Sustainability

Ⅲ. Environmental Considerations

A. Environmentally Conscious Asset Management

ADR’s properties will be managed with environmental consideration through the following measures.

a. Extending the lifespan of properties through large-scale repairs and value-enhancement renovations

b. Installing LED lighting
As of January 2021, LED lighting is installed in 95 properties (35.1% of portfolio).

c. Installing water-saving toilets

d. Installing heat shielding paint roofing

e. Encouraging tenants to conserve energy usage through posters on common area billboards and periodical “RESIDIA News” and sending of sustainability guides

f. Including a criterion concerning initiatives taken on environment in selecting a property manager.

g.Working together with building managers towards shared goals on environmental concerns.

h.Introducing car sharing in parking lots of properties
As of January 2021, 3 properties (1% of portfolio) have parking lots for car sharing.

h.Other Initiatives
ADR takes other environmentally friendly measures such as placing green open spaces on its property sites to alleviate heat island effect, paving the property grounds with interlocking paving blocks to lessen inner-city flooding and land subsidence.As of January 2021, 3 properties (1% of portfolio) have parking lots for car sharing.

1. Extending the Economic Life of Building Structures through Large-scale Repairs and Value Enhancement Renovations

ADR aims to raise unitholders’ value while contributing to the environment (e.g. reducing life cycle CO2 emissions) by extending the economic life and maintaining the value of building structures through large-scale repairs and value enhancement renovations.

2. Environmental Targets and Results (energy consumption, CO2 emissions, water usage and waste volume)

Establishing Policies

ADIM has established policies on “energy conservation,” “greenhouse gas emission reduction,” “water conservation” and “waste management” to improve energy efficiency of ADR’s properties and making effort to reduce the properties’ energy consumption and greenhouse gas emission.

In January 2021, ADR purchased Tradable Green Certificates for the amount of electricity used by RESIDIA Shimazuyama, which indirectly contributes to the spread of renewable energy and the prevention of global warming.

Environmental Targets

1% average annual reduction is the medium to long-term target on reducing energy consumption and greenhouse gas emission for the whole property portfolio.

In January 2021, ADR purchased Tradable Green Certificates for the amount of electricity used by RESIDIA Shimazuyama, which indirectly contributes to the spread of renewable energy and the prevention of global warming.

And ADR has installed electric energy measurement systems in 8 properties (3.0% of the portfolio) as of the end of March 2021, in order to improve the actual coverage rate of electricity consumption in our properties. By installing this system, it will be possible to measure the electricity consumption of the exclusive part. ADR encourages tenants to conserve usage through various enlightenment measures.

For tenants, ADIM are implementing various enlightenment measures related to energy conservation.

Items

Short-term Target

Long-term Target

Energy Consumption

1% annual intensity reduction

5 year (FY2019 through FY2024) /5% total reduction in intensity

GHG Emission (CO2)

1% annual intensity reduction

5 year (FY2019 through FY2024) /5% total reduction in intensityNote

Water Usage

avoid increase in intensity

5 year (FY2017 through FY2021) /avoid increase in intensity

Waste Volume

avoid increase in intensity

5 year (FY2014 through FY2019) /avoid increase in intensity

Note : The reduction target is the same for both Scope1 and Scope2.

Energy Consumption

 

FY2015

FY2016

FY2017

FY2018 FY2019 
  % change   % change   % change

 

Coverage

% change

% change
 (vs FY2015) 

Electricity

Total Usage
(MWh)

18,295

16,360

-10.6%

17,407

6.4%

17,825

2.4%

17,049

88.65%

-4.4%

-6.8%

Intensity
 (MWh/㎡)

0.111

0.100

0.106

0.109

0.104

Fuel

Total Usage
(MWh)

854

676

-20.8%

712

5.3%

796

11.7%

602

100.00%

-24.3%

-29.5%

Intensity
 (MWh/㎡)

0.010

0.008

0.009

0.010

0.007

District Heating and Cooling

Total Usage
(MWh)

3,236

1,620

-49.9%

3,696

128.1%

3,254

-12.0%

3,051

100.00%

-6.2%

-5.7%

Intensity
 (MWh/㎡)

0.074

0.037

0.084

0.074

0.069

GHG Emission(CO2)

