Sustainability Management

JHRA believes that sound management, which enables coexistence and harmony with society and the environment, contributes to the medium- to long-term enhancement of investment value for the investment corporation and private fund that we are entrusted with asset management. Accordingly, we are committed to improving sustainability through the consideration of Environmental, Social, and Governance (ESG) issues.

JHRA and Japan Hotel REIT Investment Corporation (JHR) established a Sustainability Policy in December 2017 and are pursuing a series of measures relating to ESG, including reduction of our environmental impact, consideration of all our stakeholders, etc.

In December 2021, in order to further enhance our ESG initiatives, JHR defined its materiality and is promoting measures to address various issues. Moreover, we believe that appropriate disclosure of these initiatives and building a relationship of trust with our stakeholders will lead to JHRA and JHR's growth over the medium to long term.

Sustainability Policy

  1. Monitoring and improvement of environmental performance in our portfolio
    We promote monitoring environmental performance such as energy consumption, etc. in our portfolio. Also, we share our goals with hotel lessees and operators, and strive to continuously improve environmental performance through optimizing operations and management as well as through facility renovation, etc. Furthermore, we seek assessment from third-party institutions where appropriate.
    We take environmental risks into consideration to make investment decisions and to monitor operations of our portfolio.
  2. Promotion of comfortable, healthy, secure and safe hotels
    We care safety, health and barrier-free access etc. of our hotels and promote initiatives to have stronger resilience against natural disaster, etc.
    We take safety, health and well-being factors into consideration upon making investment decisions and monitoring operations of hotels in our portfolio.
  3. Promotion of ESG in value chains
    We ask our hotels to understand and to cooperate on sustainability initiatives. At the same time, we promote procurement of products and services with environmental and social considerations.
  4. Consideration for and contribution to local communities
    We strive to contribute to the sustainable development of local community through cooperation with hotel lessees and operators as well as communication and collaboration with local residents and local governments in surrounding communities where hotels are located.
  5. Initiatives for our officers and employees
    We establish work environment that allows diverse ways of working with work-life balance into consideration. We also consistently provide opportunities of professional education and training, with the aim to improve abilities and skills of our employees and raise awareness on sustainability.
  6. Compliance as corporate citizens
    We comply with related laws and regulations as well as social norms, etc. and promote ethical and sincere business activities. Additionally, we strive to reduce governance risks through respecting fundamental human rights at our business and through establishing a proper compliance system.
  7. Improvement of transparency and engagement with our stakeholders
    We disclose financial information as well as ESG related information in a timely and appropriate manner. We will sincerely listen to voices and opinions from our stakeholders through interactive communication, and utilize them to improve our initiatives.

Initiatives for Climate Change

Our Awareness of Climate Change

In 1992, "United Nations Framework Convention on Climate Change (hereinafter called "Convention")," with the ultimate goal of stabilizing the concentration of greenhouse gases in the atmosphere was adopted, and it was agreed to take action against climate change worldwide. Based on the Convention, the Conference of the Parties to the United Nations Framework Convention on Climate Change (hereinafter called "COP"), was held every year since 1995. At COP 21 in 2015, all 196 countries, including developed and developing countries, which are members of the Convention, adopted the "Paris Agreement," which sets a common reduction target (strive to limit global warming to well below 2℃ and make additional effort to limit it to 1.5℃). As a result, recognition and initiatives of tasks for climate change became more concrete.
Japan has also been actively working on climate change issues and announced in 2020 that Japan will reduce greenhouse gas emissions to virtually zero by 2050 (hereinafter called "Carbon Neutral Declaration") based on the Paris Agreement. Carbon neutrality is also positioned as a basic principle in "Act on Promotion of Global Warming Countermeasures," and it is expected to accelerate decarbonization initiatives, investments, and innovation as well as to further promote decarbonization initiatives utilizing renewable energy in local areas and decarbonization management by companies.
We believe that the climate change action, which are being discussed as a global initiative, are not restrictions on economic growth but are key to generate a major shift in industrial structure and strong growth through drastically transforming the economy and society, encouraging investment and improving productivity. Therefore, we recognize that properly identifying, assessing, and managing the "risks" and "opportunities" caused by climate change is essential to enhancing business resilience of JHR and ensuring our sustainability, and has positioned action to climate change as one of JHR's materialities (key issues).

Expression of Support for the TCFD Recommendations by the Asset Management Company

TCFD is the "Task Force on Climate-related Financial Disclosures" established by the Financial Stability Board (FSB) in 2015 to encourage companies to disclose appropriate information and to encourage investors and others to make appropriate investment decisions, and recommended disclosure themes within the framework in its final report in 2017.
Based on the recognition that "climate change will cause dramatic changes in the natural environment and social structure and is important issue that will have a significant impact on the management of investment corporations," JHRA, which is the asset management company of JHR, judged that it is important to promote disclosure based on the TCFD recommendations and expressed its support for the TCFD recommendations in November 2021.
At the same time, JHRA joined the TCFD Consortium, an organization of Japanese companies that support the TCFD recommendations.
Through the activities of the TCFD Consortium, JHRA promotes the study of effective information disclosure and initiatives to link the disclosed information to appropriate investment decisions by financial institutions, etc., while striving to expand appropriate information disclosure of JHR.

