Environmental InitiativesSUSTAINABILITY

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Engaging to our social mission of improving the environmental performance of the properties we manage, we believe that reducing the environmental impact of such properties including energy consumption, GHG emissions, water consumption and waste management, and contributing to environmental sustainability through the continuous reduction of environmental impact as well as reduction and appropriate management of hazardous substances, will contribute to improving our mid- to long- term profit.

Climate Change

Global warming, as the main factor for a climate change, has been the primal topic at international meetings, and in 2015 Paris Agreement has adopted a new framework. In this agreement, one of the goals is to keep the increase in global average temperature to well below 2°C, preferably to 1.5°C, compared to pre-industrial levels. Furthermore, at COP26 in 2021, the Glasgow Climate Pact was agreed that the 1.5°C target remains in sight and scales up action on dealing with climate impacts. We recognize that efforts to climate change is the most important issue for our business activities and properties under management.
Reduction of energy consumption and CO2 emissions is one of our material issues. We are making a contribution to environmental sustainability by using our business activities and property management operations for continuously cutting energy consumption and CO2 emissions in order to lower our environmental impact.

Support for TCFD Recommendations

The Asset Management Company expressed its support for the recommendations made by the Task Force on Climate-related Financial Disclosures (“TCFD”) and also joined the TCFD Consortium, a group of domestic companies that support TCFD recommendations in October 2021.
TCFD is an international initiative established by the Financial Stability Board (“FSB”) at the request of the G20 for the purpose of discussing the disclosures of climate-related financial information and the responses by financial institutions. TCFD publishes recommendations for companies to disclose their governance, strategy, risk management, and metrics and targets for climate-related risk and opportunities.

Moreover, TCFD Consortium is a group of companies and financial institutions that support the TCFD recommendations. Consortium was established with a view to further discussion on effective corporate disclosures of climate-related information and initiatives to link disclosed information to appropriate investment decisions on the part of financial institutions and other organizations.
KDXR and the Asset Management Company will work to expand information disclosure based on TCFD and continue to actively promote ESG (Environment, Social and Governance) initiatives based on “Sustainability Policies” established by the Asset Management Company.


For further details concerning governance for climate change, please refer to Sustainability Management System.


Scenario Analysis

The Asset Management Company conducted a scenario analysis to identify the risks and opportunities for KDXR to be posed by the climate change, and to assess their potential impact on KDXR’s business. World outlook of each scenario is provided below. The analysis was conducted with reference to future climate projections and energy trends published by international organizations.

World Outlook in the 4℃ Scenario

4°World outlook in the 4℃ Scenario

World Outlook in the 1.5℃ Scenario

World outlook in the 1.5℃ Scenario

(Major reference sources)

Scenarios Transition risks Physical risks
4°C Scenario IEA (International Energy Agency)
World Energy Outlook 2020 STEPS
IPCC (Intergovernmental Panel on Climate Change)
Fifth Assessment Report RCP8.5
1.5°C Scenario IEA (International Energy Agency)
IPCC (Intergovernmental Panel on Climate Change)
Fifth Assessment Report RCP2.6
Financial Impact based on Scenario Analysis

The Asset Management Company examined the mid-term (2030) and long-term (2050) impacts of the risks, opportunities, and financial impacts for KDXR for each of the world outlook in the 4°C and 1.5°C scenario described above. The summary of the evaluation is as follows.

