises the 2050 neutrality goal and the 2030 NDC (-46% from 2013, with efforts toward -50%), (ii) the GX Promotion Act (Act on the Promotion of Smooth Transition to a Decarbonized, Growth-Oriented Economic Structure), amended in May 2025, enabling a national GX-ETS to become mandatory from FY2026, and (iii) financing via GX Economy Transition Bonds (planned JPY 20 trillion over 10 years; ~JPY 3 trillion issued in FY2023–2024). Sectoral plans remain anchored by the Sixth Strategic Energy Plan (2021) and the government’s Long-term Strategy under the Paris Agreement. Implementation is increasingly rule-based (ETS compliance design under way), but parts of the policy mix (e.g., exact cap-setting and credit limits) are still being finalised ahead of the mandatory ETS phase.
Inclusive Corporate Governance
Japan’s framework relies on exchange-led and policy guidance rather than binding legislation on employee representation. There is no statutory co-determination or mandatory worker representation on corporate boards. Since October 2023, Tokyo Stock Exchange (TSE) rules ask Prime Market issuers to “strive” to appoint at least one female executive by 2025 and to “aim” for 30% female executives by 2030, with action plans encouraged; these provisions are framed as desired items under the Code of Corporate Conduct. The government’s 2023 “Intensive Policy for Gender Equality and Women’s Empowerment” mirrors these targets. ESG disclosure is being tightened through FSA/TSE guidance and moves toward TCFD-aligned reporting in securities filings, but there is no single, comprehensive ESG/SDG corporate law. Overall, inclusion is promoted through targets and soft-law guidance; hard mandates are limited to listing-rule expectations rather than statute, and employee participation rights are not prescribed.
Japan’s framework relies on exchange-led and policy guidance rather than binding legislation on employee representation. There is no statutory co-determination or mandatory worker representation on corporate boards. Since October 2023, Tokyo Stock Exchange (TSE) rules ask Prime Market issuers to “strive” to appoint at least one female executive by 2025 and to “aim” for 30% female executives by 2030, with action plans encouraged; these provisions are framed as desired items under the Code of Corporate Conduct. The government’s 2023 “Intensive Policy for Gender Equality and Women’s Empowerment” mirrors these targets. ESG disclosure is being tightened through FSA/TSE guidance and moves toward TCFD-aligned reporting in securities filings, but there is no single, comprehensive ESG/SDG corporate law. Overall, inclusion is promoted through targets and soft-law guidance; hard mandates are limited to listing-rule expectations rather than statute, and employee participation rights are not prescribed.
Participatory Policymaking
Japan has formal mechanisms for public consultation, including through the e-Gov portal, Basic Act on the Formation of Laws, and GX Implementation Council, which includes industry, academia, and civil society. The White Paper on the Environment reports on public engagement and feedback mechanisms. However, while consultation is structured, impact assessments for marginalised groups (e.g. IP/LCs, people with disabilities) are not systematically mandated across all policy areas. Japan’s Plan for Gender Equality (2020–2030) includes participation goals, but broader social impact assessments remain limited.
Japan has formal mechanisms for public consultation, including through the e-Gov portal, Basic Act on the Formation of Laws, and GX Implementation Council, which includes industry, academia, and civil society. The White Paper on the Environment reports on public engagement and feedback mechanisms. However, while consultation is structured, impact assessments for marginalised groups (e.g. IP/LCs, people with disabilities) are not systematically mandated across all policy areas. Japan’s Plan for Gender Equality (2020–2030) includes participation goals, but broader social impact assessments remain limited.
Beyond GDP
Japan has formalised “well-being” evidence in policy via the Cabinet Office’s annual Survey on Satisfaction and Quality of Life (since 2019) and a well-being indicator dashboard; the Digital Agency runs a Community Well-Being Indicator service for local governments. Japan advances SEEA implementation (training hosted by UNSD/UNSIAP in Chiba) and supports ecosystem accounting research; however, a single, comprehensive national “wealth” framework covering human, social, natural, and produced/financial capital that is embedded in budgeting/planning is not yet in place.
