SUSTAINABILITY-RELATED DISCLOSURE

Product name: Japan Logistics Fund, Inc.

Legal entity identifier: 3538004KZWISCQO70151

Japan Logistics Fund, Inc. ("JLF") promotes environmental or social characteristics, but does not have as its objective a sustainable investment within the meaning of article 9(1) of Regulation (EU) 2019/2088 ("SFDR"). JLF has no employees in accordance with the prohibition on having employees under the Act on Investment Trusts and Investment Corporations of Japan and relies on. Mitsui & Co., Logistics Partners Ltd. (the "Asset Manager"), to manage and operate the properties in JLF's portfolio. JLF and the Asset Manager are hereinafter referred to collectively as "we," "us" or "our" unless noted otherwise. References to "fiscal year" or "FY" are to the 12 months began or beginning April 1 of the year specified in line with the fiscal year of the Asset Manager, unless noted otherwise.

Summary

No sustainable

The financial products offered by JLF promote environmental or social

investment objective

characteristics, but do not have as its objective sustainable investment.

Environmental or

JLF invests primarily in logistics properties and aspire to achieve stability and

social characteristics

growth in dividends over the mid-to-long-term. At the same time, the Asset

of the financial

Manager closely studies the impact of our portfolio on environmental factors

product

such as CO2 emissions, energy consumption, water consumption, asbestos and

soil contamination as well as social factors on tenants, including with respect to

antisocial forces and the work environment, and on relationships with the

community. Such factors are considered for every investment decision, along

with the profitability of the property. Accordingly, we implement various

environmental or social initiatives, as described below.

Investment strategy

JLF invests directly or indirectly through trust beneficiary interests in real estate.

Therefore, due diligence (including the assessment of good governance

practices) in relation to investee companies is not applicable.

In order to conduct sustainable asset management while maximizing the value of

JLF's properties, we have taken into consideration ESG factors in our investment

and asset management processes. In particular, we have established a green

finance framework (see below for details).

In order to promote ESG initiatives, the Asset Manager's President & CEO and

the Managing director of each department convene a Sustainability Promotion

Liaison Meeting generally once every three months to review our sustainability

policy, goals and initiatives and how our investments are performing against the

foregoing, as described below.

Proportion of

JLF offers financial products which promote environmental or social

investments

characteristics, but does not have sustainable investments as its objective. As of

January 31, 2023, 78.6% of our properties qualified as Green Eligible Assets

(defined below) based on leasable area, and 21.4% did not qualify as Green

Eligible Assets based on leasable area. We aim to increase the percentage of

JLF's properties with green building certifications based on leasable area to 90%

by the end of FY2025.

Monitoring of

In order to periodically monitor and track our performance on environmental or

environmental or

social characteristics, we use the initiatives and indicators such as (i) acquiring

social characteristics

external certifications and assessments for sustainability performance such as

GRESB (as defined below) and MSCI ESG Rating; (ii) ratifying and

participating in PRI (as defined below) and PFA 21 (as defined below); (iii)

obtaining SBT (as defined below) certification for our target KPI for greenhouse

gas emissions reduction; (iv) acquiring green building certification (as defined

below) for the individual properties in JLF's portfolio; (v) tracking and disclosing

data on greenhouse gas emissions, energy consumption and water consumption;

and (vi) implanting green leases (as defined below), each as further described

below.

Methodologies

The Asset Manager has established a Sustainability Policy and has formed a

Sustainability Promotion Liaison Meeting ("SPLM"), which promotes ESG

initiatives. The SPLM pursues ESG initiatives in accordance with the

Sustainability Policy and is comprised of the President and CEO, and

department managing director of the Asset Manager. The Managing Director of

the Finance & IR Department of the Asset Manager is responsible for managing

sustainability targets. Regular meetings are held approximately once every

three months where sustainability policies, at which ESG targets and initiatives

are studied and discussed in light of circumstances in society and the state of

operations at JLF. Moreover, SPLM identifies ESG materialities, establishes

and manages KPIs (action plans and targets), and reports to the Board of

Directors. The Asset Manager uses the methodologies as described below to

monitor and track our ESG key performance indicators.

Data sources and

As further described below, the Asset Manager obtains certain ESG-related data

processing

from tenants, property management companies, third-party consulting firms and

issuers of green building certifications, depending on the type of data. In

addition, the Asset Manager seeks to ensure data accuracy and quality by

coordinating with relevant departments within the Asset Manager and obtaining

an assurance report regarding certain ESG data from an independent third-party

accounting firm.

Limitations to

As further described below, the primary limitation to the methodology or data

methodologies and

source is the necessity of our reliance on the tenants and property management

data

companies for raw data at the property level. Data at the portfolio level are

compiled internally at the Asset Manager. To ensure the accuracy of compiled

data at the portfolio level, we have engaged an independent third-party

accounting firm which has provided an assurance report regarding the accuracy

and quality of compiled data at the portfolio level, but the assurance report does

not provide independent verification of accuracy of raw data at the property

level and the challenges associated with our reliance on the tenant and property

management companies for raw data at the property level remain.

