Second-Party Opinion

NTT Group Green Bond Framework

Evaluation Summary
Sustainalytics is of the opinion that the NTT Group Green Bond Framework is credible
and impactful and aligns with the four core components of the Green Bond Principles
2021 (GBP). This assessment is based on the following:
The eligible categories for the use of proceeds, 1)
Energy Efficiency, 2) Green Buildings, and 3) Renewable Energy, arealigned with those recognized by the Green Bond Principles 2021.
Sustainalytics considers that NTT Group’s eligible projects will leadto positive environmental impacts and advance the UN Sustainable
Development Goals, specifically SDGs 7 and 9.
NTT Group’s affiliatedcompanies will respectively evaluate and select eligible projects
based on the eligible criteria, and the Group Treasury Department of
NTT Finance Corporation’s Finance and Accounting Business
Headquarters will select projects based on the NTT Group CSR
Charter, in consultation with Nippon Telegraph and Telephone
Corporation. The Director in charge of the Group Treasury
Department of NTT Finance Corporation’s Finance and Accounting
Business Headquarters will make the final decision. NTT Group has
established a process for reducing environmental and social risks,
and applies it to all allocation decisions made under the Framework.
Sustainalytics views this risk management process as adequate. NTT
Group’s process to evaluate and select projects is aligned withmarket practice.
The proceeds of the green bond will
be managed by NTT Finance Corporation. The Group Treasury
Department of NTT Finance Corporation’s Finance and Accounting
Business Headquarters will track and manage the allocated andunallocated amounts of the proceeds of the green bond using aninternal management system. For unallocated proceeds, theequivalent amount of proceeds is to be managed as cash or cash
equivalent. The Group’s proceeds management process is alignedwith market practice.

Evaluation date

September 30,
20211

Issuer Location

Tokyo, Japan

Report Sections
Introduction .................................................. 2
Sustainalytics’ Opinion ................................ 3
Appendices ................................................ 11

For inquiries, contact the Sustainable
Finance Solutions project team:
Kosuke Kanematsu (Tokyo)
Project Manager
kosuke.kanematsu@sustainalytics.com(+81) 3 4510 2343

Marie Toyama (Tokyo)
Project Support
marie.toyama@sustainalytics.com(+81) 3 4510 2343

Taku Kinomura (Tokyo)
Client Relations
susfinance.japan@sustainalytics.com(+81) 3 4571 2343

NTT Group is committed to reporting on the allocationand positive environmental impacts annually. Allocation reporting will
include an overview of allocated projects and the amount allocatedand unallocated. Impact reporting will include quantitative andqualitative environmental performance indicators, including theamount of CO2 emissions reduced and green building certificationand level received. NTT Group’s reporting is aligned with market
practice.

Alignment with Japan’s Green Bond Guidelines 2020

Sustainalytics is of the opinion that the NTT Group Green Bond Framework is in line with Japan’s Green Bond Guidelines 2020 (elements
described with the word “should”) developed by the Ministry of the Environment of Japan.
1This document is an update of the second-party opinion published June 3, 2020.

© Sustainalytics 2021

Second-Party Opinion

NTT Group Green Bond Framework

Introduction
NTT Group (NTT Group and its affiliated companies, hereinafter, “NTT Group” or the “Group”) consists of
Nippon Telegraph and Telephone Corporation (hereinafter, “NTT”), which was established based on the Act
on Nippon Telegraph and Telephone Corporation, etc. (the NTT Act) in 1985, and its affiliated companies. Asa holding company of NTT Group, NTT executes management strategies, and promotes research anddevelopment for the entire group, and the affiliated companies mainly operate mobile communications,regional telecommunications, long-distance/international telecommunications, data communications
businesses, etc. Major NTT subsidiaries include NTT DOCOMO, INC., Nippon Telegraph and Telephone East
Corporation, Nippon Telegraph and Telephone West Corporation, NTT Ltd., NTT Communications Corporation,
NTT DATA CORPORATION, etc. The head office of NTT is located in Tokyo.
NTT Group has developed the NTT Group Green Bond Framework (the “Framework”) in June 2020 and
updated in September 2021. Under the Framework, NTT Group intends to issue green bonds and use theproceeds to finance and/or refinance, projects that generate environmental benefits. The Framework defines
eligibility criteria in the following areas:
1.

2.
3.

Energy Efficiencya.
5G networksb.
FTTH (Fiber to the Home)c.
Next-generation communications infrastructure IOWN (Innovative Optical andWireless Network)d.
Data centers
Green Buildings
Renewable Energya.
Wind power generationb.
Solar photovoltaic generationc.
Geothermal power generationd.
Biomass power generatione.
Hydroelectric power generation

NTT Group engaged Sustainalytics to review the Framework, dated September 2021, and provide a secondparty opinion on the Framework’s environmental credentials and its alignment with the Green Bond Principles
2021 (GBP)2 and Japan’s Green Bond Guidelines 2020. 3 This Framework has been published in a separate
document.4
Scope of work and limitations of Sustainalytics Second-Party Opinion
Sustainalytics’ Second-Party Opinion reflects Sustainalytics independent 5 opinion on the alignment of thereviewed Framework with the current market standards and the extent to which the eligible categories are
credible and impactful.
As part of the Second-Party Opinion, Sustainalytics assessed the following:The Framework’s alignment with the GBP and Japan’s Green Bond Guidelines 2020;
The credibility and anticipated positive impacts of the use of proceeds;
The alignment of the issuer’s sustainability strategy and performance and sustainability risk
management in relation to the use of proceeds.

For the use of proceeds assessment, Sustainalytics relied on its internal taxonomy, version 1.11.1, which isinformed by market practice and Sustainalytics’ expertise as an ESG research provider.
As part of this engagement, Sustainalytics held conversations with various members of NTT’s Finance
Department to understand the sustainability impact of their business processes and planned use of proceeds,
The Green Bond Principles are administered by the International Capital Market Association and are available at: https://www.icmagroup.org/greensocial-and-sustainability-bonds/green-bond-principles-gbp/.
3
Ministry of the Environment, Japan, “Green Bond Guidelines, 2020”, at: http://www.env.go.jp/policy/guidelines_set_version_with%20cover.pdf
4
The NTT Group Green Bond Framework is available on NTT Group’s website at: https://www.ntt-finance.co.jp/ir/greenbond/5
When operating multiple lines of business that serve a variety of client types, objective research is a cornerstone of Sustainalytics and ensuring analyst
independence is paramount to producing objective, actionable research. Sustainalytics has therefore put in place a robust conflict management
framework that specifically addresses the need for analyst independence, consistency of process, structural separation of commercial and research (andengagement) teams, data protection and systems separation. Last but not the least, analyst compensation is not directly tied to specific commercial
outcomes. One of Sustainalytics’ hallmarks is integrity, another is transparency.
22Second-Party Opinion

