ESG Report
January 2020

MC-UBS Group
Brand Message

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

Mission, Vision &Core Values

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

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

CORE VALUESM

Mastery

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

C

Challenge

We always challenge the unprecedented.

U

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

B

Belief in ourselves

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

S

Stewardship and Sensitivity

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

R

Respect

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

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

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

2

Contents

Editorial Policy
Mitsubishi Corp.-UBS Realty Inc. (MCUBS) and all of
the funds under management (also called The
MC-UBS Group) are actively engaged in practices
that promote sustainability within the J-REIT
industry, information on which they disclose to
stakeholders. For this term, information pertaining
to sustainability published on the websites of eachmanagement company and investment corporation
has been consolidated in this document, ESG Report
January 2020, in order to provide a clear explanation of our initiatives as a Group.
ESG Report January 2020 serves as an informative tool for stakeholders with a high level of interestin sustainability and therefore makes reference to
GRI standards and SASB standards (real estate).
Going forward, we hope to gather opinionsfrom those who read this report in order to further
improve subsequent reports. In addition, we hopethat this report can be used as an effective means
to maintain a dialogue with our stakeholders.
Month of issuance: January 2020
Frequency of updates: Once annually
Reference guidelines: GRI standards,
SASB standards (real estate)
The GRI Guidelines and SASB Index will be posted
at the end of February 2020.
Contact Information
Tel: +81-3-5293-7000 (main)
E-mail: contact-us_mcubs@mc-ubs.com

4

Message from Management

20

Social2	Message fromPresident Okamoto

21	Communication with
Stakeholders

3	Massage from
Deputy President Suzuki (CSO)

22 Creating a Positive Impact
24 Health and Well-Being
27	Social Contributions by
Employees

Sustainability Strategy
4

Sustainability Strategy

6

ESG Materiality and the SDGs

28	Communication with Local
Communities

8

Supported Initiatives

29 Communication with Tenants
30 IR Activities

9

Environmental
10 Climate Change and Resilience31

Corporate Governance13	Environmental Approvals and
Evaluations for Group Assets

32 Corporate Governance

14 Energy

35 Risk Management

34 Compliance

16 Water / Waste
17	Pollution Prevention /Building Safety
18 Biodiversity
19 The Green BondESG Report January 2020

1

36

Investment Corporation Overview

Message from Management

The MC-UBS Group aims improve
unitholder value throughinvestment management andcontributes to solving global issues.

Message from President Okamoto
This year, we will again issue our ESG Report, which has

From the perspective of creating a prosperous society

been well received by everyone.

where people can live comfortably, real estate has large

Mitsubishi Corp.-UBS Realty Inc. (MCUBS), as one ofpotential in being able to contribute toward addressing

Japan’s leading asset management companies for listed realenvironmental and social issues. We hope to increase unit-

estate investment corporations (J-REITs), understands that

holder value through real estate asset management, and atalways keeping in mind whether asset management activi-

the same time, recognize social impact—such as respond-ties are leading to the creation of a sustainable society is a

ing to climate change and consideration toward society—social responsibility required from long-term management,

and contribute toward addressing global issues.

and has promoted sustainability initiatives, a pioneering

The MC-UBS Group is committed to making further

move within the J-REIT sector.

advances, and we ask for your continued support andThrough our ESG Report, which was created to share ourunderstanding in our endeavors.

basic approach toward ESG as well as our activities withvarious stakeholders including our unitholders, we feel thatmore and more people empathize with our initiatives.
Looking at the current growing interest in ESG, we firmly
believe that an ESG perspective will become increasingly
important in the future.

ESG Report January 2020

2

January 2020

Katsuji Okamoto
President & CEO

Message from Deputy President Suzuki (CSO)
I was recently appointed as Chief Sustainability Officer.

I hope you can deepen your understanding about ourAround 2013 when MCUBS was embarking on

initiatives through this ESG Report.

sustainability activities in earnest, I was responsible for the
initiative. At that time, the concept of sustainability was notwidely known yet. Today, however, not only is it widely
shared by our employees and affiliates, it is also widely
recognized as an issue of management in the society. I feel
deeply moved to see such a spreading of this concept, andat the same time, I feel it further reinforces the importanceof social responsibility.
Our sustainability activities are promoted centered on our
Sustainability Committee through proposing strategies
and monitoring the activities of the three J-REITs wemanage. Going forward, we will continue to make sure

Naoki Suzuki

that we are able to create value exceeding the expectations

Deputy President andof our stakeholders.

Chief Sustainability Officer

Group Organizational Chart 
The sponsors of the MC-UBS Group, Mitsubishi Corporation andopportunities for investors in Japan and overseas. Through thisUBS AG, carry with them knowledge of and experience in themanner of business, we can contribute to investors, contributereal estate and financial markets, respectively, cultivated overto the growth and development of domestic and overseas

many years. With this as our base, we would like to build real

investment markets, and contribute to the real estate market.

estate investment trusts and provide an abundance of investment

This goal forms the basic management policy of our business.

Asset Management

First REIT specializing in retail properties in Japan
Japan Retail Fund Investment Corporation (JRF)

Asset Management

Asset Management Company

First REIT specializing in industrial properties in Japan
Industrial & Infrastructure Fund Investment
Corporation (IIF)

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

REIT focusing on the three major metropolitan areas(Tokyo, Osaka, Nagoya)MCUBS MidCity Investment Corporation (MMI)

ESG Report January 20203

Sustainability Strategy

Sustainability Strategy
The MC-UBS Group’s Vision for Sustainability
Supported by the funds procured from investors and otherand the Responsible Property Investment Policy as a clarifi-

parties, the MC-UBS Group manages various types of prop-

cation of its strategies and policies. In doing so, the Grouperties, including commercial facilities, industrial facilities,

is integrating ESG considerations into its investment andand offices. Amid the rising level of interest from global

asset management processes. The Group is also working toinvestors toward environmental, social, and governanceincorporate ESG within its Mission, Vision & Core Values(ESG) factors, the Group is undertaking ESG-related initia-

with the aim of establishing a shared awareness of ESG

tives based on an awareness shared across the organization.

across the entire Group.

The Group has formulated the Environmental Charter
Environmental Charter
WEB

MCUBS

https://www.mc-ubs.com/english/sustainability/environmental_charter_and_RPI.html(See page 9.)

Responsible Property Investment Policy
MCUBS 	https://www.mc-ubs.com/english/sustainability/environmental_charter_and_RPI.html

Our Sustainability Goals
MCUBS has set the following sustainability goals to realize its vision for sustainability incorporating the ideas of the
Sustainable Development Goals (SDGs).
1. Reduce environmental impact
2. Create social value / Improve health and well-being of employees / Contributing to the local communities
3. Practice sound asset management for all stakeholders

Collaboration between Mitsubishi Corporation and UBS AG
Our Sustainability Committee keeps in close communication

Meanwhile, our other sponsor, UBS AG, is engaging inwith our sponsor, Mitsubishi Corporation. Starting with theadvanced ESG activities on a global scale. By having

adoption of a sustainability strategy based on Mitsubishi’s

employees seconded to the Company from UBS participate

Three Principles, this communication has led to the sharing

in our Sustainability Committee, we are able to learn aboutof know-how and examples of successful initiatives

examples of global initiatives and acquire relevant knowl-

between the Company and Mitsubishi. In addition, exam-edge, which we then leverage within our own sustainability

ples of our Green Buildings were showcased in Mitsubishi’s

activities. Furthermore, we mutually share know-how and

ESG Data Book 2018, issued in December 2018.

expertise with UBS, and examples of the MC-UBS Group’s
initiatives have been introduced as best practices in the CSR
reports published by UBS.

ESG Report January 20204

Sustainability Promotion Structure
The Sustainability Committee 

Chief Sustainability Officer 

MCUBS have newly organized the Sustainability Committee in

The Deputy President & Representative Director has been

January 2020. As a result, we’ll do our best to change theappointed as Chief Sustainability Officer (CSO) to

Sustainability Promotion Structure to which the Sustainability

strengthen the sustainability promotion system. CSO as theCommittee plays a central role in formulating strategies

committee chairman reports the matter confirmed by thecentered and monitoring the activities of three investment

Sustainability Committee to the Board of Directors, chaired

corporations and we’ll make effort to create value thatby the President & CEO & Representative Director and works

exceeds the expectations of our stakeholders.

to share awareness of issues and raise awareness levels.

And we have established the person in charge at eachdivision and by playing the role of driving ESG target activities,
we’ll integrate ESG considerations into its investment andasset management processes.

Organizational Chart of the Sustainability Committee
Retail Division(JRF)
Committee chair: CSO (Deputy President)
Secretariat: Research, Marketing and ESG Department

Industrial Division(IIF)
Office Division(MMI)

Main Members of the Sustainability Committee
Committee chair:

CSO

Committee members:	President, COO, Head of Retail Division, Head of Industrial Division, Head of Office Division,
Head of Corporate Division, Head of Strategic Planning Office, Head of Research, Marketingand ESG Department
Secretariat:

Research, Marketing and ESG Department

Frequency of Meetings

Main Examination Items

The Sustainability Committee meets approximately four times a•

Sustainability policy, strategy, and structure

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

Sustainability targets

ate frequency, where more detailed discussion takes place from a•

Membership and signing of environmental organizations

practical and operational standpoint.

