Japan Logistics Fund : Principal adverse impact statement pursuant to SFDR

PRINCIPAL ADVERSE IMPACT STATEMENT

The following is the adverse sustainability impact statement of Japan Logistics Fund, Inc. ("JLF") pursuant to Regulation (EU) 2019/2088 ("SFDR"). JLF has no employees in accordance with the prohibition on having employees under the Act on Investment Trusts and Investment Corporations of Japan and relies on Mitsui & Co., Logistics Partners Ltd. (the "Asset Manager"), to manage and operate the properties in our portfolio. JLF and the Asset Manager are hereinafter referred to collectively as "we", "us" or "our". References to "fiscal year" or "FY" are to the 12 months began or beginning April 1 of the year specified in line with the fiscal year of the Asset Manager, unless noted otherwise.

1. Summary

We consider principal adverse impacts of our investment decisions on sustainability factors. The present statement is our consolidated statement on the principal adverse impacts on sustainability factors ("PAI"). This statement on PAI covers the reference period from February 1, 2022 to July 31, 2022. The statement will be reviewed at least once every year.

We believe that our sustainability initiatives are essential for our sustainable growth. We improve long-term returns of investors and contribute to the realization of sustainable society and urban development by implementing initiatives that address social issues. Under our sustainability policies and framework, we, in collaboration with the Asset Manager, take actions on climate change, including energy conservation, use of renewable energy, and being resilient in times of disasters.

We use the definition of PAI as described in Recital 20 of SFDR being "those impacts of investment decisions and advice that result in negative effects on sustainability factors", with sustainability factors referring to environmental, social and employee matters, respect for human rights, anti‐corruption and anti‐bribery matters as defined in article 2 (24) of SFDR.

We believe that investment decisions that negatively affect climate or other environment-related resources, or have negative implications for society, can have a significant impact to risk and value creation for our unitholders. To this end, we consider PAI of our investment decisions throughout all major steps of the investment decision and property management process throughout the lifecycle of the properties in our portfolio.

Please note that SFDR requirements, including the scope of their application to issuers outside the European Economic Area, continue to evolve. We are therefore taking a principles-based approach to compliance with the SFDR disclosure standards, which are subject to change.

2. Description of principal adverse sustainability impacts

Nearly all types of economic activity have the potential to impact various PAI indicators, both positively and adversely. We aim to manage the risk connected to PAI from our investment decisions in several ways, including general screening criteria, due diligence and our ESG initiatives. Some of the PAI indicators listed below are currently already being monitored and reported. As the availability of data improves, it is our intention that more indicators will be added.

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Table 1

Principal adverse sustainability impacts statement

JLF does not invest in investee companies, but invests in real estate. As adverse sustainability indicators 1-16 as contained in Table 1 of Annex 1 of the draft Delegated Regulation pertain to investee companies, these are not included in this PAI statement, which pertains to real estate investments.

Indicators applicable to investments in real estate assets

Adverse	Metric	Impact in	Impact in	Explanation	Actions taken,
sustainability		2022	2021		and actions
indicator					planned and
						targets set for
						the next
						reference
						period
Fossil	17.	Share of	N/A	N/A	We do not	N/A
fuels	Exposure	investments in			invest in real
	to fossil	real estate			estate assets
	fuels	assets			involved in the
	through	involved in			extraction,
	real estate	the extraction,			storage,
	assets	storage,			transport or
		transport or			manufacture of
		manufacture			fossil fuels.
		of fossil fuels
Energy	18.	Share of	As of July 31,	As of July 31,	To track the	Assets that
efficiency	Exposure	investments in	2022, 30.2% of	2021, 56.0% of	environmental	receive outside
	to energy-	energy-	our properties	our properties	performance of	certifications
	inefficient	inefficient real	(by leasable	(by leasable	our properties,	under our
	real estate	estate assets	area) had not	area) had not	we use	green finance
	assets		obtained	obtained	certifications	framework,
			neither	neither	issued by third-	and have
			Certification	Certification	party	energy
			for CASBEE	for CASBEE	organizations	reduction rate
			for Real Estate,	for Real Estate,	such as the	(ERR) of 30%
			ASBEE	ASBEE	Development	or higher are
			Certification	Certification	Bank of Japan's	defined as
			for Buildings	for Buildings	Green Building	"Green
			(New	(New	Certification	Eligible
			Construction),	Construction),	("DBJ	Assets". We
			the BELS	the BELS	Certification"),	adopt
			Certification	Certification	Building	environmental
			nor the DBJ	nor the DBJ	Energy-	measures such
			Certification.	Certification.	efficiency	as LED
					Labeling	installation and
					System	solar panel
					certification	installation,

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("BELS

Certification"),

SMBC Sustainable Building Assessment Loan Program and Comprehensive Assessment System for Built Environment Efficiency ("CASBEE Certification") certification.

and aim to acquire more certifications accordingly.

