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About this ESG report
In recent years, there has been growing interest primarily among investors in information
about corporate sustainability, and in particular factors pertaining to ESG (environment,social and governance). Nippon Building Fund Inc. (hereinafter “NBF” ) has, together with
Nippon Building Fund Management Ltd. (hereinafter “NBFM” ) to which NBF entrusts asset
management, taken ESG into consideration through its business activities. ESG reportis issued for the purpose of reporting NBF’ s approach and efforts to promote ESG to its
investors and other stakeholders.

C o n t e n t s
NBF’s Approach to ESG・Top Message����������������������������������������������������� 1
・ESG Initiative Policy������������������������������������������� 2・Materiality�������������������������������������������������������� 4
・ESG Promotion System�������������������������������������� 6
・Stakeholder Engagement����������������������������������� 6
・SFDR Documents���������������������������������������������� 7

Environment Initiatives
・Environmental Initiatives�����������������������������������16
・Initiatives for Climate Change����������������������������20
・Green Finance��������������������������������������������������25
・Environmental Performance�������������������������������27

Social Initiatives
・Social Initiatives�����������������������������������������������31
・Initiatives for NBFM Employees��������������������������36

Governance・Corporate Governance��������������������������������������44
・Compliance�����������������������������������������������������48
・Risk Management���������������������������������������������51

Commitment and External Evaluation
・Commitment���������������������������������������������������52
・External Evaluation�������������������������������������������53
・Utilization of Green Building Certification������������� 54

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Top Message

Nippon Building Fund Inc.

Nippon Building Fund Management Ltd.

Executive Director Koichi Nishiyama

President & CEO Daisuke Yamashita

The way corporations are engaging with environmental challenges, and improving the business environment for its employees andclients, are becoming ever more prevalent mid-to-long-term risk factors for investors to consider, in viewing how management exercise
sound management practices and introduce governance systems. At the same time, it is understood that addressing these challenges
serves as a gateway for new value creation and business opportunities.
In light of the ever-tightening environmental regulations in various countries in addition to changes in stakeholdersʼ preference for realestate with excellent environmental performance and comfort, etc., NBF recognizes that taking ESG factors into consideration within its
operations is a top priority for management. It believes that facing ESG issues head-on is essential for maintaining and improving asset
value in the mid-to-long-term.
Based on this recognition, NBF believes that proactive disclosure of ESG initiatives will become increasingly important, thus NBF
stipulated the " Policy for ESG Initiatives " issuing the first ESG Report among J-REITs in 2017.
The purpose of this Report is to disclose extensively to our investors and other stake holders, NBFʼs approach to ESG and various
initiatives, and to provide clarity of its actions.
NBF will continue to aim to construct healthy relationships based on trust with all stakeholders by further enhancing ESG initiatives,
simultaneously striving to increase asset value.
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NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

ESG Initiative Policy
NBFM has stipulated a basic policy for ESG initiatives. In addition, ESG initiatives are

2.Collaboration and engagement with various stakeholders

promoted by incorporating the policies and guidelines related to sustainability set by Mitsui

NBFM will collaborate and engage with officers and employees, tenants, property

Fudosan Co., Ltd. the main sponsor of NBF.

management companies, local communities and other stakeholders. At the same time, NBFM
promotes various efforts to address social demand from its stakeholders as a member ofsociety.

Policy for ESG Initiatives(i) Training of officers and employees
NBFM recognizes that human capital is its largest asset and strives to create an employeefriendly and healthy work environment for individual officers and employees to fully exert
their capabilities as well as promoting initiatives for human resource development throughBasic Policy

specialized education, training support, etc. In addition, NBFM aims to improve awareness of

NBFM, in recognition of the importance of ESG for carrying out real estate

ESG by training its officers and employees through continuous implementation of education

investment and management activities, strives to achieve asset management

and encouragement of activities relating thereto.

activities considering reduction of environmental load, improving security, safety(ii) Collaboration with tenants, and initiatives for customer satisfaction improvement

and comfort and diversified collaboration and cooperation with various

NBFM asks tenants for understanding and cooperation for environmental and social

stakeholders, in line with "The Group Environmental Policy" and "Policy for Social

considerations in the use of the buildings and promotes green leases and other collaborative

Contribution Initiatives" established by the Mitsui Fudosan Group.

initiatives. In addition, NBFM strives to improve customer satisfaction through initiatives
related to the enhancement of the level of tenants’ health and well-being, disaster prevention
and business continuity plan measures.
(iii) Cooperation with property management companies and business partners

1.Reduction of environmental load and initiatives for climate

NBFM asks property management companies and other business partners for understanding
and collaboration and promotes initiatives concerning environmental and social considerations

change issues

in its supply chain.

(i) Promoting energy eﬃciency and reduction of GHG emissions(iv) Contribution to the local community

By promoting eﬃcient use of energy and introduction of energy-saving facilities etc., NBFM

As a member of the community, in order to contribute to vitalization and development ofendeavors to reduce GHG emissions such as CO2 through energy saving.

local communities, NBFM will conduct engagement programs with the community in its
portfolio asset.

(ii) Conserving water environment and improving waste recycling rate
NBFM aims to conserve the water environment by initiatives for saving water such as theintroduction of water-saving devices. NBFM also makes an eﬀort to promote 3R (reduce,reuse and recycle) for resource saving and improving waste recycling rate.
(iii) Responding to climate-related issues
NBFM identiﬁes and assesses climate-related risks and opportunities and promotes its
resilience by managing and mitigating those risks while taking actions to realize thoseopportunities.

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NBF’s Approach to ESG

3.Initiatives for governance(i) Thorough compliance
NBFMʼs oﬃcers are to execute operation acknowledging that compliance is one of the mostimportant agenda for the management, and proactively promote compliance as well as haveoﬃcers and employees fully understand its importance.
(ii) Establishment of governance structure and risk management structure
NBFM strives to improve transparency of decision making and to avoid conﬂict of interest as
well as to manage and reduce various operational risks (including climate-related transition
risks and physical risks) by establishing Management Policies, Asset Management Guidelines
and other standards and regulations that should be observed in the course of operation anddeveloping an internal structure that enhances governance such as a Compliance Committee,
Investment Review Meeting and Risk Management Meeting.

In addition, we will strive to manage and mitigate various risks (including transition risk andphysical risk related to climate change issues) in the conduct of our business.

4.Information Disclosure to Related Parties such as Investors,
and Utilization of Environmental Certification and Evaluation
In accordance with the Policy, NBFM actively discloses its implementation status to relatedparties such as investors and tenants. This disclosure is aligned with international standards
such as TCFD from the perspective of transparency and comparability. Environmental
certification and evaluation such as GRESB and CDP are also used to actualize initiatives
based on this Policy.

Environmental and Social Initiatives of the
Mitsui Fudosan Group
Mitsui Fudosan Co., Ltd. the main sponsor of NBF, with its statement of "Transforming thecity Transforming the future" establishes "The Group Environmental Policy" and "Policy forSocial Contribution Initiatives.“
Please refer to "ESG Report" for the Mitsui Fudosan Groupʼs social, environmental andgovernance initiatives.

3

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Materiality
Materiality and KPIImproving tenant satisfaction

KPI and numerical target

・GHG emissions (Scope 1+2+3)
90% reduction by 2050 compared to 2021 SBT
・GHG emissions (Scope 1+2)
42% reduction by 2030 compared to 2021 SBT
・CO2 emission intensity
46% reduction by 2030 compared to 2013
・Water consumption intensity
5% reduction by 2030 compared to 2019
・Waste recycling rate
65%
・Green building certification coverage 100%・Procurement of green finance10 billion yen / year or more
Addressing climate-related issues(reduction of environmental impact)
Overview

Ｓ(Society)

In response to changes in the environment caused by global warming andother factors, we will promote initiatives to reduce environmental impact,
fulfill our social responsibilities, and strive to improve the value of ourcompanies and assets under management.

Ｅ(Environment)

Environmental Performance

Utilizing green building certification

Reference

Social Initiatives

Ensuring the health and well-being of employees andhuman resource development
Overview
andObjectives

We will create a comfortable work environment, achieve a work-life balance,and secure and develop human resources who will enhance organizational
productivity.

Reference

Initiatives for NBFM Employees

Overview
andObjectives

We will contribute to community development, and safety and security of
local communities, implement programs aimed at community revitalization,and promote greening with an awareness of biodiversity.

Reference

Social Initiatives

Strengthening corporate governance

Reduction of water consumption intensity
Waste: Improving waste recycling rate

Reference

We aim to operate office buildings with a high level of tenant satisfaction
through customer satisfaction surveys and office environment monitoring.

Contributing to the community

Relevant SDGs

Reduction of GHG emissions
Objectives

Overview
andObjectives

Ｇ(Governance)

Relevant SDGs

Overview
andObjectives

We will continuously improve and enhance corporate governance by
establishing governance structures such as the Compliance Committee andthe Risk Management Meeting.

Reference

Corporate Governance

Strict Compliance practice

Overview

Aiming to reduce environmental impact while improving the workplaceenvironment, we will enhance the objectivity of environmental performancethrough green building certification, and strive to understand environmental
performance at the time of asset acquisition and to improve our operating
assets over the medium to long term.

Overview
andObjectives

We aim to be a company that continues to be trusted by society, not only bycomplying with laws and regulations, but also by responding to social needs
and expectations.

Objectives

Improvement of green building certification coverage

Reference

Compliance

Reference

Utilization of Green Building Certification

Green Finance procurement
Overview

We will procure funds for the acquisition of properties with highenvironmental performance that meet the eligibility criteria of the Green
Finance Framework through green finance (green bonds, green loans, etc.).

Objectives

Procurement of green finance for the acquisition of qualified assets

Reference

Green FinanceRelevant SDGs

4

Relevant SDGs

Relevant SDGs

Relevant SDGs

Relevant SDGs

Relevant SDGs

NBF’s Approach to ESG

Materiality identiﬁcation process
Step1: Extracton of societal challenges
Select highly relevant societal challenges by referring to ESG assessment criteria and ESG
disclosure frameworks, and the situation of peer companies in order to measure theimportance to stakeholders.

Step2: Evaluation of importance levels
Prioritize the important issues by discussing the relevance between elements of selectedsocietal challenges and opportunities and risks for NBF's continuous growth, while taking
into account NBF's business plan as well as ESG disclosure contents.

Step3: Third-party review
Conduct a review by a consulting company

Step4: Discussion and identification at the ESG Promotion Committee
Discuss prioritized issues and identify important sustainability issues (materiality) at the
ESG Promotion Committee

Step5: Set KPIs
Set KPIs and numerical targets to address the material issues

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Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Stakeholder Engagement

ESG Promotion System
ESG Promotion System

The basic approach of NBF and NBFM regarding social considerations is to engage indialogue with stakeholders (affiliates inside and outside the company) associated withbusiness activities, including investors, NBFM employees, tenants, business partners and

The ESG Promotion Committee, which includes the President and CEO, Director, CIO andlocal communities and to endeavor to meet their expectations.

CFO, Director, and COO, Compliance Officer, and General Manager of each department of
NBFM as its final decision maker, has been established to supervise and promote initiatives
on climate change as well as other environmental and social initiatives based on NBFM's《Responsibilities of NBF and NBFM to Key Stakeholders》

Policy for ESG Initiatives.
The Strategy Planning and ESG Promotion Department assesses ESG risks andopportunities and consults on KPIs and specific measures to reduce GHG emissions such as
CO2 with the Committee, which meets at least once every three months (held as often asnecessary) and the final decision maker decides specific targets and measures.
The Strategy Planning and ESG Promotion Department reports on the progress of thedecided targets and measures to the Committee at least once every three months. Thesetargets and measures are shared with all officers and employees through briefings, email
distribution, posting on the in-house portal, etc.
In addition, the Board of Directors of NBF and NBFM also receive regular reports about
once every six months from the Committee on the progress of risk management andprograms related to climate change, review the risk management process and direct new
actions as necessary, thereby continually carrying out the monitoring of each initiative.

Corporate Governance and Compliance
SystemNBFM to which asset management services are entrusted has established a governancestructure such as with its Compliance Committee, Risk Management Meeting, Investment
Review Meeting and Executive Board, and endeavors to thoroughly implement risk
management and compliance in its operations and improve corporate governance on an
ongoing basis.
https://www.nbf-m.com/nbf_e/profile/governance/index.html

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NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

SFDR Documents (Sustainable Finance Disclosure Regulation)
SFDR Pre-contractual Disclosure

Investment strategy[980KB]

Tokyo and surrounding urban areas where office leasing demand isrelatively strong. In order to realize sustainability in our asset
management while maximizing NBF’s portfolio value, we consider ESG
factors in our investment and asset management processes. In
particular, we have established a green finance framework where
proceeds are used only to acquire Eligible Green Assets or repay loans orbonds financed for such acquisitions.
We ensure our investment strategy is implemented on a continuous
basis by establishing and maintaining green eligible criteria, andensuring that any proceeds from our green financing will be used
exclusively toward properties that meet such criteria.
We do not invest in investee companies and have therefore opted toprovide information on the governance policies adopted by us and theAsset Manager.

STATEMENT ON PRINCIPAL ADVERSE IMPACTS OF INVESTMENT DECISIONS ON
SUSTAINABILITY FACTORS[221KB]SUSTAINABILITY-RELATED DISCLOSURE
Product name: Nippon Building Fund Inc.
Legal entity identifier: 52990053R8NL2MB32172

Proportion of investments

NBF offers financial products which promote environmental or social
characteristics, but does not have sustainable investments as its
objective. As of December 31, 2023, 97.2% of NBF’s properties were
Eligible Green Assets, and 2.8% of NBF’s properties were not Eligible
Green Assets based on gross floor area.

Monitoring ofenvironmental or social
characteristics

In order to measure the attainment of the E/S characteristics wepromote, we use the indicators such as (i) acquiring external
certifications and assessments for sustainability performance such as
GRESB, (ii) acquiring environmental certification, (iii) tracking anddisclosing data related to climate change, (iv) conducting customer
satisfaction surveys and (v) conducting employee satisfaction survey.
Each is further described below.

Methodologies

The ESG Promotion Committee, which includes the President and CEO,
Director, CIO and CFO, Director, and COO, Compliance Officer, andGeneral Manager of each department of the Asset Manager as its final
decision maker, has been established to supervise and promote
initiatives on climate change as well as other environmental and social
initiatives based on the Asset Manager’s Policy for ESG Initiatives.
The Strategy Planning and ESG Promotion Department assesses ESG
risks and opportunities and consults on KPIs and specific measures toreduce GHG emissions such as CO2 with the ESG Promotion Committee,
which meets at least once every three months (held as often asnecessary) and the final decision maker decides specific targets andmeasures.
The Strategy Planning and ESG Promotion Department reports on the
progress of the decided targets and measures to the Committee at least
once every three months. These targets and measures are shared withall officers and employees through briefings, email distribution, postingon the in-house portal, etc.
In addition, the Board of Directors of NBF and the Asset Manager also
receive regular reports about once every six months from the ESG
Promotion Committee on the progress of risk management andprograms related to climate change, review the risk management
process and direct new actions as necessary, thereby continually
carrying out the monitoring of each initiative.

Nippon Building Fund Inc. (“NBF”) promotes environmental or social characteristics, but does not have as
its objective a sustainable investment within the meaning of Article 9(1) of Regulation (EU) 2019/2088("SFDR"). NBF has no employees in accordance with the prohibition on having employees under the Act on
Investment Trusts and Investment Corporations of Japan and relies on Nippon Building Fund Management
Ltd. (the “Asset Manager”), to manage and operate the properties in NBF’s portfolio. NBF and the AssetManager are hereinafter referred to collectively as “we,” “us” or “our” unless noted otherwise. References to“fiscal year” or “FY” are to the 12 months began or beginning April 1 of the year specified in line with thefiscal year of the Asset Manager, unless noted otherwise.

Summary
No sustainable investment
objective

The financial products offered by NBF promote environmental or social
characteristics, but NBF does not have as its objective sustainable
investment.

Environmental or social
characteristics of thefinancial product

The Asset Manager established an ESG policy in November 2017, inrecognition of the importance of considering ESG (defined below) factors
in real estate investment and management. The ESG policy stipulates
the implementation of environment-friendly initiatives as well as
initiatives targeting stakeholders including investors, tenants,
employees, business partners and local communities in our daily asset
management operations, based on policies established by Mitsui FudosanCo., Ltd, NBF’s main sponsor. Under the ESG policy, we undertake efforts
to reduce our environmental impact, improve safety, security andcomfort for tenants and engage in a diverse range of collaboration andcooperation efforts with various stakeholders. We implement various
environmental initiatives at NBF’s properties, as described below.

With our strategy of aiming to achieve consistent growth of assets andstable income, we have developed an urban portfolio focused in central

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NBF’s Approach to ESG

Data sources andprocessing

Limitations tomethodologies and data

Due diligence

Engagement policies

Designated reference
benchmarkEnvironment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

No sustainable investment objective

As further described below, the Asset Manager obtains certain ESGrelated data from NBF Office Management Co., Ltd., third-party
consulting firms and building management companies. In addition,
depending on the type of data, the Asset Manager ensures data accuracy
and quality through a third-party organizationʼs external review.

The financial products offered by NBF promote environmental or social characteristics, but NBF does nothave as its objective sustainable investment.

As further described below, the primary limitation to methodologies anddata is the necessity of reliance on tenants and building managementcompanies for raw data at the property level.
Data at the portfolio level is compiled internally at the Asset Management
Company. To ensure the accuracy of compiled data at the portfolio level,
we have engaged an independent third-party accounting
firm which has provided an assurance report regarding the accuracy andquality of certain parts of the compiled annual data at the portfolio levelin accordance with our own criteria and methodologies.
Limitations to the methodologies and data are not expected to affect theattainment of the environmental or social characteristics promoted by
NBF in any material way.

