Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

SECOND PARTY OPINIONKIRIN HOLDINGS COMPANY, LIMITED.
KIRIN SUSTAINABLE FINANCE FRAMEWORK

Prepared by: DNV Business Assurance Japan K.K.
Location: Kobe, Japan
Date: March 18, 2022
Ref. Nr.: PRJN-340461-2022-AST-JPN-01

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Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Executive Summary
Kirin Holdings Company, Limited (hereinafter, Kirin Holdings) is the holding company of theKirin Group consisting of Kirin Brewery Company, Limited, Kirin Beverage Company, Limited,
Mercian Corporation, Lion Pty Ltd, Kyowa Kirin Co., Ltd. and Kyowa Hakko Bio Co., Ltd., etc.
Based on fermentation and biotechnology cultivated since its foundation, Kirin expanded into
the Food domain (alcoholic & beverages business), the Pharma domain (pharmaceuticalbusiness), as well as the Health Science domain (health science business), an intermediate
domain between the two, with its operations mainly in Japan, Asia and Oceania.
Kirin Holdings is aiming at "becoming a global leader in CSV by creating value in domains
ranging from food & beverages to pharmaceuticals" under its long-term management vision,"Kirin Group Vision 2027 (KV2027)". Moreover, Kirin Holdings considers taking a CSV(Creating Shared Value) approach, which make the resolution of social issues an integral
part of its business operations, as one of the most productive ways for a company toachieve sustained growth and address social issues. Therefore, Kirin Holdings places CSV at
the core of its business management to make a difference in society and achieve sustainablemutual growth. "CSV Purpose" has been formulated as one of the long-term non-financial
goals of "Kirin Group Vision 2027 (KV2027)". "CSV Purpose" is the Kirin Group's guiding
principle to achieve sustainable growth and create value together with people across society.
In order to raise funds that are necessary for addressing environmental and social issues
defined in "CSV Purpose" through Green/Social/Sustainability Finance, Kirin Holdings
formulated "Kirin Sustainable Finance Framework".
Kirin Holdings has commissioned DNV Business Assurance Japan Co., Ltd. (hereinafter,
DNV) to conduct the pre-issuance assessment on "Kirin Sustainable Finance Framework"(hereinafter, the Framework) and Kirin Sustainable Finance, which will be implemented
based on the Framework. DNV, as an external reviewer, referred to or applied the four coreelements defined in the following sustainable finance principles and guidelines that are
currently widely recognized by the capital markets, and evaluated the eligibility of the
Framework and Kirin Sustainable Finance.
- Sustainability Bond Guidelines (ICMA/2021, hereinafter, SBG）
- Green Bond Principles (ICMA/2021, hereinafter, GBP）
- Green Bond Guidelines (Ministry of the Environment, Japan/2020, hereinafter, GBGLs）- Social Bond Principles (ICMA/2021, hereinafter, SBP）
- Social Bond Guidelines (Financial Services Agency/2021, hereinafter, SBGLs)- Green Loan Principles (LMA, etc./2021, hereinafter, GLP)
- Green Loan and Sustainability Linked Loan Guidelines (Ministry of the Environment,
Japan/2020 hereinafter, GLGLs) (Only applicable to Green Loan)

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Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

The summary of the assessment is as follows:
SBG-1. Use of Proceeds:
DNV confirmed that the proceeds from Kirin Sustainable Finance will be allocated to six
nominated Green and Social Projects that meet the representative eligible projects
categories in the table below outlined in SBG, GBP/GBGLs, SBP/SBGLs, and GLP/GLGLs.
See the table below and Schedule-1 for the summary of Eligible Sustainable Project
Portfolio.
SBG-2. Process for Project Evaluation and Selection:
For the evaluation and selection of Eligible Sustainable Projects, DNV confirmed that theaccounting department and the CSV strategy department will select the projects whichmeet the eligible criteria defined by the Framework, and the Executive Officer in chargeof Financial Strategy will make the final decisions on the selected eligible projects. In
addition, DNV also confirmed that Kirin Holdings evaluated the eligibility of the projects
comprehensively based on the contribution to the achievement of "CSV Purpose". The
six nominated projects evaluated and selected through the above process are closely
related to the key issues outlined in "Management Issues for Sustainable Growth (theKirin Group Materiality Matrix (GMM)" in addition to Kirin Holdings' "CSV Purpose", andare consistent with the Kirin Group's efforts related to environmental/social
sustainability.
SBG-3. Management of Proceeds:
DNV confirmed that Kirin Holdings plans to allocate the proceeds to financing andrefinancing the eligible projects within one year after the fundraising.
In the case of refinancing, DNV confirmed that the proceeds will be allocated to capital
expenditures made within five years or operational expenditures made within three
years from the execution of Kirin Sustainable Finance (in both cases, projects wereconfirmed that they will have environmental and social benefits throughout theredemption or repayment period). DNV also confirmed that the allocation of theproceeds for each project will be managed by the accounting department semi-annuallyin accordance with Kirin Holdings' accounting management procedures, and that Kirin
Holdings will manage the proceeds by using the internal management system to ensurethat the total amount of eligible projects is not less than the proceeds. The unallocatedproceeds will be managed in cash or cash equivalents until the proceeds have been fully
allocated.
SBG-4. Reporting:
DNV confirmed that Kirin Holdings will conduct Kirin Sustainable Finance reporting(annual reporting) and disclose the allocation of proceeds (project name, projectdescription including its progress, amount of allocated and unallocated proceeds) until
the proceeds have been fully allocated. In terms of the environmental and social
benefits, Kirin Holdings plans to report on the indices specified for each project until thematurity of Kirin Sustainable Finance. If any significant event, such as a major change inplans or actual results, occurs after full allocation of the proceeds, Kirin Holdings will
disclose such information in a timely manner. The reporting will be disclosed on the Kirin
Holdings website.

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Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Based on the Framework and other relevant documents and information provided by Kirin
Holdings, DNV confirmed that Kirin Sustainable Finance meets the relevant criteria and will beplanned and implemented properly.
Table Summary of Eligible Sustainable Project Portfolio№

Categories

1

Businesses related
to energy
efficiency

2

3

Green
Projects
Categories

Contri
Environmental bution
Issuesto
SDGs

Green Projects

Green Projects Overview

Introduction of heatpump systems to
production sites

Introduction site: Kirin Brewery Company,
Limited Hokkaido Chitose factory, Sendai
factory, Toride factory, Yokohama factory,
Nagoya factory, Shiga factory, Kobe factory,
Okayama factory, Fukuoka factory, etc.
Introduction period: 2019～2028
Total investment: Approx. 2 billion JPY～3
billion JPY

Climatechangemitigation

Businesses related ・ Pollution
to pollution
prevention
prevention andand control
control・ Eco-efficient
products
Eco-efficient
and/orproducts and/or
circularcircular economy
economyadapted products, adapted
production
products,
technologies andproduction
processes
technologies
andprocesses

Procurement andcapital investment ofrecyclable PET resin

Procurement and capital investment forrecyclable PET resin to achieve 50% recycledresin usage ratio in PET bottles in Japan by2027

