March 31, 2023
Heiwa Real Estate Co., Ltd.

Information Disclosure Based on the Task Force on Climaterelated Financial Disclosures Recommendations

Contents

The Heiwa Real Estate Group’s Response to Climate Change................................................ 2
Support for the Task Force on Climate-related Financial Disclosure Recommendations ............. 3

Governance..............................................................................................................................4

Strategy ....................................................................................................................................5

Risk Management ..................................................................................................................11

Metrics and Targets ...............................................................................................................13

TCFD Index...........................................................................................................................15

1

The Heiwa Real Estate Group’s Response to Climate Change
The 196 Parties at the 2015 United Nations Climate Change Conference (COP 21) adopted the Paris
Agreement with the goal of limiting global warming to well below 2 degrees Celsius on averagecompared to pre-industrial levels. In 2021, a report by the Working Group 1 of the Intergovernmental
Panel on Climate Change (IPCC) stated that the impact of human activity on global warming isundeniable, and climate systems are changing, resulting in more intense and frequent natural disasters.
It also concluded that average temperatures will increase by over 1.5 or 2 degrees Celsius in thetwenty-first century compared to pre-industrial levels unless greenhouse gas emissions are
significantly reduced over the next several decades.
The Heiwa Real Estate Group recognizes that climate change will seriously affect the naturalenvironment and social structures, and regards it as a material issue that will have a major impact on
its businesses as a whole. As climate change intensifies, abnormal weather and rising sea levels will
have serious consequences for countries around the world. This could also have a significant impact
on the Group’s business activities, as the value of properties it owns could decrease due to natural
disasters, and stricter environmental regulations could affect its operations.
In response to these risks, the Heiwa Real Estate Group practices sustainability management as a
strategy of its medium-term management plan, Challenge & Progress. In accordance with its
Sustainability Vision, the Group has specified climate change countermeasures as one of its material
issues, shown below, and aims to contribute positively to communities by developing
environmentally friendly buildings and neighborhoods that emit less carbon.

2Support for the Task Force on Climate-related Financial
Disclosure Recommendations
Many corporate stakeholders, particularly investors, are aware that climate change poses systemicrisks to the financial performance of companies today, and, therefore, they expect companies todisclose information concerning climate related risks and opportunities. In response to this trend,
Heiwa Real Estate announced its support for the recommendations of the Task Force on Climaterelated Financial Disclosures* (TCFD) in December 2021. Based on the TCFD recommendations,which were finalized in 2017, the Company will identify, assess, and manage climate-related risks andopportunities that could impact the Group’s business and enhance its information disclosure
accordingly, recognizing that improving the resilience of its operations is essential for continuously
and stably generating earnings over the long term.
* The Task Force on Climate-related Financial Disclosures was established by the Financial Stability
Board at the request of the G20 to propose a framework for disclosing climate-related information.

3

Governance
The Company has established a Sustainability Committee, headed by the Executive Officer, President
and CEO and comprised of Executive Officers and Managing Officers and heads of each departments,
to facilitate the smooth implementation of our sustainability policy. By monitoring the plan-do-checkact (PDCA) cycle for each sustainability initiative, including those for climate change and otherenvironmental issues, and by reporting important details to the Board of Directors, the Sustainability
Committee acts as a main driver in increasing the effectiveness of sustainable management. As a rule,
the Sustainability Committee meets twice a year, but will hold additional meetings whenever necessary.

The Sustainability Committee is chaired by Heiwa Real Estate’s the Executive Officer, President andCEO, who is responsible for final decisions concerning the Group’s sustainability initiatives andmeasures for dealing with climate-related issues. The head of the Company’s office in charge ofsustainability (within the Corporate Planning and General Affairs Department) is assigned as theofficer responsible for executing these initiatives and measures. Furthermore, this officer periodicallyreports to the committee chair on assessments of specified climate change impacts, management ofrisks and opportunities, progress of efforts to adapt to and mitigate such impacts and risks, and efforts
to combat climate change, including performance indicators and targets. All of these matters are
discussed and examined by members of the Sustainability Committee, and on that basis, decisions are
finalized by the committee chair.

