Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change
• ESG

Environmental Achievements

• Reduced annual emissions intensity related to energy consumption of CRE REIT's portfolio (market basis) (t-CO2e/m2) by a certain percentage from the fiscal year 2019 level by fiscal year 2030. Specific percentage reduction not explicitly stated but targeted at 46% reduction.
• Increased green building eligibility criteria properties to at least 95% of CRE REIT’s portfolio (based on total floor area) by fiscal year 2027.

Social Achievements

• Not disclosed

Governance Achievements

• Established a Sustainability Promotion Committee to oversee and implement sustainability initiatives.
• Declared support for the Task Force on Climate-related Financial Disclosures (TCFD) and participates in the TCFD Consortium.

Climate Goals & Targets

Environmental Challenges

• Transition risks (carbon tax, regulations, changes in tenant behavior, investor behavior) and physical risks (natural disasters, extreme weather) associated with climate change.
• Maintaining a high percentage of green building certifications.

Mitigation Strategies

• Selection and acquisition of properties meeting energy-saving standards.
• Expansion of photovoltaic power generation.
• Reduction in external electricity consumption.
• Purchase of emission credits and non-fossil certificates.
• Promotion of Green Lease Clauses.
• Acquisition of green building certifications.
• Promotion of green finance.
• Selection and acquisition of properties with low disaster risk.
• Periodic review of disaster response manuals and drills.
• Purchase and periodic review of appropriate insurance coverage.
• Reduction of utilities expenses by installing high-efficiency air conditioning.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Natural disasters
• Extreme weather

Transition Risks

• Carbon tax
• Regulations
• Changes in tenant behavior
• Changes in investor behavior

Opportunities

• Increased demand for properties with high environmental performance
• Reduced expenses for externally procured utilities
• Increased revenue due to sales of renewable energy
• Decreased financing costs due to improving reputation

Reporting Standards

Frameworks Used: TCFD

Certifications: DBJ Green Building Certification, CASBEE Certification, BELS evaluation

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Green Finance
• Environmental Sustainability

Environmental Achievements

• Acquires properties with BELS evaluation in the development stage of logistics facilities; installs solar panels, introduces LED lighting, and uses high environmental performance exterior wall panels in developments.

Social Achievements

• Contributes to local communities by creating jobs through the development of logistics facilities.

Governance Achievements

• Established a Green Finance Framework in accordance with Green Bond Principles 2018, Green Bond Guidelines 2020, Green Loan Principles, and Green Loan and Sustainability Linked Loan Guidelines 2020; received the highest grade (“Green 1 (F)”) in the JCR Green Finance Framework Evaluation.

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Green Bond Principles 2018, Green Bond Guidelines 2020, Green Loan Principles, Green Loan and Sustainability Linked Loan Guidelines 2020

Certifications: DBJ Green Building certification, CASBEE Certification for Buildings, BELS Certification

Third-party Assurance: Japan Credit Rating Agency, Ltd. (JCR)

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Achieved BELS certification in approximately 80% of properties and CASBEE certification in approximately 80% of properties.
• Implemented solar power self-consumption, motion sensors, water-saving sanitary ware, and roof sprinkler systems.
• Utilized sandwich panels for exterior walls to reduce heating and cooling loads.

Social Achievements

• Supported tenant business continuity and improved comfort.
• Provided employee training and development opportunities.
• Improved workplace environment through office relocation and implementation of remote work options.
• Actively communicated with investors.

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: BELS, CASBEE

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Climate Change
• Environment

Environmental Achievements

• Portfolio to consist of over 50% green eligible assets (acquisition cost basis).
• Promoting BELS evaluation in the development stage of logistics facilities.
• Implementing environmentally friendly development practices such as solar panel installation, LED lighting, and the use of high-performance exterior wall panels.

Social Achievements

• Not disclosed

Governance Achievements

• Established a Green Equity Framework, reviewed by DNV Business Assurance Japan K.K., aligning with Green Bond Principles.

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Green Bond Principles 2021

Certifications: Null

Third-party Assurance: DNV Business Assurance Japan K.K. (Second-party opinion)

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Approximately 80% of the properties produce solar power, and 70% of the total consumption is covered with renewable energy (from April 2020 to March 2021).

Social Achievements

• Support for BCP measures; Support for skill development; Amenity Improvements (warm-color lighting, restrooms for outside drivers, renovated smoking rooms); Improvement of the work environment (refreshed and expanded workspace, staggered commuting and working from home, quarterly 1 on 1 meetings with the president); Active disclosure to investors; Contribution to regional and social development (cooperation with local government on archaeological excavation, CRE forum for sharing logistics issues).

