Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

SECOND PARTY OPINIONSUMITOMO CHEMICAL COMPANY LIMITEDTRANSITION LOAN FRAMEWORK

Prepared by: DNV Business Assurance Japan K.K.
Location: Kobe, Japan
Date: 03 February 2022
Ref. Nr.: PRJN-333915-2022-AST-JPN

This report was prepared in the “Climate Transition Finance Model Project in
FY2021 (Investigation of ideal way of Transition Finance)” which is acommissioned project by the Ministry of Economy, Trade and Industry.

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Contents
Executive Summary

3

I. Introduction

5

II.

14

Scope and Objectives

III.

Responsibilities of Sumitomo Chemical and DNV

15

IV.

Basis of DNV’s opinion

15

V.

Work Undertaken

16

VI.

Observations

17

VII.

Assessment Conclusion

33

Schedule-1 Candidate Transition Loan Projects

35

Schedule-2 Climate Transition Finance Eligibility Assessment Protocol

36

Schedule-3 Green Loan (Transition Finance with specific use of proceeds) Eligibility Assessment
Protocol40

Schedule-4: Basic Guidelines on Climate Transition Finance Eligibility Assessment Checklist

44

Schedule-5 Eligibility Assessment for Green Loan Guidelines (Bonds with Specified Purpose forTransition Finance)

64

List of reference materials

76

Revision history
Revision
Number0

Issue Date
03 Feb 2022

Remarks
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 riskthat errors or irregularities, possibly significant, may not have been detected. Limited depth of evidence gathering including inquiry and analytical procedures andlimited 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 aperson 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 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 ordata 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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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Executive Summary
DNV Business Assurance Japan K.K. (hereinafter, "DNV") has been commissioned by
Sumitomo Chemical Co., Ltd. (hereinafter, "Sumitomo Chemical," the "fundraiser") toevaluate the eligibility of the "Sumitomo Chemical Group Transition Loan Framework(hereinafter, "framework") "and the eligibility of the transition loans (Use of Proceeds bond)to be implemented based on the framework conform with the Climate Transition FinanceHandbook (CTFH), the Basic Guidelines on Climate Transition Finance (CTFBG), the Green
Loan Principles (GLP), and the Green Loan Guidelines (GLGLs). The following is a summaryof the assessment results of each four elements indicated in CTFH and GLP.

< Climate Transition Finance Assessment results>
Element 1: Issuer (Fundraiser)’s climate transition strategy and governance
The purpose of Sumitomo Chemical's transition financing (transition loan) is to implement
the company's carbon neutral (transition) strategy for the year 2050. This transition
strategy is consistent with the Japanese government's 2050 Carbon Neutral Goal, the"Technology Roadmap for the Chemical Sector" based on a science-based concept alignedwith the Paris Agreement, and the transition pathway of the internationally recognized
Science Based Targets (SBT). Also, it contributes to the company's business transformation.
Element 2: Business model environmental materiality
The transition pathway of Sumitomo Chemical's plan relates to the materiality thatmanagement needs to address in terms of the environment, particularly in response to
climate change. In formulating the transition strategy and investment plan, several
internationally recognized future scenarios are utilized from their potential to influence
decisions on materiality.
Element 3: Climate transition strategy to be science-based including targets andpathways
Sumitomo Chemical's Transition Strategy is based on science-based targets and pathways
for transition. Using the internationally widely recognized SBT as a benchmark andconsidering society needs, Sumitomo Chemical is updating their long-term targets for GHG
emission reductions and medium-term targets for the pathway to a high level.
Element 4: Implementation transparency
In pursuing its transition strategy, Sumitomo Chemical will communicate its investment
plans appropriately directly with the lenders of the transition loans or through the loanarrangers if the loans are structured in syndication to ensure transparency possible. Since
the individual results of each investment target are aligned with the overall goal, Sumitomo
Chemical believes that the comprehensive GHG emission reduction of the entire group willbe the outcome of the transition loan and will lead to the impact of achieving carbon
neutrality. In terms of negative impacts, the environmental aspects of the project are

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compliance with national environmental laws, and the social aspects of the project are theemployment situation due to project promotion.

< Green Loan Principles Assessment results>
Principle 1: Use of Proceeds
The framework defines the use of proceeds as practically "projects for the construction of
LNG-fired power generation facilities," these types of projects are consistent with thetoward transition. The funds raised through this transition loan are appropriately planned
to be allocated to the specified projects, including refinancing. Projects that are eligible forthe use of proceeds are expected to generate a clear environmental impact in the form of
reduced GHG emissions, such as fuel conversion to LNG and the introduction of an energyefficient power generation system.
Principle 2: Process for Project Evaluation and Selection
Eligible projects are aligned with the fundraiser's corporate philosophy, materiality, carbonneutral strategy, and investment plan, and GHG emission reduction targets. In theevaluation and selection of projects, a process has been established whereby multiple
departments involved in the fundraiser's project selection process are consulted before adecision is made by management. These processes are consistent with GLP.
Principle 3: Management of Proceeds
The fundraiser plans to allocate the proceeds to new investments or refinancing of projects
that are considered eligible in a timely manner after the fundraising. The proceeds'
allocation status is distinguished between the amount allocated to the transition assets andthe amount not allocated. Each project operator manages it through the fundraiser's fundmanagement system or dedicated forms. The funds raised will be managed in cash or cash
equivalents until allocated, which is consistent with GLP.
Principle 4: Reporting
The fundraiser plans to disclose information to the lender or the public on a regularlyscheduled basis, to the extent practicable, on the status of the allocation of funds for
eligible projects and the environmental improvement benefits (group-wide GHG emission
reductions) until the funds raised are allocated, which is consistent with GLP's approach.
If there is a significant change in the progress of construction prior to the launch of theeligible project, fundraiser will disclose such change in a timely manner.
Based on an assessment of the framework and other relevant documents and information
provided by the fundraiser, DNV has confirmed that the framework meets the criteria requiredby the appropriate schemes and is eligible for transition finance. DNV also confirmed that theplanned transition loans are expected to be appropriately designed and implemented inconformance with the framework.

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I. Introductioni.

About the fundraiser
Overview
Sumitomo Chemical Co., Ltd. (hereinafter, "Sumitomo Chemical," the "Business
Operator," the "Fundraiser") is a major diversified chemical company founded in 1913
and is the core business of the Sumitomo Chemical Group, which consists of the company
and 313 affiliated companies (as of March 2021). Based on a portfolio of five business
units (Petrochemicals, Energy & Functional Materials, IT-related Chemicals, Health & Crop
Sciences, and Pharmaceuticals), the company is committed to creating next-generation
businesses by focusing on R&D and business development in four key areas (healthcare,environmental impact reduction, food, and ICT).
Sumitomo Joint Electric Power Co., Ltd. (hereinafter, "Sumitomo Kyodo Electric," "theBusiness Operator," "the Fundraiser") is an electric power company based in Niihama
City, Ehime Prefecture, and a consolidated subsidiary of Sumitomo Chemical (52.52%
shares held by Sumitomo Chemical). Sumitomo Joint Electric Power supplies electricity,
steam, and carbon dioxide gas separated and produced from the exhaust gas of thermal
power plants to Sumitomo Group-affiliated businesses operators and factories located in
Niihama and Saijo City.

Company philosophy
Sumitomo Chemical defines " promotion of sustainability" as contributing to developing asustainable society through their business and achieving sustained growth for ourcompany, which is clearly stated in the Framework of Sumitomo Chemical’s Corporate
Philosophy. With the "Sumitomo Spirit" that has been with them since our founding as
their fundamental spirit, they have set forth the basic spirit, mission, and values of
Sumitomo Chemical as Business Philosophy. In addition, they have established the Basic
Principles for Promoting Sustainability to express their thinking and commitment to thepromotion of sustainability throughout the Group.
Framework of Sumitomo Chemical’s Corporate Philosophy

From Sumitomo Chemical Annual Report 2021

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The history of Sumitomo Chemical began when gasses from a copper smelting processcaused a pollution problem, and there was an urgent need for a solution. Sumitomo
Chemical was founded to resolve this problem, using those gasses as the raw material
for fertilizer manufacturing, overcoming an environmental problem while also improving
agricultural productivity. Sumitomo Chemical's commitment to sustainability is rooted inthis founding history. In other words, the philosophy of resolving problems facing society
through its business is in the DNA of the Sumitomo Chemical Group. The Basic Principles
for Promoting Sustainability is positioned next to Sumitomo Spirit and Business
Philosophy to demonstrate the management's commitment to promoting sustainability.
Sumitomo Chemical's Basic Principles for Promoting Sustainability

From Sumitomo Chemical Sustainability Data Book 2021

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinionii.

Fundraiser’s initiatives for sustainability
Materiality for management
Sumitomo Chemical has a process for identifying material issues to be addressed basedon its corporate philosophy. In the specific identification process, issues are first identified
and organized in two dimensions: economic value (importance to the business) and social
value (importance to society), and then the Sustainability Promotion Committee (chairedby the president), which is composed of senior management, deliberates on the issues.
After deliberation, the committee categorizes materiality into two categories: MaterialIssues for Social Value Creation and Material Issues for Future Value Creation.
Climate change mitigation is the first item to be addressed in the "Contribution to reducing
environmental impact" section of the "Material Issues for Social Value Creation." Thesematerial issues were deliberated by the Management Committee and approved by the
Board of Directors in February 2019 and are being incorporated into the medium-term
management plan that started in April of the same year.

Material Issues for Sustainable Value Creation and the Foundation for BusinessContinuation

From Sumitomo Chemical Sustainability Data Book 2021

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Contributing to the achievement of the Sustainable Development Goals (SDGs)
When identifying the material issues that Sumitomo Chemical addresses as management
priorities, we referred to the SDGs as a guideline for surveying social needs and issues.
In addition, with the aim of aligning our efforts with the contribution to the achievementof the SDGs, they have set the key performance indicators (KPIs) for their material issues
for social value creation based on the SDG targets, which comprises 169 items.
Specific SDGs for Each Business Sector to Focus on

From Sumitomo Chemical Sustainability Data Book 2021

Key Performance Indicators (KPIs) for climate change mitigation
For each material issue to be addressed, Key Performance Indicators (KPIs)
common to all business activities have been established for economic and social
value. In particular, with regard to climate change mitigation, Sumitomo Chemical
has accurately grasped the accelerating trend in the world toward the realization ofcarbon neutrality and actively revised the GHG emission reduction targets set in the
mid-term management plan that started in 2019. In December 2021, they
announced a new goal of reducing GHG and a grand design (transition strategy) toachieve carbon neutrality.

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New Goal of Reducing GHG

From Sumitomo Chemical News Release (December 10, 2021)

The KPIs (GHG emission reduction targets) for climate change mitigation are expected tohelp manage the progress of internal initiatives and promote dialogue with internal andexternal stakeholders by promoting information disclosure, leading to the enhancement
and acceleration of efforts to achieve carbon neutrality.

Management System for carbon neutrality
In February 2021, Sumitomo Chemical established the Carbon Neutral Strategy Council
to clarify the management structure for formulating and promoting an integrated strategy
to achieve carbon neutrality. In addition, a Carbon Neutral Strategy Cross-functional
Team has been assigned as the secretariat to provide practical support to the Council.
Organization of Addressing Climate Change

From Sumitomo Chemical Sustainability Data Book 2021

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With this new organization of the Council and Team, the primary responsibility forformulating and promoting strategies to achieve carbon neutrality has been made clearer.
In addition, the Sustainability Promotion Committee, and the Responsible Care
Committee, which have traditionally been responsible for analysing the climate changesituation and risks, as well as for deciding and promoting material issues related to
specific responses, will support the formulation of strategies by this Council. As a result,the decision-making roles for promoting the strategy have been clarified.
Sumitomo Chemical considers climate change a pressing challenge facing society. They
are actively working to respond to risks and seize opportunities to address this issue. The
Carbon Neutral Strategy Council and the Carbon Neutral Strategy Cross-functional Team,established in February 2021, took the lead in formulating a grand design for achievingcarbon neutrality by 2050, based on the "Sumitomo Chemical Carbon Neutral Strategy
Perspectives" as described below. This grand design was published in December 2021.
From now on, they plan to promote specific initiatives based on this grand design.
Sumitomo Chemical Carbon Neutral Strategy Perspectives

From Sumitomo Chemical Sustainability Data Book 2021

Grand Design and Strategy for achieving carbon neutrality
In December 2021, Sumitomo Chemical formulated and announced a grand design,
including policies and activity targets for initiatives to achieve carbon neutrality by 2050.
The Sumitomo Chemical Group aims to reduce GHG emissions by 50% by fiscal 2030
compared to fiscal 2013 and achieve carbon neutrality by 2050. To achieve this goal, andto realize carbon neutrality that is "unique to the Sumitomo Chemical Group" as themission of a chemical company, Sumitomo Chemical has clarified its policy of promoting
two initiatives: (1) "responsibility" to bring the GHG emissions of the Sumitomo ChemicalGroup close to zero, and (2) "contribution" to global GHG reduction through the products
and technologies of the Sumitomo Chemical Group.

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In particular, about (1) "responsibility" to bring the GHG emissions of the Sumitomo
Chemical Group close to zero, Sumitomo Chemical was the first diversified chemicalcompany in the world to be certified under the SBT Initiative in 2018. And now, they
have been approved again under the "well below 2°C", which significantly increases the
GHG emissions reduction target by fiscal 2030. They promote scientific, logical, andquantitative initiatives and aim to achieve their approved target. To achieve this target,
it is important to make thorough use of Best Available Technology (BAT) and thoroughenergy efficiency. Sumitomo Chemical plans to take a variety of initiatives, including theconstruction of a liquefied natural gas (LNG) power plant at its Ehime Works and theinstallation of a high-efficiency gas turbine power generator at its Chiba Works, which are
candidates for the use of the proceeds of the transition loan. The fuel conversion to LNG
with a lower CO2 emission factor, which is the purpose of this funding, is an important
preliminary step in the grand design (transition strategy).
Sumitomo Chemical's carbon neutral strategy (main measures for the medium and long term)

From Sumitomo Chemical ESG Meeting (14 December 2021)

It is also recognized that to achieve the net-zero goal in 2050, it will be difficult to achieve
it using existing technologies alone, and innovation is necessary. Sumitomo ChemicalGroup will need to make various efforts to develop innovative technologies that contributeto Carbon dioxide Capture and Utilization (CCU) and carbon negativity and to implement
them in society. It is expected that Sumitomo Chemical will use its long-cultivatedtechnological capabilities to innovate to reduce GHG emissions and that this will be alignedwith the investment plan as a specific transition initiative that includes business
transformation.

