Second-Party Opinion

Kirin Holdings Company, Limited.
Green Bond Framework

Evaluation Summary
Sustainalytics is of the opinion that the Kirin Holdings Company, Limited. (“Kirin
Holdings” or the “Company”) Green Bond Framework (“Framework”) is credible andimpactful and aligns with the four core components of the Green Bond Principles 2018
(GBP). This assessment is based on the following:

Evaluation dateNovember 6, 2020

Issuer Location

Tokyo, JapanThe eligible categories for the use of proceeds –1) Eco-efficient and/or Circular Economy Adapted Products,
Production Technologies and Processes, 2) Pollution Prevention andControl, 3) Energy Efficiency, and 4) Renewable Energy –, are alignedwith those recognized by the GBP. Sustainalytics considers that theeligible categories will lead to positive environmental impacts andadvance the UN Sustainable Development Goals, specifically SDG 7,
9 and 12.

Report Sections

Kirin Holdings’ internal
process in evaluating and selecting projects is managed by the
Accounting Department and CSV Strategy Department. The final
decision for the projects selected based on the use of proceeds
defined in the Framework, will be made by the Executive Officer incharge of financial strategy. Kirin Holdings’ process is in line withmarket practice.

For inquiries, contact the Sustainable
Finance Solutions project team:

Kirin Holdings’ Accounting
Department will track the allocated and unallocated amounts of theproceeds on a semiannual basis, using the internal management
system, until redemption of the bond. The proceeds will be allocatedto eligible projects within one year, and the unallocated proceeds will
be held in cash or cash equivalents. The Company’s management ofproceeds is in line with market practice.

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

Wakako Mizuta (Tokyo)
Project Manager
wakako.mizuta@sustainalytics.com(+81) 3 4510 2343
Marie Toyama (Tokyo)
Project Support
marie.toyama@sustainalytics.com(+81) 3 4510 2343

Kirin Holdings is committed to disclosing on its website
annually allocation reporting and environmental impact reporting.
Allocation reporting contains the name of projects, overview ofprojects with progress, and amounts allocated and unallocated, andwill be disclosed on a timely basis, in the event of any significant
changes. Impact reporting contains quantitative information
including conversion rate of PET bottle resin to recycled resin andreduction in greenhouse gas emission (in tons). Moreover, Kirin
Holdings commits to receive an annual review from an external
reviewer. Sustainalytics views Kirin Holdings’ commitments onreporting and annual review to be 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 developed by the Ministry of theEnvironment of Japan. 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.

© Sustainalytics 2020

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Kirin Holdings Company, Limited. Green Bond Framework

Introduction
Kirin Holdings Company, Limited. (“Kirin Holdings” or the “Company”) is the holding company of the Kirin
Group including Kirin Brewery Company, Limited, Kirin Beverage Company, Limited, Mercian Corporation, Lion
Pty Limited, Myanmar Brewery Limited, Kyowa Kirin Co., Ltd., and Kyowa Hakko Bio Co., Ltd. Headquarteredin Tokyo, Japan, the Company operates alcoholic beverage, non-alcoholic beverage, health science, andpharmaceutical businesses mainly in Japan, Asia and Oceania.
Kirin Holdings has developed the Kirin Holdings Company, Limited. Green Bond Framework (the “Framework”)
under which it intends to issue green bonds and use the proceeds to finance and/or refinance, projects thatwill lead to the positive environmental impact. The Framework defines eligibility criteria in the following areas:
1.
2.
3.
4.

Eco-efficient and/or Circular Economy Adapted Products, Production Technologies and Processes
Pollution Prevention and Control
Energy Efficiency
Renewable Energy

Kirin Holdings engaged Sustainalytics to review the Framework, dated October 2020, and provide a SecondParty Opinion on the Framework’s environmental credentials and its alignment with the GBP1 and Japan’sGreen 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 independent 3 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 1.6.1, 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 Kirin Holdings’s
Accounting Department and CSV Strategy Department to understand the sustainability impact of theirbusiness processes and planned use of proceeds, as well as management of proceeds and reporting aspectsof the Framework. Kirin Holdings representatives have confirmed (1) they understand it is the sole
responsibility of Kirin Holdings 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 Kirin Holdings.
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
1

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/.
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 (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.
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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 Kirin Holdings has
made available to Sustainalytics for the purpose of this Second-Party Opinion.

