SUSTAINABLE BOND FRAMEWORKMarch 2023
Mitsubishi HC Capital Inc.

Contents
1. Introduction ............................................................................................................................. 2
1.1 Basic Sustainability Policy ......................................................................................................... 2
1.1.1 Basic Management Policy ................................................................................................... 3
1.1.2 Materiality of Mitsubishi HC Capital Group ...................................................................... 3
1.1.3 How Materiality Relates to “Our Mission” and “Our Vision” ............................................ 5
1.2 Efforts on Sustainability ............................................................................................................ 6
1.3 Environment .............................................................................................................................. 6
1.3.1 Environment Policy ............................................................................................................ 6
1.3.2 Environmental Management System .................................................................................. 7
1.4 Addressing Climate Change- Information Disclosure Based on TCFD Recommendations- ... 7
2. Sustainability Bond Framework ................................................................................................. 8
2.1 Use of Proceeds ......................................................................................................................... 8
2.1.1 Eligibility Criteria ............................................................................................................... 8
2.1.1.1 Green Projects ................................................................................................................. 8
2.1.1.2 Social Projects .................................................................................................................. 9
2.1.2 Exclusion Criteria ............................................................................................................. 10
2.2 Process for Project Evaluation and Selection .......................................................................... 10
2.3 Management of Proceeds ........................................................................................................ 10
2.4 Reporting ................................................................................................................................. 11
2.4.1 Allocation Reporting ......................................................................................................... 11
2.4.2 Impact Reporting .............................................................................................................. 11
3. External Review ...................................................................................................................... 12

Note: Diagrams, organization names etc. in this document are current as of March 31, 2023

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1. Introduction
Mitsubishi HC Capital Inc. (the "Company") was born in April 2021 from the business integrationof Mitsubishi UFJ Lease & Finance and Hitachi Capital.
We set "Our 10-year Vision" as "Together we innovate, challenge and explore the frontiers of the
future," to realize Our Mission, which is our long-term goal. We address social issues that can besolved only by Mitsubishi HC Capital with our customers and partners, anticipating the changes inthe society and business environment including changing global industry structures, accelerating
digitalization and the increasing importance of sustainability.
To accelerate our initiatives, the Company has developed "Sustainable Bond Framework" ("theFramework") for the issuance of Green/Social/Sustainability Bonds. The Framework is designed to
be aligned with the following Principles and Guidelines via key pillars i.e. Use of Proceeds, Process
for Project Evaluation and Selection, Management of Proceeds and Reporting;Green Bond Principles 2021 (ICMA)Social Bond Principles 2021 (ICMA)

Sustainability Bond Guidelines 2021 (ICMA)

The Company believes that Efforts toward sustainability—among them, protecting the global environment, respecting human rights, and embracing diversity—are an essential responsibility to society that corporations should fulfill. To continue to survive, corporations must pursue long-term
growth while gaining the trust of their stakeholders by engaging in business activities that seek toresolve environmental, social, and economic issues. The Company will raise funds via Green/Social/Sustainability Bond issuances to fund our initiatives tackling various issues and promoting sustainability, which enables us to demonstrate our continuous effort in this area to our stakeholders.
1.1 Basic Sustainability Policy
Since the business integration on April 1, 2021, the Company has been building partnerships withnumerous stakeholders globally and has considered itself to have the huge potential capability tocontribute and solve social issues.
The Company established "Our Mission" to create social value with customers and partner companies and to contribute the prosperous and sustainable future as its ideal image, and defined what
the Mitsubishi HC Capital Group ("the Group") needs to do to achieve "Our Mission" as "Our Vision".
The Basic Sustainability Policy consists of and integrates "Our Mission", "Our Vision" and the materiality.

21.1.1 Basic Management Policy＜Our Mission＞ Our long-term goal
Contribute to a prosperous and sustainable future by creating social value through maximizing thepotential of assets.
＜Our Vision＞ Objectives to achieve our long-term goal
• Solve social issues by developing unique and progressive businesses with consideration for the
global environment.
• Aim for sustainable growth through value co-creation with diverse stakeholders across the globe.
• Enhance corporate value by evolving our business model through utilizing digital technology
and data.
• Foster an “open, creative and engaging” corporate culture that shapes each and every employee’s motivation and pride.
• Aim to be a trusted company by complying with laws and regulations, as well as implementing
ethical corporate management.
＜Action Principles＞ “Values and mindset to be held” and “actions to be taken” by each and every
employee•

Challenge

Challenge ourselves to look forward to the future with a sense of responsibility and commitment.

•

DigitalDrive digital innovation and expertise.

•

Communication

Communicate openly and honestly to build mutual understanding and trust.

