In February 2024, the Ministry of Finance (MOF) of Japan issued its landmark JPY799.5 billion ($5.3 billion) climate transition bond.
The issuance was the world's first sovereign climate 'transition bond' and the largest transition bond to date.
In line with guidance in the ICMA Climate Transition Finance handbook (CTFH), proceeds focus on transforming Japan's power and industry, a core part of Japan's economy and emissions.
This is a core part of Japan's Nationally Determined Contribution under the Paris Agreement to achieve a 46% reduction in absolute greenhouse gas emissions from 2013 levels by 2030, and a supplemental long-term target of reaching net zero emissions by 2050.
One of its innovative features was that it allocates more than 50% of proceeds to research and development (R&D) of viable decarbonisation technologies.
The credibility of the issue was enhanced by being certified under the Climate Bonds Standard.
'Milestone' Japanese transition bond three-times oversubscribed
