SUSTAINABILITY-RELATED DISCLOSURES

Product Name: GLP J-REIT

Legal Entity Identifier: 353800E27V9KA51K2I90

GLP J-REIT promotes environmental or social characteristics, but does not have as its objective a sustainable investment within the meaning of Article 9(1) of Regulation (EU) 2019/2088 ("SFDR"). GLP J-REIT has no employees in accordance with the prohibition on having employees under the Act on Investment Trusts and Investment Corporations of Japan, and relies on GLP Japan Advisors Inc. (the “Asset Manager”), to manage and operate the properties in its portfolio. GLP J-REIT and the Asset Manager are hereinafter referred to collectively as “we,” “us” or “our.” References to “fiscal year” or “FY” are to the 12 months began or beginning March 1 of the year specified in line with the fiscal year of GLP J-REIT, unless noted otherwise.

Summary

No sustainable investment objective	The financial products offered by GLP J-REIT promote environmental or social characteristics, but do not have as their objective sustainable investment.
Environmental or social characteristics of the financial product	We promote environmental and/or characteristics through a host of environmental, social and governance (“ESG”) enhancement initiatives. Specifically, we implement various environmental initiatives at GLP J-REIT’s properties including those against climate change, in water resources and in recycling of waste, as described below. For social characteristics, we aim to coexist with local communities where GLP J-REIT’s properties are located while supporting a work environment that encourages diverse work styles and human resource development, and contributing to solving social issues. Specifically, our social initiatives include supporting local communities, business-continuity-planning, tenants and their employees and employees of the Asset Manager, as described below.
Investment strategy	GLP J-REIT invests directly or indirectly through trust beneficiary interests in real estate and real estate-related assets. Therefore, due diligence review (including the assessment of good governance practices) in relation to investee companies is not applicable. The investment and due diligence policies as described below are related to real estate and real estate-related assets. The Asset Manager has established a separate committee for ESG and related matters (the “ESG Committee”) and appointed a Chief Sustainability Officer in April 2021 to effectively promote ESG in our business practices. Review and assessment of material ESG risks and opportunities by the ESG Committee are built into our investment decision process. While there is no third-party rating used for assessment of our governance practices, we and the Asset Manager have introduced the measures to assess and enhance our governance systems, as described below.
Proportion of investments	GLP J-REIT offers financial products which promote environmental or social characteristics, but does not have sustainable investments as its objective. As of August 31, 2023, 82.6 % of the properties in GLP J-REIT’s portfolio, including properties in which we hold quasi co-ownership interests, had obtained at least one environmental certification which we consider sufficient and qualified as Green Certified Assets (as defined below), and 17.4% had not, in each case based on gross floor area, achieving our initial target of having the portion of the Green Certified Assets in GLP J-REIT’s portfolio reach 80% or higher based on total gross floor area ahead of the initial target date of the end of FY2024. We plan to increase the proportion of the Green Certified Assets at 90% or higher of GLP J-REIT’s portfolio based on total gross floor area by the end of FY2025.
Monitoring of environmental or social characteristics	In order to measure the attainment of the E/S characteristics we promote, we use the indicators such as (i) acquiring environmental certification of GLP J-REIT’s properties, (ii) incorporating green clauses in lease contracts, (iii) monitoring and tracking ESG data, (iv) transition to LED lighting and (v) transition to renewable energy, each as further described below.
Methodologies	The Asset Manager has established the ESG Committee in April 2021 to effectively promote ESG in our business practice. The ESG Committee collects and compiles data and internal reports on ESG and related issues, tracks progress for meeting our ESG key performance targets and formulate ESG key performance indicators and targets. The Asset Manager uses the methodologies as described below to monitor and track our ESG performance.
Data sources and processing	As further described below, the Asset Manager obtains certain ESG-related data from the tenants and GLP group’s property management department. In addition, depending on the type of data, the Asset Manager ensures data accuracy and quality through a third-party organization’s external verification.
Limitations to methodologies and data	As further described below, the primary limitation to the methodology or data source is the necessity of our reliance on the tenants and GLP group’s property management department for raw data at the property level. Data at the portfolio level is compiled internally at the Asset Manager, but the data is confirmed by the relevant departments and the compiled ESG data at the portfolio level is verified by a third-party organization. Limitations to the methodology and data are not expected to affect the attainment of the environmental or social characteristics promoted by GLP J-REIT in any material way.
Due diligence	Prior to GLP J-REIT’s investment in a property, the Asset Manager conducts due diligence on the property, including ESG due diligence, building review and regulatory environmental due diligence. Our ESG due diligence on a property considers, among others, various ESG factors as described below.
Engagement policies	We do not generally consider investing in properties that are designated as contaminated areas that require government notification under the Soil Contamination Countermeasures Act of Japan or that do not otherwise meet our environmental standards based on their history of land usage and soil contamination assessment by experts and examination of presence of harmful substances, unless appropriate measures are taken under the Soil Contamination Countermeasures Act or we conclude, after appropriate due diligence review, that any health or other ESG risk is limited. We also review whether the property we may acquire is compliant with applicable law. When investing in properties using proceeds from our ESG financing, we do not consider properties that do not meet the criteria under our ESG finance framework and do not qualify as Green Certified Assets for our investment.
Designated reference benchmark	GLP J-REIT does not have a specific index designated as a reference benchmark to determine whether GLP J-REIT is aligned with the environmental or social characteristics it promotes.

