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Responsible organization

Sustainability policies
– Responsible organization –

We ensure compliance and sound risk management in our entire business activities. We are committed to responsible property investment by a responsible organization by aligning with global ESG initiatives and proactively disclosing ESG information.

Corporate governance

Basic views

To ensure its sustainable growth and increased corporate value over the medium to long term by creating value from real estate, Kenedix has configured its corporate governance to strike an appropriate balance between independence and autonomy ("offensive" and "defensive" functions) and a strong sense of ethics. Kenedix accords one of its highest management priorities to employing an appropriate management system and a thorough internal control system, making positive and decisive management decisions based on appropriate processes, and ensuring their accountability.

Corporate Governance Report

Corporate governance guidelines

Kenedix has established corporate governance guidelines in accordance with Tokyo Stock Exchange's Corporate Governance Code that came into effect in June 2015 as a part of its Securities Listing Regulations. These guidelines are based on the spirit and intent of the Corporate Governance Code and ensure the company's sustainable growth and increased corporate value over the medium to long term.

Corporate Governance Guidelines

Corporate governance system

Kenedix has adopted the "Company with a Board of Corporate Auditors" as a form of corporation organization based on the Companies Act, in the aim of combining the Board of Directors' decision-making and monitoring functions with respect to operational execution with the audit authority of the Board of Corporate Auditors.

In addition to this organizational form, to augment the Board of Directors monitoring function and ensure governance with a high degree of transparency and fairness, Kenedix establishes nomination and remuneration advisory committees as voluntary committees. The majority of these committees' members and their chairs are independent outside directors.

Through these overlapping organizational forms, Kenedix has created a hybrid type of Board of Directors that balances the decision-making and monitoring functions for operational execution and promotes sound corporate management that achieves both independence and autonomy.
In a step to increase the diversity of the corporate governance system, a woman became a director of Kenedix for the first time in March 2018.

Corporate governance system
Board of Directors
The Board of Directors, which consists of nine directors including four independent directors, endeavors to fulfill its responsibilities to stakeholders through decision-making on the execution of important operations and the exercise of appropriate monitoring functions with the goals of ensuring Kenedix's sustainable growth and increasing corporate value.
Board of Corporate Auditors
The Board of Corporate Auditors, which consists of five corporate auditors including three independent outside corporate auditors, ensures corporate soundness and fulfills its responsibilities to stakeholders by conducting independent and highly objective audits of the execution of duties by directors and the status of the internal control systems of Kenedix and its subsidiaries. In addition, the Board supports Kenedix's sustainable growth and an increase in corporate value from the perspective of audits.
Equity Investment Committee
This committee discusses proposals for direct investments and loans by Kenedix and approves or rejects the proposals. Committee members also monitor existing investments and loans, discuss allocations and risk management, and submit reports.
Nomination and Remuneration Advisory Committees
To supplement the Board of Directors monitoring function and ensure highly transparent and fair governance, Kenedix establishes nomination and remuneration advisory committees as optional committees comprised mainly of and chaired by independent outside directors. The nomination and remuneration advisory committees deliberate director and corporate auditor personnel administration, director remuneration policies, systems, categories and amounts, and report the results of their findings to the Board of Directors.
Corporate Compliance Committee
This committee, which is a permanent corporate governance unit, discusses matters involving compliance and reaches decisions. Committee members determine the compliance framework, authority and other items for the purpose of making compliance activities more effective. This committee does not handle matters involving business operations, such how businesses that contribute to revenue or are expected to contribute to revenue are conducted, and matters involving business transactions with customers.
Business Compliance Committee
This committee, which is a permanent corporate governance unit, discusses matters involving compliance involving business operations and reaches decisions. Committee members determine the compliance framework, authority and other items for the purpose of making compliance activities for business operations more effective.

Internal audit department, corporate auditors and accounting auditors

Internal audit department

Kenedix has an Internal Audit Department supervised directly by the company president for the purpose of ensuring that the management of the Kenedix Group is rational and appropriate. The department performs internal audits in accordance with rules for studies and assessments concerning assets, internal systems for business operations, compliance, risk management and other items, and how business operations are conducted. The department also submits advice and instructions for improvements and provides support.

