SECOND PARTY OPINION
The Government of Japan
Climate Transition Bond Framework

Prepared by: DNV Business Assurance Japan K.K.
Location: Kobe, Japan
Date: 7 November 2023
Ref. Nr.: PRJN-627316-2023-AST-JPN-01

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Contents
Executive Summary

3

Ⅰ. Introduction

13

Ⅱ. Scope and Objectives

18

Ⅲ. Responsibilities of the Issuer and DNV

19Ⅳ. Basis of DNV’s Opinion

20

Ⅴ. Work Undertaken

22

Ⅵ. Findings and DNV’s Opinion

23

Ⅶ. Assessment Conclusion

58

Schedule-1 Climate Transition Bond Eligibility Criteria and Representative Nominated Use of Proceeds(Eligible Projects)

60

Schedule-2 Climate Transition Finance Eligibility Assessment Protocol

62

Schedule-3 Green Bonds Principles (for Climate Transition Bonds with Use of Proceeds) Eligibility
Assessment Protocol

71

Schedule-4 Basic Guidelines on Climate Transition Finance Eligibility Assessment Protocol

77

Schedule-5 Green Bond Guidelines (Transition Bonds with Specific Use of Proceeds) Eligibility
Assessment Protocol

108

Appendix-1 List of Reference Materials

126

Revision history
Revision
number0

Date of Issue
7 November 2023

Remarks
InitialDisclaimer
Our assessment relies on the premise that the data and information provided by Issuer to us as part of our review procedures have been provided in good faith.
Because of the selected nature （sampling） and other inherent limitation of both procedures and systems of internal control, there remains the unavoidable risk thaterrors or irregularities, possibly significant, may not have been detected. Limited depth of evidence gathering including inquiry and analytical procedures and limited
sampling at lower levels in the organization were applied as per scope of work. DNV expressly disclaims any liability or co-responsibility for any decision a person or anentity may make based on this Statement.

Statement of Competence and Independence
DNV applies its own management standards and compliance policies for quality control, in accordance with ISO/IEC 17021:2011 - Conformity Assessment Requirements forbodies providing audit and certification of management systems, and accordingly maintains a comprehensive system of quality control, including documented policies andprocedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. We have complied with the DNV Codeof Conduct1 during the assessment and maintain independence where required by relevant ethical requirements. This engagement work was carried out by an independent
team of sustainability assurance professionals. DNV was not involved in the preparation of statements or data included in the Framework except for this Statement. DNV
maintains complete impartiality toward stakeholders interviewed during the assessment process.

1 DNV Code of Conduct is available from DNV website （www.DNV.com）

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Executive Summary
Environmental initiatives of the Government of Japan:
The Government of Japan regards the actions against climate change, which includes
extreme weather on a global scale and increasing large-scale natural disasters, as achallenge common to all humankind and has made an international commitment to reduce
GHG emissions by 46% in FY2030 (compared to FY2013) and to take up the challenge ofachieving a further 50% reduction as well as carbon neutrality*1 by 2050.
*1 This means subtracting the “absorptions“* of CO2 and other greenhouse gases through afforestation, forest
management, etc. from the “emissions*” to bring the total to virtually zero. *Artificial amount (from the Ministryof the Environment's Decarbonization Portal)

The Government of Japan has positioned its actions against climate change as Green
Transformation (hereinafter, “GX”), a shift in industrial and social structures fromdependence on fossil energy since the Industrial Revolution to a focus on clean energy.
The Government and private sector are now cooperating to achieve decarbonization. In
particular, the Government of Japan is working towards an early transition to a
decarbonized society by supporting investments that lead to decarbonization in the power
generation, industrial, transport and household sectors.
Issuance of Climate Transition Bond:In pursuing these environmental initiatives, the Government of Japan (hereinafter, the“Issuer”), as the issuer of the Green Transformation Economy Transition Bond and the
Climate Transition Bond (hereinafter, the “GX Economy Transition Bonds” or “Climate
Transition Bond”), intends to create new demand and market in the decarbonization
sector, including stable supplies of clean energy by making maximum use of
decarbonization- related technologies in Japan, in order to strengthen Japan's industrial
competitiveness and achieve economic growth.
The Issuer has been working with international sustainable finance initiatives. Specifically,
the Issuer has developed various guidelines (e.g., Green Bond Guidelines, Basic Guidelines
on Climate Transition Finance) and provided various types of support to develop
sustainable finance in Japan, utilizing international sustainable finance principles, etc. As aresult, the private sector’s initiatives in sustainable finance are steadily expanding, and thedesired outcomes are being achieved.
The Issuer plans to issue a Climate Transition Bond to promote initiatives to meet theinternational commitments described above. The proceeds from the Climate Transition
Bond are planned to be used mainly for the private sector’s projects related to newtechnologies and businesses that will lead to innovations contributing to decarbonization.
The Issuer has established the Climate Transition Bond Framework (hereinafter, the“Framework”) to ensure that the Climate Transition Bond is issued in a manner consistent
with internationally recognized principles and guidelines.

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External review by an independent evaluation body:
DNV Business Assurance Japan K.K. (hereinafter, “DNV”) assessed the eligibility of the
Framework as an independent third-party evaluation body to provide an external review
recommended in the following principles and guidelines. The relevant books recommended
to be referenced in each framework were cited as appropriate to provide the eligibility
assessment.
- Climate Transition Finance Handbook (CTFH), International Capital Market Association(ICMA), 2023
- Basic Guidelines on Climate Transition Finance (CTFBG), Financial Services Agency,
Ministry of Economy, Trade and Industry, Ministry of the Environment, 2021
- Green Bond Principles (GBP), International Capital Market Association (ICMA), 2021
- Green Bond Guidelines (GBGLs), Ministry of the Environment, 2022
A summary of the eligibility assessment against the common elements set out in the above
principles and guidelines, etc., is presented below separately for CTF (CTFH/CTFBG) and GBP(GBP/GBGLs Transition Bonds with use of proceeds).

<CTF eligibility assessment results>
DNV has identified the following based on the materials and information provided by theIssuer. CTF-1 to CTF-4 below are the findings and DNV’s opinion on the four common
elements of CTFH and CTFBG (disclosure elements) required by the Issuer's transition
strategy, etc.
CTF-1. Issuer’s Climate Transition Strategy and Governance:
Climate Transition Strategy:
The Issuer's Climate Transition Strategy (hereinafter, the “Transition Strategy”) is
consistent with the Paris Agreement*2, which sets a long-term goal of carbon neutrality
in 2050 and a mid-term goal of a 46% reduction in GHG emissions in FY2030 (comparedto FY2013), and is scientifically based. The Transition Strategy has been establishedbased on the revisions etc. of the Plan for Global Warming Countermeasures*3
formulated in October 2021, Japan's NDC (Nationally Determined Contribution)*4, theStrategic Energy Plan*5 and the long-term strategy as a growth strategy based on the
Paris Agreement*6, etc. and has specific actions to realize the above-mentioned longterm and mid-term goals. In addition, the “Basic Policy for the Realization of GX” wasformulated in 2023 as a roadmap for the next 10 years, outlining initiatives to strengthen
Japan’s industrial competitiveness and achieve economic growth. These initiatives
contribute to the SDGs*7 and a Just Transition*8.
Governance:
The above plans and strategies, which form the basis for strategy implementation, will
be updated annually or through regular follow-up and revision. In particular, in theevent of major changes to the Plan for Global Warming Countermeasures, which is partof the fundamental elements of the strategy, or to the Strategic Energy Plan, theTransition Strategy and initiatives for its realization will be reviewed based on
discussions between

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the GX Implementation Council chaired by the Prime Minister, relevant ministers, andexperts, etc.
Based on the above, DNV judges that the Climate Transition Bond satisfies the element
required by CTF-1 that it “should be directed towards achieving a GHG reduction
strategy in line with the goals of the Paris Agreement.”
*2

*3
*4
*5
*6

*7

*8

New international framework for GHG emission reduction etc. since 2020, adopted at the 2015 United Nations
Climate Change Conference (COP21) and entered into force in 2016, replacing the Kyoto Protocol;
https://www.mofa.go.jp/mofaj/ic/ch/page1w_ 000119.html
The Government’s comprehensive plan based on the Act on Promotion of Global Warming Countermeasures;https://www.env.go.jp/earth/ondanka/domestic.html
GHG emission reduction targets set by each country under the Paris Agreement, which must be submitted andupdated every five years; https://www.env.go.jp/earth/earth/ondanka/ndc.html
Formulated by the Government in accordance with the Basic Act on Energy Policy to set the basic direction ofenergy policy; https://www.enecho.meti.go.jp/category/others/index.html
The strategy is developed by the Government as a long-term low emission development strategy based on theprovisions of the Paris Agreement (Article 4.19) and presents the basic approach, vision, etc. towards carbon
neutrality in 2050; https://www.env.go.jp/earth/ondanka/keikaku/chokisenryaku.html
Sustainable Development Goals (SDGs) is an international goal consisting of 17 goals and 169 targets to beachieved by 2030, when a pledge was made to “leave no one behind” on the planet;
https://www.mofa.go.jp/mofaj/gaiko/oda/sdgs/about/index.html
As defined by ICMA, “Just Transition” aims to ensure that the substantial benefits of the transition to a green
economy are widely shared, while supporting those who stand to suffer economic disadvantages (including
countries, regions, industries, communities, workers and consumers). The concept is tied to the United Nation’s
SDGs; https://www.fsa.go.jp/news/r2/singi/20210507_2/03.pdf

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CTF-2. Business model environmental materiality:
Environmental materiality:
The Issuer recognizes that the manufacturing sector accounts for approximately 20% ofJapan’s GDP and is a key sector of the economy, that Japan’s energy self-sufficiency
rate is 13.3% (FY2021) and the country is dependent on energy resources fromoverseas, and that changes in the international energy situation since 2022 is making
energy security challenges in business activities and people’s lives more apparent.
In this context, DNV believes that the GX can be positioned as an important industrial
and energy policy to shift the industrial and social structure to focus on clean energy,
making maximum use of decarbonization-related technologies owned by Japanesecompanies, in order to achieve a stable energy supply, promote decarbonization andeconomic growth.
Scenario considerations:
In advancing the GX, the Issuer classifies the sectors mainly related to GHG*9 emissions
into “energy supply side (energy conversion sectors such as power generation)” and“energy demand side (household and industrial sectors).” The Issuer has further
developed GHG (CO2) emission reduction image etc. for major emission sectors (11sectors in total, including power generation, industrial and transport sectors) by making
the roadmap for the promotion of transition finance*10 consistent with various
governmental measures and scenarios (e.g., IEA*11, IPCC*12, SBTi*13).
Based on the above, DNV judges that the Climate Transition Bond satisfies the element
required by CTF-2 that “the transition strategy should relate to the environmentally material
aspects of the issuer's business model and take into account several future scenarios that
could influence the decision on current materiality.”*9
GHG: Green House Gas*10 A specific direction of transition towards achieving carbon neutrality in 2050 for GHG and other emitting
industries, developed by the Ministry of Economy, Trade and Industry;
https://www.meti.go.jp/english/policy/energy_environment/transition_finance/index.html*11 The International Energy Agency (IEA) was established in 1974 as an autonomous agency within the OECD;https://www.iea.org/*12 IPCC: Intergovermental Panel on Climate Change; https://www.ipcc.ch/*13 SBTi: Science Based Targets initiative

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CTF-3. Climate transition strategy to be ‘science-based’ including targets andpathways:
Science-based strategies, targets and pathways:
The Issuer's Transition Strategy is defined by scientifically-based CO2 reduction targets
and pathways consistent with the Paris Agreement. Specifically, the Issuer has set
targets and pathways based on the strategies and plans described in CTF-1, and index
and quantify mid-term (FY2030) and long-term (FY2050) goals for (total) GHG emission
reduction in Japan, together with the base year (FY2013). In particular, the means toachieve the mid-term (FY2030) goal are published for each industrial sector. Thesetargets, pathways and means of achieving the targets have been discussed through anumber of meetings consisting of experts and academics, and the results have been
disclosed in detail in official documentation and information.
In addition, the Government is also working on a strategy to invest more than JPY 150
trillion to achieve the GX targets by incentivizing GX promotion through the future
introduction of carbon pricing*14 and through blended finance that combines public andprivate investments, including the GX Economy Transition Bonds.
Based on the above, DNV judges that the Climate Transition Bond satisfies the element
required by CTF-3 that “the issuer’s transition strategy should be based on science-basedtargets and pathways towards transition.”*14 A policy instrument putting a price on carbon in order to change the behavior of emitters. Broadly speaking,there are five typologies: carbon taxes, domestic emissions trading, credit trading, market mechanisms byinternational organizations and internal carbon pricing; https://www.env.go.jp/earth/ondanka/cp/index.html

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CTF-4. Implementation transparency:
Investment plan:
The Issuer discloses the basic investment program for the implementation of theTransition Strategy. Specifically, the investment plan is to provide upfront investment
support*15 (GX Economy Transition Bonds) in the amount of approximately JPY 20
trillion as government support over the next 10 years in order to lead to an overallpublic-private investment of over JPY 150 trillion over the same period starting in 2023.
The main investment destinations of the Climate Transition Bond are the “promotion of
non-fossil energy (JPY 6-8 trillion),” “industrial restructuring and radical energy
conservation in a combination of supply and demand (approximately JPY 9-12 trillion),”and “resource recycling and carbon fixation technologies (approximately JPY 2-4
trillion).” These investment programs are disclosed in the Framework, the “Basic Policy
for the Realization of GX,” etc. as necessary information for dialogue with the market.
The investment destinations of the GX Economy Transition Bonds (approximately JPY
20 trillion) include subsidies, investments and debt guarantees according to thebusiness risk (technical risk, market risk, etc.) of each field/technology from researchand development to social implementation for green projects classified under the
GBP/GBGLs (e.g., renewable energy sector, energy conservation (energy efficiency)
sector and activities that should be undertaken at present for future carbon neutrality(e.g., initiatives for phasing out fossil fuel use, the utilization of nuclear power).
Just transition, mitigation of negative impact, avoidance of lock-in:
The Issuer plans to ensure that Just Transition, mitigation of negative impacts*16 andavoidance of lock-in*17 are in place in the “Basic Policy for the Realization of GX” andthe selection process of investment destinations (eligible projects). Specifically, thepolicy for Just Transition is set out in the “Basic Policy for the Realization of GX” as“Promoting GX for entire society (section 5).” In addition, with regard to mitigation ofnegative impacts and avoidance of lock-in, it is to be confirmed in the selection
process of investment destinations (eligible projects) that they do not fall under the
pre-defined exclusion criteria and that they are consistent with the GHG reduction
roadmap.
Based on the above, DNV judges that the Climate Transition Bond satisfies the element
required by CTF-4 that “the dialogue with the market on the provision of green,sustainability and sustainability-linked finance intended to finance the issuer's transition
strategy should, as far as possible, also have transparency with regard to the investment
program including capital and operating costs.”*15

This is the very positioning of the “GX Economy Transition Bonds,” which are designed to boost private
investments in order to realize GX investments over JPY 150 trillion in a coordinated public-private partnership.
*16 Adverse environmental and social impacts associated with the implementation of eligible projects (e.g., adverse
impacts on the surrounding area, such as noise and vibration associated with construction, adverse impacts on
ecosystems due to land modification, changes in marine ecosystems)*17 Lock-in refers to carbon lock-in, a measure that avoids the continuation of systems that use large amounts offossil fuels or delay or hinder the transition to alternative energy sources that lead to low-carbon anddecarbonization; https://www.smfg.co.jp/sustainability/materiality/environment/business/pdf/tfp_j.pdf

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<GBP eligibility assessment results (transition bonds with use of proceeds)>
DNV has identified the following based on the materials and information provided by theIssuer. GBP-1 to GBP-4 below are the findings and DNV’s opinion on the four elements(including GBGLs) required to properly manage transition bonds with use of proceeds.
GBP-1. Use of Proceeds:
The Issuer classifies the use of proceeds into eligibility criteria and defines projects that
directly or indirectly contribute to the realization of the Transition Strategy and targets as
eligible projects. Specifically, the eligibility criteria are categorized as shown in Table-1 andthe proceeds are allocated to the support required for these economic activities as a new
expenditure, such as capital investment and research and development expenditures
required for the implementation of eligible projects, or refinance*18 to existing
expenditure. DNV, through its assessment of the Issuer, has confirmed that eligible
projects based on these eligibility criteria are consistent with the elements of CTF-1 to
CTF-4. Eligible projects are assessed by the Issuer to have clear environmental benefits on
the Issuer's Transition Strategy and are expected to make a direct or indirect contribution
to the SDGs.
Eligible projects include green projects classified mainly under the GBP (e.g., renewableenergy sector, energy conservation (energy efficiency) sector) and activities that should beundertaken at present for future carbon neutrality (e.g., initiatives for phasing out fossil
fuel use, the utilization of nuclear power).
Based on the above, DNV judges that the Climate Transition Bond satisfies the element
required by GBP-1 that “the issuer must use the proceeds for eligible projects that provide
clear environmental benefits*19.”*18 Refers to the reforming or refinancing of loans. In the event of allocating to refinancing, it is recommended toindicate the period covered by the eligible project (look-back period).
*19 Proceeds from transition bonds are also allowed to be allocated to related projects necessary to realize Just
Transition and the transition strategy.

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Table-1 Climate Transition Bond Eligibility criteria category
Categories (GBP classification)

1

Energy efficiency

2

Renewable energy

3

Low-carbon and decarbonizedenergy*Category set out in the Issuer’s
Climate Transition Bond

4

Clean transportation

5

Circular economy adapted
products, production technologies
and processes

6

Environmentally sustainable
management of living natural
resources and land use, Circular
economySub-categories Eligibility Criteria- Houses and buildings
Promotion of- Restructuring the manufacturing
thoroughindustry (fuel and feedstocks
energytransition)
efficiency- Digital investment aimed at
improvement
decarbonization- Battery industry- Making renewable energy a major power source- Infrastructure- Establishing electricity and gas markets to achievecarbon neutrality- Utilization of nuclear power- Clean transportation (GX in transport sector)- Resource circulation- Infrastructure- Restructuring the manufacturing sector (fuel andfeedstocks transition)- Facilitating introduction of hydrogen and ammonia- Carbon Recycling and CCS- Food, agriculture, forestry, and fisheries- Resource circulation

Page 10 ofGBP-2. Process for Project Evaluation and Selection:
The Issuer will ensure that the project meets the GBP-1 eligibility criteria and the criteria
required for eligible projects and has clear environmental benefits at present or in thetimeline required by the roadmap, as well as that negative environmental and social
impacts have been or will be appropriately considered (including necessary procedures in
the area where the project is to be implemented).
Specifically, eligible projects to which the proceeds will be allocated will be confirmed by
the “Intergovernmental Committee on the Issuance of GX Economy Transition
Bonds*20,” consisting of Director-Generals, to be consistent with the “GX Promotion
Strategy” and conform to the selection criteria set out for each eligibility criterion shownin GBP-1. The eligibility of projects is assessed and selected through discussions with
relevant ministries and agencies as necessary, and finally reported to the “GX
Implementation Council,” chaired by the Prime Minister.
Specifically, eligible projects to which the proceeds will be allocated will be confirmed byministries in charge of the projects to be consistent with the “GX Promotion Strategy”
and conform to the selection criteria set out for each eligibility criterion shown in GBP-1.
Eligible projects are confirmed again through discussions with the “Intergovernmental
Committee on the Issuance of GX Economy Transition Bonds,” consisting of DirectorGenerals, and relevant ministries and agencies as necessary, and finally reported to the“GX Implementation Council,” chaired by the Prime Minister.
With regard to the negative impacts of projects, DNV has confirmed that the impact on
the relevant supply chain, including Just Transition, mitigation of negative impacts (e.g.,
actions through environmental impact assessments) and avoidance of lock-in, as shownin CTF-4, will be considered before the selection of eligible projects as well as at theimplementation stage of eligible projects.
Based on the above, DNV judges that the Climate Transition Bond satisfies the element
required by GBP-2 that “the issuer must outline the process for determining the eligibilityof the project and outline how the project considers its impact on the targets.”*20 Members of the Intergovernmental Committee on the Issuance of GX Economy Transition Bonds:
the Cabinet Secretariat, the Financial Services Agency, the Ministry of Finance, the Ministry of
Economy, Trade and Industry and the Ministry of the Environment

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GBP-3. Management of Proceeds:
Management of allocation of proceeds:
The Issuer has specified the Ministry of Economy, Trade and Industry (METI) to be
responsible for the allocation and management of proceeds using an internalmanagement system. The proceeds of the Climate Transition Bond will be received in
the Energy Supply and Demand Account*21 of the Special Account for Energy
Measures*22 and will be managed separately from other accounts. In addition, theproceeds can be tracked and managed on an eligible project basis as “Costs ofmeasures to promote a smooth transition to a decarbonized growth economy
structure.”
Management of unallocated proceeds:
Until the proceeds are allocated to eligible projects, unallocated proceeds will be
managed as cash and will not be used for other temporary investments (e.g., green
investments).
The Issuer will be subject to annual inspections by the Board of Audit of Japan of its
proceeds management results. During the inspections by the Board of Audit of Japan, theclimate transition bond-specific management process required under GBP-3 will also beinspected.
Based on the above, DNV judges that the Climate Transition Bond satisfies the element
required by GBP-3 that “the issuer must track and manage the proceeds (and, where
necessary, establish and manage under appropriately classified portfolio units) anddisclose how unallocated proceeds are treated.”*21 Special account established in 2007 under the Act on Promotion of Administrative Reform for Realization of
Small and Efficient Government to integrate the Special Account for Measures to Upgrade the Petroleum andEnergy Supply and Demand Structure and the Special Account for Measures to Promote Power Source
Development, and to clarify the accounting for energy measures;https://www.mof.go.jp/policy/budget/topics/special_account/fy2022/2022-kakuron-6.pdf*22 An account to succeed the operations that were carried out in the special account for measures to improve
the oil and energy supply and demand structure.

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GBP-4. Reporting:
Allocation status reporting:
The Issuer will report on the allocation status of proceeds on an annual basis on the
Government's website, at least until the full amount of proceeds has been allocated.
Allocation status reporting will be on an eligible project/eligibility criteria basis and will
include the following items in consideration of confidential obligations.
• Allocated amount and unallocated balance• Estimated amount of the proceeds allocated in the fiscal year prior to the issuanceImpact reporting (environmental benefits reporting):
The Issuer will, at least until the full amount of proceeds has been allocated, report ona project-by-project or eligibility criteria basis on key environmental benefit items(direct and expected benefits) and progress status of projects on an annual basis on the
Government’s website, taking into account confidential obligations and the extent
practicable.
In the event of a significant change in circumstances in eligible projects (e.g., significant
process changes, suspension/discontinuation, changes in specifications that have asignificant impact on the environmental benefits) during the redemption period of thebond after allocations have commenced, the Issuer will disclose it in a timely manner or
through reporting.
Based on the above, DNV judges that the Climate Transition Bond satisfies the element
required by GBP-4 that “the issuer shall, at least, report to bond investors regarding theallocation status of proceeds and quantitative or qualitative performance (environmental
benefits) of eligible projects.”
DNV has confirmed through an assessment based on relevant documentation andinformation provided by the Issuer through the Framework established by the Issuer andassessments, etc. that the Framework meets the material issues required by the relevant
standards, CTFH/CTFBG and GBP/GBGLs.

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I. Introductioni.

Challenges and initiatives against climate change in Japan
Japan, being surrounded by the sea on all sides, has geographical constraints and landuse restrictions, and has been developing and introducing various energy-saving
technologies and low-carbon and decarbonized energy sources to tackle the challenges
of ensuring low-cost and safe energy supply for people’s lives and ensuring productivity
in economic activities, as well as decarbonizing energy. The major energy
infrastructures, including electricity and gas, that cover throughout Japan have achieved
a highly efficient and reliable energy system.
However, Japan is also facing the emergence of energy supply risks from conventionalenergy systems due to various natural disasters, such as typhoons and heavy rains,which are believed to be caused by climate change, which is said to have a tendency to
become more severe and frequent in recent years. There is a growing international
consensus on the importance of controlling the increase in CO2 and other greenhousegases generated by the use of fossil resources and avoiding negative impacts on climatechange.
The Government of Japan has been leading the international society on environmental
issues such as climate change, including the adoption of the Kyoto Protocol in 1997. In
FY2021, the Government made an international commitment to “achieve carbon
neutrality by 2050 (reducing GHG emissions by 46% in FY2030 (compared to FY2013)
and taking up the challenge of achieving a further 50% reduction as well as carbon
neutrality by 2050)” as an initiative consistent with the Paris Agreement.
The Government of Japan is working to achieve decarbonization as well as industrial
competitiveness and economic growth by transforming Japan’s energy system (fromfossil energy to clean energy) and industrial and social structures through the Green
Transformation (GX) as an action against climate change by fulfilling its international
commitments.

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ii.

GX (Green Transformation) initiatives
In July 2022, the Government of Japan held the GX Implementation Council to discuss
necessary measures to implement the transformation of the entire economic and social
system, or GX (Green Transformation), by shifting the fossil fuel-oriented economy,society, and industrial structure since the Industrial Revolution to a clean energyoriented structure. In this context, the Government plans to support investments
leading to decarbonization in the power generation, industrial, transport and household
sectors, and to work towards an early transition to a decarbonized society, withparticular priority given to initiatives that make sectors with high GHG emissions more
effective and efficient, and that contribute to strengthening industrial competitivenessand economic growth.

