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: 26 December 2022
Ref. Nr.: PRJN-476579-2022-AST-JPN-01

Page 1 of 66

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

Table of Contents
Executive Summary

3

I. Introduction

11

Ⅱ. Scope and Objectives

20

Ⅲ. Responsibilities of Kirin Holdings and DNV

23Ⅳ. Basis of DNV s Opinion

24

V. Work Undertaken

27

Ⅵ. Findings and DNV's Opinion

28

Ⅶ. Assessment Conclusion

47

Schedule-1 Kirin Sustainable Finance Nominated Projects List

49

Schedule-2 Key Performance Indicators (KPIs) and Sustainability Performance Targets (SPTs)

51

Schedule-3 Transition Finance Framework Eligibility Assessment Protocol

52

Schedule-4 Kirin Sustainable Finance (or Transition Finance with specific use of proceeds) Eligibility
Assessment Protocol

56

Schedule-5 Sustainability-Linked Finance Framework Eligibility Assessment Protocol

61

Revision History
Revision No.
0

Date of Issue

Remarks

26 December 2022 Initial

Disclaimer
Our assessment relies on the premise that the data and information provided by Fundraiser 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)

Page 2 of 66

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

Executive Summary
Kirin Holdings Company, Limited (hereinafter, Kirin Holdings) is a holding company of the 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 expanded into
the Food & Beverages domain (alcoholic & beverages business), the Pharmaceuticals domain(pharmaceutical business), as well as the Health Science domain (health science business), anintermediate domain between the two, with its operations mainly in Japan, Asia, and Oceania.
Kirin Holdings' corporate philosophy is to bring joy to society by crafting food and healthcare
products inspired by the blessings of nature and the insights of our customers. Moreover, Kirin
Holdings considers taking a CSV (Creating Shared Value) approach, which makes theresolution of social issues an integral part of its business operations, as one of the mostproductive ways for a company to achieve sustained growth and address social issues.
Therefore, Kirin Holdings places CSV at the core of its business management under its longterm management vision, "Kirin Group Vision 2027 (KV2027)" to make a difference in society
and achieve sustainable mutual growth.
"CSV Purpose" has been formulated for each of the four priority issues to be addressed as a
guideline for the "Kirin Group Vision 2027 (KV2027)". In order to raise funds that arenecessary for addressing environmental and social issues defined in "CSV Purpose" throughGreen/Social/Sustainability Finance, Kirin Holdings formulated "Kirin Sustainable Finance
Framework (hereinafter, the Framework)" in March 2022.
Furthermore, following the acquisition in July 2022 of the net zero accreditation of the
Science-Based Target (SBT) standard for 1.5℃ set by the Science-Based Targets initiative(SBTi) for the medium- and long-term GHG reduction targets formulated based on the net
zero declaration and roadmap for achieving the targets under the long-term strategy "Kirin
Group s Environmental Vision 2050", Kirin Holdings updated the framework in order to raise
funds that are necessary for its realization through Transition Finance.
DNV Business Assurance Japan K.K. (hereinafter, DNV), as an external reviewer, evaluated theeligibility of the Framework. Specifically, DNV applied the following frameworks (e.g.,principles and guidelines) to provide an eligibility assessment of the Framework.
- Climate Transition Finance Handbook (ICMA/2020, hereinafter, CTFH)- Basic Guidelines on Climate Transition Finance (Financial Services Agency, Ministry of
Economy, Trade and Industry, and Ministry of the Environment/2021, hereinafter, CTFBG)- Green Bond Principles (ICMA/2021, hereinafter, GBP)
- Green Bond Guidelines (Ministry of the Environment/2022, hereinafter, GBGLs)- Green Loan Principles (LMA, etc./2021, hereinafter, GLP)
- Green Loan Guidelines (Ministry of the Environment/2022, hereinafter, GLGLs)- Social Bond Principles (ICMA/2021, hereinafter, SBP)
- Social Bond Guidelines (Financial Services Agency/2021, hereinafter, SBGLs)- Social Loan Principles (LMA, etc./2021, hereinafter, SLP)
- Sustainability Bond Guidelines (ICMA/2021, hereinafter, SBG)

Page 3 of 66

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion- Sustainability-Linked Bond Principles (ICMA/2020, hereinafter, SLBP)- Sustainability-Linked Bond Guidelines (Ministry of the Environment/2022, hereinafter,
SLBGLs)- Sustainability-Linked Loan Principles (LMA, etc./2021, hereinafter, SLLP)- Sustainability-Linked Loan Guidelines (Ministry of the Environment/2022, hereinafter,
SLLGLs)
The summary of the eligibility assessment for each of the common elements presented in theabove framework is as follows:

Page 4 of 66

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion<CTF eligibility assessment results>
DNV has confirmed the following from the documentation and information provided by Kirin
Holdings. CTF-1 to CTF-4 below are findings and opinions of DNV against the four common
elements (disclosure elements) of the CTFH and CTFBG.
DNV confirmed through the assessment that the importance for Kirin Holdings to reduce GHG
emissions gradually from its diverse global operations and numerous value chains.
Kirin Holdings' Transition Finance meets CTF-1 to CTF-4, described below, and is consistent
with the definitions and objectives of the relevant handbook and basic guidelines. Kirin
Holdings' efforts to reduce carbon emission and decarbonize in its entire value chain throughTransition Finance will not only reduce Kirin Holdings GHG emissions but also, directly andindirectly, support reducing those of a wide range of stakeholders in Japan and abroad. Kirin
Holdings' Transition Finance is a benchmark initiative that is expected to help establishing lowcarbon/decarbonized society as a whole as an example of utilizing transition finance outside ofhigh-emitting industries.
CTF-1. Fundraiser s Climate Transition Strategy and governance:
The transition strategy of Kirin Holding, the fundraiser, has been formulated as a roadmap
structured based on specific initiatives required to achieve targets consistent with the Paris
Agreement and the SBT for 1.5℃. The planned transition strategy shall be reviewed in linewith social trends and changes in the business environment, etc. In terms of governanceand disclosure related to implementation, an internal structure and an information
disclosure process based on the TCFD*1 have been established. These are disclosed in theframework and other documents, and meet the disclosure elements of CTF-1.
*1: Task Force on Climate-related Financial Disclosures

CTF-2. Business model environmental materiality:
Kirin Holdings has organized the materialities in its business model into the "Group Materiality
Matrix (GMM) Revision of Management Issues for Sustainable Growth". The materiality mainly
related to the Green/Transition Finance is "Overcoming climate change", and Kirin Holdings
set out the challenges of bridging the gap between the current situation and the long-termtarget set out in the "Kirin Group s Environmental Vision 2050" to achieve net zero GHG
emissions in the entire value chain by 2050. In the Kirin Holdings Transition Strategy, theGroup's management strategy and ESG (Environment, Society, and Governance) initiatives
are inseparable, and specific initiatives have been presented in the long-term target set out
in the "Kirin Group s Environmental Vision 2050", which aims to achieve net zero GHG
emissions in the entire value chain by 2050 and its roadmap. The contribution to the SDGs,
which is described later in this report has also been taken into consideration. These aredisclosed in the framework and other documents, and meet the disclosure elements of CTF2.
CTF-3. Climate Transition Strategy to be science-based including targets andpathways:
Kirin Holdings' Transition Strategy is defined by science-based targets and pathways.
Specifically, it is based on the targets and pathways set out in the Paris Agreement and the
SBT for 1.5℃ target described in CTF-1. Medium-term and long-term targets for Scope 1,

Page 5 of 66

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

Scope 2, and Scope 3 are indexed and quantified, and the process of achieving thesetargets is clarified. These are disclosed in the framework and other documents or thissecond party opinion, and meet the disclosure elements of CTF-3.
CTF-4. Implementation transparency:
Kirin Holdings has presented an outline of its basic investment plan, including the amount ofinvestment required to implement the Transition Strategy, and the results and impact of theimplementation. Kirin Holdings has announced that it will use part of the funds raised
through sustainable finance for capital investment and procurement of renewable energy
power that contributes to green/transition finance, amounting to approximately JPY 10
billion in FY2022-2024, JPY 8 billion in FY2025-2027, and JPY 8 billion in FY2028-2030.
These are disclosed in the framework and other documents or the second party opinion,
and meet the disclosure elements of CTF-4.

Page 6 of 66

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion<SF eligibility assessment results>
DNV has confirmed the following from the documentation and information provided by Kirin
Holdings. SF-1 to SF-4 below are findings and opinions of DNV against the four elements
common to GBP/GLP/SBP/SLP/SBG (*including GBGLs/GLGLs and SBGLs).
SF-1. Use of Proceeds:
DNV confirmed that the proceeds from Kirin Sustainable Finance will be allocated to six
nominated Green, Green/Transition, and Social Projects that meet the representative
eligible criteria in Table-I outlined in GBP/GBGLs, SBP/SBGLs, GLP/GLGLs, SLP, and SBG.
See Table-I and Schedule-1 for the summary of Eligible Project.
SF-2. Process for Project Evaluation and Selection:
For the evaluation and selection of Kirin Sustainable Finance Eligible Projects, DNV
confirmed that Finance Department and CSV Strategy Department of Kirin Holdings will
select the projects from the eligibility criteria in Table-I, which are comprehensively basedon the contribution to the achievement of "CSV Purpose", and that the Executive Officer incharge of Financial Strategy will make the final decisions.
The six nominated eligible projects which are evaluated and selected through the above
process are closely related to the key issues outlined in the "Group Materiality Matrix (GMM)
Revision of Management Issues for Sustainable Growth" in addition to Kirin Holdings' "CSV
Purpose", and are consistent with the Kirin Group's efforts related to environmental/social
sustainability.
Table-I Kirin Sustainable Finance Eligibility Criteria[Green Projects]
Categories

Green Projects

GBP Project Categories

Businesses related topollution prevention
and control

 Procurement and capital
investment of recyclable
PET resin Pollution prevention and control(Environmental goal: pollution
prevention and control) Eco-efficient products and/or
circular economy adapted
products, production
technologies and processes(Environmental goal:conservation of natural
resources)

Eco-efficient products
and/or circular
economy adapted
products, production
technologies andprocesses

Alignment with
the SDGs[Green/Transition Projects]
Categories

Green/Transition Projects

GBP Project Categories

Businesses related to  Introduction of heat pump  Energy efficiency
energy efficiency
systems to production sites(Environmental goal: climatechange mitigation)
Businesses related to  Introduction of solar power  Renewable energy
renewable energy
generation equipment to(Environmental goal: climatechange mitigation)
production sites
 Procurement of renewables

Page 7 of 66

Alignment with
the SDGs

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion[Social Projects]
Categories

Social Projects

SBP Project Categories

Alignment with
the SDGs

Businesses that contribute to  Capital investment, Access to essential
the achievement of a society
operation, andservices (health,of health and longevity,
procurement of raw
healthcare)mainly through infant andmaterials contributing to(Target population:
toddler health improvement
the production of Human
general public)
and disease prevention
Milk Oligosaccharide (HMO)
Businesses that contribute to  Capital investment, Access to essential
the achievement of a society
operation, andservices (health,of health and longevity,
procurement of raw
healthcare)through brain function
materials contributing to(Target population:
improvement and brain
the production of Citicoline
general public, aging
function decline prevention
people, patients)
Businesses that contribute to  Capital investment, Access to essential
the achievement of a society
operation, andservices (health,of health and longevity,
procurement of raw
healthcare)through the maintenance ofmaterials contributing to(Target population:
immune function
the research andgeneral public, aging
development of Lc-PLASMA
people, vulnerable
and the production of raw
youth)
material powder utilizing
Lc-PLASMA

SF-3. Management of Proceeds:
DNV confirmed that Kirin Holdings will make efforts to allocate the proceeds to financing
and refinancing the eligible projects within about two years after the fundraising, and thatthe specific allocation plan will be clearly stated in a legally disclosed document at thetime of the implementation of finance or contract documents, etc.
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 will be confirmedthat they will have environmental and social benefits throughout the redemption or
repayment period). DNV also confirmed that the allocation of the proceeds for each projectwill be managed by the Finance Department semi-annually in accordance with Kirin
Holdings' accounting management procedures, and that Kirin Holdings will manage theproceeds by using the internal management system to ensure that the total amount ofeligible 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.
SF-4. Reporting:
DNV confirmed that Kirin Holdings will conduct Kirin Sustainable Finance reporting (annual
reporting) and disclose the allocation of proceeds (project name, project description
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 the maturity of Kirin
Sustainable Finance. If any significant event, such as a major change in plans or actual
results, occurs after full allocation of the proceeds, Kirin Holdings will disclose suchinformation in a timely manner. The reporting will be disclosed on the Kirin Holdings
website.