Environmental or social characteristics of the ﬁnancial product
The Asset Manager established an ESG policy in November 2017, in recognition of the importance ofconsidering environmental, social and governance (“ESG”) factors in real estate investment andmanagement. The ESG policy stipulates the implementation of environment-friendly initiatives as well as
initiatives targeting stakeholders including investors, tenants, employees, business partners and local
communities in our daily asset management operations, based on policies established by Mitsui Fudosan Co.,
Ltd, NBFʼs main sponsor. Under the ESG policy, we undertake efforts to reduce our environmental impact,
improve safety, security and comfort for tenants and engage in a diverse range of collaboration andcooperation efforts with various stakeholders.

When investing in properties using proceeds from green financing, we
do not consider properties that do not meet the criteria under our green
finance framework. We also investigate use of hazardous substances
including asbestos or countermeasures to such substances and soil
contamination when investing in properties.

We implement various environmental initiatives at NBFʼs properties including the following.
● Reducing greenhouse gas emissions and energy consumption from NBFʼs properties. We aim to reduce energy
consumption by installing energy saving equipment such as LED lighting at NBFʼs properties.
● Reducing water use. Some of NBFʼs oﬃce buildings are equipped with facilities for reusing rainwater andgreywater to reduce the consumption of tap water.

We investigate use of hazardous substances including asbestos orcountermeasures to such substances and soil contamination wheninvesting in properties.
In order to realize sustainability in our asset management while
maximizing NBFʼs portfolio value, we consider ESG factors in ourinvestment and asset management processes.

● Including “Green Lease” provisions in our agreements. We have executed lease agreements, which include
clauses requiring our tenants to collaborate with us in implementing various measures and to promote
environmental consideration, including installation of LED lighting at NBFʼs properties with the consent of thetenants.
● Collaboration with the Asset Manager and third party. We utilize the expertise of NBF Oﬃce Management Co.,

NBF has no benchmark index designated as a reference benchmark tomeet the environmental or social characteristics promoted by NBF.

Ltd. (“NBFOM”) to maintain and increase the competitiveness, occupancy rates and rent at NBFʼs properties
while eﬀectively advancing environmental initiatives. In meetings with NBFOM that are held once every twomonths, we share and discuss initiatives and other information concerning the various energy saving andenvironmental issues. We utilize the support of Nikken Sekkei Construction Management, Inc. as an expert
consultant for suggestions on energy management and measures that contribute to increasing theenvironmental performance of NBFʼs portfolio.
We implement various social initiatives at NBFʼs properties including the following.

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NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Investment strategy● Providing support to tenants and their employees. To keep good indoor air quality and sanitary conditions andenhance users’ health and productivity, we monitor the indoor environment based on a satisfaction survey ofWith our strategy of aiming to achieve consistent growth of assets and stable income, we have developed

tenants (excluding master lessees) and aim to make NBF’s properties comfortable every day. Based on thesurvey, we expanded kitchenettes and installed built-in counters for garbage bins, expanded hot water supply

an urban portfolio focused in central Tokyo and surrounding urban areas where office leasing demand isrooms with hot water supply rooms with occupancy indicators, installed air purification equipment and sanitizer

relatively strong. In order to realize sustainability in our asset management while maximizing NBF’s portfolio

stations to improve the convenience and cleanliness of Shinjuku Mitsui Bldg. No.2 in 2020.

value, we consider ESG factors in our investment and asset management processes. In particular, we haveestablished a green finance framework where proceeds are used only to acquire Eligible Green Assets or● Supporting local communities and social development. For the local communities, we hold initiatives such as

repay loans or bonds financed for such acquisitions.

lunchtime concerts, seasonal events, water sprinkling programs for cooling down and local cleanup programs.
In office buildings that have residential portions required under local ordinances, we have performed major
living environment. We also manage buildings with consideration given to historical and cultural heritage. For● Selection of projects that qualify for green financing. When determining whether to acquire or invest inproperties by green financing, we rely on the DBJ and CASBEE certifications. We use green financing to acquire

example, Toranomon Kotohira Tower was developed in a manner that protected Kotohira-Gu shrine, a historic

properties that receive (i) three stars or higher out of DBJʼs ﬁve-star ranking system, (ii) B+ Rank or higher out

renovations on the residential portions to ensure that the residents have adequate space and to improve theirof the CASBEE ranking system or (iii) three stars or higher out of BELSʼs ﬁve-star ranking system.

property for the area, and is designed to be a mixed-use building with space made available for the shrine● Second-party opinion. We have obtained (most recently in February 2021) a second-party opinion fromoffice. We also contribute to local communities by providing space for bicycle sharing services at NBF’sproperties. In the fiscal period ended on December 31, 2022, the Asset Manager’s employees and their families

Sustainalytics, a third-party ESG evaluation agency, that our green ﬁnance framework is “credible and impactfulparticipated in the “Bridge Washing” at the famous Nihonbashi Bridge.

and aligns with the four core components of the Green Bond Principles 2018 (GBP) and the Green Loan
Principles 2020 (GLP)”.

● Disaster countermeasures. In support of the Minato-ku Regional Disaster Prevention Plan, we provide free-ofcharge some of our leasable spaces to store emergency materials at Roppongi T-CUBE, Celestine Shiba Mitsui

We ensure our investment strategy is implemented on a continuous basis by establishing and maintaining

Bldg. and Shiba NBF Tower.

green eligible criteria, and ensuring that any proceeds from our green financing will be used exclusively● Promoting universal design. We introduced universal design at some of NBF’s properties such as widening of

toward properties that meet such criteria.

ramps and installation of handrails, improvement of interior signage and automation of service entrance doors

We do not invest in investee companies and have therefore opted to provide information on the governance(for wheelchair accessibility and COVID-19 safety). As part of our capital investment decision-making process,policies adopted by us and the Asset Manager.

we always review the status of the building’s compliance with the Barrier-Free Law of Japan, accessibility forpeople with disabilities and accessibility to public transportation around the property. These matters are also

We, along with the Asset Manager, have introduced the following measures to assess and enhance ourperiodically reviewed by obtaining engineering reports and other relevant documents following acquisition.

governance systems:

Through these inclusive efforts, we aim to manage properties that are comfortable for all office users.
● Respecting human rights. We support the Universal Declaration of Human Rights in the International Bill of● Adoption of a decision-making process in conﬂict-of-interest transactions involving independent outside experts.

Human Rights, international labor standards such as the ILO Declaration on Fundamental Principles and Rights

We have adopted a governance structure stricter than what is legally required. The Asset Manager reviews andat Work, and the UN Guiding Principles on Business and Human Rights.

examines conﬂict-of-interest transactions through its Compliance Committee, whose members include outside
expert(s).

● Providing support for employees. The Asset Manager promotes the acquisition of qualifications by its employees
such as ARES Certified Master (a qualification obtainable after participating in an educational program that

● Corporate Governance. The Asset Manager believes that compliance refers not only to legal compliance but alsoteaches practical expert know-how in real estate and finance). The Asset Manager has also introduced various

to compliance with the Asset Managerʼs Code of Ethics and Compliance Rules, which include concrete guidelines

training programs, including on compliance, and will bear the costs of its employees attending seminars,

on how to take ethical actions. In addition, its Compliance Oﬃcer promotes company-wide compliance activities

lectures and courses that lead to self-improvement.

by planning and oﬀering a compliance program and training and awareness raising activities for all oﬃcers andemployees.

9NBF’s Approach to ESG

Proportion of investments

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Methodologies

NBF offers financial products which promote environmental or social characteristics, but does not have

The ESG Promotion Committee, which includes the President and CEO, Director, CIO and CFO, Director, andsustainable investments as its objective. As of December 31, 2023, 97.2% of NBF’s properties were Eligible

COO, Compliance Officer, and General Manager of each department of the Asset Manager as its final decision

Green Assets, and 2.8% of NBF’s properties were not Eligible Green Assets based on gross floor area.

maker, has been established to supervise and promote initiatives on climate change as well as otherenvironmental and social initiatives based on the Asset Managerʼs Policy for ESG Initiatives.
The Strategy Planning and ESG Promotion Department assesses ESG risks and opportunities and consults

Monitoring of environmental or social characteristics

on KPIs and specific measures to reduce GHG emissions such as CO2 with the ESG Promotion Committee,
which meets at least once every three months (held as often as necessary) and the final decision maker

We use the following indicators to measure the attainment of the environmental or social characteristics we

decides specific targets and measures.

promote:The Strategy Planning and ESG Promotion Department reports on the progress of the decided targets and● GRESB Real Estate Assessment. The GRESB Assessment, established in 2009 primarily by major European

measures to the Committee at least once every three months. These targets and measures are shared withpension fund groups, is an annual benchmark survey for evaluating ESG considerations in the real estate sector.

all officers and employees through briefings, email distribution, posting on the in-house portal, etc.

It evaluates sustainability efforts by real estate companies and REITs. NBF received a “Green Star” in 2023, forthe ninth consecutive year. NBF also received in 2023 a “4-Star”, the second highest rating based on its overall

In addition, the Board of Directors of NBF and the Asset Manager also receive regular reports about once

GRESB score.

every six months from the ESG Promotion Committee on the progress of risk management and programs● Environmental certification of properties: To track the environmental performance of NBF’s properties, we relyon certifications issued by third-party organizations, such as the Development Bank of Japan’s (“DBJ”) Green

related to climate change, review the risk management process and direct new actions as necessary, thereby
continually carrying out the monitoring of each initiative.

Building Certification, Comprehensive Assessment System for Built Environment Efficiency (“CASBEE”)● GRESB Real Estate Assessment. GRESB is a portfolio-level assessment and is conducted by GRESB throughcertification, Building Energy-efficiency Labeling System (“BELS”) certification and other equivalentcertifications. We call NBF’s property that receives any such certifications an “Eligible Green Asset”. With respectannual submission of our responses and relevant data to GRESBʼs questionnaires on ESG matters. The ESG &to DBJ certifications, we consider a property to have sufficient environmental certification if it received 3 stars or

Business Promotion Department takes the lead in preparing our responses to GRESB questionnaires with thehigher out of DBJ’s five-star ranking system. With respect to CASBEE, we consider a property to have sufficient

help of an external consulting ﬁrm. From around March, each department within the Asset Manager work

environmental certification if it received B+ Rank or higher out of the CASBEE ranking system featuring Rank S

together to compile relevant ESG data information and after checking with the consulting company and(excellent), Rank A (very good), Rank B+ (good), Rank B- (slightly inferior) and Rank C (inferior). With respect

reporting to the ESG Promotion Committee of the Asset Manager, our responses to GRESBʼs questionnaires will
be submitted around June. The evaluation results are then received in October.

to BELS, we consider a property to have sufficient environmental certification if it received a three stars or● Environmental certiﬁcation of properties. Based on the annual ESG plan, the Real Estate Management

higher out of BELS’ five-star ranking system. As of December 31, 2023, 97.2% of NBF’s properties were Eligible

Department of the Asset Manager, under the supervision of the ESG & Business Promotion Department, collects

Green Assets based on gross floor area.

data in cooperation with NBF Oﬃce Management Co., Ltd., an oﬃce management services provider, and● Climate change initiatives: The Asset Manager has expressed support for the Task Force on Climate-related
Financial Disclosures (TCFD), established by the Financial Stability Board and clarified stronger efforts to

prepares response data for the certifying organizations. The ESG & Business Promotion Department of the Assetaddress climate-related issues. The Asset Manager aims to assess the financial impact of future climate changeManager compiles the prepared response data for each property and submits it to the certifying organizations

risks and opportunities and assertively disclose activities. The Asset Manager also has set a target of reducing

with the cooperation of an external consulting ﬁrm. With regard to the acquisition of environmental

energy-based CO2 emissions by 46% or more from that in 2013 by 2030 and intends to promote initiatives

certiﬁcations, reports are made at the ESG Promotion Committee of the Asset Manager, and decisions are madeby the President of the Asset Manager.

addressing climate-related risks and opportunities.

● Climate change initiatives. The ESG & Business Promotion Department collects basic environmental data, such

● Social initiatives – tenants: We conduct customer satisfaction surveys targeting the tenants excluding master

lessees every year in order to understand the level of satisfaction and needs of tenants, and the PDCA cycle is

as electricity and gas consumption data, on a monthly basis from our oﬃce building management companies,

applied to promptly address any issues identified in the survey. For example, as a response to the result of theand data checks and increase/decrease analyses are conducted in cooperation with consulting ﬁrms and NBF

surveys, we changed the layout of the common space at NBF Toyosu Canal Front to enhance user-friendliness.

Oﬃce Management Co., Ltd. The amount of CO2 emissions are calculated by multiplying the amount of activity
by the emission factor set by each energy supplier. Data collected and compiled by the ESG & Business● Social initiatives – employees: The Asset Manager provides all of its employees with regular opportunities toPromotion Department is reported to the ESG Promotion Committee of the Asset Manager.

consult with their superiors and directors. This program provides them with opportunity to discuss their careers,
receive feedback on their performance and discuss requests to the company. The Asset Manager also conducts
an employee satisfaction survey every year as part of its efforts to maintain excellent relations with its
employees. The surveys allows the Asset Manager to see whether employees are satisfied about their assigned
responsibilities and working environment and requests for company initiatives.

10

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Limitations to methodologies and data

● Social initiatives – tenants. The Real Estate Management Department of the Asset Manager, together with NBF
Oﬃce Management Co., Ltd., conducts an annual tenant satisfaction survey in order to obtain tenants' opinions,

The primary limitation to methodologies and data is the necessity of reliance on tenants and building

satisfaction levels, and needs. The survey is conducted on the oﬃce environment and convenience, general
operation and management such as cleaning, crime prevention and disaster prevention, as well as the

management companies for raw data at the property level. Like many other real estate investmenteﬀectiveness of CS activities for each building and the needs of tenants, and is reﬂected in building

corporations and asset managers, we rely on raw data provided by the tenants, and independent verification

management as appropriate. Questions related to ESG initiatives have been added since FY2022. The results ofof accuracy of such raw data provided by the tenants presents challenges. In addition, data at the property

the tenant satisfaction survey are reported to the President, CIO, COO, and the General Manager of the ESG &level provided by the tenants is generally updated on an annual basis. Accordingly, property-specific data will

Business Promotion Department.

therefore not always be fully up-to-date.

● Social initiatives – employees. The Planning and General Aﬀairs Department of the Asset Manager conducts anemployee satisfaction survey through interviews annually. The results are fed back to management of the Asset

Data at the portfolio level is compiled internally at the Asset Management Company. To ensure the accuracyof compiled data at the portfolio level, we have engaged an independent third-party accounting firm which

Manager and the entire company, and the survey results are also used as reference in organizational revisions

has provided an assurance report regarding the accuracy and quality of certain parts of the compiled annual

and personnel transfers.

data at the portfolio level in accordance with our own criteria and methodologies. However, the assurance
report does not provide independent verification of the accuracy of raw data at the property level and thechallenges associated with our reliance on the tenants for raw data at the property level remain.

Data sources and processing

Limitations to the methodologies and data are not expected to affect the attainment of the environmental

We use the following data sources:

or social characteristics promoted by NBF in any material way.

● GRESB Real Estate Assessment. GRESB provides assessment questionnaires and announces results of its
assessment and rankings thereof annually. At the Asset Manager, each department work together to compile

Due diligence

relevant ESG data information and after checking with the consulting ﬁrm, our responses to GRESBʼsquestionnaires will be submitted.

When investing in properties using proceeds from green financing, we do not consider properties that do● Environmental certiﬁcation of properties. The property-related data for obtaining the environmental

not meet the criteria under our green finance framework. We also investigate use of hazardous substances

certiﬁcations is collected by the Real Estate Management Department under the supervision of the ESG &including asbestos or countermeasures to such substances and soil contamination when investing in

Business Promotion Department through scoring sheets answered by the persons in charge of the subject

properties.

properties. The data compiled by the Real Estate Management Department will be shared with the certifying
organizations.
● Climate change initiatives. Basic environmental data, such as electricity and gas consumption, are collected in

Engagement policies

cooperation with consulting ﬁrms and NBF Oﬃce Management Co., Ltd. The contents of the basic environmental
data are veriﬁed by a third-party organization.

We investigate use of hazardous substances including asbestos or countermeasures to such substances andsoil contamination when investing in properties.

● Social initiatives – tenants. The Real Estate Management Department of the Asset Manager, together with NBF
Oﬃce Management Co., Ltd., conducts an annual tenant satisfaction survey. The survey results are collected

In order to realize sustainability in our asset management while maximizing NBFʼs portfolio value, we

and compiled by NBF Oﬃce Management Co., Ltd.

consider ESG factors in our investment and asset management processes. In particular, we have established● Social initiatives – employees. The Planning and General Aﬀairs Department of the Asset Manager conducts an

a green finance framework where proceeds are used only to acquire Eligible Green Assets or repay loans or

employee satisfaction survey through interviews annually.

bonds financed for such acquisitions.

Designated reference benchmark
NBF has no benchmark index designated as a reference benchmark to meet the environmental or social
characteristics promoted by NBF.