Japan has formalised “well-being” evidence in policy via the Cabinet Office’s annual Survey on Satisfaction and Quality of Life (since 2019) and a well-being indicator dashboard; the Digital Agency runs a Community Well-Being Indicator service for local governments. Japan advances SEEA implementation (training hosted by UNSD/UNSIAP in Chiba) and supports ecosystem accounting research; however, a single, comprehensive national “wealth” framework covering human, social, natural, and produced/financial capital that is embedded in budgeting/planning is not yet in place.
Finance
Green Finance & Banking
Japan has articulated a comprehensive “Green Transformation (GX)” financing approach combining transition finance, sovereign Climate Transition Bonds, and supervisory work on climate risk. The Ministry of Finance issued a Climate Transition Bond Framework (2023) to fund GX measures (e.g., energy efficiency support for SMEs) and began issuance in 2024–2025. The Financial Services Agency (FSA) and Bank of Japan (BOJ) have completed a second climate scenario analysis (June 2025) with major banks, expanding methodology and integrating NGFS scenarios; Japan is also progressing toward more consistent TCFD-style disclosures in statutory reports for listed firms. The government’s GX Basic Policy targets ¥150 trillion in public-private investment over a decade, underpinned by carbon-pricing revenues and transition finance instruments. While supervisory climate testing is not yet annual and fully mandatory across all institutions, Japan’s policy settings combine incentives, disclosure, and supervisory exercises at national scale.
Japan has articulated a comprehensive “Green Transformation (GX)” financing approach combining transition finance, sovereign Climate Transition Bonds, and supervisory work on climate risk. The Ministry of Finance issued a Climate Transition Bond Framework (2023) to fund GX measures (e.g., energy efficiency support for SMEs) and began issuance in 2024–2025. The Financial Services Agency (FSA) and Bank of Japan (BOJ) have completed a second climate scenario analysis (June 2025) with major banks, expanding methodology and integrating NGFS scenarios; Japan is also progressing toward more consistent TCFD-style disclosures in statutory reports for listed firms. The government’s GX Basic Policy targets ¥150 trillion in public-private investment over a decade, underpinned by carbon-pricing revenues and transition finance instruments. While supervisory climate testing is not yet annual and fully mandatory across all institutions, Japan’s policy settings combine incentives, disclosure, and supervisory exercises at national scale.
Greening Fiscal & Monetary Policy
In 2023, Japan became the first country to issue sovereign climate transition bonds under its Green Transformation (GX) Policy, with ¥1.6 trillion (~US $11 billion) raised in the first two tranches of a planned ¥20 trillion program (2023–2032).
Japan is implementing new carbon pricing mechanisms as part of the GX Policy, including a carbon levy targeting fossil fuel importers and the development of a mandatory emissions trading scheme (ETS), which began its trial phase in 2023 and will become compulsory for high-emission businesses from 2026.
Japan also maintains a strong green finance regulatory framework, including its Climate Transition Finance Guidelines (2021), Green Bond Guidelines (updated in 2022), and the Bank of Japan’s Climate Response Financing Operations launched in 2021, which offer near-zero-interest loans for climate projects.
The Financial Services Agency (FSA) and the Bank of Japan conducted a pilot scenario analysis exercise on climate-related risks with major financial institutions in 2022. Furthermore, the FSA is aligning corporate sustainability disclosures with international standards in 2025, promoting greater transparency and integration of environmental factors into financial reporting.
In 2023, Japan became the first country to issue sovereign climate transition bonds under its Green Transformation (GX) Policy, with ¥1.6 trillion (~US $11 billion) raised in the first two tranches of a planned ¥20 trillion program (2023–2032).
Japan is implementing new carbon pricing mechanisms as part of the GX Policy, including a carbon levy targeting fossil fuel importers and the development of a mandatory emissions trading scheme (ETS), which began its trial phase in 2023 and will become compulsory for high-emission businesses from 2026.
Japan also maintains a strong green finance regulatory framework, including its Climate Transition Finance Guidelines (2021), Green Bond Guidelines (updated in 2022), and the Bank of Japan’s Climate Response Financing Operations launched in 2021, which offer near-zero-interest loans for climate projects.
The Financial Services Agency (FSA) and the Bank of Japan conducted a pilot scenario analysis exercise on climate-related risks with major financial institutions in 2022. Furthermore, the FSA is aligning corporate sustainability disclosures with international standards in 2025, promoting greater transparency and integration of environmental factors into financial reporting.
