Japan Logistics Fund, Inc. Japan Logistics Fund, Inc. 物流の、未来にかける

Sustainability Management

The contents of the "Sustainability Report 2023," which summarizes the ESG initiatives of Japan Logistics Fund, Inc. (JLF)and Mitsui & Co. Logistics Partners Ltd.(MLP).
The report is available in PDF format.

Sustainability Report 2023

In addition, "ESG Initiatives" in the Sustainability Report and JLF website refer to the GRI Standards. The following table shows where the relevant information is posted.

GRI Standard Reference Table

MLP an asset manager of JLF has established "Guidelines for ESG Initiatives".

Guidelines for ESG Initiatives.

1. Basic Stance

Mitsui & Co., Logistics Partners Ltd. (hereinafter referred to as the “MLP”), as the asset manager for Japan Logistics Fund, Inc. (hereinafter referred to as the “JLF”), recognizes the importance of environmental, social and governance (ESG) aspects in real estate investment management business.

As its initiatives for environment and society, MLP shall consider reducing the environmental burden and building trust with various stakeholders in and outside the company, and aims at realizing a sustainable society and contributing to society through the conduct of investment management operations. Moreover, in its corporate governance initiatives, MLP shall ensure legal compliance, establish risk management systems and strive for timely and appropriate information disclosure to investors and other relevant persons.

MLP has established a “Sustainability Policy” (hereinafter sometimes referred to as the “Policy”) and shall promote ESG initiatives which shall be led by “Sustainability Promotion Liaison Meeting.” Furthermore, to advance its ESG initiatives, MLP shall identify and set sustainability targets for important matters related to ESG (materialities) and build and manage an Environmental Management System (EMS).

2. Sustainability Policy

MLP has established a “Sustainability Policy,” as described below, with an eye to conducting a real estate investment management business that considers the reduction of the environmental burden, safety and security and the improvement of comfort, as well as a variety of different types of coordination and cooperation with various stakeholders.

I. Contribute to sustainable environment

To achieve the social responsibility of improving environmental performance of the managed properties, MLP shall contribute to environmental sustainability by continuously reducing the environmental impact of the managed properties and mitigating environmental burden.

(i) Improve efficiency in energy use and respond to climate change and net zero

MLP shall endeavor to reduce CO2 emissions by advancing the more efficient use of energy in real estate operations. MLP will also introduce technologies and facilities that conserve or generate energy and switch to power sources with lower carbon dioxide emission factors, among other things. Furthermore, MLP will strive to address climate change in a manner that is cognizant of net zero targets that align with the Paris Agreement.

(ii) Preserve water environment

MLP shall work to preserve water environment by conserving water and introducing water-saving equipment, among other measures.

(iii) Promote resource saving and waste disposal reduction

MLP shall work to implement initiatives for resource saving and waste disposal reduction through the three Rs (reduce, reuse and recycle).

(iv) Consider biodiversity

Through landscape management and so forth that give consideration to biodiversity, MLP strives to coexist with the natural environment and contribute to building a society in harmony with nature.

(v) Consider environmental attributes of building materials

In executing repair work and add-value renovations of properties, MLP shall consider using environmentally friendly building materials.

II. Support respect for human rights and labor practices

MLP will respect human rights in accordance with international norms and based on the Mitsui & Co., Ltd., Group human rights policy and will not tolerate discrimination or inhumane treatment based on race, nationality, gender, disability, religion, age, or any other grounds, and will strive to guarantee equal opportunity. These include, but are not limited to, freedom of association, the right to collective bargaining, the elimination of forced labor, unreasonably low wages and long working hours, and the abolition of child labor.

MLP strives to promote opportunities for productive and decent work, work that is rewarding and humane. MLP is also mindful to have a work environment and practices where freedom, fairness, safety, and human dignity exist.

III. Create a pleasant and healthy work environment and endeavor to educate officers and employees

Recognizing that human resources are its greatest asset, MLP shall work to create a healthy and pleasant work environment where each officer and employee can perform to their maximum potential by promoting acceptance and respect for each other's individuality, pursuing equity in the provision of opportunities, and creating an organization that allows individuality to flourish (diversity, equity & inclusion ”DEI”). In addition, MLP will strive to create a healthy and comfortable work environment with consideration for work-life balance and promote human resource development initiatives through assistance toward professional education and training and the establishment of an evaluation feedback system.

