ANNEX - SECOND PARTY OPINION
EAST JAPAN RAILWAY COMPANY
GREEN BOND
PRE-ISSUANCE ASSESSMENT
Prepared by: DNV Business Assurance Japan K.K.
Location: Kobe, Japan
Date: 15 February 2023
Ref. Nr.: PRJN- 507825-2023-ANX-JPN-01

This ANNEX is prepared based on the East Japan Railway Company Sustainability Finance Framework Second
Party Opinion (hereinafter, "Master SPO") (Ref. Nr.: PRJN-461128-2022-AST-JPN-01 *5 December 2022),
which was assessed against the East Japan Railway Company Sustainability Finance Framework (hereinafter,"Framework").
*For more information on the ANNEX - Second Party Opinion, see following DNV website
https://www.dnv.jp/news/page-227965 Release of a new evaluation service (Master SPO + ANNEX)

Page 1 of 15

Executive Summary
DNV Business Assurance Japan K.K. (hereinafter, "DNV") has confirmed that the East Japan
Railway Company Green Bond (hereinafter, “BOND”) to be executed by East Japan Railway
Company (hereinafter, "JR East"), based on the Framework*1 which has already been assessed
its eligibility*2 and that is planned to be executed and managed through appropriate internal
processes.
*1: East Japan Railway Company Sustainability Finance Framework*2: East Japan Railway Company Sustainability Finance Framework Second Party Opinion

Table-1 provides an overview of the BOND and ANNEX - Second Party Opinion. The additional
criteria to be assessed in the ANNEX - Second Party Opinion are Element-1 (Use of Proceeds)
and Element-4 (Reporting) which are under the specific use of proceeds bond (response to thefour elements). In addition, this report includes opinion against to EU taxonomy criteria related
to “Transportation”.
The conformances against to the criteria for the other elements has already been assessed its
eligibility in accordance with Framework.
Table-1 JR East Green Bond ANNEX - Second Party Opinion
Target financeTargetorganization
Targetframework
Target

JR East Green Bond
East Japan Railway Company
East Japan Railway Company Sustainability Finance Framework
East Japan Railway Company Sustainability Finance Framework Second Party Opinion

external review

Ref. Nr.: PRJN-461128-2022-AST-JPN-01 Issued on 5 December 2022
Criteria for the use of proceeds bondTarget criteria-

Green Bond Principles (ICMA, 2021)-

Green Bond Guidelines (MoE, 2022)-

Bonds withspecific use ofproceeds(response to thefour elements)

EU taxonomy “Transportation” (EU committee)- Confirmed reliance on the Framework. Additional
assessment was implemented as follows:・Train cars; Investments in relation to
manufacturing or renovation of train cars poweredby electricity
Element-1
・Railway facilities; Investment (capital(Use of proceeds)
expenditure) and expenses (operating expenditure)
for the maintenance, renovation or renewal ofrailway equipment, tracks, signals, station buildings,
rail yards and other essential facilities for railway
operations
Element-2(Process for project- Confirmed reliance on Framework
evaluation and selection)
Element-3(Management of- Confirmed reliance on Framework
proceeds)

Page 2 of 15-Element-4 (Reporting)Confirmed reliance on Framework. Additional review
were carried out as follows:・ Allocation of proceeds: items and categories
・ Environmental benefits:- Train Cars; CO2 emissions stemming fromrailway operations (g-CO2/person-km)- Railway facilities; Details of maintenance,
renovation and renewal of essential facilities tooperate railways, including tracks, signals, stationbuildings and rail yards
 Details are described in section V

DNV, as an external reviewer, provided an additional eligibility assessment on the use ofproceeds and reporting of the BOND, based on an assessment of the Framework, additional
criteria (EU taxonomy, Transportation) and other relevant documents and information provided
by JR East. DNV also confirmed that there were no changes to the other items (in accordancewith the framework).