 Pollution
prevention
and control
 Conservationof natural
resources

Businesses related
to renewableenergyIntroduction of solar
power generationequipments to
production sites

Introduction site: Kirin Brewery Company,
Limited Hokkaido Chitose factory, Sendai
factory, Toride factory, Yokohama factory,
Nagoya factory, Shiga factory, Kobe factory,
Okayama factory, Fukuoka factory, etc.
Introduction period: 2021～2029
Total investment: Approx. 2 billion JPY～3
billion JPY

Climatechangemitigation

Procurement of
renewables

Switching to renewables for all purchased
electricity№

Categories

4

Businesses that
contribute to theachievement of aEnergyefficiency

RenewableenergySocialProjects
Categories
Access toessential
services

Social Projects
Social Projects
Overview
Capital investment,
operation, andprocurement of raw

Target population
General publicPage 4 of 35

Social Benefits
Contributing to thehealth of a wide
range of ourContributionSocial Issues
to
SDGs
Infant andtoddler healthimprovement

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

society of health(health, health materials contributing
and longevity,care)
to the production of
Human Milk
mainly throughOligosaccharide (HMO)
infant and toddler
healthimprovement anddisease prevention

customers throughproviding products
containing Human
Milk Oligosaccharide
(HMO)

5

Businesses that
contribute to theachievement of asociety of healthand longevity,
through brain
function
improvement andbrain function
decline prevention

Capital investment,
operation, andprocurement of raw
materials contributing
to the production of
Citicoline

General public, aging
people, patients

6

Businesses that
contribute to theachievement of asociety of healthand longevity,
through themaintenance of
immune function

Capital investment,
General public, aging
operation, andpeople, vulnerable
procurement of raw
youth
materials contributing
to the research anddevelopment of LcPLASMA and the
production of raw
material powder
utilizing Lc-PLASMA

Page 5 of 35

Contributing to brain
function
improvement andbrain function decline
prevention of ourcustomers throughproviding products
containing Citicoline
as health food andpharmaceuticalingredientsBrainfunction
improvement
and brainfunctiondeclineprevention

Contributing to themaintenance of
immune function of
our customers
through providing
products containing
Lc-PLASMA

Maintenanceof immunefunction

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Contents
Executive Summary

2

Ⅰ.

Introduction

7

Ⅱ.

Scope and Objectives

12

Ⅲ.

Responsibilities of Kirin Holdings and DNV

13Ⅳ.

Basis of DNV’s Opinion

14

Ⅴ.

Work Undertaken

15

Ⅵ.

Findings and DNV’s Opinion

16

Ⅶ.

Assessment Conclusion

23

Schedule-1 Kirin Sustainable Finance Nominated Projects

25

Schedule-2 Kirin Sustainable Finance Eligibility Assessment Protocol

29

Revision History
Revision No.

Date of Issue

0

March 18, 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 thaterrors or irregularities, possibly significant, may not have been detected. Limited depth of evidence gathering including inquiry and analytical procedures and limited
sampling at lower levels in the organization were applied as per scope of work. DNV expressly disclaims any liability or co-responsibility for any decision a person or anentity may make based on this Statement.

Statement of Competence and Independence
DNV applies its own management standards and compliance policies for quality control, in accordance with ISO/IEC 17021:2011 - Conformity Assessment Requirements
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.

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

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Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Ⅰ. Introductioni.

About the Fundraiser
Kirin Holdings Company, Limited. (hereinafter, Kirin Holdings) is the holding
company of Kirin Group consisting of Kirin Brewery Company, Limited, Kirin
Beverage Company, Limited, Mercian Corporation, Lion Pty Ltd, Kyowa Kirin Co.,
Ltd., and Kyowa Hakko Bio Co., Ltd., etc. Based on fermentation and biotechnology
cultivated since its foundation, Kirin Holdings expanded into the Food domain(alcoholic & beverages business), the Pharma domain (pharmaceutical business)and the Health Science domain (health science business), an intermediate domain
between the two, with its operation mainly in Japan, Asia and Oceania.
Kirin Group sets "KIRIN brings joy to society by crafting food and healthcare
products inspired by the blessings of nature and the insights of our customers" as its
corporate philosophy.

ii.

Fundraiser's ESG/SDGs Initiatives
Kirin Holdings is aiming at "becoming a global leader in CSV by creating value indomains ranging from food & beverages to pharmaceuticals" under its long-term
management vision, "Kirin Group Vision 2027 (KV2027)". Moreover, Kirin Holdings
considers taking a CSV (Creating Shared Value) approach, which make theresolution of social issues an integral part of its business operations, as one of themost productive ways for a company to achieve sustained growth and addresssocial issues. Therefore, Kirin Holdings places CSV at the core of its business
management to make a difference in society and achieve sustainable mutual
growth.
"CSV Purpose" has been formulated as one of the long-term non-financial goals of"Kirin Group Vision 2027 (KV2027)", and the Kirin Group's guiding principle toachieve sustainable growth and create value together with people across society.
The Kirin Group is committed to playing its role as a responsible alcohol producer
and addressing three key social issues: "health and well-being," "community
engagement," and "the environment." By fulfilling these commitments, the Group
brings joy to society and a bright future to our customers. (See Table -1)
For formulating the "CSV Purpose", Kirin Group has formulated its "Management
Issues for Sustainable Growth" in Kirin Group Materiality Matrix (GMM) as part of its
commitment to sustainable development in partnership with society. (See Figure-1)
Selection criteria for each management issue have been established for the selectionof materialities. (See "Procedure to select Materiality" on the Kirin Holdings
website.) Kirin Group has also established "CSV Commitment" as a medium-term
action plan to achieve its "CSV Purpose" and incorporated it into the business plansof the Group and key business companies. (See "Commitments and Performance
Indicators" on the Kirin Holdings website.)

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Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Table-1 "Kirin Group Vision 2027 (KV2027)" and "CSV Purpose" of Kirin Group
Kirin Group Vision2027
A global leader in CSV, creating value across our world of Food & Beverages to Pharmaceuticals.

CSV Purpose
A Responsible Alcohol Producer
Make steady progress toward eradicating the harmful use of alcoholin all countries of operation(Zero Harmful Drinking)Categories of Social
IssuesMessage

Relevant SDGs

Raise the number of healthy people,
Ⅰ

Health and Well-lower the number of sick people, andbeing

contribute to the people who are
involved in healthcare.

Ⅱ

Ⅲ

Community
Engagement

The Environment

Create positive forces for people’s
well-being and society by developing
communities.

Enrich a sustainable Earth for future
generations through positive impact.