Page 8 of 66

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion<SLBP/SLLP eligibility assessment results>
DNV has confirmed the following from the documentation and information provided by Kirin
Holdings. SLBP/SLLP-1 to SLBP/SLLP-5 below are findings and opinions of DNV against the fiveelements common to SLBP/SLLP (*including SLBGLs/SLLGLs).
SLBP/SLLP-1. Selection of Key Performance Indicators (KPIs):
The one/two KPIs (CDP climate change score and CDP water security score / GHG emission
reduction rate in Scope 1 and Scope 2, and GHG emission reduction rate in Scope 3) for
environmental sustainability/transition set by Kirin Holdings shown in Table-II are important
indicators in the comprehensive transition strategy towards the long-term target ofachieving net zero GHG emissions in the entire value chain by 2050 set out in the "Kirin
Group s Environmental Vision 2050" and "sustainable use of water resources". The selectionof KPIs is based on a rational process, and the KPIs are clearly defined, measurable andverifiable, are robust and reliable and in accordance with the SLBP/SLLP.
SLBP/SLLP-2. Calibration of Sustainability Performance Targets (SPTs):
Kirin Holdings' SPTs shown in Table-II are meaningful and related in the context of both
Kirin Holdings' sustainability/transition and business strategy and represent a material
improvement over a predetermined timeline. The SPTs shown in Table-II comprise CDP
scores and GHG emission (Scope 1, 2, and 3) reduction rate. Each SPT is benchmarked
against Kirin Holdings' most recent performance levels and the GHG emission reduction
targets set by the SBTi. As for the ambition of each SPT, based on the ratio of rank A in the
CDP scoring and the consistency with the SBT for 1.5℃ target considering the ambitious
target of "net zero by 2050" set out in the Paris Agreement, DNV may judge that the future
initiatives for the "Kirin Group s Environmental Vision 2050" will go beyond "Business as
Usual" and have been set as ambitious targets going beyond national targets. DNV
concluded through its review that Kirin Holdings' plans are feasible to achieve the SPTs in
FY2030.
SLBP/SLLP-3. Finance Characteristics:
The financial characteristics of the transition-linked finance under the Framework are
impacted based on KPIs performance under SPTs. DNV has confirmed in the formal
documentation relating to the bond/loan that this impact is linked to changes in bondinterest rates, loan interest rates, or other financial incentives (e.g., donation toorganizations working on similar improvements in the case of failing to achieve SPTs), andthat it is specified upon execution of each financing by specific trigger events (achievement
status of SPTs) in the period/due date defined under the Framework. As for the specificinterest rate variation, a step up/down of the annual interest rate defined at the time of theimplementation of the financing from the time of interest payment after the decision dateuntil the redemption/repayment date, or a donation to organizations working on similar
improvements of SPTs, based on the achievement status of the SPTs as verified by a third
party. Kirin Holdings has examined an appropriate fallback mechanism (fallback
alternatives), and consequently concluded that they would not set other SPTs or calculation
method at this time since the risk of being uncalculated or unobservable is negligible.

Page 9 of 66

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

SLBP/SLLP-4. Reporting:
The reporting is planned to include the information required in the SLBP/SLLP and the
Framework stipulates that the reporting is to be published on an annual basis.
SLBP/SLLP-5. Verification:
Kirin Holdings plans to undergo independent verification of KPIs-related data annually by an
external reviewer.
Table-II KPIs and SPTs of Kirin Holdings Sustainability/Transition-Linked Finance(KPI-1 to KPI-3 and SPT-1 to SPT-3 are selected for Sustainability-Linked Finance, while any or both of
KPI-2/SPT-2 and KPI-3/SPT-3 below are selected for Transition-Linked Finance.)
KPIs
SPTs
KPI-1: CDP climate change score and CDP water
SPT-1: Maintain CDP climate change score and CDP
security scorewater security score A
KPI-2: GHG emission reduction rates in Scope 1 and SPT-2: GHG emission reduction rates in Scope 1 andScope 2
Scope 2 consistent with the following targets(Base year: FY2019)
・ 50% reduction in GHG emissions in FY2030
・ Net zero GHG emissions in FY2050(Base year: FY2019)
KPI-3: GHG emission reduction rate in Scope 3
SPT-3: GHG emission reduction rate in Scope 3(Base year: FY2019)consistent with the following targets
・ 30% reduction in GHG emissions in FY2030
・ Net zero GHG emissions in FY2050(Base year: FY2019)
Explanation of KPIs
Explanation of SPTs
The KPIs are closely related to the 2050 net-zero
Each SPT has a score and target value linked to Kirin
target for "Overcoming climate change", a challenge Holdings' transition strategy, set with reference to theset out in the "Kirin Group s Environmental Vision"Kirin Group s Environmental Vision 2050".
2050", and to sustainable use of water resources.
KPI-1: CDP climate change score and CDP water
security score
It is a KPI related to external evaluation of
initiatives to address issues set by Kirin Holdings,
which can be assessed continuously based on thecriteria of a third-party organization (CDP).

SPT-1: Maintain CDP climate change score and CDP
water security score A
The percentage of CDP-scored companies obtaining ascore A in 2022 was approximately 1.5% for CDP
climate change and 2.6% for CDP water security. It
can be judged that maintaining a score A is set as anambitious target.

KPI-2: GHG emission reduction rates in Scope 1 and SPT-2: GHG emission reduction rates in Scope 1 andScope 2
Scope 2 consistent with the following targets
KPI-3: GHG emission reduction rate in Scope 3
・
50% reduction in GHG emissions in FY2030
These are core KPIs towards Kirin Holdings' 2050
・
Net zero GHG emissions in FY2050
net zero target and is quantifiable and continuously SPT-3: GHG emission reduction rate in Scope 3
measurable according to the GHG Protocol.
consistent with the following targets
・ 30% reduction in GHG emissions in FY2030
・ Net zero GHG emissions in FY2050
It can be judged that Kirin Holdings has been
accredited by SBTi to the SBT for 1.5℃, and the SPTs
are set in alignment with the ambitious 2050 net zerotarget set by the Paris Agreement.
As for SPTs as trigger events, SPT-2 is set by linear
interpolation, etc. between actual results in the baseyear FY2019 and targets up to FY2030, while SPT-3 isset to be reasonable and ambitious in Table-6. They
may also be set individually when detailed plans are
drawn up in the future.

DNV has confirmed, from the framework and other documentation and information provided
by Kirin Holdings, that the framework established by Kirin Holdings meets the standards
required in the relevant frameworks CTFH/CTFBG, GBP/GBGLs, GLP/GLGLs, SBP/SBGLs, SLP,
SBG, SLBP/SLBGLs, and SLLP/SLLGLs, and is eligible.

Page 10 of 66

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

I. Introductioni.

About the Fundraiser
Kirin Holdings Company, Limited. (hereinafter, Kirin Holdings) is a 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 & Beverages domain (alcoholic &beverages business), the Pharmaceutical domain (pharmaceutical business) and the
Health Science domain (health science business), an intermediate domain between thetwo, 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 in domains
ranging from food & beverages to pharmaceuticals" under its long-term management
vision, "Kirin Group Vision 2027 (hereinafter, KV2027)". Moreover, Kirin Holdings considers
taking a CSV (Creating Shared Value) approach, which makes the resolution of social issues
an integral part of its business operations, as one of the most productive ways for thecompany to achieve sustainable growth and address social issues. Therefore, Kirin Holdings
places CSV at the core of its business management to make a difference in society andachieve sustainable mutual growth.
"CSV Purpose" has been formulated as one of the long-term non-financial goals of theKV2027, and the Kirin Group's guiding principle to achieve 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 wellbeing," "community engagement," and "the environment." By fulfilling these commitments,
the Group brings joy to society and a bright future to our customers. (See Figure-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 tosustainable development in partnership with society. (See Figure-2) Selection criteria foreach management issue have been established for the selection of materialities. Kirin Group
has also established "CSV Commitment" as a medium-term action plan to achieve its "CSV
Purpose" and incorporated it into the business plans of the Group and key businesscompanies.

Page 11 of 66

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

Figure-1 "CSV Purpose" of Kirin Group

Page 12 of 66

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

Figure-2 Management Issues for Sustainable Growth (Group Materiality Matrix: GMM)

Page 13 of 66

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 new one,
"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
2050 and switch 100% of its electricity consumption to renewables by 2040. In November
2020, Kirin Group was the first Japanese food company to obtain an approval of the
Science-Based Target (SBT) for 1.5℃ by the Science-Based Targets initiative (SBTi).
In 2019, Kirin Holdings established the "Kirin Group Plastic Policy", an effort aimed atsolving the global plastic waste problem, and declared to increase the percentage of PET
bottles made using recycled resin to 50% of bottles sold in Japan by 2027. Towards"sustainable use of water resources" as one of the challenges set out in the "Kirin Group s
Environmental Vision 2050" announced in February 2020, Kirin Group will work on toachieve 100% sustainable containers and packaging made from recycled materials andbiomass by 2050.

Figure-3 Kirin Group s Environmental Vision 2050

Page 14 of 66

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

Figure-4 Reduction targets for Scope 1, 2, and 3 accredited to the SBT for 1.5℃ target
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 "gut microbiome" as its
three key areas and is endeavoring to solve health issues in these areas through providing
products and services that use strategic ingredients produced by utilizing fermentation &biotechnology, the Kirin Group's core competencies.
Specifically, Kirin Group addresses the improvement of access to nutrition, support to brain
function improvement and brain function decline prevention, and the maintenance of
immune function. Human Milk Oligosaccharide (HMO), a unique nutrient of human breast
milk, was successfully mass-produced by the Kirin Group's fermentation production
technology utilizing microorganisms. β-Lactolin (Citicoline) is a proprietary ingredientderived 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 theresult of various research and development efforts, the Kirin Group contributes to solvingsocial and health issues in Japan and around the world.

Figure-5 Initiatives on the key area "Health and Well-Being"

Page 15 of 66

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

Table-1 Kirin Holdings Participation in external initiatives
External Initiative

Task Force on
Climate-related
Financial Disclosures(TCFD)

United Nations Global Compact (UNGC)

Sustainable
Development Goals(SDGs)

Kirin Holdings Activities
The Kirin Group became the first Japanese food company toendorse the TCFD in December 2018, and in order toappropriately transition its business to adapt to a decarbonizedsociety, become resilient, and lead the decarbonized society,
the Group discloses how it assesses and analyses the impactsof climate change and how it seeks to appropriately integrate
and promote mitigation and adaptation into its strategy.
The Kirin Group signed up to the UNGC in September 2005 andis taking concrete steps to realize its principles in its relations
with employees and in corporate activities such as
procurement, development, manufacturing, and sales.
As a guideline for the KV 2027, "CSV Purpose" has beenformulated for each of the four priority issues to be addressedin particular, and efforts are being made to realize themanagement vision with a clear link to the SGDs.

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" in March 2022.
This time, following the acquisition in July 2022 of the net zero accreditation of SBT
standard for 1.5℃ set by the SBTi for the medium- and long-term GHG reduction targets
formulated based on the net zero declaration and roadmap for achieving the targets under
the long-term strategy "Kirin Group s Environmental Vision 2050" in July 2022, Kirin
Holdings updated the framework in order to raise funds that are necessary for its realization
through Transition Finance.
The standards and guidelines being referred to in the Framework are described in Section II(3) below.

Page 16 of 66

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

Fundraiser s Transition Strategy for Decarbonization(1) Sector (Industry) specific strategies at international and national/regional
levelsIn October 2021, SBTi developed the SBTi Corporate Net-Zero Standard as a benchmark
for companies to set net zero targets to achieve the 1.5°C target in the Paris Agreement.
In the standard, SBTi requires companies to make a commitment to net zero and to set
short-term and net zero targets. Net zero is hereby defined as follows:

Reduce Scope 1, 2, and 3 emissions to zero or to a residual emissions level consistent
with achieving net zero emissions at global or sectoral level in an eligible 1.5°C
trajectory.



Neutralize residual emissions at the time of the net zero target and all GHG emissions
released into the atmosphere thereafter.

Kirin Holdings aims to balance its business activities with its response to climate change,
based on the reduction targets necessary for realizing the goals of the Paris Agreement.

