The government of Japan has pledged to substantially reduce greenhouse gas (GHG)
emissions in the coming decade. Japan is among the largest greenhouse gas emitting economies
in the world exposing it to significant transition risk. Although Japan’s overall exposure to physical
risk is considered as very high due to the changing climate and the impact of the predicted increase
in the frequency and severity of natural catastrophes, its overall vulnerability to physical risks is
relatively low because of its strong capacity to cope with such risks. In accordance with the United
Nations Climate Change Convention, Japan has set an interim target to reduce GHG emissions by 46
percent from 2013 levels until 2030, with an objective of achieving net-zero GHG emissions by 2050.
To realize this ambitious goal, Japan enacted the Green Transformation (GX) Promotion Act in May
2023 and laid out, based on the law, a comprehensive strategy to facilitate the transition to a net
zero GHG economy.