Initiatives for Sustainability

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Environmental Initiatives

Engaging the social mission that is to improve the environmental performance of the properties we manage, we will lower the environmental impact by constantly reducing the negative environmental impact of these properties such as energy consumption, GHG emissions, water consumption and the generation of waste materials and having activities for the proper management of hazardous substances and reduction in their use, and make contribution to environmental sustainability with the following environmental initiatives in a proactive manner for increasing mid-long term profit.

Initiatives to Improve Environmental Performance of Building

KDO aims to maximize unitholder profits, obtain stable earnings and achieve sustainable growth in investment assets by mainly investing in and operating mid-sized office buildings in the Tokyo Metropolitan Area (Tokyo and its three neighboring prefectures: Kanagawa, Saitama and Chiba). For this reason, 87 properties or 91% of KDO portfolio is mid-sized office buildings (approx. 84% by acquisition price) and average age is approx. 24 years as of April 30, 2021.
In general, large-sized office buildings are regarded as efficient and easy to achieve certifications, however KDO and KFM have achieved new acquisition and improvement with the level of environmental certifications at mid-sized buildings through refurbishment and environmental measures to improve energy efficiency with over 15 years of experience and knowledge in real estate asset management.

Refurbishment Case Studies: certified as green building standard or improve level of green certification

Fully renovated following the move-out of the tenant that had occupied the whole building (completed in April 2016)

・Review of floor plan for multi-tenants
・Upgrading of common/private area
・Introduction of grid ceiling in private area
・HVAC renewal to enhance energy efficiency
・Installation of LED lightings in common/private area
・Renewal of sanitation facilities to more water-efficient equipment.

Achieved "two stars" in DBJ Green Building Certification in October 2016
The rank improved to "three stars" in November 2018

BELS Certification "3 Star"

Occupancy rate reached approx. 50% about one month after the renovation and full about six months after. The building successfully filled vacancies at an excellent pace.

KDX Yokohama Kannai Building

Conducted a large-scale renovation of common areas, etc. following the move-out of the tenants that occupied 5 floors (completed in April 2021)

・Installation of Low-E glasses and LED lighting in common areas
・Conducting regular tenant satisfaction surveys
・Adoption of vibration control systems, installation of emergency generators, etc.

The rank improved from “two stars” to “three stars” in June 2021.

Conducted a large-scale renovation as countermeasures against aging deterioration of the building and obsolescence of the design to raise competitiveness (completed in October 2016)

・Upgrading of common area
・Full renovation of rental conference rooms, community space, etc.
・HVAC renewal to enhance energy-efficiency
・Installation of LED lightings in common area, etc

Achieved "one star" in DBJ Green Building Certification in Oct. 2016
The rank improved to "two stars" in November 2018

Increased newly contracted rents by 15% after the renovation

KDX Shinjuku Building

Restroom renovation was implemented for measures against aged deterioration and water-saving.

・All Toilets were renewed to high efficiency model to reduce water use from 16ℓ upon final completion per flush to 4.8ℓ after the renovation, resulted in water efficiency performance considerably improved than former equipment

The rank of Certification for CASBEE for Real Estate has improved from initially acquired “A” to “S”.

For the following properties, the rank of green certification has improved by implementing both software and hardware measures to enhance energy and water efficiency through LED introduction for lighting facilities and restroom renovation and improve customer satisfaction such as placing an emergency kit box in elevators and organizing tenant engagement activities for energy conservation.

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KDO considers it important to seek to identify and improve the environmental performance of non-certified properties. Accordingly, KDO collects data on its whole portfolio (Note) and implements measures to improve efficiency.

As of september 30, 2021

Note: The scope for above are buildings, where KDO has the authority to introduce and implement policies on operations on energy.

Reduction of Energy Consumption, GHG Emissions and Water Consumption (Initiatives for Climate Change, etc.)

Global warming, as the main factor for a climate change, has been the primal topic at international meetings so far and in 2015 Paris agreement has adopted a new framework in 18 years since Kyoto protocol. In this agreement, one of the goals is to keep the increase in global average temperature to well below 2°C above pre-industrial levels. Also, water scarcity derived from climate change and increase in human population is recognized as a serious issue globally.
Considering the recent increase of extreme weather condition, which we expect to have significant impact on operations of real estate asset management company and its properties, KDO and KFM have identified "reduction of energy consumption, GHG emissions and water consumption" as the material topic and committed to make contributions to sustainability of environment through continually reducing energy, GHG emissions and water consumption.

