Insights from a Sustainable Finance Professional: Transforming Japan’s Fisheries through ESG Investments (Part 1)

Insights from a Sustainable Finance Professional: Transforming Japan’s Fisheries through ESG Investments (Part 1)

In September 2022, Maruha Nichiro Corporation issued Japan’s first blue bond. Blue bond is dedicated to financing projects related to marine conservation and sustainable fisheries. While the number of the issues remains low at present, blue bonds are expected to garner increasing attention in the future.

In 2017, Kotaro Sueyoshi founded the SDGs Business Desk at Mizuho Financial Group to promote the development and support of socially impactful businesses and impact investing.  He has worked on numerous sustainable business plans for corporate clients.

We spoke with Mr. Sueyoshi, who currently serves as Deputy Director for Mizuho’s Sustainable Business Department, established in September 2022. We asked him about the factors that contributed to the success of Marubeni Chiyoda Corporation’s blue bond issuance, as well as trends in demand for sustainable finance, including Sustainability Linked Loans* (SLL).


* A Sustainability Linked Loan (SLL) is a type of loan that encourages borrowers to achieve ambitious Sustainability Performance Targets (SPTs). Specifically, this involves (1) organizing the relationship between SPTs and the sustainability targets set forth in the borrower’s comprehensive social responsibility strategy, (2) evaluating and measuring the level of improvement in sustainability based on appropriate SPTs measured by pre-established Key Performance Indicators (KPIs), and (3) ensuring transparency through reporting on these factors after the loan is taken out. The loan’s interest rate and other terms are adjusted according to the achievement of SPTs.


Kotaro Sueyoshi
After joining Mizuho Bank, Ltd., he worked in corporate sales for large corporations, international operations, and business planning for domestic corporations. Since 2018, along with the digitization of the banking business for corporations, he has led the SDGs Business Desk that he established, and is promoting business development support for solving social issues and impact investment and financing. He has been in charge of sustainable business planning for corporations since 2021.


Supporting companies that see sustainability as an opportunity for new business

——What led you to pursue a career in finance and become involved in sustainability-related businesses?

Well, for one, my father was a banker. When I was young, my family lived in Thailand for my father’s work, and I was shocked by how children with different backgrounds from me lived. That experience inspired me to pursue a career in finance as a way to address social inequality.

In my 18th year as a banker, which was 2016, Mizuho Financial Group decided to finance a social impact bond* and I was put in charge of it. The project we financed aimed to increase the rate of colorectal cancer screening, which was not directly related to environmental issues, but had significant social value in terms of reducing the number of colorectal cancer patients and cutting social security costs.

As a result of that experience, I felt a strong desire to work on more projects that could contribute to society and the environment. To do so, I established an SDGs Business Desk within the company. With the growing interest in SDGs, a specialized department called the Sustainable Business Department was established in September 2022 to promote sustainable business, and I was appointed as the Deputy Director.


New departmental structure for sustainability promotion (Mizuho Financial Group)


* Social impact bonds are a public-private partnership mechanism introduced to Japan in 2015. Private funders invest in projects that seek to solve social and environmental issues, and they only receive compensation from the government if the project achieves its pre-agreed aims.


——What kind of work does the Sustainable Business Department do?

Financial institutions need to assess sustainability from both a risk and opportunity standpoint. For instance, initiatives that emit high levels of CO2 may become obsolete in the future due to decarbonization efforts, potentially resulting in stranded assets if funded. Conversely, if companies view the decarbonization trend as an opportunity to pursue new business ventures, we want to support their efforts towards a decarbonized economy. For that reason, the Sustainable Business Department collaborates with companies that aim to pursue new business opportunities by leveraging sustainability as an opportunity and works with them to design business models.


The use of sustainable finance attracts public

——Mizuho Financial Group has provided loans to Thai Union Group and Maruha Nichiro for SSL. Is the demand for SSL increasing?

Sustainability efforts require a dual focus on creating positive outcomes and mitigating negative consequences. Sustainable finance options, such as green bonds for SSL and environmental improvement, and blue bonds for marine conservation and sustainable fishing, play a role in climate change mitigation and marine resource recovery through the management of these consequences.

Sustainable finance provides companies with an excellent opportunity to publicly demonstrate their commitment to addressing climate change and promoting the restoration of ocean resources in line with international standards. Consequently, an increasing number of companies are exploring the use of sustainable finance as a means of raising capital. In response to this growing demand, Mizuho is proactively expanding its range of sustainable finance options.


Example of how blue bond funds are used (From Mizuho Securities document)


——Marubeni Chiyoda issued Japan’s first blue bond, and it was reported that over ¥6 billion yen was raised, surpassing the ¥5 billion issuance amount. What do you think were the factors behind its success?

It was the first blue bond issued in Japan, making it a rare opportunity for investors. I think it stimulated the investment needs of those who want to invest strategically in sustainability-related initiatives.

The funds raised through the blue bond will be used for an inshore salmon aquaculture project in Toyama Prefecture, in collaboration with Mitsubishi Corporation. The project was evaluated in accordance with the International Finance Corporation’s (IFC) Blue Finance Guidelines, which provide guidance on evaluating what contributes to the sustainability of the ocean. I believe that the sustainable business strategy behind this project resonated with investors.

As the first blue bond in Japan, it was important to ensure that it did not become greenwashing, or more precisely, “bluewashing” — claiming to be environmentally responsible without concrete actions to back that up. For that reason, I understand that strong efforts were made to obtain the appropriate certifications.

——What are the challenges in issuing blue bonds?

One challenge for companies issuing blue bonds is that there are not many businesses that meet the criteria for issuance. There are costs to issuing bonds, so the amount issued should not be too low. However, there are still not many businesses in Japan related to marine conservation that require large-scale funding. With the emergence of frameworks like blue bonds, I hope to see the development of new businesses.

Financial institutions should not only assist companies in managing their finances, but also collaborate with them in developing businesses that promote marine conservation. For Mizuho, providing funding support is the final stage of a process that starts with engaging in discussions on how to shift the company’s focus towards marine conservation. Working together, we formulate and execute action plans towards achieving that goal.

Sustainable finance options like blue bonds are not limited to corporations. They can be used by municipalities, too, so we are also looking to propose ways for municipalities to use blue bonds.


>>> In the second installment, we will discuss the significance of sustainable finance and financing options that can be utilized by small and medium-sized enterprises in the fisheries industry, as well as the TNFD, which is scheduled to release its final recommendations this autumn.


Original Japanese text by: Shino Kawasaki