TOKYO GAS GROUP | Integrated Report 2023

Introduction

New

Group

Introduction
Contents

SloganCEO’s Message

CEO’s Message

How We Create Value

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

Business Strategy

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

Corporate Strategy

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Financial Data

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

01

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

CEO’s Message
How We Create ValueBusiness Strategy

We should never stop the energy supply. As an energy provider
that stands by our customers and supports society, we areresponsible for ensuring a stable supply of energy. At the sametime, we must contribute to achieving a decarbonized society. It
is also our responsibility to address climate change head-on fora sustainable global environment. By working simultaneously
toward these two objectives and further creating value thattranscends the framework of energy, we aim to“Be an Energy Driver.”Introduction

Achieving Twin Goals:
A Stable Supply of Energy and
Decarbonization

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

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Financial Data

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

02

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

Our Commitment
Introduction

Approx.

*Tokyo Gas Network Co., Ltd.

Corporate Strategy
Financial Data

For more than 130 years since our founding, we have done our utmost
to ensure the safety and security of our customers as an energy
provider. We have advanced our disaster prevention systems bystrengthening pipeline networks and arranging seismometers in dense
configurations to provide more comprehensive disaster preparedness.
Even when our business environment includes unpredictable factors
such as the COVID-19 pandemic and geopolitical risks, we remain
responsible for maintaining a stable energy supply and protecting ourcustomers’ daily living and business activities.

Business Strategy

4,000
locations

How We Create Value

Seismometers in the service area*

CEO’s Message

Protecting Safe and Secure
Living of Our Customers

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

03

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

Our Commitment
Introduction

Photo courtesy of INPEX Corporation

10 carriers

13 million

As the energy system becomes more decentralized and bidirectional, the energy
market grows increasingly complex. Against this backdrop, we will harness theflexibility of the entire value chain and utilize digital technologies to optimize
and control supply and demand.
We will serve the diverse needs of our customers, such as for stability,
environmental friendliness, and optimization, by offering a variety of energy
sources, including LNG, renewable energy, e-methane, and hydrogen.

Renewable energy transaction volume

In Japan and overseas

In Japan and overseas

2.118 mn kW

1.633 mn kW

Total of

Total ofFinancial Data

Gas generation capacity

Corporate Strategy

4 locations

13 million tons

Business Strategy

LNG terminals

4 countries / 13 projects

No. of customer accounts

How We Create Value

Serving Diverse
Customer Needs witha New Model for
Stable Supply

LNG procurement

CEO’s Message

LNG carriers owned andmanaged by the company

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

04

Tokyo Gas Group Integrated Report 2023

* Data is as of the end of March 2023

Corporate Governance Report
Sustainability Factbook

Our Commitment
Introduction

CO2 reduction contribution (2030)

17

CO2

CO2

CO2

CO2

CO2
Net-zeroemissions

CO2 absorbed
by forest conservation,
reforestation, etc.

CO2

CO2

CO2

Financial Data

CO emitted2
across the LNG value chain

CO2

Corporate Strategy

CO2Business Strategy

mn tons

How We Create Value

We are committed to promoting a responsible transition towards a decarbonizedsociety, taking into account factors such as stable supply and economic viability. To
achieve these goals, we will promote the sophisticated use of natural gas to steadily
reduce CO2 emissions across society.
One solution could be carbon-neutral LNG. This refers to LNG that offsets theCO2 emitted from natural gas through carbon credits generated through forest
conservation and other activities. On a global scale, this type of LNG is considered
to be carbon neutral, even if combusted. We are committed to working with ourcustomers to achieve net-zero CO2 emissions by promoting and expanding the use ofcarbon neutral LNG.

CEO’s Message

Responsibly Leading the Transition by
Making Sophisticated Use of Natural Gas

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

05

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

Our Commitment
Introduction

Our goal is to realize decarbonization that leaves no one behind.

Corporate Strategy

CO2Business Strategy

Net-zero

To realize a net-zero CO2 world, innovation to decarbonize gas and electricity
is essential. We are developing methanation technologies, which recycles CO2,
alongside the expansion of renewable power sources, and are making moves
to replace city gas with carbon-neutral “e-methane.” By utilizing existing
infrastructure, we aim to achieve net-zero CO2 without extensive investments.

How We Create Value

CO2 emissions by the
Tokyo Gas Group (2050)

CEO’s Message

Achieving Net-Zero CO2 andRealizing a Decarbonized Society
through Innovation

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

Financial Data

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

06

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

Our Commitment
Introduction
CEO’s Message
How We Create Value

Providing Value with Solutions
That Go Beyond Energy

Business Strategy
Corporate Strategy

Business portfolio composition:
Operating profit + equity income of subsidiaries
Overseas

Solutions, etc.

Energy (gas + electricity + networks)

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 Governance17%

FY2022
results
73%

25%

10%

2030
Vision50%

Financial Data

We view the trends of decarbonization and digitalization, along with other changes in thebusiness environment, as significant opportunities to make a major leap forward.
We also recognize the increasing geopolitical risks as important social issues that must
be addressed.
By accelerating the shift of our resources toward new growth areas, we aim to transform
our business model and provide value centered on resilience, optimization, anddecarbonization, through solutions that go beyond the boundaries of the energy business.
With transformation as our byword, we are committed to pursuing sustainable
development of society and further enhancing value for our customers.

Introduction

Financial Data

25%
Web Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

07

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

Our Purpose
Introduction
Business Strategy
Corporate Strategy
Financial Data

The Tokyo Gas Group will constantly strive tobuild the future of people’s lives, communities,
and our planet.

How We Create Value

Respecting and sincerely engaging
all indivisuals and society,making meaningful contributions.
These are the beliefs we have cherishedsince our founding.
While upholding these principles, we willcontinue to challenge ourselves to thinkbeyond conventional boundaries and be
mindful of everyone in the world, striving tocontribute to society.

CEO’s Message

Standing by Every Person
and Dedicating Ourselvesto the Society

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

08

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

Introduction
CEO’s Message
Business Strategy
Corporate Strategy

Now Beginningwith the Three
Years That
Weaves the Future

How We Create Value

Toward achieving
Compass2030

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

Financial Data

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

09

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

01 Introduction

Editorial Policy
40 Corporate Strategy
41 Sustainability
Responding to Climate Change

15 How We Create Value46

 isclosure based on TCFD
D
recommendations

15 The Value Creation Process

49

Energy Security

Promoting Sustainability and16
Material issues

50

Human Capital Management

19 Business Strategy
20 Compass2030 & Compass Action
22 Compass Transformation 23-25

53 Corporate Governance53

Policies and Systems

58

Officer Remuneration System

60

Internal Control

Strategy 1: A chieve both stable energy
supply & decarbonization

61

Compliance26

62

Risk Management System

30

Strategy 2: Fully roll out Solutions business

63

List of Executives

34

Strategy 3: Realize a flexible corporate
culture resilient to change65 ialogues with Shareholders andD
Investors

66

Message from Outside Director

35 Introduction of Internal Companies
38 CFO’s Message

67 Financial Data
10-Year Consolidated Financial Highlights

69

Consolidated Balance Sheets70

 onsolidated Statements of Income/C
Consolidated Statements ofComprehensive Income

71Consolidated Statements of Cash Flows72

 elayed Impact of Gas RateD
Adjustment System

Cautionary statement regarding forward-looking statements
The plans, forecasts, strategies, and other non-historical information contained in this report
are forward-looking statements of the Tokyo Gas Group. These results are based on the
judgment of the management of the Tokyo Gas Group, which was based on currently available
information. Please note that actual results may differ significantly from these forecasts due tovarious factors. Important factors that can affect actual business results include developmentsin the Japanese economy and crude oil prices, fluctuations in temperature and the yen/U.S.
dollar exchange rates, and the Tokyo Gas Group’s response to rapid technological innovationand deregulation.
The Tokyo Gas Group publishes this report so that all stakeholders, including shareholders andinvestors, better understand the feasibility of sustainable management and increasing corporate
value of the Tokyo Gas Group. More detailed information and the latest information including
news releases are available on the corporate website.

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

Investor Relations Website
https://www.tokyo-gas.co.jp/en/IR/index.html
Investors’ Guide(Financial Data and Industry Data)

https://www.tokyo-gas.co.jp/en/IR/library/invguid_j.html

Financial Results Presentation Materials https://www.tokyo-gas.co.jp/en/IR/library/document_j.html
Financial Results Bulletin

https://www.tokyo-gas.co.jp/en/IR/library/earn_j.html

Corporate Governance Reporthttps://www.tokyo-gas.co.jp/en/IR/gvnnc/pdf/governance.pdf

Sustainability Factbook
https://www.tokyo-gas.co.jp/sustainability/download/index.html?wovn=en

Financial Data

67

Fiscal Year 2022 (From April 1, 2022 to March 31, 2023; including information on some
activities prior to and after the period)

Corporate Strategy

Overall Strategy

Period covered

Business Strategy

22Tokyo Gas Co., Ltd. and Tokyo Gas Group companies (subsidiaries and affiliates) in Japanand overseas

How We Create Value

41

Contents

Organizations covered
CEO’s Message

11 CEO’s Message

Introduction

Contents

Introduction

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

10

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

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 aim
to 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 both
decarbonization and a stable energy supply” and“expand our lineup of solutions.” By doing so, we will
pursue 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

11

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

Development

GrowthCommercialize& monetization

GX

Solutions

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 our
initial 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. In
the 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 DX
and 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 Bulletin
Corporate Governance Report

12

Tokyo 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 Data

glasses.” We look forward to the infusion of a new culture and the resulting chemical
reactions 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 various
initiatives for the early practical application of
decarbonization technologies including renewableenergy, hydrogen, and e-methane. In particular, we
believe that the value co-creation set forth in our
vision 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 that
integrate DX and GX one after another in the future.
We will also create a new brand to clearly
demonstrate the value we provide to Residential
customers, Corporate customers and Community
customers. 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 Group
employees, 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 Data

I 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 the
management philosophy, new values and management
whenever I have the opportunity, and I feel that the
number 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 to
fully promote decarbonization. We will improve capitalefficiency by enhancing business portfolio
management so that we can sustainably generate the
cash 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

The Value Creation ProcessStanding by every person and dedicating ourselves to the society, we shall be the energy that weaves the future.

Material issues

Compass2030
Compass Action2

 stablish a value coE
creation ecosystem

3

Realizing anorganizationthat embraces
diverse talentCompass Transformation 23-25

Goals for 2030

Medium-term managementtargets (FY2025)

Key indicators and targets related to materiality(FY2025)

Segment profits 150 bn yen

CO 2 emissions reduction contribution

12 mn tons

R
 OA

Approx.

4%

Enhance circularity of equipment and facilities(gas equipment, gas meters, etc.)

R
 OE

Approx.

8%

Maintain record of no major city gas accidents or supply disruptions

0casesD/E ratio

Approx.

 ate of participation in Supply Command Center’sRemergency response training100%

 ransform the LNG
Tvalue chain

0.9

Provide services supporting physically & mentally enriching lives

11%

Ratio of women in managementSeeking to ensure human rights are upheld throughout the supply chain

Foundationthat Supports
Business
Activities

Economic value
Ability to generate long-term,
sustainable sources of growth

Financial strength

Technological strength

Profit level
Approx. 200 bn yen
CO 2 reduction contribution
17 mn tons
Renewable power source
transaction volume
6 mn kWNo. of customer accounts
20 mn
Natural gas transaction
volume20 mn tons

Social value
Sustainable global environment

Human resources

Vibrant communities and lives

Customer baseOrganizations and associates who
co-create the future

Stakeholder trust

Natural capital

Financial Data

Value
Creation

Respecting
human rights
across the entire
value chain

Corporate Strategy

 ead transition to NetL
zero CO2

Contributing
to well-beingof people andcommunities

Business Strategy

1Enhancingsafety & disasterprevention,
resilient regional
development

Securing stableenergy supply

Next Vision

Challenge 2020 Vision

VisionStrategy

Protecting
the global
environment

How We Create Value

Responsiblytransitioning to
a decarbonizedsocietyCEO’s Message

Management
Philosophy

Based on its Group’s Management Philosophy, the Tokyo Gas Group defines material issues—the key mediumand long-term sustainability issues we need to address— and aims to create economic and social value throughits business activities. Furthermore, by strengthening the foundation that supports our business activities throughthe values created, we will further improve enterprise value.

Introduction

How We Create Value

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

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Sustainability Factbook

Introduction

Promoting Sustainability and Material issues
Fundamental policy

Material issues (from FY2023)

We have defined key sustainability issues (material issues) in order to embody the Group’s
management philosophy—“Standing by every person and dedicating ourselves to thesociety, we shall be the energy that weaves the future.”—and we will tackle them throughour business activities. In this way, we strive to create both social and economic value.

We have defined seven material issues corresponding to issues we aim to resolve throughour business activities over the medium-to long-term.

Sustainability Promotion System

Board of Directors, Directors
ReportReportP

Business activities
based onmaterial issues

D

Disclosure

C

Since the Russian invasion of Ukraine, the world has become increasingly
divided, and the Tokyo Gas Group (the “Company”), a comprehensive energy
company, is being significantly affected by geopolitical risks. In such abusiness environment, the Company has become more sensitive to societal
trends and reassessed its material issues. As a result, it is committed toaddressing climate change, including decarbonization, and supply chain risk
management. The Company places a central focus on providing solutions that
go beyond traditional energy businesses and aims to have an ongoing impact
on society and business growth in the long term, including beyond 2030.
I would like to commend the Company for incorporating the infrastructurebusiness into its growth strategy from a new perspective, without beingbound by the traditional “status quo.” This should prove to be a significant
strength for the Company as it transitions towards a decarbonized society andbecomes a key player in resilient energy infrastructure.
Looking ahead, I anticipate that Company will responsibly transition
toward a decarbonized society by developing and implementing a concreteroadmap. Furthermore, I look forward to the Company becoming a leader inclosing the gender gap, in addition to promoting women’s empowerment, inline with the goal of “Realizing an organization that embraces diverse talent”
from the perspective of diversity, equity, and inclusion.

Fellow (Sustainability)
Mitsubishi UFJ Research &Consulting Co., Ltd.
Visiting Professor, Collegeof Arts and Sciences, The
University of TokyoYOSHITAKA Mari

Financial DataA

Stakeholders

Internal companies, major business subsidiaries, etc.

4Enhancing safety &disaster prevention,
resilient regional
development

7

Respecting humanrights across the entire
value chain

Comment from an expert

Sustainability Committee

Dialogue

Sustainability management

Management Committee
Oversee3

Securing stable energy
supply6

Realizing anorganization thatembraces diverse talent

Corporate Strategy

Representative Corporate Executive Officer, President and CEO
Corporate Executive Officers

Expectations
and requests

Supervise2

Protecting the global
environment

5

Contributing to wellbeing of people andcommunities

Business Strategy

Various organizations within the Tokyo Gas Group strive to promote business activities basedon material issues. In addition, a committee that supports rational decision-making by
Corporate Executive Officers (Management Committee) and the Sustainability Committee,
which is chaired by the President, are instrumental in promoting sustainability management
throughout the Group. Furthermore, important matters are reported to the Board of Directors.

1

Responsiblytransitioning to a
decarbonized society

How We Create Value

Key Sustainability Issues (Material issues)

CEO’s Message

Promoting sustainability

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

16

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

Introduction

The Definition Process
Step 2

Step 3

Step 4

Sort social issues

Sort risks and opportunities

Define material issues

Resolution and announcement

Organize issues based on various
international standards and guidelines (suchas GRI standards)

Based on Step 1, and considering the progressof social problems due to Megatrends, examinerisks and opportunities for the Group in termsof both the impact of social issues on corporate
activities and the impact of corporate activities
on society, and organize important social issues

Based on Step 2, confirm alignment with the
management philosophy, strategy and vision,and appropriate reflection of expectations
and requests from internal and external
stakeholders, and define material issues

Based on the management philosophy, after
clarifying the positioning as a prerequisite forthe strategy and vision, make a resolution
by the Board of Directors together with the
FY2023–25 mid-term management plan, andannounce it in February 2023

Impact of social issues on our corporate activities

Sorting of risks and opportunities of importance tothe Tokyo Gas Group
Megatrends

GlobalGlobalIf the decarbonization of gas-based energy does not progress, the valueof gas-related assets will be lost
A decline in the competitiveness of the electric power business due toinsufficient acquisition of renewable energy
Decrease in demand due to increase in prosumers
Carbon taxes and other schemes that may affect the natural gas businessIncreasing global demand for natural gas, LNG, and carbon-neutral
gas energy
Acceleration of the electric power business with green power
Business opportunities to meet emerging and expanding demandside needs, such as EVs, storage batteries, PVs, and VPPs

Responsibly transitioning to
a decarbonized society

 nvironmental destruction atE
the local and global levels

 he potential for lawsuits and business injunctions in the event ofTnoncompliance with regional environmental considerations in natural gas
extraction, power development, and power plant operation

 ifferentiation of products and services through advancedD
environmental initiatives (advanced resource recycling, nature
positive measures)

Protecting the global
environment

Constraints on energy resourcesand destabilization of theinternational situationIncreasing global demand for natural gas making procurement more difficult
Impact of the worsening supply and demand tightness on supply disruptions

 otential for increased profits in upstream operations
P
Enhancement of stable supply through integrated supply and demand

Securing stable energy
supplyDeterioration of infrastructure
and buildings over time
Concentration of functions in cities

Degradation of owned assets
Worsening supply disruptions due to disasters

 ustainable urban development using various energy sourcesSE xpansion of gas demand due to the improved positioning ofdisaster-resistant gas infrastructure

Enhancing safety & disasterprevention, resilient
regional development

Shrinking domestic market
Declining regional vitality
A lack of spiritual richness

In the energy retail business, profits decrease as the population declines

Improving lifetime value by transitioning to a service model
Development of services contributing to the enrichment of the mind
Efforts to contribute to the local community as a company that hascontinued to uphold the values of “Safety, Security, and Trust.”

Contributing to well-beingof people and communities

 ecline in the productiveD
working population
L ack of support for work styles
of diverse human resources

Difficulty securing workers at stable supply sites
Negative impact on recruitment and engagement, increase in retirement

Accelerating innovation through the diversification of human resources

Realizing an organizationthat embraces diverse
talentHuman rights violations

 rowing awareness of human rights and diversification of peopleG
involved in supply chains have led to increases in lawsuits and businessinjunctions worldwide—

Respecting human rights
across the entire value
chain

Japan

Changes indemographics
and changes anddiversification ofvalues as Japan’s
economy matures

GlobalGrowing demandfor corporate social
responsibility

Financial Data

Material issues

Corporate Strategy

Population growthand economic
development inemerging countries

Opportunities

Climate change

Risks

Business Strategy

Climate change

Social issues*

Impact of our corporate activities on society

How We Create Value

Sort risks and opportunities

CEO’s Message

Step 1Introduction
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

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Sustainability Factbook

Introduction

Material issues Initiatives and Value Creation
Material issues

Responsiblytransitioning to
a decarbonizedsociety

Protecting
the global
environment

3

Securing stableenergy supply

Enhancingsafety & disasterprevention,
resilient regional
development

6

7

Respecting
human rights
across the entire
value chain

 nhance circularity of equipment and facilities (gasEequipment, gas meters, etc.)
Promote biodiversity conservation

As a company responsible for the stable supply of energy, we willcontinue to secure stable energy supply through both supply anddemand approaches so that society can use energy with peace ofmind, even in an increasingly complex business environment withheightened geopolitical risks.

 aintain record of no major city gas accidents orMsupply disruptions (0 cases)
Address procurement risks

As an energy infrastructure company, we will promote disaster-resistanturban development so that our customers can use energy safely
and securely, not only in normal times but also in the event of natural
disasters such as earthquakes and wind and flood disasters, andcontinue to earn the trust of our customers.

 ate of participation in Supply Command Center’sRemergency response training (maintaining 100%)
Continue subdivision of disaster prevention blocks
to contribute to minimize supply outage areas in theevent of a large-scale earthquake
Promote the introduction of resilient energy systems

As a company that has built a brand of peace of mind, affluence,safety, and trust based on energy, we will continue to contribute toa society in which people live healthy lives in vibrant communities byworking together with various stakeholders to realize a fulfilling life both
physically and mentally in light of social conditions such as the declining
population and birthrate, the aging population, and the increase in
the number of dual-income households, and to revitalize regions andcommunities.

 rovide services supporting physically & mentallyP
enriching lives
Promote regional and municipal collaboration on
carbon-neutral cities

As a company that is expanding its business areas and promoting
innovation, we will continue to promote diversity, equity, and inclusion
so that each and every one of our diverse human resources can growand play an active role on their own and in their own way and giveback to society, while we strengthen recruitment and training efforts byenhancing mid-career hiring and providing employees with reskilling
opportunities.

Ratio of women in management (11%)
Percentage of male employees taking childcare
leave of at least one month (100%)
Reskilling/retraining participation rate (100%)
Measure Group employee engagement indicatorsand make improvements

As a company involved in a wide range of supply chains, we will respect
the human rights of all related people and continue to contribute toa society in which all people can secure their lives and freedom andpursue their own happiness.

 eeking to ensure human rights are upheldS
throughout our supply chain

We will lead the transition to a
decarbonization society while
ensuring the stability of society
as a whole, and contribute to the
response to climate change. We
will also contribute to therealization of a society that is lessaffected by biodiversity loss andresource constraints.

Vibrant communities
and lives
With safe, secure, clean energy
and optimized solutions, we willcontribute to the enrichment ofphysical and mental well-being,
stable businesses, and therevitalization of regions andcommunities.

Organizations andassociates who cocreate the future
Based on the premise of respectand esteem for all people
involved throughout the Group’s
entire supply chain, humanresources who have a sense of
mission and willingness tochange the earth, society,community, and individuals will
become the driving force forco-creating the future.

Financial Data

Realizing anorganization thatembraces diverse
talentAs a company that conducts business activities using the earth’s resources
such as natural gas, renewable energy, and various mineral resources,
we will conserve the environment in our business activity areas, including
biodiversity conservation, and continue to enhance resource utilization with
an awareness of the balance with economic efficiency.

Sustainable global
environment

Corporate Strategy

5

Contributing
to well-beingof people andcommunities

CO2 reduction contribution (12 mn tons)
Renewable power source transaction volume (2.2mn kW)
Promotion of large-scale methanation overseas
Reduction of CO2 emissions from our activities(achieve 60% vs. FY2020)

Contents

Social value createdby the Tokyo Gas
GroupBusiness Strategy

4(FY2025 numerical targets)

We will contribute to the transition to a decarbonization society in termsof both electricity and heat through our decarbonization of gas andelectric initiatives such as low-carbonization and the introduction ofrenewable energy and methanation through the sophisticated use ofnatural gas. In this process, we will realize a responsible transition that
does not place excessive burden on society from various viewpoints
such as economic efficiency, stable supply, and employment.

Relevant SDGs

How We Create Value

2

Main targets and indicators

CEO’s Message

1

What we aim to become

Introduction

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

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Sustainability Factbook

Introduction
CEO’s Message
How We Create ValueBusiness Strategy
Corporate Strategy
Financial Data

Business Strategy

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
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
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

19

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Sustainability Factbook

Introduction

For achieving the Vision

Our Strategy

FY2022 results

2030¥417.0 billion Approx. ¥200.0 billion

6.35 million tons

17.00 million tons*

Renewable power source
transaction volume (FY-end)

1.633 million kW

6.00 million kW*

No. of customer accounts

13.00 million

20.00 million

19.00 million tons

20.00 million tons

Natural gas transaction volume(FY)

120.0 billion

1200.0 billion

Approx. ¥Approx. ¥

25%
25%

2

50%
At the time of formulation of the management vision in 20192030

*1 The Compass2030 initial target: 10 million tons (Japan only) *2 The Compass2030 initial target: 5 million kW *3 All overseas businesses *4 Energy-related, real estate, other *5 Domestic gas, electricity, and network businesses

Financial Data

CO2 reduction contribution (base year:
FY2013)(FY-end)Overseas*3
Solutions, etc.*4
Energy*5 (gas + electricity + networks)

Corporate Strategy

operating profit + equity
income of subsidiaries

Company portfolio in 2030: Profit level

Business Strategy

Management guidelines and results

How We Create ValueOn November 27, 2019, we announced our new management vision, “Compass2030,” and on November 26, 2021, we announced Compass
Action to realize our management vision.
For half a century since LNG was first introduced in Japan, Tokyo Gas has led the expansion of this new energy and ushered in the era of natural gas.
We are in the midst of a new era of transformation, including decarbonization, digitalization, changes and diversification of customer values, andprogress in energy deregulation.
We aim to be a corporate group that continues to create value together with our customers, society and business partners while leading thenext generation of energy systems by capitalizing on the strengths of the Tokyo Gas Group, which has revolutionized energy and taken on thechallenge of realizing a sustainable society.