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinioniii. About Transition Finance
Investment plan for carbon neutrality
From 2013 to 2021, Sumitomo Chemical has invested and made decisions to invest
approximately 80 billion yen in energy-saving measures at its plants and fuel conversion
from coal and heavy oil to LNG to reduce GHG emissions. In addition, they are planningto consider investing approximately 120 billion yen by 2030. The plan includes energy
savings and upgrading of production facilities at each plant, which is expected to reduce
further (or contribute to reducing) GHG emissions, chemical recycling of plastic resources,
and investment in technologies such as CO2 separation and CCU, which is a prerequisite
for future technological innovation.

Investment plan to achieve carbon neutrality (scale of investment)

From Sumitomo Chemical ESG Meeting (14 December 2021)

The Significance of Transition Finance and Sumitomo Chemical Group
Transition Loan Framework
Sumitomo Chemical aims to achieve sustainable growth in corporate value by consistently
achieving targets for financial indicators such as ROE and ROI. They set the ROE targetof over 10 percent based on the idea of contributing to the realization of a sustainable
society through their business and on their policy of implementing businesses that they
believe will make an essential contribution to solving social issues, as long as a certain
level of profitability can be expected. The D/E ratio (Interest-bearing liabilities/Total
equity) is controlled to be around 0.7 times over the medium term, taking into
consideration the need to maintain their credit rating, which allows flexible financing.

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Net present value (NPV), internal revenue rate (IRR), payback period, etc., aretraditionally used as economic indicators in individual investment decisions (e.g., newcapital expenditures). Since fiscal 2019, to contribute to the creation of a sustainable
society, we have been calculating an economic indicator that reflects our internal carbon
pricing (10,000 yen per ton) for any project that is expected to increase or decrease CO2
emissions, which is used in our investment decision-making.
Considering these factors, the financing through transition finance will promote active
investment in facilities aimed at reducing GHG emissions, which will contribute to the
expansion and strengthening of the business and, as a result, improve the financial baseof Sumitomo Chemical, which is consistent with the financial strategy described above.
The transition loan in accordance with the "Sumitomo Chemical Group Transition Loan
Framework" is consistent with the Group's strategy, which aims to both "responsibility"
for reducing GHG emissions to near zero and "contribute" to the realization of carbon
neutrality through its business activities, on the premise that Sumitomo Chemical
maintains a sound financial base.

Company name: Sumitomo Chemical Co., Ltd. and Sumitomo Joint Electric Power Co., Ltd.
Framework Name: Sumitomo Chemical Group Transition Loan Framework
Name of external review body: DNV Business Assurance Japan K.K.
Date of report: 03 February 2022

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II.

Scope and Objectives

Sumitomo Chemical has commissioned DNV to assess the "Sumitomo Chemical Group
Transition Loan Framework" and the transition loans to be made under the framework. Our
objective has been to implement an assessment on whether Sumitomo Chemical's transitionloan meets the criteria established on CTFH, CTFBG, GLP, and GLGLs to provide a second party
opinion on the eligibility of the transition loan.
DNV, as an independent external reviewer, has identified no real or perceived conflict ofinterest associated with the delivery of this second-party opinion for Sumitomo Chemical.
In this report, no assurance is provided regarding the financial performance of Sumitomo
Chemical's transition loan, the value of any investments, or the long-term environmental
benefits of the transaction.
(1) Scope of review*
The review assessed the following elements and confirmed their alignment with the gist of GBP/GLP:☒.

Use of Proceeds☒.

Process for Project Evaluation and Selection☒.

Management of Proceeds☒.

Reporting*The scope of review is to be applied as a part of the evaluation of the transition finance with use of proceeds*The four disclosure elements of CTFH and CTFBG are included in the scope of review(2) Role(s) of review provider☒

Consultancy (incl. 2nd opinion)☐

Certification☐

Verification☐

Rating☐Other (please specify):(3) Standards/Guidelines to be applied
No.

Standards/Guidelines

Scheme Owner

1.

The Climate Transition Finance Handbook (CTFH)*1

International Capital Markets Association (ICMA), 2020

2.

Basic Guidelines on Climate Transition Finance(CTFBG)*1

Financial Services Agency of Japan, Ministry of Economy,
Trade and Industry of Japan and Ministry of Environment ofJapan, 2021

3.

Green Loan Principles (GLP)*2

Loan Market Association (LMA) and others, 2021

4.

Green Loan Guidelines (GLGLs)*2

Ministry of the Environment, 2020

*1 Climate Transition: The concept of climate transition focuses principally on the credibility of an issuer’s climate change-related
commitments and practices (Quoted and edited from CTFH and CTFBG)*2 It confirms compliance with the four core elements (use of proceeds, process for project evaluation and selection, management ofproceeds, and reporting) that must be met when implementing as a bond/loan that meets the four elements of transition and has a specificuse of proceeds (quoted and edited from CTFBG).

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III.

Responsibilities of Sumitomo Chemical and DNV

Sumitomo Chemical has provided the information and data used by DNV during the deliveryof this review. DNV's second party opinion represents an independent opinion and is intended
to inform Sumitomo Chemical and other interested stakeholders in Sumitomo Chemical'stransition loan as to whether the established criteria have been met, based on the information
provided to us. In our work, we have relied on the information and the facts presented to us
by Sumitomo Chemical. DNV is not responsible for any aspect of the nominated projects andassets referred to in this opinion and cannot be held liable if estimates, findings, opinions, orconclusions are incorrect. Thus, DNV shall not be held liable if any of the information or data
provided by Sumitomo Chemical's management and used as a basis for this assessment were
not correct or complete.

IV. Basis of DNV’s opinion
To provide as much flexibility for the fundraiser, Sumitomo Chemical and Sumitomo Joint
Electric Power as possible, we have adapted our Sumitomo Chemical's transition financeassessment methodologies, which incorporates the requirements of the CTFH, CTFBG, GLP,
and GLGLs, to create a Sumitomo Chemical's Transition Finance Eligibility Assessment Protocol(hereinafter, "Protocol"). Please refer to Schedule-2. The Protocol is applicable to Sumitomo
Chemical's transition loan under the CTFH, CTFBG, GLP, and GLGLs.
Our Protocol includes a set of suitable criteria that can be used to underpin DNV's opinion. The
overarching principle behind the criteria is that a Climate Transition Finance should "provide
an investment opportunity with transparent sustainability credentials" and" enable financing
and investment for new or existing projects that provide environmental benefits."
As per our Protocol, the criteria against Sumitomo Chemical's transition loan to be reviewed
is grouped into the following elements, represented by the CTFH, CTFBG, GLP and GLGLs:(1) Four common components of CTFH and CTFBG (disclosure elements)Element 1: Issuer (Fundraiser)’s climate transition strategy and governance
The financing purpose should be for enabling a fundraiser’s climate change strategy.

Element 2: Business model environmental materiality
The planned climate transition trajectory should be relevant to the environmentallymaterial parts of the fundraiser’s business model.

Element 3: Transition is science-based including targets and pathway
Fundraiser’s climate strategy should reference science-based targets and transition
pathwaysElement 4: Implementation transparency

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Market communication in connection with the offer of a financing instrument which
has the aim of funding the fundraiser’s climate transition strategy should also provide
transparency of underlying investment program(2) Four common components of a transition loan with use of proceedsPrinciple 1: Use of Proceeds
The Use of Proceeds criteria are guided by the requirement that a fundraiser oftransition finance with use of proceeds must use the funds raised to finance eligible
activities. The eligible activities should produce clear environmental benefits.

Principle 2: Process for Project evaluation and selection
The Project Evaluation and Selection criteria are guided by the requirements that afundraiser of a transition finance should outline the process it follows when
determining the eligibility of an investment using transition finance proceeds andoutline any impact objectives it will consider.



Principle 3: Management of Proceeds
The Management of Proceeds criteria is guided by the requirements that transition
finance 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 4: Reporting
The Reporting criteria are guided by the recommendation that at least Sustainability
Reporting to the bond investors and loan lenders should be made of the use offinance proceeds, and that quantitative and/or qualitative performance indicators
should be used, where feasible.



Other: Review (External Review)
In cases where the fundraiser judges that an objective evaluation of its responses to
Principles 1 through 4 in (1) and (2) above is necessary, it is considered useful toutilize a review by an external organization. Reviews include "second party opinion,""verification," "certification," and "rating."

V. Work Undertaken
Our work constituted a comprehensive review of the available information, based on theunderstanding that this information was provided to us by the issuer in good faith. We havenot performed an audit or other tests to check the veracity of the information provided to us.
The work undertaken to form our opinion included:i. Pre-funding assessment

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Creation of a Sumitomo Chemical-specific Protocol, adapted to the purpose of theSumitomo Chemical's transition finance, as described above and in Schedule-2 to thisassessment;

Assessment of documentary evidence provided by Sumitomo Chemical on the Sumitomo
Chemical's transition finance and supplemented assessment by comprehensive desktop
research. These checks refer to current assessment best practices and standards
methodology;Discussions with Sumitomo Chemical, and review of relevant documentation;

Documentation of findings against each element of the criteria.

ii. Post-funding assessment (*not included in this report)
 Interviews with Sumitomo Chemical's managers and review of relevant document control
 Field research and (if necessary) Document creation of post-issuance assessment results

VI. Observations
DNV’s findings and opinion are as described in (1) and (2) below:(1) Four common components of CTFH and CTFBG (disclosure elements)Element 1: Issuer (Fundraiser)’s climate transition strategy and governance
DNV has confirmed that the purpose of Sumitomo Chemical's transition financing(transition loan) is to realize the company's carbon neutral strategy (i.e., Climate
Transition Strategy). Sumitomo Chemical's transition strategy is consistent with theJapanese government's 2050 Carbon Neutral Goal and the "Technology Roadmap for theChemical Sector," a science-based concept consistent with the Paris Agreement and isalso an initiative that will contribute to the transformation of the Sumitomo Chemical'sbusiness. Details are as follows:

Governance (Organization for the advancement of carbon neutrality): DNV has
confirmed that Sumitomo Chemical has established a Carbon Neutral Strategy Council anda Carbon Neutral Strategy Cross-functional Team to strengthen its sustainability
promotion system to achieve carbon neutrality. As a result of this organizational reform,a system for monitoring climate change efforts and governance (organizational structure)for evaluation and management of these efforts were established. Among the newPage of 17 of 76

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management structures, the Carbon Neutral Strategy Cross-functional Team has been
established to ensure that the board of directors' decisions are appropriately implemented.
The team is composed of experts from across the Sumitomo Chemical Group who are
equipped with mobility and execution capabilities.
Organization for the advancement of carbon neutrality

From Sumitomo Chemical ESG Meeting (14 December 2021)

Strategy for carbon neutrality (transition): As described above, Sumitomo Chemical
has confirmed that its transition strategy initiatives, linked to its management strategy
and business plan (investment plan), are managed by a highly effective management
system. They have a system to formulate and review their carbon neutral (transition)
strategy, using "Sumitomo Chemical Carbon Neutral Strategy Perspectives" as a guideline.
Climate Change-related risks and opportunities: About the risks and opportunities
related to climate change issues, DNV confirmed the idea of understanding and analyzing
the magnitude, scope of impact, and items, and then promoting the transformation ofbusiness models in a way that contributes to the realization of the Paris Agreement.
Regarding risks, Sumitomo Chemical is mainly implementing measures to achieve Science
Based Targets (SBT). With regard to opportunities, we are promoting the development of
products and technologies of the Sumitomo Chemical Group that contribute mainly to thefield of climate change as "Sumika Sustainable Solutions (SSS)" under our certification
system and focusing on their dissemination to markets and customers.

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Climate Change-related risks and opportunities

From Sumitomo Chemical Sustainability Data Book 2021

Scenarios related to climate change: DNV has confirmed that Sumitomo Chemical has
selected multiple scenarios related to climate change and is considering the impact ofclimate change on their business and management and predicting changes in the businessenvironment due to climate change impacts and long-term policy trends response to
climate change. At present, Sumitomo Chemical is conducting scenario analysis from bothrisk and opportunity perspectives using the 1.5°C (Reduced GHG Emissions) scenario andthe 4°C (Business as Usual) scenario and is continuously examining possible situations,assessing the impact on their business, and considering actions to be taken in the future.
Transition pathway: DNV has confirmed that Sumitomo Chemical's transition pathway
is consistent with the "Technology Roadmap for the Chemical Sector on Transition
Finance" (hereinafter "Chemical Sector Roadmap") published by the Ministry of Economy,
Trade and Industry in December 2021, in addition to the transition pathway along withthe benchmark SBTi.
The Chemical Sector Roadmap can be used as a reference for companies in the domestic
chemical industry as they consider climate change measures using transition finance. It
mainly deals with technologies for low-carbon and decarbonization in the chemical field,
and GHG reduction scenarios have been developed for naphtha cracking, feedstock
conversion, final products, recycling, inorganic chemistry, and steam and electricity onsite use, considering the timing of their practical application. Sumitomo Chemical Group

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is promoting fuel conversion in the relevant manufacturing areas, collaboration withcustomers and local governments for recycling in the supply chain, and research anddevelopment for feedstock conversion, which is consistent with the timing of eachmeasure and the level of reduction targets in the relevant areas of the Chemical Sector
Roadmap. This is consistent with the timing of actions and the level of reduction targets
in the relevant areas of the Chemical Sector Roadmap.
Environmental and social impacts other than climate change: DNV has confirmedthat Sumitomo Chemical has appropriately considered possible environmental and social
impacts other than climate change within their existing framework in implementing theirtransition strategy. In particular, about the construction project of LNG-fired power
generation facility, which is the subject of the transition loan, DNV has confirmed theconsistency of the project with the Sumitomo Chemical Group's policy on energy
conversion, as well as the compliance with the code of conduct and policies and guidelines
established by each of the Group companies. In addition, Sumitomo Chemical complies
with environmental laws and regulations, considering regional characteristics, andimplements measures to reduce environmental risks, such as conducting environmental
impact assessments, as necessary, when negative impacts are foreseen because of project
implementation. DNV also confirmed that there will be no significant negative impact on
employment status because of the project.
Responding to significant changes in the external environment: DNV confirmed that
Sumitomo Chemical sees policy developments such as the carbon tax in Japan and Carbon
Border Adjustment Mechanism within the EU as significant changes in the external
environment in terms of carbon-neutral related policies. To address these changes,
Sumitomo Chemical is introducing an internal carbon pricing system (10,000 yen per ton)in 2019 and plans to calculate this new economic index to make investment decisions in
response to anticipated future changes in the external environment. DNV confirmed that
Sumitomo Chemical has established a system that enables it to appropriately change andmodify the content of its transition strategy according to the situation.

 Element 2: Business model environmental materiality: DNV confirmed that the
trajectory of Sumitomo Chemical's planned transition relates to an essential part of thefundraiser's business model in terms of the environment, particularly in addressing
climate change. In addition, Sumitomo Chemical has considered several future scenariosthat may affect its current judgment on material items. The details are as follows.

