From the perspective of improving unitholders' value in the long term, NIPPON REIT recognizes that environmental consideration is an important issue in the real estate investment management business and works to reduce its environmental impact through measures such as the renovation of existing facilities and the improvement of the management of the properties held by NIPPON REIT. Moreover, NIPPON REIT aims to achieve environmentally friendly investment management by taking facility users’ comfort, biodiversity and other factors into consideration.
Climate Change Initiatives
Awareness of Climate Change
Progress in climate change is a scientific fact as indicated mainly by the Paris Agreement (2015), IPCC Special Report (2018) and IPCC Sixth Assessment Report (Working Group 1, 2021), and the progress in climate change is expected to result in the occurrence and expansion of weather disasters such as the intensification of typhoons and heavy rains, the frequent occurrence of heat waves and droughts and progress in global sea level rise.
Achieving net zero by 2050 is increasingly necessary as a global effort to mitigate climate change, and the transition to socio-economic decarbonization and its process may have a significant impact on NIPPON REIT's business.
NIPPON REIT recognizes that it is essential to enhance the resilience of its businesses by identifying, assessing and managing risks and opportunities that may be brought about by climate change from a range of perspectives, including the securing of NIPPON REIT's sustainable and stable profitability on a long-term basis.
Basic Policy / Commitment
SRA supports the international goals set out in the Paris Agreement and will continue to promote initiatives to achieve net zero GHG emissions to contribute to climate change mitigation.
TCFD
In December 2022, SRA expressed its support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) to advance the disclosure of climate-related information.
In addition, SRA had been a member of the TCFD Consortium, contributing to the enhancement and broader utilization of climate-related disclosures. Following the reorganization of the TCFD Consortium and the establishment of the GX Future Consortium in April 2026, SRA has continued its participation as a member of the GX Future Consortium.
Please click here for the details of TCFD
Information Disclosure Based on TCFD Recommendations
Governance
The operating officer for climate-related issues at SRA will periodically provide a report about matters related to climate change initiatives, such as the identification and evaluation of the impact of climate change, management of risks and opportunities, progress of initiatives pertaining to adaptation and mitigation, and establishment of metrics and targets, to the chief executive (President & CEO) in charge of climate-related issues at the Sustainability Promotion Committee in accordance with the Climate Change and Resilience Policy.
Policies, targets, and various measures related to climate change that have been drafted by the relevant divisions are discussed and examined by the Sustainability Promotion Committee and then determined by the Chief Officer of climate-related issues.
Discussions at the Sustainability Promotion Committee are reported regularly to the Board of Directors of SRA and the Board of Officers of NIPPON REIT.
Strategy
Scenario Analysis
To identify risks and opportunities related to climate and identify, evaluate and manage their impacts on the management activities, strategies and financial plans of NIPPON REIT, we examined changes in the external environment in 2050 and how they may affect our business by referring to the following "scenarios" published by international organizations, etc., and assuming changes in the world under each scenario.
| 1.5℃ scenario | 4℃ scenario | |
|---|---|---|
| Transition Risks | IEA (International Energy Agency) World Energy Outlook 2022 NZE 2050 |
IEA World Energy Outlook 2022 STEPS |
| Physical Risks | IPCC (Intergovernmental Panel on Climate Change) the Sixth Assessment Report SSP1-2.6 |
IPCC the Sixth Assessment Report SSP5-8.5 |
4℃ scenario
Scenarios in which climate change mitigation measures that exceed the current level are not realized, GHG emissions will continue to increase, and the physical risks of weather disasters will increase.
1.5℃ scenario
Scenarios in which social policies for decarbonisation, emission regulations and technology investment, etc. make greater progress than at present in order to achieve the Paris Agreement goals, and the transition risk becomes relatively higher
Risk Management
Identification of risks and opportunities, the evaluation of their financial impact, and our initiatives
Based on the scenario analyses, SRA has identified risks and opportunities and evaluated their impact on our business as shown in the table below.
