Hitachi Zosen Corporation Green Bond Framework 2021
September 2021

1.

Introduction

1.1 Overview of the company
Hitachi Zosen Corporation (hereafter “Hitz” or “the Issuer”) is a plant engineering company rooted in
Osaka Tekkosho (Osaka Iron Works) and founded in 1881 by E.H. Hunter. Hitz has globally expanded
and developed its business in the field of “Environmental systems”, “Machinery and Infrastructure” inorder to provide the values for society through manufacturing and engineering technologies developed by
shipbuilding technology (since the shipbuilding business division was divested in 2002). Its head office islocated at Osaka in Japan. The global enterprise activity is executed with 11,089 employees and 115
consolidated subsidiaries.(as of end-March, 2021)
1.2 Environmental Strategy of the company
1.2.1 Corporate philosophy
Our corporate philosophy is "We create value useful to society with technology and sincerity to contributeto a prosperous future." Under this philosophy, we will commit to become an impactful corporate that
devotes to achieving SDGs by providing the products and services using our experience of manufacturing
and engineering and our advanced technology, and Hitz will continuously build trust with society bycommunicating with social stakeholders and through fair and spontaneous disclosure.
1.2.2 Policy on Environmental Issues
Since the 1970s, Hitz has been working on environmental conservation measures for offices, factories
and local communities. In 1992, Hitz established its “Basic Environmental Protection Policies and Action
Guidelines” for its employees as a good corporate citizen.
In 1993, we have also established the “Hitachi Zosen Environmental Protection Promotion Plan” by theEnvironmental Protection Promotion Committee, built on the prior policies with a concrete agenda basedon the Action Guidelines. It adds breadth to our previous regional environmental protection activities, withadditional focus on areas like ozone layer protection, global warming prevention, waste reduction andrecycling.
In this environmental policy, we have established our ISO14001 management system, and set up our"Environment Policy" to carry out our business activities.
(1) Regarding our company products, service and business activity, we try to improve environmental loadreducing and improve global environmental protection.
(2) Observe statutory and regulatory requirements, agreements and the other requirements that theorganization has agreed to and also our company's self-imposed controls.
(3) Set environmental objectives, and environmental targets for the year (an Environment Management
Program), and make a continuous commitment to reducing burden on the environment and preventing
environmental pollution.
(4) Review regularly, make continuing improvements and maintain operations of Environment
Management System effectively.

All factories located in Japan and the two business headquarters of Environment, Machinery andInfrastructure have acquired ISO14001 certificate. Also, ISO14001 periodical environmental audits are
conducted by an external reviewer in ISO14001 acquiring offices at all the sites.

1.2.3 Mid/Long Term Vision
Hitz considers creating a sustainable, safe, secure society through providing “clean energy and water”,
environmental conservation” and “building a disaster-resilient, prosperous community” to every
stakeholder a vital mission. We are committed to continue working on “Forward 22”, the 3 year mediumterm management plan which launched in 2020 and pass on to achieve our long-term goal “Hitz 2030
Vision” in 2030.

Long-term vision: Hitz 2030 Vision“Hitz 2030 Vision” is a long-term vision that has been laid out for Hitz to commit to boosting our own
profitability through optimizing the value supplied to customers and aiming to become a corporate groupthat can achieve sustainable growth as the understanding of UN’s SDGs expand globally and the social
movement toward the realization of sustainable development and recycling-based society. Actions thatalign with Hitz Value, our management stance proclaiming that quickly understanding clients’ needs andproviding solutions lead to the prosperous society, is the premise for the setting of long-term
management goals.
As a part of our initiatives for providing clean water and clean energy, we will aim to expand the use ofrenewable energy that contribute to the reduction of CO2 emissions by speed up to expand capacity ofEnergy-from-Waste plant operations and develop wind power and biomass power generation.
Also we will foster cooperation between public-private partnerships by involving local government to cover
the lack of financial resources and will respond to water demand in an emergency through rental
equipment. In addition, we will tackle waste treatment and waste plastic issues through the Energy-fromWaste and recycling facility business to promote environmental preservation and protection, and work on
maintenance and remote monitoring of infrastructure such as aging expressways, and constructing flapgate type seawalls and GPS wave meter to mitigate natural disasters such as Tsunami.