Sustainalytics’ Opinion
Section 1: Sustainalytics’ Opinion on the Kirin Holdings Company, Limited.
Green Bond Framework
Sustainalytics is of the opinion that the Framework is credible and impactful, and aligns with the four corecomponents of the GBP. Sustainalytics highlights the following elements of the Framework:•

Use of Proceeds:- The four eligible categories for the use of proceeds defined by Kirin Holdings – 1) Eco-efficient
and/or Circular Economy Adapted Products, Production Technologies and Processes; 2)
Pollution Prevention and Control; 3) Energy Efficiency; and 4) Renewable Energy – are allrecognized by the GBP as project categories with clear environmental impact. The Company’s
expenditures in those projects will further enhance the Company’s efforts to promotesustainable containers and packaging and to eliminate greenhouse gas (GHG) emissions fromthe Company’s value chains in line with the Company’s long-term goals and also will contributeto resources recycling and decarbonization in the society as a whole. Please see Section 3 for
Sustainalytics’ assessment of the environment benefits in Japan expected from the use ofproceeds.
- Within the category of Eco-efficient and/or Circular Economy Adapted Products, Production
Technologies and Processes, Kirin Holdings intends to allocate the proceeds to procure recycled
PET (polyethylene terephthalate) resin.
- Under the category of Pollution Prevention and Control outlined in the Framework, the Company
intends to allocate proceeds to investment in recycling facilities that produce recycled PET resin.
The recycling process of producing PET resin from collected PET bottles will contribute to
reduce plastic wastes that are otherwise landfilled or combusted.
- Sustainalytics notes that, with regard to recycling of plastics globally, while the vast majority,
approximately. 79%, of plastics manufactured between 1950 (when mass production started)and 2015 were landfilled, recycling of plastics is very low, with an estimated 9% of total global
plastic waste having been recycled. 4 Sustainalytics also recognizes that improved recycling
rates alone, even if attainable, will not fully address the holistic environmental issues associatedwith plastics,5 and believes that the industry needs to take substantial measures, including an
increased use of sustainably sourced alternative low-carbon materials, in order to achieve
circularity. While the Company has been promoting resource-recycling of PET bottles andintroducing PET bottles completely made of recycled PET resin for some products, it iscommitted to increasing the conversion rate of PET bottle resin to recycled resin in use in Japan
to 50% by 2027, and to fully convert to sustainable containers and packaging with the use ofrecycled and biomass materials by 2050. Sustainalytics believes that the use of recycled PET
resin by the Company will reduce the use of new petroleum-derived PET resin and improve
resources efficiency, contributing to the transition to a circular economy.

4

Science Advances, “Production, use, and fate of all plastics ever made”, at: https://advances.sciencemag.org/content/3/7/e1700782.full
Unlike steel, glass, and aluminum, plastics can only be recycled a finite number of times before being disposed of. In addition, recycled and bio-based
plastics face end-of-life management issues similar to conventional (fossil-fuel) plastics.
5

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In the category of Energy Efficiency, the Company intends to allocate the proceeds to introduce
heat pump systems at its factories, which include the expenditures related to purchase andinstallation. The Company intends to shift from boilers that use natural gas and other fossil fuels
to heat pumps that supply heat efficiently in the heating process at factories. Moreover, theCompany is committed to Sustainalytics that it will install heat pumps that run on electricity andnot on fossil fuels including natural gas.
- In the Renewable Energy category, Kirin Holdings intends to allocate the proceeds to introduce
solar power generation facilities at its factories and to procure renewable energy. In procuring
renewable energy, the Company is committed to procure power directly from power companiesor through Green Power Certificates on a medium- to long-term basis for at least five years,
which Sustainalytics considers it to be in line with market practice.
- In the Framework, the Company has established exclusionary criteria, and is committed not toallocating the proceeds to unfair transactions that do not abide by the laws and regulations of
the country of location, transactions involving improper relationship including bribery, corruption,
blackmail and embezzlement, and transactions that may cause human rights, environmental
and other social issues.
- Kirin Holdings intends to allocate the proceeds to new expenditures and to refinancing. The
Framework restricts the look-back period to five years prior to issuance of the green bond.
Sustainalytics acknowledges that the market expectation for look-back period is three years.
Project Evaluation and Selection:- Kirin Holdings’ project evaluation and selection will be managed by the Accounting Department
and CSV Strategy Department in accordance with the use of the proceeds described in the
Framework, developed based on the Environmental Vision 2050 of the Company. The final
decision for the projects selected will be made by the Executive Officer in charge of financial
strategy. Sustainalytics considers the Company’s project evaluation and selection procedure to
be in line with market practice.
Management of Proceeds:- The management of proceeds will be handled by Kirin Holdings’ Accounting Department. The
Accounting Department will track the allocated and unallocated amounts of the proceeds of thegreen bond on a semiannual basis, using the internal management system, until redemption of
the bond. While pending full allocation, Kirin Holdings will hold the unallocated proceeds in cash
or cash equivalent, it intends to allocate the proceeds in eligible projects within one year.
Sustainalytics considers that the Company’s process for the management of proceeds to be inline with market practice.
Reporting:- Kirin Holdings is committed to disclosing on its website annually allocation reporting and impact
reporting. Allocation reporting includes the name of projects, overview of projects with progress,
and amounts allocated and unallocated on a project basis, subject to confidentiality
considerations, until full allocation. Additionally, the Company is committed to disclosing in theevent of any significant changes, on a timely basis. Impact reporting includes quantitative
information including conversion rate of PET bottle resin to recycled resin and reduction ingreenhouse gas emission (in tons) on project basis until the green bond is redeemed. Moreover,
Kirin Holdings’ intends to receive an annual review from an external reviewer. Sustainalytics
views Kirin Holdings’ commitments on reporting and annual review as aligned with market
practice.
-

•

•

•

Alignment with Green Bond Principles 2018
Sustainalytics has determined that the Kirin Holdings Company, Limited. Green Bond Framework aligns to thefour core components of the GBP. For detailed information please refer to Appendix 2: 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 is
expected to do to issue a credible green bond. Sustainalytics assessed the alignment between the Frameworkand the ‘should’ items outlined in the Japan’s Green Bond Guidelines 2020.