Page 3 of 15

Table of Contents
Executive Summary

2

I. Scope and Objectives

5

II. Responsibilities of JR East and DNV

6III. Basis of DNV’s Opinion

6

IV. Work Undertaken

8

V. Findings and DNV's Opinion

9

Ⅵ. Assessment Conclusion

13

Schedule-1 Green Bond Nominated Projects

15

Revision History
Date of Issue
15 February, 2023

Remarks
Initial version, JR East Green Bond ANNEX - Second Party Opinion

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

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

1

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

Page 4 of 15

I. Scope and Objectives
DNV has been commissioned by JR East to provide a pre-issuance assessment on the JR
East Green Bond. Our objective has been to implement an assessment to confirm that JR
East meets the criteria established on GBP/GBGLs and related EU taxonomy criteria, which
are the criteria for BOND with the specific use of proceeds, to provide ANNEX - Second
Party Opinion regarding the eligibility of the BOND.
DNV, as an independent external reviewer, has identified no real or perceived conflict ofinterest associated with the delivery of this ANNEX - Second Party Opinion for JR East.
In this report, no assurance is provided regarding the financial performance of the BOND,
the value of any investments in the BOND, or the long-term environmental benefits of thetransaction.
(1) Scope of review*As per the review, DNV assessed the following elements and confirmed their alignment with the GBP:☒

Use of Proceeds☐

Process for Project Evaluation and Selection☐

Management of Proceeds☒

Reporting＊ DNV has already reviewed "Process for Project Evaluation and Selection", and "Management of Proceeds"
and has issued Master SPO as below1). DNV also confirmed through our assessment with JR East that there
were no changes in these elements for the BOND to be issued this time or no additional assessments are
required for them.
1) East Japan Railway Company Sustainability Finance Framework Second Party Opinion
Ref. Nr.: PRJN-461128-2022-AST-JPN-01, 5 December 2022

(2) Role(s) of review provider☒

Second Party Opinion☐

Certification☐

Verification☐

Ratings☐

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

Standards/guidelines

Scheme owner

1.

Green Bond Principles (GBP)

International Capital Market Association(ICMA), 2021

2.

Green Bond Guidelines (GBGLs)

Ministry of the Environment, 2022

3.

EU taxonomy (Transportation) *1

European Commission*1

This report additionally provides opinion on the alignment with EU taxonomy criteria “Transportation”(Activity number 6.1 “Passenger interurban rail transport” and 6.14 “Infrastructure for rail transport”.)

Page 5 of 15

II. Responsibilities of JR East and DNV
JR East has provided the information and data used by DNV during the delivery of this review.
DNV’s ANNEX - Second Party Opinion represents an independent opinion and is intended to
inform JR East and other interested stakeholders in the BOND as to whether the establishedcriteria have been met, based on the information provided to us. In our work we have relied on
the information and the facts presented to us by JR East. DNV is not responsible for any aspectof the nominated projects and assets referred to in this opinion and cannot be held liable if
estimates, findings, opinions, or conclusions are incorrect. Thus, DNV shall not be held liable if
any of the information or data provided by JR East’s management and used as a basis for thisassessment were not correct or complete.

III. Basis of DNV’s Opinion
To provide a more flexible ANNEX - Second Party Opinion for the issuer, JR East, DNV
identified the key assessment targets and carried out assessments in accordance with its
procedures.
DNV, as an independent external reviewer, provides ANNEX - Second Party Opinion according
to the protocol.
Our Protocol includes a set of suitable criteria that can be used to underpin DNV’s opinion.
The overarching principle behind the green bond as the basis for the opinion are as follows:“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 grouped into common
elements below.
The additional assessment for this ANNEX - Second Party Opinion covers Element-1 andElement-4 out of the four common elements of GBPs/GBGLs, and EU taxonomy criteria“Transportation”.

Page 6 of 15

Part of four elements and their alignment of the BOND with GBP/GBGLs eligibility havealready been assessed for eligibility. Detailed results of the eligibility assessment for suchparts can be found in the "East Japan Railway Company Sustainability Finance Framework
Second Party Opinion” (Ref. Nr.: PRJN-461128-2022-AST-JPN-01 Issued on 5 December2022).
(1) Four elements of GBP/GBGLs
Principle One: Use of Proceeds*Subject to additional assessment of ANNEX - Second Party Opinion
The Use of Proceeds criteria are guided by the requirement 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 Project Evaluation and Selection criteria are guided by the requirements that an issuer of a green
bond should outline the process it follows when determining eligibility of an investment using theproceeds from green bond, and outline any impact objectives it will consider.