| * | SRA qualitatively analyzed the degree of financial impact on financial indicators and evaluated it in three stages: large, medium and small. |
|---|
| Type of risk | Risk/Opportunity | Financial Impacts | Financial Impacts | Risk Management, Countermeasures, and Initiatives |
||||
|---|---|---|---|---|---|---|---|---|
| 4℃ | 1.5℃ | |||||||
| Mid term 2030 |
Long term 2050 |
Mid term 2030 |
Long term 2050 |
|||||
| Transition Risks |
Policy and Legal | ・Toughening taxation on GHG emissions by introducing a carbon tax | ・Increasing tax burden on GHG emissions of properties due to the introduction of carbon tax | Small | Small | Medium | Large | ・Reducing and declining energy consumption and GHG emissions ・Setting and monitoring of GHG emission reduction targets ・Reducing energy consumption through the renovation of portfolio properties and collaboration with tenants |
| ・Stricter energy efficiency evaluation, certification and labeling systems for buildings | ・Increasing cost burden due to rising environmental certification expenses for existing properties ・Increasing (operation) expenses, such as payment to external vendors to comply with the labeling systems |
Small | Small | Large | Large | ・Setting of environmental certification targets and management of progress ・Management of energy usage through the introduction of energy management system ・Generation of expenses for renovating existing properties to improve energy efficiency |
||
| Technology | ・Evolution and widespread adoption of renewable energy and energy-saving technologies | ・Increasing expenses for introducing new technologies to prevent the equipment of portfolio properties from becoming technologically obsolete | Small | Small | Medium | Large | ・Introduction of renewable energy ・Conversion of existing properties to ZEB/ZEH and the acquisition of ZEB/ZEH properties ・Introduction of advanced energy-saving technology ・Implementation of energy-saving renovation work |
|
| Market | ・Changes in the ESG evaluation and investment and lending stance of investors and financial institutions | ・Rising funding costs | Small | Small | Medium | Large | ・Rising ratio of environmentally certified area (to total floor area) ・Implementation of green financing |
|
| Reputation | ・Declining brand value due to delayed response to climate change | ・Decreasing rent income due to declining brand value | Small | Small | Medium | Medium | ・Acquisition of environmental certifications and energy-saving rating ・Implementation of equipment renewal and renovation in response to climate change |
|
| ・Declining tenant demand for properties with low environmental performance (and resilience) and their asset value | ・More difficult acquisition of new tenants and residents ・Declining rent income due to rising vacancy rate ・Declining asset value |
Medium | Large | Medium | Large | |||
| Physical Risks |
Acute | ・Physical damage to portfolio properties due to abnormal weather (typhoons, floods, storm surges, etc.) | ・Increasing repair expenses and insurance premiums ・Increasing renovation expenses to prepare for abnormal weather ・Declining rent income when damage occurs |
Medium | Large | Medium | Medium | ・Understanding of risks using hazard maps, etc. ・Implementation of flood prevention measures such as water stops in properties expected to flood ・Provision of appropriate property insurance |
| Chronic | ・Rise in average temperatures | ・Increases in air-conditioning operation, maintenance, and repair expenses | Medium | Medium | Small | Medium | ・Introduction of air conditioning equipment with excellent energy-saving performance(Adoption of high efficiency type, etc.) ・Improving insulation performance of properties |
|
| Opportunity | Products and services | ・Increasing tenant needs for properties with high environmental performance (and safety against weather disasters) | ・Increase in revenue by attracting tenants and residents | Medium | Large | Medium | Large | ・Acquisition of environmental certifications and energy-saving rating ・Enhancing disclosure of information on environmental performance ・Implementation of equipment renewal and renovation in response to climate change |
| Market | ・Changes in investment stance due to the expansion of ESG investment | ・Increasing appetite for investment of institutional investors ・Declining funding costs through green financing |
Small | Small | Medium | Medium | ・Implementation of green financing ・Implementation of equipment renewal and renovation in response to climate change |
|
Indicators and Targets
Since the status of GHG emissions from the portfolio and emission intensity are key indicators in the real estate sector, NIPPON REIT will monitor Scope 1, Scope 2 and Scope 3 emissions in accordance with the GHG Emissions Reduction Policy to strive for their continuous reduction.
Targets
- Achieve net-zero by 2050.
- Reduce GHG emissions 50% by 2030 (compared to 2016, based on intensity)
Environmental Performance
Premise
Based on the Sustainability Policy articles “1. Effort to save energy and reduce greenhouse gas emissions” and “2. Realization of a recycling-oriented society,” NIPPON REIT has set reduction targets for energy consumption and greenhouse gas emissions to improve the environmental performance of its real estate portfolio.
In order to achieve these targets, NIPPON REIT’s asset management company, SRA implements measures to improve the operational performance of buildings, conduct energy efficiency retrofits and engage tenants on energy efficiency based on its “Energy Conservation Policy,” which stipulates operational policies for improving energy efficiency of the real estate portfolio, and “GHG Emissions Reduction Policy,” which aims to create a low-carbon society.