In addition, in February 2023, the Government of Japan formulated the “Basic Policy for
the Realization of GX (A roadmap for the next 10 years)”*23, Reference Figure-1 to work on
the following five items.
The Basic Policy for the Realization of GX includes a comprehensive set of concepts thatform the basis of the Framework in the next section.
*23 The basic policy to simultaneously achieve decarbonization, stable energy supply and economic growth through
GX, formulated through discussions at the GX Implementation Council chaired by the Prime Minister and at
councils in various ministries; https://www.meti.go.jp/english/press/2023/pdf/0210_003a-2.pdf<The Basic Policy for the Realization of GX Main items>
1. Decarbonization initiatives towards GX based on the premise of ensuring astable energy supply
2. Realizing and implementing Pro-Growth Carbon Pricing Concept*Reference Figure-2
3. Strategy for global actions
4. Promoting GX for entire society
5. Evaluating and reviewing the status of progress in the implementation of newpolicy initiatives for realizing GX

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Reference Figure-1 “The Basic Policy for the Realization of GX (A roadmap
for the next 10 years)” Extract from reference material
Reference: https://www.meti.go.jp/press/2022/02/20230210002/20230210002_3.pdf
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Reference Figure-2 Growth-oriented carbon pricing concept
Reference: “About growth-oriented carbon pricing”, Industrial Technology and Environment Bureau, Ministry of
Economy, Trade and Industry, 14 Feb 2023

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iii. Climate Transition Bond Framework
In implementing the Climate Transition Bond, the Issuer has developed the Framework
based on the three concepts and relevant national environmental plans, strategies, etc.,
and in a manner consistent with international/national principles, guidelines, etc.
The overview of the concept and the Framework's relationship with relevant national
environmental plans, strategies, etc. are as shown below.
The Issuer aims to realize GX through public-private partnerships by providing
approximately JPY 20 trillion in government support to the private sector over the next
10 years through the GX Economy Transition Bonds.
The principles, guidelines, etc. to which the Framework specifically refers are describedin section II (3) below.
<GX Economy Transition Bonds Three concepts (overview)>
1.

Support companies etc. tackling the challenge of decarbonization and beyond, using futurecarbon pricing (CP) as a reimbursement source.

2.

Promote private sector’s (business operators and financial institutions) transition finance, withprojects that contribute to the transition towards decarbonization as the use of proceeds.

3.

Establish measures and mechanisms for decarbonization by discussing with investors and themarket through the GX Economy Transition Bonds.

<National environmental plans, strategies, etc. and the Framework>
Plan for Global Warming Countermeasures

2050 Carbon Neutrality Declaration
GX Promotion Act

Long-term strategy as a growth strategy basedon the Paris Agreement(Act on the Promotion of a Smooth Transition to a Decarbonized Growth Economic Structure)

GX promotion strategy(Strategy for promoting the transition to a decarbonized
growth economic structure)

International/national principles, guidelines, etc.

(CTFH/CTFBG, GBP/GBGLs, etc.)

The Basic Policy for the Realization of GX(Roadmap)

Climate Transition Bond Framework
Issuer Name: The Government of Japan
Framework Name: Climate Transition Bond Framework
Review Provider’s Name: DNV Business Assurance Japan K.K.
Date of Report: 7 November 2023

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II. Scope and Objectives
The Issuer has commissioned DNV to conduct a Framework assessment on the Climate
Transition Bond. The objective of the assessment of DNV is to conduct an assessment toconfirm that the Issuer meets the criteria of the CTFH/CTFBG and GBP/GBGLs, which will be
described later, and to provide a second party opinion on the eligibility of the Framework.
DNV, as an independent external reviewer, has identified no real or perceived conflict ofinterest associated with the delivery of this second party opinion for the Issuer.
In this paper, no assurance is provided regarding the financial performance of the Climate
Transition Bond, the value of any investments, or the long-term environmental benefits of thetransaction.
(1) Scope of review
The review assessed the following elements and confirmed their alignment with four core elements in GBP.
☒

Use of Proceeds☒

Process for Project Evaluation and Selection☒

Management of Proceeds☒

Reporting* The scope of review is to be applied as a part of the evaluation of the Climate Transition Bond (transitionbond with specific use of proceeds).
* The four disclosure elements of CTFH and CTFBG are included in the scope of review.

(2) Role(s) of review provider☒

Second Party Opinion☐

Certification☐

Verification☐

Rating☐Other (please specify):(3) Standards to be applied
No.
1.

2.

Standards/Guidelines*1
Climate Transition Finance Handbook(CTFH)*2
Basic Guidelines on Climate Transition
Finance (CTFBG)*2

Scheme owner
International Capital Market Association (ICMA), 2023
Financial Services Agency, Ministry of Economy, Tradeand Industry, Ministry of the Environment, 2021

3.

Green Bond Principles (GBP)*3

International Capital Market Association (ICMA), 2021

4.

Green Bond Guidelines (GBGLs)*3

Ministry of the Environment, 2022

*1 Provide an eligibility assessment, citing relevant books recommended for reference in the principles andguidelines, etc., as appropriate.
*2 Climate transition: The concept of climate transition focuses principally on the credibility of an issuer’s
climate change-related commitments and practices (quoted from CTFH and CTFBG).
*3 It confirms compliance with the four core elements (use of proceeds, process for project evaluation andselection, management of proceeds, and reporting) that must be met when implementing as a bond/loanthat meets the four elements of transition and has a specific use of proceeds (quoted and edited fromCTFBG).

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III. Responsibilities of the Issuer and DNVThe Issuer has provided the information and data used by DNV during the delivery of thisreview. Our statement represents an independent opinion and is intended to inform the Issuer
and other interested stakeholders in the Bond as to whether the established criteria have beenmet, based on the information provided to us. In our work, we have relied on the informationand the facts presented to us by the Issuer. DNV is not responsible for any aspect of the eligible
projects selected or to be selected referred to in this opinion and cannot be held liable if
estimates, findings, opinions, or conclusions are incorrect. Thus, DNV shall not be held liable if
any of the information or data provided by the Issuer and used as a basis for this assessment
were not correct or complete.

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IV. Basis of DNV’s Opinion
To provide as much flexibility as possible for the Issuer, DNV has adapted our climate transition
bonds assessment methodology, which incorporates the requirements of the CTFH/CTFBG and
GBP/GBGLs, to create the Issuer-specific Climate Transition Bond Eligibility Assessment Protocol(hereinafter, the “Protocol”). Please refer to Schedule-2 to 5. The Protocol is applicable toclimate transition bonds under the CTFH/CTFBG and GBP/GBGLs.
DNV, as an independent external reviewer, provides second party opinion according to theProtocol.
DNV’s Protocol includes a set of suitable criteria that can be used to underpin DNV’s opinion.
The overarching principle behind the Climate Transition Bond as the basis for the opinion are as
follows:“enable capital-raising and investment for new and existing projects with environmental
benefits”“provide an investment opportunity with transparent sustainability credentials”
As per our Protocol, the criteria against which the Climate Transition Bond has been reviewed
are grouped into four common elements (disclosure elements), respectively (1) and (2) below.
(1) Four common elements of CTFH/CTFBG (disclosure elements)

Principle One: Issuer’s Climate Transition Strategy and Governance
The financing purpose should be shown as enabling issuer’s climate change strategy.
Principle Two: Business model environmental materiality
The planned climate transition trajectory should be relevant to the environmental
materiality of the issuer’s business model.
Principle Three: Climate transition strategy to be ‘science-based’ (including targets andpathways)
Issuer’s climate strategy should reference science-based targets.
Principle Four: Implementation transparency
Market communication in connection with the offer of a financing instrument which has theaim of funding the issuer’s climate transition strategy should also provide transparency of
the underlying investment program.

(2) Four common elements of GBP/GBGLs (common elements as transition bonds with use ofproceeds)

Principle One: Use of Proceeds
The Use of Proceeds criteria are guided by the requirement that an issuer of atransition bond must use the proceeds to bond eligible activities. The eligible activities
should produce clear environmental benefits.
Principle Two: Process for Project Evaluation and Selection
The Project Evaluation and Selection criteria are guided by the requirements that anissuer of a transition bond should outline the process it follows when determining
eligibility of investment destinations (e.g., businesses) using transition bond proceeds,
and outline any impact objectives it will consider.

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Principle Three:

Management of Proceeds

The Management of Proceeds criteria are guided by the requirements that theproceeds from a transition bond should be tracked by the issuer, that separate
portfolios should be created when necessary and that a declaration of how unallocatedproceeds will be handled should be made.
Principle Four:
Reporting
The Reporting criteria are guided by the recommendation that at least Sustainability
Reporting to the transition bond investors should be made of the allocation status ofproceeds and that quantitative and/or qualitative performance indicators should be
used, where feasible.

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V. Work Undertaken
Our work constituted a high-level review of the available information, based on theunderstanding that this information was provided to us by the Issuer in good faith. We have not
performed an audit or other tests to check the veracity of the information provided to us. The
work undertaken to form our opinion included:i. Pre-Issuance Assessment (Climate Transition Bond Framework Assessment)•

Creation of an Issuer-specific Protocol, adapted to the purpose of the Climate Transition
Bond, as described above and in Schedule-2 to 5 to this assessment;•

Assessment of documentary evidence provided by the Issuer on the Climate Transition
Bond and supplemented assessment by a comprehensive desktop research. Thesechecks refer to current assessment best practice and standards methodologies;•

Discussions with the Issuer, and review of relevant documentation;•

Documentation of findings against each element of the criteria.

ii. Post-Issuance Assessment (periodic review) (*not included in this report)•

Interview with the management of the Issuer, and review of the relevant
documentation;•

Field research and inspection (if necessary);•

Document creation of post-issuance assessment results.

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VI. Findings and DNV’s Opinion
DNV’s findings and opinion are as described below.
From the CTF-1 to CTF-4 in (1) below are the findings and opinions of DNV against the fourcommon elements (disclosure elements) of CTFH and CTFBG including the Issuer’s Transition
Strategy. Please see Schedule-2 and 4 for details.
From the GBP-1 to GBP-4 in (2) below are the findings and opinions of DNV against the fourcommon elements of GBP/GBGLs necessary for the Issuer to manage transition bonds. Pleasesee Schedule-3 and 5 for details.
(1) Findings and opinions of DNV against the four common elements (disclosure
elements) of CTFH and CTFBG
CTF-1.

Issuer’s Climate Transition Strategy and Governance

Climate Transition Strategy:
DNV has confirmed that the Issuer’s mid-term goal quantified under theTransition Strategy, as well as the long-term goal, are consistent with the Paris
Agreement and have a scientific basis.
Specifically, the long-term goal is carbon neutrality in 2050 and the mid-termgoal is a 46% reduction in greenhouse gases in FY2030 (compared to FY2013).
-

The Issuer's Transition Strategy has specific activities to realize the Transition
Strategy by the revisions etc. of the Plan for Global Warming Countermeasures,Japan's NDC (Nationally Determined Contribution), the Strategic Energy Plan
and the long-term strategy as a growth strategy based on the Paris Agreement,
etc. established with reference to international scenarios. As a concrete
example, the Plan for Global Warming Countermeasures sets out the
government’s comprehensive plan to achieve the 46% reduction target for
FY2030, as shown in Table-2.

-

The actual GHG emissions from FY2013 to FY2021 are shown in Figure-1.
Compared to the base year (FY2013): 1.408 billion t-CO2, the FY2021 figure was
1.122 billion t-CO2, with a reduction rate of 20.3%, showing a certain level ofprogress.
The current status of these GHG emissions and absorptions and the measures tobe taken are followed up every year for each sector, including energy
conversion, industrial, transport and household sectors, and the plan is approved
and promoted by the Global Warming Prevention Headquarters, which is
attended by all ministers.

-

In 2023, the Issuer formulated the “Basic Policy for the Realization of GX” as aroadmap for the next 10 years, which integrates the “GX initiatives based on thepremise of ensuring a stable energy supply” and the “growth-oriented carbon
pricing concept”, and sets out initiatives to strengthen the industrial
competitiveness and achieve economic growth in the Japanese economy.

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Furthermore, the Issuer presented GX-oriented decarbonization initiatives
classified into 14 categories and 22 examples of targets and strategies, GX
investments, regulations and institutions and international strategies up to 2050
as “the way forward.”-

The Climate Transition Bond executed in accordance with the Issuer’s Transition
Strategy contribute directly or indirectly to the SDGs and Just Transition.
In terms of direct or indirect contributions to the SDGs, the Issuer has further
classified its decarbonization initiatives towards the GX, which are classified into
14 categories, into the six eligibility criteria shown in Table-3 and organized eacharea of contribution to the SDGs.
The “Basic Policy for the Realization of GX” also organizes Just Transition as GX
promotion for the entire society, as shown in Table-4. The Article 3 of the GX
Promotion Act stipulates to “promote close mutual cooperation between theState and business operators as a basic principle, while also taking into accountthe perspective of Just Transition.”-

The Issuer is committed to minimizing negative environmental and social
impacts (negative external effects) that may arise from the implementation of
the GX through its contribution to the SDGs and consideration of Just Transition.

Table-2 The Government’s comprehensive plan based on the Act on Promotionof Global Warming Countermeasures(Base year: FY 2013 results; Progress: FY2021 results including reduction rate; Target: FY2030)
Unit: billion t-CO2
FY2013
results(Base year)

FY2021 results(Progress)
Reduction
rate: 20.3%

GHG
emissions/absorptions

Reduction rate

1.408

11.22

0.760

▲46%

1.235

9.88

0.677

▲45%

Industry

0.463

3.73

0.289

▲38%

Business etc.

0.238

1.90

0.116

▲51%

Household

0.208

1.56

0.070

▲66%

Transportation

0.224

1.85

0.146

▲35%

GHG emissions/absorptions (total)(Unit: billion t-CO2)

GHG emissions/absorptions (breakdown)

Energy-derived CO2

Breakdown ofenergy-derived CO2

EnergyFY2030 (Target)

conversion
Non-energy-derived CO2,methane, N2O

0.106

0.84

0.056

▲47%

0.134

1.23

0.115

▲14%

Four gases such as HFC (CFCs)

0.039

0.59

0.022

▲44%

-

▲0.46

▲0.48

▲0.37

Absorption source (billion t-CO2)
Bilateral credit system

Aim for a cumulative international emission reduction/absorption of around
0.1 billion t-CO2 by FY2030 through public-private partnerships.
Appropriately count the credits earned as Japan for the achievement ofJapan’s NDC.

Source: Plan for Global Warming Countermeasures, October 2021

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GHG emissions and absorptions(converted to t-CO2, including absorptions)

15.00

14.08
(-)

14.00

13.01
(▲7.6%)

13.00

12.65
(▲10.2%)

12.49(▲11.3%)12.35(▲12.3%) 11.91(▲15.4%) 11.61(▲17.5%)

12.00
11.00
10.00

11.01

11.22

(▲21.8%) (▲20.3%)

2013

2014

2015

2016

2017

2018

2019

2020

2021

Fiscal Year

Figure-1 GHG emissions and absorptions (converted to billion t-CO2)*In consideration of the absorption amount

FY2013 (base year) - FY2021 (latest available definitive figures)
Source: FY2021 GHG emissions and absorptions (confirmed values), Ministry of theEnvironment, Office for Promotion of Transition to a Decarbonized Society, et al.

Table-3 Relationship between the eligibility criteria
based on the Transition Strategy and the SDGs*

Eligibility

Energyefficiency

RenewableenergyLow and Clean
Decarboni transpor
zed
tationenergy7, 8, 9,11, 137, 8, 137, 8, 9,13

criteria
Representative
SDGs goals

SDGs
goals

7, 8, 9,11, 13

Environment
ally-friendly
products etc.

Biological andnatural resources,
circular economy,etc.

7, 8, 9, 13

8, 9, 11, 12,
13, 14, 15

7. Affordable and clean energy

12. Responsible consumption and production

8. Decent work and economic growth

13. Climate action

9. Industry innovation and infrastructure

14. Life below water

11. Sustainable cities and communities

15. Life on land

＊ The relationship between the eligibility criteria and the SDGs based on the Transition
Strategy is complementary to the Green, Social and Sustainability Bonds: A High-Level
Mapping to the Sustainable Development Goals published by ICMA, which sets out theGreen Bond Principles, and is not directly linked to the financing objectives.

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Table-4 Just Transition* (GX promotion in the entire society)In promoting GX, it is important to appropriately promote labor transfer tonewly created industries from the perspective of Just Transition.
1) Basic concept

2) Future actions

Supporting the smooth labor transfer from fossil fuel-related industries to
low-carbon industries will ensure people’s lives and employment andcontribute to Japan’s economic growth. Therefore, necessary support,
including human resource development at universities etc. will be provided,
while taking into account the actual conditions of each industry.
The policy package of investment in people of JPY 400 billion over three
years is significantly expanded to JPY 1 trillion over five years, taking into
account the comprehensive economic measures to overcome high prices
and realize economic revival approved by the Cabinet in October 2022.
Promote Just Transition by simultaneously facilitating the acquisition of new
skills and smooth labor transfer to growth sectors, including green sectors,
through support for the facilitation of labor transfer to growth sectors etc.
and support for job transfers for career advancement of incumbent workers.

＊ “Just Transition” is a concept put forward by the International Trade Union Confederation(ITUC) at COP15 in 2009.

Governance:-

The Issuer has established structures and mechanisms to promote the Transition
Strategy as a country. The above plans and strategies, which form the basis forthe implementation of the Transition Strategy, will be updated as necessary
through annual or periodic follow-up and revision.

-

The Issuer plans to review the Transition Strategy and the initiatives for its
realization and to promote the strategy in the event of major changes to the Plan for
Global Warming Countermeasures, which is part of the basis for the strategy
implementation, and the Strategic Energy Plan.

-

For GX implementation, the GX Implementation Council, chaired by the Prime
Minister, has been held since July 2022 to have discussions with relevant ministers
and experts to determine the policy direction.

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Figure-2 GX Implementation Council-

Based on the assessment of the Transition Strategy based on the Frameworkand the “Basic Policy for the Realization of GX” developed by the national plansetc., DNV has confirmed that the implementation plan is credible, ambitious andachievable.

Based on the above, DNV judges that the Climate Transition Bond satisfies the element
required by CTF-1 that it “should be directed towards achieving a GHG reduction
strategy in line with the goals of the Paris Agreement.”

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CTF-2.

Business model environmental materiality

Environmental materiality:-

The Issuer recognizes that the manufacturing sector accounts forapproximately 20% of Japan’s GDP and is a key sector of the economy, thatJapan’s energy self-sufficiency rate is 13.3% (FY2021) and the country isdependent on energy resources from overseas, and that changes in theinternational energy situation since 2022 is making energy security challenges
in business activities and people’s lives more apparent.

-

In this context, DNV believes that the GX can be positioned as an important
industrial and energy policy to shift the industrial and social structure to focus
on clean energy, making maximum use of decarbonization-related
technologies owned by Japanese companies, in order to achieve a stableenergy supply, promote decarbonization and economic growth.

Scenario considerations:-

In advancing the GX, the Issuer classifies the sectors mainly related to GHG
emissions into “energy supply side (energy conversion sectors such as power
generation)” and “energy demand side (household and industrial sectors).”
The Issuer has further developed GHG (CO2) emission reduction image etc. formajor emission sectors (11 sectors in total, including power generation,industrial and transport sectors) by making the roadmap for the promotion oftransition finance consistent with various governmental measures andscenarios (e.g., IEA, IPCC, SBTi).

Based on the above, DNV judges that the Climate Transition Bond satisfies theelement required by CTF-2 that “the transition strategy should relate to theenvironmentally material aspects of the issuer's business model and take into accountseveral future scenarios that could influence the decision on current materiality.”

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Table-5 Main categories/types of sectors (eligibility criteria) mainly related to
GHG emissions*Eligibility criteria relevant to several sectors
Category ofenergy supply
and demand

Energysupply side

Sector types(GX category)

Energyconversion
sectorHouseholdsectorEnergydemand side

Industrial sector

Eligibility criteria-

Making renewable energy a major power source
Utilization of nuclear power-

Facilitating the introduction of hydrogen and ammonia
Establishing electricity and gas markets to achievecarbon neutrality-

Battery industry-

Restructuring the manufacturing industry (fuel and*feedstocks transition)*
Battery industry*
GX in transport sector-

Digital investment aimed at decarbonization
Houses and buildings*-

Infrastructure-

Facilitating the introduction of hydrogen and ammonia-

Restructuring the manufacturing industry (fuel and*feedstocks transition)*
Battery industry
Resource circulation*
GX in transport sector*
Digital investment aimed at decarbonization-

Houses and buildings
Infrastructure
Carbon Recycling and CCS-

Food, agriculture, forestry, and fisheries

*

*

*

*

*

Table-6 Roadmap for promoting transition finance(1) METI(2) Other sectors

Steel sector

International shipping sector (MLIT)

Chemical sector

Inland shipping sector (MLIT)

Power sector

Aviation sector (MLIT)

Gas sector
Oil sector
Pulp and paper sector
Cement sector
Automotive sector
METI: Ministry of Economy, Trade and Industry sector
MLIT: Ministry of Land, Infrastructure, Transport and Tourism
Source: https://www.meti.go.jp/policy/energy_environment/global_warming/transition_finance.html

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CTF-3.

Climate transition strategy to be ‘science-based’ (including targets andpathways)

Science-based strategies, targets and pathways:-

The Issuer's Transition Strategy is defined by scientifically-based CO2 reduction
targets and pathways consistent with the Paris Agreement.

-

Specifically, the Issuer has set targets and pathways based on the strategies andplans described in CTF-1, and index and quantify mid-term (FY2030) and longterm (FY2050) goals for (total) GHG emission reduction in Japan, together withthe base year (FY2013). In particular, the means to achieve the mid-term(FY2030) goal are published for each industrial sector. These targets, pathways
and means of achieving the targets have been discussed through a number of
meetings consisting of experts and academics, and the results have been
disclosed in detail in official documentation and information.

-

In the latest year FY2021, CO2 emissions (GHG emissions) was 1.122 billion tCO2 (reduction rate: 20.3%), showing a certain level of progress (see Table-7).
Table-7 Long-term and mid-term CO2 reduction targets
Fiscal year
2013
(2021)
2030
＊

2050

Targets

Base year(Latest confirmed value:
20.3% reduction)
CO2 emissions: 46% reduction(Challenging the 50% reduction)

Carbon neutrality

CO2 emissions*1.408 billion t-CO2(1.122 billion t-CO2)
0.76 billion t-CO2
0 billion t-CO2

CO2 emissions (GHG emissions): Calculated in accordance with IPCC
guidelines and includes all coverage areas and gases with the coverage
ratio of 100%; CO2 emissions and absorptions are combined (carbon
neutrality refers to zero CO2 emissions and absorptions combined).

-

In addition, the Government is also working on a strategy to invest more than
JPY 150 trillion to achieve the GX targets by incentivizing GX promotion throughthe future introduction of carbon pricing and through blended finance thatcombines public and private investments, including the GX Economy Transition
Bonds.

-

DNV recommends that the Issuer also proactively considers and discloses where
possible in the future the progress to achieve the 2030 and 2050 targets (e.g.,short-term targets up to 2030 and how they will be reduced between 2030 and2050), which have a scientific basis as shown in Table -7.

Based on the above, DNV judges that the Climate Transition Bond satisfies the element
required by CTF-3 that “the issuer’s transition strategy should be based on sciencebased targets and pathways towards transition.”

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CTF-4.

Implementation transparency

Investment plan:-

The Issuer discloses the basic investment program for the implementation of
the Transition Strategy.

-Specifically, the investment plan is to provide upfront investment support (GX
Economy Transition Bonds) in the amount of approximately JPY 20 trillion as
government support over the next 10 years in order to lead to an overallpublic-private investment of over JPY 150 trillion over the same period startingin 2023.

-

The main investment destinations of the Climate Transition Bond are the“promotion of non-fossil energy (JPY 6-8 trillion),” “industrial restructuring andradical energy conservation in a combination of supply and demand(approximately JPY 9-12 trillion),” and “resource recycling and carbon fixation
technologies (approximately JPY 2-4 trillion).” These investment programs aredisclosed in the Framework, the “Basic Policy for the Realization of GX”, etc. asnecessary information for dialogue with the market.

-

The investment program (investment amount and investment destinations)after the above (from 2033 onwards) until 2050 will be considered in thecourse of future GX initiatives.

-

The investment destinations of the GX Economy Transition Bonds(approximately JPY 20 trillion) include mainly green projects classified mainly
under the GBP (e.g., renewable energy sector, energy conservation (energy
efficiency) sector) and activities that should be undertaken at present for
future carbon neutrality (e.g., initiatives for phasing out fossil fuel use, theutilization of nuclear power).

