Introduction

SASAYAMA Shinichi

The Group’s traditional business model is based on strong roots in the community. Ourstrength lies in the ability to provide customers with courteous, face-to-face service.
However, we are entering an era that requires significant transformations, such as digitaltransformation (DX), green transformation (GX), and strengthening customer
communication (CX). We aim to create and provide new services and solutions by utilizing
digital channels as well as face-to-face interactions, and by combining various energy
sources such as electricity, renewable energy, hydrogen, and e-methane*. We arecommitted to driving transformation across the entire Group to achieve this.
I personally recognize that taking on new challenges and being able to make drasticchanges are my strengths. For about the first ten years since joining the Company, I had
been responsible for analyzing various data related to our business, and this gave me*e-methane: Methane synthesized from non-fossil fuel energy raw materials (green hydrogen, etc.)

Financial Data

I am SASAYAMA Shinichi. I was appointed president in April 2023. I would like to sharewith you some of my resolutions.
I understand that my role is to diligently execute the Group’s management vision,Compass2030, and the new and recently announced mid-term management plan, Compass
Transformation 23-25, in order to achieve sustainable improvement in enterprise value.
In April 2022, we established a holdings-type group structure that converted eachbusiness into a quasi-branch company, in conjunction with the separation of the Pipeline
Network Division into a separate company as the final step in addressing gas liberalization.
Looking ahead, we will move forward with these Group reforms that enable ourorganizations, strategies, and governance to function more organically. In these ways, I aimto steer the Group as a whole toward further growth.

Corporate Strategy

As the new president, I will work to transform the Group’s business model.

Business Strategy

Director, Representative Corporate Executive Officer, President and CEO

How We Create ValueThe Tokyo Gas Group is uniquely capable of achieving
the goals it has set for itself, namely to “achieve bothdecarbonization and a stable energy supply” and“expand our lineup of solutions.” By doing so, we willpursue society’s ongoing development and provide
further value to customers.

CEO’s Message

CEO’s Message

Introduction
Contents

CEO’s Message

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Web Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

11Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

DevelopmentGrowthCommercialize& monetization

GXSolutions

Environment, DX, etc.

e-methane, hydrogen, etc.

Real estate

ESG-oriented
development, etc.

Renewables(offshore wind power, etc.)

Overseas

Shale + renewables/decarb., etc.

Reallocate management
resources

Turn around falteringbusinesses, sell off
non-core segments(gas, electricity, networks)

Selection

Streamlining

EnergyAggressive streamlining
Formation of customer baseunderpinning growth areas

Financial Data

Reallocate management
resources

Corporate Strategy

Manage volatility across theportfolio

Growth potential

The previous mid-term management plan covered FY2020 to FY2022. This period wasmarked by rapid changes in the environment that had a significant impact on ourbusiness, such as of COVID-19 and fluctuations in the energy market, triggered byinternational instability.
Even in such a business environment, we recognize that we have largely achieved ourinitial targets. In addition to achieving the targets for segment profits (operating profit +equity method profit), financial indicators, and cost structure reform, we accelerated ourefforts toward decarbonization and actively invested in renewable energy. On top of that, I
believe that the KPIs that were not achieved due to changes in the market conditions andcompetitive situation are issues that remain in the new mid-term management plan.
The new mid-term management plan for FY2023–FY2025 depicts a 150 bn yen profit
level as the target for FY2025. Beyond that, the Group’s management vision calls forsegment profits of 200 bn yen in FY2030. In terms of efficiency indicators, we will aim for
an ROA of approx. 4% and an ROE of approx. 8%.
In order to steadily achieve these goals, the new mid-term management plan will fully
promote portfolio-based management with enhanced business portfolio management. Inthe energy field, which has been the Group’s mainstay business to date, we will further
improve efficiency and generate cash. We will then actively invest in the new growth areasof GX, solutions, overseas, and real estate to develop the cash generated into the next

Maximize synergy among segments

Business Strategy

We will promote transformation in accordance with three core strategies,
based on Compass Transformation 23–25, our mid-term management plan.