11

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

INTEGRATION OF SUSTAINABILITY RISKS IN THE
INVESTMENT DECISIONS, AND THE IMPACT OF
SUCH RISKS ON THE RETURNS OF NIPPONBUILDING FUND INC. (SFDR ARTICLE 6
DISCLOSURE)REMUNERATION AND SUSTAINABILITY RISKS(SFDR ARTICLE 5 DISCLOSURE)
The Asset Manager has a remuneration policy in place which aims to support its strategy, values and longterm interests, including its interest in sustainability. The Asset Manager’s remuneration policy is consistent
with the integration of sustainability risks as follows.
● Base remuneration comprises standard amounts based on position and rank. Performance-based remuneration

The ESG Promotion Committee, which includes the President and CEO, Director, CIO and CFO, Director, andis based on meeting certain pre-determined targets, where individual and company performance (including with

COO, Compliance Officer, and General Manager of each department of the Asset Manager as its final decisionrespect to sustainability targets) is taken into consideration. Allowances are provided for transportation andmaker, has been established to supervise and promote initiatives on climate change as well as othercertain other circumstances.

environmental and social initiatives based on the Asset Managerʼs policy for ESG initiatives.
In order to realize sustainability in our asset management and to maximize the value of NBFʼs portfolio
assets, we have emphasized taking into consideration ESG factors in our investment and asset management
processes. The Asset Manager has established a green finance framework in accordance with the 2018 Green
Bond Principles and the 2017 Green Bond Guidelines to conduct sustainable finance. Green financing under
our green finance framework consists of green bonds where proceeds are used only to acquire Eligible Green
Assets or refinance loans or bonds financed for such acquisition.
Under this organizational structure, we have instituted a number of initiatives, at both the portfolio level
and the property level, to promote environmental or social characteristics. Such initiatives include climatechange initiatives, water resources and waste management initiatives and tenant initiatives.
To address the sustainability risks including the risk of occurrence of damage to the asset value of lowperformance buildings due to the impact of environmental performance on real estate prices against the
backdrop of the tightening of regulations and change in tenant preference, we promote investment under ourgreen finance framework and try to improve NBFʼs portfolio environmental performance through property
replacements. We believe that our ESG initiatives contribute to the competitive strengths of NBFʼs portfolioand sustainable growth in returns.
While sustainability issues will severely impact our business activities, we believe that such issues may also
become potential business opportunities to create new value for sustainable growth. Accordingly, we position
our commitment to sustainability as a top priority in our management strategies. We also believe that
integrating sustainability factors alongside traditional financial and operational metrics in our investment
decision process helps us make a more holistic assessment of a propertyʼs risks and opportunities and iscommensurate with the pursuit of superior risk-adjusted returns.
The risk analysis was conducted based on scenarios of rising temperatures developed by internationalorganizations such as the International Energy Agency (“IEA”) and the Intergovernmental Panel on Climate
Change (“IPCC”) as information sources. The scenario overviews and main information sources referred toare as follows:12

NBF’s Approach to ESG

Scenario

4℃
Scenario

1.5℃
Scenario

Scenario overview
A scenario in which temperatures are assumed to rise by 4℃
compared with pre-industrial levels.
Climate change will progress without sufficient progress towards
global decarbonization, and disasters will become more intense andphysical risks greater than in the current world. Transition risks, suchas tighter laws and regulations, will be relatively small, but there areconcerns about increased air conditioning costs in offices andincreased costs of preparing for more severe extreme weather events.
A scenario in which temperatures are assumed to rise by 1.5℃
compared with pre-industrial levels.
While physical risks will remain relatively small as the world deepens
its efforts to decarbonize, the legal and other risks associated withpressing ahead with such efforts will be greater and more severe thanat present. Specifically, while costs associated with taxing GHG
emissions from offices are likely to increase, business opportunities
include higher rents for properties with high environmental
performance.

Environment Initiatives

Main references
Type of
Risks

Category

Social Initiatives

Principal risks
andopportunities● IEA Stated
Policies Scenario

GovernanceCommitment and External Evaluation

Financial impact
Factors that may
4℃ Scenario
1.5℃ Scenario
affect business
LongLongand financial
Mid-term
Mid-term
term
term
performance
2030
2030
2050
2050

Risk
management,
countermeasures,
initiatives● Set GHG
emissions(STEPS)● IPCC RCP8.5

reduction target● Reduce energy
consumption
through● IEA Net Zero
Emissions by

Introductionof GHGemissions
regulations
Introductionof carbon
taxes

2050 Scenario(NZE2050)● IPCC RCP2.6

renovation of
Increase in costs
due toresponding tolegal regulations

owned buildings
and
Minor

Minor

Major

collaboration
with tenants● Acquireproperties withsuperior energy

Transition Policy and
Legal
Risks

The following table presents the key climate-related risks that we consider may have a financial impact onModerateeﬃciency
performanceNBFʼs real estate investment management business and the initiatives that we have taken to address those● Introduce
renewablerisks, based on the recommendations of TCFD. More information can be found on the website:energyhttps://esg.nbf-m.com/en/environment/climate.html.

● Implement
energyeﬃciency
retroﬁts in a
Strengtheningof energy
conservation
standards

Increase inrenovation costs
to improveenergy efficiency

well-planned
manner
Minor

Minor

Moderate Moderate ● Appropriate
examination ofcosteﬀectiveness ofenergyeﬃciency
retroﬁts

13

NBF’s Approach to ESG

Type of
Risks

Category

Principal risks
andopportunities

Financial impact
Factors that may
4℃ Scenario
1.5℃ Scenario
affect business
LongLongand financial
Mid-term
Mid-term
term
term
performance
2030
2030
2050
2050

Risk
management,
countermeasures,
initiatives

Environment Initiatives

Type of
Risks

Category

Social Initiatives

Principal risks
andopportunities

GovernanceCommitment and External Evaluation

Financial impact
Factors that may
4℃ Scenario
1.5℃ Scenario
affect business
LongLongand financial
Mid-term
Mid-term
term
term
performance
2030
2030
2050
2050

● Build a portfoliowith superior● Acquireproperties

energybased on priceevaluation

Increase inproperty
Strengthening acquisition
Policy and of energy
prices due toLegalconservation scarcity ofstandards
investment

Increase inChanges infinancing costs
environmental for properties
performancewith relatively
values inlowfinancingenvironmental
performance

considering
environmental

Minor

Minor

Moderate Moderate

performance● Acquireproperties withexcellenttargets

eﬃciency
performance
Minor

Minor

● Introduce
renewable
Moderate Moderateenergy● Acquireenvironmental
certiﬁcations,environmental

etc. to good

performance byeﬀect

Marketleveraging
sponsor● Build a portfoliowith superior

pipelines● Implement
retroﬁts in a
Transition
Risks

Increase inrenovation costs
due tointroduction ofnewtechnologies

well-planned

Transition
Risksmanner
Minor

Minor

Moderate Moderate ● Appropriate
veriﬁcation of
cost-

Change intenants'

environmental

Decrease inrental income

performancefrom properties

with relatively
needs forenvironmental low
environmental
performance
performance

Minor

Minor

Moderate Moderate

etc. to goodeﬀect

● Acquireproperties● Build a portfoliowith superior

based on priceevaluation

Decrease incorporate(brand) value
due toReputation
delayedresponse to
climatechangeconsidering
environmental
performance
Minor

energycertiﬁcations,eﬀectiveness of

Minor● Introduce
renewable● Acquireenvironmental

renovations
Disseminationof new
Technology technologies
related toenvironmental
performance
Increase inpropertyacquisition
prices due toscarcity ofinvestment
targets

Risk
management,
countermeasures,
initiatives

Moderate Moderate ● Acquire
properties withexcellentenvironmental

environmental
performance
Decrease inrental income(due to decline
in brandstrength)

Minor

Minor

Moderate Moderate● Introduce
renewableenergy● Acquireenvironmental
certiﬁcations,etc. to good

performance by

eﬀect

leveraging
sponsorpipelines

14

NBF’s Approach to ESG

Type of
Risks

Category

Principal risks
andopportunities

Financial impact
Factors that may
4℃ Scenario
1.5℃ Scenario
affect business
LongLongand financial
Mid-term
Mid-term
term
term
performance
2030
2030
2050
2050

Increase in costsofModeratecountermeasures

Major

Moderate Moderate

Riskmanagement,
countermeasures,
initiatives

Environment Initiatives

Type of
Risks

Category

Social Initiatives

Principal risks
andopportunities

GovernanceCommitment and External Evaluation

Financial impact
Factors that may
4℃ Scenario
1.5℃ Scenario
affect business
LongLongand financial
Mid-term
Mid-term
term
term
performance
2030
2030
2050
2050

● Cost-eﬀective,
appropriate and● Graspinundation riskssystematicusing ﬂood
maps

implementationof

Rising sea
levelscountermeasure
works

Increase in costsofModerate

Major

Minor

● Cost-eﬀective,
Moderateappropriate andsystematiccountermeasures● Reduce theimpact of the

PhysicalRisks

disaster

implementationofChronic

countermeasureworks

throughsystematic

Physical
Risks

Acute

Increase in
the severityof extreme
weather(Typhoons,floods, andheavy rains)

Decrease inoperatingrevenue at thetime of damage

Major

Moderate Moderateof

Risingaveragetemperaturescountermeasure
works● Reduce theimpact of theencouraging
evacuation drills● Reduce theimpact ofdisasterthroughsystematic
implementation

Moderate

Major

Moderate Moderate

Increase in costs
due to increased
Moderate Moderate
air-conditioning
load

equipment with
Minor

Moderate

excellentenergyeﬃciency
performancedisaster by

Incurring
recovery costs
when damage
occurs● Install airconditioning

implementation
ModerateRiskmanagement,
countermeasures,
initiatives

ofcountermeasure
works● Appropriate
property
insurancecoverage15

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Environmental Initiatives
Promoting LED lighting

Environmental Initiatives through Real
Estate Investment

For the purpose of reduction of CO2, improvement in asset value by green building
initiatives and meeting tenantsʼ needs, promotion of LED lighting (tenant areas and common
areas) is being carried out.

Understanding and Reducing Environmental Risks in

Status of promotion of LEDs (private and common areas)

Investment Decisions and Monitoring

Percentage of lighting fixtures converted to LED* 55%*Aggregated by number of ﬁxtures

Regarding due diligence for new investments, NBF obtains an understanding ofenvironmental and social risks by utilizing external experts and uses this information in its
investment decisions. Periodic monitoring of environmental and social risks is conducted forexisting properties under management as well and initiatives that provide opportunities for
reducing risks and increasing property value are carried out, e.g., expert building
assessments such as "Energy Efficiency Walkthroughs".

Co-Existence with the Mitsui Fudosan Group in
Redevelopments
The environmental load and environmental risks of the portfolio are reduced throughinvesting in properties with excellent environmental performance that were redeveloped by
the Mitsui Fudosan Group under the co-existence model with the Mitsui Fudosan Group.

16

NBF’s Approach to ESG

Consideration to biodiversity

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Introduction of Renewable Energy

NBF has taken biodiversity into consideration by protecting the precious natural

NBF promotes introduction of renewable energy, focusing on "FIT Non-Fossil certificates"

environment in urban areas, creating and protecting greenery and biotopes that are inelectricity.

harmony with the surrounding environment.
G-BASE TAMACHI provides a variety of plants, mainly native species, precious green space

Initiatives for Water Resources

for workers and community, as well as providing café and benches.
IIDABASHI GRAND BLOOM provides a greening ratio of 40% in total and, mitigates the heat

Water Stress Assessments

island effect and creates a lush green landscape in harmony with the surrounding nature.

Using the World Resources Instituteʼs Aqueduct assessment tool, NBF conductedassessments of water stress．As a result, NBF found that none of our properties were in
regions where water risks were "high".

Adoption of Water-Saving Equipment
NBF reduces the consumption of water by installing water-efficient sanitary equipment,
automatic mixing flush washbasin and similar facilities.

The sponsor, Mitsui Fudosan Co., Ltd. from which G-BASE TAMACHI and IIDABASHI
GRAND BLOOM were acquired, joined the Keidanren Committee on Nature Conservation, andacquired some environmental certifications such as Association for Business Innovation in
Harmony with Nature and Community (ABINC) at the time of development. For details on
the efforts of the Mitsui Fudosan Group, please refer to “biodiversity”

17

NBF’s Approach to ESG

Use of Rainwater and Grey Water

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Environmental Initiatives in Collaboration
with Tenants

NBF works on the effective use of water resources by storing rainwater and reusing it for
sprinkling, toilet flushing, and other purposes, as well as using miscellaneous wastewaterthat is relatively clean, such as hand washing, as miscellaneous water (grey water).

NBF is advancing collaborative initiatives with tenant companies to reduce theenvironmental load of office buildings.

Use of Well Water
Well water (ground water) is used to reduce the use of clean water, and aquifers, helping

Holding of Sustainability Events for Tenants and Distributing

to reduce the impact of water usage.

Sustainability Guides

Waste Reduction

Through activities such as distributing sustainability guides to tenants to promote energy
conservation activities within buildings and holding "water sprinkling events" in collaboration

NBF monitors the amount of waste generated on a monthly basis and work with ourwith tenants which result in heat island countermeasures and energy conservation, NBF

tenants to save resources and improve the waste recycling rate through the 3Rs (Reduce,

conducts initiatives to increase the environmental awareness of tenant companies.

Reuse, Recycle).

Introduction of Green Lease
Soil Contamination Countermeasures (Investment of

A green lease is an initiative in which both building owner and tenant promote

Brownﬁeld Redevelopment)

environmental consideration through a building lease agreement.
NBF has concluded green lease agreements concerning retrofits for the following properties

If soil contamination is found, NBF maintains proper treatment and procedures inupon obtaining understanding of tenant companies, switching over the lighting of areas

accordance with laws and regulations. If necessary, NBF implements measures to prevent

exclusively occupied by tenant to LED and such.

the spread of soil contamination and countermeasure construction (mining and removal ofcontaminated soil).

Properties with green lease agreements concluded

Introduction of Energy Management System
NBF has introduced management systems (BEMS, etc.) to measure the energy efficiencyof building facilities and to achieve energy-saving and an optimal indoor environment. NBF
also works on improving efficient energy utilization by using smart meters to monitor
electricity consumption and other details as well as providing feedback to tenants.

18【Shinbashi M-SQUARE】

NBF’s Approach to ESG

Environmental Initiatives in Collaboration
with Business Partners

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Environment Management System / PDCA
Cycle
NBFM has developed an Environmental Management System (EMS) operation manual in

Collaboration with NBF Oﬃce Management

accordance with the requirements in the guidelines of Eco Action 21 established by the
Ministry of the Environment, to manage environmental impacts such as energy consumption,
CO2 emissions, water consumption, and waste generation in its real estate portfolio, and to

NBF Office Management Co., Ltd. (hereinafter "NBFOM") is a property management

achieve its targets. Based on this manual, a PDCA cycle is implemented annually.

company of the Mitsui Fudosan Group which exclusively manages office buildings owned by
NBF. NBF utilizes the expert abilities of NBFOM to maintain and increase thecompetitiveness, occupancy rate and rent level of its existing properties under management
while effectively advancing initiatives of environmental consideration. In the joint meetings
with NBFOM, discussions are held regarding the sharing of information and initiatives
concerning the various energy saving and environmental issues, as to improve accuracy of
information.

Utilization of Outside Consultants
NBF utilizes the support of Nikken Sekkei Construction Management, Inc. as an expert
consultant for suggestions for the portfolioʼs energy management and measures that
contribute to increasing environmental performance.

19

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Initiatives for Climate Change
NBF's perception of climate change

Strategy

In December 2015, the Paris Agreement was adopted at the twenty-first session of the Conference of

Scope and assumptions of scenario analysis

the Parties to the United Nations Framework Convention on Climate Change (COP21) as a new

In the scenario analysis conducted in this study, all assets held by NBF were considered.

international framework for reducing greenhouse gas emissions and such after 2020. The agreement

NBF refers to the following scenarios in its scenario analysis. In addition, each scenario

upheld a goal to keep the global average temperature increase well below 2℃ compared with the pre-assumes the following outlook on the world.

industrial levels, as well as another goal to make the best efforts to limit the increase to 1.5℃.
NBF has positioned conducting business that reduces energy consumption and greenhouse gas (GHG)

Classiﬁcation

emissions to curb global warming and lower the risks associated with climate change as its social mission
in carrying out real estate investment management business, and set such as one of the material issues

Scenario overview

Main reference scenarios

A scenario in which temperatures are assumed(Materiality).

to rise by 4℃ compared with pre-industrial
levels.
Climate change will progress without suﬃcient
progress towards global decarbonization, andSupport for TCFD (Task Force on Climate-related Financial
Disclosures)

4℃ scenario

disasters will become more intense and physicalrisks greater than in the current world.
Transition risks, such as tighter laws and●IEA Stated Policies Scenario(STEPS)●IPCC RCP8.5

regulations, will be relatively small, but there

NBFM expressed support for the Task Force on Climate-related

are concerns about increased air conditioning

Financial Disclosures (TCFD) in 2021 to promote disclosure on

costs in oﬃces and increased costs of preparing

climate-related issues. In addition to endorsing the TCFD, NBFM also

for more severe extreme weather events.

joined the TCFD Consortium. The TCFD Consortium, in which many
companies and organizations in Japan supporting the TCFD

A scenario in which temperatures are assumed

participate, discusses how information on climate-related issues

to rise by 1.5℃ compared with pre-industrial

should be disclosed and how it should be used. NBFM will continue tolevels.

promote the disclosure of relevant information based on analysis of

While physical risks will remain relatively small

the risks and opportunities that climate change poses to its businessas the world deepens its eﬀorts to decarbonize,

and finances.

the legal and other risks associated with
1.5℃ scenariopressing ahead with such eﬀorts will be greaterand more severe than at present. Speciﬁcally,●IEA Net Zero Emissions by
2050 Scenario (NZE2050)●IPCC RCP2.6

while costs associated with taxing GHG

Governanceemissions from oﬃces are likely to increase,business opportunities include higher rents for

In accordance with the “Regulations Concerning ESG Initiatives,” NBFM has organized the ESG Promotion

properties with high environmental

Committee, with the President and CEO of NBFM as the final decision-making authority. The committee

performance.

makes decisions on identification, assessment and management of risks and opportunities related toclimate change, which is an ESG issue, implementation of measures to mitigate risks, and setting targets
and KPIs. Furthermore, NBF and NBFMʼs Boards of Directors receive reports from the ESG Promotion

Identifying risks and opportunities, assessing ﬁnancial impact and initiatives

Committee on resolutions on climate-related issues and the progress of initiatives and review the risk

NBF has identified the risks and opportunities related to its real estate investment management business

management process and give instructions on new actions as necessary.

while referring to each of the abovementioned scenarios and analyzed and evaluated their business andfinancial impacts as follows.