Figure-1 Management Issues for Sustainable Growth (Group Materiality Matrix)

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Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinioniii. Fundraiser's Initiative to Environmental and Social Issues
The Kirin Group has revised its existing environmental vision and formulated a newone, "Kirin Group's Environmental Vision 2050", a long-term strategy looking ahead
to 2050, with the aim of spearheading the efforts to tackle environmental issues.
One of the Kirin Group's initiatives to address environmental issues is overcoming
climate change, and Kirin Group has declared to achieve Net-Zero GHG emissions
across its entire value chain by fiscal 2050 and switch 100% of its electricity
consumption to renewables by fiscal 2040. Kirin Group was the first company toobtain an approval of the SBT 1.5°C target, a science-based goal of the SBT
Initiative (SBTi). In 2019, Kirin Holdings established the "Kirin Group Plastic Policy,"
an effort aimed at solving the global plastic waste problem, and declared to increase
the percentage of PET bottles made using recycled resin to 50% of bottles sold inJapan by fiscal 2027. In "Kirin Group Environmental Vision 2050," announced in
February 2020, Kirin Group will work on to achieve 100% sustainable containers
and packaging made from recycled materials and biomass by 2050.

The Kirin Group has identified "Health and Well-being" as one of the key issues
within "CSV Purpose". It has determined "immunity", "brain function," and the "gutmicrobiome" as its three key areas and is endeavoring to solve health issues inthese areas through providing products and services that use strategic ingredients
produced by utilizing fermentation & biotechnology, the Kirin Group's corecompetencies.
Specifically, Kirin Group addresses the improvement of access to nutrition, support
to brain function improvement and brain function decline prevention, and themaintenance of immune function. Human Milk Oligosaccharide (HMO), a uniquenutrient of human breast milk, was successfully mass-produced by the Kirin Group's
fermentation production technology utilizing microorganisms. β-Lactolin (Citicoline)
is a proprietary ingredient derived from Kirin Group's brain research that supports
the maintenance of memory, which declines with age. The world's first Lc-PLASMA
activates pDC (Plasmacytoid dendritic cells), the command center of immune cells.
By providing such highly functional products as the result of various research andPage 9 of 35

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

development efforts, the Kirin Group contributes to solving social and health issues
in Japan and around the world.

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Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

iv. About "Kirin Sustainable Finance Framework"
In order to raise funds that are necessary for addressing environmental and social issues
defined in "CSV Purpose" through Green/Social/Sustainability Finance, Kirin Holdings
formulated "Kirin Sustainable Finance Framework". The standards and guidelines beingreferred to in the Framework are described in Section II (3) below.
Net proceeds from the Green/Social/Sustainability Financing are expected to be allocated toeach category of the following Green and Social Projects and will be managed and executedin accordance with the established Framework.
【Green Projects】• Business related to energy efficiency(Introduction of heat pump to production sites)• Business related to pollution prevention and control, Eco-efficient products
and/or circular economy adapted products, production technologies andprocesses(Procurement and capital investment for recyclable PET resin)• Business related to renewable energy(Introduction of solar power generation equipment to production sites/Procurement of renewables)【Social Projects】• Business that contribute to the achievement of a society of health andlongevity, mainly through infant and toddler health improvement anddisease prevention(Capital investment, operation, and procurement of raw materials contributing to
the production of Human Milk Oligosaccharide (HMO))• Business that contribute to the achievement of a society of health andlongevity, through brain function improvement and brain function decline
prevention(Capital investment, operation, and procurement of raw materials contributing to
the production of Citicoline)• Business that contribute to the achievement of a society of health andlongevity, through the maintenance of immune function(Capital investment, operation, and procurement of raw materials contributing to
the research and development of Lc-PLASMA and the production of raw material
powder utilizing Lc-PLASMA)

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Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Ⅱ. Scope and Objectives
DNV has been commissioned by Kirin Holdings to provide a pre-issuance assessment on"Kirin Sustainable Finance Framework" and Kirin Sustainable Finance. The aim of this preassessment is to ensure that the Framework and Kirin Holdings' Sustainable Finance meetthe requirements of SBG, GBP/GBGLs, SBP/SBGLs, and GLP/GLGLs described below, and toprovide a second party opinion on its eligibility.
DNV, as an independent external reviewer, identified no real or perceived conflict of interest
associated with the delivery of this second-party opinion for Kirin Holdings. In this report, noassurance is provided regarding the financial performance of Kirin Sustainable Finance andGreen/Social/Sustainability Finance to be executed based on the Framework, the value of
any investments, or the long-term environmental benefits of the transaction.
(1) Scope of Review *The review assessed the following items and confirmed their alignment with four core elements such as SBG.
☒

Use of Proceeds☒

Process for Project Evaluation and Selection☒

Management of Proceeds☒

Reporting(2) Role(s) of Review Provider☒

Consultancy (incl. 2nd opinion)☐

Certification☐

Verification☐

Rating☐Other (please specify):(3) Standards/Guidelines to be Applied
No.

Standards/Guidelines

Scheme Owner

Applied Level *1*2

1.

Sustainability Bond Guidelines 2021
(SBG)

International Capital Market Association(ICMA), 2021

Apply

2.

Green Bond Principles 2021 (GBP)

International Capital Market Association(ICMA), 2021

Apply

3.

Green Bond Guidelines 2020 (GBGLs)

Ministry of the Environment, Japan,
2020

Apply

4.

Social Bond Principles 2021 (SBP)

International Capital Market Association(ICMA), 2021

Apply

5.

Social Bond Guidelines 2021 (SBGLs)

Financial Services Agency, 2021

Apply

6.

Green Loan Principles 2021(GLP)

Loan Market Association (LMA) andothers, 2021

Apply

7.

Green Loan Guidelines 2020 (GLGLs)

Ministry of the Environment, Japan,
2020

Apply

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Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Climate Bonds Standards Version 3.0
8.

Refer
Climate Bonds Initiative, 2020

[Sector Criteria for Solar (version 2.1)](CBS-SE 2.1)

9.

Green and Social Bonds: A High-Level
Mapping to the Sustainable Development
Goals (SDGs)

International Capital Market Association(ICMA), 202010.

Handbook Harmonized Framework for
Impact Reporting

International Capital Market Association(ICMA), 2021

Refer

Refer

*1. Apply: Eligibility for all four core common elements to each handbook, principle and guideline was evaluated*2. Refer: DNV evaluated the eligibility of the finance to the criteria and guidelines available which are globally recognized.

Ⅲ.

Responsibilities of Kirin Holdings and DNVKirin Holdings has provided the information and data used by DNV during the delivery of thisreview. DNV’s second party opinion represents an independent opinion and is intended to
inform Kirin Holdings and other interested stakeholders in the finance of whether theestablished criteria have been met, based on the information provided to us. In our work, wehave relied on the information and the facts presented to us by Kirin Holdings. DNV is not
responsible for any aspect of the nominated activities referred to in this opinion and cannot beheld liable if estimates, findings, opinions, or conclusions are incorrect based on the informationand facts provided by Kirin Holdings. Thus, DNV shall not be held liable if any of the information
or data provided by the management of Kirin Holdings and used as a basis for this assessment
were not correct or complete.

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Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Ⅳ.