•Diversity

Embrace diversity and respect each other.

•

Sustainability

Act in harmony with people, society and the earth to create a sustainable
world.

•

Integrity

Maintain the highest standards of ethics and integrity.

1.1.2 Materiality of Mitsubishi HC Capital Group
Mitsubishi HC Capital has identified the following six materiality issues as priority key challenges
which must be addressed to achieve sustainable development of the Mitsubishi HC CapitalGroup(see subsequent pages). Against a backdrop of megatrends such as recent climate change
driven by global warming, population growth, urbanization, and scarcity of resources, not only our
personal lives but also social environments have been drastically changing worldwide. Under suchcircumstances, companies are expected to take efforts to solve numerous issues, such as to promote a decarbonized society and to create a circular economy.

3＜How the Company Identified the Materiality＞
1.

Identified internal ESG priority key challenges
The Company first listed wide-ranging ESG-related challenges based on related internationalguidelines and principles such as the ISO 26000 standards, SDGs (Sustainable Development
Goals), and others. Subsequently, the Company conducted employee questionnaires and interviews throughout the Group and ascertained potential challenges in consideration of their importance for the Group as both opportunities and risks.

2.

Identified ESG priority key challenges for external stakeholders
Via interviews with stakeholders including major customers, shareholders, and partners, theCompany confirmed and listed key ESG material issues from the perspective of the stakeholders.

3.

Management held discussions and made decisions
By reviewing how the priority key challenges relate to Our Mission, Our Vision and SDGs, theCompany identified the key challenges that the Group must address through discussions with
relevant departments, the Sustainability Committee, the Executive Committee, and the Boardof Directors.

＜Materiality of Mitsubishi HC Capital Group＞
Materiality

Why the Group Treats as Highly Material Challenges

Relation to
SDGs

Promote a

Efforts to realize a decarbonized society have been globally rec-decarbonizedognized as an urgent issue, and the Group can significantly con-societytribute to solving this challenge through its services and solutions, such as renewable energy investment and EV promotion.
It is quite a few impact on but is significant for the Group to distinct its business from not solving social issues.

Realize the

The Group aims to contribute to creating a circular economy bycircularreducing waste, not only within the Group but also within society

economythrough maximizing the potential of assets as a leading leader
in the leasing industry. The Group treats this challenge as material. The Group can also contribute to realizing a sustainable andprosperous society through strengthening the collaboration between partners.

Establish

Large parts of the infrastructure within Japan needs to be re-resilientpaired. The Group also recognizes the business has huge potential opportunities to support the development of infrastructure4social infra-

in overseas countries with active collaboration between various

structure

partners and create a smart city. The Group will contribute to thebusiness being diversified, enhanced and efficient through establishing system and providing services for supporting the collaboration of various companies.

Realize

It is vital for its stakeholders that the Group recognizes the im-healthyportance of health, safety, mental and physical wellbeing for re-lifestyles thatalizing the prosperous future. Valuable human resources arepromotekey. Personal development and attraction and retention of talent

positive well-

are significant for the Group members.

being
CreateBoth financing for the purpose of the digital transformation ofbusinesses

customers and providing solution by internal and external digitalutilizing thetechnologies urge to develop new business models. Including

latestestablishing supply chains with utilizing alternative energies,

technologies

the Group identifies material one as the opportunity.

Collaborate

Social issues differ by countries and regions. It is significant thatwith partners

the Group aims to solve these issues by collaborating with local

locally andpartners to ensure the Group is meeting individual needs

globally

through local community-based communication. The Group canrealize mutual benefits in developing society by utilizing the integrated capability in the Group.

1.1.3 How Materiality Relates to “Our Mission” and “Our Vision”

51.2 Efforts on Sustainability
The Company believes that Efforts toward sustainability-among them, protecting the global environment, respecting human rights, and embracing diversity-are an essential responsibility to societythat corporations should fulfill. To continue to survive, corporations must pursue long-term growth
while gaining the trust of their stakeholders by engaging in business activities that seek to resolve
environmental, social, and economic issues.
With this fundamental understanding, and to lead and promote sustainability-based management,
the Company established a Sustainability Committee in April 2021 to better contribute to the realization of a sustainable and prosperous future. The Sustainability Committee is positioned as an advisory body to the Executive Committee, and aims to lead and promote sustainability efforts in a waythat is unified with the management strategies. The Sustainability Committee is chaired by the Headof the Engagement Division, and its members comprise Executive Officers in charge of businessdepartments and the corporate center, including the President & CEO. The committee implements awide range of activities-including checking the progress of activities and the level of achievement oftargets in non-financial sectors, deliberating over new activities, and discussing non-financial indicators-and reports the results to the Executive Committee and the Board of Directors.

