NEWSRELEASE
23-D-1398

January 31, 2024
Japan Credit Rating Agency, Ltd. (hereinafter referred to as "JCR") will announce the results of the Green Finance Framework
Evaluation as follows:

Daiwa Securities Group Inc.
G r e e n F i n a n c e F ra m e w o r kAssignment

Overall Evaluation

Green Evaluation(Use of Proceeds)

Management,
Operation andTransparency
Evaluatio n

Green 1(F)

g1(F)

m1(F)

Issuer/Borrower
Evaluation
TargetDaiwa Securities Group Inc.
(Securities code: 8601)
Daiwa Securities Group Inc.
Green Finance Framework

Evaluation Overview▶▶▶

1. Overview of Daiwa Securities Group Inc.

Daiwa Securities Group Inc. ﴾hereinafter referred to as "Daiwa Securities Group" or "the Group"﴿
is the second largest securities group in Japan and one of the industry leaders. Daiwa Securities
Group has independently managed its business, unaffiliated with any specific financial groupalthough it has aggressively expanded its external network such as a capital and business alliancewith Credit Saison Co., Ltd. The Group's business operations are primarily comprised of Retail,
Wholesale, Asset Management and Investment Divisions. In addition to traditional securities
business, Daiwa Securities Group has recently focused on a wealth management business andhas steadily increased stock-related assets under management. The Group has focused to invest

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in Real Estate Asset Management or renewable energy business, promoting its efforts to expand
its stable revenue base.
▶▶▶ 2. Daiwa Securities Group’ ESG Management and Efforts toward Decarbonization

The Group has set four Corporate Principles: "Building trust," "Placing importance on personnel,""Contributing to society" and "Maintaining healthy earnings results," based on which it hasdeveloped its business to achieve its mission, "Benefit the economy and society through thedevelopment of healthy financial markets." Daiwa Securities Group has also formulated the
management vision, "2030Vision" to show its goals in 2030 toward the achievement of such
mission. In the Vision, the Group has established its core concept, "Realize the SDGs by creatinga sustainable capital cycle" in which it has listed "Promotion of green finance/transition financeto support the realization of a carbon-free society," "Development and provision of new financial
products and services that contribute to the realization of a sustainable society" and "Creating abeautiful global environment that will lead to the next generation" as critical environment issues.
"The Daiwa Securities Group Carbon Neutral Declaration" has been established in 2021 as a
guideline for environmental initiatives in addition to the Group-wide business strategy. The
Declaration has included "Achieve net zero greenhouse gas ﴾hereinafter referred to as "GHG"﴿
emissions within its own operations by 2030" or "Achieve net zero GHG emissions within its
investment and loan portfolios by 2050" as its goals. In order to achieve these goals, the Grouphas formulated six major priority areas, based on which it has established a roadmap with thespecific directions up to 2050. This shows the Group's stance to promote concreate initiatives
toward a carbon-free society.
Chaired by the CEO, the Sustainability Promotion Committee was established by Daiwa Securities
Group in 2018 as the decision-making organization for its sustainability promotion policies. This
Committee regularly reports the details of its discussions regarding sustainability promotion to
the Board of Directors and the Executive Management Committee. The Group invites external
experts to the Committee on a regular basis, which enables it to utilize the experience andinsights of those experts. Based on decisions made by the Committee, the Corporate Planning
Department’s Sustainability Promotion Office that serves as Secretariat works to deploy
sustainability promotion initiatives throughout the Group.
▶▶▶ 3. Green Finance Framework

The subject of this evaluation is a green finance framework ﴾hereinafter referred to as "thisframework",﴿ which has been stipulated exclusively for use of the proceeds financed throughgreen bonds or green loans ﴾hereinafter green bonds and green loans are collectively referred
to as "green finance"﴿ with environmental benefits. JCR will evaluate whether this framework isaligned with "Green Bond Principles1," "Green Loan Principles2," "Green Bond Guidelines3" and——————————————"Green Bond Principles 2021" by International Capital Market Association ﴾ICMA﴿ at https://www.icmagroup.org/green-socialand-sustainability-bonds/green-bond-principles-gbp/
2"Green Loan Principles 2023" by Loan Market Association ﴾LMA﴿, Asia Pacific Loan Market Association ﴾APLMA﴿ and Loan
Syndications and Trading Association ﴾LSTA﴿ at https://www.lsta.org/content/guidance-on-green-loan- principles-glp/
3“Green Bond Guidelines 2022” by Ministry of the Environment at https://www.env.go.jp/content/000062495.pdf
1

