How Can Companies Commercialize the Japanese Energy Transition?

Last week, SMBC and Jefferies co-hosted a forum for senior executives from leading Japanese corporations and investment firms. The event built on Jefferies’ Sustainability and Transition team’s longstanding collaboration with Japanese leaders to unlock opportunities in the country’s climate investing and decarbonization journey.

SMBC and Jefferies explored how Japanese companies can best monetize the energy transition and Green Transformation (GX) Plan, a $1 trillion effort to reduce emissions over the next decade. The event’s themes — pragmatism, value creation, and collaboration — anchored discussion of best practices across Europe, the United States, and China.

Below are key takeaways from the event, each paired with guidance for companies.

1. The View from Asset Allocators

Key Takeaway: Asset owners are now integrating the transition across strategies, not limiting it to dedicated products.

Advice for companies:

• Clearly communicate the link between your transition plans and national policy frameworks.
• Treat regulatory and investor collaboration as part of your strategy.
• Align transition goals with your core competencies.
• Focus your investments on specific segments of the transition.

2. Lessons from Portfolio Managers

Key Takeaway: Investors only support transition initiatives that expand enterprise value by strengthening moats, driving growth, improving profitability, or creating strategic optionality.

Advice for companies:

• Lead with value creation, not disclosures.
• Invest in regions that have low levels of policy uncertainty.

3. Navigating Governance & Investor Activism

Key Takeaway: Governance is foundational. Credible boards, long-term planning, and active debate are key to success.

Advice for companies:

• Add directors with technical and sector expertise.
• Tie incentives to long-term strategic goals for the transition.
• Engage foreign investors early with a clear, credible narrative.
• Narrow priorities to areas of focus and strength.
• Ensure robust internal debate before setting transition strategy.

4. US, European & Chinese Companies

Key Takeaway: Innovation that drives energy cost deflation is the unlock. Energy security and transition goals need to be managed together.

Advice for companies:

• Balance decarbonization with competitiveness and energy security.
• Prioritize innovation and drive down costs of new technologies.
• Compete where you have structural advantages (e.g., nuclear).

5. Insights from Japanese Companies

Key Takeaway: Domestic and international collaboration is essential for scaling transition technologies.

Advice for companies:

• Pursue joint ventures and side-car structures.
• Avoid hype cycles; maintain long-term orientation.
• Tailor strategies for Asian markets and demand patterns.

6. Capital Formation, Fundraising and M&A

Key Takeaway: Capital markets for the transition remain active, supported by load growth and energy security priorities.

Advice for companies:

• The missing middle is not capital, but clarity on risk allocation and de-risking.
• Build solutions that reduce execution risk and improve unit economics.
• Engage capital partners early and structure for scale and bankability.

Japan’s GX spans all areas of climate finance: carbon levies, emissions trading, transition bonds, and more. And given that it represents nearly three times the annual GDP investment percentage of the U.S. Inflation Reduction Act (relative to the sizes of their economies), it is sure to be one of the defining climate investment themes of the next decade.

For Japanese and global companies alike, that scale of opportunity comes with meaningful strategic considerations. The insights from Japanese executives and climate investors here offer a practical guide for navigating this moment in the global transition.

Follow along for more insights from Jefferies’ Sustainability and Transition Team on the Japan GX Plan and other important climate investing themes in the weeks ahead.