SECOND PARTY OPINIONOSAKA GAS CO., LTD.
Transition Finance Periodic Review (#1)

Prepared by: DNV Business Assurance Japan K.K.
Location: Kobe, Japan
Date: 8 September 2023
Ref. Nr.: PRJN-333926-2023-AST-JPN-01

Revision History
Date of Issue
10 March 2022
1 August 2022
8 September 2023

Remarks
Green/Transition Finance Framework Second Party Opinion First edition
The eligibility assessment section for bonds described in the First Edition was detachedand revised as a master SPO
Transition Finance Periodic Review (#1)
(1st Transition Bond, 2nd Transition Bond, Transition Loan)

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Scope and Objectives
Osaka Gas Co., Ltd. (hereinafter, “Osaka Gas”) has commissioned DNV Business Assurance
Japan K.K. (hereinafter, “DNV”) to conduct periodic reviews of the "Osaka Gas Transition
Finance (1st Transition Bond (The 44th Unsecured Corporate Bond), 2nd Transition Bond
(The 47th Unsecured Corporate Bond), and Transition Loan, (hereafter, ‘The Loan and
Finance’'))."The objective of the periodic review of DNV is to conduct an assessment to confirm thatthese Osaka Gas Finance meet the criteria such as the Climate Transition FinanceHandbook 2020 (hereinafter, “CTFH”), Basic Guidelines on Climate Transition Finance(FSA, METI and MOE 2021; hereinafter, “CTFBG”) and the Green Bond Principles (Green
Bond Principles 2021; hereinafter, “GBP”) as finance that meets the four elements oftransition and specifies the use of the funds, (hereinafter, “GBP”), Green Bond Guidelines(Ministry of Environment 2020; hereinafter, “GBGLs”), Green Loan Principles (Green Loan
Principles 2021; hereinafter, “GLP”) and Green Loan Guidelines (Ministry of Environment
2020; hereinafter, “GLGLs”) as financing that meets the four elements of CTFBG andtransitions with specific use of proceeds, and to provide a second party opinion on theeligibility of the Loan and Finance.
Osaka Gas issued JPY 10 billion 1st Transition Bond (The 44th Unsecured Corporate Bond)on 2 June 2022, JPY 27 billion 2nd Transition Bond (The 47th Unsecured Corporate Bond)on 1 September 2022, and JPY 35 billion Transition Loan in January 2023. DNV conducted
the first periodic review for the period from the time of each financing to 31 March 2023,
based on the CTFH and CTFBG, GBP and GBGLs, GLP and GLGLs.
This report provides a periodical review of the requirements for Transition Finance withspecific use of proceeds (Elements 1 to 4, which are described below).
DNV, as an independent external reviewer, has identified no real or perceived conflict ofinterest associated with the delivery of this second party opinion for Osaka Gas.
In this paper, no assurance is provided regarding the financial performance of Transition
Finance, the value of any investment or the long-term environmental benefits of thetransaction.
DNV has confirmed that since the revision of the Master SPO in August 2022, Osaka Gas
transition strategy has been updated in the Integrated Report 2022 and Daigas Group
Energy Transition 2030. A summary of the updates is as follows.

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Disclosure Element - 2 Business Model Environmental Materiality (Level ofImportance)
Scenario analyses based on the IEA's 1.5°C scenario (NZE2050) and 2.6°C scenario(STEPS) have been added.

Disclosure Element - 3 Climate Transition Strategy to be Science-Based (including
targets and pathways)
The following items have been added to the 2030 interim targets.
Reduction of CO2 emissions (Scope 1, 2, and 3) in the domestic supply chain ... 5
million tons
Introduction of e-methane ... 1%

Although the Ministry of Economy, Trade and Industry's transition roadmap for the gas
sector depicts a pathway where the demand for natural gas increases in the gas industry
due to the fuel shift in society as a whole and gas companies' CO2 emissions (Scope 3) will
increase in a short term, Osaka Gas' domestic supply chain CO2 emissions as of 2030
(Scope 1, 2, and 3) by 5 million tons in absolute terms is considered to be a very
progressive initiative.

Figure-1 Daigas Group's CO2 emissions reduction roadmap(Source: Daigas Group Energy Transition 2030)

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Standards/Guidelines to be applied
No.

Standards/Guidelines

1.

Climate Transition Finance Handbook International Capital Markets Association(CTFH) *1(ICMA), 2020.

2.
3.

