Environmental Initiatives Conservation of Natural Capital, Coexistence of Humankind and Nature, and Initiatives for Environmental Resources

Basic Recognition and Vision

SHR has established the vision of “managing assets to better provide for people, society and the future” and aims to continue contributing to the creation of a prosperous future by addressing social issues through its ESG (Environmental, Social and Governance) strategy. We recognize that our society and economy are founded on the natural environment, and that the conservation and restoration of natural capital are indispensable for achieving a sustainable society and maximizing unitholder value.

Sustainability Policy and Identification of Materiality

Under the Sustainability Policy established by SHA, key environmental themes such as Measures for Responding to Climate Change, Biodiversity Conservation, and Water and Resource Saving Measures are specified. Based on this policy, SHR has identified nine Materialities (Material Issues), including Promoting Response to Climate Change, Conservation of Natural Capital, Coexistence of Humankind and Nature, and Initiatives for Environmental Resources, and Investing in Real Estate with Excellent Environmental Performance. As specific key performance indicators (KPIs) for addressing these issues, SHR has established targets for reducing absolute GHG emissions, promoting planting management that respects biodiversity, and reducing water consumption and waste intensity, and is advancing initiatives to achieve these targets.

Contribution to nature positive through the Gohon no Ki (“five trees”) Project

As a concrete approach to the conservation of natural capital, we incorporate the philosophy of the Gohon no Ki (“five trees”) Project promoted by Sekisui House, which is based on the principle of “three trees are for birds and two trees for butterflies, and all are local native tree species.” By maintaining and managing the landscaping of our owned properties with a focus on native tree species that provide ecological resources underpinning local ecosystems, we aim to create high-quality green spaces in urban areas, aiming to preserve and restore ecosystem networks while prioritizing harmony with the surrounding environment.

For details of Gohon no Ki ("Five trees") Project, please click here.

SHA has signed up as an endorser of Spring and also participated in the 30by30 Alliance for Biodiversity. We will continue to actively promote initiatives for the coexistence of humankind and nature.
For details of Spring, please click here.
For details of the 30by30 Alliance for Biodiversity, please click here.

Assessment and Disclosure based on TNFD

SHR utilizes the disclosure framework recommended by the Taskforce on Nature-related Financial Disclosures (TNFD) to appropriately identify and manage the impacts and dependencies, as well as the associated risks and opportunities on natural capital.

Through continuous analysis and strategic actions, we seek to mitigate nature-related risks and maximize opportunities. Concurrently, through highly transparent information disclosure and collaboration with our stakeholders, we aim to contribute to the realization of a society where humankind and nature coexist in harmony.

Application of Materiality

To promote sustainability initiatives through our business activities, SHR has organized and identified its material issues after evaluating priorities based on a two-axis matrix representing impact/importance to society and stakeholders, and impact/importance to SHR, referencing international standards such as the SDGs and GRI Standards, as well as requests from ESG rating agencies.

Please refer to Materiality (Important Issues) for details of the identification process.

Scope of Disclosure

In addition to real estate investment management business, which constitutes SHR’s direct operations, we have included construction business (property construction, etc.) in the upstream value chain as an analytical target sector, given its indispensability to SHR's operations and its high dependency and impact on nature.

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Direct Operations	Real estate investment management business (including real estate investment management and certain construction activities such as repairs and restoration work)
Upstream Value Chain	Construction business (activities related to real estate development)

Locations of Nature-related Issues

The analysis covers all 139 properties owned by SHR in Japan and overseas (U.S.) as of April 30, 2026.

Area	Country	Number of properties
Hokkaido/Tohoku	Japan	4
Greater Tokyo	Japan	109
Chubu	Japan	9
Kansai	Japan	8
Kyushu	Japan	7
Washington D.C. and Washington	United States	2
Total		139

Time Horizons

The assumed time horizons are short-term (within 1 year), medium-term (up to fiscal 2030), and long-term (up to fiscal 2050).

(Note)The timing for evaluating or revising target achievement may vary by a few years depending on circumstances.

Stakeholder Engagement

In order to accurately understand the demands and expectations of stakeholders and society and respond to them through its business activities, SHR strives to actively disclose ESG-related information. At the same time, SHR utilizes the insights gained through communication with stakeholders in its business activities and seeks to strengthen engagement.

For details of stakeholder engagement, click here.

SHA has established a Sustainability Committee as the decision-making body for sustainability issues. It meets at least once every three months to define policies, targets, and various measures related to sustainability and to discuss climate change and nature capital risks (transition risks and physical risks) , as well as material issues concerning climate change mitigation and adaptation, the conservation of natural capital, and the coexistence of humankind and nature.
To strengthen the promotion of sustainability initiatives and clarify accountability, the Committee has appointed the Director responsible for the Sustainability Promotion Department as the Chief Sustainability Officer (CSO). The President ＆ Representative Director serves as the ultimate accountability for the Committee and its sustainability-related activities. These activities aimed at climate change mitigation and adaptation, conservation of natural capital, and coexistence of humankind and nature are reported as appropriate to the President & Chief Executive Officer, the Board of Directors of SHA, and the Board of Directors of SHR.