Environmental material issues (materiality): Sumitomo Chemical has identified
climate change mitigation, in the broad sense of the term, as a material issue to reduce
environmental impact, and has positioned it as a core issue. Sumitomo Chemical has
identified "contribution through products and technologies," "efficient use of energy andresources," and "contribution to the recycling of plastic resources" as environmental

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

material issues other than climate change response and has decided to address them ascritical management issues that will contribute to the transformation of its businessactivities.

Climate change-related scenario: Sumitomo Chemical expressed its support for the
TCFD recommendations as soon as they were released in June 2017 and has continued
to disclose information in accordance with those recommendations. In disclosing thestrategies suggested in the TCFD recommendations, multiple climate scenarios have beenused for analysis, with consideration of regional and industry characteristics. Initially,
Sumitomo Chemical considered the IEA's WEO New Policy Scenario (4°C scenario) andthe 450 Scenario (2°C scenario), but after the launch of the IPCC's 1.5°C Special Report,
they revised their plan from a 2°C scenario to a 1.5°C scenario. At present, they are
analyzing the "1.5°C (Reduced GHG Emissions) scenario", the "4°C (Business as Usual)scenario", and the "Common for All Scenarios," which is a situation that can be assumed
in both scenarios, from the perspective of both risks and opportunities, and considering
the impact on our business and future actions to be taken. DNV confirmed that Sumitomo
Chemical continues to reevaluate and disclose information, updating its scenario analysis
to current world trends.

Element 3: Science-based climate transition strategies, including goals andpathways
DNV has confirmed that Sumitomo Chemical's transition strategy is based on sciencebased goals and pathways for transition. Details are as follows:

SBTi Validation Initiatives: Sumitomo Chemical has set long-term goals that areconsistent with the goals of the Paris Agreement and reasonable medium-term goals thatare on track, and these meet the approval criteria and recommendations of Science-Based
Targets initiative(SBTi). Sumitomo Chemical Group is the first diversified chemicalcompany to obtain the approval of SBT in 2018. In addition, in the December 2021
renewal of validation, the Sumitomo Chemical Group obtained a new validation
corresponding to the well-below 2°C target for Scope 1+2 (SBTi Version 4.2). As for Scope
3, a supplier engagement target was initially upgraded to a numerical target at thevalidation renewal. In addition, GHG reduction for Category 1 (Purchased goods andservices) and Category 3 (Fuel- and energy-related activities not included in Scope 1 and2), which account for more than two-thirds of the Sumitomo Chemical Group's Scope 3
GHG emissions.

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

New targets for GHG emission reductions

From Sumitomo Chemical ESG Meeting (14 December 2021)

GHG Emission Reduction Targets Certified under the Science Based Targets initiative (SBTi)

From Sumitomo Chemical Sustainability Data Book 2021

Medium- to Long-Term GHG Reduction Targets: Sumitomo Chemical considers SBTi
certification an important management initiative to achieve carbon neutrality. They newly
set the existing GHG reduction targets as absolute values for all of Scope 1, 2, and 3 at
the timing of this validation renewal. DNV has confirmed that each target is quantitatively
measurable based on consistent measurement methods.

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Sumitomo Chemical's GHG reduction targets
Group Scope1+2

Scope 3 of the group*1

Medium-termtargets(2030 target)

50% reduction compared to
FY201336% reduction compared to
FY2020*2

14% reduction compared to
FY2020*2

Long-term goals(2050 target)

Net zero achieved

Working to achieve carbon
neutrality in 2050

*1: limited to GHG emissions from Category 1 and Category 3 as defined in the GHG Protocol*2: Updated and latest SBTi certification objectives

 Element 4: Implementation Transparency
DNV confirmed that as Sumitomo Chemical pursues its transition strategy, it expects thatits investment plans will be communicated appropriately with the lenders of the transitionloans directly or through the loan arrangers if the loans are structured in syndication toensure as much transparency as possible.

Investment Plan: As mentioned above, Sumitomo Chemical has invested approximately
80 billion yen from 2013 to the present in its overall carbon neutral (transition) strategy
and is considering investing approximately 120 billion yen by 2030. Primary investment
targets are expected to include energy-saving measures and upgrading of production
facilities at factories to reduce GHG emissions, fuel conversion from coal and heavy oil to
LNG, chemical recycling of plastic resources, as well as research and development of CO2
separation and CCU technology, which is a prerequisite for future technological innovation.
Investment plans may include research and development directly related to carbon
neutrality and M&A and dismantling and removal costs of old facilities that indirectly
contribute to carbon neutrality. The basic idea is that necessary costs and investments
will be factored in as much as possible. DNV confirmed that the transition loan identifies
the boundary for the use of funds (construction projects of LNG-fired power generation
facility in Ehime and Chiba), making it possible to distinguish between expenditures fornormal business activities and expenditures related to the transition.
Outcomes and Impacts: Sumitomo Chemical does not consider the direct deliverables
and results (outputs) obtained from the individual projects that make up the investment
plan fragmented, but rather the Sumitomo Chemical Group's comprehensive approach tothe investment plan. In other words, it was confirmed that the individual results of each
investment target are consistent with the overall goal, and that the reduction of GHG
emissions of the entire group will lead to the impact of achieving carbon neutrality as an
outcome. DNV has also confirmed that they can adequately address negativeenvironmental impacts in the first instance by complying with domestic laws such as the

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Environmental Impact Assessment Law. In terms of considering " just transition" in theinvestment plan, they especially took the negative impact on employment into account.
In this transition loan, DNV confirmed that the project implementation would not cause
any particular impact on employment status.

(2) Four common elements of a transition loan with use of proceeds
 Principle 1: Use of Proceeds
DNV has confirmed that the funds to be procured by the Sumitomo Chemical Groupthrough the Transition Loan will be used for the construction, installation, operation, andmaintenance of Project 1: "Construction Project of LNG-Fired Power Generation Facility in
Niihama City, Ehime Prefecture" (Sumitomo Kyodo Electric Power) and Project 2:"Construction Project of LNG-Fired Power Generation Facility in Sodegaura City, Chiba
Prefecture" (Sumitomo Chemical). It is planned that the procured funds will be used for
new financing and/or refinancing of these subject projects. Details are as follows:

Overview of the target project: This project is to promote thorough energy efficiency
and low-carbon fuel use. To supply steam for the processes required in the production
process of the chemical plant, a cogeneration system that can efficiently use energy is
being constructed in the chemical plant to improve the overall thermal efficiency. In
addition, a combined cycle power generation system with excellent power generation
efficiency has been adopted to save energy and reduce CO2 emissions. The fuel to be used
has been changed from coal, heavy oil, and petroleum coke to LNG, and DNV has
confirmed that the project is eligible for the use of Climate Transition Finance funds
because of the high CO2 emission reduction effect of the production activities and theconsideration of measures against negative impact on the environment and society.

Contribution to the reduction of GHG emissions by two nominated projects

From Sumitomo Chemical Sustainability Data Book 2021

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Eligible projects details＜Project 1>
Project nameConstruction Project of LNG-Fired Power Generation Facility in Niihama
City, Ehime Prefecture

Project overview• Sumitomo Kyodo Electric Power will build the Niihama North Thermal
Power Plant in the Niihama district of Sumitomo Chemical's Ehime
Works, using liquefied natural gas (LNG) and effective use of byproducts gas (hydrogen) generated in the production process ofchemical plants. They will combine the power generation equipmentwith cycle power generation, which has excellent energy
conservation and CO2 reduction efficiency.
• A new LNG terminal (not covered by this financing) will be
constructed within the Ehime Works in conjunction with this project.
Introducing the LNG fuel supply route into the Ehime Works will shift
from existing fuels with high CO2 emission factors. In addition to fuelconversion, the excess low-pressure steam generated during thepower generation process will be effectively used in the chemicalplant.

Construction of Niihama North Thermal Power Station (Sumitomo Joint
Electric Power Co., Ltd., 6 February 2018)
Location

5-1 Sobai-cho, Niihama City, Ehime Prefecture (Niihama District,
Ehime Works, Sumitomo Chemical)

Businesses/Fundraisers
Type of prime mover

Sumitomo Joint Electric Power Co., Ltd.
LNG-fuelled gas turbines and steam power (combined cycle power
generation system)

Equipment output

Power generation: Maximum 150,000 kW (50,000 kW x 3 trains)
Steam: 35tonnes/hour x 3 trains

Planned start ofAutumn 2022

operations
Total investment

Approx. 25 billion yen (North thermal power station only, not including
peripheral equipment)

Planned amount andApprox. 8 billion yen (March 2022)

timing of funding

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Allocation plan for the

The approximately 8 billion yen raised will be repaid (refinanced) in

project

2021 against the entire bridge loan of the same amount already raised.
The difference between the total investment amount and thefundraising amount, approximately 17 billion yen, will be funded fromcash on hand.

Finance period

9 years

Projected emission

6510,000 tonnes/year

reductions from covered• Sumitomo Joint Electric Power is expected to reduce CO2 emissions

projects

by switching from coal and heavy oil to LNG.
• The Ehime Works is expected to reduce CO2 emissions by converting
the fuel used in the Works from kerosene, heavy oil, LPG, etc. to
LNG.

Counteracting negative

As part of the environmental assessment for the construction of the

impacts on the

power generation facility, the following issues were assessed during

environment and society

the construction period and after the start of operation: (a) air quality,(b) noise, vibration, and low-frequency sound, (c) white smoke fromthe cooling tower, (d) water quality, and (e) ecosystem of terrestrial
and marine animals and plants. The results show that there will belittle impact on the environment.

＜Project 2>
Project nameConstruction Project of LNG-Fired Power Generation Facility in
Sodegaura City, Chiba Prefecture

Project overview

At Sumitomo Chemical's Chiba Works, the existing petroleum coke
power generation facility will be discontinued, and a new, highly
efficient combined cycle power generation facility will be built using
LNG as fuel. In addition to fuel conversion, the excess low-pressure
steam generated during the power generation process will beeffectively used in the chemical plant.

Location

2-1 Kitasode, Sodegaura, Chiba (in the Chiba Plant of Sumitomo
Chemical)Businesses/Fundraisers
Type of prime mover

Sumitomo Chemical Co., Ltd.
LNG-fuelled gas turbines and steam power (combined cycle power
generation system)

Equipment output

Power generation: over 45,000 kW
Steam: over 80 tonnes/hour

Planned start ofAutumn, 2023

operations
Total investment

Approx. 14.5 billion yen (of which approx. 3 billion yen is subsidised)

Planned amount andApprox. 10 billion yen (autumn 2022)

timing of funding
Allocation plan for the

Approximately 10 billion yen of the funding will be used to refinanceproject

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

spent - approximately -0.6 billion yen in subsidies) that has alreadybeen spent (funded by existing loans) between 2021 and 2022. The
remaining 8.6 billion yen will be managed as unappropriated funds andwill be used for future project expenses.
Finance period

Around 10 years

Projected emission

240,000 tonnes/year

reductions from covered• CO2 emissions are expected to be reduced by converting the fuelprojects

used at the Chiba Works (including Koei Chemical, an adjacent groupcompany) from petroleum coke to LNG.
• The project is expected to improve the overall power generation
efficiency and reduce CO2 emissions by introducing gas turbinesinstead of steam turbines for more efficient power generation.

Counteracting negative• No environmental assessment is required because the project scale

impacts on thedoes not reach the scale subject to the Environmental Impact

environment and society

Assessment Law (Ministry of Economy, Trade, and Industry) andChiba Prefecture Environmental Impact Assessment Ordinance.
• However, the project is subject to the agreement on environmental
preservation concluded between Chiba Prefecture and Sodegaura
City. Prior consultation was conducted in accordance with theprovisions of Article 10 of the agreement, and the agreement wasapproved by the name of the Governor of Chiba Prefecture on
December 10, 2021.

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Lock-in measures for the projects: Sumitomo Chemical recognizes that as aprecondition for the continued operation of these power generation facilities, considerationmust be given to not prolonging the life of the LNG usage. To cope with this, they are
considering co-firing hydrogen with LNG in the medium term, extracting hydrogen fromammonia, and adapting it in the long term. It is recognized that there are issues to beaddressed in both measures, such as progress in technological development as fuelutilization and active distribution, and it is planned that these will be explored and widely
deployed.
Hydrogen is recognized as a good match for natural gas. Compared to natural gas,hydrogen has the following combustion characteristics mainly: (1) lower calorific value,(2) faster combustion speed, and (3) higher adiabatic flame temperature. From this, it isrecognized that technical issues are to be addressed, such as the occurrence of local hot
spots due to high flame temperatures and the need to control thermal NOx generation
when utilizing conventional LNG gas turbines. At the stage of the demonstration
experiment, two main areas need to be modified to co-fire hydrogen in an LNG-fired gas
turbine. The first is that the gas compressor needs to be enhanced to obtain the sameamount of heat from hydrogen, which has less than 1/3 the calorific value per unit volumeof LNG. The other is that the fast combustion speed of hydrogen makes the area aroundthe burner hotter (possibly causing a backfire), so the specifications of the combustion
cylinder need to be changed. As a solution to both issues, DNV confirmed that there aresupported models available from overseas manufacturers and that domestic
manufacturers have completed development and are in the process of commercializing
some of their products.

 Principle 2: Process for Project Evaluation and Selection
Through our review, DNV has confirmed that the two nominated projects mentioned
above (construction project of LNG-fired power generation facility) are compatible withthe efforts by the Carbon Neutral Strategy Council and the Carbon Neutral Strategy Crossfunctional Team, which formulate and promote strategies to achieve carbon neutrality in
2050 for the Sumitomo Chemical Group and that the projects are compatible with theGroup's medium- and long-term GHG reduction targets.
In evaluating and selecting projects, the Responsible Care Department, and the Production
Engineering Department, which are in charge of environmental and technologicalinitiatives toward carbon neutrality, such as fuel conversion and energy conservation that
led to GHG emission reduction, discuss candidate projects. In selecting projects, they
check for consistency with the Sumitomo Chemical Group's energy conversion policy andcheck for compliance with the code of conduct and policies and guidelines established byeach Group company. Furthermore, in addition to complying with environmental laws andregulations that consider regional characteristics, they implement measures to reduce
environmental risks, such as conducting environmental impact assessments as necessary
when negative impacts are foreseen because of project implementation.

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

DNV confirmed that the Finance Department, which is ultimately responsible for funding,has confirmed the project's conformity and that it will be approved through theappropriate internal processes.

Evaluation and selection☒.

Conforms to the issuer’s achievement of☒.

Documented process to determine that projects

environmental contribution goals☒.

fit within defined categories

The project is eligible for use of proceeds☒.

Documented process to identify and manage

by green bond and transparency ispotential ESG risks associated with the project

ensured.

☐The project is evaluated and selected☐

Other (please specify):

based on the published standard summary

Information on Responsibilities and Accountability☒.

Evaluation / Selection criteria subject to☒.