Risks and Opportunities Financial Impact Measures to address risks and opportunities
Category Factor 4℃
Mid-term Long-term Mid-term Long-term
Risks and
CO2 emission regulation
Introduction of CO2 emission regulations as a measure to comply with international frameworks incur costs and risks related to CO2 emissions
Increase in costs to improve energy efficiency of existing properties Low Low Low Mid
  • Improvement of energy-saving in existing properties
  • Establishment of GHG reduction targets
Carbon tax
The introduction of carbon tax as a measure to comply with international frameworks incur costs and risks related to CO2 emissions
Increase in carbon tax costs Low Low Mid High
  • Introduction of renewable energy
  • Acquisition of non-fossil certificates, etc.
Increase in acquisition costs of non-fossil certificates, etc. Low Low Mid Mid
Technology Advancement of energy-saving and renewable energy technologies
Further technology advancement will result in lower installation costs and effective achievement of energy-saving and renewable energy
Increase in costs due to introduction of new technology Low Low Low Mid
  • Energy-saving in existing properties
Decrease in utility costs due to energy-saving, introduction of renewable energy, conversion to ZEB/ZEH, etc. Low Low Low Mid
  • Acquisition of ZEB/ZEH properties
  • Conversion of existing properties to ZEB/ZEH
Markets Evaluation by investors and financial institutions
Investors and financial institutions will value improvement of the environmental performance of properties
Increase in financing costs due to low valuation Low Low Low Low
  • Energy-saving in existing properties
  • Acquisition of environmental certifications
  • Improvement of engagement with investors and financial institutions
  • Utilization of green finance
Decrease in financing costs due to high valuation Low Low Low Low
Focus on environmental certification
Environmental certification will be required for portfolio evaluation by investors and financial institutions as well as property selection by tenants
Increase in cost of actions to improve evaluation Low Low Low Low
  • Acquisition of environmental certifications
Increase in acquisition costs of environmental certifications Low Low Low Low
Reputation Tenant behavior change due to environmental orientation
Environmental performance of properties will become valued due to regulation compliance and changing preferences
Low environmental performance properties becoming stranded Low Low Mid Mid
  • Energy-saving in existing properties
  • Acquisition of environmental certifications
  • Engagement
Maintain and improve occupancy rates by improving environmental performance Low Low Mid Mid
Tenant behavior change due to disaster-prevention orientation
Disaster prevention aspect of properties will become valued due to increasing disasters caused by rising temperatures and sea level
Low resilience properties becoming stranded Mid Mid Low Low
  • Due diligence on acquisition
  • Flood risk analysis of properties
  • Improvement of resilience
  • Engagement
Maintain and improve occupancy rates by improving resilience measures Mid Mid Low Low
Risks and
Acute Intensification of heavy rains and torrential rains
The frequency of property damage will increase due to severe wind and extreme flood
Increase in disaster recovery costs Mid Mid Low Low
Decrease in rental income during the recovery period Mid Mid Low Low
Chronic Rise in sea level
Chronic rise in sea level
Increase in costs to cope with sea level rise Low Low小 Low Low
Rise in average temperature
Chronic rise in average temperatures
Increase in utility costs during summer Low Low Low Low
  • Energy-saving in existing properties

Risk Management

Risk Management System for Climate Change

Listed REIT Department of the Asset Management Company and the Sustainability Committee identifies and evaluates the sustainability and ESG-related risks of KDXR and the Asset Management Company. These sustainability and ESG-related risks are managed on a daily basis by each department in charge, and important risks are analyzed and reviewed regularly by the Sustainability Committee under the supervision of the Chair of the Sustainability Committee, and are managed appropriately. In addition, these risks are incorporated into the organization’s overall risk management by sharing them with relevant parties as necessary.

Metrics and Targets

KPIs related to Climate Change

Responding to climate change is one of the important social issues, and initiatives for climate change countermeasures are accelerating domestically and internationally. KDXR has set GHG emission reduction goal (KPI) as follows in order to actively promote the reduction of environmental impact and contribute to sustainability of environment through the mid- to long-term reduction of GHG emission in our portfolio.

GHG Emission Reduction Targets (Note 1) 2030 Targets
(2022 baseline)
2050 Targets
Total amount: 42% reduction
Per unit: 42% reduction (Note 2)
Scope1 and 2 Scope1, 2 and 3

KDXR has obtained Science Based Targets (SBT) certification for the above GHG emission reduction targets.

For further details concerning Science Based Targets (SBT), please refer to Awards and Initiatives.

KDXR has set reduction goal (KPI) of energy consumption. (mid- to long-term targets) as follows:

Goal (KPI)
for Energy Consumption
  • Reduce unit energy consumption by an average of 1% or more per year over the past five years in accordance with the Act on Rationalizing Energy Use (Energy Saving Act)
  • Set individual goal for properties subject to local regulations related to cope with global warming

Process to Promote Sustainability / PDCA Cycle

KDXR has established PDCA process as below to achieve the mid- to long-term goal on reduction in GHG emissions, energy consumption and others, and been monitoring and assessing environmental performance on energy consumption at the Sustainability Committee held on regular basis.

Process to Promote Sustainability/PDCA Cycle

Environmental Performance

GHG Emissions

GHG emission (t-CO2) (Note 1) 100,349
 Scope 1 1,592
 Scope 2 40,036
 Scope 3 (Category 13) 48,720
Intensity (t-CO2/m²) (Note 2) 0.055

Energy and Water Consumption

Energy Consumption 472,800
Intensity (MWh/m²) (Note) 0.240
Water consumption (m³) 2,502,296
Intensity (m³/m²) (Note) 1.273

Independent Assurance Statement

GHG emission and energy and water consumption in 2022 have been assured by a third party, Sustainability Accounting Co., Ltd.

Independent Assurance Statement (Former KDO) PDF (266KB)

Independent Assurance Statement (Former KDR) PDF (266KB)

Independent Assurance Statement (Former KRR) PDF (266KB)

Reduction of Environmental Burden

Installation of LED Lightings

We promote to convert lightings in common area, tenant area, etc. and emergency lights (including emergency guide lights) to LED to actively promote reduction of electricity consumption.
We will continue to convert lightings in tenant area by promoting Green Lease based on discussions with tenants in a planned way as well as in common area.

Solar Panel Installation

We installed solar panels at our properties to decrease GHG emissions.