No sustainable investment objective

The financial products offered by GLP J-REIT promotes environmental or social characteristics, but does not have as its objective sustainable investment.

Environmental or social characteristics of the financial product

We promote environmental and/or characteristics through a host of environmental, social and governance (“ESG”) enhancement initiatives. Specifically, we implement various environmental initiatives at GLP J-REIT’s properties including those against climate change (installation of solar panels, wind turbine and energy saving equipment such as LED lighting and efficient heating and cooling systems), in water resources (using rainwater and well water, updating toilet equipment and installing saving devices) and in recycling of waste (promoting recycling of logistics equipment through business partnerships and waste recycling in collaboration with tenants). For social characteristics, we aim to coexist with local communities where GLP J-REIT’s properties are located while supporting a work environment that encourages diverse work styles and human resource development, and contributing to solving social issues. Specifically, our social initiatives include supporting local communities (availing logistics facility buildings as local disaster prevention centers), business-continuity-planning (seismic isolation structure, flood and snow damage control, stockpiling disaster-relief supplies for disaster prevention, and delivery centers for delivery of disaster-relief supplies to disaster areas at properties), tenants and their employees (amenities such as cafeterias, stores and conducting customer satisfaction surveys) and employees of the Asset Manager (promoting paid leave and remote work and other diverse ways of working and implementing training programs and certification exams).

GLP J-REIT does not have a specific index designated as a reference benchmark to determine whether GLP-J-REIT is aligned with the environmental or social characteristics it promotes.

GLP J-REIT has no employees in accordance with the prohibition on having employees under the Act on Investment Trusts and Investment Corporations of Japan and relies on the Asset Manager, to manage and operate the properties in GLP J-REIT’s portfolio. The Asset Manager is a subsidiary of GLP Pte. Ltd., and a part of the GLP group. The GLP group, GLP J-REIT and the Asset Manager all share the same approach to sustainability and work together to promote sustainability in our businesses. As the leading provider of modern logistics facilities to the global logistics real estate market, the GLP group is uniquely positioned to develop best-in-class logistics facilities that maximize supply chain efficiency and help meet the needs of domestic consumption-led growth in various countries in a more sustainable way (as described below in more detail). We believe that logistic facilities, as the infrastructure of society, have potential to contribute to resolving societal issues in Japan, such as responding to various environmental challenges and realizing sustainable cities and communities. Incorporating the GLP group’s ESG policy statement, we aim to integrate sustainability as a core practice in business strategy, underpinned by the following ESG principles:

1. Building businesses and investing responsibly – This means embedding ESG into our investment and decision-making process by understanding how our activities impact material ESG factors and how these can affect our reputation, capital value and stakeholders, focusing on how we can best manage our workforce, whether it is the Asset Manager’s own employees or our tenants, contractors and suppliers, and recognizing how we can work with the communities where GLP J-REIT invests in and operates businesses and how we can enhance our presence through economic development, limiting our environmental impact and seeking a community’s license to operate.
2. Developing and managing sustainable assets – We consider ESG impact throughout an asset’s lifecycle even after our acquisition or investment decision by empowering the Asset Manager’s asset management teams to prioritize, act, track and monitor the sustainability performance of our assets and in certain instances collaborate with our tenants, partners and communities.
3. Improving efficiency and enhancing value – Our mission is to build sustainable businesses and generate attractive risk-adjusted returns to our unitholders over the long term, while providing exceptional investment and operational services that enhance value. We partner with GLP group companies that develop and invest in technologies and innovations that enhance the efficiency of our assets including data analytics, robotics, automated clearance systems, digital loading docks, smart sorting, telematics, energy-efficient fleet management systems, Internet of Things, resource conservation and transition to renewable energy.
4. Governing with high ethics and transparency – We are committed to maintaining the highest standards of corporate governance as a means of enhancing corporate performance and accountability and adopting an evolving suite of governance practices that are woven into the fabric of our business. We continuously review and refine our processes in light of best practice, consistent with our needs and circumstances, maintain a zero-tolerance approach to bribery and corruption and require all management and the Asset Manager’s management and employees to comply with our code of business conduct at all times.
5. Promoting well-being – We aim to incorporate health and well-being throughout our organization and assets in support of our tenants and the Asset Manager’s management and employees, and the communities in which they work. We focus on introducing well-being concepts such as creating spaces that encourage physical activity, integrating natural lighting, improving access to nature and providing areas for healthy eating and socializing.

Investment strategy

GLP J-REIT invests directly or indirectly through trust beneficiary interests in real estate and real estate-related assets. Therefore, due diligence review (including the assessment of good governance practices) in relation to investee companies is not applicable. The investment and due diligence policies as described below are related to real estate and real estate-related assets.

The Asset Manager has established a separate committee for ESG and related matters (the “ESG Committee”) and appointed a Chief Sustainability Officer in April 2021 to effectively promote ESG in our business practices. Review and assessment of material ESG risks and opportunities by the ESG Committee are built into our investment decision process.

1. Investment research. Our initial investment research includes understanding how our activities impact material ESG factors and how these can affect our reputation, capital value and stakeholders. Our investment research analyzes various ESG factors such as how we can reduce our environmental load, coexist with local communities where GLP J-REIT invests and operates its assets, contribute to solving social issues and achieve healthy growth for all stakeholders. We consider these ESG factors throughout an asset’s lifecycle even after our acquisition or investment decision by analyzing how to prioritize, act, track and monitor the sustainability performance of our assets and collaborate with our workforce, partners and communities.
2. Due diligence. The due diligence findings related to ESG risks and opportunities are reported and reviewed by the ESG Committee prior to their submission to the Asset Manager’s investment committee (the “Investment Committee”). During the review, the ESG Committee reviews ESG risks and opportunities, assigns an ESG risk rating based on materiality for each ESG risk and opportunity review and monitors overall ESG risk ratings for the target property analyzed by the Asset Manager’s investment management department (the “IMD”).
3. Follow-up actions. We assign four different levels of ESG risk rating, high, medium, low or cannot be determined, to each ESG risk and opportunity identified during our due diligence. The ESG Committee reviews such individual ESG risk rating and an overall ESG risk rating for the target property, which are analyzed and determined by the IMD. We engage external experts to complete a more detailed due diligence if the overall ESG risk rating assigned is high and include the external experts’ findings in the ESG Committee’s reports and action plans prior to their submission to the Investment Committee.
4. Selection of properties. The ESG Committee submits its ESG action plans with due diligence findings to the Investment Committee which considers the ESG action plans and due diligence findings with other economic and operational considerations when making a final decision to invest in a property. As a rule, we do not acquire those properties that are not appropriately treated for soil contamination and other environmental contamination in accordance with the Soil Contamination Countermeasure Act of Japan and other environmental laws and ordinances. In addition, from time to time, we issue investment corporation bonds earmarked for use in projects that contribute to resolving environmental and social issues (collectively, the “sustainability bonds”). The proceeds from the sustainability bonds will be used for financing eligible green and/or sustainable projects.