In-house assessment

external advice or verification☐

Other (please specify):

 Principle 3: Management of Proceeds
DNV has confirmed that Sumitomo Chemical plans to allocate the funds to new financing
or refinancing of eligible projects in a timely manner after the funding. Also confirmed that
Sumitomo Chemical will be able to track and manage the funds appropriately until theredemption of the transition loan.
Specifically, the status of expenditures for each project will be managed by a core systemthat centrally controls the business operations of Sumitomo Chemical. As for project 1 will
use the entire amount to repay the bridge loan that the project had raised in 2021 on thesame day of loan disbursement (hence no look-back period has been set).
For Project 2, confirmed that the plan is to manage the actual expenditures managed by
the core system using a particular form to ensure that the total amount of eligible projects
is not less than the amount of funds raised. The unallocated funds 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): Unallocated proceeds are managed in cash or cash equivalents

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

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):

Allocations to both existing and future
investments

unallocated proceeds

 Principle 4: Reporting
DNV has confirmed that the fundraiser plan to regularly disclose information on the"allocation status" and "environmental impacts" of eligible projects to the lenders or the
public until all funds are allocated. The details and method of disclosure will be considereddepending on the situation.
Confirmed that Sumitomo Chemical plans to report the status of fund allocation directly
to the lenders at least once a year or disclose the status of fund allocation throughSumitomo Chemical's website, integrated reports, or other disclosure documents until all
the raised funds are allocated to eligible projects. Any major changes in status after allproceeds have been allocated to the eligible projects will be reported to the lenders as
appropriate.
About the effects of environmental improvements, as part of the environmental
improvement activities of the entire consolidated Sumitomo Chemical Group, agovernance system is in place to monitor the amount of GHG reductions (Scope 1+2 andScope 3) in each fiscal year to achieve the Group's overall GHG reduction targets. DNV
confirmed that Sumitomo Chemical would disclose information on GHG emissions by scope,
covering the Sumitomo Chemical Group, at least once a year on its website, in its
integrated report "Sumitomo Chemical Report" and "Sustainability Data Book," etc., to theextent practicable. Even after all the raised funds have been allocated to the eligible
projects, they plan to disclose promptly any significant changes in the progress ofconstruction even before the power generation facilities are operational.

The main reporting items are as follows.
<Status of appropriation of funds>•

Amount of funds allocated•Amount of unappropriated funds raised•

Amount of funds raised to be used for refinancing

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion<Environmental benefits>•

Annual greenhouse gas emissions of Sumitomo Chemical Group on aconsolidated basis (by scope)

Use of Proceeds reporting:☒

Project-by-project☐

On a project portfolio basis☐

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

Percentage of the total investment amountInformation reported:☒☐

Allocated amounts

that is used for transition financing
Other (please specify):

Frequency:☒

Annual☐Other (please specify):☐

Semi-annual

Impact reporting (Environmental Impact):☐

Project-by-project☐

Project-by-project☐

Linkage to individual bond(s)☒Sumitomo Chemical Group unit

Frequency:☒

Annual☐Other (please specify):☐

Semi-annual☐

Energy savings

Information reported (expected or ex-post):☒

GHG Emissions / Savings☐

Other ESG indicators (please
specify):

Means of Disclosure☒

Information published in sustainability report☐

Other (please specify):☐

Information published in financial report☐

Information published in ad hoc documents☐

Reporting reviewed (if yes, please specify which parts of the reporting are subject to external(Integrated Report)

review)

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

 Other: Review (External Review)
Sumitomo Chemical uses an external review by DNV to determine transition loans'eligibility and increase objectivity. DNV assessed the "Sumitomo Chemical Transition Loan
Framework" and the two nominated projects to be funded by this transition loan to confirm
that they conform with all the CTFH, CTFBG, GLP, and GLGLs, and provided a second party
opinion on their eligibility. DNV, as an independent external review organization, has nointerest in the facts or perceptions of Sumitomo Chemical in providing a second party
opinion.

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

VII.

Assessment Conclusion

Based on the information provided by Sumitomo Chemical and the work undertaken, it is
DNV's opinion that Sumitomo Chemical's framework and transition finance executed by
the framework meets requirements in the eligibility assessment protocol and areconsistent with the definition and purpose of Climate Transition Finance, which is to"provide an investment opportunity with transparent sustainability credentials" and"enable financing and investment for new or existing projects that provide environmental
benefits."

DNV Business Assurance Japan K.K.

03 February 2022

Mark Robinson

Naoki Maeda

Manager, Sustainability Services

Managing Director

DNV Business Assurance, Australia

DNV Business Assurance Japan K.K.

Masato Kanedome

Koichiro Tanabe

Project Manager

Lead Assessor

DNV Business Assurance Japan K.K.

DNV Business Assurance Japan K.K.

Takeshi Katori
Technical Assessor
DNV Business Assurance Japan K.K.

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion
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 We continuously invest in research andcollaborative innovation to provide customers and society with operational and technological foresight.
With our origins stretching back to 1864, our reach today is global. Operating in more than 100 countries, our 16,000
professionals are dedicated to helping customers make the world safer, smarter and greener.

Disclaimer
Our statement represents an independent opinion and is intended to inform the Issuer management and the SecondParty Opinion Providers, DNV: The management of Issuer has provided the information and data used by DNV during thedelivery 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, basedon DNV: The management of the Issuer has provided the information and data used by DNV during the delivery of thisreview. Our statement represents an independent opinion and is intended to inform the Issuer management and otherinterested stakeholders in the Bond as to whether the established criteria have been met, based on the information
provided to us. In our work we have relied on the information and the facts presented to us by the Issuer. DNV is not
responsible for any aspect of the nominated assets referred 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 theIssuer's management and used as a basis for this assessment were not correct or complete

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Schedule-1 Candidate Transition Loan Projects
The projects listed in the table are candidate eligible projects that have been assessed for eligibility at the time of the pre-financing assessment.
Under the Transition Loan Framework, loans will be made exclusively to these eligible project candidates and will be reported in the prefinancing or post-financing reporting.
Project nameEligible project categories

1)

Project for construction of
LNG-fired power
generation facilities in
Niihama, Ehime
Prefecture• Fuel conversion frompetrochemical-derived fuelssuch as coal and heavy oil to
LNG• Increased efficiency of
combined-cycle power
generation (including heatutilisation)

2)

Project for construction of
LNG-fired power
generation facilities in
Sodegaura, Chiba
Prefecture• Fuel conversion from petroleum
coke to LNG• Increased efficiency of
combined-cycle power
generation (including heatutilisation)

Project overview• Type of power source: LNG-fuelled gas turbine and steam power (combined cycle
power generation system)• Power output: Maximum 150,000 kW (50,000 kW x 3 trains)• Steam output: 35 tons per hour x 3 trains• Scheduled start of operation: Autumn 2022
• Total investment amount: Approx. 25 billion yen (North thermal power plant only, notincluding peripheral facilities)• Planned amount and timing of financing by transition loan: Approximately 8 billion yen(March 2022)• Financing period: 9 years*Additional information is provided in the report.
• Type of power source: LNG-fuelled gas turbine and steam power (combined cycle
power generation system)• Power output: 45,000 kW or more
• Steam output: 80 tons per hour or more
• Scheduled start of operation: Autumn 2023
• Total investment amount: approx. 14.5 billion yen (including approx. 3 billion yen in
subsidies)• Planned amount and timing of financing by transition loan: Approximately 10 billion
yen (autumn 2022)• Financing period: Approximately 10 years*Additional information is provided in the report.

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Schedule-2 Climate Transition Finance Eligibility Assessment Protocol
The checklists (1～4) below are DNV evaluation procedures created for eligibility assessment based on the disclosure requirements of CTFH and CTFBG.
The "confirmed documents" in the Work Undertaken include public or private documents (materials inside the issuer), etc., and are provided by [company
name] as evidence of eligibility judgment for DNV.
*Please replace “Issuer”, “Investor” to “Borrower/Fundraiser”, “Lender” in the context in the following requirements
Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

1

Issuer’s Climate
Transition
Strategy andGovernance

The financing purpose should be forenabling an issuer’s climate change
strategy. A ‘transition’ label applied to a
debt financing instrument should serve tocommunicate the implementation of anissuer’s corporate strategy to transform thebusiness model in a way which effectively
addresses climate-related risks andcontributes to alignment with the goals of
the Paris Agreement.

Confirmed documents/01//02//03//04/

Through its evaluation work, DNV has confirmed thatfundraisers are considering transition loans as a way ofhelping to realise their own grand designs and strategies
toward achieving carbon neutrality.

Interviews with stakeholders

DNV has also confirmed through its evaluation work thatthe fundraiser will communicate to their transition
lenders, by using transition finance, that their corporate
strategies are designed to transform their businessmodels in ways that contribute to effectively addressing
climate-related risks and aligning them with the goals of
the Paris Agreement.

Suggested information and indicators•••< Information and indicators already disclosed>.

A long-term target to align with thegoals of the Paris Agreement (e.g., theobjective of limiting global warming
ideally to 1.5℃ and, at the very least,
to well below 2℃);
Relevant interim targets on the
trajectory towards the long-term goal;
Disclosure on the issuer’s levers
towards decarbonisation, and strategic•••

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A long-term goal consistent with the Paris
Agreement goal (to keep global averagetemperature increase well below at least 2°C
compared to pre-industrial levels, ideally 1.5°C).
Reasonable medium-term objectives that are on a
trajectory towards long-term goals
Disclosure of the issuer's measures to decarbonise
and its strategic plan for long-term goals consistent
with the Paris Agreement targets.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

Criteria

Requirements

•
•

2

3

Business model
environmental
materiality

Climatetransition
strategy to bescience-based
includingtargets andpathways

Work Undertakenplanning towards a long-term target toalign with the goals of the Paris
Agreement;
Clear oversight and governance oftransition strategy and,Evidence of a broader sustainability
strategy to mitigate relevant
environmental and social externalities
and contribute to the UN Sustainable
Development Goals.

••

The planned climate transition trajectoryshould be relevant to the environmentallymaterial parts of the issuer’s businessmodel, taking into account potential futurescenarios which may impact on current
determinations concerning materiality.

Confirmed documents/01//02//03//04/

Issuer’s climate strategy should reference
science-based targets and transition
pathways. The planned transition trajectoryshould:Confirmed documents/01//02//03//04/••

DNV FindingsInterviews with stakeholders

Clear oversight and governance of the transition
strategy
A broader sustainability strategy to contribute to the
UN Sustainable Development Goals (SDGs) while
mitigating the associated negative environmental
and social externalities.

Through its evaluation work, DNV has confirmed that the
trajectory of the climate transition planned by thefinancier relates to the material environmental part of theissuer's business model.
DNV also confirmed that, through its evaluation work, thefundraisers have considered several future scenarios that
could influence their current materiality decisions.

Interviews with stakeholders

be quantitatively measurable (based ona measurement methodology which isconsistent over time);be aligned with, benchmarked orotherwise referenced to recognized,

Through its evaluation work, DNV has confirmed thatfundraisers' climate strategies are based on sciencebased targets and pathways towards transition.
DNV has also confirmed through its evaluation work thatthe planned trajectory of the fundraisers' transitions
meets the following requirements•

Page of 37 of 76

Can be measured quantitatively using consistentmethods over a long period of timeSumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

Criteria

Requirements••

Work Undertaken

science-based trajectories where suchtrajectories exist;
be publicly disclosed (ideally inmainstream financing filings), include
interim milestones, and;be supported by independent assurance
or verification

•
•

•
•
•
•

4

Implementationtransparency•••

Short, medium, and long-term
greenhouse gas reduction targets
aligned with Paris Agreement;
Baseline
Scenario utilised, and methodology
applied (e.g. ACT, SBTi, etc.);
Greenhouse gas objectives covering all
scopes (Scope 1, 2 and 311); and,Targets formulated both in intensity
and absolute terms

Market communication in connection withthe offer of a financing instrument which
has the aim of funding the issuer’s climatetransition strategy should also provide
transparency to the extent practicable, ofthe underlying investment program
including capital and operational
expenditure. This may include R&D-related
expenditure where relevant, and details ofBenchmarked transition pathways in line with SBTi
accreditation standards
published in a form that includes interim targets<Recommended disclosure information and indicators

Suggested information and indicators•

DNV Findings••

Confirmed documents/01//02//03//04/
Interviews with stakeholders

Page of 38 of 76

Medium and long-term greenhouse gas emission
reduction targets consistent with the Paris
Agreement
Baseline
Scenarios and methods applied in line with SBTi
accreditation criteria
Greenhouse gas emission reduction targets covering
all scopes (Scope 1, Scope 2, and Scope 3)
Targets formulated in absolute terms

DNV has confirmed through its evaluation work that it
expects fundraisers to communicate their investment
plans appropriately with transition lenders, either directlyor through loan arrangers, and to be as transparent as
possible. DNV has also confirmed through its evaluation
work that communication is expected to be astransparent as practicable in relation to the basic
investment plan, including capital expenditure (Capex)
and operational and operating costs (Opex).

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

Criteria

Requirements

Work Undertaken

where any such operating expenditure isdeemed ‘non-Business as Usual’, as well asother relevant information indicating how
this program supports implementation of
the transition strategy, including details ofany divestments, governance and processchanges.
Suggested information and indicators••

Disclosure on the percentage ofassets/revenues/
expenditures/divestments aligned to
the various levers outlined in Element 1
above;
Capex roll-out plans consistent with theoverall strategy and climate science

Page of 39 of 76

DNV Findings

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Schedule-3 Green Loan (Transition Finance with specific use of proceeds) Eligibility Assessment
ProtocolThe checklist below (GBP/GLP-1 to GBP/GLP-4) is a DNV evaluation procedure created for Transition Finance (Bond & Loan) Eligibility Assessment (Bond & Loan withspecific use of proceeds) based on the requirements of GBP/GBGLs and GLP/GLGLs. "Confirmed documents" in the “Work Undertaken” includes documents inside theissuer and is provided as evidence of eligibility judgment for DNV.
In Schedule-3, it is referred to as GBP or GLP according to the practice, but this is the standard to be referred to in the case of financing that specifies the use ofproceeds such as transition projects in transition finance (bonds and loan) that specifies the use of proceeds based on CTFH and CTFBG, so please read as themeaning of the transition as appropriate.

GBP/GLP-1 Use of proceeds
Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

1aTypes of funds

The types of green bonds are classified into
one of the following types defined by GBP.
· (Standard) Green/transition Bond・ Green/transition Revenue Finance・ Green/transition Project Finance・ Other

Confirmed documents/01/

Through its evaluation work, DNV has identified thefollowing categories of transition finance (bonds/loans)Interviews withstakeholders

Transition loans (for specific purposes)

The key to a green/transition bond is thatthe proceeds will be used for a green
project, which should be properly stated in
the legal documents relating to the security.

Confirmed documents/01//017/

1b

Green/transition
Project
Classification

Interviews withstakeholders

Page of 40 of 76

Through its evaluation work, DNV has ensured that thelenders will properly state in the loan agreements they
intend to sign with fundraisers that the funds raised will be
used for transition projects.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

1cEnvironmental
benefits

All green projects to which the funds areused should have clear environmental
benefits, the effects of which should beassessed by the issuer and, where possible,
quantitatively demonstrated.

