Utilising Japan’s forest resources

The concept of the circular economy has increased in importance as investors face the task of simultaneously solving environmental issues and creating economic added value. The Japanese society has a particularly high affinity with the concept, writes Nikko Asset Management. The concept embodies a variety of perspectives, among them the promotion of the “wood cycle”.

“Forest resources can be used to cut overall CO2 emissions and reduce construction waste. Forests in Japan differ in characteristics from those found in the rest of the world, and each presents different challenges to the utilisation of forest resources,” wrote Shigeru Aoyagi, Chief Portfolio Manager at Nikko AM in a recent insight. While globally, deforestation is a challenge, in Japan ageing forests are the issue.

This means that old trees present a valuable environmental asset, but at the same time, their CO2-absorbing capacity continues to diminish, according to Aoyagi. “To turn this situation around, it will be important to harvest and utilise mature trees which have already absorbed enough CO2 and allow for rejuvenation through reforestation all the while protecting the ecosystem. Seen from a different viewpoint, Japan boasts a wealth of forest resources unseen anywhere else that can store CO2.”

Read the full insight at emea.nikkoam.com.