Green Trade Practices
Japan’s trade agreements, including the EU–Japan Economic Partnership Agreement (EPA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), systematically include cooperation-oriented environment and Trade and Sustainable Development (TSD) chapters. These provide for dialogue, technical assistance, and cooperation, but they do not function as binding market-access mechanisms for environmental goods and services (EGS), nor do they embed interoperability of green taxonomies or carbon-pricing regimes. Japan also participates in regional frameworks such as the ASEAN–Japan Environment and Climate Partnership and the Asia Zero Emission Community (AZEC, 2023), both focused on joint energy transition projects and capacity building rather than enforceable liberalisation.
Domestically, Japan is advancing a growth-oriented carbon pricing framework under the Green Transformation (GX) agenda. The GX Promotion Act establishes a national emissions trading system (GX-ETS), currently voluntary but transitioning to mandatory participation from FY2026 (Cabinet decision, February 2025). Japan is also in dialogue with the EU regarding the Carbon Border Adjustment Mechanism (CBAM). However, no CBDR-linked market-access exemptions are included in Japan’s trade agreements, and there is no multilateral green trade pact with binding provisions in force.
Japan’s trade agreements, including the EU–Japan Economic Partnership Agreement (EPA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), systematically include cooperation-oriented environment and Trade and Sustainable Development (TSD) chapters. These provide for dialogue, technical assistance, and cooperation, but they do not function as binding market-access mechanisms for environmental goods and services (EGS), nor do they embed interoperability of green taxonomies or carbon-pricing regimes. Japan also participates in regional frameworks such as the ASEAN–Japan Environment and Climate Partnership and the Asia Zero Emission Community (AZEC, 2023), both focused on joint energy transition projects and capacity building rather than enforceable liberalisation.
Domestically, Japan is advancing a growth-oriented carbon pricing framework under the Green Transformation (GX) agenda. The GX Promotion Act establishes a national emissions trading system (GX-ETS), currently voluntary but transitioning to mandatory participation from FY2026 (Cabinet decision, February 2025). Japan is also in dialogue with the EU regarding the Carbon Border Adjustment Mechanism (CBAM). However, no CBDR-linked market-access exemptions are included in Japan’s trade agreements, and there is no multilateral green trade pact with binding provisions in force.
Pricing Carbon
Japan is phasing in a national ETS (GX-ETS) and a carbon levy (“GX-surcharge”) under the GX framework. The ETS began with a voluntary phase (FY2024–FY2025) and is due to operate at full scale from FY2026; paid auctioning for the power sector is scheduled from FY2033. Separately, a carbon levy on fossil fuel suppliers is legislated to start in FY2028, with implementing technical provisions advanced by Cabinet decision in February 2025. Japan maintains subnational ETSs (Tokyo, Saitama) and crediting schemes (J-Credits, JCM). While economy-wide carbon pricing architecture is being implemented, Japan does not operate a legal, binding carbon-budget framework aligned to a 1.5°C pathway; sectoral and NDC targets are pursued through plans (e.g., Strategic Energy Plan, Plan for Global Warming Countermeasures).
Japan is phasing in a national ETS (GX-ETS) and a carbon levy (“GX-surcharge”) under the GX framework. The ETS began with a voluntary phase (FY2024–FY2025) and is due to operate at full scale from FY2026; paid auctioning for the power sector is scheduled from FY2033. Separately, a carbon levy on fossil fuel suppliers is legislated to start in FY2028, with implementing technical provisions advanced by Cabinet decision in February 2025. Japan maintains subnational ETSs (Tokyo, Saitama) and crediting schemes (J-Credits, JCM). While economy-wide carbon pricing architecture is being implemented, Japan does not operate a legal, binding carbon-budget framework aligned to a 1.5°C pathway; sectoral and NDC targets are pursued through plans (e.g., Strategic Energy Plan, Plan for Global Warming Countermeasures).
Sectors
Cross-Sectoral Planning
Japan maintains a robust green sectoral policy framework. Building upon its Green Growth Strategy (2020), Japan launched in 2023 a more comprehensive, integrated Green Transformation (GX) Policy, outlining a 10-year plan for decarbonization with substantial public and private investments. The establishment of the GX Promotion Council and GX Execution Council (2023) strengthens inter-sectoral coordination to develop, coordinate and monitor plans across key economic sectors.
