Mitsui Fudosan｜Sustainability/ESG

Policy

As the international movement on environmental and social issues accelerates, further substantial efforts are required to achieve a decarbonized society. Sustainable finance to support the realization of such a society is becoming increasingly important. By proactively engaging in sustainable finance, we intend to raise more awareness of the Group's policy among a wide range of stakeholders and promote the diversification of financing and the realization of a decarbonized society.

Establishment of Framework

Sustainability Linked Loan Framework

Features of the Framework

The Sustainability Linked Loan (SLL) Framework is a comprehensive SLL framework that uniformly defines SLL requirements such as sustainability performance targets (SPTs), applicable interest rates, and reporting. This will allow us to universally apply the framework to each financial institution's standard loan agreements in individual transactions, making it easier for both us and financial institutions to engage in SLL.

We compiled our SLL Framework, with the assistance of Sumitomo Mitsui Banking Corporation, our sustainability coordinator, in line with the Sustainability Linked Loan Principles (May 2021 edition)-jointly published by international financial organizations the Loan Market Association (LMA), Loan Syndications and Trading Association (LSTA) and Asia Pacific Loan Market Association (APLMA)-and Japan's Ministry of the Environment's Green Loan and Sustainability Linked Loan Guidelines (2020 edition). To verify conformity with these, we acquired a second opinion from a third-party body, Rating and Investment Information, Inc. (R&I).

Second Opinion (Japanese only)

⇒ https://www.r-i.co.jp/news_release_suf/2022/01/news_release_suf_20220114_jpn_01.pdf

Green Finance Framework

Features of the Framework

We have formulated the Green Finance Framework as we look to issue green bonds and execute green loan flexibly.

The framework has set both domestic and global environmental certifications as eligibility criteria, allowing for investment in both domestic and global projects.

We have established our Green Finance Framework in line with the Green Bond Principles 2021 administered by the ICMA (International Capital Market Association) Green Bond Guidelines 2020 established by Japan's Ministry of the Environment, four core components of the Green Loan Principles 2021 jointly administered by LMA (Loan Markets Association) and APLMA (Asia Pacific Loan Market Association) and the Green Loan and Sustainability Linked Loan Guidelines 2020 established by Japan's Ministry of the Environment. We obtained a second-party opinion (SPO) from Sustainalytics as an external reviewer.

Green Finance Framework

⇒ https://www.mitsuifudosan.co.jp/english/corporate/esg_csr/pdf/2021/greenbond_eng.pdf

Second-party opinion

⇒ https://www.mitsuifudosan.co.jp/english/corporate/esg_csr/pdf/2022/greenbond_spo_eng.pdf

Sustainability Linked Loans

As SPTs, we have set ourselves the target of reducing greenhouse gas emissions (in Scopes 1 and 2) for the entire Group by 46.2% compared to FY2019 levels by FY2030, which we announced in the Group Action Plan to Realize a Decarbonized Society we formulated in November 2021.

To see our Group Action Plan to Realize a Decarbonized Society, please click the link below.

⇒ https://www.mitsuifudosan.co.jp/english/esg_csr/carbon_neutral/

FY2023 Achievements (as of September 30,2023)

Total number of loans	Total loan amount
6	¥41.7 billion

Until FY2022

Procurement fiscal year	Total number of loans	Total loan amount
2022	7	¥69.5 billion
2021	12	¥69 billion

Green Finance

We proactively engage in green loan and green bond by utilizing green projects that meet the eligibility criteria set forth in the Green Finance Framework.

Allocation Report

FY2023 (as of September 30, 2023)

Green Loan

Name of project	Amount financed	Amount allocated	Amount unallocated
Otemachi One Tower	¥9 billion	¥9 billion	¥- billion
Gran Tokyo North Tower	¥20 billion	¥20 billion	¥- billion
Nihonbashi 1-chome Mitsui Building	¥2 billion	¥2 billion	¥- billion
East Muromachi Mitsui Building	¥16.8 billion	¥16.8 billion	¥- billion

Green Bond

Name of project	Amount financed	Amount allocated	Amount unallocated
Yaesu Central Tower, Tokyo Midtown Yaesu	¥26.5 billion	¥26.5 billion	¥- billion
Otemachi One Tower	¥60.2 billion	¥60.2 billion	¥- billion
Nihonbashi Muromachi Mitsui Tower	¥93.3 billion	¥93.3 billion	¥- billion
Nihonbashi Mitsui Tower	¥50.0 billion	¥50.0 billion	¥- billion

Until FY2022

Green Loan

Procurement fiscal year	Name of project	Amount financed	Amount allocated	Amount unallocated
2022	Yaesu Central Tower, Tokyo Midtown Yaesu	¥48 billion	¥48 billion	¥- billion
2022	Tokyo Midtown Hibiya	¥92.5 billion	¥92.5 billion	¥- billion

