Japan Logistics Fund : Statement on principal adverse impacts of investment decisions on sustainability factors

STATEMENT ON PRINCIPAL ADVERSE IMPACTS OF INVESTMENT DECISIONS ON SUSTAINABILITY FACTORS

Product name: Japan Logistics Fund, Inc.

Legal entity identifier: 3538004KZWISCQO70151

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 JLF's 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.

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.

1. Summary

Pursuant to Article 4 of the Delegated Regulation C(2022)1931 supplementing SFDR (the "SFDR Delegated Regulation"), JLF is required to publish on its website the information referred to therein covering the period of one calendar year. JLF is a Japanese real estate investment trust, commonly known as J-REIT, and has no employees, relying on the Asset Manager for the management and operation of its properties. The Asset Manager does not operate based on a calendar year, but operates based on fiscal year ending in March of ever year. A recalculation and translation of the data into the reference period of one calendar year would most likely lead to inaccuracies and would therefore provide a potentially less accurate overview of the required information than using the approved and validated data for the period from April 1, 2022 to March 31, 2023. This reference period is sufficiently compatible with, and shows results that do not materially differ from, those that would be produced using the calendar year-based reference period noted in the SFDR Delegated Regulation.

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 April 1, 2022 to March 31, 2023. The statement will be reviewed at least once during every twelve-month period ending on March 31 of each 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 JLF's 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 JLF's portfolio.

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.

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 SFDR 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		FY2022	FY2021		and actions
	indicator					planned and
							targets set for
							the next
							reference period
Fossil		17.	Share of	N/A	N/A	JLF does not	N/A
fuels		Exposure	investments in			invest in real
		to fossil	real estate			estate assets
		fuels	assets involved			involved in the
		through	in the			extraction,
		real estate	extraction,			storage,
		assets	storage,			transport or
			transport or			manufacture of
			manufacture of			fossil fuels.
			fossil fuels

Energy	18.	Share of
efficiency	Exposure	investments in
	to energy-	energy-
	inefficient	inefficient real
	real estate	estate assets
	assets

As of March 31, 2023, 21.4% of JLF's properties did not qualify as Eligible Green Assets (as defined to the right) based on leasable area. We consider properties other than Green Eligible Assets to be "energy- inefficient real estate assets".

As of March 31, 2022, 31.1% of JLF's properties did not qualify as Eligible Green Assets (as defined to the right) based on leasable area. We consider properties other than Green Eligible Assets to be "energy- inefficient real estate assets".

To track the environmental performance of JLF's properties, we use certifications issued by third- party organizations such as the Development Bank of Japan's Green Building Certification ("DBJ Certification"), Building Energy- efficiency Labeling System certification ("BELS Certification"),

SMBC Sustainable Building Assessment Loan Program, Certification for Comprehensive Assessment System for Built Environment Efficiency ("CASBEE") for Real Estate and Certification for CASBEE for New Construction. With respect to

DBJ Certification, we consider a property to have sufficient environmental certification if it received a 3- star ranking or higher out of

We adopt environmental measures such as LED installation and solar panel installation, and aim to acquire more certifications accordingly. We aim to increase the percentage of JLF's properties with environmental certifications based on leasable area to 90% by the end of FY2025.

DBJ certification's

5-star ranking system. With respect to BELS Certification, we consider a property to have sufficient environmental certification if it received a 3- star ranking or higher out of

BELS Certification's 5-star ranking system. With respect to CASBEE, we consider a property to have sufficient environmental certification if it received a Rank B+ or higher out of the

CASBEE ranking system for Real Estate or New Construction featuring Rank

1. (excellent), Rank A (very good), Rank B+ (good), Rank B- (slightly inferior) and Rank C (inferior). We consider JLF's properties that receive any such sufficient environmental certifications or equivalent level of environmental certifications, or have energy reduction rate of 30% or

higher as

"Green Eligible Assets".

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 SFDR Delegated Regulation pertain to investee companies, these are not included in this PAI statement, which pertains to real estate investments.

CLIMATE AND OTHER ENVIRONMENT-RELATED INDICATORS

Adverse sustainability impact

Adverse impact on sustainability factors (qualitative or

quantitative)

Metric

Indicators applicable to investments in real estate assets

Greenhouse gas emissions

18. GHG emissions

We monitor and track GHG emissions of the properties in JLF's portfolio by estimating GHG emissions based on the energy consumption (including fuel and electricity consumption) of JLF's properties (including properties that were sold or acquired during the relevant period) and the adjusted emissions coefficients published by the Ministry of the Environment of Japan, which we regularly check for updates. In addition, we started purchasing non-fossil fuel certificates in FY2022 in order to offset the estimated GHG emissions of JLF's properties.

Based on this method, Scope 1, Scope 2, Scope 3 and total GHG emissions of the properties in JLF's portfolio during FY2022 and

FY2021 were:

GHG	Unit	FY20221	FY2021
emissions
Scope 1	(t-CO2)	0	0
Scope 2	(t-CO2)	753	792
Scope 3	(t-CO2)	27,205	28,400
Total	(t-CO2)	27,958	29,192

(Note)

1. As noted above, we have purchased non-fossil fuel certificates to offset GHG emissions starting in FY2022. After offsetting the non-fossil fuel certificates purchased during FY2022, Scope 2 and Scope 3 GHG emissions for FY2022 were 0 t-CO2 and 27,195 t- CO2, respectively.

Scope 1 GHG emissions generated by real estate assets

Scope 2 GHG emissions generated by real estate assets

Scope 3 GHG emissions generated by real estate assets

Total GHG emissions generated by real estate assets