Identification of Material Topics

Mitsui Fudosan Accommodations Fund Management Co., Ltd., to which Nippon Accommodations Fund Inc. ("NAF") entrusts management operations of its assets, established the "Sustainability Policy" in Apr 2016, under the recognition that sustainability is the important topic in its asset management business. Our CEO, who is also the most senior decision maker on sustainable issues made a statement that the organization will commit to the sustainability issues especially the materials issues identified above.

■ Process for Identifying Material Topics

We identified our material topics through discussion at the Sustainability Promotion Office, which consists of members from various functional groups and departments across the organization. The topics identified were approved by the Investment Committee, which includes the President & CEO of the Asset Management Company, who is a member of the Committee and the highest-level decision maker of the company.

Step1

We gathered information to identify the issues that NAF might have a significant impact on sustainable growth of the environment, society and economy, by referring to the following:
● Mitsui Fudosan Group's long-term vision, “VISION 2025”
● UN Sustainable Development Goals (SDGs)
● Global Reporting Initiative Index
● External ESG evaluation such as GRESB real estate assessment and MSCI ESG rating
● Interim summary issued by ESG real estate investment investigate committee, Ministry of Land, Infrastructure and Transport, Japan

Step2

We assessed and prioritized each issue by using 2 axes of impacts: on our investment policy and on our stakeholders, environment and society. Then, we identified material topics that NAF should strategically allocate its resources.

Step3

The material topics were discussed and approved at the Investment Committee, which includes the President & CEO of the Asset Management Company who is a member of the Committee and the highest-level decision maker of the company.

Step4

The material topics have been communicated to all employees in the asset management company as well as board members in the investment committee. The topics are subject to periodical review and update to reflect changes in society and environment.

■ Materiality
Materiality Why this topic is material How the organization manages the topic Applicable SDGs
Promote Energy Efficiency and CO2 Emissions Reduction (Act against Climate Change)

・We recognize that greenhouse gas (including CO2) emissions from the real estate assets of our investment corporation have a significant impact on the environment.

・We understand the importance of learning the impact of physical and transitional risks of climate change on our asset to pursue sustainable growth of our investment corporation.

・We monitor and manage energy consumption and CO2 emissions in the common areas of our residential assets by setting reduction target.

・We install equipment for energy efficiency, such as LED lighting.

・We pursue further understanding and managing physical and transitional risks of climate change.

We set as annual reduction of 1% from 2021 to 2025 as medium-to long-term target, with 2015 as the base year, for intensities of energy consumption and energy-originated CO2 emissions.

Acquire External Certification and Assessment on Sustainability

・We recognize promoting green building in our property would have certain impact to environment and it is one of a major concerns of our stakeholders that whether we make commitment to.

・By participating external ESG assessment such as GRESB and referring to ESG ratings such as MSCI ESG Ratings, we are able to assess our initiatives and improve our sustainability-related activities.

・We proactively acquire and update external green building certifications such as DBJ Green Building Certification.

・We have been participating GRESB real estate assessment since 2017.

・Using GRESB assessment, we review sustainability initiatives and plan actions for improvement each year.

Develop Human Capital and Raise Sustainability Awareness among our Employees We understand that providing a working environment, in which employees of the asset management company can maximize their capability, contributes to improving their productivity and attracting new talents. This will eventually benefit the investment corporation. We provide the following programs and benefits to our employees in the asset management company.

・Career-building support for employees by implementing regular interviews to help them set their career goals and objectives

・Performance evaluation program which includes their commitment to sustainability initiatives

・Regular training on compliance and sustainability

・Financial and non-financial support for the acquisition of certifications/qualifications and the participation in external training programs.

・Monetary support for annual health checkups, thorough medical checkups and vaccinations.

・Regular employee’s satisfaction surveys f to improve their working environment.

Enhance Tenant Satisfaction, Safety and Comfort We recognize that our asset, residential or accommodation facilities, have a substantial impact on safety and comfort of our tenant. Therefore, it is highly important to maintain and improve them.

・We offer a high-quality rental apartment series, the Park Axis, which assures the tenants’ safety and comfort.

・We upgrade common / tenant-owned area of the properties to increase our tenants’ safety and comfort.

・We provide our tenants with holistic services such as house cleaning, through an exclusive membership program, “Mitsui Sumai Loop” to enhance tenants’ satisfaction.

Build Partnership with Property Companies and Operators We consider that cooperating with property management companies and operators that manage our asset is essential to promote our sustainability initiatives.

・We engage property management companies and operators to share our ESG policy and goals.

・We assess and monitor sustainability initiatives conducted by property management companies and operators.

・We share energy consumption and CO2 emissions data from the common area of the building with property management companies to discuss the increases/decreases and work on improvement measures together.

Contribute to Community Development We consider that developing local community will have an impact on maintaining and increasing competitiveness of our properties.

・At the Okawabata Apartment Communities, NAF has proactively cooperated in activities of the management association and strives to contribute to formation of a local community.

・We provide a space for regional bicycle sharing and encourage community residents to use at the Okawabata Apartment Communities.

Ensure Fairness and Transparency of Corporate Governance We understand that complying with laws and regulations and having organization process that embraces fair transactions will have a significant impact on trust and confidence from stakeholders. The asset management company of NAF has established the following governance structure.

・We have a code of conduct on compliance. Following the code, we develop an action plan and implement the plan in our daily operation.

・We have Chief Compliance Officer (CCO) who is in charge of assuring internal audit.

・We have an established standard procedure in transaction with our stakeholders to prevent a conflict of interest.

・We perform an internal audit on a regular basis.