1. Purpose and Background

On February 4, 2025, Japan's Ministry of the Environment released its "Carbon Footprints Indication Guide (this "Guide")¹. The expression "Carbon Footprints of Products" ("CFP") refers to the amount of greenhouse gases ("GHG") emitted throughout the entire life cycle of a product or service, from the procurement of the raw materials for the product or service to its disposal and recycling, converted into CO2 emissions and indicated on the product or on the system that dispenses it.

The purpose of this Guide is to encourage companies to indicate the CFP in a realistic and appropriate manner and to lead to changes in consumer behavior. The background to this is the lack of globally unified guidelines for the indication of CFPs, an insufficient understanding of CFPs among consumers, and a growing criticism of greenwashing, especially in Europe². Additionally, it is important for companies to note and to indicate the GHG emissions from individual products in order to understand the GHG emissions of the entire supply chain.

This Guide does not specify the obligation to indicate CFP.

¹ https://www.env.go.jp/press/press_04288.html (In Japanese)

² In this article, "Greenwashing" means "making it appear as if a given measure has a positive environmental effect (such as GHG emission reductions) even though there is no positive environmental impact."

2. Overview of this Guide

In this Guide, the basic principles of CFP indications are as follows:

• Reliability and Credibility
  Companies must provide credible information through reliable calculation methods. In doing so, they must maintain technical reliability while paying attention to adaptability, practicality, and cost-effectiveness.
• Life Cycle
  All stages of the life cycle of products and services must be considered.
• Comparability
  Companies must enable users to make comparisons possible between products and services with the same functions or with declared declaration units within the same products or service groups in the future.
• Transparency
  Companies must ensure that it is possible to confirm how the CFP was calculated through quantitative information and explanatory documents.
• Territoriality
  Companies must make the user aware that there is a possibility that the CFP value may change depending on the location where the product is used or disposed of.

This Guide also indicates that the unit used in CFP indications should be "kg-CO2e" whenever possible, enumerates the items that should be indicated in conjunction with the results of CFP, and gives examples of indication media such as the product itself.

As basic approaches to formulating indications, this Guide points out that there should be no misunderstandings, accurate information should be stated, targets should be clarified and, if changes are made, recalculations and updates should be carried out. In addition, the need to ensure access to data for numerical verification and the precautions to be taken when indicating comparative indications of CFPs are also mentioned in this Guide.

3. Future Challenges

We understand that there is an active trend to strengthen greenwashing regulations in Europe while such trend is subject to anti-ESG movement in the US. In Japan, although climate change related regulations (e.g., a legislation for a cap & trade emission trading scheme) are being developed, there are no greenwashing regulations so far. As such, this Guide is expected to function as de-fact greenwashing regulations in Japan.

Future discussions regarding CFPs are necessary to consider global regulations and to ensure that they do not interfere with the interests of the companies and consumers impacted by CFP indications. It is expected that a framework that rewards companies that have made efforts to reduce GHG emissions in the supply chain by accurately indicating the CFP of their products or services will be established, thereby accelerating their efforts to reduce GHG emissions.