NEWSRELEASE
23-D-1788

March 15, 2024
Japan Credit Rating Agency, Ltd. (hereinafter referred to as "JCR") will publish the evaluation results of green bonds as follows:

Joint Green Bond issuers(Local Government)
Joint Local Government Green Bond 2nd
Assignment

Overall
Evaluation

Green
Evaluation(Use of Proceeds)

Management,
Operation andTransparency Evaluation

Green 1

g1

m1

IssuerJoint Green Bond issuers(Local Government)* Joint Green Bond issuers refers to a group that issues Joint Local
Government Green Bond.

Evaluation Target

Joint Local Government Green Bond 2nd

Label

Bond

Amount of Issue

56.4 billion yen

Interest Rate

0. 893 per cent

Date of Issuance

March 29, 2024

Date of
Repayment

March 24, 2034

Payment Method

Bullet payment at maturity

Use of Proceeds

Projects that contribute to climate change mitigation
and adaptation

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Evaluation Overview▶▶▶ 1. Overview of Joint Green Bond issuers ﴾Local Government﴿

Japanese local governments are broadly divided into ordinary local governments and special
local governments in Article 1-3, paragraph ﴾1﴿ of the Local Autonomy Law ﴾Act No. 67 of 1947.﴿
Ordinary local governments include prefectures and municipalities, and special local
governments have special wards, unions of local governments and property wards.
Municipalities are categorized into three: ﴾1﴿ designated cities that are required to be designatedby cabinet orders among cities with a population of 500,000 or more, ﴾2﴿ core cities whose
requirements are to be designated by cabinet orders from cities with a population of 200,000 or
more, ﴾3﴿ special cities at the time of the enforcement ﴾they were actually special cities when thespecial city system was abolished,﴿ ﴾4﴿ other cities that are required to have a population of
50,000 or more or others﴿ and ﴾5﴿ towns and villages 1 . Local bonds can be issued by local
governments except for property wards according to budgets stipulated, respectively.
Municipal bonds refer to debts borne by local governments through externally financing
proceeds financially required, which are to be repaid for more than one fiscal year2. Municipal
bonds, in principle, can be issued only in the cases listed in each item of Article 5 of the Local
Finance Law ﴾Act No. 109 of 1948,﴿ including those when financing financial resources for public
work expenditures ﴾transportation, gas or water supply﴿ or construction expenses of public orofficial facilities. The main characteristics of municipal bonds are: ﴾1﴿ debts borne by local
governments, ﴾2﴿ debts borne through financing, ﴾3﴿ debts in the form of loans on deeds or
securities issuance, ﴾4﴿ debts whose substantial collateral are taxation rights of local governments,
﴾5﴿ debts are to be repaid beyond one fiscal year and ﴾6﴿ municipal bonds can be issued forbusinesses stipulated by law3.
Among the municipal bonds, joint local government bonds are municipal bonds jointly issued
by local governments that issue publicly offered local bonds nationwide and have been issued
since April 2003. The joint local government bonds mainly have the following characteristics: ﴾1﴿they are issued in accordance with Article 5-74of the Local Finance Law through assuming joint
and several debts5 by local governments, ﴾2﴿ measures are taken to supplement liquidity and ﴾3﴿having large issuance lots and high liquidity. As for ﴾1﴿, respective participating organizations are
responsible for fully repaying the issuance amount of the joint local government bonds as joint
and several obligors and thus the system is extremely robust on the certainty of the repayment.
Regarding ﴾2﴿, a fund is established, aiming to supplement liquidity by depositing part of sinking
funds of respective organizations in the trustee bank in order to repay the principal and interests
without delay even if the participating organizations face unforeseen situations caused bydisasters. Concerning ﴾3﴿, products are superior with high liquidity since the issuance amount islarge, approximately 100 billion yen every month ﴾FY2020.﴿

——————————————
Source: Ministry of Internal Affairs and Communications website athttps://www.soumu.go.jp/mainsosiki/jichigyousei/bunken/chihou-koukyoudantaikubun.html
2
Source: Ministry of Finance website https://www.mof.go.jp/policy/filp/summary/filplocal/tihousaiseidonogaiyou.htm
3
Source: Akane Enatsu ﴾2007﴿ "Local Bond Investment Handbook" published by Zaikei Shoho Sha
4
Article 5-7 of the Local Finance Law ﴾Joint Issuance of Municipal Securities﴿
In case of issuing municipal bonds by a method to issue securities, two or more local governments can jointly issue securities
through the vote of the Assembly1

5

Joint and several debts: Respective Joint and several debtors shall be accountable for repaying all debts ﴾Article 436 of the Civil

Code﴿

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▶▶▶ 2. Environmental initiatives of Joint Green Bond issuers ﴾Local Government﴿

Local governments can be a key to implement regional priority strategies and are main
promoters on local environmental conservation, which is a core for developing sustainable
society and are expected to play a role as a coordinator of local initiatives in the government's"Fifth Basic Environmental Plan." Therefore, local governments are expected to comprehensively
deploy environmental conservation measures in their regions, such as presenting targets ordirections of regional efforts, setting respective systems or developing bases for social
infrastructure or promoting actions of respective bodies according to regional characteristics bycooperating and coordinating with residents, businesses, private organizations, other local
governments or government-affiliated institutions while striving to closely cooperate among
related divisions.
The national global warming measure's plan lists two main roles to be played by local
governments as follows: "promoting measures in accordance with natural and social conditions
in regions" and "taking measures on their own affairs and projects." Local governments will
promote measures comprehensively and systematically to reduce greenhouse gas emissions
according to the natural and social conditions in regions for the former. Prefectures andmunicipalities will map out/implement plans on measures to reduce greenhouse gas emissions
and to conserve/strengthen absorption mechanisms for their own affairs and projects ﴾Local
Governments' Implementation Plan for Affairs/Businesses﴿ since the local governments should
aim to be a model for business operators and residents in the areas by working though efforts
initiatively for the latter.
Furthermore, local governments are to strive to consider the plan and to formulate the regional
climate change adaptation plan in order to promote measures on climate change adaptationaccording to regional natural economic and social conditions in the national Climate Change
Adaptation Plan. Simultaneously, the local governments actively incorporate climate change
adaptation into related measures, including disaster prevention/national resilience, promoting
agriculture, forestry and fisheries and preserving biodiversity in cooperation with related
departments and strive to promote measures on climate change adaptation in respective
categories.
As described above, local governments promote measures for climate change mitigation andadaptation based on Basic Environmental Plan, Global Warming Measures Plan and Climate
Change Adaptation Plan formulated by the national government or respective local
governments.
Joint Local Government Green Bonds ﴾hereinafter referred to as "Joint Local Government Green
Bond"﴿ has been issued in and after FY 2023. Mitigation and adaptation measures for climatechange can be accelerated nationwide more than ever since utilizing the mechanism of the Joint
Local Government Bond enables the local governments that could not handle allocation projects
to finance proceeds with green bonds individually.

▶▶▶ 3. Green Bonds

The evaluation target is Joint Local Government Green Bond 2nd ﴾hereinafter referred to as "thisbond"﴿ issued by local governments. JCR will evaluate whether this bond aligns with Green Bond

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Principles6 and Green Bond Guidelines7, which are principles or guidelines and are not legally
underlying regulations; however, JCR will evaluate this bond by referring to the Principles andGuidelines above since they are domestically and internationally unified standards at the present
moment.
Local governments established eligible criteria for Joint Local Government Green Bond
Framework ﴾hereinafter referred to as "Joint Local Government Green Bond Framework"﴿ inaccordance with the Basic Environmental Plan, Global Warming Measures Plan or Climate
Change Adaptation Plan formulated by the national government or respective local
governments. The projects whose proceeds are used for this bond consist of 223 projects
selected by local governments, which meet the Framework. JCR has confirmed that all projects:
﴾1﴿ are important measures to achieve the goals on the environmental policy intended by thenational or local governments' Basic Environmental Plan, Global Warming Measures Plan or
Climate Change Adaptation Plan, ﴾2﴿ align with the "requirements to determine the alignment of
individual projects" set in the Joint Local Government Green Bond Framework and ﴾3﴿ have taken
or will take "the negative impacts and measures assumed" properly established in the
aforementioned Framework based on various materials submitted by respective Joint Green
Bond issuers. With which, JCR has evaluated that the projects eligible for the use of proceeds are
expected to have environmental benefits.
The project selection process will be carried out with departments having specialized knowledge
in local governments. A management system has been established to ensure that the proceeds
are certainly allocated to green projects. Items to be disclosed as reporting will present
environmental benefits. JCR has evaluated that the management system in the local
governments as appropriate and that transparency is ensured based on the aforementioned.
Accordingly, JCR has assigned "g1" to the "Green Evaluation ﴾Use of Proceeds﴿,"m1" to the"Management, Operation and Transparency Evaluation" and "Green 1" to the "JCR Green Bond
Evaluation" for this bond, based on JCR Green Finance Evaluation Methodology. JCR has
evaluated that this bond meets the criteria for items required in the Green Bond Principles andGreen Bond Guidelines.