Scheme Owner

Basic Guidelines on Climate Transition
FSA, METI, MOE, 2021.
Finance (CTFBG) *1
International Capital Markets Association
Green Bond Principles (GBP) *2(ICMA), 2021.

Applied Level
Apply
Apply
Apply

4.

Green Bond Guidelines (GBGLs) *2

Ministry of the Environment, 2020.

Apply

5.

Green Loan Principles (GLP) *2

Loan Market Association (LMA) and others,
2021.

Apply

6.

Green Loan Guidelines (GBGLs) *2

Ministry of the Environment, 2020.

Apply

*1

Climate transition: The concept of climate transition focuses principally on the credibility of an fundraiser’s
climate change-related commitments and practices.(Quoted from CTFH and CTFBG)*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).

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Responsibilities of Osaka Gas and DNV
The management of Osaka Gas 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 Osaka Gas
management and other interested stakeholders in The Loan and Finance as to whether theestablished criteria have been met, based on the information provided to us.
In our work, we have relied on the information and the facts presented to us by OsakaGas. DNV is not responsible for any aspect of the nominated transition project assets
referred to in this opinion and cannot be held liable if estimates, findings, opinions, orconclusions are incorrect. Thus, DNV shall not be held liable if any of the information ordata provided by Osaka Gas management and used as a basis for this assessment were
not correct or complete.

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Basis of DNV’s Opinion
To provide as much flexibility as possible for Osaka Gas, DNV has adapted the CTFH
and CTFBG, GBP and GBGLs, GLP and GLGLs, which required for the management ofTransition Finance with specific use of proceeds, in order to develop a Transition
Finance Eligibility Assessment Protocol (hereinafter, the "Protocol") specific to thefundraiser. The Protocol is applicable to Transition Finance with specific use ofproceeds based on the CTFH and CTFBG, GBP and GBGLs, GLP and GLGLs.
DNV's Protocol includes a set of suitable criteria that can be used to underpin DNV’sopinion. The overarching principle behind the criteria is that a Transition Financeshould “provide an investment opportunity with transparent sustainability credentials.”
As per our Protocol, the criteria against which The Loan and Finance have beenreviewed are grouped under the four Principles:•

Principle One: Use of Proceeds
The Use of Proceeds criteria are guided by the requirement that the fundraiser ofTransition Finance (with specific use of proceeds) must use funds raised to financeeligible 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 theTransition Finance (with specific use of proceeds) fundraiser should outline the process
it follows when determining eligibility of an investment using Transition Financeproceeds and outline any impact objectives it will consider.

•

Principle Three︓ Management of Proceeds
The Management of Proceeds criteria are guided by the requirements that theTransition Finance (with specific use of proceeds) should be tracked within the issuingorganization, that separate portfolios should be created when necessary and that adeclaration of how Unallocated Funds will be handled should be made.

•Principle Four︓ Reporting
The Reporting criteria are guided by the recommendation that at least a sustainability
reporting to the Finance investors should be made of the use of Transition Financeproceeds and that quantitative and/or qualitative performance indicators should be
used, where feasible.

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Work Undertaken
Our work constituted a high-level review of the available information, based on theunderstanding that this information was provided to us by Osaka Gas in good faith. We
have not performed an audit or other tests to check the veracity of the information
provided to us. The work undertaken to form our opinion included:Pre-funding assessment of Transition Finance *Not included in this reportCreation of an Osaka Gas specific Protocol, adapted to the purpose of The Loan and
Finance.

Assessment of documentary evidence provided by Osaka Gas on The Loan and
Finance and supplemented by a high-level desktop research. These checks refer tocurrent assessment best practices and standards methodology.

Discussions with Osaka Gas management, and review of relevant documentationand evidence related to the criteria of the Protocol.

Documentation of findings against each element of the criteria.

Periodic (Annual) Review *This report• Assessment of evidential documents provided by the Osaka Gas after issuance of
the Transition Finance, and supplemental assessment by desk review from a higher
perspective. These checks refer to current evaluation best practices and standard
methodologies.
• Interview with managers of Osaka Gas, and review of the relevant documentation.
• Field research and inspection (if necessary).
• Review of the nominated projects and assets at the time of the periodic review.
• Document creation of periodic review observation results described in this report.

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Findings and DNV’s Opinion
DNV’s findings and opinion are as described below.

(1) Principle One: Use of Proceeds
DNV has confirmed that, as of 31 March 2023, Osaka Gas had used the funds raised
through the 1st Transition Bond, 2nd Transition Bond, and Transition Loan for thefollowing projects.

