Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

VERIFICATION REPORT
Japan Railway Construction, Transport
and Technology Agency
JRTT Sustainability Finance
DNV Post Issuance verification andperiodical review

Prepared by: DNV Business Assurance Japan K.K.
Location: Kobe, Japan
Date: Nov. 2021
Ref. Nr.: PRJN-234044-2021-AST-JPN

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Revision history
Issue Date
January 2019
October 2019
November 2020
June 2021

Remarks
JRTT Sustainability Finance Eligibility
DNV GL Pre Issuance Verification and Report
JRTT Sustainability Finance
DNV GL Post Issuance verification and periodical review (1st)
JRTT Sustainability Finance
DNV GL Post Issuance verification and periodical review (2nd)
JRTT Sustainability Finance Eligibility
DNV Pre Issuance Verification and Report (R-1)
JRTT Sustainability Finance
DNV Post Issuance verification and periodical review (3rd)-November 2021
(This report)

Allocation Status: All Proceeds (sustainability bond 101.6 billion JPY, sustainability loan
15.8 billion yen) have been allocated as planned-

Project progress: “Railway construction business” (Project No.01) opened.

-

Environmental improvement effect: Confirmed of CO2 emissions per transport volume
by CBS eligible criteria (low carbon transport)-

Updating the contribution to SDGs goals: Reorganizing the environmental and social
benefits of the JRTT sustainability finance, and the contribution to SDGs goals inaccordance with updating the framework

Disclaimer
Our assessment relies on the premise that the data and information provided by Issuer to us as part of our review procedures have been provided in good faith.
Because of the selected nature (sampling) and other inherent limitation of both procedures and systems of internal control, there remains the unavoidable riskthat errors or irregularities, possibly significant, may not have been detected. Limited depth of evidence gathering including inquiry and analytical procedures andlimited sampling at lower levels in the organization were applied as per scope of work. DNV expressly disclaims any liability or co-responsibility for any decision aperson or an entity may make based on this Statement.

Statement of Competence and Independence
DNV applies its own management standards and compliance policies for quality control, in accordance with ISO/IEC 17021:2011 - Conformity Assessment
Requirements for bodies providing audit and certification of management systems, and accordingly maintains a comprehensive system of quality control, including
documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. We
have complied with the DNV Code of Conduct1 during the assessment and maintain independence where required by relevant ethical requirements. This
engagement work was carried out by an independent team of sustainability assurance professionals. DNV was not involved in the preparation of statements ordata included in the Framework except for this Statement. DNV maintains complete impartiality toward stakeholders interviewed during the assessment process.

1 DNV Code of Conduct is available from DNV website (www.DNV.com)

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Scope and Objectives:
Japan Railway Construction, Transport and Technology Agency (hereinafter “JRTT” or“Issuer”) is an independent administrative organization and fully invested by government.
JRTT is only one independent administrative organization who develops and supports
transportation networks through railway and ship assets. Its organization is divided into thefollowing five accounts: Construction Account, Maritime Account, Special Operation Account,
Local public transportation Account, and Subsidy Account; moreover, this organization has
the following five businesses activities: Railway construction, Joint Ownership Shipbuilding,
Disposition of past national railway asset and payment of pensions, and Investments in Local
Public Transportation and Railway Development Supports.
JRTT determined the basic philosophy indicated below to achieve the goals prescribed inJapan Railway Construction, Transport and Technology Agency Act. Furthermore, JRTT has
formulated the environmental consideration policy as “Basic Environmental Policy”(determined at 27 Aug. 2013) and “Environmental Action Plan" (formulated at 1 Apr. 2018),
and executed the specific commitment to reduce the environmental load for its businessactivities.
【JRTT’s Basic Philosophy】
Contribute to Build Tomorrow's Transportation Networks.
-

We contribute to build safe, secure, eco-friendly transportation networks
Our transportation network building helps improve people’s lives and further develop
economies and societies
In the course of building transportation networks, we use our reliable technicalcapacity, abundant experience, and advanced expertise to the fullest

The Promotion for the business of Railway Construction and Joint Ownership Shipbuilding
through this sustainability finance issuance contributes the solution for environmental issues
and the social benefits. These activities also contribute the SDGs goals set by the United
Nations. Moreover, DNV has confirmed that JRTT captured and linked the relationship widely
between SDGs goals and each business of overall organization. The outline of Green(Environmental) / Social benefit and Contribution to SDGs is described in the following table.

