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Daiki Axis Co., Ltd.
Daiki Axis Green Bond
Green bond eligibility pre-issue assessment report

DNV GL second party opinion

Jan. 2020

DNV GL Business Assurance Japan K.K.

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Contents
Executive Summary

3

Ⅰ Introduction

4

Ⅱ Scope and Objectives

6

Basis of DNV GL’s opinion

7

Ⅲ Work Undertaken

8

Ⅳ Findings and DNV GL’s opinion

9

Schedule-1 Daiki Axis Green Bond Projects

17

Schedule-2 Green Bond Eligibility Assessment Protocol

18

GBP-1 Use of proceeds

18GBP-2 Process for Project Selection and Evaluation

20

GBP-3 Management of Proceeds

21GBP-4 Reporting

22

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Executive Summary
Daiki Axis Co., Ltd. (hereinafter “Daiki Axis”) was founded as fully owned subsidiary of Daiki Corporation in2005 and has provided its core business ‘Environmental Facilities’, ‘Housing Facilities’ and ‘Renewable Energy’
which intends to be issued this green bond. Daiki Axis has established its ‘Daiki Axis Green Bond Framework’
and will raise the proceeds from the bond 3.0 billion JPY to refinance to Solar power project and Small scalewind power project. Daiki Axis engages DNV GL business assurance Japan K.K. (hereinafter “DNV GL”) as
external reviewer to assess its eligibility as green bond. Eligible projects falling into this green bond aredescribed in following table. The Daiki Axis Green Bond projects contribute to 2 UN Sustainable
Development Goals (7.Affodable and Clean Energy, 13.Climate Action) both directly and indirectly, as well.
Eligible ProjectGreen Project
Category & fund amount

Project 01 :Solar PVs
project

Project 02 :Small ScaleWind Powerproject

Category ;Renewable Energy*1(contributes to CO2Emission reduction
from primary energy
source)Fund amount ;3.0 billion JPY(bond term : 10 years)(will be fully allocatedas refinance)

Social Project
Category*- Outline
Solar PVs are equipped on the roof top of the DCM
group home-center retail premises without further
land development- Capacity *total approx. 133 facilities (max)
50kW~900kW/facility total :approx. 23,750kW- Location *total approx. 133 facilities (max)Chubu:53, Shikoku:32, Kansai:19 others:29

Contribution
to SDGs
7.Affodable andClean Energy
13.Climate
Action- Outline
Horizontal axis small scale wind power as Daiki Axis
group business- Capacity *total approx. 24 towers (max)
10kW class×2towers/site total :approx. 240kW- Location total approx. 12 site (max)Kagoshima, Hokkaido, etc*1:Refer to The Green Bond Principles (ICMA, 2018), Green Bond Guidelines(MOE, 2017) and Climate Bonds
Standard v2.1 representative eligible project category
DNV GL provides its eligibility in our independent opinion against the Green Bond Principle (ICMA, 2018
hereinafter GBP), Green Bond Guidelines (MOEJ, 2017 hereinafter GBGLs) and sector criteria of CBS (CBIv2.1) using DNV GL assessment protocol. Assessment summary against 4 core components are following.
1.Use of Proceeds :Proceeds raised from green bond, 3.0billion JPY, would be fully allocated to Renewable
Energy. Proceeds will be disbursed as refinance to maintain Solar PVs equipped on the roof top
the DCM group home-center and small scale wind power in Japan. Eligible projects contribute toemission reduction of primary energy source.
2.Process for Project Evaluation and Selection :Projects would aligned with Daiki Axis corporate
philosophy, mid-term management plan(promotion of ESG management). Project which has
been selected and evaluated based on the protocol of Daiki Axis against the GBP, GBGLs and
UN SDGs. Projects are considered the environmental law and regulation, estimation of lifecycle GHG emission reduction and communication with local community which can achieveenvironmental benefit.
3.Management of Proceeds :Daiki Axis would manage the proceeds based on its internal protocol. Net
proceeds from green bond will be allocated as refinance soon after bond issuance. Proceeds will
be managed by Finance dpt. as cash or cash equivalent until disbursement, based on theaccount procedure of Daiki Axis.
4.Reporting :Daiki Axis will disclose annual report/information on the Daiki Axis website include status offund allocation, project progress and environmental impact, at least once a year with external
review by DNV GL until full allocation (at least 2 years) for its conformance with integrity andobjectivity against green bond
DNV GL confirmed Daiki Axis green bond framework, related documents and information that Daiki Axis
green bond conforms relevant criteria then is supposed to be appropriately executed.