1. Inami Wind Power Plant - 4.5 billion JPY allocated (1st Transition Bond)
The project operates a 26.0 MW onshore wind farm located near the Kuroshio Fruit Linebetween Inami City and Minabe Town, through an investment in Inami Wind Farm Co.,
Ltd. The project started operation in June 2018 and as of August 2023, operation was
continuing smoothly, and the environmental benefits of the project are being realised.
Renewable energy sources are projects that contribute to the decarbonisation of powersources in the “Daigas Group Roadmap to Carbon Neutrality” and are positioned as anecessary initiative for the realisation of Osaka Gas' Transition Strategy.

Figure-2 Inami Wind Power Plant

Page 8 of 26

2. Daigas Oita Mirai Solar - 1.2 billion JPY allocated (1st Transition Bond)
The project operates a 26.5 MW photovoltaic power generation facility located in the
coastal industrial area of Oita City, Oita Prefecture, Japan, through an investment in Daigas
Oita Mirai Solar Co., Ltd. The facility started operation in May 2013 and was still runningsmoothly as of August 2023. The environmental benefits are being realised.
Renewable energy sources are projects that contribute to the decarbonisation of powersources in the “Daigas Group Roadmap to Carbon Neutrality” and are positioned as anecessary initiative for the realisation of Osaka Gas' Transition Strategy.

Figure-3 Daigas Oita Mirai Solar Power Plant

3. Noheji Mutsu Bay Wind Farm - 1.5 billion JPY allocated (1st Transition Bond)
The project involves the operation of a 39.6 MW onshore wind farm located in Noheji
Kamikita-gun, Aomori Prefecture, Japan, through an investment in GK Aomori Wind Power.
The facility started operation in January 2023 and was still running smoothly as of August2023. The environmental benefits are being realised.
Renewable energy sources are projects that contribute to the decarbonisation of powersources in the “Daigas Group Roadmap to Carbon Neutrality” and are positioned as anecessary initiative for the realisation of Osaka Gas' Transition Strategy.

Figure-4 Noheji Mitsu Bay Wind Farm

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4. Yokohama Town Wind Farm - 1.8 billion JPY allocated (1st Transition Bond)
The project operates a 43.2 MW onshore wind power generation facility located in
Yokohama-machi, Kamikita-gun, Aomori Prefecture, Japan, through an investment in GK
Yokohama Town Wind Power. The project was under construction in FY2022; thus,
environmental benefits were not included in this report.
Renewable energy sources are projects that contribute to the decarbonisation of powersources in the “Daigas Group Roadmap to Carbon Neutrality” and are positioned as anecessary initiative for the realisation of Osaka Gas' Transition Strategy.

Figure-5 Yokohama Town Wind Farm

5. Shikoku Central Energy Natural Gas Supply - 1 billion JPY allocated (1st Transition
Bond)
This project contributes to fuel switching by constructing an LNG satellite terminal at theEast Wharf of Mishima-Kawanoe Port in Shikokuchuo City, Ehime Prefecture, and supplying
natural gas to various industries, through an investment in Shikoku Central Energy Co.
The fuel conversion from coal and oil to low-carbon LNG is a project that contributes to theadvanced use of natural gas and cogeneration in the “Daigas Group Roadmap to Carbon
Neutrality” and is positioned as a necessary initiative to realise Osaka Gas' transition
strategy. It is also consistent with the Ministry of Economy, Trade and Industry's transition
roadmap for the gas sector.
The facility started operation in December 2022 and was still running smoothly as ofAugust 2023. The environmental benefits are being realised.

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6. Kuwaharajyou Mega Solar (No. 4) - 1.5 billion JPY allocated in total with project #7
indicated below (2nd Transition Bond)
The project involves the operation of an approximately 12.0 MW photovoltaic power
generation facility located in Izumi City, Kagoshima Prefecture, Japan, through aninvestment in D&D Solar GK. The facility started operation in April 2020 and was stillrunning smoothly as of August 2023. The environmental benefits are being realised.
Renewable energy sources are projects that contribute to the decarbonisation of powersources in the “Daigas Group Roadmap to Carbon Neutrality” and are positioned as anecessary initiative for the realisation of Osaka Gas' Transition Strategy.

