Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion

SECOND PARTY OPINION
HOKURIKU ELECTRIC POWER COMPANY
GREEN BOND FRAMEWORK ELIGIBILITY
PRE-ISSUANCE
Prepared by: DNV Business Assurance Japan K.K.
Location: Kobe, Japan
Date: October 28, 2021
Ref. Nr.: PRJN-289645-2021-AST-PNJ-01

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion

Table of contents
I. Introduction

6

II. Scope and Objectives

11

Ⅲ. Responsibilities of Hokuriku Electric Power Company and DNV

12Ⅳ. Basis of DNV’s Opinion

12

V. Work Undertaken

13

Ⅵ. Findings and DNV’s Opinion

14

Schedule-1 Green Bond Nominated Projects

23

Schedule-2 Green Bond Eligibility Assessment Protocol

24

Revision history
Revision

Date of issue or

numberpublication

0

October 28, 2021

Main changes
InitialDisclaimer
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 makebased 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 forbodies providing audit and certification of management systems, and accordingly maintains a comprehensive system of quality control, including documented policies andprocedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. We have complied with the DNV Codeof Conduct1 during the assessment and maintain independence where required by relevant ethical requirements. This engagement work was carried out by an independent
team of sustainability assurance professionals. DNV was not involved in the preparation of statements or data included in the Framework except for this Statement. DNV
maintains complete impartiality toward stakeholders interviewed during the assessment process.

1

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

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion

Executive Summary
Hokuriku Electric Power Company (hereinafter, "Hokuriku Electric Power Company" or"Issuer") is engaged in power generation and retail business, and Hokuriku Electric PowerGroup is also engaged in Electricity & Engineering, Information & Telecommunications,
Environment & Recycling, Daily Life, Office and Finance, Manufacturing, Total Energy, andother businesses that support customers in a variety of situations.
In April 2019, Hokuriku Electric Power Company established and announced the "Hokuriku
Electric Power Group 2030 Long-Term Vision", which drawing a roadmap to sustainablegrowth, in order to handle not only immediate tasks, but also forward-looking challenges,
with a sense of speed amid the drastic changes in the business environment.
The Long-Term Vision sets the following efforts towards by FY2030: for power generation,"Amount of renewable energy power generation = up 2.0 billion kWh/year increase(compared to FY2018)", "Coal consumption = 10% reduction/year", "Energy Conservation Act
Environmental Index achievements (Overall thermal power generation efficiency: 44.3%,
actual thermal power generation efficiency record/target value = 1.00)", and for sales,"Sophisticated Method Act Environmental Index achievements (Ratio of electricity soldproduced from non-fossil sources = 44%)" and “Greenhouse gas emission intensity = 0.37kgCO2/kWh". Hokuriku Electric Power Company is now continue working on the abovementioned efforts to achieve the goals.
In April 2021, Hokuriku Electric Power Company established the "Hokuriku Electric PowerGroup Roadmap toward Achieving Carbon Neutrality," and announced that Hokuriku ElectricPower Company would take on the challenge of becoming carbon neutral by 2050 as a
responsible energy company that is trusted and chosen by people in the region, through"decarbonization of power sources," "sophisticating of power transmission and distribution
facilities," and "decarbonization support for customers and local communities".
Hokuriku Electric Power Company has established the "Hokuriku Electric Power Company
Green Bond Framework (hereinafter, "Framework")" for the issuance of Green Bond. Hokuriku
Electric Power Company plans to allocate the proceeds through the Green Bond to cover
expenditures for projects related to the construction, installation, operation, and maintenanceof renewable energy, and has designated hydropower generation projects, wind power
generation projects, solar power generation projects, and biomass power generation projects
as eligible green projects.
DNV Business Assurance Japan K.K. (hereinafter, "DNV"), as an external reviewer, has
assessed the eligibility of the framework for hydropower, wind power and solar power
projects. The projects to be implemented under the Green Bond are green projects topromote low and decarbonized power sources from renewable energy, as shown in the tablebelow. These projects contribute directly and indirectly to the four SDGs (Sustainable
Development Goals set by the United Nations).

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party OpinionGreen
project

Green project
category

Green project
outline- outline -7. AFFORDABLE AND CLEAN

Towards by 2030, Hokuriku ElectricPower Company will achieve theHydropower

following efforts: for power generation,

generation
business

Contribution to the SDGs
ENERGY
12. RESPONSIBLE
CONSUMPTION AND"Amount of renewable energy power

PRODUCTION

generation = up 2.0 billion kWh/year

13. CLIMATE ACTION

increase (compared to FY2018)", "Coal

15. LIFE ON LAND

consumption = 10% reduction/year","Energy Conservation Act

Wind power
generation
business

Renewable

Environmental Index achievements

energy(Overall thermal power generation(Construction,

efficiency: 44.3%, actual thermal

installation,

power generation efficiency

operation andrecord/target value = 1.00)", and formaintenance)

sales, "Sophisticated Method Act
Environmental Index achievements(Ratio of electricity sold produced fromnon-fossil sources = 44%)" and"Greenhouse gas emission intensity =Solar power
generation
business

0.37kg-CO2/kWh".
Moreover, Hokuriku Electric Power
Company will make an effort toward
low and decarbonization for realizing
the carbon neutrality by 2050.