CEO’s Message

Compass2030 & Compass Action

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
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Three challenges for achieving the Vision

Lead transition to Net-Zero CO2

Establish a value co-creation ecosystem

Transform the LNG value chain

01

02

03

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

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Energy market’s digital marketing front runner

Top leader at the forefront of the transition

No. 1 player in customer satisfaction throughvalue co-creation at the last mile*5

Human resources system that encourages pursuitof challenges in ways that leverage diversity

Create value chain for e-methane*2
Form alliance for achieving low-cost, practical deployment ofhydrogen & carbon-neutral methaneHydrogen: ¥30/m * or lower (2030)
3

3

Launch services in Kanto area that provide solutions to eachtype of lifestyle need, then expand nationwide via alliances

Create renewable energy value chain leveraging
our Group’s unique strengths

Provider of solutions for community challenges

Establish revenue model that covers from power source
development, O&M*4 to renewable energy sales
Renewable energy transaction volume : 6 million kW (2030)

Financial strategy that promotes growth investing
Step up investment in growth areas by selling/replacing assets
and boldly revamping cost structure

Challenges to accelerate for achieving the Vision

Accelerate value co-creation via digitalization
and reinforced face-to-face engagement

Improve each business’s earning power andresilience to change

Mid-term management plan based on the Vision (Compass Transformation 23–25)

02

strategy

03

strategy

Achieve both stable energy
supply & decarbonization

p.22

strategy

Fully roll out Solutions
business

Realize a flexible corporate
culture resilient to change

Segment profits

ROA

ROE

D/E ratio

CO2 reduction contribution

Cumulative operating
cash flow

Growth investments

Infrastructure investments

Financial Data

Major coefficients

Corporate Strategy

01

New mid-term management plan

Business Strategy

Responsibly lead the transition with gaseous& renewable energy

How We Create Value

Provide nationwide and global solutions for decarbonizationand strengthening resilience through coordination with local
government & businesses

Employ and cultivate diverse human resources at eachinternal company and operating company

CEO’s Message

Use digital & face-to-face channels to increase retail power
contracts beyond 5 million in 2030

Enable more autonomous management of internal
companies and operating companies
Major realignment of management structure on a Group-wide level
Establish a business model that leads our market volatility
responsiveness toward the stabilization of earnings

Introduction

Nationwide operation as a digital marketer(TG Octopus Energy Group Limited)Thoroughly use natural gas + develop practical CCUS*1
Strengthen gas-fired thermal power as balancer for
renewable energy

Corporate culture that enhances the earning
power of each business

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
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Web Site*1 Carbon capture, utilization & storage *2 Methane synthesized from non-fossil fuel energy raw materials (green hydrogen, etc.) *3 The hydrogen supply cost (CIF price) target set by the Japanese government. It is premised on a reduction in the cost of hydrogenproduction equipment, and achievement of low-cost renewable electricity made possible by factors such as growth of the renewable energy market. *4 Operation & maintenance *5 Technical work performed at customers’ residences

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

21

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Sustainability Factbook

New mid-term management plan

Final Stage

Positioning of the new mid-term management plan

Realizing our Vision2026-2028

2nd Stage2023-2025

Delivering the results of change
Strengthen human capital management andthe financial base, steadily commercialize andmonetize the decarbonization field, establish thesolutions business as a second pillar of businessafter energy

1st Stage

Compass
Transformation

2020-2022

23-25

Economic frame for 2025
Crude oil price = 90$/bbl / Exchange rate = 140 yen/$

Financial & environmental indicators

Company witha Nominating
Committee, etc.

Transition toholdings typegroup structure

Redefining
material issues

Business
investment
to realize ourvision22 average)

Segment profits*1 (operating profit ¥130.0 billion+ equity income of subsidiaries)
Finan- ROA*1
cial
1
ROE*

D/E ratio

Environ- CO reduction contribution
2
mentalFY2025¥150.0 billion

3.0%

Approx. 4%

7.3%

Approx. 8%

0.91

Approx. 0.9

6.00 mn tons*2

12.00 mn tons*3

Energy¥200.0 billion

Cash flow & investment plan

FY2020–22

Cumulative operating cash flow (profit
attributable to owners of parent + depreciation)¥960.0 billion¥1.1 trillion¥530.0 billion¥650.0 billion(¥230.0 billion)

Solutions, etc.

¥370.0 billion¥350.0 billion¥900.0 billion¥1 trillion¥260.0 billion

Growth investments (portion

Formulationof a newmanagement
philosophy

Now (FY2020–

for decarbonization-related

Invest- investments)
ments Infrastructure investments
Total (3 years)(estimated)(¥190.0 billion)

FY2023–25

Overseas¥190.0 billion*1 Profits after sliding time lag effects *2 Average for FY2020–21, Japan only *3 Includes overseas

Financial Data

Laying the foundation for 10 years from now

Maximize cash flow generated
from the core energy business andactively invest in new growth areas
such as decarbonization andsolutions, etc., while identifying
core and non-core businesses
and business life cycles, andpromoting asset replacement

Preconditions

Corporate Strategy

Transforming our business modelBusiness Strategy

Decarbonization
Digitalization
Fluctuations in energy
markets

Providing energy and solutions to the future of
our life, society and the earth

How We Create Value

3rd Stage
Tokyo Gas GroupManagement Vision

External environment

Contents

2029-2030
CEO’s Message

The business environment continues to change rapidly due to heightening
geopolitical risks and the associated volatility in energy markets.
We have positioned the 2023–2025 period of the mid-term management plan as
one in which “We transform our own business model in pursuit of the sustainable
development of society and the provision of greater value to customers withsolutions and business groups that transcend conventional energy frameworks.”
Through this, we will make steady progress toward the vision outlined in theGroup’s management vision, Compass2030.

Introduction

Compass Transformation 23-25

Introduction

CEO’s Message

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

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
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

22

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

17%
10%
12%

Overseas*1
Solutions, etc.*2
Energy*3 (gas + electricity +networks)

28%

73%

25%
50%

60%
FY2022 results

Management guidelines
and key figures in
Compass2030¥140.0 billion¥417.0 billion

Approx. 200 bn yen overseas business (particularly upstream interests) due to

Key contributing factors and sentiments

Strong performance driven mainly by competitive accessto raw materials, and by increased revenues fromskyrocketing oil prices, and sharp yen depreciation

Financial indicators
Approx. 4%

8.3%

4% Profitability indicators soared with strong earnings

ROE

Approx. 8%

20.0%

8% Profitability indicators soared with strong earnings

D/E ratio
Factoring in hybrid bonds/loans

Approx. 0.9
—

0.81
0.76

No. of customer accounts, million (FY-end)

14.80

13.00

20.00 growth in services & solutions accounts has stalled

Natural gas transaction volume, million
tons (FY)

17.00

19.00

20.00 power generation industry and other factors

Segment profit from Overseas Business,¥billion (FY)

16.0

67.9

— owing to higher oil prices and other factors

Approx. 0.9

Borrowings are expanding due to focused investment ingrowth areas, etc., but D/E ratio is advancing as planned
thanks to strong earnings

KPI

6.35

17.00* customer equipment

Renewable power source transaction
volume, million kW (FY-end)

2.00

1.633

6.00*5 conditions and fiercer competition

Cost structure reform, ¥billion (vs. FY2019)

-30.0

-30.0

— other costs are moving on track

4 Plateauing due to factors such as decreased operation of

Growth is being slowed down by shifting market

Corporate Strategy

Upstream and shale business performance is robust

6.50

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

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Reforms for reducing consignment, repair, indirect, andFY2021–30 plan

Financial Data

FY2020–22 plan FY2020–23 results

CEO’s Message

Tracking strongly, buoyed by increased demand fromCO2 reduction contribution , million tons
(Base year: FY2013)

Capital expenditure

200.0

153.3

Approx. 500.0

110.0

61.7

—

Solutions, etc. (¥ billion)*2

200.0

130.3

Approx. 1,000

Energy (¥ billion)*

380.0

436.0

Approx. 500.0

30.0

107.4

—

Web SiteCommon (¥ billion)

220.0

106.3

—

Investor Relations Website

Total (¥ billion)

1,000

826.1

2,000

Overseas business (¥ billion)*1
Renewable energy (¥ billion)*1 All overseas businesses*2 Energy-related, real estate, other*3 Gas and electricity business in Japan*4 The Compass2030 initial target: 10 million tons (Japan only)*5 The Compass2030 initial target: 5 million kW

Gas and electricity accounts have steadily risen, but

Business Strategy

ROA

How We Create ValueFY2022 plan

KGI
operating profit + equity income ofsubsidiaries

Contents

25%
CEO’s Message

Despite an uncertain business environment owing
to the spread of COVID-19 and the expansion ofmarket volatility, our efforts to achieve the mid-term
management plan were progressing smoothly.
As for KPIs and KGIs, while some issues remain,such as growth in the No. of customer accounts
and renewable power source transaction volume
due to ongoing competitive pressure, we were able
to generally achieve our targets for the most part.
We will continue to monitor trends in the LNG andelectricity markets, international situations, andother factors, and promote initiatives to achieve ourvision and the new mid-term management plan.

Introduction

Looking Back on thePrevious Mid-termManagement Plan

Business portfolio composition: operating profit + equity income of subsidiaries

Introduction

3

Renewable energy (¥ billion)

Financial Data

Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

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Introduction

Deriving Strategy from remaining challenges

Introduction
Contents

Achievements and challenges under the previous medium-term plan

Three challenges to realizing our vision01* LNG deemed to have net-zero
CO2 emissions because
carbon credits from forest
conservation projects, etc. areused to offset GHG emissionsof the processes from
exploration to combustion

Establish a value cocreation ecosystem

Transform the LNG
value chain

 ctively invested in renewables inAJapan & abroad
Expanded carbon-neutral LNG*

Partner with Octopus Energy Group Limited
E xpanded decentralized energy systems &smart city development

 ransition to holdings type groupT
structureL aunched new LNG trading company &new services (last-mile, etc.)

 ecure procurement of energy andSstable supply amid risinggeopolitical risks
Gain additional strengths in the
decarbonization field

Achieve green transformation(GX) while maintaining stableenergy procurement & supplyImprove service quality andawareness thereofStrengthen customer experience(CX) by accelerating digitaltransformation (DX)
Establish new business to join
gas and electricity businesses

Strengthen the system to realize Vision01

CEO’s Message

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

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

02
Financial Data

Remaining
challenges to befocused on in the
new mid-term
management
plan

Lead transition to
net-zero CO 2

Corporate Strategy

Challenges
under theprevious
mid-termmanagement
plan

03

Business Strategy

Achievements
under theprevious
mid-termmanagement
plan

02

How We Create Value

promoting commercialization and increasing profitability, and in improving the quality andrecognition of services amid ongoing competitive aggressiveness.
Based on the achievements and challenges under the previous mid-term management plan,
the new mid-term management plan aims to maximize the diverse values of LNG while actively
investing resources in the GX field (renewable energy, e-methane, etc.), expand solutions byutilizing digital technology based on our real strengths, establish a profit model, and reform staff
operations and Human Capital Management through the use of digital technology.

CEO’s Message

By actively investing in the renewable energy field in Japan and overseas, partnering with
Octopus Energy Group Limited, and shifting to a holdings type group structure through FY2022,
we have built the foundation to achieve the vision we set for ourselves in Compass2030.
However, as LNG procurement risks due to the external environment, such as
geopolitical risks, have become apparent, this was also a period in which we strongly felt
the importance of continuing stable procurement and supply.
In addition, challenges remained in acquiring strengths in the decarbonization field,

Strengthen human capital
Drive structural reforms withdigital tools (DX)

Financial Data

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

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strategy

01

strategy

02

strategy

Strategy

Achieve both
stable energy
supply &decarbonization

Fully roll out
Solutionsbusiness

Realize a flexible
corporate culture
resilient tochangeAction Plan everaging value chain flexibility toLaddress market volatility and maintainstable supplyR esponsibly leading the transition

Commercialize and monetize thebusiness in decarbonization area, while
continuing to stably supply energy

 trengthening customer communication
Sthrough our strengths in face-to-faceengagement and through digitaltechnologies
 o-creating value with communities byCproviding them with optimized solutions thatleverage our strong root in the community

Develop Solution business as a center next
to Energy business, by integrating solutions
which incorporate GX & DX

Implementing 3 key DX actions
 xercising human capitalEmanagement p.50
S trengthening our financial base
p.38

Increase resilience to uncertainty bytransforming our business model throughDX, in addition to exercising humancapital management and implementing
financial strategy

Financial Data

Strategy
outcomes

 uilding an integrated business brand &B
expand lineup of solutions

Corporate Strategy

 stablishment of a new model forE
stable energy supply

03

Business Strategy

Transform the LNG valuechain

How We Create Value

Establish a value
co-creation ecosystem

CEO’s Message

Lead transition to
net-zero CO2

VisionIntroduction

Three core strategies derived from remaining challenges

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
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
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

25

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01

strategy

Achieve both stable energy supply & decarbonization

Lead the transition to net-zero CO 2

Provide customers with optimal energy solutions by integrating various values such as decarbonization and decentralization using digital technologies

https://www.tokyo-gas.co.jp/en/IR/support/pdf/20230222-05e.pdf#page=14

Secure long-term LNG
contracts and powersources for base load

Value for diverse
range of offerings
Value forflexibility

Expand supply/
demand balancing &trading

A new form of
stable supply
Expand credit offset
products

Demandresponse, etc.

Develop gas/electricity
pricing system alignedwith market fluctuations

Digital utilization

Value for stable supply
Value for balancing
capacity

Diverse solutions
Supply–demand adjustment
and trading

Financial Data

Energy demand

Utilize decentralized
resources

Value forintegration

Corporate Strategy

Energy supply

Value for decarbonization
Value for decentralization

Business Strategy

A new model for stable energy supply

Secure profitability across the entire group
Form optimal assets and strengthen thecustomer baseStrengthen transportcapacity

Provide optimal solutions to our customers

Develop renewable
power sources

How We Create ValueAs an island country with few resources, it is important for Japan to achieve both a stable supply of energy and decarbonization, and the Tokyo Gas Group sees
this as its own responsibility.
The new model for stable energy supply that we are aiming for is to provide optimal energy solutions to customers through a combination of the value for stablesupply of LNG, the value for balancing capacity that flexibly balances supply and demand, the decarbonization and the decentralization value for renewableenergy, in combination with the power of digital technology.
Even in an environment with high volatility, we will promote decarbonization while simultaneously controlling the impact of fluctuations by integrating supply anddemand, customers, and society as a whole, rather than going unidirectionally from supply to demand.
Compass Transformation 23-25

CEO’s Message

Establish a new model for stable energy supply

Introduction

Strategy
Explanation

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
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Web Site

Toward a decarbonized society

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

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01

strategy

Achieve both stable energy supply & decarbonization

Lead the transition to net-zero CO 2

CEO’s Message

Leverage value chain flexibility to address market volatility andmaintain stable supply

Laid AO&T* groundwork

 uilt platform centered on
B
Singapore & Tokyo for LNG
trading in East Asia & Pacificregion entralize management across the entire
Cvalue chain of market risk and the option
values of our LNG and electricity assets,
which previously we managed individually D ecentralized resources (storage batteries,
PVs, EVs), which are customer equipment,
are also centrally managed across the value
chain and utilized as a coordination force

Expand LNG/electricity trading andincrease sophistication
 trengthen LNG trading in European/AtlanticSmarkets

Financial Data

*Asset optimization & trading: Integrated approach to optimal operation of facilities and trading

Customers

 iversify trading by entering the electricity
D
supply/demand balancing market

LNG market

 C ombine financial products and our assets,
and engage in sophisticated asset operation
using digital technology

Until now, our focus has been on strengthening our own LNG assets and expanding gas andelectricity sales volumes, but going forward, we will expand the value we provide to customers
through energy by integrating supply and demand with our digital trading platform.
By centrally managing not only our company assets but also customer-owned equipment suchas storage batteries and PVs, as well as other companies’ assets, and establishing a series ofenergy supply and demand portfolios including transactions with the market, we aim to optimize
and monetize the option value of each resource, including its adjustability and environmental
friendliness, and respond to risks and opportunities in real time.
For example, when electricity market prices rise, we can realize a stable and competitive energy
supply by procuring electricity not
LNG purchasing
only from among our own assets
Gas & power contracts
LNG
contracts
Customer equipment
carriers
but also from customer
equipment in the value chain. In
addition, if surplus electricity is
generated, it can be traded on the
Digital trading platform
as envisioned for 2026 and beyond
electricity market and monetized.
To achieve this, we will
combine the knowledge weRenewable
LNG terminals
have cultivated so far with
LNG-fired thermal power plants
power sourcesand grid storage batteries
Octopus Energy’s Group
Limited’s technology. In
Electricity market
addition, we will accelerate theacquisition of decentralized
When theProcure electricity not only from among our own assets but
resources and expand ouralso from customer equipment and supply it to customers
electricity
market soars Trading surplus electricity on the electricity market
decarbonization product line.

Corporate Strategy

 aunched LNG trading with
L
North America, Europe, and thePacific through collaboration with
European alliance partner

Risk management & flexible asset
utilization across the value chain

Achieving advanced asset optimization & trading with a digital trading platform

Business Strategy

 ommenced optimal operation
Cof LNG/electricity procurement,
supply, and trading in ways
leveraging our LNG assets

Actions for FY2023–25

How We Create Value

In order to respond to the increasing fluctuations in the energy market, we will form and manage assets suitable for newly growing markets, such as adjustability
and environmental value, and by building a digital trading platform, we will realize an energy supply that is highly stable, environmentally friendly, and flexible
according to customer needs.
What we’ve done

Introduction

Strategy
Explanation

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
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
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

27

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01

strategy

Achieve both stable energy supply & decarbonization

Lead the transition to net-zero CO 2

What we’ve done

Actions for FY2023–25

Sophisticated use of natural gas
 onsumer need for carbonC
neutral LNG: about 120 projects

 xpand solutions, including carbon credit-based
E
CNL, etc.

(As of April 30, 2023)

Conducted small-scale
methanation demonstration testing eveloped innovative methaneD
production technology
 eveloped low-cost waterDelectrolysis cell stack xpanded renewable powerEsources through development &acquisition
 enewable power sourceRtransaction volume*1: 1.49 mn kW egan working to achieve netB
zero emissions of CO 2 from ouractivities*2
 et-zero CO 2 from our activities:
N
Achieved 18% of our target

 evelop Commercial low-cost water electrolysis cellDstack for production of hydrogen cquire renewable power sources toward acquisitionAof new revenue sources ccelerate efforts for early real-world deployment ofAfloating offshore wind power enewable power source transaction volume byR
2025: 2.20 mn kW tudy methods for achieving net-zero CO 2 emissions
S
from our thermal power plants
 chieve net-zero CO 2 emissions from city gas
Aproduction facilities
Implement countermeasures for methane emissions
in shale development
B y 2025, reach 60% net-zero CO 2 from our activities:(vs. FY2020)*1 Total from our assets (including projects targeted for investment), external suppliers, etc.
*2 CO2 emitted from city gas production facilities, buildings, etc. we use, and company vehicles. Target is based on FY2020.

30 bn yen
FY2023–FY2025
Decarbonizationrelated investment
Renewableenergy in Japanand overseas

230 bn yen

200 bn yen

Strengthening the earnings base overseas and contributing to decarbonization
Overseas, in addition to replacing assets, we will promotecollaboration among our businesses and expand
earnings. For example, in the shale gas business, weare considering connecting each business throughtrading functions, rather than generating revenue throughindividual projects. We will also accelerate investments inthe decarbonization field including renewable energy tocontribute to future profits. By 2025, we aim to establish
a stable profit base by making profit contributions inthe shale gas business and contributing to profits in the
decarbonized field including renewable energy.

Financial Data

Reduction of our emissions

 inal investment target decision for building largeF
scale e-methane supply chain overseas in 2025

Hydrogen
Methanation, etc.

Corporate Strategy

Decarbonization of electricity

E stablish large-scale e-methane supply chain

In the domestic renewable energy sector, weplan to expand our earnings through thedevelopment and acquisition of power sources.
For overseas renewable energy, we will invest in
Europe and Southeast Asia to contribute tofuture earnings. In the area of hydrogen andmethanation, we will work on establishment oftechnologies, system compliance, and raw
material procurement to build a large-scale
overseas e-methane supply chain, with the aimof monetization in the future.

Business Strategy

Decarbonization of gas

Investment in the decarbonization sector, including renewableenergy, methanation, and hydrogen

How We Create Value

While further promoting the advanced use of LNG in Japan and overseas to reduce CO 2 emissions, we will use the profits therefrom to invest in advanced
decarbonization fields such as renewable energy (especially offshore wind with its large market), e-methane and hydrogen, and will progressively commercialize
these fields to lead a responsible transition that achieves both stable supply and decarbonization.
In addition to reduction of our emissions, we will provide optimal solutions that meet customer needs, and establish a virtuous cycle of sustainable development
for both our customers and the Tokyo Gas Group, with the aim of achieving both decarbonization and economic growth for society as a whole.

CEO’s Message

Responsibly leading the transition

Introduction

Strategy
Explanation

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
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
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

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01

strategy

Achieve both stable energy supply & decarbonization

Efforts toward commercialization of floating offshore wind power
generation business

Promotion of business feasibility studyin Malaysia

Promoting projects in the US

Tokyo Gas, SUMITOMO CORPORATION,
Petroliam Nasional Berhad

ImplementerTokyo Gas, Mitsubishi Corporation,
Osaka Gas Co., Ltd., TOHO GAS Co., Ltd.

Implementation
details

Considering the establishment of
e-methane production, liquefaction, andtransportation supply chains in Malaysia

Implementation
details

Considering the establishment of
e-methane production, liquefaction, andtransportation supply chains in the US

Introduction of
e-methane in Japan
MiddleEast

Corporate Strategy

Implementer

WindFloat ®
Among floating foundation systems for offshore wind power generation, WindFloat ®
uses what is called a semi-submersible platform, and it has already been commerciallyoperated in the Atlantic Ocean and the North Sea with a total capacity of 72.7 MW. As tothe technical performance of WindFloat ®, it has a track record of being able to operate
without problems even in an environment where waves of a maximum height of 17 m andwind of a maximum speed of 59.4 m/s. occur.

Business Strategy

Consideration for building a large-scale e-methane supply chain overseas

In May 2020, Tokyo Gas invested in Principle Power Inc., developer of its own floating
foundation system for offshore wind power generation, WindFloat ®. WindFloat ®, owned
and developed by Principle Power Inc., has excellent stability at sea and has alreadybeen adopted*1 for large wind turbines in Europe. For Japan, which has few shallow
waters, floating offshore wind power generation using technology that can be installedeven in deep waters is expected to have great potential, and it is expected to be
introduced more and more in the future.
In February 2023, Tokyo Gas and Shinobuyama Fukushima Power Co., Ltd.
announced the start of their study on a floating offshore wind power project off the coastof Fukushima Prefecture. Based on Principle Power’s floating technology, we will aim tocommercialize the project by utilizing the know-how gained through the demonstration
research project*2 conducted off the coast of Fukushima.

How We Create Value

Leveraging the knowledge we have gained from the small-scale demonstration of
e-methane in Japan, we are promoting multiple commercialization projects to establish
the world’s first large-scale manufacturing and supply chain for e-methane overseas. The
goal for FY2025 is to make investment decisions for building a large-scale supply chain
for e-methane overseas, and we will also support the introduction of e-methane in Asia,
where LNG market growth is expected in the future.
In addition, we are developing innovative methanation technologies with the support of
the Green Innovation Fund to reduce the cost of e-methane production.
Furthermore, in order to reduce the cost of production of hydrogen, which is a raw
material for e-methane, we are working with SCREEN Holdings Co., Ltd. to develop
low-cost water electrolysis cell stacks utilizing the knowledge cultivated in fuel cells.

CEO’s Message

Promotion of Large-Scale e-methane Commercialization Projects
Overseas, Development of Innovative Methanation Technologies, andDevelopment of Low-Cost Water Electrolysis Cell Stacks

Lead the transition to net-zero CO 2

Introduction

Strategy
Explanation

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
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

US

Financial Data

Southeast
Asia

Australia

Promotion of business feasibility studies in foreign countries
ImplementerTokyo Gas, Shell Singapore Pte. Ltd., Osaka Gas Co., Ltd.

Implementation
details

Studying the establishment of e-methane production,liquefaction, and transportation supply chains in foreigncountries

In addition, we are making initialconsiderations with various
businesses for projects in
multiple regions.
Photo of the Kincardine Offshore Wind Farm project courtesy of Principle Power Inc.

Innovation for a decarbonized society
p.44*1 Performance details: commercial operation of three 8.4-MW units offshore Portugal and five 9.5-MW units offshore Scotland*2 Fukushima floating offshore wind farm demonstration research project

Financial Data

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

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02

strategy

Fully roll out Solutions business

Establish a value co-creation ecosystem

We have redefined the values we provide to our customers as “Resilience,” “Optimization,” and “Decarbonization,” and we are building a new brand that integrates
solutions related to these. We provide easy-to-understand and easy-to-use solution menus for residential, corporate, and community customers.

Three forms of value provided
Resilience

Underpinning corporate values:
Safety, Security & Reliability

Residential
customers

Provide securityin everyday life

Provide smart
livingCommunity
customers

Provide optimal
solutions alignedwith their life stages
and changes insociety

Contribute to theircontinued growthby combining our
expertise with theirs

Energizecommunities
through cocreation withstakeholders

Increase businessproductivity

Realize ecofriendly living

Community
customers

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
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Enhanceenvironmental
value

Solutions

Developresilient urban
infrastructure

Corporate
customers

Sustainable urban
development

Realize cities thatleverage local
characteristics andadvanced technologies

Financial Data

Corporate
customers

Strengthenbusiness
continuity

Corporate Strategy

Concepts

Residential
customers

Decarbonization

Optimization

Business Strategy

In addition to the corporate values of “safety, security, and reliability,” which have beencultivated as the foundation of our business, we will formulate a business brand thatincorporates the three values of “resilience, optimization, and decarbonization” in order
to expand our solutions.
We have been developing each service according to the needs of our customers, but
by branding the solutions we deliver and clarifying the value we provide, we will further
improve recognition and achieve profit growth.

How We Create Value

Role and purpose of building a comprehensive business brand

CEO’s Message

Building an integrated business brand & expand lineup of solutions

Introduction

Strategy
Explanation

Introduction

Financial Data

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

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strategy

Fully roll out Solutions business

Establish a value co-creation ecosystem

CEO’s Message

Strengthening customer communication through our strengths inface-to-face engagement and through digital technologies
Enhance residential solutions to serve diverse customer needs

What we’ve done

Actions for FY2023–25
Achieve real growth in energy business

Energy supply aunched Sasutena Denki &Lother new electricity plans
Expansion of products/services
 egan offering products/solutionsB
for PV, storage batteries, etc.