Table 2

Additional climate and other environment-related indicators

JLF does not invest in investee companies but in real estate. As additional climate and other environment-related indicators 1-17 as contained in Table 2 of Annex 1 of the draft Delegated Regulation pertain to investee companies, these are not included in this PAI statement, which pertains to real estate investments.

Adverse	Adverse sustainability impact (qualitative or quantitative)	Metric
sustainability
impact
	Indicators applicable to investments in real estate assets
Greenhouse gas	18. GHG emissions	Scope 1 GHG
emissions		emissions generated
	Scope 1 GHG emissions generated by real estate assets were 0 t-CO2	by real estate assets
	(in FY2021).
		Scope 2 GHG
	Scope 2 GHG emissions generated by real estate assets were 963 t-	emissions generated
	CO2 (in FY2021).	by real estate assets
	Scope 3 GHG emissions generated by real estate assets were 31,447 t-
	From 1 January 2023,
	CO2 (in FY2021).	Scope 3 GHG
	Total GHG emissions generated by real estate assets were 29,872 t-	emissions generated
	by real estate assets
	CO2 (in FY2020) and 32,410 t-CO2 (in FY2021).
		Total GHG emissions
		generated by real
		estate assets

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Energy consumption

19. Energy consumption intensity

Our total energy consumption intensity (based on gross floor area) of the properties in our portfolio was 0.173 GJ/m2 (in FY2020) and 0.175 GJ/m2 (in FY2021).

Our total energy consumption was 255,288 GJ (in FY2020) and 262,751 GJ (in FY2021).

Energy consumption in GWh of owned real estate assets per square meter

Table 3

Additional indicators for social and employee, respect for human rights, anti-corruption and anti-

bribery matters

JLF has no employees in accordance with the prohibition on having employees under the Act on Investment Trusts and Investment Corporations of Japan, and relies on the Asset Manager to manage and operate the properties in our portfolio. Accordingly, additional indicators for social and employee, respect for human rights, anti-corruption and anti-bribery matters in this PAI statement pertain to the Asset Manager and the tenants of the properties in our portfolio, to the extent available.

SOCIAL AND EMPLOYEE, RESPECT FOR HUMAN RIGHTS, ANTI-CORRUPTION AND ANTI-

BRIBERY MATTERS

Adverse sustainability impact

Adverse sustainability impact (qualitative or quantitative)

Metric

Indicators applicable to investments to the Asset Manager or tenants

Social and employee matters

5. Lack of grievance/complaints handling mechanism related to employee matters

The Asset Manager has established a hotline for employees which allows them to consult not only with a compliance officer, but also anonymously with outside counsel. All employees of the Asset Manager can report through the hotline a range of matters such as legal violation, violation of human rights, corruption, bribery and harassment through the hotline. Reported matters are promptly addressed and measures are taken to prevent recurrence under the CEO's supervision.

At our all of our properties, a grievance/complaints handling system has been established to allow tenants to report their

Share of investments in investee companies without any grievance/complaints handling mechanism related to employee matters

The Asset Manager has a grievance/complains handling mechanism for all employees.

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complaints to the Asset Manager through the property manager. More Specifically, under consignment contract made between the Asset Manager and the property manager, the property manager is responsible for acting as a contact point for daily complaints from tenants and reporting such complaints to the Asset Manager, and is obliged to submit a monthly report regarding tenant management to the Asset Manager.

For descriptions of actions which JLF takes and will take with respect to the PAI indicators, please refer to our ESG website with respect to JLF: https://8967.jp/en/esg/index.html

3. Description of policies to identify and prioritize principal adverse sustainability impacts

Subject to data availability, we monitor the selected PAI indicators for the existing properties in our portfolio.

Prior to our investment in a property, we conduct due diligence review of the property, including ESG due diligence, which includes selected PAI indicators. The due diligence findings related to selected PAI indicators are reported and reviewed prior to the investment decision.

The Asset Manager tracks and monitors on an ongoing basis consumption of energy, greenhouse gas emission and water consumption at our portfolio properties. The Asset Manager's Sustainability Promotion Liaison Meeting uses the data to assess progress made on against targets, discuss with President and CEO, Representative Director and the Board of Directors of the Asset Manager, and deliberate on necessary action plans every year.

For further information, please refer to our ESG website: https://8967.jp/en/esg/index.html

4. Engagement policies

Due diligence and screening

The Asset Manager considers principal adverse impacts of its investment decisions on sustainability factors, including those listed above. We and the Asset Manager believe that investment decisions that negatively affect climate or other environment-related resources, or have negative implications for society, can have a significant impact to risk and value creation for our unitholders. To this end, we and the Asset Manager consider the principal adverse impacts of our investment decisions on sustainability factors throughout all major steps of the investment decision and management process throughout the lifecycle of our portfolio properties.

At the properties we operate, we set numerical targets and monitor the amount of greenhouse gas emissions within the property in order to reduce our environmental burden.

Engagement

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