BOJ chief says he does not view tackling climate change as ‘cost’

Bank of Japan Gov. Haruhiko Kuroda said Monday that addressing climate change should not be taken as a “cost” as decarbonization efforts can spur innovations and create industries and jobs.

Speaking at a financial forum, Kuroda stressed the importance of the financial sector providing support to industries making efforts toward decarbonization, a goal he said is expected to take considerable time.

“In promoting decarbonization of the economy as a whole, it is important to provide stable support for structural change in sectors and industries where decarbonization will be difficult to achieve in a short period of time,” Kuroda said during the online forum.

“I would like to emphasize that addressing climate change should not be considered as a cost or a constraint on economic growth,” he said.

Responding to climate change is one key theme among major central banks. The BOJ has decided to launch a program in December to provide zero-interest funds to financial institutions for their loans to companies and investments to address climate change.

Kuroda said the measure is the most effective for Japan because green bond issuance remains smaller than in other advanced nations and that the nation has a “bank-centric” financial system.

Japan has set a goal of reducing carbon dioxide emissions to net zero by 2050.

Kuroda acknowledged there is “considerable uncertainty” over the impact of climate change and decarbonization efforts.

“We cannot be sure exactly how they will affect society, the economy and finance over the coming decades,” he said, adding the financial system needs to be resilient against climate-related risks.

On the state of the Japanese economy, Kuroda struck an optimistic note with the number of newly confirmed coronavirus cases on a sharp downward trend.

“I’m quite sure that the Japanese economy would overcome the impact of COVID-19 in coming months and would be on a recovery and growing phase within a couple of months,” he said.