Initiatives to Address Climate Change
Our Awareness of Climate Change
As indicated by the Paris Agreement adopted in 2015 and other agreements, the progression of climate change is a scientific fact, and social demands to address climate change-related issues are increasing.
Since the natural environment and social structure are expected to change dramatically due to more severe weather disasters and stricter emission regulations brought about by the progression of climate change, INV and CIM recognize that climate change is an important issue (risk) that will have a significant impact on our management and business in the medium to long term.
Based on this awareness, INV and CIM have set forth "Adaptation to Climate Change" in our "Sustainability Policy", and INV and CIM are promoting efforts to address climate change-related issues. Furthermore, INV and CIM support the international goals set forth by the Paris Agreement over the long term based on our "Policy on Addressing Climate Change-Related Issues", and will continuously promote initiatives for realizing net-zero by 2050 in order to contribute to mitigating climate change.
Support for the TCFD Recommendations
The Task Force on Climate-related Financial Disclosures (TCFD) is an international initiative established by the Financial Stability Board (FSB) at the request of the G20 to examine how climate-related information should be disclosed and how financial institutions should respond. The TCFD has published recommendations for companies and others to disclose their "governance", "strategy", "risk management", and "metrics and targets" for climate change-related risks and opportunities.
In February 2023, CIM has expressed its support for the TCFD recommendations in order to officially announce its support for the international goals set forth in the Paris Agreement and its willingness to continue to promote efforts to reduce greenhouse gas emissions in order to contribute to climate change mitigation.
CIM also participated in the TCFD Consortium, an organization of supporting companies in Japan (the TCFD Consortium transitioned to its successor framework, the "GX Future Consortium," on April 1, 2026). Although the TCFD itself has been dissolved in 2023, CIM continues to promote climate-related information disclosure and initiatives in accordance with the TCFD's recommendations.
Governance
CIM has established the following governance structure to address climate change-related risks and opportunities.
- The chief executive overseeing climate change-related issues shall be the President and CEO, who is the final decision-maker on sustainability promotion.
- The operating officers responsible for climate change-related issues shall be the General Manager of the Asset Management Department and the General Manager of the Planning Department, who are responsible for the execution of sustainability promotion.
- The operating officers for climate change-related issues shall report regularly to the chief executive for climate change-related issues at the Sustainability Committee on matters related to initiatives to address climate change, including identification and assessment of climate change impacts, risk and opportunity management, progress in adaptation and mitigation efforts, and the setting of metrics and targets. The Sustainability Committee shall discuss and review these matters. After deliberation and consideration by the Sustainability Committee, decisions shall be made by the chief executive for climate change-related issues.
For an overview of the Sustainability Committee, please refer to "Promotion Structure of Sustainability" in "Sustainability Policy and Promotion Structure".
Strategy
Reference Scenarios
CIM used the following two scenarios (future visions) to identify climate change-related risks and opportunities.
Scenario of Transition to a Decarbonized Society
A scenario in which the global average temperature increase is limited to less than 1.5℃ compared to pre-industrial revolution levels (1.5℃ scenario). Investors and companies are required to address risks that they may face in the future due to structural social and economic changes that will occur in the process of transitioning to a sustainable low-carbon society (transition risks). Transition risks consist of the following risks;
| Risks | Overview |
|---|---|
| Policy and Regulatory Risks | Risks that administrative burdens and costs will increase in order to comply with tighter policies, laws, and regulations aimed at decarbonization |
| Technology Risks | Risks that technological innovations related to decarbonization may render existing technologies and products obsolete |
| Market Risks | Risks related to cost increases due to soaring raw material prices or changes in customer demand for specific products and services |
| Reputation Risks | Risks of damage to reputation among stakeholders due to inadequate decarbonization efforts |
Scenario of Climate Change Progression
A scenario in which the average global temperature increases by 4℃ compared to pre-industrial revolution levels (4℃ scenario). The risks related to direct damages and hazards caused by natural disasters, changes in weather conditions, or rising sea levels, brought about by climate change (physical risks) must be addressed. Physical risks consist of the following risks;
| Risks | Overview |
|---|---|
| Acute Physical Risks | Risks of damage due to an increase in typhoons, floods, and other sudden weather disasters |
| Chronic Physical Risks | Risks of damage occurring due to long-term shifts in climate patterns, such as rising sea levels and heat waves |
CIM conducted a scenario analysis by referring to the World Energy Outlook 2024 published by the International Energy Agency (IEA) and the Sixth Assessment Report published by the United Nations Intergovernmental Panel on Climate Change (IPCC).
| Scenarios | Referenced Scenarios | World View | |
|---|---|---|---|
| Transition Risks | Physical Risks | ||
| 1.5℃ Scenario | IEA NZE2050 | IPCC SSP1-2.6 | As decarbonization-related policies are rapidly strengthened, technological transitions advance, and transition risks increase significantly, progress in emissions reduction curbs the rise in global temperatures, thereby limiting the increase in physical risks. |
| 2.4℃ Scenario | IEA STEPS | IPCC SSP2-4.5 | If current policies remain unchanged, the transition to a decarbonized society is gradual, and transition risks remain moderate. Physical risks increase compared to the 1.5°C scenario. |
| 4℃ Scenario | - | IPCC SSP5-8.5 | Emissions continue to rise, global warming progresses, and physical risks, such as more severe extreme weather events, increase significantly. |
Identification of Climate Change-related Risks and Opportunities and Financial Impact
CIM has assessed the financial impact of the risks and opportunities identified based on the scenario analysis on INV as follows;
(Scroll left and right to view the entire table. Click here to print.)
Transition risks
| Risks and Opportunities in Real Estate Management | Classification | Financial Impact | Risk Management, Countermeasures, and Initiatives | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Details of Impact | 2.4℃ scenario | 1.5℃ scenario | ||||||||
| Short-term | Medium-term | Long-term | Short-term | Medium-term | Long-term | |||||
| Policy and Regulation | Strengthening and implementing carbon pricing | risk | ・Increased cost burden based on energy consumption and GHG emissions due to the introduction and strengthening of carbon taxes |
Small | Medium | Medium | Small | Medium | Large | ・Introduction of energy-saving equipment and facilities ・Introduction of renewable energy ・Promoting awareness of energy conservation among property users ・Monitoring energy consumption and conducting energy conservation assessment ・Promoting acquisition of environmental certifications ・Replacing properties with ones that have higher environmental performance |
| Tightening of energy conservation standards in existing real estate | risk | ・Increased cost of renovation to comply with the standards, and fines imposed in some cases |
Small | Medium | Large | Small | Medium | Large | ||
| Strengthening and institutionalizing requirements for calculation, reporting, and disclosure of greenhouse gas emissions and embedded carbon |
risk | ・Increased expenses due to increased outsourcing costs to meet reporting requirements and increased internal staffing |
Small | Small | Medium | Small | Medium | Medium | ||
| Compliance with overseas laws and regulations | risk | ・Risk of sanctions due to violations of laws and regulations ・Loss of reputation with investors due to delayed response |
Small | Small | Medium | Small | Medium | Medium | ・Consulting with foreign legal counsel and strengthening cooperation with our overseas offices |
|
| Technology | Evolution and diffusion of renewable energy and energy-saving technologies | risk | ・Increased costs of introducing new technology for owned properties to prevent becoming technologically outdated |
Small | Small | Medium | Small | Medium | Medium | ・Utilization of outside consultants who are knowledgeable in the field of renewable energy and energy-saving technologies ・Employing the experienced in-house engineers ・Utilization of businesses that provide products and services that take advantage of cutting-edge technologies ・Utilize subsidies and work with operators to promote energy-saving measures |
| Evolution and diffusion of renewable energy and energy-saving technologies | Opportunity | ・Reduction of utility costs through improved environmental performance |
Small | Small | Medium | Small | Medium | Medium | ||
| Market | Introduction of environmental performance and other criteria into real estate appraisals |
risk | ・Lower appraisal value and NAV (Net Asset Value) when environmental performance is low |
Small | Small | Small | Small | Medium | Medium | ・Introduction of energy-saving equipment and facilities ・Introduction of renewable energy ・Promoting awareness of energy conservation among property users ・Monitoring energy consumption and conducting energy conservation assessment ・Promoting acquisition of environmental certifications ・Replacing properties with ones that have higher environmental performance ・Implementing green finance ・Improvement of ESG ratings ・Enhancing disclosure of climate change-related information ・Conducting satisfaction surveys and make improvements according to survey results ・Strengthening information sharing and collaboration with hotel operators and property management companies ・Strengthening sustainability-related initiatives and appeals at owned properties |
| Deterioration of financing conditions for market participants not addressing climate change |
risk | ・Rising financing costs | Small | Small | Medium | Small | Medium | Medium | ||
| Developing new investors | Opportunity | ・Utilization of Green Bonds ・Increased funding volume and lower funding costs by addressing and appealing to investors who care about environmental issues |
Small | Small | Medium | Small | Medium | Medium | ||
| Rising utility costs (including externally procured renewable energy) | risk | ・Increase in expenses | Small | Small | Medium | Small | Large | Large | ||
| Introduction of on-site renewable energy | Opportunity | ・Reduction of externally procured utility costs | Small | Small | Medium | Small | Medium | Medium | ||
| Change in hotel guests and tenants and/or occupants demand, where they may choose properties with lower environmental impact or avoid non-environmentally friendly properties |