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6

GBP and Japan’s Green
Bond Guidelines 2020

Alignment with GBP
and with Japan’sGreen Bond
Guidelines 2020

Sustainalytics’ comments on alignment withJapan’s Green Bond Guidelines 20206

1. Use of Proceeds

Yes

Eligible projects for the use of proceeds defined by
Kirin Holdings within the Framework, related to 1)
Eco-efficient and/or Circular Economy Adapted
Products, Production Technologies and Processes,
2) Pollution Prevention and Control, 3) Energy
Efficiency, 4) Renewable Energy, are recognized as
projects with clear environmental benefits in theJapan’s Green Bond Guidelines 2020. The
Company also describes measures to manage andreduce environmental risks associated with eligible
projects in the Framework, which will be accessible
to the investors in advance. In case the Company
issues multiple green bonds for refinancing assetsthat requires long-term maintenance, the Company
is also committed to disclose the age, remaining
useful life and refinancing amount of such assets.

2. Process for ProjectEvaluation and Selection

Yes

The Company describes the “Kirin Group
Environmental Vision 2050” in the Framework,
which it seeks to achieve through the issuance ofgreen bonds. The Framework also outlines theeligible criteria for the use of proceeds and states
that, as the process for evaluating and selecting
projects, the Accounting Department and CSVStrategy Department of the Company selects the
projects, which are then finalized by the Executive
Officer in charge of financial strategy.

3. Management ofProceeds

Yes

The Accounting Department of Kirin Holdings will
track and manage the allocated and unallocatedamounts of the proceeds of the green bond on asemiannual basis using the internal management
system until redemption of the green bond. The
Framework states that the Company intends toallocate the proceeds to eligible projects within ayear, and that the unallocated proceeds will be heldin cash or cash equivalents.

4. Reporting

Yes

Kirin Holdings is committed to disclosing, annuallyand on a timely basis in the event of significant
changes after full allocation, information on the
allocation of the proceeds and the environmental
benefits. Regarding the allocation of the proceeds,
the name of projects, overview of projects with
progress, and amounts allocated and unallocatedon a project basis, will be disclosed until theproceeds are fully allocated. As environmental
benefits, conversion rate of PET bottle resin torecycled resin and reduction in GHG emission (t)will be disclosed as environmental improvement

For detailed comments on alignment with ICMA GBP, please see Appendix 2.
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indicators, depending on the project category, until
the green bond is redeemed.

Section 2: Sustainability Strategy of Kirin Holdings
Contribution of framework to Kirin Holdings’ sustainability strategy
Kirin Holdings positions CSV (Creating Shared Value: creating values that can be shared with customers andsociety) as one of the core policies of management 7 and, by formulating the “Kirin Group Environmental
Vision 2050”,8 which is the Company’s long-term environmental strategy, and the “Kirin Group Vision 2027”,9which is a long-term management vision until 2027, the Company intends to deliver positive environmental
impact, through its business, in four areas: 1) biological resources; 2) water resources; 3) containers andpackaging; and 4) climate change, which are material environmental issues for the Company.
To address the issue of “containers and packaging” that is one of the material environmental issues, theCompany intends to promote development and use of sustainable containers and packaging as well as toestablish a resources recycling system. Having set the goal of completely converting to sustainablecontainers and packaging made of fully recycled and biomass-originated materials by 2050,10 the Company
intends to achieve the recycled resin utilization rate of 50% for materials for bottles produced in Japan by
2027.11 At the same time, by formulating the “Kirin Group Plastic Policy,”12 the Company is committed tobuilding mechanisms to collect and recycle used PET bottles in the areas where the Company operates.
Regarding “climate change,” through the “Kirin Group Environmental Vision 2050”, the Company sets out atarget of achieving net zero emission of GHG throughout its value chain as one of the material environmental
issues, and is promoting energy saving and renewable energy utilization measures such as introduction ofheat pump systems.13 As a medium-term target, Kirin Brewery Company, Limited intends to convert at least
50% of its electricity purchased at the factories to power from renewable energy sources by 2030, and Lion
Pty Limited Intends to introduce solar power generation facilities for 10MW by 2026.14 Kirin Holdings intends
to achieve the RE100 target as early as possible.15 In addition, the Company has received SBTi’s approval forthe 2.0 degree criteria for its reduction target to reduce GHG emission through its business activities and by
its value chain (total of Scope 1 and Scope 2, as well as Scope 3) by 30% respectively from 2015. Furthermore,
the Company intends to revise its targets to meet the 1.5 degree criteria by the end of 2020.1617
Given the above, Sustainalytics views that the Framework is consistent with the overall strategies andinitiatives of Kirin Holdings, and will further the Company’s actions on its key environmental priorities.
Well positioned to address common environmental and social risks associated with the projects
While Sustainalytics recognizes that the projects, defined as eligible for the use of proceeds in the Framework,
create environmental benefits, Sustainalytics is also aware that such projects pose potential environmental
and social risks. Major environmental and social risks are, among others, risks associated with the supply
7