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Ⅰ Introduction
Basic Information
Daiki Axis Co., Ltd. (hereinafter “Daiki Axis”) was founded as fully owned subsidiary of Daiki
Corporation in 2005 and has provided its core business ‘Environmental Facilities’, ‘Housing
Facilities’ and ‘Renewable Energy’ which intends to be issued this green bond. Daiki Axis has
established its ‘Daiki Axis Green Bond Framework’ and will raise the proceeds from the bond
3.0 billion JPY to refinance to Solar PVs project and Small Scale Wind Power project. Daiki
Axis engages DNV GL business assurance Japan K.K. (hereinafter “DNV GL”) as external
reviewer to assess and provides its eligibility in our independent opinion against the Green
Bond Principle (ICMA, 2018 hereinafter GBP), Green Bond Guidelines (MOEJ, 2017
hereinafter GBGLs) and sector criteria of CBS (CBI v2.1) using DNV GL assessment protocol.
DNV GL confirmed Daiki Axis green bond framework, related documents and information that
Daiki Axis green bond conforms relevant criteria then is supposed to be appropriately
executed.
Issuer name: Daiki Axis Co., Ltd.
Framework Name: Daiki Axis Green Bond Framework
Review provider’s name: DNV GL business assurance Japan K.K.
Completion date of this form: 21th Jan. 2020
Publication date of review publication: 31st Jan. 2020

About the Issuer
Daiki Axis history began in 1958 with founding ‘Ogame Corporation’ of a specialty store fortiles and sanitary ware, and then changed its commercial name to ‘Daiki Corporation’. Daikiaxis was established as a wholly owned subsidiary of Daiki Corporation and was independentby buy-out soon after. Daiki Axis group currently consists of Daiki Axis, 14 consolidated
subsidies (domestic : 8, overseas : 6) and 2 affiliates (overseas : 2).
The main business segments are “Environmental equipment-related business” centered on
Johkasou (septic tanks) and wastewater treatment systems, “housing equipment-related
business” represented by system kitchen, and “Renewable energy related business”
including solar power generation business, small wind power generation business andbiodiesel fuel business, etc.
Daiki Axis set its management philosophy ‘PROTECT x CHANGE ‘ to protect the environmentand change the future*1. Daiki Axis promotes its mid-term management plan (promotion of
ESG management) *2 through its business especially (1)Water-related infrastructure businessin overseas (China, Southeast Asia and India), (2) Renewable energy business centering insolar power and small wind power generation business in environment field.
Daiki Axis identifies 6-materiality which it should achieve priority based on the UN SDGS
Promoting renewable energy business through Daiki Axis green bond directly contributes toenvironmental issues. It is closely related to Daiki Axis’s corporate philosophy, promotion of
mid-term management plan (ESG management) and selected SDGs contribution.

