SECOND PARTY OPINIONOBAYASHI CORPORATIONSUSTAINABILITY BOND
DNV PERIODIC REVIEW (#5)

Prepared by: DNV Business Assurance Japan K.K.
Location: Kobe, Japan
Date: 28 June 2024
Ref. Nr.: PRJN-249559-2021-AST-JPN

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Table of Contents
I.

Scope and Objectives .............................................................................. 4II.

Responsibilities of Obayashi and DNV ........................................................ 5

III.

Basis of DNV’s Opinion ............................................................................. 6

IV.

Work Undertaken .................................................................................... 7

V.

Findings and DNV’s Opinion ...................................................................... 8

Schedule-1 Sustainability Bond Nominated Projects & Assets Outline ........................ 20
Schedule-2 Sustainability Bond Eligibility Assessment Protocol ................................. 22

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Issue Log

Description

30 May 2019

Second Party Opinion - Sustainability bond eligibility pre-issuanceassessment report

29 June 2020

Sustainability Bond Periodic Review (#1)

30 June 2021
30 June 2022
30 June 2023

Sustainability Bond Periodic Review (#2)
Use of Proceeds: JPY 3.86 billion out of JPY 10 billion has been allocatedSustainability Bond Periodic Review (#3)
Use of Proceeds: JPY 9.81 billion out of JPY 10 billion has been allocatedSustainability Bond Periodic Review (#4)
Use of Proceeds: Net proceeds JPY 9.94 billion out of JPY 10 billion has
been fully allocatedSustainability Bond Periodic Review (#5)
Use of Proceeds: Net proceeds JPY 9.94 billion out of JPY 10 billion has
been fully allocated(See Schedule-1 for details of target Project Portfolio 01, 02, 03)
Environmental benefits:
28 June 2024
(This report)-

CO2 emission reductions through the renewable energy business
56,617 t-CO2 (FY2023)
Operation status of the hydrogen production plant demonstration(as planned)

Social impact:-

Providing vocational training opportunities (66 people), provision ofqualification allowances to those responsible for maintenance andrenewal of disaster response/social infrastructure (561 people)

Disclaimer
Our assessment relies on the premise that the data and information provided by Issuer 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 that errors 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 an entity 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 maintainindependence 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)

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I.

Scope and Objectives

On June 20th, 2019, Obayashi Corporation (hereinafter “Obayashi” or “Issuer”) issued
Obayashi Sustainability Bond (hereinafter “BOND”). The issuance value for the BOND is 10.0
billion JPY, and its redemption period is 5 years. DNV Business Assurance Japan Co., Ltd.
(hereinafter referred to as “DNV”) conducted a sustainability bond eligibility assessment byusing the Sustainability Bond Guidelines (SusBG)*1 in accordance with Green Bond Principles(GBP)*2and Social Bond Principles (SBP)*3. DNV also considered the requirements of theGreen Bond Guidelines, 2017*4 (MOE, Japan 2017) and Climate Bonds Standard Version
2.1*5 during its assessment.
*1: Sustainability Bond Guidelines (International Capital Market Association ICMA 2018)*2: Green Bond Principles (International Capital Market Association ICMA 2018)*3: Social Bond Principles (International Capital Market Association ICMA 2018)*4: Green Bond Guidelines, 2017 (Ministry of the Environment)*5: Climate Bonds Standard Version 2.1 (Climate Bonds Initiative)

Obayashi Green Vision 2050, the medium-to-long-term vision adopted in 2011, wasupdated to Obayashi Sustainability Vision 2050. The Sustainability Vision expands on theGreen Vision by incorporating promotion of ESG management and achievement of SDGs.
Also, Obayashi established action plans to solve the specified 6 ESG material issues andpublished their approaches. (Refer to: Appendix-3)
Obayashi has allocated the proceeds from Obayashi Sustainability Bond to the following
sustainability projects (portfolio) and assets as scheduled *.
*Allocation of the proceeds from Sustainability Bond includes financing and / or refinancing. See Schedule-1 fordetails.

• Environmentally friendly “Wellness Building” under the concept of “Smart
Buildings that are good for all people”• Secure skilled workers for construction industry and strengthen trust
relationship with suppliers• Renewable Energy businesses based on the action plans of “Obayashi Green
Vision 2050”
DNV has been commissioned by Obayashi to provide the initial and periodic reviews of
Obayashi’s eligibility of the BOND. Our criteria and information to achieve the purpose aredescribed under “Work Undertaken” shown below. This periodic review was done based on
the information and documents provided by Obayashi as well as the interview conductedwith them on 4 June 2024. We do not provide any independent assurance or other types ofaudit activities.

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In this report, no assurance is provided regarding the financial performance of the Issuer,
the value of any investments in the BOND, or the long-term environmental benefits arisingfrom the nominated projects. Our objective of the review is to provide an assessment thatthe usage of the proceeds of the BOND has met the criteria established on the basis set
forth below.

II.

Responsibilities of Obayashi and DNV

The management of Obayashi provided the information and data used by DNV during thisreview. Our statement represents an independent opinion and is intended to informObayashi management and other stakeholders interested in the BOND as to whether theestablished criteria have been met, based on the information provided to us. In our work,
we have relied on the information and data presented to us by Obayashi. DNV is not
responsible for any aspect of the nominated assets referred to in this opinion and cannot beheld liable if estimates, findings, opinions, or conclusions are incorrect. Thus, DNV shall not
be held liable if any of the information and/or data provided by Obayashi and used as thebasis for this assessment were found to be not correct or complete.

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III.

Basis of DNV’s Opinion

To provide as much flexibility for the issuer, Obayashi, as possible, we have adapted our
Sustainability Bond Guidelines (SusBG)*1 (considering Green Bond Principles (GBP)*2 andSocial Bond Principles (SBP)*3), while referencing the requirements of Green Bond
Guidelines, 2017*4 and Climate Bonds Standard Version 2.1*5 assessment methodologies, tocreate the Obayashi-specific Sustainability Bond Eligibility Assessment Protocol (henceforthreferred to as “Protocol”).
The Obayashi-specific Protocol (eligibility) has the capacity for potential application of theBond under the Green Bond Guidelines, 2017 and Climate Bond Standard with theirTechnical. Our Protocol includes a set of suitable criteria that can be used to underpin DNV’sopinion. The overarching principle behind the criteria is that a sustainability bond should“enable capital-raising and investment for new and existing projects with environmental andsocial benefits”.
As per our Protocol, the criteria against which the BOND has been reviewed are grouped
under the four Principles:•

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

•

Principle Two: Process for Project Evaluation and Selection. The ProjectEvaluation and Selection criteria are guided by the requirements that an issuer of asustainability bond should outline the process it follows when determining eligibilityof an investment using Sustainability Bond proceeds, 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 sustainability bond should be tracked within
the issuing organization, that separate portfolios should be created when necessary
and that a declaration of how unallocated funds will be handled should be made.

•Principle Four: Reporting. The Reporting criteria are guided by therecommendation that at least Sustainability Reporting to the bond investors should
be made of the use of bond proceeds and that quantitative and/or qualitative
performance indicators should be used, where feasible.
*1: Sustainability Bond Guidelines (International Capital Market Association ICMA 2018)*2: Green Bond Principles (International Capital Market Association ICMA 2018)*3: Social Bond Principles (International Capital Market Association ICMA 2018)*4: Green Bond Guidelines, 2017 (Ministry of the Environment)*5: Climate Bonds Standard Version 2.1 (Climate Bonds Initiative)

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IV.

Work Undertaken

Our work constituted a comprehensive review of the available information, based on theunderstanding that the information was provided to us by Obayashi in good faith. We havenot performed an audit or other tests to check the veracity of the information provided tous. The work undertaken to form our opinion includes initial assessment and periodic
assessment.
Initial Assessment (pre-issuance):•

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

•

Assessment of supporting documents provided by Obayashi on the BOND andsupplemented assessment by a comprehensive desktop research. These checks
refer to current assessment best practices and standards methodology.

•

Discussions with Obayashi and review of relevant documentation.

•

Documentation of findings against each element of the criteria.

Periodic Assessment (post-issuance) *This report•

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

•

Discussions with Obayashi management and review of relevant documentation.

•

Field survey and inspection, if required.

•

Review of the nominated projects and assets as described in Schedule-2.

•Documentation of findings in detail.

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

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V.

Findings and DNV’s Opinion

DNV’s findings are listed below:

Principle One: Use of Proceeds
DNV has confirmed that Obayashi has completed allocation of the proceeds [netproceeds JPY 9.94 billion out of total JPY 10 billion] that was raised at the time of theprevious report (as of the end of FY2022).
Obayashi has reported usage of the proceeds to refinance and/or finance the projects
including:Eligible Sustainability Projects:
Wellness Buildings (Project 01)- Project 01-1：Obayashi Technical Research Institute ZEB：

0.4 billion JPY(Net Zero Energy Building, Refinanced)- Project 01-2：Obayashi Next-Generation Training Facility：

5 billion JPY(in Yokohama)
Vocational Training and Subsidies（Project 02）- Project 02-1：Training & Subsidies for Young Workers：

1 billion JPY

Renewable Energy（Project 03）- Project 03-1：R&D for CO2-free Hydrogen Production
and logistics system:

0.4 billion JPY(Refinanced: 0.25 billion JPY & financed: 0.15 billion JPY)
- Project 03-2：Otsuki Biomass Power Plant andProject 03-3：Kamikita Ogawara Wind farm：3.14 billion JPY

Sub Total: 9.94 billion JPY

Balance:Total

0.0 billion JPY: 9.94 billion JPY

Schedule-1 indicates the list and details of sustainability projects 01-03.
DNV reviewed the eligibility for sustainability of the nominated projects and assets tocontinuously meet the criteria for the project categories above.

