Basic Policy on Sustainability

Fukuoka REIT Corporation carries out various activities through the sharing of ideas on sustainability with Fukuoka Realty Co., Ltd.

Basic Policy on Sustainability

Please refer to Fukuoka Realty’s website regarding the sustainability policy and framework.

Fukuoka Realty Co., Ltd.（Sustainability）

Materiality

Fukuoka Realty is taking steps to identify materiality (important issues to address) in its sustainability initiatives based on the requests and expectations of its stakeholders and the expected impact on and importance to FRC. By promoting initiatives based on materiality policies and targets derived through cooperation with stakeholders, Fukuoka Realty targets sustainable growth at FRC alongside contributions toward solving social issues.

Materiality		Policies and targets	KPIs and targets	Related SDGs
Environment	Reduction of environmental load	●Coordinate with property management companies and building management companies on promotion of control and reduction of energy consumption, greenhouse gas emissions, water consumption, and waste output	● (by 2030) 35% reduction in CO2 emissions (compared with 2019, basic unit) 75% waste recycling rate
Environment	Maintenance and enhancement of environmental and construction performance	●Carry out performance and function evaluation of properties on a regular basis and ameliorate any deterioration in performance, etc. ●Maintain and improve competitiveness by acquiring green building certifications and through visual representation of building performance	●(by 2030) 85% Green Building Certification rate or higher
Society	Creation of pleasant workplaces（Asset management company）	●Improve quality of operations by enhancing and expanding employee education systems and promoting acquisition of qualifications ●Continue to improve office environments and work on providing pleasant working environments ●Give consideration to work-life balance and boost employee satisfaction	●Training per employee (number of times) ●Improve office environment (number of cases)
Society	Creation of pleasant workplaces（Tenants）	●Promote improvement of employee satisfaction and work toward increasing the job satisfaction of tenant employees	●Conduct regular tenant satisfaction surveys (all properties)
Society	Contributions to boosting the attractiveness and revitalization of Fukuoka and Kyushu	●Enhance dissemination of information regarding the strengths and charms of Fukuoka and Kyushu ●Support research and studies on the local economy and industries; promote attractive urban development in collaboration with local business circles	●Join and participate in local economic organizations ●Host local community events (number of times)
Society	Co-creation with the local community	●Deepen dialogue and collaboration with the local community through participation in community activities and various initiatives using properties under our management to grow and develop together with the local community	●Join and participate in area management organizations ●Continued participation in activities that contribute to the community (number of times)
Governance	Information disclosure and dialogue with stakeholders	●Disclose financial and non-financial information to stakeholders in an appropriate and timely manner ●Build relationships of trust through proactive dialogue with stakeholders and reflect stakeholder feedback in our management strategy	●Dialogue with investors (number of times) ●ESG training for employees (number of times)
Governance	Compliance / Risk Management	●Ensure thorough compliance, including with laws and ordinances, and the elimination of any conflict of interest with interested parties, and develop and operate an appropriate internal risk management system to maintain and improve corporate value	●Compliance training (number of times)

Main initiatives

TCFD Scenario Analysis

Creation of Climate Change and Resilience Policy (August 2022)

Climate Change Scenario Analysis

We conducted an analysis to be used for the purpose of assessing the validity of current climate change measures and developing future strategies. We assessed risks, opportunities, and financial impacts as shown in the table below.

				4℃ Scenario			1.5℃ Scenario
		Risk/Opportunity Factors	Financial Impacts	Short-term	Medium-term	Long-term	Short-term	Medium-term	Long-term
Transition risks	Policy and law	Taxation of CO2 emissions due to introduction of carbon tax, etc.	Increased taxation on CO2 emissions for owned properties	S	S	S	S	M	M
		Stricter energy-saving standards for existing real estate and introduction of carbon emission-related restrictions, etc.	Increased renovation costs for purpose of compliance Increased environmental certification acquisition costs	S	S	S	S	M	L
		Stricter mandatory emissions reporting requirements in Energy Efficiency Act	Increased payments, etc. to external companies for purpose of handling reporting	S	S	S	S	S	S
	Technology	Evolution/spread of renewable energy and energy-saving technology	Increased costs of introducing new technology to prevent facilities in owned properties becoming technologically obsolete	S	S	S	S	M	L
	Market	Changing social values relating to environmental performance	Increased financing costs for properties with poor environmental performance	S	S	S	S	S	S
		Decrease in asset value due to delayed environmental compliance at owned properties	Relative decrease in institutional investors’ investment appetite due to delayed environmental compliance	S	S	S	S	S	S
		Increased importance of transition risks	Increased financing costs due to properties being assessed as having high transition risks	S	S	S	S	S	S
		Increased value related to environmental performance	Reduced property value and average rents due to environmental certifications such as DBJ Green Building Certification not being acquired	S	S	S	S	M	L
		Tenant needs relating to environmental performance	Decreased revenue due to owned properties’ environmental performance becoming relatively low, creating stranded assets	S	S	S	S	M	L
Physical risks	Acute	Damage to owned properties due to typhoons/heavy rain	Increased repair costs and insurance premiums: loss of sales opportunities due to flooding, decreased asset value of owned properties with high flooding risks, increased countermeasure costs	S	S	M	S	S	S
	Chronic	Flooding at owned properties in low-elevation areas due to sea level rise	Increased flooding countermeasure costs	S	S	M	S	S	S
		Increased need for A/C due to rising temperatures	Increased A/C operation, maintenance, and repair costs	S	S	M	S	S	S
Opportunities	Energy sources	Introduction of renewable energy at sites	Reduction in externally procured utility costs	S	S	S	S	S	S
	Products and services	Attracting tenants, occupants, and users by offering low-emission facilities and services	Increased revenue by attracting tenants and occupants	S	S	S	S	M	L
	Markets	Expanding the client base by continuing to provide rental properties aligned with changing tenant and occupant tastes	Increased revenue from higher rents and improved tenant acquisition and retention	S	S	S	S	M	L
		Expanding the investor base	Use of green bonds: increased financing by adapting/appealing to investors who prioritize environmental issues, decreased financing costs	S	S	S	S	S	S

ESG Initiatives

Environment	DBJ Green Building certified total of 12 properties in the 36th fiscal period
Environment	Acquired 4 BELS certified properties
Social	Certified as a “Fukuoka ‘Work-Style Reform’ Promotion Company” (August 28, 2018)
Governance	Formulated Policies for Customer-Oriented Business Operations on September 20, 2017
Governance	Strengthened the decision-making process (Basic Policy on Compliance and Compliance Regulations)

Integrated Report