NTT Group Green Bond Framework

as well as management of proceeds and reporting aspects of the Framework. NTT Group representatives
have confirmed (1) they understand it is the sole responsibility of NTT Group to ensure that the information
provided is complete, accurate or up to date; (2) that they have provided Sustainalytics with all relevant
information and (3) that any provided material information has been duly disclosed in a timely manner.
Sustainalytics also reviewed relevant public documents and non-public information.
This document contains Sustainalytics’ opinion of the Framework and should be read in conjunction with that
Framework.
Any update of the present Second-Party Opinion will be conducted according to the agreed engagement
conditions between Sustainalytics and NTT Group.
Sustainalytics’ Second-Party Opinion, while reflecting on the alignment of the Framework with market
standards, is no guarantee of alignment nor warrants any alignment with future versions of relevant market
standards. Furthermore, Sustainalytics’ Second-Party Opinion addresses the anticipated impacts of eligible
projects expected to be financed with bond proceeds but does not measure the actual impact. The
measurement and reporting of the impact achieved through projects financed under the Framework is the
responsibility of the Framework owner.
In addition, the Second-Party Opinion opines on the intended allocation of proceeds but does not guarantee
the realised allocation of the bond proceeds towards eligible activities.
No information provided by Sustainalytics under the present Second-Party Opinion shall be considered as
being a statement, representation, warrant or argument either in favour or against, the truthfulness, reliability
or completeness of any facts or statements and related surrounding circumstances that NTT Group has madeavailable to Sustainalytics for the purpose of this SPO.

Sustainalytics’ Opinion
Section 1: Sustainalytics’ Opinion on the NTT Group Green Bond Framework
Sustainalytics is of the opinion that the Framework is credible and impactful, and aligns with the four corecomponents of the GBP 2018. Sustainalytics highlights the following elements of the Framework:

Use of Proceeds:- The eligible categories for the use of proceeds — 1) Energy efficiency, 2) Green buildings and 3)
Renewable energy — are recognized by the GBP as project categories with clear environmental
impact. NTT Group has set targets for the contribution to the reduction of CO2 emission insociety as a whole by its business activities, and the use of proceeds will further promote theGroup's goal of reducing the environmental impact of the Company and society in Japan. Pleasesee Section 3 for Sustainalytics’ assessment on impact of the use of proceeds.
- In the Framework, NTT Group has set a lookback period of up to three years for refinancing
operating expenses (OPEX). Sustainalytics considers that this is in line with market practice.
- In the energy efficiency category, NTT Group intends to invest in projects for 5G networks, FTTH
(Fiber to the Home), the next-generation communications infrastructure IOWN, and data centersthat improve electricity consumption efficiency. Sustainalytics positively views the Group’s useof proceeds, considering the following elements:

Sustainalytics recognizes that the expansion of 5G and fiber-optic networks will
potentially increase the overall electricity demand, while positively viewing thecontribution of those technologies to improving energy efficiency. Sustainalytics
positively views that NTT Group intends to allocate proceeds to 5G-related projects
that are primarily aimed at reducing power consumption and CO 2 emissions, including
the introduction of 5G base stations that are expected to save power compared to 3G
and 4G, and the introduction of base stations with automatic sleep mode that willcontribute to reducing power consumption during low-traffic periods. In addition, in the
FTTH business, NTT Group plans to allocate the proceeds to investments in the
installation, and operation of optical fiber network (FTTH). The Group has committed
to Sustainalytics that it will exclude investments related to the migration from Public
Switched Telephone Network (PSTN) to metal IP in the allocation of the proceeds, andwill limit the allocation to the investments related to the migration from metal IP lines
to FTTH networks as well as new installation of FTTH.
3

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NTT Group Green Bond Framework

Regarding data centers, NTT Group intends to allocate the proceeds for construction,
refurbishment, acquisition and operation of data centers with high energy efficiency. In
the Framework, the Group defined the eligibility criteria of the projects to be below 1.5
Power Usage Effectiveness (PUE),6 the ratio of total power used by a data center to thepower used by ICT equipment. Sustainalytics considers the threshold to be aligned withmarket practice as a standard that assures a certain level of energy efficiency of data
centers.

NTT Group intends to allocate the proceeds to R&D on the next-generation
communications infrastructure IOWN, 7 which may significantly improve electricity
efficiency with a network utilizing photonics technology that aims to increase power
efficiency by 100 times and an information processing infrastructure that achieves low
power consumption by utilizing photonics technology. Sustainalytics considers the
allocation of the proceeds into R&D to be aligned with market practice only if theinvestments have reasonable assurance of implementation, as well as achievement of
measurable impact in the near-term. NTT Group has also committed in this Framework
to limiting the allocation of proceeds for such R&D up to 20% of the total amount ofproceeds raised by its green bonds.
The Framework defines the category of green buildings, and NTT Group intends to allocate theproceeds in the expenses for construction, refurbishment and acquisition of green buildings thathave received or will receive a green building certification from credible third parties, as well as
for its relevant investments. For the selection of use of proceeds, the Group will use green
building certification programs from credible third parties, which are Platinum, Gold or Silver of
LEED-BD+C and LEED-O+M, S, A or B+ of CASBEE buildings (for New building, Existing building,and Renovation) and CASBEE real estate, three stars or above of BELS and three stars or aboveof DBJ Green Building. While Sustainalytics considers that buildings that achieved any of the top
three levels of these certification programs have environmental positive impacts, it also is awarethat the market practice is to limit allocation of the proceeds to buildings that have received anyof the top two levels of the certification schemes. (Please refer to Appendix 2 for an overview
and comparison of the green building certification scheme.) In addition to the eligibility criteria
above, the Framework has defined the eligibility criteria for buildings that receives B+ rank orabove for the local government-version CASBEE8 and AAA for the Tokyo Building Environment
Plan9 (both the power-saving property of the facility system and the thermal insulation propertyof building). Since these programs are based on self-evaluation, which may weaken thestrictness and credibility of the environmental positive impact, Sustainalytics encourages theGroup to allocate the proceeds in the buildings that obtains a green building certificationassessed by a third party to further strengthen the Framework.
The Group intends to allocate the proceeds in the expenses related to the construction,
refurbishments and operation of renewable energy (solar, wind, geothermal, biomass, andhydroelectric power generation). The Framework defines the thresholds for the use of proceedsby power source. Sustainalytics views that the thresholds set for each power source by theGroup mitigate environmental and social risks, and are aligned with market practice. (Theemission volume of greenhouse effect gases (GHG) of a geothermal facility is 100 gCO 2/KWhor less, the biomass raw material to be used for biomass power generation is waste-derived
which excludes non certified palm oils, and the capacity of hydroelectric power generation isless than 22.5 MW.)