Kenedix has two internal auditors. An internal auditor can designate an individual in another department as an internal auditor in order to conduct an audit. Audits cover all departments of Kenedix as well as all Kenedix subsidiaries and affiliated companies.

Corporate auditors

Audits by corporate auditors are performed by the five corporate auditors, three of whom are outside auditors. The corporate auditors attend meetings of the Kenedix Board of Directors and other meetings that the auditors believe are important for the purpose of objectively overseeing management from a fair standpoint. All auditors receive regular reports from the Internal Audit Department, which is responsible for internal audits, and exchange information with this department. The goal of these activities is to conduct efficient and effective audits. The corporate auditors and Internal Audit Department hold regular meetings with the accounting auditors for exchanging information. Proper accounting audits are performed while maintaining close ties with the corporate auditors and the Internal Audit Department. Corporate auditor Shintaro Kanno is a certified public accountant who has considerable expertise in the fields of finance and accounting.

Accounting audits

Kenedix has selected an accounting auditor as prescribed in the Companies Act and undergoes an accounting audit. In addition, as needed, Kenedix receives advice from attorneys, tax accountants and other professionals concerning the compliance with laws and regulations of management and business operations as well as their suitability and fairness.
Kenedix has an auditing contract with BDO Toyo & Co. to perform accounting audits in accordance with the Companies Act and the Financial Instruments and Exchange Act. There is no special interest relationship between Kenedix and BDO Toyo or this company's managing partners that conduct the Kenedix audit.

Internal control system

Kenedix positions as one of its highest management priorities the establishment and operation of a framework to ensure that all executives and employees perform their jobs properly. Kenedix has established a Fundamental Policy for Internal Controls and the following basic policies for the establishment of internal controls. In addition, there are constant actions aimed at further strengthening corporate governance.

  1. System for ensuring that the execution of duties by directors and employees complies with laws and regulations and the Articles of Incorporation
  2. Systems for storing and managing information concerning the execution of duties by Directors
  3. Rules and other systems for the management of the risk of losses for Kenedix
  4. System for ensuring that directors perform their duties efficiently
  5. System for ensuring that Kenedix Group business operations are performed properly
  6. System for the assignment of employees to assist corporate auditors when requested, matters concerning independence of these employees from directors, and matters for ensuring the effectiveness of instructions to these employees from corporate auditors
  7. System for reports by directors and employees to corporate auditors, system for reports to the Kenedix corporate auditors by individuals who have received reports from subsidiary executives, employees and others, system to ensure no negative consequences for individuals who have submitted a report to a corporate auditor, and system for ensuring effective audits
  8. Policy concerning prepayment or reimbursement procedure for expenses resulting from execution of duties by the corporate auditors and the treatment of other expenses or debt resulting from execution of duties by the corporate auditors
  9. Fundamental approach to eliminating anti-social forces and status of measures

Support system for outside directors and/or corporate auditors

Kenedix considers correcting the gap between the information possessed by its management and that possessed by outside directors and outside corporate auditors to be important in appropriately reflecting experience and knowledge of independent outside directors and independent outside corporate auditors (hereinafter, "outside executives") in Board of Directors deliberations, invigorating these deliberations, enhancing their effectiveness and contributing to their quality. The Company implements the following measures for correcting the information gaps, and the Board of Directors confirms that these measures are being appropriately implemented.

  1. People attending Board of Directors' meetings are provided in advance with materials for deliberation. In addition, opportunities are provided to explain agenda items to outside executives in advance, as necessary.
  2. Meetings are held to provide information to outside executives or to have discussion. In principle, these meetings are set on the same day as regular Board of Directors' meetings. These meetings explain an overview of items that are to be tabled at upcoming Board of Directors' meetings and their state of progress, share management and other information and provide other opportunities for outside executives to enhance their specialized knowledge. In addition, outside executives may request the attendance of the management, Group company executives, legal advisors, the accounting auditor and other members to share valuable information, thereby contributing to Board of Directors effectiveness and invigorating deliberations.
  3. Outside executives may voluntarily participate as observers in other types of internal meetings.
  4. The Board of Directors secretariat exists as a vehicle for providing necessary information to the Board of Directors in a timely manner. For independent outside directors in particular, the secretariat places a person in charge separately as a pipeline to the management and internal departments to provide necessary information in a timely manner.

Kenedix has submitted notices that all outside directors and outside corporate auditors are independent.

Policy for determining of remuneration amounts for directors and corporate auditors

Kenedix considers ensuring the ongoing presence of excellent human resources who can contribute to its sustainable growth and increases in corporate value to be an important management priority. From this perspective, Kenedix's basic policies regarding the remuneration of directors, etc. are to 1) reflect their level of contribution to sustainable growth and increases in corporate value, 2) appropriately reflect corporate and individual performance and 3) share with shareholders any share price fluctuation risk.

The frameworks of remuneration for directors and corporate auditors are as follows.

1. Director remuneration
Kenedix positions the remuneration of directors (excluding outside directors) as a sound incentive for achieving its medium- to long-term vision. Accordingly, from the perspectives of fixed and variable compensation, the applicable performance period and cash and shares (common interest with shareholders), there are three types of compensation: 1) cash remuneration as base remuneration (fixed portion), 2) cash remuneration linked with short-term operating performance (variable portion) and 3) share compensation linked with medium-term operating performance (performance-linked share compensation). Remuneration (variable portion) for outside directors consists only of a fixed amount of cash remuneration as base remuneration, from the perspective of their role and independence.

2. Corporate auditor remuneration
From the perspective of their role and independence, remuneration for corporate auditors consists only of a fixed amount of cash remuneration as base remuneration set within the scope of remuneration resolved at the General Meeting of Shareholders.

Performance-linked remuneration

The Board of Directors of Kenedix approved and implemented a resolution in February 10, 2015 to establish a stock remuneration program for directors that is linked to results of operations. This program was subsequently approved by shareholders at the annual meeting held in March 25, 2015. A reexamination of the remuneration of directors and other executives led to the decision to strengthen the link between their remuneration and results of operations and shareholder value. The objective is to make directors more committed to the steady growth of the company's performance and corporate value by exposing directors to both potential gains and losses resulting from stock price movements, just as shareholders are.

Introduction of DPU-linked and unit performance-linked management fee structures

The three listed REITs where Kenedix is the main sponsor have adopted DPU-linked as well as investment unit performance-linked asset management fee structures to provide further common incentives between unitholders and the asset manager, respectively.


Basic views

Strict compliance with laws, regulations and other guidelines is positioned as a vital element of the management of Kenedix based on the awareness that compliance problems are a significant risk regarding business operations.

We have a responsibility to use business operations to create the types of value that meet social requirements. We have extensive and constant compliance programs in order to achieve qualitative and quantitative improvements of the value of our business operations.

By implementing a rigorous compliance program, we are determined to contribute to economic and social advancement and, as a result, earn the admiration of investors and the trust of the public.

Compliance is one of our material issues and the entire group has a strong commitment to compliance.

Compliance system

A Compliance Officer who reports directly to the president of Kenedix is responsible for the establishment and operation of a compliance program. There is also a Corporate Compliance Committee for discussing matters involving compliance at Kenedix (except items involving business operations (primarily how businesses that contribute to revenue or are expected to contribute to revenue are conducted and matters involving business transactions with customers)) and reaching decisions about specific actions. In addition, there is a Business Compliance Committee for discussions and approvals of matters involving compliance concerning business operations of Kenedix.

The Compliance Officer performs the following activities.

  1. Proposals for rules and other items and their implementation
    Proposals, and subsequent implementation of, for rules and other items associated with compliance activities, including the Compliance Manual, Compliance Program and other guidelines for the proper conduct of executives and employees
  2. Guidance and training
    Periodic compliance guidance and training activities for executives and employees
  3. Confirmation of the status of compliance
    Activities to confirm that compliance programs are functioning properly
  4. Handling of problems
    When there is an incident involving financial instruments or any other problem related to compliance, the Compliance Officer immediately performs an investigation to determine what happened. After using this information to determine the cause, the Compliance Officer implements preventive measures and, as needed, submits a report to regulatory authorities and takes other actions.

