Sustainability Report 2021

CONTENTS
02 Table of contents
03 Message from the President
05 Basic Policy and Management
Structure of ESG Issues

07 Disclosure Policy, Signatory toInternational Initiatives,
Evaluations from External
Parties, and Certifications

11 E
 nvironment
 PIs and Strategies to Reach
K
Targets
Environmental Measures
Climate Change Initiatives
Green Finance

23 Society elationship Between JRE’s RealR
Estate Investments andStakeholders
Stakeholder Engagement

Toward 2030

 Tenants and Partners

About KPIs

Local Communities Employees (Human Capital
Development)

In 2019, Japan Real Estate Investment Corporation (JRE) became
the first J-REIT to disclose information based on the recommendations put forth by the TCFD, and announced environmental
KPIs in 2020 to further respond to climate change risks. As aleader in the J-REIT industry, JRE will continue to promote ESG
initiatives in the future.

CO2 Emissions*1

35
90

Reduceby%

Waste Recycling Rate% or higher

Zero Energy Buildings*2
Own


01

Japan Real Estate Investment Corporation

5~10

Carbon Intensity

60
20

Well-being	 Creating Fair Work Environments

Non-Financial Data Highlights

31 GovernanceManagement System
Risk Management
Compliance System

37 GRI Content Index
45 SASB Frameworkk g-CO2/m2
or lower

Water Usage*1
Reduceby%*1 Carbon intensity basis*2 Includes ZEB Ready and ZEB
Oriented buildings

About the JRE ESG Website
Details regarding this report are posted on
JRE’s ESG website (external site).
Please refer to it as necessary.
https://jre-esg.com/en/
Disclaimer
JRE is not liable for any trouble, loss or damage caused by actions as made based onjudgements using the information containedin this report. In addition, please note that
JRE is not liable for any damages caused byfalsification of the text, content leaks, unauthorized use by a third party, or other accidents that are not its responsibility.

Japan Real Estate Investment Corporation

02

Message from the President

The global spread of COVID-19 is having a massive impact onsociety and the economy, with no clear exit from the situation
as yet in sight. In such circumstances, the sustainability of societies and companies around the world is being put to the test.
Japan Real Estate Asset Management Co., Ltd. (JRE-AM),
Japan Real Estate Investment Corporation’s asset management company, positions proactive environmental, social, andgovernance (ESG) initiatives as one of the top priorities of its
management strategy. This is not only because greater society
expects us to engage in efforts to improve social sustainability
through enhancing ESG- related efforts but also because webelieve that these efforts will maximize long-term returns forunitholders in a listed J-REIT such as JRE. In 2018 JRE-AM
established the ESG Office consisting of three to four dedicatedmembers for ESG, and in the same year, became a signatory to
the United Nations Principles for Responsible Investment (thePRI) (Please refer to page 7 for more information). In 2019, JRE
disclosed information in line with the Task Force on Climaterelated Financial Disclosures (TCFD) recommendations, making it the first J-REIT to do so. In 2020, we establishedenvironmental key performance indicators (KPIs) to further
address climate change risks that include our target for reducing CO2 emissions by 2030. After setting KPIs for 2030, we
acquired our first ZEB Ready Certification which plays animportant role in reducing CO2 emissions. Furthermore, we
became the first J-REIT to procure funds through a sustainability-linked loan. We are proud to be lauded as the front running
J-REIT in ESG initiatives as a result of these efforts. JRE publishes its sustainability report on an annual basis in order todisclose such ESG initiatives in an easy-to-understand manner.
One of the reasons I think that active ESG initiatives will leadto long-term returns for investors goes back to my experience
when I was engaged in office building development at
Mitsubishi Estate London Limited. I was involved with over five
newly built office buildings and was always engaged in hot discussions with the design teams—teams of experts in design,

machine & equipment, structure, cost, and construction management—on how we could acquire a strong BREEAM* rating.
When making these decisions, the question of where to find thebalance between the profitability of an investment and the environmental performance of a building has always been a difficult
one. On the other hand, even if costs increased a little, the best
tenants were almost always willing to pay a higher rent thanusual to move into an office building if it meant giving due consideration to the environment and comfort.
One strong impression that I drew from this experience wasthat tenants have become more aware of ESG than I had previously thought. There have been an increasing number of companies worldwide that make ESG a strong point ofconsideration in their core businesses. For these companies it
is infeasible from a business strategy point of view to operate in
an office building that does not factor in ESG. What this meansis that JRE’s active commitment to ESG initiatives, coupled withincreasing the number of office buildings that large number oftenants opt for, will lead to long-term returns for investors. I
am confident that this is a win-win situation.
We have made it our mission to anticipate changes in thebusiness environment and improve the competitiveness of ourportfolio constantly, through forward-thinking and proactive
asset management. Our ESG efforts may take some time tobear results, but we intend to use this sustainability report as away to regularly share information with our stakeholders andconfirm the progress of our efforts as we work toward ourgoals. JRE is eager to fulfill its social responsibilities throughits ESG initiatives and link these to long-term returns forunitholders.
* Building Research Establishment Environmental Assessment Method, theubiquitous sustainability rating for buildings in the U.K.

President & CEO

ESG HIGHLIGHTS
Acquisition of

ZEB Ready
03

Japan Real Estate Investment Corporation

Certification for HigashiGotanda 1Chome Building

Percentage of green
building-certified
properties

76.2(Based on acquisition price)%

PRI Assessment Result· Strategy & Governance· Property

A+

GRESB
Real Estate
Assessment

5 Stars

MSCI ESG
Rating

A Prime Status
ISS ESG Corporate Rating

Japan Real Estate Investment Corporation04

Basic Policy and Management Structure of ESG Issues

 ontribution to creating a low-carbon
Csociety
In order to contribute to creating a lowcarbon society, we will proactively promote
efficient use of energy, mainly by improving
operation systems and introducing appropriate facilities to increase energy
conservation.
1

Basic Policy and Management Structure of ESG Issues
Sustainability Policy

JRE is committed to endeavoring to enhance consideration towards the environment, social contributions, and corporate
governance to improve the sustainability of society. We recognize that this is an important social responsibility for a listed
enterprise to assume, and also believe that it is essential for maximizing our unitholder value.
To put our commitment into practice based on the above recognition, JRE-AM has established its Sustainability Policy tocommunicate its priority issues and basic policies on sustainability with regard to its real estate investment management.
Under the Policy, we implement various initiatives, including environmental impact reduction through facility upgrades andacquisition of Green Building certifications, as well as contribution actions to the local communities.

 ontribution to creating a recyclingC
oriented society
In order to contribute to creating a recycling-oriented society, we will promote
efficient use of water resources as wellas implementing Reduce, Reuse andRecycling initiatives.
2 ontribution to creating a society inCharmony with nature
In order to contribute to creating a
3

JRE-AM convenes its Sustainability Committee with a view to implementing
the Sustainability Policy in order to improve sustainability and maximize its
unitholder value.

Energy Conservation Policy

Policy for Implementing
the Sustainability Policy

Members of the committee:
President & CEO (Chief Sustainability Officer)
Head of ESG Office, Real Estate Management Department (Sustainability Officer)
General Managers of other departments and those practically in charge of sustainability
at each department
Reporting details, meeting frequency, and examination process:The Sustainability Committee meets four times a year in principle and executes the
PDCA cycle by examining and planning measures, reporting and evaluating the progress
and analysis results, and then examining and planning improvement actions, thereby
making improvements on a continual basis.
For the matters examined by the Sustainability Committee, JRE-AM makes decisions
and implements measures based on its decision making rules, and the results arereported to JRE’s Board of Directors once a year.

GHG Emissions Reduction Policy
Based on our Sustainability Policy, we
have set targets for reducing energy consumption and greenhouse gas emissions
to improve the performance of our realestate portfolio. To achieve these goals,
we will implement initiatives such as
improving building operations, updating toenergy efficient equipment, and informing
tenants about energy conservation.

Green Procurement Policy
We have established a “Green Procurement
Policy” to promote sustainability initiatives
in the supply chain. This policy serves as a
guideline for selection criteria for products
to be procured and selection and evaluation criteria for suppliers.
 asic Concepts of Health and Well-being
Bof JRE-AM’s Officers and Employees
Our human capital such as officers or
employees is one of the most important
operation source for us to realize sustainable growth. Based on this idea, wewill practice the corporate management
which enables co-enrichment of thecompany and employees through initiatives to raise physical and mental healthof employees, and to promote work-lifebalance and improve job satisfaction.
 asic Concepts of Health and WellB
being of Tenant Workers
We strive to enhance value and competitiveness of JRE’s assets through providing
office buildings promoting health and wellbeing for tenant workers and increasing
their productivity and satisfaction.

Mitsubishi Estate Group Code of Corporate Conduct (excerpt) 
Respecting Human Rights and Employee Diversity
We respect human rights and believe that diversity maximizes value.
1
2

Japan Real Estate Investment CorporationI nitiatives aimed at officers andemployees
We will provide education and training
programs for officers and employees toraise environmental awareness and build
capacity, as well as support a diverse
human workforce and flexible work styles
to meet individual lifestyles.
5I nformation disclosure and obtaining
environmental certifications
We will endeavor to disclose ESG(Environment, Society and Governance)related information to our investors andvarious other stakeholders. Also, we will
work to obtain environmental certifications
and ratings, including the Green Building
certification, on a continuous basis.
7

Shinjuku Front Tower

Human Rights Initiatives

05

4 Enhancement of safety and security
As part of disaster prevention and response
initiatives, we will organize emergency
drills based on public-private partnerships,
and develop business continuity plans.

 ollaboration with externalCstakeholders
We will collaborate with property management companies and other suppliers
to work together to increase tenant satisfaction and build harmonious relationships with local communities.
6

As stated above, we will develop sustainability promotion systems, comply with laws, regulations, and other rules pertaining to ESG, and implement sustainability initiatives, thereby contributing to creating a sustainable society through real estate management business.

Sustainability Committee 

As a member of society, the Mitsubishi Estate Group , to which
JRE-AM belongs, is keenly aware of the importance of respect forhuman rights. To fulfill our responsibility to respect the basic
human rights of all stakeholders, not only those involved in Groupbusinesses, we set up the Mitsubishi Estate Group Human Rights
Policy on April 1, 2018. Respect for human rights is part of the
Mitsubishi Estate Group Guidelines for Conduct, which all
employees are expected to follow on a daily basis. These
Guidelines stress the importance of respect for human rights andsociety in harmony with nature, we will
support efforts aimed at living harmoniously with the natural environment
through planting initiatives conducive to
biodiversity conservation.

diversity, which means that employees show concern for humanrights and the environment in the course of their business activities. The Human Rights Policy is intended to ensure that we, as agood corporation, understand that internationally mandated
human rights are a bare minimum that we must go beyond, that
we reaffirm the importance of supporting, protecting andrespecting human rights and that we work to respect the fundamental human rights of every single person involved in theGroup’s businesses.

 e respect human rights at all times.
WWe reject discrimination and harassment in any form.

 e strive to establish a creative and competitive organization
W
that safeguards and respects the beliefs of the individual asreflected in the diverse communities in which we work and live.
4 We foster an open corporate culture in which all employees areencouraged to speak freely.
3

Mitsubishi Estate Group Human Rights Policy (excerpt)
We uphold and respect international standards related to humanrights. These include the International Bill of Human Rights, whichsets out the fundamental human rights possessed by all the peopleof the world, and the International Labour Organization’s Declaration
on Fundamental Principles and Rights at Work, which contains
requirements concerning fundamental rights in the workplace.
We help ensure that respect for human rights is actively practiced
in all business activities, and that such activities do not infringe on
the human rights of other people. If such activities neverthelessresult in a violation of the human rights of others, efforts shall bemade to minimize the negative impact.
We carry out human rights due diligence in order to minimize any

negative impact caused by human rights violations occurring as aresult of the Group’s business activities. We maintain a frameworkfor human rights due diligence and make improvements to theframework on an ongoing basis or if problems arise in order toimprove its efficacy.
Furthermore, in the event that the activities of a business partner
or any other individual or organization affiliated with the Mitsubishi
Estate Group directly have a negative impact on the human rights ofothers, even if we were not directly involved in fostering such a negative impact, we shall endeavor to make improvements together
with stakeholders to ensure respect for human rights and eliminate
all violations.

Japan Real Estate Investment Corporation

06

Disclosure Policy and Signatory to International Initiatives

Signatory to United Nations Environment Programme
Finance Initiative (UNEP FI)

Disclosure Policy, Signatory to International Initiatives,
Evaluations from External Parties, and Certifications
JRE-AM attaches great importance to ESG-conscious investing in order to continuously improve thevalue of assets under management, and is a signatory or participant in the following international initiatives, and will actively engage in initiatives and disclosure in line with these frameworks.
In addition, several of JRE-AM’s ESG initiatives have been evaluated highly by external organizations in Japan and overseas. Going forward, we will maximize long-term returns by strengthening our­environmental, social, and governance initiatives.

UNEP FI is a broad-based and closely knit partnership between
UNEP and more than 200 banks, insurance, and securities companies around the world to promote sustainable finance. Since it
was established in 1992, it has cooperated with financial institutions, policymakers, and regulatory authorities to promote a shift
to a financial system that integrates economic growth and consideration for ESG issues.
JRE-AM agreed with the basic approach of UNEP FI andbecame a signatory in August 2018. It also participates in the
UNEP FI Property Working Group. As of March 2020, thisworking group consisted of approximately 30 representative realestate institutions in the world and promotes and encourages
Responsible Property Investment (RPI).

Participation in
the United Nations Global Compact (UNGC)

Information Disclosure Policy
JRE strives to disclose ESG-related information to its investors
and other stakeholders.
As ESG garners more support globally, JRE also regards it as
its social responsibility to improve its sustainability and disclose
initiatives in pursuit of that goal, both of which are necessary to
maximize its unitholder value. Accordingly, we will promote ESG
initiatives and the ESG information disclosure while fostering
mutual communication with various stakeholders.
Specifically, we refer to the Global Reporting Initiative
Standards (GRI Standards), an international sustainability
framework for ESG-related reporting, and standard for the realestate industry put forth by the Sustainability AccountingStandards Board (SASB) for the disclosure of a wide range of
ESG information on the JRE ESG website. We hope both thisreport and our ESG website will further deepen understanding of
JRE’s ESG activities.
Reporting scope and period
In principle, the reporting scope shall be JRE’s entire portfolio
and the report will be made every year.
The current reporting period is the fiscal year that started on
April 1, 2020 and ended on March 31, 2021, but the report for theyear does include some information outside this period.

UNGC is a voluntary, global initiative supporting a global framework for sustainable growth through the demonstration of creative, responsible leadership by the respective corporations andorganizations as principled members of society.
First proposed in 1999, as of August 2021 participants currently
includes more than 13,000 organizations and companies basedin 162 countries. It engages in activities based on ten universally
accepted principles in the four areas of human rights, labor,
environment, and anti-corruption.

Mitsubishi Estate Co., Ltd. became asignatory of the UNGC and the
Mitsubishi Estate Group was registeredas a participant in April 2018. Along with
this, JRE-AM has participated in thisinitiative as a member of the Mitsubishi
Estate Group.

International Initiatives
International Initiatives to which JRE-AM is Signatory or Participant
JRE-AM has become a signatory to the following international initiatives and participated in UNGC based on the idea that asset management considering ESG is essential to sustainable asset value growth.