For details on NBFM's ESG promotion system, please refer to ESG Promotion System.

Based on such results, to mitigate risks and realize opportunities, NBF will implement various initiatives
including the following.

20

NBF’s Approach to ESG

Risks
Opportuniteis
Category

Principal risks andopportunities

Factors that may affectbusiness and financial
performance

Minor
Minor

Moderate
Moderate

Environment Initiatives

Social Initiatives

Risks
Opportuniteis

Major
Major

Financial impact (Millions of JPY)
4℃ Scenario
1.5℃ Scenario
Mid-term Long-term Mid-term Long-term
2030
2050
2030
2050

Risk management,
countermeasures, initiatives

Category

Principal risks andopportunities

Increase in costs due toresponding to legal
regulations（※）

ー

ー

960

1,270

target● Reduce energy consumption
through renovation of ownedbuildings and collaboration withtenantsl a g eL d n a y c i l oP

● Acquire properties withsuperior energy efficiency
performance

ー

8,070

3,010

ー

ー

ー

Increase in renovation
costs due to introductionof new technologies

ー

ー

250

70

Decrease in rental income
from properties withrelatively low
environmental
performancet ek r a M
Change in tenants' needs
for environmental
performance
noitatupeR

Decrease in corporate(brand) value due todelayed response to
climate changeーーIncrease in financing
costs for properties withrelatively low
environmental
performance

Decrease in rental income(due to decline in brandstrength)

Minor
Minor

Moderate
Moderate

Major
Major

Financial impact (Millions of JPY)
4℃ Scenario
1.5℃ Scenario
Mid-term Long-term Mid-term Long-term
2030
2050
2030
2050
5

560

1

560

ー

ー

Risk management,
countermeasures, initiativesー● Cost-effective, appropriate andsystematic implementation ofcountermeasure worksー● Reduce the impact of thedisaster through systematic
implementation ofcountermeasure works● Reduce the impact of disasterthrough systematic
implementation ofcountermeasure works● Reduce the impact of thedisaster by encouraging
evacuation drills● Implement energy efficiency

Increase in property
acquisition prices due toscarcity of investment
targets

Changes in environmental
performance values infinancing

Decrease in operating
revenue at the time ofdamageCommitment and External Evaluation

retrofits in a well-planned
manner● Appropriate examination of

cost-effectiveness of energy
efficiency retrofits

ー

2

10

ー

ー

90

90

2,560

2,560

ー

ー

Rising sea levels

Increase in costs ofcountermeasures

ー

ー

ー

ー

Rising averagetemperatures

Increase in costs due
increased air-conditionin
load

170

520

140

200

● Acquire properties based on
price evaluation considering
environmental performance● Acquire properties withexcellent environmental
performance by leveraging
sponsor pipelines● Implement retrofits in a well-ー

Incurring recovery costs
when damage occurs● Appropriate property insurance
coverage● Grasp inundation risks using
flood maps
● Cost-effective, appropriate andsystematic implementation ofcountermeasure works

cinorhCy g o l o n h c eTs k s i R n o i t i s n a rT

Dissemination of newtechnologies related toenvironmental
performance

Increase in the severity of
extreme weather(Typhoons, floods, andheavy rains)

sk s i R l a c i syh P

Strengthening of energy
conservation standards

e t u cA

● Introduce renewable energy

Increase in renovation
costs to improve energy
efficiency（※）

Factors that may affectbusiness and financial
performance
Increase in costs ofcountermeasures● Set GHG emissions reduction

Introduction of GHG
emissions regulations
Introduction of carbon
taxes

Governanceplanned manner Appropriate● verification of cost-effectiveness of renovations● Build a portfolio with superior
environmental performance● Introduce renewable energy● Acquire environmental
certifications, etc. to good effect● Build a portfolio with superior
environmental performance● Introduce renewable energy● Acquire environmental
certifications, etc. to goodeffect21● Install air-conditioning equipmentwith excellent energy efficiency
performance

NBF’s Approach to ESG

Risks
Opportuniteis
Category

Principal risks andopportunities

ycneiciffE ecruoseR

Installation of highefficiency facilities

secivreS dna st cudorP

Appealing to tenants andoccupants by providing
low emission facilities andservicesseitinut roppOst ek r a M

Continuous offering ofrental properties thatmeet the changing
preferences of tenants
and occupants
Development of new
customer baseDevelopment of new
investor baseecneiliseR

Improvement ofadaptability to climaterelated risks by improving
disaster prevention
performance

Factors that may affectbusiness and financial
performance

Reduction of utility costs

Minor
Minor

Moderate
Moderate

Major
Major

Financial impact (Millions of JPY)
4℃ Scenario
1.5℃ Scenario
Mid-term Long-term Mid-term Long-term
2030
2050
2030
2050

ー

ー

580

Environment Initiatives

580

Social Initiatives

GovernanceCommitment and External Evaluation

1.5℃ Long-term 2050 Estimated Business and Financial Impact

Risk management,
countermeasures, initiatives● Install or replace with highefficiency facilities● Build a portfolio with superiorenergy-saving performance

Increase in income fromattracting
tenants/occupants

ー

ー

4,500

6,000

Increase in the amount offinancing and decrease infinancing costs by
responding and appealing
to investors who place
importance on addressing
climate change issues

ー

ー

5

20

Improvement of resilienceto natural disasters by
improving disasterprevention performance

210● Introduce renewable energy● Acquire environmental
certifications, etc. to good effect(Note)The qualitative assessment shows the annual amount of impact estimated in reference to the scenarios presented by major● Leverage green financeinstitutions, etc. based on NBFʼs portfolio, operational performance, etc., and does not guarantee the accuracy of theﬁgures. In addition, the assumed countermeasures are assumptions used in the estimation and their execution has not beenplanned or decided.

210

ー

ー

● Implement renovations fordisaster prevention(*)Evaluation and analysis using Carbon Risk Real Estate Monitor (CRREM) have been implemented for part of the transition risks.

As for the 1.5℃ scenario with a relatively high probability, which NBF should aim for, a chart of theincrease/decrease in financial impact has been made as follows. Despite the increase in expenses forenergy-saving renovations and response to laws and regulations, opportunities for a positive financial
impact are believed to arise with the enhancement of competitiveness in terms of leasing through theimplementation of initiatives. Therefore, such scenario is evaluated as a positive scenario as a result ofcomprehensively taking such factors into account.

22

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation● Physical risks● Transition risks
In order to achieve the Paris Agreement and the Glasgow Climate Pact's non-binding target of limiting

Climate change is causing average temperatures and sea levels to rise around the world, and damage

the global average temperature increase to 1.5℃ compared with pre-industrial levels, as well as Japan'sfrom rising average temperatures, heavy rainfall, typhoons, etc. has been observed in Japan as well. With

"carbon neutrality by 2050," curbing greenhouse gas emissions is an urgent issue.

the progression of global warming, the risk of natural disasters becoming more severe is expected to

NBF has made the following efforts as part of the method to achieve the numerical target established byfurther increase in the future. NBF is taking the following measures to mitigate the risks of the properties

setting the reduction of GHG emissions as the main materiality assuming that the transition to ait owns, after regularly assessing disaster risks.

decarbonized society will strengthen policies and regulations, accelerate innovation, change the behavior①Systematic implementation of building and facility improvementsof all parties in the office leasing business, and such.

NBF is installing and improving ﬂood barriers based on a ﬂood countermeasure plan formulated after①Systematic implementation of energy-saving renovation plans

analyzing ﬂood risks using ﬂood hazard maps. In addition, we are systematically updating and enhancing

NBF has set a goal of “reducing energy-derived CO2 emissions by 46% or more by 2030 (compared with 2013

emergency power generators.

levels),” and is working to promote LED lighting and introduce high-eﬃcient equipment based on energysaving renovation plans for the properties it owns. In addition, there are 15 properties (approximately 21% of
the portfolio based on the number of properties as of the end of December 2023) that are subject to the total
volume control (Tokyo Cap-and-Trade Program), which imposes the reduction of GHG emissions from largescale business facilities in Tokyo, and NBF is considering and promoting plans to achieve an average of 50%
reduction between 2025 and 2029. For properties that underwent energy-saving renovation, NBF examines
their eﬀects as necessary.
②Introduction of electricity derived from renewable energy sources
By promoting the greening of electricity used in common and tenant areas of its owned properties, NBF aims

Installation of flood barriers

Inspection/update of emergency

Installation of an additional（NBF Higashi-Ginza Square）

power generator

emergency power generator（NBF Takanawa Building）（NBF Shibuya Garden Front）

to reduce GHG emissions from the properties it owns as well as meet the needs of its corporate tenants forpurchasing green electricity.
③Building of a portfolio with superior environmental performance②Preparing for possible disasters

NBF is building a portfolio with superior environmental performance by proactively acquiring properties

In order to improve resilience, NBF is strengthening its BCP system, placing disaster prevention stockpiles anddeveloped in consideration of the reduction of environmental load and energy saving and properties with highconducting disaster drills.

environmental eﬃciency (properties reducing energy consumption and emitting less GHG, etc.).

NBF has established an advanced emergency communication system with NBF Oﬃce Management Ltd., which
manages operation of the properties, to quickly identify the extent of the damage.

④Introduction of Internal Carbon Pricing (ICP)
NBF has set a price per ton of CO2 (20,000 yen/t-CO2) and estimates the amount of CO2 emissions generated
and reduced in environmental-related projects, such as LED replacement, in order to conduct economic● Opportunities

evaluations that consider CO2 emissions related to investments and make use of this as a reference for making

The Paris Agreement has triggered a movement to embrace decarbonization as an opportunity fordecisions on whether to proceed with the projects.

corporate management (decarbonization management), and NBF believes that efforts to mitigate climatechange and adapt to change will contribute to the creation of new business opportunities.
NBF is undertaking the following initiatives at its owned properties to mitigate and adapt to climatechange, as opportunities to enhance competitiveness in terms of leasing will also arise by responding totransition risks.
①Acquisition of Green Building Certiﬁcation
Against the backdrop of growing preferences for environmental performance upon leasing oﬃces, NBF is
promoting acquisition of green building certiﬁcation as it views third-party certiﬁcation regarding thespeciﬁcations and various initiatives of its owned properties as added value, and aims for a 100% acquisitionrate.
②Procurement of Green FinanceNBF uses green ﬁnance, a method of procuring funds speciﬁcally for initiatives that have a positive eﬀect on
the environment, such as reducing greenhouse gas emissions and investing in renewable energy, and aims toprocure more than 10 billion yen annually.

23

NBF’s Approach to ESG

Risk Management
NBFM's processes for managing climate change-related risks pertaining to NBF's real estate investment
management business are as follows.

Process for identifying and assessing risks and opportunities
Key risks and opportunities related to climate-related issues are discussed at least once every threemonths at the ESG Promotion Committee.

Processes for managing risk
The President & CEO, who has the highest responsibility for climate-related issues, instructs the Strategy
Planning and ESG Promotion Department to discuss countermeasures for risks identified and assessed at
the ESG Promotion Committee at least once every three months. Based on the results of the discussion ofcountermeasures and their implementation status reported, the Strategy Planning and ESG Promotion
Department conducts monitoring (e.g., checking the implementation status against GHG reduction targets,analyzing the reasons for increases or decreases, and considering necessary countermeasures).

Integration into a company-wide risk management program
Climate change-related risks are integrated into the multi-disciplinary company-wide comprehensive risk
management process in the same way as other business risks, and are discussed at least once every threemonths at the Risk Management Meeting.
Please click here for an explanation of the ESG Promotion Committee and the Strategy Planning and ESG
Promotion Department.

Metrics and Targets
Please refer to the "Materiality" page for the KPIs and targets that NBF has set in relation to climatechange issues for its real estate investment management business (the relevant indicators are "GHG
emissions" ,"CO2 emissions intensity", "green building certification coverage" and "procurement of green
finance"). Please refer to the following pages for the actual results of each indicator.
●GHG emissions: Environmental Performance●CO2 emissions intensity: Environmental Performance●Green building certiﬁcation coverage: Utilization of Green Building Certiﬁcation●Procurement of green ﬁnance: Green Finance24

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Green Finance
5.Reporting

Green Finance Initiatives

NBF discloses the following items once a year on its website.

NBF has established a green finance framework with an aim to obtain more than 10 billion● Property names of Eligible Green Assets and the total acquisition priceyen green finance.

● Amount of eligible green debt
● Outstanding balance of green ﬁnance

Outline of Green Finance Framework● Types and ratings of green building certiﬁcations given to Eligible Green Assets*1● Energy-based CO2 emissions, etc.*2

1.Use of Procured funds* Please click here to see types and ratings of green building certiﬁcations given to Eligible Green Assets.

NBF will use the procured funds to acquire assets that meet the eligibility criteria (“Eligible* Please click here to see energy-based CO2 emissions, etc.

Green Assets”), or to repay the loans taken out/redeem the investment corporation bonds(including green bonds) issued for the acquisition.

as of March 31, 2024

2.Eligibility Criteria
Assets that have already received or are expected to receive any of the following
certifications given by third-party certification bodies are considered eligible.
● Five, four, or three stars in the DBJ Green Building Certiﬁcation

Total acquisition price of Eligible Green Assets

1,444.0 billion yen

Amount of green eligible debt

1,444.0 billion yen

Outstanding balance of green ﬁnance● Five, four, or three stars in the BELS assessments

65.0 billion yen● S, A, or B+ grade in the CASBEE for real estate certiﬁcation
Status of appropriation of funds from NBFʼs green finance is as follows.

3.Evaluation and Selection of Projects
Green ﬁnanceCandidate projects are selected by NBF and the Real Estate Investment Department of
Investment & Finance Group of NBFM. Final selection is made with the decision of the
President after deliberation at the Investment Review Meeting consisting of generalmanagers or higher ranked personnel of each department and deliberation at the Executive
Board.

4.Management of Procured funds
The funds procured by NBF are managed under the portfolio approach. As long as there isan outstanding balance of green finance, the Finance and Accounting Department of theInvestment & Finance Group of NBFM ensures that the outstanding balance of green financewill not exceed the total acquisition price of Eligible Green Assets each year. Unappropriatedfunds are managed in cash and cash equivalents.

25

65.0 billion yen

Green bonds (GB)

5.0 billion yen

Green loans (GL)60.0 billion yen

NBF’s Approach to ESG

Green Finance Overview*1
as of March 31, 2024

Year

Amount of money

Procurement*2

Fund appropriation target

2021

5.0 billion yen

Green Bond

Osaki Bright Tower, Nagoya Mitsui Main Bldg.
and Nagoya Mitsui New Bldg.

2022

35.0 billion yen

Green LoanIIDABASHI GRAND BLOOM (Additional
Acquisition), Toyosu Bayside Cross Tower

2023

23.0 billion yen

Green LoanIIDABASHI GRAND BLOOM (Additional
Acquisition), Toyosu Bayside Cross Tower(Additional Acquisition)

2024

2.0 billion yen

Green Loan

Toyosu Bayside Cross Tower (Additional
Acquisition)

Total

65.0 billion yen--*1 We have obtained a second-party opinion from Sustainalytics, an ESG assessment ﬁrm, regarding oureligibility for the Green Finance Framework.
*2 Individual ﬁnance information can be found on the website (https://www.nbf-m.com/nbf_e/ﬁnancial/borrowings.html).

26

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Environmental Performance
Actual results

Energy consumption

Item

Actual results

GHG emssions (Scope 1+2+3) (t-CO2)
Item

2021

2022

2023

Total energy consumption (thousand kWh)

426,911※1

446,499※2

417,345※3

Fuel consumption (thousand kWh)

65,615

71,212※2

58,343※3

Electricity consumption (thousand kWh)283,858

290,881※2

278,181※3

Other heat consumption (thousand kWh)

77,38484,348※2

80,756※3

54

59※2

64※3

Renewable energy self-consumption(thousand kWh)

Reduction rate of total amount(Comparison with base year)

Item
GHG emssions (Scope 1+2) (t-CO2)
Reduction rate of total amount(Comparison with base year)

2021

2022

2023

147,900

151,484

124,487

-

▲2.4%

15.8%

2021

2022

2023

27,37020,476

16,178

-

25.2%

40.9%

*In 2022,The Scope classiﬁcation has been changed. Therefore, the ﬁgures for 2021 are diﬀerent from those in

Energy consumption intensity (kWh/㎡)
Non-fossil fuel certiﬁcate utilization(thousand kWh)

146.1

180.6

174.7

4,920

13,975

24,625the table below.

