Japan Real Estate Investment Corporation Sustainability Report 2020

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

Sustainability Report 2020
Printed in Japan

CONTENTS

Toward 2030

About KPIs

In 2019, Japan Real Estate Investment

CO2 Emissions*1

Corporation (JRE) became the first
J-REIT to disclose information based on
the recommendations put forth by the
TCFD, and announced environmental
KPIs in 2020 to further respond to climatechange risks. As a leader in the J-REIT
industry, JRE will continue to promote

35

Reduceby60k g-CO2/m2
or lower

Water Usage*2

20

Reduce by


%

Waste
Recycling Rate90

% or higher

Zero Energy
Buildings*3
Own


5 10
~

*1 Carbon intensity basis *2 Intensity (m3/m2) basis *3 Includes ZEB Ready and ZEB Oriented buildings

01

Japan Real Estate Investment Corporation

Table of contents

03

Message from the President05 asic Policy and Management
B
Structure of ESG Issues

07 isclosure Policy, Signatory to
DInternational Initiatives, andEvaluations from External Parties

11Environment
Environmental Measures
Climate Change Initiatives
Green Bonds

23

 ociety
S
Tenants and Partners
Local Communities
Employees
Non-Financial Data Highlights31

GovernanceManagement System
Risk Management
Compliance System

37

GRI Content Index

45

SASB Framework%

ESG initiatives in the future.

Carbon Intensity

02

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

Japan Real Estate Investment Corporation

02

ESG HIGHLIGHTS
Number ofgreen buildingcertified properties
PRI Assessment Result· Strategy & Governance· Property

48
A+

ISS ESG Corporate Rating

Properties

Percentage ofgreen buildingcertified properties* Based on acquisition price

GRESB Real Estate
Assessment

73.9
5 Stars％*

Prime Status

President & CEO

Message from the President
We have published this sustainability report, the first sustainability
report for the Company to disclose to our stakeholders the various
ESG-related initiatives JRE has taken to date. In 2018 JRE-AM(Japan Real Estate Asset Management Company) established the
ESG Office consisting of three to four dedicated members for ESG,
and in the same year, became a signatory to PRI (the United
Nations Principles for Responsible Investment). In 2019, JRE disclosed information in line with the TCFD (Task Force on ClimateRelated Financial Disclosures) recommendations, making it thefirst J-REIT to do so. In 2020, we established environmental KPIs tofurther address climate change-related risks that include target
for reducing CO2 emissions by 2030. When determining these KPIs,
we set goals that we considered feasible and based on engineeringstudies and factoring in additional renewal costs. We are proud tobe lauded as the front running J-REIT in ESG initiatives as a resultof these efforts.
At JRE-AM, proactive ESG initiatives have been one of the top
priorities of its management strategy. This is not only because

03Japan Real Estate Investment Corporation

greater society expects us to engage in efforts to improve social
sustainability through enhancing environmental, social and governance related efforts. We believe that these efforts will maximize
long-term returns for unitholders in a listed J-REIT such as JRE.
One of the reasons I think that active ESG initiatives will lead to
long-term returns for investors goes back to my experience when I
was engaged in office building development at Mitsubishi Estate
London Limited. I was involved with over five newly built officebuildings and was always engaged in hot discussions with thedesign teams—teams of experts in design, machine & equipment,
structure, cost, and construction management—on how we could
acquire as strong BREEAM* rating. When making these decisions,the question of where to find the balance between the profitabilityof an investment and its environmental performance of a building
has always been a difficult one. On the other hand, even if costs
increased a little, the best tenants were almost always willing to
pay a higher rent than usual to move into an office building if itmeant giving due consideration to the environment and comfort.

One strong impression that I drew from this experience wasthat tenants have become more aware of ESG that I had previously
thought. There have been an increasing number of companies
worldwide that make ESG a strong point of consideration in theircore businesses. For these companies it is infeasible from a business strategy point of view to operate in an office building that does
not factor in ESG.
What this means is that JRE’s active commitment to ESG initiatives, coupled with increasing the number of office buildings thatcan be opted by a large number of tenants, will lead to long-term
returns for investors. I am confident that this is a win-win situation.
The global pandemic of COVID-19 in 2020 has had a massive
impact on society and the economy, and there is no clear exit at
this point. These circumstances have been a reminder for many
that collaboration, coexistence, and both giving and receiving help
from various stakeholders are important for sustainable growth. It
has been a strong reminder for us as well, that the health andwell-being of all stakeholders, including employees and their families, tenants, those working at property management companies,
construction companies, and those living in local communities, isof utmost importance.
We have made it our mission to anticipate changes in the business environment and improve the competitiveness of our portfolio
constantly, through forward-thinking and proactive asset management. Our ESG efforts may take some time to bear results, but we
intend to use this sustainability report as a way to regularly share
information with our stakeholders and confirm the progress of ourefforts as we work toward our goals. As a leading company in the
J-REIT industry, ESG initiatives are JRE’s social responsibility, but
not only are we eager to take on these initiatives, but also to lead to
long-term returns for unitholders.
* Building Research Establishment Environmental Assessment Method, theubiquitous sustainability rating for buildings in the UK.

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Basic Policy and Management Structure of ESG Issues

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

Sustainability Policy

JRE-AM convenes its Sustainability Committee with a view to implementing the Sustainability Policy in order to improvesustainability and maximize its unitholder value.
Members of the committee:
President & CEO (Chief Sustainability Officer)
Head of ESG Office, Real Estate Management Department(Sustainability Officer)
General Managers of other departments and those practically incharge of sustainability at each department

Reporting details, meeting frequency, and examination process:The Sustainability Committee meets four times a year in principle andexecutes the PDCA cycle by examining and planning measures,
reporting and evaluating the progress and analysis results, andthen examining and planning improvement actions, thereby
making improvements on a continual basis.
For the matters examined by the Sustainability Committee,
JRE-AM makes decisions and implements measures based on its
decision making rules, and the results are reported to JRE’s
Board of Directors once a year.

Policy for Implementing the Sustainability Policy

1

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

Initiatives aimed at officers and employees
We will provide education and training programs for officers
and employees to raise environmental awareness and build
capacity, as well as support a diverse human workforce andflexible work styles to meet individual lifestyles.

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

2 Contribution to creating a recycling-oriented society
In order to contribute to creating a recycling-oriented society, we will promote efficient use of water resources as wellas implementing Reduce, Reuse and Recycling initiatives.

6 Collaboration with external stakeholders
We will collaborate with property management companies
and other suppliers to work together to increase tenant satisfaction and build harmonious relationships with local
communities.

Green Procurement Policy
We have established a “Green Procurement Policy” to promote sustainability initiatives in the supply chain.
This policy serves as a guideline for selection criteria for products to be procured and selection and evaluation
criteria for suppliers.

3 Contribution to creating a society in harmony with nature
In order to contribute to creating a society in harmony withnature, we will support efforts aimed at living harmoniouslywith the natural environment through planting initiatives
conducive to biodiversity conservation.
4 Enhancement of safety and security
As part of disaster prevention and response initiatives, wewill organize emergency drills based on public-private partnerships, and develop business continuity plans.

5I nformation disclosure and obtaining environmental
certifications
We will endeavor to disclose ESG (Environment, Society andGovernance)-related information to our investors and various other stakeholders. Also, we will work to obtain environmental certifications and ratings, including the Green
Building certification, on a continuous basis.
7Basic Concepts of Health and Well-being of JRE-AM’s Officers and Employees
Our human capital such as officers or employees is one of the most important operation source for us torealize sustainable growth. Based on this idea, we will practice the corporate management which enables
co-enrichment of the company and employees through initiatives to raise physical and mental health of
employees, and to promote work-life balance and improve job satisfaction.
Basic Concepts of Health and Well-being of Tenant Workers
We strive to enhance value and competitiveness of JRE’s assets through providing office buildings promoting health and well-being for tenant workers and increasing their productivity and satisfaction.

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

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Disclosure Policy, Signatory to International Initiatives,and Evaluations from External Parties

Signatory to the Principles for Responsible Investment (PRI)
governance issues into investment decision-making processes, withthe aim to help companies enhance long-term investment performance and better fulfill their fiduciary duty.
JRE-AM became a signatory in August 2018 in solidarity withthe basic approach of PRI.

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

PRI comprises an international network of investor signatories andencourages the incorporation of environment, social, andSignatory to United Nations Environment Programme Finance Initiative (UNEP FI)
institutions, policymakers, and regulatory authorities to promotea shift to a financial system that integrates economic growth andconsideration for ESG issues.
JRE-AM agreed with the basic approach of UNEP FI andbecame a signatory in August 2018. It also participates in the
UNEP FI is a broad-based and closely knit partnership between
UNEP and more than 200 banks, insurance, and securities companies around the world to promote sustainable finance. Since it
was established in 1992, it has cooperated with financial

Information Disclosure Policy
JRE strives to disclose ESG-related information to its investors andother stakeholders.
As ESG garners more support globally, JRE also regards it as
its social responsibility to improve its sustainability and disclose
initiatives in pursuit of that goal, both of which are necessary to
maximize its unitholder value. Accordingly, we will promote ESG initiatives and the ESG information disclosure while fostering mutualcommunication with various stakeholders.

Specifically, we refer to the Global Reporting Initiative
Standards (GRI Standards), an international sustainability framework for ESG-related reporting, and standard for the real estateindustry put forth by the Sustainability Accounting Standards
Board (SASB) for the disclosure of a wide range of ESG information on the JRE corporate website. We hope both this report andour corporate website will further deepen understanding of JRE’s
ESG activities.

Reporting scope and period
In principle, the reporting scope shall be JRE’s entire portfolio and the report will be made every year.
The current reporting period is the fiscal year that started on April 1, 2019 and ended on March 31, 2020, but the report for the year
does include some information outside this period.

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

UNEP FI Property Working Group. As of March 2020, this working
group consisted of approximately 30 representative real estate
institutions in the world and promotes and encourages
Responsible Property Investment (RPI).

Participation in the United Nations Global Compact (UNGC)
UNGC is a voluntary, global initiative supporting a global framework for sustainablegrowth through the demonstration of creative, responsible leadership by therespective corporations and organizationsas principled members of society.
First proposed in 1999, participants
currently includes more than 13,000

organizations and companies based in 160 countries. It engages in
activities based on ten universally accepted principles in the fourareas of human rights, labor, environment, and anti-corruption.
Mitsubishi Estate Co., Ltd. became a signatory of the UNGC
and the Mitsubishi Estate Group was registered as a participant
in April 2018. Along with this, JRE-AM has participated in this initiative as a member of the Mitsubishi Estate Group.

