No. 23 — June 16, 2000

Feature Article

JAPAN GOES FOR THE "GREEN" IN ENVIRONMENTAL ARENA

Jon Choy

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Summary

Like Great Britain and the United States before it, Japan paid scant attention to the potential environmental consequences in its headlong rush to develop an advanced industrial economy. In particular, the reconstruction after World War II and the subsequent drive to lift Japan into the top ranks globally were achieved at the cost of fouled air, water and soil — a price that both policymakers and the public had been willing to pay.

Since entering the postindustrial phase of economic development, however, Japan has been reassessing its priorities. Having built the second-largest market-based economy in the world and generated one of the highest per capita incomes, the argument that Japan could not afford environmental cleanups and anti-pollution technology increasingly rang hollow. The problem of cost began to recede in the face of Japan's economic development, and the country's interest in environmental matters grew as it started to focus on quality-of-life issues.

Paralleling this domestic shift in attitude were changes at the global level. As mankind's understanding of the planet's complex ecology deepened, it became apparent that some environmental problems could only be addressed effectively from a worldwide perspective. The Japanese political vanguard has made leadership on global environmental issues a keystone of its commitment to uphold Japan's responsibilities as an economic superpower. Leading by example, Tokyo has pledged to reduce the country's release of pollutants on a wide scale, again bringing "green" topics to the direct attention of companies and individuals.

Signs of Japan's environmental revolution are popping up everywhere — in government programs, in new and revised laws, in corporate business plans and in everyday life. In the opinion of most activists, Japan has taken significant strides in the past several years but still has much catching up to do.

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Background

In the years immediately following World War II, Japan was laser-like in its focus on recovering from the conflict's devastation and then on "catching up to the West" by building an advanced industrialized economy with globally competitive companies. The promotion of rapid economic development overrode most other policy goals, meaning that the concept of placing the environment's health on a par with — much less ahead of — economic growth was not on the minds of the Japanese.

Even such environmental debacles in the 1950s as mercury poisoning in Kumamoto prefecture's Minamata Bay, cadmium poisoning in Niigata prefecture and the worsening air pollution in Japan's major metropolitan areas failed to disrupt the consensus that economic development was the paramount goal. While Japanese business leaders warned that regulations should balance the consideration of growth and environmental issues,1 they also agreed on the need to regulate the release of industrial pollutants that pose an immediate threat to human health.

Nevertheless, Tokyo did not convene an advisory panel to develop a basic pollution-control law until 1965. The cabinet approved a version of the bill in February 1967, which the Diet approved five months later. In drafting the legislation, Japanese executives stressed that industrial-pollution policy should be guided by three principals: a basic goal should be to improve the welfare of residents in affected areas by pursuing a balance between environmental protection and economic development; regulations should be based on clear scientific evidence and imposed only when effective remedies are available; and the government must bear some responsibility because it had failed to set appropriate land-use rules and had permitted sources of industrial pollution to be sited in residential areas. The business lobby successfully enshrined the concept of balancing growth and pollution control in an article of the Basic Law for Environmental Pollution Control of 1967. Over the next several years, the government developed specific standards for measuring pollution and established limits to known harmful substances.

The Environmental Pollution Control Headquarters, an ad hoc body that was chaired by the prime minister, was created in 1970 to coordinate anti-pollution activities that previously had been handled by several ministries and agencies. A year later, the Environment Agency was set up as the permanent body mandated with the comprehensive administration of environmental issues, including pollution control.

In 1969 and in 1970, another rash of poisonings related to factory effluents led to public pressure on Tokyo to restrain industry. Environmental activists organized at the grass roots and began effective campaigns to reeducate voters and executives about the dangers of pollution. The special legislative session convened in November 1970 came to be known as the "Pollution Diet" because it approved 14 environmental bills. Especially important was the Diet's decision to amend the 1967 law by deleting the article that put environmental protection and economic growth on an equal footing.

The highly organized environmental activists used the new anti-pollution laws to generate a wave of lawsuits that forced the central government to adopt and enforce tougher standards covering industrial waste. Even as business executives clung to their unpopular policies that held that regulations should be based on hard scientific evidence and that development and environmental protection considerations must be balanced, Japanese companies strove to meet Tokyo's demands. Many firms were able to comply, and those that could not often struck deals with local governments for more time and financial assistance.

These agreements marked the beginning of local authorities' role in Japan's environmental sphere. While some prefectural and municipal officials were willing to give local businesses more time and money to comply, others did not hesitate to impose even tougher regulations and standards when they felt it necessary. The pressure from consumers and politicians influenced corporate thinking about pollution, changing the early 1970s opinion that growth and pollution must go hand-in-hand to the mid-1970s commitment to protect the environment — even at the cost of development.2

Another important event in the development of Japan's environmental conscience was the 1973-74 oil crisis. Energy conservation suddenly became a national priority, a change that benefited Japan's pollution situation. Investment to develop nonfossil fuel sources of energy (primarily nuclear) grew sharply as did the money spent on pollution abatement equipment. By the end of the 1970s, Japan had slashed its output of certain pollutants, for example, sulfur dioxide, by more than half. Even so, the country still was able to maintain an enviable rate of real economic growth through the 1980s.

