Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

SECOND PARTY OPINION
MITSUBISHI HEAVY INDUSTRIES, LTD.
GREEN/TRANSITION FINANCE FRAMEWORK

Prepared by: DNV Business Assurance Japan K.K.
Location: Kobe, Japan
Date: March 18, 2022
Ref. Nr.: PRJN-339571-2022-AST-JPN-01

This report was prepared in the “Climate Transition Finance Model Project in FY2021 (Investigation of ideal
way of Transition Finance)” which is a commissioned project by the Ministry of Economy, Trade and Industry.

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Executive Summary
Mitsubishi Heavy Industries, Ltd. (hereinafter, “MHI” *including MHI Group) was founded on July7, 1884 by Yataro Iwasaki, the founder of Mitsubishi, as Nagasaki Shipyard & Machinery Works,
after leasing the Nagasaki Shipyard & Machinery Works from the Ministry of Engineering. Today,
MHI is engaged in manufacturing, installation, sales, and service in the Energy Systems, Plant &Infrastructure Systems, Logistics, Thermal & Drive Systems, Nuclear Energy Systems, Machinery
Systems, Integrated Defense & Space Systems, and Commercial Aviation Systems, incooperation with its affiliated companies.
In 1970, MHI established the "Our Principles" as its management philosophy. In keeping with thisspirit, MHI serves as a manufacturing corporation that contributes to societal progress throughits business endeavors of delivering products and technologies in support of social and industrial
infrastructure worldwide. In this context, MHI has declared "MISSION NET ZERO" with the aim of
becoming carbon neutrality by 2040, and has set "realization of a green society" as one of thethree key themes MHI aims to achieve in 2030. In addition, in the mid-term business plan "2021
Business Plan" (FY2021-FY2023), MHI has identified two growth areas: "Energy Transition,"
which aims for decarbonization on the energy supply side, and "New Mobility & Logistics " whichaims for decarbonization, energy conservation, and manpower savings in the energy demandside in order to steadily realize the goal of "providing energy solutions to enable a carbon neutral
world" one of the five materialities.
In pursuing these initiatives, MHI has set forth its transition efforts as a roadmap for becoming
carbon neutrality in “MISSION NET ZERO”. These efforts are consistent with the World Energy
Outlook of the International Energy Agency and the Technology Roadmap to Promote Transition
Financing of Ministry of Economy, Trade and Industry; Power and Gas Sector in February 2022,
Iron and Steel Sector in October 2021, Chemical Sector in December 2021, International
Shipping of Ministry of Land, Infrastructure, Transport and Tourism in December 2020.
MHI will finance the investment to contribute to transition strategies to lead transition efforts to a
decarbonized society as green/transition financing. In addition, MHI will engage in dialogue withinvestors and a wide range of market participants and has established MHI Green/Transition
Finance Framework (hereinafter, “framework”) to implement the finance in a manner consistent
with internationally established frameworks.
DNV Business Assurance Japan K.K. (hereinafter, "DNV"), as an external reviewer, evaluated theeligibility of the framework and the MHI Green/Transition Bonds (to be issued after March 2022).
Specifically, DNV provided the eligibility evaluation for frameworks against the following
handbook, principle and guidelines which are widely recognized:-

Climate Transition Finance Handbook (International Capital Market Association, 2020, hereinafter CTFH)-

Basic Guidelines on Climate Transition Finance (Financial Services Agency, Ministry of Economy, Tradeand Industry, Ministry of the Environment, 2021 hereinafter, CTFBG)-

Green Bond Principles (International Capital Market Association, 2021 hereinafter GBP)-

Green Bond Guidelines (Ministry of the Environment, 2020, hereinafter GBGLs)-

Green Loan Principles (Loan Market Association (LMA) and others, 2021 hereinafter GLP)-

Green Loan and Sustainability Linked Loan Guidelines (Ministry of the Environment, 2020, hereinafter
GLGLs) (applicable to green loans only)

The following is a summary of the assessment results for each common element indicated in theabove handbooks, principles and guidelines. Followings (CTF-1 ~ CTF-4) are findings andopinions of DNV against the four common elements of the CTFH and CTFBG (disclosure
elements); Followings (GBP/GLP-1 ~ GBP/GLP-4) are findings and opinions of DNV against theelements of GBP/GBGLs and GLP/GLGLs as a transition finance with Use of Proceeds.

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion<CTF Eligibility assessment results>

CTF-1. Issuer’s Climate Transition Strategy and Governance:
The Transition Strategy of the MHI as fundraiser has set a long-term goal "MISSION NET
ZERO" to contribute to carbon neutrality by 2040, consistent with the goals of the Paris
Agreement and will contribute to the realization of carbon neutrality on both the supply
side and demand side of energy as an important initiative presented in the various plans
and strategies for decarbonization in Japan.
These efforts are consistent with the International Energy Agency's World Energy Outlook,
the pathway of the Ministry of Economy, Trade and Industry's Technology Roadmap in thePower, Gas, Iron and Steel and Chemical sectors and the Ministry of Land, Infrastructure,
Transport and Tourism's Roadmap in International Shipping. In addition, as governanceand disclosure related to implementation, an internal structure and information disclosure
process based on the recommendations of the TCFD*1 have been established. These aredisclosed in the Framework and other documents and meet the disclosure elements of CTF1.
*1: Task Force on Climate-related Financial Disclosures

CTF-2. Business model environmental materiality︓
MHI has identified "climate change" as an environmental materiality under the theme of"providing energy solutions to enable a carbon neutral world" and this is closely related to
MHI's efforts to contribute to the transformation of both the energy supply and demand sides
of its core businesses, including the Energy Systems, Plant & Infrastructure Systems, andLogistics, Thermal & Drive Systems.
Materiality is identified through analysis and evaluation methods that take into account both
positive and negative aspects of the business, utilizing GRI standards*1, ISO 26000, SASB,
TCFD, etc. In addition, our approach to environmental materiality includes not only emission
reductions from MHI’s own business activities, but also activities that contribute to the
reduction of Scope 3. In addition, contribution to the SDGs, described below, is also taken
into consideration. These are disclosed in the Framework and other documents, and meetthe disclosure elements of CTF-2.
*1: Global Reporting Initiative (an international standard providing ESG-related reporting, management and analysis
tools)

CTF-3. Climate transition strategy to be ‘science-based’ including targets andpathways︓
MHI's transition strategy is defined by science-based targets and pathways. Specifically, it isconsistent with the International Energy Agency's World Energy Outlook and the Ministry of
Economy, Trade and Industry's Technology Roadmap for Power, Gas, Iron and Steel andChemical sectors and the Ministry of Land, Infrastructure, Transport and Tourism's Roadmap
in International Shipping, which are described in CTF-1. In addition to CO2 emission
reductions from its own activities, long-term and short- to medium-term targets are indexedand quantified, taking into account Scope 3 and reduction contributions, and the process forachieving these targets is clarified.
These are disclosed in the framework or through a second party opinion, and meet thedisclosure elements of CTF-3. In addition, MHI's approach to transitions contributes to thetransitions of society as a whole, including its own, as a company that manufactures andsells key systems, facilities, and equipment for energy, iron and steel, and other CO2
emitting businesses.
CTF-4. Implementation transparency:
MHI has organized a basic investment plan for the execution of the transition strategy andan overview of the results and impact of the execution. Specifically, under “MISSION NET

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

ZERO”, MHI plans to invest 180 billion yen scale in growth areas including decarbonization
by 2023, which encompasses projects to be implemented under green/transition finance. It
was confirmed that future overall and individual investments necessary to implement thetransition strategy are planned to be executed according to the appropriate timelines inaccordance with internal management systems and processes, taking into account CTF-1 to
CTF-3. These are disclosed in the Framework or through this Second Party Opinion and meetthe disclosure elements of CTF-4.
<GBP/GLP Eligibility assessment results>
GBP/GLP-1. Use of Proceeds:
MHI defines the eligibility criteria for the use of proceeds as green/transition projects that
directly or indirectly contribute to the realization of transition strategies and goals.
Specifically, green/transition projects are identified in the eligible project/project categories
listed below and may be allocated to finance one or more of these research anddevelopment, business development, business operations, or other related expenditures,
either as new expenditures or as refinancing of existing expenditures. DNV has confirmedthat green/transition projects are consistent with the elements of CTF-1 to 4.
Green/Transition projects have been evaluated by MHI to provide clear environmental
benefits to the transition strategy and are expected to make direct and indirect contributions
to the SDGs. These processes are consistent with GBP-1.
Table 1: Green Projects*1

Table 2: Transition Projects*2

EligibleBusinesses
Eligibility Criteria
and/orProjects
Renewable  Wind power (wind power plants)
energy Geothermal power (geothermal power
plants)Clean
 Hydrogen gas turbine (hydrogen
Energypower generation businesses and/or
projects for 100% hydrogen firing) Ammonia gas turbine (ammonia
power generation businesses and/or
projects for 100% ammonia firing) Hydrogen/ammonia production(green) Steam power (conversion to 100%
ammonia firing) Gas engine for power generation(100% hydrogen firing)

EligibleBusinesses
and/orProjects
Decarbonize
existing
infrastructure

Build a hydrogensolutionsecosystem

Related
SDGs*1Projects that qualify as green projects can beincorporated as green projects in future green bond issues.
Green projects are also permitted within the CTFBG to beincorporated as part of a transition bond issue.

Build a CO2
solutionsecosystem

Eligibility Criteria
 Hydrogen gas turbine (co-firing) Ammonia gas turbine (co-firing) LNG-fueled high-efficiency gas
turbine Steam power (conversion toammonia co-firing) Gas engine for power
generation (hydrogen co-firing) Material Handing (highefficiency and fuel cell powered) Hydrogen production (blue or
turquoise, etc.)
 Ammonia production (blue or
turquoise, etc.)
 Hydrogen compressors (forhydrogen production, transportand storage, etc.)
 Metals machinery (hydrogenreduced ironmaking, etc.)
 CO2 capture and storage
 CO2 transport (liquefied CO2
carries, etc.)

Related SDGs
*2 Some projects classified as transition projects at this time
may become green projects through the application/appliedof future technological innovations. (e.g., application ofgreen fuels/production processes, achieving performancethat meets CO2 emission standards as green projects, etc.).

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

GBP/GLP-2. Process for Project Evaluation and Selection:

MHI will ensure that the transition project does not conflict with the exclusion criteriapreviously established in the framework, in addition to meeting the GBP-1 eligible project
category. Specifically, after the finance department confirms that the projects selected by
the business divisions meet the eligibility criteria, the Chief Financial Officer makes the final
decision. These processes are consistent with GBP-2.
GBP/GLP-3. Management of Proceeds:
The proceeds are managed by the finance department on a regular basis (at least once ayear) using an internal management system to manage the allocation of proceeds for eachproject. The system is equipped to track the fact that the proceeds have been allocated.
Pending the allocation to eligible businesses and/or projects, the amount of unallocatedproceeds will be held in cash or cash equivalents.
GBP/GLP-4. Reporting:
MHI will announce on its website the status of fund allocation (allocated/unallocated amount,new/refinancing) until the proceeds are fully allocated. MHI will also disclose the outline ofthe project and its environmental benefits on the MHI website to the extent practicable, atleast until the proceeds are fully allocated. (for projects undergoing research anddevelopment, etc., the progress status and the expected environmental improvement effects
will be included). Any major changes in transition strategies or pathways, allocation plans, or
actual results will be reported in a timely manner or in the reporting.
Based on the assessment of the framework and other relevant documents and information provided
by MHI, DNV has confirmed that the framework meets the criteria required by the relevant
framework and eligibility as Green/Transition finance. It was also confirmed that theGreen/Transition Bond to be implemented this time would be appropriately planned andimplemented in accordance with this framework.

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Table Green/Transition Bonds (to be issued after April 2022) Overview of the six projects (1/3)
Eligiblebusinesses
and/or Projects
Decarbonize
existing
infrastructure

Eligibility
Criteria

Project Overview

Hydrogen gas ・ Project Name: Development of
turbine (100%
Hydrogen GTCC
firing/co・ Project Overview: Development of
firing)100% hydrogen firing and co-firing
gas turbine, combustion testing at
actual pressure

Hydrogen gas turbine schematic
diagram・ Period: ~FY2030 (planned)
Environmental benefits: CO2
Reduction rate from existing
facilities (intensity): -10% for 30%(vol%) hydrogen co-firing, -100%
for 100% hydrogen firing
Decarbonize
existing
infrastructure

Steam power(conversion
to ammonia
co-firing)・ Project Name: Development and
Demonstration of High Ammonia
Co-firing Technology in Coal
Boilers
・ Project Overview: Development ofan ammonia burner suitable forcoal boilers and demonstration
operation using actual equipment
New Energy and Industrial
Technology Development
Organization (NEDO) "Green
Innovation Fund Project/Project
for Establishment of FuelAmmonia Supply Chain
・ Period: FY2021~FY2028(planned)
・ Environmental benefits: CO2
Reduction rate from existing
facilities (intensity): -20% in caseof 20% ammonia co-firing

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Conceptual diagram of ammonia cofiring in a coal boiler

Coal & Ammonia

Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Table Green/Transition Bonds (to be issued after April 2022) Overview of the six projects (2/3)
Eligiblebusinesses
and/or Projects
Decarbonize
existing
infrastructure

Eligibility
Criteria

Project Overview

Gas engine for ・ Project Name: Development of
power
Hydrogen Gas Engine Technology
generation
・ Project Overview: Development(100%
for practical use of hydrogenhydrogenengines based on conventionalfiring/codiesel and gas engines
firing)・ Period: FY2019 - FY2030s(planned)

Internal schematic diagram ofhydrogen gas engine

・ Environmental benefits: CO2
Reduction rate from existing
facilities (intensity): -10% in caseof 30% hydrogen co-firing(volume ratio), -100% for 100%hydrogen firing
Build ahydrogensolutionsecosystem

Hydrogenproduction(blue orturquoise,etc.)

・ Project Name: Hydrogen Power
Generation Demonstration Facility"Takasago Hydrogen Park”
・ Project Overview: Development,
verification and manufacturing of
100% hydrogen firing hydrogengas turbine for earlycommercialization (Takasago City,
Hyogo Prefecture "Takasago
Hydrogen Park")
・ Period: FY2021 - FY2023(planned)
・ Environmental benefits: Project
overview and progress will bereported.

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Planned completion of Takasago
Hydrogen Park

Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Table Green/Transition Bonds (to be issued after April 2022) Overview of the six projects (3/3)
Eligiblebusinesses
and/or Projects
Build ahydrogensolutionsecosystem

Eligibility
Criteria
Metalsmachinery(hydrogenreduced
ironmaking,etc.)

Project Overview
・ Project Name: Research andDevelopment of HydrogenReduced Ironmaking Technology

Hydrogen-reduced ironmaking
process flow

・ Project Overview: Hydrogenbased Fine Ore Reduction(HYFOR): Associateddevelopment and engineering
work for the demonstration ofindustrial prototype plant for
HYFRO, a new direct reduction
process based on fluidized bed
technology that allows the direct
usage of iron ore (ultra) fines
without any agglomeration step.
As a transition technology,
HYFOR can be operated withnatural gas, H2-rich gas and100% pure H2.
・ Period: FY2021 - FY2025(planned)
・ Environmental benefits:
Reduction rate of CO2 emission
from conventional products:-80% or more

Build a CO2
solutions
Ecosystem

CO2 captureand storage

・ Project Name: Improve
performance of CO2 capture
technologies and increase
applications of CO2 from varietyof emission sources.
・ Project Overview: Improved CO2
Capture Process Performance(enhancement of amine-based
solvents (KS-1, KS-21, etc.) as
our core technologies), expansionof product lineup from CO2
capture plant to compact CO2
capture system, etc.
・ Period: ~FY2030 (may continue
beyond 2030)
・ Environmental benefits: CO2
capture rate from flue gas: 90%
and above (captured CO2 Purity
99.9% or above)

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CO2 capture process flow

Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Contents
Executive Summary

2

I. Introduction

10

II. Scope and objectives

24

Ⅲ. Responsibilities of MHI and DNV

26

Ⅳ. Basis of DNV’s opinion

26

V. Work Undertaken

28

Ⅵ. Findings and DNV's opinion

29

Ⅶ. Assessment Conclusion

43

Schedule-1 MHI Green/Transition Financing Eligible Projects Candidates

45

Schedule-2 Climate Transition Finance Eligibility Assessment Protocol

47

Schedule-3 Green Bond and Transition Finance with specific use of proceeds Eligibility Assessment
Protocol54

Schedule-5 Green Bond Guideline (Green Bonds and Transition Finance with specific use of proceeds)
Eligibility Assessment

92

Schedule-6 Green Loan Guidelines (Green Loans and Transition Finance Loan with specific use ofproceeds) Eligibility Assessment

107

CBS-MRE-1 The Marine Renewable Energy Sector Eligibility Criteria of the Climate Bonds Standard

123

CBS-WE-1 Wind Sector Eligibility Criteria of the Climate Bonds Standard (ver1.1)

131

CBS-GE-1 Checklist for eligibility criteria of geothermal energy

134

EU-MFR-Hydrogen Hydrogen production eligibility checklist

138

EU-NFF-Electricity Non-Fossil Fuel Electricity Generation Eligibility Checklist

140

Reference List

145

Revision History
Revision
number0

Date of issue
18/3/2022

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 that

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion
errors 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
for bodies providing audit and certification of management systems, and accordingly maintains a comprehensive system of quality control, including documented
policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. We have compliedwith the DNV Code of Conduct1 during the assessment and maintain independence where required by relevant ethical requirements. This engagement work was carriedout 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.

I. Introductioni.

About the Issuer
Mitsubishi Heavy Industries, Ltd. (hereinafter, “MHI” *including MHI Group) was founded on
July 7, 1884 by Yataro Iwasaki, the founder of Mitsubishi, as Nagasaki Shipyard & Machinery
Works, after leasing the Nagasaki Shipyard from government.
Today, in cooperation with its affiliated companies, MHI operates in the following 7 businesssystems (domains/segments).*1*1: Edited by DNV based on the Mitsubishi Heavy Industries website.
Energy Systems

Clean gas and steam power systems, renewableenergy power systems, nuclear power systems,
compressors, aeroengines, and marine machinery

Plant & Infrastructure Systems

Commercial ships, transportation systems,
chemical plants, CO2 capture plants, waste toenergy systems, and sludge treatment systems.

Logistics, Thermal & Drive Systems Forklift trucks, logistic systems, businesscustomers air conditioners, centrifugal chiller, heatpumps, power generation engines, marine
engines, and turbochargers.
Nuclear Energy Systems

Development, manufacture, operation andmaintenance of nuclear power plants.

Machinery Systems

Traffic management systems; testing equipment;
industrial machinery; particle accelerators;
cultural, sports, and leisure facilities; rubber andtire machinery.

Integrated Defense & Space Systems Defense aircraft, missile systems, special
vehicles, naval ships, maritime systems, and spacesystems.

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

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Commercial Aviation Systems

Manufacture and assembly of commercial aircraft,including fuselage, wings, doors, etc.

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ii.

Issuer’s Initiatives for ESG/SDGs
The MHI Group is committed to "developing business activities that take into its diverse
range of our stakeholders into consideration and return profits to all stakeholders in
optimum fashion, while at the same time providing excellent products and technologies torealize a sustainable society and a secure future for people and the planet. Approach tosustainability promotion based on this concept, MHI aims to address materiality throughits business activities and contribute broadly to the achievement of the SDGs, thesustainable development goals set by the United Nations (Table-1).
The materiality to which Green/Transition Finance is mainly related is "provide energy
solutions to enable a carbon neutral world".

Table-1 Relationship between materiality and company-wide goals and SDGs
Materiality
Provide energy
solutions toenable a carbon
neutral world
Contribution business(Business)

Transform
society throughAI anddigitalization

Build a safer
and moresecure world

Foundation to support business(Corporate)

Promotediversity andincrease
employeeengagement

Enhance
corporate
governance

Company-wide goals
・ Decarbonize MHI Group‘s business activities by 2040
(Scope 1, Scope 2)・ Contribute to building up energy infrastructure toward
a carbon neutral world by 2050 (supply side)・ Contribute to decarbonization in the energy demand
sector by 2050
・ Contribute to building a circular economy
・ Expand lineup of convenient and sustainable AI/digitalproducts meeting needs of customers and users
・ Create a future-oriented energy management
structure・ Build a foundation to produce creative products
・ Make critical infrastructure more resilient・ Make critical infrastructure unmanned or requiring
fewer people
・ Continuously strengthen cybersecurity measures for
all MHI products
・ Commercialize cross-domain security technologies
・ Develop engineers keenly aware of safety and security
needs in all products
・ Create new value through participation of diverse
human resources
・ Ensure safe and comfortable workplaces
・ Support the health and vitality of employees, so they
can contribute to society
・ Foster self-sustaining growth in all employees
・ Increased employee engagement
・ Further improve Board of Directors meetings
・ Promote legal compliance and honest and fairbusiness practices
・ Further promote responsible (CSR) procurement in
the global supply chain
・ Create opportunities to explain non-financial
information

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Contribution to
the SDGs

Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinioniii. Issuer's Environmental Initiatives

In 1970, MHI established the "Our Principles" as its management philosophy. In keepingwith this spirit, MHI serves as a manufacturing corporation that contributes to societal
progress through its business endeavors of delivering products and technologies in supportof social and industrial infrastructure worldwide. In this context, MHI has declared"MISSION NET ZERO" with the aim of becoming carbon neutrality by 2040, and has set"realization of a green society" as one of the three key themes MHI aims to achieve in
2030. In addition, in the mid-term business plan "2021 Business Plan" (FY2021-FY2023),
MHI has identified two growth areas: "Energy Transition," which aims for decarbonizationon the energy supply side, and " New Mobility and Logistics " which aims for
decarbonization, energy conservation, and manpower savings in the energy demand side inorder to steadily realize the goal of "providing energy solutions to enable a carbon neutral
world" one of the five materialities.
In pursuing these initiatives, MHI has set forth its transition efforts as a roadmap forbecoming carbon neutrality in “MISSION NET ZERO” (Figure 1).
In the roadmap for transitioning to carbon neutrality, MHI has set the goal of reducing its own
CO2 emissions from its "business activities" (Scope 1 and 2) to 50% below 2014 levels by 2030
and to Net Zero by 2040. In addition, MHI aims to reduce the CO2 emissions contribution from
"Scope 1 and 2 of customer" (Scope 3) by 50% from 2019 levels and to achieve Net Zero by2040. MHI has set 2040 as the year for achieving its Net Zero target because, in order torealize a carbon neutral society by 2050, it is first necessary to supply systems, facilities, andequipment that contribute to low-carbon and decarbonization, which, when introduced andoperated by customers, will reduce CO2 emissions throughout society (Figure-2). In addition,
MHI has clearly stated in its "MISSION NET ZERO" that “we believe that as a technology leader,with a proven track record in the field of decarbonization, it is MHI’s responsibility to help leadthe fight against climate change” and MHI is actively working to "provide energy solutions toenable a carbon neutral world" as its materiality by participating in various external initiatives
as shown in Table-2.

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Figure-1: MHI "Roadmap to Achieve Carbon Neutrality”

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Figure-2 MHI "Contributions to Customers’ Scope 1&2 Reductions"

Table-2 MHI’s Participation in External Initiatives and Efforts
External Initiatives

MHI’s Initiatives

United Nations Global

Signed in 2004 and implemented the 10 principles; established theCompact

MHI Group Global Code of Conduct in 2015, which outlines the codeof conduct to be followed by MHI employees.

Sustainable(See Table-1) For more than 130 years, MHI has contributed to theDevelopment Goals

development of society in the spirit of its corporate principles,(SDGs)"Contribute to the advancement of society through company
business.

Task Force on Climate-Endorsed the TCFD recommendations in March 2019; disclosure in

related Financial

line with TCFD recommendations beginning in FY2020.

Disclosures (TCFD)

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

iv. About the Green/Transition Finance Framework
In advancing MISSION NET ZERO, MHI engaged in dialogue with investors and a wide
range of market participants in order to fulfill its role as a supplier of the systems, facilities,
and equipment that are essential for low-carbon and decarbonization, which are required
for transition activities to realize the World Energy Outlook of the International Energy
Agency and the sector-specific roadmaps*1*2*3*4*5 established by the Ministry of Economy,
Trade and Industry and the Ministry of Land, Infrastructure, Transport and Tourism, andhas established the Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework(hereinafter, “framework”) in order to procure the necessary funds as green/transition
finance in a manner that conforms to internationally established frameworks.
The framework which this framework specifically refers to is described in (3) of Section II
below.

*1: Electricity Infrastructure Division, Agency for Natural Resources and Energy: Power Sector
Transition Roadmap in February 2022
*2: Ministry of Economy, Trade and Industry: Technology Roadmap in the Gas Sector on "Transition
Finance," in February 2022
*3 : Ministry of Economy, Trade and Industry: Technology Roadmap in the Iron and Steel Sector on"Transition Finance" in October 2021
*4 : Ministry of Economy, Trade and Industry: Technology Roadmap in the Chemical Sector on"Transition Finance" in December 2021
*5 : Ministry of Land, Infrastructure, Transport and Tourism: Roadmap to Zero Emission fromInternational Shipping in December 2020

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinionv.