4Strategy
Since a potential range of outcomes of future events related to climate change is uncertain, Heiwa Real
Estate takes this into account in its business strategies. Specifically, it identifies risks and opportunities
under two scenarios: an increase in average global temperatures of 1.5 or 4 degrees Celsius. On
overview of each scenario analysis is shown in the diagrams below.
Scope of the Scenario Analyses
The analyses take into account the significance of the impact of climate change on the Group’s
financial performance, particularly with respect to its main operations, the Building Business. Thisbusiness is involved in the development, leasing, management, operations, and sale of stock exchangebuildings, office buildings, commercial facilities, and residential buildings.
Mainly Referenced Scenarios
Organization publishing the scenarios
Transition

International Energy Agency (IEA)

4°C scenario

Net Zero Emissions byStated Policies

2050 Scenario in the

Scenario in the IEA’s

IEA’s World Energy

World Energy Outlook

Outlook 2020

2020

Intergovernmental Panel on Climate

Representative

RCP8.5 in the IPCC’s

Change (IPCC)

Concentration Pathway

Fifth Assessment(RCP) 2.6 in theReportrisks*

Physical risks*

1.5°C scenario

IPCC’s Fifth
Assessment Report* For information about transition and physical risks, please refer to the Risk Management section,
below. In addition to the references above, the Company referred to publicly available information
provided by real estate-related organizations to assess the financial impact of risks and opportunities.

5Expected outcomes of each scenario
Global temperature increase of 1.5 degrees Celsius

Global temperature increase of 4 degrees Celsius

6Climate-related Risks to and Opportunities for the Company’s Businesses
Potential financial

and opportunities

impacts

Higher taxes on GHG
emissions if a carbon tax
program is adopted, andstricter energy
conservation standards
for buildings• Increasing outlays for taxes
or fines associated withbuilding GHG emissions• Taxation of carbon-intensive
building materials• Increasing outlays for related
retrofitting costs

Mediumterm↓－

Technology

Advancements andwidespread adoption oftechnologies for reusing
and saving energy• Increasing costs for adopting
new technologies forbuilding facilities

Mediumterm↓－

MarketHigher prices of services
from relevant suppliers
amid growing need todecarbonize• Increasing costs fordeveloping and constructing
low-carbon buildings,
including net zero energy
buildings and houses

Mediumterm↓－

Reputation

Changing demand frombuilding tenants andoccupants based on theirpreferences for buildings
equipped to combat
climate change andavoidance of buildingsthat are not• Decreasing leasing income if
measures to decarbonize areslow, due to difficulty inattracting new tenants andoccupants as well as lower
retention rates

Shortterm

↓

－

Acute

Damage to properties
caused by violent winds
from typhoons or
flooding inside buildings
from torrential rains oroverflowing rivers• Increasing repair costs anddecreasing operational
efficiency of buildings

Mediumterm↓↓

Chronic

Growing demand for air
conditioning due toincreasing numbers of
extremely hot and colddays

• Increasing costs for
operating, maintaining, andupgrading air conditioning
systems

Mediumterm↓↓

Reduced energy
consumption due toinstallation of more
efficient facilities• Reduced maintenance andoperating costs resulting
from improved energysaving performance

Shortterm↑↑

Greater ability to attract
building tenants,
occupants, and users
through moreenvironmentally friendly
and disaster-preparedfacilities and services• Increased leasing revenue andopportunities to attract
tenants with buildings thathave been differentiated interms of superior
environmental performanceand business continuity
plans

Mediumterm↑↑• Lower borrowing costs fromloans secured through green
financing initiatives

Shortterm

↑

－

Type

Policy andlegal

Transition
risks

Physical risks

Resource
efficiency

Opportunities

Degree of financial

Climate-related risks

Products andservices

Markets

Growing numbers ofenvironmentally aware
investors and banks that
integrate climate-related
factors in financing
decisions

Period1

impacts2, 3
1.5°C

4°C

scenario scenario

Notes: 1. Short-term refers to a period spanning up to three years, medium-term refers to a period offour to 10 years, and long-term refers to over 10 years.

72. Arrows shown in bold represent financial impacts spanning between 500 and 1,500 million
yen, arrows shown without bold represent financial impacts between 0 and 499 million yen,
and a dash represents no financial impacts.
3. The degree of financial impacts assumes a medium-term period up to 2030.

Business Resilience Measures
Based on the scenario analyses, above, Heiwa Real Estate has executed the following measures toimprove the resilience of its businesses.
(1) Switchover to Renewable Energy Sources
From May 2021, electricity used at 25 Group-owned properties, including the Nisshokan Building,which houses the Company’s head office (Chuo-ku, Tokyo), were gradually switched to electricity
derived from renewable energy sources. This is expected to result in the use of approximately 15 GWhof renewable energy per year and a reduction in CO2 emissions equivalent to approximately 7,000 tons
per year. Heiwa Real Estate plans to steadily increase the number of its properties that will use
renewable energy going forward.
(2) Energy-saving building agreements
Heiwa Real Estate concludes contracts and agreementswith tenants aimed at reducing the energy consumptionof its building. These arrangements help reduce
environmental burden and improve building operations,bringing mutually benefits to the Company and its
building tenants.