Figure-6 Kuwaharajyou Mega Solar (No. 4)

7. Isohara Extra-high Power Plant- 1.5 billion JPY allocated in total with project #6
indicated above (2nd Transition Bond)
The project involves the operation of an approximately 35.0 MW photovoltaic power
generation facility located in Kitaibaraki City, Ibaraki Prefecture, Japan, through aninvestment in D&D Solar GK.
Renewable energy sources are projects that contribute to the decarbonisation of powersources in the “Daigas Group Roadmap to Carbon Neutrality” and are positioned as anecessary initiative for the realisation of Osaka Gas' Transition Strategy.

Figure-7 Isohara Extra-high Power Plant

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8. Himeji Natural Gas Power Plant - 25.5 billion JPY allocated (2nd Transition
Bond), 34.69 billion JPY allocated (Transition Loan)
Through its investment in Himeji Natural Gas Power Generation Co., Ltd., the project
involves the operation of a power plant based on a gas turbine combined cycle power
generation system with a highly efficient 1650°C-class gas turbine and a waste heatrecovery steam exchanger. In the future, the gas turbine is designed to enable low-carbon
power generation through hydrogen co-firing by modifying the equipment, and measures
are in place to avoid lock-in.
The Himeji Natural Gas Power Plant is an indirect replacement for inefficient thermal power
plants and thermal power plants with relatively high CO2 emissions and is a project that
contributes to the advanced use of natural gas and cogeneration in the "Daigas Group
Roadmap to Carbon Neutrality,” and is positioned as a necessary initiative for realising
Osaka Gas' transition strategy. The project is also consistent with both the Ministry of
Economy, Trade and Industry's transition roadmap for the gas sector and the electricity
sector.
Preparation work for Unit 1 and Unit 2 started in March 2022 and the main construction
work began in August 2022, with construction work progressing smoothly towards thestart of operation in January 2026 and May 2026, respectively.

Figure-8 Himeji Natural Gas Power Plant

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(2) Principle Two: Process for Project Evaluation and Selection
DNV confirmed through the approval documents and other evidence that when Osaka
Gas evaluated and selected transition projects, the Finance Department selectedcandidates based on the eligibility criteria defined in the Framework, and that thefinance officer made the final decision after consultation with the business units andother departments and the Planning Department.
DNV has confirmed that Osaka Gas has considered potentially negative environmental
and social impacts in assessing the eligibility of each project, and that the required
facility approvals and permits have been obtained for the subject facilities and projects,
and that the environmental assessment procedures, etc. were appropriate. DNV
confirmed that Osaka Gas has established the following systematic procedures forenvironmental and social impacts of the power generation project.

(3) Principle Three: Management of Proceeds
DNV confirmed how Osaka Gas has managed the proceeds since the financing was
executed until 31 March 2023. The allocation of proceeds is shown in Tables 1~3 in
Principle 4.
DNV confirmed that the proceeds are managed on an annual basis by the Finance
Department of Osaka Gas, which prepares dedicated ledgers and manages the allocation
status until the full amount has been allocated.
DNV confirmed that Osaka Gas had completed the full allocation of proceeds of the 1st
and 2nd Transition Bonds to each eligible project as planned by 31 March 2023. DNV
also confirmed that as of 31 March 2023, the unallocated proceeds of the Transition
Loan (JPY 0.31 billion) were managed in cash or cash equivalents and that the allocation
had already been completed in FY2023, immediately after the reporting year.
Note as mentioned earlier, no assurance is provided regarding the financial
performance of Transition Finance, the value of any investment or the long-term
environmental benefits of the transaction.

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(4) Principle Four: Reporting
DNV has confirmed that Osaka Gas plans to disclose the allocation status of proceeds andenvironmental benefits on its website. According to the Osaka Gas Framework, theallocation status of proceeds is planned to be reported until the proceeds have been fully
allocated and the environmental benefits are reported until the finance is redeemed or
repaid.
Through periodic reviews, DNV confirmed that the environmental benefits brought about
by the Transition Project had been properly calculated using the method set out by Osaka
Gas before the financing was executed, and that the environmental benefits weregenerally achieved as planned.
The following table shows the allocation status of proceeds and environmental benefits of
the 1st Transition Bond, the 2nd Transition Bond and Transition Loan in the period up to
31 March 2023.

(I)

Allocation Status

1st Transition Bond (The 44th Unsecured Corporate Bond)DNV has confirmed that the proceeds from the 1st Transition Bond (The 44th Unsecured
Corporate Bond) were fully allocated as planned, as shown in Table-1.

