• Environmental Targets
• Performance Data
• Initiatives for climate change

Environmental Targets

SLR has set the environmental targets below and has been monitoring and controlling performance.

Indicators	Target
Energy consumption	SLR aims to achieve an energy consumption intensity reduction of 35% from the level in FY2019 by FY2030.
GHG	SLR aims to reduce the total greenhouse gas emissions of its portfolio (Scope 1 and 2) by 42.0% (with FY2020 as the baseline) by FY2030. SLR aims to reduce its total greenhouse gas emissions throughout its value chain (Scope 1, 2 and 3) to net zero by FY2050.
Water consumption	SLR aims to preserve the status quo up until 2030, using FY2019 as a baseline.
Waste disposal	SLR aims to preserve the status quo up until 2030, using FY2019 as a baseline.
Environmental certification	SLR aims to achieve environmental certification for 70% of its properties by FY2030. (based on total floor)

Performance Data

Energy Consumption	Total Energy Consumption (kWh)	Breakdown		Data Coverage (GFA basis) (Note 1)	Energy Consumption Intensity (kWh/㎡) (Note 2)	Percentage Change (vs previous year)
		Gas/fuel Consumption (kWh)	Electricity Consumption (kWh)
FY 2019	17,067,975	225	17,067,750	100%	58.1	―
FY 2020	18,867,677	1,199	18,866,478	100%	44.4	-23.7%
FY 2021	20,594,448	384	20,594,064	100%	45.4	2.4%
FY 2022	23,880,134	1,507	23,878,627	100%	42.3	-6.9%
FY 2023	24,844,848	1,773	24,843,075	100%	43.4	2.6%

GHG Emissions	GHG Emissions (t-CO2) (Note 3)	Breakdown			Data Coverage (GFA basis) (Note 1)	CO2 Emissions Intensity (t-CO2/㎡) (Note 2)	Percentage Change (vs previous year)
		Scope1 Emissions (t-CO2)	Scope2 Emissions (t-CO2)	Scope3 Emissions (t-CO2)
FY 2019	7,885	0.048	979	6,906	100%	0.0269	―
FY 2020	8,396	0.006	1,114	7,282	100%	0.0197	-26.5%
FY 2021	8,917	0	1,167	7,750	100%	0.0197	-0.4%
FY 2022	10,388	0	1,308	9,079	100%	0.0184	-6.5%
FY 2023	10,882	0	1,361	9,521	100%	0.0190	3.3%

Water consumption	Water consumption (thou. m3)	Data coverage (based on total space) (Note 1)	Water consumption intensity (m3/㎡) (Note 2)	Reduction of intensity
FY 2019	31,203	74%	0.1442	―
FY 2020	35,453	100%	0.0834	-42.2%
FY 2021	34,893	100%	0.0770	-7.7%
FY 2022	50,842	100%	0.0901	17.0%
FY 2023	51,236	100%	0.0895	-0.6%

Waste management	Waste output (t)	Data coverage (based on total space) (Note 1)	Recycling rate
FY 2019	1,100	81%	97%
FY 2020	1,797	100%	93%
FY 2021	588	100%	48%
FY 2022	1,448	83%	70%
FY 2023	4,559	83%	65%

• Numerator = GFA of the property for which data is known(㎡）, Denominator = Total GFA of Portfolio properties excluding land with leasehold interest and land
  Gross floor area is calculated based on the area listed on the inspection certificate of each property.
• Numerator = Each consumption amount, Denominator = Total GFA of the Portfolio properties every fiscal year, and take consideration of occupancy rate
• Scope 1:Direct emissions derived from areas managed by owner.
  Scope 2:Indirect emissions derived from areas managed by owner (location-based).
  Scope 3:Emissions derived from areas managed by tenants.
• Environmental performance above is calculated for which the requisite data is available.