Click here for Sustainability Promotion System.

Steps of the LEAP Approach

To identify and evaluate the interfaces between our business activities and the natural environment, as well as our dependencies and impacts on natural capital, SHR conducted an analysis based on the LEAP Approach recommended by the TNFD. The LEAP approach is an integrated framework for assessing and managing nature-related issues. In this analysis, we covered 139 properties, identifying nature-related risks and opportunities through an evaluation process based on operational locations, which has informed our strategy formulation for disclosure.

Step1 Locate (The Interface with Nature)

Based on coordinate data of the properties, we evaluated the ecosystem conditions around our operational locations. We used biodiversity importance, biodiversity intactness, inundation depth from flood hazard map data, and property site area as indicators for the analysis. Through this process, we identified 15 properties that are ecologically sensitive and where dependencies and impacts on nature are highly likely to materialize as priority sites, narrowing the focus of subsequent evaluations.

Step2 Evaluate (Dependencies and Impacts)

SHR selected construction businesses in the upstream value chain in addition to the real estate investment management business in our direct operations as target sectors for evaluating nature-related issues. Since the TNFD recommends considering the entire value chain related to business activities, we identified natural dependencies and impacts by including construction activities associated with property development, etc., as upstream value chain elements. Note that because repairs and restoration work in direct operations fall under the category of construction, we evaluated them within the upstream value chain of construction business to ensure a comprehensive assessment. Using ENCORE—an analytical tool developed by the UNEP-WCMC—and spatial data, we evaluated and organized the extent of our dependencies. Through the analysis, we identified specific dependencies and impacts that could lead to risks or opportunities at the priority sites extracted in the Locate phase.

Step3 Assess (Risks and Opportunities)

Based on the analyses from the Locate and Evaluate phases, we comprehensively identified nature-related risks and opportunities. We organized physical and transition risks—such as increased repair costs due to more severe natural disasters—and opportunities— such as enhancing real estate value by introducing green infrastructure or acquiring green certifications around our priority sites in Japan and the U.S. Furthermore, we conducted scenario analysis to evaluate the business impacts of risks and opportunities of significance using two different uncertainty scenarios from the four scenario quadrants recommended by the TNFD: one is the “Ahead of the Game” scenario with high transition risk, and the other is the “Sand in the Gears” scenario with high physical risk.

Step4 Prepare (To Respond and Report)

We deliberated the disclosure of evaluation results as a TNFD report, integrating them with our existing climate disclosures based on TNFD recommendations (governance, strategy, risk and impact management, and metrics and targets). Going forward, we will formulate policies and strategies toward sustainable operations and implement concrete actions in alignment with our KPIs, such as targets for acquiring environmental certifications.

Locate (Interface with Nature)

Purpose and Approach of the Analysis

SHR conducted a location-based evaluation covering all owned properties to objectively identify the interfaces between our business locations, the natural environment, and biodiversity. For this analysis, we utilized the biodiversity big data possessed by Think Nature Inc. and evaluated our portfolio’s interface with nature using metrics such as biodiversity importance and biodiversity intactness.

Biodiversity Assessment and Identification of Priority Sites

For the 139 properties, we used the following indicators to identify the most ecologically sensitive properties. The scores for biodiversity importance and biodiversity intactness at each property location were evaluated at a 10 arcminute spatial resolution (about 15km-grid around Japan).

Biodiversity importance

Based on species richness and species rarity, the conservation importance of each location is scored on a scale of 0 to 1. A higher value indicates higher conservation importance. The scores of the properties were mostly in the range of 0.8 to 1.0, confirming that many properties are located in areas of high biodiversity importance.

Biodiversity intactness

This is an indicator of the degree of land-use change from a natural state, scored on a scale where one represents a fully natural state. In areas where development is restricted, such as national parks, the values tend to range from approximately 0.6 to 1.0. Most of the properties scored below 0.1, indicating that they are located in already urbanized, heavily developed areas. On the other hand, several properties in the United States and Japan possessed relatively high integrity (0.2 or higher), designating them as areas where the impacts of business activities on nature require special attention. Accordingly, we selected three properties in these areas as priority sites.

Assessment results of biodiversity importance and biodiversity intactness for all 139 properties

Other indicators

Under the premise that a larger physical site area increases the potential materiality of nature-related dependencies and impacts, we prioritized properties of 5,000 m² or more as priority sites for detailed assessment.
In addition, based on SHR's flood, pluvial flood, and storm surge risk assessments conducted for domestic properties, we selected sites with particularly large inundation depths in hazard maps of river flood, inland flood, and storm surges. Specifically, properties with an anticipated maximum inundation depth of 5 m or more were designated as high-risk sites. Properties with an inundation depth of 3 m or more were also deemed high-risk, and among them, properties with a site area of 2,000 m² or larger were included in the priority sites.

Priority site extraction

Based on the criteria above, the following 15 properties assumed to have relatively high nature-related risks were selected as priority sites for detailed assessment in the Evaluate and Assess phases.

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Property Name	Area	Biodiversity Importance	Biodiversity Intactness	Site Area (m²)	Inundation Depth (m)
The Ivey on Boren	WA, U.S.	0.974	0.221	1,973	-
City Ridge	DC, U.S.	0.985	0.204	39,286	-
Hommachi Minami Garden City	Osaka Area	0.898	0.062	3,737	3.0～5.0
HK Yodoyabashi Garden Avenue	Osaka Area	0.908	0.053	2,368	3.0～5.0
Esty Maison Kameido	Greater Tokyo	0.963	0.037	438	5.0～10.0
Prime Maison Musashinonomori	Greater Tokyo	0.959	0.085	5,117	0.1～0.5
Prime Maison Teriha	Kyushu Area	0.986	0.086	4,131	3.0～5.0
Prime Maison Gotenyama East ^{(Note 2)}	Greater Tokyo	0.987	0.075	2,168 ^{(Note 2)}	0.0～0.5
Esty Maison Ojima	Greater Tokyo	0.958	0.063	3,004	5.0～10.0
Prime Maison Central Park	Kyushu Area	0.887	0.191	5,000	3.0～5.0
Kobe Women’s Student Housing	Osaka Area	0.958	0.315	4,495	0.0～0.5
Prime Maison Gotenyama West ^{(Note 2)}	Greater Tokyo	0.987	0.075	3,168 ^{(Note 2)}	0.5～1.0
Esty Maison Toyosu Residence	Greater Tokyo	0.987	0.075	8,818	1.0～3.0
Prime Maison EGOTANOMORI	Greater Tokyo	0.963	0.037	15,789	0.0～0.5
Esty Maison Noborito	Greater Tokyo	0.938	0.037	369	5.0～10.0

(Note 1)Bold red values: Metrics exceeding the thresholds for Biodiversity Intactness (≥ 0.2), Site Area (≥ 5,000 m²), or Inundation Depth (≥ 5.0 m), used in the selection of priority sites.
Bold blue values: Metrics exceeding the thresholds for properties with an inundation depth of 3 m or more and a site area of 2,000 m² or more.

(Note 2)Since Prime Maison Gotenyama East and West are adjacent properties, they were selected based on the combined area of both properties (totaling 5,336 m²).

Evaluate (Dependencies & Impacts)

Summary of Analysis

To identify our business activities' dependencies and impacts on nature, we first utilized the evaluation tool ENCORE to obtain a comprehensive understanding of the dependencies and impacts in both the real estate investment management business (direct operations) and the construction business (upstream value chain). Next, we analyzed location-specific dependency and impact scores for the properties using the biodiversity big data of Think Nature Inc., extracting high-risk priority sites based on quantitative scores.

Overview of Dependencies and Impacts

Dependency on Nature

As a result of evaluating the degree of dependency on natural capital in the real estate investment management and construction business, scores of Medium or higher were identified for dependencies such as soil and sediment retention, water purification, flood mitigation services, global climate regulation, water supply, storm mitigation, water flow regulation, rainfall pattern regulation, and visual amenity services. Dependency on visual amenity services in the real estate investment management sector was evaluated as Very High, indicating that landscapes and green spaces provided by nature are indispensable elements for maintaining and enhancing property value and tenant satisfaction.

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operation	Sector	Solid waste remediation	Soil and sediment retention	Water purification	Other regulating and maintenance service - Dilution by atmosphere and ecosystems	Air filtration	Flood mitigation services	Global climate regulation	Water supply
Direct operations	Real estate activities		M			VL	VL	VL	VL
Upstream value chain	construction	VL	H	M	L	VL	M	M	M

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operation	Sector	Noise attenuation	Other regulating and maintenance service - Mediation of sensory impacts (other than noise)	Local (micro and meso) climate regulation	Storm mitigation	Water flow regulation	Rainfall pattern regulation	Visual amenity services	Other provisioning services - Animal-based energy
Direct operations	Real estate activities	VL	VL	L	L	VL		VH
Upstream value chain	construction	VL	VL	L	M	M	VH		VL

(VH: Very High, H: High, M: Medium, L: Low, VL: Very Low)

Impact on Nature

According to ENCORE, the impacts of business activities on the natural environment in real estate activities alone were evaluated as low (Low or Very Low). On the other hand, in the upstream construction sector, disturbance (e.g., noise, light) was identified as Very High, emissions of GHG and toxic soil and water pollutants as High, and generation and release of solid waste discharge as Medium.

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Operation	Sector	Disturbances (e.g., noise, light)	Emissions of GHG	Emissions of non-GHG air pollutants	Emissions of toxic soil and water pollutants	Emissions of nutrient soil and water pollutants	Generation and release of solid waste	Area of land use	Volume of water use	Introduction of invasive species
Direct operations	Real estate activities	L	VL	VL	L		VL	L	L
Upstream value chain	construction	VH	H	L	H		M	L	L	L

(VH: Very High, H: High, M: Medium, L: Low, VL: Very Low)

Quantitative Assessment of Dependencies and Impacts by Location

Assessment of Dependencies and Impacts by Property

For the high dependency and impact items (Medium or above) identified via ENCORE, we quantified detailed, location-specific risks based on the databases possessed by Think Nature Inc. ^(Note) The scores were evaluated at a spatial resolution of 10 arcminute spatial resolution (about 15-km grid around Japan).

