Second-Party Opinion

NTT Group Green Bond Framework

Evaluation Summary
Sustainalytics is of the opinion that the NTT Group (NTT Group and its affiliatedcompanies, hereinafter, “NTT Group” or the “Group”) Green Bond Framework (The“Framework”) aligns with the four core components of the Green Bond Principles 2018
(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,
are aligned with those recognized by the GBP. Sustainalytics
considers that the Group’s eligible projects will lead to positiveenvironmental impacts and advance the UN Sustainable
Development Goals, specifically SDGs 7 and 9.

Evaluation dateJune 3, 2020

Issuer Location

Tokyo, Japan

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

NTT Group’s affiliatedcompanies will respectively evaluate and select eligible projects
based on eligible criteria, and the Finance Department of NTT
Finance Corporation and Nippon Telegraph and Telephone
Corporation (NTT) will select projects based on the NTT Group CSR
Charter. The director in charge of the Finance Department of NTT
Finance Corporation will make the final decision. The Group’s process
to evaluate and select projects is aligned with market practice.

For inquiries, contact the Sustainable
Finance Solutions project team:
Wakako Mizuta (Tokyo)
Project Manager
wakako.mizuta@sustainalytics.com(+81) 3 4510 2343

The proceeds of the green bondwill be managed by NTT Finance Corporation. The Finance
Department of NTT Finance Corporation will track and manage theallocated and unallocated amounts of the proceeds of the green bondusing an internal 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 practices.

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

NTT Group is committed to disclosing allocation
reporting and impact reporting on its Group website or an integrated
report annually. Allocation reporting will include the allocation status,
an overview of allocated projects, amount allocated and unallocated,and shares of financing and refinancing. Impact reporting will include
qualitative environmental performance indicators including green
building certification and level received, in addition to quantitativeenvironmental performance indicators including CO2 emissions ofdata center and green building projects as well as CO2 emissions
avoided of renewable energy projects. Sustainalytics views theGroup’s reporting as aligned with market practice.

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. The guidelines communicate what
an issuer is expected to do to issue a credible green bond. Sustainalytics assessed the alignment between the Framework and the ‘should’
items outlined in the Japan’s Green Bond Guidelines 2020.

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Second-Party Opinion

NTT Group Green Bond Framework

Introduction
NTT Group consists of Nippon Telegraph and Telephone Corporation (NTT), which was established based on
the Act on Nippon Telegraph and Telephone Corporation, etc. (the NTT Act) in 1985, and its affiliatedcompanies. As a holding company of NTT Group, NTT executes management strategies, and promotes
research and development 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 Telegraphand 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”) under which it intends
to issue green bonds and use the proceeds to finance and/or refinance, projects that generate environmental
benefits. The Framework defines eligibility criteria in the following areas:
1.
2.
3.

Energy Efficiency
Green Buildings
Renewable Energy
a. Wind power generation
b. Solar photovoltaic generationc.
Geothermal power generationd. Biomass power generatione. Hydroelectric power generation

NTT Group engaged Sustainalytics to review the Framework, dated May 2020, and provide a second-party
opinion on the Framework’s environmental credentials and its alignment with the GBP1 and Japan’s Green
Bond Guidelines 2020.2 A summary overview of the Framework has been provided in Appendix 1.
Scope of work and limitations of Sustainalytics Second-Party Opinion
Sustainalytics’ Second-Party Opinion reflects Sustainalytics independent3 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 1.3.2, 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,
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.
1

The Green Bond Principles are administered by the International Capital Market Association and are available at https://www.icmagroup.org/green-socialand-sustainability-bonds/green-bond-principles-gbp/.
2
Ministry of the Environment, Japan, “Green Bond Guidelines, 2020”, at: http://www.env.go.jp/policy/guidelines_set_version_with%20cover.pdf
3
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 frameworkthat specifically addresses the need for analyst independence, consistency of process, structural separation of commercial and research (and engagement)
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.
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NTT Group Green Bond Framework

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 and3) 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 in society as a whole by its business activities, and the use of proceeds will further
promote the Group's goal of reducing the environmental impact of the Company and society inJapan. Please see Section 3 for Sustainalytics’ assessment on impact of the use of proceeds.
- NTT Group intends to allocate the proceeds for construction, refurbishment, acquisition andoperation of data centers that has energy efficiency. In the Framework, the Group establishedthe eligibility criteria of the projects to be less than 1.5 of Power Usage Effectiveness (PUE)4,
which is the ratio of total power used to the power used by IT equipment within data centers.
Sustainalytics positively views the setting of the threshold by the Group, given that the market
considers the threshold assures a certain energy efficiency of a data center.
- 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, Existingbuilding, and Renovation) and CASBEE real estate, three stars or above of BELS and threestars or above of DBJ Green Building. While Sustainalytics considers that these certification
programs are robust and credible and the inclusion of top three levels of certification has
environmental positive impact, it also acknowledges that investors generally prefer the proceeds
to be financed the buildings that have received the top two levels of the programs. (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 forbuildings that receives B+ rank or above for the local government-version CASBEE5 and AAA
for the Tokyo Building Environment Plan6 (both the power-saving property of the facility system