Basis of DNV’s Opinion

To provide as much flexibility for the fundraiser, Kirin Holdings, as possible, we have adapted
our Green/Social/Sustainability Finance assessment methodologies, which incorporates therequirements of the SBG, GBP/GBGLs, SBP/SBGLs, and GLP/GLGLs, to create an Eligibility
Assessment Protocol (hereinafter, Protocol). (Refer to Schedule-2). The Protocol is applicable toGreen/Social/Sustainability Finance based on SBG, GBP/GBGLs, SBP/SBGLs, and GLP/GLGLs.
DNV provides second party opinion as an independent external reviewer based on theassessment utilizing this Protocol. Our Protocol includes a set of suitable criteria that can be used
to underpin DNV’s opinion. The overarching principle and guidelines behind the criteria are that
Green/Social/Sustainability Finance should "enable capital-raising and investment for new andexisting projects with social and environmental benefits." As per our Protocol, the criteria against
which Kirin Sustainable Finance has been reviewed are grouped into four core elements outlined
in GBP, SBP, and GLP, etc.:
Principle One: Use of Proceeds
The Use of Proceeds criteria are guided by the requirement that a
Green/Social/Sustainability Finance fundraiser must use the funds raised to financeeligible activities. The eligible activities should produce clear environmental andsocial benefits.
Principle Two: Process for Project Evaluation and Selection
The Project Evaluation and Selection criteria are guided by the requirements that a
Green/Social/Sustainability Finance fundraiser should outline the process it follows
when determining the eligibility of an investment using Green/Social/Sustainability
Finance proceeds and outline any impact objectives it will consider.
Principle Three: Management of Proceeds
The Management of Proceeds criteria are guided by the requirements that
Green/Social/Sustainability Finance 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
Sustainability Reporting to the Green/Social/Sustainability Finance investors
should be made of the use of finance proceeds and that quantitative and/or
qualitative performance indicators should be used, where feasible.

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Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

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
have not performed an audit or other tests to check the veracity of the information provided
to us during the assessment before fundraising. DNV's work undertaken and will be
undertaken to form our opinion includes;i. Assessment before Fundraising•

Creation of the fundraiser’s specific Protocol, adapted to the purpose of Kirin
Sustainable Finance, as described above and in Schedule-2 to this assessment.

•

Assessment of documentary evidence provided by the fundraiser on Kirin Sustainable
Finance and supplemented by high-level desktop research. These checks refer tocurrent assessment best practices and standards methodology;•

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

Documentation of findings against each element of the criteria.

ii. Assessment after Fundraising（＊Not Included in This Report）•

Assessment of evidential documents provided by Kirin Holdings after fundraising of Kirin
Sustainable Finance, and supplemental by desk review from a higher perspective.

•

Interview with key personnel of Kirin Holdings and review the relevant documentation.

•

Field research and inspection (if necessary).

•

Review of the nominated projects and assets at the time of the fundraising verification(update of the details mentioned in Schedule-1).

•

Document creation of assessment results after fundraising.

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Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Ⅵ.

Findings and DNV’s Opinion

DNV’s findings and opinion against the four core elements outlined in SBG, GBP/GBGLs,
SBP/SBGLs and GLP/GLGLs are listed in (1)-(4) below.
(1) Use of Proceeds
DNV confirmed that the proceeds from Kirin Sustainable Finance will be allocated to six
sustainable project portfolio (Table-2), which is consistent with the following
representative eligible project categories outlined in SBG, GBP/GBGLs, SBP/SBGLs, and
GLP/GLGLs. The nominated projects in the Framework that contribute to the society andthe environment are classified into the eligible sustainable project portfolio shown in
Table-2 (from 1 to 6). The net proceeds will be allocated to one or more than one eligible
projects within the nominated projects shown in Table-2. Please refer to Schedule-1 fordetails of the eligible sustainable project portfolio.
Table-2 Sustainable project portfolio (See Schedule-1 for details)№

Categories

1

Businesses related
to energy
efficiency

2

3

Green
Projects
Categories

Contri
Environmental bution
Issuesto
SDGs

Green Projects

Green Projects Overview

Introduction of heatpump systems to
production sites

Introduction site: Kirin Brewery Company,
Limited Hokkaido Chitose factory, Sendai
factory, Toride factory, Yokohama factory,
Nagoya factory, Shiga factory, Kobe factory,
Okayama factory, Fukuoka factory, etc.
Introduction period: 2019～2028
Total investment: Approx. 2 billion JPY～3
billion JPY

Climatechangemitigation

Businesses related ・ Pollution
to pollution
prevention
prevention andand control
control・ Eco-efficient
products
Eco-efficient
and/orproducts and/or
circularcircular economy
economyadapted products, adapted
production
products,
technologies andproduction
processes
technologies
andprocesses

Procurement andcapital investment ofrecyclable PET resin

Procurement and capital investment forrecyclable PET resin to achieve 50% recycledresin usage ratio in PET bottles in Japan byfiscal 2027

 Pollution
prevention
and control
 Conservationof natural
resources

Businesses related
to renewableenergyIntroduction of solar
power generationequipment toproduction sites

Introduction site: Kirin Brewery Company,
Limited Hokkaido Chitose factory, Sendai
factory, Toride factory, Yokohama factory,
Nagoya factory, Shiga factory, Kobe factory,
Okayama factory, Fukuoka factory, etc.

Climatechangemitigation

Energyefficiency

RenewableenergyPage 16 of 35

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Introduction period: 2021～2029
Total investment: Approx. 2 billion JPY～3
billion JPY

Procurement of
renewables№

Categories

SocialProjects
Categories

Switching to renewables for all purchased
electricity
Social Projects

Social Projects
Overview

Target population

Social Benefits

ContributionSocial Issues
to
SDGs

4

Businesses that
Access to
Capital investment,
contribute to theessential
operation, andprocurement of raw
achievement of a services
society of health(health, health materials contributing
to the production ofand longevity,
care)
Human Milk
mainly throughOligosaccharides
infant and toddler(HMO)
healthimprovement anddisease prevention

General public

Contributing to the
Infant andhealth of a wide
toddler healthrange of our
improvement
customers throughproviding products
containing Human
Milk Oligosaccharides
(HMO)

5

Businesses that
contribute to theachievement of asociety of healthand longevity,
through brain
function
improvement andbrain function
decline prevention

Capital investment,
operation, andprocurement of raw
materials contributing
to the production of
Citicoline

General public, aging
people, patientsContributing to brain
function
improvement andbrain function decline
prevention of ourcustomers throughproviding products
containing Citicoline
as health food andpharmaceuticalingredientsBrainfunction
improvement
and brainfunctiondeclineprevention

6

Businesses that
contribute to theachievement of asociety of healthand longevity,
through themaintenance of
immune function

Capital investment,
General public, aging
operation, andpeople, vulnerable
procurement of raw
youth
materials contributing
to the research anddevelopment of LcPLASMA and the
production of raw
material powder
utilizing Lc-PLASMA

Contributing to themaintenance of
immune function of
our customers
through providing
products containing
Lc-PLASMA

Maintenanceof immunefunction

Page 17 of 35

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Use of Proceeds Categories as per GBP:☒

Renewable energy☒

Energy efficiency☒

Pollution prevention and control☐

Sustainable management of living natural
resources☐

Terrestrial and aquatic biodiversity☐

Clean transportation☐

Sustainable water management☐

Climate change adaptation☒

Eco-efficient products, production☐

Green buildings with regional, national orconservation

technologies and processes

internationally recognized standards andcertifications☐

Other (please specify)；☐

It is undecided at the time of bond issuance, but is expected to be in line with the GBP
classification or other eligible areas not listed in the GBP at this time.

