ESG ReportFebruary 2022

MC-UBS Group
Brand Message

The Logo
Symbol markThe logo evokes the idea of buildings and land
while representing both the "M" of Mitsubishi
Corporation and the "U" of UBS A.G. The logo
expresses the focus of our group, born from the
combined expertise and experience of the two
firms in real estate and finance.

Mission, Vision &Core Values

MISSION“Always Create New Value for People, the Community, and the World”
Through real estate investment management, we create new demand in our society
and new value that exceed people’s expectations.

VISION
We strive to be the leading group of professionals, trusted by people,
the community, and the world.

CORE VALUESM

Mastery

We act proactively and professionally and adhere to the highest standardsof compliance and discipline.

C

Challenge

We always challenge the unprecedented.

U

UniquenessWe think outside the box and dare to be original.

B

Belief in ourselves

We believe in ourselves and are committed to our “MCUBSR” values.

S

Stewardship and Sensitivity

 e take our dialogue with investors seriously, and fulfill our fiduciary duty.
W
We are sensitive to changes in the world and respond to them appropriately.

R

Respect

We respect our colleagues and partners so that we can all work with pride and a smile.

Certifications(Note) T HE INCLUSION OF MITSUBISHI CORP.-UBS REALTY
INC. IN ANY MSCI INDEX, AND THE USE OF MSCILOGOS, TRADEMARKS, SERVICE MARKS OR INDEXNAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF MITSUBISHI
CORP.-UBS REALTY INC. BY MSCI OR ANY OF ITS
AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVEPROPERTY OF MSCI. MSCI AND THE MSCI INDEXNAMES AND LOGOS ARE TRADEMARKS OR SERVICEMARKS OF MSCI OR ITS AFFILIATES.

2

Message from Management202	Message fromPresident Okamoto

Contents

21

24

4

Sustainability Strategy
4 Sustainability Strategy

Industrial & Infrastructure Fund Investment Corporation under management are actively engaged in

6 ESG Materiality and the SDGs

practices that promote sustainability within the J-REIT
industry, information on which they disclose tosustainability published on the websites of eachof our initiatives.
ESG Report February 2022 serves as an informative
tool for stakeholders with a high level of interest in
sustainability and therefore makes reference to GRI
standards and SASB standards (real estate).
Going forward, we hope to gather opinions fromthose who read this report in order to further improve
subsequent reports. In addition, we hope that thisreport can be used as an effective means to maintaina dialogue with our stakeholders.
Month of issuance: February 2022
Frequency of updates: Once annually

10

Environmental
11

29

Human Capital Development

32	Social Contributions by Employees /ESG Study Sessions andBriefing Sessions

has been consolidated in this document, ESG ReportFebruary 2022, in order to provide a clear explanation

Health and Well-Being

31	Building Safety

9 Supported Initiatives

management company and investment corporation

27

30 Communication with Tenants

7 ESG Materiality and KPIs

stakeholders. For this term, information pertaining to

The Social Bond

25	Communication with
Local Communities

Editorial Policy
Metropolitan Fund Investment Corporation andCommunication with Stakeholders

22	Creating a Positive Impact

3	Message from
Chief Sustainability Officer Suzuki
Mitsubishi Corp.-UBS Realty Inc. (MCUBS) and Japan

SocialClimate Change and Resilience14	Environmental Approvals and
Evaluations for Assets
15

The Green Bond

16

Energy18

Water / Waste / Biodiversity

19

Pollution Prevention

33

Corporate Governance
34 Corporate Governance
36Compliance37

Risk Management

38

ESG Data

40

Investment Corporation Overview

Reference guidelines: G
 RI standards,
SASB standards (real estate)
The GRI Guidelines and SASB Index will be posted at
the end of March 2022 on website.
Contact Information
Tel: +81-3-5293-7000 (main)
E-mail: contact-us_mcubs@mc-ubs.com

ESG REPORT Februar y 2022

1

Message from Management

Aims to improve unitholder value
through investment management andcontributes to solving global issues.

Message from President Okamoto
We at Mitsubishi Corp.-UBS Realty Inc. (MCUBS) aim toincrease unitholder value by “creating, through realestate investment management, new demand in oursociety and new value that exceeds people’s expectations” under our mission of “always creating new value
for people, the community, and the world.”
In 2021, the Japanese economy continued to beaffected by COVID-19, and economic activities such as
cross-border movement of people and goods wererestricted. Although there were signs of improvement
following the lifting of the state-of-emergency declaration at the end of September, the outlook for the­economy has remained uncertain due in part to theemergence of a new COVID-19 variant.
However, while economic activities have stagnatedwith the spread of COVID-19, moves toward therealization of a sustainable society have been accelerating worldwide. In October 2021, the 26th UN Climate
Change Conference of the Parties (COP26) took place inGlasgow, UK. In the Conference, the parties agreed topursue efforts to limit the increase in the global averagetemperature by 2100 to 1.5ºC above pre-industrial
levels, while all nations agreed to review and strengthen
their emissions targets up to 2030 as necessary by 2022.
Prime Minister Fumio Kishida attended the COP26
World Leaders Summit and stated that the decade up to2030 will be critical. As Japan’s initiatives, he unveiled
the country’s new greenhouse gas reduction target for2030 and its commitment to provide additional funds of
up to 10 billion U.S. dollars over the next five years to
support the decarbonization of Asia and other regions.
This has resulted in a further increase in the importance

ESG REPORT Februar y 20222

of addressing climate change.
Japan Metropolitan Fund Investment Corporation andIndustrial & Infrastructure Fund Investment Corporation—the investment corporations managed by MCUBS—
have established new CO2 reduction targets. These targets are to become carbon neutral by 2050 and reduce
CO2 emissions by 50% (on an emissions per unit basis(note)) compared with 2015 by 2030. To date, we haveactively worked on environmental, social, and governance (ESG) initiatives, aiming for the realization of asustainable society, based on the MCUBS sustainability
vision of “aiming to improve unitholder value throughinvestment management and contributing to solving
global issues.” We recognize that while various countries
across the world are accelerating their efforts to deal
with climate change, both of the investment corporations

aiming for the realization of a sustainable society willcontribute to the worldwide countermeasures against
climate change and also help to increase unitholder value.
We will continue to contribute to creating a sustainable society by creating economic effects and employment, enhancing the health and well-being of tenants,
and providing safe and secure spaces.
(note) E missions per unit are calculated based on total floor area (after considerations
for rate of occupancy).

February 2022

Katsuji OkamotoPresident & CEO

Message from Chief Sustainability Officer Suzuki
We have established the Sustainability Committee as abody that approves resolutions and receives reports
concerning sustainability policies, strategies, and othermatters of MCUBS and the investment corporations
it manages—Japan Metropolitan Fund Investment
Corporation (JMF) and Industrial & Infrastructure Fund
Investment Corporation (IIF).
In 2021, MCUBS, JMF, and IIF decided to aim forcarbon neutrality in 2050 and established CO2 reduction
targets for 2030.
JMF issued Green Bonds in June and December, procuring funds of 8.5 billion yen and 5 billion yen, respectively.
IIF also issued its first Social Bonds in August, raising a
total of 5 billion yen. Industrial properties, which are IIF’s
investment targets, play an important social role, andwe recognize that holding and managing these industrial properties stably for a long time will contribute tosolving social issues.
In recent years, there has been a significant increasein the issuance of Social Bonds that limit the use offunds to projects contributing to solving social issues,and these bonds are expected to help promote the­resolution of social issues.
We will continue to advance ESG activities to enable
us to bring benefits to all stakeholders in the form ofcontribution to eco-friendly initiatives and local communities, in addition to improved earnings, through positive
ESG activities.



Naoki Suzuki

Deputy President andChief Sustainability Officer

ESG REPORT Februar y 2022

3

Sustainability Strategy

Sustainability Strategy

MCUBS’s Vision for Sustainability
Contribute to solve global-scale issues through achieving
enhancements to unitholder value by investment management
Environmental

SocialGovernance

Reduce environmental impact

Create social value

Practice sound asset management
for all stakeholders

Response to
climate change

Introduction ofrenewable­energy use

Health andwell-being

Resilience

Pursuit of­diversity

ESG Disclosure incompliance withinternational
standard

Responsible Property Investment Policy
MCUBS believes that Responsible Property Investment(RPI) adds value to an investment by limiting the risks ofregulatory non-compliance and losing its competitive
position in the market, by making a property more
appealing to tenants and purchasers and, in some cases,by reducing expenses and improving returns. Therefore,
RPI is important strategy for us.

The concept of RPI for us is to make it a first priority is
to deliver improved profitability of the investment
corporations and also consider social and environmental
issues from a long term perspective. We believe thatEnvironmental, Social and Governance issues will havean impact and these issues should be considered in ourasset management strategies.

Establishment of New CO2 Emissions Reduction Targets Toward Carbon Neutrality by 2050

東京都渋谷区神宮前5-10-1

階数：B2F-5F

Ca
tS
t.

所在地：〒150-0001

M
eij
iS
t.

Considering that responding to climate change is an“aiming to improve unitholder value through investment
important social issue, MCUBS is a signatory to the
management and contributing to solving global issues.”
Montreal Carbon Pledge and supports the Task Force
They are also actively engaged in ESG initiatives, and areon Climate-related Financial Disclosures (TCFD)
promoting environmentally friendly measures andrecommendations and the Japan Climate Initiative (JCI).
energy-saving measures and more efficient use ofJapan Metropolitan Fund Investment Corporationenergy in the properties held by them.
and Industrial & Infrastructure Fund Investment
In June 2021, MCUBS and both of the investment
Corporation—the investment corporations managed bycorporations established new CO2 emissions reduction
名称：GYRE（ジャイル）
主要用途：店舗
targets toward realizationof carbon neutrality by 2050.
MCUBS—are also working toward the realizationof aHarajukuSta.
開業：2007年sustainable society based on our sustainability vision
最高の高さ：29.95m(PH37.245m)
of
Meiji

jingumae
地域、区域、地区： Japan Metropolitan Fund Investment Corporation 構造：SRC+RC+S/SRC+RC+S造(JMF)​
Industrial & Infrastructure Fund Investment
Corporation (IIF)​

北側 / NORTHSIDE：
商業地域、防火地域、市街化区域
南側 / SOUTHSIDE：

建築面積：1532.28㎡
・Aim to reach carbon neutrality
by 2050・Reduce CO2 emissions 建ぺい率：86.61％＜94.56％
per unit by 50% by 2030 compared with 2015

延べ面積：8950.46㎡

第一種中高層住居専用地域、準防火地域、市街化区域

容積率：418.15％ ＜418.46％

Mitsubishi Corp.-UBS Realty (MCUBS)​

・Aim to reach carbon neutrality by 2050
・Reduce CO2 emissions by 2030

ESG REPORT Februar y 2022

4

Sta.

Om

ot

es

an

do

o

Sustainability Promotion Structure
The Sustainability Committee 
The Sustainability Committee is the body that approves
resolutions concerning environmental, social, and governance (ESG) policy, strategy, and structure, based on theEnvironmental Charter and the Responsible Property

Investment Policy. It also functions as a body that sharesinformation on the status of activities, evaluation results,
and analysis of the sustainability of the investment
corporations.

Chief Sustainability Officer 
The Deputy President & Representative Director
appoints as Chief sustainability Officer (CSO) tostrengthen the sustainability promotion system. CSO as
the committee chairman reports the matter confirmedby the Sustainability Committee to the Board of
Directors, chaired by the President & CEO and works toshare awareness of issues and raise awareness levels.

Person in Charge of ESG System 
We have established the person in charge at each Division and by playing the role of driving ESG target activities, we’ll
integrate ESG considerations into its investment and asset management processes.
Members of the Sustainability Committee

Frequency of Meetings

Committee chair:

The Sustainability Committee meets approximately four times a

CSO

Committee members: 	President, COO, Head of Metropolitan

year. In addition, subcommittee meetings are held at an appropri-

Business Division, Head of Industrial

ate frequency, where more detailed discussion takes place from a

Division, Head of Corporate Division,practical and operational standpoint.