Sectoral targets have become more ambitious: the Seventh Strategic Energy Plan (2025) aims to raise the share of renewables to 40–50% of electricity generation by 2040. On transport, Japan is advancing a target of 100% electrified vehicle sales by 2035 and a 10% replacement of conventional jet fuel with Sustainable Aviation Fuel by 2030. In buildings, the Building Energy Efficiency Act was amended in 2022 to mandate energy efficiency standards for all new buildings from 2025, with a requirement to meet "Net Zero Energy House/Building" for all new construction by 2030. In agriculture, the Strategy MeaDRI (2021) continues its implementation in order to achieve sustainable food systems and decarbonization of agriculture, forestry, and fisheries sectors. All these strategies align with Japan’s broader GX policy.
Japan maintains a robust green sectoral policy framework. Building upon its Green Growth Strategy (2020), Japan launched in 2023 a more comprehensive, integrated Green Transformation (GX) Policy, outlining a 10-year plan for decarbonization with substantial public and private investments. The establishment of the GX Promotion Council and GX Execution Council (2023) strengthens inter-sectoral coordination to develop, coordinate and monitor plans across key economic sectors.
Sectoral targets have become more ambitious: the Seventh Strategic Energy Plan (2025) aims to raise the share of renewables to 40–50% of electricity generation by 2040. On transport, Japan is advancing a target of 100% electrified vehicle sales by 2035 and a 10% replacement of conventional jet fuel with Sustainable Aviation Fuel by 2030. In buildings, the Building Energy Efficiency Act was amended in 2022 to mandate energy efficiency standards for all new buildings from 2025, with a requirement to meet "Net Zero Energy House/Building" for all new construction by 2030. In agriculture, the Strategy MeaDRI (2021) continues its implementation in order to achieve sustainable food systems and decarbonization of agriculture, forestry, and fisheries sectors. All these strategies align with Japan’s broader GX policy.
Circular Economy
Japan’s circular economy framework is anchored in the Basic Act on Establishing a Sound Material-Cycle Society (2000) and implemented through successive Fundamental Plans, with the 5th Plan now being prepared following adoption of the Sixth Basic Environment Plan (2024). The system is complemented by the Plastic Resource Circulation Act (2022), the Circular Economy Vision 2020 (METI), and the Green Procurement Act (Act on Promotion of Procurement of Eco-Friendly Goods and Services) with a Basic Policy updated in January 2025.
The Circular Economy Action Portal provides behavioural guidelines (“buy, use, sort, pass on”) for businesses and consumers, and the 2025 White Paper on the Environment, Sound Material-Cycle Society and Biodiversity confirmed emphasis on resource efficiency, regional revitalisation, and value-chain integration. Japan’s Circular Material Use Rate (CMUR) was 20.8% in 2023, one of the highest globally, but there is no legislated CMUR target.
Japan’s circular economy framework is anchored in the Basic Act on Establishing a Sound Material-Cycle Society (2000) and implemented through successive Fundamental Plans, with the 5th Plan now being prepared following adoption of the Sixth Basic Environment Plan (2024). The system is complemented by the Plastic Resource Circulation Act (2022), the Circular Economy Vision 2020 (METI), and the Green Procurement Act (Act on Promotion of Procurement of Eco-Friendly Goods and Services) with a Basic Policy updated in January 2025.
The Circular Economy Action Portal provides behavioural guidelines (“buy, use, sort, pass on”) for businesses and consumers, and the 2025 White Paper on the Environment, Sound Material-Cycle Society and Biodiversity confirmed emphasis on resource efficiency, regional revitalisation, and value-chain integration. Japan’s Circular Material Use Rate (CMUR) was 20.8% in 2023, one of the highest globally, but there is no legislated CMUR target.
Green Transport & Mobility
Japan’s transport decarbonisation is guided by the 7th Strategic Energy Plan (2025) and the GX Basic Policy, with a goal of 100% electrified new passenger vehicle sales by 2035 (including HEV, PHEV, BEV, and FCEV). Programmes include national Clean Energy Vehicle (CEV) subsidies, battery-swapping pilots, and investments in charging and hydrogen infrastructure. The GX2040 Vision further integrates these targets with long-term industrial strategy.
