NRI Sustainability-Linked Bonds

overall rating:



An-Binh Bui
No items found.

Nomura was the first business enterprise in Japan to issue green bonds. In March 2021, to continue its ESG initiative, Nomura officially launched its NRI Sustainability-Linked Bonds.

Sustainability-Linked Bonds are bonds with terms that change upon whether the firm can achieve its sustainability/ESG targets, indicated by KPIs and SPTs (Sustainability Performance Targets).

The bonds are expected to drive sustainability while stabilizing the company’s financing and diversifying fundraising methods.

I have evaluated that the NRI SL Bonds framework is sufficiently relevant and robust to justify the sustainability label. The bonds address goals that are material, relevant, and core to the company’s strategies as well as its sector’s concerns. Targets are also benchmarked based on science, measurable, and externally verifiable.

Through its bonds and other changes in business activities, Nomura certainly shows its commitments to Sustainability – and also seems to be in a better position to achieve net zero than its peers. But there is still uncertainty about clearly how and for how long it will achieve these ambitions, especially as data of NRI’s recent fiscal year indicate it’s performing less than expected.

What it's made of:


 NRI set is two ESG targets as following:

- KPI 1: NRI Group’s Greenhouse Gas Emissions (Scope 1 and 2), with the following target(s) and trigger event(s):

SPT 1: Decrease NRI Group’s greenhouse gas emissions 72% by FY2030, baseline

FY2013 (108 kt-CO2e), equivalent to a target of 30 kt-CO2e.

- KPI 2: Renewable Energy in the Data Centers, with the following target(s) and trigger event(s):

SPT 1: Increase Renewable Energy use in the Data Centers (NRI’s main source of

emission) to 70% by FY2030.

If NRI achieves these targets, investors can choose to redeem the debt early. NRI’s option of early redemption is progressive because for a typical sustainability-linked bonds, if the firm takes longer to meet its ESG targets set by the interest rates would increase, and the debt would offer extra yield to investors. This implies investors benefit from unmet sustainability goals. However, for NRI’s case, with the early redemption option, investors prefer to call bonds as early as possible to reduce the risk of interest-rate moves. And NRI also can build relationships whereby its ESG targets are supported by investors.

NRI is on its way. In FY2020, NRI SL Bonds helped the group decrease GHG emissions to 55 from 108 in 2013 (55% in 7 years). Given the target of 30 for GHG emission in 2030, this progress is quite impressive. However, NRI has only used renewable energy up to 1.6% of its  data center’s energy mix. The path to 70% is still far, and substantially more commitments are needed.

How it's made:


First, NRI’s KPIs and SPTs choice is material, relevant, and even core to the company and its industry. As a part of the Software and IT Services sector, NRI operations mostly center around its IT infrastructure, in which data centers account for the most energy use and emissions. Thus, NRI’s ESG targets, which are closely associated with data centers, are potentially impactful within the Software and IT Services sector.

Moreover, NRI’s focus on switching to renewable energy reflects its high commitments to decarbonization, which it understands cannot be achieved by energy-saving alone. Its target renewable energy use of 70% is ambitious, given that its currently 22-24% in Japan.. Striving toward its ambition, NRI is working on policy proposals to the Japanese Government to increase renewable energy supply, according to its 2021 report.

Second, NRI discloses transparent verification, credentials, and evidence to make and track its targets. The targets are science-based and certified by SBT and RE100 initiative. Both are internationally recognized indicators. NRI’s benchmark and baselines methods are also supported by data of its performances, published, and verified by third-party organizations annually.

To prevent financial, operational, or climate-related risks, NRI also established bodies to inter-regulate ESG risks and opportunities. However, as sustainability concerns and methods are vast and highly volatile, NRI may need to identify potential key factors, recalculations, or adjustments and the corresponding strategies to sail through its plan more ably.

Who makes it:


Nomura Research Institute (NRI) is the leading economics research, consulting firm, and think-tank in Japan. It’s a member of Nomura Holdings. Nomura has been embracing and advancing sustainability since 1925. The company’s mission is “[resolve] environmental and social issues such as climate change and widening social inequalities. [] help build a sustainable world through our business.”

Nomura aimed high for sustainability. It dedicated 70% of its investment to sustainable causes, issued ESG bonds that are certified internationally, and also published reports with transparency recognized by CDP, a global non-profit that evaluates firm’s sustainability initiatives. Recently, it also gained Net-zero edge by acquiring Greentech, who has completed some 170 green and sustainable deals, including $55bn of M&A, $9bn of capital raising and 77GW of renewable energy asset transactions.

Nomura’s sustainability vision, efforts, and outcomes indicate a clear commitment to align business to this end.