Process to Promote Energy Efficiency/PDCA Cycle

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KDO has set energy reduction targets (medium- to long-term targets) as follows

Reduction targets for energy consumption (medium- to long-term targets)

Reduce the energy intensity by an annual average rate of 1% or more in five years in accordance with the Act on Rationalizing Energy Use (the Energy Saving Act)
Set individual targets for properties subject to local regulations on measures to cope with global warming

KDO has established PDCA process as above to achieve the medium- to long-term target on reduction in energy consumption, and been monitoring and assessing performance on energy consumption at the “Sustainability Committee” held on regular basis and the “Energy Conservation Measures Committee” where an external consultant also attends.

Year on Year Comparison of Performance data

The total floor area of the portfolio has increased from 664,402.77 m² as of April 30, 2016 to 712,623.20 m² as of September 30, 2021. The intensities for energy, GHG and water are all decreased for 2020, compared to those for 2017.

Items 2017 2018 2019 2020
Energy Consumption(GJ) 977,020 973,169 957,744 913,867
Intensity(GJ/㎡) 0.1284 0.1265 0.1215 0.1149
GHG Emission(t-CO2) 44,529 44,358 46,139 42,631
Intensity(t-CO2/m²) 0.005851 0.005765 0.005854 0.005361
Water Consumption(m³) 463,546 460,370 467,882 371,630
Intensity(m³/m²) 0.06091 0.05983 0.05936 0.04673

Reporting period: From April to March for each fiscal year.
Scope: Buidings that KDO has the authority to introduce and implement policies on operations on energy.
Intensity: Calculated by dividing the total consumption/emission amount by the total occupied floor area for each fiscal year.

Measures to improve energy and water efficiency

Installation of LED lightings

The ratio of
converting lighting in
common area (Note)

・Converting lighting in common area, tenant area, etc. and emergency lights (including emergency guide lights) to LED to actively promote reduction of electricity expenses.
・We will continue to convert lightings in tenant area by promoting Green Lease based on discussions with tenants in a planned way as well as in common area.

Note: Ratio is calculated for 90 buildings that completed the LED replacement (including those partially implemented and excluding Shinjuku 6chome Building (Land)) for common area as of the end of September 2021.

Energy reduction through LED lighting rental areas

In 32nd fiscal period (April, 2021), 13 properties switched to LED lighting in rental areas, reducing annual power consumption by 67%.

Note: Calculated by KFM based on the "Annual Energy Consumption, Amount Paid, and GHG Emissions per Household (Nationwide)" obtained from the "FY2019 Statistical Survey on GHG Emissions in the Household Sector (Provisional Figures).

Proactive introduction of water-saving equipment

The reduction ratio of
water consumption (Note)

・Upon renovation of KDX Iidabashi Square, toilets at all the floors of were renewed to high efficiency model to reduce water use from 13ℓ to 4.8ℓ.
・Some of KDO's properties have introduced smart irrigation to facilitate watering plant and save water.

Note: The ratio is calculated based on the estimated reduction amount at time of design and not the actual consumption amount.

Status of Achievement Against Reduction Targets of Energy Consumption Intensity

The reduction ratio of energy
intensity to the reduction
target of 1% on 5-year
average intensity (Note)

We will reduce the energy intensity (Note) by an annual average rate of 1% or more in most recent five years in accordance with the Act on Rationalizing Energy Use (the Energy Saving Act) and set individual targets for properties subject to local regulations on measures to cope with global warming.
Average change in intensity over 5 years from FY2016 to FY2020 is 96.9% or 3.1% reduced from the target and we achieved the reduction target.

Note: Energy intensity is calculated by dividing total energy use equivalent to crude oil (kl/year) by total occupied floor area (m2/year).

