Framework Overview and Second-Party Opinion

MORI BUILDING Co., Ltd. Green Bond
Evaluation Summary
Sustainalytics is of the opinion that the MORI BUILDING Co., Ltd. Green Bond
Framework is credible and impactful, and aligns with the four core components of theGreen Bond Principles 2018. This assessment is based on the following:
The eligible category for the use of proceeds,
green buildings, is recognized by the Green Bond Principles.
Sustainalytics considers that the eligible projects will lead to positiveenvironmental impacts and advance the UN Sustainable
Development Goals (SDGs), specifically SDGs 7 and 11.
A Green Bond Committee,
comprised of members of the Finance Department and a department
which promotes sustainability, will select eligible projects, andcorporate officers of both Departments will be responsible for project
evaluation and selection. The final decision is made by the President
and CEO. This is in line with market best practice.
MORI BUILDING’s Finance Department
will use existing tracking systems to manage the proceeds, with
monitoring conducted biannually. Pending allocation, funds will beheld in cash or cash equivalents, subject to disclosure in statutory
documents. This is in line with market practice.
MORI BUILDING is committed to annual reporting on
allocation and impact via its website. The former will include amounts
allocated to each eligible project, while the latter will consist of
information on certifications achieved and quantitative metrics ofenvironmental performance. This is in line with market practice.

Alignment with Japan’s Green Bond Guidelines 2017
Sustainalytics is of the opinion that the MORI BUILDING Co., Ltd. Green Bond
Framework is in line with the ICMA Green Bond Principles. In addition, Japan’s Green
Bond Guidelines communicate what an issuer should do to issue a credible green bond.
Sustainalytics considers the MORI BUILDING Co., Ltd. Green Bond Framework to bealigned with the ‘requirements of’ Japan’s Green Bond Guidelines.

© Sustainalytics 2018

Evaluation date

January, 2019

Issuer Location

Tokyo, Japan

Report Sections
Introduction

2

Overview of Issuer

2

Framework Overview

3

Sustainalytics’ Opinion

6

Appendices12

For inquires, contact the Sustainable
Finance Solutions project team:
Marion Oliver (Toronto)
Project Manager
marion.oliver@sustainalytics.com(+1) 647 603 3329
Zach Margolis (Toronto)
Project Support
zach.margolis@sustainalytics.com(+1) 647 695 4341
Wakako Mizuta (Tokyo)
Project Manager
wakako.mizuta@sustainalytics.com(+81) 3 4510 7979

Framework Overview and Second-Party Opinion

Mori Building Co., Ltd. Green Bond

Introduction
MORI BUILDING Co., Ltd. (“MORI BUILDING” or the “Issuer”) has developed a green bond framework (the“framework”) under which it is planning to issue green bonds and use the proceeds to finance/refinanceexpenditures related to green buildings.
MORI BUILDING engaged Sustainalytics to review the framework and provide a second-party opinion on thealignment of the green bond with the Green Bond Principles 2018 (the “GBP”), as administered by theInternational Capital Market Association (the “ICMA”),1 and the framework’s environmental credentials.
As part of this engagement, Sustainalytics held conversations with various members of MORI BUILDING,
including the Finance Department and Sustainability Office, to understand the sustainability impact of theirbusiness processes and planned use of proceeds, as well as management of proceeds and reporting aspectsof MORI BUILDING’s green bond. Sustainalytics also reviewed relevant public documents and non-public
information.
This document contains two sections: Framework Overview – summary of the MORI BUILDING Co., Ltd. Green
Bond framework; and Sustainalytics’ Opinion – an opinion on the framework.

Overview of Issuer
MORI BUILDING is a comprehensive landscape developer founded in Japan in 1959; Mori Fudosan, thepredecessor of the company, was established in 1955. Since its inception, MORI BUILDING has operated
leasing and management of office buildings focusing in the area of Minato Ward, Tokyo as its core business.
To diversify its business, MORI BUILDING operates retail facilities, urban redevelopment with mixed-use of
office buildings, residences, retail facilities, and cultural facilities and overseas business. In recent years, while
focusing on its leasing business, MORI BUILDING also operates culture management, hotels, and consulting
for urban development. MORI BUILDING strives to create rich urban life and develop Tokyo as an international
city through its business activities.
The MORI BUILDING Group contributes to the creation of a sustainable society for the future by promoting theharmonious coexistence of cities and nature, low-carbon cities, and resource recycling. MORI BUILDING does
so through urban development and operation inspired by the "Vertical Garden City"2.
In order to further promote its environmental objectives and certified green buildings, MORI BUILDING isplanning to issue green bonds.

1
2

ICMA’s Green Bond Principles 2018; https://www.icmagroup.org/green-social-and-sustainability-bonds/green-bond-principles-gbp/
Vertical City Garden, Mori Building; https://www.mori.co.jp/en/company/urban_design/vgc.html
2

Framework Overview and Second-Party Opinion

Mori Building Co., Ltd. Green Bond

Framework Overview
For the purpose of issuing green bonds, MORI BUILDING has developed the following framework which
addresses the four core components of the Green Bond Principles (GBP): use of proceeds, project evaluationand selection process, management of proceeds, and reporting. The framework belongs to MORI BUILDING
and a summary overview has been provided below.

