Frontier Real Estate Investment Corporation

ESG Report
October 2023

FRI is a retail facilities-specialized J-REIT,
sponsored by Mitsui Fudosan

Index
02

Our Commitment

03

Sustainability Management

09

Environmental Initiatives

18

Social Initiatives

25

Governance Initiatives

30

Index

Our Comm i tm ent

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Gove rn an c e In i ti ati ve s

In de xThe Ministry of the Environment forecasts that if global warming were to continue on its present course

FRI strives to achieve its mission of building

without the implementation of effective countermeasures, summers in Tokyo would reachsustainable relationships with all stakeholders

maximum of 90 meters per hour. Judging from the severity of the torrential rains and typhoons caused

and raising the medium- and long-term value forthat is all too possible.

temperatures over 40 degrees centigrade in 2100, and the wind speed of typhoons would rise to a
by climate change in recent years, we feel that these forecasts are not fiction, but instead pose a crisis
To ensure that the world and society in which we live every day remain environmentally sound andunitholders by further augmenting its initiatives

that our business continues to grow sustainably, Frontier Real Estate Investment Corporation (“FRI” or“the Investment Corporation”), which holds and manages retail facilities, and Mitsui Fudosan Frontier

aimed at addressing ESG issues in real-estate

REIT Management Inc. (the “Asset Management Company”), are pursuing measures to reduce ourenvironmental impact, leading to a reduction in CO₂ emissions.

investment management going forward,

We believe that we must not be a homogenous organization, but rather adopt approaches that value

and disclosing its results appropriately.

organizational diversity.
About half of the officers and employees of the Asset Management Company are women, and our

We ask for your continuing support

members come from diverse career backgrounds. We believe that a vibrant corporate atmospherewith open communication in which employees can exchange their views on a regular basis is theand understanding.

source of new ideas.
We also believe that providing an environment that focuses on each individual employee supporting
the organization, as well as their families, and enables them to work in a healthy way with energy andmotivation is an important management issue. We work together with employees to pursue healthmanagement initiatives that will maintain and improve employees’ health to ensure that the AssetManagement Company remains sustainable.
In strengthening the governance system, we will give priority to the transparency of decision-making,with compliance and risk management taking utmost precedence. Moreover, by reinforcing dialogue
with investors through intensive IR activities, we will maintain a system that is transparent externally as
well.
FRI strives to achieve its mission of building sustainable relationships with all stakeholders and raising
the medium- and long-term value for unitholders by further augmenting its initiatives aimed ataddressing ESG issues in real-estate investment management going forward, and disclosing its results
appropriately. We ask for your continuing support and understanding.

Mitsui Fudousan Frontier REIT Management Inc.
Chief Executive Officer and Representative Director

Frontier Real Estate Investment Corporation ESG Report2

Sustainability
Management

Our Comm i tm ent

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In de xOur Approach to Sustainability
The Mitsui Fudosan Group is committed to social and economic development as well as global environmental preservation under the principles of coexisting in harmony with society. linking diverse values,
represents our Group Vision.
and achieving a sustainable society represented by its
corporate logo. Under the principles of thelogo,
We, as part of Mitsui Fudosan group, will make efforts to execute ESG challenges in our group.
The Investment Corporation aims to secure stable earnings for medium- to long-term and maximize unitholders’ values.
We, as an asset management company of the investment corporation, recognize the needs to operate real estate business in harmony with the society, the economy, and the earth, as well as the needs toreduce environmental burdens, to develop sustainable relationships with a variety of our stakeholders and to develop governance system so that our investors can rest assured that their unit holdings in theinvestment corporation will continue rewarding them over the long term.
After considering the roles that we should play in the relationships with our stakeholders, we hereby formulate “Sustainability Policy”, aiming at operation with the environment, social and governance factors in mind.
We will put in place this policy in day-to-day operation and communicate the effort status properly.

Sustainability Policy
1. Reducing environmental impact(1) Reducing carbon emissions through pursuing energy efficiency
We aim to contribute to reducing carbon emissions through implementing power saving andenergy efficiency measures in our operations as well as installing energy efficient equipment.
And furthermore, we work to achieve low carbonization and non-carbonization in theportfolio through the use of renewable energy or other approaches, in order to adapt to theforthcoming decarbonized society.
(2) Conserving water and other natural resources while reducing waste
We aim to introduce high-efficiency fixtures to conserve water and promote 3Rs, i.e., reduce,reuse, recycle, to contribute to realizing resource-saving and recycle-oriented society.
(3) Reducing hazardous substances with health and safety
We aim to reduce hazardous substances or environmental pollution, brought by theoperation in commercial facilities, to the extent possible, properly manage environment
quality in the building space and promote efforts to enhance health, safety and hygiene fortenant employees or visitors.
In parallel, we take all possible measures in preparation for large-scale earthquakes orserious climate disasters like typhoon or flood in order to secure “safety and security” forbuilding users.
2. Developing sustainable relationships with a variety of stakeholders(1) Cooperation and coexistence with local communities
We aim to operate our retail facilities as a “core of local community”, providing place ofhuman interaction and information exchange and thus contributing to regional vitalization.

(2) Collaborating with Mitsui Fudosan group companies and tenants
We strive to create comfortable and environmentally-conscious retail space, collaboratingwith Mitsui Fudosan group companies and our tenant companies, so as to improve customer
satisfaction as well as to enhance sustainability awareness among our visitors. In addition,
we adopt ESG factors as one of criteria to select outsourcing companies related to property
operation and suppliers of goods and services, and also require them to proceed with
operation with sustainability in mind.
(3) Engaging with our employees
We endeavor to raise environmental awareness and literacy among our employees throughconducting organized training programs including environmental seminars as well as torealize work-life balance by supporting diversified work styles.
Moreover, we strive to increase employee engagement by improving the workplaceenvironment and creating opportunities for active internal communication.
(4) Establishing trusting relationships with investors
We make the best efforts to disclose non-financial information including environment, socialand governance (ESG) factors in addition to financial information in a timely and adequate
manner, aiming to establish trusting relationships with investors.
3. Enhancing governance system(1) Clarifying corporate governance structure
We make utmost efforts to disclose decision-making process, secure the traceability, raiseawareness about compliance and achieve risk management in order to make decisionmaking process more transparent.
(2) Enhancing corporate governance system
We pursue to increase diversity in the Board of Directors and to establish effective
governance structure, in an effort to enhance the corporate governance system.

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Materiality
Materiality(2) Conserving water and otherresources while reducing
waste(3) Reducing hazardous
substances and ensuring
health and safety

KPI

The Mitsui Fudosan Group is committed to social and economic development as well as
global environmental preservation under the principles of harmony and coexistence,
while working to link diverse values and achieve a sustainable society as represented by its
corporate logo.

Support SDGs

a. Data coverageb. Per-unit energy consumptionc. Per-unit greenhouse gas (GHG) emissions

Based on the vision of the Mitsui Fudosan Group and an awareness of the role they must
fulfill in their relationships with stakeholders, FRI and the Asset Management
Company have established the Sustainability Policy as one of their basic policies.

a. Data coverageb. Per-unit water consumptionc. Waste recycling rate

Furthermore, with reference with to GRI standards, FRI has evaluated the importance toitself and to stakeholders of the issues outlined in the Sustainability Policy and designatedissues of particularly high priority as material issues.
When designating material issues, FRI works to identify relevant stakeholders, understandstakeholder priorities and expectations, clearly identify tasks, and assign an order of priority
through the discussions of the Sustainability Committee.

Collaborating with various stakeholders (S)Materiality(1) Cooperation andcoexistence with local
communities

KPI

Support SDGs

a. Asset Management Company employees who take part inrunning activities for &EARTH Clothing Support Projectb. Participants of the &EARTH Clothing Support Project in
FRI Properties
c. Clothing collected of the &EARTH Clothing Support Project in
FRI Propertiesd. Additional donations of the &EARTH Clothing Support Projectin FRI Properties(2) Collaboration with the
Mitsui Fudosan Group andtenantsa. Percentage of engagement programs for tenants(3) Engaging with
our employees

a. Average annual training hours per employee
b. Average annual training expenses per employeec. Employees with official certifications
d. Employee awareness survey(4) Establishing trusting
relationships with
our investorsa. Percentage of portfolio with environmental certification(DBJ Green Building Certification or CASBEE Rank (＊))
b. External certifications
c. IR briefings per year

Relation to SDGs
In September 2015, at the United Nations Sustainable Development Summit, the 2030 Agenda
for Sustainable Development was adopted by all 193 member nations. The agenda is a
guideline for how citizens, governments, businesses and international society as a whole shallwork together to realize sustainability through the Sustainable Development Goals (SDGs)composed of 17 larger goals and 169 smaller targets-to be completed by the year 2030.
FRI and the Asset Management Company will contribute to the achievement of the SDGs aswell as contributing to social and economic development and the preservation of the global
environment by tackling our materiality. How FRI and the Asset Management Company working
toward achievement of the 17 goals and 169 targets of the SDGs is detailed above.

Looking Forward
FRI and the Asset Management Company seek to achieve sustainable growth by addressing thematerial issues presented above in the course of their business activities.

(＊) FRI has not received any other green building certifications.

At the same time, while remaining aware of society’s expectations by deepening dialogue with

Enhancing the Governance System (G)Materiality

In de x

Process of Identifying Material Issues

Reducing environmental impact (E)(1) Reducing carbon emissions
by pursuing energy
efficiency

Gove rn an c e In i ti ati ve s

KPI(1) Clarifying corporate
governance structurea. Number of compliance trainings
b. Compliance training attendance rate(2) Enhancing corporate
governance systems

a. Number of independent Directors (Supervisory Directors)
b. Board of directors’ meeting attendance ratec. Number of female director

stakeholders, FRI will flexibly revise its designated material issues in response to changes insociety.

Support SDGs

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Dialogue with Stakeholders
The Investment Corporation and the Asset Management Company build sustainable relationships through dialogue with stakeholders .
Information about stakeholder priorities and expectations obtained through dialogue is reflected in our material issues, the basis for our sustainability initiatives.

＜Examples of Dialogue with Stakeholders＞

Tenants

Shopping Center Managers
and Business Partners● Promoting initiatives to reduce● Environmental and social data

environmental burden duringcollection through SC management

setting of green-lease clauses
or regular on-site meetings● Cooperation on sustainability

initiatives● Distributing a “Sustainability Guide”

Employees

Unitholders and Investors● Communication during everyday● Communication via the Generalwork and at workshops

Meeting of Unitholders, analyst

meetings, meetings with investors in● Dialogue via employee awarenessand outside Japan, IR-related events,

surveys and other means

and the Investment Corporation’s

website and other tools

Local Communities● Communication through theoperation of properties● Communication through events for

local residents at our facilities

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In de x

Our Comm i tm ent

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In de xSustainability Promotion Framework
To ensure the efficacy of its sustainability initiatives, the Asset Management Company has established a Sustainability Committee and a Sustainability Secretariat (“Secretariat”) as an organ for examining
matters prior to their consideration by the committee. The Sustainability Committee is chaired by the Chief Executive Officer and Representative Director, and its other members are general managers of theInvestment Division, the Finance Division, and the Planning and Administration Division.