Table-1: 1st Transition Bonds (The 44th Unsecured Corporate Bonds) Allocation Status
Eligibility
Criteria

Allocation amountAmountProject Nameof

Refinance

Proceeds
Inami Wind Power
Plant
Noheji Mitsu Bay

Renewable

Wind Farmenergy source

Yokohama Town
Wind Farm
Daigas Oita Mirai
Solar Power Plant

Natural gas

Shikoku Central

cogeneration

Energy Natural

high-level use

Gas Supply

New
Investment

UnallocatedAmount

4.5 billion--

1.5 billion--

1.8 billion--

1.2 billion--

0.82 billion

0.18 billion-

10 billion
JPY

10 billion JPY

Total Amount(Fully allocated)

Page 14 of 26

0 billion JPY

2nd Transition Bond (The 47th Unsecured Corporate Bond)DNV confirmed that the proceeds from the 2nd Transition Bond (The 47th Unsecured
Corporate Bond) were fully allocated as planned, as shown in Table-2.

Table-2: 2nd Transition Bonds (The 47th Unsecured Corporate Bonds) Allocation Status
Eligibility
Criteria

Allocation AmountAmountProject Nameof

Refinance

Proceeds

New
Investment

UnallocatedAmountKuwaharajyou
Renewableenergy source

Mega Solar(No. 4)high Power Plant

supply/advanced
use of natural
gas and

-

-

-

-

-

1.5 billion

Isohara Extra-

Thermal power-

27 billion
Himeji Natural
Gas Power Plant

JPY
25.5 billion

cogeneration
27 billion JPY

Total Amount(Fully allocated)

Page 15 of 26

0 billion JPY

Transition Loan
DNV confirmed that, as shown in Table-3, the proceeds from the Transition Loan were
progressively allocated as planned and the unallocated amount as of 31 March 2023 was 0.31
billion, which was managed in cash or cash equivalents. It was confirmed that the unallocatedproceeds had already been fully allocated in FY2023, immediately after the reporting year.

Table-3: Transition Loan Allocation Status
Eligibility
Criteria
Thermal power
supply/advanced
use of natural gas

Allocation AmountAmountProject Nameof

Refinance

Proceeds

New
Investment

UnallocatedAmountHimeji Natural
Gas Power

and cogenerationPlant

35 billion

31 billion

3.69 billion

0.31 billion

JPY

Total Amount34.69 billion JPY

Page 16 of 26

0.31 billion
JPY

(II)

Environmental benefits

1st Transition Bond (The 44th Unsecured Corporate Bond)(1) Renewable energy source
DNV confirmed that as of August 2023, the projects in the table below, which were eligible forallocation, were operating smoothly and were showing environmental benefits.
Project Name
Inami wind Power Plant
Noheji Mutsu Bay Wind
Farm
Yokohama Town Wind
Farm
Daigas Oita Mirai Solar

Start of

Equipment

Environmental Benefits*1

Operation

Capacity(FY2022 results)

Jun 2018

26.0 MW

18,412 t-CO2 /year

Jan 2023

39.6 MW

6,859 t-CO2 /year*2

Apr 2023

43.2 MWMay 2013

26.5 MWNo results for FY2022 due
to construction in progress
19,318 t-CO2 /year*1 Environmental benefits:
Actual electricity generation (kWh) X Percentage of contribution (%) X Average CO2 emission
factor for thermal power sources (kg-CO2 /kWh) X 1/1000*2 Since the start of operation in January 2023.

(2) Advanced use of natural gas and cogeneration
DNV confirmed that as of August 2023, the projects in the table below, which were eligible forallocation, were in good supply and were showing environmental improvement benefits.
Project Name
Shikoku Central Energy
Natural Gas Supply

Start ofEnvironmental Benefits *3

Supply(FY2022 results)

Dec 2022

5,174 t-CO2 /year*4*3 Environmental benefits:("CO2 emissions of coal, oil, etc. before fuel conversion" - "CO2 emissions of LNG after fuelconversion") X Investment ratio (%)*4 Since start of supply in December 2022

Page 17 of 26

2nd Transition Bond (The 47th Unsecured Corporate Bond)(1) Renewable energy source
DNV confirmed that as of August 2023, the projects in the table below, which were eligible forallocation, were operating smoothly and were showing environmental improvement benefits.
Environmental

Start of

Equipment

Operation

Capacity

Kuwaharajyou Mega Solar (No.4)