Confirmed documents/01//05//06/

DNV has confirmed through its evaluation work that thetwo transition projects to be financed (LNG-fired power
generation facility construction projects) have clear
environmental benefits (GHG emission reductions), which
will be assessed by the financiers and, where possible,
quantified.

If all or part of the proceeds are used or
may be used for refinancing, the issuer will
indicate the estimated ratio of the initialinvestment to the refinancing and, if
necessary. Therefore, it is recommended toclarify which investment or project portfolio
is subject to refinancing.

Confirmed documents
/01/

1d

Refinancing rate

Interviews withstakeholders

Interviews withstakeholders

GBP/GLP-2 Project selection and evaluation process
Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

2aProject
selection
process

Green bond issuers should provide an overview
of the process of qualifying projects for whichgreen bond funding will be used. This includes(but is not limited to):• The process by which the issuer determinesthat the project in question is included in thebusiness category of a qualified green project.
・ Creation of criteria for eligibility of projects forwhich green bond funding will be used
・ Environmental sustainability goals

Confirmed documents/01//02//03//04//05//06//08//010//011//013/

Throughout the evaluation process, DNV has
confirmed that the fundraisers have outlined theprocess by which they have determined the eligibilityof projects for use of the funds raised.

Interviews with stakeholders

Page of 41 of 76

・ The process by which an issuer determines that
an eligible project falls within the businesscategory of an eligible transition project.
Targets for environmental sustainability

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

Criteria

Requirements

Work Undertaken

DNV Findings

2bIssuer's
Environment
al and Social
Governance
Framework

In addition to criteria and certifications, theinformation published by issuers regarding thegreen bond process also considers the quality of
performance of the issuer's framework andenvironmental sustainability.

Confirmed documents/01//02//03//04//05//06//08//010//011//013/

Through its evaluation work, DNV has confirmed thatthe information published by fundraisers also takes
account of the quality of performance in relation toenvironmental sustainability in transition loans.

Interviews with stakeholders

GBP/GLP-3 Management of funds raised
Ref.

Criteria

3a

Tracking
procedure-1

3b

3c

Tracking
procedure-2

Temporaryholding

Requirements

Work Undertaken

DNV Findings

The net proceeds from of Green bonds should bemanaged in sub-accounts, included in subportfolio, or otherwise tracked. It should also be
certified by the issuer in a formal internal process
related to the issuer's investment and financing
operations for the Green Project.

Confirmed documents/01//015/

Through its evaluation work, DNV has confirmed thatthe funds raised by transition loans are tracked in an
appropriate manner. DNV has also confirmed thatfundraisers manage transition projects appropriately
within the formal internal processes associated with thefundraisers' lending operations.

During the green bond redemption period, thebalance of funds raised that is being tracked
should be adjusted at regular intervals to matchthe amount allocated to eligible projects
undertaken during that period.

Confirmed documents/01//015/

If no investment or payment has been made in aqualified green project, the issuer should also
inform the investor of the possible temporary
investment method for the balance of unallocatedproceeds.

Confirmed documents/01//015/

Interviews with stakeholders

Interviews with stakeholders

Interviews with stakeholders

Page of 42 of 76

Through its evaluation work, DNV has confirmed thatover the repayment period of the transition loan, thebalance of funding tracked will be adjusted at regularintervals to match the amount allocated to eligible
projects during that period.
Through its evaluation work, DNV has confirmed that in
the event of non-payment for eligible projects, thefinancier will also inform the lender of the envisaged
temporary management of the balance ofunappropriated funds.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

GBP/GLP-4 Reporting
Ref.

Criteria

4aPeriodical
Reporting

Requirements

Work Undertaken

DNV Findings

In addition to reporting on the use ofproceeds and the temporary
investment of unallocated proceeds,
the issuer will consider each projectat least once a year for projects towhich the Green bond proceeds havebeen allocated, taking into accountthe following: A list of each project
should be provided.
-Confidentiality and competitive
considerations-Outline of each project, expectedsustainable environmental and social
effects

Confirmed documents/01//016/

Through its evaluation work, DNV has confirmed that, in addition to reportingon the use of funds raised and the temporary investment of unallocated funds,
fundraisers should disclose information at least once a year on the projects towhich the funds raised by transition loans have been allocated, considering thefollowing:

Interviews withstakeholders

・ Confidentiality and competitive considerations
・ An overview of each project and the expected sustainable environmental
and social benefits

Page of 43 of 76

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Schedule-4: Basic Guidelines on Climate Transition Finance Eligibility Assessment Checklist
The following checklist (from CTF-1 to CTF-4) are based on four “disclosure elements “which indicated in the “Basic Guidelines on Climate Transition Finance (CTF)”
established by the Financial Services Agency, Ministry of Economy, Trade and Industry, and Ministry of the Environment in May 2021.
According to the CTF, “disclosure elements” are classified into the following three categories. Should:◎ recommend:〇 be considered/possible: △These expressions are used in the following context.
-

Items described with the word “should” are basic elements that financial instruments labelled as transition finance are expected to have.

-

Items described with the word “recommended” are elements that financial instruments labelled as transition finance are optimally recommended to have under-these Guidelines although instruments which do not have these items can also be labelled as “transition”.
Items described with the word “be considered” or “possible” are elements that these Guidelines provides as examples and interpretations although it is notconsidered problematic even if financial instruments labelled as transition finance do not have them.

There is a supplementary explanation in the margin of each checklist for the annotations in the disclosure elements.
The number /01/、/02/～/19/ listed in the “Work Undertaken” are documents confirmed through the eligibility evaluation work. Details (document name) are
shown in Appendix. In addition to the confirmed documents, the “Work Undertaken” includes the case where the information obtained through discussions andinterviews with the issuer is used as evidence.

CTF-1 Fundraisers' Climate Transition Strategies and Governance
Ref.

No.

Disclosure elements

◎

1-a)

Financing through transition finance should aim
to implement or incentivize the achievement oftransition strategies9. Such strategies shouldincorporate a long-term target to align with thegoals of the Paris Agreement, relevant interim
targets on the trajectory towards the long-term
goal, disclosure on the levers towards

Requirement
check
Yes
No
Not Applicable

Work
Undertaken

DNV Findings

Confirmed
documents:/01//02//03//04/

Through its evaluation, DNV has confirmed that thefundraisers are considering transition loans as a wayof helping to realise their own grand designs andstrategies toward achieving carbon neutrality.

Interviews withstakeholders

Page of 44 of 76

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
check

Work
Undertaken

DNV Findings

Yes

Confirmed

No

documents:/01//02//03//04/

Through its evaluation, DNV has confirmed that thefundraisers will communicate that when they make atransition loan, their corporate strategy is designed
to transform their business model in a way that
contributes to effectively addressing climate-relatedrisks and aligning with the goals of the Paris
Agreement. We confirmed that we plan to do so.

decarbonization, and fundraiser’s strategicplanning.

◎
(△)

1-b)

A transition strategy should serve to explicitly
communicate the implementation of an issuer’s
strategy to transform the business model in a
way which effectively addresses climate-relatedrisks and contributes to achieving the goals of
the Paris Agreement10. Transformation of abusiness model is not limited to initiatives as anextension of existing businesses but can also betransformation based on various otherperspectives. It includes fuel conversion that
achieves significant carbon and GHG reduction
benefits, introduction of innovativetechnologies, improvement of / changes inmanufacturing processes and products, anddevelopment and provision of products andservices in new fields.

Not Applicable

Interviews withstakeholders< Information and indicators already disclosed>.
•

•
•

•

A long-term goal consistent with the Paris
Agreement goal (to keep global averagetemperature increase well below at least 2°C
compared to pre-industrial levels, ideally 1.5°
C).
Reasonable medium-term objectives that are ona trajectory towards long-term goals
Disclosure of the issuer's measures todecarbonise and its strategic plan for long-termgoals consistent with the Paris Agreementtargets.
Clear oversight and governance of the transition
strategy

A broader sustainability strategy to contribute to the
UN Sustainable Development Goals (SDGs) while

Page of 45 of 76

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
check

Work
Undertaken

DNV Findings

mitigating the associated negative environmental
and social externalities.
〇

◎
(△)

〇

1-c)

1-d)

1-e)

The implementation of a transition strategy
assumes cases where it affects society andenvironment other than climate change, suchas employment or stable provision of products
and services, through transformation of abusiness model. In such cases, it isrecommended that the fundraiser also takes
into consideration the impact of business
innovations to society and environment otherthan climate change.

Yes

Climate change-related scenarios11 should bereferenced in developing transition strategies.
The pathway to transition should be planned forrespective sector and regions of individual
fundraiser, who may generally be placed in adifferent starting point and pathway totransition.

Yes

Transition strategies and plans must be highly
credible in terms of their effectiveness.
Therefore, it is recommended that a transition

Yes

No
Not Applicable

Confirmed
documents:/01//02//03//04/
Interviews withstakeholders

No
Not Applicable

Confirmed
documents:/01//02//03//04/
Interviews withstakeholders

No

Confirmed
documents:/01//02//03//04/

Page of 46 of 76

Through its evaluation work, DNV has confirmedthat fundraisers have considered the non-climate
environmental and social impacts of business
transformation, such as job security, in
implementing their transition strategies. DNV also
confirms that, through its evaluation work,
fundraisers have considered the non-climate
environmental and social contributions of businesschange.

Through its evaluation work, DNV has confirmedthat fundraisers have referred to internationallyrecognised climate change-related scenarios indeveloping their transition strategies. DNV has also
confirmed through its evaluation work thatfundraisers have considered the "Technology
Roadmap for Transition Finance in the Chemical
Sector" issued by the Government of Japan,
considering regional and sectoral characteristics.

Through its evaluation work, DNV confirmed that thefundraisers have developed transition strategies andplans that are linked to management strategies andSumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

△

No.

1-f)

Disclosure elements

Requirement
check

strategy and plan are linked to management
strategy and business plan, including mediumterm management plans.

Not Applicable

However, because such strategies and plansrun for a long period of time, it is possible thatthe content may be modified or adjusted in theevent of a major change in the assumed
external environment and so on.

Yes

Work
Undertaken

Interviews withstakeholders

No
Not Applicable

Confirmed
documents:/01//02//03//04/
Interviews withDNV Findings

business plans such as the medium-term
management plan, and that there is a high degree ofconfidence in their effectiveness.

Throughout the evaluation process, DNV confirmedthat fundraisers consider that the content of thetransition strategy and plan can be changed oramended in the event of major changes in theexternal environment or other factors.

stakeholders

△

◎

1-g)

1-h)

In the initial phase of developing a transition
strategy by the fundraiser, it is considered as
an option for the fundraiser to indicate a planfor future implementation of items describedwith the words “recommended” and “beconsidered/ possible” in these Guidelines.

Yes

In order to secure the effectiveness of thetransition strategy, the fundraiser should
establish an organizational structure12 for theboard of directors and/or other such committee
to oversee the activities addressing climatechange and for management to play a role in

Yes

No
Not Applicable

Confirmed
documents:/01//02//03//04/
Interviews withstakeholders

No
Not Applicable

Confirmed
documents:/01//02//03//04/
Interviews withstakeholders

Page of 47 of 76

Through its evaluation work, DNV has confirmedthat fundraisers are likely to implement the items
listed as 'desirable' and 'conceivable' in the Core
Principles in the future as they review their transition
strategies in line with future changes in the external
environment.

Through its evaluation work, DNV has confirmedthat fundraisers have established organisational
structures to ensure the effectiveness of theirtransition strategies, to monitor climate change
responses by boards of directors and other bodies,and to evaluate and manage their efforts.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
check

Work
Undertaken

DNV Findings

Confirmed
documents:/01//02//03//04/

Through its evaluation work, DNV has confirmedthat this transition loan is limited to the fundraisers
and their group companies.

assessing and managing such climate-related
activities.

△

◎

△

1-i)

1-j)

1-k)

While a transition strategy shall be basicallydeveloped by a company in need of finance, it ispossible for entities to utilize the strategy ofcompanies that are wholly or partially
responsible for the initiatives to establish or
explain their own strategy, given that thefinance supports GHG emissions reduction
initiatives of not just a single company but its
supply chain.

Yes

Transition strategies should be disclosed inadvance in a company’s integrated report,sustainability report, statutory documents andother materials for investors (including suchdisclosures on the website). This also applies tothe other three elements.

Yes

It is possible to disclose transition strategies
and elements concerning the governanceguaranteeing that the execution of transition
strategies is in alignment with the reporting
frameworks such as the Recommendations of

Yes

No
Not Applicable

Interviews withstakeholders

No
Not Applicable

Confirmed
documents:/01//02//03//04/
Interviews withThrough its evaluation work, DNV confirmed thatfundraisers disclose their transition strategies (granddesigns) in advance, for example through theirwebsites, integrated reports, and sustainability data
books.

stakeholders

No
Not Applicable

Confirmed
documents:/01//02//03//04/

Page of 48 of 76

Through its evaluation work, DNV has confirmedthat fundraisers disclose in a manner consistent withthe framework of the TCFD recommendations ontransition strategies and the governance that
secures their implementation.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
check

the Task Force on Climate-Related Financial
Disclosures (TCFD; Final Report)13.

〇

◎

〇

1-l)

1-m)

1-n)

Work
Undertaken

DNV FindingsInterviews withstakeholders

If the implementation of a transition strategy
assumes impacts on society and environment
other than climate change, it is recommended
that the fundraiser explain the view underlying
its approach14, etc. to address such impacts anddisclose how the strategy on the wholecontributes to achieving the Sustainable
Development Goals (SDGs) so that the effects
can be appropriately evaluated by the financier.

Yes

Considering the length of application and otherfactors, there may be instances when atransition strategy and plan will need to bemodified due to major changes in the external
environment and relevant conditions that wereassumed at a planning phase. In this case, thecontents of the modification should be disclosed
together with the underlying reason in a timely
manner.

Yes

In terms of governance, it is recommended that
disclosures include an organizational structure

Yes

No
Not Applicable

Confirmed
documents:/01//02//03//04/
Interviews withstakeholders

No
Not Applicable

Confirmed
documents:/01//02//03//04/
Interviews withstakeholders

Confirmed
documents:

Page of 49 of 76

Through its evaluation work, DNV has confirmedthat the fundraisers have explained and disclosed
the potential environmental and social impacts,
other than climate change, of implementing thetransition strategy in a way that enables fundraisers
to properly assess the effects, and that the strategy
considers its contribution to achieving the
Sustainable Development Goals (SDGs). and that thestrategy considers its contribution to achieving the
Sustainable Development Goals (SDGs).
Through its evaluation process, DNV has confirmedthat it will disclose in a timely manner any significant
changes in the progress of construction, even after
all financing has been allocated to the project inquestion but before the generation facility is
operational, due to major changes in the external
environment that the financier assumed whendeveloping the transition strategy and plan. The
company confirmed that it plans to do so.