Reduction Targets for Energy Consumption and Greenhouse Gas
At SRA’s Sustainability Promotion Conference, budget and performance management (ascertaining the degree of achievement against the actual value target, comparing and analyzing with the previous fiscal year) is performed, generally on a quarterly basis. Furthermore, we have identified issues for each property and made improvements by referring to results of CO2 reduction potential and energy-saving diagnoses made by a third-party organization.
This table can be scrolled sideways.
| FY2016 (Base Year) |
FY2017 | FY2018 | FY2019 | FY2020 | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | Rate of change(%) (cf. FY2016) |
||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Energy Consumption | Total (MJ) | 467,828,166 | 467,719,396 | 460,970,411 | 457,258,994 | 424,633,654 | 381,024,918 | 369,686,036 | 319,804,224 | 306,079,335 | 280,866,182 | -40.0 |
| Intensity (MJ/㎡) | 1,520 | 1,422 | 1,252 | 1,176 | 1,045 | 958 | 932 | 804 | 783 | 729 | -52.0 | |
| CO2 Emission | Total (tCO2) | 23,292 | 22,483 | 23,302 | 22,052 | 19,403 | 17,284 | 15,713 | 13,776 | 14,046 | 13,136 | -43.6 |
| Intensity (kgCO2/㎡) | 75 | 68 | 63 | 57 | 47 | 43 | 39 | 34 | 35 | 34 | -54.9 | |
| Water Consumption | Total (㎥) | 244,964 | 254,822 | 270,526 | 305,605 | 239,361 | 218,464 | 213,685 | 214,532 | 202,281 | 184,811 | -24.6 |
| Intensity (㎥/㎡) | 0.82 | 0.78 | 0.74 | 0.77 | 0.59 | 0.54 | 0.53 | 0.53 | 0.51 | 0.48 | -41.5 | |
| Amount of Waste | Amount of Non- hazardous Waste (t) |
2,519 | 2,863 | 2,995 | 2,664 | 2,072 | 1,902 | 1,889 | 1,949 | 1,918 | 1,674 | - |
| Amount of Incineration (t) |
1,035 | 1,348 | 1,404 | 1,130 | 941 | 990 | 1,014 | 1,010 | 1,009 | 878 | - | |
| Recycling Quantity (t) | 1,422 | 1,514 | 1,591 | 1,534 | 1,130 | 912 | 871 | 924 | 909 | 796 | - | |
| Recycling Rate (%) | 56.4 | 52.9 | 53.1 | 57.6 | 54.6 | 47.9 | 46.1 | 47.4 | 47.3 | 47.5 | - |
Energy Consumption
CO2 Emission
Water Consumption
Amount of Waste
| (Note) | All figures from FY2023 onward, with some exceptions, have received the third-party assurance of Sustainability Accounting Co., Ltd. |
|---|
Our Environmental Efforts
Reducing Energy Consumption
Introduction of LED
Utilizing the government’s subsidy program, NIPPON REIT is actively promoting the introduction of LED lighting to reduce energy consumption. The energy consumption of the underlying properties is reduced, and a brighter and more comfortable environment is provided by converting lighting fixtures in common areas and leased areas, and emergency lighting fixtures (guide lights and emergency lights) to LEDs.
As of June 30, 2026
| LED Lighting Ratio | 92Properties 58.2% of Gross Floor Area |
Adoption of Renewable Energy Electricity
Properties with Renewable Energy Systems Installed
Water Conservation
Installment of Water Saving Device(Example: FORECAST Gotanda WEST)
Water-saving toilets have been installed at multiple properties as part of our water conservation initiatives.
This initiative not only reduces water consumption but also contributes to lower electricity usage for water-pumping systems, thereby helping to reduce CO2 emissions.
| Before | After | Reduction rate |
|---|---|---|
| 9.2ℓ/toilet flush | 5.5ℓ/toilet flush | 40% |
| (Note) | The table above indicates the average amount of water used per toilet flush before and after the installation of the water-saving equipment. |
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Stakeholder Engagement to Improve Property Performance
Green Lease
Green lease agreements are concluded with tenants to ensure mutual cooperation between individual building owners and tenants in promoting environmental measures.
What is Green Lease Agreement?
It is an agreement specifying that building owners and tenants shall cooperate with each other to reduce environmental burden. The agreement contains provisions to facilitate renovation toward more environmentally-friendly office buildings by reducing building owners' investment burden through sharing the economic merits generated as a result of energy-saving renovation works among building owners and tenants.