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"Green Loan Guidelines 4 ." These are principles or guidelines and not regulations with legal
evidence; however, JCR will evaluate the subject by referring to the principles and guidelines as
currently unified domestic and international standards.
The Group will use the proceeds in this framework to make new investments in projects thatmeet predefined eligibility criteria or its refinance. Daiwa Securities Group has stipulated that itshould consider negative impacts on the environment and society and appropriately takemeasures in implementing eligible projects. Accordingly, JCR has evaluated that the use ofproceeds in this framework is expected to have environmental benefits.
Daiwa Securities Group established a system in which internal specialized divisions or the
management have been appropriately involved in the process to select projects for which
proceeds will be used. How to manage proceeds has been properly designed and the framework
for internal and external audits has been formed and controlled. In terms of reporting, items on
the allocation of proceeds and environmental benefits will be appropriately determined anddisclosed on the Group's website. Accordingly, JCR has evaluated that the management andoperation system in the Group has been established and transparent.
Consequently, as for this framework, JCR has assigned "g1﴾F﴿" to "Green Evaluation ﴾Use ofProceeds﴿," "m1﴾F﴿" to "Management, Operation and Transparency Evaluation" and “Green 1﴾F﴿”to "JCR Green Finance Framework Evaluation" based on the JCR green finance evaluation
methodology. JCR has also evaluated that this framework meets the items required in "Green
Bond Principles," "Green Loan Principles," "Green Bond Guidelines" and "Green Loan Guidelines."——————————————
4“Green Loan Guidelines 2022” by Ministry of the Environment at https://www.env.go.jp/content/000062495.pdf
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Table of Contents■Evaluation Phase 1: Green Evaluation
I. Use of Proceeds
JCR's Key Consideration in this Factor
Current Status of Evaluation Targets and JCR Evaluation
1. Environmental Benefits of Projects
2. Negative Impacts on the Environment and Society
3. Alignment with SDGs

■Evaluation Phase 2: Management, Operation and Transparency Evaluation
I. Selection Criteria and Processes of Use of Proceeds
JCR's Key Consideration in this Factor
Current Status of Evaluation Targets and JCR Evaluation
1. Goal
2. Selection criteria
3. Process

II. Management of Proceeds
JCR's Key Consideration in this Factor
Current Status of Evaluation Targets and JCR Evaluation

III. Reporting
JCR's Key Consideration in this Factor
Current Status of Evaluation Targets and JCR Evaluation

IV. Organizational Sustainability Initiatives
JCR's Key Consideration in this Factor
Current Status of Evaluation Targets and JCR Evaluation■Evaluation Phase 3: Evaluation Results (Conclusions)

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Evaluation Phase 1: Green Evaluation

g1(F)I. Use of Proceeds
JCR's Key Consideration in this Factor
In this section, firstly, JCR will confirm whether the proceeds have been allocated to green projects
with clear environmental benefits. Then, in cases where the use of proceeds is expected to havenegative impacts on the environment or society, the impacts have been thoroughly examined by aninternal specialized department or an external third-party institution and necessary workarounds andmitigation measures have been taken. Lastly, JCR will confirm whether the proceeds is aligned with
the Sustainable Development Goals ﴾hereinafter referred to as "SDGs".﴿

▶▶▶ Current Status of Evaluation Targets and JCR Evaluation

The two items, which the Group has designated for the use of proceeds in this framework are both
important measures for achieving the goals on reducing GHG emissions set forth in "the Daiwa
Securities Group Net Zero Carbon Declaration" and are expected to have environmental benefits.

This Framework for Use of Proceeds

1. Use of Proceeds
The proceeds financed through green finance will be allocated to the proceeds on thefollowing new or existing eligible green projects.
Eligible Green Project

Renewable Energy

Green Building

Eligibility Criteria
Expenditures or investments for the development, construction, operation andacquisition of the following renewable energy generation projects
・solar power・wind power・geothermal power（limited to projects with direct emissions of less than
100g-CO2/kWh）・hydroelectric power (excluding large hydro power with more than 20 MW
capacity)
・biomass energy power (limited to projects with sourcing from the same orneighboring prefecture)
Expenditures or investments for the construction of green buildings as well as
refurbishment to convert existing buildings into green buildings to meet thefollowing criteria.
・3, 4 or 5 Stars under the DBJ Green Building Certification
・B+, A or S Rank under CASBEE
・3, 4 or 5 Stars under BELS

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Evaluation by JCR to the Framework

