Leveraging comprehensive strengths of Daiwa House Groupand aiming to continuously increase unitholder value

Sustainability Report 2021

IndexSustainability Report 2021

Message from
the Management

Sustainability
Strategy

History

Environment

Society

Outline of DHR /the Asset Manager

Governance

GRI Content Index

Back

Forward

DHR will work to continuously increase unitholder value
by ensuring stable revenue and steady growth of its
assets under management over the medium to long term.
Characteristics of Daiwa House REIT Investment Corporation

Diversified REIT primarily investing in four core asset classes


The core assets are logistics properties, residential properties, retail properties, andhotel properties

Invests mainly in the three metropolitan areas: the Greater Tokyo area,
the Greater Nagoya area, and the Greater Osaka area

Creating Dreams, Building HeartsBuilds a diversified portfolio, consisting of assets with various risk-return profiles

Collaboration with Daiwa House GroupLeverages the value chain built on Daiwa House Group’s well-rounded strengths
Receives Daiwa House Group’s pipeline support such as preferential negotiation rights

Expands
asset size mainly through the acquisition of properties developed by
Daiwa House Group

Daiwa House Group symbol - the Endless Heart - represents the group’s vision ofbuilding endless emotional connections with each and every one of its customers,
as well as the solidarity of the Daiwa House Group.

Cuts administration and operation costs through cooperation with Daiwa House Group

Enhanced financial stability

As a group that co-creates value for individuals, communities and people’s lifestyles,
the Daiwa House Group aims to think outside the box and always to create new value ineach successive generation. The Daiwa House Group will continue to pass on the ideals
on which Daiwa House was founded, and work to help realize a sustainable society.



Lengthens and diversifies debt maturities and fixes interest rates

Controls LTV (based on total assets including goodwill) within a range from 40%
to 50% to maintain stable financial operation

Builds solid lender formation

Editorial Policy

Index
Characteristics of DHR, Index, Editorial Policy  1

Supported Initiatives and External Evaluation 

12Green Finance 

23

Initiatives for Tenants and Supply Chain  33

Message from the Management 2

Environment 

14

Environment-friendly Initiatives 24

Governance 

34

History 

4Climate Change 

15

Human Rights 26Compliance 37

Sustainability Strategy 

6

GHG Emissions 

17

Investor Relations Initiatives 

27

Risk Management 

38

Materiality and SDGs 

8Environmental Certifications 

18

Developing Human Resources 28Outline of DHR /the Asset Manager 

39

Sustainability Policy 

10Energy 

21

Diversity and Inclusion 

30

GRI Content Index 

40

Stakeholder Engagement 

11

Water Consumption/Waste Management/Pollution Prevention  22

Initiatives for Local Community 

32This report describes the overall efforts of Daiwa House REIT Investment Corporation(hereinafter referred to as “DHR”) and its asset manager, Daiwa House AssetManagement Co., Ltd. (hereinafter referred to as the “Asset Manager”) to contributeto the realization of a sustainable society and to maximize unitholder value over the
medium to long term. This report has been prepared based on information on thewebsite as of July 2021. For the latest information thereafter, please refer to thewebsite, which will be updated as needed.
This report contains forward-looking statements, but these statements are based on
judgments made with information available at the time each material was prepared,
and are not guarantees of future financial results.
Yen amounts of less than the units indicated are truncated in this report.
Issue Date: July 2021 Issue Frequency: Annually1IndexSustainability Report 2021

Message from
the Management

History

Sustainability
Strategy

Environment

Society

Governance

Outline of DHR /the Asset Manager

GRI Content Index

Back

Forward

Message from the Management
DHR will work to continuously increase unitholder value by ensuring stable revenue and steady
growth of its assets over the medium to long term through fully utilizing Daiwa House Group’s
comprehensive strengths and knowhow regarding real-estate development.

Toshiharu Asada

Koichi Tsuchida

Executive Director

President and CEO

Daiwa House REIT
Investment Corporation

Daiwa House AssetManagement Co., Ltd.

five-star rating is assigned based on the overall score relative to rankings of global participants, to “4 Stars” in 2020 from “3Stars” in 2019 and “2 Stars” in 2018. DHR also received an “A” rating, the highest rating given on a 5-grade scale, in the GRESB
Public Disclosure evaluation scheme for two consecutive years based on its proactive information disclosure practices related to
ESG initiatives.
DHR participated in the CDP Climate Change Program for the first time in 2020 and achieved an “A-” score of the highest
Leadership level in recognition of having taken a leadership role in climate change initiatives and information disclosure.
Moreover, under the CDP Supplier Engagement assessment, DHR was selected for the Supplier Engagement Leaderboard,
making it the first listed J-REIT to be selected for inclusion.
To increase the objectivity and reliability of DHR’s initiatives in reducing the environmental burden of properties it owns, DHR intends
to increase medium- to long-term asset value and pursue the acquisition of third-party external certifications and evaluations.
As of March 31, 2021, 63.1% of the properties have obtained environmental certification (DBJ Green Building Certification, BELS
Certification, CASBEE for Real Estate Certification; gross floor area basis), which is 9.2 percentage points higher than thecertification rate as of March 31, 2020. Whereas DHR had intended to increase the environmental certification rate of its
properties to 50% or more (gross floor area basis), the certification rate of its properties is already up to 63.1% as of March 31,
2021. As such, DHR has updated its target and accordingly aims to achieve a certification rate of 70% or more by the fiscal year
ending March 31, 2031.

Identifying Priority Issues (Materiality)

ESG-related issues of particular importance (materiality) were identified in view of factors
such as the impact of DHR’s business operations and stakeholder expectations
Daiwa House REIT Investment Corporation’s ESG Policy

Aiming to ensure stable revenue and steady growth of assets over the medium
to long term, we will strive to manage assets in a manner that embraces ESG
considerations while appropriately disclosing such performance
Daiwa House REIT Investment Corporation and its asset manager Daiwa House Asset Management Co., Ltd. share the Daiwa
House Group’s basic approach of “Creating Dreams, Building Hearts.” To attain a sustainable society, it is essential that we
include environmental, social, and governance (“ESG”) considerations in real estate investment management operations. We also
believe that this will contribute to DHR’s basic policy of ensuring stable revenue and achieving steady asset growth over the
medium to long term. As such, DHR established the Sustainability Policy in April 2017, and has been applying it to its real estate
investment management business.
This constitutes our first Sustainability Report, prepared for the purpose of providing an opportunity for unitholders and otherstakeholders to learn more about the various ESG initiatives and approaches implemented by DHR and the Asset Manager thus
far. Going forward, DHR will keep striving to further enhance its ESG initiatives with respect to its real estate investment
management business, while endeavoring to appropriately disclose such performance.

Acquiring External Evaluation

We aim to acquire external evaluation and improve assessment results in order toachieve greater objectivity and reliability with respect to our ESG initiatives
DHR manages investment in a manner that embraces ESG considerations, working in conjunction with the Asset Manager. We
accordingly aim to acquire external evaluation and improve assessment results in order to achieve greater objectivity andreliability with respect to our ESG initiatives.
Having been taking part in the Global Real Estate Sustainability Benchmark (GRESB) Real Estate Assessment since 2017, DHR
has received the “Green Star” rating for three consecutive years, and has furthermore improved its GRESB rating, whereby a2

DHR has identified ESG-related issues it deems to be of particular importance (“materiality”). Identifying materiality issues entailed
pinpointing sustainability challenges involving DHR, derived from among various ESG assessments worldwide, sustainability
disclosure standards, and SDGs. It also entailed checking DHR’s practices of disclosing and addressing such issues, conducting
interviews with management of the Asset Manager, assigning priorities, having an external consulting company conduct reviews,
and finally having the Sustainability Committee engage in a process of discussion and approval in March 2021.
DHR has identified issues as having materiality with respect to ESG factors. For instance, (1) when it comes to environmental (E),this involves achieving energy efficiency (energy saving), reducing greenhouse gas emissions (renewable energy), and making
buildings more resilient. (2) When it comes to social (S), this involves developing human resources (training and careerdevelopment), promoting diversity, improving health, safety, and comfort of tenants, and cooperating with tenants (promoting
Green Leases). (3) When it comes to governance (G), this involves ensuring compliance (appropriate transactions with interested
parties), and acquiring and improving Green Building Certification and ESG assessments. The interviews with management
explicitly revealed priority matters from the perspective of management, particularly in terms of developing human resources,
addressing climate change, and cooperating with tenants.

Initiatives of the Asset Manager

Aiming to improve long-term investment performance by incorporating ESG issues
into the investment decision-making process
The Asset Manager acquired certification under the EcoAction 21 third-party evaluation system in March 2020 for certifying andregistering organizations that implement appropriate environmental initiatives, establish, operate and maintain environmental
management systems, and promote environmental communications in accordance with the EcoAction 21 Guideline formulatedby the Ministry of the Environment.
In addition, the Asset Manager became a signatory organization of the Principles for Responsible Investment (“PRI”) in February
2021. The Asset Manager has agreed with the basic approach of the PRI, which encourages the incorporation of ESG issues
into investment decisions and aims to help the beneficiaries enhance long-term investment performance and the signatories
better fulfill their fiduciary duty by including these perspectives in the investment decision-making process.

3

Message from
the Management

Index

Sustainability Report 2021

Sustainability
Strategy

History

Environment

History

Society

Outline of DHR /the Asset Manager

Governance28th Fiscal Period

26th Fiscal Period

DHR shares the Daiwa House Group’s basic approach of “Creating Dreams, Building Hearts” and considers that including

March 2020 cquiring the highest rating of “S” forA
MUFG ESG Rating Certificate for J-REITs
supported by JCRAcquiring “Green Star” rating for GRESBReal Estate Assessment and the highest
rating of “A” for GRESB Public Disclosure cquiring “Green Star” rating forA
GRESB Real Estate Assessment for
the first time

consideration for ESG in its real estate investment management operations contributes to DHR’s basic policy of ensuring stablerevenue and steady asset growth over the medium to long term. Therefore, we have set targets for sustainability and have been cquiring BELS
A
Certification (2 properties)

working on the implementation of various measures.

 coAction 21 certificationE
and registration

December 2018

1st Fiscal Period

12th Fiscal Period

23rd Fiscal Period

June 2005

December 2011

April 2017 romoter (Morimoto Asset Management Co., Ltd. (currently,
P
Daiwa House Asset Management Co., Ltd.)) submitted
notification of establishment of BLife Investment Corporation
under Article 69 Paragraph 1 of the Act on Investment Trusts
and Investment Corporations (the “Investment Trusts Act”)
Commercial registration of establishment under Article 166 of
the Investment Trusts Act; incorporation of BLife Investment
Corporation
Application for registration as BLife Investment Corporation
under Article 188 of the Investment Trusts Act

May 2020

 cquiring DBJ Green Building
A
Certification (3 properties)

27th Fiscal Period

February 2018

15th Fiscal Period

 rime Minister registered BLife Investment Corporation underP
Article 187 of the Investment Trusts Act (Registration Number:
Director of Kanto Local Finance Bureau No. 38)

 cquiring DBJ Green Building
A
Certification (5 properties)

March 2013Issuance of Green Bonds(10 years, ¥6.0 billion) cquiring an “A” rating for SMBC
A
Environmental Assessment Loan
Acquiring DBJ Green Building
Certification (3 properties) and BELS
Certification (1 property)

24th Fiscal Period

30th Fiscal Period

November 2019

March 2019 hange of the corporate name from BLifeC
Investment Corporation to Daiwa House
Residential Investment Corporation

July 2005

Issuance of Green Bonds(5 years, ¥2.4 billion)Issuance of Green Bonds(10 years, ¥1.6 billion)Issuance of Green Bonds(20 years, ¥1.0 billion) cquiring CASBEE for Real EstateA
Certification (1 property) cquiring DBJ Green Building
A
Certification (3 properties)

Introducing the new brand “Castalia” forresidential properties (rental housing)November 2020 cquiring “4 Stars” and “Green Star”
A
ratings for GRESB Real
Estate Assessment
Acquiring the highest
rating of “A” for GRESB
Public Disclosure

December 2019 cquiring DBJ Green Building
A
Certification (1 property)
and BELS Certification (8 properties)

Split of investment units (2-for-1 split)

2nd Fiscal Period

19th Fiscal Period

February 2006

March 2015

 pplication for approval to be listed on the Japan real estateA
investment trust (J-REIT) market of Tokyo Stock ExchangeApproval to be listed on the Japan real estate investment trust(J-REIT) market of Tokyo Stock Exchange

December 2020
July 2019

June 2015

February 2021

 cquiring CASBEE for Real EstateA
Certification (4 properties)

March 2018

 cquiring DBJ Green Building
A
Certification (1 property) cquiring an “A-” rating forA
CDP Climate Change
ProgramFebruary 2020

Acquiring BELS Certification(3 properties)

25th Fiscal Period

Split of investment units (2-for-1 split)

March 2006

Forward29th Fiscal Period

September 2019

September 2018Back

GRI Content Index ecoming a PRI
Bsignatory

 cquiring DBJ Green Building
A
Certification (2 properties)

819.1

 isting on the Japan real estate investment trust (J-REIT)
L
market of Tokyo Stock Exchange (Securities Code: 8984)

820.1

August 2019

May 2018

April 2010744.8

 cquiring DBJ Green Building
A
Certification (4 properties)
and BELS Certification (5 properties)

9th Fiscal Period

671.7

 cquiring DBJ Green Building
A
Certification (3 properties)

Merger with New City Residence Investment Corporation

745.6

683.4

Reaching¥500.0 billion 577.7
in asset size

22nd Fiscal Period
September 2016

577.7

513.7

 erger with Daiwa House REIT
M
Investment Corporation
Change of the corporate name from
Daiwa House Residential Investment
Corporation to Daiwa House REIT
Investment Corporation

228
213
189

199

216

225

229

227

199

=Asset size (Yen in billions)=Number of properties=Eligible green assets (Yen in billions)

127=Distributions per unit (Yen)

192.6
3,654

4

32.0 1432.0 15

Nov.
2005

Nov.
2006

35.5

24

May
2007

3,234
51.1 243,315
51.1 243,10851.1 24

2,784

2,215

3,835

121
192.1

121
192.1

125
210.2

123
211.0

123
212.7

127
221.0

132
229.9

134
235.3

136
237.6

141

142
256.3

300.8

142
256.3

236.3

225.3

4,220

4,080

4,000

4,066

4,236

4,150

4,344

4,343

4,345

4,460

4,501

4,537

Feb.
2011

Aug.
2011

Feb.
2012

Aug.
2012

Feb.
2013

Aug.
2013

Feb.
2014

Aug.
2014

Feb.
2015

Aug.
2015

Feb.
2016

Aug.
2016

4,800

4,964

5,194

Feb.
2017

Aug.
2017

Feb.
2018

5,046

Aug.
2018

5,427

5,773

6,040

236.3

5,427

5,856

51.1 2451.1 24

Nov.
2007

May
2008

Nov.
2008

May
2009

Nov.
2009

Aug.
2010

Feb.
2019

Aug.
2019

Feb.
2020

Aug.
2020

Feb.
2021

5

Message from
the Management

Index

Sustainability Report 2021

History

Sustainability
Strategy

Environment

Society

Outline of DHR /the Asset Manager

GovernanceBack

GRI Content Index

ForwardSustainability Strategy
DHR’s Sustainability Goals

Promotion System

Our investment strategy is to target a diversified portfolio, focusing on logistics, residential, retail and hotel properties as ourTo promote awareness of ESG based on the Sustainability Policy, the Asset Manager is working to secure an appropriate

core asset classes, as well as other asset classes such as office buildings and healthcare properties as a “diversified REIT.”

system for promoting sustainability. To do this, it established the “Regulations Concerning the System for Promoting

DHR carries out investment and management of real estate, etc. located throughout Japan, focusing on the three major

Sustainability” and rules regarding topics such as internal framework, collaboration with stakeholders, and information

metropolitan areas. Our policy is to operate in a manner that will maximize unitholder value by ensuring stable revenue anddisclosure policy. In addition, a meeting of the Sustainability Committee is held at least once every three months, in principle,

steady growth of assets through fully utilizing the comprehensive strengths and knowhow of the sponsor, the Daiwa House

to examine goals and measures related to sustainability. The Asset Manager is working to achieve these goals andGroup.

implement various measures. Moreover, in principle, the Head of the Sustainability Committee annually directs the Committee

Challenges such as climate change risks and other social issues, the reform of work styles due to COVID-19, and theto assess the status of all sustainability initiatives and to review them as necessary.

strengthening of governance to ensure trust from stakeholders and society are having a significant impact on the businessactivities of investment corporations and management companies. The impact of the status of ESG initiatives on corporate
reputation and corporate value is increasing every year.