Unicus Ina
(Power generation
capacity: 334.53 kW)

Kawamachi Yahagi Mall
(Power generation
capacity: 302.40 kW)

Apita Terrace Yokohama Tsunashima
(Power generation
capacity: 25.26 kW)

Tenri Distribution Center
(Power generation
capacity: 100.00 kW)

Monenosato Mall
(Power generation
capacity: 525.00 kW)

Yumemachi Narashinodai Mall
(Power generation
capacity: 234.35 kW)

iias Kasugai
(Power generation
capacity: 824.76 kW)

Property Name Solar Power Generation
Unicus Ina 307,655 kWh
Kawamachi Yahagi Mall 292,328 kWh
Apita Terrace Yokohama Tsunashima 27,986 kWh
Tenri Distribution Center 144,756 kWh
Monenosato Mall 494,663 kWh
Yumemachi Narashinodai Mall 264,818 kWh

Promotion of Greening

We plant bushes, flowering plants and other greening at building entrances, open areas of building sites, rooftops and other locations. Rooftop greening at retail facilities creates a relaxing space for people and has the added benefit of preventing the reflection of sunshine, which helps hold down summer heat in large cities.

MONA Shin-Urayasu (Rooftop)

KDX Residence Togoshi (Entrance)

Water Conservation Initiatives

We are working to reduce water consumption by introducing toilets with water-saving functions and installing rainwater tanks in our properties.

Remote Surveillance of Road Heating

We have installed remote surveillance systems for snow melting equipment at four residential properties in Sapporo. Remote surveillance has significantly reduced the cost of fuel for keeping outdoor areas free of snow.

Installing Secure Lockers for Deliveries

Secure lockers for parcels eliminate the need for delivery companies to return to a property when a resident is not home the first time. This reduces transportation GHG emissions and wasted working time for drivers.

Contribution to Biodiversity Conservation

KDXR is committed to contribute to biodiversity conservation through real estate investment and management.

JHEP Certification (Note)

KDX Residence Tsudanuma and KDX Residence Tsudanuma Ⅱacquired AA certification.

KDX Residence Tsudanuma
For more details Concerning JHEP

Stakeholder Engagement to Improve Property Performance

As KDXR and the Asset Management Company are continuously making effort to realize sustainable environment, we think it is crucial to cooperate with our tenants who constantly use our properties. KDXR and KFM are aiming to cooperate by taking initiatives to raise awareness and promoting green lease that allow both owner and tenant to share economic merit to achieve sustainable environment.
KDXR and KFM have identified “tenant engagement to improve environmental performance” as material topic and been making contribution through promoting tenant cooperation and cooperating with other stakeholders such as property management companies who actually manage the building and employees in the Asset Management Company who manage the properties.

Proper Measures for Hazardous Substances, Soil Contamination and Other Materials Requiring Special Handling

Before acquiring a property and in conjunction with other transactions, we thoroughly examine properties by receiving an engineering report that covers the building's structure and facilities, including environmental items. We also receive an earthquake probable maximum loss assessment, a soil contamination survey and other information. These activities ensure that the building complies with laws and regulations.
The engineering report includes a confirmation that a building is free of asbestos, PCBs and fluorocarbons. If any hazardous substances are discovered, appropriate actions are taken, such as by establishing counter-measures, managing or disposing of these substances, in accordance with laws and regulations.
If a property we plan to acquire has soil contamination, we make the investment only after the completion of soil contamination counter-measures.

Brownfield Development at Yokohama Connect Square

Kenedix, Inc. has completed a large-scale development project in the 37th district of Yokohama Minato Mirai Central District in collaboration with our partner companies. For this project, Kenedix Group is contributing approximately 1 billion yen to take appropriate measures to deal with soil contamination such as removal of contaminated soil and installation of water shielding walls, etc.

Green Lease

KDXR conducted LED lighting installation works for a part of a tenant property space at the expense of KDXR based on the Agreement. A certain ratio of the highly reduced amount of electricity charges and maintenance costs (costs for exchanging fluorescent bulbs) has been paid from the tenants in return as Green Lease fee.

What is Green Lease?

It is an agreement specifying that property owners and tenants shall cooperate with each other to reduce environmental burden. The agreement contains provisions to facilitate renovation toward more environmental-friendly properties by reducing property owners' investment burden through sharing the economic merits generated as a result of energy-saving renovation works among property owners and tenants. It also contains an agreement to streamline operations for energy saving, water saving and enhancing indoor conditions.

Promoting Lease Agreement with Clause for Environmental Cooperation

We have promoted including clause to cooperate to improve environmental performance of the property, comfort and productivity of our tenant into its base contract.

Cooperation with Property Managers

KDXR and KFM are engaging with property management companies to share our vision, policies of sustainability and when making contract with a new tenant, property managers explain these ideas to tenants to achieve their cooperation.

Education to Employees on Green Building

KFM provides annual sustainability training by external specialists to improve awareness and knowledge on green building for its employees.

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