Principle Three: Management of Proceeds
The Management of Proceeds criteria are guided by the requirements that a green bond should betracked within the issuing 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*Subject to additional assessment of ANNEX - Second Party Opinion
The Reporting criteria are guided by the recommendation that at least Sustainability Reporting to thebond investors should be made of the use of bond proceeds and that quantitative and/or qualitative
performance indicators should be used, where feasible.

Page 7 of 15

IV. Work Undertaken
Our work constituted a comprehensive 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:i. Pre-funding assessment (ANNEX - Second Party Opinion)•

Assessment of additional documentary evidence provided by JR East on the BOND andsupplemented assessment by a comprehensive desktop research. These checks refer tocurrent assessment best practice and standards methodologies;•

Discussions with JR East, and review of relevant documentation;•

Documentation of findings against each element of the criteria to be additionallyassessed.

ii. Post-funding assessment (periodic review) (*not included in this report)•

Interviews with fundraiser managers and review of relevant documentation.

•

Site surveys and inspections (if required).

•Documentation of post-issuance assessment results.

Page 8 of 15

V. Findings and DNV's Opinion
DNV’s findings and opinion are as described below.
Please see Schedule-1 and Schedule-2 for details.
GBP/GBGLs-1. Use of Proceeds
JR East has defined the criteria applied eligible project to green projects which are
categorized in GBP/GBGLs and EU taxonomy.
The proceeds of the BOND will be used for the nominated 2 projects. Please see
Schedule-1 and following assessment results for details.
The amount of proceeds of the BOND will be disclosed in future documents relating to the
BOND issuance. DNV confirmed at the time of this assessment that the proceeds will beallocated mainly to new investments and partly for refinancing. The actual allocation
results will be reported on an annual basis in accordance with GBP/GBGLs-4.Reporting.

Page 9 of 15

Project-01: Train cars (Shinkansen Series E7 train)-

Train cars (Shinkansen Series E7 train) is a project categorized as a “Clean
transportation” in GBP 2021 and “Passenger interurban rail transport” in EU taxonomy
Activity number 6.1.

-

Specifically, DNV confirmed that the nominated project is direct zero emission trains
which meets climate mitigation criteria of EU taxonomy described above. It has been
widely recognized and demonstrated by JR East that zero-emission trains realize
substantial contribution of CO2 emission reduction compared to competitivetransportation media such as Privately owned car, Aviation, and Bus, etc. ref)-Use of proceeds from the BOND will be allocated to manufacturing trains and purchasingof equipment of Shinkansen Series E7 train (the newest series improved safety andcomfortability), which will be operated at Joetsu and Hokuriku Shinkansen line (fromTokyo to Niigata (Joetsu), and to Kanazawa (Hokuriku) ).

-Environmental benefits from the Project-01 are CO2 emissions stemming from E7 trains
operation (estimation) and record of introducing E7 train cars (actual) by annum.

Project-01 Train cars (Shinkansen Series E7 train)
Ref. JR East website

Ref) CO2 emission per Transport Volume (Passenger Transportation), FY2021

Page 10 of 15

Project-02: Railway facilities (to increase and maintain the resilience of railway)-

Railway facilities is a project categorized as “Clean transportation” and part of “Climatechange adaptation” in GBP 2021 and “Infrastructure for rail transport” in EU taxonomy
Activity number 6.14.

-

Specifically, DNV confirmed that the nominated project is essential to economic activity
which increases (reinforces) and maintains the resilience against natural disaster fromdirect zero emission trains operation area covered by JR East, which meets climate
mitigation and adaptation criteria of EU taxonomy described above.

-

Use of proceeds from the BOND will be allocated to the work of civil engineering,
construction work, and purchasing of equipment of the railway of Shinkansen.

-

Environmental benefit of the Project-02 is its contribution to enhance cleantransportation operation opportunities (green economic activities). Therefore, projectprogress will be reported in the annual reporting contents.

Project-02 Railway facilities(to increase and maintain the resilience of railway)(ref. JR East Group Report, Integrated report 2022)

Common (Project-01、Project-02): DNSH (Do No Significant Harm) criteria
JR East demonstrated that negative impacts due to the projects and related activities are
identified and measures are taken.
Specifically, DNSH criteria (Climate adaptation, Water, Circular economy, Pollution prevention
and Biodiversity) and Minimum safeguards are considered with the principle of EU taxonomy
2.1.6, which describes that;“locally relevant standards may be applied in countries outside the EU”
According to the EU taxonomy principle, DNV confirmed most criteria are appropriately satisfied
with relevant Japanese laws and ordinances by JR East.
DNV also confirmed that JR East has been taking measures to improve and respond to
Japanese laws and ordinances as per admonition from related ministries and local municipality
in a timely manner.