Hitz 2030 Vision:Overall Business Policy

Regarding the direction of our business activities toward 2030, on the basis of previous mid-term
management goals, we will strive to strengthen our earning capacity through the creation of new
products, new businesses and will also aim to expand operation and maintenance services for all
businesses. Regarding specific product and business strategies, in addition to existing EfW plants,
desalination plants, we will channel efforts into the expansion of public-private partnership(PPP) projects,
as well as projects of methanation and power-to-gas, wind power generation, food security, nuclear
power plant decommissioning, support for highly accurate autonomous driving through GPS transmission,and other lines of businesses. In addition, we will optimize the value supplied to customers by utilizing the
IoT and AI in all businesses.
We will continue to speed up investment, development and commercializing of offshore wind power
generation and hydrogen business, both of which are considered crucial for achieving Green Growth
Strategy of Japanese government which aims to achieve carbon neutral in 2050.
Hitz 2030 Vision:Direction of business activities toward 2030

Medium-term management plan: Forward 22
In our medium-term management plan “Forward 22”, Hitachi Zosen Group positions the three-year term
starting in fiscal year 2020 a period for boosting profitability and ensuring that results are achieved. As theslogan for Forward 2022 is “I’ll do it! Stepping forward will change the future”, company will become
together as one and keep working to increase the added value of products and services, promoting
business selection and concentration of businesses and shifting resources to growth areas, andpromoting work style reforms by improving operational efficiency and productivity. We will contribute to
the realization of a sustainable, safe, and secure society through approaching three corporate activities.

(1) Initiatives for clean energy
Our energy-from-waste plant, which is our main product, conducts sanitary waste treatment andgenerates electricity at the same time, contributing to the reduction of greenhouse gas emissions. In
addition, we are also working on power generation from biomass, onshore and offshore wind power, andon technologies such as Power to Gas that use the surplus power from these renewable energy sources
to generate hydrogen and methane. Our aim is to expand the use of renewable energy and contribute to
the reduction of CO2.
(2) Clean water, environmental conservation, and building a disaster-resilient, prosperous community
In our water businesses, we are engaged in actively responding to the needs of public-private
partnerships in Japan and are promoting the utilization of reverse osmosis membrane technology from
Osmoflo (Australia), one of our overseas group companies, for water and sewage treatment as well as
the utilization of mobile equipment. In terms of environmental protection, we are working to promote themarine SCR system technology to clear NOx emission regulations for ships, and land-based aquaculture
technologies to ensure food safety. Further, we are also actively engaged in responding to the needs ofsocial foundations, including reinforcement and renovation of infrastructure such as aging expressways,
special shield tunneling machines for urban areas, and flap-gate type seawalls to protect against flood
disasters caused by tsunamis or storm surges.
(3) Contribution to CO2 emission reduction
Clean energy facilities designed and constructed by our company including our energy-from-waste andour biomass and wind power generation facilities, contribute to the reduction of CO2 emissions throughour customers’ business activities. As of the end of fiscal 2019, our products have reduced CO2※ by 15
million tons per year, equivalent to 4.9% of Japan’s reduction target for the fiscal year 2030. We seek tocontinue contributing to CO2 reduction through our products, and we aim to reduce CO2 emissions by 22
million tons per year by the end of fiscal 2022 and about 40 million tons per year by the end of fiscal
2030.

Amount of CO2 Reduction(Including Licensees)

End of FY2019(current status)
15.18
million tons ofCO2/year

FY2022(target)22.06
million tonsof CO2/year

FY2030(target)About 40.00
million tonsof CO2/year

Cumulative total
for FY2020~2030
About 320 million
billion tons of CO2※Based on “The Method of Calculating Greenhouse-Gas Emissions and List of Emission Coefficients” issued by theJapanese Ministry of the Environment, and for the emission coefficients of other countries, on the “Global Warming”
issued by Japan’s Agency for Natural Resources and Energy. These estimates of the amount of CO2 reduction are
based on the power generation capacity of working facilities (expected in 2022) excluding decommissioned facilities,
and does not include heat utilization in the facilities. Targets for fiscal 2023 and thereafter were calculated
proportionally based on the results up to fiscal 2019. The target reduction of approximately 308 million tons of CO2 /year was calculated from the amount of energy-derived CO2 emissions indicated in the “Submission of Japan’s
Intended Nationally Determined Contribution (INDC)” issued by the Ministry of the Environment, and was used toestimate the Group’s contribution rate.

1.2.4 Our commitment to SDGs
As awareness towards SDGs surges globally, the world has been working together to create asustainable and circular society. This trend aligns with our corporate vision which aims to contribute to therealization of sustainable, safe and secure society through products and businesses.
Hitz approaches SDGs in two different ways: “Directly through products and businesses”, and “Internallythrough sustainability efforts”. These two types of approaches resonate with each other and contribute to
SDGs as whole corporate activities.

