JAPAN REAL ESTATE INVESTMENT CORPORATION
Sustainability Report 2023

Sustainability Report2023

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

Printed in Japan

Contents
01 | Table of Contents

03 | Message from the President
05 | B asic Policy and Management Structureof ESG Issues
09 | D isclosure Policy and Signatory toInternational Initiatives
11 |	Disclosure Policy, External Evaluation,
and Certifications
13 | Environment
Setting New Targets for CO2 Emissions
Reduction for 2030 and Declaration on
Net-Zero by 2050
Environmental Measures
Climate Change Initiatives
		 Green Finance
27 |	Society
Relationship Between JRE’s Real Estate
Investments and Stakeholders
Stakeholder Engagement

Toward 2030, About KPIs
In 2019, Japan Real Estate Investment Corporation (JRE) became thefirst J-REIT to disclose information based on the recommendations
put forth by the TCFD, and in 2020, we announced environmental KPIs
such as CO2 reduction targets by fiscal 2030 . In 2022, we updated ourenvironmental KPIs in order to further promote our climate change
initiative. We have determined new targets that we considered feasible
and ambitious based on external expert verification. As a leader in the
J-REIT industry, JRE will continue to further promote ESG initiatives
in the future.

	 Tenants and Partners
	 Local Communities	 Employees(Human Capital Development)

CO2 Emissions*1(vs FY2019)

Reduce by	 Well-being

Carbon Intensity

12

Waste Recycling Rate90

	 Creating Fair Work Environments

		Non-Financial Data Highlights
35 | GovernanceManagement System
Governance Structure of JRE
Risk Management
	  Compliance System

41 | GRI Content Index
47 | SASB Framework

Water Usage*²(vs FY2019)% or higher

90

Disclaimer
JRE is not liable for any trouble, loss or damage caused byactions as made based on judgements using the information
contained in this report. In addition, please note that JRE is notliable for any damages caused by falsification of the text, content leaks, unauthorized use by a third party, or other accidents
that are not its responsibility.

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Japan Real Estate Investment Corporation

20

%

%

*1 Absolute emissions

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/%

kg-CO2/m2 or lower

Reduce by

Renewable Energy Rate

80

*2 Intensity (m3/m2) basis

3
2
0
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Japan Real Estate Investment Corporation

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Message from the President

While social and economic activities disrupted by the COVID-19 pandemic are returning to normal, anumber of risks have become increasingly evident globally due to factors including the protracted
war between Russia and Ukraine and natural disasters resulting from extreme weather. Such circumstances have reaffirmed the importance of providing for issues from a long-term perspective.
For this reason, we will emphatically continue with our initiatives to enhance sustainability.
Business activities emphasizing ESG initiatives might entail short-term costs. However, if suchcosts can be expected to mitigate future risks and increase opportunities, we should view them as
investments, rather than costs. The core mission of JRE is to provide high-quality office space while
offering long-term investment opportunities and maximizing unitholder value. The basic concept of
this core mission is highly compatible with enhancing sustainability in terms of long-term value.
In 2018, JRE established the ESG Office (currently Sustainability Management Department), a dedicated team for ESG—ahead of its industry competitors—and became a signatory to the United
Nations Principles for Responsible Investment (the PRI) in the same year. In 2019, JRE became thefirst J-REIT to disclose information following the Task Force on Climate-related Financial
Disclosures (TCFD*1) recommendations. We revised our environmental key performance indicators(KPIs) in 2022, targeting an 80% reduction in CO2 emissions by fiscal 2030 over the fiscal 2019
levels, and net-zero carbon emissions by fiscal 2050. The new targets have been approved by the
Science Based Targets initiative (SBTi*2). JRE is also committed to sourcing 100% of the electricity used at its buildings from renewable energy. In line with this aim, we have joined RE100,
a global initiative promoting renewable electricity. In addition, we acquired our fourth ZEB
Certification*3 in 2022.
Utilizing such ESG initiatives in financing, we have borrowed funds on eight occasions using sustainability-linked loans. Through such achievements and more, JRE has been lauded by stakeholders as the front-running J-REIT in promoting ESG initiatives.

e
g
a
ss
e
M

Pursuing the Best for
All Our Fellow Stakeholders andMaximizing Unitholder Value
| ESG HIGHLIGHTS |JRE Yoyogi 1Chome Building
JRE Kayabacho 2Chome Building
ZEB Certification (3rd and 4th certifications)Percentage of green building-certified
properties (Gross floor area of ownedbuilding basis) 76.3%
Inclusion in MSCI Japan
Received a rating of A in MSCI ESG Ratings
 RESB Real Estate Assessment
G
5 Stars

 DP Climate Change Program
C
Made the CDP Climate Change “A List”
 RI Assessment ResultP   • Investment & Stewardship Policy

Before taking up my current post in April 2022, I was involved in the management of global realestate investment management companies. During that time, I had the opportunity to engage insurveys regarding ESG measures at group companies in various regions across the globe. Thesesurveys reminded me that, in addition to macro-economic and property performance analyses,
evaluations of ESG measures have, in recent years, become important criteria for investors when
deciding on investment targets. With their exacting ESG standards, some investors from Europe
and North America will not invest in real estate that has inadequate environmental measures.
These investors have also established strict standards regarding the governance systems of asset
management companies. Given that foreign investors account for approximately 30% of its unitholders, the views of such investors are of the utmost importance to JRE. ESG standards extend
beyond the realm of investment. In the United Kingdom, for example, new sales or leasing
contracts cannot, in principle, be concluded for buildings with an energy efficiency rating below acertain level on their Energy Performance Certificate. In time, such regulatory trends are likely to
spread throughout the world. Indeed, we are already seeing companies selecting the buildings theyoccupy based on ESG standards.
We aim to pursue the best for all our fellow stakeholders, including tenants of buildings, those
involved in property management, neighboring communities, and colleagues who lead the management of our assets, by enhancing sustainability in relation to our business activities, which
will, in turn, maximize unitholder value. I hope this sustainability report will lead to a greater
understanding of JRE’s initiatives, which are based on such ideas.
*1 The TCFD was established by the Financial Stability Board, an international institution.
*2 The SBTi is an international initiative promoting the establishment of targets based on scientific grounds.
*3 The ZEB Certification program defines the energy performance of buildings based on a third-party certification
program led by the Ministry of Land, Infrastructure, Transport and Tourism, which focuses on energy savings.

   • Real Estate
Highest rating

Shojiro Kojima

I SS ESG Corporate Rating
Prime Status

President & CEO,Japan Real Estate AssetManagement Co., Ltd.

WEB

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Japan Real Estate Investment Corporation

For the full text, please visit the ESG website.
https://jre-esg.com/en/esg/message.html

Japan Real Estate Investment Corporation04

Basic Policy and Management Structure of ESG Issues

Basic Policy and Management Structure of ESG Issues Materiality, Objective and Target

Climate Change Initiative
Objective• Manage and reduce CO2 emissions

Sustainability Policy

JRE is committed to endeavoring to enhance consideration towards the environment, social contributions, and corporate
governance to improve the sustainability of society. We recognize that this is an important social responsibility for a listed
enterprise to assume, and also believe that it is essential for maximizing our unitholder value.
To put our commitment into practice based on the above recognition, Japan Real Estate Asset Management Co.,Ltd. (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 actions to contribute to local communities.

3 Contribution to conserving biodiversity

decarbonization and strengthening
resilience)
In order to make the move toward a decarbonized society, we will reduce greenhousegas (GHG) emissions through proactively
introducing energy efficient equipment andrenewable energy. Also, we will strengthen
the resilience of our portfolio against thegrowing frequency and severity of natural
disasters.

and ecosystem
We will conserve biodiversity and ecosystemin such a way as to select and manage nativeplant species.

2 Contribution to resource conservation

including water and resource recycling
We will protect and conserve water throughintroducing water saving equipment as well as
promoting water reuse. For the sustainable useof resources, we will reduce waste (3Rs: Reduce,
Reuse, Recycle) including plastic consumption.

4 Enhancement of tenants’ health andwell-being, and safety
We will realize “offices of tenants’ choice”
through collaborating with our stakeholders
such as property management companies.
5 Creating a workplace where a diverse

workforce can thrive
We will provide education and training programs for officers and employees to raise
ESG awareness and build capacity, as well as
support a diverse human workforce and flexible work styles to meet individual lifestyles.

We will also create an employee-friendly
workplace considering employee’s health andwell-being.
6 Enhancement of governance systems

Conservation of Water Resources
Objective• Manage and reduce water use

We will enhance our governance systems withan aim to maximizing our unitholders’ value
through complying with laws, regulations,and rules as well as ensuring appropriate
management of conflicts of interest.

Recycling and Conservation of Resources
Objective• Reduce and reuse waste

Environmental Consideration of Portfolio
Objective• Raise the proportion of “green” properties in our portfolio

7 Stakeholder engagement through infor-•P romote sustainable investment (Effective use of ESG criteria for property
acquisition)mation disclosure and ESG evaluations
We will endeavor to disclose ESG related
information, based on the various ESG reporting frameworks, to each of our stakeholders,
including our investors, thereby promoting
constructive dialogue with them.

Basic Concepts of Health and Well-beingof Tenant Workers
We strive to enhance value and competitiveness of JRE’s assets through providing officebuildings promoting health and well-being fortenant workers and increasing their productivity and satisfaction.

Social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 the selection criteria of products
to be procured and the selection and evaluation criteria for suppliers.

KPI• Waste recycling rate: 90% or more by FY2030

KPI• Maintain more than 70% of our properties are green
building-certified• Own 5 to 10 Net Zero Energy Buildings by FY2030

KPI• Collaborate with tenants on ESG through promoting green leases•P ercentage of buildings with green leases•R ealize “offices of tenants’ choice” through building management considering
tenants’ health and well-being•P ercentage of buildings receiving environmental
data feedback• Improve employeesʼ professional and practical skills and help them become
professionals in the ﬁelds of REITs and real estate asset management
through providing continuous specialized training programs and professional
qualiﬁcations encouragement•P romote the diversity of our workforce which helps us attract competentpersonnel as well as encourages business innovations

Employee Health and Well-being at JRE-AM
Objective• Strive to provide comfortable office environment and more generous employee
beneﬁts, enabling competent personnel to demonstrate their capabilities fully
and to motivate them to stay with JRE-AM for a long time.

Governance

Policy for Implementing the Sustainability Policy05 HG Emissions Reduction Policy
G
Based on our Sustainability Policy, we have
set targets for reducing energy consumption
and GHG emissions to improve the performance of our real estate portfolio. To achievethese goals, we will implement initiatives
such as improving building operations, updating to energy efficient equipment, and informing tenants about energy conservation.

 iversity, Equity and Inclusion (DEI)
D
Promotion Policy
We strive to create a workplace where all
employees can equally access opportunities
to thrive, thereby enabling them to demonstrate their talents to the fullest extent, byuniting individuals and organizations to promote DEI. In addition to helping us attractcompetent personnel, we believe that promoting DEI leads to business innovations, sophisticated risk management, and a more efficientand vibrant organization as a whole. Based on
this idea, we aim to maximize value arisingfrom diverse values and individuality by fostering an open corporate culture.

KPI• Water use intensity: 20% reduction by FY2030
compared with FY2019.

Tenant Engagement
Objective

Human Resources Development and Diversity Promotion
Objective
Basic Concepts of Health and Well-beingof JRE-AM’s Officers and Employees
Our human capital, such as officers or
employees, is one of the most important
operation sources for us to realize sustainablegrowth. Based on this idea, we will practicecorporate management that enables the
co-enrichment of JRE-AM and employees
through initiatives to improve the physical andmental health of employees, and to promote
work-life balance and improve job satisfaction.

• CO2 intensity: 12kg-CO2/m2 or below• Improve resource efficiency through reuse and recycling

As stated above, we will develop sustainability promotion systems and reflect risks and opportunities that ESG presents in our business strategies.

Energy Conservation Policy

KPI• CO2 emissions: 80% reduction by FY2030 (comparedwith FY2019)• Renewable energy rate: 90% by FY2030 / 100%by FY2050

Environment

1 Climate change initiative (promoting• Manage and reduce energy use

Supporting SDGs

KPI
• Number of training programs by external lecturers• Training hours per employee• Number of employees with qualifications• Ratio of female senior management & Female
employee ratio/Number of employees aged 60 +years/Number of foreign employees

KPI•M
 anage and improve employees’ data regarding
health and well-being / welfare and benefits

Enhancing Governance Systems at Both JRE and JRE-AM
Objective

KPI• Operate the Board of Directors ensuring independence and diversity, which iscomposed of the directors appointed by the General Meeting of Unitholders•C ompliance/human rights/business ethics trainings attendance rate•P
 ursue improvement of management performance through appropriate
investment decision and appropriate asset management• Implementation of risk assessments•P erform the asset management services in a fair way through compliance andefforts to prevent conflicts of interest• JRE’s 1 outside director ratio 2 female director
ratio 3 Board of Directors’ meeting attendance ratio•P romote investment management that prioritizes the unitholders’ interests byintroducing asset management fees linked to management performance• Implementation of internal audits• J RE-AM’s female director ratio

Materiality

Information Disclosure and Stakeholder Engagement
Objective

KPI

Based on the Sustainability Policy, JRE and JRE-AM have determined materiality in order to achievea sustainable society under our corporate social responsibility, recognizing the importance of consideration for ESG. We will annually disclose the progress of KPIs linked to each objective and work towards
contributing to the Sustainable Development Goals (SDGs) as well as achieving medium- to long-term
growth of JRE through our responses to materiality.

