Environment Transition Plan Toward Net Zero
OJR’s point of view
In 2021-22, OJR conducted scenario analyses based on TCFD recommendations to identify the impact of climate change on its business, identifying business risks and opportunities. The scenario analysis results suggest that the 1.5°C and 4°C scenarios could have a moderate impact by 2030, requiring measures to mitigate these impacts. OJR supports the Paris Agreement and has established its 2050 net zero and 2030 reduction targets, obtaining approval from SBTi for each. Regarding the 2030 target, the goal includes Scope 1 (S1), Scope 2 (S2) direct emissions, and Scope 3 (S3) tenant emissions, including those managed by OJR, in line with SBTi’s near-term requirements. It is proceeding systematically with measures to achieve the “OJR 2030 Target.” Achieving net zero is a long-term effort that will take over 20 years, and there are inherent challenges that OJR cannot overcome alone. Therefore, we have formulated a medium-to-long-term action plan as a “Transition Plan Toward Net Zero,” which will be addressed in phases. By 2030, we will focus on areas where OJR has management responsibility, promoting energy-saving renovations and introducing renewable energy. Post-2030, efforts will be made in collaboration with the entire value chain, including tenants.
Governance
The President of OAM is responsible for addressing climate-related challenges and achieving net zero for OJR. OAM has established a Sustainability Committee comprising directors and executive officers to deliberate on ESG issues, including climate change, and report on the results of their actions.
Identification of Risks and Opportunities and Scenario Analysis
Scenario analysis based on TCFD recommendations analyzed the impact on earnings for 2030, with the 1.5°C scenario estimated to have an impact of 1–8% annually on earnings (operating income) and the 4°C scenario estimated to have an effect of around 3%.
Please click here for more details
| Risk items | 4℃ | 1.5℃ | |
|---|---|---|---|
| Opportunity |
Changes in customer behavior (Rent increases for properties with higher environmental performance level) |
0 bn yen | 0.2 bn yen |
| Transition Risk |
Changes in customer behavior (Decreased rent revenue of properties for which environmental certification is not acquired) |
0 bn yen | -1.26 bn yen |
|
Changes in customer behavior (Partial avoidance of net revenue fall due to increased certification acquisition rate) |
0 bn yen | 0.21 bn yen | |
| Carbon Price (Carbon tax) | 0 bn yen | -0.61 bn yen | |
| Carbon Price (Avoidance of carbon tax due to achieving reduction targets) | 0 bn yen | 0.26 bn yen | |
| Electricity price (Changes in electricity price) | 0.02 bn yen | -0.17 bn yen | |
| Response to GHG emission regulations (Energy-saving repairs cost and return of electricity bills by green lease) |
-0.4 bn yen | -1.01 bn yen | |
| Response to GHG emission regulations | 0.25 bn yen | 0.64 bn yen | |
| Physical Risk | Increase in average temperature (Air conditioning costs) | -0.52 bn yen | -0.36 bn yen |
| Intensification of extreme weather (Flood Damage) | -0.13 bn yen | -0.04 bn yen | |
| Intensification of extreme weather (Typhoon Damage) | -0.01 bn yen | -0.01 bn yen | |
|
Intensification of extreme weather (Damages compensated by insurance) |
-0.01 bn yen | -0.03 bn yen |
This estimate is based on parameters set using multiple scenarios presented by major institutions, considering OJR’s performance and future impact. The accuracy of the figures is not guaranteed. The assumed countermeasures are based on impact estimates and are not necessarily planned or decided for execution.
Roadmap Toward 2030 Targets and 2050 Net Zero
OJR’s Goals
To achieve the goals of the Paris Agreement, we are working toward the long-term target of achieving Net Zero by 2050.
(1) By 2050, reduce total GHG emissions (Scope 1, 2, 3) across the entire value chain by more than 90% compared to 2021
→ SBTi SME version (for small and medium-sized enterprises) Net Zero target certification obtained
(2) As the “OJR 2030 Target,” reduce total GHG emissions from Scope 1, Scope 2, and Scope3 (Category 13 under OJR’s management authority) by 42% compared to 2021 by 2030.
→ Of this, the portion of GHG emission reductions for Scope 1 and Scope 2 has been certified as an SBTi SME version near-term target.
About the Measures
We aim for both stable business growth and achieving Net Zero by combining energy conservation, energy creation, and introducing renewable energy. Regarding energy conservation, we focus on ongoing initiatives for LED installation and air conditioning renewal in shared and private areas. These will be addressed as part of the regular maintenance plan. However, we will utilize internal reserves for LED installation in private areas as it is implemented when tenants are replaced. For renewable energy, we will introduce and expand it in a planned manner while monitoring fluctuations in electricity prices and the impact on utility costs. If the plan has any shortfalls, we intend to use non-fossil certificates. All these measures will be handled within the utilities budget management. We are also advancing the introduction of Sustainability-Linked Loans linked to the “OJR 2030 Target.” This not only serves as an incentive to achieve OJR’s target but also helps gain understanding and support from financial institutions regarding OJR’s activities, thereby contributing to the spread and expansion of sustainability finance.
Roadmap
| Target Year | 2030 (Mid-Term Target) | 2050 (Long-Term Target) | |
|---|---|---|---|
| Scope | Scopes 1 and 2, as well as items managed by OJR under Scope 3 Category 13 | Scopes 1, 2, and 3 (all) | |
| Reduction Targets | 42% reduction (considering a 3% annual increase in emissions due to expansion of asset size, etc.) | Level of Contribution to Reduction | 90% reduction (considering a 3% annual increase in emissions due to expansion of asset size, etc.) |
| Countermeasures Anticipated Measures |
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22% |
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51% |
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27% |
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Energy creation: Initiatives to generate energy on one’s own, such as through solar power generation.