Platform for value provision edesigned platform forRcustomer reception/management

Turn energy & environmental equipment
into solutions
 everage decentralized resources (PV, storage
L
batteries, EV) to build up solutions (demand
response, etc.) through alliances with diverse players

Implement personalized digital marketingthat capitalizes on our strengths in faceto-face engagement
 tandardization and centralization of systems thatS
have until now been subdivided by service

FY2025
Expand internal/external partnerships andco-creation to support customer lifestyles
Total sales

100 billion

Approx. ¥(more than +40%
over 3 years)

Providesecurity ineverydaylife

Providesmart living

Realizeeco-friendly
livingNumber of holders of plumbing
repair qualifications

1,147 persons

As of May 2023

Number of registered equipment
installation workers

3,293 persons As of May 2023

Expanding customer accounts by leveraging TG Octopus Energy’sGroup Limited’s digital technology
We established TG Octopus Energy Group Limited, ajoint venture with Octopus Energy’s Group Limited, aUK-based energy tech company, and began
operations in Japan in November 2021. Octopus
Energy’s Group Limited proprietary systemcentralizes essential functions for energy services
such as customer information management, billing
management, and invoicing, enabling the quick creation of a variety of rate plans andservices. In addition, the same customer support team is always available for eachcustomer, forming a concierge-like service to solve all inquiries.
We will apply this expertise in the gas and power services of the Tokyo Gas Groupto further expand customer accounts.

Financial Data everage digital technology platform to expand interactive
Lcommunication with customers, by shifting to highly responsive
customer-centric processes/systems and optimizing
approaches based on data on customer traits/behavior

2,176 persons As of May 2023

Corporate Strategy

 olled out repair & home support
R
services that leverage our lastmile strengths

 stablishment of price menus and service deliveryEsystems that meet the diverse needs of ourcustomers, such as environmental friendliness anddifferent usage patterns

The strengths of LIFEVAL and Enesta, which areresponsible for Tokyo Gas’ last-mile, lie in their having
many engineers and connections with customers andlocal communities. We leverage these strengths toprovide services such as in-home repair andequipment installation for our customers who demand
technical capability and quality.
Based on these strengths and high-quality services,
we will continue to expand and utilize our digital
infrastructure, including standardizing systems
subdivided by service, and provide solutions that can
immediately respond to customer needs.

repair qualifications

Business Strategy

 xpanded customer base withE
co-creation partners

Strengthening of customer relationships through solutions thatleverage the last-mile
Number of holders of gas appliance

How We Create Value

By utilizing advanced digital technologies such as those of Octopus Energy Group
Limited to enhance communication with our customers, we will further strengthen
the relationships we have cultivated with them through in-person contact.

Introduction

Strategy
Explanation

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
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
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

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02

strategy

Fully roll out Solutions business

What we’ve done

Actions for FY2023–25

Energy supply
 xpanded supply of city gas,
E
LNG, and electricity in mainly the
Tokyo metropolitan area
 ecame first in Japan toBintroduce carbon-neutral LNG

 roviding continuous and highly effective solutions inPdomains ranging from environmental consulting to EPC,
from energy services to operation and maintenance nhance/provide decarbonization products and linkEthem with certification (Provide customer-tailored
renewable energy [Solar Advance, biomass,
geothermal, etc.] and carbon credit offsetting products)
 romote large projects combining energy supply andP
decarbonization solutions

 rovided engineering solutions
P
that capitalize on our user knowhow elp customers to improve the value added of their equipment
Hand optimize energy management (VPP*3, demand response,storage batteries, CPPA*4 , corporate EV services, etc.)
 nsure stable energy procurement/supply, expand
Erange of solutions aligned with market conditions

 orporate sales functions wereC
consolidated at TGES

Develop/deploy data-driven solutions
 xpand new solutions that help to streamline workEprocesses and save labor (Helionet Advance, O&MDX, Joy series*5, facility management, etc.)

Total sales

210 billion

Approx. ¥(+10% over three years)

Enhanceenvironmental
value

Strengthenbusiness
continuity

Increasebusiness
productivity*1 G enerating panel capacity*2 A ccording to research by Narita International Airport Corporation and Tokyo Gas*3 Virtual power plant (a system that provides integrated control of customer-owned power sources and uses them to balance
electricity supply/demand)*4 Corporate power purchase agreement (agreements in which corporate customers [businesses, local governments, etc.]
make long-term purchases of electricity from utilities)*5 Central management software that helps customers with factories, etc. digitalize utility equipment and improve productivity

Financial Data

FY2025
Decarbonization solutions partner thatsolves a wide range of management
challenges and co-creates the future forcustomers that operate offices nationwide

Corporate Strategy

Sales organization realignment

Business Strategy

Sophisticated decentralized energy networks

Provision of solutions

An energy supply company contributing to the decarbonization of
Narita International Airport
Green Energy Frontier, which was established by NARITA INTERNATIONAL AIRPORTCORPORATION and Tokyo Gas to provide energy supply to Narita International Airport,
began operations in April 2023. We will start supplying energy (electricity and heat) to Narita
International Airport and take on the challenge of decarbonizing the energy supplied to it by2050. We plan to invest 100 bn yen by 2050 in the construction of a new energy plant and theinstallation of a 180MW*1 solar
power generation facility which willbe the world’s largest*2 solar power
generation facility at an airport.
The Tokyo Gas Group will engage
in the energy supply business andthe airport decarbonization businessby leveraging the energy supply
know-how it has cultivated over theyears, as well as its knowledge inthe construction and operation oflarge-scale energy plants.

Enhancement and nationwide deployment
of decarbonization solutions

How We Create ValueThe Tokyo Gas Group and its alliance partners will optimally combine a fullrange of environmental solutions, from energy conservation to advanced
decarbonization technologies, to help solve challenges for our customers
and local communities.
Furthermore, we will promote ESG-oriented real estate development andurban development by expanding our solutions, business areas, and fields,
aiming to realize sustainable communities.

Enhance corporate customer solutions for theera of decarbonization & decentralization

CEO’s Message

Co-creating value with communities
by providing them with optimized
solutions that leverage our strong
root in the community

Establish a value co-creation ecosystem

Introduction

Strategy
Explanation

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
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
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

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02

strategy

Fully roll out Solutions business

Establish a value co-creation ecosystem

What we’ve done

Actions for FY2023–25
Expand solutions

Expansion of community
collaboration
 ntered into comprehensiveEagreements for carbon-neutral
urban development with local
governments and city gas suppliers
 stablished new communityEelectric power company(Utsunomiya Light & Power) xpand service areaE
based on experience inworking with local
governments, etc.

Increase resilience/efficiency ofcommunity-supporting energy systems

Introduce advanced energy-saving technologies andunused/renewable energy
Provide electricity supply/demand balancing functions,and supply heat/power during disasters

Promotion of alliances
C ollaborated with local
companies and other industries

Achieved stable growth with adevelopment model focused onlong-term properties chieved stable growth byA
developing long-term properties(mainly offices/residences, which
offer stability) on land we own
Provision of solutions thatleverage group synergies suchas optimal energy management,
environmental products, and
BCP measures
Office rental business “msbTamachi”
 he LATIERRA series of urbanTrental condominiums

Sustainable urban
development

Develop resilient urban
infrastructure

Leverage our strong roots
in each community toprovide the best solutions
to local needs

Revitalize cities that leverage
local characteristics andadvanced technologies

Leveraging the strengths of community contribution, execution, and long-term support that wehave cultivated in our business areas, the Group will solve regional issues and maximize profit
opportunities by combining carbon neutral LNG, renewable energy, digital solutions, and EV
charging management. In July 2021, Utsunomiya Light & Power Co., Inc. was establishedthrough joint investment with Utsunomiya City, NTT Anode Energy Corporation, The Ashikaga
Bank, Ltd., and THE TOCHIGI BANK, LTD. With Utsunomiya Light & Power supplying electricity
from biomass power generation and solar power generation in Utsunomiya City to municipal
facilities, we are promoting local production for local consumption of renewable energy.

 nhance eco-friendliness of properties
EProvide decarbonization solutions
Strengthen BCP support and environmental/disasterprevention functions
Acquire sustainability certification and make nonfinancial disclosures

Establish circular development model stablish a real estate fund under concept of providing
E
ESG valueEstablish circular development model that includes ourdeveloped properties in the fund, and accelerate
ESG-oriented development
Achieve both business growth and greater efficiencies

Expand range of development

 aunch development of our Group-led “circular futureLcity” in Shin-Toyosu
Join in ESG-oriented development project in Australia, aleader in ESG-oriented development
E xpand asset holdings to include distribution facilities etc.

Example of ESG-based development:
LATIERRA Ueno-Inaricho (tentative name)
In addition to obtaining the ZEH-M Oriented environmental
certification, we plan to install solar panels on the roof and use
Sasutena Denki, which is effectively 100% renewable energy.

Zero CO2
emissions inshared areas

FY2025Contributing to sustainable urban
development by co-creating
value with investors throughESG-based development as anengine for growth

Electric vehicles
Installation of
charging outlets

Profit growth of
more than 10%
over three years

Real estate fundsize of 40 billion
yen

Financial Data

Provision of solutions in collaboration with local governments and city
gas companies

Engage in ESG-oriented development

Corporate Strategy

Launch community
support services in atleast ten areas

Actions for FY2023–25

Business Strategy

Provision of solutions
Contributed to urban developmentwith Smart Energy Network(Tamachi, Yaesu Smart Energy)

FY2025
Partner that helps communities/
local governments to advancedecarbonization measures

Expand service area

What we’ve done

How We Create Value nhance/provideE
environmental products/
solutions that arecompetitive (CNL, Joy
series, demand
response, EV services,
environmental education
programs etc.)

Engage in ESG-oriented real estate development

CEO’s Message

Expand community solutions through co-creation

Introduction

Strategy
Explanation

Startedlarge-scale
development in
Shin-Toyosu

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
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
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

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03

strategy

Realize a flexible corporate culture resilient to change

Development of data and digital infrastructures,
Expansion of DX human resources bystrengthening recruitment of external humanresources and actively investing in education

We will promote the following measures as the three pillars of DX, with the aim ofincorporating the knowledge of advanced companies and evolving systems andbusiness processes that take advantage of the characteristics of digital technology.
p.50

Strengthening our financial basep.38

What we’ve done
Implemented DX measures ineach value chain function

Establishment of a digital trading platform that contributes to both supply anddemand adjustment and profit generation
Core strategies in the new
mid-term management plan1

Digital trading platform

p.27

Built an integrated platform forGroup-wide data analysis
Established Digital Innovation
Division to lead Group-wide DX
Systematized DX talent training(800 DX leaders)

Improve CX by centralizing and standardizing customer management
systems platform
Core strategies in the new
mid-term management plan

2

Centralization and standardization of customer
management system platform trengthen data platform for value co-creation throughS
internal/external data coordination and for AI-enhanced
sophisticated processing
Build digital technology platform for supporting
implementation of focused DX actions (use Octopus
Energy’s technologies)

Increase pool of DX talent and strengtheninter-organization coordination through DX
promotion committee nhance DX training that emphasizes practical expertiseE
and actively invest in trainingIncrease recruitment of high-level DX talent and develop
career paths
Establish DX promotion committee chaired by CDO

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
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

p.31

DX leaders: 3,000

High-level/
core DX talent: 500

Development of DX human resources

p.51

Corporate Strategy

FY2025
Begin operating data/digitaltechnology platform

In order to fully roll out the Solutions business, we will promote the centralization andstandardization of the customer management system platform. We will realize thetransition to customer-centric, highly responsive operations and systems, and digitalmarketing based on customer demographic and behavior data.

3

Build a data/digital platform

Business Strategy

To achieve both stable energy supply & decarbonization, we will proceed withbuilding a digital trading platform. We aim to provide stable supplies of energy andgas, electricity, and environmental value that meet our customers’ needs.

2

Actions for FY2023–25

How We Create Value

1

Exercising Human Capital Management

CEO’s Message

Implementing three key DX actions

Transform the LNG value chain

Introduction

Strategy
Explanation

Introduction

Corporate Strategy
Sustainability
Corporate Governance

Double the productivity of indirect operations by fundamentally reviewing the business processes of staff operations
Headquarters

Organizations

Group
companies

HR

Standardize/consolidate routine
processes
Integrate systems

Accounting
Planning

Strategically assign personnel

Strategically assign personnel
Establish shared service center
Expand areas where automation is
usedEliminate processes that overlap or have room for improvement, and review specs
Overlap

Overlap

Analyze work processes

Financial Data

We will improve efficiency and strengthen governance by standardizing andconsolidating staff operations and promoting strategies for optimal utilization ofreal estate holdings. In addition, we will utilize digital technology to improve
productivity by visualizing business processes and performance. By 2025, we aim
to achieve a 40–50% reduction in indirect operations and improve earning power
and management agility.

Financial Data

Use digital technologies to visualize work processes/
performance

Develop/cross-train high-level specialists in back-office operations

OthersWeb Site

Systems

Jumble of different, compartmentalized systems

Promotion of optimal CRE* use

Investor Relations Website

Workplaces

Decentralized functions means workplace
operations are also decentralized.

 ake optimal use of CRE based on a review of businesses/operations
MMaximize revenue through sophisticated use, including officeconsolidation, selling off properties, and external leasing

Financial Results Presentation Materials*Corporate Real Estate

Investors’ Guide(Financial Data and Industry Data)
Financial Results Bulletin
Corporate Governance Report

34

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Introduction

Introduction ofInternal Companies

The holdings-type group structure

Nominating Committee

Representative Corporate
Executive Officer,
Presidentand CEO

Compensation Committee
Audit Committee

Audit Committee
OfficeBusiness Strategy

Board of Directors

How We Create Value

Organizational chart

CEO’s Message

In FY2022, the Tokyo Gas Group shifted to a group structure in which quasi-branchcompanies and business subsidiaries are self-run and grow by working with the market
and customers. In order to realize agile decision-making, we have expanded the discretionof the quasi-branch companies and business subsidiaries and pursue group synergy
through intergroup collaboration.
Under the new business structure, we promote transformation into a group with multiple
business pillars by improving the earning power of each business entity and resilience tofluctuations, and aim to realize Compass2030/Compass Action.
Here, we introduce the four companies and three key business subsidiaries of our 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
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Financial Data

Tokyo Gas Real Estate Co., Ltd.

Tokyo Gas Engineering Solutions Corporation

Tokyo Gas Network Co., Ltd.

Global Business Company

Green Transformation Company

Energy Trading Company

Corporate business

Customer & Business Solution Company

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

35

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As of March 31, 2023

4 locations

LNG procurement

Gas generation capacity

4 countries
13 projects Photo ofcourtesy
INPEX
13 million tons Corporation

Gas power generation at
locations in Japan

4
1.533 million kW

Annaka Solar Power
Plant

2030 Target
Renewable powersource transaction
volume2030 Target
e-methane

1% deployed

6 million kW

Number of businesses/
projects selected for public
offering by National Researchand Development Agency

3 projects

Ibaraki

Enefit

2

3

Gunma

Tochigi

EnestaEnesta6

Enesta6

4

Enefit7

LIFEVAL

5

Kanagawa

LIFEVAL31

Risks

 tagnation of business operation, increase inS
expenses, and missing of business opportunities
due to compliance with country-specific laws,
regulations and/or business practices
Impact of fluctuations in crude oil/gas prices
and foreign exchange rates on the revenue
and expenditure of overseas business
operations in general

Europe2 bases
1 business

Enefit1

Tokyo

Enefit9

LIFEVAL

34

Enefit33

CEO’s Message

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

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

As of March 31, 2023

North America
1 base6 businesses

SoutheastAsia
6 bases
8 businesses
Australia
1 base5 businesses

Financial Data

Strengths

Global Business Company

In North America and Australia, Global Business Company
has been engaging in resource development business, and inSoutheast Asia, it has focused on LNG infrastructure projects
by leveraging the know-how accumulated in Japan. In recent
years, we have also focused on the renewable energy business inNorth America and Scandinavia. Going forward, we will continue
replacing the asset portfolio while participating in growth areas,
including the decarbonization field, and acquiring and utilizing
functions that link our various businesses. We will promotecollaboration among the businesses we have developed so far, andexpand our earnings base across the board.

1

Corporate Strategy

LIFEVAL

Contents

Chiba

Saitama

Major business areas
 table operating capability in LNG terminals,
S
power generation projects, etc.
E xpertise in resource development and LNG
infrastructure business that we have cultivatedso farAs of the end of
April 2023

Number of LIFEVAL and other stores
EnestaIntroduction

Methanation facility

Business Strategy

Risks

 ecrease in demand caused by intensifiedD
competition driven by liberalization and changes
in lifestyle and business environmentPolicy changes and acceleration by national and local
governments, including laws, regulations, and systems
Delay in technological development required todeal with competition and alternatives

10 carriers

How We Create Value

Strengths

 ommunity-based sales network composed ofC
LIFEVAL, Enesta, and other outlets,
a customer base of over 13 million accounts,
the trust of customers
E xpertise in work requiring technical capability at
customers’ homes (i.e., device installation, repairs, etc.)
Energy solution technology and one-stop
provision of gas, electricity, and solutions

LNG terminals

CEO’s Message

 eclining competitiveness due to delayedD
implementation in societyL agging behind in the technological innovation
race
Uncertainty in international trading rules andsystem design for environmental value

LNG carriers owned
and managed by thecompany

Introduction

 cquiring technology and knowledge based onA
alliances with overseas partners
R elationship cultivated in the power value chain
from power sources development and to retailH ydrogen production know-how cultivatedthrough fuel cell development, etc.

Risks

Customer & Business Solution
Company

Customer & Business Solutions Company provides customers
with gas and electricity and solutions for homes and businesses.
With “Resilience,” “Optimization,” and “Decarbonization” as thethree forms of value we provide, we offer easy-to-understand,systematized solutions for our customers, contributing to theresolution of social issues and the creation of value. In the BtoC
sector, we are strengthening not only LIFEVAL’s customer contact
points, but also digital contact points such as the member
site my TOKYOGAS. We are working to improve customer
satisfaction. In the BtoB sector, we offer a comprehensive range
of decarbonization products (CNL, renewable energy power,
environmental consulting) to commercial and industrial customers,
and also collaborate with local governments to create attractive
towns, aiming to solve social issues by improving environmental
sustainability.

 roblems in raw material procurement due toPgeopolitical risks, etc. related to the import of
raw materials
Supply disruption due to damage to production,
supply, power generation facilities, etc. caused bylarge scale disasters
Impact on earnings due to fluctuations in LNG
and electricity wholesale market prices and costsof raw materials and fuels

Strengths

Green Transformation Company

GX Company was established in FY2023 as a specializedorganization to promote decarbonization of electricity and gas. In
the electricity sector, we are expanding the volume of renewableenergy that we handle, and we have invested in Principle Power
Inc., which has a proven track record in Europe, for floating
offshore wind power, which is expected to be widely used in the
future, and have begun studying a project in waters off the coastof Fukushima using the company’s technology. In the gas sector,
we are exploring the feasibility of multiple projects with the aimof building large-scale supply chains for e-methane. In addition,
we are focusing on research to reduce the cost of hydrogenrequired for e-methane production and to develop high-precisionwind forecasting tools to increase the efficiency of wind power
generation.

Risks

Photo courtesy of: Principle Power Inc.

Strengths

Energy Trading Company

This company includes the Raw Material Procurement Division,
which engages in LNG contracts and transportation; the ElectricPower Division, which deals with development and procurementof electric power sources; the Wholesale & Regional Service
Division, which provides energy solutions to other gas companies
and municipalities; and the Product Division, which operates LNG
terminals and power plants. Through LNG as a commodity, we
aim to leverage our strengths that derive from having abundantassets and customer connections to ensure a stable supply andmaximize the value of energy. Furthermore, as market volatility is
increasing, we will work to establish monetization models. As aleading company handling natural gas, we will take the lead toward
net-zero CO 2 and create environmental value.

 bundant LNG-related assets (i.e., procurementA
contracts, terminals and carriers); LNG trading
volume and trade management capabilities
S cale of electric power business (generation
and retail)Trade experiences

Financial Data

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

36

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Utsunomiya
Trunk Line

Gunma TrunkLine

Kumagaya–Sano
Trunk Line

Tokyo Gas
Network
service area

Ibaraki-Tochigi
Trunk Line

TochigiLine

Koga-Moka
Trunk Line

Saitou Trunk Line
No.2 Joso
Trunk Line

Saihoku Trunk Line
Saitama Trunk Line

IbarakiTrunk Line

Introduction
Contents

Joso Trunk Line upply disruption due to damage to supplyS
facilities, etc. caused by large scale disasters

Risks

CEO’s Message

Domestic sales offices and business results
Hokkaido Sales
Energy service results
OfficeLNG terminal/LNG satellite results
Mapping system introduction
Nagano Sales
results
OfficeNiihama LNG Co., Ltd.
Kyushu Sales Office

Okinawa Sales Office

JR Tamachi Station

Pullman Tokyo
Tamachi*Pedestrian deck

Tamachi
StationTower S

Tamachi
StationTower N

Shibaura
Nursery
SchoolMinato Park
Shibaura

Shibaura Park

Aiiku
Hospital

Redevelopment area

msb Tamachi (musubu Tamachi)*HotelCorporate Strategy

Nagisa TerraceRisks ecline in business potential due to real estateDmarket conditions, increased competition, orother environmental changes (including
infectious diseases)D amage, malfunction, etc. of owned andmanaged properties caused by large-scaledisasters (earthquakes, fires, floods, etc.)

Wangan Douro Trunk Line

Kaitei Trunk Line

Shibahamaelementary
schoolStrengths

 wnership of high-quality lands in the TokyoO
metropolitan area
S ynergy achieved by leveraging the Group’s
expertiseL ong-standing track record of operation andmanagement of buildings

Chuo Trunk Line

Keihin Trunk LineBusiness Strategy

 apid change in the market environment due toRintensified competition driven by liberalization
and rapid progress in decarbonization
Policy changes and acceleration by national andlocal governments, including laws, regulations,and systems
Supply disruption due to damage to equipment
and plants caused by large scale disasters

Total length of pipeline:
63,189 km(As of March 31, 2023)

How We Create Value ll-in-one proposal for service, energy and engineeringAInsights accumulated from the user’s
perspective and engineering solutions cultivatedthrough the management and operation ofplants and facilities
E xperience in engineering projects related to over
100 LNG terminals in 20 overseas countries

Shin-Negishi
Trunk Line

CEO’s Message

Chiba-Kashima Line
Chiba Trunk Line
No.2 Chiba Trunk Line

Yokohama Trunk LineStrengths

Tokyo Gas Real Estate Co., Ltd.

Taking full advantage of the land we have acquired over more than
130 years of business development, we have grown our office andresidential leasing business centering on central Tokyo based on theconcepts of stable earnings and improvement of asset value. We arealso actively working on energy proposals and urban development
based on our strong roots in the community through joint projects
with business partners. In the future, we will work to achieve stable
growth and increase revenue and efficiency through the expansionof development areas such as the establishment of a cyclicaldevelopment model that incorporates our own developed properties
into funds, participation in projects in Australia, and expansionof assets into logistics facilities and expansion of developmentareas, while at the same time strengthening our competitivenessby accelerating ESG-based development. We will also contribute tosustainable urban development by developing properties that arehighly resilient, comfortable and environmentally friendly.

Tokyo Gas
Network’s
high-pressure
gas pipelines

Tokyo Trunk Line

Risks

Tokyo Gas Engineering
Solutions Corporation

Since the first LNG installation in Japan (1969), the Tokyo Gas
Group has been consistently involved in the entire LNG value chain.
Utilizing the technical strength and know-how we have cultivatedthroughout that involvement, we have provided solutions such asengineering and energy services for LNG terminal and pipeline
construction in Japan and overseas. As a key business subsidiary,Tokyo Gas Engineering Solutions will provide one-stop services,gas, power, and engineering to solve challenges for corporate
customers throughout Japan, and will expand the provision of
low-carbonization and decarbonization solutions that combine
renewable energy to create environmental value.

Strengths

Tokyo Gas Network Co., Ltd.

 any years of experience in safe and stableMsupply of gas
T ies with customers and communities thathave been cultivated through the pipeline
business

Introduction

Supply areas and pipeline networks
The Tokyo Gas Group has been expanding the use of natural
gas while ensuring a safe and stable supply. Tokyo Gas Network
has inherited the gas pipeline business from Tokyo Gas, andcommenced operations on April 1, 2022. In addition to actively
promoting sales of city gas and contribution to CO 2 emission
reductions at customer sites, we will improve value-added
businesses by using smart meters and enhance regional value bycollaborating with infrastructure operators, thereby maintaining
industrial and technological innovation and a foundation for people’s
lives. We will also continue to promote the spread of natural gas
and create environmental value by promoting gas-based lowcarbonization and decarbonization.

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

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
Introduction of Internal Companies
CFO’s Message

Corporate Strategy
Sustainability
Corporate Governance

Financial Data

Financial Data

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

Photo courtesy of INPEX Corporation

37

Tokyo Gas Group Integrated Report 2023

Corporate Governance Report
Sustainability Factbook

Introduction

Introduction
Contents

CFO’s Message

Senior Managing Executive Officer, CFO

How We Create Value

SATO Hirofumi

CEO’s Message

Achieve sustainable growth and improve enterprisevalue by realizing both a sound financial position andgrowth investments through strengthening businessportfolio management

Business Strategy

target of 140 bn yen in segment profits (operating profit + equity method profit), butwith a tailwind from the global surge in raw material prices, we achieved 417 bn yen,nearly triple our target. Although this result exceeded our expectations, our analysis
posits it as a result of our raw material procurement portfolio and the risk control
ability we have built up to date, which have enabled us to appropriately respond to
In FY2023, we are assuming raw material prices on a normal basis, so a significant
decrease in profits is inevitable compared to FY2022, and we are forecasting
segment profits of 154.8 bn yen.