-

-



Project Evaluation and Selection:

PUE = (Total Facility Power) / (IT Equipment Power). A PUE closer to 1.0 is considered to have better energy efficiency.
NTT Group, “R&D IOWN”, at: https://www.rd.ntt/e/iown/
8
Information on the CASBEE evaluation by the local governments of 24 cities is available at http://www.ibec.or.jp/CASBEE/local_cas.htm
9
For newly built, added to, and modified buildings whose total floor space exceeds 2,000 m2, the Tokyo Building Environment Plan System demands thesubmission of a self-evaluation of the environmental measures (rationalization of energy use, the appropriate use of resources, conservation of the naturalenvironment, and mitigation of heat island phenomena) to the Tokyo Metropolitan Government. At the time of the transfer of selling/leasing/trust
beneficiary rights of newly built and extended buildings whose total floor space exceeds 10,000 m2, a transferor is required to provide the assessment
results of energy-saving properties to a transferee. In addition to the status of the adoption of energy-efficient facilities, etc., the assessment results ofenergy-efficiency properties have a section to evaluate the thermal insulation property of a building and power-saving property of a facility system. This
uses the five-grade evaluation set by the Tokyo Metropolitan Government (AAA being the best and C being the worst).
https://www7.kankyo.metro.tokyo.lg.jp/building/eva/outline.html#no5
6
7

4

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NTT Group Green Bond Framework--

NTT Group’s evaluation and selection of the projects will be conducted by NTT Group’s affiliatedcompanies which operate those eligible projects, the Group Treasury Department of NTT
Finance Corporation’s Finance and Accounting Business Headquarters, and NTT. Those
affiliated companies will evaluate and select the projects based on the eligibility criteria. Thenthe Group Treasury Department of NTT Finance Corporation’s Finance and Accounting Business
Headquarters will select the projects based on the Group’s basic guidelines “NTT Group CSR
Charter,” in consultation with NTT. The director in charge of the Group Treasury Department of
NTT Finance Corporation’s Finance and Accounting Business Headquarters will make the final
decision. Sustainalytics considers the Group’s project evaluation and selection process to bealigned with market practice.
Toward reducing environmental and social risks associated with eligible projects, NTT Group
has specified in the Framework matters that should be ensured, including complying withapplicable environmental laws and regulations and implementation of environmental impact
assessments as needed, and has committed to confirm the implementation during the project
selection process. Sustainalytics views that the Group’s process for managing environmental
and social risks is adequate and is in alignment with market practice. Please see Section 2 fordetails.

Management of Proceeds:- The proceeds of NTT Group’s green bond will be managed by NTT Finance Corporation. The
Group Treasury Department of NTT Finance Corporation’s Finance and Accounting Business
Headquarters will track and manage the allocated and unallocated amounts of the proceeds
using an internal management system every quarter. NTT Group intends to allocate theproceeds within 24 months from issuance. For unallocated proceeds, the equivalent amounts
are managed as cash or cash equivalent. Sustainalytics views the Group’s management ofproceeds as aligned with market practice.



Reporting:- NTT Group intends to annually disclose allocation reporting and impact reporting on its Groupwebsite or an integrated report. It is also committed that, when a significant change occurs inthe status of the fund after proceeds are fully allocated, the Group will disclose such in a timely
manner.
- Allocation reporting, which will be conducted until the proceeds are fully allocated, will include
the status of the allocation to eligible projects, an overview of the allocated eligible projects(including the age of the assets and remaining useful life), the allocated and unallocatedamounts of the proceeds, the share of finance and refinance, and the allocation policy including
planned period for the full amount of the proceeds to be allocated if there is any unallocatedamount. Impact reporting will be conducted until the redemption of the green bond is completed
and will disclose qualitative and quantitative indicators, including (depending on the content ofeligible projects) the amount of CO2 emissions reduced, the amount of CO2 emissions, thenumber of 5G base stations established, effects intended by R&D projects, power generation
capacity and/or the amount of power generated in renewable energy projects, as well as thetype and level of green building certification acquired and the period of the acquisition andreacquisition. Sustainalytics considers the Group’s reporting to be aligned with market practice.

Alignment with Green Bond Principles 2021
Sustainalytics has determined that the Framework aligns to the four core components of the GBP. For detailed
information please refer to Appendix 3: Green Bond/Green Bond Programme External Review Form.

Alignment with Japan’s Green Bond Guidelines 2020
Sustainalytics is of the opinion that the Framework is in line with Japan’s Green Bond Guidelines 2020
developed by the Ministry of the Environment of Japan. The guidelines communicate what an issuer should
do to issue a credible green bond. Sustainalytics assessed the alignment between the Framework and the5Second-Party Opinion

NTT Group Green Bond Framework

elements described with the word “should” outlined in the Japan’s Green Bond Guidelines 2020. For detailed
information please refer to Appendix 2: Alignment with Japan’s Green Bond Guidelines 2020.

Section 2: Sustainability Strategy of NTT Group
Contribution of framework to NTT Group’s sustainability strategy
NTT Group has identified (1) climate change, (2) energy, (3) resources, and (4) ecosystems as its key
environmental issues, and has set the “Eco Strategy 2030” as targets for these issues through Fiscal Year (FY)20301011. In the areas of climate change and energy, the Group has set the goal of raising power efficiency
per data transmission in its telecommunications businesses (including data centers) by 10 times or morecompared with FY 2013 levels. The Group has been working to reduce the environmental impact of its
telecommunications businesses by reducing energy consumption of communications equipment, raising
efficiency of networks and data centers, and promoting R&D that contributes to energy conservation.
Furthermore, NTT Group has set the target of contributing to reducing the CO 2 emissions of society throughthe Group’s products and services by at least 10 times more than NTT Group's own emissions. In this way,
the Group is also aiming to contribute to the reduction of CO2 emissions of society as a whole12. In real estatebusiness by NTT Urban Development Corporation, the Group utilizes green building certification to promote
efforts to reduce the burden on the environment, including the control of GHG emissions, effective utilizationof resources, and reduction of waste, as stipulated in its Environmental Policy.13
In May 2020, the Group formulated the “Environment and Energy Vision,” in which it committed to contributing
to the reduction of the environmental impact of society as a whole by promoting businesses and R&D that
contribute to the reduction of environmental impact. In terms of a quantitative goal, NTT Group declared that
it will increase the percentage of renewable energy use to 30% or more across the Group by FY2030.
Furthermore, in September 2021, NTT Group updated the Vision as “NTT Green Innovation toward 2040” andset a GHG emission reduction target (Scope 1 + Scope 2) in accordance with the science-based target of 1.5
degrees Celsius temperature increase, aiming to reduce GHG emissions by 80% by 2030 (compared to
FY2013) and to achieve carbon neutrality by 2040 across the Group. 14
In order to achieve carbon neutrality, NTT Group aims to reduce GHG emissions from its business activities
by 45% compared to the business-as-usual (BAU) scenario by 2040 through the introduction of renewableenergy. As a target for FY2030, the Group aims to generate about half of the renewable energy used in Japan
from NTT-owned power sources, which will be achieved by developing power sources and expanding the useof green power at its business sites. In addition, by reducing electricity consumption, NTT Group aims to
reduce GHG emissions from its business activities by 55% by FY2040, compared to the BAU scenario. NTT
Group plans to achieve the majority of this reduction target by reducing electricity consumption through theintroduction of IOWN, aiming to reduce electricity consumption by 15% by FY2030 and 45% by FY2040
compared to the BAU scenario. Under the IOWN concept, the Group aims to realize the next-generation
communications infrastructure by 2030 that helps significantly reduce power consumption of computer
terminals and networks by applying optical technologies15. As part of this effort, NTT concluded a three-year
joint research agreement with Intel Corporation, which has a rich portfolio of technologies and expertise on
hardware and software16. Furthermore, in July 2021, it established the NTT IOWN Integrated Innovation Centerby bringing together development resources of NTT Laboratories. 17
Given the abovementioned environmental goals of NTT Group, Sustainalytics considers that NTT Group iswell position to issue green bonds. Moreover, Sustainalytics believes that the use of proceeds defined by the