Signatory to PRI

Signatory to UNEP FI

Shinjuku Eastside Square

Participation in UNGC

Signatory to the Principles
for Responsible Investment (PRI)
PRI comprises an international network of investor signatories
and encourages the incorporation of environment, social, andgovernance issues into investment decision-making processes,with the aim to help companies enhance long-term investment
performance and better fulfill their fiduciary duty.

07

Japan Real Estate Investment Corporation

JRE-AM became a signatory in August 2018 in solidarity withthe basic approach of PRI.

Japan Real Estate Investment Corporation

08

Disclosure Policy,

External Evaluation, and Certifications
GRESB Real Estate Ratings

MSCI ESG Ratings

In the 2021 GRESB Real Estate Assessment, JRE received the 5 Stars rating, which is the highest GRESB rating (five-level rating) based onrelative evaluation of overall scores, for the fourth consecutive years. It also received Green Star rating for the sixth consecutive year,
meaning that JRE has demonstrated an excellent ESG management system and performance record.

Evaluations
In 2021, JRE received a rating of A (AAA-CCC tier rating) in the MSCI ESG Ratings
assessment.

What is GRESB?
GRESB is an annual benchmarking assessment to measure ESG (Environmental, Social and Governance) integration of real estatecompanies and funds, as well as the name of organization which runs the assessment. It was founded in 2009 by a group of major
European pension funds who played leading roles in launching Principles for Responsible Investment (PRI).

Assessment Type

Content of the Assessment
Evaluates ESG performance in terms of“management & policy” and“asset portfolio performance”

GRESB Real Estate
Assessment

GRESB Public
Disclosure

Rating
Green Star

Relative assessment basedon the total score(GRESB Rating)

5 Stars

Evaluates the level of ESG disclosure

A

Highest rating
Obtained for the sixth consecutive year

Highest rating
Obtained for the fourth consecutive year

Highest rating

About the MSCI ESG Ratings
MSCI ESG Ratings by MSCI ESG Research LLC comprise a rating system wherecompanies are rated on a seven-tier scale ranging from ‘AAA‘(highest) to‘CCC’(lowest) according to their exposure to industry-specific environmental andsocial, governance (ESG) risks and their ability to manage those ESG risks.
MSCI ESG Ratings are used by over 1,300 investors worldwide and as the foundation of over 1,000 investment indexes, such as The MSCI Japan ESG Select Leaders
Index, which has been selected as an ESG index for passive investment tracking by
the Government Pension Investment Fund (GPIF).

Disclaimer
The use by JRE of any MSCI ESG Research LLC or
its affiliates (“MSCI”) data, and the use of MSCI
logos, trademarks, service marks or index names
herein, do not constitute a sponsorship, endorsement, recommendation, or promotion of JRE by
MSCI. MSCI services and data are the property of
MSCI or its information providers and are provided “as-is” and without warranty. MSCI names
and logos are trademarks or service marks of
MSCI.

Achieved Institutional Shareholder Service (ISS) ESG Corporate Rating“Prime” Status
About the ISS ESG Corporate Rating
JRE achieved ISS ESG Corporate Rating Prime status in March 2020. ISS highly noted
JRE for eco efficiency, climate change strategy, and environmental management. Prime
status companies are regarded as sustainability leaders in their industry.

Obtained for the fourth consecutive year

PRI Assessment Result
 bout the PRI Assessment Result
A
PRI signatories are required to report annually on the status of their ESG integration practices for evaluation. JRE-AM
has received the highest “A+” rating in 2020 as shown at under. This is the highest result among all signatories worldwide.
ModuleScore

Strategy & GovernanceA+

PropertyA+

Efforts to Acquire Environmental Certifications
JRE will continue to acquire various green building certifications, including DBJ Green
Building certifications, and CASBEE certifications.
As of March 2021, 76.2% of our portfolio has been green certified, obtaining one ormore certifications out of DBJ Green Building certification, CASBEE certification, as well
as BELS certification. In addition, the Higashi-Gotanda 1Chome Building became the first
JRE property to acquire a ZEB Ready Certification based on the design and renovation
plan for the building, assuming that the renovation will be carried out in the future.

* The rating system is a 6-rank scale (A+, A, B, C, D and E.)

Participation in the CDP’s Climate Change Program
CDP Score
JRE has received the “B” designation in the 2020 Carbon Disclosure Project (“CDP”) Climate
Change Program.

DISCLOSURE INSIGHT ACTION

About CDP
CDP is an international non-profit organization researching measures taken against global warming by listed companies with thesupport of institutional investors around the world. CDP has gradually come under the spotlight in recent years as a private-sector
effort working to ensure the effectiveness of the Paris Agreement. Since 2003, CDP has been sending out questionnaires to major
companies around the world seeking the disclosure of information with relation to areas such as business risks and opportunities
coming about due to greenhouse gas emissions and climate change. CDP then assesses corporate actions being taken against theissue of climate change based on their responses. In terms of assessments, there are eight grades; A, A-, B, B-, C, C-, D, and D-.
JRE has participated in the CDP Climate Change Program since 2018.

09

Japan Real Estate Investment Corporation

Front Place Nihonbashi

Japan Real Estate Investment Corporation

10

KPIs and Strategies to Reach Targets

JRE established KPIs
in line with SDGs to help
realize a sustainable society.

CO2 Emissions*1
Reduce by

35%

Water Usage *1
Reduce by

20%

Zero Energy
Buildings*2
Own

5~10

Carbon Intensity

60

Waste Recycling Rate90

% or higher

kg-CO2/m2 or lower

KPIs to Reduce CO2 Emissions

KPIs for Water
and Waste Management

JRE has set KPIs to reduce energy andCO2 emissions generated fromour portfolio by 2030 from a 2013 baseyear. We will continue to proactively
address climate change.

ENVIRONMENT
JRE implements measures to improve the environmental performance of its real estate portfolio based on the
Sustainability Policy items “1. Contribution to creating a low-carbon society” and “2. Contribution to creating a
recycling-oriented society.”

11

12

KPIs and Strategies to Reach Targets

13

Environmental Measures

15

Climate Change

21

Green FinanceJapan Real Estate Investment Corporation

JRE supports the “SDGs (Sustainable
Development Goals)” adopted by theUnited Nations and has establishedrelated KPIs for 2030.

*1 Base year: Fiscal 2013 / Carbon intensity basis *2 Includes ZEB Ready and ZEB Oriented buildings

Fiscal 2013 (base year)

Carbon Intensity

Water Usage

92.1kg-CO /m
0.793m /m

2

Fiscal 2030 targets

68.9kg-CO /m
2

2

2

3

Fiscal 20202

60kg-CO /m or lower
2

2Reduce by

25.2%

Reduce by

35%

Reduce by

38.9%

Reduce by20%

Waste Recycling Rate

—

56.6%

90% or higher

ZEB Ownership

—

1 ZEB

5~10 ZEBs

Japan Real Estate Investment Corporation

12

ENVIRONMENT

Environmental Measures
Contributions to the Environment through Real Estate Investment Management
Environment Management Systems (EMS)

Incorporating ESG Criteria for Property Acquisition

 rasping Accurate Data and Executing a PDCA CycleG
JRE measures and gains an understanding of the energy consumption, water use, and waste of each building on a monthly
basis. We outsource data calculation and data analysis to a company specializing in EMS to execute its PDCA cycle. If there is alarge difference in the aggregated data from the previous monthor year, we investigate the cause by conducting interviews withthe property manager and ensuring accurate data. We also constantly monitor the reduction effects of green refurbishments
such as LED and AC upgrades.
Aggregated data disclosed in “WEB information” on JRE’s website has been given limited assurance in accordance with ISAE
3000 (International Standard on Assurance Engagements 3000) by
a third-party organization (Ernst & Young ShinNihon LLC).

JRE has newly added the following factors to the assessment
criteria (such as location and building specifications) it applies
when acquiring properties.

 onthly Data Entry, Analysis, and Feedback
M
JRE-AM recognizes environmental data aggregated via EMS as
an important indicator, as well as performance data. Therefore,
the data and analysis of the various indicators are reported to
the Chief Sustainability Officer (President & CEO) on a monthly
basis. This is not a matter of simply circulating documents.
Instead, these indicators are reported and analyzed at meetings
and are an important part of decision-making for future asset
management and CAPEX investments.

Establish
reduction
targets

Asset-level initiatives
Electricity

CO2

Water

Waste

Monitoring by AM company

Monthly
monitoring

Execute plans
and makemeasurements

Analyze andformulateplans

Environmental Contribution in Collaboration with
Tenants
Aiming to make environmental contributions by collaborating withtenants, JRE has been gradually introducing Green Leases interms of both operational improvement and efficiency retrofits.
Moreover, JRE is conducting diverse sustainability initiatives
together with our tenants.

Japan Real Estate Investment Corporation

JRE accelerates the use of electricity made from renewable energy recognized by RE100* (“renewable electricity”). Doing so reduces abuilding’s CO2 emissions to zero, including the CO2 emissions of tenant areas. JRE plans to introduce renewable electricity into more than
80% of its properties of 100% operational control by the end of April 2022 and complete all the switch by the end of September 2022.
Thanks to this, JRE will accomplish its fiscal 2030 CO2 emissions reduction target ahead of schedule. Also, the reduction of CO2 emissions
will further accelerate if JRE proactively introduces renewable electricity into the buildings other than 100% operational control.
* RE100 is the global corporate renewable energy initiative bringing together hundreds of large and ambitious businesses committed to 100% renewable electricity.

ESG criteria to be incorporated
Green building certifications
Environmental performance including CO2 emissions

JRE’s Switch to Renewable Electricity(Outline)CO2
reduction

In establishing the abovementioned framework, JRE has
obtained a second-party opinion from CSR Design Green
Investment Advisory, Co., Ltd.
Retailelectricity
companies

Process of Real Estate Investment
Valuation

ESG Criteria

Spec

Renewable
electricity

CO2
reduction

Renewable electricity supply

WIN-WIN
Tenant A

Electricity
supply contract
JRE

LocationContributing to the reduction of CO2
emissions and the realization ofa decarbonized society
hand in hand with tenant companies

Tenant B

Tenant C

GB
Certifcation
GHG Intensity

ESG

Valuation

Age

Acquisition

EnergyEfficiency
Appraisal

OthersScale

Introduction of Renewable Energy
JRE promotes the reduction of CO2 through the utilization ofrenewable energy in solar generation at some of the office buildings owned by JRE such as Otemachi Park Building andShinjuku Front Tower.

Environmental Risk Assessment at the Time of
Acquisition

PDCA Cycle for Environmental Data

13

Accelerated Use of Electricity Made from Renewable Energy (RE100 Compatible)

When acquiring real estate properties, JRE conducts on-site
inspections and also investigates on soil contamination and toxic
substances such as asbestos and PCBs by obtaining real estateappraisal reports and engineering reports in addition to receiving related disclosure materials from the sellers.

Consideration to Urban Greenery and Biodiversity
JRE’s Sustainability Policy stipulates that it will support efforts
aimed at living harmoniously with the natural environment andcontribute to creating a society in harmony with nature. JRE
gives consideration to biodiversity in the operation of buildings
by endeavoring to conserve and improve the ecosystem on property premises and adjacenturban green areas and natural areas.

Otemachi Park Building

Green Procurement Policy
JRE-AM has set the Green Procurement Policy as one of thepolicies to implement the specific items put forth in the
Sustainability Policy. The Green Procurement Policy provides
guidelines on the selection of products to be procured by
JRE-AM as well as on the selection and evaluation of suppliers.
JRE-AM promotes sustainability measures across its supply
chain based on this policy.

PM Company Selection Criteria and Evaluation
Measures
JRE has established selection criteria for property management(PM) companies to which it commissions the managementof properties, and evaluates all of the PM companies once a
year, in principle. In addition to the companies’ building
management and maintenance abilities, JRE evaluates the PMcompanies based on their environmental friendliness in terms ofoperations, occupational health and safety measures for theiremployees, and understanding of and cooperation with the
Sustainability Policy set by JRE-AM. Moreover, JRE requests the
PM companies to make proposals to help JRE reduce environmental impacts, such as energy efficiency measures in buildings. In this way, JRE makes environmental improvement efforts
in cooperation with the PM companies.

Other Measures
JRE makes contracts with professional firms to conduct energy
assessment of a selection of our properties, and utilizes theresults to understand the current level of their energy performance and to formulate improvement plans for the future.

Japan Real Estate Investment Corporation

14

ENVIRONMENT

Scenario Analysis
Using scenarios published by international organizations and other entities that predict the impact of global warming and climate change
and of the changes that may occur in the business environment as a result of long-term policy trends in relation to climate change, JRE
has examined how its businesses could be affected.

Climate Change

Global Outlook under the 4°C Scenario*

Climate Change Initiatives
JRE believes that climate change is more than an environmental
issue. We also believe that it bears a major influence on social
and industrial structures, and therefore greatly impacts ourbusiness activities. To maintain sustainable and stable earnings
over the long term and overcome the wave of oncoming changes

Global Outlook under the 1.5°C Scenario

Climate and Weather

Climate and Weather

Further intensification of typhoons and floods / Increased severity ofchronic rises in temperatures and sea levels

Increase in typhoons and floods / Advancement to a certain degreeof chronic climate change

stemming from climate change, it is important that we evaluate
the risks and opportunities that climate change presents,
and reflect them in our operational policies and asset management accordingly.

Investors

Investors

Assessment of status ofcompliance with laws andregulations
Rise in importance of environmental certifications

Increase in the importanceof transition risk assessments and environmental
certification in making
investment decisions

Financial Institutions

Financial Institutions
Invigoration of green finance
Assessment of status of legal
and regulatory compliance inmaking investment decisions
Rise in importance of environmental certifications

Assessment of physicalrisks in making investment
decisionsGlobal Trends
Global Trends in Climate Action

Supporting the TCFD Recommendations

The Paris Agreement is an international framework adopted in2015 and signed by 197 countries, with the goal of limiting global
warming to well below 2°C above pre-industrial levels and pursuing efforts to limit it even further to 1.5°C. It also aims toachieve net zero greenhouse gas (GHG) emissions by the second
half of this century. To achieve these goals, efforts are being
made and regulations are being strengthened in many countries
and regions and in every industry, aimed at reducing emissions.
Furthermore, the possibility of even stronger regulations for
reducing emissions has been also discussed.
The fact of the matter is that climate change (global warming)
was already underway in the latter half of the 20th century,
according to the Intergovernmental Panel on Climate Change(IPCC)*. This is starting to become apparent through a growing
frequency of heatwaves as well as heavy rain and other natural
disasters. We are expected to respond to these and other physical risks of climate change as a major issue, as they may bear astrong influence on business.

The Task Force on Climate-related Financial Disclosures (TCFD),
launched in 2016, has discussed and made recommendations on
how financial institutions and companies should disclose information pertaining to the impact that the above effects of climatechange will have on business. At present time, the TCFD recommendations have received worldwide support from a great numberof financial institutions, companies, investors, and governments.
JRE-AM became a supporter of the TCFD in June 2019. As asupporter, JRE-AM is now evaluating the risks and opportunities
that climate change presents to all of our business and promoting disclosure of climate-related information to our stakeholders.

Government
Government

JRE

Strengthening of laws andregulations regarding
disaster prevention andreduction

JRE

Compliance withdisaster-prevention related
laws and regulations

Expansion in scope of legal
and regulatory compliance

Portfolio
Expansion in scope of
response to physical risks(adaptation measures)

Tenants
Increase in demand for heatstroke countermeasures, BCP,
and other measures
Greater consideration for
health, well-being, andsafetyTightening of laws andregulations on carbon emissions and energy consumption
Strengthening of ZEB
regulations and expansion ofsubsidies for acquiring ZEB
expansion in policies prioritizing renewable energy andenergy efficiency

Property and Building
Management Companies
Procurement of emergency
supplies, implementation ofevacuation drills, formulation of BCP

Portfolio
Monitoring of environmental performance
Implementation of medium- tolong-term refurbishment plans
Property and Building
Management Companies
Increase in legal
compliance

Tenants
Growth in preference forenvironmental performance
Increase in RE100 member
companies* The IPCC Special Report on Global Warming of 1.5°C, published by the IPCC
in 2018.

Governance Related to Climate Change
JRE-AM convenes its Sustainability Committee, chaired by the
President & CEO of JRE-AM. The committee determines risks
and opportunities related to climate change and investigates anddecides on strategies to address these risks and opportunities.

The 4°C scenario assumes that policy responses to climate change
will remain largely the same as current policies, with average global
temperatures rising 4°C by the end of the 21st century. The impact ofclimate change would result in weather and climate events becoming
more extreme and intense, including sea level rise (approximately 0.4
to 0.8 m) and an increase in the frequency and intensity of very heavy
rain and typhoons, leading to an increase in physical risks. Conversely,as this scenario assumes that laws and regulations would remain
largely unchanged, transition risks would be minimal.
(Reference Scenario: Intergovernmental Panel on Climate Change RCP8.5)

The 1.5°C scenario assumes that efforts to promote a low-carbon society with the aim of achieving net zero greenhouse gas (GHG) emissions by around 2050 will restrict the rise in temperature to around
1.5°C. Under this scenario, the implementation of stringent laws andregulations and tax systems in conjunction with the promotion of policies to achieve a low-carbon society and the development of low-carbon technologies would result in a decrease in GHG emissions,
thereby restricting the rise in temperature. Accordingly, althoughphysical risks would be minimized, transition risks would increase as
this scenario assumes the implementation of major changes in thesocial structure aimed at achieving decarbonization.
(Reference Scenario: International Energy Agency NZE2050)

Impactrisks  

Impact opportunities* R eference material: Prediction for Japan by the Japan Meteorological Agency based on Representative Concentration Pathway (RCP) 8.5 (as at the end of the 21st century)
Climate change
Annual average temperature

15

Japan Real Estate Investment Corporation

Compared with the end of the 20th century

Climate change

Compared with the end of the 20th century

Rise of approx. 4.5°C

Sea-surface temperature

Rise of approx. 3.58°C

Typhoons

Increase in intensity

Occurrence of very heavy rain (200 mm per day) (days per year)

Approx. 2.3 times

Occurrence of violent showers (50 mm per hour) (times per year)

Approx. 2.3 times

Sea level

Rise of approx. 0.71 m

Source: Climate Change in Japan 2020 - Report on Observations and Projections Assessment on Atmosphere, Land, andOceans, Ministry of Education, Culture, sports, Science and technology (MEXT) and the Japan Meteorological
Agency (JMA)

Japan Real Estate Investment Corporation

16

ENVIRONMENT

Examination of Financial Impact Based on Scenario Analysis

Financial Impact

JRE examined the magnitude of the financial impact of risks and opportunities that it identified for the aforementioned 4°C and 1.5°C scenarios. We have examined the impact of each scenario for 2030 (medium-term prospects) and 2050 (long-term prospects). The results are
outlined in the following table.

Risk and Opportunity
Factors

Category

Changes in Cash Flow

4°C Scenario
1.5°C Scenario
Classification Medium- Long-Term Medium- Long-Term
Term 2030 2050 Term 2030 2050

Increase in the cost of refurbishments
and expense of up-front countermeasures and property insurance premiums
stemming from inundation of JREowned properties

risks

Minor

Moderate

Minor

Minor

Loss of sales opportunities due toinundation of JRE-owned properties

risks

Minor

Moderate

Minor

Minor

Decrease in asset value of properties
with a high risk of inundation

risks

Minor

Minor

Minor

Minor

Increase in market competitiveness by
maintaining a highly resilient portfolio

opportunities

Minor

Moderate

Minor

Minor

Advancement of risein annual averagetemperatures

Rise in costs resulting from a growthin demand for air-conditioning

risks

Minor

Moderate

Minor

Minor

⋅Install highly efficient air-conditioning (implement as
an energy-saving measure)

Advancement of risein sea water levels

Increase in costs incurred for measures
to tackle rising sea levels

risks

Minor

Minor

Minor

Minor

⋅Implement hard (e.g., installation of water-stopping
plates) and soft (e.g., evacuation drills and formulationof BCP) disaster measures

Note: Approach to financial impact (minor/moderate/major): Quantitative and qualitative analysis carried out to assess the relative impact.
Financial Impact
Category

Risk and Opportunity
Factors

Introduction of CO2
emission regulations
Adoption of carbon
taxes

Policy and
LegalTransition
Risks and
Opportunities

4°C Scenario
Changes in Cash Flow

Increase in cost of complying with laws
and regulations (e.g., carbon taxes,
carbon credit purchases)

Rise in expense of acquiring environmental certification

Introduction of carbon
emission-related
regulations
Introduction of healthand well-being
Enhancement of property competitiveness thanks to complying with laws
regulations
and regulations
Strengthening ofenergy regulations

Spread of low-carbon
technology(Improvement of enviTechnology
ronmental performance of existing
properties)

Increase in costs incurred in procuring
ZEB properties and in conducting
research on converting properties to
ZEBs and installing new technology

Rise in retrofit costs associated withintroducing energy efficient equipment
and renewable energy and promoting
the carbon neutralization of real estate

Rise in asset value
resulting from
improved green
performance

Rise in investment appetite of institutional investors thanks to attainmentof environmental certifications andacquisition of high ratings from global
ratings institutions

Increase in fund procurement costs
Market and Growth in importance stemming from a high climate riskoftransition
risks
Reputationassessment

17

risks

risks

opportunities

risks

risks

Minor

Minor

Minor

Minor

Minor

Minor

Minor

Minor

Moderate

Minor

Moderate

Major

Acute
⋅Set CO2 reduction target (35% reduction compared with
FY2013)⋅Reduce energy intensity in a planned manner⋅Proactively conduct resource efficiency-related capital
improvements using internal carbon pricing (in cooperation with external experts)⋅Replace existing properties with those with good environmental performance⋅Manage energy consumption using our proprietary EMS⋅Introduce renewable energy

Minor⋅A cquire environmental certifications and energy-efficiency ratings based on a medium- to long-term GHG
emissions reduction plan

Major

⋅Set CO2 reduction target (35% reduction compared with
FY2013)⋅Reduce energy intensity in a planned manner⋅Proactively conduct resource efficiency-related capital
improvements using internal carbon pricing (in cooperation with external experts)⋅A cquire ZEB properties⋅Convert existing properties to ZEBs in a proactive andplanned manner⋅Manage energy consumption using our proprietary EMS⋅Introduce renewable energy⋅A cquire environmental certifications and energy-efficiency ratings based on a medium- to long-term GHG
emissions reduction plan⋅A cquire ZEB properties

Minor

Moderate Moderate ⋅Convert existing properties to ZEBs in a proactive andMinor⋅Cooperate with external experts⋅Provide support for technical assessments and equipment, such as those for energy efficiency⋅Review lifecycle costs
Moderate⋅Formulate medium- to long-term refurbishment plans
based on achieving net zero emissions⋅Promote a switch to the use of power from renewableenergy sources

planned manner

Minor

Minor

Moderate

opportunities

Minor

Minor

Moderate Moderate ⋅Procure funds through sustainability-linked loans

opportunities

Minor

Minor

Moderate Moderaterisks⋅Issue green bonds

Minor

Minor

Moderate

Minor

Minor

Changes in tenants’environmental performance needs

Decrease in earnings resulting from
JRE properties becoming stranded
assets following a relative decline intheir environmental performance

Minor

Minor

risks

⋅Proactively leverage green finance

Minor

Rise in property value and increase inaverage rents thanks to the acquisitionof environmental certification, such as opportunities
ZEB and DBJ Green Building
Certification

Major⋅Implement planned equipment retrofitting at JRE-ownedbuildings

Minor

Rise in value ofenvironmental
performance

Japan Real Estate Investment Corporation

JRE Initiatives

Classification Medium- Long-Term Medium- Long-Term
Term 2030 2050 Term 2030 2050

Reduction in utility costs thanks to ZEB
opportunities
conversion and green refurbishments

Changes in social
Decrease in fund procurement costs
values regarding envi- through use of green financeronmental performance

1.5°C Scenario⋅Disclose ESG-related initiatives via our ESG website⋅Disclose environmental performance data
⋅Proactively participate in various ESG evaluations (suchas GRESB, CDP, and MSCI)⋅Reduce portfolio energy intensity in a planned manner⋅Proactively conduct resource efficiency-related capital
improvements using internal carbon pricing (in cooperaModeratetion with external experts)⋅Replace existing properties with those with good environmental performance⋅A cquire environmental certifications and energy-efficiency ratings based on a medium- to long-term GHG
emissions reduction plan
⋅Contribute to improving portfolio competitiveness byacquiring properties with good environmental performance through the adoption of ESG evaluation criteria
Moderate Moderate at the time of acquisition
Major

Increase in typhoons,concentrated heavy
rains, floods, andbuilding inundation

Physical Risks
and
Opportunities

Chronic

JRE Initiatives⋅Perform inundation risk assessment in due diligenceprocess⋅Understand inundation risks by checking hazard maps,
including for properties already under JRE-ownership⋅Implement hard (e.g., installation of water-stopping
plates) and soft (e.g., evacuation drills and formulationof BCP) disaster measures

Note: BCP: Business continuity planning ; EMS: Environmental management system

Climate Change-Related Risks, Opportunities and JRE’s Response
Transition Risks Reduction of CO2 emissions:
To respond to the future possibility of even stronger
regulations for reducing emissions, such as obligation to reduce
total emissions or introduction of carbon taxes,
JRE has set a reduction target for its entire portfolio of 35%
compared to 2013 to be achieved by 2030.

Reduction of carbon intensity(CO2 emissions per unit floor area):
Rising awareness on climate change risks has been appearing in
not only the real estate industry but in every industry around theworld. Also, an increasing number of office building tenants havestarted to make efforts to address climate change as an important issue. JRE believes that properties with high CO2 emissions
will decrease in value while properties with high energy efficiency will increase in value as this market trend continues.
By 2030, JRE aims to reduce the average carbon intensity of
its entire portfolio to 60 kg-CO2/m2 as well as own 5–10 zeroenergy buildings (ZEBs).
We believe improving energy efficiency of each asset will prevent it from becoming a “stranded asset,” and increase its value
in the market. We will pursue higher profits by
utilizing ZEB properties and other highly competitive,
high-performance green buildings to appeal to our tenants.

Physical Risks “Hard” Measures at Buildings to Address Natural
Disasters (Typhoons, Heavy Rain)
To address flooding caused by typhoons and heavy rain, which
affect Japan due to geographical factors, we have taken “hard”
measures at buildings that include installing water-stopping
plates in building apertures,
preparing sandbags andwater-stopping sheets, andhave installed waterproofed doors for underground rooms with
important equipment.

“Soft” Measures for When Disasters Occur
Disaster countermeasures and training appropriate to each typeof disaster are implemented by a top-class PM company in Japan.
In addition, appropriate “soft” measures have been taken, which
include holding disaster prevention council meetings with tenants,
distributing BCP manuals, and introducing a system between
JRE-AM and PMs to assess the damage in the event of disaster.

Japan Real Estate Investment Corporation

18

ENVIRONMENT

Resilience of JRE Portfolio According to Past Cases ofDisasters and Data
Japan is a country that experiences numerous natural disasters.
Over the past 10 years, Japan has been struck by several catastrophic disasters, such as the 2011 Great East Japan Earthquake(earthquake and tsunami), the Heavy Rain Event of July 2018(heavy rain, inundation), the 2018 Hokkaido East Iburi Earthquake(earthquake, landslides, wide-ranging power outages), andTyphoon Faxai (strong winds, house damage, long-term power
outages) and Typhoon Hagibis (heavy rain, river collapse, inundation) in 2019.

1

 ypes of Disasters that Have Caused
T
Damage in the Past (number of cases)*2

JRE’s portfolio has not been exempt from these disasters andseveral properties have been affected by these disasters in someway, but thanks to the resilience of the buildings and the strong
response from PM companies, damage to these buildings has
been limited. 1
Even when a disaster occurs, buildings are restored within
one week in almost all cases, with repairs costs under JPY 10.0
million. 2 3
In addition, there is only example of a building becoming inoperable (closed, etc.) due to a disaster.

 ime Required for Post-Disaster
T
Building Repairs (%)

As of March 2020
Extreme weather(hot and cold waves, etc.)

1
23

Earthquakes
Inundation and riverflooding from heavy rain

8

Typhoons and tornadoes

3

1.4
One week to one month
One day to one weekNo problems
with facility
Not applicable

Repair Costs (%)

J PY 10 million to
JPY 100 million or lower
Under JPY 10 million
Not applicable

9.7

2.8

The reduction through renovations and ZEB properties above is
supported by the engineering study conducted by Mitsubishi Jisho
Sekkei Inc. We conducted theoretical scenario analysis supportedby the extensive track record of renovations of Mitsubishi Jisho
Sekkei Inc., as well as studies based on the on-site inspections.
The study results are as follows (comparison of the same property):

FY2013

Case I

Case II

Case III

Emissions(t-CO2/year)

105,386

89,314

84,59082,620Compared to2013—–15.3%–19.7%–21.6%

Emissions perunit floor area
(kg-CO2/m2)

92

67.6

64

62.6

Compared to2013—–26.5%–30.4%–32.0%

Extra cost—

No additional
JPY 1.1 billion JPY 3.2 billion
cost

The Mitsubishi Jisho Sekkei CO2 Reduction Study
Report can be viewed here
https://jre-esg.com/en/pdf/mjs-report_20200509.pdf

41.7

54.2

47.2

* There are 32 properties that have never been
affected by disasters.

43.1

JRE’s Approaches toward Climate Change Opportunities and JRE’s KPIWhile climate change presents business risks, it also provides opportunities for socioeconomic reform and new value
creation. JRE is driving the below strategies to increase value and to seize REIT growth opportunities in terms ofinternal growth, ­external growth, and financial strategy.
I nternal Growth Opportunities
Effective CAPEX (capital expenditure) control/internalcarbon pricing
1. Effective CAPEX Control
	JRE-AM has a dedicated engineering team (Lifecycle Design
Office), which is engaged in efficiently controlling CAPEX andrefurbishment works of over 70 properties. Furthermore, we
collaborate with the engineering team of Mitsubishi Jisho Sekkei
Inc., which is one of the leading architectural firms in Japan,
to conduct technical assessments of our properties, review
lifecycle costs of the existing properties, and control costs.

renovation work. However, JRE has found that retrofitting
existing buildings will also reduce GHG emissions without
significant additional costs.
3. Pathway for CO2 Emissions Reduction by 2030
CO2 Emissions Reduction Pathway	JRE aims for 35% reduction of CO2 emissions by 2030
(carbon intensity basis). The breakdown of the reduction
is shown in the bar chart below. We expect 25% reduction
mainly from renovation works of existing buildings and ZEBs.

Based on the results, JRE will work on the way between Case
II and Case III. When carrying out renovation work on individual
property, not only will we simply refurbish aging facilities andwork on energy efficiency but we will also strive to further
improve profitability by increasing the total value of our property,
while considering the needs of tenants and customers.

19Japan Real Estate Investment Corporation2013
Base year

While improving the energy efficiency of individual buildings serves
as an advance response to the transition risk of reducing GHG
emissions, it also serves as an opportunity to improve profitability
by increasing net operating income (NOI) via savings of utility costs
and raising appeal for environmentally conscious tenants.
JRE is reducing utility costs by upgrading to LED lighting.
Furthermore, we are moving forward with asset-level green
refurbishment projects. These projects receive a green premium
after conferring with tenants comprising increased rent and payment into a cooperative green fund, resulting in lower emissions
and higher profitability.

Future ZEB Achievements in JRE’s Portfolio

2030
Target year
25% or more
Reduction from Renovation, ZEB(AC upgrade, LED, etc.)

100%

65%
or
below

10~15%
Reduction from Grid decarbonisation,
Renewable energy, New acquisition &disposition. Operation at site, etc.
* Intensity base (kg-CO2/m2)

ZEBs consume
50%
or less energy

Higashi-Gotanda 1Chome Building(Shinagawa Ward, Tokyo)

External Growth Opportunities
With the cooperation of JRE-AM’s sponsor, Mitsubishi Estate Co.,
Ltd, we continue to build a portfolio that balances profitability
with adaptability to a decarbonized society by leveraging property
replacements and mutual trading to replace older properties with
newly constructed buildings with high energy efficiency.
Example of Property Replacement with Sponsor:

Asset-level Renovation Projects andValue-add Approach

Please refer to page 21 for more details.

2. Internal Carbon Pricing
	JRE develops a medium-term construction budget every year.
As for green refurbishments (air conditioning and LED
upgrades, toilet & washroom refurbishment for common
areas, etc.), we calculate how much we can have the energy
and water reduction effects from these works. The impacts wecalculate are converted into t-CO2 equivalent, which helps us
know how much CO2 saved of the entire portfolio and how
much it costs to reduce 1t-CO2.
	  Generally, introduction of renewable energy has been considered cost effective to reduce GHG emissions rather thanPrevious building
energy consumption
100%

The theoretical scenario analysis supported by the Mitsubishi
Jisho Sekkei Inc.

WEB
25

Source: The Ministry of the Environment’s
ZEB Portal

Reduction of
50% or morethrough energy
efficiency

ZEB Ready

JRE aims to own 5–10 ZEBs by 2030 (including ZEB Ready and ZEB
Oriented buildings). In collaboration with Mitsubishi Jisho Sekkei
Inc., we have started to verify the future possibility to make theexisting properties to ZEBs through renovations. In March 2021, we
acquired ZEB Ready Certification for the Higashi-Gotanda 1Chome
Building. The ZEB Ready Certification—JRE’s first—is based on thedesign and renovation plan for the building, assuming that the renovation will be carried out in the future. JRE will continue to promote its ZEB initiatives in order to achieve its KPIs.

Disposed

Shibuya Cross Tower(building section)

Acquired

CO2 emissions

Water usage–89.2%–83.4%

Front Place Nihonbashi
Actual yield after depreciation
2.2%

3.1%

Financial Strategy Opportunities
As the financial impact of climate change comes increasingly tolight, it is likely that financial institutions and investors will place
more focus on green financing. In order to obtain advantageous
funding opportunities as a green investment and lending target,
JRE is actively utilizing green finance as follows.
· Procurement of funds through sustainability-linked loans· Issuance of green bonds
To ensure that our green commitment can be objectively verified, we are making use of DBJ Green Building certification,
BELS certification, and other certifications, establishing a systemfor evaluating and measuring positive impacts on the environment and society, and also actively reporting to external parties.
Please refer to page 21 for more details.

Japan Real Estate Investment Corporation

20

ENVIRONMENTGreen Finance
Sustainability-Linked Loans
JRE announced to borrow funds, as described below, which will
be procured through sustainability-linked loans (the “SLLs”), thefirst such arrangement in the J-REIT industry in January 2021.
Sustainability-linked loans are loan instruments that aim to facilitate and support environmentally and socially sustainable economic activity and growth. In this loan scheme, the borrower setssustainability performance targets (“SPTs”) based on its business
management strategy, and the lender incentivizes the borrower’s
achievement of those objectives by aligning loan terms to the borrower’s performance against the relevant predetermined SPTs.
In the SLLs, focus is placed on climate change risks, especiallyreduction of CO2 emissions. Among the JRE’s environmental KPIs
for fiscal 2030, the following targets have been set as the SPTs.
∙ Reduce CO2 emissions by 35%(Base year: Fiscal 2013 / Carbon intensity basis)∙ Own five ZEBs

Second-party Opinion
Moreover, the SLLs are designed in such a way that, based on
the above SPTs, achievement confirmation shall be made several
times and, if the predetermined levels are achieved upon eachconfirmation, the reduction in the interest rate will be offered.
Overview of the Borrowings
Loan 1
LenderLoan amount
Borrowing datePrincipal
repayment date

Loan 2The Norinchukin Bank
JPY 5,000 million

JPY 5,000 million

January 29, 2021
July 31, 2031

January 30, 2032

In concluding the agreement for the SLLs, JRE has obtained a second-party opinion from Japan Credit Rating Agency, Ltd. (JCR) withregard to conformity with the SLLP and the rationality of the established SPTs.

Model Cases in the Model Creation Projects by the Ministry of the Environment
The SLLs have been selected to the“Model Cases in the Model
Creation Projects on Sustainability-Linked Loans 2020” by the
Ministry of the Environment of Japan, cited to serve as a modelin terms of environmental awareness and represent a pioneering fund procurement method.

Furthermore, the framework of the SLLs selected as themodel case has been confirmed to conform to the Guidelines by
Ministry of the Environment and its contractors (Japan Credit
Rating Agency, Ltd. and E & E Solutions Inc.).

Green Bonds
JRE issues Green Bonds in order to further promote our sustainability initiatives. Going forward, we will promote energy conservation,
improve customer satisfaction, and encourage acquiring green building certifications through various measures such as refurbishment
work and other ESG investments that give consideration to the environment, and achieve Positive Impact* by doing so.
* “Positive Impact” is defined as “that which produces a positive impact on society or the environment and simultaneously ensures the market-level return”. It is advocated by the United Nations Environment Programme Finance Initiative (UNEP FI).

Overview of the Refurbishment

Achieving Positive Impact

The refurbishment has been planned based on the concept of
Positive Impact advocated by the United Nations Environment
Programme Finance Initiative (UNEP FI).

The impacts derived from the refurbishment were greater thaninitially expected. The results are as follows.

Energy *1

Adopted highly efficient air-conditioning units and LED
lights to reduce environmental load

TOPICS

Enhanced convenience and security by replacing tenant
doors and adopting card access security systems

Enhanced the property’s presence by innovatinginternal fittings of common areas to renew impression

Refurbishment work of Shiba 2Chome Daimon Building has been planned basedon the concept of Positive Impact advocated by the United Nations Environment
Programme Finance Initiative (UNEP FI). Among the eligibility criteria for eligible
green projects, this project meets, “refurbishments with more than a 10% reduction in CO2 emissions or energy consumption” and “3 Stars under the DBJ Green
Building certification.” Additionally, as for DBJ Green Building certification, ourefforts to contribute toward disaster prevention and BCP were highly evaluated,
as were our efforts to install highly efficient air conditioning and LED lighting
inside the building.

CO2 *1
Reduced

44.3%

Reduced

49.5%

Average rent
per areaincreased by

32.8%

17.5%

Tenant Satisfaction Level*3
Increased to80%*1 Comparison of annual results for 2020 and 2017
*2 Comparison between 31 Mar. 2021 (unofficially confirmed basis) and 31
Mar. 2018 (actual results))*3 In relation to offices, elevator hall, and restroom facilities after refurbishment

Overview of Refurbishments and Property
Project Name

Shiba 2Chome Daimon Building Refurbishment Project

Project System

Design supervision: Mitsubishi Jisho Sekkei Inc.

Elevator hall after renovation Rest room after renovation

Japan Real Estate Investment Corporation

CO2

Switched to individually controlled air-conditioning
and renovated rest rooms, etc., caring for tenant
employees’ health and comfort

Refurbishments of Shiba 2Chome Daimon Building

21

ReducedWater *1

PM company: okio Marine &T
Nichido Facilities, Inc.

Design andconstruction:

 BAYASHI CORPORATION andO
othersConstruction period: April 2018–2021 (completion)

Property Overview
Name of property:

Shiba 2Chome Daimon Building

Location:

2-3-3 Shiba, Minato-ku, Tokyo

Area:

Land: 2,820m2
Building: 16,235m2

Structure:

Steel-framed reinforced concrete structure, 2 floors below
ground, 8 floors above ground

Time of construction: March 1984
Type of ownership:

Land and building

Time of acquisition:

September 2001

IMPACT

JRE-AM supports activities aimed at
Positive Impact, which is advocated by theUnited Nations Environment Programme–
Finance Initiative (UNEP FI).

Japan Real Estate Investment Corporation

22

SOCIETY

Relationship Between JRE’s Real Estate Investments and Stakeholders
JRE makes investments based on its ESG Policy and conducts office building
management and operations in order to generate stable and sustainable profits.
We are creating a system to improve property value and generate returns over the
medium-to-long term by both increasing stakeholder engagement and promoting
environmental initiatives.
Investment andmanagement

Sustainability Policy
Please refer to page 05-06 for more details.

1. Contribution to creating a low-carbon society
2. Contribution to creating a recycling-­oriented society
3. Contribution to creating a society in harmony with nature
4. Enhancement of safety and security
5. Initiatives aimed at officers andemployees
6. Collaboration with external stakeholders
7. Information disclosure and obtaining
environmental certifications

Unitholders

JRE
Japan Real Estate
Investment Corporation

JRE-AM’s Responsibility

Contributing
towardincreasing thevalue of theentire portfolio

ESG disclosure,improving
evaluations fromexternal parties

JRE-AM promotes efforts to acquire anddevelop professional human resources
capable of conducting asset management and to improve the health and wellbeing of its employees, with the goal ofbeing an asset management company
with the trust of its stakeholders

Office Building
Investments

Employees

Promotion of
ESG-related
initiatives

Please refer topage 27-29 formore details.

PM Companies

Employees

SOCIETY

Based on its ESG Basic Policy, JRE-AM strives to improve the value of properties by promoting investment management of office buildings with consideration for the health and well-being of tenant workers. Similarly, JRE-AM
practices corporate management that enriches both the Company and employees through efforts to improve thephysical and mental health of officers and employees.
24	Relationship Between JRE’s Real
Estate Investments and Stakeholders
25

23

Stakeholder Engagement
25 Tenants and Partners

Japan Real Estate Investment Corporation

30

26 Local Communities
27	Employees (Human Capital Development)
28 Well-being
29 Creating Fair Work Environments
Non-Financial Data Highlights

Stakeholders
Tenants

Local
Communities

External Evaluation andCertifications
Please refer to page 07-10 for more details.

• GRESB• ZEB certification

Contribution to theenvironment and society• DBJ Green Building certifications

Local Communities

Please refer topage 26 formore details.

Working with PM companies, we
promote mutual communication
with local governments,
residents, and facility users topromote develop­ment alongside
the local community.

PM Companies

Please refer topage 25 formore details.

We are working with PMcompanies to improve the asset
value of each property, withconsideration given to reducing
the environmental impact ofbuilding operations.

Tenants

Please refer topage 25 formore details.

We are making efforts toincrease tenant satisfaction andare committed to building
long-term trust relationships
between owner and tenant.

Japan Real Estate Investment Corporation

24

SOCIETY

Stakeholder Engagement
Tenants and Partners

Local Communities

Sustainability Program for Tenants
JRE is implementing various initiatives to increase the satisfaction and enhance the sustainability of tenants in each building.
Sustainability Guide to Promote Owner and Tenant Collaboration
JRE creates and distributes the Sustainability Guide as part ofits efforts to promote collaboration with tenants. The
Sustainability Guide introduces activities that we can do in theoffice, mainly from the viewpoints of the “environment” and “tenant well-being.”
SUSTAINABILITY
GUIDE

Sustainability Guide VOL.1
Theme Work Style Reform
Sustainability Guide VOL.2
Theme 1 	Offices in the“New Normal” Era
Theme 2 Waste Recycling

66.7%

Percentage of Buildings Receiving
Environmental Data Feedback

72 buildings total

40.3%

Percentage of Buildings
Conducting Survey on Tenant
Satisfaction

72 buildings total

26.4%

Percentage of Buildings Receiving
Online Tenant Services

72 buildings total

58.3%

MITSUBISHI ESTATE CO., LTD.

Japan Real Estate Investment Corporation

Feedback on Sustainability to PMs
Society

Tenants/
Customers

Co-creation
EconomyBuilding
OwnersEnvironment

Our Thoughts
In 2020, the COVID-19 pandemic completelychanged the way we live.

The pandemic has prompted us to evolve into

a “non-contact” society where contact is avoided
to prevent infection from airborne droplets.

This transformation has resulted in a steep increasein the use of delivery and take-out services,which in turn has led to more plastic bottle andthe pandemic has had a significant impact
on the problem of waste.

What can we do to help create a sustainable society?

This Sustainability Guide mainly focuses on steps that,
as office workers, all of us can take to enhanceenvironmental and employee friendliness.
In partnership with our tenants,

we will co-create a sustainable society.

2

Survey on Tenant Satisfaction
We carry out satisfaction surveys to achieve a high level ofcustomer satisfaction and realize sustainable buildings.
Example of tenant satisfaction survey
In a bid to increase the asset value, JRE conducted the renovation work for common areas in Shiba 2Chome Daimon Building,including switching from central to individual air conditioning
systems and upgrading them tomore energy-saving ones, converting
to LED lights in the building, andinstalling card access security systems, which led to increased satisfaction of its tenants in a survey on
how they are satisfied with the building and its management.

Feedback of Environmental Data /Online Tenant Services on the Internet
We provide feedback to tenants including energy, water usage,
and waste-related data. In addition, we provide online feedback
and services using our proprietary system.

Japan Real Estate Investment Corporation

72 buildings total(As of March 31, 2021)* The above percentages were calculated based on the number of buildings

VOL. 2lunch box waste in homes and offices. Consequently,

25

Percentage of Buildings with
Green Leases

JRE conducts surveys for PMs for all properties in the portfolio
based on the GRESB-related questions, a global real estate sustainability certification. Based on the survey results, we analyze
sustainability efforts at each asset level.
As for the survey results and each property’s sustainability
efforts, we provide PM companies with opportunities toprovide feedback.
We believe that property managers who are connected withtenants and visitors to each building will improve the level ofsustainability of our entire portfolio by raising their sustainability-related knowledge and awareness.

JRE has been participating in a range of activities to contribute to local communities and local society. We also foster
mutual communication with various stakeholders, including local authorities, local residents, and visitors to our properties, through such activities.
Contribution to Community Development
JRE addresses issues related to community development, including urban redevelopment and revitalization as part of investing in andoperating office buildings located in major cities throughout Japan. JRE works to improve the long-term value of its portfolio by contributing to the sustainable development of cities through cooperation with local stakeholders, including local governments, regional councils,
tenants, and our sponsor that is a developer.

Local Contribution in the Event of a DisasterSupport for Local Events, Local GroupFor Akasaka Park Building and others, we have established a system to host stranded commuters in the event of a disaster, and for
Otemachi Financial City we have concluded an agreement with
Chiyoda ward to host stranded commuters in such an event. In
addition, we have installed a well on the premises of Kanazawa
Park Building and a regional warehouse on the premises ofHarumi Front for disaster control. We also participate in disaster
control drills held in Mitsubishi UFJ Trust and Banking Building
and other buildings. Through these activities, we strive to contribute to the community by offering places where they can turn to in
the event of disaster, thereby contributing to local communities.

