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Meidensha Green Bonds

For Green bond eligibility Post-issuance

DNV GL Verification Report

Jan. 2020

DNV GL Business Assurance Japan K.K.

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Scope and Objectives
The scope of this Post Issuance Verification Report includes the Meidensha Corporation(hereinafter, “Meidensha” or “Issuer”) Green bond Issuance currently outstanding.
Meidensha on 23rd July 2019, issued 6.0 billion-JPY Green Bond (“BOND”) and has
secured certification of the BOND from the Climate Bonds Initiative against the ClimateBonds Standard.
Meidensha has used the proceeds of the BOND to finance the nominated projects andassets falling under the following categories ;- Clean Transportation (3 manufacturing facilities for EV motors & invertors)- Renewable Energy (Solar PV power)
DNV GL Business Assurance Japan K.K. (henceforth referred to as “DNV GL”, “us”,“our” and “we”) has been commissioned by Meidensha, to provide the Post Issuance
verification of the BOND as an independent and approved verifier under the CBS v2.1*1.
DNV GL’s criteria and information covered to achieve this is described under ‘Work
Undertaken’ below. The Post Issuance Verification was conducted on the provided
information including interview by Meidensha dated 12th November 2019.
*1: Climate Bonds Standard | version 2.1 (Climate Bonds Initiative)

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In this paper, no assurance is provided regarding the financial performance of the BOND,
the value of any investments in the BOND, or the long term environmental benefits of thetransaction. Our objective has been to provide an assessment as to whether the BOND
has met the criteria set out in the CBS v2.1 and the associated Sector Technical Criteriaon the basis set out below,• Low Carbon Land Transport and the Climate Bonds Standard (Version 1.0)

Also, solar PV facility installed to Project 02 Kofu Meidensha Electric Mfg. Co., Ltd. has
been assessed its eligibility as secondary environmental benefit referring following Sector
Technical Criteria• Climate Bonds Standard & Certification Scheme Sector Criteria for Solar (version 2.1)

The scope of this DNV GL opinion is limited to the CBS v2.1. during its verification, at thetime of review, Technical Criteria for - ‘Low Carbon Land Transport and the Climate Bonds
Standard (version 1.0)’ (e.g. passenger, light-duty vehicles, component, EV and hybrid) ,and Climate Bonds Standard & Certification Scheme Sector Criteria for Solar (version 2.1)
are available for Issuer use.

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Responsibilities of the Directors of Issuer(Meidensha) and DNV GL
The management of Meidensha has provided the information and data used by DNV GL
during the delivery of this review. DNV GL’s statement represents an independent
opinion and is intended to inform Meidensha management and other interested
stakeholders in the BOND as to whether the established criteria have been met, basedon the information provided to us. In our work we have relied on the information andthe facts presented to us by Meidensha.
DNV GL is not responsible for any aspect of the nominated projects and assets referred
to in this opinion and cannot be held liable if estimates, findings, opinions, or conclusions
are incorrect. Thus, DNV GL shall not be held liable if any of the information or data
provided by Meidensha’s management and used as a basis for this assessment were notcorrect or complete.

Basis of DNV GL’s opinion
DNV GL has conducted the verification against the CBS v2.1 and associated Sector
Technical Criteria through the creation and execution of a verification protocol
addressing each requirement of the CBS v2.1 and the associated Sector TechnicalCriteria. The detail of areas covered in the DNV GL verification is summarised in
Schedule 2 below.