How We Create Value

Shifting resources to new growth areas

CEO’s Message

pillars of our business.
Together with these concepts, we set out “three core strategies” in the mid-term
management plan.
The first is “Achieve both stable energy supply & decarbonization.” As an energy
provider, we believe that our Group’s mission is to achieve decarbonization of the energy
we supply while securing stable energy supply irrespective of the business environment.
We positioned this as a key strategy going forward under the new mid-term management
plan as well, in light of the recent heightened geopolitical risks and the acceleration of thedecarbonization trend.
We have been responsible for building and operating resilient infrastructure to achieve astable supply, and we have promoted three types of diversification: Procurement sources,
terms of contracts, and LNG networks. In the future, by utilizing our gas and power assets
more flexibly and enhancing integrated risk management that combines the supply anddemand sides, we will be able to achieve a stable supply and improve profits throughtrading and other means, even in the face of increasing market volatility.

Introduction

insights into the Tokyo Gas Group from a data perspective.
Subsequently, I was involved in the launch of energy services and power businesses, thefull-scale development of our trading business, the development of new services utilizing
derivatives, and the promotion of innovation equivalent to our current GX initiatives.
Additionally, in the field of digital innovation, I have promoted digitalization throughpartnerships such as the one with Octopus Energy Group Limited in the UK. Whenengaging in business development, I placed importance on visiting the actual sites tosense and verify aspects that may not be apparent from the data.
I also formed a network of people in the government, industry, and academic sectors byparticipating in discussions related to Japan’s environmental and energy policies. In thisway, I have gained experience in various business areas beyond the city gas business.
Recently, I have been deeply involved in the establishment of the Group Management
Vision (“Compass2030,” announced in 2019), “Compass Action” (announced in 2021), theGroup management philosophy (formulated in 2022), and the mid-term management plan(announced in February 2023). These plans have laid the foundation and set the strategy
for the entire Group going forward.
Drawing on this experience, I will concentrate on realizing new solutions that combine DXand GX.

Introduction
Contents

CEO’s Message

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Profitability
Web Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results BulletinCorporate Governance Report

12Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

Introduction
CEO’s Message
How We Create ValueBusiness Strategy

Portfolio management will enable us to respond flexibly to market changes
while clearly enhancing capital efficiency.
With the Group taking on a holdings-type group structure and need arising for internal
companies or business subsidiaries to be self-run, awareness of earnings within the Group

Financial Dataglasses.” We look forward to the infusion of a new culture and the resulting chemicalreactions for the Tokyo Gas Group to become a truly diversified company.
One of the features of the Tokyo Gas Group that has characterized it so far is its earnest
approach, putting stable supply and safety first, and making thorough consideration andacting accordingly so that nothing goes wrong. Of course, there are areas where that isnecessary, and not every new cultural change is necessarily good. However, new fields will
require different approaches and forms of risk management. To that end, we place
importance on having diversity within us.

Corporate Strategy

Additionally, we will actively promote initiatives
toward decarbonization. We will promote variousinitiatives for the early practical application ofdecarbonization technologies including renewableenergy, hydrogen, and e-methane. In particular, webelieve that the value co-creation set forth in ourvision will be important for technologicaldevelopment, and we will promote it bycollaborating with domestic and overseas partners
as well as utilizing the national Green Innovation(GI) fund.
The second core strategy is “Fully roll out thesolutions business.” Until now, we have beenpromoting our business under a structure based onstrong roots in the community centered on theTokyo metropolitan area and focusing on face-toface customer service, but from the previous midterm management plan, we have also started
full-fledged efforts toward digitalization. We haveestablished a new joint venture in partnership with
Octopus Energy Group Limited, a company rapidly
growing in the UK, and are promoting businesses
that utilize the latest digital technologies. In addition
to this, we intend to create new services thatintegrate DX and GX one after another in the future.
We will also create a new brand to clearly
demonstrate the value we provide to Residentialcustomers, Corporate customers and Communitycustomers. The underlying values of the brand as
we have categorized them are “resilience,” “optimization,” and “decarbonization.” By
offering a variety of solutions and combining them according to customer needs, we will
expand our menu based on the value we provide.
The third core strategy is “Realize a flexible corporate culture resilient to change,”
which includes human capital management. As I mentioned earlier, we must challenge
ourselves in new fields such as GX, DX, and CX. As for the mindset of our Groupemployees, while valuing the traditional corporate culture of safety, security, and trust, I
would like them to strengthen their awareness of the Group’s reforms, take on thechallenge of reskilling in new fields, and proactively gain a variety of experience.
Human resources with diverse external experience have joined our Group. The wish I
always convey to them is: “We want the Group to work together as one to promote ourbusiness, so please actively communicate with employees who have been with our Groupfor a long time. That said, please don’t start to see everything through ‘Tokyo Gas Group’Introduction
Contents