Activities, and Artistic and Cultural Activities. For Shiodome
Building, we support the local summer festival by providing avenue and supplying human resources while holding local music
events in the open spaces and common areas of Higashi
Nibancho Square and Tokyo Opera City Building on a regularbasis. Furthermore, we support a range of artistic and culturalactivities conducted in Tokyo Opera City Building, which comprises multiple cultural facilities. In these ways and others, JRE
has committed to promoting regional revitalization as well as
artistic and cultural activities by supporting a range of events.

ESG Seminars for Stakeholders
JRE offers ESG seminars for our business partners, master lessees, and property managers, among others, for the purpose ofraising stakeholder awareness. We invite ESG experts from outside the Company to cover global ESG trends and discuss specialized fields such as GRESB and ZEB.
We believe that raising sustainability awareness not only
within JRE, but among all our stakeholders, will benefit
sustainability efforts at each asset level.

TOPICS

Social Initiatives
https://jre-esg.com/en/society/society.html

Introducing town development to increase sustainability

Urban redevelopment project in cooperation with
Mitsubishi Estate Co., Ltd.: Link Square Shinjuku

Seminar held in May 2019, with over 180 attendees

Link Square Shinjuku, which is directly connected to the pedestrian deck of Shinjuku Station, was completed and opened in2019 and has helped bring new liveliness to the area as a hubconnecting the Shinjuku, Yoyogi, and Sendagaya area.
The subsequent redevelopment project removed the three
aged buildings which were built according to old earthquake
resistance standards and constructed a new 16-story complex
consisting of offices, commercial facilities, and facilities that
contribute to the community, which has greatly enhanced theattractiveness of the area while enhancing the disaster preparedness function for the community.

Strategy to Attract Tenants to Achieve Urban Revitalization
For our properties in the Tokyo area,
we have adopted a strategy to attract
tenants that will help to make thecity more attractive and revitalize theregion based on the Urban
Development System Utilization
Policy for New City Development of
the Tokyo Metropolitan Government.

Japan Real Estate Investment Corporation

26

SOCIETY

Employees (Human Capital Development)

Well-being

Basic Policy
JRE is prohibited from having any employees under theJapanese Act on Investment Trusts and Investment
Corporations, and therefore commissions business operations to
JRE-AM. As the asset management company for JRE, JRE-AM
believes that acquiring and training top-level human resources isa very important aspect of maintaining top-level management. In

Employee Health and Well-being
addition, JRE-AM has highlighted efforts related to officers andemployees as an important issue in its Sustainability Policy. To
achieve these goals, JRE-AM is promoting efforts to improve thehealth and well-being of its employees by creating a system toacquire and develop professional human resources who canhandle the responsibility of asset management.

Talent Pipeline & Development Strategy
We have access to professionals with extensive experience andexpertise in real estate investment and asset management as
seconded staff from our shareholder, Mitsubishi Estate Co., Ltd.
and also recruit experienced, talented individuals, to acquirecompetent personnel on a timely basis.
We employ a human resources development strategy that
includes a support for acquiring various qualifications and specialized training after joining the Company. In addition, we aredeveloping an easy-to-work-in environment for employees thatis mindful of their health and well-being.
Whereas JRE-AM currently does not hire new graduates, we
continually host junior employees (with fewer than ten years’ experience) seconded from our shareholder who regularly recruit new
graduates. By creating a well-balanced, diverse workforce consisting of both young and experienced profes­sionals, we ensure that
our specialized knowledge and skills in real estate asset management are shared and passed on within the company, thereby
enhancing the sustainability of the organization as a whole.

Human Capital Development
Learning and Development for All Employees
We encourage all employees, including permanent, seconded,
contract, and temporary staff, to pursue self-development andprofes­sional development. We conduct our own training programs that increase knowledge of the REIT industry and awareness of compliance issues. Furthermore, we encourage
employees to actively participate in a variety of training programs offered by our shareholder. By participating in such programs, we expect each employee to develop as both a businessperson and an industry professional.
Specialized Skills Training
We offer training programs led by external lecturers and expertsthat improve employees’ professional and practical skills, helping them become professionals in the fields of REITs and realestate asset management. Further, we encourage all employees
and officers to pursue educational opportunities outside thecompany by subsidizing relevant educational expenses such as
the costs of attending seminars and training programs offeredby external organizations.
Advanced Leadership Development
At JRE-AM, managerial positions are given to those who display
management potential and show a willingness to acquire specialized knowledge from both inside and outside the Company.
After these managers are appointed, we expect them to improvetheir management abilities on a voluntary basis. To support their
participation in management seminars and symposiums, webear the costs of these activities. To ensure up-to-date knowledge of laws, such as the Financial Instruments and Exchange
Act and the Act on Investment Trusts and Investment
Corporations, we periodically invite external experts to lectureon these topics, and also provide training for managers conducted by our shareholder.

Examples of training programs by external lecturers in FY2020 (20 programs were conducted in total):case 1

 ompliance training for those engaged in investment manC
agement business (July and August 2020, February 2021)
case 2 Internal Audit Seminar (June and July 2020)

27

Japan Real Estate Investment Corporation

Creating Productive and Employee-friendly Workplace
JRE-AM Office EnvironmentA work environment that enhances productivity through consideration for health and well-being
We moved to our new office at Otemachi Park Building in
December 2017. Otemachi Park Building is a state-of-the-art
building aiming to offer an employee-friendly workplace thatreforms working styles and improves creativity and productivity ofworkers, featuring advanced energy efficient facilities, BCP functions, and facilities focused on coexistence with the environment.
The building is equipped with a designated lounge space for tenants complete with a fitness room, nap room, shower room, etc.,
in addition to a nursery and a community plaza with natural
greenery that is designed with consideration for biodiversity.
 ffice Design Promoting Internal CommunicationO
To coincide with our relocation, we have adopted a free seating

Anti-Money Laundering Training (August 2020)
case 4 Sustainability Seminar (January 2021)
case 5 Anti-Harassment Training (February 2021)

Human resources
evaluation system

Percentage of employees
who had performance
review meetings

Performance evaluation
Process evaluation

100%

system for employees and have upgraded communication spaces
within the Company. These spaces are aimed at invigorating inCompany communication and have been set up to add a playful
touch to our office and promote employees’ physical activities. We
believe that these offices will facilitate work style reforms andlead to improved productivity.

Promote Diverse Work Styles
We endeavor to provide a comfortable working environment byoffering various employee benefit programs and promoting a better work-life balance so that no employee has to give up theiremployment for childbirth, childcare, nursing care, or otherlife events.
Introduction of a Fully Flextime System that Abolishes Core
Working Hours
We have introduced a flextime system for all employees. Under
this system, prescribed work hours are managed by the monthand not by the day, meaning that employees can measure theirwork obligations and private affairs and come up with a workstylethat takes into account a proper work-life balance.

Employee
Voice
Promoting a Diverse Workforcecase 3

Fair Performance Evaluation and Remuneration
JRE-AM has introduced an evaluation system for all employees
based on performance and processes. At the beginning of the fiscal year, each employee sets his or her own targets with advice
from their managers, and bonuses are paid based on the degreeof achievement of those targets. Employees receive comprehensive feedback on their performance and specific contributions
through the Semi-Annual Follow-Up Meeting and the Final
Appraisal Meeting.

We believe that the physical and mental health of employees and the creation of an accommodating work environment
are important management issues in terms of improving business performance. Based on this understanding,we implement various measures to promote the physical and mental health of employees, help them achievea good work-life balance, and increase worker motivation.

I came to Japan in 2013 to study as a postgraduate
and joined JRE-AM in February 2020 from my previous
position at a bank. The workplace atmosphere at JRE-AM
is friendly and conducive to good communication. As there
are systems in place that allow for a high degree of freedom, I find it to be a comfortable place to work, where I
can follow a workstyle that suits me.
When internal interactions brought me into contact with avariety of approaches and value systems, I gained a sensethat the Company’s aim of creating a workplace where
employees can work enthusiastically, regardless of theirnationality, helps make JRE a highly diverse organization.
I believe that finding ways to identify with and accept
each other, irrespective of linguistic or cultural differences,is vital for communication. As disagreements are a natural
occurrence, I will endeavor to communicate with otherswith awareness of theneed to consider theapproaches that
underpin their views
before offering my own
opinions.

Japan Real Estate Investment Corporation

28

SOCIETY

Non-Financial Data Highlights

Creating Fair Work Environments

Communication with Employees
We implement the following measures to foster an open and efficient communication environment among all employees.
Satisfaction Survey
At JRE-AM, we consider our employees to be our closest stakeholders, and we believe that improving their satisfaction isimportant for sustainable growth.
For this reason, we regularly conduct annual surveys of all
employees on a wide range of topics, including the work environment, ease of working including benefits, and educational
support, in a way that prevents the identification of individuals.
Through this survey, we strive to actively collect honest opinions
and frank views. The results of this survey are fed back to the
President & CEO, and are used for improvement activities.
In addition, the HR department conducts interviews with
employees to gather their opinions on how to improve operational efficiency.
Anti-harassment
We conduct anti-power harassment and anti-sexual harassment
training regularly to raise awareness, and provide employeeswith the tools and guidance they need to identify, prevent andremove sexual/power harassment from the workplace.
Furthermore, we keep everyone informed about the existence ofthe compliance hotline.
Support for promoting a strong team culture
We provide a certain amount of subsidies for expenses related to
employee social gatherings, such as welcome parties and yearend parties, to support building and maintaining a strong teamculture among employees. We believe it helps not only withcreating a comfortable work environment but also strengthening
the company’s competitiveness through open communication.

Employee-related data is listed below. Particularly notable is data related to the active participation of women, as the
proportion of female employees at JRE-AM has increased for the past consecutive year, far exceeding the average forJapanese companies of 25.8%.* In addition, results from the reporting period below show a 100% return and retention
rate for employees 12 months after taking childcare leave.
* Source: “Corporate awareness survey on promoting the participation of women in their workforce” conducted in August 2020 and released by Teikoku Databank Ltd.

Number of Employees

Training Hours per Employee(persons)

Male

JRE’s 20th anniversary of IPO

Employee hotlines & grievance reporting
For the purpose of empowering staff, uncovering risks/problems,and increasing workplace satisfaction, all employees can consult
with either the GM of the Compliance Department, a legal advisoryﬁrm, or an external specialist organization on such matters aswork problems, grievances, improvement requests, and whistleblowing on illegal/unethical behavior by officers and employees.
Every employee can access the above hotlines at any time andconsultations can be made anonymously, and whistleblowers are
given protection under the Whistleblower Protection Act. If
deemed necessary, the contact point will report the details of theconsultation to the President & CEO and the President & CEO willconduct an investigation in consideration of the human rights ofthe employees and take the measures necessary for resolution of
the issue.

Policies and Initiatives amid COVID-19

23.0

18

21

24

23

22

22

FY2018FY201943.9

29Consideration for Tenants
We have installed cameras for measuring temperature at somebuildings to monitor visitors’ health condition in real time. In
addition, we are thoroughly implementing the provision of alcohol-based sanitizers and the disinfection of handrails and othersurfaces in common areas, and placing markings on floors toindicate standing positions in places where people line up, suchas elevator lobbies. We are
striving to offer peace of mind
and safety for tenants by
restricting as required the useof lounges, smoking rooms,
and other areas, as well as
the number of people who canuse them at the same time.
Temperature measurement with aJapan Real Estate Investment Corporation

FY2019FY2020Training Expenses per Employee
48.8

52.2

(JPY per year)

39,72831,880FY2018FY2019FY2020FY2018FY2019Annual Paid Leave per Person

Monthly Average Overtime(Days)(Hours per Month)

FY2020

8.5

14.1
11.3

Amid the ongoing impact of COVID-19, we are making a variety of efforts to protect the health of JRE-AM’s employees andour tenants and to provide a safe working environment. We will continue keep an eye on social trends and respond torequests from the government in a flexible manner.
We are conducting operations while staying mindful of work-lifebalance in an effort to prevent infection. Therefore, we haveestablished rules for adopting teleworking and are promoting
staggered commuting. We have clarified work priority and promote the use of IT through online meetings and other means, andhave set up a system that allows work to be carried out smoothly
even when working from home. In the office, we are careful toapply disinfectants and wear masks to prevent infection. The
company also provides PCR testing as a benefit. Moreover,
JRE-AM has entered into an advisory contract with an industrial
physician in consideration for the physical and mental health of
employees. JRE-AM’s employees can receive health consultations
based on this contract. These consultations can be conducted
online if requested and they will continue to be used as a measure to support the mental health of employees amid COVID-19.

FY2018FY202017.1

17,605

13.9

Consideration for Employees

15.3

Female Employee Ratio(%)(hours per year)

46

43

41

FemaleFY2018FY2019FY20202.3

2.4

FY2018FY2019FY2020

Promote Diverse Workforce
FY2018FY2019FY2020

Number of Employees

41

43

46

Foreign employees

0

1

2

Of which female senior management

2

2

3

Of which Female directors

1

0

0*

* One female director has been appointed in April 2021, and ratio of female directors became 25%.

non-contact thermometerJapan Real Estate Investment Corporation

30

Management System
JRE entered into an entrustment contract for asset investments with JRE-AM. JRE has also entered into business consignment contracts with various trust banks for custodial business related to assets and general business outsourcing.
Under the management structure below, JRE-AM conducts asset investments such as acquisition and transfer of properties and leasing spaces to tenants.
Asset Custody Company

Investment Corporation

Asset Custody
Entrustment

Trust BankJapan Real Estate
Investment Corporation

Administrative Agent

Asset Manager

Asset Management
Entrustment

Japan Real Estate
Asset Management Co., Ltd.

Administration
Entrustment

Trust Bank

General Meeting of shareholder

Auditors

Board of Directors

Compliance Committee

Investment Management Council

President & CEO

GOVERNANCE

Our basic policy as an investment corporation and asset management company is not only to comply with laws andregulations, but to meet social demands as well. Taking care to have each employee perform his or her duties withhigh ethical standards and strict self-discipline raises our reputation among investors and garners the trust of thewider society.

31

32Management System

33

Risk Management

36

Compliance System

Japan Real Estate Investment Corporation

Compliance Department

Planning
Department

WEB

Finance &Accounting
Department

Real Estate
Investment
Department

Real EstateManagement
Department

Corporate
Administration
Department

Risk Management
Department

For details, please refer to the securities report (Part 2. Details of JRE, Section 4. Status of affiliates, 1. Outline of JRE-AM,(2) Operation system (available only in Japanese).

Japan Real Estate Investment Corporation

32

GOVERNANCE

Risk Management
In order to gain an understanding of risk inherent in operations and manage them in appropriate fashion, JRE-AM has
formulated a Basic Risk Management Policy, Risk Management Regulations, and Risk Management Rules, and has
established the Risk Management Department, which handles risk management for JRE and reports the status of risk
management for JRE to the Board of Directors.

4 Efforts Related to Risk Management
Based on the Risk Management Rules, the “Risk Assessment Table” created by each department is reviewed every year in principle
according to the following process in order to properly manage various types of risks and confirm the status of risk management.
Risk Assessment Process

1 Basic Risk Management Policy
This policy defines JRE’s basic policy regarding risk management. This policy stipulates: 1) the classification and definition of risks andmanagement in line with the characteristics of each risk; 2) risk identification, assessment, and analysis; 3) activities to mitigate risks
based on assessment and the means to monitor these activities; and 4) implementation of measures when risks become apparent. This
policy also lays out provisions for an organizational structure regarding risk management and for reporting to the Board of Directors.
2 Risk Management Regulations
Under the Basic Risk Management Policy, the Risk Management Regulations clarify the types of risks related to JRE’s business operations and where they may occur, and determines management methods and systems to mitigate these risks.