Use of Proceeds
The proceeds of the green bond will be allocated towards financing and/or refinancing the projects that meetthe following criteria.
Eligibility Criteria
GREEN BUILDINGSThe proceeds of the green bond will be allocated toward expenditures or investments in new and/or existingbuildings that i) have received at least one of the following third-party green building certifications or recertifications within 24 months prior to the date of green bond issuance, ii) are expected to receive
certification or recertification post issuance, or iii) have a construction completion date within 24 months prior
to the date of green bond issuance and have at least one valid certification or recertification. Expenditures
may include costs related to acquisition, planning and development, construction (including the cost of copartner's contribution for redevelopment), refurbishment and operational management. The following
certifications and levels are deemed eligible under this Framework:-

A or S Rank under the Comprehensive Assessment System for Built Environment Efficiency (CASBEE)
Certification for Buildings (New Construction, Existing Buildings, and Renovation) or CASBEE
Certification for Real Estate
Platinum or Gold Rank under the LEED BD+C (Building Design and Construction) or LEED O+M (Building
Operations and Maintenance)
4 or 5 Stars under the Building Energy-efficiency Labeling System (BELS)
4 or 5 Stars under DBJ Green Building Certification
Gold Plus or Platinum Rank under the BCA Green Mark Certification

MORI BUILDING will continuously recertify third-party green building certifications for its assets after their
expiration by sustaining and improving assets' environmental performance through maintenance andrefurbishment.

Project Evaluation and Selection Process
Application of Eligibility and Exclusionary Criteria in Project Selection
MORI BUILDING operates its business activities inspired by "Vertical Garden City"3. Under that vision MORIBUILDING takes "Environment and Greenery" as one of its missions. MORI BUILDING set the eligibility criteria
to select projects which will contribute to its mission, "Environment and Greenery". The net proceeds of thegreen bond(s) will be allocated to project(s) which meets the eligibility criteria.
MORI BUILDING’s Green Bond Committee will be charged with project selection in accordance with theeligibility criteria. The Green Bond Committee is comprised of members of MORI BUILDING’s Finance
Department and a department which promotes sustainability as applicable. Selection of eligible projects isapproved by a corporate officer of the Finance Department and a department which promotes sustainability
and the final decision is made by the President and CEO of the company.

3 Vertical City Garden, Mori Building; https://www.mori.co.jp/en/company/urban_design/vgc.html

3

Framework Overview and Second-Party Opinion

Mori Building Co., Ltd. Green Bond

Environmental Objectives
MORI BUILDING's business is designing and constructing urban cities and developing them with tenants andusers. "Vertical Garden City" is the concept behind its proposal for building cities. "Vertical Garden City" is acompact city that integrates work, residence/living, entertainment, commerce, education, relaxation, culture,social interaction, and other urban functions vertically into a high-rise building with everything necessary
available within walking distance. Combining segmented properties and creating a taller building minimizes
above-ground built-up areas, making the resulting empty space available for people and nature. This not only
fosters urban nature and achieves living where people can experience the four seasons, but also mitigates
the heat island phenomenon by covering ground surface and rooftops with greenery. The aggregation ofdiverse urban functions also brings about a levelling of energy demand, enhancing energy efficiency. A
compact city where work and residence are in close proximity greatly reduces the time and energy requiredfor commuting to work or school. It also has positive effects on resource recycling and efficiency of
distribution. Moreover, making high-level use of urban centers in this form aids in the protection of nature in
suburbs. The "Vertical Garden City" is a new urban model that aims for the harmonious coexistence of cities
and nature where constraining impact on the global environment.
MORI BUILDING always pursues three missions consisting of "Safety and Security", "Environment andGreenery", and "Culture and Art", which leads to setting out an Environmental Philosophy and Environmental
Policies. The company examines them in every development from the planning phase to administrative
operation phase.
MORI BUILDING contributes to the creation of a sustainable society for the future by promoting the"Harmonious Coexistence of Cities and Nature", "Low-carbon Cities", and "Resource Recycling". MORIBUILDING does so through urban development and operation inspired by the "Vertical Garden City". To
promote the above, MORI BUILDING works on "legal compliance and the development of an environmental
management system", "disclosure of environmental information" and "implementing environmental education
and activities to develop environmental awareness".
Process to Mitigate Environmental and Social Risks
As part of MORI BUILDING's compliance activities, the MORI BUILDING Group strictly ensures that all officers
and employees comply with all applicable laws and regulations, including environmental laws and regulations
such as the Environmental Impact Assessment and the System of Building Environment Plan described below.
MORI BUILDING follows the procedures for Environmental Impact Assessment set by Tokyo Metropolitan
Environmental Impact Assessment Code. The Code obliges surveys, prediction and evaluation of thepossibility of negative environmental impact accompanying the implementation of large-scale development
projects. In the Environmental Impact Assessment procedure, it is required to have briefing sessions at theplanning and operation phase of the projects, to provide information to residents and to create opportunities
for residents and related municipalities to express their opinions.
According to the System of Building Environment Plan (Green Building Program) established by the Bureau ofEnvironment of Tokyo Metropolitan Government, newly built or extended buildings whose total floor area
exceeds 5,000 square meters are required to submit their building environment plans. New or extended
buildings whose total floor area exceeds 10,000 square meters are also required to submit energy
conservation performance standards, energy conservation performance targets (only applied to specificdevelopment projects) and energy conservation performance evaluation documents. In implementing newly
constructed or expanded buildings which exceed the above scale, it is necessary to fill out Building
Environment Plan documents to clarify its environment-friendly design contents, submit it and receive
confirmation from the Tokyo Metropolitan Government. The plan is assessed by environment-friendly points
such as streamlining of energy use, appropriate utilization of resources, protection of natural environment andmitigation of the heat island phenomenon. The MORI BUILDING Group complies with the System of Building
Environment Plan when it constructs buildings with requirement scales and all projects clear the requirementof Grade 2 (High Standards of Efforts) for reduction in heat load and energy conservation through theirequipment systems. Furthermore, the Group aims for Grade 3 (Best Efforts) in the urban redevelopment
projects in specific districts.
In addition to the above laws and regulations, MORI BUILDING has established guidelines that internallypromote various regulations stipulated by the Act on the Rational Use of Energy in Japan and complies with
it. To realize a sustainable society and environment, MORI BUILDING has established several committees andconference systems for environmental management.
4

