Sustainability of
HEIWA REAL ESTATE����
Message from the President�

Approach to Sustainability�Environment

�・Climate Change Countermeasures��・Waste Initiatives

��・Environmental Concepts�・Water Resource Initiatives

��Social��・Achieving Diverse Work Styles

��・Health and Safety

��・Human Resource Management��・Social Supply Chain

・Initiatives for Shareholders and Investors
・Community Initiatives

・Human Rights and Labor Standards

��
��
��
��

Governance��・Compliance���・Basic Approach and Corporate Governance System
・Risk Management

��

���

Ratings from Outside Bodies

���

Third-party Veriﬁcation

���
-1-

Message from the President

Helping realize a sustainable society as a company
that contributes to revitalizing areas

The Mission of the Heiwa Real Estate Group
Heiwa Real Estate Co., Ltd., was originally established as the owner of stock exchange buildings in cities
across Japan, including Tokyo, Osaka, and Nagoya. By operating and maintaining the facilities thathouse the country’s ﬁnancial infrastructure, the Group has built up relations of trust with its building

tenants, business partners, and the local communities it serves. Through its eﬀorts to revitalize urban
areas, the Group has been providing solutions for environmental issues and challenges faced bycommunities, while closely engaging with its diverse stakeholders to raise their level of satisfaction. In
these ways, the Group is playing a part in making society more sustainable.

Oﬀering solutions to communities as a company that contributes torevitalizing areas
To realize a sustainable society and further growth, Heiwa Real Estate will make eﬀorts to resolve social

issues and contribute to the SDGs through our corporate activities. In terms of materiality, we recognize
climate change countermeasures, industrial and regional development, response to social needs,

natural disaster risk mitigation measures, and strengthening corporate governance as particularly
important and will promote various initiatives to address each issue.
-2-Meanwhile, the Heiwa Real Estate Group is expected to help enhance Tokyo’s competitiveness amongmajor cities of the world. The Tokyo Metropolitan Government has created a vision to make Tokyo a“global ﬁnancial city,” and the Group is playing a part by improving infrastructure in the city’s ﬁnancial
center through its redevelopment of the Nihonbashi Kabutocho and Kayabacho district.

On that basis, we opened KABUTO ONE, the ﬁrst phase of the Nihonbashi Kabutocho and Kayabacho
Revitalization Project, in August ����. In connection with the government’s vision to make Tokyo aglobal ﬁnancial city, KABUTO ONE has been designated as a nationally strategic urban development
project, and its facilities as a ﬁnancial center have been highly evaluated. It is also designed fordisaster preparedness with emergency shelters for stranded commuters, and will utilize renewableenergy to reduce environmental burden.

In April ����, we completed construction of KITOKI, the ﬁrst oﬃce building with retail stores for which
Heiwa Real Estate adopted a hybrid structure comprising wood and SRC. In creating a district inharmony with nature, we incorporated a biophilic design that satisﬁes the instinctive human desire to
be close to nature, featuring exteriors reﬂecting vibrant greenery and interior designs conveying a
sense of trees, water and wind on each ﬂoor.

We are developing the Kabutocho �� Project aimed at the FY���� opening of Caption by Hyatt

Kabutocho Tokyo, the ﬁrst Hyatt select service lifestyle hotel brand in Japan. As it aims to advancetechnologies and spread awareness related to wooden buildings, this project was selected for the

Leading Projects Program for Sustainable Buildings for ���� (led by wooden structure) promoted by

the Ministry of Land, Infrastructure, Transport and Tourism, as a leading project promoting the use ofwood in mid- and high-rise hotels. After KITOKI, this is the second Heiwa Real Estate project selected
for this program. These projects are part of our eﬀorts to realize sustainable district revitalization,
which is one goal of the Nihonbashi Kabutocho and Kayabacho Revitalization Project.

Considering the risk of major earthquakes and other natural disasters, reducing the overconcentrationof people in Tokyo is a major issue in terms of the resilience of Japanese society as a whole. We will
also incorporate lessons learned from the Nihonbashi Kabutocho and Kayabacho Revitalization

Project to promote Redevelopment Business in Sapporo. I believe that the city of Sapporo, which
hosted the full marathon event originally planned for Tokyo in last year’s Olympics, is itself quite

signiﬁcant for its diverse array of functions. We own assets in the heart area of Sapporo, and will focus
on the Sapporo Redevelopment Project from the larger perspective of addressing social issues.

In all of the Group’s projects—not only new ones—our aim is to improve environmental performanceand disaster-response capabilities. By implementing sustainable building management, we will keep
working to reduce CO� emissions over the long term.

-3-

Aiming to continuously raise corporate value under our new
Medium-term Management Plan, “Challenge & Progress”
Established in April ����, our new Medium-term Management Plan, “Challenge & Progress,” spans fromﬁscal ���� to ����. Under this plan, we intend to continue revitalizing the Nihonbashi Kabutocho andKayabacho districts, proceed with redevelopment projects in Sapporo, shift to a business model

designed to create added value through external and internal growth, and implement sustainability

initiatives as a means to help communities solve related challenges. In all of these activities, Heiwa Real
Estate will work to make substantial progress going forward as a company that contributes torevitalizing areas.

While pursuing those activities, we will strive to achieve out proﬁt targets by ﬁscal ����, speciﬁcallyearnings per share of ¥��� and consolidated operating income of ¥��.� billion. We have also designatedkey performance indicators for facilitating our corporate capital policies, which place importance on

the cost of capital and capital eﬃciency, from ﬁscal ���� to ﬁscal ����. Speciﬁcally, we are aiming for
return on equity of �%, and a consolidated total shareholder return ratio of ��% along with aconsolidated dividend payout ratio of ��% by ����. Moreover, we will take steps to raise awareness ofcompliance among oﬃcers and employees in an eﬀort to ensure greater compliance. At the same time,
we will work to further strengthen corporate governance, practice sustainability management, andpromote occupational health for employees.

A Message to Stakeholders
Through these endeavors, Heiwa Real Estate will work to help communities overcome challenges as acompany that contributes to revitalizing areas. Management is committed to meeting the expectationsof all stakeholders and ensuring that the Group attains sustainable growth going forward. On behalf ofmanagement, I look forward to the ongoing support of the Group’s stakeholders.

Kiyoyuki Tsuchimoto

Representative Executive Oﬃcer, President and CEO-4-

Approach to Sustainability
Sustainability Vision
Under its slogan of “Aiming to be a company that contributes to revitalizing areas,” the Heiwa Real
Estate Group works to help communities overcome challenges and enhance the satisfaction of its
stakeholders through its business activities as ways to continuously oﬀer value to people
throughout society.

Stakeholder Engagement
The Group promotes engagement with all stakeholders in order to mutually strengthen bonds witheveryone who has a stake in its business. At the same time, the Group endeavors to improve urban

environments, bring value to communities and help people beneﬁt economically with a view to help
make society more sustainable.

-5-Building tenants and users

Business partners

The Group works to ensure sound business

The Group conducts business in good faith instandpoint of its building tenants and users,

related to free and fair competition andactivities and improve its services from theaccordance with societal norms and laws

while responding to their concerns fairly andtransactions in an eﬀort to mutually raisesincerely.

corporate value together with its business
partners.

Employees

Shareholders and investors

The Group endeavors to respect each

The Group creates a wide range of

discrimination and harassment, and ensure aand investors by proactively making such

employee’s character, eliminate any and allopportunities to engage with shareholders

safe and comfortable work environment.

eﬀorts as holding ﬁnancial results brieﬁngs

Through these eﬀorts, the Group strives toand attending events for individual investors

realize a sense of latitude and abundance.

as well as disclosing information in a timely
and proper manner.

Global environment

Local communities

Giving full consideration to its responsibility

The Group places importance on coexistenceGroup actively implements environmental

contribute to society as a good corporate

to conserve the natural environment, thewith local communities and broadly works toinitiatives while complying withenvironment-related laws and regulations.

citizen.
-6-

Environment> Basic Approach> Basic Approach> Basic Approach> Environmental Supply Chain

on TCFD Recommendations> Initiative Targets and Results> Speciﬁc Initiatives> Promotion System> Environmental Compliance> Disclosing Information Based> Speciﬁc Initiatives> Pollution> Waste and Resource Usage
Initiatives-7-> Initiative Targets and Results

Environmental Concepts
Basic Approach
The Heiwa Real Estate Group considers its initiatives in environmental concerns as fundamental

managerial issues and will promote the initiatives throughout its overall corporate activities. Giving
full consideration to its responsibility to conserve the natural environment, the Group actively
implements environmental initiatives while complying with environment-related laws andregulations.

Promotion System
In December ����, the Company has established a Sustainability Committee, headed by the ExecutiveOﬃcer, President and CEO and comprised of Executive Oﬃcers and Managing Oﬃcers and heads ofeach departments, to facilitate the smooth implementation of our sustainability initiatives.

By monitoring the plan-do-check-act (PDCA) cycle for each sustainability initiative, including those forclimate change and other environmental issues, and by reporting important details to the Board of
Directors, the Sustainability Committee acts as a main driver in increasing the eﬀectiveness ofsustainable management.

-8-

We have also established individual rules and policies for important environmental issues, andformulated speciﬁc measures to reduce our impact on the environment.

To implement these rules and policies, we established an Environmental Management System (EMS)
based on the PDCA cycle with the aim of continuously reducing our impact on the environment.
*None of our oﬃces have received ISO ����� or other environmental certiﬁcation.

Environmental Supply Chain
As the development and operation of real estate in the core Building and Redevelopment Businesses isa long-term process involving many stakeholders (design companies, construction companies,

customers and others), we recognize the importance of tackling environmental issues throughout the
supply chain in order to properly address them.

To promote ESG-friendly initiatives throughout the value chain for the Group’s real estate portfolio, we
have established procurement policies for major products, services and business partners (e.g.,property management companies and building management companies). The Group strives to build
cooperative relationships by sharing information on environmental concepts and targets to thegreatest extent possible.

Environmentally Friendly Procurement Policies (Excerpted from
Sustainable Procurement Policy)➁ Introduction of Environmentally Friendly Operational Procedures

We shall comply with the various laws, regulations, standards, and other requirements related tothe environment and sustainability.

➂ Procurement of Environmentally Friendly Goods

When selecting goods for procurement in construction projects, the following items related toreducing environmental burden must be satisﬁed in addition to the necessary quality, functions,
economic eﬃciency, and rationality.

a. We shall strive to conserve resources and energy.

b. Reduction of environmental pollutants: We shall strive to reduce the use and emission of harmful
chemical substances, ozone-depleting substances, and other such substances.

c. Long useful lifespans: We shall explore improvements such as in durability and ease of repair andparts replacement.

For more details on the Group’s Sustainable Procurement Policy, please refer to Social Supply Chain
under Social.

-9-Social Supply Chain＞

The Heiwa Real Estate Group views initiatives addressing environmental concerns as fundamental
managerial issues and promotes them throughout all corporate activities. In full recognition of its

responsibility to conserve the natural environment, the Group proactively implements environmental
initiatives while complying with environment-related laws and regulations. Environmental guidelines
for tenants include policies on environmental issues such as climate change, water resources andwaste.

Policy on Environmental Issues within Tenant Businesses（Excerpts from the Tenant Guidelines for Environmental Concerns）
Climate Change Countermeasures: Approach and Policies

The Group manages and maintains an appropriate understanding of energy consumption and thestatus of greenhouse gas (GHG) emissions arising from real estate management in the Group’sbusinesses. We also take various initiatives to promote GHG emission reductions, eﬃcient energyuse, and renewable energy utilization beyond compliance levels, thereby working to ﬁght climatechange.

Water Resource Initiatives: Approach and Policies

The Group manages and maintains an appropriate understanding of the status of water usage

arising from real estate management in the Group’s businesses. We also make various eﬃciency
improvements to promote water usage eﬃciency beyond compliance levels stipulated by law.
Waste Initiatives: Approach and Policies

The Group strives to reduce (waste emissions), reuse, and recycle in all of its corporate activities.
We also work to reduce building lifecycle costs and conserve resources to realize a
recycling-oriented society.

-10-・Wood Project Implementation

The Japan Exchange Group (JPX) is engaged in conservation activities in the hope that the growth oftrees will lead to the development and enhanced attractiveness of markets. Heiwa Real Estate will use

timber from the Tokyo Stock Exchange (TSE) Listing Forest, located in the Yashima district of Yurihonjo,
Akita Prefecture, to contribute to the eﬀective recycling of forest resources in Japan and help preserve
ecosystems through the Wood Project, in which timber is utilized for building materials, benches andother purposes in our business activities. We also contribute to the preservation of biodiversity in urban
areas with building rooftop gardens and tree planting around properties.
・Edible KAYABAEN Project

Heiwa Real Estate subsidiary, The Tokyo Shoken Building Incorporated, in collaboration with Universal
Engeisha Co., Ltd., and Edible Schoolyard Japan, created a rooftop farm garden, including a vegetablegarden, on the roof of the Tokyo Shoken Kaikan Building.

The aim of the rooftop farm garden is to make eﬀective use of building rooftops to support sustainable
and local food cycles for food education purposes, and contribute to abundant food supplies in local
communities, becoming a space where various vegetables grow and living things coexist.

-11-

＞ Water Resource Initiative Targets and Results＞ Climate Change Initiative Targets and Results＞ Climate Change Initiative Targets and Results

Environmental Compliance
The Group maintains compliance with environment-related laws and regulations. There were no

violations of environment-related laws and regulations or environmental accidents in ﬁscal ����.
Item

Unit

FY����

FY����

FY����

FY����

Violations ofEnvironment-Related
Laws and Regulations

Cases

�

�

�

�

Environmental Accidents

Cases

�

�

�

�

Environment-Related Fines

yen

�

�

�

�

-12-

Climate Change Countermeasures
Basic Approach
The Heiwa Real Estate Group recognizes that climate change will seriously aﬀect the naturalenvironment and social structures, and regards it as a material issue that will have a major impact
on its businesses as a whole.

As climate change intensiﬁes, abnormal weather and rising sea levels will have serious
consequences for countries around the world.

This could also have a signiﬁcant impact on the Group’s business activities, as the value of

properties it owns could decrease due to natural disasters, and stricter environmental regulations

could aﬀect its operations. Based on this recognition, we are making an eﬀort to reduce greenhousegas emissions and energy consumption while promoting the use of renewable energy and othermeasures.

Recognizing Issues and Commitments Related to Greenhouse Gas Emissions

The reduction of GHG emissions to mitigate climate change is one of the most important global

environmental issues. In Japan, companies and oﬃces (buildings) are required to calculate GHG

emissions in accordance with the Act on Promotion of Global Warming Countermeasures, reduce total
emissions in line with Tokyo Metropolitan Government regulations, and submit plans and reports on
global warming countermeasures.

As society as a whole undergoes the transformation toward low-carbon and decarbonization, taking

the initiative in reducing GHG emissions is also expected to lead to ﬁnancial beneﬁts, such as businessdiﬀerentiation, enhanced preference from prime tenants, and increased ﬁnancing opportunities from
ESG investors.

In light of these issues, the Group will appropriately monitor and manage GHG emissions from realestate management, while promoting GHG emission reductions beyond legal compliance levels
through various GHG emission reduction measures.

Recognizing Issues and Commitments Related to Energy Consumption

Ineﬃcient energy consumption leads to the waste of global environmental resources and excessive
greenhouse gases emissions, which have negative impacts on the global environment, while also

increasing the cost of energy and regulatory compliance, and can become factors that deteriorate theeconomic value of real estate.

-13-

Conversely, the eﬃcient use (conservation) of energy in real estate protects the global environment andthe mitigates climate change. Eﬃcient energy consumption can also be expected to result in reduced
operating costs, lower regulatory risks, and increased ﬁnancial beneﬁts, such as improved real estatevalue over the medium to long-term, which in turn can lead to business opportunities.

Based on our recognition of these issues, the Group will promote the eﬃcient use of energy above andbeyond statutory compliance requirements by appropriately monitoring and managing energy

consumption within Group real estate operations while implementing various energy conservation
measures.

Disclosing Information Based on TCFD Recommendations
Support for TCFD Recommendations

Many corporate stakeholders, particularly investors, are aware that climate change poses systemicrisks to the ﬁnancial performance of companies today, and therefore, they expect companies todisclose information concerning climate related risks and opportunities. In response to this trend,
Heiwa Real Estate announced its support for the recommendations of the Task Force on
Climate-related Financial Disclosures* (TCFD) in December ����.

Based on the TCFD recommendations, which were ﬁnalized in ����, the Company will identify, assess,and manage climate-related risks and opportunities that could impact the Group’s business andenhance its information disclosure accordingly, recognizing that improving the resilience of its
operations is essential for continuously and stably generating earnings over the long term.

*The Task Force on Climate-Related Financial Disclosures (TCFD) was established by the Financial Stability Board
at the request of the G�� to recommend a framework for the disclosure of climate-related information.