Issuer’s Transition Strategy for Decarbonization(1) Strategy by Sector (industry) at the international/national/regional level
Figure-3 shows roadmaps by sector set by the Ministry of Economy, Trade and Industry andthe Ministry of Land, Infrastructure, Transport and Tourism. Although these roadmaps do
not set clear interim targets, they show specific efforts toward carbon neutrality by 2050.
MHI's transition roadmap is well aligned with Figure-3 in terms of quickly providing thesystems, facilities, and equipment necessary to realize each of these sectoral roadmaps by
2040, and it is designed to reduce CO2 emissions in society as a whole through contributions
to CO2 reduction throughout the entire value chain, including various key industrial sectors.

Electric Power Field

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Gas Field

Iron and Steel Fields

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Chemical Field

International shipping

Figure-3 Ministry of Economy, Trade and Industry and Ministry of Land,
Infrastructure, Transport and Tourism Roadmap by Sector

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion(2) Issuer’s Transition Strategies
Under “MISSION NET ZERO”, MHI has set a long-term goal of Net Zero in 2040 for thecompany and its entire value chain to achieve the Paris Agreement target of carbon
neutrality by 2050, and has set short-term and medium-term goals toward that longterm goal. MHI has positioned its efforts to achieve this goal as a transition strategy.
These targets contribute to (and support) the implementation of carbon neutrality
throughout the value chain of MHI's related businesses as a key initiative outlined inJapan's various decarbonization plans and strategies. As a manufacturer, MHI can makea significant contribution to the reduction of MHI's Scope 3 and its customers' Scope 1
and 2 through the provision of advanced technologies. Therefore, MHI believes that it
can contribute to the realization of transition strategies in various industrial sectors,
including the power, gas, iron and steel, chemical, international shipping, andtransportation sectors, through the establishment and diffusion of energy transition
technologies. In addition, MHI's mission is to help lead the fight against climate change
as a proven leader in the field of decarbonization. To this end, MHI has set a long-termgoal of achieving Net Zero by 2040, ahead of the Paris Agreement's goal of carbon
neutrality by 2050.
Table-3 shows the MHI Transition Targets. Table-4 shows the low-carbon anddecarbonization efforts toward carbon neutrality, and Figure-5 shows the transition
strategy outline, specific efforts, and timeline as a roadmap for transitioning to carbon
neutrality.
Although the transition strategies of the Ministry of Economy, Trade and Industry andthe Ministry of Land, Infrastructure, Transport and Tourism do not set clear interim
targets (base year, specific quantified reduction targets, etc.), MHI has set short,medium and long-term targets required by the transition strategies in terms of its own
activities and contribution to society, as well as specific management strategies andbusiness plans. The plan is set out in the following table.

Table-3 MHI Transition Targets
Reduce CO2 emissions across MHIGroup Scope 1&2*1

Reduce CO₂ emissions across MHI'svalue chain Scope 3*2 + reductions
from CCUS

2030▲50% (compared to 2014)▲50% (compared to 2019)

2040

Net Zero

Net ZeroTargetyear*1: The calculation standard is based on the GHG Protocol.
*2: The calculation standard is based on the GHG Protocol. However, we also account for reductions
achieved by CCUS as an MHI original index.
Reference: The short-term target is set in the MHI Group's Fifth Environmental Target (FY2021FY2023) as "a 9% improvement in CO2 emissions per unit of production from offices andplants in FY2023 compared to FY2014”.

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Table-4 MHI Low and Decarbonization Initiatives Toward Carbon Neutrality
Initiatives for lowcarbonization anddecarbonization
Reduction of in-house CO2
emissions

Project Category
Energy Conservation (Energy Management)
Implement proprietary technologies (heat pump chillers,
H2/CCUS, etc.)
Implement decarbonized energy sources
Fuel Conversion (Energy Transition)

Reduction of CO2 emissions
throughout the value chain

Energy conservation/electrification (new mobility & logistics,
electrify and improve efficiency of existing businesses)
CCUS business expansion

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Figure-5 (Figure-1 reposted) MHI Group "Roadmap for Transition to Carbon Neutrality.

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion(3) Governance of the Issuer (Sustainability Promotion System)
Figure-6 shows MHI's sustainability promotion system. In order to promote managementthat takes into account the sustainability, MHI established the Materiality Council and theSustainability Committee.
MHI recognizes the implementation of the transition strategy as one of the ways to promotesustainability, and as an important management issue, deliberation and decision-making areconducted by a committee that supports rational decision-making by executive officers, andthen business execution is realized. The conference body has established an organizational
structure to address environmental and social issues associated with the implementation oftransition strategies, and to monitor, evaluate, and manage transition efforts. In addition,
the Materiality Council, chaired by the president, promotes initiatives to address social andenvironmental issues, including "resolving energy issues toward decarbonization," one of thematerialities. In addition, the Sustainability Committee, chaired by the CSO (Chief Strategy
Officer, Director, the officer in charge of sustainability), promotes initiatives to address ESG
issues, including the TCFD.

Figure-6: MHI Sustainability Promotion System
Issuer Name: Mitsubishi Heavy Industries, Ltd.
Framework Name: Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework
Review provider’s Name: DNV Business Assurance Japan K.K.
Date of report: March 18, 2022

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

II. Scope and objectives
DNV has been commissioned by MHI to provide a pre-issuance assessment on MHI
Green/Transition Finance Framework. Our objective has been to implement an assessment onwhether the MHI’s Green/Transition Finance Framework and the Green/Transition Bonds meetthe criteria established on CTFH・CTFBG, GBP・GBGLs and GLP・GLGLs and provide a second party
opinion on the eligibility of the MHI’s Green/Transition Finance Framework and theGreen/Transition Bond to be implemented.
DNV, as an independent external reviewer, has identified no real or perceived conflict of interest
associated with the delivery of this second-party opinion for MHI.
In this report, no assurance is provided regarding the financial performance of the BOND, thevalue of any investments in the BOND, or the long-term environmental impacts of thetransaction.

(1) Scope of Review*
The review assessed the following elements and confirmed their alignment with the gist of GBP/GLP☒

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 transition finance with 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):

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion(3) Standards/Guidelines to be Applied
No.

Standards/guidelines

1.

Climate Transition Finance Handbook (CTFH)*1

2.

Basic Guidelines(CTFBG) *1

3.

Green Bond Principles (GBP)*2*3

4.

Green Bond Guidelines (GBGLs)*2*3

Ministry of the Environment, 2020

5.

Green Loan Principles (GLP)*2*3

Loan Market Association (LMA) and others,
2021

on

Scheme owner

ClimateTransition

International Capital Markets Association(ICMA), 2020
Financial Services Agency, Ministry of
Finance
Economy, Trade and Industry, Ministry of theEnvironment, 2021
International Capital Markets Association(ICMA), 2021

Green Loan and Sustainability Linked Loan Guidelines
Ministry of the Environment, 2020
(GLGLs)*2*3 (only green loans was applied)*1. 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)
6.

*2. 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 from CTFBG).
*3. Green projects were assessed for eligibility using the referable technical criteria of the Climate Bond
Initiative's Climate Bond Standard.

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Ⅲ. Responsibilities of MHI and DNV
MHI has provided the information and data used by DNV during the delivery of this review. DNV’s
second party opinion represents an independent opinion and is intended to inform MHI and otherinterested stakeholders in the MHI’s Green/Transition Finance as to whether the established criteria
have been met, based on the information provided to us. In our work we have relied on theinformation and the facts presented to us by MHI. DNV is not responsible for any aspect of thenominated projects and 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 theinformation or data provided by MHI’s management and used as a basis for this assessment were
not correct or complete.

Ⅳ. Basis of DNV’s opinion
To provide as much flexibility for the issuer, MHI as possible, we have adapted our MHI
Green/Transition Finance assessment methodologies, which incorporates the requirements of the
CTFH, CTFBG, GBP, GBGLs, GLP and GLGLs, to create a MHI Green/Transition Finance Eligibility
Assessment Protocol (hereinafter, “Protocol”). Please refer to Schedule-2. The Protocol is applicable
to MHI Green/Transition Finance under the CTFH, CTFBG, GBP, GBGLs, GLP and GLGLs.
*Green projects were qualified using the Climate Bond Initiative's Climate Bond Criteria, which are technicalcriteria that can be referenced.

DNV, as an independent external reviewer, provides second party opinion according to the protocol.
Our Protocol includes a set of suitable criteria that can be used to underpin DNV’s opinion. The
overarching principle behind the Climate Transition Finance of Bond and Loan with a specific use ofproceeds as the basis for the opinion are as follows:“provide an investment opportunity with transparent sustainability credentials”“enable capital-raising and investment for new and existing projects with environmental benefits"

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

As per our Protocol, the criteria against which the MHI Green/Transition Finance has beenreviewed are grouped into common elements bellow, represented by CTFH, CTFBG, GBP, GBGLs,
GLP and GLGLs.

(1) Four elements of CTFH/CTFBG (disclosure elements)
Principle One: Issuer’s climate transition strategy and governance
The financing purpose should be for enabling an issuer’s climate change strategy.
Principle Two: Business model environmental materiality
The planned climate transition trajectory should be relevant to the environmentallymaterial parts of the fundraiser’s business model.
Principle Three: Transition is science-based including targets and pathway
fundraiser’s climate strategy should reference science-based targets and transition
pathways.
Principle Four: Implementation transparency
Market communication in connection with the offer of a financing instrument which
has the aim of funding the fundraiser’s climate transition strategy should also provide
transparency of the underlying investment program.

(2) Four elements of GBP/GBGLs and GLP/GLGLs
Principle One: Use of Proceeds.
The Use of Proceeds criteria are guided by the requirement that a fundraiser of agreen/transition finance with specific use of proceeds must use the funds raised tobond 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 afundraiser of a green/transition finance should outline the process it follows when
determining eligibility of an investment using the proceeds from transition finance,and outline any impact objectives it will consider.
Principle Three: Management of Proceeds.
The Management of Proceeds criteria are guided by the requirements that agreen/transition finance should be tracked within the fundraiser, that separate
portfolios should be created when necessary and that a declaration of howunallocated funds will be handled should be made.
Principle Four: Reporting
The Reporting criteria are guided by the recommendation that at least Sustainability
Reporting to the bond investors and lenders should be made of the use of bondproceeds and that quantitative and/or qualitative performance indicators should be
used, where feasible.

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion*The GLGLs set out requirements for loan-specific elements (internal reviews). This is
identified in the green loan requirements check in Schedule-6.

V. Work Undertaken
Our work constituted a comprehensive review of the available information, based on theunderstanding that this information was provided to us by the fundraiser in good faith. We havenot 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-funding assessment (Green/Transition Finance Framework and Green/Transition
Bonds)•Creation of MHI-specific Protocol, adapted to the purpose of the MHI Green/Transition
Finance, as described above and in Schedule-2 to this assessment.

•

Assessment of documentary evidence provided by MHI on the MHI Green/Transition Financeand supplemented assessment by a comprehensive desktop research. These checks refer tocurrent assessment best practice and standards methodologies;•

Discussions with MHI, and review of relevant documentation;•

Documentation of findings against each element of the criteria.

ii. Post-Funding Assessment (*not included in this report)•

Interviews with fundraisers' managers, and review of the relevant documentation;•

Field research and inspection (if necessary)•

Document creation of post-issuance assessment results

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Ⅵ. Findings and DNV's opinion

DNV’s findings and opinion are as described in (1) and (2) below.
The CTF-1 to 4 in (1) below are the findings and opinions of DNV against the disclosure elementsof the CTFH and CTFBG.
Please see Schedule-2 for details.
The GBP 1 to 4 in (2) below are the findings and opinions of DNV against the requirement of thefour common elements of GBP/GBGLs and GLP/GLGLs.
Please see Schedule-3 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-

MHI has declared "MISSION NET ZERO" with the aim of becoming carbon neutral
by 2040, and has set "realization of a green society" as one of its three goals for2030 as a key theme, and has identified two growth areas in the 2021 Business
Plan: "Energy Transition" which aims for decarbonization on the energy supply
side, and " New Mobility and Logistics " which aims for decarbonization, energy
conservation, and manpower savings on the energy demand side. “MISSION NET
ZERO" sets a long-term goal of Net Zero in 2040 for the company and its entire
value chain to achieve the Paris Agreement target of carbon neutrality by 2050.
MHI has set short-term and medium-term goals toward that long-term goal, anddisclosed a strategic plan to achieve the above goals as a transition roadmap tocarbon neutrality.

-

As a proven leader in the field of decarbonization, MHI's mission is to help lead thefight against climate change. To this end, MHI has set Net Zero in 2040 as its
long-term goal, ahead of the Paris Agreement target of carbon neutrality by 2050.
As a manufacturer, MHI can make a significant contribution to the reduction of its
Scope 3 and its customers' Scope 1 and 2 through the provision of advanced
technologies, and through the establishment and diffusion of energy transition
technologies, MHI can contribute to the reduction of the emissions of various
sectors, including the power, gas, iron and steel, chemical, shipping, and traffic
and transportation sectors. MHI believes that it can contribute to thematerialization of transition strategies in the industrial sector.

-

DNV has reviewed and confirmed that MHI's goals are equivalent to achieving theParis Agreement goals, in that they are based on science-based, long-term goals
quantified by MHI. MHI has set corporate strategies in environmental aspects thatare critical to its business model, based on risk and opportunity identification andscenario analysis using TCFD guidance.

-

Specifically, MHI's transition strategy is consistent with the International Energy
Agency's World Energy Outlook and the roadmaps for transition by sector (power

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

sector, gas sector, iron and steel sector, chemical sector, and international
shipping) of the Ministry of Economy, Trade and Industry and the Ministry of Land,
Infrastructure, Transport and Tourism, as well as incorporates an action plan toachieve less than 2°C using TCFD. In addition, if it becomes necessary to revise
our efforts to achieve sustained emission reductions in the future, MHI plans to
implement them according to the timeline as appropriate.
-

MHI recognizes the implementation of transition strategies as one of the ways topromote sustainability, and has established a system and framework to promote
the initiatives set forth in MISSION NET ZERO at the management level.

-

MHI is committed to developing business activities that take into its diverse rangeof our stakeholders into consideration and return profits to all stakeholders in
optimum fashion, while at the same time providing excellent products andtechnologies to realize a sustainable society and a secure future for people and theplanet. MHI’s approach to sustainability promotion based on this concept, MHI
aims to address materiality through its business activities and contribute broadly
to the achievement of the SDGs, the sustainable development goals set forth by
the United Nations. Of these, the materiality to which Green/Transition Finance isprimarily related is "provide energy solutions to enable a carbon neutral world".

-

Based on the evaluation of the Framework, MISSION NET ZERO and the
Implementation Plan, DNV confirmed that they are well aligned with MHI's
Transition Strategy. Through the evaluation, DNV confirmed that theimplementation plan based on the Transition Strategy is credible, ambitious, andachievable.

CTF-2.

Business model environmental materiality-

MHI's Transition efforts include not only emission reductions from its own businessactivities (Scope 1 and 2), but also Scope 3 and activities that contribute to
reductions at other companies. This will contribute to the implementation of
supply-side and demand-side carbon neutrality as an important initiative
presented in various plans and strategies for decarbonization in Japan. In otherwords, as a company that manufactures and sells key systems, facilities, andequipment for energy, steel, and other CO2 high-emission businesses, MHI's
Transition efforts directly support the transition of society as a whole, including its
own.

-

MHI's Transition Roadmap is well aligned with the International Energy Agency's
World Energy Outlook and the Ministry of Economy, Trade and Industry and
Ministry of Land, Infrastructure, Transport and Tourism's roadmaps for transition
by sector (power sector, gas sector, iron and steel sector, chemical sector, andinternational shipping). In other words, the project is designed to enable these
sectors to quickly provide the systems, facilities, and equipment that are essential
to make the transition a reality. Their specific implementation plans and targets
are set and quantified to allow for further improvement in the best possible
solution currently available.

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion-

DNV has confirmed that MHI's plan to implement its transition strategy is closely
linked to the activities of MHI's core business and to activities that contribute to
the reduction of CO2 throughout society, thus contributing to the environmental
aspects of society as a whole and helping to drive MHI's business. MHI's plannedtransition strategy and transition pathway will be linked to materiality, for which
MHI utilizes GRI standards*1 , ISO 26001, SASB, TCFD, etc., and will contribute tosignificant environmental improvement benefits (impact) from qualitative andquantitative perspectives.
-*1: Global Reporting Initiative (an international standard providing ESG-related reporting,management and analysis methods)

CTF-3.

Transition is science-based including targets and pathways-

MHI has established a transition plan consistent with the science-based Paris
Agreement and a transition trajectory consistent with the International Energy
Agency's World Energy Outlook and the roadmaps of the Ministry of Economy,
Trade and Industry and the Ministry of Land, Infrastructure, Transport andTourism.

-

DNV confirmed that MHI's transition strategy is quantified in terms of emissions
intensity and absolute values based on a consistent measurement methodology
based on prescribed assumptions. Transition targets are voluntarily set based onefforts to utilize the TCFD and other measures to reduce CO2 emissions in asustainable manner, and they are consistent with the benchmark International
Energy Agency's World Energy Outlook and the policies of the Ministry of
Economy, Trade and Industry and the Ministry of Land, Infrastructure, Transport
and Tourism.

Table-5 MHI Transition Targets
Target year

Reduce CO2 emissions across
MHI Group Scope 1&2*1

Reduce CO₂ emissions across MHI'svalue chain
Scope 3*2 + reductions from CCUS

2030

▲50% (compared to 2014)▲50% (compared to 2019)

2040

Net Zero

Net Zero*1: The calculation standard is based on the GHG Protocol.
*2: The calculation standard is based on the GHG Protocol. However, we also account for
reductions achieved by CCUS as an MHI original index.
Reference: The short-term target is set in the MHI Group's Fifth Environmental Target(FY2021-FY2023) as "a 9% improvement in CO2 emissions per unit of production from offices
and plants in FY2023 compared to FY2014”.

-

MHI's CO2 emission reductions include not only emission reductions from its own
business activities (Scope 1 and 2), but also Scope 3 and activities that contributeto reductions at other companies. This contributes to the implementation of
supply-side and demand-side carbon neutrality as an important initiative indicatedin various plans and strategies for decarbonization in Japan. In other words, asa company that manufactures and sells key systems, facilities, and equipment forenergy, steel, and other CO2 many emitting businesses, MHI's Transition efforts
directly support the transition of society as a whole, including its own.
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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

CTF-4.

Implementation Transparency-

DNV has confirmed that MHI's investment and deployment plans related to theTransition Strategy include agreements for future investments and expenditures.
Specifically, the 2021 Medium-Term Business Plan intends to invest 180 billion yen
in growth areas, including decarbonization, by 2023, and encompasses projects tobe implemented with green/transition financing.

-

DNV has confirmed that the overall investment plan (investment amount) for the
future is a plan where the investments required to implement the transition
strategy will be executed according to the appropriate timeline in accordance with
the internal management structure and processes, taking into account CTF-1
through CTF-3.

(2) Findings and opinions of DNV against the four common elements of GBP/GBGLs and
GLP/GLGLs*The four elements are used as criteria for transition finance to specify the use of proceeds, and somegreen bonds/loans below can be read as transition finance (bond/loan).

GBP/GLP-1. Use of Proceeds
MHI defines the eligibility criteria for the use of proceeds as green projects that the projects
meet the requirements of GBP/GBGLs and GLP/GLGLs, and as transition projects that the
projects meet the requirements of the Transition Strategy and related frameworks (CTF-H and
CTF-BG).
Green/Transition Finance Eligible business/project candidates and eligibility criteria are listed inTables-6 and 7, respectively.
Table-8 also shows the details of six projects that are planned to use the proceeds of thisGreen/Transition Bond (to be issued after April 2022).

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Table-6: Green Projects*1
Eligible business and/or
projects

Eligibility Criteria

Renewable energy Wind power (wind power plants)
 Geothermal power (geothermal power plants)

Clean energy Hydrogen gas turbine (hydrogen power generation businesses and/or
projects for 100% hydrogen firing) Ammonia gas turbine (ammonia power generation businesses and/or
the projects 100% ammonia firing) Hydrogen/ammonia production (green) Steam power (conversion to 100% ammonia firing) Gas engines for power generation (100% hydrogen firing)*1: Projects that qualify as green projects can be incorporated as green projects in future green bond issues. Green
projects are also permitted within the CTFBG to be incorporated as part of a transition bond issue.

Table-7: Transition Projects*2
Eligible business and/or
projects

Eligibility Criteria

Decarbonize existing
infrastructure Hydrogen gas turbine (co-firing) Ammonia gas turbine (co-firing) LNG-fueled high-efficiency gas turbine
 Steam power (conversion to ammonia co-firing) Gas engine for power generation (hydrogen co-firing) Material handing (high efficiency and fuel cell powered)

Build a hydrogen solutions
ecosystem Hydrogen production (blue or turquoise, etc.)
 Ammonia production (blue or turquoise, etc.)
 Hydrogen compressors (for hydrogen production, transport andstorage, etc.)
 Metal machinery (hydrogen-reduced ironmaking, etc.)

Build a CO2 solutions
ecosystem CO2 capture and storage
 CO2 transport (liquefied CO2 carries etc.)*2 Some projects classified as transition projects at this time may become green projects through the application/applied offuture technological innovations. (e.g., application of green fuels/production processes, achieving performance that meetsCO2 emission standards as green projects, etc.).

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Table-8 Green/Transition Bonds (to be issued after April 2022) Overview of the six projects
Eligible business
and/or projects

Eligibility Criteria

Decarbonize
existing
infrastructure

Hydrogen gas
turbine (100%firing/co-firing)

Project Overview
・
・

・
・

Decarbonize
existing
infrastructure

Steam power(conversion toammonia co-firing)

・

・

・

・
・

Decarbonize
existing
infrastructure

Gas engine forpower generation(100% hydrogenfiring/co-firing)

・
・

・
・

Project Name: Development ofHydrogen Powered GTCC
Project Overview: Development of
100% hydrogen firing and co-firing
gas turbine, combustion testing at
actual pressure
Period: ~FY 2030 (planned)
Environmental benefits: CO2
Reduction rate from existing
facilities (intensity): -10% for 30%(vol%) hydrogen co-firing, -100%
for 100% hydrogen firing

Hydrogen gas turbine
schematic diagram

Project Name: Development and
Demonstration of High Ammonia
Co-firing Technology in Coal
Boilers
Project Overview: Development ofan ammonia burner suitable forcoal boilers and demonstration
operation using actual equipment
New Energy and Industrial
Technology Development
Organization (NEDO) "Green
Innovation Fund Project/Project
for Establishment of FuelAmmonia Supply Chain
Period: FY2021~FY2028(planned)
Environmental benefits: CO2
Reduction rate from existing
facilities (intensity): -20% in caseof 20% ammonia co-firing

Conceptual diagram ofammonia co-firing in acoal boiler

Project Name: Development ofHydrogen Gas Engine Technology
Project Overview: Development
for practical use of hydrogenengines based on conventional
diesel and gas engines
Period: FY2019 - FY2030s(planned)
Environmental benefits: CO2
Reduction rate from existing
facilities (intensity): -10% in caseof 30% hydrogen co-firing(volume ratio), -100% for 100%hydrogen firing

Internal schematic
diagram of hydrogengas engine

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Eligible business
and/or projects

Eligibility Criteria

Build a hydrogensolutionsecosystem

Hydrogenproduction

・(blue or turquoise,
etc.)

・

Project Overview
Project Name: Hydrogen Power
Generation Demonstration Facility"Takasago Hydrogen Park”
Project Overview: Development,
verification and manufacturing of
100% hydrogen firing hydrogengas turbine for earlycommercialization (Takasago City,
Hyogo Prefecture "Takasago
Hydrogen Park")
Period: FY2021 - FY2023(planned)
Environmental benefits: Project
overview and progress will bereported.

Planned completion of
Takasago Hydrogen
Park

Project Name: Research andDevelopment of HydrogenReduced Ironmaking Technology
Project Overview: Hydrogenbased Fine Ore Reduction(HYFOR): Associated development
and engineering work for thedemonstration of industrial
prototype plant for HYFRO, a new
direct reduction process based on
fluidized bed technology thatallows the direct usage of iron ore(ultra) fines without any
agglomeration step. As atransition technology, HYFOR canbe operated with natural gas, H2rich gas and 100% pure H2.
Period: FY2021 - FY2025(planned)
Environmental benefits: Reduction
rate of CO2 emission fromconventional products:-80% or
moreHydrogen-reduced
ironmaking process
flow・

Project Name: Improve
performance of CO2 capture
technologies and increase
applications of CO2 from variety ofemission sources.

CO2 capture process
flow・

Project Overview: Improved CO2
Capture Process Performance(enhancement of amine-based
solvents (KS-1, KS-21, etc.) as
our core technologies),
expansion of product lineup fromCO2 capture plant to compact
CO2 capture system, etc.

・・

Build a hydrogensolutionsecosystem

Metals machinery・(hydrogenreduced
ironmaking, etc.)

・・・

Build a CO2
solutions
Ecosystem

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

・Period: ~FY2030 (may continue
beyond 2030)

・Environmental benefits: CO2
capture rate from flue gas: 90%
and above (captured CO2 Purity
99.9% or above)

DNV has confirmed that MHI plans to use all proceeds, excluding expenses, from the entire
amount raised through green/transition financing as new investment and refinancing for
research and development, business development, operations, and other related
expenditures for green/transition-eligible projects that are consistent with MHI's investment
plan to implement its transition strategy.
These are representative projects that contribute to business transformation as exemplified
by CTFH/CTFBG, GBP/GBGLs, and GLP/GLGLs, as well as projects that contribute to theachievement of the roadmaps of Ministry of Economy, Trade and Industry, Ministry of Land,
Infrastructure, Transport and Tourism. These projects have been evaluated for their clear
environmental benefits on transition strategies and are expected to contribute to the SDGs.
These processes are consistent with GBP-1.