Figure-3 Image of governmental support andoverall public-private investments for the 10 years since 2023
Source: Intergovernmental Committee on the Issuance of GX Economy Transition Bonds(1st meeting), June 2023

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Just Transition, mitigation of negative impact, avoidance of lock-in:-

The Issuer plans to ensure that Just Transition, mitigation of negative impacts
and avoidance of lock-in are in place in the “Basic Policy for the Realization of
GX” and the selection process of investment destinations (eligible projects).
Specifically, the policy for Just Transition is set out in the “Basic Policy for the
Realization of GX” as “promotion of GX for the entire society (section 5).” In
addition, with regard to mitigation of negative impacts and avoidance of lockin, it is to be confirmed in the selection process of investment destinations(eligible projects) that they do not fall under the pre-defined exclusion criteria
and that they are consistent with the GHG reduction roadmap.

DNV has confirmed through reviews of the Framework and the roadmap that theimplementation is transparent and that the adequacy of the implementation has been
explained and agreed by the Issuer.
Based on the above, DNV judges that the Climate Transition Bond satisfies theelement required by CTF-4 that “the dialogue with the market on the provision ofgreen, sustainability and sustainability-linked finance intended to finance the issuer'stransition strategy should, as far as possible, also have transparency with regard to
the investment program including capital and operating costs.”

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Findings and opinions of DNV against the four common elements* of GBP and GBGLs* The four elements are applied as criteria for transition bonds that specify the use of proceeds.
References to “green” in the description citing GBP should be read as “transition” where appropriate.

GBP-1.

Use of Proceeds-

With regard to the eligibility criteria for the use of proceeds, the Issuer defines
projects that meet the elements of the Transition Strategy and the roadmap
and related principles, guidelines, etc. as eligible businesses (eligible projects).

-

Specifically, the proceeds will be allocated to projects to achieve carbon
neutrality in 2050 and a 46% reduction in FY2030 (compared to FY2013),
based on the “GX Promotion Strategy.” The proceeds are to be invested inprojects that are truly difficult for the private sector alone to make investment
decisions and that contribute to emission reductions and the realization ofindustrial competitiveness and economic growth, and will be prioritized basedon the basic approach as shown in Reference Table-1.

-

The “basic conditions” (overview) in the selection of the use of proceeds of the
GX Economy Transition Bonds are shown in Table-8 and the Green/Transition
Finance Eligibility Criteria are shown in Table-5 (reposted).

-

In addition, the Issuer plans to prioritize projects of 1) strengthening industrial
competitiveness and economic growth and 2) emission reductions out of theabove basic conditions that meet one of each of the categories A to C and ① to③ listed below as candidates for support (Reference Table-1).
Table-8 The GX Economy Transition Bonds “Basic conditions” in theselection of the use of proceeds (overview)
Basic conditions (overview)I.

Those being truly difficult for the private sector alone to make investment
decisionsII.

Those contributing to 1) strengthening industrial competitiveness and economic
growth, which are essential for achieving GX, and 2) emission reductions*III. Integrity with regulatory and institutional aspects that change companies’
investments and the behavior of the demand side
IV. Those leading to increased human and physical investments in the country

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Reference Table-1 Priority assessment based on the types in the basic
conditions section II
1) Strengthening industrial
competitiveness and economic
growthA.

B.

C.

Growth investments with a view toacquiring foreign demand or increasing
domestic demand, with technological or
business innovation potential
orGrowth investments that contribute toboth reducing fossil raw materials andenergy and improving agglomeration(e.g., integration, restructuring andmark-ups) utilizing advanced
technologies
orMeasures to address domestic demandin the early period of the introduction of
key commodities for which a nationwide market is expected (also involving
supply-side investments)

2) Emission reductions

①

②

③

R&D investments that contributeto future national reductions
through technological innovation
or
Capital investments etc. that aretechnically effective in reducing
emissions and contribute directly
to domestic emission reductionsor
Measures to address domestic
demand in the early period of
introduction of key commodities
with a nation-wide demand andhigh long-term reduction effects-

Based on the roadmap, the Issuer has defined 14 categories of the eligibility
criteria based on the GX type. The eligibility criteria have a set of eligible
business assessment criteria (internal criteria) in place that are aligned with the
GBP classification and the way forward as set out in the roadmap.

-

Eligible projects that are candidates for the use of proceeds are selected basedon the eligible business assessment criteria (internal criteria) set out for eacheligibility criterion, as well as the basic conditions and priority assessment
described above. In each issue of the bond, the Issuer establishes a protocol
whereby eligible projects with appropriate allocation needs are selected out of
the candidate projects for actual use of the proceeds.

-

The GBP classification of the eligible criteria, representative candidate projects
and an overview of DNV's opinion (including the Issuer’s specific measures andkey assessment criteria) are shown in Table-9. DNV has confirmed through its
assessment of the Issuer that the representative projects evaluated as
candidate uses of proceeds meet the eligibility criteria (assessment criteria for
eligible projects) and are eligible as uses of proceeds of the Climate Transition
Bond and that the above protocol established by the Issuer is properly
implemented.

-

The Issuer has also organized in relation to the policy roadmap to be organizedin the reference material of the “Basic Policy for the Realization of GX” for eachof the sub-categories of the eligibility criteria, and the roadmap for promoting

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transition finance shown in Table-6, where the eligibility criteria and use ofproceeds are explained as being closely related to the various initiatives.
-

In addition to the eligible candidate uses of proceeds (eligible projects) shownin Table-9, the Issuer may have additional projects that have been identified as
eligible under the protocol.

-

DNV recommends the Issuer to establish in the future and disclose, where
necessary, specific measures and how compliance with the assessment criteria
has a scientific basis in order to clarify that the candidate uses of proceeds
comply with the GBP classification.

Basic Policy for the Realization of GX
Technology sector roadmap(11 sectors)(Roadmap)

Eligibility criteria

GBP classification(6 categories)(14 categories)

GX types (energy supply anddemand, GX classification)
The way forward (22 cases)

Eligible businesses (eligible projects)
assessment criteria

Basic conditions for use ofproceeds (priority)

Candidate uses of proceeds

See GBP-2 for the assessment
criteria for candidate uses ofproceeds (eligible projects) andthe actual evaluation process.

Selection of the use of proceeds

Figure-4 Relationship between the Basic Policy for the Realization of GX(roadmap) and the use of proceeds

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Table-5 (reposted) Main categories/types of sectors (eligibility criteria) mainly
related to GHG emissions*Eligibility criteria relevant to several sectors
Classificationof energy
supply anddemandSector types(GX
classification)

Eligibility criteria- Making renewable energy a major power source- Utilization of nuclear power

Energysupply side

Energyconversion
sector- Facilitating the introduction of hydrogen and*ammonia- Establishing electricity and gas markets toachieve carbon neutrality*- Battery industry- Restructuring the manufacturing industry (fuel andfeedstocks transition)**

Householdsector- Battery industry*- GX in transport sector*- Digital investment aimed at decarbonization- Houses and buildings*- Infrastructure- Facilitating the introduction of hydrogen and*ammonia

Energydemand side

- Restructuring the manufacturing industry (fuel andfeedstocks transition)**- Battery industry
Industrial
sector- Resource circulation*- GX in transport sector*- Digital investment aimed at decarbonization*- Houses and buildings- Infrastructure- Carbon Recycling and CCS- Food, agriculture, forestry, and fisheries

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Table-9 The GBP classifications of the eligibility criteria and representative nominated use of proceeds (eligible projects)
and an overview of DNV’s opinion

1

Eligibility criteria
Categories (GBP
Sub-categories
classification)
Energy efficiency 1.1: Promotion ofthorough energy
efficiency improvement

Representative
nominated UoPs
(eligible projects)- Promote the spreadof energy-efficient
appliances

Overview of DNV’s Opinion(including the Issuer’s specific measures and key assessment criteria)-

Energy-saving is an initiative to reduce the amount of energy equivalent
to 62 million kiloliters of crude oil (CO2 reduction: equivalent to 0.16
billion tonnes) in the period FY2013-2030, and is considered to be an
important contribution to the reduction of CO2 emissions for the country
as a whole (1.408 billion tonnes in 2013).

-

The major assessment criteria include heat pump water heaters (e.g.,energy efficiency of 3.5 or more* The FY2025 target standard in theenergy-saving top runner scheme), any of the following: non-fossil use
ratio (increase of 30% or more) or quantity (1,000 kiloliter or more)combined with energy saving, energy consumption intensity
improvement ratio (e.g., 15% or more), etc. In the case of tailor-madeprojects*, the project is eligible if it meets one of the following criteria
for the entire factory/workplace: energy-saving ratio + non-fossil use
ratio increase: 10% or more, energy-saving amount + non-fossil use
amount: 700 kiloliter or more, or energy consumption intensity
improvement ratio: 7% or more, etc.
* Projects that upgrade to equipment that involves mechanical design orthat is designed and manufactured to suit the purpose and use of thebusiness operator (tailor-made equipment)

Reference links:-

Current situation and challenges for the manufacturing industry - Future policy
directions-

Energy saving legislation for manufacturers of energy-consuming equipment Top Runner Scheme-

Act on Rationalizing Energy Use and Conversion to Non-fossil Energy (Energy

https://www.meti.go.jp/shingikai/sankoshin/seizo_sangyo/pdf/014_04_00.pdf

https://www.enecho.meti.go.jp/category/saving_and_new/saving/enterprise/equipment/

Page 38 of 127

Eligibility criteria
Categories (GBP
Sub-categories
classification)

Representative
nominated UoPs
(eligible projects)

Overview of DNV’s Opinion(including the Issuer’s specific measures and key assessment criteria)saving Act)
https://www.enecho.meti.go.jp/category/saving_and_new/saving/enterprise/overview/

1.2: Houses andbuildings--

Support for building
new houses andbuildings with highenergy efficiency andretrofitting to improveenergy efficiency
Replacing windows
with thermal
insulated models
with higher energy
efficiency-

ZEH (Net Zero Energy House) and ZEB (Net Zero Energy Building), which
virtually reduce CO2 emissions from buildings to zero, are expected topromote the introduction of renewable energy sources such as solar
power generation installed on roofs, in premises, etc. as well as to saveenergy in buildings. In addition, activities to reduce energy use in existingbuildings, such as refurbishment with insulated windows, are expected toreduce CO2 emissions associated with energy use in houses andbuildings.

-

The Government has established the Top Runner Scheme for building
materials and is working towards 2050 by setting technical requirementsfor products, components and equipment to be covered.

-

The major assessment criteria are that the building is ZEH or ZEB andthat the thermal transmittance coefficient (Uw value) of insulated
windows is 1.9 or lower, etc. The target projects are the introduction of
products that exceed the 2030 target level in the Top Runner Scheme forbuilding materials etc.

Reference links:

1.3: Digital investment
aimed atdecarbonization- Facilitating thedevelopment of andinvestment in energy
efficient semiconductors,
photonics electronics
convergence
technologies, etc.

Page 39 of 127-

Energy saving legislation for manufacturers of energy-consuming equipment - Top
Runner Scheme-

Act on the Improvement of Energy Consumption Performance of Buildings (Building
Energy Saving Act)

https://www.enecho.meti.go.jp/category/saving_and_new/saving/enterprise/equipment/

https://www.mlit.go.jp/jutakukentiku/house/08.html- Initiatives to reduce the use of electricity by semiconductors used in allindustries to between one-fifth and one-tenth of the current level andinvestments in the development of photonics-electronics convergence
technology to realize energy savings in data centers, which are expectedEligibility criteria
Categories (GBP
Sub-categories
classification)

Representative
nominated UoPs
(eligible projects)

Overview of DNV’s Opinion(including the Issuer’s specific measures and key assessment criteria)
to expand in the future, are expected to lead to reduced electricity use in
the future.

-

The major assessment criteria are that the project scale is at least JPY 200
billion, that the project has state-of-the-art facilities and equipment
performance and that the semiconductor device performance index(bandwidth density/power, (Gbps/mm)/(pJ/bit)) is at least 800 times
higher than that of popular products at the time of research anddevelopment.

Reference links:-

Research, development and social implementation plan for the GI Fund project“Building the Next Generation Digital Infrastructure”
https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_15_randd.pdf

1.4 Battery industry- Investments in plants
manufacturing batteries
together with theirmaterial andcomponents

Page 40 of 127-

The battery industry is considered to be an important industry from theperspective of promoting the effective use of renewable energy sources
with fluctuating power generation and the electrification of various
industrial and household sectors from the use of fossil fuels (heat,electricity and power).

-

Initiatives to establish supply chains, including the recycling of storage
batteries (e.g., research and development of next-generation storage
batteries, manufacturing including materials, recycling technologies) areconsidered to be important from the perspective of promoting theelectrification of the entire society and the sustainable use of storage
batteries.

-

The Government is working towards the goal of establishing a domestic
manufacturing infrastructure that will enable a storage battery capacity of
150 GWh/year by 2030, as part of the Battery Industry Strategy in 2022.

-

The major assessment criteria are that the project has an expansion of
production capacity for in-vehicle storage batteries (3,000 MWh/year or

Eligibility criteria
Categories (GBP
Sub-categories
classification)

Representative
nominated UoPs
(eligible projects)

Overview of DNV’s Opinion(including the Issuer’s specific measures and key assessment criteria)more) and stationary storage batteries (300 MWh/year or more).
Reference links:-

About mission-oriented automobile policy-

Research, development and social implementation plan related to the GI Fund

https://www.meti.go.jp/shingikai/mono_info_service/mobility_kozo_henka/pdf/004_02_00.pdf

project “Development of next-generation storage batteries and motors”
https://www.meti.go.jp/press/2021/11/20211111004/20211110004-2.pdf

2Renewableenergy2.1: Making renewableenergy a major powersource-Next-generation solar
cells (perovskite)
Floating offshore wind
Development ofsubmarine DC powertransmission etc.

Page 41 of 127-

With the aim of making renewable energy a major power source, thedevelopment and demonstration of technologies that enable power
generation using renewable energy sources in limited land and sea areasin Japan with geographical constraints is considered to be an important
initiative, together with the expansion and application of existing
renewable energy sources.

-

Specifically, next-generation solar batteries (perovskite), as shown in the
typical use of proceeds (eligible projects), are expected to be installed onwalls and curved surfaces, taking advantage of their lightness andflexibility. Floating offshore wind turbines are also expected to be installed
in sea areas where it is difficult to use a landing type. Both are considered
to be important initiatives for the expansion of renewable energy in Japan
with geographical constraints.

-

In addition to the typical use of proceeds, nation-wide initiatives to makerenewable energy a major power source, including further expansion andapplication of existing technologies, lower costs and various schemes, areconsidered to be important initiatives for the realization of GX, including
raising the renewable energy source ratio to 36-38% or higher by 2030.

-

In addition, further introduction of renewable energy requires tostrengthen interconnection lines (transmission facilities) connecting thevarious regions of Japan. The Government plans to develop transmission
facilities, including submarine DC transmission from Hokkaido to Honshu,

Eligibility criteria
Categories (GBP
Sub-categories
classification)

Representative
nominated UoPs
(eligible projects)

Overview of DNV’s Opinion(including the Issuer’s specific measures and key assessment criteria)
on a scale of more than 10 million kW over a period of about 10 years
starting in FY2023.

-

The major assessment criterion is that the project is capable of achieving
low generation costs (e.g., wind: JPY 8-9/kWh; solar: JPY 14/kWh).

Reference links:-

Research, development and social implementation plan for the GI Fund project“Low-cost offshore wind power”-

https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_01_randd.pdf

Research, development and social implementation plan for the GI Fund project“Development of next-generation solar batteries”

2.2: Infrastructure- Development of cities
and communities
contributing todecarbonization-

https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_02_randd.pdf

Initiatives to optimize (minimize) energy use through the introduction of
decarbonized products, technologies and local energy networks in cities
and regions and the effective use of renewable energy and stored energy
are considered to be important for decarbonizing the industrial sector.

- The major assessment criteria are that the project has a plan with the total
electricity demand in the city or region concerned is equal to the total
electricity supply from renewable energy and other sources, and that the
project includes initiatives that are consistent with the Global Warming

Page 42 of 127

Eligibility criteria
Categories (GBP
Sub-categories
classification)3

Low-carbon anddecarbonizedenergy*Classification
set out in theIssuer’s Climate
Transition Bond

3.1: Establishingelectricity and gas
markets to achievecarbon neutrality

Representative
nominated UoPs
(eligible projects)

Overview of DNV’s Opinion(including the Issuer’s specific measures and key assessment criteria)
Action Plan. A typical example is the project to support the establishmentof a self-owned line microgrid.

- Promoting zeroemission thermal
power

-

The technology development to expand the introduction of low-carbon anddecarbonized energy (zero-emission thermal power etc.) using gases suchas hydrogen (including hydrogen carriers such as MCH) and ammonia, andthe development of various environments for research and development
and implementation related to supply chain establishment is considered to
be an important initiative for achieving a stable energy supply anddecarbonization in the future.

-

The major criterion is that the project is capable of realizing supply costs
in 2030 and 2050 equivalent to those of fossil fuels (e.g., below JPY
30/Nm3 in 2030 and below JPY 20/Nm3 in 2050).

Reference links:-

Research, development and social implementation plan for the GI Fund project“Establishment of a large-scale hydrogen supply chain”-

https://www.meti.go.jp/press/2021/05/20210518005/20210518005-2.pdf

Research, development and social implementation plan for the GI Fund project“Establishment of a fuel ammonia supply chain”
https://www.meti.go.jp/press/2021/09/20210914003/20210914003-b.pdf

3.2: Utilization of
nuclear power- Next-generation
advanced reactors
with built-in new
safety mechanisms

Page 43 of 127-

Initiatives to improve the business environment, research anddevelopment and demonstration of innovative light water reactors, hightemperature gas reactors, fast reactors, etc. incorporating new safetymechanisms are considered to be an important initiative for the restart ofexisting nuclear power plants (expecting 20-22% of power generation asof 2030) in order to achieve carbon neutrality and stable energy supply
from 2030 onwards.

-

Low-cost, stable and large-volume hydrogen production and supply using
high-temperature gas reactors is expected to lead to increased use invarious industrial sectors, including the steel and chemical industries, andEligibility criteria
Categories (GBP
Sub-categories
classification)

Representative
nominated UoPs
(eligible projects)

Overview of DNV’s Opinion(including the Issuer’s specific measures and key assessment criteria)
contribute to the decarbonization of the entire industry.
- The major assessment criteria are that the project is based on thestrategic roadmap for the development of fast reactors and that the
project has high-temperature gas reactors that enable hydrogenproduction (e.g., expecting to supply hydrogen at a rate of approximately
JPY 12/Nm3 in 2050).

4

Clean
transportation

4.1 Cleantransportation (GX intransport sector)-

Support for the
introduction of nextgeneration vehicles
Developing
demonstration
aircraft by 2030s andspreading the use ofzero-emissions ships,
etc.

-

The transport sector accounts for approximately 20% of the country’s total
GHG emissions and is the second largest emitting sector after theindustrial sector (FY2019 results: 0.206 billion t-CO2). In order todecarbonize the transport sector, the de-fossilization (decarbonization) offuels used in the automotive, aviation and shipping industries, as well as
electrification and energy-saving (improvement in transport modes suchas logistics) are considered to be important and it needs to be promoted inboth the industrial and household sectors.

-

The major assessment criteria include the introduction of zero-emission
and low-carbon vehicles such as EVs as clean energy vehicles, FCVs
(passenger cars and commercial) and PHEVs*; hydrogen aircraft as nextgeneration aircraft (engine performance, hydrogen tank weight, energysaving airframe design (cruising performance), etc.).
* DNV has confirmed that the target PHEVs have been estimated andconfirmed by the Issuer to meet internationally-known standards (<50gCO2/passenger-km*) at the time of the Framework assessment. Notethat the standard may become stricter in the future (e.g., only vehicles
with zero direct emissions, such as EVs and FCVs with 0g-CO2/passenger-km, will be eligible), so if the Issuer includes PHEVs as a useof Transition Bond proceeds, it is expected to reassess at the time of theTransition Bond issuance.
*Climate Bonds Standard v4.0 Land Transport Standard, April 2023

Page 44 of 127

Eligibility criteria
Categories (GBP
Sub-categories
classification)

Representative
nominated UoPs
(eligible projects)

Overview of DNV’s Opinion(including the Issuer’s specific measures and key assessment criteria)
Reference links:-

Research, development and social implementation plan for the GI Fund project“Building a smart mobility society”
https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_14_randd.pdf-

Research, development and social implementation plan for the GI Fund project“Development of next generation aircraft”
https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_16_randd.pdf-

Research, development and social implementation plan for the GI Fund project“Development of next generation ships”
https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_17_randd.pdf

4.2 Infrastructure- Development of cities
and communities
contributing todecarbonization-

The energy used in each urban and regional (industrial zones etc.)
infrastructure (ports, roads, (hybrid) dams, sewers, etc.) is to be
decarbonized across the entire area.

-

The major assessment criteria are that the project has a plan with thetotal electricity demand in the city or region concerned is equal to the total
electricity supply from renewable energy and other sources, and that the
project includes initiatives that are consistent with the Plan for Global
Warming Countermeasures.

Reference links: *Carbon neutral ports as a typical example-

About carbon neutral ports (CNPs)-

Manual for the preparation of the “Port Decarbonization Promotion Plan”-

Outline of the certification system for decarbonization of port terminals (CNP
certification (container terminals)) (Draft) [Trial version]

https://www.mlit.go.jp/kowan/kowan_tk4_000054.html
https://www1.mlit.go.jp/kowan/content/001597599.pdf

https://www1.mlit.go.jp/kowan/content/001598435.pdf

5Circular economy 5.1: Restructuring theadapted products, manufacturing industry
production
technologies andprocesses- Development andintroduction of innovativetechnologies such ashydrogen reduction
steelmaking
Page 45 of 127- GHG emissions in the industrial sector are mainly associated with the useof electricity and heat. The industrial sector is the largest sector,
accounting for approximately 30% of Japan's GHG emissions (FY2019

Eligibility criteria
Categories (GBP
Sub-categories
classification)(fuel and feedstocks
transition)

Representative
nominated UoPs
(eligible projects)- Conversion to CarbonRecycling

Overview of DNV’s Opinion(including the Issuer’s specific measures and key assessment criteria)
result: 0.384 billion t-CO2). In particular, in the steel, chemical, cement,
pulp and paper and biomanufacturing industries, which are so-called GHGintensive industries due to their high consumption of electricity and heat in
the product manufacturing process, various energy-saving measures aswell as fuel and feedstocks transition (from coal and heavy oil to gas,decarbonized energy or feedstocks that do not rely on fossil resources),
etc. are considered to be important initiatives.

-

The above-mentioned GHG-intensive industries are required to beaddressed with reference to the technology roadmap prepared by the
Ministry of Economy, Trade and Industry (METI) as a specific direction for
the transition towards achieving carbon neutrality in 2050.

-

The major assessment criteria are that the project can establish
ironmaking process (blast furnace hydrogen reduction technology anddirect hydrogen reduction technology) that reduces CO2 emissions by 50%
or more in the steel sector, or industrial furnaces with 50% hydrogenmixing by FY2031 to decarbonize the heat used or technology to reduce
peak electricity consumption and electricity receiving capacity by 30% ormore in the manufacturing sector.

Reference links:-

Current status and challenges for the manufacturing industry Future policy
directions-

Research, development and social implementation plan for the GI Fund project

https://www.meti.go.jp/shingikai/sankoshin/seizo_sangyo/pdf/014_04_00.pdf“Hydrogen utilization in steelmaking processes”-

https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_05_randd.pdf

Research, development and social implementation plan for the GI Fund project“Decarbonization of thermal processes in the manufacturing sector”
https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_20_randd.pdf

Page 46 of 127

Eligibility criteria
Categories (GBP
Sub-categories
classification)
5.2: Facilitating
introduction ofhydrogen and ammonia--

Representative
nominated UoPs
(eligible projects)
Building supply
chain both
domestically andinternationallyResearch anddevelopment as well as
the introduction
support of production
and usage of hydrogen
derived from excess
renewable energy
sources

Overview of DNV’s Opinion(including the Issuer’s specific measures and key assessment criteria)-

Initiatives to facilitate the introduction of hydrogen and ammonia areconsidered to be necessary technologies for both the energy supply side(energy conversion sector) and the energy demand side (mainly industrial
sector). In the establishment of supply chains (production, transport andutilization) for hydrogen and ammonia utilization, the establishment andcost-cutting of production technologies (e.g., production of greenhydrogen by water electrolysis using renewable energy) to secure thesupply volume for the expected demand to make it commercially available
as a decarbonized fuel. This is considered to be an important initiative infacilitating the introduction and utilization of hydrogen and ammonia. The
main focus here is on large-scale supply and cost-cutting.

-

The planned domestic introduction of hydrogen and ammonia is asfollows:2030 Hydrogen: 3 million tonnes; Ammonia: 3 million tonnes (approx.
0.5 million tonnes of hydrogen equivalent)
2050 Hydrogen: 20 million tonnes; Ammonia: 30 million tonnes(approx. 5 million tonnes of hydrogen equivalent)-

The major assessment criteria are the establishment of the supply chain
necessary to realize the above-mentioned domestic introduction volumes
and projects that enable supply costs to be equivalent to fossil fuels, i.e.,
below JPY 30/Nm3 in 2030 and below JPY 20/Nm3 in 2050.