CEO’s Message

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Web Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

13

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

How We Create ValueBusiness Strategy
Corporate Strategy
Financial DataI have mentioned the need for reform, but looking
back at our long history—about 140 years since ourfounding, reveals a picture of a history of challenges,
overcoming turbulent times, including the Great Kanto
Earthquake. The challenge of introducing LNG in 1969
was a major historic and significant undertaking not
only for our company but also for Japan. Japan
entered a period of rapid economic growth in the latter
half of the 1950s and faced both sharply rising energy
demand due to urban concentration and air pollution
caused by factories. Tokyo Gas made concerted
efforts over 12 years to address these problems,
holding discussions with relevant government
agencies and energy companies, and realized LNG
imports for the first time. With regard to IT and DX, weintroduced large-scale computers at a very early stage
and have been using them not only for factory
operations but also as part of business reforms, in customer information management
and business systems. In this way, the Tokyo Gas Group has historically been equipped
to deal with potentially major changes in environmental issues and the IT and DX areas.
The Group management philosophy, which was formulated in 2022, has been in placefor one year and is now recognized by almost 100% of employees. However, if theGroup management philosophy is not taken to heart and utilized as one’s own, it
becomes only lifeless words on a page, so I am convinced that it is necessary toCEO’s Message

We will ramp up our focus on augmenting
corporate value while contributing toward thesolution of social issues.

continue to work to have it take hold. I have
conversations with Group members about themanagement philosophy, new values and management
whenever I have the opportunity, and I feel that thenumber of members who talk about various
businesses in light of the philosophy is steadily
increasing.
The meaning of our philosophy in the former part,“Standing by every person and dedicating ourselves tothe society,” has been our foundation since the old daysof “Security, Safety, and Trust,” and this part is obviously
necessary.
On the other hand, it is my conviction that the latterpart, to become “the energy that weaves the future,” will
be extremely important for the future. There are twomeanings to “energy” here. One is, literally, the energy
we supply to our customers. In addition to conventional
gas and electricity, this also includes renewable energy,hydrogen, e-methane, and energy solutions for futuredecarbonization. The second meaning of energy is the“vitality” or “drive” necessary for all Group members totake on challenges toward a bright future, which is also
linked to Human Capital Management, which is basedon the premise for providing new solutions to ourcustomers.
We will take on the challenge of “weaving the future”
with energy under both of these meanings. That is, “wewho weave the future” will realize “the energy that weaves
the future” and “the solutions that weave the future.”
In addition, based on the Group management
philosophy, and incorporating insights from external
stakeholders, we have defined materialities, which are
key sustainability issues that the Group will address
through business activities, and based on this, we have established a new mid-term
management plan.
The Tokyo Gas Group will continue to focus on improving its enterprise value byachieving both sustainable growth and solutions to social issues, including contributions to
the decarbonization field, as the materialities indicate. I would like to ask for your continued
understanding and support.

Introduction

is increasing more than ever. Up until now, P&L
management has had a strong significance, but I would
like to focus on improving asset efficiency from now on.
As we set required returns for each business based onrisks and other characteristics and manage ourportfolio, I would like to raise awareness on the balance
sheets and capital costs of each company.
In the future, further investment will be needed tofully promote decarbonization. We will improve capitalefficiency by enhancing business portfolio
management so that we can sustainably generate thecash we need in the future.

Introduction
Contents

CEO’s Message

How We Create ValueThe Value Creation Process
Promoting Sustainability and Material issues

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Web Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

14

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook