Charting a Sustainable Financial Future for Tokyo and Japan

Tokyo Governor Yuriko Koike opened proceedings by emphasizing the city’s ongoing transformation, highlighting its designation as a special zone for financial and asset management businesses, aiming to position the city as a financial and innovation hub for Asia.

“Now is the time for Tokyo to take the lead in generating innovation through the power of finance,” she declared, pointing to initiatives such as the SusHi Tech Tokyo event to further illustrate this vision, fostering collaboration among startups, investors, and global stakeholders.

Next up was the keynote dialogue, which examined Tokyo’s role as a financial center in the context of a review of global economic and geopolitical currents and a look at what may lie ahead.  

Moderator Jesper Koll, a Japan financial sector veteran, was joined by former Deputy Governor of the Bank of Japan and current FinCity.Tokyo Chairman Hiroshi Nakaso, and Masato Kanda, Special Advisor to the Minister of Finance and soon-to-be head of the Asian Development Bank.

Nakaso painted a complex picture of global economic fragmentation driven by geopolitical tensions, particularly between the U.S. and China. He highlighted shifts in trade patterns and the IMF’s forecast of moderate global economic growth of 3.3% in 2025, warning of potential downside risks.

“The near-term uncertainty surrounding global economies, compounded by Trump 2.0 policies, cannot be underestimated,” he noted, stressing the unpredictable consequences of U.S.-led trade policies.

Kanda cited the RISE strategy for clean energy and supply chain resilience launched during Japan’s G7 presidency as evidence of the country’s commitment to secure supply chains and economic security. Addressing monetary policy, Nakaso expressed optimism about Japan’s economic trajectory.

“The mission to overcome deflation is nearly complete,” said Nakaso,

Both speakers acknowledged Japan’s need to address its high debt-to-GDP ratio, but also pointed to other encouraging economic signals, including the biggest wage increases in more than three decades, record-high corporate earnings and capital investment. Nakaso emphasized fiscal sustainability and higher potential growth as interlinked goals, arguing that investment in innovation and labor force transformation is critical.

“The government should use this period of monetary policy normalization to advance structural reforms,” he added.

Koll wrapped up the session by highlighting Japan’s growing appeal as a financial hub, driven by “reprivatization of financial markets” and improved corporate governance.

The second panel focused on Japan’s bold green transformation (GX) initiative, which aims to achieve carbon neutrality by 2050 while boosting economic growth and industrial competitiveness. Moderator Hideki Takada of the GX Acceleration Agency noted that the government is planning for 150 trillion yen ($1 trillion) in investment over the next decade - 20 trillion yen from public funds and 130 trillion yen from private sector financing. Takada pointed out that Japan’s government last year began issuing GX economic transition bonds, the world's first sovereign transition bond.

“Transition finance is crucial for high-emission sectors to move toward low-emission solutions,” explained Takada, whose agency facilitates public-private sector collaboration and offers guarantees to accelerate private investment.

Keiji Hattori, head of Japan operations for alternative asset specialists Brookfield, emphasized the global flow of “risk money” into high-return markets, noting that Japan must create investment opportunities attractive enough to compete globally.

“Global capital is like a snake; it will stay where it finds sustenance. Japan must ensure that sustenance,” he quipped, riffing on 2025 being the Chinese zodiac year of the snake.

Brookfield manages the world’s largest transition fund, with significant participation from Japanese institutional investors, explained Hattori.

BlackRock Japan CEO Hiroyuki Arita underscored the irreversible nature of the global shift toward decarbonization. He shared examples of relevant projects worldwide, including BlackRock’s partnerships to develop climate finance funds and Southeast Asia’s decarbonization initiatives.

Fumiyo Harada of the Development Bank of Japan (DBJ) also pointed to real-world GX investments that the DBJ was involved in both domestically and internationally, such as hydrogen station networks, green steel, and perovskite solar cells. Harada also stressed the importance of public-private collaboration to build supply chains and ensure market viability.

“Projects must not only be green but also profitable to attract investment,” she added.

The panelists agreed that Tokyo was demonstrating its potential as a green transformation global finance hub, underpinned by strong commitment from both the metropolitan and central governments, along with growing support from the financial sector and keen interest from private investors.

Takada pointed to government efforts like the Japan Financial Literacy and Education Corporation (J-FLEC) as crucial steps to cultivating financial literacy and expertise in asset management. In addition, Hattori pointed to the need for more skilled professionals who can effectively communicate Japan’s investment opportunities to global investors.

Both discussions highlighted the interconnected nature of finance innovation, policy reforms, and sustainability initiatives as they relate to the twin goals of establishing Tokyo as a global financial hub and advancing Japan’s green transformation. They also underscored that there would be Japanese characteristics to these initiatives.

As Koll put it, “Japan’s goal is not just to make bankers richer but to enrich its people by building trust and fostering sustainable growth.”