•

ESG Report approval•

Activity report•

Eligible Green Projects

ESG Report January 20205

Sustainability Strategy

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

ESG Materiality Selection Process
STEP• Identification of Sustainability Issues

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

STEP• Establishment of Priority Order

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

STEP• Confirmation of Validity3	To ensure objectivity, we underwent a review by CSR Design Green Investment Advisory, Co., Ltd.
regarding our ESG materiality and its selection process.

STEP• Discussion and Approval by Senior Management

4

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

In 2018, through the ESG materiality selection processtenant employees about ESG, and strive to increase satis-

detailed above, we have identified the following ESG materi-faction to achieve this goal.

ality as having a high level of importance to the MC-UBS

Next, in addition to responding to climate change andGroup at this time. In 2019, we organized opportunities andenergy efficiency, we must work together with our tenants

risks about it, and set new KPIs.

and local community members to address the issues ofFirst, as a real estate asset management company, it isefficient water use and waste disposal. By doing so, we will

absolutely essential that MCUBS ensures the quality of thework to establish partnerships and build green communities.

buildings it manages through certifications and other

Going forward, after further clarifying the level of priority

means and addresses issues related to climate change andof these issues and working to visualize them, we will strive

energy efficiency. Also, we will strive to improve building

to achieve their resolution while promoting dialogue with

comfort and convenience and to raise the awareness of

all of our stakeholders.

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

E mployee cultivation and level of satisfactionEfficient water use
Waste disposal
Partnership with tenants
Collaboration with local communities

ESG Report January 2020

6B iodiversity in areas surrounding
our buildings
E mployee diversityC omplianceS upply chain management

Level of Importance
Most important
ESG materiality

Response tosustainability
certifications

TargetImproving proportionof environmental
certifications

KPI

Risk

Defined by each
investment corporation

Improving sustainability
activities through participation in GRESB andother external evaluation
institutions

Participate every year

Implementing disasterprevention measures

Defined by each
­investment corporation

Disclosure in compliance with the TCFD
Response to climate frameworkchangeReduction in CO2emission

Disclosure in compliancewith a shared framework (Target year: 2020)

Building resilience

Energy efficiency

among tenants and investors
who base their assessments
on sustainability• Increase in expenses forrecovery, compensation,etc., after natural disasters
increase in property damages due to physical impact
of climate change• Decline in assessment bytenants & investors

Defined by each
investment corporation• Increase in energy-related

Introduction of renewable energy use

Defined by each
investment corporation• Reinforcement of environ-

Improvement in tenant
employee space

Defined by each
investment corporation

CASBEE-WO certification

Defined by each
investment corporation
Survey conductedbiannually

Improvement in paid
leave usage rate

Paid leave usage rate at
70% (Target year: 2020)

Improvement in
employee training program menu

Providing menu fora program offering
choices for all employees(Target year: 2020)

Employee participation in 100%
compliance training(Target year: 2020)

Closely related
SDGs• Improve environmental

performance of properties• Expand the range ofinvestors• Increase in property

competitiveness• Drop in tenant sales &Improvement in energy
consumption

Ensuring of health
Development of theand well-being of
office environmentand conveniencefor people (tenants) and implementation of
employee satisfaction
surveyEmployee cultivation and level ofsatisfaction

Defined by each
investment corporation• Decline in assessment

Opportunity

expenses• Cost reduction withefficient energy use• Cost reduction withefficient energy use

mental regulations• Improved sustainability• Decline in property

competitiveness• Manpower outflow due todeclining work conditions

assessment by assessment
bodies and investors• Improvement in employee
satisfaction and tenant
assessment & satisfaction• Development & recruit• Outflow of talent• Emergence of risks withdecline in complianceawarenessment of competitive
human resources• Assurance of customer
trust through improved
compliance awarenessLevel of ImportanceImportant ESG
materiality

Target

KPI

Risk

Opportunity• Impact of shortage or quality

Efficient water use

Reduction in water
consumption

Defined by each
investment corporation

Waste disposal

Reduction in wastes

Defined by each
investment corporation

Partnership withtenants

Collaboration withlocal communities

Introduction of green
lease

Defined by each
investment corporation

Execution of tenantsatisfaction survey

Defined by each
investment corporation

Support of social welfareorganizations

Two or more organizations per year

Providing land to community events

Defined by each
investment corporation

decline of water resourceson surrounding areas• Rise in cost with increase inwater consumption volume• Reputation risk caused byincrease in wastes• Increase in processing cost

• Cost reduction with

reduction in water
consumption• Processing cost reduction

with reduction in wastes• Greater tenant burden• Devolution into property

regarding safety and theenvironment• Decline in tenant satisfaction• Generation of stable• Degradation of theenvironment surrounding
the real asset• Decline in reputation in theneighboring area

* The KPI setting of each investment corporation will be disclosed on each website after March 2020.

ESG Report January 2020

7

attractive to the tenant
revenues• Revitalization of neigh-boring areas• Improvement of corpo-

rate image

Closely related
SDGsSustainability Strategy

Supported Initiatives

Principles for Responsible Investment (PRI)

Signatory since August 2013

First J-REIT asset manager

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

Principles for Financial Action toward a Sustainable Society(Principles for Financial Action for the 21st Century)

Signatory since June 2013

In solidarity with these principles put forth by the Ministry of the Environment, MCUBS became asignatory in June 2013.

Montreal Carbon Pledge

Signatory since September 30, 2015

First J-REIT asset manager

MCUBS became the first J-REIT asset manager to sign the Montreal Carbon Pledge on September
30, 2015. Since then, MCUBS has continued to disclose the amount of CO2 emissions through its
corporate website and works on the reduction of its environmental impact for a sustainable society.

United Nations Environment Programme 
Finance Initiative (UNEP FI)Signatory since October 2016
First J-REIT asset manager

Acknowledging the proactive sustainability initiatives of MCUBS, UNEP FI invited MCUBS to participate
in the UNEP FI’s Property Working Group (PWG). MCUBS became the first J-REIT asset manager toboth sign up to UNEP FI and join the PWG of the initiative in October 2016. PWG is a working
group consisting of 20 major real estate investors around the world, with MCUBS being the third
member from Japan.
Through becoming a signatory, for the asset management of each investment corporation,
MCUBS is sharing best practice cases globally and continues striving to reduce its environmentalload and realize a sustainable society.

United Nations Global Compact (UN Global Compact)

Signatory since October 2016
First J-REIT asset manager

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

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

Signatory since August 2019

MCUBS supports the spirit of the recommendations published in June 2017 by the Task Force on
Climate-related Financial Disclosures (TCFD), which was established by the Financial Stability Board,and in August 2019, MCUBS declared that support.
TCFD was established in 2015 by the Financial Stability Board, which is composed of the central
banks and financial regulatory authorities of major countries. In June 2017, in order to reduce risks
associated with destabilizing financial markets, TCFD recommended that companies disclose business risks and opportunities presented by climate change in the medium to long term, along withthe effects of these on financial conditions, as well as specific measures and strategies.
Recognizing that climate change is an important environmental issue that significantly affects ourbusiness activities, we will aim to take measures in line with the TCFD framework.

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

ESG Report January 2020

8

E N V I R O N M E N T A L

Environmental Charter
The MC-UBS Group formulated the Environmental Charter, which sets out our environmental principles and action plans,in June 2013.

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

ESG Report January 20209

Environmental

Climate Change and Resilience
The MC-UBS Group recognizes that climate change is an important environmental issue that significantly impacts
our business activities. Global warming is becoming more severe with increasing economic activities, and various
researches have made clear that this leads to abnormal weather such as torrential rains, floods, and droughts.
Our mission is “Through real estate investment management, we create new demand in our society and newvalue that exceed people’s expectations.” To achieve our mission, it is necessary to create a sustainable society, andwe recognize that the shift to a low-carbon society is a social responsibility required from long-term management.

Agreement to Task Force on Climate-Related Financial Disclosures (TCFD)
Overview of TCFD
TCFD stands for the Task Force on Climate-related Financial Disclosure. It was established in 2015 by the Financial Stability Board,which is composed of the central banks and financial regulatory authorities of major countries. In June 2017, in order to reduce risks
associated with destabilizing financial markets, TCFD recommended that companies disclose medium- to long-term business risks andopportunities presented by climate change and the impacts of these risks and opportunities on their financial conditions, as well as
specific measures and strategies.

Policy 
The MC-UBS Group recognizes the importance of climate-energy efficiency and building resilience of properties in therelated financial disclosure. Together with expressing

possession of the investment corporations by cooperating

support for the recommendations of the TCFD in Augustwith all our stakeholders so as to reduce the impact of

2019, we promote initiatives aimed at improving theclimate change through real estate asset management.

GovernanceManagement Structure 
In January 2020, MCUBS redefined our existing Sustainability Committee, and at the same time,
appointed our Deputy President as the Chief Sustainability Officer (CSO).
With the CSO as the committee chair and the President and other executive officers as the main
members, the Sustainability Committee meets once every fiscal quarter to propose strategies regarding
important issues—such as climate change—related to sustainability in general, and share information andverify the measures of the investment corporations related to aspects such as energy efficiency. These
results are reported to the board of directors meeting chaired by the President of MCUBS.
Under the committee, subcommittees—comprising sustainability staff from the Research, Marketingand ESG Department and the investment corporations—are established as appropriate to share information about the progress of specific issues and initiatives by each investment corporation so as to share
recognition of issues and increase the level of awareness.