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SDGs

business

Daiki Axis group activities
 Introduction manufacturing facility basefor Johkasou (septic tank) to large

Water-related
business

population area (China, India andIndonesia)
 Local sales office contraction in Asia
region (Vietnam, Myanmar and Sri Lanka)
and Africa (Kenya)

Renewable

 CO2 emission reduction throughenergy related

Renewable energy business (solar powerbusinessand small scale wind power) Introduction of Energy efficient products
 Promotion of 100％ introduction of
Daiki axis

renewable energy electricity coveringrespective

Daiki Axis business activities

business(Corporate

Reform working system and diversity

administration)

 Promotion women to board member
 Certification of ‘KURUMIM’ (MHLW) for
Women’s career promotion＊1︓Corporate Slogan︓http://www.daiki-axis.com/english/index.html＊2︓ESG promotion http://www.daiki-axis.com/ir/info/index09.html(Explanatory Material for Individual Investors)

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Ⅱ Scope and Objectives
Daiki Axis has commissioned DNV GL Business Assurance Japan K.K. (hereinafter “DNV GL”)
to conduct green bond assessment of Daiki Axis green bond (hereinafter “BOND”), preissuance assessment and periodical review. The objective of DNV GL’s assessment is toimplement an assessment to confirm that the BOND meets the identified criteria of the GBP,
GBGLs and the associated technical criteria related of solar energy and wind energy in CBS,as set out below, and to provide the Issuer with independent second-party opinion on theeligibility of the BOND.
In this report, no assurance is provided regarding the financial performance of the BOND, thevalue of any investments in the BOND, or the long-term environmental benefits of thetransaction.
(1) Scope of review
The review assessed the following elements and confirmed their alignment with the gist of GBP:☒

Use of Proceeds☒

Process for Project Evaluation and Selection☒

Management of Proceeds☒

Reporting(2) Role(s) of review provider☒

Consultancy (incl. 2nd opinion)☒

Certification☐

Verification☐

Rating☐Other (please specify):(3) Standards/guidelines to be applied
No.

Standards/guidelines

Scheme owner

Applied level

1.

The Green Bond Principles 2018

International Capital Market Association

apply

2.

Green Bond Guidelines

Ministry of Environment Japan, 2017

apply

3.

Climate Bonds Standard version2.1(Sector criteria)

Climate Bond Initiative

Apply(Available sector)

4.

Green and Social Bonds: A High Level
Mapping to the Sustainable
Development Goals (June 2018)

International Capital Market Association

Reference

5.

Handbook Harmonized Framework for
Impact Reporting June 2019

International Capital Market Association

Reference

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Basis of DNV GL’s opinion
To provide as much flexibility for the issuer, Daiki Axis as possible, we have adapted ourgreen bond assessment methodologies, which incorporates the requirements of the GBP and
GBGLs, to create a Daiki Axis-specific Green Bond Eligibility Assessment Protocol (henceforthreferred to as “Protocol”). The Protocol has the capacity for potential application of the Bond
under the GBP and GBGLs.
Our Protocol includes a set of suitable criteria that can be used to underpin DNV GL’s opinion.
The overarching principle and guidelines behind the criteria is that a green bond should“enable capital-raising and investment for new and existing projects with environmental
benefits”.
As per our Protocol, the criteria against which the BOND has been reviewed are grouped
under the four Principles:•

Principle One: Use of Proceeds. The Use of Proceeds criteria are guided by therequirement that an issuer of a green bond must use the funds raised to bond eligible
activities. The eligible activities should produce clear environmental benefits.

•

Principle Two: Process for Project Evaluation and Selection. The ProjectEvaluation and Selection criteria are guided by the requirements that an issuer of agreen bond should outline the process it follows when determining eligibility of aninvestment using green Bond proceeds, and outline any impact objectives it willconsider.

•Principle Three: Management of Proceeds. The Management of Proceeds criteria
are guided by the requirements that a green bond should be tracked within theissuing organization, that separate portfolios should be created when necessary andthat a declaration of how unallocated funds will be handled should be made.

•Principle Four: Reporting. The Reporting criteria are guided by the recommendationthat at least Sustainability Reporting to the bond investors should be made of the useof bond proceeds and that quantitative and/or qualitative performance indicators
should be used, where feasible.