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Work undertaken
Our work constituted a high level review of the available information, based on theunderstanding that this information was provided to us by Meidensha 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:
Initial (Pre-Issuance) Verification (completed previously)• Creation and execution of a Climate Bonds Standard Protocol, adapted to include therelevant Sector Technical Criteria for the BOND nominated projects and assets, as
described above and in Schedule-2 to this Assessment;• Assessment of documentary evidence provided by Meidensha on the BOND andsupplemented by a high-level desktop research, onsite visit for documentation review
and interviews with key personnel from Meidensha. These checks refer to current
assessment best practices and standards methodology;• Discussions with Meidensha management, and review of relevant documentation;• Documentation of findings against each element of the criteria.
Post-Issuance Verification• Assessment of documentary evidence provided by Meidensha on the BOND andsupplemented by a high-level desktop research, documentation review and interviews
with key personnel from Meidensha.
• Discussions with Meidensha management, and review of relevant documentation;• Review of the nominated projects and assets as described in Schedule-2 as at thetime of Periodic Verification;• Verification of impact reporting claims and associated data where applicable;• Review and testing where possible of Impact Reporting Data;• Documentation of findings for Periodic Verification as detailed in this Assessment. Ouropinion as detailed below is a summary of these findings.

DNV GL’s findings are listed below:

Page 6 of 14Findings and DNV GL’s opinion
DNV GL has performed a Post Issuance Verification of the BOND. It is DNV GL’s
responsibility to provide an independent verification statement on the compliance of theBOND with the CBS v2.1.
DNV GL conducted the Post Issuance verification in accordance with the CBS v2.1 andwith International Standard on Assurance Engagements 3000 Assurance Engagements
other than Audits or Reviews of Historical Information. The verification included i)checking whether the provisions of the CBS v2.1 were consistently and appropriately
applied and ii) the collection of evidence supporting the verification.
DNV GL’s verification approach draws on an understanding of the risks associated with
conforming to the CBS v2.1 and the controls in place to mitigate these. DNV GL plannedand performed the verification by obtaining evidence and other information andexplanations that DNV GL considers necessary to give limited assurance that the BOND
meet the requirements of the CBS v2.1.
The main information from the post issuance verification is as follows ;・Green bond proceeds have been allocated to the eligible projects described inschedule-1. Total amount of funding as of Sep. 2019 is 3.8 billion-JPY compared
the total amount of the proceeds (6.0 billion-JPY). Balance of the proceeds(unallocated amount), 2.2 billion-JPY will be funded to the eligible projects asprojects progress based on the schedule.

・Green bond proceeds have been partially allocated as refinance. Refinance shareslightly changed from pre-issuance stage due to progress of project and its
payment date (refer to schedule-1, updated).

・Projects progress follows the schedule. Nagoya works and Kofu Meidensha has
started from Nov. 2019, and Numazu works has started from Apr. 2019.

Post Issuance Verification Summary
Based on the limited assurance procedures conducted, nothing has come to ourattention that causes us to believe that the BOND is not, in all material respects, incompliance with the requirements of the CBS v2.1 and associated Sector TechnicalCriteria.
Considering all of the above verification, DNV GL has confirmed that the nominatedgreen projects of Meidensha has been executed in accordance with related criteria ofClimate Bonds Standard v2.1 through the post issuance verification.

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DNV GL Business Assurance Japan K.K.

15th Jan. 2020

Mark Robinson

Naoki Maeda

Manager, Sustainability Services

Managing Director

DNV GL – Business Assurance, Australia

DNV GL – Business Assurance Japan K.K.

Masato Kanedome
Project Leader
DNV GL – Business Assurance Japan K.K.

About DNV GL
Driven by our purpose of safeguarding life, property and the environment, DNV GL enables organisations to advance thesafety and sustainability of their business. Combining leading technical and operational expertise, risk methodology andin-depth industry knowledge, we empower our customers’ decisions and actions with trust and confidence. We
continuously invest in research and collaborative innovation to provide customers and society with operational andtechnological foresight. With our origins stretching back to 1864, our reach today is global. Operating in more than 100countries, our 16,000 professionals are dedicated to helping customers make the world safer, smarter and greener.

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1. Schedule-1 Nominated Green bond project & assets outline (Details are in following Appendix)
Schedule data as of 12 November 2019 when post-issuance verification, Data confirmed by DNV GL to relate to the Meidensha is executing green
bond projects, as scheduled.

Table-1 Meidensha Green Bonds ProjectProjectNo.

