22-D-0138

May 13, 2022

Third-party Opinion on Transition Linked Bond
Framework to ENEOS Holdings, Inc.
Japan Credit Rating Agency, Ltd. (JCR) submitted a third-party opinion to the Transition Linked Bond Framework to
ENEOS Holdings, Inc. (“ENEOS” or the "Company").

<Executive Summary>This third-party opinion confirmed the conformity of Transition-Linked Bond Framework (the "Framework") andTransition-Linked Bond originated under the Framework with respect to Climate Transition Finance Handbook("CTFH") 1 , Climate Transition Finance Basic Guidelines 2 ("CTF Basic Guidelines") (CTFH and CTF Basic
Guidelines collectively, "CTFH, etc."), Sustainability-Linked Bond Principles (SLBP) 3 , Green Loan andSustainability-Linked Loan Guidelines ("Guidelines") (Guidelines for SLBP and Ministry of the Environment,collectively, "SLBP, etc."). In order to ensure the transparency and objectivity of evaluations recommended by
CTFH, etc., and SLBP, etc., JCR, as an independent third-party organization, conducted third-party evaluations of
the following (1) ENEOS' transition strategy and its appropriateness, (2) ENEOS' sustainability strategy andestablishment of key performance indicators (KPIs) and sustainability performance targets (SPTs), and (3) bondterms and the monitoring system during the period.
(1) ENEOS Business Overview, Climate Transition Strategy and Its Appropriateness
ENEOS is a pure holding company of ENEOS Group, which was established in April 2017 by merging themanagement of the former JX Holdings Group and the former TonenGeneral Group. The Group is engaged in awide range of businesses in the energy and non-ferrous metals businesses, from upstream to downstream. In June
2020, the company changed its name from JXTG Holdings to ENEOS Holdings. Its main petroleum refining andmarketing business accounts for about 50% of domestic fuel oil sales. In addition, it has the No. 1 supply capacity
for petrochemical products (paraxylene and propylene) in Asia and the No. 1 share of the global market forelectrical materials. As an energy and materials company, it is implementing initiatives that are ahead of theindustry. By segment, in the fiscal year ended March 2021, the energy business accounted for 78.3% of the sales,
the oil and natural gas exploration and production business 1.5%, the metals business 14.3%, and others 5.9%.
In response to long-term changes in the business climate, such as the response to climate change, the progress ofthe digital revolution, and changes in lifestyles, ENEOS envisages a halving of domestic fuel oil demand in 2040,
and has set a Long-Term Vision for 2040 as the Group's envisioned goals for 2040. In addition, ENEOS has
incorporated it into its three-year Medium-Term Management Plan and is considering specific measures to achieve
its long-term vision. In the Second Medium-Term Management Plan announced in May 2020, the Company's basic
policy is to promote reforms aimed at realizing the long-term vision, which is the envisioned goals for the Group
in 2040.
ENEOS revised the Carbon Neutrality Plan in May 2022, and set the following targets as targets for FY2050,
FY2040, and FY2030, respectively.
The realization of Carbon Neutrality including Scope3 by working with the government and other companies
by FY2050
1

Established by International Capital Market Association (ICMA) in December 2020.
Established by the Financial Services Agency, the Ministry of Economy, Trade and Industry, and the Ministry of the Environment
in May 2021.
3 International Capital Market Association (ICMA) established in July 2020.
2

Net zero Scope1 and 2 CO2 emissions by FY2040
46% reduction compared with FY2013 in Scope1 and 2 by FY2030 (16 million tons on a net emissions basis)
To achieve the above targets, ENEOS intends to utilize offsets such as: (1) energy conservation and utilization ofrenewable energy at refineries, manufacturing plants and smelters; (2) utilization of CCS and CCUS; and (3)forest absorption.
ENEOS has established an ESG management structure centered by ENEOS Holdings Executive Council, which
is chaired by the president and CEO and withtop management. The Executive Council discusses risks andopportunities in relation to ESG that may affect management, and in principle confirms the status of responses tomaterial ESG issues once a year. The Board of Directors also monitors and supervises risks and material issues
determined by the Executive Council and reports on the status of responses to them (in principle, once a year) fromthe Executive Council. In April 2022, the Carbon Neutral Strategy Department was established as a dedicatedorganization to strengthen the system for early and steady promotion of strategy formulation and concrete measures
for realizing carbon neutrality.
Under the Second Medium-Term Business Plan, which covers FY2020 to FY2022, ENEOS has announced plans
to allocate 960 billion JPY of its cumulative capital expenditures of 1.6 trillion JPY to strategic investments ingrowth businesses such as next-generation energy supplies and regional services, and environmentally friendly
businesses.
The company plans to implement measures for strategic investment through participation and investment indomestic and overseas solar power generation, onshore and offshore wind power generation, biomass, and otherrenewable energy projects, and demonstration-related investment for the construction of hydrogen supply chains.
ENEOS also plans to disclose future investment plans in conjunction with the formulation of a Medium-Term
Management Plan for FY2023 and beyond.
JCR assesses that the above transition strategies and specific policies satisfy the four elements of CTFH, etc.
ENEOS' transition strategy is also highly transparent, as it is progressive in its efforts to achieve carbon neutrality
by achieving net zero of Scope1 and 2 emissions by FY2040 and by FY2050, including Scope3, and it hasannounced its investment plan.
(2) ENEOS' Sustainability Strategy and Establishment of KPI and SPTs
JCR confirmed that ENEOS would set the following KPI and SPTs in the Transition-Linked Bonds (theBonds) to be issued under the Framework.

KPI: The Scope 1 and 2 net CO2 emissions of the ENEOS Group
SPT1: 46% reduction compared with FY2013 in Scope 1 and 2 net CO2 emissions of the ENEOS Groupby FY2030
SPT2:Net zero Scope 1 and 2 CO2 emissions of the ENEOS Group by FY2040
In this framework, ENEOS set the Group's net CO2 emissions (Scope1 and 2) as KPI and set SPTs for the
FY2030 and 2040 goals. The above KPI is consistent with the FY2040 and FY2030 goals in ENEOS' Carbon
Neutrality Plan, and are meaningful because efforts to reduce CO2 in the petroleum industry are of paramountimportance to achieve carbon neutrality, while ensuring a stable supply of petroleum is a major premise from theviewpoint of energy security. In terms of SPTs, the content set by ENEOS is significantly above the industry
level compared to other companies in the same industry. In addition, compared to the Company's own historical
track records, it requires initiatives that exceed the conventional business (Business As Usual), and JCR
evaluates this as a goal with a high degree of ambition.
(3) Bond Characteristics and Medium-Term Monitoring System
JCR has confirmed that economic conditions and other factors are linked to each other in terms of thefinancial characteristics of the Bonds if SPTs related to them are achieved. ENEOS will also disclose net CO2
emissions for the fiscal year after the end of its fiscal year, and will obtain third-party verification of SPT1, 2's
CO2 emissions from the external certification organization. Should a significant change in SPTs occur in the
period to redemption, JCR will continue to review the status of compliance with SLBP, etc. and whether theoriginally assumed ambitions and meaningfulness will be maintained. The Bonds will be reviewed by ENEOS
and JCR upon maturity to assess the status of SPTs achievement as well as the status of ENEOS and social
impacts.
Based on the above considerations, JCR has confirmed that this framework of ENEOS, which is the subject ofthird-party opinion, conforms to CTFH, etc. and SLBP, etc.

*Please refer to the following pages for details of the opinions.

Japan Credit Rating Agency, Ltd.

Third-Party Opinion
Subject: Transition-Linked Bond Framework
Issuer: ENEOS Holdings, Inc.

May 13, 2022
Japan Credit Rating Agency, Ltd.

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Japan Credit Rating Agency, Ltd.

Table of Contents<Executive Summary> ------------------------------------------------------------------------------------------------------ - 3 I.

Positioning and Purpose of Third-Party Opinions------------------------------------------------------------ - 6 -II. Outline of the Subject Matter of Third-Party Opinion ------------------------------------------------------ - 6 III. Confirmation of alignment with CTFH, etc. and SLBP, etc. of this framework --------------------- - 7 1. The Relationship of between Sustainability and this Framework ------------------------------------- 7 2. ENEOS' long-term vision and transition strategies -------------------------------------------------------- 7 3. Consistency with elements required in the Climate Transition Finance Handbook ---------- - 15 3-1. Element 1: Issuer's Climate Transition Strategy and Governance -------------------------------- - 15 3-2. Element 2: Business Model Environmental Materiality ---------------------------------------------- - 16 3-3. Element 3: Climate Transition Strategy to be Science-based including Targets and Pathways 18 3-4. Element 4: Transparency is assured in the investment plan for transition -------------------- - 19 4. Consistency with SLBP, etc.: Principle 1 Appropriateness of KPI selection---------------------- - 22 4-1. Evaluation perspective ------------------------------------------------------------------------------------------ - 22 4-2. Current Situation of Evaluation Targets and Evaluation of JCR---------------------------------- - 22 5. Consistency with SLBP, etc.: Principle 2 Calibration of SPTs ---------------------------------------- - 23 5-1. Evaluation perspective ------------------------------------------------------------------------------------------ - 23 5-2. Current Situation of Evaluation Targets and Evaluation of JCR---------------------------------- - 23 5-3. Impact assessment by JCR------------------------------------------------------------------------------------- - 27 6. Consistency with SLBP, etc.: Principle 3 Bond Characteristics (Economic Conditions) ------ - 29 6-1. Evaluation perspective ------------------------------------------------------------------------------------------ - 29 6-2. Current Situation of Evaluation Targets and Evaluation of JCR---------------------------------- - 29 7. Consistency with SLBP, etc.: Principles 4 and 5 Reporting and Verification -------------------- - 30 7-1. Evaluation perspective ------------------------------------------------------------------------------------------ - 30 7-2. Current Situation of Evaluation Targets and Evaluation of JCR---------------------------------- - 30 8. Conclusions on conformity with CTFH, SLBP, etc.------------------------------------------------------- - 31 --2-

Japan Credit Rating Agency, Ltd.
<Executive Summary>This third-party opinion confirmed the conformity of Transition-Linked Bond Framework (the"Framework") and Transition-Linked Bond originated under the Framework with respect to Climate
Transition Finance Handbook ("CTFH")1, Climate Transition Finance Basic Guidelines2 ("CTF Basic
Guidelines") (CTFH and CTF Basic Guidelines collectively, "CTFH, etc."), Sustainability-Linked Bond
Principles (SLBP) 3 , Green Loan and Sustainability-Linked Loan Guidelines ("Guidelines")(Guidelines for SLBP and Ministry of the Environment, collectively, "SLBP, etc."). In order to ensure
the transparency and objectivity of evaluations recommended by CTFH, etc., and SLBP, etc., JCR, as
an independent third-party organization, conducted third-party evaluations of the following (1)ENEOS' transition strategy and its appropriateness, (2) ENEOS' sustainability strategy andestablishment of key performance indicators (KPIs) and sustainability performance targets (SPTs),and (3) bond terms and the monitoring system during the period.
(1) ENEOS Business Overview, Climate Transition Strategy and Its Appropriateness
ENEOS is a pure holding company of ENEOS Group, which was established in April 2017 by merging
the management of the former JX Holdings Group and the former TonenGeneral Group. The Groupis engaged in a wide range of businesses in the energy and non-ferrous metals businesses, fromupstream to downstream. In June 2020, the company changed its name from JXTG Holdings to
ENEOS Holdings. Its main petroleum refining and marketing business accounts for about 50% of
domestic fuel oil sales. In addition, it has the No. 1 supply capacity for petrochemical products(paraxylene and propylene) in Asia and the No. 1 share of the global market for electrical materials.
As an energy and materials company, it is implementing initiatives that are ahead of the industry. By
segment, in the fiscal year ended March 2021, the energy business accounted for 78.3% of the sales,
the oil and natural gas exploration and production business 1.5%, the metals business 14.3%, andothers 5.9%.
In response to long-term changes in the business climate, such as the response to climate change, theprogress of the digital revolution, and changes in lifestyles, ENEOS envisages a halving of domestic
fuel oil demand in 2040, and has set a long-term vision for 2040 as the Group's envisioned goals for2040. In addition, ENEOS has incorporated it into its three-year Medium-Term Management Planand is considering specific measures to achieve its long-term vision. In the Second Medium-Term
Management Plan announced in May 2020, the Company's basic policy is to promote reforms aimed
at realizing the long-term vision, which is the envisioned goals for the Group in 2040.
ENEOS revised the Carbon Neutrality Plan in May 2022, and set the following targets as targets for
FY2050, FY2040, and FY2030, respectively.