Disclosing Information Based on
TCFD Recommendations＞

Initiative Targets and Results
Initiative Targets
The Group set the long-term target of a ��% reduction in GHG emissions by FY���� (total volume target
compared to FY���� level), and the short-term target of annual reductions of at least �% (basic unit
target compared to previous ﬁscal year)*� *�. The long-term target acquired SBT certiﬁcation as

consistent with the Paris Agreement under the SBT Initiative. We are also aiming for a ���%environmental certiﬁcation acquisition rate at newly developed properties.
-14-

Item
GHG emissions
reductions*� *�

Long-term
target*�Short-termtargetNewly developed property environmental
certiﬁcation acquisition rate*�

Target��% reduction in GHG emissions by FY����(total volume target compared to FY���� level)

Annual reduction of at least �% (basic unit target
compared to the previous ﬁscal year)
���% acquisition*� Prior to FY����, the scope of calculation is the real estate portfolio held by the Group (excluding buildings

designated to be sold and jointly owned buildings of which the Company has an ownership share of less than��%).

In FY����, the scope of calculation is the real estate portfolio held by the Group (excluding inventories).

*� Greenhouse gas (GHG) emissions = Scope � + �

Scope �: Direct greenhouse gas emissions directly from sources owned or controlled by business operators.
Scope �: Indirect greenhouse gas emissions from the use of electricity, steam and heat.

*� Heiwa Real Estate obtained SBT certiﬁcation (�.�°C level) from the Science Based Target (SBT) Initiative, which
encourages the setting of science-based reduction targets to achieve the Paris Agreement, an internationalframework for reducing greenhouse gas emissions.

*� Environmental certiﬁcations include DBJ Green Building Certiﬁcation and CASBEE construction; applicableproperties include oﬃces and commercial buildings (excluding small properties).

-15-

Results
GHG Emissions and Energy Consumption
Unit

FY����
（Base
year）

FY����

FY����

GHG（CO�）emissions

t-CO����,���

���,���

���,��� ✓ ���,��� ✓ ���,��� ✓Scope �

t-CO�

�,���

�,���

�,��� ✓

�,��� ✓

�,��� ✓

CO�

t-CO�

�,���

�,���

�,���

�,���

�,���

CH�

t-CO�

�

�

�

�

�

N�O

t-CO�

�

�

�

�

�

HFC

t-CO�

���

���

���

���

��

PFC

t-CO�

�

�

�

�

�

SF�

t-CO�

�

�

�

�

�

Other

t-CO�

�

�

�

�

�

Scope �t-CO���,���

��,���

��,��� ✓��,��� ✓��,��� ✓Scope � + �

t-CO���,���

��,���

��,��� ✓��,��� ✓��,��� ✓-16-

FY����

FY����

Scope�Category �
Purchased products
and services
Category �Capital goods
Category �

Scope�,�upstream
Category �
Waste emissions frombusiness
Category �Business travel
Category �

Employee commuting
Category ��

Use of products soldCategory ��Disposal of products

Category ��

Leased assets (downstream)

GHG（CO�）emissions(unit of output) Scope �+�
Energy consumption
Energy consumption(unit of output)

t-CO����,���

���,���

��,��� ✓ ���,��� ✓ ���,��� ✓t-CO���,���

��,���

��,��� ✓��,��� ✓�,��� ✓t-CO���,���

��,���

��,��� ✓��,��� ✓��,��� ✓

t-CO�

�,���

�,���

�,��� ✓

�,��� ✓

�,��� ✓

t-CO�

�,���

�,���

�,��� ✓

�,��� ✓

�,��� ✓

t-CO�

��

��

�� ✓

�� ✓

�� ✓

t-CO�

��

��

�� ✓

�� ✓

�� ✓

t-CO�

���,���

���,���

��,��� ✓��,��� ✓��,��� ✓

t-CO�

�,���

���

��� ✓

��� ✓

��� ✓

t-CO�

�,���

��,���

��,��� ✓��,��� ✓��,��� ✓kg-CO�/m�

��.�

��.�

��.� ✓

��.� ✓

��.� ✓

MWh��,���

kWh/m�

���.�

-17-

���,��� ���,��� ✓ ���,��� ✓ ���,��� ✓���.�

���.� ✓

���.� ✓

���.� ✓

Data marked with ✓ are guaranteed by a third party.

*Categories �, �, �, ��, �� and �� are excluded from calculations as there are no such emission sources.

*Prior to FY����, the scope of calculation is the real estate portfolio held by the Group (excluding buildings
designated to be sold and jointly owned buildings of which the Company has an ownership share of less than��%).
In FY����, the scope of calculation is the real estate portfolio held by the Group (excluding inventories).

Environmental Certiﬁcation Acquisition

Heiwa Real Estate achieved its FY���� target of ���% environmental certiﬁcation acquisition
at newly developed properties.

*Environmental certiﬁcations include DBJ Green Building Certiﬁcation and CASBEE construction; applicableproperties include oﬃces and commercial buildings (excluding small properties).

Speciﬁc Initiatives
Initiatives by Aﬃliated Industry Associations
The Heiwa Real Estate Group complies with the Paris Agreement, an international framework for the
reduction of greenhouse gas emissions, as well as the policies of industry associations to which webelong, and will reduce Group greenhouse gas emissions and energy consumption while promoting

the use of renewable energy. In the event that the polices of these aﬃliated industry associations arestrengthened and Group eﬀorts become insuﬃcient, we will further revise internal polices toproactively promote climate change countermeasures. The Heiwa Real Estate Group participates inand endorses the following climate change-related frameworks.

TCFD Recommendations and the TCFD Consortium

The Heiwa Real Estate Group announced its endorsement ofrecommendations set forth by the Task Force on

Climate-Related Financial Disclosures (TCFD), established by the
Financial Stability Board (FSB). We also participate in the TCFD
Consortium, which was established to promote initiatives
conducted jointly by Japanese corporations and ﬁnancial
institutions that endorse the TCFD recommendations.

-18-

Science Based Targets

With the aim of realizing a decarbonized society, in October����, Heiwa Real Estate set a new target calling for a ��%

reduction in overall Group greenhouse gas (GHG) emissions(Scope � + �) compared to FY���� by FY����. This target wasrecently certiﬁed by the SBT Initiative as consistent with thelevel (�.�°C) targeted by the Paris Agreement.

Going forward, the Group will further strengthen

decarbonization initiatives in an eﬀort to realize a sustainable

society and continuously enhance corporate value as a company
that contributes to revitalizing districts.

UN Global Compact and Global Compact Network JapanThe Heiwa Real Estate Group is a member of the United Nations

Global Compact (UNGC), as well as the Global Compact Network
Japan (GCNJ), a local network in Japan.

We support the UNGC, comprising human rights, labor,

environment and anti-corruption, and will strive to realize asustainable society. GCNJ activities also include the exchange of
information on CSR concepts and initiatives throughparticipation in the Environmental Management Subcommittee
among other bodies. Heiwa Real Estate aims to further

contribute to the realization of a sustainable society byparticipating in information sharing and dialogues with experts,
NGOs and other organizations.

Regarding Switchover to Renewable Energy Sources
From May ����, electricity used at Company-owned properties, including the Nisshokan Building,which houses the Company’s head oﬃce (Chuo-ku, Tokyo), were gradually switched to electricity

derived from renewable energy sources. This is expected to result in the use of approximately �� GWh

of renewable energy per year and a reduction in CO� emissions equivalent to approximately �,��� tons

per year.

-19-

Reducing environmental impact
To address environmental concerns (reduce energy use), Heiwa Real Estate's initiatives focus on
resources (reducing costs).

Because oﬃce buildings require large amounts of energy to run, they are increasingly expected tooﬀer high environmental performance. The Group gives top priority to the environment whenconstructing and renovating buildings, and also take steps to create a more attractive cityscape. Our
approach helps to reduce the life-cycle cost of buildings through long-term use and to preserve
historical value.

➀Tokyo Stock Exchange Bldg.

・Saving energy by controlling power and air conditioning equipment (total �,��� units) of the building
management system

・Reducing heat load by controlling operation through total heat exchangers and controlling byoutside air cooling・Reducing motor energy consumption with variable air volume control using inverters
・Controlling waste heat recovery with heat-recovery turbo freezers
・Rooftop greening, solar heating, and utilization of rainwater・Open spaces secured and greenery maintained in open spaces surrounding the building inconsideration of the scenery・Utility poles have been removed by burying power cables
・Installing of streetlights-20-➁Osaka Securities Exchange Bldg.
・Saving energy by controlling power and air conditioning equipment (total �,��� units) of the building
management system*The market wing of the old Osaka Securities Exchange Bldg., completed in ����, was for decades a Kitahama
landmark beloved by the people of Osaka. A part of the entrance hall on the ﬁrst ﬂoor has been preserved in
its original form as part of the city’s cultural heritage.

Various events are now held in the hall, which caters not only to the building’ s users but also to visitors andthe people of Osaka at large.

・Smart meters installed➂CentRise Sakae
・Exterior Blind System

・Automatic Adjustment of Blind Slats
・Installation of Window Eaves

・Double-pane low-emissivity glass installed
・Eﬀective Use of Rain and Well Water

・Lighting Control by Daylight Sensors
・Smart meters installed➃Ichiban-cho Heiwa Bldg.

・LED lighting installed throughout the building (excluding some lighting in stores)
・Lights changed to longer lasting lights
・Use of high-eﬃciency air conditioning

・Double-pane thermal insulating low-emissivity windows installed
・Smart meters installed-21-

➄KABUTO ONE
・Solar panels to be installed as an initiative to use renewable energy

・Rainwater storage tanks to be installed as a means to reuse rainwater for everyday facility use(non-drinking water)・LED lighting and control systems as well as high-eﬃciency devices to be installed to eﬃciently use
energy・Greenery to cover ��% of the entire redevelopment site as a measure to combat the heat island eﬀect
・Smart meters installed

Global Warming Countermeasures Report Based on the Tokyo Metropolitan
Environmental Security Ordinance

Environmental Ratings by Outside Bodies
When constructing new buildings and conducting major renovation projects, the Group gives toppriority to the environment; hence we have received high ratings from the DBJ Green Building
Certiﬁcation program and CASBEE.

-22-

＞

KABUTO ONE

DBJ Green
Building
Certiﬁcation
program

CASBEE

指名委員会
KITOKI

DBJ Green
Building
CASBEE
Certiﬁcation
監査委員会
報酬委員会
CASBEE
program-

Tokyo Stock Exchange Bldg.

Kabutocho Heiwa Building No. �--

Osaka Securities Exchange Bldg.

Tenjin Heiwa Building--

Kabutocho Heiwa Building No. �

CentRise Sakae--

Kayabacho Broad Square

Ichibancho Heiwa Building--

Shimbashi Square Building

Nisshokan Building-

Kitahama �-Chome Heiwa Building

Kayabacho �-Chome Heiwa Building
-

-

-23-

Heiwa Real Estate Nagoya
Fushimi Building

DBJ Green
Building
Certiﬁcation
program

CASBEE-*DBJ Green Building Certiﬁcation

Certiﬁcation system established by Development Bank of Japan (DBJ) to support the green building realestate with consideration for the environment and society. A program for identifying and certifying “green

buildings” in response to the needs of today’s real estate market. The evaluation is comprehensive, taking
into account not only the property’s environmental performance but also the degree to which the societal
needs of various stakeholders surrounding the property are considered.
*CASBEE

A method for evaluating and rating the environmental performance of buildings. This program

comprehensively assesses building quality, including eco-friendliness (such as energy eﬃciency and use ofmaterials and ﬁxtures with a small environmental footprint), interior comfort, and respect for thesurrounding landscape.

-24-

Water Resource Initiatives
Basic Approach
Ineﬃcient use of water leads to waste of resources and adverse eﬀects on the ecosystem. This not

only has a negative impact on the global environment, but also increases building operation costs

and regulatory compliance costs, and can become a deteriorating factor for the economic value ofreal estate. With regard to water usage issues, Japan has set regulations on wastewater discharge,

including the Water Pollution Prevention Act. Depending on its class and region, real estate may also
be subject to separate regional environmental regulations.

In light of our understanding of these issues, the Group maintains an appropriate understanding andmanages the status of water usage within real estate management operations. We also make various
eﬀorts to improve water usage eﬃciency beyond legal compliance levels.

Initiative Targets and Results
Initiative Targets
The Group targets a ��% reduction in water consumption by FY���� (per-square-meter target
compared to FY����).
Items

Targets

Reduction of water
consumption

20% reduction by FY2030 (target water usage per square meter comparedto FY2018)*Prior to FY����, the scope of calculation is the real estate portfolio held by the Group (excluding buildings

designated to be sold and jointly owned buildings of which the Company has an ownership share of less than��%).

In FY����, the scope of calculation is the real estate portfolio held by the Group (excluding inventories).

-25-

Results
FY����
（Base
year）

FY����

���,���

FY����

FY����

FY����

���,���

���,��� ✓���,��� ✓���,��� ✓���,���

���,���

���,���

���,���

���,���

�

�

�

�

�

�

�

�

�

�

��,���

���,���

��,���

���,���

���,���

�

�

�

�

�

�

�

�

�

�

���,���

���,���

���,���

���,���

���,���

Greywater（m�）

�,���

�,���

�,���

��,���

��,���

Rainwater（m�）

�,���

�,���

�,���

��,���

��,���

���,���

���,���

���,���

���,��� ✓���,��� ✓

�.��

�.��

�.��✓

�.��✓

�.��✓

Water consumption（m�）(actual)
Water intake（m�）Fresh surface water
Brackish surface water/
sea water
Groundwater

Water collected atquarries
External wastewater
Third-party water
source (waterworks)

Water consumption（m�）(annualized)
Per-unit water consumption（annualized)（m�/m�）

Data marked with ✓are guaranteed by a third party.

*Prior to FY����, the scope of calculation is the real estate portfolio held by the Group (excluding buildings
designated to be sold and jointly owned buildings of which the Company has an ownership share of less than��%).
In FY����, the scope of calculation is the real estate portfolio held by the Group (excluding inventories).

-26-

Speciﬁc Initiatives
Business Activities in Water-stressed Regions
The Heiwa Real Estate Group does not earn revenue from business activities in regions where water

stress is a concern, namely, regions with risk scores of three or above (High, Extremely High) based on
the World Resource Institute (WRI) Aqueduct Survey.

Further, with regard to domestic business activities, Japan has been identiﬁed as having Low‒Medium
risks related to water and is certiﬁed as a region with relatively low water stress.

Use of Rainwater and Well Water
Group eﬀorts to eﬀectively utilize water resources include the installation of storage facilities
facilitating the daily use of rainwater and the eﬀective use of well water.

Introduction of Water-Saving Equipment
We are working to reduce the amount of water used at existing properties by gradually promoting
renovation work facilitating the conversion to water-saving equipment.

Cooperation with Business Partner
We established the Tenant Guidelines for Environmental Concerns and call on everyone in the Groupand all our business partners to help conserve water.

Additionally, lease agreements with tenants stipulate cooperation with environmental performance
initiatives, specifying eﬀorts that include remembering to shut of water faucets and prevent leaks.

-27-

Waste Initiatives
Pollution

Basic Approach
We recognize the need to reduce and control the emission of environmental pollutants across theGroup’s real estate portfolio and make an eﬀort to reduce the use and emissions of harmful
chemical and ozone-depleting substances in an eﬀort to prevent pollution.

Pollutants emitted from business activities can adversely aﬀect people involved in our business andthe surrounding environment. In recognition of this impact, we will strive to prevent pollution.

Initiative Targets

The Heiwa Real Estate Group has established procurement policies for mainstay Group products,

services, and major business partners (property management companies and building managementcompanies), introducing operational procedures and procuring materials that meet ESG-related
standards, including the reduction of environmental pollutants.

Process Targets
The Group carefully considers its impact on the global environment and complies with environmental

laws and regulations by controlling waste emissions, including hazardous substances, and thoroughly
implementing countermeasures to prevent soil, air and water pollution and the use of asbestos inGroup business.

Based on our Sustainable Procurement Policy, we strive to reduce environmental pollutants, including
the use and emission of hazardous chemicals and ozone-depleting substances, as one criterion for
selecting products and services for procurement. We also select and evaluate business partners(suppliers).

The Group targets a ��% reduction in hazardous waste and other emissions by FY����. To this end,

targets are set each ﬁscal year and results are conﬁrmed to promote the reduction of hazardous waste
and control environmental pollution.

-28-

Speciﬁc Initiatives
Asbestos countermeasures
We conduct property surveys to determine whether building materials containing asbestos have been
used, based upon which we make regular reports regarding removal eﬀorts and response policies.

Appropriate Handling of PCBs
We conduct periodic surveys on the presence or absence of equipment containing PCBs and makeregular reports on disposal costs and related issues.

Appropriate Handling of Chloroﬂuorocarbons
We also conduct periodic surveys on the amount of chloroﬂuorocarbon (CFC) emissions at each
property in an eﬀort to reduce pollutants within business activities.

Waste and Resource Usage Initiatives
Basic Approach
The Heiwa Real Estate Group recognizes that eﬀorts to reduce adverse impacts on theenvironment, such as maintaining an appropriate awareness of how much waste is emitted andreduced, eﬀorts to eﬃciently utilize and conserve resources without waste, and adverse impacts on
ecosystems, are all issues we must address as a company.