4

PUE = (Total Facility Power) / (IT Equipment Power). A PUE closer to 1.0 is considered to have better energy efficiency.
Information on the CASBEE evaluation by the local governments of 24 cities is available at http://www.ibec.or.jp/CASBEE/local_cas.htm
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 natural
5
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Second-Party Opinion

NTT Group Green Bond Framework--and the thermal insulation property of building). Since these programs are based on selfevaluation, which may weaken the strictness and credibility of the environmental positive impact,
Sustainalytics encourages the Group to allocate the proceeds in the buildings that obtains agreen building certification assessed 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 practices. (Theemission volume of greenhouse effect gases (GHG) of a geothermal facility is 100 gCO2/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 is lessthan 22.5 MW.)NTT Group has defined a lookback period of 24 months for the refinancing of existing projects
in the Framework.

•

Project Evaluation and Selection:- The evaluation and selection of the projects will be conducted by NTT Group’s affiliatedcompanies which operate those projects, the Finance Department of NTT Finance Corporation,
and NTT. Those affiliated companies which include NTT Global Data Center Corporation(energy efficient data centers), NTT Urban Development Corporation (green buildings), and NTT
Anode Energy Corporation (renewable energy) will evaluate and select the projects based on
eligibility criteria. The Finance Department of NTT Finance Corporation and NTT will select the
projects based on, its basic guidelines, NTT Group CSR Charter. The director in charge of the
Finance Department of NTT Finance Corporation will make the final decision. Sustainalytics
considers the Group’s project evaluation and selection process to be aligned with market
practice.

•

Management of Proceeds:- The proceeds of NTT Group’s green bond will be managed by NTT Finance Corporation. The
Finance Department of NTT Finance Corporation will track and manage the allocated andunallocated amounts of the proceeds using an internal management system every quarter. NTT
Group intends to allocate the proceeds within 24 months from issuance. For unallocatedproceeds, the equivalent amounts are managed as cash or cash equivalent. Sustainalytics views
the Group’s manage proceeds 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 unallocated amountsof the proceeds, the share of finance and refinance, and the planned period for the full amountof the proceeds to be allocated if there is any unallocated amount. Impact reporting will be
conducted until the redemption of the green bond is completed and include volume of CO2
emissions for data centers and green building projects, volumes of CO2 emissions reduced andpower generation capacity and/or amount of power generated for renewable energy projects,
as well as name and level of green building certification acquired and the period of the acquisition

environment, and mitigation of heat island phenomena) to the Tokyo Metropolitan Government. At the time of the transfer of selling/leasing/trust beneficiaryrights of newly built and extended buildings whose total floor space exceeds 10,000 m2, a transferor is required to provide the assessment results ofenergy-saving properties to a transferee. In addition to the status of the adoption of energy-efficient facilities, etc., the assessment results of energyefficiency 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
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and reacquisition. Sustainalytics considers that the Group’s reporting to be aligned with market
practice.

Alignment with Green Bond Principles 2018
Sustainalytics has determined that the Framework aligns to the four core components of the GBP 2018. 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. The
guidelines communicate what an issuer should do to issue a credible green bond. Sustainalytics assessed
the alignment between the Framework and the ‘should’ items outlined in the Japan’s Green Bond Guidelines
2020.

7

GBP and Japan’s Green Bond
Guidelines 2020

Alignment with GBP andwith Japan’s Green Bond
Guidelines 2020

Sustainalytics’ comments onalignment with Japan’s Green Bond
Guidelines 20207

1. Use of Proceeds

Yes

The eligible categories for use ofproceeds defined in the Framework of
NTT Group — 1) Energy efficiency, 2)
Green buildings and 3) Renewableenergy — are recognized as project
categories with a clear environmental
impact in Japan’s Green Bond
Guidelines 2020. In addition, theFramework indicates specific businesscategories of use of proceeds forinvestors to evaluate eligibility of the useof proceeds. The process to mitigate
environmental risks associated withprojects are described in the Framework
for investors to review in advance. In
cases of refinancing assets that requirelong-term maintenance through multiple
issuances of green bonds, the Grouphas committed to, disclose the age of theassets, remaining useful life, and theamount of refinancing at the time ofissuance.