Through its evaluation work, DNV has confirmedthat fundraisers disclose the organisational structureSumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

〇

△

No.

1-o)

1-p)

Disclosure elements

Requirement
checkfor overseeing the implementation of atransition strategy and for assessing andmanaging related initiatives. It is also
recommended that disclosures include thespecific roles of the constituent organizations
and the management and the process by which
the content of deliberations is reflected inmanagement.

No

In cases where the fundraiser determines theneed for an objective assessment regarding thetransition strategy, it is recommended that areview, assurance and verification by an
external organization for its transition strategy.

Yes

It is recognized useful to obtain a review
particularly concerning the following inconnection with the transition strategy:- Alignment of short-term, mid-term and longterm targets (for targets, refer to Element 3)
with the overall scenario- Credibility of the fundraiser’s strategy toreach the targets- Appropriateness of the management process
and governance for the transition strategy

Yes

Not ApplicableNo
Not Applicable

Work
Undertaken

DNV Findings/01//02//03//04/

for monitoring the implementation of transition
strategies and evaluating and managing initiatives,
as well as the specific roles of the constituent
organisations and management, and the process bywhich deliberations are reflected in management.

Interviews withstakeholders

Confirmed
documents:/01//02//03//04/

DNV carried out this review of transition loans as anexternal reviewer.

Interviews withstakeholders

No
Not Applicable

Confirmed
documents:/01//02//03//04/
Interviews withstakeholders

Through its evaluation work, DNV has conducted areview of fundraisers' transition strategies, inparticular with regard to••

Alignment of scenarios with short-, mediumand long-term objectives (see Element 3 forobjectives) Consistency ofConfidence that the fundraiser's transition
strategy will achieve its goals

Appropriateness of the process and governance formanaging the Transition Strategy

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

9 Transition finance is available for not only entities with strategies and plans for reducing emissions associated with their corporate economic activities, but also entities that plan to take initiatives that enable
others to implement transition strategies through their own products and services. In such cases of financial institutions, a financier should articulate how the underlying projects or activities themselves fit
into the fundraiser’s strategy while, similarly, a subsidiary or an SPC to make use of its group’s or its sponsors’ strategy. However, doing so they should explain how their strategy will contribute to thestrategy. In addition, it can be considered that parent company or the group who established the strategy would explain the transition elements as the main fundraiser.
10 The Paris Agreement sets out a goal to Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C
above pre-industrial levels.
11 Climate-related scenarios are listed in the “Task Force on Climate-related Financial Disclosures (TCFD) Technical Supplement” and the document issued by the Ministry of the Environment: “Practical Guide for
Scenario Analysis in line with TCFD Recommendations”. In addition, Principles for Responsible Investment (PRI) disclose a set of climate scenario tools.
12 Assumes matters provided for under “governance” in the TCFD Recommendations.
13 As for the approach to disclosure aligned with TCFD Recommendations, refer to “Guidance on Climate-related Financial Disclosures (TCFD Guidance) 2.0”, “Guidance for Utilizing Climate-related Information to
Promote Green Investment (Green Investment Guidance)” (both published by the TCFD Consortium), and the document published by the Ministry of the Environment: “Practical Guide for Scenario Analysis inline with TCFD Recommendations”.
14 An example of the approach may be to identify, eliminate, reduce, and manage potential negative effects.

CTF-2 Business Model Environmental Materiality
Ref.

No.

Disclosure elements

◎

2-a)

〇

2-b)

Requirement
checkWork Undertaken

DNV Findings

Initiatives for achieving the transition
strategy should be such that contributeto transforming core business activities
that are environmentally material parts
today and in the future.15

Yes

Confirmed
documents:/01//02//03//04/

Through its evaluation work, DNV has confirmed that the
project will contribute to the transformation of core businessactivities of environmental importance now and in the futurein the implementation of the financier's transition strategy.

When identifying business activities thatare environmentally material parts, it isrecommended that the fundraiser
consider multiple climate change-related

Yes

No
Not Applicable

Interviews withstakeholders

No
Not Applicable

Confirmed
documents:/01//02//03//04/

Page of 51 of 76

Throughout its evaluation work, DNV has ensured thatfunders have considered several future scenarios that could
influence their current materiality decisions.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

scenarios that may possibly impact its
judgment on the identification16.

△

◎

2-c)

2-d)

DNV FindingsInterviews withstakeholders

In terms of considering materiality, it ispossible to apply existing guidance
provided by an organization that creates
standard criteria concerning sustainability
reporting17.

Yes

The fundraiser should indicate thatclimate change is an environmentallymaterial part of business activities18.

Yes

No
Not Applicable

Confirmed
documents:/01//02//03//04/
Interviews withstakeholders

No
Not Applicable

Confirmed
documents:/01//02//03//04/

Through its evaluation work, DNV confirmed that funders
refer to the SDGs as a guideline for identifying societal
needs and challenges with regard to materiality
considerations, and that key performance indicators (KPIs)
are set in line with the 169 SDG targets.

Through its evaluation work, DNV has confirmed thatfunders have indicated that climate change is anenvironmentally significant (material) aspect of theirbusiness activities.

Interviews withstakeholders〇

2-e)

It is recommended that disclosures
include the contents of climate changerelated scenarios used in identifying
business activities that areenvironmentally material parts along withthe underlying reasons (e.g., regional
and industrial characteristics) for
selecting such scenarios.

Yes
No
Not Applicable

Confirmed
documents:/01//02//03//04/
Interviews withstakeholders

Through its evaluation work, DNV has confirmed thatfunders have referred to internationally recognised climatechange-related scenarios in developing their transition
strategies. DNV has also confirmed through its evaluation
work that funders have considered the "Technology
Roadmap for Transition Finance in the Chemical Sector"
issued by the Government of Japan, considering regionaland sectoral characteristics.

15 They include activities that are environmentally material parts are considered to be business activities of the fundraiser that identifies climate change as part of its materiality.

Page of 52 of 76

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

16 Scenario analysis using multiple climate-related scenarios is similar to that required by the TCFD Recommendations, and it is considered useful to refer to relevant guidelines and such like for implementation
methods. An example is the document issued by the Ministry of the Environment: “Practical Guide for Scenario Analysis in line with TCFD Recommendations”.
17 “The SASB Materiality Map” issued by the Sustainability Accounting Standards Board serves as a guidance concerning materiality.
18 As for the approach to identifying environmentally material business activities, it is possible to use the materiality map and such like and outline the level of materiality of climate change for one’s entity.

CTF-3 Climate Transition Strategy to be Science-based Including Targets and Pathways
Ref.

No.

Disclosure elements

◎

3-a)

The fundraiser should reference
science-based targets in developing
its transition strategies.

Requirement
check
Yes
No
Not
Applicable

◎

◎

3-b)

3-c)

This should include mid-termtargets (short- to mid-term targets)in addition to long-term targets for2050 and be quantitatively
measurable based on ameasurement methodology whichis consistent over a long period oftime.

In addition, it is recommended thatGHG reduction targets, which could

Yes
No
Not
Applicable

Yes

Work Undertaken

DNV Findings

Confirmed documents:/01//02//03//04//05//06//07//08/

Through its evaluation work, DNV has confirmedthat fundraisers' climate strategies arebenchmarked against transition pathways in linewith SBTi accreditation criteria and are based on
science-based targets and pathways towards
transition.

Interviews with stakeholders

Confirmed documents:/01//02//03//04//05//06//07//08/
Interviews with stakeholders

Through its evaluation work, DNV has confirmedthat the trajectory of the fundraisers' plannedtransitions, which includes an intermediate(short- and medium-term) target as well as along-term target for 2050, can be measured
quantitatively over a long period of time and in aconsistent manner.

Confirmed documents:/01//02//03//04//05//06//07//08/

Through its evaluation work, DNV has confirmedthat the fundraisers have included a long-term

Page of 53 of 76

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

No.

be formulated either in intensity
and absolute terms, should
consider environmental materiality
and cover Scopes 1 through 3 of
GHG Protocol, the international
standard on supply-chain
emissions. It is recommended thattargets covering Scope 3 be set
using a practical calculation method
when it could be subject tosignificant reduction in thefundraiser’s business model19. It isalso possible to disclose the avoided
emissions as necessary.

(△)

◎
(△)

Disclosure elements

3-d)Science-based targets are GHG
reduction targets required forachieving the goals of the Paris
Agreement and should be set while
taking into account differences inregional characteristics andindustries. In so doing, it is possible
to refer to the following
trajectories.
- Scenarios widely recognizedin the international community(Examples include theSustainable Development

Requirement
check
No
Not

Work Undertaken

Interviews with stakeholders

Applicable

Yes
No
Not
Applicable

Confirmed documents:/01//02//03//04//05//06//07//08/
Interviews with stakeholders

Page of 54 of 76

DNV Findings

target for 2050 as well as an intermediate target(short- to medium-term target), which can bemeasured quantitatively over a long period oftime and in a consistent way.

Through its evaluation work, DNV has confirmedthat the fundraisers' climate strategy isbenchmarked against a transition pathway in linewith the SBTi accreditation criteria and is basedon science-based targets and pathways towards
transition. DNV has also confirmed through its
evaluation work that the fundraisers haveconsidered the "Technology Roadmap for theChemical Sector on Transition Finance" issued by
the Government of Japan, considering regionaland sectoral characteristics.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

DNV Findings

Confirmed documents:/01//02//03//04//05//06//07//08/

Through its evaluation work, DNV has confirmedthat the fundraisers' climate strategies are set to
be on a path towards the planned long-termgoals, benchmarked against a transition path inline with the SBTi accreditation criteria.

Scenario (SDS) outlined by theInternational Energy Agency(IEA)20)- Objectives verified under the
Science Based Targets
Initiative (SBTi) and such like- Nationally Determined
Contributions (NDC) of
countries aligned with thegoals of the Paris Agreement,
roadmaps by industry sector21,
industries set out plans thatare science-based achieving
the Paris Agreement22 and so
on.
◎

△

3-e)

3-f)

Short- to mid-term targets (with aterm of three to fifteen years)
should be set by referencing the
aforesaid trajectories or on thepathway toward the long-termtargets planned as benchmarks23.

In doing so, since short- to midterm targets will likely be set inconsideration of various factors(including the starting point andtrack records of the issuer, timing

Yes
No
Not
Applicable

Yes
No
Not
Applicable

Interviews with stakeholders

Confirmed documents:/01//02//03//04//05//06//07//08/
Interviews with stakeholders

Page of 55 of 76

Through its evaluation work, DNV has confirmedthat fundraisers have set up a transition path inline with the SBTi accreditation criteria,
considering, for example, whether various
matters have already been implemented.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

DNV Findings

Confirmed documents:/01//02//03//04//05//06//07//08/

Through its evaluation work, DNV has confirmedthat fundraisers disclose the medium- and longterm objectives they have set, including the baseyear.

of capital investments, economic
rationality, cost-benefit analysis,
and availability of technology
necessary to achieve the targets), it
is possible that the pathway may
not necessarily be linear with thesame slope at all times but may benonlinear.

◎

◎

3-g)

3-h)

The fundraiser should disclose theshort- to mid-term and long-termtargets they have set, including thebase years etc.

In order to show that long-termtargets are science-based,disclosures should explain themethodology or trajectory used todefine target, including theunderlying reasons (e.g.,characteristics specific to a region
or industry). In particular, whenreference is made to plans andindustry roadmaps established byan industry, etc., the explanation

Yes
No
Not
Applicable

Yes
No
Not
Applicable

Interviews with stakeholders

Confirmed documents:/01//02//03//04//05//06//07//08/
Interviews with stakeholders

Page of 56 of 76

Through its evaluation work, DNV has confirmedthat fundraisers are setting up transition
pathways in line with SBTi accreditation criteria,
taking into account, for example, whether various
matters have already been implemented, andhave most recently renewed their SBTi
accreditation based on the well-below 2°C target.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

DNV Findings

Confirmed documents:/01//02//03//04//05//06//07//08/

Through its evaluation work, DNV has confirmedthat fundraisers are aligned on the pathway toachieving carbon neutrality, the medium-term
objectives on that pathway, the transition
strategy, and their investment plans.

should include that they are
grounded in scientific basis.

△

△

3-i)

3-j)

It is possible that disclosuresexplain the pathway toward a longterm target and the alignment
between the short- to mid-termtargets on the pathway and thetransition strategy, based on theinvestment plan (refer to Element
4) and other plans.

Concerning targets and trajectories,
obtaining expert reviews on thefollowing is considered to beparticularly useful:- Whether the long-term target isaligned with science-based targets➡Whether the disclosed
information explains thealignment with the Paris
Agreement- Whether the short- to mid-termtargets are determined using a
GHG emissions forecast

Yes
No
Not
Applicable

Yes
No
Not
Applicable

Interviews with stakeholders

Confirmed documents:/01//02//03//04//05//06//07//08/
Interviews with stakeholders

Page of 57 of 76

Through its evaluation work, DNV has confirmedthat the mid-term and long-term targets are
science-based, as fundraisers have set up
transition pathways in line with SBTi accreditation
criteria and have most recently renewed their
SBTi accreditation based on the well-below 2°C
target.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

DNV Findings

calculated based on a climatechange scenario analysis➡Whether scenarios, etc. widely
recognized in the international
community are used orreferenced- Whether the actual values of theindicators used for the targets arequantitatively measured using
consistent measurement methods➡Whether a specific GHG emissions
reduction measure has beendeveloped to achieve short- to midterm targets aligned with long-term
goals
Since an appropriate method for calculating Scope 3 emissions for specific industrial sectors is under development, it is possible to estimate Scope 3 emissions on a provisional “best effort” basis. When disclosing,it is recommended that boundaries, calculation methods and other relevant factors be also reported. “Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain” (METI, MoE;
2017 Japanese only. Related information in English) can be used for calculation references.
20 In addition to benchmarks indicated by the IEA, there are those referenced by the IPCC, such as RCP 2.6 (keep global warming to below 2°C), RCP 1.9 (keep global warming to below 1.5°C) and other related
Transition Pathway Initiative (TPI) benchmarks. Meanwhile, scenario listings are available in the TCFD Technical Supplement and in the document published by the Ministry of the Environment: “Practical
Guide for Scenario Analysis in line with TCFD Recommendations”.
21 An example of a sector-specific roadmap formulated by a public organization is the “Roadmap to Zero Emission from International Shipping” (Ministry of Land, Infrastructure, Transport and Tourism; 2020).
The Ministry of International Trade and Industry also plans to formulate a roadmap for high emission industries.
22 In utilizing a plan formulated at a sector level, it is necessary to have a credible proposition that the alignment with the Paris Agreement can be explained with scientific grounds.
23 While it is possible to set short- to mid-term targets by determining the standard based on an assumed use of best available technologies (BAT), consideration should be made as to whether the use of suchtechnologies might make it difficult to achieve long-term targets.