GRESB Ratings
JRE received the following evaluations in GRESB Real Estate Assessment” and GRESB Public
Disclosure conducted in 2019, with a first place ranking among the listed and unlisted office sector
in Japan.

Real estate assessment

ESG management system andperformance
Overall score

Signatory to PRI

Signatory to UNEP FI

Participation in UNGC
Disclosure assessment

07

Japan Real Estate Investment Corporation

Information disclosure level

Green Star(highest evaluation)

5 Stars(highest evaluation)A(highest evaluation)

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Disclosure Policy, Signatory to International Initiatives,and Evaluations from External Parties

Sustainability-related initiatives that have been highly
evaluated are as follows:• Issuance of green bonds to fund the refurbishment project of
the existing property which improves energy efficiency• Obtaining third-party assurance (by Ernst & Young ShinNihon
LLC) on energy consumption, greenhouse gas emissions andwater usage data
• More than 70% of the company’s portfolio is green certified• Enhancement of a cooperative relationship with tenants (e.g.,
promoting green lease program and conducting tenant satisfaction surveys)• Promoting health & well-being initiative for tenant/customer
and community

Selected as Sustainability Champion at the Milestone of 10 Yearsof GRESBAs a member of the international initiative, JRE-AM has beenworking for greater sustainability by networking and sharing
information with companies that are advanced in terms of ESG as
well as by showcasing Japanese practices to the global community. In December 2019, our Head of the ESG Office was selected
as one of the sustainability champions at the milestone of 10
years of GRESB.
About GRESBThe Global Real Estate Sustainability Benchmark (GRESB) wasestablished in 2009 by a group of pension funds in Europe. The
GRESB assessment does not target individual real estate, but ischaracterized by evaluating consideration for the environment andsustainability efforts at each real estate company and REIT.

MSCI ESG Rating
Evaluations
JRE holds an MSCI Rating of “BBB” as of July 2020.
About the MSCI ESG Ratings
MSCI ESG Ratings by MSCI ESG Research LLC comprise a rating
system where companies are rated on a seven-tier scale ranging
from ‘AAA’ (highest) to ‘CCC’ (lowest) according to their exposure toindustry-specific environmental, social, and governance (ESG)
risks and their ability to manage those ESG risks.
MSCI ESG Ratings are used by over 1,300 investors worldwide
and as the foundation of over 1,000 investment indexes, such as the
MSCI Japan ESG Select Leaders Index, which has been selected as
an ESG index for passive investment tracking by the Government
Pension Investment Fund (GPIF).

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

PRI Assessment Result
About the PRI Assessment Result

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

ModuleScore

Strategy & GovernanceA+

PropertyA+

ESG Finance Award
Winning the ESG Finance Award
JRE Investment Corporation Bonds (JRE Green Bonds) won
bronze at the Ministry of the Environment’s inaugural ESG
Finance Awards in February 2020

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

Participation in the CDP’s Climate Change Program
CDP Score

DISCLOSURE INSIGHT ACTION

JRE has received the “B” designation in the 2019 Carbon
Disclosure Project (“CDP”) Climate Change Program.
About CDP
CDP is an international non-profit organization researching measures taken against global warming by listed companies with the09

Japan Real Estate Investment Corporation

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

About the ESG Finance Award
The ESG Finance Award is an award program launched in 2019 by
the Ministry of the Environment to recognize those investors andfinancial institutions that have been actively involved in promoting
green projects and contributed toward creating positive impacts
on the environment and society. The award program also celebrates outstanding company initiatives which have incorporated
significant environmental risks and opportunities into their corporate strategies while also enhancing their corporate values andhaving a positive impact on the environment.

Efforts to Acquire Environmental Certifications
JRE will continue to acquire various green building certifications,
including DBJ Green Building certifications, and CASBEE
certifications.
As of March 2020, over 70% of our portfolio has been green
certified, obtaining one or more certifications out of DBJ Green
Building certification, CASBEE certification, as well as BELS
certification.

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Environment

KPIs and Strategies to Reach Targets

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

CO2 Emissions*1
Reduce by

35%

Water Usage *2
Reduce by

20%

Zero Energy
Buildings*3
Own

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

5~10

Carbon Intensity

60

Waste Recycling Rate90

% or higher

kg-CO2/m2 or lower

KPIs to Reduce CO2 Emissions

KPIs for Water
and Waste Management

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

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

P12 Environmental Measures
P15 Climate Change Initiatives
P21 Green Bonds*1 Carbon intensity basis *2 Intensity (m3/m2) basis *3 Includes ZEB Ready and ZEB Oriented buildings

Fiscal 2013 (base year)

Carbon Intensity

92.1kg-CO /mWater Usage
Waste Recycling Rate

0.793m /m—

2

Fiscal 2030 targets

79.7kg-CO /m
2

2

2

3

Fiscal 20192

60kg-CO /m or lower
2

2Reduce by

13.5%

Reduce by

35%

Reduce by

15.5%

Reduce by20%

57.7%*

4

90% or higher*4 The data accuracy is being examined.

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Environmental Measures

Contributions to the Environment through Real Estate Investment Management

Green Procurement Policy

Energy Management Systems (EMS)

JRE-AM has set the Green Procurement Policy as one of the policies to implement the specific items put forth in the Sustainability
Policy. The Green Procurement Policy provides guidelines on the

Grasping Accurate Data and Executing a PDCA Cycle
JRE measures and gains an understanding of the energy consumption, water use, and waste of each building on a monthly
basis. We outsource data calculation and data analysis to a company specializing in EMS to execute its PDCA cycle. If there is alarge difference in the aggregated data from the previous monthor year, we investigate the cause by conducting interviews with theproperty manager and ensuring accurate data. We also constantly monitor the reduction effects of green refurbishments
such as LED and AC upgrades.
Aggregated data disclosed in “WEB information” on JRE’s
website has been given limited assurance in accordance with ISAE
3000 (International Standard on Assurance Engagements 3000) by
a third-party organization (Ernst & Young ShinNihon LLC).
Monthly Data Entry, Analysis, and Feedback
JRE-AM recognizes environmental data aggregated via EMS as
an important indicator, as well as performance data. Therefore,
the data and analysis of the various indicators are reported to theChief Sustainability Officer (President & CEO) on a monthly basis.

 nvironmental Contribution in CollaborationEwith TenantsAiming to make environmental contributions by collaboratingwith tenants, JRE has been gradually introducing Green Leases interms of both operational improvement and efficiency retrofits.
Moreover, JRE is conducting diverse sustainability
initiatives together with our tenants.

This is not a matter of simply circulating documents. Instead,these indicators are reported and analyzed at meetings and are
an important part of decision-making for future asset management and CAPEX investments.

PM Company Selection Criteria and Evaluation Measures

PDCA Cycle for Environmental Data

Establish
reduction
targets

Monthly
monitoring

selection of products to be procured by JRE-AM as well as on theselection and evaluation of suppliers. JRE-AM promotes sustainability measures across its supply chain based on this policy.

Asset-level initiatives

Electricity

CO2

Water

Waste

Monitoring by AM company

Executeplans andmakemeasurements

Analyze andformulateplans

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

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

(Examples)• Distribution of sustainability guide(Please refer to page 25 for more details.)•H olding Global Warming Prevention Committee with tenants• Introduction of an online system that enables tenants tocheck their energy use

Otemachi Park Building•P articipation in the energy conservation month campaign andenergy efficiency promotion on other occasions

Biodiversity Preservation Initiatives
At the Otemachi Park Building, located in the vicinity of the Imperial
Palace, we have taken biodiversity into consideration, creating homes fora variety of flora and fauna by including a variety of trees and bushes,

Environmental Risk Assessment at the Time of Acquisition
When acquiring real estate properties, JRE conducts on-site
inspections and also investigates on soil contamination and toxic
substances such as asbestos and PCBs by obtaining real estate

birdhouses, porous stone walls, and waterscapes into the design.

appraisal reports and engineering reports in addition to receiving related disclosure materials from the sellers.

Under the leadership of our sponsor, Mitsubishi Estate Co., Ltd., we
conduct monitoring of the living creatures in the area both as part ofour cleaning and plant maintenance duties, and as an activity that thecommunity can participate in as efforts to visualize the biodiversity network centered on the Imperial Palace and to collect and disseminate
information aimed at high-quality green space management andConsideration to Urban Greenery and Biodiversity
JRE’s Sustainability Policy stipulates that it will support efforts
aimed at living harmoniously with the natural environment andcontribute to creating a society in harmony with nature. JRE gives
consideration to biodiversity in the operation of buildings byendeavoring to conserve and improve the ecosystem on property
premises and adjacent urban green areas and natural areas.

greater environmental awareness.
In recognition of the efforts to conserve biodiversity in thesespaces, the building has been certified by the Organization for Landscapeand Urban Green Infrastructure under the Social and Environmental
Green Evaluation System (SEGES) for creating green spaces.
Furthermore, it has acquired ABINC certification in the urban/SC category, issued by the Association for Business Innovation in Harmony
with Nature and Community (ABINC).

Hotoria Square

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Climate Change

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

Climate Change-Related Risks and JRE’s Response
stemming from climate change, it is important that we evaluate
the risks and opportunities that climate change presents, andreflect them in our operational policies and asset management
accordingly.

The TCFD recommendations broadly categorize climate change-related risks into two types: “transition risks” and “physical risks.” We anticipate that climate change will present various risks and opportunities to JRE that have been reflectedin our management policy and asset management activities.

Global Trends
Global Trends in Climate Action

Supporting the TCFD Recommendations

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

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

* The IPCC Special Report on Global Warming on 1.5°C, published by the IPCC in 2018.

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

Transition
Risks

The government of Japan and local municipalities
are already making moves to tighten regulations
as a measure against climate change. If policies,
laws, and regulations are strengthened to keep
within the 2°C global temperature limit stated in
the Paris Agreement, there are concerns that theoutcomes, including regulations on GHG emissions that extend to Japan, regulations onenergy-saving capabilities for buildings, and theintroduction of carbon taxes, could have various
impacts on the real estate business.
Moreover, as we make the move toward adecarbonized society, there is the belief that tenants of office buildings will be incentivized to

CO2 Emissions*1
Reduction of CO2 emissions:
To respond to the future possibility of even stronger
regulations for reducing emissions, such as obligation to
reduce total emissions or introduction of carbon taxes,
JRE has set a reduction target for its entire portfolio of 35%
compared to 2013 to be achieved by 2030.

