Framework Overview and Second-Party Opinion

Development Bank of Japan Inc.
Sustainability Bond
Evaluation Summary
Sustainalytics is of the opinion that the Development Bank of Japan Inc. (DBJ)
Sustainability Bond Framework, 2018 is credible and impactful and aligns with the four
core components of the Green Bond Principles, 2018 and Sustainability Bond
Guidelines, 2018. This assessment is based on the following:
The eligible categories for the use of proceeds arealigned with those recognized by the Green Bond Principles andSustainability Bond Guidelines. While recognizing that the DBJ
Sustainability Bond is not exclusively project based, Sustainalytics
considers that the range of eligible projects and loans will lead topositive environmental and social impacts and advance the UN
Sustainable Development Goals 7, 8, 9, 11 and 13.
DBJ’s Treasury team is
responsible for the selection of financial assets that meet the DBJ
Sustainability Bond Eligibility Criteria. Additionally, DBJ has
developed an exclusionary criteria to ensure that it does not financepotentially controversial activities. DBJ’s internal process inevaluating and selecting projects is in line with market practice.
DBJ will deposit and record bondproceeds separately, in an internal management system, which
ensures monitoring and tracking of the use of proceeds. DBJ’s
processes to manage and track proceeds are in line with market
practice.
DBJ has committed to publish an annual report on its
website with updates on the allocation of proceeds, estimated shareof financing or refinancing, and amount of unallocated proceeds.
Impact reporting will include relevant key performance indicators,
where feasible, as aligned with market practice.

© Sustainalytics 2018

Evaluation dateAugust 29, 2018

Issuer Location

Tokyo, Japan

Report Sections
Introduction .................................................. 2
Overview of Issuer ....................................... 2
Framework Overview ................................... 4
Sustainalytics’ Opinion ................................ 7
Appendices ................................................ 12

For inquires, contact the Sustainable
Finance Solutions project team:Ankita Shukla (New York)
Project Manager
ankita.shukla@sustainalytics.com(+1) 617 603 3329
Wakako Mizuta (Tokyo)
Client Relations
wakako.mizuta@sustainalytics.com(+81) 3 4578 7516

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Introduction
Development Bank of Japan Inc. (“DBJ”) has issued multiple green and sustainability bonds since 2014,1 andhas developed an updated sustainability bond framework under which it is planning to issue a sustainability
bond (the “DBJ Sustainability Bond”). DBJ has engaged Sustainalytics to provide a second-party opinion the
updated DBJ Sustainability Bond Framework, 2018 and the framework’s environmental and, where relevant,social credentials. As part of this engagement, Sustainalytics held conversations with members of DBJ’s
management team to understand the sustainability impact of their business processes and updates to theplanned use of proceeds, as well as management of proceeds and reporting aspects of the DBJ Sustainability
Bond Framework, 2018. Sustainalytics also reviewed relevant public documents and non-public information.
This document contains two sections: Framework Overview – summary of DBJ Sustainability Bond
Framework, 2018 and Sustainalytics’ Opinion – an opinion on the framework.

Overview of Issuer
DBJ is a 100% government-owned financial institution headquartered in Tokyo, Japan. DBJ provides domestic
and global financial services to its clients, operating across Japan, the U.S., Europe and Asia. Throughout its
history, DBJ has been devoted to regional development, environmental conservation, basic social
infrastructure, and the creation of technology and industry.
Japan Development Bank, the predecessor of Development Bank of Japan, was established in 1951 to
facilitate the reconstruction of Japan after the Second World War, specifically in relation to securing asustainable energy industry. Soon after, its activities expanded to include infrastructure development, bothnationally and internationally. During the 1970s and 80s, as a result of growing social imbalance andincreasing concerns in relation to the stable supply of energy, Japan Development Bank focused its efforts on
decreasing the gap in standards of living, pollution control, and regional and urban developments. During thelate 1980s and 90s Japan Development Bank continued to support improvements to social capital. In 1999,
Japan Development Bank and Hokkaido Tohoku Development Finance Public Corporation merged to form
Development Bank of Japan. Development Bank of Japan has focused on three areas: community
development, environmental conservation and sustainable societies, and the creation of new technologies
and industries. In 2008, DBJ was established under the Development Bank of Japan Inc. Act as the successor
to Development Bank of Japan.
According to its business model, DBJ “works to resolve the issues its clients face by providing specialised
financial services involving integrated investments and loans.” DBJ and its affiliates provide and integrate thefollowing services:•
Loans: Provision of medium- and long-term financing, as well as project financing and other formsof structured and/or subordinated financing.
•
Investment: Provision of mezzanine and equity financing•
Consulting/Advisory services: Arrangement of structured financing, provision of M&A advisory
services, applying DBJ’s industry research function and expertise in environmental and technology
evaluations.
•
Asset management services: Provision of investment opportunities and supporting services.
Beginning with the anti-pollution measures implemented in the late 1960s and early 70s, DBJ and its
predecessor has provided more than 3 trillion yen in investments and loans for environmental measures.
Furthermore, DBJ states that it has advanced its commitment on sustainability by issuing the inaugural green
bond in 2014 as well as the first, second and third sustainability bond in 2015, 2016 and 2017, respectively.

1

DBJ had previously engaged Sustainalytics in 2015 and 2017 to provide a second-party opinion on its framework.
DBJ Sustainability Bond, Development Bank of Japan Inc.
https://www.dbj.jp/en/ir/credit/sri/index2.html
2

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

According to the fourth medium-term management plan for the year ending 31 March, 2018 through the year
ending 31 March, 2020, DBJ also states that it plans to continue to issue a DBJ Sustainability Bond, under the
Policy on Sustainability, as it seeks to diversify its investor base, connect dedicated investor demand with its
growing sustainable business, and contribute to the sustainable development of Japan and the world.

3

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Framework Overview
For the purpose of issuing the DBJ Sustainability Bond, DBJ has updated the following DBJ Sustainability
Bond Framework, 2018 which addresses the four core components of the Green Bond Principles (“GBP”) andthe Sustainability Bond Guidelines: use of proceeds, project evaluation and selection process, managementof proceeds, and reporting. As per the external review guidelines, the framework was developed by, andbelongs to, DBJ. Sustainalytics has included an overview of the framework below:

Use of Proceeds
Eligibility Criteria
The net proceeds, or an amount equal to the net proceeds, of the issuance of the DBJ Sustainability Bonds
will be allocated, by way of various financial instruments, exclusively to finance or refinance, in whole or inpart, existing and/or future projects or businesses which meet the following Eligibility Criteria (the “DBJ
Sustainability Bond Eligibility Criteria” and the financing(s) satisfying the DBJ Sustainability Bond Eligibility
Criteria is(are) defined as the “Eligible Financing(s)”):1.

