Issuance of Green Bonds

The Aozora Group recognizes that providing financial support for domestic/overseas corporations addressing environmental issues as well as responding to investors’ needs are part of our social responsibilities as a financial institution. In March 2021, March 2023, and September 2023, we issued green bonds whose proceeds will be used solely to finance projects that contribute to environmental solutions, such as renewable energy projects (e.g. solar/wind power generation) and green buildings.
Green bonds issued by Aozora Bank are part of the Bank’s Green Bond Framework, which was formulated in accordance with the International Capital Market Association (ICMA)’s “Green Bond Principles 2018”^*1 as well as the Japanese Ministry of the Environment’s “Green Bond Guidelines 2020”^*2. The framework has obtained a Second-Party Opinion from Sustainalytics, an external certification organization.

A guideline regarding the issuance of Green Bonds which was formulated by the Green Bond Principles Executive Committee, a private organization whose secretarial operations are overseen by the International Capital Market Association (ICMA)
Designed to be used as a reference for market participants who are considering concrete green bond-related initiatives in order to maintain the consistency of Green Bond principles. The Ministry of the Environment first formulated and announced its Green Bond guidelines in March 2017 and published a revised version in March 2020 with the aim of further popularizing Green Bonds in Japan by providing concrete examples and interpretations based on Japan’s unique characteristics

Green Bond Framework

Use of Proceeds

Proceeds from green bonds are allocated to investments and loans in renewable energy projects and green buildings that meet specific standards (“Eligible Green Projects”).

Eligible Green Projects
Renewable energy		Investments and loans to finance the construction, acquisition, renovation and operation of renewable energy projects that comply with the Environmental Impact Assessment Act and the local ordinances when verifying the feasibility of power generation facilities (solar/wind/biomass^*1) Raw materials for biomass energy are limited to sustainable feedstock and waste. (Waste from the palm oil industry needs to be certified according to RSPO or RSB standards.)
Green buildings		Investments and loans to finance the construction, acquisition and renovation of green buildings that have obtained the first or second grade^*2 under green building certification systems S or A in the CASBEE certification (for buildings [new/existing/renovation], real estate and housing [new]), 5 or 4 Star in the BELS certification, 5 or 4 Star in the DBJ Green Building certification, Platinum or Gold in the LEED certification, and Outstanding or Excellent in the BREEAM certification

Project Evaluation and Selection Process

We select loan/investment transactions for the Eligible Green Projects by verifying their adherence to specific standards using relevant documents. The verification and selection processes are based on our specific validation guideline, which allows us to ensure the conformity to the standards in the selection process. In addition, we confirm if the selection process meets the standards once a year following the selection of the Eligible Green Projects.

Management of Proceeds

We regularly monitor the status of allocating proceeds from green bonds to the Eligible Green Projects as well as the unallocated amount. If the proceeds are not fully used, we retain the remaining portion in cash or cash equivalents.

Reporting

Until green bonds are redeemed, we provide annual reporting on Aozora’s website regarding the number of renewable energy projects receiving an allocation, the number of facilities by type/grade of green bond certification, the status of using the proceeds including a list of allocation amounts, and the effect of environmental solutions including reduced CO₂ emission levels.

For further details about Aozora’s Green Bond Framework, please click on the link below.

Overview of the Green Bond Framework and Sustainalytics' Second-Party Opinion

(Reporting)
For further details about the allocation and impact reporting related to the green bonds, please click on the link below.