Further, we strive to realize a recycling-oriented society by reducing building lifecycle costs througheﬀorts to reduce (waste emissions), reuse and recycle at all our properties.

Based on this understanding and the above policies, the Heiwa Real Estate Group strives to reduce
waste emissions and utilize resources eﬃciently.

-29-

Initiative Targets
Initiative Targets
In our aim to reduce waste emissions, the Sustainability Committee, chaired by the Representative
Executive Oﬃcer, President and CEO, compares actual results each ﬁscal year with consumption
volumes and output in one or several previous ﬁscal years.

Heiwa Real Estate targets a ��% reduction in waste emissions by FY���� (compared to FY����).

Items
Reduction of industrial
waste generation
Recycling rate

Targets

��% reduction by FY���� (target waste per square metercompared to FY����)��% by FY����*Recycled waste is excluded from the actual ﬁgures for waste and waste emissions per square meter.

Results
FY����
（Base
year）

FY����

FY����

FY����

FY����

�,���

�,���

�,��� ✓

�,��� ✓

�,��� ✓

t

�,���

�,���

�,���

�,���

�,���

t

�,���

�,���

�,��� ✓

�,��� ✓

�,��� ✓

kg/m�

�.�

�.��

�.�� ✓

�.�� ✓

�.�� ✓

%

��

��

��

��.�

��.�

ℓ

�

�

�

�

�

Unit
Total waste emissions
Waste emissions(excluding recycled waste)
Recycled waste emissions
Waste emissions(excluding recycled waste)(per square meter)

Recycling rate

Volatile organic compoundemissionst-30-

Data marked with ✓ are guaranteed by a third party.

*Prior to FY����, the scope of calculation is the real estate portfolio held bythe Group (excluding buildings
designated to be sold and jointly owned buildings of which the Company has an ownership share of less than��%).
In FY����, the scope of calculation is the real estate portfolio held by the Group (excluding inventories).

Speciﬁc Initiatives
Reuse of Waste Materials in Company Properties
The ﬂexible oﬃce XPORT, a Group property aimed at providing a sustainable oﬃce environment, eﬀorts
to reduce waste including the use of terrazzo tile ﬂooring, a natural stone material derived from wastematerials.

Constructing the First Flexible Oﬃce
XPORT Nihonbashi Kabutocho

＞

-31-

Wooden Hybrid Structure KITOKI Initiatives
This ��-ﬂoor retail and oﬃce building adopts a hybrid structure that includes three-ﬂoor

mega-structures constructed using SRC frames, with each ﬂoor within the mega-structures made ofwood. This is the ﬁrst project on which the Company adopted a hybrid structure.

The combination of SRC mega-structures and ﬁre-resistant wooden structures has been praised for

opening up new possibilities in terms of construction methods and user beneﬁts when utilizing wood in
high-rise buildings, as well as extending the building lifecycle. This project was selected for the Leading
Projects Program for Sustainable Buildings (wood-based structures) in FY���� implemented by the
Ministry of Land, Infrastructure, Transport and Tourism (MLIT), which aims to drive technologicaladvancement and raise public awareness related to wooden structures.

Outside the building, we plan to install benches made of wood from the Tokyo Stock Exchange (TSE)
Listing Forest* located, in the Yashima district of Yurihonjo, Akita Prefecture, based on a social

contribution program being run by the Japan Exchange Group, Inc. (JPX). The wood, called kabulock,can be used in a multitude of applications, and will be processed into benches. The expectation is that

this hybrid structure will convey the sense of warmth unique to wood to everyone who works in, visits,

or lives near the building, while adding a touch of tranquility to the area (acquired certiﬁcate for carbon
dioxide ﬁxation promoting the use of wood produced in Akita Prefecture).

Heiwa Real Estate empathizes with and supports JPX TSE Listing Forest conservation activities, and willcontribute to the eﬀective recycling of forest resources in Japan through the Wood Project, promoting
the reuse of wood in building materials, benches and other purposes.

We are using cedar on top of concrete frames for the exterior design to give a wood-like feel while

retaining durability. Rather than dispose of wood when it is time for replacement, which is typical forcedar due to its grain and knots, it will instead be reused for benches and in other applications. Heiwa
Real Estate aims to implement a circular economy in projects that contribute to a recycling-oriented
society.

*In June ����, the Japan Exchange Group (JPX), set aside an area of approximately � hectares (now expanded toapproximately �.� hectares) in the Yashima district of Yurihonjo, Akita Prefecture, as the “TSE Listing Forest,”
where it engages in forest conservation activities in the hope that the exchange market will grow and prosper inline with the growth of the forest.

-32-

Deciding on New Wooden Hybrid
Structure Project KITOKI Building
Name and Overview of Interior Design＞

Cooperation with Business Partners
Establishing Tenant Guidelines

We established the Tenant Guidelines for Environmental Concerns as part of our waste management
eﬀorts, calling on the Group and all its business partners to cooperate on this initiative.

Excerpt from Tenant Guidelines for Environmental Concerns
•
•
•
•
•

Ensure that everyone working at a building understands the rules about recycling and trash
separation there.
Install recycling bins in various oﬃce spaces.

Personal tumblers and mugs should be used where possible to reduce plastic bottle andpaper cup garbage.
Be active in purchasing recycled stationery and other supplies.

While a number of municipalities treat paper waste from homes as burnable waste, these canbe used as recyclable resources at oﬃces.

-33-

Social> Basic Approach> Basic Approach> Employee Development Policy> Ratings from Outside Bodies> Initiatives SupportingWork-Life Balance> Major Initiatives> Structure> Promotion of Diversity> Basic Approach> Basic Approach> Maintaining Building Safety
and Security> Promoting Constructive
Dialogue> Improving Service and Quality> Corporate Governance> Dividend Policy andShareholder Bonus Program> Human Rights Policy> Major Initiatives-34-> Structure> Basic Approach> Nihonbashi Kabutocho andKayabacho Revitalization
Project> Community-based Initiatives> Corporate Initiatives

Health and Safety

Basic Approach

Heiwa Real Estate believes that it is essential that its employees to be healthy, both mentally andphysically, for the continuous growth of its businesses and corporate value. We seek to increase

corporate value by improving the health of our employees, creating a safe working environment,
and preventing overwork and occupational accidents.

We also call on our subcontractors and other important stakeholders in our businesses toimplement health and safety initiatives for their employees.
＜Declaration of Health Management＞

The Heiwa Real Estate Group believes that employee mental and physical health and the ability to
fully demonstrate their capabilities and individuality will lead to sustainable corporate growth.

In line with this ideal, the Group will engage in eﬀorts to maintain and improve employee health topromote health management.

Structure

The Representative Executive Oﬃcer, President and CEO serves as the chief oﬃcer responsible forpromoting health management, who works with the Health Committee, industrial physicians, andhealth insurance associations primarily through the General Aﬀairs Department. Reports are also madeto the Management Conference.

The Health Committee is held once a month, in principle, where attendees discuss the importance of
maintaining and improving health, as well as share information within the Company.

Committee members include managers in charge of labor aﬀairs, division health committee members,
industrial physicians, and employee representatives.

-35-

Health and Productivity
Management Strategy Map＞

Ratings from Outside Bodies
Certiﬁed Health & Productivity Management Outstanding Organization
Heiwa Real Estate has been recognized as a Certiﬁed Health & Productivity Management Outstanding
Organization for ���� (White ���) by the Ministry of Economy, Trade and Industry and the Nippon

Kenko Kaigi (Japan Health Conference). This program highlights outstanding enterprises engaging in
eﬀorts to advance health management.

We have also been certiﬁed as a Sports Yell Company for ���� by the Japan Sports Agency and as aTokyo Sports Promotion Company for ���� by the Tokyo Metropolitan Government for our eﬀorts to
support and promote our employees’ sports activities.

-36-

＞

Percentage of Oﬃce Locations with OHSAS ����� Certiﬁcation
Currently, no oﬃce has obtained OHSAS����� certiﬁcation.

Health Management Initiatives
Critical Issues Related to Employee HealthPrevention and early detection of lifestyle-related diseases
In recognition of the importance of this issue and its signiﬁcant impact on employee health andproductivity, the Group takes steps to prevent and detect lifestyle diseases as early as possible.

Mental Health Countermeasures

In recognition of the importance of this issue in terms of employee productivity, the Group takes steps
to prevent and detect mental health issues as early as possible.

Work environment improvements

The Group views the creation of comfortable working environments as essential for improving
employee productivity.

-37-

Eﬀorts Targeting Improved Employee Health

Medium-term
management
plan KPIs

Healthmanagement
KPI

Numerical targets(FY����)Item

FY����

FY����

Annual health checks

���% ✓―

Cancer screenings

���% ✓―

���%*�

Paid holiday usage

��% ✓

―

At least ��%*�

Item

FY����

FY����

Stress checks

���％

���％

Cigarette smokers

��.�％

��.�％

��% or less

Regular exercise

��.�％

��.�％

At least ��%

��.�％

��.�％

At least ��%

��.�％

��.�％

At least ��%

０people０people０people０people０people０peopleHighly stressed employees

�.�％

�％

�% or lessWork Engagement Status*�

��.�％

��.�％

At least ��%

Work-related deaths

０ people ✓� people� people*�

Employees getting suﬃcient
sleep and a balanced dietAppropriate body weight
Employees leaving work
due to injury or illness

Employees missing work due toinjury or illness*� Numerical targets for each ﬁscal year���%*�

Numerical targets(FY����)���%※�

*� Percentage of employees who responded “yes” or “somewhat” to “my work is rewarding” in stress checks.
FY����: ��� people measured/���% response rate
FY����: ��� people measured/���% response rate

✓ indicates data that has been veriﬁed by a third party.

-38-

Other Indicators of Successful Health Management
Item

FY����

FY����

Absenteeism (*�)�.� Day�.� Day

Presenteeism (*�)

��.�％

��.�％

Complete physicals

��.�％

��％

Healthcare guidance

���％

―

Hypertension treatments

�.�％

―

*� Days absent due to physical or mental illness (including late arrivals or early departures).
FY����: �� people measured/���% response rate

FY����: ��� people measured/���% response rate*� Self-assessment of performance over previous four weeks. Ability to work without illness or injury = ���%.
(Tokyo University Single-Item Presenteeism Question)
FY����: �� people measured/���% response rate
FY����: ��� people measured/���% response rate

Initiatives to Improve HealthParticipation in the Hokkaido Marathon

Heiwa Real Estate sponsored the Hokkaido Marathon ���� as a Gold Partner and recruited runners
from within and outside the Company, with several employees participating in the event.

We also had a corporate booth at the Hokkaido Marathon EXPO, where we distributed original sports
towels to visitors to encourage and support everyone involved in this event.

-39-

2022

2023

Support for Oﬀ-work Activities

The Group facilitates the promotion of employee health and the vitalization of communication among
employees by supporting activities for an internal baseball team and football team organized byenthusiasts.

-40-

Events Held In-house

To commemorate the ��th anniversary of Heiwa Real Estate’s founding, we held an event to promoteinteraction among employees throughout the Company.

Smoking countermeasures and cessation support•

Education on the health impact of tobacco•

Designation of “World No Tobacco Day” as a “no smoking day” to encourage tobacco cessation••

Prohibition on smoking before work

Provision of ﬁnancial assistance for outpatient smoking cessation treatments and materials*Assistance with out-of-pocket expenses (limited to a single payment of up to ��,��� yen per person)*Smoking cessation materials comprise nicotine patches and chewing gums sold in Japan.

Support for Women’s Speciﬁc Health Issues

Online seminars on health issues speciﬁc to women, work-life balance and other topics are held for
managers and female employees.

Eﬀorts to Improve Dietary Habits

The Group provides employees with opportunities to rethink their food choices using online seminars
focused on improving dietary habits.

-41-

Initiatives for Prevention and Early Detection of Health Issues
Implementation of Stress Checks

The Group conducts annual stress checks to manage employee health and improve workplaceenvironments.

Employees are encouraged to undergo health exams, with the aim of achieving a ���% participation
rate. (Participation in FY����: ���%)Implementation of e-Learning Courses

We regularly hold e-learning courses on topics such as diet, sleep, lifestyles, and mental health, andnursing care.

Sleep and Mindfulness Yoga Seminars

Seminars on sleep and mindfulness are provided to encourage employee to think about healthy habits.

These seminars provide support for the improvement of insomnia, stiﬀ necks and shoulders, back pain,
headaches and other physical conditions that adversely aﬀect employee productivity.

Implementation of Cancer Seminars

In addition to holding cancer seminars in conjunction with insurance companies, the Group maintains
a cancer-related website providing information on cancer.

Company-Paid Cancer Screenings

Blood marker testing is included in physical exams for employees over �� years of age.

-42-

Exam Item

TargetMen

PSA (Prostate cancer)

WomenCA��� SCC (Ovarian, cervical and other cancers)CA��-� (Pancreatic, gallbladder, bile duct and other cancers）

Men and women

α-FP (Liver and other cancers)

Men and women

CEA (Stomach, colon, lung, pancreas and other cancers)

Men and women

Training Participation and Degree of Satisfaction
Participation
rate

Degree ofsatisfaction

All employees

��%

���%

All employees

��%-

Women’s health-related
seminars

Female employees

��%

��%

Line care training

Managers

��%-First aid training

All employees

���%

-

Item

Targets

Exercise-related seminars

All employees

Diet-related seminars
Sleep-related seminars

��%

��%

Employee Health Literacy
Item
Item

FY����

FY����

Health literacy*

��.�

��.�

*Employee health literacy calculations based on Communicative and Critical Health Literacy (CCHL)-43-

Health Management Measure Investments
Item

FY����

FY����

Medical and healthcare-related expenses(per employee)��,��� yen

��,��� yen

Creating Comfortable Work Environments

The Nisshokan Building where the Group’s head oﬃce is located has a lounge that can be utilized forbreaks, lunch, internal meetings, regular business and other purposes.

This lounge also includes exercise equipment to promote employee health.

In line with workstyle reforms, the Group also promotes the creation of comfortable work
environments.

-44-

Achieving Diverse Work Styles
Basic Approach
We strive to realize comfort and aﬄuence by respecting the personalities of each and every
employee, rejecting all forms of discrimination and harassment, and securing a working
environment that is safe and easy to work in.

We are also working to improve work-life balance by promoting work eﬃciency and reducing
overtime hours.

Human Rights Initiatives

Heiwa Real Estate endeavors to build and maintain a safe and exemplary working environment that
respects the personality and individuality of each individual.

Prohibition of Discrimination

Heiwa Real Estate does not discriminate on the basis of nationality, race, gender, age, sexual

orientation, disability, beliefs, ideas, and religions. In addition, we do not conduct or permit any

behavior that may cause a negative impact on the working environment, including unilateral coercion
or solicitation regarding beliefs, ideas, or religions.

Prohibition of Harassment

For Heiwa Real Estate, employees and oﬃcers are regarded as important partners in the execution ofwork duties. Accordingly, the Group prohibits sexual harassment, power harassment, or any otherforms of harassment in recognition of its obligation to maintain orderly and cooperative relations in theworkplace.

It has also established oﬃcial rules prohibiting sexual and power harassment in an eﬀort to prevent
workplace harassment.

-45-

Promotion of Diversity

Our basic policy is to be inclusive of diversity in characteristics such as gender, age, nationality, andvalues, to create an environment where each individual can maximize their abilities, and to promote
the active participation of diverse human resources.

We are working to promote diversity, including the success of women, conduct rigorous evaluations
regardless of gender, and have set quantitative targets for the ratio of new female hires.
Medium-term Management Plan KPI：Rate of new hires that are female: At least ��%
FY����

FY����

FY����

Percentage of female employees

��.�%

��.�%

��.�%

Percentage of female managers

�.�%

�.�%

��.�%

�.�%

�.�%

��.�%

�%

�%

�%

Percentage of non-regular
employees (*�)Percentage employees withdisabilities (*�)*�. Ratio of non-regular employees, comprising contract workers and temp staﬀ, among overall employees(consolidated basis).
*�. Ratio of employees with disabilities among overall employees (consolidated basis).

Number of femaleｃｃuniversity
graduates hiredChildrearing
leave obtained by
育児休業取得実績
Short
working hours obtained by
時短勤務取得•••FY����

FY����

FY�����（total�）�（total�）�（total�）

ー

ー

�

���％

ー

��.�％

�

��％

１

Job category conversion: � employees (Employees whose job categories have been switched from aclerical career track to a managerial career track)
Action Plan Based on the Act on Advancement of Measures to Support Raising Next-Generation
Children（PDF：104KB）
Action Plan Based on the Act on Promotion of Women’s Participation and Advancement in the
Workplace（PDF：246KB）-46-

Initiatives Supporting Work-Life Balance
Employee Childcare Support ProgramsChildcare leave programAn employee is eligible to take childcare leave until his or her childreaches the age of �� months.

Childcare shortened

An employee is eligible to work shortened working hours (�:�� a.m.

Childcare overtime

An employee may be exempt from working any overtime until his or

working hours program
exemption programChildbirth gift money
and paid time oﬀ

to �:�� p.m.) until his or her child reaches the age of three.
her child reaches the age of three.