NTT Group,”Environmental management, The NTT Group Environmental Statement, Identifying the Priority Environmental Issues of NTT Group”, at :https://www.ntt.co.jp/kankyo/e/management/analysis.html
11
NTT Group, ”Environmental management, The NTT Group Environmental Statement, The Eco Strategy 2030” at:https://www.ntt.co.jp/kankyo/e/management/strategy.html
12
NTT Group, ”Environmental management, The NTT Group Environmental Statement, The Eco Strategy 2030” at:https://www.ntt.co.jp/kankyo/e/management/strategy.html
13
NTT Urban Development Corporation, “Environmental management system” (Japanese only), at:https://www.nttud.co.jp/csr/environment/management.html
14
NTT Group, “NTT Green Innovation toward 2040”, at: https://group.ntt/en/newsrelease/2021/09/28/pdf/210928aa.pdf
15
NTT Group, “R&D IOWN”, at: https://www.rd.ntt/e/iown/
16
NTT, “NTT Announces Technology Collaboration Targeted at Next Generation Communications Infrastructure for Innovative Optical & Wireless
Network”, at: https://group.ntt/en/newsrelease/2020/05/14/200514a.html
17
NTT, “Reorganization of NTT Laboratories”, at: https://group.ntt/en/newsrelease/2021/05/12/210512d.html
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Framework is consistent with and contributes to the realization of the Group’s environmental policy and longterm environmental goals.
Well positioned to address common environmental and social risks associated with the projects
While NTT Group’s eligible projects generate positive environmental impact, Sustainalytics recognizes thatthat these projects are exposed to environmental and social risks. Major risks include the contamination ofwater, air and soil, negative effects on the ecology and local residents, and safety and sanitation risks withregard to workers due to development, construction and operation of buildings and renewable energy
generation facilities. The construction and operation of data centers could result in the infringement of humanrights in the supply chain to obtain mineral resources, information leakage, the invasion of data privacy, andan increase in power consumption. Sustainalytics believes that NTT Group is prepared to manage and reduce
the risks associated with eligible projects by applying the following policies and processes:Within the framework, NTT Group commits to confirm the compliance with environmental laws andregulations of the country or municipality where the project is located, provide sufficient explanation to
local residents and conduct environmental assessments as necessary. As main environmental laws andregulations related to eligible projects, NTT Group names the Environmental Impact Assessment Law
and environmental impact assessment ordinances set by local governments for renewable energy
projects, as well as the Soil Contamination Countermeasures Act and the Construction Material
Recycling Law in relation to green buildings. Additionally, with respect to the treatment of hazardous
waste and the storage, management and disposal of polychlorinated biphenyls (PCBs) equipment andcontaminants, the Group commits within the Framework to ensure compliance with the Waste
Management and Public Cleansing Law and Act on Special Measures concerning Promotion of Proper
Treatment of PCB Wastes, respectively.

To reduce the environmental impact of the entire life cycle of data centers and other buildings owned
and managed by the Group, NTT Group has established the NTT Group Green Design Guideline for
Buildings 18 to determine matters to be observed, such as energy efficiency, the reduction of toxic
substances uses, and the effective utilization of resources. In addition, to develop and procure ICT
equipment with high energy efficiency, NTT Group has compiled the NTT Group Energy Efficiency
Guidelines 19 and have set evaluation methods and standard values for power efficiency for eachequipment. Furthermore, over 90% of the Group’s total operation sites are working to mitigate
environmental risks by introducing environment management systems including an international
standard, ISO14001.20

In response to the supply chain risks associated with the Group’s procurement activities, including data
center business, the Group established the NTT Guidelines for CSR in Supply Chain 21 , and requests
suppliers to conform to requirements in six areas of human rights and labor, health and safety,
environment, fair trading, quality and safety, and information security, and conducts risk evaluation oftier 1 suppliers based on the guideline. 22 Furthermore, based on the NTT Group's Human Rights Charter23,
the Group identified human rights issues related to ICT businesses by conducting pre-assessments fordata center businesses and potential human rights impact assessments, and committed to continuous
monitoring and risk assessment and analysis on the aforementioned issues at all business areas in andoutside Japan.24 The Group is also committed to taking steps to avoid the use of conflict minerals, which
are a source of funding for armed groups, in its procurement activities, by establishing its basic policy
on conflict minerals.25

Through the NTT Group Information Security Policy 26, NTT Group is working to mitigate the information
security risk at data centers. Within the policy, the Group commits to continuously implement measures
to protect information, including the protection of secrecy of telecommunications, the implementationof security measures to prevent the loss, falsification, or leakage of information, supervision ofoutsourcing contractors, etc.

NTT Group, “NTT Group Green Design Guideline for Buildings”, at: https://www.ntt.co.jp/design/green_design_e.pdf
NTT Group, “NTT Group Energy Efficiency Guidelines”, at: https://www.ntt.co.jp/kankyo/e/management/img/energy/guidelinever8_1_e.pdf
20
NTT Group, “Group management measures”, at: https://group.ntt/en/environment/management/group/
21
NTT Group, “NTT Guidelines for CSR in Supply Chain”, at: https://www.ntt.co.jp/ontime/e/img/pdf/supply_chainE2.pdf
22
NTT Group, “NTT Group Sustainability Report 2020”, at: https://www.ntt.co.jp/csr_e/pdf/sustainability_report_2020_databook.pdf
23
NTT Group, “Respect for Human Rights”, at: https://www.ntt.co.jp/csr_e/communication/team-ntt/02.html
24
NTT Group, “NTT Group Sustainability Report 2020”, at: https://www.ntt.co.jp/csr_e/pdf/sustainability_report_2020_databook.pdf
25
NTT Group, “To Our Suppliers”, at: https://group.ntt/en/procurement/policy/supplier/26
NTT Group, “NTT Group Information Security Policy”, at: https://www.ntt.co.jp/g-policy/e/index.html
18
19

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NTT Group Green Bond Framework

To assure the safety and health of workers, the Group commits to complying with Labor Standards Act
and the Industrial Safety and Health Act, and other relevant laws and regulations, and has establishedinternal rules.27

Based on the above, Sustainalytics believes that NTT Group is well-positioned to manage and reduce theenvironmental and social risks associated with the eligible projects.