Japan Real Estate Investment Corporation

Reduce by

35%

Zero Energy
Buildings*2

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

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reduce energy consumption and GHG emissions
in their rental spaces. These incentives couldchange conditions in the office market.
Financial institutions and investors are also
incorporating the climate-related risks of theirinvestment targets into their investment processes. This may have an effect on business’ procurement of funds.
To address these “transition risks,” JRE is
promoting a variety of specific measures andactions, such as Green Projects that reduce GHG
emissions or improve energy efficiency, andobtaining green building certifications.

Own

5~10

Carbon Intensity

60

kg-CO2/m2 or lower* Carbon intensity basis* Includes ZEB Ready and ZEB Oriented buildings

Japan Real Estate Investment Corporation

16

Climate ChangePhysical
Risks

Due to its geographical circumstances, Japan
experiences typhoons and heavy rain every summer and an accumulation of snow in the winter.
This, in conjunction with its susceptibility to earthquakes, classifies Japan as a country prone tomany natural disasters. As global warming continues on a global scale, there is a possibility thatthese disasters will become more numerous andsevere, with a greater financial impact. These“physical risks” brought on by major climatechange are cause for global concern.
In order to mitigate risks toward the profitability of its portfolio as a result of disaster-related damages, JRE employs a strategy to minimize damage
in the event of a disaster, and to increase resilienceagainst the growing severity of these disasters.

include installing water-stopping plates in building
apertures, preparing sandbags and water-stopping
sheets, and have installed water-proofed doors forunderground rooms with important equipment.
“Soft” Measures for When Disasters Occur
Disaster countermeasures and training appropriate
to each type of disaster are implemented by a topclass PM company in Japan. In addition, appropriate “soft” measures have been taken, which include
holding disaster prevention council meetings withtenants, distributing BCP manuals, and introducing
a system between JRE-AM and PMs to assess thedamage in the event of disaster.

Future Risk
Forecast

Analysis of JRE’s Portfolio Based on Municipal Hazard Map
In recent years, typhoons around the Japanese archipelago have been increasing in size. In addition, riverflooding and inundation have been occurring frequently due to typhoons and heavy rains. Damages due toinundation are predicted by the hazard maps of each local government. These maps are believed to havehigh accuracy when compared against actual disaster occurrence.
The graph below shows the estimated status of inundation damage in the hazard map of the JRE
portfolio. 4
82% of buildings within JRE’s portfolio (based on the number of buildings) fall under the category of “Noinundation damage expected” or “inundation of 0.2m to 0.5m in depth (minor damage expected).”
The remaining 18% of buildings are susceptible to 0.5m of inundation or more, but every building in theportfolio is subject to hard measures, such as installation of water-stopping plates, and soft measures,such as training on how to stop inundation.
* Earthquake risks are generally distinguished from climate change risks, but JRE has combined its climate change and disastercountermeasures as part of physical disaster risk management in an effort to increase resiliency.
4“Hard” Measures at Buildings to Address Natural
Disasters (Typhoons, Heavy Rain)
To address flooding caused by typhoons and heavy
rain, which affect Japan due to geographical factors,
we have taken “hard” measures at buildings that xpected Inundation AccordingE
to Hazard Map (%)
4.2

6.9
6.9

51.4

Over 2m
1m to 2m
0.5m to 1m
0.2m to 0.5m
No damage expected

31.9

Resilience of JRE Portfolio According to Past
Cases of Disasters and Data
Japan is a country that experiences numerous natural
disasters. Over the past 10 years, Japan has been
struck by several catastrophic disasters, such as the2011 Great East Japan Earthquake (earthquake andtsunami), the Heavy Rain Event of July 2018 (heavy
rain, inundation), the 2018 Hokkaido East Iburi
Earthquake (earthquake, landslides, wide-ranging
power outages), and Typhoon Faxai (strong winds,
house damage, long-term power outages) andTyphoon Hagibis (heavy rain, river collapse, inundation) in 2019.
JRE’s portfolio has not been exempt from thesedisasters and several properties have been affected bythese disasters in some way, but thanks to the resilienceof the buildings and the strong response from PM companies, damage to these buildings has been limited. 1
Even when a disaster occurs, buildings arerestored within one week in almost all cases, withrepairs costs under JPY 10.0 million. 2 3
In addition, there is only example of a building
becoming inoperable (closed, etc.) due to a disaster.
We will introduce this past example of our disaster
response, where a building was closed due to a largescale power outage.
(Please refer to the 8·3 Square Kita Building case on thefollowing page)

17

Japan Real Estate Investment Corporation

1

As of March 2020

 ypes of Disasters that Have Caused Damage in the Past
T
(number of cases)*
As of March 2020
1

Extreme weather (hot and cold waves, etc.)

23

Earthquakes, volcanic eruptions, and tsunami

8

Inundation and river flooding from heavy rain

25

Typhoons and tornadoes* There are 32 properties that have never been affected by disasters.

8·3 Square Kita Building
Response to Damage from the Hokkaido Earthquake

2

Time Required for Post-Disaster Building Repairs (%)
1.4

The 8·3 Square Kita Building was closed as result of large-scale power outages lasting

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

9.7

about two days stemming from the 2018 Hokkaido Eastern Iburi Earthquake that
occurred in the summer of that year. The building was closed as a result of the power
outage, with no damage to the building. On the day of the event, on-site staff responded
appropriately and promptly to ensure that all tenants and visitors in the building were
evacuated smoothly, and were successful in their efforts. Furthermore, there was no41.7

loss of profits as a result of the building closing. Despite the difficulty in gathering information due to the power outage, JRE was able to get an accurate and timely grasp of
the local response and deliver press release on the disaster situation, as its system for

47.2

understanding such situations was functioning normally.
3

Repair Costs (%)
2.8

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

54.2

43.1

Japan Real Estate Investment Corporation

18

Climate ChangeOverviews of Climate Risks and JRE’s Countermeasures
Risk Classification(based on TCFD
recommendations)

Policy and
LegalTransition
Risks

Technology

Effects Relative to
Office andReal Estate Market•S tronger energy regulations•P otential introduction ofcarbon taxes• Increase in regulatorycompliance costs

Timeframe*1

JRE’s Tasks to Address Risks• Continue improving energy efficiency
Medium-term • Introduce renewable energyLong-term • Quantify risks related to cost increases
from future regulations• Potential relative degradation Medium-term• Employ advanced technology
of existing buildings
Long-term

Internal Growth Graph

JRE’s Strategy to Address Risks*2• Setting 35% reduction target of CO2 emissions• CAPEX and energy saving investments (in cooperation withengineering team of Mitsubishi Jisho Sekkei Inc.)• Implement PDCA cycle that includes proprietary EMS andinternal carbon pricing• Introduce green certificates and renewable energy• Replace property (mainly with our sponsors’)• Scenario-based quantitative risk assessment (in progress)• Gain an understanding of tenants’
green needs
Medium-term• Tenant engagement
Long-term• Improve environmental performanceof buildings• Reduction of CO2 emissions intensity(i.e., energy efficiency improvement)• Conduct tenant satisfaction survey and market research• Promote green projects with the cooperation of tenants• Acquire green building certifications

Reputation• Increase of procurement
costs stemming from a highclimate risk assessment

Short-term • Improve environmental performance
Medium-term • G reen financing and procurement ofLong-termfunds• Green bonds (for refurbishment) and green financing• Strengthen ESG risk management system

Acute

•R
 isk of damage from intense
typhoons and floods

Short-term • Increase resiliency and create a
Medium-term
disaster response
Long-term • Quantify future disaster risks• Perform DD and risk assessment• Implement hard and soft disaster measures• Scenario-based quantitative risk assessment (in progress)

Chronic• Increased building
management costs due
to climate change

Long-term

Physical
Risks• Determine cost of rising temperaturesand rising sea level• Perform DD and risk assessment• Quantify risk related to future operating • S cenario-based quantitative risk assessment (in progress)
cost increases*1 Timeframes defined as follows: Short term: within a few years Medium-term: By roughly 2030 Long-term: By roughly 2050
*2 Abbreviations: CAPEX: capital expenditures EMS: environmental management system DD: due diligence

10~15%
100%

While climate change presents business risks, it also provides opportunities for socioeconomic reform and new value creation.
JRE is driving the below strategies to increase value and to seize REIT growth opportunities in terms of internal growth,­external growth, and financial strategy.
Internal Growth Opportunities
Effective CAPEX (capital expenditure) control/internal carbon pricing

19Japan Real Estate Investment Corporation

10~15%
Reduction from Grid decarbonisation,
Renewable energy, New acquisition& disposition. Operation at site, etc.

65%
or below* Intensity base (kg-CO2/m2)

The reduction through renovations and ZEB properties above is
supported by the engineering study conducted by Mitsubishi Jisho
Sekkei Inc. We conducted theoretical scenario analysis supportedby the extensive track record of renovations of Mitsubishi Jisho
Sekkei Inc., as well as studies based on the on-site inspections.
The study results are as follows (comparison of the same property):
The theoretical scenario analysis supported by the Mitsubishi
Jisho Sekkei Inc.
FY2013Emissions (t-CO2/year)

know how much CO2 saved of the entire portfolio and how
much it costs to reduce 1t-CO2.
	  Generally, introduction of renewable energy has been considered cost effective to reduce GHG emissions rather thanrenovation work. However, JRE has found that retrofitting
existing buildings will also reduce GHG emissions without significant additional costs.
3. Pathway for CO2 Emissions Reduction by 2030
CO2 Emissions Reduction Pathway	JRE aims for 35% reduction of CO2 emissions by 2030
(carbon intensity basis). The breakdown of the reduction
is shown in the bar chart in the top-right. We expect 25%
reduction mainly from renovation works of existingbuildings and ZEBs.

Case I

Case II

Case III

105,386

89,314

84,59082,620Compared to 2013—–15.3%–19.7%–21.6%

Emissions per unit floorarea (kgCO2/m2)

92

67.6

64

62.6

Compared to 2013—–26.5%–30.4%–32.0%—

No additionalcost

JPY 1.1
billionJPY 3.2
billion

JRE’s Approaches toward Climate Change Opportunities and JRE’s KPI

2. Internal Carbon Pricing
	JRE develops a medium-term construction budget every year.
As for green refurbishments (air conditioning and LED
upgrades, toilet & washroom refurbishment for common
areas, etc.), we calculate how much we can have the energy
and water reduction effects from these works. The impacts wecalculate are converted into CO2-ton equivalent, which helps us

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

25%
or moreExtra cost

1. Effective CAPEX Control
	JRE-AM has a dedicated engineering team (Lifecycle Design
Office), which is engaged in efficiently controlling CAPEX andrefurbishment works of over 70 properties. Furthermore, we
collaborate with the engineering team of Mitsubishi Jisho
Sekkei Inc., which is one of the leading architectural firms inJapan, to conduct technical assessments of our properties,
review lifecycle costs of the existing properties, and control
costs.