In the implementation of this Policy, MLP shall also endeavor to improve social and environmental awareness among its officers and employees by continuously conducting educational and familiarization activities.

IV. Cooperate and coordinate multimodally with a wide range of stakeholders

MLP shall stress dialogues with tenants, property managers and other business partners, as well as local communities and other external stakeholders, work to build trust relationships with them and strive to promote ESG initiatives.

MLP shall consider health, safety and comfort of the tenants occupying the properties, practice disaster prevention drills based on public and private partnerships and promote initiatives based on a business continuity plan (BCP).

V. Ensure legal compliance and establish corporate governance and risk management systems

(i) Ensure legal compliance

Recognizing legal compliance as one of the most important management initiatives, Directors of MLP shall lead efforts to promote legal compliance in the execution of business operations and ensure that officers and employees are fully aware of the importance of legal compliance. In addition, all officers and employees shall not only comply with laws, regulations and rules but endeavor to uphold high moral values and to sincerely and appropriately carry out their duties.

(ii) Establish corporate governance and risk management systems

MLP has established internal systems for the development of regulations, rules, procedures and manuals to be observed in its business conduct and the enhancement of corporate governance, in its effort to improve transparency in decision-making and avoiding conflicts of interest and to manage and mitigate various risks associated with the execution of business operations.

VI. Disclose information to investors and other relevant persons and utilize environmental certifications and evaluations

MLP shall strive to proactively disclose information pertaining to the Policy and the status of implementation of initiatives based on the Policy to investors and other relevant persons. In addition, it shall explore the utilization of environmental certifications and evaluations in order to materialize the outcome of initiatives based on the Policy.

VII. Review the Policy

To ensure the effectiveness of the Policy, MLP shall review the Policy, considering social situations, changes in people’s awareness, advances in technology and other circumstances.

3. Sustainability Promotion Structure

I. Sustainability Promotion Liaison Meeting

Sustainability Promotion Liaison Meeting shall pursue ESG initiatives in accordance with the Sustainability Policy.

Our Sustainability Promotion Liaison Meeting is run and managed by our Finance & IR Department, with our President and CEO as Supervisor of Sustainability Promotion. Regular meetings are held once every three months, in general, with participation from the President & CEO, Officers in Charge, Department Management Director and other department personnel. There, participants review the Sustainability Policy and Goals and various sustainability initiatives considering circumstances in society and the state of operations at JLF.

II. Important ESG matters (materialities)

JLF and MLP shall select from among various ESG issues, those ESG issues that JLF should address and identify important ESG matters (materialities) that JLF should tackle. For each materiality, KPIs (action plans and targets) shall be set and managed so as to drive ESG activities deeper.

① Important ESG matters (materialities) identification process

② Responding to SDGs

To further promote management with a focus on ESG, JLF and MLP shall identify important matters (materialities) that should be prioritized and clarify targets for strongly related SDGs.

MLP aim to strengthen our response to social issues, including SDGs, to maintain and improve our competitiveness, and to contribute to the realization of a sustainable society.

Important ESG matters (materialities) are managed in general by Chief Financial Officer, department in charge of each item (Including Compliance Officer and Internal Audit Officer) is set, and the officer in charge of the department in charge (or Compliance Officer and Internal Audit Officer) plays a central role in setting, managing, and promoting targets.

③ Important ESG matters (materialities) for JLF and MLP

Category Important challenge Direction/Target Medium- to long-term KPIs* FY 2023 KPIs SDGs
E Response to climate change Manage and reduce energy consumption and CO2 emissions Endeavor to reduce CO2 emissions by introducing technologies and facilities that use energy efficiently, conserve energy or generate energy and switching to power sources with low emissions coefficients, among other things.

・scope 1.2 GHG emission reduction targets:
- 42% reduction by FY2030 (compared to FY2021)
- Net zero by FY2050

・Conducted 1 ESG study session for at least 75% of tenants(Once each year)

・Conducted 1 ESG study session for all PM companies(Once each year)

・Conducted 1 ESG study session for at least 75% of tenants

・Conducted 1 ESG study session for all PM companies

Environmental Compliance To enhance the competitiveness of our properties, JLF and MLP will consider installing high-environmental performance equipment
Continue to work to acquire green certifications, such as Green Building Certifications

・Acquire green building certifications in 90% of portfolio by FY2025

・Acquire green building certifications in 85% of portfolio by FY2023

Collaboration with tenants to be environmentally friendly Promote the introduction of green leases from the perspective of both operations and facility improvements to contribute to the environment through collaboration with tenants.

