Since the Paris Agreement of 2015, climate change has become an urgent global challenge, and the need to address environmental issues has become a common understanding among countries around the world. The current climate system and the scale of the changes observed in the climate are unprecedented in hundreds of thousands of years. The IPCC Sixth Assessment Report, published in 2021, warns that anthropogenic climate change is already affecting many weather and climate extremes in all regions of the world and that unless GHG emissions are significantly reduced over the next few decades, it will cause more severe and frequent natural disasters. The world must hold the increase in global average temperature to below 2°C or even to 1.5°C above the pre-industrial level by the end of the 21st century. Efforts to reduce GHG emissions are being made worldwide, and in Japan, the movement toward the achievement of a decarbonized society has been accelerating since the Japanese government's declaration on Net Zero GHG Emissions by 2050.

Under these circumstances, the Tosei Group recognizes that the climate change will cause dramatic changes in the natural environment and social structure, and that it is an issue that will have a significant impact on our business. We also are aware that natural disasters could reduce the value of real estate and stricter government environmental regulations could significantly affect our business activities, strategies and financial plans. Tosei has established the Tosei Group ESG Policy and Action Guidelines and has also included initiatives to address environmental and social issues in its current medium-term management plan, Further Evolution 2026. We will continue to strive to implement ESG management that takes sustainability into consideration and contribute to the realization of a sustainable and decarbonized society through our corporate activities.

In November 2021, we endorsed the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and joined the Japan TCFD Consortium. Based on the TCFD recommendations, we will analyze the risks and opportunities posed by climate change to our business, and strive to further enhance information disclosure.

Note: Task Force on Climate-related Financial Disclosures (TCFD) has fulfilled its remit and disbanded on October 12, 2023. The monitoring function on the progress of companies' climate-related disclosures is handed over to the IFRS Foundation, who are responsible for the formulation of the International Financial Reporting Standards.

Tosei's Revitalization Business is not only attractive as an investment product, but also leads to the utilization and extension of existing resources and is environmentally friendly. This means that, Tosei's model as the utilization of existing used properties can reduce total amount of CO2 generated due to construction by 54% in comparison to the Scrap and Build Model during 100-year term.（According to our estimation）

When we plan new construction and value-up, we consider the use of environmentally friendly equipment in accordance with the characteristics of the property, and actively introduce environmental products from various perspectives, such as energy and resource conservation.

In particular, when we value up existing properties after acquisition, we consider the adoption of equipments that lead to sustainable energy, cost, and resource savings based on "Three Value Up Code" consisting of "WELL BEING (sophistication & comfort)," "ECO FRIENDLY (ecology & recycling)," and "RESILIENCE (safety & reassurance)."

In our Fund and Consulting Business, through our asset management services, we promote energy-saving renovation of buildings owned by privately placed real estate funds and REITs, acquisition of environment-related certifications, and efforts to reduce GHG emissions.
Tosei Asset Advisors, Inc has established the Green x Value Up Residential Fund (hereinafter "the Fund") in FY2023, which aims to reduce whole-building GHG emissions through energy-saving renovations, working with domestic institutional investors.
The Fund will operate its properties with the goal of significant reducing GHG emissions for the whole-building by　holding existing rental apartments over the long term and conducting energy-saving renovations not only of　common areas but also vacant units. The Company will carry out the renovation work as construction manager, and the value of the property will be increased with a focus on the reduction of environmental impact, thereby revitalizing the property as a rental apartment building that contributes to the realization of a decarbonized society. In addition to LED lighting and the introduction of motion sensors in common areas, the installation of solar power generation equipment on the rooftop is planned along with the application of highly reflective paint. In the exclusive areas, water, lighting, and air conditioning equipment will be upgraded to energy- and water-saving models, and a Home Energy Management System (HEMS) is installed to enable the visualization and optimization of energy use.

In 2013, Tosei Asset Advisors, Inc. was selected as the fund manager for the first project managed by Real Estate Sustainability & Energy-Efficiency Diffusion Organization (Re-Seed Organization) under the Earthquake Resistance and Environmental Real Estate Formation Promotion Project promoted by Ministry of Land, Infrastructure and Transport and the Ministry of the Environment. Furthermore, new funds were established in 2014 and 2017.

We are working to build houses that meet the ZEH (Net Zero Energy House) standard, and in FY2023, we supplied 12 ZEH and long-life quality housing. We are developing products that incorporate the most advanced housing equipment and systems, including solar power generators, energy- and water-saving equipment, and IoT. We will continue with these efforts to provide houses that combine high energy-saving performance and comfort.

The Group's development properties actively adopt equipment and materials that contribute to greenhouse gas reduction and energy conservation, as described below.

The Group is promoting the installation of LED lighting in the fixed assets it owns. To date, we have installed LED lighting throughout 7 existing office buildings and 1 existing logistic facility and reduced electricity consumption by an average of approximately 20% to 30%. This is expected to improve tenant satisfaction by reducing electricity consumption and costs, increasing the brightness of the buildings, and eliminating the need for maintenance.

We conduct an annual survey of all tenants of our buildings (fixed assets) to ascertain their needs regarding building management systems and facilities, etc. The Sustainability Committee of Tosei Community Corporation, which is responsible for the management of fixed assets, and the Sustainability Committee of Tosei confirm the results of the survey and take necessary measures to improve tenant satisfaction. The Sustainability Committee of Tosei Community Corporation, which is responsible for the management of fixed assets, and the Sustainability Committee of Tosei Corporation confirm the results of the questionnaires and take necessary measures to improve tenant satisfaction.

For tenants of buildings that have undergone whole-building LED construction, we have entered into green lease contracts with tenants that stipulate that both the owner and the tenant will enjoy the benefits of energy conservation through the installation of energy-saving equipment, and that the tenant will work with the owner on various energy-saving activities that will contribute to improving the environmental performance of the property. As of the end of the fiscal period ended November 30, 2023, green lease contracts were in place for 8 properties, including Shinden Logistics, Awaji-cho Tosei Building, and others.

We are striving to raise building users' awareness of energy conservation and reduce energy consumption by distributing Sustainability Guides, which provide information on energy conservation activities, and by displaying posters to promote energy and resource conservation, waste separation, stairway use, and other activities.

We are promoting energy-saving renovations, including the installation of LED lighting in buildings. We are also promoting the acquisition of certifications that evaluate the environmental performance and social aspects of real estate and use these certifications to enhance the value of our assets and for leasing.

By establishing an IT infrastructure within the company, meeting materials and documents for approval are being made paperless. In addition, we are continuing steady activities such as using electric fans and halogen heaters instead of relying on air conditioners. We are also actively introducing resource- and energy-saving equipment such as water-saving toilets and motion-sensor lighting. We believe that it is important to make continuous efforts throughout the year to promote resource and energy conservation, and we will continue to educate and implement familiar eco-activities that can be carried out by every employee.