Institutional and retail investors in Japan will soon see the launch of the country’s first portfolio composed solely of REITs that meet defined health and energy targets under the Global Real Estate Sustainability Benchmark (GRESB). Nikkei Asian Review reported the news this week.
Norinchukin Bank, the cooperative farm, fishery and forestry lender and a major Japanese institutional investor with JPY 70.8 trillion (about $844 billion) in total assets, has announced plans to roll out a new ESG-indexed REIT portfolio.
The public portfolio—a market first, amid a rising tide of interest in sustainable investment—will include approximately 40 out of the 64 REITs currently listed on the Tokyo Stock Exchange.
The new portfolio will aim to deliver returns equal to or above the Tokyo Stock Exchange REIT Index.
Listed RE driving ESG gains
Sustainability performance under GRESB, which covers more than 100,000 assets globally, is assessed according to a standardized scale (maximum 100). In 2019, the average GRESB score was 72. Asia’s real estate sector scored the second-highest regional GRESB score worldwide with a reading of 72 (just behind Oceania).
Unlike most other regions under GRESB’s purview, where sustainability improvements have been greater in privately held commercial properties, Asia’s ESG gains have occurred mostly in listed real estate.
As a cooperative bank, Norinchukin is a major domestic financial institution in Japan. Norinchukin accepts deposits from and lends to its members, the Japan Agricultural Cooperatives (JA), Japan Fishery Cooperatives (JF), and Japan Forest Owners’ Cooperatives (FOAs). Norinchukin is also a major institutional investor in Japan and abroad.