Governance Achievements

• R&I changed rating outlook from “A- (stable)” to “A- (positive)” (April 2021); Newly acquired “A (stable)” rating from JCR (August 2021); Borrowed with CRE REIT's first green loan (July 2021); Planned submission of an asset management fee structure that is more closely linked to earnings per unit at the general meeting of unitholders in September 2021; President of sponsor holds units of CRE REIT; Many officers and employees of the Asset Management Company hold investment units of CRE REIT.

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced the percentage of properties not meeting “Green Building” certification from 7.0% to 4.7% between 2020 and 2021.
• Implemented energy-efficient measures such as LED lighting, insulated panels, and human sensors in multiple properties.

Social Achievements

• Zero workdays lost to injuries, accidents, fatalities, or illness at the Asset Manager from July 1, 2019, to July 31, 2021.
• Established a complaint handling policy and a whistleblower system.

Governance Achievements

• Established a green finance framework using green loans and bonds.
• Implemented due diligence processes to screen for ESG risks before investments.

Climate Goals & Targets

Environmental Challenges

• Energy inefficiency in some properties.
• Potential for negative impacts related to climate change and other environmental factors.

Mitigation Strategies

• Implementing energy-efficient upgrades in properties.
• Using green financing for acquisitions that meet environmental criteria.
• Monitoring GHG emissions and energy consumption intensity.

Supply Chain Management

Supplier Audits: Annual sustainability review of each supplier

Responsible Procurement

• ESG performance evaluation of suppliers prior to engagement

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: SFDR

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Recession in the Japanese and global economy caused by the COVID-19 pandemic, inflation due to high resource prices, and deterioration of consumer and corporate confidence.
• Increasing difficulty of securing warehouse personnel due to current labor shortages.

Mitigation Strategies

• Maintaining a 100% occupancy rate for properties.
• Engaging in management to further grow cash flow and return outcomes to investors.
• Acquiring high-quality logistics-related facilities that meet tenant needs and create stable cash flow.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Sluggish Japanese economy due to decreased consumption and COVID-19 rebound.
• Supply constraints in China and Southeast Asia impacting production.
• Unstable TSE REIT index due to rising natural resource prices and long-term interest rates.

Mitigation Strategies

• Appropriate management and operation of properties, maintaining 100% occupancy.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Rising long-term interest rates due to inflationary measures and unstable TSE REIT index due to soaring natural resources prices.
• Increasing difficulty of securing warehouse personnel due to current labor shortages.

Mitigation Strategies

• Appropriate management and operation of its 19 properties, maintaining 100% occupancy.
• Focus on acquiring, holding, and operating high-quality logistics-related facilities in locations accessible to more hiring opportunities.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: PricewaterhouseCoopers Aarata LLC

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced the percentage of properties that are not 'Green Buildings' from 5.4% in 2022 to 0.0% in 2023. 'Green Buildings' are defined as properties with certain environmental certifications (DBJ, BELS, CASBEE).

Social Achievements

• Zero workdays lost to injuries, accidents, fatalities, or illness at the Asset Manager in 2023.
• Established a policy to handle complaints from clients and business partners, with a system for escalating significant complaints.

Governance Achievements

• Established a whistleblower system with a hotline to the Compliance Department, protecting whistleblowers from retaliation.

Climate Goals & Targets

Environmental Challenges

• Managing the principal adverse impacts of investment decisions on sustainability factors, particularly GHG emissions and energy consumption intensity.

Mitigation Strategies

• Implementing a green finance framework using green loans and bonds, investing only in properties meeting specific environmental criteria (DBJ, BELS, CASBEE certifications).
• Conducting ESG due diligence before investments, monitoring selected PAI indicators for existing properties.
• Utilizing Green Lease provisions in tenant agreements to promote energy conservation and environmental preservation.
• Implementing standards for selecting and evaluating suppliers to promote ESG initiatives.

Supply Chain Management

Supplier Audits: Annual sustainability review of each supplier.

Responsible Procurement

• ESG performance evaluation of suppliers prior to entering into a relationship.

Climate-Related Risks & Opportunities

Opportunities

• Reduction of GHG emissions is expected to generate financial benefits, such as differentiation from competitors, greater ability to attract prime tenants, increased access to capital from ESG investors, and improved loan terms from financial institutions.

Reporting Standards

Frameworks Used: SFDR

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Rising long-term interest rates in major countries due to inflationary measures and credit uncertainty in US and European financial markets.
• Increasing difficulty of securing warehouse personnel due to current labor shortages.

Mitigation Strategies

• Appropriate management and operation of its 21 properties, maintaining a high operation status with 99.3% occupancy.
• Focus on acquiring, holding, and operating high-quality logistics-related facilities in locations accessible to more hiring opportunities.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: PricewaterhouseCoopers Aarata LLC

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• 100.0% of properties were Green Buildings (based on total floor area) as of March 23, 2023.