Click here for more details about the indicator values and calculation methods for each item, as well as the assessment results for items identified as high-risk.

(Note)Visual amenity services were excluded from this quantitative analysis due to the technical difficulties of performing detailed, location-specific risk assessments.

Evaluation Scores of Priority Sites

The dependency and impact scores for each location at the 15 Priority Sites are detailed in the tables below.

Dependency

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Property Name	Area	Dependency
Property Name	Area	Soil and sediment retention	Water purification	Flood mitigation services	Global climate regulation	Water supply	Storm mitigation	Water flow regulation	Rainfall pattern regulation
The Ivey on Boren	WA, U.S.	78.31	84.08	63.08	55.74	94.64	72.26	83.78	86.96
City Ridge	DC, U.S.	30.92	51.18	30.23	81.93	72.17	33.69	68.05	64.72
Hommachi Minami Garden City	Osaka Area	19.56	22.98	6.39	38.03	70.82	17.01	72.71	70.19
HK Yodoyabashi Garden Avenue	Osaka Area	17.80	25.61	6.08	32.83	63.54	18.39	71.08	49.27
Esty Maison Kameido	Greater Tokyo	9.22	37.73	4.41	33.52	66.95	15.98	70.41	65.31
Prime Maison Musashinonomori	Greater Tokyo	57.77	75.48	43.50	53.31	87.41	60.75	96.31	33.80
Prime Maison Teriha	Kyushu Area	28.37	35.16	10.59	45.81	52.34	24.05	72.63	56.35
Prime Maison Gotenyama East	Greater Tokyo	7.01	36.87	2.41	25.03	63.47	14.24	71.37	62.77
Esty Maison Ojima	Greater Tokyo	11.98	37.99	3.94	42.28	63.05	16.43	70.10	55.09
Prime Maison Central Park	Kyushu Area	27.16	37.74	9.21	40.06	34.94	27.62	73.37	34.50
Kobe Women’s Student Housing	Osaka Area	80.95	72.57	69.02	75.78	80.80	72.84	95.08	88.88
Prime Maison Gotenyama West	Greater Tokyo	7.01	36.87	2.41	25.03	63.47	14.24	71.37	62.77
Esty Maison Toyosu Residence	Greater Tokyo	7.01	36.87	2.41	25.03	63.47	14.24	71.37	62.77
Prime Maison EGOTANOMORI	Greater Tokyo	9.22	37.73	4.41	33.52	66.95	15.98	70.41	65.31
Esty Maison Noborito	Greater Tokyo	47.85	70.29	36.89	51.43	87.77	56.99	93.06	41.90

(Note)Red values indicate the 10 highest risk scores among all properties.

Impact

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Property Name	Area	Impact
Property Name	Area	Disturbances (e.g., noise, light)	GHG emissions	Emissions of toxic soil and water pollutants	Generation and release of solid waste
The Ivey on Boren	WA, U.S.	99.73	99.29	56.91	99.95
City Ridge	DC, U.S.	99.98	99.80	57.23	99.98
Hommachi Minami Garden City	Osaka Area	99.98	98.68	90.75	99.97
HK Yodoyabashi Garden Avenue	Osaka Area	99.97	99.27	88.05	99.97
Esty Maison Kameido	Greater Tokyo	100.00	98.99	60.91	99.99
Prime Maison Musashinonomori	Greater Tokyo	99.99	98.89	58.97	99.95
Prime Maison Teriha	Kyushu Area	99.90	99.31	75.19	99.89
Prime Maison Gotenyama East	Greater Tokyo	99.99	99.40	60.84	99.99
Esty Maison Ojima	Greater Tokyo	99.99	99.16	60.65	99.98
Prime Maison Central Park	Kyushu Area	99.64	98.90	73.47	99.65
Kobe Women’s Student Housing	Osaka Area	99.85	99.12	80.21	99.85
Prime Maison Gotenyama West	Greater Tokyo	99.99	99.40	60.84	99.99
Esty Maison Toyosu Residence	Greater Tokyo	99.99	99.40	60.84	99.99
Prime Maison EGOTANOMORI	Greater Tokyo	100.00	98.99	60.91	99.99
Esty Maison Noborito	Greater Tokyo	100.00	98.66	60.84	99.98

(Note)Red values indicate the top 10 highest risk scores among all properties.

Assess (Risks & Opportunities)

Identification of Risks and Opportunities

In accordance with the risk and opportunity categories illustrated by the TNFD, we identified nature-related risks and opportunities that may arise from SHR’s direct operations and upstream value chain (construction business), extracting dependency and impact items of particular focus for our priority sites. In identifying these items, we collected and organized case studies, scientific papers, reports, and news articles from Japan and the United States.