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Ⅲ Work Undertaken
Our work constituted a high level of review of the available information, based on theunderstanding that this information was provided to us by the Issuer in good faith. We havenot performed an audit or other tests to check the veracity of the information provided to us.
The work undertaken to form our opinion included:

Initial (Pre-Issuance) Assessment:•

Creation of the Issuer-specific Protocol, adapted to the purpose of the BOND, asdescribed above and in Schedule-2 to this Assessment.

•

Assessment of documentary evidence provided by the Issuer on the BOND andsupplemented assessment by a high-level desktop research. These checks refer tocurrent assessment best practices and standards methodology;•

Discussions with the Issuer, and review of relevant documentation;•

Documentation of findings against each element of the criteria.

Periodic (Annual) Assessment: *periodic assessment is not included in this report•

Evaluation of the supporting documents provided by the Issuer related to the BOND,
high level desktop surveys, document reviews, and interviews with key personnel ofthe issuer. These checks refer to current assessment best practices and standard
methodologies.

•

Discussion with the Issuer management and review of relevant documentation.

•

Field survey and inspection, if required.

•

Review of the nominated projects and assets as described in Schedule 2 as at thetime of periodic assessment•

Review and testing where possible of reporting data;•

Documentation of findings for Periodic assessment as detailed in this document.

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

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Ⅳ Findings and DNV GL’s opinion
DNV GL’s findings are listed below:(1) Use of Proceeds
DNV GL has confirmed that the net proceeds raised by the BOND (3.0 billion JPY, fully
be disbursed as refinance) is planned to be allocated to the nominated two green
projects (table-1) that meet the representative green project category in GBP and
GBGLs criteria below:
Renewable Energy
This green project category is divided into 2 projects;- Project 01 : Solar power business
Roof top type, approx. 23,750kW(50~900kW/site, max)

- Project 02 : Small scale wind power business
Horizontal Axis type, approx. 240kW(10kW class/tower, max)

Table-1 Daiki Axis green project (details are shown in Schedule-1)
Eligible ProjectGreen Project
Category & fund amount

Project 01 :Solar PVs
project

Project 02 :Small ScaleWind Powerproject

Category ;Renewable Energy*(contributes to CO2Emission reduction
from primary energy
source)Fund amount ;3.0 billion JPY(will be fully allocatedas refinance)

Social Project
Category*

Contribution
to SDGs- Outline
Solar PVs are equipped on the roof top of the
DCM group home-center retail premises
without further land development

7.Affodable andClean Energy
13.Climate
Action- Capacity *total approx. 133 facilities (max)
50kW~900kW/facility total :approx. 23,750kW- Location *total approx. 133 facilities (max)Chubu:53, Shikoku:32,
Kansai:19 others:29- Outline
Horizontal axis small scale wind power as Daiki
Axis group business- Capacity *total approx. 24 towers (max)
10kW class×2towers/site total :approx. 240kW- Location total approx. 12 sites (max)Kagoshima, Hokkaido, etc

Page 10 of 22a) Daiki Okayama(500kW Okayama

Aug.2018)b) Daiki Mihara-enichi (350kW Hiroshima Jul. 2018)c) Kahma Nagahama(300kW Shiga Sep. 2018)d) Homac Tsukubamirai(400kW Ibaraki Jan. 2019)

Figure-1 Project01 Solar Power business (example)

Kagoshima 10kW×2 Jul. 2019

Figure-2 Project 02 Small Scale Wind Power Business (example)

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Use of proceeds categories as per GBP:☒

Renewable energy☐

Energy efficiency☐

Pollution prevention and control☐

Sustainable management of living
natural resources☐

Terrestrial and aquatic biodiversity☐

Clean transportationconservation☐

Sustainable water management☐

Climate change adaptation☐

Eco-efficient products, production☐

Other (please specify):

technologies and processes☐

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

Page 12 of 22(2) Process for Project Evaluation and Selection
DNV GL has confirmed that the nominated two green projects described in the Schedule-1, were
evaluated and selected through the appropriate determined process by the relevant sections of
the issuer based on its corporate philosophy (corporate slogan) and mid-term management plan
(promotion ESG management) (refer to the section Ⅰ ‘About Issuer’). Issuer applies eligibility
criteria listed Section Ⅱ (3) and considers the negative effect to environment or society based onits ‘selection prerequisites’ described below, as well.