 

 

 

FY2015

FY2016

FY2017

FY2018 FY2019
  % change   % change   % change

 

Coverage

% change

% change
 (vs FY2015) ​

Total
(scope1+2)

Total Usage
(MWh)

10,505

9,119

-13.2%

10,103

10.8%

10,249

1.4%

9,763

90.1%

-4.7%

-7.1%

Intensity
 (MWh/㎡)

0.055

0.048

0.053

0.054

0.051

Direct Emission
Scope1

Total Usage
(MWh)

149.6

118.5

-20.8%

124.8

5.3%

139.4

11.7%

105.5

100.0%

-24.3%

-29.5%

Intensity
 (MWh/㎡)

0.002

0.001

0.002

0.002

0.001

In-direct Emission
Scope2

Total Usage
(MWh)

10355.0

9000.5

-13.1%

9977.8

10.9%

10109.6

1.3%

9657.0

90.1%

-4.5%

-6.7%

Intensity
 (MWh/㎡)

0.054

0.047

0.052

0.053

0.051

Scope3(※)
 

Total Usage
(MWh)

- - - 5,022 - 6,815 35.7% 6,076 62.9% -10.8% 21.0%

Intensity
 (MWh/㎡)

- - - 0.006 - 0.009 0.008

Note: Calculated by multiplying the amount of garbage discharged at the property by incinerator emission factor.

Water Usage

 

FY2017 FY2018

FY2019

  % change  

Coverage

% change % change
 (vs FY2017) ​

Total Usage (㎡)

200,408 201,306 0.4% 191,945 45.6% -4.7%

-4.2%

Intensity (㎡/㎡)

1.1362 1.141 0.4% 1.088 45.6%
All water is taken from the water supply.
    FY2017 FY2018 FY2019
Water itake  

Total Usage (㎡)

200,408 201,306 191,945

Intensity (㎡/㎡)

1.1362 1.141 1.088
All drainage goes to the sewer.
    FY2017 FY2018 FY2019
Displacement

Total Usage (㎡)

200,408 201,306 191,945

Intensity (㎡/㎡)

1.1362 1.141 1.088
Waste Volume
  FY2017 FY2018 2019年度 
  % change  

Coverage

% change % change
 (vs FY2017) ​

Total Amount (t)

4,709 6,716 42.6% 5,629

62.9%

-19.3% 19.5%

Intensity (t/㎡)

0.0076 0.011 42.6% 0.009 -19.3% 19.5%

Recycling Rate (%)

21%

18%

-15.0%

20%

15.2%

-2.1%

Notes:

  1. Review period
    The fiscal year starts on April and end on March of the following year.
  2. Calculation method
    1. “Intensity” is calculated as follows.
      Total Usage or Emission (MWh) ÷ Total Property Floor Space (m2)
    2. ”Same Store” only compares properties that have annual data for both 2017 and 2018 on energy consumption / GHG emissions / water usage / waste volume. Properties were excluded if they have been newly acquired, disposed, developed,  renovated, or if the properties’ data acquisition rate vary between the reporting period.
    3. “Coverage” is calculated as follows.
      Total Floor Space of Data Collected (m2) ÷ Total Property Floor Space (m2)
  3. Target of aggregation
    1. Energy consumption and GHG Emmission are comparisons of properties in the portfolio that have been in operation for 5 consecutive years and properties for which data can be obtained for 5 consecutive years.
    2. Water consumption and waste weight are a comparison of properties in the portfolio that have been in operation for 3 consecutive years and properties for which data can be obtained for 3 consecutive years.

3. Setting Green-lease Contract Clauses

56.8% of tenants are under leasing contract with clauses concerning energy and water conservation (green-lease contract) as of January 2021

Also ADR will insert green lease clause in the management consignment contract with property manager at the time of future consignments and contract renewals.

And based on the contract, ADR has received proposals concerning LED installation once a year from the building managers.

4. Supply Chain Management

ADIM has established a Green Procurement Policy to put the sustainability policy’s specific component into practice with the cooperation from its suppliers.

Since FY2016, to strengthen the engagement with suppliers, major suppliers including all property management companies that ADIM uses as a vendor have been evaluated by conducting surveys at the start of the contract and annually in accordance to the policy, on how they are addressing sustainability issues.