While there is no third-party rating used for assessment of our governance practices, we and the Asset Manager have introduced the following measures to assess and enhance our governance systems:

1. Adoption of performance-linked asset management fees. We pay performance-linked fees based on our earnings to the Asset Manager and its management to align the interest of our unitholders and the interest of the Asset Manager.
2. Independent outside expert’s veto for related-party transactions. We are not allowed to carry out related-party transactions without the approval of independent outside expert(s) of the Investment Committee and the compliance committee of the Asset Manager. The selection of such outside expert(s) requires the approval of the Asset Manager’s board of directors.
3. Transparent and appropriate information disclosure. We hold IR and financial presentation meetings for both our domestic and overseas unitholders for the purpose of information disclosure to a wide range of unitholders. We provide press releases and disclosure materials in both Japanese and English simultaneously.

Proportion of investments

GLP J-REIT offers financial products which promote environmental or social characteristics, but does not have sustainable investments as its objective. As of August 31, 2023, 82.6% of the properties in GLP J-REIT’s portfolio, including properties in which we hold quasi co-ownership interests, had obtained at least one environmental certification which we consider sufficient and qualified as Green Certified Assets (as defined below), and 17.4% had not, in each case based on gross floor area, achieving our initial target of having the portion of the Green Certified Assets in GLP J-REIT’s portfolio reach 80% or higher based on total gross floor area ahead of the initial target date of the end of FY2024. We target to increase the proportion of the Green Certified Assets to 90% or higher of GLP J-REIT’s portfolio based on total gross floor area by the end of FY2025.

Monitoring of environmental or social characteristics

In order to monitor and track our performance on environmental and social initiatives, we use the following key performance indicators and targets.

1. Environmental certification. We use various certifications issued by third-party organizations to monitor and track the ESG performance at the building level. We use the Building Energy-efficiency Labeling System (“BELS”), Net Zero Energy Building (“ZEB”), Comprehensive Assessment System for Built Environment Efficiency (“CASBEE”) and Leadership in Energy and Environmental Design (“LEED”) for the environmental certification of the logistics facility buildings in GLP J-REIT’s portfolio. For BELS, we consider a logistics facility building to have the environmental certification if it received a certification of three stars or higher out of the five-star ranking system of BELS. For ZEB, we consider a logistics facility building to have the environmental certification if it is certified at least as ZEB Oriented. For CASBEE, we consider a logistics facility building to have the environmental certification if it received a certification of B+ Rank or higher out of the CASBEE ranking system featuring Rank S (excellent), Rank A (very good), Rank B+ (good), Rank B– (slightly inferior) and Rank C (inferior). For LEED, we consider a logistics facility building to have the environmental certification if it received a certification of Silver, the third highest certification under LEED ranking system, or higher. We consider GLP J-REIT’s properties that receive any such sufficient environmental certification as the “Green Certified Assets”. We plan to increase the portion of the Green Certified Assets in GLP J-REIT’s portfolio to 90% or higher based on total gross floor area by the end of FY2025.
2. Green clauses in lease contracts. We include certain information-sharing and cooperation clauses in the lease contracts with our tenants in order to monitor energy and other ESG-related consumption data, promote energy saving and water conservation of our tenants and to facilitate and improve ESG certification of the logistics facility buildings in GLP J-REIT’s portfolio. We plan to include green clauses in all of the fixed term lease contracts with our tenants, including the existing lease contracts, by the end of FY2023.
3. ESG data coverage. We monitor and track electricity usage, greenhouse gas emissions, water usage and amount of waste generated of the properties in GLP J-REIT’s portfolio. More information and relevant ESG data can be found at GLP J-REIT’s website: https://www.glpjreit.com/en/esg/performance.html.
4. Transition to LED lighting. As part of our initiatives to reduce energy consumption and improve energy efficiency of GLP J-REIT’s properties, we have already completed the installation of LED lighting in all of the common areas of the properties in our portfolio, in line with our target completion date of the end of FY2022.
5. Transition to renewable energy. We promote use of electricity from renewable sources in the properties in GLP J-REIT’s portfolio, including use of electricity from renewable sources by our tenants in tenant-controlled areas. We plan to complete 100% transition to renewable sources for electricity used in all of the common areas of the properties in GLP J-REIT’s portfolio (including purchases of non-fossil fuel energy certificates to offset use of electricity from non-renewable sources) by the end of FY2025.

