Sustainability Policy/Environment Certification

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Sustainability Policy/Environment Certification

1. Message from Executive Officer
2. Sustainability Policy
3. Sustainability Target
4. Environmental Certifications/ Initiatives
5. Materiality

1. Message from Executive Officer

NIPPON REIT Investment Corporation (“NIPPON REIT”) and SBI REIT Advisors Co., Ltd. (formerly Sojitz REIT Advisors K.K.) (“SRA”), the asset management company of NIPPON REIT, is engaged in timely investment in the light of the medium-to-long term trends of the real estate supply-demand under the principle of unswerving discipline, since its establishment. Among all, ESG (Environment, Social and Governance ) initiatives are positioned as one of the most important management issue in order to continuously enhance its corporate value. NIPPON REIT and SRA have established the "Sustainability Policy" and the "Sustainability Targets," working to mitigate environmental burdens in cooperation and collaboration with stakeholders.

As a part of the initiatives for environmental consideration, NIPPON REIT and SRA are proactively promoting green buildings through obtaining of environmental certifications and evaluations from external organizations. In the GRESB Real Estate Assessment, NIPPON REIT have received “Green Star” for the 5th consecutive year by achieving high performance both in “Management Component” that evaluates policies and organizational structure for ESG promotion, and “Performance Component” that assesses environmental performance and tenant engagement of properties under management.

We will continue to carry out real estate investment management business effectively, deepening our mutual communication with investors, tenants, local communities, employees and all other stakeholders. and providing enriched information that would contribute to the investment decisions and benefit of unitholders.

2. Sustainability Policy

The SBI Group, the main sponsor of NIPPON REIT, has contributed to resolving social issues through many different business activities and seeks to realize a sustainable society and continuously improve its social value based on the unwavering idea that "a company is a part of society and is only able to continue existing because it belongs to society" since its founding.
SRA has established the "Sustainability Policy" and practices it, with an understanding that taking viewpoint of ESG seriously contributes to realize basic policy of NIPPON REIT such as "maximization of unitholders’ value while focusing on income growth and stability".

1. Effort to save energy and reduce greenhouse gas emission

We will make effort for reduction of greenhouse gas emission to contribute to climate change mitigation by improving energy efficiency and installation of facility equipment which is conductive to save energy, etc..

2. Realization of recycling-oriented society

We aim to realize recycling-oriented society by driving forward resources saving as well as waste reduction and recycling.

3. Compliance with environment-related laws and regulations

We will comply with environment-related laws and regulations including requirements which we decide to meet. Furthermore we will monitor law amendments and follow them.

4. Environmental education and enlightenment

We will disseminate the "Sustainability Policy" to our employees. Furthermore we will educate and enlighten them to consider the environment.

5. Collaboration with outside stakeholders

We will strive to collaborate with all stakeholders especially tenants, property management companies, suppliers and local communities in order to practice initiatives based on this policy.

6. Disclosure of ESG information and obtaining environment certification

We will disseminate the "Sustainability Policy" to all stakeholders such as investors, and will strive to proactively disclose information on the status of activities related to ESG. Furthermore we will make effort to obtain environment certification continually.

3. Sustainability Target

SRA has set its "Sustainability Target" as follows.

(1) Establishment of targets to reduce energy use

■ A. Energy consumption

In the short term, a reduction of 1% per year in unit energy consumption will be targeted in the entire portfolio.
Over the medium and long term, a reduction of 5% per five-year period in unit energy consumption will be targeted in the entire portfolio.

■ B. GHG emissions

In accordance with the energy consumption reduction targets, a reduction of 1% per year in unit greenhouse gas (GHG) emissions will be targeted over the short term in the entire portfolio.
In accordance with the energy consumption reduction targets, over the medium and long term, a reduction of 5% over the five-year period from FY2021 to FY2025 in unit GHG emissions will be targeted in the entire portfolio.
Individual targets will be set with respect to properties subject to measures against global warming prescribed by local regulations (Tokyo Metropolitan Ordinance, etc.).
CO₂ emission intensity is targeted to be reduced 50% by fiscal year 2030 from fiscal year 2016 level.

■ C. Water consumption

A reduction of an average of 0.5% per year over the ten-year period from FY2017 in unit water consumption will be targeted in the entire portfolio.

■ D. Waste management

A waste recycling ratio of 70% over the ten-year period from FY2017 will be targeted in the entire portfolio.

(2) Management of targets

As a general principle, every three months we carry out target management, review the progress made toward achieving its targets and ascertaining the degree of achievement against the actual value target, comparing and analyzing with the previous year at a general meeting called Sustainability Promotion Conference.