Kirin Holdings, ”KIRIN CSV REPORT2020”, at: https://www.kirinholdings.co.jp/english/ir/library/integrated/pdf/report2020/kirinreport2020e.pdf
Kirin Holdings, ”Kirin Group Environmental Vision 2050”(Japanese only), at:https://www.kirin.co.jp/csv/eco/mission/#Main_inner&_ga=2.240601990.406456111.1600219800-1519271274.1595820383
9
Kirin Holdings, ” Kirin Group Announces its Long-Term Management Vision for 2027 and Medium-Term Business Plan for FY2019-2021”, at:https://www.kirinholdings.co.jp/english/news/2019/0214_01.html
10Kirin Holdings, ”Kirin Group Environmental Report 2020”(Japanese only), at:https://www.kirinholdings.co.jp/csv/report/env/pdf/environmental2020.pdf
11
Kirin Holdings, ”Our CSV Commitment”, at: https://www.kirinholdings.co.jp/english/csv/commitment/
12
Kirin Holdings, ”Kirin Group Establishes its Plastic Policy”, at: https://www.kirinholdings.co.jp/english/news/2019/0207_01.html
13
Kirin Holdings, ”Kirin Group Environmental Vision 2050”(Japanese only), at:https://www.kirin.co.jp/csv/eco/mission/#Main_inner&_ga=2.240601990.406456111.1600219800-1519271274.1595820383
14
Kirin Holdings, ”Our CSV Commitment”, at: https://www.kirinholdings.co.jp/english/csv/commitment/
15
Kirin Holdings, ”Kirin Group Environmental Vision 2050”(Japanese only), at:https://www.kirin.co.jp/csv/eco/mission/#Main_inner&_ga=2.240601990.406456111.1600219800-1519271274.1595820383
16
Kirin Holdings, ” Kirin Group becomes the first Japanese food company to receive approval for its mid-term greenhouse gas (GHG*1) reduction targets
under the Science Based Targets (SBT) Initiative.”(Japanese only), at: https://www.kirinholdings.co.jp/news/2017/0324_01.html
17
Kirin Holdings, ”Kirin Group Environmental Report 2020”(Japanese only), at:https://www.kirinholdings.co.jp/csv/report/env/pdf/environmental2020.pdf
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chain of the Company including procurement, workers’ health and safety at factories, outflow of muddy waterand impacts on ecosystem of plants and animals due to the installation of solar power at factories.
Considering the following measures, Sustainalytics believes that Kirin Holdings is well positioned to manage
and address environmental and social risks accompanying the projects.
▪

▪

▪

Kirin Holdings is committed to management and prevention of risks in procurement, abiding by laws andregulations, adhering to the industry’s voluntary standards and paying due attention to the environmentand human rights, in cooperation with suppliers, as stated in the “Kirin Group Sustainable Procurement
Policy” and “Kirin Group Basic Procurement Policy.” 18 In addition, the Company measures to reduce
environmental and social risks and alleviate negative impacts on the society in the supply chain, by
establishing the code of conducts for suppliers to observe as “Kirin Group Supplier CSR Guideline”,19
which consists of the following six items: organizational system and compliance and risk management;
paying due attention to human rights; paying due attention to environment; safety and security; programs
to address alcohol-related issues; and social contribution.
Kirin Holdings discloses its approach to Occupational Safety and Health,20 and enhances the workplaceenvironment through abidance by laws and regulations on safety, health and labor. At each office, theCompany has established the labor, health and safety committee to formulate the workers’ health andsafety policy by each operating company, and at meetings that are held every month, dangerous spots
and factors that could cause health problems are identified and improvement measures are implemented.
Further, Kirin Brewery, one of the major group companies, establishes safety-related KPIs every year andthe Company’s management monitors the progresses on a quarterly basis. At factories, surveys on
hazardous spots and toxicity are carried out based on the “risk assessment guideline,” and measures aretaken to prevent hazards and health problems based on the results.21
Kirin Holdings implements measures to enhance the environmental management system by conducting
internal audits in accordance with ISO14001 and other standards at each operating company. In addition
to complying with laws, each business site strives to prevent environmental pollution by setting its own
standards, which are stricter than the law, as well as managing water, soil and air pollution, chemical
substances, and other environmental issues. The Company also implements monitoring on abidance bylaws and regulations and progress of measures for environmental targets through internal audit.22