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

GBP/GLP-2. Process for Project Evaluation and Selection
MHI will ensure that green/transition projects, in addition to contributing to the achievementof the transition strategy, have a pre-determined framework for environmental and social risk
reduction efforts and do not conflict with the Exclusion Criteria (see below). Specifically, after
the finance department confirms that the projects selected by the business divisions meet theeligibility criteria, the Chief Financial Officer makes the final decision.
These processes have been established as internal documents of MHI, and DNV has
confirmed that they are planned to be implemented in accordance with the appropriate
processes.
DNV also confirmed that the green/transition projects implemented by MHI are consistent
with the issuer's management and environmental policies, as well as with the transition
strategy, goals and pathways.
< Exclusion Criteria>
Transactions that do not meet the policies and standards in the sustainability
framework-

CSR Action Guidelines



Policy on Human Rights

Basic Policy on Environmental Matters and Action Guidelines

Privacy PolicyPolicy of Safety and HealthProcurement Policy

MHI Group Supply Chain CSR Promotion Guidelines Basic Policy Concerning Conflict
Minerals

Evaluation and Selection☒

Conforms to the issuer’s achievement of☒

The project is eligible for use of proceeds by☒

The project is evaluated and selected based

environmental contribution goals
green bond and transparency is ensured.
on the published standard summary☒

Documented process to determine that projects☒

Documented process to identify and manage☐

Other (please specify):

fit within defined categories
potential ESG risks associated with the project

Information on Responsibilities and Accountability☒

Evaluation / Selection criteria subject to☐Other (please specify):

external advice or verification☒

GBP/GLP-3. Management of Proceeds

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In-house assessment

Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

The proceeds will be deposited into a common account at MHI, after which the financedepartment will manage the allocation using an internal management system.
This internal control system will be trackable over the outstanding period and will be
reviewed periodically (at least annually) by the Finance Department for allocation status.
Vouchers related to the management of proceeds will be kept in accordance with theDocument Retention Period Criteria Table.
All proceeds (net proceeds) will be allocated to green/transition projects within 3 years offundraising based on the framework, given that these projects involve long-term projects.
If the amount is significantly in excess of that, it will be stated in advance in the Amended
Shelf Registration Statement and other documents pertaining to the issuance of the bonds,
along with the reasons for such excess. In the case of refinancing of existing expenditures,the project is expected to be financed within about three years from the time of thefinancing, and the project will be eligible if it is determined to be eligible as agreen/transition project at the time of the allocation, based on the process set forth in
GBP/GLP-2. Pending the allocation to eligible businesses and/or projects, the amount of
unallocated proceeds will be held in cash or cash equivalents.
In the future, if green/transition financing is executed under this framework, it will be
disclosed in statutory and other documents prior to execution.

Tracking of Proceeds:☒

Some or all of the proceeds by green bonds that are planned to be allocated are systematically☐Disclosure of intended types of temporary investment instruments for unallocated proceeds☒

Other (please specify): Unallocated proceeds are managed in cash or cash equivalents

distinguished or tracked by the issuer.

Additional disclosure:☐

Allocations to future investments only☒

Allocation to individual☒

Allocations to both existing and future☐

Allocation to a portfolio of disbursements☐

Other (please specify):

investments

disbursements☐

Disclosure of portfolio balance of
unallocated proceeds

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

GBP/GLP-4. Reporting
DNV has confirmed that the issuer will provide reporting (annual reporting) on the
allocation status of proceeds until the proceeds are fully allocated. DNV has also confirmedthat the issuer will report annually on an outline and the environmental benefits of the
projects eligible for allocation, at least until the proceeds are fully allocated. We also
confirmed that if any significant events occur, such as major changes in the allocation planor actual, MHI will disclose such information in a timely manner.
Reporting will be disclosed on the website.

<Allocation Status>
Status of allocation to eligible businesses and/or projects, overview with
up-to-date progress



Amount or share of unallocated proceeds, allocation schedule, and the method tomanage unallocated proceeds

Ratio of new financing to refinancing<Environmental benefits>
Disclose the outline (Including progress of research and development, operation,etc.) of the project and the expected environmental benefits (e.g., tons-CO2/year,
etc. (reduction effect is calculated based on the number of facilities installed,
number of facilities sold, or basic unit (g-CO2/kWh), etc.)), within the scope ofconfidentiality and to the extent practicable, and taking into account thecharacteristics of the project.

Indicators, etc. listed in Table-9 to Table-11 to the extent practicable
Table-9: Green Projects

Eligible business and/or
projects
Renewable energy

Clean Energy

Eligibility Criteria

Reporting Contents

 Wind power (windpower plants)

 Information on their progress in R&D(such as the outline of projects
participated in) Annual power generation of renewableenergy (MWh) Annual CO2 reduction (tons)

 Geothermal power(geothermal power
plants) Information on their progress in R&D(such as the outline of projects
participated in) Annual power generation of renewableenergy (MWh) Annual CO2 reduction (tons)

Hydrogen gas turbine(hydrogen power
generation businesses

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 Information on their progress in R&D(such as the outline of projects
participated in)Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

and/or projects for
100% hydrogen firing) Annual CO2 reduction (tons) by products
sold (including implementation within
MHI) Ammonia gas turbine(ammonia power
generation businesses
and/or the projects
100% ammonia firing) Information on their progress in R&D(such as the outline of projects
participated in) Annual CO2 reduction (tons) by products
sold (including implementation within
MHI) Hydrogen/ammonia
production (green) Information on their progress in R&D(such as the outline of projects
participated in) Amount of hydrogen/ammonia produced

 Steam power 100%
ammonia firing) Information on their progress in R&D(such as the outline of projects
participated in) Annual CO2 reduction (tons)

 Gas engines for power
generation (100%hydrogen firing) Information on their progress in R&D(such as the outline of projects
participated in) Annual CO2 reduction (tons) by products
sold (including implementation within
MHI)

Table-10: Transition Projects
Eligible business and/or
projects

Eligibility Criteria

Reporting Contents

Decarbonize existing
infrastructure Hydrogen gas turbine (co Information on their progress infiring)R&D (such as the outline of Ammonia gas turbine (coprojects participated in)firing)
Hydrogen/ammonia co-firing ratio LNG-fueled high-efficiency gas(%)
turbine Steam power (conversion to Annual CO2 (tons) reduction byammonia co-firing)products sold (including
 Gas engine for power
implementation within MHI)
generation (hydrogen cofiring) Material handing (highefficiency and fuel cell
powered)Build a hydrogen solutions
ecosystem Hydrogen production (blue or
turquoise, etc.)
 Ammonia production (blue or
turquoise, etc.)
 Hydrogen compressors (forhydrogen production,transport and storage, etc.))
 Metal machinery (hydrogenreduced ironmaking, etc.)

 Information on their progress in
R&D (such as the outline ofprojects participated in) Annual CO2 (tons) reduction by
products sold (including
implementation within MHI)
 Hydrogen/ammonia production(tons)

Build a CO2 solutions
ecosystem CO2 capture and storage
 CO2 transport (liquefied CO2
carries, etc.)

 Information on their progress in
R&D (such as the outline ofprojects participated in) Annual CO2 (tons) reduction by
products sold (including

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

implementation within MHI)

Table-11 Calculation Method of Environmental Benefits (Green/Transition Bonds to be issued
this time. Target 6 projects)
Eligiblebusiness
and/orprojects

Eligibility
Criteria

Decarbonize Hydrogen gas
existing
turbine (100%infrastructure firing /cofiring)

Project Overview
Project Name
Development ofHydrogen GTCC

Environmental effects
Environmental benefits: CO2 Reduction rate fromexisting facilities (intensity): -10% for 30%(vol%) hydrogen co-firing, -100% for 100%hydrogen firing
Calculation Method: In case of 30% hydrogen cocombustion, 10% is calculated on a basic unit (gCO2 /kWh) basis.

Decarbonize Steam power
existing(conversion to
infrastructure ammonia cofiring)

Development and
Demonstration of High
Ammonia Co-firing
Technology in Coal
Boilers

Environmental benefits (indicator): CO2 reduction
rate from existing facilities (intensity) -20% incase of 20% ammonia co-firing

Decarbonize Gas engine for Development ofexisting
power
Hydrogen Gas Engine
infrastructure generation
Technology(100%hydrogenfiring/co-firing)

Environmental benefits (indicator): CO2
Reduction rate from existing facilities (intensity):-10% in case of 30% hydrogen co-firing (volume
ratio), -100% for 100% hydrogen firing

Calculation Method: Calculate reductions on acalorie basis

Calculation Method: In case of 30% hydrogen cofiring (volume ratio), 10% is calculated on a basic
unit (g-CO2 /kWh) basis.

Build ahydrogensolutionsecosystem

Hydrogenproduction

Hydrogen Power
Generation
Demonstration Facility(blue orturquoise, etc.) "Takasago Hydrogen
Park”

Environmental benefits (Indicators): Project
Overview and progress to be reported

Build ahydrogensolutionsecosystem

Metalsmachinery

Research andDevelopment ofHydrogen-reduced
ironmaking Technology

Environmental benefits (Indicators): Reduction
rate of CO2 by more than ▲80% compared withthe conventional system.

Improve performanceof CO2 capture
technologies andincrease applications of
CO2 from variety ofemission sources.

Environmental benefits: CO2 capture rate fromflue gas: 90% and above (captured CO2 Purity
99.9% or above)

Build a CO2
solutionsecosystems(hydrogenreduced
ironmaking,etc.)
CO2 captureand storage

Calculation method: Reductions are calculated ona weight basis.

Calculation method: Calculate recovery rate on a
volumetric basis

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Use of Proceeds reporting:☐

Project-by-project☐

On a project portfolio basis☐

Linkage to individual bond(s)☒Other (please specify) : Eligible Criteria Units

Information reported:☒

Allocated amounts☐

Other (please specify):☐ GB refinanced share of total investment

Frequency:☒

Annual☐Other (please specify):☐

Semi-annual

Impact reporting (Environmental Impact):☐

Project-by-project☐

On a project portfolio basis☐

Linkage to individual bond(s)☒Other (specify): Eligible Criteria Units

Frequency:☒

Annual☐Other (please specify):☐

Semi-annual

Information reported (expected or ex-post):☐

GHG Emissions / Savings☒

Other ESG indicators (please

R&D progress, amount of electricity generated, amount ofspecify):

production, annual CO2 emissions reductions from products☐

Energy savings

sold (including in-house installations), annual CO2 emission
reduction

Means of Disclosure☐

Information published in financial report☐

Information published in sustainability report☒

Other (please specify): on MHI website(Integrated Report)☐

Information published in ad hoc documents☐

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

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion

Ⅶ. Assessment Conclusion
On the basis of the information provided by MHI and the work undertaken, it is DNV’sopinion that the MHI Green/Transition Finance Framework and Green/Transition Bondissued by MHI meets the criteria established in the Protocol, and that it is aligned with thefollowing stated definition or purpose of climate transition finance for bonds and loans thatspecify the use of proceeds within the CTFH/CTFBG, GBP/GBGLs, GLP/GLGLs.
“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.
March 18, 2022

Mark Robinson

Naoki Maeda

Manager, Sustainability Services

Managing Director

DNV Business Assurance, Australia

DNV Business Assurance Japan K.K.

Masato Kanedome

Yasuaki Miyamoto

Project Leader

Assessor

DNV Business Assurance Japan K.K.

DNV Business Assurance Japan K.K.

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Mitsubishi Heavy Industries, Ltd. Green/Transition Finance Framework Second Party Opinion
About DNV
Driven by our purpose of safeguarding life, property and the environment, DNV enables organisations to advance thesafety and sustainability of their business. Combining leading technical and operational expertise, risk methodology andin-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 andtechnological 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 ofIssuer 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 haverelied on the information and the facts presented to us by the Issuer. DNV is not responsible for any aspect of thenominated assets referred to in this opinion and cannot be held liable if estimates, findings, opinions, or conclusions areincorrect. 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

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Schedule-1 MHI Green/Transition Financing Eligible Projects Candidates
The projects listed in the table are candidate projects that have been evaluated for eligibility at the time of pre-issue eligibility assessment (as of February2022). In the future, green/transition bonds or loans issued under the MHI Green/Transition Finance Framework will be selected from one or more of thegreen/transition eligible project (Eligible Criteria) as per its labelling and reported in the pre-financing or post-financing reports.
If additional green/transition projects are included, eligibility will be evaluated in advance by MHI in accordance with the MHI Green/Transition Finance
Framework and, if necessary, DNV will evaluate them in a timely manner.

Green project*1
Eligible business and/or
projects

Alignment with SDGs
Eligibility Criteria (Green Project Overview)

CandidateRenewable energy

・ Wind power (wind power plants)
・ Geothermal power (geothermal power plants)

Clean energy Hydrogen gas turbine (hydrogen power generation businesses and/or projects for100%
hydrogen firing ) Ammonia gas turbine (ammonia power generation businesses and/or the projects 100%
ammonia firing) Hydrogen/ammonia production (green)

7. AFFORDABLE AND CLEAN
ENERGY9. INDUSTRY, INNOVATION
AND INFRASTRUCTURE
12. Responsible Production andConsumption
13. CLIMATE ACTION

 Steam power (conversion to 100% ammonia firing)・ Gas engines for power generation (100% hydrogen firing)*1Projects that qualify as green projects can be incorporated as green projects in future green bond issues. Green projects are also permitted within the CTFBG to be incorporated
as part of a transition bond issue.

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Transition Project*2
Eligible business and/or
projects

Eligibility Criteria (Transition Project Overview)

Alignment with SDGs

Candidate
Decarbonize existing
infrastructure

・
・
・
・

Build a hydrogen solutions
ecosystem

Build a CO2 solutions
ecosystem

7. AFFORDABLE AND CLEAN
ENERGY

Hydrogen gas turbine (co-firing)Ammonia gas turbine (co-firing)
LNG-fueled high-efficiency gas turbine
Steam power (conversion to 100% ammonia firing)・

Gas engine for power generation (hydrogen co-firing)・

Material handing (high efficiency and fuel cell powered)・

Hydrogen production (blue or turquoise, etc.)

・Ammonia production (blue or turquoise, etc.)

・Hydrogen compressors (for hydrogen production, transport, storage, etc.))

・

Metals machinery (hydrogen-reduced ironmaking, etc.)

・

CO2 Capture and Storage

・

CO2 transport (liquefied CO2 carries, etc.)

9. INDUSTRY, INNOVATION
AND INFRASTRUCTURE
12. Responsible Production andConsumption
13. CLIMATE ACTION*2 Some projects classified as transition projects at this time may become green projects through the application/applied of future technological innovations. (e.g., application of green
fuels/production processes, achieving performance that meets CO2 emission standards as green projects, etc.).

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Schedule-2 Climate Transition Finance Eligibility Assessment Protocol
The following checklists (1-4) are DNV evaluation procedures created for MHI Green/Transition Finance Framework and Transition Bond Eligibility Assessment, basedon the disclosure requirements of the CTFH and CTFBG.
The "confirmed documents" in the Work Undertaken include public or private documents (internal documents of the issuer or borrower), etc., and are provided by
MHI as evidence of eligibility judgment for DNV.
*Please replace “Issuer”, “Investor” to “Borrower/Fundraiser”, “Lender” in the context in the following requirements.
Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

1

Issuer’s Climate
Transition Strategy andGovernance

The financing purpose should be forenabling an issuer’s climate change
strategy. A ‘transition’ label applied toa debt financing instrument should
serve to communicate theimplementation of an issuer’s
corporate strategy to transform thebusiness model in a way which
effectively addresses climate-relatedrisks and contributes to alignment
with the goals of the Paris
Agreement.

Confirmed documents- Framework- Mission Net Zero
- 2021 Business Plan
- International Energy
Agency World Energy
Outlook- Ministry of Economy,
Trade and Industry
Roadmap (Power,Gas, Iron and Steel,
Chemicals)- Ministry of Land,
Infrastructure,
Transport andTourism Roadmap(International
Shipping)- MHI Group
Integrated Report
2021

MHI has established a framework and has also introduced
various plans and initiatives to manage and enhance theorganization's environmental sustainability and related
performance against MHI's broader environmental
strategy.

Suggested information and indicators•

A long-term target toalign with the goals of
the Paris Agreement(e.g. the objective oflimiting global warming
ideally to 1.5℃ and, atthe very least, to well
below 2℃);

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DNV has reviewed and confirmed that MHI's goals areequivalent to achieving the goals of the Paris Agreement,in that they are based on science-based long-term goals
quantified by MHI. MHI has set corporate strategies inenvironmental aspects that are critical to its businessmodel, based on risk and opportunity identification andscenario analysis using TCFD guidance.
MHI has declared "MISSION NET ZERO" with the aim of
becoming carbon neutral by 2040, and has set"Realization of a Green Society" as one of its three goals
for 2030 as a key theme, and has set in 2021 Business
Plan two growth areas: "Energy Transition," which aims
to decarbonize the energy supply side, and " New Mobility& Logistics," which will realize decarbonization, energy
conservation, and manpower savings on the energy
demand side.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

Criteria

Requirements
•

•

•

•

Relevant interim targets
on the trajectory towards
the long-term goal;
Disclosure on the issuer’s
levers towards
decarbonisation, andstrategic planningtowards a long-termtarget to align with thegoals of the Paris
Agreement;
Clear oversight andgovernance of transition
strategy and,Evidence of a broader
sustainability strategy to
mitigate relevant
environmental and social
externalities andcontribute to the UN
Sustainable Development
Goals.

Work Undertaken

DNV FindingsInterviews withstakeholders“MISSION NET ZERO" sets a long-term goal of Net Zeroin 2040 for the company and its entire value chain toachieve the Paris Agreement target of carbon neutrality
by 2050. MHI discloses its strategic plan to achieve theabove goals as a "transition" roadmap.
Specifically, MHI's transition strategy is consistent with
the International Energy Agency's World Energy Outlook
and the sectoral roadmaps for transition (power sector,
gas sector, iron and steel sector, chemical sector, andinternational shipping) of the Ministry of Economy, Tradeand Industry and Ministry of Land, Infrastructure,
Transport and Tourism, it also incorporates a plan ofaction to achieve less than 2°C using the TCFD. In
addition, if it becomes necessary to review efforts toachieve sustained emission reductions in the future, it isplanned to be implemented according to the timeline as
appropriate.
MHI recognizes the implementation of transition
strategies as one of the ways to promote sustainability,and has established a system and framework to promote
the initiatives set forth in MISSION NET ZERO at the
management level.
The MHI Group is committed to "developing businessactivities that take into its diverse range of our
stakeholders into consideration and return profits to all
stakeholders in optimum fashion, while at the same time
providing excellent products and technologies to realize asustainable society and a secure future for people and theplanet”. MHI’s approach to sustainability promotion
based on this concept, MHI aims to address materiality
through our business activities and contribute broadly to

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings
the achievement of the SDGs, the sustainable
development goals set forth by the United Nations. Of
these, the materiality to which Green/Transition Financeis primarily related is "providing energy solutions toenable a carbon neutral world”.
Based on the framework and evaluation of “MISSIONNET ZERO” and the Implementation Plan, DNV confirmedthat they are well aligned with MHI's Transition Strategy.
Through the evaluation, DNV confirmed that theimplementation plan based on the Transition Strategy iscredible, ambitious, and achievable.

2

Business model
environmental
materiality

The planned climate transition
trajectory should be relevant to theenvironmentally-material parts of theissuer’s business model, taking into
account potential future scenarios
which may impact on current
determinations concerningmateriality.

Confirmed documents- Framework- Mission Net Zero
- 2021 Business Plan
- International Energy
Agency World Energy
Outlook- Ministry of Economy,
Trade and Industry
Roadmap (Power,Gas, Iron and Steel,
Chemicals)- Ministry of Land,
Infrastructure,
Transport andTourism Roadmap(International
Shipping)

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DNV assessed whether key activities related to MHI's
business operations corresponded to MHI's Transition
Strategy, which was evaluated as an environmental
contribution.
MHI's greenhouse gas emissions (FY2020) are shown
below.
SCOPE1,2: 550,000 t-CO2
SCOPE3 ︓ 9.34 million t-CO2(Category 1 (purchased products andservices): 8.8 million t-CO2,
Other categories 2-7 were calculated andCategory 11 (use of products sold) is underconsideration for calculation)
MHI's Transition efforts include not only emission
reductions from its own business activities (Scope 1 and2), but also Scope 3 and activities that contribute to
reductions at other companies. This will contribute to theimplementation of supply-side and demand-side carbon

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

Criteria

Requirements

Work Undertaken--

MHI Group
Integrated Report
2021
MHI Group ESGDATABOOKInterviews withstakeholders

DNV Findings
neutrality as an important initiative presented in various
plans and strategies for decarbonization in Japan. In
other words, as a company that manufactures and sells
key systems, facilities, and equipment for energy, steel,and other CO2 many emitting businesses, MHI's
Transition efforts directly support the transition of society
as a whole, including its own.
MHI's transition (Transition) Roadmap is based on theInternational Energy Agency's World Energy Outlook ( Itis also well aligned with the sectoral roadmaps fortransition (power sector, gas sector, iron and steel sector,
chemical sector, and international shipping) of the
Ministry of Economy, Trade and Industry and the Ministryof Land, Infrastructure, Transport and Tourism. In otherwords, it is intended to enable these sectors to quickly
provide the products and services that are indispensable
to make the transition a reality. Their specificimplementation plans and goals are set and quantified toensure that they are the best possible solutions available
today and allow for further improvement.
DNV confirmed that MHI's plan to implement its transition
strategy is closely linked to the activities of MHI's corebusiness and to activities that contribute to the reductionof CO2 throughout society, thus contributing to theenvironmental aspects of society as a whole andsupporting the promotion of MHI's business. MHI'splanned transition strategy and transition pathway arelinked to the materiality of MHI's use of GRI standards*1,
ISO 26001, SASB, TCFD, etc., and will contribute tosignificant environmental improvements (impact) inPage50 of145

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings
qualitative and quantitative terms. The following is asummary of the results of the study.
*1: International standard developed by the Global
Reporting Initiative to provide ESG-related reporting,management, and analysis methodologies.

3

Climate transition
strategy to be sciencebased including targets
and pathways

Issuer’s climate strategy shouldreference science-based targets andtransition pathways. The plannedtransition trajectory should:
•

•

•

•

be quantitatively
measurable (based on ameasurement
methodology which isconsistent over time);be aligned with,benchmarked orotherwise referenced torecognized, sciencebased trajectories wheresuch trajectories exist;
be publicly disclosed(ideally in mainstream
financing filings), include
interim milestones, and;be supported byindependent assurance
or verification

Confirmed documents- Framework- Mission Net Zero
- 2021 Business Plan
- International Energy
Agency World Energy
Outlook- Ministry of Economy,
Trade and Industry
Roadmap (Power, Gas,
Iron and Steel,
Chemicals)- Ministry of Land,
Infrastructure,
Transport and Tourism
Roadmap (International
Shipping)- MHI Group Integrated
Report 2021
- project list
- CO2 Reduction Effects
Estimated Results

Suggested information and indicators

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MHI has established a transition plan consistent with thescience-based Paris Agreement and a transition trajectory
consistent with the International Energy Agency's World
Energy Outlook) and the roadmaps of METI and MLIT.
This plan provides a realistic achievement and pathway
for CO2 emission reductions in absolute terms and a plan
to reduce CO2 emissions in absolute (total) terms tomaintain defined levels in the future.
DNV confirmed that MHI's transition strategy is quantified
in terms of emissions intensity and absolute values basedon a consistent measurement methodology based onprescribed assumptions. Transition targets are set
voluntarily based on the TCFD and other initiatives forsustainable CO2 emission reductions, and they are
consistent with the World Energy Outlook of theInternational Energy Agency, which serves as abenchmark, and the policies of the Ministry of Economy,
Trade and Industry and the Ministry of Land,
Infrastructure, Transport and Tourism. Specifically, MHI
has established the following goals for transitions
TargetReduce CO₂

Reduce CO₂ emissions

year

emissions acrossacross MHI's value chain

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

Criteria

Requirements
•

•
•

•

Short, medium, andlong-term greenhousegas reduction targets
aligned with Paris
Agreement;
Baseline
Scenario utilised, andmethodology applied(e.g. ACT, SBTi, etc.);
Greenhouse gas
objectives covering all
scopes (Scope 1, 2 and311); and,Work Undertaken

DNV FindingsInterviews with relevant
parties

MHI Group Scope
1&2
2030

*1

▲50% (compared

Scope 3*2 + reductions
from CCUS▲50% (compared to 2019)

to 2014)2040

Net Zero

Net Zero*1: The calculation standard is based on the GHG
Protocol.
*2: The calculation standard is based on the GHG
Protocol. However, we also account for reductions
achieved by CCUS as an MHI original index.
Reference: The short-term target is set in the MHIGroup's Fifth Environmental Target (FY2021-FY2023) as"a 9% improvement in CO2 emissions per unit ofproduction from offices and plants in FY2023 comparedto FY2014”.

Targets formulated both in intensity
and absolute terms

MHI's CO2 emission reductions include not only emission
reductions from its own business activities (Scope 1 and2), but also Scope 3 and activities that contribute to the
reduction of other companies. This will contribute to theimplementation of supply-side and demand-side carbon
neutrality as an important initiative indicated in thevarious plans and strategies for decarbonization in Japan.
In other words, as a company that manufactures andsells key systems, facilities, and equipment for energy,
steel, and other CO2 many emitting businesses, MHI's
Transition efforts directly support the transition of society
as a whole, including its own.
Transition efforts and emissions for each scope aredisclosed in "MISSION NET ZERO", "MHI Group
Integrated Report", etc.