——————————————
6

International Capital Market Association ﴾ICMA﴿ "Green Bond Principles 2021"
https://www.icmagroup.org/sustainable-finance/the-principles-guidelines-and-handbooks/green-bond-principles-gbp/

7

Ministry of the Environment "2022 Green Bond Guidelines" https://www.env.go.jp/content/000062495.pdf

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Table of Contents■Evaluation Phase 1: Green Evaluation
I. Use of Proceeds
JCR's Key Consideration in This Factor
Current Status of Evaluation Targets and JCR Evaluation
1. The Outline of the Use of Proceeds
2. The Environmental Benefits of the Project
3. Negative Impacts on the Environment and Society
4. Consistency with SDGs

■Evaluation Phase 2: Management/Operation/Transparency Evaluation
I. Criteria and Processes for Selecting the Use of Proceeds
JCR's Key Consideration in This Factor
Current Status of Evaluation Targets and JCR Evaluation
1. Goals
2. Selection Criteria
3. Processes

II. Management of Proceeds
JCR's Key Consideration in This Factor
Current Status of Evaluation Targets and JCR Evaluation

III. Reporting
JCR's Key Consideration in This Factor
Current Status of Evaluation Targets and JCR Evaluation

IV. Organizational environmental initiatives
JCR's Key Consideration in This Factor
Current Status of Evaluation Targets and JCR Evaluation■Evaluation Phase 3: Evaluation Results (Conclusion)

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Evaluation Phase 1: Green Evaluation

g1

I. Use of Proceeds
JCR's Key Consideration in This Factor
JCR will initially confirm whether the proceeds are used for green projects that bring about clear
environmental benefits in this section. JCR will then confirm whether the impacts are fully
examined by internal specialist departments in local governments or external third parties, andwhether measures are taken for the avoidance/mitigation required in cases where the use ofproceeds is expected to negatively impact on the environment/society. Lastly, JCR will confirm
the consistency with the Sustainable Development Goals ﴾hereinafter referred to as "SDGs"﴿ ofthe use of proceeds.
▶▶▶

Current Status of Evaluation Targets and JCR Evaluation

JCR has examined various materials provided by respective Joint Green Bond issuers for all projects, andaccordingly, JCR has confirmed the followings about the projects using proceeds from this bond: (1) they
are important measures to achieve the goals on the environmental policy sought in the national or local
governments' Basic Environmental Plan, Global Warming Measures Plan or Climate Change Adaptation
Plan, (2) they align with the "requirements to determine the alignment of individual projects" set in the
Joint Local Government Green Bond Framework and (3) "the negative impacts and measures assumed"
established in the aforementioned Framework are properly considered or will be considered, andconsequently the projects are expected to have environmental benefits.

1. The Outline of the Use of Proceeds
Local governments will target the projects for the use of proceeds shown in Figure 1.

Category

Subcategory

Green related Business﴾1﴿ Convert public

1

Convert public facilities into ZEB

facilities into ZEB

2Convert public housing into ZEH

1Convert lighting for public facilities or traffic lights into LED

﴾2﴿ Introduction of
2. Projects forenergy-saving

equipment with highDevelopment of air conditioning equipment for public
2

energy-saving
performance to public
facilities

energy efficiency﴿
34

﴾3﴿ Utilization ofunused energy

facilities ﴾introducing air conditioning equipment with high1

Improvement of elevators in public facilities ﴾introducing
elevators with high energy efficiency﴿
Energy saving for other public facilities
Development of facilities that utilize unused heat energy
﴾geothermal/sewage heat﴿
Development of sewerage facilities ﴾related to sewage

3. Projects for pollution
prevention and control

﴾1﴿ Improvement of1

facilities/pipes or cross-jurisdictional renovation﴿

sewage treatment
facilities

treatment﴿ ﴾improvement of sewage treatment

2

Improvement of combined sewage systems

3

Development of night soil treatment facilities

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Category

Subcategory

Green related Business
Improvement of core equipment in general waste
1treatment facilities, such as energy recovery type waste
treatment/high-efficient refuse-burning power generation
facilities ﴾related to energy recovery﴿
Improvement of energy recovery type waste treatment

﴾2﴿ Development of2

facilities/high-efficient refuse-burning power generation

disposal related

facilities ﴾scrap-and-build, reconstruction﴿facilities

Development of general waste treatment
3

equipment/facilities ﴾leading to the reduction of hazardous
substances emissions ﴾Scrap-and-build or reconstruction incase of improving facilities﴿

41
﴾3﴿ Monitoring/removalof contaminants

﴾1﴿ Conservation/
management of marine
resources

4. Projects for sustainable2

﴾2﴿ Conservation/

Development of monitoring facilities of water/air pollutants
and hazardous chemical substances
Reduction of nitrate nitrogen ﴾improvement of animal
excrement treatment facilities ﴾compost center﴿
Removal of contaminated soil

4

Measures for marine pollution

1

Creation of tidal flats, shallow bottom and seaweed beds

2

Development of fish beds

3

Creation of breeding grounds

4

Improvement of river environment ﴾fish ladder installation
facilities﴿

5

Development of seed production facilities

6

Improvement of fisheries technology development facilities

1

Development of forest roads

2

management of forest
resources﴾waste﴿ for proper reuse of used products

3

management of natural
resources/ land use

Improvement of facilities/equipment of recycling resources

Improvement of forests, such as thinning or afforestation
﴾excluding opening of forest roads﴿
Promote to introduce wooden structure and introduce

3wooden interior decoration with wood produced by thegroup concerned in public facilities

﴾3﴿ Improvement of
personnel training
bases on natural1

Improvement of bases to develop human resources who
are responsible for sustainable forests/forestry

resources management

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Category

Subcategory
﴾4﴿ Greening promotion
﴾5﴿ National parkdevelopment

﴾1﴿ Development of
wildlife habitat

5. Projects for biodiversity
conservation

Green related Business
1

Development of parks ﴾creation of green space﴿2

Greening public facilities

1

Improvement of national park facilities

1

Conservation of wetlands or coral reefs

2

Development of wildlife habitat under conservation

3

Improvement of rare species protection facilities/laboratory

1

Prevention of damage by wildlife or alien species

﴾2﴿Prevention ofdamage by wildlife oralien species
﴾3﴿ Landscapeconservation

1
2
1

﴾1﴿ Development ofvehicles in public

2transportation
3

6. Projects for cleantransportation

﴾2﴿ Spread andexpansion of electricvehicles﴾3﴿ Promotion ofutilizing the cleanmodes of transport
﴾4﴿ Formation of carbon
neutral port ﴾CNP﴿

1

2

to climate change

﴾1﴿ Measures fordamage from storms
and floods

natural river reconstruction methodsatoyama ﴾community-based forest﴿ conservation
Development of vehicles in the railway business﴾public/quasi-public corporation﴿
Improvement of facilities ﴾station buildings﴿ in the railway
business ﴾public/quasi-public corporation﴿
Development of vehicles in the bus business ﴾public/quasipublic corporation﴿
Switch official vehicles from conventional cars to electricvehiclesImprovement of battery charging facilities for electricvehicles3

Development of hydrogen stations

1

Improvement of bicycle running space2

Development of facilities for park and ride1

Formation of carbon-neutral port ﴾CNP﴿

1

8. Projects for adaptation

Development of landscape-friendly facilities with theDevelopment of river bank protection ﴾improvement ofbanks or dams﴿

2

Removal of sediment from rivers

3

Widening rivers

4

Improvement of floodway

5

Development of roads ﴾drainage/permeability pavement,

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Category

Subcategory

Green related Businessroads for emergency transportation﴿
6
7

8

9

10

11

12

Improvement of flood control dams
Development of agricultural irrigation facilities ﴾drainage
pump stations﴿
Development of railway bridge replacement at thebottleneck in watercourses
Extending the life of river management facilities﴾improvement of switching gears﴿
Improvement of flood control facilities
﴾retention/equalizing reservoirs or basins﴿
Removal of all power poles on roads ﴾for reducing damage
in case of damages from storms and floods﴿
Development of additional devices of emergency power
supply for traffic lights
Water level gauge for crisis management, river monitoring

13

camera or river information infrastructure ﴾information
gathering/processing devices of precipitation﴿

14

Improvement of wide-area disaster prevention bases thatwill be evacuation sites in the event of disasters
Development of sewerage facilities ﴾related to rainwater﴿

15

﴾improvement of rainwater drainage/infiltration facilities
and additions of pumps﴿
Development of facility to protect the coastline ﴾bank﴾2﴿ Measures for high1protection, embankment, detached breakwaters, groins,floodgates, improvement of drainage pumping stations orrising breakwater﴿tide/wave
2

