Japan Finance Organization for Municipalities (JFM)

Chiyoda, Japanwww.jfm.go.jp/en/
Invested through
  • Triodos Impact Mixed Fund - Defensive
  • Triodos Impact Mixed Fund - Neutral
  • Triodos Impact Mixed Fund - Offensive
  • Triodos Euro Bond Impact Fund
Asset ClassesImpact bonds
Impact strategyImpact Equities and Bonds
ISIN codeXS2291905474
Industry groupRegional Banks
Aligned with SDGs

Japan Finance Organization for Municipalities (JFM) provides long-term funding at low interest rates to local governments in Japan. It primarily offers loans for various projects operated by local governments, such as projects related to water supply and sewerage, transportation, hospital facilities, and local road construction. JFM is wholly owned by prefectures, cities and special wards of Tokyo, government-designated cities and towns, villages and local government associations. JFM was founded in 1957 and is based in Tokyo, Japan.

JFM offers community lending with a social value or related to social infrastructure. In addition, the company finances municipal enterprises with a high social benefit: about 45.5% of the overall outstanding loans can be attributed to the provision of public water services, with some 13.9% accounting for water supply and 31.6% for the funding of sewerage systems. Moreover, 4.6% of the total loan portfolio is dedicated to public hospitals and elderly care facilities, 3.6% constitutes public transportation and 4% to disaster management an mitigation.

Investment rationale

Japan Finance Organization for Municipalities (JFM) provides loans to projects operated by local governments. As of 31 March 2020, total outstanding loans stood JPY 23.3996 tn, of which JPY 7.2805 tn was for sewerage, accounting for 31.1% of the total amount. JFM issued its inaugural green bonds in February 2020 to finance Japanese local government’s sewerage projects and fully allocated the net proceeds by 31 March 2020 after issuance.

As JFM’s green bond framework is specifically set up to finance reconstruction and upgrading of the sewerage system in Japan, the framework is already narrow in the type of projects that it will finance. Proceeds of this green bond are therefore very much in line with the framework: eligible project categories are Sustainable water and wastewater treatment and Pollution prevention and control.