To congratulate an employee and his or her spouse upon the birth oftheir child, the Group oﬀers a gift of ¥���,���. The employee is also
given four days oﬀ at the time of childbirth.

Employee Nursing Care Support Programs

Nursing care leave
program

Employees with primary nursing care responsibilities are eligible totake up to ��� days of nursing care leave for each family member

they care for. The program can be used up to three times per family
member within a period during which continuous care is required.

Nursing care shortened

Employees with family nursing care responsibilities are eligible to

Nursing care overtime

Employees with family nursing care responsibilities may be exempt

working hours program

exemption program

work shortened working hours (��:�� a.m. to �:�� p.m.).

from working any overtime.

-47-

Welfare and Other Systems
Flextime system

Employees can freely decide when to start and end work.

Telecommuting system

Employees may work from their homes.

Cafeteria plan

Summer vacation

Extra day-oﬀ program

Annual paid vacation
accumulation system

Long-service
leave program
Hour-based leave system

We have introduced a welfare system that allows employees to pickand choose from a menu of beneﬁts, such as health promotion
activities and self-development.

Employees can take ﬁve summer vacation days, either consecutively
or separately, every year within the period from July � to September��.

When scheduling at least two consecutive paid vacation days,

employees can take an extra complimentary day oﬀ once each year.
The Group oﬀers an annual paid vacation accumulation system,

which allows employees to accumulate and take paid holidays thatwere previously unused due to job circumstances or other reasons.
Ten paid holidays can be accumulated annually (up to �� days).
The Group oﬀers ﬁve additional days oﬀ and a special bonus of¥��,��� to employees when they reach their ��th and ��th year ofservice in appreciation for their many years of hard work.
Employees may take leave on an hourly basis.

-48-

Human Resource Management
Employee Development Policy
We recognize that diversity in perspectives and values is important to achieve new growth. We work
to ensure diversity in our workforce, oﬀer fair opportunities for skills development and career

promotion to all employees, and aim to develop self-directed employees with growth mindsets andstrong motivation.

Structure (Human Resource Development Structure)
At Heiwa Real Estate, we practice a job rotation system so employees can gain experience in a numberof departments over the ﬁrst �� years after they join the Company. In addition, we use on-the-job
training (OJT) and other methods to instill real estate knowledge, fostering their motivation tocontribute to the organization and assessing each employee’s own aptitude.

From new employee training to management training, we have established a series of training

programs tailored to employee career plans. At the same time, we oﬀer a system where employees may
take courses at university city campuses, aimed at cultivating next-generation human resources withskills in areas like planning, proposal, negotiation, and leadership.

We also recommend that employees acquire multiple real estate-related qualiﬁcations before being
promoted to a managerial position. The Company bears the costs associated with acquiring thesequaliﬁcations. Furthermore, by encouraging the acquisition of other qualiﬁcations in self-development,
we support our employees in their self-growth and development of specializations.

-49-

Major Initiatives
OJT and Job Rotation

We practice job rotation so employees can gain experience in a number of departments over the ﬁrst
�� years after they join the Company. Employees also gain speciﬁc departmental business and realestate knowledge through OJT, systematically and continuously developing the abilities necessary forthe execution of their work. Through communication between employees, we foster motivation tocontribute to the organization and assess each employee’s own aptitude.

Training Programs

From new employee training to management training, we have established a series of training

programs tailored to employee career plans. At the same time, we oﬀer a system where employees

may take courses at university city campuses, aimed at cultivating next-generation human resources
with skills in areas like planning, proposal, negotiation, and leadership.

As part of new employee training, we also conduct fundamental real estate training, IT literacy training,
and training to improve PC skills.

-50-Support System for Qualiﬁcation Acquisition

We recommend that employees acquire multiple real estate-related qualiﬁcations—e.g., Real EstateTransaction Agent, First-Class Architect, or Real Estate Appraiser—before being promoted to a

managerial position. The Company bears the costs required when acquiring these qualiﬁcations. By

encouraging and assisting employee acquisition of oﬃcial qualiﬁcations, we seek to cultivate a pool ofoﬃcial qualiﬁcation holders, including those who are necessary for business operation and those whohave advanced specialized abilities.

Support for Self-Development
Employees are oﬀered e-learning programs and business seminars on subjects like qualiﬁcations

exams, language learning, and business skills. As a means of developing global human resources, we

also have a system oﬀering subsidies to employees who achieve a standard attendance rate at English
conversation courses speciﬁed by the Company.

In addition, through our incentive system for qualiﬁcation acquisition, we encourage our employees

toward these qualiﬁcations as a means of self-development, supporting them in their self-growth anddevelopment of specializations.

Short-Term Overseas Training Program and English Training Program
We oﬀer a short-term overseas training program where employees are dispatched for around threemonths, as well as an English training program where employees attend an English conversation

school for three months. These programs are intended to develop global human resources, including
the improvement of language skills, acquisition of communication skills, experience in overseas
cross-cultural environments, and forming personal networks at the company where they aredispatched.

Standard First Aid Training
Since FY����, we have run standard ﬁrst aid training courses (including training in the use of AEDs) for
all oﬃcers and employees.

数値目標% of employees withﬁrst aid qualiﬁcations

Target %Target schedule
目標年

���％

Every year throughFY����

-51-

FY����

FY����

FY����

���％

���％

���％

Skills Development Training for Employees

Time spent and expenses incurred with regard to employee skills development training were as follows.
Item

FY����

FY����

FY����

Total hours of training (hours/year)

�,���

�,���

�,���

Hours of training per employee (hours/year)

��.�

��.�

��.�

Total training expenses (yen/year)�,���,���

�,���,���

�,���,���

Training expenses per employee (yen/year)��,���

��,���

��,���

-52-

Social Supply Chain
Basic Approach
To promote ESG-friendly initiatives throughout the value chain for the Group’s real estate portfolio,
we have established procurement policies for the Group’s major products, services, and business
partners (e.g., property management companies and building management companies).

The Group strives to build cooperative relationships by sharing information on environmental
concepts and goals to the greatest extent possible.

Excerpted from Sustainable Procurement Policy➀ Corporate Ethics/Child Labor

Policies and systems shall be established related to corporate ethics, including prevention ofcorruption from bribery. Child labor shall be prohibited.

➁ Introduction of Environmentally Friendly Operational Procedures

We shall comply with the various laws, regulations, standards, and other requirements related tothe environment and sustainability.

➂ Procurement of Environmentally Friendly Goods

When selecting goods for procurement in construction projects, the following items related toreducing environmental burden must be satisﬁed in addition to the necessary quality, functions,
economic eﬃciency, and rationality.

a. We shall strive to conserve resources and energy.

b. Reduction of environmental pollutants: We shall strive to reduce the use and emission of harmful
chemical substances, ozone-depleting substances, and other such substances.

c. Long useful lifespans: We shall explore improvements such as in durability and ease of repair andparts replacement.

➃ Respect for Human Rights and Diversity

The human rights of oﬃcers and employees shall be respected, and discrimination and harassment
shall be prohibited.

-53-➄ Procurement of Employee Health-Friendly Goods

Certain standards shall be established for the procurement of goods, including for drugs for which
use is prohibited, in consideration of employee health.

➅ Appropriate Working Environments and Health and Safety

Compliance shall be kept with laws and regulations related to labor standards, and unfair labor
practices such as forced labor shall be prohibited. Initiatives shall be implemented related toappropriate work environments and health and safety for oﬃcers and employees, including

appropriate work hour management and ensuring that holidays and vacations are provided.
➆ Employee Health and Comfort

Initiatives shall be executed in consideration of employee health and comfort. Support shall be
provided to improve employee work-life balance.

➇ Establishing ESG Requirements in Selecting External Vendors

Requirements considering sustainability shall be established in the selection of subcontractors andother external parties.

➈ Involvement in Local Communities

Initiatives shall be conducted to contribute to local communities.
➉ Building a Disaster Risk Management SystemEﬀorts shall be made to build a business continuity plan (BCP) in preparation for disasters.
⑪ Information Security

Conﬁdential and personal information shall be handled and protected appropriately.

-54-

Improving Service and Quality
The Heiwa Real Estate Group strives to provide safe, high-quality, and valuable goods and services inaccordance with a basic policy of providing comfortable and aﬄuent oﬃces and living spaces. The

Group works to ensure sound business activities and improve its services from the standpoint of its
building tenants and users, while responding to their concerns fairly and sincerely.

Maintaining and improving the quality of oﬃce building operations
Heiwa Real Estate works to ensure that the overall management and operations of its buildings aremaintained at a uniform level of high quality, and makes improvements whenever necessary. For that

purpose, it periodically compiles reports on the operational status of its oﬃce buildings together withthe companies consigned to manage the buildings, and veriﬁes that they are performing their duties
appropriately and in compliance with relevant laws and regulations. The Group also requires thesemanagement companies to report on any problems that have occurred in the buildings along with theresults of measures to rectify such problems.

Using questionnaires to ensure tenant customer’s satisfaction (CS)Heiwa Real Estate has all tenants of its oﬃce buildings complete a questionnaire on the level of theirsatisfaction. The questionnaire covers multiple aspects of building management and usage, including
elevator operations, air conditioning, cleanliness, security, and building staﬀ. The Group carries out
improvements based on the feedback and requests that it collects from tenants in an eﬀort topromptly raise the level of their satisfaction.

Consideration for the Elderly and Disabled
All properties developed by the Heiwa Real Estate Group are subject to the Act on Promotion of
Facilitation of Mobility for Elderly and Disabled Persons.

Accordingly, we incorporate barrier-free measures such as ensuring suﬃcient hallway width, installingwheelchair ramps and providing toilets for the disabled.

-55-

Organizing gatherings for tenants
Heiwa Real Estate organizes tenant forums for all of its oﬃce building tenants to provide opportunities
for them to meet and promote their businesses. The gatherings also provide valuable newopportunities for new tenants.

-56-

Maintaining Building Safety and Security
To facilitate the health and safety of tenants and employees involved in building operations, as well
as facilitate fair business practices, the Group ensures security and safety by incorporating thefollowing initiatives in the management of real estate facilities.

Holding disaster preparation and crime prevention drills
Heiwa Real Estate holds disaster preparation and crime prevention drills at its oﬃce buildings inorder to ensure safety and security for tenants. It also initiates various measures for improvingbuilding safety and security on an ongoing basis.

Business continuity planningHeiwa Real Estate has set up a notiﬁcation system for providing damage reports to the tenants of its
oﬃce buildings in the event of an earthquake or other natural disaster, and has made preparations
for alleviating the damage caused by such a disaster. Emergency food and supplies are also stored
at the buildings for tenants during times of disaster.

Ensuring the earthquake resistance of buildings
Heiwa Real Estate has assessed the earthquake resistance of all its buildings that were constructed
before Japan’s new earthquake resistance standards, and seismically reinforced almost all thebuildings deemed to fall short of those standards. The Group has also rechecked the structural
calculations of its oﬃce buildings that were built after the new standards but requiredreconﬁrmation, and veriﬁed the soundness of their structural designs.

-57-

Opposition to organized crime syndicatesIn accordance with its Code of Conduct, Heiwa Real Estate takes a ﬁrm stance against organizedcrime syndicates, which have a history of extortion in Japan’s real estate industry, and has

established rules for strictly forbidding any relationships with their members. The Group has put

procedures in place for responding to any contacts from such syndicates and refusing any attempts
by them to extort money.

Responding to Social Issues

In line with current trends, the Group promotes ﬂexible initiatives targeting tenants and local
communities in response to a variety of social issues.

Workplace Vaccinations for Tenants
In July and August ����, the Heiwa Real Estate Group implemented COVID-�� vaccinations in theworkplace for directors and employees from approximately ��� companies in �� Group-ownedbuildings located in the Nihonbashi Kabutocho and Kayabacho area. This action was taken to provide
safe, high-quality and valuable products and services to Group employees and customers amid theongoing spread of COVID-��.

Providing Facilities for People Unable to Return HomeAt KABUTO-ONE, opened in ����, the Group provides temporary waiting areas and emergency supply
stockpiles to assist people unable to return home in the event a disaster occurs.

This emergency provision contributes to enhancing local disaster prevention capabilities in theTokyo metropolitan area, where there are concerns about earthquakes and other natural disasters.

-58-

Initiatives for Shareholders and Investors
Basic Approach
The Heiwa Real Estate Group strengthens corporate governance Group-wide to earn the trust ofshareholders and other stakeholders and to manage its businesses fairly and eﬃciently. The Groupalso creates a wide range of opportunities to engage with shareholders and investors by proactively
making such eﬀorts as holding ﬁnancial results brieﬁngs and attending events for individual
investors.

Corporate GovernanceHeiwa Real Estate considers the enhancement of corporate governance an important businessissue. We strengthen Group corporate governance to earn the trust of shareholders and otherstakeholders and to manage our businesses fairly and eﬃciently.

Corporate Governance＞

Promoting Constructive Dialogue
Approach to information disclosure
In accordance with its Disclosure Policy, Heiwa Real Estate aims to disclose accurate information in

an impartial and timely manner in order to facilitate investment decisions among shareholders andinvestors. In compliance with relevant laws and regulations, the Group proactively provides detailsof its management strategies and ﬁnancial results, which promotes better understanding of its

business activities. The Group also promptly provides information that falls outside the scope oftimely disclosure regulations and related laws on its website when such information is deemeduseful for investment decisions by shareholders and investors.

Disclosure Policy

-59-

＞

Presentations for Individual Investors
Heiwa Real Estate proactively engages in IR events for individual investors to provide them withdetailed information about the Group. Speciﬁcally, it participates in the Tokyo Stock Exchange’s IR
Festival, the Nagoya Stock Exchange’s IR Expo, the Nikkei IR and Investment Fair, the Nomura IR

Asset Management Fair, and other conferences and seminars targeting individual investors, thereby
creating opportunities for many people to learn more about the Group. Heiwa Real Estate intends
to further expand its IR activities for individual investors in the future.

＞
Brieﬁng Sessions for Institutional Investors and Analysts
Twice annually, Heiwa Real Estate holds brieﬁng sessions on its interim and ﬁscal year-end ﬁnancial
results primarily for institutional investors.

Business Result Presentations

-60-

＞

Dividend Policy and Shareholder Bonus Program
Dividend Policy
The Group strives to suitably reward shareholders by paying dividends twice a year (an interim＞

dividend and a year-end dividend).

Paid and Planned Dividends＞

Shareholder Bonus ProgramHeiwa Real Estate has set up a shareholder bonus program to show appreciation for the ongoingsupport of its shareholders.

Shareholder Beneﬁts

-61-

＞

Community Initiatives
Basic Approach
Heiwa Real Estate will help to address social issues through activities consistent with sustainability
matters (materiality) by every single member of our company working, as members of society, tobuild sustainable societies based on our corporate philosophy.

Materiality-62-

Nihonbashi Kabutocho and Kayabacho Revitalization ProjectAs “a company that contributes to revitalizing districts,” the Group strives to help our society become

more sustainable while also improving corporate value, by increasing satisfaction through interactive
communication with stakeholders and providing solutions to environmental and social issues.
In the Redevelopment Business, we will cooperate with various stakeholders to promote

contributions to local communities, improved disaster preparedness, and reduced environmental
impacts.

Since the Meiji Era, Kabutocho has been particularly known as an entrepreneurial district forinvestment and securities, a stage for modern innovations, the gathering of investors and theexchange of various information. In light of this historical background, we announced the concept ofcreating a district where people connect, and where investment and growth are born with the aim ofrevitalizing the essence of Kabutocho by integrating Kabutocho’s potential with neighboring district
functions.

Contributing to the Tokyo metropolitan government’s“Global Financial City: Tokyo” Vision
Heiwa Real Estate has proposed three concepts to the Tokyo metropolitan government for improving

the securities trading and ﬁnancial performance of the Nihonbashi Kabutocho and Kayabacho district.
At each stage of its redevelopment of the area, the Group has incorporated innovative ﬁnance-related
initiatives aimed at raising Tokyo’s status as an international ﬁnancial center in step with thegovernment’s vision to make it a global ﬁnancial city. In these ways, the Group is playing a role inrealizing the “Global Financial City: Tokyo” Vision by paving the way for the entire district’s future.

-63-

Initiatives to Add Appeal in the“Global Financial City: Tokyo” Vision＞

KABUTO ONEKABUTO ONE will introduce functionality to the district consistent with the “global ﬁnancial city”

vision, fostering information sharing and talent development in the ﬁnancial industry and promoting
dialogue and communication between investors and companies. KABUTO ONE will contribute to thevision as well as furthering the development and appeal of the entire region.

Facing the intersection of Eitai-dori and Heisei-dori, the KABUTO ONE’s atrium is about �� m high and isdesigned with a three-story glass wall. The atrium symbolizes the ﬁnancial base as a regional gateway
and will be an “icon” of the Japanese ﬁnancial capital market. Using the open space in the atrium,

KABUTO ONE features the world’s largest LED video cube called “The Heart,” to display market energy
and trends in a visual and spatial manner.