01

Nominated
Project/Asset
Nagoya Works:
Renovation of existing buildings andintroduction of new facilities(solely to enable the installation of newequipment and/or upgrade existingequipment)(refinance share : 14%*2)

02

Kofu Meidensha Electric Mfg. Co., Ltd.:
Construction of new building andintroduction of new facilities*1(refinance share : 5%*2)

03

Numazu Works:
Expansion of facilities(refinance share : 100%)

Green Project
Category

Clean Transportation

Green Project
Sub-Category
EV, PHEV and HVcomponent for light-duty
vehicle(automobile)

Remarks (on going)
Location, size, schedule, etc.
Location: Kiyosu City, Aichi Prefecture
Operation from : Nov. 2019
Capacity : 4,620m2, 170,000
units/year(max.)

Location: Chuo City, Yamanashi
Prefecture
Clean Transportation
Operation from : Nov. 2019
Capacity : 2,660m2, 170,000 units/year(max.)
Location: Numazu City, Shizuoka
EV, PHEV and HVPrefecture
Operation from : Apr. 2019
Clean Transportation component for light-duty
vehicle(automobile)
Capacity : 240m2, 120,000 units/year(max.)
Total Exposure : approx. 7 billion JPY
Bond amount : 6 billion JPY (Bond maturity : 5 years)
Funded amount : 3.8 billion JPY (as of Sep. 2019)
EV, PHEV and HVcomponent for light-duty
vehicle(automobile)*1 : Including roof-top type solar PV (approx. 300kW) which meets CBS sector criteria as secondary environmental benefit
This verification report will be updated and/or published if important change is encountered according to the requirement of relevant criteria, byagreement both Meidensha and DNV GL*2 : updating the latest information

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Schedule-1 Appendix-1/3
DNV GL has confirmed that the proceeds from the BOND issued by Meidensha has been
allocated to the one project portfolio (including 3 projects) which meets the green bondcriteria below. Meidensha has allocated the proceeds 3.8 billion JPY as finance andrefinance, as of Sep. 2019.

Eligible green projects portfolio:
Mass-production facilities* for electric vehicle (EV) parts
01 Nagoya Works
02 Kofu Meidensha Electric Mfg. Co., Ltd.
03 Numazu Works*a new production hub for such parts, upgrading and mass-production lines construction,a new building for producing EV parts, and beef up of existing production lines for parts

Table-1, Figure-1, -2, Photo-1 and Schedule-1 show the list of green projects 01-03
as described above.

Figure-1 Project locations and products

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Schedule-1 Appendix -2/3
Table-1 Outline of Meidensha Green Bonds Project

Project 01 : Nagoya Works:
Renovation of existing buildings and introduction of new facilities(solely to enable the installation of new equipment and/or upgrade existing equipment)

Location
Parts to be produced
Start of operations
Total floor space
Production capacity-496 Ittangosewari, Nishibiwajimacho, Kiyosu City, Aichi Prefecture
Inverter-Integrated Motor Units for EVs
November 2019
4,620 ㎡
Maximum annual production of 170,000 units

Location
Parts to be produced
Start of operations
Total floor space
Production capacity
Remark

825 Nakadate, Chuo City, Yamanashi Prefecture
Motors for EVs
November 2019
2,660 ㎡
Maximum annual production of 170,000 units
Equiped with roof-top solar PV (approx. 300kW)

Project 02 : Kofu Meidensha Electric Mfg. Co., Ltd.:
Construction of new building and introduction of new facilities

Project 03 : Numazu Works:
Expansion of facilities
Location

Parts to be produced
Start of operations
Total floor space
Production capacity

515 Kaminakamizo, Higashimakado, Numazu City, Shizuoka
Prefecture
Inverters for EVs
April 2019
240 ㎡
Maximum annual production of 120,000 units
http://www.meidensha.com/news/news_03/news_03_01/1228557_3190.html

NagoyaKofu Meidensha
Electric Mfg. Co.,Ltd.