Types of Risk
1. Asset management risks• Real estate investment risks (risks related to volatility in thereal estate market, real estate credit risks, etc.)

2. Identify risks and review
Identify risks comprehensively
according to the operational processes and sub-processes ofeach department and review
them using benchmarks such as
supervisory guidelines and casestudies

3. Assess specific risks
Assess specific risks based on“impact” and “frequency ofoccurrence”• Other asset management risks (market risks, credit risks,
operational risks, etc.)

2. Other risks• Companywide risks (risks caused by inadequate organizational
structure, corporate governance, and internal control systems)• Disclosure risks (risks caused by failure to disclose information in a timely and appropriate manner)

1. Recognize the external andinternal environment
Recognize changes in the external environment (market trends,
regulatory and institutional
trends, etc.) and internal environment (organizations, processes, systems, etc.) and reflect
them in the following processes• Reputation risks (risks caused by the spread of negative information or perception)• Event risks (risks caused by unpredictable external factors
such as earthquakes and other natural disasters)

4. Assess controls
Assess controls based on“impact” and “ability to control
frequency of occurrence”

5. Assess residual risks
Assess residual risks basedon the results of assessing(3) and (4)Risk Management System
The Board of Directors determines the Basic Risk Management Policy and supervises the development of an appropriate risk management system. In addition, the Risk Management Department has been established as the department responsible for handling risk management, and risk management managers have been assigned to each department to promote appropriate risk management.
Furthermore, the status of risk management is reported to the Board of Directors.
3 Risk Management Rules
In accordance with the Risk Management Regulations, the Risk Management Rules stipulate that each department is to clarify the risks to be
managed, that each department is to recognize and address these risks, and that the Risk Management Department will monitor these efforts.
As a general rule, once every fiscal year, each department uses a “Risk Assessment Table” to revise their list of risks, reassess their approach,and review countermeasures. The Risk Management Department monitors these actions and reports their findings to the Board of Directors.

Basic Risk Management Policy
Determine the Company’s basic
policy related to risk management.

33

Japan Real Estate Investment Corporation

Risk Management Regulations
Clarify the types of risks, where they
may occur, and determine management methods and systems to mitigate these risks.

Risk Management Rules
Establish risk management procedures suchas risk recognition and responses
for each department, monitoringby the Risk Management Department,
and reporting results of monitoring
to the Board of Directors.

Compliance Risk Management through Three Lines of Defense
Each department of JRE-AM is proactively and autonomously working on compliance risk management. The following is a summary
based on the “Three Lines of Defense” concept.

1 1st Line of Defense—Self-Control by Front Divisions
A compliance manager has been appointed in each department to promote compliance, which includes daily compliancechecks and assessments, formulation and implementation of compliance programs, and formulation and implementation ofrules and manuals under jurisdiction of each department.
A risk management manager is appointed in each department to promote efforts such as reviewing the “Risk Assessment
Table,” gaining an understanding of the types of risks inherent to work under the jurisdiction of each department in order toensure that these risks are managed appropriately.
A compliance program has been developed as a concrete implementation plan aimed at achieving proper compliance.

Japan Real Estate Investment Corporation

34

GOVERNANCE

Basic Principle of Compliance for the Investment Corporation (JRE)
2 2nd Line of Defense—Control by Risk Management and Compliance Divisions
The Compliance Department drafts general compliance plans, practices compliance, and inspects, checks, and works to
improve the level of compliance in each department.
In addition to planning and promoting the Basic Risk Management Policy, the Risk Management Department monitors the status of risk management in each department and provides direction based on the “Risk Assessment Table.”A Compliance Committee has been set up to examine, deliberate over, and make decisions on compliance-related concernsand pressing matters such as important transactions that involve key related parties. Independent external experts also servein the committee as members.
A variety of compliance training is conducted to ensure an understanding of the laws and regulations to be complied with, andto ensure that officers and employees can engage in activities while maintaining thorough compliance.

3 3rd Line of Defense—Review by Audit Divisions
Internal audits are conducted every year to inspect and verify the appropriateness and effectiveness of legal compliance, internal management, risk management, crisis management, and other systems from the perspective of ensuring investor protection and fair market formation as an asset management company.

Preventing Fraud and Corruption at the Asset Management Company
The Mitsubishi Estate Group has declared that it will carry out
equitable, transparent corporate activities with a primary emphasis on earning trust. The Group’s Guidelines for Conduct forbid notjust actions that could be construed as collusion with government
officials or other actions considered illegal, but also entertainmentand gift-giving that goes beyond the bounds of social convention.
When providing support related to the activities of politicalgroups, the Group ensures it is appropriate in accordance with relevant laws and regulations such as the Political Funds Control Act
and the Public Offices Election Act, as well as internal regulations
such at the Mitsubishi Estate Group Guidelines for Conduct.
Moreover, in 2013, the Group established the Mitsubishi EstateGroup Basic Regulations on the Prevention of Corruption to put inplace a system to prevent corruption across the organization. In

Employee hotlines & grievance reporting
For the purpose of empowering staff, uncovering risks/problems, and increasing workplace satisfaction, all employees
can consult with either the GM of the Compliance Department,a legal advisory ﬁrm, or an external specialist organization onsuch matters as work problems, grievances, improvement
requests, and whistleblowing on illegal/unethical behavior by
officers and employees. Every employee can access the above

WEB

35

For Mitsubishi Estate Group Guidelines for Conduct, please click here.
https://www.mec.co.jp/e/company/charter/index.html

Japan Real Estate Investment Corporation

2018, the Group established and published the Mitsubishi EstateGroup Anti-Corruption Guidelines. The Guidelines document
expectations of business partners with the aim of ensuring compliance throughout the supply chain based on the cooperation of
all of the Group’s business partners. The Group provides training
on corruption prevention to officers and employees and obtains
pledges on the Guidelines on the Prevention of Corruption fromofficers and employees. The Group also holds annual lectures on
corruption prevention, particularly for departments and Group
companies engaged in international business.
In 2017, an external organization assessed the Mitsubishi EstateGroup’s corruption prevention system as a whole. The Group has
been working to further strengthen the corruption prevention system by responding to the issues identified through the assessment.

hotlines at any time and consultations can be made anonymously, and whistleblowers are given protection under the
Whistleblower Protection Act. If deemed necessary, the contact point will report the details of the consultation to the
President & CEO, and the President & CEO will conduct aninvestigation in consideration of the human rights of theemployees and take the measures necessary for resolution of
the issue.

For Mitsubishi Estate Group Anti-Corruption Guideline, please click here.
https://www.mec.co.jp/e/sustainability/activities/governance/compliance/
pdf/anti_corruption_guideline_201903.pdf

JRE’s basic principle of compliance is to thoroughly observe legal and other relevant norms in regard to the business operation as well as
to respond to the requirements from society. This means that the investment corporation administers and oversees the outsourcing
companies from the same standpoint, while complying with legal and other relevant norms in its decision-making.

Basic Principle of Compliance for the Asset Management Company (JRE-AM)

Ensuring thorough compliance is one of its top priority issues, since JRE-AM understands that any insufficiency in compliance would affect even its management base.
2 As an asset management company, JRE-AM recognizes that it bears the responsibility for realizing the values that are
required by society in its business operation, and makes proactive and continuous efforts for full compliance to enhance thevalue of its business operation both qualitatively and quantitatively.
3 JRE-AM is determined to achieve a reputation for quality among its investors by promoting compliance activities, and thereby
gains the trust of a wide spectrum of society.
1

Conflict of Interest Policy of JRE-AM
JRE-AM recognizes the importance that its business of investing the assets of the investment corporation (JRE) is to manage the funds ofthe unitholders of the investment corporation, and makes it a principle that JRE-AM always gives the first priority to the interest of theinvestment corporation, which entrusts the asset investment to JRE-AM, and performs the asset management services in a loyal, fair,sincere, and equitable way. JRE-AM acts in the best interest of the investment corporation, and discharges the fiduciary duties as an
asset management company, and makes a fair deal at all times.
Decision-making structure in internal control system
In a case where a transaction is made with an interested party and above a certain amountRejectand referbackConsideration, Selection, Draft
by Department in Charge<The first compliance check>

The department in charge consults a third-party expert as appropriate, and especially regarding transactions with an interested party, drafts a proposal after confirmation that there is no
issue on compliance from the perspective of conflict of interest, among other things.

Preliminary Verification
by Compliance Department<The second compliance check>

The said proposal is verified preliminary by the compliance department head. In theevent of an issue on compliance, it is referred back to the department in charge.

Deliberation and Approval
by Compliance Committee<The third compliance check>

The said proposal is approved by the majority vote of the compliance committee members and all of the votes of the external compliance committee members present. As
needed, the committee orders its halt or alternation.

Approval by Board of Directorsof Investment Corporation<The fourth compliance check>

Subject to the attendance of the majority of the executive and supervisory directors, thesaid proposal is approved by the majority vote of the directors present.

Deliberation and Decision
by Investment Management Council<The fifth compliance check>

Subject to the attendance of the CEO and the majority of the executive officers of
JRE-AM, the said proposal is decided by the CEO’s vote and the majority vote of the officers present.

Report to JRE-AM’s Board of Directors,
Executive Director and Boardof Directors of Investment Corporation

JRE-AM reports the decision to the boards of directors of JRE-AM and the investment
corporation.

WEB

For details, please refer to the report on the management systems of the issuers of real estate investment trust securities (2. Management
systems of investment corporations and asset management companies, (3) Measures for transactions that constitute conflicts of interest)(available only in Japanese).

Japan Real Estate Investment Corporation

36

GRI Content Index

GRI 100:Universal Standard

2021.04

GRI Index
102
GeneralDisclosures2016

102-1 Name of the organization⋅Overview of JRE⋅Corporate Data

⋅IR Library⋅Annual Report102-2 Activities, brands, products,
and services⋅Portfolio List (Portfolio Overview)⋅Portfolio List (Portfolio Overview)⋅IR Library⋅Annual Report102-3 Location of headquarters⋅Overview of JRE⋅Corporate Data

⋅IR Library⋅Annual Report⋅Overview of JRE⋅Corporate Data

⋅IR Library⋅Annual Report⋅Organizational Structure⋅Organizational Structure⋅IR Library⋅Annual Report⋅Portfolio List (Portfolio Overview)⋅Portfolio List (Portfolio Overview)⋅IR Library⋅Annual Report⋅Overview of JRE⋅Corporate Data⋅Financial Highlights⋅Trend of Financial Results⋅IR Library⋅Annual Report102-8 Information on employees
and other workers⋅“JRE-AM website”>Employee Initiatives⋅Basic Employee Data

102-9 Supply chain⋅IR Library⋅Annual Report102-11 Precautionary Principle orapproach⋅Environmental Initiatives⋅Contributions to the Environment through Real
Estate Investment Management⋅Climate Change Initiatives⋅Climate Change-Related Risks and JRE’s
Response⋅International Initiatives⋅Signatory to PRI⋅Signatory to UNEP FI⋅Participation in UNGC

⋅External Evaluation and Certifications⋅Commitment to GRESB⋅PRI Assessment Result⋅Participation in the CDP's Climate Change
Program102-4 Location of operations

102-5 Ownership and legal form

102-6 Ownership and legal form

102-7 Scale of the organization

102-12 External initiatives⋅Global Trends (Supporting the TCFD
Recommendations)102-13 M embership of associations⋅“JRE-AM website”>About JRE-AM⋅Memberships

102-14 Statement from seniordecision-maker⋅JRE Information⋅Message from Executive Director⋅About JRE’s ESG Measures⋅Message from Our President

102-15 Key impacts, risks,and opportunities⋅Basic Policy on ESG / Management Structure⋅Sustainability Policy⋅About JRE’s ESG Measures⋅Message from Our President⋅Climate Change Initiatives⋅Climate Change-Related Risks and JRE’s
Response⋅Basic Policy on ESG / Management Structure⋅Sustainability Policy⋅”The website of Mitsubishi Estate Co., Ltd.”>CORPORATEINFORMATION : PROFILE OF
MITSUBISHI ESTATE>CODEOF CONDUCT⋅The Mission of Mitsubishi Estate Group⋅Mitsubishi Estate Group Code of Conduct⋅Mitsubishi Estate Group Guidelines for Conduct⋅Compliance System⋅Basic Principle of Compliance for the
AssetManagement Company (JRE-AM)⋅Basic Policy on ESG / Management Structure⋅Sustainability Committee⋅Governance Structure of JRE⋅Governance Structure of JRE⋅Management System⋅Management System102-18 Governance structure

Japan Real Estate Investment Corporation

GRI Index
102
GeneralDisclosures2016

102-19 Delegating authority

Location on the Company’s web site⋅Basic Policy on ESG / Management Structure⋅Sustainability Committee⋅Management System⋅Management System

102-20 Executive-level responsibility
for economic, environmental,
and social topics⋅Basic Policy on ESG / Management Structure⋅Sustainability Committee⋅compliance system⋅Compliance System

102-21 Consulting stakeholders on
economic, environmental,
and social topics⋅Environmental Initiatives⋅Contributions to the Environment through Real
Estate Investment Management⋅Social Initiatives⋅Collaboration with Suppliers⋅Stakeholder Engagement⋅Relationship with Local Communities⋅"JRE-AM website">Employee Initiatives⋅Employee Initiatives

Initiatives for stakeholder engagements are included in the matters under the jurisdiction of Sustainability
Committee and periodically reported to JRE’s board of directors’ meeting.

102-22 Composition of the highest
governance body and its
committees⋅Basic Policy on ESG / Management Structure(Environmental, Social and Governance) Issues⋅Sustainability Committee⋅Governance Structure of JRE⋅Governance Structure of JRE⋅Compliance System⋅Compliance System⋅History/Directors’ Profile⋅Directors’ Profile⋅“JRE-AM website”>About JREA

⋅Corporate Data102-24 Nominating and selecting thehighest governance body⋅IR Library⋅Articles of Incorporation

102-25 Conflicts of interest⋅Compliance System⋅Conflict of Interest Policy of Asset Management
Company102-26 Role of highest governancebody in setting purpose, values, and strategy⋅Basic Policy on ESG / Management Structure⋅Sustainability Committee

102-27 Collective knowledge ofhighest governance body⋅Basic Policy on ESG / Management Structure⋅Sustainability Committee

102-29 Identifying and managing
economic, environmental,
and social impacts⋅Basic Policy on ESG / Management Structure⋅Sustainability Committee⋅Management System⋅Risk Management102-30 Effectiveness of risk management processes⋅Basic Policy on ESG / Management Structure⋅Sustainability Committee⋅Management System⋅Risk Management102-31 Review of economic, environmental, and social topics⋅Basic Policy on ESG / Management Structure⋅Sustainability Committee

102-32 Highest governancebody’s role in sustainability
reporting⋅Basic Policy on ESG / Management Structure⋅Sustainability Committee

102-33 Communicating criticalconcerns⋅Basic Policy on ESG / Management Structure⋅Sustainability Committee⋅Management System⋅Risk Management⋅Compliance System⋅Conflict of Interest Policy of Asset Management
Company102-23 Chair of the highest governance body

JRE has no employees and outsources all asset management operations to the asset managementcompany(JRE-AM), so we disclose the employees of the asset management company here.

⋅Climate Change Initiatives

102-16 Values, principles,standards, and normsof behavior

37

Location on the Company’s web site102-34 Nature and total number ofcritical concerns

No significant concerns are reported during the reporting period.