Head of Strategic Planning Office,Head of ESG Promotion OfficeSecretariat:

ESG Promotion Office

Main Examination Items·	Sustainability policy, strategy, andstructure·	Sustainability targets·	Activity report·	Membership and signing of·	Eligible Green Projects

environmental organizations·	ESG Report approval

Organizational Chart of the Sustainability Committee

Metropolitan Business Division (JMF)

Committee chair: CSO (Deputy President)
Secretariat: ESG Promotion Office

Industrial Division (IIF)

Collaboration with Mitsubishi Corporation and UBS AG
Our Sustainability Committee keeps in close communication with our sponsor, Mitsubishi Corporation. Startingwith the adoption of a sustainability strategy based on
Mitsubishi’s Three Principles, this communication has led tothe sharing of know-how and examples of successful initiatives between the Company and Mitsubishi Corporation.

We share examples of advanced global initiatives and
MCUBS’s initiatives with our other sponsor, UBS AG,
through UBS’s Sustainability Committee and othermeans, which we then leverage within each other’ssustainability activities.

ESG REPORT Februar y 2022

5

Sustainability Strategy

ESG Materiality and the SDGs
Through the meetings of the Sustainability Committee, MCUBS has examined its vision and targets forsustainability and carried out efforts toward their realization. As the level of interest toward ESG is rising,
we have identified and visualized ESG material issues related to sustainability (materiality). By doing so, we havefurther clarified the dialogue we hold with global stakeholders and the efforts we pursue in collaboration withother organizations. These issues were identified based on MCUBS’s Corporate Philosophy and Environmental
Charter but also incorporate the ideas of the Sustainable Development Goals (SDGs), globally shared goals
promoted by the United Nations.

ESG Materiality Selection Process
STEP• Identification of Sustainability Issues

1	We compiled lists of sustainability issues related to REITs based on the SDGs, global ESG disclosure criteria, and benchmark studies by overseas companies in the same industry.

STEP• Establishment of Priority Order

2	We established an order of priority for the issues we identified by taking into account their levelof importance to asset management companies, each fund under the Company’s management,
overseas companies in the same industries, and external organizations.

STEP• Confirmation of Validity3	To ensure objectivity, we underwent a review by External third-party organization regarding our
ESG materiality and its selection process.

STEP•Discussion and Approval by Senior Management

4	The Company’s Sustainability Committee discussed and approved the selected ESG materiality.

Through the ESG materiality selection process detailed
above, we identified the ESG materiality shown on
pages 7 to 8. We also organize opportunities and risks
about it, and set new KPIs.
First, as a real estate asset management company, it isabsolutely essential that MCUBS ensures the quality ofthe buildings it manages through certifications andother means and addresses issues related to climatechange and energy efficiency. Also, we will strive toimprove building comfort and convenience and to raise
the awareness of tenant employees about ESG, andstrive to increase satisfaction to achieve this goal.

Next, in addition to responding to climate change andenergy efficiency, we must work together with our tenants and local community members to address theissues of efficient water use and waste disposal. By
doing so, we will work to establish partnerships andbuild green communities.
Going forward, after further clarifying the level ofpriority of these issues and working to visualize them,
we will strive to achieve their resolution while promoting
dialogue with all of our stakeholders.

List of Sustainability Issues
Response to sustainability certifications
Building resilience
Response to climate change
Energy efficiency
Ensuring of health and well-being of andconvenience for people (tenants)

Employee cultivation and level of satisfactionEfficient water use
Waste disposal
Partnership with tenants
Collaboration with local communities
Biodiversity in areas surrounding our buildings

ESG REPORT Februar y 2022

6

Employee diversity
Compliance
Supply chain management

ESG Materiality and KPIs
Level of Importance
Most important
ESG materiality

Target and KPIRisk and Opportunity

Improving proportion of environmental certifications

Response tosustainability
certifications

JMF• Acquiring certifications for 75% or more of the total
portfolio (Total floor area basis)

IIF• Acquiring certifications for 60% or more of thetotal portfolio

IIF• Acquiring certifications for 70% or more of Logistics
facilities (Target year: 2023)

JMF• GRESB: Acquiring “5 Star”

JMF• CDP: Acquiring more than “B” score

IIF• MSCI: Acquiring more than “A” rank

IIF

• GRESB: Acquiring “5 Star”

JMF• Preparing emergency supplies at 100% of theproperties where such supplies can be kept

JMF

• Developing an emergency communication networkthat covers 100% of properties

JMF• Collecting engineering reports (ERs) regularly for
100% of properties

IIF• Completion of construction of emergency call tree

Reduction in CO2 emission
Response to
climate change

JMF• Reduction in CO2 emission per unit* by 50%
compared with 2015 (Target year: 2030)

IIF• Reduction in CO2 emission per unit* by 50%
compared with 2015 (Target year: 2030)

Opportunity• Increase in property competitivenessRisk•D rop in tenant sales & increase in property damages
due to physical impact of climate change• Decline in assessment by tenants & investors
Opportunity• Cost reduction with efficient energy use• Reduction in energy consumption per unit* by 20%
compared with 2015 (Target year: 2030)

Risk• Increase
in energy-related expenses• Reinforcement

of environmental regulations

IIF• Reduction in energy consumption per unit* by 30%
compared with 2015 (Target year: 2030)

Opportunity• Cost
reduction with efficient energy use

Introduction of renewable energy use
JMF• Increasing the share of renewable energy in electricity used in business activities to 20%(Target year: 2030)

IIF• Shifting to electricity sourced from renewableenergy at directly managed properties(Target year: 2030)

Improvement in tenant employee space
Ensuring ofhealth andwell-being ofandconveniencefor people(tenants)

Risk• Increase
in expenses for recovery, compensation,etc., after natural disasters

JMF

Improvement in energy consumption

Energyefficiency

Opportunity• Improve environmental performance of properties• E xpand the range of investors

Improving sustainability activities through participation in GRESB
and other external evaluation institutions

Implementing disaster prevention measures

Building
resilienceRisk•D ecline in assessment among tenants and investors
who base their assessments on sustainability

JMF• Improving communication space and refresh spaceat the time of renewal

Visualization of health and comfort
JMF

Considering acquisition of wellness certification

Implementation of employee satisfaction survey
MCUBS• Survey conducted annually

Opportunity• Improved sustainability assessment by assessment
bodies and investors• Improvement in employee satisfaction and tenant
assessment & satisfaction
Risk• Outflowof talent• Emergence
of risks with decline in complianceawareness

Employee participation in compliance training
MCUBS

Risk
• Declinein property competitiveness• Manpoweroutflow due to declining work
conditions• 100%

Employeecultivation

Opportunity• Development & recruitment of competitive
human resources• Assurance of customer trust through improved
compliance awareness* Calculated based on the total floor space (after considerations for occupancy rate)

ESG REPORT Februar y 2022

7

Closely
relatedSDGs

Sustainability Strategy

ESG Materiality and KPIs

Level of ImportanceImportant
ESG materiality

Target and KPIRisk and Opportunity

Reduction in water consumption
IIF

Efficient
water use

• Keeping water use per unit* at the same level as2015 (Target year: 2030)

Closely
relatedSDSs

Risk• Impact of shortage or quality decline of water
resources on surrounding areas• Rise in cost with increase in water consumption
volumeOpportunity• Cost reduction with reduction in water consumption

Reduction in wastes
JMF

Waste disposal• Implementing comprehensive waste management(waste amount, waste treatment operators, final
treatment sites) at 100% of directly managed
properties (Target year: 2023)

Providing land to community events
Collaboration
with local
communities

IIF• E xisting Property : Maintenance for the actual
condition

IIF• New Property : Consideration of the plan based on
the negotiation with tenants

Risk• Reputation risk caused by increase in wastes• Increase in processing cost
Opportunity• Processing cost reduction with reduction in wastes
Risk• Degradation of the environment surrounding
the real asset• Decline in reputation in the neighboring area
Opportunity• Revitalization of neighboring areas• Improvement of corporate image* Calculated based on the total floor space (after considerations for occupancy rate)

Level of ImportanceImportant
ESG materiality

Target and KPIRisk and Opportunity

Reduction in water consumption
JMF• Implementation of reducing water consumption

Efficient
water use

Risk
• Impact of shortage or quality decline of water
resources on surrounding areas• Rise in cost with increase in water consumption
volumeOpportunity• Cost reduction with reduction in water consumption

Introduction of green lease
JMF• Proposal to introduce green lease to tenants

Execution of tenant satisfaction survey
Partnershipwith tenants

JMF• Conducting tenant satisfaction surveys at 100% of
directly managed properties

Promoting environmental consideration to tenants
JMF

Collaboration
with local
communities• Cooperating for UNICEF fundraising and campaign
for United Nations Refugee Support Activities

Providing land to community events
JMF

Opportunity• Devolution into property attractive to the tenant• Generation of stable revenues• Proposing (environmentally friendly) interior
design criteria

Support for social welfare organizations
JMF

Risk
• Greater tenant burden regarding safety andthe environment• Decline in tenant satisfaction• Conducting programs that contribute to communities at 100% of directly managed properties where
events can be conducted

Risk• Degradation of the environment surrounding
the property• Decline in reputation in the neighboring area
Opportunity• Revitalization of neighboring areas• Improvement of corporate image

ESG REPORT Februar y 2022

8

Closely
relatedSDSs

Supported Initiatives

Principles for Responsible Investment (PRI) 

Signatory since August 2013
First J-REIT asset managerIn solidarity with the fundamental ideas of the PRI, MCUBS became a signatory in August 2013.
MCUBS is the first J-REIT asset manager to become a signatory of the PRI.

Principles for Financial Action toward a Sustainable Society

Signatory since June

2013

(Principles for Financial Action for the 21st Century)
In solidarity with these principles put forth by the Ministry of the Environment, MCUBS became asignatory in June 2013.

Montreal Carbon Pledge Signatory since September 30, 2015
First J-REIT asset manager

MCUBS became the first J-REIT asset manager to sign the Montreal Carbon Pledge on September
30, 2015.

United Nations Global Compact (UN Global Compact)

Signatory since October 2016
First J-REIT asset manager

MCUBS became the first J-REIT asset manager to sign up to the UN Global Compact in October 2016.
As a signatory and respecting the principles of the UN Global Compact, MCUBS has further strengthened its corporate governance in the areas of human rights, labor, the environment, and anti-corruption,
based on its corporate mission to “always create new value for people, the community, and the world.”

Task Force on Climate-related Financial Disclosures (TCFD)

Signatory since August 2019

MCUBS supports the spirit of the recommendations published in June 2017 by the Task Force on
Climate-related Financial Disclosures (TCFD), which was established by the Financial Stability Board,and in August 2019, MCUBS declared that support.
Recognizing that climate change is an important environmental issue that significantly affects ourbusiness activities, we will aim to take measures in line with the TCFD framework.

Japan Climate Initiative (JCI)MCUBS participated in Japan Climate Initiative (JCI) in May 2020 in support of the JCI’s declaration“Joining the front line of global trend for decarbonization from Japan.”
JCI was established in July 2018 as a network of Japanese companies, local governments,organizations, NGOs, etc. that are actively engaged in climate change countermeasures toward therealization of a decarbonized society aimed at by the Paris Agreement.

The investment group of UNEP FI , which MCUBS signed up in October 2016, was transferred to Principles for Responsible Investment (PRI) on January 1, 2022.

ESG REPORT Februar y 2022

9

EN V I RO N MEN TA L

Environmental Charter
MCUBS formulated the Environmental Charter, which sets out our environmental principles and action plans, in June 2013.

Environmental Charter
At MCUBS, we consider the Earth itself to be our most important stakeholder and are continuously working toward the realizationof a sustainable society through our business activities.
• We will strive to reduce greenhouse gas emissions by continuously implementing new efficiency measures and embracing newtechnologies.
• We will promote the sustainable use of natural resources including energy, minerals, food stocks, and water throughout our global
business operations.
• We recognize the critical importance of what ecosystems can provide and are committed to protecting ecosystems and mitigating any
potential impacts on biodiversity.
• We will strive to create and enhance environmental benefits by undertaking conservation activities and reducing our environmental
footprint.
• We will continue to actively engage and work with our various stakeholders openly and transparently and disclose information on theenvironmental impacts of our business operations in an appropriate and timely manner.
• We will conduct all of our activities in compliance with environmental laws while adhering to international rules and social standards.