CTF-4 Implementation Transparency
Page of 58 of 76

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

No.

Disclosure elements

◎

4-a)

In implementing transition
strategies, the fundraiser should
provide transparency of the basic
investment plan to the extent
practicable.

◯

△

4-b)

4-c)

The investment plan includes not
only capital expenditure (Capex) but
also capital and operational
expenditure (Opex). Therefore, costs
related to research anddevelopment, M&A, and dismantling
and removal of facilities are also
subject to the investment plan. In
other words, it is recommended thatthe investment plan incorporate, tothe extent possible, expenditure andinvestment necessary for
implementing the transition
strategy.
It is recommended that theinvestment plan outline the assumed
climate-related outcomes andimpacts24 in a quantitative fashion
where possible, along with thecalculation methods andprerequisites25. If quantification is

Requirement
check
Yes
No
Not
Applicable

Yes
No
Not
Applicable

Yes
No
Not
Applicable

Work Undertaken

DNV Findings

Confirmed documents:/01//02//03//04//05//06//07//016/

Through its evaluation work, DNV has confirmedthat the fundraisers disclose to the extent possible
their basic investment plans in implementing theirtransition strategies.

Interviews with stakeholders

Confirmed documents:/01//02//03//04//05//06//07//016/
Interviews with stakeholders

Confirmed documents:/01//02//03//04//05//06//07//016/
Interviews with stakeholders

Page of 59 of 76

Through its evaluation work, DNV has confirmed
that, where appropriate, a financier's investment
plan should include not only capital expenditure(Capex), but also operational and operating costs(Opex). DNV has also confirmed that, whereappropriate, investment plans can cover R&Drelated costs, mergers, and acquisitions, anddismantling and demolition costs.

Through its evaluation work, DNV has confirmedthat the investment plans of the financiers haveprovided quantitative indicators of the envisaged
climate-related and other outcomes (GHG emission
reductions), together with assumptions on thescope of coverage and other factors.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

DNV Findings

Confirmed documents:/01//02//03//04//05//06//07//016/

Through its evaluation work, DNV has confirmedthat fundraisers are, in effect, considered to a justtransition and that they consider the reduction of
GHG emissions and mitigation of climate change to
be a key outcome and impact, and will disclose
GHG emissions by scope across the Group to theextent practicable.

difficult, the use of external
certification systems can beconsidered as a substitute for
qualitative assessment.
◯

〇

◎

4-d)

4-e)

4-f)

In particular, when outlining theassumed climate-related outcomes
and impacts, it is recommended thatthe disclosure include not only GHG
emission reduction and otherinitiatives to ease climate change
but also report how consideration of
a “just transition”26 is incorporated
into the transition strategy.
If implementing the transition
strategy has the potential of having
a negative impact on employment or
the environment and communities
other than climate change, it isrecommended that any expenditures
to mitigate such negative impacts be
added to the plan.
Moreover, the outcomes arising frominvestments included in the

Yes
No
Not
Applicable

Yes
No
Not
Applicable

Yes
No

Interviews with stakeholders

Confirmed documents:/01//02//03//04//05//06//07//016/
Interviews with stakeholders

Confirmed documents:/01//02//03//04//05//06//07//016/

Page of 60 of 76

Through its evaluation work, DNV has confirmedthat the fundraisers plan to monitor the
implementation of the transition strategy to ensurecompliance with the required environmental
emission standards, in accordance withenvironmental assessment legislation andenvironmental protection agreements with local
authorities.
Through its evaluation work, DNV has ensured thatthe results and targets generated by theinvestments in question are aligned with therespective GHG emission reductions.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

No.

Disclosure elements

investment plan should align withthe targets.
〇

4-g)

(△)

◯

◯

4-h)

4-i)

Transition finance is a means tofinancially support theimplementation of a transition
strategy, and it is recommended
that financing be provided for new
initiatives. However, in the case oftransition finance in the format of
Use of Proceeds instruments,
refinancing for a reasonably set
lookback period (the period during
which refinancing is to be applied for
projects that have already started) is
considered to be eligible.
It is recommended that investment
plans be disclosed by linking theoutcomes and impacts with theexpenditures to the extent
practicable27.
It is recommended that thefundraiser, after securing financing,
reports any deviations between theinitial plan and the actual
expenditure, outcomes and impacts.

Requirement
check
Not

Work Undertaken

DNV FindingsInterviews with stakeholders

Applicable
Yes
No
Not
Applicable

Yes
No
Not
Applicable

Yes
No
Not
Applicable

Confirmed documents:/01//02//03//04//05//06//07//016/
Interviews with stakeholders

Confirmed documents:/01//02//03//04//05//06//07//016/
Interviews with stakeholders
Confirmed documents:/01//02//03//04//05//06//07//016/
Interviews with stakeholders

Page of 61 of 76

Through its evaluation work, DNV has confirmedthat it plans to use the entirety of the part of theproceeds on the same day as the loan is drawn
down, to repay the bridge loan that the project
had raised in 2021. As such, no look-back period
has been set.

Through its evaluation work, DNV has confirmedthat the financiers have individually estimated anddisclosed the estimated GHG emission reductions
to be achieved by each of the two projects inquestion.
Through its evaluation work, DNV has confirmedthat the fundraisers intend to disclose in a timely
manner any significant changes in construction
progress, even after all financing has beenSumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

For any deviations, it isrecommended that the underlying
reasons be explained.
◎

◯

(△)

4-j)

4-k)

In cases where the Use of Proceeds
bonds include refinancing, thefundraiser should provide an
explanation on the lookback period
set under the framework or otherrelevant methods along with theunderlying reasons and factors.
While there are differences inbusiness practices, such as the factthat loans are traditionally madebased on the bilateral relationshipbetween a borrower and a lender, it
is recommended that disclosure on
the above be made to the extent
possible in order to ensuretransparency and credibility oftransition finance. However, if it isdifficult to disclose such information
to the public from the standpoint ofconfidentiality and competition, it ispossible to report such information
only to lenders or external

DNV Findings

allocated to the target project but before thegeneration facility is operational.

Yes
No
Not
Applicable

Yes
No
Not
Applicable

Confirmed documents:/01//02//03//04//05//06//07//016/
Interviews with stakeholders

Confirmed documents:/01//02//03//04//05//06//07//016/
Interviews with stakeholders

Page of 62 of 76

Through its evaluation work, DNV has confirmedthat the fundraisers plan to use the entirety of thepart of the proceeds on the same day as the loan
is drawn down, to repay the bridge loan that the
project had raised in 2021. As such, no look-backperiod has been set.

Through its evaluation work, DNV has confirmedthat the fundraisers will report on the transitionloan to the extent practicable to ensuretransparency and credibility, and they will also
consider cases where information that is difficult todisclose to the public from a confidentiality orcompetition perspective will be reported only to thelender.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

No.

Disclosure elements

Requirement
checkWork Undertaken

DNV FindingsInterviews with stakeholders

The fundraisers are not SMEs.

evaluation organizations without
disclosing it to the public.
△

4-l)

Similarly, in cases where thefundraiser is a small-to-mediumsized enterprise and it is difficult todisclose to the public the samecontent as that reported to thefinancier or an external evaluation
institution, it is possible for thefundraiser to simplify the content of
disclosure, for example, by limiting
disclosure to a summary of h) to j)of this section.

Yes
No
Not
Applicable

24 The Ministry of the Environment, in its “Concept Paper on Impact Finance”, refers to impact as “a positive or negative change to the environment, society or economy caused by an organization and is not a
direct deliverable or output but an outcome as a change brought about in terms of the environment, society or economy.”
25 In disclosing impacts, outlining the amount of contribution to reducing CO2 emissions in the global value chain on the whole and the entire lifecycle, including the consumption phase, can be considered. For
the amount of contribution to the reduction, it is possible to reference the “Guideline for Quantifying GHG Emission Reduction Contribution” (METI, 2018). Furthermore, as for outcomes on research anddevelopment, it is possible to reference the IEA Measuring Innovation by Technology Readiness Level (TRL) or Importance for Net-Zero Emission, among others, and outline the progress in the R&D phase or
the potential of reducing CO2 emissions with the relevant technology by highlighting the importance of net-zero emissions.
26 A just transition is an attempt to ensure the wide sharing of virtual profits created through a transition to a green economy, as well as to support any party who will experience an adverse economic impact(be it a country, a region, an industry, a community, a worker, or a consumer). The concept of a just transition corresponds to several SDGs.
27 In particular, disclosure of investment plans is expected to be required for projects applicable to Use of Proceeds.

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Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Schedule-5 Eligibility Assessment for Green Loan Guidelines (Bonds with Specified Purpose forTransition Finance)
The following check list (GLGLs-1 to GLGLs-6) is prepared based on the Green Loan Guidelines (GLGLs, MOE, 2020).
According to the GLGLs, Requirements/Evaluation aspects are divided into following two terms, Should:◎ Recommend:〇
The numbers /01/, /02/ ~ /19/ listed in the Work Undertaken column are the confirmed documents, and the details (document name) are shown in Reference
dcoument-1 (See the Attachment).
In addition to the confirmed documents, the Work Undertaken includes the case where the information obtained through discussions and interviews with the
publishers is used as evidence.
This assessment applies as a requirement for Use of Proceeds based on CTFH and CTFBG, so any term "green" and “bond” in Schedule-6 should beread as "transition” or “finance (bond)".

GLGLs-1 Use of proceeds
Ref.

SectionRequirements◎

1-①

Proceeds of Green Loans should be
used for Green Projects that haveclear environmental benefits.
The borrowers should assess suchenvironmental benefits.

Requirement
check
Yes

Work UndertakenNo

Not Applicable

Confirmed
documents:/01//02//03//04//05//06//07//010//011//012/
Interviews withstakeholders

Page of 64 of 76

DNV Findings

Through its evaluation work, DNV has confirmed that thefunds raised by the financier through the transition loan areearmarked for projects that will result in environmental
improvements (GHG emission reductions) and that suchenvironmental improvements have been assessed by theborrower.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

SectionRequirements〇

1-①

The borrowers is recommended toquantify them where possible.

Requirement
check
Yes

Work UndertakenNo

Not Applicable

Confirmed
documents:/01//02//03//04//05//06//07//010//011//012/

DNV Findings

DNV has confirmed through its evaluation work that the twotransition projects to be financed (LNG-fired power
generation facility construction projects) have clear
environmental benefits (GHG emission reductions), which
will be assessed by the financiers and, where possible,
quantified.

Interviews withstakeholders◎

1-④

Borrowers should explain in advancethe use of proceeds in documents
including contracts exchanged
between parties involved.

Yes

No

Not Applicable

Confirmed
documents:/01//02//03//04//05//06//07//010//011//012/

Through its evaluation work, DNV has confirmed that theuse of the funds raised was explained to the lenders inadvance through the draft contracts exchanged between theparties involved and the application documents forgovernment grants.

Interviews withstakeholders◎

1-⑤

The provision of the information
regarding the use of proceeds should
specify the Green Project categories.

Yes
No
Not Applicable

Confirmed
documents:/01//02//03//04//05//06//07//010//011//012/

Through its evaluation work, DNV has confirmed that the
explanation to lenders of the use of the funds raised ispresented in line with the basic guidelines for transition
projects.

Interviews withstakeholders〇

1-⑤

In cases where individual Green
Projects have been specified, it isrecommended that issuers clearly

Yes
No

Confirmed
documents:

Page of 65 of 76

Through its evaluation work, DNV has confirmed that thefundraisers have specifically identified to lenders theSumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

SectionRequirements

present the projects to lenders.

Requirement
checkWork Undertaken

Not Applicable/01//02//03//04//05//06//07//010//011//012/

DNV Findings

individual transition projects for which the funds raised will
be used.

Interviews withstakeholders
◎

〇

1-⑥

1-⑦

In cases where Green Projects haveincidental negative environmental
impacts along with the alleged
environmental benefits, borrowers
should include information regardingthese negative impacts (e.g., how
they are assessed, how borrowers
intend to address them) so that
lenders and market participants canappropriately evaluate these impacts.

Yes

In cases where Green Loan proceeds
are used to refinance existing Green
Projects, it is recommended thatborrowers provide information to thelenders regarding (1) the amount (orthe share) of the loan proceeds being
allocated for refinancing, and (2)which Green Projects (or Green
Project categories) may be
refinanced. Furthermore, when using
proceeds for refinancing Green
Projects, the borrower is

YesNo
Not Applicable

Confirmed
documents:/01//02//03//04//05//06//07//010//011//012/
Interviews withstakeholders

No
Not Applicable

Confirmed
documents:/01//02//03//04//05//06//07//010//011//012/
Interviews withstakeholders

Page of 66 of 76

Through its evaluation process, DNV has confirmed that thetransition projects have been implemented in accordancewith environmental protection legislation and regulations,and that the use of proceeds has been explained to lenders
and other interested parties, to reduce the potential for
negative environmental effects apart from the originalenvironmental benefits. the lenders and other parties
concerned.

Through its evaluation work, DNV has confirmed thatfundraisers have explained to lenders of transition loans theamounts that will be used to repay new investments andbridge loans.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

SectionRequirements

Requirement
checkWork Undertaken

DNV Findings

recommended to indicate theapplicable period of the Green Projectrefinanced (Lookback Period).
◎

1-⑦

When Green Loans are used multiple
times to refinance an asset that
requires long-term maintenance, theborrower should clearly disclose theasset’s age, remaining life and theamount to be refinanced as of thetime of procurement, evaluate thelong-term sustainability ofenvironmental benefits and receive anassessment from an outside agency
for verification as necessary.

Yes
No
Not Applicable

Confirmed
documents:/01//02//03//04//05//06//07//010//011//012/

Through its evaluation work, DNV has confirmed that thefundraisers plan to use part of the funds raised, in full, on thesame day as the loan is disbursed to repay the bridge loanthat the project had raised in 2021, and that this is acceptable
for the purposes of this requirement/assessment item.

Interviews withstakeholders

GLGLs-2 Process for Project Evaluation and Selection
Ref.

SectionRequirements◎

2-①

Borrowers should provide lenders
with information in advanceregarding the following: theenvironmental sustainability
objectives that the borrowers intend
to achieve through the Green Loans;

Requirement
checkWork Undertaken

Yes
No
Not Applicable

Confirmed
documents:/01//02//03//04//05//06//07//010//011//0
12//013/

Page of 67 of 76

DNV Findings

Through its evaluation work, DNV has confirmed that thefundraisers explain their "environmental objectives" (theenvironmental benefits they intend to achieve throughthe transition loan) to lenders in advance.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

SectionRequirements

Requirement
checkWork Undertaken

DNV FindingsInterviews withstakeholders

◎

◎

〇

2-①

2-①

2-⑥

Borrowers should provide lenders
with information in advanceregarding the following: the criteria
for determining the appropriatenessof Green Projects based on theenvironmental sustainability
objectives described above;

Yes

Borrowers should provide lenders
with information in advanceregarding the following: the process
for determining how Green Projects
fit thecriteria for the achievement of theenvironmental sustainability
objectives.
It is recommended that the borrower
explains to lenders in advance any
environmental standards orcertification that the borrower willrefer to in evaluating and selecting a
Green Project to be financed.

