Climate Change
Climate Change
Global warming, as the main factor for a climate change, has been the primal topic at international meetings so far and in 2015 Paris Agreement has adopted a new framework in 18 years since Kyoto Protocol. In this agreement, one of the goals is to keep the increase in global average temperature to well below 2℃, preferably to 1.5℃, compared to pre-industrial levels. In addition, at COP26 in 2021, the Glasgow Climate Pact was agreed that the 1.5℃ target remains in sight and scales up action on dealing with climate impacts., Kenedix recognizes that efforts to climate change is the most important issue for our business activities and properties under management.
Support for TCFD recommendations


The Asset Management Company expressed support for the recommendations of the Task Force on Climate-related Financial Disclosures (“TCFD”) and also joined the TCFD consortium, a group of domestic companies that support TCFD recommendations in October 2021.
TCFD is an international initiative established by the Financial Stability Board (“FSB”) at the request of the G20 for the purpose of discussing the disclosures of Climate-related financial information and the responses by financial institutions. TCFD publishes recommendations for companies to disclose their governance, strategy, risk management, and metrics and targets for Climate-related risk and opportunities.
On the other hand, TCFD Consortium is a group of companies and financial institutions that support the TCFD recommendations. The consortium was established with a view to further discussion on effective corporate disclosures of Climate-related information and initiatives to link disclosed information to appropriate investment decisions on the part of financial institutions and other organizations.
The Investment Corporation and the Asset Management Company will work to expand information disclosure based on TCFD and continue to actively promote ESG (Environment, Social and Governance) initiatives based on “Sustainability Policies” established by the Asset Management Company.
Governance
■Governance structure for climate change
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 the Investment Corporation 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 Asst Management Company’s Board of Directors with an independent external member, and to the Investment Corporation’s Board of Directors with independent supervisory directors.
The Sustainability Committee is composed of the President & CEO (Chief Sustainability Officer), who is the Chair 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 Department, the Head of Sustainability Office, the Head of Strategic Planning and the Head of Asset Management Division, who are in charge of each REIT Department, and the Head of Finance & Accounting Division.
In addition, the Head of Sustainability Office also serves as a member of 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, an organizational structure has been established to promote initiatives related to sustainability and ESG across the board.

Strategy
■Scenerio Analysis
The Asset Management Company conducted a scenario analysis based on multiple world outlook in order to understand the risks and opportunities that climate change may pose to the Investment Corporations it manages in the future, and to proactively consider and respond to these risks and opportunities. World outlook of each scenario is provided below. The analysis was conducted with reference to future climate projections and energy trends published by international organizations.
(Major reference sources)
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Transition risks |
Physical risks |
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4℃ Scenario |
IEA (International Energy Agency)
World Energy Outlook 2020 STEPS |
IPCC (Intergovernmental Panel on Climate Change)
Fifth Assessment Report RCP8.5 |
1.5℃ Scenario |
IEA (International Energy Agency)
NZE2050 |
IPCC (Intergovernmental Panel on Climate Change)
Fifth Assessment Report RCP2.6 |
■Financial Impact based on Scenerio Analysis
The Asset Management Company examined the medium-term(2030) and long-term(2050) impacts of the risks, opportunities, and financial impacts for the Investment Corporation it manages for each of world outlook in the 4℃ and 1.5℃ scenario described above. The summary of the evaluation is as follows.
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The financial impact (low, mid, or high) of each scenario is formulated through discussions based on qualitative and quantitative perspectives at the Asset Management Company. The red color of the financial impact in each scenario represents risk items, and the green color represents opportunity items. This evaluation will continue to be reviewed and updated as necessary based on new external and internal factors that have arisen and close examination of the quantitative impact. |
■Risk Management
Each REIT Department of the Asset Management Company and the Sustainability Committee identifies and evaluates the sustainability and ESG-related risks of the Investment Corporation and the Asset Management Company. These sustainability and ESG-related risks are managed on a daily basis by each department in charge, and important risks are periodically analyzed and reviewed by the Sustainability Committee under the supervision of the chairperson of the Sustainability Committee, and are managed appropriately. In addition, these risks are integrated into the overall risk management of the organization by sharing them with related parties as necessary.
Metrics and Targets
■Metrics and Targets related to Climate Change
Reduction of energy consumption and CO2 emissions is one of our material issues. The Asset Management Company and the Investment Corporation are making a contribution to environmental sustainability by using our business activities and property management operations in continuously cutting energy consumption and CO2 emissions in order to lower our environmental impact.
The Investment Corporation sets reduction targets related to climate change and conducts ongoing monitoring and promotes initiatives that lead to a reduction in environmental impact. As a result of the scenario analysis, the Investment Corporation and the Asset Management Company are currently in the process of redefining the targets.