Established by International Capital Market Association (ICMA) in December 2020.
Established by the Financial Services Agency, the Ministry of Economy, Trade and Industry, and the Ministry of
the Environment in May 2021.
3 International Capital Market Association (ICMA) established in July 2020.
1
2

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The realization of Carbon Neutrality including Scope3 by working with the government and othercompanies by FY2050
Net zero Scope1 and 2 CO2 emissions by FY2040
46% reduction compared with FY2013 in Scope1 and 2 by FY2030 (16 million tons on a net
emissions basis)
To achieve the above targets, ENEOS intends to utilize offsets such as: (1) energy conservation andutilization of renewable energy at refineries, manufacturing plants and smelters; (2) utilization of CCS and

CCUS; and (3) forest absorption.
ENEOS has established an ESG management structure centered by ENEOS Holdings Executive
Council, which is chaired by the president and CEO and attended by top management. The Executive
Council discusses risks and opportunities in relation to ESG that may affect management, and inprinciple confirms the status of responses to material ESG issues once a year. The Board of Directors
also monitors and supervises risks and material issues determined by the Executive Council andreports on the status of responses to them (in principle, once a year) from the Executive Council. In
April 2022, the Carbon Neutral Strategy Department was established as a dedicated organization tostrengthen the system for early and steady promotion of strategy formulation and concrete measures
for realizing carbon neutrality.
Under the Second Medium-Term Business Plan, which covers FY2020 to FY2022, ENEOS hasannounced plans to allocate 960 billion JPY of its cumulative capital expenditures of 1.6 trillion JPY
to strategic investments in growth businesses such as next-generation energy supplies and regional
services, and environmentally friendly businesses.
The company plans to implement measures for strategic investment through participation andinvestment in domestic and overseas solar power generation, onshore and offshore wind power
generation, biomass, and other renewable energy projects, and demonstration-related investment forthe construction of hydrogen supply chains. ENEOS also plans to disclose future investment plans inconjunction with the formulation of a Medium-Term Management Plan for FY2023 and beyond.
JCR assesses that the above transition strategies and specific policies satisfy the four elements of
CTFH, etc. ENEOS' transition strategy is also highly transparent, as it is progressive in its efforts toachieve carbon neutrality by achieving net zero emissions of Scope1 and 2 emissions by FY2040 and
by FY2050, including Scope3, and it has announced its investment plan.
(2) ENEOS' Sustainability Strategy and Establishment of KPI and SPTs
JCR confirmed that ENEOS would set the following KPI and SPTs in the Transition-Linked
Bonds (the Bonds) to be issued under the Framework.
KPI:

The Scope 1 and 2 net CO2 emissions of the ENEOS GroupSPT1:

46% reduction compared with FY2013 in Scope 1 and 2 net CO2 emissions of the
ENEOS Group by FY2030

SPT2:

Net zero Scope 1 and 2 CO2 emissions of the ENEOS Group by FY2040-4-

Japan Credit Rating Agency, Ltd.
In the Framework, ENEOS set the Group's net CO2 emissions (Scope1 and 2) as KPI and set SPTs
for the FY2030 and 2040 goals. The above KPI is consistent with the FY2040 and FY2030 goals in
ENEOS' Carbon Neutrality Plan, and are meaningful because efforts to reduce CO2 in the
petroleum industry are of paramount importance to achieve carbon neutrality, while ensuring astable supply of petroleum is a major premise from the viewpoint of energy security. In terms of
SPTs, the content set by ENEOS is significantly above the industry level compared to othercompanies in the same industry. In addition, compared to the Company's own historical trackrecords, it requires initiatives that exceed the conventional business (Business As Usual), and JCR
evaluates this as a goal with a high degree of ambition.
(3) Bond Characteristics and Medium-Term Monitoring System
JCR has confirmed that economic conditions and other factors are linked to each other in terms of
the financial characteristics of the Bonds if SPTs related to them are achieved. ENEOS will also
disclose net CO2 emissions for the fiscal year after the end of its fiscal year, and will obtain thirdparty verification of SPT1, 2's CO2 emissions from the external certification organization. Should asignificant change in SPTs occur in the period to redemption, JCR will continue to review the statusof compliance with SLBP, etc. and whether the originally assumed ambitions and meaningfulness
will be maintained. The Bonds will be reviewed by ENEOS and JCR upon maturity to assess thestatus of SPTs achievement as well as the status of ENEOS and social impacts.
Based on the above considerations, JCR has confirmed that the Framework of ENEOS, which isthe subject of third-party opinion, conforms to CTFH, etc. and SLBP, etc.

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Japan Credit Rating Agency, Ltd.
I.

Positioning and Purpose of Third-Party Opinions
JCR conducted a third-party evaluation on the Framework in line with CTFH, etc. and SLBP, etc.

CTF refers to a financial method aimed at supporting the initiatives of corporates considering
measures for climate change when they are making efforts to reduce greenhouse gases in accordancewith long-term strategies in order to realize a carbon-free society. SLBs are bonds that aim to help
the issuer contribute to the realization of a sustainable society by incentivizing it to achieve ambitious
SPTs predetermined by it.
CTFH consists of four elements. Element 1 is the transition strategy and governance of the issuer,element 2 is an environmental challenge in the enterprise's business model, element 3 is based on
scientific evidence, and element 4 is secured by transparency on the investment plan for the transition.
SLBP consists of five principles. The first principle is the selection of KPIs; the second principle isthe measurement of SPTs; the third principle is the characteristics of bonds; the fourth principle isreporting; and the fifth principle is verification.
The purpose of this third-party opinion is to ensure the transparency and objectivity of theevaluation recommended by the CTF's basic guidelines and five SLBP principles, and JCR, as anindependent third-party, confirms compliance of the Framework with SLBP Principles 1 through 5and the Ministry of the Environment guidelines, and also confirms compliance with CTFH four
elements and the CTF Basic Guidelines.

II. Outline of the Subject Matter of Third-Party Opinion
The scope of this evaluation is the Transition-Linked Bond Framework formulated by ENEOS in
May 2022. The following are the endpoints included in this Third Party Opinion.
1.

The Sustainability Relationship of this Framework

2.

ENEOS' long-term vision and transition strategy

3.

Consistency with items required in CTFH

4.

Consistency with SLBP (Principle 1) Appropriateness of KPIs Selection

5.

Consistency with SLBP (Principle 2) Calibration of SPTs

6.

Consistency with SLBP (Principle 3) Characteristics of Bonds (Economic Conditions)7.

Consistency with SLBP (Principle 4) Reporting and (Principle 5) Verification

8.

Conclusions on fitness with CTFH, etc. and SLBP, etc.

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Japan Credit Rating Agency, Ltd.
III. Confirmation of alignment with CTFH, etc. and SLBP, etc. of this framework
1.

The Relationship of between Sustainability and this Framework
ENEOS chose the following KPI and SPTs related to the Company's materiality and emphasized

initiatives for financing activities under the Framework. As described in detail in the following section,
the KPI, together with the related SPTs, is one of the most important issues within the company's
sustainability strategy.

2.

KPI:

The Scope 1 and 2 net CO2 emissions of the ENEOS GroupSPT1:

46% reduction compared with FY2013 in Scope 1 and 2 net CO2 emissions of the
ENEOS Group by FY2030

SPT2:

Net zero Scope 1 and 2 CO2 emissions of the ENEOS Group by FY2040

ENEOS' long-term vision and transition strategies<Business Overview>ENEOS is a pure holding company of the ENEOS Group, which was established in April 2017by merging the former JX Holdings Group and the former TonenGeneral Group. The Group is
engaged in a wide range of businesses in the energy and non-ferrous metals businesses, fromupstream to downstream. In June 2020, the company changed its name from JXTG Holdings to
ENEOS Holdings. Its main petroleum refining and marketing business accounts for about 50%of domestic fuel oil sales. In addition, it has the No. 1 supply capacity for petrochemical products(paraxylene and propylene) in Asia and the No. 1 share of the global market for electricalmaterials. As an energy and materials company, it is implementing initiatives that are ahead of
the industry. By segment, in the fiscal year ended March 2021, the energy business accounted for
78.3% of the sales, the oil and natural gas exploration and production business 1.5%, the metals
business 14.3%, and others 5.9%.

<ENEOS Group Philosophy>
ENEOS' Group Philosophy is to contribute to the development of its commuinities and help
to ensure a vibrant future through its business. In order to realize ENEOS Group Philosophy,
ENEOS Group Code of Conduct embodies the standards of conduct of every employee. This
Code of Conduct is composed of 14 items, including compliance, safety and security,environmental conservation , and respect for human rights etc., and is established as the basis
for decisions in business activities as a standard to be practiced by employees working in
ENEOS Group in order to fulfill their social responsibilities.

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Figure. 1:ENEOS Group Philosophy(Source: ENEOS Holdings website)<Envisioned Goals for 2040 and Value Creation Process>In response to long-term changes in the business climate, such as the response to climatechange, the advancement of the digital revolution, and changes in lifestyles, ENEOS anticipatesa halving of domestic fuel oil demand in 2040, and presents the following long-term outlook for
the Group's business domains.
Non-fossil energy is growing its share in global primary energy demand
Global demand for petrochemicals is growing against the backdrop of economic growth in
Asia.
Global demand for copper bullion is expanding in India and other emerging countries.
Based on the above long-term outlook, ENEOS assumes the future image of the Group'sbusiness portfolio for 2040 as shown in the chart below.
Figure. 2: Overview of ENEOS' future businesses to 2040

(Source: ESG Briefing Materials "ENEOS Group ESG Management" March 2022)-8-

Japan Credit Rating Agency, Ltd.
<Second Medium-Term Management Plan (FY2020-FY2022)>
ENEOS Group has incorporated the above Long-Term Vision to 2040 into its three-year
medium-term management plan and is considering specific measures. The second medium-term
management plan announced in May 2020 is positioned as the promotion of reforms aimed atrealizing the Long-Term Vision to 2040 for the Group. It is developing and strengthening growthbusinesses by combining the strengths of the same group, such as efficient supply chains, SS
networks, and advanced material development, with digital technologies and open innovation. At
the same time, it is pursuing business portfolio optimization. It also plans to maintain thesoundness of its management base and appropriately allocate cash flow.
Figure. 3: Long-Term Vision and Positioning of the Second Medium-Term Management Plan

(Source: ESG Briefing Materials "ENEOS Group ESG Management" March 2022)<Basic Policy for ESG Management>
ENEOS has established the Basic Policy for ESG Management in order to realize its envisioned
goals in its long-term vision in line with the Group Philosophy. Under this basic policy, for acompany to achieve sustainable growth, ENEOS will respond to social needs through ourbusiness activities and contribute to solving social issues, thereby earning the trust of society andthe recognition of its value.