Greenhouse gas emissions
KPI
Item

TargetGHG emssions (Scope 1＋2＋3)

90% reduction by 2050（Base year 2021）

GHG emssions (Scope 1＋2)

42% reduction by 2030（Base year 2021）

27

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

From2022, the definitions of Scope 1, 2, and 3 have been changed as follows.

KPI

Scope 1:CO2 emissions associated with the use of fuel (city gas, bunker A, diesel oil) in properties excluding tenant-managed
properties ("owner-managed properties").

Item

Target by 2030

CO2 emission intensity

46% reduction (Base year 2013)

Scope 2:CO2 emissions from the use of purchased electricity and heat (Electricity, cool water, warm water, steam, other hot
water) in owner-managed properties. Emissions calculated based on tenants' energy consumption using the total ﬂoor
area and tenants' exclusive area ("tenants' energy-derived CO2 emissions") are excluded from the calculation.
Scope 3:CO2 emissions from tenant energy consumption. For owner-managed properties, the total ﬂoor area and exclusive area
for tenants are used to calculate tenant energy-derived CO2 emissions.

Actual results
Item
Total CO2 emissions (t-CO2): before
deduction of Non-fossil fuel certiﬁcate

Scope1 emissions (t-CO2)

Scope2 emissions (t-CO2): before
deduction of Non-fossil fuel certiﬁcate

Scope2 Non-fossil fuel certiﬁcate
utilization (t-CO2)

2013

2021

2022

2023

A

191,606

150,079※1

157,713※2

134,270※3①-

11,756

4,819※2

4,354※3②a-138,323

20,942※2

17,983※3②b--5,285※2

6,159※3②c--15,658※2

11,824※3③a--131,952※2

111,934※3

③b

-

-

944※2

3,624※3③c--131,008※2

108,309※3

Water consumption

Scope2 emissions (t-CO2):
after deduction of Non-fossil fuelcertiﬁcate

KPI

Scope3(category13) emissions: before
deduction of Non-fossil fuel certiﬁcate(t-CO2)
Scope3 Non-fossil fuel certiﬁcate
utilization (t-CO2)
Scope3 (category13)emissions (tCO2): after deduction of Non-fossil
fuel certiﬁcate
Total Scope2,3 Non-fossil fuel certiﬁcate
utilization (t-CO2)

CO2 emissions (t-CO2): after deduction ofNon-fossil fuel certiﬁcate

CO2 emissions intensity (kg-CO2/㎡)*

Reduction rate of intensity(Comparison with base year)

Item

Target by 2030

Water consumption intensity

5% reduction (Base year 2019)

Actual results
Item

B＝
②b+
③b

-

2,179

6,228※2

9,783※3

C＝
A-B-

147,900

151,484※2

124,487※3

91.7

61.8

61.2

52.1

-

32.6%

33.3%

43.2%

Total water consumption (thousand ㎥):A+B
Purchased water consumption (thousand ㎥):A
Other water consumption (thousand ㎥):B
Water consumption intensity (㎥/㎡):
Subject to A
Reduction rate of intensity(Comparison with base year)

28

2019

2021

2022

2023

1,752

1,360※1

1,478※3

1,549※3

1,571

1,219※1

1,305※2

1,361※3

181

141※3

173※2

187※3

0.69

0.51

0.53

0.57

-

26.5%

23.5%

17.3%

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation※1We have received the independent practitionerʼs assurance from Deloitte Tohmatsu Sustainability Co., Ltd. for"Nippon Building Fund Inc. 2021 Environmental Performance".

Waste emissions※2We have received the independent practitionerʼs assurance from Deloitte Tohmatsu Sustainability Co., Ltd. for"Nippon Building Fund Inc. 2022 Environmental Performance".
※3We have received the independent practitionerʼs assurance from Deloitte Tohmatsu Sustainability Co., Ltd. for

KPI"Nippon Building Fund Inc. 2023 Environmental Performance".

Item

Target by 2030

Waste recycling rate

65%

Notes on the Above Performance
1. Scope of data calculation● In principle, all properties owned by Nippon Building Fund Inc. (NBF) during the period fromJanuary 1 to December 31, 2023 are covered. Except as follows, above data consists of total

Actual results
Item

2021

2022

2023

9,462

9,888

9,282

General waste emissions (t)

7,816

7,903

7,621

Industrial waste emissions (t)1,646※1

1,985※2

1,661※3

Total waste emissions (t)consumption/emissions from common-use areas and tenantsʼ exclusive areas in each property
and conversion to equity is not performed.
● NBF Shinagawa Tower partly owned by NBF is a part of the property including Shinagawa
Grand Central Tower, but that is excluded from the calculation.
● Parale Mitsui Building consists of an administrative service wing partly owned by NBF, a
residential wing, a retail stores wing and a parking wing, but the data is compiled for theentire building.

Ratio by method of waste disposal
Land ﬁlling

3.9%

3.3%

3.6%

Incineration

30.2%

31.6%

32.9%

Recycling

62.6%

63.7%

62.1%

● Properties with exclusive ownership areas holding 25% or less than 25%（GranTokyo South
Tower, Panasonic Tokyo Shiodome Bldg., Osaki Bright Tower, Toyosu Bayside Cross Tower）arecalculated for equity held by NBF.
● Regarding gas consumption, some data such as amount of city gas consumption, contracted
directly by tenants, which is diﬃcult to calculate, is excluded.
● Waste data for properties where building management is performed by tenants (NBF Osaki
Bldg. and NBF Ginza Street Bldg.), are excluded.

29

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation③ Water consumption

2. Calculation period

Total water consumption＝Σ (Purchased water consumption*1 ＋ Other water consumption*2)*1Purchased water consists of purchased clean water and industrial water among other things.

Calculation period: January 1st through December 31st 2023

*2Other water consists of water recycled inside the property, grand water, rainwater among other things.

④ Waste emissions
Total waste emissions＝Σ (General waste emissions ＋ Industrial waste emissions)

3. Calculation method

Based on the “Waste Management and Public Cleansing Act”

① Energy consumption⑤ Intensity ﬁgures

Total energy consumption＝Σ (consumption by energy type × heating value conversion factor

Each intensity ﬁgure ＝ Total consumption of each / Floor space× conversion rate for electricity)

Floor space is based on area under the Building Standards Act.

Calculated by using the conversion factor based on the “Act on Rationalization of Energy Use

As for Toyosu Bayside Cross Tower, since additional acquisition was made during theand Shift to Non-fossil Energy”

calculation period, the ﬂoor space is calculated by averaging the ﬂoor space for each month

Energy type: city gas, bunker A, diesel oil, Electricity, cool water, warm water, steam, otherover the year.

hot water

The data was calculated from properties held by NBF. However, some portion of these② Greenhouse gas emissions

properties like residential areas were excluded due to diﬃculties in collecting the data.

Scope of greenhouse gas: Energy origin CO2

Intensity ﬁgures are corrected by annual average occupancy rate.

Energy origin CO2 emissions＝Σ (energy consumption × CO2 emission factor)

Corrected intensity ﬁgures ＝ Non-Corrected Intensity Figures / Average vacancy rate [%]The CO2 emission factors for fuel and other heat are based on the "Greenhouse Gas Emission

Calculations of energy consumption intensity and CO2 emission intensity are based on the

Calculation and Reporting Manual” published by Ministry of the Environment and Ministry ofenergy consumption and CO2 emissions that reﬂect the non-fossil fuel certiﬁcate utilization.

Economy, Trade and Industry.

※Some variance come from rounding off.

ⅰ)The deﬁnitions of Scope 1, 2, and 3
Scope 1:CO2 emissions associated with the use of fuel (city gas, bunker A, diesel oil) in properties
excluding tenant-managed properties ("owner-managed properties").
Scope 2:CO2 emissions from the use of purchased electricity and heat (Electricity, cool water, warm water,
steam, other hot water) in owner-managed properties. Emissions calculated based on tenants'
energy consumption using the total ﬂoor area and tenants' exclusive area ("tenants' energyderived CO2 emissions") are excluded from the calculation.
Scope 3:CO2 emissions from tenant energy consumption. For owner-managed properties, the total ﬂoor
area and exclusive area for tenants are used to calculate tenant energy-derived CO2 emissions.
ⅱ)Non-fossil fuel certiﬁcate
NBF has been sourcing its real CO2-free electricity together with a non-fossil fuel certiﬁcate.

30

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Social initiatives
Initiatives for Local Communities
In its relationship with local communities, NBF conducts investment management with anawareness of contributing to urban development (revitalizing local economies, creating jobs,etc.), revitalizing local communities, supporting the environment, medicine and health, andimproving disaster resilience, and holds a policy to engage with local communities to achievethese goals. Please see below for specific processes and initiatives.

Contribution to local community development (investment inurban redevelopment projects)
When investing in projects involving urban redevelopment, NBF includes factors such as
economic revitalization and job creation in the target area, creation of a lively community,
utilization of culture and history, and improvement of safety and well-being in its investment

Gate City Ohsaki: Complex Redevelopment Project

management decisions. Therefore, when considering investments, it conducts due diligence● Gate City Ohsaki, directly connected to Osaki Station by pedestrian walkway, was completed inthat incorporates the stability and future potential of the area, as well as the environment

1999 as part of the Osaki Station East District Second Urban Redevelopment Project. It is a

and geology, and through a rigorous screening process, it strives to realize investments thatlarge-scale, redeveloped complex with a concentration of various urban functions, consisting ofmeet the above policies. The following are some examples.

the West and East Towers (oﬃce buildings), retail facilities mainly containing restaurants, andcultural facilities such as rental halls and rental rooms.

IIDABASHI GRAND BLOOM: Urban Development Project● Since its completion, NBF has been working to revitalize the facility and the local community
by adopting the town management concept, holding various events such as atrium concerts in● IIDABASHI GRAND BLOOM (an oﬃce/retail building with 30 ﬂoors above ground and 2 below),
together with the adjacent residential building (40 ﬂoors above ground, 2 below) and church

the open space, and holding various cultural seminars for oﬃce workers, promoting thebuilding (3 ﬂoors above ground), is called "Iidabashi Sakura Park," and was redeveloped bycreation of a lively and energetic area as a sectional owner (since 2006).

Mitsui Fudosan Co., Ltd. (NBFʼs sponsor) and others as the Iidabashi Station West District
Urban Redevelopment Project. It was completed in 2014.
● The retail zone, "Iidabashi Sakura Terrace," has restaurants and cafes, a supermarket, a postoﬃce, a pharmacy, and other stores that meet the needs of oﬃce workers and local residents,
with a focus on food and beverage.
● The building is equipped with the latest BCP speciﬁcations to strengthen local disaster
preparedness, and as a landmark, it takes advantage of the rich natural and historicalenvironment in the urban area to contribute to creating a safe, secure, comfortable, lively, andattractive area in front of the station.

31

NBF’s Approach to ESG

Toranomon Kotohira Tower: Project to Preserve a Tokyo Metropolitan

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Community revitalization initiatives

Government Selected Historical Building (Kotohiragu) and Harmonize● At IIDABASHI GRAND BLOOM and Toranomon Kotohira Tower, NBF cooperates in community

with the Shrine Grounds and Approach

revitalization by sponsoring local festivals.

● Toranomon Kotohira Tower, completed in 2004, was developed to preserve Kotohiragu,● At Nakanoshima Mitsui Bldg., NBF is participating in "Mission Uchimizu," a water-sprinkling

selected as a historical building by the Tokyo Metropolitan Government, which is located on the

campaign in cooperation with Osaka City and other buildings to combat the heat island eﬀect.

property, and to harmonize with Kotohiraguʼs space, including its shrine oﬃce and approachway.
● Indispensable to the local community and visitors, the building utilizes a "comprehensive
design system" (a system that relaxes ﬂoor-area ratio, etc.) to make eﬀective use of thesurplus area.

Nishi-Shinjuku Mitsui Bldg.: Urban Redevelopment Project● Nishi-Shinjuku Mitsui Bldg. (completed in 1999), an oﬃce building, and a residential building● NBF tenanted "WORKSTYLING" a shared oﬃce and rental oﬃce business, in 7 properties. By

comprise this complex development, which was developed as an urban redevelopment projectproviding high-grade unrestricted workspaces in favorable locations, NBF revitalizes local

covering an area of approximately 1.4 ha. The project aims to harmonize the residences andcommunities by meeting the new workplace needs of people with diverse work styles.

business facilities and create a people-friendly and safety-conscious community by utilizing● Toyosu Bayside Cross Tower and IIDABASHI GRAND BLOOM oﬀer “31 Builedge,” a lineup of

open spaces to make green areas and securing pedestrian spaces.

rental meeting rooms for lectures, seminars, and meetings based on the concept of "meetingrooms that connect people.”

Investment in conveniently located properties and promotionof accessibility and universal design

Support for the local environment, medical care, and health

NBF places importance on access to public transportation when investing in real estate.

NBF cooperates with and contributes to communities by recruiting tenants that match each

In addition, NBF implements renovations that remove barriers and actively incorporateareaʼs characteristics and implementing various initiatives.

universal design as part of its commitment to inclusiveness, to ensure safe and comfortable(1) Medical facilities

use for office workers and the diverse range of people who visit the offices. NBF aims to

Yotsuya Medical Bldg. has tenanted a medical facility (Yotsuya Medical Mall) to support theprovide facilities that are comfortable for all users.

health of the local community.
(2) Childcare facilities
Toyosu Canal Front contains a daycare center as a tenant, contributing to work-life balance ofresidents in the neighborhood.
(3) Bike share
Shinjuku Mitsui Bldg. No.2 and Toyosu Canal Front provide a bike-share service (approx. 30
bikes) in consideration of eﬀective use of excess bicycle parking space, improvement of
tenant convenience and environmental friendliness.
(4) Eﬀorts to improve urban living environment
Kowa Nishi-Shinbashi Bldg. B has undergone a major renovation of its rental residential units

32

to improve the urban living environment.

NBF’s Approach to ESG

Community contribution in times of disaster

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Initiatives for Tenants(1) Refuge for stranded commuters in a disaster

Recognizing the importance of providing safe, secure, and comfortable environments for

IIDABASHI GRAND BLOOM, Toyosu Bayside Cross Tower, and Ueno East Tower provide space

its tenants and enhancing customer satisfaction, NBF works diligently to resolve and improveto shelter stranded commuters in the event of a disaster.

various issues identified through daily management and customer satisfaction surveys. In
this way, in addition to providing comfortable facilities, NBF improves the quality of tenant
services by offering various events and other intangible services.

Customer satisfaction surveys
Together with its exclusive property management company NBF Office Management Co.,
Ltd., NBF conducts annual building management that aims to enhance tenant satisfaction.
(2) Preparation of emergency stockpile storehouses

Customer satisfaction surveys are conducted every year in order to understand the real

Roppongi T-CUBE, Celestine Shiba Mitsui Bldg., Shiba NBF Tower, Ueno East Tower, andthoughts, level of satisfaction and needs of tenants, and PDCA cycles are established to

IIDABASHI GRAND BLOOM rent out parts of the buildings as storehouses for emergency

promptly reflect the challenges found in surveys and points to be improved.

stockpile free of charge in accordance with local disaster prevention plans, and store materials
necessary at a time of disaster.

FY 2023 CS Survey on Operation and Management Services in Oﬃce
Properties● Survey subjects:

Tenant Survey at 41 buildings (excluding master-leased and otherproperties)
Oﬃce Worker Survey at 41 buildings (excluding master-leased and otherproperties)● Number distributed: 650 tenant companies (response rate: 90%)
5,713 oﬃce workers (response rate: 78%)

(3) Preparation of emergency disaster wells and emergency toilets
IIDABASHI GRAND BLOOM is equipped with an emergency well that can supply drinking
water to tenant companies, local residents, and stranded commuters, as well as emergency● Survey period:

September-October 2023

● Survey topics:

Oﬃce environment and convenience; Cleaning; Crime and disasterprevention; Service qualities of general building operation andmanhole toilets to support the community in the event of a disaster.

management; Eﬀectiveness of CS activities in each property; Tenantsʼneeds; etc.

33

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Shared facilities and services for tenants

Examples of actions taken● Shinjuku Mitsui Bldg. No.2: New establishment of B1F lounge for tenant workers, renewal of● In the "CUIMOTTE" space of Nakanoshima Mitsui Building, individuals working in the building

common space.

can spend their time eating, working, and connecting in a way that suits them best. The spaceis designed with the concept of a new workspace centered around food and provides meeting
spaces, events, and opportunities for people to meet each other.
● At Toyosu Bayside Cross Tower, "+C (+Cross)" space has been installed in the common areas
to enhance productivity and eﬃciency. Along with rental meeting rooms, the space boasts a
range of other amenities, including a mini ﬁtness gym, shower rooms, and a lounge.
Additionally, it oﬀers various spaces tailored to diﬀerent work styles beyond just desk work,
including concentration booths to improve focus and refresh rooms to promote relaxation.

Events with tenant participation● NBF holds regular events such as photo contest, Tanabata decorations, and ema (votive
wooden plaques) .
● The annual summer three-day "Company Nodojiman Competition", a karaoke contest with 213
participants from about 44 tenant companies is held at the Shinjuku Mitsui Bldg.
● NBF holds an “Utauma Festival” a karaoke contest with video submission, for the tenants of 40
properties, in which 116 people working in the building participated.
● NBF holds lunchtime concerts at 9 properties, in which about 1,000 people working in thebuilding participated.
These events encourage interaction among employees of tenant companies and provide a
comfortable working environment. We endeavor to further enhance employee engagementfrom such intangible aspects as well.

34

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

NBFMʼs Initiatives for Social Contribution
Activities

Collaboration with Business Partners
Supply chain management● As part of community contribution activities, employees participated in the “Bridge Washing” at
the famous Nihonbashi Bridge, and the Fukutoku Shrine Jinkosai Festival.