Compliance manual

The Kenedix Compliance Manual gives executives and employees specific guidelines for what they should do concerning compliance activities. The manual explains corporate compliance programs and laws and regulations that must be understood and observed when conducting business operations. In addition, members of the Compliance Department use this manual to hold seminars in order so that everyone has a sound compliance understanding and commitment.
When a compliance problem occurs, executives and employees have a duty to submit a report containing the basic sequence of events. This includes the discovery of a violation of the Compliance Manual rules and guidelines or behavior that creates a compliance problem as well as the receipt of information from a customer or other source about a compliance problem. If it is not possible to submit this type of report for some reason, the whistleblowing system can be used.

Compliance as a company

Compliance as a company
  • Respect for human rights, refusal to allow discrimination, harassment, etc.
  • No conflicts of interest and the protection of corporate assets
  • Strict oversight of giving or receiving gifts, including meals and entertainment, involving customers
  • Proper management of confidential information (personal information)
  • Proper and timely disclosure of corporate information
  • No insider trading
  • Rejection of anti-social forces
  • Resolution of complaints
  • Proper handling of clerical errors, etc.

Compliance program

Kenedix has a compliance program for the purpose of providing a specific action plan for compliance. As a rule, Kenedix establishes a compliance program every six months and uses the program to provide compliance guidance and training activities for employees.

Corporate ethics policy

Kenedix has the following Corporate ethics policy.

  • We will contribute to the advancement of society as a responsible corporate citizen.
  • We will maintain sincere relationships with all customers and business partners in the spirit of fair play.
  • We will adhere to the high standards of conduct expected of a corporate group with public ownership, contribute to society in many ways, and operate in a manner that benefits investors.
  • We will use our skills as real estate professionals to be a source of highly appealing products and services.
  • We will provide the greatest possible protection and convenience for users of financial services.

Whistleblowing system

Kenedix has a whistleblowing system for the prevention and rapid discovery of incidents caused by violations of laws and regulations and other improper conduct, the improvement of self-cleansing processes, the control of reputational risk exposure, and the retention of public trust. Every executives and employees at the Kenedix Group can use this system for access to internal and external reporting channels.

Internal channel 1
(for all legal, personnel and labor problems)
Compliance Officer
Internal channel 2
(for improper behavior by directors and other executives)
Full-time corporate auditors
External channel (for all categories of problems) External attorney

When an internal or external channel is used to report a problem, a fair investigation is performed while ensuring that the individual who submitted the report is protected. The findings of the investigation are submitted to the Compliance Officer and president of Kenedix and all required measures to resolve the problem are quickly implemented.


The Kenedix Compliance Manual has specific guidelines for the management of meals, entertainment and other gifts involving customers and for the prevention of insider trading. Compliance and other training programs are conducted to ensure that employees understand guidelines for the prevention of bribes and other forms of corruption. In addition, the receipt of meals, entertainment and other gifts involving customers that goes beyond normal socially accepted boundaries poses the risk of collusion. Kenedix has rules for these activities with external individuals and entities, whether concerning the provision or receipt of these activities, for the purpose of ensuring that giving or receiving meals, entertainment or other gifts remains within the scope of generally accepted social standards.

Managing conflicts of interests

Managing conflicts of interest is one of our material issues. The Compliance Manual has specific policies for the prevention of these conflicts and protection of the company's assets. Compliance and other training programs give employees a thorough understanding of conflicts of interest and how to prevent them. In addition, we have Related Party Transaction Rules that include processes for making decisions, basic views concerning these transactions and other guidelines. The objective is to prevent transactions between Kenedix and related parties (executives, major shareholders and others) and between these related parties from being detrimental to shareholder value.

Business compliance committee

The role of the Business Compliance Committee is separate from that of the Corporate Compliance Committee, which discusses matters involving compliance and reaches decisions. Discussing and making decisions involving business that contribute to revenue now or may contribute in the future is this committee's responsibility. These activities concern how business operations are conducted and how these businesses perform transactions with customers. The Business Compliance Committee ensures that business operations use extreme care to avoid conflicts of interest between different stakeholder categories.