Strategy

Regarding Climate Change’s Periods of Risks and Opportunities 
The MC-UBS Group sees financial risks from climate change as medium to long term risks.
We understand its short term risk is limited as we conduct due diligence when acquiring properties.
At the same time, we have come to recognize that there is even more severe physical risk when taking
into consideration factors such as the increased severity of typhoons and floods from torrential rains
beyond expectation occurring in recent years.
We seek to respond to risks and opportunities by undertaking responses to building resilience of properties, and by introducing green building and renewable energy.

ESG Report January 2020

10

Risks and Impact on Business Impact on business
Policies, and legal

Increase in facility costs due to energy-saving performance
becoming obligatory
Increase in costs due to expansion of emission trading
system and introduction of carbon tax

Transition risks(Acute)Physical risks(Chronic)

Increased severity of
typhoons, floods, etc.

Property selection
Increase in insurance premiums

Rise in averagetemperatures

Measures against localized torrential rains

Rise in sea levels

Measures to elevate foundations

Scenario Analysis 
The Paris Agreement is an international framework regarding the climate change problem from 2020 andbeyond. Its long term goal is stated as holding the increase in the global average temperature to well
below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C, andaiming to reach global peaking of greenhouse gas emissions as soon as possible so as to achieve a balance
between emissions and removals (by forests, etc.) of greenhouse gases in the second half of this century
in order to achieve this goal.
The MC-UBS Group is to undertake scenario analysis while seeking collaboration with the United
Nations Environment Programme—Finance Initiative (UNEP FI) and other organizations.

RiskManagement

Risk Management Related to Climate Change 
The Sustainability Committee identifies and evaluates important risks and opportunities related toclimate change.
Identified issues are managed under the aforementioned management structure, and MCUBS intends tostudy into the specific methods for strategy formulation and monitoring.

Indexes andGoals

Indexes and Goals Each investment corporation undertakes reduction of CO2 emissions as a response to climate change.
While we have stated our goal of reducing CO2 emissions by 1% each year, we plan to revise our goal
after deepening our recognition of the risks and opportunities brought by climate change and conducting
scenario analysis.

Resilience
Tenant Risk Management 
We promote disaster response measures for tenants of

we contribute to the occupational health and safety of

our investee properties, such as monitoring the implemen-

our tenants.

tation of disaster-preparedness drills. At the same time,
Provision of Portable Storage Batteries and Lifelines 
IIF provides lifeline equipment including portable storage batteries, disposable toilets, and emergency lighting in its properties
as a disaster countermeasure aimed at tenants.
Improve Disaster Response 
JRF installs wireless phones and development of crisis management portal as a means of communication during disasters suchas major earthquakes.

ESG Report January 202011

Environmental

Climate Change and Resilience

CO2 Emissions
JRF

IIF

MMI

(Thousand tCO2)(tCO2/m2)(Thousand tCO2)(tCO2/m2)(Thousand tCO2)(tCO2/m2)

250

0.20

205
200

196

150

0.16

80

60

100

0.08

40

50

0.04

20

0

0

2016

0.09

0.09

0.08

2017

2018

75

75
66

0.12

0

50

0.20

43
179

0.09

0.20

100

(FY)

CO2 emissions
CO2 emissions per unit (right axis)

0.08

0.08

0.15

2018

2017

40

0.16

0.13

0.13

0.12

30

0.12

20

0.08

10

0.04

0.10

0.05

2016

44

44

0

0

(FY)

CO2 emissions
CO2 emissions per unit (right axis)

2016

2017

2018

CO2 emissions
CO2 emissions per unit (right axis)

IIF Supports “Zero Emission Tokyo” Initiative
In support of initiatives by the Tokyo Metropolitan

For details, please refer to the website of Tokyo Metropolitan
Government Bureau of Environment.

Government Bureau of Environment to make zero CO2

http://www.kankyo.metro.tokyo.jp/en/climate/zc4d/index.html

emissions in Tokyo. IIF has donated 1,341 tons of CO2 credits
acquired through energy conservation efforts in accordancewith Tokyo’s Cap-and-Trade Program.

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

Aggregation period 

CO2 emissions and energy amount

JRF

2018: 89.1% 2017: 92.7% 2016: 88.4%

		

Water consumption		

2018: 89.0% 2017: 92.7% 2016: 90.1%

		

Waste generated

		

2018: 61.7% 2017: 88.5% 2016: 99.1%
IIF

2018: 100% 2017: 100% 2016: 100%

MMI

2018: 100% 2017: 100% 2016: 100%

2018: March 2018–February 2019		

2017: March 2017–February 2018		

2016: March 2016–February 2017
IIF

2018: February 2018–January 2019		

2017: February 2017–January 2018		

2016: January 2016–December 2016

MMI

2018: January 2018–December 2018		

2017: January 2017–December 2017		

2016: January 2016–December 2016

For examples of the environmental initiatives for each fund, please refer to the links below.

WEB

JRF

	https://www.jrf-reit.com/english/sustainability/environment/index.html

IIF

https://www.iif-reit.com/english/sustainability/environment/index.html

MMI

https://www.midcity-reit.com/english/sustainability/environment/index.html

ESG Report January 2020

12

0

(FY)

Environmental Approvals and Evaluations forGroup Assets
At the MC-UBS Group, we make active efforts to achieve sustainability, but we also believe in the importance ofacquiring positive ratings and appropriate certifications for these efforts. To meet the demand of investors,
tenants, and other stakeholders worldwide, we acquire a wide range of domestic and overseas certifications, fromperformance assessments of individual buildings to evaluations of entire funds.

Conditions Regarding the Acquisition of Certifications
We have received several positive overall ratings of our

Project) climate change program in 2016.

funds under management from GRESB (Global Real Estate

Regarding performance evaluations on real estate, we have

Sustainability Benchmark), the current global standard for

acquired certifications for CASBEE for Real Estate, DBJ Green

real assets. Our funds received certification in their early

Building, and BELS. Furthermore, MMI received the first certifi-

stages, including IIF, which became the first J-REIT to becation of J-REIT for “CASBEE for Smart Wellness Office” newly

selected as a Sector Leader in 2013. In 2019, JRF, IIF, andestablished from Institute for Building Environment and Energy

MMI each received the highest ranking given by GRESB, theConservation (IBEC). For further details, please see below.

Green Star, for the fifth, seventh, and fourth consecutive

Going forward, the MC-UBS Group will maintain its

years, respectively and MMI received 5 stars for second

policy of improving the ratings of its overall funds underconsecutive years. In addition, JRF became the first J-REIT tomanagement while increasing its proportion of properties

participate in the CDP (formerly, the Carbon Disclosure

with certifications from external parties.
As of December 31, 2019

JRF
GRESB

Real Estate Rating
Green Star:
4 stars

IIF

MMI(fifth consecutive year)

Real Estate Rating
Green Star: (seventh consecutive year)
4 stars

Real Estate Rating
Green Star:
5 stars

Public Disclosure RatingA(third consecutive year)

Public Disclosure RatingA(second consecutive year)

Public Disclosure Rating
A

S :
		
A :
		
B+:
		

A :
		
B+:
		

CDP Climate Change ProgramC	

CASBEE Certifications for Real Estate,
Buildings, & Wellness OfficeS:A:(fourth consecutive year)(third consecutive year)

11 properties(first rating acquired in 2015)
2 properties(first rating acquired in 2015)

5 properties(first rating acquired in 2018)
8 properties(first rating acquired in 2014)
1 property(first rating acquired in 2013)

2 properties(first rating acquired in 2008)
3 properties(first rating acquired in 2018)

Includes properties subject to reporting system of local municipalities
DBJ Green Building Certification

5 stars: 1 property (first rating acquired in 2015)
4 stars: 7 properties (first rating acquired in 2014)
3 stars: 4 properties (first rating acquired in 2014)
2 stars: 5 properties (first rating acquired in 2014)
1 stars: 2 properties (first rating acquired in 2016)

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

4 stars: 4 properties (first rating acquired in 2012)

BELS Certification

4 stars: 1 property (first rating acquired in 2017)

5 stars: 2 properties (first rating acquired in 2016)
4 stars: 2 properties (first rating acquired in 2014)
2 stars: 4 properties (first rating acquired in 2016)

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

Detailed examples of our environmental approval and evaluation

WEB

JRF

https://www.jrf-reit.com/english/sustainability/environment/index.html

IIF

https://www.iif-reit.com/english/sustainability/environment/index.html

MMI

https://www.midcity-reit.com/english/sustainability/environment/index.html

ESG Report January 202013

Environmental

EnergyThe MC-UBS Group implements environmentally friendly and energy-saving measures and makes efforts toward
more efficient energy use for the properties held by each investment corporation under management to show
greater consideration for the environment and lessen its environmental impact. We collectively manage energy,
fuel, and water consumption and analyze the accumulated data, which is both accurate and highly transparent toactively manage reduction of energy use.