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

4

Implementationtransparency

Market communication in connection
with the offer of a financing
instrument which has the aim offunding the issuer’s climate transition
strategy should also provide
transparency to the extent
practicable, of the underlying
investment program including capitaland operational expenditure. This
may include R&D-related expenditure
where relevant, and details of where
any such operating expenditure isdeemed ‘non-Business as Usual’, aswell as other relevant information
indicating how this program supports
implementation of the transition
strategy, including details of any
divestments, governance and processchanges.

Confirmed documents- Framework- Mission Net Zero
- 2021 Business Plan
- International Energy
Agency World Energy
Outlook- Ministry of Economy,
Trade and Industry
Roadmap (Power, Gas,
Iron and Steel,
Chemicals)- Ministry of Land,
Infrastructure,
Transport and Tourism
Roadmap (International
Shipping)- MHI Group Integrated
Report 2021
- project list
- CO2 Reduction Effects
Estimated Results

DNV confirmed that MHI's investment and deployment
plans related to the Transition Strategy include
agreements for future investments and expenditures.
Specifically, the 2021 Business Plan plans to invest 180
billion yen in growth areas, including decarbonization, by
2023, and encompasses projects to be implemented withgreen/transition financing.

Suggested information and indicators•

Disclosure on thepercentage ofassets/revenues/
expenditures/divestmentsaligned to the various
levers outlined in
Element 1 above;

Interviews with relevant
parties• Capex roll-out plansconsistent with the overall
strategy and climate
sciencePage53 of145

DNV confirmed that the overall investment plan
(investment amount) for the future is a plan where theinvestments required to implement the transition strategy
will be executed according to the appropriate timeline inaccordance with the internal management structure andprocesses, taking into account CTF-1 to CTF-3.
MHI plans to allocate to R&D, business development,
operations, operations, and other related expenditures forthe nominated transition eligible projects shown in
Schedule-1. Through the assessment, DNV determinedthat MHI's transition strategy can be viewed as a nonbusiness-as-usual concept in terms of directly andindirectly supporting the decarbonization of society as awhole.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Schedule-3 Green Bond and Transition Finance with specific use of proceeds Eligibility Assessment
ProtocolThe checklist below (GBP/GLP-1 to GBP/GLP-4) is a DNV evaluation procedure created for MHI Green/Transition Finance (Bond & Loan) Eligibility Assessment (Bond& Loan with specific use of proceeds) based on the requirements of GBP/GBGLs and GLP/GLGLs. "Confirmed documents" in the “Work Undertaken” includes
documents inside the issuer and is provided by MHI as evidence of eligibility judgment for DNV.
In Schedule-3, it is referred to as GBP or GLP according to the practice, but this is the standard to be referred to in the case of financing that specifies the use ofproceeds such as transition projects in transition finance (bonds and loan) that specifies the use of proceeds based on CTFH and CTFBG, so please read as themeaning of the transition as appropriate.

GBP/GLP-1 Use of Proceeds
Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

1aTypes of funds

The types of green bonds areclassified into one of thefollowing types defined by GBP.
· (Standard) Green/transition
Bond
・ Green/transition Revenue
Finance・ Green/transition Project
Finance・ Other

Confirmed
documents

Through the evaluation work, DNV confirmed that MHI
Green/Transition Finance (bond/loan) fall into the following
categories.

Interview withstakeholders

Green/Transition Bonds/Loans

The key to a green/transitionbond is that the proceeds will be
used for a green project, whichshould be properly stated in thelegal documents relating to thesecurity.

Confirmed
documents- framework- project list
- CO2 Reduction
Effects
Estimated
Results

DNV has confirmed that the MHI Green/Transition Financing
is intended to fund a wide range of green/transition projects
focused on MHI's environmental goals and transition
strategies as described in the Framework and Schedule-1.

1b

Green/transition ProjectClassification-

Frameworks

Page54 of145

Specifically, all Green/Transition financing categories andeligible project candidates listed in the table below and
Schedule-1 have been evaluated to meet the Transition
Strategy, and the proceeds from Green/Transition financing

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

Criteria

Requirements

Work Undertaken-

Amendment
Shelf
Registration
StatementInterview withstakeholders

DNV Findings
will be allocated to fund one or more of the candidate
Green/Transition finance eligible projects. If a transition
project has been pre-selected prior to financing, it will be
disclosed in legal documents.
Through the assessment, DNV concludes that the nominatedgreen/transition eligible project will provide tangible and truly
environmental benefits.
Table MHI Green/Transition Finance Eligible Project
Category
Green project
Eligible businessEligibility Criteria

and/or projects

Renewable energy Wind power (wind power plants)
 Geothermal power (geothermal power
plants)Clean energy Hydrogen gas turbine (hydrogen power
generation businesses and/or projects for
100% hydrogen firing) Ammonia gas turbine (ammonia power
generation businesses and/or the projects
100% ammonia firing) Hydrogen/ammonia production (green) Steam power (conversion to 100%
ammonia firing) Gas engines for power generation (100%hydrogen firing)Transition Project

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings
Eligible businessEligibility Criteria

and/or projects

Decarbonize existing

infrastructure

Hydrogen gas turbine (co-firing)

Ammonia gas turbine (co-firing)

LNG-fueled high-efficiency gas
turbine

Steam power (conversion to 100%

Gas engine for power generation

ammonia firing)(hydrogen co-firing)

Material handing (high efficiency
and fuel cell powered)

Build a hydrogensolutions ecosystem

 Hydrogen production (blue or
turquoise, etc.)
 Ammonia production (blue or turquoise,etc.) Hydrogen compressors (for hydrogenproduction, transport, storage, etc.)
 Metals machinery (hydrogen-reduced
ironmaking, etc.)

Build a CO2 solutions
ecosystem

1c

Environmental Benefits

All green projects to which thefunds are used should haveclear environmental benefits,
the effects of which should beassessed by the issuer and,
where possible, quantitatively
demonstrated.

Confirmed
documents- framework- project list
- CO2 Reduction
Effects
Estimated
Results
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 CO2 Capture and Storage
 CO2 transport (liquefied CO2carries,etc.)Green/Transition projects are projects that contribute to low
and decarbonization through 2 business, 3 projectclassifications for each of the green/transition categories
shown in 1b, which contribute to MHI's Transition Strategybased goals. The environmental benefits are CO2 emission
reductions, which are quantitatively evaluated by the issuer.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

Criteria

Requirements

Work Undertaken
Interview withstakeholders

1dRefinancing rate

If all or part of the proceeds areused or may be used forrefinancing, the issuer will
indicate the estimated ratio of
the initial investment to therefinancing and, if necessary.
Therefore, it is recommended toclarify which investment or
project portfolio is subject torefinancing.

Confirmed
documents- framework- project list
- CO2 Reduction
Effects
Estimated
Results
Interview withstakeholders

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DNV Findings
Before the execution of the green/transition finance, it was
confirmed that the environmental benefits evaluation method(calculation method) of the project to be allocated by the
subject finance will be disclosed, and that it will bequantitatively evaluated and reported as CO2 emission
reductions in the annual reporting.
The Issuer plans to allocate all proceeds to make newinvestments, refinance, or both in one or more of thenominated eligible projects included in Schedule-1. If it isclear in advance whether the proceeds will be allocated to
new investment or refinancing before the financing is
executed, it will be disclosed in legal documents. If it isundecided, MHI plans to disclose the estimated amount (orpercentage) of the proceeds that will be allocated torefinancing through reporting (annual report).

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

GBP/GLP-2 Process for Project Evaluation and Selection
Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

2aProject
selection
process

Green bond issuers should provide an overview ofthe process of qualifying projects for which green
bond funding will be used. This includes (but is not
limited to):・The process by which the issuer determines thatthe project in question is included in the businesscategory of a qualified green project.
・ Creation of criteria for eligibility of projects forwhich green bond funding will be used
・ Environmental sustainability goals
In addition to criteria and certifications, theinformation published by issuers regarding thegreen bond process also considers the quality of
performance of the issuer's framework andenvironmental sustainability.

Documents reviewed- framework- Process for Project Evaluationand Selection

DNV confirmed that the issuer has a process
document that determines the eligibility of the
project for which the green/transition financing
proceeds are to be allocated and that it is clearly
outlined in the framework.

2b

Issuer's
Environment
al and Social
Governance
Framework

Interview with stakeholders

Documents reviewed- framework- Process for Project Evaluationand Selection

Interview with stakeholders

When selecting green/transition projects, the Issuer
considers compliance with environmental laws,
ordinances, and regulations, as well as clear
environmental benefits such as CO2 reductions
throughout the life cycle or in each process.
In operating and implementing its projects, theIssuer is committed to preserving the surrounding
environment in all relevant departments.
DNV confirmed that the green/transition projects
implemented by the issuer are consistent with theissuer's management and environmental policies, aswell as with the transition strategy, goals andpathways.

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

GBP/GLP-3 Management of proceeds
Ref.

Criteria

3a

Tracking
procedure-1

Requirements

Work Undertaken

DNV Findings

The net proceeds from of Green 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 Green Project.

Confirmed documents- framework- Document Retention
Period Criteria Table- Green Bond FundManagement Chart

DNV has confirmed that the proceeds related to theproceeds by the Green/Transition financing aretraceable to the issuer's internal management systems,
etc., and through the assessment, DNV confirmed thatthe systems and documents actually used are verified
and certified accordingly.

Interviews with stakeholders
3b

Tracking
procedure-2

During the green bond redemption period, thebalance 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- framework- Document Retention
Period Criteria Table- Green Bond FundManagement Chart

DNV confirmed that the issuer plans to review thebalance of the green/transition financing on a regularbasis (at least once a year) during the period between
the execution of the green/transition financing and its
redemption or repayment, such as through the internal
control system described in 3a.

Interviews with stakeholders
3cTemporaryholding

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

Confirmed documents- framework- Document Retention
Period Criteria Table- Green Bond FundManagement Chart
Interviews with stakeholders

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DNV confirmed that the confirmation process throughthe issuer's internal management system and othersystems is a mechanism that allows for the sequential
recognition of unallocated balances.
DNV confirmed through the Framework andAssessment that unallocated proceeds balances will be
managed in cash or cash equivalents. DNV also
confirmed that the balance of unallocated proceeds willbe identified through the reporting of allocation status.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

GBP/GLP-4 Reporting
Ref.

Criteria

4aPeriodical
Reporting

Requirements

Work Undertaken

DNV Findings

In addition to reporting on the useof proceeds and the temporary
investment of unallocatedproceeds, the issuer will consider
each project at least once a year
for projects to which the Greenbond proceeds have been
allocated, taking into account thefollowing: A list of each project
should be provided.
-Confidentiality and competitive
considerations-Outline of each project, expectedsustainable environmental andsocial effects

Confirmed documents- framework- project list
- CO2 Reduction
Effects EstimatedResults-

DNV confirmed that the issuer will conduct Green/Transition financing
reporting (annual reporting) at least until the proceeds are allocated,disclosing information on the status of the allocation of proceeds, theprojects to which the proceeds have been allocated and theenvironmental benefits.
In addition, DNV confirmed that even after the allocation is completed,any changes in the transition strategy or pathway, or any major changes
in the allocation plan or project implementation status (e.g., suspensionof a project that has initiated allocation, significant deferral on an annual
basis, sale or retirement, etc.) will be reported in a timely manner or in
the reporting.
Reporting will be published on the website.
<Allocation Status>
Status of allocation to eligible businesses and/or
projects, overview with up-to-date progress

Amount or share of unallocated proceeds, allocation
schedule, and the method to manage unallocatedproceeds

Ratio of new financing to refinancing<Environmental benefits>Disclose the outline (Including progress of research anddevelopment, operation, etc.) of the project and the
expected environmental benefits (e.g., tons-CO2/year, etc.
(reduction effect is calculated based on the number offacilities installed, number of facilities sold, or basic unit (gCO2/kWh), etc.)), within the scope of confidentiality and to
the extent practicable, and taking into account thecharacteristics of the project.
The currently planned reporting details for the green/transition
project to be implemented at this time are described in the
GBP/GLP-4. Reporting section of this document.

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Schedule-4 Basic Guidelines on Climate Transition Finance Eligibility Checklist
The checklists below (CTF-1 ~ CTF-4) are based on the four "Disclosure Elements" which indicated in the "Basic Guidelines on Climate Transition Finance (CTF)"
established by the Financial Services Agency, Ministry of Economy, Trade and Industry, and Ministry of the Environment in May 2021.
According to the CTF, “disclosure elements” are classified into the following three categories. Should:◎ recommend:〇 be considered/possible: △These expressions are used in the following context.
-

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

-

Items described with the word “recommended” are elements that financial instruments labeled as transition finance are optimally recommended to have under-these Guidelines although instruments which do not have these items can also be labeled as “transition”.
Items described with the word “be considered” or “possible” are elements that these Guidelines provides as examples and interpretations although it is notconsidered problematic even if financial instruments labeled 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.
The number /01/、/02/〜/18/ listed in the “Work Undertaken” are documents confirmed through the eligibility evaluation work. Details (document name) are
shown in Appendix. In addition to the confirmed documents, the “Work Undertaken” includes the case where the information obtained through discussions andinterviews with the issuer is used as evidence.

CTF-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 of transition
strategies9. Such strategies shouldincorporate a long-term target to alignwith the goals of the Paris Agreement,
relevant interim targets on the
trajectory towards the long-term goal,
disclosure on the levers towards
decarbonization, and fundraiser’s

Requirement
checkWork Undertaken

DNV Findings

Yes

Confirmed
documents:/01//02//03//04//12//13//14//15//16//17/
Interviews withstakeholders

MHI's financing through Green/Transition finance isintended to help the company achieve its transition
strategy in line with the International Energy Agency's
World Energy Outlook, which aims to align with the goalsof the Paris Agreement, and the low-carbon strategy set
forth in the sectoral roadmaps of the Ministry of Economy,
Trade and Industry and the Ministry of Land,
Infrastructure, Transport and Tourism.
MHI has developed a transition strategy as a transition
roadmap, which incorporates short-term targets, medium-No
Not Applicable

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

strategic planning.

DNV Findings
term targets, and a strategic plan for decarbonization (i.e.,a plan to introduce technologies that will contribute to thetransition). Each goal under MHI's Transition Strategy isdisclosed as follows.
TargetReduce CO₂ emissions Reduce CO₂ emissions acrossyear

across MHI Group
Scope 1&2

2030

*1

▲50% (compared to

MHI's value chain Scope 3*2 +reductions from CCUS
▲50% (compared to 2019)

2014)
2040

Net Zero

Net Zero*1: The calculation standard is based on the GHG Protocol.
*2: The calculation standard is based on the GHG Protocol.
However, we also account for reductions achievedby CCUS as an MHI original index.
Reference: The short-term target is set in the MHI Group's
Fifth Environmental Target (FY2021-FY2023) as "a
9% improvement in CO2 emissions per unit ofproduction from offices and plants in FY2023
compared to FY2014”.
◎
(△)

1-b)

A transition strategy should serve to
explicitly communicate theimplementation of an issuer’s strategy
to transform the business model in a
way which effectively addresses
climate-related risks and contributes toachieving the goals of the Paris
Agreement10. Transformation of abusiness model is not limited toinitiatives as an extension of existingYes
No
Not Applicable

Confirmed
documents:/01//02//03//04//05//06//12//13//14//15//16//17/
Interviews withstakeholders

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MHI's Transition Strategy takes into account theInternational Energy Agency's World Energy Outlook andthe roadmaps of the Ministry of Economy, Trade andIndustry and Ministry of Land, Infrastructure, Transport
and Tourism's sector roadmaps. MHI's Transition Strategy
includes initiatives that seek to achieve significant
reductions in the contribution to achieving carbon
neutrality on both the supply and demand side of energy,
as a key effort outlined in Japan's various decarbonizationplans and strategies.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

businesses but can also betransformation based on various otherperspectives. It includes fuel conversion
that achieves significant carbon and
GHG reduction benefits, introduction of
innovative technologies, improvementof / changes in manufacturing
processes and products, anddevelopment and provision of products
and services in new fields.

DNV Findings
Specific initiatives include the following (see table below).
Table MHI Green/Transition Finance Eligible Project
Category
Eligible

Eligibility Criteria

business
and/orproject
Renewable Wind power (wind power plants)

energy Geothermal power (geothermal power

Clean Hydrogen gas turbine (hydrogen power

plants)Energygeneration businesses and/or projects for
100% hydrogen firing) Ammonia gas turbine (ammonia power
generation businesses and/or the projects
100% ammonia firing) Hydrogen/ammonia production (green) Steam power (conversion to 100%
ammonia firing) Gas engines for power generation (100%hydrogen firing)Transition Project
Eligiblebusiness
and/orprojects

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Eligibility Criteria

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

DNV Findings

Decarbonize Hydrogen-fired (co-firing) gas turbine

existing

 Ammonia-fired (co-firing) gas turbine

infrastructur

 LNG-fired high-efficiency gas turbinee Steam power (conversion to 100% ammonia
firing)
 Gas engine for power generation (hydrogenco-firing) Material handing (high efficiency and fuel cell
powered)Build a Hydrogen production (blue or turquoise, etc.)

hydrogen Ammonia production (blue or turquoise, etc.)

solutions Hydrogen compressors (for hydrogenecosystem

production, transport, storage, etc.)
 Metals machinery (hydrogen-reduced
ironmaking, etc.)

Build a CO2
solutions CO2 Capture and Storage
 CO2 transport (liquefied CO2 carries, etc.)

ecosystem〇

1-c)

The implementation of a transition
strategy assumes cases where it affects
society and environment other thanclimate change, such as employment or
stable provision of products andservices, through transformation of abusiness model. In such cases, it isrecommended that the fundraiser also
takes into consideration the impact ofbusiness innovations to society andenvironment other than climatechange.

Yes
No
Not Applicable

Confirmed
documents:/01//05//06//09/
Interviews withstakeholders

Page64 of145

DNV confirmed that at this time there are no additionalsignificant social or environmental impacts associated with
the implementation of MHI's Transition Strategy. DNV has
also confirmed that procedures are in place to ensure thatthe project evaluation and selection process does notconflict with any exclusion criteria (e.g., human rights,
environmental or other social issues). However, in theimplementation of the project, consideration and measures
for social and environmental impacts based on laws,
regulations, ordinances, and the company's own standards
are implemented as part of MHI's standard business andoperational management processes.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

◎
(△)

1-d)

〇

△

1-e)

1-f)

Requirement
checkWork Undertaken

DNV Findings

Climate change-related scenarios11
should be referenced in developing
transition strategies. The pathway totransition should be planned forrespective sector and regions ofindividual fundraiser, who may
generally be placed in a different
starting point and pathway totransition.

Yes

Confirmed
documents:/01//02//03//04//06//07//12//13//14//15//16//17/
Interviews withstakeholders

MHI's transition strategy is built on the International
Energy Agency's World Energy Outlook, the sector
roadmap of the Ministry of Economy, Trade and Industry
and the Ministry of Land, Infrastructure, Transport andTourism, and the use of TCFD guidance.
MHI is building a transition strategy that embodies theInternational Energy Agency's World Energy Outlook andthe roadmaps of the Ministry of Economy, Trade andIndustry and the Ministry of Land, Infrastructure,
Transport and Tourism, which clarify criteria, pathways
and targets for CO2 emission reductions.

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

Yes

Confirmed
documents:/01//02//03//04//06/
Interviews withstakeholders

MHI has set forth transition initiatives as a roadmap forbecoming carbon neutral in its "MISSION NET ZERO"
carbon neutrality declaration for 2040, and in its mediumterm business plan "2021 Business Plan," MHI has set"Realization of a Green Society" as one of its goals for2030. MHI has set this as a priority theme and is working
on it. In other words, MHI's transition strategy and plan
are closely related to its management plan, and are
judged to be highly effective and credible initiatives.

However, because such strategies andplans run for a long period of time, it ispossible that the content may be
modified or adjusted in the event of amajor change in the assumed external
environment and so on.

Yes

Confirmed
documents:/01//02//03//04//06//07/
Interviews withstakeholders

MHI is including various technology options to realize thetransition strategy. Through the assessment, DNV also
confirmed that MHI plans to flexibly implement changes
and revisions to the transition strategy and plan in
response to the revision of national guidelines.

No
Not ApplicableNo
Not ApplicableNo
Not Applicable

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

△

1-g)

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

Yes

In order to secure the effectiveness ofthe transition strategy, the fundraiser
should establish an organizational
structure12 for the board of directors
and/or other such committee tooversee the activities addressing
climate change and for management toplay a role in assessing and managing
such climate-related activities.

Yes

◎

1-h)

Requirement
check

No
Not ApplicableNo
Not Applicable

Work Undertaken

DNV Findings

Confirmed
documents:/01/*Confirmation
through thisassessment

DNV confirmed that MHI's transition strategy has been
generally implemented for the " recommend " and " beconsidered/possible " items in the Guidelines.

Confirmed
documents:/01//02/
Interviews withstakeholders

MHI has established and is implementing the following
organizational structure.
 Established a sustainability promotion system fromthe Board of Directors to promote sustainability
throughout the Group, including subsidiaries.
 Establish an organizational structure to addressenvironmental and social issues associated with theimplementation of transition strategies, and tomonitor, evaluate, and manage transition efforts.
 Established the Materiality Promotion Council,
chaired by the president, as a meeting body forsustainability promotion, to promote efforts toaddress materiality, including climate change.
MHI Sustainability Promotion System Chart

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

△

1-i)

◎

1-j)

Requirement
checkWork Undertaken

DNV Findings

While a transition strategy shall bebasically developed by a company inneed of finance, it is possible for
entities to utilize the strategy ofcompanies that are wholly or partially
responsible for the initiatives toestablish or explain their own strategy,
given that the finance supports GHG
emissions reduction initiatives of notjust a single company but its supply
chain.

Yes

Confirmed
documents:/01//02//03//04//12//13//14//15//16//17/
Interviews withstakeholders

MHI is building a transition strategy as the MHI Group,with MHI at its core. The transition strategy includes
activities to contribute to the reduction of CO2 in Japanand abroad, as well as in society as a whole, by providing
technologies, systems, facilities, and equipment that
contribute to low-carbon and decarbonization on both the
supply and demand sides of energy, in accordance with
policies set by the government and other organizations.

Transition strategies should be
disclosed in advance in a company’s
integrated report, sustainability report,
statutory documents and othermaterials for investors (including suchdisclosures on the website). This also
applies to the other three elements.

Yes

Confirmed
documents:/01//02//03//04/
Interviews withstakeholders

MHI's transition strategy (including overall environmental
initiatives) is based on the vision for 2030 in the MHIGroup's Medium-Term Management Plan "2021 Business
Plan" and is presented in the "MISSION NET ZERO" carbon
neutrality declaration for 2040 and in the Integrated
Report, etc., in advance to stakeholders.

No
Not ApplicableNo
Not Applicable

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

△

1-k)

〇

1-l)

Requirement
checkWork Undertaken

DNV Findings

It is possible to disclose transition
strategies and elements concerning thegovernance guaranteeing that theexecution of transition strategies is inalignment with the reporting
frameworks such as the
Recommendations of the Task Force on
Climate-Related Financial Disclosures(TCFD; Final Report)13.

Yes

Confirmed
documents:/01//02//03//04/
Interviews withstakeholders

MHI's transition strategy takes into account the TCFD
recommendations, and the transition strategy and thegovernance of TCFD recommendations are consistent. MHI
discloses governance items in its Integrated Report andFramework. Relevant information is provided in 1-d), 1-h),and 1-j).

If the implementation of a transition
strategy assumes impacts on society
and environment other than climatechange, it is recommended that thefundraiser explain the view underlying
its approach14, etc. to address suchimpacts and disclose how the strategy
on the whole contributes to achieving
the Sustainable Development Goals(SDGs) so that the effects can beappropriately evaluated by thefinancier.

Yes

Confirmed
documents:/01//05//06//09/
Interviews withstakeholders

DNV confirmed that at this time there are no additionalsignificant social or environmental impacts associated with
the implementation of MHI's Transition Strategy. We havealso confirmed that procedures are in place to ensure thatthe project evaluation and selection process does notconflict with any exclusion criteria (e.g., human rights,
environmental or other social issues). However, in theimplementation of the project, consideration and measures
for social and environmental impacts based on laws,
regulations, ordinances, and MHI's own standards are
implemented as part of MHI's standard business andoperational management processes.
In addition, the contribution to the achievement of theSDGs in the implementation of the Transition Strategy isincorporated in "providing energy solutions to enable acarbon neutral world" as the relationship between MHI's
materiality and the SDGs.

No
Not ApplicableNo
Not Applicable

Reference (listed in Table-1 in the main text): Providing
energy solutions to enable a carbon neutral world
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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

DNV Findings

Goal 7: Affordable and Clean Energy
Goal 12: Responsible Consumption and Production
Goal 13: Climate Action
◎

〇

1-m)

1-n)

Considering the length of applicationand other factors, there may beinstances when a transition strategy
and plan will need to be modified due
to major changes in the external
environment and relevant conditions
that were assumed at a planningphase. In this case, the contents of themodification should be disclosed
together with the underlying reason ina timely manner.