Section 3: Impact of Use of Proceeds
All three use of proceeds categories are aligned with those recognized by the GBP and Japan’s Green Bond
Guidelines 2020. Sustainalytics explains why those project categories produce positive environmental
impacts in Japan as follows:
Contribution to climate change measures through the improvement of the energy efficiency ofcommunications networks and data centers
Looking at global electricity demand in 2019, data networks consumed 250 TWh, or 1% of global electricity
use, while data centers consumed 200 TWh, or 0.8%. 28 Global IP traffic (data traffic) increased by about 12.1
times from 2010 to 2019.29 It is expected to reach 4.8 Zettabyte by 2022, a 3.2-time increase from 2017. 30
With an increase in data traffic, the demand for communications networks and data centers is expected toincrease. In order to curb the increase in power consumption and CO 2 emissions from information andcommunications infrastructure, continuous improvement of energy efficiency is required.
In the “Greenhouse gas emissions trajectories for the information and communication technology (ICT) sector
compatible with the UNFCCC Paris Agreement,” 31 which outlines recommendations for the ICT industry tocomply with the Paris Agreement, the International Telecommunication Union (ITU) requires the entire
industry to reduce GHG emissions by 45% from 2020 levels by 2030. Specific measures for decarbonizationof the industry that ITU shows include the introduction of measures to improve energy efficiency incommunications networks and buildings and the use of renewable energy. The Japanese government also
formulated the “Green Growth Strategy”32 for achieving carbon neutrality in 2050, which calls for facilitating
the reduction of CO2 emissions in communications networks and data centers. The target it has set for data
centers is to improve the energy efficiency of all new data centers by 30% or more by 2030 with a view toachieving carbon-neutral data centers by 2040.
Based on the Framework, in the energy efficiency category, NTT Group intends to allocate the green bondproceeds to projects that contribute to reducing power consumption of communications networks andinvestments in highly efficient data centers. Sustainalytics positively views that NTT Group’s use of proceeds
will help reduce power consumption of communications networks and data centers, whose demands are
expected to grow, and contribute to achieving Japan’s climate targets.
Necessity of promoting renewable energy
Regarding the composition of Japan’s power sources in 2019, renewable energy (solar, wind, biomass,
geothermal, and hydro) accounted for 18.1%, while fossil fuel-based energy accounted for 75.7%. 33 In April
2021, the Japanese government committed itself to reducing GHG emissions by 46% below 2013 levels by2030.34 As part of the energy mix aligned with this commitment, it is considering an increase in the proportion
NTT Group, “NTT Group Sustainability Report 2020”, at: https://www.ntt.co.jp/csr_e/pdf/sustainability_report_2020_databook.pdf
International Energy Agency (IEA), “Data Centers and Data Transmission Networks”, at: https://www.iea.org/reports/data-centres-and-datatransmission-networks
29
International Energy Agency (IEA), “Data Centers and Data Transmission Networks”, at: https://www.iea.org/reports/data-centres-and-datatransmission-networks
30
Cisco, “Cisco Visual Networking Index: Forecast and Trends, 2017–2022”, at:https://twiki.cern.ch/twiki/pub/HEPIX/TechwatchNetwork/HtwNetworkDocuments/white-paper-c11-741490.pdf
31International Telecommunication Union (ITU), “Greenhouse gas emissions trajectories for the information and communication technology sector
compatible with the UNFCCC Paris Agreement”, at: https://www.itu.int/rec/T-REC-L.1470-202001-I
32“Green Growth Strategy through Achieving Carbon Neutrality in 2050”, at: https://www.meti.go.jp/press/2021/06/20210618005/20210618005-3.pdf
33
Agency for Natural Resources and Energy, “FY2019 Energy Supply and Demand Report (Final Figures) (Japanese only)”, at:https://www.meti.go.jp/press/2021/04/20210413004/20210413004-1.pdf
34
The Prime Minister’s Office of Japan, “Press conference by the Prime Minister on the greenhouse gas reduction targets and the declaration of a stateof emergency (Japanese only)” at: https://www.kantei.go.jp/jp/99_suga/statement/2021/0422kaiken.html
27
28

8

Second-Party Opinion

NTT Group Green Bond Frameworkof renewable energy to 36–38% by 2030.35 Furthermore, having committed to net-zero GHG emissions by
2050,36 the government has formulated the Green Growth Strategy,37 which describes the policy direction andaction plan towards achieving carbon neutrality in 2050. In the Strategy, the government expresses its intent
to promote the use of renewable energy, setting a reference target of covering 50–60% of electric power
generation with renewable energy.
In the Framework, NTT Group specifies that it will allocate the proceeds to renewable energy-related projects.
Sustainalytics views that the Group’s use of proceeds will help promote the introduction of renewable energy
in Japan and contribute to achieving the Japanese government’s mid- and long-term climate goals.
Importance of promoting green buildings
In 2019, CO2 emissions from buildings accounted for about 30% of Japan’s total CO 2 emissions.3839 As of
2019, the final energy consumption by buildings increased about 20% from 1990 levels. 4041 Thus, thepromotion of energy conservation in buildings is essential for reducing Japan’s CO 2 emissions. Based onthese conditions, the Japanese government established the Act on the Improvement of Energy Consumption
Performance of Buildings (Building Energy Efficiency Act)42 in 2015 for the purpose of improving the energy
efficiency of buildings, and has been working to strengthen energy-saving regulations on buildings in a phasedmanner, including the regulatory obligation to comply with energy-efficiency standards. Moreover, based on
the Paris Agreement, the Japanese government submitted its Nationally Determined Contribution (NDC) 43 in
2020, in which it pledged to reduce GHG emissions by 26% from 2013 levels by 2030, and set the goal of
cutting the CO2 emissions from buildings by 40% toward meeting that GHG emission reduction goal for
FY2030. It aims to achieve the goal via a number of measures including improving the energy efficiency
properties of newly built buildings, modifying existing buildings, reinforcing energy management, andintroducing highly efficient lighting.
In the Framework, NTT Group intends to allocate the proceeds from the green bonds to green buildings thathave received green building certification. Green building certification requirements stipulated in the eligibility
criteria include energy efficiency properties, as well as the building performance and operation in the areas ofresource conservation, pollution prevention and biodiversity. Sustainalytics considers that the use ofproceeds will help promote green buildings in Japan and contribute to mitigating buildings’ environmental
impacts and achieving Japan’s climate goals.

