Climate change is currently recognized as one of the most significant threats to the sustainable development of global society. The Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), released over the course of 2013 and 2014, states that human activities are “extremely likely” (at least 95%) to be the main cause of global warming and climate change. Subsequently, the IPCC Sixth Assessment Report, released in August 2021, states that it is “unequivocal” that human activities are the main cause of global warming and climate change.

Based on these scientific views, a debate on how to deal with climate change has raged in society as a whole and across the world. At the Conference of the Parties (COP21) of the United Nations Framework Convention on Climate Change (UNFCCC) in 2015, the Paris Agreement was adopted to pursue efforts to “limit global warming to well below 2, preferably to 1.5°C, compared to pre-industrial levels.”
Under the Paris Agreement, countries have set targets for reducing Greenhouse Gas (GHG) emissions and are implementing a variety of climate change-related measures. For example, in Japan, where our Group mainly operates, the government declared its goal in October 2020 to achieve carbon neutrality by 2050.

The impact of climate change on the global economy and corporate activities is becoming increasingly severe with each passing year. Accordingly, shareholders and investors are facing a growing urgency to assess how the businesses and plans of each company will be affected by climate change. Recognizing the need for a common global framework that facilitates an appropriate assessment of the risks and opportunities of climate change for each company, the TCFD was established to promote disclosure of information on climate change responses in response to requests from the G20 and national central banks. It released its final report in June 2017 and has been encouraging companies to disclose information on climate change.

Given this environment, we recognize that addressing social and environmental issues is essential for the sustainable growth of our company. We clearly stated “urban development and community building concerning the future of the global environment and local communities” as one of the four value creation themes for our Mid- to Long-term Business Plan, released in April 2019.

Mid- to Long-term Business Plan

In carrying out sustainability activities, the Group considers the environment and climate change as vital management concerns. We have also defined the four key themes of “Safety and Security,” “the Environment,” “Community,” and “Health and Well-being” as of March 31, 2022, and positioned responding to climate change as a key area under “Environment.”

As mentioned above, the Nomura Real Estate Holdings President and Group CEO is responsible for promoting measures to address sustainability and climate change throughout the Group. The Group CEO is the chief executive officer of the Board of Directors and the Executive Committee and is responsible for making the best decisions to achieve the sustainable growth of the Group as a company, including addressing sustainability and climate change, and for executing key related operations.

Sustainability Management System

In addition, our risk management system also manages climate change-related risks.

Each business unit closely monitors social trends related to climate change, such as changes in customers and markets and revised regulations. They also identify risks and opportunities in climate-related issues and examine and implement associated actions at the operational, business, and product levels. One example is the planning of Net Zero Energy House (ZEH) and Net Zero Energy Building (ZEB) based on changes in the market and customer needs, technology trends, and other factors. Of these initiatives undertaken by each business unit, those deemed particularly important to management are reported to the Sustainability Committee, Risk Management Committee, Management Committee, and Board of Directors as needed.

In addition, since fiscal 2019, the Group has been requiring. that directors, including the CEO, maintain a strong awareness of the need to adapt to changes in society and the needs of the times under their selection criteria, and has also incorporated the sustainability and ESG perspectives, such as climate change, into decisions on director compensation. In our director compensation system, the degree of achievement of sustainability targets, including measures to respond to climate change, in the business areas under the control of each director is incorporated into evaluation criteria. Also, the system calculates variable compensation according to the degree of achievement of roles related to sustainability and ESG assigned to each director.

Director Compensation System

In formulating climate change strategies, the Group conducted a qualitative analysis using scenarios based on the Fifth Assessment Report of the IPCC^* and the Paris Agreement. We examined the risks and opportunities that climate change may present to the Group, and then we planned and implemented strategies and measures to manage them.

The Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) released in August 2021 will also be used for analysis for future fiscal years.

The TCFD recommendations classify climate change risks into transition risks (policy and legal, technology, market, and reputation) and physical risks (acute and chronic). The Group has accordingly identified the impacts of these risks on the Group. This section describes the representative impacts of each risk category.