Initiatives for climate change

Awareness of climate change

SLR and SRM understand that climate change is an important (material) issue that brings about drastic changes to natural environmental conditions and social structures, seriously affecting our operations as well as businesses overall.
Further, we are aware that progress in climate change is a scientific fact as indicated mainly by the Paris Agreement (2015), IPCC Special Report on Global Warming of 1.5℃ (2018) and IPCC Sixth Assessment Report (Working Group Ⅰ, 2021).

Announcement of support for the TCFD recommendations
(and participation in the TCFD Consortium)

SRM declared its support for the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”) in November 2021.
The TCFD was established by the Financial Stability Board (“FSB”) for the purpose of reviewing financial institutions’ climate related information disclosure and response. The TCFD announced recommendations to the effect that climate change should be seen as a significant risk to the global economy and companies, etc. should understand and disclose climate related information under the four pillars Governance, Strategy, Risk Management and Metrics and Targets. SLR is committed to increasing communication with stakeholders including investors by disclosing the financial impacts of climate change in accordance with the TCFD Recommendations.

Governance

To ensure the effectiveness of sustainability initiatives, SRM has established the ESG Promotion Committee, which is chaired by the president and composed of the persons responsible for fund operations, etc. and ESG Promotion Team members; the ESG Promotion Team as the working level ESG review structure; and the ESG Taskforce, which is in charge of the ESG operations of each business line and fund.
In terms of the governance structure for responding to climate-related risks and opportunities related to SRM and SLR, the person with the most responsibility for climate-related issues is the president. The president is the person with final decision-making authority for ESG activities. The person responsible for promoting ESG initiatives is the General Manager of the Business Planning Department. The ESG Promotion Committee is responsible for identifying and evaluating the impacts of climate change, managing risks and opportunities, and regularly reporting action on climate change including the status of initiatives to adapt to and mitigate the impacts, and the setting of metrics and targets.

Strategy

SRM 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 SLR, 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.
The identified risks and opportunities and the results of evaluation of their impacts based on scenario analysis are as follows.

Source organizations	1.5-2°C scenario	4°C scenario
IEA (International Energy Agency)	IEA NZE2050 scenario	IEA SPS scenario (World Energy Outlook 2020)
IPCC (Intergovernmental Panel on Climate Change)	IPCC RCP4.5 scenario (Fifth Assessment Report)	IPCC RCP8.5 scenario (Fifth Assessment Report)

◇SLR’s worldview based on the scenarios

[1.5°C scenario]
The 1.5°C scenario is the pathway for reduction in greenhouse gas emissions through the enactment of strict regulations and tax policies aimed at decarbonizing society. Under this scenario, the global temperature increase is limited to 1.5°C above pre-industrial levels.

[4°C scenario]
The 4°C scenario is the pathway where greenhouse gas emissions continue to grow unmitigated, with no enactment of strict regulations and tax policies aimed at combatting climate change. Under this scenario, the global temperature reaches 4°C above pre-industrial levels.