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Project Portfolio 01: Wellness Building
Project 01-1: Obayashi Technical Research Institute ZEB[Project 01-1 Obayashi Technical Research Institute＊Roof-Top Solar Power,
Kiyose-city, Tokyo, BELS (ZEB): Mar. 2019, WELL (Gold): Nov. 2017 & WELL Health-Safety Rating: Apr. 2021]

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Project 01-2: New Environmentally Friendly “Wellness Building” under theconcept of “smart buildings that are good for all people”
Obayashi has evaluated and selected the building which meets the criteria against the“process for project evaluation and selection” in their sustainability bond framework.
The nominated project is “Obayashi Next-Generation Training Facility”, which isintended to nurture innovation and corporate culture. It will be the first high-rise buildingin Japan made of wooden materials including its structures and be fire-resistant. The
atmosphere from wooden materials is expected to bring-in relaxation and comfort topeople with its humidity-adjustment feature. The building will also enhance people’s healthand well-being by its unique design and technologies that incorporate naturalenvironments.
In this project, by levering various environment-friendly technologies, it obtained BELS
certification (the highest rating) and ZEB Ready (Net Zero Energy Building Ready) in
November 2021, and LEED certification (Gold) in August 2022. Furthermore, based on the
results of the above-mentioned Project 01-1 Obayashi Technical Research Institute ZEB, it
obtained CASBEE Wellness Office (rank S) in October 2022, WELL Certification (platinum),an evaluation standard for wellness-conscious buildings and indoor environments, and
WELL Health-Safety Rating in February 2023.
This project has also obtained FSC® Project Certification (FSC-P001889) from theviewpoint of sustainable use and utilization of building materials, and has been selected forthe "Leading project for sustainable buildings (wooden construction) in FY2019" and"Demonstration project for buildings utilizing CLT in FY2019".
Obayashi Next-Generation Training Facility construction has been completed as "PortPlus®" in March 2022.
*1: Obayashi website; The construction of "Port Plus®" (next-generation training facility), Japan's first high-risepure wooden fire-resistant building, has been completed.
https://www.obayashi.co.jp/news/detail/news20220520_1.html

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[Project 01-2 Next-generation training facility in Yokohama] exterior and part of the training space(Construction period: from March 2020 to March 2022, completed in March 2022)
Site area: 563.28 m2, total area: 3,502.87 m2, story: 1 basement floor and 11 floors above ground (44 m high)Page 11 of 33

Project Portfolio 02: Secure skilled workers for construction industry andstrengthen trust relationships with suppliers
Project 02: Vocational training and subsidy for developing of the young skilledworkers[Project 02 Vocational training operation and subsidy
for developing of the young skilled workers
Vocational training school, accommodation, field training, in Yashio-city, Saitama
FY2019 Certification ceremony for Obayashi senior site manager and operator]

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Project Portfolio 03: Renewable energy business towards the realization ofgoals set out in “Obayashi Green Vision 2050”
Project 03-1: R&D for CO2-Free Hydrogen Production and Logistics System
This project consists of CO2-free hydrogen production including pilot manufacturing plant
construction and logistics systems (production, storage and distribution). CO 2-freehydrogen is generated by renewable energy source, using geothermal power generation.
Obayashi has launched this project according to the joint research agreement with
Tuaropaqui Trust in December 2018, who owns geothermal power station in New
Zealand. This CO2-free hydrogen pilot manufacturing plant (hydrogen production
capacity; 22.5kg/h) has been completed in March 2021, and is operating smoothly as ofJune 2024.

Project 03-2: Otsuki Biomass Power Plant
Commercial operation started in December 2018, and as of June 2024, it is operatingsmoothly.
*1: Obayashi website; https://www.obayashi.co.jp/green_energy/project/biomass/

OutlineRated
output14.5 MW (net 12.5 MW)

FuelBiomass (Wood chip only*)＊Exception for emergency
operation

Location

Otsuki City, Yamanashi Prefecture

Commercial
operation

From 2 December 2018

[Project 03-2 Otsuki Biomass Power Plant]

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Project 03-3: Kamikita Ogawara Wind Farm
Kamikita Ogawara Wind Farm will be located in Rokkasho in Aomori Prefecture and have
six towers of wind power generation, and its total rated power is estimated at max. 20.4
MW (3.4 MW/tower)*1. The construction was done by Obayashi Corporation, using thewind lift method*2.
*1: Obayashi website; https://www.obayashi.co.jp/news/detail/news20220406_1.html*2: Obayashi website; https://www.obayashi.co.jp/solution_technology/detail/tech074.html

The construction of the facility has been completed in FY2021, the commercial
operation started in April 2022, and the facility is operating smoothly as of June 2024.
The facility utilization rate in FY2023 is estimated to be approximately 19% (planned as
22-25%), and the environmental benefits are being obtained, though it is slightly below
the initially planned level due to wind conditions.

OutlineRated
output20.4 MW (3.4 MW/unit × 6 units)

Location

Rokkasho, Kamikita-gun, Aomori
Prefecture

Commercial
operation

From April 2022

[Project 03-3

Kamikita Ogawara Wind Farm]

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Principle Two: Process for Project Evaluation and Selection
The BOND’s proceeds have been allocated solely to refinance and/or finance theprojects and assets as defined in Schedule 1, as scheduled. DNV has reviewed
evidence that demonstrates that Obayashi regularly assesses opportunities for
improvement and devises action plans and initiatives to mitigate negativeenvironmental and social impacts from its construction and operations.