Development of harbor and fishing port facilities ﴾quay
walls﴿
Development of erosion control ﴾hereinafter referred to as

1"SABO") facilities ﴾SABO dams or mountain stream
maintenance work﴿﴾3﴿ Measures forlandslide2
3

Improvement of afforestation facilities ﴾check dams orchannel works﴿
Development of protection forests
Implementation of projects to prevent landslides at steep4slopes ﴾development of retaining wall/ slope work﴿ and to
take measures for landslide
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Category

Subcategory

Green related Business
5

6
﴾4﴿ Research anddevelopment in
preparation for climate

12change by the
Agriculture, forestry

3

and fisheries industry

Implementation of measures for road slopes and projects
for stone fall prevention
SABO information infrastructure ﴾information
gathering/processing equipment of precipitation﴿
Improvement of developmental facilities for varieties ofagricultural products or agricultural production technology
Development of fisheries research facilities
Improvement of seeding production facilities for aquaticplants and animals
Addressing summer heat along with heat island

﴾5﴿ Measures for1roads﴿

temperature increase2
10. Projects for green
buildings

﴾1﴿ Green buildings

phenomenon ﴾improving heat shielding/water retention of1

Creating cool spots in cities
New construction/renovation of public facilities ﴾obtaining
environmental certification﴿

*1 Categories/Subcategories comply with the 2022 Green Bond Guidelines formulated by the Ministry of theEnvironment.
*2 Lists are omitted for the categories without appropriation projects on this joint local government green bond.
*3 Appropriation projects on this joint local government green bond are highlighted in green in the table.

Figure 1: List of the use of proceeds18

2. The Environmental Benefits of Projects
Use of Proceeds 1: Project for Energy Saving (ZEB conversion of public facilities)
Local governments will use the proceeds from this bond for ZEB conversion of public facilities.
ZEB ﴾Net Zero Energy Building﴿ is defined as ﴾1﴿ ZEB ﴾energy savings of100 per cent or more,﴿ ﴾2﴿
Nearly ZEB ﴾energy savings of 75 per cent or more and less than 100 per cent﴿ and ﴾3﴿ ZEB Ready﴾no introduction of renewable energy﴿ for buildings that have further reduced energy
consumption by introducing renewable energy depending upon the reduction amount after
making efforts to save 50 per cent or more energy. Additionally, ﴾4﴿ ZEB Oriented is defined asa building of 10,000 square meters or more to achieve energy savings of at least 30 to 40 per
cent and has adopted technologies that are expected to save energy but are not presently
evaluated in the energy conservation calculation program under the Act on Improvement ofEnergy Consumption Performance of Buildings ﴾Act No. 53 of 2015.﴿ The Joint Local Government
Green Bond Framework has stipulated that green projects meet one of the aforementioned——————————————
8

Source: Materials submitted by the Ministry of Internal Affairs and Communications that were processed by JCR

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criteria from ﴾1﴿ to ﴾4﴿ as the eligibility of green projects, and JCR has confirmed that the use of
the proceeds falls under the criteria above.
The use of the proceeds is expected to improve the environmental benefits since high energy
efficiency is likely to be achieved in accordance with the use of the building. This use of proceeds
falls under Energy Efficiency in the Green Bond Principles and Project for Energy Conservation
among the uses of proceeds exemplified in the Green Bond Guidelines.

Use of Proceeds 2: Project for Energy Saving (introducing equipment with high energy saving
performance to public facilities)
Local governments will use the proceeds from this bond to convert lighting in public facilities ortraffic lights into LED and developing air conditioning equipment in public facilities ﴾introducing
air conditioning equipment with high energy efficiency.﴿
The project selected under the Joint Local Government Green Bond Framework is expected to
improve energy efficiency by 30 per cent or more by installing alternatives in the existing
equipment. JCR can determine that the project has environmental benefits since the level isfavorably compared with the globally required level as energy efficiency reduction rates.
Environmental benefits are prospective since the use of proceeds is likely to help achieve theenergy efficiency of 30 per cent or more. The use of this proceeds falls under Energy Efficiency
in the Green Bond Principles and Project for Energy Saving among the use of proceeds
exemplified in the Green Bond Guidelines.

Use of Proceeds 3: Project for Energy Saving (utilizing unused energy)
Local government will use the proceeds from this bond for developing facilities with unutilized
thermal energy ﴾hot spring water.﴿
Unutilized thermal energy is a generic term to refer to energy that has not been used so far
although it has a potential to be effectively usable, such as geothermal heat, sewage heat9, riverwater/sea water heat10 or snow and ice heat11. The unused energy is characterized into three12 asfollows: ﴾1﴿ widely and shallowly distributed, ﴾2﴿ temporal variation is large and ﴾3﴿ a long distance
between the place energy is generated and the place energy is used. Taking these characteristics into
consideration, it is required to develop facilities to utilize unused thermal energy.
In cases where thermal sources or thermal demand are appropriately consolidated due to the reduced
size of cities toward the achievement of compacted urban space with neighboring nature in the Basic
Environment Plan, the usability of unused thermal energy, such as geothermal heat or sewage heatincreases, therefore, the government is making efforts to use the heat through the support tointroduce heat supply facilities.
——————————————

Sewage treatment water is relatively warmer even in winter; therefore, it is heat sources frequently used.
River water or sea water is efficiently usable as coolant water or heat source water since the temperature of river water or sea
water is lower than the external temperature in summer and higher than the external temperature in winter11
Coldness of snow and ice is usable as heat sources to store vegetables or use energy for air conditioning in summer bystoring snow in winder.
12
Source: The website of National Institute for Environmental Studies athttps://tenbou.nies.go.jp/science/description/detail.php?id=5
910

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It is expected to have environmental benefits since greenhouse gas ﴾hereinafter referred to as "GHG"﴿
is directly or indirectly reduced with the use of proceeds. This use of proceeds is categorized into
Energy Efficiency in the Green Bond Principles and Project for Energy Efficiency among the use ofproceeds exemplified in the Green Bond Guidelines.

Use of Proceeds 4: Project for Pollution Prevention and Control (developing waste treatment
facilities)
Local governments will use the proceeds from this bond for developing facilities/equipment torenew core equipment and reasonably reuse used products in general waste treatment facilities,
such as energy recovery type waste treatment facilities or high-efficient refuse-burning power
generation facilities or for improving facilities/equipment on recycling resources.
JCR deems that the development that has environmental benefits or is contributable to reducing
environmental loads is qualified as green characteristics: for instance, there are mechanisms torecover thermal energy generated in the process of waste treatment and reuse it within or
outside facilities or to effectively reduce harmful substances generated during normal operationsin the development of waste treatment facilities.
Environmental benefits are prospective since the contribution is made to generate energy andto reduce harmful substances along with waste disposal through using this proceeds. This useof proceeds falls under Pollution Prevention and Control in the Green Bond Principles andProjects for Pollution Prevention and Control among the uses of proceeds exemplified in theGreen Bond Guidelines.

Use of Proceeds 5: Project for Sustainable Management of Natural Resources/Land Use(contributing to the conservation/management of fishery resources)
Local governments will use the proceeds from this bond for developing fish reef.
As seen in the recent poor catches of squid, saury and salmon, fish that had been caught in thepast has not been caught any more, and fish that had not been caught in the past has beencaught for several years, which is different from the short-term poor catches experienced before.
These changes are likely to be fluctuation in resources caused by global warming or changes in
the marine environment and may continue for a long period in the future. In response to theseissues, the government established the "Basic Plan for Fisheries" so as to comprehensively andsystematically promote measures on fisheries in cooperation with relevant prefectural offices,
local governments, producers or consumers.
In the Basic Plan for Fisheries, sustainable fishing is important while maintaining the marine
ecosystem, and the conservation and development of seaweed beds or tidal flats have beenpromoted, which play a major role to nurture ecosystems and increase fishery resources.
Similarly, fishery resources have increased due to breeding grounds such as fish beds in which
sea algae necessary for spawning have grown thick, young fish has hidden from enemies or the
food required for their growth has increased.
It is expected to have environmental benefits since the efforts toward sustainable fishery will bepromoted with the use of proceeds. This use of proceeds is categorized into Sustainable

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Management of Living Natural Resources and Land Use in the Green Bond Principles and Projectfor Sustainable Management of Living Natural Resources and Land Use among the use ofproceeds illustrated in the Green Bond Guidelines.

