ESG Policies / Management System｜Sustainability｜KDX Realty Investment Corporation

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ESG Policies / Management System

KDXR and the Asset Management Company have positioned initiatives on ESG (Environment, Social and Governance) awareness as an important business management issue. To promote ESG initiatives, the Asset Management Company has established the following Sustainability Policies.

Sustainability Management System
Materiality
Sustainability Policies
Environmental Policies

Sustainability Management System

Sustainability Committee

The initiatives for sustainability are promoted under the leadership of the Sustainability Committee organized by the Asset Management Company.
The Sustainability Committee is chaired by the President & CEO (Chief Sustainability Officer), and consists of the following members.

Structure of the Asset Management Company

Chair (Convener / President)	President & CEO (Chief Sustainability Officer)
Committee Members	Head of each REIT Department Head of Strategic Planning Department Head of Sustainability Department General Manager (each REIT) of Strategic Planning Department Head of Strategic Planning, each REIT Department Head of Asset Management Division of each REIT Department Head of Portfolio Management Division of Listed REIT Department Head of Finance & Accounting Department Head of Corporate Administration Department
Observers	Head of Public Relations & Sustainability Department of Kenedix, Inc. Others designated by the Chair
Secretariat	Sustainability Department
Frequency of Meetings	Once every three months
Functions	The Sustainability Committee gathers, analyzes and examines the policies, targets, activity plans, various initiatives, risk management, and other important sustainability and ESG related matters for KDXR and the Asset Management Company, and shares them with related parties, with the aim of promoting initiatives for sustainability and ESG-related matters. Depending on the contents, the discussions are reported to the Asst Management Company's Board of Directors, and to KDXR's Board of Directors with independent supervisory directors.

Materiality

The Kenedix Group has established material issues that are critical for achieving sustainable growth of the Kenedix Group along with its stakeholders and society. We will make commitment to find solutions to these issues both in business and society by making initiatives that reflect the opportunities and risks associated with each issue. Furthermore, we intend to contribute to achieving the SDGs by carrying measures for our materiality.

Process of Defining Materiality

Step 1. Identify and study ESG issues: We examined ESG issues by creating a long list that covers Global Reporting Initiative, the evaluation items used by multiple ESG evaluation organizations, the SDGs.

Step 2. Cross check with business issues: After once again studying business issues at the Kenedix Group, we selected a list of issues that should be considered from the standpoint ob both in our business operations and society.

Step 3. Examine issues based on input from Kenedix Group companies: The list was discussed among relevant departments and group companies that are involved, external professionals, and other stakeholders to select the issues that are most important to the Kenedix Group from the standpoint of both business operations and society.

Step 4. Final discussion at senior management: Board of directors of Kenedix, Inc. defined the material issues after final discussion led by the President and CEO of Kenedix, Inc., including auditors.

Kenedix Group’s Materiality

Key Areas and Applicable SDGs	Materiality
Contribution to a Sustainable Environment	Reduction of energy consumption and CO₂ emissions
	Reduction of water consumption and waste materials
	Collaboration with tenants for environmental initiatives
Commitment to a Diverse Society	Providing properties with environmental and social considerations
	Improving resilience/climate adaptation
	Initiatives for an aging society with fewer children
Stakeholder Engagement	Continuous improvement of customer satisfaction
	Community engagement
	Managing conflicts of interests
Attractive Working Environment	Recruiting, employee retention and career advancement
	Health and wellbeing of employees
	Diversity and equal opportunities
Responsible Organization	Compliance
	Risk management
	Commitment to responsible investments

Sustainability Policies

As materiality is defined, we have set comprehensive Sustainability Policies regarding ESG. The Kenedix Group will adhere to the Sustainability Policies to promote specific initiatives towards materiality.

1: Contribution to a Sustainable Environment
Improving the environmental performance of the properties we manage is one of our social missions. We will lower the environmental impact and make contribution to environmental sustainability by constantly reducing the negative environmental impact of these properties, such as energy consumption, GHG emissions, water consumption and the generation of waste materials. We also have activities for the proper management of hazardous substances and reduction in their use.

2: Commitment to a Diverse Society
We contribute to the diversity of society while taking into account the social impact of our properties. We are committed to maintaining safety, confidence, good health, comfort and diversity regarding our tenants and the communities where we operate.

3: Stakeholder Engagement
We manage our properties as a responsible real estate asset management company by stressing the importance of engagement with our stakeholders such as investors, tenants, business partners, communities and property management companies.

4: Attractive Working Environment
We aim to maintain an attractive working environment by implementing measures for employees' health and wellbeing and for diversity and equal opportunities. To enable employees to realize their full potential, we will provide a variety of training programs and other educational opportunities.

5: Responsible Organization
We have sound compliance and risk management activities in all of our business activities. We are committed to the principle of responsible property investments by a responsible organization by aligning our operations with global ESG initiatives and actively disclosing ESG information.

Environmental Policies

The officers and employees of the Asset Management Company will undertake investment management operations in accordance with the following environmental policies. The Asset Management Company (Kenedix Real Estate Fund Management, Inc.: “KFM”) supports the international goals set forth in the Paris Agreement and is committed to continuously make efforts to mitigate climate change. We also endeavor to contribute to the shift towards a circular economy by using resources efficiently.

1: Compliance with Environmental Laws and Regulations
KFM will promote environment-friendly investment management operations by adhering to environmental laws and regulations.

2: Promotion of Energy Conservation Measures
KFM will systematically advance energy conservation measures at its managed properties, maintaining a strong awareness of the importance of natural and energy resources.

3: Reduction of Environmental Burden
KFM will undertake initiatives to reduce GHG (Greenhouse gas), water consumption and waste emissions as well as promote recycling at its managed properties, underscoring its commitment to alleviating its environmental burden. In addition, KFM will take sufficient care when handling harmful substances and environmental pollutants.。

4: Challenge to achieve net zero GHG emissions
To achieve Net Zero, KFM has established long-term targets for reducing GHG emissions of its REITs and will work internally and externally.

5: Disclosure of Environmental Information
KFM will work to disclose necessary information to a variety of concerned parties, including investors, tenants and business partners, in such areas as its environmental policies and measures.

6: Environmental Education
KFM will take steps to improve the environmental consciousness of its officers and employees through internal education.