Official statistics highlight ongoing challenges: in 2023, only 2% of electricity consumption came from transport, and wind power supplied under 1% of total electricity. While major cities such as Tokyo and Osaka are advancing plans for fully zero-emission bus fleets by 2030, at the national level there is no binding mandate for full electrification of public, private, and freight transport by 2030.
Japan’s transport decarbonisation is guided by the 7th Strategic Energy Plan (2025) and the GX Basic Policy, with a goal of 100% electrified new passenger vehicle sales by 2035 (including HEV, PHEV, BEV, and FCEV). Programmes include national Clean Energy Vehicle (CEV) subsidies, battery-swapping pilots, and investments in charging and hydrogen infrastructure. The GX2040 Vision further integrates these targets with long-term industrial strategy.
Official statistics highlight ongoing challenges: in 2023, only 2% of electricity consumption came from transport, and wind power supplied under 1% of total electricity. While major cities such as Tokyo and Osaka are advancing plans for fully zero-emission bus fleets by 2030, at the national level there is no binding mandate for full electrification of public, private, and freight transport by 2030.
Clean Energy
The revised Seventh Strategic Energy Plan (2025) sets renewables target at 40–50% of electricity by 2040, up from the Sixth Plan's 36–38% target for 2030. Specific breakdowns for RE target are: Solar 23-29%, Wind 4-8%, Hydro 8-10%, Geothermal 1-2%, Biomass 5-6%. The plan also includes a target of approximately 20% nuclear power by 2040, indicating a clear role for it in the clean energy transition. The Plan still projects a role for thermal power in the 2040 mix, but commits to increasing CCUS capacity.
The GX Basic Policy (2023) provides the overarching framework and roadmap for Japan's decarbonization, with ¥150 trillion in public-private investments over the next 10 years dedicated to clean energy technologies, including renewables, nuclear, hydrogen/ammonia, Carbon Capture, Utilization, and Storage, and batteries. It also introduces various funding and support schemes, such as GX Economy Transition Bonds and a Contracts for Difference (CfD) system for low-carbon hydrogen.
The revised Seventh Strategic Energy Plan (2025) sets renewables target at 40–50% of electricity by 2040, up from the Sixth Plan's 36–38% target for 2030. Specific breakdowns for RE target are: Solar 23-29%, Wind 4-8%, Hydro 8-10%, Geothermal 1-2%, Biomass 5-6%. The plan also includes a target of approximately 20% nuclear power by 2040, indicating a clear role for it in the clean energy transition. The Plan still projects a role for thermal power in the 2040 mix, but commits to increasing CCUS capacity.
The GX Basic Policy (2023) provides the overarching framework and roadmap for Japan's decarbonization, with ¥150 trillion in public-private investments over the next 10 years dedicated to clean energy technologies, including renewables, nuclear, hydrogen/ammonia, Carbon Capture, Utilization, and Storage, and batteries. It also introduces various funding and support schemes, such as GX Economy Transition Bonds and a Contracts for Difference (CfD) system for low-carbon hydrogen.
Just Transition
Green Job Creation
Japan's Green Transformation (GX) Policy addresses green job creation and workforce transition. The GX policy is designed to fundamentally restructure Japan's industry towards decarbonization, which inherently requires new skills and jobs across various sectors.Crucially, the GX Human Resource Market Creation Working Group was established in 2023 to "create a stable sustainability-related human resource market", and has developed the GX Skills Standard. This standard defines the specialized knowledge and skills required to promote GX, with the goal of facilitating reskilling and career changes, demonstrating a clear national-level effort in planning for green skills.
Japan's Green Transformation (GX) Policy addresses green job creation and workforce transition. The GX policy is designed to fundamentally restructure Japan's industry towards decarbonization, which inherently requires new skills and jobs across various sectors.Crucially, the GX Human Resource Market Creation Working Group was established in 2023 to "create a stable sustainability-related human resource market", and has developed the GX Skills Standard. This standard defines the specialized knowledge and skills required to promote GX, with the goal of facilitating reskilling and career changes, demonstrating a clear national-level effort in planning for green skills.