＊ The relevance of the SDGs is complementary to the issuance of green bond, referring to Green,
Social and Sustainability Bonds: A High-Level Mapping to the Sustainable Development Goals
published by ICMA, which defines the Green Bond Principles. This is a complementary to theissuance of green bond and is not directly related to the purpose for the use of proceeds.

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion

DNV provides the assessment of the eligibility of framework and green projects against theGreen Bond Principles (ICMA 2021, hereinafter, "GBP"), Green Bond Guidelines (Ministry ofEnvironment 2020, hereinafter, "GBGLs") and, where applicable, the sector technical criteriaof the Climate Bonds Standard (CBS v3.0, hereinafter, "CBS"). Assessment summary against
4 core components in GBP and GBGLs are following.
Principle 1. Use of Proceeds

Hokuriku Electric Power Company defines the eligible criteria for the use of proceeds as"Renewable Energy". This is in line with the eligible green projects categorized in GBP and
GBGLs. Specifically, it is planned that the proceeds will be allocated to new investments
and refinancing related to the construction, installation, operation and maintenance of
renewable energy power plants and facilities (hydropower, wind power and solar power)
and related facilities. These projects are expected to bring clear environmental benefits,and Hokuriku Electric Power Company will contribute to the realization of a low-carbon andsustainable society through electrification by using the renewable energy.
Principle 2. Process for Project Evaluation and Selection
The green projects conform to the targets related to renewable energy that contributes
to the reduction of CO2 emissions set forth in the "Hokuriku Electric Power Group 2030
Long-Term Vision" and "Hokuriku Electric Power Group Roadmap toward Achieving Carbon
Neutrality" established by the Hokuriku Electric Power Group. In addition, for theevaluation and selection of green projects, the Finance & Accounting Dept. selects eligible
projects in collaboration with internal related departments, and the General Manager of
the Finance & Accounting Dept. makes the final decision on the selected eligible projects.
Systematic procedures have also been established for addressing the environmental andsocial impacts of business operations. These processes are aligned with GBP requirements.
Principle 3. Management of Proceeds
The total amount of the proceeds will be managed by the Finance & Accounting Dept.
using internal management systems and dedicated ledgers to manage the allocation foreach project, and the systems and ledgers will be used to ensure that the total amount ofgreen eligible projects is not less than the allocated amount. The proceeds will be
managed in cash or cash equivalents in an amount equal to the unallocated amount until
the allocation.
Principle 4. Reporting
Hokuriku Electric Power Company will report the allocation status of the proceeds in the"The Hokuriku Electric Power Group Integrated Report" or on the Hokuriku Electric Power
Company website until the full amount of the proceeds is allocated. This will include theallocated amount of the proceeds, the unallocated amount of the proceeds, and theallocated amount of proceeds that have been allocated as refinancing out of the total
allocated amount. In addition, as environmental benefits, Hokuriku Electric Power
Company plans to disclose indicators related to annual CO2 emission reductions by
renewable energy type and installed capacity by renewable energy type.
DNV confirmed from the framework, related documents and information provided by
Hokuriku Electric Power Company that green bond conforms relevant criteria then is supposed
to be appropriately planned and executed.

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion

I. Introductioni.

About the Issuer
Hokuriku Electric Power Company is engaged in power generation and retail business,and Hokuriku Electric Power Group are engaged in businesses that support customers in avariety of situations, including Electricity & Engineering, Information &Telecommunications, Environment & Recycling, Daily Life, Office and Finance,
Manufacturing, and Total Energy.

ii.

ESG Initiatives of the Issuer
The realization of a decarbonized society is a major social issue, and Hokuriku ElectricPower Company recognizes that addressing the problem of global warming is an
important management issue.
Under these circumstances, in April 2021, Hokuriku Electric Power Group established its
vision for the future of Hokuriku Electric Power Group in 2050, based on its determination
to develop its business beyond the framework of the existing electric power business andcontribute to solving social issues such as addressing the problem of global warming,sustainable development of the region and realization of a smart society. In this Group's
vision for 2050, Hokuriku Electric Power Group has set up and is promoting initiatives torealize ① a society that is friendly to people and the environment through decarbonizationof energy, ② a vibrant community for the next generation, ③ peaceful life in network ofconnections, and ④ living comfortably in a digital society, with the keyword "Together
with local communities, aiming for a sustainable smart society: Connecting, Supporting,and Delivering".
As part of this initiative, Hokuriku Electric Power Company is taking on the challenge of
becoming carbon neutral by 2050 as a responsible energy company that is trusted andchosen. In April 2021, Hokuriku Electric Power Company established a roadmap that
focuses on "decarbonization of power sources," "sophisticating of power transmission anddistribution facilities," and "decarbonization support for customers and local
communities". In July, Hokuriku Electric Power Company established the "the Carbon
Neutral Promotion Meeting", chaired by the president, with the aim of vigorously
promoting the initiatives of the Group as a whole.