2030
Target year

• Utilize technological expertise of our sponsor group(engineering team of Mitsubishi Jisho Sekkei Inc.)•B rown discounts of theexisting buildings•S tranded assets

Market2013
Base year

WEB

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

Asset-level Renovation Projects and Value-add Approach
While improving the energy efficiency of individual buildings
serves as an advance response to the transition risk of reducing
GHG emissions, it also serves as an opportunity to improve profitability by increasing net operating income (NOI) via savings of utility costs and raising appeal for environmentally conscious tenants.
JRE is reducing utility costs by upgrading to LED lighting.
Furthermore, we are moving forward with asset-level green
refurbishment projects. These projects receive a green premium
after conferring with tenants comprising increased rent and payment into a cooperative green fund, resulting in lower emissions
and higher profitability.
Please refer to page 21 for more details.

Future ZEB Achievements in JRE’s Portfolio
JRE aims to own 5–10 ZEBs by 2030 (including ZEB Ready andZEB Oriented buildings). In collaboration with Mitsubishi Jisho
Sekkei Inc., we have started to verify the future possibility tomake the existing properties to ZEBs through renovations.

The Mitsubishi Jisho Sekkei CO2 Reduction
Study Report.

External Growth Opportunities
With the cooperation of JRE-AM’s sponsors, Mitsubishi EstateCo., Ltd and Mitsui & Co., Ltd., we continue to build a portfoliothat balances profitability with adaptability to a decarbonizedsociety by leveraging property replacements and mutual
trading to replace older properties with newly constructed buildings with high energy efficiency.

Example of Property Replacement with Sponsor:

Disposed

Shibuya Cross Tower(building section)

Acquired

CO2 emissions

Water usage–89.2%–83.4%

Front Place Nihonbashi
Actual yield after depreciation
2.2%

3.1%

Financial Strategy Opportunities
As the financial impact of climate change comes increasingly tolight, it is likely that financial institutions and investors will place
more focus on green financing. As a green investment and lending target, JRE has developed a green bond framework and has
been promoting green financing as a means to acquire advantageous funding opportunities.

To ensure that our green commitment can be objectively verified, we are making use of DBJ Green Building certification,
BELS certification, and other certifications, establishing a systemfor evaluating and measuring positive impacts on the environment and society, and also actively reporting to external parties.
Please refer to page 22 for more details.

Japan Real Estate Investment Corporation

20

Green Bonds

Green Bonds
JRE issues Green Bonds in order to further promote our sustainability initiatives. Going forward, we will promote energy
conservation, improve customer satisfaction, and encourage acquiring green building certifications through various measures such as refurbishment work and other ESG investments that give consideration to the environment, and achieve Positive
Impact* by doing so.

TOPICS

Refurbishments of Shiba 2Chome Daimon Building

Use of Proceeds from Issuing Green Bonds

Green Bond Framework

The net proceeds of Green Bonds are used to refinance and/or
finance the refurbishments to or the acquisition of assets thatmeet the eligibility criteria.

Eligible Green Projects must meet one or more of the following
eligibility criteria.
(i) Refurbishmentsa.	Refurbishments with more than 10% reduction in
CO2 emissions or energy consumptionb.	Refurbishments with more than 10% reduction in water
consumptionc.	More than one level of star/rank improvement in the green
building certifications listed in (ii)d.	Refurbishment that contributes to the conservation andrecovery of biodiversity, including of diversity of outdoor
plants will also be considered if one or more of “a” through“c” criteria in (i) are met.
e.	Refurbishment that contributes to the local community by
improving public open space connected to the buildings andrenovating for accepting people who are temporarily unable
to return home will also be considered if one or more of “a”
through “c” criteria in (i) are met.
f. Either one of the certifications/recertification listed in (ii)Name of investment Japan Real Estate Investment Corporation
corporate bonds
12th Unsecured Bond
Date of issue

November 1, 2018

Final redemption
date

November 1, 2023

Payment period

Five years

Total amount ofbonds to be issued

JPY 10.0 billion

Denomination ofeach bond

JPY 100 million

Subscription
methodPublic offering

Interest rate

0.23%

RatingAA (Rating and Investment Information, Inc.)

Underwriters

Mizuho Securities Co., Ltd., Mitsubishi UFJ Morgan Stanley
Securities Co., Ltd., SMBC Nikko Securities Co., Ltd.,plus two other companies

Use of proceeds•R efurbishments of Shiba 2Chome Daimon Building:
JPY 1.0 billion• Repayment of loan for acquiring Akasaka Park Building:
JPY 6.0 billion•R epayment of loan for acquiring Shijo Karasuma
Center Building: Any remaining proceeds(ii) Acquisition
a. 3, 4 or 5 Stars under the DBJ Green Building certification
b. 3, 4 or 5 Stars under BELS
c. B+, A or S Rank under CASBEE

ReportingWinning the ESG Finance Award

Allocation Reporting
Fund allocation is reported every year at the end of March.
Impact Reporting
1 We disclose the progress and levels of certifications of Eligible
Green Projects that have been funded by the green bonds.
Additionally, JRE discloses the following indicators.
• Energy consumption   • Water usage   • CO2 emissions
2 The environmental impacts resulting from refurbishment will be
disclosed annually after the construction has been completed.
3 JRE will indicate either an estimated % of reduction of energy
consumption or water usage or CO2 emissions before and afterrefurbishment.

JRE Investment Corporation Bonds(JRE Green Bonds) won bronze at
the Ministry of the Environment’s
inaugural ESG Finance Awards in
February 2020.

* Changes in customer satisfaction and actual investment returns are disclosed
on an optional basis.

 valuation by an External Organization
E(Second-Party Opinion)
JRE has obtained a second-party opinion from Sustainalytics, aninternational ESG evaluation company for the eligibility of its
green bond framework.
WEB

About the Sustainalytics Second-Party Opinion

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

Achieving Positive Impact (Expected Value)
Energy consumption
Reduce by

30%

Water consumption
Reduce by46

Overview

Greater tenantsatisfaction
Green Building certification(result)%

Investment return of

4~5%

Elevator hall after renovation

Replacement of Building Equipment to Reduce
Environmental Impacts
Installation of highly efficient air conditioning and
LED lighting inside the building
Consideration for the Health and Well-Being ofTenant Employees
Provision of spaces for relaxation and refreshmentwith greenfield areas and natural materials
Improvement of Business Environment with High
Tenant Satisfaction
Development and expansion of lounges and othershared spaces as requested by several tenants on
tenant satisfaction surveys
Enhanced Value in Terms of Design
Investigation into ESG-conscious design in addition
to updating existing image to enhance building
presence

Overview of Refurbishments and Property
Project Name
Shiba 2Chome Daimon Building Refurbishment
Project
Project System
Design supervision: Mitsubishi Jisho Sekkei Inc.
PM company: Tokio Marine & Nichido Facilities, Inc.
Design and construction: OBAYASHI CORPORATION
and others
Construction period: April 2018–2021 (planned)

Property Overview
Name of property: Shiba 2Chome Daimon Building
Location: 2-3-3 Shiba, Minato-ku, Tokyo
Area: Land: 2,820m2 Building: 16,235m2
Structure: Steel-framed reinforced concrete
structure, 2 floors below ground, 8 floors
above ground
Time of construction: March 1984
Type of ownership: Land and building
Time of acquisition: September 2001

IMPACT

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

* “Positive Impact” is defined as “that which produces a positive impact on society or the environment and simultaneously ensures the market-level return”. It is advocatedby the United Nations Environment Programme–Finance Initiative (UNEP FI).

21

Japan Real Estate Investment Corporation

Japan Real Estate Investment Corporation

22

Society
Relationship Between JRE’s Real Estate Investments and Stakeholders
JRE makes investments based on its ESG Policy and conducts office building management and operations in order to generate stable and sustainable profits. We are creating a system to improve property value and generate returns over the
medium-to-long term by both increasing stakeholder engagement and promoting environmental initiatives.
Sustainability Policy
Please refer to page 05-06 for more details.

1. Contribution to creating a low-carbon society
2. Contribution to creating a recycling-­oriented society
3. Contribution to creating a society in harmony with nature

4. Enhancement of safety and security
5. Initiatives aimed at officers
and employees
6. Collaboration with external stakeholders
7. Information disclosure and obtaining environmental certifications

Investment andmanagement

Unitholders

Society

Contributing
toward increasing
the value of theentire portfolio

JRE

Office Building
Investments

Japan Real Estate Investment Corporation
Employees

Based on its ESG Basic Policy, JRE-AM strives to improve thevalue of properties by promoting investment management of officebuildings with consideration for the health and well-being of tenant workers. Similarly, JRE-AM practices corporate managementthat enriches both the Company and employees through efforts toimprove the physical and mental health of officers and employees.

ESG disclosure,improving
evaluations fromexternal parties

P25 Tenants and Partners
P26 Local Communities
P27 Employees

Please refer topage 27-29 formore details.

JRE-AM’s Responsibility

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

Promotion of
ESG-related
initiatives

PM Companies

Employees

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

• GRESB

Contribution to
the environmentand society

Tenants
Local
Communities• ESG Finance Award• DBJ Green Building certifications

Local
Communities

Please refer topage 26 formore details.

23Japan Real Estate Investment Corporation

PM Companies

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

Please refer topage 25 formore details.

Tenants

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

Please refer topage 25 formore details.

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

Japan Real Estate Investment Corporation

24

Stakeholder Engagement
Tenants and Partners

Local Communities

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

Introduction of Green Leases
We are promoting the incorporation of green lease clauses into
lease contracts with tenants.
Survey on Tenant Satisfaction
We carry out satisfaction surveys to achieve a high level ofcustomer satisfaction and realize sustainable buildings.
Feedback of Environmental Data / Online Tenant Services on theInternet
We provide feedback to tenants including energy, water usage, andwaste-related data. In addition, we provide online feedback andservices using our proprietary system.

