Initiatives for Climate Change

Recognition of Climate Change by the Investment Corporation

As evidenced by the Paris Agreement (2015), the IPCC Special Report (2018), and the Sixth IPCC Assessment Report (2023), the progression of climate change is now firmly established as a scientific fact. As part of a global effort to mitigate climate change, there is an accelerating move towards decarbonized society and the economy, including the establishment of frameworks to reduce greenhouse gas (GHG) emissions and the strengthening of emissions regulations.
The Investment Corporation recognizes that the progress of climate change may drive profound transformations in both the natural environment and social structures. The Investment Corporation views climate change as a material issue with the potential to significantly impact its corporate management and overall business operations.
Accordingly, it has established a basic policy and commitment regarding climate change and resilience, and it also recognizes the importance of taking various measures to achieve “net zero” by 2050.

Support for TCFD Recommendations and Joining the GX Future Consortium

The Asset Management Company has expressed its support for the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) .
The TCFD was an international initiative established by the Financial Stability Board (FSB) at the request of the G20 to develop recommendations on climate-related disclosures and the responses of financial institutions. In 2023, its functions were transferred to the International Sustainability Standards Board (ISSB), which was established under the IFRS Foundation.
In addition, the Asset Management Company has expressed its support for the TCFD recommendations and has joined the GX Future Consortium. The GX Future Consortium is an organization reorganized from the former TCFD Consortium as of April 1, 2026, with the aim of strongly promoting the implementation of green transformation (GX) across society and realizing a virtuous cycle of decarbonization and economic growth.
The Investment Corporation will proactively advance the disclosure of climate-related information related to the Investment Corporation in order to fulfill its accountability to its unitholders and other stakeholders.

Disclose framework under the TCFD Recommendations

Category	Recommendations
Governance	Disclose the company’s governance around climate-related risks and opportunities.
Strategy	Disclose the actual and potential impacts of climate-related risks and opportunities on the company’s businesses, strategy, and financial planning where such information is material.
Risk Management	Disclose how the company identifies, assesses, and manages climate-related risks.
Metrics and targets	Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.

Governance

In order to appropriately address climate-related risks and opportunities associated with the Asset Management Company, the Investment Corporation has designated the Representative Director of the Asset Management Company as the Chief Sustainability Officer, and the Head of the Corporate Planning Department as the Executive Sustainability Officer for climate-related matters.
The Executive Sustainability Officer is responsible for reporting to the Chief Sustainability Officer, on a regular basis, regarding the identification and assessment of climate change impacts, management of risks and opportunities, progress of adaptation and mitigation efforts, and the formulation of relevant metrics and targets. These matters are discussed and reviewed by the Sustainability Promotion Committee of the Asset Management Company.
Based on the deliberations of the Sustainability Promotion Committee, the Chief Sustainability Officer makes final decisions regarding climate-related matters. The content of these decisions is subsequently reported to the Board of Directors of the Investment Corporation.

For more, please refer to the "Sustainability Promotion System"

Strategy

The Investment Corporation has established and implemented a systematic process to identify, assess, and manage the potential impacts of climate-related risks and opportunities on its management activities, business strategy, and financial planning.
In identifying and evaluating these risks and opportunities, the Investment Corporation seeks to apply scientific and academic knowledge, ensuring that the process is both systematic and objective.

External Reference Scenarios Used in Analysis

In conducting scenario analysis, the Investment Corporation referenced the following climate-related scenarios developed by the IEA and IPCC.

Category	Institution	4℃ Scenario	1.5/2℃ Scenario
Transition risks	IEA：International Energy Agency	-	IEA NZE2050
Physical risks	IPCC：Intergovernmental Panel on Climate Change	SSP5-8.5	SSP1-1.9

Assumed Future States under Each Scenario

The scenario analysis was conducted based on the assets held by the Investment Corporation as of March 2025.

【1.5℃ Scenario】

The 1.5°C scenario envisions a world where strict climate policies and regulations are implemented to achieve net-zero GHG emissions by 2050, in order to mitigate climate change.
This scenario suppresses temperature rises by reducing GHG emissions and has relatively low physical risks and high transition risks.