Energy Consumption
J RF

IIF

MMI

(Mwh)(kwh/m2)(Mwh)(kwh/m2)(Mwh)(kwh/m2)

400,000250

180,000

300

100,000

200

144,000

240

80,000358,745

347,921319,663

320,000

162.21149.54153.15150

108,000

160,000

100

80,00050

2016

146,045

125,801

240,000

0

139,627

2017

2018

0

73,727228.77177.4675,862226.6780,277280

223.90180

60,000210

72,000120

40,000140

36,00060

20,000

70

0

(FY)

Energy consumption
Energy consumption per unit (right axis)

350

159.0220162017

157.79

2018

0

0

(FY)

Energy consumption
Energy consumption per unit (right axis)

2016

2017

2018

0

(FY)

Energy consumption
Energy consumption per unit (right axis)

Fuel/Gas Consumption
J RF

IIF

MMI

(Mwh)(kwh/m2)(Mwh)(kwh/m2)(Mwh)(kwh/m2)

120,000

96,000100

94,97315,00012,43598,89180

12,00082,27772,000

42.94

42.50

48,00039.42

24,000

0

2016

2017

25

2018

60

9,000

40

20

0

Fuel consumption (fuel only)
Fuel consumption per unit (right axis)

40,00035,016

12,97720

17.54

32,00031,806
98.69

14.80

14.02

36,310104.63150

120

101.2715

24,000

90

6,000

10

16,000

60

3,000

5

8000

30

0

(FY)

12,997

2016

2017

2018

0

0

(FY)

Fuel/gas consumption
Fuel/gas consumption per unit (right axis)

ESG Report January 2020

14

2016

2017

2018

0

(FY)

Fuel/gas consumption
Fuel/gas consumption per unit (right axis)

Initiatives

LED Lighting 

JRF

Switching from conventional incandescent lighting to LED

the long term. JRF actively promotes the use of LED lighting,lighting reduces labor required for maintenance and also

which reduces electricity consumption through its highreduces the cost of purchasing parts and equipment overluminous efficiency.

Properties

GYRE
La Porte Aoyama
KAWASAKI Le FRONT
mozo wonder city
Kyoto Familyplus other properties
mozo wonder city

Solar Power 

IIF

Solar panels are installed on the roofs of facility buildings to

IIF Kobe Logistics Centersave energy by using renewable sources.

Properties

IIF Kobe Logistics Center
IIF Misato Logistics Center
IIF Tosu Logistics Center
IIF Iruma Logistics Center
IIF Fukuoka Hakozaki Logistics Center IIplus 5 other properties
IIF Tosu Logistics Center

Green Lease MMI

A “green lease” refers to an agreement made via a contract

both parties agreeing to upholdof memorandum between building owners and tenants tothe terms of the arrangement. For

cooperate toward reducing environmental impact andexample, MMI has borne the costs

making a more environmentally friendly facility throughof installing LED lighting in its

various means, including energy conservation on properties.

facilities, which allows tenants toGreen leases are entered into on a voluntary basis, withenjoy lower energy fees inexchange for paying MMI a fixedgreen lease payment.

Properties

Twin 21
Twin 21

ESG Report January 202015

Environmental

Water
The MC-UBS Group strives for sustainable resource use. The Group makes active efforts to utilize water resources
effectively as part of a greater effort toward sustainable resource use. JRF returns over 6,000m2 of rainwater togroundwater every year through means such as permeable pavement, while IIF works with tenants to promote
effective water use by utilizing on-site well water pumped from 100m underground, drawn using an automaticwater supply apparatus.

Water Use
J RF

IIF

MMI

(Thousand m3)(m3/m2)(Thousand m3)(m3/m2)(Thousand m3)(m3/m2)

2,500

2.0

700

1.6

560

1.2

420

1,000

0.8

280

500

0.4

140

0

0

2,172

2,073

1,995

2,000

1,500

0.95

0

2016

0.89

2017

0.96

549

543

362
0.61

2018

(FY)

Water use
Water use per unit (right axis)

0.59

0.51

2016

2017

2018

1.5

700

1.2

560

0.9

420

0.6

280

0.3

140

0

0

(FY)

Water use
Water use per unit (right axis)

5

546

542

519

4

3

1.62

1.61

2

1.52

1

2016

2017

2018

0

(FY)

Water use
Water use per unit (right axis)

Waste
The MC-UBS Group has been making efforts to minimize the amount of waste produced by its properties, monitor
the amount of waste generated, and appropriately manage waste production.

Waste and Recycling Rate
J RF
(t)
35,000IIF

MMI(t)(%)(t)(%)

7,000

32,774

50

6,000

40

4,800

30

3,600

80.0

6,000
28,00026,1285,000

19,87321,000

33.2

2,000

48.0

6,403

3,000

64.0

32.1

31.6

4,000

14,000

62.7

61.6
57.2

5,827

20

2,400

10

1,200

104 0

0

4,607

4,362

32.0

3,778

3,505

7,000

16.0

1,000

0

2016

Total waste

2017

2018

0

(FY)

94

2016

105

2017

2018

Volume of non-hazardous waste
Volume of hazardous waste
Recycling rate (right axis)

ESG Report January 2020

16

(FY)

199

2016

245

2017

2210

2018

Volume of non-hazardous waste
Volume of hazardous waste
Recycling rate (right axis)(FY)Pollution Prevention
The MC-UBS Group strives to create and enhance environmental benefits by undertaking conservation activities
and reducing its environmental footprint.

Assessments When Acquiring Real Estate Properties
Pre-Investment Assessment Workflow

When acquiring real estate properties, MCUBS takes various environmental factors into consideration before making

Phase 1: Historical record review

investment decisions: property inspections, land history*1

investigations, and other related research on environmental

Phase 1’: Interviews*2

risk factors.

Phase 2: Soil and groundwater contamination survey(Determining presence or absence of problems by surveying the soil)

During soil and environmental investigations, third-party
experts perform environmental pollution investigations.
Prior to executing any purchase agreement, IIF will have

No concerns

experts conduct a soil and environmental contamination*3
Adjustoffer price*4
Phase 3:Site remediation

survey to assist it in assessing a property’s environmental

Investment Committee

risks. IIF will use the pre-investment assessment workflow

Purchase agreement / Closing

Rejectchart indicated on the right to determine whether theinvestment would be appropriate.

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

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

Building Safety
The MC-UBS Group is working to maintain the safety of its buildings by conducting building and earthquake risk
assessments at the time of acquisition as well as collecting engineering reports on a regular basis.

Seismic Reinforcements 

Measuring Air Environment 

JRF

MMI

JRF conducts a building and earthquake risk assessment at

Asbestos is a naturally occurring mineral fiber sometimes

the time of property acquisition, and calculates earthquake

called sekimen or ishiwata, and breathing it is highly likely

risk in held properties whenever standards are revised.

to be hazardous to health, thus implementation of some

When necessary, secondary assessments are performed asmeasures is required. MMI measures the air environmentwell. When results of those assessments conclude thatonce a year to confirm the dispersal status of asbestos.

earthquake-resistant reinforcement construction is required,
we make environmentally conscious choices that will provide the necessary seismic retrofitting while minimizing
waste. At the same time, we also work to reduce CO2 emissions and energy consumption in the updated facility.

ESG Report January 202017

Environmental

Biodiversity
The MC-UBS Group recognizes the critical importance of what ecosystems can provide and is committed toprotecting ecosystems and mitigating any potential impacts on biodiversity.

Examples of Initiatives

Greening of Facilities 

JRF

In addition to energy savings, the greening of facilities creates pleasant spaces for customers and allows them to relax and enjoy
the colors and fragrances of the natural surroundings.
Greening of main entrances and wall surfacesof parking lots
The greening of main entrances and wall surfaces of parking lots
mitigates outdoor temperature increases by means of transpiration by plants and also provides relaxation and comfort throughits visual impact, in addition to energy savings and the suppression of temperature increases due to solar radiation.
La Porte Aoyama

Greening of rooftops and entrances
The greening of rooftops and entrances and the bedding ofvarious flowers and plants throughout the year creates a visuallyappealing environment for customers. JRF can also expect tobenefit from such greening as it encourages shopping by customers who come to various events that are held in open spaces
on a regular basis.
Nara Family

Establishing Green Zones Protection of Native Species 

IIF

IIF creates green zones at each of its properties to help reduce

When planting at our proper-

the heat island effect and the amount of CO2 emissions.

ties, MMI makes sure to

MMItransplant any native plantsthat were replaced to new areasand promote the greening ofour properties with consider-

Total greening area

ation given to biodiversity.

7.8ha(78,000m2)

IIF Noda Logistics Center

M-City Akasaka 1-chome Bldg.

ESG Report January 2020

18

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

About the Green Bond
The Green Bond Framework Overview
1. Project evaluation/selection
With regard to the Green Bond issuance process, which is based on the Green Bond Principles, MCUBS selects new or existing properties (“Eligible Green Projects”) from its portfolio, which satisfy the eligibility criteria*1 of MCUBS Sustainability Committee, as subject
assets for the Green Bond.
*1 To be eligible for Green Bond proceeds, Eligible Green Projects must meet one of the following eligibility criteria:• On the payment date of each investment corporation bond, buildings that have received 3, 4, or 5 stars under the DBJ Green Building Certification Program within two years
preceding the Green Bond issuance date, and/or buildings that are expected to receive the certification after issuance. At the time of reporting, buildings that meet the same
criteria as of the end of February of each year.
• On the payment date of each investment corporation bond, buildings that have received B+, A, or S rank under the CASBEE Certification Rank within two years preceding theGreen Bond issuance date, and/or buildings that are expected to receive the certification after issuance. At the time of reporting, buildings that meet the same criteria as of theend of February of each year.