Social Achievements

• Established guidelines to prevent congestion and accidents; improved indoor environment with features like interior walls with windows, cafeterias, rental meeting rooms, and retail spaces; developed green spaces.
• Strong relationships built with tenants and CRE, Inc. for effective collaboration on data collection (electricity, water consumption, CO2 emissions, waste).

Governance Achievements

• Adoption of a decision-making process in conflict-of-interest transactions involving independent outside experts; transparent and appropriate information disclosure.

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Sustainable Procurement Policy to select and evaluate suppliers based on corporate ethics, legal compliance, environmental and sustainability performance, and respect for human rights.

Climate-Related Risks & Opportunities

Physical Risks

• Devastating disasters resulting from climate change

Transition Risks

• Socioeconomic implications of decarbonization

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: DBJ’s Green Building Certification, BELS certification, CASBEE certification

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Increasing difficulty of securing warehouse personnel due to current labor shortages

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Climate Change
• Environment
• Social
• Governance
• Green Finance

Environmental Achievements

• Achieved 4 Stars GRESB Real Estate Assessment rating in 2023.
• Consecutively obtained Green Star for three years in GRESB.
• Consecutively obtained A rating in GRESB Disclosure Assessment for three years.
• High percentage of green building certifications (93.8% by floor area, 87.6% by property, 100% by property) across portfolio.
• Reduction in portfolio energy consumption-based annual emission intensity (t-CO2e/㎡) target of 46% by 2030 compared to 2019.

Social Achievements

• Annual tenant satisfaction surveys conducted to improve tenant comfort and convenience.
• Implemented various initiatives to improve workplace environment, work-life balance, and employee satisfaction.
• 100% of employees participated in compliance training (four times a year).
• High percentage of employees holding professional qualifications (e.g., 73.3% holding Real Estate Transaction License).

Governance Achievements

• Established sustainability policy and promotion system.
• Obtained “Green1 (F)” rating from JCR for Green Finance Framework.
• Obtained second-party opinion from DNV for Green Equity Framework.
• Revised asset management fee system in 2023 to better align with investor interests.
• Strict review procedures for transactions with related parties.

Climate Goals & Targets

Environmental Challenges

• Climate change-related risks (transition risks from decarbonization policies and physical risks from natural disasters).
• Maintaining high green building certification rates.

Mitigation Strategies

• Scenario analysis (1.5°C and 4°C scenarios) to assess climate-related risks and opportunities.
• Implementation of various mitigation strategies for transition and physical risks (e.g., renewable energy expansion, disaster preparedness, green lease clauses).
• Setting targets for greenhouse gas emissions reduction, data capture rate, and green building certification rate.

Supply Chain Management

Supplier Audits: Annual sustainability questionnaires

Responsible Procurement

• Sustainable procurement practices considering environmental and social impacts.

Climate-Related Risks & Opportunities

Physical Risks

• Natural disasters

Transition Risks

• Strengthening environmental regulations and carbon pricing
• Changes in tenant preferences towards environmentally friendly buildings

Opportunities

• Increased demand for green buildings
• Cost reduction through energy efficiency improvements and renewable energy adoption

Reporting Standards

Frameworks Used: GRESB, TCFD

Certifications: DBJ Green Building, CASBEE, BELS

Third-party Assurance: Japan Quality Assurance Organization (limited assurance for 2022 data)

Awards & Recognition

• GRESB 4 Stars
• GRESB Green Star (3 consecutive years)
• GRESB A rating (3 consecutive years)

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Continued wage increases and increased inbound demand from foreign tourists, however, real wage continued to decrease due to inflation. Private consumption weakened and the real GDP growth rate from January to March 2024 remained negative. Concerns about further hikes in policy interest rates.
• Increasing difficulty of securing warehouse personnel due to current labor shortages is creating demand for logistics real estate at locations where there are more hiring opportunities.
• Escalation of the conflict between United States and China, attention must be paid to recession and deterioration of corporate performance not only in the Japanese economy, but the global economy.

Mitigation Strategies

• CRE REIT has been conducting appropriate management and operation of its 21 properties held as of the end of the current fiscal period in cooperation with CRE, Inc. (“CRE”) and has maintained a high operation status with 97.4% occupancy of the overall portfolio as of the end of the current fiscal period.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Renewable Energy
• Green Finance
• Greenhouse Gas Emissions Reduction

Environmental Achievements

• Over 80% of properties equipped with solar power generation, generating 75% of total electricity used by renewable energy.
• Reduced greenhouse gas emissions in H1 of FY2023 compared to the previous year.

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Rising market interest rates
• Increase in vacancies in the Tokyo metropolitan area due to new supply exceeding demand.

Mitigation Strategies

• Introduced floating interest rates for some borrowings to control funding costs.
• Focus on internal growth strategies such as rent increases and cost control to absorb increased vacancies.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Rising market interest rates

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: TCFD

Certifications: Green building certifications (100% of properties)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed