GHG Emissions and Energy-related Targets

DHR set targets of reducing total GHG emissions by 42% in the fiscal year ending March 2031 compared to the fiscal year ended March 2021 and achieving net zero emissions by the fiscal year ending March 2051, and became the first J-REIT to obtain SBTi certification for its SBT 1.5°C targets.

Item	Coverage	Base year	Target year	Target
GHG emissions (Scope 1 and 2)	All properties	2020	2030	Reduce total emissions by 42% SBT
			2050	Net zero SBT
GHG emissions (Scope 3)	Properties with data available	2020	2030	Calculate and reduce total emissions SBT
			2050	Net zero SBT
Energy consumption	Properties with data available	2017	2027	Reduce consumption intensity by 10%
Water consumption	Properties with data available	2017	2027	Reduce intensity to below the level of base FY
Waste management	Properties with data available	2017	2027	Improve recycling rate

GHG Emissions of Portfolio Properties (Scope 1, 2, and 3)

* Market-based

Unit: t-CO₂

Asset class	Fiscal year ended March 2021 (Base year)	Fiscal year ended March 2022	Fiscal year ended March 2023	Fiscal year ended March 2024	Fiscal year ended March 2025
Logistics	51,706	60,880	67,756	75,288	73,772
Residential	6,595	4,513	18,973	18,783	16,093
Retail	30,450	28,219	27,808	28,119	27,187
Hotel	1,823	2,155	2,532	3,139	3,373
Other	6,559	3,444	666	1,067	1,070
Total	97,133	99,210	117,736	126,396	121,494

• This table shows GHG emissions of the properties for which data of emissions by tenants were obtained among the properties owned by DHR.
• GHG emissions from tenants’ energy use are calculated as Scope 3 figures.
• The increase in emissions data in fiscal year ended March 2021 to fiscal year ended March 2025 is mainly due to the increase in the number of properties for which emissions data were obtained.

GHG Emissions by Category (Scope 3)

Boundary: DHR, owned properties

Unit: t-CO₂

Category		Fiscal year ended March 2021 (Base year)	Fiscal year ended March 2022	Fiscal year ended March 2023	Fiscal year ended March 2024	Fiscal year ended March 2025
Upstream	1. Purchased goods and services	160	45	8,609	13,232	17,942
	2. Capital goods	18,310	29,694	8,443	13,115	13,560
	3. Fuel- and energy-related activities not included in Scope 1 or Scope 2	1,067	1,124	1,095	1,137	1,162
	4. Upstream Transportation and Distribution	3	2	2	2	2
	5. Waste generated in operations	130	164	156	194	159
	6. Business travel	0	0	0	0	0
	7. Employee commuting	0	0	0	0	0
Downstream	13. Downstream leased assets	95,263	106,690	127,008	137,940	133,801

• Calculated based on “Guidelines for Accounting of Greenhouse Gas Emissions of Organizations through the Supply Chain” by the Ministry of the Environment. Categories not listed above have no emission sources or are included in Scope 1 and Scope 2.
• GHG emissions from tenants’ energy use and waste disposal are calculated.
• Figures are verified by a third party based on “ISO 14064-3:2019 Greenhouse gases - Part 3: Specification with guidance for the verification and validation of greenhouse gas statements.”
  Greenhouse Gas Emissions Independent Verification Report (Limited Assurance)PDF
• The main reason for the increase in category 1 from the fiscal year ended March 2024 onward is that emissions from the outsourced management services of portfolio properties have been included in the calculation scope.

Physical Risk (Risk of Flooding)

• Responding to risks by implementing construction countermeasures and adding fire insurance coverage to avoid economic damage.

Flood depth	Number of properties	Acquisition price (millions of yen)	Ratio (based on acquisition price)	High
Over 20m	0	0	0.0%	Risk of flooding
10m to 20m	0	0	0.0%
5m to 10m	5	82,260	8.9%
3m to 5m	28	105,442	11.4%
0.5m to 3m	104	383,528	41.3%
0.5m or less	13	54,356	5.9%
0	83	302,045	32.6%
Total	233	927,631	100%	Low

• Method: Based on the estimated flood prone areas (estimated maximum size) (source: Ministry of Land, Infrastructure, Transport and Tourism), compiled by the Asset Manager in April 2024.

• For Royal Parks SEASIR (residential facility), we installed waterproof panels and waterproof doors at the entrance, electrical room, elevators, and management office to reduce the impact of water damage from torrential rains and large-scale typhoons.

• We will take risk reduction measures and reduce the percentage of properties owned that are exposed to acute and chronic physical risks.