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Table-1 JRTT sustainability finance for Environmental/Social benefits and Contribution to SDGs*
Project
portfolio
No.01
Railway
Construction

Green(Environmental)

Social benefit

benefit
Eligible category:

Eligible category:

Clean Transportation- Essential and- Mitigation ofimperativeenvironmental loadtransportation(Greenhouse gas

infrastructure

emission reduction,- Low cost and easy

e.g. CO2)

access for various
customers

No.02
Joint Ownership
Shipbuilding

Linkage/Contribution to SDGs

Eligible category:
Clean Transportation,
Pollution Prevention
and Control- Mitigation ofenvironmental load(Greenhouse gas
emission reduction,e.g. CO2)- Marine environment
conservation

Eligible category:- Essential andimperativetransportation
infrastructure andvarious user

・Goal 3: Good Health and Well-being
・Goal 7: Affordable and Clean Energy
・Goal 8: Decent Work and Economic Growth・Goal 9: Industry, Innovation andInfrastructure
・Goal 11: Sustainable Cities and Communities
・Goal 12: Responsible Consumption and
Production
・Goal 13: Climate Action
・Goal 15: Life on Land・Goal 8: Decent Work and Economic Growth・Goal 9: Industry, Innovation andInfrastructure
・Goal 11: Sustainable Cities and Communities
・Goal 13: Climate Action
・Goal 14: Life Below Water

convenience- Efficient distribution- Operation of routes

to remote island* DNV has confirmed that JRTT organized the contribution to the SDGs goals as follows, from theperspective of the environmental/social benefits per its governance system or its business activities, inaddition to the contribution to SDGs goals related to the project portfolio of sustainability finance (shownin Table-1).

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Table-2 Relationship between JRTT business activities and SDGs
JRTT Governance system/Business activities

Linkage/Contribution to SDGs

Governance system sustaining the businessactivities

・Goal８: Decent Work and Economic Growth・Goal 16: Peace and Justice Strong Institutions

Securing/Cultivating human resources
Appropriate staff assignment

・Goal 5: Gender Equality
・Goal８: Decent Work and Economic Growth

Activating communities

・Goal９: Industry, Innovation and Infrastructure
・Goal 11: Sustainable Cities and Communities

International cooperation

・Goal 3: Good Health and Well-being
・Goal７: Affordable and Clean Energy
・Goal 9: Industry, Innovation and Infrastructure
・Goal 11: Sustainable Cities and Communities
・Goal 13: Climate Action
・Goal 17: Partnerships to achieve the Goal

This report includes both Post Issuance Verification and Periodical review, which based on
CBI programmatic certification, of JRTT Sustainability Finance*1 Issuances as Climate
Finance(bond and loan) currently outstanding in FY 2020.
As JRTT sustainability finance, JRTT issued a total of 101.6 billion yen with a bond on 28th
May 2020, 28th August 2020, 27th November 2020, and 25th February 2021, and raised a
total of 15.8 billion yen with a loan on 29th March 2021. JRTT has secured program
certification from the Climate Bonds Initiative against the Climate Bonds Standard. DNVBusiness Assurance Japan K.K. (hereinafter “DNV”) conducted post issuance verification
against Climate Bond Standards version3.0 (hereinafter “CBS v3.0”) and periodical review of
the Finance eligibility assessment by using the Sustainability Bond Guidelines 2018 (ICMA,
hereinafter “SBG”) and the Green Bond Guidelines (the Ministry of the Environment, Japan
2017, hereinafter “GBGLs”).
* 1: financing method that includes contribution to both environmental (green) and social (social) nature,and bond issuance (bond) and market borrowing (loan)

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

JRTT determined principle “We contribute to build safe, secure, eco-friendly transportation
networks.” for social contribution. Under its principle, JRTT executes various businessincludes sustainability eligible project portfolio “Railway Construction” and “Joint Ownership
Shipbuilding”. JRTT defines its sustainable social contribution through its businessassociating its Finance eligible project with SDGs. As of August 2021, JRTT has allocated theproceeds (bonds and loans) from JRTT Sustainability Finance to the following categories of
nominated projects and assets as refinance, as scheduled:“Project 01, Railway Construction”- No. R-2, Public railway; Leased railway [Arterial railway (Main line and Interurban line)]*refinance- No. R-3, Public railway; Assigned railway [Public railway operated by Private sector]*refinance- No. R-4, Urban railway *refinancing
Please refer to the schedule-1 for details.

