ESG Materiality Issues Identified by NMF

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 improve our unitholder value. In order to take specific sustainable initiatives, we have identified ESG materiality issues in consideration of expectations from our stakeholders as well as the impact on our business and performance.

Information

Please refer to KPI Actual Results Management Sheet（19.3KB） 

Materiality, Policy and Target					Supporting SDGs
Enviroment E	Raising the proportion of “green” properties in our investment portfolio
	Target	・Raise the ratio of properties acquired green certification (with three stars or more or equivalent to) to 70% by 2030
	KPI	・Ratio of green certification (with three stars or more or equivalent to) ※ ・Ratio of Green Certification ※ 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 )
	Reported Location	Raising the Proportion of “Green” Properties in Our Portfolio
	Countering climate change
	Target	・Achieve carbon neutrality by 2050. ・Achieve 40% reduction in greenhouse gas (GHG) emissions per floor area (intensity) from our portfolio by 2030 compared with the 2016 level. (Midium-term goal：Achieve 34% reduction by 2025)
	KPI	・GHG emissions per floor area (intensity)
	Reported Location	Environmental Measures/Counting Climate Change
	Countering water resources
	Target	・Achieve 10% reduction in water use per floor area (intensity) in our portfolio by 2030 compared with the 2016 level.
	KPI	・Water use per floor area (intensity)
	Reported Location	Environmental Measures/Preserving Water Resources
Society S	Ensuring the safety and security of tenants and improving user comfort
	Target	・Improve tenant satisfaction by conducting a regular survey of tenants' satisfaction, by carrying out property renewal and renovation aimed at accommodating diversifying social needs, by enhancing the content of tenant assistance services.
	KPI	・Customer satisfaction survey results ※Scheduled to be implemented on a sector-by-sector basis from FY 2020
	Reported Location	Social Responsibility/Ensuring the Safety and Security of Tenants and Improving User Comfort
	Creating a workplace environment in which everyone is treated fairly and empowered to find his/her job rewarding
	Target	・Enhance employee satisfaction via the creation of a sound working environment that ensures impartial evaluation, provides fair compensation, respects for fundamental rights and allows everyone to find his/her job rewarding.
	KPI	・Average number of paid holidays taken(Target : 18days per year or more) ・Employee satisfaction survey results
	Reported Location	ESG Management (Asset Management Company website)
	Human resource development and talent management
	Target	・Help our human resources improve their capabilities by providing them with periodic training and by encouraging them to engage in self-directed studies and acquire job-related certification
	KPI	・Actual attendance results of employee training (Training hours per employee) ・Number of employees qualified or certified
	Reported Location	ESG Management (Asset Management Company website) FIDUCIARY DUTY (Asset Management Company website)
Governance G	Strengthening corporate governance
	Target	・Establish an effective sustainability promotion system through appropriate operation of PDCA cycle as well as a governance system which ensures impartiality and diversity of the directors. ・Promote investment management that prioritizes the unitholders' interest by aligning the interests of the unitholders, NMF and the Asset Management Company by introducing asset management fees linked to management performance. ・Aim to improve management performance through appropriate management based on the market research function of the Asset Management Company and selective investment backed by our own valuation method at the time of acquisition.
	KPI	・NMF's ① Outside director ratio ② Female director ratio ③ Board of directors' meeting attendance ratio ・External evaluation of the sustainability promotion system
	Reported Location	Governance/Governance of the Investment Corporation Policies and Management Structure Investment Management Structure Prioritizing Unitholders' Interest
	Establishment of an effective internal control system
	Target	・Ensure legal compliance through raising awareness of compliance. ・Prevent risks to the soundness of management and business continuity through appropriate risk management such as elimination of conflicts of interest in transactions with interested parties. ・Ensure the effectiveness of internal control process through internal audits.
	KPI	・Compliance training attendance rate(Target:100%) ・Risk assessments frequency(Target: once a year) ・BCP training frequency(Target: once a year) ・Safety drill frequency utilizing safety confirmation system(Target: 4 times a year) ・Internal audit frequency(Target: once an year)
	Reported Location	Governance/Compliance Governance/Risk Management
	Stakeholder engagement and timely and appropriate information disclosure
	Target	・Build solid relationships with and win the trust of all stakeholders by engaging in the timely, appropriate and proactive disclosure of financial/non-financial information and by maintaining constructive dialogue
	KPI	・Number of IR meetings ・ESG rating assessment
	Reported Location	Stakeholder Engagement Disclosure Policy International Initiatives and Certifications

Identifying Process on Materiality Issues

Process 1：Selection of Issues to Be Considered
We have selected issues of particular concern in terms of securing NMF’s sustainable growth from among a broad range of environmental, social and governance (ESG) issues. This selection was made in reference to various guidelines, such as SASB(Note1) Standards and GRI Guidelines (Note 2), United Nations SDGs(Note 3), and evaluation criteria specified by ESG rating agencies, including MSCI and Sustainalytics, as well as the status of initiatives undertaken by our peers in the same industry.

（Note 1）	The Sustainability Accounting Standards Board: A U.S.-based non-profit organization aimed at helping businesses identify industry-specific materiality issues that could affect the judgment of rational investors and engaging in the development of standards for sustainability-related information disclosure
（Note 2）	The GRI Guidelines: International guidelines concerning sustainability reporting formulated by GRI (Global Reporting Initiative) which is an official body of the UNEP as well as a non-profit organization whose mission is to create and disseminate a sustainability report.
（Note 3）	Sustainable Development Goals: Adopted at a United Nations Summit in September 2015, SDGs comprise 17 goals and 169 targets for international initiatives to be undertaken to achieve United Nations’ 2030 agenda for sustainable development.

＜SDGs 17 Goals＞

Process 2：Determining Priorities and Preparing a Materiality Matrix
We have determined priorities among the selected issues in line with their materiality by assessing their impact on NMF’s business and performance on various fronts, including its corporate philosophies, financial results and business plans. In the course of this process, we have also examined the issues from the perspectives of a variety of stakeholders within and outside the Nomura Real Estate Group. Each issue has thus been prioritized in light of its materiality to NMF’s sustainable growth from two aspects—the opportunity arising from it and the risk associated with it—with its positioning being indicated in NMF’s materiality matrix.

Process 3：Discussion for Approval on Identifying NMF’s Materiality Issues in the Investment Committee
Having determined their priorities, we have discussed these issues at the Sustainability Promotion Committee and officially positioned them as NMF’s materiality issues associated with sustainability after obtaining the approval of the Investment Committee, which serves as the highest decision making body.

＜Materiality Matrix＞