Climate and weather	Stakeholder
Climate and weather	Government administration	PM, BM	Tenant	Investors and financial institutions
Continued progress of chronic climate change, including increased frequency of extreme weather events.	Introduction of carbon taxes and stricter energy regulations. Enhanced requirements for GHG emissions reporting.	Greater emphasis on energy-saving measures encouraged for tenants. Increase in compliance requirements related to environmental regulations.	Rising demand for properties with superior environmental performance.	Expansion of climate-related disclosure requirements for investment decision-making. Greater activity in green finance markets.

【4℃ Scenario】

The 4℃ scenario assumes insufficient progress in climate action, resulting in minimal policy intervention and a continued rise in GHG emissions.
As a result, physical risks such as severe natural disasters and sea level rise become significantly more pronounced, while transition risks remain relatively low due to the absence of stringent regulations.

Climate and weather	Stakeholder
Climate and weather	Government administration	PM, BM	Tenant	Investors and financial institutions
Increased frequency and severity of natural disasters due to rising global temperatures. Ongoing sea level rise.	Strengthening of regulations focused on disaster prevention and mitigation.	Emphasis on business continuity planning (BCP), disaster preparedness training, and emergency supply stockpiling.	Increased demand for properties offering higher resilience and safety against climate hazards.	Growing concerns regarding the robustness of climate-related strategies.

Identification of Climate-Related Risks and Opportunities

Based on the scenario analysis described above, the Investment Corporation has identified key climate-related risks and opportunities and assessed their potential impacts on its business operations. The assessment of financial impacts has been conducted qualitatively, with reference to the assumed conditions of each scenario.