DNV has been commissioned by JRTT to provide the initial(pre-issuance) andperiodic(post-issuance) verification and review of the JRTT’s eligibility of the Finance against
the CBS v3.0 determined Climate Bonds Initiative (hereinafter “CBI”), as well as SBG and
GBGLs. Pre-issuance verification which was conducted in January 2019 concluded theeligibility of railway construction against CBS v3.0 and related technical sector criteria. Ourcriteria and information covered to achieve this is described under ‘Work Undertaken’ shown
below. The periodic review was based on information and documents provided by JRTT as of
13 Sep 2021. Finance has received the CBI certification and been certified as programmatic
certification who issues repeated and multiple finance which contribute environmentally
sustainability. No assurance is provided regarding the financial performance of the Finance,
the value of any investments in the Finance, or the long-term environmental benefits arisingfrom the nominated projects. Our objective of these reviews has been to provide anassessment that the usage of the proceeds of the Finance has met the criteria established on
the basis set out below.
•

Low Carbon Transport[Low Carbon Land Transport and the Climate Bonds Standard (Version 1.0)]

Also, DNV includes other related criteria described in the section “Basis of DNV’s opinion”
for annual report review.
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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Responsibilities of the Management of JRTT and DNV
The management of JRTT has provided the information and data used by DNV during thedelivery of this verification and review. Our statement represents an independent opinion
and is intended to inform JRTT management and other interested stakeholders in the
Finance as to whether the established criteria have been met, based on the information
provided to us. In our work we have relied on the information and the facts presented to us
by JRTT. DNV is not responsible for any aspect of the nominated assets referred to in thisopinion and cannot be held liable if estimates, findings, opinions, or conclusions areincorrect. Thus, DNV shall not be held liable if any of the information or data provided by
JRTT used as a basis for this assessment were not correct or complete.

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Basis of DNV’s opinion
DNV has conducted the verification against the CBS v3.0*1 and associated Sector
Technical Criteria through the creation and execution of a verification protocol addressing
each requirement of those standard and criteria. The detail of areas covered in the DNV
verification is summarized in Schedule 2 below.
Our Protocol includes a set of suitable criteria that can be used to underpin DNV’sopinion. The overarching principle behind the criteria is that a Finance should “enable
capital-raising and investment for new and existing projects with environmental and social
benefits”.
As per DNV’s Protocol for assessment, in addition to the CBS v3.0 above, DNV also
considers the criteria against which the Finance has been reviewed are grouped under thefour Principles (GBP*2, SBP*3, SBG*4, GLP*5, and GBGLs*6) as follows:

Principle One: Use of Proceeds. The Use of Proceeds criteria are guided by
the requirement that an issuer of a Finance must use the funds raised tofinance eligible activities. The eligible activities should produce clear
environmental and/or social benefits.

Principle Two: Process for Project Evaluation and Selection. The ProjectEvaluation and Selection criteria are guided by the requirements that an issuerof a Finance should outline the process it follows when determining eligibility of
an investment using Finance proceeds, and outline any impact objectives it willconsider.



Principle Three: Management of Proceeds. The Management of Proceeds
criteria are guided by the requirements that a Finance should be tracked within
the issuing organization, that separate portfolios should be created whennecessary and that a declaration of how unallocated funds will be handledshould be made.



Principle Four: Reporting. The Reporting criteria are guided by therecommendation that at least Sustainability Reporting to the financestakeholders should be made of the use of finance proceeds and thatquantitative and/or qualitative performance indicators should be used, where
feasible.

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review*1: Climate Bonds Standard version 3.0 (Climate Bonds Initiative)*2: Green Bond Principles (June 2018, International Capital Market Association)*3: Social Bond Principles (June 2018, International Capital Market Association)*4: Sustainability Bond Guidelines (June 2018, International Capital Market Association)*5: Green Loan Principles (2018, Loan Market Association, Asia Pacific LMA and LOANSYNDICATION AND TRADING ASSOCIATION)*6: Green Bond Guidelines, 2017 (March 2017, Ministry of the Environment, Japan)

Work undertaken
Our work constituted a high-level review of the available information, based on theunderstanding that this information was provided to us by JRTT in good faith. We have not
performed an audit or other tests to check the veracity of the information provided to us.
The work undertaken to form our opinion includes:
Pre Issuance (Initial) Verification/assessment (completed previously):•

Creation and execution of a Climate Bonds Standard Protocol, adapted to include therelevant Sector Technical Criteria for the Finance nominated projects and assets, as
described above and in Schedule 2 to this Assessment;•

Assessment of documentary supporting documents provided by JRTT on the Financeand supplemented assessment by a high-level desktop research. These checks refer
to current assessment best practices and standards methodology;•

Discussions with JRTT, and review of relevant documentation;•

Documentation of findings against each element of the criteria.

•

Field survey and inspection against the projects and assets;

Post Issuance (Periodic) Verification and Assessment:•

Evaluation of the supporting documents provided by JRTT and related to the Financeissuance, high level desktop research, document reviews, and interviews with key
personnel of the Issuer. These checks refer to best practices in current assessment
and standard methodologies;•

Discussions with JRTT management and review of relevant documentation;•

Review of the nominated projects and assets as described in Schedule 2;•Documentation of findings in detail.