Use of Proceeds 6: Project for Sustainable Management of Natural Resources/Land Use(contributing to the conservation/management of forest resources)
Local governments will use the proceeds from this bond for improving forest roads, developing
forests, such as thinning or afforestation and promoting to introduce wooden structure andwooden interior decoration in public facilities with wood made by the issuers.
Forests that make up roughly 70 per cent of the land in Japan have multiple functions, such as
preventing global warming, preserving the natural environment, cultivating water sources orconserving biodiversity. There have been some issues, which can hinder from demonstrating
multifaceted functions, including some forests without proper reforestation, in which clearcutting is concentrated in areas where is easier to cut down trees or disasters that frequently
occurs in mountain regions due to increased heavy rains. In response to these issues, Japanese
government has established Forest/Forestry Basic Plan, indicating the perspective and basic
direction for future policy development. The Plan aims to achieve prosperous special economy,looking ahead to carbon neutrality in 2050 by appropriately managing forests and developing
the forestry/forest industry while increasing its sustainability.
In order to maintain the multiple functions of forests, forest management, such as thinning topromote tree growth or afforestation is required after logging. The purpose of forest roads is toprovide access to forests and promote forest improvement. Using wood in prefectures to which
respective issuers belong is established as the eligible criteria through introduction of wooden
structure and wooden interior decoration in public facilities. The followings are advantages tolog trees from forests under proper management and to introduce wooden structure andwooden interior decoration.
・It is contributable to the prevention of global warming due to carbon fixation by trees.
・It is contributable to a sustainable society since wood is a renewable resource.
・Less energy is required for construction.
・Mountains are well cared and forests are kept healthy.
These initiatives are listed as specific efforts in the Basic Plan for Forestry and Forest Industry,
and JCR has evaluated that this use of proceeds is in line with the Plan.
The use of proceeds will promote the initiatives toward sustainable forests/forestry; therefore,
environmental benefits are prospective. The use of this proceeds falls under Environmentally
Sustainable Management of Living Organism Resources and Land Use in the Green Bond
Principles and Projects for Sustainable Management of Natural Resources/Land Use among theuse of proceeds exemplified in the Green Bond Guidelines.

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Use of Proceeds 7: Project for Sustainable Management of Natural Resources/Land Use(improving human resources development bases on natural resource management)
Local governments will use the proceeds from this bond to improve bases for developing humanresources who will be responsible for sustainable forests and forestry.
Forestry workers have continuously declined from 126,000 in 1985 to approximately 44,000 in
2020. The aging rate in the forestry industry ﴾a percentage of workers who age 65 or older﴿ was
25 per cent in 2020, higher than the average of all industries, 15 per cent, and aging is also
becoming a serious issue. It is essential to continuously ensure new workers and simultaneously
to increase the retention through fostering human resources to secure the forestry workforce.
Improving productivity and safety is required in the forestry work in order for forestry workers
to be able to continue working for a long time, which makes the industry attractive. In recent
years, prefectures have opened new colleges of forestry as pre-employment education /training
institutions nationwide to improve technical skills of forestry workers and to make them worksafely and efficiently. The local governments use the proceeds to develop human resources
development bases as described above. Securing human resources ﴾supporting new employees
and gradually developing human resources﴿ are also listed in the Forests and Forestry Basic Plan,
and JCR has evaluated that this use of proceeds complies with the Plan.
This use of proceeds will promote the development of human resources necessary forsustainable forests/forestry, and thus it is expected to have environmental benefits. The use ofproceeds is categorized into Environmentally Sustainable Management of Living Organism
Resources and Land Use in the Green Bond Principles and Projects for Sustainable Managementof Natural Resources/Land Use among the uses of proceeds exemplified in the Green Bond
Guidelines.

Use of Proceeds 8: Project for Sustainable Management of Natural Resources/Land Use(promoting greening)
Local governments will use the proceeds from this bond to develop parks ﴾create green space.﴿
Park development whose purpose is creating green space brings about a variety of effects that
improve the urban environment, such as developing urban biodiversity by conserving/
regenerating region-specific flora and fauna species or ecosystems, mitigating heat island
phenomenon through the greenery's evapotranspiration effects, preventing urban areas fromspreading, making green belts and creating good landscapes that can become a symbol of thearea.
This proceeds will be used to conserve natural landscapes and improve biodiversity, andaccordingly, environmental benefits are prospective. This use of proceeds fall under
Environmentally Sustainable Management of Living Organism Resources and Land Use in theGreen Bond Principles and Projects for Sustainable Management of Natural Resources/Land Useamong the use of proceeds exemplified in the Green Bond Guidelines.

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Use of Proceeds 9: Project for Biodiversity (reservation of natural landscape)Local governments will use the proceeds from this bond for conserving satoyama ﴾communitybased forest area.﴿
satochi-satoyama ﴾community-based forest areas and the surrounding countryside﴿ is areas withdiverse natural environments, such as farmlands, reservoirs, woodlands or grasslands. satochisatoyama is located between nature areas in deep mountains with rich nature and urban areasin which human activities are concentrated and covers approximately 40 per cent of Japan. It isneither completely pristine nature nor fully under human control. With moderate humanintervention and management, it has become habitats for a variety of plants and animals andhas played a role in enriching the natural environment in the Japanese archipelago. On the other
hand, satoyama has been increasingly unmanaged due to changes in industrial structures andlifestyles. Without human management, satoyama will rapidly deteriorate and lead to risks, suchas increasing damage in case of a disaster due to the loss of ecosystems or the disappearanceof functions of nature. The conservation of satoyama, which is the use of this proceeds is
expected to contribute to the maintenance of biodiversity that will be bring about by thesatoyama by avoiding or controlling such risks.
It is expected to have environmental benefits with the use of this proceeds since the projectcontributes to biodiversity. The use of this proceeds falls under Terrestrial and Aquatic
Biodiversity Conservation in the Green Bonds Principles and Project for Terrestrial and Aquatic
Biodiversity Conservation among the use of proceeds exemplified in the Green Bond Guidelines.
Use of Proceeds 10: Project for Clean Transportation (developing rolling stock of public
transportation)
Local governments will use the proceeds from this bond for developing rolling stock in railway
projects ﴾public/quasi-public corporation﴿ and facilities ﴾station buildings.﴿
The development of rolling stock in the railway projects assumed for this use of proceeds will
involve the introduction of new rolling stock by the railway companies. Railways are a means oftransportation with low environmental burdens and CO2 emissions per transport volume is 1/5of private cars for passengers and 1/10 of commercial cargo vehicles for freight.13 This use ofproceeds will be used to further reduce environmental loads by introducing rolling stock withhigher energy efficiency than the existing vehicles.
Station buildings are required for operating railway projects and is made conditional on
reduction of CO2 emission such as introducing energy saving facilities in the eligible criteria
under this framework. The criteria make energy-saving be achievable and in cases where theconvenience of rail road increases through the development of railway facilities, a modal shift torailroads from other means of transportation is achievable.
This use of proceeds provides a means of transportation that are highly effective to reducegreenhouse gas emissions and thus environmental benefits are prospective. This use of proceeds
falls under Clean Transportation in the Green Bond Principles and Projects for Clean
Transportation among the use of proceeds illustrated in the Green Bond Guidelines.

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13

The website of Ministry of Land, Infrastructure, Transport and Tourism athttps://www.mlit.go.jp/sogoseisaku/environment/sosei_environment_tk_000007.html
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Use of Proceeds 11: Project for Clean Transportation (spreading and expanding electricvehicles)Local governments will use the proceeds from this bond to convert public vehicles into electricvehicles.
Electrifying public vehicles refers to purchasing battery electric vehicles ﴾hereinafter referred toas "BEV",﴿ fuel cell vehicles ﴾hereinafter referred to as "FCV"﴿ and hybrid vehicles ﴾hereinafterreferred to as "HV"﴿ and replacing them with the existing gasoline-powered cars. BEV has highenvironmental benefits since it does not emit GHG while running.
It is listed to popularize next-generation vehicles and improve fuel efficiency as one of theinitiatives on decarbonization in the transportation sector in the government's Global Warming
Measures Plan. The aim is to reduce the environmental burdens by spreading/expanding thenext-generation vehicles ﴾EV, FCV or PHEV that is an abbreviation of Plug-in Hybrid Electric
Vehicle﴿ with excellent energy efficiency and by strategically developing EV charging facilities
and hydrogen stations that are required for widespread use of the next-generation vehicles. Thisuse of proceeds is considered to be contributable to these measures.
JCR has evaluated that HV has environmental benefits only if it meets the fuel efficiency with
CO₂ emissions of 50 gram or below per person/kilometer by 2025.
This use of proceeds is expected to have environmental effects since reducing CO₂ emissions isachievable. This use of proceeds falls under Clean Transportation in the Green Bond Principles
and Projects for Clean Transportation among the uses of proceeds exemplified in the Green Bond
Guidelines.

Use of Proceeds 12: Project for Clean Transportation (Promoting utilization of clean meansof transportation)
Local governments will use the proceeds from this bond for developing bicycle riding space.
The Bicycle Use Promotion Act was enforced in 2017 as a basic concept, based on which reducing
dependency upon automobiles has economic and social benefits by improving people's health,reducing traffic congestion and expanding the role of bicycle transportation in the transportation
system. The national government stipulated a plan for promoting bicycle utilization at Cabinet
meetings, including targets and necessary legislative and financial measures to be taken, andlocal governments is obliged to make the best efforts to establish a plan for promoting bicycle
utilization depending upon the actual conditions in the areas under their jurisdiction in line withthe 14 basic policies that are to be intensively studied and implemented under the Act. The
government formulated the Bicycle Use Promotion Plan14 and many local governments set local
versions of their own bicycle use promotion plans.
The latest plan has listed the creation of a favorable urban environment through the expansionof the role of bicycle transportation as one of its targets, and it is designated to increase use of
bicycles with the following measures.
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14

The latest ﴾the 2nd Bicycle Use Promotion Plan﴿ was decided in the cabinet in May, 2021.