Limitations to the methodology and data are not expected to affect the

attainment of the environmental or social characteristics promoted by JLF in

any material way.

Due diligence

Prior to our investment in a property, the Asset Manager conducts due diligence

on the property, including ESG due diligence, building review and regulatory

environmental due diligence. Such due diligence process encompasses various

studies of climate-related risks as a basis for deliberations at the Investment

Committee and eventual investment decision at the Board of Directors.

Specifically, water submersion levels according to various hazard maps are

investigated in connection with the possibility of flooding or water submersion

at the target property.

Engagement policies

JLF does not generally consider investing in properties that are designated as

contaminated areas that require government notification under the Soil

Contamination Countermeasures Act of Japan or that do not otherwise meet our

environmental standards based on their history of land usage and soil

contamination assessment by experts and examination of presence of harmful

substances

When investing in properties using proceeds from financing under our green

finance framework, JLF does not consider properties that do not meet the

criteria under our green finance framework and do not qualify as Green Eligible

Assets for investment.

Designated reference

JLF has no benchmark index designated as a reference benchmark to meet the

benchmark

environmental or social characteristics promoted by JLF.

No sustainable investment objective

The financial products offered by JLF promotes environmental or social characteristics, but does not have as its objective sustainable investment.

Environmental or social characteristics of the financial product

JLF invests primarily in logistics properties and aspire to achieve stability and growth in dividends over the mid-to-long-term. At the same time, the Asset Manager closely studies the impact of our portfolio on environmental factors such as CO2 emissions, energy consumption, water consumption, asbestos and soil contamination as well as social factors on tenants, including with respect to antisocial forces and the work environment, and on relationships with the community. Such factors are considered for every investment decision, along with the profitability of the property.

We believe that an investment corporation should conduct its business toward achieving sustainable society from a long-term perspective by making contributions to people, local communities, and the natural environment. The Asset Manager makes efforts to reduce our environmental burden and earn the trust of our stakeholders through its asset management. In addition, the Asset Manager ensures that we are in compliance with applicable laws, conducts risk management and makes timely and appropriate disclosures to investors and other parties. The Asset Manager has established a Sustainability Policy and has formed a Sustainability Promotion Liaison Meeting ("SPLM"), which promotes ESG initiatives. Our Sustainability Policy includes our basic policy on how we can contribute to the environment, improve the work environment, ensure compliance, and collaborate with each stake holder. In order to advance its ESG initiatives, the Asset Manager establishes material ESG targets and utilizes an environmental management system (EMS) to achieve those targets.

We implement various environmental initiatives including the following.

  • Addressing climate change. We contribute to the creation of low-carbon society through our initiatives including greenhouse gas reductions (e.g. installation of LED light bulbs and solar panels), and we also make efforts to adapt to climate hazards and natural disasters (e.g. obtaining and reviewing updated engineering reports). Our target KPI is to reduce Scope 1 and 2 GHG emissions by 42% by FY2030 compared to the levels in FY2021 and to achieve carbon neutrality by FY2050.
  • Consent with and support of TCFD. In July 2021, the Asset Manager announced its support of the June 2017 recommendations by the Task Force on Climate-related Financial Disclosures
    ("TCFD"), which was established by the Financial Stability Board in December 2015 to develop recommendations for more effective climate-related disclosures. The Asset Manager has participated in the TCFD Consortium, a group of Japanese companies that support TCFD recommendations. The TCFD Consortium meets from time to time to discuss how to disclose and use climate-related information effectively to support informed decisions by investors.
  • Responding to transitional risks - improving facilities to save energy and conducting ESG efforts with tenants. We are prepared to address what we call the "transitional risks", the policy, regulatory, market and reputational risks associated with climate change. In order to save energy,

we replace old lighting equipment with LED lighting equipment, and track the estimated yearly reduction of electronic power consumption from LED conversion. We aim to increase the percentage of JLF's properties with LED lightning equipment (by gross floor area) to 80% by FY2025. We renew air-conditioning equipment and install photovoltaic panels on the rooftop of some of our properties. In addition, we cooperate with tenants on environmental efforts, including by providing ESG training sessions for tenants. We enter into "green leases" with some tenants, which require tenants to cooperate with us on implementing environmentally- friendly initiatives. We also implement "greening", the process of selection and planting of plants, initiatives at JLF's properties such as installing green roofs, greening of walls, setting up of green zones and protection of native species, which we believe would help suppress temperature rise at the properties caused by heat-island phenomena and improve visual aesthetics. We contribute to biodiversity conservation by planting indigenous plant species

  • Responding to physical risks - greenification and countermeasures against disasters. We promote greenification of rooftops and the grounds surrounding all of our properties to mitigate the urban heat island effect, which describes the higher temperatures experienced in urban areas due to buildings because they absorb and re-emitheat more than natural landscapes. Additionally, we take countermeasures to protect buildings from disasters, including raising the level of building foundations to help avoid electrical system failures in our properties.
  • Promote resource circulation. We strive to minimize water use in our business activities by improving efficiency and reducing consumption. We promote greening of buildings to help suppress temperature increases caused by the urban heat island effect and improve the aesthetics of our logistics properties. We also contribute to biodiversity conservation by planting indigenous plants. In addition, we endeavor to minimize waste from our properties by monitoring and conducting appropriate management.
  • Conducting soil contamination surveys. We conduct soil contamination surveys when acquiring properties and require the seller to ensure that all chemical substances are removed before the acquisition, and do not consider investing in properties that do not meet the standards for soil contamination and other environmental contamination in accordance with the Air Pollution Control Act and the Soil Contamination Countermeasures Act of Japan and other environmental laws and ordinances, unless the underlying lands meet our voluntary standards for evaluation and determination of soil contamination.