Alignment with/contribution to SDGs
The Sustainable Development Goals (SDGs) were set in September 2015 and form an agenda for achieving
sustainable development by the year 2030. This green bond advances the following SDG goals and targets:
Use of Proceeds
Category
Energy Efficiency
Green Buildings

SDG

SDG target

7. Affordable and Clean
Energy7.3 By 2030, double the global rate of
improvement in energy efficiency

9. Industry, innovation andinfrastructure

9.4 By 2030, upgrade infrastructure and retrofit
industries to make them sustainable, withincreased resource-use efficiency and greater
adoption of clean and environmentally soundtechnologies and industrial processes, with all

Ministry of Economy, Trade and Industry, "Outline of the Basic Energy Plan (Draft)", at:https://www.enecho.meti.go.jp/committee/council/basic_policy_subcommittee/2021/046/046_004.pdf
36
Prime Minister of Japan and His Cabinet, “Policy Speech by the Prime Minister to the 203rd Session of the Diet”, at:https://japan.kantei.go.jp/99_suga/statement/202010/_00006.html
37“Green Growth Strategy through Achieving Carbon Neutrality in 2050”, at: https://www.meti.go.jp/press/2021/06/20210618005/20210618005-3.pdf
38“Greenhouse Gas Emissions in Fiscal Year 2019 (Final Figures) (Japanese only)”, at: https://www.env.go.jp/press/files/jp/116118.pdf
39
The combined data for the residential sector and commercial and other sector are referred to as the CO2 emissions for buildings.
40
Agency for Natural Resources and Energy, “FY2019 Energy Supply and Demand Report (Final Figures) (Japanese only)”, at:https://www.meti.go.jp/press/2021/04/20210413004/20210413004-1.pdf
41
The combined data for the residential sector and commercial and other sector are referred to as the final energy consumption for buildings.
42
Ministry of Land, Infrastructure, Transport and Tourism, “Overview of the Building Energy Efficiency Act (Detailed Explanatory Session) (Japaneseonly)”, at: https://www.mlit.go.jp/common/001178846.pdf
43"Submission of Japan’s Nationally Determined Contribution”, at: https://www.env.go.jp/press/files/jp/113675.pdf
35

9Second-Party Opinion

NTT Group Green Bond Framework

countries taking action in accordance with theirrespective capabilities
Renewable Energy

7. Affordable and Clean
Energy7.2 By 2030, increase substantially the share of
renewable energy in the global energy mix

Conclusion
NTT Group intends to issue green bonds based on the Framework and allocate the proceeds to new or existing
projects related to 1) Energy Efficiency, 2) Green Buildings and 3) Renewable Energy. Under the Eco Strategy
2030 and Environment and Energy Vision, NTT Group has set numerical goals for reducing its own
environmental impact and reducing GHG emissions of society through its business activities, and the use ofgreen bond proceeds are expected to contribute to achieving these long-term goals. Moreover, Sustainalytics
believes that the use of proceeds leads to advance the climate change measures of the Japanese government
and SDGs 7 and 9 of the United Nations, by improving the energy efficiency of buildings and data centerswhere demand is expected to increase, as well as contributing to expand the introduction of renewable energy.
The Framework defines the Group’s eligibility criteria and policies for project evaluation and selection process,management of proceeds, and reporting, which Sustainalytics views as aligned with market practice. In the
Framework, NTT Group explains its measures to manage and mitigate the environmental and social risks
associated with eligible projects, and Sustainalytics believes that the Group has adequate policies andprocesses in place.
Considering the above, Sustainalytics is of the opinion that the Framework is aligned with the four corecomponents of GBP and Japan’s Green Bond Guidelines 2020, and is credible and transparent.

10Second-Party Opinion

NTT Group Green Bond Framework

Appendices
Appendix 1: Overview and Comparison of Green Building Certification Schemes
LEED44
Background

Leadership in Energy
andEnvironmental
Design (LEED) is a US
Certification System
for residential andcommercial buildings
used worldwide. LEED
was developed by the
non-profit U.S. Green
Building
Council(USGBC) and covers
thedesign,construction,
maintenanceandoperation of buildings.

CertificationlevelsCertifiedSilverGold
Platinumof

BELS46

C (Poor)B- (Slightly Poor)
B+ (Good)A (Very Good)S (Excellent)

1 Star
2 Stars
3 Stars
4 Stars
5 Stars* 4-grade evaluation
for CASBEE for Real
Estate excluding C
rank
CASBEE assesses two
main factors: insideandoutsidethebuilding site, whichtranslate into Q (Built
Environment Quality)
and,L(BuiltEnvironment
Load),
respectively.

Areas
of
Assessment:
Environmental
Project
Management

Areas
Assessment:

CASBEE
Certification45
The Comprehensive
Assessment System
for Built Environment
Efficiency (CASBEE)
Certification is a green
building certification
scheme in Japan,
which a third party
certifies
theenvironmental
performanceofbuildings.
The
certification scheme
includes, based on
types of buildings:
CASBEE for Buildings,
CASBEEforReal
Estate, and CASBEE
for Housing.

•Energyatmosphereand* The above are notapplied to CASBEE forReal Estate• Energy Efficiency• Resource efficiency

The Building-Housing
Energy-efficiency
Labelling
System(BELS) is an energy
performancelabel,
issuedunder
guidelines establishedby Japan’s Ministry ofLand, Infrastructure,
Transport,
andTourism. The BELS
certification scheme
evaluates
primaryenergy consumption inorder to measureperformance of energy
conservation.

DBJ Green Building
Certification47
The
Development
Bank of Japan (DBJ)Green
Building
Certification
Programme
waslaunched
byDevelopment Bank ofJapan in 2011 and isoperatedin
conjunction with theJapan Real Estate
Institute (JREI), a
major appraisal firm inJapan.
The
certification scheme isrecognized as one ofJapan’s major regional
standards.
The
certificationisavailable for officebuildings,
logistics,
residential, and retailfacilities.
1 Star
2 Stars
3 Stars
4 Stars
5 Stars

None

Evaluation of DBJ
Green
Building
Certification includes
construction
specifications,environmental
features as well associal factors.

Energy efficiency•Energy & Resources(Energy conservation,

More information on the LEED certification scheme at: https://new.usgbc.org/leed.
Institutefor
Building
Environment
andEnergyConservation,“CASBEE
certification
scheme(Japaneseonly)”,
at:http://www.ibec.or.jp/CASBEE/certification/certification.html.
46
Association for Housing Performance Evaluation & Labeling, “Building-Housing Energy-efficiency Labelling System Building Energy-efficiency
Performance Labeling System (Japanese only)“, at: https://www.hyoukakyoukai.or.jp/bels/bels.html.
47
Development Bank of Japan, Japan Real Estate Institute (JREI), “DBJ Green Building”, at: http://igb.jp/en/index.html.
44
45

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NTT Group Green Bond Framework

Environmental
Performance of
the Building

Requirements• Sustainable Sites•
LocationandTransportation•
Materials
andresources• Water efficiency• Indoor environmental
quality• Innovation in Design• Regional Priority• Local environment• Indoor environment

Prerequisites(independent of levelof certification) +Creditswithassociated points.

Score-based
performance level.

Score-based
performance level.

CASBEE uses the BEE(BuiltEnvironment
Efficiency)
asits
assessment indicator,
which is calculated
fromQ(BuiltEnvironment Quality)
as the numerator and
L (Built Environment
Load)
as
the
denominator. Q and L
are obtained throughthe classification andrearrangement of the
four
areas
of
assessment.

The BELS score isbased on the Building
Energy Index, obtainedby comparing theenergy consumptionof a building to thestandard
primaryenergy consumptionof the building type in
official guidelines.

These points are thenadded together toobtain the LEED levelof certification
There are several
different
ratingsystems within LEED.
Each rating system isdesigned to apply to a
specific sector (e.g.
NewConstruction,
Major
Renovation,
Core
and
Shell
Development,
Schools/Retail/Healthcare
NewConstruction
and
Major
Renovations,
Existing
Buildings:
Operation
andMaintenance).