Yes

In terms of governance, it isrecommended that disclosures include
an organizational structure foroverseeing the implementation of atransition strategy and for assessing
and managing related initiatives. It isalso recommended that disclosures
include the specific roles of theconstituent organizations and the
management and the process by which

Yes

No
Not ApplicableNo
Not Applicable

Confirmed
documents:/01//02//03//04//06//07/
Interviews withstakeholders

MHI is including various technology options to realize thetransition strategy. DNV also confirmed through theassessment that MHI plans to flexibly implement changes
and modifications to the transition strategy and plan in
response to revisions of national guidelines.
MHI plans to disclose any material changes to its transition
strategy and plan in a timely manner, along with thereasons for such changes.

Confirmed
documents:/01//02/
Interviews withstakeholders

MHI has established the following organizational structure.
 Established a sustainability promotion system fromthe Board of Directors to promote sustainability
throughout the Group, including subsidiaries.
 Establish an organizational structure to addressenvironmental and social issues associated with theimplementation of transition strategies, and tomonitor, evaluate, and manage transition efforts.
 Established the Materiality Promotion Council,
chaired by the president, as a meeting body forsustainability promotion, to promote efforts toaddress materiality, including climate change.

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

the content of deliberations is reflected
in management.

〇

1-o)

In cases where the fundraiser
determines the need for an objective
assessment regarding the transition
strategy, it is recommended that areview, assurance and verification by
an external organization for its
transition strategy.

DNV Findings

MHI links the governance of the Transition Strategy to thegovernance of the TCFD recommendations as asustainability promotion structure, and discloses theprocess as follows (MHI website).
“To enhance corporate value and grow in the medium
to long term through solutions to social issues, in fiscal
2020, MHI Group has identified materiality it should be
addressing. (Snip)
Activities that engage in materiality embody
sustainability management in terms of business. In
order to make materiality activities effective, we will
establish subcommittees with managers anddepartments in each materiality to examine specificmeasures and roadmaps. In October 2021, weestablished the Materiality Council, chaired by the
President, to follow up on business activities aimed atrealizing materiality goals and to instruct businessdivisions to take necessary measures. These activities
are important themes in sustainability management
and are regularly reported to the Board of Directors."
Yes
No
Not Applicable

Confirmed
documents:/01/~/11/
Interviews withstakeholders*Confirmation
through thisassessment

Page70 of145

MHI utilizes an external DNV review for an objective
assessment of green/transition financing eligibility,
including transition strategies.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

△

1-p)

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

Requirement
check
Yes
No
Not Applicable

Work Undertaken

DNV Findings

Confirmed
documents:/01/~/11/
Interviews withstakeholders*Confirmation
through thisassessment

DNV confirmed the following regarding its review of MHI'stransition strategy- MHI's transition strategy is consistent with thescenarios (specific action plans) and the targets
shown in the table below.
- It is judged that MHI's transition strategy is positioned
as one of the core components of its management
plan and vision, and that its credibility is supported by
specific plans and goals.
- The Transition Strategy is a plan where themanagement process and governance of theTransition Strategy will be properly implemented
under the Sustainability Promotion Structure.
TargetReduce CO₂

Reduce CO₂ emissions

year

emissions across MHI

across MHI's value chain

Group Scope 1&2*1

Scope 3*2 + reductions fromYear

▲50% (compared to▲50% (compared to 2019)

2030

2014)

Year

Net Zero

CCUS

Net Zero

2040*1: The calculation standard is based on the GHG Protocol.
*2: The calculation standard is based on the GHG Protocol.
However, we also account for reductions achievedby CCUS as an MHI original index.
Reference: The short-term target is set in the MHI Group's
Fifth Environmental Target (FY2021-FY2023) as "a
9% improvement in CO2 emissions per unit ofproduction from offices and plants in FY2023
compared to FY2014”.
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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

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.

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

CTF-2 Business Model Environmental Materiality
Ref.

No.

Disclosure elements

◎

2-a)

Initiatives for achieving the transition
strategy should be such that contribute totransforming core business activities that areenvironmentally material parts today and in
the future.15

Requirement
checkWork Undertaken

DNV Findings

Yes

Confirmed documents:

MHI's Transition Strategy includes initiatives designed
to achieve significant CO2 reductions that willcontribute to transformational change on both the
supply and demand sides of energy, including MHI's
core Energy Domain, Plant & Infrastructure Domain,and Logistics, Chiller & Drive System Domain.
Specific initiatives include the following (see tablebelow).

/01//02//03//04//06//07

No
Not Applicable/
Interviews withstakeholders

Table MHI Green/Transition Finance Eligible Project
Categorygreen project
Eligible

Eligibility Criteria

Businesses
and/orProjects
Renewable Wind power (wind power plants)

energy Geothermal power (geothermal power
plants)Clean energy  Hydrogen gas turbine (hydrogen power
generation businesses and/or projects
for100% hydrogen firing) Ammonia gas turbine (ammonia power
generation businesses and/or the projects
100% ammonia firing) Hydrogen/ammonia production (green)

Page73 of145

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

DNV Findings

 Steam power (conversion to 100%
ammonia firing) Gas engines for power generation (100%hydrogen firing)Transition Project
Eligible

Eligibility Criteria

Businesses
and/orProjects
Decarbonize Hydrogen-fired (co-firing) gas turbine

existing

 Ammonia-fired (co-firing) gas turbine

infrastructur  LNG-fired high-efficiency gas turbinee Steam power (conversion to 100%
ammonia firing) Gas engine for power generation(hydrogen co-firing) Material handing (high efficiency and fuelcell powered)

Build ahydrogensolutionsecosystem Hydrogen production (blue or turquoise,etc.) Ammonia production (blue or turquoise,etc.) Hydrogen compressors (for hydrogenproduction, transport, storage, etc.)
 Metals machinery (hydrogen-reduced
ironmaking, etc.)

Build a CO2
solutionsecosystem

Page74 of145

 CO2 Capture and Storage
 CO2 transport (liquefied CO2 carries, etc.)

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

〇

2-b)

△

◎

2-c)

2-d)

Requirement
checkWork Undertaken

DNV Findings

When identifying business activities that areenvironmentally material parts, it isrecommended that the fundraiser consider
multiple climate change-related scenariosthat may possibly impact its judgment on
the identification16.

Yes

Confirmed documents:

MHI discloses climate change-related information inline with TCFD recommendations. Specifically, it
discloses governance, strategy (transitions), risk
management (1.5 °C below, risks and opportunities
for the 4°C scenario, efforts toward 2030, andfinancial impacts), and indicators and targets. MHI'stransition strategy is associated with this TCFD effort.

In terms of considering materiality, it ispossible to apply existing guidance provided
by an organization that creates standard
criteria concerning sustainability reporting17.

Yes

The fundraiser should indicate that climatechange is an environmentally material partof business activities18.

Yes/01//02/No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//02/No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//02//04/

No
Not Applicable

Interviews withstakeholders

Page75 of145

In identifying materiality, MHI utilizes analysis andevaluation methods that take into account both
positive and negative aspects of its operations,
utilizing GRI standards, ISO 26000, SASB, TCFD, etc.
In addition, efforts to address environmental
materiality include not only emission reductions fromthe company's own business activities, but also
activities that contribute to Scope 3 and reductions atother companies. In addition, contribution to theSDGs, which will be discussed later, is also taken into
consideration. These are disclosed in the Frameworkand other documents. *1: An international standard
established by the Global Reporting Initiative toprovide ESG-related reporting, management, andanalysis methods.
MHI's environmental materiality is "climate change"
under the theme of "providing energy solutions toenable a carbon neutral world". These are disclosed in
the Integrated Report, on the website, and throughthe Framework.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

〇

2-e)

It is recommended that disclosures include
the contents of climate change-related
scenarios used in identifying businessactivities that are environmentally material
parts along with the underlying reasons(e.g., regional and industrial characteristics)
for selecting such scenarios.

Requirement
checkWork Undertaken

DNV Findings

Yes

Confirmed documents:

Through its TCFD efforts, MHI explains theimportance of transitions using multiple forecast
scenarios from the International Energy Agency. In
this context, efforts to contribute to transitions byutilizing core business are explained.

No
Not Applicable/01//02//03//12//13//14//15//16//17/
Interviews withstakeholders

15 They include activities that are environmentally material parts are considered to be business activities of the fundraiser that identifies climate change as part ofits 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.

Page76 of145

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

CTF-3 Climate Transition Strategy to be Science-based Including Targets and Pathways
Ref.

No.

Disclosure elements

◎

3-a)

The fundraiser should reference sciencebased targets in developing its transition
strategies.

Requirement
checkWork Undertaken

DNV Findings

Yes

Confirmed documents:

MHI's transition strategy and targets are consistent
with the sector-specific roadmaps of the International
Energy Agency and the Ministry of Economy, Tradeand Industry and the Ministry of Land, Infrastructure,
Transport and Tourism, which are intended to alignwith the Paris Agreement targets. Since theseroadmaps are based on the scientific evidence
necessary to achieve the goals of the Paris
Agreement, MHI's transition strategy is considered to
be a scientifically based goal.

No
Not Applicable/01//02//03//12//13//14//15//16//17/
Interviews withstakeholders

◎

3-b)

This should include mid-term targets (shortto mid-term targets) in addition to longterm targets for 2050 and be quantitatively
measurable based on a measurement
methodology which is consistent over a long
period of time.

Confirmed documents:

Yes/01//02//03//04//05/

No
Not Applicable

Interviews withstakeholders

MHI has developed a transition strategy as a transition
roadmap, which incorporates short-term targets,
medium-term targets, and a strategic plan for
decarbonization (i.e., a plan to introduce technologies
that will contribute to the transition). Each goal under
MHI's Transition Strategy is disclosed as follows.
TargetReduce CO₂

Reduce CO₂ emissions

year

emissions acrossacross MHI's value chain

MHI Group Scope

Scope 3*2 + reductions

1&2*1

from CCUS

2030▲50% (compared to ▲50% (compared to 2019)
2014)

2040

Net Zero

Net Zero*1: The calculation standard is based on the GHG
Protocol.
*2: The calculation standard is based on the GHG
Protocol. However, we also account for reductions
achieved by CCUS as an MHI original index.
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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

DNV Findings
Reference: The short-term target is set in the MHIGroup's Fifth Environmental Target (FY2021-FY2023)
as "a 9% improvement in CO2 emissions per unit ofproduction from offices and plants in FY2023 comparedto FY2014”.

◎

3-c)

(△)

◎
(△)

3-d)

In addition, it is recommended that GHG
reduction targets, which could be formulated
either in intensity and absolute terms,
should consider environmental materiality
and cover Scopes 1 through 3 of GHG
Protocol, the international standard on
supply-chain emissions. It is recommended
that targets covering Scope 3 be set using apractical calculation method when it could
be subject to significant reduction in thefundraiser’s business model19. It is also
possible to disclose the avoided emissions asnecessary.

Yes

Science-based targets are GHG reduction
targets required for achieving the goals of
the Paris Agreement and should be set while
taking into account differences in regional
characteristics and industries. In so doing, it
is possible to refer to the following
trajectories.
- Scenarios widely recognized in theinternational community (Examples

Yes

Confirmed documents:/01//02//03//04//05/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:No
Not Applicable/01//02//03//04//12//13//14//15//16//17/
Interviews withstakeholders

Page78 of145

MHI's emissions are evaluated in absolute and specificemissions. It covers Scope 1, Scope 2, and Scope 3(major items), and also considers emission reductions
from society as a whole. Scope 3 is an important
reduction target in MHI's supply chain and businessmodel, and targets are set to the extent practicable.
See 3-b) for details.

MHI's Transition Strategic Target refer to thefollowing-

Internationally widely recognized scenario⇒Refer to IEA's analysis of multiple scenarios to
the TCFD-

MHI's transition roadmap and goals werevalidated through an assessment of its plans.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

include the Sustainable Development
Scenario (SDS) outlined by theInternational Energy Agency (IEA)20)- Objectives verified under the Science
Based Targets Initiative (SBTi) andsuch like- - Nationally Determined Contributions(NDC) of countries aligned with thegoals of the Paris Agreement, roadmaps
by industry sector21, industries set out
plans that are science-based achieving
the Paris Agreement22 and so on.
◎

△

3-e)

3-f)

DNV Findings-

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

Yes

In doing so, since short- to mid-term targets
will likely be set in consideration of various
factors (including the starting point andtrack records of the issuer, timing of capital
investments, economic rationality, costbenefit analysis, and availability oftechnology necessary to achieve thetargets), it is possible that the pathway may
not necessarily be linear with the same slope
at all times but may be nonlinear.

Yes

Confirmed documents:/01//02//03//04/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//02//03//04/

No
Not Applicable

Interviews withstakeholders

Page79 of145

Targets consistent with the goals of the Paris
Agreement (NDCs, industry-specific roadmaps,
scientific basis defined by industry, etc.)⇒Refer to the Ministry of Economy, Trade andIndustry's roadmap for the electric power, gas,iron and steel, and chemical industries and theMinistry of Land, Infrastructure, Transport andTourism's roadmap for international marinetransportation.

MHI's goals for the Transition Strategy (2030/2040)
are based on the asset deployment and technology
development plans outlined in the Pathway to Carbon
Neutrality for Society as a Whole in 2050 (Transition
Roadmap). *For details, see 3-b)

MHI plans to achieve its goals through multiple
technology options, taking into account a variety offactors (short-term initiatives, medium- to long-term
technology development and implementation) whendeveloping the transition roadmap presented in
Mission Net Zero. A non-linear path toward carbon
neutrality in 2040 is planned through energy
conservation and in-house technologies in Scope 1
and 2, and fuel conversion, energy
conservation/electrification, and CCUS businessexpansion in Scope 3.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

◎

3-g)

◎

△

3-h)

3-i)

Requirement
checkWork Undertaken

DNV Findings

The fundraiser should disclose the short- to
mid-term and long-term targets they haveset, including the base years etc.

Yes

Confirmed documents:

MHI's transition strategy sets 2014 as the base year
for Scope 1 and 2, and 2019 as the base year for
Scope 3, with 2021-2023 as the short-term target,
2030 as the medium-term target, and 2040 as thelong-term target. These are disclosed through Mission
Net Zero and the Framework. *For details, see 3-b).

In order to show that long-term targets are
science-based, disclosures should explain
the methodology or trajectory used to definetarget, including the underlying reasons(e.g., characteristics specific to a region orindustry). In particular, when reference ismade to plans and industry roadmaps
established by an industry, etc., theexplanation should include that they are
grounded in scientific basis.

Yes

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

Yes/01//02//03/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:No
Not Applicable/01//02//03//04//12//13//14//15//16//17/
Interviews withstakeholders

Confirmed documents:No
Not Applicable/01//02//03//04//06//07/
Interviews withstakeholders

The long-term goals in MHI's Transition Strategy are
consistent with those of the International Energy
Agency and the Ministry of Economy, Trade andIndustry.
The Ministry of Economy, Trade and Industry and theMinistry of Land, Infrastructure, Transport andTourism’ targets (sectoral roadmaps for Power, gas,iron and steel, chemicals, and international shipping)refer to Japan's various policies and international
scenarios aimed at achieving carbon neutrality in
2050, and are clearly stated to be consistent with theParis Agreement.
MHI has identified the following (see table below) as
specific initiatives that are examples of representative
projects (eligible project categories) that may be
eligible for investment in its efforts to achieve its
long-term goals.
Table MHI Green/Transition Finance
Eligible Project Category
green project
Eligiblebusiness

Page80 of145

Eligibility Criteria

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

DNV Findings

and/orprojects
Renewable Wind power (wind power plants)

energy Geothermal power (geothermal power
plants)Clean

 Hydrogen gas turbine (hydrogen power

Energygeneration businesses and/or projects
for100% hydrogen firing) Ammonia gas turbine (ammonia power
generation businesses and/or the projects
100% ammonia firing) Hydrogen/ammonia production (green) Steam power (conversion to 100%
ammonia firing) Gas engines for power generation (100%hydrogen firing)Transition Project
Eligiblebusiness/prEligibility Criteria

oject

Decarbonize Hydrogen-fired (co-firing) gas turbine

existing

 Ammonia-fired (co-firing) gas turbine

infrastructur  LNG-fired high-efficiency gas turbinee Steam power (conversion to 100%
ammonia firing) Gas engine for power generation(hydrogen co-firing)

Page81 of145

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

DNV Findings

 Material handing (high efficiency and fuelcell powered)

Build ahydrogensolutionsecosystem Hydrogen production (blue or turquoise,etc.) Ammonia production (blue or turquoise,etc.) Hydrogen compressors (for hydrogenproduction, transport, storage, etc.)
 Metals machinery (hydrogen-reduced
ironmaking, etc.)

Build a CO2
solutions CO2 Capture and Storage
 CO2 transport (liquefied CO2 carries, etc.)

ecosystem

DNV confirmed that MHI has an overall investment
plan (investment amount) of 180 billion yen in growthareas, including decarbonization, by 2023, in line withthe timeline.
△

3-j)Concerning targets and trajectories,
obtaining expert reviews on the following is
considered to be particularly useful:- Whether the long-term target is alignedwith science-based targets

Confirmed documents:

Yes
No
Not Applicable/01//02//03//04//06//07//12//13//14//15//16//17/
Interviews withstakeholders

Page82 of145

Based on the materials and information provided by
MHI, DNV reviewed the following and confirmed thatthe targets and trajectories are based on scientificevidence.
Are the long-term goals scientifically based
goals?

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken➡Whether the disclosed information
explains the alignment with the Paris
Agreement- Whether the short- to mid-term targets
are determined using a GHG emissions
forecast calculated based on a climatechange scenario analysis➡Whether scenarios, etc. widely recognizedin the international community are used orreferenced- Whether the actual values of theindicators used for the targets arequantitatively measured using consistentmeasurement methods➡Whether a specific GHG emissions
reduction measure has been developed toachieve short- to mid-term targets alignedwith long-term goals

DNV Findings➢The targets and trajectory based on MHI's
Transition Strategy are incorporated in theInternational Energy Agency's World Energy
Outlook and the targets of the Ministry of
Economy, Trade and Industry and the Ministry ofLand, Infrastructure, Transport and Tourism(roadmaps by sector for Power, gas, Iron andsteel and chemicals) to achieve carbon neutrality
in 2050. It refers to each of Japan's policies andinternational scenarios, etc., and specifies thatthose goals are consistent with the Paris
Agreement.

Page83 of145-

In setting short- and medium-term targets, are
GHG accounting projections based on climatechange scenario analysis?
➢ IEA's analysis by TCFD based on the below
1.5°C and 4°C scenarios.

-

Are performance values related to the indicators
utilized in the objectives quantitatively measured
by consistent measurement methods?
➢ The indicator used for the target is CO2
emissions (absolute value), and MHI has
established a method for calculating the
reduction effect based on the number of facilities
installed, the number of facilities sold, or thebasic unit (g- CO2 /kWh). Through the review,
DNV confirmed that the CO2 reduction effect isestimated based on the actual number of
equipment installed and equipment sold or thebasic unit (g- CO2 /kWh). Some projects areMitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

DNV Findings
difficult to calculate direct CO2 reductions, so theprogress of the project and other information
shall be disclosed.

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 a provisional “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
Technical Supplement 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.

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

CTF-4 Implementation Transparency
Ref.

No.

Disclosure elements

◎

4-a)

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

Yes

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

Yes

◯

4-b)

Requirement
checkWork Undertaken

DNV Findings

Confirmed

DNV confirmed that MHI has an overall investment plan
(investment amount) of 180 billion yen in growth areas,
including decarbonization, by 2023, in line with thetimeline.

documents:No
Not Applicable/01//04//06/

Interviews withstakeholders

Confirmed
documents:No
Not Applicable/01//04//06/

Interviews withstakeholders

The investment plan is a plan that includes any or moreof the following strategies that contribute to the efforts
necessary to implement the transition strategy:
research and development, business development,
business operations, operations, and other related
expenditures.
Specific initiatives include the following (see tablebelow).
Table MHI Green/Transition Finance Eligible Project
Category
Green project
Eligible businessEligibility Criteria

and/or projects

Renewable energy  Wind power (wind power plants)
 Geothermal power (geothermal power
plants)Clean energy Hydrogen gas turbine (hydrogen power
generation businesses and/or projects
for100% hydrogen firing)

Page85 of145

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

DNV Findings

 Ammonia gas turbine (ammonia power
generation businesses and/or the
projects 100% ammonia firing) Hydrogen/ammonia production (green) Steam power (conversion to 100%
ammonia firing) Gas engines for power generation(100% hydrogen firing)Transition Project
Eligible businessEligibility Criteria

and/or projects

Decarbonize existing

infrastructure

Hydrogen gas turbine (co-firing)

Ammonia gas turbine (co-firing)

LNG-fueled high-efficiency gasSteam power (conversion toGas engine for power generation

turbine100% ammonia firing)(hydrogen co-firing)

Material handing (high efficiency
and fuel cell powered)

Build a hydrogensolutions ecosystem

 Hydrogen production (blue or
turquoise, etc.)
 Ammonia production (blue or
turquoise, etc.)
 Hydrogen compressors (forhydrogen production, transport,
storage, etc.)

Page86 of145

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

DNV Findings

 Metals machinery (hydrogenreduced ironmaking, etc.)
Build a CO2 solutions
ecosystem

△

◯

4-c)

4-d)

It is recommended that the investment plan
outline the assumed climate-related
outcomes and impacts24 in a quantitative
fashion where possible, along with thecalculation methods and prerequisites25. If
quantification is difficult, the use of external
certification systems can be considered as a
substitute for qualitative assessment.

Yes

In particular, when outlining the assumed
climate-related outcomes and impacts, it isrecommended that the disclosure include
not only GHG emission reduction and otherYes

Confirmed
documents:No
Not Applicable/01//02//03//04//
06//07/
Interviews withstakeholders

Confirmed
documents:No
Not Applicable/01//02//03//04//
06//07/

Page87 of145

 CO2 Capture and Storage
 CO2 transport (liquefied CO2 carries,etc.)

The climate-related outcomes and impacts envisionedby the investment plan are reductions in society as awhole (including both domestic and international)
through "reductions in own CO2 emissions" and"contributions to society through the entire value chain"(including reduction contributions at suppliers). Both ofthese are based on the CO2 reduction amount as anindicator, and are set to be reduced by 50% each by2030 (compared to 2014 for the company itself, andcompared to 2019 for the entire value chain).
Through the assessment, DNV confirmed that MHI has
established calculation methods and assumptions foreach appropriate project category. However, because
the calculation methods and assumptions include
business strategies, it is MHI's policy not to provide
general disclosure, including the appropriateness ofsuch disclosure.
No critical factors are identified that would hinder a "fairtransition" through the implementation of MHI'stransition strategy. The project is capable of utilizing
existing assets and is considered to be able to transition

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
check

initiatives to ease climate change but also
report how consideration of a “justtransition”26 is incorporated into thetransition strategy.

〇

◎

4-e)

4-f)

Work Undertaken

DNV FindingsInterviews with

with limited impact on employment in the existing value
chain and increased social costs.
If, through the assessment, DNV confirmed that MHI
believes that any future projects it implements may
have a negative impact on the "fair transition" or theSDGs, it confirmed that it will take appropriate actions
and disclose such information when necessary.

stakeholders

If implementing the transition strategy has
the potential of having a negative impact on
employment or the environment andcommunities other than climate change, it isrecommended that any expenditures tomitigate such negative impacts be added tothe plan.

Yes

Moreover, the outcomes arising frominvestments included in the investment planshould align with the targets.

Yes

Confirmed
documents:No
Not Applicable/01//02//03//04//
05//06//07/
Interviews withstakeholders

Confirmed
documents:No
Not Applicable/01//02//03//04//
06//07/
Interviews withAt this time, we have confirmed that there are no
additional significant social or environmental impacts
related to the implementation of MHI's transition
strategy. However, in the implementation of the
project, consideration of and measures to address socialand environmental impacts in accordance with laws,
regulations, ordinances, and in-house standards will be
implemented as part of MHI's standard business andoperational management processes.
MHI is quantitatively evaluating that the results (CO2
reductions) from each of the qualified project
candidates (see (3-b)) included in the investment plan
are consistent with the target (see (3-c)).

stakeholders

〇
(△)

4-g)

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

Confirmed

Yes

documents:No
Not Applicable/01//02//03//04//
05//06//07/
Interviews withstakeholders

Page88 of145

MHI Green/Transition Financing is planned to be used
to fund both new initiatives and refinancing of existing
expenditures (amounts and percentages are expected
to vary by project and bond).
When refinancing is targeted, we confirmed that areasonable look-back period (e.g., the subject asset's

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

refinancing for a reasonably set lookback
period (the period during which refinancing
is to be applied for projects that havealready started) is considered to be eligible.

◯

4-h)

It is recommended that investment plans be
disclosed by linking the outcomes andimpacts with the expenditures to the extent
practicable27.

transitional nature is maintained at the time ofrefinancing and that environmental improvement
effects are realized during the redemption or repayment
period) is established.

Confirmed

Yes

documents:No
Not Applicable/01//02//03//04//
05//06//07/
Interviews withstakeholders

◯

◎

4-i)

4-j)

DNV Findings

It is recommended that the fundraiser, after
securing financing, reports any deviations
between the initial plan and the actual
expenditure, outcomes and impacts. For any
deviations, it is recommended that theunderlying reasons be explained.