Sustainability Committee

Sustainability Committee

The committee meets once every quarter in principle.

Committee chair:＊In principle, the Compliance Division General Manager attends committee meetings and offers opinions from a compliance-based perspective.

Chief Executive Officer and Representative Director

The Sustainability Committee deliberates sustainability policy, short- and medium-term goals—including key
performance indicators (KPIs) used to measure progress—based on the relevant risks and opportunities as well as,
to manage and realize these, specific measures and their implementation plans. These items are proposed to thecommittee by the Sustainability Secretariat.

Other members:
Investment Division General Manager
Finance Division General Manager
Planning and Administration Division General Manager

Secretariat＊In principle, the Compliance Division General Manager also attends committee meetings

The secretariat meets at least once every quarter in principle.
The Sustainability Secretariat is an organ for examining matters prior to their consideration by the Sustainability
Committee.
The secretariat submits proposals to the committee pertaining to such matters as sustainability policy and shortand medium-term goals—including the KPIs used to measure progress—based on the relevant risks andopportunities as well as, to manage and realize these, specific measures and their implementation plans.
Furthermore, the secretariat manages Companywide implementation related to such matters as goals and specificmeasures decided by the Sustainability Committee and gathers relevant information from responsible divisions thatit periodically reports to the committee.

Sustainability Secretariat
Secretariat Manager (appointed by the committee)
At least one person from each division

Image of Sustainability Promotion Based on the PDCA Cycle

Annual Activities
The boards of directors of the Asset Management Company and the Investment Corporation

Plan

periodically receive reports on the policies, goals, specific measures and other matters decided by● Formulation of sustainability policy● Consideration and planning of goals andmeasures related to sustainability● Summary of environmental laws andregulations

the Sustainability Committee as well as the progress of their implementation.
Number of committees (held): 4, average attendance rate of committee members: 100% (fiscal 2022)
Apr.-May

Sustainability
initiatives

Jun.

Secretariat
meeting▼
Committee
meetingJul.-Aug.

Sep.

Oct.-Nov.

Secretariat
meeting▼
Committee
meeting

Dec.

Jan.-Feb.

Secretariat
meeting▼
Committee
meeting● Conﬁrm progress toward goals, including KPIs

Mar.

Secretariat
meeting▼
Committee
meeting● Review previous year's
activities● Consider policy revisions● Determine following year's
goals● Implementation of goal-based measures● Implementation of sustainability training

ActionCheck● Review of activities in the preceding fiscal year
● Planning of improvement measures for the next
fiscal year
● Setting goals for the following fiscal year
● Reporting to the Boards of Directors of theInvestment Company and the Asset Management
Company each time the Sustainability Committee
convenes (once every quarter)● Sustainability Committee checks progress
toward goals, including KPIs (four times peryear)● Participation in GRESB real estate assessment● Disclosure of KPI results

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In de xExternal Certifications/Assessments
FRI has received environmental certification/recognition from the following external assessment organizations for its sustainability activities.

GRESB Assessment

SMBC Environmental Assessment

In the 2023 GRESB Real Estate Assessment, The Investment Corporation

The Investment Corporation received this assessment as the firstreceived an assessment rank of “4 Stars” and a “Green Star” status for the

J-REIT on August 29, 2017.

nine consecutive years in the GRESB Real Estate Assessment, as well as
the highest “A Level” under the GRESB Public Disclosure Level Assessment.
Certification rank

GRESB is a benchmark assessment to measure environmental, social,AAand governance (ESG) consideration of real estate companies andRating4 Stars

funds, as well as the name of organization which runs the assessment.

Implementing excellent
environmental consideration

GRESB data is used for investment decision-making and engagementwith investees.

“SMBC Environmental Assessment Loan” is a system in which thestate of a company’s environmental consideration is assessed using
criteria prepared independently by the Japan Research Institute,
Limited, and Sumitomo Mitsui Banking Corporation sets conditions forloans according to the results of the assessment.
The degree of progress in environmental management iscomprehensively gauged from four aspects: [1] The state ofawareness of environmental loads; [2] the extent of environmental
conservation measures and the results of such efforts; [3] the state ofenvironmental management system building; and [4] the extent ofinitiatives forenvironmental communication and environmental business.

Initiatives at the Mitsui Fudosan GroupIn order to realize continuous value creation, the Mitsui Fudosan Group has positioned ESG (Environment, Society, and Governance) as a key management issue, the Group aims to achieve a sustainable
society and drive sustainable profit growth. The Mitsui Fudosan Group supports the following initiatives.

Participation in the United Nations Global Compact

Supporting the Task Force on Climate-related Financial
Disclosures (TCFD)

The Mitsui Fudosan Group supports the UN Global Compact comprising 10 principles relating
to human rights, labor, the environment, and anti-corruption advocated by the UN. We signed

The Mitsui Fudosan Group agrees with the disclosure of the associated risks and opportunities

the compact in December 2018, and participate in the Global Compact Network Japan.

regarding climate change proposed by the Task Force on Climate-related Financial Disclosures(TCFD). Furthermore, we are also active as a member of the TCFD Consortium, a collective ofJapanese companies supporting the TCFD.

Affiliation with RE100

Greenhouse gas (GHG) emissions reduction targets
validated by the SBT initiative

The Mitsui Fudosan Group is a member of RE100, a global initiative committed to utilizing
100% renewable energy. We are also proud to be fighting climate change as a recognized

The Mitsui Fudosan Groupʼs Groupwide greenhouse gas (GHG) emissions reduction targets

member of the JCLP (Japan Climate Leaders’ Partnership), a local partner of RE100.

have been validated as scientifically sound by the international Science Based Targets (SBT)
initiative.

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Environmental
Initiatives

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In de xResponding to Climate Change
Our Recognition of Climate-related Issues

Secretariat as a body to examine matters before their discussion in the Sustainability Committee.

progression of climate change is a scientific fact. Climate change progression is expected to(CEO) and Representative Director, who has final decision- making authority on sustainability

The chief executive officer for climate- related issues is the Company’s Chief Executive Officer

As shown in the Paris Agreement (2015), the IPCC Report (2018), and other documents, thepromotion, and the operating officer for climate-related issues is the Chief Investment Officer.

enlarge climate disasters such as intensified typhoons and heavy rains, frequent heat waves andMatters related to climate change responses, such as identification and evaluation of the effects

droughts, and the progressive rise of global sea levels. In addition, as part of a concerted effort toof climate change, management of risks and opportunities, progress in adaptation and mitigation

mitigate climate change, a global transition to socioeconomic decarbonization, such as setting a

initiatives, and setting of metrics and targets, are reported periodically to the chief executive

framework for reducing greenhouse gas emissions and tightening emission regulations, is expected

officer for climate-related issues by the Sustainability Secretariat, and each agenda item is

to continue. In this way, the progression of climate change is a material challenge that will lead todramatic changes in the natural environment and social structure and have a significant impact on

discussed and considered by the Sustainability Committee.

our business.

Strategy

Identifying, assessing, and managing the risks and opportunities posed by climate change and

Identification of risks and opportunities

improving business resilience (both in the sense of toughness and ability to recover) are essential

About once a year, the Asset Management Company identifies and assesses climate-related

matters for FRI to secure stable profits over the medium to long term, and to aim for stablerisks and opportunities pertaining to itself and FRI.

distribution of dividends and maximization of unitholder value.
The Asset Management Company has established Guidelines for Addressing Climate Change in

Projected future state

August 2021, which set forth a policy for addressing climate change-related risks and opportunities

Transition Risks

as well as initiatives concerning business and strategic resilienceto climate-related issues.

Policy and Legal
Regulatory
tightening bypromoting low
carbon anddecarbonization
through policy

Support Expressed for the Recommendations of the Task
Force on Climate-related Financial Disclosures (TCFD)
In January 2022, the Asset Management Company announced its support for therecommendations of the Task Force on Climate-related Financial Disclosures (TCFD)＊1 with theTechnology
New low-carbon
and decarbonization
technologies andtheir mainstreaming

aim of improving transparency by disclosing climate-related risks in line with the TCFD
recommendations. It also participates in the TCFD Consortium＊2, in which many companies andorganizations that support the TCFD in Japan participate.

MarketFluctuations inenergy prices andchanges in service
demand, etc.
Reputation
Negative changes
in reputation fromstakeholders＊1 The TCFD was established by the Financial Stability Board (FSB) to consider how best to disclose climate-related information and how
financial institutions should respond.
It regards climate change as a serious risk to the global economy, and recommends that companies understand and disclose information on
governance, strategy, risk management, and metrics and targets.
＊2 An organization established to discuss how to disclose and make use of climate-related information. Many companies and organizations that
support the TCFD in Japan participate in this consortium.

Physical Risks

GovernanceTo ensure the effectiveness of its sustainability initiatives, the Asset Management Company has
established a Sustainability Committee chaired by the Chief Executive Officer (CEO) and
Representative Director and comprising as members the Chief Investment Officer, Chief Financial
Officer, and the Planning & Administrative Officer. It has also established a Sustainability

Risk/
Timeline Opportunity

Impact on business of transitioning society and the economy to low carbon and carbon-free
Introduction of carbon taxes, introductionof emissions trading systems

Increase in carbon tax burdens, costs forpurchase of carbon credits, and other costs

2030(Mid term)

Risk

Stricter regulations on total building
carbon emissions and energy conservation
standards

Occurrence of costs for retrofitting(modification of existing buildings to increaseenergy efficiency)

2030(Mid term)

Risk

Mandatory and stricter disclosure andreporting systems relating to building
energy efficiency assessments

Occurrence of certification and other costs

2030(Mid term)

Risk

Lower utility expenses as a result of
introduction of energy efficient equipment and
ZEB conversion

2030
Opportunity(Mid term)

Advances in and dissemination of energy­saving technology and ZEB (net zeroenergy building) technologies

Increased demand from investors and financial
institutions regarding ESG factors and portfolio
environmental performance in funding

Selection of properties by tenants with anemphasis on environmental performance

Selection of properties by tenants with anemphasis on disaster preparedness

Increase in costs with introducing energy
efficient equipment and ZEB conversion

2030(Mid term)

Diversification of financing methods andexpansion of the breadth of investors

2030
Opportunity(Mid term)

Increase in capital procurement costs

2030(Mid term)

Higher rents at properties with highenvironment performance2030
Opportunity(Mid term)

Lower occupancy rates at properties with low
environment performance

2030(Mid term)

Higher rents at properties with low disaster
risks

2030
Opportunity(Mid term)

Lower occupancy rates at properties with highdisaster risks

2030(Mid term)

Risk

Risk

Risk

Risk

Impact on business caused by changes from traditional climate patterns as climate change progresses

Acute
Caused by events

Increase in torrential rains, typhoons,floods, and storm surges

Loss of sales opportunities due to suspensionof public transportation, Loss of sales
2050
opportunities due to building flooding, Increase(Long term)in repair costs and casualty insurance
premiums due to building flooding

Risk

Chronic
Stemming fromlong-term shifts inclimate patterns

Rising sea levels

Loss of sales opportunities due to building
flooding, Increase in repair costs and casualty
insurance premiums due to building flooding

2050(Long term)

Risk

Increase in average temperature

Increase in air conditioning costs

2050(Long term)

Risk

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Financial impact

Our Comm i tm ent

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Gove rn an c e In i ti ati ve s

In de xAssessment of risks and opportunities

Initiatives to mitigate risks and realize opportunities

The identified risks and opportunities were assessed under the scenarios of a global

We are implementing the following initiatives to mitigate climate-related risks and realize

temperature rise of 1.5°
C and 4°C, taking into account uncertainties regarding the progress ofclimate-related opportunities:

climate change. We will take priority measures regarding those risks and opportunities with a● Environmental initiatives through real estate investment (P13)large impact according to the assessment results.