The lower ﬂoors (�st ﬂoor and basement) will be used mainly for food and beverage outlets to create acontinuously bustling atmosphere by converting them into street-level stores, while middle ﬂoors (�rdand �th ﬂoors) will be used for conferences and a book lounge facilitating dialogues and exchanges

among investors and businesses, helping to maintain the bustle of the area through the creation of aspace where people are able to remain engaged with the community.
-64-Book Lounge Kable

KABUTO ONEKABUTO ONE HALL & CONFERENCE

Building Name Concept

Kabutocho has prospered as the heart of the Japanese economy since the Edo period and has
grown into one of the world’s leading economic areas.

The KABUTO ONE development has been named as such to reﬂect the idea that Kabutocho
was, and will continue to be the starting point for the Japanese economy.

-65-Project Overview
Address

�-�, Nihonbashi Kabutocho, Chuo-ku, Tokyo

AccessDirect access to Kayabacho Station on Tokyo
Metro’s Tozai and Hibiya lines

Main uses

Oﬃces, shops, meeting rooms, conference rooms, parking

Number of ﬂoors

�� above-ground ﬂoors, � basement ﬂoors, � penthouse ﬂoors

Structure

Above ground: Steel construction; Basement:
Steel-reinforced concrete (SRC) construction (steel construction inparts); intermediate layer seismic isolation structure

Total ﬂoor area

Approx. ��,���m�

Owner/Developer
Design/Supervision
Construction

Heiwa Real Estate Co., Ltd. Yamatane

Corporation, Chibagin Securities Co., Ltd.
(Design/facilities) Mitsubishi Jisho Sekkei Inc.
(Structure) OBAYASHI CORPORATIONOBAYASHI CORPORATION-66-

The HEART“The HEART” is one of the world’s biggest digital signage installed in the atrium inside “KABUTO ONE.”“The HEART” was designed in the image of the “heart” of ﬁnancial and economic district Nihonbashi

Kabutocho and installed in the hope of turning it into a symbol of the region as a new face of the capital
market.

Membership in the Consortium for Japan International AssetManagement Center Promotion (JIAM)

Heiwa Real Estate is a member of the Consortium for Japan International Asset Management Center
Promotion (JIAM), which was established in October ���� for the purpose of improving theinternational competitiveness of Japan’s asset management industry. Other members include theJapan Securities Dealers Association, Investment Trusts Association, Japan Investment Advisors

Association, and Japan Exchange Group, Inc. The consortium works to attract foreign investment in theindustry by participating in various conferences and events, including seminars organized by the Tokyo
metropolitan government intended to establish Tokyo as a global ﬁnancial city.

JIAM
-67-

＞

Developing FinGATE Brand
In support of the “Global Financial City: Tokyo” vision, we will revitalize Nihonbashi Kabutocho andKayabacho to support the growth of start-ups such as ﬁntech companies. We will also develop ﬁve
oﬃce buildings as a new ﬁnancial center for the district called FinGATE.

FinGATE KABUTOFinGATE KAYABAFinGATE BASE

FinGATE TERRACEFinGATE

-68-

＞

K�
Designed based on the concept of revitalization, K� is a ﬁve-ﬂoor commercial building housing a small

hotel along with restaurants, a bar and a café. The building was constructed in ���� and later acquiredby Heiwa Real Estate. The exterior had been covered with steel panels since the ����s, but research
conﬁrmed that the structure was originally owned by The First National Bank, Japan’s ﬁrst bankestablished in ���� by Eiichi Shibusawa, commonly known today as the “father of Japanese

capitalism,” and was the annex of the bank’s third-generation building. The building was designed by
Yoshitoki Nishimura, who was one of Japan’s top architects specializing in banks at that time.

Aiming to not only raise the building’s property value but also enhance the value of the neighborhood,
Heiwa Real Estate restored the building’s exterior to its original appearance, recapturing its charm formodern-day use. Following the exterior restoration and repair work, the building was reborn as K�.
This was part of the ﬁrst project of the Company’s Nihonbashi Kabutocho and Kayabacho
Revitalization Project.

Kabutocho Heiwa Bldg. No. � Exterior-69-

Creating districts with diversity
The atmosphere of the district has been updated after K�, which was opened in February ����, byinviting unique and attractive restaurants and stores. Commercial facilities that we have invited forstrategic town-building have reached a total of �� with the opening of BANK and Keshiki in December

����. The number of monthly visitors to commercial facilities invited based on our strategy increased
from approx. ��,��� (as of April ����) to approx. ��,��� (as of March ����).

-70-

Community-based Initiatives
Bringing prosperity to Osaka’s Kitahama district
Opening of the Kitahama Terrace

Heiwa Real Estate created a buzz in the Kitahama area of Osaka with its opening of theKitahama Terrace, a riverside commercial complex connected to the Kitahama �-Chome Heiwa
Building and Heiwa Real Estate Kitahama Building.

Holding exciting events in the Osaka Securities Exchange Building atrium

As part of its eﬀorts to revive the Kitahama area, the Group has been holding various events inthe atrium of the Osaka Securities Exchange Building, including public telecasts of the Osaka

Women’s Marathon, classical music performances by the Osaka Philharmonic Orchestra, andsummer holiday economics seminars for parents and their children, sponsored by Osaka
Securities Exchange.

Our Achievements Osaka (Kitahama)

-71-

＞

Creation a thriving neighborhood at Sakae, Nagoya.
The Kitahama district of Osaka is, like Nihonbashi Kabutocho in Tokyo, home to many brokerage ﬁrms.
When rebuilding the Osaka Exchange, we decided to endow it with symbolism so it would act as thecatalyst for Kitahama’s transformation into an even more vibrant neighborhood.

Our Achievements Nagoya (Sakae)＞

Participation in urban development projects in Sapporo and Fukuoka
Activities in Sapporo

Heiwa Real Estate owns and operates several buildings in the city of Sapporo, including the
Dogin Building, Shin-Odori Building, and Sapporo Ekimae Godo Building. The Group, alongwith other local businesses and land owners, has joined an urban planning committee thatwas set up to examine the full-scale redevelopment of the district in which the Sapporo Ekimae
Godo Building is located.

Activities in Fukuoka

The Group owns and operates several buildings in the Tenjin district of the city of Fukuoka,

including the Fukuoka Shoken Building, Fukuoka Heiwa Building, and Tenjin Heiwa Building.

The Group has joined an urban planning consortium of local businesses and land owners thatwas established to completely redevelop a ��-hectare area surrounding Tenjin Meiji-doriAvenue, a project now underway and approaching an important new stage.

-72-

Corporate Initiatives
Involvement in community events
Participation in the Sanno Festival

The Group participates in the Sanno Festival, one of the three major festivals of Tokyo since
the Edo era, by collaborating with the neighborhood association in carrying a mikoshi(portable shrine) through the streets of Nihonbashi Kabutocho. The participation of numerous
local companies has vitalized the Nihonbashi Kabutocho and Kayabacho district. We willcontinue to deepen interaction with local residents by actively participating in community
events.

Cleanup events in Nihonbashi Kabutocho

The Group participates in cleanup events in the Nihonbashi Kabutocho district in cooperation
with local businesses and the local neighborhood association.

-73-

Trees donated to Chuo Ward for lining streets in Nihonbashi Kayabacho

The Group gifted boulevard trees (�� dogwood trees) to the district of Nihonbashi Kayabachoin Tokyo’s Chuo Ward, which was targeted by the landscape improvement and boulevard tree
planting project that the Chuo Ward government promoted for ����.

Placement and Exhibition of the Red Stone from Sado in Connection with
Old Eiichi Shibusawa
In ���� when Eiichi Shibusawa, who is known as the father of capitalism in Japan, built his
Kabutocho house in the place where the Nisshokan Building, in which our headquarters

resides, is currently located, he placed the Red Stone from Sado there as a histric stone to wish
for the development of Japan’s economy. In ����, as one of the activities to mark the ��thanniversary project, we will exhibit the Red Stone from Sado in the Nihonbashi Kabutocho
district for the ﬁrst time in ��� years.

-74-Community Networking and PR Initiatives
CAFE SALVADOR BUSINESS SALONThe Group has been operating the Cafe Salvador Business Salon on the ﬁrst ﬂoor of the Tokyo

Shoken Kaikan Building in the Nihonbashi Kabutocho and Kayabacho district with the goals ofbringing energy and prosperity to the area and creating a venue for sharing news about the
district’s redevelopment.

Kabuto Live! website

Heiwa Real Estate launched and operates a community website for the Nihonbashi Kabutocho
and Kayabacho district. Through the website Kabuto Live! (https://kabuto-live.com/), theGroup contributes to the area’s revitalization by publishing information about local events andthe culture of the Nihonbashi Kabutocho and Kayabacho district, which developed as Tokyo’s
ﬁnancial center. The site helps bring energy to the area by providing people with information

on various opportunities to learn about building an asset portfolio as well as news of businessmatching and other events.

-75-

Kabutocho and Kayabacho featured in Tokyojin magazine

The Group produced supplementary book on the excitement of the Kabutocho and Kayabacho district
for Tokyojin, a Japanese-language monthly magazine. The feature was written to promote the history
and attractions of the area, relay the desires of local residents to share stories and preserve theneighborhood, and explain how the district is playing a role in making Tokyo a global ﬁnancial city.

Support for Social Contributions
Helping Healthcare Professionals and Clinical Settings Manage COVID-��
To stop the spread of COVID-��, we continue to work on initiatives to prevent infections, including

working from home for oﬃcers and employees, use of teleconferencing and other online systems, anda switch to digital processes for internal administration, as well as building management procedures
to ensure the health and safety of tenants and local communities.

To help healthcare professionals and clinical settings manage COVID-�� and the global threat it poses,
we donated ¥�� million to the Japan Medical Association in February ����.

Support for Employee Involvement in Social Programs

We have established systems to help employees get involved in social programs. For example, we have
set up a new category of special leave called Volunteer Leave. Under this system, employees canaccumulate their annual leave and take long periods of leave for the purpose of working on volunteer
programs.

-76-

Human Rights and Labor Standards
Human Rights Policy
Heiwa Real Estate Group considers respect for human rights to be a basic requirement for business

continuity, and we comply with laws and ordinances on human rights for workers in all countries where
we operate. We also support and respect international treaties on human rights, including theInternational Bill of Human Rights, which includes the Universal Declaration of Human Rights and othercovenants; the International Labor Organization’s (ILO) Declaration on Fundamental Principles andRights at Work; and the UN Guiding Principles on Business and Human Rights.

We formulated the Heiwa Real Estate Group Human Rights Policy in December ���� and will work to
implement human rights initiatives in line with this Policy.

Heiwa Real Estate Group Human Rights Policy

The Heiwa Real Estate Group Human Rights Policy (the Policy) clariﬁes the Company’s position onhuman rights as they pertain to our business activities. As a corporate citizen, we respect humanrights in our activities in line with the Policy.

We expect all stakeholders in our business to understand and put into practice this respect forhuman rights described in the Policy and aim to work collaboratively with stakeholders to promoterespect for human rights.

�.Prohibition of Discrimination

Heiwa Real Estate does not discriminate on the basis of nationality, race, religions, beliefs, ideas,
gender, age, sexual orientation, and disability.
�.Prohibition of Harassment

The Group prohibits sexual harassment, power harassment, and any other forms of harassment in
the workplace. We will not tolerate any harassing behavior including verbal and physical actions.
�.Prevention of Forced Labor

The Group prohibits all forms of forced labor and works to prevent this.
�.Prevention of Child Labor

We support and are implementing programs to eﬀectively abolish child labor.

-77-

�.Prevention of Overwork and Reduced Overtime

We strive to prevent employees from overworking and reduce overtime, in order to promote

work-life balance and help employees lead healthy lifestyles. In Japan, we also observe the “��agreement” (named after Article �� of the Labor Standards Act, this provision states that any workin excess of � hours a day or �� hours a week, or on holidays, requires an advance writtenagreement between the employer and the relevant labor union).

�.Employee Health and Safety

We aim to create workplaces where employees can work safely and in good health, following laws
on labor standards and other laws and ordinances in all countries and regions.

�.Respect for Freedom of Association and the Right to Collective Bargaining

Heiwa Real Estate respects the rights of employees regarding freedom of association and collective
bargaining.

�.Wage Payments above the Minimum Wage

We pay wages that are above the minimum wage, in line with labor laws and ordinances and toensure employees have stable living conditions.

Formulated December 2021

Major Initiatives
Disseminating the Company Policy on Labor Standards
We are working to disseminate the Heiwa Real Estate Human Rights Policy by translating the Policy into
English, sharing the contents within the Company, and making the Policy available for externalaudiences on our company website.

In FY����, there were no violations of applicable laws, regulations, or Company rules and policies in the
Company’s business, services, or transaction methods.

Oﬀering traineeships or internships and implementing initiatives to improveyouth unemployment rates and to employ people who lack opportunities,
including those without formal training or qualiﬁcations or of low social
statusHeiwa Real Estate runs an internship program to give students opportunities that allow them to makebetter career choices. The program is open to university undergraduate and postgraduate students.
-78-

Risk Assessment for Labor Issues

Heiwa Real Estate recognizes that working conditions in the real estate industry are an important

human rights issue, particularly measures put in place to prevent workplace accidents during contract
work. We work to prevent all sorts of risks that we have identiﬁed as priority concerns, through dialog
with our suppliers and other business partners.

Equal Opportunities for Work
(Action to reduce discrimination, improve equal opportunities, and ensure adiverse workforce that does not discriminate on the basis of race, religion,
gender, age, sexual orientation, disability, or nationality)

Through our human rights initiatives that are based on our Corporate Code of Conduct, Standards for
Behavior for the Heiwa Real Estate Group, and Heiwa Real Estate Group Human Rights Policy, we

actively and voluntarily fulﬁll our social responsibilities and educate all our employees to have a correctunderstanding and awareness of human rights issues.

Speciﬁc initiatives include ongoing training and e-learning sessions covering the various types ofharassment and discrimination, including sexual harassment and power harassment. We have alsoestablished a compliance hotline and external reporting desk to allow internal and external parties toreport and discuss issues like harassment.

Human Rights Impacts and Risk Assessments

We work to ensure the human rights are respected for all stakeholders involved in our business activities,

including those involved in actual projects as well as local communities. We achieve this through ongoingrisk assessments of human rights compliance in both new project proposals and existing businesses,
following the procedures set out in our company’s risk management processes.

Human Rights Policy

Support for International Initiatives

The Heiwa Real Estate Group supports and respects the OECD Guidelines for Multinational Enterprises,
International Labor Standards, and the UN Guiding Principles on Business and Human Rights.

In December ����, the Group also announced its support for the United Nations Global Compact. Basedon the �� Principles derived from the UN Global Compact focus on human rights, labor, environment andanti-corruption, the Group will promote responsible management and contribute to the realization of asustainable society.

-79-The �� Principles of the UN Global Compact
Human
Rights

•
•
•

Labor

•
•

Principle 1: Businesses should support and respect the protection ofinternationally proclaimed human rights; andPrinciple 2: make sure that they are not complicit in human rights abuses.
Principle 3: Businesses should uphold the freedom of association and theeﬀective recognition of the right to collective bargaining;
Principle 4: the elimination of all forms of forced and compulsory labour;
Principle 5: the eﬀective abolition of child labour; and•Principle 6: the elimination of discrimination in respect of employment andoccupation.

•

Principle 7: Businesses should support a precautionary approach toenvironmental challenges;

Environment•

AntiCorruption••

Principle 8: undertake initiatives to promote greater environmental
responsibility; andPrinciple 9: encourage the development and diﬀusion of environmentallyfriendly technologies.
Principle ��: Businesses should work against corruption in all its forms, including
extortion and bribery.

United Nations Global Compact

-80-

＞

Human Rights Training
We use e-learning programs and other methods to educate all oﬃcers and employees on human rights, inorder to further understanding of respect for human rights and elimination of discrimination.

In ﬁscal ����, we ran e-learning training programs and seminars by legal experts on preventing power
harassment.

We also uploaded compliance-related regulations, such as the Standards for Behavior for the Heiwa Real
Estate Group, on the Company intranet to spread awareness of how to eliminate discrimination andharassment.

Due Diligence on Human Rights
We are considering the introduction of due diligence processes for human rights and are engaging withongoing initiatives.

As set out in our Sustainable Procurement Policy that was formulated in March ����, we require ourbusiness partners to comply with various sustainability matters, including human rights.

Discussing and Reporting Human Rights Issues
Based on our Internal Reporting Regulations, we have set up a compliance hotline within the Group to
ensure that, as a company, we are quickly made aware of instances of organizational or individual

misconduct or violations of laws and ordinances and implement corrective measures. This system also
promotes compliance with Group ethics and laws and ordinances. An internal or an external reporting

desk can be selected when reporting any issue, in order to protect those using the compliance hotline andensure users understand they can contact the Hotline at any time without negative consequences.

To ensure fair dealings with our corporate business partners, we have established an external reporting
desk where people can report issues relating to non-compliance or suspect behavior by Group oﬃcers
and employees. By setting up multiple points of contact in this way, we are working to create anenvironment that promotes discussion, where issues can be identiﬁed at an early stage and quickly
resolved, and where measures can be put into place to prevent recurrence.

