Daiwa House REIT Investment : Supplementary Material for Support for TCFD Recommendations and First SBTi Certification in J-REITs

Governance

The Asset Manager, as an asset manager of DHR, established the "Regulations

The Sustainability Committee deliberates on sustainability strategies such as

Concerning the System for Promoting Sustainability" and rules on topics such as

addressing climate-related issues and formulates annual business plans and

internal framework, collaboration with stakeholders and information disclosure

operational action plans based on the strategies. The Committee also

policy to secure an appropriate system for promoting sustainability.

examines the progress of execution of the plans including budgets and

Remuneration structure was changed to link asset management fees to the Asset

reflects it in the strategy planning for the next fiscal year.

Manager, remuneration for Executive Director of DHR and remuneration for

The President and CEO of the Asset Manager, as the Chief Executive of the

directors of the Asset Manager to sustainability indices including GHG emissions

Sustainability Committee, provides final approval of various climate-related

reduction ratio, GRESB evaluation and CDP evaluation.

goals and measures, evaluates the status of efforts and gives instructions for

For governance  Page 5

review. The President and CEO is also responsible for climate-related issues

at the Board of Directors.

Strategy

Understanding the risks and opportunities for DHR in the future due to unusual

In accordance with the TCFD recommendations, the Asset Manager

weather caused by climate change and increasing social demands for climate

conducted analysis based on multiple scenarios of below 2°C scenario and

change measures, the Asset Manager verified and analyzed the effectiveness of

4°C scenario and formulated a roadmap for achieving the targets

the current climate change measures.

certified by SBTi.

For scenario analysis  Pages 6-7

For roadmap  Page 8

Risk

While recognizing climate change risk as one of the risks that could pose a

The Board of Directors shall oversee the development of an appropriate risk

Management

significant impact on business in the medium to long term, the Asset Manager

management system based on the "Risk Management Policy" after

sees such risk as areas of potential and manages the risk by incorporating it in our

considering where and what the risk is based on the strategic goals set

overall risk management process.

separately by the Board of Directors.

The Asset Manager has established the "Risk Management Regulations" and "Risk

The President and CEO shall be responsible for all risks in accordance with

Management Implementation Guidelines" as internal regulations in order to

the provisions of the "Daiwa House Group Risk Management Regulations",

accurately identify risks and opportunities inherent in business, develop a system

develop an appropriate risk management system and be responsible for

for appropriately managing potential losses and profits when the identified risks

promoting and implementing risk management.

and opportunities are realized, ensure the soundness of management and operate

The Compliance Officer, who is responsible for risk management, shall

business in a fair manner.

establish methods including measurement, monitoring and management

For risk management  Page 9

based on the type of risk along with the risk management policy and shall

develop internal regulations to ensure the effectiveness of these methods.

Metrics and

DHR set targets of reducing total GHG emissions by 42% in FY2030 compared to

We are promoting the acquisition of third-party external certifications and

Targets

FY2020as the first J-REIT certified by SBTi for its SBT 1.5°C targets. In addition,

evaluations to increase the objectivity and reliability of our sustainability

DHR set long-termtargets of net zero emissions in FY2050.

initiatives at portfolio properties and improve the asset value over the

Internal carbon price is set at 10,000 yen / t-CO2and used as an incentive for low-

medium to long term.

carbon promotion works, guidelines for investment decision making and a

Our policy is to increase the percentage of properties with environmental

reference index to identify risks of rising costs.

certification (based on gross floor area) to 70% or more by FY2030.

For metrics and targets → Page 10