Sustainability Committee

Organizational chart

General Meeting of Unitholders

Corporate Auditor

With the aim of realizing a sustainable society, DHR positions ESG initiatives as one of its important management issues, and willcontinue to focus on them going forward. Furthermore, in response to social demands and in order to strengthen the bond of trustwith unitholders and achieve sound growth, DHR plans to continue striving toward establishment of a highly-effective compliancesystem and highly-transparent management system by ensuring thorough compliance positioned as a basic principle.

Board of Directors
Daiwa House REIT Investment Management Committee

Compliance Committee

Private Fund Investment Management Committee

Management Finance Committee

President and CEO

Sustainability Target

Compliance Officer

The Asset Manager considers efforts such as energy conservation and reducing greenhouse gas emissions in relation toCompliance Department

asset management to be serious environmental issues. As such, it establishes individual policies and strives to reduce theburden it puts on the environment.
Furthermore, we have established the following reduction target (medium to long term) for energy consumption.

For individual properties, reduce energy consumption and CO2 emission
intensity by 10% in the ten years from 2018 to 2027
Indicator

Energy consumption

GHG emissions

Water consumption

Annual target

Long-term target(over the ten-year period from 2018 to 2027)

1% reduction of intensity

10% reduction of intensity

1% reduction of CO2 emission intensity

10% reduction of CO2 emission intensity–

Reduction of consumption rate to theconsumption intensity of fiscal year
ended March 2018 (base year) or less

Daiwa House REIT
Division

Fund Management
Department

Asset Management
Department

Waste management–

Administration andAccounting Department

 umber of Sustainability
N
Committee meetings held

Private Fund Division

Fund Management
Department

Asset Management
Department

Fiscal year
Fiscal year
Fiscal year
Fiscal year
ended March ended March ended March ended March
2018
2019
2020
2021

6

6

6

5

Concept of Sustainability Promotion Based on the PDCA Cycle

Fiscal year results(Policy formulation and revision)

Progress monitoring
Improvement of recycling rate to therate of fiscal year ended March 2018(base year) or higher

Investment
Department

Committee Head:
President and CEO
Operating officer:
Director in charge of Administration andAccounting Department
Members:
All Managing Directors, all General
Managers, the Compliance Officer andother selected officers and employees
Frequency of meetings:
At least once every three months in principle
Function and role:
Reviewing and formulating various policies,
targets and measures related tosustainability, and reporting to DHR Boardof Directors as necessary

Action

Check

Plan

Do

Reviewing and formulating various
policies, targets and measuresrelated to sustainability

Adressing priority issues*Targeted at properties designated by the Asset Manager’s Sustainability Committee or its secretariat.

67

IndexSustainability Report 2021

Message from
the Management

Sustainability
Strategy

History

Environment

Society

Governance

Outline of DHR /the Asset Manager

GRI Content Index

Back

ForwardMateriality and SDGs
Materiality Identification Process

Identified Materiality

In 2021, DHR identified ESG-related materiality through the following process.

Goals indirectly related to the SDGs

Energy efficiency (energy saving)Promotion of reduction of greenhouse gas emissions(renewable energy)
Improvement of building resilience
Cooperation with tenants (promotion of Green Leases)

Employees and tenants

 uman resource development
H(training and career development)
Promotion of diversityImprovement in the health, safety, and comfort of tenants
Cooperation with tenants (promotion of Green Leases)G nsuring complianceE(appropriate transactions with interested parties)
Acquiring and improving Green Building Certification and
ESG assessments

Discussions and approval by management
Discussions were held and approval was made by the Sustainability Committee.

Third-party written opinion on materiality with respect to Daiwa House REIT Investment Corporation

The items below are deemed important by DHR in terms of DHR’s asset characteristics and management policy, and do notsignify importance as social issues.

Extremely strong

Stakeholder expectations

Local contribution activities

Improvement in the health, safety,
and comfort of tenants

Transparent, sound governance

Ensuring compliance(appropriate transactions withinterested parties)

Reduction of water consumption

Improvement in the health, safety,
and comfort of employees

Reduction of waste

Supply chain management

Protection of biodiversity

Community revitalization,
redevelopment

Response to climate change(energy saving/renewable energy,
improvement in resilience)
Promotion ofhuman resource development(training and career development)
Promotion of diversity

Cooperation with tenants(promotion of Green Leases)
Acquiring and improving
Green Building Certificationand ESG assessments

The process of establishing issues of materiality was carried out as follows.
(1) Prepared a long list of issues derived from various ESG assessments, sustainability disclosure standards, and SDGs
(2) Verified the state of DHR’s disclosure and response with respect to each item on the long list
(3) Prepared an intermediate list upon analyzing content in terms of item redundancy in the ESG assessments and the state of DHR’s response(4) Conducted interviews with three of DHR’s C-level executives (CEO and officers in charge of sustainability-related domains) based on
the intermediate list
(5) Prepared a short list and issues of materiality taking into account managerial perspectives gained in the course of conducting the interviews

In terms of ESG content, addressing climate change under environmental (E) component involves the worthy aim of taking action by making
buildings more resilient, beyond merely reducing carbon dioxide emissions. Meanwhile, efforts under social (S) component are distinctive in that
DHR will place top priority on developing human resources with emphasis on “develop people through business,” serving as a member of the
Daiwa House Group. Efforts under governance (G) component are important given that the notion of engaging in appropriate business dealings
with interested parties under a J-REIT structure is a matter of high priority from the perspective of stakeholders.
Going forward, it will be desirable to track progress upon having set quantitative KPIs and targets for each item of the issues of materiality to
the extent possible. In particular, it is hoped that DHR will consider options that involve setting more aggressive reduction targets looking
toward the years 2030 and 2050, serving as a member of the Daiwa House Group which is committed to taking swift action with respect toefforts such as the RE100, TCFD and SBT initiatives, in alignment with Japan’s carbon neutral declaration.

Extremely strong

Impact on own business
Environmental

Daiwa House REIT Investment Corporation, which serves as a J-REIT of the Daiwa House Group, along with its asset manager Daiwa
House Asset Management Co., Ltd. (hereinafter collectively, “DHR”) have established issues of materiality associated with preparation of thisSustainability Report. Having already put in place its Sustainability Policy and a system for promoting sustainability, DHR has been steadily
promoting ESG initiatives, which has culminated in it having gained “4 Stars” rating under the GRESB Real Estate Assessment for 2020.
Meanwhile, DHR is now opting to specify issues of materiality in order to clarify orders of priority for implementing initiatives going forward.
This involves assigning levels of importance to ESG issues based on stakeholder expectations and the impact of such initiatives on thecompany’s business.

There were certain distinguishing characteristics of this process. For instance, step (3) enlisted an approach whereby those items for which
the company had not made progress were assigned high degrees of materiality from the perspective of risk exposure, which extended
beyond the notion of gaining an understanding of stakeholder expectations from ESG assessments and other external benchmarks.
Meanwhile, step (4) involved interviewing three C-level executives on an individual basis (CEO and officers in charge of sustainability-related
domains), which explicitly revealed priority matters from the perspective of management, particularly in terms of developing humanresources, addressing climate change, and cooperating with tenants. Under step (5), the issues of materiality were ultimately narrowed
down to seven items, but another eight items will require attention on par with that placed on the issues of materiality.

Strong8

GovernanceConfirming validity
To ensure objectivity, CSR Design Green Investment Advisory Co., Ltd. reviewed our “selection
process” and “identified materiality.”

Step 4

Employees and tenants

Goals related to the main SDGs

S

Setting priority rankings
We set priority rankings from the extracted issues by verifying the state of DHR’s disclosure andresponse and through interviews with management of the Asset Manager.

Step 3

Climate Change

E

Extracting sustainability issues
Sustainability issues related to DHR were extracted using various global ESG assessments,
sustainability disclosure standards, and the SDGs.

Step 2

Environmental Social

Step 1

Materiality

SocialCSR Design Green Investment Advisory Co., Ltd.
Co-founder and CEO
Ryuichi Horie

Governance9IndexSustainability Report 2021

Message from
the Management

History

Sustainability
Strategy

Sustainability Policy

Environment

Society

Outline of DHR /the Asset Manager

Governance

GRI Content Index

Back

Forward

Stakeholder Engagement

Sustainability Policy

Basic Approach

The Daiwa House Group’s basic approach is “Creating Dreams, Building Hearts.” As a group that co-creates value for

DHR conducts its business and other activities through interactions with its various stakeholders, including not only

individuals, communities and people’s lifestyles, the group aims to build trust relationships with stakeholders and contribute tounitholders, tenants of properties, local communities, supply chains, etc., but also officers and employees of the Assetsociety through its businesses, and to realize a sustainable society by meeting the challenge of achieving “zero environmental

Manager and the sponsor. DHR aims for sustainable growth through building long-term relationships and actively

impacts.” Daiwa House Asset Management Co., Ltd. shares the Daiwa House Group’s basic approach as DHR’s asset

communicating with stakeholders.

manager, and considers that including consideration for ESG in its real estate investment management operations contributes
to DHR’s basic policy of ensuring stable revenue and steady growth of assets over the medium to long term. Therefore, wehave established the following “Sustainability Policy” to guide our real estate investment management.

Unitholders

1. Prevention of global warming· Results briefing

We will promote energy conservation measures through the installation of energy conservation equipment and so forth to realize acarbon-free society. We will also consider introduction of renewable energy power generation facilities and acquisition of properties
that have such equipment installed.

2. Harmony with the natural environment (preservation of biodiversity)
We will aim for a society that is able to pass on abundant natural resources to future generations in order to protect and improvenatural capital. We will also promote planting and management considering harmony with the surrounding environment.

3. Conservation of natural resources (protecting water resources, reducing waste)· Holding presentation
meetings for unitholders,etc.

Local communities

Tenants· Investment in existing
urban development zones· Tenant satisfaction surveys· Local job creation,· Cooperation programs withtenants,

etc.

etc.

We will work towards the realization of a recycling-oriented society by promoting water conservation measures through the
installation of water conservation equipment. We will also promote 3R activities (reduce, reuse, and recycle) for resources.

4. Prevention of chemical pollution
We will aim to realize a society where people and ecosystems do not suffer adverse effects from chemical substances by promoting
reduction, substitution and appropriate management of harmful chemical substances when managing real estate, and taking efforts
to minimize risks.

5. Establishment of an internal framework and initiatives for employees
We will establish an internal framework for promoting sustainability and take steps to develop personnel by conducting regulareducation and training for officers and employees. We will also aim to create workplaces where people can work safely andhealthily, and workplaces where diverse employees can work flexibly.

6. Building of trust relationships with external stakeholders
We will aim to build trust relationships with external stakeholders and we will work on our suppliers to enhance the satisfaction oftenant customers and promote CSR in our supply chain. We will undertake neighborhood co-existence activities with local residents.

7. Promotion of communication through information disclosure
We will proactively disclose ESG-related information and utilize dialogues with stakeholder such as investors in our future businessactivities. Furthermore, we will aim for continuous acquisition of Green Building Certification.

8. Compliance with laws and regulations, and risk management
We will comply with ESG-related laws and regulations. Moreover, we will strive to implement appropriate risk management, such as
giving consideration for the environmental and social impacts in risk evaluations when acquiring real estate and promoting
awareness of human rights.

10Supply chain

Officers and employees· Continuous evaluation forproperty managementcompanies and building
management companies· Diversity & Inclusion· Human resource
development,· ESG training,

etc.

etc.

Sponsor· Use of the value chain of
Daiwa House Group· Daiwa House Group’s
pipeline support,
etc.

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Message from
the Management

History

Sustainability
Strategy

Environment

Society

Governance

Outline of DHR /the Asset Manager

GRI Content Index

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Forward

Supported Initiatives and External Evaluation
Signing on to Principles for Responsible Investment (PRI)
The “Principles for Responsible Investment (PRI)” is an international network of institutional
investors working to realize the following six principles. The PRI is supported by the United
Nations Environment Programme Finance Initiative (UNEP FI) and the United National Global
Compact (UN Global Compact). The investors who are signatories to the PRI declare toinclude ESG issues into investment decisions, and while helping the beneficiaries enhancelong-term investment performance and fulfilling their fiduciary duty as signatories, they aim tocreate an abundant world for all stakeholders.