● Implementation of building assessments for medium- to long-term decarbonization planning
Through these initiatives, we will enhance resilience to climate change and climate-related

Scenario analysis assumptions

issues.
4°
C scenario

1.5°
C scenario

Transition Risks

IEA (International Energy Agency) World Energy Outlook
2020 SPSIEA World Energy Outlook 2020 NZE2050

Physical Risks

IPCC (Intergovernmental Panel on Climate Change)
Fifth Assessment Report IPCC RCP8.5

IPCC Fifth Assessment Report IPCC RCP4.5

Risk Management

The Asset Management Company establishes countermeasures for material climate-related risks
and opportunities discussed by the Sustainability Committee and considers them in terms ofcompany-wide risk management programs in an effort to integrate the risk identification,assessment, an d management processes.

Financial impact of risks and opportunities based on the scenario analysis
Risk/
Opportunity

4°
C scenario
Impact1.5°
C scenario
ImpactIncrease in carbon tax burdens, costs for purchase of carbon
credits, and other costs

Risk

Small

Large

Occurrence of costs for retrofitting (modification of existingbuildings to increase energy efficiency)

Risk

MediumLarge

Occurrence of certification and other costs

Risk

Small

MediumOpportunity

Small

MediumIncrease in costs with introducing energy efficient equipment and
ZEB conversion

Risk

MediumLarge

Diversification of financing methods and expansion of the breadthof investors

Opportunity

Small

Medium

Risk

Small

MediumHigher rents at properties with high environment performance

Opportunity

MediumMediumLower occupancy rates at properties with low environment
performance

Risk

MediumMediumOpportunity

MediumSmall

Lower occupancy rates at properties with high disaster risks

Risk

MediumSmall

Loss of sales opportunities due to suspension of public
transportation, Loss of sales opportunities due to building flooding,
Increase in repair costs and casualty insurance premiums due tobuilding flooding

Risk

MediumSmall

Loss of sales opportunities due to building flooding, Increase inrepair costs and casualty insurance premiums due to building
flooding

Risk

MediumSmall

Increase in air conditioning costs

Risk

MediumSmall

Financial impact

Metrics and Targets

Transition Risks

Policy and Legal

Technology

Lower utility expenses as a result of introduction of energy
efficient equipment and ZEB conversion

Increase in capital procurement costs

Market/Reputation

Higher rents at properties with low disaster risks

In its initiatives to mitigate risks or realize opportunities, the Asset Management Company
defines KPIs and manages them through monitoring and target setting.
The targets and actual results for energy consumption, greenhouse gas (GHG) emissions, water
consumption, and waste recycling rate, which are set as KPIs for mitigating climate-related risks,
can be seen in p.12.

Physical Risks
Acute

Chronic

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In de xT a r g e ts f or Reduc ing Env ir o nmental Bur d en
As part of the efforts to reduce environmental burden, the Asset Management Company has set the following reduction targets for energy consumption, greenhouse gas (GHG) emissions, water consumption,
and waste recycling rate.

Greenhouse gas (GHG) emissions

Indicators for 2022 marked with * have been independently assured by KPMG AZSA Sustainability Co., Ltd.

Boundary The entire portfolio pertaining to properties owned by FRI and beneficiary rights.
Reporting Period
Energy consumption, Greenhouse gas (GHG) emissions, Water consumption:
12-month period from January to December
The reporting period for data for 2021 and before has been changed to 12-month period from January
to December, and the base year in setting targets for greenhouse gas (GHG) emissions and water
consumption have also been changed from FY2019 to 2019.
Waste recycling rate:
Until FY2021: 12-month period from April to MarchFY2022: 12-month period from January to December

1. Target setting⃝ Achieve 30% reduction in 2030 compared with the base year (2019) for GHG emitted as partof the operations of shopping centers (SC) owned (total of scopes 1-3; per-unit basis).
2. Actual results of our greenhouse gas (GHG) emissions
Unit

1. Target setting
has been set for reducing the basic unit of energy consumption by 1% annually on averageover the medium to long term for the entire portfolio and individual properties.
⃝ The term for the medium-to long-term target is set for the upcoming five years.

Per-unit energy consumption
Data coverage

2022

t-CO2

90,40075,511

76,706

374

438

389

77,684435*

Scope2

t-CO2

1,805

1,556

1,304

1,383*

Scope3t-CO2

88,22173,51875,01375,865*t-CO2/㎡

0.081

0.068

0.068

0.069*

Annual reduction rate to thebase year (Per-unit)

％

－

-16.0

-16.0

-14.8

Data coverage

％

98.4

98.7

99.4

99.8

Calculation methods/Emission factors

2. Actual results of our energy consumption

Energy consumption

2021

t-CO2

Per-unit GHG emissions⃝ Pursuant to the Energy Conservation Act (Act on the Rational Use of Energy), the basic target

2020

Scope1

GHG emissions

Energy consumption

2019(Base Year)

Unit

2018
(Base Year)

kWh

2020

2021

Greenhouse gas (GHG) emissions (unit: t-CO2)(Emissions) energy consumption × CO2 emission factor(Basic unit) GHG emissions ÷ property floor area (total floor area)● GHG emissions consist with only CO2.
● GHG emissions related to the electricity usage are calculated based on the basic emissions factors
in the “Emissions factors for purchased electricity for each power company (for the use ofgreenhouse gas emission calculations by specified emitters)” (Ministry of the Environment andMinistry of Economy, Trade and Industry) for each fiscal year.
GHG emissions other than those related to electricity are calculated based on the emissions factors
in the “List of calculation methods and emission factors used in the Greenhouse Gas Emissions
Calculation, Reporting and Publication System” (Ministry of the Environment).
● Definitions of each scope are as follows.
Scope1：Direct GHG emissions from locations owned or controlled by the organization (physicalfacilities and processes that release GHG into the atmosphere).
In FRI’s portfolio, this represents the direct CO2 emissions from the fuel usage at common
areas in multi-tenant properties as well as pass-through master lease properties.
Scope2：GHG emissions caused by the generation of electricity, heat and steam purchased by theorganization.
In FRI’s portfolio, this represents the indirect CO2 emissions from the usage of electricity, heatand steam supplied by third party at common areas in multi-tenant properties and passthrough master lease properties.
Scope3：This represents GHG emissions other than Scope 1 or Scope 2 generated from sources thatare owned or controlled by other organizations, but are related to the activities of theorganization.
In FRI’s portfolio, only category 13 (emissions from the operation of assets that are owned by
the reporting company (acting as lessor) and leased to other entities) is included in Scope 3
which represents the indirect CO2 emissions other than Scope 1 or Scope 2 from the usage ofelectricity, heat and cold water supplied by third party as well as fuel usage.

2022

281,751,586

213,922,981

220,445,290

223,244,104*

kWh/㎡

245

195

197

199*

%

96.8

98.6

99.4

99.8

Calculation methods/Emission factors
Energy consumption (unit: kWh)(Consumption) Fuel: usage of each fuel type ×unit calorific values × electricity energy conversion factor
Electricity: purchased amount(Basic unit) energy consumption ÷ property floor area (total floor area)

Frontier Real Estate Investment Corporation ESG Report12Our Comm i tm ent

S u s tai n ab i li ty M an age me n t

E nv ir o nm ent a l I nit ia t iv es

S o c ia l I nit ia t iv e s

Gove rn an c e In i ti ati ve s

In de xEnvironmental Initiatives through Real Estate Investment
Environmental management for the portfolio as a whole

Water consumption

Aiming to continuously conduct management related to environmental impacts, including

1. Target setting

efforts to reduce energy consumption, FRI carries out data collection, compilation and⃝ For water consumption on a per-unit basis of the portfolio as a whole not to exceed the baseanalysis through outside experts.

year (2019).
2. Actual results of our water consumption
Unit
Water consumption㎥

Promotion of the switch to LED lighting

2019(Base Year)

2020

2021

FRI strives to promote energy saving by installing LED lighting.

2022

1,124,224

926,407

940,709977,771*

1.014

0.844

0.842

0.871*

％

－

-16.7

-16.8

-14.0

％

98.5

98.4

100.0

100.0

Per-unit water consumption㎥/㎡

Annual reduction rate to thebase year (Per-unit)
Data coverage

Calculation methods/Emission factors
Water consumption(Water consumption) Calculated by aggregating with water usage, gray water usage, rainwater usage,
well water usage, recycled water usage, and industrial water usage. This isaggregated by considering the water intake volume to be the water
consumption.
(Basic unit) water consumption ÷ property floor area (total floor area)

AEON MALL
NAGOYADOME-Mae

VIORO

Utilization of renewable energy⃝ Well water usage, recycled water usage, and industrial water usage were added from 2022.
Well water usage, recycled water usage and industrial water usage were added for data for2021 and before.

FRI utilizes renewable energy through the installation of solar panels and wind turbines.

Waste recycling rate
1. Target setting⃝ Cooperate with tenants to conduct initiatives to improve the recycling rate.
2. Actual results of our waste recycling rate
Unit

FY2019FY2020

FY2021

Solar panels
LaLaport IZUMIFY2022

Waste recycling rate

％

50.8

54.1

45.6

37.2

Data coverage

％

88.6

88.0

89.5

86.3

Calculation methods/Emission factors
Waste recycling rate
Calculated based on emissions worked out in accordance with the standards of each municipality.

