Daiwa
House
REIT

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

Sustainability Report 2022

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 of building
endless emotional connections with each and every one of its customers, as well as thesolidarity 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, theDaiwa House Group aims to think outside the box and always to create new value in eachsuccessive 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

Index

Editorial Policy

Characteristics of DHR, Index, Editorial Policy 

1Risk Management 

20

Water Consumption/Waste Management/Pollution Prevention  40

Labor Standards 

59

Outline of DHR /the Asset Manager Message from the Management 

2

Metrics and Targets 21Biodiversity 

42

Investor Relations Initiatives 

60

4

Sustainability Policy 

28

Environmental Certifications 

43

Initiatives for Local Community 

61

Leading-edge Sustainability Initiatives 

6Stakeholder Engagement 

29

Environment-friendly Initiatives 

46

Initiatives for Tenants and Supply Chain  64

Improved External Evaluations by Promoting Sustainability Initiatives  7

Materiality and SDGs 

30

Green Finance 48

Governance 

66

Supported Initiatives 

8Supported Initiatives and External Evalutions  32

Sustainability Finance 

50Compliance 

70

Information Disclosure Based on TCFD Recommendations 

10Environment 

36

Developing Human Resources 52

Risk Management 72

Governance 

12

GHG Emissions 37

Diversity and Inclusion 

55

GRI Content Index 

74

Strategy 

14Energy 

39

Human Rights 56This report describes the overall efforts of Daiwa House REIT Investment
Corporation (hereinafter referred to as “DHR”) and its asset manager, Daiwa House
Asset Management Co., Ltd. (hereinafter referred to as the “Asset Manager”) to
contribute to 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 the website as of June
2022. For the latest information thereafter, please refer to the website, which will be
updated as needed.
This report contains forward-looking statements, but these statements are basedon 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 2022 Issue Frequency: Annually1

Sustainability Report 2022

Message from
the Management

About DHR

Special Feature

Information Disclosure Basedon TCFD Recommendations

Outline of DHR

Sustainability

Environment

SocialGovernance

GRI Content Index

Back

ForwardOutline of the Asset Manager

Overview

Overview

Name of investment corporation
Representative
Location
Asset Manager
Accounting period

Daiwa House REIT Investment Corporation
Toshiharu Asada, Executive Director
2-4-8, Nagatacho, Chiyoda-ku, Tokyo 100-0014
Daiwa House Asset Management Co., Ltd.
Tel: +81-3-3595-1265 (Inquiries)
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

Company nameDaiwa House Asset Management Co., Ltd.

Representative

Koichi Tsuchida, President and CEO

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%)

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 andTourism
Financial Instruments Business License: (Kinsho) No. 409, issued by Director of Kanto Local Finance
BureauInvestment Corporation Structure
Parent Company of
the Asset Manager
SponsorInvestment Corporation

Daiwa House REIT
Investment Corporation

Daiwa House Industry Co., Ltd.

Unitholders’ Meeting

Asset Custodian
General Administrator
Transfer Agent
Special Account Administrator

Management Structure of the Asset Manager

Sumitomo Mitsui Trust Bank, Limited

Board of Directors
Pipeline Supporting Company
Cosmos Initia Co., Ltd.
Daiwa Lease Co., Ltd.
Daiwa House Realty Mgt. Co., Ltd.
Fujita Corporation
Daiwa Logistics Co., Ltd.

Executive Director: Toshiharu AsadaSupervisory Director: Hiroshi Ishikawa
Supervisory Director: Junko Kogayu
Independent Auditor
Ernst & Young ShinNihon LLC

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

Daiwa House Asset Management Co., Ltd.

General Meeting of Unitholders
Administrator of Investment
Corporation Bonds

 sset custody agreement, generalAadministration agreement, transfer agency
agreement, and special accountadministration agreement
Fiscal agent agreement

History2

Corporate Auditor

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

June 1, 2005

Promoter (Morimoto Asset Management Co., Ltd. (currently, 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”)

June 7, 2005

Commercial registration of establishment under Article 166 of the Investment Trusts Act; incorporation of BLife Investment
Corporation

June 16, 2005

Application for registration as BLife Investment Corporation under Article 188 of the Investment Trusts Act

July 4, 2005

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

February 6, 2006

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

February 15, 2006

Approval granted for listing on the Japan real estate investment trust (J-REIT) market of Tokyo Stock Exchange

March 22, 2006

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

April 1, 2010

Merger with New City Residence Investment Corporation

December 1, 2011

Change of the corporate name from BLife Investment Corporation to Daiwa House Residential Investment Corporation

March 1, 2013

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

March 1, 2015

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

September 1, 2016

Merger with Daiwa House REIT Investment Corporation
Change of the corporate name from Daiwa House Residential Investment Corporation to Daiwa House REIT Investment Corporation

Board of Directors

Sustainability Committee

Compliance Committee

Daiwa House REIT
Investment Management Committee

Private Fund
Investment Management Committee

President and CEO

Sustainability Promotion Department

Compliance Officer

Compliance Department

Daiwa House REIT Division

Fund Management
Department

Investment Department

Asset Management
Department

Administration andAccounting Department

Fund Management
Department

Private Fund Division

Asset Management
Department

3

Sustainability Report 2022

About DHR

Message from
the Management

Special Feature

Information Disclosure Basedon TCFD Recommendations

Sustainability

Environment

SocialGovernance

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.

Supporting these trends, DHR and the Asset Manager have set targets for reducing GHG emissions by 2030, and DHR has
become the first J-REIT to receive certification from the Science Based Targets initiative (SBTi) that these targets are
consistent with the levels required by the Paris Agreement and are based on scientific evidence.
DHR was the first J-REIT to introduce a sustainability index-linked fee whereby asset management fees are paid to the AssetManager by linking the fees to sustainability indices. The purpose of the sustainability index-linked fee is to improve unitholder
value by prompting reductions in GHG emissions of properties in DHR’s portfolio and by facilitating improvement with respect
to external evaluations related to DHR’s sustainability initiatives. DHR was also the first J-REIT to introduce a sustainability
index-linked remuneration with respect to the Executive Director of DHR and the Directors of the Asset Manager.

Acquiring External Evaluation

Toshiharu Asada

Koichi Tsuchida

Executive Director
Daiwa House REIT
Investment Corporation

President and CEO
Daiwa House AssetManagement Co., Ltd.

Daiwa House REIT Investment Corporation’s Sustainability Policy

Aiming to ensure stable revenue and steady growth of assets over the medium to longterm, 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 theDaiwa House Group’s basic approach of “Creating Dreams, Building Hearts.” To attain a sustainable society, it is essentialthat 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 steadyasset growth over the medium to long term. As such, the Asset Manager established the Sustainability Policy in April 2017,and has been applying it to its real estate investment management business. This constitutes our Sustainability Report,
prepared for providing an opportunity for unitholders and other stakeholders 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 enhance its
ESG initiatives further with respect to its real estate investment management business, while endeavoring to appropriately
disclose such performance.

Leading-edge Sustainability Initiatives

We are committed to promoting leading-edge sustainability initiatives by reflecting itin the remuneration
The COP26 summit held in the United Kingdom in October 2021 revealed a mounting commitment of countries around theworld to more widespread use of renewable energy.
In October 2020, the Japanese government declared that Japan would realize carbon neutrality by 2050, and in October
2021, revised its target for the fiscal year 2030 to an ambitious 46% reduction in greenhouse gas (GHG) emissions comparedto the fiscal year 2013. Companies and other organizations now face the crucial task of actively shifting to renewable energy
sources.

4

We aim to acquire external evaluation and improve assessment results in order toachieve greater objectivity and reliability with respect to our sustainability initiatives
DHR became the first J-REIT ever to gain recognition as a climate change A List company under the 2021 CDP Climate
Change Program, upon having received the highest-rated “A” score in recognition of exhibiting high standards internationallywhen it comes to addressing issues of climate change and disclosing information in that regard.
DHR has been named on the CDP Supplier Engagement Leaderboard, the highest rating, for two consecutive years as acompany that engages in initiatives deemed particularly outstanding in terms of the CDP Supplier Engagement Rating. The
ratings have been determined based on assessment of DHR’s initiatives to address climate change throughout its supply
chain, based on its responses to questions across the four categories, “Supplier Engagement,” “Governance,” “Scope 3
Emissions,” and “Targets,” and based on an overall CDP Climate Change Program score.

Information Disclosure Based on TCFD Recommendations

We have pledged our support for the TCFD recommendations, and accordingly
disclosed information based on the TCFD recommendations in March.
Such disclosure will remain in effect going forward.
The TCFD (Task Force on Climate-related Financial Disclosures) publishes recommendations for companies to identify anddisclose their “Governance,” “Strategy,” “Risk Management” and “Metrics and Targets” with respect to climate changerelated risks and opportunities. The Asset Manager has pledged its support for the TCFD recommendations, and accordingly
disclosed information based on the TCFD recommendations in March 2022. Such disclosure will remain in effect going
forward.

Initiative Support and Participation

We will actively work on solving social issues
by supporting and joining the sustainability initiatives.
Underpinned by a commitment to addressing important social issues involving climate change, human rights, diversity andinclusion, and biodiversity, DHR and the Asset Manager will continue to actively work on solving social issues going forward
by taking part in such initiatives. In February and March 2022, we supported and joined in ten initiatives involving importantsocial issues. One such initiative was the “Race to Zero” international campaign calling for immediate action in alignment withour commitment to achieving net zero GHG emissions by 2050. Another such initiative was that of DHR becoming the firstever J-REIT participant in the new “RE Action – Declaring 100% Renewable” initiative for conveying intent and taking actionin terms of transitioning to use of renewable energy exclusively, and accordingly promoting such transition.

5

Sustainability Report 2022

Message from
the Management

About DHR

Special Feature

Information Disclosure Basedon TCFD Recommendations

Leading-edge Sustainability Initiatives

Sustainability

Environment

SocialGovernanceBack

GRI Content Index

Improved External Evaluations by Promoting Sustainability Initiatives

Obtained various external certifications and evaluations as the First J-REIT
and implemented leading-edge sustainability initiatives

CDP Climate Change Program

CDP ScoreAA he first J-REIT to be named on Supplier
T
Engagement Leaderboard (participation in the2020 CDP Climate Change Program)

A-

AB
BC

Page 24 he first J-REIT to be certified by Science BasedT
Targets initiative (SBTi), an international institution(Disclosed information at the same time based on
the amended TCFD recommendations and new
guidance in October 2021)

 he first J-REIT (Note) to be awarded the highest score of “A” andT
named on the Climate Change “A List” company by itself in
2021 CDP Climate Change Program AssessmentCDN amed as the only J-REIT to the Supplier Engagement
Leaderboard, the highest rating, for two consecutive years in
the CDP Supplier Engagement Rating

DF(Note) E xcludes the case where the parent company of the groupanswers the questionnaire.

F

F

F

2017

2018

2019

2020

2021

Page 7
 he first J-REIT toT
be named on “A List”(highest recognition)
in CDP Climate
Change Program

Item

GHG emissions reduction target

Scope 1 and 2

Reduce total emissions by 42%(compared to the fiscal year ended March
2021)

Scope 3October
2021

Calculate and reduce total emissions

Pages 10 and 26

Page 7

February
2021

GRESB Real Estate Assessment and
GRESB Public Disclosure

December
2021

February
2022

March
2022
 cquiring “4 Stars” for two consecutive years in 2021 GRESBAReal Estate Assessment

 he first J-REIT to introduce SustainabilityT
index-linked fee

Leading-edge initiatives

Reduction in GHG
emissions
GRESB Rating
CDP Score cquiring the highest rating of “A” on a 5-star scale for threeA
consecutive years in GRESB Public DisclosureS ustainability Committee· Raised to a formal committee· Held at least once a month· Outside advisor appointed

Asset management fees
are calculated according
to the degree ofachievement of eachindex

 ustainability Promotion
S
Department· Newly established

Reduced amount of fees is to be used forthe measures to reduce GHG emissions and improve
environmental certifications

GRESB Real Estate Assessment

4

4

2020

2021

3

MSCI ESG Rating

2

2

2017

2018

2019

MSCI ESG Rating
AAA

Promoting ESG initiatives

 lso linked to remuneration for Executive DirectorAof DHR

Each external ESG evaluation improved

External certifications and evaluations

 he first J-REIT
T
to receive “ZEB”
certification (highest
ZEB rating) inaddition to thehighest BELS rating
DPL Nagareyama IIIof 5 stars he only J-REIT to be named on the 2021
T
Leaderboard for two consecutive years

ForwardAA

Pages 12 and 13

A

Page 22BBB

BBB

 he first J-REIT to purchase FIT non-fossil certificatesTin the renewable energy value trading market
Reduced GHG emissions by approx. 9,195 t

Achieved total GHG emission reduction (Scope 2)
in the fiscal year ended March 2022
Page 23 he first J-REIT to joinT“Race to ZERO” and “RE
Action – Declaring 100%
Renewable” (Joined/signed
on to total of 10 initiatives
related to climate change,
human rights, diversity andinclusion, and biodiversity)

BB

Rating was upgraded from “BB” to “BBB” in March 2022
Disclaimer
The use by DHR of any MSCI ESG Research LLC or its affiliates (“MSCI”) data, and the useof MSCI logos, trademarks, service marks or index names herein, do not constitute asponsorship, endorsement, recommendation, or promotion of DHR by MSCI. MSCI services
and data are the property of MSCI or its information providers and are provided “as‐is” andwithout warranty. MSCI names and logos are trademarks or service marks of MSCI.

B

B

B

Jun-18

Feb-19BB

BB

Jan-20Jan-21

CCC

Mar-22

Pages 8 and 9(Note) In chronological order of the date of announcements

6

7

Sustainability Report 2022

Message from
the Management

About DHR

Information Disclosure Basedon TCFD Recommendations

Special Feature

Sustainability

Environment

SocialGovernance

GRI Content Index

Back

Forward

Supported Initiatives
Initiative Support and Participation Policy
Most important social issues

Climate change

Human rights

Diversity and inclusion

Biodiversity

We have signed and joined the initiatives listed on this page. By joining the initiatives related to the above, we will continue to actively work on solving social issues.

Climate change

Climate change

Human rights

Diversity and inclusion

Climate changeFirst in J-REITs

Climate change

Science Based Targets (SBT)RE Action – Declaring 100%
Renewable

The United Nations Global Compact(UNGC)

Feb. 2022 Certified(DHR)

Mar. 2022 Joined(DHR)

Mar. 2022 Signed(Asset Manager)

Race to Zero

Task Force on Climate-related
Financial Disclosures

Mar. 2022 Joined(DHR)

Feb. 2022 Supported(Asset Manager)

WWF Japan
Environmental conservation organization
working in more than 100 countries andfounded in 1961

World Wide Fund for Nature(WWF) Japan
Mar. 2022 Joined(Asset Manager)

Climate change

Japan Climate Initiative (JCI)

Principles for Responsible
Investment (PRI)

Eco Action 21

Mar. 2022 Joined(DHR/Asset Manager)

Feb. 2021 Signed(Asset Manager)

Mar. 2022 Certified and registered(DHR/Asset Manager)

Principles for Financial
Action for the 21st Century

Overall ESG

Biodiversity

Environmental management system

TCFD Consortium
Feb. 2022 Joined(Asset Manager)

Mar. 2022 Signed(Asset Manager)

Climate change

8

United Nations
Global Compact(UNGC)

Climate changeFirst in J-REITs

Climate change

Biodiversity

First in J-REITs

Climate change(Note) “DHR” and “Asset Manager” represent Daiwa House REIT Investment Corporation
and Daiwa House Asset Management Co., Ltd., respectively.

9About DHR

Sustainability Report 2022

Message from
the Management

Special Feature

Information Disclosure Basedon TCFD Recommendations

Sustainability

Environment

SocialGovernance

GRI Content Index

Back

ForwardInformation Disclosure Based on TCFD Recommendations
Support for the TCFD Recommendations and Joining the TCFD Consortium
The Asset Manager has shown its support for the Task Force on Climate-related Financial Disclosures (TCFD)
recommendations and has joined the TCFD Consortium, an organization consisting of domestic companies supporting the
TCFD recommendations.

Information Disclosure Based on TCFD Recommendations
The Asset Manager supports TCFD recommendations and promotes risk management and initiatives related to climate change.
Information disclosure is based on the amended TCFD recommendations and new guidance in October 2021.
Item

About TCFD

Governance

TCFD is an international initiative established by the Financial Stability Board (FSB)
at the request of the G20 to examine how climate-related information should be
disclosed and how financial institutions should respond. The TCFD publishes
recommendations for companies to identify and disclose their “Governance,”“Strategy,” “Risk Management” and “Metrics and Targets” with respect to climatechange-related risks and opportunities.

About TCFD Consortium
The TCFD Consortium was established as an organization to promote initiatives
in which domestic companies that support the TCFD recommendations, financial
institutions, etc. work together, and to discuss initiatives that will lead to effective
information disclosure by companies and appropriate investment decisions byfinancial institutions, etc. based on the disclosed information.

Contents
 he Asset Manager established the “Regulations Concerning
T
the System for Promoting Sustainability” and rules on topics
such as internal framework, collaboration with stakeholders
and information disclosure policy to secure an appropriate
system for promoting sustainability.

 he Sustainability Committee, which was established in May
T
2017, was raised to a formal committee in April 2022 andmust be held at least once a month. An outside expert
advisor who has a high level of insight and expertise insustainability was also appointed.

 he Board of Directors receives and monitors reports fromT
the Sustainability Committee on considerations for climaterelated and other global environmental issues and risk
management for natural disasters, etc.

 he Sustainability Committee deliberates and resolves onTsustainability-related policy and strategy development suchas addressing climate-related issues and execution ofsustainability-related operations.

 s the Chief Executive related to climate-related issues atA
the Board of Directors and the Chief Executive of the
Sustainability Committee, the President and CEO of theAsset Manager provides final approval of various climaterelated goals and measures, evaluates the status of efforts,
and gives instructions for review.

For governance

DHR set targets for reducing GHG emissions by the fiscal year ending March 2031 and became the first J-REIT to acquirecertification for its emission targets from SBTi, which certified that the targets are science-based targets consistent with thestandards required by the Paris Agreement.

StrategyFirst J-REIT to Be Certified by SBTi

 nderstanding the risks and opportunities for DHR in theUfuture due to unusual weather caused by climate change
and increasing social demands for climate change
measures, the Asset Manager verified and analyzed theeffectiveness of the current climate change measures.

For scenario analysis

About SBT
Risk Management

The Paris Agreement aims to keep the global average temperature well below
2°C above pre-industrial levels and pursue efforts to limit global warming to
1.5°C. Science Based Targets (“SBT”) refer to GHG emissions reduction targets
set by companies with a target year of 5 to 15 years ahead, which is consistent
with the level required by the Paris Agreement. SBTi is an international initiative,
which certifies companies that set the SBT and jointly run by the CDP, the United
Nations Global Compact (UNGC), the World Resources Institute (WRI) and theWorld Wide Fund for Nature (WWF).

Pages 12 and 13

Pages 14 to 17

 hile recognizing climate change risk as one of the risks
W
that could pose a significant impact on business in themedium to long term, the Asset Manager sees such risk as
areas of potential and manages the risk by incorporating it inour overall risk management process. The Asset Manager
has established the “Risk Management Regulations” and“Risk Management Implementation Guidelines” as internal
regulations in order to accurately identify risks andopportunities inherent in business, develop a system forappropriately managing potential losses and profits when theidentified risks and opportunities are realized, ensure thesoundness of management and operate business in a fairmanner.

