Environmental Obligations for Japanese Businesses

Published on October 31, 2025 and written by Cyril Jarnias

In Japan, environmental obligations for businesses have taken on a prominent role in recent years, transforming the commercial landscape while redefining corporate responsibilities toward society. Faced with challenges related to climate change and biodiversity degradation, Japanese companies must now adapt to an increasingly rigorous regulatory framework dictated by national and international laws. The integration of sustainable practices has become not only a regulatory necessity but also a strategic lever to stand out in an evolving global market.

As the Japanese government intensifies its efforts to achieve carbon neutrality by 2050, companies are encouraged to adopt green innovations and responsible strategies, ensuring long-term viability while meeting growing consumer and investor expectations.

Understanding Environmental Regulations in Japan

Environmental regulations in Japan are built upon numerous laws and policies aimed at achieving a sustainable society while addressing national and international challenges. The following details Japan’s main environmental regulations and their impact.

Key Environmental Laws and Regulations

Japan has over 40 major environmental laws, each implementing specific measures in particular areas. Here are some representative examples:

• Act on Promotion of Global Warming Countermeasures: Establishes greenhouse gas emission reduction targets and reporting obligations for companies, promoting actions against climate change.
• Waste Management and Public Cleansing Act: Specifies proper management and treatment methods for industrial and household waste.
• Air Pollution Control Act: Measures for preserving air quality, including setting emission standards and monitoring air pollution status.
• Water Pollution Prevention Act: Measures to prevent pollution of public and groundwater by factory effluents.
• Act on Promotion of Effective Utilization of Resources: Recycling policies for various materials such as plastics and home appliances.

Beyond these, specific and strict laws are in effect in many other areas such as soil pollution countermeasures, mercury use restrictions, and chemical substance management.

Role of the Ministry of the Environment

The “Ministry of the Environment” plays a leading role within the Japanese government, developing and implementing policies across a wide range of areas from pollution prevention to nature protection. This ministry also emphasizes collaboration with local governments and ensures flexibility based on regional characteristics, in addition to “uniform national standards.”

Furthermore, it cooperates with other ministries such as the Ministry of Economy, Trade and Industry and the Ministry of Agriculture, Forestry and Fisheries on climate change issues.

Relationship with International Agreements

Japan actively participates in international frameworks such as the “Paris Agreement” and the “Montreal Protocol,” which strongly influence the formation of national policies. For example:

1. Under the Paris Agreement, Japan has set the goal of achieving carbon neutrality by 2050, and concrete policies such as promoting renewable energy and strengthening energy efficiency standards are being developed.
2. The obligation to reduce CFCs under the Montreal Protocol has been implemented in Japan through the CFC recovery and destruction system.

Impact on Businesses

These regulations have a direct impact on corporate activities:

1. Carbon Emission Management: Introduction of mandatory detailed reporting at the facility level, with trials implementing carbon pricing mechanisms in some regions.
2. Waste and Resource Management: Severe penalties for improper disposal. Increased use of subsidies to support achieving a circular society.
3. Increased Burden of Water and Air Management Standards: Often requiring improvements in industrial equipment investments.

Examples of Important Recently Implemented Measures

Notable recent developments include:

1. Adoption of a resolution expanding support frameworks for disseminating new technologies, including revising the 2025 decarbonization roadmap (e.g., research on CO2 adsorption materials).
2. Enforcement of a new comprehensive treaty on plastic regulation in 2024, with a proposed support system for biological replacement for small businesses underway.

ISO Standards: A Guide for Japanese Businesses

ISO standards are “global common standards” established by the International Organization for Standardization (ISO), and they apply to products, services, and management systems. This unifies different national standards and provides a framework to facilitate trade and business activities. In the environmental field, ISO 14001 is particularly representative, serving as a guide for companies to reduce environmental risks while operating sustainably.

Importance of ISO Certification for Japanese Businesses

In Japan, efforts to address environmental issues have been strengthened by legal regulations in recent years. Obtaining certification such as ISO 14001 is extremely effective for companies operating both inside and outside Japan to demonstrate their environmental responsibility. This certification offers the following benefits:

• Compliance: Ensuring adherence to laws and standards required by business partners.
• Enhanced International Competitiveness: Building trust when entering foreign markets.
• Risk Management: Early response to potential environmental risks.

Specific Benefits of Implementing ISO 14001

1. Resource Optimization
   ISO 14001 recommends efficiency improvement measures such as reducing energy consumption and improving waste management. For example, in Japan, some manufacturers have adopted measures to reduce energy loss, leading to significant cost reductions.
2. Improved Public Image
   Environmentally conscious management results in positive societal evaluation and helps acquire new customer bases. It is also often used in connection with CSR activities.
3. Reduced Ecological Impact
   Setting and implementing concrete goals such as reducing carbon dioxide emissions directly contributes to combating global warming. Such initiatives are sometimes highly appreciated by authorities.

Challenges and Solutions During Adoption

Japanese companies, particularly small and medium-sized enterprises, face the following challenges:

1. Burden of Adoption Costs
   – Solution: Use public subsidies or consider group purchasing schemes.
2. Insufficient Internal Infrastructure
   – Solution: Seek support from specialized consultants and develop a gradual adoption plan.
3. Insufficient Understanding of Standards
   – Solution: Organize employee training and distribute simplified guides.

