ENEOS Holdings, Inc.
Transition-Linked Bond Framework
May 2022
1. Introduction
ENEOS Holdings, Inc. (hereinafter "ENEOSHD") has established the Transition-Linked Bond
Framework (hereinafter "the Framework"). Based on the Framework, ENEOSHD will issue transitionlinked bonds to inform investors and market participants of as well as advance its efforts toward
carbon neutrality.
1.1 Overview of the ENEOS GroupThe ENEOS Group (formerly the JXTG Group) was established as a result of the merger of the JXGroup and the TonenGeneral Group in April 2017. In June 2020, with the change in trade names of
JXTG Holdings, Inc. and JXTG Nippon Oil & Energy Corporation to "ENEOS Holdings, Inc." and"ENEOS Corporation", respectively, the JXTG Group changed its name to the "ENEOS Group".
Under the management of ENEOSHD, three principal operating companies are engaged separately
in the energy business; the oil and natural gas exploration and production business; and the metals
business.
1.2 Reference to Principles and Guidelines
The Framework will communicate in a transparent manner on the key elements and corecomponents recommended by the following principles and guidelines.
 ICMA Climate Transition Finance Handbook 2020
 Financial Services Agency; Ministry of Economy, Trade and Industry; and Ministry of theEnvironment, Japan Basic Guidelines on Climate Transition Finance May 2021
 ICMA Sustainability-Linked Bond Principles 2020
 Ministry of the Environment, Green Loan and Sustainability Linked Loan Guidelines 2020
<Alignment with the Four Key Elements of Climate Transition Finance>
Four Key Elements of Climate Transition Finance

Related Sections

1.

Issuer's climate transition strategy and governance

2.1、2.2、2.3、2.4、2.5、2.6、2.7

2.

Business model environmental materiality

2.1、2.2、2.3、2.4、2.6、2.7

3.

Climate transition strategy to be 'science-based'
including targets and pathways

4.

Implementation transparency

2.5、2.6
2.2、2.6<Alignment with the Five Core Components of Sustainability-Linked Bond>
Described in Chapter 3: "The Five Core Components of ICMA Sustainability-Linked Bond
Principles".
1

ENEOSHD has obtained a third party opinion from Japan Credit Rating Agency, Ltd. regarding thealignment of the Framework with the Principles and Guidelines stated above.

22. Carbon Neutrality Strategy of the ENEOS Group
Strategy & GovernanceMateriality

Science-based

Transparency

2.1 ENEOS Group Philosophy

The ENEOS Group (hereinafter "the Group") is working to realize the ENEOS Group Philosophy
by enhancing its core businesses, pursuing innovation and expanding its businesses globally. To thisend, the Group is also working to develop employees with a strong sense of ethics and a willingness
to take on challenges. Through these efforts, the Group aims to become one of the most prominentand internationally competitive energy and materials company groups in Asia.

3Strategy & GovernanceMateriality

Science-based

Transparency

2.2 ESG Management of the ENEOS Group
2.2.1 Basic Policy for ESG Management
To achieve sustainable growth, our value must be recognized by building more credibility with our
stakeholders through our response to social needs and the resolution of social issues. The Group has
accordingly formulated the Basic Policy for ESG Management.
＜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 to realize the ENEOS
Group Philosophy.



The ENEOS Group is a group of companies that strives to earn the trust of stakeholders throughthe implementation of ESG management in our business operations.

2.2.2 ESG Management Structure
Pursuant to its Basic Policy for ESG Management, the Group has established a structure in which the
ENEOS Holdings Executive Council, chaired by the president of ENEOSHD, analyzes management
risks and business opportunities and confirms the status of responses to identified risks and material
ESG issues.

4Strategy & GovernanceMateriality

Science-based

Transparency

2.3 Material ESG Issues
The Group identifies material ESG issues every year based on various guidelines as well as theassessment items and weightings of ESG assessment organizations.
Following the identification procedures, 15 material ESG issues were identified for FY2021. In addition,
departments responsible and KPIs are set for each material ESG issue, and the progress of KPIs andthe results of measures for material ESG issues are reported to the Executive Council and the Boardof Directors.
<FY2021 Material ESG Issues and Targets (KPIs)>
Categories

Material ESG Issues

Targets (KPIs)

Environmental

Contribution to the development of a•low-carbon society

Reduction in CO2 emissions: Reduce by 4.02
million tons compared to fiscal 2009

Contribution to the development of a•recycling-oriented society

Waste-to-landfill ratio: Maintain zero
emissions (less than 1%)

