Environmental Targets and Performance
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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.
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”, anorganization of domestic supportingcompanies.
As of April 1, 2026, the consortium was reorganized and is now called the “GX Future Consortium”.The Asset Manager continues to participate in the consortium.
The following disclosures on “Governance”, “Strategy”, “Risk Management” and “Metrics and Targets” are provided with reference to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and IFRS S1/S2 published in June 2023 by the International Sustainability Standards Board (ISSB) under the IFRS Foundation.
Click here for GX Future 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.
Click here for 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 2022 to 2050, with medium-term, and long-term timeframes
(Medium term: 2025–2030, Long term: 2031–2050)
Analysis Procedure
- In 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.
- Concerning 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.
- Based 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
| 1.5°C/2°C scenario | 4°C scenario | |
|---|---|---|
| Transition Risks | IEA World Energy Outlook2024 NZE |
IEA World Energy Outlook2024 STEPS |
| Physical Risks | IPCC Fifth Assessment Report RCP4.5 | IPCC Fifth Assessment Report RCP8.5 |
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. |
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1.5°C/2°C 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 |
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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.
- Transition risks: Policy and legal risks, technology risk, market risk, and reputation risk
- Acute physical risks: Event-driven climate risks, including typhoons and floods
- Chronic physical risks: Climate risks caused by long-term shifts in climate patterns, including sustained higher temperatures and sea level rise
| Category | Risk and Opportunity Drivers in Real Estate Operations | Potential Financial Impacts |
Type | Financial Impact | Response Measures | ||||
|---|---|---|---|---|---|---|---|---|---|
| 4°C | 1.5°C / 2°C | ||||||||
| Medium term | Long term | Medium term | Long term | ||||||
| Transition Risks and Opportunities | Policy / Regulation | Stricter GHG Emissions Regulations through the Introduction of Carbon Taxation |
• Increased tax burden in proportion to GHG emissions from properties following the introduction of carbon taxation |
Risk | Low | Low | Medium | High |
• Introduction of energy management systems and renewable energy solutions • Planned reduction of energy consumption and GHG emissions across the portfolio • Improvement of GHG emissions through strategic asset replacement and property renovations • Installation of energy-saving and water-saving equipment |
| Mandatory Compliance with Energy Efficiency Standards |
• Additional costs to comply with energy efficiency standards may increase property acquisition prices and renovation costs. |
Risk | Low | Low | High | High | |||
| Higher Occupancy Rates and Unit Rents for Properties with Strong Environmental Performance |
• Increased rental income from owning properties with strong environmental performance |
Opportunity | Low | Low | Medium | Medium | |||
| Reduction in Utility Costs through Improved Environmental Performance |
• Reduction of utility costs through improved energy efficiency |
Opportunity | Low | Low | Low | Low | |||
| Technology | Advancement and Wider Adoption of Energy-Saving and Renewable Energy Technologies |
• Increased renovation costs associated with the introduction of new technologies • Increased costs associated with ZEB renovations |
Risk | Low | Low | High | High |
• Introduction of advanced technologies • Implementation of planned renovation works • Implementation of ZEB renovations and energy-saving renovations |
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• Advancement and wider adoption of energy-saving and renewable energy technologies may reduce installation and maintenance costs for properties. |
Opportunity | Low | Low | High | High | ||||
| Market / Reputation | Changes in the Investment and Lending Stance of Investors and Lenders |
• Lower evaluations by investors and financial institutions due to delays in environmental responses, including disclosure, mitigation and adaptation measures • Increased financing costs due to lower investment unit prices, downgraded ESG ratings and divestment |