Principle Three: Management of Proceeds
DNV has reviewed evidence indicating how Obayashi traced the proceeds from theBond, from the time of issuance to the time of disbursement. In the previous periodic
review, DNV confirmed, based on evidence provided by Obayashi, that the net
proceeds JPY 9.94 billion out of the total JPY 10 billion had been fully allocated as at
the end of FY2022.
As stated above, DNV provides no assurance regarding the financial performance of
the Bond, the value of any investments in the Bond, or its long-term environmental
benefits.

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Principle Four: Reporting
Obayashi has confirmed that they publish and maintain a dedicated section on the
Sustainability Bond in its website. This includes a detailed description of the projects
and value of the proceeds invested, as well as the associated qualitative andquantitative environmental impacts [CO2 emission reduction from Renewable Energy,
Energy Efficiency (Green Buildings)].
DNV confirmed that the sustainability projects have actual environmental and/or social
benefits and if they were calculated properly by applying the methods specified by
Obayashi before the issuance of sustainability bonds.
Schedule-1 shows the qualitative and quantitative assessments of environmental
and/or social benefits by Obayashi sustainability bond projects, some of which havestarted commercial operations.
For the current status of each project, please refer to Table-1 shown below.

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Table-1(1/2) Progress of Projects (allocation status of proceeds)(Unit: billion JPY)
Project

01-1

01-2

02

03-1

03-2

03-3

ObayashiTechnical
Research
Institute (ZEB)
Obayashi NextGeneration Training
Facility
Vocational training
and subsidy fortalent managementof young skilledworkers
R&D for CO2-Free
Hydrogen
Production andLogistics System
Otsuki Biomass
Power Plant(operating)
Kamikita Ogawara
Wind Farm(operating)
Sub-total
Total

Proceeds
to beallocated

2019

2020

2021

2022

0.4

0.4

0

0

0

5.0

0

0.34

4.62

0.04

0/ completed

1.0

0.21

0.33

0.37

0.09

0/ completed

0.4

0.4

0.0

0.0

0

3.14

0

2.18

0.96

0

0/ completed

1.01

2.85

5.95

0.13

0/ completed
0/ completed

Allocated amount

9.94

9.94

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Balance / Status0/ completed(fully refinanced)

0/ completed（refinance: 0.25)（refinance: 0.65)

Table-1(2/2) Progress of Projects (environmental/social benefits)
Project

Allocated amount(billion JPY)

Environmental/social benefits
Provide well-being residence

Obayashi Technical01-1 Research Institute
(ZEB)

0.4
(refinance: 0.4)

(Maintain and improve the health and productivity ofwellness building users)•

WELL Certification (gold) (November 2017)•

WELL Health-Safety Rating (April 2021)

Provide well-being residence
Obayashi Next01-2 Generation
Training Facility(Maintain and improve the health and productivity ofwellness building users)

5.0•

CASBEE Wellness Office (rank S) (October 2022)•

WELL Certification (platinum) (February 2023)•

WELL Health-Safety Rating (February 2023)

Provide education and vocational training
opportunities(Construction technicians: Ensure a workforce torespond to disasters and to maintain and renew

02

Vocational training
and subsidy fortalentmanagement ofyoung skilledworkers

R&D for CO2-Free
Hydrogen
03-1
Production andLogistics System
Otsuki Biomass
Power Plant
03-2(operating)social infrastructure)
Number of trainees attending vocational schools

1.0(upper row) / Number of super foremen and super
operators receiving qualification allowances (lower
row)

0.4
(refinance: 0.25)

2020

2021

2022

2023

74

44

51

60

66

456

492

497

523

561

Renewable energy(R&D)
Hydrogen production capacity: 22.5 kg/h
Renewable energy
CO2 emission reductions per year (t-CO2)

3.14
Kamikita Ogawara
03-3 Wind Farm
(operating)
Total

2019

2019

2020

2021

2022

2023

＊1

37,434

43,69356,87056,617

9.94－(refinance 0.65)＊1 Not subject to reporting as the allocation of proceeds started in FY2020.

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On the basis of the information provided by Obayashi and the work undertaken, it is DNV’sopinion that the BOND meets the criteria established in the Protocol and that it is alignedwith the stated definition of sustainability bonds within the Sustainability Bond Guidelines(SusBG) in accordance with the Green Bond Principles (GBP) and the Social Bond Principles(SBP) which is to “enable capital-raising and investment for new and existing projects withenvironmental and/or social benefits”.

DNV Business Assurance Japan K.K.
28 June 2024

Jun Chokai

Naoki Maeda

Technical Reviewer

Managing Director/SCPA Vice President

DNV Business Assurance Japan K.K.

DNV Business Assurance Japan K.K.

Masato Kanedome

Kazumasa Terada

Project Leader

Team Leader

DNV Business Assurance Japan K.K.

DNV Business Assurance Japan K.K.

About DNV
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16,000 professionals are dedicated to helping customers make the world safer, smarter and greener.

