Tokyo Tech establishes Sustainability Bond Framework in preparation for bond issuance

Tokyo Tech will begin issuing 40-year sustainability bonds totaling JPY 30 billion from fiscal year 2022 onwards.

Tokyo Tech, Japan's leading science and technology university, has a long history which began with the founding of Tokyo Vocational School, the Institute's predecessor, in 1881. Tokyo Tech was selected as a designated national university (DNU) by the Japanese government in March 2018. With the long-term goal of becoming a world-leading science and technology university, the Institute views the next decade leading up to its 150th anniversary in 2031 as a great leap forward. During the next 10 years, the Institute will take on the challenge of redefining science and technology while fostering highly skilled global talent, executing the Tokyo Tech virtuous cycle through major reforms in university management and campus systems, and contributing to a better future society.

In addition to its plans to issue sustainability bonds, Tokyo Tech has initiated the Tamachi Campus Redevelopment Project, which includes a 75-year land lease agreement with business operators who will develop the land made available on Tamachi Campus and manage operations during the lease period. The land lease, which is expected to commence in fiscal year 2026, will generate JPY 4.5 billion of revenue per year.

This revenue will be utilized to finance Tokyo Tech's ultra-long-term investment strategy. Of the roughly JPY 230 billion that will be generated over the 75-year period (JPY 3 billion per year after taxes), approximately JPY 80 billion will be invested in "talent," JPY 100 billion will be invested in "the environment," and JPY 50 billion will be invested in "the future" through the establishment of various funds.

Tokyo Tech's Sustainability Bond Framework will help the Institute to realize XCIE2031 by making proceeds from sustainability bonds available for projects that redevelop Tokyo Tech campuses, create an advanced educational and research environment, and ultimately form a diverse ecosystem that serves as a base for talent from around the world, while also contributing to carbon neutrality.

Based on its philosophy of creating new industries, Tokyo Tech aims to provide solutions to societal issues through innovation. The Institute has positioned integrated energy science as one of its priority fields in its DNU scheme, and will contribute to the achievement of carbon neutrality through the establishment of the Laboratory for Zero-Carbon Energy at the Institute of Innovative Research, the launch of the Tokyo Tech Green Transformation Initiative (GXI), and other efforts. A distinctive feature of Tokyo Tech's Sustainability Bond Framework is that it evaluates the "green" nature of the Institute's decarbonization-related educational and research activities with green eligibility criteria. This characteristic is not often associated with conventional sustainability bonds or green bonds.*

A third-party evaluation of Tokyo Tech's Sustainability Bond Framework has been conducted by R&I. R&I's second opinion states that the framework complies with Green Bond Principles 2021, Social Bond Principles 2021, Sustainability Bond Guidelines 2021, and other principles and guidelines published by ICMA.

Proceeds will be used for projects that meet the following eligibility criteria:

Eligible project

Tokyo Tech Cross-Campus Innovation Ecosystem 2031 Initiative

Examples of specific efforts

Projects that potentially fall under the Sustainability Bond Framework are selected by the Strategic Management Council, the body that oversees the Institute's operational strategy under the leadership of the president. After confirmation of compliance with green and social bond eligibility criteria, projects are voted on by the Board of Directors.

Tokyo Tech's financial accounting system will be used to manage deposits and withdrawals. An auditing firm will audit the Institute's financial statements each fiscal year. Unappropriated funds will be managed or invested in cash or cash equivalents.

Information on allocation of the proceeds will be disclosed annually until the full amount has been allocated to a qualified project. The environmental and societal benefits of the project will also be disclosed annually until the sustainability bonds are redeemed.

A sustainability bond is a form of financing for both green and social projects. A sustainability bond framework is a document in which the issuer explains that the financing complies with the Green Bond Principles 2021 and Social Bond Principles 2021 published by ICMA. The four core components for alignment with these principles are 1. use of proceeds, 2. process for project evaluation and selection, 3. management of proceeds, and 4. reporting. External evaluations of the framework's content for conformity with various principles, etc. is recommended.

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This article has been updated to correct a link error on November 2.