Response to Climate Change

As indicated in the Paris Agreement (2015) and elsewhere, climate change is a scientific fact and is recognized as a material issue that will cause dramatic changes in the natural environment and social structure and have a significant impact on the overall management and business of One REIT and the Asset Management Company.
Based on the recognition that climate change is a global issue, One REIT aims to realize a decarbonized society and build a strong, climate change-resilient business foundation by managing and reducing energy consumption, greenhouse gas emissions, water consumption and waste volume, and enhancing severe disaster resiliency.

Support for TCFD (Task Force on Climate-related Financial Disclosures) Recommendations

In April 2022, Mizuho Realty One Co., Ltd. (MONE), which is the Asset Management Company's parent company announced its support for the TCFD recommendations and joined the TCFD Consortium, an organization of Japanese companies that have endorsed them.

One REIT and the Asset Management Company also recognize the importance of disclosing information on climate-related risks and opportunities, and are committed to addressing this and promoting further disclosure.

The TCFD published its final report in June 2017, recommending that companies disclose the following items on climate change-related risks and opportunities. (In October 2023, the TCFD was dissolved, and the International Sustainability Standards Board (ISSB), established under the IFRS Foundation, inherited the discussions of the TCFD.)

Disclosure Items Recommended by TCFD

This table can be scrolled sideways.

Disclosure Item	Disclosure Details
Governance	Disclose the organization's governance around climate-related risks and opportunities.
Strategy	Disclose the actual and potential impacts that climate-related risks and opportunities will have on the organization’s businesses, strategy, and financial planning.
Risk management	Disclose the process which the organization uses to identify, assess, and manage climate-related risks.
Indicators and targets	Disclose the indicators and targets used to assess and manage relevant climate-related risks and opportunities.

Basic Policy and Commitments

The Asset Management Company supports the international goals set forth in the Paris Agreement and will continuously work to reduce greenhouse gas emissions in order to contribute to the mitigation of climate change. In addition, in accordance with MONE, which endorses the TCFD recommendations, we will disclose climate-related information to our stakeholders while following the disclosure framework.

Governance

We have the following structure in place to address climate-related risks and opportunities.

(1) Board of Directors

The Board of Directors makes decisions on the formulation of mid- to long-term or annual plans for sustainability in the Asset Management Company's corporate operations and on other important sustainability matters.

(2) Investment Committee

The Investment Committee makes decisions on important sustainability matters for One REIT.

(3) Sustainability Promotion Council

The Sustainability Promotion Council is an advisory body to the Chief Executive Officer and discusses matters related to the Asset Management Company's corporate operations and the setting and monitoring of targets for sustainability initiatives of the REITs designated by the Chief Executive Officer.

(4) Sustainability Promotion Officer

The Sustainability Promotion Officer is the Chief Executive Officer, who oversees the sustainability initiatives of the Asset Management Company and its REIT.

(5) MONE Sustainability Committee

An advisory body to MONE's Board of Directors, MONE's Sustainability Committee deliberates on the MONE Group's sustainability policy, presents targets for the MONE Group to the Asset Management Company's Sustainability Promotion Officer, and monitors them. However, MONE is not involved in the Asset Management Company's decision-making on investment management matters for REITs which entrust their asset management to the Asset Management Company (regardless of the contract name or asset type). In addition, the MONE Group's Chief Climate Officer (MONE's President and Representative Director) can ask the Asset Management Company's Sustainability Promotion Officer to report to MONE's Sustainability Committee on the status of climate-related issues. (With respect to information concerning the REITs for which the Asset Management Company manages the assets, this is limited to information that the Asset Management Company deems may be provided without any problems, such as public information in the case of One REIT.)

Strategy

One REIT has analyzed scenarios in line with the TCFD recommendations in order to understand the risks and opportunities that climate change poses to the REIT and examine their impact.

Scenario Analysis Assumptions

(1) Time horizon

For the scenario analysis, we divided the timing in which financial impacts of climate-related risks and opportunities become more apparent into the following three time periods.

This table can be scrolled sideways.

Period	Definition
Short term	1 to 3 years later
Medium term	By 2035
Long term	By 2050

(2) Information Sources Referenced

One REIT analyzed scenarios using future climate projections published by various international organizations, etc. as its main sources of information (shown below).
Note that climate-related risks can be broadly classified as "transition risks" or "physical risks," and may bring not only risks but also new business opportunities.