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Basic Policy for ESG Management
ESG management at the ENEOS Group involves formulating management and businessstrategies based on risks and business opportunities and creating both economic value(profits) and social value (resolution of social issues) through our business in order torealize the ENEOS Group Philosophy.
The ENEOS Group is a group of companies that strives to earn the trust of stakeholders
through the implementation of ESG management in our business operations.
(Source: ENEOS Holdings website)<ESG Management Structure>
In order to effectively and reliably implement ESG management, ENEOS abolished theexisting CSR Committee system and shifted to an ESG management structure centered on the
ENEOS Holdings Executive Council from FY2020. The ENEOS Holdings Executive Council,
chaired by the President and Representative Director and with top management participated,discusses risks and opportunities in relation to ESG that may affect management, and inprinciple confirms the status of responses to material ESG issues once a year. In addition, theBoard of Directors monitors and supervises the Executive Council by receiving reports (inprinciple, once a year) on the risks, material issues, and the status of responses to the material
issues determined by the Executive Council. Departments in charge of each ESG issue,
respectively, the Safety, Health & Environment Department for environment issues, the Legal &Corporate Affairs Department for governance issues, the Corporate Planning Department forhuman rights issues etc., attend the Executive Council. The Corporate Planning Department acts
as the secretariat.
Figure. 4: ENEOS ESG Management Structure(Source: ENEOS Holdings website)- 10 -

Japan Credit Rating Agency, Ltd.
In April 2022, ENEOS established the Carbon Neutral Strategy Department, a dedicatedorganizational unit with the purpose of strengthening the system for early and steady promotionof strategic formulation and concrete measures for realizing carbon neutrality. As a dedicatedorganization, the department is responsible for formulating medium-and long-term strategies for
the ENEOS Group's carbon neutrality and a Circular Economy. It is also responsible forconsidering and promoting individual carbon neutral projects, managing the progress andperformance of plans to reduce greenhouse gas emissions, and formulating guidelines for thecontent of external disclosures. In the future, this department will take the lead and further
promote the realization of the company's Carbon Neutrality Plan.
<Response to Material ESG Issues>
ENEOS identifies material ESG issues annually based on various guidelines, such as GRI
standards and ISO26000, as well as the evaluation items of ESG evaluation organizations, suchas the U.S. Sustainability Accounting Standards Board (SASB). ENEOS has established threesteps for identifying material ESG issues: (i) designating ESG risks to consider; (ii) assessing
the designated ESG risks; and (iii) identifying material ESG issues. For FY2021, 15 Material
ESG issues were identified. In addition, departments responsible and targets (KPIs) are set foreach material ESG issue, and the progress of KPIs and the results of measures for material
ESG issues are reported to the Executive Council and the Board of Directors.

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Japan Credit Rating Agency, Ltd.
Figure. 5: Material ESG Issues and Targets (KPIs) for Fiscal 2021

(Source: ENEOS Holdings website)

Among the material ESG issues identified by ENEOS for FY2021, the most highly evaluatedissue is "contribution to the development of a low-carbon society" in the environmental category.
Transition strategy is a core issue in the company's sustainability strategy.

<Environmental Targets and Results>
ENEOS revised its Carbon Neutrality Plan in May 2022. The following targets were set as themedium-to long-term targets for FY2050, 2040, and 2030, respectively.
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Target year

Details of Targets

FY2050Net zero Scope1 and 2 CO2 emissions and the realization of Carbon Neutrality
including Scope 3 by working with the government and other companies by
FY2050FY2040Net zero Scope1 and 2 CO2 emissions by FY2040

FY203046% reduction compared with FY2013 in Scope1 and 2 net CO2 emission by
FY2030(Source: Prepared by JCR based on materials submitted by ENEOS)

Figure. 6: ENEOS grouped CO2 emissions (Scope1, 2)4(Source: ENEOS Transition-Linked Bond Framework)

With regard to ENEOS' Scope 1 and 2 emissions by business segment, the energy business andthe oil exploration business account for more than 90% of ENEOS' total Scope 1 and 2 emissions.
Therefore, measures for the carbon neutral strategy of the energy business mainly centered on
petroleum are shown in the evaluation of the Framework.
The current revision of the Carbon Neutrality Plan is in line with the Japanese Government's
goal towards carbon neutrality in line with the 1.5°C target. In addition, the method of offsetting

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Scope of data: ENEOS Group, JX Oil Exploration Group, JX Metals Group, and other operating companies- 13 -

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shifted from recording the contribution to CO2 reduction as offsets based on the sales volume ofrenewable energy and the sale of environmentally conscious products, to recording only the direct
removal of CO2 in the atmosphere through CCS and forest absorption etc. as offsets.
In order to achieve net zero Scope 1 and 2 CO2 emissions by FY2040 while maintaining thedomestic business foundation essential for a stable energy supply, ENEOS plans to take theinitiative in promoting CCS as a domestic Carbon Major through utilizing the know-how it has
accumulated through participation in the U.S. Petra Nova CCUS project and through joint
projects with Electric Power Development Co., Ltd.. In addition, ENEOS is considering utilizing
offsetting through forest absorption, etc.5<Medium-Term Environmental Management Plan>
ENEOS has formulated the Second Medium-Term Environmental Management Plan, athree-year plan which covers FY2020 to FY2022. By breaking down the plan into specifictargets for a single fiscal year, the Group is pushing forward initiatives to contribute to a lowcarbon society on a group-wide basis.
Figure. 7: Medium-Term Environmental Management Plan

(Source: ENEOS Holdings integrated Report 2021)

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https://www.hd.eneos.co.jp/newsrelease/upload_pdf/20220510_02_01_2008355.pdf- 14 -

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3.

Consistency with elements required in the Climate Transition Finance Handbook
3-1. Element 1: Issuer's Climate Transition Strategy and Governance(1) Does the financing issuer have a strategy related to transition for climate change mitigation?
As an energy and materials company group, the ENEOS Group views climate change asboth a critical management risk and an opportunity. The Long-Term Vision to 2040 sets threeenvisioned goals: "Become one of the most prominent and internationally competitive energy
and materials company group in Asia", "Create value by transforming our current businessstructure" and "Contribute to the development of a low-carbon, recycling-oriented society".
Based on these goals, the Carbon Neutrality Plan announced in May 2022 sets the following
targets for reducing medium-to long-term CO2 emissions.
Aiming for net zero Scope 1 and 2 CO2 emissions and the realization of Carbon
Neutrality including Scope 3 by working together with the government and othercompanies by FY2050
Net zero Scope 1 and 2 CO2 emissions by FY2040
46% reduction compared with FY2013 in Scope 1 and 2 net CO2 emissions by
FY2030 (16 million tons on a net emissions basis)
In order to achieve the above targets for FY2040 and 2030, ENEOS intends to utilize offsets
such as (i) energy conservation and utilization of renewable energy at refineries,
manufacturing plants and smelters, (ii) utilization of CCS and CCUS, and (iii) forest
absorption.
(2) Whether the purpose of applying the "transition" label to financing is to contribute to therealization of the issuer's corporate strategies to transit to a business model that caneffectively address climate change-related risks and contribute to the achievement of thegoals of Paris Agreement.
ENEOS' transition strategy is developed based on scenario analyses conducted in line with
TCFD guidance. ENEOS regularly analyzes the long-term outlook for global energy demandusing the IEA's World Energy Outlook. During the formulation of its Long-Term Vision to2040, while referring to World Energy Outlook 2018's New Policies Scenario and theSustainable Development Scenario based on Paris Agreement, ENEOS anticipates that there
will be three changes in the business environment: "the development of a low-carbon,
recycling-oriented society," "the development of the digital revolution," and "lifestylechanges". Therefore, JCR evaluates ENEOS' transition strategy as important for the Group'sbusiness model transition.
(3) Is a governance system established to ensure the effectiveness of the transition strategy?
As previously stated, ENEOS has adopted a system in which the ENEOS Holdings
Executive Council, chaired by the president of ENEOS Holdings, analyzes risks and business
opportunities that could have a major impact on future management, and appropriately
confirms the status of responses to identified risks and material issues. The Executive- 15 -

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Council conducts company-wide risk management, risk analysis related to ESG, andcomprehensive discussions on risk events related to internal control, in principle, once a year.
The responsible departments take the lead in responding to the identified risks and material
issues on a cross-organizational basis. In addition, the Board of Directors monitors andsupervises the Executive Council by receiving reports (in principle, once a year) on the risks,material issues, and the status of responses to the material issues determined by the
Executive Council. In addition, ENEOS has established the Carbon Neutral Strategy
Department as a dedicated organization, and is formulating strategies and implementing
specific measures. Accordingly, the Executive Council, which discusses the most important
issues, discusses material issues including climate change. JCR has evaluated that a system
has been established for cross-organizational and group-wide deployment centered on a
dedicated organization for strategies and specific measures.
3-2. Element 2: Business Model Environmental Materiality
According to the comprehensive energy statistics of the Ministry of Economy, Trade andIndustry6, petroleum products account for about 40% of Japan's CO2 emissions per final energy
consumption, and more than 400 million tons of the emissions. Among them, combustion use
accounts for 30% and non-combustion use such as chemical materials accounts for 10% of thetotal. According to the Life Cycle Inventory analysis on fossil energy in Japan by Institute ofEnergy Economics, Japan,7 crude oil production, transportation, and refining account for lessthan 10% of the life cycle CO2 emissions from oil, while product combustion accounts for 90%.
According to the IEA's Net Zero by 2050, as the world moves toward carbon neutrality, while
demand for oil will remain in some sectors, the majority will be converted to biofuels andsynthetic fuels etc. Therefore, the petroleum industry needs to change the petroleum refining
process to a low-carbon or decarbonized one and replaces petroleum products themselves withdecarbonized fuels. There are also needs for a major shift in the business model itself, fromconventional crude oil production, transportation, and petroleum refining to product sales.