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・Promote local governments to formulate bicycle utilization promotion plans and to steadilytake measures based on these plans
・Promote the systematic development of safe and comfortable bicycle riding space, which isappropriately separated from pedestrians, bicycles and automobiles.
・Promote to secure bicycle riding space through the development of off-street parking lots
or parking spaces for cargo handling.
The use of the proceeds is expected to improve environmental benefits since a means oftransportation with lower environmental impacts can be selected. This use of proceeds falls
under Clean Transportation in the Green Bond Principles and Project for Clean Transportation
among the use of proceeds illustrated in the Green Bond Guidelines.

Use of Proceeds 13: Project for Adaptation to Climate Change (measures for disasters causedby storms and floods)
Local governments will use the proceeds from this bond for developing rivers ﴾bank protection,
removal of sediment from rivers, widening rivers or flood-dam control,﴿ improving agricultural
irrigation facilities and sewerage facilities ﴾drainage pump stations or storm drainage facilities﴿
and the project for storm and flood control measures including the project for roads
﴾drainage/permeable pavement or pole-free cities.﴿
The government considers that it is required to evaluate future climate change and to starttaking measures in advance since new forms of large-scale disasters may occur due to complex
factors, such as landslide/flooding, high tide/flooding as well as frequent/serious water disasters
along with increases in the frequency and intensity of short-term heavy/massive rain, increases
in total precipitation, rises in average sea levels, sea level anomaly or increases in extreme values
in its Regional Climate Change Adaptation Plan. The government is to further its efforts of River
Basin Disaster Resilience and Sustainability by All so as to reduce damage in the entire basins,
such as catchment areas/rivers and floodplain areas by all stakeholders in any kind of placearound basins, including those who were not involved before in order to view the flow of water
as one system. Strengthening non-structural measures ﴾software measures,﴿ such as utilizing
green infrastructure with various functions of the natural environment or enforcing observation
systems/improving prediction accuracy for concentrated downpours or typhoons caused bylinear precipitation zones when promoting River Basin Disaster Resilience and Sustainability by
All.
Local governments quantitatively grasp the extent of the maximum storm and flood disasters
assumed by the project concerned or the degree of damage to be reduced by the project inquestion when selecting climate change adaptation projects. Environmental benefits areprospective with this use of proceeds since it is expected to reduce damage caused by storm
and flood disasters. This use of proceeds falls under Climate Change Adaptation in the Green
Bond Principles and Projects for Climate Change Adaptation among the use of proceeds
illustrated in the Green Bond Guidelines.

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Use of Proceeds 14: Project for Adaptation to Climate Change (measures for high tide/highwave)
Local governments will use the proceeds from this bond for developing facilities for protecting
the coastline and improving harbor/fishing port facilities.
Sea levels around Japan are on an upward trend ﴾rising 2.8 ﴾1.7 to 4.0﴿ millimeters per year from1993 to 2015, rising 4.19 ﴾- 1.10 to +8.20﴿ millimeters per year from 2004 to 2019﴿ based on theanalyses of sea level observation records according to the government's Regional Climate
Change Adaptation Plan. No concrete events or research results have been confirmed regarding
the relationship between high waves/tides and the effects of climate change at the current
moment. On the other hand, the average global sea level will definitely rise between 2081 and
2100, based on the average between 1986 and 2005 even through the greenhouse gas emissions
will be reduced in both RCP2.6 and RCP8.5 scenarios. In cases where the sea level rises by 80
centimeters, the zero-meter area in the three major bays ﴾Tokyo Bay, Ise Bay and Osaka Bay﴿
increases by 1.6 times and accordingly, the impacts are extended to coasts across Japan. In theevent that sea levels rise, disaster risks of damage from high tides, high waves or tsunamis or
coastal erosion increase compared to the current situation even if there is neither typhoon nor
powerful low-pressure systems. In particular, anticipated impacts are the followings: river water
intake facilities, coastal disaster prevention facilities or ports and harbors/fishing port facilities
may be functionally degraded or damaged, coastal areas may be submerged/flooded, coastal
erosion may be accelerated, ports and harbors/fishing port operations may be hindered and theecosystems in the tidal areas of tidal flats or rivers may be impacted.
This use of proceeds is expected to have environmental benefits since the effects to reduce
damage from high tides/waves are prospective. This use of proceeds falls under Climate Change
Adaptation in the Green Bond Principles and Projects for Climate Change Adaptation among theuses of proceeds exemplified in the Green Bond Guidelines.

Use of Proceeds 15: Project for Adaptation to Climate Change (measures for sedimentdisaster)
Local governments will use the proceeds from this bond for measures for landslide disasters,such as development of SABO facilities, improvements of forest conservation facilities,
prevention of landslides at steep slopes or control of road slopes.
There is not much research that clearly shows the cause-effect relationship between landslidedisasters and climate change according to the government's Climate Change Adaptation Plan.
On the other hand, changes in the situations are assumed on the basis that rainfall conditions
will become more stringent in the future, including the frequent occurrence of concentrated
collapses/landslides/debris flows, the impacts on social life in mountains or around slopes, thestructural/non-structural measures that are relatively less effective and increases in thefrequency of landslides/floods. Both of the structural and non-structural aspects are considered
to be effective since landslides often occur due to a combination of complicated factors. Several
concrete measures are listed in the Climate Change Adaptation Plan as specific countermeasuresagainst landslides, including increases in the frequency, short-time warning/evacuation anddeep-seated landslides.

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This use of proceeds is expected to be effective for mitigating landslides; therefore,
environmental benefits are prospective. This use of proceeds falls under Climate Change
Adaptation in the Green Bond Principles and Projects for Climate Change Adaptation among theuses of proceeds illustrated in the Green Bond Guidelines.

Use of Proceeds 16: Project for Adaptation to Climate Change (R&D in agriculture, forestry
and fisheries in preparation for climate change)
Local governments will use the proceeds from this bond to improve facilities for developing
agricultural product varieties or agricultural production technology.
The government's Climate Change Adaptation Plan states that climate change will cause changes
in distribution ranges or life cycles, further negative impacts will cause changes in interspecificinteraction through migration/local extinction of species or species may be extinct since species
cannot migrate in the distribution ranges to follow climate change due to the fragmentation of
habitats. It is predicted that 30 per cent or more species worldwide will be at risk of extinction if
temperature rises by 2 degrees Celsius or higher by 2050.
This use of proceeds is expected to be effective for mitigating damage, such as deterioration inquality or reduction in yields in the agriculture, forestry and fisheries, and is therefore expected
to have environmental benefits. This use of proceeds falls under Climate Change Adaptation in
the Green Bond Principles and Projects for Climate Change Adaptation among the uses ofproceeds illustrated in the Green Bond Guidelines.

Use of Proceeds 17: Project for Green Buildings (green buildings)
Local governments will use the proceeds from this bond for green buildings.
The buildings eligible for the use of proceeds obtained or will obtain either of the two highest
ratings of CASBEE certification or ZEB certification.
CASBEE ﴾Comprehensive Assessment System for Built Environment Efficiency﴿ is a tool toreconfigure predetermined evaluation factors from the perspective of the environmental qualityof buildings ﴾Q refers to quality﴿ and the environmental loads ﴾L means load﴿ of architecturalwork, and BEE ﴾Building's Environmental Efficiency﴿ value is an indicator and is calculated with L
as a denominator and Q as a numerator. High quality of overall buildings is required to be highly
rated, and consideration should be given to the indoor comfort and landscape as well as theenvironment, such as utilizing equipment with energy conservation or low environmental
burdens.
ZEB ﴾Net Zero Energy Building﴿ is defined as "a building that has achieved significant energy
savings while maintaining the quality of the indoor environment by controlling energy loads via
advanced architectural design, actively utilizing natural energy through the adoption of passive
technologies or introducing highly efficient equipment systems. Such a building aims to achievea zero annual primary energy consumption balance by introducing the use of renewable energy,
thereby increasing energy independence as much as possible." ZEB is categorized into fourstages as follows: ﴾1﴿ reduce 100 per cent or more primary energy with ZEB ﴾energy savings ﴾of
50 per cent or more﴿ and energy creation,﴿ ﴾ii﴿ reduce 100 per cent or more primary energy with19 / 31

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Nearly ZEB ﴾energy savings ﴾of 50 per cent or more﴿ and energy creation of 75 per cent or more,﴿﴾iii﴿ ZEB Ready ﴾reduce 50 per cent or more primary energy﴿ and ﴾iv﴿ ZEB Oriented ﴾for buildings
with a total floor space of 10,000 square meters or more, satisfying the requirements establishedby use.﴿ The ZEB certification ﴾four stages from ﴾i﴿ to ﴾iv﴿ above﴿ for which local governments use
the proceeds is not eligible criteria of the Joint Local Government Green Bond Framework;
however, at least a 50 per cent reduction from the standard primary energy consumption isrequired, which means that the building must have a BEI value of five stars or higher in the BELS15.
Accordingly, JCR has determined the use of the proceeds as adequate.
This use of proceeds will promote to construct buildings with high environmental performanceand is expected to have environmental benefits. The use of proceeds is categorized into Green
Buildings with Standards or Certifications Recognized for Environmental Performance Regionally,
Nationally or internationally in the Green Bond Principles, and Project for Green Buildings among
the use of proceeds exemplified in the Green Bond Guidelines.
Consequently, JCR has evaluated that the aforementioned use of proceeds from 1 to 17 aresubject to projects with environmental benefits, respectively.