•Field survey and inspection against the projects and assets, if required;

Our opinion as detailed below is a summary of these findings.

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Findings and DNV’s opinion

DNV has conducted the Post Issuance Verification of the Finance (bond) issued 28th May

2020, 28th August 2020, 28th November 2020 and 27th February 2021, and of the Finance(loan) issued 29th March 2021 by JRTT. It is DNV’s responsibility to provide an independent
verification statement on the compliance of the JRTT Finance with the CBS v3.0.
DNV conducted the verification in accordance with the CBS v3.0 and with International
Standard on Assurance Engagements 3000 Assurance Engagements other than Audits or
Reviews of Historical Information. The verification included i) checking whether theprovisions of the CBS v3.0 were consistently and appropriately applied and ii) the collectionof evidence supporting the verification.
DNV’s verification approach draws on an understanding of the risks associated with
conforming to the CBS v3.0 and the controls in place to mitigate these. DNV planned andperformed the verification by obtaining evidence and other information and explanations thatDNV considers necessary to give limited assurance that the Finance continues to meet therequirements of the CBS v3.0.
Based on the limited assurance procedures conducted, nothing has come to our attention
that causes us to believe that the Finances are not, in all material respects, in accordancewith the requirements of the CBS v3.0 and Associated Low Carbon Transport Technical
Criteria. Furthermore, nothing has come to our attention that causes us to believe that thereported impacts associated with the nominated projects and assets are inaccurate.
DNV also conducted periodical review, other than post issuance verification of the JRTT’s
annual report against to the criteria of GBP2018, SBP2018, SBG2018, GLP2018, and
GBGLs2017 accordingly.

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

DNV’s findings are listed below:
Principle One, Use of Proceed
JRTT has reported use of the proceeds (total finance proceeds: Sustainability bond
101.6 billion JPY, Sustainability loan 15.8 billion JPY) as refinance into following two
projects under the eligible projects on its website.
(1) Sustainability Finance Eligible Project (refinanced): Sustainability bond
Railway Construction (Project 01 R-2, R-3 and R-4)
Project 01 R-2: Public railway; Leased railway [Arterial railway (Mainline and interurban line)]
Sub Total: 10.0 billion JPY

Project 01 R-3: Public railway; Assigned railway (Public railway
operated by Private sector)
Sub Total: 57.9 billion JPY

Project 01 R-4: Urban railway line
Sub Total: 33.7 billion JP

Total: 101.6 billion JPY(2) Sustainability Finance Eligible Project (refinanced): Sustainability loan
Railway Construction (Project 01 R-2 and R-3)
Project 01 R-2: Public railway; Leased railway [Arterial railway (Mainline and interurban line)]
Sub Total: 4.22 billion JPY

Project 01 R-3: Public railway; Assigned railway (Public railway
operated by Private sector)
Sub Total: 11.58 billion JPY

Total: 15.8 billion JPY

Schedule-1 shows lists and details of sustainability projects.
DNV reviewed the eligibility of the funded projects and assets to meet the criteria forthe project categories above.

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Fig-1 Project 01 representative railway construction

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Principle Two, Process for Project Evaluation and Selection
The Finance’s proceeds have been allocated solely to refinance the projects andassets as defined in Schedule 1. As for the negative impact caused by these projects,
appropriate countermeasures and practical action plans which comply with relevant
regulations and laws have been taken and will be taken after the evaluation by JRTT.
DNV confirmed that JRTT resulted that its effect is limited and appropriate action will
be executed if required.

Principle Three, Management of Proceeds
DNV has reviewed evidence showing how JRTT traced the proceeds from the Finance(loan or Bond, from the time of issuance to the time of disbursement). The full amountof the proceeds fund has been allocated promptly. The details of the disbursement
value are tracked using JRTT’s internal protocol. At the end of each financial period(fiscal year), JRTT manages the outstanding balance of the Finance.
DNV confirmed based on the evidences showing by JRTT that the Sustainability bond
101.6 billion JPY and the Sustainability loan 15.8 billion JPY have been allocated at theend of the FY 2020 (End of Mar. 2021) as refinance, as scheduled.

As stated above, DNV provides no assurance regarding the financial performance of
the Finance, the value of any investments in the Finance, or the effects of thetransaction.

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Principle Four, Reporting
DNV has confirmed that JRTT annual report includes and maintains a dedicatedsection on the Finance in its website. This includes the project and value of theproceeds invested, as well as the associated qualitative and quantitative environmental
impacts based on the MLIT data.
JRTT disclosed environmental and social benefit and management proceeds on its
web site.
https://www.jrtt.go.jp/ir/sustainability-finance.html (Reporting)- CO2 emission per transportation unit (FY 2019)- Numbers of passenger of eligible railway project(representative line) (FY 2018)- FY 2020 Fund amount of allocation and outstanding- FY 2020 Refinance share (Unit: %)- FY 2020 Project progress (funded amount)
Project progress has been published in the followings in its web site
- Environmental report 2021
- FY 2020_Annual business report- FY 2020_Annual financial report- FY 2020_Annual financial statement- FY 2020_project report- Finance information report
Project progress information above includes other than project funded FY 2020.

