Sustainability Management

Sustainability Policy

The AEON Group has adopted the AEON Sustainability Principle, a policy for the entire group aiming to achieve further progress in the development of the sustainable society. Based on this principle, the AEON Group is pursuing a course of sustainable management while addressing its priority agenda, including the "realization of a zero-carbon society," "conservation of biodiversity," and "promotion of resource recycling" for the environment. The agenda also includes social issues to be addressed such as the "development of products and stores that are capable of meeting people's expectations in society," "embedding respect for human rights across business operations," and "collaborations with local communities."

Furthermore, in recent years, the need for care and consideration over Environmental, Social and Governance-related issues (hereinafter referred to as "ESG") has started to gain widespread recognition in the world of asset management. This reflects the idea, based on factors such as the toughening of environmental regulations and the shifting awareness of tenants and customers, that consideration for ESG issues is imperative to sustain and enhance property value over the medium to long term.

With its basic philosophy of contributing to the enrichment of people's lives and local communities through investment in retail facilities and related properties, the Investment Corporation aims to ensure stable income in the medium to long term by investing in assets that form the backbone of local communities and their lifestyle infrastructure. Based on the idea that consideration for ESG in all aspects of work and cooperation with stakeholders to facilitate it--are important in order to achieve the realization of these philosophies and goals, the Asset Manager has formulated a Sustainability Policy, and is working towards its implementation.

Environment

1. (1)In order to achieve the realization of a low-carbon society, we will work to continuously improve energy efficiency at the retail facilities and other property assets that we manage, and to reduce emissions of greenhouse gases through the use of renewal sources of energy.
2. (2)We will promote peaceful coexistence with the natural environment by paying consideration to the conservation of ecosystems, and through tree planting activities and other real estate management initiatives at the retail facilities and other property assets that we manage.
3. (3)In order to achieve sustainable use of resources, we will work towards conservation and recycling of resources through the promotion of water saving and the 3Rs (Reduce, Reuse, Recycle) with regard to the use of resources at the retail facilities and other property assets that we manage.
4. (4)We will observe and conform to environmental-related laws and regulations, etc., and endeavor to prevent environmental pollution.

Cooperation with Stakeholders

1. (1)By carrying out education and training with regard to environmental issues, we will endeavor to raise the environmental awareness of our corporate officers and to pay care and attention to the diversity and work life balance of our employees.
2. (2)By utilizing the total, comprehensive power of the AEON Group, we will endeavor to provide comfortable work environments to the employees of end tenants/associates taking residence at the retail facilities and other property assets that we manage, as well as those of other partner companies, and work to build a sound and healthy cooperative relationship.
3. (3)In order to facilitate the advancement of ESG initiatives across the entire supply chain for our real estate operations, we will endeavor to implement a green procurement ^*1 strategy.
4. (4)We will provide support for volunteer activities and places/opportunities for people from local communities to gather for educational and information exchanges, and endeavor to cooperate with communities as a hub for reconstruction efforts in times of disaster.
5. (5)We will proactively disclose information regarding ESG issues to investors and endeavor to communicate openly with them. We will also work continuously towards obtaining Green Building certification ^*2 at the retail facilities and other property assets that we manage.

Materiality (Key issues)

Materiality Matrix

Reflecting the expectations given by stakehloders, the Investmet Corporation and AEON Reit Management, the Asset Management Company assessed important ESG materialities that may cause a significant financial impact in the mid to long term period. In addition, the assessment results were mapped on the two axes of "importance for stakeholders" and "importance for the company", and priority topics were set among all the materialities. Based on the Materiality Matrix, the Investment Corporation and the Asset Management Company will proceed with strategy formulation and promotopm of specific measures for the priorities.

Together with the Asset Management Company, the Investment Corporation will consider and disclose specific measures and KPI for the 8 priorities set among 14 topics listed in the Materiality Matrix.

ESG		Topics	Details	SDGs
Priorities	●E	Opportunities in Green buildings	We will promote reductions in carbon dioxide emissions, water usage, and waste in our properties. At the same time, we will actively promote the acquisition of green building certification for our properties.
		Climate change	We will identify and manage the climate change risk that affect our properties.
		Biodiversity and land use	We will promote biodiversity conservation by working with the AEON Group.
	●S	Local community engagement and sustainable development	We will contribute to the sustainable development of local communities by acquisition and owning the properties.
		Safety and security of owened properties	We will act to promote safe and security of owned properties in order to protect our customers' wellness and comfort.
		Human capital development	AEON Reit management, the Asset Management Company, will continue to develop human resources to ensure the knowledge and abilities required to secure our owned properties.
	●G	Corporate governance	We will strengthen our corporate governance aiming to increase long-term unitholder value.
		Compliance and risk management	We will comply with compliance and promote appropriate risk management.
	●E	Master lessee Engagement	We will engage with Master lessees for decarbonization.
		Sublease tenant engagement	We will engage with sublease tenants for decarbonization.
		Energy management of the Asset Management Company	AEON Reit management, the Asset Management company will act to reduce energy consuption.
		Water management	We will conserve water resources around our properties.
	●S	Fair and healthy environment of workplace	AEON Reit Management, the Asset Management Company, will provide fair and decent working place for the employees.
		Child labor and forced labor	AEON Reit Management and other related companies will prevent child labor and forced labor in the value chain.

Materiality Assessment Process

1. Step1

   Identification of the issues

   • Summarized the expectations given by stakeholders outside and inside the company such as the AEON Group, master lessees, custodians, agents, end tenants, customers, investoers and employees of the Asset Management Company.
   • Identified important issues by referring GRI standards and SASB.

2. Step2

   Assessment

   • Created Materiality Matrix by assessing the important issues on two axes, the importance to stakeholders and to AEON REIT.
   • Referred to the Investment Corporation's and also the AEON Group’s company philosophy/policies in the assessment.

3. Step3

   Discussion and approval by the management

   • The items evaluated in Step 2 were evaluated by experts and reported at the Sustainability Promotion Committee of the Asset Management Company.
   • The final proposal was resolved by the board of directors of the Asset Management Company and reported at the board of directors of the Investment Corporation.