3. Negative Impacts on the Environment and Society
Local governments are aware of negative impacts of the projects assumed as targets for the useof proceeds and are examining the potential environmental/social effects when projects arecarried out. As a result of verification by the local governments, projects with less negative
impacts on the environment and society will be selected as eligible projects for the use ofproceeds.
JCR has confirmed that appropriate consideration will be given to negative effects on theenvironment and society of the projects for which the proceeds will be used and has evaluatedthat appropriate avoidance/mitigation measures will be taken per project.

4. Consistency with SDGs
JCR has evaluated that the projects eligible for the use of proceeds will contribute to the SDGs'
goals as indicated in the Joint Local Government Green Bond Framework.

——————————————
BELS ﴾Building-Housing Energy-efficiency Labeling System﴿ evaluates and certifies the energy-saving performance of new andexisting buildings by a third-party evaluation institution. The evaluation covers envelope performance and primary energy
consumption, and a building must have excellent energy-saving performance to receive a high rating.
15

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Evaluation Phase 2:
Management, Operation and Transparency Evaluation

m1

I. Criteria and Processes for Selecting the Use of Proceeds
JCR's Key Consideration in This Factor
In this section, JCR will confirm the objectives to be achieved through this evaluation target, theadequacy of the criteria and processes for selecting green projects, and whether a series ofprocesses will be appropriately disclosed to investors.
▶▶▶ Current Status of Evaluation Targets and JCR Evaluation
JCR has determined that the departments and executives with specialized knowledge are appropriately
involved in the goals of this bond and the criteria and processes for selecting green projects.

1. Goals
The climate change caused by global warming is an urgent issue that none of all creatures livingon the earth is avoidable. It is unveiled that the relationship between cumulative CO2 emissions
that are anthropogenic sources and the changes in the global average temperature projected isalmost proportional according to the Fifth Assessment Report of the Intergovernmental Panelon Climate Change ﴾hereinafter referred to as "IPCC".﴿ It is therefore necessary to keep the
cumulative emissions below a certain level, taking sinks into account, and continuously reducing
greenhouse gas emissions is of significance in Japan. As global warming progresses, it causes
not only abnormal weather events and rises in sea levels but also a wide range of impacts,
including economic impacts on agriculture, forestry and fisheries, disasters or health effects.
Japan as a whole is facing a full-fledged decline in the birthrate combined with an aging
population/depopulated society. While a decline in the total population is inevitable for the next
several decades, the population has been unevenly distributed at an accelerated rate, and the
young/working-age population in rural areas are decreasing with continuous excess inflows into
cities from rural areas especially by the young. These demographic changes undermine local
communities, impede the performance of local governments' administrative functions and haveserious consequences on various local administrative areas as well as local environmental
conservation efforts. For instance, abandoned farmland or poorly maintained forests haveincreased due to the decline in people who will take over agriculture and forestry, and thedamage caused by wild birds and mammals has worsened because of declines in hunters. In
such areas, the vulnerability to natural disasters is increasing while rich natural habitats, such as
Satochi-Satoyama ﴾community-based forest areas and the surrounding countryside﴿ are being
lost, and biodiversity are endangered.
There are also issues on the environmental pollution of air, water and soil. Marine pollution has
been worsened due to marine debris, such as microplastics, and global pollution also has been
aggravated, including anthropogenic mercury emissions or persistent/highly bioaccumulative
chemical substances, and consequently there are concerns about health effects or impacts on
ecosystems through water, air or food chains. In Japan, although the achievement ofenvironmental standards has been on an increase in the medium to long term, there are stillnegative impacts, such as soil contamination due to heavy metals, asbestos in buildings andpolychlorinated biphenyls ﴾PCBs﴿ that are not detoxified, and also issues remain in theatmospheric environment, such as dealing with fine particulate matter ﴾PM2.5﴿ or photochemical
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oxidants, and there are still problems in the environmental water quality, including
eutrophication in enclosed water areas.
In this way, the government is facing complex environmental challenges; therefore, it hasestablished six priority strategies in the Fifth Basic Environmental Plan to deal with various
environmental issues that are closely related to each other.

Priority Strategy 1: Building green economic systems to realize sustainable production andconsumption
The aim is to achieve innovation in economic and social systems and to improve
resources/carbon productivity ﴾to realize economic growth while reducing inputs of natural
resources or greenhouse gas emissions﴿ so as to ensure sustainable production andconsumption
patterns.
Specificmeasuresincludeaccelerating
green
purchasing/environmentally friendly contracts, promoting thorough energy conservation,
introducing the maximum renewable energy, expanding the use of hydrogen and utilizing
biomass as energy/recyclable resources.
Priority Strategy 2: Improving the values of national land through stock effects
The important is to promote various measures for sustainable national land management inlight of a variety of issues, such as apparent effects of climate change, energy problems, aging
infrastructure and increases in land that is difficult to continuously manage properly. National
land development needs to consider the environment in both structural and non-structural
aspects, such as social infrastructure improvements or land use and to address
economic/social issues in order to handle these problems. Specific measures include
developing/conserving forests, building ecosystem networks, preserving the marine
environment, maintaining or restoring healthy water cycles and promoting adaptation to theeffects on climate change.
Priority Strategy 3: Sustainable regional development with local resources
Local economic and social activities are generated based on a variety of local resources, suchas local energy, natural resources, urban infrastructure or industry accumulation. It is
important to lead to progressing economic and social activities by improving quality of local
resources and maximizing the use of natural/physically produced/human capital in regions ina sustainable manner. Measures will be taken to sustainably optimize the use of local resourcesfrom the standpoint above. Specific measures include the introduction of renewable energy
utilizing local resources, regional development with unused biomass resources and thepromotion of resources circulation in regions, such as the use of waste biomass.
Priority Strategy 4: Realizing healthy and fulfilling life
People's life is supported by various nature's blessings ﴾ecosystem services﴿ provided byforests, villages, rivers or seas. It is essential to create diverse and attractive local recycling
networks utilizing regional uniqueness to maintain/improve Japanese vitality. There is a needto reaffirm values of unique nature, including forests, villages, rivers or seas in respective
regions and to rebuild the connections between people and nature and among people.
Concrete measures contain promoting low-carbon and healthy housing, creating new demand
for wood, maintaining/restoring the healthy and rich water environment, promoting proper

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waste disposal, accelerating measures for marine debris, including microplastics or taking
measures for heat islands.
Priority Strategy 5: Developing/disseminating technologies to support sustainability
In Japan, it is required to have technologies that can contribute not only to Japan but also to
the world, such as achieving the 2 degrees Celsius target of the Paris Agreement and adapting
to the effects of climate change and that can address issues, including decreasing
population/declining birthrate and aging society in advance of the rest of the world, highdependence on overseas resources/energy, regional revitalization or disasters, and it isimportant to develop/disseminate environmental technologies that can help solve theseissues. Specific measures contain developing technologies that contribute to climate change
adaptation, biodiversity conservation/restoration and the disaster prevention/mitigation withecosystems.
Priority Strategy 6: Demonstrating Japan's leadership through international contributions andbuilding strategic partnerships
Japanese excellent environmental technologies/infrastructure and their supportive ideas,
systems or human resources can greatly contribute to improving the world's environmental
problems while global environmental problems are becoming more serious. In order for the
aforementioned to be widely adopted globally, the ideal way of international rules, such as
multilateral environmental treaties or various guidelines under respective treaties is crucially
important including which positive participation in formulating fair and effective internationalrules is required.
Local governments can be a key in promoting these priority strategies in their regions, and theyplay a role as a leading promoter of local environmental conservation, which is a basis to build
sustainable society and simultaneously serve as a coordinator of local initiatives. In response towhich, local governments are working closely with related departments to comprehensively
deploy environmental conservation measures in regions in cooperation and collaboration withresidents, business operators, private organizations, other local governments or related nationalorganizations, such as presenting goals or directions for local initiatives, establishing various
systems, developing social infrastructure or promoting activities of respective entities depending
upon local characteristics. Local governments play extremely important roles in taking
environmental conservation measures widely, comprehensively and exhaustively even in theenvironmental areas in which private business operators are not involved from the perspectiveof economic rationality.
Local governments formulated some plans for the basic environment, global warming measuresand climate change adaptation in accordance with the circumstances of respective organizations
so as to play a role to promote the critical strategies mentioned above. "Net Zero Emission of
CO2 by 2050" aimed by local governments or so-called zero-carbon cities include only four local
governments as of September 2019; however, the zero-carbon cities have rapidly increased to
1,013 local governments as of December 28, 2023 due to a rising sense of crises against intense
weather disasters.
The national government aims to reduce greenhouse gas emissions by 46 per cent in FY 2030
from FY 2013 in its global warming measures plan. The local governments that formulated plansfor global warming measures established greenhouse gas reduction targets in line with thecircumstances of respective organizations.