Ministry of Economy, Trade and Industry Agency for Natural Resources and Energy, Statistics,
https://www.meti.go.jp/english/statistics/index.html
7 The Institute of Energy Economics, Japan, https://eneken.ieej.or.jp/data/old/pdf/enekei/lci.pdf
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Japan Credit Rating Agency, Ltd.
Figure. 8: Analysis CO2 emissions per final energy consumption and life cycle inventory of petrology(Source: Ministry of Economy, Trade and Industry, Roadmap for "Transition Finance" in Oil Sector)

On the other hand, the stable supply of petroleum, which is regarded as an indispensable
source of energy for people's lives and economic activities, is a major premise for promoting theclimate transition of the society. According to the Energy White Paper 20218, petroleum is thelargest source of energy, accounting for about 40% of the domestic supply of primary energy. By
application, automobiles account for about 44%, chemical feedstocks account for about 25%, andhouseholds and businesses account for about 13%. Petroleum is considered as an essential energy
source that supports the society, with it being used in many fields. In addition, petroleum plays
an important role in energy supply in the event of disasters, because it has advantages in mobility
given the established supply systems and stockpiling systems to final users.
Similarly, from the viewpoint of energy security, securing a stable supply of oil is indispensable.
The Russian invasion of Ukraine launched in February 2022 and the implementation of severe
economic sanctions against Russia from all over the world have resulted in instability ininternational politics, security, the global economy, and soaring crude oil prices and European gas
prices, which have also destabilized the international energy market. On March 7, 2022, price of
WTI crude oil from the U.S., which is used as an indicator, temporarily exceeded US$130 per
barrel in futures trading on the New York Mercantile Exchange, a new record high after the
global financial crisis. The Japanese government also held a Ministerial Meeting on Soaring
Crude Oil Prices in March 2022.9 The Ministerial Meeting said that geopolitical changes could
have a major impact on global crude oil prices on supply and demand, and that in preparation forfurther soaring prices, it is essential to consider and implement additional measures ahead ofschedule.

8

Ministry of Economy, Trade and Industry, Agency for Natural Resources and Energy, White Paper,https://www.enecho.meti.go.jp/en/category/whitepaper/
9

Cabinet Secretariat, https://www.cas.go.jp/jp/seisaku/genyu_kakau/index.html- 17 -

Japan Credit Rating Agency, Ltd.
From the viewpoint of energy security, the petroleum industry's most important task inadvancing the climate transition is to promote efforts to achieve carbon neutrality while
maintaining a stable supply and security of oil, which is an essential energy source for people's
lives and economic activities, as a major prerequisite.
ENEOS handles petrochemical products, non-ferrous metals and other materials industries in
addition to petroleum. Copper materials, functional materials and thin film materials forsemiconductor materials handled in ENEOS' metals business are used in electronic equipment,
electric vehicles, and storage batteries. Demand for these materials is expected to increase in the
future in line with the decarbonization of society through the spread of renewable energy andelectric vehicles, and the progress of digital transformation through the use of IoT and AI
technologies. Under the Long-Term Vision to 2040, ENEOS has positioned the Materials Businessas one of its growth businesses, and its policy is to invest further in order to respond flexibly torapidly expanding demand and to contribute to the decarbonization of society through theprovision of materials. At the same time, ENEOS believes that decarbonization initiatives are
crucial to the materials manufacturing supply chain. In addition to energy conservation, fuelconversion, and process development in the metals business, the company is introducing CO2 freeelectricity derived from renewable energy, creating renewable energy, and improving the ratio ofrecycled raw materials in copper smelting.
ENEOS' Long-Term Vision to 2040 also states that ENEOS would like to contribute to a lowcarbon, recycling-oriented society, and it is aiming to realize carbon neutrality. In addition,
contribution to the development of a low-carbon society is identified as a material ESG issue.
Based on the above, JCR has evaluated that efforts toward a low-carbon society are top-priority
business issues for ENEOS.
3-3. Element 3: Climate Transition Strategy to be Science-based including Targets and Pathways
Does the transition roadmap meet the following requirements?
(1) Quantitatively measurable and covers Scope1 and 2. (it is desirable that Scope 3 targets are
set to the extent feasible)
ENEOS measures Scope 1 and 2 (on a consolidated basis) and Scope 3 (ENEOS Corporationonly) CO2 emissions and obtains third-party verification for Scope 1 and 2 and part of Scope
3. The transition roadmap of ENEOS has indicated that ENEOS will work toward achieving
net zero Scope 1 and 2 by FY2040 and Carbon Neutrality of Scope 3 by FY2050. The transition
roadmap of ENEOS covers Scope1, 2 and 3.
(2) Consistent with generally recognized science-based target setting
By FY2030, ENEOS' goal of reducing net CO2 emissions by 46% compared with FY2013 (16million t-CO2 per year on a net CO2 emissions basis) is consistent with Japan's CO2 Emissions
Reduction Target. In addition, ENEOS' targets, which are achieving net zero Scope 1 and 2- 18 -

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by FY2040 and carbon neutrality of Scope 3 by FY2050, are considered being consistent withthe policies of Japan, Paris Agreement, and the roadmap for transition finance in oil sector
published by the Ministry of Economy, Trade and Industry.
Figure. 9: Image of Reducing CO2 Emissions in the Oil Field(Source: Ministry of Economy, Trade and Industry, Roadmap for "Transition Finance" in Oil Sector)(3) Publicly disclosed, include midpoint milestones
In May 2020, ENEOS announced its Environmental Vision for FY2040, long-term
environmental targets for FY2030, and the Second Medium-Term Environmental Plan, which
covers FY2020 to FY2022. Thereafter, the Carbon Neutrality Plan was revised in May 2022,with a target for FY2050 and midpoint milestones of the plan, the FY2040 target and theFY2030 target both announced. The Environmental Vision (FY2040), the long-term
environmental targets (FY2030), and the Medium-Term Environmental Management Plan
for FY2023 and beyond will be aligned with the Carbon Neutrality Plan announced in May
2022.
(4)

Supported by independent assurance or verification
ENEOS obtains third-party verification for environmental data, including actual CO2
emissions.

3-4. Element 4: Transparency is assured in the investment plan for transition
Under the Second Medium-Term Management Plan, which covers FY2020 to FY2022, ENEOS- 19 -

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has announced plans to allocate 960 billion of its 1.6 trillion capital expenditures for strategic
investments in growth businesses, such as next-generation energy supplies and regional services,and environmentally friendly businesses. The plan aims at implementing measures for strategic
investment through participation and investment in domestic and overseas renewable energy
projects such as solar power generation, land/offshore wind power generation, and biomass power
generation, and demonstration-related investment for the construction of hydrogen supply chains.
ENEOS also plans to disclose future investment plans in accordance with the formulation ofMedium-Term Management Plans for FY2023 and beyond.
Figure. 10: Investment Plan

(Source: ENEOS Holdings website)

As stated above, ENEOS regularly analyzes the long-term outlook for global energy demandusing the IEA's World Energy Outlook. While formulating the Long-Term Vision to 2040, ENEOS
used the New Policies Scenario of the World Energy Outlook 2018 and Sustainable Development
Scenario based on Paris Agreement, and set the long-term targets for FY2050 and FY2040 and
the FY2030 target as a milestone in the Carbon Neutrality Plan. As the global trend is to achieve
Carbon Neutrality by 2050, JCR has evaluated that it is an advanced initiative to set a net zerotarget for its own Scope 1 and 2 emissions by FY2040, that is 10 years ahead of schedule, and towork toward achieving Carbon Neutrality of Scope 3 by FY2050. ENEOS also plans to disclose
specific investment plans to achieve these targets in accordance with the Medium-Term
Management Plans going forward. JCR has evaluated that these plans are highly transparent.
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With the implementation of ENEOS' transition strategy, the negative impact on employment
and society other than climate change will be mitigated by shifting to growth businesses such asadvanced materials, next-generation energy supply including hydrogen etc., and environmentally
responsive businesses including CCS and CCUS etc., although the impact on employment will
exist to a certain extent as operations decline and the oil industry as a whole shrinks in the future.
From an environmental perspective, JCR confirmed that appropriate measures are being taken,
such as participation in renewable energy projects, demonstration-related investment forhydrogen energy, utilization of know-how accumulated through participation in CCUS projects
that the U.S. Petra Nova has been working on since 2014, and taking the lead in CCS as adomestic Carbon Major. Regarding the possibility of lock-in to fossil fuels, while entering anddeveloping the renewable energy and hydrogen energy businesses mentioned above andadvancing CCS in parallel, JCR anticipated a decline in refinery utilization rates due to adecrease in demand for petroleum products along with the anticipation of progress toward global
decarbonization in the future. Therefore, there is no possibility of lock-in to fossil fuels.
Furthermore, the investment plans for transition explained in the Framework is unlikely to haveany significant damage (Do No Significant Harm) to other environmentally beneficial projects.
Moreover, as for just transition, the impact on employment is expected to be mitigated by shiftingto growth businesses, although it exists to a certain extent as mentioned above.
Based on the above, JCR has evaluated that the Framework satisfies the four elements requiredby the Climate Transition Finance Handbook.

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4.

Consistency with SLBP, etc.: Principle 1 Appropriateness of KPI selection
4-1. Evaluation perspective
This section assesses the significance of the issuer's selected KPIs, centered on whether they
contain the following elements illustrated in SLBP and elsewhere:1)

Are the KPIs relevant, core and material to the issuer's overall business, and of highstrategic significance to the issuer’s current and/ or future operations?

2)

Are they measurable or quantifiable on a consistent methodological basis and can be
externally verifiable?

3)

Can be benchmarked (i.e. as much as possible using an external reference or definitions
to facilitate the assessment of the SPT’s level of ambition)?

4-2. Current Situation of Evaluation Targets and Evaluation of JCR(Evaluation Results)
The KPIs defined in the Framework include all the elements required by SLBP, etc., and
KPIs with significance have been selected to contribute to the achievement of ENEOS'
Environmental Vision and long-term environmental targets.
With respect to net CO2 emissions (Scope1 and 2) set in the KPIs in the Framework, thisIndicator is consistent with the quantitative environmental targets set by ENEOS for FY2040,
which is to achieve a net zero for Scope1, 2, and with the revised Carbon Neutrality Plan, which
will reduce net Scope1, 2 emissions to 46% compared with FY2013 by FY2030. In its Long-Termvision to 2040, ENEOS also sets forth its envisioned goals to contribute to a low-carbon, recyclingoriented society. As a material ESG issue, its contribution to the formation of a low-carbon society
is highly evaluated, and it is positioned as a key issue in its business and material ESG issues.
As mentioned earlier, the petroleum industry is required to change its business in order to realize
carbon neutrality, while it is highly assumed that the stable supply and security of petroleum,
which is an indispensable source of energy for people's daily lives and economic activities, will be
crucial for promoting transition from the viewpoint of energy security. Therefore, it can be said
that efforts to reduce CO2 are of utmost importance for the industry as a whole.
Accordingly, JCR assesses that the KPIs selected in the Framework are significant.

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5.

Consistency with SLBP, etc.: Principle 2 Calibration of SPTs
5-1. Evaluation perspective
This section assesses the ambition and significance of an issuer's established SPTs, focusing onwhether they include the following factors illustrated in SLBP and elsewhere:
1)

Are SPTs represent a material improvement in the respective KPIs and be beyond a“Business as Usual” trajectory?

2)(Where possible) can be compared to a benchmark or an external reference?

3)

Are they consistent with the issuers’ overall strategic sustainability / ESG strategy?