The new mid-term management plan, Compass Transformation 23–25, is a more
concrete implementation of Compass Action, an action plan through 2030, with a threeyear period from FY2023–FY2025. We have positioned these three years as a period for
us to accelerate a transformation, and it will be very important for determining thecertainty of the path to 2030 as depicted in Compass Action.
The profit forecast for the new mid-term management plan appears almost flat, but there
are some changes in the content. As announced in October 2022, we are currently in theprocess of selling our upstream assets in Australia, and we expect to lose the operating
profit from the Australian upstream business during the new mid-term management plan
period. This is a challenging indicator, as we are aiming to reach 150 bn yen in FY2025,
after compensating for this loss with other factors. In addition to profit growth in theelectric power business, we would like to achieve this by selecting projects that can

Financial Datasignificant market fluctuations.

In the execution of the new mid-term management plan, respondflexibly to the drastically changing business environment andexplain the process in detail

Corporate Strategy

In FY2022, the final year of the previous mid-term management plan, we had set a

CEO’s Message

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

Business Strategy
Compass2030 & Compass Action
Compass Transformation 23-25
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
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

38

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We aim to improve the Price Book-value Ratio (PBR) by enhancing
efficiency and profitability through business portfolio management
and increasing confidence in our future growth potential.

ROE

PER

Improve PBR by working to improve efficiency and profitability through business portfolio
management (ROE improvement) and aiming to increase stock prices by improving
market evaluation of future growth potential (PER improvement)

ROE
improvement

Efforts to improve ROA and appropriate leverage eveloping a portfolio management system (improving asset efficiency
Dthrough ROA vs WACC by department and business)

Reducing earnings volatility by strengthening market risk management
PER
improvement

Eliminating undervaluation factors and raising growth
expectations through Investors Relations
Improving capital market confidence in the growth story by explaining the
progress and results of investments
Enhancing disclosure of initiatives that contribute to long-term improvementof enterprise value, such as investments in human capital and technologicaldevelopment, through information media such as integrated reports

Financial Data

Reducing cost of capital through stabilizing the profit structure

Corporate Strategy

We have revised the total return ratio from 50% to 40%. Since the rate has just been
lowered from 60% to 50%, we expected to receive severe comments from shareholders
and investors.
We in fact achieved a record profit level of over 400 bn yen in FY2022, but the impact ofmarket price volatility is so great that, depending on the situation, our Group’s earnings
may decline significantly due to external factors. Under these circumstances, we areplanning to invest 1 tn yen during the new mid-term management plan, which is necessary
for decarbonization and sustainable growth. Investment decisions are made with sufficientdiscipline, but important investments need to be made steadily regardless of the status ofoperating cash flow, and depending on the timing and scale of the project, there is a riskthat financial soundness could deteriorate significantly. In order to achieve stable business
operations and increase business value over the medium to long term, we have decided toshift the focus of cash management somewhat to the safe side and to review the level ofthe total return ratio and flexibility in the management.
We want to give back to our shareholders not only through short-term returns, but also
through long-term improvement of enterprise value, such as the sustainable growth of ourGroup and contribution toward a decarbonized society.

PBR

Business Strategy

Increase flexibility in cash management to maintain necessary
growth investments in the face of increasing volatility

How We Create Value

Basic policy for improving PBR

CEO’s Message

In the spring of 2023, we received a request from the Tokyo Stock Exchange to take action
toward realizing management that is conscious of the cost of capital and stock prices forlisted companies with a PBR of less than one. At our company, we consider the factors
contributing to the low PBR to be that our business stability and growth potential has been
perceived as declined due to the liberalization of the gas and electric power businesses
and the expansion of the business domains, and that the levels of ROE and ROA havedeclined on lower profit as well as asset expansion.
PBR can be understood as ROE PER (Price Earnings Ratio), and in order to improve it,
we believe that it is important to raise ROE by applying appropriate leverage while
increasing ROA, as mentioned earlier. At the same time, in order to improve PER, we will
work to lower the cost of capital by stabilizing the profit structure through the initiatives of
the new mid-term management plan, and strive to raise expectations for future growthpotential by enhancing dialogues with shareholders and investors as well as disclosure.

Introduction

contribute to profits at an early stage in each business and making investments.
On the other hand, with regard to the outlook for income and expenditure, we believethat it is difficult to predict three years from now amid such drastic changes in the businessenvironment. During the previous mid-term management plan, there were significant
changes in the business environment, such as a decline in demand due to the impact of
COVID-19 and a fall in crude oil prices, that disrupted the assumptions in the plan. In theactual situation, the effects of this change were carefully examined and reworked for theplan for that year. Based on this experience, we believe it is important in the new mid-term
management plan to respond flexibly and appropriately to changes in the environment,
including changes in planned values. When reviewing the mid-term management plan, we
will provide detailed explanations, including the background.
With regard to asset efficiency, although it is inevitable that volatility will cause
performance fluctuations in a single fiscal year, we believe it is necessary to clear an ROA
of 4% on average as a financial discipline. As shown in the new mid-term management
plan, it is time to accelerate growth investments, including those related todecarbonization. To prevent a decline in asset efficiency, we will implement full-scalebusiness portfolio management and promote the reduction and replacement of assets thatare not expected to lead growth while confirming the ROA and ROIC against the required
returns on a business-by-business basis. Similarly, with regard to ROE, we will first aim for
8% and proceed with business operations with a strong awareness of capital efficiency.

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
Strategy 1: Achieve both stable energy
supply & decarbonization
Strategy 2: Fully roll out Solutions
business
Strategy 3: Realize a flexible corporate
culture resilient to change
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

39

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Sustainability Factbook

Introduction
CEO’s Message
How We Create ValueBusiness Strategy
Corporate Strategy
Financial Data

Corporate Strategy

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
Responding to Climate ChangeD isclosure based on TCFD
recommendations
Energy Security
Human Capital Management
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

40

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Introduction

Sustainability
Responding to Climate Change—Initiatives for a Decarbonized Society—2030 Target

e-methane

1%deployed

Hydrogene-methane

CNL

Highly efficient equipment,
Smart energy network

Renewable energyof 6 mn kW

Toward adecarbonizedsociety

Bio-derived energy

Decarbonization of gas and electricity
Renewable energy

Renewable energy

solar , wind power

Offshore wind power

Transition period
CO 2 emissions

CO2 reduction contribution results andtargets (compared to FY2013)
2022
2025
2030
Domestic

6.35 mn tons

Domestic
andoverseas

12 mn tons

Breakdown of 2030 target of 17 mn tons
Category

Major initiatives

25%

Fuel switching

Low carbonization field 15% High-efficiency equipment
Domestic
andoverseas65%

Decarbonization field

17 mn tons

35%

of high-efficiency
25% Introduction
LNG-fired power generationof renewable energy
15% Introduction
and new energy
of non-fossil fuel20% Utilization
certificates

Concept and calculation method of reduction effect (example)

Total CO2 emissionsof society

Net-zero CO2
The Tokyo Gas Group’s
CO2 emissions*1(Scope 1, 2, 3)

2022

Net-zero CO2 from our activities*2

2030*1 Including the amount of absorption (CCUS and forests) and offsetting by carbon credits*2 CO2 emissions from city gas production facilities, buildings we use, and corporate vehicles

2050

Financial Data

Corporate
emissionsincrease

Approximately
mn tons(figures for FY2022 result)p.48

Corporate Strategy

Total
emissionsof society
decrease

Business Strategy

CO 2 reduction contribution

Total emissions ofsociety

Sophisticated useof natural gas
Fuel switching

2050

58

(representative example)

Corporate
emissions

2030

How We Create Value

Conceptual diagram of CO2 reduction contribution

2022

CEO’s Message

As a group of energy companies that supports society, the Tokyo Gas
Group will realize a decarbonized society without compromising stablesupply from the present to the medium to long term, even amid
uncertainties surrounding energy such as geopolitical risks.
First in this transition period, we will make sophisticated use ofnatural gas, which has the lowest CO 2 emissions among fossil fuels, invarious forms, and steadily reduce CO 2 emissions of society as awhole. At the same time, we will promote the use of renewable energy
and actively develop technologies for the social implementation of newtechnologies such as e-methane, hydrogen, and bio-derived energy.
We will promote these initiatives on the premise of stable supply, andrealize a responsible transition. By 2030, we will achieve a CO 2
reduction contribution of 17 mn tons.
In addition, beyond 2030, we will continue to contribute to reducing
CO 2 emissions of society as a whole by steadily increasing the amountof e-methane introduced and further expanding renewable energy,
while aiming to achieve net-zero CO 2 in 2050 for the Tokyo Gas Group’s
CO 2 emissions (Scope 1, 2, 3). During this period, we will continue tomake maximum use of our Group’s energy infrastructure and effectively
utilize diverse energy sources to optimize the operation of the entire
energy system in terms of both supply and demand, thereby realizing a
new model for stable supply.

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
Responding to Climate ChangeD isclosure based on TCFD
recommendations
Energy Security
Human Capital Management
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

41

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Introduction

Specific initiatives

Acceleration of the transition

Smart energy network

Contents

Fuel switching

NIIHAMA LNG Co., Ltd., which Tokyo Gas Engineering Solutions Corporation establishedjointly with Shikoku Electric Power Company, Inc., Sumitomo Chemical Co., Ltd.,
Sumitomo Joint Electric Power Co., Ltd., and Shikokugas Co. Ltd., completed
construction of the Niihama LNG terminal and started gas supply in March 2022. By
supplying natural gas to Sumitomo Chemical Ehime Works, and Sumitomo Joint ElectricPower’s Niihama Kita Thermal Power Plant, we expect to reduce CO 2 emissions by
650,000 tons per year in the future by switching from coal, LPG, and heavy oil. We also
supply gas to nearby customers to promote fuel conversion, reduce CO 2 emissions in thesurrounding areas, and contribute to the development of the Shikoku region.

Locations of
LNG terminals
KagawaPrefecture
Tokushima
Prefecture

LNG tank (230,000 kl,
1 above-ground unit)
Manufacturing facilities(LNG vaporization facilities)
Truck shipping facilities
Receiving facilities for LNG carriers

Financial Data

Equipment
overview

Kochi
Prefecture

Corporate Strategy

Ehime
Prefecture

Business Strategy

The Kiyohara Industrial Park Smart Energy Project (Utsunomiya City, Tochigi Prefecture) is an
example of Tokyo Gas Engineering Solutions Corporation building a smart energy network (anoptimal energy system for each area utilizing ICT) in an existing industrial park. This uniqueenergy network comprises a smart energy center that uses mainly gas cogeneration, as wellas private power lines and steam lines, serving seven plants and offices at the park that areoperated separately by three companies. This is designed to supply electricity and heat in ahighly stable and environmentally friendly manner. This has resulted in approximately 20%
energy and CO 2*1 savings, which would be difficult to achieve at individual business sites. The
project represents Japan’s first “integrated energy-saving business serving multiple plants” tosupply electricity and heat to multiple businesses of different sectors in an inland-typeindustrial park, and has been certified by the Minister of Economy, Trade and Industry under
its Certification System for Collaborative Energy Saving Plans*2. The initiative was also
awarded the Chairperson’s Prize for Cogeneration in FY2020, the METI Minister’s Prize forEnergy Conservation in FY2021, and the METI Minister’s Prize for the Global Environment in
FY2023. Going forward, we will continue to work on initiatives in collaboration with eachcompany toward further energy conservation and CO2 reduction.

How We Create Value

Niihama LNG terminal: Promotion of carbon neutrality
and stable supply of energy

CEO’s Message

Kiyohara Industrial Park: Realizing significant energy andCO2 savings through business collaboration*1 R eduction rate of electricity and heat sent from the Smart Energy Center (compared to FY2015, measured in 2020). Crude
oil equivalent approx. 11,500kL/year, CO2 reduction of approximately 23,000t/year*2 A system under which, when multiple business operators are collaborating to implement energy-saving initiatives, theamount of energy saved through the collaboration can be distributed among the business operators in their regular reports
under the Act on the Rational Use of Energy (Energy Conservation Act).

Introduction

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
Responding to Climate ChangeD isclosure based on TCFD
recommendations
Energy Security
Human Capital Management
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

42

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Sustainability Factbook

Acceleration of the transition

Carbon-neutral LNG: To meet heat demand

Acceptance

Carbon-neutral
City gas

Manufacture

Customers(use)

Implementation as of March 2023

Supply1 Mechanism for using high-quality voluntary carbon credits
Professional meeting body of top executives
Common among
projects
 ur own riskOassessment
manualAfter procuring credits

Carbon-neutralcity gas consumers

122

Manual based
monitoring
Communication
with customers

CNL buyers alliancemembers77(As of April 30, 2023)

Buildings,
etc.we use

Other buildings used by thecompany
Offsetting of CO 2 emissions of electricity
consumption in some buildings owned by
Tokyo Gas Real Estate Co., Ltd. by using nonfossil fuel certificates (electricity)

City gas
production
facilities

Financial Data eputation riskR
assessment in lightof the manualDouble-checking
by domestic andinternational experts

After procuringcredits

Offsetting of CO 2 emissions of electricity
consumption by using non-fossil certificates(electricity), carbon-neutral city gas (gas), andJ-Credits (heat from district heating and cooling)

2 Tightening of operations
Issuance of supply
certificates tocustomers (image atright)
Third-party
verification totighten operations
Developmentof gas industry
management
guidelines

Corporate Strategy

Tokyo Gas headquarters

Hitachi LNG terminal
Offsetting of CO 2 emissions of electricity
consumption by using non-fossil fuelcertificates (electricity)

Business Strategy

Carbon-neutral
LNG* E Vrest (an EV charging service) and Charge Planner (an EV installation support service for corporations and local
governments)

How We Create Value

Voluntary carbon
credits

The Tokyo Gas Group has been working to reduce CO 2 emissions from our activities bythoroughly conserving energy and introducing high-efficiency equipment. We will further
accelerate these efforts to achieve net-zero CO 2 emissions from our activities in FY2030 forbuildings we use, city gas production facilities, and company vehicles.
Specifically, we will promote the use of non-fossil certificates for energy consumption,
switch to carbon-neutral LNG, and introduce low-emission company vehicles (hybrids, fuelcells, EVs) as our main initiatives, while actively introducing products into our own facilities
that the Tokyo Gas Group will plan to build up as businesses (off-site corporate powerpurchase agreements, EV-related services* ,etc).
In FY2022, we achieved 18% net-zero CO 2 emissions from our activities (using FY2020
as the benchmark) by completing the net-zero conversion of our headquarters andoffsetting electricity consumption by using non-fossil certificates (electricity) for otherbuildings we use as well as some city gas production facilities. Going forward, we willcontinue and expand our efforts, aiming for a 60% achievement rate for FY2025 throughnet-zero-related initiatives at city gas production facilities.

CEO’s Message

Carbon-neutral LNG (CNL) is LNG for which the greenhouse gases emitted in theprocesses from natural gas exploration to combustion have been offset by carbon credits(carbon offsets) generated from environmental protection projects carried out in emerging
countries and elsewhere. In addition to reducing greenhouse gases emissions on a global
scale, these environmental conservation projects are also related to SDG goals, such as
creating local jobs and protecting biodiversity, and the use of CNL will contribute to therealization of a sustainable society.
The Tokyo Gas Group recommends CNL to its customers to meet their heat demand in
addition to promoting energy conservation and introducing renewable energy, and CNL iscurrently being used by more than 120 customers. As the rules for CO 2 credits are currently
in the process of being developed, our Group is working to ensure customer trust by
1 improving the quality and transparency of credits and 2 tightening operational
procedures, including quantity control.

Initiative to achieve Net-zero CO2 emissions from our activities

Introduction

Specific initiatives

Hamamatsucho headquarters building

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
Responding to Climate ChangeD isclosure based on TCFD
recommendations
Energy Security
Human Capital Management
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

43

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

Electric power

Innovation for a decarbonized society
Efforts toward commercialization of floating
offshore wind power generation business

Aiming for urban decarbonization with e-methaneHydrogen production
from renewable energy
sources

CO 2 emissions frompower plants

Use of city gas

Re-emitted
during use
CO 2

Atmospheric CO2 does not increase
because it is recovered and reused.

Emitted andrecovered
CO 2

1

Decarbonizationin the heatsectorContribution to the realizationof carbon-neutrality in Japan

Value

Reductionof additionalsocial costs

Reduction of the burden
on the public (customers)

Value

4

Improved energy
security

Reduction ofcountry risk

Overseas
expansionof Japanesetechnologies

Toward global
carbon-neutrality

Scale up

24

25

26

27

28

Social implementation

29

30

31

32

33

Innovative technology prototypes

In-house demonstration
Construction

Innovative technologies
Small-scale demonstration

Domestic small-scale demonstration

Suitable site selection FS

FEED FID Construction

Approx.
1.6 mnm 3/yearDomestic regional cooperationand on-site use

Innovative technologies
Application

Suitable site selection FS

FEED FID Construction

Socialimplementation

Approx. Construction of large-scale
80 mnoverseas production andm 3/year
supply chains

Overseas

1% deployed

Financial Data

Domestic

Innovative technology: Hybrid Sabatier, PEMCO 2Approx.
50,000m 3/year

Corporate Strategy

23

Selection and evaluationof innovative technologies

3

Business Strategy

Value

Establishment of technology

22

CH 4

CEO’s Message

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

Value provided by e-methane

2

2021

CH4

Methanation

Value

In 2022, the Tokyo Gas Group started a domestic
demonstration using the Sabatier reaction, an existingmethanation technology, for the social implementation of
e-methane.
We aim to establish a large-scale overseas production andsupply chain by FY2030 and introduce e-methane for 1% of
our Group’s domestic city gas demand (approx. 80 mn m3),
and we are currently promoting specific projects.
At the same time, we are working to improve efficiency
and reduce costs through the development of innovative
methanation technologies utilizing the Green Innovation
Fund project.

e-methane

Hydrogen
H2

How We Create ValueThe Tokyo Gas Group is accelerating Initiatives for the practical application of e-methane, acarbon-neutral gaseous energy. e-methane is produced by methanation, a technique forsynthesizing methane which is the main component of city gas, through a chemical reaction
between the raw materials hydrogen and CO 2. In the production of e-methane, CO 2
recovered from exhaust gases is reused as a raw material, so even if CO 2 is emitted during
combustion, there is substantially no increase in atmospheric CO 2. In addition, we plan to
manufacture hydrogen, another raw material, using renewable energy, so e-methane can besaid to be a carbon-neutral energy.
e-methane has the following values: 1 decarbonization in the heat sector, 2 reduction ofsocial costs through the thorough utilization of existing infrastructure, 3 improvement ofenergy security through reduction of country risk, and 4 overseas expansion of Japan's
unique technologies.

Roadmap for social implementation

Contents

CO 2 emission reduction effect of e-methane

p.29

CEO’s Message

Gas

Introduction

Specific initiatives

Introduction

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

Corporate Strategy
Sustainability
Responding to Climate ChangeD isclosure based on TCFD
recommendations
Energy Security
Human Capital Management
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

44

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

Introduction

Specific initiatives

Innovation for a decarbonized society

feasibility study on a project to produce e-methane in Texas or Louisiana, liquefy it at theexisting Cameron LNG facility, and transport it to Japan utilizing other existing
infrastructure, including LNG ships and receiving terminals in Japan. The targeted
e-methane production volume is 130,000 tons per year to start in 2030.

Overseas (US)Domestic

CO2 from emittersor pipelines

e-methane production(construction & operation)

Liquefaction at the existing
Cameron LNG facility

International transportation byexisting LNG ships*1 L
 ocal partners to be considered as necessary*2 H 2 procurement from external sources to be assessed(both blue & green H 2
in initial production period)

CO 2
*2

H2

Candidate areas

1

Procurement from external sources

Candidate areas

2
3

Candidate areas: Texas and Louisiana, US

Candidate areas3 ccess to the existing Cameron LNG facility
AExistance of CO2 & H2 pipelines
High potential of onshore wind powerE xistance of H 2 pipelines
 igh potential of PV & onshore windH
power
Existance of CO 2 pipelines

1

2

Financial Data

Texas and Louisiana, the candidate states for e-methane production
sites in this study, have a high potential for sustained availability ofabundant renewable energy and easy access to the existing Cameron
LNG facility, of which Mitsubishi Corporation owns equity. Furthermore,existing pipelines of carbon dioxide and hydrogen are also accessible.

Transportation & distribution byexisting city gas infrastructures

Corporate Strategy

H2O

H 2 production(construction & operation)

Business Strategy

Industrial water or
Water desalination

Contents

CEO’s Message

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

CH 4

H2

Renewable power(development by JV or procurement fromexternal sources)

Tokyo Gas, Osaka Gas,
Toho Gas

Mitsubishi Corporation

The four companies’ JV (+local partner)

How We Create Value

For e-methane’s better visibility, it is effective to promote the e-methane in Japan andoverseas simultaneously and important to establish cost-competitive e-methane supply
chain from overseas where renewable power is accessible at low cost.
In November 2022, Tokyo Gas, Osaka Gas Co., Ltd., Toho Gas Co., Ltd., and Mitsubishi
Corporation have entered into an agreement and commenced to conduct a detailed joint

CEO’s Message

Produce e-methane in the US and transport it to Japan, utilizing Cameron LNG in Louisiana(large-scale overseas social implementation project)

Introduction

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

Corporate Strategy
Sustainability
Responding to Climate ChangeD isclosure based on TCFD
recommendations
Energy Security
Human Capital Management
Corporate Governance

Financial Data

The existing Cameron LNG facility
Web Site
Investor Relations Website

Candidates for e-methane production site
CO 2 pipelines
H 2 pipelines

Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

45

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

Introduction

Disclosure based on TCFD recommendations

Introduction
Contents

The Tokyo Gas Group regards the Task Force on Climate-Related Financial Disclosures (TCFD) framework as being an effective way to promote information disclosure and dialogue withstakeholders on climate-related issues. We therefore signed the statement of support for the TCFD, in May 2019. We are utilizing the TCFD recommendations as an framework to assess our

Governance

Strategy

Promoting Sustainability and Materiality

p.16

p.53

The performance of key indicators* related to responding to climate change in a period isreflected in incentive remuneration (bonuses) for Corporate Executive Officers, including
those who also serve as Directors (decided by the Compensation Committee inconsideration of the linkage with priority management indicators in the management planfor the relevant fiscal year).

2.6°C scenario (STEPS)
Scenario that assumes existing policies aremaintained, but that no stronger decarbonization
policies are announced and implemented

Carbon tax will be introduced worldwide*1
Carbon tax per t-CO2:
2022 *a: 3,000 yen, 2050 *c: 30,000 yen
Decrease in total energy supply*1, Increase inrenewable energy ratio*1
SupplyTotal supply: 2021: 624EJ
2050: 532EJ
Renewable energy ratio: 2021: 12%
2050:
70%
MarketIncrease in electrification rate*1
Electrification rate: 2021: 20% 2050: 52%
TransiDemand Progress in renewable energy and energy
conservation markets
tion
Activation of offset market
Advancing development and utilization ofhydrogen, CCUS, and other technologies*1
Utilization rate of hydrogen and hydrogenDecarbonization
derived fuel:technology
2021: 0%2050: 9%
CO2 capture:
2021: 0.0Gt-CO2
2050: 6.2Gt-CO2
Increasing environmental awareness among
Reputation
consumers, financial institutions, and investors

Carbon tax will be introduced in some regions*1
Carbon tax per t-CO2:
2022 *a: 3,000 yen, 2050 *b: 9,240 yen
Increase of total energy supply*1, increase ofrenewable energy ratio*1
Total supply: 2021: 624EJ 2050: 740EJ
Renewable energy ratio: 2021: 12%
2050:
29%
Slight increase in electrification rate*1
Electrification rate: 2021: 20% 2050: 28%
Current status maintained in renewable energy
and energy conservation markets
Offset market remains at the same level
Development and utilization of hydrogen, CCUS,
and other technologies remain at the same level*1
Utilization rate of hydrogen and hydrogenderived fuel:2021: 0%2050: 0%
CO2 capture:
2021: 0.0Gt-CO2
2050: 0.0Gt-CO2
Environmental awareness among consumers, financial
institutions, and investors remains at the same level

Weather disasters intensify to 2030
Increase in non-life insurance premium rate*2
Premium rate: 2021: 100.0%
2050: 130.9%

Weather disasters intensify to 2050
Increase in non-life insurance premium rate*2
Premium rate: 2021: 100.0%
2050: 238.0%

Worldview

Policy and Legal

PhysicalOfficer Remuneration System

p.58

Acute

Source: *1: IEA WEO 2022, *2: General Insurance Rating Organization of Japan
Note: *a: Median carbon prices in 2022 for 60 countries/regions listed in World Bank State and Trends of Carbon Pricing 2022,*b: Median values for countries (Canada, Chile, Colombia, China, Europe, Korea) referenced in the STEPS scenario, *c:Median values for developed countries in the NZE scenario

Financial Data

* F Y2023 performance indicators related to responding to climate change· CO2 reduction contribution· Net-zero CO2 emissions from our activities· Volume of newly developed renewable power sources in Japan· Volume of newly developed renewable power sources overseas

1.5°C scenario (NZE 2050)
Scenario assuming the achievement of net-zero
CO2 emissions by 2050 worldwide throughvarious initiatives for decarbonization

Corporate Strategy

Corporate Governance

The Tokyo Gas Group conducts scenario analysis to qualitatively and quantitatively
understand the impacts of climate change on our business, to assess the resilience ofbusiness strategies, and to consider countermeasures.
The scenario analysis is conducted by assuming the business environment withreference to scenarios published by the International Energy Agency (IEA) and focusing onenergy projects that are expected to be significantly affected by climate change.

Business Strategy

As our governance system, the Board of Directors makes decisions on management plans,
policies, and other matters, including responding to climate change. In addition, we havedelegated the authority to make decisions on business execution to our Representative
Corporate Executive Officer and President, which brings speed to management and focus
on monitoring based on reports from Corporate Executive Officers. The Management(generally meeting weekly), deliberates on matters submitted to the Board of Directors, aswell as important matters related to business execution including responding to climatechange. We also have established the Sustainability Committee, chaired by the
Representative Corporate Executive Officer and President, to share information within ourGroup regarding climate change response, and to enable coordination of the companywide direction. Furthermore, important matters are reported to the Board of Directors.

