Sustainability Finance Green Finance
Green Finance
SHR has identified “Investing in Real Estate with Excellent Environmental Performance” as a materiality issue, and is working to obtain green certification, which evaluates the environmental performance of properties we own, as a solution to identified issue.
In addition, we recognize that it is necessary to build a strong financial base to continue investing in real estate with excellent environmental performance, and we are promoting financing through green finance based on the idea that expanding the sources of financing through green finance will contribute to solving the materiality issue.
Green Finance Framework
SHR has formulated the Green Finance Framework as follows to implement green finance that conforms to the Green Bond Principles and other various principles and guidelines.
1.Use of funds
The funds procured through green finance are scheduled to be allotted to funds for the acquisition of existing or new assets which satisfy the following eligibility criteria (“Eligible Green Projects”), funds for the refinancing of borrowings required for the acquisition of Eligible Green Projects or funds for the redemption of outstanding investment corporation bonds required for the acquisition of Eligible Green Projects.
2.Eligibility criteria
At the borrowing or payment date of green finance, assets that have acquired or are scheduled to acquire any of the following evaluations in third-party certifications, shall be designated as Eligible Green Projects.
a. DBJ Green Building Certification: 3 Stars, 4 Stars, 5 Stars
b. Certification for CASBEE for Real Estate: B+ Rank, A Rank, S Rank
c. 3, 4 or 5 stars under the Building Energy-efficiency Labeling System (BELS) (FY2016 standard)
ⅰ. Residential without renewable energy facilities: Level 3 or 4*1
ⅱ. Residential with renewable energy facilities: Level 3, 4, 5 or 6*1
ⅲ. Non-residential: Level 4, 5 or 6*2
*1:For residential buildings, existing buildings constructed before 2016 qualify if they are at least Level 2, whether or not they have renewable energy systems.
*2:For non-residential buildings, existing buildings constructed before 2016 qualify if they are at least Level 3 and are not existing nonconforming buildings (factories, etc. including logistics facilities: BEI = over 0.75).
d. Following evaluation of ZEH, ZEB in BELS
ⅱ. ZEB Oriented, ZEB Ready, Nearly ZEB or ZEB
e. Silver, Gold or Platinum Rank under the LEED (v4.0 and later under BD+C, O+M or ND)
3.Evaluation and selection process of Eligible Green Projects
Eligible Green Projects will be evaluated and selected by the Sustainability Committee, which is chaired by the president & chief executive officer of Sekisui House Asset Management, Ltd., and participated by all Senior Executive Directors and all heads of departments of SHA, in accordance with its management policy(or business growth strategy), the Sustainability Policy and eligibility criteria.
4.Management of procured funds
SHR intends to allot the funds procured through green finance towards Eligible Green Projects. As long as the green finance balance exists, SHR will manage to ensure that the green finance balance does not exceed the Eligible Green Liability (Note).
In addition, SHR will report that the total amount of funds procured through green finance has been fully allocated to Eligible Green Projects and as long as the green finance balance exists, the allocated funds will be tracked and managed internally on a portfolio basis.
In the event that all or part of the funds procured through green finance are not immediately allocated to Eligible Green Projects, SHR will identify unappropriated funds and manage all or part of the funds raised in cash or cash equivalents until the unappropriated funds are allocated to Eligible Green Projects.
(Note)Eligible Green Liability is calculated by multiplying total acquisition price of Eligible Green Projects by LTV (total asset basis) as of the end of the latest fiscal period. The same applies hereinafter.
5.Reporting
a. Reporting related to the status of allocation of funds
SHR will disclose that the funds procured through green finance has been fully allocated to Eligible Green Projects according to the Framework and the green finance balance does not exceed the Eligible Green Liability via SHR’s website. As long as the green finance balance exists, SHR will report the amount of Eligible Green Liability and the green finance balance as of the end of December every year.
b. Impact reporting
As long as the green financing balance exists, SHR will disclose following environment-related indicators, etc., as of the end of December every year via SHR’s website.
ⅰ. The number of Eligible Green Projects and acquired evaluations in third-party certifications
ⅱ. Total floor area of Eligible Green Projects
ⅲ. Eligible Green Liability(total amount of Eligible Green Project as of the end of December × Total Asset LTV as of the end of October)
ⅳ. The following quantitative indicators for Eligible Green Projects (Note)
(ⅰ) Energy consumption
(ⅱ) CO₂ emissions
(ⅲ) Water consumption
(Note)Only the parts of properties for which SHR has the energy management authority.
Third-party evaluation
SHR acquired “Green 1(F)”, the highest rating in “Green Finance Framework Evaluation” from Japan Credit Rating Agency, Ltd. (JCR) as a third-party evaluation of the Framework.
Click here for details of the “Green Finance Framework Evaluation”.