4)

Are they determined on a predefined timeline, set before (or concurrently with) the issuanceof the bond?

Next, we examine the benchmarks taken into account when setting the issuer's SPTs. The
following elements are illustrated in SLBP, etc.
Establish quantitative measures based on the issuer's own recent performance level (selectKPIs with at least the last three years' track records whenever possible) and also disclose
forward-looking information on KPIs as much as possible.
Relative positioning of established SPTs relative to peers (e.g., average level of performance,industry-leading level, etc.)
Scientific-based scenario analyses and absolute values (e.g., carbon budgets), national andregional or international targets (e.g., Paris Agreement, CO2 Zero Emissions Targets, SDGs,
etc.), recognized BATs (best available technologies) and other indicators that determine
relevant targets across ESG topics
5-2. Current Situation of Evaluation Targets and Evaluation of JCR(Evaluation Results)
ENEOS' established SPTs relative to its peers and to the company's historical performance areambitious setting.
(1) Comparison of initiatives with other companies in the same industry
As mentioned earlier, ENEOS set a target of reducing net CO2 emissions (Scope1, 2) by
46% compared with FY2013 by FY2030 (16 million percentage t-CO2 on a net emissions
basis) and a target of net zero by FY2040, and set each target as a SPTs of the Framework.
Regarding the 2030 goals set in SPT1, JCR assesses that ENEOS' reduction ratio ishigh compared to domestic peers, and that ENEOS' 2030 target is not inferior to those of
BP and Shell when compared to overseas peers, and are ambitious.
Regarding the targets set in SPT2, JCR believes that ENEOS is progressive and highly
ambitious in that no other domestic or overseas peer company in this study has set atarget for 2040, and that ENEOS has set a target of zero net emissions for 2050, 10 years
ahead of the target set by other companies.
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Based on the above, JCR evaluates that the targets of SPT 1 and 2 are highly ambitious
and beyond the industry level, as they lead the petroleum industry to a low-carbon society.

(2) Comparison with the company's historical track record
The following figures show historical CO2 emissions and estimates for FY2030 and
2040. In the most recent fiscal years of 2019 and 2020, the outliers were observed in eachfiscal year in response to the contraction of economic activities due to the COVID-19
pandemic from the second half of FY2019. When the impact is subtracted, the numericaltargets for individual SPTs can be said to have a degree of ambition as SPTs, compared tothe track records to date, because they require initiatives that go beyond conventional
business (Business As Usual).
Figure. 11: ENEOS grouped CO2 emissions (Scope1, 2)(Source: ENEOS Transition Linked Bond Framework)(3) Efforts to Reduce ENEOS' CO2 Emissions
The following measures will be taken to reduce CO2 emissions at ENEOS.
(i) Energy conservation at refineries, manufacturing plants, and smelters, and the useof renewable energy
ENEOS has been introducing automated operation to refineries and smelters. In theconventional plant operation, operators monitor operations and make operational
decisions in 24-hour system, and the lack of human resources with operational know dueto the aging of skilled operators is a concern. In order to cope with this issue, ENEOS
has developed an AI system that automates plant operation. By learning complex
correlations between multiple sensor values and valve operations from past operation
data and simulator data, it has made it possible to predict sensor values and automate
valve operation decisions. The company aims to introduce an AI model for automated- 24 -

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plant operation in the future, as the introduction of automated operation will lead tomore efficient production and energy-efficient operation.
Figure. 12: Image of Autonomous Plant Operation AI System(Source: ENEOS News Release)10(ii) Reducing Emissions through CCS and CCUS
Since December 2016, ENEOS has been promoting a project in Petra Nova CCUS
Project to increase production of crude oil by separating and recovering CO2 generated
at thermal power plants in the U.S. and injecting it into the ground. This plant is theworld's largest plant to recover CO2 from flue gases, and 3,770,000 tons of CO2 have beencollected to date. CO2 collected at this plant is about 5000 tons/day, and the useful life of
CO2 recovery equipment is expected to be about 30 years. On the other hand, as the costof separating and recovering CO2 is large in the current CCS, there is room for cost
reduction through technological advances. It is said that it is necessary to reduce storage
costs by increasing the amount of CO2 injection in collaboration with partner companies,
and to support the development of technologies to achieve costs equivalent to the carbon
price that is expected to be formed in the future. ENEOS believes that CCS/CCUS
technologies for collecting, using and storing CO2 will play a key role in realizing adecarbonization society. In the future, it plans to accelerate its efforts at home andabroad by utilizing the technologies and operating know-how it has cultivated.

10

https://www.eneos.co.jp/english/newsrelease/2021/pdf/20211228_01.pdf- 25 -

Japan Credit Rating Agency, Ltd.
Figure. 13: Image of CO2 collection, transport, and storage(Source: 2nd Material of the CCS Long-Term Roadmap Study Group, Ministry of Economy, Tradeand Industry)(iii) Utilization of offsets such as forest absorption
ENEOS is promoting efforts to create carbon credits derived from forests, and isactively advancing collaborations with startups and other organizations to createbusinesses that will contribute to reducing CO2 emissions.
In March 2021, ENEOS launched a collaboration with a startup aimed at promoting
forest-based CO2 absorption and sequestration. This collaboration will utilize 3D laserand drone measurement technology and measurement data analysis systems to digitize
forest resource information and provide managers with information necessary for forest
maintenance and management, such as areas and timing for thinning and afforestation,
thereby contributing to the proper functioning of forests as a source of CO2 absorption
and sequestration.
In the future, ENEOS aims to build a CO2 environmental value ecosystem in which
it will credit CO2 reduction amounts through collaboration in the value exchange
business and apply them as its own CO2 emission reduction amounts. ENEOS plans toparticipate in the forestry business from an early stage and accumulate the necessary
offsetting volume from 2040 onward.

Based on the above, JCR assesses that SPTs set by ENEOS are ambitious, as they aim forachieving targets for reduction rates that go beyond conventional scenarios, in addition to being
ambitious targets beyond industry levels.

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5-3. Impact assessment by JCR
JCR examined the degree of impact (degree of impact) of SPTs in line with the five elements(diversity, effectiveness, efficiency, multiplicity, and additionality) of the impact assessment
criteria illustrated in Principle 4 of the Positive Impact Finance (PIF) principle formulated by theUnited Nations Environmental Programme in order to ensure that SPTs established in the
Framework are ambitious and significant and contribute to sustainable growth of ENEOS andenhancement of social value, as well as to maximize positive impact and avoid, manage, and reduce
negative impact.
(1) Variety: Variety of positive impacts delivered
While ENEOS' CO2 mitigation objectives are limited to mitigating climate change in theimpact area, they have a broad scope in a variety of aspects:
SPTs sets are Scope1 and 2
Target for the entire business segment
Targets domestic and overseas business sites(2) Magnitude: Magnitude of the impacts delivered
The Bonds have a significant impact in the petroleum industry from the following
perspectives.
ENEOS is the largest domestic company in the petroleum industry. As it is working todevelop low-carbon technologies by forming consortiums with a variety of different industries
when it moves forward with its decarbonization efforts, it is expected to have a significant
impact. In addition, the targets for FY2030 are more ambitious than those of other companies
in the domestic industry, and initiatives aimed at achieving zero Scope1, 2 net emissions by
FY2040 are also advanced. Therefore, these initiatives are highly influential from theviewpoint of further development of SLBs and transition financing.
(3) Efficiency: Scale of impacts delivered relative to amount of funds spent
The Bonds are an efficient initiative from the following perspectives.
At ENEOS, the following targets were set by the Carbon Neutrality Plan: tackling with theaim of realizing carbon neutrality including Scope 3 by FY2050, net zero emission of Scope1,
2 by FY2040, and targets in line with the Japanese government's target for 2030. As
measures for the achievement of the goals for FY2030 and FY2040, the government intends
to utilize the following: (i) energy conservation at refineries, manufacturing plants andsmelters and the utilization of renewable energy; (ii) utilization of CCS and CCUS; and (iii)utilization of offset such as absorption of forests. ENEOS' initiative to promote
environmentally conscious initiatives will be crucial to maintaining and expanding
businesses in the future, and the impact of petroleum products on other industries is also
considered significant. ENEOS has identified "Contribute to the development of a low-carbon,
recycling-oriented society" in the environmental field as a material ESG issue. It conducts
scenario analyses in line with TCFD and decides investment plans after thoroughly- 27 -

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considering its own risks and opportunities. Based on the above, it is expected to have a large
impact on invested capital.
(4) Leverage: Degree of leverage of private funds relative to public funds and/or donations
As for the efforts aimed at reducing CO2 emissions by the Bonds, subsidy system from somethe government can be utilized for hydrogen technological development, etc., but many arefinanced by private funds. It is expected that further decarbonization of the petroleum
industry will proceed with the backup of these public funds.
(5) Additionality: Level of additionality
Individual indicators are considered to have additional impacts on several of SDGs 17 and
169 targets as follows:
Goal 7: Affordable and clean energy
Target 7.3 By 2030, double the global rate of improvement in energy
efficiency
Goal 9: Industry, innovation and infrastructure
Target 9.4 By 2030, upgrade infrastructure and retrofit industries to makethem sustainable, with increased resource-use efficiency and greater
adoption of clean and environmentally sound technologies and industrial
processes, with all countries taking action in accordance with theirrespective capabilities
Goal 12: Responsible consumption and production
Target 12.4 By 2020, achieve the environmentally sound management ofchemicals and all wastes throughout their life cycle, in accordance withagreed international frameworks, and significantly reduce their release toair, water and soil in order to minimize their adverse impacts on humanhealth and the environment
Target 12.6 Encourage companies, especially large and transnational
companies, to adopt sustainable practices and to integrate sustainability
information into their reporting cycle
Goal 13: Climate action
Target 13.1 Strengthen resilience and adaptive capacity to climate-related
hazards and natural disasters in all countries
Target 13.3 Improve education, awareness-raising and human andinstitutional capacity on climate change mitigation, adaptation, impact
reduction and early warning- 28 -

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6.

Consistency with SLBP, etc.: Principle 3 Bond Characteristics (Economic Conditions)6-1. Evaluation perspective
In this section, we confirm the following details.
(1) Are there arrangements under which the financial and structural characteristics of thebond will change depending on whether or not the selected KPIs achieve pre-establishedSPTs?
(2) Are the definitions of KPIs, SPTs and variability of the financial and structuralcharacteristics of sustainability-linked bonds included in the bond disclosure documents?
(3) Are there plans to mention the responses in the event of unexpected events that could havea material impact on the method of measuring KPIs, setting of SPTs and assumptions, andscope of KPIs (such as important M&A activities, significant changes in regulations or othersystems, or the occurrence of unusual events, etc.) in the bond disclosure documents?
6-2. Current Situation of Evaluation Targets and Evaluation of JCR(Evaluation Results)
The Bonds have arrangements whereby the financial characteristics of the Bonds will varydepending on whether or not the pre-defined SPTs are achieved with respect to the selected
KPIs. Such variability is included in the bond disclosure documents and all targets are
expected to be disclosed in the Framework, resulting in a high degree of transparency. Methodsof measuring KPIs, SPTs setting and assumptions will be mentioned in the bond disclosures.
JCR has confirmed that in the disclosure document for the Bonds, if the SPTs are not achieved,arrangements will be made to change the financial characteristics of the Bonds and that thearrangements will be disclosed. The definition of KPIs, setting of SPTs, and assumptions will also
be described in the same document. In the event that the definition of KPIs, the setting of SPTs,
or the assumptions are changed due to circumstances that cannot be foreseen at the time of thefinancing of the Bonds, ENEOS will disclose to investors an explanation of the changes in an
appropriate manner.
In addition, in the event of a material change in the setting of SPTs, ENEOS will discuss withthe relevant parties the establishment of a SPTs that is at least as ambitious as the previous
evaluation criteria based on the plans of these changes, and obtain an assessment by an external
review organization as required.
Based on the above, JCR confirmed that the necessary arrangements or disclosures will be madein connection with the terms and conditions the Bonds, and that the information in the disclosure
documents of the Bonds or to be disclosed is also appropriate.