Frontier Real Estate Investment Corporation ESG Report

13Wind turbines
LaLaport IWATAWind turbines with
attached solar panels
LaLaport SHIN-MISATO

Our Comm i tm ent

S u s tai n ab i li ty M an age me n t

E nv ir o nm ent a l I nit ia t iv es

S o c ia l I nit ia t iv e s

Installation of electric vehicle chargers

Gove rn an c e In i ti ati ve s

In de x

Reduction of water consumption

FRI has installed quick chargers for electric vehicles at its facilities in various regions.

FRI strives to reduce water consumption through a variety of initiatives, including installation ofwater-saving toilets and water-efficient taps.

LaLaport IWATA

LaLaport SHIN-MISATO
BRANCH Hakata Papillon Garden

Promotion of greening, conservation of biodiversity

Reduction of wasteof biodiversity.

other facilities as fertilizer and animal feed, and by promoting used paper collection.

FRI implements the greening of walls, rooftops, and so on, thereby contributing to the conservation

AEON MALL
NAGOYADOME-Mae

FRI strives to reduce waste by working with tenants to recycle food waste from restaurants and

LaLaport SHIN-MISATO

Ecospo (Collecting used paper)
BRANCH Hakata Papillon Garden

BRANCH Hakata Papillon Garden
FRI is leasing part of this site to
the authorities free of charge
as “Chiyo Higashi Ryokuchi”(“Chiyo East Green Space”).
Within the facility, there is alarge park rich in greenery.

Frontier Real Estate Investment Corporation ESG Report14Our Comm i tm ent

S u s tai n ab i li ty M an age me n t

E nv ir o nm ent a l I nit ia t iv es

S o c ia l I nit ia t iv e s

Gove rn an c e In i ti ati ve s

In de xEnvironmentally-Conscious Initiatives with Stakeholders
Green-lease, engagement programs

Investment in redeveloped districts

introducing green-lease clauses in lease contracts with tenants.

revitalization of towns and communities, and to improved convenience for local residents.

Moreover, FRI is working in collaboration with tenants, for example, by promoting the visualization

Furthermore, for the acquisition, FRI obtained real estate appraisal reports, engineering reports,of data through the provision of energy data to tenants.

etc. in addition to on-site inspections and investigations and disclosure materials from sellers,

In order to promote the environmentally-conscious management of its portfolio, FRI is sequentially

Number of cases of the introduction of

11

green-lease clauses at FRI properties(as of June 30, 2023)

FRI is reinvesting in properties that have already been developed, thereby contributing to thecarried out investigations related to brown fields and hazardous substances, and confirmed
appropriate measures had been taken for properties for which measures were necessary.
BRANCH Hakata Papillon Garden
FRI reacquired a property which had been a conventional roadside shopping mall with a

Urban regeneration

parking lot as its focal point, and was reborn as a neighborhood shopping center that is highly

By investing in properties developed through urban regeneration projects, FRI is

migratory and has a sense of unity.

contributing to the revitalization of towns and communities, and to improved convenience

The previous facility had been developed on the former site of the Fukuoka factory of Japanfor local residents.

Tobacco Inc. (JT), FRI’s former sponsor. 25 years had passed since it was built and the buildings
were aging. In addition, changes to the surrounding environment created an opportunity, and a

LaLaport SHIN-MISATO

project to increase the value of the facility began in collaboration with Daiwa Lease Co., Ltd. FRI

A development project at the site of a former freight car classification yard, which had seen no

assigned the existing buildings to the Daiwa Lease, which then constructed new buildings

development for about 20 years, has given rise to a new lifestyle space for the town.

(extension and reconstruction).

Musashino classification yard in Saitama prefecture was established in 1974 as a freight

Subsequently, FRI acquired the new buildings after construction was completed in 2019.

car classification yard between Misato Station and Yoshikawa Station.
Subsequently, operations were discontinued in 1986, after which the site was notdeveloped. In 2008, FRI’s sponsor, Mitsui Fudosan and other project partners brought
about the rebirth of the 51.1 ha site of the classification yard as Shin-Misato LaLaCity, alarge-scale urban complex. This new town comprises a large-scale retail facility
zone and a residential zone, both of which were central to development that capitalized
on an extensive plot of land.

BeforeAfter

Summit Store Yokohama Okano (land interest)
This property was built on a former factory site as part of redevelopment of the area. Althoughminor soil contamination was found in this area in early stage of the redevelopment project, FRI
acquired this property after confirming that appropriate measures were taken on brownfield.

Source: Arial photograph from photography by Geospatial Information Authority of Japan (taken 1979-83)

Before（Musashino classification yard）

After（Shin-Misato LaLaCity）

Frontier Real Estate Investment Corporation ESG Report15

Our Comm i tm ent

S u s tai n ab i li ty M an age me n t

E nv ir o nm ent a l I nit ia t iv es

S o c ia l I nit ia t iv e s

Gove rn an c e In i ti ati ve s

In de xGreen Building Certification
・Status of Green Building Certifications
Number of certified properties

13

Certified area

936,119 ㎡(as of June 30, 2023)

Percentage of certified properties＊

87.6％＊ Percentage of certified properties is calculated on a floor area basis (excluding land interest properties)

・ DBJ Green Building Certification
Certification rank★★★★

Mitsui Shopping Park
LaLaport SHIN-MISATO

Certification rank

Assessment rank Rank

Properties with exceptionally high environmental & social awarenessMitsui Shopping Park
LaLagarden KASUKABE★★★

CASBEE Assessment(as of October 1, 2023)

Mitsui Outlet Park IRUMA

Mitsui Shopping Park
LaLaport IWATA

You Me Town Hiroshima

Assessment rank Rank

Properties with excellent environmental& social awarenessIkebukuro Square

AEON MALL Ibaraki

AEON MALL
NAGOYADOME-Mae

VIORO

AEON STYLE
Shinagawa Seaside

Ikebukuro GLOBESA(as of October 1, 2023)

BRANCH Hakata Papillon Garden

GINZA GLASSECASBEE Assessment
The “Comprehensive Assessment System for Built Environment Efficiency” (“CASBEE”) is asystem for comprehensively assessing and ranking the environmental performance ofbuildings with regard to aspects such as the enhancement of environmental quality and

DBJ Green Building Certification

performance including indoor comfort and consideration for the landscape, on top of the

DBJ Green Building Certification Program was launched by DBJ in April, 2011

aspect of environmental consideration such as energy saving and the use of materials andfor the purpose of supporting the properties which give proper care toequipment with a lower environmental burden.

environment and society (Green Building).

FRI has received CASBEE Assessment for the following properties.
Frontier Real Estate Investment Corporation ESG Report16

Our Comm i tm ent

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E nv ir o nm ent a l I nit ia t iv es

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Gove rn an c e In i ti ati ve s

In de xGreen Finance
FRI aims to build a more solid financial foundation through efforts to expand the breadth of its investors by spurring demand among investors with a strong interest in ESG and to diversify its financing methods,
as well as to go further in its pursuit of initiatives related to reducing environmental impact and building sustainable relationships with various stakeholders as stipulated in the Sustainability Policy.

Overview of Green Finance Framework
Eligibility criteria and process for selection

When some of the proceeds is not allocated, the liability amount calculated by multiplying the

The criteria for eligibility are discussed by the Sustainability Committee, which is chaired by the

total acquisition cost for the Eligible green assets held by the FRI by the fiscal period-end LTV

Chief Executive Officer and Representative Director of the Asset Management Company, andthat can be calculated at the confirmation point (Eligible green liability amount) is set as thedecided by the authority of the Chief Executive Officer and Representative Director.

maximum for green financing, and the green financing balance is managed so that it does not

The person in charge of finances at the Asset Management Company considers whether

exceed the Eligible green liability amount.

projects that will utilize the proceeds meet the criteria for eligibility, carries out an evaluationand makes selections.

Green loan

Criteria for eligibility（1）Eligible green assets
Properties that have acquired or plan to acquire any of the certifications below, from third-party
institutions:● DBJ Green Building Certification : five stars, four stars or three stars● CASBEE real estate certification : S, A or B+ rank
● BELS Certification : five stars, four stars or three stars● LEED rating system : Platinum, Gold or Silver rank

LenderBorrowing Amount(million yen)Interest Rate*1

Drawdown Date

Maturity Date*2

Remarks

Mizuho Bank, Ltd.

1,500

Annual rate
0.83250%

June 23, 2022

June 23, 2032

Unsecured /Unguaranteed

Sumitomo Mitsui
Banking
Corporation

1,000

Annual rate
0.61750%

July 3, 2023

July 3, 2030

Unsecured /Unguaranteed

Sumitomo Mitsui
Banking
Corporation

1,000

Annual rate
0.90125%

July 3, 2023

July 4, 2033

Unsecured /Unguaranteed

Total

3,500

―

―

―

―

*1 Interest rate is fixed until the maturity date.
*2 Borrowing will be repaid in a lump sum on the maturity date.

（2）Repair work
Any of the following repair work:（1）
above by one rank or more
● Repair work carried out to improve the rank in certifications

Green bonds

and to renew or acquire environmental certification

Name

Issued amount(million yen)Interest rateIssuance date

Maturity date

Collateral/
Guarantee

6th Series Unsecured Investment
Corporation Bonds(with special pari passu conditions among
specified investment corporation bonds)

1,500

0.400%

October 29,
2021

October 29,
2031

Unsecured /Unguaranteed

7th Series Unsecured Investment
Corporation Bonds(with special pari passu conditions among
specified investment corporation bonds)

1,000

0.660%

October 29,
2021

October 29,
2036

Unsecured /Unguaranteed

Total

2,500

―

―

―

―

● Repair work to facilities and other aimed at making beneficial improvements for theenvironment, such as improving energy efficiency and water consumption performance(work resulting in a 30% or more improvement in performance)
Use of proceeds from Green Finance
Proceeds from Green Finance shall be allocated towards the acquisition of green buildings(Eligible green assets) that meet the following eligibility criteria, to make repairs, or to refinancesuch loans.

Evaluation by Outside Organizations

Management of proceeds

The Investment Corporation obtained a Green 1 (F) rating from Japan Credit Rating Agency, Ltd.

The proceeds from green financing is promptly or swiftly used to acquire Eligible green assets,(JCR) in the JCR Green Finance Framework Evaluation, which is its highest rating in this third-

to repay loans used to acquire Eligible green assets, or to redeem investment corporation

party evaluation of its Green Finance Framework. Please see below for details.

bonds issued to acquire Eligible green assets.