<Disclosure framework of TCFD>

Recommended Disclosure Themes Governance Strategy Risk Management Metrics and Targets
Description
(Summary)
The organization's governance around climate-related risks and opportunities The actual and potential impacts of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning The processes used by the organization to identify, assess, and manage climate-related risks The metrics and targets used to assess and manage relevant climate-related risks and opportunities
tcfd

Initiatives for Employees

In order to maintain its professional expertise and continue performing stable asset management, JHRA believes it must be a company at which highly motivated, exceptional human resources are able to achieve excellent performance over the long term. It provides an appealing, pleasant work environment where exceptional employees remain highly motivated to enhance their quality and have incentives to continue working there in the medium to long term.

  1. Initiatives for HR Development
    Viewing human resources as its most important asset, JHRA supports employees' career development by implementing various development programs that enable each individual to grow through their work while expressing their individuality and achieving personal fulfillment.

    HR development (professional skills development)

    With the aim of cultivating REIT and real estate management professionals, we recommend and support the acquisition of professional certifications such as ARES (Association for Real Estate Securitization) Certified Master (an educational program that systematically teaches practical, specialized knowledge in the real estate and finance fields) for all officers and employees, and throughout the year, the company covers the full cost of participation in training and seminars relating to practical knowledge, industry trends, complying with laws, etc.

    Certification Holders (as of December 31, 2023)

    • Real Estate Broker
    20 employees
    • Real Estate Appraiser
    3 employees
    • Cerfitied Building Administrator
    3 employees
    • Official Real Estate Consulting Master
    2 employees
    • ARES Cerfitied Master
    14 employees

    HR development (general skills development)

    In order to support efforts aimed at acquiring the specialized expertise and qualifications required to carry out the responsibilities of their position and improve their skills, we offer training programs conducted by external organizations to all employees, as well as supporting expenses for personal development using the Cafeteria Plan program.

    HR development (leadership development)

    We regularly conduct various training programs aimed at acquiring the abilities and skills required at each level of the organization for the purpose of cultivating the next generation of management and leader.

    <Examples of recent training programs>

    • June 2023
    Implementation of training for management
    • October 2023
    Attendance at external training for female managers
  2. Initiatives for Employee Health and Well-being
    With the purpose of ensuring employees' mental and physical health and establishing a comfortable work environment, JHRA promotes work-life balance and initiatives to improve mental and physical health and pursues initiatives to enhance job satisfaction.

    Establishment of Health Committee

    Even though the size of our workplace does not oblige us to establish under the Industrial Safety and Health Act, we have established a Health Committee with the aim of improving Standards of labor health for employees and maintaining and promoting wellness. The committee, which meets once a month, reviews matters including status of work by all employees and the well-being and safety of the work environment, and after meetings, advice from an occupational health physician is distributed to all employees.

    Encouraging regular health checks, flu shots, etc.

    In general, we subsidize costs related to regular health checks/screenings once a year and costs related to flu shots and we encourage employees to take health check and vaccinations by these measures. Moreover, we implement a system that enables those who desire it to consult with occupational health physician about mental health issues as needed.

    Establishment of employee consultation service

    For the purpose of protecting employees' human rights and strengthening compliance management as well as for prevention, early detection, and correction of conduct that violates laws and regulations, fraud, harassment, etc., we have set up whistleblowing regulations that apply to all employees and established an employee consulting service. We set the Compliance Office as an in-house contact point and an external lawyer as an external contact point. Employees may report or consult with consulting service anonymously.

    Consideration of human rights, diversity, and equality of opportunities

    Our in-house regulations stipulate that acts of discrimination based on ethnicity, religion, gender, age, origin, nationality, etc., shall not be allowed. Through activities such as compliance training, we promote respect for various perspectives and values and pursue awareness activities to eliminate discrimination and harassment.

    Preparation of environmental where senior personnel can be active

    We have introduced a re-employment system for employees aged 60 and over who wish to continue working. We have established a labor environment where senior personnel may remain active after the official retirement age by leveraging their work experience and expertise.

    Preparation of office environment

    Our offices are amply equipped with common spaces that promote communication between employees, and spaces are also provided for individuals to rest. Furthermore, we are taking steps to implement a comfortable work environment, such as hiring an external specialist company to perform periodic air cleaning maintenance in order to ensure excellent air quality.

    Pension plans and fund installment program under NISA at workplace (Employee Stock Purchase Plan)

    To help employees build up assets for the future and enjoy a comfortable standard of living after retirement, we have introduced a defined contribution pension plan (401k) as well as a defined benefit pension plan and other measures.

    Furthermore, with the purpose of maintaining officers' and employees' motivation for improving unitholder value over the medium to long term by having the same perspective as unitholders, we have introduced fund installment program under NISA at workplace for all officers and employees, under which the company provides contributions equal to a certain percentage of individuals' contributions as an incentive. We made possible to acquire investment units of JHR by officers and employees under the program while paying attention to insider information.