Reference links:-

Research, development and social implementation plan for the GI Fund project“Establishment of a large-scale hydrogen supply chain”-

https://www.meti.go.jp/press/2021/05/20210518005/20210518005-2.pdf

Research, development and social implementation plan for the GI Fund project“Establishment of a fuel ammonia supply chain”
https://www.meti.go.jp/press/2021/09/20210914003/20210914003-b.pdf

Page 47 of 127

Eligibility criteria
Categories (GBP
Sub-categories
classification)
5.3: Carbon
Recycling and CCS(Carbon Captured &Storage)

Representative
nominated UoPs
(eligible projects)- Support for researchand development of
Carbon Recycling fuelOverview of DNV’s Opinion(including the Issuer’s specific measures and key assessment criteria)-

Initiatives to make available fuels that contribute to decarbonization, suchas SAF (Sustainable Aviation Fuel), synthetic fuels and synthetic methaneas carbon recycling (e.g., development of regulations and systems,
coordination with international rules) are important for realizing
decarbonization in the transport sector (which accounts for approximately
20% of emissions in Japan) etc.

-

CCS (Carbon Captured & Storage) is to capture CO2 that will remain to be
emitted in the future and store it underground or elsewhere.
Internationally, the introduction of CCS is recognized as a necessary step
towards achieving carbon neutrality. Early actions are considered to benecessary to secure the amount of CCS storage indicated in the eligibility
criteria and to establish domestic and international value chains and CCS
markets.

-

The major assessment criteria include projects that develop anddemonstrate control technologies to address feedstock variability*. There
are no clear criteria for CCS at present, but projects that meet the above
eligibility criteria through the Issuer’s project evaluation and selection
process are eligible.
* The feedstocks for the production of synthetic fuels are waste materials
from various applications (e.g., waste oil) etc., and the properties of thefeedstocks fluctuate. Therefore, in order to improve the efficiency ofcarbon recycling, it is necessary to develop technologies such astemperature control during production and the adjustment ofappropriate catalyst quantities in response to fluctuations in theproperties etc. of the feedstocks.

Reference links:-

Research, development and social implementation plan for the GI Fund project“Development of fuel production technology using CO2 etc.”
https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_08_randd_set.pdf

Page 48 of 127

Eligibility criteria
Categories (GBP
Sub-categories
classification)

Representative
nominated UoPs
(eligible projects)

Overview of DNV’s Opinion(including the Issuer’s specific measures and key assessment criteria)-

Research, development and social implementation plan for the GI Fund project“Development of CO2 separation and collection
technologies“ https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_

6

Environmentally
sustainable
management ofliving natural
resources andland use, Circular
economy6.1: Food, agriculture,
forestry, and fisheries
industry- Decarbonization ofagriculture, forestry
and fisheries

10_randd_ set.pdf-

As absorption source for greenhouse gases, forests, agricultural lands andseaweed beds of the food, agriculture, forestry, and fisheries industries
play an essential role in achieving carbon neutrality by 2050 as well as for
decarbonization and mitigation of environmental impacts.

-

There are no clear criteria for food, agriculture, forestry, and fisheries.
However, projects that contribute to the above through the Issuer’s
project evaluation and selection process in accordance with the “Green
Food System Strategy” and the “Green Food System Act” are eligible.

Reference links:-

Green Food System Strategy-

Green Food System Act-

https://www.maff.go.jp/j/kanbo/kankyo/seisaku/midori/attach/pdf/index-10.pdf
https://www.maff.go.jp/j/kanbo/kankyo/seisaku/midori/houritsu.html#h_69877885961662471448330

Research, development and social implementation plan for the GI Fund project“Development of CO2 and other reduction and absorption technologies for food,agriculture, forestry, and fisheries”
https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_18_randd.pdf

6.2: Resource
circulation- Investment toaccelerate resource
circulation ofplastics, metals,
sustainable aviationfuel (SAF), etc.

Page 49 of 127- Initiatives to avoid at most additional CO2 emissions in the supply chain in
the entire society through investments to introduce equipment etc. for low
and decarbonized resources (e.g., recycled materials and bio-materials),material-saving resources and services such as leasing and sharing(investments in the arterial industry), and investments to introduce
equipment etc. for recycling and re-use of plastics, metals (including
battery materials, solar panels, etc.), biomass waste (e.g., production andsupply of SAF) (investments in the venous industry) are considered to beimportant to minimize energy use in the future.

Eligibility criteria
Categories (GBP
Sub-categories
classification)

Representative
nominated UoPs
(eligible projects)

Overview of DNV’s Opinion(including the Issuer’s specific measures and key assessment criteria)-

The major assessment criteria include projects that establish technologies
to realize waste incineration facilities based on CO2 separation andcollection that meet a stable collection rate of 90% or more of the carbon
contained in waste under specified conditions by 2030.

Reference links:-

Research, development and social implementation plan for the GI Fund project“Development of production technology of plastic raw materials using CO2 etc.”-

https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_07_randd.pdf

Research, development and social implementation plan for the GI Fund project“Development of fuel production technology using CO2 etc.”-

https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_08_randd_set.pdf

Research, development and social implementation plan for the GI Fund project“Development of manufacturing technology for concrete etc. using
CO2“ https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_09_randd

-

.pdf

Research, development and social implementation plan for the GI Fund project“Development of CO2 separation and collection technologies etc.”-

https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_10_randd_set.pdf

Research, development and social implementation plan for the GI Fund project“Achieving carbon neutrality in the field of waste and resource circulation”-

https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/gif_11_randd2.pdf

Research, development and social implementation plan for the GI Fund project“Promotion of carbon recycling using CO2 as a direct feedstock throughbiomanufacturing technology”
https://www.meti.go.jp/policy/energy_environment/global_warming/gifund/pdf/gif_19_randd.pdf

Page 50 of 127

-

DNV has confirmed that the Issuer plans to allocate all amount of the net
proceeds, excluding expenses, of the entire amount of proceeds from the
Climate Transition Bond to new investment and refinancing for eligible projects
that meet the Issuer’s investment plan to implement its Transition Strategy.
With regard to refinancing, eligible projects are those to which the proceeds
were disbursed in the previous fiscal year retrospectively from the date of thefinancing.

-

The eligibility criteria and eligible projects focus on green projects classified
under GBP/GBGLs (e.g., in the renewable energy sector and the energy-saving
sector (energy efficiency etc.)) and also include activities that need to beaddressed at present in order to achieve carbon neutrality in the future (e.g.,
initiatives for phasing out fossil fuel use, the utilization of nuclear power, etc.)
like the eligibility criteria classified as low-carbon and decarbonized energy.

-

Green projects classified under GBP/GBGLs and projects that meet the eligibility
criteria classified as low-carbon and decarbonized energy are eligible projects
that directly or indirectly support projects that result in significant GHG
emission reductions as exemplified by CTFH/CTFBG and GBP/GBGLs or that
contribute to achieving carbon neutrality, which contribute to achieving nationaltargets, roadmaps for individual industries, etc. Eligible projects have beenassessed for meeting the criteria set out by the Issuer and for having clear
environmental benefits on the Transition Strategy, and are expected tocontribute to the SDGs.

-

The Issuer is also required to be aware that some eligible projects that meetthe criteria at the time of the Framework assessment, such as PHEVs, may
need to be reassessed due to future revisions of the criteria (e.g., stricter
thresholds or revised assessment boundaries). It is expected that the projectwill be assessed to ensure that it is an eligible project at the time of issuance ofthe transition bond by monitoring international trends, reviewing theassessment criteria in a timely manner, etc.

Based on the above, DNV judges that the Climate Transition Bond satisfies the element
required by GBP-1 that “the issuer must use the proceeds for eligible projects thatprovide clear environmental benefits*.”＊ Proceeds from transition bonds are also allowed to be allocated to related projects necessary torealize Just Transition and the transition strategy.

Page 51 of 127

Use of proceeds classified under GBP☒

Renewable energy☒

Energy efficiency (energy savings)☐

Pollution prevention and control☒

Environmentally sustainable management of☐Conservation of terrestrial and aquatic☒

Clean transportation☐

Adaptation to climate change

living natural resources and land use
biodiversity☐

Sustainable water resources andwastewater management☒☒

Circular economy adapted products,☐

Green buildings with locally, nationally or

production technologies andinternationally recognized standards orprocesses (circular economy)certifications

Other: Low-carbon and decarbonizedenergy (item set out in the Issuer’s
Climate Transition Bond)☒

Projects/eligibility criteria that are undetermined at the time of finance execution, buthave been confirmed through appropriate processes to fit into the GBP classification orother eligibility areas not currently listed in the GBP, may be included.

Page 52 of 127

GBP-2.

Process for Project Evaluation and Selection-

The Issuer selects projects based on an assessment that they meet the GBP1 eligibility criteria and the criteria required for an eligible project, and thatthey have clear environmental benefits in the timeline required by theroadmap. Eligible projects are planned to cover a range of activities such astechnology development/research and development, demonstration tests,
support for equipment and system installation (subsidies), etc., according to
the timeline until the project is socially implemented.

-

Specifically, eligible projects to which the proceeds will be allocated will be
confirmed by the ministries in charge of the projects to be consistent withthe “GX Promotion Strategy” and conform to the selection criteria set out in
GBP-1 for each eligibility criterion. Eligible projects that are found to be inconformity will be re-confirmed by the “Intergovernmental Committee on
the Issuance of GX Economy Transition Bonds,” consisting of DirectorGenerals, and relevant ministries and agencies as necessary, and finallyreported to the “GX Implementation Council,” chaired by the Prime Minister.
Each eligible project is determined annually by a resolution of the Diet aspart of the governmental budget.
The members of the above Intergovernmental Committee are as follows:Cabinet Secretariat
Financial Services Agency
Ministry of Finance
Ministry of Economy, Trade and Industry

 Ministry of the Environment-

When selecting eligible projects, the Issuer will ensure to take negativeenvironmental and social impacts into account (including the necessary
procedures in the region where the project is to be implemented) and thatthe proceeds are not allocated to projects related to the following exclusion
criteria.
<Exclusion criteria>
 Businesses with the purpose of manufacture or distribution of
inhumane weapons such as nuclear, chemical, biological and otherweapons of mass destruction or anti-personnel landmines, orbusinesses engaged in the manufacture of products or provision ofservices supporting manufacture or sale of inhumane weapons such as
nuclear, chemical, biological and other weapons of mass destruction or
anti-personnel landmines; Businesses related to coal mining, refining or transportation;
 Businesses related to the ownership or operation of gambling facilities
or businesses;

Page 53 of 127

 Businesses related to forced labor or businesses related to unfair trade,
bribery, corruption, extortion, embezzlement or other inappropriate
relationships that do not comply with the laws and regulations of thecountry where the business is located; Businesses related to transactions that could cause human rights,
environmental or other social problems.
-

DNV has confirmed that the Issuer assesses and selects projects after
confirming negative impacts (including exclusion criteria) following astandard process. However, in order to assess and select projects asTransition Bond eligible projects, including those, DNV recommends to makea common documentation as a robust process for operation that takes into
account Just Transition, avoidance of lock-in, additional positiveenvironmental impacts, etc., as required specifically for the Transition Bondas shown in the CTFH/CTFBG.

Based on the above, DNV judges that the Climate Transition Bond satisfies theelement required by GBP-2 that “the issuer must outline the process fordetermining the eligibility of the project and outline how the project considers its
impact on the targets.”

Evaluation and selection☒☒

The project is consistent with the

The project has been assessed andachievement of the Issuer’s

selected through a documented processenvironmental contribution targets.

that demonstrates that it meets thedefined eligibility category.

☒

The project is an eligible project as☒

The project has been assessed andthe use of green finance proceeds

selected through a documented process toand is transparent.

identify and manage potential ESG risks
associated with the project execution.

☒

The project is evaluated and selectedbased on published criteria abstracts☐

Other (please specify):(green project with existingreferenceable criteria).

Information on responsibility and accountability☒

Evaluation/selection criteria based on☒

advice or verification by an external
body☐

Other (please specify):

Page 54 of 127

Evaluation within the organization

GBP-3.

Management of Proceeds
Management of allocation of proceeds:-

The Issuer has specified the Ministry of Economy, Trade and Industry(METI) to be responsible for the allocation and management of proceeds
using an internal management system (Government Accounting System,ADAMS II, etc.). The proceeds of the Climate Transition Bond will bereceived in the Energy Supply and Demand Account of the Special Accountfor Energy Measures and will be managed separately from other accounts.

-

Specifically, the procurement is carried out by the Ministry of Finance, andafter payment to the Accounting Office of the Agency for Natural Resources
and Energy, revenue and expenditure management is carried out using aninternal management system. The Accounting Office of the Agency for
Natural Resources and Energy manages the allocation of proceeds throughthe allocation to the private sector etc. via the responsible office andministry.

-

The management status of the proceeds allocation can be tracked on an
eligible project basis as “costs for measures to promote a smooth transition
to a decarbonized growth economic structure” using an internalmanagement system from the issuance of the transition bond until theredemption.

-

The Issuer intends that the proceeds will be allocated to projects that havebeen put into operation (commenced operation) or to which proceeds havebeen allocated in the fiscal year that includes the date of fundraising, after
the fiscal year and in the previous year.

Management of unallocated proceeds:-

Until the proceeds are allocated to eligible projects, all unallocatedproceeds will be managed as cash and will not be used for other temporary
investments (including green investments) etc.

The Issuer will be subject to annual inspections by the Board of Audit of Japan ofits proceeds management results. During the inspections by the Board of Audit ofJapan, the climate transition bond-specific management process required under
GBP-3 will also be inspected.
Based on the above, DNV judges that the Climate Transition Bond satisfies theelement required by GBP-3 that “the issuer must track and manage the proceeds(and, where necessary, establish and manage under appropriately classified
portfolio units) and disclose how unallocated proceeds are treated.”

Page 55 of 127

Tracking and management of proceeds:☒

Some or all of the proceeds from the Climate Transition Bond that are planned to beallocated are systematically distinguished or tracked by the Issuer.

☐

Disclosure of intended types of temporary investment instruments for unallocated proceeds☒

Other: Unallocated proceeds are managed in cash.

Additional disclosure:☐

Allocations to future investments only☒

Allocations to individual☐

Disclosure of portfolio balance of
unallocated proceeds☒

Allocations to both existing and future
investments☒

Allocations to a portfolio of disbursements☐

Other (please specify):

disbursements

GBP-4.

Reporting

DNV has confirmed that the Issuer intends to report the following on an annual basis on
the Government’s website as proceeds allocation reporting and impact reporting until theIssuer has fully allocated the proceeds from the Climate Transition Bond.
The Issuer intends to work on to strengthen organization’s commitments and gain
market recognition for the content of the upfront investment by additionally disclosing
the mid-term strategy and the expected environmental benefits as well as the allocation
status of proceeds and the direct impacts (environmental benefits) of eligible projects towhich the allocation has been made.
In the event of a significant change in circumstances in eligible projects (e.g., significant
process changes, suspension/discontinuation, changes in specifications that have asignificant impact on the environmental benefits), the Issuer will disclose it even after
the completion of the proceeds allocation.
DNV recommends that impact reporting should not be limited within the period up to thecompletion of the proceeds allocation, but also after the completion of proceeds
allocation until milestones are reached that are considered to be important, such as thecompletion of the project or the achievement of expected environmental benefits. DNV
also recommends to establish and operate an appropriate reporting period as a
documented process as an internal arrangement of the Issuer.
Allocation status reporting:-

The Issuer will report on the allocation status of proceeds on an annual
basis on the Government’s website, at least until the full amount of theproceeds has been appropriated. Allocation status reporting will be on a
project-by-project or eligibility criteria basis and will include the following
items, taking into account confidential obligations.

Page 56 of 127

Allocated amount and unallocated balance

Estimated amount of the proceeds allocated in the fiscal year
prior to the issuanceImpact reporting (environmental benefits reporting):-

The Issuer will, at least until the full amount of proceeds has been
allocated, report on the items of major environmental benefits (mainly GHG
emission reduction effects) on a project-by-project or eligibility criteria
basis (direct and indirect benefits and expected future benefits) andprogress status of projects on an annual basis on the Government's
website, taking into account confidential obligations and the extent
practicable.

-

In the event of a significant change in circumstances in eligible projects(e.g., significant process changes, suspension/discontinuation, changes in
specifications that have a significant impact on the environmental benefits)during the redemption period of the bond after allocations havecommenced, the Issuer will disclose it in a timely manner or throughreporting.

-

DNV recommends that the impact reporting is conducted in comparison
with what the Issuer actively discloses about specific environmental benefit
indicators to be used for each eligibility criterion, representative project,etc. and the calculation method (including baseline conditions), wherepracticable, in the statutory documents for each bond issuance etc.

Based on the above, DNV judges that the Climate Transition Bond satisfies the element
required by GBP-4 that “the issuer shall, at least, report to bond investors regarding theallocation status of proceeds and quantitative or qualitative performance (environmental
benefits) of eligible projects.”

Page 57 of 127

Allocation status reporting:☒

Project-by-project☒

On a project portfolio basis☐

Linkage to individual bond(s)☐Other (please specify):☐

Green financed share of total investment☐

Semi-annual

Information reported:☒

Allocated amounts☐

Other (please specify):

Frequency:☒

Annual☐Other (please specify):

Impact reporting (environmental benefits reporting):☒

Project-by-project☒

On a project portfolio basis☐

Linkage to individual bond(s)☐Other (please specify):

Frequency:☒

Annual☐Other (please specify):☐

Semi-annual☐

Energy savings

Information reported (expected or ex-post):☒

GHG emissions/savings☒ Other ESG indicators (please
specify):

According to project progress and other properties ofeach eligibility criterion or eligible project

Means of disclosure☐

Information published in financial report☐

Information published in sustainability report☒

Other (please specify): The Government’s(Integrated Report)☐

Information published in ad hoc documents

website☐Reporting reviewed (if yes, please specify which parts of the reporting are subject to external
review)

External review (post-issuance periodic review of the Climate Transition Bond)The Issuer will obtain an external review on an annual basis until the proceeds havebeen fully allocated in order to increase certainty (consistency) and objectivity of theongoing compliance of the Climate Transition Bond with the relevant principles,
guidelines and other required elements.

Page 58 of 127

VII. Assessment Conclusion

On the basis of the information provided by the Issuer and the work undertaken, it is DNV’sopinion that the Framework meets the criteria established in the Protocol, and that it isaligned with the following stated definition or purpose of the CTFH/CTFBG and GBP/GBGLs.
“provide an investment opportunity with transparent sustainability credentials”“enable capital-raising and investment for new and existing projects with environmental
benefits"

DNV Business Assurance Japan K.K.
7 November 2023

Thomas Leonard

Naoki Maeda

Head of Section, Sustainability Services

Managing Director

Supply Chain & Product Assurance

DNV Business Assurance Japan K.K.

DNV Australia, New Zealand and Southeast Asia

Masato Kanedome

Jun Chokai

Project Manager

Project Leader

DNV Business Assurance Japan K.K.

DNV Business Assurance Japan K.K.

Akira Tsukasaki
Assessor
DNV Business Assurance Japan K.K.

Page 59 of 127

About DNVDriven by our purpose of safeguarding life, property and the environment, DNV enables organisations to advance the safety andsustainability of their business. Combining leading technical and operational expertise, risk methodology and in-depth industry knowledge,
we empower our customers’ decisions and actions with trust and confidence. We continuously invest in research and collaborative
innovation to provide customers and society with operational and technological foresight.
With our origins stretching back to 1864, our reach today is global. Operating in more than 100 countries, our 16,000 professionals are
dedicated to helping customers make the world safer, smarter and greener.

Disclaimer
Responsibilities of the Management of the Issuer and the Second-Party Opinion Providers, DNV: The management of Issuer has provided
the information and data used by DNV during the delivery of this review. Our statement represents an independent opinion and is intended
to inform the Issuer management and other interested stakeholders in the Bond as to whether the established criteria have been met,
based on the information provided to us. In our work we have relied on the information and the facts presented to us by the Issuer. DNV is
not responsible for any aspect of the nominated assets referred to in this opinion and cannot be held liable if estimates, findings, opinions,or conclusions are incorrect. Thus, DNV shall not be held liable if any of the information or data provided by the Issuer’s management andused as a basis for this assessment were not correct or complete.

Page 60 of 127

Schedule-1 Climate Transition Bond Eligibility Criteria and Representative Nominated Use ofProceeds (Eligible Projects)
The representative nominated use of proceeds (eligible projects) shown in the table have been assessed for eligibility by the Issuer at the timeof the Framework assessment (as of October 2023). Future issuances of transition bonds based on the Framework may include, in addition to
the representative nominated use of proceeds (eligible projects) shown in the table, eligible projects of which eligibility has been additionallyconfirmed by the Issuer in accordance with the “Process for Project Evaluation and Selection” described in the Framework and, if necessary
additional assessments will be made in a timely manner by an external evaluation body.
Eligibility criteria
No.

Categories

Representative Nominated use of proceeds (eligible projects)

Sub-categories(GBP classification)

1.1: Restructuring the
manufacturing industry (fueland feedstocks transition)

1

Energy efficiency

Promotion ofthoroughenergyefficiency
improvement

Subsidy system for energy-saving measures in the industrial sector- Decarbonization of factories, energy savings- Fuel and feedstock transition measures in five major industries etc.
Subsidy system for energy-saving measures in the household sector- Subsidy for energy-saving refurbishment of existing buildings- Subsidy for low-carbon housing (life cycle) technology developmentetc.

1.2: Houses and buildings

1.3: Digital investment aimed
at decarbonization

Facilitating the development of and investment in energy efficient
semiconductors, photonics electronics convergence technologies, etc.
Investments in plants manufacturing batteries together with their materialand components

1.4: Battery industry

Next-generation solar cells (perovskite)
2

Renewable energy

2.1: Making renewable energy a major powersourceFloating offshore wind
Costs of basic surveys and maintenance of submarine DC transmission
etc.

Page 61 of 127

Eligibility criteria
No.

Categories(GBP classification)

Low-carbon anddecarbonized energy

3*Classification set out in
the Issuer’s Climate
Transition Bond

Representative Nominated use of proceeds (eligible projects)

Sub-categories

2.2: Infrastructure
3.1: Establishing electricity and gas markets toachieve carbon neutrality

Clean transportation

4.2: Resource circulation

5

products, production
technologies and processes

5.1: Restructuring the manufacturing industry(fuel and feedstocks transition)
5.2: Facilitating the introduction of hydrogenand ammonia
5.3: Carbon Recycling and CCS

6Support for the introduction of next-generation vehicles
Developing demonstration aircraft by 2030s and spreading the use of zeroemissions ships, etc.
Decarbonization of fuels (SAF, synthetic fuels, etc.)
Introduction of Carbon Neutral Ports (CNP) and clean transportation at
airports and other infrastructure facilities

4.2: Infrastructure

Circular economy adapted

Research and development towards zero-emission thermal power
Research and development of next-generation advanced reactors withbuilt-in new safety mechanisms

3.2: Utilization of nuclear power

4.1: Clean transportation (GX in transport
sector)
4

Infrastructure facilities (costs of introducing renewable energy in diverse
infrastructure spaces such as airports, roads, dams and sewers)
Support for the establishment of self-owned line microgrids

Environmentally sustainable 6.1: Food, agriculture, forestry, and fisheries
management of living
natural resources and land
6.2: Resource circulationuse, Circular economy--

Development and introduction of innovative technologies such ashydrogen reduction steelmaking
Conversion to Carbon-Recycling-

Building supply chain both domestically and internationallyResearch and development as well as the introduction support ofproduction and usage of hydrogen derived from excess renewableenergy sources
Support for research and development of Carbon Recycling fuelDecarbonization of agriculture, forestry and fisheries
Investment to accelerate resource circulation of plastics, metals,
sustainable aviation fuel (SAF), etc.

Page 62 of 127

Schedule-2 Climate Transition Finance Eligibility Assessment Protocol
The following checklists are the DNV assessment protocol created for the eligibility assessment based on the disclosure requirements of the CTFH.
The “Confirmed documents” in “Work Undertaken” column include public or non-public documents (internal document of the Issuer), information, etc. and areprovided to DNV by the Issuer as evidence for determining the eligibility.
Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

1

Issuer’s Climate
Transition
Strategy andGovernance

The green, sustainability or sustainabilitylinked financing should be directed toward
enabling an issuer’s GHG emissions
reduction strategy in alignment with thegoals of the Paris Agreement.

Confirmed documents:

The Climate Transition Bond is a plan implemented with astrategy and governance to achieve Japan’s 2050 carbon
neutrality in line with the goals of the Paris Agreement anda science-based reduction of 46% of GHG emissions in
FY2030 (compared to FY2013).

