Support for the TCFD Recommendations and Joining the TCFD Consortium

The Asset Manager has shown its support for the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and has joined the TCFD Consortium, an organization consisting of domestic companies supporting the TCFD recommendations.

First J-REIT to Be Certified by SBTi

In 2022, DHR received certification from the Science Based Targets initiative (SBTi) that its GHG reduction targets are aligned with the levels required by the Paris Agreement and are based on scientific evidence. The targets include a 42% reduction in total Scope 1 and 2 GHG emissions by 2030 compared to the fiscal year ended March 2021, and achieving net-zero total emissions across the entire value chain by 2050.

KPIs and Main Initiatives

Item	Coverage	Base year	Target year	Target
GHG emissions (Scope 1 and 2)	All properties	2020	2030	Reduce total emissions by 42% SBT (February 2022)
GHG emissions (Scope 3)	Properties with data available	2020	2030	Calculate and reduce total emissions SBT (February 2022)
GHG emissions (value chain)	All properties	2020	2050	Net zero SBT (August 2022)

Information Disclosure Based on TCFD Recommendations

• The Asset Manager supports TCFD recommendations and promotes risk management and initiatives related to climate change.
• Information disclosure is based on the amended TCFD recommendations and new guidance in October 2021.

Item	Contents
Governance	The Asset Manager established the “Regulations Concerning the System for Promoting Sustainability” and rules on topics such as internal framework, collaboration with stakeholders and information disclosure policy to secure an appropriate system for promoting sustainability. The Board of Directors receives and monitors reports from the Sustainability Committee on considerations for climate and nature-related and other global environmental issues and risk management for natural disasters, etc. As the Chief Executive related to climate and nature-related issues at the Board of Directors and the Chief Executive of the Sustainability Committee, the President and CEO of the Asset Manager provides final approval of various climate and nature-related goals and measures, evaluates the status of efforts, and gives instructions for review. For Governance, please click here.	The Sustainability Committee, which was established in May 2017, was raised to a formal committee in April 2022 and must be held at least once a month. An outside expert advisor who has a high level of insight and expertise in sustainability was also appointed. The Sustainability Committee deliberates and resolves on sustainability-related policy and strategy development such as addressing climate and nature-related issues and execution of sustainability-related operations.
Strategy	Understanding the risks and opportunities for DHR in the future due to unusual weather caused by climate change and increasing social demands for climate change measures, the Asset Manager verified and analyzed the effectiveness of the current climate change measures. For Scenario Analysis, please click here.	In accordance with the TCFD recommendations, the Asset Manager conducted analysis based on multiple scenarios of below 2°C scenario and 4°C scenario and formulated a roadmap for achieving the targets certified by SBTi. For Roadmap, please click here.
Risk Management	While recognizing climate change risk as well as nature-related dependency, impact, and risk as one of the risks that could pose a significant impact on business in the medium to long term, the Asset Manager sees such risk as areas of potential and manages the risk by incorporating it in its overall risk management process. The Asset Manager has established the “Risk Management Regulations” and “Risk Management Implementation Guidelines” as internal regulations in order to accurately identify risks and opportunities inherent in business, including those that are climate change-related and nature-related, develop a system for appropriately managing potential losses and profits when the identified risks and opportunities are realized, ensure the soundness of management and operate business in a fair manner. For Risk Management, please click here.	The Board of Directors shall oversee the development of an appropriate risk management system based on the “Risk Management Policy” after considering where and what the risk is based on the strategic goals set separately by the Board of Directors. The President and CEO shall be responsible for all risks in accordance with the provisions of the “Risk Management Regulations” of Daiwa House Group, develop an appropriate risk management system and be responsible for promoting and implementing risk management. The Compliance Officer, who is responsible for risk management, shall establish methods including measurement, monitoring and management based on the type of risk along with the risk management policy and shall develop internal regulations to ensure the effectiveness of these methods.
Metrics and 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 as the first J-REIT certified by SBTi for its SBT 1.5°C targets.In addition, DHR set long-term targets of net zero emissions in the fiscal year ending March 2051. 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. For Metrics and Targets, please click here.	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.