Green Bond

Procurement fiscal year	Name of project	Amount financed	Amount allocated	Amount unallocated
2022	Yaesu Central Tower, Tokyo Midtown Yaesu	¥80 billion	¥80 billion	¥- billion
2021	50 Hudson Yards	$300 million	$300 million	$- million
2019	Nihonbashi Muromachi Mitsui Tower	¥50 billion	¥50 billion	¥- billion

Allocation Review

We obtained an Allocation Review from Sustainalytics, an external reviewer, on our compliance with the eligibility criteria set forth in the framework for each use of funds and on the status of proceeds' appropriation.

FY2022
⇒ https://www.mitsuifudosan.co.jp/english/corporate/esg_csr/pdf/2022/greenbond2022_greenloans2022_annualreview2022_eng.pdf

FY2021
⇒ https://www.mitsuifudosan.co.jp/english/corporate/esg_csr/pdf/2022/greenbond2022_annualreview2022_50hudsonyards_eng.pdf

FY2019
⇒ https://www.mitsuifudosan.co.jp/english/corporate/esg_csr/pdf/2022/greenbond2019_annualreview2022_nihonbashi_eng.pdf

For more information on management assertion, please see the link below.

FY2023

(Nihonbashi Muromachi Mitsui Tower;Nihonbashi Mitsui Tower)
⇒ https://www.mitsuifudosan.co.jp/english/corporate/esg_csr/pdf/2023/assertion_on_allocation_of_proceeds_nihonbashi_eng.pdf

(Yaesu Central Tower, Tokyo Midtown Yaesu; Otemachi One Tower; Nihonbashi Muromachi Mitsui Tower)
⇒ https://www.mitsuifudosan.co.jp/english/corporate/esg_csr/pdf/2023/assertion_on_allocation_of_proceeds_yaesu_eng.pdf

FY2022 (Yaesu Central Tower, Tokyo Midtown Yaesu)
⇒ https://www.mitsuifudosan.co.jp/english/corporate/esg_csr/pdf/2022/assertion_on_allocation_of_proceeds_yaesu_eng.pdf

FY2021 (50 Hudson Yards)
⇒ https://www.mitsuifudosan.co.jp/english/corporate/esg_csr/pdf/2021/assertion_on_allocation_of_proceeds_eng.pdf

Impact Report

Category	FY2022 achievements			Property name	Certification acquisition
Category	Greenhouse gas emissions	Amount of water used	Amount of energy consumption	Property name	Certification acquisition
Office buildings	28,364t-CO₂	214,015m³	75,893kWh	Tokyo Midtown Yaesu Yaesu Central Tower	DBJ Green Building Certification (5-star)
				Otemachi One Tower	DBJ Green Building Certification (5-star)
				Nihonbashi Muromachi Mitsui Tower	DBJ Green Building Certification (5-star)
				Tokyo Midtown Hibiya	DBJ Green Building Certification (5-star)
				50 Hudson Yards	LEED GOLD certification

Introduction to Green Projects

For detailed information of each Green Projects, please refer to the link below.

⇒ https://www.mitsuifudosan.co.jp/english/corporate/esg_csr/pdf/2023/green_projects_eng.pdf

Positive Impact Finance

FY2023 Achievements (as of September 30, 2023)

Total number of loans	Total loan amount
11	¥63.5 billion

FY2022 Achievements

Total number of loans	Total loan amount
1	¥19 billion

On December 21, 2022, we concluded an agreement with Sumitomo Mitsui Trust Bank, Limited, under which the bank provides us with positive impact finance (in the form of funding for companies that is not restricted to certain uses) to the amount of ¥19 billion. We are also working on positive impact finance with financial institutions other than Sumitomo Mitsui Trust Bank, utilizing the "Positive Impact Evaluation Framework".

Positive impact finance is a type of funding that aims to continuously support corporate activities that have an impact (positive or negative) on the environment, society, or the economy, as comprehensively analyzed and evaluated by the providing financial institution, in line with the Principles for Positive Impact Finance*1 published by the UN Environment Programme Finance Initiative (UNEP FI).*2 The biggest characteristics of this sort of finance is that the evaluation criterion that financial institutions use is the level of contribution that a company makes to the achievement of the UN's Sustainable Development Goals (SDGs) through its corporate activities and products or services, and that the financial institution monitors these based on disclosed information, and engages with the company to support its activities.

This evaluation receives third-party feedback from the Japan Credit Rating Agency, Ltd. on the conformance of evaluation procedures with the Principles for Positive Impact Finance and the conformance of evaluation indicators that are applied.

