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SUSTAINABILITY MANAGEMENT

Material Issues of the Mitsubishi Estate Group

The Mitsubishi Estate Group implemented internal working units throughout the Group in fiscal 2018 to promote further Group-wide integration of sustainability and management. In the working units, we newly identified the themes that the Group should focus on in consideration of the SDGs as the seven material issues (key issues in sustainability management) as well as the associated opportunities and risks. Then the Group formulated Mitsubishi Estate Group 2030 Goals for SDGs based on these seven material issues. The Group will work to achieve its key themes derived from this process in its Long-Term Management Plan 2030.

Process for Identifying Material Issues

STEP01

Set out strengths/characteristics of each business unit

  • Review process for each business
  • Clarified strengths/characteristics (source of value creation) of own company

STEP02

Identified 55 changes in business environment related to business activities

  • Identified social issues and trends, such as SDGs
  • Set out relationships between business processes and social issues and trends, such as SDGs
  • In addition to relationships with business processes, examined social environment and trends from the perspective of the Medium-Term Management Plan (fiscal 2018-2020) and the perspective of the executive office

STEP03

Identified 24 social issues and trends we should focus on from the three perspectives of business unit operations, the Medium-Term Management Plan (fiscal 2018-2020), and external evaluations

  • Identified business opportunities and risks for each social issue and trend
  • Grouped material issues based on opportunities and risks
  • Careful review conducted by working group executive office

24 Social Issues and Trends

  • Worsening of climate change
  • Exhaustion of existing natural resources and resultant changes in energy configuration in society as a whole
  • Increase in frequency of natural disasters (including earthquakes)
  • Further penetration of the Internet of Things (IoT) (including virtualization and acceleration of the proliferation of information)
  • Increase in e-commerce and omni-channel commerce, and diversification of payment methods
  • Economic growth of emerging nations, principally in Asia
  • Rise in interest in physical and mental health, medical care, and wellness
  • Acceleration of the aging population and changing position of the elderly in society in Japan
  • Progress of the social advancement of women and the diversification of society
  • Growth in need for social integration and universal design
  • Increase in prevalence of aging public infrastructure and housing stock (including vacant housing)
  • Changes in lifestyles and work styles
  • Deterioration of the natural environment and depletion of natural resources
  • Increase in social unease due to terrorism and crime (including risks from the outbreak of infectious diseases)
  • Risk of rise in associated costs
  • Improvements in artificial intelligence (AI) (including the spread of automated driving technology)
  • Progress of globalization (including increases in inbound and outbound tourism and rise in immigration)
  • Global population growth and shortage of food supplies
  • Decline in the total population and working-age population of Japan
  • Emergence of risks in the supply chain (including worsening of human rights issues)
  • Increase in number of foreign workers in Japan
  • Restructuring and revitalization of regional communities (including regional depopulation and population increases of major cities)
  • Promotion of private sector vitality, as a result of the privatization of public facilities
  • Diversification of consumption patterns, such as the sharing economy

STEP04

Implemented dialogue with stakeholders in order to share awareness internally and externally

  • Prepared draft of material issues and carried out stakeholder interviews
  • Submitted to management
  • Carried out interviews with three outside experts for third-party opinions on the draft of material issues submitted to management
  • Titles as of December 2018
  • Dr. Mika Takaoka (Ph.D. in Economics)
    Professor, College of Business, Rikkyo University
  • Mari Yoshitaka
    Chief Environmental and Social Strategist, Environmental Strategy Advisory Division, Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
  • Dr. Norichika Kanie (Ph.D. in Media and Governance)
    Professor, Graduate School of Media and Governance, Keio University

(In no particular order)

Material Issues of the Mitsubishi Estate Group

  • Environment
  • Globality
  • Community
  • Diversity
  • Declining Birthrate
     and Aging
     Population
  • Leveraging Existing
     Properties
  • Digital Innovation

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Opportunities and Risks for Each Material Issue

The opportunities and risks for the seven material issues and their relationships with the four key themes listed in the Mitsubishi Estate Group 2030 Goals for SDGs are as shown below.

