Live on Bloomberg TV

00:00[CC may contain inaccuracies] Let's just ask a broad question on where Japan is headed when it comes to ESG what change does the country need to see the most right now. Thank you for having me. I think to answer your question the most important missing ingredient perhaps is that he is G is not just a compliance exercise but rather E G is an important and critical driver for growth. I believe that many companies many people still believe that it's a box ticking exercise. Hence we have seen greenwashing incidents here and there. Japan is not an exception to the global trend but I think the real missing ingredient and the reason why we're trying to integrate ESG is these start startups that we're investing in is so that they get these values injected into their DNA before they become fully formed adults. And these are really basic principles good governance employee engagement worrying about how diverse your management team is the impact your business is having on the climate you're existing in. So all of these elements which we think are actually quite basic really do need to be at the core of a company's business strategy. And that's what we're trying to help integrate here in Japan. And these are all they seem very positive trends when it comes to really implementing ESG across the country. But we are now facing these questions on whether or not ESG is also having some exposure in the invasion of Ukraine and some of those Russian assets. Do you have an understanding at this point where Japan stands in terms of ESG in relation to Russia Ukraine. It's a very timely question Sherry. And I think that we've already been seeing companies in the automobile sector in the technology sector beginning to either halt and or sort of pull back some of their presence in in Russia for instance. But again this is a very delicate balance because as you know for example Russia does account for a certain percentage. I believe it's around 6 or 7 percent of Japan's total energy imports. Japan is wholly reliant on imports for its fuel supplies and these fossil fuel supplies. And so it always has to walk this delicate balance between geopolitical considerations but also economic realities. But we have seen many many companies begin to step forward not only with regard to their businesses and operations in Russia but also some very generous philanthropic charitable support for the country and people of the Ukraine. One of the points that the story that we did on this points out is that it kind of lays bare the confusion or the conflation between sustainability and ethical investing. Right. Where do you sit in terms of ESG as just a screening tool to help funds avoid these risks to actual ethical investing. So it's your absolute right. It's very confusing. How do you where do you draw the line. Are these lines becoming more blurred by the day. But at the end of the day to me there is still a bit of a difference in so far as you know ESG is quite a broad framework. It's not just looking at ethical considerations. It's looking at like I said you know what kind of emissions is this company having not just in its own operations for instance but if you go down to scope three for instance what kind of emissions impact is this company having in its broader supply chain. And a lot of industries that's where the biggest impact is being felt. So it's not just about is it good or not good to do business with a certain customer or with certain counter parties. But how are you doing business. How is it impacting the environment on the governance side of things. What kind of decision making structure do you have. How diverse is that decision making structure have that has significant ramifications of course for risk management practices as well. Your fund launched last year. I'm wondering since then how much of a push have you seen from the cash to government in terms of green funding in terms of agenda oriented funding. And have you seen any investments. What what opportunities are you looking at. So indeed Kishi the government has basically reiterated the thrust of the previous regime which was Japan really has two big buckets of focus when it comes to economic policy. Number one is green investments and British administration has committed to doubling the amount of investments in so-called green technologies should also. I made a speech earlier this year basically stating that Japan will actually back a carbon pricing system which I think has been a controversial subject of discussion in this country for quite some time. So that was very encouraging to see. But I think we need more than just pronouncements. We need real money backing very innovative startups and innovative companies in this space. Like I said earlier Japan is very dependent on imported fossil fuels but it has this very ambitious target. At the same time to reach carbon neutrality by 2050. In my personal view you will not be able to get there if you do not invest in innovative technologies as some of those technologies may come from outside Japan not just inside Japan. On your other question on diversity there has been some talk about womenomics and diversity within the Keystone government. But personally speaking I think they could do more. I think there is more about focus on women in terms of income redistribution angle as opposed to let's get women more fully engaged in society more fully represented and leaders in positions of leadership and decision making and that being a positive engine for growth. Kathy what do you make of. It is new capitalism. Is it a more appropriate framework to look at the economic and social challenges of Japan's time now than through genomics. Well I think he is framework. Is reflective of the challenges that Japan's society is facing namely that growth has been present but growth has not been enforced evenly distributed. So he's tried to address on the one hand you know the inequities within society. But frankly speaking it's hard to redistribute income if you don't have much income to begin with. So the first thing is how to drive growth in innovation and living in the venture and start of the startup ecosystem. For the past less than a year my partners and I truly truly believe there are some brilliant founders in this country. There's not enough infrastructure to support that growth though not enough risk capital. But we think that if the government and private sector can work together and collaborate to drive more innovative startups that can really drive the income growth that the government needs to redistribute more broadly to the overall society.

No schedule data available.

Japan Ahead: MPower Partners' Kathy Matsui on ESG

Kathy Matsui, former vice chair of Goldman Sachs Japan and now general partner at venture capital fund MPower Partners, discusses the challenges the country faces when it comes to environmental, social and governance, or ESG. MPower incorporates ESG into its investment strategy and has a target total value of $150 million. Matsui also talks about Prime Minister Fumio Kishida's economic policies. She speaks with Shery Ahn and Haidi Stroud-Watts on the latest segment of "Japan Ahead" on "Bloomberg Daybreak: Asia." (Source: Bloomberg)

More From Daybreak Asia
All episodes and clips

Bloomberg Markets
"Bloomberg Markets" is focused on bringing you the most important global business and breaking markets news and information as it happens.
More episodes and clips