1. Use of proceeds
The proceeds of the green bond will be allocated towards new or existing businesses and/or projects that relate to the eligible businesses and/or projects described below.
Eligible businesses and/or projects:
Renewable energy/clean energy business (wind, hydrogen, and geothermal power generation facilities/businesses)
Expenditures for, and refinancing of, the Group's renewable energy/clean energy business (such as R&D funds, business development and operation funds, and working capital) that meet the following criteria:
- Hydrogen power generation businesses and/or projects for 100% hydrogen combustion;
- Geothermal power generation businesses and/or projects that emit less than 100g CO2/kWh;
- Investments in corporations that are exclusively engaged in the renewable energy/clean energy business or generate at least 90% of their sales from renewable energy/clean energy-related business
- The expenditure for the business and/or project was made within 7 years preceding the green bond issuance date.
2. Process for project evaluation and selection
2.1 Process for project selection
MHI's business divisions select the businesses and/or projects to be funded by green bond proceeds, and the finance department then confirms the compliance with the eligibility criteria, and the CFO will make the final decision.
2.2 Process to Mitigate Environmental and Social Risks
In executing projects, MHI is committed to the mitigation of environmental and social risks according to the eligibility criteria and contributing to the creation of a sustainable society in accordance with the Group's CSR framework.
3. Management of Proceeds
MHI's finance department manages the allocation of the green bond proceeds on a regular basis (at least once a year), until the maturity of the green bond, using an internal management system. After the issuance of a green bond, the proceeds will be allocated entirely and immediately to eligible businesses and/or projects. Pending the allocation to eligible businesses and/or projects, the amount of unallocated proceeds will be held in cash or cash equivalents if the allocation requires a certain period of time.
MHI will annually report on the allocation of proceeds to eligible businesses and/or projects, management of proceeds, and social impact on its corporate website, or in a timely manner whenever any significant change occurs. The first report will be made public within one year from the green bond issuance.
4.1 Allocation reporting
Until the proceeds are fully allocated, MHI will provide information on the allocation of proceeds to businesses and/or projects that meet the eligibility criteria, on an annual basis.
MHI will report on the following items to the extent practicable.
- Status of allocation to eligible businesses and/or projects, overview with up-to-date progress
- Amount or share of unallocated proceeds, allocation schedule, and the method to manage unallocated proceeds
Moreover, in case of refinancing an asset that requires long-term maintenance through the issuance of multiple green bonds, MHI will disclose the asset's age and remaining useful life and the amount to be refinanced as at the time of the bond issuance.
4.2 Impact reporting
Until the maturity of the green bond, MHI will provide, to the extent practicable, the following and other indices that indicate positive environmental impacts:
- Annual power generation (MWh) and annual CO2 reduction (tons) of renewable energy/clean energy facilities related to the funded business
- information on their progress in R&D (such as the outline of projects participated in)
- Management Policy
- Financial Data
- IR Library
- Stock and Bond Information