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

GRESB Assessment
DHR began participating in the GRESB Real Estate Assessment in 2017. DHR received a GRESB “4 Stars” on a 5-star scale<The six Principles for Responsible Investment>
1. We will incorporate ESG issues into investment analysis and decision-making processes.
2. We will be active owners and incorporate ESG issues into our ownership policies and practices.
3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.
4. We will promote acceptance and implementation of the Principles within the investment industry.
5. We will work together to enhance our effectiveness in implementing the Principles.
6. We will each report on our activities and progress towards implementing the Principles.
The Asset Manager agreed with the basic approach of the PRI and became a signatory in February 2021.

Participation in CDP Climate Change Program
CDP
CDP is an international non-profit organization that encourages companies and governments to disclose information on
measures for such environmental issues as climate change, water security, and forests, based on requests from global
institutional investors and major purchasing companies that are promoting a transition to a carbon-free society. In 2020, overevaluation of the overall score relative to global participants in the 2020 assessment. Furthermore, DHR has received a“Green Star” assessment for three consecutive years as an excellent participant in both the “Management Component,”
which evaluates policies and organizational structures to promote ESG, and the “Performance Component,” which evaluates
the environmental performance of properties and initiatives with tenants. DHR also received an “A” rating, the highest rating
given on a 5-grade scale in the GRESB Public Disclosure evaluation scheme for two consecutive years based on its
proactive information disclosure practices related to ESG initiatives.

SMBC Environmental Assessment Loan
SMBC Environmental Assessment Loan
The SMBC Environmental Assessment Loan refers to a seven-tier scale assessment system as part of theloan origination process, with “AAA” as the highest rating, that assesses the level of environmental
consciousness of a company based on proprietary assessment standards set by Sumitomo Mitsui
Banking Corporation and The Japan Research Institute, Limited.
[Overview of assessment]
We received an “A” rating for our environmental initiatives, having earned high evaluation in the areas of “environmental management,”“environmental communication” and “environmental conservation policy initiatives.”

9,600 global companies disclosed information on their measures for environmental issues through CDP, making CDP one of
the global information disclosure platforms for environmental information disclosure.

CDP Climate Change Program Assessment
CDP assessments are provided across four consecutive levels, which are broken down into eight-tier score bands. The levels
are: Leadership level (A and A-), Management level (B and B-), Awareness level (C and C-) and Disclosure level (D and D-). DHR

MUFG ESG Rating Certificate for J-REITs supported by JCR
MUFG ESG Rating Certificate for J-REITs supported by JCR is a product exclusively for J-REITs that Mitsubishi UFJ
Research and Consulting Co., Ltd. awards on a five-tier scale with “S” as the highest rating by assessing the ESG measures,

responded to CDP Climate Change Questionnaire for the first time in 2020 and achieved an “A-” score of the highestwith the support of Japan Credit Rating Agency, Ltd. (JCR).

Leadership level, as CDP recognized DHR for its leadership role in climate change initiatives and information disclosure.

[Overview of assessment]

CDP Supplier Engagement Rating
The CDP Supplier Engagement Rating is determined through responses from companies engaged incorporate initiatives against climate change throughout their value chain in the four areas of “supplierengagement,” “governance,” “scope 3 emissions” and “targets,” as well as their overall CDP Climate
Change Program score. In 2020, CDP listed approximately 400 companies, including approximately 80
Japanese companies, on the Supplier Engagement Leaderboard out of approximately 5,800 companies
subject to evaluation, as recognition of the particularly excellent initiatives of those companies. DHR
participated in the CDP Climate Change Program for the first time in 2020 and made it onto the Supplier
Engagement Leaderboard as the first listed J-REIT to be named.

12

MUFG ESG Rating Certificate for J-REITs supported by JCR

Our broad-based initiatives in all areas of ESG were highly evaluated in the assessment, and DHR and the Asset Manager acquired an“S” rating (the highest).

EcoAction 21 Certification and Registration Program
EcoAction 21 Certification and Registration Program
EcoAction 21 Certification and Registration Program is a third-party evaluation program to certify andregister organizations which implement appropriate environmental initiatives, establish, operate, andmaintain environmental management system, and promote environmental communication in accordancewith the EcoAction 21 Guidelines formulated by the Ministry of Environment.
The Asset Manager was certified and registered in March 2020.

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IndexSustainability Report 2021

Message from
the Management

History

Environment

Sustainability
Strategy

Environment

Society

Governance

Outline of DHR /the Asset Manager

GRI Content Index

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Climate Change

Environmental Targets

Sustainability Policy

DHR’s asset manager, Daiwa House Asset Management Co., Ltd., recognizes matters such as

In recent years, unusual weather events, thought to be caused by global warming, are occurring globally and in all regions

energy saving and the reduction of greenhouse gas (“GHG”) emissions in asset managementof Japan. Believing that initiatives to reduce greenhouse gas emissions are important measures to mitigate this effect, we

operations as important environmental issues and has created individual policies to reduce theare promoting initiatives to reduce the impact on climate change from the asset management of DHR’s properties.

environmental burden.
Furthermore, we have established the following reduction target (medium to long term) forenergy use.

GovernanceTarget for the ten year period from 2018 to 2027 in regard to individual properties

10% reduction of energy consumption intensity
10% reduction of CO2 emission intensity iscussion and guidance on strategy, discussion and guidance on major action plans, discussion andDguidance on annual budget, discussion and guidance on business plan, and monitoring of results
The Sustainability Committee is attended by the President and CEO of the Asset Manager. At the committee, a review isconducted on strategies for sustainability, including the response for climate related issues. An annual business plan isformulated based on those strategies, and an action plan for its implementation is considered. In addition, the committee
confirms the progress status relating to the plan’s implementation, including its budget, and reflects those findings in theLong-term Environmental Vision of “Challenge ZERO 2055”
Looking ahead to 2055, which marks the 100th anniversary of the foundation of Daiwa House
Industry Co., Ltd. (hereinafter referred to as “Daiwa House”), the Daiwa House Group formulated
a long-term environmental vision of “Challenge ZERO 2055” in fiscal year ended March 2017.
The Daiwa House Group aims to realize a sustainable society in accord with its Group Management

proposal for the next year’s strategy.

Monitoring of major capital expenditures, acquisition and sales
This is formulated based on the content of the climate related issues discussed at the Sustainability Committee.

Discussion and guidance on risk management policies

Vision of being a Group that co-creates value for individuals, communities and lifestyles. It will

The Compliance Committee is attended by the President and CEO of the Asset Manager. At the committee, policies arechallenge to reduce its environmental impact to zero with respect to four environmental priority

decided and results are assessed.

themes (mitigation of and adaptation to climate change, harmony with the natural environment,
conservation of water and other natural resources, and prevention of chemical pollution) throughthe three stages of procurement, business activities, and products/services.

Setting performance targets
The Board of Directors, which is attended by the President and CEO of the Asset Manager, sets performance targets andassesses the results. By incorporating the climate related issues into “strategy,” “major action plans,” “risk management
policy,” “annual budget,” “business plan,” etc., the monitoring of the issue of climate change conducted at the Board of

Establishment of EMS Operation Manual
In managing DHR’s properties, the Asset Manager continuously endeavors to reduce
environmental burden by setting environmental targets related to energy consumption, GHG
emissions, water consumption and waste, obtaining results, analyzing the results against targets

Directors of the Asset Manager and the Board of Directors of DHR is functioning effectively. For example, it is monitored
whether the targets such as reduction of GHG emissions are proceeding according to plan. Discussion and guidance onplans and policies, etc. are reported monthly at the Board of Directors of the Asset Manager and the Board of Directors of
DHR as activity reports relating to sustainability, including the issue of climate change.

and implementing corrective measures and improvements through an PDCA (plan-do-check-act)
cycle in accord with an EMS Operation Manual that provides detailed instructions on
implementing policies on objectives such as saving energy, reducing GHG emissions, conserving

Strategywater and managing waste.

In addition to many environmental risks concerning not only climate change but also resource and water security,

In operating the environmental management system, the Asset Manager complies withenvironmental pollution, etc., DHR and the Asset Manager directly face other risks such as competition related risk, realapplicable environmental laws and regulations and other environmental requirements.

estate related risk, and business diversification related risk. While recognizing climate change risk as a risk that could pose

Violations of environmental laws and regulations and environmental accidents

one of the biggest impacts in the medium to long term, we also identify such risks as areas of potential, and incorporates
them in our overall risk management process.

There were not any significant violations of environmental laws and regulations or significant
environmental accidents at DHR’s properties that would affect stakeholders. (Fiscal year ended
March 2021)

14

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IndexSustainability Report 2021

Message from
the Management

History

Sustainability
Strategy

Environment

Society

Outline of DHR /the Asset Manager

GovernanceBack

GRI Content Index

ForwardGHG Emissions

Climate Change
Property Assessments Based on Hazard Maps

GHG Emissions

At the beginning of each period, DHR assesses portfolio properties held as of the end of the previous period, taking into

Target (KPI)

account a matrix analysis based on stability and profitability.
In these property assessments, the disaster risk is converted into a score utilizing a hazard map as the climate change risk.

Index

Yearly target

Long-term target (10-year period from 2018 to 2027)

GHG emissions

Reduce CO2 emission intensity by 1%

Reduce CO2 emission intensity by 10%

Countermeasures Against Large-scale Flooding
GHG emissions

DPL Nagareyama I

Fiscal year ended
Fiscal year ended Fiscal year ended Fiscal year ended
March 2018
March 2019
March 2020
March 2021
(Base year)

DHR has entered into an “Agreement on Use as Temporary Evacuation Facility in Event of Disaster” with Nagareyama City,
Chiba. This agreement allows the city to use DHR property DPL Nagareyama I as a temporary evacuation facility for nearby
residents and others in the event of large-scale flooding or other disaster.
The purpose of this agreement is to ensure safety in the event that the Edogawa River, which runs through the city, overflows
due to torrential rains, etc., by temporarily taking in nearby residents and employees of companies in the Nagareyama
Industrial Park until an evacuation center can be opened.

Number ofproperties=Total emissions (t-CO2)=Emission intensity (t-CO2/m3)
0.06

100,000
90,0000.05

80,000143 properties

Total emissions(t-CO2)152 properties

190 properties

202 properties

70,0000.04

60,00034,33638,44984,80891,8730.03

50,00040,0000.02

30,000The latest BCP measures have been implemented at DPL Nagareyama I, including a seismic isolation structure and back-up
power supply. The on-premises parking lot, vehicle passageways on each floor (total floor area of 3,000 m2 per floor), thecafeteria, and daycare center can serve as temporary shelters for up to 1,200 people in the event of a disaster, and it also
keeps emergency supplies for 500 people.
In addition, there are ramps for accessing the vehicle passageways on each floor, and these can be used by evacuees
arriving by car to get to the top floors while remaining in their cars. This allows quick evacuation, and with evacuees
remaining in their cars, it can prevent the spread of COVID-19.

Emission intensity(t-CO2/m3)

0.05560.0441

0.04140.0377

Reduction rate ofintensity (%)–-20.6%-25.6%-32.2%

20,0000.01

10,0000

FY ended FY ended FY ended FY ended
Mar. 2018 Mar. 2019 Mar. 2020 Mar. 2021

0.00

*1 Aggregation period: The aggregation period is from every April to the following March. Results are updated annually in principle.
*2 Calculation method: Calculated using only DHR’s properties for which the requisite data are available.
Intensity is calculated by dividing total electricity usage and CO2 emissions by intensity denominator (gross floor area (m2)).
*3 Except for certain ones, these numbers are verified/assured by a third party based on International Standard on Assurance Engagements (ISAE) 3410 “Assurance Engagementson Greenhouse Gas Statements.”

Solar Power Generation

Greening and Countermeasures Against Heat Island Effect
DHR carries out efforts such as those below out of consideration for climate change at its properties.

Introduction of solar power generation systems
Solar panels have been installed on the rooftops of logistics and retail properties
owned by DHR, and DHR utilizes the renewable energy they generate.

Solar power generationequipment installations

Large-scale green area

Rooftop greening

Exterior greening/water-permeable paving

Number ofproperties

Power generated infiscal year ended
March 2020

Power generated infiscal year ended
March 2021

14 properties

16,419 MWh

16,319 MWh*Amount of power generated is calculated only for properties with solar power generation equipment for which therequisite data are available.

Use of electricity from biomass power generation
Electricity generated using environmentally friendly biomass power generation isused to satisfy some power demand at DHR’s properties.
(Equivalent to 200 MWh of the power consumed from April 1, 2020 to March
31, 2021 at D Project Kuki I, Royal Parks SEASIR, Royal Parks Umejima, Super
Hotel JR Nara Station Sanjo Street, and Nursery Room Berry Bear Omori Nishi
Welcia Ota Omori Nishi Store.)

1617

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the Management

Sustainability
Strategy

History

Environment

Society

Outline of DHR /the Asset Manager

Governance

GRI Content Index

Back

ForwardEnvironmental Certifications
Environmental Certifications

 ercentage of properties that havePobtained environmental certifications

CASBEE for Real Estate Certification

To increase the objectivity and reliability of DHR’s initiatives in reducing

CASBEE (Comprehensive Assessment System for Built Environment Efficiency) is a system forthe environmental burden of properties, DHR intends to increase

performing a comprehensive assessment of the overall environmental performance of buildings

medium- to long-term asset value and pursue the acquisition of third-that is being developed and promoted in Japan under the guidance of the Ministry of Land,

party external certifications and evaluations. DHR’s acquisition rate ofInfrastructure, Transport and Tourism.

63.1%

environmental certifications is as follows. DHR plans to increase the

CASBEE for Real Estate Certification is a system in which a third-party agency examines the(gross floor area basis)

percentage of properties with environmental certification (gross floor

CASBEE assessment of a building and certifies that it is accurate. The assessment is based on aarea basis) to 70% or more by the fiscal year ending March 2031.

four-scale system (S rating:- B rating:).

Main properties

Status of environmental certifications*1
Percentage of
Number of Number ofPercentage of certified
Certified area Area in whole portfolio*2
certified properties
certified
portfolio
properties*3)*3)(grossfloor
area(grossfloor
area(gross floor area basis)
properties properties*2 (Based on number of properties)
Total of properties thathave obtained
environmental certifications

47

219

21.5%

2,087,781.40 m2

3,306,700.02 m2

63.1%

DBJ Green Building
Certification

30

219

13.7%

1,643,027.79 m2

3,306,700.02 m2

49.7%

CASBEE for Real Estate
Certification

12

219

5.5%

912,129.00 m2

3,306,700.02 m2

27.6%

BELS Certification

36

D Project Hachioji

DPL Misato

ACROSSMALL Shinkamagaya

GRANODE Hiroshima

BELS Certification
219

16.4%

1,651,893.61 m2

3,306,700.02 m2

50.0%

Under the Act on the Improvement of Energy Consumption Performance of Buildings (Building
Energy Conservation Act), real estate companies are required to make an effort to display the*1 The number of certifications is as of March 31, 2021.
*2 Excludes land properties.
*3 Total floor area is based on the floor area provided on the inspection certificate of each property.
*4 The percentage of properties that have obtained environmental certifications is rounded to the first decimal place.

energy saving performance of buildings. The Building-Housing Energy-efficiency Labeling System(BELS) is a five-scale system (-) in which a third-party agency assesses the energy

saving performance of a building based on the criteria established by the Ministry of Land,
Infrastructure, Transport and Tourism.