Recommended information and indicators:•••

a long-term, science-based target toalign with the goals of the Paris
Agreement;
relevant and credible interim sciencebased targets in the short andmedium-term on the trajectory
towards the long-term goal, in linewith the relevant regional, sector, orinternational climate change
scenarios;
disclosure on an issuer’s transition
plan or climate transition strategy.
This should include specificitemisation of the main levers
towards GHG emissions reduction,such as a detailed capital expenditure(CapEx) plan and relevant
technological implications (i.e.,- Framework- Basic Policy for the
Realization of GX(roadmap)- Plan for Global
Warming
Countermeasures- Strategic Energy Plan
- Long-term strategy
as a growth strategy
based on the Paris
Agreement- Japan’s NDC- Sector-specifictechnology roadmap- GX Implementation
Council documents
Interview with theIssuerPage 63 of 127i)

The Issuer has explained that the 2050 carbon
neutrality is consistent with the goals of the Paris
Agreement.

ii)

The Issuer has set a mid-term goal of a 46%
reduction in GHG emissions in FY2030 (compared to
FY2013), which is the intersection of the year 2030
with the year 2050 on a trajectory linearlyinterpolated from FY2013 emissions to 2050 carbon
neutrality, and is judged to have a scientific basis. In
addition, the mid-term goal has been set in the Planfor Global Warming Countermeasures as ambitious
targets and specific initiatives as reduction rates foreach industrial category that emits greenhousegases, and ensuring their implementation brings
relevance and credibility for achieving the goal.

iii)

The Issuer has associated in its roadmap aninvestment program of approximately JPY 20 trillion
in governmental support over a 10-year period fromFY2023 and an overall public-private investment

Ref.

Criteria

Requirements••

Work Undertaken

DNV Findings
amount of over JPY 150 trillion with the transition
plan and Transition Strategy. The main instruments
for GHG emission reduction are organized in the Planfor Global Warming Countermeasures and theroadmap.

amounts to be spent, what carbon
cost is considered for implementing
such CapEx programme, operational
impacts, regulatory considerations,etc.);
clear oversight and governance of anissuer’s climate transition strategy,
including management/board levelaccountability; andevidence of a broader sustainability
strategy to mitigate relevant
environmental and social
externalities, including ‘just transition’considerations where appropriate,and contributions to the UN
Sustainable Development Goals (UNSDGs).

Page 64 of 127

iv)

The Issuer has established a structure andmechanism to promote the Transition Strategy as acountry. The above plans and strategies, which form
the basis for the implementation of the Transition
Strategy, will be updated annually or through periodic
follow-ups and revisions. These GX initiatives will be
discussed with relevant ministers and experts at the
GX Implementation Council chaired by the Prime
Minister, where the policy direction will be decided.
This means that the GX is judged to have clear
oversight and governance with accountability by thestate.

v)

With regard to direct or indirect contributions to theSDGs, the Issuer has further categorized its
decarbonization initiatives towards the GX, which areclassified into 14 categories, into the six eligibility
criteria shown in Table-3, each organizing areas ofcontribution to the SDGs. Just Transition is also
stipulated in the “Basic Policy for the Realization of
GX” to be considered as a society-wide promotion of
GX. The above indicates that the Issuer should work
to minimize negative environmental and social
impacts (negative external effects) that may occur asa result of the implementation of the GX bycontributing to the SDGs and taking into account Just
Transition.

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

2

Business model
environmental
materiality

The climate transition strategy should be
relevant to the environmentally material
parts of an issuer’s business model, taking
into account potential future scenarios
which may impact current determinations
concerning materiality.

Confirmed documents:

In developing the Transition Strategy, the Issuer has
positioned GX as an important industrial and energy policythat shifts the industrial and social structure to a clean
energy focus in order to ensure a stable energy supply forbusiness activities and people’s lives, promotedecarbonization and achieve economic growth. The Issuer
has developed roadmaps for key emitting sectors on how to
reduce GHG emissions, consistent with various
governmental measures and scenarios (see e.g., IEA, IPCC,
SBTi).

Recommended information and indicators:
Discussion on the materiality of theplanned climate transition strategy may:•••

be disclosed in the form of amateriality matrix made publicly
available by an issuer or be covered in
an issuer’s annual reports; andaddress the materiality of climaterelated eligible projects and/or KPI(s)on the overall emissions profile of anissuer.
Where Scope 3 emissions are
expected to be material but are notyet identified or measured, a timeline
for reporting should be disclosed.

- Framework- Basic Policy for the
Realization of GX(roadmap)- Plan for Global
Warming
Countermeasures- Strategic Energy Plan
- Long-term strategy
as a growth strategy
based on the Paris
Agreement- Japan’s NDC- Sector-specifictechnology roadmap- GX Implementation
Council documents
Interview with theIssuerPage 65 of 127

i)Materiality is not disclosed or described as a matrix,
but is disclosed through various plans, strategies,
laws, etc., which are also described in this report.
Therefore, GX, the Transition Strategy to shift theindustrial and social structure to a clean energy focus
in order to achieve a stable energy supply, promotedecarbonization and economic growth in Japan isconsidered to be an important industrial and energy
policy.

ii)

Eligible projects (eligible businesses) related toclimate change and KPIs (quantitative reduction
targets set for each industry) define how thecountry’s emission profile is to be reduced. Eligible
projects and initiatives to achieve the KPIs areimportant milestones for the Issuer to achieve its
goals.

iii)

GHG emissions cannot be directly organized as Scope
3 in the assessment of GHG emissions of the Issuer
or Japan. When GHG emissions corresponding to
Scope 3 are taken as emissions in the entire Japanesesociety and assessed, it has been confirmed that theRef.

Criteria

Requirements

Work Undertaken

DNV Findings
coverage ratio is 100%, including the scope andtarget gases, in accordance with IPCC guidelines. In
addition, the scope for GHG emission calculation has
been identified for each industry and GHG emissions
are measured on an annual basis and reported on the
Government’s website.

3

Climatetransition
strategy andtargets to bescience-based

An issuer’s climate transition strategy
should reference science-based targets
and transition pathways. There is scientificguidance around the required rate of GHG
emission reductions (the “GHG emissions
reduction trajectory”) to align the global
economy with the goals of the Paris
Agreement.
The planned transition trajectory should:•••

be quantitatively measurable andaligned with the latest available
methodology;
be aligned with, benchmarked, orotherwise referenced to recognised
third-party, science-based
trajectories, where such trajectories
exist; when third-party trajectories
are not available, consider industry
peer comparison and/or internal
methodologies/historicalperformance;
be publicly disclosed (ideally inmainstream financial filings),
including interim targets; andConfirmed documents:- Framework- Basic Policy for the
Realization of GX(roadmap)- Plan for Global
Warming
Countermeasures- Strategic Energy Plan
- Long-term strategy
as a growth strategy
based on the Paris
Agreement- Japan’s NDC- Sector-specifictechnology roadmap- GX Implementation
Council documents
Interview with theIssuerPage 66 of 127

The Issuer’s Transition Strategy is defined by ascientifically-based CO2 reduction target (reduction rate)
and pathway consistent with the Paris Agreement.
Specifically, a 46% reduction (compared to FY2013) is set
as a mid-term goal for FY2030, with 2013 as the baseyear and 2050 as a linearly interpolated carbon-neutral
trajectory.
i)

The Transition Strategy is quantitatively measurable
in terms of GHG emissions and absorptions.
Specifically, the scope (target sectors etc.) andtarget gases (100% coverage) are consistent with
IPCC guidelines and in line with establishedcalculation methods.

ii)

The Transition Strategy has set a mid-term goal of a
46% reduction (compared to FY2013) for FY 2030,
which is on a linearly interpolated trajectory with
2013 as the base year and 2050 carbon neutrality.

iii)

The Transition Strategy has been published with a
mid-term target of 46% reduction in FY2030 (GHG
emissions and absorptions of 0.76 billion t-CO2).

iv)

Although the targets set out in the Transition
Strategy have not been independently assured orRef.

Criteria

Requirements•

Work Undertaken

verified, the publicly available information (specificreduction amounts per sector and action plans)suggests that it is a reasonable strategy.

be supported by independent
assurance or verification.

-------

Strongly recommended information andindicators:
•

•

•

•

•

•

DNV Findings

short, medium, and long-term GHG
emission reduction targets alignedwith the Paris Agreement;
baseline year and historic emissions(including absolute emissions, where
intensity metrics are the mainindicator);
scenario utilised and methodology
applied (e.g., ACT, SBTi, IEA etc.).
When third-party trajectories are notavailable, industry peer comparison
and/or internal
methodologies/historicalperformance;
GHG emission objectives covering all
scopes and most relevant subcategories (Scopes 1, 2 and 3);
targets formulated in either intensity
or absolute terms, noting, that where
intensity targets are used, projections
on the change to absolute emissions
should also be provided; andwhere applicable, use of carbon
capture technology as well as of highquality and high-integrity carbon
credits, and their relative contributionv)

The Issuer has set mid- and long-term GHG
emission reduction goals consistent with the Paris
Agreement. Specifically, the Issuer has set 2013 as
the base year, with a mid-term target of a 46%
reduction in FY2030 and a long-term target ofcarbon neutrality in 2050.

vi)

In addition to the base year (FY2013), the Issuer
has disclosed past emission data (including
breakdown) since 1990. Note that emissions fromFY1990 to FY2013 (base year) ranged between aminimum of 1.249 billion t-CO2 (FY2009) and amaximum of 1.396 billion t-CO2 (FY2012).

vii) The Transition Strategy sets a mid-term goal of a
46% reduction (compared to FY2013) for FY2030,
which is on a linearly interpolated trajectory with
2013 as the base year and 2050 carbon neutrality.
viii) The Transition Strategy is quantitatively measurable
in terms of GHG emissions and absorptions.
Specifically, the scope (target sectors etc.) andtarget gases (100% coverage) are consistent with
IPCC guidelines and in line with establishedcalculation methods.
ix)

Page 67 of 127

The Transition Strategy is a target formulated inabsolute GHG values (t-CO2).

Ref.

Criteria

Requirements

Work Undertaken

to the GHG emissions reduction
trajectory in line with best industry
practices (e.g., SBTi, VCMI andICVCM).

4

Implementationtransparency

Market communication regarding the offer
of a GSS financing instrument intended tofund an issuer’s climate transition strategy
should also be transparent, to the extent
practicable, on the underlying investment
program including capital and operational
expenditures (CapEx and OpEx).
Recommended information and indicators:••

CapEx roll-out plan consistent withthe overall climate transition strategy
and climate science and discussion of
how it informs CapEx decisionmaking within the organisation;phase-out plan regarding
activities/products incompatible withthe climate transition strategy (whensuch activities or products are
significantly harmful or display levelsof performance inconsistent withDNV Findingsx)

Confirmed documents:- Framework- Basic Policy for the
Realization of GX(roadmap)- Plan for Global
Warming
Countermeasures- Strategic Energy Plan
- Long-term strategy
as a growth strategy
based on the Paris
Agreement- Japan’s NDC- Sector-specifictechnology roadmap- GX Implementation
Council documents- Assessment
documents

Page 68 of 127

In addition to the absorption of greenhouse gases byforests, agricultural soil, urban greening, etc.
(FY2021: 0.048 billion t-CO2, approx. 4% ofemissions), the Issuer will utilize the bilateral credit
scheme (JCM; Joint Crediting Mechanism), aiming
for a cumulative international emission reduction
and absorption of around 0.1 billion t-CO2 by FY2030
through public-private partnerships. The Issuer
plans to count the credits acquired by Japan
appropriately for the achievement of Japan’s NDC.

The Issuer has disclosed the basic investment program forthe implementation of the Transition Strategy. Specifically,
the Issuer plans to provide approximately JPY 20 trillion ingovernmental support (The GX Economy Transition Bonds)
as upfront investment support* over a 10-year period
starting in FY2023, as well as over JPY 150 trillion in
public-private investment over the same period.
The investment program has been disclosed in the
Framework and the “Basic Policies for the Realization of
GX” as the information necessary for dialogue with themarket, and is transparent.
i)

The major investment destinations of the GX
Economy Transition Bonds are the “promotion of
non-fossil energy (JPY 6-8 trillion),” “industrial
restructuring and radical energy conservation in a
combination of supply and demand (approximately
JPY 9-12 trillion),” and “resource recycling andcarbon fixation technologies (approximately JPY 2-4
trillion).” These decisions are made by the GX
Implementation Council and the Cabinet Secretariat

Ref.

Criteria

Requirements

•

•

•

•
•

science-based GHG emission
reduction trajectories);
green CapEx, for example thosereferenced under the eligible green
project categories in the Green Bond
Principles, as a percentage of total
CapEx and how the ratio may be
expected to evolve over time;
disclosure on the percentage ofassets/revenues/
expenditures/divestments aligned to
the various levers;
a qualitative and/or quantitative
assessment of the potential locked-in
GHG emission from an issuer’s key
assets and products;
assumptions on the internal cost ofcarbon; anddisclosure on adverse impacts on theworkforce, community andsurrounding environment, and related
strategies used to mitigate thosenegative impacts.

Work Undertaken

DNV Findings
GX Office, based on sector-specific investment
strategy proposals, including investment promotion
measures, by relevant ministries and agencies andexperts’ working groups.

Interview with theIssuerPage 69 of 127

ii)

The Transition Strategy has remaining activities thatpartially continue to use fossil fuels from an
economic or asset utilization perspective at present
for future decarbonization. However, the continued
use of these activities is conditional on having a lockin avoidance plan in place, which will be adjusted
accordingly to match the GHG emission reduction
trajectory by decarbonizing the fuels and feedstocks
used, in addition to phase-out.

iii)

The investment destinations of the GX Economy
Transition Bonds (approximately JPY 20 trillion) aremainly green projects classified under the GBP (e.g.,
the renewable energy sector and energy
conservation (energy efficiency) sector), but also
include activities that should be undertaken atpresent in order to achieve future carbon neutrality(e.g., initiatives for phasing out fossil fuel use, theutilization of nuclear power). GX aims to achievecarbon neutrality by 2050 and the share of
allocations for green projects classified under the
GBP is expected to increase.

iv)

The Issuer has presented initiatives classified into 14
categories in the roadmap and 22 cases as the way
forward. The 22 cases are organized according to atimeline of what investments are planned for what
projects (assets).

Ref.

Criteria

Requirements

Work Undertaken

DNV Findingsv)

The Issuer has elaborately specified the scope(target sectors etc.) and target gases in accordancewith the IPCC guidelines etc. for GHG emissions andabsorptions in Japan. In addition, the details of the
reduction plans for each scope and target gas aredefined quantitatively and qualitatively. In particular,
the Issuer has prepared roadmaps for GHG-intensive
industries, set and disclosed the reduction policy up
to 2050.

vi)

The Issuer has displayed the “Growth-oriented
Carbon Pricing Initiative” as a key initiative of the GX
Implementation Plan, and is working on accelerating
GX investments and achieving carbon neutrality
through “upfront investment support” and“measures to promote emission reductions (levy andemission trading scheme).” The carbon pricing (levy
on carbon) has not yet been set as a concrete
pricing system, but is scheduled to be introduced
from FY2028.
Reference: the GX-ETS (Emission Trading Scheme)is planned to be promoted under the following plan.
FY2023: Enforcement
FY2026: Full-scale operation of the emission
trading market
FY2033: Phased introduction of pricingvii) The Issuer plans to ensure that Just Transition,
mitigation of negative impacts and avoidance oflock-in are in place in the “Basic Policy for the
Realization of GX” and in the selection process ofinvestment destinations (eligible projects).

Page 70 of 127

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings
Specifically, the policy on Just Transition has been
set out in the “Basic Policy for the Realization of GX”
as “Promotion of GX in the entire society (section5).” In addition, mitigation of negative impacts andavoidance of lock-in will be confirmed in theselection process of investment destinations (eligible
projects) that they do not fall under the pre-defined
exclusion criteria and that they are consistent with
the GHG reduction roadmap.

Page 71 of 127

Schedule-3 Green Bonds Principles (for Climate Transition Bonds with Use of Proceeds) Eligibility
Assessment Protocol
The following checklists (GBP-1 to GBP-4) are the DNV assessment protocol created for the Climate Transition Bond (climate transition bond with use of proceeds)
based on the requirements of the GBP. The “Confirmed documents” listed in the “Work Undertaken” column include public or non-public documents (internal
document of the Issuer), information, etc. and are provided to DNV as evidence for determining the eligibility.

GBP-1 Use of Proceeds
Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

1aTypes offunds

The types of transition bond areclassified into one of the following
types defined by GBP.
 (Standard) Transition Bond Transition Revenue Bond Transition Project Bond
 Other

Confirmed documents:

DNV has confirmed that the transition bond is classified in the following
category through its assessment work.

- Framework- Basic Policy for the
Realization of GX(roadmap)- Sector-specifictechnology roadmap(Standard) Transition Bond** Bonds issued to raise funds for projects. The redemption is notdependent on a specific financial resource, but is funded by the Issuer’s
overall cash flow.

Interview with the Issuer
1bTransition
Project
Classification

The key to a transition bond is thatthe proceeds will be used for atransition project, which should beproperly stated in the legal
documents relating to the security.

Confirmed documents:- Framework- Basic Policy for the
Realization of GX(roadmap)- Sector-specifictechnology roadmap
Interview with the Issuer

DNV has confirmed that the transition bond is necessary for therealization of the Issuer’s Transition Strategy, as set out in the
Framework and Schedule-1, and is intended to be allocated to eligible
businesses (projects) that have been selected through an appropriate
process.
If a project has been selected prior to the issuance of the transition bond,it will be disclosed in the statutory documents. If the project has not been
selected prior to the issuance of the transition bond, it will be disclosed
within the post-issuance reporting of the transition bond.
Through the assessment, DNV concludes that the candidate eligible
businesses (projects) have specific and true environmental benefits.

Page 72 of 127

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

1cEnvironmental
benefits

All transition projects to which thefunds are used should have clear
environmental benefits, the effectsof which should be assessed by theissuer and, where possible,
quantitatively demonstrated.

Confirmed documents:

DNV has confirmed that eligible businesses (projects) have clear
environmental benefits, such as CO2 emission reduction, and that theenvironmental benefits are reported on an annual basis. The
environmental benefits of eligible businesses (projects) can be direct,
such as the installation of equipment and systems, as well as indirect,
such as research and development and demonstration tests, which
contribute to future realization of the Transition Strategy. The Issuer isconsidering quantifying and presenting these to the extent practicable,
taking into account the characteristics of eligible businesses (projects).

- Framework- Basic Policy for the
Realization of GX(roadmap)- Plan for Global
Warming
Countermeasures- Sector-specifictechnology roadmap- List of candidate useof proceeds- Assessment
documents
Interview with the Issuer

1d

Refinancing
rate

If all or part of the proceeds areused or may be used forrefinancing, the issuer will indicate
the estimated ratio of the initialinvestment to the refinancing and,if necessary. Therefore, it isrecommended to clarify whichinvestment or project portfolio issubject to refinancing.

Confirmed documents:- Framework- List of candidate useof proceeds- Assessment
documents
Interview with the Issuer

Page 73 of 127

DNV has confirmed that if the amount or percentage to be refinanced by
the Issuer is known prior to the issuance of the transition bond, it will be
disclosed in the statutory documents etc. DNV also confirmed that if it is
not known prior to the issuance, the Issuer intends to disclose theapproximate amount (or percentage) of the portion allocated asrefinancing in the post-issuance reporting.

GBP-2 Process for Project Evaluation and Selection
Ref.

Criteria

2a

Project
Selection
Process

Requirements

Work Undertaken

Transition bond issuers should provide
an overview of the process ofqualifying projects for which transitionbond funding will be used. This
includes (but is not limited to):Confirmed documents:

 The process by which the issuer
determines that the project inquestion is included in the businesscategory of a qualified transition
project Creation of criteria for eligibility of
projects for which transition bondfunding will be used
• Environmental sustainability goals- Framework- Basic Policy for the
Realization of GX(roadmap)- Sector-specifictechnology roadmap- List of candidate useof proceeds- Assessment
documents
Interview with theIssuerDNV Findings
DNV has confirmed that the Issuer has a process for determining theeligibility of eligible businesses (projects) to use the proceeds of thetransition bond and that the overview is clearly stated in the Framework.
• The Issuer has defined 14 eligibility criteria, where eligible projects areclassified into 14 categories based on the type set out in the GX
Roadmap as activities necessary to realize the Issuer’s Transition
Strategy. The eligibility criteria have developed assessment criteria(internal criteria) that are consistent with the GBP classification and theway forward set out in the roadmap.
• Eligible projects that are candidate use of proceeds are selected on thebasis of the assessment criteria (internal criteria) defined for eacheligibility criterion and the basic conditions and priority assessment
described above. In each issuance of the bond, the Issuer establishes a
procedure by which eligible projects with appropriate allocation needs
are selected as the actual use of the proceeds from among thecandidate projects for the use of proceeds.
• The environmental sustainability goals are linked to the various national
environmental plans, strategies, etc. to which the GX Roadmap refers.
Specifically, the Issuer is working to achieve decarbonization as well as
industrial competitiveness and economic growth by transforming
Japan’s energy system (from fossil energy to clean energy) andindustrial and social structures through the GX as an action against
climate change by fulfilling its international commitments.

2b

Issuer’s
Environment
al and Social
Governance
Framework

In addition to criteria and certifications,the information published by issuers
regarding the transition bond process
also considers the quality ofConfirmed documents:- Framework- Basic Policy for the
Realization of GX(roadmap)

Page 74 of 127

DNV has confirmed that, when selecting eligible projects, the Issuer will
ensure to take negative environmental and social impacts into account(including the necessary procedures in the region where the project is to be
implemented) and that the proceeds are not allocated to projects related tothe separately specified exclusion criteria.

Ref.

Criteria

Requirements
performance of the issuer’s frameworkand environmental sustainability.

Work Undertaken- Sector-specifictechnology roadmap- List of candidate useof proceeds- Assessment
documents

Interview with theIssuerPage 75 of 127

DNV Findings
DNV has also confirmed through the assessment that the Issuer willconsider the negative impacts of projects at the project implementation
stage and the impacts on the relevant supply chain, including Just
Transition, mitigation of negative impacts (e.g., actions throughenvironmental impact assessment) and avoidance of lock-in, as indicated in
CTF-4.

The above has been published in the Framework, roadmap, etc.

GBP-3 Management of Proceeds
Ref.

Criteria

3a

Tracking
procedure-1

3b

3c

Tracking
procedure-2

Temporaryholding

Requirements

Work Undertaken

DNV Findings

The net proceeds from transition bonds should bemanaged in sub-accounts, included in subportfolio, or otherwise tracked. It should also be
certified by the issuer in a formal internal process
related to the issuer’s investment and financing
operations for the Transition Project.

Confirmed documents:

DNV has confirmed that the allocation status of proceeds fromthe transition bond can be tracked and managed on an eligible
project basis using the Ministry of Economy, Trade andIndustry’s internal management system as “costs for measuresrelated to the promotion of a smooth transition to a
decarbonized growth economic structure.”

During the transition bond redemption period,
the balance of funds raised that is being tracked
should be adjusted at regular intervals to matchthe amount allocated to eligible projects
undertaken during that period.

Confirmed documents:

If no investment or payment has been made in aqualified transition project, the issuer should also
inform the investor of the possible temporary
investment method for the balance of unallocatedproceeds.

Confirmed documents:- Framework- Assessment
documents
Interview with theIssuer- Framework- Assessment
documents
Interview with theIssuer- Framework- Assessment
documents
Interview with theIssuerPage 76 of 127

DNV has confirmed that the Issuer will be subject to annual
inspections by the Board of Audit of Japan of its proceeds
management results. DNV has also confirmed that during theinspections by the Board of Audit of Japan, the climatetransition bond-specific management process required under
GBP-3 will also be inspected, including the management of thebalance of proceeds required in 3b.
DNV has confirmed that the Issuer intends to manage allunallocated proceeds in cash until the decision is made toallocate the proceeds. DNV also confirmed that the unallocatedproceeds will not be used for other temporary investments(including green investments) etc.

GBP-4 Reporting
Ref.

Criteria

4aPeriodical
Reporting

Requirements

Work Undertaken

In addition to reporting on the use of proceeds
and the temporary investment of unallocatedproceeds, the issuer will consider each project atleast once a year for projects to which thetransition bond proceeds have been allocated,taking into account the following: A list of eachproject should be provided.

Confirmed documents:- Framework- Assessment
documents
Interview with theIssuerDNV Findings
DNV has confirmed that the Issuer intends to include thefollowing as disclosure information. The impact porting will be
disclosed on an annual basis on the Government’s website on a
project-by-project or eligibility criteria basis, taking into accountconfidential obligations and the extent practicable.
[Allocation status reporting]••- Confidentiality and competitive considerations- Outline of each project, expected sustainable
environmental and social effects

Allocated amount and unallocated balance
Estimated amount of the proceeds allocated in the fiscal
year prior to the issuance[Impact reporting](environmental benefits reporting)••Key environmental benefits (direct and indirect benefits
related to GHG emission reduction etc., and benefits
expected in the future)
Progress status of projects

In the event of a significant change in circumstances in eligible
projects (e.g., significant process changes,
suspension/discontinuation, changes in specifications that havea significant impact on the environmental benefits) during theredemption period of the bond after allocations havecommenced, the Issuer will disclose it in a timely manner or
through reporting.

Page 77 of 127

Schedule-4 Basic Guidelines on Climate Transition Finance Eligibility Assessment Protocol
The following checklists (from CTF-1 through CTF-4) are based on the four “disclosure elements” set forth in the “Basic Guidelines on Climate Transition Finance(CTFBG)” established by the Financial Services Agency, Ministry of Economy, Trade and Industry, and Ministry of the Environment in May 2021.
According to the CTFBG, “disclosure elements” are classified into the following three categories: “should”: ◎; “recommended”: 〇; and “be considered/possible”: △.
These expressions are defined as follows.
-

Items described with the word “should” are basic elements that financial instruments labelled as transition finance are expected to have.

