Daiwa House Industry : Chapter 6 Environmental Vision [5.8MB］

Environmental Vision
Overall picture of environmental strategy and main KPIs .......... 63
Management Message:
Environment and Energy Business Division	.......... 64
Key actions for achieving carbon neutrality	.......... 67
Response to the TCFD recommendations	68
Endless Green Program 2026 .......... 70	Chapter6

Daiwa House Group Integrated Report 2023 61

Message from the CEO		Long-Term Vision		The Story of the Group's		Message from the CFO		Developing	Environmental Vision	Strengthening
	and the 7th Plan		Value Creation			our Businesses	our Bases

Renewable energy		ZEH rate
utilization rate
41%				86%
100%		100%	in
	principle

Governance

Financial Results,

Corporate Information

Introduction rate of

Doing	everything
we can by 2030

ZEH-M rate

(rental housing)

14%

100% in

principle

clean energy cars

(company-owned cars)

1.5%

100%

it should	take
We have decided

level

of CO2 emissions

continues,

.

If the current

reaching the 1.5°C emission

limit

or less before

.

only a decade

our decarbonization

efforts

we can to accelerate

to do everything

results;

Lower

row: FY2030

targets

row: FY2022

Upper

indicator:

Note: For each

Renewable energy

generation equipment

construction (EPC)

2,706MW

5,000MW or

more

ZEB rate

66%

100% in

principle

Daiwa House Group Integrated Report 2023 62

ZEH-M rate

(condominiums)

68%

100% in

principle

Message from the CEO

Long-Term Vision and the 7th Plan

The Story of the Group's

Value Creation

Message from the CFO

Developing	Environmental Vision	Strengthening
our Businesses	our Bases

Governance

Financial Results,

Corporate Information

Chapter 6 Environmental Vision

Overall picture of environmental strategy and main KPIs

Aiming to achieve Our Hopes for the Future, the Group announced an ultimate goal for 2055 and specific milestones for 2030 in our environmental initiatives. Through the Endless Green Program (EGP) 2026, we will steadily pursue circular economy and carbon neutrality, which are one of the materiality.

2026

Targets

Strike a balance between decarbonization (impacts on society) and corporate profits (impacts on economy)

2030

Milestones

2055

Ultimate goals (2050 for climate change)

Materiality

Seventh Medium-TermManagement Plan (Carbon-neutral strategy)

Endless Green Program 2026

decarbonization Closed-loopresource Harmony with the to(Mitigatingclimateandchange)adapting ofsourcingaquaticandenvironmentsconservation natural(Preservation ofenvironmentbiodiversity) (Circular economy)

Community development

GHG emissions from building use (vs FY2015)

Business activities

Reduction rate of GHG emissions from business activities (vs FY2015)

Supply chains

Setting rate of principal suppliers' SBT-level GHG emissions reduction targets

Number of assets subject to effective use

Reduction rate of water consumption per unit of sales(vs FY2012)

Ratio of C-ranked timber

Eco-friendly surface area of green spaces

(cumulative, vs FY2021)

Prevention of chemical pollution

Seven Challenge

1- 54%

2- 55%

390%

1. 4,500
2. - 40%

1. 0%
2. +1million m²

• 63%
• 70%

Achievement of

GHG reduction targets by principal suppliers

(To be formulated in FY2026)

• 45%
  0%

+2 million m²

Carbon neutrality

Minimize the volume of

resources used and

waste emissions

Use water sustainably

Zero deforestation arising from materials procurement at all segments

Prevent any net loss

of biodiversity

Minimize chemical pollution risk

and soil contamination risk

* Prevention of chemical pollution is not defined as Challenge ZERO because it is already at the maintenance and management level.

Daiwa House Group Integrated Report 2023 63

Message from the CEO

Long-Term Vision and the 7th Plan

The Story of the Group's

Value Creation

Message from the CFO

Developing	Environmental Vision	Strengthening
our Businesses	our Bases

Governance

Financial Results,

Corporate Information

Management Message: Environment and Energy Business Division

Doing everything we can by 2030: Continuing our exciting challenge to make the world a better place

We made the environment a part of our business early on, moving into the wind power generation business in 2007, because we believed that businesses harnessing wind, sun, and water are essential in the 21st century. Although there was no guarantee that these businesses would succeed, we continued our challenge with the positive attitude ingrained in our corporate culture. As its says in the founder's spirit, "if you fall, fall forwards," and "there is no mountain we cannot scale, nor river we cannot cross." Our business grew as renewable energy became more widespread.

