Sustainability Management

The contents of the "Sustainability Report 2024," 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 2024

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 "Sustainability Policy" and "Guidelines for ESG Initiatives".

Sustainability Policy

1. 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.

① Improve efficiency in energy use

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.

②Respond to climate change and net zero

MLP shall work to improve the resilience (disaster prevention and mitigation) of the properties under the management to the effects of climate change, such as more frequent and more severe natural disasters that have already occurred or are unavoidable in the medium to long term. In addition, MLP shall strive to meet the net-zero target for greenhouse gas emissions that cause climate change, consistent with the Paris Agreement.

③ Preserve water environment

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

④ 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).

⑤ 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.

⑥ Consider environmental attributes of building materials

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

2. 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.

3. 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.

4. 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).

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

① 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.

② 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.

6. 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.

7. 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.

Guidelines for ESG Initiatives

1. Basic Stance

As the asset manager for Japan Logistics Fund, Inc. (hereinafter referred to as “JLF”), Mitsui & Co., Logistics Partners Ltd. (hereinafter referred to as “MLP”), recognizes the importance of environmental, social and governance (ESG) initiatives in the real estate investment management business and promotes sustainability management.
Regarding environmental and social initiatives, MLP is cognizant to reduce environmental impact and build relationships of trust, both inside and outside the company, and aims to realize a sustainable society and contribute to society through its asset management operations. Regarding corporate governance, MLP strives to ensure compliance, establish a risk management system, and disclose information to investors and other stakeholders in a timely and appropriate manner.
MLP has established a "Sustainability Policy" to ensure its real estate investment management operations consider a reduced environmental impact, safety and security, enhanced comfort, and partnerships and cooperation with various entities. MLP’s President & CEO supervises sustainability promotion, and the executive officer in charge of the Finance & IR Department oversees sustainability management. In addition, MLP deepens its sustainability management by establishing and operating an Environmental Management System (EMS).

2. Sustainability Promotion System (build and operate an EMS)

(1) Overview

By establishing and operating an EMS, MLP promotes sustainability management to improve the sustainability of its business with consideration for the environment (E), society (S), and governance (G).
The EMS encompasses the sustainability management of JLF and MLP by incorporating environmental (E) elements such as energy, GHG, water, and waste at assets under management by MLP, as well as social (S) and governance (G) elements.
Based on the EMS, MLP executes the PDCA cycle, such as formulating (Plan), implementing and operating (Do), inspecting and correcting (Check), and evaluating and reviewing (Act) the sustainability management policies, targets, and plans, per instructions from the President & CEO.

(2) Scope

Sustainability management at MLP applies to all its operations (including all asset management operations for properties managed by MLP). Therefore, all officers and employees and all assets under management are within scope.

(3) Sustainability Promotion System and EMS Operation System, Roles, Responsibilities, and Authority

MLP promotes the establishment and operation of an EMS in accordance with the requirements in the Eco Action 21 Guidelines.
As a Sustainability Promotion System, the President & CEO supervises sustainability promotion, the executive officer in charge of the Finance & IR Department is responsible for sustainability execution, and the Finance & IR Department is responsible for overall sustainability operations and management. The Supervisor of Sustainability Promotion or Sustainability Executive Officer shall establish an implementation system, define their roles, responsibilities, and authority, and appropriately inform all officers, employees, and the Board of Directors of the following information to appropriately promote and continuously improve the Sustainability Management Policy and other relevant policies.

Implementation Systems for Sustainability Promotion and EMS, Roles, Responsibilities, and Authority
Sustainability Management Policy, Sustainability Management Targets and Plan (once a year)
Results of review of sustainability management policies, etc., and details of instructions for improvement, etc. (once a year)

In addition, a "Sustainability Promotion Liaison Meeting" is held once every three months to report and discuss sustainability initiatives. The Sustainability Promotion Liaison Meeting is held with the participation of the President & CEO, the executive officer in charge of each department, the general manager of each department, and the person in charge of each department to promote sustainability policies, targets, and various initiatives, while considering social conditions and the status of JLF's operations.
Operations related to sustainability shall be promoted by MLP’s officers and employees and in cooperation with the property management companies (PM companies) that manage assets owned by JLF.

(4) Formulating sustainability management policy, targets, and plans (Plan)

① Process for formulating sustainability management policies, etc.

At MLP, the Supervisor of Sustainability Promotion takes the lead in formulating the annual sustainability management policy, etc., which is approved and pledged by the Supervisor of Sustainability Promotion.