Percentage of Buildings with
Green Leases

Percentage of Buildings Receiving
Environmental Data Feedback

71 buildings total

54.9%
71 buildings total

31.0%

Percentage of Buildings Conducting
Survey on Tenant Satisfaction

Percentage of Buildings Receiving
Online Tenant Services

71 buildings total


31.0%

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

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

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

71 buildings total

57.7%

As of March 2020

Feedback on Sustainability to PMs
JRE conducts surveys for PMs for all properties in the portfolio
based on the GRESB-related questions, a global real estate sustainability certification. Based on the survey results, we analyze
sustainability efforts at each asset level.
As for the survey results and each property’s sustainability
efforts, we provide PM companies with opportunities toprovide feedback.

We believe that property managers whoare connected with tenants and visitors toeach building will improve the level ofsustainability of our entire portfolio by raising
their sustainability-related knowledge andawareness.
Score for each building

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

TOPICS

Introducing town development to increase sustainability

Urban redevelopment project in cooperation with

Strategy to Attract Tenants to Achieve Urban Revitalization

Mitsubishi Estate Co., Ltd.: Link Square Shinjuku

For our properties in the Tokyo area, we have adopted a strategy

Link Square Shinjuku, which is directly connected to the pedestrian

to attract tenants that will help to make the city more attractive

deck of Shinjuku Station, was completed and opened in 2019 and has

and revitalize the region based on the Urban Development Systemhelped bring new liveliness to the area as a hub connecting theUtilization Policy for New City Development of the Tokyo Metropolitan

Shinjuku, Yoyogi, and Sendagaya area.

Government.

The subsequent redevelopment project removed the three aged

Seminar held in May 2019, with over 180 attendees

At TIXTOWER UENO, stores and educational businesses in line withbuildings which were built according to old earthquake resistancethe characteristics of the area were invited to be tenants in order to foster

standards and constructed a new 16-story complex consisting ofa downtown bustling atmosphere while preserving the original mood of

offices, commercial facilities, and facilities that contribute to thethe area and enhancing the urban function of the building as a highly

community, which has greatly enhanced the attractiveness of theconvenient spot for the local community.

area while enhancing the disaster preparedness function for thecommunity.

25

Japan Real Estate Investment Corporation

Japan Real Estate Investment Corporation

26

Stakeholder Engagement
Employees (Human Capital Development)

Well-being

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

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

Talent Pipeline & Development Strategy
We have access to professionals with extensive experience andexpertise in real estate investment and asset management as
seconded staff from our shareholders, Mitsubishi Estate Co., Ltd.
and Mitsui & Co., Ltd., and also recruit experienced, talented
individuals, to acquire competent personnel on a timely basis.
We employ a human resources development strategy that
includes a support for acquiring various qualifications andspecialized training after joining the Company. In addition, we aredeveloping an easy-to-work-in environment for employees that is

Creating Productive and Employee-friendly Workplace
mindful of their health and well-being.
Whereas JRE-AM currently does not hire new graduates, we
continually host junior employees (with fewer than ten years’
experience) seconded from our sponsors who regularly recruit new
graduates. By creating a well-balanced, diverse workforce
consisting of both young and experienced profes­sionals, we ensurethat our specialized knowledge and skills in real estate asset
management are shared and passed on within the company,
thereby enhancing the sustainability of the organization as a whole.

Human Capital Development
Learning and Development for All Employees
We encourage all employees, including permanent, seconded, contract, and temporary staff, to pursue self-development and profes­sional
development. We conduct our own training programs that increase knowledge of the REIT industry and awareness of compliance issues.
Furthermore, we encourage employees to actively participate in a variety of training programs offered by our shareholders. By participating in such programs, we expect each employee to develop as both a business person and an industry professional.
Specialized Skills Training
We offer training programs led by external lecturers and experts that
improve employees’ professional and practical skills, helping them
become professionals in the fields of REITs and real estate asset
management. Further, we encourage all employees and officers to
pursue educational opportunities outside the company by subsidizing relevant educational expenses such as the costs of attending
seminars and training programs offered by external organizations.
Advanced Leadership Development
At JRE-AM, managerial positions are given to those who display

management potential and show a willingness to acquire specialized knowledge from both inside and outside the Company. Afterthese managers are appointed, we expect them to improve their
management abilities on a voluntary basis. To support their participation in management seminars and symposiums, we bear thecosts of these activities. To ensure up-to-date knowledge of laws,
such as the Financial Instruments and Exchange Act and the Act
on Investment Trusts and Investment Corporations, we periodicallyinvite external experts to lecture on these topics, and also provide
training for managers conducted by our shareholders (sponsors).

1

	Compliance training for those engaged in investment managementbusiness (June and September 2019)4

Sustainability Seminar (January 2020)

2

Internal Audit Seminar (June and July 2019)5

Seminar by Industrial Physician on Stress (October 2019)3

Anti-money Laundering Training (February 2020)

6

Anti-Harassment Training (February 2020)

Fair Performance Evaluation and Remuneration

27

Japan Real Estate Investment Corporation

Human resources
evaluation system
Performance evaluation
Process evaluation

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

Percentage of
employees who had
performance
review meetings100%Office Design Promoting Internal Communication
To coincide with our relocation, we have adopted a free seating system for employees and have upgraded communication spaces within
the Company. These spaces are aimed at invigorating in-Company
communication and have been set up to add a playful touch to ouroffice and promote
employees’ physicalactivities. We believethat these offices will
facilitate work stylereforms and lead to
improved productivity.

Promote Diverse Work Styles
We endeavor to provide a comfortable working environment byoffering various employee benefit programs and promoting abetter work-life balance so that no employee has to give up theiremployment for childbirth, childcare, nursing care, or other life
events.
Introduction of Flex-Time Working Hours for All Employees
We have introduced a flex-time system for all employees in which
they can schedule their daily working hours outside of our core

Employee
Voice

Examples of Training Programs by External Lecturers in Fiscal 2019 (20 Programs Conducted Total)

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

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

Thanks to the flextime system, I was able towork without having to worry about sticking
to set working hours or having do work a set
amount of hours each day, which let me work
after returning from childcare leave without
trouble. Since the core required time under this system can be as short as two hours, I can adjust my day to suit
my child’s schedule for things such as vaccinations, nurseryschool events, or whatever else may come up. What is more,business hours of 1pm until 3pm which allows employees to find amanner of working that suits their lifestyle. Furthermore, prescribed work hours are managed by the month and not by the day,meaning that employees can measure their work obligations andprivate affairs and come up with a working style that takes into
account a proper work-life balance.
As part of our business continuity plans during times of
emergency, we have an operating environment that allows forremote working as needed.

I can work more efficiently by deciding and managing myown daily working hours. All in all, I feel like the system has
improved my productivity.
The work environment is such that I can take paid leave
with ease, so even though
I have a small child I canstill find time for myself,
and this work-life balanceis another plus for me.

Daily schedule
7:15

7:30

Drop-off child at Commute
nursery school

8:30

16:30

17:30

Begin work

Finish work

Pick up child

Japan Real Estate Investment Corporation

28

Stakeholder Engagement
Non-Financial Data Highlights

Creating Fair Work Environments

Communication with Employees
We implement the following measures to foster an open and efficient communication environment among all employees.
Satisfaction Survey
We believe that hearing the frank and honest opinions of employees is indispensable for creating a good work environment. In accordance with this recognition, the HR department regularly conducts
the Employee Satisfaction Survey* and interviews employees inorder to improve working environments.
* The Employee Satisfaction Survey is conducted on condition of anonymity inorder to collect frank and honest opinions. The survey results are shared with
the CEO and all employees, and the data is utilized for improvement activities.

Anti-harassment
We conduct anti-power harassment and anti-sexual harassment
training regularly to raise awareness, and provide employeeswith the tools and guidance they need to identify, preventand remove sexual/power harassment from the workplace.
Furthermore, we keep everyone informed about the existence ofthe compliance hotline.
Support for promoting a strong team culture
We provide a certain amount of subsidies for expenses related to
employee social gatherings, such as welcome parties and yearend parties, to support building and maintaining a strong teamculture among employees. We believe it helps not only with creating a comfortable work environment but also strengthening thecompany’s competitiveness through open communication.

Employee-related data is listed below. Particularly notable is data related to the active participation of women, as the
proportion of female employees at the Company has increased for the third consecutive year, far exceeding the averagefor Japanese companies of 25.2%.* In addition, results from the reporting period below show a 100% return and retention
rate for employees 12 months after taking childcare leave.
* Source: “Corporate awareness survey on promoting the participation of women in their workforce” conducted in August 2019 and released by Teikoku Databank Ltd.

Number of employees

Employee hotlines & grievance reporting
For the purpose of empowering staff, uncovering risks/problems,and increasing workplace satisfaction, all employees can consult
with either the GM of the Compliance Department, a legal advisory firm, or an external specialist organization on such matters
as work problems, grievances, improvement requests, and whistleblowing on illegal/unethical behavior by officers and employees.
Every employee can access the above hotlines at any time andconsultations can be made anonymously, and whistleblowers are
given protection under the Whistleblower Protection Act or theequivalent. If deemed necessary, the contact point will report thedetails of the consultation to the Representative Director, and theRepresentative Director will conduct an investigation inconsideration of the human rights of the employees and take themeasures necessary for resolution of the issue.

14

We are conducting operations while staying mindful of work-lifebalance in an effort to prevent infection. Therefore, we haveestablished rules for adopting teleworking and are promoting
staggered commuting. We have clarified work priority and promote the use of IT through online meetings and other means,and have set up a system that allows work to be carried out
smoothly even when working from home. In the office, we arecareful to apply disinfectants and wear masks to prevent infection. Moreover, JRE-AM has entered into an advisory contract
with an industrial physician in consideration for the physical andmental health of
employees. JRE-AM’s
employees can receive
health consultations
based on this contract.
These consultations
can be conducted
online if requested andTemperature measurement with a non-contact
they will continue to be
thermometer

29

Japan Real Estate Investment Corporation

23.0

18

21

23

22

15.3
9.6

23
FY2017FY2018FY2017FY2019Training expenses per employee(%)(JPY per year)

48.8

43.9

37.8

FY2018FY201931,880FY2017Monthly average overtime(hours per month)

We are working to ensure the safety and security of our tenants byproviding disinfectants in common areas, communicating the benefits of washing hands, gargling and wearing masks, and setting up
stations to check temperatures with non-contact thermometers.

FY2018FY20194.05

14.1

Consideration for Tenants

Consideration for Suppliers

FY2018(days)

13.9

FY201939,72834,647

Annual paid leave per person

used as a measure to support the mental health of employeesamid COVID-19.

Taking the health and safety of employees of the suppliers suchas construction companies, equipment companies, and PM companies into consideration, particularly as it pertains to preventing
the spread of infection, we are postponing refurbishment works
and maintenance inspection when possible after weighing
urgency and importance. At the same time, we are making efforts
to ensure safe operations by distributing work through rotatingschedules.