2. Process for Project Evaluationand Selection

Yes

The Framework demonstrates the EcoStrategy 2030 and Environment andEnergy Vision that NTT Group aims toachieve through the issuance of thegreen bond. The eligibility criteria, which
serve as standards for project evaluationand selection, are also defined. Projects
are evaluated and selected by NTT
Group’s affiliated companies which
operate the projects, the Finance
Department
ofNTT
Finance
Corporation, and NTT based on eligible
criteria. The director in charge of the
Finance Department of NTT FinanceCorporation makes the final decision.

For detailed comments on alignment with ICMA GBP, please see Appendix 3.
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3. Management of Proceeds

Yes

The Framework describes that the
Finance Department of NTT FinanceCorporation tracks and manages theproceeds of the green bond. To be
specific, every quarter, it is confirmedthat the sum of the allocated andunallocated amounts of the green bondproceeds matches the total amount of
the green bond proceeds using aninternal control system. NTT Groupplans to allocate the proceeds within 24
months from issuance. As forunallocated proceeds, the equivalentamounts are managed as cash or cash
equivalent.

4. Reporting

Yes

Until the green bond proceeds are fully
allocated, NTT Group is committed that
it will disclose the status of the allocationof the proceeds on its group website or
integrated report every year. Should asignificant change occur in the status of
the fund thereafter, such will be
disclosed in a timely manner. The Groupplans to disclose the status of theallocation to eligible projects, an
overview of the allocated eligible
projects (including the age of the assets
and remaining useful life), the allocatedand unallocated amounts of theproceeds, the share of finance andrefinance, and the planned period for thefull amount of the proceeds to beallocated if there is any unallocatedamount. Until the redemption of thegreen bond is completed, impact
reporting shall be annually presented.
As
environmental
improvement
indicators, in addition to the volume of
CO2 emissions reduced and emissions,
the Group plans to disclose the names ofgreen buildings, acquired certificate
level,
theperiodoftheacquisition/reacquisition, and power
generation capacity and/or amount of
power generated.

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 priority
challenges within its environmental activities, and has set “Eco Strategy 2030” as targets for these issues by
fiscal 20308. In the areas of climate change and energy, the Group has set the goal of improving the power
efficiency per data transmission of telecommunication businesses including data centers by ten times or morecompared with that of fiscal 2013. The Group has been working to reduce the environmental impact of its
telecommunication business by introducing equipment with high energy-saving performance and streamlining
network configurations. Furthermore, NTT Group has set the target of contributing to reduce CO2 emissions
8

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

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NTT Group Green Bond Frameworkof society through the Group’s products and services by more than ten times the amount released by NTT
Group's business activities. In this way, the Group is also aiming to contribute to the reduction of CO2 emissionsof society as a whole9. For its real estate business, NTT Urban Development Corporation utilizes green building
certifications to promote efforts to reduce the burden on the environment such as the control of GHG emissions,effective utilization of resources, and reduction of waste, as stipulated by its Environmental Policy10.
In May 2020, the Group established it’s “Environment and Energy Vision”,11 in which it aims to achieve “ZeroEnvironmental Impact” in which the amount of contribution to reducing the environmental impact of society
through business activities exceeds the environmental impact of the Group’s business activities. Under one of
the four pillars of the vision, “Promotion of Renewable Energy”, the Group set a numerical target to achieve autilization ratio of renewable energy of 30% or higher by fiscal 2030.
Given the above mentioned 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
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 thestorage, management and disposal of polychlorinated biphenyls (PCBs) equipment and contaminants,
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 andmanaged by the Group, NTT Group has established the NTT Group Green Design Guideline for
Buildings 12 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 13 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.



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 Chain14, 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 of tier

NTT Group, ”Environmental management, The NTT Group Environmental Statement, The Eco Strategy 2030” at:https://www.ntt.co.jp/kankyo/e/management/strategy.html
10
NTT Urban Development Corporation, “Environmental management system” (in Japanese), at:https://www.nttud.co.jp/csr/environment/management.html
11
NTT Group, “Financial Results for the Fiscal Year Ended March 31, 2020”, at: https://www.ntt.co.jp/ir/library_e/presentation/2020/200515e.pdf
12
NTT Group, “NTT Group Green Design Guideline for Buildings”, at: https://www.ntt.co.jp/design/green_design_e.pdf
13
NTT Group, “NTT Group Energy Efficiency Guidelines”, at: https://www.ntt.co.jp/kankyo/e/management/img/energy/guidelinever8_1_e.pdf
14
NTT Group, “NTT Guidelines for CSR in Supply Chain”, at: https://www.ntt.co.jp/ontime/e/img/pdf/supply_chainE2.pdf
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1 suppliers based on the guideline.15 Furthermore, based on the NTT Group's Human Rights Charter16,
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.