・Implement green leases in 70% of portfolio by FY2025.

・Exchange opinions on ESG with at least 75% of tenants (Once each year)

・Implement green leases in 65% of portfolio by FY2023.

・Exchange opinions on ESG with at least 75% of tenants

Resilience
(business continuity)
Implement strategies to increase resilience against intensifying natural disasters to lower the risk of damages to portfolio profitability caused by disasters.
In addition, JLF and MLP will carry out planned repair work on properties in response to changes in weather patterns.

・Consider and implement 1 initiative related to business continuity planning (BCP)

・Implement 1 initiative related to business continuity planning (BCP)
(Plan to prepare a list of emergency construction vendors related to BCP)

Support a recycling economy Strive to preserve the water environment by conserving water, introducing water-saving equipment and the like.

・Distribute informational posters and pamphlets with at least 75% of tenants (Once each year)

・Distribute informational posters and pamphlets with 75% or more of tenants.

S Respect for diversity, employee motivation and wellness Strive to create a work environment where each employee is healthy in body and soul and feels as if they are leading a fulfilled lifestyle in society.

・Achieve 75% usage of paid leave days by 2025.

・Health examinations (target: 100%)

・Percentage of feedback interviews conducted (100%)

・Yearly training in diversity, equity & inclusion (DEI) (Once each year)

・Health examinations (target: 100%)

・Percentage of feedback interviews conducted (100%)

・Yearly training in diversity, equity & inclusion (DEI)

Employee performance and career development Aim to improve human resources by encouraging employee self-improvement through the provision of continuous education opportunities and incentives to acquire credentials.

・At least 15 hours of training per employee per year.

・At least 15 hours of training per employee.

Contribute to the community Actively contribute to the community based on the understanding that an important challenge to business continuity is gaining social license to operate based on a relationship of trust with the community.

・Making social contributions (Once each year)

・Making social contributions at least once

G Disclosure to and dialog with stakeholders Build relationships of trust through active disclosure including non-financial information such as ESG-related activities and constructive dialog with stakeholders.

・IR with individual investors (Sixth each year)

・IR with institutional investors: 260 meetings

・IR with individual investors: Conducted on average 6 times

Strengthen governance Raise awareness of compliance and effect thorough adherence to laws and regulations by implementing training.

Compliance training

・Training participation: 100%

・Training time: 6 hours/each year

Compliance training

・Training participation: 100%

・Training time: 6 hours

Establish a sophisticated governance structure and implement fair corporate governance

・Attendance rate of directors at JLF’s board meetings annual average of at least 90%

・Attendance rate of directors at JLF’s board meetings annual average of at least 90%

  • The numerical values of the quantitative targets of the KPIs will be verified for adequacy at the time of the annual review, and revisions such as target improvement will be considered as necessary. For those KPIs for which no fiscal year is specified, JLF and MLP will aim to achieve them continuously until 2030.

III. Environmental Management System

For important ESG matters (materialities) independent environmental management systems (EMS) are built and run to continually achieve improvement on the issue.
At MLP which manages JLF KPIs are set and confirmed to endeavor to improve challenges identified by important ESG matters (materialities).
For environmental KPIs, JLF track environmental performance data on energy consumption, greenhouse gas (GHG) emissions, water consumption, and waste generation by property on an annual basis, and obtain third-party assurance based on the International Standard on Assurance Engagements (ISAE3000) from an independent assurance engagement organization. JLF aim to achieve our reduction targets through accurate data and analysis of causes.
In addition to environmental performance data, progress on materiality KPIs is monitored and reported at least once a year to the Sustainability Promotion Liaison Meeting, President, Representative Director and CEO and the Board of Directors, and a PDCA cycle is implemented, including a review of materialities and KPIs.

