A growing number of local governments in Japan are issuing green bonds to fund specific initiatives, such as energy-efficient infrastructure projects and disaster mitigation measures aimed at addressing the consequences of climate change.
Due to strong demand from environmentally conscious investors, local governments can issue green bonds at lower interest rates. In fiscal 2023, a system was introduced allowing multiple municipalities to issue green bonds jointly, broadening the range of potential issuers.
Typically, local governments issue municipal bonds to raise funds for public facility development, but green bonds have proved more attractive to investors than conventional municipal bonds.
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