NBFM promotes ESG initiatives based on the guidelines set forth by its main sponsor,
Mitsui Fudosan Co., Ltd.
The Mitsui Fudosan Group recognizes that it has an obligation to fulfill its social
responsibilities at a higher level as a corporate group that supports the infrastructure ofdaily life, such as offices. To that end, it believes that the entire supply chain should be
involved in promoting sustainable procurement that contributes to solving ESG issues.
Mitsui Fudosan Group Sustainable Procurement Standards
The Mitsui Fudosan Group has established basic guidelines that both the Group and its
business partners should comply with or actively promote, including: 1. compliance withlaws and regulations; 2. respect for human rights in business activities; 3. respect forhuman rights related to labor; 4. safe and healthy working environment; 5. establishment ofbusiness ethics; 6. ensuring quality; 7. consideration for the environment; 8. information
security; and 9. crisis management and business continuity plan.

Engagement with oﬃce manager
NBF and NBF Office Management Co., Ltd. have established an elaborate system ofcollaboration and engagement to promote ESG-related operations. At the bi-weekly ESG
meetings, they discuss initiatives to reduce environmental impact, check the progress ofenvironmental data, and promote timely and accurate operations based on the shared
policies.

35

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Initiatives for NBFM Employees
Human Resources Management

5. Introduction of support systems for attending seminars, lectures, and courses that lead to selfimprovement, aimed at nurturing the ability to perceive things from diverse perspectives andsensibilities and overﬂowing creativity in proposal-making.
6. Additionally, conducting training to enhance the evaluation skills of department heads.

Initiative Policy

Providing access to appropriate training and educational opportunities for each career stage,focusing on the development of interdisciplinary talents and leadership personnel with broad

At NBFM, human resources are the companyʼs most important asset. Recognizing that they

perspectives, insights, and ideas, not limited by industry or ﬁeld.

are indispensable to the sustained development of the business (Stable growth andoperation of NBF) and organization, we have established a human resources vision andInternal Training & Education System

strive to secure and develop specialized personnel with extensive expertise in real estate andfinance and leadership personnel with management capabilities that will improve theorganizationʼs productivity.
Human resources vision
To support the continued growth of the organization which we aim to be, theemployees will remain committed to results and continue striving to achieve
growth, while the company will provide a venue that fosters growth andreward results appropriately.

The number of employees with certificates is shown below (including employees seconded
from sponsors, etc.).

Initiatives System
Certiﬁcates

Based on the above philosophy, NBFM is mainly engaged in the following initiatives:

1. Recruitment activities for timely and appropriate talent acquisition in response to changes inthe business environment, business conditions, and organizational status.
2. Accepting many secondees from sponsoring companies to receive know-how in real estaterelated operations.

ARES Certiﬁed Master

16

Real estate notary

31

Class-1 architect

3

Chartered Member of the Securities

3. Optimal job rotation based on understanding employees' desires, experiences, and work

Analysts Association of Japan

capabilities through annual employee surveys, interviews, etc., to ensure the right person is in
the right place.
4. Introduction of support systems for obtaining professional qualiﬁcations such as "The
Association for Real Estate Securitization (ARES) Certiﬁed Master" and "Certiﬁed Building
Administrator" (qualiﬁcation acquisition assistance system available to all employees).

The number of employees

4Lawyer1

Tax accountant

1

Certiﬁed Building Administrator

5* As of January 31, 2024

36

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Training Participation

Training Details

FY2021

FY2022

FY2023

Average hours per an employee

15 hours

13 hours

17 hours

Average days per an employee

19 days

16 days

21 days

Training in Specialized Fields
We aim to regularly update the fundamental knowledge necessary for asset management
by inviting external instructors to conduct various training sessions periodically. Thesesessions deepen our expertise in not only the state of the real estate market but also trends
in the economic environment, the ever-changing dynamics of ESG, changes in laws related
to asset management, and the complex compliance surrounding REITs, including

Human Resources seconded from Sponsors

understanding and adhering to changes. The training by external instructors, who areexperts in their respective fields, facilitates this. Additionally, with the goal of developing

As part of our human resources strategy, NBFM receives highly specialized humanglobally active talent, we offer one-on-one English conversation training with native
speakers. Within the company, we conduct weekly information sharing meetings with all

resources with diverse backgrounds from our multiple sponsors, with the aim of achieving

employees and officers to share the current state of the real estate and financial sectors

qualitative improvement in our operational expertise and implementing high-quality asset

surrounding the REIT market in real-time.

management through leveraging their expert capabilities.

Leadership Training for directors and general manager-level employees

Number of People (Employees) seconded from Sponsors

We have training and human resource management programs for not only directors but

The number of human resources

also for prospective directors, providing opportunities to learn about management and
Mitsui Fudosan Co., Ltd. (46% equity ratio)

leadership in their respective positions.

Sumitomo Life Insurance Company (35%Training Track Details

Sustainability training
Leadership Training for directors andequity ratio)
FY2021

FY2022

FY20230 times

6 times

5 times

2 times

1 timeReal estate market training

5 times

8 times

8 timesCompliance training

13 times

14 times

12 times

1 time2 times

1 time1 time2 times

1 timeHuman rights training(LGBT, harassment, etc.)
Other training (IT training, etc.)
English training

equity ratio)

2

1* As of March 31, 2024

2 times

general manager-level employees

Sumitomo Mitsui Trust Bank, Ltd. (5%6Interested

Interested

Interested

employees

employees

employees

Training participation in 2021, 2022, and 2023 is as shown below.

37

NBF’s Approach to ESG

Furthermore, management-level personnel seconded from our sponsors Mitsui Fudosan

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Health and Safety

Co., Ltd. and Sumitomo Life Insurance Company possess both specialized knowledge andorganizational management skills due to the human resources training systems at their
original companies, and by continuing to attend training programs at those companies, they

Initiatives Policy

make contributions in terms of both asset management and making the organization more
dynamic.

Recognizing that human resources are the companyʼs most important asset, we believethat creating a comfortable work environment and organization that will help promote theConducting Regular Career Conversations, Performancemental and physical health of all employees is an essential management issue.
Based on this approach, we meet regulatory standards in all our health and safety

Evaluation

initiatives, such as promoting work-life balance, employee health, labor management, andrisk management, as well as strive to create a work environment that enables all employees

NBFM has adopted a compensation system that rewards employees for their achievements

to continue working with peace of mind while improving their mental and physical health,(performance evaluation). Compensation is divided into fixed and variable pay, with theincluding introducing a staggered working hours system and setting recommended paidvariable pay, which is awarded based on individual performance evaluations, designed tovacation days.

enhance motivation and the desire for growth. Furthermore, the proportion of variable pay
in the annual salary is higher for those in upper grades, reflecting a reward system that
expects a greater contribution to company performance from those at higher levels.

Developing the Oﬃce Environment

Additionally, at NBFM, regular career consultations are conducted for all employees.
Opportunities are provided at least once every six months for detailed discussions on one's

With the relocation of our office in September 2019, we created workspaces that focus on

career development and skill enhancement, receive feedback on performance, and express

employee comfort.

requests to the company, supporting the improvement of employee motivation and thebroadening of their skills. The process includes initial interviews (goal setting) at the● Expansion of common space

beginning of the period, mid-term interviews (progress check and advice), and final● Workspaces that focus on employee comfort

interviews (feedback on evaluation results), establishing a transparent goal setting andevaluation feedback system between supervisors and subordinates. The goal setting is
divided into performance goals and behavioral characteristics (competency) goals, each ofwhich is evaluated separately. Performance evaluations objectively quantify the degree ofachievement of individual performance goals directly linked to departmental objectives, andthis degree of achievement is reflected in the employee's variable compensation amount.
The evaluation of behavioral characteristics (competency) objectively quantifies the extent towhich the required competencies for the job grade were demonstrated, leading to anincrease in the employee's fixed salary.

FY2021
Rate of interviews
with directors (Allemployees)

FY2022

FY2023

100%

100%

100%

(22 out of 22)(21 out of 21)(26 out of 26)

38

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation＜Vacation-Related＞

Concentration Booth● Promoting taking paid vacation time
*Paid vacation usage rate: 74.0% in FY2023● Special summer vacation or consecutive vacation days
＜Initiatives Targeting Employee Health＞● Medical examination cost subsidy program (all direct-hire employees)● Conﬁrmation of medical examination by industrial physicians and public health nurses (allOffice space/free space

direct-hire employees)● Conducting antigen tests for those who are interested● Participating in events aimed at maintaining/improving health● Inﬂuenza vaccination cost subsidy program＜Initiatives Targeting Work Style＞● Provision of satellite oﬃces*In April 2023, we converted the break area into an oﬃce space/free space and made changes to the layout that

＜Other＞

will further promote and enhance communication and foster synergy among employees.

● Collaboration with companies providing beneﬁt services● Volunteer activities during working hours

Beneﬁts and Work-Life Balance● Deﬁned contribution pension plan intended to support life planning● Implementing base-pay increase in FY2024

As part of our efforts to create work environments that enable employees to continue
working with peace of mind, we have established the following benefit programs in addition
to promoting diverse work styles.

Examples※In principle, all employees are eligible. (If limited, indicate in parentheses.)＜Relating to Childbirth, Childcare, and Family Care＞● Vacation, leave, and shortened work hours program for childcare● Vacation, leave, and shortened work hours program for family care
● Enhanced support for employees balancing work with childcare, including establishing paid
maternity leave and extending childcare leave period*Maternity leave taken rate: 100%, Childcare leave taken rate: 40%

39

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Respecting Human Rights and Diversity,
Equity & Inclusion

Employee Stock Purchase Plan
We have established an Employee Stock Purchase Plan that enables direct-hire employees
to acquire NBF investment units. Due to this system, it is anticipated that employees will be
more focused on improving the companyʼs performance, which we believe will contribute toInitiatives Policy, Respecting Human Rights

the continued growth of NBF and improve value for investors. Furthermore, we provide
financial incentives to employees who use the system, with the aim of enhancing employee
benefits.

In addition to respecting basic human rights, Mitsui Fudosan Group complies with laws andregulations concerning workersʼ rights in the various countries where it conducts its businessactivities. Furthermore, it supports and respects the basic labor rights stipulated in the ILO

Employee Satisfaction Survey

Declaration on Fundamental Principles and Rights at Work. The Group complies with the laws
and regulations that apply in the different countries and regions where it conducts its

As part of our efforts to establish excellent relations between employees and the company,

business activities. In accordance with the provisions of the UN Guiding Principles on

we conduct an employee satisfaction survey each year to verify how fulfilling their assigned

Business and Human Rights, it also promotes human rights due diligence in its supply chain.

duties are, how satisfied they are with the work environment, and their preferences withregard to introducing programs at the company (response rate: 100%). Based on the survey

1. Policy Prohibiting Discrimination

results, we provide feedback to all employees and also we strive to develop a better work

We will eliminate all discrimination on the grounds of race, nationality, religion, gender, age,environment.

Employee Satisfaction
Score (5-point scale)disability, or sexual orientation.

FY2021

FY2022

FY2023

4.1

4.0

3.7

2. Policy Prohibiting Harassment
We will not tolerate any form of harassment, including sexual harassment or abuse of power.
3. Policy to Prevent Child Labor or Forced Labor
We will not permit child labor or forced labor. The Group has never used child or forced labor.
To ensure that none is used in the future, we ensure that each business location complies
thoroughly with the laws and regulations of its host country and conduct regular monitoring.

Example Initiatives

In the unlikely event that such a violation is suspected to have occurred, we have alsoestablished a whistle-blower contact point that employees can report to.

● Expanding the scope of the training support program

4. Policy to support Freedom of Association and the Right to Collective Bargaining● Enhancing support for employees balancing work with childcare, including establishing paid

We respect freedom of association and the right to collective bargaining.

maternity leave and extending the childcare leave period, etc.

5. Policy Supporting Rights to a Minimum Wage and Living wage
Mitsui Fudosan Group conducts labor management while abiding by the labor laws andregulations of each country. In terms of wages, we have adopted a basic policy of not only
following rules on minimum wages in each country, but also paying wages that exceed thoserequirements.
6. Principles and Procedures for Community Investment
Mitsui Fudosan Group carries out business activities that do not infringe on human rights,
either inside or outside Japan, by ensuring respect for the human rights of all stakeholders,
including local residents and children. Through neighborhood creation, we are striving toform communities and create opportunities for interaction between diverse human40

NBF’s Approach to ESG

resources, ultimately leading to new markets and employment. In this way, we oﬀer various

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Promoting Diversity, Equity, & Inclusion

forms of value to the communities where we conduct business. By participating in and fundingarea management organizations, we invest in local communities, and work to increase the value

Diversity, Equity & Inclusion Initiative Policyof real estate.

NBFM pursues various diversity, equity & inclusion initiatives to enable a wide range ofhuman resources to display their individual skills.

Referring to international norms relating to human rights, such as the Universal Declaration

Our passionate, capable employees have a diverse range of skills, experiences, and values;of Human Rights, NBF and NBFM seek to identify any negative impacts of their businessas such, we are working to ensure an environment where they can demonstrate theiractivities on the human rights of various people, including foreign residents and indigenous

individual abilities to the upmost, and recognize one another as individuals, evaluated fairly

peoples, in advance and take steps to prevent or improve them with the aim of thoroughly

regardless of their race, nationality, religion, gender, age, presence or not of disability,

promoting our business considering human rights.

gender identity, sexual orientation, or other characteristics. To this end, we are promoting

In addition to complying with the relevant laws and regulations, NBF and NBFM support andworkstyle reforms and enhancing our human resources system so as to raise organizational

respect the basic labor rights stipulated in the ILO Declaration on Fundamental Principles andproductivity and our employees' work-life balances.

Rights at Work.

1. Promoting female participation (female employee rate)

1. Eﬀective approval of freedom of association and collective bargaining rights

FY2019

2. Prohibition of forced labor
3. Prohibition of child labor and consideration for young workers

⇒
13.3%

FY202339.5%

4. Prohibition of discrimination in hiring
5. Prohibition of abuse and harassment

2. Wide age range

6. Appropriate wages and beneﬁts
7. Appropriate working hours, holidays, and vacation time

FY2019Based on the above policy, NBF and NBFM have established a Compliance Manual, andFY202320s – 30s: 42%

seek to impart the human rights-related policies to all employees, including those on

51%⇒

temporary assignment, through activities such as compliance training.
● Freedom of association and collective bargaining rights: NBF and NBFM support and respect

40s – 50s: 54%

44%

60s: 4%

5%

freedom of association and collective bargaining rights.
● Prohibition of discrimination, harassment, and other inappropriate behavior in the workplace:

3. Continued employment system (promoting participation of employees above retirement age)

NBF and NBFM prohibit discrimination and inappropriate behavior for any reason unrelated to

We have created a system for continuing to employ interested employees above theoneʼs position in the business, including on the basis of race, nationality, birthplace, religion,

designated retirement age until they reach the age of 65, with the aim of drawing on the

belief, gender, age, disability, sexual orientation, gender identity, education, marital status, andextensive specialized skills and management capabilities that they have accumulated to date toemployment type. Furthermore, we do not tolerate abuse of any kind in the workplace,train younger employees and maintain and improve the vitality of the business. The continuous

including sexual harassment and power harassment.

employment system enables participants to use the same leave program, ﬂex-time program,● Prohibition of child labor and forced labor: There has never been any child labor or forced laboretc. as regular employees.

at NBF or NBFM. Furthermore, a contact point has been established for reporting concerns if apotential violation is discovered.

41

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

System for Receiving Requests and Grievances from

Dealing with Harassment

Employees

In its internal regulations such as the Compliance Manual and Regulations on theProhibition of Harassment, NBFM prohibits all employees from harassing others for reasons

We have introduced a system (setting up suggestion boxes) allowing all employees,

such as nationality, gender, age, pregnancy, childbirth, etc. or engaging in actions that could

including those on temporary assignment, to submit a wide range of opinions relating topotentially lead to harassment. Furthermore, we conduct regular training.

human resources, the work environment, etc. while maintaining their anonymity. Submitted
opinions are shared with management as needed. Based on whistleblower protection

Training Examples

regulations, NBFM has also set up internal and external whistleblowing contact points andestablished a system that enables conduct toward employees, suppliers, etc. that violates● Training for all employees, including management, on methods of dealing with discrimination

human rights (including discrimination and harassment), unfair or inappropriate conduct,

and harassment when they occur.

and the like to be anonymously reported to a compliance officer or external law firm. When
handling the details of requests or grievances, the rules prohibit adverse treatment of● Training on types of discrimination and harassment (power harassment, sexual harassment,

whistleblowers, including protecting whistleblowersʼ personal information and prohibiting

maternity harassment), examples of language and behavior that constitute harassment, andretaliatory treatment, and oblige NBFM to determine and implement appropriate measures

methods for dealing with discrimination and harassment when subject to thembased on the reported information, as well as mandating that NBFM,(whistleblowing, prohibition of adverse treatment, etc.).

whistleblowing/consulting contact persons, and individuals responsible for handling● Training to provide a deeper understanding of how to avoid discriminating against LGBT people

whistleblowing shall not disclose or leak the fact that whistleblowing or consulting occurred,

and appreciate their diverseness and individuality.

the details of the whistleblowing or consultation, personal information obtained in theinvestigation, etc. without a valid reason (duty of confidentiality).
Furthermore, if a whistleblower is subjected to adverse treatment due to consulting or
whistleblowing, they may report this to a whistleblowing contact point. After receiving thisreport, the whistleblowing contact person shall promptly implement corrective measures
addressing the adverse treatment to protect the whistleblower.

