Materiality Determination Process

Determination Process for Sustainability Policy, Priority Issues (Materiality), and Key Performance Indicators (KPIs)

STEP1. Examine long-term social issues extensively

Social issues were broadly identified, using as reference international guidelines such as ISO 26000, the GRI Standards and SASB, and information from ESG external assessment questionnaires and external consulting firms. Social issues that are closely related to the Group’s business were selected after extensively examining their long-term future outlook, including global environmental and social issues and technological trends.

STEP2. Identify key themes for the Group

Based on the social issues identified in STEP 1, workshops were held for the Group’s young and mid-career employees (183 participants) to gather opinions as to “What kind of value should be provided in 2050?” and “How do you want the company to be viewed in 2050?”. Twelve items were identified in these workshops, then additional workshops were held for the Group’s management (214 participants including general managers and senior managers) to score the 12 items.

Twelve items identified

Contribute to a circular economy	Contribute to a decarbonized society	Maintain harmony with the natural environment
Provide healthy and comfortable lifestyles	Develop smart cities	Promote secure and safe urban development
Make unique contribution to regional revitalization	Pursue happiness and dignity for future society	Implement co-creation and open innovation in society
Contribute to diversity and inclusion	Cultivate creativity and sensitivity	Develop rules and standards for market creation

STEP3. Identify key items for stakeholders

We gathered opinions from 41 stakeholders, including sustainability professionals, institutional investors, business partners, and customers, by asking them to score the 12 items identified based on what they expect from the Group and which issues they believe the Group should focus on.

Stakeholders involved	Number	Stakeholders involved	Number
Sustainability experts	10	Business partners (academic institutions in R&D)	4
Institutional investors	5	Business partners (consulting firms)	2
Financial institution	3	JV partner	1
Customers (tenant companies)	3	Prospective employees	3
Customers (condominium residents)	4	Employee union	1
Business partners (construction companies, design offices)	5	Total	41

STEP4. Formulate a sustainability policy and three key themes and finalize priority issues (materiality)

After evaluating the scoring results of Steps 2 and 3, we distributed a questionnaire for the management level employees (20 participants). After further discussions at several Sustainability Committee meetings (chairperson: the president and Group CEO of Nomura Real Estate Holdings), we finalized the Sustainability Policy (the Group’s vision of 2050), the three key themes, and the priority issues (Materiality) for 2030, and reported these to the Board of Directors.

Diversity & inclusion
Stakeholders	〇 Employees, suppliers, customers, local communities
Priority reasons	〇 The sustainable growth of the Company depends upon creating an environment in which a workforce with diverse backgrounds and values can accept and respect each other and everyone can demonstrate their abilities to the fullest.
The Group’s approach	〇 As a corporate group that connects people, towns, and communities to the future, we will realize lifestyles for which diverse backgrounds and values are respected.
Human rights
Stakeholders	〇 Employees, suppliers, customers, local communities
Priority reasons	〇 Interest and expectations for human rights are high, internally and externally, and they must be addressed as part of corporate activities. If human rights are not taken seriously, the Group’s very existence is in danger. 〇 The Group can sustain itself only if everyone involved in its business respects each other.
The Group’s approach	〇 We respect people’s dignity and basic human rights throughout our business activities and pursue co-creation initiatives that transcend organizations and business models.
Decarbonization
Stakeholders	〇 Employees, suppliers, customers, local communities
Priority reasons	〇 The Group’s businesses make extensive use of natural resources and energy, so environmental issues affect its business continuity. 〇 Environmental issues affect not only the Group’s businesses but also the lives and businesses of its stakeholders.
The Group’s approach	〇 Through urban development and the provision of products and services that leverage property development and property-related services, the Company will play its part in addressing climate change as a shared international concern, with the three main focuses of energy conservation, low-carbon buildings, and renewable energy use.
Biodiversity
Stakeholders	〇 Employees, suppliers, customers, local communities
Priority reasons	〇 This can contribute to the realization of a decarbonized society as well as the preservation of the natural environment.
The Group’s approach	〇 We will promote initiatives such as the restoration of forest cycles through the use of domestic timber.
Circular design
Stakeholders	〇 Employees, suppliers, customers, local communities
Priority reasons	〇 We can contribute to the realization of a decarbonized society by, for example, incorporating mechanisms that promote resource recycling into the designs of products/services and producing less waste by extending the life of products.
The Group’s approach	〇 We will contribute to the realization of a sustainable society by promoting environmentally sound urban development and service provision. This includes the appropriate use of resources, which also helps reduce CO₂ emissions. 〇 We will promote appropriate environmental management and comply with environmental laws and regulations.

STEP5. Set key performance indicators (KPIs) for priority issues (Materiality)

Based on the new mid- to long-term business plan, as well as international frameworks and policy trends such as the GRI Standards, the Sustainability Committee deliberated on and finalized the KPIs for priority issues (Materiality) identified in Step 4 and reported to the Board of Directors.

Achievements and Progress on Priority issues (materiality) for 2030 and KPIs

Priority issues (materiality)	Key performance indicators (KPIs)	Achievements and progress
Society and employees	Provision of products and services with inclusive design^*	Promoting inclusive and universal design Diversity & inclusion
	Procurement guideline survey implementation rate: 80%	Compliance with the procurement guidelines Improved supplier management
	Creation of human rights due diligence system	Creation of human rights due diligence system Human rights
	Childcare leave utilization rate by men and women: 100%	Promoting diverse work styles Diversity & inclusion
	Female manager and junior manager ratio: 20%	Promoting active participation by women Diversity & inclusion
	Percentage of implementation of one-on-one meetings: 100%	Enhancing cultivation of human capital Diversity & inclusion
	Percentage of participation in human rights training: 100%	Percentage of participation in human rights training: 100% Human rights
Climate change and the natural environment	CO₂ emissions: reduce by 60% in Scope 1, 2 and reduce by 50% in Scope 3 (compared to FY2019)	Reducing CO₂ emissions Decarbonization
	Energy conservation performance indicators in new buildings: Maintain ZEH/ZEB-oriented standards	Acquiring of advanced environmental management certification (DBJ Green Building, LEED, CASBEE, BELS, etc.) Decarbonization
	Develop timber-based buildings: Carbon storage 10,000 t-CO₂ per year	Promoting use of domestic/certified timber Decarbonization
	Obtain biodiversity certification	Number of biodiversity certifications (ABINC/JHEP/SEGES) acquired Decarbonization
	Initiatives to promote building longevity: Full implementation of the Group’s voluntary standards	Provisioning products and services with long lifespans and high durability Circular design
	Promote waste reduction and increase recycling rate: Reduction of industrial wastes by 20%	Reducing waste discharge Circular design

* Design process involving people with diverse backgrounds, values, and challenges