Methodologies

The Asset Manager has established the ESG Committee in April 2021 to effectively promote ESG in our business practice. The ESG Committee collects and compiles data and internal reports on ESG and related issues, tracks progress for meeting our ESG key performance targets and formulate ESG key performance indicators and targets. The ESG Committee used the following methodologies to monitor and track our ESG key performance indicators.

1. Environmental certification. The ESG Committee receives and confirms reports regarding selection of properties for new environmental certifications, expiration date of obtained environmental certifications and status of initiatives to acquire or renew environmental certifications. Such reports are made by the IMD several times in a given year. We have carried out the following initiatives in relation to the environmental certification: ESG due diligence for new investment, improvement of GLP J-REIT’s properties’ certification levels, new acquisition of environmental certification for properties that have not obtained environmental certification and promotion to obtain carbon-neutral friendly environmental certifications such as BELS, etc.
2. Green clauses in lease contracts. The ESG Committee receives reports regarding status of new lease contracts with green clauses, establishment of green clauses for existing lease contracts and progress of green clauses introduction and makes sure that all new lease contracts include green clauses. Such reports are made by the IMD. GLP group’s leasing department is in charge of green clauses introduction.
3. ESG data coverage. Environmental data and social data are collected by GLP group’s property solution department. GLP group’s property solution department prepares and submits reports regarding such environmental and social data to the IMD and the Asset Manager’s corporate planning department (the “CPD”). The IMD and/or the CPD then reviews and submits reports regarding such data to the ESG Committee. We timely collect ESG data based on the nature of each data. For example, we collect energy consumption data every month for the multi-tenant properties in GLP J-REIT’s portfolio while we collect data regarding environmental certification and social contribution achievements every fiscal periods. We ensure accuracy of each ESG data using inspection by third-party organizations.
4. Transition to LED lighting. Transition to LED lighting is carried out by the IMD and GLP group’s property solution department as well as the Asset Manager’s engineering team as a part of the Asset Manager’s KPI for ESG targets. GLP group’s property solution department and the Asset Manager’s engineering team prepare and submit reports regarding status of transition to LED lighting to the IMD. The IMD in turn reviews and submits reports regarding such status to the ESG Committee several times in a year.
5. Transition to renewable energy. Transition to renewable energy is carried out by installing solar power generation facilities and procurement of non-fossil fuel energy certificates. The IMD and CPD are in charge of this transition. We ensure energy to be renewable using objective certificates issued by third-party.

Data sources and processing

We use the following data sources:

1. Environmental certification. When considering a property for a new environmental certification, or renewal or upgrade of an existing environmental certification, the IMD initially collects the relevant data required by the third-party organizations that issue environmental certifications with the assistance from a third-party environmental certification consulting firm. The IMD engages the relevant third-party issuing organization and submits the relevant data and supporting materials required for a given environmental certification. In addition, the IMD monitors and tracks the current status of environmental certifications of GLP J-REIT’s properties, and internally calculates the proportion of the Green Certified Assets in GLP J-REIT’s portfolio based on gross floor area.
2. Green clauses in lease contracts. The IMD initially collects the relevant data and reports it to the ESG Committee. The adoption status of green clauses in lease contracts with tenants is tracked and monitored internally.
3. ESG data coverage. GLP group’s property solution department initially collects the relevant data and reports it to the IMD and the CPD. The IMD and/or CPD compiles the relevant data and reports such data to the ESG Committee. In principle, data on electricity, water usage, greenhouse gas emissions and amount of waste generated are compiled every year by the IMD. To ensure the accuracy of the compiled data, the Asset Manager engages a third-party consulting firm to perform verification of the annually compiled ESG data.
4. Transition to LED lighting. GLP group’s property solution department and the Asset Manager’s engineering team initially collect the relevant data and report it to the IMD. The IMD in turn prepares and submits reports regarding such data to the ESG Committee. The installation status of LED lighting at the properties in GLP J-REIT’s portfolio is tracked and monitored internally.
5. Transition to renewable energy. The IMD initially collects the relevant data and reports it to the ESG Committee. The usage rate of electricity from renewable sources in the common areas of the properties in GLP J-REIT’s portfolio is tracked and monitored internally. We ensure energy to be renewable using objective certificates issued by third-party.