For risk management

Targets Certified by SBTi
Coverage

Base year

Target year

GHG emissions reduction target

Scope 1 and 2

All properties

2020

2030

Reduce total emissions by 42%

Scope 3

Properties with data available

2020

2030

Calculate and reduce total emissions

Metrics and Targets

10

Item

Page 20

DHR set targets of reducing total GHG emissions by 42% in
the fiscal year ending March 2031 compared to the fiscal
year ended March 2021 as the first J-REIT certified by SBTi
for its SBT 1.5°C targets. In addition, DHR set long-termtargets of net zero emissions in the fiscal year ending March
2051.
Internal carbon price is set at ¥10,000 / t-CO2 and used as
an incentive for low-carbon promotion works, guidelines forinvestment decision making and a reference index to identify
risks of rising costs.

For metrics and targetsIn accordance with the TCFD recommendations, the AssetManager conducted analysis based on multiple scenarios of
below 2°C scenario and 4°C scenario and formulated aroadmap for achieving the targets certified by SBTi.

For roadmap

Pages 18 and 19

 he Board of Directors shall oversee the development of anTappropriate risk management system based on the “RiskManagement Policy” after considering where and what therisk is based on the strategic goals set separately by the
Board of Directors.
 he President and CEO shall be responsible for all risks inTaccordance with the provisions of the “Daiwa House Group
Risk Management Regulations,” develop an appropriate risk
management system and be responsible for promoting andimplementing risk management.
 he Compliance Officer, who is responsible for risk management,Tshall establish methods including measurement, monitoringand management based on the type of risk along with the risk
management policy and shall develop internal regulations toensure the effectiveness of these methods.
 e are promoting the acquisition of third-party externalW
certifications and evaluations to increase the objectivity andreliability of our sustainability initiatives at portfolio properties
and improve the asset value over the medium to long term.
Our policy is to increase the percentage of properties withenvironmental certification (based on gross floor area) to
70% or more by the fiscal year ending March 2031.

Pages 21 to 23

11

Sustainability Report 2022

About DHR

Message from
the Management

Information Disclosure Basedon TCFD Recommendations

Special Feature

Sustainability

Environment

SocialGovernance

GRI Content Index

Back

ForwardInformation Disclosure Based on TCFD Recommendations (Governance)
Sustainability Promotion System, Supervision by Board of Directors, and Role of Top Management
On April 1, 2022, the Asset Manager made the organizational change to further improve asset management operations and sustainability initiatives.
Establishment of the Sustainability Promotion Department responsible for the duties related to sustainability
The Sustainability Committee, which was established in May 2017, was raised to a formal committee and must be held at least once a monthAppointment of an outside expert advisor to the Sustainability Committee who has a high level of insight and expertise in sustainability

Organizational chart

Sustainability Committee eliberates and resolves onDsustainability-related policy and strategy
development
Deliberates and resolves on executionof sustainability-related operations

Sustainability Committee
Committee Head:

President and CEO

Operating officer:

General Manager, Sustainability Promotion
Department

Executing officer:

Head of Daiwa House REIT Division
Head of Private Fund Division

Members:

All full-time Managing Directors, Heads ofDivision, General Managers (excluding
Compliance Officer) and other selected
officers and employees

Observers:

Outside expert advisor, Compliance Officer

Frequency of meetings: At least once a month
Function and role:

Deliberations and approvals regarding
sustainability-related policy and strategy
development and execution of sustainabilityrelated operations; reporting to the Board of
Directors and the DHR Board of Directors as
appropriate

Number of Sustainability
Committee meetings held

Fiscal year ended March 2018
6

General Meeting of Unitholders

Supervision by Board of Directors

Corporate Auditor
Board of Directors
Sustainability Committee

Compliance Committee

Daiwa House REIT Investment
Management Committee

Private Fund Investment
Management Committee
President and CEO

Sustainability Promotion Department

Compliance Officer
Compliance Department

Daiwa House REIT
Division
Fund Management
Department

Investment Department

Asset Management
Department

Fiscal year ended March 20196

Fiscal year ended March 2020
6

Revision of Rules of the Board of Directors
The following content was added to the rules with reference to Principle 2-3 of the “Revised Corporate Governance Code”
published by the Tokyo Stock Exchange in June 2021

<Rules of the Board of Directors>
Items reported to the Board of Directors
Among the items deliberated by the Sustainability Committee, matters related to the following items are deemed to require
reporting to the Board of Directors: consideration of global environmental issues such as climate change, respect for humanrights, consideration and fair and appropriate treatment of employees’ health and working environment, fair and appropriate
transactions with business partners, and crisis management in response to natural disasters, etc.

12

Administration andAccounting Department
Fund Management
Department

Fiscal year ended March 2021
5

Receives and monitors reports fromthe Sustainability Committee on
considerations for climate-related andother global environmental issues and risk
management for natural disasters, etc.

Role of President and CEO
As the Chief Executive related to climate
issues at Board of Directors and the Chief
Executive of the Sustainability Committee,
provides final approval of various climaterelated goals and measures, evaluates thestatus of efforts and gives instructions forreview

Private Fund Division

Asset Management
Department

Fiscal year ended March 2022
9

Remuneration for Executive Director of DHR and Directors of the Asset Manager
In November 2021, DHR became the first J-REIT to introduce a provision to fluctuate the asset management fees paid
to the Asset Manager by linking the fees to sustainability indices.
 ustainability indexed-linked fee (sum of indexed GHG emissions reduction ratio, GRESB Rating and CDP Score multiplied byS
the total assets of DHR) is aimed at strengthening the commitment to ESG issues and improving governance.
 emuneration for the Executive Director of DHR and for directors of the Asset Manager are now linked toRsustainability indices including GHG emissions reduction ratio, GRESB Rating and CDP Score.

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Scenario Analysis
We evaluate impact on business under several scenarios and conduct scenario analysis according to the following steps to assess strategic resilience to climate-related risks and opportunities.

Scenario analysis process

Step 1

Step 2

Identify material climaterelated risks and opportunities
and set parameters

Extract climate-related risks and opportunities

Set climate-related
scenarios

Assess material risks and opportunities

Identify relevant scenarios among existing scenarios
based on the information in Step 1

Set parameters related to material risks and opportunities

Set climate-related scenarios (social impact)

Identify material climate-related risks
and opportunities and set parameters

Step 1

We have identified the risks and opportunities for DHR in the future due to unusual weather caused by climate change andincreasing social demands for climate change measures.
Category

Step 3

Step 4

Evaluate impact on businessin each scenario

Evaluate strategic resilience
to climate-related risks andopportunities and consider
additional measures nalyze the impact on business in each scenarioA
based on each scenario set in Step 2 and thematerial climate-related risks and opportunities
together with related parameters identified in Step 1

Step 2

Set climate-related scenarios

Reference scenarios

Type

Contents

Category

Summary of scenario

Policy andregulation

Increased costs due to introduction of a carbon tax and expansion of emissions
trading system, increased procurement costs for construction materials

Below 2°C
scenarioIEA Sustainable Development Scenario (SDS)

Technology

Increased installation and maintenance costs due to installation of solar power
generation equipment

MarketDecrease in rent income due to changes in tenant demand (declining needs forproperties not responding to climate change)

The scenario that assumes policies andregulations to realize a carbon-free society are
implemented and the global warming from preindustrial levels will stay below 2°C. While thetransition risk is high, the physical risk is low
compared to the 4°C scenario.

Reputation

Increased funding costs due to growing stakeholder concerns or negative feedback
by delayed response to climate change risks

Chronic

Increased utility charges due to rising average temperature

The scenario that assumes announced goals
such as national goals under the Paris Agreement
will be achieved. No new policies or regulations
will be introduced, and global energy-derived CO2
emissions will continue to increase. While thetransition risk is low, the physical risk is high.

IEA Stated Policy Scenario (STEPS)

Acute

Loss of business opportunities and increased repair costs and non-life insurance
premiums due to inundation of buildings caused by increased torrential rain,
typhoons / floods, landslides and storms

Risks

Physical risk

14

Consider additional measures

The scenarios on climate change referenced to formulate our own climate-related scenarios are outlined below.

Transition risk

Opportunities

 ssess the resilience of our strategy forA
climate-related risks and opportunities

Products and services

4°C
scenario

Main reference scenarios

IEA Net Zero Emissions by 2050 Scenario (NZE)
IPCC RCP2.6

IPCC RCP8.5

Increase in rent income (high occupancy, high rent) by providing low-carbon
emission equipment and services to tenants

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Step 3

Evaluate impact on business in each scenario

Step 4

Evaluate strategic resilience to climate-related risks and opportunities and consider additional measures

Assuming 2030, we analyzed the impact of climate-related risks and opportunities on the business of DHR and formulated countermeasures and resilience.

Category

Summary of scenario analysis results

Impact on business (Note)
Below 2°C scenario

Increase renewable energy (including green power procurement) ratio
Introduce energy-saving equipment and energy management system
Set energy consumption / GHG emissions targets (SBT) for portfolio properties
Promote GHG emissions reduction by introducing internal carbon pricing

Indirect costs increase related to GHG emissions in business activities
due to introduction of a carbon tax¥35 million¥29 million

Service purchase costs indirectly increase related to GHG emissions inrepairs and renovation work due to introduction of a carbon tax¥94 million¥42 million

Technology

Installation and maintenance costs increase due to installation of solar
power generation equipment¥798 million¥798 millionImplement planned renovation work
Acquire new properties with new technology introduced

MarketRent income decreases if the acquisition of environmental certification
does not proceed as planned¥914 million¥914 million

Obtain green building certification for portfolio properties
Disclose information on environmental performance

Reputation

Investment unit prices fall and funding costs increase due to delays in
ESG compliance¥48 million¥48 million

Improve ESG ratings
Implement sustainable finance¥427 million¥854 million

 ake appropriate measures such as insurance coverage based on riskTassessment
Perform waterproofing, exterior wall and sealing work ahead of scheduleOwn or replace properties with high resilience by using the check system forclimate change, etc.
Install sandbags, water stop plates and tide platesRent income decreases due to increased risk of flooding of buildings¥42 million to ¥1,000 million¥84 million to ¥2,000 million

Same as above

Non-life insurance premiums increase due to increased risk of water
damage¥22 million¥45 million

Same as above(1) Increase in water charges¥42 million(1) Increase in water charges¥45 million(2) Increase in power charges¥271 million(2) Increase in power charges¥272 million

Policy andregulation

Transition
risk

Response / Resilience of DHR

4°C scenario

Building repair costs increase due to increased natural disasters such as
floodsSame as above

Acute
Physicalrisk

Chronic

Water charges and power charges for tenants increase due to rising
average temperatureIntroduce energy-saving equipment and energy management system
Introduce irrigation equipment and water-saving equipment
Choose native plants for planting
Promote energy conservation activities in collaboration with tenants
Promote green leases(Note) The figures shown are the annual amount of impact estimated by the Asset Manager based on the past results and other factors with reference to the parameters general disclosed; therefore, accuracy of the figures are not guaranteed.

16

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ForwardInformation Disclosure Based on TCFD Recommendations (Strategy)
Roadmap for Reduction of Emissions and Achievement of Targets Certified by SBTi
DHR has set long-term targets of reducing total GHG emissions by 42% in the fiscal year ending March 2031 compared to the fiscal year ended March 2021 and net zero in the fiscal year ending March 2051
and formulated a roadmap that includes reduction rates by measure to achieve the goals.

2020 (Base year)

2030

Emissions reduction target / measure mix

Graph legend

2050
GHG emissions in case ofno countermeasures(1) Reduction of power consumption(2) Switch to energy derived from renewable energy(3) Introduction of renewable energy equipment and utilization of non-fossil certificates(4) Scope 1, 2 and 3 emissions(1)

IntermediatetargetAsset size
expansion
Increasedemissions

(3)

(4)

Long-term target

Substantiallyzeroemissions

(2)

-42%

Target GHG
emissions

+33%

+67%

Emissions reduction rate (vs Fiscal year ended March 2021) -42%

-100%

Increased emissions by asset size expansion

Reduction rate by measure(1) Reduction of power consumption-11%

Switch to LED lighting equipment
Update to high-efficiency air conditioning equipment-50%(2) Switch to energy derived from renewable energy-38%

GHG reduction by better energy mix
Switch to a power company with a low emission factor (t-CO2 /kWh)-65%(3) Introduction of renewable energy equipment and utilization of non-fossil certificates

-26%

18

2040

Utilization of green power certificates and non-fossil certificates
Investment in solar power generation equipment / switching existing equipment to own use
Switch from fossil fuels to alternative energy

-52%

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Information Disclosure Based on TCFD Recommendations(Risk Management)(Metrics and Targets)

Risk Management System

GHG Emissions of Portfolio Properties (Scope 1, 2, and 3)

While recognizing climate change risk as one of the risks that could pose a significant impact in the medium to long term,
the Asset Manager sees such risk as areas of potential and manages the risk by incorporating it in our overall risk
management process. The Asset Manager has established the “Risk Management Regulations” and “Risk Management
Implementation Guidelines” as internal regulations in order to accurately identify risks and opportunities inherent inbusiness, develop a system for appropriately managing potential losses and profits when the identified risks andopportunities are realized, ensure the soundness of management and operate business in a fair manner.
The Board of Directors shall oversee the development of an appropriate risk management system based on the “RiskManagement Policy” after considering where and what the risk is in accordance with the strategic goals set separately by
the Board of Directors. The President and CEO shall be fully responsible for all risks in accordance with the provisions of
the “Daiwa House Group Risk Management Regulations,” develop an appropriate risk management system and be
responsible for promoting and implementing risk management. In addition, the Compliance Officer, who is responsible forrisk management, shall establish methods including measurement, monitoring and management based on the type of risk
along with the risk management policy and shall develop internal regulations to ensure the effectiveness of thesemethods.

Item

Fiscal year ended March 2019 Fiscal year ended March 2020 Fiscal year ended March 2021 Fiscal year ended March 2022

Number of properties

152

190

=Scope 1 and 2 (t-CO2)=Scope 3 (t-CO2)

201

211

104,615
96,636

Scope 1 and 2(t-CO2)84,808

6,558

6,712

6,661

38,44978,147

7,508

Scope 3(t-CO2)

89,924

98,05730,941

Unit: t-CO2

 ustainability Promotion
S
Department
Board of Directors
President and CEO

Identifying
risk items

Development of risk
management system
Promotion of risk
management

Responding
to risks

Identifies transition risks andphysical risks. Analyzes andevaluates the impact on
business of the climate-relatedrisks for each work of eachdepartment compiled by theCompliance Department
Reports on climate-related risk
management and considers
improvements at the
Sustainability Committee
Reports to the Board of
Directors on climate-related risk
management

 omplianceC
Officer

Asset ClassFiscal year ended March 2020

Identifies the risk items including
climate-related risks of eachwork in each department every
April
The identified risks are managed
by the “risk assessment sheet”

Fiscal year ended March 2022

6,540

41,266

51,72762,650Residential

5,466

6,295

6,490

6,292

Retail20,811

30,34430,41529,481

Hotel

854

2,100

1,828

2,164

Other

4,778

4,803

6,176

4,028

Total

38,44984,80896,636

104,615(Note 1) This table shows GHG emissions of the properties for which data of emissions by tenants were obtained among the properties owned by DHR.
(Note 2) G HG emissions from tenants’ energy use are calculated as Scope 3 figures.
(Note 3) Increase in emissions data in fiscal year ended March 2020 to fiscal year ended March 2022 compared to data for the fiscal year ended March 2019 is mainly due to theincrease in the number of properties for which emissions data were obtained.

GHG Emissions by Category (Scope 3)
Boundary: DHR, owned properties
Category

Monitoring
and reporting

Fiscal year ended March 2021

Logistics

Compliance Department
 stablishment ofEmethods ofmeasurement,
monitoring andmanagement
Development of internal
regulations

Fiscal year ended March 2019

Upstream

1.

Purchased goods and services

2.

Unit: t-CO2

Fiscal year ended March 2021

Fiscal year ended March 2022

160

185

Capital goods

18,31029,4773.

Fuel- and energy-related activities not included in Scope 1 or Scope 2

1,067

1,068

5.

Waste generated in operations

130

142

6.

Business travel

0

0

7.

Employee commuting

0095,263104,955

Downstream 13. Downstream leased assets *owned properties (Note 2)(Note 1) Calculated based on “Guidelines for Accounting of Greenhouse Gas Emissions of Organizations through the Supply Chain” by the Ministry of the Environment. Categories
not listed above have no emission sources or are included in Scope 1 or Scope 2.
(Note 2) GHG emissions from tenants’ energy use and waste disposal are calculated.
(Note 3) Figures are verified by a third party based on “ISO 14064-3:2019 Greenhouse gases - Part 3: Specification with guidance for the verification and validation of greenhousegas statements.”

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Remuneration for Executive Director of DHR and Directors of the Asset Manager

Purchase of Non-fossil Certificates

In November 2021, DHR introduced a provision to fluctuate the amount of asset management fees to the Asset Manager in
conjunction with the sustainability indices as the first initiative in J-REITs for the purpose of increasing unitholder value by
encouraging the reduction of GHG emissions of DHR properties and enhancing the external evaluations of its sustainability
initiatives.
This is to increase or decrease the amount of asset management fees based on the sum of indexed GHG emissions
reduction ratio, GRESB Rating and CDP Score multiplied by the total assets of DHR, and is aimed at strengthening thecommitment to solving ESG issues and improving governance.
Furthermore, remuneration for Executive Director of DHR and remuneration for directors of the Asset Manager are now linked
to sustainability indices including GHG emissions reduction ratio, GRESB Rating and CDP Score.

DHR participated for the first time in the third auction in the renewable energy value trading market in fiscal year ended March2022 and procured 13 million kWh of fiscal year ended March 2022 FIT non-fossil certificates through an intermediary (Whole
Energy, Inc.). This was the second test run of trading allowing consumers and intermediaries to purchase FIT non-fossil
certificates. DHR also participated in the fourth auction in fiscal year ended March 2022 and procured 5 million kWh of fiscal
year ended March 2022 FIT non-fossil certificates (total amount of 18 million kWh for fiscal year ended March 2022
(hereinafter referred to as the “Procurement”)).
Expected reduction effect of CO2 emissions by the Procurement was approx. 9,195 tons (t-CO2 equivalent), and all of the
DHR’s electricity-derived GHG emissions (Scope 2) for the fiscal year ended March 2022 were offset alongside theintroduction of 100% net zero renewable energy at the properties owned by DHR.

Mechanism for procuring FIT non-fossil certificates by auction in the renewable energy value trading market

Asset Management Fee Structure
Purchase request of
non-fossil certificatesNew(1) Total assets × 0.008% (Note 1) ×Reduction in GHG emissions (Multiples listed in Table 1 below)

Management fee 3(linked to sustainability indices)(2) Total assets × 0.002% (Note 2) ×GRESB Rating (Multiples listed in Table 2 below)

Japan Electric Power
Exchange(3) Total assets × 0.002% (Note 3) ×CDP Score (Multiples listed in Table 3 below)

Management fee 1(linked to assets)(Before change)(After change)

Total assets × 0.2%

Total assets × 0.18%(Note 4)

Established Management fee 3
and reduced Management fee 1(No change)

Management fee 2

Recent assessments<Table 1>

Multiple(Note 1) The upper limit is 0.012% for the index (1) of Management fee 3.
(Note 2) The upper limit is 0.004% for the index (2) of Management fee 3.
(Note 3) The upper limit is 0.004% for the index (3) of Management fee 3.
(Note 4) The upper limit is 0.4% for Management fee 1 and 5.0% for Management fee 2.

