Materiality

We have identified eight materiality issues as priority focus of management attention considering 2030 situation
in order to achieve sustainable growth together with society.
We have also set single-year KPIs for each materiality to monitor and manage the quantitative progress of the response measures.

Eight materiality issues and KPIs

Materiality Identification Process

As a framework for identifying the materiality, we first identify social challenges related to the Company, and then consider whether those issues represent opportunity or risk. The materiality are organized into ESG categories. Handling construction defects was identified as one of the materiality unique to the Company. In order to ensure the execution of publicly announced repair completion plan and prevent similar issues from reoccurring, we designated two KPIs for the purview of governance, and continue to address them as important issues.

• Step1

  Identify social challenges
  related to the Company
• Step2

  Determine whether issue
  represents opportunity or risk
  in the fiscal year 2022
• Step3

  Organize the materiality into
  ESG category
• Step4

  Receive approval from
  Sustainability Committee

Step1 Identify social challenges relevant to the Company

Among a lot of social challenges, ones facing Leopalace21 which provides apartments for single-person households across the country, were identified and discussed within the Sustainability Committee secretariat. As a result, seven items were identified as social challenges relevant to the Company, such as shrinking labor force, demographic trends, employment issues, issues related to the living conditions, governance, and climate change.

Social challenges

• Shrinking
  labor force
  because of
  falling
  birthrate
  and aging
  population
• Employment issues
• Demographic
  trends
• Innovations
  in digital
  technology
• Rising
  demand for
  convenient
  living
  conditions
• Tighter
  checks on
  corporate
  governance
• Climate
  change

Step2 Determine whether issue represents opportunity or risk

We have identified risks and opportunities by determining whether each social challenge poses a risk or an opportunity for the Company.

Each social challenge

• Risk
• or
• Opportunity

Step3 Organize the materiality into ESG category

Based on the risks and opportunities for each social challenge, we examined the key issues that we need to address. As a result, we identified eight materialy issues: offer rental housing with stable operation, promote real estate tech business, work-style reform and HR development, respect for human rights, communication with stakeholders, maintain the workable corporate governance system, strengthen compliance, and environmental initiatives. Each materiality is then organized according to ESG category.

Each social challenge

• Risk
• Opportunity

Eight materiality issues

• E
• S
• G

Step4 Receive approval from Sustainability Committee

The identified materialy issues are reported to and approved by the Sustainability Committee. The materiality issues are reviewed annually and discussed, with or without change, at the first meeting of the Sustainability Committee each year. The Sustainability Committee reports the materiality to the Board of Directors after it approves the materiality.