Loans to companies that are rated A, B or C under the DBJ Environmentally Rated Loan Programme(“ERLP”).2

2.

Funds to finance or refinance buildings that are rated 3, 4 or 5 stars under the DBJ Green Building
Certification Programme (“GBC”).3

3.

Funds to finance or refinance companies, buildings, real estate properties or REITs that have a ‘GreenStar’ rating under the Global Real Estate Sustainability Benchmark (GRESB) evaluation framework.

4.

Funds to finance or refinance renewable energy projects:a.
Construction and/or operation of solar, wind (onshore and offshore), biomass, geothermal,
run-of-river hydropower, and tidal and wave power assets

5.

Funds to finance or refinance clean transportation projects or loans to companies exclusively for use
for clean transportation projects:4a.
Installation and/or maintenance of energy-efficient and/or electric trainsb.
(Re)construction, extension, maintenance, and/or upgrade of rail lines
c.
(Re)construction, maintenance, operation and/or upgrade of railway systems and assetsd.
Infrastructure and components which could help increase the transport capacity andimprove the efficient movement of people and freight

For methodological details of eligibility criteria, please see Appendices 1, 2 and 3.
Exclusionary Criteria
DBJ has developed a list of exclusionary criteria to be applied to the allocation of the proceeds from the DBJ
Sustainability Bond issuance. In this regard, DBJ commits to not knowingly allocating the net proceeds forthe financing of assets/projects/businesses included in the exclusionary criteria.
1.

Businesses dedicated to the manufacture or retail sale and distribution of weapons and small
arms; or businesses dedicated to the production of products and services supporting the
manufacture or retail sale of weapons and small arms

2

https://www.dbj.jp/en/service/finance/enviro/index.html
https://www.dbj.jp/en/service/finance/g_building/index.html
4
DBJ confirms that in lending to companies, it is able to track use of loans from sustainability bond proceeds to ensure that the loans are directed
towards eligible clean transportation projects. DBJ also confirms that the amount of loans from sustainability bond proceeds will be equal to or lessthan the amount of CAPEX or OPEX spent by companies on eligible clean transportation projects.
3

4

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

2.
3.
4.
5.

Extraction, refining, or transportation of coal
Ownership or operation of dedicated gambling establishments/activities
Biomass plants designed primarily to consume food stocks
Large-scale (over 25MW capacity) hydropower dams

Project Evaluation and Selection Process
Application of Eligibility and Exclusionary Criteria in Project Selection
DBJ’s Treasury team is responsible for the selection of financial assets that meet the DBJ Sustainability Bond
Eligibility Criteria and for the allocation of the DBJ Sustainability Bond proceeds to the selected financial
assets. All financings and corresponding approved ratings (only applicable to the ERLP and GBC programmes
as well as the GRESB framework) are tracked in an internal management system. This allows DBJ’s Treasury
team to accurately identify and select the financial assets in accordance with the DBJ Sustainability Bond
Eligibility Criteria and allocate the DBJ Sustainability Bond proceeds appropriately. These eligible
assets/projects/businesses and the net proceeds, or an amount equal to the net proceeds, allocated to them,
are recorded and maintained in the internal management systems, which are used for tracking and reporting
purposes and appropriately updated from time to time.
Sustainability Objectives
DBJ has a mission of "Applying financial expertise to design the future",5 and states that it has an aim of
conducting business in a manner which resolves the issues of its clients and the larger society and realizes
the sustainable development of Japan and the world. In support of its mission, DBJ has developed ‘the LongTerm Vision 2030’6 and further sets out the Fourth Medium-Term Management Plan for the three-year period
from FY 2017 throughout FY 2019, which aims to provide solutions for the issues of client and society andmakes efforts towards sustainable growth.
In line with its mission, under the Policy on Sustainability, DBJ pursues and implements sustainability
management.7 DBJ defines sustainability management as management directed at creating a sustainable
society and realizing economic and social value, while consistently improving the process of value creation
through communication with stakeholders. The Sustainability Committee discusses and considers thesustainable management undertaken by DBJ.
With an aim to achieve this sustainability goal, DBJ has aligned with UNEP (United Nations Environment
Programme) since signing up to the UNEP Statement by Financial Institutions on the Environment andSustainable Development in 2001.8 Following the Policy on Sustainability and Environmental Management,9DBJ, through its business activities including investment, lending, consulting/advisory and asset
management, tackles environmental challenges with the promotion of global warming prevention, a recyclingoriented society and other activities, as well as giving consideration to social challenges such as human rights,
which are associated with its clients, employees, financial markets, and investors.
Process to Mitigate Environmental and Social Risks
DBJ has the following processes that consider management of environmental and social risks in its financing
process:•
DBJ periodically monitors if borrowers comply with applicable regulations and laws (including
environmental laws), and if they obtain and maintain governmental permits, approvals, licenses andauthorizations. If a breach is expected to have a materially adverse effect, and not cured within agrace period, DBJ is entitled to request prepayment subject to contractual arrangements.
•
With respect to asset/structured/project finance, in some cases, DBJ engages an independent
consultant to undertake due diligence on environmental and social aspects. If this is not the case,
DBJ assesses the capability and reliability of the borrower in relation to identifying and managing
environmental and social risks.

5 Corporate Philosophy, Development Bank of Japan Inc.

https://www.dbj.jp/en/co/info/philosophy.html
6Integrated Report 2017, Development Bank of Japan Inc.
https://www.dbj.jp/en/pdf/CSR_disclo/2017/02.pdf
7 Article 2 of the DBJ Policy on Sustainability
8 https://www.dbj.jp/en/co/csr/responsibility/management.html
9 https://www.dbj.jp/en/co/csr/responsibility/management.html
5

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond•The Sustainability Committee, responsible for considering the incorporation of sustainability and
ESG insights into the DBJ’s usual business activities, discusses and considers the balance between
economic and social value (i.e. sustainability management), and maintains communications withstakeholders on this topic.

Management of Proceeds
The net proceeds, or an amount equal to the net proceeds, from the DBJ Sustainability Bond issuance will beheld and tracked in DBJ’s treasury until they are allocated to the eligible projects and/or businesses. So longas the DBJ Sustainability Bond is outstanding, DBJ aims to allocate the net proceeds, or an amount equal to
the net proceeds, of the DBJ Sustainability Bond towards the eligible projects and/or businesses. Unallocatedproceeds will be held in cash and/or a money-market portfolio which will be tracked by DBJ Treasury
Department. DBJ has internal management systems to track the amount of funds allocated to each of the
Eligible Financings.