DBJ Green Building Certification
DBJ Green Building certification is a certification

Main properties

Main properties

system established by the Development Bank ofJapan Inc. (DBJ) to support real estate that isenvironmentally and socially conscious (Green
Building). It assesses and certifies properties thatare required by society and the economy, basedon a comprehensive assessment of environmental
performance, disaster prevention, consideration ofRoyal Parks Hanakoganei

the community, and other actions taken for various
stakeholders, and supports those efforts.

D Project Kakegawa

DPL Nagareyama I

FOLEO Otsu Ichiriyama

Shibaura Island
Bloom Tower

Royal Parks Wakabadai

18

D Project Yashio

iias Tsukuba

19

IndexSustainability Report 2021

Message from
the Management

Sustainability
Strategy

History

Society

Outline of DHR /the Asset Manager

GovernanceBack

GRI Content Index

Forward

EnergyEnvironmental Certifications
Status of Environmental Certifications for the Portfolio
Logistics properties

Environment

Residential properties(As of March 31, 2021)

Retail properties

Hotel properties

Other assets

Energy Consumption
Target (KPI)

Property
number
LB-001
LB-002
LB-006
LB-008
LB-009
LB-011
LB-019
LB-020
LB-021
LB-025
LB-026
LB-027
LB-028
LB-029LB-030
LB-031
LB-035
LB-037
LB-038
LB-044
LB-049
LB-050
LB-051
LB-053
LB-054
LB-056
LB-059LB-060
LB-062
LM-001
LM-002
LM-004RE-043RE-059RE-081
RE-094
RE-107
RE-109RE-110RE-138
RE-141
RM-001
RM-009RM-012
HO-005
OT-003
OT-00620

Property name
D Project Machida
D Project Hachioji
D Project Urayasu II
D Project Noda
D Project Inuyama
D Project Neyagawa
D Project Tosu
D Project Kuki I
D Project Kuki II
D Project Fukuoka Hakozaki
D Project Kuki III
D Project Kuki IV
D Project Kuki V
D Project Kuki VI
D Project Yashio
D Project Nishiyodogawa
D Project Kawagoe III
D Project Urayasu III
D Project Tomisato
D Project Kakegawa
DD Project Chibakita
D Project Matsudo II
D Project Tomisato II
D Project Sendai Izumi II
D Project Kaminokawa
D Project Tosu III
D Project Kitahachioji III
D Project Itabashi Shingashi
D Project Kuki VIII
DPL Misato
DPL Fukuoka Kasuya
DPL Nagareyama I
Shibaura Island Bloom Tower
Castalia Tower Shinagawa Seaside
Royal Parks Toyosu
Royal Parks SEASIRRoyal Parks Hanakoganei
Royal Parks Wakabadai
Pacific Royal Court Minatomirai Urban Tower
Royal Parks Namba
Castalia Ningyocho III
ACROSSMALL Shinkamagaya
FOLEO Otsu Ichiriyama
iias Tsukuba
Candeo Hotels Nagasaki Shinchi Chinatown
Naha Shin-Toshin Center Building (Daiwa Roynet Hotel Naha-Omoromachi)
GRANODE Hiroshima
Total

Index

Yearly target

Long-term target (10-year period from 2018 to 2027)

Energy consumption

Reduce consumption intensity by 1%

Reduce consumption intensity by 10%

Energy consumption=Total amount (MWh)Fiscal year ended
Fiscal year ended Fiscal year ended Fiscal year ended
March 2018
March 2019
March 2020
March 2021
(Base year)
Number of properties

143 properties

152 properties

190 properties

76,44083,491

190,299

204,817

Consumption intensity(MWh/m2)

0.12530.09590.09290.0841

Reduction rate of intensity(%)

250,000

0.14
0.12

200,000

202 properties

Total amount(MWh)=Consumption intensity (MWh/m2)

0.10
150,000

0.08

100,000

0.06
0.04

50,0000–-23.5%-25.9%-32.9%

0.02

FY ended FY ended FY ended FY ended
Mar. 2018 Mar. 2019 Mar. 2020 Mar. 2021

0.00

*1 Aggregation period: The aggregation period is from every April to the following March. Results are updated annually inprinciple.
*2 Calculation method: Calculated using only DHR’s properties for which the requisite data are available.
Energy consumption intensity and GHG emission intensity are calculated by dividing total electricity usage and CO2
emissions by intensity denominator (gross floor area (m2)).

Promotion of LED Lighting
DHR is promoting conversion to LED lighting at its properties, in an effort to reduce energy consumption.

Example of conversion to LED lighting[Example]
December 2020

Logistics property

Estimated CO2 reduction

Estimated running cost reduction-55.3%-63.6%-165.7 tons/year-9,274 thousand yen/year

Conversion to
LED lighting at
D Project Tsuchiura

Energy Saving Measures
DHR is taking the following measures at its properties in consideration of the environment.

30 properties

12 properties

36 properties

Conversion to LED lighting

Slope to upper floor

Large-scale window space allowing the use ofnatural light21

IndexSustainability Report 2021

Message from
the Management

Sustainability
Strategy

History

Environment

Water Consumption/Waste Management/Pollution Prevention
Water Consumption
Target (KPI)
Index

Yearly target

Long-term target (10-year period from 2018 to 2027)

Water consumption–

Reduce consumption rate to the consumption intensity of fiscal year ended March 2018 (base year) or less

Water consumption=Total amount (m3)Fiscal year ended
Fiscal year ended Fiscal year ended Fiscal year ended
March 2018
March 2019
March 2020
March 2021
(Base year)
142 properties

150 properties

190 properties

200 properties

Total amount (m3)

Number of properties

391,637

666,764

900,955

840,857

Consumption intensity (m3/m2)

0.82050.84380.4296

0.3438Reduction rate of intensity (%)

–

2.8%

-47.6%-58.1%

900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0*1 Aggregation period: The aggregation period is from every April to the following March. Results are updated annuallyin principle.
*2 Calculation method: Calculated using only DHR’s properties for which the requisite data are available.

=Consumption intensity (m3/m2)

FY ended FY ended FY ended FY ended
Mar. 2018 Mar. 2019 Mar. 2020 Mar. 2021

0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0

GRI Content Index

Back

Forward

Green Finance
The Daiwa House Group’s basic approach is “Creating Dreams, Building Hearts.” As a group that co-creates value for individuals,
communities and people’s lifestyles, the group aims to build trust relationships with stakeholders and contribute to society throughits businesses, and to realize a sustainable society by meeting the challenge of achieving “zero environmental impacts.”
DHR shares the basic stance of the Daiwa House Group and engages in Green Finance, including the issuance of Green Bonds,
to further promote real estate investment management that considers ESG.

Green Finance Framework
Third-party evaluation
DHR has obtained a rating of “Green 1 (F)” for our Green Finance Framework. This is the highest rating offered in JCR Green Finance
Framework Evaluations conducted by the third party, Japan Credit Rating Agency, Ltd. (JCR).
For details on this evaluation, see the JCR website at https://www.jcr.co.jp/en/greenfinance/

Funds procured through Green Bonds or Green Loans are applied to the acquisition of eligible green assets that meet the eligibility
criteria below, refinancing of those funds or funding or refinancing renovation work.

1. Eligibility criterion 1 (Eligible green assets)
Properties that have received or received one of the following three third-party certifications:

At the large commercial complex, “ACROSSMALL Shinkamagaya,”the ground around the property is stable, there is plenty of water,
and the water quality is good. Therefore, after acquiring theproperty, DHR carried out construction to switch from tap waterto groundwater at the property.
At the logistics property, “DPL Nagareyama I,” DHR installed
an automatic irrigation system that reuses rainwater to prevent
plants from withering.

(1) DBJ Green Building Certification: 3 Stars, 4 Stars or 5 Stars(2) CASBEE for Real Estate Certification: B+ rating to S rating(3) BELS Certification: 3 Stars, 4 Stars or 5 Stars

2. Eligibility criterion 2 (Renovation work)
Renovation work that can reduce energy consumption, CO2 emissions or water usage by 10% or more
ACROSSMALL Shinkamagaya

Management of financing

DPL Nagareyama I

Target (KPI)
Index

Yearly target

Long-term target (10-year period from 2018 to 2027)

Waste management–

Improve recycling rate to the rate of fiscal year ended March 2018 (base year) or higher

Waste management (recycling rate)=Total amount (t)6 properties

10 properties

41 properties

56 properties

1,202

3,398

12,99012,8365,000

Recycling rate (%)

54.2%

68.4%

77.0%

68.4%

2,500

*1 Aggregation period: The aggregation period is from every April to the following March. Results are updated annuallyin principle.
*2 Calculation method: Calculated using only DHR’s properties for which the requisite data are available.

70

0

42.0%

Eligible green debt amount(millions of yen)

Reporting on status of fund allocation60

10,000Total amount (t)LTV300,861

126,361

Reporting80

12,5007,500

Total amount of eligible green assets(millions of yen)

=Recycling rate (%)

15,000Fiscal year ended
Fiscal year ended Fiscal year ended Fiscal year ended
March 2018
March 2019
March 2020
March 2021
(Base year)

Fiscal period ended
February 28, 2021

PeriodThe eligible green debt amount is calculated by multiplying the sum of the totalacquisition price of eligible green assets and the total amount of renovation workthat meets Eligibility criterion 2 (total amount of eligible green assets) by theinterest-bearing-debt to total assets ratio (LTV) as of the end of the most recent
fiscal period. This is the maximum amount for Green Finance.

Waste Management

50
40
30

Impact reporting

Balance (millions of yen)
15,00015,000–

Green FinanceGreen Bonds
Green Loans* Balance as of April 15, 2021.

20
10FY ended FY ended FY ended FY ended
Mar. 2018 Mar. 2019 Mar. 2020 Mar. 2021

0Green Bonds
The following table provides information about DHR’s status of fund allocation regarding Green Finance.
Name

Pollution Prevention

22

Outline of DHR /the Asset Manager

Governance

Eligibility criteria

Effective Use of Water Resources

Number of properties

Society

Outstanding Interest
issue
rate
(Millions of yen)

9th Unsecured
Investment Corporation Bonds

6,000

0.53%

Before adding any property to its portfolio, DHR shall conduct detailed environmental due diligence on the matters listed
below. During the due diligence process, DHR comprehensively assesses the property’s investment value, weighing its
impact on DHR’s overall portfolio, contribution to expected increase in value and other relevant considerations while
consulting a fair real-estate appraisal by a third party with sufficient skill and experience in due diligence studies.

10th Unsecured
Investment Corporation Bonds

2,400

0.34%

11th Unsecured
Investment Corporation Bonds

1,600

0.64%

1,000

1.00%

a. Soil and ground conditions, buried objects, soil contamination, etc.
b. Status with respect to hazardous substances (asbestos, PCBs, etc.)

12th Unsecured
Investment Corporation Bonds
14th Unsecured
Investment Corporation Bonds

4,000

0.50%

Issue date

Maturity

November November
25, 2019 22, 2029
May 27,
May 27,2020
2025
May 27,
May 27,2020
2030
May 27,
May 25,2020
2040
April 15,
April 15,
2021
2031

Unallocatedamount(Millions of yen)

–
–
–
–
–

Third-party evaluation
JCR Green Bond Evaluation“Green 1”
JCR Green Bond Evaluation“Green 1”
JCR Green Bond Evaluation“Green 1”
JCR Green Bond Evaluation“Green 1”
JCR Green Bond Evaluation“Green 1”

DHR will annually disclose thefollowing indicators on its website
for as long as the funds procured
through green finance areoutstanding.

· Number and type ofenvironmental certificationsof portfolio assets
See pages 18 and 20 for details.

· Water consumption· Electric power consumption(energy consumption)· CO2 emissions(GHG emissions)See pages 17, 21 and 22 for details.

23

Message from
the Management

Index

Sustainability Report 2021

Sustainability
Strategy

History

Environment

Society

Governance

Outline of DHR /the Asset Manager

GRI Content Index

Back

ForwardEnvironment-friendly Initiatives
Specific Initiatives for Renovation

Acquisition of Environment-friendly Properties
The large-scale commercial complex “iias Tsukuba” was selected as an exceptional

Efforts to increase attractiveness
Built in 1968, “Castalia Toritsudaigaku” is located in a popular residential area. Both theinterior and exterior had become somewhat dilapidated, and its earthquake performance
was designed according to the old standards. Most of the rooms were Japanese-stylerooms as well, so they did not necessarily meet the needs of the tenants. Accordingly, in
2005, the floor plans were modified using the refinement method. Seismic retrofitting work
was performed while leaving the existing frame in place, and the piping and housing
equipment were completely replaced, making them more convenient and easy to use. Witha bold and daring external design, the building was reborn as a rental property suited tomodern lifestyles.
“Castalia Meguro Takaban” is located in a residential area with a quiet living environment. Built
in 1969, the building is quite old, but renovations and seismic retrofitting work were performed
in 2007. It has been fully updated, including the exterior walls, common areas, equipment ineach room, and more. It has all the expected equipment and is well maintained. In addition,
the fashionably designed exterior, interior equipment, and floor plans are on par with nearby
competing properties that are relatively newer, so it has a standard level of competitivenesswithin its market area. In 2008, the property received the GOOD DESIGN AWARD.

Introduction of Green Leases
Aiming to improve the environmental performance of properties
through a collaborative effort with tenants, DHR is promoting green
leases. In a green lease agreement, the building owner and thetenants jointly cooperate by proactively entering into agreements
and memorandums of understanding regarding the reduction of theenvironmental burden of the property, such as through energy
savings, and improvement of the workplace environment, and by
putting the details of these undertakings into practice.

Efficient Lighting Design Awards 2012,” sponsored by the Ministry of the Environment,
due to the work they underwent to change to LED lighting after opening in October 2008.

Reducing energy and maintenance with full-scale introduction of LED lighting

Castalia Toritsudaigaku

Green leaseagreements

Switching to LED lighting for everything from the hallways and indoor parking lot to outdoor
signs, work areas other than the sales floor, and the restrooms reduced power consumption
by around 68% compared to the old fluorescent lighting. Compared to fluorescent andincandescent lighting, LED lighting gives off less heat, helping to suppress rising room
temperatures, which also contributes to saving energy on air conditioning.
Furthermore, consideration is also given to the maintenance aspect by using the suitable LED
lights in each place, such as adopting long-lasting kinds of LED lights in outdoor signs installedon the top of the buildings where changing lights is difficult.