Apr 2020

Approx. 12.0 MW

Isohara Extra-high Power Plant

Jan 2021

Approx. 35.0 MW

Project Name

Benefits *5(FY2022 results)
17,572 t-CO2 /year*5 Environmental benefits:
Actual electricity generation (kWh) X Percentage of contribution (%) X Average CO2 emission
factor for thermal power sources (kg-CO2 /kWh) X 1/1000(2) Advanced use of natural gas and cogeneration
DNV has confirmed that as of August 2023, construction work on the projects in the tablebelow, which were eligible for allocation, was progressing well with the aim of starting
operation in 2026 as originally planned.
Project Name

Start of Operation

Equipment

Environmental Benefits(planned)

Capacity(FY2022 results)

Himeji Natural

Unit 1: January 2026

Gas Power Plant

Unit 2: May 2026

1245.2 MWPage 18 of 26

No results for FY2022 due toconstruction in progressTransition Loan
(1) Advanced use of natural gas and cogeneration
DNV has confirmed that as of August 2023, construction work on the projects in the tablebelow, which were eligible for allocation, was progressing well with the aim of starting
operation in 2026 as originally planned.
Project Name

Start of Operation

Equipment

Environmental Benefits(planned)

Capacity(FY2022 results)

Himeji Natural

Unit 1: January 2026

Gas Power Plant

Unit 2: May 2026

1245.2 MWPage 19 of 26

No results for FY2022 due toconstruction in progressAssessment Conclusion
On the basis of the information provided by Osaka Gas and the work undertaken, it is DNV’sopinion that the Transition Finance carried out by Osaka Gas meets the criteria established in
the Protocol, and that it is aligned with the stated definition or purpose of Climate Transition
Finance as stated in the CTFH and CTFBG, GBP and GBGLs, GLP and GLGLs as "enable capitalraising and investment for new and existing projects with environmental benefits" and"providing an investment opportunity with transparent sustainability credentials.”

DNV Business Assurance Japan K.K.
8 September 2023

Thomas Leonard

Naoki Maeda

Sustainability Services Manager

Managing Director

DNV Business Assurance, Thailand

DNV Business Assurance Japan K.K.

Masato Kanedome

Jun Chokai

Technical Reviewer

Project Leader/Assessor

DNV Business Assurance Japan K.K.

DNV Business Assurance Japan K.K.

About DNV
Driven by our purpose of safeguarding life, property and the environment, DNV enables organisations to advance the safety
and sustainability of their business. Combining leading technical and operational expertise, risk methodology and in-depth
industry knowledge, we empower our customers We continuously invest in research and collaborative innovation to provide
customers and society with operational and technological foresight.
With our origins stretching back to 1864, our reach today is global. operating in more than 100 countries, our 16,000
professionals are dedicated to helping customers make the world safer, smarter and greener.
Disclaimer
Responsibilities of the Management of the Fundraiser and the Second-Party Opinion Providers, DNV: The management ofFundraiser has provided the information and Our statement represents an independent opinion and is intended to inform theFundraiser management and Our statement represents an independent opinion and is intended to inform the Fundraiser
management and other interested stakeholders in the Bond as to whether the established criteria have been met, based on
the information provided to us. In our work we have relied on the information and the facts presented to us by theFundraiser. Thus, DNV shall not be held liable if any of the information or data provided by the Fundraiser is incorrect. Thus,
the DNV shall not be held liable if any of the information or data provided by the Fundraiser's management and used as abasis for this assessment were not correct or complete.

Page 20 of 26

Schedule - 1 Green Finance Eligibility Assessment Protocol
The following (GBP/GLP-1 ~ GBP/GLP-4) are DNV’s Green Finance Eligibility Assessment Protocol created for Osaka Gas based on the requirements of GBP/GBGLs
and GLP/GLGLs. "Confirmed Documents" in the work undertaken include internal documents of fundraiser and are provided by Osaka Gas as evidenceof eligibility judgment for DNV.
Although the terms GBP and GLP are used here in accordance with practice, this section refers to the criteria and the criteria to be referred to in the case of
Transition Finance (Bond & Loan) that specifies the use of funds under the CTFH and CTFBG, such as transition projects. Requirements and should therefore beread in the context of transitions as appropriate.

GBP/GLP-1 Use of Proceeds
Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

1aType of Funds

The types of green/transition finance fall
into one of the following types as definedin the GBP/GLP.
・(standard) Green/transition
bonds/loans
・Green/transition revenue
bonds/loans
・Green/transition project bonds/loans
・
Other

Confirmed Documents

DNV has identified the following categories of Transition Finance(bonds/loans) through its assessment work.