Proper information management among group companies

The Kenedix Group provides asset management services for a large number of investment corporations and funds on behalf of investors. Kenedix has signed a memorandum with Kenedix Real Estate Fund Management, Inc. and the investment corporations managed by this company and with Kenedix Investment Partners, Inc. concerning the provision of real estate and other information by Kenedix. The proper provision of information by Kenedix and group companies along with the determination of the types of support supplied by the Kenedix Group (and disclosure of this information) ensures the transparency and suitability of the operations of funds and other similar entities.

Rule concerning conflicts of interest among REITs

Since Kenedix Real Estate Fund Management, Inc. manages multiple REITs, it has established a pipeline committee and adopted internal guidelines in order to prevent the improper allocation of acquisition opportunities as well as prohibition of concurrent serve as several general managers of REIT management departments, and thus, managing conflicts of interests among the REITs.

By managing these rules appropriately and smoothly, it strives to implement appropriate measures for conflicts of interest, such as preventing arbitrary distribution of real estate sales information and preventing conflicts of interest among the investment corporation managed by the asset management company.

Rejection of anti-social forces

The Kenedix Compliance Manual has specific policies for measures concerning anti-social forces. Compliance and other training programs give employees a thorough understanding of these policies.

Kenedix refuses to have any relationship whatsoever with anti-social forces. If a customer or business partner is determined to be an anti-social force or if an improper demand is received from an anti-social force, the prescribed internal process is immediately used to submit a report. Furthermore, we contract the police, an attorney and other external parties as needed to cut off this relationship with an anti-social force.
In addition to eliminating any anti-social force ties that are discovered, our normal business activities include measures to prevent these relationships. For example, we always do a background check of counterparties before signing contracts.

Risk management

Basic views

Kenedix manages risk in accordance with its Risk Management Rules, which define risk factors as potential problems that could be detrimental to corporate value with respect to business processes or be an impediment to the ability to achieve sustained growth.

Risk management is one of the material issues of Kenedix. There are many activities for the proper oversight and control of risk factors.

Risk management system

The General Administration and Human Resources Department is responsible for risk management. Department managers are responsible for risk management in their respective business units and are given the authority needed to establish and operate risk management systems, submit reports, and perform other duties.

The Internal Audit Department performs audits to confirm that risk management activities of the General Administration and Human Resources Department comply with the Risk Management Rules.

Crisis and disaster response system

Kenedix has Crisis Management Rules and Disaster Response Rules for incidents, accidents, natural disasters and other problems that have a major impact on business activities or society overall and are detrimental to corporate value. The General Administration and Human Resources Department is responsible for crisis management and disaster response activities. This department establishes an emergency response headquarters to take actions as needed when problem occurs.

In accordance with the Kenedix Group Business Continuity Plan, disaster response drills are held periodically, there are measures in place to resume business operations quickly following a disaster or other problem, and other measures to be prepared for a crisis.
We periodically reexamine this plan and make revisions as needed.

Kenedix also uses the following measures to be prepared for a disaster.

  1. Storage of disaster response kits with food, water and other supplies for executives and employees at business sites
  2. A safety confirmation system for quickly determining the status of executives and employees after a disaster
  3. Back-up servers in several locations to protect data

Information security

Information security measures at Kenedix are based on an Information Management Policy that includes the following measures and is constantly seeking ways to improve security. These activities reflect the understanding that protecting and properly managing information, whether on paper of electronic media, is a key social responsibility.

  1. Kenedix obtains information as needed for business operations and by using legal and fair methods.
  2. Kenedix protects information from unauthorized access, loss, theft, damage, alteration, leaks, improper use and other problems.
  3. Kenedix has established rules and other guidelines based on the Information Management Policy and prescribed methods for handling information. In addition, the duties and responsibilities of executives and employees regarding information are clearly defined.
  4. When the handling of information is outsourced, Kenedix confirms that companies used for outsourcing have an information management system that is equivalent to its own system.
  5. Kenedix constantly reexamines and makes improvements as needed to its information management framework.

Kenedix has an Information Security Officer for the oversight of information security. This officer is an executive who supervises departments that perform information system operations and who has responsibilities and authority for the handling of information in all business units of Kenedix.