Framework Overview and Second-Party Opinion

Mori Building Co., Ltd. Green BondManagement of Proceeds
MORI BUILDING's Finance Department is in charge of allocation and management of proceeds. MORIBUILDING’s Finance Department has internal management systems to track and manage the budget ofprojects that meet the eligibility criteria and actual expenditures on a biannual basis.
MORI BUILDING will disclose its policy of managing proceeds in the form of cash or cash equivalents while
pending their allocation to eligible projects in Shelf Registration Supplements or other statutory documents atthe date of the issuance.

Reporting
Allocation Reporting
MORI BUILDING will annually disclose its allocation reporting on its website. The contents of disclosure are
the list of assets financed/refinanced, the amount of allocated and unallocated proceeds on a project by
project basis.
Impact Reporting
MORI BUILDING will disclose the following indicators until the maturity of the green bond. This reporting will
be provided annually on the Issuer’s website.
-

Name of the building and project
Name and level of certifications the eligible project received
Energy consumption
Energy conservation
CO2 emissions
CO2 emissions of total floor area
Water consumption

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Framework Overview and Second-Party Opinion

Mori Building Co., Ltd. Green Bond

Sustainalytics’ Opinion
Section 1: Sustainalytics’ Opinion on the MORI BUILDING Co., Ltd. Green Bond
Framework
Summary
Sustainalytics is of the opinion that the MORI BUILDING Co., Ltd. Green Bond Framework is credible andimpactful, and aligns with the four core components of the Green Bond Principles 2018. Sustainalytics
highlights the following elements of MORI BUILDING’s green bond framework:•

Use of Proceeds:- The eligibility criterion of its use of proceeds, Green Buildings, is recognized by the Green Bond
Principles as a project category with positive environmental benefits.
- Strong alignment with credible third-party standards, namely CASBEE, LEED, BELS, DBJ Green
Building Certification, and BCA Green Mark, signals adherence to global market standards.
Sustainalytics notes that the market best practice is to allocate the proceeds into the top twolevels of certification within these schemes, and views positively the framework’s inclusion of
only those levels. (Please refer to Appendix 1 for our assessment on these certifications).
- MORI BUILDING is committed to using the net proceeds of the bond to refinance projects whichhave achieved certification within the 24 months preceding issuance, as well as those achieving
certification post issuance. Sustainalytics is of the opinion that this lookback period is in linewith market standards.

•

Project Selection Process:- MORI BUILDING has established a Green Bond Committee, consisting of members of the
Finance Department and a department which promotes sustainability. A corporate officer of the
Finance Department and a department which promotes sustainability will be responsible forproject evaluation and selection. Final decision will be made by the Company’s President andCEO.
- Based on the involvement of C-level officers, Sustainalytics considers this approach to be in linewith market best practice.

•

Management of Proceeds:- MORI BUILDING’s Finance Department is responsible for the management of proceeds and willuse its internal tracking systems to monitor allocations on a biannual basis.
- Pending allocation, funds will be held in cash or cash equivalents, with additional disclosure
provided in shelf registration supplements or other statutory documents at the time of issuance.
- Sustainalytics considers this approach to be in line with market practice.

•

Reporting:- MORI BUILDING is committed to annual allocation reporting on its website, including the list ofassets financed/refinanced, the amount allocated to each eligible project and the unallocatedproceeds. This disclosure is in line with market practice.
- MORI BUILDING is committed to annual impact reporting on its website, including green building
certifications received, and quantitative indicators of energy consumption, energy conservation,
CO2 emissions and water consumption. This disclosure is in line with market practice.

Alignment with Green Bond Principles 2018
Sustainalytics has determined that the MORI BUILDING Co., Ltd. Green Bond Framework aligns with the four
core components of the Green Bond Principles 2018. For detailed information please refer to Appendix 2:
Green Bond/Green Bond Programme External Review Form.

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Framework Overview and Second-Party Opinion

Mori Building Co., Ltd. Green Bond

Alignment with Japan’s Green Bond Guidelines 2017
The Japanese Green Bond Guidelines communicate what an issuer should do to issue a credible green bond.
Sustainalytics considers MORI BUILDING’s green bond framework to be aligned with the ‘requirements of’Japan’s Green Bond Guidelines.

4
5

ICMA Green Bond Principles andJapan’s Green Bond Guidelines,
20174

Alignment with GBP
and with Japan’sGreen Bond
Guidelines?

1. Use of Proceeds

Yes

MORI BUILDING’s selected eligibility criteria,
green (energy efficient) buildings, are clearlyrecognized as green projects with clear
environmental benefits in the Japanese Green
Bond Guidelines. Additionally, the informationon the management of green bond proceeds,
green project categories, as well as the process
to mitigate the risks of negative impacts are all
described in the framework and will beaccessible to the investors.

2. Process for ProjectEvaluation and Selection

Yes

MORI BUILDING will select projects which fulfill
one of its mission statements, "Environment
and Greenery", and in particular those whichhave achieved certified green building status.
Furthermore, MORI BUILDING has established
a committee to ensure that selection
processes are followed.

3. Management of Proceeds

Yes

MORI BUILDING’s framework states that thefinance team will manage proceeds using its
internal tracking system, monitored on abiannual basis. MORI BUILDING will disclose instatutory
documents
howunallocatedproceeds will be held in cash or cash
equivalents.

4. Reporting

Yes

MORI BUILDING has confirmed that its
reporting on the bond will be annual and will
include the amounts allocated to each project,
as well as impact indicators including the green
building certifications achieved, electricity
consumption, water consumption, and CO2
emissions of eligible green properties.

Sustainalytics’ comments on alignment withJapan’s Green Bond Guidelines.5

Green Bond Guidelines, 2017, Summary, Ministry of the Environment, Japan; https://www.env.go.jp/en/policy/economy/gb/summary2017.pdf
For detailed comments on alignment with ICMA GBP, please see Appendix.
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Framework Overview and Second-Party Opinion

Mori Building Co., Ltd. Green Bond

Section 2: Sustainability Strategy of the Issuer
Contribution of framework to issuer’s sustainability strategy and targets
MORI BUILDING operates its business activities inspired by the "Vertical Garden City".6 To realize this ideal,
the company has set "Environment and Greenery" as one of its three missions to pursue in every developmentfrom planning to administrative and operations phases.7
Furthermore, in accordance with this ideal, MORI BUILDING has set Environmental Policies which consist of
three pillars, "Harmonious Coexistence of Cities and Nature", "Low-carbon Cities", and "Resource Recycling".
To promote these policies, the company has specified that it works on "legal compliance and the developmentof an environmental management system", "disclosure of environmental information" and "implementing
environmental education and activities to develop environmental awareness".8 In practice, that means that
MORI BUILDING has committed to policies and undertaken initiatives to advance its environmental objectives.
These include9:•

Using green building certifications as a tool to promote environmentally conscious design, inparticular from CASBEE for Buildings (New Construction), setting the highest-level S certification asa target. As of January 2019, the company has received A or S Rank of CASBEE for Buildings (NewConstruction) or CASBEE Certification for Real Estate for 10 properties. 10•

In order to foster a rich ecosystem in an urban center, the company is creating areas as "bases foran ecological network" to act as relay and rest sites for living beings that travel among nearby green
spaces, in accordance with plans including the Tokyo Metropolitan Environmental Master Plan and
the Minato Ward Comprehensive Plan Regarding Green Space and Water. The green coverage rateof the facilities managed and operated by the company has increased from 23.3% in 1990 to 37.4%
in 201811, demonstrating how the company’s development has contributed to the promotion of urban
greening.

The company has implemented the latest environmentally friendly technologies to new construction andundertakes energy-conserving renovations in existing buildings to reduce carbon emissions. The initiatives
include high-efficiency air-conditioning systems, Building Energy Management System (BEMS), LED lighting
systems and energy conservation measures for windows and external walls. Given the company’scommitments, policies, and positive track record, Sustainalytics is of the opinion that MORI BUILDING’sframework is in line with its business strategy, will contribute to the realization of its sustainability efforts, andthat the company is well positioned to issue a green bond.
Well positioned to address common environmental and social risks associated with the projects
By constructing green buildings, or refurbishing existing buildings to improve performance, the use ofproceeds of MORI BUILDING's green bonds will deliver environmental benefits. Nevertheless, the buildings
and real estate sector may be exposed to environmental and social risks, including but not limited to, worker
health and safety, community and stakeholder support, and environmental impacts of the construction
processes such as air, water, and soil pollution. MORI BUILDING has policies and procedures in place tosupport the mitigation of these risks.
MORI BUILDING enforces strict compliance with all applicable laws and regulations, including a commitment
to conduct Environmental Impact Assessments (EIA) and to either meet the requirement of Grade 2 (HighStandards of Efforts) or Grade 3 (Best Efforts) of the System of Building Environment Plan established by the
Tokyo Metropolitan Government. Additionally, MORI BUILDING has adopted internal guidelines that align withregulations of the Act on the Rational Use of Energy in Japan. 12 To ensure that the Company meets its

Vertical City Garden, Mori Building; https://www.mori.co.jp/en/company/urban_design/vgc.html
Environment and Greenery, Mori Building; https://www.mori.co.jp/en/company/urban_design/environment/
8 Mori Building’s Initiatives, Mori Building;https://www.mori.co.jp/company/urban_design/environment/resource/pdf/environmental_initiatives2018E.pdf
9Mori Building’s Initiatives, Mori Building;https://www.mori.co.jp/company/urban_design/environment/resource/pdf/environmental_initiatives2018E.pdf
10 Mori Building shared with Sustainalytics the latest list of certified green buildings as of January 2019.
11 Mori Building shared with Sustainalytics the latest rate of green coverage as of January 2019.
12 Mori Building’s Initiatives, Mori Building;https://www.mori.co.jp/company/urban_design/environment/resource/pdf/environmental_initiatives2018E.pdf
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Framework Overview and Second-Party Opinion

Mori Building Co., Ltd. Green Bondsustainability and risk mitigation goals, MORI BUILDING has established a Committee on Sustainability, theSustainability Office, and the Global Warming Countermeasures Council, as well as enacting a Plan-Do-CheckAct management process.13 Furthermore, MORI BUILDING has incorporated safety and security features into
its building designs, with particular attention to earthquake and disaster resiliency. 14
Based on the commitments made, and the management structure in place to ensure compliance,
Sustainalytics considers MORI BUILDING to be well-positioned to address common environmental and social
risks associated with the projects funded by the green bonds.

Section 3: Impact of Use of Proceeds
Importance of green buildings towards achieving energy efficiency targets in Japan
Japan’s energy strategy has historically focused on the development of nuclear power, which by 2011
generated 30% of the nation’s electricity. 15 Subsequently, in the wake of the Fukushima-Daiichi nuclear
disaster, the Japanese government ordered a nation-wide closure of its reactors, forcing Japan to rely heavily
on energy imports, particularly on fossil fuels, in order to meet its energy needs. However, due to economic
needs, emissions reduction targets, and self-sufficiency goals, Japan has recently re-affirmed its commitment
to including nuclear power in its supply mix, while continuing to emphasize the importance of renewables andefficiency.16
Buildings make up a significant part of Japan’s overall energy demands, accounting for 33% of total energyuse, while in Tokyo that figure reaches as high as two thirds.17 Within the office building sector specifically,
air conditioning is responsible for 50% of energy demand, lighting and office equipment for 30%, and elevatorsfor 20%. 18 According to the 2018 International Energy Efficiency Scorecard Japan ranks 15th out of 25
countries assessed for the energy efficiency of its building sector. 19 In 2015, the Ministry of Land,
Infrastructure, Transport and Tourism launched the Act on the Improvement of Energy Consumption
Performance of Buildings (Building Energy Efficiency Act) as a means of increasing the efficiency of buildings;
20 the Act includes regulations setting energy efficiency standards for non-residential buildings.21
Given this context, it is expected that enhancements to energy efficiency in buildings will continue to increasein Japan. Therefore, Sustainalytics is of the opinion that the use of proceeds of MORI BUILDING’s green bondwill play a key role in financing green buildings, creating positive environmental impact while supporting Japanin meeting its own climate targets.
Alignment with/contribution to SDGs
The Sustainable Development Goals (SDGs) were set in September 2015 and form an agenda for achieving
sustainable development by the year 2030. This green bond advances the following SDG goals and targets:
Use of Proceeds
Category
Green Buildings

SDG

SDG target

11. Sustainable Cities
and Communities

11.6 By 2030, reduce the adverse per capita
environmental impact of cities, including by paying

13 Corporate Organization Chart, Mori Building; https://www.mori.co.jp/en/company/about_us/organization.html
14 Safety and Security, Mori Building; https://www.mori.co.jp/en/company/urban_design/safety.html
15 Nuclear Power in Japan, World Nuclear Association; http://www.world-nuclear.org/information-library/country-profiles/countries-g-n/japan-nuclear-

power.aspx
16 Japan backs role of nuclear power in 2030 energy plan, The Thomson Reuters;
https://www.reuters.com/article/japan-energy/japan-backs-role-of-nuclear-power-in-2030-energy-plan-idUSL3N1SN0TE
17 Energy Efficiency in Buildings: Policy and Programs in Tokyo, Tokyo Metropolitan Government-Environment;
https://www.eu-japan.eu/sites/eu-japan.eu/files/Nishida.pdf
18 Energy Efficiency (2009) Overview of energy consumption and GHG mitigation technologies in the building sector in Japan;
http://environmentportal.in/files/Overview%20of%20energy%20consumption%20and%20GHG%20mitigation.pdf
19 The 2018 International Energy Efficiency Scorecard, American Council for an Energy-Efficient Economy;
https://aceee.org/sites/default/files/publications/researchreports/i1801.pdf
20
Overview of the Building Energy Efficiency Act (Japanese), Ministry of Land Infrastructure, Transport and Tourism, Japan;
http://www.mlit.go.jp/common/001178846.pdf
21 Overview of the Act on the improvement of Energy Consumption Performance of Buildings (Building Energy Efficiency Act), Ministry of Land,
Infrastructure,
Transport and Tourism, Japan; https://www.mlit.go.jp/common/001134876.pdf
9Framework Overview and Second-Party Opinion

Mori Building Co., Ltd. Green Bond

special attention to air quality and municipal andother waste management.

Energy Efficiency

7. Affordable and Clean
Energy11.B By 2020, substantially increase the number ofcities and human settlements adopting andimplementing integrated policies and plans towards
inclusion, resource efficiency, mitigation andadaptation to climate change, resilience to disasters.
7.3 By 2030, double the global rate of improvement inenergy efficiency

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Framework Overview and Second-Party Opinion

Mori Building Co., Ltd. Green Bond

Conclusion
MORI BUILDING has developed the MORI BUILDING Co., Ltd. Green Bond Framework under which it will issue
green bonds, with the proceeds being directed to financing or refinancing investments in green buildings.
Green buildings may include those certified by the Comprehensive Assessment System for Built Environment
Efficiency (CASBEE), LEED, the Building Energy-efficiency Labelling System (BELS), the DBJ Green Building
Certification Programme, and the BCA Green Mark program. Sustainalytics is of the opinion that the projects
described by the framework will support MORI BUILDING’s stated ideal of a Vertical Garden City” and will
deliver positive environmental benefits.
The use of proceeds categories specified in the framework are aligned with those of the Green Bond Principles
2018 and the Japan Green Bond Guidelines 2017; MORI BUILDING has processes in place for project
evaluation, selection, and management of proceeds in line with market practice; and commitments have been
made to report on allocation and impacts. Furthermore, Sustainalytics believes that the initiatives funded by
the green bonds will contribute to the advancement of UN Sustainable Development Goals 7 and 11.
Based on the above points, Sustainalytics considers the MORI BUILDING Co., Ltd. Green Bond Framework to
be robust, transparent, and in alignment with the Green Bond Principles 2018 as well as Japan’s Green Bond
Guidelines 2017.