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Table-1 shows the qualitative and quantitative environmental impacts by JRTT
sustainability finance project, Railway Construction, published by MLIT. CO2 emission
per unit (passenger and freight) is comparably lower enough than other transportation
categories.
MLIT: Ministry of Land, Infrastructure, Transport and Tourism, Japan

Table-1 CO2 emission per unit(passenger and freight) (2019）reference︓MLIT
category
Private light vehicle

passenger︓

freight︓

g-CO2/p-km

g-CO2/t-km
130

1,166

-

225

Airplane

98

-

Bus

57

-

Ship

-

41

17

18

Cargo vehicle

Railway

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

DNV Business Assurance Japan K.K.

10th Nov. 2021

Masato Kanedome

Naoki Maeda

Project Leader

Managing Director

DNV – Business Assurance Japan K.K.

DNV – Business Assurance Japan K.K.

Masahito Seiwa
Assessor
DNV – Business Assurance Japan K.K.
About DNV
Driven by our purpose of safeguarding life, property and the environment, DNV enables organisations to advance thesafety and sustainability of their business. Combining leading technical and operational expertise, risk methodology andin-depth industry knowledge, we empower our customers’ decisions and actions with trust and confidence. We
continuously invest in research and collaborative innovation to provide customers and society with operational andtechnological foresight. With our origins stretching back to 1864, our reach today is global. Operating in more than 100
countries, our 16,000 professionals are dedicated to helping customers make the world safer, smarter and greener.

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

1. Schedule-1 JRTT Sustainability finance nominated project/asset portfolio
Table JRTT Sustainability Finance (Sustainability bond) Project/Asset Portfolio (Project No. 01)
Project
No.
R-1

R-2

Nominated
Project/Asset Portfolio
Public railway; Railway Project under
the Urban Railway Convenience
Improvement Law (Projects toEnhancement the convenience ofurban railways)
Public railway; Leased railway(Arterial railway (Main line andInterurban line)

Sustainability Project
Category
・Clean transportation
・Affordable basic
infrastructure

・Clean transportation
・Affordable basic
infrastructure

01
R-3

R-4

Public railway; Assigned railway(Public railway operated by Private
sector)Public railway; Railway Project
under the Act on Special Measuresconcerning Integrated Promotion of
Residential Land Development and
Railway Construction in Major
Urban Areas (Urban railway)

・Clean transportation
・Affordable basic
infrastructure

・Clean transportation
・Affordable basic
infrastructure

Sustainability Project
Sub-Category・rail (electric)・transportation(public)・rail (electric)・transportation(public)

・rail (electric)・transportation(public)

・rail (electric)・transportation(public)

Funded amountin FY 2020

Remarks
Railway Construction(Construction Account):
Nominated Project・Eastern Kanagawa Lines・etc－

10.0 billion JPY

57.9 billion JPY

33.7 billion JPY

Railway Construction(Construction Account)︓
the following is project example
Nominated Project・Keiyo line ・Musashino line・etc
Railway Construction(Construction Account):
the following is project example
Nominated Project・Minatomirai 21 line・Odakyu
Odawara line・etc
Railway Construction(Construction Account)︓
Nominated Project・Joban new line (TX line)

The amount of assets:

1,395,729,500,091JPY(end of FY 2020)

Sustainability Finance (Sustainability Bond);

101,600,000,000 JPY(FY 2020 result)

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Table JRTT Sustainability Finance (Sustainability Loan) Project Portfolio (Project No. 01)
Project
No.

R-1

R-2

Nominated

Project/Asset Portfolio
Public railway; Railway Project
under the Urban Railway
Convenience Improvement Law(Projects to Enhancement theconvenience of urban railways)

Public railway; Leased railway(Arterial railway (Main line andInterurban line)

Sustainability Project

Category
・Clean transportation
・Affordable basic

R-3

Funded amount・rail (electric)・transportation(public)

・Clean transportation

Railway Construction－(Construction Account）︓NominatedProject
・Eastern Kanagawa Lines・etc

・rail (electric)

Railway Construction・transportation(public)(Construction Account)︓
4.22 billion JPY

・Affordable basic
infrastructure

・Clean transportation

Remarks

in FY 2020

infrastructure01
Public railway; Assigned
railway(Public railway operated by
Private sector)

Sustainability Project
Sub-Category

the following is project example
Nominated Project・Keiyo line ・Musashino line・etc

・rail (electric)

Railway Construction・transportation(public)(Construction Account)︓

・Affordable basic

11.58 billion JPY

infrastructure

the following is project example
Nominated Project・Minatomirai 21 line・Odakyu
Odawara line・etc

R-4

Public railway; Railway Project
under the Act on Special Measuresconcerning Integrated Promotionof Residential Land Development
and Railway Construction in Major
Urban Areas (Urban railway

・rail (electric)・Clean transportation

・transportation(public)

・Affordable basic
infrastructure

Railway Construction－(Construction Account）︓NominatedProject
・Joban new line (TX line)

The amount of assets:
1,395,729,500,091JPY(end of FY 2020)
Sustainability Finance (Sustainability loan) allocated amount;
15,800,000,000JPY (FY 2020 result)

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

2. Schedule-2 CBS v3.0 Verification criteria
Summary criteria for assertions of compliance with the CBS v3.0
Prior to incorporating eligible projects and assets for the Finance, the criteria for reviewing relevant projects and assets are
categorized based on CBS 3.0 and technical criteria. The main requirements of CBS3.0 version and technical criteria are roughly
categorized into Part A to Part C in the table below.
DNV has verified that JRTT conforms with all requirements here based on the evidences provided JRTT’s relevant documents andinterview through verification. Hereafter ‘bond’ also suggests finance, both bond and loan. These requirements broadly include:

Part A: Pre-Issuance Requirements
Area

Requirements

1. Use of Proceeds

The Net Proceeds of the Bond shall be allocated to the Nominated Projects & Assets.

2. Process for Evaluation and Selection of(The Issuer) shall document and maintain a decision-making process which it uses to determine the continuing eligibility

Projects & Assetsof the Nominated Projects & Assets.

3. Management of Proceeds
4. Reporting Prior to Issuance

The Net Proceeds of the Bond can be credited to a sub-account, moved to a sub-portfolio, or otherwise tracked by theIssuer in an appropriate manner and documented.
(The issuer) shall clarify the disclosure of the framework, eligible criteria, management of allocation (new investment
and refinancing) unallocated funds, preparation of update reports including project information and disclosure plans.

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Part B: Post-Issuance Requirements
Area

Requirements
The Net Proceeds of the Bond shall be allocated to the Nominated Projects & Assets.
Allocated projects and assets should not be mixed with other green bonds, loans, etc. In addition, the value of the target

5. Use of Proceeds

project and assets should be at least equal to or greater than the bond issuance amount (at the time of issuance) or theissued amount.

6. Process for Evaluation and Selection of

The Issuer shall document and maintain a decision-making process which it uses to determine the continuing eligibility

Projects & Assetsof the Nominated Projects & Assets.
The Net Proceeds of the Bond shall be credited to a sub account, moved to a sub portfolio or otherwise identified by the

7. Management of Proceeds

Issuer in an appropriate manner, and documented.
The Issuer shall prepare and disclose an Update Report at least annually while the Bond remains
outstanding. The update report shall include allocation reporting, environmental improvement effect and8. Reporting

information about the target project. Information required for eligibility shall be provided to the verifier
and to the Climate Bonds Standard Board.

Part C: Eligibility of Projects & Assets
Area

Requirements

9. Climate Bonds Taxonomy

Nominated Projects & Assets shall fall into one or more of the investment areas listed as included in the Climate Bonds

10. Sector Eligibility Criteria

Nominated Projects & Assets shall meet the specific eligibility requirements provided in the relevant Sector Eligibility

Taxonomy.
Criteria documents.
Followings are outline of the sector criteria against the verification
Land Transport
All electrified public transport (infrastructure, infrastructure refurbishment, rail and transport vehicles) meets thestandards. For example, electrified railroads, trams, trolleys, buses and cable cars.

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

3. Schedule-3 Sustainability Finance Eligibility Assessment Protocol
Checklist-1 Sustainability Finance Guideline (SBG) Eligibility checklist
Finance means JRTT’s general proceeds instruments including both bond and loan. Hereafter ‘bond/BOND’ also suggests both bondand loan, official bond statement and loan document. JRTT Sustainability Finance Framework, official bond statement and loan
document, etc. will be published for explanation to investor on JRTT’s website as follows;
https://www.jrtt.go.jp/05Ir/ir-sustainabilityfinance.html
Following (1)〜(4) are based on Sustainability Bond Guideline (ICMA, 2018) “SBG” referring to Green Bond Principle (ICMA, 2018),
Social Bond Principle (ICMA, 2018). DNV established checklist according to the above guideline and principles. DNV describes our
findings in the checklists based on the evidences provided JRTT’s relevant documents and interview through verification.