4. Environmental Certifications/ Initiatives

GRESB Real Estate Assessment

Sustainability Policy ⑥

GRESB is an annual benchmarking assessment that measures ESG (Environmental, Social and Governance) integration of real estate companies and funds and it is also the name of organization which runs the assessment. GRESB was founded in 2009 by a group of major European pension funds who played leading roles in launching Principles for Responsible Investment (PRI).

Currently, more than 150 Investor Members use GRESB data for their investment decision-making and engagement with investees, and several institutions from Japan including Government Pension Investment Fund (GPIF) utilize GRESB Assessment results. In 2023, 2,084 listed or private real estate companies/funds participated in GRESB Real Estate Assessment.

In the 2023 GRESB Real Estate Assessment, NIPPON REIT has received “3 Stars” in GRESB Rating, which is based on GRESB Overall Score and its quintile position relative to global participants, and designated as a “Green Star” for the seventh consecutive year since the first participation in 2017, through its high performance both in “Management Component” that evaluates policies and organizational structure for ESG promotion, and “Performance Component” that assesses environmental performance and tenant engagement of its properties. In addition, NIPPON REIT has achieved the highest “A” level for the GRESB Public Disclosure, which assess the width of ESG disclosure.

Please click here for details of GRESB.

Principles for Financial Action for the 21st Century

Sustainability Policy ⑥

SRA has become a signatory to the Principles for Financial Action for the 21st Century (PFA21) in December 2020. PFA21 was established in October 2011 as a guideline for financial institutions seeking to fulfil their roles and responsibilities in shaping a sustainable society, with the Ministry of Environment taking on the role of secretariat.

Please click here for details of PFA21.

Environmental Considerations Rating Obtained from Sumitomo Mitsui Banking Corporation (SMBC)

Sustainability Policy ⑥

“SMBC Environmental Assessment Loan” assesses status of corporate initiatives for environmental considerations, on loan execution and establishment of lending conditions, based on environmental assessment criteria developed independently by SMBC and The Japan Research Institute, Limited.

NIPPON REIT received an “A” grade from SMBC in accordance with “SMBC Environmental Assessment Loan”, in recognition of its commitment to environmental initiatives in asset management.

Please click here for details of SMBC Environmental Assessment Loan.(Japanese)

Track Record of Environmental Certification and Evaluation

Sustainability Policy ⑥

	Number of Properties	Floor Area (㎡)	Ratio (%)^{(Note 2)}
Green Certified Building ^{(Note 1)}	28	196,332.21	48.03
DBJ Green Building Certification	2	28,104.36	6.87
Certification for CASBEE for Real Estate	5	61,753.15	15.11
BELS Certification	21	115,023.20	28.14
Low-Carbon Model Building	5	21,627.76	5.29

*As of November 30, 2023

Note 1:	In case when a property holds multiple certifications, number and floor area of one property is included.
Note 2:	Ratio of each floor area to the gross floor area of NRT portfolio (408,807.72㎡).

DBJ Green Building Certification

Sustainability Policy ⑥

The DBJ Green Building Certification Program (the Certification) is a program launched in April 2011 by DBJ to support properties which demonstrate environmental and social considerations (“Green Building”). DBJ evaluates and certifies properties that are socially and economically sought, through comprehensive assessment of each property’s environmental performance and measure taken for various stakeholders including disaster prevention and community-conscious measures.

Property Name	Certification Rank	Date Certified
Tower Court Kitashinagawa	★★★★★ (5 Stars)	December 9, 2022
FORECAST Kameido	★★★ (3 Stars)	June 22, 2021

Please click here for details of DBJ Green Building Certification

CASBEE for Real Estate

Sustainability Policy ⑥

Comprehensive Assessment System for Built Environment Efficiency (CASBEE) is a method for evaluating and rating the environmental performance of buildings and the built environment. It is a comprehensive assessment of the quality of a building, evaluating features such as interior comfort and scenic aesthetics, in consideration of environment practices that include using materials and equipment that save energy or achieve smaller environmental loads.

Property Name	Certification Rank	Date Certified
FORECAST Ichigaya	S	November 30, 2021
Omiya Center Building	S	November 25, 2022
FORECAST Takadanobaba	S	May 30, 2023
FORECAST Shinjuku SOUTH	S	November 30, 2023
FORECAST Sakurabashi	A	June 24, 2022

Please click here for details of CASBEE Certification

BELS (Building-Housing Energy-efficiency Labeling System) /ZEB (Net Zero Energy Building)

Sustainability Policy ⑥

BELS (Building-Housing Energy-efficiency Labeling System) is a system in which a third-party organization evaluates and displays the energy-saving performance of all buildings, newly built and existing buildings. In April 2014, the system first started for non-residential buildings, and from April 2016, BELS expanded the scope of coverage to include residential buildings, and started its operation as one of the third-party certifications in accordance with the “Guidelines for Displaying Energy-Saving Performance of Buildings” which is a guideline based on Article 7 of the “Act on the Improvement of Energy Consumption Performance of Buildings.”
ZEB (Net Zero Energy Building) is a building that aims to reduce the annual energy consumption of a building to net zero balance while realizing a comfortable indoor environment. In the BELS evaluation system, it is displayed in four stages: ZEB, Nearly ZEB, ZEB Ready, and ZEB Oriented.