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Framework Overview and Second-Party Opinion

Mori Building Co., Ltd. Green Bond

Appendices
Appendix 1: Overview of Real Estate Certification Schemes
CASBEE22

LEED

Background

CASBEE(Comprehensive
Assessment System
for Built Environment
Efficiency) represents
a green building
management systemfrom Japan,
evaluating and rating
the environmental
performance ofbuildings and the built
environment. CASBEE
is formed of four
assessment tools
tailored to different
scales: housing,building, district andcity.

CertificationlevelsC (Poor)B- (Slightly Poor)
B+ (Good)A (Very Good)S (Excellent)
CASBEE assesses
two main factors:
inside and outside thebuilding site, whichtranslate into Q (Built
Environment Quality)
and, respectively, L(Built Environment
Load).

Leadership in
Energy andEnvironmental
Design (LEED) is a
US Certification
System forresidential andcommercial
buildings usedworldwide. LEED
was developed by
the non-profit U.S.
Green Building
Council (USGBC)
and covers thedesign,construction,
maintenance andoperation ofbuildings.
CertifiedSilverGold
Platinum

Areas of
Assessment:
Environmental
Project
Management

Areas of
Assessment:
Environmental
Performanceof the Building• Energy Efficiency• Resource efficiency• Local environment• Indoor environment

Integrative process,which requires,from the beginningof the design
process, theidentification andcreation ofsynergies between
the various projectstakeholders.
• Energy andatmosphere• Sustainable Sites• Location andTransportation• Materials andresources• Water efficiency• Indoor
environmental
quality

DBJ Green Building
Certification23 24
DBJ Green Building
Certification
Programme waslaunched by
Development Bankof Japan in 2011
and is operated
together with Japan
Real Estate Institute(JREI). The
programme isrecognized as oneof the leading
regional standards.
The certification isavailable for officebuildings, logistics,
residential & retailfacilities.

BELS

BCA Green Mark

BELS (BuildingHousing Energyefficiency Labelling
System) is an energy
performance label,issued underguidelines
established by the
Ministry of Land,
Infrastructure,
Transport, andTourism. The BELS
system evaluates
primary energy
consumption tomeasureconservation
performance.

The BCA GreenMark Scheme
provides real estatecertifications in
Singapore topromotesustainability in thebuilt environment(during project
conceptualisationand design, as wellas during
construction.)

1 Star
2 Stars
3 Stars
4 Stars
5 Stars
Evaluation of DBJ
Green Building
Certification
includesconstruction
specifications,environmental
features as well associal factors.

1 Star
2 Stars
3 Stars
4 Stars
5 Stars
None

CertifiedGold
Gold Plus
Platinum

Assessment
includes three areas.
Each area includes
additional
subcategories:• Ecology• Risk management&
amenities/diversity• Community &partnership• Energy efficiency

The assessment
process aims toverify the relevant
reports anddocumentary
evidences suchthat the building
project meets theintents of thecriteria andcertification level.
• Climate
Responsive
Design• Building Energy
Performance• Resource
Stewardship• Smart and
Healthy Buildings• Advanced Green
Efforts

22 CASBEE, CASBEE; http://www.ibec.or.jp/CASBEE/english/
23 Certification Overview, Development Bank of Japan; http://www.dbj.jp/en/service/finance/g_building/outline.html
24 DBJ Green Building Certification (Japanese), Development Bank of Japan; http://www.dbj.jp/service/finance/g_building/outline.html

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• Innovation in

Design• Regional Priority

Requirements

Score-based
performance level
CASBEE uses the BEE(Built Environment
Efficiency) as its
assessment indicator,
which is calculated
from Q (Built
Environment Quality)
as the numerator and
L (Built Environment
Load) as thedenominator. Q and L
are obtained throughthe classification andrearrangement of thefour areas ofassessment.
For authorization, abuilding must receivea report from the
CASBEE Certification
system, which isafterwards assessedby the local
government.

Prerequisites(independent oflevel ofcertification) +Score-based
performance level
There are several
different rating
systems within
LEED. Each rating
system is designed
to apply to a
specific sector (e.g.
New Construction,
Major Renovation,
Core and Shell
Development,
Schools-/Retail/Healthcare New
Construction and
Major Renovations,
Existing Buildings:
Operation and
Maintenance).

Score-based
performance level

Score-based
performance level.

There are three mainareas comprised ofadditional
subcategories a fullscore of 100 points.

The BELS score isbased on the
Building Energy
Index, obtained bycomparing theenergy consumptionof a building to thestandard primaryenergy consumptionof the building type
in official guidelines.

In addition to theregular points, anadditional point
system is employed.
In the final process,
JREI will conduct on
the ground review ofbuilding
performance on theindicators above,
and a committee set
in JREI will decide
the result ofcertification rank. 25

A two-star rating isequivalent tomeeting existingenergy conservation
standards, withhigher star ratings
implying greatersavings.

Prerequisites foreach performancearea + Score-based
performance level.
Performance Areas
have different
weights; dependingon the level ofbuilding
performance andnumerical scoreachieved inperformance area,building’s level ofcertification isdetermined.

The score is
calculated by anaccredited third
party.

Performance
display
28

27

26

Qualitative
considerations

In Japan, many local
governments havemade CASBEE
assessment resultsmandatory forbuilding permits.
Compared to similar
tools available
internationally,
CASBEE displays aunique and simple
structure.