-

Items described with the word “recommended” are elements that financial instruments labelled as transition finance are optimally recommended to haveunder these Guidelines although instruments which do not have these items can also be labelled as “transition”.

-

Items described with the word “be considered” or “possible” are elements that these Guidelines provide as examples and interpretations although it is notconsidered problematic even if financial instruments labelled as transition finance do not have them.

There is a supplementary explanation in the margin of each checklist for the annotations in the “Disclosure Elements” column.
The documents listed in the “Work Undertaken” column are those confirmed as evidence, whose details (document names) are shown in the List of Reference
Materials (Appendix-1).
The evidence used in the assessment work includes information obtained through discussions and interviews with the management of the Fundraiser in addition to
the confirmed documents.

CTFBG-1 Fundraiser’s Climate Transition Strategy and Governance
Ref.

No.

Disclosure Elements

◎

1-a)

Financing through transition financeshould aim to implement or
incentivize the achievement oftransition strategies9. Such
strategies should incorporate along-term target to align with thegoals of the Paris Agreement,
relevant interim targets on the
trajectory towards the long-term

Requirement
Check
Yes
No
Not Applicable

Work Undertaken

DNV Findings

Confirmed documents:

DNV has confirmed that the Issuer’s financing with thetransition bond is aimed at achieving carbon neutrality in
2050 in accordance with the Transition Strategy, which isbased on the Plan for Global Warming Countermeasures,
NDC, etc.

- Framework- Basic Policy for the
Realization of GX(roadmap)- Plan for Global
Warming
Countermeasures- Strategic Energy Plan

Page 78 of 127

The Issuer’s Transition Strategy is a 46% reduction in
2030 (compared to 2013) and carbon neutrality in 2050,
consistent with the goals of the Paris Agreement. The
specific plan, including a basic concept, future actions,targets and strategies, investments, regulations and

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertaken

goal, disclosure on the levers
towards decarbonization, andfundraiser’s strategic planning.

- Long-term strategy
as a growth strategy
based on the Paris
Agreement- Japan’s NDC- Sector-specifictechnology roadmap- GX Implementation
Council documents- Assessment
documents

DNV Findings
institutions, and international strategies for each major
initiative have been disclosed in the roadmap.
Fiscal
year
2013
2030
2050

Targets
Base year
CO2 emissions: 46%
reduction(Ibid. challenging the
50% reduction)
Carbon neutrality

CO2 emissions
1.408 billion t-CO2

0.76 billion t-CO2
0 billion t-CO2

Interview with theIssuer◎(△)1-b)

A transition strategy should serve
to explicitly communicate theimplementation of an issuer’s
strategy to transform the businessmodel in a way which effectively
addresses climate-related risks andcontributes to achieving the goals of
the Paris Agreement10.
Transformation of a business model
is not limited to initiatives as anextension of existing businesses but
can also be transformation basedon various other perspectives. It
includes fuel conversion that
achieves significant carbon and
GHG reduction benefits,
introduction of innovative

Same as 1-a)

Yes
No
Not Applicable

DNV has confirmed that the transition bond is intended
to fund a wide range of eligible businesses (projects)
that focus on the Issuer’s challenges and initiatives toaddress climate change, GX goals and initiatives and theTransition Strategy as set out in the roadmap, theFramework and Schedule-1 of this report.
Specifically, all candidate eligible projects that meet theeligibility criteria and the criteria set out for eacheligibility criterion shown in the table below and in
Schedule-1 will be assessed as meeting the Transition
Strategy. The proceeds from the transition bond will beallocated to one or more of the candidate eligible
projects selected through an appropriate process. If an
allocation is selected prior to the execution of thetransition bond, it will be disclosed in statutory
documents etc.

Page 79 of 127

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertaken

technologies, improvement of /changes in manufacturing
processes and products, anddevelopment and provision of
products and services in new fields.

DNV Findings
The eligibility criteria are organized as the content ofinitiatives aimed at achieving decarbonization as well as
industrial competitiveness and economic growth bytransforming Japan’s energy system (from fossil fuelbased energy to clean energy) and industrial and social
structure through GX.
Through the assessment, DNV concludes that theeligibility criteria and the candidate eligible projects thatmeet the criteria defined for each eligibility criterion
provide true environmental benefits.
No.

1

Page 80 of 127

Categories

Energy efficiency

2

Renewableenergy3

Low-carbon anddecarbonizedenergy4

Cleantransportation

Eligibility Criteria
Sub-categories
Houses andbuildings

Promotionof thoroughenergyefficiency
improvement

Restructuring the
manufacturingindustry (fueland feedstocks
transition)
Digital investment
aimed atdecarbonization

Battery industry
Making renewable energy amajor power source
Establishing electricity and gas
markets to achieve carbon
neutrality
Utilization of nuclear power
GX in transport sector
Resource circulation
Infrastructure

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertaken

DNV Findings

5

6

〇

◎
(△)

1-c)

1-d)

The implementation of a transition
strategy assumes cases where it
affects society and environment
other than climate change, such as
employment or stable provision of
products and services, throughtransformation of a business model.
In such cases, it is recommended
that the fundraiser also takes into
consideration the impact ofbusiness innovations to society andenvironment other than climatechange.

Yes

Climate change-related scenarios11
should be referenced in developing
transition strategies. The pathway
to transition should be planned forrespective sector and regions ofindividual fundraiser, who may

Yes

Circular economy
adaptedproducts,
production
technologies andprocesses
Sustainable
management of
biological natural
resources etc.

Restructuring the manufacturingindustry(fuel and feedstocks transition)
Facilitating the introduction ofhydrogen and ammonia
Carbon Recycling and CCS
Food, agriculture, forestry, andFisheries industry

Resource circulation

Same as 1-a)With regard to the implementation of the Issuer’s
Transition Strategy, DNV has confirmed through its
assessment of the Issuer that the significant social andenvironmental impacts are expected to contribute toindustrial competitiveness and economic growth, in
addition to the contribution to climate change.

Same as 1-a)

The Issuer’s Transition Strategy is established on thePlan for Global Warming Countermeasures, Japan’s NDC(Nationally Determined Contribution), the Strategic
Energy Plan and the long-term strategy as a growthstrategy based on theNo
Not ApplicableNo
Not Applicable

Page 81 of 127

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertaken

generally be placed in a different
starting point and pathway totransition.

DNV Findings
Paris Agreement, which were formulated with reference
to international scenarios.
The Issuer has formulated roadmaps for promoting
transition finance in key emission sectors (11 sectors intotal, including power, industry and transport) in line withvarious governmental measures and scenarios (see e.g.,
IEA, IPCC, SBTi), including GHG (CO2) emission reduction
images.
(1) METI

Steel sector
Chemical sector
Power sector
Gas sector
Oil sector
Pulp and paper sector
Cement sector
Automotive sector

〇

△

1-e)

1-f)

Transition strategies and plans
must be highly credible in terms of
their effectiveness. Therefore, it isrecommended that a transition
strategy and plan are linked to
management strategy and businessplan, including medium-term
management plans.

Yes

However, because such strategies
and plans run for a long period ofYes(2) Other sectors
International shipping sector(MLIT)
Inland shipping sector (MLIT)
Aviation sector (MLIT)

Same as 1-a)

The issuer has formulated a roadmap, in which it has
specifically developed a strategy and plan for the decade.
The roadmap is closely linked to the Issuer’s challenges
and initiatives to address climate change and is judged tobe highly credible in terms of effectiveness.

Same as 1-a)

DNV has confirmed that the Issuer has established astructure and mechanism to promote the TransitionNo
Not Applicable

No

Page 82 of 127

Ref.

△

◎

No.

1-g)

1-h)

Disclosure Elements

Requirement
Check

Work Undertaken

time, it is possible that the content
may be modified or adjusted in theevent of a major change in theassumed external environment andso on.

Not Applicable

In the initial phase of developing atransition strategy by thefundraiser, it is considered as an
option for the fundraiser to indicate
a plan for future implementation of
items described with the words“recommended” and “beconsidered/possible” in these
Guidelines.

Yes

In order to secure the effectivenessof the transition strategy, thefundraiser should establish anorganizational structure12 for theboard of directors and/or othersuch committee to oversee theactivities addressing climate change

Yes

DNV Findings
Strategy as a country. DNV has also confirmed that theabove plans and strategies, which form the basis for the
implementation of the Transition Strategy, will be
updated annually or through periodic follow-ups andrevisions.

Same as 1-a)

DNV has confirmed that the Issuer’s Transition Strategy
has also generally been implemented, or is planned to be
implemented in the future, for the “recommended” and“be considered/possible” items in these Basic Guidelines.

Same as 1-a)

DNV has confirmed that the Issuer will establish andimplement the following organizational structures:•
For GX implementation, the GX Implementation
Council, chaired by the Prime Minister, has been
held since July 2022 to have discussions with
relevant ministers and experts to determine thepolicy direction.

No
Not ApplicableNo
Not Applicable

Page 83 of 127

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertaken

DNV Findings

Same as 1-a)

DNV has confirmed that the Issuer has defined thetargets and activities necessary to realize the GX for eachindustry.

and for management to play a rolein assessing and managing suchclimate-related activities.

△

◎

1-i)

1-j)

While a transition strategy shall bebasically developed by a company
in need of finance, it is possible for
entities to utilize the strategy ofcompanies that are wholly or
partially responsible for the
initiatives to establish or explain
their own strategy, given that thefinance supports GHG emissions
reduction initiatives of not just asingle company but its supply
chain.

Yes

Transition strategies should be
disclosed in advance in a company’s
integrated report, sustainability
report, statutory documents andother materials for investors(including such disclosures on thewebsite). This also applies to theother three elements.

Yes

No
Not ApplicableSpecifically, the Issuer has formulated roadmaps forpromoting transition finance in key emission sectors (11sectors in total, including power, industry and transport)
in line with various governmental measures andscenarios (see e.g., IEA, IPCC, SBTi), including GHG(CO2) emission reduction images.
In addition, specific measures and emission reductions
are set out in the Plan for Global WarmingCountermeasures until 2030.
Same as 1-a)

No
Not Applicable

Page 84 of 127

DNV has confirmed that the Issuer’s Transition Strategy
has been publicly disclosed and explained to
stakeholders, including investors, in advance through theroadmap and the Framework.

Ref.

No.

Disclosure Elements

△

1-k)

It is possible to disclose transition
strategies and elements concerning
the governance guaranteeing thatthe execution of transition
strategies is in alignment with thereporting frameworks such as the
Recommendations of the Task
Force on Climate-Related Financial
Disclosures (TCFD; Final Report)13.

Requirement
Check
Yes

Work Undertaken

DNV Findings

Same as 1-a)

The main process of the Issuer’s Transition Strategy
follows the NDC framework (rules for NDC descriptionetc.) with seven items outlined and disclosed in theannex to “Japan’s NDC (Nationally Determined
Contribution).”No
Not Applicable

1. Quantifiable information on the reference point(including, as appropriate, a base year):
2.
3.
4.
5.

Time frames and/or periods for implementation:
Scope and coverage:
Planning processes:
Assumptions and methodological approaches, including
those for estimating and accounting for anthropogenic
greenhouse gas emissions and, as appropriate, removals:

6. How the Party considers that its nationally determined
contribution is fair and ambitious in the light of its
national circumstances:
How the nationally determined contribution contributes
towards achieving the objective of the Convention as set out in
its Article 2:

Other detailed implementation plans and governancehave been disclosed in the Framework.
〇

1-l)

If the implementation of a transition
strategy assumes impacts onsociety and environment other thanclimate change, it is recommended
that the fundraiser explain the view
underlying its approach14, etc. toaddress such impacts and disclose
how the strategy on the wholecontributes to achieving theSame as 1-a)

Yes
No
Not Applicable

Page 85 of 127

The Climate Transition Bond executed in accordance with
the Issuer’s Transition Strategy contributes directly or
indirectly to the SDGs and contributes to Just Transition.
The direct or indirect contributions to the SDGs are
categorized by eligibility criteria and each area ofcontribution to the SDGs are organized.
No.

Eligibility criteria

12Energy efficiency
Renewable energy

Typical SDG classification(SDG Goals)
7, 8, 9, 11, 13
7, 8, 13

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertaken

Sustainable Development Goals(SDGs) so that the effects can beappropriately evaluated by thefinancier.

DNV Findings

3
4

5
6

7

Low-carbon anddecarbonizedenergyClean transportation
Prevention andcontrol of pollution
Circular economy
adapted products
etc.
Sustainable
management of living
naturalresources etc.

7, 8, 9, 13
7, 8, 9, 11, 13

7, 8, 9, 13
7, 8, 9, 13

8, 9, 11, 12, 13, 14, 15

SDG Goals
7. Affordable and clean energy
8. Decent work and economic growth
9. Industry innovation and infrastructure
11. Sustainable cities and communities
12. Responsible consumption and production
13. Climate action
14. Life below water

Page 86 of 127

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertaken

DNV Findings

15. Life on land
◎

〇

1-m)

1-n)

Considering the length ofapplication and other factors, there
may be instances when a transition
strategy and plan will need to bemodified due to major changes inthe external environment andrelevant conditions that wereassumed at a planning phase. In
this case, the contents of themodification should be disclosed
together with the underlying reason
in a timely manner.

Yes

In terms of governance, it isrecommended that disclosures
include an organizational structure
for overseeing the implementationof a transition strategy and forassessing and managing related
initiatives. It is also recommended
that disclosures include the specificroles of the constituent
organizations and the management
and the process by which thecontent of deliberations is reflected
in management.

Yes

Same as 1-a)

No
Not Applicable

DNV has confirmed that the Issuer intends to update theTransition Strategy and plans as necessary, either
annually or through periodic follow-ups and revisions.
In the event of major changes to the Plan for Global
Warming Countermeasures and the Strategic Energy Plan,
which form the basis for the strategy implementation, theTransition Strategy and the initiatives for its realization
are planned to be reviewed. The content and reasons forthe changes are expected to be disclosed in the reviewed
plan.

Same as 1-a)

No
Not Applicable

Page 87 of 127

Same as 1-h) and 1-m)

Ref.

No.

Disclosure Elements

〇

1-o)

In cases where the fundraiser
determines the need for an
objective assessment regarding thetransition strategy, it isrecommended that a review,
assurance and verification by an
external organization for its
transition strategy.

Yes

It is recognized useful to obtain areview particularly concerning thefollowing in connection with thetransition strategy:- Alignment of short-term, midterm and long-term targets (fortargets, refer to Element 3) withthe overall scenario- Credibility of the fundraiser’s
strategy to reach the targets- Appropriateness of the
management process andgovernance for the transition
strategy

Yes

△

1-p)

Requirement
Check

Work Undertaken

DNV Findings

Same as 1-a)

The Issuer uses the reviews of DNV and Japan Credit
Rating Agency, Ltd. as external bodies to ensure an
objective assessment on the eligibility of the Framework,
including the Transition Strategy.

Same as 1-a)

DNV has confirmed the following with regard to its reviewof the Issuer’s Transition Strategy:No
Not ApplicableNo
Not Applicable- The Issuer’s Transition Strategy is aligned with midand long-term goals, and established GHG (CO2)emission reduction images etc. in major GHGintensive industries in line with governmental
measures and scenarios (see e.g., IEA, IPCC, SBTi).
These are consistent with the targets shown in thetable below as a whole.
Fiscal
year
2013

2030

2050

Page 88 of 127

Targets
Base year
CO2 emissions: 46%
reduction(Ibid. challenging the 50%
reduction)
Carbon neutrality

CO2 emissions
1.408 billion tCO2
0.76 billion tCO2
0 billion t-CO2

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertaken

DNV Findings-

DNV has confirmed that the implementation plan iscredible, ambitious and achievable based on theassessment of the Transition Strategy in accordancewith the Framework established by the national
plans etc. and the “Basic Policy for the Realization of
GX.”- The Transition Strategy is planned to appropriately
implemented through the organizational structure
described in 1-h) and the management processes
described in 1-f), 1-m) and 1-n).

9 Transition finance is available for not only entities with strategies and plans for reducing emissions associated with their corporate economic activities, but also
entities that plan to take initiatives that enable others to implement transition strategies through their own products and services. In such cases of financial
institutions, a financier should articulate how the underlying projects or activities themselves fit into the fundraiser’s strategy while, similarly, a subsidiary or an
SPC to make use of its group’s or its sponsors’ strategy. However, doing so they should explain how their strategy will contribute to the strategy as a whole. In
addition, it can be considered that parent company or the group who established the strategy would explain the transition elements as the main fundraiser.
10 The Paris Agreement sets out a goal to Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts
to limit the temperature increase to 1.5°C above pre-industrial levels.
11 Climate-related scenarios are listed in the “Task Force on Climate-related Financial Disclosures (TCFD) Technical Supplement” and the document issued by the
Ministry of the Environment: “Practical Guide for Scenario Analysis in line with TCFD Recommendations”. In addition, Principles for Responsible Investment (PRI)
disclose a set of climate scenario tools.
12 Assumes matters provided for under “governance” in the TCFD Recommendations.
13 As for the approach to disclosure aligned with TCFD Recommendations, refer to “Guidance on Climate-related Financial Disclosures (TCFD Guidance) 2.0”,“Guidance for Utilizing Climate-related Information to Promote Green Investment (Green Investment Guidance)” (both published by the TCFD Consortium), andthe document published by the Ministry of the Environment: “Practical Guide for Scenario Analysis in line with TCFD Recommendations”.
14 An example of the approach may be to identify, eliminate, reduce, and manage potential negative effects.

Page 89 of 127

CTFBG-2 Business Model Environmental Materiality
Ref.

No.

Disclosure Elements

◎

2-a)

Initiatives for achieving
the transition strategy
should be such that
contribute totransforming corebusiness activities thatare environmentallymaterial parts today
and in the future.15

Requirement Check
Yes
No
Not Applicable

Work Undertaken

DNV Findings

Confirmed documents:

The Issuer has positioned realization of the Transition
Strategy through GX as an important industrial and energy
policy that shifts the industrial and social structure to a clean
energy focus in order to ensure a stable energy supply forbusiness activities and people’s lives, promotedecarbonization and achieve economic growth.

- Framework- Basic Policy for the
Realization of GX(roadmap)- Plan for Global
Warming
Countermeasures- Strategic Energy Plan
- Long-term strategy as a
growth strategy based on
the Paris Agreement- Japan’s NDC- Sector-specifictechnology roadmap- GX Implementation
Council documents- Assessment documents
Interview with the Issuer

As GX core business activities, the roadmap has identified thefollowing eligibility criteria as specific initiatives.
No.

1

Energy efficiency

2

Renewable energy

3

Low-carbon anddecarbonizedenergy45Page 90 of 127

Categories

Eligibility Criteria
Sub-categories
Houses and buildings
Promotio

Restructuring the
manufacturing industry(fuel and feedstocks
transition)
Digital investment aimed
at decarbonization
Battery industry
Making renewable energy a major
power source
n ofthoroughenergyefficiency
improvement

Establishing electricity and gas markets
to achieve carbon neutrality

Utilization of nuclear power
GX in transport sector
Clean transportation Resource circulation
Infrastructure

Circular economy
adapted products,
production
technologies andprocesses

Restructuring the manufacturing industry(fuel and feedstocks transition)

Facilitating the introduction ofhydrogen and ammonia

Ref.

No.

Disclosure Elements

Requirement CheckWork Undertaken

DNV Findings

6

〇

△

2-b)

2-c)

When identifying
business activities thatare environmentallymaterial parts, it isrecommended that thefundraiser consider
multiple climatechange-related
scenarios that may
possibly impact its
judgment on theidentification16.

Yes

In terms of considering
materiality, it ispossible to apply

Yes

Same as 2-a)

No
Not Applicable

Sustainable
management ofliving natural
resources etc.

Carbon Recycling and CCS
Food, agriculture, forestry, andFisheries industry

Resource circulation

The Issuer’s Transition Strategy is established on the Plan for
Global Warming Countermeasures, Japan’s NDC (Nationally
Determined Contribution), the Strategic Energy Plan and thelong-term strategy as a growth strategy based on the Paris
Agreement, which were formulated with reference tointernational scenarios.
The Issuer has formulated roadmaps for promoting transition
finance in key emission sectors (11 sectors in total, including
power, industry and transport) in line with various
governmental measures and scenarios (see e.g., IEA, IPCC,
SBTi), including GHG (CO2) emission reduction images.
(1) METI(2) Other sectors
International shipping
Steel sector
sector (MLIT)
Inlandshipping sector
Chemical sector(MLIT)
Power sector
Aviation sector (MLIT)
Gas sector
Oil sector
Pulp and paper
sectorCement sector
Automotive sector

Same as 2-a)No

Page 91 of 127

Although no existing guidance has been applied with regard to
the consideration of the environmental materialities of theIssuer, the challenges and initiatives as well as initiatives

Ref.

◎

〇

No.

2-d)

2-e)

Disclosure Elements

Requirement Checkexisting guidance
provided by anorganization thatcreates standard
criteria concerning
sustainability
reporting17.

Not Applicable

The fundraiser should
indicate that climatechange is anenvironmentallymaterial part ofbusiness activities18.

Yes

It is recommended that
disclosures include thecontents of climatechange-related
scenarios used in
identifying businessactivities that areenvironmentallymaterial parts alongwith the underlying
reasons (e.g., regional
and industrial

Yes

Work Undertaken

DNV Findings
through GX presented by the Issuer itself to address climatechange have been positioned as an important industrial andenergy policy to shift the industrial and social structure to aclean energy focus.
These initiatives are consistent with Japan’s initiatives toaddress climate change and other environmental issues in theinternational society, as well as initiatives consistent with theParis Agreement.

Same as 2-a)

No
Not Applicable

The Issuer has explained through the roadmap and the
Framework that the initiatives to address climate change areimportant to the country in the environmental aspect.
The Issuer is also supporting the participation of Japanesecompanies in the TCFD on climate change initiatives andrecommends to disclose that climate change will be importantin the environmental aspect for corporate activities in the entire
society.

Same as 2-a)

No
Not Applicable

Page 92 of 127

The Issuer has formulated roadmaps for promoting transition
finance in key emission sectors (11 sectors in total, including
power, industry and transport) in line with various
governmental measures and scenarios (see e.g., IEA, IPCC,
SBTi), including GHG (CO2) emission reduction images (see 1d), and 2-b)).

Ref.

No.

Disclosure Elements

Requirement CheckWork Undertaken

DNV Findings

characteristics) for
selecting such
scenarios.
15 They include activities that are environmentally material parts are considered to be business activities of the issuer that identifies climate change as part of its
materiality.
16 Scenario analysis using multiple climate-related scenarios is similar to that required by the TCFD Recommendations, and it is considered useful to refer torelevant guidelines and such like for implementation methods. An example is the document issued by the Ministry of the Environment: “Practical Guide for
Scenario Analysis in line with TCFD Recommendations”.
17 “The SASB Materiality Map” issued by the Sustainability Accounting Standards Board serves as a guidance concerning materiality.
18 As for the approach to identifying environmentally material business activities, it is possible to use the materiality map and such like and outline the level ofmateriality of climate change for one’s entity.

Page 93 of 127

CTFBG-3 Climate Transition Strategy to be Science-based including Targets and Pathways
Ref.

No.

Disclosure Elements

◎

3-a)

The fundraiser should reference
science-based targets in developing
its transition strategies.

Requirement
Check
Yes
No
Not Applicable

Work Undertaken

DNV Findings

Confirmed documents:

The Transition Strategy is based on the long-term goal ofcarbon neutrality in 2050, when the total emissions andabsorptions of greenhouse gases will be zero, and the
mid-term goal of a 46% reduction in 2030 (compared to
FY2013).

- Framework- Basic Policy for the
Realization of GX(roadmap)- Plan for Global
Warming
Countermeasures- Strategic Energy Plan
- Long-term strategy
as a growth strategy
based on the Paris
Agreement- Japan’s NDC- Sector-specifictechnology roadmap

The long-term goal is consistent with the goals of theParis Agreement, and the 46% reduction in 2030
(compared to FY2013) is the intersection with 2030 on a
trajectory linearly interpolated from FY2013 (base year)
emissions to carbon neutrality in 2050, both of which areconsidered to have a scientific basis.
The Transition Strategy is embodied in the roadmap, thePlan for Global Warming Countermeasures, etc. together
with implementation timelines based on the above sciencebased goals.

Interview with theIssuer◎3-b)This should include mid-term targets(short- to mid-term targets) inaddition to long-term targets for 2050
and be quantitatively measurable
based on a measurement
methodology which is consistent overa long period of time.

Yes

Same as 3-a)

No
Not Applicable

The Issuer has a long-term goal of carbon neutrality in
2050, when the total emissions and absorptions ofgreenhouse gases will be zero, which is intended to alignwith the goals of the Paris Agreement, and a mid-termgoal of a 46% reduction by 2030 (compared to 2013).
These have been measured and monitored for a long
period of time in the Plan for Global WarmingCountermeasures etc.,

Page 94 of 127

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertaken

DNV Findings
and are judged to be quantifiable using consistentmeasurement methods.