Reporting
DBJ will report annually on its website the following information until full allocation of the net proceeds, or an
amount equal to the net proceeds, from the DBJ Sustainability Bond issuance:
1. Allocation in aggregate to each eligibility criterion, and number of businesses/assets/projects funded
under each eligibility criterion
2. The estimated share of financing or refinancing
3. The amount of unallocated proceeds and the investments in which these proceeds are held.
Furthermore, DBJ will report on the following additional information and impact metrics:
Type of Eligible
Financings
ERLP

Additional Information to be reported

GBC▪ Certification vintage▪ Subject to confidentiality and clients’ prior consent, two or three case studies of underlying
green buildings funded by the relevant Sustainability Bond

GRESB

▪ Certification vintage▪ Subject to confidentiality and clients’ prior consent, two or three case studies of underlying
REITs and real estate properties funded with the relevant Sustainability Bond

Green Projects10- Renewable Energy,
Clean Transportation▪ Distribution by sub-sector and location▪ Subject to confidentiality and clients’ prior consent, high-level description of select projects▪ Where feasible, quantitative assessment of expected positive environmental impacts on
an aggregate basis▪ KPI: estimated carbon avoidance▪ Certification vintage▪ Distribution by sector▪ Subject to confidentiality and clients’ prior consent, select project summaries and key
factors evaluated on specific green projects undertaken or implemented by the clients

10 DBJ’s Green Projects will be gathered and reported on a best effort basis.

6

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Sustainalytics’ Opinion
Section 1: Sustainalytics’ Opinion on the DBJ Sustainability Bond
Summary
Sustainalytics is of the opinion that the DBJ Sustainability Bond Framework, 2018 is credible and impactful,
and aligns with the four core components of the Green Bond Principles, 2018 and Sustainability Bond
Guidelines, 2018. Sustainalytics highlights the following elements of DBJ’s sustainability bond framework:
•

•

•

•

Use of Proceeds:- The Green Eligibility Criteria (Green Buildings, Renewable Energy, and Clean Transportation) arerecognized by the Green Bond Principles, 2018 as project categories with clear environmental
impact. Additionally, DBJ’s Environmentally Rated Loan Programme (“ERLP”) incorporates both
environmental and social elements within its assessment.
- Sustainalytics has reviewed and provided an assessment on the ERLP, GBC, and GRESB
programs, and considers these ratings and the associated methodologies as a credible androbust assessment of companies’ sustainability performance.
- Sustainalytics holds a positive opinion on DBJ’s efforts to strengthen its Eligibility Criteria andassessment procedures leading to more stringent requirements for projects and loans to beeligible. Updates to the DBJ Sustainability Bond Framework, 2018 include:▪
ERLP: (i) requirement of companies to be rated as A, B, or C and the removal of the D
rating, (ii) additions to the ERLP assessment tool to include a materiality assessment
under the new Sustainability category, and (iii) sector-specific screening categories forcompanies across different industries.
▪
GBC Programme: (i) requirement to have assessment of eligible green buildings to be
conducted by a third-party (Japan Real Estate Institute), rather than conducting an inhouse assessment.
Project Evaluation and Selection Process- DBJ’s Treasury Department is responsible for the selection and approval of financial assets thatmeet the DBJ Sustainability Bond Eligibility Criteria. DBJ has sufficient oversight over potential
environmental and social risks through its periodic monitoring practices, engagement of
independent consultants, and involvement of its Sustainability Committee. Additionally, DBJ has
developed exclusionary criteria to ensure that it does not finance potentially controversial
activities. DBJ’s internal process in evaluating and selecting projects is in line with market
practice.
Management of Proceeds- The net proceeds raised by a sustainability bond issuance will be deposited and recorded
separately which ensures monitoring and tracking of the use of proceeds. All financings andcorresponding approved ratings for ERLP, GBC, and GRESB are tracked in an internalmanagement system. Unallocated proceeds may be held in cash or a money-market portfolio
which will be tracked by DBJ’s Treasury Department. DBJ’s processes to manage and track
proceeds using internal management systems are in line with market practice.
Reporting- DBJ has committed to report annually on its website updates on the allocation of proceeds toeligible projects, the estimated share of financing or refinancing, as well as the balance of funds
remaining. Furthermore, DBJ will provide impact metrics, where feasible, which may include:
distribution of ERLP loans distributed by sector, certifications under the GBC and GRESB, andproject information on renewable energy and clean transportation.
- Sustainalytics encourages DBJ where possible to report on quantitative KPIs such as estimatedamount of CO2 avoided.

Alignment with Green Bond Principles, 2018 and Sustainability Bond Guidelines, 2018
Sustainalytics recognizes that the DBJ Sustainability Bond is not exclusively project based, i.e. DBJ may also
allocate the net proceeds to finance lending and investment activities in companies. Sustainalytics recognizes
that (i) the Green Bond Principles and Sustainability Bond Guidelines prefer project-based lending, and that (ii)in general, there is less transparency associated with reporting on non-project-based financing. However, DBJ
has confirmed to Sustainalytics a commitment to disclosure and transparency, and has also made acommitment, to the extent possible, to track projects (including without limitation capital expenditure,7

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

operation, maintenance and R&D) to which the net proceeds, or an amount equal to the net proceeds, of the
DBJ Sustainability Bond are (deemed to be) allocated, through their corporate lending and investment
activities. Sustainalytics also recognizes that DBJ is subject to confidentiality constraints when reporting on
the DBJ Sustainability Bond. Taking into account this constraint, their commitment and the nature of therelevant eligible projects/businesses, Sustainalytics is of the opinion that the DBJ Sustainability Bond istransparent.
Based on Sustainalytics’ assessment of the ERLP, GBC, and GRESB programs, Sustainalytics is of the opinion
that the DBJ Sustainability Bond creates positive impact in Japan and contributes to DBJ’s sustainability
strategy and objective.
While the DBJ Sustainability Bond is not exclusively project-based, DBJ may allocate the net proceeds tofinance lending and investment activities to companies that meet well established impact criteria.
Sustainalytics considers the DBJ Sustainability Bond to be transparent and to create credible impact. In thissense, Sustainalytics is of the opinion that the DBJ Sustainability Bond aligns with the Green Bond Principles,
2018 and the Sustainability Bond Guidelines, 2018. For details please see Appendix 6.