• Promote information disclosure and dialogue with stakeholders• Issuance of annual sustainability reportJapan Real Estate Investment Corporation•M aintaining positive evaluations for ESG Ratings

WEB

For more information, please see our website.
https://jre-esg.com/en/esg/policy.html#anchor02

Japan Real Estate Investment Corporation

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Basic Policy and Management Structure of ESG Issues

Identifying Process for Materiality

Sustainability Committee| STEP 1 | Selection of Issues to Be Considered
We have selected and proposed a wide range of topics from the perspectives of a variety of stakeholders within and outside JRE.
This selection was made in reference to the various guidelines and evaluation criteria specified by ESG rating agencies such as SASB
Standards, GRI Guidelines, MSCI, FTSE, GRESB and CDP, as well as the status of initiatives undertaken by our peers in the same industry.

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

| STEP 2 | Prioritization of Proposed Topics
We have prioritized the proposed topics and created a materiality matrix in terms of their importance to stakeholders and their impact
and importance to JRE.

Materiality Matrix

Environment

SocialGovernanceSocial trends and stakeholder expectations

Very Strong

Climate Change
Initiative

Environmental
Consideration ofPortfolio

Human Resources
Development andDiversity Promotion

Tenant Engagement

Enhancing Governance
Systems at BothJRE and JRE-AM

Employee Healthand Well-beingat JRE-AM

Regional
Redevelopment

StrongWeak

Contributing to Local
Communities

Impact of JRE’s business

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

Human Rights Initiatives

Information Disclosureand Stakeholder
Engagement

Protecting
Biodiversity

Members of the committee:
President & CEO (Chief Sustainability Officer)
General Manager, Sustainability Management Department (Sustainability Officer)
General Managers of other departments and those practically in charge of sustainability at each department

Conservation of Water
Resources

As a member of society, the Mitsubishi Estate Group, to which JRE-AM belongs, is keenly aware of the importance of respect for humanrights. To fulfill our responsibility to respect the basic human rights of all stakeholders, not only those involved in Group businesses, we
set up the Mitsubishi Estate Group Human Rights Policy on April 1, 2018. Respect for human rights is part of the Mitsubishi Estate Group
Guidelines for Conduct, which all employees are expected to follow on a daily basis. These Guidelines stress the importance of respect forhuman rights and diversity, which means that employees show concern for human rights and the environment in the course of their business activities. The Human Rights Policy is intended to ensure that we, as a good corporation, understand that internationally mandated
human rights are a bare minimum that we must go beyond, that we reaffirm the importance of supporting, protecting and respecting
human rights and that we work to respect the fundamental human rights of every single person involved in the Group’s businesses.

Mitsubishi Estate Group Code of Corporate Conduct (Excerpt)

Recycling andConservation of
Resources

Very Strong

Respecting Human Rights and Employee Diversity
We respect human rights and believe that diversity maximizes value.
1 We respect human rights at all times.
2 We reject discrimination and harassment in any form.
3 We strive to establish a creative and competitive organization that safeguards and respects thebeliefs of the individual as reflected in the diverse communities in which we work and live.
4 We foster an open corporate culture in which all employees are encouraged to speak freely.

Mitsubishi Estate Group Human Rights Policy (Excerpt)
We uphold and respect international standards related to human rights. These include the International| STEP 3 | Discussion, Confirmation of Appropriateness and Approval on theBill of Human Rights, which sets out the fundamental human rights possessed by all the people of theManagement Level
Having determined their priorities, we have discussed these issues at the Sustainability
Committee and officially positioned them as JRE’s Materiality based on the advice fromtwo ESG experts. Finally, JRE’s Materiality was approved at the Investment Management
Council of JRE-AM and was reported to the Board of Directors of JRE.

world, and the International Labour Organization’s Declaration on Fundamental Principles and Rights
at Work, which contains requirements concerning fundamental rights in the workplace.
We help ensure that respect for human rights is actively practiced in all business activities, andthat such activities do not infringe on the human rights of other people. If such activities nevertheless result in a violation of the human rights of others, efforts shall be made to minimize the negative impact.
We carry out human rights due diligence in order to minimize any negative impact caused byWEB

Please see the following for details of a discussion in which experts offered advice from their
specialist standpoints on behalf of stakeholders for setting up JRE’s materiality.
https://jre-esg.com/en/pdf/discussion.pdf

human rights violations occurring as a result of the Group’s business activities. We maintain a
Naoki Umeda, Former President and CEO, Japan
Real Estate Asset Management Co., Ltd., and two
ESG experts

framework for human rights due diligence and make improvements to the framework on an ongoing basis or if problems arise in order to improve its efficacy.
Furthermore, in the event that the activities of a business partner or any other individual ororganization affiliated with the Mitsubishi Estate Group directly have a negative impact on thehuman rights of others, even if we were not directly involved in fostering such a negative impact,
we shall endeavor to make improvements together with stakeholders to ensure respect for humanrights and eliminate all violations.

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Japan Real Estate Investment Corporation

the ARGYLE aoyama

Japan Real Estate Investment Corporation

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Disclosure Policy and Signatory to International Initiatives

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

Obtaining SBTi Approval

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

The SBTi is a global, joint initiative by CDP, the United Nations Global Compact (UNGC), theWorld Resources Institute (WRI), and the World Wide Fund for Nature (WWF), establishedin 2015. It promotes the validation and certification of science-based GHG emissions reduction targets set by private companies to achieve the goal upheld at the Paris Treaty.*
JRE’s CO2 emissions reduction targets were approved by the Science Based Targets initiative (SBTi) in 2022.

Information Disclosure Policy* limiting global warming due to climate change to below 2°C compared with pre-industrial levels

JRE strives to disclose ESG-related information to its investors
and other stakeholders.
As ESG garners more support globally, JRE also regards it as
its social responsibility to improve its sustainability and disclose
initiatives in pursuit of that goal, both of which are necessary to
maximize its unitholder value. Accordingly, we will promote ESG
initiatives and ESG information disclosure while fostering mutualcommunication with various stakeholders.
Specifically, we refer to the Global Reporting Initiative (GRI)
Standards, an international sustainability framework for ESGrelated reporting, and standard for the real estate industry put
forth by the Sustainability Accounting Standards Board (SASB)

for the disclosure of a wide range of ESG information on the JRE
ESG website. We hope both this report and our ESG website willfurther 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, 2022 and ended on March 31, 2023 but the report for theyear does include some information outside this period.

Joining RE100
RE100 is a global collaborative initiative comprising companies aiming to source 100% of
the electricity used in their operations from renewable energy. The initiative is led by The
Climate Group in partnership with the CDP, which operates a global information disclosure system for investors, companies, cities, states, and regions to manage their environmental impacts.
JRE aims to make 90% of electricity used at our buildings renewable electricity by
2030 and 100% by 2050, and it joined RE100 as the first J-REIT in 2022.

Participation in Japan Climate Initiative (JCI)The JCI is a diverse network of non-state actors, such as Japanese companies, local
governments, organizations, and NGOs, actively engaged in climate action. JRE-AM
joined the JCI in September 2022.

International Initiatives
Signing and Participating in International Initiatives
JRE and JRE-AM have become signatories 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.

Obtaining
SBTi Approval

Joining RE100

Signatory to PRI

Signatory to
the Principles for
Financial Action
for the 21st Century

Participation in Japan
Climate Initiative(JCI)

Signatory to the Principles for Responsible Investment (PRI)
PRI comprises an international network of investor signatories that works to realize theSix Principles established for the finance industry in 2006 under the leadership of thethen United Nations Secretary-General, Kofi Annan. This network is promoted throughthe United Nations Environment Programme (UNEP) and the United Nations Global
Compact (UNGC).
PRI encourages the incorporation of Environment, Social and Governance issues into
investment decision-making processes, with the aim to help companies enhance longterm investment performance and better fulfill their fiduciary duty.
JRE-AM agreed with the basic approach of PRI and became a signatory in August 2018.

Signatory to the Principles for Financial Action for the 21st Century
Participation in UNGC

In June 2019, JRE-AM became a signatory to the Principles for Financial Action for the
21st Century, which were formulated in October 2011, with the Ministry of Environment
serving as secretariat, as guidelines for action by financial institutions seeking to fulfill
their roles and responsibilities necessary to create a sustainable society.

Participation in UNGC
UNGC is a voluntary, global initiative supporting a global framework for sustainablegrowth through the demonstration of creative, responsible leadership by the respective
corporations and organizations as principled members of society.
First proposed in 1999 by the then United Nations Secretary-General Kofi Annan, it
engages in activities based on ten universally-accepted principles in the four areas ofhuman rights, labor, environment, and anti-corruption.
Mitsubishi Estate Co., Ltd. became a signatory of the UNGC and Mitsubishi EstateGroup was registered as participants in April 2018. Along with this, JRE-AM has participated in this initiative as a member of Mitsubishi Estate Group.

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Japan Real Estate Investment Corporation

Japan Real Estate Investment Corporation

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Disclosure Policy, External Evaluation, and Certifications

GRESB Real Estate Ratings

Inclusion in MSCI Japan ESG Select Leaders Index

In the 2023 GRESB Real Estate Assessment, JRE received the 5 Stars rating, which is the highest GRESB rating (five-level rating) basedon relative evaluation of overall scores, for the sixth consecutive year. It also received Green Star rating for the eighth consecutive year,
meaning that JRE has demonstrated an excellent ESG management system and performance record. In addition, JRE received the highest evaluation of A in the GRESB Public Disclosure.

JRE was selected as a constituent of the MSCI Japan ESG Select Leaders Index in 2022.

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

Assessment Type

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

GRESB Real Estate
Assessment

GRESB Public
Disclosure

Relative assessment
based on the total score(GRESB Rating)

Evaluates the level of ESG disclosure

Achieved Institutional Shareholder Service (ISS) ESG Corporate Rating“Prime” Status

Rating

Green Star

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.

Highest rating
Obtained for the eighth consecutive year

Highest rating

5 StarsA

Obtained for the sixth consecutive year

Efforts to Acquire Environmental Certifications

Highest rating
Obtained for the sixth consecutive year
Public Disclosure 2023

PRI Assessment Result
 bout the PRI Assessment Result
A
PRI signatories are required to report annually on the status of their ESG integration practices for evaluation.
JRE-AM has received as shown at under in its 2021 assessment result.
Module

JRE will continue to acquire various green building certifications, including DBJ Green
Building certifications, and CASBEE certifications.
As of the end of March 2023, 76.3% of our portfolio has been green certified, obtaining
one or more certifications out of DBJ Green Building certification, CASBEE certification,
and BELS certification. In addition, in fiscal 2022 JRE Kayabacho 2Chome Buildingreceived ZEB Ready Certification and JRE Yoyogi 1Chome Building received ZEB Oriented
Certification based on the designs and renovation plans for the buildings, assuming thatthe renovations will be carried out in the future. Moreover, JRE Omori-Eki Higashiguchi
Building received the S Rank under CASBEE Real Estate Certification.
As of the end of March 2023

DBJ Green Building
Certification(Highest rating)
CASBEE-Real EstateParticipation in the CDP’s Climate Change Program
CDP Score
In the 2022 Carbon Disclosure Project (CDP) Climate Change Program, JRE made the A List of companies, those with the highest scores, for the first time. A total of 283 companies (including 74 Japanesecompanies), of almost 18,700 companies evaluated, were named in the Climate Change A List.

Gross floor area of owned building basis(m2)

Number of Properties

Score

Investment & Stewardship Policy

Real Estate

Disclaimer
THE INCLUSION OF JRE IN ANY MSCI INDEX,AND THE USE OF MSCI LOGOS, TRADEMARKS,SERVICE MARKS OR INDEX NAMES HEREIN, DO
NOT CONSTITUTE A SPONSORSHIP,
ENDORSEMENT OR PROMOTION OF JRE BY
MSCI OR ANY OF ITS AFFILIATES. THE MSCIINDEXES ARE THE EXCLUSIVE PROPERTY OF
MSCI. MSCI AND THE MSCI INDEX NAMES AND
LOGOS ARE TRADEMARKS OR SERVICE MARKSOF MSCI OR ITS AFFILIATES.

About the MSCI Japan ESG Select Leaders Index
The MSCI Japan ESG Select Leaders Index is an index that represents companies
with high ESG performance selected based on the data from the MSCI Japan IMIIndex. The index has been selected by the Government Pension Investment Fund(“GPIF”) as one of their ESG indices for their passive investment strategy.

4,264.56
294,527.00

25

689,791.80

110,778.10

SubtotalS
A
Subtotal

35
6
1
7*1

999,361.46
37,839.07
7,416.74
45,255.81[of which, ZEB]

5(4)29,166.65

BELS
この建物の

Total

1
8

Subtotal
エネルギー消費量

235,728.13

387,278.84

8124,298.05

18
53 60*％削減*

276,471.67
1,063,005.82*3

1 2

Portfolio coverage(Gross floor area of owned building basis)

—

71.7%
—
3.2%

—

この建物の
エネルギー消費量

46 ％削減19.8%
76.3%*3*1 Counts number of certifications obtained *2 Includes “DBJ Green Building” certification, CASBEE certification, and “BELS” certification. Total number of properties
建築物省エネルギー性能表⽰制度
建築物省エネルギー性能表⽰制度
acquired. *3 Excludes duplication of DBJ Green Building, CASBEE 国⼟交通省告⽰に基づく第三者認証
certification, and BELS for the same property.
国⼟交通省告⽰に基づく第三者認証
2023年3⽉7⽇交付

2023年3⽉7⽇交付

What is CDP?
CDP is a global non-profit charity that runs the world’s environmental disclosure system and assesses over 18,000 companies on
their environmental transparency and actions. An assessment questionnaire spanning topics such as governance, risk management, business strategy, and targets and performance is used to score companies among eight levels: Leadership (A/A-),Management (B/B-), Awareness (C/C-), and Disclosure (D/D-). JRE has participated in the CDP Climate Change Program since 2018.