Frontier Real Estate Investment Corporation ESG Report17Social Initiatives

Our Comm i tm ent

S u s tai n ab i li ty M an age me n t

E nv ir o nm ent a l I nit ia t iv es

S o c ia l I nit ia t iv e s

Policy Concerning Respect for Human Rights

Gove rn an c e In i ti ati ve s

In de x

Initiatives for Respecting Human Rights

The Asset Management Company stipulates the following human rights policies based on Mitsui

The status of The Asset Management Company’s initiatives is as follows.

Fudosan’s “Mitsui Fudosan Group Human Rights Policy” and “Mitsui Fudosan Group Sustainable
Procurement Standards.”

Respect for human rights

Respect for human rights

gender, age, birthplace, nationality, ethnicity, race, creed, religion, health, disability or any otherdiscrimination have occurred thus far.

reason, and promotes initiatives, such as the formation of internal systems and a work

The Asset Management Company is advancing enhancement activities, such as by continuing toenvironment where diverse personnel can play active roles.

regularly carry out training related to the various types of harassment, discrimination and LGBT

Prevention of child labor and forced labor（Training examples）

The Asset Management Company respects human rights without discriminating based onNone of the various types of harassment, such as sexual harassment or power harassment, orawareness.

The Asset Management Company will observe laws and regulations and internal rules, and willthoroughly eliminate and prevent child labor and forced labor.

September 2022

Unconscious bias training

September 2022

Business and human rights

February

Prevention of overwork

The Asset Management Company will work to suppress overwork and reduce overtime work,2023

Human rights enlightenment training

Prevention of child labor and forced labortaking into consideration the maintenance and improvement of employees’ healthand work-life balance.

The Asset Management Company has never used child or forced labor.

We thoroughly observe laws and regulations so that child labor and forced labor do not occur.

Respect of the freedom of association and right tocollective bargaining

Prevention of overwork

There have been no cases of long overtime work that violates the Article 36 agreement.

The Asset Management Company recognizes that employees have the right to organize, theright to collective bargaining and the right to strike.

The Asset Management Company will observe the “Article 36 agreement” by monitoring

Payment of wages higher than the minimum wage

In addition to the Article 36 agreement, we internally communicate the various labor

working hours to reduce unreasonably long working hours and overtime work.
agreements, work regulations, etc. posted on our internal portal site.

The Asset Management Company’s basic policy is to not only observe minimum wage rules in
the labor laws, but to pay a wage that exceeds those requirements.

Appropriate wage payment

The Asset Management Company clearly indicates internal regulations, such as salary
regulations, the composition and breakdown of salary in labor contracts, the calculation method
and the wage table, which is based on job grade, and pays appropriate wages.

Frontier Real Estate Investment Corporation ESG Report19Our Comm i tm ent

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E nv ir o nm ent a l I nit ia t iv es

S o c ia l I nit ia t iv e s

Gove rn an c e In i ti ati ve s

In de x

Initiatives for Local Communities&EARTH Clothing Support Project

Support at the time of major disasters

Support project, inviting the public to donate unneeded clothing at retail facilities. The clothingcommunity by coordinating with municipalities.

In spring and autumn every year, the Mitsui Fudosan Group kicks off the &EARTH Clothing

With its disaster measures, it aims to support the safety and security of members of theis then distributed to people in need through the NPO Japan Relief Clothing Center.

LaLaport IWATA

Asset Management Company employees also take part in running the project.

Concluded agreement with Iwata City regarding providing support in the event of a large-scale

Organizer: NPO Japan Relief Clothing Center

disasterCooperation: Mitsui Fudosan Co., Ltd., Mitsui Fudosan Retail Management Co.,Ltd.

27th &EARTH Clothing Support Project (Spring 2023)
Participants

Clothing
collected

343

1,930kg

Facility

Additional
donations¥21,150Results
Date

Participants

Clothing
collected

Additional
donations

Mitsui Shopping Park
LaLaport SHIN-MISATO

May 20, 2023

38

284kg

¥6,723

Mitsui Shopping Park
LaLagarden KASUKABE

May 28, 2023

175

975kg

¥8,385

Mitsui Shopping Park
LaLaport IWATA

May 28, 2023

130

671kg

¥6,042Social Contribution Events

Various social contribution events for visitors, primarily the residents of the surrounding areas,
are held at the Investment Corporation properties.
Mitsui Outlet Park IRUMA

Environmental education event

Frontier Real Estate Investment Corporation ESG Report

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Disaster readiness eventOur Comm i tm ent

S u s tai n ab i li ty M an age me n t

E nv ir o nm ent a l I nit ia t iv es

S o c ia l I nit ia t iv e s

Gove rn an c e In i ti ati ve s

In de xEngagement with tenants

Promoting a barrier-free environment

The Investment Corporation properties have installed barrier-free facilities so that various people,
including elderly persons and persons with disabilities, can use them with peace of mind.

Distribution of sustainability guideAs a part of initiatives for encouraging collaboration with tenants, it creates and distributes a

BRANCH Hakata Papillon Garden

sustainability guide, and is appealing for work to be undertaken on reducing the environmental
burden and generating environmental awareness.

Implementing an exchange of ideas with tenants

While undertaking initiatives to reduce electricity and water consumption and to reduce theamount of waste, particularly regarding large-scale properties that have a significant effect on
the portfolio as a whole, once a year it establishes the opportunity to compare figures andconfirm whether there are any irregularities concerning various indicators with the tenant or thefacility management company in relation to each fiscal year, and is implementing various
initiatives with the cooperation of tenants for linking with future operations and so on.

Information disclosure to and dialogue with stakeholders

Ensuring safety in preparation for times of disaster
Disaster drills

FRI periodically carries out interviews with institutional investors in Japan and overseas

It conducts a disaster response drill for all executives and employees once a year. Using a

institutional investors in Asia, Europe, North America, etc.

scenario in which an earthquake strikes directly below the Tokyo metropolitan area, the drill is

Furthermore, by participating in events for the individual investors held by the Association for

aimed at improving disaster readiness, from first response to the setup of crisis management

Real Estate Securitization, securities companies, etc., FRI carries out IR activities that strive forheadquarters and ascertaining the extent of damage at properties.

direct communication with individual investors.
IR activities in 2022
Financial results briefing
Institutional investor (domestic and overseas) meetings
Property tours for institutional investors
Participation in events for individual investors, etc.

Frontier Real Estate Investment Corporation ESG Report21Our Comm i tm ent

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E nv ir o nm ent a l I nit ia t iv es

S o c ia l I nit ia t iv e s

Gove rn an c e In i ti ati ve s

In de x

Initiatives for Employees at the Asset Management Company
The Asset Management Company regards developing professionals with sophisticated and specialized skills, broad knowledge, and a firm sense of ethics as a key priority.
Accordingly, the Asset Management Company carries out a range of initiatives related to developing employees’ abilities, ensuring employee health and safety, and creating rewarding workplaces.

P e r s on n e l T ra ining
Support for acquiring qualifications

Job ranking-based training
The Asset Management Company is endeavoring to improve the skills of employees throughtheir attendance at external seminars, the content of which is appropriate toeach stage, from managers to mid-level and junior employees.

To support all executives and employees in acquiring qualifications needed to enhance their
specialized knowledge or further develop their abilities, The Asset Management Company haveestablished an internal system that offers subsidies and other forms of aid.
The major qualifications we have supported are as follows.
Qualification

Number of people*

ARES Certified Master

17

Real estate notary

15

Tax accountant

1

Securities analyst

1

Image of job ranking-based training program
Technical skills

New
graduates/
junioremployees* All executives and employees who have obtained the qualification as of April 1, 2023

Implementation of various types of training

Training in specialized fields
With the purpose of periodically updating the fundamental knowledge necessary for asset
management for all employees (including full-time employees, contractors, and temporary staff),
the Asset Management Company is using external seminars and the appointment of external
lecturers to periodically implement training in sustainability, changes to laws and regulations
relating to asset management, and so on.

Mid-level
employees

Managers

Implementation examples● Audit corporations/securities monitoring● Industry bodies/sustainability training

Executives

Necessaryknowledge foreach employee
according torank/duties

Human skills

Conceptual skills■ Communication■ Teamwork■ Ability to utilize appropriate
tools■ Ability to gather/organize
information■ Creating materials■ Logical thinking/ability toconvey ideas■ Planned operational execution■ Time management■ Multilateral outlook/viewpoint■ Conceptual ability■ Communicative ability■ Coaching/feedback ability■ Teambuilding■ Long-term thinking■ Building relationships withother divisions■ Building relationships withstakeholders■ Definition of duties andpersonnel selection■ Understanding strategy■ Project management■ Work guidance/monitoring―■ Setting work targets

Other skills(internal control)■ Understanding
compliance■ Understanding
importance ofpreventing mistakes/
accidents―■ Personnel
evaluation
methods―

Training for new graduates
After graduating and entering the company, employees on secondment from our sponsor
complete a training program for the development of human resources.

Training using educational institutions
In order to improve specialized knowledge and abilities in the business practice of REIT asset
management companies, the Asset Management Company is promoting attendance at
programs held periodically by the Waseda University Institute for Business and Finance.

Field-based human resource development business seminars (occupational specialisms)
To develop the abilities of all executives and employees, The Asset Management Company
recommend and provide support for outside training programs as well as
various seminars and courses.
● SMBC Business Seminar (general business topics and education)● Japan Knowledge Center Seminar and Dynamic Marketing Co., Ltd. (retail facilities and realestate)● The Association for Real Estate Securitization and the Investment Trusts Association, Japan
Seminar (Investment Trust Act, Financial Instruments and Exchange Act, etc.)

Attendance record● Fund Management Program● Investment Banking Program

Frontier Real Estate Investment Corporation ESG Report22

Our Comm i tm ent

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E nv ir o nm ent a l I nit ia t iv es

S o c ia l I nit ia t iv e sCompliance Training
The Asset Management Company continue to provide compliance training for all executives andemployees with the aim of improving compliance awareness and forming an organizational
culture that emphasizes compliance.

Per person*2

Training hours

413 hours

16 hours/year

Training fees

1.74 million yen

67 thousand yen/year

The situation regarding employees on secondment from our sponsor. (as of April 1, 2023)*1 Total number of hours and amount of fees for training attended by all executives and employees*2 Calculated by dividing the annual totals by the number of all executives and employees as of April 1, 2022

Personnel evaluations

Company name

Number of people

Mitsui Fudosan Co., Ltd.

9

Diversity and inclusion

Regarding the execution of business by employees, we introduced a personnel evaluation
system that assesses employees’ abilities and performance from multiple perspectives, including
those related to sustainability-related initiatives.
In addition, supervisors hold meetings with their subordinates at the beginning, middle, and endof each fiscal year to give advice that helps them hone their abilities, to identify issues, and tocheck progress and results.