102-35 Remuneration policies⋅Governance Structure of JRE⋅Governance Structure of JRE

102-36 Process for determining
remuneration⋅Governance Structure of JRE⋅Governance Structure of JRE

Japan Real Estate Investment Corporation

38

GRI Content Index

GRI 300: Environmental Standards
GRI Index
102
GeneralDisclosures2016

102-41 Collective bargaining
agreements

Not applicable as JRE does not have employees.

102-43 Approach to stakeholder
engagement⋅Environmental Initiatives⋅Contributions to the Environment through Real
Estate Investment Management⋅Collaboration with Suppliers⋅Social Initiatives⋅Stakeholder Engagement⋅Improving Tenant Satisfaction⋅Relationship with Local Communities

102-47 List of material topics

201
Economic
Performance2016

GRI Index⋅“JRE-AM website”>Employee Initiatives⋅Employee Initiatives⋅Basic Policy on ESG / Management Structure⋅Sustainability Policy⋅Disclosure of ESG-Related Information⋅GRI Content Index⋅SASB Framework (GRI Standard Content Index)

103
Management
Approach 2016

Location on the Company’s web site103-1 Explanation of the material
topic and its Boundary⋅Basic Policy on ESG / Management
Structure⋅Sustainability Policy

103-2 The management approachand its components⋅Basic Policy on ESG / Management
Structure⋅Sustainability Policy⋅Environmental Initiatives⋅Environmental Performance⋅Contributions to the Environment through Real
Estate Investment Management⋅Collaboration with Supplier⋅Green Finance⋅Sustainability-Linked Loans⋅Green Bonds⋅Complaint Handling and Dispute
Resolution⋅JREA’s Complaint Handling and Dispute
Resolution Measures⋅Basic Policy on ESG / Management
Structure⋅Sustainability Committee⋅External Evaluation and Certifications⋅Commitment to GRESB

302-1 Energy consumption within
the organization⋅Environmental Initiatives⋅Environmental Performance

102-48 Restatements of information

Not applicable

102-49 Changes in reporting

Not applicable

102-50 Reporting period⋅Disclosure of ESG-Related Information

102-51 Date of most recent report

17/4/2020

102-52 Reporting cycle⋅Disclosure of ESG-Related Information⋅Reporting scope and period302-2 Energy consumption outsideof the organization

Energy consumption outside of the organization is not subject to reporting, therefore it is
not applicable.

102-53 Contact point for questions
regarding the report⋅Disclosure of ESG-Related Information⋅Inquiries

302-3 Energy intensity⋅Environmental Initiatives⋅Environmental Performance⋅Disclosure of ESG-Related Information⋅GRI Content Index

302-4 Reduction of energy
consumption⋅Environmental Initiatives

102-55 GRI content index⋅Environmental Performance⋅Contributions to the Environment through Real
Estate Investment Management102-56 External assurance⋅Environmental Initiatives⋅Environmental Performance⋅Green Finance⋅Disclosure of ESG-Related Information⋅GRI Content Index / SASB Framework⋅Sustainability-Linked Loans⋅Green Bonds⋅Environmental Initiatives⋅Climate Change Initiatives⋅Climate Change-Related Risks and JRE’s Response⋅Environmental Performance⋅Contributions to the Environment through Real
Estate Investment Management

201-2 Financial implications andother risks and opportunities
due to climate change

103-3 Evaluation of the management approach⋅Reporting scope and period

302
Energy 2016302-5 Reductions in energy
requirements of products
and services

Water (“Contribution to creating a recycling-oriented society” / “Contribution to creating a society in harmony with nature”)

List of material topics

GRI Index

Sustainability Policy

39

Reviewed bya third-party
organization

Energy (“Contribution to creating a low-carbon society”)

Location on the Company’s web site

GRI Material Topics

1. Contribution to creating a low-carbon society“302:Energy” / “305:Emissions”

2. Contribution to creating a recycling-oriented society“303:Water and Effluents” / “306:Waste”

3. Contribution to creating a society in harmony with nature“303:Water and Effluents” / “306:Waste”

4. Enhancement of safety and security“403: Occupational Health and Safety” / “416: Customer Health and Safety” “Customer
Satisfaction (G4 Construction and Real Estate Sector Disclosures PR5)”

5. Initiatives aimed at officers and employees“401:Employment” / “404:Training and Education”

6. Collaboration with external stakeholders“308:Supplier Environmental Assessment” / “414:Supplier Social Assessment” /“Customer Satisfaction(G4 Construction and Real Estate Sector Disclosures PR5)”

7. Information disclosure and obtaining environmental certifications“Sustainability Certification(G4 Construction and Real Estate Sector Disclosures CRE8)”

Japan Real Estate Investment Corporation

103
Management
Approach 2016

303
Water andEffluents 2018

*1

*2

Reviewed bya third-party
organization

Location on the Company’s web site103-1 Explanation of the material
topic and its Boundary⋅Basic Policy on ESG / Management
Structure⋅Sustainability Policy

103-2 The management approachand its components⋅Basic Policy on ESG / Management
Structure⋅Sustainability Policy⋅Environmental Initiatives⋅Environmental Performance⋅Contributions to the Environment through Real
Estate Investment Management⋅Collaboration with Supplier⋅Green Finance⋅Sustainability-Linked Loans⋅Green Bonds⋅Complaint Handling and Dispute
Resolution⋅JREA’s Complaint Handling and Dispute
Resolution Measures⋅Basic Policy on ESG / Management
Structure⋅Sustainability Committee⋅External Evaluation and Certifications⋅Commitment to GRESB

303-3 Water withdrawal⋅Environmental Initiatives⋅Environmental Performance303-5 Water consumption⋅Environmental Initiatives⋅Environmental Performance103-3 Evaluation of the management approach*1*1 Ernst & Young ShinNihon LLC was engaged to provide independent limited assurance on the Environmental Performance Data on the company’s website.
*2 CSR Design Green Investment Advisory, Co., Ltd. reviewed accuracy of JRE’s ESG performance.

Japan Real Estate Investment Corporation

40

GRI Content Index

Emissions (“Contribution to creating a low-carbon society”)
GRI Index
103
Management
Approach 2016

⋅Basic Policy on ESG / Management
Structure⋅Sustainability Policy

103-2 The management approachand its components⋅Basic Policy on ESG / Management
Structure⋅Sustainability Policy⋅Environmental Initiatives⋅Environmental Performance⋅Contributions to the Environment through Real
Estate Investment Management⋅Collaboration with Supplier⋅Green Finance⋅Sustainability-Linked Loans⋅Green Bonds⋅Complaint Handling and Dispute
Resolution⋅JREA’s Complaint Handling and Dispute
Resolution Measures⋅Climate Change Initiative⋅Climate Change-Related Risks and JRE’s
Response⋅Basic Policy on ESG / Management
Structure⋅Sustainability Committee⋅Climate Change Initiatives⋅Governance⋅External Evaluation and Certifications⋅Commitment to GRESB

305
Emissions 2016305-1 Direct (Scope 1) GHG
emissions⋅Environmental Measures⋅Environmental Performance>WEB information

305-2 Energy indirect (Scope 2)
GHG emissions⋅Environmental Initiatives⋅Environmental Performance>WEB information

305-3 Other indirect (Scope 3) GHG ⋅Environmental Initiatives
emissions⋅Environmental Performance>WEB information

305-4 GHG emissions intensity⋅Environmental Performance⋅Environmental Initiatives

305-5 Reduction of GHG emissions ⋅Environmental Initiatives

GRI Index
103
Management
Approach 2016

Location on the Company’s web site103-1 Explanation of the material
topic and its Boundary⋅Basic Policy on ESG / Management
Structure⋅Sustainability Policy

103-2 The management approachand its components⋅Basic Policy on ESG / Management
Structure⋅Sustainability Policy⋅Environmental Initiatives⋅Contributions to the Environment through Real
Estate Investment Management⋅Collaboration with Supplier⋅Complaint Handling and Dispute
Resolution⋅JREA’s Complaint Handling and Dispute
Resolution Measures⋅Basic Policy on ESG / Management
Structure⋅Sustainability Committee⋅External Evaluation and Certifications⋅Commitment to GRESB

103-3 Evaluation of the management approach
308
Supplier
Environmental
Assessment
2016

Supplier applicable of environmental criteria was not newly hired.
308-1 New suppliers that werescreened using environmental criteria308-2 Negative environmental
impacts in the supply chain
and actions taken

*1
*1
*1

103
Management
Approach 2016

103-1 Explanation of the material
topic and its Boundary
103-2 The management approachand its components

GRI Index
103:
Management
Approach 2016

103-1 Explanation of the material
topic and its Boundary

103-2 The management approachand its components

103-3 Evaluation of the management approach⋅Sustainability Policy⋅Sustainability Policy⋅Environmental Initiatives⋅Environmental Performance⋅Contributions to the Environment through
RealEstate Investment Management⋅Collaboration with Supplier⋅Complaint Handling and Dispute
Resolution⋅JREA’s Complaint Handling and Dispute
Resolution Measures⋅Basic Policy on ESG / Management
Structure⋅Sustainability Committee⋅External Evaluation and Certifications⋅Commitment to GRESB

306-3 Waste generated⋅Environmental Initiatives⋅Environmental Performance>WEB information

306-5 Waste directed to disposal⋅Environmental Initiatives⋅Environmental Performance>WEB information

103-3 Evaluation of the management approach

306
Waste 2020

Location on the Company’s web site⋅Basic Policy on ESG / Management
Structure

Reviewed bya third-party
organization

Employment (“Initiatives aimed at officers and employees”)*1⋅Environmental Performance⋅Contributions to the Environment through
RealEstate Investment Management⋅Basic Policy on ESG / Management
Structure

No specific supplier with significantly negative environmental impact was determined during the recent period.

GRI 400: Social Standards

Waste(“Contribution to creating a recycling-oriented society”/” Contribution to creating a society in harmony with nature”)
GRI Index

Reviewed bya third-party
organization

Supplier Environmental Assessment (“Collaboration with external stakeholders”)

Location on the Company’s web site103-1 Explanation of the material
topic and its Boundary

103-3 Evaluation of the management approach

Reviewed bya third-party
organization

401:
Employment
2016

103:
Management
Approach 2016

⋅Sustainability Policy⋅“JRE-AM website”>Employee
Initiativesues⋅Employee Initiatives⋅Basic Policy on ESG / Management
Structure⋅Sustainability Policy⋅“JRE-AM website”>Employee
Initiatives⋅Employee Initiatives⋅Complaint Handling and Dispute
Resolution⋅JREA’s Complaint Handling and Dispute
Resolution Measures⋅Basic Policy on ESG / Management
Structure⋅Sustainability Committee⋅External Evaluation and Certifications⋅Commitment to GRESB

401-1 New employee hires andemployee turnover⋅“JRE-AM website”>Employee
Initiatives⋅Employee Initiatives

401-2 B
 enefits provided to full-time
employees that are not provided to temporary or parttime employees⋅“JRE-AM website>Employee Initiatives⋅Employee Initiatives

401-3 Parental leave⋅“JRE-AM website>Employee Initiatives⋅Employee Initiatives

103-1 Explanation of the material
topic and its Boundary⋅Basic Policy on ESG / Management
Structure⋅Sustainability Policy

103-2 The management approachand its components⋅Basic Policy on ESG / Management
Structure⋅Sustainability Policy⋅Complaint Handling and Dispute
Resolution⋅JREA's Complaint Handling and Dispute
Resolution Measures⋅Basic Policy on ESG / Management
Structure⋅Sustainability Committee⋅External Evaluation and Certifications⋅Commitment to GRESB⋅Social Initiatives⋅Improving Tenant Satisfaction>Initiatives for thesafety and health of tenants⋅"JRE-AM website">Employee
Initiatives⋅Employee Health and Well-being

103-3 Evaluation of the management approach403:
Occupational
Health and
Safety 2018

Location on the Company’s web site⋅Basic Policy on ESG / Management
Structure403-6 Promotion of worker health

*2

*2

*2

*2
*2

*1 Ernst & Young ShinNihon LLC was engaged to provide independent limited assurance on the Environmental Performance Data on the company’s website.
*2 CSR Design Green Investment Advisory, Co., Ltd. reviewed accuracy of JRE’s ESG performance.

41

Japan Real Estate Investment Corporation

Japan Real Estate Investment Corporation

42

GRI Content Index

Training and Education (“Initiatives aimed at officers and employees”)
GRI Index
103:
Management
Approach 2016

⋅Sustainability Policy

103-2 The management approachand its components⋅Basic Policy on ESG / Management
Structure⋅Sustainability Policy⋅Sustainability Policy⋅Environmental Initiatives⋅Contributions to the Environment through Real
Estate Investment Management⋅“JRE-AM website”>Employee
Initiatives⋅Employee Initiatives⋅Social Initiatives⋅Improving Tenant Satisfaction⋅Complaint Handling and Dispute
Resolution⋅JREA’s Complaint Handling and Dispute
Resolution Measures⋅Climate Change Initiatives⋅Climate Change-Related Risks and JRE’s
Response⋅Basic Policy on ESG / Management
Structure⋅Sustainability Committee⋅Complaint Handling and Dispute
Resolution⋅JREA’s Complaint Handling and Dispute
Resolution Measures⋅External Evaluation and Certifications⋅Commitment to GRESB⋅Basic Policy on ESG / Management
Structure⋅Sustainability Committee

404-1 Average hours of training
per year per employee⋅“JRE-AM website”>Employee
Initiatives⋅Employee Initiatives

404-2 Programs for upgrading
employee skills and transition assistance programs⋅“JRE-AM website”>Employee
Initiatives⋅Employee Initiatives

404-3 Percentage of employees
receiving regular performance and career development reviews⋅“JRE-AM website”>Employee
Initiatives⋅Employee Initiatives⋅Sustainability Policy⋅“JRE-AM website”>Employee
Initiatives⋅Employee Initiatives⋅Basic Policy on ESG / Management
Structure

GRI Index
103-1 Explanation of the material
topic and its Boundary⋅Basic Policy on ESG / Management
Structure⋅Sustainability Policy

103-2 The management approachand its components⋅Basic Policy on ESG / Management
Structure⋅Sustainability Policy⋅Social Initiatives⋅Relationship with Local Communities⋅Complaint Handling and Dispute
Resolution⋅JREA’s Complaint Handling and Dispute
Resolution Measures⋅Basic Policy on ESG / Management
Structure⋅Sustainability Committee⋅External Evaluation and Certifications⋅Commitment to GRESB

413-1 Operations with local community engagement, impact
assessments, and development programs⋅Social Initiatives*2*2⋅Relationship with Local Communities

413-2 Operations with significant
actual and potential negative
impacts on local communities

No specific office with significantly negative impact on local communities was determined
during the reporting period.

Reviewed bya third-party
organization⋅Basic Policy on ESG / Management
Structure⋅Sustainability Policy

103-2 The management approachand its components⋅Basic Policy on ESG / Management
Structure⋅Sustainability Policy⋅Environmental Initiatives⋅Collaboration with Supplier⋅Complaint Handling and Dispute
Resolution⋅JREA’s Complaint Handling and Dispute
Resolution Measures⋅Basic Policy on ESG / Management
Structure⋅Sustainability Committee⋅External Evaluation and Certifications⋅Commitment to GRESB

414-1 New suppliers that werescreened using social criteria⋅Commitment to GRESB⋅Social Initiatives⋅Improving Tenant Satisfaction>Initiatives for thesafety and health of tenants

416-2 Incidents of non-complianceconcerning the health andsafety impacts of products
and services⋅Social Initiatives⋅Improving Tenant Satisfaction>Initiatives for thesafety and health of tenants

JRE sets “Adaptation to new earthquake-resistant standards or equivalent structure/strength” as one of its acquisition criteria. All properties in the current portfolio held by JRE
also meet the same criteria.