Through the NTT Group Information Security Policy17, 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 implementation of
security measures to prevent the loss, falsification, or leakage of information, supervision of outsourcing
contractors, etc.



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 rules18.

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 of data
centers
The amount of energy consumed by data centers around the world was 198 TWh in 2018, and this accounted
for 1.1% of total power consumption19. Global communication traffic volume is expected to double from 2018
to 202120, and it is estimated that if energy efficiency improvements continue to be around 10% of historicalperformance, the amount of power consumed by data centers will increase by around 10% in 202121. Similarly
in Japan, projections show that data centers will increase their share of domestic electricity demand from 1.5%
in 2018 to 5% in 202822. Therefore, improving the energy efficiency of data centers plays an important role incurbing Japan's CO2 emissions
In the Framework, NTT Group determines that it shall allocate the proceeds of the green bonds for investingin highly efficient energy-saving data centers. In the Nationally Determined Contribution (NDC) of the Paris
Agreement23, the Japanese government set the goal of reducing the total GHG emissions volume of Japan by
26% between 2013 and 2030. To achieve this goal, the government aims to improve energy efficiency by
about 35% and reduce energy demand by 50.3 million kL by 2030. Sustainalytics evaluates that the use ofproceeds as determined by NTT Group will reduce the power consumed by data centers, the number of whichis expected to grow in Japan, and contribute to the climate change measures promoted by the Japanese
government.

Importance of Advancing Renewable Energy
The share of the power generated with renewable energy to Japan’s total power generation volume in fiscal
2017 is 16% (solar photovoltaic 5.2%, wind 0.6%, biomass 2.1%, geothermal 0.2%, and hydroelectric power
NTT Group, “NTT Group Sustainability Report 2019”, at: https://www.ntt.co.jp/csr_e/pdf/sustainability_report_2019_databook.pdf
NTT Group, “Respect for Human Rights”, at: https://www.ntt.co.jp/csr_e/communication/team-ntt/02.html
17
NTT Group, “NTT Group Information Security Policy”, at:https://www.ntt.co.jp/g-policy/e/index.html
18
NTT Group, “NTT Group Sustainability Report 2019”, at: https://www.ntt.co.jp/csr_e/pdf/sustainability_report_2019_databook.pdf
19International Energy Agency (IEA), “Data centers and data communication networks”, at:https://www.iea.org/reports/tracking-buildings/data-centresand-data-transmission-networks
20
Ministry of Internal Affairs and Communications, "White Paper on Information and Communications, Part 1, Special Feature: The Evolving Digital
Economy and the Future of Society 5.0”(Japanese only), at: https://www.soumu.go.jp/johotsusintokei/whitepaper/ja/r01/html/nd112110.html
21International Energy Agency (IEA), “Data centers and data communication networks”, at:https://www.iea.org/reports/tracking-buildings/data-centresand-data-transmission-networks
22
Nihon Keizai Shimbun, "Impact on power supply and demand at data centers: Challenges in developing transmission lines”(Japanese only), at:https://www.nikkei.com/article/DGXMZO47917970Z20C19A7EE8000/
23"Submission of Japan’s Nationally Determined Contribution”, at :https://www.env.go.jp/press/files/jp/113675.pdf
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generation 7.9%)24. With the Great East Japan Earthquake and the accident at Fukushima Daiichi Nuclear
Power Plant, which occurred in 2011, as a turning point, the Japanese government announced a policy to
reduce dependency on nuclear power generation and introduce renewable energy to the extent possible. It
has also set the target of doubling the share of the power generated with renewable energy in Japan’s total
power generation volume in fiscal 2030 from 10.4% (before the earthquake) to 22–24% (solar photovoltaic
7.0%, wind 1.7%, biomass 3.6–4.6%, geothermal 1.0–1.1%, and hydroelectric power generation 8.8–9.2%)25.
By power source, the introduction of solar photovoltaic and hydroelectric power generation is steadily
increasing, having achieved about 80% of the introduction goal set for fiscal 2030 as of the end of fiscal 2018.
Meanwhile, the introduction progress rates for wind and geothermal power generation are both about 37%,
biomass power generation is about 60%, and the promotion of further introduction is required for those areas.26
Moreover, in NDC27 of the Paris Agreement, the Japanese government pledged to reduce GHG emission
volume by 26% between 2013 and 2030. As a precondition for this achievement, the government is working
to achieve the energy-mix stated above. The Fifth Strategic Energy Plan28 approved by the Japanese cabinet
in 2018 presents the policy of making renewable energy the main power source by 2050.
In the Framework, NTT Group defines the projects related to renewable energy (solar photovoltaic, wind,biomass, geothermal, and hydroelectric power generation) as use of the proceeds. Sustainalytics views thatthe use of proceeds will contribute to achieving the Japanese government’s climate change goals by
increasing power generated from renewable energy and reducing the CO2 emissions caused by power
generation.