Tenants and Stakeholder Engagement to Improve Property Performance
- ①NRT prepared letters to tenants requesting reduced energy consumption, distributed manuals for office users and put posters on each floor to raise awareness about energy efficiency.
- ②The property management company receives ESG - related training for the purpose of promoting increased awareness of environmental consideration in daily operations.
- ③For electronic toilets, the temperature settings for the heater and water for cleansing are controlled and adjusted for each season.
- ④Electric water heaters in staff kitchens are managed and their temperature settings are adjusted for each season.
- ⑤The temperature settings and hours of operation of air conditioning and lighting for common use space are adjusted by means such as timer control, Environmental Management Systems (EMSs) and human presence sensors for lighting.
The poster of “In the power saving”
Environmental Pollution Prevention
Prior to finalizing an agreement to purchase real estate, due diligence is always conducted by an expert to verify legal compliance. NIPPON REIT also conducts due diligence in advance to check for the presence of soil contamination or specified hazardous substances, such as asbestos, to identify and avoid properties that are a risk in terms of their impact on the natural environment.
Green Finance
NIPPON REIT practices asset management taking into consideration Environment, Society and Governance (“ESG”). As a part of such initiatives, NIPPON REIT strives to realize a sustainable environment and society by implementation of green finance including green bonds and green loans etc.
Green finance framework
Use of proceeds from green finance
NIPPON REIT plans to use the funds procured through green finance as funds for the acquisition and refinancing of the funds for the asset conforming to “Eligible criteria A” and project conforming to “Eligible criteria B”. In terms of “Eligible criteria B”, renovation work that has been completed or will be completed within 3 years from the payment date of the green bond or the green loan are eligible.
Eligible criteria
Eligible criteria A:
Assets for which any of the following certifications from a third-party certification body (“green building certification”) has been or will be obtained
- I. DBJ Green Building Certification (Note 1): 3 stars and above 3 stars and above
-
II. BELS (Note 2):
(Based on FY2016) 3 stars and above
(Based on FY2024) non-residential: Level 4 or above residential: Level 3 or above -
III. CASBEE for Real Estate, CASBEE for Buildings (Note 3)(Note 4):
B+ rank or higher
※ Except for cases in which BEI=0.75 exceeds at plants, etc., including logistics centers.
Eligible criteria B:
The renovation works that meet one out of the following three requirements.
- I. Renovation work intended to reduce CO2 emissions by more than 30%
- II. Renovation work intended to reduce energy consumption by more than 30%
- III. Renovation work intended to reduce water consumption by more than 30%
| (Note 1) | “DBJ Green Building Certification” is a certification of buildings with environmental and social awareness (Green Building) implemented by Development Bank of Japan Inc. (“DBJ”) based on a five-grade evaluation system (1 to 5 stars) by using a comprehensive scoring model independently developed by DBJ. |
|---|---|
| (Note 2) | BELS (Building-Housing Energy-efficiency Labeling System) is an evaluation system conducted by a third-party organization based on guidelines established by the Ministry of Land, Infrastructure, Transport and Tourism. It evaluates and displays energy-saving performance based on the primary energy consumption of buildings. Until March 2024, evaluations were conducted in five ranks (one-star to five-stars) (based on FY2016). Since April 2024, evaluations have been conducted in seven ranks (0 to six-stars) for houses with energy-saving facilities and non-houses (based on FY2024). |
| (Note 3) | "CASBEE(Comprehensive Assessment System for Built Environment Efficiency）for Real Estate" is a system that evaluates the environmental performance of a building and assigns a rating (Rank B to Rank S) on four stages. It is a system that comprehensively evaluates the environmental performance of a building, including consideration for the landscape, in addition to the environmental impact reduction aspects such as energy conservation, resource conservation, and recycling performance. |
| (Note 4) | "CASBEE for Building" is a methodology that evaluates the buildings on five stages (rank C to S) based on the scores of Q (building's environmental quality/performance) and LR (building's environmental impact reduction). |
Process for project evaluation and selection
The projects that meet eligible criteria (“eligible green project”) are decided by the “Sustainability Committee” of the Asset Management Company, which is comprised of the President and CEO, the Senior General Manager of Investment Management Division and the Senior General Manager of Finance & Planning Division etc., under discussion about evaluation of eligible green project, use of the fund and eligibility for the criteria.