この建物のエネルギー消費量53％削減

この建物のエネルギー消費量

2023年3⽉7⽇交付 国⼟交通省告⽰に基づく第三者認証

JRE Kayabacho
2Chome Building

11

Japan Real Estate Investment Corporation

46％削減

2023年3⽉7⽇交付 国⼟交通省告⽰に基づく第三者認証

JRE Yoyogi 1Chome
Building

Japan Real Estate Investment Corporation

12

Setting New Targets for CO2 Emissions Reduction for 2030 and Declaration of Net-Zero by 2050 

Environment
Based on the Sustainability Policy items “1. Climate change initiative(promoting decarbonization and strengthening resilience)” and“2. Contribution to resource conservation including water and resource
recycling,” JRE leverages a variety of environmental measures to raise
the environmental performance of its real estate portfolio.
14	Setting New Targets for CO2 Emissions Reduction for 2030 and
Declaration of Net-Zero by 2050
15 Environmental Measures
17 Climate Change
25 Green FinanceIn 2022, JRE formulated the following targets based on data verified by external experts. In the same year, we received approval from the
SBTi for our CO2 emissions reduction targets. In addition, we became the first J-REIT to join the RE100 as we aim to source 100% of ourelectricity from renewable energy.
JRE will further promote initiatives to realize a decarbonized society by proactively introducing renewable electricity in addition to renovating its buildings and making efforts to own more ZEBs (net zero energy building).

Target year

CO2 emissions reduction target

Target year

Renewable energy rate

FY203080% reduction (vs FY2019)

FY203090%

FY2050Net zero

FY2050100%

Obtaining SBTi Approval

Joining RE100

CO2 Total emissions

80% reduction

FY2019FY2030Net zero

FY2050FY2019 (Base year)

FY2020

FY2021

FY2022% change (vs FY2019)

102,942

93,37871,01929,836-71.02%

77.7

69.1

51.8

22.2

-71.47%

1.6

2.0

16.4

72.9

—

Water Intensity (m3/m2)

0.669

0.485

0.471

0.513

-23.38%Waste Recycling rate* (%)

56.1

55.5

55.3

55.0

—

Total CO2 Emissions
Total (Scope 1 + Scope 2 + Scope 3) (t-CO2)
Intensity (Scope 1 + Scope 2 + Scope 3) (kg-CO2/m2)
Renewable Energy Rate (Scope 2) (%)* Recycling / Total waste
Note: As we examined the data accuracy, some of the above data may differ from the previously disclosed data.

13

Japan Real Estate Investment Corporation

Japan Real Estate Investment Corporation

14

Environment

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

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

Incorporating ESG Criteria for Property Acquisition

 rasping Accurate Data and Executing a PDCA CycleG
JRE measures and gains an understanding of the energy consumption, water use, and waste of each building on a monthly
basis. We outsource data calculation and data analysis to a company specializing in EMS to execute its PDCA cycle. If there is alarge difference in the aggregated data from the previous monthor year, we investigate the cause by conducting interviews withthe property management companies 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
and ISAE 3410 (International Standard on Assurance Engagements)
by a third-party organization (Ernst & Young ShinNihon LLC).

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

PDCA Cycle for Environmental Data

CO2

Water

Waste

Analyze and formulate plans

Establish reduction targets

Electricity

CO2 reduction

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

Retailelectricity
companies

Process of Real Estate Investment
Valuation

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

GB Certifcation
GHG Intensity
Energy Efficiency

ESG
Appraisal

Valuation

OthersAge

CO2 reduction

Renewable electricity supply

WIN-WIN
Tenant A

Electricity
supply contract

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

Tenant B

Tenant C

Introduction of Renewable Energy
JRE promotes the reduction of CO2 through the utilization of renewable energy from solar generation at some of the office buildings we own.

Scale

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

JRE’s Sustainability Policy stipulates a contribution to conserving
biodiversity and the ecosystem. JRE gives consideration to biodiversity in the operation of buildings by endeavoring to conserveand improve the ecosystem onproperty premises and adjacenturban green areas and naturalareas. In fiscal 2023, Otemachi
Park Building’s Hotoria Plaza wascertified as an Other Effectivearea-based Conservation
Measures (OECM) site.
Otemachi Park Building

WEB

Japan Real Estate Investment Corporation

Renewable
electricity

JRE
Spec

Consideration to Urban Greenery and Biodiversity
Monitoring by AM company
Monthly monitoring

15

JRE’s Switch to Renewable Electricity (Outline)

Environmental Risk Assessment at the Time of
Acquisition

Execute plans and make measurements
Asset-level initiatives

Green building certifications
Environmental performance including CO2 emissions

Acquisition

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

*1 RE100 is the global corporate renewable energy initiative bringing together hundreds of large and ambitious businesses committed to100% renewable electricity.
*2 CIRCLES Hirakawacho, which JRE acquired on March 30, 2023, had not yet introduced renewable electricity at the time of acquisition.

ESG criteria to be incorporated

ESG
Criteria

JRE is accelerating the use of electricity that is made from renewable energy recognized by RE100*1 (“renewableelectricity”). Doing so reduces a building’s CO2 emissions to zero, including the CO2 emissions of tenant areas.
As of September 2022, JRE had completed the switch to renewable electricity at its properties of 100% operational control*2. JRE proactively introduces renewable electricity into the buildings other than 100% operational
control and further accelerates the reduction of CO2 emissions.

For more information, please click below (available only in Japanese).
https://www.mec.co.jp/news/mec231006_hotoria/mec231006_
hotoria.pdf

the ARGYLE aoyama

Toyosu Front

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

PM Company Selection Criteria and Evaluation Measures
JRE has established selection criteria for property management(PM) companies to which it commissions the management ofproperties, and evaluates all of the PM companies once a year, inprinciple. In addition to the companies’ building management andmaintenance abilities, JRE evaluates the PM companies based on
their environmental friendliness in terms of operations,occupational health and safety measures for their employees, andunderstanding of and cooperation with the Sustainability Policy
set by JRE-AM. Moreover, JRE requests the PM companies tomake proposals to help JRE reduce environmental impacts, suchas energy efficiency measures in buildings. In this way, JRE
makes environmental improvement efforts in cooperation with
the PM companies.

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

Japan Real Estate Investment Corporation

16

Environment

Scenario Analysis

Climate Change

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

Global Outlook under the 4°C Scenario*

Climate Change Initiatives
JRE believes that climate change is more than just an environmental issue. We also believe that it has
a major influence on social and industrial structures, and therefore greatly impacts our business activities.
To maintain sustainable and stable earnings over the long term and overcome the wave of oncoming changes
stemming from climate change, it is important that we evaluate the risks and opportunities that climate changepresents, and reflect them in our operational policies and asset management accordingly.

Global Trends
Global Trends in Climate Action
The Paris Agreement is an international framework adopted in 2015 and signed by 197 countries, with thegoal of limiting global warming to well below 2°C above pre-industrial levels and pursuing efforts to limit iteven further to 1.5°C. It also aims to achieve net zero greenhouse gas (GHG) emissions by the second halfof this century. To achieve these goals, efforts are being made and regulations are being strengthened inmany 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 ofthe 20th century, according to the Intergovernmental Panel on Climate Change (IPCC)*. This is starting tobecome apparent through a growing frequency of heatwaves as well as heavy rain and other natural disasters. We are expected to respond to these and other physical risks of climate change as a major issue, as
they may have a strong influence on business.

Climate and Weather

Climate and Weather

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

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

The Task Force on Climate-related Financial Disclosures (TCFD), launched in 2016, has discussed andmade recommendations on how financial institutions and companies should disclose information pertaining
to the impact that the effects of climate change will have on business. At present time, the TCFD recommendations have received worldwide support from a great number of 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 therisks and opportunities that climate change presents to all of our business and promoting disclosure ofclimate-related information to our stakeholders.

Governance Related to Climate Change

Investors

Investors

Assessment of status ofcompliance with laws
and regulations
Rise in importance of environmental certifications

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

Financial Institutions

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

Assessment of physicalrisks in making investment
decisions

Government
Government

JRE

Strengthening of laws andregulations regarding
disaster prevention andreduction

Compliance withdisaster-prevention related
laws and regulations

Portfolio
Expansion in scope of
response to physical risks(adaptation measures)* The IPCC Special Report on Warming of 1.5°C, published by the IPCC in 2018.

Supporting the TCFD Recommendations

Global Outlook under the 1.5°C Scenario

Tenants
Increase in demand forheatstroke countermeasures,
BCP, and other measures
Greater consideration for
health, well-being,and safety

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

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

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.

Tightening of laws andregulations on carbon emissions and energy consumption
Strengthening of ZEB
regulations and expansion ofsubsidies for acquiring ZEB
expansion in policies prioritizing renewable energy andenergy efficiency

JRE
Expansion in scope of legal
and regulatory compliance

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

Tenants
Growth in preference forenvironmental performance
Increase in RE100 member
companies

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

Impactrisks  

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

17

Japan Real Estate Investment Corporation

Climate change

Compared with the end of the 20th century

Climate change

Compared with the end of the 20th century

Annual average temperature

Rise of approx. 4.5°C

Sea-surface temperature

Rise of approx. 3.58°C

Typhoons

Increase in intensity

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

Approx. 2.3 times

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

Approx. 2.3 times

Sea level

Rise of approx. 0.71 m

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

Japan Real Estate Investment Corporation

18

Environment

Estimated Business Impact
The effects of JRE’s countermeasures including ZEB initiative and energy-efficient renovations increased operating profit despite the significant impacts of transition risks.

Examination of Financial Impact Based on Scenario Analysis
JRE examined the magnitude of the financial impact of risks and opportunities that it identified for the aforementioned 4°C and 1.5°C scenarios. Our qualitative financial impact analysis analyzed the impact for 2030 (medium-term prospects) and 2050 (long-term prospects),
while our quantitative financial impact analysis analyzed the impact by envisaging circumstances in 2050 based on the level of operating
income in FY2021. The results are outlined in the following table.

(In hundreds ofmillions of JPY)

355.01

Effects ofCountermeasures

0

15.86

Avoid the imposition of carbon taxes by conducting energyefficient renovations, introducing renewable electricity, andachieving zero emissions from fossil fuels

0.30

Secure preferential interest rates by procurement of funds
through sustainability-linked loans and achieving sustainability performance targets (SPTs)

Risks

0

0

Achieve environmental certification acquisition rates of 100%
under the 1.5°C scenario

Cost ofCountermeasures

0

–0.26

Cost of acquiring environmental certifications

Effects ofCountermeasures

0

30.16

Command rent premium by maintaining environmental
certifications

Risks

0

–64.58Decline in rent income that results from assets becoming
stranded due to a failure to take action (calculated using theresults of CRREM analysis)

Effects ofCountermeasures

0

64.58

Avoid declines in rent income by introducing renewable electricity and achieving zero emissions from fossil fuels to prevent assets becoming stranded

Risks–16.37–14.03Decline in rent income in the event of flood damage on the
maximum expected scale

Effects ofCountermeasures

16.37

14.03

Avoid damage to facilities by implementing planned flood
countermeasures

Risks

–4.07

Effects ofCountermeasures

4.07

–3.48

3.48

Risks

–0.36

–0.16

Increase in electricity consumption due to a rise in annual
average temperatures

Effects ofCountermeasures

0

0.08

Reduce electricity consumption by implementing energyefficient renovations and renovations for acquiring ZEB
certifications

Reflects forecasted future increases in assets under management
Note 1: Figures for risks include costs for implementing proactive countermeasures, such as converting properties to ZEBs
Note 2: This estimate is an analysis of part of JRE’s business and does not assess the overall impact. We will continue to examine the approach to assumptions in estimated items andexpand estimated items based on the policy trends in the world and Japan in order to further deepen our analysis.
Note 3: This estimate is made based on JRE’s actual performance and refers various parameters such as scenarios and reference materials presented by major organizations.
The amount of financial impact is an annual basis. No assurances are provided on the accuracy thereof. Furthermore, the assumed measures are estimated assumptions,and no plans or decisions have been made to execute them.