(1)

SBG-1 Use of Proceeds

Ref.

Criteria

Requirements

DNV Findings

1aType ofbond

The bond must fall in one of the following
categories, as defined by the Sustainability (Greenand Social) Bond Principles:•
Sustainability Use of Proceeds Bond•
Sustainability Use of Proceeds Revenue Bond•
Sustainability Project Bond•
Sustainability Securitized BondThe reviewed evidence confirms that the BOND falls in the category:

Project
Categories

The cornerstone of a Sustainability Bond is theutilization of the proceeds of the bond whichshould be appropriately described in the legal
documentation for the security.

As identified by the purpose of the loan is to use the proceeds to finance andrefinance for projects falling under the following categories;

1b

Green/Social (Sustainability) Use of Proceeds Bond.

FY 2020, proceeds of Bond 101.6 billion JPY and proceeds of loan 15.8 billion JPY
have been allocated to the Gothic, Italic and underscored projects

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Ref.

Criteria

Requirements

DNV Findings<Railway Construction>--

Public railway; Railway Project under the Urban Railway Convenience
Improvement Law (Projects to Enhancement the convenience of urban
railways)
Public railway; Leased railway (Arterial railway (Main line andInterurban line)
Public railway; Assigned railway (Public railway operated by
Private sector)
Public railway; Railway Project under the Act on Special Measuresconcerning Integrated Promotion of Residential Land Development and
Railway Construction in Major Urban Areas (Urban railway)<Joint Ownership shipbuilding>- Joint ownership shipbuilding (freight and passenger ship)
DNV’s assessment concluded that these asset and project would present eligible
project against green and social bond principles (as sustainability bond) and green
loan principles. Above information was included in official document about a bondand loan issued by JRTT. DNV concluded that 1b requirement is satisfied. In casethat new project is nominated, JRTT will evaluate and its eligibility and disclose it
as official document.

1cEnvironment
al and Social
benefits

All designated Sustainability Project categories
should provide clear environmentally sustainable
benefits, which, where feasible, will be quantified
or assessed by the issuer.

DNV, as CBI verifier, assessed and verified eligibility of Railway construction project
portfolio through relevant criteria such as Low carbon land transportation as wellas CBS. Railway construction project portfolio also has social benefit. Joint
ownership shipbuilding project portfolio aligns with mainly social benefit and also

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Ref.

Criteria

Requirements

DNV Findings
have environmental secondary benefit (CO2 emission reduction and prevent marine
pollution).
DNV confirmed that JRTT evaluates its benefit qualitatively and quantitively as
much. DNV also confirmed that JRTT determines the relationship between thoseprojects and SDGs mapping.
DNV reviewed JRTT provided document and explanation that JRTT alreadyidentified the environmental risk and addressed appropriate countermeasures. DNV
concluded that 1c requirement is satisfied.

1d

Refinancing
share

(2)

In the event that a proportion of the proceeds may
be used for refinancing, it is recommended thatissuers provide an estimate of the share offinancing vs. re-financing, and where appropriate,
also clarify which investments or project portfolios
may be refinanced.

The proceeds of the BOND, in their entirety has been allocated to sustainability
project described schedule-1 as refinance, project 01 in FY 2020. Refinance was
as follows-Refinance to Railway construction project portfolio (all for refinance)
Identification of finance or refinance has been disclosed to investor in official
document.

SBG-2 Process for Project Selection and Evaluation

Ref.

Criteria

Requirements

DNV Findings

2aInvestmentdecision
process

The issuer of a Sustainability Bond should outline
the decision-making process it follows todetermine the eligibility of projects using
Sustainability Bond proceeds. This includes,
without limitation:

As well as Climate Bond Standards v3.0 and related sector technical criteria andselected following eligible projects. Since the CBI technical criteria for the Joint
Ownership shipbuilding was not effective at the time of the assessment, it was decided
to verify when the target project is executed in the future.
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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Ref.

Criteria

Requirements• A process to determine how the projects fit
within the eligible Sustainability Projects
categories identified in the Green Bond
Principles and Social bond principle;• The criteria making the projects eligible forusing the Sustainability Bond proceeds; and• The environmental and social sustainability
objectives