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Environmental Issues In The Spotlight

Despite its accomplishments, Japan was dogged by its reputation as an environmental laggard on account of several emotional issues. One was the country's continued promotion of commercial and scientific whaling (see JEI Report No. 24B, June 25, 1999). Another was its role as a major importer of tropical hardwoods that were being harvested at such a rapid rate as to threaten their source, the biodiverse forests of Southeast Asia.

To shake this reputation, Tokyo initiated a review of its anti-pollution laws in July 1992 with an eye toward updating and compiling them into a new Basic Environment Law. The debate was protracted, and the Environment Agency's advisory panel's final report, submitted in October 1992, shied from many politically sensitive areas. Although the cabinet quickly approved a draft bill, the Diet deliberated it over two sessions before finally giving its assent in November 1993. Two developments formed the background for the new legislation.

Changing Public Attitudes and Sensitivities - The growing monetary affluence of the average Japanese citizen began to contrast sharply with what many considered a meager standard of living. The Japanese seemed to be well behind their Western peers when the criteria were average living space, park area per capita and other indicators of social infrastructure. Another glaring deficiency was the poor quality of some highly visible environments. Tokyo's Sumida River, for example, had become too polluted to support aquatic life and often stank. Popular awareness was growing of the health consequences of long-term exposure to seemingly insignificant amounts of carcinogenic or pathogenic by-products of modern economic activity.

In sum, the consensus behind the "growth at all costs" movement was eroded by its very success. The continued pursuit of breakneck development came to be seen as a course that yielded diminishing material returns while imposing an ever-increasing environmental cost. After climbing nearly to the top of the global economic heap, Japan had both the financial means and the desire to enjoy the good life, including an environment that was clean and aesthetically pleasing.

International Conferences - Billed as the first Earth Summit, the June 1992 meeting of the United Nations Conference on Environment and Development in Rio de Janeiro, Brazil produced the U.N. Framework Convention on Climate Change. The document committed signers to develop a global response to the increasing levels of gases in the atmosphere that trapped solar energy, a trend that could turn the earth into a giant greenhouse, disrupt weather patterns, cause climatic shifts and perhaps even melt the polar ice caps. Although it took the U.N. group until 1997 to hammer out a plan of action, the Rio Earth Summit raised the profile of environmental issues to a new level.

In the euphoric years of the late 1980's "bubble economy," Japanese politicians made global environmental protection a central theme of the country's foreign policy. As will be discussed below, Japan's foreign aid and diplomatic programs were tinted "green" from that time on. This international leadership role, however, also directly impacts domestic life since both Japanese consumers and companies will have to alter their behavior if Tokyo is to fulfill its environmental promises.

The Basic Environment Law of 1993 favored the business community's viewpoint in many respects. Rather than rely on government regulation imposed from above, Article 4 of the law makes conservation an activity to be "voluntarily and positively pursued by all people sharing [a] burden." The legislation also refused to make environmental impact statements a legal requirement, addressed other critical topics only vaguely and set up a host of conditions for action on certain points. In general, the law hesitates to impose burdens on companies without solid evidence that a regulation is needed — the traditional stance of business leaders.3

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The Government Wraps Itself In Green

National politicians and central government bureaucrats have been slow to embrace the idea that rapid economic growth can carry too high an environmental price. A balance of industrial development and conservation is the realistic approach to compromise. Officials will not hesitate to control substances that clearly are inimical to humans, but they also understand that zero pollution is not an option. Like their counterparts in other countries, Japanese authorities are searching for workable solutions in the vast gray area between these extremes.

Local governments often have been at the cutting edge of environmental policy for the reasons mentioned above and also because they have a direct connection with voters. Citizens concerned about air or water pollution in their neighborhoods complain to local officials, not to Tokyo. Local governments, therefore, have been the source of tough pollution regulations that have been unpopular with businesses. Tokyo Gov. Shintaro Ishihara, for example, recently proposed strict limits on particulate exhaust from all diesel-powered vehicles operating within his jurisdiction, setting off howls from the trucking industry.

Prefectural and municipal authorities also face practical problems that central government officials do not, such as the rapidly growing amount of refuse their constituents produce each day and the just as rapidly dwindling space in which to dispose of it. It is no surprise that local jurisdictions have taken the lead in promoting recycling and waste-reduction not only by companies but by households as well. Another area where local politicians and bureaucrats are ahead is in encouraging environmentally sound products and businesses by specifying such products in their purchasing plans and offering incentives for eco-friendly entrepreneurs to locate in their jurisdictions.

The central government is showing signs that it is taking its anti-pollution responsibilities more seriously. Tokyo's increasing conscientiousness is due in part to its international commitments to lower Japan's total output of harmful substances, but also because certain environmental problems must be addressed at the national level.

 

Domestic Initiatives

Recycling and Waste-Reduction Laws - As of April 2000, a new national law has required large Japanese companies to recycle plastics, PET (polyethylene terephthalate) containers, glass bottles and paper. This regulation will be extended to cover an estimated 160,000 smaller firms next April. Because most large corporations already had implemented systems to recycle these materials voluntarily or to meet local regulations, the new law is not seen as an excessive burden. Smaller firms also should be able to meet their recycling responsibility with little effort.