② Establishment of Sustainability Management Policy

Among various issues related to sustainability, MLP shall identify those sustainability-related issues and opportunities that a real estate investment trust should address, identify key sustainability-related issues (materialities) that JLF and MLP should address, and develop a Sustainability Management Policy that addresses those issues.
In identifying materiality priorities, MLP shall identify the most relevant SDGs. MLP aims to strengthen response to social issues, including SDGs, to maintain and improve its corporate competitiveness and contribute to the realization of a sustainable society.

③ Establishment of sustainability management targets and sustainability management plan

To enhance specificity of the Sustainability Management Policy, MLP shall establish a department (including the Compliance Officer and the General Manager of the Internal Audit Office) responsible for each item contained in the Sustainability Management Policy and develop sustainability management targets and sustainability management plans. For sustainability management targets related to energy consumption, greenhouse gas (GHG) emissions, water consumption, waste, etc., MLP shall consider environmental performance data and environmental and other relevant laws and regulations, set numerical targets to the extent possible, and formulate measures (sustainability management plans) to achieve the targets. Regarding environmental and other related laws and regulations, MLP shall endeavor to identify the latest information on environmental and other related laws and regulations that govern its business activities by periodically identifying and compiling a list of such laws and regulations. Additionally, MLP shall periodically confirm the status of compliance with such laws and regulations.
MLP shall review its Sustainability Management Targets and Sustainability Management Plan every year. Additionally, such a review shall take place if major directional changes are made to the Sustainability Management Policy, the status of achievement of Sustainability Management Targets, or the content of environmental performance data or related environmental and other laws and regulations.

④ Understand environmental performance data and status of initiatives

Environmental performance data on energy consumption, greenhouse gas (GHG) emissions, water consumption, and waste generation are tracked on an annual basis for each property and are subject to assurance and verification based on the International Standard on Assurance Engagements (ISAE3000) by an independent, third-party assurance and verification engagement organization. By accurately identifying data and analyzing causes, MLP aims to develop appropriate sustainability management targets and plans and achieve reduction targets.

（5）Implementing and operating the EMS (Do)

① Implementation and operation

The departments in charge of each item of the Sustainability Management Policy shall implement various initiatives in accordance with the established sustainability management targets and plans. MLP shall be conscious of compliance with environmental and other relevant laws and regulations when implementing initiatives and strive to revise sustainability management targets and plans in response to revisions of environmental and other relevant laws and regulations. In addition, MLP shall develop procedures as necessary to achieve sustainability management targets.

② Education, training, and communication to stakeholders related to sustainability

MLP shall conduct sustainability training for all officers and employees of MLP as well as the PM companies and tenant companies, etc., to implement the Sustainability Management Policy. MLP shall conduct interactive communication, such as by providing opportunities for opinions and suggestions at training sessions to improve knowledge and promote initiatives concerning sustainability. If there are any complaints or requests from outside parties regarding the environment or other issues, MLP shall take necessary actions and take steps to prevent recurrence.

③ Prepare for and respond to environmental emergencies

In preparation for and response to environmental emergencies in the assets under management, MLP shall formulate and implement a business continuity plan (BCP) and emergency response manuals that incorporate cooperation with the PM and BM companies. The effectiveness of the response measures shall be verified and revised as necessary after the occurrence of an emergency or after a trial implementation.

④ Creation and management of documents

To properly promote sustainability initiatives, the following documents (paper or electronic media, etc.) and other documents deemed necessary by the department in charge shall be prepared and managed.

Sustainability Management Policy (including Sustainability Management Targets and Sustainability Management Plan)
Compilation of environmental and other relevant laws and regulations
Implementation system
Status of receipt of external complaints, etc. and results of response
Sustainability Management Plan implementation results
Results of compliance with environmental and other relevant laws and regulations
Results of corrective and preventive actions for problems
Results of evaluation of the overall status of initiatives and review and direction by the Supervisor of Sustainability Promotion

(6) Inspecting and correcting the EMS (Check)

The department in charge of each item of the Sustainability Management Policy shall make an interim report at least once a year on the status of achievement of sustainability management targets and implementation of the Sustainability Management Plan at the Sustainability Promotion Liaison Meeting to confirm the appropriateness of the target setting and progress. Measures to correct sustainability management targets and plans shall be taken as necessary based on the status of achievement.

(7) Evaluating and reviewing the EMS (Act)

① Management review

The President & CEO, who is the Supervisor of Sustainability Promotion, shall periodically (once a year) evaluate and review the appropriateness, effectiveness, and efficacy of the EMS.
Specifically, at the Sustainability Promotion Liaison Meeting, the department in charge of each item of the Sustainability Management Policy shall report regularly (at least once a year) on the status of achievement of materiality, trends in sustainability in Japan and overseas, status of efforts by competitors, compliance with environmental and other related laws and regulations, external complaints and requests regarding the environment, and the Supervisor of Sustainability Promotion shall evaluate these reports.