Interviews withstakeholders(Standard) Transition Bonds/Loans

The key to a Transition Finance is thatthe proceeds will be used for a Transition
Project, which should be properly statedin the legal documents relating to thesecurity.

Confirmed Documents- framework- Outline of the
project- supplementary
document

DNV confirmed that the Daigas Group Green/Transition Finance isintended to fund a wide range of green/transition projects
focused on Osaka Gas' environmental goals and transition
strategy, as set out in the Framework and in the table below.

1bTransition ProjectClassification-

framework

Interviews withstakeholders

Page 21 of 26

Specifically, all green/transition finance categories and eligible
project candidates listed in the table below were assessed asmeeting the transition strategy, and the funds proceed throughtransition finance were allocated to one or more of the transition

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings
finance eligible project candidates. The proceeds from Transition
Finance were allocated to one or more of the Transition Finance
Eligible Project Candidates. Transition projects were disclosed instatutory and other documents.
Through the assessment, DNV concludes that the potential
Transition-eligible project candidates provide tangible andgenuinely environmental benefits.
Table: Daigas Group Key initiatives to achieve carbon neutrality(green/transition finance candidate projects)
Eligible Criteria
Hydrogen
Decarboniz
utilization
1) ation of gas
energyBiogasRenewable
power
Decarboniz
generation
ation of2)
power
Thermalgeneration power
generation
Fuel Cells
Advancedutilization ofnatural gas
and CHP
Advanced
Lowenergy3) carbonizatio
utilizationn
Other(Reductionof CO2emissionassociatedwith own
activities)

Page 22 of 26

Eligible Criteria & Project Overview
Methanation, direct use (chemicallooping combustion technology), etc.
On-site utilization in domestic/global
scale
Solar power plants, onshore wind farm,offshore wind farm, biomass power
plants, etc.
Use of carbon neutral fuels such assynthetic methane, hydrogen andammonia, CCUS (Carbon Capture,
Utilization and Storage), etc.
Enhancing efficiency and downsizing,etc.
Support for converting fuel from oil andcoal to natural gas
Demonstration of building micro gridUse of carbon neutral LNG
VPP, smart energy systems, etc.

Cryogenic power generation in the city
gas production process, Cryogenic
power generation facilities, energy
efficiency renovation work of buildings,
etc.

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

1cEnvironmental
benefits.

All green projects to which the funds areused should have clear environmental
benefits, the effects of which should beassessed by the fundraiser and, where
possible, quantitatively demonstrated.

Confirmed Documents- framework- Outline of the
project

Transition projects are projects that contribute to low anddecarbonisation, which fall into the three eligible criteria listed in
1b, contributing to the targets under Osaka Gas' Transition
Strategy. The environmental benefit is a reduction in CO2emissions, which has been quantitatively or qualitatively assessedby Osaka Gas.

Interviews withstakeholders
1dRefinancing rate

If all or part of the proceeds are used or
may be used for refinancing, thefundraiser will indicate the estimatedratio of the initial investment to therefinancing and, if necessary. Therefore,
it is recommended to clarify whichinvestment or project portfolio is subject
to refinancing.

Confirmed Documents- framework- Allocated funds
management
table
Interviews withstakeholders

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Osaka Gas used all proceeds for both new investment andrefinancing for one or more of the eligible projects. DNV has also
confirmed that Osaka Gas intends to reveal the estimated amountof the portion of the proceeds used for refinancing throughreporting (annual report).

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

Criteria

Requirements

Work Undertaken

DNV Findings

2a.

Project
selection
process

Transition Finance fundraisers should provide an
overview of the process of qualifying projects forwhich Transition Finance funding will be used.
This includes (but is not limited to):・The process by which the fundraiser determinesthat the project in question is included in thebusiness category of a qualified green project.
・ Creation of criteria for eligibility of projects forwhich Transition Finance funding will be used
・ Environmental sustainability goals

Confirmed Documents- framework- Proposal submitted to obtain
permission

DNV confirmed that Osaka Gas has a process
document that determines the eligibility of a project
to use Transition Finance proceeds, and that this isclearly outlined in the Framework.

In addition to criteria and certifications, theinformation published by fundraisers regarding
the Transition Finance process also considers thequality of performance of the fundraiser's
framework and environmental sustainability.