◇Climate-related risks and opportunities and response

							4°C scenario	2/1.5°C scenario
		Risks and opportunities for real estate management	Financial impact on our business and fund	Time span	Risk management, countermeasure, initiative		Financial impact	Financial impact
Transition risks	Policy and Legal	Tightening of environmental regulations including carbon taxes	Increase in tax burden on properties with respect to GHG emissions	Short- term	Setting of GHG emission reduction targets		Small	Large
		Enhancement of energy-saving measures at managed properties	Increased burden of renovation expenses for energy saving measures and imposition of fines in some cases	Mid- term	Acquisition of green building certification and energy rating (for individual properties) Switch to LEDs Installation of solar power generators Upgrading of air-conditioning systems		Small	Large
		Stricter emission reporting requirements under the Act on the Rational Use of Energy	Rising costs to comply with reporting requirements	Mid- term	Compliance with reporting requirements		Small	Small
	Technology	Evolution and widespread adoption of renewable energy and energy-saving technologies	Increase in costs for introducing new technologies	Mid- term	Acquisition of green building certification and energy rating (for individual properties) Switch to LEDs Installation of solar power generators Upgrading of air-conditioning systems		Small	Large
	Market	Introduction of environmental performance standards, among other standards, in real estate appraisal	Decrease in value of REIT and fund assets	Mid- term	Acquisition of green building certification and energy rating (for individual properties)		Small	Large
		Worsening funding conditions for market participants that have not responded to climate change	Rising funding costs	Mid- term	Acquisition of green building certification and energy rating and energy efficiency rating based on medium-to-long-term GHG reduction plan assumptions		Small	Large
		Rising utilities expenses (including expenses for renewable energy procured from outside sources)	Increasing business expenses	Mid- term	Switch to LEDs Installation of solar power generators Upgrading of air-conditioning systems		Large	Small
		Changes in demand from tenants (choosing properties that have responded to climate change, avoiding properties that have not responded to climate change)	Decrease in rent income due to the difficulty in attracting new tenants and a decline in retention rate Rising cost for acquisition of green building certification and energy rating	Short- term	Acquisition of green building certification and energy rating (for individual properties) PR in the display of green building certification and energy rating in properties (entrance hall, etc.) Promotion of green leases		Small	Large
	Reputation	Decline in brand value	Damage to reputation caused by tardy response to climate change	Short- term	Communication of ESG initiatives (utilizing website and disclosures) Monitoring of attainment of targets		Small	Large
Physical risks	Acute	Damage to properties caused by typhoon	Increasing repair expenses and insurance premiums	Short- term	BCP at an individual property level (establishment of emergency contact network)		Large	Small
		Inundation due to intensive heavy rainfall and flooding of nearby rivers	Other additional impacts such as fall in occupancy	Short- term	Due Diligence at the investment stage based on a hazard map, etc. Installation of flood barriers		Large	Small
	Chronic	Flooding of properties located in low-lying places due to sea level rises	Expenses for large-scale renovations (raising flood barriers) incurred	Short- term	Due Diligence at the investment stage Installation of tide barriers		Large	Small
		Increasing demand for air-conditioning due to increases in extreme climatic conditions, such as extremely hot and cold days	Increases in air-conditioning operation, maintenance, and repair expenses	Short- term	Installation of solar power generators Upgrading of air-conditioning systems		Large	Small
Opportunities	Resource efficiency	Introduction of onsite renewable energy generation	Reduction in expenses for utilities procured from outside sources	Short- term	Installation of solar power generators		Small	Small
	Products and services	Providing low-emission facilities and services and communicating them to tenants and users	Increase in revenue by attracting tenants	Mid- term	Acquisition, management and leasing of high-quality properties		Small	Large
	Market	Finding new investors	Utilization of green bonds Increasing funds raised and reducing funding costs by attracting the attention of investors that emphasize environmental issues	Short- term	Adoption of green finance framework		Small	Large

Risk management

SRM has established a management process such as the following with respect to material climate-related risks and opportunities that it has decided to prioritize and will focus on mitigating the risks and realizing the opportunities.

[Risk management process and integration into enterprise risk management program]

1. The person with the most responsibility for climate-related issues instructs the ESG Promotion Team to formulate proposed measures with respect to high priority climate-related risks and opportunities that are important for business and financial plans.
2. Depending on their content, the proposed measures formulated by the ESG Promotion Team are implemented after deliberation at a meeting of the ESG Promotion Committee and/or other appropriate internal committees.
3. The above process uses procedures such as the review of climate-related risks that are important for business and financial plans by the person with the most responsibility for climate-related issues and the reporting of content reviewed by the ESG Promotion Team to the ESG Promotion Committee for deliberation in order to achieve integration of the climate-related risk identification, evaluation and management process into enterprise risk management.

Metrics and Targets

SRM and SLR set key metrics (KPIs) and targets in order to manage and monitor risks and opportunities. The metrics and targets we have set are as follows.

Environmental Targets

Energy

Water consumption

Waste management

SLR is working to reduce waste in cooperation with tenants by continuously monitoring the volume of waste generated and seeking to improve the recycling rate.