Hallways with LED lighting

Lighting design conscious of the brightness of the space
Castalia Meguro Takaban

Number ofproperties
195 properties

Agreement
conclusion
percentage
88.2%*1 The information shown is based on the status of agreements as of March
31, 2021.
*2 Agreement conclusion percentage = Total floor area of properties forwhich a green lease agreement has been concluded/Total floor area ofthe entire portfolio (excluding land properties)*3 Total floor area is based on the floor area provided on the inspection
certificate of each property.
*4 The agreement conclusion percentage is rounded to the first decimal place.

Warm white lights are used for indoor lighting to produce a warm and relaxed atmosphere. Furthermore, our lighting design realizes
energy conservation while ensuring brightness and safety by reconsidering illuminance levels for interior walkways and giving
consideration to light leakage from shops and shop sign illumination.
These lighting designs create pleasant shopping spaces while making each shop’s display stand out. As a result, they provide a highlevel of satisfaction not only for customers but also for each shop.

About the “Energy-Efficient Lighting Design Awards”
Sponsored by the Ministry of the Environment, this award aims to spread “new energy-efficient
lighting designs” that create attractive spaces while achieving excellent energy saving results, and tocontribute to limiting peak demand of power consumption. The evaluation covers: (1) the results of
installing energy saving lighting; (2) design, innovation, creativity, and comfort; (3) reproducibility,
ability to contribute to the region, and autonomy as a model and (4) practicality, economic efficiency,
etc. Furthermore, installation of solar power generation facilities and wall greening took place at thisproperty. Going forward, DHR is promoting acquisition of environment-friendly properties.

Solar power generation equipment

Environmental Certification Initiatives in Properties Developed by Sponsor

Reduction of Truck Waiting Times With Introduction of Truck Berth Reservation System

In the fiscal year ended March 2021, Daiwa House, the sponsor, began promoting efforts to increase the percentage of its
in-house developed properties with Green Building certification to 50% or higher in order to reduce their environmental
impact. Progress is checked quarterly to improve these efforts. In particular, Daiwa House is enhancing its environmental
efforts at large-scale properties by acquiring BELS and other certifications, primarily for logistics facilities that account for alarge percentage of in-house developed properties.

Daiwa House, the sponsor, was the first* in the logistics developer industry to introduce an online system for truck drivers andManagement of multi-use properties

Environment-friendly Construction Work

Capitalizing on its status as a diversified REIT, DHR also owns multi-use properties.
DHR believes multi-use properties help to reduce environmental burden andcontribute to revitalizing neighborhoods and communities through such means as
reducing travel distances between workplaces, shopping and other popular
destinations.
Naha Shin-Toshin Center Building

At the large-scale residential property, “Royal Parks Hanakoganei,” DHR replaced the underutilized mechanical parking lot with

(Daiwa Roynet Hotel Naha-Omoromachi)(Office, hotel and retail facilities)

24

example in the “Commercial Facilities and Accommodations Category” of the “Energy-transportation companies to reserve truck berths at all its logistics facilities. This made it easier for tenant companies in thelogistics facilities developed by Daiwa House to make plans for in-facility work and movement of goods, improved the operational
efficiency of the facilities, and reduced the environmental impact by shortening truck waiting times. We provide new services toour tenant shippers at our logistics facilities that incorporate the state-of-the-art technology. *Daiwa House survey

a flat parking lot capable of accommodating electric vehicles. In addition to reducing maintenance costs, this also reduced
energy consumption, including the electricity used by themechanical parking system when loading and unloading vehicles
and the gasoline used by idling vehicles. Moreover, the installationof charging stands for electric vehicles, the future spread of whichis expected, contributes to convenience for tenants.

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IndexSustainability Report 2021

Message from
the Management

History

Sustainability
Strategy

Human Rights

Environment

Society

Governance

Outline of DHR /the Asset Manager

GRI Content Index

Back

Forward

Investor Relations Initiatives

Human Rights Policy and Approach

DHR endeavors to ensure transparency in its asset management operations and disclose information that is easy to understand

The Daiwa House Group Principles of Corporate Ethics stipulate “We respect basic human rights and the dignity of all
people, and do not discriminate against anyone on the grounds of race, nationality, ethnicity, gender, sexual orientation,
sexual identity, disability, age, creed, or social status.” In January 2018, the group established the Human Rights Policy of
Daiwa House Group with understanding the corporate responsibility of respecting human rights as set forth in the UN
Guiding Principles on Business and Human Rights. After receiving advice from outside experts, this policy was established byresolution of the Daiwa House Board of Directors in December 2017.

with the principle of self-responsibility. DHR discloses information in compliance with the Financial Instruments and Exchange

Training Program
The Daiwa House Group establishes every April a policy on human rights educational activities in the name of the Daiwa
House president. All employees of the Daiwa House Group are required to participate in at least one training session per year
so that each employee is able to engage in business activities with respect for the dignity and basic human rights of various
stakeholders.

HotlineSince 2004, the Daiwa House Group has been operating a hotline for in-house whistleblowing and consultation, while
implementing regulations to protect whistleblowers (current Daiwa House Group Internal Reporting Regulations). The hotline
is available and the regulations are applicable to all group employees regardless of their type of employment. In 2020, theservice was renamed the “Corporate Ethics and Human Rights Hotline.” The hotline accepts not only reports of suspected orconfirmed cases of breach but also reports of, and request for help and advice on, a variety of workplace- or human rightsrelated problems, thereby contributing to early detection and resolution of such problems.
In the process of working toward resolution, whistleblowing is accepted under anonymity. In the factual confirmation andinvestigation, privacy of not only the consulter but also employee(s) in question and third parties who cooperate in theinvestigation is respected. Along with such actions, hearings are held with the parties involved under strict confidentiality, andappropriate measures are taken to prevent recurrence. Once the problem has been resolved, a follow-up investigation iscarried out to ensure, in some cases, that the reporter will not be subject to retaliatory treatment or that improvements havebeen made, thus always protecting hotline users.
As measures for recurrence prevention, information is shared among related worksites and departments via the persons incharge of the hotline at worksites to raise general awareness of the risks. Training programs are also organized to draw
attention to such issues. In addition, points of contact for consultation for group employees have been put in place at the
Sustainability Planning, Legal, and Human Resources Departments of Daiwa House, facilitating the detection of legal
irregularities, violations of human rights, workplace problems, and the like. Several contact points are available within thecompany to lower the psychological barrier that employees may feel about reporting or seeking advice, thus easing the way
for them to reach out at an early stage.
In addition, as with the Corporate Ethics and Human Rights Hotline, we accept issues relating to human rights via thePartners Hotline, which is a whistleblowing system for reports from business partners concerning the relationship between
Daiwa House Group employees and business partners.

from the investor’s perspective in a fair, timely, and accurate manner so that investors can make investment decisions in accord
Act, Investment Trusts Act, and disclosure rules prescribed by the Tokyo Stock Exchange, Investment Trusts Association, Japan,
etc. It also endeavors to proactively disclose even information not legally or otherwise required for disclosure if the information isdeemed likely to influence investors’ investment decisions. Disclosure documents are posted on DHR’s website. Furthermore,
DHR implements the following initiatives:(1) DHR provides IR News Mail Service to notify registered person by email of updates posted on DHR’s website.
(2) In order to monitor the appropriateness of timely disclosure operations, the Compliance Department of the Asset Manager verifies thedisclosure materials along with the time, date, and method of disclosure, and other relevant items immediately following timely disclosure. The
result is then reported to the DHR Board of Directors.
(3) By actively participating in presentation meetings for individual investors, DHR will provide the information necessary for investment decisions
in an easy-to-understand manner.

Completed IR activities (including online meetings and telephone/web conferences)
Results briefings for domestic institutional investors and analysts(April 2020-March 2021)

2 times

IR meetings for domestic institutional investors and analysts

133 times

IR meetings for overseas institutional investors

42 times

Presentation meetings for individual investors

1 timeTotal Number of Cases of Discrimination and Corrective Actions Implemented
At the branches and group companies of Daiwa House, human rights awareness-raising promoters are assigned to create asystem to immediately respond to and report individual human rights problems. As for harassment, a sexual harassment
prevention expert who is of a different gender than the human rights awareness-raising promoter is selected for each branchfor easier access to consultation. In the fiscal year ended March 2020, there were 22 reports received from the branches of
Daiwa House, and none of these were determined not to require relief.
* In addition to reporting to the main organization, we operate the Corporate Ethics and Human Rights Hotline, an internal whistleblowing and consultation contact
point for employees, and provide consultation on harassment issues.

26

27

Message from
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Index

Sustainability Report 2021

History

Sustainability
Strategy

Environment

Society

Governance

Outline of DHR /the Asset Manager

Back

GRI Content Index

ForwardDeveloping Human Resources
Policy on and Approach to Human Resources Development

Initiatives for Officers and Employees

As stated in its Company Philosophy (Corporate Creed), the Daiwa House Group aims to “develop people through business.”

The Asset Manager sets up an internal program to promote sustainability and endeavors to develop its human resources by

We believe that human resources are the group’s greatest assets. To take advantage of the abilities and unique talents of ourregularly conducting education and training sessions for officers and employees. Additionally, it aims to create workplaces

employees and develop human resources capable of contributing to society, we implement various training and programs

where a diverse group of officers and employees can work safely, healthily and flexibly.

that combine on-the-job and off-the-job training.
For details on the Daiwa House Group’s approach and policies regarding human resources development, follow this link.
Web

Labor/Management Relations

Developing Human Resources

Labor-management relations at the Asset Manager have been harmonious, and there have been no large-scale mergers,

https://www.daiwahouse.com/English/sustainable/social/employee/human_resource/acquisitions, or layoffs in the past three years.
In addition, the Asset Manager has entered into a labor-management agreement on overtime work (36 Agreement) with its
employees, and strived to maintain the health of its employees by appropriately managing working hours.

New Employee Training Program
To help new employees acquire operational knowledge as quickly as possible, the Asset Manager provides training on the

Officers and Employees’ Violations/Accidents

following topics:

There were no significant violations committed by or accidents involving the Asset Manager’s officers and employees that

Explanation of the operations of each department
Human rights
CSR

System-related risks

Compliance

Email use

Basic knowledge related to buildings

Etiquette

Insider trading regulations

would influence stakeholders. (Fiscal year ended March 2021)

Disaster prevention/crisis management

Basic knowledge related to J-REIT, etc.

Target Management and Performance Evaluation Program
The Asset Manager runs a target management and performance evaluation program to (1) foster communication between

Training on Operational Expertisesuperiors and subordinates, (2) strengthen human resource development, (3) increase motivation with respect to roles and

The Asset Manager provides training on the topics below to officers and employees (including fixed-term employees,
temporary employees and part-time employees).

Compliance training

evaluations are determined by evaluation of performance benchmarked against individualized targets, evaluation of skills/
conduct and a compliance evaluation. The issues for improvement are shared through the performance review and follow-up

Fiscal year ended
March 2018
7 timesItemresults (performance), and (4) clarify evaluation criteria and gain better understanding of evaluations. Employee performance

Fiscal year ended
March 2019
8 times

Fiscal year ended
March 2020
9 times

Fiscal year ended
March 2021
12 times

Sustainability training

1 time1 time1 time1 timeInformation security training

2 times

2 times

2 times

2 times

interviews. Additionally, “ESG initiatives in response to societal demands” was added as a performance evaluation criterion
from the second half of fiscal year ended March 2019.

Support for Operational Skills Development and Training

Training for managers and above

0 times

0 times

1 time0 times

The Asset Manager has established a system for providing funding for the registration and renewal of professional

Training for senior managers and group leaders

0 times

0 times

1 time0 timesqualifications and a system for providing congratulatory payments for acquiring professional qualifications to encourage theReal estate market training

4 times

5 times

5 times

5 timesacquisition of knowledge, qualifications, and licenses. The purpose is to increase the motivation of all employees (including

New employee training

5 times

3 times

4 times

5 times

Other training

3 times

4 times

4 times

18 times

fixed-term employees, temporary employees, and part-time employees) with respect to self-development, improve their

Architectural training

18 times

0 times

0 times

19 times

abilities and talents, continuously and steadily secure human resources with the specialized skills necessary to contribute to
the achievement of business objectives, and assess the environmental friendliness of DHR’s properties.

Number of the Asset Manager’s employees with qualifications

Active Roles Played by Older Employees

Item

Number of people with qualifications (*)

The Asset Manager promotes a system of re-hiring employees 60 years of age and older and is working toward the succession

ARES (Association for Real Estate Securitization) Certified Master26

of expertise and the growth of future generations by employing persons with expert knowledge for the long-term.

Real Estate Transaction Agent

58

Real Estate Appraiser

2First-Class Architect

2

Certified Real Estate Consulting Master5

Office Building Manager

9

TOEIC score of 700+

8CASBEE Accredited Professional for Buildings

2

CASBEE Accredited Professional for Real Estate1

Office Environment Improvement
Seeking to provide a pleasant workplace environment for all officers and employees, the Asset Manager have introduced andinstalled the following:
Telecommuting system

Loan laptop computers, mobile routers, and displays to employees

System for choosing working hours

28(Total of 66 officers and employees as of March 31, 2021)

Multiple large humidifiers

Large monitors in each conference room

*Includes personnel who have passed the credentialing exam but are not yet credentialed.

29Message from
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Index

Sustainability Report 2021

Sustainability
Strategy

History

Environment

Society

Governance

Outline of DHR /the Asset Manager

GRI Content Index

Back

ForwardDiversity and Inclusion
Paying Fair Wages

The Daiwa House Group is actively promoting the creation of workplaces in which diverse employees can work flexibly.
For details on the Daiwa House Group’s efforts to utilize diverse human resources, follow this link.
Web

The Asset Manager has established an evaluation-linked monetary compensation system by post classification andInitiatives for Utilization of Human Resources

conducted appropriate assessments of performance. Bonuses are paid twice a year in the summer and the winter, and thehttps://www.daiwahouse.com/English/sustainable/social/employee/diversity/

amount is determined according to work performance. In the fiscal year ended March 2021, the average annual salary paidby the Asset Manager was 10,251,000 yen*.