Property Name	Certification Rank	Date Certified
La Verite AKASAKA	★★★★★ ZEB Ready	July 31, 2020 January 20, 2022
Nishi-Shinjuku Sanko Building	★★★★★ ZEB Ready	January 20, 2022
FORECAST Kayabacho	★★★★	July 28, 2020
Towa Higashi-Gotanda Building	★★★★	July 30, 2020
FORECAST Takadanobaba	★★★★	August 7, 2020
Pigeon Building	★★★	July 29, 2020
FORECAST Gotanda WEST	★★★	August 5, 2020
FORECAST Sakurabashi	★★★	August 6, 2020
I•S Minamimorimachi Building	★★★	November 30, 2021
FORECAST Mita	★★	March 9, 2020
FORECAST Kameido	★★	July 2, 2020
Shibakoen Sanchome Building	★★	July 28, 2020
Itohpia Kiyosubashidori Building	★★	July 30, 2020
Itohpia Iwamotocho 1-chome Building	★★	July 31, 2020
FORECAST Shinjuku AVENUE	★★	November 30, 2021
FORECAST Ichigaya	★★	November 30, 2021
FORECAST Waseda FIRST	★★	November 30, 2021
Sannomiya First Building	★★	November 30, 2021
Alte Building Higobashi	★★	November 30, 2021
Nihombashi Playa Building	★	February 2, 2018
Splendid Namba	★	November 30, 2021

Please click here for details of BELS. (Japanese only)
Please click here for details of ZEB. (Japanese only)

Low-Carbon Model Building

Sustainability Policy ⑥

Small and medium-sized leased buildings that (1) fall within the range of A1 or higher in the Low-Carbon Benchmark, an assessment index for low-carbon buildings released by the Tokyo Metropolitan Government in May 2012 with the aim of creating a real estate market in which low-carbon buildings with low CO₂ emission features are valued; and (2) are actively implementing energy-saving measures, are officially recognized and publicized as the Low-Carbon Model Buildings by the Tokyo Metropolitan Government.

Property Name	Low-Carbon Benchmark	Date Publicized
Itohpia Iwamotocho ANNEX Building	A3^-	September 13, 2021
Shinto GINZA EAST	A3^-	September 13, 2021
Homat Horizon Building	A3^-	November 25, 2022
FORECAST Kayabacho	A2⁺	March 16, 2020
FORECAST Ningyocho	A2	November 25, 2022

Please click here for details of Low-Carbon Model Building(Japanese)

Kanto District Electricity Use Rationalization Committee

Sustainability Policy ①・⑥

The Kanto District Electricity Use Rationalization Committee annually gives awards to factories, business sites, and individuals who have made significant achievements in the effective use of electricity, promotion of energy conservation, and improvement of load factors.

■Fiscal Year 2022

Nishi-Shinjuku Sanko Building

Fiscal Year 2022

At Nishi-Shinjuku Sanko Building, as a result of renewal of air conditioning system and installation of LED lighting, average CO2 emission from January to December 2022 was reduced by 39.2% from the previous year.

■Fiscal Year 2021

FORECAST Gotanda WEST

Fiscal Year 2021

At FORECAST Gotanda WEST, as a result of renewal of air conditioning system and installation of LED lighting, average CO₂ emission from January to December 2020 was reduced by 17.9% from the previous year.

■Fiscal Year 2020

Towa Higashi-Gotanda Building

Fiscal Year 2020

At Towa Higashi-Gotanda Building, as a result of renewal of air conditioning system and installation of LED lighting, average CO₂ emission from January to December 2020 was reduced by 35.1% from the previous year.

■Fiscal Year 2019

FORECAST Takadanobaba

Fiscal Year 2019

At FORECAST Takadanobaba, as a result of renewal of air conditioning system and installation of LED lighting, average CO₂ emission from April to December 2019 was reduced by 63.9% from the previous year.

■Fiscal Year 2018

La Verite AKASAKA

Fiscal Year 2018

At La Verite AKASAKA, as a result of renewal of air conditioning system and installation of LED lighting, average CO₂ emission from April to June 2018 was reduced by 44.8% from the previous year.