Category		Impact on the Group	Our understanding
Large	Small
Transition risks	Policy and legal	Enforcement and strengthening of GHG reduction regulations on a business and property basis (Scopes 1 and 2) Potential consequences ・Stricter regulations in Japan and overseas (Energy Conservation Act, Tokyo Metropolitan Government’s Ordinance on Environmental Preservation, emissions trading system, carbon tax, etc.) ・ Expansion of subsidy programs (energy-saving technologies, ZEH and ZEB, etc.)	Risks Opportunities
	Market	Delay in the improvement of energy efficiency of buildings (buildings, houses, etc.) and the development and introduction of decarbonization technologies Potential consequences ・Higher development costs for real estate ・Investment in decarbonization technologies and energy-saving equipment ・Introduction of renewable energies	Risks Opportunities
	Reputation	Increased demand from customers for functions related to the environment, energy conservation, and disaster prevention Potential consequences ・Changes in the needs of customers, including tenants of buildings, buyers of houses, and REIT ・Higher customer evaluation of ZEH and ZEB ・Impact on the appraisal of real estate we own	Risks Opportunities
	Technology	Risk of the Group’s initiatives and businesses not being well received by investors and consumers. Potential consequences ・Changes in the credibility and brand value of our businesses and products ・Impact on funding due to evaluation by shareholders, investors, financial institutions, etc.	Risks Opportunities
Physical risks	Acute	Losses due to the occurrence of disasters, such as typhoons, floods, and torrential rains Potential consequences ・Damage to or suspension of functions of our buildings due to the occurrence of a disaster ・ Interruption or delay in construction projects for real estate under development due to the occurrence of a disaster	Risks
	Chronic	Impact on businesses due to rising average temperatures Impact on real estate appraisal due to rising sea level Potential consequences ・Impact on the wellbeing of customers, employees, and business partners due to an increase in the number of midsummer days ・Damage to real estate values in coastal areas, etc.	Risks

Matters related to climate change, including risk management, are overseen by the Board of Directors and the Management Committee and are discussed in detail by the subordinate committees, the Sustainability Committee, and the Risk Management Committee. In addition, individual business matters, including business planning and product planning, are managed by each business unit.

The Sustainability Committee deliberates Group-wide policies and targets on climate change and discusses the risks and opportunities of climate change for the entire Group.

In addition, risks related to climate change are also managed within the risk management system of the Group. To discuss various risks related to Group management, we have designated the Management Committee as the integrated risk management body and operate a system to regularly monitor, evaluate, and analyze the state of major risks while periodically reporting details to the Board of Directors.

Business units also individually investigate and grasp risks related to the market (client companies and consumers) and laws and regulations on construction and real estate, and they reflect the results of their investigations in the planning of businesses and products as needed. Of the matters examined, those that have a significant impact on the Group as a whole are reported to the Board of Directors, Management Committee, Sustainability Committee, and Risk Management Committee as appropriate, depending on specific content.

Sustainability Management System

Risk Management System

The Group has set the following three targets to promote its response to climate change and has also identified the indicators described below for greenhouse gases.

• Reduction of Greenhouse Gases (GHG and CO₂)

  Medium- to Long-term Targets^* ※Certified by the SBT (Science Based Targets) Initiative in November 2020
  Reduce the total amount of GHG emissions from Scopes 1, 2, and 3 (Categories 1 and 11)^* by 35% by 2030 compared to the FY2019 level.

  Short-term Target
  Reduce the total amount of emissions from Scopes 1, 2, and 3* (Categories 1 and 11) by 15% by 2025 compared to the fiscal 2019 level.

  Scope 1: Direct emissions such as fuel combustion, Scope 2: Indirect emissions resulting from the use of electricity or heat purchased by the Company, Scope 3: Indirect emissions other than those in Scopes 1 and 2

  Scope 3 targets cover Categories 1 (products and services purchased) and 11 (use of products sold). The GHG emissions of Category 1 cover approximately 94% of the total emissions of Scope 3. (FY2019)

  Mid-to long-term target
  The power consumption of Scope 1 and 2 in the Group will be 100% renewable electricity by 2050.（joined RE100 in January 2022）

  Short-term target
  Switching electricity consumed by all leasing properties^* owned by Nomura Real Estate Development to renewable electricity by 2023.

  Excludes leasing properties (including the portion used by tenants) for which Nomura Real Estate Development has concluded direct electricity supply contracts with power companies, properties that Nomura Real Estate Development owns units in or are jointly owned with other parties, and properties planned to be sold or demolished, as well as the common use areas of some rental housing.

• Reduce Energy Use

The Group will in principle promote measures to respond to climate change by collecting data on GHG (CO₂) emissions for all properties owned and sold by the Group as a whole and reducing the GHG emissions of the entire Group by compiling and monitoring the results. We will also look into setting an ultra-long-term target to achieve carbon neutrality by 2050. For the results related to climate change, please refer to the following.

Results for Medium- to Long-term Targets (2030 Targets)

Third Party Assurance

We have asked Lloyd’s Register Quality Assurance Ltd. to provide assurance on the GHG emissions and energy use data for the entire Group.

Independent Assurance Statement