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion

Hokuriku Electric Power Company will also contribute to the realization of a sustainable
society (achieving SDGs) by further deepening our management from an ESG
perspective, with the aim of realizing not only a carbon neutral society in 2050 but also asustainable smart society.
In the midst of a rapidly changing business circumstances, the Hokuriku Electric PowerGroup sees these changes as an opportunity to improve corporate value over the medium
to long term, and aims to achieve sustainable growth by harnessing the Group's
strengths.
In addition, Hokuriku Electric Power Company is implementing the following
environmental management and ESG initiatives.
- Establishment of the environmental management system: Hokuriku Electric Power
Company has established and are operating the Environmental Measures Committee,
which is chaired by the Executive Vice President or Managing Director, with the
President as the Chief Environmental Management Officer.
- Information Disclosure: Hokuriku Electric Power Company discloses information inaccordance with TCFD in the "The Hokuriku Electric Power Company Group
Integrated Report" to promote good communication with stakeholders.
• Disclosure under the Task Force on Climate-related Financial Disclosures(TCFD)

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinioniii. Issuer's Environmental Policy
Through the "Hokuriku Electric Power Group 2030 Long-Term Vision," Hokuriku ElectricPower Company has established the following group environmental goals.
Power generation
Amount of renewable energy power generation = up 2.0 billion kWh/year
increase (compared to FY2018)
Coal consumption = 10% reduction/year
Energy Conservation Act Environmental Index achievements (Overall thermal
power generation efficiency: 44.3%, actual thermal power generation efficiency
record/target value = 1.00).
Sales
Sophisticated Method Act Environmental Index achievements (Ratio ofelectricity sold produced from non-fossil sources = 44%).
Greenhouse gas emission intensity = 0.37kg-CO2/kWh.

The following is the main measures to achieve the above environmental policy andtargets and to challenge the 2050 carbon neutral.


Decarbonization of power sources-

Renewable energy: up 2.0 billion kWh/year increase (compared to FY2018) ⇒maximizing introduction (including outside the region andoverseas).

Nuclear power: Efforts to achieve early restart of nuclear power, stable
operation as a base load power source, and the world's
highest level of safety, and examination and utilization of new
nuclear power technologies.
Thermal power: Expansion of co-combustion of biomass fuels in coal-fired
power plants. ⇒ Shift to single fuel combustion.
Consider introduction of ammonia and hydrogen. ⇒Conversion
Consider introduction of Carbon dioxide Capture, Utilizationand storage technology (CCUS*). ⇒ Introduction*CCUS: Technology to reuse separated and recovered CO2, or to store CO2 in the ground.
-

Sophisticating of power transmission and distribution facilities
Construction of a robust and smart backbone system that supports the shift tomain power sources for renewable energy, and the advancement of supply
and demand operations.
Construction and operation of an optimal power distribution system based on
the expansion of the introduction of distributed resources such as EVs and the
expansion of the distributed grid.



Decarbonization support for customers and local communities

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion--

Promotion of electrification: Electrification of air-conditioning, hot watersupply, kitchen, and production processes inindustrial fields, and expansion of EV use. ⇒Further promotion of electrification through the
adoption of new technologies.
Customers and local communities: Provide electricity rate menu for RE100*1,
various solution services for ZEH*2 and ZEB*3,
etc., development of distributed renewableenergy sources, use of storage batteries, anddevelopment of infrastructure to support the
expansion of renewable energy introduction.
Development of infrastructure to support the
expansion of the introduction of renewableenergy ⇒ Zero-emission local communities using
distributed renewable energy sources, hydrogen,etc., and local energy management.
*1: Renewable Energy 100, *2: Net Zero Energy House, *3: Net Zero Energy BuildingThis green project will mainly contribute to the "decarbonization of power sources" as
the Hokuriku Electric Power Group takes on the challenge of becoming carbon neutral by
2050 as a responsible energy provider that is trusted and chosen as described above.