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Category			Risks and Opportunities	Anticipated time horizon
Risks	Physical	Acute	Increase in repair costs due to natural disasters or decline in asset value due to lower land prices Increase in non-life insurance premiums	Medium to Long
		Chronic	Rise in material prices and repair costs due to unstable water supply and material procurement	Medium to Long
		Chronic	Increase in energy costs due to temperature rise and instability	Medium to Long
	Transition	Market	Rise in financing costs due to insufficient response to biodiversity	Medium to Long
		Reputational	Decline in competitiveness and decrease in rental income due to perceived insufficient response to biodiversity	Medium to Long
		Policy	Increase in waste treatment and purification costs due to stricter regulations on waste management and pollution Increased regulatory compliance investment associated with transition to circular economy	Medium to Long
			Increased compliance and disclosure costs resulting from stricter regulations on light pollution, noise, and ecosystem impacts	Medium to Long
			Increased costs from carbon taxes or emission trading due to stricter GHG regulations Increased investment to comply with decarbonization regulations	Medium to Long
Opportunities	Capital flow and financing		Prevention of property value declines through adoption of green infrastructure Reduction of repair costs by enhancing resilience to natural disasters	Medium to Long
	Resource Efficiency		Reduction of disposal and treatment costs by minimizing waste	Medium to Long
	Resource Efficiency		Reduction of water intake through rainwater utilization and water-saving equipment	Medium to Long
	Market		Enhancement of property value and increasing revenue through improved environmental performance	Long
	Reputational capital		Improvement of profitability, increasing asset values, and lowering financing costs as a result of being preferred by tenants who value biodiversity-conscious properties	Long
	Products and services		Reduction of air-conditioning costs and CO₂ emissions by increasing proportion of ZEH properties in the portfolio and utilizing renewable energy and green infrastructure	Medium to Long
	Ecosystem protection, restoration and regeneration		Restoration of ecosystem services through maintenance and conservation of green spaces	Medium to Long
	Ecosystem protection, restoration and regeneration		Conservation of biodiversity by reducing disturbances (light, noise) and soil/water pollution	Medium to Long

Analysis of Nature-related Scenarios

To evaluate the impact of identified risks and opportunities on SHR's business and strategy, we conducted analysis based on two scenarios representing different uncertainties—one where transition risks are maximized and another where physical risks are maximized.

Scenario A (High Transition Risk)

A scenario where degradation of ecosystem services is curbed, but policies, laws and regulations, and market demand toward nature positive are rapidly strengthened and promoted. (#1 Ahead of the Game scenario in TNFD’s default scenario)

Scenario B (High Physical Risk)

A scenario where policy and regulatory responses stagnate while climate change and degradation of the natural environment progress, leading to the prominent materialization of physical risks such as natural disasters. (#3 Sand in the gears scenario in TNFD’s default scenario)

Source: Recommendations of the Taskforce on Nature-related Financial Disclosures (2023) p.74

Materiality Assessment of Risks and Opportunities

Following a qualitative assessment of business impacts under scenario analysis, we extracted nature-related risks and opportunities to be addressed in alignment with SHR's materiality. Specifically, under Scenario B (High Physical Risk), risks such as increase in repair costs due to more severe natural disasters were evaluated as relatively high, while creating green spaces and responding to biodiversity demands were confirmed as significant business opportunities. We will continue to deliberate on the prioritization of our responses to the extracted risks and opportunities, considering their alignment with our material issues.