Risk | Low | Low | Medium | Medium |
• Sufficient disclosure of the environmental performance of portfolio properties • Appropriate disclosure of ESG-related information, including climate change • Investigation and analysis of natural disaster risks, and implementation of countermeasures • Proactive use of green finance |
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• Improved evaluations by investors and financial institutions through proactive disclosure and responses • Reduced financing costs through the use of green finance |
Opportunity | Low | Low | Medium | Medium | ||||
| Changes in Tenant Needs for Environmental Performance |
• Decrease in rental income for properties with relatively low environmental performance or without environmental certifications • Decline in brand value and investment unit prices due to delays in environmental responses |
Risk | Low | Low | Medium | Medium |
• Improvement in the ratio of properties with environmental certifications • Improvement in ESG evaluations by external organizations • Implementation of energy-saving measures in collaboration with tenants through green leases and other initiatives • Reduction of running costs through installation of energy-saving and water-saving equipment |
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• Increase in rental income from properties with strong environmental performance or environmental certifications • Enhancement of brand value and increase in investment unit prices by taking the lead in environmental responses |
Opportunity | Low | Low | Low | Low | ||||
| Physical Risks | Acute | Increased Damage from More Severe Storm and Flood Events |
• Increase in repair costs and insurance premiums • Decrease in rental income due to lower occupancy rates • Increase in renovation costs to prevent flooding and prepare for property damage and destruction • Increase in electricity consumption due to higher cooling demand caused by more frequent extreme heat days |
Risk | Low | Medium | Low | Low |
• Implementation of risk assessments using hazard maps and other resources • Ownership of highly resilient properties and properties located in areas less susceptible to flood damage • Enhancement of BCP preparedness • Promotion of greening at portfolio properties |
| Chronic | Increased Damage Due to Rising Average Temperatures and Sea Level Rise | Risk | Low | Low | Low | Low | |||
【CRREM】
CRREM (Carbon Risk Real Estate Monitor) publishes pathways for reducing GHG emissions aligned with the 1.5°C and 2°C targets set out in the Paris Agreement, by property use type. DOI uses CRREM’s risk assessment tool to compare the GHG emissions of its owned properties with CRREM’s 1.5°C decarbonization pathway, thereby assessing risk on a property-by-property basis and identifying the required scale and timing of retrofits. These findings are used to improve operations and inform business strategies aimed at decarbonizing the portfolio.
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 sees the transition to a carbon-neutral society as an opportunity. The following target KPIs(Key Performance Indicators)have been established as key monitoring indicators in the process of managing climate change risks and opportunities. Non-climate-related target KPIs are also included.
Environmental Targets
| Time horizon | Item | Unit | Targets |
|---|---|---|---|
| by 2030 | Scope1 and 2 | t-CO2 | Reduce by 42% compared with FY2023 |
| Scope3 | t-CO2 | Reduce by 25% compared with FY2023 | |
| Energy consumption | Mwh/㎡ | Reduce by 7% compared with FY2023 | |
| CO2 emissions | t-CO2/㎡ | － | |
| Water consumption | ㎥/㎡ | Maintain FY2023 level |
Performance
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.
| Item | Unit | Actual reduction | |||
|---|---|---|---|---|---|
| FY2023 (base year) |
FY2024 | FY2025 | Rate of change |
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| Energy | Consumption (Mwh) | 87,008 | 80,156 | 81,044 | -6.85% |
| Consumption intensity (Mwh/㎡) |
0.180 | 0.161 | 0.162 | -10.04% | |
| CO2 | SCOPE1+2 (t-CO2) | 9,207 | 10,944 | 10,512 | 14.17% |
| SCOPE3 (t-CO2) | 41,339 | 50,365 | 129,725 | 213.81% | |
| Water | Consumption (㎥) | 318,833 | 340,199 | 353,534 | 10.88% |
| Consumption intensity (㎥/㎡) |
0.658 | 0.685 | 0.706 | 7.35% | |
| Waste | Output (t) | 3,455 | 4,146 | 4,270 | ― |
| Amount of recycled waste (t) | 1,642 | 2,458 | 2,417 | ― | |
| Recycling rate (%) | 47.530 | 59.280 | 56.612 | ― | |
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.