Limitations to methodologies and data

The primary limitation to the methodology or data source is the necessity of our reliance on the tenants and GLP group’s property solution department for raw data at the property level. Like many other real estate investment corporations and asset managers, we rely on raw data provided by the tenants, which is initially collected by GLP group’s property solution department, and independent verification of accuracy of such raw data provided by the tenants and collected by GLP group’s property solution department presents challenges. In addition, certain ESG data at the property level provided by the tenants and collected by GLP group’s property solution department is generally updated on an annual basis. Accordingly, property-specific data will therefore not always be fully up to date.

Data at the portfolio level is compiled internally at the Asset Manager, but the data is confirmed by the relevant departments and the compiled ESG data at the portfolio level is verified by a third-party organization.

Limitations to the methodology and data are not expected to affect the attainment of the environmental or social characteristics promoted by GLP J-REIT in any material way.

Due diligence

Prior to GLP J-REIT’s investment in a property, the Asset Manager conducts due diligence on the property, including ESG due diligence, building review and regulatory environmental due diligence. Our ESG due diligence on a property considers, among others, the following ESG factors: (i) any environmental or health and safety certifications; (ii) proximity to wetlands, biodiversity hotspots or other ecologically sensitive areas; (iii) proximity to an archaeological site/site of cultural importance such as a World Heritage Site; (iv) susceptibility to earthquakes, subsidence, landslides, erosion, flooding, or extreme or adverse climatic conditions; (v) proximity to critically polluted areas; (vi) whether the property resulted in physical displacement of affected communities; (vii) impact on vulnerable groups such as internally/previously displaced households, informal right holders, below poverty line households and socially marginalized population; (viii) generation and discharge of untreated wastewater into the environment, and air emissions; (ix) use of hazardous or toxic chemicals; (x) generation and storage of hazardous waste; (xi) high-risk occupational health and safety risks such as working at high altitude, working in confined spaces, high temperature workspace, fire hazards or high noise level; and (xii) litigation or media coverage related to land, labor, public interest, worker compensation, regulatory agencies or protest against the property. In addition, as a part of our building review, we consider current ESG-related certifications of the building and potential for ESG enhancements to the building. For our regulatory environmental due diligence, we engage experts to conduct a soil and environmental contamination survey and review soil and environmental reports in accordance with the Soil Contamination Countermeasure Act of Japan. The due diligence findings related to ESG risks and opportunities are reported by the IMD and reviewed by the ESG Committee prior to their submission to the Investment Committee. During the review, the ESG Committee considers ESG risks and opportunities for the target property and asks the IMD to create action plans to reduce ESG risks and/or capitalize on ESG opportunities presented if necessary.

Engagement policies

We do not generally consider investing in properties that are designated as contaminated areas that require government notification under the Soil Contamination Countermeasures Act of Japan or that do not otherwise meet our environmental standards based on their history of land usage and soil contamination assessment by experts and examination of presence of harmful substances, unless appropriate measures are taken under the Soil Contamination Countermeasures Act or we conclude, after appropriate due diligence review, that any health or other ESG risk is limited. We also review whether the property we may acquire is compliant with applicable law.

When investing in properties using proceeds from our ESG financing, we do not consider properties that do not meet the criteria under our ESG finance framework and do not qualify as Green Certified Assets for our investment. We target to increase the proportion of the Green Certified Assets to 90% or higher of GLP J-REIT’s portfolio based on total gross floor area by the end of FY2025.

In addition, we include certain information-sharing and cooperation clauses in the lease contracts with our tenants in order to monitor energy consumption of our tenants and to facilitate and improve ESG certification of the logistics facility buildings in GLP J-REIT’s portfolio. We plan to include green clauses in all of the lease contracts with our tenants, including the existing lease contracts, by the end of FY2023.

Designated reference benchmark

GLP J-REIT does not have a specific index designated as a reference benchmark to determine whether GLP-J-REIT is aligned with the environmental or social characteristics it promotes.