Certified as “Class S (Excellent Operator)” under Assessment System Through Classification of Business Operators”

FY2018 FY2019 FY2020

Assessment system under which operators are classified by METI such as S (excellent operators) and A (operators expected to make further efforts) based on the contents of periodic reports based on Act on the Rational Use of Energy. For three consecutive years, KDO has achieved the target of “reducing the five-year average of energy intensity by 1% or more annually” and was evaluated as "S Class (Excellent operators).

Stakeholder Engagement to Improve Property Performance

As KDO and KFM are continuously making effort to realize sustainable environment, we think it is crucial to cooperate with our tenants who constantly use the properties. KDO and KFM are aiming to cooperate by taking initiatives to raise awareness and promoting green lease that allow both owner and tenant to share economic merit to achieve sustainable environment.
KDO and KFM have identified "tenant engagement to improve environmental performance" as material topic and been making contribution through promoting tenant cooperation and cooperating with other stakeholders such as property management companies who actually manage the building and employees in asset management companies who manages the properties.

Investment standards for the environment and geology

Regarding due diligence for new investments, KDO invests only the properties that indicate that hazardous substances are unlikely to exist in engineering reports and geographical history survey reports, etc., prepared by specialist contractors. Or even if the hazardous substances exist, KDO invests only if the hazardous substances are legally stored or treated in accordance with all laws and regulations, and that has the less possibility of operational failures is judged based on the investigation by the asset management company.

Issuance of Green Bonds

KDO has positioned sustainability improvement initiatives aimed at realizing a sustainable society as an important business management issue to fulfill its corporate social responsibility, and hope to contribute to development of the domestic green bond market by offering opportunities to the universe of investors who take active stance towards ESG investment with further strengthening our efforts to improve sustainability by issuing green bonds.

What is Green Bonds?

A bond issued by companies, local governments, or other organizations to raise funds for domestic and overseas green projects, which is a project contributing to environmental solution, is called green bond. As main characteristics of green bond, proceeds are allocated exclusively to green projects, and are tracked and managed in a reliable manner, ensuring transparency by reporting after the issuance of the bond.

New installation of fund-raising vending machines

Installed fund-raising vending machines in April 2020 in which a portion of the proceeds from the sales of the vending machines is used to support tree-planting activities through a public-interest foundation
KDO will continue to expand these new initiatives and deepen our active involvement to broaden the scope of our support in the future

Activities to Raise Tenant Awareness

We have prepared letters to tenants asking for reducing energy consumption, distributing manuals for office users and putting posters at each floor to raise awareness on energy efficiency.
※Eco-friendly paper including limestone materials are used for the posters.

Green Lease

The properties having introduced
Green Lease contract
End of October 2018   End of September 2021
 2 properties  ▶   9 properties
 4 tenants     ▶  16 tenants

KDO conducted LED lighting installation works for a part of a tenant office space at the expense of KDO based on the Agreement. A certain ratio of the highly reduced amount of electricity charges and maintenance costs (costs for exchanging fluorescent bulbs) has been paid from the tenants in return as Green Lease fee. Also, the ratio of Green Lease Contract is 19.7%(Note) as of September 30, 2021.

Note: The ratio of Green Lease contract is calculated by dividing total area of Green Lease contract by total leased area of properties having introduced Green Lease contract as of September 30, 2021.

What is Green Lease?

It is an agreement specifying that building owners and tenants shall cooperate with each other to reduce environmental burden. The agreement contains provisions to facilitate renovation toward more environmentally-friendly office buildings by reducing building owners' investment burden through sharing the economic merits generated as a result of energy-saving renovation works among building owners and tenants. It also contains an agreement to streamline operations for energy saving, water saving and enhancing indoor conditions.

Introducing Green Lease with Clause for Environmental Cooperation

KDO has promoted including clause to cooperate to improve environmental performance of the property, comfort and productivity of office tenant into its base contract.

Cooperation with Property Managers

KDO and KFM are engaging with property management companies to share our vision, policies of sustainability and when making contract with a new tenant, property managers explain these ideas to tenants to achieve their cooperation.

Education to Employees on Green Building

KFM provides annual sustainability training by external specialists to improve awareness and knowledge on green building for its employees. Also, it is encouraged its employees to acquire qualifications related to green building and there are four employees who are CASBEE Accredited Professionals for Real Estate as of September 30, 2021.