2. Use of proceeds
The Green Bond totaling the same amount will be allocated toward one or more of the following.
The acquisition of existing and/or new Eligible Green Projects.
The refinancing of existing debts that have already been allocated to Eligible Green Projects.
The redemption of the issued investment corporation bonds (including Green Bonds) required to acquire Eligible Green Projects.
3. Management of Green Bond proceeds
JRF has an internal process in place to track and monitor the amount of outstanding Green Bond proceeds and the allocation thereof,
which is in line with market practice. The maximum outstanding amount of the proceeds (“Debts of Eligible Green Projects”) is calculated
by multiplying the total book value of Eligible Green Projects by JRF’s interest-bearing liabilities ratio (45.1% as of the end of February 2019).
The maximum outstanding amount of Green Bond proceeds is ¥116.3 billion, and JRF currently issues ¥15 billion (as of the end ofJune 2019).

Second-Party Opinion

The Green Bond Summary

JRF has obtained a second-party opinion

The 1st Green Bond (The12th Unsecured Investment
Corporation Bonds)

The 2nd Green Bond (The13th Unsecured Investment
Corporation Bonds)

Issued Amount (million yen)

8,000

7,000

Interest Rate

0.210%

0.200%

Issue Date

May 25, 2018

June 25, 2019

Maturity Date

May 25, 2023

June 25, 2024

Remarks

Unsecured, Unguaranteed

Unsecured, Unguaranteedfrom Sustainalytics, an ESG rating
agency, for the eligibility of Green
Bond*2 proceeds. For more information,please refer to the second party opinion.
*2 Green Bond eligibility entails a Green Bondframework that aligns with the four pillars (use ofproceeds, project evaluation and selection,
management of proceeds, and reporting) of theGreen Bond Principles 2017.

Assessment*

GA1

3

—

*3 A
 ssessment is a rating opinion provided by R&I with regard to the extent to which the Green Bond proceeds areused to invest in projects that resolve environmental issues.
WEB

https://www.jrf-reit.com/english/sustainability/environment/phccuf0000001fzc-att/sustain_secop201804_1.pdf

Green Bond details

WEB

JRF

	
https://www.jrf-reit.com/english/sustainability/environment/greenbond.html

ESG Report January 202019

S O C I A L

ESG Report January 202020

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

Employees•

Improving worker health and benefits (counselingservices from outside experts such as medical
examinations, lectures by industrial doctors,
establishment of the Health Committee, improved
employee benefits, etc.)•

Establishing a positive work environment•

Cultivating human resources (qualification acquisition

support, providing training, etc.)•

Providing employee opinion polls

Efforts to further
enhance thecompany

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

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

Holding periodic workshops•

Conducting tenant satisfaction survey

•

•

•

MC-UBS Group

Proactive
disclosure
activities

MCUBS

•

•

JRF

Improving energy efficiency(Installing LED lighting, solar powersystem, etc.)

Local communities•

Cooperation inconsiderationof sustainability

Investors, lenders, andbondholders•

MMI rganizing facility visits in cooperaOtion with tenants

Governments••P roviding spaces for community
events••

Detailed examples of our initiatives

WEB

JRF

https://www.jrf-reit.com/english/sustainability/society/index.html

IIF

https://www.iif-reit.com/english/sustainability/society/index.html

MMI

https://www.midcity-reit.com/english/sustainability/society/index.html

ESG Report January 202021

Responding to environmental certi-

fication system

Cooperation withlocal governments as
the owners andmanagers offacilities

Participating in local cleanup activities

Operating websites and preparing

communication tools (asset management reports, etc.)

IIF

Continued contributions to local
communities

 olding briefing sessions on finanH
cial results and giving presentations
to investors

P articipating in town planning project led by municipality
 eveloping and disseminating demD
onstration projects promoted by thegovernment
Obtaining “Comprehensive
Assessment System for Built
Environment Efficiency”(CASBEE) ratingsP roviding open public spaces andplanting trees

SocialCreating a Positive Impact
MC-UBS Group conducts corporate activities based on a l-ng-term perspective on ESG. We focus on the identified
materiality from perspective of impact on society, by creating economic and social value, we aim for sustainable growth
and at the same time aim to contribute to the SDGs, which are sustainable development goals as a global company.
As a Positive Impact is one of the methods to realize it, we are working on it.

The Principle for Positive Impact
In October 2015 UN Environment Finance Initiative’s (the Finance Initiative) banking and investment members released the Positive
Impact Manifesto, which calls for a new financing paradigm. As per the Manifesto, bridging the funding gap for sustainable development and the attainment of the SDGs requires a new, impact-based approach, based on a holistic consideration of the three pillars ofsustainable development. The development of a dedicated set of Principles for Positive Impact Finance to guide financiers and investors in their efforts to increase their positive impact on the economy, society, and the environment, constitutes a central component of
the Positive Impact Roadmap outlined in the Manifesto. By providing a common language to the finance community and for a broader
set of stakeholders, the Principles are expected to constitute an important step in unlocking the SDGs opportunity and overcoming thefunding gap for sustainable development.

The Positive Impact Initiative 
The Positive Impact Initiative brings together banks,

The Initiative is promoting the idea that new lines ofinvestors, corporations, and government to co-createbusiness and impact business models need to be developed

commercially viable, impact-based solutions to theand financed to meet the SDGs. It’s one of the measures to

Sustainable Development Goals (SDGs).

address the SDGs financial issues.

Impact-Based Real Estate Investment Framework 
UNEP FI has developed action-oriented framework based on four Investment Objectives for real estate investors to practicethe Positive Impact Principles.
Positive Impact Real Estate Framework Investment Objectives

Market and Sustainable
Returns

Clarity of Impact
Identifying and creating impact
from investment activity

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

Additional Finance and/or
Impact Flows

Measurement of Impact

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

Positive and negative attributes
and mitigating the negative;
linking ex-ante and ex-post intent
with impact

Source: POSITIVE IMPACT REAL ESTATE INVESTMENT FRAMWORKESG Report January 202022

Acquisition of OTA Techno COREIn January 2019, IIF decided on an impact investment project (a silent partnership, herein referred to as the“Tokumei Kumiai”) related to the OTA Techno CORE building. This is the first case of a J-REIT making such an
agreement based on the Principles for Positive Impact Finance.

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

Measures for the Creation of a Sustainable Society
OTA Techno CORE
Providing space to work

Dividends

Payment of rent
HR development
supportEquity investment in
the Tokumei Kumiai

Ota-ku, Tokyo
•
•

IIF

A manufacturing industry hub in Tokyo• n accumulation of human resources, including engineersAand craftsmen

ResultSite secured to develop bothhuman resources and thesuccession of technologies topromote industry over the
medium to long term•

The only J-REIT that specializes in industrial properties
E stablished track record of acquiring manufacturing and
R&D facilities

Measures in support of regional economic
development from the perspective ofreal estate investment (PRE)Cooperation with J-REIT as along-term owner

Property details

WEB

IIF

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

ESG Report January 2020

23

ResultSecured high profitability overthe medium term
Ensured future acquisition
opportunities

SocialHealth and Well-Being
The MC-UBS Group considers its employees to be its most important management resource and essential forcarrying out its activities. We are actively working to create conditions where each and every employee canperform their work in a lively manner and to cultivate them accordingly. In addition, we regularly conduct
employee opinion polls with the aim of building an even better company.

Work Environment
The MC-UBS Group is working to ensure that all employees can work with peace of mind and to improve the benefits it
provides to them.
Improving Employee Health and Benefits 
Besides meeting the legal requirements in Japan for

To improve the benefits we provide to our employees, notemployee health and safety, including labor and risk man-

only do we completely supply a social insurance system, weagement, MCUBS emphasizes the prevention of excessive

have also introduced an original retirement pension system

work and understanding the appropriateness of working

and have entered into general welfare group term life insur-

hours, and is enhancing our system for managing working

ance, group long-term income compensation insurance, andhours through an original monitoring framework. In addition

member welfare services.

to an emphasis on measures aimed at reducing overtime, we

MCUBS also emphasizes work-life balance. Regardless ofrequire employees to take long-term leave and are taking

men or women, we offer support and welfare services tosteps to increase the rate that paid leave is used.

help all employees who are starting families and raising

We also provide various wellness programs to maintainchildren. Furthermore, we are also promoting diversity.

and improve the mental and physical health of our employ-

New hires

ees and their families. Specifically, health checkups, influenza

Women in managerial posts(Employees who joined between January 1
and December 31, 2019)

immunization shots, various counseling services (EAP) byexternal experts, and health-based lectures by industrial
physicians are being implemented.

Men

65.2%

Women

34.8%

* Excluding executives, temporary
employees, and staff

In addition, stress checks are conducted once each year
for the mental health of our employees and to prevent

Diversity of employees

mental disorders.
We have also established the Health Committee thatmeets once a month to exchange opinions on working

4.1%

30 to 50
years old

83.5%

* Excluding executives andtemporary staff

related insight. In doing so, we are supporting employees in
the preservation of their health.