*
Areas
for
assessment
of
CASBEEforReal
Estateareenergy/GHG,
water,
resource, biodiversity,
indoor environment* CASBEE for Real
Estate does not use
BEE, additional point
system. Certification
will not be given, if
required item are notmet.

A two-star rating isequivalent to meeting
existing
energyconservation
standards, with higher
star ratings implying
greater savings.

resource
conservation, etc.)•Amenity(Convenienceandcomfort)•Resilience(Environmental risks,
legal compliance, etc.)•Community&
Diversity(Consideration for thesurrounding
environment
andbiodiversity, etc.)•Partnership(information
disclosure, etc.)
Score-based
performance level.
The assessment has afull score of 300 points
and consists of 85
questions, 73 of which
are regular questions
and 12 of which arequestionsoninnovative initiatives.
JREI will conduct on
the ground review ofbuilding performanceontheindicators
above,
andacommittee set in JREI
will decide the resultof certification rank.

The
score
is
calculatedbyanaccredited third party.

Performance
display
51
49

50

48

Qualitative
considerations

Worldwide recognition
and application

CASBEEiscontinuously
developed based on
industry-governmentacademia

BELS is aligned with
official
government
standards.

In addition to LEEDand CASBEE, DBJ
Green
Buildings
Certification
Programme
isU.S. Green Building Council, ”Green building leadership is LEED”, at: https://new.usgbc.org/leedInstitute for Building Environment and Energy Conservation, “Method of Evaluation and Built Environment Efficiency (BEE)”, at:
http://www.ibec.or.jp/CASBEE/CASBEE_outline/method.html.
50
Institutefor
Building
Environment
andEnergyConservation,“Displayexampleof
BELS(Japaneseonly)”,
at:https://www.hyoukakyoukai.or.jp/bels/pdf/170401bels_07.pdf.
51
Development Bank of Japan, “DBJ Green Building”, at: http://www.dbj.jp/en/pdf/service/finance/g_building/gb_presentation.pdf.
48
49

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Second-Party Opinion

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collaboration
under
the support of Ministryof Land, Infrastructure,
Transport
andTourism. In Japan,
many
local
governments
have
made
CASBEE
assessment
results
mandatory for building
permits.

52

The scheme assesses
onlyenergyperformance, withoutany
broaderconsiderationofholistic environmental
factors.

considered as one of
the green building
standards in Japan.
Accordingtoits
website, as of March
2021, 1073 properties
in Japan are certified
by the programme.52

Development Bank of Japan, Japan Real Estate Institute (JREI), “DBJ Green Building”, at: http://igb.jp/en/index.html.
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Appendix 2: Alignment with Japan’s Green Bond Guidelines 2020
Four elements

Alignment

Sustainalytics’ comments

1. Use of Proceeds

Yes

The eligible categories for use of proceeds defined in the Frameworkof NTT Group — 1) Energy efficiency, 2) Green buildings and 3)
Renewable energy — are recognized as project categories with a clear
environmental impact in Japan’s Green Bond Guidelines 2020. In
addition, the Framework indicates specific business categories of useof proceeds for investors to evaluate eligibility of the use of proceeds.
The process to mitigate environmental risks associated with projects
are described in the Framework for investors to review in advance. In
cases of refinancing assets that require long-term maintenancethrough multiple issuances of green bonds, the Group has committed
to, disclose the age of the assets, remaining useful life, and theamount of refinancing at the time of issuance.

2.
ProcessforProject Evaluationand Selection

Yes

The Framework demonstrates the Eco Strategy 2030 and Environment
and Energy Vision that NTT Group aims to achieve through theissuance of the green bond. The eligibility criteria, which serve as
standards for project evaluation and selection, are also defined.
Projects are evaluated and selected by NTT Group’s affiliatedcompanies which operate the projects, the Group Treasury
Department of NTT Finance Corporation’s Finance and Accounting
Business Headquarters, and NTT based on eligible criteria. The
director in charge of the Group Treasury Department of NTT FinanceCorporation’s Finance and Accounting Business Headquarters makes
the final decision.

3. Management ofProceeds

Yes

The Framework describes that the Group Treasury Department of NTT
Finance Corporation’s Finance and Accounting Business
Headquarters tracks and manages the proceeds of the green bond. To
be specific, every quarter, it is confirmed that the sum of the allocatedand unallocated amounts of the green bond proceeds matches thetotal amount of the green bond proceeds using an internal control
system. NTT Group plans to allocate the proceeds within 24 months
from issuance. As for unallocated proceeds, the equivalent amounts
are managed as cash or cash equivalent.

4. Reporting

Yes

Until the green bond proceeds are fully allocated, NTT Group iscommitted that it will disclose the status of the allocation of theproceeds on its group website or integrated report every year. Shoulda significant change occur in the status of the fund thereafter, such
will be disclosed in a timely manner. The Group plans to disclose thestatus of the allocation to eligible projects, an overview of theallocated eligible projects (including the age of the assets andremaining useful life), the allocated and unallocated amounts of theproceeds, the share of finance and refinance, and the planned period
for the full amount of the proceeds to be allocated if there is any
unallocated amount. Until the redemption of the green bond iscompleted, impact reporting shall be annually presented. The Groupintends to disclose environmental improvement indicators, including(depending on the content of eligible projects) the amount of CO 2
emissions reduced and CO2 emissions, the names of green buildings,
the level of certification acquired, the period of theacquisition/reacquisition, and power generation capacity and/or theamount of power generated.

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Second-Party Opinion

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Appendix 3: Green Bond / Green Bond Programme - External Review Form
Section 1. Basic Information
Issuer name:

NTT Group

Green Bond ISIN or Issuer Green Bond Framework Name, if
applicable:

NTT Group Green Bond Framework

Review provider’s name:

Sustainalytics

Completion date of this form:

September 30, 2021

Publication date of review publication:

Section 2. Review overview
SCOPE OF REVIEWThe following may be used or adapted, where appropriate, to summarise the scope of the review.
The review assessed the following elements and confirmed their alignment with the GBPs:☒

Use of Proceeds☒

Process for
Selection☒

Management of Proceeds☒

Reporting

Project

Evaluation

andROLE(S) OF REVIEW PROVIDER☒

Consultancy (incl. 2nd opinion)☐

Certification☐

Verification☐

Rating☐Other (please specify):
Note: In case of multiple reviews / different providers, please provide separate forms for each review.

EXECUTIVE SUMMARY OF REVIEW and/or LINK TO FULL REVIEW (if applicable)
Please refer to Evaluation Summary above.