•••

Initiatives to Reduce Overtime Work
Established “No Overtime Day”

Pre-approval system for overtime

Understanding of work hours, and raising employee awareness regarding overtime-81-

Prevention of Child Labor and Forced Labor
There have been no incidents of child labor or forced labor as of this writing.

To prevent any future incidents, we are thorough in maintaining compliance with laws and regulations
and conduct monitoring of our operations.

Wage Management
We comply with minimum wage regulations in each country and pay wages that exceed these levels. An

employee’s age or gender makes no diﬀerence to the wages that we pay. We continue to keep abreast of
our compliance with laws and ordinances and manage our wages to accurately reﬂect the hours worked
and overtime completed.

Our average annual salary for ﬁscal ���� was ¥��.�� million.

Eﬀorts to Ensure Diversity

In order to increase corporate value over the medium and long term, we strive to provide workplaceenvironments where a diverse pool of talent, including both new graduates and mid-career recruits, canmaximize their abilities and actively participate regardless of their race, religion, nationality, gender, or

sexual orientation. We evaluate employees according to their individual abilities, not personal attributes,
when deciding promotions to managerial roles and our basic policy is to be inclusive of diversity. Under
this basic policy, we employ both new graduates and mid-career recruits.

Building Positiv e Relationships between Labor and Management

Our Code of Conduct and Heiwa Real Estate Group Human Rights Policy specify our respect for humanrights in terms of freedom of association and guaranteed collective bargaining rights, as well as equal
employment opportunities for all employees.

We also work to build positive relationships between labor and management, for example throughcompliance questionnaires and interviews with those in managerial positions as appropriate.

-82-

Data
Item

FY����

FY����

FY����

FY����

% of staﬀ turnover(leaving for personalreasons only)

�.�%

�.�%

�.�%

�.�%

��hours��hours��hours��hours

��.�years

��.�years

��.�years

��.�years

Average overtime
hours worked

Average length of service

Number of workplace accidents
To ensure the safety of our employees, each ﬁscal year we set a target of zero deaths from workplace
accidents.

Item

FY����

FY����

FY����

FY����

TargetNumber ofworkplace accidents

１

�

�

�

-

Number of deaths

�

�✓

�✓

�

� each ﬁscal
year

Number of working
days lost

�

�

�

�

-

Data marked with ✓ are guaranteed by a third party.
Note: Accidents logged for all employees, including contract workers-83-Governance> Basic Approach> Corporate governanceprinciples> Corporate Governance
System> Compensation of Directors
and Oﬃcers> Cross-Shareholdings> Compliance> Basic Policy> Compliance Hotline> Prevention of Corruption
and Bribery> Compliance System> Compliance Training> Combating Anti-Social
Forces> Information Security> Proper Information
Disclosure and Dialog with
Shareholders> Corporate Governance
Guidelines> Basic Policy on Controllers
for Company Financial andBusiness Policymaking> External Directors> Internal control systems-84-> Risk Management Systems

Basic Approach and Corporate
Governance System

Basic approach to corporate governanceCorporate governance is a top priority for us.

We strive for rigorous corporate governance across the group so that we can earn the trust of ourshareholders and other stakeholders and conduct our business impartially and eﬀectively.

Corporate governance principles
We have established the following corporate governance principles, which reﬂect the principles ofJapan’s Corporate Governance Code.

�.We protect the rights and ensure the equitable treatment of all shareholders. We strive to create aclimate in which all shareholders can duly exercise their rights.

�.We recognize that our sustainable growth and mid-to-long-term value depend on us engaging andcooperating with stakeholders, including our shareholders, employees, customers, trading partners,
creditors, and the local communities we serve. We foster a corporate culture that respects
stakeholder rights and emphasizes sound business relationships with them.

�.We disclose ﬁnancial and non-ﬁnancial information when required to do so by law. Even whendisclosure is not mandated, we voluntarily disclose any information that could aﬀect the investment
decisions of shareholders or other investors.

�.We understand that members of the Board of Directors are accountable to shareholders. To promotesustainable growth and enhance mid-to-long term corporate value, the board provides eﬀective
oversight of the management, ensuring that the management takes reasonable risks and that it
contributes to the company’s proﬁtability.

�.To promote sustainable growth and enhance mid-to-long term corporate value, we actively engage
in constructive dialogue with shareholders and other stakeholders. To earn stakeholders’ support
and conﬁdence, members of the Board of Directors actively listen to stakeholders and relay their

feedback to the management, while ensuring that our corporate strategy is clear and transparent tostakeholders.

-85-Corporate Governance System-99.863 mm

�.Board of Directors

The Board of Directors consists of nine (�) directors (including one (�) female director) and is chairedby the executive oﬃcer, president and CEO.

The Board of Directors decides on basic policies of management and supervises business execution
by directors and executive oﬃcers.

The Board of Directors passes resolutions on the matters speciﬁed under laws and regulations andthe Regulations of the Board of Directors’ meetings and delegates the execution of other business tothe executive oﬃcers.

The number of members of the Board of Directors is limited to eleven (��) as stipulated in the Articles
of Incorporation, and a majority of these are independent external directors.

When appointing directors, in addition to considering diversity of gender and size, the Company will
appoint directors in consideration of appropriate combination according to the businessenvironment and business characteristics, after identifying required skills, etc. regarding theknowledge, experience, abilities, etc. that directors should have in light of the Company’s

management strategy. In addition, the Company has set a rule that external directors shall include
those who have management experience at other companies.

-86-

[Skillmatrix]
CandidateforDirector
Kiyoyuki
Tsuchimoto
Kazuo
YamadaTakahisa
AoyamaDaisuke
Kobayashi
Kiichiro
Masui

Corporate

Financialmentaccounting

managesecurities

Planning /

●

sales

●

●

●

●

●

●

●

●

●

●

DX / IT●●

Eiji
Yamada★Chairperson

national

perspective

Finance /●●Mitsunobu
Yamaguchi

aﬀairsInter●

TakahiroMoriguchi

Junko
Utsunomiya

aﬀairs /Legal

Nominating

●

★

●

●

●
●

●

Compensation

●

●

●

●

Audit

●

●

●

Committee to be appointed

★
●

●

●
★

*This list does not indicate all of the skills possessed by each candidate for Director.

�.Nomination Committee

The Nominating Committee is composed of three (�) or more committee members chosen by the
Board of Directors, and from the viewpoint of ensuring independence and objectivity, thechairperson of the Committee shall be an external director.

The Nominating Committee decides on the content of proposals related to election and dismissal of
directors to be submitted to the general shareholders’ meeting, and formulates the standards forelection and dismissal of directors.

The Nominating Committee expresses opinions regarding the matters relating to the election anddismissal of executive oﬃcers and the succession plan for the executive oﬃcer, president and CEO
upon consultation with the Board of Directors or with the executive oﬃcer, president and CEO.

The Company will disclose the reasons for the election and dismissal of the senior top management
and the election, dismissal and appointment of the individual candidates for directors upon theelection, dismissal and appointment thereof.

-87-�.Audit Committee

The Audit Committee is composed of three or more committee members chosen by the Board of

Directors, and from the viewpoint of ensuring independence and objectivity, the chairperson of theCommittee shall be an external director. Furthermore, from the perspective of enhancing the audit
function, a statutory Audit Committee member will be selected.

The Audit Committee audits business execution by directors and executive oﬃcers, prepares audit
reports, and decides on the content of proposals related to appointment, dismissal andnon-reappointment of independent auditors.
�.Compensation Committee

The Compensation Committee is composed of three (�) or more committee members chosen by the
Board of Directors, and from the viewpoint of ensuring independence and objectivity, thechairperson of the Committee shall be an external director.

The Compensation Committee decides on policy related to decisions on the content ofcompensation, etc. for directors and executive oﬃcers individually, and decides on the content ofcompensation, etc. for directors and executive oﬃcers individually.
�.Meeting of Executive Oﬃcers

The Meeting of Executive Oﬃcers shall consist of Five (�) executive oﬃcers. Its agenda is managed by
the executive oﬃcer, president and CEO. In addition to executing important business operations, it
conducts prior deliberation on matters to be submitted to the Board of Directors.

�.Management Conference

The Management Conference consists of the executive oﬃcer, president and CEO and executiveoﬃcers, with its agenda managed by the executive oﬃcer, president and CEO. It discusses the
direction of the Company’s management strategy and other matters.

�.Sustainability Committee

The Company has established the Sustainability Committee, which consists of the executive oﬃcer,
president and CEO as the chairperson, executive oﬃcers, managing oﬃcers and the heads of eachdepartment as the committee members, with the aim of smoothly promoting measures for thepractice of sustainability management.

By monitoring the plan-do-check-act (PDCA) cycle for sustainability initiatives, the Sustainability
Committee acts to increase the eﬀectiveness of sustainable management.
�.Risk Management Committee

The Company assigns the executive oﬃcer, president and CEO as oﬃcers of primary responsibility forrisk management, and has established the “Risk Management Committee” that consists of executiveoﬃcers, managing oﬃcers and general managers and endeavors to appropriately grasp the overallrisk of the Company Group and deal with any risks that are emerged.
-88-Members of the Board of Directors and their Committee Memberships
Name

Position

Board ofDirectors

Nomination
Committee●

Kiyoyuki
Tsuchimoto

Director★

Takahisa
AoyamaDirector●

Director●

Director●

External Director●★

External Director●●

External Director●●

External Director●

External Director

●

Kazuo
YamadaDaisuke
Kobayashi
Kiichiro
Masui

TakahiroMoriguchi

Junko
Utsunomiya
Eiji
YamadaMitsunobu
Yamaguchi

Audit
Committee

Compensation
Committee
●

●

★
●
●
★

(Note)★ Indicates the chair of each organization, and ● indicates its members-89-Members of the Meeting of Executive Oﬃcers and their Committee Memberships
Name

Position

Kiyoyuki
Tsuchimoto

Executive Oﬃcer,
President and CEO

Tomoharu
Nakao

Managing Executive
Oﬃcer

Kazuo
YamadaNobuhiro
Seo
Takahisa
AoyamaRepresentative and Senior
Managing Executive Oﬃcer

Meeting ofCorporate
ExecutiveOﬃcersManagement
Conference

★

★

★

★

●

●

●

●

●

●

●

●

Risk
Sustainability
Management
Committee
Committee

Executive Oﬃcer

●

●

●

Executive Oﬃcer

●

●

●

(Notes) �.★ indicates the chair of each organization, and ● indicates its members.

�.The Sustainability Committee and the Risk Management Committee are composed of themembers indicated in the table above, as well as managing oﬃcers and heads of department.

Compensation of Directors and Oﬃcers
�.Basic approach

・ Compensation for directors, executive oﬃcers, and managing oﬃcers (hereinafter referred to as“executive compensation”) shall be provided under the following basic approach in accordance withthe principles of the Corporate Governance Code so as to carry out our management policy.

(i) Motivate employees to enhance business performance over the medium to long term andcorporate value(ii) Share value with shareholders(iii) Establish standards and systems contributing to retaining talented personnel(iv) Establish decision-making processes ensuring ample objectivity and transparency

・Executive compensation consists of ﬁxed compensation as basic remuneration, bonuses as

short-term incentives, and performance-linked stock remuneration as medium- to long-term
incentives.

・Directors who concurrently serve as executive oﬃcers shall only receive compensation for executiveoﬃcers.

・Compensation for directors (excluding those concurrently serving as executive oﬃcers) and managing
oﬃcers on special appointment managing the secretariat of the Audit Committee shall solely consistof basic remuneration in consideration of their roles and other factors.

-90-

�.Policy on determining individual basic remuneration amount (monetary remuneration) including

policy on determining remuneration timing and conditions
・Basic remuneration shall be determined through comprehensive consideration of the signiﬁcance ofroles and scope of responsibilities for each position, as well as performance and other factors,
founded in the executive compensation system.

・Basic remuneration shall be paid in ﬁxed monthly compensation.
�.Policy on determining performance-linked remuneration and non-monetary remuneration details

and amount, as well as method for calculation (including policy on determining remuneration timing
and conditions)(�) Bonuses

・Bonuses are paid in cash in June each year as a short-term incentive to raise awareness of the need to
improve performance in each ﬁscal year.

・Bonuses are calculated by multiplying a base amount determined in accordance with position by acoeﬃcient determined in accordance with the achieved level of net income attributable to owners ofparent. This amount is then added to the multiplicative product of the monthly ﬁxed compensationfor each position and a coeﬃcient determined in accordance with an evaluation of each individual(including ESG evaluation). The coeﬃcient for net income attributable to owners of parent shall be
adjusted within the range of �% to ���%, while the coeﬃcient for individual evaluation (including
ESG evaluation) shall be adjusted within the range of �% to ���%. However, the executive oﬃcer,

president and CEO shall not be paid compensation based on individual evaluation or the associatedmonthly ﬁxed compensation for each position.

・The Compensation Committee has the authority to forgo or reduce bonus payments in cases where
an executive oﬃcer or managing oﬃcer has been dismissed or where they have caused damage to
the Company intentionally or through gross negligence, etc.

・Bonuses for managing oﬃcers shall be determined in the same manner as bonuses for executiveoﬃcers.

(�)Performance-linked stock remuneration

・Performance-linked stock remuneration shall be paid as medium- to long-term incentives, consistingof a ﬁxed portion and a performance-linked portion.

・The ﬁxed portion is determined based on position, while the performance-linked portion isdetermined based on the achievement level of performance conditions, stock price level, and otherfactors.

・The ﬁxed portion is designed to strengthen sharing value with shareholders, while theperformance-linked portion is designed to motivate employees to enhance corporate value over the
medium- to long-term, as well as business performance, and to strengthen the linkage between
business performance and compensation.

・In principle, shares shall be paid at the time of retirement of eligible executive oﬃcers and managing
oﬃcers using a stock compensation trust.

-91-

Standard for calculating performance-linked stock remuneration

・In the interest of improving performance over the medium- to long-term, evaluation indicators usedin the performance-linked portion shall be consolidated operating income, a straightforward
indicator of the earning power of our core businesses, and total shareholder return (TSR), an
indicator of shareholder return provided as a result of increased corporate value.

・Stock remuneration in the performance-linked portion shall be determined by adjustments within therange of �% to ���% for each of the achievement level of consolidated operating income versus
performance targets and relative evaluation of TSR versus stock indices, respectively.

・The details shall be stipulated in the Share Beneﬁt Regulations determined by a resolution of theCompensation Committee.

�.Policy for determination of the ratio of monetary remuneration, performance-linked remuneration, or
non-monetary remuneration as a share of total individual director (excluding managing oﬃcers)
remuneration.

・The ratio of each type of remuneration for executive oﬃcers (including those concurrently serving as

directors) shall be determined by the Compensation Committee based on the remuneration levels at
peer companies and other factors. The following presents general guidelines for ratios when
performance targets are achieved.

Performance-linked
stock remuneration

Item

Fixed compensation

Bonuses

Purpose

Basic remuneration

Short-term incentive

Ratio of totalcompensation(Guideline)

Medium- to long-term
incentive��％‒��％��％‒��％��％‒��％・Compensation for directors (excluding those concurrently serving as executive oﬃcers) shall solely

consist of basic remuneration in consideration of their roles and other factors. There is no policy for
determination of the ratio of monetary remuneration, performance-linked remuneration, or
non-monetary remuneration as a share of total individual remuneration.

-92-

Cross-Shareholdings
The Company maintains cross-shareholdings to strengthening business relationships, as well as tofacilitate ﬁnancial activities and to strengthen business alliances considered to be beneﬁcial for
medium- to long-term business development.

Every year, the Board of Directors veriﬁes the appropriateness of individual cross-shareholdings inoverall consideration of yields and capital costs, as well as whether they are useful for medium- tolong-term business development and are in line with Company objectives including strengthening
business relationships, facilitating smooth ﬁnancial activities and enhancing business alliances.

If, as a result of this veriﬁcation, holdings are determined to be inappropriate, they are reduced throughdisposal by sale after considering for share prices and market trends.

The Company deliberates on each proposal regarding the exercising of voting rights from theperspective of the issuing company’s prospects for sustained growth, corporate value enhancement
over the medium- to long-term and increased shareholder value, while conﬁrming that the issuing

company has not engaged in any anti-social acts, been involved in major scandals and that there are noserious concerns regarding corporate governance.

In addition, the Company thoroughly investigates the appropriate reasons, objectives, and otherfactors regarding proposals that have the potential to aﬀect corporate value and shareholder value,
and then determines whether or not to grant approval.

Proper Information Disclosure and Dialog with Shareholders
�.The Company announces the “Policies for the Establishment/Improvement of and Initiatives for the
System to Promote Constructive Dialog with Shareholders” approved by the Board of Directors.

�.The department in charge of IR ensures information control to prevent the leakage of unannounced
important insider information outside the Company through dialog according to the regulations forthe control of insider information and the prevention of insider trading.

�.To promote sustainable growth and enhance the corporate value in the medium and long term, theCompany sets and publishes medium- and long-term goals for capital eﬃciency, etc. after

accurately grasping the capital cost when the Company formulates management strategies andmanagement plans and works to achieve the goals and explains its eﬀorts to that end toshareholders and others.

