Climate Change and Natural Capital (TCFD/TNFD)

Policy on Climate Change and Natural Capital

Approach to Climate Change and Natural Capital

Based on the idea that it is essential for our sustainable growth to realize sustainable society, we also believe our contribution to solving social issues through our business is in line with our fundamental philosophy of “securing stable profit over the medium to long term” and “steadily achieving growth in assets under management.” Consequently, it would contribute to improving our unitholder value.
Responses to climate change and natural capital are urgent management issues for NMF in undertaking sustainable business activities, and we have positioned it as a particularly important ESG issue (materiality).
We will continue to advance our sustainability initiatives by addressing key issues related to climate change and natural capital.

Integrated TCFD/TNFD Disclosure

• Nomura Real Estate Asset Management, the asset management company of NMF, recognizes responses to climate change and natural capital as urgent issues. We thus endorsed the TCFD recommendations in July 2020 and joined the TNFD Forum in 2025.
• In March 2024, NMF disclosed non-financial information in accordance with the TCFD recommendations. Furthermore, in April 2026, we identified and disclosed nature-related risks and opportunities, as well as priority areas, based on the TNFD LEAP approach.
• We disclose information regarding climate change and natural capital in accordance with the four frameworks for TCFD and TNFD: governance, strategy, risk management, and metrics and targets, as outlined below.

This table can be scrolled sideways.

NMF conducted a scenario analysis to identify the risks and opportunities that climate change may pose to the Investment Corporation and to assess their potential impacts on its business. In conducting the analysis, NMF took into consideration Japan's Green Growth Strategy Through Achieving Carbon Neutrality in 2050, which was formulated based on the government's declaration of achieving carbon neutrality by 2050.

Scenario Analysis Assumptions

NMF conducted scenario analysis using future climate predictions announced by various international organizations and other groups as the main information sources. The main information sources referenced by NMF are indicated below. Climate change risks can be broadly classified as transition risks and physical risks, and it is believed that the relationship between these two types of risks is one of interdependence and trade-offs.

This table can be scrolled sideways.

In light of the intent of the Paris Agreement, NMF set three patterns—a 4°C scenario, 2°C scenario, and 1.5°C scenario—as the assumed scenarios for scenario analysis. Overviews of each scenario are set forth below.

2°C Scenario and 1.5°C Scenario

The 1.5°C scenario assumes that greenhouse gas emissions will trend downward as a result of the adoption of more strict regulations, tax systems, and so on to achieve a decarbonized society. This scenario entails low physical risks and high transition risks.
The 2°C scenario is positioned between the 4°C scenario and the 1.5°C scenario and assumes that greenhouse gas emissions will be curtailed to some degree as a result of the adoption of more strict regulations, tax systems, and so on, similar to the 1.5°C scenario. This scenario entails low physical risks and high transition risks, but not to the same degree as the 1.5°C scenario.

4°C Scenario

The 4°C Scenario assumes that more strict regulations, tax systems, and so on will not be introduced to create a decarbonized society and that greenhouse gas emissions will continue to increase. This scenario entails high physical risks and low transition risks.

Verification of Financial Impact Amounts Based on Scenario Analysis

NMF verified the scope of the financial impacts from the identified risks and pportunities for each of the three scenario patterns described above. Impacts were verified at 2030 (medium-term outlook) and 2050 (long-term outlook) for each scenario. A summary of the results is set forth in the table below.
This verification made reference to scenarios announced by the IEA, IPCC, and other organizations, objective forecast data announced by other third-party specialized organizations, and other data available at the time, and involved qualitative and quantitative verification based on the status of the NMF's asset holdings, but the known risks entail uncertainties, and unknown risks and other factors are inherent, and consequently, there is no guarantee of the accuracy or safety of that information.

1.5°C Scenario

This table can be scrolled sideways.

• *1 Because the impact is minor, it is not included in the calculation.
• *2 For the prerequisites for calculating each risk, please see here.

NMF response policy

This table can be scrolled sideways.

4°C Scenario (reference)

This table can be scrolled sideways.

• *1 Because the impact is minor, it is not included in the calculation.
• *2 For the prerequisites for calculating each risk, please see here.

The risk management systems relating to sustainability of the asset management company to which NMF has entrusted operation of its assets are as set forth below.

At the time of investment decision

When making new investments in assets under management, the Investment Committee makes investment decisions in the due diligence process taking into consideration various investigations of climate change related risks. Specifically, with respect to the possibility of flooding and inundation of a target property, the inundation level and inundation history are investigated and confirmed using various hazard maps and the history of hydraulic engineering work implementation is also investigated and confirmed. In addition, the presence of environmental and energy-conserving facilities including acquisition of environmental certification, the status of business continuity planning, and other factors are confirmed.

During operation

The Sustainability Promotion Committee performs management and monitoring of overall risks relating to sustainability including climate change risks. Specifically, the status of implementation of energy-conservation measures to achieve greenhouse gas (GHG) emissions reduction targets (see (4) Metrics and Targets below for details) and the status of GHG reductions based on such implementation are monitored for each property, and this information is visualized to analyze the factors of increases or decreases in GHG emissions, and necessary countermeasures are investigated as needed. In addition, sustainability and risk assessment sheets are prepared for each property and the likelihood of climate change risks and other risks occurring is evaluated. These evaluations are conducted for a certain proportion of owned properties each year in accordance with a rotation of approximately five years for all properties. All sustainability initiatives, including climate change risk, are promoted based on the management and supervision of the Chief Executive Officer (Director) for Sustainability Promotion.

NMF is aware that solving environmental problems exemplified by climate change is an important management issue within its sustainable business and its business strategies for achieving sustainable business. Based on this understanding, NMF is investing in lower environmental impact buildings, taking measures to increase the efficiency of energy usage and reduce GHG emissions through the implementation of environmental and energy conservation measures at owned properties, and seeks to establish a low environmental impact portfolio.

Making owned properties greener

• ※Green certification (with three stars or more or equivalent to) refers to DBJ Green Building Certification (three stars or more) or BELS Certification (three stars or more), or CASBEE for Real Estate (B+ or higher)
• ※The figure is calculated based on the floor area of our properties excluding land.
• ※For actual results to KPI, please refer here.

Greenhouse Gas (GHG) Emissions

Water Use

NMF has formulated a transition roadmap to achieve net zero GHG emissions by 2050.

NMF will endeavor to reduce total Scope 1, 2, and 3 (Category 13) GHG emissions by 80% compared with the 2019 level by 2030.
For the detailed action plan, please see here.

Toward 2050, NMF will endeavor to achieve net zero Scope 1, 2, and 3 GHG emissions.
In accordance with the definition of net zero emissions referred to above, NMF will reduce its total GHG emissions by 90% compared with the 2019 level and neutralize the remaining emissions by internationally accredited methods.