rising again,
the chrysanthemums faint
after the rains
– Matsuo Basho
Living in one of the most disaster-prone countries on the planet, the people of Japan know all too well the importance of being prepared. With each incident – be it typhoon, flood, fire, or earthquake – they have honed what is today widely regarded as one of the world’s best disaster management systems.

Following the “triple disaster” at Fukushima in 2011, Japan’s earthquake and tsunami early warning systems alerted civilians to action and likely saved many lives. Charitable donations in the region reached $6 billion, or more than half the total annual giving in 2010. Hundreds of thousands of people who were forced to flee their homes were relocated. While the government’s response was less than stellar, it later issued a report on the mistakes made in the management and governance of the Fukushima Power Plant, the first time it has publicly acknowledged failure in the hopes that such oversights will not be repeated.

And, for the first time, we are seeing the emergence of social innovators keen to help Japan revitalize the regions affected by the Earthquake such as the Tohoku area. A growing number of Japanese are beginning to see the potential for social entrepreneurship as a means to “bounce forward”. Though this space is still quite nascent and uncoordinated in Japan, according to a July 2014 report by the Japan National Advisory Board, key actors such as the Mitsubishi Corporation, the Nippon Foundation, and the Japan Research Institute are stimulating its growth.

The leading impact investment funds have similar focuses on the themes of education, job creation, industry recovery and community development. For example, the MCDRF is working with Koriyama city authorities in Fukushima on a project that supports local fruit farmers and trains them in grape-growing and wine production. A Tokyo-based social entrepreneurship group called ETIC also stepped in to add an “entrepreneurial recovery effort” – a fellowship for young business leaders to move to the recovering region for 3 to 12 months to work with local social enterprise organizations focused on rebuilding damaged areas.

Efforts like these not only go a long way toward rebuilding, but building back better. Before the earthquake, the region had already faced a brain drain of young people to the big cities. Now, with more interest generated around social entrepreneurship, locals in the area are returning to their hometowns, finding new opportunities and looking to play a part in the rebuilding process.

Here, we can clearly see the role of impact investments, which are directed at the rejuvenation of local communities, in building resilience and achieving long-term recovery in post-disaster Japan. Even after the Great Hanshin Earthquake of 1995 in Kobe, despite the successes in the physical reconstruction of the city, the recovery of the local economy was a much slower process. Post-2011, there appears to be a more holistic approach towards resilience and recovery. As pointed out by Nanoko Kudo from the Nippon Foundation, “Self-reliance is the key factor for long term reconstruction in the disaster-affected areas” – and impact investments are playing a key role in this.

There is still much work to do for impact investing to reach its potential. Impact investing is a relatively new concept in Japan, but the interest generated around it thus far, especially in Tohoku, could drive the growth of the industry. Tamako Watanabe, a researcher at the Japan Research Institute, believes that many corporations want to get involved – they just need to learn how to do it. “Many companies and investors still do not understand what makes impact investing different from traditional investing,” she said in an interview. “We need to educate these actors to understand concepts such as ‘impact’ and the risks involved.”

With other entities such as the Japan International Cooperation Agency (JICA) and the Japan National Advisory Board coming on board and coordinating impact investment initiatives, there is great optimism around the outlook for the industry. Disaster-relief and reconstruction efforts might have provided the impetus for most of the impact investment capital in the past few years, but the hope is for these enterprises to achieve sustainable impact and scale beyond Tohoku to the rest of Japan. This will make Japanese communities even more resilient in the face of challenges and crises, and help them rise again, like the chrysanthemums after the rains.

Nadine Fattaleh, Research & Assessment, Shujog
Manny Fassihi,Research & Assessment, Shujog
Shang Hui Chia,Research and Programs, Shujog