1.3 Environment
1.3.1 Environmental Policy＜Basic Philosophy＞
Mitsubishi HC Capital shall conduct business activities in harmony with the environment and society
in order to contribute to the creation of a society that can conserve the global environment andachieve sustainable development.

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＜Environmental Action Guidelines＞
1.

We will provide innovative solutions to society and promote collaboration with stakeholders tosolve environmental issues. Additionally, we will comply with relevant laws and regulations to
conduct responsible corporate activities that consider people and the global environment.

2.

We will pursue services and solutions that contribute to the reduction of environmental impact
and the development of society, properly recognize the effects and impacts of these services
and solutions on the environment and society, and endeavor to utilize environmentally friendly
goods and services.

3.

With the aim of becoming a society that is decarbonized and highly recycling-oriented as wellas one that is in harmony with nature and contributes to the conservation of biodiversity, we will
endeavor to reduce CO₂ emissions through the value chain, improve the efficiency of the useof water, resources, and energy, and minimize the impact on natural capital.

4.

In order to build a relationship of trust with the local communities in Japan and overseas where
we conduct business, we will work together with society to solve problems and create a societythat can balance conservation of the global environment and sustainable development. If anissue should arise in our business activities, we will make it public in a timely and appropriatemanner and promptly take measures to prevent recurrence.

5.

As a good corporate citizen, we will raise awareness of environmental and social issues andpromote environmental conservation activities as well as community/social contribution activities.
1.3.2 Environmental Management System
We position environmental issues, most notably climate change, as one of our most importantmanagement issues and formulate and implement environmental plans accordingly.
Furthermore, based on the ISO 14001:2015 international standard for environmental management
systems, we operate efficient and effective environmental management systems across four groupsof divisions, namely, the sales, office-based, lease-up asset handling, and internal audit divisions.
These systems are overseen by the Head of the IT & Operations Division, who is also a member of
the Sustainability Committee.
1.4 Addressing Climate Change- Information Disclosure Based on TCFD RecommendationsClimate change is a major challenge that needs to be resolved in order for a sustainable society
become a reality. The Group believes that for any company to survive moving forward, it must work
to solve this problem through its business activities. Furthermore, the Group is aware of the importance of earning the trust of stakeholders through proper disclosure of information, and supports
the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).

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2. Sustainability Bond Framework
2.1 Use of Proceeds
The net proceeds or equivalent from the issuance of Green/Social/Sustainability Bond will be allocated to the following projects: finance existing and/or new loans / investments / intercompany
loans/capital expenditures, repairs and renovations, and other related funds (including investments
and loans to special purpose companies) that meet at least one of the following Eligibility Criteria(Eligible Projects).
In the case of existing loans or existing projects, only expenditures made within 36 months on or
prior to the date of issuance of the applicable Green/Social/Sustainability Bond.
The funds will be allocated to other Eligible Projects should it be recovered due to repayments etc.
2.1.1 Eligibility Criteria
2.1.1.1 Green Projects
Green Bond Principles
Eligible Category andEligible Projects

Environmental Objectives
Renewable EnergyNew loans, investments, or refinancing for the development, construction and/or operation & maintenance of solar power genera-(Environmental Objectives：Climate Changetion facilities that meet all of the following criteria:• The expenditure is related to the development, construction

Mitigation)

and/or operation & maintenance of solar power generation facility
located in Japan• A client (power producer), on the contract, has confirmed the compliance of both environmental impact assessment and relevant
regulations and laws such as Japan's Forestry Act in construction
and installation of the facility, where applicable• A client (power producer) has provided explanation and consultation to the local residents for their agreement to the business andoperation prior to construction and installation of the facility※Including intercompany loans to the subsidiaries involved in the renewable energy business set forth in the above

Green BuildingsNew loans, investments, or refinancing for the development or acquisition of properties (office buildings and/or warehouses) that(Environmental Objec-

have received or will receive one of the following green building

tives：Climate Change

certifications

Mitigation)• CASBEE: Rank A or above (Including CASBEE by local governments)8• DBJ Green Building Certification: 5 Stars or 4 Stars• BELS Certification: 5 Stars or 4 Stars• LEED Certification: Platinum or Gold
• ZEB Certification: ZEB or Nearly ZEB※In the case of investments and loans to special purpose companies,
only those specialized in green building related business or those withat least 90% of assets in green building-related ones are eligible.
※Facilities equipped with freezer and refrigerator must be designed inan eco-friendly manner , such as using natural refrigerant.
<Group's Materiality Alignment>
Promote a decarbonized society< SDGs Alignment>
7. Affordable and clean energy
13. Climate action
2.1.1.2 Social Projects
Social Bond Principles
Eligible Category andEligible Projects

Target Populations
Access to EssentialServices

Nursing reward and Medical fee receivable factoring. (financing tonursing care providers and medical institutions for them to meetshort-term liquidity)（Target Populations:※Only those to nursing care providers and medical institutions

Nursing Care Providers

generating at least 90% of their revenue from medical practices

and Medical Service

covered by Japanese public medical insurance are eligible.

