Interest in environmental, social and governance (ESG) issues has grown globally, as countries, companies and investors have focused more on this area. The same trend has occurred in Japan.
Sustainability-linked derivatives (SLDs) are not yet a major product in the Japanese market, but they have emerged as one of the tools available to help firms meet their ESG objectives. As SLDs gain increasing attention around the world, and as some SLDs emerge in Japan, it is necessary for users to understand how these instruments fit into existing regulatory regimes.
This whitepaper analyzes two categories of SLDs in the context of the derivatives regulatory framework in Japan. Specifically, it considers:
- Whether SLDs would be classified as ‘over-the-counter (OTC) derivatives transactions’ or ‘OTC commodity derivatives transactions’, and how they are regulated; and
- Compliance issues for market participants to consider when executing SLDs.
Documents (1) for Regulatory Framework for Sustainability-linked Derivatives: Japan Analysis
Latest
Trading Book Capital: Scott O'Malia Remarks
Trading Book Capital: Capital Conundrum, Navigating Basel III Endgame February 5, 2026 Welcoming Remarks Scott O’Malia, ISDA Chief Executive Good afternoon, and welcome to ISDA’s Trading Book Capital event – it’s great to be here in New York. We...
ISDA In Review – January 2026
A compendium of links to new documents, research papers, press releases and comment letters published by ISDA in January 2026.
ISDA Responds to RBI Unique Transaction Identifier (UTI) Proposals
On November 14, 2025, ISDA submitted comments to a Draft Circular from the Reserve Bank of India (RBI) proposing to mandate the global Unique Transaction Identifier (UTI) for all transactions in OTC markets for Rupee interest rate derivatives, forward contracts in Government...
How and Why Pension Funds Use Derivatives
With over $58 trillion in assets globally, pension fund managers are major participants in financial markets and play a vital role in helping to provide post-retirement incomes for plan employees. Meeting such an important goal requires careful consideration of investment...