Sustainalytics’ Opinion on the strength of the ERLP, GBC, and GRESB programs
Sustainalytics is of the opinion that the ERLP methodology adequately assesses companies on key
environmental issues and is effective in identifying environmental leaders. Additionally, social issues are
identified within the materiality assessment which has been added to DBJ’s ERLP assessment as of July
2018. For a detailed assessment of the ERLP see Appendix 4.
Sustainalytics is of the opinion that by selecting buildings with 3, 4 or 5 stars of the GBC programme, DBJ isallocating the net proceeds, or an amount equal to the net proceeds of the DBJ Sustainability Bond to thebuildings with top environmental performance in Japan. For a detailed assessment of the GBC see Appendix
5.

Sustainalytics’ assessment of GRESBGlobal Real Estate Sustainability Benchmark (“GRESB”) is an industry-driven organization that assesses theenvironmental, social and governance (ESG) performance of real assets and infrastructure globally.
Sustainalytics reviewed the GRESB Framework in detail and compared it with its own ESG rating methodology
to determine if the GRESB adequately evaluates real estate assets on key environmental and sustainability
metrics.
Sustainalytics considers the GRESB rating to be robust for the following reasons:•
The methodology that GRESB employs considers issues similar to the Sustainalytics ESG rating
framework and green bond issuer assessment. A strong and typical ratings methodology rates
companies in the areas of commitment, disclosure, and performance. GRESB’s methodology
assesses companies in the abovementioned areas, under the broad themes of management andpolicy, and implementation and measurement.
•
GRESB rates REITs, real estate property funds and developers on a score of 0-100. The GRESB Rating
is based on the GRESB Score and its quintile position relative to the GRESB universe, with annual
calibration of the model. If the entity is placed in the top quintile, it will be a GRESB 5 Star rated entity;
if it ranks in the bottom quintile, it will be a GRESB 1 Star rated entity, etc.11•
Entities with scores higher than 50 on both the Implementation & Measurement and the Management& Policy dimensions are rated a “Green Star” and can communicate their position. The ‘Green Star’label not only identifies top performers, but also recognizes the rated entities for integration ofsustainability issues. Sustainalytics is of the opinion that such recognition encourages further
disclosure and improvement around performance of these sustainability issues.
•This is validated by GRESB, which confirms that the average GRESB Score for 2017 was 63, ascompared to 60 in 2016, 56 in 2015, and 47 in 2014.12 GRESB has collected data to demonstrate thatcompanies, real estate funds and REITs reporting to GRESB improve performance over time.
•
While nature of data collection and submission is voluntary, GRESB verifies submitted data;•
GRESB assessment areas include market best practice like LEED certifications.
•
The methodology and indicators are aligned with credible third-party norms like Global Reporting
Initiative (GRI) and PRI.
11 https://gresb.com/your-results/
12 http://gresb-public.s3.amazonaws.com/2017/Public%20Results/2017_RE_Global_Results.pdf

8Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond•GRESB collects and reports on data on key quantitative performance indicators, like total water
saved, and total amount of CO2 emissions mitigated.

Based on the above, Sustainalytics considers the GRESB rating meaningful and credible and that “Green Star”
rating appropriately identifies leaders in green/sustainable building horizon in Japan. By financing only ‘GreenStar’ rated REITs, companies or real estate funds DBJ is aligned with industry best practice.

Section 2: Sustainability Performance of the Issuer
DBJ has set clear sustainability commitments though its policies and management plan. DBJ’s Sustainability
policy emphasizes:•
identifying material sustainability issues in the relevant fields based on trends in government policy
as well as legislation and norms regarding ESG criteria in Japan and throughout the world; 13•
incorporating the recognition of the necessity for a sustainable society into its investing, lending,asset management and other business activities;14 and•encouraging and supporting, by way of financing activities (particularly via certification programs 15)
and academic research, the sustainable management16 and the improved ESG performance of its
clients,17
Furthermore, DBJ develops the Fourth Medium-term Management Plan for the three-year period from FY 2017
throughout FY 2019, which aims to contribute to the creation of a sustainable society. The plan lays out
initiatives including the DBJ Environmentally Rated Loan and DBJ Green Building Certification programmes,
as well as integrated financial services in infrastructure such as energy, transportation and urban
development, to further create both economic and social value.
As reflected above, DBJ has strong sustainability commitments for achieving a sustainable society while
outlining a sustainability strategy through its mission, policies, and management plan. Additionally, the Policy
on Sustainability and the current management plan clearly demonstrate its commitments to contributing topositive environmental and social impacts among its stakeholders and society through its financial services
such as investment, lending and asset management. Sustainalytics is of opinion that the DBJ Sustainability
Bond Framework is aligned with the DBJ’s mission, the Policy on Sustainability as well as the Fourth Mediumterm Management Plan, and DBJ is well positioned to issue a sustainability bond.
Sustainalytics is of the opinion that the DBJ Sustainability Bond Framework is aligned with DBJ’ corporate
mission and sustainability and management strategies.

Well positioned to address common environmental and social risks associated with the projects
DBJ’s management of environmental and social risks in its financing process is described in this framework.
Overall, Sustainalytics does not identify considerable environmental and social risks with respect to lending
to sustainably rated companies through the ERLP, GBC, and GRESB programs. Financing construction of cleantransportation and renewable energy can be associated with certain environmental and social risks such as
loss of biodiversity, pollution, and worker health and safety. Given the use of proceeds, Sustainalytics is of theopinion that DBJ’s general process to consider environmental and social factors in its financing process issufficient.

Policy on Sustainability, Development Bank of Japan Inc.
https://www.dbj.jp/en/co/csr/regular/index.html
14 Policy on Sustainability, Development Bank of Japan Inc.
https://www.dbj.jp/en/co/csr/regular/index.html
15 Certification Programs, Development Bank of Japan Inc.
https://www.dbj.jp/en/service/finance/rating/index.html
16 DBJ's Environmental Management, Development Bank of Japan Inc.
https://www.dbj.jp/en/co/csr/responsibility/management.html
17 Integrated Report 2017, Development Bank of Japan Inc.
https://www.dbj.jp/en/pdf/CSR_disclo/2017/02.pdf
13

9

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Section 3: Impact of Use of Proceeds
Importance of green real estate in climate change mitigation in Japan
Japan has developed the Plan of Global Warming Countermeasures that sets the reduction targets ofgreenhouse gas (GHG) emission for the medium and long term, in which the country is committed to reducing
26 % GHG emissions from 2013 level by 2030 in line with the Paris Agreement (as a medium-term goal) andfurther pursing 80% reduction by 2050 (as a long-term goal).18 As the main policies and measures, the planaddresses the promotion of compliance of energy saving standards for new buildings, energy saving
renovation of existing buildings, and Zero Energy Buildings, as well as the intensive management of energy byadopting building energy management system and energy saving diagnostics. 19 These government measures
have led to an increased pressure for the buildings to be environmentally sustainable and to contribute to thenational anti-global warming plan and GHG reduction targets.
Given this context, Sustainalytics is of the opinion that financing sustainable buildings, real estate properties
and REITs will create meaningful environmental impact in an important area for Japan and will contribute to
reduction of GHG emissions in the country.
Alignment with/contribution to SDGs
The Sustainable Development Goals (SDGs) were set in September 2015 and form an agenda for achieving
sustainable development by the year 2030. The DBJ Sustainability Bond advances the following SDG goals
and targets:
Use of Proceeds
Category
DBJ
Environmentally
Rated Loan
Programme (ERLP)

SDG

SDG target

13. Climate Action

13.3 Improve education, awareness-raising and human andinstitutional capacity on climate change mitigation,
adaptation, impact reduction and early warning.

DBJ Green Building
Certification
Programme

9. Industry,Innovation andInfrastructure

9.4 By 2030, upgrade infrastructure and retrofit industries tomake them sustainable, with increased resource-use
efficiency and greater adoption of clean andenvironmentally sound technologies and industrial
processes, with all countries taking action in accordancewith their respective capabilities.
11.c Support least developed countries, including throughfinancial and technical assistance, in building sustainable
and resilient buildings utilizing local materials.
7.2 By 2030, increase substantially the share of renewableenergy in the global energy mix.
8.2 Achieve higher levels of economic productivity throughdiversification, technological upgrading and innovation,
including through a focus on high-value added and labourintensive sectors.
9.1 Develop quality, reliable, sustainable and resilient
infrastructure, including regional and transborderinfrastructure, to support economic development andhuman well-being, with a focus on affordable and equitable
access for all.

Global Real Estate
Sustainability
Benchmark(GRESB)
Renewable Energy

Clean
Transportation

11. Sustainable
Cities andCommunities
7. Affordable andClean Energy
8. Decent Work andEconomic Growth
9. Industry,Innovation andInfrastructure

18 Cabinet Decision on the Plan for Global Warming Countermeasures, Ministry of Environment, Japan

https://www.env.go.jp/en/headline/2238.html
19 Overview of the Plan for Global Warming Countermeasures, Ministry of Environment, Japan
https://www.env.go.jp/press/files/en/676.pdf
10

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

11. Sustainable
Cities andCommunities

11.2 By 2030, provide access to safe, affordable, accessible
and sustainable transport systems for all, improving roadsafety, notably by expanding public transport, with special
attention to the needs of those in vulnerable situations,
women, children, persons with disabilities and older
persons.

Conclusion
Development Bank of Japan Inc. has updated its Sustainability Bond Framework under which it will continue
to issue sustainability bonds. While recognizing that the DBJ Sustainability Bond is not exclusively projectbased, Sustainalytics considers the bond to be transparent and to create credible impact. This assessment isbased on:i.
DBJ’s stated commitment to transparency and disclosure given the nature of the relevant eligible
projects/businesses, and its confidentiality constraints,
ii.
Sustainalytics’ assessment of DBJ’s processes with respect to management of proceeds and project
selection process as aligned with market practices,
iii.
Sustainalytics’ assessment of the ERLP, GBC and GRESB programmes as a credible and robust
assessment of companies’ sustainability performance and impact. By selecting A, B or C rated
companies under ERLP, buildings that are rated 3, 4 or 5 stars under GBC programme, and buildings
rated as Green Star under the GRESB programme, DBJ is financing companies/buildings that provide
the highest positive sustainability impact,iv.
the contribution of the DBJ Sustainability Bond to the organization’s sustainability strategy andobjective, andv.
updates to Eligibility Criteria within the DBJ Sustainability Bond Framework, 2018 leading to more
stringent requirements under the ERLP and green building categories.
Overall, Sustainalytics is of the opinion that DBJ’s Sustainability Bonds will continue to create meaningful
impact, and that the DBJ Sustainability Bond Framework, 2018 aligns with the Green Bond Principles, 2018
and the Sustainability Bond Guidelines, 2018.

11

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Appendices
Appendix 1A: Methodological details of Environmentally Rated Loan Programme(ERLP)
DBJ’s ERLP Rating Process follows three key steps.
Step 1: Preliminary Survey•
Clients are asked to fill in a preliminary survey sheet for negative screening.
Step 2: Full Assessment•
After the preliminary survey, DBJ will conduct its full assessment based on the research of public
information of the company’s environmental efforts (for example a CSR Report).
•
DBJ will then interview clients to collect non-public information on their environmental efforts.
Step 3: Rating and Monitoring•
Ratings will be assigned according to the points scored in the assessment.
•
Clients enter into a covenant to maintain the level of environmental effort until redemption of
the loan. If the covenant is breached, DBJ will review the rating.
•If such breach is not cured within a certain period specified in a loan agreement, resulting in the
borrower ceasing to be rated or the applicable rating to meet the Eligibility Criteria, thecorresponding loans will be removed from the allocation and replaced with other Eligible
Financings (not be limited to the ERLP).
The assessment undertaken by DBJ incorporates the following key areas:
1.
General Management
2.
Business Activities
3.
Environmental Performance
The key areas are broken down into sub-sectors which are weighted for importance. DBJ provides loans tocompanies rated A, B, C or D and excludes companies rated “None”. In addition, for the companies that are
rated A or B, DBJ provides a discount on loan interest rates (for companies rated C or D loans are offered atregular rates).20 An overview of the assessment topics is provided in Appendix 1B.

