High Awareness of ESG Taking Root in the Investment Corporation and Sumitomo Corporation Group
Sumitomo Corporation faces many different social issues as a general trading company. It is motivated to address these issues and has the responsibility for addressing them for the sustainable growth of society. The Investment Corporation will be proactively engaged in ESG initiatives as the Sumitomo Corporation Group is committed to ESG.
ESG Initiatives Related to Acquired Assets (SOSiLA Series)
The Investment Corporation focuses on acquiring SOSiLA seriesthat have been developed based on three themes: Sociability (ties to society), Sustainability (eco-friendliness and sustained growth) and individuality (consideration for people and working environments). The assets acquired (in the SOSiLA series) are designed in consideration of the surrounding environment and workers, and environmentally friendly activities are conducted there.
Introduction of Management Fee Structure Linked to Interests of Unitholders and Establishment of Rotation Rules
The Investment Corporation aims to meet the interests of both the unitholders and the Asset Management Company by introducing a management fee structure linked to NOI and EPU, among other profit indicators. The Asset Management Company has “rotation rules” under which the unit responsible for asset management for the Investment Corporation receives preferential treatment in obtaining information on logistics and industrial properties.
ESG Taking Root in Sumitomo Corporation Group
Sumitomo Corporation Group has specified “Six Material Issues for Achieving Sustainable Growth with Society (Material Issues),” which are the priority issues that it needs to address through business activities, using its strengths. The six issues are four social issues that the Sumitomo Corporation Group needs to address (“Achieving Harmony with the Global Environment,” “Contributing to the Development of Local Communities and Industries,” “Establishing a Foundation for Comfortable and Enriching Lifestyles” and “Providing Diverse Accessibility”) and two issues of the Sumitomo Corporation Group as an entity that supports initiatives for solving these social issues (“developing human resources and promoting diversity” and “enhancing governance”). These are regarded as the basis for the Sumitomo Corporation Group’s management of its business. The group’s business activities and initiatives based on this philosophy have been widely acclaimed, and Sumitomo Corporation has become a constituent of numerous ESG-related indexes and has been certified as an ESG-conscious company. p>
The Investment Corporation is the first J-REIT that has formulated a green finance framework since IPO. It aims to promote ESG-oriented asset management through green finance and to strengthen its financing base through the expansion of investors with an interest in ESG investment.
Green Finance Framework
The Investment Corporation has obtained Green 1 (F), the highest rank in the JCR Green Finance Framework Evaluation, from Japan Credit Rating Agency, Ltd. (JCR), which evaluates green finance, in relation to the adequacy of the Investment Corporation’s green finance framework. Please visit the website of JCR for further information.
◇Use of funds
The funds procured through green financing will be used for the acquisition of assets that meet certain criteria (qualified green assets) or renovations that meet certain criteria, or for the repayment of borrowings (including green loans) or the redemption of investment corporation bonds (including green bonds) for the abovementioned purposes.
|Qualified green assets||Properties that have obtained or are expected to obtain any of the following certifications:
CASBEE: S, A or B+
DBJ Green Building Certification: 5 stars, 4 stars or 3 stars
BELS: 5 stars, 4 stars or 3 stars
LEED: Platinum, Gold or Silver
|Renovations||Renovations that meet either of the following criteria:
i. Renovations whose purpose is improving the environmental impact, including reducing the consumption or emissions of CO2, energy, water, etc. (renovations that are expected to reduce consumption or emissions by 10% or more)
ii. Renovations leading to meeting the criteria for qualified green assets and the acquisition or re-acquisition of an environmental certification, or going up a notch
|Energy-saving equipment||Replacement of air-conditioning equipment, LED lighting, introduction of power storage systems (which are expected to reduce energy consumption by 10%)|
|Renewable energy||Acquisition or installation of renewable energy power generation facilities (the facilities need to be installed on the site of a property or in the room of a building owned by the Investment Corporation)|
The Investment Corporation sets the upper limit of green financing (qualified green liabilities) at the sum of the acquisition prices of assets owned by the Investment Corporation that meet the qualification criteria and expenses for renovations, etc. that meet the qualification criteria, and controls green financing so that the total funds procured through green financing will not exceed the qualified green liabilities. If there are any funds procured through green financing that are not appropriated, the funds will be accounted for as cash or cash equivalents until they are appropriated for other projects that meet the qualification criteria.
As of December 10, 2019
|Assets owned by the Investment Corporation
|Qualified green assets
|Qualified green liabilities
◇Appropriation of funds
As of December 10, 2019
|Green loan (Million yen)||Loan date/issue date||Repayment date/redemption date||Appropriation of green financing (million yen)||Amount of green financing that is not appropriated (million yen)|
|2,100||Dec. 10, 2019||Dec. 10, 2020||2,100||0|
|8,000||Dec. 10, 2019||Dec. 10, 2023||8,000||0|
|9,100||Dec. 10, 2019||Dec. 10, 2025||9,100||0|
|6,800||Dec. 10, 2019||Dec. 10, 2027||6,800||0|
|3,500||Dec. 10, 2019||Dec. 10, 2029||3,500||0|
◇Status of qualified green assets
|Property||Type of certification||Certification level|
|SOSiLA Yokohama Kohoku (co-ownership ratio: 80%)||CASBEE New construction||Rank A ★★★★|
|SOSiLA Sagamihara||CASBEE New construction||Rank A ★★★★|
|SOSiLA Kasukabe||CASBEE New construction||Rank A ★★★★|
|SOSiLA Nishiyodogawa I||CASBEE New construction||Rank B+ ★★★|