23.9%

Total workforce

Under 30
years old

50 years old
or olderconditions alongside industrial doctors, and to gain health-

Women* Excluding executives andtemporary staff

12.4%

Men

61.4%

Women

38.6%

* Excluding executives andtemporary staff
As of December 31, 2019, resultsof MCUBS-wide survey

Establishing a Positive Work Environment 
In January 2018, MCUBS renovated its office space andIn addition, we have gone 70% paperless, reducing thecreated an environment that allows employees to workneed for cabinet space. This move, combined with improved

comfortably and actively.

communication that includes using electronics to host meet-

Natural light enters the work space through windows

ings, has reduced printing and paper costs for the Company.

and plants have been arranged throughout this new, bright

Furthermore, we periodically conduct environmental checks

office. Employees’ desks are larger than those at a standard

to provide comfortable working conditions for employees.

Japanese office,* and we have upgraded communal spaces* Desk width per person is 1,200mm in a standard Japanese office (as of December
2018, according to the website of Kokuyo Co., Ltd.).

to promote communication with fellow co-workers. We
have also incorporated rest areas where employees canrelax and refresh themselves.

ESG Report January 202024

Human Capital Development—Job-Specific Development Training Programs
Support for Acquiring Further Qualifications In order to cultivate professional human resources in real

specialized knowledge in the fields of real estate andestate finance, the MC-UBS Group encourages employees

finance). Moreover, employees are also encouraged toto pursue higher qualifications by providing financial assis-

undergo training and participate in seminars after obtaining

tance and training opportunities.

this qualification. Employees are also dispatched as lecturers

Specifically, the MC-UBS Group is actively utilizing thewhen requested by ARES.

specialist qualification system by the Association for RealThe Company also covers some or all of the costs ofEstate Securitization (ARES), of which we are an official

work-related training and tests for obtaining qualifications

member. The Company covers the costs for employees toand maintaining them. As a result, several employees are

obtain the ARES Certified Master qualification (educational

taking on the challenge of improving their qualifications.

program enabling systematic learning of practical

The number of employees with qualifications at MCUBS is shown below.
Real estate transaction specialists
ARES Certified MastersLicensed senior architects

53
60
10

As of December 31, 2019 eal estate appraisers
R
6
CMAs7
Lawyers2

CPAs6
Tax accountants
5
MBAs1

Improved Training 
The MC-UBS Group has improved employee training by

In addition, to support improving the skills of each andinstituting a variety of programs aimed at enhancing occu-

every person through enhancing off-job training (Off-JT), we

pational expertise and leadership skills.

provide employee training services which allows all officers

Employees in managerial positions are dispatched to vari-and employees to easily participate in business seminars

ous leadership programs, such as the Program for Leadership(open seminars) by a professional group of lecturers.

Development by Mitsubishi Corporation (training over a total

In addition, we conduct seminars in order to raise aware-of five days in which skills as a manager can be obtained inness of sustainability, and offer improved training to increase

coordination with overseas business schools). Furthermore,

understanding of compliance and IT literacy. We also

we support employees after they enter the Company byprovide support several times a year through e-learning so

providing management training, which includes invitingthat employees are aware of the latest information and canoutside lecturers to provide interviewer training.

utilize it effectively.

Communication with Employees
MCUBS has measured employee satisfaction on an annual

understanding of the presence of a wide range of views

basis since 2011 as part of our engagement. In addition,(diversity) within the company, to foster greater solidarity

communication improvement is being promoted throughand to resolve issues.

dialogues between the employees and management.

In addition, MCUBS is executing strict action on all forms ofThrough casual lunch meetings, discussions at the Divisions

harassment by boosting employee awareness through in-and direct dialogues with the General Managers and otherhouse training, consultation desk and whistle-blowing system.

top management officers, action is taken to assure mutual

ESG Report January 202025

SocialHealth and Well-Being

Measures for Health and Well-Being
Space and Interior

Sound

Interiors decorated with a clear concept, including spaces that incorporate natureSoundproofed spaces where people canconcentrate on their work

Light

Exercise

Office that actively incorporates natural light

Community area with dimmable lighting

Furniture that is adjustable to various
health-conscious configurations

Rest

In-office cafeteria
Providing health beverages

Spaces to Move and Communicate

In-office, furnished rest area for employees

Rooms for groups to gather and discuss locatednear the entrance and in the corridor

Telecommunications

An upgraded telecommunications system thatallows employees to use the Internet away fromtheir desks

MaintenanceA teleconferencing system that allows for meetings
with outside groups, including branch offices

Satisfaction

Programs

Regular worker satisfaction surveys

Use of local events to promote communicationand exchange between employees

ESG Report January 202026

Regular air quality
inspections

KIDs DAY

Regular replacementof planting

Investment Corporation Initiatives
Investment corporations collaborate with tenants in working to improve the environment so that tenant employees are able
to work comfortably.
Development of Productive Work Environments Good use of Courtyard Area 

JRF is putting effort into developing better working environ-At the IIF Mitaka Card Center, which is one of the properties

ments for tenant employees, such as renovating theowned by IIF, there is an interior courtyard which is used by

employee lounge and creating a powder room for tenanttenant employees as a place for meetings and having lunch.

employees at mozo wonder city.

IIF is putting effort into maintaining the courtyard, such as
by changing the flowers and trees planted there.

Employee lounge

Interior courtyard at IIF Mitaka Card Center

Powder room

Social Contributions by Employees
The MC-UBS Group undertakes social contribution activities in partnership with sponsors. We will continue todeepen our employees’ understanding about contributing to local communities, and support social welfare groups
and other organizations.

Examples of Initiatives
Support for Social Welfare Organizations 

Volunteer Activities 

We undertake support by selling within the company prod-

We participate in volunteer activities being conducted byucts produced by social welfare groups that UBS AG gives

Mitsubishi Corporation in support of disaster areas, andcontinuous support, disaster areas, and others.

cooperate in supporting reconstruction.

Volunteer activities forreconstruction support

Sales of Kamaishi rugby pie

ESG Report January 202027

SocialCommunication with Local Communities
The MC-UBS Group works to create important bonds with local communities by implementing disaster prevention
measures and performing activities that contribute to society at every one of its wide range of properties.

Initiatives by FundJRF

JRF carries out day-to-day management of its properties

other communal spaces. We have also opened up thebased on the Property Management Policy so that custom-­rooftop of our Abiko Shopping Plaza as one of the largest

ers can shop safely, and is mindful of making contributions

viewing spots during fireworks festivals, as part of ourto society and local communities. We aim to provide com-continuous effort to provide safe spaces for the local com-

mercial facilities that exist as part of the local community bymunity and to coordinate with local events. Through thesehaving our properties fulfill a role as hubs for disaster pre-efforts, we are working to create an environment where

vention activities in areas where disasters are prone to occur.

local residents see our facilities as part of their community.

We have introduced “Park & Ride Shopping” at mozo
wonder city as an effort to alleviate traffic jams in thesurrounding area and to be environmentally friendly. We
cooperate with nearby railway companies and offer benefits to customers who visit the shopping center by train
after parking in a designated parking lot.
To provide peace of mind to our customers, we haveadded greenery to our facilities and opened up parks and
IIF

Abiko Shopping Plaza

IIF provides neighboring communities and governmentswith spaces and public open spaces at the real estate properties it owns. In addition, we provide tours of our facilities
and other services to ensure that local residents are awareof the functions performed by our properties in the area.
IIF Haneda Airport
Maintenance Center

MMIAt MMI, we actively utilize the property as a space for local
events and community exchange so that locals and visitors,
in addition to resident office workers, can enjoy it.
In the summer, G-Square Shibuya Dogenzaka holds an

Uchimizu (water-sprinkling) event, co-sponsored by the
Tokyo Metropolitan Government, working to create an

Flower event at Twin 21

environmentally friendly office building.

Uchimizu (water-sprinkling)
event at G-Square Shibuya
Dogenzaka

ESG Report January 202028

Communication with Tenants
The MC-UBS Group operates a wide variety of properties, including retail facilities, industrial facilities, and officebuildings, which means the needs of our tenants are also diverse. We make efforts in consideration of our tenants’safety and the facility environment, but we promote measures that consider the global environment as well.

Initiatives by Fund

JRF

JRF services more than 900 tenants over 100 properties.

investment costs from the rent payments, while tenants

Despite this large number, JRF proactively takes measures tosave utility costs without any capital outlay. Therefore, asave energy and reduce CO2 emissions at the properties it

win-win relationship is created between JRF and tenants.

owns. For example, JRF improves the environmental

In addition, JRF is collaborating with tenants to reduce

efficiency of properties. In some cases, it makes initial

CO2 emissions by participating in the CO2 Reduction / Light-

investments in energy-saving equipment and recovers the

Down Campaign.