(2) Fundraiser s transition strategy
Kirin Holdings has positioned its activities towards realizing the long-term target set in the
Kirin Group s Environmental Vision 2050 to achieve net zero GHG emissions in the entire
value chain by 2050 as a transition strategy.
Table-2 shows Kirin Holdings' long- and medium-term targets and Figure-6 shows theroadmap. Kirin Holdings has set targets for Scope 1+2 total emissions and Scope 3
emissions of net zero in 2050 and a 50%/30% reduction in FY2030 compared to FY2019,and is working towards achieving these targets as shown in Figure-6.
Table-4 shows the investment plan to achieve the roadmap.
DNV has confirmed that these roadmaps and investment plans will be updated from time
to time based on policy and other conditions, on the premise of the progress of industrial
development, and the content will be reviewed along with the change in the premise, andthat the company has willingness to consider transforming to a more ambitious approach
towards a global net zero target by 2050.
Table-2 Long- and medium-term targets based on the roadmap
Item

Target Value

Scope 1+2 total emissions

Target for FY2030: 50% reduction(compared to FY2019)
Target for FY2050: Net zero

Scope 3 emissions

Target for FY2030: 30% reduction(compared to FY2019)
Target for FY2050: Net zero

Page 17 of 66

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

Figure-6 Transition Roadmap

Table-3 Kirin Group GHG emissions (Scope 1-3)
Item

FY2019FY2020

FY2021

Scope 1+2

834,000 t-CO2e

757,000 t-CO2e

722,000 t-CO2e

Scope 3

4,211,000 t-CO2e

3,983,000 t-CO2e

3,689,000 t-CO2e

Total

5,045,000 t-CO2e

4,740,000 t-CO2e

4,411,000 t-CO2e*Based on the scope of aggregation at the time of publication of the Framework

Table-4 Investment plans to achieve the roadmap
Environmental
investment(Billions ofyen)

2022-2024

2025-2027

2028-2030

Approx. JPY 10.0

Approx. JPY 8.0

Approx. JPY 8.0

billion yen

billion yen

billion yen

Page 18 of 66

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion(3) Fundraiser s governance (system for environmental initiatives)
In order to promote "CSV Purpose", a GMM-based guideline, including the long-termtarget of "achieving net zero GHG emissions in the entire value chain by 2050" set out inthe Kirin Group s Environmental Vision 2050 and the secure realization of "sustainable useof water resources" as well as its mid-term action plan "CSV Commitments", Kirin
Holdings has established the "Group CSV Committee", chaired by the President of Kirin
Holdings, which is responsible for formulating CSV policies and strategies and actionplans, discussing ESG risks, monitoring the progress of implementation status, andsubmitting reports to the Board of Directors as necessary. In order to enhance theeffectiveness of formulated CSV policies and strategies, the "CSV Staff Meeting" has been
established, consisting of the persons in charge of practical matters in each department of
Kirin Holdings and the planning departments of major operating companies, for
information sharing and exchange of opinions.

Figure-7 CSV Governance Structure

Name of the Fundraiser: Kirin Holdings Company, Limited.
Name of the Framework: Kirin Sustainable Finance Framework
Name of the external reviewer: DNV Business Assurance Japan K.K.
Creation date of report: 26 December 2022

Page 19 of 66

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

Ⅱ. Scope and Objectives
DNV has been commissioned by Kirin Holdings to provide an eligibility assessment on the
Framework. The aim of this eligibility assessment is to ensure that the Kirin Sustainable
Finance meets the requirements of CTFH/CTFBG, GBP/GBGLs, GLP/GLGLs, SBP/SBGLs, SLP,
SBG, SLBP/SLBGLs, and SLLP/SLLGLs described below, and to provide a second party opinion
on its eligibility.
DNV Business Assurance Japan K.K. (hereinafter, DNV), as an external reviewer, evaluated theeligibility of the Framework. Specifically, DNV applied the following frameworks (e.g.,principles and guidelines) to provide an eligibility assessment of the Framework.
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 and,Green/Transition/Social Finance and Sustainability/Transition-Linked Finance to be executed
based on the Framework, the value of any investments, or the long-term environmental
benefits of the transaction.

Green Finance and Transition Finance with specific use of proceeds* Below are listed based on GBP but replaced with loan-specific items as appropriate(1) Scope of review**The review assessed the following elements and confirmed their alignment with the gist of four core elements
such as GBP.
⊠

Use of Proceeds⊠

Process for Project Selection and Evaluation⊠

Management of Proceeds⊠

Reporting(2) Role(s) of review provider (Specific use of proceeds)⊠

Second Party Opinion☐

Certification☐

Verification☐

Rating☐Other (please specify):

Sustainability Finance and Transition Finance with general corporate purpose* Below are listed based on SLBP but replaced with loan-specific items as appropriate(1) At the launch of the bond, the structure is⊠a step-up structure⊠

a variable redemption structure*Any of the above or others is set individually based on the fundraiser's internal processes when executing thefinance.

Page 20 of 66

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion(2) Scope of Review*
The review assessed the following elements and confirmed their alignment with the gist of five core elements
such as SLBP/SLLP.
⊠

assessed all the following elements(complete review)☐

only some of them (partial review)⊠

Selection of KPIs⊠

Bond Characteristics⊠

Calibraiton of SPTs⊠

Reporting⊠

Verificationand confirmed their alignment with
the SLBP*The scope of review is to be applied as a part of the evaluation of the Transition finance with general
corporate purpose.
*The four disclosure elements of CTFH/CTFBG are included in the scope of review.
⊠(3) Role(s) of Review Provider (with general corporate purpose)⊠

Second Party Opinion☐

Certification☐

Verification☐

RatingStandards/Guidelines to be Applied
No. Standards/Guidelines

Scheme Owner

1.

Climate Transition Finance Handbook (CTFH)*1

International Capital Market Association (ICMA), 2020

2.

Climate Transition Finance Basic Guidelines(CTFBG)*1

Financial Services Agency, Ministry of Economy, Tradeand Industry, Ministry of the Environment, 2021

3.

Green Bond Principles (GBP)*2*3

International Capital Market Association (ICMA), 2021

4.

Green Bond Guidelines (GBGLs)*2*3

Ministry of the Environment, 2022

5.

Green Loan Principles (GLP)*2*3

Loan Market Association (LMA) and others, 2021

6.

Green Loan Guidelines (GLGLs)*2*3

Ministry of the Environment, 2022

7.

Social Bond Principles (SBP)

International Capital Market Association (ICMA), 2021

8.

Social Bond Guidelines (SBGLs)

Financial Services Agency, 2021

9.

Social Loan Principles (SLP)

Loan Market Association (LMA) and others, 2021

10. Sustainability Bond Guidelines 2021 (SBG)

International Capital Market Association (ICMA), 2021

11. Sustainability-Linked Bond Principles (SLBP)*4

International Capital Market Association (ICMA), 2020

12. Sustainability-Linked Bond Guidelines (SLBGLs)*4

Ministry of the Environment, 2022

13. Sustainability-Linked Loan Principles (SLLP)*4

Loan Market Association (LMA) and others, 2022

14. Sustainability-Linked Loan Guidelines (SLLGLs)*4

Ministry of the Environment, 2022

Page 21 of 66

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion*1 Climate transition: The concept of climate transition focuses principally on the credibility of a fundraiser s climatechange-related commitments and practices. (Quoted from CTFH/CTFBG)*2 It confirms compliance with the four core elements (use of proceeds, process for project evaluation and selection,
management of proceeds, and reporting) that must be met when implementing as a bond/loan that meets the four
elements of transition and has a specific use of proceeds. (Quoted from CTFBG)*3 Green projects were assessed for eligibility using the referable technical criteria of the Climate Bond Initiative's Climate
Bond Standard.
*4 Sustainability-Linked Loan: Sustainability-Linked loan is any type of loan product and/or contingent facility (e.g., bonding
loan facilities, guaranteed loan facilities, credit contingent facilities (e.g., bonding loan facilities, guaranteed loan facilities,
letters of credit)) that incentivises the achievement of ambitious pre-set sustainability performance targets by theborrower. (Quoted from SLLP. *Also assessed as synonymous for SLBP) It is confirmed that the five elements are met
when implementing transition-linked finance without Use of Proceeds.

Page 22 of 66

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

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 theinformation and 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 forthis assessment were not correct or complete.

Page 23 of 66

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/Transition/Social Finance assessment methodologies, which incorporates therequirements of the CTFH/CTFBG, GBP/GBGLs, GLP/GLGLs, SBP/SBGLs, SLP, SBG,
SLBP/SLBGLs, and SLLP/SLLGLs, to create an Eligibility Assessment Protocol (hereinafter,
Protocol). (Refer to Schedule-2). The Protocol is applicable to Green/Transition/Social Financeand Sustainability/Transition-Linked Finance based on CTFH/CTFBG, GBP/GBGLs, GLP/GLGLs,
SBP/SBGLs, SLP, SBG, SLBP/SLBGLs, and SLLP/SLLGLs.
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 Green/Transition/Social Finance andSustainability/Transition-Linked Finance as a basis of our opinion are as follows:
enable capital-raising and investment for new and existing projects with environmental
benefits"
provide an investment opportunity with transparent sustainability credentials
Climate Transition Finance is important through KPIs and SPTs, quantitative, pre-determined,
ambitious, and regularly monitored and externally validated and encourage the achievement of
ESG of fundraisers
As per our Protocol, the criteria against which the Green/Transition/Social Finance andSustainability/Transition-Linked Finance has been reviewed are grouped as follows outlined in
CTFH/CTFBG, GBP/GBGLs, GLP/GLGLs, SBP/SBGLs, SLP, SBG, SLBP/SLBGLs, and
SLLP/SLLGLs:(1) Four elements of CTFH/CTFBG (disclosure elements)
Principle One: Fundraiser s climate transition strategy and governance
The financing purpose should be for enabling a fundraiser s climate change strategy.
Principle Two: Business model environmental materiality
The planned climate transition trajectory should be relevant to the environmentallymaterial parts of the fundraiser s business model.
Principle Three: Transition is science-based including targets and pathway
Fundraiser s climate strategy should reference science-based targets and transition
pathways.
Principle Four: Implementation transparency
Market communication in connection with the offer of a financing instrument which has theaim of funding the fundraiser s climate transition strategy should also provide transparencyof the underlying investment program.

Page 24 of 66

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion(2) Four elements of GBP/GBGLs, GLP/GLGLs, SBP/SBGLs, SLP, and SBG
Principle One:Use of Proceeds

The Use of Proceeds criteria are guided by the requirement that a fundraiser of asustainable finance with specific use of proceeds (green/transition/sustainability/social
finance) must use the funds raised to eligible activities. The eligible activities should
produce clear environmental benefits.
Principle Two:

Process for Project Evaluation and Selection

The Project Evaluation and Selection criteria are guided by the requirements that afundraiser of a sustainable finance should outline the process it follows when
determining eligibility of an investment using the proceeds from sustainable finance,and outline any impact objectives it will consider.
Principle Three: Management of Proceeds
The Management of Proceeds criteria are guided by the requirements that asustainable finance should be tracked within the issuing organization, that separate
portfolios should be created when necessary and that a declaration of how unallocatedfunds will be handled should be made.
Principle Four:

Reporting

The Reporting criteria are guided by the recommendation that at least Sustainability
Reporting to the bond investors should be made of the use of bond proceeds and thatquantitative and/or qualitative performance indicators should be used, where feasible.

(3) Five elements of SLBPs/SLBGLs and SLLPs/SLLGLs*1* Please replace Sustainability with Transition in the context if necessary.

Principle One:

Selection of Key Performance Indicators (KPIs)The fundraiser of asustainability-linked finance or a transition-linked finance should clearly communicate toinvestors or lenders its overall sustainability objectives, as set out in its sustainability ortransition strategy, and how these relate to its SPTs. The KPIs should be reliable, material
to the fundraiser's core sustainability and business strategy, address relevant ESG
challenges of the industry sector and be under management control.
Principle Two:

Calibration of Sustainability Performance Targets (SPTs)

The SPTs should be ambitious, meaningful and realistic. The target setting should be donein good faith and based on sustainability or transition improvement in relation to apredetermined performance target benchmark.
Principle Three: Finance Characteristics
The finance will need to include a financial and/or structural impact depending on whether
the selected KPIs reach (or not) the predefined SPTs. The finance documentation needs torequire the definitions of KPIs and SPTs and the potential variation of the financial and/or
structural characteristics of the sustainability-linked finance or transition-linked finance.
Any fallback mechanisms in case the SPTs cannot be calculated or observed in asatisfactory manner, should be explained.

Page 25 of 66

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

Principle Four:

Reporting

The fundraiser should publish and keep readily available and easily accessible up to date
information on the performance of the selected KPIs, as well as a verification assurance
report (see Principle 5) outlining the performance against the SPTs and the related impact
and timing of such impact on the finance s financial and/or structural characteristics, withsuch information to be provided to those institutions participating in the finance or toinvestors participating in the finance at least once per annum.
Principle Five:

Verification

The fundraiser should have its performance against its SPTs independently verified by aqualified external reviewer with relevant expertise, at least once per annum. The
verification of the performance against the SPTs should be made publicly available.
*1: DNV s Protocol for Sustainability-Linked Finance consists of five requirements set out based on
SLBP (2020)/SLLP (2022) and includes SLBGLs/SLLGLs.

Page 26 of 66

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. Pre-funding assessment (Kirin Sustainable Finance Framework)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. Post-funding assessment (*Not Included in This Report)Interview with key personnel of Kirin Holdings and evaluation (or verification) of therelevant documentation.



Field research and inspection (if necessary).

Document creation of assessment results after fundraising.