Section 3: Impact of Use of Proceeds
All four 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 produces positive environmental
impacts in Japan as follows:
Importance of cyclic use of plastics through procurement of recycled PET resin
Globally, over 90% of plastics are manufactured from virgin raw materials derived from fossil resources
including petroleum, and plastics manufacturing accounts for about 6% of petroleum consumption worldwide(of which about a quarter is for containers and packaging). 23 The greenhouse gas emitted by the plastics
industry accounts for about 1% of all the emissions worldwide, 24and extraction, transportation and refining ofoil for use as raw material of plastics are sources of GHG emission. As the volume of plastics packaging is
expected to increase by about three times by 2050,25 promoting the use of recycled materials instead of fossil
resources in manufacturing PET bottles is important for effective use of natural resources and as measuresagainst climate changes.
Kirin Holdings defines procurement of recycled PET resin as its use of proceeds, which is produced bymechanically recycling used PET bottles. By using recycled PET resin bottles as raw materials, PET bottles
can be recycled into PET bottles. In addition to reducing the use of fossil resources, CO2 emission in the
manufacturing process is demonstrated to be reduced by 50% to 60% compared to the manufacture of18

Kirin Holdings, ”Kirin Group Supplier CSR Guideline”(Japanese only), at: https://www.kirinholdings.co.jp/csv/procurement/pdf/csr_guideline.pdf
Kirin Holdings, ”Kirin Group CSR Guideline”(Japanese only), at:https://www.kirinholdings.co.jp/csv/procurement/pdf/csr_guideline.pdf
20
Kirin Holdings, ”Occupational Safety and Health”, at: https://www.kirinholdings.co.jp/english/csv/well-being/working_environment.html
21
Kirin Holdings, ”Occupational Safety and Health”, at: https://www.kirinholdings.co.jp/english/csv/well-being/working_environment.html
22
Kirin Holdings, ”Kirin Group Environmental Report 2020”(Japanese only), at:https://www.kirinholdings.co.jp/csv/report/env/pdf/environmental2020.pdf
23World Economic Forum, “The New Plastics Economy Rethinking the future of plastics”, at:
http://www3.weforum.org/docs/WEF_The_New_Plastics_Economy.pdf
24World Economic Forum, “The New Plastics Economy Rethinking the future of plastics”, at:
http://www3.weforum.org/docs/WEF_The_New_Plastics_Economy.pdf
25Center for International Environmental Law (CIEL), “Plastic & Climate”, at: http://www3.weforum.org/docs/WEF_The_New_Plastics_Economy.pdf
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petroleum-derived PET bottles.26 In Japan, while about 613,000 tons of PET bottles are produced annually,27
only 72,700 tons of recycled PET resin are used as raw materials of PET bottles.28 It is therefore important toincrease use of recycled PET resin for manufacturing PET bottles.
Given the above, Sustainalytics views that Kirin Holdings’ planned use of proceeds for procurement of recycled
PET resin is expected to contribute to reduction of fossil resources-derived virgin resources used to
manufacture PET bottles and to promotion of effective use of plastics resources.
Importance of enhancing recycling system for PET bottles
Of the plastic wastes generated in Japan (of which about half are containers and packaging),29 only 27% arerecycled (23%: material recycled; and 4%: chemical recycled), 56% incinerated for power generation or heatutilization, and 16% simply burnt or landfilled and not used effectively.30 Japan depends on foreign countries
for recycling wastes, and in 2018, 910,000 tons, or 43% of material recycled plastics, were exported mainly toSoutheast Asian nations such as Malaysia, Taiwan, Vietnam and Thailand.31,32 In addition, the marine pollution
caused by plastic waste leakage is now a major environmental issue globally. Based on this situation, in May
2019, the Japanese government released the “Resource Circulation Strategy for Plastics,” 33 with the target of
reusing or recycling about 60% of containers and packaging by 2035, as well as improving the country’s waste
plastic recycling capacity.
Kirin Holdings defines investment in facilities for manufacturing recycled PET resin as its use of proceeds, andSustainalytics views the use of proceeds positively as it is expected to promote recycling of waste plastics inJapan through enhanced recycling capacity of PET bottles and contribute to prevention of marine pollution.
Importance of Promoting Energy Conservation in Manufacturing Processes by Introducing Heat Pump
Systems
Kirin Holdings defines expenditures related to the installation of a heat pump system at its factories as its useof proceeds, a technology that recovers low-temperature heat sources from air and water and converts theminto high-temperature energy by adding energy. Heat pump systems are applied in industry in production
processes such as heating, thermal retention, sterilization, drying, cleaning and distillation, using unused heatsources such as waste air and waste heat to generate high temperature energy.34 Kirin group intends to useheat pump systems to replace the burning of fossil fuels for the heating process, which accounts for the
majority of GHG emissions from the manufacturing process, and is working to develop a manufacturingsystem with lower GHG emissions by procuring renewable energy for the electricity used as its energy source.
The Japanese government has committed to reducing GHG emissions by 26% by 2030 compared to 2013
levels as its climate goal, and has set a target of reducing final energy demand in the Industrial sector by 10.42
million kL of crude oil equivalent in order to achieve this goal.35 It positions the introduction of industrial heatpumps as one of the sector’s energy conservation measures and expect to achieve 879,000 kL, or 8.4% of the26