Understanding and management of•

biodiversity risks

Understand risks at manufacturing sites andexamine responses

Understanding and management of•

Serious environmental incidents: zerowater risks•

Serious legal compliance incidents: zero•

Understand risks at manufacturing sites andexamine responses

Control of air pollutant emissions

SocialEnsuring safety/ Health enhancement•

Serious environmental incidents: zero•

Serious legal compliance incidents: zero•

Zero serious occupational injuries(occupational fatalities)•

Achieve TRIR* of 1.0 or less
*Number of occupational injuries of non-losttime severity or greater per one million
working hours•

Increase the cancer screening rate
(recommendations)•

Achieve screening rate of 70% or higher for
stomach cancer, colorectal cancer, breast
cancer, and cervical cancer

Communication with stakeholders•(investors, etc.)

Effective engagement with investors andothersCompliance with international principles•

on human rights

Implement human rights due diligence,
including for subsidiaries

Securing and developing humanresources•

Implement human rights training•

Implement effective training and evaluation
based on human resource development plan5

Diversity and inclusion•

Maintain rate of women among newly hired
university graduates at 25% or higher•

Maintain employment rate of people withdisabilities at 2.3% or higher

Work-life management•

Maintain annual paid leave days taken at 80%
or higher•

Maintain 100% rate of return to work afterchildcare leave

GovernanceAppropriate structuring and operation of•

corporate governance

Implement evaluations of the effectiveness of
the Board of Directors•

Improve corporate governance based on thecorporate governance code and analysis of
the results of exercising voting rights at
general meetings of shareholders

Compliance•

Conduct legal compliance inspections•

Implement training on important laws andregulations (Anti-Monopoly Act, etc.)•

Appropriate operation of the internal reporting
systemSocial responsibility in the supply chain•

Implement CSR procurement surveys atoverseas sites in addition to domestic sites,
where surveys have already been conducted•

Communicate the Group’s procurement
policies and procurement guidelines forbusiness partners

Effective risk management•

Steady execution of the risk management
process※Applicable companies: ENEOHD, principal group companies and NIPPO Corporation<Identification Procedure for Material ESG Issues>
Step1

Designate ESG risks to consider

Designate ESG risks by comprehensively examining various guidelines (GRI Standards, ISO
26000, US Sustainability Accounting Standards Council (SASB), etc.), assessment items of ESG
assessment organizations, and the Sustainable Development Goals (SDGs)▼
Step2

Assess the designated ESG risks

Assess the degree of materiality of the ESG risks designated in Step 1 based on the assessment
weightings of ESG assessment organizations▼
Step3

Identify material ESG issues

Identify the ESG risks assessed in Step 2 that exceed the assessment reference baselines asmaterial ESG issues

6Strategy & GovernanceMateriality

Science-based

Transparency

2.4 Policy for Environmental Initiatives
As an energy and materials company group, the Group recognizes that climate change involves
both material management risks and opportunities.
We believe that developing practical solutions to climate change will enable us to continuously
generate profits into the future. As a clear expression of our intent, we established the following as
our envisioned goals in our Long-Term Vision to 2040: become one of the most prominent andinternationally competitive energy and materials company groups in Asia, create value by transforming our current business structure, and contribute to the development of a low-carbon,
recycling-oriented society. In May 2020, we have also stated our intent to achieve carbon neutrality
in our own emissions by 2040.
Strategy & GovernanceMateriality

Science-based

Transparency

2.5 Assumption of Business Environment in 2040
The Group regularly analyzes long-term forecasts of energy demand based on the World Energy
Outlook report, published annually by the International Energy Agency (IEA).
When developing its Long-Term Vision to 2040, the Group referred to the World Energy Outlook
2018 New Policies Scenario and Sustainable Development Scenario, which is based on the Paris
Agreement. Using this information, the Group identified three long-term trends in the businessenvironment: the development of a low-carbon, recycling-oriented society, digital innovation, andlifestyle changes.
By 2040, the Group envisions the mass introduction of renewable energy; the replacement ofgasoline and diesel cars with electric vehicles (EVs), used for car sharing and energy storage;
distributed energy resources with energy storage; and recycling technology and infrastructure formetals and plastic. Although we expect domestic fuel demand to decline to half the 2017 level, we
also foresee a great increase in demand for hydrogen and renewable energy in line with the shift toa low carbon, recycling-oriented society.
In addition, with the progression of digital innovation, demand is expected to rise dramatically forcopper, a base metal, raw materials for recycling, and high-performance and advanced materials
required for digital devices.

