Tokyu Fudosan Holdings has in place the Sustainability Committee, comprising executive directors and chaired by the company president, which meets twice a year in conjunction with the Risk Management Committee to address, develop action plans and oversees performance against the targets, and other important issues including compliance, climate change, social contribution and diversity

Governance

Sustainability Committee to assess and manage climate-related risks and opportunities

Tokyu Fudosan Holdings has in place the Sustainability Committee, comprising executive directors and chaired by the company president, which meets twice a year in conjunction with the Risk Management Committee to address, develop action plans and oversees performance against the targets, and other important issues including compliance, climate change, social contribution and diversity. The outcomes of these joint meetings are reported to Board of Directors.

Board's oversight of climate-related risks and opportunities

Based on reporting from the Sustainability Committee on prominent climate-related issues including those that influence management strategy, financial planning and goal setting, Tokyu Fudosan Holdings Board of Directors oversees climate-related risks and opportunities.

Sustainability Committee structure

Organization Structure

Strategy

Faced with mounting threats of climate change and environmental challenges, it has become imperative to find solutions to these issues, and we are aware that our business operation's contribution to the environment is crucial in gaining market acceptance.

In our long-term GROUP VISION 2030, we have set “Creating sustainable environment" as a materiality for our value creation efforts, and included environmental management in our company-wide policies. The key environmental opportunities and risks have been identified as follows and KPI targets set accordingly.

With our robust Group-wide effort in environment management, we are implementing climate change initiatives based on TCFD recommendations and reducing environmental impact through our supply chain, aiming to achieve our quantitative targets. At the same time, viewing global-scale environmental challenges as business opportunities, we endeavor to build cutting edge businesses that lead the industry in the pathway to decarbonized society.

Time horizons for climate-related strategy

We define following short, medium and long-term time horizons for our climate-related strategies:

【Short-term】1- 2 fiscal year(s)
【Medium-term】3- 9 years. Medium-term management plan falls in this time horizon. Our medium-term scenario analysis assumes SBT of 1.5°C in year 2030.
【Long-term】10- 30 years. Long-term management policy falls in this time horizon. Our long-term scenario analysis assumes zero-emission in year 2050.

Financial impacts of climate-related risks and opportunities

In setting climate-related strategies, we define magnitude of impacts on our business portfolio

【High】10% or more (of consolidated operating revenue)
【Medium-high】10% or more of the operating revenue for the respective business portfolio
【Medium】5-10% of the operating revenue for the respective business portfolio
【Medium-low】2-5% of the operating revenue for the respective business portfolio
【Low】 Less than 2% of the operating revenue for the respective business portfolio

Businesses subject to climate change scenario analysis

The Group uses scenario analysis to assess impacts including on upstream and downstream value chain of our different business operations. Scenario analysis has been applied to, and expanded to include, following businesses in accordance with their relevance to climate change risks/opportunities.

【In 2018】Urban development business(medium-term), Resort business(long-term)
【In 2020】Urban development, Resort, Residential, Renewable energy businesses(all medium/long-term)
【Yet to be analyzed】Logistics, Overseas, Human capital-utilizing business

Climate change scenario analysis process

Serving as the secretariat for the scenario analysis, the Group Sustainability Promotion Department identified, in consultation with the relevant departments, risks and opportunities that may have significant impacts on the business strategy and financial plan. With the help of external consultants, Sustainability Promotion Department conducted quantitative evaluation of the impacts and shared the information within the organization. Furthermore, strategies for likely scenarios are formulated in consultation with the relevant departments, approved by the Sustainability Committee, and reported to the Board of Directors.

Material climate-related issues

We have identified following material climate-related risks and opportunities that have potential impact on the Group :

Real estate business, due to significant greenhouse gas emissions during development and operation stages, is perceived by our group as a transition risk in response to the intensification of climate change, regulatory strengthening in society, rising energy costs, and changes in customer and investor awareness. Furthermore, we recognize the increasing physical risks of climate change in real estate operations.

Particularly, we acknowledge the significant challenges posed by new regulations and the increase in construction and renovation costs associated with the transition to a decarbonized society.