This table can be scrolled sideways.

	Climate-related risks	Main information sources referenced
Transition risks	Business impacts resulting from social/economic transition to low/zero carbon	IEA World Energy Outlook 2025 NZE2050 IPCC 6th Assessment Report: SSP1-1.9 IPCC 6th Assessment Report: SSP5-8.5
Physical risks	Business impacts resulting from ongoing climate change from previous patterns and phenomena	IPCC 6th Assessment Report: SSP1-1.9 IPCC 6th Assessment Report: SSP5-8.5

(3) Scenarios based on the main information sources

Based on the Paris Agreement, our base cases for analysis were the 4°C scenario and the 1.5°C scenario, as summarized below.

4°C Scenario (sources referenced: STEPS, RCP8.5)
A future in which climate change mitigation measures are insufficient and GHG emissions continue to rise, resulting in a large temperature increase. This scenario has high physical risk and low transition risk.

1.5°C Scenario (sources referenced: NEZ2050, RCP2.6)
A future in which zero-carbon social policies, emission controls and technology investment proceed more than in the present situation toward achieving the Paris Agreement targets, limiting temperature increase. This scenario has low physical risk and high transition risk.

Summary of Scenario Analysis

Based on the abovementioned assumptions, One REIT has examined climate-related risk and opportunity factors as well as financial implications and risk management/response measures that can be expected, as summarized below.

This table can be scrolled sideways.

Risk assessment timing: February 2026

This table can be scrolled sideways.