Page 27 of 66

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

Ⅵ. Findings and DNV's Opinion
DNV's findings and opinion are as described in (1)-(3) below.
From the CTF-1 to 4 in (1) below are the findings and opinions of DNV against the disclosure
elements of the CTFH and CTFBG applied in Green/Transition Finance.
Please see Schedule-3 for details.
From the SF 1 to 4 in (2) below are the findings and opinions of DNV against the requirementof the four common elements of GBP/GBGLs, GLP/GLGLs, SBP/SBGLs, SLP, and SBG.
Please see Schedule-4 for details.
From the SLBP/SLLP 1 to 5 in (3) below are the findings and opinions of DNV against therequirement of SLBP/SLBGLs and SLLP/SLLGLs as Sustainability(Transition)-Linked Finance*1
applied in Sustainable Finance.
Please see Schedule-5 for details.
*1: Bonds or loans with potential financial and structural changes linked to the achievement
status of future transition targets.
(1) Findings and opinions of DNV against the four common elements (disclosure
elements) of CTFH and CTFBG
DNV confirmed through the assessment the importance of Kirin Holdings to reduce GHG
emissions gradually from its diverse global operations and numerous value chains.
Kirin Holdings' Transition Finance meets CTF-1 to CTF-4, described below, and is consistent
with the definitions and objectives of the relevant handbook and basic guidelines. Kirin
Holdings' efforts to reduce carbon emission and decarbonize in its entire value chain
through Transition Finance will not only reduce Kirin Holdings GHG emissions but also,
directly and indirectly, support reducing those of a wide range of stakeholders in Japan andabroad. Kirin Holdings' Transition Finance is a benchmark initiative that is expected to help
establishing low-carbon/decarbonized society as a whole as an example of utilizing
transition finance outside of high-emitting industries.
CTF-1. Fundraiser s Climate Transition Strategy and governance- In February 2021, Kirin Holdings established its long-term target of achieving net zero GHG
emissions in the entire value chain by 2050 set out in the Kirin Group s Environmental
Vision 2050. In addition, the Kirin Group's management strategy and ESG (environment,
society, and governance) initiatives are inseparable, and the strategies and roadmap in the
Kirin Holdings Medium-Term Management Plan FY2022-FY2024 are linked to ESG
respectively. Furthermore, the transition strategy and path/trajectory are presented as themedium- and long-term targets for FY2030 and up to 2050 and the roadmap.
- DNV has reviewed and confirmed that the science-based targets based on the SBT for
1.5℃ standard quantified by Kirin Holdings are consistent with the goals of the Paris
Agreement with respect to their coverage (Scope 1, 2, and 3).

Page 28 of 66

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion- The Kirin Holdings Transition Strategy incorporates the results from the TCFD scenario
analysis and the reduction targets and policies necessary to achieve the goals of the Paris
Agreement.
- Kirin Holdings has established a system to promote the transition strategy at managementlevel.
- Kirin Holdings clearly contributes to ESG and SDGs while minimizing negative impacts onsociety (negative external effects) through its business activities.
- Based on its assessment of the long-term target and roadmap to achieve net zero GHG
emissions in the entire value chain by 2050 set out in the Kirin Sustainable Finance
Framework and the Kirin Group s Environmental Vision 2050, DNV has confirmed that Kirin
Holdings' implementation plan based on the transition strategy is credible, ambitious, andachievable.

CTF-2. Business model environmental materiality- Kirin Holdings' transition efforts include not only GHG emission reductions from its own
business activities (Scope 1 and 2), but also activities that contribute to the emission
reduction of Scope 3. The transition efforts will contribute to achieve net zero as animportant initiative indicated in the various plans and strategies for decarbonization in the
global supply chain. In other words, Kirin Holdings' transition initiatives directly support
the transition of society as a whole, including its own company, as a business operator
taking on the challenge of achieving net zero in 2050.
- The Kirin Holdings' roadmap is well aligned with the goals of the Paris Agreement and the
SBT for 1.5℃ standard, and the roadmap sets and quantifies specific execution plans andtargets with the absolute sense that the plans and targets must be optimized solution andenable further improvement.
- DNV confirmed that Kirin Holdings' plan to implement its Transition Strategy is closely
linked to the activities of its core business and to activities that contribute to the GHG
emissions reduction of society as a whole, and the strategy contributs the environmental
aspects of society as a whole and supports promoting Kirin Holdings' business. Kirin
Holdings' planned transition strategy and transition pathway are associated with themateriality that Kirin Holdings has achieved through ISO 26000, GRI standards*1, etc., andwill contribute to significant environmental improvements (impact) in both qualitative andquantitative terms.
*1: Global Reporting Initiative (an international standard providing ESG-related reporting, management andanalysis methods)

CTF-3. Transition is science-based including targets and pathways- For Scope 1, 2, and 3, Kirin Holdings has set a transition plan and a transition trajectorythat is consistent with the science-based Paris Agreement and the SBT for 1.5℃ standard.

Page 29 of 66

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion- DNV has confirmed that Kirin Holdings' Transition Strategy is quantified in terms ofabsolute values or ratios based on a consistent measurement methodology with prescribedassumptions.
- DNV has confirmed that Kirin Holdings' Transition Strategy is built based on a milestone of
the medium-term (FY2030) and long-term (2050) targets aligned with the 1.5°C standard
set by the SBTi.
Table-5 Medium- and long-term targets
Item

Target Value

Scope 1+2 total emissions

Target for FY2030: 50% reduction(compared to FY2019)
Target for FY2050: Net zero

Scope 3 emissions

Target for FY2030: 30% reduction(compared to FY2019)
Target for FY2050: Net zero

CTF-4. Implementation Transparency- DNV has confirmed that the investment and development plans related to Kirin Holdings'
Transition Strategy include agreement on future investment and expenditure. Specifically,
DNV has confirmed that an investment plan of approximately 26 billion yen over the
medium-term plan period from FY2022 to FY2030 has been formulated of a part of theproceeds from sustainable finance for capital investment and procurement of renewableenergy that contribute to green/transition. DNV has also confirmed that Kirin Holdings
intends to consider the overall investment plan (investment amount) for disclosure to theextent possible from the perspective of ensuring transparency in the future.
- DNV has confirmed, through the review of the framework and the roadmap towards thelong-term target set out in the Kirin Group s Environmental Vision 2050 to achieve net zero
GHG emissions in the entire value chain by 2050, that the implementation of the frameworkand the roadmap is transparent, and that their appropriateness has been explained by
Kirin Holdings and agreed upon.

Page 30 of 66

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion(2) Findings and opinions of DNV against the four common elements of GBP/GBGLs and
GLP/GLGLs*The four elements are used as criteria for green/social/sustainability finance and transition finance tospecify the use of proceeds, and some green bonds below can be read as transition finance (bond/loan).

SF-1.

Use of Proceeds

DNV confirmed that the proceeds from Kirin Sustainable Finance will be allocated to six
nominated green projects, green/transition projects, and social projects, which areconsistent with the representative eligible project categories shown in Table-1 outlined in
GBP/GBGLs, SBP/SBGLs, GLP/GLGLs, SLP and SBG. The nominated projects in the
Framework that contribute to the society and the environment are classified into theeligibility criteria shown in Table-1. The net proceeds will be allocated to one or more than
one eligible project within the nominated projects. Please refer to Schedule-1 for details of
the eligibility criteria.
Table-1 (reposted) Kirin Sustainable Finance Eligibility Criteria[Green Projects]
Categories
Businesses related topollution prevention
and control

Green Projects
 Procurement and capital
investment of recyclable
PET resin

Eco-efficient products
and/or circular
economy adapted
products, production
technologies andprocesses

GBP Project Categories

Alignment with
the SDGs

 Pollution prevention and control(Environmental goal: pollution
prevention and control) Eco-efficient products and/or
circular economy adapted
products, production
technologies and processes(Environmental goal:conservation of natural
resources)[Green/Transition Projects]
Categories
Businesses related toenergy efficiency
Businesses related torenewable energy

Green/Transition Projects

GBP Project Categories

Alignment with
the SDGs

 Introduction of heat pump  Energy efficiency
systems to production sites(Environmental goal: climatechange mitigation)
 Introduction of solar power  Renewable energy
generation equipments to(Environmental goal: climatechange mitigation)
production sites
 Procurement of renewables[Social Projects]
Categories
Businesses that
contribute to theachievement of asociety of health andlongevity, mainly
through infant andtoddler healthimprovement anddisease prevention

Social Projects

SBP Project Categories

 Access to essential services
 Capital investment,
operation, and(health, healthcare)procurement of raw(Target population: generalpublic)materials contributing to
the production of Human
Milk Oligosaccharide (HMO)

Page 31 of 66

Alignment with
the SDGs

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

Businesses that
 Access to essential services
 Capital investment,
contribute to theoperation, and(health, healthcare)achievement of a
procurement of raw(Target population: generalsociety of health andmaterials contributing to
public, aging people, patients)
longevity, throughthe production of Citicoline
brain function
improvement and brain
function decline
prevention
Businesses that
 Capital investment, Access to essential services
contribute to theoperation, and(health, healthcare)achievement of a
procurement of raw(Target population: generalsociety of health andmaterials contributing to
public, aging people, vulnerable
longevity, through thethe research andyouth)
maintenance ofdevelopment of Lc-PLASMA
immune function
and the production of raw
material powder utilizing
Lc-PLASMADNV has confirmed that Kirin Holdings plans to use all net proceeds from Kirin Holdings
Sustainable Finance, excluding expenses, as new expenditure or refinancing of existing
expenditure of capital expenditure, operational and operating expenses, equity investments,
R&D-related expenses and removal costs for green/transition/social eligible projects thatmeet Kirin Holdings' investment plan toward the achievement of CSV Purpose .
These expenses directly or indirectly support projects that bring significant GHG reductions,as exemplified by the CTFH/CTFBG, GBP/GBGLs, and GLP/GLGLs, etc. or projects that
contribute to business transformation to achieve net zero, are consistent with the Paris
Agreement and contribute to achieving its goals. These projects have been assessed asmeeting the criteria required for green/transition projects and as having clear
environmental benefits on transition strategies. In addition, projects exemplified by
SBP/SBGLs, SLP and SBG have been assessed as meeting the criteria required for social
projects and as having clear social improvement benefits. These are expected to contributeto the SDGs. These processes are consistent with SF-1.

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 transportationconservation☐

Sustainable water management☐

Climate change adaptation⊠

Eco-efficient products, production☐

Green buildings with regional, national or

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.

Page 32 of 66

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

Use of Proceeds Categories as per SBP:☐

Affordable basic infrastructure⊠

Access to essential services☐

Affordable housing☐

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 33 of 66

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

SF-2.

Process for Project Evaluation and Selection

DNV confirmed through the review that Finance Department and CSV Strategy Departmentof Kirin Holdings will select the projects from the eligibility criteria in Table-1, which arecomprehensively based on the contribution to the achievement of "CSV Purpose", and that
the Executive Officer in charge of Financial Strategy will make the final decisions.
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, theproject-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 of environmental

Documented process to determine thatprojects fit within defined categories

contribution goals⊠

The project is eligible for use of proceeds⊠

Documented process to identify and manage
potential ESG risks associated with the projectby Green/Social/Sustainability Financeand 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⊠In-house assessment

external advice or verification☐

Other (please specify):

Page 34 of 66

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

SF-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 will make efforts to allocate the proceeds to financing(new) and refinancing the eligible projects within about two years after the fundraising,and that the specific allocation plan will be clearly stated in a legally disclosed document
at the time of the implementation of finance or contract documents, etc. 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
Finance 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 ofeligible 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 beallocated are systematically distinguished or tracked by the fundraiser.

☐

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

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⊠

Allocations to both existing and future⊠

Allocation to individual disbursements☐

Allocation to a portfolio of disbursements☐

Disclosure of portfolio balance of☐

Other (please specify):

Investments

unallocated proceeds

Page 35 of 66

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

SF-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 Kirin Holdings website. 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.

<Allocation of Proceeds>
 Project description, including project name and progressAllocated and unallocated amounts

Age and remaining useful life of the asset in refinancing and refinancing amount<Environmental benefits>[Green Projects]
Categories

Green Projects

Businesses related to pollution
prevention and control
Eco-efficient products and/or
circular economy adapted
products, production
technologies and processes

 Procurement and capital
investment of recyclable PET
resin

Reporting Items
 Use rate of recycled resin (%)[Green/Transition Projects]
Categories

Green/Transition Projects

Businesses related to energy
efficiency
Businesses related to renewableenergy Introduction of heat pumpsystems to production sites
 Introduction of solar power
generation equipments to
production sites
 Procurement of renewables

Reporting matters
 GHG reductions (t-CO₂e)
 GHG reductions (t-CO₂e)<Social benefits>[Social Projects]
Outcome (*)
Categories

Social Projects

OutputBusinesses that
contribute to theachievement of asociety of health andlongevity, mainly
through infant andtoddler healthimprovement anddisease prevention

 Capital investment,
operation, andprocurement of
raw materials
contributing to the
production of
Human Milk
Oligosaccharide(HMO)

 Expanded production
capacity of Human
Milk Oligosaccharide(HMO)(Benefits or changes (outcome) brought
to the target population)

Page 36 of 66

 Increase in the number ofusers of products containing
Human Milk Oligosaccharide(HMO) (e.g., powdered milk,
health foods) in Japan andabroad, which contribute toimproving the health ofcustomers in a wide range ofregions and age groups.

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

Businesses that
contribute to theachievement of asociety of health andlongevity, throughbrain function
improvement andbrain function decline
prevention
Businesses that
contribute to theachievement of asociety of health andlongevity, throughthe maintenance of
immune function

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

 Expanded production
capacity of Citicoline

 Capital investment,
operation, andprocurement of
raw materials
contributing to theresearch anddevelopment of LcPLASMA and the
production of raw
material powder
utilizing Lc-PLASMA Expanded production
capacity of Lc-PLASMA Publication of papers
 Presentation atconferences Partnership withacademia Increase in the number ofusers of products containing
Citicoline (e.g.,
pharmaceuticals, health foods)
in Japan and abroad, which
contribute to improving theperformance of customers'
brain functions and preventing
their decline.
 Increase in the number ofpeople in Japan and abroad
continuously intaking LcPLASMA, which contribute to
the maintenance of customers'
immune function.