Use of Proceeds Categories as per SBP:☐

Affordable basic infrastructure☒☐

Affordable housing☐

Access to essential services
Employment generation （SME financing andMicrofinance)☐

Food security and sustainable food☐Socioeconomic advancement and empowerment☐

Other (please specify)；

systems☐

Areas that are considered to meet the
SBP classification or are not listed in the
SBP but are eligible.

Page 18 of 35

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion(2) Process for Project Evaluation and Selection
For the evaluation and selection of Eligible Sustainable Projects of Kirin Sustainable
Finance, DNV confirmed through the review that the accounting department and the CSV
strategy department will select the eligible projects which meet the eligible criteria
defined by the Framework, and the Executive Officer in charge of Financial Strategy will
make the final decisions on the selected eligible projects. In addition, DNV also confirmedthat the eligibility of the projects was evaluated comprehensively based on theircontribution to the achievement of "CSV Purpose".
The six nominated projects evaluated and selected through the above process are closely
related to the key issues outlined in "Management Issues for Sustainable Growth (theKirin Group Materiality Matrix (GMM)" in addition to Kirin Holdings' "CSV Purpose", andare consistent with the Kirin Group's efforts related to environmental/social sustainability.
The following exclusion criteria have been established for project selection. In addition,
the project-related risks identified internally are reported and discussed quarterly at
meetings through monitoring of business plans, including compliance measures.
< Exclusion Criteria >• Plastic manufacturing not subject to recycled PET• Unfair transactions that do not comply with the laws and regulations of the country,
such as bribery, corruption, blackmail, embezzlement, etc.
• Transactions that can cause social problems relate to human rights and theenvironment
In selecting projects, DNV confirmed that the fundraiser meets the eligibility criteria as
indicated in "II. Scope and Objectives (3) Standards/Guidelines to be Applied," and that it
will comply with environmental laws and regulations and agreements with the relevant
communities, as well as with the Kirin Group Compliance Guidelines in order to act withintegrity and in conformity with social ethics. Kirin Holdings will appropriately address anddisclose any ESG-related controversy that may arise regarding eligible projects.
Evaluation and Selection☒

Conforms to the fundraiser’s achievement☒

Documented process to determine that☒

Documented process to identify and manageof environmental contribution goals☒

projects fit within defined categories

The project is eligible for use of proceeds
by Green/Social/Sustainability Financepotential ESG risks associated with the project

and transparency is ensured.
☒The project is evaluated and selected☐

Other (please specify):

based on the published standard
summary

Information on Responsibilities and Accountability☒

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

In-house assessment

external advice or verification

Page 19 of 35

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion(3) Management of Proceeds
DNV confirmed how will Kirin Holdings track and manage the proceeds during the period
from the execution of Kirin Sustainable Finance to the redemption or repayment. DNV
also confirmed that Kirin Holdings plans to allocate the proceeds to financing (new) andrefinancing the eligible projects within one year after the fundraising. In the case ofrefinancing, it was confirmed that the proceeds will be allocated to capital expenditures
made within five years or operational expenditures made within three years from theexecution of Kirin Sustainable Finance (in both cases, projects should be confirmed thatthey have environmental and social benefits throughout the redemption or repayment
period).
It was confirmed that the allocation of the proceeds for each project will be managed by
the accounting department semi-annually in accordance with Kirin Holdings' accounting
management procedures. In addition, it was also confirmed that Kirin Holdings will
manage the proceeds by using the internal management system to ensure that the total
amount of eligible projects is not less than the proceeds. The unallocated proceeds will be
managed in cash or cash equivalents until the proceeds have been fully allocated.

Tracking of Proceeds:☒

Some or all of the proceeds by Green/Social/Sustainability Finance that are planned to
be allocated are systematically distinguished or tracked by the fundraiser.

☐

Disclosure of intended types of temporary investment instruments for unallocatedproceeds☒

Other (please specify): The unallocated proceeds will be managed in cash or cash

equivalents until the proceeds have been fully allocated.
Additional Disclosure:☐

Allocations to future investments

☒

only

☒

Allocation to individual

investments☐

disbursements☐

Disclosure of portfolio balance of

Allocations to both existing and future
Allocation to a portfolio of
disbursements☐

Other (please specify):

unallocated proceeds

Page 20 of 35

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion(4) Reporting
DNV confirmed that Kirin Holdings will conduct Kirin Sustainable Finance reporting (annual
reporting) and will disclose the allocation of proceeds until the proceeds have been fully
allocated. In terms of the environmental and social benefits, Kirin Holdings plans to reporton the following indices until the maturity of Kirin Sustainable Finance. The reporting will
be disclosed on the Kirin Holdings website. If any significant event, such as a majorchange in plans or actual results, occurs after full allocation of the proceeds, Kirin Holdings
will disclose such information in a timely manner.
<Allocation of Proceeds>Eligible criteria and the amount of allocated proceeds
Management methods and the balance of unallocated proceeds
Proceeds to be allocated to refinancing<Environmental benefits>Introduction of heat pump systems: GHG reductions (t-CO2）＝【Annual reduction in city gas consumption as a result of equipment introduction(Nm3/year)】 × 【CO2 emission factor*1 (t-CO2/Nm3)】*2 －【Annual increase in electricity consumption as a result of equipment introduction(MWh/year)】 × 【CO2 emission factor (t-CO2/MWh)】*3*1: Emission factor of each electric power supplier (for calculation of GHG emissions
generated by specified electric power supplier)*2: Annual reductions in city gas consumption calculated by comparison with meteredsteam consumption*3: Annual electricity consumption increased by the introduction of a heat pump systems



Procurement and capital investment of recyclable PET resin:
Ratio of recycled resin (%) = amount of recycled resin used ÷ amount of resin
used for PET bottles



Introduction of solar power generation equipment: GHG reductions (t-CO2) ＝CO2 emission factor × amount of solar power generated



Procurement of renewables: GHG reductions (t-CO2) ＝CO2 emission factor × amount of renewables procured<Social benefits>

Human Milk Oligosaccharide production: Number of continuous users of the
products (people) = sales volume ÷ intake per day ÷ 12 months duration of use



Citicoline production (Food): Number of continuous users of the products(people) = sales volume ÷ intake per day ÷ 12 months duration of use



Citicoline production (Pharmaceutical): Number of continuous users of the
products (people) = sales volume ÷ intake per day ÷ 6 months duration of use



Lc-PLASMA production: Number of continuous users of the products (people) =sales volume ÷ intake per day ÷ 12 months duration of use

Page 21 of 35

Kirin Holdings Company, Limited. Kirin Sustainable 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):

Information Reported:☒

Allocated amounts☐

Other (please specify):☐

Green bond refinanced share of total investment☐

Semi-annual

Frequency:☒

Annual☐Other (please specify):

Impact Reporting (Environmental Benefits, Social Benefits):☒

Project-by-project☐

On a project portfolio basis☐

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

Frequency:☒

Annual☐Other (please specify):☐

Semi-annual

Information Reported (Expected or Post-issuance):☒

GHG Emissions / Savings☐

Energy Savings☒

Number of continuous users of the☒

Other ESG evaluation item (please specify):

product

Recycled resin ratio in PET bottles

Means of Disclosure☐

Information published in financial report☐

Information published in ad hoc documents☐

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

Described in sustainability report☒

Other (please specify): Disclosing on website

review):

Page 22 of 35

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Ⅶ.