(3) Sustainable Financing
The Company has procured funds through assessment loans and sustainability-linked loans (SLLs) tofurther strengthen its commitment to sustainable management. It has received the highest rating of “S”
as an industry-leading ESG management company in the MUFG ESG Evaluation, and concluded anassessment loan agreement with the Bank of Tokyo-Mitsubishi UFJ, Ltd. Regarding compliance withsustainability-linked loan principles, SSLs from Shinsei Bank were confirmed by the Sustainability
Impact Assessment Office, while third-party opinions were obtained from Japan Credit Rating Agency,
Ltd., with regard to SLLs from other banks.

8

(4) Disaster drills
Heiwa Real Estate implements measures to improve
the safety and security of its buildings. Among them,
the Company holds disaster drills at the officebuildings it operates in order to practice necessary
procedures for keeping all occupants safe during an
emergency.
(5) Business continuity planningTo effectively deal with weather-related disasters caused by typhoons and torrential rains, Heiwa Real
Estate deploys communication tools for sharing information and continuing operations during such adisaster, and has established an internal emergency response system designed to facilitate a smooth
response to the situation. Furthermore, the Company has installed watertight panels in the entrancesand elevators of most of its buildings to prevent flooding of below-ground floors during rainstorms
and typhoons. In response to requests from local governments, the Company has designated a numberof its buildings as emergency shelters for stranded commuters during times of disaster.
(6) Acquisition of environmental certification
When constructing new buildings and conducting major renovation projects, the Group gives toppriority to the environment; hence it has received high ratings from the DBJ Green Building
Certification program and CASBEE.

9(7) GRESB Real Estate Assessment
Heiwa Real Estate most recently received ratings from the Global Real
Estate Sustainability Benchmark (GRESB) in October 2022. Based onscores for GRESB’s Standing Investments Benchmark (related tocurrently operated properties) and Development Benchmark (related to
new development and major renovation projects), the Company received
a 4 Star and 3 Star rating, respectively, following 3 Star ratings for bothbenchmarks in 2021. These benchmarks are generated by the GRESBReal Estate Assessment, which offers data on environmental, social, andgovernance (ESG) initiatives in the real estate sector. For the second
consecutive year, Heiwa Real Estate received a Green Star designation, which is awarded to companies
that have scored highly in both the Management and Performance components of the assessment.
Looking ahead, the Company will work to raise its ratings by enhancing its sustainability management.

10

Risk Management
Heiwa Real Estate has identified risks related to environmental, social, and governance (ESG) issues,
including important climate-related risks, to address through company-wide risk management, andwill take steps to mitigate those risks and capitalize on related opportunities going forward.
Processes for Identifying and Assessing Climate-related Risks
Each year, the officer responsible for executing climate-related initiatives and measures assembles aworking group comprised of members in charge of relevant departments to identify and assess climaterelated risks that could impact the Company. The working group’s analysis is based on the following
framework.
(1) Transition risks: The Company’s businesses could be impacted by socioeconomic trends
associated with the transition to a lower-carbon economy.
a) Policy and legal risks: The Company could be subject to stricter regulations resulting frompolicies to shift to a lower-carbon economy.
b) Technology risk: The Company may need to adopt new technologies developed for the purposeof shifting to a lower-carbon economy.
c) Market risk: The Company’s businesses could be affected by higher energy prices and changes
in demand for services.
d) Reputation risk: The Company risks being viewed negatively by its stakeholders, which
include building tenants, local residents, employees, and investors.
(2) Physical risks: The Company’s businesses could be impacted by the intensification of climatechange and changes in future climate patterns and events.
a) Acute risk: The Company’s properties could be damaged by typhoons, flooding, or otherclimate events.
b) Chronic risk: The Company’s businesses could be affected by long-term shifts in climate
patterns, including higher or lower average temperatures.
If business opportunities are found in the process of identifying risks, the Company will recognize
them separately from risks as climate-related opportunities, and examine ways for potentially
capitalizing on those opportunities. The progress and results of efforts by working groups to identify
risks and examine opportunities will be periodically reported to the Sustainability Committee by theofficer responsible for executing climate-related initiatives and measures.

