Sustainability Bond Framework
NEC Capital Solutions Limited

September 2023

NEC Capital Solutions Limited Sustainability Bond Framework
Introduction
NEC Capital Solutions Limited (hereinafter “the Company”) was founded in 1978 as a sales financing company
for NEC products. Since then, we have expanded the scope of our business as a financial service provider bydeveloping a full range of financial products to address our customers’ business challenges, in addition toleases for ICT and other equipment. Additionally, we are working with our customers, which include many
government agencies and local governments, to promote the development of social infrastructure.
Leveraging our unique characteristics of being a financial services company with the DNA of NEC and providing
services that are unique to the Company, we are committed to practicing management based on the concept
of “Creating Shared Value” (CSV), aiming for sustainable growth while increasing social value and creating
economic value.
We will diversify financing methods through the use of sustainability bonds, and contribute to solving social
issues by implementing business activities that address the material issues that we have identified.

1. Corporate Philosophy and Group Vision
As a financial services company of the NEC Group, we provide solutions for various kinds of issues regarding
the managerial resources (capital) of our customers. Our Corporate Philosophy and Group Vision are as follows.

◼

Corporate Philosophy

Helping Societies Advance Through “Capital Solutions*1”
The Company aims to be a best partner worthy of our customers’ trust, where all employees have a clear
understanding of their respective mission, values, and vision based on our Corporate Philosophy.
*1 Capital Solutions: The Company’s own term referring to the provision of solutions (“Solutions”) for a wide
range of issues related to customers’ managerial resources (“Capital”)◼

Group Vision 2023
"Be a solution company leading the next-generation circular economy”

In April 2023, we formulated a new Group Vision to “Be a solution company leading the next-generation circular
economy,” as our basic management policy, aiming to help societies advance, as stated in our corporate
philosophy. While continuing with management based on the concept of Creating Shared Value (CSV) that wehave advocated thus far, we have set the 2030 as the goal for our new Group Vision, synchronized with theSDGs, which have a high affinity with CSV management, in order to respond to the diversification of social
issues such as climate change, advancements in cutting-edge technologies such as IoT, AI, robotics and otherdigital technologies, and the significant changes they will bring to future industries and social life.

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◼

Our approach to “a next-generation circular economy”

Up through this point, we have taken steps to achieve a circular economy through the introduction of ecofriendly products and resource circulation through advanced 3R processing by way of the lease business. The
next-generation circular economy anticipated for 2030 and beyond not only projects a reduction in theenvironmental load through improved resource efficiency, but also imagines a world in which resources
continue to be used in a cyclical process, and a circular economy and society that goes on from there andcontinues to generate new added value.
In this envisioned society, the Group will strive to achieve a “next-generation circular economy” by realizing avirtuous cycle of both environment and growth through the innovation of capital solutions that go beyond
leasing, by providing services that lead to the cyclical use of products, services that contribute to the virtuous cycleof local economies and societies, and services that facilitate corporate growth that lead to a virtuous circle allwhile addressing the diversifying challenges faced by our customers and society.

◆◆◆

Services that lead to cyclical use of products
Services that lead to a virtuous circle for local economies
and societies
Services that lead to a virtuous circle for corporate growth

Current services (example)➢
Leasing and rental with maintenance➢
Service model (from owning to using)➢
PC-LCM services➢
Subscription services➢
Effective use of asset (real estate-related business)➢
Infrastructure sharing➢
Renewable energy power generation➢
Life cycle support for companies (from establishment torevitalization)➢
Projects to revitalize communities, etc.

Source: the Company’ s website◼

Solution Company

A solutions company embodies its corporate philosophy (reason for existence) and the practice of capitalsolutions stated in the Company’s name by innovating solutions in vendor finance, ICT services, and financial
products both in Japan and overseas, and the term also carries the intention of not only expanding existing
businesses but also venturing into peripheral areas, initiating new businesses, and taking on the challenge ofcreating cyclical services. In addition to the general meaning of company, the word also includes themeaning of “a group of people or colleagues who share values.” In addition to increasing profitability byproviding value-added solutions to social issues, this Group Vision is also intended to create a company that
employees, who share our values, can be proud of (improve engagement).