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion

iv. Issuer's Initiatives for SDGs
The Hokuriku Electric Power Group is working to resolve the issues of the SDGs, andthis Green Bond is an initiative that is directly or indirectly related to and contributes to
the SDGs for Goal 7, Goal 12, Goal 13 and Goal 15 related to energy and climate change.
＊ The relevance of the SDGs is complementary to the issuance of green bonds, referring to Green,
Social and Sustainability Bonds: A High-Level Mapping to the Sustainable Development Goals
published by ICMA, which defines the Green Bond Principles, and is not directly related to the
purpose for the use of proceeds.

v.

About the Green Bond Framework
For the purpose of issuing green bonds, Hokuriku Electric Power Company established aframework based on GBP and GBGLs.
The net proceeds from the Green Bond are planned to be allocated to the following green
project categories, which will be managed and executed in accordance with theestablished framework.
Business related to renewable energy(Construction, installation, operation, and maintenance of power plants, facilities,
and related facilities for hydropower, wind power, and solar power, etc.)

Issuer Name: Hokuriku Electric Power Company
Framework Name: Hokuriku Electric Power Company Green Bond Framework
Name of external review organization: DNV Business Assurance Japan K.K.
Report date: October 28, 2021

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion

II. Scope and Objectives
Hokuriku Electric Power Company has commissioned DNV to conduct a pre-issuanceassessment of the "Hokuriku Electric Power Company Green Bond". The objective of the preissuance assessment of DNV is to conduct an assessment to confirm that Hokuriku ElectricPower Company Green Bond meets the criteria such as GBP, GBGLs, related technicalstandards of CBS, which will be described later, and other related standards or guidelines(see the table in (3) below), and to provide a second party opinion on the eligibility of thisGreen Bond.
DNV, as an independent external reviewer, has identified no real or perceived conflict ofinterest associated with the delivery of this second-party opinion for Hokuriku Electric Power
Company.
In this paper, no assurance is provided regarding the financial performance of the BOND,
the value of any investment in the BOND, or the long-term environmental benefits of thetransaction.
(1) Scope of review
The review assessed the following elements and confirmed their alignment with four core elements in GBP.
☒

Use of Proceeds☒

Process for Project Evaluation and Selection☒

Management of Proceeds☒

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

Consultancy (incl. 2nd opinion)☐

Certification☐

Verification☐

Rating☒Other (please specify): Providing review as a green bond issuance supporter (External Review
Division)(3) Standards/guidelines to be applied
No.

Standards/Guidelines

Scheme owner

Applied level*1*2

1.

The Green Bond Principles

International Capital Market
Association (ICMA), 2021

Apply

2.

Green Bond Guidelines

Ministry of the Environment, 2020

Apply

Climate Bonds Initiative, 2019

Refer (applicabletechnical criteria)International Capital Market
Association (ICMA), 2020

Refer

International Capital Market
Association (ICMA),2021

Refer

3.
4.
5.

Climate Bonds Standard 3.0v
(Sector Criteria)
Green and Social Bonds: A High-Level
Mapping to the Sustainable Development
Goals
Handbook Harmonized Framework for
Impact Reporting*1 Apply: Eligibility for all four core common elements to each principle or guideline was assessed.
*2 Refer: Based on the green project and implementation plans, relevant contents were partially considered.

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion

Ⅲ. Responsibilities of Hokuriku Electric Power Company and DNV
Hokuriku Electric Power Company has provided the information and data used by DNV
during the delivery of this review. DNV's second party opinion represents an independent
opinion and is intended to inform Hokuriku Electric Power Company and other interested
stakeholders in the Green Bond as to whether the established criteria have been met, basedon the information provided to us. In our work we have relied on the information and thefacts presented to us by Hokuriku Electric Power Company. DNV is not responsible for any
aspect of the selected assets referred to in this opinion and cannot be held liable if estimates,
findings, opinions, or conclusions are incorrect. Thus, DNV shall not be held liable if any of
the information or data provided by Hokuriku Electric Power Company and used as a basis forthis assessment were not correct or complete.

Ⅳ. Basis of DNV’s Opinion
To provide as much flexibility as possible for Hokuriku Electric Power Company, DNV has
adapted our green bond assessment methodologies, which incorporates the requirements of
GBP and GBGLs, to create Hokuriku Electric Power Company-specific Green Bond Eligibility
Assessment Protocol (hereinafter “DNV’s Protocol”). Please refer to Schedule-2. The Protocol
is applicable to Green Bonds under the GBP and GBGLs.
DNV's Protocol includes a set of suitable criteria that can be used to underpin DNV’sopinion. The overarching principle behind the criteria is that a green bond should “enable
capital-raising and investment for new and existing projects with environmental benefits”.
As per DNV’s Protocol, the criteria against which the Green Bond has been reviewed aregrouped under the four Principles.
•

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

•

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

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

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

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion

V. Work Undertaken
Our work constituted a high level of review of the available information, based on theunderstanding that this information was provided to us by Hokuriku Electric Power Company
in good faith. We have not performed an audit or other tests to check the veracity of theinformation provided to us. The work undertaken to form our opinion included:i. Pre-Issuance Assessment of Green Bond•

Creation of the Issuer-specific Protocol, adapted to the purpose of the Green Bond, as
described above and in Schedule-2 to this Assessment.