At the Asset Management Company, we are advancing with the creation of an organization for
personnel with a diversity of values, talents, and lifestyles to demonstrate the individual abilities they
can possess to the maximum possible extent, and with the creation of employee-friendly workplaces.
HR Data

Meeting implementation rate
FY2022 results

In de xwe select the appropriate managerial candidates from direct-hire employees and our sponsor’s
human resources pipeline, and we plan for the inheritance of business and executive positions
to be undertaken smoothly.
Furthermore, while the recruitment of new graduates is not being undertaken at the AssetManagement Company at present, it is being undertaken periodically at our sponsor, and theAsset Management Company is also accepting the secondment of junior employees who havecompleted training programs for developing human resources at our sponsor and who entered
the company less than ten years ago.

Fiscal 2022 Training and Seminar Attendance
Annual total*1

Gove rn an c e In i ti ati ve s

Item

100% (15 of 15 people)

Number of employees

Strategy for the development and securing of
human resources

Number of contract employees
Number of dispatched employees
Number of temporary staff

At the Asset Management Company, in order to be able to secure the appropriate humanresources at the appropriate times and in line with changes in the business situation,
environment, etc., in addition to undertaking new recruitment on an ongoing basis, we arepromoting the development of various skills for employees via the aforementioned educationand training programs.
Furthermore, in order for employees to continue working with peace of mind, we are advancing
the enhancement of employee welfare and the provision of employee-friendly workplaceenvironments, and we are aiming to improve labor efficiency through longer retention andincreased motivation of employees.
At the Asset Management Company, as a part of improvements to levels of operational
execution, we are accepting personnel with specialized skills as employees on secondment,
where appropriate and in addition to those from our sponsor.
Furthermore, employees at a managerial level on secondment from our sponsor possess both
specialized knowledge and organizational management skills due to the human resources
development system at the assignor company, and are contributing to asset management andorganizational revitalization at the Asset Management Company.
Officers of the Asset Management Company are under the jurisdiction of the Board of Directors
and the General Meeting of Shareholders, and personnel in other managerial positions are
determined based on the approval of the Director and President. When personnel are relocated,

Total number of executives and employees

FY2021

FY2022

FY2023

Male

5

5

6

Female

7

7

8

Male

2

2

2

Female

2

1

1

Male

7

7

7

Female

2

3

2

Male

0

0

0

Female

0

1

0

Male

14

14

15

FemalePercentage of female executives and employees*2

11

12

11

44.0%

46.1%

42.3%

Percentage of female director

0.0%

0.0%

0.0%

Percentage of temporary staff

0.0%

3.8%

0.0%

5.7 years

6.7 years

6.0 years

Male

0

0

1

Female

0

0

1

0

1

1

Average length of service*3
Number of new hires*4

Number of persons who left the Company*4*5
Attrition rate in the fiscal year*4*5

0.0%

3.8%

3.8%

Paid leave usage rate*4

82.3%

81.8%

81.8%
0

Number of people who have taken childcare leave*400

Number of people who have taken caregiving leave*4

0

0

0

Percentage of global staff with a disability

0.0%

0.0%

0.0%

There have been no mergers or acquisitions that necessitated layoffs and there have been no large-scale layoffs.
*1 Figurers are as of April 1 of each fiscal year.
*2 The percentage of women among the total number of executives and employees.
*3 Calculated based on the number of employees at the Asset Management Company as of April 1 of each fiscal year.
*4 For previous fiscal year (regular employees and contract employees).
*5 The employees who reached the retirement age are not included.

Frontier Real Estate Investment Corporation ESG Report23Our Comm i tm ent

S u s tai n ab i li ty M an age me n t

E nv ir o nm ent a l I nit ia t iv es

S o c ia l I nit ia t iv e s

Employee-friendly working environments andwork-life balance
The Asset Management Company undertakes an annual survey (employee awareness survey)
regarding the present state of awareness and behavior, to understand the reality and therequirements of employees with the aim of understanding the issues and considering theappropriate policies and measures. With reference to the relevant survey results, the AssetManagement Company is striving to improve internal systems, working environments, and so on.

Employee health and well-being

Implementation status of awareness survey

At the Asset Management Company, we declare health management, and we are actively
promoting preventive support with consideration for prioritizing the health and well-being of all
employees and in order to maintain and improve their health.
The asset management company has been recognized as a 2023 CertifiedHealth & Productivity Management Outstanding Organization (small- andmedium-scale corporation sector) under the Certified Health & Productivity
Management Outstanding Organizations Recognition Program for the fiveconsecutive years. This Recognition Program recognizes large enterprises,
SMEs and other organizations that are engaged in particularly impressive
health management, based on initiatives aimed at addressing healthrelated issues in communities and initiatives aimed at improving health led by the Nippon Kenko
Kaigi.
Also, The Asset Management Company earned Silver Certification as a company with a superior
health program from the Tokyo Association, National Federation of Health Insurance Societies in
July 2023

Conducted September 2022 (sixth survey)
19

Response rate

100%

In de xhire employees (full-time employees and contractors) of the Asset Management Company are
eligible. Furthermore, officers, etc. of the Asset Management Company can also use thecumulative unit investment program of the assignor company, Mitsui Fudosan, to acquire unit
investments in the Investment Corporation. It is expected that this system will further increaseawareness of improvements to the performance of all employees, and as a consequence, we
believe this will contribute to ongoing growth of the Investment Corporation and to increased
value for investors. We are also granting financial incentives to employees who utilize thesystem and aiming to improve employee welfare.

Employee awareness survey

Number of subjects

Gove rn an c e In i ti ati ve s

Employee benefits

As a part of creating a working environment that enables employees to continue working withpeace of mind, the Asset Management Company is establishing various types of employee
benefit systems.
Childcare support (direct-hire employees)
childcare leave system, sick child leave system, childcare reduced working hour
Caregiving support (direct-hire employees)
caregiving leave system, caregiving reduced working hour system

Periodic ordinary health checks

The Asset Management Company put the health of executives and employees first and mandate
they get health checks. Regarding periodic ordinary health checks or comprehensive healthchecks, The Asset Management Company have set up a system for taking leave to receive acomprehensive health check and provide subsidies for examination fees as The AssetManagement Company actively support and promote the improvement of executive andemployee health. In addition, The Asset Management Company provide subsidies for influenza
vaccination fees.

Special leave systems (direct-hire employees)
refreshment leave (five days), leave for comprehensive health checks, leave for special occasions
or bereavement, menstrual leave, leave for pregnancy-related hospitalization or impairment, preand post-childbirth leave.
Other employee benefit systems● Collaboration with companies providing employee benefit services (direct-hire employees)● Introduction of flextime system and staggered work hours system (all employees)● Remote work system (all employees)● Provision of satellite offices (all employees)● Provision of smartphones and portable laptops (all employees)● Introduction of defined contribution pension plan (DC) system (direct-hire employees)● End-of-year bonus (regular employees)● System for subsidizing the cost of influenza vaccinations (all employees)

Percentage of executives and employees who received
ordinary and comprehensive health checks (fiscal 2022)

100% (14 of 14 people)

Sharing of health-related information and use of industrial
physicians

The Asset Management Company disseminates a wide range of health-related informationinternally and periodically holds meetings on how to improve one’s health. In addition, The
Asset Management Company use platforms like this to provide opportunities for getting advice
from industrial physicians.

Introduction of cumulative unit investment program

Stress checks

The Asset Management Company has introduced a cumulative unit investment program thatenables the acquisition of unit investments in the Investment Corporation, and for which direct-

The Asset Management Company conduct stress checks as part of our efforts to prompt
executives and employees to practice self-care and to prevent mental health problems.

Frontier Real Estate Investment Corporation ESG Report24GovernanceInitiatives

Our Comm i tm ent

S u s tai n ab i li ty M an age me n t

E nv ir o nm ent a l I nit ia t iv es

S o c ia l I nit ia t iv e s

Gove rn an c e In i ti ati ve s

In de xF R I’ s C o r porat e G ov ernanceCorporate GovernanceDi r e c to r i nf o rm a t i o n

The Investment Corporation shall have at least one executive director and at least two
supervisory directors (the number of supervisory directors must be equal or larger than thenumber of executive director(s) plus one).
The executive director(s) and the supervisory directors shall constitute the Board of Directors of
the Investment Corporation.
The Investment Corporation’s institutions are made up of one executive director, three
supervisory directors, the Board of Directors comprising all executive directors and supervisory
directors, and the accounting auditor, in addition to the Investment Corporation’s unitholders,
who constitute the General Meeting of Unitholders.

Title
Executive
Director
Supervisory
Director
Supervisory
Director
Supervisory
Director

Basic Structure
Asset Management Company

Real Estate Acquisition
Advisory Services Agreement
Asset Management Company’s
Parent Company

Asset
Management
Agreement

Basic
Agreement
Concerning
Shopping
CenterManagement

Mitsui Fudosan Co., Ltd.

Shopping Center Management
Re-Commissioning Agreement

Investment Corporation

Custody Agreement /Administrative
Agency Agreement(Investor Registry)

General Meetingof Unitholders

Board of Directors
Executive Director
Takao Iwadou
Supervisory Directors
Toshio Suzuki
Koji Iida
Noriko Suzuki
Accounting Auditor

Frontier REIT SCManagement Co., Ltd.

Administrative
Agency Agreement(Institutional)

Ernst &
Young ShinNihon LLC

Administrative
Agency Agreement(Accounting)MaleToshio Suzuki

Male

Koji Iida

Male

Noriko Suzuki

FemaleAttendance at Board of
Directors meetings(FY2022)100%（13 times / 13 times）
100%（13 times / 13 times）
100%（13 times / 13 times）
100%（13 times / 13 times）

Total compensation amountin the 38th Period
ended June 30, 2023
3,000 thousand yen
1,800 thousand yen
1,800 thousand yen
1,800 thousand yen

April 2018

Entered Mitsui Fudosan Co., Ltd. (Mitsui Fudosan)
Appointed General Manager of Affiliated Business Division, Group Management Department,
Mitsui Fudosan
Appointed General Manager of General Administration Department and Internal Audit
Department, Mitsui Fudosan
Appointed Managing Officer and General Manager of General Administration Department andInternal Audit Department, Mitsui Fudosan
Appointed Managing Officer and General Manager of General Administration Department,
Mitsui Fudosan
Appointed Advisor, Mitsui Fudosan
Senior Corporate Auditor, Mitsui Fudosan Residential Co., Ltd.
Retired Advisor, Mitsui Fudosan
Retired Senior Corporate Auditor, Mitsui Fudosan Residential Co., Ltd.
Appointed Executive Director, Frontier Real Estate Investment Corporation (present post)

April 1971
April 2000

Entered Mitsubishi Corporation
Retired Mitsubishi Corporation

December 2009

Registered as an attorney (Daiichi Tokyo Bar Association)

December 2009Entered Sakuragi, Koiwai & Sakurai

April 2016
June 2020

Appointed Supervisory Director, Frontier Real Estate Investment Corporation(present post)
Retired Sakuragi, Nakano & Co. (former, Sakuragi, Koiwai & Sakurai)

June 2020

Entered Aoyama Tokyo Law Offices (present post)

April 1981
December 1984

Entered Asahi & Co. (currently, KPMG AZSA LLC)
Registered as a certified public accountant

May 1998

Appointed Partner, Asahi & Co. (currently, KPMG AZSA LLC)

May 2007

Appointed Representative Partner, KPMG AZSA & Co. (currently, KPMG AZSA LLC)

July 2010

Appointed Representative Partner, KPMG AZSA LLC

June 2019

Retired KPMG AZSA LLC

July 2019

Established Iida CPA Office (present post)

Sumitomo Mitsui Trust Bank,
Limited

Executive
Director

Administrative Agent(Accounting)

Takao

April 2005

IwadouApril 2007

Reiwa Accounting Holdings
Co., Ltd.