7

The Group is accelerating structural reforms to build a resilient business portfolio that will enable it
to respond to risks and opportunities that have been identified and achieve sustainable growth.
In building our business portfolio, we have largely categorized the Group’s businesses into growthbusinesses, where we will increase strategic investment, and base businesses. In petroleum
refining and marketing, one of our base businesses, we will optimize the value chain and maximize
cash flows through improved efficiencies and resilience while fulfilling our responsibility to provide astable supply of energy. In our growth businesses, we will focus on five newly defined businesses
where we will effectively concentrate our management resources.

8

Strategy & GovernanceMateriality

Science-based

Transparency

2.6 Targets towards Carbon Neutrality
As a milestone toward its stated goal of achieving net zero in its own CO2 emissions, the Group has
developed the Medium-Term Environmental Management Plan for FY2020 to 2022, and has
established long-term environmental targets to 2030.
In light of the changes in domestic and global circumstances, such as the declaration of CO2
emissions reduction targets by the Government of Japan and global discussions related to carbon
neutrality standards, the Group revised its Carbon Neutrality Plan. While maintaining its domestic
business, which is essential to a stable energy supply, the Group has set a target for a 46%
reduction compared with FY2013 in Scope 1 and 2 net CO2 emissions by FY2030, as well as atarget for net zero Scope 1 and 2 CO2 emissions by FY2040. In order to achieve these targets, theGroup will utilize carbon offsets such as CCS and forest absorption. Furthermore, the Group will
work together with the government and other companies toward the reduction of Scope 3 CO2emissions and the realization of carbon neutrality by FY2050.
The efforts of ENEOSHD are aligned with the 2050 Carbon Neutrality Declaration of theGovernment of Japan, the Sixth Strategic Energy Plan, and Technology Roadmap for Transition
Finance in the Oil Sector. We believe that our efforts will contribute to the mitigation of climatechange, which is recognized as a global issue.
ENEOSHD will review its long-term strategies, including its assumptions of the businessenvironment and the Medium-Term Management Plan, from time to time in case of materialchanges in its assumptions of the external environment and other factors.

9

Carbon Neutrality Plan (Announced on May 13, 2022)

2.6.1 Environmental Vision (FY2040)*Developed in May 2020. To be reviewed for consistency with the Carbon Neutrality Plan revised in
May 2022.
2.6.2 Long-term Environmental Targets (FY2030)*Developed in May 2020. To be reviewed for consistency with the Carbon Neutrality Plan revised in
May 2022.

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2.6.3 Medium-Term Environmental Management Plan (FY2020~FY2022)

2.6.4 Capital Investment Plan (FY2020~FY2022)
According to the 2nd Mid-Term Management Plan for FY2020~FY2022, among a total capital
investment of ¥1,600 billion, ¥960 billion will be used for strategic investment for growth businesses
including next-generation energy supply, local services, and environmentally conscious businesses,
etc.

11

Strategy & GovernanceMateriality

Science-based

Transparency

2.7 Participation in External Initiatives
UN Global Compact (UNGC)
Four Group companies (ENEOSHD, ENEOS, JX Nippon Oil & Gas Exploration, and JX Nippon
Mining & Metals) participate in the UN Global Compact, supporting the compact's 10 principles
in the four categories of human rights, labor standards, the environment, and anti-corruption.



Task Force on Climate-related Financial Disclosures (TCFD)In May 2019, we signed the TCFD recommendations, and we disclose information on climatechange in accordance with the TCFD recommendations to the greatest extent possible.



Challenge Zero



CDP



Council for Better Corporate Citizenship (CBCC)



Alliance to End Plastic Waste (AEPW)World Business Council For Sustainable Development (WBCSD)International Council on Mining & Metals (ICMM)

Japan Business Initiative for Biodiversity (JBIB)IPIECA—a global oil and gas industry association for advancing environmental and social
performance

Extractive Industries Transparency Initiative (EITI)Business for Nature Call to Action

