To further advance our decarbonization efforts, Shimizu has established a Sustainability-Linked Loan Framework (the “Framework”) as outlined below.
A Sustainability-Linked Loan (SLL) is a financing structure in which Sustainability Performance Targets (SPTs), aligned with the borrower’s management strategy, are established, and loan terms—such as interest rates—are linked to the borrower’s performance against these targets. This approach is designed to motivate target achievement while supporting sustainable business activities and growth from both environmental and social perspectives. We believe that raising funds through SLL will not only help advance our sustainability initiatives, but also serve as a strong demonstration of our commitment to realizing a zero-carbon society to all stakeholders.
The Framework outlines our alignment with the key elements recommended in the principles and guidelines listed below.
- Sustainability-Linked Loan Principles 2023 by LMA, APLMA, and LSTA
- Sustainability-Linked Loan Guidelines 2024 Edition by the Ministry of the Environment, Japan
The Framework has received a second-party opinion from Rating and Investment Information, Inc., an independent third party, confirming its alignment with the above principles and guidelines.
The Framework’s alignment with the five core components of the Sustainability-Linked Loan Principles is outlined below.
＜The Five Core Components＞
- Selection of KPIs
- Setting of SPTs
- Loan characteristics
- Reporting
- Verification
Shimizu Corporation Sustainability-Linked Loan Framework (PDF: 1,440 KB)
R&I Second-Party Opinion – Shimizu Corporation Sustainability-Linked Loan Framework (PDF: 311 KB)
Selection of KPIs
SLLs executed under the Framework will use the two KPIs (hereinafter, the KPIs) below.
KPI 1 ：Reduction rate of total CO2 emissions in the Construction Business (non-consolidated, domestic) compared to FY2023
KPI 2：CDP Climate Change Score (consolidated, domestic and overseas)
The KPIs align with our previously mentioned material issue of decarbonization and serve as indicators that contribute to SHIMZ Beyond Zero 2050, Group's Environmental Vision.
＜Results＞
| KPI | FY2021 | FY2022 | FY2023 |
|---|---|---|---|
| KPI 1 Total CO2 emissions in the Construction Business |
201,228t-CO2 | 177,779t-CO2 | 192,754t-CO2 |
| KPI 2 CDP Climate Change Score* |
CDP2022 A |
CDP2023 A- |
CDP2024 B |
The CDP score is used in FY 2021.
Setting of SPTs
SLLs executed under the Framework will use the two SPTs below.
SPT 1：Reducing total CO2 emissions in the Construction Business (non-consolidated, domestic) compared to FY2023, as shown in the table below
| Year | Reduction rate (compared to FY2023) |
|---|---|
| FY2025 | ≥8.00% |
| FY2026 | ≥12.00% |
| FY2027 | ≥21.38% |
| FY2028 | ≥26.73% |
| FY2029 | ≥32.07% |
| FY2030 | ≥37.42% |
| FY2031 | ≥42.76% |
| FY2032 | ≥48.11% |
SPT 2：Achieving a CDP Climate Change Score (consolidated, domestic and overseas) of A or A-
The targets for FY2025 and FY2026 under SPT 1 are those set forth in the Mid-Term Business Plan (2024–2026). The target levels for FY2027 to FY2032 are considered to be consistent with the 1.5°C scenario set by the Science Based Targets (SBT). (Certification scheduled for FY2025.)
For SPT 2, the target is to achieve a CDP Climate Change Score of either A or A-, which represents the leadership level for companies demonstrating current best practices.
Going forward, we plan to establish feasible emission reduction measures and targets for Scope 3 as well,and will consider revising the framework when setting new medium-to long-term CO2 reduction targets.
Loan characteristics
The loan interest rate will vary depending on the SPT achievement status. The specific details regarding the loan characteristics, definitions of the KPIs and SPTs, and the SPT determination dates will be set forth in the documents executed at the time of each loan (such as the loan agreement and other related contracts). If the SPT is not achieved/achieved, the interest rate will increase/decrease at the annual rate specified for the SPT at the time of the loan execution from the interest payment date following the determination date until the next determination date (or the maturity date in the case of the final determination).
Reporting
Throughout the term of each loan, we will disclose the reporting items listed below on our website annually.
| Reporting item | Reporting timing |
|---|---|
| Actual values of the KPIs for the relevant reporting period | Annually, starting from the fiscal year following the execution of the SLL through the final determination date |
| Achievement status of the SPTs for the relevant reporting period | |
| Provision of information that may affect the achievement of the SPTs (Establishment or revision of sustainability strategies, formulation or implementation status of action plans, etc.) |
|
| Disclosure of verification reports by an independent third party regarding the achievement status of the KPIs against the SPTs (For the CDP Climate Change Score [KPI 2], if the score results are disclosed on the CDP website or similar platforms, disclosure of a verification report on our website will not be required.) |
Verification
We will obtain third-party verification at the following three stages:
- 1）For the Framework, we will obtain a second-party opinion from an independent third party confirming its alignment with the Sustainability-Linked Loan Principles established by LMA, APLMA, and LSTA, as well as the Sustainability-Linked Loan Guidelines established by the Ministry of the Environment, Japan. The second-party opinion obtained will be disclosed on our website prior to the execution of any SLLs based on the Framework.
- 2）If the Framework is updated, we plan to obtain a new second-party opinion. In principle, for loans executed based on the Framework, the contents of the Framework will remain applicable until the maturity of the respective loan.
- 3）We will obtain a verification report from an independent third party regarding the actual KPI values and disclose it on our website. For the CDP Climate Change Score (KPI 2), if the score results are disclosed on the CDP website or other platforms, independent third-party verification will not be required.
Validity and review of the Framework
While the Framework does not have a specified expiration date, it may be updated as necessary in consultation with relevant parties such as external evaluation agencies. As noted above, if the Framework is updated, we plan to obtain a new second-party opinion.
(Examples) Cases in which a review of the Framework may be required
- Changes to our sustainability strategy require revisions to the KPIs or SPTs
- Revisions to past reduction performance require changes to the SPTs
