Disclosure Based on TCFD Recommendations

Governance

The Tokyo Tatemono Group has established the Sustainability Committee, chaired by the President, and the Sustainability Promotion Committee as a subordinate organization to promote sustainability with regard to areas such as climate change.

The Sustainability Committee, like the Executive Committee, Risk Management Committee, and Internal Control Committee, is under the direct control of the President. It meets in principle at least twice a year to deliberate and discuss matters related to the formulation of the Group's sustainability policies, the development of systems, the setting of indicators and targets, and the monitoring and evaluation of progress. The Sustainability Committee deliberates and discusses important matters concerning climate change, such as the identification of risks and opportunities, greenhouse gas (GHG) emissions reduction targets and policies, and the status of initiatives to address climate change. Important matters discussed and deliberated by the Sustainability Committee are brought up for discussion by or are reported to the Board of Directors, which makes decisions on important sustainability-related matters and monitors and supervises the status of their promotion. The Sustainability Promotion Committee, which sits under the Sustainability Committee, is a cross-sectional organization composed of corporate departments and business divisions. It shares the decisions of the Sustainability Committee, conducts preliminary discussions for consideration, shares and considers the Group's sustainability measures, and reports on and discusses the progress of the Group's sustainability efforts.

More details:
Environmental Management /
Environmental Management Framework

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Strategy (Scenario Analysis)

The Tokyo Tatemono Group identifies risks and opportunities related to climate change, assesses their significance, and conducts analyses of the impact different scenarios could have on the Group's business profit using scenarios it has set.

Risk Analysis Review Process

Setting Up the Scenarios

For our scenario analysis, we set up future worlds (scenarios). To create our scenarios, we made use of scenarios published by the IPCC^*1 and the IEA^*2. In our 4°C scenario, in which current policies are maintained, the average temperature rises by 4°C or more compared to pre-industrial levels by 2100. In our 2°C scenario, a delayed transition scenario, the average temperature increase is limited to less than 2°C. In our 1.5°C scenario, the average temperature increase is kept below 1.5°C.

IPCC (Intergovernmental Panel on Climate Change): An institution that provides clear scientific opinions on the status of climate change and its socioeconomic impact.
IEA (International Energy Agency): An independent body within the OECD that facilitates policy cooperation on energy security and energy.

The Scenarios Used in the Analysis

Scenarios	Scenario Analysis	Reference Scenario
4°C scenario	A scenario in which the average temperature rises by about 4°C compared to pre-industrial levels as a result of failure to introduce stricter government policies and strengthen regulations, such as regulations to curb GHG emissions, and of failure by businesses to take effective action in response to climate change. Acute effects include more frequent extreme weather events and more intense heavy rainfall, while chronic effects include rising sea levels.	IPCC SSP5-8.5 (RCP 8.5) IEA STEPS

Scenarios	Scenario Analysis	Reference Scenario
1.5C/2°C scenario	A scenario in which the average temperature rise compared to pre-industrial levels is kept below 1.5°C or 2°C by improving low-carbon technologies, expanding renewable energy, and promoting energy conservation. In this scenario, companies around the world are strongly required to respond to climate change by introducing carbon taxes and strengthening policies to regulate emissions in order to curb GHG emissions.	IPCC SSP1-1.9 （RCP 2.6） IEA NZE IEA SDS

Identifying Risks and Opportunities/Assessing Materiality

Looking at the Tokyo Tatemono Group's core businesses-the Commercial Properties Business and Residential Business-and based on the areas where we develop and own buildings as well as the conditions of each business phase (development, operation and management, and sale), we identified the main risks and opportunities concerning climate change for each and assessed their materiality in terms of their expected degree of impact on the Group's finances and likelihood of occurrence. The period of impact was categorized into short-term (1-5 years), medium-term (5-10 years), and long-term (>10 years).