<Environmental Management System (EMS) Flowchart>

MLP

<Conceptual diagram of the PDCA cycle>

<Results of FY2022 materiality>

Category Important challenge Direction/Target KPI Results for FY2022
E Response to climate change Manage and reduce energy consumption and CO2 emissions Endeavor to reduce CO2 emissions by introducing technologies and facilities that use energy efficiently, conserve energy or generate energy and switching to power sources with low emissions coefficients, among other things.

・scope 1.2 GHG emission reduction targets:
- 42% reduction by FY2030 (compared to FY2021)
- Net zero by FY2050

・Distribute informational posters and pamphlets (covering 75% or more of portfolio every year).

・Implement ESG study groups (covering 75% or more of tenants every year).

In FY 2022, achieved net zero scope 1.2 greenhouse gas emissions by purchasing non-fossil fuel certificates

・Distribute educational posters (at least 75% of properties) ⇒ Achieved 100%

・Conducting ESG study sessions (for at least 75% of tenants every year) ⇒ Achieved 100%

Environmental Compliance Continue to work to acquire green certifications, such as Green Building Certifications

・Acquire green building certifications in 75% of portfolio by FY2022.

・Acquire green building certifications in 90% of portfolio by FY2025.

・Has acquired green building certifications in 79.7% of portfolio at the end of FY2022.

Collaboration with tenants to be environmentally friendly Promote the introduction of green leases from the perspective of both operations and facility improvements to contribute to the environment through collaboration with tenants.

・Implement green leases in 50% of portfolio by FY2022.

・Implement green leases in 70% of portfolio by FY2025.

・Exchange opinions with tenants on ESG. (75% or more of tenants every year)

・Has implemented green leases in 63.1% of portfolio at the end of FY 2022.

・Exchanged opinions with tenants on ESG (covering 100% of tenants).

Resilience
(business continuity)
Implement strategies to increase resilience against intensifying natural disasters to lower the risk of damages to portfolio profitability caused by disasters.

・Develop tools for BCP operation and build a cooperative system with related companies.

・Consolidate PBM companies

・Organize tools related to BCP

・Prepare list of emergency construction vendors to enhance ability to procure general contractors and other partners

Support a recycling economy Strive to preserve the water environment by conserving water, introducing water-saving equipment and the like.

・Distribute informational posters and pamphlets (covering 75% or more of portfolio every year).

・Distributed educational materials to all tenants (covering 100% of tenants)

S Employee motivation and wellness Strive to create a work environment where each employee is healthy in body and soul and feels as if they are leading a fulfilled lifestyle in society.

・Achieve 75% usage of paid leave days by 2025.

・Health examinations (target: 100%)

・Percentage of feedback interviews conducted (100%)

・Yearly training in diversity, equity & inclusion (DEI) (to be achieved continuously through FY2030)

・Average number of paid holidays used Use 75% by FY 2025 ⇒ FY 2022: 83.0%

・Percentage of employees who have received health examinations (target: 100%) ⇒ 100%

・Percentage of feedback interviews held (100%) ⇒ 100%

・Yearly training in diversity, equity & inclusion (DEI)⇒ Held training one

Employee performance and career development Aim to improve human resources by encouraging employee self-improvement through the provision of continuous education opportunities and incentives to acquire credentials.

・At least 15 hours of training per employee per year (to be achieved continuously through FY2030).

・Average hours of attendance : 17 hours/person

Contribute to the community Actively contribute to the community based on the understanding that an important challenge to business continuity is gaining social license to operate based on a relationship of trust with the community.

・Making social contributions at least once a year

・Making social contributions

G Disclosure to and dialog with stakeholders Build relationships of trust through active disclosure including non-financial information such as ESG-related activities and constructive dialog with stakeholders.

・IR with institutional investors: 230 meetings in FY2022

・IR with individual investors: Conducted on average 6 times a year (to be achieved continuously through FY2030)

FY2022

・IR with institutional investors: 289 meetings

・IR with individual investors: 9 times

Strengthen governance Raise awareness of compliance and effect thorough adherence to laws and regulations by implementing training.

Compliance training (FY2022)

・Training participation: 100%

・Training time: 6 hours/year

Compliance training

・Training participation: 100%

・Training time: 6 hours/year

Establish a sophisticated governance structure and implement fair corporate governance

・Attendance rate of directors at JLF’s board meetings annual average of at least 90%

・Attendance rate of directors at JLF’s board meetings:97.1%