Yes

In cases where the Use of Proceeds bonds
include refinancing, the fundraiser should
provide an explanation on the lookback
period set under the framework or otherYes

Confirmed
documents:No
Not Applicable/01//02//03//04//
05//06//07/
Interviews with

DNV confirmed that MHI plans to invest 180 billion yen
in growth areas, including decarbonization, by 2023,
with investment plans in line with the timeline.
For each type of financing, the amount of the project to
be invested, the amount to be allocated (whether new
allocation or refinancing), and the environmental
benefits (calculation method or results) will be disclosed
to the extent practicable in the evaluation of the specificuse of the funds.
MHI will report any significant deviations in
expenditures, outcomes, or impact from the originalplan, and will include the reasons for such deviations in
the post-funding reporting.

stakeholders

Confirmed
documents:No
Not Applicable/01/

Interviews withstakeholders

Page89 of145

MHI has established a look-back period of
approximately three years. This is a standardized periodof time that MHI's environmental business would notlose its transitional nature in a short period of time. MHI
has confirmed that if a look-back period longer thanapproximately three years arises in the future, theMitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

relevant methods along with the underlying
reasons and factors.

◯

4-k)

(△)

△

4-l)

DNV Findings
period and the reason will be explained at an
appropriate time (e.g., in statutory documents orreporting prior to the issuance of bonds).

While there are differences in businesspractices, such as the fact that loans are
traditionally made based on the bilateralrelationship between a borrower and alender, it is recommended that disclosure on
the above be made to the extent possible inorder to ensure transparency and credibilityof transition finance. However, if it is difficult
to disclose such information to the publicfrom the standpoint of confidentiality andcompetition, it is possible to report suchinformation only to lenders or external
evaluation organizations without disclosing itto the public.

Yes
Not Applicable

Confirmed
documents:/01/
Interviews withstakeholders* This report

When MHI executes green/transition financing thatutilizes loans, it will explain that the loan is based on
the Framework and the results of this external
evaluation, and will disclose, to the extent practicable,
the requirements set forth in the Green Loan-relatedStandards.

Similarly, in cases where the fundraiser is asmall-to-medium-sized enterprise and it isdifficult to disclose to the public the samecontent as that reported to the financier oran external evaluation institution, it ispossible for the fundraiser to simplify thecontent of disclosure, for example, bylimiting disclosure to a summary of h) to j)of this section.

Yes

Interviews withstakeholders

MHI is not a small business.

No

No
Not Applicable

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

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 investment plans is expected to be required for projects applicable to Use of Proceeds.

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Schedule-5 Green Bond Guideline (Green Bonds and Transition Finance with specific use ofproceeds) Eligibility Assessment
Following check list (GBGLs-1 ~ GBGLs-4) is prepared based on the Green Bond Guidelines (GBGLs, MOE, 2020).
According to the GBGLs, Requirements/Work Undertaken are divided into following two terms, Should:◎ Recommend:〇
The numbers /01/, /02/ ~ /18/ listed in the Work Undertaken column are the confirmed documents, and the details (document name) are shown in Appendix.
In addition to the confirmed documents, the Work Undertaken includes the case where the information obtained through discussions and interviews with the
publishers is used as evidence.
This assessment applies as a requirement for Use of Proceeds based on CTFH and CTFBG, so any term "green" and “bond” in Schedule-5 should beread as "transition” or “finance (bond)".

GBGLs-1 Use of Proceeds
Ref.

SectionRequirements◎

1-①

Green Bond proceeds should be allocatedto Green Projects that state the clear
environmental benefits, which should beassessed by the issuer

Requirement check
Yes

Work Undertaken

DNV Findings

Confirmed

The proceeds from Green/Transition Finance will beallocated to projects that contribute to the low-carbon
and decarbonization of the MHI Group through projects
related to climate change in MHI's materiality. Specificenvironmental benefits have been evaluated by theissuer to lead to CO2 reductions.

documents:No
Not Applicable/01//02//03//04//
06//07/
Interviews withstakeholders〇

1-①

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

Confirmed

Yes

documents:No
Not Applicable/01//02//03//04//
06//07/
Interviews withstakeholders

Page92 of145

MHI quantifies the environmental benefits ofgreen/transition projects. Specifically, a calculation
formula has been established in advance for the CO2
reduction effect and quantified.
(Some projects include research and development
and installation of equipment for future environmental

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

SectionRequirements

Requirement check

Work Undertaken

DNV Findings
benefits, making it difficult to disclose and quantify
actual results.)

◎

◎

1-④

1-⑤

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

Confirmed
documents:No
Not Applicable/01//06/

MHI plans to explain the use of the proceeds toinvestors in advance through the Framework and theAmended and Restated Shelf Registration Statement.

Interviews withstakeholders

Confirmed
documents:No
Not Applicable/01//06/

Interviews withstakeholders

The proceeds will be allocated to one or more of the
projects listed in the table below and will be explained
to investors through the Framework, the Amended
Shelf Registration Statement and other documents andthe results of the external review.

* This report

Table MHI Green/Transition Finance
Eligible Project Category
green project
Eligible businessEligibility Criteria

and/or projects

Renewable Wind power (wind power plants)

energy Geothermal power (geothermal power
plants)Clean energy Hydrogen gas turbine (hydrogen
power generation businesses and/or
projects for 100% hydrogen firing) Ammonia gas turbine (ammonia
power generation businesses and/or
the projects 100% ammonia firing)

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

SectionRequirements

Requirement check

Work Undertaken

DNV Findings
 Hydrogen/ammonia production(green) Steam power (conversion to 100%
ammonia firing) Gas engines for power generation(100% hydrogen firing)Transition Project
Eligible business
and/or projects

Eligibility Criteria

Decarbonize existing  Hydrogen gas turbine (co-firing)
infrastructure Ammonia gas turbine (co-firing) LNG-fueled high-efficiency gas
turbine Steam power (conversion to 100%
ammonia firing) Gas engine for power generation(hydrogen co-firing) Material handing (high efficiency
and fuel cell powered)
Build a hydrogensolutions ecosystem

 Hydrogen production (blue or
turquoise, etc.)
 Ammonia production (blue or
turquoise, etc.)
 Hydrogen compressors (forhydrogen production, transport,
storage, etc.)
 Metals machinery (hydrogenreduced ironmaking, etc.)

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

SectionRequirements

Requirement check

Work Undertaken

DNV Findings
Build a CO2
solutions ecosystem〇

1-⑤

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

Confirmed

Yes

documents:No
Not Applicable/01//06//07/
Interviews withstakeholders* This report

◎

〇

1-⑥

1-⑦

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 curbthem) to investors so that the investors
and market participants can appropriately
evaluate these impacts.

Yes(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 (1) the amount (orthe share) of the bond proceeds being
allocated for refinancing, and (2) which
Green Projects (or Green Project

Yes

Confirmed
documents:No
Not Applicable/01//05//06//09/
Interviews withstakeholders

Confirmed
documents:No
Not Applicable/01//02//03//04//
05//06//07/
Interviews withstakeholders

Page95 of145

 CO2 Capture and Storage
 CO2 transport (liquefied CO2
carries, etc.)

The investor description is clearly stated about theoutline of the green/transition project throughdisclosure of the framework and the results of theexternal review, taking into account confidentiality
and other factors. Details of specific potential eligible
projects and projects to which proceeds are to beallocated are provided to the external review
organization to confirm eligibility.
Negative impacts associated with the implementationof the project are taken into consideration, such ascompliance with environmental laws, ordinances, andregulations, and clear environmental benefits such as
CO2 reductions during the entire life cycle or in eachprocess. In the operation and implementation of the
project, each relevant department is working toconserve the surrounding environment.

DNV confirmed that it is planned to be disclosed theestimated amount (or percentage) of the portion of
the proceeds used for refinancing on an annual basison the website. If the inclusion of refinancing and its
details are confirmed prior to the issuance of thebonds, the plan is to disclose the necessaryMitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

SectionRequirements

Requirement check

Work Undertaken

categories) may be refinanced.

◎

1-⑦

When Green Bonds are issued multiple
times to refinance an asset that requires
long-term maintenance, the issuer should
clearly disclose the asset’s age andremaining useful life and the amount tobe refinanced as at the time of the bondissuance, evaluate the long-termsustainability of environmental benefits
and obtain an assessment from external
reviewers for verification.

DNV Findings
information in legal documents, etc., in accordancewith CTF 4-g).

Confirmed

Yes

documents:No
Not Applicable/01//02//03//04//
05//06//07/
Interviews withstakeholders

Page96 of145

There are no plans at this time to use refinancing for
projects that have been in place for a long period oftime.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

GBGLs-2 Process for Project Evaluation and Selection
Ref.

SectionRequirements◎

2-①

In advance, issuers should provide
investors with information regarding thefollowing:
The environmental sustainability
objectives that the issuers intend toachieve through Green Bonds.

Requirement
checkWork Undertaken

Yes

Confirmed documents:No
Not Applicable/01//02//03//04//12//13//14//15//16/
Interviews withstakeholders

DNV Findings
The financing to be provided by MHI throughgreen/transition finance is consistent with the low-carbon
strategy set forth in the World Energy Outlook of theInternational Energy Agency and the sector-specificroadmaps of the Ministry of Economy, Trade and Industry
and the Ministry of Land, Infrastructure, Transport andTourism, which are intended to align with the goals of theParis Agreement. The purpose of this project is to achieve
the Transition Strategy.
MHI has developed a transition strategy as a transition
roadmap, which incorporates short-term targets, mediumterm targets, and a strategic plan for decarbonization (i.e.,a plan to introduce technologies that will contribute to thetransition). Each goal under MHI's Transition Strategy isdisclosed as follows.
These are planned to be explained to investors in advancethrough the Framework, the results of the external review
and the Amended and Restated Shelf Registration
Statement.
TargetReduce CO₂

Reduce CO₂ emissions

year

emissions acrossacross MHI's value chain

MHI Group Scope

Scope 3*2 + reductions

1&2
2030

*1

▲50% (comparedfrom CCUS▲50% (compared to 2019)

to 2014)2040

Net Zero

Net Zero*1: The calculation standard is based on the GHG Protocol.

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

SectionRequirements

Requirement
checkWork Undertaken

DNV Findings*2: The calculation standard is based on the GHG Protocol.
However, we also account for reductions achieved by CCUS as an
MHI original index.
Reference: The short-term target is set in the MHI Group's Fifth
Environmental Target (FY2021-FY2023) as "a 9% improvement in
CO2 emissions per unit of production from offices and plants in
FY2023 compared to FY2014”.

◎

2-①

In advance, issuers should provide
investors with information regarding thefollowing:
The criteria for determining theappropriateness of Green Projects basedon the environmental sustainability
objectives described above

Confirmed documents:

Yes

/01/

No
Not Applicable

Interviews withstakeholders

It was confirmed through the framework and assessmentthat the eligibility of MHI's green/transition projects is
described in terms of what assessment criteria (standards)
are based on. Specifically, the criteria are as follows
-

-

-

-

Climate Transition Finance Handbook
International Capital Markets Association (ICMA),
2020
Basic Guidelines on Climate Transition Finance
Financial Services Agency, Ministry of Economy,
Trade and Industry, Ministry of the Environment,
2021
Green Bond Principles
International Capital Markets Association (ICMA),
2021
Green Bond Guidelines
Ministry of the Environment, 2020
Green Loan Principles
Loan Market Association et al. (LMA et al.), 2021
Green Loan Guidelines
Ministry of the Environment, 2020

These will be clearly stated in the Framework and areplanned to be explained to investors in advance throughPage98 of145

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

SectionRequirements

Requirement
checkWork Undertaken

DNV Findings
the Amended and Restated Shelf Registration Statement
and other means.

◎

〇

2-①

2-⑥

In advance, issuers should provide
investors with information regarding thefollowing:
The process for determining how Green
Projects fit the criteria for theachievement of the environmental
sustainability objectives (The process forthe determination refers to the reason
why issuers determine that Green Projects
can provide environmental benefits
appropriately in light of the objectives andcriteria for the use of Green Bond
proceeds, how and by whom are thecriteria applied and used to determine
whether Green Projects are appropriate inlight of the objectives, and the like)
It is recommended that the issuers
explain to investors in advance any
environmental standards or certifications
that the issuers will refer to in evaluating
and selecting a Green Project to befinanced.

Confirmed documents:

Yes/01//08//09/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:

Yes
No
Not Applicable/01//02//03//04//06//12//13//14//15//16//17/Interviews withstakeholders

Page99 of145

DNV confirmed that within the framework there is a
description of what process was used to determine theselection of green/transition projects.
Specifically, after the finance department confirms that the
projects selected by the business divisions meet the eligibility
criteria, the Chief Financial Officer makes the final decision.
These processes have been established as internal
documents of MHI, and DNV confirmed that the plan is to be
implemented in accordance with the appropriate processes.

The Transition Strategy, which is the basis for evaluationand selection of Green/Transition Finance, is MHI'stransition roadmap based on the International Energy
Agency Roadmap and the sectoral roadmaps of the Ministryof Economy, Trade and Industry and Ministry of Land,
Infrastructure and Transport, with specific goals (short,medium and long-term) and plans. These will be explained
to investors through the Framework and Second Party
Opinions.
There are no environmental standards or certifications forindividual projects. Some activities are included throughsubsidized projects and alliances.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

SectionRequirements◎

2-⑦

If an issuer intends to establish an
exclusion standard to identify and control
such potentially material environmental
and social risks of Green Projects, theissuer should explain it to investors inadvance as one of the criteria it applies.

Requirement
checkWork Undertaken
Confirmed documents:

Yes
No
Not Applicable/01//02//03//04//05//06//09/
Interviews withstakeholders

DNV Findings
MHI has eliminated the following transactions as a response
to materiality Green/Transition Finance Not specified
separately.
Transactions that do not meet the policies and standards
in the sustainability framework
CSR Action Guidelines



Policy on Human Rights
Basic Policy on Environmental Matters and Action
Guidelines
Privacy PolicyPolicy of Safety and Health
Procurement Policy

MHI Group Supply Chain CSR Promotion

Guidelines Basic Policy Concerning Conflict
Minerals
〇

〇

2-⑨

2-⑪

It is recommended that internal groups
who have expertise, such as theenvironment related group, or external
institutions check whether thedetermination process is suitable from anenvironmental point of view.

Yes

It is recommended that issuers position
their environmental objectives, criteria
and information on their processes in thecontext of their comprehensive
environmental sustainability objectives,
strategy, policies and so on (e.g.,
medium-term management plan,sustainability strategy, CSR strategy)

Yes

Confirmed documents:/01//08//09/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:No
Not Applicable/01//02//03//04//06//12//13//14//15//16//
17/
Interviews withstakeholders

Page100 of145

DNV confirmed that the selection of transition projects is
described within the framework as to what process thedecision was based on. Specifically, after the financedepartment confirms that the projects selected by thebusiness divisions meet the eligibility criteria, the Chief
Financial Officer makes the final decision. These processes
have been established as internal documents of MHI, andDNV confirmed that the plan is to be implemented inaccordance with the appropriate processes.
The Transition Strategy, which is the basis for evaluation andselection of Green/Transition Finance, is MHI's transition
roadmap based on the International Energy Agency
Roadmap and the sectoral roadmaps of the Ministry of
Economy, Trade and Industry and the Ministry of Land,
Infrastructure, Transport and Tourism, with specific targets(short, medium and long-term) and plans. These will beMitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

SectionRequirements

Requirement
checkWork Undertaken

when explaining them to investors.

DNV Findings
explained to investors through the Framework and Second
Party Opinions.
MHI's transition strategy is closely related to its Mission Net
Zero, 2021 Business Plan (2021-2023), and TCFD-based
initiatives.

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

GBGLs-3 Management of proceeds
Ref.

SectionRequirements

◎

3-①

◎

◎

3-②

3-②

Requirement
checkWork Undertaken

Issuers should track and manage thenet Green Bond proceeds in an
appropriate manner. These tracking
and managing activities should becontrolled by the issuer’s internal
process.

Yes

Confirmed documents:

As long as the Green Bonds areoutstanding, issuers manage theamount of the allocation to the Green
project is equal to or more thanproceed, or issuers should periodicallyadjust to match the amount of thetotal Green Bond proceeds to the sumof the amount of the proceeds
allocated to Green Projects and theamount of the unallocated proceeds.

Yes

If any of the proceeds remains
temporarily unallocated, the issuer
should explain to investors how it
intends to manage the balance ofsuch unallocated funds and endeavour
to promptly allocate such funds toGreen Projects.

Yes/01//08//10//11/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//08//10//11/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//06//10//11/

No
Not Applicable

Interviews withstakeholders

Page102 of145

DNV Findings
DNV confirmed that MHI plans to manage theproceeds so that the total green/transition eligible
project amount is not less than the amount ofgreen/transition financing issued, either in theaccounting system or in separate internal documents.
Through interviews with stakeholders and actual
results, DNV confirmed that there is an operation(system) that can be tracked and verified by theabove-mentioned fund management.
DNV confirmed that MHI plans to monitor the
allocation of the proceeds on a regular basis (at least
once a year) based on data extracted from its
accounting system to confirm that the requirements
are satisfied.

DNV has explained to investors that MHI will track thebalance of unallocated proceeds through its internal
control system and how it will manage such funds(i.e., in cash and cash equivalents). In addition, DNV
confirmed that MHI plans to allocate the funds to thesubject project (including refinancing) in a timely
manner. In addition, DNV confirmed that unallocatedfunds are planned to be allocated within three years,
taking into account that the projects include long-term

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

SectionRequirements

Requirement
checkWork Undertaken

DNV Findings
projects, and that if there is a significant excess, it will
be reported in the reporting, etc., along with thereasons for the excess.

◎

〇

◎

〇

3-⑤

3-⑥

3-⑧

3-⑨

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

Yes

It is recommended that issuers keep
evidenced documents appropriatelythat demonstrate how they tracked
and managed Green Bond proceeds.

Yes

In advance, issuers should provide
investors with information on how
unallocated Green Bond proceeds will
be managed when the Green Projects
that will receive the Green Bond
proceeds have not been determined,
or when such Green Projects havebeen determined but the proceeds
have not been allocated because theallocation timing has not yet arrived.

Yes

It is recommended that issuers
manage unallocated Green Bond
proceeds as an asset with highliquidity and safety such as cash, cash
equivalents, or short-term financial
assetsYes

Confirmed documents:/01//08//10//11/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//08//10//11/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//10//11/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//10//11/

No
Not Applicable

Interviews withstakeholders

Page103 of145

DNV confirmed that the issuer has internal processes
in place to track the proceeds. It confirmed that theseare planned to be explained to investors in theframework or otherwise.
DNV confirmed that there is an internal process inplace to ensure that documents related to the
management of proceeds are properly retained
throughout the outstanding period in accordance with
MHI's regulations for document management.
DNV confirmed that the framework describes themethod of investment of proceeds equivalent to theamount of funds before allocation (to be managed in
cash or cash equivalents).

Cash or cash equivalents as specified in theframework are safe assets and conform to therequirements.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

GBGLs-4 Reporting
Ref.

SectionRequirements

◎

4-①

◎

◎

4-②

4-③

Requirement
checkWork Undertaken

Issuers should publicly disclose thelatest information on the use of Green
Bond proceeds after issuanceYes

Confirmed documents:

Issuers should disclose the latest
information at least once a year until
full allocation of the proceeds and asnecessary thereafter in the event of
new developments.

Yes

Disclosed information should include thefollowing contents:<Contents>
・ A list of the Green Projects to which
Green Bond proceeds have been
allocated

Yes

/01/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:

/01/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//06//10//11/

No
Not Applicable

Interviews withstakeholders

DNV Findings
DNV has confirmed that MHI plans to report(annually) on the status of the allocation of proceedsfrom the Green/Transition financing issue and theenvironmental benefits of the financing at least until
the year following the completion of the allocation,
beginning with the year following the issuance of theGreen/Transition financing.
The annual report will be disclosed on MHI's
website.
Same as 4-①.
The committee confirmed that even after allocations
is completed, any changes in transition strategies orpaths, major changes in allocation plans or project
implementation status (e.g., suspension of a projectthat has initiated allocations, significant deferrals onan annual basis, sale or retirement, etc.) will bereported in a timely manner or in the reporting.
The information to be disclosed will include thefollowing for confidentiality reasons
The planned timing of the allocation is within 3 years
after procurement, and the investment method is
expected to be managed with cash or cash
equivalents.
Reporting will be published on the website.

・ A brief description of each Green
Project (including up-to-date progress)<Allocation Status>
 Status of allocation for eligible projects
 Amount or percentage of allocated andunallocated proceeds, scheduled time ofallocation, and method of investment

・ The amount allocated to each Green
Project

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Ref.

SectionRequirements

Requirement
checkWork Undertaken

・ The expected environmental benefitsof each Green Project Ratio of new financing to refinancing<Environmental benefits> The environmental improvement effects should
be within the scope of confidentiality obligations,to the extent practicable, and in consideration of
the characteristics of the project, including an
overview of the project (including the progress of
research and development, operation, etc.), theassumed environmental benefits (e.g., tonsCO2/year, etc. (Reduction effect is calculated
based on the number of facilities installed,
number of facilities sold, or basic unit (gCO2/kWh), etc.)

・ Information regarding unallocatedGreen Bond proceeds (the amount of
the unallocated proceeds or the share of
the unallocated proceeds to the total
amount of the proceeds, when theunallocated proceeds are expected to beallocates to Green Projects, and how theunallocated proceeds are managed until
allocation)

〇

〇

◎

4-④

4-⑤

4-⑦

DNV Findings

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
the allocated proceeds used forrefinancing, and 2) a list of the Green
Projects (or the project categories)
refinanced.

Yes

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

Yes

When disclosing information regarding
the expected environmental benefits ofYes

Confirmed documents:

/01/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//06/No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//06//07/
Page105 of145

DNV confirmed that MHI plans to disclose theestimated amount (or percentage) of the portion of
the procured funds allocated to refinancing in anannual report on its website, if the funds are used forrefinancing.

It was confirmed that information disclosure would
be on a per green/transition project basis, but may
be in an aggregated format depending on thesituation, taking into account confidentiality
agreements, etc.

The environmental benefits will be based on the CO2
reduction benefits, but will use the appropriate statedMitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

〇

Section

4-⑧

Requirements

Requirement
checkWork Undertaken

projects, issuers should use appropriate
indicators while ensuring consistency
with the “environmental sustainability
objectives,” the “criteria” for Green
Projects specified in Section 2, “Process
for Project Evaluation and Selection,”and the characteristics of Green
Projects.

No
Not Applicablestakeholders

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.

Yes

Confirmed documents:

Interviews with

/01//06//07/

No
Not Applicable

Interviews withstakeholders

Page106 of145

DNV Findings
indicators depending on the nature of the project for
which green/transition financing is being allocated.

Environmental improvement benefits will be disclosed
using quantitative indicators, but will be conducted
on a per-qualified-criteria basis, taking into
consideration confidentiality and the rationality of theevaluation process. The calculation method will be
disclosed to the extent necessary.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Schedule-6 Green Loan Guidelines (Green Loans and Transition Finance Loan with specific use ofproceeds) Eligibility Assessment
The following check list (GLGLs-1 to GLGLs-6) is prepared based on the Green Loan Guidelines (GLGLs, MOE, 2020).
According to the GLGLs, Requirements/Evaluation aspects are divided into following two terms, Should:◎ Recommend:〇
The numbers /01/, /02/ ~ /18/ listed in the Work Undertaken column are the confirmed documents, and the details (document name) are shown in Reference
dcoument-1 (See the Attachment).
In addition to the confirmed documents, the Work Undertaken includes the case where the information obtained through discussions and interviews with the
publishers is used as evidence.
This assessment applies as a requirement for Use of Proceeds based on CTFH and CTFBG, so any term "green" and “bond” in Schedule-6 should beread as "transition” or “finance (bond)".

GLGLs-1 Use of Proceeds
Ref.

SectionRequirements

◎

1-①

〇

1-①

Requirement
checkWork Undertaken

Proceeds of Green Loans should be used
for Green Projects that have clear
environmental benefits.
The borrowers should assess suchenvironmental benefits.

Yes

Confirmed documents:

The borrowers is recommended toquantify them where possible.

Yes

No
Not Applicable/01//02//03//04//06//07/
Interviews withstakeholders

Confirmed documents:No
Not Applicable/01//02//03//04//06//07/
Interviews withstakeholders

Page107 of145

DNV Findings
The proceeds through Green/Transition Finance will be
used for projects that contribute to the low anddecarbonization of the MHI Group through projects
related to climate change in MHI's materiality. The
specific environmental improvement benefits havebeen evaluated by the issuer to reduce CO2 emissions.
MHI is quantifying the environmental improvement
benefits of its green/transition projects. Specifically, acalculation formula has been established in advancefor the CO2 reduction effect and quantified.
(Some projects include research and development for
future environmental improvements and installation of

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

SectionRequirements

Requirement
checkWork Undertaken

DNV Findings
equipment, making it difficult to disclose and quantify
actual results.)

◎

◎

1-④

1-⑤

Borrowers should explain in advance theuse of proceeds in documents including
contracts exchanged between parties
involved.

Yes

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

Yes

Confirmed documents:/01//06/No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//06/No
Not Applicable

Interviews withstakeholders*This report

MHI plans to explain to investors in advance how theproceeds will be used through frameworks and othermeans.