Kirin Holdings, ”Recycling of plastic bottles”(Japanese only), at: https://www.kirin.co.jp/csv/eco/special/recycle/pet02.html
The Council for PET Bottle Recycling, “Overview of Designated PET Bottle Recycling (Transition Table)” (Japanese only), at: http://www.petbottlerec.gr.jp/data/general_situation.html
28
The Council for PET Bottle Recycling, “Survey of Recycled PET Resin Usage in Japan” (Japanese only), at: http://www.petbottlerec.gr.jp/nenji/2019/p10.html
29
Plastic Waste Management Institute, “Production, disposal, recycling, treatment and disposal of plastic products” (Japanese only), at:https://www.pwmi.or.jp/pdf/panf2.pdf
30
Plastic Waste Management Institute, “Basic facts of plastic recycling 2020” (Japanese only), at: https://www.pwmi.or.jp/pdf/panf1.pdf
31
Ministry of the Environment, “The status of recycling of waste plastics in Japan and overseas” (Japanese only), at:https://www.env.go.jp/press/files/jp/114077.pdf
32
Japan External Trade Organization, “Japan to export 900,000 tons of waste plastic in 2019, the first time since 2004 that the volume has fallen below
1 million tons” (Japanese only), at: https://www.jetro.go.jp/biznews/2020/02/5c7b57b5cc67b51c.html
33
Ministry of the Environment, “Resource Circulation Strategy for Plastics” (Japanese only), at: https://www.env.go.jp/press/files/jp/111747.pdf
34
Japan Electro-Heat Center, “Industrial Heat Pump Application Guide” (Japanese only), at: http://www.jehcenter.org/asset/00032/HeatPump_Guide/Heatpump%20Guide.pdf
35“Japan’s NDC (Nationally Determined Contribution)”(Japanese only), at: https://www.env.go.jp/press/files/jp/113664.pdf
27

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sector's reduction target through the introduction.36 In order to achieve Japan’s climate goals, strengthening
energy-saving measures in factories through increased use of industrial heat pumps are essential.37
Based on the above, Sustainalytics is of opinion that Kirin Holdings’ use of proceeds related to the installationof heat pump system at factories is expected to contribute to the Japanese government's efforts to combat
climate change, through reducing GHG emissions from its manufacturing processes.
Necessity to Promote the Introduction of Renewable Energy
Kirin Holdings has specified expenditures related to the introduction of solar power generation facilities atfactories and procurement of electricity from renewable energy sources as its use of proceeds. In FY2018,
renewable energies accounted for 16.9% of Japan’s power source.38 In the Nationally Determined Contribution(NDC),39 the Japanese government is committed to reduce GHG emission to 26% by 2030 from the 2013 levelbased on the premise that the share of electricity from renewable energy sources is increased to 22-24%.
Accordingly, promoting introduction of renewable energy is an integral policy for Japan to achieve its climate
target. The Japanese government has established the goal of reducing GHG emission by 80% by 2050,40 andto achieve the target, sets out the policy of making renewable energy the primary source of electricity that is
free of emission.41 By power source, progress against the government’s 2030 introduction target as of end of
FY2018 was steady at 78% for solar), 60% for biomass, and 86% for small- to medium-sized hydropower, whilewind and geothermal power generation accounted for 37% each, and further expansion of their use isrequired.42
Given the above, Sustainalytics views positively that the use of proceeds determined by Kirin Holdings is
expected to contribute to the achievement of the Japan’s climate target through introduction and expanded
use of renewable energy and decarbonization of energy sources.
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
Eco-efficient and/or
Circular Economy
Adapted Products,
Production Technologies
and Processes

SDG

SDG target

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.