CEO’s Message

Scenario analysis
How We Create ValueThe Tokyo Gas Group recognizes responding to climate change as a key sustainability
issue to be tackled through business activities, and defines responsibly transitioning to a
decarbonized society as one of our material issues

CEO’s Message

response to climate change, and consistently disclosing relevant information on the impact of climate change on our business activities and the measures to be taken.

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
Responding to Climate ChangeD isclosure based on TCFD
recommendations
Energy Security
Human Capital Management
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

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Sustainability Factbook

Introduction

Strategy

Introduction
Contents

Risks/opportunities and countermeasures

Taking into account the environment surrounding the Tokyo Gas Group’s business, we identifiy risks and opportunities, evaluate them separately in the short to medium term through 2030 andCategory

Introduction of carbon pricing

Expansion of non-fossil
energySupplyside
Expanding needfor natural gas as atransition energy

MarketDemandside

Technology

Advancement of decarbonization
technologies such as renewableenergy, e-methane, hydrogenand CCUS

Reputation

Focus on low carbon anddecarboinzation in investment
standards

Acute

Extreme weather intensification

Increased costs for city gas and thermal power generation projects

Risks

Decrease in sales of city gas and thermal power

Opportunities
Risks
Opportunities
Risks
Opportunities
Risks
Opportunities
Risks

Expansion of development of renewable power sources and increase insales volume
Soaring LNG prices

Sophisticated use of natural gas
 witch from coal, oil, etc. to natural gas as fuel, introduce
Scogeneration systems, develop smart cities, strengthen
resilience in Japan and global markets.
Increase provision of carbon-neutral LNG (CNL)E xpand use of natural gas for balancing renewable power
CCUS

Decarbonization of gas and electricity

Increase in city gas and natural gas sales volume due to progress in fuelswitchingDecrease in city gas sales volume due to progress in energy
conservation and electrification
Expanding demand for services that utilize decentralized resources(renewable energy, storage batteries, demand response)
Decrease in sales of city gas and thermal power
Profit expansion through renewable energy, e-methane, hydrogen, andCCUS
Decrease in financing capacity of fossil fuel-related businesses

Opportunities

Increase in financing capacity of decarbonization-related businesses

Risks

Increase in costs for measures against wind and flood damage, risk of
shutdown of operations if production equipment is damaged

Opportunities

Measures taken by the Tokyo Gas Group

Short toMedium tomedium term long term

Expansion of decentralized energy due to disaster prevention andresilience needs

methanation and commercial use ydrogen: Establish practical, affordable hydrogenHproduction technologies
E xpand renewable power sources (Increase solar, wind &biomass power generation)
Achieve zero emissions in our thermal power generation

Infrastructure development (resilience)
Enhanced resilience in the natural gas infrastructureEnhanced establishment of a water hazard-resilient public
utilities (i.e., disaster countermeasures for LNG terminals
and power stations) and full preparation for BCP
E xpanded use of decentralized energy systems thatare highly resilient, such as smart energy networks,
cogeneration systems, and ENE-FARM (home fuelcells), etc.

as significant risks and integrated into the Enterprise Risk Management (ERM) system.
In addition, the Risk Management Committee, which was established with the aim of
improving the level of ERM management, regularly checks the status of the development
and operation of the ERM system, including the review of risks, and reports it to acommittee that supports rational decision-making by Corporate Executive Officers.

Financial Data

Risk management
The Tokyo Gas Group defines significant risks as those that are deemed to have asignificant impact on its business in its risk management policy that defines the basic
matters of risk management. The policy is reviewed each fiscal year and daily monitoring is
conducted to check for signs of risk. These significant risks are set by identifying andprioritizing the risks specific to each division and subsidiary for each fiscal year for theentirety of the Tokyo Gas Group business, and risks related to climate change are also set

CEO’s Message

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

e- methane: Transition to large-scale & high-efficiency

Corporate Strategy

PhysicalChanges in energy
consumption structure

Risks

High financial impact

Business Strategy

Transition

Business impact

How We Create Value

Policy andLegal

Factors

CEO’s Message

in the medium to long term through 2050, and then consider countermeasures. In the short to medium term, we will promote sophisticated use of natural gas, and in the to medium term, we willachieve decarbonization of gas and electricity.

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

Corporate Strategy
Sustainability
Responding to Climate ChangeD isclosure based on TCFD
recommendations
Energy Security
Human Capital Management
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

47

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Indicators and targets

Concept and calculation method of reduction effect (example)

12 mn tons

2030

17 mn tons

2050 Net-zero CO		2

After fuel switching

Calculation Development volume
methodfactor difference
Baseline

High-efficiency equipment

2025

100% achieved
6 mn kWNatural gas transaction
volume2030

20 mn tons

e-methane introduction
volume2030

2023–2025

Scope 3

Other

92.0%

1.2%

Raw material
procurement(electricity
and LNGprocurement)

27.4%

t-CO 2 e

34.8%
Power generation

58.6%

Existing
thermal power

Calculation Power generation difference in CO2
methodemission factor from thermal power average

After introduction

Baseline

CO2 reduction
contribution

Reduction ofoperation ofexisting thermal
power plants

After introduction*The Tokyo Gas Group’s CO2 emissions remain unchanged

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
Responding to Climate ChangeD isclosure based on TCFD
recommendations
Energy Security
Human Capital Management
Corporate GovernanceDecarbonization field
Reduce CO2 emissions by increasing the
Perspective amount of power generated by renewable
on reduction energy that does not emit CO2 andeffects
reducing the amount of power generated
existing thermal power plants
Calculation Power generation thermal power
methodaverage coefficient
Baseline

Before introduction

Average thermal power generation

Average thermal power generation

Financial Data

8.0%

High-efficiency
thermal power

Reduce CO2 emissions by increasing theamount of power generated by highPerspective
efficiency LNG-fired power plants andon reduction
reducing the amount of power generated
effects
by existing thermal power plants that emit
relatively large amounts of CO2

Low CO2 emissions
when generating
electricity

Existing
thermal
power

63.4%

Scope 1+2

After introduction

Expand introduction of renewable energy

Existing thermal
power

t-CO 2 e

4.654 mn

CO2 reduction
contribution

Before introduction

Emission volume

58.169 mn

Low carbonization field

3.2%
Districtheating andcooling, etc

reduction

Corporate Strategy

2.4%

Offices 1.0%
City gas production
facilities

Calculation Number of units introduced
methodper unit

Introduction of high-efficiency LNG-fired power generation

Before introduction

Existing thermal
power

Other

Perspective Reduce CO2 emissions by upgradingon reduction low-efficiency natural gas equipment toeffects
high-efficiency equipment

Conventional-performance gas appliances

Emission volume

GHG emissions: FY2022 results

Progressin energy
conservation

Baseline

1% deployed (80 mn Nm3/year)

230 bn yen (3-year total)

CO2 reduction
contribution

Fuel before conversion such as heavy oil

Business Strategy

2030

Decarbonization investment
amount

2.2 mn kW

2030

CO2 emission

Low carbonization field

Highefficiency
equipment

Renewable energy
transaction volume

60% achieved

Low-efficiency
equipment

2025

Emission volume

Net-zero CO 2 emissions
from our activities(vs. FY2020)

Use of soldproducts(city gas
combustion)

Before fuel switching

Reduce CO2 emissions by shutting
Perspective
down facilities that use coal and oil andon reduction
replacing them with facilities that use
effects
natural gas and emit relatively low CO2

How We Create ValueGHG emissions(Scope 1, 2, 3)

2025

Replacement withclean natural gas

CEO’s Message

CO 2 reduction contribution(vs. FY2013)

Contents

Low carbonization field

Natural gas

Targets

CO2 reduction
contribution
Oil

Indicators

Fuel switching
Emission volume

In order to realize a decarbonized society, we have set the following indicators and targets
to contribute to reducing CO 2 emissions for society as a whole and to promote progressand management of initiatives, such as reducing the Tokyo Gas Group’s CO 2 emissions(Scope 1, 2, 3).

CO2 emissions of society as a whole
CO2 emissions by the Tokyo Gas Group

Introduction

CO2 reduction contribution

Introduction

Financial Data

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

48

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Sustainability Factbook

Introduction

Energy Security
For a stable energy supply

Power procurement

We have improved supply stability and increasedtransportation capacity by looping high-pressure gas
pipelines in the Northern Kanto region. In order tominimize the damage caused by a major earthquake,
we have adopted structural designs, materials, andsafety technologies with excellent earthquake resistancefor manufacturing and supply facilities. The Supply
Command Center monitors and controls the statusof manufacturing and supply facilities 24 hours a day,365 days a year. We will systematically carry out the
replacement of old gas pipes and conduct regularinspections for gas leaks.

Tokyo
Cove Point

CameronMozambique

New LNG Project
Existing LNG Project

Malaysia

Disaster-resilient everyday lives andcity development

Pluto
GorgonIchthysNWS

We are expanding the introduction of decentralizedenergy systems such as ENE-FARM and gas
cogeneration systems, as well as formation of smart
energy networks for heat and electricity used in the
ICT-managed areas. We are thereby promoting thecreation of cities with enhanced disaster preventionfunctions and assurance of the continual energy
supply even in an emergency.

Queensland Curtis

Safety measures

Tokyo Gas Network

The Safety Command Center of Tokyo Gas is inoperation 24/7 to accept gas leak reports. When such
notification is received, Gaslight 24 (our emergency
reaction team) promptly responds and dispatches
technical staff even at night or on holidays. Periodic
security inspections* are conducted at least once every
four years for all customers using city gas.

Complete earthquake
protection

Tokyo Gas Network

We have adopted preventive measures to minimize
earthquake damage, such as the use of PE pipes for
low-pressure gas pipelines. As emergency-preparation
measures, we have expanded the installation of
microcomputer meters that automatically shut off gas supply
during earthquakes of seismic intensity of five or higher, andhave divided the medium- and low-pressure pipelines into
multiple blocks so as to minimize gas supply cut-off areas
and to prevent secondary disasters. As recovery measures,
we have established a thorough disaster prevention
system that is capable of monitoring seismometers which
are installed with high locational density, and controlling
gas shutoff. This system enables us to grasp the damage
situation of each block where gas supply has been stopped,
and to determine the most appropriate recovery method.

* The leakage inspection of the inner tube is carried out by the pipeline business operator, and the inspection of
consumer equipment is carried out by the retail business operator.

Procure LNG

LNG carrier

Send gas

Produce gas and electricity
LNG receiving
terminal

Renewable Thermal power
energygeneration

To customers
Power gridGas diffusion tower

Radio tower

Areal governor(pressure regulator)

Financial Data

Sustainably utilize existing infrastructure throughout the city gas and LNG
supply chains by aiming for decarbonization of gas-based energy throughpractical application of e-methane

Corporate Strategy

In terms of electric power, in addition to procurement through theoperation of natural gas-fired power plants with high-efficiency
combined cycles utilizing LNG procurement capabilities andfacilities such as LNG terminals and pipelines, as well as ininitiatives to develop and acquire solar, wind and biomass
power plants in Japan and overseas, and strengthening ourcompetitiveness in the development of renewable power sources
and procurement capabilities.

Tokyo Gas Network

Business Strategy

Since the start of LNG imports in 1969, Tokyo Gas has
diversified its procurement sources to encompass 13
suppliers projects in four countries, reducing procurement
risks. We have also enhanced procurement flexibility throughdiversification of contract contents, by making contracts
based not only on crude oil price indicators, but also on U.S.
natural gas prices and coal prices, and making contracts withno destination restrictions. Through strategic partnerships
with domestic and overseas companies, we have establishedan LNG network that connects the Asian, North American,
and European markets, thereby increasing LNG transport
efficiency and contract flexibility, and reducing costs.
Furthermore, in 2020, we established TG Global Trading Co.,
Ltd., a subsidiary responsible for the LNG trading business, topromote more flexible LNG trading.

Enhance infrastructure
resilience

Sakhalin

How We Create Value

Flexible LNG procurement

Customers’ safe and reliable use ofenergy services

Stable supply

Stable procurement

CEO’s Message

safety, we are strengthening disaster countermeasures based on our experience of theGreat Kanto Earthquake, which marks its 100th anniversary this year, including thecompletion of a disaster prevention system that utilizes high-density seismometers.
Going forward, towards the realization of a decarbonized society, we will promote thepractical use of e-methane in addition to renewable energy, and take initiatives for the
decarbonization of gas-based energy making maximum use of the existing energy
infrastructure. Through such initiatives, we will respond to the diversifying needs of ourcustomers, such as stability, environmental friendliness, and flexibility, and create social
values such as the realization of a decarbonized society and safety and security.

For more than 130 years since its foundation, the Tokyo Gas Group, as an energy company
group that supports social infrastructure, has been dedicated to ensure stable procurement,
stable supply, and ensuring safety, providing our customers with safe and secure living.
With regard to stable procurement, in addition to diversifying our LNG procurement
sources and schemes, and strengthening trading and management functions, we are also
working to strengthen power sources such as renewable energy. For stable supply, in
addition to strengthening infrastructure, we are working to improve resilience functions
utilizing natural gas, such as by expanding distributed energy systems. In terms of securing

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
Responding to Climate ChangeD isclosure based on TCFD
recommendations
Energy Security
Human Capital Management
Corporate Governance

Financial Data

Microcomputer meter(gas meter)

Web Site
Investor Relations Website

LNG tank

High-pressure
gas pipe

Gas holder

Mediumpressure
gas pipe

Supply CommandCenterSI sensor (seismometer)Low-pressure
gas pipe

Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

49

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Introduction

Human Capital Management

Initiatives for FY2023–2025

In order to confront the three challenges outlined inCompass2030, we set forth “Three Promises” to ourcurrent and future colleagues. By leveraging thestrengths of each of our colleagues, we aim to becomea corporate group that strives to create greater value
from the chemical reactions created by diversity. In
order to fulfill these promises towards 2030, we aredeveloping a human resources strategy andimplementing initiatives.

In order to realize a flexible corporate structure that is resilient to change, we will implement human capital management in waysthat provide a real sense of our growth, both as individuals and as a Group.
Ideal human resources

We will produce work that will have amajor impact on society.

We will emphasize the self-fulfillment ofeach person.

Turning diversity into a strength
Knowledge/experience diversity, equity, and inclusion
 romote utilization of women and young employees (increasePplacement in positions of responsibility, promote childcare leave formen, use femtech to enhance understanding) and workstyles notconstrained by time/place
Actively recruit experienced people globally and increase theirplacement in positions of responsibility

Growing by taking on challenges
Promote professional talent growth/challenge-taking
and self-led career formation
P rovide opportunities to build career/skills in ways
reflecting employee aptitude and will, using talentmanagement systems and data
Encourage employees to personally explore opportunities bypromoting/expanding side jobs, internal recruitment, andinternal entrepreneurialism

We believe in the potential of each individual
and will support each employee’s activities.

Where we want
to be in 2025

To build a system that can respond to change, we haveworked on creating systems that accept, develop, andencourage wide range of diverse talents. This includes
the introduction of a talent management system, reemployment of former employees, company-specifichiring, and the implementation of one-on-one meetings.

Promotingself-learning

Promoting childcare leave taking by
men & utilization of women

Improvingengagement

Reskilling/
retraining
participation rate:
100%*1

Percentage of male employees taking
childcare leave of at least one month:100%
Ratio of women in management: 11%

Regularly measureengagement indicatorsand reflect results inimprovement measures*1 R
 ate of participation in training and certification programs, etc. for acquiring/refreshingskills (including reskilling)P romote businessgrowth in new areasP romote thecreation of solutions
that meet thevalues of diverse
customers

Social value
Organizations andassociates who cocreate the futureImprove theprofessional skills ofgroup members
A n organization
where diverse humanresources engage infriendly rivalry
R ealize a spirit ofchallenge and wellbeing for each andevery Group member

Financial Data

Initiatives for FY2020–2022

Ability to generate
long-term,
sustainable sourcesof growth

Corporate Strategy

 uman resources who canHlearn autonomously andcontinue to take on challenges
without being bound by
conventional wisdom

We will create a venue for encounterswith diversity and friendly competition.

 lignment of HR planning, optimal placement, andA
reskilling (skills/competencies for contributing to DX andbusiness development in decarbonization, overseas operations,etc.) with management strategy
Acquisition of high-level specialists and talent systemdevelopment, including through M&A

Business Strategy

 uman resources whoH
can understand thediverse values of society

The Tokyo Gas Group will be a gathering
place for diverse thinking and experience.

3

Economic value

Realize a flexible corporate culture resilient to change uman resources withH
expertise in expanding andevolving businesses

We commend a spirit of taking on challenges
and the ability to learn from mistakes.

2

Value creation

Strengthen ability to address talent shifts and business changes

Three Promises

1

Actions for FY2023–25
Strategic talent placement

How We Create Value

Compass2030 “Three Promises”

CEO’s Message

At the Tokyo Gas Group, we believe that the source of corporate vitality is people, and that the company will not grow without the growth of its employees. It is each and every member of ourGroup who will bring about the transformation laid out in Compass Transformation 23–25. By exercising human capital management aligned with the management strategy, we will achievesustainable improvement of our enterprise value.

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
Responding to Climate ChangeD isclosure based on TCFD
recommendations
Energy Security
Human Capital Management
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

50

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Introduction

Strategic talent placement
Acquisition of specialized human resources
Percentage of mid-career hires in
the hiring of regular workers
20

19%
16%

15
10
7%

Agile
development

0(FY)

We are working on DX talent training with the aim of enabling each and every employee toutilize digital technology to transform business and operations. We have set three levels of
DX talent and are promoting their development: “DX leaders” who can utilize digitaltechnology in their work, “core DX talent” who can promote DX projects at the core, and“high-level DX talent” who can lead the development of digital platforms necessary for DX
promotion using advanced technology.

2020

2021

2022

Digitalization

StreamliningofbusinessAI
DatavisualizationNewbusinesses

ArchitectureDataanalysis

Businesstransformation

Web

Apps

High-level DX talent

Active participation of human resources with expertise in growth areas

DX leaders

Global Business Company
Tokyo Gas Asia Pte. Ltd.

Tokyo Gas Real Estate Investment
Advisors Co., Ltd.
President and Representative Director

NAKAMURA Takuya

OTOMO Manabu

I have worked in project financeand financial advisory in overseas
projects at a bank for nearly 10
years. Since joining the company
in 2019, I have been engaged inoverseas business development
and support, utilizing my skills infinancial, legal, and technical risk
analysis, contract negotiation,and process management andcorporate value evaluation in M&A,
as well as the network that I built
when I was stationed overseas.
I am also working to contributeto raising the level of humanresources in overseas fields bysharing my own experiences.

After working for 16 years in theoperation and new opening oflarge-scale commercial facilities
at a company that develops andoperates commercial facilities, I
transitioned to a real estate fundmanagement company in 2007.
I joined our company, whichprimarily focuses on real estate
investment management business,in 2017 and have been serving as
the representative since 2020. We
have set a new goal of launching a
private REIT within this fiscal year,
and I am working diligently every
day to achieve this goal.

DX Development Education
Practical education andon-the-job training

Enhancing skills inpractical work
Practical experience incollaboration with high-level DX talent

Career recruitment ofexperienced
professionals

In the DX Basic Education program aimed at developing DX leaders, the participants
select appropriate programs that can be used in their work from among a number ofprograms including Excel, AI, web analysis, and robotic process automation (RPA). In
FY2022, we certified approximately 1,000 DX leaders, and are aiming to certify 3,000
people by FY2025.
In the DX Development Education program aimed at fostering core DX talent, we set
up three specialization categories: business transformation, data science, and digitalengineering. In addition to e-learning andclassroom training, participants spend
several months working under theguidance of instructors to solve
problems in their practical work which
they have set for themselves.

Financial Data

TANIGUCHI Chieko
I have engaged in the renewableenergy business for about 10 years,
involved in investment evaluation inbusiness development and income
and expenditure management
after operation commencement.
After joining the company in 2022,
I have been responsible for theoperation and management ofsolar power plants and biomass
power plants, working towards theplants’ profitability on the premiseof stable operation. Leveraging mystrengths in both development andmanagement, I will devote myself tocontribute to our business operationfrom the perspective of overall
optimization.

DX Basic Education
Acquisition of basic knowledge
and practical training in digitaltechnology utilization

Corporate Strategy

Green Transformation Company
Renewable Energy Business
Development Dept.

Core DX talent
Able to take the lead in promoting DX projects by leveraging
their respective expertise

Business Strategy

Able to contribute to businessefficiency and innovation by utilizing
basic digital knowledge and skills

Able to lead transformational
development by making full use ofadvanced programming and digitaltechnology

How We Create Value

5

Contents

DX talent training
CEO’s Message

In promoting business in growth areas under Compass
Transformation 23–25, we are actively recruiting
human resources who have expertise in the relevant
areas and can immediately lead the business. We willcontinue to strengthen our proactive acquisition toaccelerate business promotion, as the increase in thenumber of employees with expertise and diverse
experience not only enhances the skills of existing
employees, but also contributes to strengtheningorganizational capabilities.

Introduction

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
Responding to Climate ChangeD isclosure based on TCFD
recommendations
Energy Security
Human Capital Management
Corporate Governance

Financial Data

DX talent (target for 2025)

3,000 persons
High-level/core DX talent: 500 persons
DX leaders:

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

51

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Sustainability Factbook

Support for self-led career formation

We have positioned active participation by women as the starting point for diversity, equity,and inclusion, and are promoting the creation of opportunities for women to play activeroles, including promotion to important positions, support for career formation, provision of
information on various role models, and promotion of flexible work styles. In addition, fromthe perspective that the diversification of work styles of men, who make up the majority of
our employees, will lead to a major cultural change, we encourage male employees to takechildcare leave and to diversify their perspectives. In FY2022, the percentage of spousalmaternity leave taken at Tokyo Gas was 100%, and the percentage of men taking childcare
leave is also increasing year by year.

We provide career formation support so that each employee can draw their own vision andplay an active role as a professional. From FY2022, we have introduced company-wide
one-on-one meetings, with the aim of aligning the direction of growth between supervisorsand subordinates. In addition, we are strengthening the provision of opportunities for
employees who take on challenges to excel and grow in diverse fields by enhancing internal
recruitment system that allows employees to move to workplaces and jobs of their choice,open recruitment training that supports self-directed learning, and self-development
support measures.

Global recruitment

Promoting side jobs

As the Tokyo Gas Group’s business expands overseas, it is extremely important to recruit
local human resources who have an in-depth understanding of the actual situations in thetarget regions, in order to promote our overseas business. From this perspective, we are
actively promoting local recruitment at each of its overseas bases. The number of locally
hired employees has increased from 42 at the end of FY2018 to 217 at the end of FY2022(including acquisition of local companies), and their talents are utilized in a wide range offields including project development, business operation management, technology, legal,
and accounting. The Tokyo Gas Group will continue to recruit human resources globally.

We believe that in order to take on challenges in new
business areas and provide new solutions, it is important
not only to develop human resources within the company
but also to learn through business, including outside thecompany. As such, we have revised our approach tosupporting side jobs as part of our personnel system
reforms to realize challenge and diversity. By reviewing ourpolicy to support outside work, the number of permits forside jobs has been increasing year by year, and the types ofsuch work have been increasing in the forms of selfemployment, such as consulting, design production, anddata analysis commissioned by outside companies.

(FY)

2020

2021

2022

2025 (targets)

Ratio of women in management*1
Percentage of male employees taking childcare leave
Percentage of male employees taking childcare
leave etc.(including special leave)*2
Percentage of employees with disabilities*3

9.2%

9.5%

9.8%

11%

8%

16%

47%

–

–

110%

2.55%

2.54%

2.64%

100%*4–*1 R esults as of April 1 in the following fiscal year
*2 No calculation based on the calculation methods provided for in the Child Care and Family Care Leave Act prior to FY2021*3 R
 esults as of June 1 of the current fiscal year
*4 Percentage of employees taking childcare leave 100%; number of days taken for childcare leave and special leave for the
purpose of childcare combined was at least one month.

52

Tokyo Gas Group Integrated Report 2023

40
30

27
18

15

0
(FY)

2020

Toward permeation of the management philosophy

2021

2022

TOPIC

We believe that the permeation and entrenchment of our Group’s Management
philosophy will motivate each and every employee to act for the benefit of society andbecome drivers that promote the growth of our company. Since the revision in April
2022, we have promoted initiatives to disseminate the management philosophy throughdialogue and workplace discussions between management and employees. An internalsurvey we conducted in November 2022 found that 99% of our group members areaware of the management philosophy and 66% are able to relate it to their own work.
Going forward, we will work for the further permeation and entrenchment of the
management philosophy so that we can become a corporate group that can growsustainably by ensuring that each and every employee continues to make decisions andtake actions based on the philosophy.

Financial Data

Diversity, equity & inclusion results (non-consolidated)

Introduction
Contents

CEO’s Message

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

45

Corporate Strategy

In order for diverse human resources to play active roles, we believe it is important toreform the personnel system and corporate culture as a foundation, such as by creating anenvironment with flexible work styles and appropriate evaluation systems. At Tokyo Gas,
the return-to-work rate from childcare leave has been 100% for the past three years, andwe are also working to create an environment in which diverse human resources can play
active roles regardless of time or place. With regard to evaluation criteria, we are currently
considering a revision of the personnel system, including the personnel evaluation criteria,
so that our diverse human resources can play active roles competing with players fromother companies in each business field.

