CRE Logistics REIT : Explanatory Material based on TCFD Recommendations

Securities Code 3487

Explanatory Material based on TCFD Recommendations

• This material is a summary of the information announced on February 17, 2022, in the "Notice Concerning Support for TCFD Recommendations" and additional information incidental to the content of the Notice.
• While this material includes statements regarding future policies and results forecasts, these statements do not guarantee the future results and financial position of the Investment Corporation.

LogiSquare Kuki

August 15, 2022

CRE REIT Advisers, Inc.

Awareness of Climate Change and Declaration of Support for the TCFD Recommendations, Etc.

Awareness of climate change

• The Paris Agreement adopted in 2015 set a common goal of limiting the global average temperature increase to less than 2°C compared with pre-industrial levels (non-binding target 1.5°C) and reducing greenhouse gas emissions to virtually zero by the second half of the 21st century. This is expected to result in a significant transition toward a decarbonization of society and the economy, including the strengthening of international frameworks to reduce greenhouse gas emissions and policies such as emission controls in Japan and overseas.
• In light of this growing interest in sustainability in society as a whole, CRE REIT Advisers, Inc. ("the Asset Manager"), the asset manager to which CRE Logistics REIT, Inc. ("CRE REIT") entrusts the management of its assets, is focusing on efforts for ESG issues, believing that addressing sustainability and ESG issues, including the response to climate change, will contribute to the strengthening of CRE REIT's competitive edge and the enhancement of its unitholder value over the medium to long term.
• Above all, the Asset Manager recognizes that enhancing its resilience to socioeconomic changes brought about by climate change and physical changes in the global environment is essential for CRE REIT to secure sustainable and stable earnings over the long term.

Declaration of support for the TCFD recommendations and participation in the TCFD Consortium

• To promote the climate-related disclosure, the Asset Manager declared its support for the Task Force on Climate-related Financial Disclosures (TCFD) in February 2022 and participates in the TCFD Consortium, in which many companies in Japan supporting the TCFD participate.
• In the TCFD Consortium, companies and financial institutions that support the TCFD recommendations are working together to pursue their efforts and discuss initiatives to promote effective corporate information disclosure and link disclosed information to appropriate investment decisions by financial institutions and others. Through its participation in the TCFD Consortium, the Asset Manager will engage in dialogue with companies that support the TCFD recommendations, gather information on good practices and promote climate-related financial disclosure in line with TCFD recommendations.

Copyright (C) 2022 CRE Logistics REIT, Inc. All Rights Reserved.

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Governance

Sustainability promotion structure

• The Asset Manager has established the following framework to continuously and methodically promote initiatives for sustainability and ESG issues including the response to climate change.

		Responsible persons and		Roles, etc.
		members
Chief Sustainability		Representative Director and		Overseeing establishment of frameworks for promoting sustainability
Officer		President		and execution of various policies, targets and measures.

Sustainability	Head of the Corporate		Implementing the establishment of frameworks and measures to
Operating Officer	Planning Department		promote sustainability.
	Chief Sustainability Officer		Holding a meeting at least once every three months, in principle, and
		implementing the following.
	Sustainability Operating
		•	Examining and devising various policies, targets and measures related
	Officer
Sustainability			to sustainability.
Full-time Directors
	•	Continuously following up on issues regarding unachieved targets
Promotion Committee
Head of the Investment			and findings by incorporating them into targets for the next fiscal
	Management Department		•	period, in principle.
	Compliance Officer		Reporting on policies, targets and measures to the Board of Directors
			of the Asset Manager and the Board of Directors of CRE REIT.
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Strategy (1) Conditions for Scenario Analyses

Conducting scenario analyses

• To identify and assess the impacts (risks and opportunities) of climate change-related risks on CRE REIT's portfolio and take them into account in its business strategy, the Asset Manager conducted a scenario analysis under two scenarios of 1.5°C and 4°C.

Conditions for scenario analyses

	Scope	CRE REIT's portfolio
	Time span	Short	As of the end of	Medium	As of the end of	Long	As of the end of
	-term	2025		-term	2030	-term	2050
	Categories of climate change-related risks				Major sources of information referenced
				1.5°C scenario		4°C scenario
		Risks arising from new regulations, taxation,			IEA (International Energy	IEA World Energy Outlook
				Agency) World Energy
	Transition risks	technologies, etc. associated with the decarbonization		2020
		Outlook 2020
		of society and economy				NZE2050	STEPS
		Risk of direct business damage caused by climate			IPCC (Intergovernmental
				Panel on Climate Change)	IPCC the Fifth Assessment
	Physical risks	change, such as intensified natural disasters and long-
		the Fifth Assessment Report	Report RCP8.5
		term shifts in climate patterns				RCP2.6
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Strategy (2) Overview of Each Scenario

Overview of each scenario

1.5°C scenario

• To achieve a decarbonized society, strict laws, regulations and taxation systems are implemented.
• Transition risk is high, and physical risk is low.

Climate and weather

CO2 emissions are on a downward trend.

Temperature rise is controlled.

Government

Strengthening of laws and regulations on carbon

emissions and energy consumption

Strengthening of energy saving standards

Investors and financial institutions

Spreading of ESG investment

Growing demand for ESG disclosure

Tenants

Preference for properties with high environmental

performance

4°C scenario

• Strict laws, regulations and taxation systems are not implemented, and no progress is made toward achieving a decarbonized society.
• Transition risk is low, and physical risk is high.

Climate and weather

Increase in natural disasters due to higher

temperatures

Government

Laws and regulations on carbon emissions and energy consumption are not yet developed.

Investors and financial institutions

ESG investment will not be a primary investment

method.

Tenants

Tenants who prefer properties with high environmental performance are limited.

Copyright (C) 2022 CRE Logistics REIT, Inc. All Rights Reserved.

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