1.3 Purpose of issuing Green Bond
Hitz will issue the Green Bond to provide Hitz’s environmental solution technology and service (facilities
and management). We believe that delivering service consistent with our environmental policy in all thebusiness phases from funding to providing technology and services to customers will achieve Hitz’s
mission. We made this framework for the Green Bond to ensure consistency with Green Bond Principles(ICMA 2021), Green Bond Guidelines (Ministry of the Environment 2020), and Climate Bond Standards(CBI, v3.0).

2.

Green Bond Framework

For the issuance of the Green Bond, this framework is designed in align with the Green Bond Principle
2021's four core components which are: Use of Proceeds, Process for Project Evaluation and Selection,
Management of Proceeds, and Reporting. This framework will be released on our web page, andcomponents of framework will also be revealed on legal documentations for the relevant Green Bondissuance and disclosed information to the stakeholders.

2.1 Use of Proceeds
All the net proceeds from the issuance of the Green Bond will be allocated to finance and/or refinance ofexpense for development, construction, installation and operation of projects which meet the following
eligible criteria. Refinancing for existing projects are limited to be finalized/taken into operation within 24
months preceding to the date of issuance of the Green Bond.
Eligible Projects
Eligible
project
category
EnergyfromWaste

ICMA GBP
category

Eligible project and eligibility criteria

Pollution
prevention
and control

Capital investment and costs related to facility /equipment development, manufacturing,
construction, installation, operation, andmaintenance of energy-from-waste facilities thatmeet either of the following criteria:•
Energy from Waste (EfW) facilities efficiency
meet criteria for Energy from Waste set by
Climate Bonds Initiative in Waste
Management Criteria of December 2019•energy-saving and emission saving type ofenergy-from-waste facilities and equipment
Capital investment and costs related to facility /equipment development, manufacturing,
construction, installation, operation, andmaintenance of onshore and offshore wind
power facilities that meet the following criteria:•
Direct CO2 emissions shall be
100gCO2/kWh or less•
Offshore wind power should consider
environmental and social impact onaquaculture
Capital investment and costs related to facility /equipment development, manufacturing,
construction, installation, operation, andmaintenance of equipment that extracts biogas
from solid organic waste such as food waste andpruned branches and converts it into energy, andthat meet the following criteria:•
CO2 equivalent of methane emissions per
ton of waste input meet criteria for
anaerobic digestion set by Climate Bonds
Initiative in Waste Management Criteria ofDecember 2019

Onshoreandoffshore
wind
power

RenewableenergyMethanefermentati
onsystems

Pollution
prevention
and control

SDGs

Land
aquacultu
re system

Environme
ntallysustainable
manageme
nt of living
naturalresources
and landuse

Flap-Gate

Climatechangeadaptation

Hydrogen
Generation System

Circulareconomyadaptedproducts,
production
technologie
s andprocesses

Business example: Hitz Kompogas system,
WTM system
Capital investment and costs related to facility /equipment development, manufacturing,
construction, installation, operation, andmaintenance of land-aquaculture facilities andequipment that are implemented in considerationof reducing the environmental impact of marineaquaculture itself while supplementing thesustainable use of natural resources, and thatmeet the following criteria:•
Conformity to environmental laws,
regulations, etc., required by the central andlocal governments of the area where theoperation site exists•
Discharge the residual feed and manure to
the outside of the system after proper
processing•
Conservation of nature and biodiversity
outside the farm and prevent harm forbiosystem
Capital investment and costs related to facility /equipment development, manufacturing,
construction and maintenance of flood disastercountermeasure equipment that requires noelectricity or manual operation, using of thepower of nature itself such as tsunamis andstorm surges.
Business example: neo RiSe, Seabed-type
Movable Flap-Gate type Breakwater system
Capital investment and costs related to facility /equipment development, manufacturing,
installation and maintenance of equipment thatgenerates hydrogen from electricity and waterthat meet any of the following criteria:•
Electrolyzed by electricity derived fromrenewable energy•
The amount of electricity required forhydrogen production per ton meets EU
Taxonomy thresholds•
direct or indirect CO2 emissions andelectricity consumption are lower than otherhydrogen production measures
Business example: On-site type water electrochlorination hydrogen generator Hydrospring

2.2 Process for Project Evaluation and Selection
The list of selected eligible projects to be allocated with proceeds from the Green Bond will be evaluatedin each responsible department implementing each eligible project and the Finance Department. The
Board of Directors, Hitz's supreme decision-making body on operational execution, will give final approvalto the eligible project selection and allocation of Green Bond Proceeds.

