28 Jun 2022

Global X Japan issues an ETF tracking an index jointly created by Solactive and Climate Finance Asia

Throughout history, Japan has gained a reputation for its unique architecture that seeks harmony with natural surroundings. At the same time, the global building sector generates nearly 50% of annual CO2 emissions.1 Due to the significance of real estate and the need to achieve ambitious climate targets, the Japanese government has increased efforts in the adoption of Green Building certifications and energy efficiency standards. For example, the Comprehensive Assessment System for Built Environment Efficiency is a program that evaluates the sustainability performance of buildings, and The Act on Improvement of Energy Consumption Performance of Buildings further intends to decrease emissions.2 Building on these developments, Global X Japan has issued the Global X Green J-REIT ETF (Stock code: 2855), listed on the Tokyo Stock Exchange (TSE) on 24 June 2022. The ETF aims to track the performance of the Solactive Japan Green J- REIT Index, which is an index jointly created by Solactive and Climate Finance Asia.

The index consists of TSE-listed best-in-class REITs based on green building portfolio and commitment to risk- mitigation targets against climate change.

“Our methodology allows investors to identify companies which are truly demonstrating strong sustainability performance and commitment to meeting the carbon reduction targets set out in the Paris Climate Agreement. The index is rules-based and includes J-REITs that own the highest percentage of green-certified buildings in their portfolio with a commitment to climate-aligned emission reduction targets. Additionally, the index applies weights to reward best practices and industry climate leaders in Japan, which serves as a valuable tool to differentiate climate-conscious REITs, and it is believed that they should have better resilience from potential future shocks.”, says Laurence Lo, Director at Climate Finance Asia.

Timo Pfeiffer, Chief Markets Officer of Solactive, comments: “Green real estate is one of the crucial pieces within our transition to a lower carbon economy, and, therefore, it also provides vast growth and investment potentials. Moreover, the additional focus on income attached to REIT investments can be particularly attractive during economic cycles characterized by rising rates and inflation. We are very honored to have partnered with Global X Japan and Climate Finance Asia in bringing this profound investment tool to market, and we will continue to play our role as a creator of indices that help facilitate sustainable investing.”

Jooyoung Yun, CIO at Global X Japan, comments: “Green J-REIT ETF can provide another investment opportunity to local and global investors who want to respond to climate change on Japan REITs space. We are very excited to bring this investment strategy to the Japanese market, with Solactive. Moreover, Global X Japan will continuously provide innovative income products to support Japan ETF market and investors. ”

1 https://architecture2030.org/why-the-building-sector/
2 https://www.joneslanglasalle.co.jp/en/trends-and-insights/research/japan-real-estate-becomes-greener