Labor Standards and Practices
Labor-Management Relations
No labor union has been formed at NBFM, but it recognizes basic labor rights such as
freedom of association and collective bargaining rights in its Compliance Manual, etc.
Furthermore, regarding labor-management relations, NBFM has not made any layoffs or the
like in conjunction with mergers, acquisitions, etc. in the past.

42

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Personnel Data

At NBFM, all employees are informed about policies relating to labor standards such as
wages and working hours.

In order to secure human resources with high-level knowledge and experience over the long term,
improvement of internal systems including benefit and welfare programs and other schemes has been
conducted. As a result, human resources for maintaining stable fund management have been secured.

System Enabling Employees to Engage in Dialogue withManagement
At NBFM, meetings between employees and directors are held twice a year as amechanism for dialogue between employees and company management. These provide

Item

FY2021

FY2022

FY2023

Total number of employees

31

33

36

（Number of regular
employees）

opportunities for employees to make requests related to the companyʼs systems and discuss
topics such as their personal career vision.

Compliance with Labor Standards
During the period from January 1, 2023, to December 31, 2023, there were no serious
violations of labor standards.

Paying Higher than Minimum Wage and Complying with Equal
Pay for Equal Work
NBFM not only complies with the minimum wage stipulated in labor laws but also has a
the minimum wage specified, it is our policy to have a compensation system that ensuresequal pay for equal work.

Reducing Excess Working Hours and Overtime
labor-management agreement (“36 agreement”) and pursues the following initiatives:● Monitoring working hours and interviews with employees by industrial physicians and publichealth nurses

Male 16
Female 10

26

40.9%

43.4%

38.5%

Average employment period

6.1 years

5.5 years

5.3 years

Rate of used portion of paidvacation

56.4%

77.7%

74.0%

Rate of use of medical
examinations

100%

100%

100%

Employment of People with
Disabilities

0

0

0

(Number of seconded
employees)

9

10

10

Male 1
Female 3

4

Male 2
Female 3

5

Male 6
Female 1

7

Number of retired employees

0

4

4

Employee turnover rate in
the fiscal year

-

10.0%

13.3%

Number of parental leave
takersWith the aim of reducing excess working hours and overtime, NBFM has established a

Male 13
Female 10

23

Percentage of women

Number of newly hired
employees

basic policy of paying wages exceeding that amount. Along with paying a wage higher thanMale 13
Female 922

Male 0Female 00

Male 0Female 1

1

Male 1
Female 1

2

Return-to-work rate afterparental leave

-

100%

100%

Temporary Employee

5

5

7

● Notifying employees who may be working long hours and their supervisors(*)In this report, indication of “All employees” means entire employees including regular employees● Encouraging employees to take at least two consecutive days of paid vacationand seconded employees mentioned above. In addition, although temporary employees are not in direct● Taking thorough steps on a monthly basis to inform immediate supervisors of the need to

employment relationship with NBFM, some of the initiatives for NBFM employees shown in this reportappropriately manage their subordinatesʼ time at work and workload and all employees of thetarget temporary employees as well.

need to manage their time at work

43

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Corporate Governance

NBF’s Governance( ) Supervisory Directors

NBF’s Articles of Incorporation stipulate that NBF shall have at least one Executive Director and no more thanfour Supervisory Directors (but the number must be at least one more than the number of Executive Directors). At
present, NBF’s organization consists of a General Meeting of Unitholders and a Board of Directors, along with an
Accounting Auditor.
NBF’s Board of Directors is comprised of one Executive Director and three Supervisory Directors. NBF specifies in
the Rules of Board of Directors that the Board of Directors must meet at least once every three months, and it
gathers at a frequency of approximately once a month.
For the composition of the Board’s members, please click here.

External professionals with specialized expertise, such as lawyers, real estate appraisers, or certified public
accountants, shall be appointed as Supervisory Directors, each of whom shall fulfill supervisory functions relating
to the Executive Director’s execution of duties from their respective specialized viewpoints.
At Board of Directors meetings, the Supervisory Directors shall request reports on asset management status,
compliance, and risk management from the Executive Director and NBFM. They also carry out oversight of the
Executive Director’s execution of duties through conducting investigations as needed.
NBF’s Supervisory Directors are “independent Directors” in alignment with the standards for independence fromthe Executive Director, asset management company, etc. stipulated in the Investment Trusts Act, and the current
Board of Directors is comprised of individuals with no special interest in NBF, including the chairperson.

( ) Board of Directors( ) Accounting Auditor

In addition to the matters for approval stipulated by law, NBF’s Board of Directors reports on NBF’s management
and the execution of operations at the asset management company Nippon Building Fund Management, Ltd.
(NBFM). Via this reporting procedure, it maintains a structure that enables the Supervisory Directors, who are
independent of NBFM and its stakeholders, to obtain accurate information and oversee the Executive Director’s
performance.
The Board of Directors possesses the authority to convene General Meetings of Unitholders and approve theexecution of certain duties stipulated in the Act on Investment Trusts and Investment Corporations (the“Investment Trusts Act”) as well as other powers stipulated in the Act and the Articles of Incorporation and theauthority to oversee the Executive Director’s performance. Except where specified otherwise in the law or Articles
of Incorporation, resolutions of the Board of Directors shall be attended by a majority of the members with theright to vote and passed based on a majority vote of those present.

The Accounting Auditor audits NBF’s financial statements and other documents and is responsible for reporting
improper conduct by the Executive Director, a material breach of the law, or the like to the Supervisory Directors in
the event that such an incident is discovered. The Accounting Auditor shall provide an audit report to theSupervisory Directors ahead of the meeting of the Board of Directors for approving financial statements and workin collaboration with the Supervisory Directors by conducting interviews regarding awareness of fraud, suspicionof fraud, or an allegation of fraud that would impact NBF.

( ) Monitoring of Internal Control Status, Etc.
NBF monitors the status of internal control at NBFM by receiving reports at its Board of Directors meetings about
the results of internal audits conducted by NBFM, the details of Risk Management Committee meetings held once
every three months, and other matters.
Furthermore, with regards to other related companies to which tasks are outsourced, it has established a system
for managing the execution of operations by conducting interviews about these companies’ internal management,internal control status, and the like via NBFM as needed.

( ) Executive Director
The Executive Director executes the operations of NBF and has the authority to act in or out of court on its behalf
in any matters relating to its operations.

44

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

NBF’s Executive Director and Supervisory Directors(Note ) The above table indicates the typical skills of each director and does not show all of their knowledge and experiences.
(Note ) “Independent Director” in the table refers to “independent directors” in alignment with the standards for independence from the
Executive Director, asset management company, etc. stipulated in the Investment Trusts Act.

When selecting Director candidates, the Board of Directors makes decisions based on their expertise,qualifications, and eligibility, assuming that they do not meet any of the reasons for disqualification stipulated invarious laws such as the Investment Trusts Act, and chosen candidates are appointed via a resolution of theGeneral Meeting of Unitholders held on a biennial basis, per NBF’s Articles of Incorporation.

Please see the link below for the career summary of each director.
Career Summaries of NBF’s Directors

Title

Investment Unit Ownership Policy
In order to prevent insider trading, NBF has stipulated Insider Trading Control Rules, which prohibit the purchaseand sale of its investment units and investment corporation bonds by directors.

Attendance at Board of
Directors Meetings
( )

Name

Reasons for Election

Executive Director

Koichi Nishiyama (Male)

Mr. Nishiyama was elected after being deemed suitable for the
position of Executive Director and with the expectation that hewould be able to execute business from a broad perspective basedon his knowledge in the real estate nancing business andexperience, etc. as NBFM’s President & CEO.

%( / meetings)

Supervisory
Director

Masaki Okada (Male)Mr. Okada was elected after being deemed suitable for the positionof Supervisory Director and with the expectation that he would be
able to oversee the Executive Director’s execution of duties
objectively from a broad perspective based on his knowledge andexperience, etc. as an expert of law.

%
( / meetings)

Supervisory
Director

Keiko Hayashi (Female)Ms. Hayashi was elected after being deemed suitable for the
position of Supervisory Director and with the expectation that she
would be able to oversee the Executive Director’s execution ofduties objectively from a broad perspective based on her knowledge
and experience, etc. as an expert of accounting and tax.

%
( / meetings)

Supervisory
Director

Kazuhisa Kobayashi (Male)Mr. Kobayashi was elected after being deemed suitable for the
position of Supervisory Director and with the expectation that hewould be able to oversee the Executive Director’s execution ofduties objectively from a broad perspective based on his knowledge
and experience, etc. as an expert of real estate.

%( / meetings)*Inauguration: March

Evaluation of the E ectiveness of NBF’s Board of Directors
NBF analyzes and evaluates the effectiveness of the Board of Directors, aiming to further enhance its functions. It
evaluates the effectiveness by conducting a questionnaire survey to be answered by each member of the Board of
Directors once a year, and NBFM compiles and reports the results to the Board of Directors. In the evaluation
conducted in December , the results were generally high, confirming that the effectiveness of NBF’s Board of
Directors was secured. Based on this evaluation, we will continue to make efforts to further improve theeffectiveness of the Board of Directors.

Status of Directors
Title

Name

Chairperson

Executive
Director

Koichi
Nishiyama〇

Independent
Director(Note )

Treasury, Complianceand
Corporate
Risk
Real EstateManagement Accountingand
Management
Finance〇Supervisory Masaki Okada
Director〇

Supervisory Keiko Hayashi
Director〇

Supervisory
Director〇

Kazuhisa
Kobayashi

Expertise and Experience

〇

〇
〇

〇

〇

ESGandSustainability

Qualification〇

No. ofInvestment
Units Owned
units

〇

〇

Lawyer

units

〇

〇

Certified Public
Accountant

units

〇

Real EstateAppraiser

units

〇

〇

45

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Compensation of Directors

NBF’s Management Structure

Compensation of Directors

NBF entrusts its asset management to the asset management company Nippon Building Fund Management, Ltd.
(NBFM). NBFM handles tasks based on the management structure shown in the image below, in accordance with
the Asset Management Entrustment Agreement with NBF.
NBFM’s organizational chart is as follows.

Compensation for each of NBF’s Directors is no more than , yen per month per person. The amount isdetermined by the Board of Directors based on the amount that is deemed reasonable in light of compensation
standards for Directors and auditors who perform comparable duties, general price trends, wage trends, and soforth.
Title

Name

Total Amount of Compensation( )Executive Director

Koichi Nishiyama, , yenSupervisory Director

Masaki Okada, , yenSupervisory Director

Keiko Hayashi, , yen, , yenSupervisory Director
Kazuhisa Kobayashi*Inauguration: MarchThe Directors receive fixed compensation only. There is no variable compensation.

Compensation of Accounting Auditor
The auditing compensation for the Accounting Auditor is as shown below.
Name
KPMG AZSA LLC

Description of Fees

Total Compensation( )Audit-based fees

, , yenNon-audit-based feesyen

In accordance with auditing firm regulations based on the Certified Public Accountants Act, this shall be
managed as follows:● Executive o cers may not be involved in the company’s auditing tasks for more than seven accounting periods, andthe chief executive o cer may not be involved in them for more than ve accounting periods.
● Executive members may not be involved in the company’s auditing tasks for more than ve accounting periods after
replacement, and the chief executive o cer may not be involved in them again after replacement.
46

NBF’s Approach to ESG

Social Initiatives

GovernanceCommitment and External Evaluation

Appropriate Management of Potential Con ict-of-Interest Transactions

Overview of Each Body
Name of Body

Environment Initiatives

Members

Meeting Frequency

Overview

Executive BoardCEOHead of Investment & FinanceGroup (Director, CIO and CFO)
Head of Corporate Operation
Group (Director, and COO)

As a rule,
meets when discussion isrequired

Discusses general policies for executing
operations, planning, and executing importanttasks, veri es compliance, and considers the
merits of submitting issues to persons withdecision-making authority.

Compliance Committee

CEO
Head of Investment & FinanceGroup
Head of Corporate Operation
Group
Compliance O cer
External members

As a rule,
meets at least
once per months

Veri es compliance for material compliancerelated matters, such as transactions withinterested parties.

Risk Management Meeting

CEO
Head of Investment & FinanceGroup
Head of Corporate Operation
Group (Chair)Compliance O cer
Department Managers
Risk Management & ComplianceDepartment

As a rule,
meets at least
once per months) Status of risk monitoring during the applicable
period) Details of grievances, professional misconduct,
etc. that occurred during the applicable period) Details of other reports, as necessary
Amount of risk relating to accidents at assets
under management, disasters, or projects
involving long-term commitments, etc.

Investment Review
MeetingCEO
Head of Investment & FinanceGroup
Head of Corporate Operation
Group
Compliance O cer and
Department Managers

As a rule,
meets at least
once per month

The Investment Review Meeting body formulates
and approves speci ed key management
strategies, policies, etc., conducts practical
discussions about individual projects, and so forth(including veri cation of compliance), with the aimof improving management e ciency throughappropriate management and striving to protect
assets under management when carrying out
management of the assets entrusted by NBF.

Based on the Rules on Transactions with Interested Parties, NBFM has defined the scope of interested parties tobe managed more broadly than it is defined by law, stipulated decision-making procedures for transactions withinterested parties, the scope of applicable transactions, and transaction standards, based on which it implements
appropriate management of potential conflict-of-interest transactions.

Asset Management Decision-Making and Internal Control Structure for Potential Con ict-of-Interest
Transactions

Initiatives Relating to Con icts of Interest
Basic Policy Regarding Potential Con ict-of-Interest Transactions
With regard to transactions conducted in relation to asset management that involve a potential conflict between
the interests of NBF and the interests of NBFM or its interested parties, NBFM is always aware of its duty to explaintransactions to NBF and its unitholders and actively prevents transactions that are not fair and equitable inaccordance with the law and internal regulations.

47

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Compliance

Basic Policy

Compliance Promotion Structure

Officers and employees of NBF and NBFM comply with laws and regulations and maintain high ethical standards
and conduct business activities in an honest and appropriate manner.
In its Rules of Board of Directors, NBF specifies that the Board of Directors must meet at least once every threemonths, and it gathers at a frequency of approximately once a month, receiving reports from the Executive Director
about the execution of operations and ensuring oversight and check functions through the Supervisory Directors.
The Board of Directors has a structure with three Supervisory Directors for one Executive Director, and external
professionals with specialized expertise, such as lawyers, real estate appraisers, or certified public accountants, areappointed as the Supervisory Directors.
In accordance with the Management Policies that stipulates its basic management philosophy, NBFM positions
compliance as a key issue in management with the aim of increasing the confidence of all investors and otherstakeholders. Moreover, as an asset management company entrusted with managing assets, it strives toappropriately manage the assets under management by specifically stipulating norms, processes, strategies, etc.
that should be complied with and fulfills its fiduciary responsibilities.
Viewing compliance as a category that includes not only legal compliance but also following internal regulations
and acting in accordance with general social ethics and norms, NBFM has established internal regulations such as
its Code of Ethics and Compliance Rules as practical guidelines and rules. Furthermore, its Compliance Officer
promotes company-wide compliance activities by planning a Compliance Program, training and awarenessactivities for officers and employees.
In the event of concerns arising about a violation of or conflict with the laws, regulations, or internal rules, theCompliance Rules stipulate that officers and employees of NBFM must immediately report the relevant facts, thebackground to the incident’s occurrence, and the approach to its resolution to the Compliance Officer. If it isdeemed that there is a problem relating to the reported information, the Compliance Officer must promptly report
it to the CEO, the head of the Investment & Finance Group, and the head of the Corporate Operation Group anddiscuss the appropriate response. Furthermore, if necessary, the Compliance Officer will obtain confirmation fromexternal experts and report to the Compliance Committee, Board of Directors, and NBF Board of Directors as well.
In light of the laws, regulations, and internal rules, if a compliance violation occurred or if it is deemed that there
is conduct that could cause a violation, the necessary measures will be taken following discussion by the Board of
Directors in the case of an officer, while employees will be subject to discipline based on its work rules.
(From January to December , there were no claims violation cases, or disciplinary actions for officers or
employees relating to compliance breaches.)

NBFM has established the following compliance promotion structure, and in its decision-making process,compliance-related verification is implemented based on a multi-level review structure.
Body/Title

48

Main Role

Board of Directors

The Board of Directors determines basic management policy and is responsible
for ensuring that compliance is implemented fairly and e ectively as asupervisory body for the Directors. The Board of Directors discusses theformulation, revision, and abolition of the Compliance Rules, Compliance
Committee Rules, Compliance Manual, etc. in addition to discussing theformulation of the Compliance Program, which serves as a practical plan relating
to compliance implementation for each department and receives reports on its
progress status.

Board of Auditors

As an independent body, the Board of Auditors is responsible for establishing ahigh-quality corporate governance structure that will meet social expectations
and accommodate the sound continued growth of the company by auditing the
Directors’ execution of their duties. For this purpose, the Board of Auditors
attends meetings of the Board of Directors and Compliance Committee in anadvisory capacity and expresses its opinions as necessary. Furthermore, it
reviews important approved documents and other important documents related
to the execution of operations, requests explanations from Directors or
employees if necessary and expresses opinions about them.

Compliance Committee

Comprised of the CEO, head of the Investment & Finance Group, head of the
Corporate Operation Group, and Compliance O cer along with external
members appointed by the Board of Directors, this committee discusses key
matters relating to compliance, such as certain transactions with interested
parties, receives reports, and conducts compliance-related veri cation.