Yes

No

Not Applicable

Confirmed
documents:/01//02//03//04//05//06//07//010//011//0
12//013/

Through its evaluation work, DNV has confirmed that thefundraisers have explained to the lenders in advance thatthe two transition projects in question are in line with the
Climate Transition Finance Basic Guidelines.

Interviews withstakeholders

No
Not Applicable

Confirmed documents:/01//02//03//04//05//
06//07//010//011//01
2//013/
Interviews withstakeholders

Yes
No
Not Applicable

Confirmed documents:/01//02//03//04//05//
06//07//010//011//01
2//013/
Interviews withstakeholders

Page of 68 of 76

Through its evaluation work, DNV has confirmed that thefundraisers have explained to the lender in advance therationale on which the two transition projects are
considered to deliver environmental benefits appropriate
for the use of the funds raised considering the fundraisers'
transition strategy and science-based objectives. The
rationale for the project was explained to the lenders.
Through its evaluation work, DNV has confirmed that thefundraisers have considered as a benchmark the"Technology Roadmap for the Chemical Sector on
Transition Finance" issued by the Japanese Government
for the two targeted transition projects, considering
regional and industry specificities. The procurer confirmedthat the two transition projects considered the"Technology Roadmap for Transition Finance in theChemical Sector" issued by the Japanese Government as a

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

◎

〇

〇

Section

2-⑦

2-⑨

2-⑪

Requirements

If the borrower intends to establish
exclusion criteria to identify andcontrol such potentially material
environmental and social risks ofGreen Projects, the borrower should
explain them to lenders in advanceas part of thecriteria it applies.
It is recommended that internal
departments who have expertise,such as the environment related
department, or external institutions
are involved in the evaluation andselection process of Green Projects toensure suitability from anenvironmental point of view.
It is recommended that borrowers
position their environmental
objectives and criteria andinformation on their processes in thecontext of their comprehensive
objectives, strategy, policies
concerning environmental
sustainability (e.g. medium-term
management plan, sustainability
strategy, CSR strategy) and provide
an explanation to lenders.

Requirement
checkWork Undertaken

Yes
No
Not Applicable

Confirmed documents:/01//02//03//04//05//
06//07//010//011//01
2//013/DNV Findings
benchmark, considering regional and sectoral
characteristics.
Through its evaluation work, DNV has confirmed that thefundraisers have identified negative environmental andsocial effects in the two targeted transition projects andhave explained the measures to the lenders.

Interviews withstakeholders
Yes
No
Not Applicable

Confirmed documents:/01//02//03//04//05//
06//07//010//011//01
2//013/
Interviews withstakeholders

Yes
No
Not Applicable

Confirmed documents:/01//02//03//04//05//
06//07//010//011//01
2//013/
Interviews withstakeholders

Page of 69 of 76

Through its evaluation work, DNV has confirmed that the
project selection process at the fundraisers involves
departments with expertise, such as environmental
departments, and external bodies for environmental
assessment, and that checks, and balances are in place toensure appropriateness from an environmental
perspective.
Through its evaluation work, DNV has confirmed that
information on the environmental objectives, criteria, andprocesses for the two projects in question was placed in
the context of the fundraisers’ transition strategy (granddesign) and explained to the lenders.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

GLGLs-3 Management of proceeds
Ref.

SectionRequirements◎

3-①

Borrowers should track and manage theentire amount of Green Loan proceeds.
These tracking and managing activities
should be controlled by the borrower’s
internal processes.

Yes

As long as the Green Loans areoutstanding, borrowers should conductperiodic checks (at least yearly) to ensurethat the amount used for Green Projects
is equal to, or greater than, the amountraised by the procurement of Green Loansor the sum of the amount used for Green
Projects and the amount of theunallocated proceeds match the total
amount of Green Loan proceeds.

Yes

If any of the proceeds remain temporarily
unallocated, the borrower should explain
to lenders how it intends to invest thebalance of such unallocated funds andendeavor to promptly use such funds forGreen Projects.

Yes

◎

◎

3-②

3-②

Requirement
check

No
Not Applicable

Work Undertaken
Confirmed
documents:/01//014//015/

DNV Findings

Through its evaluation work, DNV has confirmed that thefundraiser plans to ensure that the full amount of funds
raised is controlled and tracked by the fundraiser's
internal processes, as appropriate.

Interviews withstakeholders

No
Not Applicable

Confirmed
documents:/01//014//015/
Interviews withstakeholders

No
Not Applicable

Confirmed
documents:/01//014//015/
Interviews withstakeholders

Page of 70 of 76

Through its evaluation work, DNV has confirmed thatfundraisers periodically (at least once a year) check thatthe amount allocated to eligible transition projects
matches the amount of funds raised by the loan, or thatthe sum of the amount allocated to projects and theamount of unallocated funds is consistent with the total
amount of funds raised by the loan, until the transitionloan is redeemed. (at least once a year).

Through its evaluation work, DNV has confirmed that
where unappropriated funds arise temporarily, thefundraisers explain to the lenders the expected
temporary management of the unappropriated fundbalance.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

SectionRequirements◎

3-④

In advance, borrowers should provide
lenders with information on how Green
Loan proceeds will be tracked andmanaged.

Requirement
check
Yes
No
Not Applicable

Work Undertaken
Confirmed
documents:/01//014//015/

DNV Findings

Through its evaluation work, DNV has confirmed thatfundraisers explain to lenders in advance how they will
track and manage the funds raised.

Interviews withstakeholders〇

3-⑤

It is recommended that borrowers keep
evidenced documents appropriately that
demonstrate how they tracked andmanaged Green Loans proceeds.

Yes
No
Not Applicable

Confirmed
documents:/01//014//015/

Through its evaluation work, DNV has confirmed that thefundraiser has document control rules for the
management of the funds raised, including theappropriate storage of vouchers and other documents.

Interviews withstakeholders

GLGLs-4 Reporting
Ref.

Secti
on

Requirements◎

4-①

Borrowers should report the latest
information on the use of Green Loan
proceeds to the financial institutions
who are lenders and took part in theGreen Loans after the procurement.

Requirement
checkWork Undertaken

Yes
No
Not Applicable

Confirmed
documents:/01//06//07//016/
Interviews withstakeholders

Page of 71 of 76

DNV Findings

Through its evaluation work, DNV has confirmed that thefundraisers plan to report up-to-date information on the useof funds raised by the loan by the financier to the lender, thefinancial institution participating in the loan, after the loan
has been made.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

Secti
on

Requirements◎

4-②

For a borrower to gain public
acceptance by expressing that the
procured loans are Green Loans, theyneed to ensure transparency. For thisreason, if a borrower expresses that the
procured loans are Green Loans, it
should publicly disclose the latest
information on the use of Green Loan
proceeds after the procurement.

Yes

Borrowers should report or disclose theusage status of funds at least once a
year until all the proceeds are used.
Borrowers should report or disclosesuch information in a timely manner
even after all the proceeds are allocated
if there has been any major change inthe situation.

Yes

Reported or disclosed information should
include the following contents:<Matters pertaining to reporting or
disclosure>
A list of the Green Projects to which
Green Loan proceeds have been
allocated
A brief description of each Green
Project (including up-to-date

Yes

◎

◎

4-④

4-⑤

Requirement
checkWork UndertakenNo
Not Applicable

Confirmed
documents:/01//06//07//016/

DNV Findings

Throughout the evaluation process, DNV confirmed that thefundraisers plan to disclose up-to-date information on theuse of the funds raised by the transition loan, either to thelender or on their website.

Interviews withstakeholders

No
Not Applicable

Confirmed
documents:/01//06//07//016/
Interviews withstakeholders

No
Not Applicable

Confirmed
documents:/01//06//07//016/
Interviews withstakeholders

Page of 72 of 76

Through its evaluation work, DNV has confirmed thatfundraisers' disclosures will be reported at least once a year
until all funding has been allocated. DNV has also confirmedthat fundraisers will disclose in a timely manner any
significant changes in construction progress, even after all
funding has been allocated to the project, but before thegeneration facility is operational.
Through its evaluation work, DNV has confirmed thatfundraisers include the following items in their disclosure
information:••

List of transition projects to which the funds raised havebeen allocatedAppropriation of funds (amount of funds appropriatedand amount of funds not appropriated)

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

Secti
on

Requirements
progress)
The amount allocated to eachGreen Project
The expected environmental
benefits of each Green Project
Information regarding unallocatedGreen Loan proceeds (the amountof the unallocated proceeds or theshare of the unallocated proceeds
to the total amount of theproceeds, and when the unallocatedproceeds are expected to beallocated to Green Projects)
A borrower is small-medium, reported
and disclosed information can be
simplified, if it is difficult to disclose thesame contents which a borrower reports
to a lender.
If Green Loan proceeds have been
allocated to the refinancing of existing
projects, it is recommended that
disclosed information include: (1) the
approximate amount (or the share) of
the allocated proceeds used forrefinancing, and (2) a list of the Green
Projects (or the project categories)
refinanced.
While it is recommended to disclose (v)and (vi) on a project-by-project basis, if
there are confidentiality agreements,
competitive considerations, or a large

Requirement
checkWork Undertaken

•

-

〇

〇

4-⑥

4-⑦

DNV Findings

Yes
No
Not Applicable

Confirmed
documents:/01//06//07//016/

the environmental benefits expected to accrue to thegroup of fundraisers as a whole

Through its evaluation work, DNV has confirmed that thefundraisers provide appropriate disclosure to the lenders of theamounts that will be used to repay new investments andbridge loans.

Interviews withstakeholders

Yes
No
Not Applicable

Confirmed
documents:/01//06//07//016/

Page of 73 of 76

Through its evaluation work, DNV has confirmed thatfundraisers will disclose information on a project-by-projectbasis or in an aggregated format to the extent practicable.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

◎

Secti
on

4-⑩

〇

4-⑪

Requirements
number of underlying projects that limit
the disclosure of details, it is consideredthat information is presented in genericterms or in an aggregated portfolio.
When disclosing information regarding
the expected environmental benefits ofprojects, borrowers should use
appropriate indicators, while ensuringconsistency with the characteristics ofGreen Projects.
When disclosing the expectedenvironmental benefits of projects, it isrecommended that borrowers, where
feasible, use quantitative indicators anddisclose information on methodologies
and/or assumptions as well as these
indicators.

Requirement
checkWork Undertaken

DNV FindingsInterviews withstakeholders

Confirmed
documents:/01//06//07//016/

Yes
No
Not ApplicableThrough its evaluation work, DNV has confirmed that, whendisclosing information on environmental improvements,
fundraisers will disclose GHG emissions to the extent
practicable and appropriate.

Interviews withstakeholders
Confirmed
documents:/01//06//07//016/

Yes
No
Not Applicable

Interviews withstakeholders

Through its evaluation work, DNV has confirmed thatfundraisers should disclose quantitative information on theemissions of each scope for the entire group of thefundraisers when disclosing information on environmental
improvements.

GLGLs-5 internal reviews
Ref.

SectionRequirements◎

5-(3)②

If the borrower performs self-certification, it
should inform the lenders in advance and explain
with sufficient transparency its internal expertise

Requirement
check
Yes
No
Not Applicable

Page of 74 of 76

Work Undertaken
Confirmed
documents:
This report

DNV Findings

The fundraisers have used external reviews
for the transition loan framework to beevaluated objectively. When conducting selfassessments, the fundraisers plan to explain

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

Ref.

SectionRequirements

Requirement
check

upon formulation of the self-certification process
pertaining to the green loan framework.

◎

◎

〇

5-(3)③5-(3)④5-(3)④

Borrowers are recommended to document theirinternal expertise. This documentation should becommunicated to the lenders on request. The selfcertification results should also be reported to thelenders on request.

Yes

When appropriate, and taking into accountconfidentiality and competitive considerations,borrowers should make publicly available, via theirwebsite or otherwise, their decision to review theGreen Loan based on self-certification as well as
the parameters based on which they assess Green
Projects and the internal expertise they have toassess such parameters.

Yes

For a borrower to gain public approval by
expressing that the procured loans are Green
Loans, they need to ensure transparency. It istherefore recommended that they make the selfcertification results publicly available via theirwebsite or otherwise.

Yes

No
Not Applicable

Work Undertaken
Interviews withstakeholders

to the lenders that they are following theframework and their internal processes.

Confirmed
documents:
This report

The fundraisers have established documented
internal processes for the evaluation andselection process of eligible projects and forthe management of the funds raised. It willreport on the results of these processes whenrequested by the lenders.

Interviews withstakeholders

No
Not Applicable

Confirmed
documents:
This report
Interviews withstakeholders

No
Not Applicable

Confirmed
documents:
This report
Interviews withstakeholder

Page of 75 of 76

DNV Findings

When fundraisers conduct self-assessments
through transition loans, they plan to conduct
them based on internal processes defined in
the framework in advance. The results will be
disclosed to the lenders directly or throughthe loan arrangers.

When fundraisers utilise transition loans on aself-assessment basis only, they intend to
disclose the results of the self-assessment
either directly to the lenders or through theloan arranger.

Sumitomo Chemical Company Limited Transition Loan Framework Second Party Opinion

List of reference materials/01/

Sumitomo Chemical Group Transition Loan Framework/02/

Annual Report 2021

/03/

IR-related materials:a.

ESG Presentation (December 24, 2021)b.

Management Strategy Presentation (June 3, 2021)/04/

Sustainability Data Book 2021

/05/

Eligible project Information:a.

Project 1 Summary Information (confidential)b.

Project 2 Summary Information (confidential)c.

Project 1 News Release Material (January 07, 2022)d.

Project 2 News Release Material (October 05, 2020)/06/

Basis for calculation of expected emission reductions from the project/07/

Basis for calculating the base year for GHG Scope 1/2 emissions/08/

Materials related to lock-in measures:a.

Description of technical issues and measures for the facility to be installedb.

Explanatory materials from gas turbine manufacturers (hydrogen-fired gas turbines)/09/

News release material on grand design (transition strategy) (December 10, 2021)/010/

Environmental Impact Assessment-related materials (Project 1)/011/

Environmental Conservation Agreement related materials (Project 2)/012/

Support subsidy for promoting investment in energy conservation/013/

Explanatory materials related to the process of project evaluation and selection/014/

Explanatory materials related to the total amount of funds raised and the plan for allocating funds toeach project (including new projects and refinancing)/015/

Explanatory material pertaining to documents that show how funds are managed/016/

Explanatory material related to the concept of reporting/017/

Syndicated loan agreement (draft)

Page of 76 of 76