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The national/local governments aim to create a secure, safe and sustainable society while striving
to prevent/mitigate damage caused by effects of climate change, stabilize the livelihood ofpeople/residents, soundly develop society/economy, preserve the natural environment andstrengthen the national land by comprehensively and systematically promoting measures on
climate change adaptation based on scientific knowledge in their climate change adaptationplans.
JCR has evaluated that the use of proceeds indicated in the Joint Local Government Green Bond
Framework is consistent with the plans for global warming measures or climate change
adaptation plans formulated by the national or local governments.
Consequently, JCR has evaluated that the purpose of issuing the joint local government green
bond is consistent with the goals or plans presented by the local governments.

2. Selection Criteria
JCR has evaluated the selection criteria stipulated in the Joint Local Government Green Bond
Framework by the local governments as appropriate with environment benefits. JCR has
confirmed that all of the projects covered by this bond meet the selection criteria.

3. Processes
The projects eligible for the use of proceeds financed by this bond will be determined aftercandidate projects will be selected cooperatively by the financial departments of respective local
governments and relevant project departments.
The green characteristics of projects is determined by the relevant departments in respective
local governments, and the projects for which proceeds are to be used are decided through theprocesses of respective local governments and thereby JCR has evaluated the selection process
as adequate.
The goals, criteria and processes on this bond are stated in the Joint Local Government Green
Bond Framework. The framework is also published on the website of JAPAN LOCALGOVERNMENT BOND ASSOCIATION. Consequently, JCR has evaluated this bond as highly
transparent.

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II. Management of Proceeds
JCR's Key Consideration in This Factor
It is generally assumed that how to manage proceeds widely varies depending on finance raisers.
JCR will confirm that proceeds financed based on this evaluation target are certainly allocatedto green projects or whether the mechanisms and internal systems are in place to easily trackand manage the allocation.
JCR will also give importance to whether the proceeds financed through this evaluation target
will be allocated to green projects promptly and also to the evaluation of managing/operating
methods for unallocated proceeds.

▶▶▶ Current status of Evaluation Target and JCR Evaluation
JCR has evaluated that the transparency is high since the financial management system of local
governments is appropriately in place and that the method of managing proceeds financed isdisclosed in this evaluation report and on the website.

The proceeds financed through this bond will be promptly transferred to the account designatedby respective local governments via the trustee bank. Respective local governments, in principle,
will allocate the proceeds financed through this bond to projects that meet the eligibility criteria
during the fiscal year in which the proceeds are financed. The proceeds to eligible projects areallocated by the finance departments of respective local governments, and the amount financed
is to be managed in order not to exceed the allocation of this bond in the target projects withthe bond management table that records the business expenses or the bond issuance amounts
per project. In cases where the project originally scheduled for appropriation is delayed orinterrupted, the proceeds of respective local governments will be appropriated to cash or highly
safe financial assets until the appropriation of the proceeds is fixed.
Performance results and financial statements are prepared for all revenues and expenditures ineach local government and are audited by the Audit Committee at the end of each fiscal year.
Thereafter, the financial statements are submitted to the assembly of each local government for
approval, with the opinions of the audit committee members attached. It is therefore considered
to be appropriately controlled.
Unallocated proceeds will be managed in cash or highly safe financial assets among theproceeds financed with this bond. Documents related to the joint local government green bondfinanced are stored until the repayment based on document management rules, and thereby
the document management is adequate.
Accordingly, JCR has evaluated the financial management by respective local governments asappropriate.

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III. Reporting
JCR's Key Consideration in This Factor
JCR will evaluate whether the disclosure systems to investors before and after financing basedon this evaluation target is planned in a detailed and effective manner in this section.
▶▶▶ Current status of Evaluation Target and JCR Evaluation
JCR has evaluated local governments' reporting as a plan in which both of the appropriation ofproceeds and environmental benefits are adequately disclosed to investors.

Reporting on the appropriation of proceeds
The use of the proceeds by this bond will be disclosed on the JLGBA's website and will be
explained to investors ahead of time. JLGBA plans to annually disclose the appropriation of theuse of proceeds related entirely to this bond on its website. Some local governments may
disclose the appropriation of their own group's proceeds as well as the appropriation of theproceeds related totally to the bond on their websites. In cases where any major change is madein the plan to appropriate the use of proceeds, that effect will be disclosed on the website.

Reporting on environmental benefits
JLGBA will annually disclose contents specified in the Joint Local Government Green Bond
Framework as reporting on the environmental benefits of the eligible projects of this bond as awhole on its website. Some local governments may disclose their own group's environmental
benefits as well as the environmental benefits of the eligible projects of this bond as a whole on
their websites. Reporting on environmental benefits include the details by which the benefits arequantitatively recognizable.
Consequently, JCR has evaluated the reporting system by local governments as adequate.

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IV. Organizational Environmental Initiatives
JCR's Key Consideration in This Factor
JCR will evaluate whether the management of finance raisers regards sustainability issues as
high-priority management issues or whether sustainable finance policies/processes or selection
criteria for green projects are clearly positioned by establishing departments that specialize insustainability categories or in cooperation with external organizations in this section.

▶▶▶ Current Status of Evaluation Target and JCR Evaluation
JCR has evaluated that local governments regard sustainability issues as important issues of policies andare promoting sustainability initiatives by widely incorporating the knowledge of outside experts.

The 2030 Agenda for Sustainable Development ﴾hereinafter referred to as "The 2030 Agenda"﴿
adopted by the United Nations General Assembly in September 2015 presents 17 goals and 169
targets as Sustainable Development Goals ﴾hereinafter referred to as "SDGs."﴿ The 2030 Agenda
includes many goals for issues related to the global environment itself and challenges closely
related to the global environment, such as water/sanitation, energy, sustainable cities,
sustainable production and consumption, climate change, terrestrial ecosystems or marine
resources, which signify the international sense of crisis for the sustainability of the global
environment. In particular, serious, wide-ranging and irreversible effects of climate change canunexceptionally reach Japan, and thus increasing risks of natural disasters is concerned. The
climate systems are undoubtedly warming, and it is apparent that the relationship between
cumulative CO2 emissions that are anthropogenic sources and the changes in global averagetemperature projected is almost proportional by 2100 according to the Fifth Assessment Reportof the IPCC.
On the other hand, while Japan as a whole is facing a full-fledged decline in the birthrate
combined with an aging population, the population has been unevenly distributed at anaccelerated rate and the young/working-age population in rural areas are decreasing due tocontinuous excess inflows into cities from local regions especially by the young as issues
surrounding local governments mentioned above. These demographic changes undermine local
communities, impede the performance of local governments' administrative functions and haveserious consequences on local environmental conservation efforts in addition tofrequency/severity of natural disasters in recent years.
After recognizing these environmental issues, the government formulated Fifth Basic
Environmental Plan ﴾Cabinet decision in April 2018﴿ in light of the fact that environmental andsocial issues ﴾e.g., low birthrate/aging population, a declining population, a reform of work stylepractices or preparation for large-scale disasters﴿ and economic issues ﴾e.g., battered regional
economy or addressing technological innovation, such as IoT﴿ are interconnected andcomplicated. The plan is designed to focus on the environmental issues and measures while
simultaneously solving economic and regional issues, making maximum use of local resourcesin a sustainable manner and improving economic/social activities.
The government has formulated plans for global warming measures and climate change
adaptation to respond to various environmental issues. The current plans for global warming
measures cover all greenhouse gases, including those other than carbon dioxide, in order toachieve the goal of reducing greenhouse gases by 46 per cent in FY 2030 ﴾from FY 2013﴿ and27 / 31