We will confirm that the following measures are taken for all the eligible projects in order to reduce
environmental and social risks.
- The environmental impact assessment by the country of residence or local government is carried out
appropriately, if necessary.
- Providing adequate explanations to local residents when conducting business.
- Making efforts to decrease the environmental risks through management of emissions by setting
voluntary standards and target values that are more strict than the law on the emission of pollutants tothe environment in the equipment manufacturing process.
- To prevent environmental problem and minimize environmental risks, make sure employees are strictly
following manuals when at work and also all the equipment are thoroughly checked on a regular basis.
- Being aware of the risk of bringing environmental disaster, and prepare manual that demonstrate
procedures to minimize the effect of the disaster. Also, conduct emergency drills on a regular basis.

2.3 Management of Proceeds
The Finance Department is in charge of allocation of the proceeds to eligible projects and managing theproceeds. The budget and actual outlay of the proceeds from the Green Bond issuance will be traced andmanaged using an internal management system on a monthly basis in accordance with Hitz's cash
management flow by numbering each eligible project. We will preserve cash management related
documents complying with Hitz's accounting rule defining the range of accounting documents andpreservation of the documents, and manage the documents with document saving books. Hitz intends toallocate most of the proceeds of the Green Bonds within 3 years of the issue date. Until the allocation of
the proceeds is decided, unallocated proceeds will be managed in cash or cash equivalent forms.

2.4 Reporting
Hitz will provide information on the allocation of the net proceeds and environmental effects of the eligible
projects on an annual basis. During construction of the eligible projects, Hitz will only disclose allocationof the net proceeds. After completion of the eligible projects, Hitz will report environmental impact fromthe year starting operation until the redemption of the green bond.
2.4.1 Reporting by issuer
Allocation Reporting
Hitz will provide information of both allocated amount and unallocated amount annually on our website or
integrated report until net proceeds are fully allocated. In addition, Hitz will disclose allocation breakdownin proportion by each project level subject to the clients' approval. For long-term assets that will be
continuously refinanced by using several green bonds, we will report the elapsed years, remaining
durable year as well as refinancing amount in the possible extent at the time of green bond issuance.
The first allocation report will be made public within 1 year from the date of the Green Bond issuance. Incase of material developments, we will renew the information on the use of proceeds on a timely basis
even after the full allocation of the proceeds.

Impact Reporting
Hitz commits to report on the any of or several of the following impact indicators related to eligible projects
on an annual basis until the redemption of the Green Bond on the company's website or the integrated
report to the extent practicably feasible considering confidentiality.
Eligible project
category
Energy-from-Waste

ICMA GBP
category
Pollution prevention
and control

Indicators for environmental impact›››

Onshore and offshore
wind power

Renewable energy

›
›
›
›

Methane fermentation
systems

Pollution prevention
and control›››

Land aquaculture
systemFlap-Gate

Environmentally
sustainable
management of living
natural resources
and land use
Climate change
adaptation›››
Hydrogen Generation
SystemCircular economy
adapted products,
production
technologies andprocesses›（example）
Outline of each facility constructed / installed(including processing capacity, whether it isunder construction or completed)
Annual power generation output after the start ofoperation of the constructed and installed facility(MWh/year)
Annual GHG emission reduction based on
annual power generation output (t CO2/ year)
Number of facilities constructed / installed andoutline of each facility (including whether underconstruction or completed)
Annual power generation output (capacity) after
the start of operation of the constructed andinstalled facility (MWh/year)
Annual power generation output after the start ofoperation of the constructed and installed facility(MWh/year)
Annual GHG emission reduction based on
annual power generation output (tCO2/year)
Outline of each facility constructed / installed(including processing capacity, whether it isunder construction or completed)
Biogas generation capacity
Annual CO2 emission reduction based on annual
biogas generation capacity (tCO2/year)
Outline of each facility constructed / installed(Including certification acquisition / preparation
status, whether under construction or completion
status, and response status to nature
conservation outside the farm)
Number of facilities constructed / installed andoutline of each facility (including installation
purpose, assumed disaster prevention target
area / population, whether under construction orcompletion)
Operation status and disaster prevention effectat the time of disaster (disaster reduction status)
Outline of each facility constructed / installed(including installation purpose, hydrogenproduction capacity (Nm3/h), whether underconstruction or completion)

2.4.2 External Review
We plan to assign DNV Business Assurance Japan to provide an external review to evaluate whether theeligible projects conform to this framework within 1 year after issuance date of green bond. This review
will be conducted annually until all proceeds by the green bond have been allocated.