Amid a broader push into impact investing, Japanese institutions are globalizing their portfolios and channeling billions into impact strategies across emerging markets in Asia, Africa and Latin America.
The Japanese government late last year said that the country’s $1.4 trillion Government Pension Investment Fund, GPIF, and other public asset owners would begin to consider non-financial factors such as impact. In March, GPIF formalized the policy shift through a revision of its investment principles to incorporate impact investments.
The move from GPIF goes further than Japan’s earlier push into sustainable investing, largely in public markets, led by Hiro Mizuno, GPIF’s chief investment officer from 2015 to 2020. Impact investing assets under management in Japan grew 50% last year to $117 billion, according to the GSG Impact JAPAN National Partner.
Now banks and insurers, pension funds and development finance agencies, and other asset owners in the country are backing more funds that advance financial inclusion, climate resilience and sustainable infrastructure around the globe.
ImpactAlpha has tracked a half-dozen key Japanese limited partners over the past year making commitments to impact funds in Asia, Africa and Latin America.
Limited partners
Corporations in Japan are diversifying in global growth markets. Last week, Sumitomo Mitsui Banking Corporation backed Novastar Ventures’ third Africa People and Planet Fund and financed Gojo’s expansion into Africa via the pan-African microfinance group Baobab.
In March, Oji Holdings, the country’s largest paper producer, anchored New Forests’ Future Forests Innovation Fund with $300 million. The fund develops carbon offset projects with tribal communities in the US, as well as in Southeast Asia, Latin America and Africa.
Sumitomo Life Insurance, one of Japan’s largest life insurers, last year signed on to LeapFrog Investments’ flagship Emerging Consumer Fund IV, which targets healthcare and financial inclusion in Africa and Asia.
Sumitomo joined National Mutual Insurance Federation of Agricultural Cooperatives (Zenkyoren), a leading Japanese insurer, in supporting BlueOrchard’s public debt impact strategy. The $140 million fund invests in bonds from emerging markets, including Africa, Latin America, Central and Eastern Europe and Asia.
And in 2024, GPIF, launched an infrastructure program with Dutch public pension fund ABP; Dutch manager All Pensions Group, or APG, anchored the fund, which will invest in sustainable infrastructure globally.
Global development
Setting the pace for international investment is the Japan International Cooperation Agency, or JICA, Japan’s development agency. This week, JICA invested $40 million in Indian impact investor Aavishkaar, part of a broader Indo-Pacific strategy that routes Japanese capital toward Africa as well.
Last year, JICA committed $1 billion to IDB Invest to launch the Trust Fund Achieving Development of Latin America and the Caribbean (TADAC), a co-investment vehicle for private-sector projects across the region. JICA also emerged as a limited partner in Dalus Capital’s third fund in Mexico, which backs early-stage impact and climate tech startups (watch ImpactAlpha’s interview with JICA’s Michiko Kogure)