Section 3. Detailed review
Reviewers are encouraged to provide the information below to the extent possible and use the comment
section to explain the scope of their review.
1. USE OF PROCEEDS
Overall comment on section (if applicable):15

Second-Party Opinion

NTT Group Green Bond Framework

The eligible categories for the use of proceeds, 1) Energy Efficiency, 2) Green Buildings, and 3) Renewable
Energy, are aligned with those recognized by the Green Bond Principles 2021. Sustainalytics considers thatNTT Group’s eligible projects will lead to positive environmental impacts and advance the UN Sustainable
Development Goals, specifically SDGs 7 and 9.
Use of proceeds categories as per GBP:☒

Renewable energy☒

Energy efficiency☐

Pollution prevention and control☐

Environmentally sustainable management ofliving natural resources and land use☐

Terrestrialandconservation☐

Sustainable
management

aquatic

biodiversity☐

Clean transportation

andwastewater☐

Climate change adaptation☐

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

Green buildings☐

Unknown at issuance but currently expected
to conform with GBP categories, or othereligible areas not yet stated in GBPs☐

Other (please specify):

water

If applicable please specify the environmental taxonomy, if other than GBPs:

2. PROCESS FOR PROJECT EVALUATION AND SELECTION
Overall comment on section (if applicable):
NTT Group’s affiliated companies will respectively evaluate and select eligible projects based on the eligible
criteria, and the Group Treasury Department of NTT Finance Corporation’s Finance and Accounting Business
Headquarters will select projects based on the NTT Group CSR Charter, in consultation with Nippon Telegraphand Telephone Corporation. The director in charge of the Group Treasury Department of NTT FinanceCorporation’s Finance and Accounting Business Headquarters will make the final decision. NTT Group has
established a process for reducing environmental and social risks, and applies it to all allocation decisions
made under the Framework. Sustainalytics views this risk management process as appropriate. NTT Group’s
process to evaluate and select projects is aligned with market practice.
Evaluation and selection☒

Credentials on the issuer’s environmental
sustainability objectives☒

Documented process to determine thatprojects fit within defined categories☒

Defined and transparent criteria for projects
eligible for Green Bond proceeds☒

Documented process to identify andmanage potential ESG risks associatedwith the project☒

Summary criteria for project evaluation andselection publicly available☐

Other (please specify):

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Second-Party Opinion

NTT Group Green Bond Framework

Information on Responsibilities and Accountability☒

Evaluation / Selection criteria subject toexternal advice or verification☐

Other (please specify):☐

In-house assessment

3. MANAGEMENT OF PROCEEDS
Overall comment on section (if applicable):
The proceeds of the green bond will be managed by NTT Finance Corporation. The Group Treasury
Department of NTT Finance Corporation’s Finance and Accounting Business Headquarters will track andmanage the allocated and unallocated amounts of the proceeds of the green bond using an internalmanagement system. For unallocated proceeds, the equivalent amount of proceeds is to be managed as cash
or cash equivalent. The Group’s proceeds management process is aligned with market practice.
Tracking of proceeds:☒

Green Bond proceeds segregated or tracked by the issuer in an appropriate manner☒Disclosure of intended types of temporary investment instruments for unallocated proceeds☐

Other (please specify):

Additional disclosure:☐

Allocations to future investments only☒

Allocations to both existing and future
investments☐

Allocation to individual disbursements☐

Allocation to a portfolio of disbursements☐

Disclosure of portfolio
unallocated proceeds☐

Other (please specify):

balanceof

4. REPORTING
Overall comment on section (if applicable):
NTT Group is committed to reporting on the allocation and positive environmental impacts annually.
Allocation reporting will include an overview of allocated projects and the amount allocated and unallocated.
Impact reporting will include quantitative and qualitative environmental performance indicators, including theamount of CO2 emissions reduced and green building certification and level received. NTT Group’s reportingis aligned with market practice.

Use of proceeds reporting:☐

Project-by-project☒

On a project portfolio basis☐

Linkage to individual bond(s)☐Other (please specify):17

Second-Party Opinion

NTT Group Green Bond Framework

Information reported:☒

Allocated amounts☒

Other (please specify): Overview
of eligible projects funded, ratio
offinanceandrefinance,
unallocated amount, planned
allocation period☐

Green Bond financed share of total
investment☐

Semi-annual

Frequency:☒

Annual☒Other (please specify): In a timely
manner, in the event of asignificant change in the status offunds occur after full allocation

Impact reporting:☒

Project-by-project☒

On a project portfolio basis☐

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

Information reported (expected or ex-post):☒

GHG Emissions / Savings☐

Energy Savings☐

Decrease in water use☒

Other ESG indicators (please
specify): The number of 5Gbase stations established;
numberofsubscribers(units); effects intended by
R&D projects; progress of
R&D and the expected
services & product examples;names of green buildings;
level of certification acquired,
and the timing of certification
and recertification; power
generation capacity and/ortheamountofpower
generated using renewableenergy☐Semi-annual

Frequency☒

Annual☐Other (please specify):

Means of Disclosure☐

Information published in financial report☐

Information published in sustainability
report☐Information published in ad hoc documents☒

Other (please specify): NTT Groupwebsite or Integrated Report18

Second-Party Opinion

NTT Group Green Bond Framework☐

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

Where appropriate, please specify name and date of publication in the useful links section.
USEFUL LINKS (e.g. to review provider methodology or credentials, to issuer’s documentation, etc.)

SPECIFY OTHER EXTERNAL REVIEWS AVAILABLE, IF APPROPRIATE
Type(s) of Review provided:☐

Consultancy (incl. 2nd opinion)☐

Certification☐

Verification / Audit☐

Rating☐Other (please specify):

Review provider(s):Date of publication:

ABOUT ROLE(S) OF INDEPENDENT REVIEW PROVIDERS AS DEFINED BY THE GBPi.

Second Party Opinion: An institution with environmental expertise, that is independent from the issuer may
issue a Second Party Opinion. The institution should be independent from the issuer’s adviser for its Green
Bond framework, or appropriate procedures, such as information barriers, will have been implemented within
the institution to ensure the independence of the Second Party Opinion. It normally entails an assessment of
the alignment with the Green Bond Principles. In particular, it can include an assessment of the issuer’s
overarching objectives, strategy, policy and/or processes relating to environmental sustainability, and anevaluation of the environmental features of the type of projects intended for the Use of Proceeds.

ii.

Verification: An issuer can obtain independent verification against a designated set of criteria, typicallypertaining to business processes and/or environmental criteria. Verification may focus on alignment withinternal or external standards or claims made by the issuer. Also, evaluation of the environmentally
sustainable features of underlying assets may be termed verification and may reference external criteria.
Assurance or attestation regarding an issuer’s internal tracking method for use of proceeds, allocation offunds from Green Bond proceeds, statement of environmental impact or alignment of reporting with the GBP,
may also be termed verification.

iii.

Certification: An issuer can have its Green Bond or associated Green Bond framework or Use of Proceeds
certified against a recognised external green standard or label. A standard or label defines specific criteria,
and alignment with such criteria is normally tested by qualified, accredited third parties, which may verify
consistency with the certification criteria.

iv.

Green Bond Scoring/Rating: An issuer can have its Green Bond, associated Green Bond framework or a key
feature such as Use of Proceeds evaluated or assessed by qualified third parties, such as specialised research
providers or rating agencies, according to an established scoring/rating methodology. The output may include
a focus on environmental performance data, the process relative to the GBP, or another benchmark, such as
a 2-degree climate change scenario. Such scoring/rating is distinct from credit ratings, which may
nonetheless reflect material environmental risks.

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