NOI × 4.5% (Note 4)(linked to NOI)

1 - GHG Emissions Reduction Ratio

Intermediary agent for
procurement of nonfossil certificates

Sale of non-fossil
certificates withtracking features

Internal Carbon Pricing
We have set the internal carbon price at ¥10,000 / t-CO2 and use it as an incentive for low-carbon promotion works,
guidelines for investment decision making and a reference index to identify risks of rising costs.

(1) Incentives for low-carbon promotion works
If GHG emissions are expected to be reduced by LED lighting and air conditioning renewal, we apply the internal carbon
price and use the data as a reference to decide whether to perform construction work.

* -32.2% in fiscal year ended Mar. 2021 (applied multiple is 1.322)* GHG emissions reduction ratio: ((b) - (a)) / (a)(a): GHG emissions intensity in fiscal year ended March 2018 (April 2017 - March 2018) 0.0556(t-CO2/m2)(b): GHG emissions intensity in the immediately preceding fiscal year (April - March) (t-CO2/m2)

Management
fee 1
Total assets
x 0.2%<Table 2>

GRESB Rating
Multiple

Calculation simulation(based on fiscal period ending August 31, 2022)

Auction and executionof non-fossil
certificates

0.8

0.9

1.0

1.1

Management
fee 3Managementfee 1: approx. Management-91 mil yen

fee 1

Total assets
x 0.18%

1.2* Multiple is determined based on the rating in the immediately preceding fiscal period.

Total management
fees: approx.
-21 mil yen

Reduced amount to
be used for themeasures to reduce
GHG emissions andimproveenvironmental
certifications(2) Guidelines for investment decision making
After calculating the profit and loss by applying the internal carbon price to the GHG emissions of the target property, we
use the data as a reference for investment decisions (when emissions can be calculated).

(3) Identifying risks of rising costs in the future
By selecting suppliers with low emissions, we aim to reduce the risk of increased procurement costs when a carbon tax
is introduced in the future.

<Table 3>

CDP Score

D-

D

C-

C

B-

B

A-

A

Multiple

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

* Multiple is determined based on the score in the immediately preceding fiscal period.

Before change

After change(Note) Calculated based on GHG emissions for the period from April
2020 to March 2021, 2021 GRESB Rating and 2021 CDP Score.

22

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Climate-related Opportunities(Status of Environmental Certification of Portfolio Properties)

Formulating Framework for Sustainable Finance
By raising funds through sustainable finance, DHR aims to further promote sustainability initiatives, expand the investor
base interested in sustainability investment and lending, and ensure stable financing.

Improved the ratio of properties with environmental certification to 67.7% (based on gross floor area)

DPL Nagareyama III

In October 2019, DHR formulated a Green Finance Framework for implementing green finance. In November 2021, DHR
formulated a Sustainability Finance Framework for implementing sustainability finance. In this way, DHR is developing
initiatives for sustainable finance and making steady progress in raising funds through sustainable finance.

Awarded the highest ZEB (Net Zero Energy Building)certification of “ZEB” in addition to the highest BELS
rating of“ZEB”

1 property––

ZEB Ready6 properties––

6 properties

6 properties

14 properties

Pacific Royal Court Minatomirai
Urban Tower
In renewal of DBJ Green
Building Certification, therating improved fromthree years ago to

7 properties

6 properties

6 properties

9 properties

14 properties

4 properties

October 2019

6 properties

Green eligibility criteria

6 properties
Number of certified properties

46 properties 25 properties 20 properties

Certified ratio(based on gross floor area)

57.7%

37.8%

Nearly
ZEB

ZEB
Ready

Buildings with reduced primary energy
consumption of 75% or more but lessthan 100% from the benchmark primaryenergy consumption including
renewable energy in addition to meeting
the requirements of ZEB Ready

Save

GenerateNet
savingof100%

Energy generated
at ZEB

Saving Generatingenergy energy

Saving Generatingenergy energy

Save

Save Generate

Save GenerateStandard
energy-savingbuilding

ZEB ReadyNet saving of75%
or moreNearly ZEB

Save energy as muchas possible

2

Generate energy foruse

Aims to realize more competitive, stable, and sustainable financing arrangements by making
not only green finance but also sustainability finance feasible

Implementation of Sustainable Finance
DHR has implemented sustainable finance of ¥29.5 billion as of the fiscal period ended February 28, 2022 through green
bonds, green loans, and sustainability bonds based on the frameworks shown above.
The ratio of sustainable finance to interest-bearing debt has also increased by continuously implementing sustainablefinance.

Outstanding balance and ratio of sustainable finance

SavingenergySaving of50%
or more1

Achieve net Zero Energy
Building by net energy
saving of 100%

Energy saving of at least 50% or more

Buildings with gross area of 10,000 m2
or more and reduced primary energy
ZEB
consumption excluding renewable
Oriented energy compared to the benchmark
specified for each use in addition to
introduction of unevaluated technology

24

Generatingenergy2

Buildings with reduced primary energy
consumption of 50% or more from thebenchmark primary energy consumption
excluding renewable energy

Source: D aiwa House Industry Co., Ltd. based on the website
of ZEB by the Ministry of the Environment

SavingenergyEnergy used
at ZEB

Social eligibility criteria
Properties that contribute to solving (S) social issues are eligible

1

Energy demand of
ordinary buildings

Properties that contribute to solving (E) environmental issues are eligible

Sustainability Finance
Framework

35.2%

Concept and Definition of ZEB
Buildings with reduced primary energy
consumption of 100% or more from thebenchmark primary energy consumption
including renewable energy in addition
to meeting the requirements of ZEB
Ready

Green eligibility criteria
Properties that contribute to solving (E) environmental issues are eligible

November 2021

*1 The number of certifications is as of March 31, 2022.
*2 Total floor area is based on the floor area provided on the inspection certificate of each property.
*3 Excludes land properties.
*4 The percentage of properties that have obtained environmental certifications is rounded to the firstdecimal place.

“ZEB”

Green Finance Framework

Net saving of
100%
or more“ZEB”

SavingenergySavingenergyIntroducing
unevaluatedtechnology

Introducing
unevaluatedtechnology=Outstanding sustainable finance (millions of yen)
=Ratio of sustainable finance to interest-bearing debt

Saving of40%
or moreSaving of30%
or moreUse

Use

Office,school,factory

Hotel, hospital,
department store,
restaurant,meeting place

ZEB Oriented(Buildings with gross area of 10,000 m2 or more)

7.2%

4.0%
2.9%

2.9%

11,00011,000Aug. 2020Feb. 2021

29,5001.7%

6,000
Feb. 2020

15,000Aug. 2021

Feb. 2022

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GHG Emissions and Energy-related Targets

Internal Carbon Pricing

DHR set targets of reducing total GHG emissions by 42% in the fiscal year ending March 2031 compared to the fiscal
year ended March 2021 and became the first J-REIT certified by SBTi for its SBT 1.5 °C targets. DHR also set long-termtargets of net zero emissions in the fiscal year ending March 2051.
Item

Coverage

Base year
2020

GHG emissions(Scope 1 and 2)-42%

Long-term
targetNet zero2020(Base FY)

2030

2050

2030

Reduce total emissions by
42%

2050

Net zero

2030

Calculate and reduce total
emissions
SBT

GHG emissions Properties with
(Scope 3)data available

Energyconsumption

Properties withdata available

Water
consumption

Properties withdata available

Waste
management

Properties withdata available

Remuneration
We have not set a target for the amount of remuneration for the executive officer of DHR and directors of the AssetManager that is linked to climate-change indicators, but will review the remuneration structure as appropriate.

SBT

2020
SBT

TargetAll properties–

TargetTarget year

We have not set a target for the internal carbon price. We will review the price as appropriate to reflect potential changes
in goverment policy.

–

2050

Net zero

2017

2027

Reduce intensity by 10%

2027

Reduce intensity to below
the level of base FY

2017

2017

2027

Improve recycling rate

Climate-related Opportunities (Targets for Obtaining Environmental Certifications ofPortfolio Properties)
We are promoting the acquisition of third-party external certifications and evaluations to increase the objectivity andreliability of our sustainability initiatives at portfolio properties and improve the asset value over the medium to long term.

Physical Risk (Risk of Flooding)
Responding to risks by implementing construction countermeasures and adding fire insurance coverage to avoid
economic damage.
Flood depth

Number of properties

We will take risk reduction measures and reduce the percentage of properties owned that are exposed to acute andchronic physical risks.

Ratio (based on acquisition price)

Over 20 m

0

0

0.0%

10 m to 20 m

0

0

0.0%

5 m to 10 m

478,7508.8%

3 m to5m

1381,4979.1%

0.5 m to3m

91

253,85028.4%

0.5 m or less

14

56,510

6.3%

0

108

424,546

47.4%

230

895,153

100.0%

Total(Note) Method: Based on the estimated flood prone areas (estimated maximum size) (source: Ministry of Land, Infrastructure, Transport and Tourism), compiled by the AssetManager from April to May 2022.

For Royal Parks SEASIR (residential facility), we installed
waterproof panels and waterproof doors at the entrance,electrical room, elevators, and management office to reducethe impact of water damage from torrential rains and largescale typhoons.

Our policy is to increase the percentage of properties with environmental certification (based on gross floor area) to 70%
or more by the fiscal year ending March 2031.

Physical Risk

Acquisition price (millions of yen)

Waterproofing panels

Waterproofing doors

Greening and Countermeasures Against Heat Island EffectOut of consideration for climate change, we carry out efforts such as those below at our properties.

Capital Deployment (Purchase of Non-fossil Certificates and Investment in Solar Power
Generation Equipment)
We will reduce GHG emissions (Scope 2) by procuring FIT non-fossil certificates, etc. by participating in auctions in the
renewable energy trading market.
We will reduce GHG emissions by investing in solar power generation equipment and switching existing equipment to
own use.

26

Large-scale green area

Rooftop greening

Exterior greening/water-permeable paving

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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 forindividuals, communities and people’s lifestyles, the Daiwa House Group aims to build trusting relationships with stakeholders
and contribute to society through its businesses, and to realize a sustainable society by meeting the challenge of achieving“zero environmental impacts.” Daiwa House Asset Management Co., Ltd. shares the Daiwa House Group’s basic approachas DHR’s asset 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 tolong term. Therefore, we have established the following “Sustainability Policy” to guide our real estate investment
management.

DHR conducts its business and other activities through interactions with its various stakeholders, including not only
unitholders, tenants of properties, local communities, supply chains, etc., but also officers and employees of the AssetManager and the sponsor. DHR aims for sustainable growth by building long-term relationships and actively communicatingwith stakeholders.

1. Prevention of global warming
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)

ForwardUnitholders

Local communities· Results briefing· Holding presentation
meetings for unitholders,etc.

Tenants· Tenant satisfaction
surveys· Cooperation programswith tenants,etc.

· Investment in existing
urban developmentzones· Local job creation,etc.

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)
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.

Supply chain· Continuous evaluation forproperty managementcompanies and building
management companies· ESG training,etc.

5. Establishment of an internal framework and initiatives for employees
We will establish an internal framework for promoting sustainability and take steps to develop human resources by conducting
regular education 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 trusting relationships with external stakeholders
We will aim to build trusting relationships with external stakeholders and we will work on our suppliers to enhance the satisfactionof tenant 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 stakeholders, such as investors, in our futurebusiness activities. 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.

28

Officers and employees· Diversity and inclusion· Human resource
development,
etc.

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

Concept of Sustainability Promotion Based on the PDCA Cycle eviewing sustainability promotionRaccording to fiscal year resultsReporting to the Board of Directors of
the Asset Manager and DHR Board of
Directors at least four times a year asa general rule articipating in GRESB Real Estate
P
Assessments and providing responses
to the CDP Climate Change ProgramChecking progress of environmental
performance results

Action
Plan

Check
Do

 eviewing and formulatingRvarious policies and measuresrelated to sustainability
Setting environmental
performance targets

 ddressing priority issues
AVerifying progress ofsustainability promotion at the
Sustainability Committee

29

Sustainability Report 2022

About DHR

Message from
the Management

Special Feature

Information Disclosure Basedon TCFD Recommendations

Sustainability

Environment

SocialGovernance

GRI Content Index

Back

ForwardMateriality and SDGs
Materiality Identification Process

Identified Materiality

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

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

Employees and tenants
Human resource development (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)
Acquisition and improvement of Green Building Certificationand ESG assessments

Discussions and approval by management
Third-party written opinion on materiality with respect to Daiwa House REIT Investment Corporation

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

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

Local contribution activities

Stakeholder expectations

Transparent and sound governanceImprovement in the health, safety,
and comfort of tenants
Ensuring compliance(appropriate transactions withinterested parties)

Response to climate change(Energy saving/renewable energy,
improvement in resilience)
Promotion of human resource
development (training and careerdevelopment)

Promotion of diversity

Reduction of water consumption

Improvement in the health, safety,
and comfort of employees
Cooperation with tenants(promotion of Green Leases)

Reduction of waste

Protection of biodiversity

Supply chain management

Community revitalization,
redevelopment

Acquisition and improvement ofGreen Building Certification and ESG
assessments

Extremely strong

Impact on own business
Environmental

Daiwa House REIT Investment Corporation, which serves as a J-REIT of the Daiwa House Group and 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.
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 theinterviews
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.
In terms of ESG content, addressing climate change under environmental (E) component involves the worthy aim of taking action bymaking buildings more resilient, beyond merely reducing CO2 emissions. Meanwhile, efforts under social (S) component are distinctive inthat DHR will place top priority on developing human resources with emphasis on “develop people through business,” serving as amember of the Daiwa House Group. Efforts under governance (G) component are important given that the notion of engaging inappropriate 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
to efforts such as the RE100, TCFD and SBT initiatives, in alignment with Japan’s carbon neutral declaration.

Strong30

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 indirectly related to the 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

Goals related to the main SDGs

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

Governance31

Sustainability Report 2022

About DHR

Message from
the Management

Special Feature

Information Disclosure Basedon TCFD Recommendations

Sustainability

Environment

SocialGovernance

GRI Content Index

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Supported Initiatives and External Evaluations
Policy on Participation in Initiatives

Participation in RE Action – Declaring 100% Renewable

DHR and the Asset Manager share the Daiwa House Group’s basic approach of “Creating Dreams, Building Hearts.” To attain asustainable 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 steadyasset growth over the medium to long term. As such, DHR has been applying the above matters to its real estate investment
management business.
DHR and the Asset Manager believe climate change, human rights, diversity and inclusion (the respect for diversity) and biodiversity areparticularly important social issues to address. By joining the initiatives related to the above, we will continue to actively work on solvingsocial issues.

RE Action – Declaring 100% Renewable is a new framework for Japanese companies, local
governments, educational institutions, medical institutions, and other organizations to express
their willingness and action to transition 100% of their electricity use to renewable energy andpromote this transition.
DHR has set a target to transition to 100% renewable energy by 2050 and participated in the RE
Action – Declaring 100% Renewable as the first J-REIT.

Signing on to the Principles for Responsible Investment (PRI)

Overall ESG

The “Principles for Responsible Investment (PRI)” is a network of international investors endorsedby the United Nations Environment Programme Finance Initiative (UNEP FI) and the United
Nations Global Compact (UNGC). The investors who are signatories to the PRI declare to include
ESG issues into investment decisions, and while helping the beneficiaries enhance long-term
investment performance and fulfilling their fiduciary duty as responsible investors over the longterm, they aim to create an abundant world for all stakeholders.
The Asset Manager agreed with the basic approach of the PRI and became a signatory.

Support for the Task Force on Climate-related
Financial Disclosure (TCFD) Recommendations

Climate Change

The Financial Stability Board (FBS) launched the Task Force on Climate-related Financial
Disclosures (TCFD) for the purpose of examining how climate-related information is to bedisclosed and the how financial institutions should respond. The TCFD considers that climatechange presents a serious risk to the world economy, and publishes recommendations for companies, etc. to grasp and disclose
climate-related financial data around the thematic areas of “Governance,” “Strategy,” “Risk Management” and “Metrics and Targets.”
The TCFD Consortium was established as an organization to promote initiatives in which companies that support the TCFD
recommendations, financial institutions, etc. work together, and to discuss initiatives that will lead to effective information disclosure bycompanies and appropriate investment decisions by financial institutions, etc. based on the disclosed information.
The Asset Manager has shown its support for the TCFD recommendations and has joined the TCFD Consortium, an organizationconsisting of domestic companies supporting the TCFD recommendations.

Certification as Science Based Targets (SBT)by the International SBT initiative

Climate Change

Participation in the Japan Climate Initiative (JCI)The Japan Climate Initiative (“JCI”) is a network of Japanese companies, local governments, andNGOs that are actively working to prevent climate change, established in response to the 2015
Paris Agreement, aiming independently to realize a decarbonized society. JCI has created anationwide movement in Japan to achieve a decarbonized society by supporting the activities ofparticipating members, working on the governments, and partnering with the international society.
DHR and the Asset Manager joined the JCI as we agreed with this mission to realize adecarbonized society and joined the JCI after satisfying the participation requirements.

Signatory of the United Nations Global Compact (UNGC) and
Joining the Global Compact Network Japan (GCNJ)

Human Rights

Diversityand Inclusion

Climate Change

Biodiversity

The United Nations Global Compact (“UNGC”) is the world’s largest sustainability initiative forbringing together the United Nations and private organizations (companies/associations) andbuilding a sound global society. The UNGC is an independent initiative for companies andassociations to act as a good standing member of society and achieve sustainable growth by
exercising responsible and creative leadership.
Companies and associations who are signatories to the UNGC are making ongoing efforts torealize the ten principles related to the protection of human rights, elimination of all forms of unfair
labor, response to the environment, and the prevention of corruption based on a commitment
from top management at each supporting company.
Local UNGC networks in each country around the world act as a platform aiming to foster
sustainable development. The Global Compact Network Japan (“GCNJ”) was launched in Japanin December 2003 as a local Japan network. The GCNJ supports member companies andassociations in Japan to take independent and strategic action toward the UNGC’s Ten Principles and engages in activities to realize asustainable society, such as holding seminars and subcommittees made up primarily of member companies.
The Asset Manager agrees with the UNGC’s Ten Principles and has become a signatory. Furthermore, it has joined the GCNJ to takeactive action.

Human Rights

LabourClimate Change

Race to Zero is a global campaign to call for immediate action from businesses, local
governments, investors, universities and other non-governmental actors worldwide to realize thegoal of substantially zero GHG emissions by 2050.
Globally, 1,049 cities, 67 regions, 5,235 businesses, 441 investors, and 1,039 higher educational
institutes participate in the Race to Zero, and they account for nearly 25% of CO2 emissions and over 50% of the GDP worldwide.
DHR aims to achieve substantially zero GHG emissions by 2050 and became the first J-REIT to join the Race to Zero.

32

Climate Change

The Ten Principles of the United Nations Global Compact

DHR has set targets to reduce GHG emissions by the fiscal year ending March 2031. Thesetargets are science-based targets following the goals of the Paris Agreement that “aims to keep
the global average temperature well below 2°C above pre-industrial levels and pursue efforts tolimit global warming to 1.5°C.” DHR has received the Science Based Targets (SBT) certificationfrom the international SBT initiative as the first J-REIT.

