Urban Decarbonization

The shift in energy consumption due to the Industrial Revolution and increased economic activities, etc. have led to greater concentrations of greenhouse gas (GHG) in the atmosphere, including carbon dioxide (CO2), which is causing climate change. Climate change is gradually leading to extreme weather conditions, rising sea levels and other negative impacts on humans, animals, and plants. It also presents various risks for the Mori Building group's business activities. In response, Mori Building is committed to reducing energy consumption, greenhouse gas emissions, and decarbonizing its urban developments and related operations. Mori Building's social mission is to curb climate change, reduce business risks, and create a sustainable society that maintains the ecosystem for humans, animals, and plant life.

The Mori Building group is working to realize environmentally efficient cities by adopting energy-efficient systems in compact cities which vertically incorporates diverse urban functions. We will aim to decarbonize cities by conducting total and high-quality management. This includes introducing cutting-edge environmentally friendly technologies in new buildings, using the regional energy network, improving energy-saving systems when renewing existing buildings, collaborating with tenants on the operational side. Through these efforts, we will strengthen and continue　the decarbonization initiatives.

In May 2022, the Mori Building group established targets in accordance with the global standard of reducing GHG emission from our business activities by 50% in Scope 1*1 and Scope 2*2 in FY 2030 (compared to FY 2019), by 30% in Scope 3*3 (compared to FY 2019), net-zero by FY 2050, and proportion of renewable energy of 100% by FY 2030 in response to the decarbonization trend around the global and in Japan. We are also working toward the national effort targets (Act on the Rational Use of Energy) and existing energy efficient operation, aiming for the mandatory standards of the Tokyo Metropolitan Government (ordinance).

• Press release: Mori Building Fixes Greenhouse Gas Emission Medium & Long Term Targets Aims to Reach Net-Zero Emission by 2050 (2022-05-23)
  Some figures have been revised after recalculation. Please note that the news release contains figures before the recalculation.

Mori building considers the promotion of sustainability-related initiatives is critical to our business execution. On this account, we have established the Sustainability Committee chaired by the President and CEO, and which comprises two separate subcommittees: the Environmental Promotion Committee and the Committee on Human Rights and Societal Issues.

The Sustainability Committee deliberates important matters regarding sustainability such as climate change, human rights, and supply chain management, in addition to supervising and monitoring the two subcommittees. The Board of Directors regularly receives reports from Sustainability Committee and evaluates critical issues.

The Environmental Promotion Committee, chaired by the director in charge of the Environmental Promotion Department, promotes and manages initiatives across the company regarding various environmental issues, including climate change, and reports to the Sustainability Committee on a regular basis.

• Sustainability Promotion System

The Sustainability Committee deliberates major issues such as drawing up policies dealing with risks and opportunities regarding climate change and establishment of targets for GHG emissions, while the Environmental Promotion Committee reports and discusses of these major issues and implements approved policies and plans (including the identification, evaluation and management of risks and opportunities).

The Mori Building group has organized the Risk Management Committee as a body that deliberates and approves of issues and measures for risk management across the group regarding climate change, both in overseas and Japan. In principle, the committee meets once a year to determine important policies and plan activities pertaining to the implementation of its systems, evaluate and analyze risk management, approve policies, monitoring measures, and planning.

Regarding individual risks, the supervisory organization and its authority and responsibilities are defined in accordance with risk management regulations, and heads of the relevant departments develop corresponding measures and instruction.
The Risk Management Committee Secretariat is established under the Risk Management Committee, implements monitoring of the Committee, supporting risk management activities of the supervisory organization for the individual risks.

• Risk Management

The Mori Building group makes recommendations to the Task Force on Climate-related Financial Disclosures (TCFD) which in turn recommends companies and other organizations to recognize climate change-related risks and opportunities, and incorporates them into their management strategies as well as disclose them.

• Task Force on Climate-related Financial Disclosures (TCFD)

The Mori Building group has quantitatively recognized and published the results of CO2 from Mori Building-owned real estate. In 2022, the group established the targets of reducing CO2 by 50% in Scope 1 + 2, and by 30% in Scope 3 by FY 2030 (compared to FY 2019). These targets are in line with the Paris Agreement*1, and were certified by the SBT initiative*2 in 2022 as science-based targets at the 1.5°C level.

In implementing the SBT initiative, we have tallied CO2 emissions from all real estate Mori Building group owned and managed. Going forward, we will tally the quantitative CO2 emissions annually and publish the data on our website as well as report it to CDP.
We received an A- score (level of leadership in climate-change actions) within the Climate Change category in 2022.

The Mori Building group is a member of RE100, a global initiative of companies that aim to procure 100% of the electricity used in their business activities from renewable energy. Our goal is to achieve this by 2030.

• RE100

The Mori Building group is a member of the Japan Climate Leaders' Partnership (JCLP), a coalition of Japanese companies and organizations aiming to achieve the 1.5°C target by promptly transitioning to a decarbonized society to avert a climate crisis.

• JCLP

We are in the process of conducting a scenario analysis to understand the future risks and opportunities posed to our company by extreme weather due to climate change and the growing societal demand for measurers against climate change, as well as to verify the effectiveness of current climate-change measures and use the results to formulate future strategies as required. We identified key risk and opportunity areas that are likely to be highly relevant to our business and conducted an impact analysis. The analysis is based on multiple scenarios for the transition scenario (below 2°C) and the current scenario (4°C) to assess the financial impact of the risks and opportunities as they occur.