On the other hand, we see the expansion of demand for renewable energy and the growth of the ESG financial market as significant opportunities. Additionally, we perceive the changing awareness of customers as an opportunity, leading to an expanded selection of companies committed to environmental initiatives.

Scenario Analysis ① 1.5°C

【Selected scenario】

This scenario assumes steady shifts in policies/technologies/market toward decarbonized society in line with Paris Agreement, and expects to limit average global temperature rise to well below 2°C above pre-industrial level at the end of the 21st century.

• SDS developed by IEA World Energy Outlook, consistent with limiting the global temperature rise to 1.65°C with a 50% probability.
• B2DS developed by IEA Energy Technology Perspectives, consistent with limiting the global temperature rise to 1.75°C.
• The roadmap presented in IEA's NZE2050 scenario outlines a path to achieve net-zero globally by 2050.
• RCP2.6 scenario developed by IPCC, consistent with global temperature rise of 0.9~2.3°C (average of 1.6°C) above pre-industrial level at the end of 21st century(2081~2100), referenced for gauging physical risks.

  ◆IEA(International Energy Agency), SDS(Sustainable Development Scenario), B2DS(Beyond 2 Degrees Scenario), NZE2050(Net Zero by 2050 Roadmap for the Global Energy Sector), IPCC(Intergovernmental Panel on Climate Change), RCP(Representative Concentration Pathways)

【Summary of scenario analysis assessment】

In the medium term (2030), we expect carbon pricing and ZEB construction cost to have substantial financial impact on our urban development business. For the long term (2050), however, we will complete ZEB conversion, which improves our buildings' market competitiveness, leading to higher rental revenue. We also expect the renewable energy business to expand.
As for physical risks, natural disasters due to extreme weather conditions will increase moderately, but the magnitude of impact is expected to be low thanks to improved BCP and LCP.

Results of Scenario Anaylsis ① 1.5°C Scenario

Scenario Analysis ② 3°C Scenario

【Selected scenario】

This scenario assumes that all nations adhere to their NDCs, and the average global warming will be about 3°C above pre-industrial level at the end of the 21st century.

• STEP developed by IEA World Energy Outlook, reflecting policies declared by each nation.
• RTS developed by IEA Energy Technology Perspectives, consistent with each nation's existing energy and climate-related commitments including the NDCs of the Paris Agreement.
• RCP6.0 scenario developed by IPCC, consistent with global temperature rise of 2.0～3.7°C（average of 2.8°C）above pre-industrial level at the end of the 21st century(2081～2100).

  ◆NDC(Nationally Determined Contribution), STEPS(Stated Policies Scenario), RTS(Reference Technology Scenario)

【Summary of scenario analysis assessment 】

Compared to 1.5°C scenario, we expect financial impact over medium term(- 2030) to be lower due to slower ZEB conversion in our urban development business, but the impact from ZEB conversion is likely to persist into long-term (-2050). On the other hand, we expect to see some growth in our renewable energy business.
As for physical risk, although our resort business will experience bigger impact from faster increase in natural disasters and global warming compared to 1.5°C scenario, its financial impact can be limited given successful differentiation strategies including selecting right building locations and utilizing resort facilities during off season.

Results of Scenario analysis ② 3°C Scenario

Scenario Analysis ③ 4°C Scenario

【 Selected scenario】

This scenario assumes that policies, technologies and markets advance on the current trend and rate, allowing average global warming to exceed 4°C above pre-industrial levels at the end of the 21st century and expects greater risk of climate change-induced natural disasters.

• RCP8.5 scenario developed by IPCC, consistent with global temperature rise of 3.2～5.4°C（average of 4.3°C）above pre-industrial level at the end of 21st century(2081～2100).

【Summary of scenario analysis assessment】

There will be limited impact of climate change for medium term(-2030) and transition risk will not emerge as significant financial impact during this period. For long-term(-2050), however, we will experience more severe natural disasters and rising temperature which likely aggravates financial impact. We expect to be able to alleviate the risk to some degree with successful differentiation through developing satellite office spaces(urban development business), selecting right building locations and off-season use of resort facilities. As for our renewable energy business, we look to expand in response to market trend.