29

30

Widely recognised
internationally, andstrong assuranceof overall quality.

In addition to LEEDand CASBEE, DBJ
Green Buildings
Certification
Programme isconsidered as oneof the green building
standards inJapan.31 According
to its website, as ofFeb 2018, 499
properties in Japanare certifed by the
programme.

BELS is aligned with
official government
standards.
The scheme
assesses only
energy performance,
without any broader
consideration ofholistic
environmental
factors.

BCA is endorsed by
the Government ofSingapore, and is
the most widely
recognized scheme
in that market.

25 Process of certification (Japanese), DBJ Green Buildings; http://igb.jp/flow.html
26 Built Environment Efficiency, CASBEE; http://www.ibec.or.jp/CASBEE/english/beeE.htm
27

LEED, Green Building Council; https://new.usgbc.org/

28 DBJ Green Building, Development Bank of Japan; http://www.dbj.jp/en/pdf/service/finance/g_building/gb_presentation.pdf
29 BELS, https://www.hyoukakyoukai.or.jp/
30 BCA Green Mark, https://www.bca.gov.sg/greenmark/green_mark_buildings.html
31 Japan sharpens its green building focus, Real Views; https://www.jllrealviews.com/places/japan-sharpens-its-green-building-focus/

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Appendix 2: Green Bond / Green Bond Programme - External Review Form
Section 1. Basic Information
Issuer name:Green Bond ISIN or Issuer Green Bond Framework
Name, if applicable: [specify as appropriate]

MORI BUILDING Co., Ltd.
MORI BUILDING Co., Ltd. Green Bond Framework

Review provider’s name:

Sustainalytics

Completion date of this form:

January, 2019

Publication date of review publication: [whereappropriate, specify if it is an update and add
reference to earlier relevant review]

Section 2. Review overview
SCOPE OF REVIEWThe following may be used or adapted, where appropriate, to summarise the scope of the review.
The review assessed the following elements and confirmed their alignment with the GBPs:☒

Use of Proceeds☒

Process for Project Evaluation and
Selection☒

Management of Proceeds☒

Reporting

ROLE(S) OF REVIEW PROVIDER☒

Consultancy (incl. 2nd opinion)☐

Certification☐

Verification☐

Rating☐Other (please specify):
Note: In case of multiple reviews / different providers, please provide separate forms for eachreview.

EXECUTIVE SUMMARY OF REVIEW and/or LINK TO FULL REVIEW (if applicable)
Please refer to Evaluation Summary above.

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Section 3. Detailed review
Reviewers are encouraged to provide the information below to the extent possible and use the comment
section to explain the scope of their review.
1. USE OF PROCEEDS
Overall comment on section (if applicable):
The eligible category for the use of proceeds, green buildings, is recognized by the Green Bond Principles.
Sustainalytics considers that the eligible projects will lead to positive environmental impacts and advance
the UN Sustainable Development Goals (SDGs), specifically SDGs 7 and 11.

Use of proceeds categories as per GBP:☐

Renewable energy☐

Energy efficiency☐

Pollution prevention and control☐

Environmentally sustainable management ofliving natural resources and land use☐

Terrestrial and aquatic biodiversity
conservation☐

Clean transportation☐

Sustainable water and wastewater
management☐

Climate change adaptation☐

Eco-efficient and/or circular economy
adapted products, production technologies
and processes☒

Green buildings☐

Unknown at issuance but currently expected
to conform with GBP categories, or othereligible areas not yet stated in GBPs☐

Other (please specify):

If applicable please specify the environmental taxonomy, if other than GBPs:

2. PROCESS FOR PROJECT EVALUATION AND SELECTION
Overall comment on section (if applicable):
A Green Bond Committee, comprised of members of the Finance Department and a department which
promotes sustainability, will select eligible projects, and corporate officers of both Departments will be
responsible for project evaluation and selection. The final decision is made by the President and CEO. This
is in line with market best practice.

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Evaluation and selection☒

Credentials on the issuer’s environmental
sustainability objectives☒

Documented process to determine thatprojects fit within defined categories☒

Defined and transparent criteria for projects
eligible for Green Bond proceeds☒

Documented process to identify andmanage potential ESG risks associatedwith the project☐

Summary criteria for project evaluation andselection publicly available☐

Other (please specify):☐

In-house assessment

Information on Responsibilities and Accountability☒

Evaluation / Selection criteria subject toexternal advice or verification☐

Other (please specify):

3. MANAGEMENT OF PROCEEDS
Overall comment on section (if applicable):
MORI BUILDING’s Finance Department will use existing tracking systems to manage the proceeds, with
monitoring conducted biannually. Pending allocation, funds will be held in cash or cash equivalents, subject
to disclosure in statutory documents. This is in line with market practice.

Tracking of proceeds:☒

Green Bond proceeds segregated or tracked by the issuer in an appropriate manner☒Disclosure of intended types of temporary investment instruments for unallocatedproceeds☐

Other (please specify):

Additional disclosure:☐

Allocations to future investments only☒

Allocations to both existing and future
investments☐

Allocation to individual disbursements☐

Allocation to a portfolio of
disbursements☐

Disclosure of portfolio balance of
unallocated proceeds☐

Other (please specify):

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4. REPORTING
Overall comment on section (if applicable):
MORI BUILDING is committed to annual reporting on allocation and impact via its website. The former will
include amounts allocated to each eligible project, while the latter will consist of information on
certifications achieved and quantitative metrics of environmental performance. This is in line with market
practice.