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7.

Consistency with SLBP, etc.: Principles 4 and 5 Reporting and Verification
7-1. Evaluation perspective
In this section, we will confirm whether the following items are planned to be included in thereport content after financing, the method of disclosure, and whether third-party verification areplanned.

i. Items to be disclosed
Are the following items planned to be disclosed at least once a year?
Update on selected KPI performance, including baseline assumptions
Useful information for issuers to gauge the degree of SPTs ambition (e.g., information
about the issuer's most recent sustainability strategy and related KPI/ESG governance,
as well as information about KPIs and SPTs analyses)
Disclosure of the following information to the extent possible:
Qualitative and quantitative explanations of the main factors contributing to theimprovement in performance/KPIs (including M&A activities, etc.)
Explanation of how improved performance impacts the sustainability of issuers andborrowers
Presence of revaluation of KPIs, revision of SPTs set, and changes in baseline assumptions
and scope of KPIs
ii. Verification
Are verification details (status of achievement of SPTs, impacts on changes in financial andstructural characteristics, timing of such changes, etc.) scheduled to be disclosed?
7-2. Current Situation of Evaluation Targets and Evaluation of JCR(Evaluation Results)
ENEOS appropriately plans the content, frequency, and methods of disclosures in postfinancing reporting, and plans to receive third-party verification of details required by the
Principles such as SPTs' progress.
ENEOS plans to disclose on its website the annual reporting on the performance of KPIs
regarding the progress of its CO2 emission reduction plan (achievement of medium-and long-termgoals). Scope1, 2 net CO2 emissions will be verified by a third party. ENEOS also plans to annuallyreport on its website the figures that have been accurately calculated in accordance with thestandard. Should a significant change in SPTs occur during the period, JCR will continue to review
the status of compliance with CTFH, SLBP, etc. and whether the initially assumed level ofambition and significance will be maintained. In the year of maturity, ENEOS and JCR willconduct a review of the individual bonds implemented based on the Framework, and evaluate thestatus of impact on ENEOS and society, in addition to the status of achievement of SPTs.

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8.

Conclusions on conformity with CTFH, SLBP, etc.
Based on the above considerations, JCR has confirmed that this Framework, which is the subjectof this third-party opinion, conforms to CTFH, SLBP, etc.
(Responsible analysts for this evaluation) Atsuko Kajiwara and Takahiro Yamauchi- 31 -

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Important explanation of this third-party opinion
1. Premises, significance, and limitations of the JCR Third-Party Opinion
Third-party opinions granted and provided by the Japan Credit Rating Agency, Ltd. (JCR) are representations of JCR's overall
opinion at the present time regarding the evaluation target, the Climate Transition Finance Handbook (CTFH), the Sustainability
Linked Bond Principles (SLBP), the basic guidelines for Climate Transition Finance established by the Financial Services Agency,
the Ministry of Economy, Trade and Industry and the Ministry of the Environment in May 2021, and the conformity of JCR to theGreen Loan and Sustainability Linked Loan Guidelines formulated by the Ministry of the Environment in March 2020. Thesestatements do not fully depict the extent of positive impact that such appraisal targets may have.
This Third Party Opinion evaluates current plans or circumstances based on information provided by the Client and information
independently collected by JCR and does not guarantee an evaluation of future status. Also, this Third Party Opinion does notquantitatively prove the positive effects of the Transition Linked Bond and is not responsible for its effects. JCR confirms that thefunding raised by this project is measured quantitatively and qualitatively by the issuer or by a third party requested by the issuer interms of the degree of achievement of the impact indicators established by the Company, but in principle, this is not directly measured.
2. International initiatives, principles, etc. referred to in carrying out this evaluation
In conducting this evaluation, JCRs refer to the following principles and guides formulated by ICMA, UNEP FI and its ministries
and agencies.
・Climate Transition Finance Handbook
・Basic Guidelines for Climate Transition Finance of the Financial Services Agency, the Ministry of Economy, Trade and Industry,
and the Ministry of the Environment
・Principles of Sustainability Linked Bonds
・Ministry of the Environment's Green Loan and Sustainability Linked Loan Guidelines
・Positive impact financial principle
・Positive Impact Finance Model Framework without Limited Use of Funds
3. Relationship with activities related to credit rating business
The conduct of providing this Third-Party Opinion is conducted by JCR as a related business and is different from the conduct
related to the credit rating business.
4. Relationship with credit ratings
This evaluation differs from credit ratings and does not constitute a commitment to provide or inspection a predetermined credit
rating.
5. Third-party nature of JCR
There are no capital or personal relationships, etc. between the parties subject to this evaluation and JCR that may give rise toconflicts of interest.
■Points of Attention

The information in this document has been obtained by JCR from issuers and accurate and reliable sources. However, this information may contain errors due to human,mechanical or other reasons. Accordingly, JCR makes no representation, express or implied, as to the accuracy, consequences, accuracy, timeliness, completeness,marketability or fitness for any particular purpose of such information, nor does JCR assume any liability for any error, omission or consequence of the use of suchinformation. JCR shall not under any circumstances be liable for any special, indirect, incidental or consequential damages of any kind, including loss of opportunity or
financial loss, which may arise from any use of such information, whether contractual liability, tort liability, negligent liability or other cause of liability, and whether suchdamages are foreseeable or unforeseeable. This third-party opinion does not express an opinion on various risks (credit risk, price fluctuation risk, market liquidity risk,etc.) related to Positive Impact Finance, which is the subject of evaluation. In addition, this third-party opinion represents JCR's overall opinion at this time and is not a
representation of facts, and does not constitute any recommendation as to risk judgments or any decision to purchase, sell or hold individual debt securities, commercial
paper or the like. This Third Party Opinion may be changed, suspended or withdrawn due to changes in information, lack of information or other reasons. All rights
associated with this document are reserved by JCR. Any reproduction, adaptation, or modification of this document, in whole or in part, without the permission of JCR is
prohibited.

■Glossary of Terms
Third-party Opinion: This report was prepared by International Capital Market Association and expresses an opinion from an independent, neutral and equitable standpointon the Transition Linked Bonds to be conducted by the issuer, as requested by the client, as well as on the conformity of Climate Transition Finance Handbook to the
Sustainability Linked Bonds Principles.

■Registration status as an external evaluator of sustainable finance, etc.
・Members of the Working Group on the Impact Financial Initiative for the United Nations Environment Programme
・Registered as External Reviewer of Green Bonds, Ministry of the Environment
・Climate Bonds Initiative Approved Verifier (Accreditation Verification Agency for the Climate Bond Initiative)
・ICMA (registration with the International Capital Markets Association as an observer) Principles for Social Bonds, Members of Climate Transition Finance Working
Group■In addition, the status of registration as a credit rating agency, etc.
・Director-General of the Financial Services Agency (Credit Rating) No. 1
・EU Certified Credit Rating Agency
・NRSRO: JCR is registered in the following four classes of five credit rating classes of NRSRO(Nationally Recognized Statistical Rating Organization as defined by the
U.S. Securities and Exchange Commission. (1)Financial institutions, broker-dealers, (2) insurance companies, (3) general business corporations, and (4) government
and local governments. When subject to disclosure under Section 17g-7(a) of the Securities and Exchange Commission, such disclosure is attached to the news releaseappearing on JCR's website (https://www.jcr.co.jp/en/).

Japan Credit Rating Agency, Ltd.

■For further information, contact

Information Service Department TEL: 03-3544-7013 FAX:03-3544-7026

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

- 32 -

<Reference>
Check Sheet for Consistency with Basic Guidelines on Climate Transition FinanceMay 13, 2022
Japan Credit Rating Agency, Ltd.
Company to be evaluated: ENEOS Holdings, Inc. (ENEOS)
The following are the check results of the consistency of the Finance with respect to the items
recommended in the Basic Guidelines on Climate Transition Finance (the "Guidelines") publishedby the Financial Services Agency, the Ministry of Economy, Trade and Industry, and the Ministry of
the Environment.
The Guidelines use three expressions: "should," "recommended," and "be considered/possible."
These expressions are used in the following context:- Items described with the word "should" are basic elements that financial instruments labeled astransition finance are expected to have.
- Items described with the word "recommended" are elements that financial instruments labeled astransition finance are optimally recommended to have under the Guidelines although instruments
which do not have these items can also be labeled as transition finance.
- Items described with the word "be considered" or "possible" are elements that they are notconsidered problematic even if financial instruments labeled as transition finance do not have them.
Element 1: Fundraiser’s Climate Transition Strategy and Governancea) Financing through transition finance should aim to implement or incentivize the achievementof transition strategies. Such strategies should incorporate a long-term target to align with thegoals of the Paris Agreement, relevant interim targets on the trajectory towards the long-term
goal, disclosure on the levers towards decarbonization, and fundraiser’s strategic planning.
Consistency: ✓In May 2022, ENEOS announced its Medium-and Long-Term Goals for FY2050: Aiming forrealization of carbon neutrality of Scope1, 2, 3 by working with the government and othercompanies; FY2040: Net zero Scope1 and 2 CO2 emissions; FY2030: 46% reduction comparedwith by FY2013 in Scope1 and 2 (16 million t-CO2 on a net emissions basis). KPI and SPTs forthis financing are the goals for FY 2040 and the targets for FY 2030 themselves, and are among themost important issues in the Transition Strategy.
The Transition Strategy refers to scenarios published by the International Energy Agency (IEA).
ENEOS’ goals are consistent with Japan's policies and Paris Agreement, and Ministry of Economy,
Trade and Industry's Roadmap for the Oil Sector. It also endorses the "Challenge Zero" declaration,
an initiative by Keidanren and the Japanese government to achieve the "decarbonized society"1positioned as the long-term goal of the Paris Agreement.
b) A transition strategy should serve to explicitly communicate the implementation of an issuer’s
strategy to transform the business model in a way which effectively addresses climate-relatedrisks and contributes to achieving the goals of the Paris Agreement. Transformation of a businessmodel is not limited to initiatives as an extension of existing businesses but can also betransformation based on various other perspectives. It includes fuel conversion that achieves
significant carbon and GHG reduction benefits, introduction of innovative technologies,
improvement of / changes in manufacturing processes and products, and development andprovision of products and services in new fields.
Consistency: ✓In May 2019, ENEOS announced its endorsement to the TCFD, developed scenarios based on the
scenarios published by the IEA, and identified possible climate-related risks and opportunities.
As a business transformation related to the transition strategy for carbon neutrality for FY2050, thecompany aims to realize carbon neutrality through the following initiatives.
・Promotion of energy conservation activities in business operations at refineries, etc.
・Fuel conversion
・Renewable Energy Utilization
・Utilization of offsets such as CCS and forest absorptionc) The implementation of a transition strategy assumes cases where it affects society andenvironment other than climate change, such as employment or stable provision of products andservices, through transformation of a business model. In such cases, it is recommended that thefundraiser also takes into consideration the impact of business innovations to society andenvironment other than climate change.
Consistency: ✓Based on the group philosophy of "we will contribute to the development of our communities andhelp to ensure a vibrant future through our business," the company plans to promote a transition
strategy toward carbon neutrality while maintaining the domestic business foundation essential forthe stable supply of energy. Negative impacts include a certain degree of impact on employments
as the oil industry as a whole is expected to shrink in the future, but this will be mitigated by shiftingto growing businesses in the advanced materials industry, next-generation energy supply businesses
such as hydrogen, and environmentally friendly businesses such as CCS and CCUS.
d) Climate change-related scenarios should be referenced in developing transition strategies. The
pathway to transition should be planned for respective sector and regions of individual2

