Environmental Initiatives

Our Approach to Climate Change

The world has been accelerating the transition to a carbon-neutral society. This trend is found in the global long-term goal set in the Paris Agreement, an international framework since 2020 to address global warming. The goal in the agreement is to hold the increase in the global average temperature to well below 2°C above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels, and Japan has declared its intention to achieve carbon neutrality by 2050.
The Investment Corporation and the Asset Manager view climate change as an important issue that changes the natural environment and social structures dramatically and has a significant impact on real estate management. Contribution to the achievement of a carbon-neutral society is considered as a social mission.
In accordance with the TCFD recommendations, we will identify and analyze risks and opportunities related to climate change and proceed with step-by-step disclosure of information related to climate change. We will continuously work to reduce the environmental impact of business activities as we understand social needs and expectations for us through active dialogue with external stakeholders.

Support for TCFD Recommendations

The Task Force on Climate-related Financial Disclosures (TCFD) is an international initiative established by the Financial Stability Board (FSB), at the request of the G20. The purpose of the TCFD is to discuss disclosure of climate-related financial information and the responses by financial institutions. The TCFD Consortium is a group of companies, financial institutions, and other organizations that support the TCFD recommendations. The consortium was established with a view to further discussing effective corporate disclosure of climate-related information and initiatives to link disclosed information to appropriate investment decisions on the part of financial institutions and other organizations.

To clarify the policy and system for addressing climate-related issues and expand the disclosure of information about relevant initiatives, the Asset Manager established the Climate Change and Resilience Policy and announced its support for the TCFD recommendations in December 2021. In January 2022, the Asset Manager joined the TCFD Consortium, a group of domestic companies that support the TCFD recommendations.
Click here for TCFD.
Click here for TCFD Consortium.

Governance Related to Climate Change

The Asset Manager has established the Climate Change and Resilience Policy, the policy for responding to risks and opportunities related to climate change and working to make business and strategy resilient to climate-related issues.
In accordance with the policy, Chief Climate-Related Issues Officers (general managers of departments engaged in sustainability promotion) make regular reports to the Chief Executive Officer for Climate-Related Issues (President and Representative Director) at Sustainability Promotion Committee meetings. The reports cover matters related to responses to climate change, including identification and evaluation of impacts of climate change, management of risks and opportunities, progress of initiatives for adaptation and mitigation, and indicator and target setting. The Sustainability Promotion Committee deliberates and discusses issues related to climate change, after which the Chief Executive Officer for Climate-Related Issues makes final decisions. Under this system, climate-related issues are supervised by the President and Representative Director.
Policy Regarding Sustainability and Sustainability Promotion System

Strategy

To factor climate-related risks and opportunities into the Investment Corporation’s real estate management business, the Asset Manager conducted a scenario analysis of the Investment Corporation’s portfolio. The Asset Manager referred to climate outlooks published by international organizations and other entities, in order to identify risks and opportunities of climate change brought to the Investment Corporation and assess financial impacts on the Investment Corporation's business. Using a 1.5°C/2°C scenario and a 4°C scenario, a qualitative analysis was conducted as described below.

Target of Analysis and Prerequisites

Target: All properties owned by the Investment Corporation
Scope: Overall real estate investment and management business
Target period: From 2023 to 2050, with short-term, medium-term, and long-term timeframes
(Short term: 2023–2025, Medium term: 2026–2030, Long term: 2031–2050)

Analysis Procedure

①In accordance with the TCFD framework, the Asset Manager discussed climate-related risks and opportunities and identified factors that may have a significant impact on the Investment Corporation’s business domain.

②Concerning the risks and opportunities identified in (1), the Asset Manager summarized and grasped what the world would look like under the 1.5°C/2°C and 4°C scenarios, based on the parameters (forecasts) of the adopted scenarios.

③Based on the forecasts in (2), the Asset Manager conducted a qualitative analysis for the Investment Corporation, calculated financial impacts in the scenario analysis, and worked out countermeasures.

Key Scenarios Adopted in the Analysis

Expected Future in Each Scenario

4°C Scenario
The 4°C scenario forecasts a future where greenhouse gas emissions are on an increasing trend due to insufficient climate change mitigation, without new regulations, taxation, or other measures to achieve a carbon-neutral society. The scenario involves high relative physical risks from climate disasters and low transition risks.

Government	Tenants	Investors	Financial Institutions	Climate/Weather
Stricter legal regulations related to resilience	Increased needs for measures against storm and flood damage, heatstroke, etc.	Higher importance of physical risk assessment in making investment decisions	Increased needs for physical risk assessment in making lending decisions	Severer storm and flood damage and increased natural disasters due to rising temperatures, etc.

1.5℃/2℃ Scenario
The 1.5°C/2°C scenario forecasts a future where greenhouse gas emissions are on a decreasing trend, with the advancement of social policy, emission regulations, technology investment, and other measures to achieve a carbon-neutral society. The scenario involves low relative physical risks from climate disasters and high transition risks.