< Green project selection prerequisites >-Compliance to environmental law and regulations (e.g. Environmental Impact Assessment)-

Evaluation of GHG emission reduction considering lifecycle-

Communication with local communities

Evaluation and selection☒

Credentials on the issuer’s green☒

objectives☒☒

Defined and transparent criteria forDocumented process to determine thatprojects fit within defined categories☒

Documented process to identify andprojects eligible for Social Bond

manage potential ESG risks associated withproceeds

the project

Summary criteria for project evaluation☐

Other (please specify):

and selection publicly available

Information on Responsibilities and Accountability:☒

Evaluation / Selection criteria subject
to external advice or verification☐

Other (please specify):☒

In-house assessment

Page 13 of 22(3) Management of Proceeds
DNV GL has reviewed and confirmed evidence showing how the Issuer has traced/managed theproceeds from the BOND, from the time of issuance to the time of disbursement. DNV GL has
confirmed that the Issuer would allocate the proceeds to the green project promptly. Daiki Axis
account dept. will manage the fund based on its internal account protocol. Issuer periodicallyreviews the outstanding balance of the BOND at the end of each Financial year for disclosure.
Note that, as stated above, DNV GL provides no assurance regarding the financial performance of
the BOND, the value of any investments in the BOND, or the long-term environmental benefits ofthe transaction.

Tracking of proceeds:☒

Green Bond proceeds segregated or tracked by the issuer in a systematic manner☒Disclosure of intended types of temporary investment instruments for unallocatedproceeds☐

Other (please specify):

Additional disclosure:☐

Allocations to future investments only☐

Allocations to both existing and future☐

Allocation to individual disbursements☒

Allocation to a portfolio of disbursements☐

Disclosure of portfolio balance of☒

Other (please specify):Refinance only

investments

unallocated proceeds

Page 14 of 22(4) ReportingDNV GL has confirmed that the Issuer would report to stakeholders the specific information
required by the GBP and GBGLs annually in the issuer’s website. These include description of theallocation and management of the proceeds, project lists and their progress, as well as theassociated qualitative and quantitative environmental impacts which are referred to the GBP’sreporting section reference ‘Handbook Harmonized Framework for Impact Reporting June 2019’.
Details are planned as follows ;-1- Fund Allocation and management of the proceeds(1) Funds amount of the capital investment to facilities which started supplying electricity.
(2) Refinancing amount or share of the proceeds(3) The amount of unallocated proceeds.
-2- Project lists and their progress(1) Number of the power generation facilities of eligible projects allocated the proceeds
which have completed interconnection work to the grid.
(2) Progress of funded eligible project (e.g. progress of construction work, completion date)-3- Environmental impact(1) Total electric power generation output (kWh) capacity(kW) and the amount of CO2
emission reduction (kg-CO2) from eligible project be allocated the proceeds.
Evaluation of environmental impact is calculated by the following formula. Daiki Axis has
already disclosed it in its website as monthly report *1
CO2 emission reduction(Δkg-CO2)= integrated output(kWh)×CO2 emission coefficient(kg-CO2/kWh)
Whereintegrated output: actual data from solar power and wind power
CO2 emission coefficient : MOE data (average value of domestic power plant)*1 Daiki Axis Website : IR news, Monthly report of Solar power business (Japanese only)

Note that, until the completion of fund allocation to the green project planned 2 years later(FY2021), Daiki Axis engages DNV GL as external reviewer to conform its eligibility as green bondwith integrity and objectivity. DNV GL will conduct assessment and provide independent opinion.