19Japan Real Estate Investment Corporation

7

8 -1

8 -2

9

00

JRE’s inundation countermeasures avoided the significant impacts of inundation risks, thereby maintaining operating profit.
(In hundreds ofmillions of JPY)

Risks and opportunities without countermeasures(In hundreds ofmillions of JPY)Countermeasures

380

380
355.01

0.21

0

0

0

0

0

0

16.37

16.37
4.07

0.36

330

334.00

0

0

0

0

0

4.07

0

354.44

0

330

280

280

Expected flood damage repairing costs in the event of flood
damage on the maximum expected scale

Avoid damage to facilities by implementing planned flood
countermeasures

6

Operating profit following the implementationof countermeasures

0

6

4°C

230

Operating profit

Risks

Opportunities

Initial profit

230

Reflects forecasted future increases in assets under management

Transition risks and opportunities
Risks

0

Physical risks
Risks

Opportunities

Transition risks: countermeasures
Cost ofcountermeasure

Effects ofcountermeasures

Risks

1

2

3

4

5

6

7

8 -1

8 -2

9

1

2

4

6

Effects ofcountermeasures

Physical risks:
countermeasures
Effects ofcountermeasures

6

7

8 -1

8 -2

9

0
Operating profit following the implementationof countermeasures

Opportunities

4

Avoid increases in electricity charges by improving
energy efficiency and converting properties to ZEBs

Significantly reduce utility costs through renovations

2

Avoid increases in electricity charges by improving
energy efficiency and converting properties to ZEBs

22.89

1

Avoid repairing costs by implementing flood
countermeasures

09

Avoid repairing costs by implementing flood
countermeasures

Effects ofCountermeasures

8 -2

Avoid rent income loss by implementing flood
countermeasures

Renovation costs for ensuring that 85% of portfolio is certified as ZEB Ready to reflect expectations under the 1.5°C
scenario

8 -1

Avoid rent income loss by implementing flood
countermeasures–21.107

Avoid declines in rent income by implementing
countermeasures to prevent assets becoming
stranded

0

6

Avoid declines in rent income by implementing
countermeasures to prevent assets becoming
stranded

Risks

5

Rise in rent income through retention of environmental certifications

Avoid the imposition of carbon taxes*Included in the effects of countermeasures (see 1 )4Physical risks:
countermeasures
Effects ofcountermeasures

Rise in rent income through retention of environmental certifications(1.98)

3

Effects ofcountermeasures

Cost of acquiring environmental certifications(0)

2

Cost of acquiring environmental certifications

Effects ofCountermeasures

Cost ofcountermeasure

Decrease in the cost of complying with laws andregulations (carbon taxes) in conjunction with
reducing CO2
Reduction in expenses for purchasing non-fossil fuelenergy certificates through energy-efficient renovations, renovations for acquiring ZEB certifications
Reduction in utility costs owing to energy-efficientrenovations and renovations for acquiring ZEB
certifications

Achieve zero emissions from fossil fuels (by carbon credits)1

Operating profit without countermeasures–0.59

Transition risks: countermeasures
Effects ofcountermeasures

Risks

Decrease in the cost of complying with laws andregulations (carbon taxes) in conjunction with
reducing CO2
Reduction in expenses for purchasing non-fossil fuelenergy certificates through energy-efficient renovations, renovations for acquiring ZEB certifications
Reduction in utility costs owing to energy-efficientrenovations and renovations for acquiring ZEB
certifications

0

00

2.10

230
230

Physical risks
Risks

Opportunities

280
280

0.26

232.01

Operating profit without countermeasures

Risks

Risks

Rise in electricity charges due to higher temperatures in summer

Reduce the cost of procuring non-fossil fuel energy certificates by implementing further energy- efficient renovations
under the 1.5°C scenario

Transition risks and opportunities

0.16

Facility repairing costs stemming from flooding at
JRE-owned properties

2.10

 eflects forecasted future increases in assets underR
management

230
230

15.86
3.48

Decline in rent income stemming from flooding at
JRE-owned properties

0

14.03

Decrease in rent income that results from assets
becoming stranded due a failure to implement
countermeasures

Effects ofCountermeasures

1.5°C

Initial profit

Decline in rent income due to a lack ofenvironmental certifications

Procure all electricity used in business activities fromrenewable energy (by non-fossil fuel energy certificates)
under the 1.5°C scenario

Risks

Opportunities

Lower fund procurement costs throughgreen finance–3.50

Operating profit

Increase in costs incurred through energy-efficientrenovations and renovations for acquiring ZEB
certifications

0

22.89

Cost of achieving zero emissions from fossil fuels

Risks

280
280

Rise in electricity charges due to higher temperatures in summer ise in electricity charges dueRto higher temperatures insummerSignificant increase in carbon taxes under the 1.5°C scenario

Facility repairing costs stemming from flooding at
JRE-owned properties

9–15.86

Decline in rent income stemming from flooding at
JRE-owned properties

Advancement of rise inannual averagetemperatures

Facility repairing costs stemmingfrom flooding at JRE-owned
properties (in the event of damage on the expected scale)–0.21

Decrease in rent income that results from assets
becoming stranded due a failure to implement
countermeasures

Acute

Decline in rent income stemmingfrom flooding at JRE-owned
properties (in the event of damage on the expected scale)

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

8 -2

Chronic

Physical Risks and Opportunities

8 -1

Decrease in rent income that
results from assets becoming
stranded due a failure to implement countermeasures

Risks

30.16

Decline in rent income due to a lack ofenvironmental certifications

7

 ariations in rent income
Vdepending on the acquisitionof environmental certifications

380
380

64.58

Lower fund procurement costs throughgreen finance

6

Lower fund procurement costs
through green financeLong-Term
2050

0

Increase in costs incurred through energy-efficientrenovations and renovations for acquiring ZEB
certifications

5384.92

330
330
0.3

Increase in the cost of purchasing non-fossil fuelenergy certificates for achieving net-zero emissions

Increase in costs incurred
through retrofits, such asenergy-efficient renovations
and renovations for acquiring
ZEB certifications

Long-Term
2050

Explanation of Calculation

Increase in the cost of complying with laws andregulations (carbon taxes)

4

1.5°C
Scenario

Cost of achieving zero emissions from fossil fuels

Changes in tenants’environmental performance needs

 ost of achieving zero emisC
sions from fossil fuels

0.08

21.10

Increase in the cost of purchasing non-fossil fuelenergy certificates for achieving net-zero emissions

Rise in value of environmental
performance

3

4°C
Scenario

Classification

0.59

Increase in the cost of complying with laws andregulations (carbon taxes)

Technology

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

Changes in social values regarding environmental performanceMarket and Reputation

Transition Risks and Opportunities2

 ost of purchasing non-fossil
Cfuel energy certificates forachieving net-zero carbon
emissions3.50

Operating profit1

 hanges in the cost of complyC
ing with laws and regulations(carbon tax costs imposed on
business activities)

3.48

15.86

330
330

Operating profit

Policy andLegal

Introduction of CO2 emission regulations
Adoption of carbon taxes

Change in Cash Flow

14.03
64.58

*in hundreds of millionsof JPY
Risk and Opportunity Factors(In hundreds ofmillions of JPY)Countermeasures

380
380

Estimated Result of Risks and Opportunities

Category

Risks and opportunities without countermeasures

Japan Real Estate Investment Corporation

20

Environment

Analysis using CRREM’s risk assessment tool

Overview of CRREM
CRREM (Carbon Risk Real Estate Monitor) calculates andpublishes GHG emissions pathways (carbon reduction
pathways) up to 2050 consistent with the 2°C and 1.5°C targets of the Paris Agreement for each use of real estate ina total of 44 countries (as of January 2023) in Europe,
North America and the Asia-Pacific region including
Japan. This tool is expected to be utilized for operational
improvement by comparing the property data analyzed andpathways to calculate the timing of assets becoming
stranded and carbon costs for each property, and to grasp
the scale of renovation required to address these issues.

JRE has targeted the properties owned by JRE (as ofMarch 2022) and analyzed the potential stranded asset
risk of the portfolio using CRREM’s risk assessment tool.
The analysis is based on the Asia-Pacific version of thetool (ver. 1.22) and global pathways (ver. 2.01). JRE will use
this analysis to make ourbusiness strategies, including renovation, dispositionof properties and otherinitiatives.

Climate Change-Related Risks, Opportunities and JRE’s Response esilience of JRE Portfolio According to Past Cases ofR
Disasters and Data
Japan is a country that experiences numerous natural disasters.
In recent years, Japan has been struck by several catastrophic
disasters, such as the 2011 Great East Japan Earthquake (earthquake and tsunami), the Heavy Rain Event of July 2018 (heavy
rain, inundation), the 2018 Hokkaido East Iburi Earthquake(earthquake, landslides, wide-ranging power outages), andTyphoon Faxai (strong winds, house damage, long-term power
outages) and Typhoon Hagibis (heavy rain, river collapse, inundation) in 2019.
JRE’s portfolio has not been exempt from these disasters andseveral properties have been affected by these disasters in someway, but thanks to the resilience of the buildings and the strong
response from PM companies, damage to these buildings has
been limited. 1
Even when a disaster occurs, buildings are restored within
one week in almost all cases, with repairs costs under JPY 10.0
million. 2 3
In addition, there is only 1 example of a building becoming
inoperable (closed, etc.) due to a disaster.
As of March 2020
1

Transition Risks 1Expected Inundation According to Hazard Map (%)
As of March 2020

Types of Disasters that Have Caused Damage in the Past (number of cases)*

Extreme weather(hot and cold waves, etc.)

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 80% compared to fiscal 2019 by fiscal 2030.

Future Risk Forecast Analysis of JRE’s Portfolio Based on Municipal Hazard Map
In recent years, typhoons around the Japanese archipelago havebeen increasing in size. In addition, river flooding and inundation
have been occurring frequently due to typhoons and heavy rains.
Damages due to inundation are predicted by the hazard maps ofeach local government. These maps are believed to have highaccuracy when compared against actual disaster occurrence.
The graph below ( 1 ) shows the estimated status of inundation damage in the hazard map of the JRE portfolio. Over 80% ofbuildings within JRE’s portfolio (82% of buildings based on total
number of buildings) fall under the category of “No inundation
damage expected” or “inundation of 0.2m to 0.5m (minor damage expected).”
The remaining 18% of buildings are susceptible to 0.5m ofinundation or more, but every building in the portfolio is subject
to hard measures, such as installation of water-stopping plates,and soft measures, such as training on how to stop inundation.

6.9%
23

Earthquakes
Inundation and river flooding
from heavy rain

Over 2m

1

1m to 2m

4.2%

51.4%

8

Typhoons and tornadoes

No damage
expected

0.5m to 1m

25

6.9%

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

 eduction of carbon intensity
R(CO2 emissions per unit floor area):
Rising awareness on climate change risks has been appearing in
not only the real estate industry but in every industry around theworld. Also, an increasing number of office building tenants havestarted to make efforts to address climate change as an important issue. JRE believes that properties with high CO2 emissions
will decrease in value while properties with high energy efficiency
will increase in value as this market trend continues.
By fiscal 2030, JRE aims to reduce the average carbon intensity of its entire portfolio to 12kg-CO2/m2 as well as own 5–10 net
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-performancegreen buildings to appeal to our tenants.

0.2m to 0.5m

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

2

One week
to one month

1.4%
Not
applicable

41.7%

21

Japan Real Estate Investment Corporation

One day
to one week

9.7%

No problems
with facility

47.2%

3 Repair Costs (%)

 PY 10 million toJ
JPY 100 million
or lower

2.8%

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

30.6%

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

Notapplicable

54.2%

Under
JPY 10 million

43.1%

Note: Earthquake risks are generally distinguished from climate change risks,but JRE has combined its climate change and disaster countermeasures
as part of physical disaster risk management in an effort to increase
resiliency.

the ARGYLE aoyama

Japan Real Estate Investment Corporation

22

Environment

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

Emissions reductions from energy-saving renovation workthrough FY2022 are as follows.

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
1. Effective CAPEX Control
JRE-AM has a dedicated engineering team (Construction
Management Office), which is engaged in efficiently controlling
the CAPEX and refurbishment works of over 70 properties.
Furthermore, we collaborate with the engineering team of
Mitsubishi Jisho Disign Inc., which is one of the leading architectural firms in Japan, to conduct technical assessments of ourproperties, review lifecycle costs of the existing properties, andcontrol costs.
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 calculated are converted
into t-CO2 equivalent, which helps us know how much CO2 wassaved of the entire portfolio and how much it costs to reduce 1t-CO2.
Generally, the introduction of renewable energy has been
considered cost effective to reduce GHG emissions rather thanrenovation work. However, JRE has found that retrofitting existingbuildings will also reduce GHG emissions without significant
additional costs.
3. Roadmap for CO2 Emissions Reduction by FY2030
CO2 Emissions Reduction Pathway
JRE aims for 80% reduction compared to FY2019 of CO2 emissions by FY2030.
The breakdown of the reductions is shown in the bar chart
below. We expect 20,000t-CO2 reduction mainly from renovation
works of existing buildings and ZEBs.
(t-CO2)120,000
100,000

Approx.
20,000 t-CO2

80,000

Reduction from Renovation,
ZEB (AC upgrade, LED, etc.)
Reduction from Grid decarbonization, Renewable energy,
New acquisition & disposition,
Operation at site, etc.

60,00040,000

Reduction from renovations, etc.
Renewable energy, etc.
CO2 emissions

20,000023

FY2019FY2030(KPI)

Japan Real Estate Investment Corporation(Total CO2 emissions reductions target throughenergy-saving renovation work)

20,000

The reduction through renovations and ZEB properties above
is supported by the engineering study conducted by Mitsubishi
Jisho Design Inc. We conducted theoretical scenario analysis
supported by the extensive track record of renovations ofMitsubishi Jisho Design Inc., as well as studies based on the onsite inspections. The study results are as follows (comparison of
the same property):
The theoretical scenario analysis supported by the Mitsubishi
Jisho Design Inc.
CO2 Reduction(t-CO2)Extra cost

WEB

Case I

Case II

Case III

21,944

26,66728,637

No additional cost

JPY 1.1 billion

JPY 3.2 billion

The Mitsubishi Jisho Design CO2 Reduction Study Report can beviewed here
https://jre-esg.com/en/environment/climate.html

Based on the results, JRE will work on the way between Case
II and Case III. When carrying out renovation work on individual
properties, 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 ofutility 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 withtenants, comprising increased rent and payment into a cooperative
green fund, resulting in lower emissions and higher profitability.

Total: 20,000 tons or
more

16,000Progress rate:15.6%* Progress rate of lighting andair conditioning (left chart shows reduction target comparison)

12,0008,000

Total: 3,113 tons
or more4,000
0Reduction
target until
FY2030

Reductionamount byenergy-saving
renovation work

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

Disposed
FY2021 work: 1,019tons
FY2020 work: 1,202tons
FY2019 work: 892tons
Total CO2 reduction amount[ton-CO2/year]

Future ZEB Achievements in JRE’s Portfolio
JRE aims to own 5–10 ZEBs by 2030 (including Nearly ZEB, ZEB
Ready, and ZEB Oriented buildings). In collaboration with
Mitsubishi Jisho Design Inc., we have started to verify the future
possibility to make the existing properties into ZEBs throughrenovations. We acquired ZEB Ready Certification for
JRE Higashi-Gotanda 1Chome Building in 2021, for Daido Seimei
Niigata Building in 2022, and for JRE Kayabacho 2Chome
Building in 2023, acquiring ZEB Oriented Certification for
JRE Yoyogi 1Chome Building in the same year. These are theacquisitions of ZEB Certification by application at the design
stage based on the assumption of renovation work in an existingbuilding. JRE will continue to promote its ZEB initiatives in orderto achieve its KPIs.