Use of proceeds reporting:☒

Project-by-project☐

On a project portfolio basis☐

Linkage to individual bond(s)☐Other (please specify):

Information reported:☒

Allocated amounts☐

Other (please specify):☐

Green Bond financed share of total
investment☐

Semi-annual

Frequency:☒

Annual☐Other (please specify):

Impact reporting:☒

Project-by-project☐

On a project portfolio basis☐

Linkage to individual bond(s)☐Other (please specify):

Frequency:☒

Annual☐Other (please specify):☐

Semi-annual

Information reported (expected or ex-post):☒

GHG Emissions / Savings☒

Energy Savings☒

Decrease in water use☒

Other ESG indicators (please
specify): Name and level ofcertifications the eligible
project received

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Means of Disclosure☐☐☐

Information published in financial report☐

Information published in sustainability
reportInformation published in ad hoc☒ Other (please specify): company
documents
websiteReporting reviewed (if yes, please specify which parts of the reporting are subject toexternal review):

Where appropriate, please specify name and date of publication in the useful links section.

USEFUL LINKS (e.g. to review provider methodology or credentials, to issuer’s documentation, etc.)

SPECIFY OTHER EXTERNAL REVIEWS AVAILABLE, IF APPROPRIATE
Type(s) of Review provided:☐

Consultancy (incl. 2nd opinion)☐

Certification☐

Verification / Audit☐

Rating☐Other (please specify):

Review provider(s):Date of publication:

ABOUT ROLE(S) OF REVIEW PROVIDERS AS DEFINED BY THE GBP
i.

Consultant Review: An issuer can seek advice from consultants and/or institutions with recognizedexpertise in environmental sustainability or other aspects of the issuance of a Green Bond, such as theestablishment/review of an issuer’s Green Bond framework. “Second Party Opinions” may fall into thiscategory.

ii.

Verification: An issuer can have its Green Bond, associated Green Bond framework, or underlying assets
independently verified by qualified parties, such as auditors. In contrast to certification, verification may
focus on alignment with internal standards or claims made by the issuer. Evaluation of the environmentally
sustainable features of underlying assets may be termed verification and may reference external criteria.

iii.

Certification: An issuer can have its Green Bond or associated Green Bond framework or Use of Proceeds
certified against an external green assessment standard. An assessment standard defines criteria, andalignment with such criteria is tested by qualified third parties / certifiers.

iv.

Rating: An issuer can have its Green Bond or associated Green Bond framework rated by qualified third
parties, such as specialised research providers or rating agencies. Green Bond ratings are separate from anissuer’s ESG rating as they typically apply to individual securities or Green Bond frameworks / programmes.

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Disclaimer© Sustainalytics 2019. All rights reserved.
The intellectual property rights to this Second-Party Opinion (the “Opinion”) are vested exclusively in
Sustainalytics. Unless otherwise expressly agreed in writing by Sustainalytics, no part of this Opinion may be
reproduced, disseminated, comingled, used to create derivative works, furnished in any manner, madeavailable to third parties or published, parts hereof or the information contained herein in any form or in any
manner, be it electronically, mechanically, through photocopies or recordings, nor publicly released without
the “Green Bond Framework” in conjunction with which this Opinion has been developed.
The Opinion was drawn up with the aim to provide objective information on why the analyzed bond isconsidered sustainable and responsible, and is intended for investors in general, and not for a specific investor
in particular. Consequently, this Opinion is for information purposes only and Sustainalytics will not accept
any form of liability for the substance of the opinion and/or any liability for damage arising from the use ofthis Opinion and/or the information provided in it.
As the Opinion is based on information made available by the client, the information is provided “as is” and,
therefore Sustainalytics does not warrant that the information presented in this Opinion is complete, accurate
or up to date, nor assumes any responsibility for errors or omissions. Any reference to third party names isfor appropriate acknowledgement of their ownership and does not constitute a sponsorship or endorsement
by such owner.
Nothing contained in this Opinion shall be construed as to make a representation or warranty, express or
implied, regarding the advisability to invest in or include companies in investable universes and/or portfolios.
Furthermore, nothing contained in this Opinion shall be construed as an investment advice (as defined in theapplicable jurisdiction), nor be interpreted and construed as an assessment of the economic performance andcredit worthiness of the bond, nor to have focused on the effective allocation of the funds’ use of proceeds.
The client is fully responsible for certifying and ensuring its commitments’ compliance, implementation andmonitoring.
In case of discrepancies between the English language and translated versions, the English language version
shall prevail.

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Sustainalytics
Sustainalytics is a leading independent ESG and corporate governance research, ratings and analytics firmthat support investors around the world with the development and implementation of responsible investment
strategies. With 13 offices globally, the firm partners with institutional investors who integrate ESG
information and assessments into their investment processes. Spanning 30 countries, the world’s leading
issuers, from multinational corporations to financial institutions to governments, turn to Sustainalytics forsecond-party opinions on green and sustainable bond frameworks. Sustainalytics has been certified by the
Climate Bonds Standard Board as a verifier organization, and supports various stakeholders in thedevelopment and verification of their frameworks. Global Capital named Sustainalytics the “Most Impressive
Second Party Opinion Provider in 2017. In 2018, the firm was recognized as the “Largest External Reviewer”
by the Climate Bonds Initiative as well as Environmental Finance. In addition, Sustainalytics received a Special
Mention Sustainable Finance Award in 2018 from The Research Institute for Environmental Finance Japan for
its contribution to the growth of the Japanese Green Bond Market.
For more information, visit www.sustainalytics.com
Or contact us info@sustainalytics.com

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