Assessment Conclusion
On the basis of the information provided by Kirin Holdings and the work undertaken, it
is DNV’s opinion that "Kirin Sustainable Finance Framework" and Kirin Sustainable
Finance conducted by Kirin Holdings meet the criteria established in the Protocol andare aligned with the stated definition and purpose of Green/Social/Sustainability
Finance within the SBG and related standards, which is to "enable capital-raising andinvestment for new and existing projects with social and 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

Tsuyoshi Katori

Project Leader

Assessor

DNV Business Assurance Japan K.K.

DNV Business Assurance Japan K.K.

Page 23 of 35

Kirin Holdings Company, Limited. Kirin Sustainable 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

Page 24 of 35

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Schedule-1 Kirin Sustainable Finance Nominated Projects
The nominated projects listed in the table are Kirin Sustainable Finance candidates evaluated for eligibility at the time of eligibility
assessment before implementation (as of March 2022). The Green/Social Project classification is the representative example shown in
GBP/GBGLs, SBP/SBGLs. In the future, Kirin Sustainable Finance executed under the Kirin Sustainable Finance Framework, one or moreof the following sustainable projects (Green /Social Projects) will be selected. If the additional sustainability projects are included in thefinance executed under the Kirin Sustainable Finance Framework, the fundraiser will evaluate the eligibility in advance. If necessary, DNV
will conduct the evaluation in a timely manner.
Contri№

Categories

Green Projects
Categories

Green
Projects

Green Projects Overview

Environmental Issues

butionto
SDGs*1

Energy efficiency

Introduction ofheat pumpsystems to
production sites

Introduction site: Kirin Brewery Company,
Limited Hokkaido Chitose factory, Sendai
factory, Toride factory, Yokohama factory,
Nagoya factory, Shiga factory, Kobe factory,
Okayama factory, Fukuoka factory, etc.
Introduction period: 2019～2028
Total investment: Approx. 2 billion JPY～3
billion JPY

Climate change mitigation
Greenhouse gas (GHG) emissions from economic
activities and daily life have been caused climatechange, and the risk of heavy rains and heat waves
is expected to increase in the future. As a global
issue, countries around the world have beenaddressing this issue, and more than 120 countries
and regions, including Japan, have set the target of"Carbon neutrality by 2050".

・ Pollution
prevention andcontrol・ Eco-efficient
Eco-efficient products
products and/or
and/or circular economy
circular economy
adapted products,
adapted products,
production technologies
production

Procurement andcapitalinvestment ofrecyclable PET
resin

Procurement and capital investment forrecyclable PET resin to achieve 50% recycledresin usage ratio in PET bottles in Japan by fiscal
2027

Pollution prevention and control, Conservationof natural resources *2
The low effective utilization rate of waste plastics
and environmental pollution caused by marine
plastics and other materials have become global
issues. Japan has formulated the "Plastic Resource
Recycling Strategy" and is aiming to solve bothresource and environmental issues related to1

Businesses related toenergy efficiency

2

Businesses related topollution prevention andcontrol

Page 25 of 35

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

3№

and processes

technologies andprocesses

Businesses related torenewable energy

Renewable energy

Categories

4

Businesses that
contribute to theachievement of a societyof health and longevity,
mainly through infant
and toddler healthimprovement anddisease prevention

5

Businesses that
contribute to theachievement of a societyof health and longevity,

SocialProjects
Categories
Access to essential
services(health, healthcare)plastics.
Introduction ofsolar power
generationequipment toproduction sites

Introduction site: Kirin Brewery Company,
Limited Hokkaido Chitose factory, Sendai
factory, Toride factory, Yokohama factory,
Nagoya factory, Shiga factory, Kobe factory,
Okayama factory, Fukuoka factory, etc.
Introduction period: 2021～2029
Total investment: Approx. 2 billion JPY～3
billion JPY

Procurement of
renewables

Switching to renewables for all purchased
electricity

Refer to the above "Climate change mitigation"

Social Projects
Social Projects
Overview

Targetpopulation

ContriSocial Benefits

Social Issues

Contributing to the health of awide range of our customers
through providing products
containing Human Milk
Oligosaccharide (HMO)

Improvement of the health of infants andtoddlers *3
The World Health Organization (WHO) states thatbreastfeeding is the best means of protecting
infants from poor health and disease. In Japan,
according to a survey by the Ministry of Health,
Labor and Welfare, 45% of infants are not fullybreastfed (by mixed feeding), and mothers whoraised their infants by mixed feeding report a highneed for breastfeeding.

Capitalinvestment,
operation, andprocurement ofContributing to brain function
improvement and brain function
decline prevention of ourcustomers through providing

Improvement of brain function of the elderly *4
In Japan, the number of elderly people withdementia is expected to reach approximately 7
million by 2025, or one out of every five persons

Page 26 of 35

to
SDGs

CapitalGeneral public
investment,
operation, andprocurement of
raw materials
contributing to the
production of
Human Milk
Oligosaccharide(HMO)
Generalpublic, aging
people,patients

butionKirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

6

through brain function
improvement and brain
function decline
prevention

raw materials
contributing to the
production of
Citicoline

Businesses that
contribute to theachievement of a societyof health and longevity,
through themaintenance of immune
function

Capitalinvestment,
operation, andprocurement of
raw materials
contributing to theresearch anddevelopment of
Lc-PLASMA andthe production of
raw material
powder utilizing
Lc-PLASMA

Generalpublic, aging
people,vulnerable
youth

products containing Citicoline ashealth food and pharmaceuticalingredients

aged 65 or older. The Ministry of Health, Labourand Welfare (MHLW) has formulated the"Comprehensive Strategy for Dementia Policy
Promotion (New Orange Plan)" and is promoting
efforts to prevent the onset of dementia, based on
the belief that efforts in daily life, such as exercise,
improvement of oral functions, better nutrition,social interaction, and hobby activities, are likely tolead to prevention of cognitive decline.

