Message from the Management

Under the Basic Policy of “Investment in the city,” MHR contributes to the creation and development of cities and solving of social issues

Social Role and Responsibility of Mori Hills REIT Investment Corporation
Mori Hills REIT Investment Corporation (MHR) and Mori Building Investment Management Co., Ltd. (MIM), the asset manager, aim to contribute to the creation and development of cities by providing investment opportunities in high-quality urban assets to investors while maximizing unitholder value through investment focused on the competitiveness and ability to create value of the “City,” as stated in the Basic Policy and Company Mission of MHR and MIM.
Society today is faced with various challenges, and companies are expected to contribute to solving these issues as they conduct business activities. We believe that working on these issues will in fact
lead to increasing our competitiveness.
MHR and MIM aim to contribute to the realization of a sustainable society and maximization of unitholder value in the medium to long term by focusing on ESG (Environmental, Social and Governance) initiatives and investing in high-quality urban assets while striving to improve various social issues.

Identification of Materiality

In order to realize the Basic Policy and the Company Mission, it is indispensable to take actions after sufficiently understanding social change and demand. As such, MHR has identified areas of Materiality after a series of discussions on important issues to be addressed by referring to the Sustainable Development Goals (SDGs), the shared rules for and the goals to be achieved by the international community in the twenty-first century.
Social issues including climate change not only cause problems in people’s daily life but also have a significant impact on MHR’s business activities. The impact of ESG initiatives by a company on the valuation and value of the company has grown every year.
Companies are expected to execute on their business characteristics and strengths to develop a sustainable society, and for MHR, an important initiative is to invest in real estate that excels in BCP and climate change issues, then further improve and enhance it in the course of daily operations. In addition, the funds invested by MHR for property acquisition are utilized by sellers such as Mori Building and other developers to carry out new high-quality development. This also creates a positive cycle by allowing further urban development and eventually solving social issues.
These activities also lead to improvement in environmental issues and the creation of new industries in addition to enhancement of safety, comfort and convenience of tenants and the community. We believe that further promotion of such initiatives will result in the growth of MHR as well as contribute to society and our clients.

Recent ESG Initiatives

Turning to our recent ESG efforts, for the environment (“E”), in order to further reduce greenhouse gases, MHR reviewed its targets in June 2022 and set new ones: From fiscal 2019, a 50% reduction by fiscal 2030 and net zero by fiscal 2050 (Scope1·2 and 3: total emissions). We have completed the introduction of renewable energy electricity in most of the properties we own, and reduced greenhouse gases by 52.7% in fiscal 2023.
As to our efforts on social (“S”) initiatives, while placing importance on the “International Bill of Human Rights” and “Declaration on Fundamental Principles and Rights at Work” of the International Labour Organization (ILO), as well as the “Guiding Principles on Business and Human Rights” of the United Nations, we have implemented various initiatives emphasizing human rights and diversity for our employees and also made efforts to further improve the workplace environment by conducting employee satisfaction surveys using third-party organizations. Because high-quality performance of employees is the source of business success, we regard talent development and other such initiatives as crucial. In addition, in the management and operation of owned properties, we are conducting activities that consider the safety and comfort of tenants and local residents.
With regard to governance (“G”) initiatives, in order to contribute to the realization of a sustainable society and maximize unitholder value over the medium to long term, we believe it is absolutely imperative to remain a company that is trusted by society. We have worked on building fair and effective corporate governance and made efforts to enhance internal control through thorough compliance and risk management. In April 2021, MHR increased its number of directors to five and its ratio of women to 40% and continues to build a diversity-oriented structure.

For Sustainable Growth and Development

Recognizing that the two pillars of enhancing corporate value are continuous profit/asset value growth and contribution to solving social issues, we intend to keep emphasizing dialogue with our stakeholders as we advance on our initiatives.

I would like to ask for your continued support.

Sustainability Promotion System

Our operations connected to sustainability are promoted primarily by the Sustainability Committee established by MIM.

The Chairperson of the Committee is the President & CEO, all general managers and some planning department staff comprise the committeepersons. Various initiatives are implemented based on the Sustainability Promotion Program which is established every fiscal year.

In principle, the Committee meets twice a year and formulates policies and the content of the Sustainability Promotion Program, monitors progress of programs, deliberates on various suggestions from departments, etc. in light of social conditions and the operating status of MHR.

The President & CEO approves the policies and promotion programs, constantly monitors the thorough promotion of sustainability, and establishes and maintains a sustainability promotion structure as a responsible party in promoting sustainability.

Moreover, sustainability-related efforts are reported on periodically to the Board of Directors of both MHR and MIM.
Each Board oversees the status of initiatives for important issues related to ESG and the status of compliance and risk management.

Initiatives throughout the Entire Supply Chain

Promotion of sustainability operations, whether environmental or social, requires initiatives that involve the whole supply chain. We believe that joint initiatives with various stakeholders with aligned values are necessary.
By actively encouraging interactive communication with stakeholders such as tenants, local residents, property management companies and with our sponsor Mori Building, and by aligning our values, we aim to contribute to the realization of a sustainable society.

Important ESG Issues (Materiality)

Materiality Identification Process

MHR identified areas of Materiality in 2020 through the following process.

*1

The SDGs (Sustainable Development Goals) are 17 goals included in the Agenda 2030 for Sustainable Development which was adopted by the United Nations Sustainable Development Summit held in September 2015.

*2

ISO 26000 is an international standard for organizational social responsibility published in 2010 by the International Organization for Standardization (ISO).

*3

The GRI Standards is an international standard related to sustainability reporting established in 2016 by Global Reporting Initiative (GRI), an international non-profit organization.

*4

SASB (Sustainability Accounting Standards Board) is a U.S. non-governmental organization that proposes standards for sustainability information disclosure for companies. SASB develops sector-specific and industry-specific sustainability accounting standards (SASB standards) for companies for when they disclose sustainability information to investors.

Depiction of Evaluating the Importance of Issues (Critical Issue Matrix)

Issues with high importance have been designated as “areas to respond to with priority” and identified as Materiality (See below for MHR’s Materiality)

MHR’s Materiality

Stakeholder Engagement

MHR conducts its business activities by engaging with various stakeholders including its employees, tenant and local communities, property management (PM) companies, and unitholders. MHR aims for sustainable growth by proactively communicating with its stakeholders to understand and respond to their expectations and requests.