Policy for climate change initiatives

The Investment Corporation and the Asset Management Company understand that climate change is an important (material) issue that brings about drastic changes to natural environmental conditions and social structures, seriously affecting the Investment Corporation and the Company's operations as well as businesses overall

The Company's understanding on climate-related issues

The following statements show the Asset Management Company's understanding with respect to the Company's resilience against climate change and climate-related issues.

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). Progress in climate change is an (material) issue that brings drastic changes to natural environmental conditions and social structures, seriously affecting the Asset Management Company's operations and businesses overall.

Weather and climate disasters, such as the intensification of typhoons and heavy rainfalls, frequent heat waves and droughts, and rising global sea levels, are expected to occur more frequently or spread more broadly due to progress in climate change. This may have a serious impact on the Asset Management Company's business.

A shift to a decarbonized society and economy is expected to take place as a result of global initiatives for the mitigation of climate change, such as the establishment of a scheme aimed at reducing greenhouse gas emissions, tightening of emission control regulations, etc. The change may have a significant impact on the Asset Management Company's businesses.

Based on the understanding that the climate change issue represents a systemic risk to financial operations, many stakeholders including investors have been requesting the disclosure of information on risks and opportunities related to climate change.  In particular, the Asset Management Company needs to address the serious issue of increasing transparency through the promotion of climate-related risk disclosures according to the recommendations made by the Task Force on Climate-related Financial Disclosures (TCFD).

The Asset Management Company should enhance the resilience of its businesses by identifying, assessing and managing risks and opportunities that may be brought about by climate change. These efforts are essential from a range of perspectives, including the securing of the Investment Corporation's sustainable and stable profitability on a long-term basis.

TCFD

HEIWA REAL ESTATE REIT, Inc. (hereinafter referred to as the “Investment Corporation”) announced today that HEIWA REAL ESTATE Asset Management CO., LTD. (hereinafter referred to as the “Asset Management Company”), the company to which the Investment Corporation entrusts its asset management operations, has declared support for the TCFD (Task Force on Climate-related Financial Disclosures) Recommendations.

Recommendations and Supporting Recommended Disclosures

Basic policy and commitment

Based on this understanding, the Asset Management Company has decided to establish its basic policy and represent its commitment with respect to climate change and resilience. Details are as follows.

The Asset Management Company supports the global targets set forth in the Paris Agreement and will work continuously to reduce greenhouse gas emissions to contribute to the mitigation of climate change.

Governance

The Investment Corporation has decided to establish the following governance system to deal with climate-related risks and opportunities pertaining to the Investment Corporation and the Asset Management Company.

The chief executive officer for climate-related issues shall be a representative director who has the authority to make final decisions in conjunction with the promotion of sustainability.

The operating officer for climate-related issues shall be the general manager of the Business Planning Division who is responsible for the promotion of sustainability.

The chief executive officer for climate-related issues shall make decisions on climate change-related initiatives after such initiatives are discussed and reviewed by the sustainability promotion committee.

The operating officer for climate-related issues shall 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 a chief executive officer for climate-related issues at a sustainability committee meeting.

Strategy

The Asset Management Company will establish a process to identify, evaluate and manage the impact of climate-related risks and opportunities on the management activities, strategies and financial plans of the Investment Corporation, and put the process into use properly. It aims to identify and evaluate climate-related risks and opportunities systematically and objectively by utilizing scientific and academic findings.

Risk management

The Asset Management Company will move forward with initiatives to manage identified climate-related risks and opportunities and raise resilience levels, thereby helping the Investment Corporation reduce business risks and create value creation opportunities. Through such efforts, it aims to secure profitability sustainably and stably on a long-term basis.

Measurement criteria and targets

The Asset Management Company will establish metrics and targets to manage climate-related risks and opportunities, and in doing so, it shall pay attention to consistency between the Asset Management Company's management strategies and comprehensive risk management in conjunction with metrics. In addition, it will disclose established targets including results in comparison with such targets.
The Asset Management Company, which endorses the TCFD recommendations, will disclose the Investment Corporation's climate-related information to investors and other stakeholders under the disclosure framework presented in the recommendations.