Rakuten Securities
楽天証券Brokerage (NISA/iDeCo) · Rakuten Securities
- Fees
- Varies
- English
- Partial
A leading low-cost brokerage for NISA and index-fund investing, integrated with Rakuten points and Rakuten Bank.
ESG investing in Japan
ESG definitions, screening and scoring, benchmark differences, greenwashing, fees, and how to compare ESG funds.
Direct answers
ESG funds screen or weight holdings on environmental, social, and governance criteria, which changes portfolio exposures rather than removing market risk; watch for greenwashing, higher fees, and concentration, and compare the actual methodology and benchmark deviation.
Key points
- ESG = environmental, social, governance criteria applied via exclusions or scoring.
- ESG screens change what you own, creating factor and sector tilts vs a broad index.
- Greenwashing risk: labels can overstate how "green" a fund actually is.
- ESG funds often charge higher fees than a plain broad index fund.
- Compare the actual exclusions, scoring model, benchmark deviation, and cost — not the label.
What ESG means in practice
ESG investing applies environmental, social, and governance criteria to portfolio construction — either by excluding certain industries (exclusionary screening) or by tilting toward higher-scoring companies (best-in-class scoring). Different providers use different data, scores, and benchmarks, so two "ESG" funds can hold quite different portfolios.
The key point is that ESG changes your exposures rather than reducing market risk. An ESG fund is still an equity fund that can fall in a downturn; the screens simply alter which companies and sectors you own relative to a plain broad index.
Greenwashing, fees, and comparison
Two cautions dominate. First, greenwashing: a green-sounding name or marketing does not guarantee the fund is meaningfully different from a conventional index. Read the actual methodology — what is excluded, how companies are scored, and how far the resulting portfolio deviates from a standard benchmark. Second, cost: ESG funds often charge more than a plain broad index fund, and that fee compounds against you.
To compare ESG funds, look past the label at concrete features: the exclusion list, the scoring model, benchmark deviation and tracking, sector and factor concentration, and total cost. If the portfolio barely differs from a cheap broad index but costs more, the ESG premium may buy little. If it differs a lot, understand the unintended bets — an ESG screen can create sizeable sector and factor tilts.
Who this is for
- Investors wanting values-aligned holdings
- People comparing ESG vs plain index funds
What this is not
- Anyone expecting ESG to reduce market risk
- Readers wanting specific ESG picks
Important cautions
- ESG does not lower market risk and can add concentration; verify methodology and cost, not the label.
Related products & services
SBI Securities
SBI証券Brokerage (NISA/iDeCo) · SBI Securities
- Fees
- Varies
- English
- Partial
Japan’s largest online brokerage by accounts, with a very broad low-cost fund lineup and full NISA/iDeCo support.
Monex Securities
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- Varies
- English
- Partial
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Frequently asked questions
What should a beginner invest in inside NISA?
This is education, not a recommendation. Most beginners research low-cost, broadly diversified index funds — for example all-country (全世界株式) or S&P 500 trackers — rather than picking individual stocks, because low fees and diversification are within your control while returns are not. Understand that values fall as well as rise, match the risk to your time horizon, and never invest money you may need soon.