Just Transition Frameworks
Japan’s GX package includes labour-market and regional industry support tools (e.g., transition finance roadmaps, SME support, local “regional decarbonization” programmes), but there is no single, national, integrated “just transition” framework with sector-specific guidance and benefit-sharing rules comparable to a dedicated law/strategy. Elements are present in the GX Basic Policy, Green Growth Strategy and METI’s Transition Finance guidance; the GX-ETS design work (2025) is ongoing and could add worker/region safeguards via revenue use, but this is not yet codified.
Japan’s GX package includes labour-market and regional industry support tools (e.g., transition finance roadmaps, SME support, local “regional decarbonization” programmes), but there is no single, national, integrated “just transition” framework with sector-specific guidance and benefit-sharing rules comparable to a dedicated law/strategy. Elements are present in the GX Basic Policy, Green Growth Strategy and METI’s Transition Finance guidance; the GX-ETS design work (2025) is ongoing and could add worker/region safeguards via revenue use, but this is not yet codified.
Greening MSMEs & Social Enterprise
Japan provides targeted financial support for SME decarbonisation within the GX agenda (e.g., energy-efficiency subsidies, diagnostics, and capacity-building; SME-focused measures referenced in the GX Basic Policy). National and local programs (METI/MOE/TMG) include grants and technical assistance for energy saving and green technology adoption; Japan also leverages the JCM for overseas project participation. However, Japan has no distinct legal corporate form for “social enterprise” or “benefit corporation”; social-purpose activity occurs under existing nonprofit and company forms.
Japan provides targeted financial support for SME decarbonisation within the GX agenda (e.g., energy-efficiency subsidies, diagnostics, and capacity-building; SME-focused measures referenced in the GX Basic Policy). National and local programs (METI/MOE/TMG) include grants and technical assistance for energy saving and green technology adoption; Japan also leverages the JCM for overseas project participation. However, Japan has no distinct legal corporate form for “social enterprise” or “benefit corporation”; social-purpose activity occurs under existing nonprofit and company forms.
Inclusive Social Protection
Schemes remain traditional, lacking explicit integration with the green economy or ecological transition. While Japan launched the Green Transformation (GX) strategy in 2023, which references finance and labor alongside environmental goals. There are no innovative, climate-linked social protection pilots or coherent policy frameworks connecting welfare with low-carbon employment or environmental adaptation.
Schemes remain traditional, lacking explicit integration with the green economy or ecological transition. While Japan launched the Green Transformation (GX) strategy in 2023, which references finance and labor alongside environmental goals. There are no innovative, climate-linked social protection pilots or coherent policy frameworks connecting welfare with low-carbon employment or environmental adaptation.
Nature
Ocean & Land Conservation
Japan adopted a new National Biodiversity Strategy and Action Plan (NBSAP) 2023–2030 (Cabinet approval, March 2023) explicitly aligned to the Kunming–Montreal GBF and setting a 2030 mission of “Nature-Positive.” The NBSAP includes targets supporting 30by30 (e.g., nationally certified “sustainably managed natural sites”) and integrates terrestrial and marine measures alongside Natura-like area networks; ministries (MOEJ/MAFF) issued supporting documents and communications through 2023–2025. Public dashboards and periodic reporting are being built out, though a consolidated, GBF-style national progress-tracking system with routine interim assessments is still developing.
Japan adopted a new National Biodiversity Strategy and Action Plan (NBSAP) 2023–2030 (Cabinet approval, March 2023) explicitly aligned to the Kunming–Montreal GBF and setting a 2030 mission of “Nature-Positive.” The NBSAP includes targets supporting 30by30 (e.g., nationally certified “sustainably managed natural sites”) and integrates terrestrial and marine measures alongside Natura-like area networks; ministries (MOEJ/MAFF) issued supporting documents and communications through 2023–2025. Public dashboards and periodic reporting are being built out, though a consolidated, GBF-style national progress-tracking system with routine interim assessments is still developing.
Natural Capital Accounting
Japan advances biodiversity and nature policy through the National Biodiversity Strategy and Action Plan (2023–2030), and maintains advisory structures such as the Central Environment Council to guide environmental planning and review. On accounting, Japan engages with SEEA capacity-building and has supported ecosystem service valuation and ecosystem asset accounting pilots; however, there is no comprehensive, routinely published national set of natural capital accounts disaggregating economic, socio-cultural and ecosystem values for policy budgeting across government, nor a dedicated independent NCA body with a formal mandate into budgets.
