Basic policy | Kenedix Residential NEXT Investment Corporation

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Executive Director　Tetsu Kawashima

Kenedix Residential Next Investment Corporation has been actively engaged in ESG (environmental, social and governance) activities through investment in and management of rental housing, etc., our main investment target since its listing in 2012. Similarly, Kenedix Real Estate Fund Management, Inc. to which KDR entrusts the management of its assets, considers ESG-related initiatives to be one of its important management issues, and has formulated sustainability policies and environmental policies in an effort to reduce environmental impacts and to improve sustainability through collaboration with stakeholders. The environment surrounding the real estate in which KDR invests and manages, changes from day to day including changes in housing conditions due to diversification of the way of working and lifestyles, rapid aging of the population. With changes in the natural environment and diversification of society as well as those mentioned above, we recognize that the challenges for realization of a sustainable society to be tackled are complex and diverse. The Investment Corporation and the Asset Management Company aim at contributing to solving as many issues as possible by engaging in proactive ESG activities. With regard to sustainability activities, we operate with an emphasis on objective results through review of environmental certifications and assessments by multiple external evaluation organizations such as GRESB (Global Real Estate Sustainability Benchmark)　or green building certification. In addition to conducting effective management to contribute to the improvement of medium- to long-term earnings for our unitholders, we will continue to focus more on sustainability initiatives. In promoting sustainability initiatives, we will place importance on dialogues with investors and other stakeholders involved with the Investment Corporation and the Asset Manager through properties under management, and we will also strive for appropriate information disclosure. We sincerely ask you for your continued support and guidance.

Sustainability Policies

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

1. Contribution to sustainable environment
We make positive contribution to sustainability by reducing the negative impact to the environment through continuously reducing energy and water consumption, CO2 emission and waste; and by eliminating and managing of hazardous materials to carry out the social mission of improving the environmental performance of properties we manage.

2. Commitment to diverse society
We contribute to realize the diverse society, considering the social impact of our properties. We endeavor to deliver built environment where safety, health and wellbeing and diversity of tenants and local community are secured.

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, local communities and property management companies.

4. Attractive working environment
We aim to deliver attractive working environment by implementing measures to promote employees' health & wellbeing and diversity & equal opportunites. We develop capabilities of employees to help them achieve the best performance by providing various educational opportunities such as trainings.

5. Responsible organization
We ensure compliance and sound risk management in our entire business activities. We are committed to responsible property investment by a responsible organization by aligning with global ESG initiatives and proactively disclosing ESG information.

Established on September 5, 2018
Kenedix Real Estate Fund Management, Inc.

Environmental Policies

We at Kenedix Residential Next Investment Corporation and Kenedix Real Estate Fund Management, Inc. practice environmental awareness in conducting investment management by establishing the environmental policies stated below and proactively utilize environmental certification and assessment systems conducted by external assessment organizations.

1.Compliance with Environmental Laws and Regulations

We promote investment management with environmental awareness, in compliance with environmental laws and regulations.

2.Promotion of Energy Conservation Measures

Recognizing the importance of resources and energy, we promote systematic endeavors for energy conservation measures at the real estate properties we manage.

3.Reduction of Environmental Burdens

Intending to reduce the burdens on the environment, we endeavor to take measures for reducing CO2 emissions and wastes as well as promoting recycling, etc.
We also fully exercise caution in handling hazardous substances and environmental pollutants.

4.Disclosure of Environmental Information

We endeavor to disclose necessary information, such as our environmental policies and the status of our environmental initiatives, to a variety of stakeholders including unitholders, tenants and business partners.

5.Environmental Education and Enlightenment

We endeavor to enhance environmental awareness of our officers and employees by internally implementing environmental education and enlightenment programs.

Established on January 26, 2016
Kenedix Residential Investment Corporation
Kenedix Real Estate Fund Management, Inc.

Kenedix Group Materiality (Material issues)

The Investment Corporation and the Asset Management Company share the materials (Material issues) set by Kenedix, the parent company of the Asset Management Company. Kenedix Group 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.

Material issues of the Kenedix Group

Key areas and applicable SDGs	Material issues
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
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

Stakeholder Engagement

KDR conducts its business activities by engaging with various stakeholders and fulfilling our social responsibilities. Constant interaction with stakeholders is essential for establishing sound relationships. KDR aims for sustainable growth by proactively communicating with its stakeholders to accurately understand the demands and respond to their expectations.

Sustainability committee

The initiatives for sustainability are promoted under the leadership of the Sustainability Committee established in the Asset Management Company.
The Sustainability Committee gathers, analyzes, and examines the policies and targets, activity plans and various initiatives, matters related to risk management, and other important matters related to sustainability or ESG for KDR and the Asset Management Company, and shares them with related parties, with the aim of promoting initiatives for sustainability and ESG-related matters. The committee meets in principle, every 3 months, and the content reviewed is also reported to the Asset Management Company’s Board of Directors with an independent external member, and to KDR’s Board of Directors with independent supervisory directors.
The Sustainability Committee is composed of the president & CEO (Chief Sustainability Officer), who is the chairperson of the Sustainability Committee, and as members, the committee is composed of full-time directors, the Head of Strategic Planning Department, the General Managers of Strategic Planning Department, who are in charge of each REIT division, the Head of Sustainability Office, the Head of Strategic Planning and the Head of Asset Management Division, who are in charge of each REIT division, and the Head of Finance & Accounting Division.
In addition, the Head of Sustainability Office also serves as the Public Relations and Sustainability Department of Kenedix, Inc., the parent company of the Asset Management Company. Under the unified policy of the entire Kenedix Group, a system has been established to promote initiatives related to sustainability and ESG across the board.

Sustainability initiatives of the Kenedix Group

For details on the sustainability initiative of Kenedix group, please refer to the Kenedix website and the asset management company website.