ESG REPORT Februar y 2022

10

Environmental

Climate Change and Resilience
Developments Related to Climate Change
The Paris Agreement is an international framework on
climate change adopted in 2015. Its long-term goal isstated as holding the increase in the global average temperature to well below 2ºC above pre-industrial levels andsharing efforts to limit the temperature increase to 1.5ºC,
and to achieve effectively zero greenhouse gas emissions.
Actions related to climate change accelerated in 2021.
For example, the U.S.-hosted Leaders Summit on Climate
was held, and climate change was discussed as the mostimportant issue in the G7 Summit. In addition, theIntergovernmental Panel on Climate Change (IPCC)

affirmed in its latest report released in August that “it isunequivocal that human influence has warmed the atmosphere.” Thus, it was revealed that significant reductions ingreenhouse gas emissions are urgently needed to achieve
the Paris Agreement goals. Under such circumstances, the26th Climate Change Conference of the Parties (COP26)
was held. The final agreement clearly states that the conference “reaffirms the goal to pursue efforts to limit thetemperature increase to 1.5ºC,” indicating that not only
governments but also industries will need to consider
measures for the 1.5ºC target going forward.

Policy on Initiatives for ESG Including Climate Change
In June 2013, MCUBS established the Environmental
Charter and the Responsible Property Investment Policy.
With regard to climate change, the Environmental
Charter clearly states that “we will strive to reducegreenhouse gas emissions by continually implementing
new efficiency measures and embracing new technologies.” In addition, the Responsible Property Investment
Policy shows our recognition that, due to climate change
and other environmental changes and growing demands

for social responsibility, new laws and regulations andcosts related to them will continue to increase, requiring
us to step up our initiatives to address these issues andincorporate such initiatives into our investment strategies going forward. Under the conviction that ESG factors will increasingly affect our financial results, we will
integrate these factors into the investment and management processes for the investment corporations’ assets.

Recognition Regarding Climate Change
MCUBS recognizes that climate change is an importantenvironmental issue that significantly impacts our business activities. Global warming is becoming more severe
with increasing economic activities, and various
researches have made clear that this leads to abnormal
weather such as torrential rains, floods, and droughts.
Our mission is “creating, through real estate investment management, new demand in our society andnew value that exceeds people’s expectations.” To
achieve our mission, it is necessary to create a sustainable society, and we recognize that the shift to a

low-carbon society is a social responsibility required
from long-term management.
MCUBS expressed support for the recommendationsof the Task Force on Climate-related Financial
Disclosures (TCFD)* in August 2019 and has been
advancing initiatives based on the recommendations.
* In its final report, the TCFD recommends that climate-related risks and opportunities
be disclosed with respect to four areas: governance, strategy, risk management, andmetrics and targets.

Information Disclosure Based on TCFD Recommendations
Governance

System of Supervision by the Board of Directors 
The matters resolved by and reported to the
Sustainability Committee chaired by the Chief
Sustainability Officer (CSO), who is the Deputy
President, are overseen and supervised by being

reported as needed to the Board of Directors, whichmeets about once every two months and is chaired by
the President of MCUBS, as well as the Board of
Directors of each investment corporation.

ESG REPORT Februar y 2022

11

Environmental

Climate Change and Resilience

The Sustainability Committee 
The Sustainability Committee is chaired by the CSO

management company are reported and investigated.

(Deputy President). The President, COO, fund managers,

The Committee identifies material risks and opportunities

and other members meet once every quarter and work

related to climate change and plays a central role in sustainability

under a system where sustainability-related mattersactivities by resolving policies, strategies, systems, andproposed by the investment corporations and asset

sustainability goals and monitoring performance.

Risk Management

Organizational Process of Identifying and Evaluating Risks With regard to climate change-related risks and opporexamine their impact. The identified risks and opportutunities for the entire organization, we first examine
nities and their impact are reported to and discussed attheir impact on our portfolio and the possibility of their
the Sustainability Committee and the identification andoccurrence, and then identify the risks and opportunities
evaluations of risks and opportunities are confirmed.
closely related to each investment corporation andProcess of Managing Risks of Climate Change and Organizational Initiatives 
The Sustainability Committee checks the status ofissues and sharing of information.
progress on responses to the risks and opportunities
Moreover, we collect and monitor monthly
identified and evaluated for each investment corporation.
environmental data for properties of each investment
In addition, MCUBS holds meetings of subcommittees
corporation. To work on initiatives for environmental
under the Committee at an appropriate frequency,
matters, including metrics and targets and efforts towhere more detailed discussion takes place from aaddress climate change, and collect environmental data,practical and operational standpoint. The subcommittees
we have established an environmental management
meet as appropriate to enhance their recognition andsystem and strive to continually strengthen and improveawareness of issues through consideration of individual
our initiatives by implementing a PDCA cycle.
Integration into Overall Risk Management 
MCUBS operates the Risk Management Committee, inwhich senior management personnel serve as members.
The Committee grasps and investigates matters related
to major risks and formulates countermeasures andmanagement policies. It checks the risk status of eachdivision once every two months using a Risk Control

Matrix (RCM), thereby implementing evaluation andmanagement. Using this RCM, MCUBS evaluates latentrisks and risks associated with climate change and othersustainability measures across the organization. Details
discussed at the Committee are reported to the Boardof Directors.

Board of Directors
Chair: President & CEO
ReportOversight andsupervision

President & CEO
Chief Officer for Risk Management

Oversight andsupervision

ReportPutting together opinions

Sustainability Committee
Chairman: Chief Sustainability Officer

Risk Management Committee
Chairman: Head of Corporate Division

ReportReportRisk Management Officer
Head of each Division and Officer

Personnel in charge at each division and subcommittee
Identification of risks
and opportunities
regarding sustainability

Evaluation of risks andopportunities regarding
sustainability

Consideration of
measures

Monitoring

Grasping of results

Implementation of
measures

Understanding of
external and internal
environments

ESG REPORT Februar y 2022

12

Consideration of risk
scenarios andmeasures

Risk evaluation

Strategy

Risks and Opportunities of Climate Change 
The TCFD recommendations classify climate change risks
into “transition risks” and “physical risks.” Responses toclimate change are likely to provide not only risks but
also business opportunities through new economic activities and the creation of social value. MCUBS considers
that responding to climate change is an important social
issue that significantly impacts our business activities. To

ensure the achievement of the mid- and long-term goals
established in June 2021, we will review the portfolio of
each investment corporation, and with the discussion at
COP26 in mind, we will advance our scenario analysis
centered on 1.5ºC and 4ºC scenarios, referring to theInternational Energy Agency (IEA) Report, IPCC
Assessment Reports, and other documents.

Risks
Risk Category
Based on TCFD

Policies, andlegal

Technology

Markets

Society

Reputation

Acute

Chronic

Narrow Classification

PeriodTransition risks
Medium· Reinforced energy regulations including mandatory
termenergy-saving performanceLong term· Costs incurred from the expansion of emissions trading
systems and introduction of a carbon tax· Higher costs to respond to regulations
Medium· Improved energy efficiency through the use of facilities
termwith high energy-saving performanceLong term· Higher costs from introduction of facilities with highenergy-saving performanceShort· Competitive advantage at properties with hightermenvironmental performance
Medium· Decrease in asset valueterm· Decrease in share priceLong term· Increased social demands to curtail GHG emissions
Medium· S ocioeconomic changes from expanded ESG investment, etc. termLong term· Decline in reputation due to delayed measures to respondShort
to climate change
termMediumterm
Long term
Physical risks· Increased severity of typhoons, floods, etc.
Short
term
Mediumterm
Long term· Climate change such as higher temperatures and sea level rise Long term

Understanding of Issues· E nergy efficiency·R enewable energy·Q uantification of the risk of higher costs to respond to
future regulations· E nvironmental management systems (EMS)·A
 doption of advanced technologies·G reen building certification· E nvironmental performance of buildings· Engagement· Introduction of renewable energy·Q uantification of future increases in operating costs· S ustainability finance·M onitoring status of target achievement·G aining tenant cooperation· E SG risk management systems·B uilding resilience·Q uantification of future climate disaster risks· Increase in insurance premiums·D D process when selecting properties· F looding damage from temperature increase (sea level rise)·H igher future operating costs and quantification of risks

Opportunities• Enhancement of energy efficiency through technological development• A variety of funding methods (Green Bonds, sustainability finance, etc.)
Responses to Climate Change Risk 
To reduce the impact of the physical risk, we are taking
measures to improve building resilience, such as theinstallation of waterproof boards and portable storage
batteries. We are also actively responding to climate change

by introducing renewable energy. In addition, we areconsidering the utilization of the Carbon Risk Real Estate
Monitor (CRREM) and use of other simulation tools in
calculating the impact of climate change risk on our portfolio.

Indexes and Goals
JMF

IIF

MCUBS

・Aim to reach carbon neutrality by 2050
・Reduce CO2 emissions per unit by 50% by 2030 compared with 2015

・Aim to reach carbon neutrality by 2050
・Reduce CO2 emissions by 2030

MCUBS 	For results and progress since 2015, please refer to page 38, ESG Data “Environmental.” For other indexes and goals, please refer to page 7
and page 8 ESG Materiality and KPIs.

ESG REPORT Februar y 2022

13

Environmental

E nvironmental Approvals and
Evaluations for Assets
At the MCUBS and each Investment Corporation, we make active efforts to achieve sustainability, and we also
believe in the importance of acquiring positive ratings and appropriate certifications for these efforts. To meetthe demand of investors, tenants, and other stakeholders worldwide, we acquire a wide range of domestic andoverseas certifications, from performance assessments of individual buildings to evaluations of entire funds.

Conditions Regarding the Acquisition of Certifications
GRESB has established its position as a global standard
as a valuation for entire investment corporation. The
former Japan Retail Fund Investment Corporation, currently JMF, and IIF have been certified from the earliest
stages, 2012 and 2013, respectively.
In 2021, JMF received 5 stars and IIF received 4 stars.

In addition, JMF and IIF were also rated as “A”, the top
rating in the GRESB Public Disclosure. In addition, theformer Japan Retail Fund Investment Corporation, currently JMF, became the first J-REIT to participate in the
CDP climate change program in 2016.
As of January 31, 2022

JMF

IIF

Real Estate Rating
5 stars

Real Estate Rating
4 stars

Public Disclosure Rating
A

GRESB

(fifth consecutive year)

A–	(leadership level)

CDP Climate Change
Program

CASBEE Certifications forReal Estate, Buildings, &Wellness Office

DBJ Green Building
Certification

BELS Certification

Public Disclosure RatingA(fourth consecutive year)—S: 19 properties (first rating acquired in 2015)
A : 7 properties (first rating acquired in 2018)
B+ : 3 properties (first rating acquired in 2018)S: 8 properties (first rating acquired in 2018)
A : 14 properties (first rating acquired in 2017)
B+ : 1 property (first rating acquired in 2020)

5 stars : 1 property (first rating acquired in 2015)
4 stars : 11 properties (first rating acquired in 2012)
3 stars : 5 properties (first rating acquired in 2014)
2 stars : 3 properties (first rating acquired in 2017)
1 stars : 4 properties (first rating acquired in 2017)

4 stars : 3 properties (first rating acquired in 2012)
3 stars : 2 properties (first rating acquired in 2014)

4 stars : 1 property (first rating acquired in 2017)
3 stars : 2 properties (first rating acquired in 2016)
2 stars : 3 properties (first rating acquired in 2016)

5 stars : 7 properties (first rating acquired in 2016)
4 stars : 4 properties (first rating acquired in 2014)
3 stars : 1 property (first rating acquired in 2021)
2 stars : 3 properties (first rating acquired in 2016)* Including acquisition of ZEB Ready fortwo properties

Detailed examples of our environmental approval and evaluation

WEB

JMF

https://jmf-reit_sustainability.disclosure.site/en/themes/132/
https://jmf-reit_sustainability.disclosure.site/en/themes/127/

ESG REPORT Februar y 2022

14

IIF

https://iif-reit_sustainability.disclosure.site/en/themes/86/
https://iif-reit_sustainability.disclosure.site/en/themes/79/

The Green BondIn May 2018, as part of its efforts to maintain sustainability for the environment and society as a whole, JMF has
issued the Green Bond, the first such issuance from a J-REIT. Through the issuance of the Green Bond, JMF conducts
investment contributing to the implementation and realization of a sustainable environment and society.

About the Green Bond
The Green Bond Framework Overview
1. Project evaluation/selection

3. Management of Green Bond proceeds

With regard to the Green Bond issuance process, which is

JMF has an internal process in place to track and monitor

based on the Green Bond Principles, MCUBS selects new or

the amount of outstanding Green Bond proceeds and theexisting properties (“Eligible Green Projects”) from its portfolio,

allocation thereof, which is in line with market practice. The

which satisfy the eligibility criteria*1 of MCUBS Sustainability

maximum outstanding amount of the proceeds (“Debts ofCommittee, as subject assets for the Green Bond.