60

Business Strategy

Personnel system enabling diverse human resources to play active roles

Number of permits forside jobs

How We Create Value

Promoting active participation by women and childcare leave for men

CEO’s Message

Growing by taking on challenges

Introduction

Turning diversity into a strength

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

Corporate Strategy
Sustainability
Responding to Climate ChangeD isclosure based on TCFD
recommendations
Energy Security
Human Capital Management
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
Sustainability Factbook

Introduction

Corporate GovernanceCorporate Governance System (As of June 29, 2023)
Number of Directors

9
6(6)Average age of Directors

64

Term of office of Directors

1 yearParticipation of Outside Directors in selecting
Director candidates

Yes

Participation of Outside Directors indetermination of remuneration

Yes

Number of Corporate
Executive Officers*2

4

Number of Executive
Officers

25

Performance-linked
remuneration (Short-term
incentive remuneration)

Yes

Non-monetary remuneration(Medium- to long-term
incentive remuneration)

Yes

Overall Corporate Governance Structure

Ensuring the legality, soundness, and transparency ofthe management based on our Management
Philosophy, we strive to clarify responsibilities ofmanagement and execution, enhance supervisory andauditing functions, and promote accurate and prompt
decision-making as well as efficient execution ofbusiness operations, in order to enhance corporate
governance systems.

As a Company with a Nominating Committee, etc., we
aim to achieve sustainable growth and medium- tolong-term improvement of enterprise value by having
two bodies, the Board of Directors and the Executive
Committee, clarify and complement each other’s roles
and responsibilities with a certain level of tension.
The Board of Directors examines and discusses
management from a broader perspective, a bird’s-eye

view, to enhance the decision-making process formatters to be resolved, while also focusing on
monitoring based on reports from Corporate Executive
Officers.
The Executive Committee examines and discusses
issues from a deeper perspective, with an awareness ofgroup management, to make decisions and carry out
operations swiftly and appropriately.

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

Financial Data

Basic views on corporate governance

The Investment Evaluation Committee chaired by the Executive
Officer in charge of financial affairs evaluates matters that requireevaluation of the significance, economy and risks related toinvestment, conducts post-investment follow-up, and reports to
Corporate Executive Officers and others concerned.

Corporate Strategy

Investment
Evaluation
Committee

Business Strategy*1: All six Outside Directors have been notified to the listing stock exchange as independent officers who
satisfy the Company’s “judgment criteria for the independence of Outside Directors.”*2: Includes a Corporate Executive Officer who concurrently serves as Director (Representative Corporate
Executive Officer and President).

How We Create Value

Number of Outside Directors (Thosebeing independent officers*1)

CEO’s Message

Policies and Systems

Introduction

Sustainability
Corporate Governance
Policies and Systems
Officer Remuneration System
Internal Control
Compliance
Risk Management System
List of Executives
Dialogues with Shareholders and Investors
Message from Outside Director

Financial Data

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

53

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Sustainability Factbook

Structure of a Company with an Audit &Supervisory Board

Appointment/dismissal of Audit& Supervisory Board Members

Audit & Supervisory
Board

Board of Directors
Determine and supervise
business execution

Business execution
Representative
Directors
Directors

Standing Audit &Supervisory Board
Members

Board of Directors
Nominating
Committee*

Audit
Committee*

Compensation
Committee*

Determination of
proposal for election of
Directors, etc.

Audit of execution ofduties by Directors andCorporate Executive
Officers, etc.

Determination of
remuneration for
Directors and Corporate
Executive Officers, etc.

* Majority of members of each committee are Outside Directors
Appointment/dismissal of Corporate
Executive Officer

2002

2016

Established the Basic Policy on Corporate GovernanceStarted the evaluation of effectiveness of the Board of
Directors
Revised the Regulations of the Board of Directors(Orientation toward a monitoring model)

2021

Made a transition to a Company with a Nominating
Committee, etc. (Established Nominating,Compensation, and Audit Committees with a majority
being Outside Directors)

Increase in the Ratio of Outside Directors

Composition of the Board of Directors
To enable the board of directors to more effectively carry out
their supervisory functions as a Company with a Nominating
Committee, etc., our Director who is also an Corporate
Executive Officer is the Representative Corporate Executive
Officer and President only. The executive and supervisory
functions are clearly separated, ensuring that management isearnest and attentive. Based on this foundation, roughly
two-thirds (2/3) of the Board of Directors consists of Outside
Directors to make diverse and objective supervision a central
element of Board of Directors operations.
8 Non-Executive Directors

Outside 6

Representative
Corporate Executive
Officer and President
is the only Director
who concurrently
serves as corporate
executive officer.

Internal 3

2017

From 2021

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

27%

67%

Note
June 2018 3/8 = 38%

June 2020 4/9 = 44%

June 2019 4/9 = 44%

June 2021 6/9 = 67%

Financial Data

2017

Corporate
Executive Officers

Corporate Strategy

2005

Established an advisory committee (to establish ad hoc
committees concerning nomination and compensation,and to improve transparency

Representative Corporate
Executive Officers

Business Strategy

History of Tokyo Gas in enhancing corporate governanceSupervise business execution

How We Create Value

Outside Audit &Supervisory Board
Members

Outside Directors

Appointment/dismissalof Directors

CEO’s Message

Appointment/dismissalof Directors

Contents

Shareholders Meeting

Business
execution

Adopted an executive officer system and reduced thenumber of Directors
Started appointment of Outside Directors

Structure of a Company with a Nominating
Committee, etc.

Shareholders Meeting

Audit

For over 130 years, since its foundation in 1885, theCompany has engaged in city gas business, primarily in
the Tokyo area. However, the world is entering an era ofdramatic changes to the energy field; therefore, based on“Compass2030”, our plan for 2030 and beyond, we must
accelerate our efforts to expand our business domains
and transform our business structure from now on.
We believe that driving management reforms will beessential to these tremendous transformation, thelargest since the Company was established. For thisreason, in June 2021 we made a transition to a
Company with a Nominating Committee, etc.

Beforetransition

Aftertransition
2021

Introduction

Transition to a Company with aNominating Committee, etc. (2021)

Introduction

Sustainability
Corporate Governance
Policies and Systems
Officer Remuneration System
Internal Control
Compliance
Risk Management System
List of Executives
Dialogues with Shareholders and Investors
Message from Outside Director

Financial Data

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

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Introduction

Attendance at Meetings of the Board of Directors andNominating, Audit and Compensation Committees

Roles and activities of the Board of Directors

Number of Directors/membersof each committee

Number ofmeetings*1

Attendance rate*2

Board ofDirectors

9

13 times

100%

Nominating
Committee

4

8 times100%

Audit Committee

4

14 times

100%

5

4 times100%*1 F
 rom after the Shareholders Meeting in June 2022 until before the Shareholders Meeting in June 2023
*2 Average attendance rate of each member

Compass Transformation 23-25
https://www.tokyo-gas.co.jp/en/IR/support/pdf/20230222-05e.pdf

OutsideInternal

Business Strategy

Structure, Role and Activities of the Nominating Committee, Audit Committee, and Compensation Committee

How We Create Value

Compensation
Committee

CEO’s Message

The Board of Directors meets once a month in principle to make important decisions
regarding management plans and policies, and other management of the company, in
accordance with laws and regulations, the Articles of Incorporation, and regulations of
the Board of Directors.
In addition, the authority to make decisions on business execution has been largely
delegated to the Representative Corporate Executive Officer, and President, whichbrings speed to management and improves enterprise value through monitoring from abird’s-eye view of management as a whole.
In FY2022, in formulating the Tokyo Gas Group FY2023—FY2025 mid-term
management plan, Directors had constructive discussions from various perspectives
based on reports from the Executive Officers on business strategies (LNG business,
Overseas business, Electric power business, etc.) decarbonization strategy, grouppersonnel reform, and finance strategy.

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

Chairperson

75%

Chairperson

75%

The Audit Committee audits the execution of duties byDirectors and Corporate Executive Officers, determines
audit reports, and also determines agenda items concerning
appointment, dismissal, or refusal of reappointment of
independent auditors, among other matters.

Ratio of
OutsideMembers

Compensation
Committee
Chairperson

60%

The Compensation Committee sets policy for individual
remuneration of Directors and Corporate Executive
Officers, and makes decisions on remuneration of each
Director and each Corporate Executive Officer,
according to the policy, among other activities.

Main activities

Main activities

Main activities

 lection of candidates for Directors, including candidates forE
newly-appointing Outside Directors
Election of candidates for Representative Corporate Executive
Officer and President

Formulation of an audit plan of the Audit Committee
Establishment of an internal control system and auditing of its
operation status, etc.
Collaboration with the Internal Audit Department, Independent
Auditors and subsidiary auditors

Evaluation of results for FY2022
Formulation of performance KPIs for FY2023
Consideration of remuneration levels and composition ratios

Financial Data

The Nominating Committee makes decisions on proposals
to the Shareholders Meeting concerning appointments anddismissal of Directors and on proposals to the Board of
Directors concerning appointments and dismissal of
Corporate Executive Officers, among other matters.

Ratio of
OutsideMembers

Audit
Committee

Corporate Strategy

Ratio of
OutsideMembers

Nominating
Committee

Sustainability
Corporate Governance
Policies and Systems
Officer Remuneration System
Internal Control
Compliance
Risk Management System
List of Executives
Dialogues with Shareholders and Investors
Message from Outside Director

Financial Data

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

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Introduction

Skills and Roles Demanded of Directors

Outside Director Skill Matrix

Introduction
Contents

Skills (up to four) held by Outside Directors are as follows:

TAKAMI Kazunori

EDAHIRO Junko

INDO Mami

ONO Hiromichi SEKIGUCHI Hiroyuki TANNOWA Tsutomu

How We Create Value

2 Sustainability
4 Marketing/Project development
5 Group management/GovernanceBusiness Strategy

6 Global business
7 M&A/Business restructuring
8 Communications
9 Finance/Accounting

p.63-64

Details about Each Skill

3 Digital/
Technology

Supervise the provision of solutions leveraging digitaltechnologies in order to transition to a Net-Zerosociety and establish a value co-creation ecosystem

4 Marketing/
Project
development

Supervise the migration from the city gas businessfocused exclusively on the Tokyo area to one thatinvolves multiple businesses and decentralized
management by transforming the LNG value chain

5 Groupmanagement/
GovernanceSupervise the business administration thatmanages multiple businesses while balancing
autonomy and overall optimization, and the
management and operation of personnel andorganizations

6 Global businessSupervise transformation of the Company’sbusiness structure as a global, total energy
company, development and implementation ofstrategies, and enhancement of the Company’s
discernment capabilities and risk management

7 M&A/Businessrestructuring

Supervise efforts to integrate and concentratebusinesses, from a multitude of angles, with theaim of achieving non-continuous, speedy growth,both in Japan and overseas

8 Communications

Supervise timely, high-impact communications
based on close public hearing activities withstakeholders

In conducting the above business field expansion
9 Finance/and M&A activities, supervise financial discipline andAccounting
investment strategies based on risk balances that
10 Risk Management differ from those in the past, while at the same timesupervising internal controls and risk management

Financial Data

Supervise the responsible transition to a Net-Zerosociety based on medium- and long-term energy
and environmental trends in Japan and overseas

Corporate Strategy

Reason for appointment of each Director (outside and internal)

1 Energy
2 Sustainability

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

10 Risk management
All Internal Directors other than the
Representative Corporate Executive
Officer and President are non-executive
Directors. Their role is to provide proposals
and information in an appropriate andtimely manner in order to maintain theeffectiveness of the Board of Directors.

CEO’s Message

1 Energy
3 Digital/Technology

Outside Directors must possess thesupervisory skills necessary for achieving‘Compass2030,’ the Group’s management
vision, and supplementary skills thatcomplement the knowledge and experienceof the Company’s Inside Directors andCorporate Executive Officer.

CEO’s Message

The following have been designated as
skills that all Directors are to possess:‘The knowledge needed to manage
the Company at a deeper level,’ ‘The
mentality needed to lead the Company’stransformation,’ and ‘The questioning
abilities needed to identify the issues facedby the Company.’

Sustainability
Corporate Governance
Policies and Systems
Officer Remuneration System
Internal Control
Compliance
Risk Management System
List of Executives
Dialogues with Shareholders and Investors
Message from Outside Director

Financial Data

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

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Sustainability Factbook

To maintain and enhance the effectiveness of the Board of Directors, theeffectiveness of the Board of Directors was analyzed and evaluated throughdiscussion at the Board of Directors’ meetings on the results of the questionnairebased self-evaluations of each Director and the third-party evaluations .

According to the third-party evaluations, “the effectiveness of theBoard of Directors is generally maintained at a good level,” and we willcontinue to work tirelessly to further enhance the effectiveness.

Summary of previous evaluation results and specific initiatives

After confirming the results of the surveys and third-party evaluations, theBoard of Directors discuss the contents and methods of monitoring thatshould be further improved, as well as specific initiatives.

Based on the previous evaluations of the effectiveness of the Board of
Directors, the following Initiatives are being implemented by the Board of
Directors for FY2022.

STEP

4

STEP

1

STEP

2

Self-evaluation by each Director in the form of a questionnaire
The questionnaire is composed of a five-grade quantitative evaluation and afreely-written qualitative evaluation, enabling fixed-point observations.
As part of this, we are verifying whether we are making steady progress
toward our desired governance system after the transition to a Company with aNominating Committee, etc.

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

Sustainability
Corporate Governance
Policies and Systems
Officer Remuneration System
Internal Control
Compliance
Risk Management System
List of Executives
Dialogues with Shareholders and Investors
Message from Outside Director

Survey content

 omposition and operation of the Board of Directors (number of people,
C
members, agenda setting, content and explanation of materials, frequency andtiming of meetings)
Functions of the Board of Directors (governance system, decision-making,monitoring, coordination with the Nominating, Audit and Compensation Committees
Activities outside of the Board of Directors (offering of oppotunities tounderstand the operations, including workshops and on-site visit for directors)
Proposals for improvements related to the Board of Directors *Free
description only

Financial Data

Evaluation comments from the third party he average scores for both internal and external Directors were all above fourTout of five points, except for some items about the functions of the Board of
Directors for which the average score of external Directors was in the higher
three-point range, indicating that the effectiveness of the Board of Directors is
generally secured at a good level.
Regarding the contents and methods of monitoring, continuous improvements
and innovations are needed to seek optimal solutions even two years after thetransition to a Company with a Nominating Committee, etc.

CEO’s Message

Corporate Strategy
Corporate Strategy

The results of questionnaires submitted by each Director are compiled by athird party (external expert) to ensure transparency.
A third-party (external expert) evaluation is also added to the compiled
evaluation results.

3

 o formulate the 23–25 mid-term management plan, the Board of Directors
T
held multiple discussions on each business strategy, including the LNG
business, and group personnel reform.
To conduct periodic monitoring, such as checking the progress of KPIs,
including of key business subsidiaries, and set indicators based on the key
strategies in the 23–25 mid-term management plan.
To conduct site visits to overseas businesses, new businesses subsidiaries,
technology development laboratories, and digital innovation forums that willcontribute to business understanding.

Business Strategy

Aggregation and evaluation by third parties (external experts)

STEP

Specific initiatives

How We Create ValueIn line with the transition to a holdings-type group structure, it is necessary to
focus more than ever on group-oriented management and new business fields.
In monitoring management, it is necessary to update the indicators formonitoring by paying attention to the links with the goals set by the company.

Future initiatives

 ased on the initiatives for the next two years after the transition to a
B
Company with a Nominating Committee, etc., we will be even more
conscious of making improvements and enhancements by utilizing theknowledge and experience we have accumulated so far.
Since many of the opinions expressed are focused on “improving the qualityof discussion” and “improving agenda setting” setting, we will work on workon specific improvements and enhancements centered on these.

Contents

Summary of previous evaluation results (opinions at Board of Directors)

Summary of evaluation results (opinions from the Board of Directors)

 edium- to long-term discussions should be held for 2030 and beyond.
MIt is necessary to further align awareness of what monitoring should be like in a
Company with a Nominating Committee, etc.
Effectiveness of monitoring should be confirmed in short-term cycles.
Consider also having opportunities other than meetings of for businessunderstanding.
A detailed annual schedule for the Board of Directors agenda should be
prepared for more systematic monitoring.

CEO’s Message

Summary of evaluation results and future initiatives

Introduction

Effectiveness of theBoard of Directors

Introduction

Financial Data

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

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Introduction

Officer Remuneration System
The Compensation Committee held on June 29, 2021 resolved a Basic Policy on Officer
Remuneration.

Composition of remuneration for non-executive Directors (internal and outside)

0%

100%

Fixed remuneration

Medium- to long-term incentive

Trust-type share-based compensation

Basic remuneration (monthly)(non-financial compensation)

About 90%

Remuneration structure of Corporate Executive Officers(including those who concurrently serve as Directors)
Composition of remuneration for Corporate Executive Officers (illustration)

100%

0%

Fixed remuneration

About 65–70%

Short-term incentive
remuneration

Medium- to long-term
incentive

Bonuses (Performance-linked
compensation)

Trust-type share-based
compensation (non-financial

About 15–20%

About 10–20%

compensation)

Indicators for bonus evaluation for FY2023
Consolidated net profit

Profitability

Increase in number of gas and electricity accounts
Solution sales
Increase in contribution to Overseas operating profit in FY2030

GrowthAmount of new renewable power sources developed in Japan
Amount of new renewable power sources developed overseas

Non-financial
indicators

CO2 reduction contribution
Initiatives to achieve net-zero emissions of CO2 from our activities

Financial Data

Financial
indicators

operating profit + equity income of subsidiaries

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
Corporate Strategy

The Basic Policy on Officer Remuneration, which was resolved at the Compensation Committee
meeting held on June 29, 2021, has incorporated non-financial indicators, in addition to financial
indicators, in the evaluation of term performance for bonuses of Corporate Executive Officers.
The amount of bonus payments is determined by quantitatively and qualitatively evaluating
and reflecting the progress of the term performance in relation to the performance evaluation
indicators for each post.

Business Strategy

Basic remuneration (monthly)

CEO’s Message

About 10%
How We Create Value

As a Company with a Nominating Committee, etc., a Compensation Committee has been
established as stipulated in the Companies Act, and it selects a chairperson from Outside
Directors, secures objectivity and transparency, and determines remuneration of individual
officers (Directors and Corporate Executive Officers).
(1) Role of officers and officer remuneration
The role assigned to officers is to seek to enhance short-term, medium- and long-term
corporate value, and officer remuneration shall serve as an effective incentive for them toperform that role.
(2) Level of officer remuneration
The level of officer remuneration shall be suitable for the role, responsibility andperformance of the officer, and be in consideration of changes in the businessenvironment, and the level of other companies according to the research of an external
specialized institution.
(3) Composition of annual remuneration
Remuneration of officers shall comprise fixed remuneration (basic remuneration) andincentive remuneration (bonus, share-based compensation).
A fixed amount in accordance with the post of each individual is paid as
Basic remuneration
monthly remuneration.
A s a short-term incentive remuneration, a bonus is paid once a year andBonuses
its amount reflects the evaluation of individual performance against
financial and nonfinancial indicators beside the basic amount set byeach rank. Indicators are reviewed and selected each year.
A s a medium- to long-term incentive remuneration, points are provided
Share-based
compensation
based on the base amount set by each rank. The stocks are provided
based on the number of points at retirement.
Remuneration for Directors is comprised of basic remuneration and share-based compensation,
while remuneration for Corporate Executive Officers (including those who concurrently serve as
Directors) is comprised of basic remuneration, bonuses, and stock compensation.
The approximate ratios of each type of remuneration for Directors are 90% in basic
remuneration and 10% in share-based compensation. The approximate ratios for Corporate
Executive Officers (including those who concurrently serve as Directors) are 65–70% in basic
remuneration, 15–20% in bonuses, and 10–20% in share-based compensation.

Contents

Composition of remuneration for Directors (illustration)
CEO’s Message

Basic Policy on Officer Remuneration

Introduction

Sustainability
Corporate Governance
Policies and Systems
Officer Remuneration System
Internal Control
Compliance
Risk Management System
List of Executives
Dialogues with Shareholders and Investors
Message from Outside Director

Financial Data

ESG

Improving Group employee engagement*Resolved at a meeting of the Compensation Committee held on May 17, 2023, taking into consideration links with the
key management indicators of the 2023 management plan.

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

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(2) Target persons
Directors (including Outside Directors), Corporate Executive Officers, and Executive Officers

Trust period

From August 2021 to August 2024 (tentative)

Amount to be contributed by the Company
as funds for acquiring shares¥461,889,900
Acquisition via disposal of treasury shares

Number of shares for the trust

224,600 shares

Corporate
Executive
Officers

Bonuses(performance-linked
remuneration)

Share-based
remuneration

Numberof eligible
officers(non-financial
remuneration)

216

192

–

24

9

(78)

(72)

(–)

(6)

(7)

264

174

52

38

4

(Notes)1. R emuneration for Directors includes the portion for one Outside Director who retired at the conclusion of the 222nd
Ordinary Shareholders Meeting.
2. R emuneration for one Corporate Executive Officers who concurrently serves as a Director is stated in the remuneration
for Corporate Executive Officers.
3. The amount of stock compensation is the amount recorded as expenses from April 1, 2022 to March 31, 2023.
4. The above amounts are rounded down to the nearest million yen.

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

Financial Data

Press releases on the share-based compensation plan

Directors (ofwhich, Outside
Directors)

Basic
remuneration

Incentive remuneration

Corporate Strategy

Method to acquire shares for the trust(¥ million)

Fixed
remuneration

Business Strategy(3) Overview of the trust (at the time of setting up the trust)

Total value ofClassification
remunerationof officers

How We Create Value(1) Overview
The Company has established a share trust (see the “Overview of the trust”). Points areto be granted to officers each year according to their position, and they shall receive
company shares based on the points when they retire/resign.

Contents

Total value of remuneration by type (¥ million)
CEO’s Message

The Compensation Committee meeting held on June 29, 2021 resolved to introduce ashare-based compensation plan for Directors and Corporate Executive Officers with theobjective of providing incentives encouraging the enhancement of medium- to long-term
corporate value.
Separately, an introduction of a similar share-based compensation plan for executive
officers has also been resolved.

Total Remuneration for Directors, and Corporate Executive Officers for FY2022

Introduction

Introduction of a share-based compensation plan using a trust

Introduction

Sustainability
Corporate Governance
Policies and Systems
Officer Remuneration System
Internal Control
Compliance
Risk Management System
List of Executives
Dialogues with Shareholders and Investors
Message from Outside Director

Financial Data

“Notice on the Introduction of a Share-based Compensation Plan” (June 29, 2021)
https://www.tokyo-gas.co.jp/Press_e/20210629-04e.pdf“Decisions on Matters related to Share Acquisition for the Share-based Compensation Plan” (July 28, 2021)
https://www.tokyo-gas.co.jp/Press_e/20210728-04e.pdf

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

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Introduction

Internal Control
Ensuring the legality, soundness, and transparency of the management based on ourManagement Philosophy, we strive to clarify responsibilities of management and execution,enhance supervising and auditing functions, and promote accurate and prompt decisionmaking, efficient execution of business operations, for sustainable growth andimprovement in medium- to long-term corporate value. In addition, Tokyo Gas and its
subsidiaries direct their efforts toward lasting development by respecting the autonomy ofeach and sharing the pursuit of total optimization as their common cause.
In order to ensure appropriate business operation of the Tokyo Gas Group, the Basic
Policy on Development of Internal Control Systems has been adopted by the Board of
Directors and Corporate Executive Officers have accordingly and effectively establishedthe Internal Control Systems and have been operating them.

Specific Examplesof Internal Control
System

1

2

3

4

5

6

7

System to ensure that
officers and employees
perform their duties
in conformance withlaws, the Articles ofIncorporation.

System to store andmanage information
regarding the executionof duties by Corporate
Executive Officers

Regulations and othersystems on managing therisk of loss of the Group

System to ensure that theperformance of duties
by Corporate Executive
Officers is conductedefficiently

System to ensure
appropriateness ofbusiness operation by theGroup subsidiaries

Items regarding
employees assisting withthe duties of the Audit
Committee

System concerning
reporting to the Audit
Committee and system toensure effective auditingby the Audit Committee

Business Strategy

Overview ofInternal Control
SystemHow We Create Value

Response to “Internal Control Reporting System”
To comply with the “Internal Control Reporting System” under the Financial Instruments
and Exchange Act, Tokyo Gas follows the internal control basic framework presented in
Financial Services Agency standards, arranges and administers internal control related tofinancial reporting, assesses their effectiveness, and improves them as necessary. In theinternal control report for the previous consolidated fiscal year prepared following thissystem, which found our internal control regarding financial reporting to be effective, theAuditors expressed the opinion that all the material points were represented appropriately.

CEO’s Message

Internal Control System

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

We have established a system for officers and employees of the Group to report to the Audit
Committee without delay, and ensure that members of the Audit Committee, who are selected by
the Committee itself, attend important meetings and express their opinions when necessary, andthat important information is made available. In addition, the Audit Committee has taken measures
as follows to ensure effective implementation of audit activities, including coordination with theInternal Audit Department and independent auditors.

Audit Sect. I
Internal Audit
Department
37 staff members(As of March 31, 2023)

Audit Sect. II
Audit Sect. III
Planning & Internal
Control Sect.

Confirmation of appropriateness of audit method
and results, confirmation of independence,
conveying of audit plans and results
Reporting of audit plans andresults, and exchange of opinions

Audit by
Independent
auditors

Audit by the Audit
Committee

Confirmation of appropriateness of internal
control, conveying of audit plans and results
Reporting of audit plans andresults, and exchange of opinions

Reporting of audit plans and results, and exchange of opinions

Internal audit

Financial Data

Audit Committee

We have established a department
responsible for internal audits of the Group(hereinafter referred to as the “Internal Audit
Department”) to efficiently and effectively
audit the status of business execution. The
Internal Audit Department reports the audit
results to the President, the Management
Committee, the Audit Committee (dualreport line), and Directors of the audited
subsidiaries.
The Internal Audit Department is anorganization for internal audit of theCompany, which is established to conduct
professional audits. Its organizational
structure and number of employees areshown on the right.

