With measures to address climate change considered a key global issue, the Paris Agreement was adopted at the 2015 Conference of the Parties (COP) to the U.N. Framework Convention on Climate Change, and in October 2020, the government of Japan declared its intention to achieve carbon neutrality by 2050.
SPI and the Asset Management Company also recognize that climate change will have a significant medium- and long-term impact on their activities from both a financial and strategic perspective.
Based on their recognition that appropriately identifying and addressing risks and opportunities of climate change impacts are vital to their sustainable development, SPI and the Asset Management Company will disclose information in accordance with the framework recommended by the TCFD (governance, strategy, risk management, metrics) and work to reduce risks and realize opportunities.
・At SPI and the Asset Management Company, identifying and assessing climate-related risks and opportunities, determining measures to address them, managing risks, setting metrics and targets, verifying progress toward targets, etc. are performed by the ESG Committee, which is chaired by the Representative Director and comprised of directors, various department managers, and other designated individuals.
・The ESG Committee meets at least four times a year and reports to the Board of Directors about matters that have been decided. Based on this system, climate-related issues are supervised by the Board of Directors.
* For details, refer to “Governance Initiatives (G)” in the “ESG Initiatives” section.
・SPI and the Asset Management Company have assessed the financial impact of climate-related risks and opportunities based on the TCFD (Task Force on Climate-related Financial Disclosures) framework.
・Scenario analyses were conducted by focusing on two scenarios: the 1.5°C scenario for transition risks and opportunities, in which the world transitions to a low-carbon economy based on the Paris Agreement, and the 4.0°C scenario for physical risks and opportunities, in which there is fossil fuel-dependent development and climate change countermeasures are not implemented.
Transition Risks/Opportunities | Physical Risks/Opportunities |
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IEA World Energy Outlook2023 NZE (net zero scenario)
Global outlook in which various climate change countermeasures are implemented based on the Paris Agreement and physical risks are reduced, but transition risks are high due to stricter regulations, etc. |
IPCC (Intergovernmental Panel on Climate Change) SSP5-8.5
Global outlook in which there is fossil fuel-dependent development, climate change countermeasures such as stricter regulations are not implemented, and physical risks are high due to more severe and frequent natural disasters |
・The financial impacts of climate-related risks and opportunities based on the scenario analyses and countermeasures for them are as shown below.
Category | Type | Item | Impact on Starts Asset Management | Degree of Impact | Countermeasures | |
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1.5℃ | 4℃ | |||||
Transition risks | Policy and legal | Carbon pricing (supply chain) | Carbon taxes will be added for carbon emissions and procurement costs for materials with high carbon intensity will increase, leading to an increase in repair and renovation work-related costs. | M |
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Carbon pricing (business activities) | Carbon taxes will be added for carbon emissions and utility costs for managed properties will increase, leading to increased running costs. | S |
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Stricter energy conservation regulations | Energy conservation regulations will become stricter (including ZEH) and it will be necessary to introduce high-efficiency lighting and A/C, solar power, storage batteries, etc. at existing properties, and the costs of renovation work will increase to comply with these. | L |
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Markets | Reduced demand for buildings with poor environmental performance | Demand for buildings with weak environmental performance will decrease due to increased environmental awareness among tenants, leading to reduced rental income. | M |
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Reputation | Increased environmental awareness among investors | Due to increased environmental awareness among investors, the brand value will be damaged because efforts to address climate change are deemed inadequate, leading to increased financing costs due to the reduction of investment unit prices, etc. | L |
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Physical risks | Acute | Increased damage due to more natural disasters, such as floods (direct damage) | Insurance premiums that cover damage to managed properties will rise due to more natural disasters such as floods caused by climate change, leading to increased costs. | M |
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Increased damage due to more natural disasters such as floods (indirect damage) | Finding tenants to occupy properties damaged by water infiltration due to more natural disasters such as floods caused by climate change will be difficult, leading to decreased rental income. | L |
Category | Type | Item | Impact on SPI | Degree of Impact | Countermeasures | |
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1.5℃ | 4℃ | |||||
Opportunities | Resource efficiency | Improved resource efficiency | Establishing sustainable procurement standards for repair and renovation work and procuring high-efficiency goods, etc. (specifying use of recycled products for wallpaper, low-flush toilets, etc.) will improve the asset value of properties. | S |
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Energy sources | Decreased utility costs | Avoiding surging utility costs due to introduction of carbon taxes, etc. by introducing renewable energy will reduce running costs. | S |
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Products/services | Increased demand for properties with strong environmental performance | Occupancy rates and rental income will increase as a result of increased demand for properties with strong environmental performance (ZEH, etc.). | M |
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Markets | Decrease in financing costs by acquiring favorable reputation from investors | Financing costs will be decreased by acquiring favorable reputation from investors with regard to addressing climate change. | L |
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Resilience | Increased demand for damage-resistant properties | Demand will increase for properties that are highly resilient against storm damage, which is a physical risk of climate change, leading to increased occupancy rates and rental income. | M |
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・Based on the recognition that climate-related risks and opportunities could have a significant medium- and long-term impact on their activities from both a financial and strategic perspective, SPI and the Asset Management Company integrate and manage climate-related risks into company-wide risk management processes.
・Assessing, managing, and determining countermeasures for climate-related risks based on scenario analyses is performed by the ESG Committee, which is chaired by the Representative Director and reports to the Board of Directors.
・The results of climate-related risk assessments conducted by the ESG Committee are reported to the Compliance Committee and incorporated into company-wide risk management processes.
・At its April 2023 meeting, the ESG Committee identified and assessed climate-related risks and opportunities, determined countermeasures and reported on their implementation status, performed risk management, and set metrics and targets (including the 2050 net zero target).
・BY FY2030, SPI and the Asset Management Company aim to reduce greenhouse gas (GHG) emissions (Scope 1 and 2) by 42% compared to FY2023.
*The reduction target for FY2030 was set in compliance with SBT (science-based targets), using FY2023 as the baseline year.
・The aim is to achieve net zero emissions by FY2050.
・*For performance to date, please refer to Environmental Performance Targets and Results.