Formulating Framework for Sustainable Finance

• By raising funds through sustainable finance, DHR aims to further promote sustainability initiatives, expand the investor base interested in sustainability investment and lending, and ensure stable financing.
• In October 2019, DHR formulated a Green Finance Framework for implementing green finance. In November 2021, DHR formulated a Sustainability Finance Framework for implementing sustainability finance.In this way, DHR is developing initiatives for sustainable finance and making steady progress in raising funds through sustainable finance.

Implementation of Sustainable Finance

• DHR has implemented sustainable finance of ¥58.5 billion as of the fiscal period ended February 28, 2025.
• The ratio of sustainable finance to interest-bearing debt has also increased by continuously implementing sustainable finance.

Outstanding Balance and Ratio of Sustainable Finance

Climate-related Opportunities

Targets for Obtaining Environmental Certifications of Portfolio Properties

• We are promoting the acquisition of third-party external certifications and evaluations to increase the objectivity and reliability of our sustainability initiatives at portfolio properties and improve the asset value over the medium to long term.
• Our policy is to increase the percentage of properties with environmental certification (based on gross floor area) to 75% or more by the fiscal year ending March 2031.

Status of Environmental Certification of Portfolio Properties

• The ratio of properties with environmental certification has improved to 74.6% (based on gross floor area).
  (As of March 31, 2025)

Please refer to "Obtainment of Green Building Certifications"

Concept and Definition of ZEB

Please refer to "ZEB Certification" in Obtainment of Green Building Certifications

Capital Deployment (Purchase of Non-fossil Certificates and Investment in Solar Power Generation Equipment)

• We will reduce GHG emissions (Scope 2) by procuring FIT non-fossil certificates, etc. by participating in auctions in the renewable energy trading market.
• We will reduce GHG emissions by investing in solar power generation equipment and switching existing equipment to own use.

Purchase of Non-fossil Certificates

DHR participated in the renewable energy value trading market, which allows consumers and intermediaries to purchase FIT non-fossil certificates, and in the fiscal year ended March 2025 procured 25.0 million kWh FIT non-fossil certificates through an intermediary (hereinafter referred to as the “Procurement”).
Expected reduction effect of CO₂ emissions by the Procurement was approx. 11,887 tons (t-CO₂ equivalent), and all of the DHR’s electricity-derived GHG emissions (Scope 2) for the fiscal year ended March 2025 were offset.

Mechanism for procuring FIT non-fossil certificates by auction in the renewable energy value trading market

Internal Carbon Pricing

• We have not set a target for the internal carbon price. We will review the price as appropriate to reflect potential changes in government policy.

Revising the Internal Carbon Price

Internal carbon price is set at ¥20,000 / t-CO₂ and used as an incentive for low-carbon promotion works, guidelines for investment decision making and a reference index to identify risks of rising costs.

Utilizing the Internal Carbon Price

(1) Incentives for low-carbon promotion works

If GHG emissions are expected to be reduced by LED lighting and air conditioning renewal, we apply the internal carbon price and use the data as a reference to decide whether to perform construction work.

(2) Guidelines for investment decision making

After calculating the profit and loss by applying the internal carbon price to the GHG emissions of the target property, we use the data as a reference for investment decisions (when emissions can be calculated).

(3) Identifying risks of rising costs in the future

By selecting suppliers with low emissions, we aim to reduce the risk of increased procurement costs when a carbon tax is introduced in the future.

Example

The investment decision on installation of solar power generation equipment at DPL Nagareyama III borne by DHR was made by balancing the cost and the revenue from power generation with the reduced GHG emissions multiplied by the internal carbon price.

Sustainability Index-linked Fees

In November 2021, DHR introduced a provision to fluctuate the amount of asset management fees to the Asset Manager in conjunction with the sustainability indices as the first initiative in J-REITs for the purpose of increasing unitholder value by encouraging the reduction of GHG emissions of DHR properties and enhancing the external evaluations of its sustainability initiatives.
This is to increase or decrease the amount of asset management fees based on the sum of indexed GHG emissions reduction ratio, GRESB Rating, and CDP Score multiplied by the total assets of DHR, and is aimed at strengthening the commitment to solving sustainability issues and improving governance.

Asset Management Fee Structure

Please refer to "Compensation of the Asset Manager" in Corporate Governance

Remuneration for Executive Director of DHR

Remuneration for the Executive Officers of DHR incorporates sustainability index-linked fees, with remuneration tied to factors such as the GHG emissions reduction ratio, GRESB Rating, and CDP Score.

Compensation of Directors of the Asset Manager

For the compensation of directors at the Asset Manager, we have adopted a performance-based compensation structure that incorporates multiple evaluation criteria, including the DHR’s GRESB Rating, CDP Score, and whether any environmental law violations have occurred. The evaluation also includes the score for “Employee Engagement with the Company,” as measured by the “Engagement Survey” conducted by the Daiwa House Group.

Greening and Countermeasures Against Heat Island Effect

Out of consideration for climate change, we carry out efforts such as those below at our properties.