A second statute planned for implementation April 1, 2001 will not be such a simple affair. The Law for Recycling Specific Kinds of Home Appliances lists types of consumer electric goods and the percentage of recyclable materials that each type will be required to contain. For example, 60 percent of an air conditioner, 55 percent of a television and 50 percent of both refrigerators and washing machines (all by weight) must be made of reusable materials. Not only have appliance makers been hustling to redesign their products to meet these goals, but they also have been forced to develop systems to handle the physical return, collection and dismantling of appliances. Matsushita Electric Industrial Co., Ltd. already has spent a reported ¥2.4 billion ($21.8 million at ¥110=$1.00) to prepare its television production operations for the new law. While Japanese manufacturers are grumbling about the burden, they can be thankful that Tokyo is not as strict as the European Union, which is considering a recycling requirement of 90 percent for all appliances made within its boundaries.4

A third major waste-reduction initiative is in the works. Last September, Tokyo announced an ambitious goal for the nation: to halve the amount of municipal and industrial waste dumped by 2010. The intent is to encourage more efficient use of resources as well as to cut the amount of refuse that is burned — a primary source of dioxin released into the environment. By the target date, the plan aims to implement a carrot-and-stick approach to limit municipal waste to 50 million tons a year and industrial waste to 480 million tons. Early this year, Tokyo began exploring the first piece of supporting legislation, a bill that would require manufacturers to both restrict their waste output and use only recyclable materials for packaging.

Recycling success can breed its own kind of problems, however. The government's mechanism to collect and reuse PET bottles has been overwhelmed by the rapid increase in use of the container material and by effective recycling collection programs. Makers of PET bottles have established the Japan Container and Package Recycling Association in Tokyo to gather bottles from collection programs and ship them on to companies that will reuse them in new products. The volume of PET containers ready for recycling has far outstripped the association's distribution capacity, leaving many hundreds of tons of used drink bottles in municipal holding areas. It is not clear how or when the backlog will be cleared.

Pollutant Release and Transfer Register - In response to the 1992 Rio Earth Summit, the Paris-based Organization for Economic Cooperation and Development recommended in 1996 that its members implement a Pollutant Release and Transfer Register to track their total discharge and disposal of hazardous chemicals. Added to the law books in 1999 and effective April 1, 2001, Japan's PRTR will require a company that discharges into the environment more than a specified amount of any of more than 200 chemicals to report annually the exact amount of such emissions.

Environmentalists agree that Japan's PRTR will be a significant improvement over the current lack of information but also unanimously assert that the system is incomplete and is potentially flawed. First, they point out that certain chemicals strongly suspected of being harmful to humans — such as endocrine disrupters — have been omitted from coverage because the scientific evidence of harm is not conclusive. Second, the system's critics feel that it is a compromise between the Environment Agency and MITI and, therefore, its effectiveness could continue to be hampered by bureaucratic turf fights.

The Environment Agency had been working with local governments on its PRTR plan in order to encourage small businesses (which are more directly under the regulatory influence of local officials) to participate in the system. The ministry interposed itself by issuing a competing PRTR that gave MITI the primary role in encouraging businesses to comply. The compromise gives each side a say in how the PRTR will operate, an arrangement that critics say could paralyze the reporting mechanism. Environmentalists want more power in the proposed PRTR to be devolved to local officials, whom they consider more responsive to public sentiment and more progressive on pollution issues.

Hoping to avoid the heavy hand of the regulators, some companies and business groups, such as Keidanren (Japanese Federation of Economic Organizations), have begun to develop their own systems for reporting the release of hazardous chemicals. These parties clearly are preparing to argue that their voluntary systems will fulfill the law's requirements without the need for explicit regulation.

Dioxin-Release Programs - The public has become very sensitive in recent years about the relatively large amounts of dioxin generated in Japan. Produced by burning certain types of plastics at low temperatures, exposure to even tiny amounts has been shown to increase the chances of developing cancer. Since landfills are expensive and are running out of space, most of Japan's waste ends up in incinerators. The country accounted for about 40 percent of dioxins released by 15 industrialized countries in 1995, according to a United Nations Environmental Program. MITI estimated that Japan released 5.3 kilograms of the gas in 1998, compared with 4 kilograms in 1990.

The Japanese public's concern with dioxin exposure stems in part from the relatively lax standards used by the Environment Agency and the Ministry of Health and Welfare, combined with reports of high concentrations of the carcinogen in areas near incinerators. While the World Health Organization's benchmark for tolerable daily intake of dioxins is 1 picogram (one-trillionth of a gram) to 4 picograms per gram of body fat per day, the Environment Agency allowed a TDI of 5 picograms; MHW's threshold was twice that amount. Soil surveys conducted by the Environment Agency in 1998 showed dioxin contamination ranging from 6.5 picograms to 28 picograms per gram of soil near landfills and agricultural areas, but as high as 8,500 picograms per gram of soil near some incinerators.

In July 1999, the Diet approved a bill intended to cut Japan's dioxin emissions by 90 percent within four years. In effect since January, the legislation ordered the Environment Agency and MHW to at least match WHO's TDI standard for dioxin and set contamination ceilings for soil (1,000 picograms per gram) and for water (1 picogram per liter).

Green Energy Legislation - Brought together by their shared opposition to nuclear energy and their support for a reduction of Japan's emissions of greenhouse gases, a suprapartisan group of 256 members from both houses of the Diet is drafting legislation to promote environmentally sound energy. The National Parliamentarians' Association for Promoting Renewable Energy proposes tax and other incentives to overcome the high initial cost of switching to power derived from solar, wind, small-scale water (nondam), biomass and other sustainable, environmentally friendly sources. To increase the share of Japan's total energy supply provided by renewable energy, the association suggests that utility companies be forced to submit their power-purchasing plans to the government. This requirement would not be as coercive as the renewable-energy programs of such other countries as Germany, which in 1991 mandated that a minimum percentage of power must come from green sources.

The legislators feel that their bill dovetails with MITI's efforts to deregulate the electric power market and with efforts to devolve more authority to local governments since small, natural-energy plants would be under local control. The proposed system, according to its proponents, also would make the government decisionmaking process that determines energy policy more transparent. Although the association hopes to introduce its proposal to the Diet before the June 17 close of the current session, the consensus is that there will be no immediate action on it because of the general elections scheduled for June 25 (see JEI Report No. 22B, June 9, 2000).5

 

International Initiatives

Kyoto Protocol and COP3 - As host of the December 1997 Third Conference of the Parties to the U.N. Framework Convention on Climate Change, or COP3 for short, the Japanese government went into a full-court press to achieve consensus among representatives from 159 countries on a plan to reduce global emissions of greenhouse gases. Only after overcoming reservations by the American contingent did the delegates agree on the Kyoto Protocol, which commits the industrialized countries to reduce their emissions of six climate-affecting gases by an average of 5.2 percent below 1990 levels by some point in the 2008-12 period (see JEI Report No. 47B, December 19, 1997).

Specifically, Japan set for itself a goal of 6 percent reduction, compared with 7 percent for the United States and 8 percent for the European Union. The consequences of this pledge are rippling through Japanese policies and already have begun to affect businesses and consumers. Most apparent has been its impact on Japan's energy policy, where a premium has been placed on boosting nonfossil fuel sources.6 The pledge also has reinvigorated energy conservation efforts, leading to higher standards for efficiency and lower ceilings for overall power consumption.

A big part of the responsibility for cutting greenhouse gas emissions will fall on industry. Business leaders already are planning ways to reduce the use of fossil fuels, to capture problem gases before they escape into the atmosphere and to shrink their overall energy demands. Given that Japanese industry has spent decades and many billions of yen on improving its energy efficiency, business leaders warn that there may not be as much room for improvement as Tokyo seems to think.

If Japan is to achieve its emissions reduction goal, citizens must be willing to adjust their lifestyles as well. Driving fewer miles in cars, being more conscientious about turning off lights and devices when they are not in use and making energy efficiency a primary factor in purchasing decisions are examples of the sort of beneficial behavior modifications that are needed. The drive to fulfill the Kyoto Protocol may mean a partial retreat from the recently adopted goal of increasing the quality of life, since the typical lifestyle in advanced industrialized countries is relatively energy-intensive.

Foreign Aid - Japan's 1992 official development assistance charter for the first time included environmental conservation as a basic philosophy. In June 1997, then-Prime Minister Ryutaro Hashimoto made environmental considerations a keystone of Japan's foreign aid policy by launching the Initiative for Sustainable Development Toward the 21st Century. Although Japanese aid and development organizations previously had included environmental impact statements in their project assessments, Mr. Hashimoto's decision — in line with his desire for Japan to assume a global leadership role in this field — lifted environmental aspects higher on the list of aid criteria.

The results have been quick — too quick in the eyes of some critics. In FY 1997, for example, the Japan International Cooperation Agency reported a "greening" of aid (see Table 1). Such assistance totaled ¥2.8 billion ($25.5 million) to Indonesia, ¥2.6 billion ($23.6 million) to the People's Republic of China, ¥2.3 billion ($20.9 million) to Thailand, ¥1.4 billion ($12.7 million) to the Philippines and ¥1 billion ($9.1 million) to Malaysia. Skeptics have argued that the aid agencies have created these positive-sounding numbers simply by reclassifying existing programs based on their environmental components. Aid officials counter that they will be proved correct when the green projects begin coming on line.