11Processes for Managing Climate-related Risks
The Chair of the Sustainability Committee will appoint a manager or team to manage climaterelated risks and opportunities that have been deemed material to business and financial planningin discussions of the committee, and instruct them to formulate relevant measures. The measuresformulated by the appointed manager or team will, depending on their substance, be discussed by
the Sustainability Committee or a relevant organization within the Company, and then executed on
the basis of those discussions.
Estate takes account of climate-related risks deemed material to business and financial planning in
its existing company-wide risk management program, and is taking steps to integrate processes for
identifying, assessing, and managing risks.

12Metrics and Targets
With a view to mitigate climate-related risks and capitalize on opportunities, Heiwa Real Estate has
specified key performance indicators, set targets, and is monitoring the achievement of the targets.
Progress made in executing various initiatives and achieving the targets is reported to the Company’s
Sustainability Committee at least once annually by the officer responsible for executing climaterelated initiatives and measures.
The Company’s target for greenhouse gas emission reductions, which it has specified a performanceindicator, and recent results are shown in the charts below. While the target is for Scope 1 and 2
emissions, the Company plans to reduce Scope 3 emissions in the future after determining calculation
methods.
Greenhouse gas emission reduction target1

Recent results in reducing greenhouse gas emissions2

Notes:
1. The greenhouse gas emission reduction target was approved as a science based target (1.5 degrees
Celsius scenario) by the Science Based Targets Initiative, which calls on members to set
scientifically based reduction targets aimed at achieving the goals of the Paris Agreement, aninternational framework for reducing greenhouse gas emissions. Heiwa Real Estate has been
following procedures for gaining approval by the initiative.
2. The results are for all buildings within the Heiwa Real Estate Group, excluding buildings designatedto be sold and jointly owned buildings of which the Company has an ownership share of less than13

25%. CO2 emissions per square meter of floor area is calculated by dividing the combined
emissions of all properties each year by the total floor space of the properties, regardless of theperiod in which the properties are owned. Figures with check marks have been verified by thirdparty organizations.

14

TCFD Index
Disclosures recommended by the TCFD
Relevant information disclosed online
Disclose the organization’s governance around climate-related risks and opportunities This webpage＞Governance
Governance

Strategya) Describe the board’s oversight ofclimate-related risks and opportunities

Metrics andTargets

The Company’s website＞Environment＞
Promotion System
Page 45 of the Company’s Integrated Report2022b) Describe management’s role in This webpage＞Governance (Page 4)
assessing and managing climate-relatedrisks and opportunities
Disclose the actual and potential impacts of climate-related risks and opportunities on theorganization’s businesses, strategy, and financial planning where such information ismateriala) Describe climate-related risks and This webpage＞Strategy＞Climate-related
opportunities the organization has
Risks to and Opportunities for the Company’s
identified over the short, medium, andBusinesses
long termb) Describe the impact of climate-related
 This webpage＞Strategy＞Climate-relatedrisks and opportunities on the
Risks to and Opportunities for the Company’sorganization’s businesses, strategy, andBusinesses
financial planningc) Describe the resilience of theorganization’s strategy, taking into
 This webpage＞Strategy＞Business Resilience
consideration different climate-related
Measuresscenarios, including a 2oC or lower
scenario
Disclose how the organization identifies, assesses, and manages climate-related risksa) Describe the organization’s processes
for identifying and assessing climaterelated risks

Risk
Management

This webpage＞Risk Management＞Processes
for Identifying and Assessing Climate-related
Risks
This webpage＞Risk Management＞Processes
for Managing Climate-related Risksb) Describe the organization’s processesfor managing climate-related risksc) Describe how processes for
identifying, assessing, and managing
climate-related risks are integrated into
 This webpage＞Risk Management＞
the organization’s overall risk
management
Disclose the metrics and targets used to assess and manage relevant climate-related risks
and opportunities where such information is material
 This webpage＞Metrics and Targetsa) Disclose the metrics used by the The Company’s website＞Environment＞
organization to assess climate-related
Climate Change Countermeasures (underrisks and opportunities in line with its“Initiative Targets”)
strategy and risk management process
 Pages 39 – 40 of the Company’s Integrated
Report 2022b) Disclose Scope 1, Scope 2 and, if
 Pages 39 – 40 of the Company’s Integrated
appropriate, Scope 3 greenhouse gas
Report 2022
(GHG) emissions and the related risksc) Describe the targets used by theorganization to manage climate-relatedrisks and opportunities and performanceagainst targets

15



Pages 39 – 40 of the Company’s Integrated
Report 2022