IIF

By providing value to tenants, IIF continues to manage its

Utilizing this concept, IIF have been able to conclude a

portfolio using its “3C Management Cycle,” which isgreen lease agreement that is for lowered costs by convert-

designed to realize internal growth through stable, long-term

ing to LED lighting in an effort to lower electricity costs and,management that goes beyond the norm. The three “Cs” ofby extension, electricity bills. IIF holds periodic tenant work-

the 3C Management Cycle are Communicate: acquire an

shops actively selected sustainability themes so that tenants

accurate understanding of tenant needs through close com-can better understand responses to climate change andmunication with tenants; Customize: strategically put forthdisaster countermeasures. With the understanding andcustomized proposals according to individual needs; andcooperation of tenants, a large number of tenants

Create: employ a concept of portfolio management thatparticipate in the workshops, and the workshops serve as acreates unitholder value through long-term, superior prop-

foundation for IIF’s cooperation with tenants in their com-erty management while creating value that meets the needs

mitment to sustainability.

of tenants.
MMI

MMI conducts a tenant satisfaction survey once a year.

buildings by improving the surrounding environments andBased on the results of the survey, MMI puts forth efforts toenhancing the convenience of building facilities andcreate comfortable spaces for those working in officeequipment as well as safety.

Tenant satisfaction survey details
WEB

https://www.midcity-reit.com/english/sustainability/society/index.html

ESG Report January 202029

SocialIR Activities
Each investment corporation strives to explain their investment policies to individual and institutional investors inan accurate and prompt manner. In doing so, we aim to maximize our value to our unitholders.

Listing on ESG Indices
MSCI Japan ESG Select Leaders Index 
MSCI, an American stock index provider listed on the New
York Stock Exchange, launched a index called the MSCIJapan ESG Select Leaders Index, taking into account highIndex launched in June 2017environmental, social, and governance (ESG) performance.

Incorporation

The index covers the top 700 equities by market capitalization size, and it is built by selecting relatively good ESG
evaluation stocks in the industry. In addition, the Government
Pension Investment Fund (GPIF) has selected MSCI Japan

JRF

Incorporated since June 2017

IIF

Incorporated since June 2017

MMI

Incorporated since December 2018

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

ESG Select Leaders Index as one of its ESG index and
implemented passive investment tracking the index.
JRF, IIF, and MMI, all funds of the MC-UBS Group, havebeen listed on the index since its establishment in 2017.
Euronext® Reitsmarket GRESB Global Sustainable NR Index This is an index created by Reitsmarket, a real estate invest-

accounts for the second-largest composition ratio in thement trust research company of Luxembourg, in collaboration

Global sector, as of the establishment of this index on June 7.

with GRESB and Euronext, to invest in the top 30 REITs
according to the score prepared by GRESB. The index was set
up on June 7, 2018.
More than six REITs have been selected from respective

Index launched in June 2018

areas in North America, Europe, and Asia Pacific, and JRF

Incorporation

JRF

Incorporated since June 2018

IR Briefing Sessions
Briefing Sessions for Individual Investors In addition to each investment corporation participating inmajor events organized by the Tokyo Stock Exchange, weare putting effort into helping individual investors better
understand investment corporations, while capitalizing on
the strength of managing three investment corporations.
Joint seminar for the three
investment corporations

This includes holding online briefing sessions and joint
seminars for the three investment corporations.

For IR information pertaining to each fund

WEB

JRF

https://www.jrf-reit.com/english/ir/index.html

IIF

https://www.iif-reit.com/english/ir/index.html

MMI

https://www.midcity-reit.com/english/ir/index.html
ESG Report January 2020

30

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

As asset management companies, MCUBS receives asset management consignments from JRF, IIF, and MMI and arecommitted to upholding their fiduciary duties to investment corporations.

ESG Report January 202031

Corporate GovernanceCorporate Governance
As an asset management company, MCUBS receives asset management consignments from JRF, IIF, and MMI, and iscommitted to upholding its fiduciary duty to investment corporations.

Decision-Making Process
Mitsubishi Corp.-UBS Realty Inc., the asset manager of JRF,

Proposals relating to stakeholder transactions of the Asset

IIF, and MMI (hereinafter, the “Asset Manager”), has fourManager must first be approved by the Compliancecommittees: the Investment Committee, the Risk

Committee before they are submitted to the Investment

Management Committee (the Risk Management

Committee (excluding “Minor Transactions,” as stipulated

Committee acting as an advisory board to facilitatein the Regulations for Transactions with Stakeholders). In

decision-making, not a decision-maker), the Complianceaddition, subsequent to approval by the Board of Directors

Committee, and the Compensation Committee.

of the Asset Manager, approval from our board of directors

In the course of making decisions regarding investment

is required prior to a transaction involving the acquisition,

policy and standards, operation and management policy

disposal, or lending of securities or real estate between us

and standards, budget and financing, as well as theand a related party (as defined in Article 201-1 of theacquisition, disposal, or operation and management of

Investment Trust Act) of the Asset Manager, except certain

assets for each investment corporation, a proposal will beof such transactions determined not to have a significant

submitted to the Asset Manager’s Board of Directors for

impact on each investment corporation under theapproval in accordance with rules of the Board of Directors.

Ordinance for Enforcement of the Investment Trust Act.

Front Division*5
Proposal*3*1Compliance Committee*2*3
Investment Committee*2*3

Board of Directors

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

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

WEB

JRF

https://www.jrf-reit.com/english/sustainability/governance/index.html

IIF

https://www.iif-reit.com/english/sustainability/governance/index.html

MMI

https://www.midcity-reit.com/english/sustainability/governance/index.html

ESG Report January 202032

Governance of Investment Corporations
The organization of each investment corporation consists of

The number of directors and their compensation is decided

executive directors, supervisory directors, an Officers

by each investment corporation, and monthly remuneration

Meeting, which is comprised of all directors, a Generalis determined by the Officers Meeting. Pursuant to the

Meeting of Unitholders, which is comprised of investors,

Investment Trust Act, investment corporations are prohibited

plus an accounting auditor.

from having employees. Accordingly, none of our investment
corporations have any employees.

As a typical example, the mechanism of MMI is as follows.
Asset Management Company(1)

Accounting Auditor

The Investment Corporation

Mitsubishi Corp.-UBS Realty Inc.

KPMG AZSA LLC

MCUBS MidCity Investment Corporation(51% Owned)
Specified Affiliated Company(Parent Company of the Asset Manager)

General Meeting of Unitholders(2)

Mitsubishi Corporation*1

General Administrator for
Asset Custodian
Sumitomo Mitsui Trust Bank, Limited

Board of Directors

Executive Director:

Katsuhiro Tsuchiya(3)

General Administrator for Investment
Corporation Bonds

Supervisory Director: Haruo Kitamura
Mizuho Bank, Ltd.

Supervisory Director: Osamu Ito
Supervisory Director: Kyoko Nagata(4)

Investor Register Administrator
Special Transfer AccountManagement Institution
Mitsubishi UFJ Trust andBanking Corporation

Contract Name
(1) Asset management agreement(2) General administrative outsourcing agreement and asset storage outsourcing agreement(3) Financial affairs and issuance & payment agency agreement(4) Administrative outsourcing agreement for investment units and special transfer account management agreement*1 Mitsubishi Corporation is the parent company of the Asset Management Company (the parent company prescribed in the Ordinance on Terminology, Forms and Preparation Methods ofFinancial Statements, etc. (Ministry of Finance Ordinance No. 59 of 1963; including subsequent revisions), Article 8, Paragraph 3; the same hereinafter), and falls under a specified
affiliated company of the Asset Management Company, which is prescribed in the Cabinet Office Ordinance on Disclosure of Information, etc., of Regulated Securities (Ministry of
Finance Ordinance No. 22 of 1993; including subsequent revisions), Article 12, Paragraph 3.
*2 Kanden Realty & Development Co., Ltd., which was one of the support company of MCUBS MidCity Inc. (the former asset management company), was to transfer all of its holding 900
shares of MCUBS MidCity Inc. to Mitsubishi Corp.-UBS Realty Inc., as of April 1, 2019 (the transfer of shares will hereafter be referred to as the “Share Transfer”). Along with the Share
Transfer, “Memorandum concerning the supply of information on real estate for sale and other support” as of April 10, 2015 and “Asset Value Improvement Support Agreement” as ofDecember 7, 2011 between MCUBS MidCity Inc. and Kanden Realty & Development Co., Ltd. (these agreements will hereafter be referred to as the “MOU”) was terminated as of thedate of the Share Transfer. However, MCUBS MidCity Inc. and Kanden Realty & Development Co., Ltd. concluded a new agreement in order to supply information on real estate for salewith each other as of January 30, 2019. In addition, following the merger between Mitsubishi Corp.-UBS Realty Inc. and MCUBS MidCity Inc. as of July 1, 2019, Mitsubishi Corp.-UBS
Realty Inc. has succeeded the position of the MCUBS MidCity Inc. in the agreement.

ESG Report January 202033

Corporate GovernanceCompliance
MC-UBS Group committed to the thorough implementation of these compliance.

Basic Policy
Mitsubishi Corp.-UBS Realty Inc. (hereinafter, “the Asset

Corporation and the Asset Manager are of a highly public

Manager”) and each Investment Corporation are striving tonature and also assume the social responsibility of extensively

ensure the appropriateness of asset management and themaking contributions to the economy and society.

soundness and adequateness of operations, as well as theGiven such a business environment and in view of the fact

protection of investors at the discretion and responsibility ofthat the Asset Manager is a joint venture company between

each entity, by strengthening and facilitating maximum

a Japanese company and a foreign financial institution, andfunctioning of the internal control system based on thecharacteristically has an international corporate culture, ithighest quality standards of laws and regulations under thehas developed the following compliance system with thereal estate investment fund system. In addition, the Investment

aim of achieving a high level of compliance in the industry.