Table 1: Highlights of Japan's Environmental Aid in FY 1997

(in millions of yen)

People's Republic of China

aaa

aaa Combined projects and overall development

¥860.2

aaa Water pollution abatement

574.4

aaa Forest conservation and reforestation

496.9

Thailand

aaa

aaa Clean water supplies

551.6

aaa Disaster prevention

495.2

aaa Forest conservation and reforestation

373.6

Malaysia

aaa

aaa Forest conservation and reforestation

276.1

aaa Combined projects and development

272.2

aaa Disaster prevention

234.2

Philippines

aaa

aaa Clean water supplies

355.9

aaa Management of natural resources

330.2

aaa Disaster prevention

231.8

Indonesia

aaa

aaa Sewage treatment factilities

762.8

aaa Forest conservation and reforestation

552.6

aaa Combined projects and development

431.8

Source: Figures rounded from Japan International Cooperation Agency data in Kazunori Yokota, "Japan Takes Lead In Fighting Asia's Environmental Woes," The Nikkei Weekly, September 13, 1999, p. 1

Diplomacy - Some aspects of Japan's diplomatic policies also have fallen under the spell of environmentalism, a natural consequence of the country's pursuit of global leadership in this area. Unlike development projects, however, diplomatic initiatives may fail despite the best-laid plans. For example, Japan and its American and European allies have worked since 1992 to support the Middle East peace process by sponsoring multilateral talks in parallel with Israeli-Arab negotiations. To improve the chances for progress, the multilateral forum created five working groups to tackle specific issues.

Japan chairs the environment subgroup which produced the Bahrain Environmental Code of Conduct for the Middle East in October 1994.7 Further progress, however, has been scant as Israel's talks with the Palestinian National Authority and with Syria have bogged down. In fact, Japan and host Tunisia had to cancel an environmental conference planned for late May because the main talks were dormant. The recent effort by the Clinton administration to invite Israeli and Palestinian negotiators to Washington to restart talks could also revive the environment subgroup discussions.

Another example of green diplomacy is Tokyo's proposal to help the government of Iran combat air pollution with technical aid. The package includes ¥100 million to ¥200 million ($909,000 to $1.8 million) to build a smog-monitoring system in Teheran, install desulfurization equipment at generating plants, convert gasoline-powered vehicles to run on cleaner fuels as well as provide technical and financial assistance to extend the Iranian capital's subway system.8 Tokyo hopes that the assistance will strengthen the hand of Iranian moderates and reformers. The olive branch is touchy not only because Iran is a major petroleum supplier but also because the issue is a sensitive topic with Japan's foremost ally, the United States.

As the tussle between the Environment Agency and MITI over the PRTR shows, the ministries and agencies that comprise the central government are not of one mind on environmental issues. Another example of bureaucrats working at cross-purposes is the issue of whether to reward or punish owners of fuel-efficient vehicles. Besides forking over the tax on gasoline, the Japanese currently pay a levy based on the weight and engine displacement of their vehicles. These taxes generated about ¥3 trillion ($27.3 billion) in revenue for the central government in FY 1999, most of which, according to the Ministry of Construction, went to maintain and build roadways. Buyers of fuel-efficient vehicles currently get tax incentives, a disparity the Construction Ministry feels is unfair because these cars and trucks use the same roads.

The Ministry of Transport has a very different view of the situation. Its goal is to slow the overall growth of vehicle numbers and miles driven in order to lower Japan's total emissions of greenhouse gases. MOT wants to widen the gap between taxes on fuel-efficient cars and trucks and gas hogs. Between FY 1987 and FY 1997, the number of registered vehicles rose from 52.3 million to 72.9 million and the total number of miles driven surged 34.3 percent.

Thus, even though the government implemented cleaner fuel requirements over that decade, as well as tougher emissions standards and tax incentives for gas-stingy cars, the average levels of airborne pollutants held steady. While preventing a worsening of air pollution may be considered an achievement, the fact that the levels were not brought lower by Tokyo's actions underscores how difficult it will be for Japan to fulfill its Kyoto Protocol commitment to reduce greenhouse gas releases.

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Individuals Demand Green

The Japanese have a well-earned reputation for bearing up under adversity, but they also are known for their fatalism. Traditional Japanese society's rigid hierarchy and the inculcation of obedience to authority has created a citizenry that feels that there is nothing it can do to affect national policies and, indeed, should not even question such things. However, as it has become increasingly clear that it is the ordinary citizen who has borne and will continue to bear the costs of the environmental degradation brought on by the country's rapid economic development, many Japanese voters have shed this meek attitude.

Complaints and Lawsuits - Lodging complaints with municipal officials about negative environmental conditions has become a staple of local political life and has led to significant actions by local authorities. Mr. Ishihara's controversial proposal to cut diesel soot in Tokyo is a perfect example, driven as it was by citizen complaints. The Environment Agency and the National Police Agency have begun to collect data on such pollution-related complaints as illegal trash burning and dumping.

Less often, irate citizens will take their cases to Japan's court system for redress. Because lawsuits can take years to inch their way through the legal process, adequate financial resources and mental fortitude are required to see this option to its end. Furthermore, Japanese judges have a reputation for deferring to government authorities when a ruling could seriously disrupt policies. Nevertheless, the important environmental cases won in recent years by citizen plaintiffs, may indicate changing attitudes among judges.

