Environmental Initiatives
Climate Change Initiatives
NUD’s Awareness of Climate Change
NUD recognizes the following regarding climate change and improving the resilience of our business.
As shown by the Paris Agreement (2015), Intergovernmental Panel on Climate Change (IPCC) Special Report on Global Warming of 1.5°C (2018), IPCC Sixth Assessment Report (Working Group 1, 2021), and others, the advance of climate change is a scientific fact. It is an issue that will cause dramatic changes to the natural environment and social structure, significantly impacting our management and business as a whole.
We recognized that identifying, assessing, and managing the risks and opportunities caused by climate change and enhancing the resilience of our business are indispensable to ensuring sustainable, stable revenue for us over the long term.
Disclosure of Financial Information Relating to Climate Change
UDAM, with the purpose of pursuing disclosure of financial information relating to climate change, announced its support for the TCFD (Task Force on Climate-Related Financial Disclosures) in April 2022.
TCFD had recommended each entitiy to disclose its initiatives regarding climate change by classifying them under the four items of “Governance,” “Strategy,” “Risk Management” and “Metrics and Targets.”
After that, TCFD passed on its activities to ISSB (International Sustainability Standards Board), which was established under IFRS（International Financial Reporting Standards）Foundation, and dissolved in October 2023, but UDAM will continue to disseminate NUD’s financial information relating to climate change based on the disclosure method recommended by TCFD.
Governance
With regard to climate-related strategies, identification of risks and opportunities, setting of metrics and targets and response to them, NUD reports such matters to the Sustainability Promotion Committee after regularly reviewing them at the Climate-Related Working Group Meeting consisting of the relevant departments of UDAM, and the Sustainability Officer decides them.
Regarding the structure for promoting sustainability at UDAM (including addressing climate change), please refer to the “Sustainability Promotion Structure”.
Strategy
Scenario Analysis
NUD has conducted multiple scenario analyses covering all owned properties.
Since the properties covered by the analysis may change in the future due to acquisition and disposition, the analysis results are also subject to change.
This table can be scrolled sideways.
| Scenario | Risks | Referenced Information Sources | Scenario Overview |
|---|---|---|---|
| 4.0℃ | Transition risks*1 | International Energy Agency (IEA) STEPS | Scenario in which existing policies or plans and agreements announced in recent years are implemented |
| Physical risks*2 | IPCC Fifth Assessment Report – RCP 8.5 | Scenario in which existing policies are relied on and global warming countermeasures surpassing the current ones are not implemented | |
| 1.5℃ | Transition risks | IEA NZE 2050 | Scenario in which CO₂ emissions are reduced by about 40% by 2030 and net zero is achieved by 2050 |
| Physical risks | IPCC Fifth Assessment Report – RCP 2.6 | Scenario in the report with the lowest assumed temperature rise range |
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(Note 1)
Transition risks: Risks arising due to new regulations, taxation, technologies, etc. for the purpose of achieving a carbon-neutral society
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(Note 2)
Physical risks: Risks arising due to climate change itself, such as changes in the weather
Assumed Global Outlook
4.0°C Scenario
This scenario assumes that laws and regulations will not become stricter and while transition risks will be kept relatively low, because global initiatives aimed at carbon reduction do not progress, natural disasters will be more severe and physical risks will be extremely high.
Assumed Global Outlook
1.5°C Scenario
This scenario assumes that strict regulations, taxation, etc. will be implemented to achieve a carbon-neutral society and that greenhouse gas emissions will trend downward, so the physical risks will be low compared to the 4.0°C scenario while the transition risks will be high.
Identification of Risks and Opportunities and Countermeasures
NUD identify risks and opportunities associated with climate change, as well as identify scenarios and evaluate the business impact of each.
The financial impact will be evaluated qualitatively, referring to each scenario.