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include the measures and policies that support the targets. The government aims toprevent/reduce damage caused by the effects of climate change, stabilize people's living,soundly develop society/economy, preserve the natural environment and strengthen thenational land in a safe, secure and sustainable manner in the current climate change adaptation
plan. The roles in which local governments should play are described in the Global Warming
Measures Plan and the Climate Change Adaptation Plan, respectively.
The government, in response to the adoption of the 2030 Agenda with SDGs at its core,established the Sustainable Development Goals Promotion Headquarters in May, 2016 anddetermined Sustainable Development Goals Implementation Guidelines, a mid- to long-term
national strategies to achieve the SDGs in December, 2016. The Implementation Guidelines wererevised in December 2019 in which local governments are expected to further accelerate efforts
to achieve the SDGs, proactively disseminate/share local best practices domestically andinternationally and approach diverse stakeholders with the aim of disseminating the SDGs stillmore. In the Guidelines, local governments are required to create "Regional Circular andSymbiotic Spheres" ﴾a concept for local vitality to be exercised to a maximum extent by forming
self-reliant/decentralized society per region with various regional resources, including natural
resources, such as renewable energy as well as human resources or proceeds by complementing
and supporting regions each other depending upon their characteristics﴿ proposed in thegovernment's "Fifth Basic Environmental Plan."
Local governments that are required to create such "Regional Circular and Symbiotic Spheres"
have formulated a basic environmental plan, aiming to simultaneously solve environmental,social and economic issues in regions in harmony with the circumstances of respective
organizations. Local governments also formulated plans for global warming measures andclimate change adaptation as necessary and promoted to take measure to migrate and adopt
climate change based on the specific environmental issues in respective regions. Prefectures andmunicipalities work together to formulate/promote these plans, taking the situation of each local
government into consideration.
Local governments collaboratively work with external institutions; for instance, collaboration ismade between the Ministry of Internal Affairs and Communications and JLGBA.
Ministry of Internal Affairs and Communications ﴾hereinafter referred to as "MIC"﴿ has provided
local governments with information on issuance of green bonds since FY 2017 when the Tokyo
Metropolitan Government issued a green bond as a local government for the first time incollaboration with JLGBA. In recent years, MIC is considering issuing green bonds utilizing thejoint bond framework in order for local governments to stably finance proceeds to meet theinvestors' need in light of the growing need for ESG investments in the domestic markets or the
expansion of issuance of green bonds by individual local governments. MIC contributes tosolving issues, such as ensuring issuance lots ﴾a financing amount that is enough to issue green
bonds﴿ or labor-saving of local governments.
JLGBA that is supporting to formulate green bond frameworks has established a working groupin the "Research and Study Committee on Local Bonds" as the Secretariat to organize challenges
when issuing green bonds and to investigate/consider concrete measures in order to promote
issuing, including jointly issued green bonds. JLGBA provides local governments that issue joint
local government green bonds with the knowledge obtained through the Research and Study
Committee on Local Bonds.

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Consequently, JCR has evaluated that the local governments regard issues on sustainability as
significant challenges and are considering policies/initiatives on sustainability by widely
incorporating the knowledge of outside experts.

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Evaluation Phase 3: Evaluation Results(Conclusion)

Green 1

JCR assigned "g1" to the "Green Evaluation ﴾Use of Proceeds,﴿ "m1" to the "Management,
Operation and Transparency Evaluation" and "Green 1" to the "JCR Green Bond Evaluation" forthis bond based on JCR Green Finance Evaluation Methodology. JCR has evaluated that thisbond meets the criteria for the factors required in the Green Bond Principle and the Green Bond
Guidelines.
<JCR Green Bond Evaluation Matrix>
Management/Operation/Transparency Evaluation

Green Evaluation

m1

m2

m3

m4

m5

g1

Green 1

Green 2

Green 3

Green 4

Green 5g2

Green 2

Green 2

Green 3

Green 4

Green 5

g3

Green 3

Green 3

Green 4

Green 5

N/A

g4

Green 4

Green 4

Green 5

N/A

N/A

g5

Green 5

Green 5

N/A

N/A

N/A

(Responsible Analysts) Atsuko Kajiwara, Rieko Kikuchi, Shintaro Arai, Takuto Toda

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Important Explanation on this Evaluation
1. Assumptions, Significance and limitation of JCR Green Finance Evaluation
JCR Green Finance Evaluation, which is granted and assigned by Japan Credit Rating Agency (hereinafter referred to as"JCR") is a comprehensive statement of JCR's current opinion on the extent to which proceeds financed through issuing green
bonds or making green loans to be evaluated, respectively (hereinafter, green bonds and green loans are collectively referred
to as "green finance" and issuance of green bonds and execution of green loans is collectively referred to as "execution ofgreen finance") are allocated to green projects as defined by JCR and the extent of the initiatives to ensure management,
operations and transparency on the use of proceeds of the green finance concerned. JCR Green Finance Evaluation does not
fully present the allocation of proceeds financed through the green finance in question and the extent of the initiative to ensure
management, operation and transparency on the use of proceeds.
JCR Green Finance Evaluation is to appraise the plan or status of proceeds allocation when the execution of green finance isplanned or made and does not guarantee the status of proceeds allocation in the future. JCR Green Finance Evaluation neither
proves the green finance effects on the environment nor assumes any responsibility for the environmental effects. JCR, in
principle, does not directly measure the environmental benefits through proceeds financed by executing green finance although
JCR confirms that the environmental benefits are quantitatively and qualitatively measured by the issuer or the borrower(hereinafter the issuer and the borrower are collectively referred to as the "finance raiser") or the third party requested by thefinance raiser. Green equity may be included in the evaluation only when the assets are categorized into green projects, suchas investment corporations.
2. Methodology Used in this Evaluation
The methodology used to make this evaluation is posted as JCR Green Finance Evaluation Methodology in the Sustainable
Finance/ESG section on the JCR's website at https://www.jcr.co.jp/
3. Relations with Conduct for Credit Rating Business
The conduct of assigning and providing JCR Green Finance evaluation is performed by JCR as its related business and isdifferent from the conduct for the credit rating business.
4. Relations with Credit RatingThis evaluation is different from a credit rating and does not commit to providing a predetermined credit rating or makeavailable for inspection.
5. Impartiality when Evaluating JCR Green Finance
There are no capital or personnel relationships that could create a conflict of interest between this evaluation target and JCR.
■Disclaimers
The information contained in this document has been obtained by JCR from the issuer and from accurate and reliable sources. However, such information may beerroneous due to human, mechanical or other reasons. Therefore, JCR makes no representation or warranty, whether express or implied, as to the accuracy, result,appropriateness, timeliness, completeness, marketability or fittingness for a particular purpose of such information, and assumes no responsibility for any error, omission,or result of using such information. JCR shall not be liable for any loss of opportunity and extraordinary, indirect, incidental or consequential damages of any kind,including any loss of money, which may result from any use of such information under any circumstances, whether contractual liability, tort liability, negligence or othercauses of liability, and whether or not such damages are foreseeable or unforeseeable. JCR Green Finance Evaluation does not express any opinion on various risks(credit risk, price fluctuation risk, market liquidity risk, price fluctuation risk, etc.) associated with the green bonds, which are the subject of the assessment. Furthermore,
it is JCR's comprehensive opinion at the present time and does not represent facts nor does it make any recommendation regarding risk assessment or decisions on thepurchase, sale or holding of individual bonds, commercial paper, etc. JCR Green Finance Evaluation may be changed, suspended or withdrawn due to changes in
information, lack of information or other reasons. All rights to this document, including data from the JCR Green Bond Assessment, are held by JCR. All or part of thisdocument, including data from JCR Green Finance Evaluation, is prohibited from being reproduced, modified or otherwise altered without the permission of JCR.

■Glossary
JCR Green Finance Evaluation: This evaluates the extent to which the funds procured from the green bonds are allocated to green projects as defined by JCR, and thedegree to which the management, operation and transparency of the green bonds are ensured. Evaluations based on a 5-point scale are given from top to bottom using
the Green1, Green2, Green3, Green4, and Green5 symbols.

■Status of registration as an external assessor of green finance・Ministry of the Environment: Registered as External Reviewer of Green Finance・ICMA (observer registration as an external evaluator with the International Capital Market Association)
・UNEP FI Positive Impact Financial Principles Working Group Member
・Climate Bonds Initiative Approved Verifier■Status of registration as a credit rating agency, etc.
・Credit Rating Agency: the Commissioner of the Financial Services Agency (Rating) No.1
・EU Certified Credit Rating Agency
・NRSRO: JCR has registered with the following four of the five credit rating classes of the U.S. Securities and Exchange Commission's Nationally Recognized Statistical
Rating Organization NRSRO: (1) financial institutions, broker-dealers, (2) insurance companies, (3) general business corporations and (4) government and municipalities.
If the disclosure is subject to Section 17g-7 (a) of the Securities and Exchange Commission Rule, such disclosure is attached to the news releases posted on the JCR
website (https://www.jcr.co.jp/en/).

■For further information, contact
Information Service Dept. TEL: 03-3544-7013 FAX: 03-3544-7026

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026

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