Corporate Strategy

Internal Audit Department

Sustainability
Corporate Governance
Policies and Systems
Officer Remuneration System
Internal Control
Compliance
Risk Management System
List of Executives
Dialogues with Shareholders and Investors
Message from Outside Director

Financial Data

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

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Introduction

Compliance
We have formulated and implemented escalation rules that encourage any employee
finding anything unusual to notify the employee’s manager without hesitation and havebeen effectively operating internal and external consultation desks. We are thereby
endeavoring to ensure that compliance-related issues are discovered and resolved at an
early stage and our corporate self-regulatory processes functions effectively.
We monitor the effectiveness of Group compliance promotion activities by conducting
regular compliance awareness surveys of all employees. The results of these surveys arereflected in initiatives for the following years. Moreover, the Internal Audit Department
conducts internal audits of the Company and its subsidiaries, focusing on potential risks
that may materialize and their degree of importance from the viewpoint of strict compliancewith laws and regulations, corporate ethics and social norms. The status of improvement
concerning any recommendations made as a result of the internal audits is checked in afollow-up audit in the following year to ensure steady improvement in risk management.

Respect for human rights

President and CEO

Management Ethics Committee
ReportingInstructing, reporting

Supporting,reportingSupporting,reportingBusiness
Departments
Key businesssubsidiaries

Supporting,reporting

Subsidiaries

Compliance Committee
Notifying,consulting

Notifying,consulting

Notifying, consulting

Employees

Notifying, consulting

Financial Data

Tokyo Gas LIFEVAL

Compliance Dept.

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
Corporate Strategy

Chairperson: President and CEO

The Tokyo Gas Group positions “Respecting human rights across the entire value chain” as
one of the material issues. We have established a Sustainability Committee, chaired by the
President, to promote respect for human rights and its continuous improvement throughout
the Group based on Tokyo Gas Group Human Rights Policy.
Specifically, we are establishing a mechanism for human rights due diligence based on
the United Nations Guiding Principles on Business and Human Rights and other global
standards. With regard to human rights issues throughout the supply chain, we determine
priorities by assessing risks in consideration of the potential human rights violations in eachbusiness sector, product, and region, taking into account the specific circumstances of ourcompany Group. We also present our suppliers with the Purchasing Guidelines for
Suppliers, request that they show consideration for human rights, and conduct risk
assessments and analysis through surveys etc., to implement initiatives for improvement. In
addition, we have established consultation offices both inside and outside the company tohandle issues related to compliance, including those concerning human rights. If it is foundthat human rights violations are being caused or promoted through our business activities,
we take appropriate measures to rectify and remedy the situation.

Business Strategy

Compliance Framework

How We Create Value

Compliance Risk Management

The company has established the Management Ethics Committee, chaired by the
President, to promote transparent management and foster an open organizational culture
through discussions related to compliance in general, including compliance with laws andregulations as well as with our management philosophy. We also monitor the
implementation status of various measures and confirm activities in the following fiscal year
and beyond. Also to that end, we have set up a Compliance Committee for each divisionand subsidiary to carry out initiatives based on their actual situation.
We have also established “Our Code of Conduct,” which serves as a code of conduct for
the Tokyo Gas Group in the course of our business operations, and we use workplace
discussions in which all employees participate at their respective workplaces, as well as
level-specific training coinciding with hiring and promotion, to ensure that employees arecontinuously and thoroughly informed.

CEO’s Message

Compliance Structure

Introduction

Sustainability
Corporate Governance
Policies and Systems
Officer Remuneration System
Internal Control
Compliance
Risk Management System
List of Executives
Dialogues with Shareholders and Investors
Message from Outside Director

Financial Data

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

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Introduction

Risk Management System

Ordinary-time responsea significant risk emerges) method. The Risk Management Policies stipulate that theBoard of Directors, taking into account the importance of risk management, shall always
oversee the effectiveness of risk management and take appropriate action when asignificant risk occurs.

Enterprise Risk Management (ERM) System
Securities Markets and Other Stakeholders
Disclosure of risk information through Securities Report, Financial results
and Sustainability Report
Reflection of results of risk assessment

Committee supporting rational decision-making by Corporate
Executive Officers
Confirmation of major risks, etc.
Reporting and proposal of plans for assessmentof major risks and other necessary matters

Clear statement of risk
management policies

Report regarding results of risk assessment,
status of implementation of countermeasures,status of improvement, etc.

Improvement proposals
Convey statement of risk
management policies

Business Departments / Subsidiaries

Business or other risks which may significantly affect judgment of investors (as of April 1, 2023)
1.Risks associated with accidents, disasters, etc.

3. Risks associated with business execution(1) Energy resource procurement difficulties(1) Risks related to existing businesses(2) Natural disasters

1. Decrease in demand caused by intensified competition
2. Fluctuation in material prices
3.Changes in laws, regulations, and national or local policy(2) Shutdown or malfunction of IT systems(3) Cyber attacks

4. F luctuation in gas sales volume caused by climate change(5) Unforeseeable, large-scale power outages

5. D ecrease in existing demand caused by changes in thebusiness environment(1) Compliance violations

6. Interruption of telephone services at call centers(2) Response to new environmental regulations(7) Reputational damage arising from a city gas accident ofanother company

2. Market fluctuation risk
(1) Fluctuation in market prices and interest rates(2) Fluctuation of the electric power market and LNG prices

7. Delay in technology development(3) Insufficient customer services(2) Risks associated with overseas business development (4) Insufficient response to human rights issues(3) Delay in development of new markets(4) Inability to recover investments

President and CEO (Organization Leader)

5. Risks related to corporate social
responsibility(4) Spread of a highly virulent or contagious infections(6) Problems in securing the safety of city gas and in quality of gas
appliances

Emergency Response Organization*

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

Sustainability
Corporate Governance
Policies and Systems
Officer Remuneration System
Internal Control
Compliance
Risk Management System
List of Executives
Dialogues with Shareholders and Investors
Message from Outside Director(1) Leakage of personal information

Collaboration
Instructions/ordersReportCorporate
Planning Dept.

Financial Data(3) A ccidents and supply impairments accompanying city gas
production and supply, and power generation

4. Risks related to information
management and system operation

Contents

Corporate Strategy
Corporate Strategy(1) Identifying and evaluating risks, formulating and implementing
risk countermeasures(2) Improvement of risk assessment, countermeasures

Business Strategy

Risk Management Committee (Chairperson: Executive Officer of the
Corporate Planning Dept., Executive Office: Corporate Planning Dept.)
Identifying and confirming Group risk management

Because the Group provides public services that comprise a lifeline,
for many years it has also had a crisis management system thatserves as a response system in case an accident or other riskrelated event actually occurs. Specifically, we have formulated
Emergency Response Organization Regulations. In case of major
crises, including major natural disasters, such as earthquakes, or
production or supply disruptions arising from major accidents at
pipelines or LNG terminals, as well as spread of highly pathogenic or
infectious diseases, terrorism, failures in mission-critical IT systems,
and compliance problems, the Emergency Response Organization
has been established to respond to the situation immediately inaccordance with the Emergency Response Organization
Regulations. Periodic training is conducted in relation to response
measures against large earthquakes, cyber terrorism, and othermajor risks. Moreover, the company has also formulated a BusinessContinuity Plan (BCP) outlining its responses in the event of a major
earthquake of the magnitude as assumed by Japan’s Cabinet Office,a major accident disrupting gas supply, a widespread blackout,highly pathogenic or infectious diseases, etc. This plan is in place toreinforce the company’s risk management system.

How We Create ValueOur Risk Management Regulations have explicitly statedspecific initiatives and major risks at ordinary times and an
enterprise risk management (ERM) system has been
established to undertake them. The Risk Management
Committee was established with the aim of improving themanagement level of the ERM system. The Committee
checks progress regarding the establishment and operational
status of the ERM system, including periodic risk
assessments. It also reports to a committee that supports the
Corporate Executive Officers’ reasonable decision-making.
Under the framework, around 240 risk management
promotion officers (as of April 1, 2023) are deployed in thebusiness departments of Tokyo Gas and its subsidiaries inorder to promote ERM. Each year, we assess risks and theimplementation and improvement status of countermeasures.
This system facilitates the steady implementation of the
ERM-PDCA (Plan-Do-Check-Act) cycle.

Emergency-time response

CEO’s Message

In accordance with the Risk Management Policies which stipulated basic items of theTokyo Gas Group’s risk management, we have established an enterprise risk management
system and are using an “ordinary-time response” (to understand risks and implement
measures against the risks) method, or an “emergency-time response” (to respond when

Introduction

Financial Data

(Group-wide coordination)

Business Departments/Subsidiaries* A department in charge of an executive office is predetermined depending on the typeof emergency.

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

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(Nominating Committee Member andCompensation Committee Member)

Mr. UCHIDA Takashi has experience mainly in operations related to corporate
planning, and energy resources & global business. As the Representative
Corporate Executive Officer and President until March 2023, he engaged inefforts for a smooth transition of the management structure and achieved
further growth amid changes in the environment surrounding the Company,
including the full deregulation of the electric power and gas retail markets,
legal separation of the Pipeline Network Division, and transition to a newgroup management structure. Currently, as Director he is working to enhance
corporate governance.

Roles played
at the Board of
Directors

During the term of office as the Representative Corporate Executive Officer andPresident, as a Director who also serves as a Corporate Executive Officer, Mr.
UCHIDA organically connected the Corporate Executive Officers and the Boardof Directors, including by providing appropriate and timely explanations on thestatus of business execution to the Board of Directors to enable it to provide
appropriate supervision. Currently, as a Chairperson of the board, he works to
improve the effectiveness of the Board of Directors by utilizing his experiences.

Reason forappointment

Mr. TAKAMI Kazunori’s management capabilities, based on the broad vision andin-depth knowledge he developed as an executive in the electrical industry, andespecially the marketing sense he acquired from the consumer perspective in thehome appliance business, will greatly contribute to the promotion and supervisionof the Company’s management strategies.

Importantconcurrent
positions

Outside Director of Tokyo FM Broadcasting Co., Ltd.
Outside Director of Nojima Corporation
Outside Director of FUJITA KANKO INC.

Mr. SASAYAMA Shinichi has experience mainly in operations related to corporate
planning, electric power and DX. In recent years, he has promoted the Group’s
new challenges, including the formulation of the Group’s management vision(Compass2030), efforts to strengthen the energy trading business, and thedevelopment of the renewable energy business. Mr. SASAYAMA was elected
as Director, as he currently served as Representative Corporate Executive
Officer and President, leading the entire company toward the realization of the
FY2023–2025 mid-term management plan.

Reason forappointment
as theRepresentative
Corporate
Executive Officer,
President and CEO

We have appointed Mr. SASAYAMA as Representative Corporate
Executive Officer and President because he is the most qualified person
to head the company in the period of change when it is necessary totake up further challenges and make a leap forward in order to steadily
implement the FY2023–2025 mid-term management plan and ensure
the sustainable growth of the Group, amid significant changes in theexternal environment.

Outside Director(Nominating Committee Member andCompensation Committee Member)

EDAHIRO Junko

July 1993
Interpreter and translator
October 1998 Environmental journalist
July 2002
CEO of EcoNetworks Co. (Retired in July 2005)
August 2002 Joint Chief Executive of Japan for Sustainability (NGO)
April 2003
Representative Director of Edahiroba Inc. (Current
e’s Inc.) (Current position)
April 2005
Representative Director and Chairperson of
Change Agent Inc.
May 2006
Director and Chairperson of Change Agent Inc.
(Current position)
August 2010 Chief Executive of Japan for Sustainability (NGO)(Retired in July 2018)
September
Professor of Department of Environmental
2014
Management, Faculty of Environmental Studies ofTokyo City University (Retired in March 2018)
August 2018 Professor of Shizenkan University Graduate Schoolof Leadership & Innovation (Current position)
June 2019
Director of the Company (Current position)
October 2019 Representative Director of Shimokawa Seeds K.K.
(Retired in September 2022).
September
Representative Director of mirai-sozo.work
2020(Current position)
August 2022 Chief Director of Blue Carbon Network (Current
position)

Reason forappointment

Ms. EDAHIRO Junko’s in-depth knowledge regarding energy and sustainability,communication abilities, and extensive practical experience in communities, which
she has cultivated as a journalist and creator, will greatly contribute to the promotion
and supervision of the Company’s management strategies.

Importantconcurrent
positionsRepresentative Director of e’s Inc.
Director and Chairperson of Change Agent Inc.
Professor of Shizenkan University Graduate School of Leadership & Innovation
Representative Director of mirai-sozo.work
Chief Director of Blue Carbon Network

Mr. HIGO Takashi has experience mainly in operations related to finance,energy resources, corporate planning, and sales. He has engaged inefforts to improve the Company’s financial strength as well as to enhancecommunication with customers, shareholders, and investors. In recent years,
he has been dedicated to ensuring the soundness of management as the
Executive Officer in charge of the Secretary Dept., General Administration
Dept., Corporate Communications Dept., Sustainability Dept. and Internal
Audit Dept.

Reason forappointment as
Director

Outside Director(Chairperson of the Audit Committee)

INDO Mami

April 1985 Joined Daiwa Securities Co. Ltd.
April 2009 Senior Managing Director and General Manager ofConsulting Div. of Daiwa Institute of Research Ltd.
April 2013 Executive Managing Director and Deputy General
Manager of Investigation Div. of Daiwa Institute of
Research Ltd.
April 2016 Senior Managing Director of the Institute of Daiwa
Institute of Research Ltd. (Retired in December 2016)
December Commissioner of Securities and Exchange
2016
Surveillance Commission (Retired in December 2019)
June 2020 Audit & Supervisory Board Member (External) of
Ajinomoto Co., Inc.
June 2020 Outside Audit & Supervisory Board Member of AIG
Japan Holdings KK
June 2020 Director of the Company (Current position)
June 2021 Outside Director of FUJITEC CO., LTD. (Retired in
February 2023)
June 2021 Outside Director of Ajinomoto Co., Inc. (Current
position)
June 2021 Outside Director of AIG Japan Holdings KK (Current
position)
June 2023 Outside Director of Mitsui Fudosan Co., Ltd. (Current
Position)

Reason forappointment

Ms. INDO Mami’s capabilities in advanced and diverse management analysis
and guidance she developed as an analyst and advisor in the financial industry,
as well as her management sense from a risk perspective nurtured by her
experience in a monitoring agency, will greatly contribute to the promotion andsupervision of the Company’s management strategies.

Importantconcurrent
positions

Outside Director of Ajinomoto Co., Inc.
Outside Director of AIG Japan Holdings KK
Outside Director of Mitsui Fudosan Co., Ltd.

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

Financial Data

TAKAMI Kazunori

Reason forappointment as
Director

Newly appointed

HIGO Takashi

Corporate Strategy

Outside Director(Chairperson of the Compensation
Committee and Nominating Committee
Member)April 1978 Joined Matsushita Electric Industrial Co., Ltd.
(Current Panasonic Holdings Corporation)
December General Manager of Corporate Planning Office of
1998Electric Appliances and Housing Facility Companyof Matsushita Electric Industrial Co., Ltd. (Current
Panasonic Holdings Corporation)
June 2004 Director of Corporate National Marketing Div. of
Matsushita Electric Industrial Co., Ltd. (Current
Panasonic Holdings Corporation)
April 2009 Managing Executive Officer, President of Home
Appliances Company of Panasonic Corporation
April 2012 Representative Director, Senior Managing
Executive Officer and President of Appliances
Company of Panasonic Corporation
April 2015 Representative Director, Executive Vice President
and in charge of Japan region, Customer
Satisfaction, and Design of Panasonic Corporation
June 2015 Outside Director of Tokyo FM Broadcasting Co.,
Ltd. (Current position)
June 2017 Corporate Advisor of Panasonic Corporation(Retired in March 2018)
June 2018 Outside Director of Nojima Corporation (Current position)
March 2019Outside Director of FUJITA KANKO INC. (Current
position)
June 2019 Director of the Company (Current position)

Newly appointed

SASAYAMA Shinichi

Director (Audit Committee Member)

April 2017 Executive Officer and General Manager of Gas
Resources Dept., Gas Resources & Energy
Production Div.
April 2018 Executive Officer and General Manager of Gas
Resources Dept., Gas Resources & Energy
Production Div., and Representative Director andPresident of Tokyo LNG Tanker Co., Ltd.
April 2019 Managing Executive Officer, and Representative
Director and President of Tokyo Gas Engineering
Solutions Corporation
April 2021 Managing Executive Officer and Chief Executive ofEnergy Solution Div.
April 2022 Senior Managing Executive Officer and in chargeof Secretary Dept., General Administration Dept.,
Corporate Communications Dept., Sustainability
Dept. and Internal Audit Dept. (retired in March 2023)
June 2023 Director (Current position)

Business Strategy

Reason forappointment(Compensation Committee Member)

April 1986 Joined the Company
April 2015 General Manager of Finance Dept.

How We Create ValueUCHIDA Takashi

Director, Representative Corporate
Executive Officer, President and CEO

April 1986 Joined the Company
April 2016 Executive Officer and General Manager ofCorporate Planning Dept.
April 2018 Managing Executive Officer and Chief Executive of
Digital Innovation Div. and in charge of Corporate
Planning Dept.
April 2019 Managing Executive Officer and Chief Executive of
Digital Innovation Div. and in charge of Corporate
Planning Dept. and Business Transformation Project
Dept.
April 2020 Senior Managing Executive Officer and Chief
Executive of Asset Optimization & Trading Div.
June 2020 Director and Senior Managing Executive Officer andChief Executive of Asset Optimization & Trading Div.
June 2021 Senior Managing Corporate Executive Officer andChief Executive of Asset Optimization & Trading Div.
April 2022 Representative Corporate Executive Officer, Vice
President and CSO
April 2023 Representative Corporate Executive Officer,
President and CEO
June 2023 Director, Representative Corporate Executive
Officer, President and CEO (Current position)

CEO’s Message

Director, Chairperson of the Board

April 1979 Joined the Company
April 2010 Executive Officer and General Manager ofCorporate Planning Dept
April 2012 Managing Executive Officer and in charge of
Personnel Dept., Secretary Dept., ComplianceDept. and Internal Audit Dept.
April 2013 Managing Executive Officer and Chief Executive ofEnergy Resources Business Div.
June 2015 Director, Managing Executive Officer and Chief
Executive of Energy Resources Business Div.
April 2016 Representative Director, Executive Vice President
and Chief Executive of Residential Sales andService Div.
April 2017 Representative Director, Executive Vice President
and Chief Executive of Residential Service Div.
April 2018 Representative Director, President
June 2021 Director, Representative Corporate Executive
Officer and President
April 2022 Director, Representative Corporate Executive
Officer, President and CEO
April 2023 Director
June 2023 Director, Chairperson of the Board (Current position)

Introduction

Directors (As of June 29, 2023)

Sustainability
Corporate Governance
Policies and Systems
Officer Remuneration System
Internal Control
Compliance
Risk Management System
List of Executives
Dialogues with Shareholders and Investors
Message from Outside Director

Financial Data

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

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Outside Director(Audit Committee Member)

ONO Hiromichi

SEKIGUCHI Hiroyuki

Reason forappointment

Importantconcurrent
positions

Mr. ONO Hiromichi’s management capabilities, based on the broad perspective
and in-depth knowledge he developed as an executive in the food industry, andespecially his management sense nurtured from a group perspective and a risk
perspective in the finance division will greatly contribute to the promotion andsupervision of the Company’s management strategies.

Reason forappointment

Mr. SEKIGUCHI Hiroyuki’s keen perception, deep discernment in approaching
the heart of matters, and great skills at presentation from the TV viewer’s
perspective concerning the overall economy including energy and sustainability,
which he developed through his experience as a TV journalist and seniorcommentator, will greatly contribute to the promotion and supervision of theCompany’s management strategies.

Importantconcurrent
positionsNone

Outside Director of Mebuki Financial Group, Inc.

Representative
Corporate
Executive Officers,
Vice Presidents

Mr. TANNOWA Tsutomu’s management abilities based on his broad view andin-depth knowledge he has acquired as a corporate executive of a chemicals
manufacturer, and knowledge on governance, especially his businesssense from a risk perspective developed through management reforms andbusiness restructuring, will be very useful in the promotion and supervision of
the management strategy which the Company aims for.

Importantconcurrent
positions

Chairperson of the Board of Mitsui Chemicals, Inc.
Outside Director of KDDI CORPORATION

Executive Officers

SASAYAMA Shinichi

CEO

KASUTANI Toshihide

Chief Executive of Global Business Company

KIMOTO Kentaro

CTO
Chief Executive of Green Transformation Company

OGAWA Shinsuke

Chief Executive of Customer & Business Solution
Company

From April 1, 2022, the Company expanded the chief officer structure to clarify their roles andimplement internal and external responses to management issues across the Group.
(The title of CFO was previously introduced).
CEO: Chief Executive Officer
CTO: Chief Technology Officer
CDO: Chief Digital Officer
CRO: Chief Risk Management Officer
CHRO: Chief Human Resources Officer
CIO: Chief Information Officer
CFO: Chief Financial Officer

Senior Managing
Executive Officers

Managing Executive
Officers

TANAZAWA Satoshi
SATO Hirofumi

CFO
In charge of Financial Management Dept., Accounting Dept., and Purchasing Dept.,

SHIGITANI Ayumi

CIO
President, Representative Director of TOKYO GAS iNET CORP.

HOSOYA Isao

Chief Executive Officer of TOKYO GAS ASIA PTE. LTD.

SAITO Akihiro

In charge of Secretary Dept., General Administration Dept., Legal Dept., Corporate
Communications Dept., Compliance Dept., and Internal Audit Dept.

KONISHI Yasuhiro

President, Representative Director of Tokyo Gas Engineering Solutions Corporation

SUGESAWA Nobuhiro

TSUJI Eito
KONISHI Masako
Executive Officers

Chief Executive of Energy Trading Company

CDO
In charge of Digital Transformation Promotion Dept. and Business Development Dept., and
Deputy Chief Executive of Customer & Business Solution Company (In charge of Solution
Co-creation Dept. and Solution Technology Dept.)
CRO, CHROIn charge of Corporate Planning Dept. and Human Resources Dept.

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

Financial DataFor
reference

Reason forappointment

Corporate Strategy

Representative
Corporate
Executive Officer,
President and CEO

TANNOWA Tsutomu

Business Strategy

Corporate Executive Officers

Outside Director Newly appointed(Chairperson of the Nominating Committee
and Compensation Committee Member)

April 1976 Joined Mitsui Toatsu Chemicals, Inc. (Current Mitsui
Chemicals, Inc.)
April 2007 Executive Officer, General Manager of Human
Resources & Employee Relations Div. of Mitsui
Chemicals, Inc.
April 2010 Managing Executive Officer, Business Sector
President of Basic Chemicals Business Sector of
Mitsui Chemicals, Inc.
June 2012 Member of the Board, Managing Executive Officer of
Mitsui Chemicals, Inc.
April 2013 Director, Senior Managing Executive Officer of Mitsui
Chemicals, Inc.
April 2014 Representative Director, Member of the Board,
President & CEO of Mitsui Chemicals, Inc.
April 2020 Representative Director, Member of the Board,
Chairperson of Mitsui Chemicals, Inc.
June 2022 Outside Director of KDDI CORPORATION (Current
position)
April 2023 Chairperson of the Board of Mitsui Chemicals, Inc.
(Current position)
June 2023 Director of the Company (Current position)

How We Create Value

Outside Director(Audit Committee Member)

April 1979 Joined Japan Broadcasting Corporation
August 1987 Reporter in the Economics Section, News Department
of Japan Broadcasting Corporation (responsible
for covering the Ministry of Transport, Ministry of
Finance, Ministry of International Trade and Industry,
distribution companies, trading companies, the Bankof Japan, the finance sector, etc.)
June 1998 Economics Section Deskman, News Department ofJapan Broadcasting Corporation
June 2001 ‘Economics Front Line’ Newscaster, News
Commentator, General Broadcasting Administrationof Japan Broadcasting Corporation
April 2004 ‘Business Compass’ Newscaster of Japan
Broadcasting Corporation
June 2007 Chief News Commentator of Japan Broadcasting
Corporation
June 2014 News Commentator Vice-chairperson of Japan
Broadcasting Corporation
April 2017 ‘Ohayo Nippon/Oha Biz’ Newscaster of Japan
Broadcasting Corporation (responsible for corporate
strategy, energy affairs, green innovation, corporate
governance, growth strategy, industrial policy, etc.)
January 2022 Retired from Japan Broadcasting Corporation
June 2022 Director of the Company (Current position)

CEO’s Message

April 1979 Joined Ajinomoto Co., Inc.
June 2007 Corporate Executive Officer and General Manager,
Finance Dept. of Ajinomoto Co., Inc.
June 2011 Member of the Board & Corporate Vice President(In charge of finance and purchasing) (Retired inJune 2017)
Director of Japan Investor Relations
Association (Retired in June 2017)
April 2013 Member of the Investment Committee ofGovernment Pension Investment Fund (Retired inJune 2017)
June 2019 Outside Director of Mebuki Financial Group, Inc.
(Current position)
June 2020 Audit & Supervisory Board Member of theCompany
June 2021 Director of the Company (Current position)

Introduction

Directors (As of June 29, 2023)

Sustainability
Corporate Governance
Policies and Systems
Officer Remuneration System
Internal Control
Compliance
Risk Management System
List of Executives
Dialogues with Shareholders and Investors
Message from Outside Director

Financial Data

In charge of Sustainability Dept., and Head of Regional Affairs

KADO Masayuki, ENDO Yo, KURIMOTO Kazuya, TAKEUCHI Atsunori, MINAMI Taku, YAKABE Hisataka, OHASHI Taro,
NAKAMURA Hajime, MIURA Kazutaka, MURAKOSHI Masaaki, SHIMIZU Seita, ENDO Masahiko, ISHIZAKA Tadashi,
KAWAMURA Toshio, KOWADA Yuko, GOSHIMA Nozomu

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

64

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Introduction

Dialogues with Shareholders and Investors
Shareholders Meeting

Main dialogue
opportunities
The maincorrespondents
are inparentheses

Q2 financial results and year-end financial results briefing(Representative Corporate Executive Officer, President and CEO)Q1 and Q3 financial results briefings and other briefings to be held
as needed
Briefing on Mid-term management plan (Representative Corporate
Executive Officer, President and CEO)President’s Small Meetings (Representative Corporate Executive
Officer, President and CEO)

Domestic and overseas institutional investor
interviews (Representative Corporate Executive
Officer, President and CEO and others)
Small Meetings with investors and Outside
Directors
Facility tour for Institutional Investors
Briefing for Individual Investors

based on questions from investors. We take the opinions
we received seriously and will utilize them in future
management policy decisions and monitoring ofexecution.
The following are Outside Directors’ responses to someexample questions from investors.

