JAPAN Trends and Developments Contributed by: Hiroshi Niinomi, Koki Hara, Naoto Yamamoto and Mitsuhiko Murata, Nishimura & Asahi (Gaikokuho Kyodo Jigyo)
under this strategy, investments and develop - ments in the renewable energy section will be continuously stimulated over the next few dec - ades. ESG ESG factors have gained attention in the real estate market, in line with other investment sec - tors. To create a sustainable environment, it is gener - ally understood that real estate, as a basic com - ponent of society, should follow global policy, such as contributing to Sustainable Develop - ment Goals (SDG). The real estate industry is thought to have significant potential to play an important role in meeting SDG targets, especial - ly with respect to the environment. There have been developments of buildings that achieve high environmental performance to reduce ener - gy consumption. Buildings with environmental performance certificates appear to attract more investments than those without such certificates. In line with the promotion of ESG, the number of Japanese participants in GRESB Real Estate Assessment has been increasing, with the par - ticipation rate of Listed J-REITs in the Assess - ment reported to have been approximately 90% (on the basis of market capitalisation) in 2019. GRESB Real Estate Assessment is the global ESG benchmark capturing information on ESG performance and sustainability best practices for real estate, and gives rating results. It appears that more and more investors have referred to, or are considering, GRESB Real Estate Assess - ment for their investment decisions.
The Japanese government is also actively pro - moting ESG/SDG through a number of policies related to this field, such as: • SDG Action Plan 2020; • Financial Administration and SDG; • the interim report for the promotion of ESG investment in real estate; • the interim report of the study group on real estate-specific joint ventures based on ESG investment; and • Guidance for responding to “Proposals of Task Force on Climate-Related Financial Information Disclosure” in the real estate field. The idea of a green lease is part of the govern - ment’s strategy to improve environmental perfor - mance in the real estate sector, which the Japa - nese government is also suggesting through its Green Lease Guidelines. In a green lease, the owner and tenant share the costs for environ - mental improvements of the leased building. Also, public funds, together with private funds, have been flowing into investments to rede - velop old buildings and remodel them to have improved seismic capacity and environmen - tal efficiency. The green bonds market is also growing and collecting funds to be spent on eco-friendly businesses.
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