April 2001
April 2003

March 2014

Supervisory
Director

Reiwakaikeisha Tax
Corporation

ToshioSuzuki

Mitsubishi UFJ Trust andBanking Corporation
Administrative Agent for
Investment Corporation Bonds

Fiscal and Issuing /Paying Agency Agreement /Fiscal Agency Agreement

Takao Iwadou

April 1973
April 1999

Special Account Manager
Special AccountManagement
Agreement

GenderBrief Biographies

Asset Custodian /Administrative Agent(Institutional) /Transfer Agent

Administrative Agent(Tax Payments)
Administrative
Agency Agreement(Tax Payments)

Name

Supervisory
Director

Sumitomo Mitsui Trust Bank,
Limited /Sumitomo Mitsui
Banking Corporation

Koji Iida

Supervisory
Director

NorikoSuzuki

Frontier Real Estate Investment Corporation ESG Report

26

April 2020

Appointed Supervisory Director, Frontier Real Estate Investment Corporation (present post)

March 1981
March 1989

Entered Chuo Accounting Corporation
Entered Chuo Coopers & Lybrand International Tax Office (currently, PwC Tax Japan)

October 1992

Entered ASAHI SHINWA & Co. (currently, KPMG AZSA LLC)

April 1996

Registered as a certified public accountant

October 2008

Appointed Senior Manager, KPMG AZSA & Co. (currently, KPMG AZSA LLC)

September 2015

Retired KPMG AZSA LLC

October 2015

Appointed part-time audit staff, KPMG AZSA LLC

October 2015

Established Suzuki Noriko CPA Office (present post)

March 2020

Contract ended part-time audit staff, KPMG AZSA LLC

April 2020

Appointed Supervisory Director, Frontier Real Estate Investment Corporation (present post)

June 2021

Appointed Outside Director (Member of Audit and Supervisory Committee),
Nishimatsu Construction Co., Ltd. (present post)Our Comm i tm ent

S u s tai n ab i li ty M an age me n t

E nv ir o nm ent a l I nit ia t iv es

S o c ia l I nit ia t iv e s

FRI’s Corporate Governance

The Investment Corporation and Mitsui Fudosan Frontier REIT Management Inc., the asset
management company (the “Asset Management Company”), which are bearers of the listed
investment corporation system that plays the role of the financial brokerage system through thesecurities market, position compliance as the fundamental principle for business operations andproactively work to promote compliance.
The Asset Management Company has established the compliance regulations as its internal
rules, in which it defines compliance as “implementing corporate activities with integrity and in afair manner, fully understanding the social norms as well as strictly abiding by all laws relating to
its operations, various regulations, internal rules and market rules.” By incorporating the function
to promote compliance into its corporate governance system, it endeavors to ensure
appropriate asset management and protect investors.
The Investment Corporation, in close coordination with the Asset Management Company,
implements fair and highly transparent asset management operations through appropriate
administration of the Board of Directors and other bodies.

The Investment Corporation has made the following arrangements as to the standard for
payment of the directors’ compensations and the time when the payment is made.
（１）The compensations for each executive director shall be up to 800,000 yen per month, andthe amount determined by the Board of Directors that is deemed reason able in light of thegeneral price trends and wage trends, etc. shall be paid for a relevant month by the end of
said month and shall be done so each month.
（２）The compensation for each supervisory director shall be up to 500,000 yen per month, andthe amount determined by the Board of Directors that is deemed reason able in light of thegeneral price trends and wage trends, etc. shall be paid for a relevant month by the end of
said month and shall be done so each month.
Audit remuneration paid to the independent auditor for the last period was as follows.
Name

Total 38th period
compensation

ERNST & YOUNG SHINNIHON LLC¥12,400 thousand

Establishment of system to eliminate anti-social forces

The Asset Management Company shall prepare a manual to cope with anti-social forces as its
internal rules, and establish a company-wide system to eliminate anti-social forces. As part ofsuch a system to eliminate them, all officers and employees of the Asset Management Company
shall review and assess the attributes of its business partners and shareholders upon initiatingtransactions as well as confirming the identity of such parties, in order to avoid all involvement,
transaction and use of any kind of anti-social forces.

* Includes compensation for auditing English financial statements.

There were no fines due to ESG issues from January 1, 2022, to December 31, 2022

Rules concerning conflicts of interest

Management System

The Asset Management Company has determined Rules Concerning Conflicts of Interest
regarding transactions with parties.
Rules Concerning Conflicts of Interest

Management of the Investment Corporation’s assets is entrusted to Mitsui Fudosan Frontier
REIT Management Inc., the asset management company, which performs its assignments basedon the asset management agreement concluded with the Investment Corporation under thefollowing organizational structure.

Investment management decision-making process● Decision-making process for establishing and changing management guidelines
and asset management plans

General Meeting of Shareholders
Corporate Auditor

Relevant Divisions:
Proposals

Board of Directors
Compliance Committee

Finance Division

Compliance
Division
General Manager:
Screening

Management
Committee:
Consideration,
approval

Board ofDirectors:
Consideration,
approval● Asset acquisition / disposition decision-making process

Compliance Division

Approval from the Investment Corporation’s Board of Directors(Asset acquisitions or dispositions involving related parties)
Relevant
Divisions:
Selection,
proposalManagement Committee

Investment Division

In de xComplianceDirectors’ Compensations

Chief Executive Oﬃcer
and Representative Director

Gove rn an c e In i ti ati ve s

Planning and Administrative Division

Compliance
Division
General Manager:
Screening

Management
Committee:
Consideration,
approval

Compliance
Committee:
Consideration,
approval

Board ofDirectors:
Consideration,
approval

Ensuring appropriate asset management and Protecting unitholders
Frontier Real Estate Investment Corporation ESG Report27

Our Comm i tm ent

S u s tai n ab i li ty M an age me n t

E nv ir o nm ent a l I nit ia t iv es

S o c ia l I nit ia t iv e s

Gove rn an c e In i ti ati ve s

In de xCompliance
Compliance Promotion Framework

Internal audits

The Asset Management Company promotes compliance based on the following framework.

Internal audits target all divisions: Investment Division, Finance Division, Planning and
Administrative Division, and Compliance Division. For those internal audits, the Compliance● Decide basic matters related to compliancepromotion● Supervise compliance promotion status

Board of Directors

Division General Manager performs the role of the internal audit officer for the Investment
Division, Finance Division, and Planning and Administrative Division, while the Planning and
Administrative Division General Manager performs that role for the Compliance Division.

Compliance Committee

Every year, we have an audit plan formulated for the purpose of regular audits, which are● Deliberate on and make decisions related to businessexecution from the perspective of ensuring
compliance, including legal compliance

Committee chair：CEO & Representative Director
Other members：Two external expert membersCompliance Division General Manager

conducted twice a year. These consist of the overall audit, which is carried out with assistancefrom a service provided by an entrusted external party, a follow-up to that audit, and audits thatmonitor voluntary inspection items, etc. The internal audits are carried out based on the audit● Planning, drafting proposals and implementation
related to overall compliance● Provide opinions and guidance related to divisions’operations from the perspective of ensuring
compliance, including legal compliance

Compliance Divisionplan, and their results are compiled into an internal audit report, which is presented to the Chief
Executive Officer and Representative Director, the Board of Directors, and the Compliance
Committee. Based on the results of the internal audit, follow up action is then carried out asnecessary, including reflecting such results in compliance programs.

● Promote compliance within each division’s operations

Each division’s compliance officer

Compliance training
The asset management company continue to provide compliance training for all executives
and employees with the aim of improving compliance awareness and forming an<Annual compliance program>
Apr.
Compliance
Program

May‒ Jun.

Compliance
Committee
Board of Directors

Jul.

Compliance
Committee
Board of Directors● Review previous year
● Report progress

Internal auditsAug.‒Sep.

Oct.

Nov.‒Dec.

Compliance
Committee
Board of Directors

Jan.

Compliance
Committee
Board of Directors● Report progressFeb.

organizational culture that emphasizes compliance.

Mar.

Training track details

Compliance
Committee
Board of Directors● Plan program forfollowing year

<Frequency: twice a year,divisions targeted: all divisions,business processes targeted: all business processes>

May 2022

Compliance general remarks

June 2022

Conflicts of interest

July 2022

Conflicts of interest (examples)

Voluntary
inspections

Voluntary
inspections

November 2022

Information management (personal information,
insider trading)

Periodic audit

Periodic audit

December 2022

Trends in financial administration, securities
monitoring

January 2023

Elimination of relationships with antisocial forces/
grievances, etc.

Compliance training<Persons targeted: all employees including temporary staﬀ>
External training, other internal training

Frontier Real Estate Investment Corporation ESG Report28

Our Comm i tm ent

S u s tai n ab i li ty M an age me n t

E nv ir o nm ent a l I nit ia t iv es

S o c ia l I nit ia t iv e sCompliance

In de xRisk Management Framework

The Asset Management Company carries out risk management based on the following framework.
The Asset Management Company has established a basic rationale regarding risk management
along with the Risk Management Regulations for its internal risk management system, and it has
put in place management systems based on the regulations and appropriately manages thevarious types of risks.
In addition, in order to manage risks regarding conflicts of interests, the Asset Management
Company has set forth regulations on transactions with interested parties and strictly established
the Rules Concerning Conflicts of Interest.
When establishing and abolishing the Risk Management Regulations that stipulate basic matters ofrisk management, the Risk Management Company is required to have such decisions determined by
the Board of Directors after the matters have been dealt with by resolution by the Management
Committee. For the specific methods for conducting risk management, the Asset Management
Company formulates a risk management plan to establish the priority items to be monitored for eachtype of risk along with the countermeasures that should be taken, and it conducts management after
the plan thereof has been dealt with by resolution by the Management Committee. The results ofimplementing such risk management plan are reported to the Management Committee, the Board of
Directors and also the Investment Corporation’s Board of Directors.
Under the Asset Management Company’s internal risk management framework, the generalmanagers of each division serve as the risk management officer for their respective division,
while the Planning and Administrative Division, which is the division responsible for overall risk
management, carries out integrated risk management.