*The number of users in each project is assumed to be reported annually.

Page 37 of 66

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):☐

Green bond refinanced share of total investment☐

Semi-annual

Information Reported:⊠

Allocated amounts☐

Other (please specify):

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☐

Described in sustainability report⊠

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

Information published in ad hoc documents☐

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

Page 38 of 66

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

Findings and opinions of DNV against the five requirements *1 of SLBP/SLLP *1:(3)

including SLBGLs/SLLGLs

SLBP/SLLP-1

Selection of Key Performance Indicators (KPIs)-

DNV reviewed Kirin Holdings' KPIs related to the sustainability and confirmed that the
selected KPIs are important and relevant to Kirin Holdings' core transition strategy andsustainability management.

-

The KPIs and SPTs of the Kirin Holdings Sustainability/Transition-Linked Finance areshown in Table-6. The three KPIs related to environmental sustainability (transition) set
by Kirin Holdings are material indicators for the overarching transition/sustainability
strategies towards the long-term target of achieving net zero GHG emissions in theentire value chain by 2050 set out in the Kirin Group s Environmental Vision 2050 andsustainable use of water resources as one of the challenges.

-

The important KPIs for Kirin Holdings are externally evaluated as ambitious in the GHG
emission reduction towards the long-term target of achieving net zero GHG emissions in
the entire value chain by 2050 set out in the Kirin Group s Environmental Vision 2050
and sustainable use of water resources . The selection of Kirin Holdings' KPIs; GHG
emission reduction rate which covers Scope 1, 2 and 3, CDP climate change score andwater security score is fully appropriate. These are positioned as core KPIs for the longterm target of achieving net zero GHG emissions in the entire value chain by 2050 set
out in the Kirin Group s Environmental Vision 2050, and for the initiatives forsustainable use of water resources .

-DNV has confirmed that the KPIs selected by Kirin Holdings are either consistent with
the Paris Agreement or ambitious in addressing climate change and water resources,
and that the KPIs are appropriately set as comparable indicators.

-

From the perspective of Kirin Holdings' business strategy, DNV believes that theinitiatives to KPIs closely related to the long-term target of achieving net zero GHG
emissions in the entire value chain by 2050 set out in the Kirin Group s Environmental
Vision 2050 and sustainable use of water resources will contribute to Kirin Holdings
creating economic value as well as social value. DNV also believes that the KPIs
contribute to realize the long-term target of achieving net zero GHG emissions in theentire value chain by 2050 set out in the Kirin Group s Environmental Vision 2050 andsustainable use of water resources , and to the alignment of Kirin Holdings' businessstrategy with the goals related to sustainability management.

-

DNV concludes that GHG emission reductions and CDP scores as KPIs are measurable
based on a consistent methodology (assessment based on GHG Protocol and CDP), areexternally verifiable, and can be benchmarked against an external reference. DNV
concludes that supply-chain GHG emissions are a robust and highly reliable indicator.

-

The SBT net zero accreditation of the SBT 1.5℃ standard, which Kirin Holdings'
medium- and long-term targets have been obtained, requires the setting of targets
based on the 1.5°C standard consistent with the Paris Agreement and can be used as
an external reference to assess Kirin Holdings' ambition.

Page 39 of 66

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

DNV confirmed that the KPIs selected by Kirin Holdings would provide a clear evaluation
scope and calculation methods. See Schedule-2 for details.

List of selected KPIs
List of selected KPIs
 KPI-1: CDP climate change score and CDP water security score
 KPI-2: GHG emission reduction rates in Scope 1 and Scope 2
 KPI-3: GHG emission reduction rate in Scope 3

Definition, Scope and Parameters⊠

Clear definition of each selected KPIs⊠

Other (please specify): CDP scoring on⊠

Clear calculation methodology

climate change and water security,
which promotes global disclosure of
information on the organization's
environmental impacts.

Relevance, robustness, and reliability of the selected KPIs⊠

Credentials that the selected KPIs are⊠

Evidence that the KPIs are externally verifiable⊠

Evidence that the KPIs can be benchmarked⊠

Other (please specify): CDP scoring is widely

relevant, core and material to theFundraiser s sustainability and businessstrategy.
⊠

Credentials that the KPIs are measurable
or quantifiable on a consistentmethodological basis

recognized as a measure of an organization's
commitment to environmental impact.

Page 40 of 66

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

SLBP/SLLP-2

Calibration of Sustainability Performance Targets (SPTs)-

DNV confirmed that the SPTs shown in Table-6 supported the supply-chain GHG
emission reduction and "sustainable use of water resources" set out in the long-termtarget of achieving net zero GHG emissions in the entire value chain by 2050 set out inthe Kirin Group s Environmental Vision 2050, Kirin Holdings' GHG emission reduction
targets are aligned with the ambitious targets set out in the Paris Agreement,
maintaining an A-score in the CDP is ambitious, and the specific plans are included.
Accordingly, DNV confirmed that Kirin Holdings' SPTs are ambitious and proactive. DNV
also confirmed that the achievements of SPTs are consistent with Kirin Holdings' efforts
for achieving net zero.

-

DNV concluded that the SPTs are realistic, the plans were feasible, the SPTs targets
outlined in the framework were achievable, based on the long-term target of achieving
net zero GHG emissions in the entire value chain by 2050 set out in the Kirin Group s
Environmental Vision 2050, "sustainable use of water resources", and the information
provided by Kirin Holdings.

-

DNV confirmed that the SPTs established by Kirin Holdings are tied to the improvementof KPIs. The Kirin Holdings' efforts to KPIs/SPTs are expected to be a driving force forthe implementation of Kirin Holdings' Transition (sustainability) strategy.

-

DNV confirmed that the SPTs goal-setting process is based on the appropriate
combination of benchmarking approaches.

-Guidelines for goal setting by FY2030 are indicated in the Framework in accordancewith KPIs information on the basis of the SBT 1.5℃ standard, based on Kirin
Holdings' actual results up to FY2021.



Kirin Holdings' GHG emission reduction targets are consistent with the ambitious
targets set out in the Paris Agreement and that maintaining an A-score in the CDP
is ambitious. In addition, the SPTs goal setting has been evaluated as ambitious as
an item closely related to GHG emission reduction and water resources, based on
the recent performance level of Kirin Holdings.

The SPTs are aligned with the achievement of the Paris Agreement targets. The
KPIs/SPTs and their respective roadmaps support the realization of the long-termtarget of achieving net zero GHG emissions in the entire value chain by 2050 set
out in the Kirin Group s Environmental Vision 2050.

DNV confirmed that the SPTs goal setting was properly disclosed as follows


The SPT-1 is to maintain A rank in the CDP climate change score and CDP water
security score.



The timeline for SPT-2 & SPT-3 achievement is set up to FY2030/FY2050. As for
SPTs as trigger events, SPT-2 is set by linear interpolation, etc. between actual
results in the base year FY2019 and targets up to FY2030, while SPT-3 is set to bereasonable and ambitious in Table-6. They may also be set individually when
detailed plans are drawn up in the future.

Page 41 of 66

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

Through the Framework and the roadmap, the progress status in GHG emission
reduction is described in detail.

Table-6 KPIs and SPTs of Kirin Holdings Sustainability/Transition-Linked Finance(KPI-1 to KPI-3 and SPT-1 to SPT-3 are selected for Sustainability-Linked Finance, while any or both of KPI2/SPT-2 and KPI-3/SPT-3 below are selected for Transition-Linked Finance.)
KPIs
SPTs
KPI-1: CDP climate change score and CDP water
SPT-1: Maintain CDP climate change score and CDP water
security scoresecurity score A
KPI-2: GHG emission reduction rates in Scope 1 andSPT-2: GHG emission reduction rates in Scope 1 and Scope
Scope 22 consistent with the following targets(Base year: FY2019)
・ 50% reduction in GHG emissions in FY2030
・ Net zero GHG emissions in FY2050(Base year: FY2019)
KPI-3: GHG emission reduction rate in Scope 3
SPT-3: GHG emission reduction rate in Scope 3 consistent(Base year: FY2019)with the following targets
・ 30% reduction in GHG emissions in FY2030
・ Net zero GHG emissions in FY2050(Base year: FY2019)
Explanation of KPIs
Explanation of SPTs
The KPIs are closely related to the 2050 net-zero Each SPT has a score and target value linked to Kirin
target for "Overcoming climate change", aHoldings' transition strategy, set with reference to the "Kirin
challenge set out in the "Kirin Group sGroup s Environmental Vision 2050".
Environmental Vision 2050", and to sustainable
use of water resources.
KPI-1: CDP climate change score and CDP water
security score
It is a KPI related to external evaluation of
initiatives to address issues set by Kirin
Holdings, which can be assessed continuously
based on the criteria of a third-party
organization (CDP).
KPI-2: GHG emission reduction rates in Scope 1
and Scope 2
KPI-3: GHG emission reduction rate in Scope 3
These are core KPIs towards Kirin Holdings'
2050 net zero target and is quantifiable andcontinuously measurable according to the GHG
Protocol.

SPT-1: Maintain CDP climate change score and CDP water
security score A
The percentage of CDP-scored companies obtaining ascore A in 2022 was approximately 1.5% for CDP climatechange and 2.6% for CDP water security. It can be judgedthat maintaining a score A is set as an ambitious target.
SPT-2: GHG emission reduction rates in Scope 1 and Scope
2 consistent with the following targets
・
50% reduction in GHG emissions in FY2030
・Net zero GHG emissions in FY2050
SPT-3: GHG emission reduction rate in Scope 3 consistent
with the following targets
・ 30% reduction in GHG emissions in FY2030
・ Net zero GHG emissions in FY2050
It can be judged that Kirin Holdings has been accreditedby SBTi to the SBT for 1.5℃, and the SPTs are set inalignment with the ambitious 2050 net zero target set by
the Paris Agreement.
As for SPTs as trigger events, SPT-2 is set by linear
interpolation, etc. between actual results in the base year
FY2019 and targets up to FY2030, while SPT-3 is set to bereasonable and ambitious as described above. They may
also be set individually when detailed plans are drawn up
in the future.

Page 42 of 66

Kirin Holdings Company, Limited. Kirin Sustainable Finance Framework Second Party Opinion(SPTs) Rationale and level of ambition⊠

Evidence that the SPTs represent a⊠material improvement⊠

Evidence that SPTs are consistent

Credentials on the relevance and reliability of
selected benchmarks and baselines⊠

with the Fundraiser s sustainability

Credentials that the SPTs are determined on apredefined timelineand business strategy☐

Other (please specify):

Benchmarking approach⊠

Fundraiser own performance⊠Fundraiser's peers⊠

Reference to the science⊠

Other (please specify): CDP, SBT for 1.5°C
standard

Additional disclosure⊠

Potential recalculations or adjustments⊠

Fundraiser s strategy to achieve description☐

Other (please specify):

description⊠

Identification of key factors that may
affect the achievement of the SPTs

Page 43 of 66

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

SLBP/SLLP-3

Bond/Loan Characteristics

For the Sustainability/Transition-Linked Finance (Bond or Loan) executed under the
Framework, DNV confirmed that the observation timing of specific SPTs and the trigger
events with performance requirements and the extent of their impact would be linked to theachievement of targets and interest rates of bonds, terms and conditions of loan or otherfinancial incentives (e.g., donation to organizations working on similar improvements in thecase of failing to achieve SPTs).
-

DNV confirmed, as for the specific interest rate variation, that a step up/down of theannual interest rate will define at the time of the implementation of the financing fromthe time of interest payment after the decision date until the redemption/repayment
date, or a donation to organizations working on similar improvements of SPTs, basedon the achievement status of the SPTs as verified by a third party.

-

DNV confirmed that Kirin Holdings considered the appropriate fallback mechanisms(fallback alternatives), and, as a result, decided not to set up other SPTs or calculation
methods at this time since the risks of not being able to calculate or observe are
extremely small.

-

Kirin Holdings explained that KPIs and SPTs may be changed after discussion at internal
meetings when there is a rational reason, in case that there is any changes in businessenvironment, business structure and KPIs, etc., regardless of whether the event is due
to external factors or the result of Kirin Holdings' management decision.

-

DNV confirmed that when there are any changes in KPIs and SPTs, Kirin Holdings will
disclose them on the website, etc.

Financial impact:⊠

Variation of the coupon⊠

Other (please specify): financial incentive, such as donation, etc.

Structural characteristic:⊠

Other (please specify): terms and conditions of trigger judgement (judgement date and SPTs)
will be set by the period of an individual bond or loan, etc., and clarified in a legal disclosure
documentation (or other disclosure method to the public) or an agreement document.

Page 44 of 66

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

SLBP/SLLP-4-

Reporting

DNV confirmed that the necessary information would be disclosed to the public on anannual basis for the following details required by the SLBP/SLLP.


KPIs performance for SPTs: will be verified by an external agency at least once a
year until the completion of redemption or repayment after the execution of
Sustainability/Transition-Linked Finance, and disclosed on the website.



