What is Green Financing?
At ITOCHU Advance Logistics Corporation (“IAL”), green financing refers to financing (i.e., issuance of bonds (green bonds) and/or procurement of loans (green loans)) for which use of proceeds is limited to environmentally-conscious projects.
IAL intends to use the proceeds from green financing for implementing sustainability-promoting initiatives in line with its “Basic Sustainability Policy”, and intends to proactively recognize required level of environmental, social, and governance (ESG) practices through a dialogue with investors and apply such knowledge to its asset management strategy.
Green Financing Framework
In order to ensure that the proceeds are used solely for projects with positive environmental impact, IAL has established the following green financing framework ( “Framework”) and procures and manages the proceeds in accordance with such Framework.
In order to make sure that the Framework is in compliance with the “Green Bond Principle 2018” established by the International Capital Market Association (ICMA), the “Green Bond Guideline 2017” established by the Ministry of the Environment of Japan, and the “Green Loan Principles” established by the Loan Market Association (LMA) and the Asia Pacific Loan Market Association (APLMA), IAL had the Framework evaluated by a third-party institution, the Japan Credit Rating Agency, Ltd. (“JCR”) and received the highest “Green 1 (F)” status in the “JCR Green Finance Framework Evaluation” (please see attachment below):
◆Use of proceeds
The proceeds from green financing are applied in its entirety to any one or combination of the following:
- Costs of acquisition of green eligible assets (Note);
- Repayment of loans borrowed for acquisition of green eligible assets; and
- Redemption of investment corporation bonds issued for acquisition of green eligible assets
- For details of green eligible assets, please refer to the “eligibility criteria” below.
The green eligible assets are selected from assets for which IAL has obtained or plans to obtain one or more of the following third-party certifications:
- (i) 5 or 4 stars of the DBJ Green Building Certification;
- (ii) S or A rank of CASBEE (Comprehensive Assessment System for Built Environmental Efficiency) (Note 5); and
- (iii) 5 or 4 stars of BELS (Building-Housing Energy-efficiency Labelling System) (Note 6)
◆Management of proceeds
IAL manages the proceeds from green financing so that the outstanding proceed amount will not exceed the amount of green eligible liabilities. (Note)
- The amount of green eligible liabilities is calculated by taking (i) the total amount of green eligible assets and multiplying the same by (ii) loan to value (LTV) ratio of IAL as of the end of the immediately preceding fiscal period.
1. Reporting on status of use of proceeds
IAL discloses the status of use of the proceeds from green financing on its website and update the status on an annual basis so long as any of the proceeds are outstanding.
2. Reporting on outstanding amount of proceeds from green financing
IAL reports, on an annual basis, the total value of green assets, the amount of green eligible liabilities, and outstanding amount of the proceeds from green financing as of the end of January each year, so long as any of the proceeds are outstanding.
|Property Name||Acquisition price
|DBJ Green Building Certification||CASBEE||BELS|
|L-2 i Missions Park Kashiwa||6,140||★★★★||－||－|
|L-3 i Missions Park Noda||12,600||★★★★||－||－|
|L-4 i Missions Park Moriya||3,200||★★★★||－||★★★★★|
|L-5 i Missions Park Misato||6,100||★★★★||－||★★★★|
|L-6 i Missions Park Chiba-Kita||2,600||－||－||★★★★★|
|L-7 i Missions Park Inzai||27,810||★★★★★||－||★★★★★|
|Total amount of green eligible assets
(based on acquisition price)
|Total amount of portfolio properties
(based on acquisition price)
|Ratio of green eligible assets||69.5%||－||－||－|
|Total amount of green eligible assets||58,450 million yen|
|LTV (total assets basis) (As of January 2020)||38.8%|
|Amount of green eligible liabilities
((i) Total amount of green eligible assets, multiplied by (ii) total assets LTV）
|22,678 million yen|
|Total outstanding proceeds from green financing||5,500 million yen|
|- Proceeds from green bonds||1,500 million yen|
|- Proceeds from green loans||4,000 million yen|
|Issuance date||Redemption date||Use of proceeds|
|IAL 1st Unsecured Investment Corporation Bonds
(IAL Green Bonds)
|1,500||0.300%||December 12, 2019||December 12, 2024||Repayment of (post-refinance) loans procured at the time of acquisition of i Missions Park Inzai|
|Borrowing date||Repayment date||Use of proceeds|
|Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
Mizuho Bank, Ltd.
MUFG Bank, Ltd.
Mizuho Trust & Banking Co., Ltd.
The Norinchukin Bank
Shinsei Bank, Limited
|March 31, 2020||March 31, 2028||Costs of acquisition of i Missions Park Inzai|
- The loan has a floating interest rate, but the interest rate swap has been effected to hedge interest rate fluctuation risk. Accordingly, the interest rate after the swap is stated.
3. Environmental Impact Reporting
As environmental impact reporting, IAL annually discloses following metrics on its website:
- The number of, level of environmental certifications awarded on, and total floor area of green eligible assets; and
- Following performance data (such data is not disclosed separately for green eligible assets, and is disclosed for the entire portfolio, with ratio of covered assets):
- (i) Total energy consumption;
- (ii) Total Co2 emissions;
- (iii) Total water consumption; and
- (iv) Total waste generation