*2*2OthersSustainability Certifications (“Information disclosure and obtaining environmental certifications”)

103
Management Approach 2016

⋅Basic Policy on ESG /Management Structure⋅Sustainability Policy

103-2 The management approach and its
components⋅Basic Policy on ESG /Management Structure⋅Sustainability Policy⋅External Evaluation andCertifications⋅Sustainability Certification⋅Green Finance⋅Sustainability-Linked Loan
⋅Green Bonds⋅Basic Policy on ESG /Management Structure⋅Sustainability Committee⋅External Evaluation andCertifications⋅Commitment to GRESB⋅Environmental Measures⋅Sustainability Certification

103-3 Evaluation of the management
approach*2

Sustainability Certifications(G4 Construction and Real
Estate Sector Disclosures
CRE8)
Reviewed bya third-party
organization

Type and number of sustainability certification, rating and labeling schemes for new
construction, management, occupation andredevelopment*2

Reviewed bya third-party
organization

Customer Satisfaction (“Collaboration with external stakeholders”)
GRI Index
103
Management Approach 2016

Location on the Company’s web site103-1 Explanation of the material topic andits Boundary⋅Basic Policy on ESG /Management Structure⋅Sustainability Policy

103-2 The management approach and its
components⋅Basic Policy on ESG /Management Structure⋅Sustainability Policy⋅Social Initiatives⋅Improving Tenant Satisfaction⋅Complaint Handling and
Dispute Resolution⋅JREA’s Complaint Handling and
Dispute Resolution Measures⋅Basic Policy on ESG /Management Structure⋅Sustainability Committee⋅External Evaluation andCertifications⋅Commitment to GRESB⋅Social Initiatives⋅Improving Tenant Satisfaction

103-3 Evaluation of the management
approachResults of surveys measuring customer
Customer Satisfaction (G4Construction and Real Estate satisfaction.
Sector Disclosures PR5)

Reviewed bya third-party
organization

Location on the Company’s web site103-1 Explanation of the material topic andits Boundary

Supplier applicable of social criteria was not newly hired.

414-2 Negative social impacts in the No specific supplier with significantly negative social impact was determined during the
supply chain and actions taken recent period.

Japan Real Estate Investment Corporation⋅External Evaluation and Certifications

416-1 Assessment of the healthand safety impacts of product and service categories

Location on the Company’s web site103-1 Explanation of the material
topic and its Boundary

103-3 Evaluation of the management approach

416
Customer
Health and
Safety 2016

GRI Index

Note: Properties owned by JRE are referred as Office in the requirement of this item taking
into account the general meaning of the report. Please see Portfolio List of JRE’s
website regarding properties held by JRE.

GRI Index

43

103-3 Evaluation of the management approach*2

Supplier Social Assessment (“Collaboration with external stakeholders”)

414
Supplier Social
Assessment
2016

103
Management
Approach 2016

Location on the Company’s web site103-3 Evaluation of the management approach

103
Management
Approach 2016

Location on the Company’s web site⋅Basic Policy on ESG / Management
Structure⋅Basic Policy on ESG / Management
Structure

Local Communities (“Collaboration with external stakeholders”)

413
Local
Communities
2016

GRI Index
103-1 Explanation of the material
topic and its Boundary

103-3 Evaluation of the management approach

103:
Management
Approach 2016

Reviewed bya third-party
organization

Customer Health and Safety (“Enhancement of safety and security”)

Location on the Company’s web site103-1 Explanation of the material
topic and its Boundary

103-2 The management approachand its components

404: Training
and Education
2016

Reviewed bya third-party
organization*2

Japan Real Estate Investment Corporation

44

SASB Framework

Activity Metrics
SASB Disclosure CodeDisclosure MetricFiscal 2019

Fiscal 2020

Unit

IF-RE-000.A

Number of assets

73

72

assets

IF-RE-000.B

Leasable floor area

871,326

873,873m

IF-RE-000.C

Percentage of indirectly managed assets

0.01

0.01

%

IF-RE-000.D

Average occupancy rate

99.7

97.9

%

SASB Disclosure CodeIF-RE-130a.5

2

Note: Fiscal years refer to the period starting from April 1 and ending at March 31 of the following year. Fiscal 2020 represents
the September 2020 period and March 2021 period.
The number of assets and the leasable area are the figures for the entire year and include properties sold during each fiscal
period. Accordingly, they differ from the figures at the end of fiscal periods (excluding leasehold land assets). The average occupancy rate is the portfolio average of the year-end occupancy rate at the end of each fiscal year.

Disclosure Topic: Energy Management
SASB Disclosure CodeDisclosure MetricFiscal 2019

Fiscal 2020

Unit

100%

100%

Percentage (%)
by floor area

IF-RE-130a.1

Energy consumption data coverage

IF-RE-130a.2

Total energy consumed by portfolio areawith data coverage

244,904

230.019

MWh

Percentage grid electricity

79.02

77.56

%

Percentage renewable electricity

1.28

1.77

%

Like-for-like percentage change in energy consumption for the portfolio area with data coverage

-4.10

-7.40

%

93.64

97.77

Percentage (%)
by floor area

20.69

21.34

Percentage (%)
by floor area

IF-RE-130a.3

Percentage of area with data coverage

IF-RE-130a.4

Percentage of eligible portfolio that has
an energy rating

Percentage of eligible portfolio that is certified to ENERGY STAR
Not applicable as the ENERGY STAR Program does not cover real estate in Japan
Reference
information

Percentage of eligible portfolio with Green
Building certification

74.30

75.65

IF-RE-130a.5

 escription of how building energy management considerations are integrated into property investment analysis andD
operational strategy(Please refer to the “Environment” section of this report beginning on page 11 for more information)
Based on the Sustainability Policy items “1. Contribution to creating a low-carbon society” and “2. Contribution to creating a recycling-oriented society”, JRE has set reduction targets for energy consumption and greenhouse gas emissions
in order to improve the environmental performance of its real estate portfolio.
In order to achieve these targets, JRE’s asset management company, JRE-AM implements measures to improve theoperational performance of buildings, conduct energy efficiency retrofits, and engage tenants on energy efficiency
based on its “Energy Conservation Policy”, which stipulates operational policies for improving energy efficiency of thereal estate portfolio, and its “GHG Emissions Reduction Policy”, which aims to create a low-carbon society.
In light of growing worldwide concern in recent years over the risks from climate change, JRE recognizes the importance of implementing an appropriate response, which includes reduction of GHG emissions is an important management issue in regard to our business strategy for ensuring the sustainability of business activities. We have beenworking to reduce energy consumption and GHG emissions of our portfolio, and have achieved a lower consumption
levels and emissions than in previous years. In fiscal 2019, we verified the possibility of reducing CO2 emissions fromover 70 of our properties and established reduction targets for 2030. Going forward, JRE will contribute to a shift to a
low-carbon society through the reduction of GHG emissions while securing its preparedness to natural disasters andother phenomena arising from climate change.
JRE is steadily implementing equipment retrofitting that includes switching to LED lighting and installing moreenergy efficient air conditioning units to reduce its environmental impact based on its sustainability plan.

45

Japan Real Estate Investment Corporation

Fiscal 2019

Fiscal 2020

Unit

JRE measures and gains an understanding of the energy consumption, water use, and waste of each building on amonthly basis, outsourcing data calculation and data analysis to a company specializing in EMS to execute its PDCA
cycle. If there is a large difference in the aggregated data from the previous month or year, we investigate the cause by
conducting interviews with the property manager and ensuring accurate data. We also constantly monitor the reduction
effects of green refurbishments such as LED and AC upgrades.
JRE has established selection criteria for property management (PM) companies to which it commissions the management of properties, and evaluates all of the PM companies once a year, in principle. In addition to the companies’
building management and maintenance abilities, JRE evaluates the PM companies by their environmental friendlinessin terms of operations, occupational health and safety measures for their employees, and understanding of and cooperation with the Sustainability Policy set by JRE-AM. Moreover, JRE requests the PM companies to make proposals to
help JRE reduce environmental impacts, such as measures to reduce energy consumption as part of their management
duties. In this way, JRE makes environmental improvement efforts in cooperation with the PM companies.
JRE makes contracts with professional firms to conduct energy assessments of a selection of its properties, andutilizes the results to understand the current level of their energy performance and to formulate future policies.
Over the past three years, 42% of the properties in our portfolio (based on floor area) have been inspected by aprofessional firm.
JRE will continue to acquire Green Building certifications as well as other environmental certifications and evaluations. As of the end of March 2021, we have acquired DBJ Green Building certifications, CASBEE certifications for realestate, and BELS certifications for a total of 51 properties (without counting properties with more than one certification
multiple times), with a coverage rate of 76.2% based on acquisition price.

Disclosure Topic: Water Management
SASB Disclosure CodeIF-RE-140a.1

Disclosure MetricFiscal 2019

Fiscal 2020

Unit

Water withdrawal data coverage as a percentage
of total floor area

100

100

Percentage (%)
by floor area

Water withdrawal data coverage as a percentage of floor area in regions with high or extremely high baseline water stress
At this time, there are no properties located in regions with high or extremely high baseline water stress.

IF-RE-140a.2

Total water withdrawn by portfolio areawith data coverage

887,660

656,771

m3

IF-RE-140a.3

Like-for-life percentage change in water
withdrawn for portfolio area with data coverage-5.57-27.15

%

93.64

97.77

Percentage (%)
by floor area

Percentage (%)
by floor area

Notes: Properties that have obtained BELS certification have been included.
Reference information:	Percentage of eligible portfolio that has DBJ Green Building certification or CASBEE certification.
Percentage of properties to have acquired environmental certification is 76.2% based on acquisition price.

Disclosure Metric

Percentage of area with data coverage

IF-RE-140a.4

Description of water management risks and discussion of strategies and practices to mitigate those risks
At this time, there is no region in Japan where water stress has been deemed high or extremely high, so JRE’s portfolio
is subject to low risk of water shortage. However, as a general rule, public water and sewerage services are purchased
for properties within JRE portfolio, and if the usage prices are raised, the overall operating costs for the portfolio may
increase. Conversely, if we can reduce consumption by improving the efficiency of water usage in buildings, there will bea corresponding reduction in operating costs.
For this reason, in its JRE has highlight “Contribution to creating a recycling-oriented society” as the second item of
its Sustainability Policy which states, “In order to contribute to creating a recycling-oriented society, we will promote
efficient use of water resources as well as implementing Reduce, Reuse and Recycling initiatives.” In keeping with thispolicy, JRE engages in efficient usage and management of water resources for its portfolio. In fiscal 2020, we set a target of 20% reduction in water consumption intensity relative to Fiscal 2013 as a long-term policy for reducing consumption for fiscal 2030.

At JRE, we are employing the following strategies for managing water consumption in our portfolio:• Implementation of technical evaluations (water-saving diagnoses) on the water-saving potential of buildings• Active introduction of water-saving equipment such as water-saving toilets and devices upon retrofit• Introduction of on-location water drainage equipment and equipment for water reuse• Renewal of irrigation equipment for exterior planting and adoption of landscapings that are easy to manage,with less water consumption• Thorough compliance with environmental laws and regulations, monitoring of water consumption, and timely
improvement through the implementation of an in-house EMS PDCA cycle

Japan Real Estate Investment Corporation

46

SASB Framework

Disclosure Topic: Management of Tenant Sustainability Impact
SASB Disclosure CodeIF-RE-410a.1

Reference
information

Disclosure Topic: Climate Change Adaptation

Disclosure MetricFiscal 2019

Fiscal 2020

Unit

Percentage of new leases that contain a cost
recovery clause for resource efficiency-related
capital improvements(To be disclosed)(To be disclosed)

Percentage (%)
by floor area

Associated leased floor area

(To be disclosed)(To be disclosed)m2

Percentage of total leasable floor area for buildings leased under a green lease agreement

42.3%

67.9

Percentage (%)
by floor area

Of which, floor area percentage for buildings
leased under a green lease agreement that contains a cost recovery clause

54.9%

53.1

Percentage by building

SASB Disclosure CodeIF-RE-450a.1

Disclosure MetricFiscal 2019

Fiscal 2020

Unit

Area of properties located in 100-year
flood zones

551,331

676,024m2

Note: Amount recorded refers to the total floor area of properties located in areas where inundation of more than 0 m indepth is expected based on hazard maps (primarily the maximum expected scale) issued by local governments.
Japanese hazard maps (maximum estimated scale) are developed for areas with an annual exceedance probability of
1 in 1,000 for flood damage.
	In addition, as these floor areas are based on hazard maps, the risk of flooding may change at different points in time
for the same property when each local government updates its hazard map.
IF-RE-450a.2

 escription of climate change risk exposure analysis, degree of systematic portfolio exposure, and strategies
Dfor mitigating risks(Please refer to the “Climate Change” section of this report beginning on page 15 for more information)

Note: “Green lease agreements” in the reference information above refers to provisions in leasing contracts related toboth refurbishments and arrangements for environmentally conscious building operations. Calculations for fiscal
2019 were based on total floor area.
IF-RE-410a.2

IF-RE-410a.3

Percentage of tenants that are separately meteredor submetered for grid electricity consumption

100

100

Percentage (%)
by floor area

Percentage of tenants that are separately
metered or submetered for water withdrawals

90.7%

91.7

Percentage (%)
by floor area

 iscussion of approach to measuring, incentivizing, and improving sustainability impacts of tenantsD(Please refer to the “Tenants & Partners” section of this report beginning on page 25 for more information)
Aiming to make environmental contributions by collaborating with tenants, JRE has been gradually introducing green
leases that incorporate both operational improvements and efficiency retrofits.Moreover, JRE is conducting diverse
sustainability initiatives together with our tenants.
Sustainability Guide to Promote Owner and Tenant Collaboration:
JRE has created the Sustainability Guide and distributes them to its tenants aiming to promote close collaboration with
them.
The Sustainability Guide provides tenants various tips on what they can do in the office, mainly from the viewpoints of
the “environment” and “tenant well-being,” supplemented with real-life case studies.
VOL.1 Work Style Reform

VOL.2 Offices in the“New Normal” Era, Waste Recycling∙ Toward a Sustainable Society∙ Case1: Offices in the “New Normal”∙ Our Thoughts∙ Case2: Waste Recycling∙ Case1: Example of a Large-Scale Office∙ What We Can Do Now∙ Case2: Example of Small- and Medium-Sized Offices∙ Case3: Creating New Spaces in the Current Office∙ What We Can Do Now

In addition to the guide, we have the following engagements with our tenants:• Introductio of an online system that enables tenants to check their energy use• Holding Global Warming Prevention Committee meetings open to tenant participation• Participation in the energy conservation month campaign and other activities to promote energy efficiency
In many buildings, tenants enter into leasing contracts in which JRE bills the tenants for utility costs based on actual
consumption of energy, water, etc. for which the tenant is obligated to pay the actual cost. This scheme therefore
provides tenants with incentives to reduce actual consumption. Tenants are also able to reap the repair-related benefitsof green leases, with these costs being shared with the property owner.

47

Japan Real Estate Investment Corporation

Japan Real Estate Investment Corporation48

100-0004
Park Building 1-1-1 Otemachi,
Chiyoda-ku, Tokyo 100-0004, Japan
URL：https://www.j-re.co.jp/en/

Printed in Japan