SPTs achievement status: will be verified annually by an independent third party
and used for determination of the financial characteristics (bond interest rate, terms
and conditions of loan or other financial incentives).

Information reported⊠

Performance of the selected KPIs⊠

Verification assurance report⊠

Level of ambition of the SPTs⊠

Other (please specify): Information on thefinancial impact when implementing trigger
judgement (information of interest rate anddonation). Validity of the adjustment andrecalculation result of KPIs and SPTs, if
necessary.

Frequency⊠

Annual☐Other (please specify):☐

Semi-annual

Means of Disclosure☐

Information published in financial report☐

Information published in sustainability report☐

Information published in ad hoc⊠

Other (please specify): disclosed on
fundraiser s website☐

Reasonable assurance☐

Other (please specify):

documents☐

Reporting reviewed

Level of Assurance on Reporting⊠

Limited assurance

Page 45 of 66

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

SLBP/SLLP-5-

Verification

DNV confirmed that Kirin Holdings planned to undergo independent verification of KPIsrelated data at least once a year by qualified external evaluation agency.

Information reported⊠

Limited assurance☐

Reasonable assurance☐

Other (please specify):☐

Semi-annual☐

KPIs methodology

Frequency⊠

Annual☐Other (please specify):

Material change⊠

Perimeter⊠

SPTs calibration

Page 46 of 66

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 the Kirin Holdings Sustainable Finance Framework meets the criteria
established in the Protocol, and that it is aligned with the following stated definition or purposeof the Green/Transition/Social/Sustainability Finance and Sustainability/Transition-Linked
Finance, within the CTFH/CTFBG, GBP/GBGLs, GLP/GLGLs, SBP/SBGLs, SLP, SBG,
SLBP/SLBGLs, and SLLP/SLLGLs.
-

enable capital-raising and investment for new and existing projects withenvironmental benefits"-provide an investment opportunity with transparent sustainability credentials-

Climate Transition Finance is important through KPIs and SPTs, quantitative, predetermined, ambitious, and regularly monitored and externally validated andencourage the achievement of ESG of fundraisers

DNV Business Assurance Japan K.K.
26 December 2022

Mark Robinson

Naoki Maeda

Manager, Sustainability Services

Managing Director

DNV Business Assurance, Australia

DNV Business Assurance Japan K.K.

Masato Kanedome

Yasuaki Miyamoto

Project Leader

Team Leader

DNV Business Assurance Japan K.K.

DNV Business Assurance Japan K.K.

Page 47 of 66

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 Fundraiser and the Second Party Opinion Providers, DNV : The management ofFundraiser 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 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 the Fundraiser. DNV is not responsible for any aspect of the nominatedassets referred to in this opinion and cannot be held liable if estimates, findings, opinions, or conclusions are incorrect. Thus,
DNV shall not be held liable if any of the information or data provided by the Fundraiser s management and used as a basis
for this assessment were not correct or complete

Page 48 of 66

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

Schedule-1 Kirin Sustainable Finance Nominated Projects List

The projects listed in the table are the nominated projects that have been evaluated for eligibility at the time of evaluation (as of November 2022). In the
future, green/transition/social finance issued under the Kirin Sustainable Finance will be selected from one or more of the Eligible Criteria (nominated eligible
projects) described in Schedule-1 as per its labelling and the use of proceed are reported in the pre-financing or post-financing reports. If additional
green/transition/social projects are included, project eligibility will be evaluated in advance by Kirin Holdings in accordance with the process based on the
Framework and, if necessary, DNV will evaluate them in a timely manner.
[Green Projects]
Categories

Green Projects

GBP Project Categories

Businesses related to pollution prevention  Procurement and capitaland control
investment of recyclable PET
resin
Eco-efficient products and/or circular
economy adapted products, production
technologies and processes

Alignment with
the SDGs

 Pollution prevention and control(Environmental goal: pollution prevention and control) Eco-efficient products and/or circular economy adapted products,
production technologies and processes(Environmental goal: conservation of natural resources)[Green/Transition Projects]
Categories

Green/Transition Projects

GBP Project Categories

Businesses related to energy efficiency

 Introduction of heat pumpsystems to production sites

 Energy efficiency(Environmental goal: climate change mitigation)

Businesses related to renewable energy

 Introduction of solar power
generation equipments to
production sites
 Procurement of renewables

 Renewable energy(Environmental goal: climate change mitigation)

Alignment with
the SDGs[Social Projects]
Categories
Businesses that contribute to theachievement of a society of health andSocial Projects

SBP Project Categories

 Access to essential services (health, healthcare) Capital investment, operation,and procurement of raw materials  (Target population: general public)
Page 49 of 66

Alignment with
the SDGs

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

longevity, mainly through infant andtoddler health improvement and disease
prevention

contributing to the production of
Human Milk Oligosaccharide(HMO)

Businesses that contribute to theachievement of a society of health andlongevity, through brain function
improvement and brain function decline
prevention

 Access to essential services (health, healthcare) Capital investment, operation,(Target population: general public, aging people, patients)
and procurement of raw materials
contributing to the production of
Citicoline

Businesses that contribute to theachievement of a society of health andlongevity, through the maintenance of
immune function

 Access to essential services (health, healthcare) Capital investment, operation,(Target population: general public, aging people, vulnerable youth)and procurement of raw materials
contributing to the research anddevelopment of Lc-PLASMA andthe production of raw material
powder utilizing Lc-PLASMA

Page 50 of 66

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

Schedule-2 Key Performance Indicators (KPIs) and Sustainability Performance Targets (SPTs)
KPIs: Key Performance Indicators
KPIs

Overview

KPI-1: CDP climate change score and CDP water security score
KPI-2: GHG emission reduction rates in Scope 1 and Scope 2
KPI-3: GHG emission reduction rate in Scope 3

The KPIs are closely related to the 2050 net-zero target for "Overcoming
climate change", a challenge set out in the "Kirin Group s Environmental
Vision 2050", and to sustainable use of water resources.
KPI-1 is related to external evaluation of initiatives to address issues set by
Kirin Holdings, which can be assessed continuously based on the criteria ofa third-party organization (CDP).
KPI-2 & KPI-3 are core KPIs towards Kirin Holdings' 2050 net zero target
and are quantifiable and continuously measurable according to the GHG
Protocol.

SPTs: Sustainability Performance Targets
SPTs

Overview

SPT-1: Maintain CDP climate change score and CDP water security score A

Each SPT has a score and target value linked to Kirin Holdings' transition
strategy, set with reference to the "Kirin Group s Environmental Vision
2050".
As for SPT-1, the percentage of CDP-scored companies obtaining a score A

SPT-2: GHG emission reduction rates in Scope 1 and Scope 2 consistent with in 2022 was approximately 1.5% for CDP climate change and 2.6% for CDP
water security. It can be judged that maintaining a score A is set as an
the following targets (Base year: FY2019)
ambitious target.
・50% reduction in GHG emissions in FY2030
As for SPT-2 & SPT-3, it can be judged that Kirin Holdings has been
・Net zero GHG emissions in FY2050
accredited by SBTi to the SBT for 1.5℃, and the SPTs are set in alignment
SPT-3: GHG emission reduction rate in Scope 3 consistent with the following with the ambitious 2050 net zero target set by the Paris Agreement.
targets (Base year: FY2019)
As for SPTs as trigger events, SPT-2 is set by linear interpolation, etc.
between actual results in the base year FY2019 and targets up to FY2030,
・30% reduction in GHG emissions in FY2030
while SPT-3 is set to be reasonable and ambitious as shown on the left.
・Net zero GHG emissions in FY2050
They may also be set individually when detailed plans are drawn up in the
future.

Page 51 of 66

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

Schedule-3 Transition Finance Framework Eligibility Assessment Protocol

The following checklists (1-4) are DNV evaluation procedures created for Kirin Holdings Transition Finance (specific use of proceeds and general corporate purpose) from Kirin
Holdings Sustainable Finance Framework, based on the disclosure requirements of the CTFH and CTFBG.
The "confirmed documents" in the Work Undertaken include public or private documents (internal documents of the issuer or the fundraiser), etc., and are provided by Kirin
Holdings as evidence of eligibility judgment for DNV.
＊Please replace Issuer , Investor to Borrower/Fundraiser , Lender in the context in the following requirements.
Ref.
1

Criteria
Issuer s
ClimateTransition
Strategy andGovernanceRequirements
Work Undertaken
DNV Findings
The financing purpose should be for enabling an
Confirmed documents: Kirin Holdings has established its Framework, and has also introduced various
issuer s climate change strategy. A transition label - Frameworkplans and initiatives to manage and enhance the performance related to theapplied to a debt financing instrument should serve - KIRIN INTEGRATED organization's environmental sustainability against Kirin Holdings' wide range
to communicate the implementation of an issuer s
REPORT 2022
of environmental strategy.
corporate strategy to transform the business model - Roadmap
DNV has reviewed and confirmed that Kirin Holdings goals are equivalent toin a way which effectively addresses climate-related - Project List
achieving the goals of the Paris Agreement in accordance with the long-termrisks and contributes to alignment with the goals ofInterviews withtarget of achieving net zero GHG emissions in the entire value chain by 2050
the Paris Agreement.
stakeholders
set out in the Kirin Group Environment Vision 2050 , which was the longterm goals with science-based evidence quantified by Kirin Holdings. Kirin
Holdings has established a corporate strategy in the significant environmental<Suggested information and indicators>
aspects for the business model, based on the identification of risks andopportunities and scenario analysis using the TCFD guidance.
• A long-term target to align with the goals of
the Paris Agreement (e.g. the objective of
In February 2021, Kirin Holdings formulated the long-term target of achieving
limiting global warming ideally to 1.5℃ and, at
net zero GHG emissions in the entire value chain by 2050 set out in the Kirin
the very least, to well below 2℃);
Group Environment Vision 2050 , which includes a roadmap. The long-term•

Relevant interim targets on the trajectory
towards the long-term goal;•

Disclosure on the issuer s levers towards
decarbonisation, and strategic planningtowards a long-term target to align with thegoals of the Paris Agreement;•

target of achieving net zero by 2050, which is consistent with the goals of theParis Agreement, are set in the roadmap, and the medium-term goals forachieving the target are also developed. Kirin Holdings strategic plan toachieve the Transition to net zero is disclosed in the roadmap.

Specifically, Kirin Holdings' transition strategy includes the reduction target
and measures necessary for achieving the goals of the Paris Agreement.
Furthermore, when a review of efforts is required in order to realize thecontinuous emission reduction in the future, it will be implemented in a timely
manner according to the timeline based on the progress in the developmentof each technology.

Clear oversight and governance of transition
strategy and,• Evidence of a broader sustainability strategy to
mitigate relevant environmental and social
externalities and contribute to the UN Sustainable
Development Goals.

Kirin Holdings considers overcoming climate change, including theimplementation of transition strategies as one of the most importantmanagement issues, and has established the system and the Framework toPage 52 of 66

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

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings
promote the initiatives set forth in the long-term target of achieving net zero
GHG emissions in the entire value chain by 2050 set out in the Kirin Group
Environment Vision 2050 and the roadmap at the management level.
DNV confirmed that the Framework, the long-term target of achieving net
zero GHG emissions in the entire value chain by 2050 set out in the Kirin
Group Environment Vision 2050 and the roadmap were well aligned with
Kirin Holdings' transition strategy, in accordance with the evaluation of theimplementation plans provided by Kirin Holdings. Through the evaluation,
DNV confirmed that the implementation plans based on Kirin Holdings'
transition strategy were credible, ambitious, and achievable.

2

Business
The planned climate transition trajectory should be
model
relevant to the environmentally-material parts ofenvironmenta the issuer s business model, taking into accountl materiality potential future scenarios which may impact on
current determinations concerning materiality.

Confirmed documents: DNV assessed whether the key activities related to Kirin Holdings' business- Framework
were being corresponding to Kirin Holdings' transition strategy which was- KIRIN INTEGRATED evaluated as contribution to the environment.
REPORT 2022
GHG emissions of the Kirin Group (FY2019-FY2021) are as follows:- Roadmap
Item
FY2019FY2020
FY2021- Project List
Scope 1+2
834,000 t-CO2e
757,000 t-CO2e
722,000 t-CO2eInterviews with
Scope 3
4,211,000 t-CO2e
3,983,000 t-CO2e
3,689,000 t-CO2e
stakeholders
Total
5,045,000 t-CO2e
4,740,000 t-CO2e
4,411,000 t-CO2e
Kirin Holdings' transition efforts include not only emission reductions from its
own business activities (Scope 1 and 2), but also activities that contribute to
the emission reduction of Scope 3. This will contribute to achieve net zero as
an important initiative indicated in the various plans and strategies for
decarbonization in Japan. In other words, Kirin Holdings' transition initiatives
directly support the transition of society as a whole, including its own
company, as a business operator taking on the challenge of achieving net
zero in 2050.
The roadmap is well aligned with the goals of the Paris Agreement, and its
specific implementation plans and targets are set and quantified in theabsolute sense that they must be the optimization to achieve them and thepossibility of further improvement.
DNV confirmed that Kirin Holdings' plan to implement its Transition Strategy
is closely linked to the activities of its core business and to activities that
contribute to the GHG emissions reduction of in society as a whole, thus
contributing to the environmental aspects of society as a whole andsupporting the promotion of Kirin Holdings' business. Kirin Holdings' plannedtransition strategy and transition pathway are associated with the materiality
Page 53 of 66

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

Ref.

