Encouraging consumption of green products – Creating reliable standards and the right incentives

Zeroboard Research Institute Director Tomoo Machiba

The Japanese government is promoting the introduction of GX economic transition bonds and emissions trading schemes, citing the lagging decarbonization of the Industry sector as it strives for carbon neutrality by 2050. However, decarbonization technologies inevitably become costly until widespread adoption. Therefore, the Ministry of the Environment launched the "Study Group for Decarbonizing the Entire Value Chain by Creating Demand for Green Products" (chaired by Professor Yukari Takamura of the University of Tokyo's Future Initiatives Institute) in May 2025 with the goal of "creating a market in which consumers, businesses, and governments on the demand side understand the value and are likely to purchase and consume them, while companies on the supply side actively and continuously invest in May." Our advisor, Professor Norihiro Itsubo of Waseda University, and our CEO, Michitaka Tokeshi, are also participating in the discussions as committee members. It is said that the group is also considering mandating manufacturers to procure green products in the future * 1 .

What has emerged from the 4 discussions so far is the importance of creating a demand-side supported market in order to ensure sustainable upfront investment by Manufacturing. The key to reducing GHG Scope 3 emission amount is for each player in the value chain to make efforts to mitigate climate change, such as purchasing green products and Service that contribute to energy conservation and decarbonization. To make this possible, a system is needed in which the value of green products and Service is properly assessed using scientific methods such as carbon footprinting (CFP), and the products are recognized and encouraged to be purchased through effective appeals to their added value. * 2

While green procurement is intended for transactions between companies and local governments, it is us, the average consumer, who ultimately drive demand. While it is often said that environmental awareness and willingness to purchase green products are lower in Japan than in Europe, this does not necessarily seem to be the case. According to a survey of 5,000 people conducted by the Japan Climate Alliance ahead of the Tokyo Metropolitan Assembly and House of Councillors elections, 85.9% of respondents believe that climate change is adversely affecting their personal lives, with 72.3% of respondents saying they feel the negative impact has worsened over the past 2 to 3 years. While not a prominent election issue, 71.2% of respondents indicated that they were interested in "Energy, the environment, and climate change" when deciding which candidates to support. While this was lower than "economic and price-related measures" (84.0%), it ranked higher than foreign policy, national security, child-rearing, and measures to combat the declining birthrate (Figure 1) * 3) .

Figure 1: Topics of interest when deciding on candidate support <br />Source: Japan Climate Alliance survey * 4)

Additionally, according to Ichijo Komuten's "2025 Energy Conservation Survey" of approximately 1,000 people, 83.7% answered "yes" to the question, "If you were to build a detached house in the future, would you like to install a solar power generation system or storage batteries?" While 83.0% felt that the insulation performance of their current home was poor, only 17.6% had considered insulation renovations (Figure 2) * 5) . Reasons cited for this include high costs, a lack of support such as subsidies, or complexity, as well as a lack of information in general, but the huge gap between this level of knowledge and willingness and whether or not people actually put it into action is an insurmountable barrier to achieving sustainable consumption and lifestyles.

The Ministry of the Environment is also promoting methods that apply behavioral psychology, such as "nudges." * 6) While this is effective in changing behaviors such as turning off switches or carrying eco-bags, applying it to purchasing behavior is not easy. That being said, when you purchase or stock something for your organization, you probably spend a considerable amount of time and go through approval procedures, weighing price and quality before making a choice, right? On the other hand, when it comes to your own daily shopping, don't you spend time and pay little attention to labels, and make your decisions based solely on price and brand? Whether the item is large or small, the former ultimately uses the organization's money, while the latter ends up costing you money, yet we ignore choice. Human behavior is quite mysterious.

Figure 2: Do you feel that the insulation performance of your current home is poor? (n=963)
Source: Ichijo Komuten survey * 7)

A fundamental prerequisite for enabling consumers and purchasing managers to make green choices is the ability to objectively evaluate the greenness of a product or Service without any false or exaggerated claims or "washing." While CFP, which assesses the entire product lifecycle from raw material extraction to disposal, is finally gaining popularity in Japan, calculation results vary depending on factors such as the underlying boundary, data granularity, and source of Emission intensity, so comparability is currently only guaranteed between similar products from the same Company. Furthermore, while in Europe and the United States, trusted NGOs have established evaluation organizations and provided labels for organic farming, sustainable wood and seafood, fair trade, and other products, in Japan, NGOs lack the credibility and capacity to independently fulfill this role, Issue of who should ensure objectivity and comparability. * 8) Furthermore, the proliferation of labels may make choosing even more difficult. Personally, I believe it would be a good idea to have a system in place at electronics retailers and distributors where "green concierges" are appointed to provide third-party advice to consumers and purchasing managers.