② Instructions for improvement

Based on the evaluation results, the Supervisor of Sustainability Promotion shall conduct a comprehensive review of the sustainability management policy, targets, plans, and implementation system on a regular basis (at least once a year) and give instructions for improvement as necessary.

(8) Reporting

The contents of (4) through (6) above shall be reported to MLP’s Board of Directors on a regular basis (once a year).
MLP's Board of Directors shall give instructions for improvement as necessary based on those reports. Any instructions for improvement issued shall be shared at the Sustainability Promotion Liaison Meeting. Improvement measures shall be formulated and their progress appropriately managed. A report on the status of improvement shall be made at MLP’s Board of Directors meeting.

Sustainability management policy and targets

This table can scroll to the left or right.

Category	Important challenge		Sustainability management policy	Sustainability management target (Medium- to long-term)^*	Sustainability management target (FY 2024)
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 100% of tenants (Once each year) ・Conducted 1 ESG study session for all PM companies (Once each year)	・Conducted 1 ESG study session for 100% 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 90% of portfolio by FY2024 - 90% of the total number of environmental performance evaluation certifications (CASBEE, etc.) acquired - 45% of the total number of energy conservation performance evaluation certification (BELS, etc.) acquired
		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 100% of tenants (Once each year)	・Implement green leases in 70% of portfolio by FY2024. ・Exchange opinions on ESG with 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. 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) (Conduct disaster drills at owned properties)
	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 100% of tenants (Once each year)	・Distribute informational posters and pamphlets with 100% 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 (Cleanup activities around owned properties, etc.)
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 (One-on-one meetings): 210 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
	Strengthen governance		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.

Results for FY2023

This table can scroll to the left or right.

Category	Important challenge		Sustainability management policy	Sustainability management target (Medium- to long-term)^*	Sustainability management target (FY 2023)	Results for FY2023
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	・In FY 2023, achieved net zero scope 1.2 greenhouse gas emissions by purchasing non-fossil fuel certificates ・Conducted ESG study sessions for all tenants. ・Conducted ESG study sessions for all PM companies.
		Environmental Compliance	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	・Has acquired green building certifications in 88.3% of portfolio at the end of 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	・Has implemented green leases in 69.5% of portfolio at the end of FY 2023. ・Exchanged opinions with all tenants on ESG.
		Resilience (business continuity)	Implement strategies to increase resilience against intensifying natural disasters to lower the risk of damages to portfolio profitability caused by disasters.	・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)	・Established rules for establishing a list of construction contractors and a list of emergency construction contractors, notified each PM company, and began operating the rules.
	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.	・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) (Once each year)	・Health examinations (target: 100%) ・Percentage of feedback interviews conducted (100%) ・Yearly training in diversity, equity & inclusion (DEI)	・Achieved 81.3% usage of paid leave days. ・Achieved 100% of health examinations. ・Achieved 100% of feedback interviews. ・Conducted training in diversity, equity & inclusion (DEI) twice.
	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.	・Average hours of attendance: 22.2 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 (Once each year)	・Making social contributions at least once	・Conducted cleanup activities around the properties.
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 in FY2023 ・IR with individual investors: Conducted on average 6 times a year (to be achieved continuously through FY2030)	・IR with institutional investors (Including the number of investors participating in seminars, etc. in addition to one-on-one meetings): 300 meetings ・IR with individual investors: 12 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 (FY2023) ・Training participation: 100% ・Training time: 6 hours/year	Compliance training ・Training participation: 100% ・Training time: 6 hours/year
	Strengthen governance		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%	・Attendance rate of directors at JLF’s board meetings: 98.6%

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.
As part of the review and improvement of the EMS, the President & CEO, who is in charge of the Sustainability Promotion Supervisor, reported the status and results of efforts of the Sustainability Management Policy and Sustainability Management Target for FY2023, domestic and international sustainability trends, status of efforts by competitors, compliance with related environmental and other laws, and external environmental complaints and requests. The Sustainability Promotion Supervisor conducted a review of sustainability-related initiatives.

＜Management review＞
All items in the Sustainability Management Policy and Targets for FY2023 were achieved. Regarding domestic and international sustainability trends, interest in the aggregation and reduction of embodied carbon (GHG emissions from construction and renovation) is increasing. J-REITs that are particularly advanced in this area are conducting TCFD scenario analysis and setting scope 3 targets, etc. Regarding the sustainability management policy and targets for FY2024, we will continue to monitor external trends and maintain our management policy as we pursue sustainability initiatives. Targets will be partially revised upward based on progress.