In order to ensure that the performance of duties by directors and employees of the Asset Manager complies with laws and regulations and the articles of incorporation, the Asset Manager shall establish the Compliance Office, which shall seek to, in operation
with the Compliance Office, develop the system for directors and employees to act in compliance with laws and regulations, thearticles of incorporation and social norms, and identify problems thereof.
T he Risk Management Committee shall identify administrative risks, system risks, and any other risks relating to the business operations of the Asset Manager and investment corporations on a regular basis.
B ased on the “Whistle-Blowing Rules,” the Asset Manager shall avoid any disadvantageous treatment on a whistle-blower. Any
whistle-blower is entitled to appropriate protection and may contact the internal inquiry counter. The employees may contact external legal counsel, using the “MC Group Lawyers’ Opinion Box,” which is designated as the external inquiry counter for consultation
and reporting.* By such means, the Asset Manager shall prevent violations of laws and regulations or the articles of incorporation
and, if any such violation has occurred, shall seek to quickly gather information and address it.
* The Confidentiality Legal Counsel will confirm the affiliation of whistle-blowers, but will not disclose their name or organizational position to the Compliance Administration
Office without their consent.

If any violation of laws and regulations or the articles of incorporation has been discovered, the Compliance Office shall, pursuant to the“Administrative Incident Handling Rules,” investigate the cause of such violation and handle and settle it, and then establish measures.
(As of January 1, 2019)

Anti-Corruption
The MC-UBS Group eliminates all forms of transactions with

anti-corruption through supporting the UNGC’s ten principles.

antisocial forces. In addition to checking against laws andWe conduct compliance training several times each year

paying the greatest attention to suspicious transactions, wefor our employees to increase their compliance knowledge

prohibit all forms of dealings which may be interpreted as

and awareness, including the above. In addition, employees­bribery. Also, MCUBS signed up to the UN Global Compact

pledge to observe our code of conduct by submitting(UNGC), endeavors to strengthen corporate governance against­compliance pledges each year.

For information regarding compliance and risk management for each fund, please visit the websites below.

WEB

JRF

https://www.jrf-reit.com/english/about/compliance.html

IIF

https://www.iif-reit.com/english/about/compliance.html

MMI

https://www.midcity-reit.com/english/about/compliance.html

ESG Report January 2020

34

Risk Management
MC-UBS Group committed to the thorough implementation of these risks under the following organization structure.

Structure on Risk Management
To protect investors and implement the investment

investment management business. The asset manager has

management business appropriately, the Asset Manager ofclassified the major risks associated with asset management

the Investment Corporation shall in principle executeinto investment management risk, clerical work risk, system

operations related to asset management for investment

risk, etc. and is striving to cope with and continuously reduce

corporations as its clients, faithfully and with the care of asuch risks through the following activities.

good manager in accordance with the purposes of the
[4]

[1]

Risk Management CommitteeStanding members:	Chief Operating Officer (Chairman),President, Deputy President,
Head of each Division,
Head of Risk Management Department,
Head of Compliance Office,Head of Strategic Planning OfficeSecretariat:
	Risk Management Department,
Corporate Division[3]
Investment Committee

Board of Directors

Making Decision

Putting
togetheropinions

Report[2]
President & CEO
Chief Officer for Risk Management

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

ReportAudit the adequacy and effectiveness of the risk management[6]
Internal Audit Office[7]

Informationexchange

Risk Management Department,
Corporate Division[8]
Compliance Office[5]
Risk Management Officer
Head of each Division and Officer

Monitoring, etc.

[1] Board of Directors

Understanding of the overall management, etc[2] P resident & CEO,
Chief Officer for Risk Management

President & CEO: Supervision of the overall risk management, etc.
Chief Officer for Risk Management: Execute necessary measures to properly manage risks[3] Investment Committee

Examines, discusses and makes decisions regarding overall risks affecting the portfolio as a whole (e.g.
acquisition, disposal and management of assets by the investment corporations, investment policy
and standards, management policies and standards, budgets, funding, etc.)[4] Risk Management Committee

When required, identifies, examines and formulates responses and policies for matters that pose
major risks (excluding those matters that are dealt with by the Investment Committee)[5] Risk Management Officer••P erson responsible for managing major risks, etc. in his/her department
Reports the state of risk management to the Risk Management Committee[6] Internal Audit OfficePlanning and implementation of internal audit[7] R isk Management Department,
Corporate Division•[8] Compliance Office

Accumulating risk information through, but not limited to, the management of operational accidents
and the review of the approval documents


Plans
and makes proposals concerning risk management for the company as a whole
Monitors, evaluates, and analyzes the extent to which risk management is in place and functioning• Runs the Risk Management Committee•

ESG Report January 202035

Investment Corporation Overview

J RF

Japan Retail Fund Investment Corporation

After becoming Japan’s first retail facility-specialized REIT listed on the Tokyo Stock Exchange, the Japan Retail Fund (JRF) has
grown to become one of the largest REITs in Japan. JRF has a large number of retail facilities mainly in Tokyo, Osaka, andNagoya, which are located in representative commercial districts, around stations used by large numbers of passengers, andaround stations in highly populated areas.
Characteristics of the REIT
1. O
 pportunity to see the actual properties
while shopping in them
2. Portfolio stability supported by diversified
asset portfolio with top-class scale in Japan

GYRE

IIF

G-Bldg. Midosuji 01

Industrial & Infrastructure Fund Investment Corporation

Listed on the Tokyo Stock Exchange, the Industrial & Infrastructure Fund (IIF) is a unique REIT that focuses on industrial
properties in Japan. IIF invests in real estate anticipated for stable use over the medium to long term while upholding aphilosophy of investing in social infrastructure as a source for generating Japan’s economic strength and supporting industrial
activities in Japan through real estate.
Characteristics of the REIT
1. Investing in properties that play a vital rolein industrial activities across a broad rangeof sectors
2. S table cash flows based on lease­agreements over 10 years

IIF Haneda Airport Maintenance Center

MMI

IIF Shin-Kawasaki R&D Center

MCUBS MidCity Investment Corporation

MCUBS MidCity (MMI) is a REIT focusing on office properties located in the three major metropolitan areas. After joining the
MC-UBS Group in 2015, its distribution per unit has grown at the fastest pace among office J-REITs. It aims to continuously
improve unitholder value.
Characteristics of the REIT
1. H
 as higher portfolio weight in Osaka
compared with other office J-REITs.
Expanded its geographical focus to thethree major metropolitan areas of Tokyo,
Osaka, and Nagoya in order to capture
more opportunities to invest in high-quality
office properties
2. A
 ims to acquire properties selectively
through various methods and to improveasset value and profitability

Twin 21

Yokohama i-land Tower

ESG Report January 2020

36

JRF

TSE code

2002/3/12

Prime

Retail properties located in representative commercial districts in Japan

Major stations

Retail properties located around stations used by large numbersof passengers

Residential station

Retail properties located around stations in highly populated areas

Secondarycore

Suburban mall

Large-scale shopping malls located in suburban areas

Value-added

High-yield retail properties with room for upsideSub

GMS / Roadside

GMS / Roadside shopping facilities

Core
Major types ofproperties

Fund listing8953

Portfolio details
WEB

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

IIF

TSE code

Major types ofproperties

Fund listing3249

2007/10/18

Logistics facilities

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

Manufacturing and R&D facilities

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

Infrastructure facilities

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

Portfolio details
WEB

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

MMI

TSE code

Fund listing

3227

More than 70% of the portfolio is invested in office properties. The
remaining 30% is invested mainly in hotels and serviced apartments.

Focus on three major metropolitan areas

More than 70% of the portfolio is invested in properties in prime
locations in Tokyo, Osaka, and Nagoya where strong tenant demandis expected. Additionally, less than 30% of the portfolio is invested
in properties located in government-designated cities and othermajor cities in which stable revenues are expected in the medium tolong term.

Building specifications attracting tenants

Holding properties with superior building specifications to satisfy awide range of demand from tenants of all sizes, such as flexible
office layout and parking lots. The locations of properties vary, fromclose to major stations to nearby neighbor stations ideal forback-office functions.

Major types ofproperties

Portfolio details
WEB

2006/8/29

Focus on office properties

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

ESG Report January 202037

Disclaimer•

T his document may contain information such as statements on future performance, plans, management targets, and strategies. Suchstatements with regard to the future are based on current hypotheses and assumptions about future events and trends of the business environment. However, these hypotheses and assumptions are not necessarily correct. Actual results may vary significantly due
to various factors.

•U nless otherwise specified, this document was created based on Japanese generally accepted accounting principles.

•J apan Retail Fund Investment Corporation, Industrial & Infrastructure Fund Investment Corporation, MCUBS MidCity Investment
Corporation, and Mitsubishi Corp.-UBS Realty Inc. (MCUBSR) shall not be liable for any errors, inaccuracies, loss or damage, or for
any actions taken in reliance thereon, or undertake any obligation to publicly update the information contained in this document
after the publication date thereof.

Asset Management Company: Mitsubishi Corp.-UBS Realty Inc.
(Financial Instrument Firm under License No. 403 of the Director of the Kanto Local Finance Bureau)