Sustainability Survey for Employees*Average for full-time employees not including officers, fixed-term employees or employees on external assignment

The Asset Manager recognizes human resources as its greatest asset and participates in the Sustainability Survey (formerly

Benefits and Welfare

CSR Awareness Survey) conducted by the Daiwa House Group every year to verify how well the Principles of Corporate
Ethics and Code of Conduct are being practiced in the workplace and the employment satisfaction level (100% response

The Daiwa House Group recognizes the importance of promoting good health among its workforce and thereby improvingrate). The Asset Manager explains the survey results to officers and employees (including fixed-term employees, temporary

labor productivity through consistent measures to eliminate excessively long working hours and help employees manage

employees and part-time employees), gives feedback, and encourages them to build a better workplace environment.

their health. Based on such recognition, the Asset Manager has introduced employee leave/vacation programs such as the*Surveys and analyses are outsourced to third-party institutions.

following in addition to celebratory event leave, bereavement leave, maternity/paternity leave, parental leave*, child caregiving
leave and elder caregiving leave*.
*Contract workers can also take advantage of these programs.

Establishment of Health Committee
The Asset Manager has established a Health Committee that meets monthly to exchange opinions on the workplaceenvironment and learn about health with the industrial physician in order to prevent health problems among officers andemployees and maintain and promote their health.

ItemSpecial paid vacation

Up to five days per year separately from annual paid vacation to promote employees’ health, etc.

Accumulated paid vacation

Unused annual paid vacation days accumulate up to 20 days per year to a maximum of 100 days. Employees may
use their accumulated paid vacation days as personal injury/sick leave, maternity/paternity leave, family caregiving
leave or community co-creation leave

Family caregiving leave

Five days per year to care for ill family members (paid leave)

In addition, stress checks are conducted for the purpose of preventing mental disorders.

Community co-creation leave Five days per year to participate in activities that contribute to society, training for such activities, etc. (paid leave)

Personnel Data

Introduction of Cumulative Investment Unit Investment Program

Fiscal year ended
March 2018

Fiscal year ended
March 2019

Fiscal year ended
March 2020

Fiscal year ended
March 2021

59

61

60

59

In December 2013, the Asset Manager introduced a cumulative investment unit investment program in the aim of increasing

Male personnel / percentage of total

44 / 74.6%

43 / 70.5%

42 / 70.0%

40 / 67.8%

the price of DHR investment units and further improving growth of DHR and medium- to long-term investor value by having

Female personnel / percentage of total

15 / 25.4%

18 / 29.5%

18 / 30.0%

19 / 32.2%

officers and employees of the Asset Manager pay close attention to investment unit prices of DHR and raising their

24

21

22

27

24 / 100.0%

21 / 100.0%

21 / 95.5%

24 / 88.9%

0 / 0.0%

0 / 0.0%

1 / 4.5%

3 / 11.1%

New hires

8

2

2

13

In November 2019, the Asset Manager introduced an investment unit ownership program of DHR for its officers andJob leavers

0

1

7

2

employees in response to the Japan Securities Dealers Association’s issuance of guidelines on investment unit ownership

Turnover*3

0.0%

1.6%

11.7%

3.4%

Monthly average overtime hours

13.7 hours

12.0 hours

12.8 hours

13.6 hours

Average tenure

4.4 years

5.0 years

5.5 years

5.1 years

12.2 days / 68.1%

12.7 days / 68.6%

12.5 days / 66.3%

13.1 days / 71.7%

100.0%

100.0%

100.0%

100.0%

0.0%

0.0%

0.0%

0.0%

Item
Total personnel*1

Manager*1 *2
Male personnel / percentage of total
Female personnel / percentage of total

Average days of annual paid vacation taken /paid vacation usage rate
Percentage of personnel who had health checkup
Occupational accident frequency rate*4*1 Headcounts are as of April 1 of each fiscal year.
*2 Senior manager and above.
*3 Turnover is the ratio of job leavers to total personnel using total personnel as of April 1 of each fiscal year.
*4 Occupational accident frequency rate = (occupational injuries/fatalities ÷ total man-hours worked) × 1,000,000

30

Description

awareness of performance.

Introduction of Investment Unit Ownership Program

programs in May 2018.
Daiwa House introduced an investment unit ownership program of DHR for its officers in November 2018, and for its employees in June 2020.

Human Resources Dispatched from Sponsor
The Asset Manager has received from the sponsor human resources with a wealth of experience in areas such as real estate
sales transactions, leasing, property management, finance and IT system operations.
For details on the Daiwa House Group’s approach and policies regarding human resources development, follow this link.
Web

Developing Human Resources
https://www.daiwahouse.com/English/sustainable/social/employee/human_resource/

31

IndexSustainability Report 2021

Message from
the Management

History

Sustainability
Strategy

Environment

Society

Governance

Outline of DHR /the Asset Manager

GRI Content Index

Back

Forward

Initiatives for Local Community
Local Job Creation

Childcare Facilities

At some retail properties owned by DHR, local residents are given priority when applying for jobs.

In June 2017, the Japanese government established the Plan for Raising Children with Peace of Mind and announced a policy foraddressing the long waiting lists for childcare. DHR invites childcare facilities such as nursery schools and daycare centers to theproperties as tenants to support child rearing.

Support for Community Activities
Some retail properties owned by DHR host events as one formof support for community activities.
The Asset Manager supports community co-creation activities,
partly through “Community Co-Creation Leave Program” it has
Orchestral stage
Information on foster
Mama Marché (event forestablished to facilitate employees’ participation in activities
parent recruitment
mothers and kids)that contribute to society, training for such activities and othersuch endeavors. Community co-creation activities supported by the Asset Manager include (1) preservation of the natural environment(litter pickup activities, recycling movements), (2) education and youth development (school visits, experiential learning programs,
athletic coaching), (3) social welfare (elder/juvenile/disabled welfare), (4) international cooperation (overseas volunteering, foreign
language interpreting, etc.), (5) volunteer training and required credentialing programs (classes in invalid care skills, sign language), (6)community outreach (neighborhood association events) and (7) disaster relief activities. Specific activities include litter cleanup activities
in response to calls from public park and facility management offices, participation in a book donation project, and volunteering for daily
conversational practice for elderly Chinese returnees to learn Japanese conversation and interact with others in Japanese.

Socially Conscious Initiatives
DHR promotes socially conscious facilities and services at its
properties.

Health and Well-being

Accessible restroom

Health and welfare

GRANODE Hiroshima
Hiroshima City collects entries from citizens for buildings, signs, activities, and more that make the city attractive and presents the most outstanding
ones with the Urban Design Award Hiroshima. “Ekikitare,” a roughly 20-meter-wide and 100-meter-long space in the event square at “GRANODE
Hiroshima,” received the 17th Urban Design Award Hiroshima in the Streetscapes category in 2020.

<Reasons for selection>(1) Located near Hiroshima Station, the land gateway to Hiroshima, the facility is a valuable space that can be utilized as
an event square and creates new lively attractions, thereby contributing to the community.
(2) It is highly convenient with the necessary infrastructure for events even though normally it is a quiet space with
comfortable breezes. It is built in such a way that event organizers sense the spirit of hospitality.

Disaster Relief/Resilience
ACROSSMALL Shinkamagaya
The city of Shinkamagaya, Chiba, where “ACROSSMALL Shinkamagaya” is located, registers as“emergency communal wells” the wells that can provide well water to local residents when tap watersupply is cut off in the event of a major earthquake or other disasters. In agreement with the intent of thisprogram, DHR has registered the groundwater used at the property as an emergency communal well.

Investment in Existing Urban Development Zones

Facilities for Senior Citizens

DHR enhances landscapes and local residents’ convenience through investments
in properties developed through redevelopment, land readjustment or othersuch projects.

DHR invests in and owns facilities and housing(assisted living facilities, paid nursing homes, etc.)
for senior citizens, which must be developed andexpanded to address the progression of the aging
society in Japan and for which there will continue
to be a certain level of demand. In so doing, we
aim to realize a society in which people can livewith peace of mind.

Main properties

Accessible parking lot

Safety and well-being

DHR contributes to the health and well-being of tenants and users byinstalling fitness gyms and other facilities at its properties.

At some DHR’s properties, we haveinstalled and are maintaining plazas andpedestrian walkways to enhance public
spaces and promote safety and well-being.
Naha Shin-Toshin Center Building(Daiwa Roynet Hotel Naha-Omoromachi)

FOLEO Otsu Ichiriyama“FOLEO Otsu Ichiriyama,” a mall-type commercial facility owned by DHR, supports refugee relief activities
by continuously providing at no cost a space for UN refugee supporter applications and fundraising
activities. In December 2020, “FOLEO Otsu Ichiriyama” received a letter of thanks from Japan for
UNHCR.

Accessible elevator

Fitness gym

LoungePlay space for children

Community-related Violations and Accidents
There were neither significant community-related violations nor accidents at DHR’s properties that would affect stakeholders. (Fiscal
year ended March 2021)

Initiatives for Tenants and Supply Chain
Tenant Engagement Programs
DHR promotes environmental initiatives in collaboration with tenants of its properties.
At some properties, DHR regularly confers with tenants in the aim of sharing
environmental information and reduction targets. Furthermore, initiatives areunderway to increase awareness of environmental issues through distribution andposting of the sustainability guide.

Sustainability
Guide

Initiatives to Increase Tenant Satisfaction
DHR conducts surveys to grasp tenants’ needs and satisfaction in the belief that increasing tenant satisfaction leads to stable andimproved property-operating performance. The questionnaire results are shared with property management companies and used to
improve building and facility specifications and services.
In a questionnaire given to the residents of 109 residential properties (6,946 units) in February 2021, around 80% of tenants said thatthey were “highly satisfied” or “satisfied” with the property overall, and in response to whether they would recommend the property toothers, around 81% of tenants said that they would “definitely recommend” or “recommend” it.

Supply Chain Management
The Asset Manager has established Sustainable Procurement Policy as one of policies to implement individual directives listed in the
Sustainability Policy. The Policy pertains to criteria for selecting products and services and selecting and evaluating suppliers (e.g.,property management companies, service providers, goods suppliers). The Policy requires suppliers, in addition to promoting green
procurement, to respect the human rights of officers and employees, to promote diversity in human resources and work-life balance, as
well as to maintain policies and systems related to corporate ethics, such as the prevention of fraud and corruption.

Supplier-related Violations and Accidents
Pacific Royal
Court Minatomirai D Project Kuki I, II, III, IV, V, VII,
Urban Tower
FOLEO Shobu

32

There were neither significant supplier-related violations nor accidents at DHR’s properties that would affect stakeholders. (Fiscal year
ended March 2021)

33

Message from
the Management

Index

Sustainability Report 2021

Sustainability
Strategy

History

Environment

Society

Outline of DHR /the Asset Manager

GovernanceBack

GRI Content Index

ForwardGovernance
Basic Approach to Corporate Governance

Executive Directors and Supervisory Directors

The Asset Manager has established the following governance-related guidelines in its internal Compliance Manual.
(1) The Asset Manager is committed to thorough compliance as a fundamental management principle based on the realization thattrust is its greatest asset and a keen awareness that compliance deficiencies can impair trust and, in turn, even undermine its
management foundation.
(2) Recognizing the importance of its societal mission and responsibilities in the national economy as an asset manager thatmanages investment corporations’ assets, the Asset Manager will ensure compliance proactively and unremittingly.
(3) By putting compliance into practice, the Asset Manager will contribute to the sound development of the economy and society,thereby elevating our reputation among investors and broadly gaining societal trust.

Corporate Governance Structure
The Asset Manager conducts asset management operations entrusted to it by DHR under the organizational structure below.
The various operations of the Asset Manager are divided among the Compliance Officer, the Compliance Department, theInvestment Department, the Fund Management Department in Daiwa House REIT Division, the Asset Management
Department in Daiwa House REIT Division, the Fund Management Department in Private Fund Division, the AssetManagement Department in Private Fund Division, and the Administration and Accounting Department. The Compliance
Officer is in charge of the Compliance Department, while the Investment Department, the Fund Management Department in
Daiwa House REIT Division, the Asset Management Department in Daiwa House REIT Division, the Fund Management
Department in Private Fund Division, the Asset Management Department in Private Fund Division, and the Administration andAccounting Department are overseen by the respective directors in charge.
In addition, the Asset Manager has the Compliance Committee as the organization that deliberates on compliance, the Daiwa
House REIT Investment Management Committee as the organization that deliberates on the acquisition, disposition andmanagement of DHR assets, the Private Fund Investment Management Committee as the organization that deliberates on
the acquisition, disposition and management of private fund assets, and the Management Finance Committee as theorganization that deliberates on important matters related to the management plans of the Asset Manager.

Organizational chart

Title and post

Name

Attendance at meetings ofthe Board of Directors(Note)

Reason for election

Toshiharu Asada has a wealth of operational experience and knowledge not only in general financeToshiharu Asada but also in real estate. We have elected him as Executive Director based on his appropriate
judgment pertaining to execution of business operations as well as his character and knowledge.
Tetsuya Iwasaki is familiar with accounting and tax matters as a certified public accountant andenrolled agent. In addition, he has experience as an outside director at a listed company. We have
Supervisory
Tetsuya Iwasaki elected him as Supervisory Director because we determined that he possesses the good character
Directorand knowledge necessary to supervise the execution of duties by Executive Director as a
Supervisory Director and to perform his duties as a member of the DHR Board of Directors.
Hiroshi Ishikawa is familiar with laws and regulations as an attorney-at-law. In addition, he has
experience as an outside director at a listed company. We have elected him as Supervisory
Supervisory
Hiroshi Ishikawa Director because we determined that he possesses the good character and knowledge necessary
Director
to supervise the execution of duties by Executive Director as a Supervisory Director and to perform
his duties as a member of the DHR Board of Directors.
Executive
Director100%(12 / 12)100%
(12 / 12)100%
(12 / 12)(Note) Attendance at meetings of the Board of Directors held during the fiscal periods ended August 31, 2020 and February 28, 2021 is indicated in terms of number and percentage.

Compensation of Executive Directors and Supervisory Directors
The maximum monthly compensation for an Executive Director shall be 800,000 yen, and the maximum monthly compensation for a
Supervisory Director shall be 350,000 yen. The amount shall be determined by the Board of Directors based on what is deemed
reasonable based on trends in general costs of living, wage trends, and other such factors.
Title and post

Name

Executive
Director

Toshiharu AsadaSupervisory
Director

Tetsuya Iwasaki
Hiroshi Ishikawa

Main concurrent positions

Total compensation per title
Fiscal period ended
Fiscal period ended
August 31, 2020
February 28, 2021–
Certified Public Accountant and Enrolled Agent, Citia Certified Public Accountant Firm
Outside Director, Uoriki Co., Ltd.
Attorney, Ohhara Law OfficeOutside Director, Japan Medical Dynamic Marketing, INC.