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Use of proceeds reporting:☐

Project-by-project☒

On a project portfolio basis☐

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

GB refinanced share of total investment☐

Semi-annual

Information reported:☒

Allocated amounts☐

Other (please specify):

Frequency:☒

Annual☐Other (please specify):

Impact reporting:☐

Project-by-project☒

On a project portfolio basis☐

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

Semi-annual

Frequency:☒

Annual☐Other (please specify):

Information reported (expected or ex-post):☒

GHG Emissions / Savings☐

Other ESG indicators (please specify):☐

Energy Savings

Means of Disclosure☐

Information published in financial report☐

Information published in sustainability report☐

Information published in ad hoc documents☒

Other (please specify):Daiki Axis web site☒

Reporting reviewed (if yes, please specify which parts of the reporting are subject to external review):

Assessment Conclusion
On the basis of the information provided by Daiki Axis and the work undertaken, it is DNV GL’s opinion thatthe Daiki Axis green bond meets the criteria established in the Protocol and that it is aligned with the stateddefinition or purpose of green bond within the Green Bond Principles and Green Bond Guidelines, which is to“enable capital-raising and investment for new and existing projects with environmental benefits”.

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DNV GL Business Assurance Japan K.K.

21th Jan. 2020

Mark Robinson

Naoki Maeda

Manager, Sustainability Services

Managing Director

DNV GL – Business Assurance, Australia

DNV GL – Business Assurance Japan K.K.

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

Disclaimer
Responsibilities of the Management of the Issuer and the Second-Party Opinion Providers, DNV GL: The management ofIssuer has provided the information and data used by DNV GL during the delivery of this review. Our statement
represents an independent opinion and is intended to inform the Issuer management and other interested stakeholders in
the Bond as to whether the established criteria have been met, based on the information provided to us. In our work wehave relied on the information and the facts presented to us by the Issuer. DNV GL is not responsible for any aspect of
the nominated assets referred to in this opinion and cannot be held liable if estimates, findings, opinions, or conclusions
are incorrect. Thus, DNV GL shall not be held liable if any of the information or data provided by the Issuer’s management
and used as a basis for this assessment were not correct or complete

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Schedule-1 Daiki Axis Green Bond Nominated Projects and Assets
No.

Green Bond
Project Portfolio

Green Project
Category[Environment
al Impact]

Green Project
Sub Category

Fund amount (plan)

Remarks(outline、capacity・size、location、etc)-Outline
Solar Panel equipped on the roof top of DCM grouphome-center retail premises

Solar
Power
Business

01

Small
Scale
Wind
Power
Business

2.0〜3.0
billion JPY(Refinance)

Roof top typeon the retailpremises
Renewable
Energy[CO2 Emission
reduction fromprimary energy
source]Renewable
EnergyBusiness

02

Solar PVs
(onshore)Wind power(onshore)
Small scale(10kW class)-Capacity・size total approx. 133 facilities (max)
50kW~900kW/facility, total : approx. 23,750kW-Location total approx. 133 facilities (max)Chugoku:53, Shikoku:32, Kansai:19 others:29

3.0
billion-JPY-Other information
Solar Panels facilitated without any landdevelopment. refinance to the previous cost of
installation work, operation and maintenance.

Green Bondterm : 10
years-Outline
Horizontal axis small scale wind power as Daiki Axis
group business.

Balance(Refinance)-Capacity・size total approx. 24 towers (max)
10kW class×2towers/site
total : approx. 240kW-Location total approx. 12 sites (max)Kagoshima, Hokkaido, etc-Other information
Refinance to the previous cost of land development,
installation work, operation and maintenance.

Page 18 of 22

Schedule-2 Green Bond Eligibility Assessment Protocol

Following check list (GBP-1 ~ GBP-4) is based on DNV GL’s green bond eligibility assessment protocol referred to the Green Bond
Principle 2018

GBP-1 Use of proceeds
Ref.