�.From the perspective of sustainable growth and enhancement of corporate value in the medium

and long term, the Company has set up its basic policy to carry out appropriate business portfolio
management in order to optimize the business portfolio and create synergies.
-93-Corporate Governance Guidelines
A guideline describing the framework of corporate governance.
＞Corporate Governance Guidelines（PDF：���KB）

Basic Policy on Controllers for Company Financial and Business
Policymaking
If a purchase is proposed by a speciﬁc person or persons that may transfer Company control, we

believe the ﬁnal decision to approve or deny this proposal should be made based on the will of all of
the Company’s shareholders. However, we believe that those people who control the Company’s

ﬁnancial and business policymaking must have suﬃcient understanding of the details of the Group’s
ﬁnances and business as well as the sources of the Company’s corporate value, and that they must
continuously improve both corporate value and shared proﬁt with shareholders. Some large-scalepurchase activities may damage this value and proﬁt that we have built up over time.

Based on this recognition, we believe that the Company’s shareholders must be given the opportunity
to carefully judge large-scale purchases for the impact they may have on the Company’s corporate

value or shared proﬁt with shareholders. We believe it is necessary that both the purchaser and theCompany’s Board of Directors provide essential and suﬃcient information and opinions toshareholders about the purpose, details, and aforementioned impact of the large-scale purchase inquestion. We also believe it is necessary for shareholders to be given the essential and suﬃcient time toconsider these; in other words, creating a situation where there is as little coercive force aﬀecting
shareholder decision-making as possible.

With this basic concept in mind, the Board of Directors of the Company will require that large-scalepurchasers provide the essential and suﬃcient information for shareholders to make an appropriate

decision on the positives and negatives of the purchase in question. This provided information will also

be disclosed in an appropriate manner and at an appropriate time, and measures will be taken deemed
appropriate within the limits permitted by the Financial Instruments and Exchange Act, the Companies
Act, other laws and regulations, and the Articles of Incorporation. The Company designed this policy toensure that its corporate value and shared proﬁt with shareholders is maximized.

-94-

External Directors(As of June ��, ����)External Director

Kiichiro Masui

Attendance at Board of Directors’ Meetings: ��/�� (���%)Attendance at Meetings of the Nominating Committee: �/�(���%)[Reason for appointment]

Mr. Kiichiro Masui serves as Chairman of the Board of The Japan Securities Research Institute.

Although Mr. Kiichiro Masui has never been directly involved in corporate management, he has servedin important positions in securities-related organizations and has abundant experience and deep
insight in the world of ﬁnance and securities.

Mr. Kiichiro Masui plays an appropriate role in supervising the execution of business eﬀectively from an
independent and objective position and providing advice to management from this standpoint. In

addition, as a chairman of the Nominating Committee, he has provided opinions from an objective andneutral standpoint regarding the personnel aﬀairs of oﬃcers at the Company.

For the above reasons, the Company expects that Mr. Kiichiro Masui will contribute to theenhancement of eﬀectiveness of the Board of Directors and committees that will lead to theenhancement of corporate value of the Group in the medium and long term as an External Director,
and thus has nominated him as a candidate for External Director.

-95-

External Director

Takahiro Moriguchi

Attendance at Board of Directors’ Meetings: ��/�� (���%)Attendance at the Nominating Committee: �/� (���%)Attendance at Meetings of the Compensation Committee: �/�(���%)[Reason for appointment]

Mr. Takahiro Moriguchi has served as Representative Director and Deputy President of the Bank ofTokyo-Mitsubishi, Ltd. (currently MUFG Bank, Ltd.) and Representative Director and Chairman of

JPMorgan Securities Japan Co., Ltd. He has served as a president at banks in the U.S., and has broad

knowledge on ﬁnance and securities, international business experience, and abundant experience anddeep insight as a corporate manager.

Mr. Takahiro Moriguchi plays an appropriate role in supervising the execution of business from an

independent and objective position and providing advice to management from this standpoint. In

addition, as a member of the Nominating Committee and a chairman of the Compensation Committee,
he has provided opinions from an objective and neutral standpoint regarding the personnel aﬀairs ofoﬃcers and oﬃcer compensation at the Company.

For the above reasons, the Company expects that Mr. Takahiro Moriguchi will contribute to theenhancement of eﬀectiveness of the Board of Directors and committees that will lead to theenhancement of corporate value of the Group in the medium and long term as an External Director, andthus has nominated him as a candidate for External Director.

-96-External Director

Junko Utsunomiya

Attendance at Board of Directors’ Meetings: ��/�� (���%)Attendance at Meetings of the Nominating Committee: �/�(���%)

Attendance at Meetings of the Audit Committee: �/� (���%)[Reason for appointment]

Ms. Junko Utsunomiya has acquired high degrees of expertise as a lawyer, and although she has neverbeen directly involved in corporate management, she has served as an outside director of other listedcompanies and has abundant experience and deep insight in the ﬁeld of corporate legal aﬀairs.

Ms. Junko Utsunomiya plays an appropriate role in supervising the execution of business eﬀectively
from an independent and objective position and providing advice to management from thisstandpoint. In addition, as a member of the Nominating Committee and the Audit Committee, she has
provided opinions from an objective and neutral standpoint regarding the personnel aﬀairs of oﬃcers
at the Company, and has appropriately audited the business execution from an independent
standpoint.

For the above reasons, the Company expects that Ms. Junko Utsunomiya will contribute to theenhancement of eﬀectiveness of the Board of Directors and committees that will lead to theenhancement of corporate value of the Group in the medium and long term as an External Director,
and thus has nominated her as a candidate for External Director.

External Director

Eiji Yamada

Attendance at Board of Directors’ Meetings: �/� (��.�%)Attendance at Meetings of the Compensation Committee: �/�(���%)[Reason for appointment]

Mr. Eiji Yamada has served as Representative Director and Senior Executive Vice President of NTT DATA
Corporation, President and Representative Director of Japan Information Processing Service Co., Ltd.,and an outside director of other listed companies, and has abundant experience in data

communication and system development, etc. and deep insight as a corporate manager.
-97-

From this standpoint, Mr. Eiji Yamada has been playing an appropriate role in supervising the executionof business eﬀectively from an independent and objective position and providing advice tomanagement. In addition, as a member of the Nominating Committee, he has provided opinions froman objective and neutral standpoint regarding the oﬃcer compensation at the Company.

For the above reasons, the Company expects that Mr. Eiji Yamada will contribute to the enhancementof eﬀectiveness of the Board of Directors and committees that will lead to the enhancement ofcorporate value of the Group in the medium and long term as an External Director, and thus has
nominated him as a candidate for External Director.

External Director

Mitsunobu Yamaguchi

Attendance at Board of Directors’ Meetings: �/� (���%)Attendance at Meetings of the Audit Committee: �/� (���%)[Reason for appointment]

Mr. Mitsunobu Yamaguchi has a high degree of specialization as a certiﬁed public accountant, has

worked in the United States, and has served as an external auditor at other listed company. Though he

has never been directly involved in corporate management, he has abundant experience in the ﬁelds ofﬁnancial accounting and auditing, and experience in international service.

From this standpoint, Mr. Mitsunobu Yamaguchi has been playing an appropriate role in supervising

the execution of business eﬀectively from an independent and objective position and providing advice
to management. In addition, as a chairman of the Audit Committee, he has appropriately audited thebusiness execution from an independent standpoint.

For the above reasons, the Company expects that Mr. Mitsunobu Yamaguchi will contribute to theenhancement of eﬀectiveness of the Board of Directors and committees that will lead to theenhancement of corporate value of the Group in the medium and long term as an External Director,
and thus has nominated him as a candidate for External Director.

-98-

Establishment of a corporate structure to ensure the proper
conduct of business (internal control systems)
In its eﬀorts to establish a lawful and eﬃcient corporate structure, the Company maintains andoperates a structure to ensure that executive oﬃcers comply with laws and the Articles of Incorporationin the execution of their operations, and other structures to ensure the proper conduct of the businessof the Company and the businesses of the Company group made up of the Company and its
subsidiaries, as follows.

�.Corporate structure to ensure legal compliance and compliance with the Articles of Incorporationin the execution of operations by executive oﬃcers and employees of the Company

・The Company elects external directors as independent oﬃcers to reinforce the supervisory functionsof the Board of Directors and Audit Committee.

・The Company has established a “Code of Conduct,” “Standards for Behavior of Heiwa Real EstateGroup,” and “Compliance Regulations,” and steps are taken to ensure that all of its members are fully
aware of their contents. Accordingly, executive oﬃcers, managing oﬃcers, and employees of theCompany are requested to maintain fair and high ethical principles and strictly adhere to laws,

regulations, and the Articles of Incorporation, in order to secure a management structure on which
the community can rely.

・Based on its “Internal Reporting Regulations,” “External Whistleblowing Regulations,” and otherrelevant regulations, the Company has established a compliance hotline and other systems as contact
points for notiﬁcation and consultation from people in or outside of the Company, including business
partners, when problems or other matters related to compliance occur, and detects and responds toany such problems as promptly as possible.

・The Company responds ﬁrmly against antisocial forces that jeopardize the order and safety of the civilsociety.

�.System for the storage and maintenance of information in relation to the performance of duties by
the executive oﬃcers of the Company

・The Company properly records the decision-making documents at the general shareholders’meetings, Board of Directors’ meetings, Meetings of Executive Oﬃcers, and other important meetings,
approval documents, and information related to the performance of duties by executive oﬃcers, andproperly stores and maintains these documents in accordance with the relevant laws and “Criteria for
the Storage and Disposal of Documents.”

・Directors and executive oﬃcers may access these documents at any time.

-99-

�.Rules of the Company related to the management of the risk of loss and other systems

・In recognition of the importance of risk management as a management issue, the Company has

established a set of “Risk Management Rules,” has established a “Risk Management Committee”
under the rules, and endeavors to secure the eﬀectiveness of risk management by deﬁning thetargeted risk and the responsibility for management of the risk.

・The “Risk Management Committee” reports on the matters under its management to the Board of
Directors and the Board of Statutory Auditors, as necessary.

�.System to ensure the eﬃcient performance of duties by the executive oﬃcers of the Company

・For its organizational structure, the Company has selected a structure with a nominationcommittee, etc., and delegates signiﬁcant authority for making decisions on business execution to

executive oﬃcers, endeavoring to use the system to segregate the functions and responsibilities ofmanagement and business execution and to accelerate the process of decision-making, hence
achieving more eﬃcient management.

・Through the system for allocating directors-in-charge, the system for job authorization, and thesystem for decision-making provided in various in-company regulations, including the “Regulationsof the Board of Directors’ Meetings,” the “Regulations of the Meetings of Executive Oﬃcers,” andthe “Rules on the Division of Authorities,” the Company works to achieve the eﬃcient execution ofduties by its executive oﬃcers.

・By formulating annual business plans and other plans, the Company establishes company-wide
objectives to promote the eﬃcient execution of business.

�.System to ensure the proper execution of business by the Company group made up of theCompany and its subsidiaries

・The Company manages the planning of strategy related to the Company Group, guidance andmonitoring related to subsidiaries and other matters pertaining to business administration,ﬁnancial operations, and administration related to consolidated accounting, the improvement andoperation of internal control related to ﬁnancial reporting and administration related to theevaluation of eﬀectiveness, and administration related to the operation of business.

・The “Code of Conduct,” the “Standards for Behavior for Heiwa Real Estate Group,” and the“Compliance Regulations” prescribed by the Company also apply to the Company Group, and theCompany takes steps to ensure that all members of the Group are fully aware of their contents.

Accordingly, the Company requests the oﬃcers and employees of the Company Group to maintain
fair and high ethical principles and strictly adhere to laws, regulations, and the articles ofincorporation so as to secure a management structure on which the community can rely.

-100-・In recognition of the importance of risk management as a management issue, the Company

endeavors to secure the eﬀectiveness of risk management by deﬁning the targeted risk and the

responsibility for management of the risk in the Company Group in accordance with a set of “RiskManagement Rules” prescribed by the Company.

・In accordance with a set of “Administrative Rules on Subsidiaries and Aﬃliates,” the Company

made mandatory for subsidiaries to report important matters related to subsidiaries in advance, in
principle.

・The Company dispatches its personnel to serve as Directors and Statutory Auditors of major

subsidiaries. The Directors of the Company oversee the performance of the duties of the Directorsof the subsidiaries, and the Statutory Auditors of the Company oversee the execution of business ofthe subsidiaries.

・In order to report and discuss matters related to consolidated group management, the Company

has established a management conference among subsidiaries and aﬃliates and an administrative
contact committee among subsidiaries and aﬃliates to share ownership of business policies,

management information, etc., and reports important matters related to subsidiaries to the Boardof Directors.

・The Company has formulated a set of “Basic Principles for the Maintenance and Operation ofInternal Control Related to Financial Reporting,” in order to secure reliable ﬁnancial reporting. The
Company has also established an “Internal Control Liaison Committee Related to Financial

Reporting” to maintain a cooperative structure that cuts across the whole Company Group for the
purpose of realizing the aforesaid principles.

�.Matters concerning relevant personnel when the Audit Committee of the Company requests the

deployment of directors or employees to assist the committee in its work, matters related to the

independence of those personnel from executive oﬃcers of the Company, and matters to secure
the eﬀectiveness of instructions from the Audit Committee of the Company to those personnel

・The Company shall establish an Audit Committee Oﬃce and assign employees to it. Employees
assigned to the Audit Committee Oﬃce shall assist the Audit Committee in its duties.

・Employees assigned to the Audit Committee Oﬃce shall follow the instructions and orders of the
Audit Committee when assisting the Audit Committee in its duties, and shall not be subject toinstructions or orders from executive oﬃcers.

・Appointment or transfer of employees assigned to the Audit Committee Oﬃce shall require theconsent of the Audit Committee, and the evaluation of these employees shall suﬃciently respect
the opinions of the Audit Committee.

-101-�.Policy for handling expenses, etc. incurred from the performance of duties by the members of theCompany’s Audit Committee

If an Audit Committee member, in the course of performing their duties, requests the Company to

pay expenses in advance pursuant to Article ���, Paragraph � of the Companies Act, the Company

shall promptly pay such expenses or debts unless such expenses or debts are determined not to benecessary for the performance of duties by the Audit Committee member.

�.System for reporting to the Audit Committee of the Company, system to ensure that a person soreporting is not treated unfavorably because of the reporting, and other systems to ensureeﬀective auditing by the Audit Committee of the Company

・The statutory Audit Committee member presents at important conferences, including the Meetingof Executive Oﬃcers, expresses their views, and obtains copies of the minutes of meetings andapproval documents. The statutory Audit Committee member also requests to be briefed on thesematters. Further, the statutory Audit Committee member regularly holds meetings with the
Representative Executive Oﬃcer, the Internal Audit Oﬃce, and the independent auditors.

・If a director or executive oﬃcer discovers any matters that may cause material damage to theCompany, they shall immediately notify the Audit Committee and/or its members of those matters.

・The Company reports to the Audit Committee and/or its members on important matters, including

matters pertaining to the subsidiaries reported at the management conference among subsidiaries
and aﬃliates and the administrative contact committee among subsidiaries and aﬃliates, theresults of internal audits of subsidiaries, the contents of notiﬁcations by the compliance hotline,
and other matters.

・The Company prohibits unfavorable treatment of the oﬃcers and employees of the Company Group
who report to the Audit Committee and/or its members due to such reporting, and keeps all of theoﬃcers and employees of the Company Group well informed of the prohibition.

-102-

Compliance
Compliance
Basic Approach
In order for the Heiwa Real Estate Group to earn the trust of society and achieve sustainable

development, we will consistently maintain an awareness of compliance and conduct business in
keeping with our Code of Conduct and the Standards for Behavior for Heiwa Real Estate Group.

To stamp out misconduct and further strengthen compliance, we also enacted the Announcementon Stamping Out Misconduct and Strengthening Compliance in December ����, and are taking
initiatives in keeping with this.

Announcement on Stamping Out Misconduct and Strengthening
Compliance�.No growth that compromises trust

The Company’s oﬃcers and employees shall constantly be aware that stakeholder trust is theplatform for, and driver of, growth. These agents of the Company shall work to improve mindsets
in order to regain that trust.

�.Stamping out misconduct

The Company’s oﬃcers and employees shall carry out their duties in accordance with the highest
ethical principles and good sense, and stamp out misconduct by pledging to not engage or

become involved in any wrongdoings, with a clear distinction between personal interests andcompany interests.

�.Strengthening compliance further

The Company’s oﬃcers and employees shall rigorously adhere to the Code of Conduct and theStandards for Behavior for Heiwa Real Estate Group, and shall place the utmost priority oncompliance.

Enacted December ����-103-

Compliance System

The Group has established a Risk Management Committee, a body for sharing, discussing, andcontrolling compliance and business risks in the Group. Serious violations of compliance or material
emerging risks are reported to the Company’s Board of Directors and handled accordingly.

The Corporate Planning and General Aﬀairs Department, which serves as the secretariat for thecommittee, is responsible for coordinating with Group companies, and promotes improved complianceand risk management function across the entire Group.