1. Environmental Benefits of Projects
﴾1﴿ Use of Proceeds 1: Renewable Energy

The use of proceeds 1 is expenditure or investments for the development, construction,
operation and acquisition of renewable energy power generation, such as solar, wind,hydroelectric, geothermal or biomass power generation. This use of proceeds is categorized into
"Renewable Energy" in "Green Bond Principles" and "Green Loan Principles," and "Project for
Renewable Energy" among the use of proceeds exemplified in "Green Bond Guidelines" and"Green Loan Guidelines."
Renewable energy is permanently usable as energy sources among non-fossil energy sources,
such as sunlight or wind power, and the renewable energy includes solar power, wind power,hydropower, geothermal heat, solar heat, atmospheric heat or others in nature, including heator biomass. JCR has evaluated that expanding the introduction of renewable energy is essential
for global warming countermeasures in energy transition sectors including electric power as therenewable energy does not emit GHG during power generation. Renewable energy is becoming
increasingly important as energy sources, which can be produced locally for local consumption
as it can be produced depending upon the natural environment in respective regions.
2050 Carbon Neutrality ﴾announced in October 2020﴿ and a 46 percent reduction in GHG
emissions by FY 2030 ﴾from FY 2013﴿ was professed in the Sixth Basic Energy Plan, approved by
the Cabinet in October 2021. Then, the government is to prioritize to make renewable energy
primary power sources and to encourage to introduce it to the maximum possible while
minimizing the burdens on citizens and coexisting with local communities, based on S + 3E
﴾Safety, Energy Security, Economic Efficiency and the Environment﴿ as the major premise towardachievement of the reduction target with a view to a 50 percent reduction in GHG emissions by
FY 2030 ﴾announced in April 2021.﴿ On one hand, the ratio of renewable energy electricity inJapan increased from 10.4 percent in FY 2011 to approximately 20.3 percent in FY 2021 with theintroduction of the FIT system from the perspective of the power source mix. On the other hand,in order to achieve the aforementioned goals, it is necessary to increase the reduction rate to atleast 36 to 38 percent as of 2030 and expand the introduction of renewable energy.5 In light ofthese points, the Group's efforts in this sector are of great social importance.
Daiwa Securities Group has assumed that the proceeds financed through green finance basedon this framework will be used for renewable energy projects to be carried out through Daiwa
Energy & Infrastructure Co. Ltd. ﴾hereinafter referred to as "DEI".﴿ DEI has made a variety ofinvestments in the renewable energy sector, including solar power generation, wind power
generation ﴾onshore and offshore,﴿ geothermal power generation and biomass power
generation. DEI has developed its business taking into consideration the impacts on the external
environment in collaboration with external business operators where appropriate in allinvestment projects and has assumed projects with the same terms and conditions as eligible——————————————
5“Future renewable energy policy” by Agency for Natural Resources and Energy at
https://www.meti.go.jp/shingikai/enecho/denryoku_gas/saisei_kano/pdf/052_01_00.pdf
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projects. Proceeds for biomass power generation will be used for projects, considering therequirements on new fuels in the feed-in tariff system ﴾whether there are concerns about
compete for food and whether sustainability criteria including life cycle GHG are satisfied.﴿
JCR has confirmed that the Group has not specified a lookback period, given that the
depreciation of the economic value of the investment and loan over time is integrated into therenewable energy project in a reasonable and appropriate manner.
Accordingly, JCR has evaluated that expenditure for or investments in the development,
construction, operation and acquisition of renewable energy power generation, such as solar,
wind, hydroelectric, geothermal and biomass power generation for which Daiwa Securities Groupwill be used as the proceeds have environmental effects as they will be used for the initiatives
that contribute to the realization of a carbon-free society, and it has selected eligible projects
with consideration to impacts on the environment and society in conducting business.
﴾2﴿ Use of Proceeds 2: Green Building

The use of proceeds 2 is subject to properties that have already obtained or will obtainenvironmental certification and that will be able to obtain environmental certification thatsatisfies the eligibility criteria for the first time through renovation and any use of proceeds will
have environmental benefits. The use of proceeds falls under "Green buildings which meetregional, national or internationally recognized standards or certifications 6 " in "Green Bond
Principles" and "Green Loan Principles" and "Project for Green Buildings" among the use ofproceeds illustrated in "Green Bond Guidelines" and "Green Loan Guidelines."
Daiwa Securities Group requires to obtain the three highest ranks in any of the DBJ Green
Building Certification, CASBEE Certification and BELS for the eligibility criteria in selecting green
building properties in this framework, all of which is regionally, nationally or internationallyrecognized environmental certifications. The details of each certification are as described below.
The Group has assumed that the proceeds financed through green finance based on thisframework will be used for green buildings acquired and owned hereby.
JCR has confirmed, in terms of the expenditure on renovation with the use of proceeds, that thetarget properties are based on the followings: ﴾1﴿ a property without environmental performance
sufficient to obtain external certification that meets the required level specified in the eligibility
criteria before renovation and ﴾2﴿ a property that has obtained the certification that satisfies thelevel required for the first time through renovation or a property that is certain to obtain thecertification.
Accordingly, JCR has evaluated that projects with a level of certification that satisfies theeligibility criteria have environmental benefits.
DBJ Green Building Certification——————————————“Green Bond Principles 2021, Voluntary Guidelines for Green Bond Issuance on June 2021 ﴾Revised Appendix I in June 2022﴿” athttps://www.jsda.or.jp/sdgs/files/Japanese_GBP202106.pdf
6

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DBJ Green Building Certification refers to a certification system provided by DBJ ﴾Development Bankof Japan﴿ to evaluate real estate with social and environmental consideration. The evaluation results
are indicated with the number of stars, and the evaluation axis is buildings with social andenvironmental consideration. The evaluation with major five categories are follows: “Energy &Resources ﴾environmental performance of buildings﴿,” “Amenity ﴾comfort of tenants﴿,” “Resilience﴾ability to respond to crises﴿,” “Community & Diversity ﴾consideration for diversity and thesurrounding environment﴿” and “Partnership ﴾cooperation with stakeholders﴿" with 5 stars ﴾extremely
excellent and top-shelf buildings in Japan,﴿ 4 stars ﴾excellent,﴿ 3 stars ﴾great,﴿ 2 stars ﴾good﴿ and 1 star﴾satisfactory.﴿ JCR has evaluated that this evaluation is equivalent to the "regional, national orinternationally recognized standards or certifications" in the green project classification defined in"Green Bond Principles" as DBJ Green Building Certification has been highly recognized in Japan andhas had certain evaluation items for environmental performance although it is not specific toenvironmental performance. However, JCR has considered that it is desirable to individually confirm
the evaluation of environmental performance as the certification is not exclusively limited toenvironmental performance.
DBJ Green Building Certification is based on a comprehensive evaluation, including not only theenvironmental performance of properties to be evaluated but also the comfort of tenants, risk
management, such as disaster/crime prevention, consideration for the surrounding environment andcommunities and collaboration with stakeholders. There are many properties that do not meet thecriteria for evaluation in the real estate market as scoring is designed by consolidating specific"excellent initiatives" for the environment and society. In order to be highly rated, a building isrequired to appropriately consider not only the environment but also all stakeholders involved in thebuilding.
The level of DBJ Green Building Certification is assumed to be the top 20 percent or so of the allincome properties in Japan in the "concerns for the environment and society." Additionally, eachrating up to 3 stars is subject to the aggregation of the top 10 percent ﴾5 stars,﴿ top 30 percent ﴾4stars﴿ and top 60 percent ﴾3 stars﴿ of properties that exceed the certification level. JCR has therefore
evaluated that the buildings with 3 stars or higher, which the Group set as the eligibility criteria, havebeen narrowed down to properties with high environmental performance among the buildings thatare designated to obtain certification.

CASBEE ﴾Comprehensive Building Environment Performance Evaluation System﴿
CASBEE is an acronym standing for Comprehensive Assessment System for Built Environment
Efficiency and is a method to evaluate and rate the environmental performance of buildings. In April
2001, a comprehensive environmental evaluation research committee for buildings was established
as an industry-academia-government collaboration project with the support of the Housing Bureauof the Ministry of Land, Infrastructure, Transport and Tourism and has been continuously developed
and maintained since then. The evaluation tools include CASBEE for Construction, CASBEE for Cities
or CASBEE for Real Estate that was developed for the real estate market to show environmental
performance in an easy-to-understand manner.

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CASBEE for New Construction is evaluated with the value of BEE ﴾Built Environment Efficiency﴿ with L
﴾L means Load﴿ as the denominator and Q ﴾Q refers to Quality﴿ as the numerator after thereconstruction from the viewpoint of environmental quality of buildings and environmental loads ofbuildings for the evaluation items in the four areas: energy consumption, resource recycling, regional
environment and indoor environment. The evaluation results are categorized into five as follows:
Rank S ﴾excellent,﴿ Rank A ﴾very good,﴿ Rank B + ﴾good,﴿ Rank B - ﴾slightly inferior﴿ and Rank C﴾inferior.﴿ CASBEE for Real Estate falls under four categories as follows: Rank S ﴾excellent,﴿ Rank A ﴾very
good,﴿ Rank B + ﴾good﴿ and Rank B ﴾satisfied with items required.﴿ In order to be highly evaluated,consideration for indoor comfort or landscape is required in addition to concern for the environment,such as energy saving or using equipment with low environmental burdens, and comprehensive
buildings with high quality is required.
CASBEE for Real Estate has been developed to utilize the results of environmental evaluation ofbuildings in CASBEE when evaluating real estate, and the evaluation criteria have been formulated tofocus on items that are strongly correlated to real estate evaluation. CASBEE for Real estate includes
the following five evaluation items: 1. Energy/GHG, 2. Water, 3. Resource use/safety, 4.
Biodiversity/site and 5. Indoor environment. The evaluation method shall: ﴾1﴿ be aligned with major
global weighted evaluation tools, ﴾2﴿ be a point-addition scoring system, ﴾3﴿ have 5 required items
and 16 adding items, with a perfect score of 100 points and ﴾4﴿ be excluded from evaluation if
required items are not satisfied.
JCR has evaluated that buildings with Rank B + or higher in the CASBEE certification set as the eligible
criteria by Daiwa Securities Group this time have had environmental benefits with the following
reasons: ﴾1﴿ such buildings have BEE of 1.0 or higher in CASBEE for New Construction, and theirenvironmental quality clearly exceeds their environmental burdens and ﴾2﴿ such buildings areequivalent to Rank B + in the conventional CASBEE for Construction although the measurement is
not based on BEE in CASBEE for Real Estate.
BELS ﴾Building Energy Saving Performance Display System﴿
BELS is an acronym standing for Building-Housing Energy-Efficiency Labeling System and is a system
in which energy-saving performance for new and existing buildings has been evaluated and certified
by the third-party evaluation institution. The envelope performance and primary energy consumption
are subject to evaluation, and it is required to have excellent energy-saving performance to be highly
evaluated. The evaluation results are indicated with the number of stars and are ranked from one to
five based on BEI ﴾Building Energy Index.﴿ BEI is criteria to measure energy-saving performance
relative to a reference value, with a design primary energy consumption amount as the numerator
and a reference primary energy consumption amount as the denominator. One star meets theexisting energy conservation standard and two stars satisfy the energy conservation standard.
JCR has considered that buildings with 3 stars or higher in the BELS, set as the eligibility criteria by
the Group, have had energy-saving performance ﴾non-residence: the BEI value of 0.8 or less﴿ andhave been appropriate as the use of the proceeds.

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2. Negative Impacts on the Environment and Society
Risk Management Department in DEI, an asset holding entity, has investigated and confirmed
renewable energy projects among the projects eligible for the use of proceeds, and a final
decision has been made as to whether to make an investment or not in the DEI Investment
Committee after receiving evaluation reports from external organizations or assessing theenvironment. The final approval has been given for the selection of renewable energy projects
stipulated in this framework after sharing the information on negative impacts including thedetailed investigation concerned with Treasury Department in Daiwa Securities Group under its
structure. JCR has confirmed that the DEI risk management team has continuously monitoredrisks, held monthly meetings and discussed risk management among relevant internal
departments in the post-investment monitoring process, and the Group has had a system inplace to formulate countermeasures if there are any issues.
Treasury Department in Daiwa Securities Group will investigate and confirm green building
projects. JCR has confirmed that the Group will investigate and figure out the negativeenvironmental and social impacts per project by obtaining green building certification from thethird-party institution and receiving reports from the external organization during review for
projects although clear rules have not yet been formulated. JCR has also confirmed that theGroup will discuss the countermeasures if there are any issues to note.
Accordingly, JCR has evaluated that the negative impacts on the environment and society havebeen considered and appropriate measures have been taken for all eligible projects for which
the proceeds will be used.

