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Social Finance

Issuing Social Bonds

As part of initiatives to resolve social issues, IIF has issued the first social bonds for IIF in September 2021. IIF promotes further ESG initiatives and expands financing methods by expanding investor base who are proactive in ESG investment by implementation of social financing through the Social Bond issuance.

About Social Bonds

Social Bonds refer to bonds that are issued by business companies, funds, local governments, and other entities in order to procure funds for social projects. Typically, the bonds are issued according to the Social Bond Principles laid down by the International Capital Market Association (ICMA). For the details, please refer to the following.

Social Finance Framework

IIF has established the Social Finance Framework to implement social financing including issuing social bond in accordance with Social Bond Principles 2021. For the details, please refer to the following.

ICMA Social Bond Principles

IIF has received “Social 1 (F)” (the highest for JCR Social Finance Framework Evaluation) rating from Japan Credit Rating Agency, Ltd. (JCR) for the Social Finance Framework.

Social Finance Framework Evaluation (Japanese language only) 

1. Project evaluation / selection

Projects to use proceeds will be submitted to the Sustainability Committee after Planning and Coordination Department Industrial Division of MCUBS considers their eligibilities to meet the Eligible Social Criteria, and will be evaluated and selected by the Sustainability Committee based on the Eligible Social Criteria and the “Responsible Property Investment Policy”.

The Eligible Social Criteria

Facilities for development of medical technology and treatment such as medicine, pharmaceuticals, and drug discovery, etc.
  1. R&D facilities for medical, pharmaceutical, drug discovery, etc.
  2. Manufacturing plants for medical devices and pharmaceuticals
  3. Logistics and distribution facilities for medical devices and pharmaceuticals
Facilities for job creation and development of regional economies through industrial promotion, etc.
  1. Facilities for industrial promotion support
  2. Facilities for job training and vocational training, etc.
  3. Factories and laboratories, etc. for job creation in reginal economies
  4. Facilities utilizing land for the purpose of revitalizing regional economies led by public institution
Facilities for maintenance and improvement of social life networks
  1. Facilities for research and practice of automation and robot introduction
  2. R&D facilities and data center facilities for telecommunications, mobility, and advanced industrial technologies, etc.
  3. Logistics facilities with temperature zone equipment (Cold storage, etc.)
Facilities for maintenance and improvement of public lifelines
  1. Renewable energy-related facilities
  2. Transportation infrastructure facilities (Airports, Harbors, Railways, and Roads (except for new construction))
  3. Lifeline infrastructure facilities (water supply, district heating and cooling, electricity, etc.)
  4. Other public facilities (incineration facilities and recycling centers)
Facilities contributing to development of disaster prevention technologies, maintenance of redundancies and maintenance of logistics networks for daily necessities in the event of disasters, and facilities for temporary evacuation, etc.
  1. R&D facilities for disaster prevention technologies
  2. Data center facilities for maintaining redundancy in the event of a disaster
  3. Facilities with specifications that can be used and diverted as response bases for temporary evacuation centers, etc., in accordance with requests for cooperation from local governments and private companies and disaster prevention agreements
  4. Logistics facilities in line with BCP measures
  5. Logistics facilities where tenants have concluded material supply agreements in the event of a disaster
* For the details of Eligible Social Projects, please refer here.

2. Use of the proceeds

Proceeds from social financing including social bond based on the Social Finance Framework will be allocated towards acquisition funds to purchase Eligible Social Projects, repayment of debts and redemption of investment corporation bonds (includes refinancing of these debts and investment corporation bonds) related to acquire Eligible Social Projects.

3. Management of social financing proceeds

Management of social financing proceeds

The amount of Eligible Social Projects in our portfolio is 92.9 billion yen in total as of July 31, 2021 (based on book value), comprised by 17 properties. The maximum outstanding amount of social financing is “Debts of Eligible Social Projects”, which is 44.3 billion yen, calculated by multiplying the total book value of Eligible Social Projects by IIF’s LTV ratio (47.7% as of July 31, 2021).

4. Reporting

Allocation report of social financing

IIF will disclose on the IIF website or in ESG reports published by the Asset Manager once a year that the proceeds from social financing including social bond based on the Social Finance Framework are fully allocated to Eligible Social Projects in accordance with the Social Finance Framework and that the balance of the proceeds in social financing is not in excess of the amount of Debts of Eligible Social Projects. In addition, Projects subject to social financing and the allocation of funds for such projects will be also disclosed on the IIF website or in ESG Report published by MCUBS. If the proceeds are not allocated yet in excess of the amount of Debts of Eligible Social Projects, the amount or percentage of proceeds not yet allocated, the schedule of the allocation, and the temporary method of management of the proceeds not yet allocated will also be disclosed at the same time.

Impact Reporting

While social financing including social bonds remain outstanding, IIF reports annually the total amount of Eligible Social Projects, Debts of Eligible Social Projects and the outstanding amount of social financing as of the end of January of each year, as well as the following KPI on Impact Reporting on the IIF website or in ESG reports published by MCUBS.

KPI on Impact Reporting

Output indicators
  • Summary of Properties and Leases of Eligible Social Projects
  • Profit and Loss of Eligible Social Projects (Details of expenses related to property rental business, NOI)
  • Occupancy rate of Eligible Social Projects
  • Outcome indicators (1) Facilities for the development of medical technology treatment such as medicine, pharmaceuticals, and drug discovery, etc.
    1. Trends in social security benefits
    2. Trends in the number of researchers and R&D expenditures in the pharmaceutical manufacturing industry
    3. Trends in the number of particular medical expenses (designated intractable disease) recipients
    (2) Facilities for job creation and development of reginal economies through industrial promotion, etc.
    1. Number of business establishments, amount of shipments of manufactured goods, and number of employees in areas where facilities are located
    (3) Facilities for maintenance and improvement of social life networks
    1. Trends in workers' excess and deficiency judgement D.I.
    2. Trends in IT investment and GDP ratio
    3. Trends in food waste
    (4) Facilities for maintenance and improvement of public lifelines
    1. Renewable energy-related facilities: Trends in energy consumption of gas, electric power, etc.
    2. Traffic infrastructure facilities: Trends in the number of accidents
    3. Lifestyle nfrastructure facilities: Population of the municipality in which the facility is located
    (5) Facilities contributing to development of disaster prevention technologies for disasters, maintenance of redundancies and maintenance of logistics networks for daily necessities in the event of disasters, and facilities for temporary evacuation, etc.
    1. Trends in the amount of damage of nature disaster
    2. Contents of cooperation with local governments and private companies, outline of disaster prevention agreements, and the number of actual use of disaster prevention site
    3. Outline of the material supply agreement in the event of a disaster
    Impact (Qualitative Targets) To contribute to the establishment and development of a stable social infrastructure by promoting industrial promotion and R&D activities as a practice under the philosophy “Invests in infrastructure and industrial properties that and the source of the Japanese economy, and support Japanese industry from a real estate grand point.”
    Industrial & Infrastructure Fund Investment Corporation