Eligible Green Projects”) is calculated by multiplying the total*1 T o be eligible for Green Bond proceeds, Eligible Green Projects must meet oneof the following eligibility criteria:• On the payment date of each investment corporation bond, buildings that havereceived 3, 4, or 5 stars under the DBJ Green Building Certification Program
within two years preceding the Green Bond issuance date, and/or buildings thatare expected to receive the certification after issuance. At the time of reporting,buildings that meet the same criteria as of the end of February of each year.
• On the payment date of each investment corporation bond, buildings that havereceived B+, A, or S rank under the CASBEE Certification Rank within two years
preceding the Green Bond issuance date, and/or buildings that are expected toreceive the certification after issuance. At the time of reporting, buildings thatmeet the same criteria as of the end of February of each year.

book value of Eligible Green Projects by JMF’s interest-bearing
liabilities ratio.
The maximum outstanding amount of Green Bond proceeds
is ¥143.2 billion, and JMF currently issues ¥23.5 billion (as ofthe end of December 2021).

Second-Party Opinion
JMF has obtained a second-party opinion from Sustainalytics, an
ESG rating agency, for the eligibility of Green Bond*2 proceeds.
For more information, please refer to the second-party opinion.

2. Use of proceeds*2 G reen Bond eligibility entails a Green Bond framework that aligns with the four pillars(use of proceeds, project evaluation and selection, management of proceeds, andreporting) of the Green Bond Principles 2017.

The Green Bond totaling the same amount will be allocatedtoward one or more of the following.
The acquisition of existing and/or new Eligible Green Projects.
The refinancing of existing debts that have already been
allocated to Eligible Green Projects.
The redemption of the issued investment corporation bonds

JMF

WEB

(including Green Bonds) required to acquire Eligible Greenhttps://jmf-reit_sustainability.disclosure.site/data/themes_135/

Projects.

sustain_secop202105_en.pdf

The Green Bonds Summary
The 1st JRF Green Bond
(The 12th Unsecured Investment
Corporation Bonds)

The 2nd JRF Green Bond
(The 13th Unsecured Investment
Corporation Bonds)

The 1st JMF Green Bond
(The 1st Unsecured Investment
Corporation Bonds)

The 2nd JMF Green Bond
(The 2nd Unsecured Investment
Corporation Bonds)

Issued Amount(million yen)

8,000

7,000

8,500

5,000

Interest Rate

0.210%

0.200%

0.450%

0.140%

Issue Date

May 25, 2018

June 25, 2019

June 25, 2021

December 7, 2021

Maturity Date

May 25, 2023

June 25, 2024

June 25, 2031

December 7, 2026

Remarks

Unsecured, Unguaranteed

Unsecured, Unguaranteed

Unsecured, Unguaranteed

Unsecured, Unguaranteed

Second-Party
OpinionSustainalytics

Sustainalytics

Sustainalytics

Sustainalytics

Green Bond details

WEB

JMF

https://jmf-reit_sustainability.disclosure.site/en/themes/135/

ESG REPORT Februar y 2022

15

Environmental

EnergyMCUBS and each Investment Corporation implement environmentally friendly and energy-saving measuresand makes efforts toward more efficient energy use for the properties held by each investment corporation
under management to show greater consideration for the environment and lessen its environmental impact.
We collectively manage energy, fuel, and water consumption and analyze the accumulated data, which is bothaccurate and highly transparent to actively manage reduction of energy use.

Initiatives

Switching to Electricity Derived from Renewable Energy 

JMF

Renewable energy has been newly introduced in seven prop-

renewable energy has been introduced in a total of 14 proper-

erties. In five of those properties, 100% renewable energy hasties, bringing the renewable energy as a percentage ofbeen implemented. Including these seven properties,

electricity consumption included in the portfolio to 10.9%*.

Number of
renewable energy
installations

As ofFeb., 2021

As ofJan., 2022

Target for2030

8properties

19
properties

—

0.9%

10.9%

20.0%

Percentage of
renewable energy
consumption to theentire portfolio
electricity consumption

G-Bldg. Daikanyama 01*C alculated by dividing the amount of renewable energy under contract as ofthe end of January 2022 by the electricity consumption in FY2020.

Seven properties newly introduced renewable energyJ MF-Bldg. Abeno 01
pivo Izumi Chuo (pivo bldg)
G -Bldg. Jingumae 06
G -Bldg. Daikanyama 01

 -Bldg. Minami Aoyama 02
GG -Bldg. Kita Aoyama 01
JMF-Bldg. Hiroo 01

JMF-Bldg. Abeno 01

In cooperation with the neighboring Yokohama City Hall
Building, this helps to increase community resilience byenergy saving and also avoidance of power supply disruptions during local disasters. These initiatives have been
rated highly, and we have received a new energy silver
award, the Agency for National Resources and Energy
Commissioner’s Award (Community Coexistence Sector)

JMF-Bldg. Yokohama
Bashamichi 01 (Left),
Yokohama City Hall
(Right)Silver Award.

WEB

https://www.nef.or.jp/award/kako/r02/s_01.html

ESG REPORT Februar y 2022

16

Initiatives

Sourcing of Renewable Energy in Line with RE100 IIF

IIF Shonan Health Innovation Park has environmentally friendly

reduced through usage of daylight and installation of motion

building design and is the first research facility to be selected

sensors, and use is made of exhaust heat from experiments. In

by the Ministry of Land, Infrastructure, Transport and Tourism’s

addition, as a new initiative, the facility switched to electricity

Model Project for Promoting CO2 Reduction in Housing andderived from renewable resources in electricity procurement in

Building. Passive design that makes maximum use of naturalline with RE100 standards from August 1, 2021, thus contrib-

energy has been adopted in addition to active technology foruting to IIF’s newly established CO2 emissions reduction

using energy efficiently. Also, electricity consumption istargets toward carbon neutrality by 2050.

Daylighting with natural light

Rooftop greening

Ventilation
Natural lighting with top light

Solar Power 
JMF

IIF

The amount of energy generated from solar power on the

Solar panels are installed on the roofs of facility buildings toroof is displayed in real time to enable office workers withinsave energy by using renewable sources.

the building to personally experience the effect of renewable energy.

JMF-Bldg. Toyocho 01

IIF Tosu Logistics Center

Green Lease JMF

A “green lease” refers to an agreement made via a contractof memorandum between building owners and tenants tocooperate toward reducing environmental impact andmaking a more environmentally friendly facility throughvarious means, including energy conservation on properties.
Green leases are entered into on a voluntary basis, withboth parties agreeing to uphold the terms of the arrangement. For example, JMF has borne the costs of installing LED
lighting in its facilities, which allows tenants to enjoy lower
energy fees, in exchange for the tenants paying JMF a fixedTwin 21

portion of the savings to JMF as a green lease payment.

ESG REPORT Februar y 2022

17

Environmental

Water
MCUBS and each Investment Corporation strive forsustainable resource use. We make active efforts toutilize water resources effectively as part of a greater
effort toward sustainable resource use. JMF returns
over 6,000m2 of rainwater to groundwater every year
through means such as permeable pavement, while

Oyama Yuen Harvest Walk

IIF works with tenants to promote effective water use
by utilizing on-site well water pumped from 100m
underground, drawn using an automatic watersupply apparatus.
IIF Mitaka Card Center
Automatic water supply
apparatus

Waste
MCUBS and each Investment Corporation are advancing
an initiative to minimize the amount of waste produced
by its properties. At Kyoto Family, which is owned by
JMF, we have set up waste measuring equipment in aneffort to reduce waste. At JMF-Bldg. Osaka Fukushima
01, we monitor the amount of waste generated andmanage it appropriately while using composting,

JMF-Bldg.Osaka Fukushima 01
Certificate of Appreciation from
Osaka City

implementing monitoring of the amount of waste,
waste recycling, separation and management, andKyoto Family
Waste measuring equipment

periodic auditing of waste disposal, in order to use
resources effectively and appropriately dispose ofhazardous waste.

Biodiversity
MCUBS and each Investment Corporation recognize thecritical importance of what ecosystems can provide andis committed to protecting ecosystems and mitigating
any potential impacts on biodiversity. We strive to put agreen spaces environment in place in our properties
and increase the kinds of plants and green spaces, while

Oyama Yuen Harvest Walk

including local trees, etc. when planting.

Machinoma Omori

ESG REPORT Februar y 2022

18

Pollution Prevention
MCUBS and each Investment Corporation strive to create and enhance environmental benefits by undertaking
conservation activities and reducing its environmental footprint.

Assessments When Acquiring Real Estate Properties
When acquiring real estate properties, MCUBS takes
various environmental factors into consideration before
making investment decisions: property inspections, land
history investigations, and other related research on
environmental risk factors.
Recognizing that hazardous substances related to soil
contamination and buildings (PCB, asbestos, etc.) are
one of the risk factors in real estate transactions.
Adequate and reasonable measures are taken in light ofsocially accepted ideas and trustee obligations, and legal
regulations, complaints, and other risk management are
implemented in relation to hazardous substances related
to soil contamination and buildings.
1 To accurately calculate the risk for the judgment materials for the acquisition of real estate
2 Minimize risk in acquiring real estate
3 Compliance with laws and regulations regarding soil
contamination, etc. after acquisition of real estate (soilcontamination countermeasures laws)
During soil and environmental investigations, thirdparty experts perform environmental pollution investigations. Prior to executing any purchase agreement,
Investment Corporations will have experts conduct a soil
and environmental contamination survey to assist it inassessing a property’s environmental risks. Investment
Corporations will use the pre-investment assessment
workflow chart indicated on the right to determine
whether the investment would be appropriate.

Concerning soil contamination, its property acquisition manual stipulates that investment targets shall be,in principle, properties “that are very unlikely to havesoil contamination or that cannot eliminate the possibility of having soil contamination but are very unlikely tocarry environmental damage risk.”

Pre-Investment Assessment Workflow
Phase 1: Historical record review*1Phase 1’: Interviews*2
Phase 2: Soil and groundwater contamination survey(Determining presence or absence of problems by surveying the soil)*3
No concerns

Adjust offer
price

*4
Phase 3:Site remediation

RejectInvestment Committee
Purchase agreement / Closing*1 If we are unable to determine solely from a review of historical records that there isno risk of soil contamination or that no other environmental contamination exists(for example, a manufacturing facility that utilized toxic or other hazardous substances in the past), we will conduct interviews with the seller.
*2 If we are unable to determine from interviews with the seller that there is no risk ofsoil or other environmental contamination, we will conduct a soil and groundwatercontamination survey.
*3 If a contamination concern exists, but the necessary remediation would be technically or
economically infeasible (for example, remediation is extremely difficult due to structures
existing above the contaminated area), we will recommend a price adjustment.
*4 If, after discussions with the seller, remediation is deemed technically and economically feasible, we will conduct site remediation or require the seller to do so.

TOPIC

Introduction of WOSH, a Portable Hand Washing Machine that Reuses Water
WOSH was introduced in mozo wonder city in March 2021.
Installed in the kids space created as “kodomozo,” itenables the space to be used with peace of mind, evenduring the COVID-19 pandemic.
WOSH also contributes to the effective use of resourcesby hygienically reusing water. No plumbing is required, andit has the advantage of being able to be installed anywhere.

mozo wonder city

ESG REPORT Februar y 2022

19

SOCIAL

ESG REPORT Februar y 2022

20

SocialCommunication with Stakeholders
MCUBS and each Investment Corporation stakeholders cover a wide range of roles, from investors, lenders andbondholders, to tenants making use of its properties and service providers related to property management(PM) and building management (BM), to members of the surrounding community, and to various government
administrations. Furthermore, we consider our employees to be stakeholders just as important as thosementioned above.
We believe that it is our mission to build long-lasting relationships with this wide variety of stakeholders andto continue sustainable management.
Employees
•

•
•

•

Improving worker health and benefits(counseling services from outside experts
such as medical examinations, lectures byindustrial doctors, establishment of the
Health Committee, improved employee
benefits, etc.)
Establishing a positive work environment
 ultivating human resources (qualificationCacquisition support, providing training, etc.)
Providing employee opinion polls

Tenants and service providers(PM / BM / engineers, etc.)•

 orking on energy-saving and CO2
W
reduction measures•

Holding periodic workshops•

Conducting tenant satisfaction survey•Improving energy efficiency (Installing
LED lighting, solar power system, etc.)