    Implementation of various benefits (programs for all officers and employees)

    • Sick leave *Leave which may be taken separately from annual paid vacation
    • Length-of-service compensation program
    • Congratulatory/condolence payment program
    • Cooperating with welfare service providers
    • Flex hours, etc.
  3. Communication with Employee
    JHRA pursues a two-way dialogue between management and employees on matters such as working styles and strives to create job satisfaction and make work more pleasant.

    Implementation of employee satisfaction surveys

    In order to build a more positive relationship between management and employees, we conduct an employee satisfaction survey of all employees once a year (surveys are conducted by an external organization once every three years). Based on the survey results, we examine and implement measures for improvement. Furthermore, we strive to become a better company by facilitating bi-directional communication between management and employees, which includes using employee suggestions for enhancements gathered during workshops.

    <Latest response rate>

    • FY2022:100%
    • FY2023:100%

    <Measures taken based on survey results>

    • Company-wide introduction of system applications to improve work efficiency
    • Provision of laptops for working from home, portable equipment for business trips, etc.
    • Establishment of internal award system
    • Implementation of rank-based training, etc.

    Target management and personnel evaluation process

    Superiors and their subordinates together review the status of the targets set by employees at the start of the fiscal year and their performance during the year through regular communication. At the end of the year, employees' achievement of their targets, performance, and use of their skills are reviewed and a follow-up meeting is held. We have instituted a PDCA process to develop the capabilities of our employees. In this process, we share improvement issues through interviews, exchange ideas to move to the next step, and set goals for the next year and the mid to long term. Moreover, in the process, all employees set ESG-related targets. Under this process, we will implement fair personnel evaluations and ensure employees are treated and assigned appropriately. In principle, these evaluations are reflected in the year-end bonuses for all employees and in the salary scales for the next fiscal year.

    Individual meetings with top executive

    As a venue for consultation and discussion about the details of individual employees' assignment, career plan, workplace-related concerns, etc., top executive hold one-on-one meetings with all employees once a year. Top executive listen to employees' voices and use them as a reference for the aim of supporting each employee's personal fulfillment and creating a more pleasant work environment.

  4. Basic Employee Data
    Basic data on JHRA's employees is shown below.

    Data related to employees (as of the end of each fiscal year)(*1)

    1. Basic data on employees

    Item FY2021 FY2022 FY2023
    Number of employees 36 41 49
    By gender (ratio) Male 24 67% 28 68% 36 73%
    Female 12 33% 13 32% 13 27%
    Average length of service 5 years 7 months 5 years 7 months 4 years 12 months
    Number of seconded employees(*2) 1 1 1

    2. Promoting of Diversity

    Item FY2021 FY2022 FY2023
    Number of Directors(*3) 7 7 7
    By gender (ratio) Male 6 86% 6 86% 6 86%
    Female 1 14% 1 14% 1 14%
    Number of employees in managerial position (Head and Deputy Head of Group or above) 12 13 14
    By gender (ratio) Male 11 92% 10 77% 11 79%
    Female 1 8% 3 23% 3 21%
    Number of employees
    over 60 years old
    2 2 1

    3. Health and safety of employees, etc.

    Item FY2021 FY2022 FY2023
    Percentage of paid leave taken(*4) 57% 66% 65%
    Number of Health Committee Meetings Held 12 11 12
    Number of interviews with
    industrial physicians
    21 8 6
    Number of employees took parental leave (Number of male employees took parental leave) 0 3 (1) 0
    Number of employees took
    nursing leave
    0 0 0
    Number of occupational accidents 0 0 0
    (*1) Representative Director, part-time Directors and Auditors are excluded.
    (*2) Seconded employees from non-sponsor-related parties for the training purpose.
    (*3) Representative Director, part-time Directors and Auditors are included.
    (*4) Exclude employees joined the company during the year.
  5. Initiatives under Impact of COVID-19
    The COVID-19 pandemic has significantly impacted daily life, social activities, and business, prompting reconsideration of how employees work and communicate. JHRA is striving to ensure employees' safety and peace of mind in the context under the pandemic, and we have implemented various initiatives aimed at making work more flexible and comfortable.

    Implementing a flexible work system

    Flexible work system, recommending staggered commuting times, setting and managing attendance rate, rotation system to work at office, establishing behavioral guidelines based on the pandemic situation, recommending online meetings, etc.

    Changing office specifications

    Introducing an online meeting system for all conference rooms, practicing social distancing of seats while attending meetings, setting limits on the number of people using conference rooms, installing partitions, etc.

    Employee health management

    Conducting regular PCR tests (voluntary), providing workplace vaccinations (voluntary), installing air purifiers and clinical thermometer, distributing infection prevention gear (e.g., disinfectant spray, masks) to all officers and employees, etc.

    Ensuring the well-being of working from home

    Loaning laptops and cell phones, subsidizing the cost of buying monitors and headsets, etc.

Please see the website below for specific sustainability initiatives at JHRA and JHR.

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