Progress of Metrics and Targets
The GHG total emissions (Scope 1, Scope 2, and Scope 3) that form the basis for the “2050 Net Zero Target” decreased by 3.4% in 2024 compared to the baseline year of 2021.
Regarding the “OJR 2030 Target” (Scope 1, Scope 2, and Scope 3 Category 13 under OJR’s management), a reduction of 25.4% was achieved in 2024 compared to the baseline year of 2021. The portion of the “OJR 2030 Target,” excluding emissions from fluorocarbons, is also the SPT (target) for the Sustainability-Linked Loan, and incorporating the GHG reduction element into financing serves as an incentive to achieve the “OJR 2030 Target.”
Although investing in obtaining Green Building certifications and energy-efficient renovations may be costly in the short term, we believe it will contribute to future earnings in the medium to long term, so we will continue investing.
| Details | Unit | FY2021 | FY2022 | FY2023 | FY2024 | FY2030 | ||
|---|---|---|---|---|---|---|---|---|
| As of 2023 | As or 2023 Expected AUM(CAGR3%) | 100 million yen | 6,932 | 7,140 | 7,354 | 7,575 | 9,045 | |
| OJR 2030 Target | Scorpe1,2 and 3 (Managed by OJR) | t-CO₂e | 50,961 | 48,556 | 46,283 | 43,826 | 29,557 | |
| Actual records regarding environmental targets | GHG total emissions | t-CO₂e | 105,472 | 107,497 | 100,988 | 101,876 | - | |
| OJR 2030 Target Scorpe1,2 and 3 (Managed by OJR) |
t-CO₂e | 50,961 | 50,148 | 44,463 | 38,011 | - | ||
| Reduction rate compared to 2021 | % | - | 1.6% | 12.8% | 25.4% | 42% | ||
| Introduction rate of renewable energy | % | 2.8% | 8.6% | 12.2% | 22.7% | - | ||
| Green building certification floor area coverage ratio | % | 83% | 84% | 82% | 82% | Over 80% | ||
| Sustainable finance ratio | % | 4.9% | 10.4% | 21.1% | 31.7% | - | ||
| Financial performance | AUM(total acquisition price) | Million yen | 688,969 | 688,361 | 696,178 | 724,564 |
2021(39th and 40th financial period) |
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| Operating revenuse | Million yen | 47,376 | 51,791 | 54,502 | 51,852 | |||
| Operating revenuse from green building certified properties | Million yen | 29,957 | 36,975 | 38,797 | 39,975 | |||
| Ratio | 63% | 71% | 71% | 77% | ||||
| DPU(yen) | Per a year | 7,013 | 7,920 | 7,646 | 7,811 | |||
| GHG emissions intensity (base on AUM) | t-CO₂e/Million yen | 0.2 | 0.2 | 0.1 | 0.1 | |||
| GHG emissions intensity (base on revenue) | t-CO₂e/Million yen | 2.2 | 2.1 | 1.9 | 2.0 | |||
Energy Consumption Status
Energy consumption is calculated based on the GHG Protocol.
Please click here for detail on GHG emissions
Engagement
Value Chain Engagement
Achieving the 2050 Net Zero Target requires the entire value chain to move toward Net Zero. OJR also promotes engagement to encourage PM, BM, tenants, and other stakeholders to advance their initiatives.
- For PM and BM companies, we regularly hold briefings and study sessions to ensure understanding of OJR’s stance on climate change and set targets, facilitate the reporting of environmental data, and coordinate responses during renovations.
- For tenants, some have been requested to consider introducing renewable energy into tenant-managed areas, and discussions have been initiated. Most tenants have signed Green Leases, creating a situation where sustainable initiatives can be pursued collaboratively. Moving forward, we aim to promote collaboration further while ensuring an understanding of OJR’s initiatives and inquiring about the tenants’ needs for sustainable efforts.
- Understanding and support from unitholders and financial institutions are also critical. This report discloses information about our climate change and sustainability initiatives, IR-related materials, website, etc. Additionally, we seek more profound engagement with financial institutions through sustainability finance.
Policy Engagement
Government policies play a critical role in ensuring a Net Zero society’s prompt and reliable realization. OJR’s transition roadmap includes expectations for policy-driven initiatives, such as promoting the adoption of renewable energy, decarbonizing energy use, and reducing carbon emissions in the construction and waste disposal industries. OAM engages in policy advocacy through its participation in initiatives and recommendations to the government. It also organizes individual dialogues with relevant ministries to advance efforts toward achieving a Net Zero society.
(Results)
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Selected as a target company for the Ministry of the Environment’s scenario analysis support project OJR’s scenario analysis case is included in the “Practical Guide for Scenario Analysis, 2022 Edition” (Pages 95~103).
https://www.env.go.jp/content/000120595.pdf (Written in Japanese) -
Policy engagement through proposals for “Achieving Net Zero in Japan” by PRI (Principles for Responsible Investment), which OAM participates in.
https://www.unpri.org/download?ac=19676 (Written in Japanese)
Third-Party Verification
Please click here for the Environmental Information Independent Verification Report
Expansion of Risk Analysis and Evaluation Methods
To ensure the transition toward 2050, we will continue to conduct continuous evaluations using CRREM to align OJR’s performance with CRREM pathways regarding transition risks for owned properties.