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Schedule-1 Sustainability Bond Nominated Projects & Assets Outline
No.

Project Portfolio

01

Environmentallyfriendly “Wellness
Building” under theconcept “smart
buildings that are goodfor all people”

02

Secure skilled workers
for constructionindustry andstrengthen trust
relationship with
suppliers

03“Renewable energy
business based on theaction plan of“Obayashi Green Vision
2050“

Nominated projects
and assets

Green Project
category

Social Project category

01-1：
Obayashi's TechnicalResearch Institute*refinance

Energy Efficiency
building(comparable withcertified Green,
low-carbon
building)

Promoting Well-being
residence and work
environment(Population who usewellness building.
Improvement of Health,Work Efficiency)(target population, social
benefit)

01-2：
Sustainability eligible
project (Wellness
Building, TBA)

Fund amount/
Allocated amountRemarks(location、plan、size、etc)

0.4b-JPY(allocation
completed, fullyrefinanced)

Kiyose, Tokyo. Built in 2014.
WELL certification (gold, 2017),
BELS (ZEB, 2019), CASBEE (Sclass, 2013), LEED-EBOMPlatinum (2013),
Part of the repayment funds forlong-term debt for ZEB

5.0b-JPY(allocation
completed)

Obayashi Next-Generation
Training Facility in Yokohama(completed in 2022), BELS
certification (ZEB Ready, 2021),
LEED‐BD+C‐Gold (2022),
CASBEE Wellness Office (rank S,
2022), WELL certification(platinum, 2023), WELL HealthSafety Rating (2023)

02-1：
Vocational training andsubsidy－

Providing educational andvocational training(skilled workers, secure
to maintain/upgrade
infrastructure andrespond to natural
disaster)

1.0b-JPY(allocation
completed)

03-1：
R&D for CO2 Free
Hydrogen Production andLogistics *partiallyrefinance

Renewableenergy(R&D)－

0.4b-JPY(allocation
completed,refinance: 0.25bJPY + new
allocation
0.15b-JPY)

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Various location in Japan,
FY2019-2022, management(operational and maintenance)
cost of vocational training andsubsidy to the skilled workers
certified by Obayashi.

New Zealand, 2018-2019. R&D
including the construction ofpilot plant.

No.

Project Portfolio

Nominated projects
and assets

Green Project
category

Social Project category

03-2：
Otsuki Biomass Power
Plant

Renewableenergy(Bioenergy)

－

03-3：
Kamikita Ogawara Wind
Farm

Renewableenergy(Onshore wind
power)－(target population, social
benefit)Fund amount/
Allocated amountRemarks(location、plan、size、etc)

3.14b-JPY has
been allocatedOtsuki, Yamanashi, Dec 2018
started commercial operation,
14.5MW
Rokkasho, Aomori. started
commercial operation in Apr.
2022, max20.4MW

Allocation amount up to FY2022: 9.94b-JPY
Total bond proceeds：10.0b-JPY(Net Proceeds: 9.94b-JPY)

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Schedule-2 Sustainability Bond Eligibility Assessment Protocol
Obayashi Sustainability Bond Framework and Amendment to Shelf Registration Statement are published as explanation materials to investors.

(1)

Use of Proceeds

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

1aType of bond

The bond must fall in one of thefollowing categories, as defined by the
Sustainability Bond Guidelines inaccordance with Green and Social Bond
Principles:•
Sustainability Use of Proceeds Bond•
Sustainability Use of Proceeds
Revenue Bond•
Sustainability Project Bond•
Sustainability Securitized Bond

Documents reviewed:
Obayashi Sustainability Bond
Framework
Amendment to Shelf
Registration Statement
Discussions with Obayashi
management

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

The cornerstone of a Sustainability
Bond is the utilization of the proceedsof the bond which should beappropriately described in the legal
documentation for the security.

Documents reviewed:
Obayashi Sustainability Bond
Framework
Amendment to Shelf
Registration Statement
Project documents (including
asset specifications)
Discussions with Obayashi
management

As identified by the purpose of the BOND, Green
and/or Social project and assets, is to use theproceeds to finance and refinance for projects fallingunder the following categories:-Green and Social, Wellness Buildings (2 projects)• Obayashi Technical Research Institute• Obayashi “Next-Generation Training Facility”(Yokohama city)- Vocational Training and subsidy (1 project)• Vocational Training and subsidy
Renewable energy (3 projects)• R&D for CO2 Free hydrogen production andlogistics• Otsuki biomass power plant (Woody biomass)

1b

Sustainability
Project
Categories

Page 22 of 33

Sustainability Use of Proceeds Bond.

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings•

Kamikita Ogawara Wind Farm(started operationin Apr. 2022)
DNV’s assessment concluded that these assets
would present a low risk of CO2 emissions and relative
to environmental negative effect quantify and qualify
for inclusion under the Green Bond Principles within
the Renewable Energy category and Energy Efficiency
category, as well as Social aspects under the Social
Bond Principles (Social contribution and target
population of each project). Above information is
included in legal documents such as Amendment to
Shelf Registration Statement. DNV concluded that 1b
requirement is satisfied.
1c

Environmental, social
benefits

All designated Sustainability Project
categories should provide clear
environmentally, socially sustainable
benefits, which, where feasible, will bequantified or assessed by the issuer.