Pollution Prevention andControl

12. Responsible
Consumption and
Production

12.5 By 2030, substantially reduce waste
generation through prevention, reduction,
recycling and reuse.

Energy Efficiency

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

Renewable Energy

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

36

Ministry of Economy, Trade and Industry, “An Act to Amend the Act on the Rational Use of Energy, etc. (Energy Conservation Act)” (Japanese only), at:https://www.enecho.meti.go.jp/category/saving_and_new/saving/h30law/sanko.pdf
37
Ministry of Economy, Trade and Industry, “An Act to Amend the Act on the Rational Use of Energy, etc. (Energy Conservation Act)” (Japanese only), at:https://www.enecho.meti.go.jp/category/saving_and_new/saving/h30law/sanko.pdf
38
Agency for Natural Resources and Energy, “FY2018 Energy Supply and Demand Report (Final Figures) (Japanese only)”, at:：https://www.enecho.meti.go.jp/statistics/total_energy/pdf/stte_029.pdf
39“Japan’s NDC (Nationally Determined Contribution)”(Japanese only), at: https://www.env.go.jp/press/files/jp/113664.pdf
40
Ministry of the Environment, “The Long-term Strategy under the Paris Agreement”, at: https://unfccc.int/sites/default/files/resource/The%20Longterm%20Strategy%20under%20the%20Paris%20Agreement.pdf
41
Ministry of Economy, Trade and Industry, “Basic Energy Plan”, at: https://www.meti.go.jp/english/press/2018/pdf/0703_002c.pdf
42
Agency for Natural Resources and Energy, “Current State of Renewable Energy in Japan and Overseas and Draft Issues Proposed for the Current Yearby the Procurement Price Calculation Committee (Japanese only)”, at: https://www.meti.go.jp/shingikai/santeii/pdf/046_01_00.pdf
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Kirin Holdings Company, Limited. Green Bond Framework
Conclusion
Kirin Holdings intends to issue green bonds under the Framework and allocate the proceeds to finance and/or
refinance projects related to 1) Eco-efficient and/or Circular Economy Adapted Products, Production
Technologies and Processes; 2) Pollution Prevention and Control; 3) Energy Efficiency; and 4) Renewable
Energy. Sustainalytics considers that the use of proceeds defined by the Framework will contribute to theachievement of the Company's Kirin Group Environmental Vision 2050 and promote the recycling of plastic
resources, prevent marine pollution, and counter climate changes as well as SDGs 7, 9 and 12.
The use of proceeds defined by Kirin Holdings Company, are aligned with project categories recognized ashaving clear environmental benefits by the GBP and Japan’s Green Bond Guidelines 2020. The Framework
also explains about the project evaluation and selection process by the Accounting Department and CSVStrategy Department, the semi-annual tracking of proceeds by the Accounting Department, and its planned
annual reporting on the allocation and environmental benefits. Sustainalytics considers that the Company's
commitment to each core component are aligned with market practices.
Based on the above, Sustainalytics is of the opinion that the Framework is credible, transparent, and inalignment with the four core components of the GBP and Japan’s Green Bond Guidelines 2020.

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Appendices
Appendix 1: Framework Overview
For the purpose of issuing green bonds, Kirin Holdings 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 October 2020. The Framework belongs to Kirin Holdings.

1. Use of proceeds
The proceeds of the green bonds will be allocated to new expenditures or refinancing in relation to eligible
projects that meet the following eligible criteria. For refinancing, the use of proceeds will be restricted to
expenditures made within five years prior to the green bond issuance.
1.1 Eligibility Criteria
Item
Product Manufacturing
and Sales

Renewable Energy

Business / Projects
・Introduction of heat pump systems atfactories

GBP Project Category
・Energy Efficiency

・Procurement of and capital investment
for recycled PET resin

・Pollution Prevention andControl・Circular Economy Adapted
Products, Production
Technologies and Processes
・Renewable Energy

・Introduction of solar power generation
facilities at factories
・Procurement of renewable energy

1.2
Exclusionary criteria
The proceeds of the green bonds will not be allocated to projects related to the following:Unfair transactions not complying with the laws and regulations of the country of location or
involving improper relationship including bribery, corruption, blackmail and embezzlement; andTransactions that may cause human rights, environmental and other social issues.

2. Process for project evaluation and selection
2.1 Application of Eligibility and Exclusionary Criteria in Project Selection
The eligible projects will be selected by the Accounting Department and CSV Strategy Department of Kirin
Holdings in accordance with the eligible criteria in 1.1 above, and finalized by the Executive Officer in chargeof financial strategy. In determining the eligibility of the businesses, Kirin Holdings comprehensively
assesses the contribution to the achievement of the Kirin Group Environmental Vision 2050.
2.2 Environmental Objectives
Under the vision of “Enrich the Earth with Positive Impact”, Kirin Group will work with its broad stakeholders
to enrich society and the Earth for future generations through positive impact on people and theenvironment.
<Efforts for Realization>
Biological Resources
Cultivate, expand and procure sustainable agricultural raw materials
Stand by the side of farmers to make raw material production areas sustainable.
Water Resources
Bring water, used as a raw material, to a sustainable state.
Solve problems with water in a way that suits the characteristics of basin regions where our businessbases are located.
Containers and Packaging
Develop and disseminate sustainable containers and packaging.

Build a resource-recycling system to make containers and packaging sustainable11Second-Party Opinion

Kirin Holdings Company, Limited. Green Bond Framework
Climate ChangeRealize Net-Zero GHG in the entire value chainTake the lead in building a decarbonized society
2.3 Process to Mitigate Environmental and Social Risks
In carrying out our operations, we will comply with environmental laws and regulations and agreements withthe region throughout the execution and duration of the project and will follow the Kirin Group Compliance
Guidelines to ensure that we act with integrity and conformity to social ethics.

3. Management of Proceeds
Kirin Holdings’ Accounting Department will manage the allocation of the proceeds of the sustainability
bonds on a semiannual basis using the internal management system until redemption of the green bond.
The proceeds are planned to be allocated to eligible projects within one year from the issuance of the green
bonds. Pending full allocation, the proceeds will be held in cash or cash equivalents.