Q: How do you see your mission and expected role as an outside Director?
Director ONO Hiromichi

In addition to being aware of the questions “What can be done to increase thecorporate value of Tokyo Gas?” and “What should I say to make the governance of theBoard of Directors effective?,” I am thinking about what the business should be likebased on my experience as the head of marketing and management.
I have also long emphasized the importance of business portfolio management and theCompany announced the strengthening of such management as part of its mid-term
management plan. I believe that we will need to deepen consideration on the specificsteps in the future, so we will confirm them through monitoring at the Board of Directors.

Based on my experience in financial accounting and risk management, I strongly feel that I
have a role to play in internal control and risk management as well as in business.
One of the things that Tokyo Gas values very much, and what I realize when I actuallyparticipate in the Board of Directors, is the foundation of social trust—safety, security, andtrust—that it has built up over nearly 140 years. As I have learned from my experience in thefood industry, this kind of social trust takes a very long time to earn, but only a moment tolose. In order to connect the foundation of Tokyo Gas’s social credibility to the future, I will
steadily fulfill my role, including my responsibilities as an Audit Committee member.

Director EDAHIRO Junko

Financial Data

It is my enduring belief that the role of Outside Directors is to represent society,including our shareholders. I believe that there are things that are natural within thecompany but that may look different or out of step with the times from the outside, and I
frankly communicate questions and opinions on those points and monitor them.
I’ve been working on the climate change issue for a long time, and decarbonization is
my number-one priority. I am serving as an Outside Director with the belief that Tokyo
Gas will lead decarbonization throughout Japan. While fulfilling our responsibility toprovide stable energy supply to society as a whole, it is important to balance the orderand timing of our efforts to achieve net-zero CO2, and I will continue to play my role
while holding discussions with executives.

We received various questions that day, including the following.
What is necessary to improve the enterprise value of Tokyo Gas?
On which KPIs are you focusing in your monitoring?
What do you think about the relationship and balance between long-term perspectives such as working
toward decarbonization and short-term results?
What is the status of the discussion on capital efficiency?
What discussions were held when reviewing the shareholder return policy? What kind of approach did theOutside Directors make?
How do you view the decline in Price Book-value Ratio (PBR) over time?
Investment in growth areas is expected to increase, but how do you manage risk?
How is the quantitative effect of human resource investment measured?

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
Corporate Strategy

Director TAKAMI KazunoriBusiness Strategy

In FY2022, we held the first small meeting between
investors and Outside Directors to enhance dialogue
toward improving enterprise value from a medium- tolong-term perspective.
Three Outside Directors (Directors TAKAMI, EDAHIRO,and ONO) attended the meeting and exchanged opinions

How We Create Value

Small Meeting between investors and Outside Directors (March 2023)

CEO’s Message

We are developing systems and implementing initiatives to promote constructive
dialogue with shareholders and investors.
We share the opinions and insights gained through dialogue with the Board of
Directors, Corporate Executive Officers, and related departments, and link them toimprovements in management plans, business activities, and disclosure.

Introduction

Sustainability
Corporate Governance
Policies and Systems
Officer Remuneration System
Internal Control
Compliance
Risk Management System
List of Executives
Dialogues with Shareholders and Investors
Message from Outside Director

Financial Data

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

65

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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
Corporate Strategy
Financial Data

I believe that the most important role of Outside Directors is to monitor the operation of theGroup with our various stakeholders in mind. The way companies are viewed andevaluated changes over time. I believe that it is extremely important for our Group toembrace the change and to keep learning, and achieve growth while appropriately fulfilling
the roles required of us as a public entity of society.

Business Strategy

We will promote improvement of thetransparency in management in order to earn
the trust of our stakeholders and continue togrow as a corporate group.

How We Create ValueINDO Mami

CEO’s Message

Outside Director

Through my work as an analyst and consultant at a securities think tank, I was
extensively involved in corporate business model analysis and corporate management. I
have also objectively observed how the demands of the capital market on companies
change due to changes in the economic environment and society. Outside Directors havediverse backgrounds and expertise. It is our role to bring new awareness to the executives
from diverse perspectives.
Two years have passed since the transition to a Company with a Nominating Committee,etc., and the monitoring of execution by the Board of Directors has been improved over the
past two years. The environment surrounding our Group is changing drastically, including
the progress of energy liberalization, the acceleration of decarbonization, and the increasein geopolitical risks. In this situation, the Board of Directors has been holding discussions
to determine the major direction of the company, and the Outside Directors have actively
expressed diverse opinions, broadening the scope of discussions.
In particular, in FY2022, we examined each theme of the mid-term management plan at
the Board of Directors. I believe that the deep discussions held over the past six months
have made clear what the Group should aim for, what should be radically changed, andwhat new initiatives should be accelerated. Drawing on our experience. In formulating the
mid-term management plan, we will create an annual agenda for future Board of Directors
meetings and proceed with discussions systematically. I believe that this will further
improve the accuracy of monitoring.
Regarding the improvement of capital efficiency, which is one of the management issues,
we have set a target ROE of 8%, but to be honest, I would like to proceed with corporatetransformation so that we can aim to achieve 10% or more in the long term. With regard to therequest from the Tokyo Stock Exchange to take action toward realizing management that is
conscious of the cost of capital, we are still on the way to achieving a PBR of one, but
although it may take some time, we will work to show a path to realizing this as well.
The Group has already begun efforts to improve capital efficiency. For example, we haveestablished a system to evaluate investments through the Investment Evaluation Committee
based on the risk of each business, after verifying the cost of capital and other factors, andto continue monitoring after an investment is made. Now is the time for innovation, and it isnecessary to increase the ratio of growth investments, but we hope to gain further trustfrom our shareholders and investors by showing a path for future profit growth.
Since 1885, when SHIBUSAWA Eiichi founded the Company, our Group has developed
its business based on an entrepreneurial spirit and the high social significance of “lighting
Japan with gas lamps.” Now, we are definitely at a major turning point in our long history. I
hope that you all will support the transformation of our Group and enjoy the fruits of growth
together with us. To that end, management transparency and reliability are essential. As an
outside Director, I will refine management and make further efforts to improve enterprisevalue in order to meet the expectations of stakeholders.

Introduction

Message from Outside Director

Sustainability
Corporate Governance
Policies and Systems
Officer Remuneration System
Internal Control
Compliance
Risk Management System
List of Executives
Dialogues with Shareholders and Investors
Message from Outside Director

Financial Data

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

66

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Sustainability Factbook

Introduction

10-Year Consolidated Financial Highlights*1
2016.32017.32018.32019.32020.32021.32022.32023.3

2,112,117

2,292,548

1,884,656

1,587,085

1,777,344

1,962,308

1,925,235

1,765,146

2,154,860

3,289,634

Operating Profit (¥ million)

166,044

171,753

192,008

58,365

116,30293,704

101,418

77,675

127,525

421,477

Operating Profit Margin (%)

7.86

7.49

10.19

3.68

6.54

4.78

5.27

4.40

5.92

12.81

Ordinary Profit (¥ million)

159,613

168,169

188,80955,688111,546

89,386102,645

70,500136,481408,846

Profit attributable to owners of parent (¥ million)

108,451

95,828111,936

53,13474,98784,55543,29349,50595,702

280,916

Net Sales (¥ million)

1,100,271

1,101,498

1,136,027

1,159,055

1,147,747

1,153,813

1,251,781

1,558,404

Total Assets (¥ million)

2,176,816

2,257,662

2,251,518

2,230,269

2,334,316

2,428,149

2,539,919

2,738,348

3,187,627

3,581,425

Interest-bearing Debt (¥ million)

713,823

730,739715,769

713,596

724,940

803,216

905,066

1,065,988

1,220,589

1,263,233

Operating Cash Flow (¥ million)

248,831237,680

257,122

217,439

240,328

246,436

213,171229,315

296,648490,216827

13,08425,08914,081

31,58322,655(13,887)(17,116)

89,422276,983

EBITDA (¥ million)

306,424

313,605

337,194

222,670

281,643

255,585

271,296

257,485

328,471

630,777

Capital Expenditure (¥ million)

248,004

224,596

232,033

203,358

208,745

223,781

227,058

246,431207,226

213,233

Depreciation (¥ million)*2

140,380

141,852

145,187

164,305

165,342

161,881

169,878

179,810

200,946

209,300

EPS (Earnings per Share) (¥)

43.10

39.15

46.68

23.02

164.12*3

187.6097.86

112.26217.67646.99

BPS (Book Value per Share) (¥)

402.91438.28460.35479.742,487.58*3

2,575.99

2,602.53

2,616.37

2,847.88

3,595.60

2,517,551

2,446,778

2,396,778

2,302,856

458,073*3

451,356

442,436

442,436440,997434,875

10

10

11

11

55*3

60

60

60

65

65

2.59

2.34

2.42

2.29

2.25

2.35

2.29

2.30

2.38

2.01

Free Cash Flow (¥ million)

Number of Issued Shares (Common Stock)(thousands of shares)
Dividend per Share (¥)
DOE (Dividends on Equity) (%)

Notes: *1 The financial information contained in this integrated report is based on annual securities report. However, it has not been audited by Audit firms etc.
*2 Depreciation includes amortization of long-term prepaid expenses.
*3 T
 he Company carried out a share consolidation at a ratio of 5 common shares to 1 on October 1, 2017.
The dividend per share of ¥55.0 is calculated on the post-consolidation basis (the interim dividend of ¥5.50 per share before the share consolidation and the year-end dividend of ¥27.50 per share after the share consolidation).

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
Financial Data

1,069,515

Corporate Strategy

1,011,787

Business Strategy

Equity (¥ million)

How We Create Value

2015.3CEO’s Message

2014.3Introduction

10-Year Consolidated Financial Highlights
Consolidated Balance Sheets
Consolidated Statements of Income
C onsolidated Statements ofComprehensive Income
C onsolidated Statements of Cash FlowsD elayed Impact of Gas Rate Adjustment
SystemWeb Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

67

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Sustainability Factbook

2017.3

2018.32019.32020.32021.32022.32023.3

Payout Ratio (%)

23.2

25.5

23.6

47.8

33.5

32.0

61.3

53.4

29.9

10.0

Total return ratio (%)

60.0

60.9

60.1

60.7

60.2

60.3

61.0

60.1

46.6*4

50.3

Current Ratio (%)

156.7

150.6

155.5

142.7

135.6

156.0

152.0

132.7

163.0

200.9

D/E (Debt-Equity) Ratio (times)

0.71

0.68

0.65

0.65

0.64

0.69

0.79

0.92

0.98

0.81

Equity Ratio (%)

46.5

47.4

48.9

49.4

48.7

47.7

45.2

42.1

39.3

43.5

ROE (Return on Equity) (%)

11.2

9.2

10.3

4.8

6.7

7.4

3.8

4.3

7.9

20.0

ROA (Return on Assets) (%)

5.2

4.3

5.0

2.4

3.3

3.6

1.7

1.9

3.2

8.3

Total Asset Turnover (times)

1.01

1.03

0.84

0.71

0.78

0.82

0.78

0.67

0.73

0.97

WACC (%)

3.2

3.6

3.4

3.0

3.1

3.0

2.7

2.6

2.3

2.4

9,982

10,125

10,26910,209

9,821

9,129

8,863

8,688

8,701

Gas sales volume (million m3)

14,735

15,541

15,436

15,72015,56815,19813,855

12,99013,146

12,574

17,22518,36018,587

19,05319,052

18,397

17,666

17,577

17,102

17,392

—

—

—

635

1,105

1,742

2,350

2,717

3,014

3,475

97.1

106.1

109.6

126.5

146.6

154.8

206.0

247.6

282.9

344.5

Gas Sales Volume, Gas
Volume used in-house*5
Number of electricity retail customers (thousand)Electric power sales volume (100 million kWh)Corporate Strategy

9,844

Business Strategy

Number of city gas retail customers (thousand)

How We Create Value

2016.3CEO’s Message

2015.3Introduction

2014.3*4 The total return ratio for the year ended March 2022 based on the profit attributable to owners of parent prior to the retrospective application (as of April earnings announcement) is 50.2%.
*5 It is the amount that added self-consuming volume, LNG sales volume (excluded volume for Nijio) to a consolidated gas sales volume.

Operating Cash Flow = Profit attributable to owners of parent + Amortization of Long-term Prepaid Expenses + Depreciation
Free Cash Flow = Profit attributable to owners of parent + Amortization of Long-term Prepaid Expenses + Depreciation – Capital Expenditure
Current Ratio = Current Assets (year-end) / Current Liabilities (year-end) x 100
Debt-Equity Ratio = Interest-bearing Debt (year-end) / Equity (year-end)
Equity Ratio = Equity (year-end) / Total Assets (year-end) x 100
Total Asset Turnover = Net Sales / Total Assets (average)

WACC calculation data (FY2022 results)a) Cost of interest-bearing debt: Real interest rate of 0.56% (after tax)b) Cost of shareholders’ equity
Risk-free rate: 10-year JGB yield of 0.30%
Risk premium: 5.5%, Beta coefficient of 0.75

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
Financial Data

Computations

Introduction

10-Year Consolidated Financial Highlights
Consolidated Balance Sheets
Consolidated Statements of Income
C onsolidated Statements ofComprehensive Income
C onsolidated Statements of Cash FlowsD elayed Impact of Gas Rate Adjustment
SystemWeb Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

68

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Sustainability Factbook

(Million yen)2022.3.31(Million yen)2023.3.31

Assets2022.3.31

2023.3.31

63,845Current liabilities
179,769

453,502

Notes and accounts payable-trade76,229Notes and accounts receivable-trade, and contract assets

364,683

446,061

Short-term borrowings

6,385

6,674

Lease receivables and investments in leases

17,824

17,125—20,000

10

10

3,467

6,030

Current portion of bonds payable
Current portion of long-term borrowings

48,972

59,973

Income taxes payable

33,830118,636

12,083

15,653

Other current liabilities

386,573

337,028

67,135

135,769

Total current liabilities

551,990

606,158

Other current assets

258,610

145,882

Allowance for doubtful accounts(3,714)( 2,122)

Bonds payable

548,619

548,976

Total current assets

899,870

1,217,914

Long-term borrowings

568,725

607,262

Non-current assets

Deferred tax liabilities

29,64133,901

Property, plant and equipment

Retirement benefit liability
Provision for share awards for Directors (and otherofficers)
Provision for gas holder repairs

66,19564,570

Buildings and structures, net

338,517346,262

Machinery, equipment and vehicles, net

892,515921,572

14,484

10,714Land

192,455

197,245

5,899

8,231

125,501

98,8781,569,373

1,582,904

Leased assets, net
Construction in progress
Total property, plant and equipment
Intangible assets
Goodwill

6,410

294,296308,122

Total intangible assets

300,315

314,533

Provision for point card certificates
Asset retirement obligations
Other current liabilities
Total non-current liabilities
Total liabilities

236,303

278,497

Share capital

Long-term loans receivable

48,65356,550Capital surplus

Retirement benefit asset

5,864

8,809

Retained earnings

Deferred tax assets

34,67032,849Treasury shares

Other investments

94,22393,649Total shareholders’ equity

Total assets

531

654

27,692

27,559106,31093,7091,354,486

1,385,965

1,906,477

1,992,124(1,647)(4,283)418,068

466,073

2,287,757

2,363,511

3,187,627

3,581,425

141,844

141,844846—

1,076,184

1,310,908(3,524)( 3,658)

1,215,350

1,449,094

Accumulated other comprehensive income
Valuation difference on available-for-sale securities

18,86630,954

Deferred gains or losses on hedges(11,904)( 9,626)
86,226

Foreign currency translation adjustment

32,545Remeasurements of defined benefit plans(3,076)

1,754

Total accumulated other comprehensive income

36,430109,309

Non-controlling interests

29,36830,896

Total net assets

1,281,150

1,589,301

Total liabilities and net assets

3,187,627

3,581,425

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
Financial Data

Total non-current assets

527
5,176

Net assets

Investment securities

Total investments and other assets

637
2,620

Shareholders’ equity

Investments and other assets

Allowance for doubtful accounts

183
3,444

Corporate Strategy

6,018

Other intangible assets

Provision for safety measures
Provision for contract loss in regards to appliance warranties

84
3,427

Business Strategy

Tools, furniture and fixtures, net

Non-current liabilities

How We Create Value

Work in process
Raw materials and supplies

CEO’s Message

Cash and deposits

Merchandise and finished goods

Contents

Liabilities

Current assets

Securities

Introduction

Consolidated Balance Sheets

Introduction

10-Year Consolidated Financial Highlights
Consolidated Balance Sheets
Consolidated Statements of Income
C onsolidated Statements ofComprehensive Income
C onsolidated Statements of Cash FlowsD elayed Impact of Gas Rate Adjustment
SystemWeb Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

69

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Sustainability Factbook

(Million yen)

Consolidated Statements of Comprehensive Income

2022.4.1-2023.3.31

2,154,860

3,289,634

ProfitCost of sales

1,766,392

2,596,462

Other comprehensive income

Gross profit

388,467

693,172

Valuation difference on available-for-sale securities

Selling, general and administrative expenses

260,941

271,695

Operating profit

127,525

421,477

Interest income

1,032

2,463

Dividend income

1,692

2,797

Non-operating income

3,725

—

Foreign exchange gains

14,5505,089

Gain on derivatives

13,725

6,639

Miscellaneous income

14,673

11,510Total non-operating income

49,39928,500Non-operating expenses
Interest expenses

14,46615,138Loss on derivatives

11,864

10,308—4,450

Miscellaneous expenses

14,113

11,233

Total non-operating expenses

40,444

41,130136,481408,846

Ordinary profit
Extraordinary income

2,226

—

Gain on sale of investment securities

4,118

3,795

Gain on sale of businesses

—

3,506

Total extraordinary income

6,344

7,301

Extraordinary losses
Impairment losses

3,742

4,093

Loss on valuation of investment securities

2,468

2,420

Loss on valuation of long-term loans receivable

2,154

6,211

8,669

Profit before income taxes

136,614

407,479

Income taxes-current

32,951

122,208

Total extraordinary losses

Income taxes-deferred

6,429

3,748

Total income taxes

39,381

125,956
281,522

Profit97,233

Profit attributable to non-controlling interests

1,530

605

Profit attributable to owners of parent

95,702

280,916

Foreign currency translation adjustment

25,00651,756

Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income(10,964)

4,795

3,113

5,560

4,879

8,583

76,608105,816

358,130

Comprehensive income attributable to owners of parent

108,198

353,795

Comprehensive income attributable to non-controlling interests(2,381)

4,334

Comprehensive income
Comprehensive income attributable toContents

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
Financial Data—

(4,178)(6,841)

12,063

Deferred gains or losses on hedges

Corporate Strategy

Gain on sale of non-current assets

281,522

Business Strategy

Share of loss of entities accounted for using equity method2022.4.1-2023.3.31

97,233

How We Create Value

Share of profit of entities accounted for using equity method2021.4.1-2022.3.31

CEO’s Message

2021.4.1-2022.3.31

Net sales(Million yen)

Introduction

Consolidated Statements of Income

Introduction

10-Year Consolidated Financial Highlights
Consolidated Balance Sheets
Consolidated Statements of Income
C onsolidated Statements ofComprehensive Income
C onsolidated Statements of Cash FlowsD elayed Impact of Gas Rate Adjustment
SystemWeb Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

70

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Sustainability Factbook

(Million yen)

(Million yen)2021.4.1-2022.3.31 2022.4.1-2023.3.31

2021.4.1-2022.3.31 2022.4.1-2023.3.31

Contents

Cash flows from financing activities(2,724)
14,466(7,757)(3,725)(147,505)(22,491)
10,132
2,305(12,587)542(57)(2,796)
8,835
11,906
166,852
9,068(14,483)(16,209)145,227(5,260)15,138(1,910)4,450(114,253)(78,491)
7,107(2,594)
6,541
12,761(3,587)(1,789)(2,223)53,814
526,622
14,915(14,069)(40,437)
487,030(16,214)8,841(167,197)(29,777)(6,584)
6,334(399)(3,180)2,158(13,189)
9,846(15,074)(28,011)
13,574(150,647)(34,294)(5,237)
5,769(1,520)(10,922)
6,642(8,128)14,706(1,303)

263

2,718

—
—
(482)
(224,656)

4,112(3,914)(7,065)(203,522)

13,839(30,000)

Repayments of lease liabilities(2,683)(2,928)Proceeds from long-term borrowings

165,014

97,366

Repayments of long-term borrowings(123,252)(72,241)

Proceeds from issuance of bonds
Purchase of shares of subsidiaries resulting in change in scope of
consolidation
Purchase of treasury shares

73,62019,791(3,620)(1,867)(3,326)(16,031)

Dividends paid

(26,424)(29,474)

Other, net(19,515)(857)

Net cash provided by (used in) financing activities

90,490(22,403)

Effect of exchange rate change on cash and cash equivalents

9,117

12,628Net increase (decrease) in cash and cash equivalents

20,179273,733

Cash and cash equivalents at beginning of period

157,811

179,699

1,708—

179,699

453,432

Increase (decrease) in cash and cash equivalents resulting from change inscope of consolidation
Cash and cash equivalents at end of period

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
Financial Data

2,556

679
30,000

Corporate Strategy

2,620

Net increase (decrease) in short-term borrowings
Net increase (decrease) in commercial paper

Business Strategy

407,479
205,076
4,093
4,224
1,658
10,904(3,347)2,420
2,154(3,506)
3,207

How We Create Value

136,614
196,810
3,742
4,136
2,574
(15,362)(3,983)
2,468——(11,312)CEO’s Message

Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment losses
Amortization of long-term prepaid expenses
Loss on retirement of property, plant and equipment
Loss (gain) on derivatives
Loss (gain) on sale of investment securities
Loss (gain) on valuation of investment securities
Loss on valuation of long-term loans receivable
Loss (gain) on sale of businesses
Decrease (increase) in retirement benefit asset
Increase (decrease) in provision for contract loss in regards toappliance warranties
Interest and dividend income
Interest expenses
Foreign exchange loss (gain)
Share of loss (profit) of entities accounted for using equity method
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Decrease (increase) in contract assets
Increase (decrease) in contract liabilities
Increase (decrease) in accrued consumption taxes
Decrease (increase) in accounts receivable - other
Decrease (increase) in prepaid expenses
Increase (decrease) in long term advances received
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Purchase of investment securities
Proceeds from sale and redemption of investment securities
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of long-term prepaid expenses
Proceeds from sale of non-current assets
Net decrease (increase) in short-term loans receivable
Long-term loan advances
Proceeds from collection of long-term loans receivable
Payments of guarantee deposits
Proceeds from refund of guarantee deposits
Purchase of shares of subsidiaries resulting in change in scope of consolidation
Proceeds from sales of subsidiaries’ shares resulting in change in scopeof consolidation
Profits due to transfer of business
Payment for settlement of contingent consideration
Other, net
Net cash provided by (used in) investing activities

Introduction

Consolidated Statements of Cash Flows

Introduction

10-Year Consolidated Financial Highlights
Consolidated Balance Sheets
Consolidated Statements of Income
C onsolidated Statements ofComprehensive Income
C onsolidated Statements of Cash FlowsD elayed Impact of Gas Rate Adjustment
SystemWeb Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

71

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook

Introduction

Delayed Impact of Gas Rate Adjustment System

Introduction
Contents

Gas Rate Adjustment System’s Medium- to Long-Term Neutralizing Effect on Crude Oil Price and Exchange Rate Formation
between the payment of raw material costs and the reflection of such changes in gas rates.
Consequently, fluctuations in crude oil prices and exchange rates may result in the underrecovery or over recovery of raw material costs if this lag cuts across a fiscal year, thereby
affecting income. Looking at the medium- to long-term, however, the gas rate adjustment
system has a neutralizing effect on the income impacts of fluctuations in raw material costs.

How We Create Value

Timing of the Standard Average Raw Material Cost Calculation and Reflection in Gas Rates

How the Sliding Time Lag in Rates Works

Timing of standard average raw material cost calculation

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Business Strategy

Jan.

CEO’s Message

Gas prices are determined using the gas rate adjustment system. Through this system,
average raw material prices over a three-month period according to trade statistics arecompared with the raw material cost that is used as the standard (standard average raw
material cost), and the gas rates are adjusted using a defined calculation method based on
the differences. A time lag of four months on average (called a sliding time lag) exists

Dec.

Average raw material price

Average raw material priceCorporate Strategy

Over recovery

Under recovery
Average raw material price

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

Reflection in gas rates

Jun.

Jul.

Aug.

The average raw material price over the past three months is calculated every month andthen reflected in the gas rate three months later.

FY N

FY N+1

Financial Data

Average all Japan LNG price
Average raw material price reflected in gas rate

10-Year Consolidated Financial Highlights
Consolidated Balance Sheets
Consolidated Statements of Income
C onsolidated Statements ofComprehensive Income
C onsolidated Statements of Cash FlowsD elayed Impact of Gas Rate Adjustment
SystemWeb Site
Investor Relations Website
Investors’ Guide(Financial Data and Industry Data)
Financial Results Presentation Materials
Financial Results Bulletin
Corporate Governance Report

72

Tokyo Gas Group Integrated Report 2023

Sustainability Factbook