Criteria

Requirements

Work Undertaken

DNV GL Findings

1aType ofbond

The bond must fall in one of thefollowing categories, as defined by theGreen Bond Principles:•Green Use of Proceeds Bond•
Green Use of Proceeds Revenue
Bond•
Green Project Bond•
OthersDocument reviewed :- Daiki Axis Green Bond
Framework (hereinafter Daiki
Axis Framework)
Discussions with Daiki Axis
management

The reviewed evidence confirms that the Bond falls in the
category:

The cornerstone of a Green bond is
the utilization of the proceeds of thebond which should be appropriately
described in the legal documentation
for the BOND.

Document reviewed :- Daiki Axis Framework- Request letter
Discussions with Daiki Axis
management

As identified by the Bond project list in Framework, the purposeof the Bond is to use the proceeds to bond eligible projects fallingunder the following categories as representative project category
in GBP and GBGLs:“Renewable Energy”
Daiki Axis will allocate the proceeds (as refinance) to following 2
eligible projects as its promotion business, Renewable Energy
Business.

1b

Green
Project
Categories•

Green Use of Proceeds Bond

- Solar Power Business- Small Scale Wind Power Business
1c

Green
benefits

All designated Green Project
categories should provide clear
greenly sustainable benefits, which,where feasible, will be quantified orassessed by the issuer.

Document reviewed :- Daiki Axis Framework- Daiki Axis website (IR news,
Monthly report of Solar powerbusiness

DNV GL considers that eligible projects contribute to CO2emission reduction from primary energy source. Issuer disclose
its environmental impact (performance) in its website withcalculation formula and evaluation result as monthly report as
described in work undertaken.

Page 19 of 22
Ref.

Criteria

Requirements

Work Undertaken

DNV GL Findings

Discussions with Daiki Axis
management

DNV GL assessment concluded that these assets would present a
low risk of GHG emission and following environmental impact
then be inclusion under the eligibility of GBP and GBGLs- Solar PVs are introduced to roof top of existing retail premises
without any land development- Wind power facility includes land development but relatively
limited.

1d

Refinancing
share

In the event that a proportion of theproceeds may be used for refinancing,
it is recommended that issuers
provide an estimate of the share offinancing vs. re-financing, and whereappropriate, also clarify whichinvestments or project portfolios may
be refinanced.

Document reviewed :- Daiki Axis Framework
Discussions with Daiki Axis
management

The proceeds of the Bond, will be fully refinanced to the both ofthe projects (solar power and small scale wind power business)listed in schedule-1

Page 20 of 22

GBP-2 Process for Project Selection and Evaluation
Ref.

Criteria

Requirements

Work Undertaken

DNV GL Findings

2aInvestmentdecision
process

The issuer of a Green bond should
outline the decision-making
process it follows to determine theeligibility of projects using Greenbond proceeds. This includes,
without limitation:• A process to determine how the
projects fit within the eligible
Green Projects categories;• The criteria making the projects
eligible for using the Green bondproceeds; and• The environmental sustainability
objectives

Document reviewed :- Daiki Axis Framework- Daiki Axis internal
document(process ofproject selection)
Discussions with Daiki
Axis management

As per the Framework, the issuer has set out the following criteria for project
selection:

In addition to information
disclosed by an issuer on its
Green bond process, criteria andassurances, Green bond investors
may also take into consideration
the quality of the issuer’s overall
framework and performance
regarding green sustainability.