Efforts to further
enhance the company

Cooperation inconsideration ofsustainability

Proactive disclosure
activities

JMF

•
•

•

P roviding spaces for community
events olding briefing sessions on financial
H
results and giving presentations toinvestors•

 perating websites and preparingO
communication tools (asset management reports, etc.)•

 esponding to environmental
R
certification system

Governments• Participating in town planning projectParticipating in local cleanup activities
 rganizing facility visits inOcooperation with tenants

•

IIF
MCUBS

Local communities

Investors, lenders, andbondholders

Cooperation with local
governments as theowners and managers
of facilities

Continued
contributions tolocal communities

led by municipality• Developing and disseminating
demonstration projects promoted by
the government• Obtaining “Comprehensive Assessment System for Built Environment
Efficiency” (CASBEE) ratings• Providing open public spaces andplanting trees

Detailed examples of our initiatives

WEB

JMF

https://jmf-reit_sustainability.disclosure.site/en/themes/129/

IIF

https://iif-reit_sustainability.disclosure.site/en/themes/82/

ESG REPORT Februar y 2022

21SocialCreating a Positive Impact
Acquisition of OTA Techno CORE
In February 2019, IIF has completed the acquisition of an impact investment project (a silent partnership, hereinreferred to as the “Tokumei Kumiai”) related to the OTA Techno CORE building. This is the first case of a J-REIT
making such an agreement based on the Principles for Positive Impact Finance.

Measures Based on the Sustainable Development Goals (SDGs)
and the Principles for Positive Impact Finance
The investment is in line with the materiality of the SDGs, which isemphasized by MCUBS and will contribute to the creation of a sustainable society.
Furthermore, a third-party opinion has been obtained stating that the
project is in accordance with the Principles for Positive Impact of the United Nations Environment Programme Finance Initiative (UNEP FI).

Measures for the Creation of a Sustainable Society
Measures in support of regional economic developmentfrom the perspective of real estate investment (PRE)Ota-ku, Tokyo•• manufacturing industryA
hub in Tokyo n accumulation of humanA
resources, including engineers and craftsmen
ResultPayment of rent
HR development
supportOTA Techno CORE

IIF
Dividends••

Providing space
to work

Equity investment in theTokumei Kumiai

Cooperation with J-REIT as a long-term ownerSite secured to develop both humanresources and the succession oftechnologies to promote industry overthe medium to long termT he only J-REIT that ­specializes
in industrial properties
E stablished track record ofacquiring manufacturing
and R&D facilities
ResultSecured high profitability over the
medium term
Ensured future acquisition
opportunities

Positive Impact Investment Monitoring Policy 
We perform regular monthly or annual measurements concerning the impact set at OTA Techno CORE in accordancewith the following monitoring policy.
ImpactCategory

Employment
and a Comprehensive andSound ­Economy(Positive impact)

Details

KPI

Securing sites forhuman resource
development andskill ­succession forindustrial development over the
medium tolong-term(1) Provision of inexpensive lease space tosmall and medium
enterprises(2) Number of jobs
maintained andcreated by tenantcompanies(3) Number of innovations created orawards won by tenantcompanies
Energy consumption
intensity, CO2 emissions
intensity

Risk of rising CO2
emissions frominefficient energy
use at properties

Climate(Negative impact)

Risk of contamination of nearby
areas by hazardous waste released
from plants oftenant companies

Soil(Negative impact)

Hazardous waste release
volumeMonitoring
Methods

Timing & Specific ­Methods(1) Change incontracted floorarea(2) Number of
employees inlease space(3) Number ofpatents andawards of eachtype won(1) D etermination ofcontracted floor area by Management Report from Property
Manager and monitoring ofchanges on an annual basis(2) (3) C ollection of necessary
information using a tenantquestionnaire administeredat the end of February ofeach year

Grasp of amount of Observed of each tenant on aelectric power used monthly basis using centralized
metering devices. Changes in usage
for the building as a whole aremonitored on an annual basis.
Identification of hazardous waste
Interviews oftenants on whether items added to the industrial waste
hazardous waste is volume survey collected from eachtenant at the end of April of eachreleasedyear for submission to the Bureau of
Public Cleansing

Property details

WEB

IIF

https://www.iif-reit.com/english/portfolio/f-99.html

ESG REPORT Februar y 2022

22

FY2020 Results(1) Lease area (end tenant)Leasable area (m2)
Leased area (m2)Occupancy rate (%)* Excluding
warehouse(2) N o. of employees inleased premises(3) Patents / various
awards received

6,122.38
6,122.38
100%

192
0

Electricity
consumption (kwh)

2,035,560

Ascertained hazardousand non-hazardous
waste: Waste oil (L)10,400Impact-Based Real Estate Investment Framework 
UNEP FI has developed action-oriented framework based on four Investment Objectives for real estate investors topractice the Positive Impact Principles.

Positive Impact Real Estate Framework Investment Objectives

Clarity of Impact

Market and Sustainable Returns

Identifying and creating impact
from investment activity

No trade-off in financial results while
generating economic, social, environmental benefits

Additional Finance and / orImpact Flows

Measurement of Impact
Positive and negative attributes andmitigating the negative; linking exante and ex-post intent with impact

T o underserved products andmarkets; supporting physical andsocial factors that contribute tolong-term economic performance

Source: POSITIVE IMPACT REAL ESTATE INVESTMENT FRAMWORKFor each of the four Investment Objectives, theFramework offers a number of ‘leading’ questions andrecommended actions to be considered by investment

practitioners. They are framing questions to support
investors in the definition and development of their
specific real estate impact-based investment approach:

INVESTMENT OBJECTIVES—Guideposts in defining and putting into practice an impact-based approach

Clarity of Impact

Measurement of Impact

What impacts and outcomes I am aiming to deliver though

Do I have clear and transparent methodology (ies) to

my investment activities, and what is my theory of change tomeasure ex-ante and ex-post the expected outputs,deliver these? Does my impact-based approach clearly deter-

and to report the intended outcomes?

mine and describe my intended impacts and outcomes?

Additionality Finance and / or Impact Flows
Market and Sustainable ReturnsHas this approach enabled my institution to go beyond a

Does my investment approach meet market norms and‘business as usual’ or ‘best practice as usual’ trajectory—has

fiduciary standards while tangibly contributing to sustain-

it yielded impact and finance flows which otherwise wouldable development?

not have been delivered? Does it cover underserved markets whether defined by geographical or impact categories?

source: UNEP FI POSITIVE IMPACT REAL ESTATE INVESTMENT FRAMEWORK November 2018

WEB

https://www.unepfi.org/wordpress/wp-content/uploads/2018/11/Positive-Impact-Initiative_Real-Estate-Investment-Framework_Nov-2018.pdf

ESG REPORT Februar y 2022

23

SocialThe Social BondAs part of initiatives to resolve social issues, IIF has issued the first social bonds for IIF in September 2021. IIF
promotes further ESG initiatives and expands financing methods by expanding investor base who are proactivein ESG investment by implementation of social financing through the Social Bond issuance.
Key Points for issuing social bonds
1. Diversification of financing methods through the issuance of the IIF’s first social bond
2. Establishment of a unique Social Finance Framework of J-REIT specializing in industrial properties
3. Promotion of further ESG initiatives by implementing impact investing aiming to acquire properties that contribute to solving social issues

About the Social Bond
1. Project evaluation / selectionof social financing is “Debts of Eligible Social Projects” calculated

Projects to use proceeds will be submitted to the Sustainability

by multiplying the total book value of Eligible Social Projects,

Committee after Planning and Coordination Department

44.3 billion yen, by IIF’s LTV ratio (47.7% as of July 31, 2021).

Industrial Division of MCUBS considers their eligibilities to meetthe Eligible Social Criteria, and will be evaluated and selected byThird-party evaluation

the Sustainability Committee based on the Eligible Social

IIF has received “Social 1 (F)” (the highest for JCR Social FinanceCriteria and the “Responsible Property Investment Policy.”

Framework Evaluation) rating from Japan Credit Rating Agency,
Ltd. (JCR), the third-party to evaluate social finance framework,

2. Use of the proceeds

for the Social Finance Framework.

Proceeds from social financing including social bond based on
the Social Finance Framework will be allocated towards acquisi-

Details of JCR Social Finance Framework Evaluation

tion funds to purchase Eligible Social Projects, repayment ofWEB

debts and redemption of investment corporation bonds

https://www.jcr.co.jp/en/greenfinance/social/(includes refinancing of these debts and investment corporation
bonds) related to acquire Eligible Social Projects.
3. Management of social financing proceeds
The amount of Eligible Social Projects in our portfolio is 92.9
billion yen in total as of July 31, 2021 (based on book value),

IIF Shonan Health­Innovation Park

comprised by 17 properties. The maximum outstanding amountThe Social Bonds Summary

Issued Amount (million yen)*

The 1st IIF Social Bonds (The 5th Unsecured
Investment Corporation Bonds)

The 2nd IIF Social Bonds (The 6th Unsecured
Investment Corporation Bonds)

3,000

2,000

Interest rate

0.390%

0.680%

Payment date

September 7, 2021

September 7, 2021

Redemption date

September 5, 2031

September 5, 2036

Remarks (million yen)Unsecured, Unguaranteed

Unsecured, Unguaranteed* The maximum amount to be issued in the Revised Shelf Registration Statement for the issuance of the Social Bonds submitted to the Kanto Local Finance Bureau on July 28,
2021 is 100 billion yen.

Detailed KPI in the eligible social criteria and impact reports

WEB

IIF

https://iif-reit_sustainability.disclosure.site/en/themes/91/

ESG REPORT Februar y 2022

24

Communication with Local Communities
Each Investment Corporation works to create important bonds with local communities by implementing disasterprevention measures and performing activities that contribute to society at every one of its wide range of properties.

Initiatives by FundJMFJMF carries out day-to-day management of its
properties based on the Property Management Policy sothat customers can shop safely, and is mindful ofmaking contributions to society and local communities.
We aim to provide facilities that exist as part of the local
community by having our properties fulfill a role as hubs
for disaster prevention activities in areas where disasters
are prone to occur.
The Oyama Yuen Harvest Walk, owned by JMF, hasbeen promoting the “Oyama City Community Bus“O-bus“ Utilization Promotion Project“ (hereinafter “theproject“) with Oyama City, Tochigi Prefecture and local
companies, and received an award at the “12th EST
Transportation Environment Award,“ sponsored by the
EST Promotion Committee *1.
This initiative has been rated highly for increasing O-bus
use, along with its impact on the revitalization of the city
center and creation of a walkable city, through its
systematic and strategic efforts to promote O-bus use incoordination and harmony with Oyama City’s vision, suchas its location optimization plan. From an environmental
perspective, the project was well rated for its expected
reduction of CO2 emissions through the shift in use frompersonal vehicles to buses as well as the creation of acompact city in the future. In addition, through its efforts
to propose a lifestyle using buses, the project was highly
rated for the resulting transformation in the image of
buses and increase in their use among citizens.

We are also cooperating in public rescue and assistanceand mutual help initiatives through public-private
partnerships at Twin 21, located in Osaka Business
Park (OBP) . Based on plans for ensuring safe urban
regeneration of the entire area, rules have been established
for maintaining transportation during a disaster andevacuation drills have been carried out*2 in anticipation ofpeople being unable to return home due to a large-scale
earthquake. Through participating in such initiatives, we
are working with the community and the government to
reduce environmental impact and increase resilience.
Railway operators(PA)

Government
(PA)

MS

MS

BCD

Lifeline operators
(PA)

MS
MS
Wide-area disasterprevention bases (PA)OBP area future targets image

Implementation ofdisaster-preparedness drills

O-bus*1 T he EST Promotion Committee aims to promote the use of Environmentally Sustainable Transport (EST). It takes into account economic sustainability (providing safe, convenient andcomfortable transportation services as efficiently and stably as possible) and social sustainability (ensuring the availability of a certain standard of transportation services necessary
for the social participation of all people, regardless of where they live), as well as environmental sustainability, and promotes initiatives to formulate and implement transportationand environmental policies from a long-term perspective.
*2 Evacuation drills were implemented remotely in FY2021.