•

Assessment of documentary evidence provided by Hokuriku Electric Power Company
on the Bond and supplemented assessment by a comprehensive desktop research.
These checks refer to current assessment best practices and standards methodology;•

Discussions with Hokuriku Electric Power Company, and review of relevant
documentation;•

Documentation of findings against each element of the criteria.

ii. Post-Issuance Assessment of Green Bond (*not included in this report)•

Assessment of evidential documents provided by the Issuer after issuance of the
BOND, and supplemental assessment by desk review from a higher perspective;•

Interview with key personnel of the Issuer, and review of the relevant
documentation;•

Field research and inspection (if necessary);•

Review of the nominated projects and assets at the time of the post-issuance
verification (update of the details mentioned in Schedule-1);•

Document creation of post-issuance assessment result.

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion

Ⅵ. Findings and DNV’s Opinion
DNV's findings and opinions are as follows.

(1)

Use of Proceeds

DNV has confirmed that all of the net proceeds from the Hokuriku Electric Power
Company Green Bond, excluding expenses, are planned to allocated to new investment
and refinancing in the construction, installation, operation and maintenance of one ormore of the following green nominated projects that meet the following typical eligible
project categories as identified in the GBP and GBGLs.
"Renewable energy business"
Specifically, projects related to renewable energy business include the construction,
installation, operation and maintenance of projects that fall into the following three
categories which DNV reviewed.
Renewable energy business (project)
Hydropower generation businessWind power generation businessSolar power generation business

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DNV understands that hydropower, wind power and solar power are widely recognizedrenewable energy businesses.
On the other hand, consideration and measurement of incidental CO2 (GHG) emissions
due to the project implementation and to the surrounding environment and social impact
for each project.
DNV confirmed how Hokuriku Electric Power Company complies (or will comply) withrelated laws and ordinances, local regulations, and confirmed its validity through theassessment. The outline is shown below.


Hydropower Project: The nominated project has been confirmed to meet thestandard of power output (W) per / reservoir or impoundment surface area (m2) for
the timing of commercial operation against to the technical criteria of CBS. In
addition, DNV confirmed through the materials and explanations provided by
Hokuriku Electric Power Company, including the outline of the project plan, records
of compliance with applicable laws and regulations, results of environmental impact
assessment, and results of consultations with local governments, that the impact of
the construction on the surrounding environment and additional impacts on otherwater users have been assessed and are being appropriately addressed.

Wind power projects: The nominated projects are onshore or offshore wind power
projects (including related facilities) that refer to the technical criteria of the CBS.
For the selection and implementation of eligible projects, onshore wind projects
must include the construction, installation, operation and maintenance of thegenerating facility as well as dedicated transmission infrastructure, while offshore
wind projects must meet the eligibility criteria of having an additional fossil fuelbackup power source and be 100% dedicated to renewable energy for climatechange mitigation. DNV confirmed through the materials and explanations provided
by Hokuriku Electric Power Company that it has a procedure in place to ensure thatappropriate measures are taken after the assessment of the climate change
adaptation and resilience conditions, which include overcoming vulnerabilities of theasset and site due to climate change risks such as sea level rise, and taking into
account the surrounding ecosystem and local residents.



Solar power projects: The nominated projects are onshore solar power projects(including related facilities) that refer to the technical criteria of the CBS. In theselection and implementation of the nominated project, through the materials andexplanations provided by the Hokuriku Electric Power Company, DNV confirmed thatthe Hokuriku Electric Power Company confirmed that the project is connected to theexisting grid, no fossil fuel-based backup power source is attached, and theprocedures are in place to ensure that any impacts on the surrounding environment
and additional impacts on other stakeholders due to the construction are assessed
and appropriately addressed.

Common responses for each project are described in the next section "(2) Process for
Project Evaluation and selection".

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion

Use of Proceeds categories as per GBP☒

Renewable energy☐

Energy efficiency (energy saving)☐

Pollution prevention and control☐

Sustainable management of living natural
resources☐

Terrestrial and aquatic biodiversity☐

Clean transportationconservation☐

Sustainable water management☐

Climate change adaptation☐

Eco-efficient products, production☐

Green buildings with regional, national or

technologies and processes

internationally recognized standards andcertifications☐

Other (please specify):☐

It is undecided at the time of bond issuance, but is expected to be line with the GBP classificationor other eligible areas not listed in the GBP at this time.