Criteria

Requirements

Work Undertaken

DNV Findingsthat Kirin Holdings has achieved through ISO 26000, GRI standards*1, etc.,
and will contribute to significant environmental improvements (impact) inboth qualitative and quantitative terms.
*1: Global Reporting Initiative (an international standard providing ESG-related reporting,management and analysis methods)

3

Climatetransition
strategy to
be sciencebased
includingtargets andpathways

Issuer s climate strategy should reference science- Confirmed documents: For Scope 1, 2, and 3, Kirin Holdings has set a transition plan and a transition
based targets and transition pathways. The planned - Framework
trajectory that is consistent with the science-based Paris Agreement.
transition trajectory should:- KIRIN INTEGRATEDThis plan provides a realistic achievement and pathway for GHG emission
REPORT 2022
• be quantitatively measurable (based on a
reduction in absolute terms and a plan to reduce GHG emissions in absolute- Roadmap
measurement methodology which is consistent - Project List
(total) terms to maintain the defined levels in the future.
over time);
The transition targets are set voluntarily based on the efforts utilizing theInterviews with• be aligned with, benchmarked or otherwise
TCFD and other measures for GHG emission reduction in a sustainable
stakeholders
referenced to recognized, science-basedmanner, and they are consistent with the SBTi net zero standard, which
trajectories where such trajectories exist;
serves as the benchmark.
•be publicly disclosed (ideally in mainstream
financing filings), include interim milestones,
and;•be supported by independent assurance orverification

Specifically, Kirin Holdings has established the following goals for transitions:
Item
Target Value
Scope 1+2 total Target for FY2030: 50% reduction (compared to FY2019)
emissionsTarget for FY2050: Net zero
Scope 3
Target for FY2030: 30% reduction (compared to FY2019)
emissionsTarget for FY2050: Net zero

<Suggested information and indicators>•

Short, medium, and long-term greenhouse gas
reduction targets aligned with Paris
Agreement;•

Baseline•

Scenario utilised, and methodology applied(e.g. ACT, SBTi, etc.);

Kirin Holdings' transition efforts include not only emission reductions from its
own business activities (Scope 1 and 2), but also activities that contribute to
the emission reduction of Scope 3. This will contribute to achieve net zero as
an important initiative indicated in the various plans and strategies for
decarbonization in Japan. In other words, Kirin Holdings' transition initiatives
directly support the transition of society as a whole, including its own
company, as a business operator taking on the challenge of achieving net
zero in 2050.

•

Greenhouse gas objectives covering all scopes(Scope 1, 2 and 311); and,The efforts to the Transition and the emissions of Scope 1, 2, and 3 aredisclosed in the KIRIN INTEGRATED REPORT 2022 , etc.

•

Targets formulated both in intensity andabsolute terms

Page 54 of 66

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

Ref.
4

Criteria
Requirements
Implementati Market communication in connection with the offeronof a financing instrument which has the aim oftransparency funding the issuer s climate transition strategy
should also provide transparency to the extent
practicable, of the underlying investment program
including capital and operational expenditure. This
may include R&D-related expenditure where
relevant, and details of where any such operating
expenditure is deemed non-Business as Usual , aswell as other relevant information indicating how
this program supports implementation of thetransition strategy, including details of any
divestments, governance and process changes.

Work Undertaken
DNV Findings
Confirmed documents: DNV has confirmed that the investment and development plans related to- Framework
Kirin Holdings' Transition Strategy include agreement on future investment- KIRIN INTEGRATED and expenditure. Specifically, DNV has confirmed that an investment plan of
REPORT 2022
approximately 26 billion yen over the medium-term plan period from FY2022- Roadmap
to FY2030 has been formulated of a part of the proceeds from sustainable- Project List
finance for capital investment and procurement of renewable energy that
contribute to green/transition. DNV has also confirmed that Kirin HoldingsInterviews withintends to consider the overall investment plan (investment amount) for
stakeholders
disclosure to the extent possible from the perspective of ensuringtransparency in the future.
DNV confirmed that the overall investment plan (investment amount) for the
future was a plan where the investments required to implement the transition
strategy would be executed according to the appropriate timeline based on
the internal management structure and processes, taking into account CTF-1
to CTF-3.

<Suggested information and indicators>•

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

DNV confirmed that Kirin Holdings plans to allocate the proceeds for capital
expenditure and operating expenditure, investment, R&D expenses, removal
costs, etc. for the nominated transition eligible projects shown in Schedule-1.

• Capex roll-out plans consistent with the overall
strategy and climate science

Page 55 of 66

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

Schedule-4 Kirin Sustainable Finance (or Transition Finance with specific use of proceeds) Eligibility
Assessment Protocol

The checklist below (SF-1 to SF-4) is a DNV evaluation procedure created for Kirin Sustainable Finance Eligibility Assessment (Transition Finance with specific use of proceeds)
based on GBP/GBGLs, GLP/GLGLs, SBP/SBGLs, SLP, and SBG. "Confirmed documents" in the Work Undertaken includes documents inside the fundraiser and is provided by
Kirin Holdings as evidence of eligibility judgment for DNV.
In Schedule-3, it is referred to as GBP or GLP according to the practice, but this is the standard to be referred to in the case of financing that specifies the use of proceeds suchas transition projects in transition finance that specifies the use of proceeds based on CTFH and CTFBG, so please read as the meaning of the transition as appropriate.
*SF: Sustainable FinanceSF-1 Use of Proceeds
Ref. Criteria
1aType of finance

1b

Project categories

Requirements
The Sustainability Finance must fall in
one of the following categories, as
defined by SBP and GBP.
- (Standard) Sustainability Finance- Sustainability Revenue Finance- Sustainability Project Finance・ Other
The cornerstone of a Sustainability
Finance is the utilization of the proceedsof the finance which should beappropriately described in the legal
documentation for the security.

Work Undertaken
DNV Findings
Confirmed documents: Through the assessment, DNV confirmed that Kirin Sustainable Finance- Framework(hereinafter, "Sustainable Finance") falls into the category below:
Interviews withstakeholders• (Standard) Sustainability FinanceConfirmed documents: DNV confirmed that the projects identified in the Framework fall into the- Framework
following representative eligible categories classified by the standards, such as- Project List
GBP, SBP and GLP. It was also confirmed that the proceeds are planned to beallocated to new or existing projects as new financing or refinancing, and that
Interviews withthe plans are properly documented in the legal documents and otherstakeholders
documents related to the financing.
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)• Access to essential services

Page 56 of 66

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

Ref. Criteria
1cEnvironmental andsocial benefits

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

Work Undertaken
DNV Findings
Confirmed documents: Among the Green Projects, the introduction of heat pump systems and solar- Framework
power generation equipment have environmental benefits in terms of GHG
emission reductions, and DNV confirmed that the environmental benefits are
Interviews withquantitatively assessed in terms of GHG emission reductions and reported
stakeholders
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 the ratio 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 andproducts, and clearly identified the beneficiaries. Each Social Project was
confirmed to have social benefits respectively: Human Milk Oligosaccharide
production for improving the health of customers in a wide range of regions andage groups, Citicoline production for brain function improvement of customers,
and Lc-PLASMA production for maintenance of immune function of customers.
The benefits were confirmed to be quantitatively assessed in terms of thenumber of continuous users and reported annually.
Through the assessment, DNV determined that the environmental and social
impact risks associated with project execution were relatively low, with thefollowing aspects considered.
 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

1d

Refinance share

In the event that a proportion of theConfirmed documents: Kirin Holdings plans to use the proceeds for either new investments,
proceeds may be used for refinancing, it is - Framework
refinancing, or both. DNV confirmed that it plans to disclose the amount of therecommended that fundraiser provide anproceeds allocated to refinancing and elapsed years and remaining useful life ofInterviews withestimate of the share of financing vs.
the asset through its annual report.
refinancing, and where appropriate, also stakeholders
clarify which investments or project
portfolios may be refinanced.

Page 57 of 66

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
decision process

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

Confirmed
documents:- Framework

DNV confirmed that Kirin Holdings selects projects based on the Framework
and according to the following criteria.

Interviews withstakeholders

・ 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 for green
and social

2b

Fundraiser's
environmental andsocial governanceframework

In addition to criteria and certifications,the information published by fundraiser
regarding the Sustainability financeprocess is also considered the quality of
performance of the fundraiser's
framework and environmental andsocial sustainability.

Eligible Projects:• Finance Department and CSV Strategy Department of Kirin
Holdingsselected the eligible projects, and the Executive Officer in chargeof Financial Strategy made the final decision on the eligibility of theselected nominated projects.
• The overall contribution of the project to the achievement of the "CSV
Purpose" was evaluated to determine the eligibility of the sustainability
projects listed in Schedule-1.
• For execution of the project, the following risk mitigation processes are inplace, 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

Confirmed
documents:- Framework- CSV Purpose- KV2027
Interviews withstakeholders

Page 58 of 66

DNV confirmed that the Green/Transition and Social Projects implemented
by Kirin Holdings are in line with Kirin Holdings' "CSV Purpose" and"KV2027" and that, in implementing the projects, Kirin Holdings will comply
with environmental laws, regulations, and agreements with the relevant
communities, as well as considerations for the surrounding environment wasconsidered. DNV also confirmed that the environmental benefits ofGreen/Transition Projects, such as GHG emission reductions, and the social
benefits of Social Projects are clear through review of the Framework andother documents, as well as interviews with stakeholders.

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

SF-3 Management of Proceeds
Ref.
3a

3b

Criteria
Requirements
Tracking procedure- Proceeds for funds raised through1
Sustainability Finance should be managed
in sub-accounts, incorporated into subportfolios, or tracked by other appropriate
means. They should also be evidenced by
the fundraiser in a formal internal process
related to the fundraiser's investment andfinancing operations for sustainability
projects.

Work Undertaken
DNV Findings
Confirmed documents: Through document review and interviews, DNV confirmed that the net- Framework
proceeds are traceable through Kirin Holdings' Kirin Group Treasury Policy and- Kirin Group Treasury internal control systems. DNV also confirmed that the actual systems andPolicyrelated documents in use can be reviewed and that the control of the proceeds- Document
can be evidenced-based on these systems.
Management
Regulation
Interviews withstakeholders

Tracking procedure- In the period for which Sustainability
Confirmed documents: DNV confirmed that Kirin Holdings plans to manage the appropriation of2
Finance is to be managed, the balance of - Framework
proceeds regularly (at least semi-annually) during the period from thethe tracked proceeds should be- Kirin Group Treasury execution of Sustainable Finance to redemption or repayment.
periodically adjusted by amounts matching Policy
eligible project investments or loan
- Document
disbursements made during that period.
Management
Regulation
Interviews withstakeholders

3cTemporary holdings Pending such investments or
disbursements to eligible Sustainability
Projects, the fundraiser should makeknown to investors the intended types of
temporary investment instruments for thebalance of unallocated proceeds.

Confirmed documents: DNV confirmed that Kirin Holdings' internal control system and other- Framework
confirmation processes ensure that the balance of unallocated proceeds is- Kirin Group Treasury recognized in a timely manner. It was confirmed through the description of the
PolicyFramework and this assessment that the balance of unallocated proceeds will
- Document
be managed in cash or cash equivalents. It was also confirmed that the balanceof unallocated proceeds will be disclosed through the reporting for funds
Management
allocation.
Regulation
Interviews withstakeholders

Page 59 of 66

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

SF-4 Reporting
Ref. Criteria
Requirements
Work Undertaken
DNV Findings
4aPeriodical Reporting In addition to reporting on the use ofConfirmed documents: DNV confirmed that Kirin Holdings will conduct Kirin Sustainable Financeproceeds and the temporary investment ofreporting (annual reporting) and will disclose the allocation of proceeds until
unallocated proceeds, fundraisers should - Framework
the proceeds have been fully allocated. In terms of the environmental andprovide at least annually a list of projects Interviews withsocial benefits, Kirin Holdings plans to report on the following indices until theto which Sustainability Finance proceeds
maturity of Kirin Sustainable Finance. DNV confirmed that the balance of
stakeholders
have been allocated including:unallocated proceeds and the amount and elapsed years and remaining usefullife of the asset of the refinanced portion will be disclosed. DNV also confirmed- confidentiality and/or competitivethat Kirin Holdings will disclose the environmental and social benefits at any orconsiderations, where possible;
all of the following indicators, within the limits of confidentiality and so far, as isreasonably practicable.
- -a brief description of the projects andthe amounts disbursed, as well as the(Environmental benefits）
expected environmental and social• GHG reductions by introduction of heat pump systems: (t-CO2e）
sustainable impact• Ratio of recycled resin by procurement and capital investment for recyclable
PET resin (%)• GHG reductions by introduction of solar power generation equipment (t-CO2e)(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 60 of 66

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

Schedule-5 Sustainability-Linked Finance Framework Eligibility Assessment Protocol

The checklist below (SLBP/SLLP1〜5) is a DNV evaluation procedure created for the Kirin Sustainable Finance Framework Eligibility Assessment based on the requirements of
SLBP/SLLP.