Importance of Promoting Green Buildings
CO2 emissions from buildings accounts for about 30%29 of Japan’s total CO2 emissions. As the final energy
consumption in the Commercial and others sector and the Residential sector related to buildings such as
offices, commercial facilities and housing increased about 20% 30 from 1990 levels, promotion of energy
conservation in buildings is essential for reducing Japan’s CO2 emissions. Based on these conditions, theMinistry of Land, Infrastructure and Transport established the Act on the Improvement of Energy Consumption
Performance of Buildings (Building Energy Efficiency Act)31 in 2015 aiming to improve the energy efficiencyof buildings, and has been working on reinforcing energy-saving regulations on buildings by implementing aphased-introduction of regulatory measures including the obligation to comply with energy-efficiency
standards.
Moreover, in the NDC32 of the Paris agreement, the Japanese government pledged to reduce GHG emissions
by 26% by fiscal 2030 compared to that in fiscal 2013, and set the goal of cutting the CO2 emissions of theCommercial and others sector and the Residential sector by 40% each. 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, and introducing highly efficient lighting.
Green building certifications stipulated by NTT Group in the eligibility criteria of the Framework, evaluateenergy efficiency properties, as well as the buildings performance and operation in the areas of resource
conservation, pollution prevention and biodiversity. Sustainalytics considers that the use of proceeds will
promote green buildings in Japan, and contribute to mitigate buildings’ environmental impact and advanceJapan’s climate change measures.

24

Agency for Natural Resources and Energy, "Current Status of Renewable Energy in Japan and Abroad and Draft Points of Discussion for the Current
Fiscal Year's Procurement Price Calculation Committee” (Japanese only), at: https://www.meti.go.jp/shingikai/santeii/pdf/046_01_00.pdf
25
Ministry of Economy, Trade and Industry, “Long-term Energy Supply and Demand Outlook” (2015), at:
http://www.meti.go.jp/english/press/2015/pdf/0716_01a.pdf
26
Agency for Natural Resources and Energy, "Current Status of Renewable Energy in Japan and Abroad and Draft Points of Discussion for the Current
Fiscal Year's Procurement Price Calculation Committee” (Japanese only), at: https://www.meti.go.jp/shingikai/santeii/pdf/046_01_00.pdf
27"Submission of Japan’s Nationally Determined Contribution”, at :https://www.env.go.jp/press/files/jp/113675.pdf
28
Ministry of Economy, Trade and Industry, “Basic Energy Plan” (2018), at: https://www.meti.go.jp/english/press/2018/pdf/0703_002c.pdf
29
Ministry of the Environment, “Japan’s National Greenhouse Gas Emissions in Fiscal Year 2017 (Final Figures) (Japanese only)”, at:https://www.env.go.jp/earth/ondanka/ghg-mrv/emissions/results/JNGI2019_1.pdf
30
Ministry of Land, Infrastructure, Transport and Tourism, “Future Energy Conservation Measures for Housing and Buildings (Second Report) (Reference
Material) (Japanese only)”, at: https://www.mlit.go.jp/common/001275971.pdf
31
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
32"Submission of Japan’s Nationally Determined Contribution”, at :https://www.env.go.jp/press/files/jp/113675.pdf
9Second-Party Opinion

NTT Group Green Bond Framework

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

SDG

SDG target

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

Green Buildings

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 allcountries 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 CO2 emissions of society through its business activities as environmental
targets by fiscal year 2030, and the use of green bond proceeds are expected to contribute to achieving theselong-term goals. Moreover, Sustainalytics believes that use of proceeds lead 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 centers where 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 practices. 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: Framework Overview
For the purpose of issuing green bonds, NTT Group has developed the following framework which addresses
the four key core components of the GBP: use of proceeds, project evaluation and selection process,management of proceeds, and reporting, on May, 2020. The framework belongs to NTT Group. This
framework has been developed for the issuance of green bonds by NTT Group and its affiliates 33.