Three similar cases underscore the judiciary's shifting position on air pollution cases. In August 1998, the Yokohama District Court ordered the government and the semigovernmental Metropolitan Expressway Public Corp. to pay damages to local residents who claimed that their health had suffered from air pollution generated by heavily used highways near their homes. In May 1999, the Tokyo High Court settled a 17-year old-suit brought by 400 residents of the suburb of Kawasaki against the same defendants by obtaining a pledge from the government and the highway developer to improve the air quality near expressways. And, in January of this year, the Kobe District Court took the unprecedented step of ordering the government and the Hanshin Expressway Public Corp. to reduce vehicle emissions in Amagasaki, Hyogo prefecture as well as to pay 50 residents a total of ¥210 million ($1.9 million) in compensation. A landmark ruling, this decision acknowledged that vehicle emissions from the highway had caused the residents' respiratory problems and stated that the government and public corporations "have a duty to prevent air pollution."9

Citizen activism has matured enough to take on one of Japan's sacred cows: the public works project. Proposed dams on the Mukogawa and Yoshino Rivers have attracted organized opposition from locals who deplore the environmental impact as well as the cost of the projects. A recent referendum on a proposed dam on the Yoshino River showed the depth of popular feeling: with nearly 55 percent of eligible voters participating, 90 percent rejected the project for environmental reasons. The Construction Ministry first tried to downplay the vote, but Construction Minister Masaaki Nakayama later said the ministry was ready to review the project with an open mind.10

Nongovernmental Organizations - In the environmental field, citizens have discovered strength in numbers, forming associations and interest groups to promote their causes. Nongovernmental organizations concerned with environmental issues have sprouted like weeds and are playing a growing role as government watchdogs. Armed with the new Public Information Access Law (see JEI Report No. 20B, May 21, 1999), these NGOs are forcing bureaucrats to reveal how environmental policy decisions are made and implemented. In addition, citizens' groups and like-minded associations of Diet members are seeking each other out to build coalitions to support tougher anti-pollution legislation. The Tokyo-based People's Association for Dioxin-Environmental Hormone Measures, for example, is working with a group of 200 anti-dioxin legislators from both houses of the Diet to develop regulations with a broad base of support. The association also is encouraging the legislative group to be proactive on such environmental issues lacking bullet-proof scientific evidence as the effects of chemicals suspected of disrupting human hormone and endocrine functions.

Eco-Friendly Buying and Investing - In the past, activists and citizen groups have tried to organize boycotts of companies with bad environmental records. This tactic, however, proved difficult to coordinate and implement unless popular outrage was high. By switching tactics 180-degrees, however, these environmentalists are gaining much greater influence over corporate decisions. Activists now encourage consumers to buy environmentally friendly products or persuade large purchasers, such as cooperatives and associations, to add "greenness" to their criteria when choosing suppliers. Activists also have approached manufacturers directly with the argument that developing environmentally safe or friendly products differentiates their goods from those of competitors. The win-win message that "green sells" has found more open ears within corporate boardrooms than the negative threats of boycotts.

In this vein, some Japanese savers and investors are dangling their pocketbooks in front of companies by putting their yen into ecologically minded financial vehicles. Sensing an opportunity, Nikko Securities Co., Ltd. launched Japan's first eco-fund in August 1999 with the goal of attracting ¥5 billion ($45.5 million). Two weeks after its first sales of subscriptions, the open-ended fund already had taken in ¥23 billion ($209.1 million) and by the end of October, the fund hit ¥50 billion ($454.5 million).

Yasuda Fire & Marine Insurance Co., Ltd. debuted its eco-fund in September 1999 and the partnership of UBS Fund Management (Japan) Ltd., Sumitomo Bank, Ltd. and Dai-Ichi Mutual Life Insurance Co. followed with its eco-offering the following month. These funds also attracted far more interest than originally expected. At the end of October, Yasuda Fire & Marine's kitty topped ¥20 billion ($181.8 million), while the UBS/Sumitomo/Dai-Ichi Mutual Life group had collected ¥40 billion ($363.6 million).11

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Companies Go For The Green

The message that "green equals yen" definitely has gotten the attention of executives. Faced with more rigorous pollution, waste-reduction and recycling laws and still suffering from what corporate leaders feel is an undeserved image as plunderers of the environment, members of Japan's business community are rushing to become green leaders.

A recent example of this shift in attitude is the decision by Mitsubishi Corp. and its partner, the government of Mexico, to abandon plans to build a giant salt-extraction plant on a pristine Baja peninsula bay. Environmentalists around the world charged that the facility would threaten the endangered gray whales that use the bay as a nursery and could pollute an adjacent wildlife sanctuary (see JEI Report No. 10B, March 10, 2000). In a move that was unprecedented for a Japanese corporation, Mitsubishi withdrew, even after an exhaustive four-year study concluded that the environmentalists' fears were overblown.

Green Products and Services - Green is in, as is evidenced by the avalanche of environmentally friendly products rolling out the doors of every type of Japanese manufacturer. In the automotive industry, for example, Toyota Motor Corp. has introduced the Prius, the world's first commercially available gasoline/electric hybrid powered car. Honda Motor Co., Ltd. followed soon with its Insight hybrid, while Mitsubishi Motor Corp. is touting a gasoline-only model that matches the hybrids' high mileage per gallon. These vehicle makers soon will roll out all-electric models and are developing more exotic power sources, such as fuel cells and gasoline-to-electricity converters.