DNV Findings<reference criteria>-Climate Bonds Standard (version 3.0 Low Carbon Transport)-Green Bond Principles (ICMA)-Social Bond Principles (ICMA)-Sustainability Bond Guidelines (ICMA)-Green Loan Principles (Loan Market Association)-Green Loan Principles (Asia Pacific Loan Market Association)-Green Loan Principles (The LOAN SYNDICATION AND TRADING ASSOCIATION)- Ministry of the Environment Green Bond Guidelines (2017 Edition)(Reference: Green Bonds, Social Bonds; SDGs Related: High Level Mapping to
Sustainable Goals (June 2018 Edition, ICMA)<eligible project>
Railway Construction- Clean Transportation (Railway Construction, Joint Ownership shipbuilding)- Pollution prevention and control (Joint Ownership shipbuilding)- Essential and imperative transportation infrastructure (Railway Construction, Joint
Ownership shipbuilding)- Low cost and easy access for various customers (Railway Construction, Joint
Ownership shipbuilding)- Efficient distribution (Joint Ownership shipbuilding)- Operation of routes to remote island (Railway Construction, Joint Ownershipshipbuilding)

2bIssuer’s
environment
al and socialand

In addition to information disclosed by an issuer
on its Sustainability Bond process, criteria andassurances, Sustainability Bond investors may
also take into consideration the quality of theThose nominated project portfolio is discussed with JRTT’s related department andresponsibilities (JRTT boards). DNV also confirmed that JRTT determines therelationship between those projects and SDGs mapping.
DNV concluded that 2a requirement is satisfied through interview and document
review.
As per the interview and review documents provided by JRTT, DNV confirmed that
JRTT has addressed to achieve both sustainable green and social activities according toenvironmental action(https://www.jrtt.go.jp/01Organization/Csr/csr-kankyo.html) andPage 24 of 27

Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review

Ref.

Criteria

Requirements

DNV Findings

governanceframework

issuer’s overall framework and performance
regarding environmental sustainability.

domestic marine route for future creative plan published by
MLIT(http://www.mlit.go.jp/common/001190904.pdf).
DNV also confirmed that JRTT has issued and intends to issue the loan and bonds
continuously based on their framework which aligns with CBS requirement and CBIcertification (programmatic certification)
https://www.climatebonds.net/certification/get-certified
https://www.climatebonds.net/programmatic-certification.
DNV concluded that 2a requirement is satisfied.

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review(3)

SBG-3 Management of Proceeds

Ref.

Criteria

Requirements

DNV Findings

3aTracking
procedure-1

The net proceeds of Sustainability Bonds should be
credited to a sub-account, moved to a sub- portfolio orotherwise tracked by the issuer in an appropriatemanner and attested to by a formal internal processthat will be linked to the issuer’s lending andinvestment operations for Sustainability Projects.

It is confirmed that each proceeds expense of JRTT is required to submit eachuse of proceeds and be approved by minister of MLIT according to the relevant
laws. Deposit accounts of the proceeds are strictly managed by each project
portfolio. The balance of the proceeds is also managed with subaccount spread
sheet (divided each project unit). DNV has reviewed actual documents thenconcluded that 3a requirement is satisfied.

3b

Tracking
procedure-2

So long as the Sustainability Bonds are outstanding, thebalance of the tracked proceeds should be periodicallyreduced by amounts matching eligible sustainability
investments or loan disbursements made during that
period.

It is confirmed balance of the bond and loan tracked proceeds (allocated andunallocated amount) has been managed at least annually during bondreimbursement or loan disbursement period. DNV reviewed actual documents(the related documents of fund settlement, 2020) then concluded that 3b
requirement is satisfied.

3c

Temporaryholdings

Pending such investments or disbursements to eligible
Sustainability Projects, the issuer should make known
to investors the intended types of temporary
investment instruments for the balance of unallocatedproceeds.

According to the Japanese incorporated administrative agency general law,
temporary investment instrument is limited to avoid risks. It is clearly describedsome options of the balance of the bond proceed will be managed safely
instrument in framework. DNV concluded that 3c requirement is satisfied. DNV
confirmed, in the assessment conducted on September 13, 2021, that there isno balance of the proceeds in FY2020 and it has been fully allocated into eligible
project.

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Japan Railway Construction, Transport and Technology Agency(JRTT) Sustainability Finance Post Issuance verification and periodical review(4)SBG-4 Reporting

Ref.

Criteria

Requirements

DNV Findings

4aPeriodical
reportingIn addition to reporting on the use of proceeds and the temporary
investment of unallocated proceeds, issuers should provide at least
annually a list of projects to which Sustainability Bond proceeds havebeen allocated including:- when possible, with regards to confidentiality and/or competitive
considerations- a brief description of the projects and the amounts disbursed, as well as
the expected environmentally and social sustainable impact.

JRTT has published the annual report including a dedicatedsection on the Finance in JRTT website. This includes
description of the project and value of the proceeds
invested, as well as the associated environmental impact.
DNV reviewed that JRTT has already reported them in its
website. DNV confirmed it as per report in its website,then concluded that 4a requirement is satisfied.
https://www.jrtt.go.jp/05Ir/ir-sustainabilityfinance.html(Refer to the reporting section)

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