1 Sustainability Management

Meteorological phenomena caused by drastic changes particularly in temperatures, rainfall, seasons, ocean currents, and winds due to climate change are beginning to transform ecosystems and lifestyles in Japan and elsewhere around the world at an unprecedented rate. As such, we have become subject to unparalleled threats. Moreover, we are encountering a situation where humankind will no longer be able to live sustainably unless we alter our lifestyles in terms of addressing global challenges such as those involving scarce resources, discarded plastics and other such materials, and waste matter.
Since ancient times, travel has acted as a humbling and healing endeavor. It has furthermore helped revitalize communities, delivered adventures that bring new discoveries, and been a source of new awakenings that change history. Continuing forward, Hoshino Resorts REIT, Inc. (HRR) is committed to contributing through tourism by ensuring that human creativity and motivation act to perpetuate a sense of humility and hope, even in the midst of such adversity, and by helping give rise to economies and sustainable new lifestyles that help ensure sustainability of the natural environment and society.

The current sponsor of HRR, Hoshino Resorts, Inc., was founded in Karuizawa, Nagano Prefecture in 1904. Hoshino Resorts upgraded the concept of a traditional Japanese inn, which involved drilling underground hot springs and installing hydroelectric power plants, and went on to operate a facility frequented by numerous cultural luminaries. With the launch of its Liberal Education Art Seminars in 1921, the location became a cultural hub of that era and helped give rise to the notion of seeking therapeutic enjoyment by finding respite in cooler surroundings during the summer. Moreover, at the Hoshino Onsen location Hoshino Resorts embarked on conservation efforts to help preserve ecosystems of the adjacent national woodlands that are home to a treasure trove of wild birds, having been inspired by the words of the founder of the Wild Bird Society of Japan, Godo Nakanishi, who upon staying at Hoshino Onsen made a sensational remark for the times that “we are entering an era where people will come to enjoy observing the wild birds that have long been regarded as food.” These efforts culminated in the woodlands becoming nationally designated as the Karuizawa Wild Bird Sanctuary, thereby helping to preserve that environment to this very day.

Having embraced such sentiment with respect to our operations of the HOSHINOYA Karuizawa luxury resort, which opened in 2005 on the former site of Hoshino Onsen, which is full of nature, we have accordingly engaged in an “Energy In My Yard” (EIMY) approach to produce energy within its area, underpinned by the aim of minimizing the burden on our natural surroundings. HOSHINOYA Karuizawa produces approximately 70% of its energy consumption as a result of progress we have made in terms of generating electricity derived from hydropower, utilizing a geothermal energy system, constructing ingeniously designed energy-efficient buildings, and engaging in biomass recycling.In addition, the Picchio initiative's teams of rangers, specializing in plants and animals, take action to establish boundaries between the vegetation and organisms of Karuizawa's woodlands and human activity. They use specialized knowledge and technology to protect natural capital and ecosystem services, working to sustain their value for future generations.

We maximize revenues from our overnight accommodations by maintaining high levels of guest satisfaction. In addition, whereas the tourism business is one that hinges on extremely robust ties to geographic localities, we believe that enabling guests using accommodations of Hoshino Resorts to experience the appeal of our locations is important from the standpoint of Japan's “tourism-oriented nation” strategy. This approach also contributes to local communities and enables us to achieve a mutually beneficial co-existence with community members from the standpoint of preserving natural environments and contributing to society. This is precisely what HRR aims to achieve with respect to its approach to investment that takes into account the notion of creating shared value (CSV) under its environment, social and governance (ESG) strategy.

We have drawn up the following objectives encompassing four key strategies in that regard.

• Shifting to a green building approach: We aim to increasingly shift to a green building approach with respect to our facility holdings with the aim of helping to mitigate climate change and major natural disasters. To such ends, when engaging in new construction, renovation, or repairs, we consider and implement options that will decrease environmental loads in areas such as energy consumption, greenhouse gas (GHG) emissions, water consumption, and waste reduction. At the same time, we strive to achieve greater energy resilience which involves considering options for adopting renewable energy.
• Discarded plastics: We strive to avoid use of plastics to the extent possible in order to help reduce volumes of micro-plastics in the ocean and PET bottle waste on land. Through such initiatives, we will build relationships conducive to enabling cooperation with our suppliers in terms of having a positive impact on lifestyles of our customers. We will furthermore coordinate efforts with all of our operators in addressing not only plastics but also general waste management, and will accordingly enter into green lease agreements with them.
• Tourism and geographic locations: Whereas tourism and geographic regions are inextricably linked, we are committed to the notion of stimulating the economy while concurrently valuing attributes of our geographic locations. This calls for us to develop workplace environments that embrace the notion of wellness, particularly in the form of providing regular health checkups to improve the health of our executives and employees who conduct our business affairs.
• We promote diversity (D), equity (E), and inclusion (I) in the way we work, respecting each individual. First, we will provide an environment in which each and every employee can demonstrate his or her individuality and talents, with the aim of achieving co-existence that transcends gender, age and nationality. Moreover, in promoting our business and achieving our goals, we will strive to create an organization in which individual differences are taken into account and what is needed is provided. These efforts help employees deepen their understanding of different values and encourage them to collaborate with local communities and participate in social contribution activities as they come into contact with local culture and history through their daily work in the tourism industry. By doing so, creative and productive ideas will be generated, and new attractions and services will be created. We will actively promote these efforts to realize sustainable management.