CEO

As the chief executive for the entire business, the CEO serves as the senior o cerwith respect to compliance and is also the supervisor for risk management,
including compliance risks.

Compliance O cer

Along with supervising NBFM’s compliance, the Compliance O cer performs
tasks related to internal auditing.

Risk Management & ComplianceDepartment

Under the supervision of the Compliance O cer, this department implementscompliance promotion, internal auditing, veri cation of risk management status,etc.

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Supervision by the Board of Directors

Furthermore, with a view to preventing the emergence of compliance risks through three line-based
management, NBFM has established a multi-level management system founded on the three lines of defense
model, with the understanding that all officers and employees are to autonomously engage in compliance and risk
management.

Each year, NBFM creates a Compliance Program that serves as a practical plan for implementing the Compliance
Manual (the details include preventing corruption, including bribery). This program is finalized based on theapproval of the Board of Directors, and the Compliance Committee receives reports about it. Verification results(achievement status, etc.) are reported to both the Board of Directors and the Compliance Committee.
If necessary, the Board of Directors and the Compliance Committee may state opinions about these reported
matters, with the aim of ensuring improvement initiatives function effectively.

Gifts/Hospitality and Prohibition of Bribery
In the Compliance Manual, NBF and NBFM prohibits accepting gifts or hospitality internally or from clients or
stakeholders that exceed the bounds of moderation, receiving, requesting, or promising bribes in dealings withexternal clients, associates, etc. (such as gifts and hospitality exceeding the bounds of moderation), and making
special arrangements based on these.

Due Diligence Relating to New Clients and Brokers
For transactions with new companies and transactions with new contractors and brokers, NBF and NBFM
conduct a check for anti-social activities, verify their approach to information management, and so forth as part ofdue diligence. Furthermore, NBF and NBFM take steps to prevent corruption in general by sharing their policies
relating to corporate ethics, such as bribery and corruption.

Whistleblowing
NBF and NBFM have established an internal whistleblowing system that allows anonymous consultation, throughwhich they strive to prevent corruption and graft of all kinds.
The company has established whistleblowing contact points for the purpose of rapidly obtaining information aboutrisks, such as illegal conduct, improper conduct, and actions that violate compliance, and taking self-corrective
action to rectify these matters. Appropriate management is implemented to strengthen protection for
whistleblowers, implement investigations that lead to corrective measures, and ensure the effectiveness of thewhistleblowing system.

Policy on Anti-Corruption Initiatives

Training
Training such as that shown below is regularly conducted for all employees and officers, including employees on
temporary assignment, on a variety of topics relating to legal and other compliance (including matters relating topreventing corruption), through which NBF and NBFM strive to improve organizational as well as individual
capabilities.

NBF and NBFM view the implementation of compliance as a key issue in the Group’s management, and in
addition to establishing a compliance system, they strive to promote compliance. The Compliance Manual
stipulates practical guidelines on preventing bribery, eliminating anti-social forces, preventing money laundering,ensuring fair competition, prohibiting insider trading, giving/receiving gifts and hospitality, etc., and NBF and
NBFM strive to implement thorough compliance and prevention of corruption, including bribery.
49

NBF’s Approach to ESG

Environment Initiatives

Examples of Key Initiatives● Human rights training (August – all employees, including temporary employees)● BCP (Large-Scale Flood Response) training (September – all employees, including temporary employees)● Training on customer-oriented business management (January – all employees, including temporary
employees)● Training on insider trading regulations (January – all employees, including temporary employees)● Training on Management of Transactions with Stakeholders（March – all employees, including temporary
employees）● Training on Cutting o relations with antisocial forces (March – all employees, including temporary employees)
Information about internal rules, revisions to the law, and compliance (including matters related to preventing
corruption) is distributed as appropriate.

Ensuring Transparency

Data on Fraud and Corruption

Tax PlanningSocial Initiatives

GovernanceCommitment and External Evaluation

In compliance with tax laws and related laws and regulations, NBF and NBFM declare and pay their taxes in an
appropriate manner. They aim to provide explanations that facilitate understanding by the tax authorities andensure transparency. They have important tax-related issues validated by external experts, and if necessary, theyalso verify them with tax authorities in advance, thereby striving to minimize tax risks.

Relationship with Tax Authorities
NBF and NBFM maintain a healthy, proper relationship with the tax authorities and do not offer them any
improper benefits. If a difference of opinion with the tax authorities arises, NBF and NBFM will strive to resolve it
based on proactive discussion with these authorities and prevent the recurrence of problems by implementing
suitable improvement measures.
NBF and NBFM do not engage in so-called tax avoidance behavior, which is considered to be “reducing the tax
burden in an unacceptable and inappropriate manner” by deviating from the true meaning and intent of various
tax system-related provisions in ways that were not intended by the tax laws and tax agencies, even if doing so
could officially be viewed as a legitimate reduction of the tax burden.

No. of cases of exposure related to fraud and corruption
No. of cases of punishment/dismissal related to fraud and corruption

Governance Structure

Reconciliation cost of penalties/punishment related to fraud and corruption (yen)The occurrence of inappropriate taxation-related incidents is a monitoring item at Risk Management Meetings,
and if such a case occurs, it will be reported to NBF’s Board of Directors and NBFM’s Board of Directors.

Total amount of political donations (yen)NBF’s Taxes Paid by Country (Corporate Taxes, Etc.)

Tax Transparency
NBF and NBFM make appropriate tax payments and contribute to the public good and the achievement of asustainable society by conducting their business activities in a fair and highly transparent manner.

Compliance with Tax Laws
In accordance with the spirit of the applicable taxation, NBF and NBFM always comply with tax laws and carryout their business activities based on the intent of the law.

50

Japan

, , yenOverseasyen

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Risk Management

Basic Policy

Internal Auditing

NBFM has formulated Risk Management Rules and Risk Management Guidelines for risks relating to investment
management activities, and the Risk Management & Compliance Department, which oversees risk management,
reports to NBF’s Board of Directors and NBFM’s Board of Directors about matters such as the status of risk
management and improvement measures.

Based on the Internal Auditing Rules, internal auditing is conducted each year, internal audit reports areprepared, and the CEO and Board of Directors receive reports, with the Compliance Officer serving as the senior
officer for internal auditing activities. Internal auditing covers the activities of all departments, and it is planned
and implemented from various perspectives, including the effectiveness and implementation status of the Code of
Conduct and the implementation of policies to prevent corruption. To enhance and complement internal auditing
functions, internal auditing activities may be outsourced to an external third party if approved by the Board of
Directors. Since they are in fact outsourced to a third party, the perspective of external experts is included in theimplementation of auditing.

Risk Management Structure
NBFM has established Risk Management Rules and stipulated its basic approach to risk management, and withrespect to items whose risks should be managed, it verifies whether risk monitoring is being conducted
appropriately based on the Risk Management Guidelines at regular Risk Management Meetings held at least once
every three months. Summaries of Risk Management Meetings are reported to both NBF’s Board of Directors and
NBFM’s Board of Directors.

BCP Measures
For the purpose of rapidly understanding disaster conditions and safety and implementing measures relating todisaster risks, drills are conducted twice a year in collaboration with a supplier (NBF Office Management Ltd.).
Furthermore, disaster-related information such as evacuation shelters in the area, healthcare institutions, andinformation sites are collected in a Disaster Safety Handbook for owned buildings, and various evacuation drills are
conducted.
In addition, there is always a reserve of three days’ worth of emergency provisions and other supplies if required.

Risk Assessment
NBF and NBFM strive to prevent corruption of all kinds, including the prevention of bribery, elimination of antisocial forces, prevention of money-laundering, elimination of unfair business practices, and prohibition of insider
trading. Furthermore, key risks are monitored at Risk Management Meetings and regularly reported on to NBF’s
Board of Directors and NBFM’s Board of Directors.

Safety Con rmation
As part of crisis management, NBFM has introduced a safety confirmation system for the purpose of confirming
safety and understanding disaster conditions in the event that a disaster occurs. Safety confirmation drills are
conducted twice a year. In , the participation rate was %.

51

NBF’s Approach to ESG

Commitment
Signatory to PRINBFM agreed with the fundamental principles of the PRI (PRI︓Principles for Responsible
Investment) and became a signatory.
PRI principles encourage the incorporation of ESG issues into investment decision making
process. By including those issues in the investment process, the goal is to help companies
enhance long-term investment performance and better fulfill their fiduciary duty.

※(For further information on PRI, please click here.)Support for TCFD
While clarifying stronger efforts to address climate-related issues, NBF and NBFM haveexpressed support for the Task Force on Climate-related Financial Disclosures (TCFD), which
recommends disclosure of information on risks and opportunities related to climate change
to companies and such.

※(For further information on TCFD, please click here.)

Participation in CDP Climate Change
Program
NBF participates in CDP (Carbon Disclosure Project) Climate Change Program, which
evaluates efforts such as information disclosure on climate change.

※(For further information on CDP, please click here.)

52

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

External Evaluation
SBT Certiﬁcation

GRESB Real Estate Assessment

NBF has established the following targets for reducing greenhouse gas emissions and the

The "GRESB Assessment" is an annual benchmark survey for evaluating environmental,social and governance (ESG) considerations in the real estate sector, established in 2009

Science Based Targets initiative (SBTi) has approved it as NBFʼs science-based emissions

primarily by major European pension fund groups.

reduction targets.

The characteristic of the GRESB Real Estate Assessment is that it evaluates sustainability

Targets

efforts by real estate companies and REITs, etc., not of individual properties. During the2023 Assessment, NBF's initiatives were highly appreciated in both dimensions of"Management Component" and "Performance Component" as sustainability efforts, and it

Base Year

Near-term target

has received a "Green Star" recognition since 2015. NBF also received a "4 Stars" based on
its overall GRESB Score ranking. In the 2023 GRESB Public Disclosure Level evaluation

Net zero target

scheme, the initiatives of NBF were highly evaluated in both dimensions of our proactive
information disclosure practices in connection with environmental and sustainability

2021

Target Year

Target GHG

GHG reduction
targets2030

Scope 1＋2

42% reduction

2050

Scope 1＋2＋3

Net zero(More than 90%
reduction)

initiatives, and NBF received an "A", the most superior rating.
The science-based targets (SBT) are a scientifically based GHG emissions reduction targets
approved by SBTi, an international joint initiative established in 2015 by CDP, the United
Nations Global Compact, the World Resources Institute (WRI) and World Wide Fund for
Nature (WWF).

SCIENCEBASEDTARGETS

NBF will disclose information on its ESG activities to investors through GRESB assessment
while utilizing the assessment results as an opportunity to improve its initiatives.

DRIVING AMBITIOUS CORPORATE CLIMATE ACTION

53

NBF’s Approach to ESG

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

Utilization of Green Building Certification
DBJ Green Building Certiﬁcation

Green building certifications are granted by third parties regarding initiatives for the
reduction of environmental load of buildings, improvement of comfort of users, etc. toassure high performance.

“DBJ Green Building Certification” is a certification system established in April 2011 by the

In an aim to increase the credibility and objectivity of its efforts to reduce environmental

Development Bank of Japan Inc. to support buildings with high environmental and social

load as well as increase the value of its buildings in the mid-to-long-term, NBF endeavors toawareness (a “Green Building”).

utilize green building certifications from third parties.

Based on its comprehensive evaluation system, which includes not only an environmental
performance but also a social one (owner response to social needs of the diverse
stakeholders of the properties), DBJ identifies and certifies “Green Building,” which are

Policy for Acquiring Green Building
Certiﬁcation and Assessment

essential in todayʼs real estate market. Evaluation results are expressed in five-level ratings.

Scoring of DBJ Green Building Certiﬁcation

NBF aims to acquire 100% to acquire green building certifications and Assessment forexisting properties under management on an ongoing basis for the purpose of reducing theStarsenvironmental risks of its portfolio and increasing asset value in the mid-to-long-term.

Summary of Green Building certiﬁed properties in NBFʼs portfolio (as ofJune 30, 2024)

DBJ Green Building Certification
CASBEE for Buildings
CASBEE for Real Estate
Total

Proportion of
Proportion ofcertifiedcertified
Total
floor
area
of
properties toproperties
tocertified
whole portfolio properties
whole portfolio（㎡）(based on number(based on floorof properties)
area)

RatingNumber of
Certifiedproperties

★★★★

4

5.9%

184,334

9.8%

★★★

11

16.2%

238,439

12.7%

Subtotal

15

22.1%

422,773

22.6%

S

1

1.5%

74,653

4.0%

S

34

50.0%

1,192,874

63.7%

A

16

23.5%

160,760

8.6%

Subtotal

50

73.5%

1,353,634

72.3%

66

97.1%

1,851,060

98.8%(*)Calculated based on the ﬂoor area multiplied by ownership ratio of the property or on the ﬂoor area of
exclusively owned area.

54

★★★★

★★★

★★

★★

★

Properties with
thebest classenvironment &socialawareness

Properties withexceptionallyhighenvironment &socialawareness

Properties withexcellentenvironment &socialawareness

Properties withhighenvironment &socialawareness

Properties withsatisfactory
environment &socialawareness

NBF’s Approach to ESG

Property NameDBJ Green Building Certification

Environment Initiatives

Social Initiatives

GovernanceCommitment and External Evaluation

CASBEE for Buildings・Real Estate

Roppongi T-CUBE★★★★

NBF Osaki Bldg.

★★★★

Osaki Bright Core - Bright Plaza★★★★

Nakanoshima Central Tower★★★★

cooperation project under the support of the Housing Bureau of the Ministry of Land,

River City M-SQUARE★★★

buildings, including but not limited to environmental considerations such as using materials

Shinbashi M-SQUARE★★★

and equipment which are energy saving or have a lower environmental impact, internal

NBF Kandasudacho Bldg.

★★★

CASBEE for Buildings is evaluated in five levels (from S rank to C rank), and CASBEE for RealNBF Toyosu Canal Front★★★

NBF Toyosu Garden Front★★★

Higashi Gotanda Square★★★

Aqua Dojima NBF Tower★★★

Sumitomo Mitsui Banking Nagoya Bldg.

★★★

Hakata Gion M-SQUARE★★★

Shinjuku Mitsui Bldg.

S

Sapporo L-Plaza★★★

IIDABASHI GRAND BLOOMSNBF Matsuyama Nichigin-mae Bldg.

★★★

Nishi-Shinjuku Mitsui Bldg.

S

Celestine Shiba Mitsui Bldg.

S

NBF Shinagawa Tower

S

Shiba NBF Tower

S

NBF Platinum Tower

S

NBF COMODIO Shiodome

S

G-BASE TAMACHIS

Toranomon Kotohira Tower

S

NBF Shibuya Garden FrontS

Shinjuku Mitsui Bldg. No.2

S

NBF ALLIANCES

NBF Shibuya EastS"CASBEE (Comprehensive Assessment System for Built Environment Efficiency)" is asystem to evaluate environmental performance of buildings, operated by the CASBEE
Research Committee, established in April 2001 as an industrial/academic /government
Infrastructure, Transport and Tourism. The system comprehensively evaluates the quality ofamenities and also giving consideration to views.
Estate is evaluated in four levels (from S rank to B rank).

Property Name
Gate City Ohsaki

S
Property Name

55

CASBEE for Buildings

CASBEE for Real EstateNBF’s Approach to ESG

Property Name

Environment Initiatives

Social Initiatives

Property Name

CASBEE for Real Estate

GovernanceCommitment and External Evaluation

CASBEE for Real Estate

Sumitomo Densetsu Bldg.

S

NBF Ogawamachi Bldg.

A

NBF Hatchobori TerraceS

NBF Higashi-Ginza SquareA

Jingumae M-SQUARES

Nihonbashi Kabuto-cho M-SQUARE

A

Toyosu Bayside Cross Tower

S

Ryukakusan Bldg.

A

Ueno East Tower

S

NBF Ikebukuro Tower

A

Nakameguro GT Tower

S

NBF Ikebukuro City Bldg.

A

OSAKI BRIGHT TOWERSNBF Urawa Bldg.

A

NBF Ikebukuro EastS

NBF Matsudo Bldg.

A

Chofu South Gate Bldg.

S

Shinanobashi Mitsui Bldg.

A

Yokohama ST Bldg.

S

Yodoyabashi Flex Tower

A

Parale Mitsui Bldg.

S

NBF Sapporo Minami Nijo Bldg.

A

Tsukuba Mitsui Bldg.

S

S-ino Omiya North WingS

Nagoya Mitsui New Bldg.

S

Nagoya Mitsui Main Bldg.

S

Top-Level Facility Certiﬁcation
The “Top-Level-Facility (Specified High Quality Commercial Facility with Measures against
Global Warming)” is a scheme to proportionally mitigate the required greenhouse gas

NBF Nagoya Hirokoji Bldg.

S

Nakanoshima Mitsui Bldg.

S

Sakaisuji-Honmachi Center Bldg.

S“certain standards set forth by the Governor” as an “office building promoting an excellent

Hiroshima Fukuromachi Bldg.

S

Measures against Global Warming).”

NBF Kumamoto Bldg.

S

NBF Ginza Street Bldg.

A

Kowa Nishi-Shinbashi Bldg. B

A

Yotsuya Medical Bldg.

A

NBF Takanawa Bldg.

A

NBF Akasaka Sanno SquareAemission reduction ratio of the subject facility, in accordance with the level of measurestaken against global warming, if such building is approved by the Tokyo Governor as meetinglevel of measures against global warming (Specified High Quality Commercial Facility with

Property Name

56

Certified Level

GranTokyo South Tower

Top-Level Facility

Shinjuku Mitsui Bldg.

Near-Top-Level Facility

IIDABASHI GRAND BLOOM

Near-Top-Level Facility