Notice Regarding Execution of the First Transition-Linked Loan*1 for a Japanese food and beverages company

TOKYO, December 26, 2022 - Kirin Holdings Company, Limited (Kirin Holdings) announces that it will conclude a transition-linked loan (planning to pursue in January 2023) as the first case among Japanese food and beverages companies. This loan is based on the Kirin Sustainable Finance Framework*3, which was updated in December 2022, and the proceeds will be allocated to funding our energy conservation efforts for reducing Scope 1 and 2 greenhouse gas(GHG) emissions and renewable energy-related projects. We are selected as a recipient of the Ministry of Economy, Trade and Industry (METI)’s FY2022 subsidy for global warming countermeasures promotion project. Also, our business adaption plan has been approved as eligible based on the Industrial Competitiveness Enhancement Act, and thus the performance-linked interest subsidies program (financial support for promoting the transition towards achieving a carbon-neutral economy*4) will be applied for the loan.

1. Objectives and Background of the Loan

Kirin Holdings sets the Kirin Group’s Environmental Vision 2050 as the guidepost for our long-term environmental initiatives, and is pursuing a target of net-zero emissions across our value chain by 2050 to address climate actions. The Kirin Group’s business operations constitute a global value chain with a wide variety of GHG emission sources. Kirin Holdings considers a phased transition to be a practical path to achieving net-zero emissions across the entire value chain, and has formulated a transition roadmap and begun actions based on the roadmap (from January 2022).
To take steps toward the transition from the area of finance, Kirin Holdings incorporated elements of the following established guidelines into the Kirin Sustainable Finance Framework (released in March 2022): the Climate Transition Finance Handbook of the International Capital Market Association (ICMA) and the Basic Guidelines on Climate Transition Finance of the Japanese Financial Services Agency, METI, and the Ministry of the Environment (collectively “transition finance-related guidelines”), as well as the Sustainability-Linked Loan Principles of the Loan Market Association (LMA), the Asia Pacific Loan Market Association (APLMA), and the Loan Syndications & Trading Association (LSTA). We will be the first Japanese food and beverages company to establish a framework which complies with transition finance-related guidelines and to have obtained a second party opinion*5 from an independent third party. We are also selected as a recipient of METI’s FY2022 subsidy for global warming countermeasures promotion project, in which Kirin Holdings’ transition strategy is evaluated as a potential benchmark case for non-GHG-intensive industries.
To realize net-zero by 2050, Kirin Holdings will continue our efforts to lead the establishment of a carbon-free society, aiming to fulfill the Kirin Group Environmental Vision 2050 and strengthen the resilience of society and companies.

2. Outline of Transition-Linked Loan (planned)

Borrower	Kirin Holdings Company, Limited
Loan amount	50 billion yen
Loan term	10 years
Loan execution	January 2023
Structuring agent	Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
External reviewer	DNV BUSINESS ASSURANCE JAPAN K.K.
Lender	MUFG Bank, Ltd.
KPI (Key Performance Indicator)	GHG emission reduction rate in Scope 1 and Scope 2 (Base year: FY2019)
SPT(Sustainability Performance Target)	50% reduction in GHG emissions in FY2030 (Base year: FY2019) *Multiple SPTs have been set over the loan period based on the above SPTs and the interest subsidy scheme of the Ministry of Economy, Trade and Industry.
Loan characteristics	An interest subsidy of up to 0.2% will be granted by the government if the SPT is achieved.

*1. A Transition-linked loan is a form of financing that enables borrowers taking climate actions to use the proceeds to fund their activities aiming to reduce GHG emissions in alignment with their long-term strategy toward realizing a decarbonized society.
The financing instrument requires to set Sustainability Performance Targets (SPTs) which are in line with Paris-aligned mid-to-long term transition strategy of borrowers and the financial/structural characteristics of it may vary depending on whether the pre-defined SPTs are achieved.
*2. Please refer to the METI’s website for details about transition finance and the FY2022 subsidy for global warming promotion countermeasures project.
https://www.meti.go.jp/policy/energy_environment/global_warming/transition_finance.html (Japanese only)
Case Summary:
https://www.meti.go.jp/policy/energy_environment/global_warming/transition/overview_kirinhd.pdfPDF：1.3MB (Japanese only)
*3. Please refer to the Kirin Holdings website for details about the Kirin Sustainable Finance Framework.
https://www.kirinholdings.com/en/impact/csv_management/sustainable_finance/ (English)
*4. Please refer to the METI’s website for details about the financial support for promoting the transition towards achieving a carbon-neutral economy
https://www.meti.go.jp/policy/economy/keiei_innovation/sangyokinyu/cnrishihokyu/index.html (Japanese only)
*5. Please refer to the DNV Business Assurance, Japan website for details about the second party.
https://webmagazine.dnv.co.jp/797(Japanese only)

＜Reference＞
Kirin Group Environmental Vision 2050
https://www.kirinholdings.com/en/impact/env/mission/ (English)

About Kirin Holdings

Kirin Holdings Company, Limited is an international company that operates in the Food & Beverages domain (Food & Beverages businesses), Pharmaceuticals domain (Pharmaceuticals businesses), and Health Science domain (Health Science business), both in Japan and across the globe.

Kirin Holdings can trace its roots to Japan Brewery which was established in 1885. Japan Brewery became Kirin Brewery in 1907. Since then, the company expanded its business with fermentation and biotechnology as its core technologies, and entered the pharmaceutical business in the 1980s, all of which continue to be global growth centers. In 2007, Kirin Holdings was established as a pure holding company and is currently focusing on boosting its Health Science domain.

Under the Kirin Group Vision 2027 (KV 2027), a long-term management plan launched in 2019, the Kirin Group aims to become “A global leader in CSV*, creating value across our world of Food & Beverages to Pharmaceuticals.” Going forward, the Kirin Group will continue to leverage its strengths to create both social and economic value through its businesses, with the aim of achieving sustainable growth in corporate value.

* Creating Shared Value: combined added value for consumers as well as for society at large.