Figure-2 Project location (Meidensha website)

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Schedule-1 Appendix-3/3＜Example : Integrated Motor/Inverter for EVs＞

Example Motor

Example Inverter

Photo-1 Products Example EV, PHEV

<Product Features>
Meidensha supplies the motor and the inverter that are used in the electric vehicle.
Meidensha’s products achieved reducing size and weight, high efficiency, low noise.
Meidensha’s experience and technology are useful for the high reliability withstanding
vehicle mounting. Meidensha is developing the drive system for the next generation
vehicle, for example drives using SiC module.
o Reducing size and weighto High efficiency
o Low noiseo High reliability for withstanding the severe condition at vehicle mounting

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Schedule-2 CBS v2.1 Verification criteria
Summary criteria for assertions of compliance with the CBS v2.1
The criteria against which the relevant projects and assets have been reviewed prior to their inclusion in the BOND are grouped under therequirements as detailed within the CBS v2.1 and associated Sector Technical Criteria. These requirements broadly include:
Part A: General Requirements
AreaRequirement

Nominated Projects & Assets

A decision-making process shall be maintained to determine the continuing eligibility of the nominatedprojects and assets.

Use of Proceeds

Net proceeds of the bond must be allocated to nominated projects and assets.

Non-Contamination of Proceeds

The net proceeds of the bond shall be credited to a sub-account, moved to a sub-portfolio or otherwise
identified in an appropriate manner, and documented.

Confidentiality

Information about the nominated projects and assets shall be provided to the Verifier and to the ClimateBonds Standard Board to support the assessment of conformance with the Climate Bonds Standard. The
information disclosed to the Verifier and the Climate Bonds Standard Board may be subject to confidentiality
arrangements.

Reporting

There are specific requirements in respect of reporting on use of proceeds and nominated projects and assets.

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Part B: Low Carbon Contribution - Eligible projects and physical assets
Nominated projects and assets include financing of, or investments in, projects and assets which enable the mitigation of greenhouse gases,
as detailed in Schedule 1.
Area

Requirement

Low Carbon Transport

Criterion 1: Emissions thresholds for private light-duty and heavy goods vehicles

Relevant criteria ;Criterion 1 & Criterion 2Emissions thresholds for private light-duty and heavy goods vehicles Assets related to the manufacture of lightduty and heavy goods vehicles qualify for certification if they belong to a technology category where the perpassenger-km or per ton-km Scope 1 emissions of the vehicles are universally estimated to be lower than theappropriate threshold.
-Automatically eligible Light Duty and Heavy Goods Vehicles: electric and fuel cell vehicles-Potentially eligible (depending on threshold) Light Duty Vehicles: hybrid vehicles

Criterion 2: Components for private vehicles
Components for private vehicles Assets related to the manufacture of components for private vehicles if it can bedemonstrated they are exclusively destined for the manufacture of vehicles that would qualify under Criterion 1.
Solar
Relevant criteria ;Criterion 1 & Criterion 2

Criterion 1︓ Eligible Project & Assets relating to solar energy generation shall be projects or assets that operate or
are under construction to operate in one or more of the following activities:-Onshore solar electricity generation facilities-Wholly dedicated transmission infrastructure and other supporting infrastructure for onshore solar electricity
generation facilities including inverters, transformers, energy storage systems and control systems.

-

Onshore solar thermal facilities such as solar hot water systems.

Criterion 2︓ Non-solar fuel use
Eligible Project & Assets that have activities in solar electricity generation facilities or solar thermal facilities shallhave a minimum of 85% of electricity generated from solar energy resources

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Part C: Bond structures
AreaRequirement

Project Holding

The issuer of a climate bond shall continue to hold nominated projects and assets which have a value at least
equal to the original principal amount of the bond at the time of issuance or the amount outstanding as thecase may be.

Earmarking

The Issuer of the bond shall maintain the earmarking process to manage and account for funding to thenominated projects and assets.