Since we believe it is important to have our major suppliers’ understanding and cooperation, on FY2017 we have re-notified our Green Procurement Guideline to our major venders, property management companies and building management companies.

B. Urban Area Investments

By investing in various kinds of urban properties, ADR promotes the reduction of environmental burden and contribute to the revitalization of cities and communities.

1. Investments in Flexible / Mixed Use Properties

ADR invests in flexible/mixed use properties (as of January 2021, 79 properties, 29% of the portfolio), thereby contributing in reducing environmental impact, revitalizing the area and providing convenient facilities to tenants and local residents. In addition, those flexible /mixed use properties have stores and squares open to public which contributes to the revitalization of the cities and the communities, by providing places for people gather.

The flexible / mixed use properties that ADR invests in are;

  1. Properties close to train stations which promote the use of public transportations thereby reducing CO2 emissions
    94% (on acquisition price) of properties are located within 10 minute walk from the nearest train station.
    In addition, ADR has established criteria (access quality and number of minutes on foot) for the distance from the nearest station regarding property acquisition, within 10 minutes on foot for single and compact types, and within 15 minutes for family and large types.
  2. Properties with convenient facilities such as a supermarkets or convenient stores attached.
  3. Properties with open space which are publicly accessible. (As of January 2021, 7 properties (3% of portfolio))
  4. Universal design properties that are accessible to senior citizens.
    In principle, ADR’s properties have wheelchair-accessible leads (slopes, handrails, private parking lots) installed in the relevant properties based on the Building Standards Act.
    In addition, although it is not legally required, a handrail was installed at Life & Senior House Kohoku Ⅱ based on requests from tenants.

2. Investments Towards Urban Revitalization and Redevelopment Properties

ADR contributes in promoting urban revitalization and redevelopment through investments in the revitalization and redeveloped properties.

In revitalization projects, block districts are re-zoned, lands are more highly utilized and properties within the redevelopment will draw in people to the community thereby revitalizatizing the area.

(There are legal restrictions to the amount of development that J-REITs are allowed to do.)

Urban redevelopment properties acquired by ADR.

  1. Pianetta Shiodome
  2. RESIDIA Minami-Senjyu
  3. RESIDIA TOWER Kami-Ikebukuro
  4. Pacific Royal Court Minato Mirai Ocean Tower
  5. RESIDIA Tsutsujigaoka

3. Investments Towards Existing Urban Brownfield Redevelopment

By investing in existing urban brownfield redevelopment properties ADR contributes in the usage of existing infrastructures such as existing water supply systems, electricity grid, public school facilities. It will also prevent urban sprawl which will save energy involved in commuting and prevent development of green lands.

C. Cooperation between the Sponsor Group Companies

ADR works together with ADIM’s sponsor group companies in various fields to lessen its environmental burden and contribute to local communities.

  1. Acquisition of sponsor group developed properties
    ADIM advises on the residential market to help sponsor group companies to succeed in developing flexible / mixed use properties that will satisfy ADR’s acquisition criteria.
  2. Property management
    The sponsor group property manager who manages the largest share of ADR’s properties cooperates with ADR not only in such measures as promoting energy savings but also in measures such as placing AED equipments in publicly accessible area, whereby contributing to local communities.

D. Expressing Support for The Task Force on Climate-related Financial Disclosures Recommendations

Based on the recommendations of TCFD, ADIM will continue to contribute to the realization of a sustainable society by assessing the impact of climate change on its businesses, taking measures to counteract risks and to take advantages of opportunities, and proactively disclosing related information.
ADIM expresses its support for the recommendations issued by the "Climate- related Financial Disclosure Task Force* (TCFD)" on March 11, 2020.  In addition to supporting TCFD, we are also a member of the TCFD Consortium (composed of Japanese companies and organizations that support TCFD).

ADIM recognizes that climate change is an important issue affecting the future sustainable growth of ADIM and ADR.

* TCFD was established in 2015 by the Financial Stability Board, which consists of central banks and financial regulators of world’s major countries. In June 2017, it issued recommendations urging companies to analyze climate-related business risks and opportunities in the medium- to long-term, and reflect the findings to its financial disclosures in order to mitigate risks that could destabilize financial markets.


 

1. Policy

ADIM recognizes that climate change is an important issue that will bring about dramatic changes in the natural environment and social structure and will have a significant impact on overall business activities. With this recognition, ADIM aims to ensure sustainable and stable earnings over the long term by appropriately assessing the risks and opportunities posed by climate change and reflecting them in the management and operational policies of ADIM and ADR

2. Climate change governance system

In order to systematically promote sustainability improvement activities, ADIM has established the Sustainability Promotion Committee, which is chaired by the Representative Director and consists of all general managers and Compliance and Risk Management Officer and the Sustainability Practical Committee, which is composed of the practitioners of each department. The Sustainability Promotion Committee meets twice a year to formulate sustainability goals and measures, identify and evaluate climate-related risks and opportunities, analyze and evaluate climate-related risks and manage them company-wide, and evaluate environmental performance and ESG by external organizations. ADIM are aiming to improve asset value over the medium to long term by implementing a PDCA cycle of monitoring results, confirming the degree of achievement of goals, and resetting goals for remaining issues and new issues. In addition, the Sustainability Practical Committee is responsible for promoting various measures necessary to achieve the goals. Goals are decided by the Representative Director, who is the Chief Executive Officer of Sustainability, and the progress of goals and measures is reported to the Board of Directors and ADR Board of Directors once every six months.

3. Identified climate-related risks, opportunities and response(As of May, 2021)

 

Risk Category

Time axis 影響 戦略

Transition Scenario

Political and Legal

Medium-term

・Increased CO2 emission costs due to introduction of carbon tax and expansion of emissions trading system.
・Increased renovation costs for existing properties due to tightening energy conservation regulations.

・Upgrading properties systematically.
・Introduced green power certificate and renewable energy.
・Acquiring properties that comply to energy saving
standards.

Technology change

Medium-term

・Increased costs for introducing new technologies to prevent portfolio obsolescence due to the evolution and spread of renewable energy and energy-saving technologies.

・Upgrading properties systematically.
・Acquisition of new properties with new technology introduced.

Market change

Medium-term

・Price increase of energy-saving property, possibility of price decrease of unsupported property.
・Rise in funding cost

・Promotion of acquisition of green building certification for existing properties and newly acquired properties. (expansion of qualified real estate in issuing green bonds)

Reputations

Short-term

・Being discredited from investors.
・Decrease in occupancy rate due to changes in reputation from tenants.

・Development of disclosures that investors place importance on when investing in ESG, including TCFD.
・Providing tenants with services to heighten satisfaction(Disaster prevention / energy saving support).

Physical Scenario

Acute

Short-term

Increases in flooding from torrential rain, rising sea level

and etc.


・Increase in insurance cost.

・Implementation of disaster risk assessment for each property.
・Disaster countermeasures for both hardware and software.
・Acquiring properties with disaster  risks.

Chronic

Long-term

・Property in the area of zero meters above sea level may be flooded due to sea level rise.
・Decreased comfort due to rising average temperature and rising indoor temperature due to the increase in hot days.

・Implementation of disaster risk assessment for each property.
・Disaster countermeasures for both hardware and software.
・New acquisition of properties with high energy-saving efficiency and heat insulation.

Opportunity

Resilience

Short-term

・Demand for properties prepared for natural disasters will increase.

・As inundation measures, necessary measures are taken from both hardware and software according to the disaster risk evaluation results of each property. Installation of waterproof boards, implementation of disaster training, distribution of disaster prevention goods, etc.

※ADIM will continue to disclose the disclosure content required by TCFD.

4. Flooding Risk

 

ADIM understands the inundation risk expected at the planned scale for the portfolio.

Economic damage is covered by fire insurance.

Regarding the response to the electrical equipment specified in the guidelines*, ADIM plans to implement inundation measures as necessary for 5 properties with cubicles on the 1st floor and below.

* Exposures were assessed using publicly accessible information such as hazard maps published by Ministry of Land, Infrastructure, Transport and Tourism (MLIT) and other local municipalities.

In addition, as a measure to ensure the safety of tenants, we plan to install inundation sensors, etc. to guide the degree of evacuation to the upper floors for 6 properties that are at risk of inundation of 3 m or more and have dwelling units on the 1st floor.