It is essential for Japanese companies to adopt flexible methods suited to their situation and develop their planning capacity. This entire process is key to strengthening competitiveness.

Eco-Responsibility: A Key Goal for Businesses in Japan

Main Strategies and Initiatives

Japanese companies integrate ecological responsibility into their business models by adopting the following strategies and initiatives.

• Promotion of Circular Economy: The Japanese government has formulated a resource-independent growth-oriented economic strategy, creating new business models through establishing resource circulation markets, extending product lifespans, and promoting reuse. This aims to minimize natural resource consumption while maximizing added value.
• Collaboration Between Public, Private, and Academic Sectors: Transitioning to a circular economy cannot be achieved by individual companies alone; various stakeholders such as the government, local communities, universities, and industry associations collaborate to build CE (circular economy) information platforms and regional circulation models.
• ESG Investment and Sustainability Reporting: Many companies adopt decarbonization targets and make sustainability information disclosure mandatory in response to ESG (environmental, social, governance) criteria. These actions also help strengthen dialogue with investors.

Related Regulations

In Japan, several strict environmental regulations exist, including:

• Act on Promotion of Global Warming Countermeasures: obligation to submit greenhouse gas emission reduction plans.
• Waste Management Act and Recycling Laws: laws on container and packaging recycling, automobile recycling law, etc.
• Energy Conservation Laws: Building Energy Conservation Act, support system for introducing energy-efficient equipment, etc.

These laws form the framework enabling Japanese companies to pursue both sustainability and profitability.

Technological Innovation and Circular Economy

Technological innovation is essential for transitioning to a circular economy. For example, developing new materials and managing product life cycles through IoT technologies, as well as better waste prediction using AI. Additionally, the PaaS (Product as a Service) model, shifting from product to service, is also being promoted, creating new market opportunities.

Success Cases

1. Japan Food Ecology Center Co., Ltd:
   – By producing animal feed from food surplus as a solution to food waste problems and supplying it to pig farmers, this approach has reduced dependency on imports and increased food self-sufficiency rates.
2. Adastria Co., Ltd:
   – Through a clothing waste reduction project, by improving inventory management and developing the FROMSTOCK upcycling brand from black dyes, they achieved zero incineration of remaining inventory.

Challenges and Overcoming Methods

Challenges include the heavy burden of initial investments, difficulty maintaining market competitiveness, and lack of consumer recognition. However, many companies overcome these challenges by:

1. Using government support systems: benefiting from subsidies and policy incentives.
2. Educating consumers: promoting transparent CSR reporting and communication.
3. Meeting investor expectations: gaining financial trust through compliance with ESG evaluation criteria.

These integrated efforts are key to achieving green growth across Japan.

How Japanese Companies Adopt Environmental Obligations

Main Environmental Obligations Japanese Companies Must Comply With

Japanese companies must comply with various environmental regulations such as greenhouse gas reduction, waste management, and energy efficiency improvement, which significantly influence their business policies and practices.

• Greenhouse Gas Emission Reduction:
  – The Act on Promotion of Global Warming Countermeasures requires major emitters to report their CO2 emissions and formulate and implement reduction plans.
  – Under the GX Promotion Act, starting fiscal year 2026, companies emitting over 100,000 tons of CO2 annually will be subject to the emission trading system, requiring operations within set limits.
• Waste Management:
  – The Waste Management and Public Cleansing Act imposes strict regulations against illegal dumping and stipulates proper delegation (manifest system). Additionally, large waste generators are required to submit industrial waste treatment plans and report implementation progress.
• Energy Efficiency Improvement:
  – Under the Energy Conservation Act, specific companies consuming over 1,500 kL of energy must annually commit to medium- and long-term reduction targets and submit detailed reports. Equipment renewal and transition to non-fossil fuels are also encouraged as energy-saving measures.

Impact of These Obligations on Japanese Companies

1. Impact on Policies and Strategies
   – In response to regulations, many companies adopt sustainability policies and strengthen decarbonization processes throughout the supply chain by introducing energy-efficient technologies.
   – To attract ESG investors, they often voluntarily comply with higher national and international standards, such as implementing ISO14001 certified environmental management systems.
2. Cost and Competitiveness
   – Although introducing renewable energy equipment involves high initial investment costs, in the medium to long term, it reduces operating costs and enhances brand value. For example, Toyota Motor Corporation has implemented innovative strategies such as reducing waste through hydrogen use.

Concrete Examples: Advanced Initiatives

1. Asahi Kasei Corporation
   – In addition to using renewable energy, it focuses on developing new technologies such as bio-chemistry aiming for net zero GHG by 2050, while integrating this into product sales expansion.
2. Ricoh
   – After becoming the first Japanese member of RE100, Ricoh actively implements renewable energy transition policies, including adopting the PPA model for its factories in China.
3. Aeon
   – The company aims to convert 50% of domestic store energy to renewable sources by 2030, including installing solar panels on store rooftops.

Challenges and Solutions

• Challenges:
  1. High burden of initial investments
  2. Difficulty keeping pace with technological innovations
  3. Lack of coordination across the supply chain
• Solutions:
  a) Maximizing use of subsidies and tax incentives (provided by the government)
  b) Data visualization tools (EMS, Scope3 calculations)
  c) Employee awareness campaigns