fundraiser, who may generally be placed in a different starting point and pathway to transition.
Consistency: ✓Identified possible climate-related risks and opportunities. In formulating the Long-Term Vision to2040, the company assumed that three changes in the business environment would occur:"Development of Low-Carbon, Recycling-Oriented Society", "Digital Innovation" and "Lifestyle
Changes" while referring to the "New Policy Scenario (NPS)" of WEO2018 published by the IEA,
as well as the "Sustainable Development Scenario (SDS)" based on the Paris Agreement.
e) Transition strategies and plans must be highly credible in terms of their effectiveness. Therefore,
it is recommended that a transition strategy and plan are linked to management strategy andbusiness plan, including Medium-term Business Plans.
Consistency: ✓In May 2020, ENEOS announced its Environmental Vision, which is a target for FY2040, longterm environmental targets for FY2030, and the Second Medium-Term Environmental Management
Plan for FY2020 toFY2022. Thereafter, the Carbon Neutrality Plan was revised in May 2022, witha target for FY2050 and milestones at the midpoint of the plan, the FY2040 target and the FY2030
target both announced. The Environmental Vision (FY2040), the long-term Environmental Target(FY2030), and the Medium-term Environmental Management Plan for FY2023 and beyond will bealigned with the carbon neutral plan announced in May 2022.
f) However, because such strategies and plans run for a long period of time, it is possible that thecontent may be modified or adjusted in the event of a major change in the assumed external
environment and so on.
Consistency: ✓ENEOS revised the carbon neutrality plan in May 2022 and will continue to revise the content
appropriately in the future.
g) In the initial phase of developing a transition strategy by the fundraiser, it is considered as an
option for the fundraiser to indicate a plan for future implementation of items described with thewords "recommended" and "be considered/possible" in these Guidelines.
Consistency: ✓All matters that are considered "should" in the Basic Guidelines satisfy their requirements. In
addition, almost all items identified as "recommended" and "considered/possible" have met theirrequirements or are expected to be implemented in the future.
h) In order to secure the effectiveness of the transition strategy, the fundraiser should establish an
3organizational structure for the board of directors and/or other such committee to oversee theactivities addressing climate change and for management to play a role in assessing andmanaging such climate-related activities.
Consistency: ✓ENEOS has adopted a system in the Holdings Executive Council chaired by the president and CEO
to analyze risks and business opportunities that could have a major impact on future management,
and to appropriately confirm the status of responses to identified risks and priority issues. At the
Executive Council in principle, once a year, the company-wide risk management, risk analysis
related to ESG, and comprehensive discussions on risk events related to internal control are
conducted, and the department in charge takes the lead in responding to the identified risks andpriority issues on a cross-organizational basis. In addition, the Board of Directors monitors andsupervises the company by receiving reports (in principle, once a year) on the risks, priority issues,and the status of responses to them determined by the Executive Council. In April 2022, the Carbon
Neutral Strategy Department, a dedicated organization, was established for the purpose ofstrengthening the system to quickly and steadily formulate strategies and implement specificmeasures to achieve carbon neutrality. The dedicated organization will play a central role in further
promoting the company's carbon neutrality plan.
i) While a transition strategy shall be basically developed by a company in need of finance, it ispossible for entities to utilize the strategy of companies that are wholly or partially responsible
for the initiatives to establish or explain their own strategy, given that the finance supports GHG
emissions reduction initiatives of not just a single company but its supply chain.
Consistency: ✓The company aims at carbon neutrality including Scope3 by FY2050, which will contribute to thegreenhouse gas emission reduction of the supply chain. In addition, the company has announced
that it will actively promote dialogue with a diverse range of stakeholders, including shareholders,investors, customers, business partners, and employees, and promote activities that respond to their
expectations and requests.
j) Transition strategies should be disclosed in advance in a company’s integrated report,sustainability report, statutory documents and other materials for investors (including suchdisclosures on the website). This also applies to the other three elements.
Consistency: ✓Transition strategies are disclosed in the Integrated Report and ENEOS Group Second MediumTerm Management Plan.

4k) It is possible to disclose transition strategies and elements concerning the governanceguaranteeing that the execution of transition strategies is in alignment with the reporting
frameworks such as the Recommendations of the Task Force on Climate-Related Financial
Disclosures (TCFD; Final Report).
Consistency: ✓ENEOS analyzes the impacts of climate change issues, and discusses, decides, or reportson the following at the Board of Directors’ Meeting.
・Representation of endorsement of the purpose of TCFD Final Report
・Disclosure in line with TCFD recommendations (e.g., scenario-based analysis)
・Formulation of carbon neutrality planl) If the implementation of a transition strategy assumes impacts on society and environment otherthan climate change, it is recommended that the fundraiser explain the view underlying its
approaches, etc. to address such impacts and disclose how the strategy on the whole contributes
to achieving the Sustainable Development Goals (SDGs) so that the effects can be appropriately
evaluated by the financier.
Consistency: ✓In addition to contributing to resolving climate change issues as a material ESG issue, the company
is promoting initiatives with the aim of achieving SDGs targets by identifying safety assurance,
health promotion, and promotion of diversity and inclusion as areas of challenge.
m) Considering the length of application and other factors, there may be instances when a transition
strategy and plan will need to be modified due to major changes in the external environment andrelevant conditions that were assumed at a planning phase. In this case, the contents of themodification should be disclosed together with the underlying reason in a timely manner.
Consistency: ✓ENEOS revised the carbon neutrality plan in May 2022 and will continue to revise the content
appropriately in accordance with the external environment. As the background of the revision of
the carbon neutrality plan, ENEOS has announced that the purpose is to revise it to be in line with
the Japanese government's goal toward carbon neutrality in line with the 1.5°C target.
n) In terms of governance, it is recommended that disclosures include an organizational structure
for overseeing the implementation of a transition strategy and for assessing and managing
related initiatives. It is also recommended that disclosures include the specific roles of theconstituent organizations and the management and the process by which the content ofdeliberations is reflected in management.
5Consistency: ✓ENEOS has adopted a system in the Holdings Executive Council chaired by the president and CEO
to analyze risks and business opportunities that could have a major impact on future management,
and to appropriately confirm the status of responses to identified risks and priority issues. At the
Executive Council in principle, once a year, the company-wide risk management, risk analysis
related to ESG, and comprehensive discussions on risk events related to internal control are
conducted, and the department in charge takes the lead in responding to the identified risks andpriority issues on a cross-organizational basis. In addition, the Board of Directors monitors andsupervises the company by receiving reports (in principle, once a year) on the risks, priority issues,and the status of responses to them determined by the Executive Council. The process describedabove is disclosed in the Integrated Report and on the ENEOS website.
o) In cases where the fundraiser determines the need for an objective assessment regarding thetransition strategy, it is recommended that a review, assurance and verification by an externalorganization for its transition strategy.
Consistency: ✓For the purpose of objective evaluation, ENEOS has obtained reviews by Japan Credit Rating
Agency, Ltd. (JCR), etc. for this framework.
p) It is recognized useful to obtain a review particularly concerning the following in connection
with the transition strategy:- Alignment of short-term, mid-term and long-term targets (for targets, refer to Element 3) with theoverall scenario- Credibility of the fundraiser’s strategy to reach the targets- Appropriateness of the management process and governance for the transition strategy
Consistency: ✓JCR confirmed the above three items and provided this evaluation report.
Element 2: Environmental Materiality (Priority) in Business Modelsa) Initiatives for achieving the transition strategy should be such that contribute to transforming
core business activities that are environmentally material parts today and in the future.
Consistency: ✓The oil industry is required to change its business in order to realize carbon neutrality,
while it is highly assumed that the stable supply and security of petroleum, which is anindispensable source of energy for people's daily lives and economic activities, will be
crucial for promoting transition from the viewpoint of energy security. Therefore, it can
6be said that efforts to reduce CO2 are of utmost importance for the industry as a whole.
ENEOS has positioned efforts toward a low-carbon society as a material ESG issue.
b) When identifying business activities that are environmentally material parts, it is recommended
that the fundraiser consider multiple climate change-related scenarios that may possibly impact
its judgment on the identification.
Consistency: ✓Identified possible climate-related risks and opportunities. In formulating the Long-Term Vision to2040, the company assumed that three changes in the business environment would occur:"Development of Low-Carbon, Recycling-Oriented Society", "Digital Innovation" and "Lifestyle
Changes" while referring to the "New Policy Scenario (NPS)" of WEO2018 published by the IEA,
as well as the "Sustainable Development Scenario (SDS)" based on the Paris Agreement.
c) In terms of considering materiality, it is possible to apply existing guidance provided by anorganization that creates standard criteria concerning sustainability reporting.
Consistency: ✓ENEOS identifies material ESG issues annually based on various guidelines such as GRI standards,
ISO26000, and the U.S. Sustainability Accounting Standards Board (SASB), as well as evaluation
items of ESG evaluation organizations.
d) The fundraiser should indicate that climate change is an environmentally material part ofbusiness activities.
Consistency: ✓Among the material ESG issues identified by ENEOS for FY2021, "contribution to the developmentof a low-carbon society" in the environmental field was identified as the most highly evaluatedissues.
e) It is recommended that disclosures include the contents of climate change-related scenarios
used in identifying business activities that are environmentally material parts along with theunderlying reasons (e.g., regional and industrial characteristics) for selecting such scenarios.
Consistency: ✓Identified possible climate-related risks and opportunities. In formulating the Long-Term Vision to2040, the company assumed that three changes in the business environment would occur:"Development of Low-Carbon, Recycling-Oriented Society", "Digital Innovation" and "Lifestyle
Changes" while referring to the "New Policy Scenario (NPS)" of WEO2018 published by the IEA,
as well as the "Sustainable Development Scenario (SDS)" based on the Paris Agreement.
78Element 3: Scientifically Rationalized Climate Transition Strategies (Including Targets
and Channels)a) The fundraiser should reference science-based targets in developing its transition strategies.
Consistency: ✓Identified possible climate-related risks and opportunities. In formulating the Long-Term Vision to2040, the company assumed that three changes in the business environment would occur:"Development of Low-Carbon, Recycling-Oriented Society", "Digital Innovation" and "Lifestyle
Changes" while referring to the "New Policy Scenario (NPS)" of WEO2018 published by the IEA,
as well as the "Sustainable Development Scenario (SDS)" based on the Paris Agreement.
b) This should include mid-term targets (short- to mid-term targets) in addition to long-term targets
for 2050 and be quantitatively measurable based on a measurement methodology which isconsistent over a long period of time.
Consistency: ✓The target for FY2050: Aiming for realization of carbon neutrality of Scope1, 2, 3 by working withthe government and other companies, and the short- and medium-term goals are: FY2040 target:
Net zero Scope1and 2; and the FY2030 target: 46% reduction compared with FY2013 in Scope1
and 2 net CO2 emission (16 million t-CO2 on a net emissions basis)c) In addition, it is recommended that GHG reduction targets, which could be formulated either inintensity and absolute terms, should consider environmental materiality and cover Scopes 1
through 3 of GHG Protocol, the international standard on supply-chain emissions.
It is recommended that targets covering Scope 3 be set using a practical calculation method
when it could be subject to significant reduction in the fundraiser’s business model.
It is also possible to disclose the avoided emissions as necessary.
Consistency: ✓Regarding the target setting, ENEOS has set an advanced target of aiming for carbon neutrality by
FY2050, including Scope 3. The company calculates and publishes CO2 emissions for Scope 1, 2
(on a consolidated basis) and Scope 3 (ENEOS Corporation only), and has obtained third-party
verification for a part of items in Scope 1, 2, and 3.
d) Science-based targets are GHG reduction targets required for achieving the goals of the Paris
Agreement and should be set while taking into account differences in regional characteristics
and industries. In so doing, it is possible to refer to the following trajectories.
- Scenarios widely recognized in the international community (Examples include the Sustainable
Development Scenario (SDS) outlined by the International Energy Agency (IEA))
9- Objectives verified under the Science Based Targets Initiative (SBTi) and such like- Nationally Determined Contributions (NDC) of countries aligned with the goals of the Paris
Agreement, roadmaps by industry sector, industries set out plans that are science-basedachieving the Paris Agreement and so on.
Consistency: ✓Identified possible climate-related risks and opportunities. In formulating the Long-Term Vision to2040, the company assumed that three changes in the business environment would occur:"Development of Low-Carbon, Recycling-Oriented Society", "Digital Innovation" and "Lifestyle
Changes" while referring to the "New Policy Scenario (NPS)" of WEO2018 published by the IEA,
as well as the "Sustainable Development Scenario (SDS)" based on the Paris Agreement.
e) Short- to mid-term targets (with a term of three to fifteen years) should be set by referencing
the aforesaid trajectories or on the pathway toward the long-term targets planned as benchmarks.
Consistency: ✓The Carbon Neutrality Plan was revised and the mid-to long-term targets are set as follows: FY2050:
Aiming for realization of carbon neutrality of Scope1, 2, 3 by working with the government andother companies, FY2040 target: Net zero Scope1 and 2 CO2 emissions; and the FY2030 target:
46% reduction compared with FY2013 in Scope1 and 2 net CO2 emission (16 million t-CO2 on a
net emissions basis)f)