Kenedix executives and employees receive training as needed concerning the proper handling and protection of information. Audits of these activities are performed by designated auditors. In addition, Kenedix has a manual concerning the use of mobile devices, personal smartphones, social media, and other devices and media and uses other activities to ensure that employees manage information strictly in accordance with all rules and guidelines.

Protection of personal information

The Kenedix Compliance Manual contains specific policies for the proper management of confidential information (personal information). Kenedix also has a Personal Information Procedures Manual and conducts compliance and other training programs for employees to be certain that everyone has a strong commitment to protecting personal information.

For the protection and proper management of personal information, Kenedix has a Personal Information Protection Policy, Personal Information Protection Rules, Rules for Handling Specific Personal Information, and other rules and guidelines.

Privacy policy

IT system security

The Kenedix IT System Security Rules specifies the minimum level of measures that employees and others must use for the proper use of information and operation of IT systems. The objectives are preventing leaks, damage, losses and other problems involving information, operating IT systems properly, and minimizing any losses or other damage caused by IT system accidents.

Commitment to responsible investments

Basic views

A commitment to responsible investments is one of the Kenedix material issues. We are committed to building a stronger infrastructure for achieving both sustained growth and social responsibility.

Signing on to the PRI

Signing on to the PRI

The PRI is a set of principles established for the financial industry in 2006 under the leadership of the United Nations Secretary-General of the time, Kofi Annan. PRI comprises six principles.
The PRI encourages the incorporation of ESG issues (Environment, Social and Governance) into investment decision-making processes, with the aim to help companies enhance long-term investment performance and better fulfill their fiduciary duty.
Kenedix has signed on to the PRI and is ambitious to become a real estate asset management company that commit responsible investment through the practice of PRI.

Signing on to the PFA21

Signing on to the PFA21

The PFA21 (Principles for Financial Action for the 21st Century) has been established by drafting committee with participation of various financial institutions in October 2011 as the action guidelines of financial institutions who seek to fulfill their responsibilities and roles required for the formation of a sustainable society. Signing financial institutions will implement initiatives based on the seven principles as much as possible based on their own businesses. It has been positioned as a starting point to collaborate without being restricted by business categories, scale or region.
Kenedix, Inc. and Kenedix Real Estate Fund Management, Inc., which is the asset management company for listed REITs and a private REIT, have signed on to the PFA 21 and are ambitious to become a real estate asset management company that commits to responsible investment through the practice of the PFA21.

GRESB membership


GRESB (Global Real Estate Sustainability Benchmark) is an annual benchmark system for assessing environmental, social and governance performance in the real estate sector. Many institutional investors use GRESB assessments when selecting investment targets and for dialogues with companies where they have made investments.
Kenedix Real Estate Fund Management, Inc., which manages the assets of listed and private REITs, is a participant member of GRESB.

Relevant data

2016 2017 2018 2019
Term of directors 1year 1year 1year 1year
Directors 8 8 10 9
 Internal directors 5 5 6 5
  Men 5 5 5 4
  Women 0 0 1 1
 Independent outside directors 3 3 4 4
  Men 3 3 4 4
  Women 0 0 0 0
 Pct. of female directors 0% 0% 10.0% 11.1%
Pct. of independent outside directors 37.5% 37.5% 40.0% 44.4%
Average age of directors 59.0 57.5 57.8 57.6
Average years since election 5.9years 4.8years 4.3years 3.6years
Number of Board of Directors meetings 25 25 25 21
Average attendance of board meetings 97.5% 95.3% 98.0% 100%
Average board meeting attendance of
independent outside directors
97.3% 92.0% 96.0% 100%
Corporate auditors 4 4 4 5
 Internal corporate auditors 2 2 2 2
  Men 2 2 2 2
  Women 0 0 0 0
 Independent outside corporate auditors 2 2 2 3
  Men 2 2 2 3
  Women 0 0 0 0
 Pct. of female corporate auditors 0% 0% 0% 0%
Pct. of independent outside corporate auditors 50.0% 50.0% 50.0% 60.0%
Total number of compliance training
programs conducted
15 17 21 16