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3. Alignment with SDGs
JCR has evaluated the Daiwa Securities Group's projects will contribute to the following SDGs
goals and targets by referring to ICMA's SDGs mapping.
Goal 3: Good Health and Well-Being
Target 3.9. By 2030, substantially reduce the number of deaths and illnesses from hazardous
chemicals and air, water and soil pollution and contamination
Goal 7: Affordable and Clean Energy
Target 7.2. By 2030, increase substantially the share of renewable energy in the global energy mix
Goal 8: Decent Work and Economic GrowthTarget 8.4. Improve progressively, through 2030, global resource efficiency in consumption andproduction and endeavor to decouple economic growth from environmental degradation, in
accordance with the 10-year framework of programs on sustainable consumption and production,with developed countries taking the lead
Goal 9: Industry, Innovation and Infrastructure
Target 9.1. Develop quality, reliable, sustainable and resilient infrastructure, including regional andtrans border infrastructure, to support economic development and human well-being with a focus
on affordable and equitable access for all
Target 9.4. By 2030, upgrade infrastructure and retrofit industries to make them sustainable, withincreased resource-use efficiency and greater adoption of clean and environmentally soundtechnologies and industrial processes, with all countries taking action in accordance with theirrespective capabilities
Goal 11: Sustainable Cities and Communities
Target 11.3. By 2030, promote inclusive and sustainable urbanization and strengthen the capacity of
all countries for participatory, inclusive and sustainable human settlements planning andmanagement
Target 11.6. By 2030, reduce the negative per capita environmental impact of cities, including by
paying special attention to air quality and municipal and other waste management
Goal 12: Responsible Consumption and Production
Target 12.4. By 2020, achieve the environmentally sound management of chemicals and all wastes
throughout their life cycle, in accordance with agreed international frameworks, and significantly
reduce their release to air, water and soil in order to minimize their adverse impacts on human healthand the environment
Goal 13: Climate Action
Target 13.1. Strengthen resilience and adaptive capacity to climate-related hazards and natural
disasters in all countries

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Evaluation Phase 2: Management, Operation andTransparency Evaluation

m1(F)I. Selection Criteria and Processes of Use of Proceeds
JCR's Key Consideration in this Factor
In this section, JCR will confirm the goals to be achieved through financing based on thisframework, the validity of the green project selection criteria and processes and whether a seriesof processes has been appropriately disclosed to investors.

▶▶▶ Current Status of Evaluation Targets and JCR Evaluation

JCR has determined that departments with specialized knowledge and the management have been
appropriately involved in the goals, green project selection criteria and processes in this framework, andthat transparency has been ensured.

1. GoalDaiwa Securities Group has stated "Promotion of green/transition finance to support therealization of a carbon-free society," "Development and provision of new financial products andservices that contribute to the realization of a sustainable society" and "Creating a beautiful
global environment that will lead to the next generation" as environmental issues of the priority
issues professed in its management vision, "2030Vision."
The Group has set forth the following targets: ﴾1﴿ Achieve net zero GHG emissions within its own
operations ﴾Scope 1 and 2﴿ by 2030 and ﴾2﴿ Achieve net zero GHG emissions within its investment
and loan portfolios ﴾Scope 3﴿ by 2050 in "the Daiwa Securities Group Net Zero Carbon
Declaration" formulated by the Group in August 2021 as more direct goals and guidelines. Daiwa
Securities Group has set the major six key policies toward the realization of such targets in which
it has listed "Promote green finance/transition finance" and "Expand business investment in the
renewable energy sector" as concreate issues to be addressed toward "A carbon-free society
through finance" as green finance policies, and green finance based on this framework has been
also positioned as measures that contribute to addressing these issues ﴾see below for moredetails.﴿

The Daiwa Securities Group Net Zero Carbon Declaration 7

1.

Achieve net zero GHG emissions within its own operations* ﴾Scope 1 and 2﴿ by 2030

2.

Achieve net zero GHG emissions within its investment and loan portfolios ﴾Scope 3﴿ by2050——————————————
7

Daiwa Securities Group's website at https://www.daiwa-grp.jp/sustainability/environment/policy.html ﴾partially processed by
JCR﴿

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3.

Support the smooth transition to a carbon-neutral society through its business activities<Daiwa Securities Group's Main Priority Areas>
Sustainable finance for the delivery of a carbon-neutral society
・Promote green finance/transition finance・Expand business investment in the renewable energy sector
・Strengthen engagement with investee firms
Support new technologies and promote business solutions that contribute to the delivery
of a carbon-neutral society
・Promote innovation ﴾hydrogen or CCUS﴿ and provide support for new technologies
・Expand its advisory business within the renewable energy sector
Provide investment opportunities that contribute to the delivery of a carbon-neutral
society・Expand its lineup of related products and services- Expand investment trusts with an environmental theme- Arrange SDG bonds including green bonds- Promote SDGs-IPOs in the environmental sector
Reduce the environmental footprint of the Group・Shift to 100 percent renewable energy
・Continue efficient use of energy
・Consider carbon offsetting
Set targets to align with the Paris Agreement goals and expand transparent information
disclosure・Analyze GHG emission management methods for investment and loan portfolios
・Set intermediate targets for Scope 3 to align with the Paris Agreement goals by utilizing
SBT ﴾in FY 2023﴿
・Ensure appropriate disclosure related to its climate change response ﴾such as TCFD﴿
Strengthen its management system to achieve net zero carbon
・Revise and embed the "Daiwa Securities Group Environmental and Social Policy Framework"
・Embed sustainability elements into corporate executive officers’ compensation*The scope of Daiwa Securities Group will be calculated on a consolidated basis.
Accordingly, JCR has evaluated that the implementation of green finance based on thisframework has been aligned with the sustainability goals and policies set forth by the Group andhas been contribute to business development.