1. Use of proceeds
The proceeds of the green bonds are planned to be allocated to finance new or existing projects that meetthe following eligibility criteria. Existing facilities, excluding green buildings, must have started operation
within 24 months prior to the issue date of the green bond to qualify.
1.1(i)

Eligibility Criteria
Highly efficient and power-saving data centers

GBP Project Category: Energy Efficiency
Data centers are the infrastructure to support ICT. NTT Group already owns about 200 data centers, andmore investment is expected to be made. Data centers, on the other hand, consume a lot of power, so
improving efficiency and power saving performance of data centers are essential to achieve a low carbon
society. The proceeds will be allocated to investment in the construction, refurbishment, acquisition andoperations of data centers that meet the following criteria and improve power efficiency and reduce
environmental impact of business operations:<Eligibility Criteria>
・PUE (Power Usage Effectiveness) under 1.5(ii)

Green Building

GBP Project Category: Green Building
The proceeds will be allocated to investments and expenditures for the construction, modification, andacquisition of properties that were confirmed to meet any of the following eligibility criteria within 24 months
prior to the issue date of the green bond, and properties that are planned be to meet with the criteria in the
future.
<Eligibility Criteria>
・LEED-BD+C (Building Design and Construction) or LEED-O+M (Building Operations and Maintenance)
certified: Platinum, Gold or Silver
・ CASBEE building (New, existing or modified) or CASBEE real estate (including CASBEE by local
governments) evaluation/certification: S, A or B+
・BELS (Building-Housing Energy-efficiency Labeling System): Three stars or above
・DBJ Green Building Certificate: Three stars or above
・Power-saving evaluation based on the Tokyo Building Environment Plan: AAA for both thermal insulation
property of building and power-saving property of facility system(iii) Renewable Energy
GBP Project Category: Renewable Energy
The proceeds will be allocated to finance expenditures on investment in the construction, refurbishment,
acquisition and operation for the following NTT Group’s renewable energy projects:<Eligibility Criteria>
・Wind power generation projects: Project with output of 10,000 kW or over should have already completed
the environment assessment defined by the Environmental Impact Assessment Law. Project with outputof less than 10,000 kW shall undergo an environment assessment as required. When an environmental
impact assessment needs to be processed by a local government of the area where operations are
conducted, such should be properly executed.
・Solar photovoltaic generation projects: Project with an installed capacity of 40 MW or over should havealready completed the environment assessment defined by the Environmental Impact Assessment Law.
A project with an installed capacity of less than 40 MW shall undergo an environment assessment as33

https://www.ntt.co.jp/gnavi_e/index.html
11Second-Party Opinion

NTT Group Green Bond Framework

required. When an environmental impact assessment needs to be processed by a local government of
the area where operations are conducted, such should be properly executed.
・Geothermal power generation projects: CO2 emissions shall be 100gCO2/kWh or less. Project with output
of 10,000 kW or over should have already completed the environment assessment defined by theEnvironmental Impact Assessment Law. Project with output of less than 10,000 kW shall undergo anenvironment assessment as required. When an environmental impact assessment needs to be processedby a local government of the area where operations are conducted, such should be properly executed.
・Biomass power generation projects: Fuel to be used should be waste-derived (excluding palm oil waste).
When an environmental impact assessment needs to be processed by a local government of the area
where operations are conducted, such should be properly executed.
・Hydroelectric power generation projects: The output shall be less than 22.5 MW, or the product should
be a run-of-river type. When an environmental impact assessment needs to be processed by a local
government of the area where operations are conducted, such should be properly executed.

2. Process for project evaluation and selection
2.1 Application of Eligibility and Exclusionary Criteria in Project Selection
Projects that may be financed by the green bond are identified by the operating company34 that executes
each eligible project based on the aforementioned eligibility criteria. Evaluation and selection of eligible
projects is done by way of discussion and consideration of the conformity to the NTT Group CSR Charter,
which is the basic guideline for the Group, by the Finance Department of NTT Finance Corporation andNippon Telegraph and Telephone Corporation (NTT). The director in charge of the Finance Department of
NTT Finance Corporation makes the final decision.
2.2 Environmental Objectives
By working to reduce CO2 emissions from its business activities, and actively developing and promoting ICT
services and cutting-edge technologies, NTT Group aims to help reduce the total CO2 emissions of society
and adjust to climate change to achieve a low-carbon society in the future. NTT Group sets out the following
three numerical goals as measures to realize a low-carbon society in the future.
(1)
CO2 reduction of the Society
NTT Group has set the goal of increasing it’s contribution to reducing society’s CO2 emissions by at least
tenfold, compared to the emission amounts released by NTT Group, by fiscal year 2030. This is a goal tocontrol CO2 emissions from business activities and contribute to the reduction of the total CO 2 emissions
from society by providing services and technologies. As the major action items, the Group will provide
services and technologies to help reduce the CO2 emissions of society, promote research and developmentthat contributes to the mitigation of climate change, and investment in renewable energy projects,
environmentally friendly (green) buildings, etc.
(2)
Improvement of power efficiency
For the telecommunications businesses including the operation of data centers, NTT Group has set out thetarget of improving the power efficiency per communication volume by ten times or more compared to thatof fiscal 2013 by fiscal 2030. As the major action items, the Group is promoting investment in improving
operational efficiency by digital transformation, implementing power-saving measures for communicationequipment as well as highly efficient energy-saving data centers.
In order to further strengthen environmental energy initiatives, NTT Group has formulated it’s new
Environmental Energy Vision "Zero Environmental Impact" in fiscal 2020, and set a target to increase theproportion of the Group’s renewable energy usage to 30% or higher by FY2030. Based on these efforts, wehave shown our commitment to Science Based Targets-initiative35 to set CO2 emission reduction targets
that are consistent with the levels required by the Paris Agreement.
(3)