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion(2)

Process for Project Evaluation and Selection

Through the review, DNV has confirmed that the three green nominated projects(hydropower, wind power and solar power) listed in Schedule-1 meet the targets related
to renewable energy that contribute to reducing CO2 emissions set out in the "Hokuriku
Electric Power Group 2030 Long-Term Vision" and "Hokuriku Electric Power Group
Roadmap toward Achieving Carbon Neutrality” established by Hokuriku Electric PowerGroup, and confirmed that the issuer's Finance & Accounting Dept. and relevant internal
departments will evaluate and select through appropriate prescribed processes.
DNV confirmed that Hokuriku Electric Power Company has established the following
systematic procedures for environmental and social impacts of the power generation
project.
1.

Formulation of business plans and determination of specifications for power
generation facilities

2.

Review of applicability of relevant laws and regulations

3.

Clarify the content of applicable legal and regulatory requirements andimplement compliance with them

4.

Confirmation of the effectiveness of the above implementation results

For example, if an environmental assessment is required, it will be clarified inprocedure 2 above and carried out in accordance with procedure 3.
In selecting a project, Hokuriku Electric Power Company would confirm that the project
meets the eligible criteria shown in "(3) Standards/guidelines to be applied in Section II
Scope and Objectives", and if it is judged that the negative impacts associated withproject implementation need to be considered, Hokuriku Electric Power Company will
confirm that the following initiatives to reduce environmental and social risks have been
implemented.

Appropriate procedures for obtaining equipment approvals / licenses, environmental
assessments procedures, and Hokuriku Electric Power Company’s project
introduction procedures according to country / regional / municipal requirements forthe nominated facilities and projects.

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion

Evaluation and Selection☒

Conforms to the issuer’s achievement of☒environmental contribution goals☒

Documented process to determine that projects
fit within defined categories

The project is eligible for use of proceeds☒

by green bond and transparency isDocumented process to identify and manage
potential ESG risks associated with the project

ensured.
☒The project is evaluated and selected based☐

Other (please specify):

on the published standard summary

Information on Responsibilities and Accountability☒

Evaluation / Selection criteria subject to☒external advice or verification☐

Other (please specify):

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In-house assessment

Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion(3)

Management of Proceeds

DNV confirmed how Hokuriku Electric Power Company will track and manage theproceeds from bond issuance to redemption period. DNV confirmed that Hokuriku ElectricPower Company plans to allocate the proceeds to financing (new investment andfinancing) and refinancing to the eligible projects in a timely manner after raising funds.
It was confirmed that the Finance & Accounting Dept. will manage the proceeds
allocation status for each project based on the accounting control procedures of
Hokuriku Electric Power Company. It was also confirmed that the total amount of green
eligible projects will be managed using an internal management system and dedicatedledgers so that the total amount will not fall below. The proceeds will be managed in
cash or cash equivalents until they are allocated.

Tracking of proceeds:☒

Some or all of the proceeds by green bonds that are planned to be allocated are systematicallydistinguished or tracked by the issuer.

☒

Disclosure of intended types of temporary investment instruments for unallocated proceeds☐

Other (please specify):

Additional disclosure:☐

Allocations to future investments only☒☐

Allocation to individual disbursements☒

Allocation to a portfolio of disbursements☐

Disclosure of portfolio balance of☒

Other (please specify): The amount of existing

Allocations to both existing and future
investments

unallocated proceeds

investment and new investment and loan of
the business subject to green bond allocation
will be disclosed in the annual report.

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion(4)

Reporting

DNV has confirmed that the Hokuriku Electric Power Company would report tostakeholders the specific information required by the GBP and GBGLs annually on theissuer’s integrated report or website.
These include report on the allocation status and environmental benefits described below
until the proceeds are fully allocated. For the environmental benefits reporting, Hokuriku
Electric Power Company plans to disclose the items to be described on a renewableenergy type-by-type basis, within considering its confidentiality and to the extent of
reasonably practical. Hokuriku Electric Power Company plans to disclose the estimatedvalues of the indicators until the relevant project starts operation. If a significant change
in the project appears, issuer will disclose it in a timely manner.
The main report items are expected as follows.
<Allocation status>•

Allocated amount•

Unallocated amount of proceeds•

Allocated amount as refinancing out of total amount allocated for each proceeds<Environmental Benefits>

Annual CO2 emission reduction

Annual power generation (MWh)Use of proceeds reporting:☐

Project-by-project☒

On a project portfolio basis☐

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

Information reported:☒

Allocated amounts☐

Other (please specify):☐

GB refinanced share of total investment☐

Semi-annual

Frequency:☒

Annual☐Other (please specify):

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion

Impact reporting (Environmental Benefits):☐

Project-by-project☒

On a project portfolio basis☐

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

Frequency:☒ Annual☐☐Semi-annual

Other (please specify):

Information reported (expected or ex-post):☐☒ GHG Emissions / Savings☒ Other ESG indicators (please