¥2,400 thousand¥2,400 thousand¥2,100 thousand¥2,100 thousand¥2,100 thousand¥2,100 thousand(Note 1) The Executive Director and Supervisory Directors do not hold investment units of DHR under their own or another person’s name. Any Supervisory Director may serve as an
executive of a corporation other than those listed above, but such corporations including those listed above do not have any interest in DHR.
(Note 2) In regard to the liability set forth in Article 115-6, Paragraph 1 of the Investment Trusts Act, if a Director has acted in good faith and has not been grossly negligent in
performing their duties, and it is deemed necessary considering the underlying facts, the status of the Director’s performance of their duties, and other such circumstances,
DHR may exempt them from liability to the extent allowed by law by resolution of the Board of Directors.

Compensation of the Audit Firm and the Asset Manager
Compensation of the Audit Firm

Board of Directors
Daiwa House REIT Investment Management Committee

Compliance Committee

Private Fund Investment Management Committee

Management Finance Committee
President and CEO
Compliance Officer
Compliance Department

Daiwa House REIT Division

34

The selection of candidates is based on the premise that they are not disqualified per the reasons set forth in various laws andregulations such as the Investment Trusts Act (Article 98 and Article 100 of the Investment Trusts Act and Article 244 of the Ordinancefor Enforcement of the Investment Trusts Act). They are elected by resolution of the general meeting of unitholders based on thereasons for election below. The Board of Directors is currently comprised of persons with no special interest with DHR.

General Meeting of Unitholders
Corporate Auditor

Fund Management Department

Criteria / Reasons for election

Investment Department

Asset Management Department

Administration andAccounting Department

Private Fund Division

Fund Management Department

Asset Management Department

The maximum compensation for the audit paid to the Independent Auditor shall be ¥25,000 thousand per fiscal period subject to audit,
and the amount shall be determined by the Board of Directors.
Title and post

Name

Independent Auditor

Ernst & Young ShinNihon LLC

Total amount of compensation
Fiscal period ended August 31, 2020
Fiscal period ended February 28, 2021
¥39,000 thousand(Note 2)¥19,000 thousand(Note 3)(Note 1) Dismissal or non-reappointment of the Independent Auditor shall be discussed at DHR’s Board of Directors pursuant to the provisions of the Investment Trusts Act for
dismissal, taking into full account all relevant factors for non-reappointment such as the quality of audits and compensation for audits.
(Note 2) Out of the ¥39,000 thousand, ¥22,500 thousand is compensation for preparation of comfort letters.
(Note 3) Out of the ¥19,000 thousand, ¥2,000 thousand is compensation for preparation of comfort letters.

Compensation of the Asset Manager
Item

Total amount of compensation
Fiscal period ended August 31, 2020

Fiscal period ended February 28, 2021

Management fees 1¥816,575 thousand¥830,824 thousand

Management fees 2¥948,233 thousand¥961,381 thousand

Acquisition/disposition fees

¥190,445 thousand¥21,725 thousand

Total¥1,955,253 thousand¥1,813,931 thousand

35

Message from
the Management

Index

Sustainability Report 2021

Sustainability
Strategy

History

Environment

Society

Governance

Outline of DHR /the Asset Manager

GRI Content Index

Back

Compliance

GovernanceHandling of Conflict-of-interest Transactions

Compliance

Policy and management structure for addressing conflict-of-interest transactions

System for promoting compliance

The Daiwa House Group could significantly influence the decision-making of the Asset Manager and DHR. It is a close

The Asset Manager realizes compliance through the following system.

partner with the deepest understanding of the basic concepts at DHR. We recognize that proper coordination with these

Organization/Title and post Main rolecompanies is a means to carry out our asset management operations more effectively.

Board of Directors(1) Establish and revise compliance manuals and compliance programs as the decision-making body on fundamental matters related to promoting compliance.
(2) Ask for reports on progress made on compliance from the Compliance Officer as necessary.

On the other hand, close relationships among companies are in fact conducive to acts that potentially pose conflicts ofCompliance Committee

In principle, convened monthly and as necessary by the Compliance Officer for discussion of the agenda from the standpoint of compliance.

interest. Recognizing that preventing conflicts of interest with the Daiwa House Group and other interested parties is one of

President and CEO(1) Supervise introduction of basic compliance policies and programs.
(2) Report to the Board of Directors on progress made on compliance at least every quarter and as necessary.

Compliance Officer(1) Conduct overall compliance planning, drafting and promotion as the head of compliance.
(2) Promptly report to the President/CEO and provide necessary suggestions or instructions to relevant departments whenever problems in the context
of compliance arise or are likely to arise.
(3) Independently review from a compliance standpoint transactions and decisions pertaining to management of DHR’s assets as an entity independentof the Asset Manager’s other internal organizations without being influenced by other internal organizations’ judgments.

Compliance Department

Engage in work related to compliance promotion, internal audits, verification of risk management, and more under the supervision of the Compliance Officer.

the top compliance priorities in the asset management operations, DHR and the Asset Manager have established thefollowing control system.

Flow of decision-making with respect to acquiring assets from interested parties

Establishment and practical implementation of Compliance Manual
The Asset Manager has established a Compliance Manual in the aim of increasing the soundness and reliability of its management andorganization as the manager of DHR’s assets and, in turn, earning the trust of unitholders and society by prescribing not only
fundamental compliance-related principles by which its officers and employees should abide but also specific practical matters.

Compliance Officer

RemandAttendance

Disagreement

RemandSpecialresolution

Rejection
Discarded

Approval

Establishment of whistleblowing system and protections for whistleblowers
Decision on acquisition

Unanimous
approval

Attendance
DHR Board of Directors

Disagreement

Report on resultsof deliberation

Attendance

Board of Directors

Unanimous
approval

AttendanceCompliance
Committee

Daiwa House REIT
Investment Management
Committee

Daiwa House REIT
Division
Investment Department

Presentation of
investment value
analysis results

Forward

Rejection
Discarded

The Asset Manager has established a system for consultation and appropriate handling of reports related to acts that are (or could
potentially be) problematic in terms of compliance, including organizational or individual legal violations and ethically questionable acts
reported by whistleblowers based on the Whistleblower Protection Act and the Cabinet Office Guidelines for Private Businesses
Concerning the Whistleblower Protection Act. Both internal and external points of contact are in place.

Severance of relationships with anti-social forces and prevention of money laundering
The Asset Manager’s Compliance Manual requires officers and employees to categorically reject all requests, both public and private,from anti-social forces that threaten the order and safety of civil society, including those for money and goods, donations, contributions,and subscriptions to informational magazines. In addition, officers and employees are to thoroughly verify the identity of customers,
etc., keep transaction records, and report suspicious transactions as stipulated by the Act on Prevention of Transfer of Criminal
Proceeds in order to prevent money laundering (hiding the source of profits from illegal acts).

Compliance training
Under the regulations of the Asset Manager, when conducting transactions involving the acquisition, disposition, leasing, oroutsourced management of portfolio, entering brokerage agreements related to these transactions or placing an order forconstruction thereof with an interested party more broadly defined than what is established by law, except when there are
separate provisions for the transaction, the rule is that unanimous approval must be obtained at the Asset Manager’s
Investment Management Committee and Compliance Committee and then a resolution by the Board of Directors before
such a transaction can be executed. In addition, at DHR, approval must be obtained from the DHR Board of Directors, whichis comprised of Directors who are not Directors or employees of the Asset Manager. When acquiring portfolio assets from aninterested party, in principle, the maximum acquisition price shall be the appraisal value, and when selling portfolio assets toan interested party, in principle, the minimum selling price shall be the appraisal value. Furthermore, from the standpoint oftransparency, when DHR conducts certain transactions with interested parties, information is promptly disclosed in an
appropriate manner in accordance with the regulations of the Asset Manager and various provisions of applicable laws.
In addition, the Asset Manager has appointed an attorney at law familiar with the Financial Instruments and Exchange Act
who possesses a solid track record as an outside expert member of the Compliance Committee. At meetings of theCompliance Committee, the outside expert member provides various on-point opinions and advice from the standpoint of aneutral expert, including in discussions on transactions carrying the risk of a conflict of interest, thereby contributing to fair
and appropriate discussions, ensuring that customer interests are not unduly harmed.
For details on corporate governance at the Daiwa House Group, follow this link.
Web

36

Corporate Governancehttps://www.daiwahouse.com/English/ir/governance/

The Asset Manager works to enhance internal education and training so that officers and employees are able to pursue the bestinterests of investors. Specifically, when it comes to internal education, we utilize a group textbook that provides easy-to-understandexplanations by means of various case studies in order to ensure that Daiwa House Group employees are able to engage in proper
decisions and actions according to “With our customers” and the other elements of the Principles of Corporate Ethics and Code of
Conduct in their routine operations. As for internal training, we carry out compliance training on a continual basis to ensure that all
officers and employees are acutely aware of pursuing the best interests of investors. We also include an assessment of whether
employees are taking action on compliance with a continual awareness of other social demands in their performance evaluations. In sodoing, we seek to raise awareness among our officers and employees.

Prevention of Corruption
PolicyThe Daiwa House Group has established a system to strictly prohibit and prevent corruption, such as bribery, money laundering,embezzlement, and other violations of the law. This includes the establishment of Anti-Bribery Regulations and Identity Verification
Regulations. In addition, acts that encourage bribery or unfair trade or that are ethically unsound are prohibited by various policies andrules, such as our Principles of Corporate Ethics and Code of Conduct, even if they do not violate the law. In this way, we set forth rules
for maintaining transparency in business operations and fairness in transactions.
The Asset Manager’s Compliance Manual stipulates the following measures to prevent bribery and corruption.
(1) Directors and employees must not provide nor accept entertainment, gifts, favors or other benefits beyond normal social etiquette
under socially accepted idea.
(2) Directors and employees must not provide any entertainment, gifts, favors or other benefits to any public servants, quasi-public
servants or other such individuals.

Problems Related to Bribery and Corruption
There were no serious problems related to bribery or corruption at the Asset Manager that would influence stakeholders. (Fiscal year
ended March 2021)

37

IndexSustainability Report 2021

Message from
the Management

History

Sustainability
Strategy

Risk Management
Development Status of Readiness for Risk Management
The Asset Manager has prescribed Risk Management Regulations and Risk Management Implementation Guidelines
regarding various risks that arise in the course of managing DHR’s assets. It endeavors to manage risk based on afundamental policy of comprehensively and accurately identifying risks, qualitatively and quantitatively measuring andappropriately assessing the identified risks’ impacts on operations, formulating risk prevention measures, monitoring risk
management status on an ongoing basis and formulating procedures for responding to risks when they surface. Additionally,
the Asset Manager conducts annual internal audits to verify the appropriateness and effectiveness of readiness for theforegoing risk-management and implementation status of risk controls. The audit results are reported to the President andCEO. The Asset Manager is committed to ensuring that operations are conducted appropriately and soundly managed
through such means as reporting to the Compliance Committee and Board of Directors as the occasion demands.
The risk management, improvements and other relevant matters are incorporated into annual Compliance Programs andreported to the Boards of Directors of both the Asset Manager and DHR.

Readiness for Risk Management
DHR and the Asset Manager recognize the existence of the above risks and have established the risk management systembelow in order to fully address such risks.
(1) Readiness for risk management

Environment

Society

DHR endeavors to develop the readiness to enable timely and appropriate disclosure of information to investors in compliance with theInvestment Trusts Act and the regulations of the Tokyo Stock Exchange so that information needed by investors to make investment decisionsin accord with the principle of self-responsibility can be appropriately and timely disclosed. The Fund Management Department in Daiwa HouseREIT Division of the Asset Manager is in charge of information disclosure.

(3) Thorough compliance
Timely and appropriate disclosure of the above must be the result of the operations of DHR and the Asset Manager being in compliance (inother words, sincere and fair corporate activities that are fully in line with social norms in addition to strict compliance with laws, regulations,internal regulations, and market rules). DHR and the Asset Manager have made the following preparations in relation to compliance ascorporations that operate legally in accordance with the Investment Trusts Act as well as the Financial Instruments and Exchange Act.
The DHR Board of Directors is comprised of one Executive Director and two Supervisory Directors and supervises the execution of business by
the Executive Director and the status of execution of services by the Asset Manager.
The Asset Manager’s Board of Directors has established and implements Compliance Regulations and other regulations that set forth the rolesof and other matters pertaining to the Board of Directors, the President and CEO, the Compliance Committee, the Compliance Officer, and theCompliance Department in order to ensure that operations are conducted in accordance with compliance requirements. In addition, various
regulations are in place for systematic stipulation of the rules of conduct for officers and employees to ensure thorough compliance.

BCP
The Asset Manager establishes the necessary items for its disaster prevention and crisis management in relation to risks
specified separately for natural disasters such as large-scale earthquakes, accidents, crimes, and other material facts. It hasestablished an Emergency Response Manual for the purpose of preventing and avoiding risk, ensuring people’s safety andreducing/mitigating damage in the event of a disaster, preventing secondary accidents, and facilitating the resumption of DHR’s
asset management operations as well as fulfilling its corporate social responsibility. Furthermore, to ensure continuity of payment
and disclosure operations from the standpoint of the business continuity requirements to which financial instrument business
operators are subject, the Asset Manager plans to operate in accordance with a BCP Execution Plan it has formulated.
The Asset Manager has stockpiled supplies, including three days of emergency meals and drinking water for officers andemployees and two storage batteries, at its office, warehouse for general affairs and elsewhere.

Safety Confirmation System
As part of corporate crisis management, the Asset Manager has adopted an online safety confirmation system to ascertain
its directors and employees’ safety and post-disaster status at the time of disaster swiftly. The Asset Manager conducts
safety confirmation drills at least once annually. In the fiscal year ended March 2021, the participation rate was 100%.

38

GRI Content Index

Back

ForwardOutline of DHR
Overview
Name of investment corporation

Daiwa House REIT Investment Corporation

Representative

Toshiharu Asada, Executive Director

Location

2-4-8, Nagatacho, Chiyoda-ku, Tokyo 100-0014

Asset Manager

Daiwa House Asset Management Co., Ltd.
Tel: +81-3-3595-1265 (Inquiries)

Accounting period

6-month period from March 1 to the end of August and 6-month period
from September 1 to the end of February of the following year

Investment Corporation Structure
Parent Company Sponsor of
the Asset Manager
Daiwa House Industry Co., Ltd.

The Asset Manager has prescribed Risk Management Regulations and endeavors to manage risks based on a fundamental policy ofcomprehensively and accurately identifying risks, qualitatively and quantitatively measuring and appropriately assessing identified risks’ impacts
on operations, formulating risk prevention measures, and monitoring risk management status on an ongoing basis.