ESG REPORT Februar y 202225

SocialCommunication with Local Communities
At KAWASAKI Le FRONT, owned by JMF, we held the“Kawasaki Children’s SDGs Lab” as part of our FY2021
regional collaboration under the theme of “encouraging
the children of Kawasaki to love their city.” The project
was aimed at elementary school children in Kawasaki
Ward, with the goal of showing them that environmental
issues are issues that are close to them and that thesmall actions that each person can take immediately areconnected to SDG activities. With the cooperation of
JMF

tenants, we held the “KAWASUI Kawasaki Aquarium
Backyard Tour” and other initiatives.

KAWASAKI Le FRONT
IIF is making contributions to local communities through
COVID-19 countermeasures. In April 2020 at IIF Shonan
Health Innovation Park, owned by IIF, IIF provided (lent)
the land as a site for construction of a temporary medical
facility for addressing COVID-19 infections free of charge
for a fixed term in response to a request from Kanagawa
Prefecture made in conjunction with the declaration ofstate of emergency by the national government.
The adjacent Shonan Kamakura General Hospital was
designated a priority healthcare institution (a facility that
accept moderate patience) under the Kanagawa Model,
and IIF received the request for cooperation so that thehospital could construct a temporary medical facility.
In 2021, we implemented workplace vaccinations for
employees of tenants and affiliated companies, as wellas their family members, who wished to be vaccinatedagainst COVID-19. In addition, starting in September,part of the property has been offered as the city of
Fujisawa’s mass vaccination site.
IIF

Furthermore, to ensure that local residents are awareof the functions performed by our properties in thearea, we provide tours of our facilities and otherservices, hold events for local residents, and open somesites to the public* to enjoy the cherry blossoms plantedon site as well as other seasonal events.
* Events have been cancelled as of the date of this document to prevent the spread of
COVID-19.

IIF Shonan Health Innovation
Park

Cherry Blossom Festival

Area Open to the Public

IIF Shonan Health InnovationPark

ESG REPORT Februar y 2022

26

Health and Well-Being
MCUBS considers its employees to be its most important management resource and essential for carrying out its
activities. We are actively working to create conditions where each and every employee can perform their workin a lively manner and to cultivate them accordingly. In addition, we regularly conduct employee opinion polls
with the aim of building an even better company.

Work Environment
MCUBS is working to ensure that all employees can work with peace of mind and to improve the benefits it provides to them.
Heath of Employees 
Besides meeting the legal requirements in Japan forMoreover, we provide various wellness programs toemployee health and safety, including labor and risk manmaintain and improve the mental and physical health ofagement, MCUBS emphasizes the prevention of excessive
our employees and their families. We have also estabwork and understanding the appropriateness of working
lished the in-house Health Committee comprising
hours, and is enhancing its system for managing working
employees representing each division and the Human
hours through an original monitoring framework. In addiResources Department. The committee meets once ation to an emphasis on measures aimed at reducing overmonth to exchange opinions on working conditions
time, we require employees to take long-term leave andalongside industrial physicians and to gain health-related
are taking steps to increase the rate that paid leave is usedinsight. Through these initiatives, we are supporting(with a target of 70%).
employees in the preservation of their health.
 orking time monitoring system
WCheck and report on deviation in working
hours (every month)Report on long working hours tosecure health (professional employees /once per half month)Flextime system
Teleworking (working from home,satellite offices) nnual paid leave (15 to 20 or 25 daysA
granted, depending on the length of
employment(the number of days granted bylaw is 10 to 20 days)
A variety of special leave programs, including
family care special paid leave
Acquisition of paid leave in units of hours
Mandatory acquisition of long-term consecutive leave ealth checkup / complete medical checkup
HInfluenza immunization shotVarious counseling services (EAP) byexternal experts
Health consultations by industrial physicians /health nurses
Health Committee
Conducting of stress checks

Improving Employee Benefits 
In addition to completely supplying a social insurance
system, we have introduced an original retirement pension system, have entered into general welfare groupterm life insurance, group long-term incomecompensation insurance, member welfare services, acongratulatory and condolence payments system and
ESOP (Employee investment unit ownership system) andother systems.

Diversity and Work-life Balance 
MCUBS emphasizes diversity and work-life balance. We
promote both of those aspects by, for example, offering
support and welfare services to help all employees, regardless of whether men or women, who are starting families

and raising children. We ensure that we have an organizational climate enabling even male employees to naturally
take childcare leave, and employees cooperate with eachother in allocating the work of those who are on leave.

Work Environment 
In January 2018, MCUBS renovated its office space andcreated an environment that allows employees to work
comfortably and actively. Natural light enters the work
space through windows and plants have been arranged
throughout this new, bright office. We have upgraded
communal spaces to promote communication with fellow
co-workers and have incorporated rest areas where
employees can relax and refresh themselves. We also

conduct environmental checks periodically to provide
comfortable working conditions for employees.
Moreover, in an effort to reduce waste, we have gone
70% paperless and turned the reduced cabinet space into
a communal space. We have improved our communication
environment, enabling work to be carried out anywhere in
the office, and have worked to reduce printing and paper
costs through using electronics to host meetings.

ESG REPORT Februar y 2022

27

SocialHealth and Well-Being

Measures for Health and Well-Being
Space and Interior

Rest

Sound

Interiors decorated with a clear concept,
including spaces that incorporate nature

In-office cafeteria

Soundproofed spaces where people canconcentrate on their work

Light

MaintenanceExercise

Office that actively incorporates natural light

Regular air quality inspections

Furniture that is adjustable to various healthconscious configurations

Investment Corporation Initiatives
Investment corporations collaborate with tenants in working to improve the environment so that tenant employees areable to work comfortably.
Development of Productive Work Environments 
JMF is putting effort into developing better working environments for tenant employees, such as renovating theemployee lounge and creating a powder room for tenant
employees at mozo wonder city.

Good use of Courtyard Area 
At the IIF Mitaka Card Center, which is one of the properties owned by IIF, there is an interior courtyard which isused by tenant employees as a place for meetings andhaving lunch. IIF is putting effort into maintaining thecourtyard, such as by changing the flowers and trees
planted there.

Employee lounge

Interior courtyard at IIF Mitaka Card Center

Powder room

ESG REPORT Februar y 2022

28

Human Capital Development
Basic Policy
Based on the concept that human resources are ourmost important asset, MCUBS supports autonomous
career development by preparing various development
programs so that each employee is able to grow andachieve self-fulfillment through working at MCUBS. As
an organization consisting of diverse human resources

with different backgrounds, MCUBS strives to spread its“Mission, Vision & Core Values” so that employees withvarious specialties and different values can respect eachother and utilize their individual strengths to achieve
high performance.

Human Capital Development
For the purpose of proactive career development andenhancement of expertise, we have been implementing
an internal recruitment system that allows employees tobe challenged by the duties of their choice, as well as
regular transfers by company order based on their own
wishes. In addition, to meet the diversified needs fortraining and support for self-development, we haveestablished a training system that allows employees totake courses at their own request. In addition to thedevelopment of various training programs and thesystem to support the acquisition and maintenance ofqualifications, we are also strengthening performance
management to support growth and regular career
discussions with supervisors.

Training for All EmployeesWith a cafeteria-style training program provided by an
external training organization, all employees can participate in the training programs of their choice fromamong seminars (held more than 1,000 times annually)by professional lecturers according to their levels andfields. Moreover, employees serve as lecturers to implement the training aimed at enhancing company-wideknowledge in specialized areas of their assigned duties.
We also provide e-learning several times a year so that
employees are aware of the latest information and canutilize it effectively.
Main examples of training Compliance, IT securities, Sustainability, Finance,
Engineering, etc.

Training for Managers
To develop employees in managerial positions, theemployees are dispatched to various leadership programs, such as the Program for Leadership Development
by Mitsubishi Corporation (training over a total of fivedays in which skills as a manager can be obtained incoordination with overseas business schools). At thesame time, we are actively developing leadershipresources, for example, by holding various in-housetraining programs for managers by outside lecturers.

Support for Acquiring Further Qualifications
In order to cultivate professional human resources in realestate finance, MCUBS encourages employees to pursue
higher qualifications by providing financial assistance andtraining opportunities. Specifically, MCUBS is actively
utilizing the specialist qualification system by the
Association for Real Estate Securitization (ARES), of which
we are an official member. The Company covers thecosts for employees to obtain the ARES Certified Master
qualification. Moreover, employees are also encouraged
to undergo training and participate in seminars after
obtaining this qualification.

The Company also covers some or all of the costs ofwork-related training and tests for obtaining qualifications
and maintaining them. As a result, many employees aretaking on the challenge of improving their qualifications.

Details of each training and support system
WEB

https://mc-ubs_sustainability.disclosure.site/en/themes/90/

ESG REPORT Februar y 202229

SocialCommunication with Tenants
JMF and IIF operate a wide variety of properties, including retail facilities, industrial facilities, and officebuildings, which means the our tenants are also diverse. We make efforts in consideration of our tenants’ safety
and the facility environment. Furthermore, we promote measures that consider the global environment as well.

Actions During the COVID-19 Pandemic
In facility operation during the COVID-19 pandemic, wehave implemented social distancing in elevators to help
avoid the “Three Cs” (Closed spaces, Crowded places,
Close-contact settings). We have also adopted antibacterial and antiviral measures through aerial disinfectionof locations with frequent opportunity for hand contact
by customers and employees such as elevator buttons,
escalator belts, as well as providing information on
customer safety and security.

In addition, to ensure the health and safety of tenants’
employees, we continued to carry out daily health statusconfirmation, development of rapid communication
systems, and installation of temperature measurement
equipment at entrances.

mozo wonder city
Installation of temperature
measurement equipment at
all tenants’ employee
entrances

As a measure for assisting tenants during the COVID19 pandemic with regard to applications for government
financial support, we implemented free-of-charge support by certified public accountant offices involved inbusiness cooperation with MCUBS. Also, to help attract
prospective customers and increase sales, we assistedwith preparation of coupons and accepted the burdenof discount expenses. In addition, in order to develop
community-based delivery business operators to create
sales opportunities for restaurants, we accepted theburden of introduction expenses and delivery costs. In
dealing with rent reduction amounts, we implemented
individual support, taking into consideration the degreeof impact on each tenant.

Nara Family

Attachment of stickers in places where antibacterial
and antiviral measures have been implemented

Initiatives by FundJMF
JMF services more than 1,400 tenants. Despite this large
number, JMF proactively takes measures to save energy
and reduce CO2 emissions with our tenants. For example,
JMF improves the environmental efficiency of properties.
In some cases, it makes initial investments in energysaving equipment and recovers the investment costs
from the rent payments, while tenants save utility costs
without any capital outlay. Therefore, a win-win

relationship is created between JMF and tenants.
Also, tenant satisfaction surveys are conducted once a
year for office buildings. Based on the results of thesesurveys, efforts are made to create comfortable working
spaces for those working in office buildings by improving the surrounding environments and enhancing theconvenience of building facilities and equipment as well
as safety.

IIF
By providing value to tenants, IIF continues to manage
its portfolio using its “3C Management Cycle,” which isdesigned to realize internal growth through stable,

long-term management that goes beyond the norm.
The three “Cs” of the 3C Management Cycle are
Communicate: acquire an accurate understanding of

ESG REPORT Februar y 202230

tenant needs through close communication with tenants;
Customize: strategically put forth customized proposals
according to individual needs; and Create: employ aconcept of portfolio management that creates unitholder
value through long-term, superior property management
while creating value that meets the needs of tenants.
In periodic tenant workshops held by IIF, sustainability
themes are actively selected to promote responses toclimate change and disaster countermeasures.

These activities serve as a foundation for IIF’s cooperation with tenants in initiatives such as provision of portable batteries and conclusion of green lease agreements.

Communication with tenants details
WEB

IIF

	https://iif-reit_sustainability.disclosure.site/en/themes/82/

TOPIC

Japan Association for UNHCR and UNICEF 
MCUBS has received a letter of appreciation from the Japan Association for UNHCR (United Nations
High Commissioner for Refugees), which closely coordinates with UNHCR Representation in Japan,
for making JMF’s vacant space from existing properties available to the Campaign for United Nations
Refugee Support Activities free of charge. Similarly, we’ll support UNICEFF campaigns.
MCUBS will continue to hold a high level of interest in reducing its environmental load and making
contributions to local society.

Building Safety
MCUBS and each Investment Corporation are working to maintain the safety of its buildings by conducting
building and earthquake risk assessments at the time of acquisition as well as collecting engineering reports
on a regular basis.