Documents reviewed:
Obayashi Sustainability Bond
Framework
Project documents (including
asset specifications (e.g.
BELS, WELL), social issues(secure skilled workers andtechnology) andcountermeasure in
construction industry faces,
environmental impact report)
Renewable energy CO2emission reduction
evaluation spread sheet
Discussions with Obayashi
management

DNV notes that Wind power project and Biomass
power project can present risks of land use and ecology
system through construction and operation. DNV
reviewed Obayashi’s provided document and confirmedthat Obayashi already identified the environmental risk
and addressed appropriate countermeasure. Obayashi
has clearly demonstrated those projects will contributeto environmental benefits such as CO2 emission
reduction. Obayashi also provided documents to DNV
which are related to the social issues andcountermeasures for construction industry that alignwith Social Bond Principles (Social contribution andtarget population of each project).
DNV concluded that 1c requirement is satisfied.

1d

Refinancing
share

In the event that a proportion of theproceeds may be used for refinancing,
it is recommended that issuers provide
an estimate of the share of financing

Documents reviewed:
Obayashi Sustainability Bond
Framework

The net proceeds 9.94 billion JPY out of the proceeds(10 billion JPY) have been fully allocated tosustainability project. Following project will be

Page 23 of 33

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

vs. re-financing, and whereappropriate, also clarify whichinvestments or project portfolios may
be refinanced.

-

Amendment to Shelf
Registration Statement
Discussions with Obayashi
management

refinanced (Refinance share is disclosed in Annual
Report).
-Refinance to the Wellness Buildings project portfolio
0.4 billion JPY-Refinance to renewable energy project portfolio
0.25 billion JPY

Page 24 of 33

(2)Process for Project Evaluation and Selection

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

2aInvestment-

The issuer of a Sustainability Bondshould outline the decision-making
process it follows to determine theeligibility of projects using Sustainability
Bond proceeds. This includes, without
limitation:• A process to determine how the
projects fit within the eligible
Sustainability Projects categories
identified in the Sustainability Bond
Guidelines considering Green and Social
Bond Principles;• The criteria making the projects
eligible for using the Sustainability Bond
proceeds; and• The environmental and social
sustainability objectives

Documents reviewed:
Obayashi Sustainability Bond
Framework
Obayashi document (internal
protocol and procedures)
Discussions with Obayashi
management.

As per the Obayashi Sustainability bond framework,
the issuer has set out the following criteria including
Sustainability Bond Guidelines (ICMA 2018) andGreen Bond Guidelines (MOE, 2017) for project
selection:“Eligible sustainability project” means alignment with
their corporate philosophy and environmental andsocial policy including-Promote the renewable energy business-Promote environmentally responsible real estatedevelopment projects

In addition to information disclosed by
an issuer on its Sustainability Bond
process, criteria and assurances,
Sustainability Bond investors may also
take into consideration the quality of theissuer’s overall framework andperformance regarding environmental
sustainability.

Documents reviewed:
Obayashi Sustainability Bond
Framework
Obayashi corporate philosophy,
environmental and social
policies
Discussions with Obayashi
management
https://www.obayashi.co.jp/en/sus
tainability/environment.html

decisionprocess

2b

Issuer’s
environmental
and social andgovernanceframework

Page 25 of 33

whose eligible criterial is stated in ‘Obayashi Green
Vision 2050’. In this sustainability bond, Obayashi
has decided eligible project overarching it andconsidering the compliance with GBP 2018 as follows.
Those nominated projects and assets are discussedwith Obayashi’s related department andresponsibilities (e.g., ESGs & SDGs department,
Financial department, Environmental department,
CSR committee representatives (representative
director, President))
DNV concluded that 2a requirement is satisfied
through interview, discussion and document review.
As per the interview and review documents provided
by Obayashi, DNV confirmed that Obayashi hasaddressed to achieve sustainable society through its
business based on the Obayashi Green Vision 2050
established in 2011, ESG materiality. Obayashi has
published and disclose OBAYASHI Corporate Report
and web site including its sustainable activities andinitiatives described above.

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

https://www.obayashi.co.jp/en/sus
tainability/esg.html

https://www.obayashi.co.jp/en/sustainability/environ
ment.html
https://www.obayashi.co.jp/en/sustainability/esg.ht
ml
DNV confirmed and found nothing to suggest that
Obayashi’s environmental and social activity is not inline with their activity to contribute sustainable
environment and society through its projects insustainability bond.

Page 26 of 33

(3)Management of Proceeds

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

3aTracking

The net proceeds of Sustainability
Bonds should be credited to a subaccount, moved to a sub- portfolio orotherwise tracked by the issuer in an
appropriate manner and attested toby a formal internal process that will
be linked to the issuer’s lending andinvestment operations for
Sustainability Projects.