REMUNERATION POLICIES IN RELATION TO THE INTEGRATION OF SUSTAINABILITY RISKS (SFDR ARTICLE 5 DISCLOSURE)

GLP J-REIT has no employees in accordance with the prohibition on having employees under the Act on Investment Trusts and Investment Corporations of Japan and relies on the Asset Manager to manage and operate the properties in its portfolio. Therefore, the remuneration policies as described below are related to the directors and employees of the Asset Manager.

The Asset Manager has a remuneration policy in place which aims to support its strategies, values and long-term interests, which include compliance with the GLP group’s ESG policy and achievement of ESG key performance indicators and targets. The Asset Manager’s remuneration policy is consistent with the integration of sustainability risks, as follows:

1. Directors. The board of directors approves remuneration for directors within the limits for total remuneration for directors authorized by the general meeting of its shareholders. Remuneration for individual directors is determined through comprehensive assessment that includes corporate performance, individual evaluation and other factors including those related to promotion or achievement of ESG key performance indicators and targets.
2. Employees. The employees of the Asset Manager receive remuneration according to their relative contribution to and expectations for the achievement of management targets including ESG key performance indicators and targets. Bonuses are calculated based on performance, and are determined after deliberation by the board of directors. Bonuses take into account issues including qualifications, personnel evaluations, performance, and attendance including those related to promotion or achievement of ESG key performance indicators and targets.

INTEGRATION OF SUSTAINABILITY RISKS IN THE INVESTMENT DECISIONS, AND THE IMPACT OF SUCH RISKS ON THE RETURNS OF GLP J-REIT (SFDR ARTICLE 6 DISCLOSURE)

We and the Asset Manager address sustainability risks by systematically integrating what we deem to be financially material ESG factors in various stages of our investment decision process. The Asset Manager has established a separate committee for ESG and related matters (the “ESG Committee”) and appointed a Chief Sustainability Officer in April 2021 to effectively review and assess material ESG risks and opportunities.

Our initial investment research includes understanding how our acquisition and operation of the target property impact material ESG factors and how these can affect our reputation, capital value and stakeholders. Our investment research analyzes various ESG factors such as how we can reduce our environmental load, coexist with local communities where we invest and operate GLP J-REIT’s properties, contribute to solving social issues and achieve healthy growth for all stakeholders. The assessment of potential ESG risks and opportunities is guided by our ESG risk rating system that the Asset Manager uses as a part of the due diligence of the target property where the ESG Committee reviews ESG risks and opportunities, assigns an ESG risk rating based on materiality for each ESG risk and opportunity review and an overall ESG risk rating for the target property is analyzed and determined by the Asset Manager’s investment management department. Building on this ESG risk rating system, the ESG Committee analyzes whether to a more detailed follow-up ESG due diligence review and may ask the IMD to create action plans to reduce ESG risks and/or capitalize on ESG opportunities for the Investment Committee’s consideration.

Environmental areas of focus include renewable energy usage, energy and water consumption, greenhouse gas emissions, biodiversity stewardship, pollution and waste management. Social considerations include workplace safety, tenant satisfaction, well-being of tenants and their employees, and community relations including natural disaster countermeasures. From a governance perspective, the key focus is on anti-bribery and anti-corruption policies, avoid conflict of interest, management incentives and corporate culture.

When the Investment Committee makes a final decision to invest in a property, the results of ESG due diligence with action plans (if necessary) for the property reviewed by ESG Committee are incorporated into the overall investment proposal. To the extent possible, the Investment Committee excludes investment proposals with the following ESG issues: (i) physical displacement of affected communities and involuntary resettlement; (ii) activities prohibited by biodiversity conservation legislation of Japan or by international conventions relating to the protection of biodiversity resources or cultural resources, such as Bonn Convention, Ramsar Convention, World Heritage Convention and Convention on Biological Diversity; (iii) location within recognized indigenous peoples’ territories that are deemed customary and/or under traditional ownership; (iv) location within areas that adversely impact cultural heritage sites; and (v) prohibited activities as determined by us such as storage of certain hazardous chemicals and other dangerous materials.

We believe that integrating sustainability factors alongside traditional financial and operational metrics in our investment decision process helps us make a more holistic assessment of a property’s risks and opportunities and is commensurate with the pursuit of superior risk-adjusted returns.

PRINCIPAL ADVERSE IMPACT STATEMENT