2. Selection Criteria

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The eligibility criteria in this framework are as same as those described in Evaluation Phase I in
this report. JCR has evaluated the project selection criteria as adequate.

3. ProcessThis Framework for the Process

Process for Project Evaluation and Selection
The Group’s Treasury Department will evaluate and select projects in accordance witheligibility criteria. Treasury Department will collaborate with relevant departments withspecialized expertise, if necessary. The final decision will be made by Chief Financial Officer
﴾hereinafter referred to as "CFO"﴿ based on the selected eligible green projects.

Evaluation by JCR to the Framework
Treasury Department in the Group will proactively confirm whether the project for which theproceeds financed will be used falls under eligible projects according to the eligible criteria while
discussing with DEI and affiliated companies/departments within the Group including
Sustainability Promotion Office as necessary when selecting such projects. Then, CFO of theGroup will give final approval.
JCR has therefore evaluated that the management or departments dedicated to sustainability
have been appropriately involved in the project selection process defined in this framework.
The Group's green finance goals, selection criteria and processes will be disclosed in thisevaluation report and will be explained to investors through disclosure in this framework on its
website and communication with investors through debt IR. Daiwa Securities Group will disclose
the target projects through amended shelf registration statements/supplementary documents
and its website when implementing green finance and via channels/opportunities such as debt
IR when financing.
Based on the aforementioned, JCR has evaluated that transparency of information disclosure toinvestors has been ensured.

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II. Management of Proceeds
JCR's Key Consideration in this Factor
It is generally assumed that how to manage proceeds widely varies depending upon issuers. JCR
will confirm whether the proceeds are surely appropriated to green projects and whether amechanism and internal system are in place to enable easy tracking and managing allocation ofproceeds.
JCR will also give importance to whether proceeds will be early allocated to green projects andto the evaluation of management and operation methods for unallocated proceeds.

▶▶▶ Current Status of Evaluation Targets and JCR Evaluation

JCR has evaluated that Daiwa Securities Group has highly kept transparency as its proceeds management
system has been appropriately established and how to manage proceeds financed will be disclosed in thisevaluation report and the framework will be disclosed on its website.

This Framework for Management of Proceeds

Management of Proceeds
The management and allocation of proceeds will be executed by Treasury Department. Treasury
Department will use a separate ledger and continuously track budgets and actual spending for
eligible green projects. For pending allocation to finance eligible green projects, the amount equal
to the balance of the proceeds will be temporally invested in cash and/or cash equivalents and willbe allocated to eligible green projects as soon as practically possible.

Evaluation by JCR to the Framework
The proceeds financed through green finance will be tracked and managed based on an
independent ledger created by Treasury Department of the Group. The policy is to allocate theproceeds financed to projects that meet the eligibility criteria as soon as practically possible, andif there are any unallocated proceeds, they will be temporarily allocated in cash or cash
equivalents until the entire amount is appropriated. The proceeds are deemed to be allocatedby making a loan from the Group to DEI for renewable energy projects among the projects
eligible for the use of proceeds.
The management of proceeds financed will be regularly and internally audited in the Group, andthe overall accounting will be externally audited by an audit firm. All ledgers on management ofproceeds financed will be electronically kept. JCR has confirmed that the data will be stored
electronically until the green finance is repaid and for a period stipulated in the laws andregulations although the storage limitation is not clearly defined in its internal rules.

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Accordingly, JCR has evaluated that Daiwa Securities Group has been highly transparent as its
proceeds management system has been appropriately established and how to manage proceeds
financed will be disclosed in this evaluation report.

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III. Reporting
JCR's Key Consideration in this Factor
In this section, JCR will evaluate whether the disclosure system to investors before and after
financing based on the subject of this evaluation is planned in a detailed and effective manner.

▶▶▶ Current Status of Evaluation Targets and JCR Evaluation

JCR has evaluated, as for the Group's reporting, that both the proceeds allocation and environmental
benefits will be appropriately disclosed to investors.

This Framework for Reporting

Reporting<Allocation Reporting>Throughout the term of the green finance, Daiwa Securities Group will report annually on
allocation of proceeds on the corporate website, until the proceeds are fully allocated to eligible
green projects. Daiwa Securities Group will also update the report in case of material changes.
Allocation reporting will include the following information:・Description of projects
・Amount allocated・Whether each project is being refinanced or financed
・Amount of unallocated proceeds ﴾if any﴿<Impact Reporting>Throughout the term of the green finance, Daiwa Securities Group will report annually on theimpact of eligible green projects on the corporate website. Impact reporting will include thefollowing information as feasibly possible.
・CO2 Emissions Reduction by the eligible green
Renewable Energy

Green Building

projects
・Power Generation by the eligible green projects
・Types of the certification
・ Level

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Evaluation by JCR to the Framework

Reporting on the Allocation of Proceeds
Daiwa Securities Group will annually disclose the details of the allocation of proceeds financed
through this framework, which is specified herein on its website. In cases where there is a majorchange in the financing after all of the proceeds was allocated, the Group will disclose that effect by
updating the information on the proceeds allocation on its website.