Of equal interest are the many small businesses and entrepreneurial start-ups that cater to consumers' growing environmental tastes or the demands of the new green regulations. Shabondama Soap Corp.'s natural soaps and detergents are strong sellers, as are Negoro Sangyo Co., Ltd.'s carpets made from recycled video cassettes. Even makers of such mundane products as bricks and tiles are exploring green alternatives, for example, an unbaked brick made with 13 kinds of solid waste held together with cement.12

Small companies also are filling the need for environmental expertise. Hanno, Saitama prefecture-based Bioindicator Co., Ltd., for example, does field research to assess the environmental impact of construction projects but also goes further by offering its expert advice on how to relocate valuable wildlife. MIC Corp. of Oguchicho, Aichi prefecture specializes in restoring natural vegetation to areas that have been disturbed by man's activities. The firm's clients include shopping centers and construction companies as well as foreign contractors.13

ISO 14001 Certification - The starting point for most Japanese corporations intent on lifting their environmental score above the average is adoption of the International Standardization Organization's 14000 family of environmental management system standards. The Geneva, Switzerland-based body has issued two modules to date: ISO 14004 (September 1996) which "provides guidelines on the elements of an environmental management system and its implementation and discusses principal issues involved" and ISO 14001 (October 1996) which "specifies the requirements for such an environmental management system."14 ISO 14001 certification indicates that the manufacturer has implemented business processes aimed at reducing waste and the release of environmentally harmful substances, and is continually looking for ways to make its operations greener.

Matsushita Electric, which makes consumer electronics goods sold under the Panasonic brand name, claimed in its FY 1998 annual report that 100 percent of its factories in Japan, 98 percent of its plants in Asia, 86 percent of its European facilities and 83 percent of its North American operations were ISO 14001 certified.15 Other top Japanese multinationals, such as Sony Corp. and Toyota, also report high levels of ISO 14001 compliance.

Environmental Accounting - In response to growing demand from investors and the government for detailed information about their environmental impact and spending, major Japanese companies have begun to calculate what they spend on environment-related activities, including pollution abatement, recycling efforts and research and development. Toyota produces a detailed report on its environmental impacts and activities, including data on related costs (see Table 2).16 Other multinational firms go beyond this to develop data on the amounts of pollutants and waste their operations create. Sony, for example, produces a matrix showing its energy consumption, water consumption, energy use and production of harmful substances by geographic area.17

Table 2: Toyota Motor Corp.'s Environmental Costs, FY 1997-FY 1998

(in billions of yen)

Category

FY 1997

FY 1998

Maintenance Costs

aaa Waste Disposal

¥2.1

¥2.1

aaa Wastewater Treatment

1.1

1.0

aaa Awareness-Building, Including Advertising and Public Relations, etc.

7.0

3.6

aaa Professional Environmental Staff Expenses

1.1

1.2

aaa Recall Expenses, Reparations, etc.

0.0

1.0

aaa aaa Subtotal

11.3

8.9

Environmental Investment*

aaa Research and Development**

aaa Capital Investment**

78.2

88.1

aaa Anticipated Expenses, such as Recycling, ISO 14001 Certification, etc.

Total

89.5

97.0

*Some items cannot be disclosed in detail because they are closely related to Toyota's business strategy.
**For items whose objectives are both environmental and non-environmental in nature, partial estimates are provided. Total research and development expenses in FY 1998 were ¥448.1 billion and total capital investment expenses were ¥329.7 billion.

Source: Toyota Motor Corp., Environmental Report 1999, p. 18. Available at http://www.global.toyota.com/globaltoyota/corp_info/envrep/envrep99/index.html.

Breaking new ground, NEC Corp. has put substantial time and money into a new system that totals up the carbon-dioxide emissions generated not only in the production of its computers and electronic gear, but in their use and disposal as well. NEC's complex exercise also covers the activities of its suppliers, from which it buys some 1 million components each month. NEC can tell how much CO2 is generated at each stage of production, distribution and marketing, and over the life of the product. NEC's method could become a model for other Japanese companies as the nation strives to meet its greenhouse-gas reduction pledge contained in the Kyoto Protocol.18

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Outlook: The Many Shades Of Green

A green revolution clearly has begun in Japan. Citizens, politicians, bureaucrats and executives all have climbed on the environmental bandwagon even if with some reservations. Expecting ingrained behaviors to be modified overnight is unrealistic. However, change is apparent in positive signs. Unfortunately, negative notes still can be heard in Japan's environmental melody.

