Initiatives towards Climate Change

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We recognize that climate change is a material global issue and medium - to long-term risk, and OJR is working on mitigation of climate change by reducing greenhouse gas emissions and adaptation of climate change in order to create opportunities while decreasing impacts as we move toward a decarbonized society together with ORIX Asset Management Corporation, the asset management company of OJR.

Supporting the TCFD Recommendations

ORIX Asset Management Corporation, OJR's asset management company, has signed off as a supporter of the Task Force on Climate-related Financial Disclosures (TCFD) launched by Financial Stability Board (FSB) and joined the Japan TCFD Consortium in October 2019.

The TCFD has published recommendations that encourage companies to disclose the financial implications of climate-related risks and opportunities to stakeholders including investors.

In fall 2020, ORIX Asset Management Corporation was selected by the Ministry of the Environment as a participant in the “Project to Analyze Scenarios of Climate Risks and Opportunities in Accordance with the TCFD in FY2020.“ We conducted scenario analysis and assessment in accordance with the TCFD recommendations under the consultation from Deloitte Tohmatsu Consulting LLC.

Click here to view details about the TCFD recommendations and here to view about the TCFD consortium.

OJR's Governance for Climate Change

ORIX Asset Management Corporation (OAM), OJR's asset management company, has established a Sustainability Committee to systematically proceed with initiatives based on our ESG policy on an ongoing basis and deliberate on climate change and other issues as one of the important ESG-related issues.
The Sustainability Committee is composed of OAM’s President and CEO (chairman of the committee) and the officers in charge of each department, including all other directors. They meet four or more times per year in principle, and receive reports on initiatives such as information sharing regarding sustainability, progress in targets and evaluation analysis as well as deliberations on ESG-related policies, targets, activity plans and other important matters.
Activity reports and future related ESG issues including climate change are reported to the board of directors of OJR once a year.

Risk Management

ORIX Asset Management Corporation (OAM), the asset manager of OJR, has established basic risk management policies and defined major risks on “Risk Management Rules”, and reviewed “Risk Library” which summarizes risk assessment every year. Based on this, OAM formulates “Risk Compliance Program” as an annual plan regarding risk management and implement risk control. Transition risks and physical risks related to climate change are also included on this and OAM is working on “long-term climate change risks and analyze its impact” as one of priority areas.

Strategy: Scenario Analysis

Launch to Scenario Analysis

The TCFD is a climate change initiative that requires companies to improve their governance and risk management, and to disclose their financial impact.
Specifically, companies are required to assess their own climate-related risks and opportunities using climate scenarios such as the 2°C target, reflect them in their management strategies and risk management, and clarify and disclose their financial impact. In assessing impacts and developing strategies, it is recommended to use a method called "scenario analysis," which assumes multiple future scenarios and examines the risks and opportunities if these scenarios were to actually occur, given that climate change is a medium- to long-term risk under uncertain circumstances.
ORIX Asset Management Corporation, the asset manager of OJR that supports the TCFD, was selected by the Ministry of the Environment as a participant in the “Project to Analyze Scenarios of Climate Risks and Opportunities in accordance with the TCFD in FY2020“and conducts scenario analysis.

Scope of Scenario Analysis

In the above project, the asset management of ORIX JREIT Inc. (OJR) managed by ORIX Asset Management Corporation was subject to the scenario analysis. The value chain of OJR is shown in the diagram below. In this project, the analysis is limited to the portion of assets held and managed based on the assumption that no changes in the portfolio such as acquisitions and dispositions for all 111 properties held as of the end of October 2020.
Therefore, the discussion presented here is limited, does not show the overall impact and it is a trial calculation based on a hypothesis.

Applied Scenario

Two scenarios were selected ; “4℃ scenario” of a 4℃ global warming, and “2℃ scenario” of a 2℃ global warming as of 2050. (Both transition risks are assumed as of 2030)

We assume the following two worldviews in the scenario analysis.

  • The term indicates an acronym of Tokyo Cap and Trade Program which represents mandatory reduction in overall greenhouse gas emissions and emissions trading program.
  • The term indicates an acronym of Net Zero Energy House/Net Zero Energy Building which aims to generate enough electricity for its consumption while saving significant energy.
  • The term is an acronym of Greenhouse Gas.

Estimated Business Impact

Metrics & Targets

Click here to view details about metrics and targets on climate change.

Further Steps to the TCFD Recommendations

This scenario analysis is limited to a part of the business scope and does not evaluate the overall impact. We recognize the necessity of further study and deepened assumptions and approaches for individual items. Japan is also accelerating the movement toward "Net Zero" as well as in global, and we will continue working on promoting information disclosure required by the TCFD taking into account policy trends.