The Ministry of the Environment's recent study group called for the establishment of a unified system for evaluating and labeling green products, so that consumers can better understand which products have high environmental value and Manufacturing can more easily understand the required standards. We look forward to future government action. In European countries, governments are taking direct steps to establish unified climate and environmental labels, rather than leaving it to the private sector. The Danish Ministry of Food, Agriculture, and Fisheries announced the introduction of climate labels for food and beverages in 2022 to reduce food-related emission amount , which account for approximately 3 % of GHG emission amount from personal consumption. A working group has been established to research and discuss label formats that will improve consumer understanding and behavioral change, and a database of emission amount data for each product is being built. * 9) While the system is taking longer than expected to establish, labels indicating the degree of climate change impact on a 5-point scale (A to E) are expected to appear in stores by the end of 2026 or early 27.* 10)

So far, I have discussed the importance of the demand side's role in promoting decarbonization and the complexity of human behavior surrounding consumption. However, market price signals are actually the most effective way to change consumer behavior. Opposition parties advocated for the abolition of the old temporary gasoline tax by the end of the year during the House of Councillors election as a way to combat rising prices. However, the National Institute for Environmental Studies estimates that if lower prices lead to increased vehicle mileage, domestic CO2 emission amount in 2030 will increase by approximately 6.1 million tons, equivalent to 1 % of total Energy-related emission amount that year. * 11) In response, the government has announced that it will begin considering the creation of a new tax to cover the approximately 1 trillion yen in reduced tax revenues by collecting funds from car users to fund the maintenance and repair of aging roads, water supply and sewerage systems, and other infrastructure. * 12) However, this would also create a sense of unfairness, as it would mean collecting funds from certain groups to fund infrastructure development, such as water and sewerage systems, which are beneficial to all residents.

Rather, the abolition of the old provisional tax rate should be filled by strengthening environmental taxes related to CO2 and other emissions from gasoline-powered vehicles, and this should be used as an opportunity to "green taxes." Also, if a consumption tax cut is to be touted, wouldn't it be possible to achieve both measures to combat rising prices and decarbonization by specifically reducing taxes on green products and Service(assuming that these are clearly defined)?

* 1 ) Yomiuri Shimbun, " Manufacturing to be required to Manufacturing 'green products' that reduce CO2 emissions as early as 25,"August 1, 2024 https://www.yomiuri.co.jp/economy/20240801-OYT1T50006　

* 2) Ministry of the Environment, "Interim Report (Draft) of the Study Group on Decarbonizing the Entire Value Chain by Creating Demand for Green Products, etc.", July 25, 2025 , https://www.env.go.jp/council/valuechain_decarbonization.html ;

* 3 ) Japan Climate Alliance, "Survey Results: 1 in 3 People Are 'Climate Voters'. Public Opinion Poll on Elections and Climate Change Conducted Ahead of the Tokyo Metropolitan Assembly and House of Councillors Elections," May 26, 2025, https://www.climatealliance.jp/post/elections_climatechange_polls2025　

* 4) Same as above

* 5) Ichijo Komuten, "Energy Saving Survey 2025,"March 3, 2025

 https://www.ichijo.co.jp/research/energy_saving/

* 6) Ministry of the Environment, "About the Japanese Nudge Unit (BEST)" https://www.env.go.jp/earth/ondanka/nudge.html ;

* 7) Same as * 5)

* 8) In Japan, the Eco Mark is managed by a public interest incorporated foundation, the Organic JAS mark by the Ministry of Agriculture, Forestry and Fisheries, and the sustainable wood and seafood labels FSC, PEFC, MSC, etc. are managed by NPOs or general incorporated associations that act as the Japanese branches of international organizations. In addition, there is Marine Eco-Label Japan (MEL), which was established by the Industry group, the Japan Fisheries Association.

* 9)Flora Southey, “Denmark 'first country in the world' to develop its own climate label for food”, Food Navigator Europe, 19 April 2022. http://www.foodnavigator.com/Article/2022/04/ 19/denmark-first-country-in-the-world-to-develop-its-own-climate-label-for-food ;

* 10) Based on an interview with Nis Christensen, Deputy Permanent Secretary at the Danish Ministry of Food, Agriculture and Fisheries.

* 11) Mainichi Shimbun, “Is the abolition of the provisional gasoline tax rate counterproductive to global warming countermeasures? The Ministry of the Environment requests an alternative tax system,”August 29, 2025, Yahoo! JAPAN News https://news.yahoo.co.jp/articles/91c9ba77217523ac6f5cad13ca5830e9080ae706　

* 12) Asahi Shimbun, "Government Considers New Tax Instead of Gasoline Tax Cuts, Proposal to Collect Tax from Car Users,"August 24, 2025 , https://digital.asahi.com/articles/AST8Q44VZT8QULFA00TM.html ;