◼

Alignment with SDGs

By providing services to solve social issues through the practice of CSV management, the Group hopes tocontribute to achievement of the SDGs by advancing efforts to enhance social value through its business. Byleveraging our unique strengths as a financial services company in the NEC Group, we intend to contribute to© NEC Capital Solutions Limited 2023

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the realization of 8 of the 17 goals, particularly the 8 on the bottom right, and we intend to make contributions
not limited to these goals as the global environment changes.
Of the 17 goals, the Group can contribute to thefollowing 8 goals in particular (we will respond toenvironmental changes around the world, without
limiting ourselves to these goals)

Source: Website of United Nations

2. Medium-term Plan 2025◼

Overview of Medium-term Plan 2025

Group Vision 2030 has three major phases, and Medium-Term Plan 2025 has been formulated as a plan torealize the first phase.
Stage One: Create circular services unique to the Group
Stage Two: Develop circular services unique to the Group
Stage Three: Establish revenue from circular services unique to the Group

Source: the Company’ s website
Medium-Term Plan 2025, which is the first step toward realizing the new Group Vision, is a three-year period
in which we will take on the challenge of transformation aimed at our vision for 2030 and the achievement ofsustainable growth, and we will create circular services unique to the Company to solve customer and social
issues through practicing CSV management and work toward realizing the next-generation circular economy.
The aims of Medium-Term Plan 2025 from the viewpoints of customers, society, shareholders, and the company
itself are defined as follows, and measures are embodied in each strategy.

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Source: the Company’ s website

3. Identification of material issues
In conjunction with the formulation of the new Group Vision 2030, we have redefined the material issues of
the Group with respect to solving social issues through our business activities and the management foundationthat supports such activities, as follows.

Source: the Company’ s website
In business activity, we have identified promotion of decarbonized society and circular economy, promotion of
establishment of social and ICT infrastructure, and creation of new services and businesses to resolve social
issues. In management foundation, we have identified investment in human capital and pursuit of corporate
governance that supports improved corporate value.

4. Set non-financial indicators
In Medium-Term Plan 2025, the following were announced as part of the non-financial targets: CO2 reductions
to achieve carbon neutrality, establishment of social infrastructure, promotion of cyclical use following
expansion of the ICT business, promotion of response to climate change, and promotion of activities
contributing to society with natural capital in mind.
By addressing these non-financial targets, we aim to realize our new Group Vision.

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Framework
The Company’s Sustainability Bond Framework (hereinafter the “Framework”) was formulated based on the“Sustainability Bond Guidelines (SBG) 2021,” “Green Bond Principles (GBP) 2021,” and “Social Bond Principles(SBP) 2021” set forth by the International Capital Market Association (ICMA), the “Green Bond Guidelines 2020”
set forth by the Ministry of the Environment of Japan, and the “Social Bond Guidelines 2021” set forth by the
Financial Services Agency of the Japanese Government. The Framework contains stipulations concerning thefollowing four elements.
1. Use of funds raised
2. Processes for assessing and selecting projects
3. Management of funds raised
4. Reporting

1．Use of Funds Raised
The Company plans to allot funds raised through the issuance of sustainability bonds to the new financing or
refinancing of green projects and social projects that satisfy the eligibility criteria set forth below.
Furthermore, the use of funds for refinancing shall be limited to payments for projects implemented no morethan 24 months prior to the issuance of the sustainability bonds.
[Green Projects]
Classification
Renewable energy

Eligibility Criteria
The installation, etc., of renewable energy power generation facilities andequipment listed below. This is subject, however, to the assumption that all
projects satisfy the environmental assessment criteria.
Additionally, the installation location must be in Japan, and it shall belimited to projects where it is judged there are no issues following advancesurveys concerning the destruction of the natural environment, etc.
・ Solar power・ Wind power (including offshore and onshore)・ Hydropower (small-scale hydropower generation)

・

Geothermal (limited to projects with negative CO2 emissions overtheir life cycle)[Social Projects]
Classification
Access to essential services

Development of basic
infrastructure at reasonable
pricesEligibility Criteria
Development of educational ICT
environments in schools
Supply of PCs to elementary,junior high, and high schools, aswell as universities (including
both state and private schools)
Provision of the following
healthcare facilities for seniorcitizens
・ Fee-paying homes for theelderly
・ Serviced accommodation forsenior citizens