Identified Risks, Opportunities, and Materiality Concerning Climate Change

	Category	Item	Impact on the Tokyo Tatemono Group's business	Period of impact	Materiality
	Category	Item	Impact on the Tokyo Tatemono Group's business	Period of impact	4°C scenario	1.5°C/2°C scenario
Transition risks	Policies	Adoption of carbon pricing	Imposition of carbon tax on own emissions (Scope 1 and 2)	Medium-term	ー	Medium
	Policies	Adoption of carbon pricing	Price hikes for construction materials, construction costs, etc.	Medium-term	ー	Medium
	Regulations	Stricter standards for GHG emissions and energy saving	Higher costs of converting new buildings to ZEB/ZEH	Medium-term	Low	Low
			Higher costs of introducing decarbonized building materials	Medium-term	Medium	Medium
			Increase in cost of energy-saving renovation of existing buildings	Medium-term	Low	Low
	Technology and Markets	Higher unit cost of grid electricity	Higher utility costs due to change in energy mix	Short- to medium-term	ー	Low
		Higher unit cost of grid electricity	Higher utility costs due to higher demand for fossil fuels	Short- to medium-term	Low	ー
		Burden from renewable energy procurement	Higher renewable energy procurement costs	Short- to medium-term	Low	Low
	Reputation	Ensuring disaster preparedness and resilience	Higher costs of ensuring disaster preparedness and resilience	Short-term	Low	Low
Physical risks	Acute	Frequent and severe extreme weather caused by extratropical and tropical cyclones, etc.	Higher costs due to construction delays caused by supply chain paralysis or disruption	Short-term	ー	ー
			Decrease in work efficiency at construction sites and delays in construction schedules due to frequent heat waves, high temperatures, etc.	Short-term	ー	ー
			Decreased rental income in the event of flooding due to heavy rains or river flooding	Short-term	Low	Low
			Increased restoration costs due to building damage from wind and flood damage	Short-term	Low	Low
			Higher insurance premiums	Short-term	Low	Low
	Chronic	Rise in average temperature	Higher utility costs	Short-term	Low	Low
Opportunities	Technology	Efficiency improvements with ZEB and ZEH development	Reduction of utility costs	Short-term	Low	Low
	Technology	Procurement of renewable energy through self-consignment	Reduction in utility costs and renewable energy procurement costs	Short-term	Low	Low
	Consumer behavior	Improved earnings from high environmental performance properties	Higher sales due to higher evaluation of ZEB/ZEH	Short- to medium-term	ー	Medium
	Consumer behavior	Improvement of energy-saving effects	Addition of energy-saving effects to rental income	Short- to medium-term	ー	Low
	Markets	Expansion of ESG finance	Reduction in financing costs	Short-term	ー	Low

Countermeasures

The Tokyo Tatemono Group has identified the promotion of a decarbonized society as a material issue and is working to minimize climate change risks through its business. At the same time, the Group also views the situation as an opportunity and is working to solve the challenges involved. To promote a decarbonized society, we have established medium- and long-term targets for reducing greenhouse gas (GHG) emissions and, to achieve these targets, we are taking measures such as shifting to renewable energy and promoting the development of ZEB/ZEH and green buildings. We are also focusing on urban development and real estate development that take into account resilience to damage from storms, floods, and other natural disasters which are becoming more frequent with climate change. Specific measures are described in Initiatives to Achieve GHG Emission Reductions .

Estimating Business Impact

We quantitatively assess the identified climate change risks and opportunities for their impact on the Tokyo Tatemono Group's FY2030 financials.
For risks and opportunities for which quantitative data is not readily available, we carry out a qualitative analysis.

Impact on the Group's Business Profit

Risk Management

Tokyo Tatemono has established a Risk Management Committee chaired by the President to build a system to oversee risk management for the Tokyo Tatemono Group. The Risk Management Committee formulates an annual risk management plan, evaluates and analyzes key management risks for the Group (priority risks), formulates preventive measures and countermeasures, and periodically monitors the status thereof. For risks other than priority risks, the heads of departments, offices, and branches as well as various committees act as risk response organizations (risk owners) to prevent and manage such risks.

With regard to sustainability-related risks, the Sustainability Committee, as the risk response organization (risk owner), works with relevant departments, offices, and branches to prevent and manage such risks, and reports important matters on the status of implementation to the Risk Management Committee. Important matters from among those deliberated at Risk Management Committee meetings are brought up for discussion by or are reported to the Board of Directors, and the Board of Directors oversees the effectiveness of the Group's risk management, including risks concerning sustainability.

Indicators and Targets

The Tokyo Tatemono Group has set medium- and long-term targets for the promotion of a decarbonized society, identified as one of the Group's material issues. In 2021, we established net zero CO2 emissions by FY2050 as the goal for our greenhouse gas (GHG) emission reductions, and set a target of reducing our Scope 1, 2, and 3 CO2 emissions by 40% compared to FY2019 levels by FY2030.

Thereafter in 2023, in response to increasing societal demand for companies to address climate change, such as the COP26 Glasgow Climate Pact, we accelerated our efforts by raising the target to reduce Scope 1 and 2 emissions by 46.2% by FY2030 compared to FY2019 levels, which is the level required to limit the increase in global average temperature to 1.5°C compared to pre-industrial levels.

We have also set goals related to promoting the development of ZEB and ZEH, shifting to renewable energy, and acquiring green building certifications as process goals to achieve our medium-and long-term targets. In 2023, we brought forward our targets for the electricity consumed at the real estate holdings of our Commercial Properties Business by 20 years, setting a target of 100% procurement from renewable energy sources by FY2030 (and at least 50% by FY2024). We have also brought forward and strengthened other targets for promoting the development of ZEB and ZEH and acquiring green building certifications, such as including new for-rent condominiums in these targets.