Fiscal
year
2013
2030
2050

◎

3-c)

(△)

◎
(△)

3-d)

In addition, it is recommended thatGHG reduction targets, which could beformulated either in intensity andabsolute terms, should consider
environmental materiality and cover
Scopes 1 through 3 of GHG Protocol,
the international standard on supplychain emissions. It is recommended
that targets covering Scope 3 be set
using a practical calculation method
when it could be subject to significant
reduction in the fundraiser’s businessmodel19. It is also possible to disclose
the avoided emissions as necessary.

Yes

Science-based targets are GHG
reduction targets required forachieving the goals of the Paris

Yes

Same as 3-a)No

Targets
Base year
CO2 emissions: 46%
reduction(Ibid. challenging the
50% reduction)
Carbon neutrality

CO2 emissions
1.408 billion t-CO2

0.76 billion t-CO2
0 billion t-CO2

The Issuer has defined emission reductions as absolutevalues (GHG emissions and absorptions).
GHG emissions cannot be directly organized as Scope 3 in
the assessment of GHG emissions of the Issuer or Japan.
When GHG emissions corresponding to Scope 3 are taken
and assessed as emissions of the entire Japanese society,the coverage ratio is confirmed to be 100%, including
scope and target gases, in accordance with IPCC
guidelines.

Not Applicable

Same as 3-a)No

Page 95 of 127

The Issuer’s transition targets refer to the following:

Ref.

No.

Disclosure Elements
Agreement and should be set while
taking into account differences inregional characteristics and industries.
In so doing, it is possible to refer tothe following trajectories.
- Scenarios widely recognized in theinternational community (Examples
include the Sustainable Development
Scenario (SDS) outlined by theInternational Energy Agency (IEA) 20- Objectives verified under the Science
Based Targets Initiative (SBTi) andsuch like

Requirement
Check

Work Undertaken

DNV Findings•

Not Applicable

Japan’s NDC consistent with the goals of the Paris
Agreement

The Issuer has formulated roadmaps for promoting
transition finance in key emission sectors (11 sectors intotal, including power, industry and transport) in line withvarious governmental measures and scenarios (see e.g.,
IEA, IPCC, SBTi), including GHG (CO2) emission reduction
images.

- Nationally Determined
Contributions (NDC) of countriesaligned with the goals of theParis Agreement, roadmaps byindustry sector21, industries set
out plans that are science-basedachieving the Paris Agreement22
and so on.
◎

△

3-e)

3-f)

Short- to mid-term targets (with aterm of three to fifteen years) should
be set by referencing the aforesaid
trajectories or on the pathway toward
the long-term targets planned as
benchmarks23.

Yes

In doing so, since short- to mid-termtargets will likely be set inconsideration of various factors(including the starting point and track

Yes

Same as 3-a)

The mid-term goal of a 46% reduction in 2030
(compared to FY2013) is the intersection with 2030 on a
trajectory linearly interpolated from FY2013 (base year)
emissions to carbon neutrality in 2050, and is judged to
be on the path towards the long-term goal.

Same as 3-a)

The Issuer set 2013 as the base year (starting point) as
an update as of 2015, when the goal for 2030 was firstprepared prior to the Paris Agreement. The mid-termgoal of a 46% reduction in 2030 (compared to FY2013) isNo
Not ApplicableNo
Not Applicable

Page 96 of 127

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertaken

records of the issuer, timing of capital
investments, economic rationality,
cost-benefit analysis, and availabilityof technology necessary to achieve
the targets), it is possible that thepathway may not necessarily be linearwith the same slope at all times but
may be nonlinear.
◎

3-g)

The fundraiser should disclose theshort- to mid-term and long-termtargets they have set, including thebase years etc.

DNV Findings
on a linear interpolation between FY2013 and 2050 asshown in 3-a) and 3-e). However, the process along theway may be non-linear due to various factors (e.g.,
status of technology development, implementation
status, economic rationale).

Yes

Same as 3-a)

No
Not Applicable

The Issuer’s mid-term and long-term goals use 2013 CO2emissions as the base year. The CO2 emissions arecalculated as the total of GHG emissions and absorptions.
The CO2 emissions (GHG emissions) for the base year,
mid-term and long-term goals are as follows:
Fiscal
year
2013
2030
2050

◎

3-h)

In order to show that long-termtargets are science-based, disclosures
should explain the methodology or
trajectory used to define target,
including the underlying reasons (e.g.,characteristics specific to a region orindustry). In particular, when

Yes

Same as 3-a)

No
Not ApplicableTargets
Base year
CO2 emissions: 46%
reduction(Ibid. challenging the
50% reduction)
Carbon neutrality

CO2 emissions
1.408 billion t-CO2

0.76 billion t-CO2
0 billion t-CO2

The Issuer’s transition targets are set in accordance with
the Japan’s NDC, which is consistent with the goals of theParis Agreement.
The Issuer has formulated roadmaps for promoting
transition finance in key emission sectors (11 sectors intotal, including power, industry and transport) in line withvarious governmental measures and scenarios (see e.g.,

Page 97 of 127

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertaken

reference is made to plans andindustry roadmaps established by anindustry, etc., the explanation should
include that they are grounded inscientific basis.
△

3-i)

It is possible that disclosures explain
the pathway toward a long-termtarget and the alignment between the
short- to mid-term targets on thepathway and the transition strategy,
based on the investment plan (refer
to Element 4) and other plans.

DNV Findings

IEA, IPCC, SBTi), including GHG (CO2) emission reduction
images.

Yes

Same as 3-a)

No
Not Applicable

The Issuer has disclosed the basic investment program
for the implementation of the Transition Strategy.
Specifically, the Issuer plans to provide approximately
JPY 20 trillion in governmental support (The GX Economy
Transition Bonds) as upfront investment support over a
10-year period starting in FY2023, as well as over JPY
150 trillion in public-private investment over the same
period.
The major investment destinations of the GX Economy
Transition Bonds are the following:“Promotion of non-fossil energy (JPY 6-8 trillion)”“Industrial restructuring and radical energy conservation
in a combination of supply and demand (approximately
JPY 9-12 trillion)”“Resource recycling and carbon fixation technologies(approximately JPY 2-4 trillion)”
The investment program has been disclosed in the
Framework and the “Basic Policies for the Realization of
GX” as the information necessary for dialogue with themarket.

Page 98 of 127

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertaken

DNV Findings

Image of governmental support and overall public-private investments for the 10
years since 2023△

3-j)

Concerning targets and trajectories,
obtaining expert reviews on thefollowing is considered to beparticularly useful:Yes

Same as 3-a)

No
Not Applicable

Based on the documentation and information provided by
the Issuer, DNV reviewed the following and has
confirmed that the targets and trajectories are based on
scientific evidence:-- Whether the long-term target isaligned with science-based targets
 Whether the disclosed information
explains the alignment with theParis Agreement- Whether the short- to mid-termtargets are determined using a GHG

Page 99 of 127

Is the long-term goal based on scientific evidence?
➢ The long-term goal of the Issuer is carbon
neutrality in 2050, when the total emissions andabsorptions of greenhouse gases will be zero. The
long-term goal is consistent with the goals of theParis Agreement and is considered to have ascientific basis.

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertaken

emissions forecast calculated basedon a climate change scenario
analysis

DNV Findings-

In setting short- and mid-term goals, has thegreenhouse gas calculation been estimated based on
an analysis of climate change scenario?
➢ The greenhouse gas calculation was estimated forshort- and mid-term goals based on linear
interpolation between the long-term goal under theParis Agreement and the base year, and the 46%
reduction in GHG emissions in 2030 (compared to
FY2013) has been set.

-

Are performance values relating to the indicators
utilized in the goals quantitatively measured byconsistent measurement methods?
➢ The Issuer has set sector-specific GHG emission
reduction measures and goals in order to realize the
mid-term goal of a 46% reduction by 2030 in its
Plan for Global Warming Countermeasures etc.

 Whether scenarios, etc. widely
recognized in the international
community are used or referenced- Whether the actual values of theindicators used for the targets arequantitatively measured using
consistent measurement methods
 Whether a specific GHG emissions
reduction measure has beendeveloped to achieve short- to midterm targets aligned with long-termgoals

19 Since an appropriate method for calculating Scope 3 emissions for specific industrial sectors is under development, it is possible to estimate Scope 3 emissions on aprovisional “best effort” basis. When disclosing, it is recommended that boundaries, calculation methods and other relevant factors be also reported. “Basic
Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain” (METI, MOE; 2017 Japanese only. Related information in English) can beused for calculation references.
20 In addition to benchmarks indicated by the IEA, there are those referenced by the IPCC, such as RCP 2.6 (keep global warming to below 2°C), RCP 1.9 (keepglobal warming to below 1.5°C) and other related Transition Pathway Initiative (TPI) benchmarks. Meanwhile, scenario listings are available in the TCFD TechnicalSupplement and in the document published by the Ministry of the Environment: “Practical Guide for Scenario Analysis in line with TCFD Recommendations”.
21 An example of a sector-specific roadmap formulated by a public organization is the “Roadmap to Zero Emission from International Shipping” (Ministry of Land,
Infrastructure, Transport and Tourism; 2020). The Ministry of International Trade and Industry also plans to formulate a roadmap for high emission industries.
22 In utilizing a plan formulated at a sector level, it is necessary to have a credible proposition that the alignment with the Paris Agreement can be explained with
scientific grounds.
23 While it is possible to set short- to mid-term targets by determining the standard based on an assumed use of best available technologies (BAT), consideration
should be made as to whether the use of such technologies might make it difficult to achieve long-term targets.
Page 100 of

CTFBG-4 Implementation Transparency
Ref.

No.

Disclosure Elements

◎

4-a)

In implementing transition
strategies, the fundraiser should
provide transparency of the basic
investment plan to the extent
practicable.

Requirement
Check

Work Undertaken

DNV Findings

Yes

Confirmed documents:

No- Framework- Basic Policy for the
Realization of GX(roadmap)- GX Implementation
Council documents- Assessment
documents

DNV has confirmed that the Issuer has disclosed theimage of the amount of governmental support and theoverall amount of public-private investments for the 10
years since 2023 as its investment plan (see 3-i)).

Not
Applicable

Interview with theIssuerThe Issuer has disclosed the basic investment program
for the implementation of the Transition Strategy.
Specifically, the Issuer plans to provide approximately
JPY 20 trillion in governmental support (The GX
Economy Transition Bonds) as upfront investment
support over a 10-year period starting in FY2023, as
well as over JPY 150 trillion in public-private
investment over the same period.
The major investment destinations of the GX Economy
Transition Bonds are the following:“Promotion of non-fossil energy (JPY 6-8 trillion)”“Industrial restructuring and radical energy
conservation in a combination of supply and demand(approximately JPY 9-12 trillion)”“Resource recycling and carbon fixation technologies(approximately JPY 2-4 trillion)”
The investment program has been disclosed in the
Framework and the “Basic Policies for the Realizationof GX” as the information necessary for dialogue withthe market.

Page 101 of

Ref.

No.

Disclosure Elements

◯

4-b)

The investment plan includes not
only capital expenditure (Capex)
but also capital and operational
expenditure (Opex). Therefore,
costs related to research anddevelopment, M&A, anddismantling and removal of facilities
are also subject to the investment
plan. In other words, it isrecommended that the investment
plan incorporate, to the extent
possible, expenditure andinvestment necessary for
implementing the transition
strategy.

Requirement
Check
Yes

Work Undertaken

DNV Findings

Same as 4-a)

The Issuer’s investment plan is to invest in projects
that are truly difficult for the private sector alone to
make investment decisions and that contribute toemission reductions and the realization of industrial
competitiveness and economic growth, and will beprioritized based on the basic concept specified in theroadmap. Specifically, costs related to research anddevelopment, including costs for the Green Innovation
Fund projects, will be accounted.

No
Not
Applicable

In addition, as “Just Transition” from the perspectiveof promoting GX in the entire society, the policy
package of investment in people of JPY 400 billion overthree years is planned to be significantly expanded to
JPY 1 trillion over five years, taking into account thecomprehensive economic measures to overcome highprices and realize economic revival approved by the
Cabinet in October 2022.
No.

Categories

Eligibility Criteria
Sub-categories
Houses andbuildings

Restructuring

1

Page 102 of 127

Energy efficiency

Promotionof thoroughenergyefficiency
improvementthemanufacturingindustry (fueland feedstocks
transition)
Digitalinvestment
aimed at

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertaken

DNV Findings

decarbonization

2

Renewableenergy3

Low-carbon anddecarbonizedenergy4

Cleantransportation

5

Circular economy
adaptedproducts,
production
technologies andprocesses

6

△

4-c)

It is recommended that theinvestment plan outline theassumed climate-related outcomes
and impacts24 in a quantitative
fashion where possible, along withthe calculation methods andprerequisites25. If quantification isdifficult, the use of external
certification systems can be

Yes

Same as 4-a)No
Not
Applicable

Page 103 of 127

Sustainable
management ofliving natural
resources etc.

Battery industry
Making renewable energy amajor power source
Establishing electricity and gas
markets to achieve carbon
neutrality
Utilization of nuclear power
GX in transport sector
Resource circulation
Infrastructure

Restructuring the manufacturingindustry(fuel and feedstocks transition)
Facilitating the introduction ofhydrogen and ammonia
Carbon Recycling and CCS
Food, agriculture, forestry, andFisheries industry

Resource circulation

With regard to the climate-related outcomes andimpacts expected in the investment plan, appropriate
indicators will be stated in the post-issuance reportingof the transition bond, depending on the characteristicsof the eligible projects, and quantitative environmental
benefits will be reported for practically quantifiable
projects.
Items relating to environmental benefits to be stated in
the reporting are planned to include the following (seeGBP-4 in the main text for details):

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertaken

considered as a substitute for
qualitative assessment.

〇

〇

4-d)

4-e)

(In particular, when outlining theassumed climate-related outcomes
and impacts, it is recommended
that the disclosure include not only
GHG emission reduction and otherinitiatives to ease climate change
but also report how considerationof a “just transition”26 isincorporated into the transition
strategy.
If implementing the transition
strategy has the potential of having
a negative impact on employment
or the environment andcommunities other than climate

Yes

Same as 4-a)No
Not
Applicable

DNV Findings-

Key environmental benefit items (direct andindirect effects and expected future effects),
progress status of projects, etc. on a projectby-project or eligibility-criteria basis (taking
into account confidential obligations and theextent practicable)-

Any significant changes in circumstances ineligible projects (e.g., significant processchanges, suspension/discontinuation, changes
in specifications that have a significant impact
on the environmental benefits) during theredemption period of the bond after allocations
have commenced

The Issuer plans to ensure that Just Transition,
mitigation of negative impact and avoidance of lock-in
are in place in the “Basic Policy for the Realization of
GX” and in the selection process of investment
destinations (eligible projects).
Specifically, the policy on Just Transition has been set
out in the “Basic Policy for the Realization of GX” as“Promotion of GX in the entire society (section 5).”Basicconcept

Yes

Same as 4-a)No
Not
Applicable

Page 104 of 127

In promoting GX, it is important toappropriately promote labor transfer
to newly created industries from theperspective of Just Transition.
Supporting the smooth labor transferfrom fossil fuel-related industries to lowcarbon industries will ensure people’s lives
and employment and contribute toJapan’s economic growth. Therefore,

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertakenchange, it is recommended thatany expenditures to mitigate suchnegative impacts be added to the
plan.

◎

〇

(△)

4-f)

4-g)

Moreover, the outcomes arisingfrom investments included in theinvestment plan should align withthe targets.

Transition finance is a means tofinancially support theimplementation of a transition
strategy, and it is recommended
that financing be provided for new
initiatives. However, in the case oftransition finance in the format of
Use of Proceeds instruments,

DNV Findings

Futureactions

Yes

Same as 4-a)

DNV has confirmed that the outcomes (4-c) from thecandidate eligible projects included in the Issuer’s
investment plan are closely related to the goals (3-b)
and that there are plans to help achieve the goals.

Same as 4-a)

The Issuer’s transition bond is basically planned to beallocated to finance new initiatives. However, it may
also be allocated as refinancing.

No
Not
Applicable
Yes

necessary support, including humanresource development at universities etc.
will be provided, while taking into accountthe actual conditions of each industry.
The policy package of investment inpeople of JPY 400 billion over three years
is significantly expanded to JPY 1 trillion
over five years, taking into account thecomprehensive economic measures toovercome high prices and realize
economic revival approved by the Cabinetin October 2022.
Promote Just Transition by simultaneously
facilitating the acquisition of new skills
and smooth labor transfer to growth
sectors, including green sectors, throughsupport for the facilitation of labortransfer to growth sectors etc. andsupport for job transfers for careeradvancement of incumbent workers.

No
Not

The Framework stipulates that if the proceeds of thetransition bond are allocated as refinancing, the Issuer
will target projects that have been put into operation(commenced operation) or to which proceeds have

Applicable

Page 105 of 127

Ref.

No.

Disclosure Elements

Requirement
Check

Work Undertaken

refinancing for a reasonably set
lookback period (the period during
which refinancing is to be applied
for projects that have alreadystarted) is considered to beeligible.
◯4-h)

It is recommended that investment
plans be disclosed by linking theoutcomes and impacts with theexpenditures to the extent
practicable27.

DNV Findings
been allocated in the fiscal year that includes the dateof fundraising and in the previous year. If a period
other than the above is targeted, it will be disclosed in
the statutory documents at the time of the issuance ofthe transition bond, together with the reasons.

Yes

Same as 4-a)No
Not
ApplicableThrough the assessment, DNV has confirmed that theinvestment plans for eligibility criteria etc. including the
GX Economy Transition Bonds set out in the roadmap,
eligible projects, and the industry-specific measuresand goals set out in the Plan for Global WarmingCountermeasures are closely linked.
Although the individual documents do not directly link
the amounts, outcomes and impacts of each
investment target, the investment plan is judged, froma comprehensive perspective, to link the amounts,
outcomes and impacts of each investment target.

◯

4-i)

It is recommended that thefundraiser, after securing financing,
reports any deviations between theinitial plan and the actual
expenditure, outcomes andimpacts. For any deviations, it isrecommended that the underlying
reasons be explained.

Yes

Same as 4-a)No
Not
Applicable

Page 106 of 127

DNV has confirmed that if there are material
differences in the originally planned outcomes or
impacts of the projects for which the Climate
Transition Bond has been disbursed, the Issuer will
explain the circumstances and reasons for suchdifferences through annual reporting etc.

Ref.

No.

Disclosure Elements

◎

4-j)

In cases where the Use of Proceeds
bonds include refinancing, thefundraiser should provide an
explanation on the lookback period
set under the framework or otherrelevant methods along with theunderlying reasons and factors.

◯
(△)

4-k)

While there are differences inbusiness practices, such as the factthat loans are traditionally madebased on the bilateral relationshipbetween a borrower and a lender,
it is recommended that disclosureon the above be made to theextent possible in order to ensuretransparency and credibility oftransition finance. However, if it isdifficult to disclose such information
to the public from the standpoint ofconfidentiality and competition, it ispossible to report such information
only to lenders or external
evaluation organizations without
disclosing it to the public.

Requirement
Check

Yes

Work Undertaken

DNV Findings

Same as 4-a)

The Framework stipulates that if the proceeds of thetransition bond are allocated as refinancing, the Issuer
will target projects that have been put into operation(commenced operation) or to which proceeds havebeen allocated in the fiscal year that includes the dateof fundraising and in the previous year. If a period
other than the above is targeted, it will be disclosed in
the statutory documents at the time of the issuance ofthe transition bond, together with the reasons.

Same as 4-a)

There are no plans to utilize loans.

No
Not
Applicable

Yes
No
Not
Applicable

Page 107 of 127

Ref.

No.

Disclosure Elements

△

4-l)

Similarly, in cases where thefundraiser is a small-to-mediumsized enterprise and it is difficult todisclose to the public the samecontent as that reported to thefinancier or an external evaluation
institution, it is possible for thefundraiser to simplify the content of
disclosure, for example, by limiting
disclosure to a summary of h) to j)of this section.

Requirement
Check
Yes

Work Undertaken

DNV Findings

Same as 4-a)

The Issuer is not an SME.
The reporting content will be taken care to ensure thatthe type and size, the implementer and the progressstatus of eligible projects do not create an undue
burden on the practical management of the eligible
project.

No
Not
Applicable

24 The Ministry of the Environment, in its “Concept Paper on Impact Finance”, refers to impact as “a positive or negative change to the environment, society or
economy caused by an organization and is not a direct deliverable or output but an outcome as a change brought about in terms of the environment, society or
economy.”25 In disclosing impacts, outlining the amount of contribution to reducing CO2 emissions in the global value chain on the whole and the entire lifecycle, including theconsumption phase, can be considered. For the amount of contribution to the reduction, it is possible to reference the “Guideline for Quantifying GHG Emission
Reduction Contribution” (METI, 2018). Furthermore, as for outcomes on research and development, it is possible to reference the IEA Measuring Innovation by
Technology Readiness Level (TRL) or Importance for Net-Zero Emission, among others, and outline the progress in the R&D phase or the potential of reducing CO2
emissions with the relevant technology by highlighting the importance of net-zero emissions.
26 A just transition is an attempt to ensure the wide sharing of virtual profits created through a transition to a green economy, as well as to support any party who
will experience an adverse economic impact (be it a country, a region, an industry, a community, a worker, or a consumer). The concept of a just transition
corresponds to several SDGs.
27 In particular, disclosure of the investment plan is expected to be required for projects applicable to Use of Proceeds.

Page 108 of 127

Schedule-5 Green Bond Guidelines (Transition Bonds with Specific Use of Proceeds) Eligibility
Assessment Protocol
The following checklists (GBGLs-1 through GBGLs-4) are prepared based on the Green Bond Guidelines (GBGLs), Ministry of Environment (MOE), 2022.
According to the GBGLs, “Requirements”/”Evaluation Items” are classified into the following two categories: “Should: ◎”; and “Recommended: 〇.”The documents listed in the “Work Undertaken” column are those confirmed as evidence, whose details are shown in the List of Reference Materials (Appendix-1).
The evidence used in the evaluation work includes confirmed documents as well as information obtained through discussions and interviews with the fundraiser.
In Schedule-5, the requirements are applied to transition bonds with use of proceeds based on CTFH/CTFBG. Therefore, the terms “green (bond,project” in the “Requirements/Evaluation Items” column in Schedule-5 should be read as “transition (bond, project)”.

GBGLs-1-1 Use of proceeds
Ref.

SectionRequirements/Evaluation Items

◎

1-1-①

Green Bond proceeds should beallocated to Green Projects that state
the clear environmental benefits, whichshould be assessed by the issuer.

Requirement
Check
Yes

No

Not Applicable

Work Undertaken

DNV Findings

Confirmed documents:

DNV has confirmed through the Frameworkand the assessment that all proceeds raisedby the Issuer from the transition bond will beallocated to eligible projects selected throughthe process of project evaluation and selectionof eligibility criteria and eligible projects set
out in the Framework. DNV has also
confirmed that the environmental benefits of
the use of proceeds will be assessed by theIssuer.

- Framework- Basic Policy for the
Realization of GX(roadmap)- Plan for Global
Warming
Countermeasures- Sector-specifictechnology roadmap- Assessment
documents
Interview with theIssuerPage 109 of 127

Ref.

SectionRequirements/Evaluation Items

〇

1-1-①

Environmental benefit of Green Bond
proceeds, where feasible, quantificationis recommended.

Yes

In advance, issuers should provide
investors with information regarding theuse of Green Bond proceeds throughlegal documentation (such as aprospectus) or other documents.

Yes

The provision of the information
regarding the use of proceeds should
specify the Green Project categories.

Yes

In the cases where individual Green
Projects have been specified, it isrecommended that issuers clearlypresent the projects to investors.

Yes

In cases where Green Projects haveincidental negative environmental
impacts along with the alleged
environmental benefits, the issuers
should include information regardingthese negative impacts (e.g., how they
are assessed, what the issuers do to

Yes

◎

◎

〇

◎

1-1-④

1-1-⑤

1-1-⑤

1-1-⑥

Requirement
Check
No

Work Undertaken

DNV Findings

Same as 1-1-①

DNV has confirmed that the environmental
benefits of the eligible projects as the use ofproceeds are quantified by the Issuer to theextent practicable.

Same as 1-1-①

The use of proceeds will be disclosed in thestatutory documents prior to the issuance ofthe transition bond, if it is selected inadvance. If the use of proceeds is not selectedprior to the issuance of the transition bond, it
will be disclosed in the reporting after theissuance of the transition bond.

Same as 1-1-①

DNV has confirmed that the Issuer intends to
explain to investors through the Framework,
statutory documents, etc. that the proceeds
will be allocated to one or more of theeligibility criteria set out in Schedule-1.

Same as 1-1-①

DNV has confirmed that the Issuer intends toclearly indicate the eligible projects throughstatutory documents etc. if the use ofproceeds has been selected prior to theissuance of the transition bond.

Same as 1-1-①

DNV has confirmed that, when selecting
eligible businesses (projects), the Issuer will
ensure to take negative environmental andsocial impacts into account (including thenecessary procedures in the region where theproject is to be implemented) and that the

Not ApplicableNo

Not ApplicableNo

Not ApplicableNo

Not ApplicableNo

Not Applicable

Page 110 of 127

Ref.