Material Issues Main Opportunities Main Risks Related Key Themes in Mitsubishi Estate Group 2030 Goals for SDGs

EnvironmentEnvironment

  • Increasing need for acquisition and leasing of real estate with low environmental impact
  • Increasing need for acquisition and leasing of real estate with resilience following natural disasters
  • Decreasing cost of environmental countermeasures and investment with the advancement of technological innovation
  • Declining asset prices and increasing cost of maintenance and countermeasures due to intensification and increase in disasters (urban flooding, etc.) associated with climate change
  • Increasing cost for new real estate development due to stronger environmental regulations and for countermeasures due to tightening of standards for repair work
1.Environment
3.Innovation
4.Resilience

GlobalityGlobality

  • Increasing opportunities for real estate investment and urban development outside Japan
  • Increasing demand for facilities and services to meet needs of non-Japanese customers
  • Decreasing personnel expenses, including construction costs, and resolution of labor shortages through acceptance of non-Japanese workers
  • Intensifying global inter-city competition
  • Increasing country-specific risks and compliance risks, including supply chain management
2.Diversity & Inclusion
3.Innovation

CommunityCommunity

  • Increasing need for acquisition and leasing of real estate with high resilience to natural disasters, such as earthquakes
  • Increasing business opportunities taking advantage of regional revitalization and urban development expertise
  • Increasing demand for facilities and services tailored to diverse lifestyles and working and consumption styles, including acceleration of telework and increase in freelancing
  • Falling asset values and rising expenses for maintenance and countermeasures due to earthquakes and other natural disasters
  • Declining public order and falling asset values for surrounding areas due to aging buildings and rise in vacant housing
  • Declining demand for facilities and services associated with increase in telework, etc.
1.Environment
2.Diversity & Inclusion
3.Innovation
4.Resilience

DiversityDiversity

  • Increasing demand for facilities and services tailored to diverse lifestyles and working and consumption styles
  • Declining demand for facilities and services with inadequate provision for diversified needs
2.Diversity & Inclusion
3.Innovation

Declining Birthrate and Aging PopulationDeclining Birthrate and Aging Population

  • Increasing demand for facilities and services tailored to new needs accompanying demographic change
  • Increasing need for facilities and services tailored to universal design, including barrier-free access
  • Decreasing demand for facilities and services accompanying demographic change (decline in working population, etc.)
2.Diversity & Inclusion
3.Innovation

Leveraging Existing PropertiesLeveraging Existing Properties

  • Increasing need for renovation and effective use of existing properties
  • Reducing waste accompanying longer demolition/rebuilding span due to effective use of existing properties
  • Declining need for newly built real estate which is highly priced compared with existing and older properties
  • Increasing expenses for repairs and disaster countermeasures accompanying aging of properties
1.Environment
2.Diversity & Inclusion
3.Innovation
4.Resilience

Digital InnovationDigital Innovation

  • Streamlining facility operation and increasing convenience utilizing IT and robots
  • Increasing need and opportunities for utilization in smart communities, residences, and offices
  • Declining need for physical stores and services accompanying development of online shopping, including e-commerce
  • Declining demand for facilities and services due to delayed provision for introduction of IT and digital innovation
1.Environment
2.Diversity & Inclusion
3.Innovation
4.Resilience

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Main Values Provided

  • Sustainable, resilient, safe and secure urban development

    Community

  • Urban development managed for climate change, waste, and energy

    Environment

  • Borderless urban development with respect for diverse backgrounds worldwide

    GlobalityDiversity

  • Interactive, value-added urban development based on knowledge-building and networks

    Community

  • Socially Inclusive Urban Development

    Diversity

  • Abundant and comfortable urban development responding to demographic and lifestyle changes

    Declining Birthrate and Aging PopulationCommunity

  • Efficient and eco-friendly urban development leveraging existing properties

    Leveraging Existing PropertiesEnvironment

  • Cutting-edge urban development with continual open innovation

    Digital Innovation