We implement various social initiatives at our properties including the following.

  • Disaster response and building safety. We and the Asset Manager examine the safety of buildings, including whether they comply with applicable laws, and earthquake risks associated with buildings at the time of acquiring properties by obtaining engineering reports. In addition, the Asset Manager reviews the safety of our buildings on an ongoing basis by obtaining updated engineering reports about every five years for all of our properties. The Asset Manager has established disaster policies and procedures to ensure that damages are minimized, ensure business operation continues, and achieve fast recovery in a time of disaster. We have installed on-site power generators at some of our portfolio properties that can be used during a power outage, and toilets that are available even during a disaster at some properties.
  • Initiatives to stimulate local communities. We redevelop our properties and engage in joint efforts with partners to develop modern, large-scale logistics properties so that these properties can contribute to revitalization of the local economy. Additionally, we recruit mobile phone companies to install their antennas at our properties, which has improved cellular coverage in the community surrounding our properties. We regularly conduct technical evaluations of environmental and social risks of our all of our properties, not only to conduct risk management, but also evaluate environmental initiatives.
  • Connection with local community. We have improved channels of communication with tenants and local residents through various initiatives, including cleaning activities in cooperation with

property managers, building managers and tenants. We also help to keep tenants and local residents safe by installing security cameras at some of our properties to monitor areas surrounding the property and on vending machines inside our properties.

  • Initiatives aimed at enhancing tenant satisfaction. In order to create a pleasant working environment for users of our properties, we have enhanced amenities at some of our properties, by adding break rooms and kiosks and regularly assessing and improving air-conditioning.
  • Creating a healthy and pleasant working environment. The Asset Manager conducts an employee satisfaction survey on an annual basis for all employees. The survey results and proposals based on such results are reported annually by the CEO. The Asset Manager has a family leave program, a special paid leave program and a flexible working hour program. The
    Asset Manager supports our employees' health and safety by providing financial aid for their health exams. The Asset Manager has a hotline for employees which allow them to consult an attorney anonymously to report harassment or other workplace issues, either inside or outside the Asset Manager.

Investment strategy

JLF invests directly or indirectly through trust beneficiary interests in real estate. Therefore, due diligence (including the assessment of good governance practices) in relation to investee companies is not applicable. The investment and due diligence policies as described below are related to real estate and real estate-related assets.

JLF invests primarily in logistics properties and aspire to achieve stability and growth in dividends over the mid-to-long-term. At the same time, the Asset Manager closely studies the impact of our portfolio on environmental factors such as CO2 emissions, energy consumption, water consumption, asbestos and soil contamination as well as social factors on tenants, including with respect to antisocial forces and the work environment, and on relationships with the community. Such factors are considered for every investment decision, along with the profitability of the property.

In order to conduct sustainable asset management while maximizing the value of JLF's properties, we have taken into consideration ESG factors in our investment and asset management processes. In particular, we have established a green finance framework ("Green Finance Framework") in accordance with the Green Bond Principles 2018 by the International Capital Market Association, the Green Bond Guidelines 2020 by the Ministry of the Environment of Japan, the Green Loan Principles by the Loan Market Association and the Asia Pacific Loan Market Association, and the Green Loan and Sustainability Linked Loan Guidelines 2020 by the Ministry of the Environment of Japan:

  • Green Finance Framework. Our Green Finance Framework meets the four requirements set forth in the Green Bond Principles 2018 with respect to (1) use of procured funds, (2) project selection criteria and process, (3) fund management methods, and (4) reporting. Our Green Finance Framework was given the Green 1(F) rating, the highest rank under the JCR Green Finance Evaluation, which is conducted by Japan Credit Rating Agency, Ltd. (JCR) on the policy for issuance of green bonds or green loans based on the Green Bond Principles 2018, the Green Loan Principles, the Green Bond Guidelines 2020 and the Green Loan and Sustainability Linked Loan Guidelines 2020.
    1. Use of procured funds: Net proceeds from borrowings or investment corporation bonds issued under our Green Finance Framework are used for the acquisition of Green Eligible Assets (defined below), Green Eligible Renovations (defined below) or repayment or redemption of loans or investment corporation bonds required for Green Eligible Assets.
      • Green Eligible Assets are defined as follows,:
        1. Green buildings

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Japan Logistics Fund Inc. published this content on 24 April 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 April 2023 02:46:05 UTC.