Document reviewed :- Daiki Axis Framework- Daiki Axis corporate
philosophy, mid-term
management plan,etc- Daiki Axis website(IR news, Monthly
report of Solar powerbusiness
Discussions with Daiki
Axis management

2bIssuer’s
environmental, social andgovernanceframework

Eligible Green Project means :- The nominated two green projects described in the Schedule-1, were evaluatedand selected through the appropriate determined process by the relevant sectionsof the issuer based on its corporate philosophy (corporate slogan) and mid-term
management plan (promotion of ESG management) (refer to the section Ⅰ‘About Issuer’).
- Issuer applies eligibility criteria listed Section Ⅱ (3) and considers the negative
effect to environment or society based on its ‘selection prerequisites’ described
below, as well.
< Green project selection prerequisites >- Compliance to environmental law and regulations (e.g. Environmental Impact
Assessment)- Evaluation of GHG emission reduction considering lifecycle- Communication with local communities
DNV GL reviews and notes that issuer demonstrates that issuer intends tocontribute environmentally sustainability through renewable energy business whichis aligned with its corporate philosophy (corporate slogan) and mid-term
management plan (promotion of ESG management) and has already implemented.
Issuer has already disclosed environmental impact of CO2 emission reduction
performance in its website with calculation formula and evaluation result as monthly
report as described in work undertaken.
http://www.daiki-axis.com/ir/004/index.html#008
Also based on the discussion and document review we had with Daiki Axis, wefound nothing to suggest that Daiki Axis’s green projects and its framework are notin line with good practice of the industry business in which it operates

Page 21 of 22

GBP-3 Management of Proceeds
Ref.

Criteria

3a

Tracking
procedure-1

3b

Tracking
procedure-2

3c

Temporaryholdings

Requirements

Work Undertaken

DNV GL Findings

The net proceeds of Green bond shouldbe credited to a sub-account, moved to a
sub- portfolio or otherwise tracked by theissuer in an appropriate manner andattested to by a formal internal processthat will be linked to the issuer’s lending
and investment operations for Green
Projects.

Document reviewed :- Daiki Axis Framework- Daiki Axis internal process
documents, etc
Discussions with Daiki Axis
management

The evidence reviewed shows how Daiki Axis plans to trace the
BOND’s proceeds from the time of issuance to the time of
disbursement.
The full amount of the proceeds will be deposited into a Daiki
Axis's general account, and thereafter managed its internal
account procedure which can identify the project and disbursedin accordance with the obligations.

So long as the Green bond outstanding,the balance of the tracked proceeds
should be periodically reduced byamounts matching eligible green
investments made until green benefit
appearance or completion of proceeds
allocation.

Document reviewed :- Daiki Axis Framework- Daiki Axis internal process
documents, etc
Discussions with Daiki Axis
management

The evidence reviewed shows that Daiki Axis plans to trace theproceeds from the BOND, from the time of disbursement, andreduce the net balance of proceeds by amounts in line with theassets as scheduled (promptly allocation to the eligible project
as refinance). At the end of each financial period, theoutstanding balance of the BOND will be reviewed.

Pending such investments or
disbursements to eligible Green Projects,
the issuer should make known toinvestors the intended types of
temporary investment instruments forthe balance of unallocated proceeds.

Document reviewed :- Daiki Axis Framework- Daiki Axis internal process
documents, etc
Discussions with Daiki Axis
management

The net proceeds of the BOND will be fully refinanced promptly
based on its internal account protocol. Unallocated proceeds will
not appear.

Page 22 of 22

GBP-4 Reporting
Ref.

Criteria

4aPeriodical
reporting

Requirements

Work Undertaken

DNV GL Findings

In addition to reporting on the use of proceeds and thetemporary investment of unallocated proceeds, issuers
should provide at least annually a list of projects to which
Green bond proceeds have been allocated including- when possible with regards to confidentiality and/or
competitive considerations- a brief description of the projects and the amounts
disbursed, as well as the expected greenly sustainable
impact.

Document reviewed :- Daiki Axis Framework
Discussions with Daiki Axis
management
Others : Daiki Axis website

Daiki Axis will disclose information as
annually which includes a dedicated section
on the Green Bond in its website. This will
include description of the project and valueof the proceeds invested, as well as theassociated qualitative and quantitativeenvironmental impacts. Daiki Axis plans todisclose CO2 emission reduction (t-CO2)
evaluation results according to theperformance (output) of the renewableenergy business listed in schedule-1.