Results of Scenario analysis ③ 4°C Scenario

Impact of climate change risks/opportunities on business strategy

The Group's business strategy has addressed climate change risks/opportunities in following areas:

Impact of climate change risk/opportunity on business strategy and financial planning

The Group's financial plan integrates the following in response to climate change risks/opportunities:

• Click here for specific examples

Risk management

Identifying / assessing climate-related risks/opportunities

“Creating a sustainable environment” is one of our 6 priority themes(materiality) on the path to Tokyu Fudosan Holding's long-term GROUP VISION 2030, and environmental management has been the company-wide policy. We reflect on risks and opportunities associated with each materiality in the entire value chain and set KPI targets.

Climate-related risk management process

Under the direct oversight of the company president, Tokyu Fudosan Holdings Sustainability Committee develops action plans and oversees performance against the targets on climate change and other important issues.

To ensure reporting compliant with relevant mandates and operate our business in a way that reduces environmental impact including GHG emission, waste, and water consumption, Group Sustainability Promotion Department, serving as a secretariat for the Sustainability Committee, sets targets for GHG emission reduction and other climate-related issues for each fiscal year, monitors performances and communicates information across the Group.

In January 2020, we laid out a Sustainable Procurement Policy to mitigate the impact of GHG emissions on climate change. To achieve this, we work with our stakeholders not only in our business operations but also upstream and downstream value chain and promote better energy efficiency and greater use of renewable energy throughout the lifecycle of products and services.

Integrating climate-related risk identification/assessment/management into organization's overall risk management

Tokyu Fudosan Holdings Co. identified 7 risks that possibly hinder the Group's management objectives, and recognized climate change risk as another highly significant emerging risk. To manage these risks, we formulated a Basic Risk Management Policy on which we developed and run a risk management framework.

Metrics and targets

Climate change-related targets in our long-term GROUP VISION 2030

Tokyu Fudosan Holdings Group has set forth medium- and long-term targets linked to climate change in line with our long-term GROUP VISION 2030 developed in 2021, and is committed to materializing decarbonized society through our business.

• With our strength in the renewable energy business, we expect the reduction of scope 1 and 2 CO2 emissions to exceed the Group's overall CO2 emissions, essentially achieving net negative in 2025. Additionally, Tokyu Land Co. plans to expedite achieving RE100.
• We aim to reduce emissions from our own and controlled facilities and supply chain (scope 1, 2 and 3) and achieve SBT (Science Based Targets) to limit global warming to 1.5 ℃ by 2030, and net zero emission by 2050.

Tokyu Fudosan Holdings Group's ESG Management

Based on our identified social materiality, the Groupʼs long-term vision "GROUP VISION 2030" has been organized into six themes with KPI targets in terms of ESG aspects. We established KPI goals for fiscal 2030 for each of these themes, and we are progressing across the Group with initiatives aimed at achieving these goals, while following the PDCA cycle.

Themes of our efforts to create value (Materialities) and KPI target for FY2030

Our company group has set indicators and goals for the expansion of renewable energy projects and utilization, in addition to reducing CO₂ emissions, as a mitigation strategy for the transition to a decarbonized society.

Additionally, as adaptive measures to address significant risks and opportunities identified through scenario analysis, we have established the following items listed in the table below as indicators and goals. In addition to mitigation measures outlined in Key Performance Indicators (KPIs), we are also addressing Business Continuity Planning (BCP) measures from the perspective of adaptation to climate change, such as installing watertight boards and elevating electrical rooms to higher floors. We are committed to addressing climate change from both mitigation and adaptation perspectives.

As of January 31,2024

1. * Results for FY2021 can be found in the CSR Report.

Materiality

E

Create a sustainable environment.

• *1 CO₂ equivalent emissions, including fluorocarbons (freons)
• *2 Tokyu Land Corporation
• *3 Formulated during the long-term business policy phase in 2021
• *4 The mid-term management plan announced in 2022
• *5 Applies to large non-residential properties (with floor space of 10,000 m2 or greater) that are owned Excluding some joint projects

• Click here for detailed environmental data