Confirmed Documents- framework- Proposal submitted to obtain
permission

2b

Fundraiser's
Environment
al and Social
Governance
Framework

Interviews with stakeholders.

Interviews with stakeholders.

When selecting transition projects, Osaka Gas took
into account compliance with environmental laws,
regulations, ordinances and rules, as well as clear
environmental benefits such as CO2 reductions
during the entire life cycle or in each process.
In the operation and implementation of its projects,
Osaka Gas is committed to the conservation of thesurrounding environment in all relevant departments.
DNV confirmed that the transition projects
implemented by Osaka Gas are in line with Osaka
Gas' management and environmental policies andconsistent with the transition strategy, targets, andpathways.

Page 24 of 26

GBP/GLP-3 Management of Proceeds
Ref.

Criteria

3a.

Tracking
procedure1

Requirements

Work Undertaken

DNV Findings

The net proceeds from of Transition Funds should
be managed in sub-accounts, included in subportfolio, or otherwise tracked. It should also be
certified by the fundraiser in a formal internal
process related to the fundraiser's investment andfinancing operations for the Transition Project.

Confirmed Documents- framework- Accounting managementrules- cash management chart

DNV confirmed that the proceeds relating to theproceeds to be raised through transition finance aretraceable in line with Osaka Gas' integrated accounting
system, etc., and that the system actually in use andthe documentation to be produced exclusively throughthe assessment are verified and certified accordingly.

Interviews with stakeholders.
3b

Tracking
procedure 2

During the Transition Fund redemption period, thebalance of proceeds that is being tracked should be
adjusted at regular intervals to match the amountallocated to eligible projects undertaken duringthat period.

Confirmed Documents- framework- Accounting managementrules- cash management chart
Interviews with stakeholders.

3c

Temporaryholding

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

Confirmed Documents- framework- Accounting managementrules- cash management chart
Interviews with stakeholders.

Page 25 of 26

DNV confirmed that Osaka Gas plans to review thebalance of the Transition Finance on a regular basis (atleast once a year) during the period between theexecution of the Transition Finance and the redemption
or repayment of the Transition Finance, including
through the integrated accounting system described in
3a and documents produced exclusively for thispurpose.
DNV confirmed that the verification process throughOsaka Gas's integrated accounting system anddocuments produced exclusively for this purpose is amechanism that enables the company to recognise thebalance of unallocated proceeds on a sequential basis.
DNV confirmed through the assessment that thebalance of unallocated proceeds was managed in cash
or cash equivalents. DNV also confirmed that thebalance of unallocated proceeds will be clarified throughthe reporting of the allocation status of proceeds.

GBP/GLP-4 Reporting
Ref.

Criteria

4a.

Periodical
reporting

Requirements

Work Undertaken

DNV Findings

In addition to reporting on the useof proceeds and the temporary
investment of unallocated proceeds,
the fundraiser will consider eachproject at least once a year for
projects to which Transition Financeproceeds have been allocated,taking into account the following: A
list of each project should be
provided.
-Confidentiality and competitive
considerations-Outline of each project, expectedsustainable environmental and social
effects

Confirmed Documents- framework- Reporting proposal

DNV confirmed that Osaka Gas will carry out transition finance reporting (annual
reporting) until the proceeds have been allocated, disclosing information on the
allocation status of proceeds, the projects for which the proceeds have been
allocated and the environmental benefits. It was confirmed that reporting on
environmental benefits will be carried out until the redemption or repayment of theTransition Finance is completed.
In addition, DNV confirmed that even after the allocation plan or allocation has
been completed, any changes in the transition strategy or pathway, or any majorchanges in the allocation plan or project implementation status (e.g., suspension ofa project that has initiated allocations, significant deferral on an annual basis, saleor retirement) will be reported in a timely manner or in reporting.
The reporting will be published on the website.
<Allocation status of proceeds> Allocation amount per qualifying criterion unit eligible for allocation
 Balance of unallocated proceeds
 Estimated amount of the portion of the proceeds allocated to refinancing<Environmental benefits>Disclose the outline of the project (including the status of progress,
completion, operation, etc.) and the expected environmental benefits,
within the scope of confidentiality and to the extent practicable, and taking
into account the project characteristics (e.g., 10,000 t-CO2 /year, etc.).

<Others>

Efforts to become carbon neutral by 2050 will be reviewed as appropriate
in light of policy and technology trends and disclosed where necessary.

The content of the reporting on the transition project carried out in this study is
described in the Principle-4. Reporting section of the text.

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