Social Investment Landscape

Japan

The social economy in Japan is one of the most mature in Asia driven by professionally managed foundations, increased interest from mainstream investors and innovative investment models

Summary

Executive Summary

The island nation of Japan has the most developed economy in Asia. Following two decades of economic stagnation, exacerbated by the devastating Tohoku Earthquake in 2011, Abenomics was introduced in 2013 with the aim to revitalise the Japanese economy through monetary easing, structural reforms and fiscal stimulus. This has resulted in a significant wage increase and the lowest unemployment rates since the early 1990s, but consumption and investment have remained weak.

Japan’s ageing population and low national fertility rate continue to be its most pressing challenges. This has led to a shrinking labour force and domestic market as well as increased social spending. Meanwhile, income and gender inequality remain stark. Japan’s 26% gender pay gap is the third largest in the Organisation for Economic Co-operation and Development (OECD).

The Japanese social economy is one of the most innovative in Asia with a rich tradition of institutional philanthropy, a sizeable impact investing market, an active and creative corporate sector and a vibrant support ecosystem. Japan has emerged as a leader in environmental, social and governance (ESG) investing and an early pioneer in social impact bonds (SIBs) in Asia.

Japan’s Fact File

Japan’s 2018 Fact File

126.8 million

Population

USD 5.49 trillion

GDP (PPP)

World Rank 4

1.7%

GDP Growth

USD 43,279

Per capita GDP (PPP)

World Rank 27

111 114 in 2016

World Giving Index Rank

32%giving money 18%volunteering time 23%helping a stranger

2.8 million

Number of Millionaires

9/137

Global Competitiveness Index

Global Competitiveness Rank (2016-2017) – 8/138

39/190

Ease of Doing Business Rank

Ease of Doing Business Rank (2018) – 34/190
Source: ADB, Charities Aid Foundation, Credit Suisse, World Economic Forum, World Bank. Figures are accurate as of March 2019

Dashboard

SDG Dashboard

Despite its advanced economy, Japan is far from attaining 9 out of 17 Sustainable Development Goals (SDGs) with another 7 only partially achieved. Gender equality, responsible consumption and production, climate action and partnerships are among the areas that need the most work.
In 2016, the SDGs Promotion Headquarters, led by Prime Minister Shinzo Abe, was established to coordinate the implementation of the SDGs. It unveiled the SDG Implementation Guiding Principles, which outline 8 priority areas and 140 measures, in the same year. The 8 priority areas are:
  • Empowerment of all people (SDGs 1, 4, 5, 8, 10, 12),
  • Achievement of good health and longevity (SDG 3),
  • Creating growth markets, revitalisation of rural areas and promoting science, technology and innovation (SDGs 2, 8, 9, 11),
  • Sustainable and resilient land use and high-quality infrastructure (SDGs 2, 6, 9, 11),
  • Energy conservation, renewable energy, climate change counter-measures and building a recycling-based society (SDGs 7, 12, 13),
  • Conservation of the environment, including biodiversity, forests and the oceans (SDGs 2, 3, 14, 15),
  • A peaceful, safe and secure society (SDG 16), and
  • Strengthening the means and frameworks for the implementation of the SDGs (SDG 17).
In June 2018, the Japanese Cabinet approved a new economic plan that removes the JPY 500 billion (USD 4.5 billion) limit on annual increases in social spending. In addition, the government has unveiled a new vision known as Society 5.0, where the Internet of Things, big data, artificial intelligence and robotics will be applied across various industries to further economic development and provide solutions to social and environmental challenges.

Source: sdgindex.org (2018)

Note: The “traffic light” colour scheme (green,yellow, orange, red) illustrates how far a market is from achieving a particular goal

Government Initiatives

Government Initiatives to Address Development Gaps

Climate action

SDG Goals

Gap

  • Coal power plants accounted for 32% of Japan’s electricity production in 2016.
  • The 2011 nuclear meltdown led the government to abandon its goal of reducing coal’s share in electricity production to 11% and aim for 26% instead by 2030.

Government Initiatives

  • The government is aiming for “clean coal” technologies which emit less carbon dioxide to account for 50% of all coal-powered electricity by 2030.
  • In 2018, the Cabinet approved the fifth Basic Energy Plan which lays out initiatives for the country to transition to a lower-carbon energy system by 2050.
  • Japan aims to cut greenhouse gas emissions by 26% from 2013 levels by 2030.

Gender equality

SDG Goals

Gap

  • Japan fell 3 places between 2016 and 2017 to 114 out of 144 countries in the Global Gender Gap Report.
  • Japan has the third largest gender income gap in the OECD after Estonia and South Korea.