Until June 2018
Rating
A
B
C
D
None

Assessment
Companies withexcellent advanced environmental
initiatives
Companies withadvanced environmental initiatives
Companies with
sufficient environmental initiatives
Companies with
sufficient environmental initiatives
but added effort to be required
Ineligible

After July 2018
RatingA
B
C

None

Assessment
Companies withexcellent advanced environmental
initiatives
Companies withadvanced environmental initiatives
Companies with
sufficient environmental initiatives
Ineligible

20 Rate D was discontinued after July 2018.

12

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Appendix 1B: ERLP assessment topics
Area

Assessment items and sub-items
General management
A

Environmental management system

B

Identified environmental issues

C

Disclosure and community involvement

D

ComplianceBusiness activities

Environmental
management

E

Environment-friendly products and services

F

Expanding sales for Environment-friendly products and services

G

Environmental considerations in facilities

H

Supply chain

I

Total assessment
Environmental performance

Sustainability

J

Measures addressing Global warmingK

Measures for effective use of resourcesL

Measures for water resources

M

Toxic waste countermeasures

N

Other

O

Identified material issues (Materiality)

P

Strategies

Q

KPI

R

Stakeholder engagement

13

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Appendix 2A: Green Building Certification (GBC) Programme
As part of its financing activities, DBJ offers “Green Building Certification” (“GBC”), in order to support its
clients who own or operate real estate properties with high standards of environmental and social features.
The certification is available for office buildings, logistics facilities, as well as retail facilities. Since February
2014, following the partnership development, Japan Real Estate Institute and DBJ have jointly undertaken thecertification assessment.
In order for buildings to be certified “green”, they must undergo an assessment by Japan Real Estate Institute(JREI). This assessment is intended to ensure that the construction takes into account environmental
considerations. Additionally, it ensures that the buildings take other responsible factors into account,
including:•Disaster-prevention and anti-crime measures;•
Tenants’ comfort and convenience;•
Harmony with the surrounding environment;•
Collaboration with stakeholders (including tenants and investors); and•Environmental Investor Relations activities.
Once a property has successfully received the certification, DBJ will support the financial needs for new
developments and refurbishments. Further details about the areas of assessment under GBC are provided inAppendix 2B.
As a result of the assessment, properties may receive one of the following certifications:14

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Appendix 2B: GBC assessment topics
Information as per GRESB Real Estate Reference Guide, 2018:

More information on the GRESB Real Estate Reference Guide, 2018, is available at:https://www.dbj.jp/en/service/finance/g_building/outline.html
15

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Appendix 3: GRESB ESG rating topics and methodology
Global Real Estate Sustainability Benchmark (“GRESB”) is an industry-driven organization that assesses theenvironmental, social and governance (ESG) performance of real assets and infrastructure globally.
•
•
•
•

•

ESG performance is assessed through a universal GRESB score assigned to all properties,
infrastructure, and funds covered by GRESB.
The GRESB score is based on a voluntary reporting assessment or survey. The content of theassessment is driven by what investors and the industry consider to be material issues in the
ESG performance of real assets.
The overall GRESB Score is assessed on two dimensions: Management & Policy and
Implementation & Measurement. The combination of these two dimensions results in a final
GRESB score.
The sum of the scores for each question adds up to a maximum of 136.5 points, and the overall
GRESB Score is then expressed as a percentage – from 0 to 100. The maximum score for each
aspect is a weighted element of the overall GRESB Score. GRESB takes into account the uniquecharacteristics of different property types, not only in benchmarking absolute scores, but also inthe scoring of a selection of questions. A selection of indicators is scored based on eachportfolio’s main property types – this holds specifically for the Performance Indicators andBuilding Certifications aspects.
The two dimensions are assessed through seven different aspects (see table below).

Seven aspects of GRESB under the two dimensions of Management & Policy and Implementation & Measurement

More information on the GRESB Real Estate Reference Guide, 2018, is available at:
http://gresb-public.s3.amazonaws.com/2018/Assessments-and-Reference-Guides/2018-GRESBRE-Reference-Guide.pdf

16

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Appendix 4: Sustainalytics’ assessment of the ERLPThe DBJ Environmentally Rated Loan Programme (“ERLP”): Sustainalytics reviewed the ERLP in detail andcompared it with its own ESG rating methodology to determine if the ERLP adequately evaluates companies
on key environmental aspects.
Sustainalytics reviewed the 18 assessment topics (see appendix 1B), all the indicators within the assessment
items, evaluation criteria and the scoring to determine if these cover the wide range of topics and assessment
areas covered by Sustainalytics’ own ratings methodology. Key points from the assessment are below:•
Sustainalytics rates companies on 1) preparedness (commitment), 2) disclosure and 3)
performance (qualitative and quantitative) which are typical areas of assessment in most rating
methodologies. Although the questions in the ERLP framework are not explicitly grouped under
the above-mentioned areas, they are adequately captured within each assessment item.
•
The Environmental Performance area in the ERLP aims to capture detailed information onquantitative metrics such as energy use, GHG emissions, water, waste, and other resource use.
Sustainalytics views this as an area of strength in the ERLP methodology.
•
Since July 2018 the ERLP has implemented an integrated screening sheet applicable acrossindustry sectors, encompassing different types of companies such as manufacturing, leasing,retail trading, transportation, logistics, etc. This allows DBJ to carry out sector-specificassessment in an integrated manner.
•
Rating companies on commitment, disclosure and performance needs to be complemented byassessing companies on major ESG events or controversies. DBJ, aims to capture major ESG
risks by asking companies to report such events as part of the rating and conducts its own
research to identify companies’ involvement in negative events.
Based on this assessment, Sustainalytics is confident that the ERLP methodology adequately assesses
companies on the key environmental issues and is effective in identifying the environmental leaders.
Additionally, in 2017, Sustainalytics reviewed several companies that were rated as leaders by DBJ and foundthat they did not have any major controversies.
The ERLP incentivizes companies to improve their environmental performance by providing discountedinterest rates for top-rated companies. In addition, companies with ratings lower than D (after July 2018, lower
than C) are not eligible for loans under the ERLP. Furthermore, DBJ updates the assessment criteria annuallywhich could result in higher thresholds, thereby making it difficult for a company to achieve the same rating
without making reasonable improvements the next time it borrows from DBJ. The fact that quite a few
companies that had previously received ratings and loans under the ERLP have returned to apply for loans
under ERLP programme and qualified under a more stringent assessment indicates the programme has
contributed to improving the environmental performance of companies. In this way, DBJ is encouraging its
borrowers to continually improve their environmental performance. In addition, by having a minimum
requirement for loan qualification and providing incentives for high performers, DBJ is providing a clear signal
to the market that environmental impact is a key consideration for its lending products. Furthermore, thecompanies that receive high scores benefit from enhanced reputation among their peers.

17

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Appendix 5: Sustainalytics’ assessment of the GBC
DBJ initiated its Green Building Certification (GBC) programme in 2011 and, as of March 2018, has certified
296 office buildings, 107 logistics facilities, 79 commercial facilities and 56 residential facilities. GBC is acertification that is independent from DBJ’s loan, therefore, the GBC rating does not affect terms of the loan.
However, only those loans that receive 3 stars or above will qualify as the Eligible Financings in the DBJ
Sustainability Bond Framework.
In FY 2010, DBJ assessed a sample of Japan’s REIT buildings (about 100 buildings) and the assessment
resulted in about 50% of the stock akin to 2-star GBC-rated buildings and most of the highly rated buildings(as defined by other 3rd party agencies) were similar to 3-star GBC-rated buildings. This indicates that JapanREIT buildings with 4 or 5 stars under GBC programme have higher environmental performance than mostbuildings in Japan that receive top ratings from 3rd party agencies.
Therefore, by selecting buildings with 3, 4 or 5 stars, DBJ is allocating the net proceeds, or an amount equal
to the net proceeds of the DBJ Sustainability Bond to the buildings with top environmental performance inJapan.
With the GBC, DBJ rates buildings based on improvements in energy efficiency, natural resource use, sourcingof renewable energy and third-party certification (LEED, BREEAM etc.), in addition to such other factors as
amenities, risk management, community and partnership. According to DBJ, the interest in its GBC has
increased over the years as property owners value the GBC as a way to differentiate their buildings from otherbuildings. Given this interest, DBJ has expanded the GBC to cover office buildings, retail, logistic andresidential facilities. Going forward, DBJ aims to foster a correlation between a building’s GBC ratings and its
economic value, creating a market in which green buildings are valued appropriately. In addition, the GBC
scoring sheet/model is revised annually, and in this way, the asset owners willing to maintain the rating levelassigned on their assets are encouraged to increase their environmental efforts and improve environmental
performance.

18

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Appendix 6: Green Bond/Green Bond Programme External Review Form
Section 1. Basic Information
Issuer name:Green Bond ISIN or Issuer Green Bond Framework
Name, if applicable: [specify as appropriate]
Review provider’s name:Completion date of this form:
Publication date of review publication: [whereappropriate, specify if it is an update and add
reference to earlier relevant review]

Development Bank of Japan Inc.
DBJ Sustainability Bond Framework, 2018

Sustainalytics
August 29, 2018
Previous frameworks include: DBJ Sustainability
Bond Framework 2015 and DBJ Sustainability
Bond Framework 2017.

Section 2. Review overview
SCOPE OF REVIEWThe following may be used or adapted, where appropriate, to summarise the scope of the review.
The review assessed the following elements and confirmed their alignment with the GBPs:☒

Use of Proceeds☒

Process for Project Evaluation and
Selection☒

Management of Proceeds☒

Reporting

ROLE(S) OF REVIEW PROVIDER☒

Consultancy (incl. 2nd opinion)☐

Certification☐

Verification☐

Rating☐Other (please specify):
Note: In case of multiple reviews / different providers, please provide separate forms for eachreview.

EXECUTIVE SUMMARY OF REVIEW and/or LINK TO FULL REVIEW (if applicable)
Please refer to Executive Summary above.

19

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Section 3. Detailed review
Reviewers are encouraged to provide the information below to the extent possible and use the comment
section to explain the scope of their review.
1. USE OF PROCEEDS
Overall comment on section (if applicable):

Proceeds will be allocated to finance or refinance projects or businesses that meet the following eligibility
criteria:
1.

Loans to companies that are rated A, B or C under the DBJ Environmentally Rated Loan Programme(ERLP).

2.

Funds to finance or refinance buildings that are rated 3, 4 or 5 stars under the DBJ Green Building
Certification Programme.

3.

Funds to finance or refinance companies, buildings, real estate properties or REITs that have a ‘GreenStar’ rating under the Global Real Estate Sustainability Benchmark (GRESB) evaluation framework.
4. Funds to finance or refinance renewable energy projects:
a. Financing or Refinancing construction and/or operation of solar, wind (onshore and offshore), biomass,
geothermal, run-of-river hydropower, and tidal and wave power assets
5. Funds to finance or refinance clean transportation projects or loans to companies exclusively for use forclean transportation projects:
a. Installation and/or maintenance of energy-efficient and/or electric trainsb. (Re)construction, extension, maintenance, and/or upgrade of rail lines
c. (Re)construction, maintenance, operation and/or upgrade of railway systems and assets
Please see full framework for all details.
Sustainalytics is of the opinion that clean transportation and renewable energy are recognized as clearly
impactful categories by the Green Bond Principles 2017, and that the ERLP, GBC, and GRESB ratings arerobust ratings that create credible impact.
Use of proceeds categories as per GBP:☒

Renewable energy☐

Energy efficiency☐

Pollution prevention and control☐

Environmentally sustainable management ofliving natural resources and land use☐

Terrestrial and aquatic biodiversity
conservation☒

Clean transportation☐

Sustainable water and wastewater
management☐

Climate change adaptation☐

Eco-efficient and/or circular economy
adapted products, production technologies
and processes☐

Green buildings☐

Unknown at issuance but currently expected
to conform with GBP categories, or othereligible areas not yet stated in GBPs☒

Other (please specify): sustainable buildings andgreen real estate

20

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability BondIf applicable please specify the environmental taxonomy, if other than GBPs:

2. PROCESS FOR PROJECT EVALUATION AND SELECTION
Overall comment on section (if applicable):
DBJ’s Treasury team is responsible for the selection of financial assets that meet the DBJ Sustainability
Bond Eligibility Criteria and for the allocation of the DBJ Sustainability Bond proceeds to the selectedfinancial assets. All financings and corresponding approved ratings (only applicable to the ERLP and GBC
programmes as well as the GRESB framework) are tracked in an internal management system. This is in linewith market practice.
Evaluation and selection☒

Credentials on the issuer’s environmental
sustainability objectives☒

Documented process to determine thatprojects fit within defined categories☒

Defined and transparent criteria for projects
eligible for Green Bond proceeds☐

Documented process to identify andmanage potential ESG risks associatedwith the project☒

Summary criteria for project evaluation andselection publicly available☐

Other (please specify):☐

In-house assessment

Information on Responsibilities and Accountability☒

Evaluation / Selection criteria subject toexternal advice or verification☐

Other (please specify):

3. MANAGEMENT OF PROCEEDS
Overall comment on section (if applicable):
The net proceeds, or an amount equal to the net proceeds, from the DBJ Sustainability Bond issuance will beheld and tracked in DBJ’s treasury until they are allocated to the eligible projects and/or businesses. So longas the Sustainability Bond is outstanding, DBJ aims to allocate the net proceeds, or an amount equal to thenet proceeds, of the DBJ Sustainability Bond towards the eligible projects and/or businesses. Unallocatedproceeds will be held in cash and/or a money-market portfolio which will be tracked by DBJ Treasury
Department. This process is in line with market practice.
Tracking of proceeds:☒

Green Bond proceeds segregated or tracked by the issuer in an appropriate manner☒Disclosure of intended types of temporary investment instruments for unallocatedproceeds☐

Other (please specify):

21

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Additional disclosure:☐

Allocations to future investments only☒

Allocations to both existing and future
investments☒

Allocation to individual disbursements☒

Allocation to a portfolio of
disbursements☒

Disclosure of portfolio balance of
unallocated proceeds☐

Other (please specify):

4. REPORTING
Overall comment on section (if applicable):
DBJ will report annually on its website until full allocation of the net proceeds, or an amount equal to the net
proceeds of the DBJ Sustainability Bond issuance:
1. Allocation in aggregate to each eligibility criterion, and number of businesses/assets/projects funded
under each eligibility criterion
2. The estimate share of financing or re-financing
3. The amount of unallocated proceeds and the investments in which these proceeds are held
DBJ has also committed to reporting on impact metrics, a full list of which can be found in the framework.
Overall, the reporting is aligned with market practice and ensures transparency, and Sustainalytics
encourages DBJ to report on quantitative KPIs and metrics wherever possible.
Use of proceeds reporting:☐

Project-by-project☒

On a project portfolio basis☐

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

Information reported:☒

Allocated amounts☐

Other (please specify):☐

Green Bond financed share of total
investment☐

Semi-annual

Frequency:☒

Annual☐Other (please specify):

Impact reporting:☐

Project-by-project☒

On a project portfolio basis☐

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

Frequency:☒

Annual☐Other (please specify):☐

Semi-annual

22Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Information reported (expected or ex-post):☒

GHG Emissions / Savings☐

Energy Savings☐

Decrease in water use☐

Other ESG indicators (please
specify):

Means of Disclosure☐

Information published in financial report☐

Information published in ad hoc☒
documents
Reporting reviewed (if yes, please specify which parts of the reporting are subject toexternal review):☐☐

Information published in sustainability
reportOther (please specify): Website

Where appropriate, please specify name and date of publication in the useful links section.

USEFUL LINKS (e.g. to review provider methodology or credentials, to issuer’s documentation, etc.)
http://www.dbj.jp/en/
http://www.dbj.jp/en/co/info/outline.html

SPECIFY OTHER EXTERNAL REVIEWS AVAILABLE, IF APPROPRIATE
Type(s) of Review provided:☐

Consultancy (incl. 2nd opinion)☐

Certification☐

Verification / Audit☐

Rating☐Other (please specify):

Review provider(s):Date of publication:

ABOUT ROLE(S) OF REVIEW PROVIDERS AS DEFINED BY THE GBP
i.

Consultant Review: An issuer can seek advice from consultants and/or institutions with recognizedexpertise in environmental sustainability or other aspects of the issuance of a Green Bond, such as theestablishment/review of an issuer’s Green Bond framework. “Second Party Opinions” may fall into thiscategory.

ii.

Verification: An issuer can have its Green Bond, associated Green Bond framework, or underlying assets
independently verified by qualified parties, such as auditors. In contrast to certification, verification may
focus on alignment with internal standards or claims made by the issuer. Evaluation of the environmentally
sustainable features of underlying assets may be termed verification and may reference external criteria.

iii.

Certification: An issuer can have its Green Bond or associated Green Bond framework or Use of Proceeds
certified against an external green assessment standard. An assessment standard defines criteria, andalignment with such criteria is tested by qualified third parties / certifiers.

iv.

Rating: An issuer can have its Green Bond or associated Green Bond framework rated by qualified third
parties, such as specialised research providers or rating agencies. Green Bond ratings are separate from anissuer’s ESG rating as they typically apply to individual securities or Green Bond frameworks / programmes.

23

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Disclaimer© Sustainalytics 2018. All rights reserved.
The intellectual property rights to this Second-Party Opinion (the “Opinion”) are vested exclusively in
Sustainalytics. Unless otherwise expressly agreed in writing by Sustainalytics, no part of this Opinion may be
reproduced, disseminated, comingled, used to create derivative works, furnished in any manner, madeavailable to third parties or published, parts hereof or the information contained herein in any form or in any
manner, be it electronically, mechanically, through photocopies or recordings, nor publicly released without
the “Green Bond Framework” in conjunction with which this Opinion has been developed.
The Opinion was drawn up with the aim to provide objective information on why the analyzed bond isconsidered sustainable and responsible, and is intended for investors in general, and not for a specific investor
in particular. Consequently, this Opinion is for information purposes only and Sustainalytics will not accept
any form of liability for the substance of the opinion and/or any liability for damage arising from the use ofthis Opinion and/or the information provided in it.
As the Opinion is based on information made available by the client, the information is provided “as is” and,
therefore Sustainalytics does not warrant that the information presented in this Opinion is complete, accurate
or up to date, nor assumes any responsibility for errors or omissions. Any reference to third party names isfor appropriate acknowledgement of their ownership and does not constitute a sponsorship or endorsement
by such owner.
Nothing contained in this Opinion shall be construed as to make a representation or warranty, express or
implied, regarding the advisability to invest in or include companies in investable universes and/or portfolios.
Furthermore, nothing contained in this Opinion shall be construed as an investment advice (as defined in theapplicable jurisdiction), nor be interpreted and construed as an assessment of the economic performance andcredit worthiness of the bond, nor to have focused on the effective allocation of the funds’ use of proceeds.
The client is fully responsible for certifying and ensuring its commitments’ compliance, implementation andmonitoring.

24

Framework Overview and Second-Party Opinion

Development Bank of Japan Inc. Sustainability Bond

Sustainalytics
Sustainalytics is a leading independent ESG and corporate governance research, ratings and analytics firmthat support investors around the world with the development and implementation of responsible investment
strategies. With 13 offices globally, the firm partners with institutional investors who integrate ESG
information and assessments into their investment processes. Spanning 30 countries, the world’s leading
issuers, from multinational corporations to financial institutions to governments, turn to Sustainalytics forsecond-party opinions on green and sustainable bond frameworks. Sustainalytics has been certified by the
Climate Bonds Standard Board as a verifier organization, and supports various stakeholders in thedevelopment and verification of their frameworks. Global Capital named Sustainalytics the “Most Impressive
Second Party Opinion Provider in 2017. In 2018, the firm was recognized as the “Largest External Reviewer”
by the Climate Bonds Initiative as well as Environmental Finance. In addition, Sustainalytics received a Special
Mention Sustainable Finance Award in 2018 from The Research Institute for Environmental Finance Japan for
its contribution to the growth of the Japanese Green Bond Market.
For more information, visit www.sustainalytics.com
Or contact us info@sustainalytics.com

25