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3. The Five Core Components of ICMA Sustainability-Linked Bond Principles
The five core components outlined under the ICMA Sustainability-Linked Bond Principles(1.Selection of Key Performance Indicators (KPIs), 2.Calibration of Sustainability Performance
Targets (SPTs), 3.Bond characteristics, 4.Reporting, 5.Verification) of the Framework are as follows.
3.1 Selection of Key Performance Indicators (KPIs)
The KPI of each transition-linked bond to be issued based on the Framework is as follow. The KPI
contributes to the achievement of carbon neutrality of the Group by 2040.
KPI： The Scope 1 and 2 net CO2 emission of the ENEOS Group＜Definition＞
The total amount of direct CO2 emissions (Scope 1) from the business activities of the ENEOS
Group (*1) and indirect CO2 emissions (Scope 2) resulting from energy use (electricity, thermal, etc.)
in its business activities, excluding carbon offsets (*2), within the specified fiscal year.
*1 The ENEOS Group: Principal operating companies (ENEOS, JX Nippon Oil & Gas Exploration, JX Nippon Mining& Metals) and other group companies*2 Carbon offsets: Domestic carbon dioxide capture and storage (CCS) and forest absorption<Historical KPI Performance (FY2018~FY2020) (*3)>
FY2018FY2019FY2020①CO2 emissions (Scope 1 and 2) (million tons)

28.30

26.66

22.49

②Carbon offsets (million tons of CO2)

2.60

3.00

3.14

*3: Carbon offsets from FY2018 to FY2020 include sales of renewable energy and environmentally friendly products.
As the definition of carbon offsets is different from that of *2, the data above are for reference only.

3.2 Calibration of Sustainability Performance Targets (SPTs)
The SPT of each transition-linked bond to be issued based on the Framework will be either of the
two SPTs stated below. The SPT and observation period will be specified in the documentation,
which are to be Amended Shelf Registration Statement and Shelf Registration Supplements, ofeach transition-linked bond.
SPT1：

46% reduction compared with FY2013 in Scope 1 and 2 net CO2 emissions of
the ENEOS Group by FY2030 (*4)

SPT2： Net zero Scope 1 and 2 CO2 emissions of the ENEOS Group by FY2040*4: Equivalent to a 16-million-ton reduction (as of May 2022)※Observation Periods
SPT1: April 1, 2030 ~ March 31, 2031
SPT2: April 1, 2040 ~ March 31, 2041
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3.3 Bond Characteristics
The bond characteristics will be specified in the documentation, which are to be Amended Shelf
Registration Statement and Shelf Registration Supplements, of each transition-linked bond.
The SPTs of the issued transition-linked bonds are not subject to any post-issuance change in SPTs
made by ENEOSHD. However, they may be subject to recalculation based on specificcircumstances, such as unexpected potential events having a material impact on the calculation
methodology of KPI, the calibration and assumptions of SPTs and KPI scope. The events may
include, but not limited to, M&A activities, drastic changes in the regulatory environment or extreme
events, etc. The details of recalculation will be disclosed on ENEOSHD's website.
The failures to achieve SPTs will result in either of the two events stated below.
(1) Donation
If the external verification reports of the SPTs achievement within the observation periods have notbeen provided by the determination dates, specified amount of donation will be made to eligible
organizations by the maturity dates. Eligible organizations are Public-interest Incorporated
Associations, Public-interest Incorporated Foundations, international organizations, municipality
certified NPOs, municipalities and other equivalent organizations for the purpose of environmental
conservation. The eligible organizations where the donation will be made will be decided throughnecessary procedures by the determination dates of the SPTs.
<Determination Dates and Donation Amount>
SPTs

Reference Dates

Determination Dates

AmountSPT1March 31, 2031

December, 2031

0.25% of the issued amount

SPT2

March 31, 2041

December, 2041

0.25% of the issued amount(2) Purchase of Carbon Credits / Renewable Energy Certificates
If the external verification reports of the SPTs achievement within the observation periods have notbeen provided by the determination dates, specified amount of carbon credits or Renewable Energy
Certificates will be purchased by the maturity dates. If purchase of carbon credits or Renewable
Energy Certificates is not available due to force majeure events such as changes in carbon market
regulations, donation will be made instead.
<Determination Dates and Purchase Amount>
SPTs

Reference Dates

Determination Dates

AmountSPT1March 31, 2031

December, 2031

0.25% of the issued amount

SPT2

March 31, 2041

December, 2041

0.25% of the issued amount14

3.4 Reporting
ENEOSHD will report on the following information. The reference period of each reporting is the
fiscal year preceding the fiscal year of that reporting. The reports will be published on ENEOSHD's
website.
No.

Information to be Reported①

Performance of the KPI within the reference period

Annually until the final②

Performance against the SPTs within thedetermination dates, starting

reference period

from the fiscal year following

Up-to-date information of climate transition

the year of issuance of eachstrategies relative to the KPI and SPTstransition-linked bondDonation or purchase status if ENEOSHD failed toTimely③④

Reporting Frequency

achieve the specified SPTs
3.5 Verification
Performance of the KPI will be verified by independent external verifier on an annual basis until the
final determination dates. The verification results will be published on ENEOSHD's website.

15