Documents reviewed:
Obayashi Sustainability Bond
Framework
Procurement scheme
Amendment to Shelf Registration
Statement (draft)
Obayashi’s internal protocol (e.g.,
accounting management
procedure, document control
procedure)
Records of fund allocation in
FY2019,2020,2021,2022
Discussions with Obayashi
management

DNV confirmed by reviewing documents andinterviewing that Obayashi plans to trace theproceeds from the Bond, from the time of issuanceto the time of disbursement are appropriate. The
full amount of the proceeds will be managed by
Obayashi’s financial department with existingaccounting system and using sustainability bondrequest for approval document form.
DNV confirmed Obayashi internal process canmanage and track the outstanding balance of thesustainability bond proceeds.
DNV concluded that 3a requirement is satisfied.

So long as the Sustainability Bonds
are outstanding, the balance of the
tracked proceeds should beperiodically reduced by amounts
matching eligible sustainability
investments or loan disbursements
made during that period.

Documents reviewed:
Obayashi Sustainability Bond
Framework
Obayashi’s internal protocol (e.g.,
accounting management
procedure)
Records of fund allocation in
FY2019,2020,2021,2022
Discussions with Obayashi
management

DNV reviewed documents and interviewed that
Obayashi plans to trace at the proceeds from theBond, from the time of issuance to the time or
disbursement period, and reduce the net balance ofproceeds by amounts in line with the projects andassets debt refinance schedule. At the end of eachfinancial period (at least every one quarter), theoutstanding balance of the Bond will be reviewed by
Obayashi financial department.
DNV concluded that 3b requirement is satisfied.

procedure-1

3b

Tracking
procedure-2

Page 27 of 33

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

3c

Temporary

Pending such investments or
disbursements to eligible
Sustainability Projects, the issuer
should make known to investors theintended types of temporary
investment instruments for thebalance of unallocated proceeds.

Documents reviewed:
Obayashi Sustainability Bond
Framework
Amendment to Shelf Registration
Statement (draft)
Records of fund allocation in
FY2019, 2020,2021,2022
Discussions with Obayashi
management

The net proceeds of the Bond will be placed in anexisting accounting system and managed byfinancial department using request for approval
document form for sustainability bond proceeds.
The net proceeds of the bond also will be fully and
immediately disbursed where possible or held incash or cash equivalent until disbursement to thenominated projects and assets as per the Obayashi
sustainability bond framework.
DNV concluded that 3c requirement is satisfied.

holdings

(4)
Ref.
4a

ReportingCriteria

Requirements

Work Undertaken

DNV Findings

Periodical
reportingIn addition to reporting on the use of proceeds
and the temporary investment of unallocatedproceeds, issuers should provide at least annuallya list of projects to which Sustainability Bond
proceeds have been allocated including- when possible with regards to confidentiality
and/or competitive considerations- a brief description of the projects and theamounts disbursed, as well as the expectedenvironmentally sustainable impact.

Documents reviewed:
Obayashi Sustainability
Bond Framework
Environmental benefit
evaluation spread
sheets (CO2 emission
reduction evaluation
spread sheet)
Discussions with Obayashi
management

Obayashi will publish the annual report including a
dedicated section on the sustainability bond in
OBAYASHI Corporate Report or website. This will
include description of the projects and value of theproceeds invested, as well as the associatedqualitative and quantitative environmental and social
impacts. Obayashi plans to report on the total
amount of CO2 emission reduction evaluation basedon the operation records (e.g., amount of electricity
generation per year, MWh/y) as environmental
benefits and green projects progress, as well as
trained and/or certified numbers of skilled workers
as its social contributions.
DNV concluded that 4a requirement is satisfied.
Details are described in Section Ⅴ table-1

Page 28 of 33

Appendix-1
Obayashi Code of Conduct

The guidelines help us realize the Obayashi Philosophy and continue being anenterprise trusted by all stakeholders.

1

Fulfill our social mission(1)

Provide high-quality buildings, infrastructure, and services(2)

Foster an environmentally responsible society(3)

Value every one of our associates(4)

Build stronger mutual trust with suppliers(5)

Build good relationships with communities

2

Ensure strict adherence to corporate ethics(1)

Comply with laws and regulations and take a sensible course of action(2)

Promote fair and free competition(3)

Maintain appropriate relationships with stakeholders(4)

Avoid all contact with antisocial forces(5)

Ensure appropriate information disclosure and transparency of management

Page 29 of 33

Appendix-2
Obayashi Environmental Policy and Vision (*1)(ⅰ) Environmental Policy-Principles
As a good corporate citizen, Obayashi considers active efforts and continuous
improvement of environmental issues to be integral components of business
management. We envision our future society, seeking to contribute to a realizationof sustainable society.

-Policies
1
2
3

We strive to protect the environment, acting in full compliance with allenvironmental statutes and ordinances, communicating with local communities.
We gather our knowledge for realization of resilient society that integrates theelements of low-carbon, recycling-oriented and respecting the natural world.
We use the expertise we have acquired through our environmental protection
activities, developing even more effective technologies and implementing new
businesses to realize sustainable society.

We sincerely focus on our business, with our affiliates, subcontractors andsuppliers, holding targets and vision to realize a sustainable society.

