Daiwa AM addresses ESG issues, including climate-related risks, in accordance with our General Policy on Stewardship Activities, which has been decided on by our Stewardship Committee, and with our ESG Investment Policy, which incorporates sustainability considerations. Related activities and policies are deliberated on and monitored by the Stewardship Committee. The Stewardship Committee reports to the Board of Directors on monitoring status in relation to the TCFD.

Framework

The climate-related risks and opportunities are reflected in Daiwa AM's corporate value assessment model, and are utilized in the selection of investee companies. We also aim, through our engagement activities, to guide companies toward a focus on decarbonization and nature-positive management, so as to enhance investee companies' corporate value. Particularly in regard to climate change, we perform scenario analysis using indicators that include conditional value at risk (CVaR) to verify portfolio risk and resilience.

Reflecting identified climate-related risks and opportunities in the corporate value assessment model

The company offers various investment trusts aimed at achieving a decarbonized society. For details, please refer to "4. Strategy (5) Climate-related Strategies ③ Development of products and services, and promotion of investment and lending focused on sustainability".

The company identifies climate change as one of its material issues and engages with investee companies. For details, please refer to "4. Strategy (5) Climate-related Strategies ⑦ Strengthening stakeholder engagement".

Daiwa AM uses information disclosed by companies, data from external vendors, the research and engagement conducted by Daiwa AM itself, and dialog with companies, to monitor the climate-related risks and opportunities for investee companies. Daiwa AM has also put in place a framework for utilizing external vendors' data as a basis for measuring the greenhouse gas emissions of the investee companies in our portfolio, and conducting climate change risk scenario analysis, and monitors and manages risk through periodic analysis.

As GHG emissions indicators, we perform monitoring and analysis of total CO₂ emissions by fund and by asset class, and of carbon footprint, carbon intensity, etc. On the basis of this data and our own original research, we undertake engagement activities with companies to encourage proactive decarbonization.

Daiwa AM has compared the total carbon emissions, carbon footprint, and weighted average carbon intensity for each of the asset classes that we invest in against the respective benchmarks for each class. The carbon footprint is an indicator measuring emissions in relation to portfolio size (market capitalization), while carbon intensity is an indicator measuring carbon emissions of investee companies per unit of sales. For each of these, climate change risk management is performed appropriately by implementing analysis and monitoring. As shown in the table on the next page, Scope 3 emissions were categorized as upstream or downstream, and the relevant emissions for each were calculated. Daiwa AM is striving to promote the decarbonization of its entire supply chain, by establishing a detailed understanding of the total carbon emissions of our investee companies, including Scope 1, Scope 2, and Scope 3 emissions, with a particular emphasis on Scope 3, and making effective use of this information in engagement activities with investee companies.

Carbon footprint and weighted average carbon intensity for overseas equities were found to exceed the benchmark values. This was attributable to having the stocks of Indian corporations accounting for a sizeable share of the investment portfolio. In the case of Japanese corporate bonds, although the carbon footprint was affected by the inclusion in the portfolio of the corporate bonds of electric power companies at a weight higher than the benchmark, the disparity with the benchmark was smaller than in the previous year, and there was also a fall in weighted average carbon intensity, so an improvement could be seen. Going forward, we will continue to utilize engagement activities, etc. to encourage investee companies to implement measures in relation to climate change.

For details, please refer to the "Sustainability Report 2024."

Portfolios' total carbon dioxide emissions

Scope 1, 2

(tons of CO₂ equivalent)

	Daiwa AM	Benchmark	Disparity
Domestic stocks	6,225,937	7,275,447	-14%
Overseas stocks	961,975	732,306	31%
Domestic corporate bonds	161,159	81,818	97%
Overseas corporate bonds	62,161	169,474	-63%
Total	7,411,231	8,259,044	-10%

Scope 3 Upstream

(tons of CO₂ equivalent)

	Daiwa AM	Benchmark	Disparity
Domestic stocks	20,538,700	22,396,744	-8%
Overseas stocks	1,164,744	1,320,133	-12%
Domestic corporate bonds	191,932	162,889	18%
Overseas corporate bonds	198,270	238,558	-17%
Total	22,093,646	24,118,323	-8%

Scope 3 Downstream

(tons of CO₂ equivalent)

	Daiwa AM	Benchmark	Disparity
Domestic stocks	42,192,765	49,558,978	-15%
Overseas stocks	2,693,483	3,395,708	-21%
Domestic corporate bonds	206,535	322,029	-36%
Overseas corporate bonds	454,892	529,307	-14%
Total	45,547,675	53,806,022	-15%

• *1Benchmarks: Domestic stocks: TOPIX (with dividends included) Overseas stocks: MSCI ACWI ex Japan Index Domestic corporate bonds: Bloomberg Asian-Pacific Japan Corporate TR Index Value Unhedged JPY Overseas corporate bonds: Bloomberg Global Aggregate ex-JPY-Corporate TR Index Unhedged USD
• *2Source: Some information is derived from ©2025 MSCI ESG Research LLC. Reproduced by permission

Carbon footprint of portfolio (Scope 1, Scope 2)

Weighted average carbon intensity of portfolio (Scope 1, Scope 2)

• *1The benchmarks used were the same as those used in the previous section for portfolio's total carbon dioxide emissions.
• *2Source: Some information is derived from ©2025 MSCI ESG Research LLC. Reproduced by permission.

The Asset Manager has established the Climate Change and Resilience Policy, the policy for responding to climate-related risks and opportunities and working to make business and strategy resilient to climate-related issues. In accordance with the policy, Chief Climate- Related Issues Officers (general managers of departments engaged in sustainability promotion) make regular reports to the Chief Executive Officer for Climate-Related Issues (President and Representative Director) at Sustainability Promotion Committee meetings. The reports cover matters related to responses to climate change, including identification and evaluation of impacts of climate change, management of risks and opportunities, progress of initiatives for adaptation and mitigation, and indicator and target setting. The Sustainability Promotion Committee deliberates and discusses issues related to climate change, after which the Chief Executive Officer for Climate-Related Issues makes final decisions.

Under this system, climate-related issues are supervised by the President and Representative Director.

To factor climate-related risks and opportunities into the Investment Corporation's real estate management business, the Asset Manager conducted a scenario analysis, using a 1.5°C /2°C scenario and a 4°C scenario. For each scenario, the Asset Manager classified the financial impacts of identified risks and opportunities into short-term, medium-term and long-term impacts and examined relative scales of impacts on the Investment Corporation. Shown below are medium-term and long-term risks from climate change that have a certain degree of financial impacts.

The Investment Corporation's Climate Change and Resilience Policy sets out processes to identify, assess, and manage the impacts of climate change risks and opportunities on the corporation's management activities, strategies, financial plans, etc.

Each Investment Corporations sees the transition to a carbon-neutral society as an opportunity. The following target KPIs (Key Performance Indicators) have been established as key monitoring indicators in the process of managing climate change risks and opportunities.

For details, please refer to the website of Daiwa Office Investment Corporation and Daiwa Securities Living Investment Corporation.