Energy Conservation Grand Prize - Awarded "Energy Conservation Center, Japan Chairman's Award" (Nishi-Shinjuku Sanko Building)

Sustainability Policy ①・⑥

Nishi-Shinjuku Sanko Building

The Energy Conservation Grand Prize, sponsored by the Energy Conservation Center, Japan, is an annual award that recognizes excellent energy-saving efforts that have been implemented by businesses and workplaces as a model for others, as well as products and business models with excellent energy-saving performance. Every year, the Ministry of Economy, Trade and Industry sponsors and awards certificates (Minister of Economy, Trade and Industry Award; Agency for Natural Resources and Energy Director Award; Small and Medium Enterprise Agency Director Award).

Nishi-Shinjuku Sanko Building won the "Energy Conservation Center, Japan Chairman's Award" in the 2022 Energy Conservation Grand Prize. At the 34-year-old Nishi-Shinjuku Sanko Building, based on the sustainability policy that serves as a guideline for ESG initiatives, the owner and contractor worked closely together to establish a ZEB model case for an urban tenant building. It was highly evaluated for achieving an energy reduction of 57.59 kL/year in crude oil equivalent on a design value basis, and for establishing a ZEB retrofit model case.

Please click here for details of Energy Conservation Grand Prize.(Japanese)

5. Materiality

「Based on its management philosophy of aiming for stable growth in unitholder value over the medium to long term, NIPPON REIT identified the following materiality (material issues) in terms of sustainability, incorporating the perspectives of ESG in Dec 2020.
By setting goals for each of these issues, and by progressively implementing PDCA to achieve these goals, we will work to resolve the global social issue of "SDGs" (Sustainable Development Goals), which was adopted by the United Nations in 2015, and medium to long term growth.」

Materiality, Action Plan and Results					Supporting SDGs
Environment	Countering Climate Change/Enhancing Energy Efficiency
	Energy consumption ■ In the short term, a reduction of 1% per year in unit energy consumption will be targeted in the entire portfolio. ■ Over the medium and long term, a reduction of 5% per five-year period in unit energy consumption will be targeted in the entire portfolio.
	GHG emissions ■ In accordance with the energy consumption reduction targets, a reduction of 1% per year in unit greenhouse gas (GHG) emissions will be targeted over the short term in the entire portfolio. ■ In accordance with the target of reducing energy consumption, over the medium to long term, the goal is to reduce the basic unit by 5% over the 5 years from fiscal 2021 to fiscal 2025 for the entire portfolio.
	Countering Water Resources
	■ A waste recycling ratio of 70% over the ten-year period from FY2017 will be targeted in the entire portfolio.
	Waste management
	■ A reduction of an average of 0.5% per year over the ten-year period from FY2017 in unit water consumption will be targeted in the entire portfolio.
	Sustainability Certification
	■ Improve sustainability activities by participating in GRESB and other external assessment. ■ Aiming to increase the ratio of green building certified property in the portfolio.
Society	Ensuring the Security and Safety of Tenants, Enhancing User Comfort and Sustainability Awareness
	■ Improve tenant satisfaction based on tenant questionnaires. ■ Implement disaster prevention measures. ■ Conduct sustainability training for contractors such as property managers. ■ With regard to security deposits, which are practices that differ according to the region, by providing security deposits reduction services using guarantee company, we aim to enable the use of funds for business investment, eliminate inequality in business opportunities between regions and companies, and contribute to the innovation and job creation of tenants.
	Contributing to Communities
	■ Contribute to communities through the measures such as establishment of Cycle Ports and enhancing resilience to disaster while collaborating with local fire departments, etc.
	Stakeholder Engagement and Timely and Appropriate Information Disclosure
	■ Build solid relationships with and win the trust of all stakeholders by engaging in the timely, appropriate and proactive disclosure of financial/non-financial information and by maintaining constructive dialogue.
	Developing Human Resources and Creating a Satisfactory Workplace
	■ Develop human resources by supporting career development, acquiring qualifications, and conducting training. ■ Maintain and improve a comfortable working environment by time-off and Flextime system, implementing tele-work environment, a child-care leave system, etc.
Governance	Strengthening Corporate Governance
Governance	■ Build a governance system that emphasizes the third party and diversity of officers and maintain and strengthen the system with a focus on unitholders' interests by establishing committees with external members, and a dedicated compliance team, etc. ■ Ensure legal compliance by raising awareness of compliance. ■ Promote the prevention of risks to the soundness of management and business continuity through appropriate risk management, such as the elimination of conflicts of interest relating to transactions with interested parties, etc. ■ Ensure the effectiveness of internal control processes through internal audits.