Category		Risks and Opportunities	Financial impact	Financial impact				Risk management, countermeasures, and initiatives
				4℃ Scenario		1.5/2℃ Scenario
				Medium term^※	Long term^※	Medium term^※	Long term^※
Transition Risks	Policy and Legal	Introduction of a carbon tax	Increase in tax burden etc. on GHG emissions from properties	Small	Small	Medium	Large	Utilization of renewable energy Establishment and monitoring of GHG emissions reduction targets (50% reduction by 2030 compared to 2018) Energy-saving renovation of existing properties Introduction of energy-saving equipment upon renewal
		Strengthening of energy-saving standards in existing real estate operation	Obsolescence of equipment in owned properties, Increase in burden of retrofit costs, decreased profitability and asset value of low-performance buildings, occurrence of Mandatory levies due to stricter laws and regulations	Small	Small	Small	Large	Energy-saving renovation of existing properties Refinement of energy data management Educational activities for tenants related to ESG initiatives Promotion of green leases Promotion of visualization of energy consumption
		Strengthening of GHG emissions reporting	Increase in operating expenses, such as payments to outside vendors to for reporting purposes	Small	Small	Small	Small	Understanding of energy data corresponding to Scope 1 to 3 Introduction of third-party guarantees to ensure the accuracy of energy data
	Technology	Development and popularization of energy-saving technologies, progress in low-carbon technologies	Increase in costs of retrofitting facilities due to the spread of high energy-efficient equipment	Small	Small	Medium	Large	Energy-saving renovation of existing properties Upgrading to high-efficiency equipment Understanding of the cost of introducing new technology
	Market and Reputation	Utility costs (including external procurement of renewable energy) in property management and operation	Increase in energy procurement costs	Small	Small	Medium	Medium	Energy-saving renovation of existing properties Introduction and renewal of BEMS, BAS Introduction of smart meters (automatic measurement meters)
		Decline in tenant demand and real estate transaction demand for properties with low environmental performance	Decrease in rental income due to difficulties in acquiring new tenants/ residents and an increase in vacancy rates	Small	Small	Medium	Large	Implementation of equipment renovations that lead to improvements in environmental performance Identifying needs through a tenant questionnaire Introduction and consideration of environmental performance equipment in response to needs Ensuring transparency by enhancing and disclosing ESG responses
		Stringent ESG evaluation and investment/financing stance of investors and financial institutions	Decrease in reputation among investors and lenders with high ESG awareness, and deterioration of financing conditions from financial institutions, etc.	Small	Small	Medium	Large	Ensuring transparency by enhancing and disclosing ESG responses Active participation in various ESG evaluations (GRESB, etc.) Increasing the ratio of area covered by environmental certification and energy-saving ratings Implementing green finance Building a portfolio with excellent energy-saving performance Introducing renewable energy
Physical Risks	Acute	Increase in damage due to more severe wind and water damage	Increase in repair and insurance costs, decreased occupancy rates due to increased tenant turnover, decreased rents, increased accounts receivable, and the occurrence of business guarantees	Medium	Large	Small	Medium	Implementation of risk assessment based on hazard maps Implementation of disaster prevention measures (both 'soft' measures such as evacuation drills and 'hard' measures such as the installation of flood barriers) Enhancement of emergency equipment in owned properties Area diversification of the portfolio
	Acute	Flooding due to concentrated heavy rain, flooding of nearby rivers, etc.		Medium	Large	Small	Medium
	Chronic	Increase in the average temperature	Increase in air-conditioning related costs and utilities costs	Medium	Medium	Small	Small	Consideration of introducing energy-saving equipment and energy management systems Introduction of high-efficiency air conditioning equipment and appropriate air conditioning control Strengthening of facility inspections Promotion of energy-saving activities with tenants Introduction of water-saving equipment Area diversification of portfolio
	Chronic	Rising sea levels	Increase in costs for measures to deal with rising sea levels	Small	Large	Small	Small	Area diversification of portfolio Restriction of investment in high-risk areas
Opportunities	Resource Efficiency	Improving the efficiency of energy use by retrofitting to high-efficiency equipment	Reduction of energy costs	Small	Medium	Medium	Medium	Upgrading to high-efficiency equipment Signing of green lease agreements in collaboration with tenants
	Products and Services	Increasing tenant needs for low-emission facilities and properties with high environmental performance	Increase in revenues from attracting tenants and tenants	Small	Small	Medium	Medium	Energy-saving renovation of existing buildings Acquisition and renewal of environmental certification and energy-saving ratings
	Markets	Continuously providing rental properties that match the changing preferences of tenants	Increase in revenues due to rent increases and acquisition of tenants and residents	Small	Small	Medium	Medium	Implementation of equipment renovations that leads to improvements in environmental performance Introducing renewable energy Acquisition and renewal of environmental certification and energy-saving ratings
		Acquiring new investor groups	Use of green bonds, Increase in fundraising and lower fundraising costs by responding to and appealing to investors who prioritize environmental issues	Small	Small	Small	Medium	Acquisition and renewal of environmental certification and energy-saving ratings Ensuring transparency by enhancing and disclosing ESG responses
		Changes in social values regarding environmental performance	Reduced fundraising costs through green finance	Small	Small	Medium	Medium	Actively utilizing green finance
		Improvement of asset value through improvement of green performance	Increase in investment interest from institutional investors due to high ratings from global evaluation agencies	Small	Small	Medium	Medium	Continuously acquiring and renewing environmental certifications and energy-saving ratings
	Resilience	Improving the ability to adapt to climate-related risks by improving disaster prevention performance	Reduced risk of business shutdown due to disaster response measures	Small	Small	Medium	Medium	Implementation of risk assessment based on hazard maps Implementation of disaster prevention measures (both 'soft' measures such as evacuation drills and 'hard' measures such as the installation of flood barriers) Providing disaster prevention information to tenants Area diversification of the portfolio Reducing the risk of damage through measures such as formulating a BCP Enhancing ESG initiatives and ensuring transparency through disclosure

※	Medium term: by 2030, Long term: by 2050

Risk Management

The Investment Corporation aims to reduce business risks and create value by effectively managing identified climate-related risks and opportunities, thereby enhancing its resilience and securing long-term, sustainable, and stable earnings.
It is undertaking the following initiatives to mitigate risks and realize opportunities:

The Chief Sustainability Officer, who holds ultimate responsibility for climate-related matters, designates the relevant department or individual in charge of addressing climate-related risks and opportunities that have been determined through deliberation by the Sustainability Promotion Committee to be of high importance to the business or financial planning. The designated party is instructed to develop appropriate countermeasures.
The countermeasures developed by the assigned department or personnel are reviewed by the Sustainability Promotion Committee or another relevant internal committee, depending on the nature of the measure, and are then implemented accordingly.
The Chief Sustainability Officer instructs that material climate-related risks, which may impact the business or financial planning, be incorporated into the Asset Management Company’s existing enterprise-wide risk management program, and will integrate the risk identification, assessment, and management processes.

Metrics and Targets

The Investment Corporation has established the following metrics and environmental targets for managing climate-related risks and opportunities and pays attention to the consistency of the metrics with the Investment Corporation's management strategy and comprehensive risk management.
The Investment Corporation also discloses progress toward its stated environmental targets, including actual performance results.

For more, please refer to the "Environment Initiatives"