Environmental Enhancement and Value-Added Practices for Our Trusted Property

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Keiko Hosoyama, Real Estate Planning Division - Mitsubishi UFJ Trust and Banking Corporation Co., Ltd. - Japan

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Environmental Enhancement and Value-Added Practices for Our Trusted Property

  1. 1. Environmental Enhancement and Value-Added Practices for Our Trusted Property Keiko Hosoyama
  2. 2. Outline <ul><li>Environmental Risks in Real Estate </li></ul><ul><li>Tokyo Metropolitan Environmental Security Ordinance </li></ul><ul><li>Practices for Our Trusted Property </li></ul><ul><li>To be Responsible for Green Real Estate </li></ul>
  3. 3. Total CO2 Emissions in Tokyo Tokyo Metropolitan Government 1990FY 2000FY 2006FY Growth (Mt-Co2) (Mt-Co2) (Mt-Co2) 1990-2006 2000-2006 Industry 9.8 6.8 5.2 ▲ 47.0% ▲ 23.5% Commercial 15.7 18.9 20.6 31.1% 9.0% Household 13.0 14.3 14.4 11.0% 0.7% Transportation 14.8 17.6 14.7 ▲ 1.1% ▲ 16.5% Others 1 1.2 1.0 ▲ 0.5% ▲ 16.7% Total 54.4 58.8 55.9 2.8% ▲ 4.9%
  4. 4. Environmental Risks in Real Estate <ul><li>Toxic substance </li></ul><ul><li>Soil contamination </li></ul><ul><li>Earthquake resistance </li></ul><ul><li>CO 2 emission </li></ul><ul><li>Energy </li></ul><ul><li>Water </li></ul><ul><li>Solid Waste </li></ul><ul><li>Safety </li></ul><ul><li>Comfortability </li></ul><ul><li>Tree preservation </li></ul><ul><li>Cultural preservation </li></ul><ul><li>Transportation </li></ul><ul><li>Biological diversity </li></ul>Environmental   Risks
  5. 5. Stakeholders <ul><li>Compliance </li></ul><ul><li>Accountability </li></ul><ul><li>Reputation </li></ul><ul><li>Education </li></ul>Community Customers Employees Tenants PM/AM Government Financial Institutions Investors Property Company
  6. 6. Tokyo Metropolitan Environmental Security Ordinance Introduction of the world’s first urban cap and trade program to cover office buildings as its emissions reduction targets <ul><li>Coverage </li></ul><ul><li>Large installations, such as office buildings and factories---Consumption of fuels, heat and electricity is 1,500kl or larger per year </li></ul>FY2006 CO2emissions 559m t 40% : Large CO2 emitters ( 1,400 installations) 60% : Small or middle CO2 emitters (700,000 installations)
  7. 7. Tokyo Metropolitan Environmental Security Ordinance <ul><li>Cap setting </li></ul><ul><li>The cap for the first compliance period has been set at a level of 6% or 8% below base year emission </li></ul><ul><li>The cap for the second compliance period will be set at a level of 17% below base year emission </li></ul>
  8. 8. Tokyo Metropolitan Environmental Security Ordinance <ul><li>Allowance Allocation </li></ul><ul><li>Base year emission × Compliance factor × Compliance period </li></ul>
  9. 9. Tokyo Metropolitan Environmental Security Ordinance <ul><li>Emissions trading mechanism </li></ul><ul><li>① Reduction exceeding the obligation </li></ul><ul><li>Emission reduction exceeding the yearly obligation may be traded from the 2nd year </li></ul><ul><li>② Small and Midsize facilities Credits </li></ul><ul><li>Emission reduction by energy-saving measures </li></ul><ul><li>③ Outside Tokyo Credits </li></ul><ul><li>④ Renewable Energy Certificates </li></ul><ul><li>cf. solar energy, wind energy, geothermal energy, </li></ul><ul><li>hydropower energy, biomass energy </li></ul>Offset Credits
  10. 10. Structures of Trust Scheme ① Land Trust Lender Trust bank Originator Tenant Property manager General constructor Trust contract Outsourcing of property management Financing for construction Rental contract Construction contract
  11. 11. Structures of Trust Scheme ② Real estate securitization Lender Trust bank Originator Tenant Property manager Asset manager Equity member Specific borrowing Equity Real estate Vehicle (SPC) Outsourcing of property management Rental contract Operation of vehicle Sale of beneficiary interests in trust Trust contract Direction of operation
  12. 12. Practice for Our Trusted Property① ① Energy Assessment
  13. 13. Practice for our trusted property② ② Simulation by CASBEE Q1:Indoor Environment Q2:Quality Services Q3:Outdoor Environment on Site L1:Energy L2:Resouces & Materials L3:Off-site Environment BEE (Building Environmental Efficiency) = Q (Building Environmental Quality & Performance) L (Building Environmental Loadings)
  14. 14. Practice for our trusted property②
  15. 15. Practice for our trusted property② Score If the scores of all three will up to 4.0 ・・・ If the score will up to 3.0 ・・・ 0.0 1.0 2.0 3.0 4.0 5.0 0.00 0.02 0.04 0.06 0.08 0.10 0.12 Consideration of Global Warming Perimeter Performance Daylight Factor Illuminance Air Supply Planning Building Thermal Load Natural Energy Utilization Use of Recycled Materials as Non-structural Materials weighting coefficients
  16. 16. Practice for our trusted property③ ③ MOU on CO2 emissions Hotel Office MUTB (Trustee) Investor① Hotel Management Company MUTB (Trustee) Investor② Tenant Conclude MOU on CO2 emissions positive to reduce CO2 emissions MUTB (Asset manager②) few choices as prioritizing over hotel users Asset manager①
  17. 17. Practice for our trusted property④ ④ ideas for market of emissions trading installations which demand for Credits MUTB Large installations Large installations Large installations Small and Midsize installations Large installations (outside Tokyo) installations which can supply for Credits ① reduction exceeding the obligation ② Small and Midsize facilities Credits ③ Outside Tokyo Credits supply Credits
  18. 18. Responsible Property Investing <ul><li>UNEP FI Property Working Group </li></ul><ul><li>  Mission: To encourage property investment and management practices that achieve the best possible environmental, social and financial goals, as consistent with fiduciary responsibilities </li></ul><ul><li>Responsible Property Investing </li></ul><ul><li>  All the ways that investors can find and create value through improving the economic, social, and environmental profile of their investments. </li></ul>
  19. 19. Responsible Property Investing 『 Owner-Tenant Engagement in Responsible Property Investing 』 This report presents several stories from leading property organizations that are committed to sustainability and responsible investing on innovative ways to promote better cooperation between owners and tenants. 『 What the leaders are doing 』 This report presents 10 strategies for responsible property investment, each demonstrated by a collection of case studies that explain the financial and environmental value of responsible property investment.
  20. 20. Responsible Property Investing 『 Metrics for Performance Measurement 』 The purpose of this toolkit is to provide how to develop systems of metrics meant to measure RPI, how those metrics across property portfolios can be collected, and finally those information collected can be integrated into portfolio management. 『 Committing and Engaging 』 The purpose of this toolkit is to provide how to commit to RPI as an investment strategy, hot to put into place governance and management structures that integrate RPI into corporate culture and practice etc.

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