Shibuya Cross Tower(building section)

Acquired

CO2 emissions

Water usage–89.2%–83.4%

Front Place
Nihonbashi
Actual yield after depreciation
2.2%

3.1%

Financial Strategy Opportunities
As the financial impact of climate change comes increasingly tolight, it is likely that financial institutions and investors will place
more focus on green financing. In order to obtain advantageous
funding opportunities as a green investment and lending target,
JRE is actively utilizing green finance as follows.
· Procurement of funds through sustainability-linked loans· Issuance of green bonds
To ensure that our green commitment can be objectively verified, we are making use of DBJ Green Building certification,
BELS certification, and other certifications, establishing a systemfor evaluating and measuring positive impacts on the environment and society, and also actively reporting to external parties.
Please refer to page 25 for more details.

Examples of Value-Enhancement Renovations

Please refer to page 26 for more details.

JRE calculates CO2 emissions reductions through energy-saving renovation work conducted in each fiscal year and promotes
the aforementioned asset-level renovation projects. We monitor
the progress on reductions against the road map by calculating
total emissions reductions from FY2019.
JRE Ginza 1Chome East Building
Opened the rooftop as a designated “sky garden” for tenants
Tenants can also use it as a venue for lunch or meetings

JRE Nishi-Shinjuku Terrace
Opened the top floor as a designated space for tenantsUpgraded the toilets to the latest models

Japan Real Estate Investment Corporation

24

Environment

Green FinanceGreen Bonds

Sustainability-Linked Loans
JRE announced the borrowing of funds, and SLL have been
implemented since then as described below, which will be procured through sustainability-linked loans (the “SLLs”), the firstsuch arrangement in the J-REIT industry in January 2021.
Sustainability-linked loans are loan instruments that aim tofacilitate and support environmentally and socially sustainable economic activity and growth. In this loan scheme, the borrower setssustainability performance targets (“SPTs”) based on its business
management strategy, and the lender incentivizes the borrower’s
achievement of those objectives by aligning loan terms to the borrower’s performance against the relevant predetermined SPTs.

In the SLLs, focus is placed on climate change risks, especially reduction of CO2 emissions. Among JRE’s environmental
KPIs for fiscal 2030, the following targets have been set as
the SPTs.
∙ CO2 emissions reduction targets∙ Own ZEBs (Includes Nearly ZEB, ZEB Ready, ZEB Oriented)
Moreover, the SLLs are designed in such a way that, based on
the above SPTs, achievement confirmation shall be made several
times and, if the predetermined levels are achieved upon eachconfirmation, a reduction in the interest rate will be offered.

Overview of the Borrowings
Loan 2

Loan 3

Loan 4

Reduce CO2 emissions by 35%

Reduce CO2 emissions by 80%(Base year: FY2013 / Carbon intensity basis) (previous target)(Base year: FY2019 / Absolute CO2 emissions basis)

SPTs2:

Own five ZEBs (Includes Nearly ZEB, ZEB Ready, ZEB Oriented)

Lender:

The Norinchukin Bank

Loan amount:

JPY 5,000 million

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

s
c
i
p
To

JRE Shiba 2Chome Daimon Building 

Loan 1
SPTs1:

JRE issued 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.

JPY 5,000 million

January 29, 2021
July 31, 2031

January 30, 2032

Report / Second-party Opinion

CO2 emissions or energy consumption” and “3 Stars under the DBJ Green Building certification.” Additionally, as
for DBJ Green Building certification, our efforts to contribute toward disaster prevention and BCP were highly

JPY 5,000 million

JPY 3,000 million

November 15, 2021

June 17, 2022

November 17, 2031

June 17, 2032

Loan 6

evaluated, as were our efforts to install highly efficient air conditioning and LED lighting inside the building.
Overview of the Refurbishment
The refurbishment has been planned based on the concept of Positive Impact advocated by the United Nations
Environment Programme Finance Initiative (UNEP FI).
• Adopted highly efficient air-conditioning units and LED lights to reduce environmental load

Loan 7

Loan 8Reduce CO2 emissions by 80% (Base year: FY2019 / Absolute CO2 emissions basis)

SPTs1
SPTs2

Own five ZEBs (Includes Nearly ZEB, ZEB Ready, ZEB Oriented)

Lender:

SBI Shinsei Bank, Limited

The Norinchukin Bank

Loan amount:

JPY 2,500 million

JPY 3,500 million

Borrowing date:

March 15, 2023

March 27, 2023

Principal repayment date:

March 15, 2033

March 28, 2033

Report / Second-party
OpinionEvaluation from theSustainable Impact
Development Division,
Assessment Department, of
SBI Shinsei Bank, Limited—
Sumitomo Mitsui Banking Corporation
JPY 3,000 million

JPY 3,000 million

March 30, 2033

• Enhanced convenience and security by replacing tenant doors and adopting card access security systems• Switched to individually controlled air-conditioning and renovated restrooms, etc., caring for tenant employees’ health and comfort• Enhanced the property’s presence by innovating internal fittings of common areas to renew impression
Achieving Positive Impact
The impacts derived from the refurbishment were greater than initially expected. The results are as follows.

March 30, 2023

Second-party Opinion
from Japan Credit Rating
Agency, Ltd. (JCR)

Impact advocated by the United Nations Environment Programme Finance Initiative (UNEP FI). Among the eligibility criteria for eligible green projects, this project meets, “refurbishments with more than a 10% reduction in

Second-party Opinion from Japan Credit Rating Agency, Ltd. (JCR)
Loan 5

Refurbishment work of JRE Shiba 2Chome Daimon Building has been planned based on the concept of Positive

March 30, 2027

• Energy*1

Reduced 44.3%• CO2*1

Reduced 32.8%•T enant Satisfaction Level*3	Increased to 80%—• Water*1

Reduced 49.5%• Average rent per area increased by 17.5%

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

Overview of Refurbishments and Property

Second-party Opinion
In concluding agreements for SLLs, JRE obtains a second-party opinion from Japan Credit Rating Agency, Ltd. (JCR) with regard to conformity with the SLLP and the rationality of the established SPTs, except when evaluations are conducted by certain lenders.

Project Name

Property Overview

JRE Shiba 2Chome Daimon Building Refurbishment

Name of property:

JRE Shiba 2Chome Daimon Building

Project

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

Project System
Design supervision:

Mitsubishi Jisho Design Inc.

PM company:

Tokio Marine & Nichido Facilities, Inc.

Design and construction: OBAYASHI CORPORATION and others

WEB

For more information, please click below.
https://jre-esg.com/en/environment/greenbond.html

Construction period:

IMPACT

25

Japan Real Estate Investment Corporation

April 2018–2021 (completion)

Restroom after renovation

Time of construction: March 1984
Type of ownership:

Land and building

Time of acquisition:

September 2001

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

Japan Real Estate Investment Corporation

26

Relationship Between JRE’s Real Estate Investments and Stakeholders Society

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 termby both increasing stakeholder engagement and promoting environmental initiatives.
Sustainability Policy

2. Contribution to resource conservation including water and resource recycling
3. Contribution to conserving biodiversity and ecosystem

Based on its ESG Basic Policy, JRE-AM strives to improve the value of
properties by promoting investment management of office buildings
with consideration for the health and well-being of tenant workers.
Similarly, JRE-AM practices corporate management that enriches both
JRE-AM and employees through efforts to improve the physical andmental health of officers and employees.

28	Relationship Between JRE’s Real Estate Investments andStakeholders
29 Stakeholder Engagement
29 Tenants and Partners
30 Local Communities
31 Employees (Human Capital Development)
32 Well-being
33 Creating Fair Work Environments
34 Non-Financial Data Highlights

Please refer to page 05 for more details.

1. Climate change initiative (promoting decarbonization and strengthening resilience)

4. Enhancement of tenants’ health and well-being, and safety
5. Creating a workplace where a diverse workforce can thrive
6. Enhancement of governance systems
7. Stakeholder engagement through information disclosure and ESG evaluations

Investment andmanagement

Unitholders
Contributing
toward increasing
the value of theentire portfolio

JRE
Japan Real Estate
Investment Corporation
JRE-AM’s Responsibility

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

Office Building
Investments

Employees

Promotion of
ESG-related
initiatives

Please refer to page
31–33 for more details.

ESG disclosure,improving
evaluations fromexternal parties

PM Companies

Employees

Stakeholders

Tenants

Local
Communities

External Evaluation and Certifications

Contribution to theenvironment and society

Please refer to page 11–12 for more details.

• GRESB• ZEB certification• DBJ Green Building certifications

Local Communities

Please refer topage 30 for
more details.

27

Japan Real Estate Investment Corporation

PM Companies

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

Please refer topage 29 formore details.

Tenants

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

Please refer topage 29 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

28

Society

Stakeholder Engagement
Tenants and Partners

Local Communities

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

SUSTAINABILITYGUIDE“New Normal” Era
Waste Recycling

78.7%
56.0%

Percentage of Buildings Receiving Environmental
Data Feedback
64 buildings / 75 buildings total 

85.3%

88.0%

VOL. 2(As of May, 2023)
Note: The above percentages were calculated based on the number of buildings

MITSUBISHI ESTATE CO., LTD.

Japan Real Estate Investment Corporation

Theme 1 	Offices in the
Theme 2

Percentage of Buildings Conducting Survey
on Tenant Satisfaction
42 buildings / 75 buildings total 

Percentage of Buildings Receiving
Online Tenant Services
66 buildings / 75 buildings total 

Sustainability Guide VOL.1
Theme Work Style Reform
Sustainability Guide VOL.2

Percentage of Buildings with Green Leases
59 buildings / 75 buildings total 

Feedback on Sustainability to PMs

Society

Tenants/
Customers

Co-creation
EconomyBuilding
OwnersEnvironment

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

The pandemic has prompted us to evolve into

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

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

What can we do to help create a sustainable society?

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

Survey on Tenant Satisfaction
We carry out satisfaction surveys to achieve a high level ofcustomer satisfaction and realize sustainable buildings.
we will co-create a sustainable society.

2

Example of tenant satisfaction survey
In a bid to increase the asset value, JRE conducted the renovation work for common areas in JRE Shiba 2Chome Daimon
Building, including switching from central to individual air conditioning systems and upgrading themto more energy-saving ones, converting to LED lights in the building,and installing card access security
systems, which led to increased satisfaction of its tenants in a survey on
how they are satisfied with the building and its management.

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

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 to provide
feedback.
We believe that property managers who are connected withtenants and visitors to each building will improve the level ofsustainability of our entire portfolio by raising their sustainability-related knowledge and awareness.

JRE has been participating in a range of activities to contribute to local communities and local society. We also foster mutual communication with various stakeholders, including local authorities, local residents, and visitors to our properties, through such activities.

Contribution to Community Development
JRE addresses issues related to community development, including urban redevelopment and revitalization as part of investing in andoperating office buildings located in major cities throughout Japan. JRE works to improve the long-term value of its portfolio by contributing to the sustainable development of cities through cooperation with local stakeholders, including local governments, regional councils,
tenants, and our sponsor that is a developer.

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

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

ESG Seminars for Stakeholders
JRE offers ESG seminars for our business partners, master lessees, and property managers, among others, for the purpose ofraising stakeholder awareness. We invite ESG experts from outside JRE 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.

Summer festival at Shiodome Building

s
c
i
p
To

Tokyo Opera City Concert Hall

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

Contribution to community development 

GRAND FRONT OSAKA - Urban revitalization / urban redevelopment project
GRAND FRONT OSAKA which JRE acquired in October 2021 has built a “Knowledge Capital” where knowledge is created.

An ESG seminar held in May 2019.
The seminar was held online in
2023 with the participation ofnearly 170 stakeholders.

“Knowledge Office Space,” consisting of knowledge work space (for researchers, creators, business owner) and educational functions and “Future Life Showroom” exhibiting new lifestyle delivered by the fusion of advanced technologies andsensibilities are represented. The “Knowledge Plaza” located at the center of the North Wing is a symbol of the “town.”
Events and presentations linked to the Knowledge Capital are held here, bringing even more life and vitality to exchanges
between people in the city.
Furthermore, as a general incorporated association “GRAND FRONT OSAKA TMO” was established to operate the
GRAND FRONT OSAKA integrated town, a participatory type of “town” development is promoted to grow the “town” alongwith its residents, workers and visitors, to bring bustle and vitality back to a place people will want to come to every day.

29

Japan Real Estate Investment Corporation

Japan Real Estate Investment Corporation

30

Society

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, and therefore commissions business operations to JRE-AM. As the asset
management company for JRE, JRE-AM believes that acquiring
and training top-level human resources is a very important aspectof maintaining top-level management. In addition, JRE-AM has

Employee Health and Well-being
highlighted efforts related to officers and employees as an important issue in its Sustainability Policy. To achieve these goals,
JRE-AM is promoting efforts to improve the health and well-beingof its employees by creating a system to acquire and develop professional human resources who can handle the responsibility ofasset management.

Talent Pipeline & Development Strategy
JRE-AM have access to professionals with extensive experienceand expertise in real estate investment and asset management
as seconded staff from our shareholder, Mitsubishi Estate Co.,
Ltd. and also recruit experienced, talented individuals, to acquirecompetent personnel on a timely basis.
We employ a human resources development strategy that
includes support for acquiring various qualifications and specialized training after joining JRE-AM. In addition, we are developing
an easy-to-work-in environment for employees that is mindful of
their health and well-being.

We continually host junior employees (with fewer than ten
yearsʼ experience) seconded from our sponsor who regularly
recruits new graduates. By creating a well-balanced, diverse
workforce consisting of both young and experienced professionals, we ensure that our specialized knowledge and skills in realestate asset management are shared and passed on within
JRE-AM, 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 andawareness of compliance issues. Furthermore, we encourage
employees to actively participate in a variety of training programs
offered by our shareholder. By participating in such programs,
we expect each employee to develop as both a business person
and an industry professional.
Specialized Skills Training
We offer training programs led by external lecturers and expertsthat improve employees’ professional and practical skills, helping them become professionals in the fields of REITs and realestate asset management. Further, we encourage all employees
and officers to pursue educational opportunities outside thecompany by subsidizing relevant educational expenses such as
the costs of attending seminars and training programs offered byexternal 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 JRE-AM. After thesemanagers 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 periodically invite external experts to lecture on these topics, and also
provide training for managers conducted by our shareholder.