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Category			Risks and Opportunities	Anticipated time horizon	Business Impact		Effective Countermeasures
Category			Risks and Opportunities	Anticipated time horizon	Scenario A	Scenario B	Effective Countermeasures
Risks	Physical	Acute	Increase in repair costs due to natural disasters or decline in asset value due to lower land prices Increase in non-life damage insurance premiums	Medium to Long	Medium	High	Promotion of disaster prevention and mitigation measures (installing emergency power supplies, flood barriers, and water-gate barriers) Feasibility assessment of green infrastructure integration (greening zones to prevent road flooding and runoff instead of concrete/asphalt)
		Chronic	Rise in material prices and repair costs due to unstable water supply and material procurement	Medium to Long	Medium	Medium	Diversification of material procurement and consideration of securing alternative resources Selection of contractors promoting environmentally conscious procurement and diversification of supply sources
		Chronic	Increase in energy costs due to temperature rise and instability	Medium to Long	Low	Low	Promotion of owning properties with excellent environmental performance and ZEH property Effective management of water consumption (introduction of water-saving equipment and rainwater storage tanks) Installation and maintenance of rooftop greening
	Transition	Market	Rise in financing costs due to insufficient response to biodiversity	Medium to Long	Low	Low	Improvement of investor perception through enhanced disclosure Acquisition of green certification and promotion of green finance
		Reputational	Decline in competitiveness and decrease in rental income due to perceived insufficient response to biodiversity	Medium to Long	Medium	Medium	Development of green spaces serving as wildlife habitats and planting native tree species
		Policy	Increase in waste treatment and purification costs due to stricter regulations on waste management and pollution Increased regulatory compliance investment associated with transition to circular economy	Medium to Long	Low	Low	Enhancement of waste management (digitization of data on waste volumes and disposal costs; improvement in recycling rates)
			Increased compliance and disclosure costs resulting from stricter regulations on light pollution, noise, and ecosystem impacts	Medium to Long	Medium	Low	Installation of plantings which buffer light pollution and noise; introduction of motion-sensor-equipped lighting; minimization of unnecessary lighting; and adoption of LED lighting designed to reduce light pollution
			Increased costs from carbon taxes or emission trading due to stricter GHG regulations Increased investment to comply with decarbonization regulations	Medium to Long	Low	Low	Disclosure of GHG emission reduction targets and achievement status Promotion of renewable energy and improvements in energy efficiency
Opportunities	Capital flow and financing		Prevention of property value declines through adoption of green infrastructure Reduction of repair costs by enhancing resilience to natural disasters	Medium to Long	Medium	High	Promotion of disaster prevention and mitigation (greening spaces with rainwater storage and permeability functions) Enhancement of water usage management (installing rainwater storage tanks and water-saving devices)
	Resource Efficiency		Reduction of disposal and treatment costs by minimizing waste	Medium to Long	Low	Low	Enhancement of waste management (digitization of data on waste volumes and disposal costs; improvement in recycling rates)
	Resource Efficiency		Reduction of water intake through rainwater utilization and water-saving equipment	Medium to Long	Medium	Medium	Effective management of water consumption (introduction of water-saving equipment and rainwater storage tanks)
	Market		Enhancement of property value and increasing revenue through improved environmental performance	Long	Medium	Medium	Acquisition of green certification
	Reputational capital		Improvement of profitability, increasing asset values, and lowering financing costs as a result of being preferred by tenants who value biodiversity-conscious properties	Long	Medium	High	Development of green spaces serving as wildlife habitats and planting native tree species Improvement of investor perception through enhanced disclosure Acquisition of green certification and promotion of green finance
	Products and services		Reduction of air-conditioning costs and CO₂ emissions by increasing proportion of ZEH properties in the portfolio and utilizing renewable energy and green infrastructure	Medium to Long	Medium	Medium	Promotion of owning ZEH property Promotion of renewable energy and improvements in energy efficiency Creation of cool shaded areas through green spaces
	Ecosystem protection, restoration and regeneration		Restoration of ecosystem services through maintenance and conservation of green spaces	Medium to Long	-	-	Development of green spaces, planting native tree species, certification as Japan’s OECM (Nationally Certified Sustainably Managed Natural Sites)
	Ecosystem protection, restoration and regeneration		Conservation of biodiversity by reducing disturbances (light, noise) and soil/water pollution	Medium to Long	Low	Low	Development of green spaces as buffers and water filtration zones

SHA has established an integrated risk management system for the purpose of accurately identifying various risks inherent in the execution of our operations, managing such risks appropriately, preventing risks from materializing, and minimizing losses when risks occur. In order to properly carry out organizational risk management, the head of the Internal Control Promotion Department takes care of risk management as the chief supervisor, and in principle, the heads of each department designated as a risk management division serve as risk management division officers. Furthermore, the Internal Control Promotion Department is in charge of promoting risk management. Every business year, the Internal Control Promotion Department formulates a risk management plan for the following fiscal year, consisting of annual policies, priority management risks, and receives approval from the Board of Directors. The Internal Control Promotion Department also holds risk management meetings every six months, monitors the progress of the risk management plan, including climate-related risks, and reports the details to the Board of Directors. Under such risk management system, with respect to climate change, the Sustainability Committee of SHA continuously identifies and assesses climate change risks and opportunities that may affect SHR’s operations, and updates its measures as deemed necessary by the President & Chief Executive Director, who is also the utimate accountability of the Sustainability Committee. We clarify the methods for managing climate change risks and opportunities, and as part of our integrated risk management process, promote management of climate change risks/opportunities and initiatives related to resilience.

Click here for Risk Management System.

SHR recognizes that addressing environmental challenges, including climate change and biodiversity conservation, is important for its sustainable growth. Based on this recognition, SHR has identified “Promoting response to climate change”, “Investing in real estate with excellent environmental performance” and “Conservation of Natural Capital, Coexistence of Humankind and Nature, and Initiatives for Environmental Resources” as materialities, and has established the following indicators and targets for use in identifying, assessing, and managing climate- and nature-related risks and opportunities.

■ GHG Emissions Reduction Target
Reduce absolute emissions compared to 2023

Medium term target:	Reduce 42% of Scope 1 and Scope 2 emissions by 2030 Reduce 25% of Scope 3 emissions by 2030

Long term target:	Achieve net zero by 2050 Reduce 90% or more of Scope 1, Scope 2, and Scope 3 and neutralize residual emissions

■ Energy Consumption Reduction Target

Reduce 10% energy consumption intensity by 2028 compared to 2018

■ Green Certification Target

Maintain 90% or more of the portfolio with green certification

■ Planting Management Target

For properties where regular inspections reveal poor management of planting strips (dead, withered, or overgrown plants), develop improvement measures and corrective action plans.
100% implementation rate as of the end of December each year

■ Waste Generation Reduction Target

No increasing waste emission intensity compared to 2018

■ Water Use Reduction Target

Reduce 5% water use intensity by 2030 compared to 2018

Biodiversity Conservation

Planting and vegetation management based on the Gohon no Ki (“five trees”) Project

In accordance with the Gohon no Ki (“five trees”) Project promoted by Sekisui House, SHR carries out maintenance and management of planting, etc. based on tree species that take the ecosystem into consideration. When replanting at some properties, in collaboration with Sekisui House, we planted trees in accordance with the Gohon no Ki (“five trees”) Project after confirming the details of the replanting, such as the selection of native tree species and whether there are non-native species that fall under the non-native species that require comprehensive measures. And the tree plates installed have QR codes on them, allowing visitors to check detailed information about the tree species.