Reporting on Environmental Benefits
The Group will annually disclose the contents stipulated in this framework as reporting on theenvironmental benefits of eligible green projects on its website. JCR has evaluated that these
disclosure items include quantitative indicators such as CO2 emission reduction/generation amounts
for renewable energy, and environmental benefits of green buildings are generally and reasonably
ascertainable with the level and type of certification provided by the third-party institution, all ofwhich serve as objective indicators that show the environmental benefits in each project.
Accordingly, JCR has evaluated the reporting system in Daiwa Securities Group as adequate.

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IV. Organizational Sustainability Initiatives
JCR's Key Consideration in this Factor
In this section, JCR will evaluate whether the management of the fundraiser has positioned
sustainability issues as high-priority management challenges or whether the sustainable financeimplementation polices/processes or selection criteria of green projects have been clearly
positioned by establishing a department that specializes in sustainability sectors or incollaboration with external institutions.

▶▶▶ Current Status of Evaluation Targets and JCR Evaluation

JCR has highly evaluated that Daiwa Securities Group has positioned sustainability issues as importantmanagement challenges, has had a meeting body to address sustainability issues from the practical andmanagement perspective and has developed business activities toward promoting sustainability while
taking into account the insight of internal departments in charge of practical tasks or external experts.

Daiwa Securities Group is a major securities group with the second largest business scope inJapan. The Group consists of domestic and overseas group companies, such as Daiwa AssetManagement Co. Ltd., Daiwa Institute of Research Ltd., Daiwa Energy & Infrastructure Co. Ltd.
or Daiwa Real Estate Asset Management Co. Ltd in addition to the Group, a holding company,
and Daiwa Securities Co. Ltd., the core subsidiary. The Group's sustainability and environmental
initiatives will be discussed below.
The Group has set four Corporate Principles: "Building trust," "Placing importance on personnel,""Contributing to society" and "Maintaining healthy earnings results," based on which it hasdeveloped its business to achieve its mission of "Benefit the economy and society through thedevelopment of healthy financial markets."
In 2021, Daiwa Securities Group formulated the management vision, "2030Vision" to show its
vision toward the achievement of such a mission in 2030. In the Vision, the Group has establishedits core concept, "Realize the SDGs by creating a sustainable capital cycle" and has indicated fivepriority areas, including "Diversity & Inclusion" or "the 100-year life" in which the Group has
listed "Promotion of green finance/transition finance to support the realization of a carbon-freesociety," "Development and provision of new financial products and services that contribute to
the realization of a sustainable society" and "Creating a beautiful global environment that willlead to the next generation" as environmental issues.

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Chart 1: Priority Areas and Issues Indicated in Daiwa Securities Group's "2030Vision"8

Such initiatives are indicated along with the timeline in the roadmap that provides a concrete
direction by 2050 to achieve the goals set forth in "the Daiwa Securities Group Net Zero Carbon
Declaration" in addition to the Group's overall business strategy. The roadmap includes specificguidelines, such as "Promote green finance/transition finance" and "Expand business investments in
the renewable energy sector" as part of "Initiatives through financial business," and the green financebased on this framework is aligned with the guidelines.
As such, the green finance based on this framework can be positioned as an initiative to promote toresolve the priority environmental issues set forth by Daiwa Securities Group through making
investments in and loans to each project for which proceeds will be used.

The Sustainability Promotion Committee chaired by the CEO has been established to discuss
policies in the Group since 2018 under the Group's sustainability promotion structure. This
Committee has made discussions on sustainability initiatives and has appropriately reported thedetails of such discussion to the Board of Directors or the Executive Management Committee.
External experts have regularly participated in the Committee, which enables Daiwa Securities
Group to utilize their experience and insight. Then, based on decisions made by the Committee,——————————————

Daiwa Securities Group's web site at https://www.daiwagrp.jp/sustainability/group_sustainability/sustainability_management.html
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Sustainability Promotion Office of Corporate Planning Department has worked to deploy
initiatives as Secretariat throughout the Group.
Accordingly, JCR has highly evaluated that Daiwa Securities Group has positioned sustainability issues
as significant management challenges, has set up a meeting body to deal with them professionally,
has worked on them from a practical and management perspective and has appropriately developed
its business activities based on internal and external insight.

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Evaluation Phase 3: Evaluation Results(Conclusions)Green 1(F)JCR has assigned "g1﴾F﴿" to "Green Evaluation ﴾Use of Proceeds﴿" and "m1﴾F﴿" to "Management,
Operation and Transparency Evaluation" for this framework based on the JCR Green FinanceEvaluation Methodology. Accordingly, JCR has assigned "Green 1 ﴾F﴿" to "JCR Green Finance
Framework Evaluation." This framework has satisfied the criteria for the items required in "Green
Bond Principles," "Green Loan Principles," "Green Bond Guidelines" and "Green Loan Guidelines."