FY2018

Female employee ratio

FY2017

Amid the ongoing impact of COVID-19, we are making a variety of efforts to protect the health of JRE-AM’s employees andour tenants and to provide a safe working environment. We will continue keep an eye on social trends and respond torequests from the government in a flexible manner.

(hours per year)

43

41

37

Policies and Initiatives amid COVID-19

Consideration for Employees

Training hours per employee■ Male ■ Female(persons)

FY2019FY20172.30

2.10

FY2018FY2019Other diversity-related data
FY2017FY2018FY2019Number of employees

37

41

43

Foreign employees

0

0

1

Women in senior management positions(deputy manager or above)

1

2

2

Japan Real Estate Investment Corporation30

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

Asset Custody Company

Investment Corporation

Asset Custody
Entrustment

Trust BankJapan Real Estate
Investment Corporation

Administrative Agent

Asset Manager

Asset Management
Entrustment

Japan Real Estate
Asset Management Co., Ltd.

Administration
Entrustment

Trust Bank

Governance

General Meeting of Shareholders

Auditors

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

Board of Directors

Compliance Committee

P32 Management System
P33 Risk Management
P36 Compliance System

Investment Management Council

President & CEO

Compliance Department

Planning
Department

WEB

31

Japan Real Estate Investment Corporation

Finance &Accounting
Department

Real Estate
Investment
Department

Real EstateManagement
Department

Corporate
Administration
Department

Risk Management
Department

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

Japan Real Estate Investment Corporation32

GovernanceRisk Management
In order to gain an understanding of risk inherent in operations and manage them in appropriate fashion, JRE-AM has formulated a Basic
Risk Management Policy, Risk Management Regulations, and Risk Management Rules, and has established the Risk Management
Department, which handles risk management for JRE and reports the status of risk management for JRE to the Board of Directors.
1 Basic Risk Management Policy
This policy defines JRE’s basic policy regarding risk management. This policy stipulates: 1) the classification and definition ofrisks and management in line with the characteristics of eachrisk; 2) risk identification, assessment, and analysis; 3) activities
to mitigate risks based on assessment and the means tomonitor these activities; and 4) implementation of measureswhen risks become apparent. This policy also lays out provisions
for an organizational structure regarding risk management andfor reporting to the Board of Directors.

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

1. Recognize the external and internal environment
Recognize changes in the external environment(market trends, regulatory and institutional trends, etc.) and internal environment(organizations, processes, systems, etc.) and reflect them in the following processes

2 Risk Management Regulations
Under the Basic Risk Management Policy, the Risk Management Regulations clarify the types of risks related to JRE’s business operations
and where they may occur, and determines management methods and systems to mitigate these risks.
Types of Risk

2. Identify risks and review

1. Asset management risks•R eal estate investment risks (risks related to volatility in thereal estate market, real estate credit risks, etc.)• Other asset management risks (market risks, credit risks,
operational risks, etc.)

Identify risks comprehensively according to the operational processes andsub-processes of each department and review them using benchmarks
such as supervisory guidelines and case studies• Reputation risks (risks caused by the spread of negative
information or perception)• Event risks (risks caused by unpredictable external factors
such as earthquakes and other natural disasters)

3. Assess specific risks

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

Risk Management System
The Board of Directors determines the Basic Risk Management Policy and supervises the development of an appropriate risk management system. In addition, the Risk Management Department has been established as the department responsible for handling risk management, and risk management managers have been assigned to each department to promote appropriate risk management.
Furthermore, the status of risk management is reported to the Board of Directors.

Assess specific risks based on “impact” and “frequency of occurrence”

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

3 Risk Management Rules
In accordance with the Risk Management Regulations, the Risk
Management Rules stipulate that each department is to clarify
the risks to be managed, that each department is to recognize
and address these risks, and that the Risk Management
Department will monitor these efforts. As a general rule, once

every fiscal year, each department uses a “Risk Assessment
Table” to revise their list of risks, reassess their approach, andreview countermeasures. The Risk Management Department
monitors these actions and reports their findings to the Board of
Directors.

5. Assess residual risks
Assess residual risks based on the results of assessing (3) and (4)Basic Risk Management Policy
Determine the Company’s basic
policy related to risk
management.

33

Japan Real Estate Investment Corporation

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

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

Japan Real Estate Investment Corporation34

Governance

Basic Principle of Compliance for JRE

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

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

Basic Principle of Compliance for JRE-AM
1 1st Line of Defense—Self-Control by Front DivisionsA compliance manager has been appointed in each department to promote compliance, which includes daily compliance checks andassessments, formulation and implementation of compliance programs, and formulation and implementation of rules and manuals
under jurisdiction of each department.

1 Ensuring thorough compliance is its basic management principle, since JRE-AM fully understands that any insufficiency in compli-

ance would affect even its management base.
2 As an asset management company, JRE-AM recognizes that it bears the responsibility for realizing the values that are required bysociety in its business operation, and makes proactive and continuous efforts for full compliance to enhance the value of its business
operation both qualitatively and quantitatively.

A risk management manager is appointed in each department to promote efforts such as reviewing the “Risk Assessment Table,”

3 JRE-AM is the asset management company of the real estate fund which is jointly managed by Mitsubishi Estate Co., Ltd., and Mitsui

gaining an understanding of the types of risks inherent to work under the jurisdiction of each department in order to ensure that

& Co., Ltd. across business boundaries-they are Japan’s leading companies in real estate, finance, and risk management. JRE-AM

these risks are managed appropriately.

therefore promotes a sophisticated compliance system as the key member of these companies.

A compliance program has been developed as a concrete implementation plan aimed at achieving proper compliance.

1st line of defense
2 2nd Line of Defense—Control by Risk Management and Compliance DivisionsT he Compliance Department drafts general compliance plans, practices compliance, and inspects, checks, and works to improve thelevel of compliance in each department.

4 JRE-AM is determined to achieve a reputation for quality among its investors by promoting compliance activities, and thereby gains

the trust of a wide spectrum of society.

Conflict of Interest Policy of JRE-AM
JRE-AM recognizes the importance that its business of investing the assets of the investment corporation (JRE) is to manage the funds ofthe unitholders of the investment corporation, and makes it a principle that JRE-AM always gives the first priority to the interest of theinvestment corporation, which entrusts the asset investment to JRE-AM, and performs the asset management services in a loyal, fair, sincere, and equitable way. JRE-AM acts in the best interest of the investment corporation, and discharges the fiduciary duties as an asset
management company, and makes a fair deal at all times.
Decision-making structure in internal control systemIn addition to planning and promoting the Basic Risk Management Policy, the Risk Management Department monitors the status ofrisk management in each department and provides direction based on the “Risk Assessment Table.”

In a case where a transaction is made with an interested party and above a certain amount

Consideration, Selection, Draft
by Department in Charge<The first compliance check>

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

Preliminary Verification
by Compliance Department<The second compliance check>

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

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

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

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

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

A Compliance Committee has been set up to examine, deliberate over, and make decisions on compliance-related concerns andpressing matters such as important transactions that involve key related parties. Independent external experts also serve in the committee as members.

A variety of compliance training is conducted to ensure an understanding of the laws and regulations to be complied with, and toensure that officers and employees can engage in activities while maintaining thorough compliance.

2nd line of defense

Rejectand referback

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

3rd line of defense

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

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

WEB

35

Japan Real Estate Investment Corporation

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

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

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

Japan Real Estate Investment Corporation

36

GRI Content Index

GRI 100:Universal Standard
GRI Index
102
GeneralDisclosures
2016

2020.04.17

Location on the Company’s web site

GRI Index

102-1 Name of the organization⋅Overview of JRE⋅IR Library (Japanese-language web site)⋅Corporate Data
⋅The securities report (available only in Japanese)

102-2 Activities, brands, products,
and services⋅Portfolio List (Portfolio Overview)⋅IR Library (Japanese-language web site)⋅The securities report (available only in Japanese)

102-3 Location of headquarters⋅Overview of JRE⋅IR Library (Japanese-language web site)⋅Corporate Data
⋅The securities report (available only in Japanese)

102-4 Location of operations⋅Overview of JRE⋅IR Library (Japanese-language web site)⋅Corporate Data
⋅The securities report (available only in Japanese)

102-5 Ownership and legal form

⋅Organizational Structure⋅IR Library (Japanese-language web site)⋅The securities report (available only in Japanese)

102-6 Ownership and legal form

⋅Portfolio List (Portfolio Overview)⋅IR Library (Japanese-language web site)⋅The securities report (available only in Japanese)

102-7 Scale of the organization⋅Overview of JRE⋅Financial Highlights⋅IR Library (Japanese-language web site)102-8 Information on employees
and other workers⋅“JRE-AM website”>Employee Initiatives⋅Sustainability Committee⋅Governance Structure of JRE⋅Management System

102-20 Executive-level responsibility
for economic, environmental, and social topics⋅Basic Policy and Management Structure of ESG(Environmental, Social and Governance) Issues⋅Governance⋅Sustainability Committee⋅Compliance System

102-21 C onsulting stakeholders
on economic, environmental, and social topics⋅Environmental Measures⋅Social Responsibility⋅“JRE-AM website”>Employee Initiatives⋅Contributions to the Environment through Real
Estate Investment Management⋅Improving Tenant Satisfaction⋅Relationship with Local Communities⋅Initiatives for Employee

Initiatives for stakeholder engagements are included in the matters under the jurisdiction of
Sustainability Committee and periodically reported to JRE’s board of directors’ meeting.
⋅Sustainability Committee⋅Governance Structure of JRE⋅Management System⋅Compliance System⋅Corporate Data
⋅Trend of Financial Results⋅The securities report (available only in Japanese)

102-23 C hair of the highest governance body⋅JRE Information⋅“JRE-AM website”>About JREA

⋅History/Directors’ Profile⋅Directors⋅Employee Initiatives

102-24 Nominating and selecting
the highest governance body⋅IR Library⋅Articles of Incorporation

102-25 Conflicts of interest⋅Governance⋅Compliance System

102-26 R ole of highest governancebody in setting purpose,values, and strategy⋅Basic Policy and Management Structure of ESG(Environmental, Social and Governance) Issues⋅Sustainability Committee

102-27 C ollective knowledge ofhighest governance body⋅Basic Policy and Management Structure of ESG(Environmental, Social and Governance) Issues⋅Sustainability Committee

102-29 I dentifying and managing
economic, environmental,
and social impacts⋅Basic Policy and Management Structure of ESG(Environmental, Social and Governance) Issues⋅Governance⋅Sustainability Committee⋅Management System

102-30 E ffectiveness of risk management processes⋅Basic Policy and Management Structure of ESG(Environmental, Social and Governance) Issues⋅Governance⋅Sustainability Committee⋅Management System

102-31 Review of economic, environmental, and social topics⋅Basic Policy and Management Structure of ESG(Environmental, Social and Governance) Issues⋅Sustainability Committee

102-32 H
 ighest governancebody’s role in sustainability
reporting⋅Basic Policy and Management Structure of ESG(Environmental, Social and Governance) Issues⋅Sustainability Committee

102-33 Communicating criticalconcerns⋅Basic Policy and Management Structure of ESG(Environmental, Social and Governance) Issues⋅Governance⋅Sustainability Committee⋅Management System⋅Compliance System

102-34 Nature and total numberof critical concerns

No significant concerns are reported during the reporting period.

