[Tokyo = E-Daily Marketin Reporter Soyoung Park ] The atmosphere was electric at the Growth Market listing ceremony held at the Tokyo Stock Exchange (TSE) on June 5, 2024. It was the day that Astroscale Holdings, a startup with technology to remove space debris—dangerous waste floating in space—went public.
Starting at an offering price of 850 yen, the stock price surged 51% on its first day, reaching 1,281 yen. Its market capitalization reached 155 billion yen. According to the company, investor demand at the time was approximately 30 times the size of the offering. It was a moment when capital responded to technology designed to solve a social problem that seemed straight out of a science fiction movie. This is the current state of impact investing in Japan.
According to the Social Innovation Investment Foundation (SIIF) on the 6th, the outstanding balance of impact investments in Japan last year stood at 18.6531 trillion yen (approximately 168.0495 trillion won). This figure represents the total value of investment assets—including stocks, bonds, and loans—held and managed by 47 institutions, such as financial institutions and asset managers, that met impact investment criteria, marking a 7.8% increase from the previous year.
In Japan, a structure has been established in which the government sets market standards, while large institutional investors (LPs)—such as banks, insurance companies, and pension funds—provide the actual capital. Consequently, the global impact investment industry has begun to view Japan as a key hub in the Asian market. This is also because cases of impact companies going public (IPO) are emerging one after another.
Focus on Impact That Goes Beyond the Greenwashing Limits of ESG
The term “impact investing” was first coined at a conference hosted by the Rockefeller Foundation in the United States in 2007. It began to grow into a full-fledged investment market following the launch of the Global Impact Investing Network (GIIN) in 2009. Impact investing intentionally pursues not only financial returns but also positive and measurable social and environmental outcomes. Before investing, specific social issues and objectives to be addressed are defined. After the investment, the actual changes that have occurred are measured and managed.
The rise of impact investing stems from the limitations encountered by traditional Environmental, Social, and Governance (ESG) investing. As ESG rapidly gained traction, controversies arose over “greenwashing”—the practice of companies and financial products overemphasizing their environmental and social image at the expense of actual performance. Critics also pointed out that it was difficult to verify exactly which problems investment targets were solving and what changes they were actually bringing about.
If ESG was “investing in good companies,” impact investing is “investing in companies that grow by solving social problems.” The very process of reducing carbon emissions, addressing the aging population, and cleaning up space debris creates new industries and translates into corporate revenue and profits.
Investors are not focusing on impact investing solely for its social value. Rather, it is because a structure is beginning to take hold in which corporate value increases as social problems are solved, and that growth translates into investment returns.
The impact investment market is also growing rapidly in Korea. According to a recent report by the Korea Capital Market Institute, the number of domestic impact funds has increased from 7 in 2004—with assets under management (AUM) of 100 billion won—to 301 in 2024, with AUM reaching 6.65 trillion won.
There have also been cases where companies addressing social and environmental issues have attracted large-scale investments. A prime example is “StarTech,” a startup that produces eco-friendly de-icing agents and cosmetic ingredients from starfish, a type of marine waste. In 2024, StarTech secured 15 billion won in Series C funding from investors including POSCO Technology Investment, Kiwoom Investment, KB Investment, BNK Venture Investment, Hanwha Investment & Securities, Mason Capital, and Cactus Private Equity (PE).
Japan’s 170 Trillion Won Impact Capital Flows into Climate Tech, Wellness, and Content Japan’s approach—where the government, financial institutions, corporations, and foundations have collaborated to foster the market
—is regarded as a model that can be applied to other countries. This is why South Korea’s impact market is paying close attention to Japan. As the foundation for impact investing expands rapidly in Japan, market focus is shifting toward which industries and companies will receive funding.
Impact ecosystem stakeholders we met in Japan cited climate and renewable energy, as well as healthcare and well-being, as key investment targets. This is because these areas involve significant challenges and urgent needs, and because the successful adoption of related technologies could drive transformation across entire industries and social systems.
Masaki Kawai, CEO of Impact Shift and UNERI, emphasized the “healthcare” sector, citing factors such as △extended life expectancy △improved physical health △access to basic healthcare and nutrition △improved quality of life △and well-being, including mental health.
He stated, “Healthcare has the potential to grow into an industry that goes beyond simply treating diseases to enhance healthy life expectancy and quality of life,” adding, “Investment opportunities may expand not only in digital health but also across the entire wellness industry, including care, nutrition, and mental health.”
Takahiro Fukui, Senior Manager of the Corporate Strategy Department and R&D Lab at Nippon TV Holdings, emphasized the need to expand the scope of impact investing to include support for creators in the entertainment industry. He particularly noted the need for such investments in South Korea and Japan, where the creative workforce may weaken due to population decline.
He said, “If high-quality content created through the creative process can bring about positive changes in viewers’ perceptions, knowledge, and behavior, it will also help solve various social issues,” adding, “Efforts to build such an ecosystem will, in the long run, contribute to the sustainable growth of media companies themselves.”