Government	Tenants	Investors	Financial Institutions	Climate/Weather
Stricter regulations against GHG emissions due to an introduction of carbon tax	Increased needs for environmental performance	Increased needs for the assessment of compliance with environmental regulations and environmental certifications in making investment decisions	Increased needs for the assessment of compliance with environmental regulations and environmental certifications in making lending decisions	A certain degree of advancement of chronic climate change, such as increased storm and flood damage

Financial Impacts in the Scenario Analysis

For each scenario, the Asset Manager classified the financial impacts of identified risks and opportunities into short-term, medium-term and long-term impacts and examined relative scales of impacts on the Investment Corporation. Shown below are medium-term and long-term risks from climate change that have a certain degree of financial impacts.
１．Transition risks: Policy and legal risks, technology risk, market risk, and reputation risk
２．Acute physical risks: Event-driven climate risks, including typhoons and floods
３．Chronic physical risks: Climate risks caused by long-term shifts in climate patterns, including sustained higher temperatures and sea level rise

※GHG refers to Green House Gas.

Risk Management

The Investment Corporation’s Climate Change and Resilience Policy sets out processes to identify, assess, and manage the impacts of climate change risks and opportunities on the corporation’s management activities, strategies, financial plans, etc.

● Chief Climate-Related Issues Officers summarize climate-related risks and opportunities and report the progress to the Sustainability Promotion Committee, in principle, once a year.

● The Sustainability Promotion Committee continuously identifies, assesses, and manages climate change risks and opportunities that are important to the business and financial plans and affect the asset management operations of the Investment Corporation. Based on the above reports, the committee prioritizes issues of strategic importance to the business.

● The Chief Executive Officer for Climate-Related Issues instructs to factor important climate-related risks with high priority, which have been deliberated by the Sustainability Promotion Committee, into the existing company-wide risk management program. The risk identification, assessment, and management processes are thus integrated.

Indicators and Targets

The Investment Corporation views the transition to a decarbonized society as an opportunity and has established the following as key monitoring indicators (KPI) in the process of managing climate change risks and opportunities.

Improvement of Environmental Performance

Target (KPI)
Reduction of CO2 emissions	Mid-term target (FY2030) : Reduction of 20% in CO2 emissions on an intensity basis across the portfolio by FY2030 (compared with FY2022)
	Long-term target (FY2050) : Achieved carbon neutrality in CO2 emissions on an intensity basis across the portfolio by FY 2050
Percentage of environmental certifications acquired	Mid-term target (FY2030) : Achieve an environmental certification ratio of at least 20% for the entire portfolio

Environmental Targets and Performance

The Investment Corporation is striving to improve environmental performance by establishing environmental targets for the reduction of energy consumption, CO2 emissions, and water consumption across the entire portfolio and monitoring its performance with respect to achieving them.

Environmental Targets
Rental housing / Healthcare

Item		Short-term target	Middle,Long-term target
Energy	Consumption intensity	Average 1% reduction per year	8% reduction by FY2030 (compared to FY2022)
CO2		-	20% reduction by FY2030 (compared to FY2022)
Water		Maintainance of the status quo	Maintainance of the status quo

Performance

In conjunction with the medium- to long-term targets formulated for its ESG initiatives, the Investment Corporation is working to keep track of energy consumption, CO2 emissions, water consumption.
The reduction targets and actual results of energy consumption, CO2 emission and water consumption for the residence (common area and part of the exclusive area) are as follows.
Rental housing

Item	Unit	Actual reduction
		FY2022 【base year】	FY2023	FY2024	Rate of change
Energy	Consumption (MWh)	8,687	8,420	8,666	-0.24%
	Consumption intensity (MWh/m²)	0.172	0.155	0.160	-6.88%
CO2	Emission (t-CO2)	3,611	3,547	3,670	1.63%
	Emission intensity (t-CO2/m²)	0.045	0.044	0.043	-5.28%
Water	Consumption (m³)	194,337	165,663	170,658	-12.19%
	Consumption intensity (m³/m²)	1.57	1.38	1.27	-18.92%

*1 Actual values ​​for "rented housing" among the managed assets are listed (energy consumption and CO2 emissions are actual values ​​for common areas only, and water consumption includes 9.5% of the exclusive area (as of the end of March 2025) and actual values ​​for common areas).
*2 Properties that were bought and sold in each target fiscal year are excluded from the calculations for that year.
*3 CO2 emissions are calculated by the asset management company based on adjusted emission factors for each electric power supplier published by the Ministry of the Environment.
*4 Sompo Risk Management Inc. is conducting third-party verification of each environmental performance data (energy consumption, water consumption) for rental housing properties from fiscal 2023 onwards.