(2) Timely and appropriate information disclosure

Outline of DHR /the Asset Manager

Governance

Investment Corporation

Daiwa House REIT
Investment Corporation

Asset Custodian
General Administrator
Transfer Agent
Special Account Administrator

Unitholders’ Meeting

Sumitomo Mitsui Trust Bank, Limited

Board of Directors
Pipeline Supporting Company
Cosmos Initia Co., Ltd.
Daiwa Lease Co., Ltd.
Daiwa Information Service Co., Ltd.
Daiwa Royal Co., Ltd.
Fujita Corporation
Daiwa Logistics Co., Ltd.

Executive Director: Toshiharu AsadaSupervisory Director: Tetsuya Iwasaki
Supervisory Director: Hiroshi Ishikawa
Independent Auditor
Ernst & Young ShinNihon LLC

Asset Manager
Asset management agreement
Basic agreement on pipeline support, etc.

Administrator of Investment
Corporation Bonds

Daiwa House
Asset Management Co., Ltd.

Sumitomo Mitsui Trust Bank, Limited
MUFG Bank, Ltd.
Sumitomo Mitsui Banking Corporation

 sset custody agreement, general administrationA
agreement, transfer agency agreement, andspecial account administration agreement
Fiscal agent agreement

Outline of the Asset Manager
Overview
Company nameDaiwa House Asset Management Co., Ltd.

Location

7th Floor, Nissei Nagatacho Building, 2-4-8, Nagatacho, Chiyoda-ku, Tokyo 100-0014
Tel: +81-3-3595-1151 (main line)

Established

September 1, 2004

Paid-in capital¥300 million

Shareholder

Daiwa House Industry Co., Ltd. (100%)

Representative
Koichi Tsuchida, President and CEO
Licenses/authorizations Building Lots and Buildings Transaction Business License: No. (4) 83758, issued by Governor of Tokyo
Discretionary Transaction Agent: No. 32, issued by the Minister of Land, Infrastructure, Transport and Tourism
Financial Instruments Firm, Kanto Finance Bureau (registration): No. 409

39

IndexSustainability Report 2021

Message from
the Management

History

Sustainability
Strategy

Environment

Society

Governance

Outline of DHR /the Asset Manager

GRI Content Index

Back

ForwardGRI Content Index
Disclosures

References

6. Reporting practiceGRI 102: General Disclosures 2016

102-45

Entities included in the consolidated financial statements

Outline of DHR (p. 39)

1. Organizational profile

102-46

Defining report content and topic Boundaries

-

102-1

Name of the organization

Outline of DHR (p. 39)

102-47

List of material topics

Materiality and SDGs (p. 8-9)

102-2

Activities, brands, products, and services

Characteristics of DHR (p. 1)

102-48

Restatements of information

-

102-3

Location of headquarters

Outline of DHR (p. 39)

102-49Changes in reporting

N/A

102-4

Location of operations

Outline of DHR (p. 39)

102-50

Reporting period

Editorial Policy (p. 1)

102-5

Ownership and legal form

Outline of DHR (p. 39)

102-51

Date of most recent report

N/A

102-6

Markets served

Characteristics of DHR (p. 1)

102-52

Reporting cycle

Editorial Policy (p. 1)

102-7

Scale of the organization

History (p. 4-5), Personnel Data (p. 30)

102-53

Contact point for questions regarding the report

Disclaimer (p. 45)

102-8

Information on employees and other workers

Personnel Data (p. 30)

102-54Claims of reporting in accordance with the GRI Standards

-

102-9

Supply chain

Outline of DHR (p. 39)

102-55

GRI content index

GRI Content Index (p. 40-43)

102-10Significant changes to the organization and its supply chain

N/A

102-56External assurance

GHG Emissions (p. 17)

102-11

Precautionary Principle or approach

Sustainability Policy (p. 10)

102-12External initiatives

Supported Initiatives and External Evaluation (p. 12)

Membership of associations

Supported Initiatives and External Evaluation (p. 12),Outline of DHR (p. 39),
Outline of the Asset Manager (p. 39)

102-13

GRI 103: Management Approach

2016

103-1

Explanation of the material topic and its Boundary

Materiality and SDGs (p. 8-9)

103-2

The management approach and its components

Promotion System (p. 7)
Materiality and SDGs (p. 8-9)

103-3

Evaluation of the management approach-

2. Strategy
102-14

Statement from senior decision-maker

Message from the Management (p. 2-3)

102-15Key impacts, risks, and opportunities

Materiality and SDGs (p. 8-9), Strategy (p. 15)

102-16

Values, principles, standards, and norms of behavior

Daiwa House Group “Creating Dreams, Building Hearts” (p. 1)

102-17

Mechanisms for advice and concerns about ethics

Compliance (p. 37)

3. Ethics and integrity

4. Governance

EconomyGRI 201: Economic Performance

2016

201-1

Direct economic value generated and distributed

History (p. 4-5), Paying Fair Wages (p. 31)

201-2

Financial implications and other risks and opportunities due to climate change

Strategy (p. 15)

201-3

Defined benefit plan obligations and other retirement plans

-

201-4

Financial assistance received from government-

102-18Governance structure

Promotion System (p. 7)

102-19Delegating authority

Promotion System (p. 7)

102-20Executive-level responsibility for economic, environmental, and social topics

Promotion System (p. 7)

102-21

Consulting stakeholders on economic, environmental, and social topics

Stakeholder Engagement (p. 11)

102-22Composition of the highest governance body and its committees

Outline of DHR (p. 39)

102-23Chair of the highest governance body

Outline of DHR (p. 39)

GRI 203: Indirect Economic Impacts

102-24

Nominating and selecting the highest governance body

Executive Directors and Supervisory Directors (p. 35)

2016102-25

Conflict of interests

Policy and management structure for addressing
conflict-of-interest transactions (p. 36)

102-26

Role of highest governance body in setting purpose, values, and strategy

Sustainability Strategy (p. 6-7)

2016

102-27

Collective knowledge of highest governance body-

GRI 205: Anti-corruption

102-28

Evaluating the highest governance body’s performance-102-29Identifying and managing economic, environmental, and social impacts

Materiality and SDGs (p. 8-9)

102-30Effectiveness of risk management processes

Risk Management (p. 38)

102-31

Review of economic, environmental, and social topics

Promotion System (p. 7)

102-32Highest governance body’s role in sustainability reporting

Promotion System (p. 7)

2016102-33

Communicating critical concerns

Risk Management (p. 38)

GRI 207: Tax

102-34Nature and total number of critical concerns

N/A

102-35

Remuneration policies

Executive Directors and Supervisory Directors (p. 35),
Compensation of the Audit Firm and the Asset Manager (p. 35)

102-36

Process for determining remuneration

Executive Directors and Supervisory Directors (p. 35),
Compensation of the Audit Firm and the Asset Manager (p. 35)

102-37

Stakeholders’ involvement in remuneration-

102-38Annual total compensation ratio-

102-39Percentage increase in annual total compensation ratio-

GRI 202: Market Presence
2016

202-1

Ratios of standard entry level wage by gender compared to local minimum wage

-

202-2

Proportion of senior management hired from the local community

-

203-1

Infrastructure investments and services supported

-

203-2

Significant indirect economic impacts-

GRI 204: Procurement Practices

2016

204-1

Proportion of spending on local suppliers

-

205-1

Operations assessed for risks related to corruption

Prevention of Corruption (p. 37)

205-2

Communication and training about anticorruption policies and procedures

Prevention of Corruption (p. 37)

205-3

Confirmed incidents of corruption and actions taken

Prevention of Corruption (p. 37)

GRI 206: Anti-competitive Behavior

2019

206-1

Legal actions for anti-competitive behavior, anti-trust, and monopoly practices

N/A

207-1

Approach to tax

-

207-2

Tax governance, control, and risk management

-

301-1

Materials used by weight or volume

-

301-2

Recycled input materials used

-

301-3

Reclaimed products and their packaging materials-

Environment
GRI 301: Materials
2016

GRI 302: Energy

5. Stakeholder engagement

40

Standards by item

102-40

List of stakeholder groups

Stakeholder Engagement (p. 11)

302-1

Energy consumption within the organization-

102-41

Collective bargaining agreements

-

302-2

Energy consumption outside of the organization-

102-42

Identifying and selecting stakeholders

Stakeholder Engagement (p. 11)

302-3

Energy intensity

Energy Consumption (p. 21)

102-43

Approach to stakeholder engagement

Stakeholder Engagement (p. 11)

302-4

Reduction of energy consumption

Energy Consumption (p. 21)

102-44

Key topics and concerns raised

N/A

302-5

Reductions in energy requirements of products and services

-

2016

41

IndexSustainability Report 2021

Message from
the Management

History

Sustainability
Strategy

Environment

Society

Governance

Outline of DHR /the Asset Manager

GRI Content Index

Back

ForwardGRI Content Index
GRI 404: Training and Education

GRI 303: Water and Effluents

2018

303-1

Interactions with water as a shared resource

Effective Use of Water Resources (p. 22)

404-1

Average hours of training per year per employee

303-2

Management of water discharge-related impacts

-

404-2

Programs for upgrading employee skills and transition assistance programs

Support for Operational Skills Development and Training (p. 29)

303-3

Water withdrawal

-

404-3

303-4

Water discharge-

Percentage of employees receiving regular performance and careerdevelopment reviews

Training on Operational Expertise (p. 28),
Support for Operational Skills Development and Training (p. 29)

303-5

Water consumption

Water Consumption (p. 22)

GRI 304: Biodiversity

2016

Significant impacts of activities, products, and services on biodiversity

-

304-3

Habitats protected or restored

-

304-4

IUCN Red List species and national conservation list species with habitats inareas affected by operations

-

305-1

Direct (Scope 1) GHG emissions-

GRI 408: Child Labor

305-2

Energy indirect (Scope 2) GHG emissions

GHG Emissions (p. 17)

2016

305-3

Other indirect (Scope 3) GHG emissions-

GRI 409: Forced or Compulsory Labor

305-4

GHG emissions intensity

GHG Emissions (p. 17)

2016

406-1

Incidents of discrimination and corrective actions taken

Total Number of Cases of Discrimination and Corrective
Actions Implemented (p. 26)

GRI 407: Freedom of Association and Collective Bargaining
407-1

408-1

409-1

Operations and suppliers in which the right to freedom of association andcollective bargaining may be at risk

Operations and suppliers at significant risk for incidents of child labor

Operations and suppliers at significant risk for incidents of forced or compulsory labor

305-5

Reduction of GHG emissions

GHG Emissions (p. 17)

305-6

Emissions of ozone-depleting substances (ODS)

-

2016

305-7

Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions-

GRI 411: Rights of Indigenous Peoples
GRI 412: Human Rights Assessment

2016

410-1

411-1

Security personnel trained in human rights policies or procedures

Incidents of violations involving rights of indigenous peoples

N/A

N/A

N/A

N/A

N/A

306-1

Waste generation and significant waste-related impacts

-

306-2

Management of significant waste-related impacts

Pollution Prevention (p. 22)

412-1

Operations that have been subject to human rights reviews or impact assessments

-

306-3

Waste generated

Waste Management (p. 22)

412-2

Employee training on human rights policies or procedures

Training Program (p. 26)

306-4

Waste diverted from disposal

-

412-3

-

306-5

Waste directed to disposal-

Significant investment agreements and contracts that include human rights
clauses or that underwent human rights screening

307-1

Non-compliance with environmental laws and regulations

N/A

308-1

New suppliers that were screened using environmental criteria

-

308-2

Negative environmental impacts in the supply chain and actions taken

-

2016

GRI 413: Local Communities
2016

413-1

Operations with local community engagement, impact assessments, anddevelopment programs

Initiatives for Local Community (p. 32)

413-2

Operations with significant actual and potential negative impacts on local communities

N/A

GRI 414: Supplier Social Assessment
2016

414-1

New suppliers that were screened using social criteria

-

414-2

Negative social impacts in the supply chain and actions taken

N/A

GRI 415: Public Policy

401-1

New employee hires and employee turnover

Personnel Data (p. 30)

2016

401-2

Benefits provided to full-time employees that are not provided to temporary or
part-time employees

Benefits and Welfare (p. 31)

GRI 416: Customer Health and Safety

401-3

Parental leave

Benefits and Welfare (p. 31)

402-1

Minimum notice periods regarding operational changes

415-1

Political contributions

Prevention of Corruption (p. 37)

416-1

Assessment of the health and safety impacts of product and service categories

Socially Conscious Initiatives (p. 33),
Initiatives to Increase Tenant Satisfaction (p. 33),
Disaster Relief/Resilience (p. 32)

416-2

Incidents of non-compliance concerning the health and safety impacts ofproducts and services

N/A

2016
-

GRI 403: Occupational Health and Safety

42

2016

GRI 410: Security Practices

GRI 402: Labor/Management Relations

2018

GRI 406: Non-discrimination

2016

GRI 401: Employment

2016

-

304-2

Society

2016

Personnel Data (p. 30)

Ratio of basic salary and remuneration of women to men-

GRI 308: Supplier Environmental Assessment
2016

Diversity of governance bodies and employees

405-2

Operational sites owned, leased, managed in, or adjacent to, protected areas
and areas of high biodiversity value outside protected areas

GRI 307: Environmental Compliance
2016

405-1

304-1

GRI 306: Effluents and Waste

2020

GRI 405: Diversity and Equal Opportunity
2016

GRI 305: Emissions

2016

2016

-

GRI 417: Marketing and Labeling403-1

Occupational health and safety management system

-

403-2

Hazard identification, risk assessment, and incident investigation

-

403-3

Occupational health services

N/A

403-4

Worker participation, consultation, and communication on occupational health and safety

-

403-5

Worker training on occupational health and safety

-

403-6

Promotion of worker health

Establishment of Health Committee (p. 30)

2016

403-7

Prevention and mitigation of occupational health and safety impacts directly
linked by business relationships-

GRI 419: Socioeconomic Compliance

403-8

Workers covered by an occupational health and safety management system

-

403-9

Work-related injuries

Personnel Data (p. 30)

403-10Work-related ill health

N/A

2016

417-1

Requirements for product and service information and labeling

Environmental Certifications (p. 18)

417-2

Incidents of non-compliance concerning product and service information and labeling

N/A

417-3

Incidents of non-compliance concerning marketing communications

N/A

GRI 418: Customer Privacy

2016

418-1

419-1

Substantiated complaints concerning breaches of customer privacy and lossesof customer dataNon-compliance with laws and regulations in the social and economic area

N/A

N/A

43

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