Management, Operation and Transparency Evaluation

Green Evaluation

m1(F)

m2(F)

m3(F)

m4(F)

m5(F)

g1(F)

Green 1(F)Green 2(F)Green 3(F)Green 4(F)Green 5(F)g2(F)

Green 2(F)Green 2(F)Green 3(F)Green 4(F)Green 5(F)g3(F)

Green 3(F)Green 3(F)Green 4(F)Green 5(F)

N/A

g4(F)

Green 4(F)Green 4(F)Green 5(F)

N/A

N/A

g5(F)

Green 5(F)Green 5(F)

N/A

N/A

N/A

(Responsible Analysts for this Evaluation) Rieko Kikuchi and Yuki Nagayasu

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Important Explanation on this Evaluation
1. Assumptions, Significance and Limitations of JCR Green Finance Framework Evaluation
JCR Green Finance Framework Evaluation, which is granted and assigned by Japan Credit Rating Agency, Ltd. (hereinafterreferred to as "JCR") is a comprehensive statement of JCR's current opinion on the alignment with green projects as defined by
JCR and the extent of the initiatives to ensure management, operations and transparency on the use of proceeds with policies set
forth by the Green Finance Framework as the target evaluation. Therefore, it is not intended to evaluate the specific environmental
benefits, management/operation systems and transparency of individual bonds or borrowings to be executed based on thesepolicies concerned. In cases where a green finance evaluation is granted or assigned to an individual bond or borrowing based on
the said framework, a separate evaluation is required. JCR Green Finance Framework Evaluation neither proves environmental
benefits on the environment from the individual bond or borrowing executed based on the framework concerned nor does it
assume responsibility for any environment benefits. JCR, in principle, will not directly measure environmental benefits ofproceeds financed through Green Finance Framework although JCR will confirm the items measured quantitatively andqualitatively by the issuer and/or borrower (hereinafter an issuer and borrower are collectively referred to as "a fundraiser") or athird party requested by the fundraiser. Green equity may also be included in the evaluation only if all assets, in case of investment
corporations, fall under green projects.
2. Methodology Used in this Evaluation
The methodology used to make this evaluation is posted as "JCR Green Finance Evaluation Methodology" in the "Sustainable
Finance/ESGs" section on the JCR's website at https://www.jcr.co.jp/en/.
3. Relation with Conduct of Credit Rating Activities
The conduct of assigning and providing JCR Green Finance Framework Evaluation is performed by JCR as its related businessand is different from the conduct of credit rating activities.
4. Relation with Credit RatingThis evaluation is different from a credit rating and is not committed to providing a predetermined credit rating or making available
for inspection.
5. Impartiality in Evaluating JCR Green Finance Framework
There are neither capital ties nor personnel relationships that could create a conflict of interest between this evaluation and JCR.
■Disclaimer
The information contained in this document was obtained by JCR from fundraisers and accurate and reliable sources. Such information however may be mistaken for
artificial, mechanical or other reasons. Therefore, JCR makes neither representation nor warranty, express or implied, as to the accuracy, result, eligibility, timeliness,completeness, marketability or fitness for any particular purpose of such information, and JCR assumes no responsibility for any errors, omissions or consequences ofusing such information. JCR shall not be liable for any loss of opportunity and extraordinary, indirect, incidental or consequential damages of any kind including any
loss of money, which may result from any use of such information under any circumstances, whether contractual liability, tort liability, negligence or other causes of
liability, and whether such damage is foreseeable or unforeseeable. JCR Green Finance Evaluation does not express any opinion on various risks (credit risk, pricefluctuation risk or market liquidity risk) on the green finance that is subject to evaluation. JCR Green Finance Evaluation is a comprehensive statement of JCR's current
opinion and does neither represent facts nor make any recommendation regarding risk assessments or decision on the purchase, sale or holding of individual bonds orcommercial papers. JCR Green Finance Evaluation may be modified, suspended or withdrawn due to changes in information or lack of information. All rights pertaining
to this document including data from JCR Green Finance Evaluation are reserved by JCR. All or part of this document including data from JCR Green Finance Evaluation
is prohibited from being reproduced, modified or otherwise altered without the permission of JCR.

■Terminology
JCR Green Finance Framework Evaluation: The assessment of the extent to which proceeds financed based on the Green Finance Framework are allocated to green
projects as defined by JCR and of the degree of management, operation and transparency on the use of proceeds for the said Green Finance. The evaluation is made ona scale of five in the order from top to bottom with evaluation symbols of Green 1 (F), Green 2 (F), Green 3 (F), Green 4 (F) and Green 5 (F.)■Status of Registration as an External Evaluator of Sustainability Finance・Ministry of the Environment: Registered as an external reviewer for Green Finance・ICMA (observer registration as an external evaluator with the International Capital Markets Association)
・UNEP FI Positive Impact Financial Principles Working Group Member
・Climate Bonds Initiative Approved Verifier■Other Registration Status as Credit Rating Agency
・Credit Rating Agency: the Commissioner of Financial Services Agency (Credit Rating) No. 1
・EU Certified Credit Rating Agency
・NRSRO: JCR has registered with the following four of the five credit rating classes of Nationally Recognized Statistical Rating Organization (“NRSRO”) as definedby the U.S. Securities and Exchange Commission: (1) financial institutions, broker/dealers, (2) insurance companies, (3) general business corporations and (4)government and local governments. In cases where disclosure is required based on Rule 17g-7(a) of the Securities and Exchange Act, such disclosure is attached toNews Release posted on the JCR's home page at https://www.jcr.co.jp/en/.

■For all other inquiries, please contact us below
TEL: 03-3544-7013 FAX: 03-3544-7026
Information-Service Department

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

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