ESG investment is a tailwind in Japan, despite global headwinds

The latest Japanese ESG indices and passive investment report, written in collaboration with SGX

Authored in collaboration with SGX, this report reviews the development of Japan's sustainability standards, the ESG performance of listed companies in Japan compared to market-specific indices, and the growth of index-linked SGX FTSE Blossom Japan Index Futures.

Key highlights from this quarter’s analysis:

• ESG investment is a tailwind in Japan, despite global headwinds:
  • Japan’s seven public pensions that completed signing the PRI in 2024 are set to increase investment
  • Discussed NISA product expansion
  • GPIF call for application new ESG indices and funds
• Both Blossom Japan and Blossom SR (Sector Relative) indices reported underperformance relative to their benchmark, the FTSE Japan All Cap Index, for April to June 2025. This was driven largely by the negative contribution from the ESG factor. Long-term performance remains stable.
• SGX FTSE Blossom Japan Index Futures continue to remain the contract of choice for Japan ESG derivatives, with a market share of 98% (in terms of open interest in USD notional).