4. Reporting
4.1 Allocation reporting
Kirin Holdings will report on status of the proceeds which includes the name of projects, overview ofprojects with progress, and amounts allocated and unallocated, on the Company’s website, while taking
into account the confidentiality of the projects, until the proceeds are fully allocated to projects meeting theeligible criteria.
Moreover, in case of refinancing an asset that require long-term maintenance through the issuance ofmultiple green bonds, the Company will disclose the assets age, remaining useful life and the amount to berefinanced at the time of the bond issuance.
In an event of a significant change that may cause major changes to the allocation plan of the proceeds,
the Company will disclose in a timely manner.
4.2 Impact reporting
Kirin Holdings will report annually, on the following metrics on the Company’s website to the extent
practicable until the maturity of the green bond.
Item
Product Manufacturing
and Sales

Renewable Energy

Business / Projects
・Introduction of heat pump systems atfactories
・Procurement of and capital investment
for recycled PET resin
・Introduction of solar power generation
facilities at factories
・Procurement of renewable energy

Reporting Items
・GHG emissions reduction (t)・Conversion rate of PET bottle
resin to recycled resin
・GHG emissions reduction (t)5. Annual Review
Before the first anniversary of the green bond issuance date, Kirin Holdings will obtain a review from
Sustainalytics, an independent external review provider, to assess whether the reporting of the eligible
projects aligns with the Company’s Green Bond Framework. This review will be conducted annually until thefull allocation of the net proceeds from Kirin Holdings’ green bond.

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Appendix 2: Green Bond / Green Bond Programme - External Review Form
Section 1. Basic Information
Issuer name:

Kirin Holdings Company, Limited.

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

Kirin Holdings Company, Limited. Green Bond
Framework

Review provider’s name:

Sustainalytics

Completion date of this form:

November 6, 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 GBP:☒

Use of Proceeds☒

Process for Project Evaluation and
Selection☒

Management of Proceeds☒

Reporting

ROLE(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):13

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Kirin Holdings Company, Limited. Green Bond Framework
The eligible project categories for the use of proceeds - 1) Eco-efficient and/or Circular Economy Adapted
Products, Production Technologies and Processes, 2) Pollution Prevention and Control, 3) Energy Efficiency,
4) Renewable Energy, are aligned with those recognized by the GBP. Sustainalytics considers that the eligible
categories will lead to positive environmental impacts and advance the UN Sustainable Development Goals,
specifically SDG 7, 9 and 12.

Use of proceeds categories as per GBP:☒

Renewable energy☒

Energy efficiency☒

Pollution prevention and control☐

Environmentally sustainable management ofliving natural resources and land use☐

Terrestrial and aquatic biodiversity
conservation☐

Clean transportation☐

Sustainable water and wastewater
management☐

Climate change adaptation☒

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

Green buildings☐

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

Other (please specify):

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

2. PROCESS FOR PROJECT EVALUATION AND SELECTION
Overall comment on section (if applicable):
Kirin Holdings’ internal process in evaluating and selecting projects is managed by the Accounting Department
and CSV Strategy Department. The projects selected based on the use of proceeds defined in the Framework,
are finalized by the Executive Officer in charge of financial strategy. Kirin Holdings’ process is in line withmarket 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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Kirin Holdings Company, Limited. 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):
Kirin Holdings’ Accounting Department will track the allocated and unallocated amounts of the proceeds ofthe green bond on a semiannual basis, using the internal management system until redemption of the bond.
The proceeds will be allocated to eligible projects within one year, and the unallocated proceeds will be heldin cash or cash equivalents. The Company’s management of proceeds is in line 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 unallocatedproceeds☐

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 balance of
unallocated proceeds☐

Other (please specify):

4. REPORTING
Overall comment on section (if applicable):
Kirin Holdings is committed to disclosing on its website annually allocation reporting and environmental
impact reporting. Allocation reporting contains the name of projects, overview of projects with progress, andamounts allocated and unallocated, and will be disclosed on a timely basis, in the event of any significant
changes. Impact reporting contains quantitative information including conversion rate of PET bottle resin torecycled resin and reduction in greenhouse gas emission (in tons). Moreover, Kirin Holdings commits toreceive an annual review from an external reviewer. Sustainalytics views Kirin Holdings’ commitments onreporting and annual review to be aligned with market practice.

Use of proceeds reporting:☒

Project-by-project☐

On a project portfolio basis

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Kirin Holdings Company, Limited. Green Bond Framework☐

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

Information reported:☒

Allocated amounts☒

Other (please specify):☐

Green Bond financed share of total
investment☐

Semi-annual

Frequency:☒

Annual☐Other (please specify):

Impact reporting:☐

Project-by-project☒

On a project portfolio basis☐

Linkage to individual bond(s)☒Other (please specify): The Group's
overall performance will be disclosed.

Information reported (expected or ex-post):☒

GHG Emissions / Savings☐

Energy Savings☐

Decrease in water use☒

Other ESG indicators (please
specify): Conversion rate of
PET bottle resin to recycled
resin

☐

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): Kirin Holdings’
website☐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.)

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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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Sustainalytics accepts no liability for damage arising from the use of the information, data or opinions
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This document is translated from the Japanese language. In case of discrepancies between the Japanese
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About Sustainalytics, a Morningstar Company
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