We believe that the physical and mental health of employees and the creation of an accommodating work environment are importantmanagement 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 achieve a good work-life balance, and increase worker motivation.

Creating Productive and Employee-friendly Workplace

Promoting Diverse Work Styles

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

We endeavor to provide a comfortable working environment byoffering various employee benefit programs and promoting a better
work-life balance so that no employee has to give up their employment for childbirth, childcare, nursing care, or other life events.

Office Design Promoting Internal Communication
In the current office, we have adopted a free seating system for
employees and have upgraded communication spaces within
JRE-AM. These spaces are aimed at invigorating in-Company
communication and have been set up to add a playful touch to
our office and promote employees’ physical activities. In addition,
we are working to make our offices more comfortable places towork. For example, we installed new “blue sky” LED lighting that
replicates blue sky and natural light to create a spacious feel in a
portion of our conference rooms. We believe that these offices
will facilitate employee work style reforms and lead to improved
productivity.

Introduction of a Fully Flextime System that Abolishes Core
Working Hours
We have introduced a flextime system for all employees. Under
this system, prescribed work hours are managed by the monthand not by the day, meaning that employees can measure theirwork obligations and private affairs and come up with a workstylethat takes into account a proper work-life balance.

communication spaces in office

Introduction of iKasa Umbrella Sharing Service
Along with participating in the “Zero Disposable Umbrellas by2030 Project for Buildings,” which is led by iKasa—an umbrella
sharing service—and aims to reduce the number of umbrellasused only once then discarded at office buildings, JRE-AM is
working to reduce waste generated from office buildings andenhance convenience for employees by introducing iKasa at
JRE-AM office.

Examples of training programs by external lecturers in FY2022 (23 programs were conducted in total): CASE 1 	Compliance training for those engaged in investment

management business (June 2022 and January 2023)

 CASE 2Internal Audit Training (June 2022)

 CASE 3

Anti-Money Laundering Training (July 2022)

 CASE 4

Sustainability Training (December 2022 and January 2023)

 CASE 5

Diversity, Equity and Inclusion (DEI) Training (February 2023)

Fair Performance Evaluation and Remuneration
JRE-AM has introduced an evaluation system for all employees basedon 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 degree of achievementof those targets. Employees receive comprehensive feedback on theirperformance and specific contributions through the Semi-Annual
Follow-Up Meeting and the Final Appraisal Meeting.

31

Japan Real Estate Investment Corporation

Human resources
evaluation system
Performance evaluation
Process evaluation

Percentage of employees
who had performance
review meetings

Press conference for the project on June 8, 2023

100%
“blue sky” LED lighting

Japan Real Estate Investment Corporation

32

Society

Non-Financial Data Highlights Creating Fair Work Environments

Employee-related data is listed below. Particularly notable is data related to the active participation of women, as the
proportion of female employees at JRE-AM has increased, far exceeding the average for Japanese companies of 26.5%.*
The return and retention rate for employees 12 months after taking childcare leave is 100%.

Communication with Employees
We implement the following measures to foster an open and efficient communication environment among all employees.

Employee Satisfaction Survey

Support for Promoting a Strong Team Culture

At JRE-AM, we consider our employees to be our closest stakeholders, and we believe that improving their satisfaction isimportant for sustainable growth. For this reason, we regularly
conduct annual surveys of all employees on a wide range of topics, including the work environment, ease of working including
benefits, and educational support, in a way that prevents theidentification of individuals. Through this survey, we strive toactively collect honest opinions and frank views. The results ofthis survey are fed back to the President & CEO, and are used
for improvement activities. In addition, the HR department conducts interviews with employees to gather their opinions on how
to improve operational efficiency.

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
JRE-AM’s competitiveness through open communication.

Employee satisfaction survey

FY2022

Employee satisfaction level (5-point scale)

4.2

Response rate100%

Anti-harassment
We conduct harassment training regularly to raise awareness,and provide employees with the tools and guidance they need to
identify, prevent and remove harassment from the workplace.
Furthermore, we keep everyone informed about the existence ofthe compliance hotline.

* Source: “Corporate awareness survey on promoting the participation of women in their workforce” conducted in July 2021 and released by Teikoku
Databank Ltd

Training Hours per Employee

Number of Employees(Persons)

Male

46

43

41

Female(Hours per Year)

43

42

23.0

18

21

24

20

20

23

22

22

22

23

22.2

For the purpose of empowering staff, uncovering risks/problems, and increasing workplace satisfaction, all employees canconsult with either the GM of the Compliance Department, alegal advisory firm, or an external specialist organization onsuch matters as work problems, grievances, improvement
requests, and whistleblowing on illegal/unethical behavior by
officers and employees. Consultations can be made anonymously, and whistleblowers are given protection under the
Whistleblower Protection Act in accordance with JRE-AM’s
internal regulations. When it receives a consultation, JRE-AM
conducts an investigation and takes the measures necessary toresolve the issue while taking into consideration the protectionof the whistleblower.

2018

2019

2020

2021

17.1

15.3

Employee Hotlines & Grievance Reporting

2022

2018

(FY)

Female Employee Ratio

2019

2020

2021

2022

(FY)

Training Expenses per Employee(%)(JPY per Year)

43.9

48.8

52.2

47.6

46.5

39,72835,442

31,88038,435

17,605

2018

2019

2020

2021

2022

2018

(FY)

2019

Annual Paid Leave per Person

Monthly Average Overtime(Days)(Hours per Month)

2020

2021

11.3

Comments from an Employee

25.8

13.9

14.1

12.1

11.3

2022

(FY)

10.0

8.5

11.9

Enjoying a Fulfilling Working Life at an Office Where Employees Want to WorkWhen I reflect on the meaning of a comfortable workplace, it strikes me that JRE-AM has many programs
available to employees, a flexible approach toward introducing new programs, and an environment where
employees can use such programs without constraint.
For example, in addition to programs such as flextime
and telework, we are provided with ample tools, including
those for internal electronic approval system and online
meetings. Using such programs and tools naturally
encourages employees to aspire to do an even better job,
while both enhancing their productivity and enablingthem to enjoy a fulfilling personal life. I think this leads toa virtuous circle, such as employees hitting on good work
ideas on days off.

33

Japan Real Estate Investment Corporation

At the same time, when I’m at work, I get the sensethat everyone wants to create an office where employees
want to come to work: the office is clean and pleasant, mycolleagues are friendly andcommunicating with them isfun, and I get inspiration fromeveryday casual conversations. Thanks to this atmosphere, I feel that my working
life is truly fulfilling.

2018

2019

2020

2021

2022

2018

2019

2020

XXXX

XXXX

Promote Diverse Workforce

(FY)

2.3

2.4

2018

2019

2020

2021

2022

(FY)

FY2018FY2019FY2020

FY2021

FY2022

Number of employees

41

43

46

42

43

Foreign employees

0

1

2

2

2

Of which female senior management

2

2

3

2

1

Of which female directors

1

0

0

1

1

Japan Real Estate Investment Corporation

34

Management System GovernanceOur basic policy as an investment corporation and asset managementcompany is not only to comply with laws and regulations, but to meetsocial demands as well. Taking care to have each employee performtheir duties with high ethical standards and strict self-discipline raises
our reputation among investors and garners the trust of the wider
society.

36
37

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
Mitsubishi UFJ Trust andBanking Corporation
Administrative Agent
Mitsubishi UFJ Trust andBanking Corporation, etc

Management System
Governance Structure of JRE
Risk Management
39

Investment Corporation

Asset Custody
Entrustment

Japan Real Estate
Investment Corporation

Asset Manager

Asset Management
Entrustment

Japan Real Estate
Asset Management Co., Ltd.

Administration
Entrustment

General Meeting of shareholder
Auditors

Compliance System
Board of Directors
Compliance Committee

Investment Management Council
President & CEO

Compliance Department

Strategic
Planning Dept.

WEB

Finance &Accounting
Dept.

Acquisition &Disposition
Dept.

Asset
Management
Dept.

Sustainability
Management
Dept.

Corporate
Administration
Dept.

Risk
Management
Dept.

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).
https://www.j-re.co.jp/ja_cms/ir/library.html

Governance Structure of JRE 
Status of Executive Director and Supervisory Directors
Candidates for investment corporation directors shall be elected at a general unitholders’ meeting on the proviso that they do not fallunder any of the grounds for disqualification stipulated in the Act on Investment Trusts and Investment Corporations and other applicable laws and regulations. The attendance rates of Executive Director and Supervisory Directors at the board of directors’ meetings of theinvestment corporation (from April 2022 to March 2023) are as follows:
Title

Name

Executive Director

Yutaka Yanagisawa *1

Japan Real Estate Investment Corporation

Mar. 2023 period

100% (3 times / 3 times)

100% (2 times / 2 times)

Executive Director

Jo Kato *2—

100% (3 times / 3 times)

Supervisory Director

Tomohiro Okanoya *1

100% (3 times / 3 times)

100% (2 times / 2 times)

Supervisory Director

Hiroaki Takano

100% (3 times / 3 times)

100% (5 times / 5 times)

Supervisory Director

Miyuki Aodai *2—

100% (3 times / 3 times)*1 Resigned as of December 13, 2022.

35

Attendance at Board of Directors Meetings
Sep. 2022 period*2 Appointed as of December 13, 2022.

Japan Real Estate Investment Corporation36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.

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

Identify risks and review
Identify risks comprehensively according to the operational processes and sub-processes of each department and review themusing benchmarks such as supervisory guidelines and case studies

3

Assess specific risks
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”

5

Assess residual risks
Assess residual risks based on the results of assessing (3) and (4)1 Basic Risk Management Policy
This policy defines JRE’s basic policy regarding risk management. This policy stipulates: 1) the classification and definition of risks andmanagement in line with the characteristics of each risk; 2) risk identification, assessment, and analysis; 3) activities to mitigate risks
based on assessment and the means to monitor these activities; and 4) implementation of measures when risks become apparent. This
policy also lays out provisions for an organizational structure regarding risk management and for reporting to the Board of Directors.
2 Risk Management Regulations
Under the Basic Risk Management Policy, the Risk Management Regulations clarify the types of risks related to JRE’s business operations and where they may occur, and determines management methods and systems to mitigate these risks.
Types of Risk
1. Asset management risks•R eal estate investment risks (risks related to volatility
in the real estate market, real estate credit risks, etc.)• Other asset management risks (market risks, credit risks,
operational risks, etc.)

2. Other risks•C ompanywide 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)•R eputation risks (risks caused by the spread of negative information or perception)•E vent risks (risks caused by unpredictable external factors
such as earthquakes and other natural disasters)

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.

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

1st Line
Self-Control by
Front Divisions

3 Risk Management Rules
In accordance with the Risk Management Regulations, the Risk Management Rules stipulate that each department is to clarify the risks
to be managed, that each department is to recognize and address these risks, and that the Risk Management Department will monitor
these efforts. As a general rule, once every fiscal year, each department uses a “Risk Assessment Table” to revise their list of risks, reassess their approach, and review countermeasures. The Risk Management Department monitors these actions and reports their findings
to the Board of Directors.

Basic Risk Management Policy
Determine basic policy
related to JRE's
risk management

Risk Management Regulations
Clarify the types of risks, where
they may occur, and determine
management methods andsystems 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.

2nd Line compliance manager has been appointed in each department to promote compliance, which includes dailyA
compliance checks and assessments, formulation and practice of compliance programs*, and formulation andpractice of rules and manuals under jurisdiction of each department.
 risk management manager is appointed in each department to promote efforts such as reviewing the “RiskA
Assessment Table,” gaining an understanding of the types of risks inherent to work under the jurisdiction of eachdepartment in order to ensure that these risks are managed appropriately.
 he Compliance Department drafts general compliance plans, practices compliance, and inspects, checks, and works
T
to improve the level of compliance in each department.

Control by Risk
Management andCompliance
DivisionsIn addition to planning and promoting the Basic Risk Management Policy, the Risk Management Department monitors
the status of risk management in each department and provides direction based on the “Risk Assessment Table.”

3rd LineInternal audits are conducted every year to inspect and verify the appropriateness and effectiveness of our system interms of legal compliance, internal management, risk management, crisis management, and other matters from theperspective of ensuring investor protection and fair market formation as an asset management company.

Review
by Audit Divisions

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

* A concrete implementation plan for achieving proper compliance

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.

37

Japan Real Estate Investment Corporation

Japan Real Estate Investment Corporation38GovernanceDecision-making structure in internal control system

Compliance System

Basic Principle of Compliance for the Investment Corporation (JRE)

In a case where a transaction is made with an interested party and above a certain amountBasic Principle of Compliance for the Asset Management Company (JRE-AM)

Reject and refer back

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 requirementsfrom society. This means that the investment corporation administers and oversees theoutsourcing companies from the same standpoint, while complying with legal and otherrelevant norms in its decision-making.

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 preliminarily by the compliance department head. In the event of anissue of 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 andall of the votes of the external compliance committee members present.
As needed, the committee orders its halt or alteration.

1

Ensuring thorough compliance is one of its top priority issues, since JRE-AM understands that any insufficiency in compliance would affect even its management base.

2

 s an asset management company, JRE-AM recognizes that it bears the responsibility for realizing the values that areArequired by society in its business operation, and makes proactive and continuous efforts for full compliance to enhancethe value of its business operation both qualitatively and quantitatively.

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

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

3

JRE-AM is determined to achieve a reputation for quality among its investors by promoting compliance activities, andthereby gains the trust of a wide spectrum of society.