Energy Savings

Amount of power generated of renewable energy that was

specify):subject to allocation (MWh)Means of Disclosure☐

Information published in financial report☐

Information published in sustainability report☐

Information published in ad hoc documents☒

Other (please specify):"The Hokuriku Electric Power Group Integrated
Report" and Hokuriku Electric Power Company
website☐Reporting reviewed (if yes, please specify which parts of the reporting are subject to external
review)

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion

Assessment Conclusion
On the basis of the information provided by Hokuriku Electric Power Company and the work
undertaken, it is DNV’s opinion that the Hokuriku Electric Power Company Green Bond meetsthe criteria established in the Protocol and that it is aligned with the stated definition or
purpose of green bond within the GBP and GBGLs, which is to "enable capital-raising andinvestment for new and existing projects with environmental benefits".

DNV Business Assurance Japan K.K.

28th Oct., 2021

Mark Robinson

Naoki Maeda

Manager, Sustainability Services

Managing Director

DNV Business Assurance, Australia

DNV Business Assurance Japan K.K.

Masato Kanedome

Yasuaki Miyamoto

Project Leader

Assessor

DNV Business Assurance Japan K.K.

DNV Business Assurance Japan K.K.

About DNV
Driven by our purpose of safeguarding life, property and the environment, DNV enables organisations to advance thesafety and sustainability of their business. Combining leading technical and operational expertise, risk methodology andin-depth industry knowledge, we empower our customers’ decisions and actions with trust and confidence. We
continuously invest in research and collaborative innovation to provide customers and society with operational andtechnological foresight.
With our origins stretching back to 1864, our reach today is global. Operating in more than 100 countries, our 16,000
professionals are dedicated to helping customers make the world safer, smarter and greener.
Disclaimer
Responsibilities of the Management of the Issuer and the Second-Party Opinion Providers, DNV: The management ofIssuer has provided the information and data used by DNV during the delivery of this review. Our statement represents
an independent opinion and is intended to inform the Issuer management and other interested stakeholders in the Bond
as to whether the established criteria have been met, based on the information provided to us. In our work we haverelied on the information and the facts presented to us by the Issuer. DNV is not responsible for any aspect of thenominated assets referred to in this opinion and cannot be held liable if estimates, findings, opinions, or conclusions areincorrect. Thus, DNV shall not be held liable if any of the information or data provided by the Issuer’s management andused as a basis for this assessment were not correct or complete.

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Hokuriku Electric Power Company Green Bond Framework Eligibility Pre-Issuance Second Party Opinion

Schedule-1 Green Bond Nominated Projects
Green Project Category

Green project1 Sub Category
Hydropower generation business

Renewable energy businessWind power generation businessSolar power generation businessGreen project Outline
Construction, installation, operation and maintenance of hydropower generation
projects

Construction, installation, operation and maintenance of wind power generation
projects

Construction, installation, operation and maintenance of solar power generation
projects

1: The Hokuriku Electric Power Company Green Bond will be allocated to one or more of the projects listed in Schedule-1. The types ofprojects to be allocated will be disclosed in the annual report.

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Hokuriku Electric Power Company Green Bond Pre-Issuance Second Party Opinion

Schedule-2 Green Bond Eligibility Assessment Protocol

The following GBP-1 ~ GBP-4 are DNV's Green Bond Eligibility Assessment Protocol created for Hokuriku Electric Power Company based on
the requirements of GBP. "Document review" in the work undertaken includes internal documents of issuer and is provided by Hokuriku
Electric Power Company as evidence of eligibility judgment for DNV.

GBP-1 Use of Proceeds
Ref.

Criteria

Requirements

Work Undertaken

1aType of bond

The bond must fall in one of the following categories, as definedby the Green Bond Principles:•Green Use of Proceeds Bond•
Green Use of Proceeds Revenue Bond•
Green Project Bond•
Others• Confirmation offrameworks and otherdocuments• Interviews with
Hokuriku ElectricPower Company’s
stakeholders(hereinafter referred toas "stakeholders")

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

The cornerstone of a green bond is the utilization of theproceeds of the bond which should be appropriately described in
the legal documentation for the bond.

• Confirmation offrameworks and otherdocuments• Interviews withstakeholders

It was confirmed that the use of proceeds"proceeds from the Green Bond will be allocatedto new investment and refinancing of businesses
related to renewable energy businesses includes
the construction, installation, operation andmaintenance of renewable energy" is properly
stated in the legal documents related to thesecurities.
Specifically, it will be allocated to one or more of
the following Green Bond nominated projects.
Hydropower generation businessWind power generation businessSolar power generation business

1b

Green
Project
Categories

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DNV Findings· Green Use of Proceeds Bond

Hokuriku Electric Power Company Green Bond Pre-Issuance Second Party Opinion

Ref.