For example, Japan remains one of the world's top importers of rare wildlife and wildlife products protected by the Convention on International Trade in Endangered Species of Flora and Fauna. Based on an analysis of CITES records for 1996, an independent watchdog group asserted that Japan was responsible for 55 percent of the global trade in tortoise shells and for 43 percent of the traffic in wild and bred birds. Japan also imported the largest quantity of live bears, reptiles, skins and coral that year, as well as the second-highest number of live primates.19

Tokyo continues to press its campaign to allow commercial harvesting of populous whale species. Its scientific whaling program has taken minke whales for the past several seasons, but stirred controversy this year by proposing to extend its research to taking 10 of the rarer sperm and 50 Bryde's whales a season. Despite a growing body of scientific evidence that certain whale species now are numerous enough to sustain controlled commercial whaling, it appears unlikely that Tokyo will be able to shift the global opinion against killing these mammals for food. Since the Japanese government's whaling position and activities earn it negative marks from global environmental activists, Tokyo's stance — no matter how principled and scientifically supported — likely will remain a stain on its environmental record.

For all their progress, Japanese corporations generally remain more conservative than their U.S. counterparts, which have taken a more active stance on environmental issues. Ford Motor Co.'s recent mea culpa regarding the negative environmental aspects of its sport-utility vehicles surprised stockholders and outsiders alike, but would have been completely stunning had it come from a Japanese automotive maker. The decision by 3M Co. to withdraw its very popular Scotchgard stain-repellant from the market for environmental reasons also won praise from environmentalists. New research showed the substance to be harmful only at very high concentrations, but because the chemical is extremely durable, it can accumulate in animal tissues over decades. This was enough for 3M officials to pull the $500 million product, even though they admit that it will not be easy to find a substitute. It is not certain that a Japanese firm in the same position would have acted so openly and aggressively.

Despite these sour notes, the green revolution is picking up speed in Japan. In response to voter complaints, lawsuits and international commitments, Tokyo is implementing tougher anti-pollution regulations and long-range plans. With yen signs in their eyes, Japanese companies are rushing green products and services to market, while at the same time burnishing their environmental credentials by supplying detailed information on their consumption of natural resources and production of waste products. The commitment of Japan's citizens, businesses and politicians to the green cause will be tested in coming years by the ambitious goals they have set to reduce the country's emissions of pollutants. All three groups will have to adopt new behaviors and attitudes to fulfill Japan's environmental pledges. They appear to have made a good start.

Jason Russell provided research assistance.

The views expressed in this report are those of the author
and do not necessarily represent those of the Japan Economic Institute

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Notes
aaa

1aa Keidanren, Kogai Boshi Rippon ni Kansuru Youbo (Requests on Pollution Control Laws) (Tokyo: 1956). Return to Text

2aa Environment Agency, Quality of the Environment in Japan 1992 (Tokyo: 1994), p. 175. Return to Text

3aa See Atsushi Yamakoshi, "Japan's Environment Policy: Regulations Versus Voluntary Initiatives," JEI Report No. 13A, April 7, 1995. Return to Text

4aa Natsuko Segawa, "Coming Appliance-Recycling Law Expected To Generate New Business Opportu-nities," The Nikkei Weekly, September 20, 1999, p. 21. Return to Text

5aa Maya Kaneko, "Green Energy Near Takeoff In Japan," The Japan Times, May 27, 2000, p. 3. Return to Text

6aa See Jon Choy, "The Kyoto Protocol And Japan's Energy Policies," JEI Report No. 10A, March 13, 1998. Return to Text

7aa Multilateral Negotiations of the Middle East Peace Process Environmental Working Group. Available at http://www.mofa.go.jp/region/middle_e/peaceprocess/ewg/bcc.pdf. Return to Text

8aa Masaaki Hisane, "Technical Assistance Planned To Combat Pollution In Iran," The Japan Times, March 8, 2000, p. 14. Return to Text

9aa "Court Orders Emissions Cut," The Japan Times, February 1, 2000, p. 1. Return to Text

10aa "Government Sends Mixed Signals After Dam Vote," The Japan Times, January 25, 2000, p. 1. Return to Text

11aa Tadahiro Mitsuhashi, "'Green Investors' Flocking To Eco-Funds," The Nikkei Weekly, February 7, 2000, p. 7. Return to Text

12aa Kaoru Matsushita, Takashi Koyama, "Ahead of the Curve," The Nikkei Weekly, January 31, 2000, p. 3. Return to Text

13aa Ibid. Return to Text

14aa International Organization for Standardization, "ISO 14000 and environmental management systems for busy managers." Available at http://www.iso.ch/9000e/14kbusy.htm. Return to Text

15aa Matsushita Electric Industrial Co., Ltd., Environ-mental Report 1998. Available at http://www.panasonic.co.jp/environment/98e/contente.htm. Return to Text

16aa Sony Corp., "Environmental Report 1999." Available at http://www.global.toyota.com/globaltoyota/corp_info/envrep/envrep99/index.html. Return to Text

17aa Toyota Motor Corp., "Environmental Report 1999." Available at http://www.world.sony.com/CorporateInfo/EnvironmentalReport/data-2.html. Return to Text

18aa "NEC Totals Up Carbon-Dioxide Account," The Nikkei Weekly, March 20, 2000, p. 9. Return to Text

19aa "Japan's Taste For Endangered Wildlife Leads Globe," The Japan Times, February 10, 2000, p. 3. Return to Text

The views expressed in this report are those of the author
and do not necessarily represent those of the Japan Economic Institute

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