*1 Principles for Positive Impact Finance:

These principles were established by UNEP FI in January 2017 as a finance framework to help achieve the SDGs. Participating banks evaluate the positive impact that a company makes toward the achievement of the SDGs-as disclosed via KPIs-and provide them with funding. In this way, the framework encourages recipient companies to maximize their positive impact and minimize their negative.

The banks that carry out this funding, as responsible financial institutions, monitor indicators to verify that the recipients are continuing to make a positive impact.

*2 United Nations Environment Programme Finance Initiative:

The United Nations Environment Programme (UNEP) is a supplementary body to the UN, and was established in 1972 to implement the Declaration of the United Nations Conference on the Human Environment and the Action Plan for the Human Environment. UNEP FI is a broad, close-knit partnership between UNEP and more than 200 financial institutions from around the world that was set up in 1992. Since that time, UNEP FI has worked with financial institutions and policy and regulatory bodies, to promote a shift to a coordinated financial system that considers economic development and ESG (environmental, social, and corporate governance) themes.

Theme	Content	Goals and indicators (KPIs)
Reduce environmental impact and generate energy	Contribute to achieving a decarbonized society by reducing energy usage and greenhouse gas emissions Transition to renewable energy for electricity used in business operations Build rich natural environments that get better with time	(a) Promotion of the Group Action Plan to Realize a Decarbonized Society Goals Reduce the Group's overall greenhouse gas emissions (Scopes 1-3) by 40% by FY2030 (compared to FY2019) and achieve net zero by FY2050 Reduce the Group's overall greenhouse gas emissions (Scopes 1 & 2) by 46.2% by FY2030 (compared to FY2019) Achieve ZEB/ZEH-standard environmental performance for all new buildings Buildings that meet the BEI standard (a standard with higher environmental performance than ZEB/ZEH Oriented), excluding some buildings. Switch all electricity used in common areas at our owned and operated properties by FY2030 to green energy* *Energy that virtually entirely comes from renewable sources, using non-fossil-fuel energy certificates, etc. Generate a total output of 380 GWh/year from mega-solar by FY2030 Encourage reduced CO₂ emissions produced during construction Indicators (KPIs) The Group's overall greenhouse gas emissions (Scopes 1-3) The Group's overall greenhouse gas emissions (Scopes 1 & 2) Spread of ZEB/ZEH-standard environmental performance among new buildings Proportion of green energy used in common areas at our owned and operated properties Total output from mega-solar Status of efforts to accurately grasp CO₂ emissions produced during construction (b) Reduction of the amount of water used Goals Reduce water intake per base unit to less than the previous fiscal year Indicators (KPIs) Water intake per base unit (c) Reduce waste emissions Goals Reduce general and industrial waste emissions per base unit to less than the previous fiscal year Indicators (KPIs) General and industrial waste emissions per base unit (d) Conserve biodiverse environments Goals Formulate a biodiversity action plan (during FY2022) with a view to acquiring OECM certification for forests owned by the Mitsui Fudosan Group Indicators (KPIs) Status of the biodiversity action plan
Establish ultra-smart societies by creating neighborhoods	Leverage technologies to solve individuals' and neighborhoods' problems by building communities and places for people to gather and support one another	Goals Promote smart cities Indicators (KPIs) Creation of new services that help to promote smart cities
Achieve health, safety and security in people's daily lives	Provide healthy, highly productive workplaces Develop and operate resilient, safe, and secure facilities that protect people from threats such as disasters and infectious diseases	(a) Provide assets and soft services that meet the needs of diverse working styles Goals Contribute to diverse working styles for office tenants Increase Health Management Support Service "&well" membership to 150,000 by FY2025 Indicators (KPIs) Status of promotion efforts for initiatives contributing to increasing office productivity Membership of Health Management Support Service "&well" (b) Spread of disaster preparedness that is coordinated with regional communities Goals Contribute to urban disaster preparedness Indicators (KPIs) Introduction status for smart energy projects
Achieve a society where a diverse workforce can thrive	Establish a foundation for everyone to live the life they choose	(a) Promote diversity and inclusion Goals Increase women in management positions ratio to 10% by FY2025 and 20% by FY2030 Increase ratio of female hires to 40% by FY2030 Ensure a return rate from childcare leave of 100% every year Ensure number of paid leave days taken (per year) is 14 or more (for Mitsui Fudosan Co., Ltd. (non-consolidated)) Indicators (KPIs) Women in management positions ratio Ratio of female hires Return rate from childcare leave Number of paid leave days taken (per year) (b) Respect human rights Goals Strengthen supply chain management Indicators (KPIs) No. of industries and companies subject to supplier questionnaires or supplier surveys (workplace inspections) Response to necessary areas for improvement identified in the questionnaires/surveys in (i) above