Page 11 of 15

GBP/GBGLs-4. Reporting
DNV has confirmed that JR East will report specific information related to sustainability
finance required by the GBP, GBGLs in its website once a year.
Annual reports will be made on the allocation status of proceeds and the social andenvironmental benefits, as described below, until the proceeds are fully allocated. In
addition, a part or all of the following items related to social and environmental benefits areplanned to be disclosed on a project basis, within the limits of confidentiality as far as
reasonably practicable. Estimated indicator values and the progress of the project will be
disclosed until the commencement of the project. It is also planned to disclose any materialchanges in the projects during the redemption or repayment period in a timely manner.
<Allocation Status>•••

Allocated amount on a project basis
Unallocated amount of proceeds
Amount of proceeds allocated as refinancing<Environmental Benefits>-

Green Category : Clean transportation (EU taxonomy 6, Transportation)
Eligible Projects : Overall rail transportation#
1

Reporting content on environmental benefits<Train cars>
 CO2 emissions stemming from railway operations (g-CO2/person-km)
 Record of introducing train cars

2

<Railway facilities> Details of investment in disaster countermeasure for the railway facility

Page 12 of 15

Ⅵ. Assessment Conclusion
On the basis of the information provided by JR East and the work undertaken, it is DNV’sopinion that the BOND mostly meets the criteria established in the Protocol, and that it isaligned with the following stated definition or purpose of the bonds that specify the use ofproceeds within the GBP/GBGLs:“enable capital-raising and investment for new and existing projects with environmental
benefits"

DNV Business Assurance Japan K.K.
15 February 2023

Mark Robinson

Naoki Maeda

Manager, Sustainability Services

Managing Director

DNV Business Assurance, Australia

DNV Business Assurance Japan K.K.

Jun Chokai

Masato Kanedome

Technical Reviewer

Project Leader, Assessor

DNV Business Assurance Japan K.K.

DNV Business Assurance Japan K.K

Page 13 of 15

About DNVDriven by our purpose of safeguarding life, properly and the environment, DNV enables organisations to advance the safety
and sustainability of their business. Combining leading technical and operational expertise, risk methodology and in-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 and technological 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 Fundraiser and the Second-Party Opinion Providers, DNV: The management ofFundraiser has provided the information and data used by DNV during the delivery of this review. Our statement represents
an independent opinion and is intended to inform the Fundraiser 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 we have relied on
the information and the facts presented to us by the Fundraiser. DNV is not responsible for any aspect of the nominatedassets referred to in this opinion and cannot be held liable if estimates, findings, opinions, or conclusions are incorrect. Thus,
DNV shall not be held liable if any of the information or data provided by the Fundraiser’s management and used as a basis
for this assessment were not correct or complete.

Page 14 of 15

Schedule-1 Green Bond Nominated Projects
No.

Green Eligible Project
Category

Project Overview

Sub Category
Project-01: Train cars

1

Clean
transportation

2

Overall railtransportation

EU taxonomy(Sector 6, Transport)Train cars (Shinkansen Series E7 train) is direct zero emission
trains which meets climate mitigation criteria of “Passenger
interurban rail transport” in EU Taxonomy 6.1.

6.1
“Passenger
interurban railtransport”)

Use of proceeds will be allocated to manufacturing trains andpurchasing of equipment of Shinkansen Series E7 train (thenewest series improved safety and comfortability), which will
be operated at Joetsu and Hokuriku Shinkansen line (fromTokyo to Niigata (Joetsu), and to Kanazawa (Hokuriku) ).

Project-02: Railway facilities
EU taxonomy(Sector 6, Transport)

6.14“Infrastructure forrail transport”

 Railway facilities is essential economic activity toincrease(reinforce) and maintain the resilience against
natural disaster from direct zero emission trains operation
area covered by JR East, which meets climate mitigation
criteria of “Infrastructure for rail transport” in EU taxonomy
6.14.
 Use of proceeds will be allocated to the work of civilengineering, construction work, and purchasing of equipmentof railway of Shinkansen.

Page 15 of 15