Seismic Reinforcements 

JMF

Measuring Air Environment 

IIF

JMF

Asbestos is a naturally occurring mineral fiber sometimes
called sekimen or ishiwata, and breathing it is highly
likely to be hazardous to health, thus implementation ofsome measures is required. JMF measures the air
environment once a year to confirm the dispersal statusof asbestos.

Each Investment Corporation conducts a building andearthquake risk assessment at the time of property
acquisition, and calculates earthquake risk in held properties whenever standards are revised. When necessary,
secondary assessments are performed as well. When
results of those assessments conclude that earthquakeresistant reinforcement construction is required, we
make environmentally conscious choices that will provide
the necessary seismic retrofitting while minimizing waste.
At the same time, we also work to reduce CO2 emissions
and energy consumption in the updated facility.

ESG REPORT Februar y 202231

SocialSocial Contributions by Employees
MCUBS undertakes social contribution activities in partnership with sponsors. We will continue to deepen our
employees’ understanding about contributing to local communities, and support social welfare groups andother organizations.

Examples of Initiatives
Supporting Activities of Non-Profit Organizations 
MCUBS participated in the FIT for Charity Run* with
UBS, and supports the activities of non-profit organizations that have high social significance but the need forthe activities is not fully recognized.

Volunteer Activities 
We participate in volunteer activities being conductedby Mitsubishi Corporation in support of disaster areas,and cooperate in supporting reconstruction.

* FIT for Charity was established by volunteers working for companies engaged infinancial services and related industries and commenced its activities in 2005.

Volunteer activities forreconstruction support

FIT for Charity Run

ESG Study Sessions and Briefing Sessions
ESG Study Sessions for Tenants and PM Companies 
JMF holds ESG study sessions with tenants and property
management companies in order to deepen their understanding of sustainability initiatives. JMF are also working
to raise ESG awareness by introducing JMF's efforts at
events conducted by commercial facility operators.

ESG Briefings for Institutional Investors andSecurities Companies 
MCUBS is putting efforts into helping investors to better
understand our initiatives by holding joint briefing sessions
on ESG initiatives involving JMF and IIF.

ESG study session

ESG briefing session

Example of the social initiatives for each fund

WEB

JMF
IIF

https://jmf-reit_sustainability.disclosure.site/en/themes/129/	https://iif-reit_sustainability.disclosure.site/en/themes/82/

ESG REPORT Februar y 2022

32

C O R P O R A T E
G O V E R N A N C E

As asset management company, MCUBS receives asset management consignments from JMF and IIF and are­committed to upholding their fiduciary duties to investment corporations.

ESG REPORT Februar y 2022

33

Corporate GovernanceCorporate Governance
As an asset management company, MCUBS receives asset management consignments from each investment
corporation, and is committed to upholding its fiduciary duty to investment corporations.

Decision-Making Process
Mitsubishi Corp.-UBS Realty Inc., the asset manager
of JMF and IIF (hereinafter, the “Asset Manager”), has
five committees: the Investment Committee, the Risk
Management Committee (the Risk Management
Committee acting as an advisory board to facilitate
decision-making, not a decision-maker), the Compliance
Committee, the Compensation Committee, andSustainability Committee.
In the course of making decisions regarding investment policy and standards, operation and management
policy and standards, budget and financing, as well as
the acquisition, disposal, or operation and managementof assets for each investment corporation, a proposal
will be submitted to the Asset Manager’s Board of
Directors for approval in accordance with rules of theBoard of Directors. Proposals relating to stakeholdertransactions of the Asset Manager must first be
approved by the Compliance Committee before they aresubmitted to the Investment Committee (excluding“Minor Transactions,” as stipulated in the Regulations
for Transactions with Stakeholders). In addition, subsequent to approval by the Board of Directors of the AssetManager, approval from our board of directors is
required prior to a transaction involving the acquisition,
disposal, or lending of securities or real estate between
us and a related party (as defined in Article 201-1 of the
Act (ITA)) of the Asset Manager, except certain of suchtransactions determined not to have a significant impact
on each investment corporation under the Ordinance for
Enforcement of the ITA.

Front Division*5
Proposal*3*Compliance Committee

*

1

2

*3
Investment Committee*2*3

Board of Directors

Board of Directors (supermajority voting)Transaction with a related party as defined in Article
201-2 of the ITA*4
Board of Directors of each Investment Corporation*4
Consent of Investment Corporation(note) Approval, rejection or sending back of each agenda*1 W ith regard to matters relating to the acquisition, disposition, operation and management of assets, the approval of the Investment Committee will be obtained based on the
Guidelines for the Investment Committee.
*2 With regard to the investment policy and standards, operation and management policy and standards, budget and financing, etc. for each Investment Corporation, the approval of
the Investment Committee and the Board of Directors will be obtained in accordance with the Guidelines for the Investment Committee and the Rules for the Board of Directors.
*3 W ith regard to matters relating to transactions with stakeholders stipulated in the Regulations for Transactions with Stakeholders, the approval of the Compliance Committee, theInvestment Committee and the Board of Directors (supermajority voting) will be obtained in accordance with the Regulations for Transactions with Stakeholders, the Guidelines for
the Compliance Committee, the Guidelines for the Investment Committee and the Rules for the Board of Directors. In the case of Minor Transactions, the approval at the Compliance Committee and the Board of Directors (supermajority voting) is not required.
*4 W ith regard to matters relating to transactions with a related party as defined in Article 201-2 of the ITA, the approval of the Board of Directors of each Investment Corporation andthe consent of Investment Corporation will be obtained. In the case of transactions determined not to have a significant impact on asset of the investment corporation under theOrdinance for Enforcement of the ITA, consent of each investment corporation based on the approval by its board of directors is not required.
*5 M etropolitan Business Division or Industrial Division is referred to as the Front Division.

For information regarding corporate governance for each fund, please visit the websites below.

WEB

JMF

https://jmf-reit_sustainability.disclosure.site/en/themes/130/

IIF

https://iif-reit_sustainability.disclosure.site/en/themes/84/

ESG REPORT Februar y 2022

34

Conflicts of Interest
MCUBS has implemented a management system as described below to ensure that conflicts of interest do not arise
from the management of assets at JMF and IIF.

1. S eparation of asset management divisions and support structure
We have established the Metropolitan Business Division and the Industrial Division as divisions that are
engaged in asset management of JMF and IIF, thereby clarifying asset management responsibilities.
2. S ecuring of independence in investment decision-making
Decisions made on asset management of each investment corporation are examined solely from theperspective of whether or not such decisions are appropriate as decisions made by the Metropolitan Business
Division and the Industrial Division, without taking into consideration the situation of other divisions of theinvestment corporations.
3. Rules on preferential investigation rights pertaining to investment information
With regard to information on sales of real estate obtained by MCUBS, we have established a rule requiring adetermination as to which division, the Metropolitan Business Division or the Industrial Division, should
conduct investigations in preference to the other division.

Establishment of a system to eliminate antisocial forces
To preempt violence from antisocial forces, clarify how
we will respond as an organization and ensure that wewill never have any relations or dealings with antisocial
forces and use them, we also provide the “Basic Rules
around How to Deal with Antisocial Forces” which
stipulates that we will take a resolute attitude as anorganization to antisocial forces, including coordinatingwith external specialized institutions, as our basic principle. Each division of the Asset Manager is expected toconfirm in advance that counterparts to transactions,etc. are not considered as antisocial forces, to report anyquestionable acts or behaviors when they are expected
directly or indirectly to the Head of the Compliance
Office and the President, and review social risks thoroughly
to make a decision of whether the transaction can goahead or not, in accordance with the Basic Rules as per
their respective operations manuals for each division thatare provided separately.

Governance of Investment Corporations
The organization of each investment corporationconsists of executive directors, supervisory directors, an
Officers Meeting, which is comprised of all directors, aGeneral Meeting of Unitholders, which is comprised ofinvestors, plus an accounting auditor.

The number of directors and their compensation isdecided by each investment corporation, and monthly
remuneration is determined by the Officers Meeting.
Pursuant to the ITA, investment corporations areprohibited from having employees. Accordingly, noneof our investment corporations have any employees.

ESG REPORT Februar y 2022

35

Corporate GovernanceCompliance
Basic Policy
MCUBS defines compliance not only as compliance withlaws and regulations, but also as voluntary efforts toadapt to broader social expectations behind laws andregulations, and has established a compliance systemwith the intention of conducting sincere and faircorporate activities and ensuring sound management
based on self-discipline.

Compliance System and
Its Practices

In accordance with the Compliance Rules, we have established the Compliance Committee and theCompliance Office to develop a company-wide cross-sectional compliance system.

Role of the Board of
Directors in Compliance

The Board of Directors, chaired by the President & CEO, decides on the compliance program and otherbasic matters related to the promotion of company-wide compliance, and receives reports on the statusof compliance promotion.

Compliance Committee

The Compliance Committee, chaired by the Head of the Compliance Office, who is also an executive
officer, is comprised of senior management and outside attorneys, and meets once every two months
in principle.

Code of Ethics

Our Code of Ethics consists of the Corporate Ethics Charter and the Code of Conduct for Executives andEmployees. In addition to compliance with laws, regulations, and social norms, the Code of Conduct
stipulates standards that must be observed, such as maintaining fair relationships and distinguishing
between public and private matters.

Compliance Program

We formulate a compliance program each fiscal year, which is a practical plan for achieving compliance.
The program is drafted by the Compliance Office, discussed by the Compliance Committee, andapproved by the Board of Directors.

Compliance ManualWith the Core Values set out in our corporate philosophy as the broader concepts, the Compliance
Manual provides the appropriate approach and code of conduct that all officers and employees(directors, auditors, and employees including contract workers and temporary employees) should adopt
in the various situations that we face as an asset management company for real estate funds.

Compliance Training

In addition to mandatory compliance training at the time of joining the company, we conduct
compliance training for all executives and employees including seconded employees, contract employees
and temporary staff, four times a year, as well as a total of seven quarterly e-learning sessions on
internal control.

Whistle-Blowing andReporting

We have established an internal inquiry counter for all executives and employees as well as our business
partners in order to receive consultations and reports regarding violations of laws and regulations,information management violations, various types of harassment, human rights, and the working
environment. There is no time limit, and in addition to acceptance of reports from whistle-blowers,
whistle-blowers are allowed to make reports anonymously. It is considered that the system will protect
whistle-blowers from disadvantageous treatment in accordance with the Whistleblower Protection Act
and our Whistle-blowing Rules.

Responding toCompliance Violations

For the purpose of accurate and fair treatment in the event of finding an act or a possibility of violationof laws and regulations and the Articles of Incorporation, etc. or for preventing occurrence of such anact, the Administrative Incident Handling Rules set forth specific actions.

Strengthening
Compliance

All officers and employees of MCUBS pledge to comply with the Code of Conduct, etc., by submitting acompliance pledge form according to the characteristics of their positions every year. In addition, selfassessments are conducted semiannually to check the status of each department in management ofcompliance-related matters. Through these efforts, we are striving to ensure the awareness of compliance.

Anti-Corruption
In April 2001, MCUBS established “the Code of Ethics”, which consists of “the Corporate Ethics Charter” and “the Code of
Conduct for Officers and Employees”, with the purpose of ensuring sound management based on high ethical standards,
ensuring that the Company continues to earn the trust of society, and contributing to the development of society.
Detailed compliance for each fund

WEB

JMF

https://jmf-reit_sustainability.disclosure.site/en/themes/130/

IIF

https://iif-reit_sustainability.disclosure.site/en/themes/84/

ESG REPORT Februar y 2022

36

Risk Management
MCUBS committed to the thorough implementation of these risks under the following organization structure.

Structure on Risk Management
We believe that implementing risk management will
ensure the continuity and stable development of ourbusiness. Being fully aware of our public mission andsocial responsibility in conducting asset management,
we carry out necessary risk management, and we also
conduct necessary risk management of the investment
corporations to strive to protect investors and operate
the investment management business appropriately. We
conduct sound and appropriate business management,
based on the MCUBS management policy and strategic
goals. With regard to the risks arising as part of that

Risk Management CommitteeStanding members:	Head of Corporate Division (Chairman),President, Deputy President,
Chief Operating Officer,
Head of each Division,
Head of Risk Management Department,
Head of Compliance Office,Head of Strategic Planning OfficeSecretariat:
	Risk Management Department,
Corporate Division

management, we have established an income and risk
management system in line with the management
policies of each of the investment corporations andbased on the strategic goals, and we manage thesystem so that risk is appropriately controlled.
Key Risks to be Managed · Investment management risk
· Clerical work risk
· System risk

Investment Committee

Board of Directors

Making Decision

Putting
togetheropinions· Reputation risk
· Conduct risk

ReportPresident & CEO
Chief Officer for Risk Management

Section for making proposals:
	Head of Metropolitan Business Division
or Head of Industrial Division
Committee members:	President (Chairman), Deputy President,
Executive Officer, Head of Compliance
Office, external estate appraisers and otherpersons nominated by the chairman
Secretariat:
	Risk Management Department,
Corporate Division

ReportAudit the adequacy and effectiveness of the risk management

Internal Audit Office

Risk Management Department,
Corporate Division

Informationexchange

Compliance Office

Risk Management Officer
Head of each Division and Officer

Monitoring, etc.