Improving the utilization rate of renewable energy

34

The operating companies that carry out the eligible businesses for which the funds will be used are as follows. Highly Efficient and Power Saving Data
Center: NTT Global Data Center Corporation, Green Building: NTT Urban Development Corporation, Renewable Energy: NTT Anode Energy Corporation
35
SBT (science-based targets): "setting targets in line with science". Despite targets for reducing CO2 emissions have been submitted by countries aroundthe world at the COP21 (Paris Agreement), the global average temperature in 2100 will increase more than 2°C compared to the pre-industrial level, even
if all targets are added up. SBT is what SBTi (SBT Initiative: CDP, Global Compact, WRI, WWF) supports and certifies to ensure that companies aroundthe world review their reduction targets and keep the temperature rise below 2°C.
12

Second-Party Opinion

NTT Group Green Bond Framework

Strengthen the Group's energy business and promote the use of renewable energy for our own businessactivities, and achieve our own use of renewable energy to at least 30% by fiscal 2030.
2.3 Process to Mitigate Environmental and Social Risks
In the selection of target projects, the Group confirms they meet eligibility criteria and whether they consider
the mitigation of environmental and social risks as follows: Conformity to environmental laws, regulations, etc., required by the central and local governments of
the area where the operation site exists, and environmental impact surveys as necessary Provision of a thorough explanation of business to local communities
 Implementation of proper toxic waste handling in accordance with laws related to waste treatment andcleaning, as well as proper storage, management, and safe and adequate disposal of equipment thatuses or is contaminated by PCB in compliance with the Act on Special Measures concerning Promotionof Proper Treatment of PCB Waste
 Execution of risk evaluations of suppliers based on the Guidelines for CSR in Supply Chain. Requestingof suppliers’ abidance to the Guidelines for Green Procurement and the Energy Efficiency Guidelines

3. Management of Proceeds
NTT Finance Corporation, which is responsible for the group finance function of NTT Group, centrally
controls the proceeds of the green bonds issued based on the Green Bond Framework to finance eligible
projects. The Finance and Accounting Department of NTT Finance Corporation manages the proceeds andallocates money to eligible projects using the internal control system, and tracks and manages the fundevery quarter. Until allocation, the equivalent amount of the proceeds are managed as cash or cash
equivalent. The allocation is planned to be completed within 24 months from issuance.

4. Reporting
4.1 Allocation reporting
Until proceeds are fully allocated, the Group annually reports on the status of proceeds allocation to eligible
projects on its group website or integrated report.
The Group plans to report the following items where feasible:
・The status of allocation of the green bond issuance amount to eligible projects
・Overview of eligible projects funded (including the age of the assets and remaining useful life)
・The amount allocated and unallocated to eligible projects
・The share of finance and refinance・When there is an unallocated portion, the planned allocation period
The first report on the allocation status of proceeds is scheduled to be provided within a year from theissuance of the green bonds. Should a significant change occur in the status of the fund following allocationof proceeds, such will be disclosed in a timely manner.
In addition, when refinancing an asset that needs to be maintained over a long period of time through theissuance of multiple green bonds, the elapsed life, remaining useful life and refinancing amount of the asset
will be disclosed at the time of issuance.
4.2 Impact reporting
As long as there is an outstanding balance of green bonds, the Group will annually report on the effect thatthe eligible projects have on the environment.
The following items will be reported individually and as a category total.
Eligible project
Impact reporting item
Data center
Volume of CO2 emissions
Green building
・ Property name of green building, obtained
certification level, and the timing ofacquisition and reacquisition
・ Volume of CO2 emissions
Renewable energy

・・Power generation capacity/actual volume(GWh)Volume of CO2 emissions reduced (t-CO2)

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NTT Group Green Bond Framework

Appendix 2: Overview and Comparison of Green Building Certification Schemes
LEED36
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
Platinum

BELS38C (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
assessestwo
main
factors:
inside and outside thebuilding site, whichtranslate into Q (Built
Environment Quality)
and,L(BuiltEnvironment
Load),
respectively.