Item	Scope of Coverage	KPIs and Targets
Reduction in greenhouse gas emissions	All businesses^*1	Scope 1, 2, and 3	Net zero CO₂ emissions by FY2050
		Scope 1 and 2	46.2% reduction in CO₂ emissions compared to FY2019 levels by FY2030
		Scope 3 ^*2	40% reduction in CO₂ emissions compared to FY2019 levels by FY2030
Promotion of development of ZEB and ZEH^*3	Commercial Properties Business	Develop ZEB for, in principle, all new office buildings and logistics facilities^*4
Promotion of development of ZEB and ZEH^*3	Residential Business	Develop ZEH for, in principle, all new for-sale and for-rent condominiums^*5
Shift to renewable energy	All businesses^*1	By FY2050, procure 100% of electricity consumed in business activities from renewable energy sources
	Commercial Properties Business	By FY2030, procure 100% of electricity consumed at owned real estate from renewable energy sources
	Commercial Properties Business	By FY2024, procure at least 50% of electricity consumed at owned properties from renewable energy sources
Acquisition of Green Building Certification^*6	Commercial Properties Business, Residential Business	Acquire green building certification for, in principle, all new office buildings, logistics properties, and condominiums^*7 for rent, etc.

Applies to the Tokyo Tatemono Group.
Applies to Scope 3 categories 11 and 13.
In addition to ZEB and ZEH-M, includes Nearly ZEB, ZEB Ready, ZEB Oriented, Nearly ZEH-M, ZEH-M Ready, and ZEH-M Oriented.
Applies to new buildings for which design work began in January 2023 or later.
Excludes certain properties such as joint venture properties or properties with special uses.
Applies to new buildings for which design work began in June 2021 or later.
Excludes certain properties such as joint venture properties or properties with special uses.
Mainly refers to DBJ Green Building certification, CASBEE building certification and BELS (Building-housing Energy-efficiency Labeling System) certification.
Applies to new buildings for which design work began in January 2023 or later.
Excludes certain properties such as joint venture properties or properties with special uses.

Analysis overview

CRREM (Carbon Risk Real Estate Monitor) calculates and publishes the greenhouse gas (GHG) emissions pathways (decarbonization pathways) to 2050 that are consistent with the 2℃ and 1.5℃ targets required by the Paris Agreement for each property type in Europe, North America and Asia-Pacific including Japan, and also publishes a tool to visualise some of the transition risks by comparing the GHG emissions pathways of the analysed buildings with the CRREM pathways. CRREM analysis using this tool is expected to be used for operational improvements, such as calculating when GHG emission pathway of the analysed buildings will exceed the CRREM pathways (becoming a stranded asset) and future carbon costs, and identifying the scale of retrofitting required to address these issues.

In order to analyse the risks in the transition to a decarbonized society consistent with the 1.5℃ targets required by the Paris Agreement, we conducted the CRREM analysis^* of our long-term building holdings (as at end-December 2022, hereafter 'our portfolio').

We used CRREM v2.03 in this analysis. It is based on the Asia-Pacific version, with some parameters (e.g. emission factors for grid electricity) adjusted to suit the actual situation in Japan.

In accordance with CRREM's analysis methodology, we compared the GHG emissions pathways of our portfolio with the CRREM pathways consistent with the 1.5℃ targets for the following two scenarios.
Scenario 1) is the case in which, in our portfolio, operations to promote energy savings, upgrades to high-efficiency equipment and the introduction of Raw Green Power, such as on-site power generation and self-consumption, self-consignment and corporate PPAs are taken into account. Scenario 2) is the case in which, in addition to the initiatives in Scenario 1), the introduction of renewable energy through switching to electricity using Non-fossil Fuel Certificates with Tracking and purchasing non-fossil certificates is taken into account.
In addition, the Tokyo Tatemono Group has established medium- and long-term targets for reducing GHG emissions and, to achieve these targets, we are taking various initiatives towards decarbonization, including promoting the development of ZEB/ZEH, shifting to renewable energy and acquiring green building certification. The results of the analysis of scenario 2) of the above scenarios, which is close to our initiatives, are therefore discussed below.

Analysis results

Although GHG emissions from electricity will be reduced through the shifting to renewable energy, and GHG emissions from various energy sources will be reduced through operations to promote energy saving and upgrades to high-efficiency equipment, some GHG emissions from fuels such as gas and heat such as district heating and cooling will remain, which means that before 2040 the our portfolio pathways is expected to exceed the CRREM pathways.
In this analysis, it was assumed that our portfolio as of the end of FY2022 will not be replaced in the future, however in reality, GHG emissions from our long-term buildings are expected to be further reduced by reconstructing to energy-efficient buildings and replacing buildings to energy-efficient buildings.

Strategies based on the results of the analysis

We will continue to operate to promote energy saving, upgrade to high-efficiency equipment and shift to renewable energy, as well as reconstruct to energy-efficient buildings and replace buildings to energy-efficient. In addition, for new buildings to be developed in the future, we will develop ZEB/ZEH and green buildings and work on the introduction of renewable energy to increase the proportion of buildings with low GHG emissions in our long-term holdings and reduce GHG emissions in the future.

Disclosure Based on TCFD Recommendations