Government Initiatives

  • As part of the updated Abenomics introduced in 2015, Japan aims to increase women’s involvement in the workforce by encouraging flexible employment, reducing overtime work and improving access to high-quality childcare.

Poverty alleviation

SDG Goals

Gap

  • Income of the top 20% households is 6 times higher than that of the bottom 20%, placing Japan in the bottom third of OECD countries in terms of income inequality.
  • The percentage of people with incomes lower than 50% of the median household disposable income for those aged 65 and above is 19%, compared to the OECD average of 13%.
  • In 2017, 16% of Japanese children lived below the national poverty line.

Government Initiatives

  • The national social welfare system is governed by 4 key laws, namely Public Assistance Law, Child Welfare Law, the Law on the Welfare of Single Mothers and Widows and the Law on the Welfare of the Elderly.
  • The Public Assistance Law stipulates support for low-income households that covers basic living expenses, housing costs, education and skill training.
  • Elderly people aged 65 and above are entitled to public health care services under the Long-term Care Insurance System.

SME development

SDG Goals

Gap

  • Japanese SMEs’ productivity is only 45% that of large companies, which is lower than OECD average of 55%.
  • While SMEs account for 70% of national employment (compared to the OECD average of 60%), they generate only slightly more than 50% of national value added.

Government Initiatives

  • The Japanese government supports SMEs primarily through public financing and tax benefits, including credit guarantees, unsecured low-interest loans and tax credits for capital investment and research expenses.

Social protection

SDG Goals

Gap

  • 27% of the population is 65 years old and above, and those aged 75 years and above have outnumbered those aged between 65 and 74. The rapidly ageing population has led to escalating medical and social security expenses for the government.

Government Initiatives

  • The government’s efforts to improve fiscal sustainability of the health care system include: expanding the role of local governments in providing community-based health care services, increasing co-payment by users and improving operational efficiency of health care providers.

DEAL SHARE PLATFORM

Deal Share in Japan

Growing Code Club and CoderDojo

By Raspberry Pi Foundation

Helping young people acquire computing & digital making skills via compelling learning resources, a thriving network of volunteer-led clubs, competitions/events, & partnering with youth organisations.

Education

The aim of the project is to mobilise green finance, using digital technology. It is achieved through a digital platform to democratise the industry.

Climate Action and Environment, Employability, Energy, Financial Inclusion, Governance

Self-Sustaining Kelp Forest Restoration

By Urchinomics Impact Kyushu

We remove over-populating pest urchins to restore kelp forests in Southern Japan. The removed urchins will be ranched into delicious “uni” and sold and the proceeds will be reinvested in kelp restoration.

Climate Action and Environment, Conservation, Livelihood and Poverty Alleviation

Aims to bring the innovation of Social Impact Bonds to scale in Asia in order to serve the marginalized communities.

Ageing, Climate Action and Environment, Education, Employability, Health, Livelihood and Poverty Alleviation, Water and Sanitation and Hygiene

Improves medication adherence and health outcomes for the elderly through an affordable, user-friendly technology that will also alleviate the burden of medication management for home nurses.

Ageing, Health

Pathways to Prosperity

By ClimateWorks Australia

Provides development project solutions across Southeast Asia and the Pacific Islands to achieve lowest emissions development alongside the Sustainable Development Goals’ program.

Climate Action and Environment, Conservation, Education, Health, Livelihood and Poverty Alleviation

PEACEMOMO

By PEACEMOMO

Fostering Glocal Denizenship in Asia with innovative pedagogies and training networks.

Education

Building this region’s pipeline of future leaders who are committed to expanding educational opportunity for underserved children across Asia Pacific.

Education, Employability, Livelihood and Poverty Alleviation

Case Studies

Case Studies in Japan

ETIC’s development of the social innovation ecosystem in Japan

Education

Japan Venture Philanthropy Fund – from grants to social innovation

Previous
Next

Reports

More Market reports

Cambodia

Cambodia has an early-stage social economy with significant growth potential given increasing interest from social investors and intermediaries

China

China’s social economy is quickly maturing, with a high concentration of new wealth, a growing number of social investors and recent government commitments to create a conducive ecosystem

Hong Kong

The social economy in Hong Kong is growing rapidly with strong government support, a well-established philanthropic culture and increasing corporate sustainability efforts

India

The Indian social economy is one of the most advanced in Asia, driven by collaborative social investment, a relatively developed impact investing market and an engaged corporate sector

Indonesia

The Indonesian social economy is transitioning from being one largely based on a tradition of religious giving to one growing in its engagement with impact and sustainable investing and green finance

Malaysia

Malaysia’s government agencies and supportive sustainable finance policies, coupled with its status as a leader in Islamic finance, indicate the high growth potential for this developing social economy

Previous
Next

Download Report

Social Investment Landscape in Asia