Cooperation with tenants and stakeholders on environmental issues

Green lease initiatives

SLR aims for a win-win relationship that benefits both building owners and tenants through reduced utilities expenses by establishing written agreements and memorandum on the reduction of environmental burdens through efforts such as energy conservation at properties owned and improvement of the working environment in cooperation with tenants.

As of May 31, 2024

	Number of tenants	Agreement conclusion percentage (based on leased area)
Green lease agreements	24 tenants	74.5

• Percentage of properties with which agreements have been concluded = Leased area by tenants which have concluded green lease agreements/Total leasable area of portfolio (excluding land with leasehold interest and other land)
• To reflect the leased area by tenants of properties in which SLR has a quasi co-ownership interest, the percentage is calculated using an area which takes such quasi co-ownership interest into consideration.

Environmental Certifications

Property Name	CASBEE	BELS Certification	DBJ Green Building
SOSiLA Yokohama Kohoku	Real Estate A Rank	★★★★★	★★★★★
SOSiLA Sagamihara	Real Estate A Rank	★★★★★
SOSiLA Kasukabe	Real Estate A Rank	★★★★★
SOSiLA Kawagoe	Real Estate A Rank	★★★★★
SOSiLA Nishiyodogawa I	Real Estate A Rank	★★★★★
SOSiLA Ebina	Real Estate S Rank	★★★★★
SOSiLA Nishiyodogawa II	Real Estate A Rank	★★★★★
LiCS Narita	Real Estate A Rank	★★★★
SOSiLA Itabashi	Real Estate A Rank	★★★★★
SOSiLA Amagasaki	Real Estate S Rank	★★★★★
SOSiLA Yashio	Real Estate S Rank	★★★★★

Status of environmental certifications

	Number of certified properties	Gross floor area (㎡)	Percentage (%)
Total of environmental certifications	11	545,490	95%
CASBEE	11	545,490	95%
BELS Certification	11	545,490	95%
DBJ Green Building	1	87,450	15%

• As of April 1, 2024

CASBEE

The Comprehensive Assessment System for Built Environment Efficiency (CASBEE) is a system assessing and rating buildings based on their environmental performance. A comprehensive environmental performance assessment of buildings should cover energy consumption performance, resource conservation, recycling performance and other aspects of environmental impact reduction as well as consideration for the landscape. There are four assessment ranks (from Real Estate S rank to B rank). CASBEE for Buildings assessment uses a five-tier ranking system (from S rank to C rank).

For more information about CASBEE, visit the website below.
https://www.ibec.or.jp/CASBEE/english/

BELS Certification

The Ministry of Land, Infrastructure, Transport and Tourism has created guidelines for the indication of the energy saving performance of non-residential buildings in 2013 that are intended to contribute to improving the energy saving performance of non-residential buildings and providing appropriate information to the real estate market, etc. Under the guidelines, BELS evaluates and indicates the energy saving performance, etc. of non-residential buildings. BELS uses an evaluation method that is in line with the revised energy-saving standards (which came fully into force on April 1, 2014).

The certification rating for energy saving performance, at both new buildings and existing buildings, is conducted by third-party institutions, using a variety of measurements. The rating is represented using a five-star (★-★★★★★) evaluation scale.

For more information about BELS, visit the website below.
https://www.hyoukakyoukai.or.jp/bels/info.html (Japanese only)

DBJ Green Building

DBJ Green Building Certification was established by Development Bank of Japan Inc. (DBJ) in April 2011 to recognize properties with environmental and social considerations (Green Building). Based on comprehensive evaluation of target real estate properties, including evaluation of consideration to disaster prevention measures and various stakeholders’ social requirements including local communities as well as environmental features, this program evaluates and certifies real estate properties required by society and economy and supports initiatives for them. The results of the evaluation are indicated by the number of stars (★-★★★★★).

For more information about the DBJ Green Building Certification, visit the website below.
http://igb.jp/en/index.html