(ⅱ) Vision (Obayashi Green Vision 2050)
Our medium- to long-term environmental vision, "Obayashi Green Vision 2050,"
which was established by using back casting methodology in February 2011,
outlines the future course of our business activities in terms of helping to build asustainable society. It sets forth specific action plans and numerical CO2 emissions
reduction targets that will be crucial to achieving our vision for society in 2050.
Our vision for society in 2050 is what we call a “3+1 Society,” an approach that
integrates the elements of “low-carbon,” “recycling-oriented” and “respect for thenatural world,” predicated on “safety and security.” To achieve that, we haveestablished a concrete action plan and are moving forward with various initiatives.
(*1): Environmental Policy and Vision are quoted as of the time of issuance of the
Sustainability Bond.

Page 30 of 33

Appendix-3
Obayashi ESG materiality
Upon the start of Medium-Term Business Plan 2017, Obayashi set its sights on
Vision for the Future. Inspired by it, we are better clarifying and promoting initiatives
to solve social challenges and realize a sustainable society. In FY2019.3, we have set
out six ESG materialities.
1. Establish Environmentally Responsible Society

Response to climate change (pursue a decarbonized society)Contribution to the establishment of recycling-oriented society (promoting
effective use of resources through the 3 R's (reduce, reuse, recycle))(Impact on our business)Expansion of construction demand through development of environmentally
related technology and generation of new businesses

Delay in response to stricter environmental laws and regulation, increase in thecosts of environment management, decline in competitiveness

2. Enhance Quality Control and Technological Capabilities


Improvement in construction management skills to maintain high quality



Development of ground-breaking technology to meet many different needs andresolve problems(Impact on our business)Improvement in productivity, strengthening of competitiveness, and increase inbusiness opportunities



Loss of trust, decline in competitiveness, loss of business opportunities

3. Ensure Occupational Health and SafetyComprehensive occupational health and safety management systemPromotion of safety training and other efforts(Impact on our business)Securing talented human resources, strengthening the supply network of excellent
suppliers

Deterioration in trust in the company from ordering customers and decline inproductivity due to occurrence of accidents

Page 31 of 33

4. Develop and Retain Human Resources

Hiring diverse human resources, comprehensive flexible personnel and training
systems to respond to globalization

Promoting diversity and establishing a workplace environment that is easy foranyone to work in effectively(Impact on our business)Securing talented human resources, improving organizational capabilities, andexpanding business domains

Outflow of talented human resources, decline in productivity, increasingorganizational rigidity

5. Implement Rigorous CompliancePromoting management that places highest priority on compliance with laws andregulations

Improvement of the system of internal controls(Impact on our business)Improvement of trust in the company by society, improvement in organizational
capabilities, strengthening of business baseSuspension/cessation of business activities, loss of trust, loss of business
opportunities

6. Conduct Responsible Supply Chain Management
Ensuring that everyone understands the procurement guidelines and strictly
adheres to themConducting surveys of the procurement process and conditions(Impact on our business)Improving competitiveness by building a strong network with suppliers andstrengthening the ability to respond in the BCP (business continuity plan) in theevent of a disaster

Suspension/cessation of business due to halting of procurement, and a loss oftrust and loss of business opportunities from the occurrence of human rights
issues and other problems

Page 32 of 33

Appendix-4

Obayashi Sustainability projects and SDGs contributions
Obayashi identified the social issues and their countermeasures which Obayashi
group executes. Obayashi has identified “ESG issues (materiality)” (classified into 6
categories) based on the above (Appendix-3).
Obayashi aligns sustainability projects to its ESG materiality, initiatives, and SDGs
contributions, as shown in the following table. Obayashi makes further alignmentsin their other business areas, which are disclosed in its web site and OBAYASHI
Corporate Report 2018.
Table: ESG Materiality, Initiatives, and SDGs Contributions
No.

01

02

03

Project Portfolio

Environmentallyfriendly “Wellness
Building” under theconcept “smart
buildings that aregood for all people”

Secure skilledworkers forconstruction industry
and strengthen trust
relationship with
suppliers“Renewable energy
business based on
the action plan
“Green Vision 2050“

Nominated projects
and assets

Green Project
category

Social Project
category

01-1：
Obayashi's TechnicalResearch Institute

Energy Efficiency
building(comparable withcertified Greenbuilding, lowcarbon building)

Promoting Wellbeing
residence andwork
environment

02-1：
Vocational training andsubsidy－

Providing
Educationaland vocational
training

03-1：
R&D for CO2-Free
Hydrogen Production
and Logistics System

Renewable Energy(*R&D)－

03-2：
Otsuki Biomass power

Renewable Energy(Bioenergy)

－

03-3：
Kamikita Ogawara
Wind Farm

Renewable Energy(Onshore wind
power)－

01-2：
Sustainability eligible
project (Wellness
Building)

SDGs 3 ：Good Health and Well-being
SDGs 11 : Sustainable Cities and Communities
SDGs 4 : Quality Education
SDGs 9 : Industry, Innovation and Infrastructure
SDGs 7 : Affordable and Clean Energy

Page 33 of 33

SDGs
Contribution