MNI BRIEF: BOJ's Kuroda Says Prices Must Reflect Climate Risks
Bank of Japan Governor Haruhiko Kuroda said on Tuesday that risks and opportunities arising from climate change should be reflected properly in the price of financial instruments, such as stocks and corporate bonds.
“This will facilitate smooth funding and investment in financial markets and thus promote efforts to address climate change,” Kuroda said at the Tokyo International Financial Forum 2022 sponsored by Paris Europlace in Tokyo.
The BOJ has launched and conducted a new survey called the Market Functioning Survey concerning climate change.
“Compared with previous surveys, the Market Functioning Survey is unique in collecting responses from a broad set of market participants, not only financial institutions but also business firms and rating agencies,” Kuroda said.
He added: “The results of the survey suggest that climate-related risks and opportunities are reflected in the price of financial instruments to a certain degree, but there is still room for improvement in pricing.”
“Challenges include increasing the availability of information, such as enhancing information disclosure and bridging data gaps on climate-related data,” Kuroda said.
“Efforts could also be made to improve transparency in evaluating activities related to Environmental, Social, and Governance - or ESG - and to further develop the assessment methodologies of climaterelated risks and opportunities.”