Approach and System

Approach and System

Message from the Management

Executive Director Hideyuki Isobe

Hideyuki Isobe
Executive Director,
Mori Hills REIT
Investment Corporation

Under the Basic Policy of “Investment in the city,” MHR contributes to the creation and development of cities and solving of social issues.

Social Role and Responsibility of Mori Hills REIT Investment Corporation
Mori Hills REIT Investment Corporation (MHR) and Mori Building Investment Management Co., Ltd. (MIM), the asset manager, aim to contribute to the creation and development of cities by providing investment opportunities in high-quality urban assets to investors while maximizing unitholder value through investment focused on the competitiveness and ability to create value of the “City,” as stated in the Basic Policy and Company Mission of MHR and MIM.
Society today is faced with various challenges, and companies are expected to contribute to solving these issues as they conduct business activities. We believe that working on these issues will in fact lead to increasing our competitiveness.
MHR and MIM aim to contribute to the realization of a sustainable society and maximization of unitholder value in the medium to long term by focusing on ESG (Environmental, Social and Governance) initiatives and investing in high-quality urban assets while striving to improve various social issues.
Promotion of sustainability-related operations requires initiatives that involve the whole supply chain. We will pursue joint initiatives with various stakeholders while sharing values with them.

Identification of Materiality
In order to realize the Basic Policy and the Company Mission, it is indispensable to take actions after sufficiently understanding social change and demand. As such, MHR has identified materiality after a series of discussions on important issues to be addressed by referring to the Sustainable Development Goals (SDGs), the shared rules for and the goals to be achieved by the international community in the twenty-first century, and such.
Social issues including climate change not only cause problems in people’s daily life but also have a significant impact on MHR’s business activities. The impact of ESG initiatives by a company on the valuation and value of the company has grown every year.
As companies are expected to execute initiatives for the development of a sustainable society leveraging their business characteristics and strengths, MHR focuses its efforts on investing in real estate with excellent measures for BCP and climate change to make further improvements in day-to-day management operations. In addition, the funds invested by MHR for property acquisition are utilized by sellers such as Mori Building and other developers to carry out new high-quality development. Such creates a positive cycle by allowing further urban development and eventually solving social issues. These activities also lead to improvement in environmental issues and the creation of new industries in addition to enhancement of security and safety of tenants and the community. We believe that further promotion of such initiatives will result in the growth of MHR as well as contribute to society and our clients.

Most Recent Efforts
Turning to our recent ESG efforts, for the environment (“E”), MIM endorsed the TCFD’s recommendations in May 2020, began creating frameworks and analyzing scenarios, deepened its scenario-based analyses in 2021 and published an overview of its results. We continue to work to reduce greenhouse gas emissions in order to achieve the government’s goal of carbon neutrality by 2050, always considering potential new efforts and target-setting.
As to our efforts on social (“S”) initiatives, while placing importance on the “International Bill of Human Rights” and “Declaration on Fundamental Principles and Rights at Work” of the International Labour Organization (ILO), as well as the “Guiding Principles on Business and Human Rights” of the United Nations, we have implemented various initiatives emphasizing human rights and diversity for our employees and also made efforts to further improve the workplace environment by conducting employee satisfaction surveys using third-party organizations. Because high-quality performance of employees is the source of business activities, we regard talent development and other such initiatives as crucial. Furthermore, despite being faced with the COVID-19 pandemic, a global crisis, we will press ahead with business activities responding to changes in lifestyles and behaviors anticipated in the future by accurately grasping situations while striving to manage and operate owned properties with an aim to continue economic activities albeit prioritizing the safety of tenants and local residents at the same time.
With regard to governance (“G”) initiatives, in order to contribute to the realization of a sustainable society and maximize unitholder value over the medium to long term, we believe it is absolutely imperative to remain a company that is trusted by society. We have worked on building fair and effective corporate governance and made efforts to enhance internal control through thorough compliance and risk management. In April 2021, MHR increased its number of directors to five and its ratio of women to 40% and continues to build a diversity-oriented structure.
We have also increased our ESG-related KPIs and targets and will continue to work consistently to achieve them while actively having dialogues with stakeholders in an aim to utilize a diversity of opinions in our management and business activities.

For Sustainable Growth and Development
Recognizing that efforts on solving social issues through business activities will enhance corporate value, we intend to press ahead with initiatives by emphasizing dialogue with stakeholders and sharing values with them.
We will promote and further a variety of ESG initiatives and, with an eye on trends in development of international ESG disclosure standards, step up our own information disclosure.

I would like to ask for your continued support.

Sustainability Promotion System

Our operations connected to sustainability will be promoted primarily by the Sustainability Committee to be established by MIM.
The Chairperson of the Committee shall be the President & CEO while all directors and some planning department staff shall comprise the committeepersons. Various initiatives will be implemented based on the Sustainability Promotion Program which is established every fiscal year.
In principle, the Committee shall meet four times a year and shall formulate policies and the content of the Sustainability Promotion Program, monitor progress of programs, deliberate various suggestions from departments, etc. in light of social conditions and the operating status of MHR.
The President & CEO approves the policies and promotion programs, constantly monitors the thorough promotion of sustainability, and establishes and maintains a sustainability promotion structure as a responsible party in promoting sustainability.
Moreover, sustainability-related efforts shall be reported on periodically to the Board of Directors of both MHR and MIM.
Each Board oversees the status of initiatives for important issues related to ESG and the status of compliance and risk management.

Initiatives throughout the Entire Supply Chain

Promotion of sustainability operations, whether environmental or social, requires initiatives that involve the whole supply chain. We believe that joint initiatives with various stakeholders with aligned values are necessary.
By actively stimulating interactive communication with stakeholders such as tenants, local residents, property management companies and with our sponsor Mori Building, and by aligning our values, we aim to contribute to the realization of a sustainable society.

Important ESG Issues (Materiality)

Materiality Identification Process

In 2020, MHR identified important issues related to ESG (Materiality) using the process below.

The SDGs (Sustainable Development Goals) are 17 goals included in the Agenda 2030 for Sustainable Development which was adopted by the United Nations Sustainable Development Summit held in September 2015.
ISO 26000 is an international standard for organizational social responsibility published in 2010 by the International Organization for Standardization (ISO).
The GRI Standards is an international standard related to sustainability reporting established in 2016 by Global Reporting Initiative (GRI), an international non-profit organization.
SASB (Sustainability Accounting Standards Board) is a U.S. non-governmental organization that proposes standards for sustainability information disclosure for companies. SASB develops sector-specific and industry-specific sustainability accounting standards (SASB standards) for companies for when they disclose sustainability information to investors.
Depiction of Evaluating the Importance of Issues (Critical Issue Matrix)

Issues with high importance have been
designated as “areas to respond to with priority”
and identified as materiality
(See below for MHR’s materiality)

MHR’s materiality

Stakeholder Engagement

MHR conducts its business activities by engaging with various stakeholders including its employees, tenant and local communities, property management (PM) companies, and unitholders. MHR aims for sustainable growth by proactively communicating with its stakeholders to understand and respond to their expectations and requests.