Japan is preparing to adopt carbon pricing from FY2026 in pursuit of net-zero emissions by 2050. Developing an equilibrium price of carbon would offer several key advantages in terms of achieving the Japanese government’s decarbonization targets via energy transition and leveraging market mechanisms to drive sustained economic growth. One such advantage is maintaining accountability to the Japanese public and international community. Others include that an equilibrium price that balances carbon emissions market demand with supply would encourage constructive behavioral change among stakeholders.

The new, improved version of NISAs (Nippon Individual Savings Accounts) may have an indelible impact on Japan’s investment trust market. The new NISAs have accentuated the distinction between funds that are suitable as stable investment vehicles and funds that are not. In the first three months following the new NISAs’ advent, investment trusts eligible to be held in NISAs captured an outsized share of asset inflows while most NISA-ineligible investment trusts experienced asset outflows. Amid ongoing changes in the Japanese public’s image of investing, NISA-eligibility may be influencing investment trust investors’ fund selection decisions, even when the fund being purchased will not be held in a NISA. If so, investment trust sponsors will have to seriously weigh whether to make compliance with NISA eligibility requirements a feature of their new products.