SLBP/SLLP-1 Selection of KPIs (Key Performance Indicators)
Ref.
1a

Criteria
Requirements
Work Undertaken
DNV Findings
KPIs ‒ material to core The fundraiser s sustainability performance Confirmed documents: DNV reviewed Kirin Holdings' KPIs related to the sustainability and confirmed
sustainability andis measured using sustainability KPIs that
- Frameworkthat the selected KPIs are important and relevant to Kirin Holdings' corecan be external or internal. The KPIs should - KIRIN INTEGRATED transition strategy and sustainability management.
business strategy
be material to the fundraiser s core
REPORT 2022
Kirin Holdings aims for the long-term target of achieving net zero GHG
sustainability and business strategy and- Roadmap
emissions in the entire value chain by 2050 set out in the Kirin Group s
address relevant environmental, social
Environmental Vision 2050 and sustainable use of water resources . The
Interviews with
and/or governance challenges of thethree KPIs related to environmental transition (sustainability) set by Kirin
stakeholders
industry sector and be under
Holdings are material indicator for the overarching transition (sustainability)
management s control. The KPIs should be
strategies.
of high strategic significance to thefundraiser s current and/or future
The KPIs that are important for Kirin Holdings are GHG emission reduction
operations;
towards the long-term target of achieving net zero GHG emissions in theentire value chain by 2050 set out in the Kirin Group s Environmental Vision
It is recommended that fundraiser
2050 and sustainable use of water resources . The selection of Kirin
communicate clearly to investors theHoldings' initiatives on GHG emission reduction and water resources inrationale and process according to which
relation to Scope 1, 2, and 3 as KPIs is fully appropriate. This is positioned as
the KPIs have been selected and how thea core KPI for the long-term target of achieving net zero GHG emissions in
KPIs fit into their sustainability strategy.
the entire value chain by 2050 set out in the Kirin Group s Environmental
Vision 2050, and for the initiatives for sustainable use of water resources .
DNV has confirmed that the KPIs selected by Kirin Holdings are consistent
with the Paris Agreement, and that the KPIs are appropriately set ascomparable indicators.
From the perspective of Kirin Holdings' business strategy, DNV believes thatthe initiatives to KPIs closely related to the long-term target of achieving net
zero GHG emissions in the entire value chain by 2050 set out in the Kirin
Group s Environmental Vision 2050 and sustainable use of water resources
will contribute to Kirin Holdings creating economic value as well as social
value. DNV also believes that the KPIs contribute to realize the long-termtarget of achieving net zero GHG emissions in the entire value chain by 2050
set out in the Kirin Group s Environmental Vision 2050 and sustainable use
Page 61 of 66

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

Ref.

Criteria

Requirements

Work Undertaken

DNV Findingsof water resources , and to the alignment of Kirin Holdings' business strategy
with the goals related to sustainability management.
The chosen KPIs are outlined in detail in Schedule-2, and entails:
KPIs
KPI-1: CDP climate change score and CDP water security score
KPI-2: GHG emission reduction rates in Scope 1 and Scope 2
KPI-3: GHG emission reduction rate in Scope 3

1b

KPIs - Measurability

KPIs should be measurable or quantifiable Confirmed documents: DNV concludes that GHG emission reductions and CDP scores as KPIs areon a consistent methodological basis;- Framework
measurable based on a consistent methodology (assessment based on GHG
externally verifiable; and able to be- KIRIN INTEGRATED Protocol and CDP), are externally verifiable, and can be benchmarked against
benchmarked, i.e. as much as possible
REPORT 2022
an external reference.
using an external reference or definitions to - Roadmap
facilitate the assessment of the SPT s level
Interviews withof ambition.
DNV confirmed that the KPIs selected by Kirin Holdings are linked to the KPIs
stakeholders
in the medium-term management plan and that performance over time isFundraisers are encouraged, when possible,
managed internally to align with that plan.
to select KPIs that they have alreadyincluded in their previous annual reports,
sustainability reports or other non-financial
reporting disclosures to allow investors toevaluate historical performance of the KPIs
selected. In situations where the KPIs havenot been previously disclosed, fundraisers
should, to the extent possible, provide
historical externally verified KPIs values
covering at least the previous 3 years.

1c

KPIs ‒ Clear definition A clear definition of the KPIs should be
provided and include the applicable scopeor perimeter as well as the calculation
methodology

Confirmed documents: DNV confirmed that the KPIs chosen by Kirin Holdings provided a clear- Framework
evaluation scope and calculation methodology. Specifically, they are assessed- KIRIN INTEGRATED as follows.
REPORT 2022
KPI-1: CDP climate change score and CDP water security score
KPI-2: GHG emission reduction rates in Scope 1 and Scope 2 based on 2019
Interviews with
KPI-3: GHG emission reduction rate in Scope 3 based on 2019
stakeholders
DNV confirmed that this assessment methodology correlates well with themethodology used by Kirin Holdings to assess its initiatives on climate change
and water resources.

Page 62 of 66

SLBP/SLLP-2 Calibration of SPTs (Sustainability Performance Targets)

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

Ref.
2a

Criteria
Target Setting Meaningful

Requirements
Work Undertaken
DNV Findings
The SPTs should be ambitious, realistic and Confirmed documents: DNV confirmed that the SPTs supported the supply-chain GHG emission
meaningful to the fundraiser s business and - Framework
reduction and "sustainable use of water resources" set out in the long-term
be consistent with the fundraisers overall- KIRIN INTEGRATED target of achieving net zero GHG emissions in the entire value chain by 2050
set out in the Kirin Group s Environmental Vision 2050, Kirin Holdings' GHG
strategic sustainability/ESG strategy
REPORT 2022
- Roadmap
emission reduction targets are aligned with the ambitious targets set out in
the Paris Agreement, and the specific plans are included. Accordingly, DNVInterviews withconfirmed that Kirin Holdings' SPTs were ambitious and proactive. DNV also
stakeholders
confirmed that the achievement of SPTs was consistent with Kirin Holdings'
efforts for achieving net zero.

2b

Target Setting Meaningful

SPTs should represent a material
improvement in the respective KPIs and be
beyond a Business as Usual trajectory;
where possible be compared to abenchmark or an external reference and be
determined on a predefined timeline, set
before (or concurrently with) the issuanceof the bond.

2cTarget Setting ‒benchmarks

The target setting exercise should be based Confirmed documents: DNV confirmed that the SPTs setting process was based on an appropriate
on a combination of benchmarking- Framework
combination of benchmarking approaches:
approaches:- KIRIN INTEGRATED
 Information on Kirin Holdings' performance up to FY2019 and KPIs
REPORT 2022
1. The fundraiser s own performance overbased on the SBT for 1.5°C standard provides guidance for target- Roadmap
time for which a minimum of 3 years,
setting up to FY2030.
where feasible, of measurement track
Interviews with SPTs are evaluated as ambitious based on Kirin Holdings' recent
record on the selected KPIs are
stakeholders
performance levels.
recommended and when possible

Confirmed documents: CDP climate change score & water security score: Maintain rank A (SPT-1)- Framework
set by Kirin Holdings is ambitious, as the obtaining results in FY2022 was- KIRIN INTEGRATED approximately 1.5% & 2.6%. In addition, GHG emissions Scope 1&2: 50%
REPORT 2022
reduction/net zero (SPT-2) and Scope 3: 30% reduction/net zero (SPT-3) in- Roadmap
FY2030/FY2050 based on FY2019 are in line with the concept of the net
zero accreditation of the SBT 1.5℃ standard, and Kirin Holdings' future GHG
Interviews with
reductions will go beyond "Business as Usual".
stakeholders

forward-looking guidance on the KPIs
2. The SPTs relative positioning versus thefundraiser s peers where comparable oravailable, or versus industry or sector
standards
3. Systematic reference to science-based
scenarios, or absolute levels (e.g. carbon
budgets) or official
country/regional/international targets or
to recognised Best-Available-Technologies
or other proxies

Page 63 of 66

DNV concludes that the SPTs are appropriately linked to the GHG
emission reduction targets of the Paris Agreement. The KPIs/SPTs andtheir respective roadmaps will support Kirin Holdings in realizing its longterm target of achieving net zero GHG emissions in the entire value
chain by 2050 set out in the Kirin Group s Environmental Vision 2050.

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

Ref.
2d

Criteria
Target setting ‒disclosures

Requirements
Disclosures on target setting should makeclear reference to:
1.
2.

3.

4.

Work Undertaken
DNV Findings
Confirmed documents: DNV confirmed that the SPTs setting was properly disclosed as follows:- Framework- KIRIN INTEGRATED  The SPT-1 is to maintain rank A in the CDP climate change score and
The timelines of target achievement, the
CDP water security score.
REPORT 2022
trigger events, and the frequency of SPTs - Roadmap
 The timeline for SPT-2 & SPT-3 achievement is set up to
Where relevant, the verified baseline or
FY2030/FY2050. As for SPTs as trigger events, SPT-2 is set by linear
reference point selected for improvement Interviews withinterpolation, etc. between actual results in the base year FY2019 andof KPIs as well as the rationale for thatstakeholders
targets up to FY2030, while SPT-3 is set to be reasonable and ambitious
baseline or reference point to be usedin Schedule-2. They may also be set individually when detailed plans
Where relevant, in what situations
are drawn up in the future.
recalculations or pro-forma adjustments
 Through the Framework and the roadmap, the progress status in GHG
of baselines will take placeemission reduction is described in detail.
Where possible and taking into accountcompetition and confidentiality
considerations, how the fundraisers
intend to reach such SPTs

Based on the information provided by Kirin Holdings, DNV concluded that
the SPTs were realistic and that the plan was viable and possible to meet
the SPTs targets outlined in the Framework.

Page 64 of 66

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

SLBP/SLLP-3 Bond Characteristics
Ref.
3a

3b

Criteria
Bond Characteristics ‒SPTs
Financial/structural
impactRequirements
The SLB will need to include a financial
and/or structural impact involving trigger
events based on whether the KPIs reachthe predefined SPTs.

Bond Characteristics ‒ Any fallback mechanisms in case the SPTs
Fallback mechanism
cannot be calculated or observed in asatisfactory manner should be explained.
Fundraisers may also consider including,where needed, language in the bonddocumentation to take into consideration
potential exceptional events.

Work Undertaken
DNV Findings
Confirmed documents: DNV confirmed that the inclusion of trigger events under the framework- Framework
was in line with the requirements outlined by SLBP.
Interviews withstakeholders

Regarding the Sustainablity-Linked Bond executed under the Framework,
DNV confirmed that the observation timing for the specific SPTs, the trigger
events with performance requirements and their extent of the impact werelinked to the target achievement and the financial incentives.

Confirmed documents: DNV confirmed that Kirin Holdings has reviewed an appropriate fallback- Framework
mechanism, and consequently would not set other SPTs or calculation
methods at this time since the risk of being uncalculated or unobservable
Interviews with
was negligible.
stakeholders
Kirin Holdings explained that Kirin Holdings may change the KPIs and the
SPTs due to both/either external factors and/or Kirin Holdings management
decision result, such as changes of Kirin Holdings' business circumstances,changes of business structures and KPIs where reasonable demonstrationon the discussion with an external reviewer, etc.

Page 65 of 66

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

SLBP/SLLP-4 Reporting
Ref.
4a.

Criteria
Reporting

Requirements
Work Undertaken
DNV Findings
Fundraisers of SLBs should publish, andConfirmed documents: DNV confirmed that necessary information, as required by SLBP, will bekeep readily available and easily accessible: - Framework
published in a timely manner:
1. Up-to-date information on theperformance of the selected KPIs,
including baselines where relevant
2. A verification assurance report relative to
the SPTs outlining the performanceagainst the SPTs and the related impact,
and timing of such impact, on the loan sfinancial and/or structural characteristics
3. Any information enabling investors tomonitor the level of ambition of the SPTs

Interviews withstakeholders

 KPIs performance: After execution of the Sustainability/Transition-Linked
Bond, Kirin Holdings will undergo the verification by the external
institution, etc. at least once a year until the final judgement date, anddisclose the information on its website.
 SPTs achievement status: Will be subject to annual verification from an
independent reviewer and it is used to determine financial characteristics(interest rate of the bond) or other financial incentives.

DNV Findings

This reporting should be publishedregularly, at least annually, and in any casefor any date/period relevant for assessing
the SPTs performance leading to a potential
adjustment of the SLB s financial and/or
structural characteristics.

SLBP/SLLP-5 Verification
Ref.

Criteria

Requirements

Work Undertaken

5aExternal Verification

Fundraisers should have its performanceagainst each SPT for each KPI
independently verified by a qualified
external reviewer with relevant expertise,at least once a year and for each SPT
trigger event.

Confirmed documents: DNV confirmed that Kirin Holdings plans to undergo independent validation of- Framework
KPIs-related data or obtain a score once a year by qualified external evaluation
agency with relevant expertise in SPTs trigger events.
Interviews withstakeholders

Page 66 of 66