Support for the TCFD Recommendations and Membership in the GX Future Consortium

The Asset Manager supports the Task Force on Climate-related Financial Disclosures (TCFD) Recommendations and has joined the GX Future Consortium, an organization consisting of domestic companies supporting the TCFD Recommendations.

First J-REIT to Be Certified by SBTi

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

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 the TCFD Recommendations and promotes risk management and various initiatives related to climate change.
• Climate-related information disclosure is conducted 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 reports from the Sustainability Committee concerning sustainability issues (including climate and nature-related issues) and monitors and supervises the progress. As the Chief Executive at the Board of Directors and the Chief Executive of the Sustainability Committee concerning sustainability issues (including climate and nature-related issues), the President and CEO of the Asset Manager provides final approval of various 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 policy and strategy development for sustainability issues (including climate and nature-related issues) and the execution of operations. The Sustainability Committee reports to the Board of Directors and the DHR Board of Directors once every 3 months and is overseen by the Board of Directors.
Strategy	The Asset Manager identifies and evaluates the risks and opportunities faced by DHR, in light of the increasing frequency of extreme weather events caused by climate change and growing societal demand associated with the transition to a decarbonized society, and analyzes their financial impacts. For Scenario Analysis, please click here.	The Asset Manager performs scenario analysis based on the 1.5℃ scenario and the 4℃ scenario, in accordance with TCFD Recommendations. The Asset Manager has also formulated a roadmap for achievement of targets certified by SBTi, considering the aforementioned analysis results. For Roadmap, please click here.
Risk Management	While recognizing climate-related risks 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 an area 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 climate-related risks and opportunities inherent in business as well as nature-related dependency, impact, and risk, 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 and became the first J-REIT certified by SBTi for its SBT 1.5℃ targets. In addition, DHR set long-term targets of net zero emissions in the fiscal year ending March 2051. The internal carbon price is set at ¥20,000 / t-CO2 and used to provide incentives for low-carbon promotion works, as guidelines for investment decision-making, and as a reference index to help identify risks related to future cost increases. 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.