⋅IR Library(Japanese-language web site)⋅The securities report (available only in Japanese)

102-11 Precautionary Principle orapproach⋅Basic Policy and Management Structure of ESG(Environmental, Social and Governance) Issues⋅Sustainability Policy“The Fourth Basic Environment Plan” developed by the Japanese Government adopts precautionary
approach. JRE agrees with the plan and sets its “Sustainability Policy” and implements various initiatives.

37⋅Basic Policy and Management Structure of ESG(Environmental, Social and Governance) Issues⋅Governance⋅Basic Policy and Management Structure of ESG(Environmental, Social and Governance) Issues⋅Governance102-9 Supply chain

102-13 Membership of associations

102-19 Delegating authority

102-22 C omposition of the highest
governance body and its
committees

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

102-12 External initiatives

102
GeneralDisclosures
2016

Location on the Company’s web site

⋅International Initiatives⋅External Evaluation and Certifications⋅Climate Change Initiatives⋅Signatory to PRI⋅Signatory to UNEP FI⋅Participation in UNGC
⋅Commitment to GRESB⋅Supporting the TCFD Recommendations⋅International Initiatives⋅External Evaluation and Certifications⋅Climate Change Initiatives⋅Signatory to PRI⋅Signatory to UNEP FI⋅Participation in UNGC
⋅Commitment to GRESB⋅Supporting the TCFD Recommendations

102-14 Statement from seniordecision-maker⋅Message from Executive Director⋅“JRE-AM website”>Message from the President

102-15 Key impacts, risks,and opportunities⋅Basic Policy and Management Structure of ESG(Environmental, Social and Governance) Issues⋅Message from Executive Director⋅“JRE-AM website”>Message from the President⋅Climate Change Initiatives⋅Sustainability Policy Climate⋅Change-Related Risks and JRE’s Response

102-16 Values, principles,standards, and normsof behavior⋅Basic Policy and Management Structure of ESG(Environmental, Social and Governance) Issues⋅“The website of Mitsubishi Estate Co., Ltd.”⋅Sustainability Policy⋅CSR

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

102-18 Governance structure⋅Basic Policy and Management Structure of ESG(Environmental, Social and Governance) Issues⋅Governance⋅Sustainability Committee⋅Governance Structure of JRE⋅Management System

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

Japan Real Estate Investment Corporation—

Japan Real Estate Investment Corporation

38

GRI Content Index

GRI 300: Environmental Standards
GRI Index
102
GeneralDisclosures
2016

201
Economic
Performance
2016

Location on the Company’s web site102-41 Collective bargaining
agreements

Not applicable as JRE does not have employees.

102-43 Approach to stakeholder
engagement⋅Environmental Measures⋅Social Responsibility⋅Initiatives for Employee⋅“JRE-AM website”>Employee Initiatives

Energy (“Contribution to creating a low-carbon society”)
GRI Index⋅Contributions to the Environment through Real
Estate Investment Management⋅Collaboration with Suppliers⋅Improving Tenant Satisfaction⋅Sustainability Guide to Promote Owner andTenant Collaboration⋅Relationship with Local Communities⋅Initiatives for Employee

102-47 List of material topics⋅Basic Policy and Management Structure of ESG(Environmental, Social and Governance) Issues⋅ESG Information Disclosure Framework⋅GRIContent Index

102-48 Restatements of information

Not applicable—

102-49 Changes in reporting

Not applicable—

102-50 Reporting period⋅ESG Information Disclosure Framework⋅GRIContent Index⋅Reporting scope and period

102-52 Reporting cycle⋅ESG Information Disclosure Framework⋅GRIContent Index⋅Information disclosure policy

102-53 Contact point for questions
regarding the report⋅ESG Information Disclosure Framework⋅GRIContent Index⋅Inquiries

102-55 GRI content index⋅ESG Information Disclosure Framework⋅GRIContent Index⋅GRI Content Index

102-56 External assurance⋅Environmental Measures⋅ESG Information Disclosure Framework⋅GRIContent Index⋅Environmental Performance⋅GRI Content Index

201-2 Financial implications andother risks and opportunities due to climate change⋅Climate Change Initiatives⋅Climate Change-Related Risks and JRE’s
Response

103
Management Approach 2016

302
Energy 2016

Location on the Company’s web site103-1 Explanation of the material topic and its
Boundary⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Sustainability Policy

103-2 T he management
approach and its
components⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Environmental Measures⋅Green Bond

⋅Sustainability Policy⋅Environmental Performance⋅Contributions to theEnvironment through Real
Estate Investment Management⋅Collaboration with Supplier⋅Green Bond Framework103-3 Evaluation of the management approach⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅External Evaluation⋅Sustainability Committee⋅Commitment to GRESB

302-1 E nergy consumption
within the organization⋅Environmental Measures⋅Environmental Performance302-2 E nergy consumption
outside of theorganization

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

302-3 Energy intensity⋅Environmental Measures⋅Environmental Performance*1

302-4 Reduction of energy
consumption⋅Environmental Measures⋅Green Bonds⋅Contributions to theEnvironment through Real
Estate Investment Management⋅(Example) Refurbishments of
Shiba 2Chome Daimon Building*2

302-5 Reductions in energy
requirements of products and services⋅Environmental Measures⋅Environmental Performance⋅Sustainability Policy⋅GRI Content Index*1

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

List of material topics
Sustainability Policy

GRI Material Topics

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

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

3. Contribution to creating a society in harmony with nature“303:Water and Effluents” / “304:Biodiversity” / “306:Effluents and Waste”

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

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

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

7. Information disclosure and obtaining environmental certifications

2020.04.17

Reviewed bya third-party
organization“Sustainability Certification(G4 Construction and Real Estate Sector Disclosures CRE8)”GRI Index
103
Management Approach 2016

303
Water and Effluents 2018

*2

Reviewed bya third-party
organization

Location on the Company’s web site103-1 Explanation of the material topic and its
Boundary⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Sustainability Policy

103-2 T he management
approach and its
components⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Environmental Measures⋅Green Bond

⋅Sustainability Policy⋅Environmental Performance⋅Contributions to theEnvironment through Real
Estate Investment Management⋅Collaboration with Supplier⋅Green Bond Framework103-3 Evaluation of the management approach⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅External Evaluation⋅Sustainability Committee⋅Commitment to GRESB

303-3 Water withdrawal⋅Environmental Measures⋅Environmental Performance*1

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

39

Japan Real Estate Investment Corporation

Japan Real Estate Investment Corporation

40

GRI Content Index

GRI 400: Social Standards
Reviewed by athird-party
organization

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

⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Sustainability Policy

103-2 The management
approach and its
components⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Environmental Measures⋅Green Bond⋅Climate Change Initiatives⋅Sustainability Policy⋅Environmental Performance⋅Contributions to theEnvironment through Real
Estate Investment Management⋅Collaboration with Supplier⋅Green Bond Framework⋅Climate Change-Related Risks
and JRE’s Response(Transition
Risks)

103-3 Evaluation of the management approach

305
Emissions 2016

308
Supplier Environmental
Assessment 2016

103: Management
Approach 2016

401: Employment 2016

⋅Sustainability Committee⋅Commitment to GRESB

305-1 Direct (Scope 1) GHG
emissions⋅Environmental Measures⋅Environmental Performance

305-2 Energy indirect (Scope 2)
GHG emissions⋅Environmental Measures⋅Environmental Performance

305-3 Other indirect (Scope 3)
GHG emissions

Scope 3 is currently not subject to reporting, therefore it is not applicable.

305-4 GHG emissions intensity⋅Environmental Measures⋅Environmental Performance*1

305-5 Reduction of GHG
emissions⋅Environmental Measures⋅Contributions to theEnvironment through Real
Estate Investment Management*2

Supplier Environmental Assessment (“Collaboration with external stakeholders”)

103
Management Approach 2016

GRI Index⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅External Evaluation

GRI Index

Employment (“Initiatives aimed at officers and employees”)

Location on the Company’s web site103-1 Explanation of the material topic and its
Boundary⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Sustainability Policy

103-2 The management
approach and its
components⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Environmental Measures⋅Sustainability Policy⋅Collaboration with Supplier103-3 Evaluation of the management approach⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅External Evaluation⋅Sustainability Committee⋅Commitment to GRESB

308-1 New suppliers that werescreened using environmental criteria

Supplier applicable of environmental criteria was not newly hired.