Participation in Race to Zero

Climate Change

Environment

Anti-Corruption

Principle 1

Support and respect of the protection of human rights

Principle 2

Not to be complicit in human rights abuses

Principle 3

Freedom of association and the effective recognition of the right to collective bargaining

Principle 4

Elimination of all forms of forced and compulsory labour

Principle 5

Effective abolition of child labour

Principle 6

Elimination of discrimination in respect of employment and occupation

Principle 7

Precautionary approach to environmental challenges

Principle 8

Initiatives to promote environmental responsibility

Principle 9

Development and diffusion of environmentally friendly technologies

Principle 10

Working against corruption in all its forms, including extortion and bribery

33

Sustainability Report 2022

About DHR

Message from
the Management

Special Feature

Information Disclosure Basedon TCFD Recommendations

Sustainability

Environment

SocialGovernance

GRI Content Index

Back

Forward

Supported Initiatives and External Evaluations
Signing on to the Principles for Financial Action for the 21st Century

Climate Change

Financial Behavior Principles for the Formation of a Sustainable Society (Principles for
Financial Action for the 21st Century) are action guidelines for financial institutions that wantto fulfill the responsibilities and roles necessary for the formation of a sustainable society.
They were put together by the Drafting Committee with the participation of diverse financial institutions in October 2011 andsubsequently revised in June 2022.
Each signatory financial institution implements efforts according to the seven principles below as much as possible based on
its business content. One of the features is that it is positioned as a starting point for collaboration without being restricted byfactors such as format, scale and region.

Financial Behavior Principles for the Formation of a Sustainable Society (The Seven Principles)
Principle 1 Basic posture

Recognizing the responsibilities and roles that financial institutions themselves play for the formation of a sustainable society, we
will take the initiative in implementing best practices through our businesses, aiming to create positive impacts on theenvironment, society and economy, and mitigate negative impacts.

Principle 2Contribution to a sustainableglobal society

We will lead the formation of a sustainable global society by developing and providing financial products and services that contribute to
the creation and development of industries and businesses through innovation, toward steady and fair transitions in society.

Principle 3

Contribution to the formationof sustainable communities

We will support the solution of environmental, social and economic issues based on regional characteristics, and lead theformation of sustainable local communities by improving the inclusiveness and resilience of the region.

Principle 4

Human resource
development

We will recognize the importance of human capital in financial institutions, and develop human resources who can think forthemselves and take action on environmental and social issues.

Principle 5

Collaboration with various
stakeholders

Recognizing the importance of cooperation among various stakeholders, including financial institutions, in order to form asustainable society, we will not only participate in such efforts but also play an active role.

Principle 6

Building a sustainable supply
chain

We will actively address environmental issues such as global warming and biodiversity and social issues such as human rights, andbuild a sustainable supply chain through constructive engagement with business partners including investees and borrowers.

Principle 7 Information disclosure

Recognizing that activities to enhance the sustainability of society are management issues, we will disclose our efforts to a wide
range of stakeholders and make constant improvements based on domestic and international trends and disclosure frameworks.

The Asset Manager agrees with these seven principles and has become a signatory.

Joining the World Wide Fund for Nature (WWF) Japan

Biodiversity

Environmental Management System

EcoAction 21 is a third-party evaluation program to certify and register organizations which
implement appropriate environmental initiatives, establish, operate, and maintain anenvironmental management system, and promote environmental communication in accordance(Note)
formulated by the Ministry of Environment.
with the EcoAction 21 Guidelines
The Asset Manager received the EcoAction 21 certification and registration in March 2020.
Following the expiration of the certification, DHR and the Asset Manager underwent a
subsequent review and received certification and registration once again.
(Note) These guidelines formulated by the Ministry of the Environment define 14 action items (requirements) based on a PDCA cycle consistingof three factors: “environmental management system,” “environmental performance evaluation,” and “environmental reporting.”

34

CDP Climate Change Program Assessment
CDP Score is provided across four levels and nine-tier score bands: Leadership level (A and A-),Management level (B and B-), Awareness level (C and C-), Disclosure level (D and D-) and Failure toprovide sufficient information to be evaluated (F). 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 the 2021
assessment, the CDP gave DHR an “A” score of the highest level recognizing the high international
standard of its initiatives to combat climate change and its approach to informational disclosure. This is
the first time CDP recognized J-REIT independently as a climate change A List company (Note). For the2021 Climate Change A List, CDP selected 200 companies (55 of which were Japanese companies) out
of roughly 12,000 companies, which were subject to evaluation.
(Note) Excludes the case where the parent company of the group answers the questionnaire.

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 2021, over 500 companies (including 105 Japanese companies), which isequivalent to the top 8% of the evaluated companies, were listed on the Supplier Engagement
Leaderboard as recognition of their particularly excellent initiatives. DHR has been participating in the
CDP Climate Change Program since 2020, and has made it onto the Supplier Engagement Leaderboard
with the highest possible rating for the second consecutive year in the 2021 evaluation.

Participation in GRESB Real Estate Assessment
Climate Change

World Wide Fund for Nature (“WWF”) was established in Switzerland in 1961 and is an environmental conservation
organization active in over 100 countries. With the goal of people living in harmony with nature, the WWF is propelling efforts
to realize a sustainable society. The organization promotes the conversation of endangered wild life in addition to sustainableproduction and consumption as a means to restore the richness of biodiversity, which is rapidly being lost, and to achieve a
decarbonized society that prevents global warming.
World Wide Fund for Nature Japan (“WWF Japan”) was established in Tokyo as the 16th WWF organization in the world in
1971. The WWF Japan mainly engages in (1) activities, survey research, policy proposals, and the dissemination of ideas onenvironmental conservation to conserve biodiversity and reduce the environmental impact of humanity on the naturalenvironment, (2) cooperation with the World Wide Fund for Nature Secretariat (WWF International) and coordination withother relevant organizations, and (3) other projects necessary to achieve its objectives.
The Asset Manager agrees with the significance of the activities of WWF Japan and supports WWF’s environmental
conservation efforts as a corporate member.

EcoAction 21 Certification and Registration

Participation in CDP Climate Change Program

GRESB Rating
In the 2021 GRESB Real Estate Assessment, DHR received a GRESB “4 Stars” on a 5-star scaleevaluation of the overall score relative to global participants for the second consecutive year. Furthermore,
DHR has received a “Green Star” assessment for four consecutive years as an excellent participant inboth 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 scalein the GRESB Public Disclosure evaluation scheme for three consecutive years based on its proactive
information disclosure practices related to ESG initiatives.

SMBC Environmental Assessment Loan
DHR received an “A” rating for its environmental initiatives, having earned high evaluation in the areas of“environmental management,” “environmental communication” and “environmental conservation policy
initiatives.”

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).

35

Sustainability Report 2022

About DHR

Message from
the Management

Special Feature

Information Disclosure Basedon TCFD Recommendations

EnvironmentLong-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 GroupManagement Vision of being a Group that co-creates value for individuals, communities andlifestyles. It will challenge to reduce its environmental impact to zero with respect to four
environmental priority themes (mitigation of and adaptation to climate change, harmony with thenatural environment, conservation of water and other natural resources, and prevention ofchemical pollution) through the three stages of procurement, business activities, and products/
services.

Establishment of EMS (Environmental Management System) 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 and implementing corrective measures and improvements through a PDCA (plan-docheck-act) cycle in accord with an EMS Operation Manual that provides detailed instructions on implementing policies onobjectives such as saving energy, reducing GHG emissions, conserving water and managing waste.
In operating the environmental management system, the Asset Manager complies with applicable environmental laws andregulations and other environmental requirements.

Commitments Related to Greenfield Developments
The Daiwa House Group is involved in a wide range of development throughout Japan, which has a high impact on thenatural environment. In development business, the Daiwa House Group is thorough in its efforts to assess the impact ofdevelopment projects on the natural environment of the site beforehand and is committed to minimizing the loss before
commercializing the business.

Violations of Environmental Laws and Regulations and Environmental Accidents

Sustainability

Environment

SocialGovernance

36

ForwardGHG Emissions
GHG Emissions
Target (KPI)
Index

Yearly target

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

GHG emissions

Reduce consumption intensity by 1%

Reduce intensity by 10%

Targets (KPI) certified by SBTi
Item

Coverage

Base year

Target year

GHG emissions reduction target

Scope 1 and 2

All properties

2020

2030

Reduce total emissions by 42%

Scope 3

Properties with data available

2020

2030

Calculate and reduce total emissions

GHG emissions=Total emissions (t-CO2)

Fiscal year
ended March
2018(Base year)

Fiscal year
ended March
2020

Fiscal year
ended March
2021

Fiscal year
ended March
2022

143
properties

190
properties

201
properties

211
properties=Emission intensity (t-CO2/m3)
0.06

110,000
100,000

0.05

90,00080,000

Number of properties

0.04

70,00060,000Total emissions(t-CO2)0.03

50,00034,33684,80896,636

104,615

40,0000.02

30,000Emission intensity(t-CO2/m3)

0.0556

0.04140.03940.037520,000

Reduction rate ofintensity (%)

0.01

10,0000There were not any significant violations of environmental laws and regulations or significant environmental accidents at
DHR’s properties that would affect stakeholders. There were also no environment-related fines or penalties. (Fiscal year
ended March 2022)

Back

GRI Content Index–-25.6%-29.1%-32.5%FY ended Mar. FY ended Mar. FY ended Mar. FY ended Mar.

2018

2020

2021

0.00

2022

*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.
Emission intensity is calculated by dividing total electricity usage and CO2 emissions by intensity
denominator (gross floor area (m2)).
*3 Except for certain ones, these figures are verified/assured by a third party based on International
Standard on Assurance Engagements (ISAE) 3410 “Assurance Engagements on Greenhouse Gas
Statements.”

37

Message from
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About DHR

Sustainability Report 2022

Information Disclosure Basedon TCFD Recommendations

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GovernanceBack

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EnergyGHG Emissions
Solar Power Generation

Energy Consumption

Introduction of solar power generation systems

Target (KPI)

Solar panels have been installed on the rooftops of logistics and retail properties owned by DHR, and DHR utilizes therenewable energy they generate.

Solar power generation equipment installations

Number of properties

Power generated in fiscal year ended March 2022

18 properties

17,866 MWh

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)*Amount of power generated is calculated only for properties with solar power generation equipment for which the requisite data are available.

Main properties with solar power generation equipment installed

Number of properties

Total amount (MWh)D Project Inuyama

SocialD Project Kuki II

DPL Inuyama

Fiscal year
ended March
2018(Base year)

Fiscal year
ended March
2020

143
properties

190
properties

201
properties

211
properties

150,000

76,440190,299

209,212247,383

100,000

Fiscal year
ended March
2021

Fiscal year
ended March
2022=Consumption intensity (MWh/m2)0.14

250,000

0.12
200,000
0.10
0.08
0.06

D Project Hibiki Nada

0.04

Consumption intensity(MWh/m2)

50,0000.12530.09290.08590.0892

0.02
0Reduction rate ofintensity (%)

D Project Kawagoe III

D Project Sano

D Project Tatebayashi

D Project Chibakita

D Project Tomisato II

D Project Fuji

DPL Misato

Royal Parks Wakabadai–-25.9%-31.5%FY ended Mar. FY ended Mar. FY ended Mar. FY ended Mar.

-28.8%

2018

2020

2021

0.00

2022

*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.
Consumption intensity is calculated by dividing total electricity usage and CO2 emissions by intensity
denominator (gross floor area (m2))*3 Except for certain ones, these figures are verified/assured by a third party based on International
Standard on Assurance Engagements (ISAE) 3000 “Assurance Engagements Other than Audits or
Reviews of Historical Financial Information.”

Introduction of Smart Meters
Smart meters* are installed at “Royal Parks Toyosu” and other properties.

Promotion of LED Lighting*A smart meter is a next-generation watt-hour meter equipped with telecommunications functions for digitally measuring electricity. This provides a detailed grasp of patterns in
power consumption data to analyze optimal consumption behavior using the aggregated data.

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

Example of conversion to LED lighting
Logistics property

Conversion to LED
lighting at D Project
Tsuchiura

Estimated CO2 reduction

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

Energy Saving Measures
DHR is taking the measures at its
properties in consideration of theenvironment as shown to the right.

Conversion to LED lighting

38

Slope to upper floor

Large-scale window space
allowing the use of natural light39

Message from
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Water Consumption/Waste Management/Pollution Prevention
Water Consumption

Waste Management

Target (KPI)

Target (KPI)

Index

Yearly target

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

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 lessWaste management–

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

Water consumption

Waste management (recycling rate)=Total amount (m3)Fiscal year
ended March
2018(Base year)

Number of properties

Fiscal year
ended March
2020

Fiscal year
ended March
2021

Fiscal year
ended March
2022

142
properties

190
properties

200
properties

210
properties

391,637

900,955

852,793

968,508

1,100,000

1.0

1,000,000

0.9

900,000

0.8

800,000

0.6

Reduction rate ofintensity (%)

0.8205–0.4296-47.6%

0.3503-57.3%

0.3535-56.9%

500,000

0.4

200,000

0.2

100,000

0.1

0

Fiscal year
ended March
2021

Fiscal year
ended March2022

6
properties

41
properties

55
properties

65
properties

Total amount (t)1,202

12,99014,445

20,7360.3

300,000*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.
*3 Except for certain ones, these figures are verified/assured by a third party based on International
Standard on Assurance Engagements (ISAE) 3000 “Assurance Engagements Other than Audits or
Reviews of Historical Financial Information.”

Number of properties

Fiscal year
ended March
2020=Recycling rate (%)

22,50090

20,00080

17,50070

15,00060

12,50050

10,000

40

7,500

30

5,000

20

2,500

10

0.5

400,000

Consumption intensity(m3/m2)

Fiscal year
ended March
2018(Base year)

0.7

700,000
600,000

Total amount (m3)

=Total amount (t)=Consumption intensity (m3/m2)

FY ended Mar. FY ended Mar. FY ended Mar. FY ended Mar.

2018

2020

2021

Recycling rate (%)

54.2%

77.0%

79.7%

82.8%

0

0.0

2022

*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.
*3 Except for certain ones, these figures are verified/assured by a third party based on International
Standard on Assurance Engagements (ISAE) 3000 “Assurance Engagements Other than Audits or
Reviews of Historical Financial Information.”

FY ended Mar. FY ended Mar. FY ended Mar. FY ended Mar.

2018

2020

2021

0

2022

Effective Use of Rainwater, Groundwater, and Greywater

Pollution Prevention

DHR reduces tap water use and the environmental impact of its owned properties by effectively using rainwater, groundwater,and greywater.
At “DPL Nagareyama I” and “DPL Misato,” irrigation systems that use rainwater and automatic irrigation timers to conserve
water and improve landscape management are installed.
The grounds around the “ACROSSMALL Shinkamagaya” is stable with plenty of good quality water. DHR implemented
construction to switch from tap water to groundwater, which suppressed the tap water consumption by supplying water tothe sports club with a pool and other such facilities.
At “Naha Shin-Toshin Center Building (Daiwa Roynet Hotel Naha-Omoromachi),” greywater (used tap water reclaimed forreuse in sprinklers, toilets, and various other amenities before drainage into the sewer system) are used.

Before acquiring any property, 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-estateappraisal by a third party with sufficient skill and experience in due diligence studies.

Adoption of Water Conservation Equipment
DHR is furthering the adoption of water conservation equipment at the time of renewal of facilities or equipment at its
properties in an effort to reduce water consumption.

Water Stressa. Soil and ground conditions, buried objects, soil contamination, etc.
b. Status with respect to hazardous substances (asbestos, PCBs, etc.)
Furthermore, DHR maintains the proper processing and procedures in accordance with laws and regulations for any
chemical substances present on its properties to strictly handle all chemical substances in the most thorough manner toensure no leaks or emissions.

Soil Contamination Countermeasures“FOLEO Ome Imai” was built on the land of a former electronic component production plant. Even though the soil
contamination had been verified, construction work was conducted by properly excavating and removing the soil. DHR
acquired the property after confirming that the topsoil survey for all specific hazardous chemicals after the construction work
showed none of the substances were detected and all were in compliance with regulatory standards.

DHR does not own any properties in regions where the water stress is “high” or “extremely high.”

40

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Sustainability Report 2022

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Biodiversity

Sustainability

Environment

SocialGovernanceBack

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ForwardEnvironmental Certifications

Social Issues

Environmental Certifications

In 2015, the United Nations Summit adopted the “2030 Agenda for Sustainable Development,” reaffirming the importance ofconserving ecosystems. Roughly, 4.1 billion hectares of forest area, which accounts for approximately 31% of the land
worldwide in 2020, has been gradually decreasing year by year (Note 1). That is why the use of sustainable timber while preventing
deforestation is essential. The state of biodiversity and ecosystem services in Japan has been showing a long-term trend ofloss and deterioration over the last 50 years (Note 2). In recent years, it is estimated that more than several million tons of plastic
waste flows into the ocean annually worldwide (Note 3), and improper management of plastic waste is exacerbating marine
pollution issues. Therefore, it is essential to reduce single-use plastics, which are the primary cause of marine pollution.

To increase the objectivity and reliability of DHR’s initiatives in reducing
the environmental burden of properties, DHR intends to increase
medium- to long-term asset value and pursue the acquisition of thirdparty external certifications and evaluations. DHR’s acquisition rate ofenvironmental certifications is as shown below. DHR plans to increase
the percentage of properties with environmental certification (gross floorarea basis) to 70% or more by the fiscal year ending March 2031.

Percentage of properties that haveobtained environmental certificationsin the entire portfolio

67.7%(gross floor area basis)(Source) (Note 1) Annual Report on Forest and Forestry in Japan Fiscal Year 2020; (Note 2) Ministry of the Environment’s “2021 Report of Comprehensive Assessment of Biodiversity
and Ecosystem Services in Japan”; (Note 3) Ministry of the Environment’s “Report on the State of Marine Plastic Litter”

Risks, Opportunities, and Responses
Any development business comes with the potential risks of losing business opportunities or incurring costs to revitalize that
ecosystem if any loss of the ecosystem occurs in the region. In the long term, there are concerns that, if demand for timber, oneof the materials handled by the Daiwa House Group, grows with a focus on legality and sustainability, there will be difficulties in
the procurement of such timber. Therefore, based on the environmental and social standards outlined in the “Biodiversity
Guidelines” [Timber Procurement] which is part of the Daiwa House Group’s “CSR Procurement Guidelines” for goods(construction materials, etc.) procured and delivered to DHR by suppliers, the Asset Manager works to promote the property
management companies to use timber that includes (1) certified timber: timber certified by various agencies, (2) recycled timber:
timber recycled from scarp construction materials, and (3) timber recommended by Daiwa House: timber determined to be
above a certain level in 11 check items (three items on legality and eight items on sustainability) other than (1) and (2).

ZERO Deforestation* Policy
The Daiwa House Group will:procure timber from suppliers advocating a policy of zero deforestation;purchase from suppliers who handle timber with respect for human rights and safety of indigenous people andworkers in the country of origin;purchase timber whose traceability can be verified; andexpand the use of timber subject to the zero deforestation policy to plywood formwork panels, main equipment,
fittings and wallpaper in addition to structural materials, base materials, batten cleats and flooring materials.
*ZERO Deforestation refers to:(1) Timber not harming biodiversity due to clear cutting of natural forests, (2) timber planted using methods that do not damage high carbon stock (HCS) lands, and (3) 100%
recycled timber

Promotion of Environmentally
Friendly Tree Name Plates
DHR is using tree name plates for the properties it owns in thehope that tenants will feel closer to nature and nurture their planting
with affection for many years.

Introduction of Biodiversity Protection Program
DHR is reducing the use of plastics by switching the location of provision of hair and tooth brushes from rooms to anamenities counter near the front desk at some of its hotels.
“QiZ GATE URAWA” is reducing plastic waste by using recycled trash bags made from used stretch films, which would benormally disposed of as trash, for the trash bags in common areas.

Status of environmental certifications*1
Number ofcertifiedproperties

Number of
portfolio
properties*3

Percentage ofcertified properties(Based on numberof properties)

Certified area
(gross floor area*2)

Area in whole portfolio*3(gross floor area*2)

Percentage of certified
properties(gross floor area basis)

Total of properties that haveobtained environmental
certifications

54

223

24.2%

2,415,751.63 m2

3,570,675.68 m2

67.7%

DBJ Green Building

25

223

11.2%

1,348,556.95 m2

3,570,675.68 m2

37.8%

CASBEE for Real Estate

20

223

9.0%

1,255,574.36 m2

3,570,675.68 m2

35.2%

BELS

46

223

20.6%

2,061,635.40 m2

3,570,675.68 m2

57.7%

LEED

1

223

0.4%

120,229.08 m2

3,570,675.68 m2

3.4%*1 The number of certifications is as of March 31, 2022.
*2 Total floor area is based on the floor area provided on the inspection certificate of each property.
*3 Excludes land properties.
*4 The percentage of properties that have obtained environmental certifications is rounded to the first decimal place.

Green Building Initiatives on Uncertified Properties
Through initiatives such as conversion to LED lighting and the introduction of energy-saving air conditioning and water saving
equipment even on DHR’s properties without any environmental certifications, DHR works to reduce its environmental impact
by promoting energy savings and proper sorting and disposal of waste.

DBJ Green Building Certification
DBJ Green Building certification is a certification system established by the Development Bank ofJapan Inc. (DBJ) to support real estate that is environmentally and socially conscious (Green Building).
It assesses and certifies properties that are required by society and the economy, based on acomprehensive assessment of environmental performance, disaster prevention, consideration of thecommunity, and other actions taken for various stakeholders, and supports those efforts.

Main properties

Monitoring System for Biodiversity
The Board of Directors of DHR and the Board of Directors of the Asset Manager have a system in place to receive reports on
items related to biodiversity from the Sustainability Committee and monitor the situation.

42

Shibaura
Island Bloom
Tower

Royal Parks Wakabadai

Royal Parks Hanakoganei

iias Tsukuba

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ForwardEnvironmental Certifications(As of March 31, 2022)

CASBEE for Real Estate Certification

Status of Environmental Certifications for the Portfolio

CASBEE (Comprehensive Assessment System for Built Environment Efficiency) is a system for performing acomprehensive assessment of the overall environmental performance of buildings that is being developed
and promoted in Japan under the guidance of the Ministry of Land, Infrastructure, Transport and Tourism.
CASBEE for Real Estate Certification is a system in which a third-party agency examines the CASBEE
assessment of a building and certifies that it is accurate. The assessment is based on a four-scale system
to B rating:).
(S rating:

Property
numberMain properties

D Project Hachioji

DPL Misato

GRANODE
Hiroshima

ACROSSMALL Shinkamagaya

BELS Certification
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 energy saving
performance of buildings. The Building-Housing Energy-efficiency Labeling System (BELS) is a five-scaleto ) in which a third-party agency assesses the energy-saving performance of asystem (building based on the criteria established by the Ministry of Land, Infrastructure, Transport and Tourism.

Main properties

D Project Machida

D Project Kuki V

DPL Nagareyama I

FOLEO Otsu Ichiriyama

ZEB Certification
Net Zero Energy Building (ZEB) refers to a building that is aimed to achieve zero primary energy
expenditures in annual building consumption by working to save energy with improved heat insulationand high-efficiency equipment while maintaining a comfortable indoor environment and by creatingenergy using solar power generation and other renewable energies. As part of the BELS Certification
System, ZEB assessments indicate the progress toward these goals with four different ratings: “ZEB”(highest rating), Nearly ZEB, ZEB Ready, and ZEB Oriented.
DHR promotes initiatives for its properties to acquire ZEB, including Nearly ZEB, ZEB Ready and ZEB Oriented. “D ProjectNoda,” “D Project Yashio,” “D Project Kakegawa,” and “DPL Fukuoka Kasuya” acquired the ZEB Ready designation after
their acquisition by DHR by converting to LED lighting.
Going forward, DHR will continue to promote ZEB initiatives.

Main properties

D Project Noda

D Project Yashio

D Project Kakegawa

LEED Certification
Leadership in Energy and Environmental Design (LEED) is a certification systemdeveloped and operated by the non-profit U.S. Green Building Council (USGBC)and examined for certification by a third party institution to assess theenvironmental performance of buildings and urban environments. The certificationlevel is represented in four levels (Platinum, Gold, Silver, and Certified).

44

DPL Fukuoka Kasuya

Certified property

LB-001
LB-002
LB-006
LB-008
LB-009
LB-011
LB-015
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-043
LB-044
LB-049
LB-050
LB-051
LB-053
LB-054
LB-056
LB-057
LB-059LB-060
LB-062
LB-065
LB-066LM-001
LM-002
LM-004LM-005LM-006RE-043RE-059RE-081
RE-094
RE-107
RE-109RE-110RE-138
RE-141
RM-001
RM-009RM-012
HO-005
OT-003

DPL Nagareyama III

OT-006

Logistics properties
Retail properties
Other assets

Residential properties
Hotel properties

Property name

D Project Machida
D Project Hachioji
D Project Urayasu II
D Project Noda
D Project Inuyama
D Project Neyagawa
D Project Tsuchiura
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 Tatebayashi
D Project Kakegawa
D 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 I
D Project Kitahachioji III
D Project Itabashi Shingashi
D Project Kuki VIII
D Project Wako A
D Project Hiratsuka
DPL Misato
DPL Fukuoka Kasuya
DPL Nagareyama I
DPL Shin-Narashino
DPL Nagareyama III
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 NahaOmoromachi)
GRANODE Hiroshima
Total

ZEB ReadyZEB ReadyZEB ReadyZEB ReadyZEB ReadyZEB Ready25 properties

20 properties“ZEB”

Certified46 properties

1 property

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ForwardEnvironment-friendly Initiatives
Specific Initiatives for Renovation

Acquisition of Environment-friendly Properties
The large-scale commercial complex “iias Tsukuba” was selected as an exceptional
example in the “Commercial Facilities and Accommodations Category” of the “EnergyEfficient 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.

Efforts to increase attractiveness
Built in 1968, “Castalia Toritsudaigaku” is located in a popular residential area. Both the interior
and exterior had become somewhat dilapidated, and its earthquake performance wasdesigned according to the old standards. Most of the rooms were Japanese-style rooms 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 werecompletely replaced, making them more convenient and easy to use. With a bold and daring
external design, the building was reborn as a rental property suited to modern lifestyles.

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

Environmental Certification Initiatives in Properties Developed by Sponsor
Daiwa House, the sponsor, has been promoting efforts to increase the percentage of its in-house developed properties with
Green Building certification to 80% 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 a large percentage of in-house developed
properties.

Management of Multi-use Properties
Capitalizing on its status as a diversified REIT, DHR also owns
multi-use properties. DHR believes multi-use properties help toreduce environmental burden and contribute to revitalizingneighborhoods and communities through such means as
reducing travel distances between workplaces, shopping andother popular destinations.

Naha Shin-Toshin
Center Building(Daiwa Roynet Hotel NahaOmoromachi)(Office, hotel and retailproperty)

Environment-friendly Construction WorkAt the large-scale residential property, “Royal Parks Hanakoganei,” DHR replaced the underutilized mechanical parking lot
with 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
the mechanical parking system when loading and unloading
vehicles and the gasoline used by idling vehicles. Moreover, theinstallation of charging stands for electric vehicles, the future
spread of which is expected, contributes to convenience fortenants.

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 tofluorescent and incandescent lighting, LED lighting gives off less heat, helping tosuppress rising room temperatures, which also contributes to saving energy on air
conditioning.
Furthermore, consideration is also given to the maintenance aspect by using thesuitable LED lights in each place, such as adopting long-lasting kinds of LED lights in
outdoor signs installed on the top of the buildings where changing lights is difficult.

Hallways with LED lighting

Lighting design conscious of the brightness of the space
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 high level 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, andto contribute 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 this property. Going forward, DHR is promoting acquisition of environmentfriendly properties.

Solar power generationequipment

Energy generation and energy saving equipment installations
DHR installs solar power generation systems as well as hybrid solar and wind power generation systems in addition to
adopting ice storage air-conditioning systems that utilize midnight power.

Reduction of Truck Waiting Time With Introduction of Truck Berth Reservation System
Daiwa House, the sponsor, was the first* in the logistics developer industry to introduce an online system for truck drivers andtransportation 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 theoperational efficiency of the facilities, and reduced the environmental impact by shortening waiting time of trucks. We provide
new services to our tenant shippers at our logistics facilities that incorporate the state-of-the-art technology. *Daiwa House survey

46

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

Green Finance Framework

Reporting
Reporting on status of fund allocation
Balance (millions of yen)
Green FinanceGreen Bonds

15,000

Green Loans

10,500*Balance as of February 28, 2022.

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

Third-party evaluation

Green Bonds

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/

Eligibility criteria
Funds procured through Green Bonds or Green Loans are applied to the acquisition of eligible green assets that meet theeligibility criteria below, refinancing of those funds or funding or refinancing renovation work.
1. Eligible green assets
Properties that have received or will receive one of the following four third-party certifications:(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(4) LEED Certification: Silver, Gold or Platinum

Outstanding
issue(millions of yen)Interest rate

Issue date

Maturity

Unallocatedamount(millions of yen)

9th Unsecured Investment
Corporation Bonds

6,000

0.53%

November 25,
2019

November 22,
2029–

10th Unsecured Investment
Corporation Bonds

2,400

0.34%

May 27,2020

May 27,2025–

11th Unsecured Investment
Corporation Bonds

1,600

0.64%

May 27,2020

May 27,2030–

12th Unsecured Investment
Corporation Bonds

1,000

1.00%

May 27,2020

May 25,2040–

14th Unsecured Investment
Corporation Bonds

4,000

0.50%

April 15,
2021

April 15,2031–

LenderLoans executedand outstanding(millions of yen)Interest rate

Borrowing date

Repayment
date

Unallocatedamount(millions of yen)

Third-party
evaluation

Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Trust Bank, Limited
MUFG Bank, Ltd.
Mizuho Bank, Ltd.
The Development Bank of Japan Inc.
Mizuho Trust & Banking Co., Ltd.
Shinsei Bank, Limited
The Yamanashi Chuo Bank, Ltd.
Kansai Mirai Bank, Limited
Shinkin Central Bank
The Bank of Kyoto, Ltd.
The Yamaguchi Bank, Ltd.

10,5000.56419%

September 3,
2021

August 29,
2031–

JCR Green Loan
Evaluation“Green 1”

Name

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”

Green Loans

2. Renovation work
Renovation work that can reduce energy consumption, CO2 emissions or water usage by 30% or moreManagement of financing
The eligible green debt amount is calculated bymultiplying the sum of the total acquisition price of eligible
green assets and the total amount of renovation workthat meets the eligibility criterion 2 (total amount ofeligible green assets) by the interest-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.

25,500PeriodFiscal period ended February 28,
2022

Total amount of eligible green
assets (millions of yen)

289,831

LTV

42.2%

Eligible green debt amount(millions of yen)

122,308

Impact reporting
DHR will annually disclose the following indicators on its website for as long as the funds procured through green finance areoutstanding.
· Number and type of environmental certifications of portfolio assets
See page 43 for details.

· Water consumption· Electric power consumption (energy consumption)· CO2 emissions (GHG emissions)See pages 37, 39 and 40 for details.

48

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Sustainability Report 2022

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ForwardSustainability Finance
The Daiwa House Group’s basic approach is “Creating Dreams, Building Hearts.” As a group that co-creates value forindividuals, communities and people’s lifestyles, the group aims to build trust relationships with stakeholders and contributeto society through its businesses, and to realize a sustainable society by meeting the challenge of achieving “zeroenvironmental impacts.”
DHR shares the basic stance of the Daiwa House Group and engages in Sustainability Finance to further promote real estate
investment management that considers ESG.

Sustainability Finance Framework

Reporting
Reporting on status of fund allocation
Balance (millions of yen)
Sustainability Finance

4,000

Sustainability Bonds

4,000

Sustainability Loans–*Balance as of February 28, 2022.

The following table provides information about DHR’s status of fund allocation regarding Sustainability Finance.

Third-party evaluation

Sustainability Bonds

DHR has obtained a rating of “SU1” for our Sustainability Finance Framework. This is the highest rating offered in JCR
Sustainability 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/

Sustainability eligibility criteria
Funds procured through Sustainability Bonds or Sustainability Loans are applied to the acquisition of eligible sustainability
assets that meet the sustainable eligibility criteria below or refinancing of those funds.

Name

Outstanding issue(millions of yen)Interest rate

15th Unsecured
Investment Corporation
Bonds

3,000

0.40%

16th Unsecured
Investment Corporation
Bonds

1,000

0.66%

Unallocatedamount(millions of yen)

Third-party evaluation

November 11, November 17,
2021
2031

–

JCR Sustainability Bond
Evaluation“SU1”

November 11, November 17,
2021
2036

–

JCR Sustainability Bond
Evaluation“SU1”

Issue date

Maturity

Sustainability eligibility criteria
Impact reporting· Properties that satisfy the following green eligibility criteria and social eligibility criteria

DHR will annually disclose the following indicators on its website for as long as the funds procured through sustainability
finance are outstanding.

1. Green eligibility criteria
Properties that have received or will receive one of the following four third-party certifications:(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(4) LEED Certification: Silver, Gold or Platinum

1. Environment improvement effect

2. Social eligibility criteria
New and existing properties that have satisfied two or more of the following four standards (however, this does not apply to facilities
for senior citizens and other properties with high social value)(1) Local disaster prevention and resilience
A property that has functions of providing an evacuation shelter for people afflicted by a disaster in the event of a disaster, disastersupplies and emergency power as well as water services and other lifelines to local residents afflicted by a disaster, by concluding
an agreement with the local government or registering to help in the disaster.
(2) Care and medical services for senior citizens and people with disabilities
A property with tenants such as housing for senior citizens as well as nursing homes, medical facilities, which contributes tooffering healthy and cultured lifestyles to nearby residents. This also includes barrier-free facilities.
(3) Support for child rearing
A property with tenants such as a nursery school or other childcare facility to help promote social welfare activities of nearby residents.
(4) Job creation for projects to help resolve local social issues
A property prioritizing employment of nearby residents as employees of facilities. Alternatively, a property that is creating jobs for theentire region by investing in facilities developed by the area as a whole with the aim of bringing greater prosperity to local communities.

Management of financing
The eligible sustainability debt amount is calculated bymultiplying the sum of the total acquisition price of eligible
sustainability assets by the interest-bearing debt to total
assets ratio (LTV) as of the end of the most recent fiscal
period. This is the maximum procurement amount for
Sustainability Finance.

50

PeriodTotal amount of sustainability
eligible assets (millions of yen)

Fiscal period ended February 28,
2022
110,870

LTV

42.2%

Eligible sustainability debt amount(millions of yen)

46,787

Number and type of environmental certifications of acquired assets
Specific consumption
Water usage (water consumption)
Power usage (energy consumption)
CO2 emissions (GHG emissions)See pages 37, 39, 40 and 43 for details.

2. Social benefit(1) Output index
Index

Total number of indices

Number of sustainability eligible assets

5(2) Outcome index
Index(i) Local disaster prevention and resilience

Total number of indices

Number of properties that have concluded disaster prevention
agreements with local governments, etc.

3

Number of properties that provide an evacuation shelter in the event of a disaster2

Number of other properties contributing to local disaster prevention

3(ii) Care and medical services for senior citizens and people
with disabilities

Number of units available at facilities for senior citizens

156

Number of medical facility tenants

11(iii) Support for child rearing

Number of children acceptable at certified childcare facilities

19(iv) Job creation for projects to help resolve local social issues

Employment status of local residents at applicable facilities

1(3) ImpactCo-creation of value for individuals, communities and people’s lifestyles by revitalizing local environments and building safe andsecure local communities

51

Sustainability Report 2022

About DHR

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the Management

Special Feature

Information Disclosure Basedon TCFD Recommendations

Sustainability

Environment

SocialGovernanceBack

GRI Content Index

ForwardDeveloping Human Resources
Policy on and Approach to Human Resources Development

Target Management and Performance Evaluation Program

As stated in its Company Philosophy (Corporate Creed), the Daiwa House Group aims to “develop people through business.”
We believe that human resources are the group’s greatest assets. To take advantage of the abilities and unique talents of ouremployees and develop human resources capable of contributing to society, we implement various training and programs
that combine on-the-job and off-the-job training.

The Asset Manager has introduced and implemented a target management and performance evaluation program semiannually to (1)foster communication between superiors and subordinates, (2) strengthen human resource development, (3) increase motivation withrespect to roles and results (performance), and (4) clarify evaluation criteria and gain better understanding of evaluations. Employee
performance 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
interviews. Additionally, “ESG initiatives in response to societal demands” was added as a performance evaluation criterion from thesecond half of fiscal year ended March 2019.

Initiatives for Officers and Employees
The Asset Manager sets up an internal program to promote sustainability and endeavors to develop its human resources byregularly conducting education and training sessions for officers and employees. Additionally, it aims to create workplaces
where a diverse group of officers and employees can work safely, healthily and flexibly.

New Employee Training Program
To help new employees acquire operational knowledge as quickly as possible, the Asset Manager provides training on thefollowing topics:
Explanation of the operations of each department
ComplianceInsider trading regulations
Human rights
System-related risks
Email use
Etiquette
Disaster prevention/crisis management
CSR
Basic knowledge related to buildings
Basic knowledge related to J-REIT, etc.

Training on Operational Expertise
The Asset Manager provides training on the topics below to officers and employees (including fixed-term employees,
temporary employees and part-time employees), by also utilizing training conducted by external experts.
Item

Fiscal year ended
March 2018

Fiscal year ended
March 2019

Fiscal year ended
March 2020

Fiscal year ended
March 2021

Fiscal year ended
March 2022

Sustainability training

1 time1 time1 time1 time1 timeTraining for general managers and above

0 times

0 times

1 time0 times

0 times

Training for senior managers and groupleaders

0 times

0 times

1 time0 times

0 times

Real estate market training

4 times

5 times

5 times

5 times

4 times

New employee training

5 times

3 times

4 times

5 times

4 times

Other training

3 times

4 times

4 times

18 times

1 timeArchitectural training

18 times

0 times

0 times

20 times

0 times

Self-Assessment Interview Program
Interviews about target management and performance evaluations conducted by the Asset Manager tend to focus on short-term
challenges, such as how targets will be achieved for the current period. Therefore, DHR has introduced and implemented a selfassessment interview program for all employees (excluding executive officers, compliance officers, general managers, and fixed-term
employees) once a year for the purpose of creating opportunities as a company to understand the long-term career vision toward thefuture or the hope and intentions of each employee about particular work that they want to experience, which can then be reflected in
the treatment, assignments and development of the employee as well as workplace improvements and other human resource policies.
These interviews focus on topics other than work targets, such as career visions, health, stress, and any concerns an employee might
have. It also confirms the intentions for the future of each employee, such as future work that they would like to experience and where
they would like to be in that future.

Support for Operational Skills
Development and Training
The Asset Manager has established a system for providing
funding for the registration and renewal of professional
qualifications and a system for providing congratulatory
payments for acquiring professional qualifications toencourage the acquisition of knowledge, qualifications, andlicenses. The purpose is to increase the motivation of all
employees (including fixed-term employees, temporary
employees, and part-time employees) with respect to selfd e v e l o p m e n t , i m p ro v e t h e i r a b i l i t i e s a n d t a l e n t s ,continuously and steadily secure human resources with thespecialized skills necessary to contribute to the achievementof business objectives, and assess the environmental
friendliness of DHR’s properties.

Benefits and Welfare

Violations/Accidents by officers and Employees
There were no significant violations committed by or accidents involving the Asset Manager’s officers and employeesthat would influence stakeholders. (Fiscal year ended March 2022)

52

The Daiwa House Group recognizes the importance ofpromoting good health among its workforce and thereby
improving labor productivity through consistent measures toeliminate excessively long working hours and help
employees manage their health. Based on such recognition,
the Asset Manager has introduced employee leave/vacation
programs such as the ones to the right, in addition tocelebratory event leave, bereavement leave, maternity/
paternity leave, parental leave*, child caregiving leave andelder caregiving leave* for all employees.
*Contract workers can also take advantage of these programs.

Number of the Asset Manager’s employees with
(Total of 72 officers and employees as of March 31, 2022)
qualifications
Item

Number of people
with qualifications (*)

ARES (Association for Real Estate Securitization)
Certified Master

28

Real Estate Transaction Agent

66

Real Estate Appraiser

2First-Class Architect

2

Certified Real Estate Consulting Master7

Office Building Manager

9

TOEIC score of 700+

9CASBEE Accredited Professional for Buildings

2

CASBEE Accredited Professional for Real Estate3*Includes personnel who have passed the credentialing exam but are not yet
credentialed.

Item

Overview

Special paidvacation

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

Accumulated paidvacation

Unused annual paid vacation days accumulate
up to 20 days per year to a maximum of 100
days. Employees may use their accumulated paidvacation 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)

Community cocreation leave

Five days per year to participate in activities that
contribute to society, training for such activities,
etc. (paid leave)53

Sustainability Report 2022

About DHR

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the Management

Special Feature

Information Disclosure Basedon TCFD Recommendations

Developing Human Resources

Sustainability

Environment

SocialGovernance

GRI Content Index

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ForwardDiversity and Inclusion

Introduction of Cumulative Investment Unit Investment Program

Sustainability Survey for Employees

In December 2013, the Asset Manager introduced a cumulative investment unit investment program in the aim of increasing
the price of DHR investment units and further improving growth of DHR and medium- to long-term investor value by having
officers and employees of the Asset Manager (including fixed-term employees) pay close attention to investment unit prices
of DHR and raising their awareness of performance.

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

Introduction of Investment Unit Ownership Program
In November 2019, the Asset Manager introduced an investment unit ownership program of DHR for its officers andemployees (including fixed-term employees) in response to the Japan Securities Dealers Association’s issuance of guidelines
on investment unit ownership 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.

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
Lending of laptop computers, mobile routers, and displays to employees and officers
System for choosing working hours
Multiple large air purifiers and humidifiers
Large monitors in each conference room

*Surveys and analyses are outsourced to third-party institutions.

eNPS Surveys and Satisfaction Evaluations
The Asset Manager conducts eNPS* surveys and satisfaction evaluations through third-party organizations for officers andemployees, including fixed-term, temporary, and part-time employees. The Asset Manager explains the survey results toofficers and employees (including fixed-term, temporary, and part-time employees), gives feedback, and encourages them tobuild a better workplace environment.
*The Employee Net Promoter Score is an index for visualizing the loyalty of employees. This index evaluates eleven levels of employee loyalty through the survey question
asking, “How likely are you to recommend our organization to your family, friends, or other acquaintances who want to find or change jobs in the same industry as yourcompany? Please answer by assuming that you have friends or other acquaintances who want to find or change jobs in the industry that you are working in.”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.
In addition, stress checks are conducted once a year for the purpose of preventing mental disorders.

Human Resources Dispatched from Sponsor

Promotion of Active Participation by Senior Citizens

DHR and the Asset Manager have entered into a basic agreement regarding new pipeline support, etc. with Daiwa House,
and the Asset Manager has continuously received from Daiwa House human resources with a wealth of experience in areas
such as real estate sales transactions, leasing, property management, finance and IT system operations.

The Asset Manager promotes a system of re-hiring employees 60 years of age and older and is working toward the successionof expertise and the development of future generations by employing persons with expert knowledge for the long term.

Personnel Data

Graduate School Education and Practical Training Programs

Item
Total personnel *Male personnel / percentage of total
Female personnel / percentage of total
Manager *1 *2
Male personnel / percentage of total
Female personnel / percentage of total
New hires
Male personnel / percentage of total
Female personnel / percentage of total
Job leavers
Turnover *3Monthly average overtime hours
Average tenure
Male personnel
Female personnel
Percentage of personnel who had stress checks
Number of employees who took parental leave / numberof employees who returned to work
Male personnel
Female personnel
Return rate
M&As
Employee lay offs
Number of employees who took elder caregiving leave
Number of employees aged 60 and older
Number of employees who are foreign nationals
Number of employees belonging to ethnic minorities
Number of employees with disabilities
Average days of annual paid vacation taken / paid vacation usage rate
Percentage of personnel who had health checkup
Occupational accident frequency rate *4
1

As an initiative at universities for occupational and career training, Daiwa House Group has been deploying employees since
the fiscal year ended March 2008 to teach about 120 second year law students about “the law alive in society” at a university
in Kyoto City, Kyoto Prefecture, which invites professional instructors from companies, governments and municipal offices aswell as other organizations to teach as visiting instructors. The employees participating in this program give lectures on work
ethic as a student, work ethic after joining a company (career history, work content, and the necessary skills for a job), andskills earned by studying the law (skills beneficial as a corporate professional) in a course incorporating practical experience.
These students rave about this course every time it is held.

Fiscal year ended
March 201859
44 / 74.6%
15 / 25.4%
24
24 / 100.0%
0 / 0.0%8
4 / 50 %4 / 50 %0
0.0%
13.7 hours
4.2 years
4.4 years
3.7 years
100.0%

Fiscal year ended
March 201961
43 / 70.5%
18 / 29.5%
2121 / 100.0%
0 / 0.0%2
1 / 50 %1 / 50 %1
1.6%
12.0 hours
4.2 years
4.2 years
4.0 years
100.0%

Fiscal year ended
March 202060
42 / 70.0%
18 / 30.0%
2221 / 95.5%
1 / 4.5%
2
2 / 100 %
0/0%
7
11.7%
12.8 hours
4.8 years
4.8 years
4.8 years
100.0%

Fiscal year ended
March 2021
59
40 / 67.8%
19 / 32.2%
27
24 / 88.9%
3 / 11.1%
13 *5
4 / 31 %9 / 69 %2
3.4%
13.6 hours
5.1 years
5.2 years
4.7 years
100.0%

Fiscal year ended
March 202264
30 / 60.9%
25 / 39.1%
28
23 / 82.1%
5 / 17.9%5 *5
5 / 100 %
0/0%
2
3.1%
15.4 hours
5.0 years
5.4 years
4.3 years
100.0 %

0/0

0/0

1/1

3/1

3/2

0/0
0/0
1/1
1/1
0/0
0/0
0/0
0/0
2/0
3/2
0.0%
0.0%
0.0%
33.3%
66.7%
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
12.2 days / 68.1% 12.7 days / 68.6% 12.5 days / 66.3% 13.1 days / 71.7% 13.1 days / 71.3%
100.0%
100.0%
100.0%
100.0%
100.0%
0.0%
0.0%
0.0%
0.0%
0.0%

*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 as of April 1 of each fiscal year.
*4 Occupational accident frequency rate = (occupational injuries/fatalities ÷ total actual hours worked) × 1,000,000 *5 This figure includes a new graduate hired as an employee.

5455

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Human Rights
Human Rights Policy and Approach[Respect for Human Rights of our Customers]

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.

Human Rights Policy of Daiwa House Group[Respect for Human Rights of our Employees]
Enacted on January 1, 2018

The Daiwa House Group co-exists with society through its business and co-exists with the people living in society through its
products and services. We will continue to carry ourselves with this “co-creation and co-existence” approach and believe it isimperative to build an honest relationship with society. The Human Rights Policy of the Daiwa House Group (hereinafterreferred to as the “Policy”) expresses our commitment to the respect of human rights based on this concept, which
complements the Daiwa House Group’s CSR Guidelines, the Principles of Corporate Ethics and the Code of Conduct.

Our Commitment to the Respect for Human Rights
As a group that co-creates value for individuals, communities and people’s lifestyles, the Daiwa House Group will contributeto the realization of a society built on the respect for human rights through its businesses.

Compliance with the Laws and Norms Pertaining to Human Right
The Daiwa House Group supports and respects the international norms on human rights, including the “International Bill of
Human Rights*,” which stipulates the fundamental human rights that all people in the world should enjoy, as well as the “ILO
Declaration on Fundamental Principles and Rights at Work” of the International Labour Organization (ILO), which stipulates
fundamental rights at work. Furthermore, in accordance with the “Guiding Principles on Business and Human Rights” of theUnited Nations, we shall strive to discharge our responsibility on the respect for human rights through our response tonegative impacts against human rights that may occur in our business operations and transactions.
Daiwa House Group shall observe the laws of each country and region in which we operate our business activities. Whenever
there is a contradiction between the laws of such country and region and the human rights as recognized internationally, we
shall pursue the way to respect the international principles of human rights, while observing the local laws.
This policy applies to all officers and employees of the Daiwa House Group (including Daiwa House and its consolidated
subsidiary, the Asset Manager). We also expect our business partners and other related parties to observe the Policy whileworking with Daiwa House Group.
* The Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social, and Cultural Rights

Approach on the Promotion of Respect for Human Rights
Continuous Execution of Due Diligence on Human Rights
Daiwa House Group shall continuously pursue our commitment to the respect for human rights, based on the “Guiding
Principles on Business and Human Rights” of the United Nations, by incorporating the due diligence on human rights in ourbusiness activities as their essential process.
As such, whenever we discover that Daiwa House Group directly caused negative impact on human rights, or indirectly
became involved therein, we shall adequately undertake the remedial and correctional actions through appropriate
procedures in and out of the company. As to the effects of our undertaking, we shall continuously review the same andannounce them.
Daiwa House Group shall be executing the due diligence on human rights by utilizing the formats based on each of theexisting policies and guidelines regarding our business activities, and shall respect the human rights of stakeholders.

56

Daiwa House Group is providing buildings and a variety of merchandise. Buildings are the ones to protect people’s life,
health, assets and comfortable living, and it is our duty to provide safe and secure buildings.
Therefore, we strive to provide conforming articles by performing strict quality control for the safety of our merchandise. We
also shall not engage in any discrimination in our sales activities and business operations, nor any conduct to facilitate
discrimination. We shall cultivate a better understanding through dialogues with our customers and reflect this understanding
in improvement of our merchandise, services and communications.

Daiwa House Group shall always aim to be a company where everyone can work with high motivation, with his/her humanrights respected, by stipulating the prohibition of discrimination, respect for diversity, and safe labor environment in thevarious policies and code of conduct about employees, and thereby realizing the responsible labor practice.
[Respect for Human Rights of our Business Partners]
Daiwa House Group considers trading counterparts such as suppliers and construction companies as our importantbusiness partners, and respects the rights of workers. We shall also require our business partners to respect the humanrights of those who are influenced in the supply chains, and not to infringe upon the rights.
[Respect for Human Rights of the People in the Community]
Daiwa House Group shall engage in business activities towards the realization of the society that respects human rights, withthe understanding that the company itself can contribute as a member thereof, and shall aim at coexistence with the local
community. In addition, beyond ourselves, when our business partners should cause negative impacts on the human rightsof the people of the local community, we shall require these partners to respect human rights and not to infringe upon them,by properly mobilizing the influence that our Group has.

Dialogue and Consultation with Stakeholders
Daiwa House Group shall strive to have dialogues and consultations with the stakeholders so as to understand the influencethat our business activities may bear upon human rights from the viewpoint of those affected and to address and improve it.
Furthermore, by setting up a channel through which various stakeholders can consult and report, we shall try to grasp thenegative impacts on human rights.

Education
Daiwa House Group shall be conducting adequate education and training so that all relevant parties involved in the businessactivities understand this Policy and human rights are respected to good effect throughout our business activities.

ReportDaiwa House Group will report on its efforts to ensure respect for human rights on its website and in its Sustainability Report.

Training Program
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 thateach employee is able to engage in business activities with respect for the dignity and basic human rights of various
stakeholders.

57Sustainability Report 2022

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the Management

About DHR

Special Feature

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Environment

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HotlineLabor/Management Relations

Since 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 areapplicable to all group employees regardless of their type of employment. In 2020, the service was renamed the “Corporate Ethics and Human
Rights Hotline.” The hotline accepts not only reports of suspected or confirmed cases of breach but also reports of, and request for help andadvice on, a variety of workplace- or human rights-related 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 and investigation, privacyof not only the consulter but also employee(s) in question and third parties who cooperate in the investigation is respected. Along with suchactions, hearings are held with the parties involved under strict confidentiality, and appropriate measures are taken to prevent recurrence. Oncethe problem has been resolved, a follow-up investigation is carried out to ensure, in some cases, that the reporter will not be subject toretaliatory treatment or that improvements have been made, thus always protecting hotline users.
As measures for recurrence prevention, information is shared among related worksites and departments via the persons in charge 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 the company 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.
Fiscal year
Fiscal year
In addition, as with the Corporate Ethics and Human Rights Hotline, we accept
ended March ended Marchissues relating to human rights via the Partners Hotline, which is a whistleblowing
2021
2022
system for reports from business partners concerning the relationship between
Number of reports and corrective action00taken at the Asset Manager (cases)
Daiwa House Group employees and business partners.

The Asset Manager has not yet organized a labor union but does recognize the constitutional right of every employee to have “freedomof association.” DHR has also signed and made a commitment to adhering to the United Nations Global Compact, one of whose
principles is “the freedom of association and the effective recognition of the right to collective bargaining.”
Labor-management relations at the Asset Manager have been harmonious, and there have been no large-scale mergers, 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 striven to maintain the health of its employees by appropriately managing working hours.

Response to Harassment, etc.
In the internal regulations of the Compliance Manual, the Asset Manager states that every officer and employee shall respect humanrights and individuality and shall never discriminate based on nationality, gender, origin, religion, creed, health, physical traits, or for any
other reason or engage in any action which can be construed as sexual, power, or any other form of harassment.
A consultation desk to handle any inquires or claims about harassment has been set up under the supervision of the General Managerof the Administration and Accounting Department with one male and one female staff member appointed as persons in charge of thisconsultation desk. Any employee, not limited to victims of harassment, can consult or submit a claim to the person in charge of thisconsultation desk if there is a risk of harassment. The person in charge of the consultation desk will confirm the factual nature of theinformation and report the incident to the General Manager of the Administration and Accounting Department and the Compliance
Officer. The Asset Manager (General Manager of the Administration and Accounting Department) shall take necessary measures toimprove the working conditions and environment for the victim, such as transferring the aggressor, in addition to disciplinary action toadequately prevent the recurrence of such harassment thorough awareness-raising and training on harassment, identifying the causesof the incident and addressing them to prevent any such harassment from happening again. Additionally, the persons in charge of thisconsultation desk should protect the privacy of all related parties when responding to a consultation or claim and never disadvantage
anyone for reasons such as consulting or cooperating in confirming the factual nature of the incident.

Response to Human Rights
The Asset Manager further solidified this commitment by signing on to the United Nations Global Compact, which states “theelimination of all forms of forced and compulsory labour,” “the effective abolition of child labour” and “the elimination of discrimination in
respect of employment and occupation” as part of its principles.
The Asset Manager also conducts regular training on human rights with the aim to realize a workplace and society free of discrimination
where diverse human resources can play an active role by gaining a better understanding of minority issues, such as those related tosexual minorities (LGBT), persons with disabilities, foreign labor, and the Buraku issue. (Training results for the fiscal year ended March
2022: 1 time)

Relevant training

Training on human rights and diversity
Training on bullying and harassment

ForwardLabor Standards

Human Rights

58

Sustainability

Fiscal year ended March 2021
Times held
Total hours/(days)
person1
0.5
00

Fiscal year ended March 2022
Times held
Total hours/(days)
person10.75
00Overwork
The Asset Manager conducts mandatory health examinations through industrial physicians for anyone who works more than 80 hoursof overtime per month.

Payment of Wages Above Minimum Wage and Equal Pay for Equal Work
The Asset Manager pays wages above the minimum wage provided for in laws and regulations and a wage that contributes toimproving the standard of living by taking into account the commodity prices. Our compensation system also maintains equal pay for
equal work and ensures no wage gap between genders.
The Asset Manager has established an evaluation-linked monetary compensation system by post classification and conducted
appropriate assessments of performance. Bonuses are paid twice a year in the summer and the winter, and the amount is determinedaccording to work performance. In the fiscal year ended March 2022, the average annual salary paid by the Asset Manager was ¥9,717
thousand*.
*Average for full-time employees not including officers, fixed-term employees or employees on external assignment

Establishment of Consultation Desk for Sexual Minorities (LGBT)
In order to create social value though its businesses, the Daiwa House Group operates based on “respect for human rights” of all
stakeholders, including its employees, customers and business partners, with the goal of sustainable management that can continuallyrealize diversity and inclusion.
To create an environment where diversified talented people can demonstrate their abilities by drawing on their individuality, we haveestablished an external contact point to which all the officers and employees of the Daiwa House Group, including staffers, fixed-term
employees, contract workers, and part-time employees, can contact for a consultation to relieve their anxieties caused by issues ofLGBT.
 ersonal information is protected even at the external consultation desk. Furthermore, we will never disclose any informationP
inside or outside of the company without the consent of the person contacting the consultation desk.
If an internal response is necessary, it will be handled in accordance with the Daiwa House Group Whistleblowing Regulations
upon consent of the person consulted.

Labor-related Violations and Accidents
The Asset Manager had no significant labor-related violations or accidents that would influence stakeholders. (Fiscal year ended March
2022)

Number of reports about laborrelated issues, discrimination,harassment, etc.
Fiscal year ended March 2021 Fiscal year ended March 2022
0

0

59

Sustainability Report 2022

About DHR

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Special Feature

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Investor Relations Initiatives

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Initiatives for Local Community

DHR endeavors to ensure transparency in its asset management operations and disclose information that is easy tounderstand from the investor’s perspective in a fair, timely, and accurate manner so that investors can make investment
decisions in accord with the principle of self-responsibility. DHR discloses information in compliance with the Financial
Instruments and Exchange Act (hereinafter, the “Financial Instruments Act”), the Investment Trusts Act and disclosure rules
prescribed by the Tokyo Stock Exchange, Investment Trusts Association, Japan, etc. It also endeavors to proactively discloseeven information not legally or otherwise required for disclosure if the information is deemed likely to influence investors’
investment decisions. Disclosure documents are posted on DHR’s website. Furthermore, DHR implements the following
initiatives:

Support of Groups Working to Resolve Social Issues
The Daiwa House Group provides support to disaster-afflicted areas and groups working to resolve social issues. As one
means to provide this support, a system has been built on the intranet where employees can easily make donations. We
donate two types of funds depending on the social situation in question: “Endless Funds” that support groups working tosolve social issues and “Heart Funds” that collect donations when disasters strike.
We are also heavily promoting these social contribution activities for our employees to get involved in with ease, to heighten
their awareness of what is happening in the world, so that we can continue offering more support.
For details on our track record of donations, follow this link.

(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.

Completed IR activities (including online meetings and telephone/web conferences)
Results briefings for domestic institutional investors and analysts(April 2021-March 2022)

2 times

IR meetings for domestic institutional investors and analysts

193 times

IR meetings for overseas institutional investors

68 times

Presentation meetings for individual investors

0 times

https://www.daiwahouse.co.jp/sustainable/social/contribution/funds/pdf/ebsuii.pdf

Support for Community Activities
Some retail properties owned by DHR host events as one
form of support for community activities.
The Asset Manager supports community co-creation
Orchestral stage
Information on foster
Mama Marché (event
parent recruitment
for mothers and kids)
activities; partly through “Community Co-Creation Leave
Program,” it has established to facilitate employees’ participation in activities that contribute to society, training for suchactivities and other such 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 parkand 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.

FOLEO Otsu Ichiriyama“FOLEO Otsu Ichiriyama,” a mall-type retail property owned by
DHR, supports refugee relief activities by continuously providing
at no cost a space for UN refugee supporter applications andfundraising activities. In December 2020, “FOLEO Otsu Ichiriyama”
received a letter of thanks from Japan for UNHCR.
Additionally, DHR set up a PCR testing site (testing tent) on asurface parking lot to provide free PCR tests without appointments
for the residents of Shiga Prefecture, and cooperated with the free
PCR testing program of Shiga Prefecture.

GRANODE Hiroshima
Hiroshima City collects entries from citizens for buildings, signs, activities, and more that make the city attractive andpresents the most outstanding ones with the Urban Design Award Hiroshima. “Ekikitare,” a roughly 20-meter-wide and100-meter-long space in the event square at “GRANODE Hiroshima,” a complex of office, retail and hotel facilities, 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 beutilized 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 spacewith comfortable breezes. It is built in such a way that event organizers sense the spirit of hospitality.

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Initiatives for Local Community
Local Job Creation

Socially Conscious Initiatives

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

DHR promotes socially conscious facilities and services at
its properties, such as barrier-free facilities.

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

Accessible restroom

Accessible elevator

Accessible parking lot

Fitness gym

LoungePlay space for children

Health and Well-being
Health and welfare
DHR contributes to the health and well-being of tenants
and users by installing fitness gyms and other facilities at its
properties.

Safety and well-being

Countermeasures Against Large-scale Flooding
DPL Nagareyama I
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.
The latest BCP measures have been implemented at DPL Nagareyama I, including a seismic isolation structure and back-up
power supply. The on-site parking lot, vehicle passageways on each floor (total floor area of 3,000 m2 per floor), the cafeteria,
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.

At some DHR’s properties, we have installed and aremaintaining plazas and pedestrian walkways to enhance
public spaces and promote safety and well-being.

Naha Shin-Toshin Center Building(Daiwa Roynet Hotel NahaOmoromachi)

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

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

Business Continuity Plan (BCP)
DHR has promoted an enhancement of BCP response from a wide range of perspectives so that tenants, users, and people
in the local community can use these safe and comfortable facilities.

D Project Machida, D Project Kuki III, DPL Misato, and DPL Nagareyama I
Seismic isolation structures* have been put in place not only to minimize load and facility damage in the event of a disasterbut also to maintain building functions. These seismic isolation structures reduce vibrations to suppress shaking on upper
floors and allow operations to restart in a short time.

Investment in Existing Urban Development Zones
DHR contributes to the renewal of urban areas and therevitalization of local communities and enhances landscapesand local residents’ convenience through investments inproperties developed through redevelopment, land readjustment
or other such projects.

*This seismic isolation structure installs rubber laminations or other seismic isolators between the ground and building to reduce the transmission of seismic forces to the building.

GRANODE Hiroshima
In addition to the installation of a seismic structure*, GRANDOE Hiroshima has emergency power generators that can supply
72 hours of power as well as a generator space for tenants.
*This seismic isolation structure installs dampers, etc., to absorb the shaking within the building to reduce vibrations.

62

Main properties

Pacific Royal
Court
Minatomirai
Urban Tower

D Project Kuki I, II, III, IV, V, VII, FOLEO
Shobu

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 2022)

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Initiatives for Tenants and Supply Chain
Tenant Engagement Programs

Cooperation with Property Management Companies

DHR and the Asset Manager promote sustainability initiatives in cooperation with tenants of its
properties. By distributing a sustainability guide that summarizes information such as theSustainability Policy of the Asset Manager* and environmental certifications to tenants and posting
it at the properties, we share the social issues with the tenants and promote initiatives.
At some properties for which a green lease agreement has been concluded, DHR regularly confers
with tenants in the aim of sharing environmental information and reduction targets.

The Asset Manager conducts evaluations of property management companies once a year to determine whether theongoing outsourcing of operations to the current property management companies is appropriate based on the internal
operations manual, including automatic contract renewals. We provide feedback on the results of these property
management company assessments to them and guide corrective actions for any items requiring improvement. These
property management companies submit reports on the corrective actions for any items presenting a major problem.
Additionally, DHR determines whether to change property management companies if a property management company
continues to have a low evaluation on the assessments and no corrective actions can be expected.

Sustainability Guide*See page 28 for the Sustainability
Policy.

Content of the property management company assessment

Initiatives to Increase Tenant Satisfaction
DHR regularly conducts surveys to grasp tenants’ needs and satisfaction in the belief that increasing tenant satisfaction leads
to stable and improved property-operating performance. In a questionnaire given to the residents of 119 residential properties(8,386 units) through a third-party organization in February 2022, around 71% of tenants gave their property a “7” or higher
out of an evaluation scale up to 11 overall, and around 62% of tenants gave their property a “7” or higher as to whether theywould recommend the property to others.
The questionnaire results are shared with property management companies and used to improve building and facility
specifications and services.

(1) Financial results and conditions as well as other management information (2) Organizational structure(3) Facility operation management and technical management capabilities (4) Tenant leasing skills(5) Reasonable compensation standards for the property management operations(6) Performance of application and area management (7) Sustainability

Sustainability survey for property management companies from the Asset Manager(1) Introduction of an environmental management system or equivalent initiatives(2) Promotion of green procurement for subcontractors (3) Occupational health and safety(4) Health and comfort (5) Respect for human rights and diversity (6) Corporate ethics(7) Community involvement (8) Environmental and health-conscious products(9) Cooperation with our sustainable procurement (including re-consigned subcontractors)

Supply Chain Management
Daiwa House Group conducts business with the belief that its suppliers are important business partners. Daiwa House Group
believes that we can provide quality that satisfies our customers by forming an extensive supply chain that includes
manufacturers of material and equipment, construction, and after-sale services.
The requirements of institutional investors and NGOs for companies to engage in environmental and social initiatives have
expanded to include not only the company and corporate group but also supply chain management. Even in internationalrules and stock exchange guidelines, the requirements for group CSR procurement initiatives and informational disclosure are
becoming even stricter. The era the world is entering demands satisfying both social factors such as human rights
considerations and expectations for quality and price to be competitive.
The promotion of CSR procurement at both the Daiwa House Group and suppliers strives to realize a sustainable society.

CSR Procurement Guidelines
Our CSR Procurement Guidelines set forth seven social and environmental principles via a “Business Partner Code of
Conduct.” And, based on this code of conduct, our “Corporate Activity Guidelines” elucidate 20 specific social andenvironmental items.
The “compliance” requirement in the “Business Partner Code of Conduct” stipulates that business partners are expected toact ethically and in full compliance with laws and regulations.
Where the code of conduct requires “considerations for occupational safety and health,” business partners are expected toconcern themselves about health and safety, by preventing industrial accidents, assiduously managing sanitation andhygiene, and being prepared for unforeseeable events like natural disasters. Our section on “fair business activities” requires
our business partners to take anti-corruption measures in order to keep business free of graft and corruption. And, thesection on “respecting human rights” outright disavows forced labor, child labor, harassment and infringements of humanrights by way of discrimination, etc.
The Asset Manager requires its property management companies to implement the CSR Procurement Guidelines, which isreflected in the annual assessment of property management companies.

Introduction of Green Leases
Aiming to improve the environmental performance of properties through acollaborative effort with tenants, DHR is promoting the introduction of green
leases. In a green lease agreement, the building owner and the tenants jointly
cooperate by proactively entering into agreements and memorandums ofunderstanding regarding the reduction of the environmental burden of theproperty, such as through energy savings, and improvement of the workplaceenvironment, and by putting the details of these undertakings into practice.
*1 The information shown is based on the status of agreements as of March 31, 2022.
*2 Agreement conclusion percentage = Total floor area of properties for which a green lease agreement has beenconcluded/Total floor area of the 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.

Green lease agreements

90.6%

206

properties

Supplier-related Violations and Accidents
There were neither significant supplier-related violations nor accidents at DHR’s properties that would affect stakeholders.
(Fiscal year ended March 2022)

For details on the CSR Procurement Guidelines, follow this link.
64

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ForwardGovernance
Basic Approach to Corporate GovernanceCompensation of 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 therealization that trust is its greatest asset and a keen awareness that compliance deficiencies can impair trust and, inturn, even undermine its management foundation.
2. Recognizing the importance of its societal mission and responsibilities in the national economy as an asset manager
that manages 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 andsociety, thereby elevating our reputation among investors and broadly gaining societal trust.

Executive Directors and Supervisory Directors of DHR
Number of members: 3 (three)(1 (one) Executive Director and 2 (two) Supervisory Directors)
Female director ratio: 33% Average tenure of 3.7 years

The maximum monthly compensation for an Executive Director shall be ¥800,000, and that for a Supervisory Director shallbe ¥350,000. The Board of Directors will determine the compensation amounts deemed reasonable in light of trends ingeneral commodity prices, wages, and the like.
The criteria for payment of compensation of Executive Directors and Supervisory Directors are stipulated in the regulations,and any changes must be approved at a Unitholders’ Meeting.
Name ofDirector

Main concurrent positions

Executive
Director

Toshiharu
Asada–¥2,400thousand¥2,400thousand

TetsuyaIwasaki

Certified Public Accountant and Tax Accountant, Citia Certified Public Accountant Firm
Outside Director, Uoriki Co., Ltd.

¥2,100thousand¥1,050thousand¥2,100thousand¥2,100thousand–¥1,050thousandHiroshi Attorney, Ohhara Law Office
Supervisory Ishikawa Outside Director, Japan Medical Dynamic Marketing, INC.
Director
As of March 31, 2022

Junko
KogayuCriteria / Reasons for election
The selection of candidates is based on the premise that they are not disqualified per the reasons set forth in various laws
and regulations such as the Investment Trusts Act (Article 98 and Article 100 of the Investment Trusts Act and Article 244 of
the Ordinance for Enforcement of the Investment Trusts Act). They are elected by resolution of the general meeting ofunitholders based on the reasons for election below. The Board of Directors is currently comprised of persons with no special
interest with DHR.
In addition, the Supervisory Directors of DHR are “independent officers” who are not in conflict with the criteria for
independence from Executive Officers and the Asset Manager as stipulated in the Investment Trusts Act.
Title and post

Name

Reason for election
Toshiharu Asada has a wealth of operational experience and knowledge not

Executive
Director

Toshiharu only in general finance but also in real estate. We have elected him as
Asada Executive Director based on his appropriate judgment pertaining toSupervisory
Director

TetsuyaIwasaki

Tetsuya Iwasaki is familiar with accounting and tax matters as a certified public
accountant and tax accountant. In addition, he has experience as an outside
director at a listed company. We have elected him as Supervisory Director because
we determined that he possesses the good character and knowledge necessary tosupervise 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.

Supervisory
Director

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
Hiroshi have elected him as Supervisory Director because we determined that he
Ishikawa possesses the good character and knowledge necessary to supervise theexecution of duties by Executive Director as a Supervisory Director and to
perform his duties as a member of the DHR Board of Directors.

Supervisory
Director

Junko Kogayu is familiar with accounting and tax matters as a certified public
accountant and tax accountant. In addition, she has experience as an outside
director at a listed company. We have elected her as Supervisory Director because
we determined that she possesses the good character and knowledge necessary
to supervise the execution of duties by Executive Director as a Supervisory Director
and to perform her duties as a member of the DHR Board of Directors.

execution of business operations as well as his character and knowledge.

Junko
KogayuAttendance at meetings ofthe Board of Directors (Note 1)

Number of investment
units held100%
(13 / 13)0 units (Note 3)

Professor, Tohoku University Accounting School
Certified Public Accountant, Junko Kogayu Certified Public Accountant Firm
Certified Public Tax Accountant, Ayako Takeuchi Certified Public Tax Accountant Firm
Outside Director and Audit & Supervisory Committee Member, NITCHO Corporation
Outside Director and Audit & Supervisory Committee Member, Nissin Corporation(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) Tetsuya Iwasaki, a Supervisory Director, resigned as of November 30, 2021, and Junko Kogayu was newly appointed as Supervisory Director as of December 1, 2021.
(Note 3) 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.

Sustainability Index-linked Fees
Remuneration for the Executive Director of DHR and for directors of the Asset Manager are now linked to sustainability
indices, including GHG emissions reduction ratio, GRESB Rating and CDP Score.
Additionally, “ESG initiatives in response to societal demands” was added as a performance evaluation criterion for theemployees of the Asset Manager.

Outside Expert Advisor of the Sustainability Committee
100% (Note 2)(10 / 10)0 units (Note 3)

The Asset Manager has appointed an outside expert advisor who has extensive knowledge and experience in sustainability
to the Sustainability Committee.

Compensation of the Audit Firm
100%
(13 / 13)0 units (Note 3)

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

100% (Note 2)(3 / 3)0 units (Note 3)(Note 1) Attendance at meetings of the Board of Directors held during the fiscal periods ended August 31, 2021 and February 28, 2022 is indicated in terms of number and percentage.
(Note 2) Tetsuya Iwasaki, a Supervisory Director, resigned as of November 30, 2021, and Junko Kogayu was newly appointed as Supervisory Director as of December 1, 2021.
(Note 3) In accordance with DHR’s rules on the management of insider trading, etc., DHR’s officers are not allowed to buy or sell units issued by DHR.

66

Total compensation per title
Fiscal period ended Fiscal period ended
August 31, 2021 February 28, 2022

Title andpost

Ernst & Young ShinNihon
LLC (Note 2)

Description of compensation

Total amount of compensation
Fiscal period ended August 31, 2021

Fiscal period ended February 28, 2022

Compensation based on auditing duties¥17,500 thousand¥17,500 thousand

Compensation based on non-auditing duties¥2,000 thousand (Note 3)¥24,000 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) The continuous auditing period is from June 2005 to the present.
(Note 3) Compensation is for preparation of comfort letters.

67

Message from
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About DHR

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ForwardGovernanceCompensation of the Asset Manager

Handling of Conflict-of-interest Transactions
Policy and management structure for addressing conflict-of-interest transactions

Total amount of compensation

Item

Fiscal period ended August 31, 2021

Fiscal period ended February 28, 2022

Management fee 1¥849,233 thousand¥868,432 thousand

Management fee 2¥926,072 thousand¥996,349 thousand

Acquisition/disposition fees

¥32,402 thousand¥206,675 thousand

Total¥1,807,709 thousand¥2,071,457 thousand

The Daiwa House Group could significantly influence the decision-making of the Asset Manager and DHR. It is a close
partner with the deepest understanding of the basic concepts at DHR. DHR recognizes that proper coordination with thesecompanies is a means to carry out our asset management operations more effectively.
On the other hand, close relationships among companies are in fact conducive to acts that potentially pose conflicts ofinterest. Recognizing that preventing conflicts of interest with the Daiwa House Group and other interested parties is one of
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
Asset Management Fee Structure (applicable from the fiscal period ending August 31, 2022)
At the Unitholders’ Meeting held in November 2021, a proposal to partially amend the regulations regarding asset
management fees was approved and became effective.

(Note 1) The upper limit is 0.4% for Management fee 1 and 5.0% for Management fee 2.
(Note 2) The upper limit is 0.012% for the index (1) of Management fee 3.
(Note 3) The upper limit is 0.004% for the index (2) of Management fee 3.
(Note 4) The upper limit is 0.004% for the index (3) of Management fee 3.

Presentationof investment
value analysis
results

Unanimous
approval

Disagreement
Remand<Table 1>
Multiple<Table 2>
GRESB Real Estate
Assessment
0.8

0.9

1.0

1.1

1.2

* Multiple is determined based on the assessment in the immediately preceding fiscal period.

<Table 3>
CDP Climate Change Program
Score

D-

D

C-

C

B-

B

A-

A

Multiple

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

* Multiple is determined based on the assessment in the immediately preceding fiscal period.

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Disagreement

Specialresolution

Rejection

Discarded

Approval

Rejection

Discarded

1 - GHG Emissions Reduction Ratio* GHG emissions reduction ratio: ((b) - (a)) / (a)(a): GHG emissions intensity in fiscal year ended March 2018 (April 2017 - March 2018) 0.0556 (t-CO2/m2)(b): GHG emissions intensity in the immediately preceding fiscal year (April - March) (t-CO2/m2)

Multiple

Unanimous
approval

Decision on acquisition(1) Total assets × 0.008 (Note 2) × GHG emissions reduction (Table 1)(2) Total assets × 0.002 (Note 3) × GRESB Rating (Table 2)(3) Total assets × 0.002 (Note 4) × CDP Score (Table 3)

Attendance

DHR Board of Directors

Management fee 3(Sustainability Index-linked fee)

Report on resultsof deliberation

Attendance

Board of Directors

NOI × 4.5% (Note 1)

AttendanceCompliance Committee

Management fee 2(Profit-linked compensation)

Daiwa House REIT Division
Investment Department

Total assets × 0.18% (Note 1)

Attendance

Daiwa House REIT
Investment Management Committee

Management fee 1(Asset-linked fee)

Compliance Officer

RemandUnder 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 between an interested party more broadly defined than what is established by law and DHR, except
when there are separate provisions for the transaction, the rule is that unanimous approval must be obtained at the AssetManager’s Daiwa House REIT 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, which is comprised of Directors who are not Directors or employees of the Asset Manager. Whenacquiring portfolio assets from an interested party, in principle, the maximum acquisition price shall be the appraisal value,
and when selling portfolio assets to an interested party, in principle, the minimum selling price shall be the appraisal value.
Furthermore, from the standpoint of transparency, 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 andvarious 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.

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ForwardCompliance
CompliancePrevention of Corruption

System for promoting compliance
The Asset Manager realizes compliance through the following system.
Organization/Title and post Main role
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.

Compliance
Committee

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

President and CEO(1) Supervise introduction of basic compliance policies and programs.
(2) R eport 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 tomanagement of DHR’s assets, as an entity independent of the Asset Manager’s other internalorganizations, 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.

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 and organization as the manager of DHR’s assets and, in turn, earning the trust of unitholders and society byprescribing not only fundamental compliance-related principles by which its officers and employees should abide but also
specific practical matters.

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 andprivate, 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
The Asset Manager works to enhance internal education and training so that officers and employees are able to pursue thebest interests of investors. Specifically, when it comes to internal education, we utilize a group textbook that provides easy-tounderstand explanations by means of various case studies in order to ensure that Daiwa House Group employees are able toengage in proper decisions and actions according to “With our customers” and the other elements of the Principles ofCorporate 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 (including fixed-term employees, temporary employees and parttime 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 so doing, we seek to raise awareness among our officers and employees.
Item
Compliance training

70

Fiscal year ended
March 2018
7 times

Fiscal year ended
March 2019
8 times

Fiscal year ended
March 2020
9 times

Fiscal year ended
March 2021
12 times

Fiscal year ended
March 2022
12 times

The 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 byvarious policies and rules, 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 has established a system for consultation and appropriate handling of reports related to acts that are (orcould potentially be) problematic in terms of compliance, including organizational or individual legal violations and ethicallyquestionable acts reported by whistleblowers based on the Whistleblower Protection Act and the Cabinet Office Guidelines forPrivate Businesses Concerning the Whistleblower Protection Act. Both internal and external points of contact are in place.
The Asset Manager further solidified this commitment by signing on to the United Nations Global Compact, which states,“businesses should work against corruption in all its forms, including extortion and bribery” as one of its principles.
Additionally, the Asset Manager’s Compliance Manual stipulates the following measures for all officers and employees to prevent
bribery and corruption.
(1) Officers and employees must not provide nor accept entertainment, gifts, favors or other benefits beyond normalsocial etiquette under socially accepted idea.
(2) Officers and employees must not provide any entertainment, gifts, favors or other benefits to any public servants,
quasi-public servants or other such individuals.
The Asset Manager raises awareness in each and every officer and employee about these measures through compliance andother training and works to prevent, quickly discover and rectify any issues through various efforts such as an internal
whistleblowing system and accordingly to the rules on protections for whistleblowers.