At a time when we must urgently respond to climate change, we are committed to doing everything we can by 2030. Realizing carbon neutrality by making all our buildings carbon-free is a focal theme of our Seventh Medium-Term Management Plan as a step toward the goal of a circular economy and carbon neutrality (a materiality). Moving forward with this carbon-neutral strategy, we aim to grow one-time revenue businesses by raising the unit price of environment-friendly

buildings and expanding the renewable energy power plant construction contract business. At the same time, we seek to generate synergies with recurring revenue businesses such as renewable power generation and electricity retail to evolve our revenue model. I believe that my mission is to create this virtuous cycle to make a substantial contribution to improving social value by decarbonization as well as improving the value of these businesses. To this end, we have set two KPIs-one for the reducing greenhouse gas (GHG) emissions and one for increasing uptake of renewable energy.

Reduction of GHG emissions

Set goal of reducing emissions to 1.5°C set by SBTi

Daiwa House Group has set a materiality KPI of reducing by 2030, the GHG emissions of its entire value chain by 40% vs fiscal 2015. By scope, it targets a 70% reduction

Director and Managing Executive Officer

Toshiya Nagase Head of Single Family Housing Business Division Head of Environment and Energy Business Division

from business activities (Scopes 1 and 2) and a 63% reduction from community development (Scope 3, Category 11). This ambitious target has been validated by SBTi, and we will achieve it by using renewable energy generated

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Message from the CEO

Long-Term Vision and the 7th Plan

The Story of the Group's

Value Creation

Message from the CFO

Developing	Environmental Vision	Strengthening
our Businesses	our Bases

Governance

Financial Results,

Corporate Information

in-house to reach RE100, making all new buildings we offer net-Zero Energy Houses (ZEHs) or net-Zero Energy Buildings (ZEBs), and installing solar panels on all buildings.

Attaining our goal of making all new buildings we offer ZEHs/ZEBs and installing solar panels on all buildings

With the first year of the Seventh Medium-Term Management Plan behind us, we have noticed a change in environmental awareness among our customers, both individual and corporate. In fiscal 2022, the share of our buildings complying with ZEH specifications increased sharply from 53% in the previous fiscal year to 86%. Contributing factors are progress in sales of ZEH-standard products and the growing share of ZEHs built for sale. Installing solar panels (with the exception of very small sites in downtown areas and areas with heavy snowfall) is now the obvious choice amid heightened environmental awareness among customers and sharply increasing power bills. However, we still see room for improvement, and society demands even more from us. We will continue to advance the uptake of solar panels as an urgent priority.

In the past few years, the number of companies opting for renewable energy as an environmental solution has been trending up, and the value of renewable energy has been re-affirmed amid the recent sharp

increase in electricity prices. As a result, more customers are investing their own funds to install solar panels. At the time we formulated the Seventh Medium-Term Management Plan, we assumed roughly 10% of customers would invest in their own solar panels, with the Group installing solar panels on the customers' roof on their behalf for the other 90% to reach the 100% target. Recent trends show these numbers reversing: 80% of customers are now investing in their own solar panels.

That said, different customers have different preferences depending on the purpose and size of their building. For example, high-capacity solar panels can be installed on a large logistics facility, whose power consumption is relatively low. This makes solar panels a solution offering major advantages, and consequently, customers are generally receptive to installing them. However, they are unlikely to have major benefits for small, retail stores on a per-building basis, which makes owners reluctant to install them. We therefore pitch a comprehensive renewable energy solution to nationwide drugstore and other chains.

We must also reduce GHG emissions at the manufacturing stage of inputs like structural steel and concrete to lower the emissions of our whole value chain. We are working with suppliers on initiatives as well as raising the share of wooden buildings, whose inputs produce less emissions at the manufacturing stage.

Increasing uptake of renewable energy

Securing an overwhelming share

in offsite power plant developments

Our second materiality KPI is to increase uptake of renewable generating capacity to at least 5,000MW by fiscal 2030. We are making steady progress toward this goal. At the end of fiscal 2022, we had installed renewable energy power plants with total capacity of 2,706 MW, with 602MW of capacity developed and operated by the Group. The construction of mega-solar facilities is trending downward as the end of feed-in tariffs (FITs) approaches. Looking ahead, we will focus our efforts on onsite and offsite power purchase agreements (PPAs).

We will continue to work with our business divisions for onsite PPAs with focus on installing solar panels. Meanwhile, our promotion of offsite PPAs has recently started to bear fruit. An offsite PPA takes almost a year of preparation (for such tasks as finding a suitable site and completing procedures for connecting to the grid) before construction can start, because the power plant is built some distance away from the user's site. Only a few companies offer offsite PPAs, and their generating stations are mostly small-scale. However, the Group spent decades amassing information on land availability, and

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