risk | ・Increased costs to meet the needs of hotel guests ・Tenant loss and difficulty in attracting new tenants due to lack of sustainability measures |
Small | Small | Medium | Small | Medium | Large | ||
| Changes in the procurement environment for materials and human resources due to increasing emphasis on environmental performance and environmental considerations |
risk | ・Increased expenses due to higher costs ・Lack of materials with high environmental performance ・Difficulty in hiring human resources due to insufficient environmental considerations |
Small | Small | Medium | Small | Medium | Large | ||
| Reputation | Decrease in a brand value of properties and the corporate image due to delays in addressing climate change |
risk | ・Decrease in rent premium due to decrease in a brand value | Small | Small | Medium | Small | Medium | Large | |
| Enhancing brand value through improved evaluations from hotel guests and residents by providing low-emission facilities, specifications, and services |
Opportunity | ・Increased revenue through acquiring new customers and maintaining occupancy rates |
Small | Small | Medium | Small | Medium | Large | ||
Physical risks
| Risks and Opportunities in Real Estate Management | Classification | Financial Impact | Risk Management, Countermeasures, and Initiatives | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Details of Impact | 4℃ scenario | 1.5℃ scenario | ||||||||
| Short-term | Medium-term | Long-term | Short-term | Medium-term | Long-term | |||||
| Acute | Managed properties may suffer damage due to inland flooding caused by torrential rains, flooding of nearby rivers, wind damage from typhoons, and snow damage from snowfall |
risk | ・Increased repair and insurance costs, lost sales opportunities due to reduced operating periods, and lower occupancy rates |
Medium | Large | Large | Medium | Medium | Large | ・Implementing disaster prevention and mitigation measures ・Area diversification of portfolio |
| Chronic | Flooding of properties with low elevation due to sea level rise | risk | ・Decrease in revenues due to business closure/inability to operate caused by flooding |
Small | Medium | Large | Small | Small | Medium | ・Implementing disaster prevention and mitigation measures ・Area diversification of portfolio ・Considering sales of properties based on the level of impact |
| Increasing demand for air conditioning due to increase in extreme weather conditions such as extremely hot and cold days |
risk | ・Increase in utilities, maintenance-related expenses, and repair costs | Small | Medium | Large | Small | Small | Medium | ・Installation of high-efficiency air conditioning equipment | |
| Impacts of climate change on resort areas | risk | ・Decrease in travel demand and lower occupancy rates due to events adversely affecting tourism resources in the resort area |
Medium | Large | Large | Small | Small | Medium | ・Area diversification of portfolio ・Considering sales of properties based on the level of impact |
|
| Resilience | Providing properties resistant to disasters
Collaboration with local communities |
Opportunity | ・Increased demand for properties equipped with disaster response and emergency power supplies (tenant preference for BCP) ・Potential for long-term advantages in terms of insurance conditions and repair costs as physical risk management improves |
Small | Medium | Medium | Small | Medium | Medium | ・Deepening relationships with local communities through participation in local events, etc. ・Participating in local environmental preservation activities |
- (Note 1)
- Due to uncertainties and unknown risks in future projections, the accuracy of the above assessment of financial impact cannot be guaranteed.
- (Note 2)
- While we have assessed the impact of physical risks under 3 scenarios (1.5℃, 2.4℃ and 4℃ scenarios), we have included assessments under the 1.5℃ and 4℃ scenarios to illustrate the range of impact
Initiatives to Address Climate Change-related Risks and Opportunities
In response to the above risks and opportunities, CIM has set environmental targets and is working on various measures to reduce its environmental impact. For details, please refer to "Initiatives for Environment"
Risk Management
CIM manages climate change-related risks based on the following processes;
Process for Identifying and Assessing Climate Change-related Risks and Opportunities
A working group composed of personnel from departments deemed necessary identifies and assesses risks and opportunities based on the classification of transition and physical risks, and reports the progress and results at the Sustainability Committee.
Process for Managing Climate Change-related Risks
The chief executive for climate change-related issues shall designate a department or person in charge of responding to climate change-related risks and opportunities that have a high priority in business and financial planning, as discussed by the Sustainability Committee, and instruct them to formulate countermeasures for such risks and opportunities. The countermeasures will be deliberated at the Sustainability Committee or an appropriate internal meeting body, depending on their nature, and then will be implemented.
Integration into the Company-wide Risk Management Program
The chief executive for climate change-related issues will direct that climate change-related risks that are material to business and financial planning be considered in existing company-wide risk management programs, and will integrate and supervise the risk identification, assessment, and management process.
Metrics and Targets
CIM has established key performance indicators (KPIs) and targets to manage and monitor risks and opportunities. Please refer to "Environmental Targets" and "Environmental Performance" in "Initiatives for Environment" for metrics, targets and results.