Analysis targets and prerequisites

• Area: Central Tokyo, where our company properties are located
• Scope: Entire supply chain
• Duration: From now until 2050

Major adaption scenarios

• below 2°C Scenario: IEA*1, SDS*2 (WEO*3 2020 and 2021) and IEA NZE*4 (WEO 2020 and 2021)
• 4°C Scenario: IPCC*5 RCP 8.5 (AR6 WG1 SPM*6), IEA STEPS*7 (IEA WEO 2020 and 2021)

Analysis procedure

1. Identify factors that could have a significant impact on Mori Building's business by frequently discussing climate-related risks and opportunities TCFD sorted
2. Based on the future predictions of the adoption scenarios, organize, and understand the situation under the below 2°C and 4°C scenarios for the risks and opportunities identified in (1)
3. Calculate the financial impact on our business based on the future predictions of (2). Conduct qualitative analysis if quantitative calculation is difficult due to insufficient information
4. Examine measures for the result of (3)

We will strive to strengthen resilience by maximizing opportunities and minimizing risks through introduction of renewable energy and implementation of early countermeasures to further lower carbonation and decarbonation going forward.

With their own energy plant, Roppongi Hills Mori Tower and Toranomon Hills Business Tower have been supplying renewable energy electricity using non-fossil certificates to tenants who have requested it, the first case of its kind in Japan for an office leasing company. Currently, approximately 70% of the electricity used in domestic properties, mainly in Hills-class properties, is switched to fully renewable energy for the entire building (both tenant-exclusive areas and common areas).

• Roppongi Hills Mori Tower
• Roppongi Hills Gate Tower*
• Roppongi Hills North Tower
• Keyakizaka Complex
• Grand Hyatt Tokyo
• Toranomon Hills Mori Tower*
• Toranomon Hills Business Tower*
• SHINTORA-DORI CORE
• ARK Mori Building
• ARK Hills Sengokuyama Mori Tower*
• ARK Hills South Tower
• Atago Green Hills Mori Tower
• Holland Hills Mori Tower*
• Akasaka Tameike Tower*
• Koraku Mori Building

Given the need to secure a stable supply of renewable energy electricity in the future, we are considering various methods to procure energy from other renewable sources, such as solar- and wind-power producers, in collaboration and partnership with a wide range of businesses, including electric power companies and renewable energy developers.

In our urban developments, where energy density is high and a variety of uses are concentrated, we are simultaneously improving energy efficiency and energy security for disasters by networking energy on an area-wide level through the promotion of regional energy use.

In the vicinity of ARK Hills, beyond the area under Mori Building's management, we are continuously working to expand the energy network for heat supply in collaboration with neighboring developments, thereby further improving efficiency throughout the area.

Roppongi Hills leverages regional energy use from an energy center that is located in the basement of Roppongi Hills Mori Tower and operated by Roppongi Energy Service Co., Ltd. A large gas co-generation system produces electricity and its waste heat is used to generate steam, which is then used for heating and cooling. Roppongi Hills, with its diverse mix of energy uses, requires electricity and heat throughout the day, which helps to level out demand and improve energy efficiency. Between 2015 and 2017, the energy center implemented a full-scale replacement of its gas-turbine generators with gas-engine generators, mainly to meet the changing demands of more eco-conscious tenants as well as upgrade its equipment, resulting in high energy efficiency of about 76% at present.

In the Azabudai Hills and Toranomon Hills area, a high-efficiency energy center run by Toranomon Energy Network Co., Ltd. has been established to implement regional energy supply to the cities. By integrating mixed-use buildings with different usage tendencies, such as offices, residences and hotels, in the Azabudai Hills and Toranomon Hills areas, energy can be leveled and appropriately controlled for improving energy efficiency. In addition, the energy center is equipped with AI for more efficient control and utilization of latent energy, such as sewage heat in the area.

In general, 60% of an office building's energy consumption is allegedly used in tenant dedicated areas, of which 70% is used by tenants via lighting and electrical outlets directly. In order to conserve energy use from buildings, tenant's cooperation, and dialog with the tenants to gain their cooperation are essential. Accordingly, Mori Building holds a Global Warming Countermeasures Conference once a year at each of its buildings, for instance, to request the cooperation of tenants regarding energy conservation and to share energy-conservation case studies with them.

The Mori Building group has developed the Tenant Energy Web System to enable tenants to "visualize" their energy consumption. The system is an online service accessible to all tenants, allowing them to easily check their energy consumption trends and results of their energy-conservation efforts both numerically and graphically and thereby encourage them to adopt specific energy- and power-saving practices.

We are working to save energy and power along with our tenants by sharing the status of the building by publishing environmental information, such as CO2 emissions and hourly electricity consumption across the entire building on monitors in the city.

Mori Building has established a system that responds to the electricity and heat demands of a building, which links the control settings determined in advance by tenants to common area control in case area power is curtailed and automatically executes this setting. This helps to restrain the building's electricity and heat demands while simultaneously optimizing power delivery to the entire area supplied by the energy center. In addition, tenants are able to check the implementation status of their leased area via the Tenant Energy Web System.

To implement advanced management of energy supply and demand, three parties—(1) the tenants, (2) the building owners and (3) the energy center—cooperate to execute demand-response control measures during peak periods of electricity and heat use and energy conservation control measures during normal times.

Mori Building also has obtained BELS certification for tenant dedicated areas. Comparing BELS values on building performance against the energy-consumption performance of individual tenants helps to raise their awareness of energy conservation.

The Mori Building group has obtained assurance from LRQA Limited that specific environment-related data are guaranteed.

• LRQA Independent Assurance Statement