Contributing to the maintenanceof immune function of ourcustomers through providing
products containing Lc-PLASMA

Improvement of immune function *5
In Japan, where the population is aging, thegovernment's "Health and Medical Strategy"
considers it important to take measures against
unwellness among the elderly, and Kanagawa
Prefecture has pointed out the importance of"nutrition (diet and oral functions), exercise, andsocial participation" in the fight against unwellness.
In addition, the government's "SDG Action Plan2022" calls for "achieving health and longevity,"and specific efforts are required. In this context, it
has been confirmed that "Plasma lactobacillus
acidophilus" suppresses cold/flu-like symptoms anddengue fever-like symptoms by activating antiviral
immunity.

*1︓Ministry of the Environment, Japan, "Decarbonization Portal"（https://ondankataisaku.env.go.jp/carbon_neutral/about/）*2：Ministry of the Environment, Japan, "Plastic Resource Circulation"（https://plastic-circulation.env.go.jp/about/senryaku）*3：Ministry of Health, Labour and Welfare, "Current Situation Surrounding Breastfeeding and Weaning"（https://www.mhlw.go.jp/content/11908000/000464806.pdf）*4：Ministry of Health, Labour and Welfare et al. "Comprehensive Strategy for Dementia Policy Promotion (New Orange Plan)"（https://www.mhlw.go.jp/file/06-Seisakujouhou12300000-Roukenkyoku/nop1-2_3.pdf）*5：Government "Health and Medical Strategy"（https://www.kantei.go.jp/jp/singi/kenkouiryou/suisin/ketteisiryou/kakugi/r020327senryaku.pdf）, Government "SDGs Action Plan2022"（https://www.mofa.go.jp/mofaj/gaiko/oda/sdgs/pdf/SDGs_Action_Plan_2022.pdf）, Kanagawa Prefecture "Measures for Unwellness of the Elderly"（https://www.pref.kanagawa.jp/docs/cz6/cnt/f480290/koureisha-me-byo.html）

Page 27 of 35

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Schedule-1 Reference: Kirin Sustainable Finance Nominated Projects№

Green/Social Projects

Example for Nominated Project (Overview)1

Introduction of heat pump systems to production sites• Introduction site: Kirin Brewery Company, Limited Okayama factory• Output: Air heat source: heating capacity 420kW(70kW×6 units),
Air heat source: heating capacity 420kW(70kW×6 units), Water heat source: heating
capacity 590kW×1 unit
• Start of operation: March 2022 (expected)• Estimated allocation: Approx. 300 million JPY

2

Procurement and capital investment for recycled PET resin

Procure recycled PET resin to increase the percentage of PET bottles made using recycled resin to
50% of bottles sold in Japan by fiscal 2027 and use it in products such as Kirin Nama-cha Decaf.

3

Introduction of solar power generation equipment to• Introduction site: Kirin Brewery Company, Limited Hokkaido Chitose factory• Power generation capacity: 612kW• Start of operation: January 2022
• Estimated allocation: Approx. 20 million JPY

production sites

4

Procurement of renewables

Kirin Brewery Company, Limited Switching the purchased electricity to renewables at Hokkaido
Chitose, Sendai, Toride, Yokohama, Nagoya, Shiga, Kobe, Okayama and Fukuoka factory, etc.

Capital investment, operation, and procurement of raw• Introduction site: Thai Kyowa New factory (Phase 1）• Annual production capacity: Approx. 300 tons
• Start of operation: 2022 (expected)• Total investment: Approx. 7 billion JPY / Estimated allocation: Approx. 7 billion JPY

materials contributing to the production of Human Milk
Oligosaccharide (HMO)
5

Capital investment, operation, and procurement of raw
materials contributing to the production of Citicoline

6

Capital investment, operation, and procurement of raw
materials contributing to the research and development of
Lc-PLASMA and the production of raw material powder
utilizing Lc-PLASMA• Introduction site: Kyowa Hakko Bio Co., Ltd. Yamaguchi Plant• Annual production capacity: 2.5 times higher than conventional• Start of operation: 2023 (expected)• Total investment: Approx. 7.7 billion JPY / Estimated allocation: Approx. 7.7 billion JPY• Introduction site: Koiwai Dairy Products Company, Limited Tokyo factory• Annual production capacity: Approx.28 tons
• Start of operation: May 2019, March 2023 (expected)• Total investment: Approx. 2.9 billion JPY / Estimated allocation: Approx. 2.9 billion JPY

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Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Schedule-2 Kirin Sustainable Finance Eligibility Assessment Protocol
The following checklists, SF-1～SF-4, are DNV protocol developed for the Kirin Sustainable Finance eligibility assessment based on the four coreelements set forth in the Green Bond Principles 2021, Social Bond Principles 2021, Green Loan Principles 2021 and other relevant standards.
*SF; Sustainable FinanceSF-1 Use of Proceeds
Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

1aType offinance

The Sustainability Finance must fallin one of the following categories, as
defined by SBP and GBP.

Confirmed documents:- Kirin Sustainable Finance
Framework (hereinafter,
Framework)

Through the assessment, DNV confirmed that Kirin Sustainable
Finance (hereinafter, "Sustainable Finance") falls into thecategory below:

Interviews with stakeholders• (Standard) Sustainability FinanceConfirmed documents:- Framework- Information related to eachproject
Interviews with stakeholders

DNV confirmed that the projects identified in the Framework fall
into the following representative eligible categories classified by
the standards, such as GBP, SBP and GLP. It was also confirmedthat the proceeds are planned to be allocated to new or existing
projects as new financing or refinancing, and that the plans areproperly documented in the legal documents and otherdocuments related to the financing.

- (Standard) Sustainability Finance- Sustainability Revenue Finance- Sustainability Project Finance- Other
1b

Project
categories

The cornerstone of a Sustainability
Finance is the utilization of theproceeds of the finance which should
be appropriately described in the legal
documentation for the security.

Environmental Contribution (Green)• Energy efficiency• Pollution prevention and control• Eco-efficient products and/or circular economy adapted
products, production technologies and processes• Renewable energy
Social Contribution (Social)

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Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings• Access to essential services

1cEnvironment
al and social
benefits

All designated Sustainability Project
categories should provide clear
greenly and/or social benefits, which,where feasible, will be quantified orassessed by the fundraiser.

Confirmed documents:- Framework
Interviews with stakeholders

Among the Green Projects, the introduction of heat pumpsystems and solar power generation equipment haveenvironmental benefits in terms of CO2 reductions, and DNV
confirmed that the environmental benefits are quantitatively
assessed in terms of CO2 reductions and reported annually. DNV
also confirmed that the capital investment in recyclable PET resin
is a project that contributes to improving the effective utilization
rate of waste plastic and preventing environmental pollution
caused by marine plastics, etc., and that the environmental
benefits of the project can be quantitatively evaluated by theratio of recycled resin used.
Regarding Social Projects, as shown in Schedule-1, Kirin Holdings
has defined the social issues in Japan to be solved by its own
business activities and products, and clearly identified thebeneficiaries. Each Social Project was confirmed to have social
benefits respectively: Human Milk Oligosaccharide production forimproving the health of customers in a wide range of regions andage groups, Citicoline production for brain function improvementof customers, and Lc-PLASMA production for maintenance of
immune function of customers. The benefits were confirmed tobe quantitatively assessed in terms of the number of continuous
users and reported annually.
Through the assessment, DNV determined that theenvironmental and social impact risks associated with project
execution were relatively low, with the following aspects
considered.
 Compliance with environmental laws and regulations (e.g.,
conducting environmental assessments)
 Comply with agreements with the relevant communities

Page 30 of 35

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings Compliance with the Kirin Group Compliance Guidelines

1d

Refinance
share

In the event that a proportion of theproceeds may be used for refinancing,
it is recommended that fundraiser
provide an estimate of the share offinancing vs. refinancing, and whereappropriate, also clarify whichinvestments or project portfolios may
be refinanced.