Policy concerning the anti-fraud and political involvement

The Asset Management Company has determined Rules Concerning Conflicts of Interest
regarding transactions with parties.
1. Anti-bribery
The Asset Management Company will keep our relationship with related parties and business
partners within a socially acceptable scope, and will not have a relationship that may raisesuspicion or distrust from society.
2. Anti-corruption
The Asset Management Company will establish a code of conduct concerning the “eliminationof antisocial forces,” “prevention of money laundering,” “appropriate management of conflictsof interest,” “prohibition of insider trading,” etc., and will work to thoroughly observecompliance and prevent corruption.
3. Political involvementT he Asset Management Company will not make donations for the political activities of thoseother than political parties and political funding organizations. In the event that we support or
make political donations to political parties or political funding organizations, we will observe
laws and regulations, such as the Political Funds Control Act and the Public Offices Election Act.
Number of cases of corruption being exposed

Gove rn an c e In i ti ati ve s

FY2020

FY2021

FY20220

0

0Amounts of money paid in fines, charges,
and settlements related to corruption (yen)

0

0

0

Punishments or dismissals related to corruption

none

none

none

Total amount of money in political donations (yen)

0

0

0

Board of Directors

Establishment of compliance consultation desk (fraud
prevention, etc.) and structure for collecting grievances

Management Committee

Consultation desks have been established both inside and outside the Asset Management
Company based on the internal consultation and whistleblower system regulations. The AssetManagement Company has a system in place where executives and employees are able toanonymously report to the Compliance Division General Manager or an external legal firm on
acts in violation of laws and regulations at an organizational level or at an individual level (actsin violation of lays, or internal company rules such as the code of ethics or compliance manuals,
or acts under suspicion of such violation). Under these same regulations, it is forbidden to treat
whistleblower unfairly, which includes such measures as protection of whistleblower informationand the prohibition on taking retaliatory action, and the Company is obligated to decide on andimplement appropriate measures concerning the reported content.
The consultation seeker or whistleblower is protected by the Whistleblower Protection Act andcannot be treated unfairly by the Company based on the matters discussed in the consultationor whistleblowing.

Risk Management
The Asset Management Company serves as the financial instruments business operator thatmanages the Investment Corporation’s assets. In this role it has created the Risk Management
Regulations to help ensure the soundness of business operations and, fully aware of theimportance of comprehensive risk management, works to appropriately manage each type ofrisk and to minimize risk. This stance serves as the basis of its management.

● Decide basic matters related to risk management● Supervise risk management status● Formulate and revise risk management plans, decide
other important matters

Division responsible foroverall risk management(Planning and Administrative Division)● Measure, manage and monitor Companywide risk
● Overall risk management

Each division’s risk
management officer● Grasp information on risks related to the operationsof each division● Measure, manage and monitor risk in the course ofeach division’s operations

Organizational culture● An open organizational culture in which everyone can
express their opinions

The Role of Risk Management Plans

The Asset Management Company regards risk management and compliance as integral tomanagement strategy and organizational culture and, as one of its management tasks, works tocarry out risk management plans in coordination with internal audit plans.

Frontier Real Estate Investment Corporation ESG Report29IndexOur Comm i tm ent

S u s tai n ab i li ty M an age me n t

E nv ir o nm ent a l I nit ia t iv es

S o c ia l I nit ia t iv e s

Gove rn an c e In i ti ati ve s

In de xKPI Actual Results
The Investment Corporation and the Asset Management Company set KPIs(Key Performance Indicators) to measure the progress of initiatives for materialities.
Materiality

KPI

Scope

Per-unit energy consumption
Reducing carbon emissions by
pursuing energy efficiency

Enviroment *Data coverage
Per-unit greenhouse gas (GHG) emissions
Data coverage

Conserving water and otherresources while reducing waste
Reducing hazardous substancesand ensuring health and safety

Cooperation and coexistencewith local communities

Collaboration with the Mitsui
Fudosan Group and tenants

Engaging with our employees

SocietyPer-unit water consumption **Data coverage
Waste recycling rate ***Asset Management Company employees who take part inrunning activities for &EARTH Clothing Support Project
Participants of the &EARTH Clothing Support Project in FRIProperties
Clothing collected of the &EARTH Clothing Support Project in
FRI Properties
Additional donations of the &EARTH Clothing Support Projectin FRI Properties
Percentage of engagement programs for tenants

Energy consumed in facility operations
Floor area basis, excluding land interest properties
and properties for which data is unavailable
Greenhouse gas (GHG) emissions from facility
operations
Floor area basis, excluding land interest properties
and properties for which data is unavailable
Water use attributable to facility operations
Floor area basis, excluding land interest properties
and properties for which data is unavailable
Waste recycling rate attributable to facility
operations
Asset Management Company employees who
participate in the project

The &EARTH Clothing Support Project in FRIProperties

GovernanceClarifying corporate governancestructure
Enhancing corporate governancesystems

KPI Results
195 kWh/㎡

Employees with official certifications(ARES Certified Master; Real estate broker; Tax accountant;
Securities analyst)

IR briefings per year
Number of compliance trainings ****
Compliance training attendance rate ****
Number of independent Directors (Supervisory Directors)
Board of directors' meeting attendance rate ****
Number of female director

The governance structure of FRI and the AssetManagement Company
The governance systems of FRI* Data tabulation periods: Energy consumption, greenhouse gas (GHG) emissions, water consumption :12-month period from January to December†
The reporting period for data for 2021 and before has been changed to 12-month period from January to December.
** Well water usage, recycled water usage, and industrial water usage were added from 2022. Well water usage, recycled water usage and industrial
water usage were added for data for 2021 and before.

197 kWh/㎡

99.8%

0.068 t-CO2/㎡

0.068 t-CO2/㎡

0.069 t-CO2/㎡

98.6%

99.4%

99.8%

0.844 ㎥/㎡

0.842 ㎥/㎡

0.871 ㎥/㎡

98.4%

100.0%

100.0%

54.1%

45.6%

37.2%

0

4

3

206

183

637

1,122 kg

1,524 kg

2,912 kg

¥14,300¥6,664¥27,023

1.7 hours¥34,000
32
ARES Certified Master: 15
Real estate broker: 15
Tax accountant: 1
Securities analyst: 1(as of April 1,2020)
Carried out in August 2020

13.0 hours¥68,000
34
ARES Certified Master: 17
Real estate broker: 15
Tax accountant: 1
Securities analyst: 1(as of May 1, 2021)
Carried out in September 2021

16.0 hours¥67,000
31
ARES Certified Master: 16
Real estate broker: 13
Tax accountant: 1
Securities analyst: 1(as of April 1, 2022)
Carried out in October 2022

75.1%
(as of December 31, 2020)

83.4%(as of December 31, 2021)

83.4%(as of December 31, 2022)

15
17
17
(DBJ Green Building Certification: (DBJ Green Building Certification: (DBJ Green Building Certification:
10; CASBEE: 1; GRESB Assessment; 11; CASBEE: 2; GRESB Assessment; 11; CASBEE: 2; GRESB Assessment;
SMBC Environmental Assessment; SMBC Environmental Assessment; SMBC Environmental Assessment;
Silver Certification from theSilver Certification from theSilver Certification from the
National Federation of HealthNational Federation of HealthNational Federation of Health
Insurance Societies;2020 Certified Insurance Societies;2021 Certified Insurance Societies;2022 CertifiedHealth & Productivity Management Health & Productivity Management Health & Productivity Management
Outstanding Organization)
Outstanding Organization)
Outstanding Organization)(as of December 31, 2020)(as of December 31, 2021)(as of December 31, 2022)
4
3
2
6
6
6
93.0%
100.0%
97.3%
3 (as of April 1, 2020)
3 (as of April 1, 2021)
3 (as of April 1, 2022)
100.0%
100.0%
100.0%
1 (as of April 1, 2020)
1 (as of April 1, 2021)
1 (as of April 1, 2022)**** 12 month period from April to March***** FRI has not received any other green building certifications.

31

199 kWh/㎡

99.4%*** Until FY2021: 12-month period from April to MarchFY2022: 12-month period from January to December
The emissions are calculated in accordance with the standards of the respective local government body.

Frontier Real Estate Investment Corporation ESG Report

2022

KPI was set in 2023

Employees of the Asset Management Company

External recognitions or certifications of portfolio
properties or of FRI or the Asset Management
Company

External certifications as of the end of December

2021

98.6%

Providing energy data to tenants

Average annual training hours per employee ****
Average annual training expenses per employee ****

Employee awareness survey
Percentage of portfolio with environmental certification (DBJ
Green Building Certification or CASBEE Rank *****) (floor areabasis, as of the end of December)

Establishing trusting relationships
with our investors

2020

Our Comm i tm ent

S u s tai n ab i li ty M an age me n t

E nv ir o nm ent a l I nit ia t iv es

S o c ia l I nit ia t iv e s

Gove rn an c e In i ti ati ve s

In de xGRI Standards Content Index
GRI Standards Content Index

Disclaimer◆All content in this document is provided solely for informational purposes and is not intended toserve as an inducement or solicitation to trade in any product offered by FRI. Investment decisions
are made at the investors’ discretion and risk. FRI disclaims any responsibility or liability for theconsequences of investing in FRI.
◆Investment units issued by FRI are subject to price fluctuations due to various factors, including:(1) volatility in the J-REIT market, interest rates and the real estate market; (2) fluctuations in rental
revenues from properties; and (3) the occurrence of unexpected losses due to natural disasters.
Accordingly, investment in FRI entails the risk of incurring a loss. For more details, please also referto a section titled “Investment Risk” presented in the Securities Registration Statement (Prospectus)
and the Securities Report issued by FRI.
◆The information provided in this document was originally published in Japanese language form andhas been translated for reference purposes only. FRI guarantees neither the completeness nor theaccuracy of this English translation. Please be advised that all information provided herein may besubject to change without prior notice.
◆Duplication or reproduction of any content presented herein without the prior consent of FRI or its
authorized representative is strictly prohibited.
Mitsui Fudosan Frontier REIT Management Inc.
(Financial Instruments Business Registration No. 395; issued by Director-General of the Kanto Finance
Bureau based on the Financial Instruments and Exchange Law)
Frontier Real Estate Investment Corporation ESG Report32