1. Risk Factors
(1)Transition Risks (Financial risk as the world transitions toward reducing climate change)
This table can be scrolled sideways.
| Category | Assumed Phenomenon (Risk factors identified) |
Major Financial Impact Details (Business Impact) |
4.0℃ Scenario | 1.5℃ Scenario | Measures and Initiatives for Risk mitigation |
||
|---|---|---|---|---|---|---|---|
| Financial Impact | Financial Impact | ||||||
| Medium -term |
Long -term |
Medium -term |
Long -term |
||||
| Policy and legal | Rising GHG emission costs | Increase in operational costs due to creation of GHG emission tax, etc. | Small | Small | Large | Large |
|
| Raise energy conservation standards | Increase in operating costs (renovation costs) due to promotion of energy conservation measures | Small | Small | Medium | Large |
|
|
| Technology | Obsolescence of owned properties due to the evolution and spread of energy conservation technologies | Increase in operating costs (renovation costs) due to introduction of energy-saving technologies | Small | Small | Medium | Large |
|
| Markets | Increasing number of tenants demanding higher energy conservation and natural disaster safety performance | Decline in operating income due to loss of competitiveness | Small | Small | Medium | Large |
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| Reputation | Increasing concerns of investors and financial institutions due to delays in climate change action | Increase in financing costs due to worsening financing conditions | Small | Small | Medium | Large |
|
(2)Physical Risks (Financial risk related to physical damage caused by climate change)
This table can be scrolled sideways.
| Category | Assumed Phenomenon (Risk factors identified) |
Major Financial Impact Details (Business Impact) |
4.0℃ Scenario | 1.5℃ Scenario | Measures and Initiatives for Risk mitigation |
||
|---|---|---|---|---|---|---|---|
| Financial Impact | Financial Impact | ||||||
| Medium -term |
Long -term |
Medium -term |
Long -term |
||||
| Acute | Intensifying natural disasters such as typhoons and torrential rains | Increase in operating costs (repair costs and insurance premiums) | Medium | Large | Small | Medium |
|
| Chronic | Inundation damage due to sea level rise | Increase in operating costs due to major renovations (e.g., bulking) (including increase in financial costs due to capital expenditures) | Medium | Large | Small | Medium |
|
| Increased heat stress, such as extreme weather (e.g., heat waves, intense cold) | Increase in operating costs related to HVAC equipment (including increase in financing costs due to capital expenditures) | Medium | Large | Small | Medium |
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2. Opportunity Factors
This table can be scrolled sideways.
| Category | Assumed Phenomenon (Opportunity factors identified) |
Major Financial Impact Details (Business Impact) |
4.0℃ Scenario | 1.5℃ Scenario | Measures and Initiatives for Realize opportunities |
||
|---|---|---|---|---|---|---|---|
| Financial Impact | Financial Impact | ||||||
| Medium -term |
Long -term |
Medium -term |
Long -term |
||||
| Policy and legal | Improving the environmental performance of owned properties in response to increased energy conservation standards | Lower operating costs (utilities) | Small | Small | Medium | Medium |
|
| Technology | Promote supply of rental properties with excellent energy-saving and disaster prevention performance | Improve profitability by enhancing resilience to natural disasters and attracting more tenants | Small | Small | Medium | Large |
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| Markets | Improve reputation among investors and financial institutions through promotion of climate change measures | Lower financial costs due to improved financing terms | Small | Small | Medium | Large |
|
Risk Management
UDAM manages NUD’s climate-related risks as indicated below.
Organizational Structure
Regarding UDAM’s organizational structure for managing climate-related risks, please refer to “Sustainability Promotion Structure”.
Management Process
- Regarding high-priority climate-related risks and opportunities that are important to business and financial planning which have been discussed by the Sustainability Promotion Committee, the chief climate officer guides the officers appointed in various relevant departments on developing proposals to address them.
- The proposals developed by the officers in the relevant departments are executed following discussion by the Sustainability Promotion Committee, according to their details.
- The chief climate officer supervises the risk identification, assessment, and management processes by providing guidance that factors in climate-related risks that are important to business and financial planning in the existing company-wide risk management program as well.
Metrics and Targets
NUD has established the following key performance indicators (KPIs) and targets to monitor our response to environmental issues.
- 42% reduction in greenhouse gas (CO₂) emissions (Scope 1 and 2) intensity by FY2030 (vs. FY2020)
- Achieving net zero greenhouse gas (CO₂) emissions (Scope 1, 2, and 3 total emissions) by FY2050