NYK Green Bonds

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NYK has begun to offer green bonds within the Japanese domestic market, becoming the world's first company to issue labelled green bonds in the global shipping business sector.

A green bond is one in which the proceeds are used solely for the purpose of funding environment-friendly projects. NYK's new medium-term management plan “Staying Ahead 2022 with Digitalization and Green” positions the company to integrate environmental, social, and governance (ESG) principles into management strategies to contribute to the sustainable development of society and enrichment of the company's corporate value.

NYK intends to use the net proceeds of the green bonds to expand the company's resources for the procurement of funds, as well as keep a wide range of stakeholders involved in the company's proactive approach to environmental investment.

Summary of Green Bonds

Name Nippon Yusen Kabushiki Kaisha Unsecured Corporate Bonds No.40 (NYK Green Bond)
Issue date May 24, 2018
Pricing date May 18, 2018
Maturity 5 years
Issue Amount 10 billion yen
Coupon 0.290%
Use of Proceeds Investment toward mainly new, but including existing, (refinancing) projects indicated in NYK's “Roadmap for Environmentally Friendly Vessel Technologies,” *1 such as (1) LNG-fueled ships, (2) LNG bunkering vessels, (3) ballast water treatment equipment, and (4) SOx (sulfur oxides) scrubber systems
Credit ratings A  (Japan Credit Rating Agency, Ltd.)

Third-party Evaluation On Eligibility

Second-party Opinion

NYK has formalized a Green Bond Framework, incorporating the Green Bond Principles,*2 under NYK's broader roadmap for sustainability in order to formalize the objectives, commitments, and processes related to this bond. A second-party opinion has been received from Vigeo Eiris.

MOEJ Model Case for Green Bonds

NYK's green bonds were given approval as “a model case for green bond issuance in fiscal year 2018” by the Ministry of the Environment, Japan (MOEJ) and have been confirmed to be in alignment with the Green Bond Guidelines*3 issued by the MOEJ and its contractors.

*2 Green Bond Principles
Voluntary process guidelines regarding green bond issuance established by the Green Bond Principles Executive Committee, which is a membership association facilitated by the International Capital Market Association (ICMA).
*3 Green Bond Guidelines
Guidelines, formulated and announced by the MOEJ in March 2017 with due consideration to consistency with the Green Bonds Principles, that provide issuers, investors, and other market participants with illustrative examples of specific approaches and interpretations tailored to the characteristics of Japan's bond market.

List NYK Green Bond Investors

Investors who have emphasized the significance of NYK's green bond issuance and have committed to investing (as of May 18, 2018):

  • The Toa Reinsurance Company, Limited
  • Sumitomo Mitsui Trust Bank, Limited
  • Mitsubishi UFJ Trust and Banking Corporation
  • Hokkaido Roudoukinko
  • THE SUGAMO SHINKIN BANK
  • Moka Shinyoukumiai
  • Iwate Prefectural Credit Federation Of Agricultural Cooperatives
  • The Shinonome Shinkin Bank
  • Hiratsuka Shinkin Bank
  • Kanagawa Prefectural Credit Federation of Agricultural Cooperatives
  • Azuma shinyoukumiai
  • Kansai University
  • Nagoya Broadcasting Network Co.,Ltd.
  • THE JAPAN CARGO TALLY CORPORATION
  • Fukuchi Town
  • Matsuoka Jisho Co. Ltd.

Green Bond Framework

1. Use of proceeds

NYK sets medium to long-term environmental (CO2 emission reduction) targets in its medium-term management plan.
NYK has a long-term roadmap for environmentally friendly vessel technologies. Each project that is to use proceeds of the bonds is considered based on its contribution to achieve the targets and its contribution to achieving the roadmap goals.

(1) LNG-fueled vessels
A vessel powered by liquefied natural gas (LNG) used as fuel. Compared to conventional heavy oil, LNG fuel emits 30 percent less carbon dioxide (CO2), almost no sulphur oxides (SOx) or particulate matter (PM), and up to 80 percent less nitrogen oxides (NOx).

(2) LNG bunkering vessels
A vessel that provides LNG to LNG-fueled ships.

(3) Ballast water management systems
Ships use ballast water to provide stability during a voyage. Usually seawater is pumped into the tank when cargo is unloaded, and the seawater is then discharged at another port when cargo is loaded. Ballast water treatment equipment treats marine species carried in ships' ballast water and contributes to preserving biodiversity by preventing the transfer of aquatic organisms that could harm the marine environment.

(4) SOx scrubber system
A system that uses seawater and chemicals to remove sulfur from ship exhaust gases.

2. Process for project evaluation and selection
NYK considers a set of criteria when evaluating and selecting candidate green projects.
3. Management of proceeds
The net proceeds of the bonds will be allocated to the eligible projects. Unallocated proceeds will be kept in the form of cash or cash equivalents.
4. Monitoring and reporting
NYK will disclose the allocation of proceeds to eligible projects, along with positive environmental impacts, on the company's website and through the NYK Report annually. NYK will publish the results of a post issuance review by a third-party annually until the net proceeds of the green bonds are fully allocated.

Others

NYK will participate in a shipping industry working group to be established by the Climate Bonds Initiative*4 and will cooperate in formulating evaluation criteria for green bonds issued by shipping companies.

*4 Climate Bonds Initiative
The Climate Bonds Initiative: The Climate Bonds Initiative is an international, investor-focused not-for-profit working to mobilize bond markets for climate change solutions. The Initiative also provides a journal of record for relevant bond issuance, develops green bond evaluation criteria such as the Climate Bonds Standard, and provides policy proposals to government, finance, and industry sectors.
https://www.climatebonds.net/New Window

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