308-2 Negative environmental
impacts in the supply
chain and actions taken

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

Location on the Company’s web site103-1 Explanation of the material topic and its Boundary⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Initiatives for Employee⋅Sustainability Policy⋅Initiatives for Employee

103-2 T he management
approach and its
components⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Initiatives for Employee⋅“JRE-AM website”⋅Sustainability Policy⋅Initiatives for Employee⋅Employee initiatives>Basic Policy

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

401-2 Benefits provided to fulltime employees that are
not provided to temporary
or part-time employees⋅“JRE-AM website”⋅Employee initiatives

401-3 Parental leave⋅“JRE-AM website”⋅Employee initiatives>Initiatives concerning employee health andwell-being*1

GRI Index

Reviewed by athird-party
organization

Reviewed by athird-party
organization

Training and Education (“Initiatives aimed at officers and employees”)*1103: Management
Approach 2016

404: Training and
Education 2016

Location on the Company’s web site103-1 E
 xplanation of the material topic and its
Boundary2020.04.17

Reviewed by athird-party
organization

Location on the Company’s web site103-1 E
 xplanation of the material topic and its
Boundary⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Sustainability Policy

103-2 T he management
approach and its
components⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Initiatives for Employee⋅“JRE-AM website”⋅Sustainability Policy⋅Initiatives for Employee⋅Employee initiatives>Basic Policy

404-1 Average hours of training
per year per employee⋅“JRE-AM website”⋅Employee initiatives>
Human Resources Development404-2 Programs for upgrading
employee skills andtransition assistanceprograms⋅“JRE-AM website”⋅Employee initiatives>
Human Resources Development

404-3 Percentage of employees receiving regularperformance and careerdevelopment reviews⋅“JRE-AM website”⋅Employee initiatives>
Human Resources Development

Reviewed by athird-party
organization

Local Communities (“Collaboration with external stakeholders”)
GRI Index
103: Management
Approach 2016*2

Location on the Company’s web site103-1 Explanation of the material topic and its Boundary⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Sustainability Policy

103-2 T he management
approach and its
components⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Social Responsibility⋅Green Bond

⋅Sustainability Policy⋅Relationship with Local Communities⋅Green Bond Framework103-3 Evaluation of the management approach⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Sustainability Committee⋅Commitment to GRESB*1 Ernst & Young ShinNihon LLC was engaged to provide independent limited assurance on the Environmental Performance Data on the company’s website.
*2 CSR Design Green Investment Advisory, Co., Ltd. reviewed accuracy of JRE’s ESG performance.

41

Japan Real Estate Investment Corporation

Japan Real Estate Investment Corporation

42

GRI Content Index

Others
Local Communities (“Collaboration with external stakeholders”)
GRI Index
413
Local Communities 2016

⋅Social Responsibility

414
Supplier Social
Assessment 2016413-2 Operations with significant actual and potential
negative impacts on local
communities

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

103-1 Explanation of the material topic and its
Boundary⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Sustainability Policy

103-2 The management
approach and its
components⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Environmental Measures⋅Sustainability Policy⋅Collaboration with Supplier103-3 Evaluation of the management approach⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅External Evaluation⋅Sustainability Committee⋅Commitment to GRESB

414-1 N ew suppliers that werescreened using social
criteria

Supplier applicable of social criteria was not newly hired.

414-2 N egative social impacts
in the supply chain andactions taken

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

GRI Index

416
Customer Health and
Safety 201643

Location on the Company’s web site103-1 E
 xplanation of the material topic and its
Boundary⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Sustainability Policy

103-2 The management
approach and its
components⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Environmental Measures⋅Social Responsibility⋅Climate Change Initiatives⋅Sustainability Policy⋅Contributions to the Environment
through Real Estate Investment
Management⋅Improving Tenant Satisfaction>Initiatives
for the safety and health of tenants⋅Climate Change-Related Risks and
JRE’s Response(Physical Risks)103-3 Evaluation of the management approach⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅External Evaluation⋅Sustainability Committee⋅Commitment to GRESB”

416-1 A ssessment of the healthand safety impacts ofproduct and service
categories⋅Social Responsibility⋅Improving Tenant Satisfaction>Initiatives
for the safety and health of tenants

416-2 Incidents of non-compliance concerning thehealth and safety
impacts of products andservices⋅Social Responsibility

Japan Real Estate Investment Corporation*

2

Reviewed by athird-party
organization

Location on the Company’s web site

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

103
Management Approach2016

GRI Index⋅Relationship with Local Communities

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

Supplier Social Assessment (“Collaboration with external stakeholders”)

103
Management Approach2016

Sustainability Certifications (“Information disclosure and obtaining environmental certifications”)

Location on the Company’s web site413-1 O perations with local
community engagement,
impact assessments, anddevelopment programs

GRI Index

Reviewed by athird-party
organization

2020.04.17

103
Management Approach2016

Sustainability
Certifications(G4 Construction andReal Estate Sector
Disclosures CRE8)

Location on the Company’s web site103-1 E
 xplanation of the material topic and its
Boundary⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Sustainability Policy

103-2 T he management
approach and its
components⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅External Evaluation⋅Green Bond

⋅Sustainability Policy⋅Sustainability Certification⋅Green Bond Framework103-3 Evaluation of the management approach⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅External Evaluation⋅Sustainability Committee⋅Commitment to GRESBType and number of sustainability certification, rating andlabeling schemes for new construction, management, occupation and redevelopment⋅External Evaluation⋅Sustainability Certification*2

Reviewed by athird-party
organization

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

Reviewed by athird-party
organization

Customer Satisfaction(G4 Construction andReal Estate Sector
Disclosures PR5)

Reviewed by athird-party
organization

Location on the Company’s web site103-1 E
 xplanation of the material topic and its
Boundary⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Sustainability Policy

103-2 T he management
approach and its
components⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅Social Responsibility⋅Sustainability Policy⋅Improving Tenant Satisfaction

103-3 Evaluation of the management approach⋅Basic Policy and Management
Structure of ESG (Environmental,
Social and Governance) Issues⋅External Evaluation⋅Sustainability Committee⋅Commitment to GRESB

Results of surveys measuring
customer satisfaction.

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

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

Japan Real Estate Investment Corporation

44

SASB Framework

Activity Metrics
SASB Disclosure CodeDisclosure MetricFiscal 2019

Unit

IF-RE-000.A

Number of assets

73

assets

IF-RE-000.B

Leasable floor area

871,326m

IF-RE-000.C

Percentage of indirectly managed assets

0.01

%

IF-RE-000.D

Average occupancy rate

99.7

%

SASB Disclosure CodeIF-RE-130a.5

2

FY2019 refers to the period from April 1, 2019 to March 31, 2020 (36th and 37th fiscal years).
The number of assets and leasable area are the figures for the entire year including the two properties disposed during theperiod stated above, and are therefore different from the figures at the end of the period.
The average occupancy rate is the portfolio average of the year-end occupancy rate as of March 31, 2020.

Disclosure Topic: Energy Management
SASB Disclosure CodeDisclosure MetricFiscal 2019

Unit

100%

Percentage (%)
by floor area

IF-RE-130a.1

Energy consumption data coverage

IF-RE-130a.2

Total energy consumed by portfolio areawith data coverage

244,904

MWh

Percentage grid electricity

79.02

%

Percentage renewable electricity

1.28

%

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

-4.10

%

93.64

Percentage (%)
by floor area

20.69

Percentage (%)
by floor area

IF-RE-140a.2—

IF-RE-140a.3

IF-RE-130a.3

Percentage of area with data coverage

IF-RE-130a.4

Percentage of eligible portfolio that has
an energy rating
Percentage of eligible portfolio that is certified to
ENERGY STAR

Reference
information

Percentage of eligible portfolio with Green
Building certification

Not applicable as the ENERGY STAR
Program does not target real estatein Japan
74.30

IF-RE-130a.5

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

45

Japan Real Estate Investment Corporation

Fiscal 2019

Unit

JRE measures and gains an understanding of the energy consumption, water use, and waste of each building on amonthly basis, outsourcing data calculation and data analysis to a company specializing in EMS to execute its PDCA
cycle. If there is a large difference in the aggregated data from the previous month or year, we investigate the cause by
conducting interviews with the property manager and ensuring accurate data. We also constantly monitor the reduction
effects of green refurbishments such as LED and AC upgrades.
JRE has established selection criteria for property management (PM) companies to which it commissions the management of properties, and evaluates all of the PM companies once a year, in principle. In addition to the companies’
building management and maintenance abilities, JRE evaluates the PM companies by their environmental friendlinessin terms of operations, occupational health and safety measures for their employees, and understanding of and cooperation with the Sustainability Policy set by JRE-AM. Moreover, JRE requests the PM companies to make proposals to
help JRE reduce environmental impacts, such as measures to reduce energy consumption as part of their management
duties. In this way, JRE makes environmental improvement efforts in cooperation with the PM companies.
JRE makes annual contracts with professional firms to conduct energy assessments of a selection of its properties,
and utilizes the results to understand the current level of their energy performance and to formulate future policies.
Over the past four years, a total of 45% of the properties in our portfolio (based on floor area) have been inspected bya professional firm.
JRE will continue to acquire Green Building certifications as well as other environmental certifications and evaluations. As of the end of March 2020, we have acquired DBJ Green Building certifications, CASBEE certifications for realestate, and BELS certifications for a total of 48 properties (without counting properties with more than one certification
multiple times), with a coverage rate of 73.9% based on acquisition price.

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

Disclosure MetricFiscal 2019

Unit

Water withdrawal data coverage as a percentage
of total floor area

100

Percentage (%)
by floor area

Water withdrawal data coverage as a percentage
of floor area in regions with high or extremely
high baseline water stress

At this time, there are no properties
located in regions with high orextremely high baseline water stress.

—

Total water withdrawn by portfolio areawith data coverage

887,660

m3

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

Percentage of area with data coverage

Percentage (%)
by floor area

Notes: Properties that have obtained BELS certification have been included.
Reference information:	Percentage of eligible portfolio that has DBJ Green Building certification or CASBEE certification
for real estate is 73.9% based on acquisition price.

Disclosure Metric

IF-RE-140a.4%

Percentage (%)
by floor area

93.64

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

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

Japan Real Estate Investment Corporation

46

SASB Framework

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

Reference
information

Disclosure Metric

Disclosure Topic: Climate Change Adaptation
Fiscal 2019

Unit

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

Percentage (%)
by floor area

Associated leased floor area

(To be disclosed)

m2

42.3%

Percentage (%)
by floor area

54.9%

Percentage by building

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

SASB Disclosure CodeIF-RE-450a.1

Disclosure MetricFiscal 2019

Unit

Area of properties located in 100-year
flood zones

551,331m2

Note: Amount recorded refers to the total floor area of properties located in areas where inundation of more than 0 m in depth
is expected based on the hazard map (planned scale) issued by the local government. Japanese hazard maps (planned
scale) are developed primarily for areas with an annual exceedance probability of 1/100 to 1/200 for flood damage.
IF-RE-450a.2

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

Note: “Green lease agreements” in the reference information above refers to provisions in leasing contracts related toboth refurbishments and arrangements for environmentally conscious building operations.
IF-RE-410a.2

IF-RE-410a.3

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

100

Percentage (%)
by floor area

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

90.7%

Percentage (%)
by floor area

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

Contents• Toward a Sustainable Society• Our Thoughts• Case1 Example of a Large-Scale Office• Case2 Example of Small- and Medium-Sized Offices• Case3 Creating New Spaces in the Current Office• What We Can Do Now

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

47

Japan Real Estate Investment Corporation

Japan Real Estate Investment Corporation48

Japan Real Estate Investment Corporation Sustainability Report 2020

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

Sustainability Report 2020
Printed in Japan