By Naoko Konishi
In October 2020, Japan’s Former Prime Minister Suga declared its aim for Japan to be carbon neutral by 2050 (“CN2050”).
The Ministry of Economy, Trade and Industry of Japan (“METI”) explained that: to realise a virtuous cycle of economic growth and environmental protection, it is essential to enhance industrial competitiveness by using the 2030 reduction target and the achievement of carbon neutrality by 2050 as an opportunity for growth; and to achieve this, a group of internationally successful companies that act quickly towards carbon neutrality should lead the transformation of the entire economic and social system (“Green Transformation” or “GX”).
METI, based on the above theory building, announced that the so-called “GX League” would be founded – and is scheduled to go into full-scale operation from Japanese FY2023 (starting date 1 Aprile 2023) – as a forum for companies actively engaged in GX to discuss the entire economy and society as a whole and to put it into practice to create new markets, through cooperation in the government, academic and economic spheres.
On 1 February 2022, METI called on companies to endorse the GX League Basic Concept (“GX League Basic Concept”) toward the establishment of the GX League, having set a deadline for application for the endorsement of it on 31 March 2022. Even though the endorsement of the GX League initiative was voluntary, according to a press release from METI dated 1 April 2022, 440 Japanese companies declared that they would endorse the GX League Basic Concept.
- GX League Basic Concept
The GX League Basic Concept consists of three kinds of efforts.
(1) Efforts to reduce their own emissions of GHG
Each company participating in GX League shall set its own GHG emissions targets, disclose its efforts and investments to reduce its emissions, and implement voluntary its emissions trading to achieve the targets it has set for itself. It will be able to sell carbon credits for reductions that exceed its emissions targets, vice versa, purchase carbon credits for not meeting them, through the Exchange Offices. To ensure transparency of transactions, transaction prices will be made publicly available.
(2) Efforts to achieve carbon neutrality in the supply chains
Each company participating in GX League shall support businesses upstream in their supply chains in their efforts to reduce its emissions towards 2050CN and shall also actively provide downstream companies in their supply chains and/or consumers with additional value, for example, by displaying Carbon Foot Print labels on their products and services.
(3) Efforts in markets through products and services
Each company participating in GX League shall drive the greening of the market by actively and preferentially purchasing green products.
- Schedule for FY2022
In Japanese FY2022 (closing date 31 March 2023), through discussions between GX League endorsing companies and the GX League Establishment Preparatory Secretariat, for rule formation and action guideline formulation, the above basic concept will be demonstrated in preparation for full-scale operation of the GX League from Japanese FY2023 (starting date 1 Aprile 2023) onwards. At the same time, conferences will be held as forums for discussion and information disclosure by GX League endorsing companies, and an information-sharing community will be set up to demonstrate open, flat and speedy communication methods and organisational structures.
Although the global situation is unstable, the Japanese Government and GX League endorsing companies are moving the project forward as per schedule.