Climate Change Data

Ichigo Hotel REIT Investment Corporation

Climate Impact & Sustainability Data (January 2020, January 2021, January 2022, July 2023, July 2024)

Reporting Period: January 2020

Environmental Metrics

Total Energy Consumption:141,699,548 kWh/year

ESG Focus Areas

  • Environmental
  • Social
  • Governance

Environmental Achievements

  • Annual CO2 reduction of 93,521,697 kg (July 2018 to June 2019)
  • Annual power generation of 141,699,548 kWh (equivalent to annual energy consumption of 47,233 households)
  • Preserve & Enhance Existing Buildings to End Wasteful Demolish & Rebuild

Social Achievements

  • Promoting Community Development as J.League Top Partner
  • Supporting Outstanding, World-Class Athletes
  • Children’s Cancer Treatment Supporting University of Miyazaki Faculty of Medicine’s Program for Children with Cancer

Governance Achievements

  • Majority of AMC Directors (3 of 5) are Independent Directors
  • First J-REIT No Fixed Fee, Performance Fee-Only Structure
  • All Ichigo Hotel Directors are Independent Directors

Climate Goals & Targets

Environmental Challenges

  • Operating Results Down YOY on Drop in Inbound Tourism
  • RevPAR Down in All Areas, Particularly Osaka and Kyoto
  • Significant forecast uncertainty due to the impact of the COVID-19 coronavirus outbreak
Mitigation Strategies
  • Highly Accretive Asset Sales Actions to Drive Earnings Growth
  • Achieving Organic Growth at Contract Renewals
  • Operator Change to Generate Higher Earnings
  • Value-Add Capex to Generate Higher Earnings
  • Acquisitions of HOTEL EMIT SHIBUYA and Washington Hotel Plaza Shimonoseki Eki Nishi

Supply Chain Management

Responsible Procurement
  • green procurement measures

Climate-Related Risks & Opportunities

Reporting Period: January 2021

Environmental Metrics

ESG Focus Areas

  • Environmental
  • Social
  • Governance

Environmental Achievements

  • Sponsor Ichigo joined RE100 with a target to source 100% of electricity needs across Ichigo Hotel-owned assets from renewable energy by 2040.
  • Ichigo Hotel will shift to using renewable electricity across its operations.

Social Achievements

  • Launched Ichigo J.League Shareholder Program, offering shareholders free tickets to every J.League game.
  • 100% return rate for employees who take maternity/paternity leave.
  • 24% of management positions held by women.
  • Support for community-based soccer clubs and artists with disabilities.

Governance Achievements

  • Ichigo Hotel and Ichigo Office are the only J-REITs (out of 61) that both have an Asset Management Company (AMC) board with a majority of Independent Directors and whose AMC President does NOT serve as the Executive Director of the REIT.
  • Performance-linked fee structure to support shareholder value creation.

Climate Goals & Targets

Long-term Goals:
  • Sponsor Ichigo's target: 100% renewable electricity across its operations by 2040.

Environmental Challenges

  • Ongoing Covid-19 impact on hotel demand.
  • Market uncertainty in the hotel industry.
Mitigation Strategies
  • Effective cost control to reduce expenses.
  • Issuance of Investment Corporation Bond (JPY 500 million) to strengthen financial base.
  • Operator change to generate higher earnings (e.g., Chisun Inn Osaka Hommachi to The OneFive Osaka Sakaisuji).
  • Shareholder Hotel Discount Program to support the hotel industry and express gratitude to shareholders.
  • Deployment of Ichigo’s PROPERA, an AI-based hotel revenue management system.

Supply Chain Management

Responsible Procurement
  • Green procurement measures

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRESB

Certifications: CASBEE, BELS, DBJ Green Building

Reporting Period: January 2022

Environmental Metrics

Total Carbon Emissions:7,745 tons (FY21/2)

ESG Focus Areas

  • Environmental
  • Social
  • Governance

Environmental Achievements

  • 68 energy efficiency improvements made between August 2020 and July 2021
  • Renewable energy contracts executed for 9 hotels as of January 2022 fiscal period, with 2 hotels already sourcing renewable energy
  • HOTEL EMIT SHIBUYA awarded 2 Stars in GRESB rating and won Green Star designation

Social Achievements

  • Support for J.League community development
  • Support for athletes in weightlifting, rifle shooting, and track and field
  • Ichigo University established for employee continuing education

Governance Achievements

  • Shifted to performance-linked fee structure to support shareholder value creation
  • All Ichigo Hotel Directors are Independent Directors
  • Majority of AMC Directors (3 of 5) are Independent Directors

Climate Goals & Targets

Long-term Goals:
  • Not disclosed
Medium-term Goals:
  • Transition to renewable energy to be completed at all 74 assets by April 2022 (excluding partially-owned assets)
Short-term Goals:
  • Disclose energy consumption levels and energy reduction targets on the Ichigo Hotel website by January 2023

