Opportunities and Risks related to Materiality and Our Actions

Every material issue that we identify is analyzed from the perspectives of opportunity and risk, enabling us to take steps to capture opportunity and respond to risk.

Environment

  Materiality Major Opportunities and Risks (〇: opportunities, ●: risks)
(E)
Environment
Take actions for climate change
  • Heightened need for buildings and properties equipped with higher energy efficiency and renewable energy
  • Need for additional measures to comply with environmental regulations. Increase of utility expenses due to a rise in energy consumption for air conditioning
Promote efficient use of resources
  • Heightened need for facilities utilizing resources effectively and recycling technologies
  • Risk that business activity may wane if resources were exhausted
Promote the ecosystem protection and restoration
  • Heightened need for real estate development that is mindful of conserving local ecosystems
  • Residential environment may deteriorate if ecosystem in vicinity of property was damaged
Enhance environmental management system
  • Creation of new business opportunities through taking actions against environmental issues as our core business
  • Risk of delayed action on environmental issues due to lack of environmental management system
Hulic’s Major Initiatives and Actions SDGs contributed to
  • Initiatives to achieve net zero CO2 emissions by 2030 and RE100 by 2024, and investment in renewable energy facilities
  • Information disclosure based on TCFD recommendations
  • Reducing CO2 emissions and promoting forest circulation by developing fireproof wooden buildings
  • Active adoption of environmentally friendly technologies (natural ventilation and natural lighting systems developed jointly with MIT, etc.)
  • Adoption of longer life building design
  • 3R (Reduce/Reuse/Recycle) initiative (adoption of PC construction method, reuse of construction materials, reduction of plastic waste)
  • Development and adoption of technologies to make effective use of resources (water-saving equipment, etc.)
  • Use of labelling systems including JHEP certification, etc.
  • Promotion of greening in development projects
  • Oversight of the Board of Directors and setting up a corporate governance mechanism centered on the Sustainability Committee
  • Establishment of long-term environmental vision with targets for 2050