The proceeds will be used for one or more of the
projects listed in the table below and will be explained
to investors through the Framework, the Amended andRestated Shelf Registration Statement, and the resultsof the external review.
Table MHI Green/Transition Finance
Eligible Project Category
green project
Eligible businessEligibility Criteria

and/or projects

Renewable Wind power (wind power plants)

energy Geothermal power (geothermal power
plants)Clean energy Hydrogen gas turbine (hydrogen
power generation businesses and/or
projects for100% hydrogen firing) Ammonia gas turbine (ammonia
power generation businesses and/or
the projects 100% ammonia firing)

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SectionRequirements

Requirement
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DNV Findings

 Hydrogen/ammonia production(green) Steam power (conversion to 100%
ammonia firing) Gas engines for power generation(100% hydrogen firing)Transition Project
Eligible businessEligibility Criteria

and/or projects

Decarbonize existing 
infrastructure

Hydrogen gas turbine (co-Ammonia gas turbine (co-

LNG-fueled high-efficiency gas

firing)firing)turbine

Steam power (conversion toGas engine for power

100% ammonia firing)
generation (hydrogen co-firing)

Material handing (highefficiency and fuel cell powered)

Build a hydrogensolutions ecosystem

 Hydrogen production (blue or
turquoise, etc.)
 Ammonia production (blue or
turquoise, etc.)
 Hydrogen compressors (forPage109 of145

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

SectionRequirements

Requirement
checkWork Undertaken

DNV Findingshydrogen production, transport,
storage, etc.)
 Metals machinery (hydrogenreduced ironmaking, etc.)
Build a CO2
solutions ecosystem

〇

◎

1-⑤

1-⑥

In cases where individual Green Projects
have been specified, it is recommended
that issuers clearly present the projects
to lenders.

Yes

In cases where Green Projects haveincidental negative environmental
impacts along with the alleged
environmental benefits, borrowers should
include information regarding thesenegative impacts (e.g., how they areassessed, how borrowers intend toaddress them) so that lenders andmarket participants can appropriately
evaluate these impacts.

Yes

Confirmed documents:/01//06//07/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//05//06//09/

No
Not Applicable

Interviews withstakeholders

Page110 of145

 CO2 Capture and Storage
 CO2 transport (liquefied CO2
carries, etc.)

The investor description is clearly stated about theoutline of the green/transition project throughdisclosure of the framework and the results of theexternal review, taking into account confidentiality
and other factors. Details of specific potential eligible
projects and projects to which funds are to beallocated are provided to the external review
organization to confirm eligibility.
Negative impacts associated with the implementationof the project are taken into consideration, such ascompliance with environmental laws, ordinances, andregulations, and clear environmental benefits such as
CO2 reductions during the entire life cycle or in eachprocess. In the operation and implementation of the
project, each relevant department is working toconserve the surrounding environment.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

SectionRequirements

〇

1-⑦

◎

1-⑦

Requirement
checkWork Undertaken

In cases where Green Loan proceeds areused to refinance existing Green Projects,
it is recommended that borrowers
provide information to the lenders
regarding (1) the amount (or the share)of the loan proceeds being allocated forrefinancing, and (2) which Green Projects(or Green Project categories) may be
refinanced. Furthermore, when using
proceeds for refinancing Green Projects,
the borrower is recommended to indicate
the applicable period of the Green Projectrefinanced (Lookback Period).

Yes

Confirmed documents:

When Green Loans are used multiple
times to refinance an asset that requires
long-term maintenance, the borrowershould clearly disclose the asset’s age,remaining life and the amount to berefinanced as of the time of procurement,
evaluate the long-term sustainability ofenvironmental benefits and receive anassessment from an outside agency forverification as necessary.

Yes

No
Not Applicable/01//02//03//04//05//06//07/
Interviews withstakeholders

Confirmed documents:No
Not Applicable/01//02//03//04//05//06//07/
Interviews withstakeholders

Page111 of145

DNV Findings
DNV confirmed that the plan is to disclose theestimated amount (or percentage) of the portion of
the proceeds used for refinancing on an annual basison the website. If the inclusion of refinancing and its
details are confirmed prior to the issuance of thebonds, the plan is to disclose the necessary
information in legal documents, etc., in accordancewith CTF 4-g).

There are no plans at this time to use refinancing for
projects that have been in place for a long period oftime.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

GLGLs-2 Process for Project Evaluation and Selection
Ref.

Secti
on

Requirements◎

2-①

Borrowers should provide lenders withinformation in advance regarding thefollowing: the environmental sustainability
objectives that the borrowers intend toachieve through the Green Loans;

Requirement
checkWork Undertaken

Yes

Confirmed documents:No
Not Applicable/01//02//03//04//12//13//14//15//16//17/
Interviews withstakeholders

DNV Findings
The financing to be provided by MHI throughgreen/transition finance is consistent with the low-carbon
strategy set forth in the World Energy Outlook of theInternational Energy Agency and the sector-specificroadmaps of the Ministry of Economy, Trade and Industry
and the Ministry of Land, Infrastructure, Transport andTourism, which are intended to align with the goals of theParis Agreement. The purpose of this project is to achieve
the Transition Strategy.
MHI has developed a transition strategy as a transition
roadmap, which incorporates short-term targets, mediumterm targets, and a strategic plan for decarbonization (i.e.,a plan to introduce technologies that will contribute to thetransition). Each goal under MHI's Transition Strategy isdisclosed as follows.
These are planned to be explained to investors in advancethrough the Framework, the results of the external review
and the Amended and Restated Shelf Registration
Statement.
TargetReduce CO₂

Reduce CO₂ emissions

year

emissions acrossacross MHI's value chain

MHI Group Scope

Scope 3*2 + reductions

1&2
2030

*1

▲50% (comparedfrom CCUS▲50% (compared to 2019)

to 2014)2040

Net Zero

Net Zero*1: The calculation standard is based on the GHG Protocol.

Page112 of145

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

Secti
on

Requirements

Requirement
checkWork Undertaken

DNV Findings*2: The calculation standard is based on the GHG Protocol.
However, we also account for reductions achieved by CCUS
as an MHI original index.
Reference: The short-term target is set in the MHI Group's
Fifth Environmental Target (FY2021-FY2023) as "a 9%
improvement in CO2 emissions per unit of production fromoffices and plants in FY2023 compared to FY2014”.

◎

2-①

Borrowers should provide lenders withinformation in advance regarding thefollowing: the criteria for determining theappropriateness of Green Projects basedon the environmental sustainability
objectives described above;

Confirmed documents:

Yes

/01/

No
Not Applicable

Interviews withstakeholders

It was confirmed through the framework and assessmentthat the eligibility of MHI's green/transition projects is
described in terms of what assessment criteria(standards) are based on. Specifically, the criteria are as
follows----

Climate Transition Finance Handbook
International Capital Markets Association(ICMA), 2020
Basic Guidelines on Climate Transition Finance
Financial Services Agency, Ministry of Economy,
Trade and Industry, Ministry of theEnvironment, 2021
Green Bond Principles
International Capital Markets Association(ICMA), 2021
Green Bond Guidelines
Ministry of the Environment, 2020
Green Loan Principles
Loan Market Association et al. (LMA et al.), 2021
Green Loan Guidelines
Ministry of the Environment, 2020

These will be clearly stated in the Framework and are

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

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Secti
on

Requirements

Requirement
checkWork Undertaken

DNV Findings
planned to be explained to investors in advance throughthe Amended and Restated Shelf Registration Statement
and other means.

◎

〇

2-①

2-⑥

Borrowers should provide lenders withinformation in advance regarding thefollowing: the process for determining how
Green Projects fit thecriteria for the achievement of theenvironmental sustainability objectives.

Yes

It is recommended that the borrower
explains to lenders in advance any
environmental standards or certificationthat the borrower will refer to in evaluating
and selecting a Green Project to befinanced.

Yes

Confirmed documents:/01//08//09/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:No
Not Applicable/01//02//03//04//06//12//13//14//15//16//17/Interviews withstakeholders

Page114 of145

DNV confirmed that within the framework there is a
description of what process was used to determine theselection of green/transition projects.
Specifically, after the finance department confirms thatthe projects selected by the business divisions meet theeligibility criteria, the Chief Financial Officer makes the
final decision. These processes have been established asinternal documents of MHI, and DNV confirmed that theplan is to be implemented in accordance with theappropriate processes.
The Transition Strategy, which is the basis for evaluationand selection of Green/Transition Finance, is MHI'stransition roadmap based on the International Energy
Agency Roadmap and the sectoral roadmaps of the
Ministry of Economy, Trade and Industry and Ministry ofLand, Infrastructure and Transport, with specific goals(short, medium and long-term) and plans. These will be
explained to investors through the Framework and Second
Party Opinions.
There are no environmental standards or certifications forindividual projects. Some activities are included throughsubsidized projects and alliances.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

Secti
on

Requirements◎

2-⑦

If the borrower intends to establish
exclusion criteria to identify and control
such potentially material environmental
and social risks of Green Projects, theborrower should explain them to lenders inadvance as part of thecriteria it applies.

Requirement
checkWork Undertaken

Yes

Confirmed documents:No
Not Applicable/01//02//03//04//05//06//09/
Interviews withstakeholders

DNV Findings
MHI has eliminated the following transactions as a
response to materiality Green/Transition Finance Not
specified separately.
Transactions that do not meet the policies andstandards in the sustainability frameworkCSR Code of Conduct







〇

2-⑨

It is recommended that internal
departments who have expertise, such as
the environment related department, or
external institutions are involved in theevaluation and selection process of Green
Projects to ensure suitability from anenvironmental point of view.

Confirmed documents:

Yes/01//08//09/

No
Not Applicable

Interviews withstakeholders

Page115 of145

Policy on Human Rights
Basic Policy on Environmental Matters and Action
Guidelines
Privacy Policy
Policy of Safety and Health
Procurement Policy
MHI Group Supply Chain CSR Promotion
Guidelines Basic Policy Concerning Conflict
Minerals

DNV confirmed that the selection of transition projects is
described within the framework as to what process thedecision was based on. Specifically, after the financedepartment confirms that the projects selected by thebusiness divisions meet the eligibility criteria, the Chief
Financial Officer makes the final decision. These
processes have been established as internal documentsof MHI, and DNV confirmed that the plan is to be
implemented in accordance with the appropriate
processes.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

Secti
on

Requirements〇

2-⑪

It is recommended that borrowers position
their environmental objectives and criteria
and information on their processes in thecontext of their comprehensive objectives,
strategy, policies concerning environmental
sustainability (e.g. medium-term
management plan, sustainability strategy,
CSR strategy) and provide an explanation
to lenders.

Requirement
checkWork Undertaken

Yes

Confirmed documents:No
Not Applicable/01//02//03//04//06//12//13//14//15//16//17/Interviews withstakeholders

DNV Findings
The Transition Strategy, which is the basis for evaluationand selection of Green/Transition Finance, is MHI'stransition roadmap based on the International Energy
Agency Roadmap and the sectoral roadmaps of the
Ministry of Economy, Trade and Industry and the Ministryof Land, Infrastructure, Transport and Tourism, withspecific targets (short, medium and long-term) andplans. These will be explained to investors through the
Framework and Second Party Opinions.
MHI's transition strategy is closely related to its Mission
Net Zero, 2021 Business Plan (2021-2023), and TCFDbased initiatives.

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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

GLGLs-3 Management of proceeds
Ref.

Secti
on

Requirements

◎

3-①

◎

◎

3-②

3-②

Requirement
checkWork Undertaken

Borrowers should track and manage theentire amount of Green Loan proceeds.
These tracking and managing activities
should be controlled by the borrower’s
internal processes.

Yes

Confirmed documents:

As long as the Green Loans areoutstanding, borrowers should conductperiodic checks (at least yearly) to ensurethat the amount used for Green Projects isequal to, or greater than, the amountraised by the procurement of Green Loansor the sum of the amount used for Green
Projects and the amount of the unallocatedproceeds match the total amount of Green
Loan proceeds.

Yes

If any of the proceeds remain temporarily
unallocated, the borrower should explain tolenders how it intends to invest thebalance of such unallocated funds andendeavor to promptly use such funds forGreen Projects.

Yes/01//08//10//11/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//08//10//11/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//06//10//11/

No
Not Applicable

Interviews withstakeholders

Page117 of145

DNV Findings
DNV confirmed that MHI plans to manage the proceeds
so that the total green/transition eligible projectamount is not less than the amount of green/transition
financing issued, either in the accounting system or inseparate internal documents.
Through interviews with stakeholders and actual
results, DNV confirmed that there is an operation(system) that can be tracked and verified by the abovementioned fund management.
DNV confirmed that MHI plans to monitor the allocationof the proceeds on a regular basis (at least once a year)
based on data extracted from its accounting system toconfirm that the requirements are satisfied.

DNV has explained to investors that MHI will track thebalance of unallocated proceeds through its internal
control system and how it will manage such funds (i.e.,
in cash and cash equivalents). In addition, DNV
confirmed that MHI plans to allocate the funds to thesubject project (including refinancing) in a timely
manner. In addition, DNV confirmed that unallocatedfunds are planned to be allocated within three years,
taking into account that the projects include long-term

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

Secti
on

Requirements

Requirement
checkWork Undertaken

DNV Findings
projects, and that if there is a significant excess, it will
be reported in the reporting, etc., along with thereasons for the excess.

◎

〇

3-④

3-⑤

In advance, borrowers should provide
lenders with information on how Green
Loan proceeds will be tracked andmanaged.

Yes

It is recommended that borrowers keep
evidenced documents appropriately that
demonstrate how they tracked andmanaged Green Loans proceeds.

Yes

Confirmed documents:/01//08//10//11/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//08//10//11/

No
Not Applicable

Interviews withstakeholders

Page118 of145

DNV confirmed that the issuer has internal processes inplace to track the funds raised. It confirmed that theseare planned to be explained to investors in theframework or otherwise.
DNV confirmed that there is an internal process in place
to ensure that documents related to the managementof proceeds are properly retained throughout theoutstanding period in accordance with MHI's regulations
for document management.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

GLGLs-4 Reporting
Ref.

SectionRequirements

◎

4-①

◎

◎

◎

4-②

4-④

4-⑤

Requirement
checkWork Undertaken

Borrowers should report the latest
information on the use of Green Loan
proceeds to the financial institutions
who are lenders and took part in theGreen Loans after the procurement.

Yes

Confirmed documents:

For a borrower to gain public
acceptance by expressing that the
procured loans are Green Loans, theyneed to ensure transparency. For thisreason, if a borrower expresses that the
procured loans are Green Loans, it
should publicly disclose the latest
information on the use of Green Loan
proceeds after the procurement.

Yes

Borrowers should report or disclose theusage status of funds at least once a
year until all the proceeds are used.
Borrowers should report or disclosesuch information in a timely manner
even after all the proceeds are allocated
if there has been any major change inthe situation.

Yes

Reported or disclosed information should
include the following contents:<Matters pertaining to reporting or

Yes

/01/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:

/01/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//06//07//09//10/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:/01//06//10//11/

No
Not Applicable

Page119 of145

DNV Findings
DNV has confirmed that MHI plans to report (annually)on the status of the allocation of proceeds from theGreen/Transition financing issue and the environmental
benefits of the financing at least until the year following
the completion of the allocation, beginning with theyear following the issuance of the Green/Transition
financing.
The annual report will be disclosed on MHI's website.
If MHI intends to finance green/transition financing
through a loan, it will state that it is a transition loan
and will disclose to the public updated information
about the use of the funds on its website.

Same as 4-①.
The committee confirmed that even after allocations arecompleted, any changes in transition strategies orpaths, major changes in allocation plans or project
implementation status (e.g., suspension of a projectthat has initiated allocations, significant deferrals on anannual basis, sale or retirement, etc.) will be reported
in a timely manner or in the reporting.
The information to be disclosed will include the following
for confidentiality reasonsMitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

SectionRequirements

Requirement
checkWork Undertaken

disclosure>
A list of the Green Projects to which
Green Loan proceeds have been
allocated
A brief description of each Green
Project (including up-to-date
progress)
The amount allocated to eachGreen Project
The expected environmental
benefits of each Green Project
Information regarding unallocatedGreen Loan proceeds (the amountof the unallocated proceeds or theshare of the unallocated proceeds
to the total amount of theproceeds, and when the unallocatedproceeds are expected to beallocated to Green Projects)
A borrower is small-medium, reported
and disclosed information can be
simplified, if it is difficult to disclose thesame contents which a borrower reports
to a lender.
〇

4-⑥

If Green Loan 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
the allocated proceeds used forrefinancing, and (2) a list of the Green
Projects (or the project categories)

Interviews withstakeholders

DNV Findings
The planned timing of the allocation is within 3 years
after procurement, and the investment method is
expected to be managed with cash or cash equivalents.
Reporting will be published on the website.
<Allocation Status>
 Status of allocation to eligible businesses and/or
projects, overview with up-to-date progress
 Amount or share of unallocated proceeds, allocation
schedule, and the method to manage unallocatedproceeds
 Ratio of new financing to refinancing<Environmental benefits> The environmental improvement effects should bewithin the scope of confidentiality obligations, to theextent practicable, and in consideration of thecharacteristics of the project, including an overview
of the project (including the progress of research anddevelopment, operation, etc.), the assumed
environmental benefits (e.g., tons-CO2/year, etc.
(Reduction effect is calculated based on the numberof facilities installed, number of facilities sold, orbasic unit (g- CO2/kWh), etc.)

Confirmed documents:

Yes/01//06//07/

No
Not Applicable

Interviews withstakeholders

Page120 of145

DNV confirmed that MHI plans to disclose the estimatedamount (or percentage) of the portion of the procured
funds allocated to refinancing in an annual report on its
website, if the funds are used for refinancing.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

Section

〇

4-⑦

◎

〇

4-⑩

4-⑪

Requirements
refinanced.
While it is recommended to disclose (v)and (vi) on a project-by-project basis, if
there are confidentiality agreements,
competitive considerations, or a large
number of underlying projects that limit
the disclosure of details, it is consideredthat information is presented in genericterms or in an aggregated portfolio.
When disclosing information regarding
the expected environmental benefits ofprojects, borrowers should use
appropriate indicators, while ensuringconsistency with the characteristics ofGreen Projects.
When disclosing the expectedenvironmental benefits of projects, it isrecommended that borrowers, where
feasible, use quantitative indicators anddisclose information on methodologies
and/or assumptions as well as these
indicators.

Requirement
checkWork Undertaken

Confirmed documents:

Yes/01//06//07/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:

Yes/01//06//07/

No
Not Applicable

Interviews withstakeholders

Confirmed documents:

Yes/01//06//07/

No
Not Applicable

Interviews withstakeholders

Page121 of145

DNV Findings

It was confirmed that information disclosure would be
on a per green/transition project basis, but may be in an
aggregated format depending on the situation, taking
into account confidentiality agreements, etc.

The environmental benefits will be based on the CO2
reduction benefits, but will use the appropriate statedindicators depending on the nature of the project for
which green/transition financing is being allocated.

Environmental improvement benefits will be disclosed
using quantitative indicators, but will be conducted on a
per-qualified-criteria basis, taking into consideration
confidentiality and the rationality of the evaluation
process. The calculation method will be disclosed to theextent necessary.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

GLGLs-5 Internal Review
Ref.

SectionRequirements◎

5-(3)②◎◎5-(3)③5-(3)④

Requirement
checkWork Undertaken

If the borrower performs selfcertification, it should inform thelenders in advance and explain with
sufficient transparency its internal
expertise upon formulation of the selfcertification process pertaining to thegreen loan framework.

Yes

Confirmed documents:

Borrowers are recommended to
document their internal expertise. This
documentation should becommunicated to the lenders onrequest. The self-certification results
should also be reported to the lenders
on request.

Yes

When appropriate, and taking into
account confidentiality and competitive
considerations, borrowers should makepublicly available, via their website orotherwise, their decision to review theGreen Loan based on self-certification
as well as the parameters based on
which they assess Green Projects andthe internal expertise they have toassess such parameters.

Yes/01//06//07//09/

No
Not Applicable/10/Interviews withstakeholders

DNV Findings
MHI utilizes reviews by external organizations as an
objective evaluation. When conducting self-evaluationsin the future, MHI plans to explain to borrowers that it
conducts evaluations in accordance with the Frameworkand internal processes.

*This report

Confirmed documents:/01//06//07//09/

No
Not Applicable/10/Interviews withMHI has established a documented internal process forthe project evaluation and selection process and the
management of proceeds. MHI will report on the resultsof these processes when requested by lenders.

stakeholders

Confirmed documents:/01//06//07//09/

No
Not Applicable/10/Interviews withstakeholders

Page122 of145

MHI intends to disclose to the public that it conducted
its self-assessment using loans in Green/Transition
Finance in accordance with the internal processpreviously defined in the Framework and the results of
the assessment.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Ref.

SectionRequirements〇

5-(3)④For a borrower to gain public approvalby expressing that the procured loans
are Green Loans, they need to ensuretransparency. It is therefore
recommended that they make the selfcertification results publicly available via
their website or otherwise.

Requirement
checkWork Undertaken

Yes

Confirmed documents:

DNV Findings
MHI plans to disclose the results of its self-assessment to
the public through its website and other means whenutilizing loans for green/transition financing based on
self-assessment only.

/01//06//07//09/

No
Not Applicable/10/Interviews withstakeholders

CBS-MRE-1 The Marine Renewable Energy Sector Eligibility Criteria of the Climate Bonds Standard

CBS-MRE-1 The Marine Renewable Energy Sector Eligibility Criteria of the Climate Bonds Standard, Illustrative use of bond proceeds eligible
under the Marine renewable energy criteria (Table-1)
AssetsNo.

Criteria

Offshorewind
Assets that
operate or
are under
construction
to operate:

1

Offshore wind energy generation facilities

Requirement check

Work Undertaken

DNV Findings

Yes

Confirmed documents:

No-

The projects to be verified(candidate projects for allocation)
are those related to theconstruction, installation,
operation, and maintenance ofoffshore wind power.

Not Applicable2

Dedicated transmission infrastructure and support
facilities (e.g., transformers, backbone, transmission
terminus, grid connections, dedicated facilities forsupport vessels and vehicles, equipment storage,
onshore assembly)/01//06/

Interviews withstakeholders

Yes

Confirmed documents:No-

Not Applicable

Page123 of145/01//06/

Interviews withstakeholders

Projects subject to verification(subject to potential allocation)
are dedicated transportation andsupport-related equipment,
including projects involving thepurchase and installation of such
equipment.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

AssetsNo.

Criteria

3

Dedicated operational production, manufacturing or
distribution facilities for key components, such as windturbines, platforms etc.

Requirement checkYes
No
Not Applicable

Page124 of145

Work Undertaken

DNV Findings

N/A

N/A

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

CBS-MRE-2 The Marine Renewable Energy Sector Eligibility Criteria of the Climate Bonds Standard, Disclosure Component
Criteria
 Project location and size, including description of marine and coastal
ecosystem in proximity to planned installations, noting for example whether
located in marine protected areas or vulnerable marine ecosystems;
 Projected life span of the asset/project; Key stakeholders involved, including other users of the area and surroundingarea (sea, land or air depending on what is applicable) of the facility(ies); Description of project activities including details on installation, operation anddecommissioning activities;
 Expected/current facility capacity and generation during and after the life of
the bond; Details of where the energy generated is being fed into, and estimated impact
on grid mix; Projected avoided GHG emissions compared to fossil fuel counterfactual (inkgCO2e) using recognised conversion factors;
 The planning standards, environmental regulations and other regulations thatthe project has been required to comply with.

Requirement check

Work Undertaken

DNV Findings

Yes

Confirmed documents:

No-

We confirmed that the subject
project has a procedure toconfirm conformity to thisrequirement during the project
evaluation and selection process.

Not Applicable/01//06/

Interviews withstakeholders

Note 1: Where the bond portfolio includes several separately identifiable projects or groups of assets, these conditions
must be met for each separately identified project or asset grouping. Bond issuers should determine these projectboundaries, which may be based on geographical and/ or supply chain linkages.
Note 2: Verifiers are required to check that the issuer has disclosed the above information, but are not required to verify
the accuracy of the information provided. It is the issuer’s responsibility to provide correct information to theverifier, potential investors and the market in general.

CBS-MRE-3 The Marine Renewable Energy Sector Eligibility Criteria of the Climate Bonds Standard, Mitigation Component

Page125 of145

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Criteria

Requirement check The asset is 100% dedicated to renewable energy
 Any fossil fuel back up in place is limited to:◦ Powering monitoring, operating and maintenance equipment in the event of
no renewable power in the system◦ Powering resilience or protection measures in the event of no renewable
power in the system◦ Restart capability

Work Undertaken

DNV Findings

Yes

Confirmed documents:

No-

We confirmed that the subject
project has a procedure toconfirm conformity to thisrequirement during the project
evaluation and selection process.

Not Applicable/01//06/

Interviews withstakeholders

CBS-MRE-4 The Marine Renewable Energy Sector Eligibility Criteria of the Climate Bonds Standard, Adaptation & Resilience Requirements,
Checklist for evaluating the Issue’s Adaptation and Resilience performance in respect of a marine renewable energy facility (table-5)
No.

Criteria

1.1

Processes are in place (as part of both the asset design andongoing management) to assess key risks to the assets from achanging climate and its impact on marine conditions.

Requirement check

These key risks should include the following, plus any others felt to beof concern for the operation of these assets. The risks should be
identified and interpreted in terms of the impact on the asset and therelated effects for the business –e.g. impact on operating feasibility
and schedules and potential system outages, impact on maintenancerequirements etc.

Work Undertaken

DNV Findings

Yes

Confirmed documents:

No-

We confirmed that the subject
project has a procedure toconfirm conformity to thisrequirement during the project
evaluation and selection process.

Not Applicable

For all facilities Sea level rise and storm surge Extreme precipitation and flooding Increase in geophysical hazards such as earthquakes, tsunamis,
volcanic eruptions and landslides
 Changes in wind and storm patterns and intensity
 Changes in ocean temperature, currents and salinity levels

Page126 of145/01//06/

Interviews withstakeholders

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

No.