Areas
of
Assessment:
Environmental
Project
Management

Areas
of
Assessment:
Environmental
Performance of
the Building

CASBEE
Certification37
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,
CASBEE for Real
Estate, and CASBEE
for Housing.

•Energyandatmosphere• Sustainable Sites•
LocationandTransportation•
Materials
andresources• Water efficiency* The above are notapplied to CASBEE forReal Estate• Energy Efficiency• Resource efficiency• Local environment• Indoor environment*
Areas
assessment

forof

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
Certification39
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,
resource
conservation, etc.)•Amenity(Convenienceandcomfort)36

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.
38
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.
39
Development Bank of Japan, Japan Real Estate Institute (JREI), “DBJ Green Building”, at: http://igb.jp/en/index.html.
37

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NTT Group Green Bond Framework

Requirements• Indoor environmental
quality• Innovation in Design• Regional Priority

CASBEE for Real
Estateareenergy/GHG, water,
resource, biodiversity,
indoor environment

Prerequisites(independent of levelofcertification)+
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
EnergyIndex,
obtained by comparing
theenergyconsumption of abuilding
tothestandard
primaryenergy consumption of
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).

* 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.

•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 result ofcertification rank.

The
score
is
calculatedbyanaccredited third party.

Performance
display
42
40

Qualitative
considerations

Worldwide recognition
and application

CASBEEiscontinuously
developed based on
industry-governmentacademia
collaboration
under
the support of Ministryof Land, Infrastructure,
Transport
andTourism. In Japan,
many
local
governments
have
made
CASBEE

41

BELS is aligned with
official
government
standards.
The scheme assesses
onlyenergyperformance, withoutany
broaderconsiderationofholistic environmental
factors.

In addition to LEEDand CASBEE, DBJ
Green
Buildings
Certification
Programmeisconsidered as one of
the green building
standards in Japan.
Accordingtoits
website, as of March
2019, 695 properties
in Japan are certified
by the programme.43

Institute 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.
41
Institutefor
Building
Environment
andEnergyConservation,“Displayexampleof
BELS(Japaneseonly)”,
at:https://www.hyoukakyoukai.or.jp/bels/pdf/170401bels_07.pdf.
42Development Bank of Japan, “DBJ Green Building”, at: http://www.dbj.jp/en/pdf/service/finance/g_building/gb_presentation.pdf.
43
Development Bank of Japan, Japan Real Estate Institute (JREI), “DBJ Green Building”, at: http://igb.jp/en/index.html.
40

15

Second-Party Opinion

NTT Group Green Bond Frameworkassessment
results
mandatory for building
permits.

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Second-Party Opinion

NTT Group Green Bond Framework

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:

June 3, 2020

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):17

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 GBP. Sustainalytics considers that the 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 toconform with GBP categories, or other eligible
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 companies will respectively evaluate and select eligible projects based on eligible criteria, andthe Finance Department of NTT Finance Corporation and Nippon Telegraph and Telephone Corporation(NTT) will select projects based on the NTT Group CSR Charter. The director in charge of the Finance
Department of NTT Finance Corporation will make the final decision. The Group’s process to evaluate andselect 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):18

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 Finance Department of
NTT Finance Corporation will track and manage the allocated and unallocated amounts of the proceeds ofthe green bond using an internal management system. For unallocated proceeds, the equivalent amount ofproceeds is to be managed as cash or cash equivalent. The Group’s proceeds management process is alignedwith market practices.

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 disclosing allocation reporting and impact reporting on its Group website or an
integrated report annually. Allocation reporting will include the allocation status, an overview of allocatedprojects, amount allocated and unallocated, and shares of financing and refinancing. Impact reporting will
include quantitative environmental performance indicators including green building certification and level
received, in addition to qualitative environmental performance indicators including CO2 emissions of data
center and green building projects as well as CO2 emissions avoided of renewable energy projects.
Sustainalytics views the Group’s reporting as aligned with market practice.

Use of proceeds reporting:☐

Project-by-project☒

On a project portfolio basis☐

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

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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): Name of Green
Building,
Obtainedcertification level, and thetiming of certification andrecertification,Powergeneration capacity and/or
amount of power generated☐

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 Report☐

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.)

20Second-Party Opinion

NTT Group Green Bond Framework

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 sustainablefeatures 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 of funds 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 nonethelessreflect material environmental risks.

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