Confirmed documents:- Framework
Interviews with stakeholders

Page 31 of 35

Kirin Holdings plans to use the proceeds for either new
investments, refinancing, or both. DNV confirmed that it plans todisclose the estimated amount (or share) of the proceeds
allocated to refinancing through its annual report.

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

SF-2 Process for Project Evaluation and Selection
Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

2aInvestment
decisionprocess

The fundraiser of a Sustainability
Finance should outline the decisionmaking process it follows todetermine the eligibility of projects
using Sustainability Finance proceeds.
This includes, without limitation:

Confirmed documents:- Framework- CSV Purpose
Interviews with stakeholders

Based on the Framework, Kirin Holdings selected projects
according to the following criteria.

・ A process to determine how the
projects fit within the eligible
Sustainability (Green and Social)
Projects categories identified in the
Sustainability Finance Principles;
・ The criteria making the projects
eligible for using the Sustainability
Finance proceeds; and・ The sustainability objectives forgreen and social

Eligible Projects:• The accounting department and the CSV strategy department
selected the eligible projects, and the Executive Officer incharge of Financial Strategy made the final decision on theeligibility of the selected nominated projects.
• The overall contribution of the project to the achievement of the"CSV Purpose" was evaluated to determine the eligibility of thesustainability projects listed in Schedule-1.
• For execution of the project, the following risk mitigation
processes are in place, in addition to meeting the eligibility
criteria indicated in Chapter II Scope and Objectives (3)Standards/Guidelines to be Applied.
< Process to reduce environmental and social risks >• Compliance with environmental laws and regulations (e.g.,
conducting environmental assessments)• Comply with agreements with the relevant communities• Compliance with the Kirin Group Compliance Guidelines

Page 32 of 35

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

2b

Fundraiser's
environment
al and social
governanceframework

In addition to criteria andcertifications, the information
published by fundraiser regarding the
Sustainability finance process is also
considered the quality of performanceof the fundraiser's framework andenvironmental and social
sustainability.

Confirmed documents:- Framework- CSV Purpose- Long-term Management
Vision, Kirin Group Vision
2027 (KV2027)（hereinafter, "KV2027"）
Interviews with stakeholders

DNV confirmed that the Green and Social Projects implemented
by Kirin Holdings are in line with Kirin Holdings' "CSV Purpose"and "Long-Term Management Concept Kirin Group Vision 2027
(KV2027)" and that, in implementing the projects, Kirin Holdings
will comply with environmental laws, regulations, andagreements with the relevant communities, as well as
considerations for the surrounding environment was considered.
DNV also confirmed that the environmental benefits of Green
Projects, such as CO2 reductions, and the social benefits of Social
Projects are clear through review of the Framework and otherdocuments, as well as interviews with stakeholders.

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Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

SF-3 Management of Proceeds
Ref.

Criteria

3a

Tracking
procedure-1

3b

Tracking
procedure-2

3c

Temporaryholdings

Requirements

Work Undertaken

DNV Findings

Proceeds for funds raised throughSustainability Finance should bemanaged in sub-accounts,
incorporated into sub-portfolios, ortracked by other appropriate means.
They should also be evidenced by thefundraiser in a formal internal process
related to the fundraiser's investment
and financing operations forsustainability projects.

Confirmed documents:- Framework- Kirin Group Treasury Policy- Document Management
Regulation
Interviews with stakeholders

Through document review and interviews, DNV confirmed thatthe net proceeds are traceable through Kirin Holdings' Kirin Group
Treasury Policy and internal control systems. DNV also confirmedthat the actual systems and related documents in use can bereviewed and that the control of the proceeds can be evidencedbased on these systems.

In the period for which Sustainability
Finance is to be managed, the balanceof the tracked proceeds should beperiodically adjusted by amounts
matching eligible project investments
or loan disbursements made duringthat period.

Confirmed documents:- Framework- Kirin Group Treasury Policy- Document Management
Regulation
Interviews with stakeholders

DNV confirmed that Kirin Holdings plans to manage theappropriation of proceeds regularly (at least semi-annually)
during the period from the execution of Sustainable Finance toredemption or repayment.

Pending such investments or
disbursements to eligible
Sustainability Projects, the fundraiser
should make known to investors theintended types of temporary
investment instruments for thebalance of unallocated proceeds.

Confirmed documents:- Framework- Kirin Group Treasury Policy- Document Management
Regulation
Interviews with stakeholders

DNV confirmed that Kirin Holdings' internal control system andother confirmation processes ensure that the balance of
unallocated proceeds is recognized in a timely manner. It was
confirmed through the description of the Framework and thisassessment that the balance of unallocated proceeds will be
managed in cash or cash equivalents. It was also confirmed thatthe balance of unallocated proceeds will be disclosed through thereporting for funds allocation.

Page 34 of 35

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion

SF-4 Reporting
Ref.

Criteria

4aPeriodical
Reporting

Requirements

Work Undertaken

DNV Findings

In addition to reporting on the use ofproceeds and the temporary
investment of unallocated proceeds,
fundraisers should provide at least
annually a list of projects to which
Sustainability Finance proceeds havebeen allocated including:Confirmed documents:- Framework
Interviews with stakeholders

DNV confirmed that Kirin Holdings will conduct Kirin Sustainable
Finance reporting (annual reporting) and will disclose theallocation of proceeds until the proceeds have been fully
allocated. In terms of the environmental and social benefits, Kirin
Holdings plans to report on the following indices until thematurity of Kirin Sustainable Finance. DNV confirmed that thebalance of unallocated proceeds and the estimated amount (orshare) of the refinanced portion will be disclosed. DNV also
confirmed that Kirin Holdings will disclose the environmental andsocial benefits at any or all of the following indicators, within thelimits of confidentiality and so far, as is reasonably practicable.

- confidentiality and/or competitive
considerations, where possible;-a brief description of the projects andthe amounts disbursed, as well as the
expected environmental and social
sustainable impact(Environmental benefits）• GHG reductions by introduction of heat pump systems: (t-CO2）• Ratio of recycled resin by procurement and capital investment
for recyclable PET resin (%)• GHG reductions by introduction of solar power generationequipment (t-CO2)(Social benefits)• Number of continuous users of the Human Milk Oligosaccharide
products (people)• Number of continuous users of the Citicoline products (people)• Number of continuous users of the Lc-PLASMA products(people)Page 35 of 35