In doing so, since short- to mid-term targets will likely be set in consideration of various factors(including the starting point and track records of the issuer, timing of capital investments,
economic rationality, cost-benefit analysis, and availability of technology necessary to achieve
the targets), it is possible that the pathway may not necessarily be linear with the same slope atall times but may be nonlinear.

Consistency: ✓Targets have been set taking into account a variety of factors in addition to a road map for
decarbonization, such as investment plans and the resulting returns. As a result, it is assumed that it
is not a linear path of the same slope.
g) The fundraiser should disclose the short- to mid-term and long-term targets they have set,
including the base years, etc.
Consistency: ✓The target of 46% reduction in net CO2 emission of Scope1, 2, which is the short-and medium-termtarget, has set the base year as FY2013.

10h) In order to show that long-term targets are science-based, disclosures should explain themethodology or trajectory used to define target, including the underlying reasons (e.g.,characteristics specific to a region or industry). In particular, when reference is made to plans
and industry roadmaps established by an industry, etc., the explanation should include that they
are grounded in scientific basis.
Consistency: ✓It is consistent with Japan's policies, the Paris Agreement, and METI’s roadmap for “transition
finance” in Oil Sector.
i) It is possible that disclosures explain the pathway toward a long-term target and the alignment
between the short- to mid-term targets on the pathway and the transition strategy, based on theinvestment plan (refer to Element 4) and other plans.
Consistency: ✓Under the Second Medium-Term Business Plan for FY2020 to FY2022, out of a total of 1.6 trillion
JPY in capital investment, 960 billion JPY has been announced as a plan to be appropriated forstrategic investments in growth businesses, such as next-generation energy supply and local
services, and environmentally conscious businesses. The company plans to develop measures forstrategic investment through participation in and investment in solar power generation, onshore andoffshore wind power generation, biomass and other renewable energy projects domestically andoverseas, and demonstration-related investment for the construction of hydrogen supply chains. The
company also plans to disclose future investment plans.
j) Concerning targets and trajectories, obtaining expert reviews on the following is considered tobe particularly useful:- Whether the long-term target is aligned with science-based targets-> Whether the disclosed information explains the alignment with the Paris Agreement- Whether the short- to mid-term targets are determined using a GHG emissions forecast
calculated based on a climate change scenario analysis-> Whether scenarios, etc. widely recognized in the international community are used orreferenced- Whether the actual values of the indicators used for the targets are quantitatively measured
using consistent measurement methods-> Whether a specific GHG emissions reduction measure has been developed to achieve shortto mid-term targets aligned with long-term goals
Consistency: ✓JCR has confirmed that all of the above items have been met in this assessment report.
11

Element 4: Transparency of Implementationa) In implementing transition strategies, the fundraiser should provide transparency of the basic
investment plan to the extent practicable.
Consistency: ✓Under the Second Medium-Term Business Plan for FY2020 to FY2022, out of a total of 1.6 trillion
JPY in capital investment, 960 billion JPY has been announced as a plan to be appropriated forstrategic investments in growth businesses, such as next-generation energy supply and local
services, and environmentally conscious businesses. The company plans to develop measures forstrategic investment through participation in and investment in solar power generation, onshore andoffshore wind power generation, biomass and other renewable energy projects domestically andoverseas, and demonstration-related investment for the construction of hydrogen supply chains. The
company also plans to disclose future investment plans.
b) The investment plan includes not only capital expenditure (Capex) but also capital andoperational expenditure (Opex). Therefore, costs related to research and development, M&A,
and dismantling and removal of facilities are also subject to the investment plan. In otherwords, it is recommended that the investment plan incorporate, to the extent possible,
expenditure and investment necessary for implementing the transition strategy.
Consistency: ✓The investment plan incorporates costs and investments related to the implementation of
the transition strategy.
c) It is recommended that the investment plan outline the assumed climate-related outcomes andimpacts in a quantitative fashion where possible, along with the calculation methods andprerequisites. If quantification is difficult, the use of external certification systems can beconsidered as a substitute for qualitative assessment.
Consistency: ✓Regarding KPIs' performance, annual reports on the progress of CO2 emission reduction plans(achievement of medium-and long-term goals) are scheduled to be disclosed on ENEOS's website.
CO2 emissions of Scope1, 2 will be verified by a third-party organization.
d) In particular, when outlining the assumed climate-related outcomes and impacts, it isrecommended that the disclosure include not only GHG emission reduction and otherinitiatives to ease climate change but also report how consideration of a "just transition" isincorporated into the transition strategy.
12Consistency:
With regard to consideration for the just transition by implementing ENEOSs' Transition Strategy,
while there is a certain degree of impact on employment that is expected to occur in the future as
the oil industry as a whole shrinks, it is considered that this will be mitigated by shifting to growing
businesses in the advanced materials industry, the next-generation energy supply business such ashydrogen, and environmentally friendly businesses such as CCS and CCUS.
e) If implementing the transition strategy has the potential of having a negative impact on
employment or the environment and communities other than climate change, it isrecommended that any expenditures to mitigate such negative impacts be added to the plan.
Consistency: ✓While there is a certain degree of impact on employment accompanying the expected decline inoperation as the oil industry as a whole shrinks in the future, it is considered that it will be mitigatedby shifting to growing businesses in the advanced materials industry, the next-generation energy
supply business such as hydrogen, and environmentally friendly businesses such as CCS and CCUS.
f) Moreover, the outcomes arising from investments included in the investment plan should alignwith the targets.
Consistency: ✓ENEOS will work to achieve carbon neutral by FY2050 through investments totaling 960 billion
JPY in strategic investments in growth businesses, such as next-generation energy supply and local
services and environmentally conscious businesses, which are currently planned.
g) Transition finance is a means to financially support the implementation of a transition strategy,
and it is recommended that financing be provided for new initiatives. However, in the case oftransition finance in the format of Use of Proceeds instruments, refinancing for a reasonably
set lookback period (the period during which refinancing is to be applied for projects that havealready started) is considered to be eligible.
Consistency: Not Applicable
General corporate purpose instrumentsh) It is recommended that investment plans be disclosed by linking the outcomes and impacts
with the expenditures to the extent practicable.
Consistency:
For the entire transition strategy, each investment target and the total investment amount are
disclosed, but it is difficult at present to link the results and impact individually, and it is not
13disclosed. In the future, it is assumed that specific individual plans will be disclosed as soon as they
are finalized.
i) It is recommended that the fundraiser, after securing financing, reports any deviations
between the initial plan and the actual expenditure, outcomes and impacts. For any deviations,
it is recommended that the underlying reasons be explained.
Consistency: ✓The differences between the original plan and actual expenditures, results and impacts of thisfinancing will be disclosed in the Impact Reporting, which is scheduled to be implemented on aregular basis after issuing the bonds.
j) In cases where the Use of Proceeds loans include refinancing, the fundraiser should provide
an explanation on the lookback period set under the framework or other relevant methods
along with the underlying reasons and factors.
Consistency: Not applicable
General corporate purpose instrumentsk) While there are differences in business practices, such as the fact that loans are traditionallymade based on the bilateral relationship between a borrower and a lender, it is recommended
that disclosure on the above be made to the extent possible in order to ensure transparency andcredibility of transition finance. However, if it is difficult to disclose such information to the
public from the standpoint of confidentiality and competition, it is possible to report suchinformation only to lenders or external evaluation organizations without disclosing it to the
public.
Consistency: Not applicable
The issuance of bonds is planned.
l) Similarly, in cases where the fundraiser is a small-to-medium-sized enterprise and it is difficult
to disclose to the public the same content as that reported to the financier or an external
evaluation institution, it is possible for the fundraiser to simplify the content of disclosure, forexample, by limiting disclosure to a summary of h) to j) of this section.
Consistency: Not applicable
Although ENEOS does not fall under the category of SMEs, it is under consideration to disclose thecontent of the report to the extent practicable by the project.

14