TOKYO -- Japanese farm lender Norinchukin Bank will market real estate investment funds focusing on properties that achieve sustainability targets, in what it calls a first for the domestic asset management industry.
Norinchukin, which has grown from a savings institution for farmers into a global investor with around 106 trillion yen ($982 billion) in assets, has devoted 10 billion yen of its own money to a handpicked portfolio of real estate investment trusts.
The move marks the latest example of Japanese institutional investors adopting environmental, social and governance factors as a guide for asset allocation.
The REITs are selected using the Global Real Estate Sustainability Benchmark, which considers criteria including worker health, energy consumption by buildings and the presence of renewable energy generation.
About 40 REITs out of the 64 trading on the Tokyo Stock Exchange will be part of the portfolio, according to Norinchukin. The portfolio was developed jointly by group company Norinchukin Zenkyoren Asset Management.
Norinchukin will develop investment products based on the portfolio for institutional and retail investors.
Returns on the products are expected to match or exceed those on the Tokyo Stock Exchange REIT Index. With interest rates at historic lows, institutional investors have shifted more money into real estate.
Norinchukin holds over 60 trillion yen in deposits from Japanese farm and fisheries cooperatives. The bank has become one of the world's biggest buyers of collateralized loan obligations, a type of security consisting of packaged corporate debt.
Its domestic peer, the Government Pension Investment Fund, has also allocated part of its assets under management to ESG investments.