Category		Factors	Type	Financial impact content	Financial impact						Risk management and countermeasures
					4℃ scenario			1.5℃ scenario
					Short term	medium term	long term	Short term	medium term	long term
Transition Risks and Opportunities	Policy and law	Strengthening of carbon pricing	Risk	Increase in costs related to GHG emissions Increase in costs for procurement of materials, fuel fees, and electricity charges	Low	Low	Low	Low	Medium	High	Introduction of low-carbon energy Promotion of energy-saving measures Promotion of tenant understanding regarding sustainability through awareness activities and promotion of measures such as green lease agreements
		Strengthening and expansion of disclosure and reporting obligations regarding GHG emissions, etc.	Risk	Costs associated with the introduction of equipment and systems, and payments to external vendors to comply with disclosure and reporting obligations	Low	Low	Medium	Low	Medium	Medium	Sharing awareness of sustainability issues and enhancing engagement with property management and building management companies Improvement and streamlining of aggregation and reporting systems
		Strengthening and mandatory implementation of energy-saving standards and certification systems for buildings	Risk	Costs for renovations and certification acquisition to meet energy-saving standards and certification requirements	Low	Low	Low	Low	Medium	High	Implementation of appropriate energy-saving retrofits through meticulous energy data management Cost leveling through management of certification timing Implementation of planned energy-saving retrofits
			Opportunity	Decrease in acquisition prices for properties not compliant with energy-saving standards and other regulations (stranded assets) due to increased property sales, alongside enhancements in property value and medium- to long-term revenue through renovation works on such properties Enhancement in added value and increase in rental income through improved environmental performance of properties compliant with lawas and regulations	Low	Low	Low	Low	Medium	Medium	Transition to green buildings through energy-saving retrofits and introduction of renewable energy Promotion of certification acquisition Consideration of ZEB
		Expansion of subsidies	Opportunity	Increase in opportunities to utilize subsidies from public institutions with the promotion of ZEB and ZEH	Low	Low	Medium	Medium	Medium	Low	Gathering of information on various subsidies
	Technology	Advancement and dissemination of renewable energy and energy-saving technologies	Risk	Increase in costs due to the introduction of new technologies	Low	Low	Low	Medium	Medium	Medium	Reduction of introduction costs through comparison and examination of various new technologies Implementation of planned introduction of new technologies Promotion of measures such as green lease agreements
	Technology		Opportunity	Reduction in energy costs with the increase in renewable energy supply Reduction in operational costs through the introduction of energy-saving technologies	Low	Low	Low	Low	Medium	Medium	Gathering of information and promotion of adoption concerning renewable energy and energy-saving technology
	Market/reputation	Increase in utilities costs (including external procurement of renewable energy)	Risk	Increase in expenses for rental business	Low	Medium	High	Low	Low	Low	Implementation of energy-saving retrofits Awareness activities on electricity and water-saving initiatives for tenants
		Changes in tenant demand and real estate transaction demand	Risk	Worsening property performance (tenant departures, prolonged leasing periods) and decline in property prices due to lower occupancy demand for properties with low environmental performance	Low	Low	Low	Low	Medium	High	Enhancement of property value through acquisition of green building certification and energy efficiency ratings Consideration of ZEB Promotion of carbon neutrality through energy-saving retrofits and introduction of renewable energy, appealing to tenants and the market
			Opportunity	Improved property performance and increase in rental income driven by the rise of companies aiming for carbon neutrality, at green buildings and renewable energy-equipped properties	Low	Low	Low	Low	Medium	Medium
			Risk	Worsening property performance (tenant departures, prolonged leasing periods) and decline in property prices due to lower occupancy demand for properties with low resilience	Low	Medium	High	Low	Low	Medium	Risk confirmation using hazard maps and operational countermeasures Strengthening disaster risk management Development of disaster response manuals for each owned property
		Changes in evaluation criteria by investors and lenders	Risk	Financial condition deterioration and increase in funding costs stemming from the avoidance of investment and lending to companies with high climate-related risks	Low	Low	Low	Low	Medium	High	Implementation of measures addressing climate change Utilization of green finance Expansion of sustainability information disclosure Strengthening engagement with investors and lenders Acquisition of sustainability evaluations and improvement of assessments by external organizations
		Changes in evaluation criteria by investors and lenders	Opportunity	Improvement in financial conditions and reduction in funding costs attributed to investment and lending preferences for companies with low climate-related risks	Low	Low	Low	Low	Medium	Low
Physical Risks and Opportunities	Acute	Increase in water damage, landslides, and wind damage caused by intensification of typhoons and heavy rainfall	Risk	Increase in recovery costs, preventive measures, disaster-response costs, and insurance premiums Loss of business opportunities and decrease in asset values due to flooding and other damage to owned properties	Low	Medium	High	Low	Low	Medium	Risk confirmation using hazard maps and operational countermeasures Strengthening disaster risk management Development of disaster response manuals for each owned property Posting evacuation sites and hazard maps at owned properties
	Chronic	Flood damage to properties with low elevation due to rising sea levels	Risk	Occurrence of flood-prevention costs (such as installing water barriers) Reduction in property value due to flooding	Low	Medium	High	Low	Low	Medium	Risk confirmation using hazard maps and operational countermeasures
	Chronic	Increase in extreme heat days and greater heat stress due to rising average temperatures	Risk	Increase in operational and repair costs due to extended air conditioning usage Increase in construction costs due to decreased work efficiency and activity restrictions for workers during summer projects	Low	Low	High	Low	Low	Medium	Promotion of energy-saving measures Implementation of planned construction considering weather conditions

Risk Management

The Asset Management Company's Sustainability Promotion Officer manages identified and assessed climate-related risks and opportunities and promotes resilience initiatives to reduce business risks and realize value creation opportunities to ensure steady, sustainable earnings over the long term. The management process for climate-related risk and opportunity factors is as follows:

The Sustainability Promotion Officer directs the Sustainability Promotion Council to consider the development of countermeasures for climate-related risks and opportunities that are high-priority in business and financial plans.
The Sustainability Promotion Council's proposed measures are deliberated on and approved by the institutions specified in the Basic Policy on Sustainability Initiatives based on their content, and are then implemented.
The Sustainability Promotion Officer also instructs the Asset Management Company to consider climate-related risks that are important in business and financial plans for its regulations.

Indicators and Targets

The following indicators and targets are used in the process of managing climate-related risks and opportunities.

	指標	目標
1	Reduction of greenhouse gas emissions	44% reduction in intensity compared to FY2014 (FY2030, Scope 1, 2, 3 Category 13) Net zero (FY2050, Scope 1, 2, 3)
2	Reduction of Energy consumption	Averaging 1% reduction in intensity per year over the past five fiscal years (target for each fiscal year)
3	Percentage of renewable energy usage in owned properties	90% (FY2050, based on electricity usage)
4	Percentage of green building certification acquisition	90% (FY2030, based on total floor area)