Criteria

Requirement check

Work Undertaken

DNV Findings

Yes

Confirmed documents:

No-

For the subject project, we
confirmed that the project
evaluation and selection process
is a procedure to confirm
conformity to this requirement. In
addition, we confirmed that the
project implementation phase has
a procedure to confirm conformity
to these requirements in theprocess of compliance withexisting laws and regulations.

The issuer understands what level of climate change would mean theasset/site is no longer viable, and understands under which climatechange scenarios this would happen.
These processes and assessments use climate information, modellingand scenarios based on peer reviewed methodologies and literatureand considering the variability in modelled scenarios. If a project does
not have any climate related risks or vulnerabilities evidence must
begiven to show how this was determined.
2.1

Processes are in place (as part of both the asset design, ongoing
operation and decommissioning) to assess the improvements
and impacts the asset has on the resilience of otherstakeholders in the system in which it operates

Not Applicable

These assessments address:
 Any ways in which renewable energy facilities might affect, both
positively and negatively, the climate resilience of other marine
users or relevant/local stakeholders/communities
 Any ways in which renewable energy facilities improve theadaptation capacity of other marine users or relevant/local
stakeholders/communities.

/01//06/

Interviews withstakeholderse.g., Any potential impacts on other marine stakeholders of a highly
dense concentration of renewable energy facilities or associatedtransmission lines?
e.g., Any potential impacts that renewable energy facilities may haveon coastal resilience by taking strength out of the wind, waves, tidal
flows, tidal range or by altering sedimentation processes?
If a project does not have any impacts beyond the asset/site evidence
must be given to show how this was determined.
3.1

An adaptation plan has been designed and is being implemented toaddress the risks identified in assessments outlined above.

Yes

Confirmed documents:

All risks identified are being addressed in the design and managementof the asset.

No-

Not Applicable

Page127 of145/01//06/

Interviews withstakeholders

For the subject project, we
confirmed that the project
evaluation and selection process
is a procedure to confirm
conformity to this requirement. InMitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

No.

Criteria

Requirement check

Work Undertaken

DNV Findings
addition, we confirmed that the
project implementation phase has
a procedure to confirm conformity
to these requirements in theprocess of compliance withexisting laws and regulations.

The issuer has designed or amended asset maintenance plans toensure that scheduled maintenance is sufficient to cope with theongoing impacts of climate change and a plan has been established togovern how they approach emergency maintenance needs arisingfrom sudden climate change impacts (e.g., extreme storms)
The issuer has remotely controlled or automated shutdown
procedures, training, capacity and governance arrangements in place
to manage the impacts of exceptional events (such as extreme
storms, winds etc.)
The issuer has monitoring and reporting systems and processes to
identify high risk scenarios
The issuer has contingency plans to address disruptions to operations
or loss of the asset and any resulting environmental or social
damage.
The issuer has processes for feeding risk assessments back into
decision making
The issuer has a budget allocated to implementing the adaptation
plan and has a named member of staff responsible for its
implementation.
The issuer complies with any existing broader or higher-level
adaption plans, such as NAPAs (National Adaptation Programs of
Action).
3.2

Inspections are carried out regularly and there is a maintenanceregime in place for future inspections with evidence that this isadhered to.

Yes

Confirmed documents:No-

Not Applicable

Page128 of145/01//06/

Interviews withstakeholders

DNV confirmed that the subject
project has a system in place toensure that it is operated inaccordance with the same internal
rules and regulations as theexisting facility, in a mannerconsistent with this requirement.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

No.

Criteria

4.1

Issuer is involved in stakeholder engagement and collaboration (i.n.
policy development, consultation, collaboration and active
engagement with other marine users)

Requirement check

Work Undertaken

DNV Findings

Yes

Confirmed documents:

No-

We confirmed that the subject
project will be operated inaccordance with the same internal
rules and regulations as theexisting facility, in a mannerconsistent with this requirement.

Not Applicablee.g., Engaging in hazard response planning for the area, or recovery
planning and operations after severe events/01//06/

Interviews withstakeholderse.g., Pursuing potential climate resilience benefits for the local areathat could be delivered by the marine renewable energy facility, suchas a tidal lagoon providing additional storm surge protection for local
townse.g., Alterations made to day-to-day operating procedures in
response to stakeholder engagement
5.1

The asset or project does not put in jeopardy at risk or endangered
species or habitats or unduly impact ecosystem services. Where there
are possible negative impacts to habitats, species, biodiversity, or
ecosystem services, mitigation measures are implemented to offset
the negative impacts.

Yes

Confirmed documents:No-

Not Applicable

E.g., Noise and vibration generated by marine renewable energy
arrays may disrupt animals, such as marine mammals, fish, birds,
turtles, and invertebrates that rely on sound for navigation and otheressential functions. The potential for collision-related injury or
mortality of marine animals is a key parameter for impact
assessment, particularly for tidal energy projects. Alteration of water
circulation, sediment transport, and other physical flows by marine
renewable energy devices as well as introduction of newelectromagnetic fields (e.g., via suspended or seafloor cables) may
negatively impact habitat quality. This might be especially relevant for
tidal barrage, but should be considered for all marine renewablearrays.
N.B. In many jurisdictions this will be well covered by existing
regulatory or licensing requirements, and those can be referenced
here if they provide sufficient evidence to cover this requirement.

Page129 of145/01//06/

Interviews withstakeholders

We confirmed that the subject
project has a procedure toconfirm conformity to thisrequirement during the project
evaluation and selection process.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

No.

Criteria

5.2

Waste is responsibly dealt with, including appropriate disposal of
construction waste and oil-based lubricants, including recycling
options where possible. Also, recycling where possible of equipment
after decommissioning.

Requirement check

Work Undertaken

DNV Findings

Yes

Confirmed documents:

No-

We confirmed that the subject
project has procedures to confirm
conformity to this requirement in
the project evaluation andselection process and in theoperation process based oninternal rules and regulations.

Not Applicable/01//06/

Interviews withstakeholders

N.B. In many jurisdictions this will be well covered by existing
regulatory or licensing requirements, and those can be referenced
here if they provide sufficient evidence to cover this requirement.
5.3

5.4

5.5

The issuer has recognized and listed the potential risks for accidentalsite contamination either from leakage of hydraulic fluid (or any otherpotential pollutant) or from wreckage/debris on the sea bed.
Demonstrable steps have been taken to minimize these risks andplans have been made for clean-up should a site contamination event
occur.

Yes

Confirmed documents:

No-

Decommissioning of the plant is planned in a way that considers theenvironmental impacts

Yes

Confirmed documents:

No-

N.B. In many jurisdictions this will be well covered by existing
regulatory or licensing requirements, and those can be referenced
here if they provide sufficient evidence to cover this requirement.

Not Applicable

Issuer has plans and processes in place to effectively manage andminimize conflict with other users of the marine and coastal space.

Yes

Confirmed documents:

No-

N.B. In some jurisdictions this will be well covered by existing
regulatory or licensing requirements, national or regional marine
plans and/ or marine spatial plans, and the application of orconformity with these regulations or plans can be referenced here if
they provide sufficient evidence to cover this requirement.

Not Applicable

Not Applicable

Page130 of145/01//06/

Interviews withstakeholders/01//06/

Interviews withstakeholders/01//06/

Interviews withstakeholders

We confirmed that the subject
project has procedures to confirm
conformity to this requirement in
the project evaluation andselection process and in theoperation process based oninternal rules and regulations.
We confirmed that the subject
project has procedures to confirm
conformity to this requirement in
the project evaluation andselection process and in theoperation process based oninternal rules and regulations.
We confirmed that the subject
project has procedures to confirm
conformity to this requirement in
the project evaluation andselection process and in theoperation process based oninternal rules and regulations.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

CBS-WE-1 Wind Sector Eligibility Criteria of the Climate Bonds Standard (ver1.1)
Green Project Eligibility Assessment Checklist
https://www.climatebonds.net/standard/windWind Sector Eligibility Criteria of the Climate Bonds Standard Version 1.2

CBS-WE-1 Wind Sector Eligibility Criteria of the Climate Bonds Standard Version 1.1, Illustrative use of bond proceeds eligible under the windcriteria (Table-1)
AssetsNo.

Criteria

Onshorewind Assetsthat operateor are underconstruction
to operate:

1

Onshore wind energy generation facilities

Requirement check

Work Undertaken

DNV Findings

Yes

Confirmed documents:

No-

The projects to be verified(candidate projects for allocation)
are those related to theconstruction, installation,
operation, and maintenance ofonshore wind power generation.

Not Applicable/01//06/

Interviews withstakeholders

-

2

3

Dedicated transmission infrastructure and support
facilities (e.g., transformers, backbone, transmission
terminus, grid connections, dedicated facilities forsupport vessels and vehicles, equipment storage,
onshore assembly)

Yes

Confirmed documents:

No-

Dedicated operational production, manufacturing or
distribution facilities for key components, such as windturbines, platforms etc.

Yes

Not Applicable/01//06/

Interviews withstakeholders

-

N/A

No
Not Applicable

The assets listed in Table 1 automatically meet the climate bond standard mitigation requirements and are shown below.
・Wind farms are projects and assets related to operation and construction for one or more of the following activities:
Page131 of145

The projects to be verified(candidate projects for allocation)
are those related to theconnection to the existing powertransmission (distribution)
facilities, including their purchaseand installation work.
N/AMitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion-Development, construction and operation of wind power-Operation-related products and manufacturing equipment dedicated to wind power development as a whole-Overall transportation equipment dedicated to wind power

Page132 of145

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

CBS-WE-2 Wind Sector Eligibility Criteria of the Climate Bonds Standard Version 1.1, Assets and projects not eligible for certification under thewind criteria
AssetsNo.

Criteria

Requirement check

Offshorewind

1Offshore wind facilities, dedicated transmission
infrastructure, dedicated support facilities,
manufacturing facilities and distribution facilities are noteligible for Certification under the Wind Criteria.
Offshore wind is eligible for Certification under the
Marine Renewable Energy Criteria.

Yes
No
Not Applicable

Page133 of145

Work Undertaken

DNV Findings

Confirmed documents:

Candidate projects related toonshore wind power generation
facilities subject to verification(subject to candidate allocation) are
not projects related to offshore
wind power generation facilities.

•/01//06/

Interviews withstakeholders

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

CBS-GE-1 Checklist for eligibility criteria of geothermal energy
The outline is as follows and the flow on the right.
/1/ Incidental CO2 emission factor (ℊ-CO2 /kWh) must be
calculated.
/2/ Incidental CO2 emission factor lower than 100ℊ-CO2 /kWh
/3/ Incidental CO2 emissions (ℊ-CO2 /kWh) sufficiently lower
than the existing grid/4/ Satisfying relevant environmental and occupational healthand safety requirements/5/ (Must be a CDM project)
For more details, please refer to the detailed checklist on the next pageand beyond.

Page134 of145

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Requirement
check

Criterion

Title

Requirements

1

Emissions Exclude the project if:
thresholdDirect operational carbon intensity > nationally-specific threshold(gCO2/kWh) of the geothermal facility

In the case of a co-generating plant, the denominator of the carbon intensity
formula should also include a term for end use energy in heat applications.
Applicants must also undertake to measure field emissions before and after
the construction of a new facility, or the realization of any other project that
could alter the rate of release of NCGs (non-condensable gases).
The ambition margin is likely to be determined through an iterative process
and be country-specific based on available information on what is typical,
and what ambitious, for geothermal plants in the relevant country. It may be
zero in countries where the combined margin is already low–geothermal
power stations would simply need to outperform the combined margin. In
countries where the combined margin is high, investors will needreassurance that the facility significantly outperforms probable fossil fuelequivalents, therefore it will be greater than zero. See Annex2 worked
examples for further discussion.
Facilities with negligible or low direct emissions, that is less than
100gCO2/kWh, are deemed to be comparable with other low carbon options(renewables or nuclear) in lifecycle terms and need not be compared withthe threshold. This allows geothermal facilities in countries with very low
fossil fuel capacity and a resulting very low combined margin, such as
Iceland, to still be certified.

Page135 of145

Yes
No
Not Applicable

Work Undertaken

DNV GL Findings

Confirmed documents: The candidate/01//06//09//18/
geothermal powersystem was confirmed
Interviews withto be a two-phase fluid
stakeholders
transport and doubleflush system.
No specific projects
have been decided at
this time.
DNV confirmed that MHI
plans to verify that its
CO2 emission factor is
below the standard assoon as the project isfinalized, and that it hasestablished procedures
to do so.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Requirement
check

Criterion

Title

Requirements

2

Emissionsmitigationtechnolog
y and/orplant
design(Only applies to cases which have not passed Criterion1)
Include the project (subject to further criteria) if mitigation technologies will
be deployed at the facility such that releases of NCGs to the atmosphere arerendered negligible.

Yes

Work Undertaken

DNV GL Findings

N/A

N/A

N/A

N/A

No
Not Applicable

At the current time, this is taken to mean any plant design (binary, combined
cycle or other) that incorporates total fluid reinjection8. The list oftechnologies that are assumed to reduce emissions to negligible may be
expanded as the Standard matures.
It has been suggested that processes which capture the CO2 for industrial use should also be
considered under this criterion to result in zero emissions. However, CO2 captured for, forexample, the soft drink industry, will still be released to the atmosphere, and this practice would
most likely not result in any net reduction in emissions overall.
83

Environm - Projects are required to comply with best practice international guidelines/
standards on environmental, health and safety (EHS) for geothermal power
ental,
generation (e.g. IFC/World Bank). As these detailed EHS guidelines containhealth,guidance on air emissions, note that compliance with them is a necessary
safetybut not sufficient requirement for certification, as the emissions performanceand social required for Climate Bonds certification is more stringent. In addition, the IFC
have advised us that the applicability of EHS Guidelines should be tailored tocriteria
the hazards and risks established for each project on the basis of the resultsof an environmental assessment in which site-specific variables are taken
into account.

Page136 of145

Yes
No
Not ApplicableMitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

Criterion

Title

Requirement
check

Requirements

Work Undertaken

DNV GL Findings

N/A

N/A

N/A

N/A

- Meeting IFC Performance Standards on Environmental and Social
Sustainability10 are strongly recommended (e.g. IFC PS5 Land Acquisition andInvoluntary Resettlement, or IFC PS6 Biodiversity Conservation andSustainable Management of Living Natural Resources).
10

4

5

See www.ifc.org/sustainabilityframework

Environm Any Enhanced Geothermal Systems project must comply with US
ental,
Department of Energy Protocol for Addressing Induced Seismicity Associatedhealth,with Enhanced Geothermal Systems11. 11
safetyhttps://www1.eere.energy.gov/geothermal/pdfs/geothermal_seismicity_protocol_012012.pdf
and social
criteria

Yes

Potential (Where applicable supersedes Criteria 1&2)
use of
CDM
If a Project Design Document (PDD) relating to the geothermal project has
appraisals been reviewed and registered under the Clean Development Mechanism, theproject will be accepted without need to comply with Criteria1&2, subject toscrutiny of the PDD, and unless any serious concerns have been raised
subsequent to registration.

Yes

Page137 of145

No
Not ApplicableNo
Not ApplicableMitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

EU-MFR-Hydrogen Hydrogen production eligibility checklist
EU-MFR-Hydrogen-1 Hydrogen production (NACE 4, code C20.11)
SectorRequirements

Requirement
check

Manufactureof hydrogen<Description>
・
Manufacture of hydrogen and hydrogen-based synthetic fuels.
・The economic activities in this category could be associated with
NACE code C20.11 in accordance with the statistical classificationof economic activities established by Regulation (EC) No
1893/2006.
<Substantial contribution criteria>
The activity complies with the life-cycle GHG emissions savings
requirement of 73.4% for hydrogen [resulting in life-cycle GHG
emissions lower than 3tCO2e/tH2] and 70% for hydrogen-based
synthetic fuels relative to a fossil fuel comparator of 94g CO2e/MJ in
analogy to the approach set out in Article 25(2) of and Annex V to
Directive (EU) 2018/2001.
Life-cycle GHG emissions savings are calculated using themethodology referred to in Article 28(5) of Directive (EU) 2018/2001
or, alternatively, using ISO 14067:2018 or ISO 14064-1:2018.

Page138 of145

Yes
No
Not Applicable

Work Undertaken

DNV Findings

Confirmed documents:

We confirmed thatthe green project
candidate ishydrogen/ammonia
production using
renewable energy
and that lifecycle
GHG emissions will
be calculated when
actually considering
the allocation offunds for the green
project and will only
be allocated if
eligible.
In selecting projects,
we confirmed thatprocedures have/01//06//09//18/
Interviews withstakeholders

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

SectorRequirements

Requirement
check<DNSH> No Significant Adverse Effect Do Not Significant Harm
・ Climate adaptation: The activity complies with the criteria set out
in Appendix A to this Annex. Pollution discharged into theatmosphere (emissions associated with the generation ofelectricity during electrolysis)
・ Water use: The activity complies with the criteria set out inAppendix B to this Annex. (degradation of local water resources)
・
Pollution prevention: The activity complies with the criteria set
out in Appendix C to this Annex.
Emissions are within or lower than the emission levels associatedwith the best available techniques (BAT-AEL) ranges set out inthe relevant best available techniques (BAT) conclusions,
including:a. the best available techniques (BAT) conclusions for the
production of chlor-alkali and the best available techniques (BAT)
conclusions for common waste water and waste gas
treatment/management systems in the chemical sector;
b. the best available techniques (BAT) conclusions for the refiningof mineral oil and gas.
No significant cross-media effects occur. Generation of waste
products (catalysts, physical and chemical processes, refining
processes)
・

Biodiversity: The activity complies with the criteria set out inAppendix D to this Annex.

Page139 of145

Work Undertaken

DNV Findings
been established toensure that they do
not conflict with the
Exclusion Criteria, in
accordance with theapproaches toenvironmental andsocial risk reduction
set forth in the
Framework.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

EU-NFF-Electricity Non-Fossil Fuel Electricity Generation Eligibility Checklist
EU- NFF Electricity generation from renewable non-fossil gaseous and liquid fuels (NACE 4, codes D35.11 & F42.22) * Excluding biomass &biogas power generation
SectorRequirements

Requirement
checkElectricity
generationfromrenewable
non-fossil
gaseous andliquid fuels
Non-fossil fuelpower
generation<Description>
Construction or operation of electricity generation facilities that
produce electricity using gaseous and liquid fuels of renewable
origin. This activity does not include electricity generation fromthe exclusive use of biogas and bio-liquid fuels (see Section 4.8of this Annex).
The economic activities in this category could be associated withseveral NACE codes, in particular D35.11 and F42.22 inaccordance with the statistical classification of economic
activities established by Regulation (EC) No 1893/2006.
<Substantial contribution criteria>
1. Life-cycle GHG emissions from the generation of electricity using
renewable gaseous and liquid fuels are lower than 100gCO2e/kWh.
Life-cycle GHG emissions are calculated based on project-specificdata, where available, using Recommendation 2013/179/EU or,alternatively, using ISO 14067:2018 or ISO 14064-1:2018.
Quantified life-cycle GHG emissions are verified by an independent
third party.
2. Where facilities incorporate any form of abatement (including
carbon capture or use of decarbonized fuels), that abatement
activity complies with the criteria set out in the relevant Section ofthis Annex, where applicable.

Page140 of145

Yes
No
Not Applicable

Work Undertaken

DNV Findings

Confirmed documents:

Candidate green
projects include thedevelopment andmanufacture of gas
turbines in power
generation using onlyhydrogen/ammonia
production produced
from renewable energy
sources, and lifecycle
GHG emissions will becalculated when
actually considering theallocation of proceeds
for green projects, andconfirmed that thefunds will be allocated,
only if eligible.
In selecting projects,
we confirmed thatprocedures have been
established to ensurethat they do not conflictwith the Exclusion
Criteria, in accordancewith the approaches to/01//06//09//18/
Interviews withstakeholders

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

SectorRequirements

Requirement
check

Where the CO2 that would otherwise be emitted from the electricity
generation process is captured for the purpose of undergroundstorage, the CO2 is transported and stored underground, in
accordance with the technical screening criteria set out in Sections
5.11 and 5.12 of this Annex.
3. The activity meets either of the following criteria:
a. at construction, measurement equipment for monitoring ofphysical emissions, such as methane leakage is installed or a leakdetection and repair program is introduced;
b. at operation, physical measurement of methane emissions isreported and leak is eliminated.
4. Where the activity blends renewable gaseous or liquid fuels withbiogas or bioliquids, the agricultural biomass used for the productionof the biogas or bioliquids complies with the criteria laid down in
Article 29, paragraphs 2 to 5, of Directive (EU) 2018/2001 while
forest biomass complies with the criteria laid down in Article 29,
paragraphs 6 and 7, of that Directive.
<DNSH>
・ Climate adaptation: The activity complies with the criteria set
out in Appendix A to this Annex.
・ Water: The activity complies with the criteria set out inAppendix B to this Annex.
・Pollution prevention: Emissions are within or lower than theemission levels associated with the best available techniques(BAT-AEL) ranges set out in the latest relevant best available
techniques (BAT) conclusions, including the best available
techniques (BAT) conclusions for large combustion plants. No
significant cross-media effects occur.

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environmental andsocial risk reduction set
forth in the Framework.

Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

SectorRequirements

Requirement
checkWork Undertaken

DNV Findings

Confirmed documents:

With regard to the
reduction of climatechange risks, including
climate change
adaptation, in theefforts to reduce
environmental andsocial risks specified in
the Framework at thetime of project
selection, DNV
confirmed thatprocedures are in place
to conduct technicaldue diligence whennecessary to ensurethat the exclusion
criteria, particularly
MHI's Basic
Environmental Policy.

For combustion plants with thermal input greater than 1 MW
but below the thresholds for the BAT conclusions for large
combustion plants to apply, emissions are below the emission
limit values set out in Annex II, part 2, to Directive (EU)2015/2193 of the European Parliament and of the Council.
・(Contribution
to climate
adaptation)

Biodiversity: The activity complies with the criteria set out inAppendix D to this Annex.
1.

The economic activity has implemented physical and nonphysical solutions (‘adaptation solutions’) that substantiallyreduce the most important physical climate risks that arematerial to that activity.
2. The physical climate risks that are material to the activity
have been identified from those listed in Appendix A to thisAnnex by performing a robust climate risk and vulnerability
assessment with the following steps:
a. screening of the activity to identify which physical climate
risks from the list in Appendix A to this Annex may affect theperformance of the economic activity during its expected
lifetime;b. where the activity is assessed to be at risk from one ormore of the physical climate risks listed in Appendix A to thisAnnex, a climate risk and vulnerability assessment to assess
the materiality of the physical climate risks on the economic
activity;c. an assessment of adaptation solutions that can reduce theidentified physical climate risk.
The climate risk and vulnerability assessment are proportionate to
the scale of the activity and its expected lifespan, such that:

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Yes
No
Not Applicable/01//06//09//18/
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Mitsubishi Heavy Industries Green/Transition Finance Framework Second Party Opinion

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a. for activities with an expected lifespan of less than 10
years, the assessment is performed, at least by using
climate projections at the smallest appropriate scale;b. for all other activities, the assessment is performed using
the highest available resolution, state-of-the-art climate
projections across the existing range of future scenarios(264) consistent with the expected lifetime of the activity,
including, at least, 10 to 30 year climate projections
scenarios for major investments.
3. The climate projections and assessment of impacts are
based on best practice and available guidance and take into
account the state-of-the-art science for vulnerability and risk
analysis and related methodologies in line with the mostrecent Intergovernmental Panel on Climate Change reports(265), scientific peer-reviewed publications and open source(266) or paying models.
4. The adaptation solutions implemented:
a. do not adversely affect the adaptation efforts or the levelof resilience to physical climate risks of other people, of
nature, of cultural heritage, of assets and of other economic
activities;
b. favour nature-based solutions (267) or rely on blue orgreen infrastructure (268) to the extent possible;c. are consistent with local, sectoral, regional or national
adaptation plans and strategies;
d. are monitored and measured against pre-definedindicators and remedial action is considered where thoseindicators are not met;
e. where the solution implemented is physical and consists inan activity for which technical screening criteria have been
specified in this Annex, the solution complies with the do no
significant harm technical screening criteria for that activity.
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Reference List
/01/

MHI green/transition Finance Framework (draft)/02/

MHI Group Integrated Report FY2021 (FY2020)/03/

MHI 2021 Business Plan

/04/

MHI Carbon Neutral Declaration Additional Explanation (December 13, 2021)/05/

MHI Group ESG DATABOOK Fiscal Year Ending March 31, 2021 (FY2020)/06/

MHI Project List

/07/

MHI List of CO2 reduction effect trial calculation results/08/

MHI Document Retention Period Standard Table/09/

MHI Process for Project Evaluation and Selection/10/

MHI Green Bond Fund Management Chart/11/

MHI Accounting Management System Form AB040-010/ Securities and investments/12/International Energy Agency World Energy Outlook (2020)/13/

Agency for Natural Resources and Energy, Electricity Infrastructure Development
Division Transition Roadmap for the Power Sector/14/

Ministry of Economy, Trade and Industry Technology roadmap for the gas sector
regarding "Transition Finance”/15/

Ministry of Economy, Trade and Industry Technology Roadmap for the Iron and Steel
Sector regarding “Transition Finance”/16/

Ministry of Economy, Trade and Industry Technology Roadmap for the Chemical Sector
regarding "Transition Finance"/17/

Ministry of Land, Infrastructure, Transport and Tourism Roadmap toward Zero
Emissions in International Shipping/18/

MHI Website

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