Criteria

Requirements

Work Undertaken

1c

Green
benefits

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

• Confirmation offrameworks and otherdocuments• Interviews withstakeholders

It was confirmed that the green project hasenvironmental benefits as a reduction in CO2emissions through lowering and decarbonizing
power sources using renewable energy, and its
environmental benefits was quantitatively
evaluated as the installed capacity of eachrenewable energy type or the amount of CO2
emission reduction, and would be reported
annually.

1d

Refinancing
share

In the event that a proportion of the proceeds may be used forrefinancing, it is recommended that issuers provide an estimateof the share of financing vs. re-financing, and whereappropriate, also clarify which investments or project portfolios
may be refinanced.

• Confirmation offrameworks and otherdocuments• Interviews withstakeholders

The issuer plans to use all of the proceeds for new
investments, refinancing, or both for eligible
Green Bond nominated projects included in
Schedule-1. It was confirmed that issuer plans todisclose the amount of the portion of the proceeds
allocated to refinancing through issuer’s annual
reports.

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DNV Findings

Hokuriku Electric Power Company Green Bond Pre-Issuance Second Party Opinion

GBP-2 Process for Project Selection and Evaluation
Ref.

Criteria

Requirements

Work Undertaken

2aInvestmentdecision
process

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

It was confirmed that the issuer has adocumented process that determines theeligibility of the project to be use of proceeds for
the Green Bond and that the outline is specified in
the framework.
In addition, it was confirmed through assessmentthat appropriate measures were taken or will betaken, or there is a procedure by which themeasures are implemented for the environmental
and social impact assessments specific to eachpower plant.

2bIssuer’s
environmental, social andgovernanceframework

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

• Confirmation offrameworks and otherdocuments• Interviews withstakeholders

It was confirmed that the green projects to be
implemented by the issuer is consistent with theissuer's "Hokuriku Electric Power Group 2030
Long-Term Vision" and "Hokuriku Electric PowerGroup Roadmap toward Achieving Carbon
Neutrality". In addition, it was confirmed that the
projects were implemented in a process in which
the environmental aspects were fully considered
and appropriate measures were taken based on
the domestic legal system, etc. Furthermore, it
was confirmed that the necessary investigations
and responses were properly planned. DNV
confirmed through confirmation of documents
such as frameworks and interviews withstakeholders.

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DNV Findings

Hokuriku Electric Power Company Green Bond Pre-Issuance Second Party Opinion

GBP-3 Management of Proceeds
Ref.

Criteria

3a

Tracking
procedure-1

3b

Tracking
procedure-2

3C

Temporaryholdings

Requirements

Work Undertaken

The net proceeds of Green bond should be credited to a subaccount, moved to a sub- portfolio or otherwise tracked by theissuer in an appropriate manner and attested to by a formalinternal process that will be linked to the issuer’s lending andinvestment operations for Green Projects.

• Confirmation offrameworks and otherdocuments• Interviews withstakeholders

It was confirmed that the net proceeds related
to the proceeds by the Green Bond can betraced by the issuer's internal management
system and dedicated ledgers, etc. DNV
confirmed the system practically used andrelated documents, etc., and confirmed that the
management status of the proceeds can beproved based on this.

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

• Confirmation offrameworks and otherdocuments• Interviews withstakeholders

DNV confirmed that the issuer plans to annuallyreview the balance of the Green Bond using theinternal management system and dedicatedledgers, etc. described in 3a during the period
from the Green Bond issuance to redemption.

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

• Confirmation offrameworks and otherdocuments• Interviews withstakeholders

It was confirmed through the issuer’s internalmanagement system, dedicated ledgers and theconfirmation process based on the internal
process that the balance of unallocated funds isrecognized in a timely manner.
DNV confirmed that the balance of unallocatedfunds is managed in cash or cash equivalents
through the description and verification of theframework. It was confirmed that the balance of
unallocated funds will be disclosed through thereporting of the fund allocation status.

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DNV Findings

Hokuriku Electric Power Company Green Bond Pre-Issuance Second Party Opinion

GBP-4 Reporting
Ref.

Criteria

4aPeriodical
reporting

Requirements

Work Undertaken

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

• Confirmation offrameworks and otherdocuments• Interviews withstakeholders

DNV Findings
DNV confirmed that the issuer will disclose theannual report of the Green Bond until theproceeds are fully allocated and provide
information including the allocation status andenvironmental benefits from the projects
which the proceeds have been allocated.
It was confirmed that information on thebalance of unallocated amount and theamount of the portion of the proceeds
allocated to refinancing would be disclosed.
It was confirmed that the environmental
benefits will be disclosed for the following
indicators within the scope of confidentiality
and to the extent practicable.
-Annual CO2 emission reduction-Annual power generation (MWh)Page 28of 28