Prevention of Corruption and Bribery

The Group has enacted the Code of Conduct and the Standards for Behavior for Heiwa Real EstateGroup, and drafted a summary of matters to be complied with in order to act with fairness and honesty
without violation of social norms. In keeping with these we maintain an awareness of the gravity of oursocial responsibility, strictly comply with all laws, regulations, and rules, and seek to be a company thathas a strong sense of ethics and can keep the trust of society.

The Standards for Behavior for Heiwa Real Estate Group calls on us to strictly refrain from behavior that
may seem like collusion from society’s standpoint in our relationships with government andadministrative bodies, prohibits entertainment, gifts, and other beneﬁts deviating from social

conventions, and concretely deﬁnes measures to prevent not only bribery, but corrupt behavior ingeneral. These details are published to our intranet, and are available for employee viewing at any
time.

We are also taking a number of actions to improve compliance awareness, such as holding at least ﬁvecompliance training sessions each year for all oﬃcers and employees and thoroughly disseminating thecontents of various compliance regulations, including those for the prevention of corruption andbribery.

Furthermore, based on our Internal Reporting Regulations, we have established a compliance hotline
at the Company in order for us to rapidly be aware of organizational or individual misconduct orviolations of laws and regulations and to take necessary measures in response. This system also
promotes ethics and compliance with laws and regulations at Group companies.

To promote fair transactions with business partners such as corporations, we have also set up an

external reporting desk to receive reports on compliance violations and suspected violations by oﬃcers
and employees of the Group.

-104-Compliance Hotline

Based on our Internal Reporting Regulations, the Group has established an internal compliance hotline
in order for us to rapidly be aware of organizational or individual misconduct or violations of laws andregulations and to take necessary measures in response. This system also promotes ethics andcompliance with laws and regulations at Group companies.

Reports may be made to internal or external desks. We protect those who provide us with reports, likeensuring that they are not penalized for their use of our compliance hotline.

To promote fair transactions with business partners such as corporations, we have also set up an

external reporting desk to receive reports on compliance violations and suspected violations by oﬃcers
and employees of the Group.

Compliance Training

The Group regularly conducts compliance training for the purpose of raising awareness of complianceamong oﬃcers and employees. We are also working to spread awareness of compliance by conducting
company-wide simultaneous inspections for compliance, information security, and other areas, anddisseminating inspection results internally.

Combating Anti-Social Forces

�.Basic concept for excluding anti-social forces

We are strongly resolved to combat anti-social forces that threaten the order and security of civilsociety.

�.Status of measures to exclude anti-social forces

The Company has clearly established a number of policies showing its strong resolve to combat

anti-social forces. These can be found in the Code of Conduct, the Standards for Behavior for Heiwa
Real Estate Group, the Basic Policy for Building Internal Control Systems, and the Regulations for
Exclusion of Anti-Social Forces. We thoroughly disseminate these policies to directors, executiveoﬃcers, and employees.

The General Aﬀairs Department serves as the controlling department for our internal systems in thisarea. In the event of unreasonable demands and other instances with anti-social forces, thisdepartment takes action in coordination with attorneys and related institutions, such as the police
department with jurisdiction.

By joining the Tokubouren, a police-run association for the prevention of organized crime, we

participate in activities to exclude anti-social forces and gather information, providing details tovarious departments as necessary.

-105-

Risk Management
Basic Approach
The Company has put a risk management system in place in order to properly manage and control
risks, limit or prevent risks from materializing, and minimize any damage in the event such risksmaterialize, and smooth control work, minimize damages for corporate resource.

Risk Management System

To have an overall understanding of the Group’s risks and appropriately take action in the event of theiremergence, the Risk Management Committee meets quarterly, chaired by the Representative Director
and President and comprised of executive oﬃcers and heads of department. At its meetings, thecommittee works to understand risks that have emerged within the Group and discusses matters suchas how to prevent recurrence in keeping with the Risk Management Guidelines.

For the acquisition and sale of properties, the Investment Risk Working Group meets ahead of Board of
Directors discussion, analyzing the risks associated with the acquisition or sale and reporting its
ﬁndings to the Managing Oﬃcers’ Meeting.

To mitigate the risk of a company crisis in the event of an emergency, we have drafted a business

continuity plan and a manual based on this plan, and we conduct regular inspections in line with this.

Information Security
Basic Approach
The Group views the appropriate management of information risks as one of its most important

information strategies. We formulated the following basic approach to implement information security
throughout the Group.

�.Information Security Management System

The Group has established an information security management system and strives to protect andappropriately manage all information assets held by the Group.

-106-�.Internal Rules Related to Information Security

The Group maintains internal rules based on this basic approach and ensures all oﬃcers andemployees are thoroughly aware of these rules.

�.Information Security Training

The Group conducts ongoing training requisite to ensuring information security and attempts
to improve information literacy among all oﬃcers and employees.

�.Information Security Countermeasures

The Group implements appropriate countermeasures for ensuring the safety of information assets andprotecting against threats including unauthorized access, destruction, data leaks, spooﬁng, loss andtheft.

Furthermore, in the event that information asset security is breached, we make every eﬀort to minimize
damage, quickly identify the cause and prevent future recurrence.

�.Compliance with Laws and Regulations

The Group complies with laws and regulations related to information security, guidance provided by
the Japanese government and other social norms.

�.Continuous Improvements

The Group strives to continuously review and improve the abovementioned initiatives.

-107-

Risk Management
Basic Approach
The Company has put a risk management system in place in order to properly manage and control
risks, limit or prevent risks from materializing, and minimize any damage in the event such risksmaterialize, and smooth control work, minimize damages for corporate resource.

Risk Management Systems
To have an overall understanding of the Group’s risks and appropriately take action in the event of
their materialization, the Risk Management Committee meets quarterly, chaired by the ExecutiveOﬃcer, President and CEO and comprised of Executive Oﬃcers and Managing Oﬃcers and heads ofeach departments, At these meetings, the committee works to understand risks that have materialized
within the Group and discusses matters such as how to prevent recurrence. For key matters, thecommittee reports to the Board of Directors as appropriate, and the system provides for Board
oversight of risk management and review of implementation status.

Note that the Risk Management System has been designed with reference to the ISO ����� standard
risk management framework.

Schematic Diagram of the Risk Management System-108-

Risk Management Process

We categorize risks as shown below to facilitate their management, in recognition of the importance ofproper risk management in the management of the Group. We single out risks that can have aparticularly signiﬁcant impact on the business and require special management as Risks subject tomonitoring.

・Real estate risk
・Legal risk

・Financial risk

・Information security risk

・Labor risk (health and safety)
・Overall business risk

・ESG risk (especially climate change and corruption)
The risks discussed below are managed carefully and important matters reported to the Board of
Directors for discussion of how to respond.
・Real estate investment risk

For the acquisition and sale of properties, the Investment Risk Working Group meets ahead of

discussion by the Board of Directors, analyzing the risks associated with the acquisition or sale andreporting its ﬁndings to the Meeting of Executive Oﬃcers.
・Business Continuity Planning (BCP)

To mitigate the risk of a company crisis in the event of an emergency, we have produced a business

continuity plan and a manual based on this plan, and we conduct regular inspections in line with this.

-109-

Provisions for Litigation, including Violation of Laws and ESG Issues
As of March ��, ����, the Company has not booked any important provisions for the possibility of ﬁnes
or settlements in the future caused by incidents occurring prior to ﬁscal ����.

Regular Rotation of Accounting Auditors and Repeat Engagement

Our basic policy on auditing ﬁrm rotation combines approaches from the Certiﬁed Public Accountants
Act and the JICPA rules on ethics.

Prevention of Corruption and Bribery
The Group has enacted the Code of Conduct and the Standards for Behavior for Heiwa Real EstateGroup, and drafted a summary of matters to be complied with in order to act with fairness and honesty
without violation of social norms. In keeping with these we maintain an awareness of the gravity of oursocial responsibility, strictly comply with all laws, regulations, and rules, and seek to be a company thathas a strong sense of ethics and can keep the trust of society.

The Standards for Behavior for Heiwa Real Estate Group calls on us to strictly refrain from behavior that
may seem like collusion from society’s standpoint in our relationships with government andadministrative bodies; prohibits entertainment, gifts, and other beneﬁts deviating from social

conventions; and concretely deﬁnes measures to prevent not only bribery, but corrupt behavior ingeneral. These details are published to our intranet and are available for employee viewing at any time.

Corruption Prevention Eﬀorts

・Our systems to prevent corruption and bribery are monitored by the Risk Management Committee andperiodic updates are reported to the Board of Directors. We are also taking a number of actions toimprove compliance awareness, such as holding at least ﬁve compliance training sessions each year
for all oﬃcers and employees and thoroughly disseminating the contents of various complianceregulations, including those for the prevention of corruption and bribery.

・Furthermore, based on our Internal Reporting Regulations, we have established a compliance hotline
at the Company in order for us to rapidly be aware of organizational or individual misconduct orviolations of laws and regulations and to take necessary measures in response. This system also
promotes ethics and compliance with laws and regulations at Group companies.

-110-・To promote fair transactions with business partners such as corporations, we have also set up an
external reporting desk to receive reports on compliance violations and suspected violations byoﬃcers and employees of the Group. This system also allows anonymous reporting.

・The Board of Directors and Investment Risk Working Group determine how to handle projects deemed
to have a high risk of corruption on a case-by-case basis.

・The Risk Management Committee conﬁrms contracts and outsourcing processes to address the risk ofcorruption and bribery by outside vendors (brokerage outsourcers and other subcontractors).

-111-

Ratings from Outside Bodies
GRESB Real Estate Assessment ����In the GRESB Real Estate Assessment, a benchmark that evaluates environmental, social, andgovernance (ESG) initiatives in the real estate sector, Heiwa Real Estate received a �-star rating (FY����:�-star) in the Standing Investments Benchmark (related to currently operating properties). For the third
consecutive year, Heiwa Real Estate received a Green Star designation, which is awarded to companies
that have scored highly in both the Management and Performance components of the assessment.

Furthermore, the Company’s disclosure of ESG-related information was recognized with the highest
rating of A in the GRESB Public Disclosure tool, which measures material sustainability disclosures
based on a set of ESG indicators.

Established in ���� by a group of large pension funds in Europe that initiated Principles for Responsible
Investment (PRI), GRESB is an organization that measures the ESG performance of property companies
and funds to generate its GRESB benchmarks each year. GRESB currently has ��� investor members,
which use its data when selecting companies to invest in and when holding dialogues with invested

companies. Many of these members, including Japan’s Government Pension Investment Fund, makeuse of GRESB assessment results. In ����, �,��� property companies, REITs, funds and developers fromaround the world participated in the GRESB Real Estate Assessment.

Going forward, we will continue to engage in proactive activities to achieve a higher GRESB rating byenhancing sustainable management practices.

-112-

CDP
Heiwa Real Estate received an “A-” score in an assessment by the Carbon Disclosure Project (CDP), aninternational nonproﬁt organization that focuses on environmental information disclosure through its
Climate Change Program.

CDP is a non-proﬁt organization that supports institutional investors and major purchasers around theworld that are highly concerned about the environment, calling on corporations and governments topromote initiatives and disclose information on climate change, water resource protection, forest

conservation and other environmental issues. In ����, more than ��� signatory ﬁnancial institutions

with over US$��� trillion in assets collaborated with CDP, As a result, more than ��,��� organizations
disclosed environmental information through CDP’ s questionnaire. This included over ��,���

companies and more than �,��� municipalities, together representing two-thirds of the world’ s
market capitalization.

Going forward, Heiwa Real Estate will maintain eﬀorts to provide transparent disclosure, including
non-ﬁnancial information, to improve our reputation by further enhancing Group sustainability
management practices.

FTSE Blossom Japan Index
Heiwa Real Estate has been selected as a constituent for the FTSE Blossom Japan Index. Created by
global index provider FTSE Russell, this index measures the performance of Japanese corporations

demonstrating excellence in ESG practices. Designed to be industry-neutral, the index is used as animportant investment decision criterion by investors around the world focused on corporate ESG
initiatives.

-113-

FTSE Blossom Japan Sector Relative Index
Heiwa Real Estate has been selected as a constituent for the FTSE Blossom Japan Sector Relative Index.
As with the FTSE Blossom Japan Index, this index is designed to be sector-neutral, reﬂecting theperformance of Japanese companies with excellent ESG responses. To promote the transition to a

low-carbon economy, only companies with particularly high greenhouse gas emissions evaluated for
improvement eﬀorts by the TPI Management Quality Score* are included in the index.

*Assesses the quality of corporate management of greenhouse gas emissions, as well as risks and opportunities
associated with the transition to a low-carbon society.

MSCI Japan ESG Leaders Index
Heiwa Real Estate has been selected as a constituent for the MSCI Japan ESG Select Leaders Index. This
stock price index created by MSCI, a leading U.S. ﬁnancial services company, comprehensively

considers various ESG risk factors and selects companies with strong ESG performance relative tosector peers within each industry.

MSCI Japan Empowering Women (WIN)Heiwa Real Estate has been selected as a constituent for the MSCI Japan Empowering Women Index(WIN). This stock price index, created by MSCI, a leading U.S. ﬁnancial services company, is based ondata related to the employment and promotion of women in corporations and gender diversity
information disclosure.

-114-

S&P/JPX Carbon Eﬃcient Index
The Company has been selected as a constituent stock of the S&P/JPX Carbon Eﬃcient Index. The

S&P/JPX Carbon Eﬃcient Index is designed to measure the performance of companies in the Tokyo

Stock Price Index (TOPIX; as the “underlying index”), weighting companies with focus on their level ofcarbon eﬃciency (carbon emissions per sales) and disclosure status of environmental information.

Morningstar Japan ex-REIT Gender Diversity Tilt Index
Heiwa Real Estate has been selected for inclusion in the Morningstar Japan ex-REIT Gender Diversity
Tilt Index. This index focuses on companies that have established gender diversity policies thatpermeate their corporate culture, as well as companies that are committed to equal opportunities for
employees regardless of gender.

-115-

ESG Finance Awards Japan
Heiwa Real Estate was selected for inclusion in the Environmentally Sustainable Enterprise Category atthe �th ESG Finance Awards Japan, organized by the Ministry of the Environment. The ESG FinanceAwards Japan are designed to further promote and expand ESG ﬁnance by recognizing institutional

investors, ﬁnancial institutions, brokerages, companies, and other organizations that have proactively
engaged in ESG ﬁnance or environmental and social projects and have made an impact, aimed atsharing these pioneering eﬀorts with wider society.

The Environmentally Sustainable Enterprise category was established to provide investors andcorporations with concrete examples of enterprises incorporating signiﬁcant environmental

opportunities and risks into their management strategies to enhance corporate value, leading to both

positive eﬀects on the environment and enhancement of corporate value. Companies, including Heiwa
Real Estate, that meet certain standards are selected as Environmentally Sustainable Enterprises.

THE INCLUSION OF HEIWA REAL ESTATE CO.,LTD. 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 HEIWA REAL ESTATE CO.,LTD. BY MSCI OR ANY OF ITS AFFILIATES.

THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE
TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES.

Morningstar, Inc., and/or one of its aﬃliated companies (individually and collectively, “Morningstar”) has

authorized Heiwa Real Estate Co., Ltd. to use of the Morningstar Japan ex-REIT Gender Diversity Tilt Logo (”Logo”)
to reﬂect the fact that, for the designated ranking year, Heiwa Real Estate Co., Ltd. ranks in the top quintile ofcompanies comprising the Morningstar® Japan ex-REIT Gender Diversity Tilt IndexSM (”Index”) on the issue ofgender diversity in the workplace. Morningstar is making the Logo available for use by Heiwa Real Estate Co., Ltd.
for informational purposes. Heiwa Real Estate Co., Ltd. use of the Logo should not be construed as anendorsement by Morningstar of Heiwa Real Estate Co., Ltd. or as a recommendation, oﬀer or solicitation topurchase, sell or underwrite any security associated with Heiwa Real Estate Co., Ltd. The Index is designed toreﬂect gender diversity in the workplace in Japan, but Morningstar does not guarantee the accuracy, completenessor timeliness of the Index or any data included in it.

-116-Morningstar makes no express or implied warranties regarding the Index or the Logo, and expressly disclaim all
warranties of merchantability or ﬁtness for a particular purpose or use with respect to the Index, any data

included in it or the Logo. Without limiting any of the foregoing, in no event shall Morningstar or any of its third

party content providers have any liability for any damages (whether direct or indirect), arising from any party’s
use or reliance on the Index or the Logo, even if Morningstar is notiﬁed of the possibility of such damages. The
Morningstar name, Index name and the Logo are the trademarks or services marks of Morningstar, Inc. Past
performance is no guarantee of future results.

-117-

Third-party Veriﬁcation
Third-party Veriﬁcation
Heiwa Real Estate environmental and social data is veriﬁed by LRQA Limited.

Veriﬁcation Statement (FY���� data)＞

Veriﬁcation Statement (FY���� data)＞

Veriﬁcation Statement (FY���� data)＞-118-