Social

  Materiality Major Opportunities and Risks (〇: opportunities, ●: risks)
(S)
Social
Deliver safe and secure lifestyles
  • Heightened need for properties that are safe and secure from natural disasters including earthquakes and flood damage
  • Rise of vacancy rate and decline of real estate value due to delayed actions on earthquake resistance techniques and BCP preparedness
Deliver healthy and comfortable lifestyles
  • Heightened need for comfortable, healthy and productive indoor environments
  • Reputational risk if health damage occurred in one of Hulic’s buildings
Coexistence with business partners / local communities
  • Better results are expected through synergies brought by aiming for mutual sustainable growth with our business partners and local communities
  • Our reputation may suffer and relationships may deteriorate if we neglected local connections
Respond to aging society
  • Heightened need for nursing homes and hospitals with the aging of society and increase in number of healthier senior citizens
  • Hiring-related costs may rise and shortage of care workers may materialize as the population of young generation declines
Respond to increasing number of tourists
  • Expected rise in need for accommodation over the medium- to long-term
  • Risk of losing hotel guests if we failed to respond to diverse tourist needs
Strike a work-life balance and advance talent development
  • Improvement of employee motivation and brand value in talent acquisition by enhancing workplace wellness features and enriching talent development program
  • Turnover rate may rise if support programs were insufficient for various work styles
Advance diversity & inclusion and respect for human rights
  • Improvement of operational quality and productivity can be achieved by respecting diversity & inclusion
  • Reputational risk may rise if we failed to respond to the need for diversity & inclusion
Practice sustainable agriculture
  • Heightened need for low-cost, high-quality agricultural products at developing countries due to decline in Japan’s farming population
  • Increase of investment costs in response to climate change and changing market conditions
Hulic’s Major Initiatives and Actions SDGs contributed to
  • Develop and apply Hulic earthquake-resistance standards* to ensure the continuity of our tenants as well as the Company’s business operations (Active adoption of earthquake-absorbing and earthquake-damping structures)
  • Comprehensive assessment of natural disaster risks at properties of all asset types
  • (Initiatives in business) Delivering a healthy and comfortable indoor environment, confirming specifications of facilities and interior materials in existing properties and those under development (use of interior finishes and equipment containing no hazardous substances)
  • (Initiatives for employees) Promotion of health and productivity management (introduction of no-smoking hours, medical checkups on par with examinations that exceed legal requirements, etc.)
  • Establishment of long-lasing good relationships through close and continuous mutual communications ((Tenants) Implementation of customer satisfaction surveys, delivering fine-tuned response to tenant needs (Business partners) Establishment of close communications with management and constructions companies (Local communities) Donating books to an elementary school near the Hulic head office building, neighborhood cleanup activities, etc.)
  • (Initiatives in business) Promotion of senior citizen-related businesses (development of and investment in nursing homes)
  • (Initiatives for talent acquisition) To secure a stable workforce, improve fringe benefits and rehire seniors who want to work
  • (Social contribution) Establishment and operation of Hulic Scholarship Program for Training of Welfare Caretakers
  • Promotion of tourism-related business (owned/leased, or managed by the Company)
  • Responses to the diverse needs of tourists by offering a wide range of lodging options (owned/leased: a wide range of business-oriented and luxury hotels in selected locations; Hulic-managed: primarily upscale hotels and luxury hot spring inns)
  • Provision of supporting framework for employees during pregnancy, childcare and caring for the elderly, and raising awareness on related programs
  • Advancement of work style reform and thorough tracking of work hours as a corrective measure to change long working hour culture
  • Enhancement of support program for obtaining qualifications and in-house training program
  • Raising awareness of diversity and inclusion, as well as developing various programs and systems
  • Initiatives to establish a talent management system that recognizes various work styles including work from home
  • Employment of diverse human resources
  • Promotion of agricultural business with a company in Vietnam
  • Strengthening of cooperation with and introduction of new technologies with domestic agricultural companies through investments
  • Information gathering on new crop varieties through joint ventures and implementation of trial cultivation of multiple varieties throughout the year
  • *Earthquake-resistance standards as specified by Hulic are where building performance can safeguard human life and enable continued use of the building with post-earthquake repair in the event of an earthquake with a seismic intensity of seven.

Corporate Governance

  Materiality Major Opportunities and Risks (〇: opportunities, ●: risks)
(G)
Corporate Governance
Further strengthen corporate governance and compliance
  • The effectiveness of operations is ensured and confidence in management improves when internal controls and corporate governance work
  • Non-compliance issue and deterioration of public confidence may occur due to lack of appropriate compliance culture and system
Respond to changes in financial and real estate markets
  • The Company's prompt response to market changes differentiates itself from competitors
  • Decline of real estate leasing revenue, rise of vacancy rate
  • Higher funding costs
Enhance business continuity plans (BCPs)
  • A sense of security for employees and their families may be delivered through taking stronger measures to ensure safety in case of a disaster
  • Delayed resumption of business due to prolonged restoration of head office functions
Hulic’s Major Initiatives and Actions SDGs contributed to
  • Appointment of external directors / auditors with knowledge in a variety of specialized fields
  • Establishment of a nomination committee and a compensation committee
  • Provision of compliance trainings for all employees / establishment of compliance hotlines
(Real estate markets)
  • Maintenance and improvement of competitiveness through adding value to our properties by redevelopments, renovations, etc.
  • Careful selection of investment projects / flexible rebalancing of portfolio mix
(Financial markets)
  • Establishment of cooperative relationships with financial institutions, procurement policy (raise long-term funds at fixed rates)
  • Periodic analysis of market conditions, implementation of rigorous risk management through careful deliveration and reporting at in-house meetings
  • Formulation of BCP, implementation of drills once or more each year
  • Establishment of cooperative program with external parties to examine situations and implement response measures on Company properties in times of disaster
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