Internal Audits
MCUBS has established the Internal Audit Office, whichis independent of any department, to conduct audits
once every three years for each department, based on
the internal audit plan established for each fiscal year.
We believe that internal audits contribute to theachievement of our management goals, not only byfinding and pointing out problems in business
operations, including compliance, but also by evaluating
the internal control systems of each department, andproposing methods of improvement, etc.
Details about the implementation of internal audits
based on the Internal Audit Rules are specified in thedetailed rules for internal audits. When the audited
department receives any instruction or proposal for
improvement through the internal audit, it prepares animprovement response plan, implements the
improvement measures, and reports the results to theInternal Audit Office.

Detailed compliance and risk management

WEB

https://mc-ubs_sustainability.disclosure.site/en/themes/91/

ESG REPORT Februar y 2022

37

ESG Data

Environmental
JMF
(FY)

2015

2016

2017

2018

2019

2020

CO2 emissions (Thousand tCO2)

252

248

240

223

212

201

CO2 emissions per unit (tCO2 /m2)

0.10

0.10

0.09

0.09

0.08

0.07
400,765

Energy consumption (Mwh)413,471432,473423,783

399,940

394,471

Energy consumption per unit (kwh/m2)

164.17170.68159.24163.52

155.75133.28

Fuel consumption (fuel only) (Mwh)

125,639

126,779

133,907

118,587

117,223

130,452

Fuel consumption per unit (kwh/m2)

49.88

50.03

50.32

48.49

46.28

43.38

Water Use (Thousand m3)

2,605

2,691

2,615

2,541

2,621

2,711

Water use per unit (m /m )
3

1.02

1.05

0.98

1.04

1.04

0.90

42,321

37,58030,151

24,45629,486

20,7372

Total waste (t)* Each figures before 2019 are simply adding up the values of​​ the former Japan Retail Fund Investment Corporation (JRF) and the former MCUBS MidCity Investment Corporation (MMI).

IIF
(FY)

2015

2016

2017

2018

2019

2020

CO2 emissions (Thousand tCO2)

79

66

75

75

74

99

CO2 emissions per unit (tCO2 /m2)

0.11

0.09

0.08

0.08

0.07

0.08

Energy consumption (Mwh)138,913

125,801

139,627

146,045

151,381

190,541

Energy consumption per unit (kwh/m2)

194.35177.46159.02

157.79134.05147.94

Fuel/gas consumption (Mwh)

7,633

12,435

12,997

12,977

11,241

65,296

Fuel/gas consumption per unit (kwh/m2)

10.68

17.54

14.80

14.02

9.95

50.70

Water Use (Thousand m3)

363

362

543

549

532

656

Water use per unit (m3/m2)

0.51

0.51

0.61

0.59

0.47

0.51

Volume of non-hazardous waste (t)

6,176

2,376

3,505

5,827

6,403

5,422

Volume of hazardous waste (t)

210

94

105

104

33

163

Recycling rate (%)

—

33.2

31.6

32.1

45.2

45.1

Environmental Performance Data
Data and emissions per unit are calculated based on the total floor area (after considerations for rate of occupancy).
Data collection rate 
JMF

Aggregation period 
JMF

CO2 emissions and energy amount2020: 97.6% 2019: 97.9%
2018: 93.0% 2017: 90.3%
2016: 93.6% 2015: 89.7%
Water consumption
2020: 97.5% 2019: 97.9%
2018: 92.9% 2017: 90.3%
2016: 93.6% 2015: 91.2%
Waste generated
2020: 78.3% 2019: 80.8%
2018: 86.6% 2017: 64.8%
2016: 89.8% 2015: 99.2%

IIF

IIF

2020: March 2020– February 2021
2019: Former

JRF

March 2019–February 2020

FormerMMI

January 2019–December 20192018: Former

JRF

March 2018–February 2019

FormerMMI

January 2018–December 20182017: Former

JRF

March 2017–February 2018

FormerMMI

January 2017–December 20172016: Former

JRF

March 2016–February 2017

FormerMMI

January 2016–December 20162015: Former

JRF

March 2015–February 2016

FormerMMI

January 2015–December 20152020: February 2020–January 2021
2019: February 2019–January 2020

	2020: 100.0% (Volume of waste: 89.6%)
2019: 100.0% (Volume of waste: 93.4%)
2018: 100.0% 2017: 100.0%
2016: 100.0% 2015: 100.0%(Volume of waste: 94.5%)

2018: February 2018–January 20192017: February 2017–January 20182016: January 2016–December 20162015: January 2015–December 2015

ESG REPORT Februar y 2022

38

Social(FY)

Total number of employees*1

Total workforce(%)*1
Women in managerial posts (%)*1
Diversity of employees (%)*1

Number of new hires*

2

Percentage of New hires (%)*2

Full-time
employees
Other thanfull-time employees

2019

2020

Men

87

93

Women

55

55

Men

2

2

Women

0

0

Men

61.8

63.3

Women

38.2

36.7

Women

25.7*3

17.2

Under 30 years old

4.0*3

4.0

30 to 50 years old

80.5*380.0

50 years old or older

15.5*3

16.0

Men

—

16

Women

—

3

Men

89.5*3

84.2

Women

10.5*3

15.8

Men

—

50

Women

—

Not applicable

Men

—

90.6

Women

—

95.9

Rate of taking paid leave (%)*1

64.7

68.5

Health checkup rate (%)*2

100.0

100.0

Rate of taking childcare leave (%)*2
Training attendance rate (%)*1,4

Results of MCUBS-wide survey*1 Excludes executives and temporary staff*2 Excludes executives, seconded employees, and temporary staff*3 As of December 31, 2020,*4 Excluding internal training by our departments

Listing on ESG Indices
MSCI Japan ESG Select Leaders Index 
MSCI, an American stock index provider listed on the
New York Stock Exchange, launched a index called the
MSCI Japan ESG Select Leaders Index, taking into
account high environmental, social, and governance(ESG) performance.
The Government Pension Investment Fund (GPIF) has
selected MSCI Japan ESG Select Leaders Index as one of
its ESG index and implemented passive investment tracking the index.

Index launched in June 2017
Incorporation

JMF

Incorporated since June 2017

IIF

Incorporated since June 2017

(Note) T HE INCLUSION OF MITSUBISHI CORP.-UBS REALTY INC. IN ANY MSCI INDEX,AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEXNAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT ORPROMOTION OF MITSUBISHI CORP.-UBS REALTY INC. BY MSCI OR ANY OF ITS
AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCIAND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICEMARKS OF MSCI OR ITS AFFILIATES.

ESG REPORT Februar y 2022

39

Investment Corporation Overview

JMF

Japan Metropolitan Fund Investment Corporation

As a top-ranking domestic diversified REIT, Japan Metropolitan Fund Investment Corporation (JMF) is listed on theTokyo Stock Exchange. With its vision of “Support metropolitan life (live, work, and consume) in Japan from theperspective of real estate,” it mainly acquires and operates retail facilities, office buildings, residences, hotels andmixed-use facilities operated for such uses located in urban areas, including commuter-town areas.
1.Portfolio focused on properties located in urban areas
2.Portfolio stability supported by diversified asset portfolio with top-class scale in Japan

Characteristics of
the REIT

GYRE

mozo wonder city

TSE code

Fund listing

8953
OfficeRetailproperties
Major types ofproperties

Twin 21

Mixed-use
properties

OthersJMF-Bldg.
Yokohama Bashamichi 01

2002/3/12

Urban offices

Favorable locations, high building specifications

Commuter-town offices

Properties that can also be used as retail space

Facing high street

Located on main thoroughfares in major retail areas

Urban retail properties

Those that can be turned into mixed-use properties

Residential station

With supermarkets being the main tenants

Office x RetailResidence x Retail
Office x Residence
Complex for three or more uses
Residence in urban areas

Located within 30 minutes from key business areas and within a
10-minute walk from the nearest station

Hotels in urban areas

Limited to those with fixed rent, in favorable locations and highly versatile

New categories
Portfolio details
WEB

https://www.jmf-reit.com/english/portfolio/map.html

Corporate Profile
Corporate name:
Mitsubishi Corp.-UBS Realty Inc.
Capital fund:¥500 million
Shareholder composition: Mitsubishi Corporation 51%, UBS Asset Management AG 49%
Offices: 	Head office	Tokyo Building 7-3, Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-6420, Japan
Kansai office	Herbis ENT Office Tower, 25th floor, 2-22, Umeda 2-chome, Kita-ku,
Osaka-shi, Osaka 530-8602, Japan

ESG REPORT Februar y 2022

40

IIF

Industrial & Infrastructure Fund Investment Corporation

Listed on the Tokyo Stock Exchange, the Industrial & Infrastructure Fund (IIF) is a unique REIT that focuses on industrial
properties in Japan. IIF invests in real estate anticipated for stable use over the medium to long term while upholding aphilosophy of investing in social infrastructure as a source for generating Japan’s economic strength and supporting
industrial activities in Japan through real estate.
Characteristics of
the REIT

1. Investing in properties that play a vital role in industrial activities across a broad range of sectors
2. Stable cash flows based on lease agreements over 10 years

IIF Shonan Health Innovation ParkIIF Haneda Airport Maintenance Center

IIF Shin-Kawasaki R&D Center

IIF Atsugi Manufacturing Center

IIF Shinonome Logistics Center

IIF Kawasaki Science Center

TSE code

Major types ofproperties

3249

Fund listing

Logistics facilities

Facilities used to provide intercompany distribution and sales distribution services,
including transportation, shipping, storage, stockpiling, cargo handling, packaging,sorting, distribution processing, and information functions

Manufacturing and
R&D facilities

Facilities for research and development, raw material procurement,
stockpiling, storage, manufacturing, production, assembly and processing,recycling, and other purposes

Infrastructure facilities

Facilities developed as bases for industrial activity, such as transportation,communication, energy, water, and public facilities

2007/10/18

Portfolio details
WEB

https://www.iif-reit.com/english/portfolio/map.html

Group Organizational Chart
The sponsors of MCUBS, Mitsubishi Corporation and UBSAG, carry with them knowledge of and experience in thereal estate and financial markets, respectively, cultivatedover many years. With this as our base, we would like tobuild real estate investment trusts and provide an abundance of investment opportunities for investors in Japanand overseas. Through this manner of business, we cancontribute to investors, contribute to the growth and development of domestic and overseas investment markets,and contribute to the real estate market. This goal forms
the basic management policy of our business.

Asset Management Company
Mitsubishi Corp.-UBS Realty Inc. (MCUBS)
Asset
Management

Japan’s largest diversified REIT
Japan Metropolitan Fund
Investment Corporation (JMF)

ESG REPORT Februar y 2022

41

Asset
Management

First REIT specializing in industrial
properties in Japan
Industrial & Infrastructure Fund
Investment Corporation (IIF)Disclaimer• This document may contain information such as statements on future performance, plans, management targets, and strategies.
Such statements with regard to the future are based on current hypotheses and assumptions about future events and trends of thebusiness environment. However, these hypotheses and assumptions are not necessarily correct. Actual results may vary significantly
due to various factors.
• Unless otherwise specified, this document was created based on Japanese generally accepted accounting principles.
• Japan Metropolitan Fund Investment Corporation (JMF), Industrial & Infrastructure Fund Investment Corporation (IIF), and Mitsubishi
Corp.-UBS Realty Inc. (MCUBSR) shall not be liable for any errors, inaccuracies, loss or damage, or for any actions taken in reliance
thereon, or undertake any obligation to publicly update the information contained in this document after the publication date thereof.
Asset Management Company: M itsubishi Corp.-UBS Realty Inc.
(Financial Instrument Firm under License No. 403 of the Director of the Kanto Local Finance Bureau)