“Internal Protections for Whistleblowers”(1) The Asset Manager, officers, and employees shall never terminate or treat a whistleblower unfavorably (disciplinary
actions, demotions, lower pay, etc.) because the whistleblower consulted about or reported a problem.
(2) The Asset Manager shall establish proper measures to ensure the workplace environment does not worsen for
whistleblowers because the whistleblower consulted about or reported a problem. Additionally, any person who treatsa whistleblower unfairly may be subject to disciplinary action in accordance with the disciplinary provisions in theemployment regulations.
(3) Officers or other employees must not hinder anyone from making a report or taking other actions without good reason.
The Board of Directors of the Asset Manager shall receive risk reports about political contributions through a risk assessment
sheet supervised by the Compliance Department and oversee the response to prevent bribery and corruption.
Furthermore, under its “CSR Procurement Guidelines” the Daiwa House Group prohibit, as part of the Business Partner Codeof Conduct, any actions that are or could be constructed as the bribery of members of Parliament, government andmunicipal officials, or local public organizations. When concluding agreements with new business partners, we explain the
purposes and outline of the “CSR Procurement Guidelines” in implementing it and ask them to submit a letter of intent.

Total political contributions (yen)Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended Fiscal year ended
March 2018
March 2019
March 2020
March 2021
March 2022
0
0
0
0
0

Number of incidents related to fraud or corruption

0

0

0

0

0

Number of dismissals or termination related to fraud or corruption

0

0

0

0

0

Costs of fines, penalties, and settlements related to fraud or corruption (yen)

0

0

0

0

0

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 2022)

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Sustainability Report 2022

About DHR

Message from
the Management

Special Feature

Information Disclosure Basedon TCFD Recommendations

Sustainability

Environment

SocialGovernance

GRI Content Index

Back

Forward

Risk Management
Development Status of Risk Management System

BCP

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 the foregoing risk
management system and implementation status of risk controls. The audit results are reported to the President and CEO.
The Asset Manager is committed to ensuring that operations are conducted appropriately and soundly managed throughsuch 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 the annual plan of Compliance
Programs and reported to the Boards of Directors of both the Asset Manager and DHR.

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” in order to prevent and avoid risk, ensure people’s safety and reduce/mitigate
damage in the event of a disaster, prevent secondary accidents, resume DHR’s asset management operations at an earlypoint, and fulfill 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, theAsset 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
Risk Management System
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) Risk Management System
The Asset Manager has prescribed Risk Management Regulations and endeavors to manage risks based on afundamental policy of comprehensively and accurately identifying risks, qualitatively and quantitatively measuring andappropriately assessing identified risks’ impacts on operations, formulating risk prevention measures, and monitoring risk
management status on an ongoing basis.

As part of corporate crisis management, the Asset Manager has adopted an online safety confirmation system to ascertain
its officers 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 2022, the participation rate was 100%.

Information Security
The Asset Manager recognizes the proper management of information as an important management challenge and has
established an information security policy as a basic policy to ensure information security. This policy implements thefollowing items:
1. Preparation of an information security management system(2) Timely and appropriate information disclosure
DHR endeavors to maintain a system that enables timely and appropriate disclosure of information to investors incompliance with the Investment Trusts Act and the regulations of the Tokyo Stock Exchange so that informationnecessary for investors to make investment decisions in accord with the principle of self-responsibility can beappropriately and timely disclosed. The Fund Management Department in Daiwa House REIT Division of the AssetManager is in charge of information disclosure.

(3) Thorough compliance
Timely and appropriate information disclosure of the above must be the result of the operations of DHR and the AssetManager being in compliance (in other 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 as corporations that operate legally in accordance with theInvestment Trusts Act as well as the Financial Instruments Act.
The DHR Board of Directors is comprised of one Executive Director and two Supervisory Directors and supervises theexecution 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 roles of and other matters pertaining to the Board of Directors, the President and CEO, the Compliance
Committee, the Compliance Officer, and the Compliance Department in order to ensure that operations are conducted inaccordance with compliance requirements. In addition, various regulations are in place for systematic stipulation of therules of conduct for officers and employees to ensure thorough compliance.

72

2. Appointment of an information security manager
3. Establishment of internal regulations
4. Information security education
5. Reinforcement of management systems of outsources
6. Implementation of ongoing improvements
Additionally, the Asset Manager has established IT management regulations, which define specific procedures for handlinginformation devices to safely and smoothly manage information devices and secure the confidentiality and completeness ofdata, with an aim to fully protect the information handled by the Asset Manager.
Item

Fiscal year ended
March 2018

Fiscal year ended
March 2019

Fiscal year ended
March 2020

Fiscal year ended
March 2021

Fiscal year ended
March 2022

Information security training

2 times

2 times

2 times

2 times

2 times

Information Security-related Problems
There were no serious problems related to information security at the Asset Manager that would influence stakeholders.
(Fiscal year ended March 2022)

73

Sustainability Report 2022

About DHR

Message from
the Management

Special Feature

Information Disclosure Basedon TCFD Recommendations

Sustainability

Environment

SocialGovernance

GRI Content Index

Back

ForwardGRI Content Index
Disclosures

References

Remuneration for Executive Director of DHR and
Directors of the Asset Manager (p. 22)

GRI 102: General Disclosures 2016
1. Organizational profile
102-1

Name of the organization

102-2

Activities, brands, products, and services

102-3
102-4

Location of headquarters
Location of operations

102-35

Overview (p. 2)

Executive Directors and Supervisory Directors of DHR (p.66-67)
Sustainability Index-linked Fees (p. 67)

Overview (p. 3)

Compensation of the Audit Firm (p. 67)

Characteristics of Daiwa House REIT Investment
Corporation (p. 1)

Compensation of the Asset Manager (p. 68)
Remuneration for Executive Director of DHR and
Directors of the Asset Manager (p. 22)

Overview (p. 2)
Overview (p. 3)

102-36

Overview (p. 2)

Process for determining remuneration

Executive Directors and Supervisory Directors of DHR (p.66-67)
Sustainability Index-linked Fees (p. 67)
Compensation of the Audit Firm (p. 67)

Overview (p. 3)

Compensation of the Asset Manager (p. 68)

Overview (p. 2)

102-5

Ownership and legal form

102-6

Markets served

102-7

Scale of the organization

102-8

Information on employees and other workers

102-9

Supply chain

Overview (p. 2)

102-40

List of stakeholder groups

Stakeholder Engagement (p. 29)

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

N/A

102-41

Collective bargaining agreements

Labor/Management Relations (p. 59)

102-11

Precautionary Principle or approach

Sustainability Policy (p. 28)

102-42

Identifying and selecting stakeholders

Stakeholder Engagement (p. 29)

External initiatives

Supported Initiatives and External Evaluations(p. 32-34)

102-43

Approach to stakeholder engagement

Stakeholder Engagement (p. 29)

102-44

Key topics and concerns raised

N/A

102-45

Entities included in the consolidated financial statements

Overview (p. 2)

102-46

Defining report content and topic Boundaries

102-47

List of material topics

Materiality and SDGs (p. 30-31)

102-48

Restatements of information

N/A

102-49Changes in reporting

N/A

102-50

Reporting period

Editorial Policy (p. 1)

102-51

Date of most recent reporthttps://www.daiwahouse-reit.co.jp/en/sustainability/report.html

Reporting cycle

Editorial Policy (p. 1)

102-12102-13

Membership of associations

Overview (p. 3)

102-37

Stakeholders’ involvement in remuneration

Compensation of Executive Directors and Supervisory Directors (p. 67)

History (p. 2)

102-38Annual total compensation ratio–

Personnel Data (p. 55)

102-39Percentage increase in annual total compensation ratio–

Personnel Data (p. 55)

5. Stakeholder engagement

Supported Initiatives and External Evaluations(p. 32-34)

6. Reporting practice

Overview (p. 2)
Overview (p. 3)

2. Strategy
102-14

Statement from senior decision-maker

Message from the Management (p. 4-5)
Materiality and SDGs (p. 30-31)

102-15Key impacts, risks, and opportunities

Information Disclosure Based on TCFD
Recommendations (Strategy) (p. 14-19)

3. Ethics and integrity

Sustainability Report
Editorial Policy (p. 1)

102-16

Values, principles, standards, and norms of behavior

Daiwa House Group “Creating Dreams, Building
Hearts” (Table 2)

102-52102-53

Contact point for questions regarding the report

Disclaimer (Back cover)

102-17

Mechanisms for advice and concerns about ethics

Compliance (p. 70)

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

GRI Content Index (p. 74-77)

102-55

GRI content index

GRI Content Index (p. 74-77)

4. Governance102-18Governance structure

Sustainability Promotion System, Supervision by Boardof Directors, and Role of Top Management (p. 12-13)

102-19Delegating authority

Sustainability Promotion System, Supervision by Boardof Directors, and Role of Top Management (p. 12-13)

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

Sustainability Promotion System, Supervision by Boardof Directors, and Role of Top Management (p. 12-13)

102-21

Consulting stakeholders on economic, environmental, and social topics

Stakeholder Engagement (p. 29)

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

GHG Emission of Portfolio Properties (Scope 1, 2, and 3) (p. 21)
GHG Emissions (p. 37)
102-56102-23

Sustainability Promotion System, Supervision by Boardof Directors, and Role of Top Management (p. 12-13)

Chair of the highest governance body

Outline of DHR (p. 2)

102-24

Nominating and selecting the highest governance body

Executive Directors and Supervisory Directors of
DHR (p. 66-67)

102-25

Conflict of interests

Handling of Conflict-of-interest Transactions (p. 69)

102-26

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

Sustainability Promotion System, Supervision by Boardof Directors, and Role of Top Management (p. 12-13)

102-27

Collective knowledge of highest governance body–102-28

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

Materiality and SDGs (p. 30-31)

102-30Effectiveness of risk management processes

External assurance

Energy Consumption (p. 39)
Water Consumption (p. 40)
Waste Management (p. 41)

GRI 103: Management Approach

Investment Corporation Structure (p. 2)

74

Remuneration policies

2016

103-1

Explanation of the material topic and its Boundary

Materiality and SDGs (p. 30-31)

103-2

The management approach and its components

Sustainability Promotion System, Supervision by Boardof Directors, and Role of Top Management (p. 12-13)

103-3

Evaluation of the management approach

Materiality and SDGs (p. 30-31)
Materiality and SDGs (p. 30-31)

Standards by item
EconomyGRI 201: Economic Performance

2016

Risk Management System (p. 20)
Risk Management (p. 72-73)

201-1

Direct economic value generated and distributed

Payment of Wages Above Minimum Wage andEqual Pay for Equal Work (p. 59)

201-2

Financial implications and other risks and opportunities due to climate change

Information Disclosure Based on TCFD
Recommendations (Strategy) (p. 14-19)

201-3

Defined benefit plan obligations and other retirement plans

–

201-4

Financial assistance received from government–102-31

Review of economic, environmental, and social topics

Sustainability Promotion System, Supervision by Boardof Directors, and Role of Top Management (p. 12-13)

GRI 202: Market Presence

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

Sustainability Promotion System, Supervision by Boardof Directors, and Role of Top Management (p. 12-13)

2016

102-33

Communicating critical concerns

Risk Management (p. 72-73)

GRI 203: Indirect Economic Impacts

102-34Nature and total number of critical concerns

N/A

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–

75

Sustainability Report 2022

About DHR

Message from
the Management

Special Feature

Information Disclosure Basedon TCFD Recommendations

Sustainability

Environment

SocialGovernance

GRI Content Index

Back

ForwardGRI Content Index
GRI 403: Occupational Health and Safety

GRI 204: Procurement Practices
2016

204-1

Proportion of spending on local suppliers–

GRI 205: Anti-corruption
2016

403-3

Occupational health services

N/A

205-2

Communication and training about anti-corruption policies and procedures

Prevention of Corruption (p. 71)

403-4

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

–

205-3

Confirmed incidents of corruption and actions taken

Prevention of Corruption (p. 71)

403-5

Worker training on occupational health and safety

–

403-6

Promotion of worker health

Establishment of Health Committee(p. 55)

403-7

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

–

403-8

Workers covered by an occupational health and safety management system

–

403-9

Work-related injuries

Personnel Data (p. 55)

403-10Work-related ill health

N/A

2018

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–

GRI 404: Training and Education

301-1

Materials used by weight or volume

–

301-2

Recycled input materials used

–

301-3

Reclaimed products and their packaging materials–

GRI 302: Energy

2016

–

302-3

Energy intensity

Energy Consumption (p. 39)

2016

302-4

Reduction of energy consumption

Energy Consumption (p. 39)

302-5

Reductions in energy requirements of products and services

Energy Consumption (p. 39)

–

2016

406-1

Incidents of discrimination and corrective actions taken

Interactions with water as a shared resource

Effective Use of Rainwater, Groundwater, and Greywater (p. 40)

2016Management of water discharge-related impacts–

GRI 408: Child Labor

303-3

Water withdrawal

–

2016

303-4

Water discharge–

GRI 409: Forced or Compulsory Labor

303-5

Water consumption

Water Consumption (p. 40)

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

–

304-2

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 in areas affected by operations

–

305-1

Direct (Scope 1) GHG emissions

GHG Emission of Portfolio Properties (Scope 1, 2, and 3) (p. 21)

305-2

Energy indirect (Scope 2) GHG emissions

GHG Emission of Portfolio Properties (Scope 1, 2, and 3) (p. 21)

305-3

Other indirect (Scope 3) GHG emissions

GHG Emission of Portfolio Properties (Scope 1, 2, and 3) (p. 21)

305-4

GHG emissions intensity

GHG Emissions (p. 37)

305-5

Reduction of GHG emissions

GHG Emissions (p. 37)

305-6

Emissions of ozone-depleting substances (ODS)

–

305-7

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

–

2016

407-1
408-1
409-1

Operations and suppliers in which the right to freedom of association and collective 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

Waste generation and significant waste-related impacts

–

306-2

Management of significant waste-related impacts

Pollution Prevention (p. 41)

306-3

Waste generated

Waste Management (p. 41)

306-4

Waste diverted from disposal

–

306-5

Waste directed to disposal–
Violations of Environmental Laws and Regulations
and Environmental Accidents (p. 36)

308-1

New suppliers that were screened using environmental criteria

N/A

308-2

Negative environmental impacts in the supply chain and actions taken

N/A

2016

410-1

Security personnel trained in human rights policies or procedures

N/A
N/A
N/A

2016

411-1

Incidents of violations involving rights of indigenous peoples

N/A

GRI 412: Human Rights Assessment
2016

412-1

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

–

412-2

Employee training on human rights policies or procedures

Training Program (p. 57)

412-3

Significant investment agreements and contracts that include human rights clausesor that underwent human rights screening–

GRI 413: Local Communities
2016

413-1

Operations with local community engagement, impact assessments, and development programs

Initiatives for Local Community (p. 61-63)

413-2

Operations with significant actual and potential negative impacts on local communities

N/A

GRI 414: Supplier Social Assessment
414-1

New suppliers that were screened using social criteria

N/A

414-2

Negative social impacts in the supply chain and actions taken

N/A

GRI 415: Public Policy
2016

415-1

Political contributions

Prevention of Corruption (p. 71)

GRI 416: Customer Health and Safety
Disaster Relief/Resilience (p. 62)
2016

416-1

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

416-2

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

Business Continuity Plan (BCP) (p. 62)
Socially Conscious Initiatives (p. 63)
Initiatives to Increase Tenant Satisfaction (p. 64)
N/A

GRI 417: Marketing and Labeling
2016

417-1

Requirements for product and service information and labeling

Environmental Certifications (p. 43)

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

401-1

New employee hires and employee turnover

Personnel Data (p. 55)

401-2

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

Benefits and Welfare (p. 53)

2016

401-3

Parental leave

Benefits and Welfare (p. 53)

GRI 419: Socioeconomic Compliance

Minimum notice periods regarding operational changes

N/A

GRI 411: Rights of Indigenous Peoples

2016

306-1

402-1

Response to Human Rights (p. 58)

GRI 410: Security Practices

GRI 402: Labor/Management Relations

76

Personnel Data (p. 55)

Ratio of basic salary and remuneration of women to men

GRI 407: Freedom of Association and Collective Bargaining

Society
GRI 401: Employment

2016

Diversity of governance bodies and employees

405-2

303-1

Non-compliance with environmental laws and regulations

Support for Operational Skills Development and Training (p. 53)

405-1

303-2

307-1

Training on Operational Expertise (p. 52)

GRI 406: Non-discrimination

GRI 308: Supplier Environmental Assessment

2016

Percentage of employees receiving regular performance and career development reviews–

GRI 307: Environmental Compliance

2016

404-3

Energy consumption outside of the organization

GRI 306: Effluents and Waste

2016

Support for Operational Skills Development and Training (p. 53)

Energy consumption within the organization

GRI 305: Emissions

2020

–

Programs for upgrading employee skills and transition assistance programs

302-1

304-1

2016

Average hours of training per year per employee

404-2

302-2

GRI 304: Biodiversity

2016

2016

404-1

GRI 405: Diversity and Equal Opportunity

GRI 303: Water and Effluents

2018

–

Prevention of Corruption (p. 71)

Environment
GRI 301: Materials
2016–

Hazard identification, risk assessment, and incident investigation

Operations assessed for risks related to corruption

GRI 207: Tax
2019

Occupational health and safety management system

403-2

205-1

GRI 206: Anti-competitive Behavior
2016

403-1

2016

418-1
419-1

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

N/A
N/A

–

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https://www.daiwahouse-reit.co.jp/en/

Disclaimer· This report is for informational purposes only and is not intended to solicit or endorse investment in any particular product or toserve as a recommendation to buy or sell.
· Inquire with a securities company to purchase DHR investment shares. Please be advised that any investment decisions
ultimately must be made based on your own decision and at your own responsibility.
· This report is not a disclosure document or investment report based on the Financial Instruments and Exchange Act, the Act
on Investment Trusts and Investment Corporations, or the listing rules of the Tokyo Stock Exchange.
· The data, analysis, and other information in this report are based on the results of a certain period in the past and do notguarantee future operational results, fluctuations, etc. Furthermore, this report includes statements regarding future
performance, but such statements do not guarantee future performance. Moreover, the value of real estate investment trusts
may fall below the investment principal due to fluctuations in the prices and profitability of the real estate under management.
· No guarantee is provided as to the accuracy or completeness of the information provided in this report. Note also that the
information is subject to change or deletion without prior notice.
· DHR and the Asset Manager accept no liability whatsoever for the results of investment actions taken based on this report.
· Copying, reproduction, etc. of the information published in this document without prior consent is prohibited.
Inquiries: Fund Management Department, Daiwa House REIT Division, Daiwa House Asset Management Co., Ltd. Tel: +81-3-3595-1265