SectionRequirements/Evaluation Items

Requirement
Check

Work Undertaken

curb them) to investors so that theinvestors and market participants canappropriately evaluate these impacts.

DNV Findings
proceeds are not allocated to projects related
to the separately specified exclusion criteria.
DNV has also confirmed through theassessment that the Issuer will consider thenegative impacts of projects at the project
implementation stage and the impacts on therelevant supply chain, including Just
Transition, mitigation of negative impacts(e.g., actions through environmental impact
assessment) and avoidance of lock-in, as
indicated in CTF-4.
DNV has confirmed that in cases where theuse of proceeds is selected prior to theissuance of the transition bond and has amaterial negative impact on the environment,
the Issuer intends to explain its approach toinvestors through statutory documents etc.

〇

1-1-⑦

(In case of where a part of Green Bond
proceeds is used to refinance existing
Green Projects,) it is recommended thatthe issuers provide information to theinvestors regarding i) the amount (orthe share) of the bond proceeds being
allocated for refinancing, and ii) which
Green Projects (or Green Project
categories) may be refinanced, and iii)
the target period of green projects
subject to refinancing (the look-backperiod).

Yes

No

Same as 1-1-①

Not Applicable

Page 111 of 127

DNV has confirmed that if the amount orpercentage to be refinanced by the Issuer isknown prior to the issuance of the transitionbond, it will be clarified in the statutory
documents etc. DNV has also confirmed that if
it is not clear prior to the issuance, the Issuer
intends to clarify the approximate amount (orpercentage) of the portion allocated asrefinancing in the post-issuance reporting.

Ref.

SectionRequirements/Evaluation Items

◎

1-1-⑦

When Green Bonds are issued multiple
times to refinance an asset that
requires long-term maintenance, theissuer should clearly disclose the asset’s
age and remaining useful life and theamount to be refinanced as at the timeof the bond issuance, evaluate the longterm sustainability of environmental
benefits and obtain an assessment froman external reviewer for verification.

Requirement
Check
Yes

No

Work Undertaken

DNV Findings

Same as 1-1-①

DNV has confirmed that the Issuer has no
current plans of allocation to refinancing toeligible projects that are long overdue (morethan two fiscal years before issuance).
DNV has confirmed that, in the event thatrefinancing is targeted, a reasonable lookback period (e.g., at the time of refinancing,the eligibility of the project is maintained atpresent and the environmental benefits will
last during the redemption period, or clear
environmental benefits can be expected in the
future) will be set.

Not Applicable

Page 112 of 127

GBGLs-1-2 Process for Project Evaluation and Selection
Ref.

SectionRequirements/Evaluation Items

Requirement
Check

◎

1-2-①

In advance, issuers should provide
investors with information regarding
the following: The environmental
sustainability objectives that theissuers intend to achieve throughGreen Bonds.

Yes

No

Not Applicable

Work Undertaken

DNV Findings

Confirmed documents:

DNV has confirmed that the Issuer intends to
explain the environmental targets it intends
to achieve through the transition bondthrough the Framework etc.

- Framework- Basic Policy for the
Realization of GX(roadmap)- Sector-specifictechnology roadmap- GX Implementation
Council documents- Assessment
documents
Interview with theIssuer◎1-2-①

In advance, issuers should provide
investors with information regarding
the following: The criteria for
determining the appropriateness ofGreen Projects based on theenvironmental sustainability objectives
described above.

Yes

No

Same as 1-2-①

Not Applicable

Page 113 of 127

Specifically, the environmental targets include
the following:
Fiscal
year
2013

2030

2050

Targets
Base year

CO2 emissions:
46% reduction(Ibid. challenging
the 50%reduction)
Carbon neutrality

CO2 emissions
1.408 billion t-CO2

0.76 billion t-CO2
0 billion t-CO2

DNV has confirmed that the Issuer, inevaluation and selection of eligible projects,
satisfies the assessment criteria (internal
criteria, with the main criteria described in
the Framework) set out for each eligibility
criterion classified in 14 categories based on
the types set out in the GX Roadmap asactivities necessary for the realization of theIssuer’s Transition Strategy, and that theIssuer selects eligible projects based on thebasic conditions and priority assessment set
out in the roadmap. DNV has also confirmed

Ref.

SectionRequirements/Evaluation Items

Requirement
Check

Work Undertaken

DNV Findingsthat the Issuer intends to explain theassessment criteria (and examples of eligible
projects selected based on the assessment
criteria) to investors through the Frameworkor statutory disclosure documents.

◎

1-2-①

In advance, issuers should provide
investors with information regarding thefollowing: The process for determining
how Green Projects fit the criteria forthe achievement of the environmental
sustainability objectives (The process
for the determination refers to thereason why issuers determine that
Green Projects can provide
environmental benefits appropriately inlight of the objectives and criteria for
the use of Green Bond proceeds, how
and by whom are the criteria appliedand used to determine whether Green
Projects are appropriate in light of theobjectives, and the like).

Yes

No

Same as 1-2-①

Not Applicable

DNV has confirmed that the Issuer intends to
explain to investors, through the Framework,
statutory disclosure documents, etc., theprocess for determining the eligibility of
projects as the use of proceeds.
Specifically, eligible projects to which theproceeds will be allocated will be confirmed by
the “Intergovernmental Committee on theIssuance of GX Economy Transition Bonds,”
consisting of Director-Generals, to beconsistent with the “GX Promotion Strategy”
and conform to the selection criteria set out in
GBP-1 for each eligibility criterion by theIssuer. The eligibility of projects is assessedand selected through discussions with relevant
ministries and agencies as necessary, andfinally reported to the “GX Implementation
Council,” chaired by the Prime Minister.
<Members of the Intergovernmental
Committee>••••

Page 114 of 127

Cabinet Secretariat
Financial Services Agency
Ministry of Finance
Ministry of Economy, Trade and Industry

Ref.

SectionRequirements/Evaluation Items

Requirement
Check

Work Undertaken

DNV Findings• Ministry of the Environment

◎

1-2-①

In advance, issuers should explain to
investors the supplemental information
regarding the "process for identification,
mitigation, and management ofenvironmental and social risks that may
be incidentally posed by the
project"(i.e., the way to identify
whether there are significant negative
impacts on the environment and society
and whether there are environmental
and social risks in implementing the
project, and mitigate and manage suchimpacts and risks).

Yes

No

Not Applicable

Same as 1-2-①

DNV has confirmed that, when selecting
eligible businesses (projects), the Issuer will
ensure to take negative environmental andsocial impacts into account (including thenecessary procedures in the region where theproject is to be implemented) and that theproceeds are not allocated to projects related
to the following exclusion criteria.
DNV has also confirmed through theassessment that the Issuer will consider thenegative impacts of projects at the project
implementation stage and the impacts on therelevant supply chain, including Just
Transition, mitigation of negative impacts(e.g., actions through environmental impact
assessment) and avoidance of lock-in, as
indicated in CTF-4.
<Exclusion criteria>• Businesses with the purpose of
manufacture or distribution of inhumane
weapons such as nuclear, chemical,
biological and other weapons of mass
destruction or anti-personnel landmines,
or businesses engaged in the
manufacture of products or provision ofservices supporting manufacture or saleof inhumane weapons such as nuclear,chemical, biological and other weapons ofPage 115 of 127

Ref.

SectionRequirements/Evaluation Items

Requirement
Check

Work Undertaken

DNV Findings
mass destruction or anti-personnel
landmines;• Businesses related to coal mining,refining or transportation;• Businesses related to the ownership or
operation of gambling facilities orbusinesses;• Businesses related to forced labor or
businesses related to unfair trade,
bribery, corruption, extortion,embezzlement or other inappropriate
relationships that do not comply with thelaws and regulations of the country
where the business is located.

〇

1-2-⑥

It is recommended that the issuers
explain to investors in advance any
environmental standards orcertifications that the issuers will referto in evaluating and selecting a Green
Project to be financed.

Yes

〇

1-2-⑧

It is recommended that internal groups
who have expertise, such as theenvironment related group, or external
institutions check whether the

Yes

No

Not ApplicableNo

Not Applicable

Same as 1-2-①

DNV has confirmed that the Issuer, in theevaluation and selection of the transition bond,will explain the assessment criteria set foreach eligibility criterion, including standards
such as CTFH/CTFBG, GBP/GBGLs, etc.,
through the Framework etc. (The Frameworkprovides examples of the main criteria, but
DNV has confirmed that the Issuer’s internalor publicly available criteria/processes arefollowed in the actual evaluation andselection.)

Same as 1-2-①

DNV has confirmed that the adequacy of theIssuer’s process for project evaluation andselection is ensured by the ministry withjurisdiction over the eligible project inaccordance with the Issuer’s internal orPage 116 of 127

Ref.

SectionRequirements/Evaluation Items

Requirement
Check

Work Undertaken

determination process is suitable froman environmental point of view.

〇

〇

〇

1-2-⑩

1-2-⑪

1-2-⑪

It is recommended that issuers position
their environmental objectives, criteria
and information on their processes in
the context of their comprehensive
environmental sustainability objectives,
strategy, policies and so on (e.g.,
medium-term management plan andsustainability/ESG strategy) when
explaining them to investors.

DNV Findings
publicly available criteria/processes and,
where necessary, with advice fromprofessional experts etc.

Yes

No

Same as 1-2-①

DNV has confirmed that the Issuer’s criteria
and processes are aligned with overarchinggoals, strategies and policies, based on theroadmap and relevant environmental plans
and strategies. These can be understood
through the Framework. DNV has also
confirmed that the Issuer intends to explainthem to investors through the Framework.

Same as 1-2-①

Same as 1-2-①.

Not Applicable

When setting requirements foreliminating the potential negativeenvironmental and social effects of agreen project (such as theappropriateness of the businesscategory of a green project) as criteria,
it is desirable to disclose relevant
information and environmental
standards and certifications referenced(Annex 1 of the Guidelines, theTaxonomy, and other environmental
standards and certifications).

Yes

When referring to standards,
certifications, etc., it is recommended
that the issuers explain how the actual
green projects, etc. comply with

Yes

No

Not ApplicableNo

Not Applicable

The Issuer identifies, mitigates and, where
necessary, eliminates negative environmental
and social impacts through an environmental
impact assessment etc. DNV has confirmed
through the assessment that there is aprocess to identify negative impacts specific to
the target project when selecting the target
project.

Same as 1-2-①

Page 117 of 127

DNV has confirmed that the eligibility criteria
set out in the Issuer’s Framework focus on
capital investment and research in green
projects classified under the GBP, a widely
recognized international standard (e.g., theRef.

SectionRequirements/Evaluation Items

Requirement
Check

Work Undertaken

referenced environmental standards,
certifications, etc.

〇

1-2-⑪

〇

1-2-⑬

DNV Findings
renewable energy sector and energy saving
sector (energy efficiency etc.)), and also
include activities that should be undertaken atpresent in order to achieve future carbon
neutrality (e.g., initiatives for phasing out
fossil fuel use, the utilization of nuclear
power), such as eligibility criteria classified as
low-carbon and decarbonized energy.

When utilizing external certification, it isrecommended that issuers not only
satisfy the certification requirements but
also explain the environmental benefits
to be achieved.

Yes

It is recommended that issuers put aprocess in place to identify mitigation
measures for potentially significant
environmental and social risks posed bygreen projects (including
implementation of a clear andappropriate trade-off analysis andnecessary monitoring when assessing
potential risks as significant).

Yes

No

Not ApplicableNo

Not Applicable

Same as 1-2-①

The Issuer has no specific plans to utilize
external certification at present.

Same as 1-2-①

Same as 1-2-①.

Page 118 of 127

The Issuer identifies, mitigates and, where
necessary, eliminates negative environmental
and social impacts through an environmental
impact assessment etc. In addition, the Issuer
intends to require the implementer of eligible
projects to take action in accordance with theplan if the result of an environmental impact
assessment etc. shows the need forcontinuous monitoring.

GBGLs-1-3 Management of Proceeds
Ref.

SectionRequirements/Evaluation Items

◎

1-3-①

Issuers should track and manage the net
Green Bond proceeds in an appropriatemanner. These tracking and managing
activities should be controlled by theissuer’s internal process.

Requirement
Check
Yes

No

Not Applicable

Work Undertaken

DNV Findings

Confirmed
documents:

The Ministry of Economy, Trade and Industry(METI) to be responsible for the allocation andmanagement of proceeds using an internalmanagement system. The proceeds of the
Climate Transition Bond will be received in the
Energy Supply and Demand Account of theSpecial Account for Energy Measures and will
be managed separately from other accounts.

- Framework- Assessment
documents
Interview with theIssuerSpecifically, the procurement is carried out by
the Ministry of Finance, and after payment to
the Accounting Office of the Agency for
Natural Resources and Energy, revenue andexpenditure management is carried out using
an internal management system. The
Accounting Office of the Agency for Natural
Resources and Energy manages the allocationof proceeds through the allocation to theprivate sector etc. via the responsible officeand ministry.
◎

1-3-②

As long as the Green Bonds areoutstanding, issuers manage the amountof the allocation to the green project isequal to or more than proceed, or issuers
should periodically (at least once a year)
adjust to match the amount of the total
Green Bond proceeds to the sum of theamount of the proceeds allocated to

Yes

No

Same as 1-3-①

Not Applicable

Page 119 of 127

The management status of the proceeds
allocation can be tracked on an eligible projectbasis as “costs for measures to promote asmooth transition to a decarbonized growtheconomic structure” using an internalmanagement system from the issuance of thetransition bond until the redemption.

Ref.

SectionRequirements/Evaluation Items

Requirement
Check

Work Undertaken

Green Projects and the amount of theunallocated proceeds.

◎

〇

◎

1-3-②

1-3-④

1-3-⑥

If any of the proceeds remains
temporarily unallocated, the issuer
should explain to investors how it intends
to manage the balance of such
unallocated funds and endeavour topromptly allocate such funds to Green
Projects.
It is recommended that management of
the proceeds should be supplemented by
an external auditor or other third- party
organization.

In advance, issuers should provide
investors with information on how Green
Bond proceeds will be tracked andmanaged.

DNV Findings
The Issuer will be subject to annual
inspections by the Board of Audit of Japan ofits proceeds management results. During theinspections by the Board of Audit of Japan,
the climate transition bond-specificmanagement process required under GBP-3
will also be inspected.

Yes

No

Same as 1-3-①

All unallocated proceeds will be managed in
cash until the proceeds are allocated toeligible projects and will not be allocated toother temporary investments (including green
investments) etc.

Same as 1-3-①Same as 1-3-②.

Not Applicable

Yes

No

Not Applicable

Yes

No

The Issuer will be subject to annual
inspections by the Board of Audit of Japan ofits proceeds management results. During theinspections by the Board of Audit of Japan,
the climate transition bond-specificmanagement process required under GBP-3
will also be inspected.
Same as 1-3-①

Not Applicable

Page 120 of 127

Same as 1-3-②.
The management status of the proceeds
allocation can be tracked on an eligible projectbasis as “costs for measures to promote asmooth transition to a decarbonized growthRef.

SectionRequirements/Evaluation Items

Requirement
Check

Work Undertaken

DNV Findings
economic structure” using an internalmanagement system from the issuance of thetransition bond until the redemption.

〇

◎

〇

1-3-⑦

1-3-⑨

1-3-⑩

It is recommended that issuers keep
evidenced documents appropriately that
demonstrate how they tracked andmanaged Green Bond proceeds.
In advance, issuers should provide
investors with information on how
unallocated Green Bond proceeds will be
managed when the Green Projects thatwill receive the Green Bond proceeds
have not been determined, or when such
Green Projects have been determined but
the proceeds have not been allocatedbecause the allocation timing has not yet
arrived.
It is recommended that issuers manage
unallocated Green Bond proceeds as an
asset with high liquidity and safety suchas cash, cash equivalents, or short-term
financial assets

Yes

No

Same as 1-3-①

The internal management system is available
throughout the redemption period and is kept
in appropriate documentation.

Same as 1-3-①Same as 1-3-②.

Not Applicable

Yes

No

All unallocated proceeds will be managed in
cash until the proceeds are allocated toeligible projects and will not be allocated toother temporary investments (including green
investments) etc.
Same as 1-3-⑨.

Not Applicable

Yes

No

Same as 1-3-①

Not Applicable

Page 121 of 127

GBGLs-1-4 Reporting
Ref.

SectionRequirements/Evaluation Items

◎

1-4-①

Issuers should publicly disclose the latest
information on the use of Green Bond
proceeds after issuance and post it in aplace where reference is easily made byinvestors (including on its website).

Requirement
Check
Yes

No

Not Applicable

Work Undertaken
Confirmed documents:- Framework- Assessment
documents
Interview with theIssuer

◎

◎

1-4-②

1-4-③

Issuers should disclose the latest
information at least once a year until all
the proceeds are used and whenever
there has been a major change in thesituation. They should disclose suchinformation in a timely manner even after
all the proceeds are allocated if there has
been any major change in the situation.
Disclosed information should include thefollowing contents:• A list of the Green Projects to which
Green Bond proceeds have been
allocated• A brief description of each Green
Project (including up-to-date progress)• The amount allocated to each Green
Project• The expected environmental benefits ofeach Green Project• Information regarding unallocatedGreen Bond proceeds (the amount of

Yes

No

Same as 1-4-①

Not Applicable

Yes

No

Same as 1-4-①

Not Applicable

DNV Findings

DNV has confirmed that the Issuer will disclose
the allocation status of the proceeds on anannual basis on the Government’s website, atleast until the proceeds has been fully allocated.
In the event of a significant change in the
progress status of projects to which theproceeds are allocated or environmental benefits(significant process changes, changes in
specifications, delays in the expectedenvironmental benefits or their acting timing,etc.), the Issuer will disclose it even after thecompletion of the proceeds allocation.

DNV has confirmed that the Issuer intends toinclude the following as disclosure information.
The impact porting will be disclosed on anannual basis on the Government’s website on a
project-by-project or eligibility criteria basis,taking into account confidential obligations andthe extent practicable.
[Allocation status reporting]••

Page 122 of 127

Allocated amount and unallocated balance
Estimated amount of the proceeds allocatedin the fiscal year prior to the issuanceRef.

SectionRequirements/Evaluation Items

Requirement
Check

Work Undertaken

the unallocated proceeds or the shareof the unallocated proceeds to the total
amount of the proceeds, when theunallocated proceeds are expected to
be allocates to Green Projects, and how
the unallocated proceeds are managed
until allocation)


〇

〇

1-4-④

1-4-⑤

If Green Bond proceeds have been
allocated to the refinancing of existing
projects, it is recommended that
disclosed information include: 1) the
approximate amount (or the share) of theallocated proceeds used for refinancing,and 2) a list of the Green Projects (or the
project categories) refinanced.

While it is recommended to disclose 4-③
and 4-④ on a project-by-project basis, if
there are confidentiality agreements,
competitive considerations, or a large
number of underlying projects that limit

DNV Findings[Impact reporting](environmental benefits reporting)••Key environmental benefits (direct andindirect benefits related to GHG emission
reduction etc., and benefits expected in the
future)Progress status of projects

In the event of a significant change incircumstances in eligible projects (e.g.,significant process changes,
suspension/discontinuation, changes in
specifications that have a significant impact on
the environmental benefits) during theredemption period of the bond after allocations
have commenced, the Issuer will disclose it in atimely manner or through reporting.
Yes

NoSame as 1-4-①

DNV confirmed that the Issuer intends todisclose in its annual reporting the estimatedamount of any portion of the proceeds allocatedto refinancing (allocated in the fiscal year prior
to the time of issuance), as per 1-4-③.

Same as 1-4-①

DNV has confirmed that the Issuer intends todisclose information on an individual green
project or eligibility criteria basis, taking into
account practical considerations and confidential

Not Applicable

Yes

No

Not Applicable

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Ref.

SectionRequirements/Evaluation Items

Requirement
Check

Work Undertaken

the disclosure of details, it is consideredthat information is presented in genericterms or in an aggregated portfolio.

◎

〇

1-4-⑦

1-4-⑨

When disclosing information regarding
the expected environmental benefits ofprojects, issuers should use appropriate
indicators while ensuring consistency withthe “environmental sustainability
objectives,” the “criteria” for Green
Projects specified in Section 2, “Process
for Project Evaluation and Selection,” andthe characteristics of Green Projects.

When disclosing the expectedenvironmental benefits of projects, it isrecommended that issuers, where
feasible, use quantitative indicators anddisclose information on methodologies
and/or assumptions as well as these
indicators.

DNV Findings
obligations, while ensuring transparency asmuch as possible.

Yes

No

Same as 1-4-①

DNV has confirmed that the Issuer will selectappropriate indicators on key environmental
benefits (direct and indirect GHG emission
reduction effects as well as future expectations)for the disclosure of environmental benefits
based on the characteristics of eligible
businesses.

Same as 1-4-①

DNV has confirmed that, for projects where
quantification is practicable, quantitativeenvironmental benefits will be estimated by theIssuer or operator and reported together withcalculation methods and assumptions, where
necessary.

Not Applicable

Yes

No

Not Applicable

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GBGLs-2-1 Green Bond Framework
Ref.

SectionRequirements/ Evaluation Items

◎

2-1-①

Issuers should provide explanation toinvestors through legal documents suchas the Green Bond Framework or aprospectus that the Green Bond or Green
Bond program is aligned with four coreelements (Use of Proceeds, Process for
Project Evaluation and Selection,
Management of Proceeds, andReporting).

Requirement
Check
Yes

No

Work Undertaken

DNV Findings

Same as 1-4-①

DNV has confirmed that the Issuer has
described in the Framework (i) the fourcommon elements of CTFH/CTFBG, consistingof disclosure items related to the transition
strategy etc. required for a transition bond,and (ii) the four core elements of green bonds,
consisting of elements required to manage atransition bond with use of proceeds, and that
conformity with the four elements will be
disclosed.

Not Applicable

In addition, these documents should be
posted in a place where reference iseasily made by investors (including on its
website).

〇

〇

2-1-②

2-1-②

It is recommended that issuerssummarise in the Green Bond Framework
relevant information in the context of theissuer's overarching sustainability/ESG
strategy.

It is recommended that issuers disclose
all environment-related standards andcertifications (Appendix 1 of the
Guideline, the Taxonomy and otherenvironmental standards andcertifications) that were referenced in the

DNV has confirmed that the Framework isplanned to be published on the Government’s
website and disclosed to the public, including
investors.
Yes

No

Same as 1-4-①

DNV has confirmed that the Framework
summarizes information on Japan’s past
initiatives and strategies for comprehensive
environment (in particular, mitigation ofclimate change), mainly in Section 1 andSections 1.1 to 1.3.

Same as 1-4-①

The Issuer identifies, mitigates and, where
necessary, eliminates negative environmental
and social impacts through an environmental
impact assessment etc. DNV has also
confirmed through the assessment that there
is a process to identify negative impacts
specific to the target project when selecting

Not Applicable

Yes

No

Not Applicable

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Ref.

SectionRequirements/ Evaluation Items

Requirement
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Work Undertaken

selection of projects.

DNV Findings
the target project (same as 1-2-①).
An overview of these will be disclosed in the
Framework.

〇

〇

2-1-②

2-1-②

When referring to standards,
certifications, etc., it is recommended
that issuers explain how the green andother projects are aligned with thereferenced environmental standards,
certifications, etc.

When utilizing external certification, it isrecommended that issuers not only
satisfy the certification requirements but
also explain the environmental benefits tobe achieved.

Yes

No

Same as 1-4-①

DNV has confirmed that the eligibility criteria
set out in the Issuer’s Framework focus on
capital investment and research in green
projects classified under the GBP, a widely
recognized international standard (e.g., therenewable energy sector and energy saving
sector (energy efficiency etc.)), and also
include activities that should be undertaken atpresent in order to achieve future carbon
neutrality (e.g., initiatives for phasing out fossil
fuel use, the utilization of nuclear power), suchas eligibility criteria classified as low-carbon
and decarbonized energy (same as 1-2-⑪).

Same as 1-4-①

The Issuer has no specific plans to utilize
external certification at present (same as 1-2⑪).

Not Applicable

Yes

No

Not Applicable

Page 126 of 127

Appendix-1 List of Reference Materials/01/

Climate Transition Bond Framework; Cabinet Secretariat, Financial Services Agency,
Ministry of Finance, Ministry of Economy, Trade and Industry, Ministry of theEnvironment/02/

The Basic Policy for the Realization of GX (a roadmap for the next 10 years); February
2023

/03/

The Basic Policy for the Realization of GX Reference material; February 2023

/04/

Plan for Global Warming Countermeasures; 22 October 2021

/05/

Long-term strategy as a growth strategy under the Paris Agreement; 22 October
2021

/06/

The (6th) Strategic Energy Plan; October 2021

/07/

Japan’s NDC (Nationally Determined Contribution)/08/

GHG emissions and absorptions in FY2021 (confirmed values)/09/

GX Implementation Council documents, minutes and agendas *July 2022 to October
2023 (1st to 7th meetings)/010/ Classification of eligibility criteria (list of candidate use of proceeds)/011/ Assessment documents-

List of questions for third-party evaluation bodies (version 24 October 2023)-

Execution management of GX bonds (Government Accounting System (ADAMS II))-

Explanatory material on eligible categories and projects

Other information on the government’s and ministries' websites and disclosure documents

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