Management of proceeds
The total of the amount obtained by multiplying the total book value of assets that meet eligible criteria A as of end of the latest fiscal period by the LTV(Note) as of end of the latest fiscal period and the amount of the total assumed expense of the renovation work that meet eligible criteria B will be set as the upper limit amount for green finance.
| The total book value of assets that meet eligible criteria A (A) | 111,722 million yen |
|---|---|
| LTV (B) (Note) | 48.2 million yen |
| The total expense of the renovation works that meet eligible criteria B (C) | 0 million yen |
| Green eligible liabilities（The upper limit amount for green finance）(A×B＋C) | 53,819 million yen |
| (Note) | LTV is calculated as follow LTV = total interest bearing debt ÷ total assets |
|---|
Eligible criteria
■Criteria A
| Property No. | Property Name | DBJ Green Building Certification |
BELS Certification |
Certification for CASBEE for Real Estate |
Book value (million yen) (As of December 31, 2025) |
|---|---|---|---|---|---|
| A-4 | FORECAST Shinjuku AVENUE | A | 6,103 | ||
| A-5 | FORECAST Ichigaya | S | 4,213 | ||
| A-8 | FORECAST Sakurabashi | ★★★ | A | 6,118 | |
| A-17 | Shibakoen Sanchome Building | A | 7,271 | ||
| A-21 | Itohpia Iwamotocho 2-chome Building | A | 2,845 | ||
| A-24 | Pigeon Building | ★★★ | S | 2,914 | |
| A-28 | Nishi-Shinjuku Sanko Building | ★★★★★ | 2,338 | ||
| A-31 | Nishi-Gotanda 8-chome Building | ★★★ | 2,265 | ||
| A-32 | Towa Higashi-Gotanda Building | ★★★★ | 2,029 | ||
| A-33 | FORECAST Takadanobaba | ★★★★ | S | 5,751 | |
| A-41 | I・S Minamimorimachi Building | ★★★ | S | 2,247 | |
| A-46 | La Verite AKASAKA | ★★★★★ | 2,100 | ||
| A-49 | FORECAST Kayabacho | ★★★★ | A | 3,125 | |
| A-50 | FORECAST Waseda FIRST | A | 4,843 | ||
| A-51 | FORECAST Gotanda WEST | ★★★ | S | 7,599 | |
| A-52 | Omiya Center Building | S | 15,426 | ||
| A-53 | Sumitomo Mitsui Bank Koraibashi Building | S | 2,892 | ||
| A-56 | Homat Horizon Building | S | 6,588 | ||
| A-67 | FORECAST Kameido | ★★★ | 2,539 | ||
| A-78 | URAWA GARDEN BUILDING | S | 12,138 | ||
| B-1 | Tower Court Kitashinagawa | ★★★★★ | 10,370 | ||
| Total | 111,714 | ||||
(Total of 21 properties)
■Criteria B
| Property No. | Property Name / Construction name | Construction completion date | Construction cost (million yen) |
|---|---|---|---|
| N/A | |||
Reporting
NIPPON REIT's allocation of proceeds as to green finance is as follows.
| Total amount of outstanding green bonds | 3,300 million yen |
|---|---|
| Amount of proceeds not yet allocated | － |
| Name | Total issue amout (million yen) |
Interest rate | Issue date | Redemption date | Remarks | Use of proceeds |
|---|---|---|---|---|---|---|
| NIPPON REIT 5th unsecured bonds (with pari passu conditions among specified investment corporation bonds) (Green bonds) |
2,000 | 0.670% | August 6, 2021 | August 6, 2031 | Unsecured Unguaranteed |
Appropriate to part of the repayment funds of the borrowings procured as the acquisition funds for the following three properties |
| NIPPON REIT 6th unsecured bonds (with pari passu conditions among specified investment corporation bonds) (Green bonds) |
1,300 | 1.346% | April 23, 2025 | April 23, 2030 | Unsecured Unguaranteed |
Appropriate to part of the repayment funds of the borrowings procured as the acquisition funds for the following two properties |
External review
For eligibility of the green finance framework, NIPPON REIT has been assigned “Green 1 (F),” the highest evaluation grade in the JCR Green Finance Framework Evaluation by Japan Credit Rating Agency, Ltd. (“JCR”). For the content and other details of the JCR Green Finance Framework Evaluation, please refer to the following website.
JCR Green Finance Framework Evaluation:https://www.jcr.co.jp/en/greenfinance/