Healthcare

Item	Unit	Actual reduction
		FY2022 【base year】	FY2023	FY2024	Rate of change
Energy	Consumption (MWh)	48,780	50,836	48,196	-1.20%
	Consumption intensity (MWh/m²)	0.232	0.237	0.218	-6.26%
CO2	Emission (t-CO2)	17,372	17,078	18,642	7.31%
	Emission intensity (t-CO2/m²)	0.081	0.076	0.082	1.34%
Water	Consumption (m³)	487,258	497,571	513,815	5.45%
	Consumption intensity (m³/m²)	2.26	2.27	2.27	0.54%

*1 Actual values ​​for "Healthcare" are listed among the managed assets (51 properties are covered, where at least one of energy consumption/CO2 emissions/water is measurable).
*2 Properties that were bought and sold in each target fiscal year are excluded from the calculations for that year.
*3 CO2 emissions are calculated by the asset management company based on adjusted emission factors for each electric power supplier published by the Ministry of the Environment.
*4 Each environmental performance data for fiscal 2023 (energy consumption, water consumption) has undergone third-party verification by Sompo Risk Management Inc.

Construction of Environmental Management System

In order to pursue energy-saving, CO2 emissions reduction, and efficient use of water resources, the Investment Corporation has established an environmental management system. Focusing on energy consumption, CO2 emissions, and water usage, it sets targets, tracks performance, manages budgets, and executes countermeasures (PDCA cycle), contributing to the realization of a sustainable society through the reduction of its environmental footprint.

Implementing Eco-Friendly Initiatives via Real Estate Investment

Efforts for environmental consideration

Introduction and renovation of LED lighting

For environmental conservation, the Investment Corporation has been switching to LED lights in the common areas of  properties.
This will help reduce power consumption and environmental impact.

（TK Flats Shibuya）

Efforts	Sep 2022	Mar 2023	Sep 2023	Mar 2024
LED lighting	650 units	523 units	614 units	453 units

Installation and renovation of environment-friendly equipment

For environmental conservation, the Investment Corporation has been installation and renovation of environment-friendly equipment in the exclusive areas of properties.

Efforts	Sep 2022	Mar 2023	Sep 2023	Mar 2024
energy-saving air conditioners	574 units	415 units	627 units	323 units
water-saving showers	176 units	104 units	116 units	121 units
water-saving toilets	28 units	32 units	36 units	25 units

（TK Flats Shibuya）	（Gala Place Shinjuku Gyoen）	（Joy Oyamadai）

Posting a call for power saving / water saving

Posting digital signage to encourage tenants of rental housing residents to save electricity and water.

（Prospect Glarsa Hiroo）

Installation of Delivery Box

A delivery box is installed in the rental housing owned by the Investment Corporation.
Since this initiative will not only improve the convenience of tenants of rental housing, but will also lead to reduction of redelivery rate and CO2 reduction. the Investment Corporation promotes the installation of the delivery box.

（Gran Casa Omori-Kaigan）

The ratio of installation of delivery boc  in rental housing (based on the number of buildings)

Efforts	Sep 2022	Mar 2023	Sep 2023	Mar 2024
Installation of delivery box	85.2%	85.8%	87.9%	89.3%

• ※13buildings such as a single-tenant property and compartmentalized ownership property are excluded.

Greening of premises and promotion of biodiversity

We are working to conserve biodiversity by establishing self-managed parks and managing plantations aimed at improving the quality of biodiversity at a property owned by the Investment Corporation..

（Gran Casa Ryokuchi-koen） 

Environmental Pollution Countermeasures

When acquiring new properties, the Investment Corporation strives to avoid risks by checking in advance for environmental and social risks to ensure there are no problems, including hazardous substances (PCB, asbestos, etc.) and soil contamination, in addition to conducting site inspections and surveys. If hazardous substances or the like are present at a property that it owns, it will implement appropriate countermeasures, management, and disposal in compliance with the laws and regulations.

Eco-Friendly Initiatives with Stakeholders

Supply Chain Management

In order to promote environmental and social initiatives in its supply chain, the Investment Corporation has established a Sustainable Procurement Policy. When selecting new property management companies, suppliers, etc. or evaluating existing counterparties, the status of their sustainability-related initiatives is included in the criteria, along with their facilities management services, lease operation and management services, leasing services, etc., and they are required to understand and cooperate with the Investment Corporation's environmental and social initiatives.

Promoting Green Leasing

As of March 31, 2023, DLI had green lease agreements in 41.3% of its entire portfolio (based on total floor area). In its rental housing, DLI has added sustainability clauses to lease  agreements for new contracts since FY2017, and is working with tenants to reduce electricity, gas, and water consumption and promote recycling.

Distribution of Sustainability Guides

Each Investment corporation has been distributing and posting the Sustainability Guide to tenants and residents of the properties they own since 2023. The guide includes the Asset Manager's sustainability policy and examples of specific sustainability initiatives that can be easily put into practice, and is used to raise awareness of the need to combat global warming and achieve the SDGs.