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

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

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

Compliance Promotion Structure for the Asset Management Company
At JRE-AM, the Board of Directors, along with the Compliance Committee, Compliance Department, and compliance managers in eachdepartment, determine and verify various matters concerning compliance in accordance with their respective authorities and responsibilities.
Organization
Board of Directors of theAsset Management
CompanyWEB

Main roles
Oversees the companywide compliance and is fully responsible for all compliance issues. Main roles are below.
1. Formulate Basic Principle of Compliance for the Asset Management Company
2. Establish compliance organizational structure
3. Approve rules, manuals and programs regarding compliance

Compliance Committee

The committee’s activities include deliberating over and deciding on system development and important matters (including
verifying important transactions that involve key related parties) in relation to compliance. The committee consists of the
President & CEO, General Manager of Compliance Department, General Manager of Risk Management Department, and one
or more external experts.

Compliance Department

Drafts general compliance plans, practices compliance, and inspects, checks, and works to improve the level of compliance ineach department.

Compliance Manager
and Compliance
Promoter in Each
Department

A compliance manager has been appointed in each department to promote compliance, which includes daily compliancechecks and assessments, formulation and implementation of compliance programs, and formulation and practice of rules andmanuals under jurisdiction of each department.

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 aswork problems, grievances, improvement requests, and whistleblowing on illegal/unethical behavior by officers and employees.
Consultations can be made anonymously, and whistleblowers are given protection under the Whistleblower Protection Act in accordance with JRE-AM’s internal regulations. When it receives a consultation, JRE-AM conducts an investigation and takes the measures necessary to resolve the issue while taking into consideration the protection of the whistleblower.

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.

39

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

Japan Real Estate Investment Corporation

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 ofinvestment corporations and asset management companies, (3) Measures for transactions that constitute conflicts of interest) (available only in Japanese).
https://www.j-re.co.jp/ja_cms/ir/library.html

Preventing Fraud and Corruption at the Asset Management Company
The Mitsubishi Estate Group has declared that it will carry out equitable, transparent corporate activities with a primary emphasis on earning trust. The Group’s Guidelines for Conduct forbid not just actions
that could be construed as collusion with government officials or otheractions considered illegal, but also entertainment and gift-giving that
goes beyond the bounds of social convention.
When providing support related to the activities of political groups,
the Group ensures it is appropriate in accordance with relevant laws
and regulations such as the Political Funds Control Act and the Public
Offices Election Act, as well as internal regulations such at the
Mitsubishi Estate Group Guidelines for Conduct.
Moreover, in 2013, the Group established the Mitsubishi Estate Group
Basic Regulations on the Prevention of Corruption to put in place asystem to prevent corruption across the organization. In 2018, theGroup established and published the Mitsubishi Estate Group AntiCorruption Guidelines. The Guidelines document expectations of business partners with the aim of ensuring compliance throughout the
supply chain based on the cooperation of all of the Group’s business
partners. The Group provides training on corruption prevention to officers and employees and obtains pledges on the Guidelines on thePrevention of Corruption from officers and employees. The Group also
holds annual lectures on corruption prevention, particularly for departments and Group companies engaged in international business.
In 2017, an external organization assessed the Mitsubishi EstateGroup’s corruption prevention system as a whole. The Group has beenworking to further strengthen the corruption prevention system by
responding to the issues identified through the assessment.

WEB

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

JRE-AM observes the Mitsubishi Estate Group Basic Regulations on
the Prevention of Corruption and the Mitsubishi Estate Group AntiCorruption Guidelines, of which it is a part, and works toward preventing bribery when entertaining clients or giving gifts. Specifically, Rules
for Entertainment and Gifts of JRE-AM makes the following stipulations, which are strictly enforced, such as detailed reporting and documentation of the details of entertainment or goods provided or received
by officers and employees• “JRE-AM’s officers and employees shall not request, provide, or
receive entertainment or gifts incompatible with sound businesspractices or common sense”• “The giving or receiving of cash as a business gift is prohibited except
for congratulatory or condolence expenses at weddings, funerals, or
ceremonial occasions.”
Moreover, with a high regard for the “Guideline to Prevent Bribery ofForeign Public Officials,” formulated by the Ministry of Economy, Tradeand Industry, JRE-AM has established the Rules for Entertainment andGifts and conducts specific internal processes when dealing with public
officials such as entertaining, giving gifts, inviting, donating, and utilizing their agencies, etc. The said Rules for Entertainment and Gifts of
JRE-AM provides “Entertainment and gift-giving to public officials andothers are prohibited. When entertainment or gift-giving is required forbusiness purposes, regardless of the amount, prior approval must be
obtained from the head of the department and the Director ofCompliance Department, and after expenditure, approval for settlement must be obtained from the head of the department.”
For Mitsubishi Estate Group Anti-Corruption Guideline, please click here.
https://mec.disclosure.site/e/sustainability/activities/governance/compliance/pdf/anti_corruption_guideline_201903.pdf

Japan Real Estate Investment Corporation

40

GRI Content Index

Statement of use
GRI 1 used
Applicable GRI Sector Standard(s)GRI STANDARD/OTHER SOURCE

Japan Real Estate Investment Corporation has reported in accordance with the GRI Standards for the period
1/April/2022 to 31/March/2023
GRI 1: Foundation 2021
None

DISCLOSURE

LOCATIONURLREASON OF OMISSION / EXPLANATION

Organizational details

LOCATIONURLREASON OF OMISSION / EXPLANATIONGRI 2:
GeneralDisclosures
2021

2-14

Role of the highest governance body in sustainability
reporting

Basic Policy on ESG / Management
Structure

Sustainability Committee

2-15

Conflicts of interest

Compliance System

Conflict of Interest Policy of Asset Management Company

Communication of criticalconcerns

Basic Policy on ESG / Management
Structure

Sustainability Committee

Management System

Risk Management

Compliance System

Conflict of Interest Policy of Asset Management Company
No significant concerns were reported in the reporting period.

Overview of JRE

Corporate Data

IR Library

Annual Report

Organizational Structure

Organizational Structure

2-2

Entities included in the organization’s sustainability
reporting

Overview of JRE

Corporate Data

2-3

Reporting period, frequency
and contact point

Disclosure of ESG-RelatedInformation

Reporting Scope and Period
Inquiries

Restatements of information

Basic Policy on ESG / Management
Structure

Sustainability Committee
The previous year's data for the reporting year has been revised fromthe previously disclosed data as we examined the data accuracy.

2-17

Collective knowledge of thehighest governance body

Basic Policy on ESG / Management
Structure

Sustainability Committee

Environmental Initiatives

Environmental Performance

2-18

Evaluation of the performanceof the highest governancebody

Basic Policy on ESG / Management
Structure

Sustainability Committee

External assurance

Disclosure of ESG-RelatedInformation

GRI Content Index / SASB Framework

2-19

Remuneration policies

Governance Structure of JRE

Governance Structure of JRE

2-20

Process to determine
remuneration

Governance Structure of JRE

Governance Structure of JRE

2-1

2-4

2-5

2-6

Activities, value chain andother business relationships

Employees
2-7Workers who are not
employees
2-8

2-11

Portfolio List (Portfolio Overview)

Portfolio List

IR Library

Annual Report

Asset management company(JRE-AM) Web page>Employee
Initiatives

Basic Employee Data
JRE is prohibited from having any employees under the Japanese Act on
Investment Trusts and Investment Corporations, and therefore commissions business operations to its asset management company, Japan Real
Estate Asset Management Co., Ltd. (JRE-AM). The information regarding
employees of JRE-AM is disclosed here.

Asset management company(JRE-AM) Web page>Employee
Initiatives

2-21

2-22

Basic Employee Data
JRE is prohibited from having any employees under the Japanese Act on
Investment Trusts and Investment Corporations, and therefore commissions business operations to its asset management company, Japan Real
Estate Asset Management Co., Ltd. (JRE-AM). The information regarding
employees of JRE-AM is disclosed here.

Governance Structure of JRE

Governance Structure of JRE

Management System

Management System

Compliance System

Compliance System

2-24

Nomination and selection of
the highest governance body

IR Library

ARTICLES OF INCORPORATION OF JAPAN REAL ESTATEINVESTMENT CORPORATION

2-25

Chair of the highest governance body

IR Library

ARTICLES OF INCORPORATION OF JAPAN REAL ESTATEINVESTMENT CORPORATION

Compliance System

Conflict of Interest Policy of Asset Management Company

Social Initiatives

Role of the highest governance body in overseeing themanagement of impacts
2-12Delegation of responsibility
for managing impacts
2-13Japan Real Estate Investment Corporation

Annual total compensation
ratio

Statement on sustainable
development strategy

Policy commitments

Sustainability Committee

2-9

2-10

2-16

Basic Policy on ESG / Management
Structure

Governance structure andcomposition41

DISCLOSURE

General disclosures

General disclosures
GRI 2:
GeneralDisclosures
2021

GRI STANDARD/OTHER SOURCE

2-23

Information unavailable:
As Japan Real Estate Investment Corporation has no employees, it is
impossible to calculate the ratio of annual total compensation. It is
not available such information of the asset management company atthis time.
JRE Information

Message from Executive Director

Basic Policy on ESG / Management
Structure

Basic Policy on ESG / Management Structure

Climate Change Initiatives

Climate Change-Related Risks and JRE's Response

Basic Policy on ESG / Management
Structure

Basic Policy on ESG / Management Structure

Compliance System

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

Asset management company(JRE-AM) Web page>Employee
Initiatives

Human Rights Initiatives

Embedding policy
commitments

Basic Policy on ESG / Management
Structure

Basic Policy on ESG / Management Structure

Processes to remediate negative impacts

Asset management company(JRE-AM) Web page>Complaint
Handling and Dispute Resolution

Complaint Handling and Dispute Resolution

2-26

Mechanisms for seeking
advice and raising concerns

Compliance System

Compliance System

Stakeholder Engagement
Relationship with Local Communities

2-27

Compliance with laws andregulations

Asset management company(JRE-AM) Web page>Employee
Initiatives

Employee Initiatives

2-28

Basic Policy on ESG / Management
Structure

Sustainability Committee

Management System

Risk Management

Basic Policy on ESG / Management
Structure

Sustainability Committee

Management System

Management System

Compliance System

Compliance System

Membership associations

Asset management company(JRE-AM) Web page>About JRE-AM

Memberships

Approach to stakeholder
engagement

Environmental Initiatives

Contributions to the Environment through Real Estate Investment
Management
Collaboration with Suppliers

Social Initiatives

Stakeholder Engagement
Improving Tenant Satisfaction
Relationship with Local Communities

Asset management company (JRE-AM)
Web page>Employee Initiatives

Employee Initiatives

2-29

2-30

No significant regulatory violations occured during the reporting
period.

Collective bargaining
agreements

It is not applicable because the investment corporation does not have any
employees. All employees except managerial positions of the asset management company are covered under a collective bargaining agreement.

Japan Real Estate Investment Corporation

42

GRI Content Index

GRI STANDARD/OTHER SOURCEDISCLOSUREURLREASON OF OMISSION / EXPLANATIONLOCATION

Material topics
GRI 3:
Material Topics
2021

GRI STANDARD/OTHER SOURCEDISCLOSUREURLREASON OF OMISSION / EXPLANATIONLOCATION

Water and efluents
3-1

Process to determine material topics

Basic Policy on ESG / Management
Structure

Materiality

List of material topics

Basic Policy on ESG / Management
Structure

Materiality

3-2

GRI 303:
Water andEffluents
2018

GRI Content Index

303-1

303-2

Interactions with water as ashared resource

Environmental Initiatives

Management of water
discharge-related impacts

Not applicable:
The wastewater discharged from all of our properties does not exceed
the general wastewater standards set by the government and the
local government.

SASB Framework
Management of material
topics3-3

Basic Policy on ESG / Management
Structure

Materiality

Asset management company (JRE-AM)
Web page>Employee Initiatives

Employee Initiatives

Environmental Initiatives

Environmental Performance
Collaboration with Suppliers
Contributions to the Environment through Real Estate Investment
Management
Climate Change-Related Risks and JRE's Response

Social Initiatives

Relationship with Local Communities
Improving Tenant Satisfaction

External Evaluations andCertifications

Sustainability Certification

Green Finance

Sustainability-Linked Loans
Green Bonds

Asset management company(JRE-AM) Web page>Complaint
Handling and Dispute Resolution

Complaint Handling and Dispute Resolution

Basic Policy on ESG / Management
Structure

Sustainability Committee

Climate Change Initiatibes

Governance

External Evaluations andCertifications

GRESB Real Estate Ratings

Environmental Performance

303-3

Water withdrawal

Environmental Initiatives

Environmental Performance

303-5

Water discharge

Environmental Initiatives

Environmental Performance

Habitats protected or restored

Environmental Initiatives

Contributions to the Environment through Real Estate Investment
Management

305-1

Direct (Scope 1) GHG
emissions

Environmental Initiatives

Environmental Performance

305-2

Energy indirect (Scope 2) GHG
emissions

Environmental Initiatives

Environmental Performance305-3

Other indirect (Scope 3) GHG
emissions

Environmental Initiatives

Environmental Performance

Biodiversity
GRI 304:
Biodiversity
2016

304-3

Emissions
GRI 305:
Emissions2016

GHG emissions intensity

Environmental Initiatives

Environmental Performance

Reduction of GHG emissions

Environmental Initiatives

Environmental PerformanceContributions to the Environment through Real Estate Investment
Management

306-1

Waste generation and significant waste-related impacts

Environmental Performance>WEB
information

Waste

306-2

Management of significant
waste-related impacts

Environmental Initiatives

Environmental Management Systems (EMS)

306-3

Waste generated

Environmental Performance>WEB
information

Waste

306-4

Waste diverted from disposal

Environmental Performance>WEB
information

Waste

306-5

Waste directed to disposal

Environmental Performance>WEB
information

Waste

305-4
305-5

Waste
EnergyGRI 302:
Energy2016

302-1

Energy consumption within
the organization

Environmental Initiatives

Environmental Performance

302-2

Energy consumption outsideof the organization

Environmental Initiatives

Environmental Performance

Energy intensity

Environmental Initiatives

Environmental Performance

Reduction of energy
consumption

Environmental Initiatives

Environmental PerformanceContributions to the Environment through Real Estate Investment
Management

302-3

302-4

302-5

43

Reductions in energy requirements of products andservices

Japan Real Estate Investment Corporation

Green Finance

Sustainability-Linked Loans
Green Bonds

Environmental Initiatives

Environmental PerformanceContributions to the Environment through Real Estate Investment
Management

GRI 306:
Waste
2020

Japan Real Estate Investment Corporation

44

GRI Content Index

GRI STANDARD/OTHER SOURCEDISCLOSURE

LOCATIONURLREASON OF OMISSION / EXPLANATION

Supplier environmental assessment
GRI 308:
Supplier
Environmental
Assessment
2016

308-1

New suppliers that werescreened using environmental criteria

There were no new suppliers that were screened using environmental
criteria.