Providers）



Medical equipment leasing and installment sales※ Only those for medical equipment to hospitals and clinics
through Mitsubishi HC Capital or its subsidiaries are eligible※Only those to medical institutions who generate at least 90% of
their revenue from medical practice covered by Japanese public
medical insurance are eligible<Group's Materiality Alignment>
Realize healthy lifestyles that promote positive wellbeing

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<SDGs Alignment>
3. Good health and well-being
5. Gender equality
8. Decent work and economic growth
2.1.2 Exclusion Criteria
The net proceeds (or the equivalent) from the issuance of Green/Social/Sustainability Bond will
not be knowingly allocated to the projects related to:•

Unfair transactions that do not comply with relevant laws and regulations of the jurisdiction•

Inappropriate relationship such as bribery, corruption, blackmail, embezzlement, etc.

•

Transactions that can cause social problems such as human rights and the environment.

•

Property development for the tenants who are primarily engaged in the business related to fossil
fuels, weapons, and tobacco.

2.2 Process for Project Evaluation and Selection
The execution of projects eligible for the proceeds allocation is subject to financial assessment by
the Environment & Energy Business Department, Real Estate Business Department, or Healthcare
Business Department and, depending on the amount of the project, the approval by an approver
between General Manager and the Board of Directors. Treasury Department will be responsible fordetermining whether approved projects are eligible for the proceeds allocation. As a part of its compliance activities, the Group ensures that all executives and employees fully comply with applicablelaws and regulations, including those related to the environment, and carries out regular compliancechecks.
2.3 Management of Proceeds
The net proceeds or equivalent from the Green/Social/Sustainability Bonds will be managed byTreasury Department using internal management files, etc. As long as the Green/Social/Sustainability Bonds is outstanding, the Group will check once a year to ensure that the net proceeds orequivalent from the issuance of Green/Social/Sustainability Bonds do not exceed the aggregate
amount of the Eligible Projects.
In the event that the entire proceeds or the equivalent of the entire proceeds from the issuance ofGreen/Social/Sustainability Bonds are not immediately allocated to the Eligible Projects, or if unallocated proceeds arise due to repayment or any other reasons, the unallocated amount will be identified and held in cash or cash equivalents until the proceeds are allocated to the Eligible Projects.

10.
2.4 ReportingOn an annual basis, the Company will prepare and make publicly available a report on the Company's website disclosing allocation status and environmental and social impacts of the Eligible Projects. The first report is planned to be made available within one year from the issuance of Green/Social/Sustainability Bonds.
2.4.1 Allocation Reporting
The Company will disclose the amount of the outstanding Green/Social/Sustainability Bonds, netproceeds allocated to Eligible Projects by Eligible Category, and the balance of the amount equal to
the net proceeds that is unallocated as of such date, if any, as long as Green/Social/Sustainability
Bonds are outstanding.
The group will report on a timely basis in the case of material developments in the allocation status
after full allocation.
2.4.2 Impact Reporting
The group will provide, to the extent practicable, the following indicators of the environmental andsocial impacts of the projects that meet the eligible criteria set forth in 2.1.1 as long as Green/Social/Sustainability Bonds are outstanding.
＜Green Projects＞
Green Bond Principles

Reporting Metrics

Eligible Category
Renewable Energy•

Annual volume of CO₂ emissions avoided (estimation based on
output standards)•

Annual power generation produced (estimation based on output
standards)

Green Buildings•

Acquisition status of green building certification•

Balance by green building certification / asset type•In the case freezer or refrigerator installed assets, outline of such
equipment (refrigerant, etc.)

11＜Social Projects＞
Social Bond Principles

Reporting Metrics

Eligible Category
Access to Essential

Nursing reward and Medical fee receivable factoring

Services•

Number of Eligible Projects executed (annual basis)•

Cumulative amount of Eligible Projects (annual basis)

Medical equipment leasing and installment sales•

Number of Eligible Projects executed (annual basis)•

Cumulative amount of Eligible Projects (annual basis)

3. External Review
The Company has obtained a second-party opinion from Sustainalytics, an independent external
reviewer, that this framework is aligned with the Green Bond Principles 2021(ICMA), Social Bond
Principles 2021(ICMA), and Sustainability Bond Guidelines 2021 (ICMA).

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