Japan advances biodiversity and nature policy through the National Biodiversity Strategy and Action Plan (2023–2030), and maintains advisory structures such as the Central Environment Council to guide environmental planning and review. On accounting, Japan engages with SEEA capacity-building and has supported ecosystem service valuation and ecosystem asset accounting pilots; however, there is no comprehensive, routinely published national set of natural capital accounts disaggregating economic, socio-cultural and ecosystem values for policy budgeting across government, nor a dedicated independent NCA body with a formal mandate into budgets.
Sustainable Agriculture & Food Systems
Japan’s Strategy for Sustainable Food Systems “MIDORI” (2021) is the national food systems framework, setting medium- and long-term targets such as increasing organic farming to 25% of farmland by 2050 and reducing environmental load through innovation. In 2024–2025, the Basic Act on Food, Agriculture and Rural Areas was amended to incorporate food systems transformation, strengthening MIDORI’s policy basis.
Complementary initiatives include the Food Loss Reduction Promotion Act (2019), MOE’s SDG 12.3 monitoring, and SDG Future Cities projects that integrate local food sustainability into urban planning. Japan reports regularly on progress through its Voluntary National Reviews (VNRs) and collaborates with FAO and UNEP in international food systems processes. While MIDORI provides strategic direction and quantified goals for organics and FLW, there is no explicit national ecological footprint target or time-bound roadmap for phasing out harmful subsidies.
Japan’s Strategy for Sustainable Food Systems “MIDORI” (2021) is the national food systems framework, setting medium- and long-term targets such as increasing organic farming to 25% of farmland by 2050 and reducing environmental load through innovation. In 2024–2025, the Basic Act on Food, Agriculture and Rural Areas was amended to incorporate food systems transformation, strengthening MIDORI’s policy basis.
Complementary initiatives include the Food Loss Reduction Promotion Act (2019), MOE’s SDG 12.3 monitoring, and SDG Future Cities projects that integrate local food sustainability into urban planning. Japan reports regularly on progress through its Voluntary National Reviews (VNRs) and collaborates with FAO and UNEP in international food systems processes. While MIDORI provides strategic direction and quantified goals for organics and FLW, there is no explicit national ecological footprint target or time-bound roadmap for phasing out harmful subsidies.
Nature Finance
Japan is scaling nature-positive finance mainly via climate-linked instruments and regulatory guidance. The GX Economy Transition Bonds (government-labelled Climate Transition Bonds) are being issued to catalyse >JPY 150 trillion of public-private GX investment over a decade; Japan also maintains national guidance on transition finance for hard-to-abate sectors. In parallel, Japan is legislating a mandatory GX-ETS from FY2026 and has indicated a carbon levy/surcharge path within GX. However, there is limited evidence of systematic reform of nature-harming subsidies (e.g., across energy/transport/agriculture) or dedicated, large-scale biodiversity funds with direct IPLC (indigenous/local community) benefit-channels at national level.
Japan is scaling nature-positive finance mainly via climate-linked instruments and regulatory guidance. The GX Economy Transition Bonds (government-labelled Climate Transition Bonds) are being issued to catalyse >JPY 150 trillion of public-private GX investment over a decade; Japan also maintains national guidance on transition finance for hard-to-abate sectors. In parallel, Japan is legislating a mandatory GX-ETS from FY2026 and has indicated a carbon levy/surcharge path within GX. However, there is limited evidence of systematic reform of nature-harming subsidies (e.g., across energy/transport/agriculture) or dedicated, large-scale biodiversity funds with direct IPLC (indigenous/local community) benefit-channels at national level.
Green Recovery
Green Recovery Measures
Japan’s COVID-19 recovery included green elements such as EV subsidies, hydrogen infrastructure, and energy efficiency programs. The Green Innovation Fund and GX Roadmap support long-term decarbonisation. However, green conditionality in stimulus measures was not systematically applied, and support for high-emission sectors continues.
Japan’s COVID-19 recovery included green elements such as EV subsidies, hydrogen infrastructure, and energy efficiency programs. The Green Innovation Fund and GX Roadmap support long-term decarbonisation. However, green conditionality in stimulus measures was not systematically applied, and support for high-emission sectors continues.