308-2

Negative environmental
impacts in the supply chain
and actions taken

No suppliers were identified that had a particularly significant negative impact in the reporting period.

401-1

401-3

New employee hires andemployee turnover

Asset management company(JRE-AM) Web page>Employee
Initiatives

Employee Initiatives

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

Asset management company(JRE-AM)Web page>Employee
Initiatives

Employee Initiatives

Parental leave

Asset management company(JRE-AM) Web page>Employee
Initiatives

Employee Initiatives

403-1

403-3

Occupational health andsafety management system

Asset management company(JRE-AM) Web page>Employee
Initiatives

Employee Health and Well-being

Hazard identification, risk
assessment, and incident
investigation

Asset management company(JRE-AM) Web page>Employee
Initiatives

Employee Health and Well-being

Promotion of worker healthSocial Initiatives

Improving Tenant Satisfaction

Asset management company(JRE-AM) Web page>Employee
Initiatives

Employee Health and Well-being

Workers covered by an occupational health and safety
management system

Asset management company(JRE-AM) Web page>Employee
Initiatives

Employee Health and Well-being

Work-related ill health

Asset management company(JRE-AM) Web page>Employee
Initiatives

Employee Health and Well-being

403-6

403-8

403-10

GRI 405:
Diversity and Equal
Opportunity
2016

405-1

Diversity of governance bodies and employees

Asset management company(JRE-AM) Web page>Employee
Initiatives

Employee Initiatives

405-2

Ratio of basic salary andremuneration of women
to menThere is no institutional pay gap based on gender.

Average hours of training peryear per employee

Asset management company(JRE-AM) Web page>Employee
Initiatives

Employee Initiatives

404-2

Programs for upgrading
employee skills and transition
assistance programs

Asset management company(JRE-AM) Web page>Employee
Initiatives

Employee Initiatives

Percentage of employees
receiving regular performance and career development reviews

Asset management company(JRE-AM) Web page>Employee
Initiatives

Employee Initiatives

404-3

404-1

Japan Real Estate Investment Corporation

GRI 413:
Local
Communities
2016

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

Social Initiatives

Relationship with Local Communities

413-1

413-2

Operations with significant
actual and potential negative
impacts on local communities

Asset management company(JRE-AM) Web page>Portfolio

Portfolio List (Portfolio Overview)No property was identified that had a particularly significant negative
impact on the local community in the reporting period.

GRI 414:
Supplier Social
Assessment
2016

414-1

New suppliers that werescreened using social criteria

There were no new suppliers that were screened using social criteria.

414-2

Negative social impacts in the
supply chain and actions
taken

No suppliers were identified that had a particularly significant negative impact in the reporting period.

Customer health and safety
GRI 416:
Customer Healthand Safety
2016

416-1

Assessment of the health andsafety impacts of product andservice categories

416-2

Incidents of non-complianceconcerning the health andsafety impacts of products
and services

Social Initiatives

Improving Tenant Satisfaction

There were no serious violations of laws and ordinances since wehave taken appropriate actions as the engineering reports requested
us to be careful not to let it become normal in our operations.

Others (G4 Construction and Real Estate Sector Disclosures)
Sustainability Certifications

Training and education

45

URL
REASON OF OMISSION / EXPLANATION

Supplier social assessment

Occupational health and safety

GRI 404:
Training and
Education
2016

LOCATION

Local communities

401-2

GRI 403:
Occupational
Health and Safety
2018

DISCLOSURE

Diversity and equal opportunity

Employment
GRI 401:
Employment
2016

GRI STANDARD/OTHER SOURCE

Sustainability
Certifications(CRE8)

Evaluations from External
Parties

External Evaluations andCertifications

Sustainability Certification

Results of surveys measuring
customer sutisfaction

Social Initiatives

Improving Tenant Satisfaction

Customer Satisfaction
Customer
Satisfaction(PR5)Japan Real Estate Investment Corporation

46

SASB Framework

Activity Metrics
SASB Disclosure CodeDisclosure MetricFiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

Unit

IF-RE-000.A

Number of assets

73

72

75

77

assets

IF-RE-000.B

Leasable floor area

871,326

873,873

907,231

907,251

m2

IF-RE-000.C

Percentage of indirectly managed assets

1.0

1.0

1.0

1.0

%

IF-RE-000.D

Average occupancy rate

99.7

97.9

97.0

95.5

%

SASB Disclosure CodeIF-RE-130a.5

Note: Fiscal years refer to the period starting from April 1 and ending at March 31 of the following year. Fiscal 2022 represents
the 42nd and 43rd fiscal year.The number of assets and the leasable area are the figures for the entire year and include
properties sold during each fiscal period. Accordingly, they differ from the figures at the end of fiscal periods (excluding
leasehold land assets). The average occupancy rate is the portfolio average of the year-end occupancy rate at the end ofeach fiscal year.

Disclosure MetricFiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

Unit

JRE is steadily implementing equipment retrofitting that includes switching to LED lighting and installing more energy efficient air
conditioning units to reduce its environmental impact based on its sustainability plan.
JRE measures and gains an understanding of the energy consumption, water use, and waste of each building on a monthly basis, outsourcing data calculation and data analysis to a company specializing in EMS to execute its PDCA cycle. If there is a large difference inthe aggregated data from the previous month or year, we investigate the cause by conducting interviews with the property manager andensuring accurate data. We also constantly monitor the reduction effects of green refurbishments such as LED and AC upgrades.
JRE has established selection criteria for 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 friendliness in terms of operations, 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 measures to reduce energy consumption as part of their
management duties. In this way, JRE makes environmental improvement efforts in cooperation with the PM companies.
JRE makes contracts with professional firms to conduct energy assessments of a selection of its properties, and utilizes the results tounderstand the current level of their energy performance and to formulate future policies.
JRE has determined “Environmental Consideration of Portfolio” as one of its key ESG issues (materiality) and established the acquisition of environmental certifications (including green building certifications and energy-efficiency ratings) as a KPI. JRE will ensure that
more than 70% of its properties obtain environmental certifications and work to continuously operate office buildings that are the tenants’ first choice.

Disclosure Topic: Energy Management
SASB Disclosure CodeDisclosure MetricFiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

Unit

100

100

100

100

% (on a floorarea basis)

IF-RE-130a.1

Energy consumption data coverage

IF-RE-130a.2

Total energy consumed by portfolio area withdata coverage

246,064

231,097

226,719

223,673

MWh

Percentage grid electricity

78.50

77.02

77.29

77.92

%

Percentage renewable electricity

1.27

1.77

17.66

57.44

%

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

–3.14

–7.90

–3.36

–3.36

%

93.64

91.00

94.70

91.20

% (on a floorarea basis)

20.69

21.34

21.16

19.85

% (on a floorarea basis)

IF-RE-130a.3

Percentage of area with data coverage

IF-RE-130a.4

Percentage of eligible portfolio that has anenergy rating

Percentage of eligible portfolio with Green
Building certification

74.30

75.65

74.99

% (on a floorarea basis) escription of how building energy management considerations are integrated into property investment analysis and operationalD
strategy (Please refer to the “Environment” section of this report beginning on page 13 for more information)
Based on the Sustainability Policy items “1. Climate change initiative (promoting decarbonization and strengthening resilience)” and“2. Contribution to resource conservation including water, and resource recycling”, JRE has set reduction targets for greenhouse gas
emissions in order to improve the environmental performance of its real estate portfolio.In order to achieve these targets, JRE’s asset
management company, JRE-AM implements measures to improve the operational performance of buildings, conduct energy efficiency
retrofits, and engage tenants on energy efficiency based on its “Energy Conservation Policy”, which stipulates operational policies
for improving energy efficiency of the real estate portfolio, and its “GHG Emissions Reduction Policy”, which aims to create a decarbonation 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. Although we have been working to reduce energy and GHG
emissions, and are at a lower level than in the past, in fiscal 2019, we verified the possibility of reducing CO2 emissions from over 70
of our properties and established reduction targets for 2030. Subsequently, as we proactively advanced the introduction of electricity
made from renewable energy and it became clear that we could expect to achieve our previous emissions targets ahead of schedule,
we updated them to even more ambitious targets. Going forward, JRE will contribute to a shift to a decarbonized society through the
reduction of GHG emissions while securing its preparedness to natural disasters and other phenomena arising from climate change.

47

Japan Real Estate Investment Corporation

IF-RE-140a.1

Disclosure Metric
Water withdrawal data coverage asa percentage of total floor area

Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

Unit

100

100

100

100

% (on a floorarea basis)

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

IF-RE-140a.3

IF-RE-140a.4
74.19

Notes: Properties that have obtained BELS certification have been included.
Reference information: Percentage of eligible portfolio that has DBJ Green Building certification or CASBEE certification.
Percentage of properties to have acquired environmental certifications (green building certification and energy rating)is 76.3% based on gross floor area.
IF-RE-130a.5

SASB Disclosure CodeIF-RE-140a.2

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

Disclosure Topic: Water Management

Total water withdrawn by portfolio area withdata coverage

886,256

655,641645,753689,740m3

As percentage of water withdrawal in regionswith high or extremely high baseline water stress

0

0

0

0

%

Like-for-life percentage change in water withdrawn for portfolio area with data coverage–5.70–26.89

–2.35

4.38

%

Percentage of area with data coverage

93.64

91.00

94.70

91.20

% (on a floorarea basis)

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 lowrisk 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 be a corresponding reduction in operating costs
For this reason, JRE has “2. Contribution to resource conservation including water and resource recycling” in its Sustainability Policy, In
keeping with this policy, JRE engages in efficient usage and management of water resources for its portfolio. In fiscal 2020, we set a targetof 20% reduction in water consumption intensity relative to fiscal 2013 as a long-term policy for reducing consumption for fiscal 2030. In fiscal 2021, together with the revision of the base year for CO2 emissions reduction targets, we revised the base year for water usage targets.
At JRE, we are employing the following strategies for managing water consumption in our portfolio:
At JRE, we are employing the following strategies for managing water consumption in our portfolio:• Implementation of technical evaluations (water-saving estimate) 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•R enewal of irrigation equipment for exterior planting and adoption of landscapings that are easy to manage, with less water
consumption•T horough 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

48

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

Fiscal 2020

Fiscal 2021

Fiscal 2022

Unit

Percentage of new leases that containa cost recovery clause for resource
efficiency-related capital improvements

—

—

66.7

84.5

% (on a floorarea basis)

Associated leased floor area——

134,037

163,112m2

Percentage of total leasable floor area forbuildings leased under a green leaseagreement

42.3

67.9

75.0

78.2

% (on a floorarea basis)

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

54.9

53.1

58.4

69.6

% (on a floorarea basis)

SASB Disclosure CodeIF-RE-450a.1

Disclosure Metric
Area of properties located in 100-year
flood zones

Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

Unit

551,331

676,024

691,570775,641m2

Amount recorded refers to the total floor area of properties located in areas where inundation of more than 0 m in depth is expected basedon hazard maps (primarily the maximum expected scale) issued by local governments. Japanese hazard maps (maximum estimatedscale) are developed for areas with an annual exceedance probability of 1 in 1,000 for flood damage.
We have integrated risk evaluations since fiscal 2021 based on the maximum expected scale.
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 ESG website “Climate Change Initiatives” page.
https://jre-esg.com/en/environment/climate.html

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

IF-RE-410a.3

Percentage of tenants that are separately
metered or submetered for grid electricity
consumption

100

100

100

100

% (on a floorarea basis)

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

90.7

91.7

92.9

93.7

% (on a floorarea basis)Discussionof approach to measuring, incentivizing, and improving sustainability impacts of tenants(Please refer to the “Tenants & Partners” section of this report beginning on page 29 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 ofthe“environment” and “tenant well-being,” supplemented with real-life case studies.
VOL.1 Work Style Reform

VOL.2 Offices in the“New Normal” Era, Waste Recycling•T oward a Sustainable Society• Case 1: Offices in the “New Normal”•O ur Thoughts• Case 2: Waste Recycling•C ase 1: Example of a Large-Scale Office• What We Can Do Now•C ase 2: Example of Small- and Medium-Sized Offices•C ase 3: Creating New Spaces in the Current Office•W hat We Can Do Now

In addition to the guide, we have the following engagements with our tenants:• Introductio 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 ofenergy, water, etc. for which the tenant is obligated to pay the actual cost. This scheme therefore provides tenants with incentives toreduce actual consumption. Tenants are also able to reap the repair-related benefits of green leases, with these costs being shared withthe property owner.

49

Japan Real Estate Investment Corporation

Japan Real Estate Investment Corporation

50

JAPAN REAL ESTATE INVESTMENT CORPORATION
Sustainability Report 2023

Sustainability Report2023

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

Printed in Japan