Esty Maison Kayaba (Example of replanting)

Tree Plate

Connecting Local Nature to Future Generations

Prime Maison EGOTANOMORI owned by SHR was developed based on the community development concept of “creating a sustainable community nurtured by multiple generations.” Adjacent to Egota Forest Park, which features a satoyama-style landscape, the property forms an integrated green environment through its preserved natural green spaces and vegetation management focused on native species.
In 2026, SHR conducted a biodiversity survey within the property's green spaces, which consist of various woodland habitats and , to assess the diversity of flora and fauna and identify species of conservation importance. During the summer survey, approximately 140 plant species, 7 bird species, 120 insect species, and several reptile species of conservation importance were identified on the site.

【Species of Conservation Importance】
Japanese Five-lined Skink (Plestiodon finitimus)

【Species of Conservation Importance】
Japanese Jewel Beetle (Chrysochroa fulgidissima)

In addition, we organized a soil fauna observation event for elementary school children at “Egotaie,” a community space for interaction among residents and local community members. Participants collected and observed soil fauna inhabiting the site, gaining first-hand exposure to the living organisms found in their immediate surroundings. Through these activities, we foster children's interest in the local natural environment and provide opportunities to learn about biodiversity.
We remains committed to preserving and enhancing the ecological value of the site through ongoing biodiversity-conscious management of vegetation and habitats, thereby contributing to the conservation of local biodiversity and the sustainability of the surrounding community.

Environmental Education Event: “Discover the Tiny Creatures Living in the Soil”

Prevention of Pollution Risks

Upon acquiring the properties, SHA establishes investigation items such as the use history, use status and storage status of asbestos, PCBs, and other hazardous substances, geological status, land use history, and soil contamination status in the due diligence standards, sufficiently conducts investigations to examine the appropriateness of the investment targets. While investment opportunities are limited, we conduct surveys of properties developed on brownfield and greenfield sites in accordance with the same criteria, and will not invest in properties developed on such sites if there is a risk of significant impact on the natural environment. Even after the acquisition of properties, we maintain legal compliance by investigating whether there are any violations of environmental laws and regulations in owned properties through continuous acquisition of engineering reports and other means.

Green Infrastructure Initiatives

Stormwater Management & Reclaimed Water System at City Ridge

At City Ridge, an underground stormwater retention tank was installed during development to manage stormwater and mitigate runoff. The tank has a storage capacity of up to 260,000 gallons (approximately 992 m³), and the collected rainwater is reused for landscape irrigation and as make-up water for cooling towers.

Water Conservation Initiatives

In domestic and overseas residences, we have installed flow control valves to prevent excessive water flow and shower heads, toilets, etc. equipped with water-saving functions.

Flow Control Valve and Water-Saving Kitchen Faucet

Water-Saving Shower

In addition, we utilize stored rainwater for watering plants and irrigation through sprinkler faucets and planters, as well as for flushing toilets in office buildings. We are promoting water conservation and the effective use of water resources.

Sprinkler Faucet

Prime Maison Asakusa EAST

Planter

The Ivey on Boren

Appropriate Waste Management

The Sekisui House Group utilizes the Resource Recycling Centers as part of its initiatives to realize a circular economy. The Resource Recycling Centers have been in operation at the production facilities across Japan since 2003, serve as the heart of Sekisui House's zero emissions efforts. The centers manage processes from allocating waste collection vehicles to supervising outsourced recycling companies. Also at SHR, in part of residences managed by Sekisui House Sha Maison PM Companies, waste materials, which are generated during repair work when vacanting, are transported to the centers for recycling.

Sekisui House's Resource Recycling Centers

In office buildings, the Osaka City Environment Bureau awarded Hommachi Minami Garden City a "Mark of Excellent Building for Waste Reduction" and HK Yodoyabashi Garden Avenue a "Mark of Excellence for Waste Reduction" in recognition of our excellent performance in promoting the reduction and proper disposal of commercial waste.
Furthermore, in order to further reduce waste emissions, we have posted awareness-raising posters for the three Rs (Reduce, Reuse, Recycle) aimed at reducing waste emissions. We will continue to strive for proper waste management through the operation of owned properties.

Excellent building mark for
waste reduction
Hommachi Minami Garden City

Mark of excellence for
waste reduction
HK Yodoyabashi Garden Avenue

Urban Revitalization / Urban Redevelopment

Leveraging our decades of expertise in housing construction, Sekisui House is implementing urban redevelopment that goes beyond mere scrap-and-build. Through the urban redevelopment of rental and for-sale condominiums, offices, hotels, commercial facilities, and complexes incorporating these property types, Sekisui House aims to realize buildings that are accommodating to all and will be passed on to subsequent generations, thereby creating value for society as a whole with focus on people, communities and the future. When planning urban redevelopment projects, Sekisui House always considers the impact of their operations on the environment and community, referencing relevant laws, regulations and internal rules. SHR, in cooperation with Sekisui House, aims to provide high-quality social capital and to create a sustainable city through the acquisition of environmentally friendly properties developed by Sekisui House.