Environmental Challenges

  • Covid-19 pandemic impact on hotel demand
  • Supply exceeding demand in some areas due to new hotel openings
  • Uncertainty in the market environment
Mitigation Strategies
  • Proactive value-add capex tailored to each hotel
  • Selling hotels with limited growth potential
  • Revising rent terms at lease renewal
  • Collaboration with sponsor (Hakata Hotels/PROPERA)

Supply Chain Management

Responsible Procurement
  • Green procurement measures

Climate-Related Risks & Opportunities

Physical Risks
  • Not disclosed
Transition Risks
  • Not disclosed
Opportunities
  • Not disclosed

Reporting Standards

Frameworks Used: GRESB

Certifications: BELS (HOTEL EMIT SHIBUYA, 4 stars)

UN Sustainable Development Goals

  • Not disclosed

Sustainable Products & Innovation

  • Not disclosed

Awards & Recognition

  • Not disclosed

Reporting Period: July 2023

Environmental Metrics

Renewable Energy Share:49% (as of May 31, 2023)
Total Energy Consumption:4,136,516 kWh (Feb 2023 actual)

ESG Focus Areas

  • Environmental
  • Social
  • Governance

Environmental Achievements

  • Completed renewable energy transition at 9 hotels as of July 31, 2023; targeting renewable energy transition for all hotels by January 2024; 4,136,516kWh renewable energy at transitioned hotels (Feb 2023 actual); CO2 Reduction: 1,824 tons (calculated as 0.441kg CO2 per kWh)
  • On track toward achieving 2025 RE100 target; 49% renewable energy ratio (as of May 31, 2023)

Social Achievements

  • Shareholder Discount Program offering special rates at various hotel brands; Ichigo J.League Shareholder Program offering free tickets to J.League games
  • Ichigo University providing continuing education and personal growth for employees; average annual number of courses: 30; supporting athletes in weightlifting, rifle shooting, and track and field

Governance Achievements

  • Shifted to performance-linked fee structure to support shareholder value creation; all Ichigo Hotel Directors are Independent Directors; active dialogue and effective internal controls via Board discussions; majority of AMC Directors (2 of 4) are Independent Directors

Climate Goals & Targets

Long-term Goals:
  • Net zero carbon society
Medium-term Goals:
  • Achieve 85% renewable energy by FY24/2; 100% by FY25/2
Short-term Goals:
  • Renewable energy transition for all hotels by January 2024

Environmental Challenges

  • Negative impact on Hotel Wing International Nagoya, Nest Hotel Kumamoto, and Hotel Sunshine Utsunomiya from April 2023 due to the end of leasing all rooms to local governments
Mitigation Strategies
  • Contract renewals and rebranding initiatives to increase stability and earnings

Supply Chain Management

Responsible Procurement
  • Sustainable procurement measures, including environmentally-friendly construction methods and materials, actively installing energy and resource efficient equipment, and the inclusion of sustainability initiatives as a selection criteria for business partners

Climate-Related Risks & Opportunities

Physical Risks
  • Not disclosed
Transition Risks
  • Not disclosed
Opportunities
  • Not disclosed

Reporting Standards

Frameworks Used: GRESB

Certifications: GRESB, CASBEE, BELS, DBJ Green Building

UN Sustainable Development Goals

  • Not disclosed

Sustainable Products & Innovation

  • Not disclosed

Awards & Recognition

  • Not disclosed

Reporting Period: July 2024

Environmental Metrics

Total Carbon Emissions:6,729 tons CO2e (Ichigo Hotel)
Renewable Energy Share:100% (as of August 31, 2024)

ESG Focus Areas

  • Environmental
  • Social
  • Governance

Environmental Achievements

  • Newly transitioned 7 hotels to renewable energy
  • Reduced water usage via installing water-saving equipment (24% reduction per person at 10 hotels)
  • Purchased non-fossil certificates for hotels that have not completed renewable energy transition to continue using 100% renewable energy
  • Achieved 100% renewable energy transition at all hotels (as of August 31, 2024)

Social Achievements

  • Shareholder Discount Program providing hotel discounts
  • Ichigo J.League Shareholder Program offering free tickets to J.League games
  • Ichigo University providing employee training and development

Governance Achievements

  • No Fixed Fee, Performance Fee-Only Structure incentivizing long-term performance
  • All Ichigo Hotel Directors are Independent Directors
  • Active dialogue and effective internal controls via Board discussions

Climate Goals & Targets

Medium-term Goals:
  • 70% reduction in Scope 1 and 2 emissions by 2030 (2022 Base Year)
  • 25% reduction in Scope 3 emissions by 2030 (2022 Base Year)
Short-term Goals:
  • Targeting full group-wide 100% renewable energy transition in FY25/2

Environmental Challenges

  • Transitioning remaining hotels to renewable energy
  • Maintaining water reduction efforts
Mitigation Strategies
  • Ongoing discussions with tenants to transition to renewable energy
  • Continued installation of water-saving equipment

Supply Chain Management

Responsible Procurement
  • Sustainable procurement measures, including environmentally-friendly construction methods and materials

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRESB, CASBEE, BELS, DBJ Green Building, RE100, SBT