Provision of ICT solutions topublic and medical institutions© NEC Capital Solutions Limited 2023

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Target PeopleChildren(In particular, children unable toaccess educational opportunities
owing to economic
circumstances)
Senior citizens

The general public

2．Processes for Assessing and Selecting Projects
Projects receiving funds from sustainability bonds will be selected based on materiality aimed at realizing
CSV management. The IR & PR Department of the Company selects the eligible projects, and assesses
selected projects’ conformity with the eligibility criteria. Next, the Executive Officer in charge of the Finance
Department and the IR & PR Department comprehensively analyzes and considers the selected projects that
fulfill the eligibility criteria after they have passed through the aforementioned process, and he or she makes
the ultimate decision.
Furthermore, the Company confirms that all candidate projects have addressed the following points, in orderto reduce environmental and social risk.
・The project complies with laws and regulations related to the environment, etc., as required by thenational and local governments of the country where the project is being implemented, and surveys ofenvironmental impact are conducted as necessary・

Sufficient explanations are provided to local residents when implementing the project・

Materials procurement, measures to address substances that are harmful to the environment, and waste
management that align with the Company’s environmental policies

3．Management of Funds Raised
The Finance Department of the Company will use management files to allot and manage funds raised, inorder to ensure that the full amount of funds raised from the sustainability bonds is allotted to projects thatsatisfy the eligibility criteria. Once every quarter, the IR & PR Department and the Finance Department will
confirm the status of the allotment of funds using the prescribed methods. In the event that there areunallotted funds, projects that satisfy the eligibility criteria will be newly selected and the funds will bereallotted.
As a means of tracking the allotment of funds, these matters will be subject to confirmation by the General
Manager of the IR & PR Department and the General Manager of the Finance Department. During the period
until the funds raised from sustainability bonds are allotted to projects that satisfy the eligibility criteria, thefunds raised will be managed as cash or cash equivalents.

4．Reporting(1) Allotment of Funds Reporting
Until the full amount of funds raised from sustainability bonds is allotted to projects, the Company intends todisclose the following information on our website on an annual basis.
・The amount of funds allotted for each classification

・The amount of unallotted funds, the scheduled timing of allotment, and methods of managing funds
while they are unallotted・The estimated amount (or proportion) of any funds allotted to refinancing© NEC Capital Solutions Limited 2023

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Furthermore, after the allotment of the full amount of funds raised, the Company will provide timely
disclosure in cases when relevant assets can no longer be used on an ongoing basis, or in case of othermaterial events, such as cases when recovery from an accident is difficult.
(2) Impact Reporting
While any of the issuance amount of sustainability bonds remains outstanding, the Company intends todisclose the following information on our website on an annual basis, as an indication of the effect on theenvironment and society.
[Green Projects]
Classification
Renewable energy

Examples of Impact Reporting Indicators
 Number of domestic renewable energy power generation facilities
 Total amount of power generated per year (MWh) Equivalent amount of CO2 emissions reduced (estimated amount, t-

CO2)[Social Projects]
Classification
Access to essential services(Development of educational ICT
environments in schools)

OutputNumber of PCs
supplied to schools(GIGA Schools, etc.)

Access to essential services(Provision of healthcare facilities
for senior citizens)

Outline of healthcare
facilities for seniorcitizens
Number of facilities
and total number ofrooms

Development of basic
infrastructure at reasonable
prices(Provision of ICT solutions topublic and medical institutions)(1) Outline of ICT
systems for
firefighting andnumber of units(2) Outline of ICT
systems for
hospitals andnumber of cases© NEC Capital Solutions Limited 2023

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Outcome・ Number of schools
using PCs
・ Number of PCs
supplied(number of children
and pupils able to use)
・ Number of feepaying homes for theelderly with nursing
care, etc.
・ Total number ofrooms(number of seniorcitizens able to moveinto facilities)(1) Regional
population covered by
the relevant systems(2) Number of patientsor healthcare
professionals
benefiting from therelevant systems

ImpactRealization of a society
where all children
have equal access to
educational
opportunities
Contribute to social
demand for thedevelopment andenhancement ofhealthcare facilities forsenior citizens

Contribution to theshift to ICT throughthe development ofpublic infrastructure
and the creation ofsocial foundations