”City Ridge”, a Redevelopment Project by Sekisui House

City Ridge, which SHR has owned through overseas SPCs, is a project in Washington, D.C., in which Sekisui House redeveloped a historic building while preserving it as listed on the United States’ National Register of Historic Places. It was built in 1956 as the head office of the Equitable Life Insurance Company, and is one of the masterpieces of Leon Chatelain, a former president of the American Institute of Architects. Since 1977, it has served as the headquarters of Fannie Mae (the Federal National Mortgage Association).
The project includes a 690-unit apartment complex, a supermarket, a fitness club and a kinder care center that serve local residents and provide a rich streetscape in harmony with the historic community landscape. It is also the first property in Washington, D.C. to receive LEED-ND Gold Certification, a green certification that certifies neighborhood development, for an entire community.

For overview of the property, please click here.

“Gotenyama Project”, a Large-Scale Complex Development by Sekisui House

“Prime Maison Gotenyama East”, “Prime Maison Gotenyama West”, and “Gotenyama SH Building” owned by SHR are properties planned and developed under Sekisui House’s large-scale complex development “Gotenyama Project”. It is not just a large-scale development that advocates only a sense of scale, but is based on the revitalization of the original landscape of "Gotenyama", which is rich in nature, and creating an expressive and intimate human-scale townscape. In addition, the project focuses on environmental considerations and actively uses natural energy and adopts advanced energy-saving technologies.
In the “Gotenyama Project”, more than 40% of the total development area is greened through exterior planting and rooftop greening. Based on Sekisui House’s proprietary Gohon no Ki Project, which takes into account the ecosystem of Japan’s original “Satoyama” landscape, a green network that is integrated with the greenery in the surrounding area is created through preservation of existing trees and planting over 26.4 thousand trees, mainly indigenous species.

＜“Gotenyama Project” Overview＞

Location	6-7-29 Kitashinagawa, Shinagawa-ku, Tokyo
Site area	Approx. 28,000㎡（Total of four sites）
Overview of the buildings	For details of each property, please refer to the following. Prime Maison Gotenyama East Prime Maison Gotenyama West Gotenyama SH Building

＜Major Awards Granted to the Project＞

February 2012
Sponsored by Shinagawa Ward, TokyoGreening Grand Prize at the Green Honoring System

September 2012
Sponsored by Organization for Landscape and Urban Green Infrastructure
Minister of Land, Infrastructure, Transport and Tourism Award in the Rooftop Greening Category at the “Rooftop / Wall / Special Greening Technology Contest”

October 2012
Sponsored by Organization for Landscape and Urban Green Infrastructure
Urban Greenery Organization Chairman’s Award in the Green Community Development Category at the Urban Green City Award

“EGOTANOMORI Project”, a large-Scale Town Development

“Prime Maison EGOTANOMORI” owned by SHR is a property planned and developed by Sekisui House through the “EGOTANOMORI Project”, a large-scale urban development project carried out on land owned by the Urban Renaissance Agency. The property consists of five different buildings: Prime Maison EGOTANOMORI EAST/WEST (rental condominiums for families), MAST ONE EGOTANOMORI (a rental condominium for students and single-persons), GRAND MAST EGOTANOMORI (serviced housing for the elderly), and NICHII HOME Egotanomori (a paid nursing home with long term care).
The area where this property is located is blessed with a rich natural environment and has been designated as a wide-area evacuation site in the Tokyo Metropolis. In the Nakano City urban planning master plan, the area is considered to have sufficient evacuation routes and an environment that is harmonious with the abundant greenery in the surrounding area, and is positioned to promote the supply of good housing complexes, etc. In addition, the community was developed under the concept of creating a sustainable community nurtured by multiple generations in order to take advantage of the many schools, medical facilities, and facilities for the elderly in the area. We aim to develop a community that regenerates as an area where diverse generations live together, including students, young family households starting to raise children, and elderly people who want a safe and comfortable life.

＜“EGOTANOMORI Project” Overview＞

Location	3-14-1~5 Egota, Nakano-ku, Tokyo
Site area	Approx. 39,500㎡
Overview of the buildings	For details of the property, please refer to the following. Prime Maison EGOTANOMORI

＜Major Awards Granted to the Project＞

May 2019
Urban Landscape Award sponsored by the “Urban Landscape Day” Executive Committee Awarded the "Urban Landscape Day" Executive Committee Chairman's Award in the Urban Space category

October 2019
Green City Award sponsored by the Organization for Landscape and Urban Green Infrastructure Awarded the Minister of Land, Infrastructure, Transport and Tourism Award in the Green Business Activities category

The land for this project was provided by the Urban Renaissance Agency as a site for rental condominiums and other facilities, taking advantage of the "rich natural environment" and developing roads and parks with the aim of “ensuring disaster prevention functions”, “creating a community with excellent health and medical care”, and “creating a community where a variety of households, mainly families, can continue to live”.