INTEGRATEDREPORT
Better servicing customers in closer communication fora brighter tomorrow2023

Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Creating
Value for a
Sustainable Future
We aim to solve various issues in building a sustainable society by taking on new challenges aswell as existing ones while thereby achieving further growth of the Daigas Group.
We focus our efforts on creating “value for a sustainable future” with our stakeholders by utilizing
our strengths in developing solutions and innovations, and share the achievements with our stakeholders.
We aim to be an “innovative energy and service company that continues to be the first choice ofcustomers” while striving to make contributions to achieving a sustainable society.
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Getting to Know the Daigas Group

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Value Creation Stories

Corporate GovernanceCorporate Data

Outline of the Daigas Group
Corporate Profile of Osaka Gas Co., Ltd. (As of March 31, 2023)

Daigas Group Organization (As of April 1, 2023)

Head Office
Date of Establishment
Date of Founding
Net Sales*1

Board of Directors

Ordinary Profit*1
Profit*1
Capital
Number of Employees

4-1-2, Hiranomachi, Chuo-ku, Osaka 541-0046, Japan
April 10, 1897
October 19, 1905
[Non-consolidated] 1,716.7 billion yen[Consolidated] 2,275.1 billion yen[Non-consolidated] -77.4 billion yen [Consolidated] 75.6 billion yen[Non-consolidated] -45.2 billion yen [Consolidated] 57.1 billion yen*2
132,166 million yen[Non-consolidated] 1,163

Chairman/President

Energy Resources & Int'l Business Unit
Osaka Gas USA Corporation
LNG, Power & Engineering Business UnitManagement Meeting

Daigas Gas and Power Solution Co., Ltd.
Energy Solution Business Unit

Audit & Supervisory
Board Members(including executive officers, directors and temporary employees; excluding employees
temporarily transferred to affiliated companies)[Consolidated] 21,017*1 Fiscal year ended March 31, 2023
*2 Profit attributable to owners of parent

Main Business Lines of the Daigas Group (As of March 31, 2023)

Office of Audit &Supervisory Board

Osaka Gas Marketing Co., Ltd.
Daigas Energy Co., Ltd.

Osaka Gas Co., Ltd. organizations

Osaka Gas Network Co., Ltd.

Core energy business companies,
overseas regional headquarters,gas pipeline business company,
core non-energy business companies,business process service company

Osaka Gas Urban Development Co., Ltd.
OGIS-RI Co., Ltd.

Main business lines

Core Non-Energy
Business Companies
Business Process
Service Company

Corporate Strategy Dept.
ESG Office
Carbon Neutrality Promotion Office

Production, supply and sale of city gas, sale of gas appliances,
gas pipe installation, sale of LNG, LNG transport, sale of LPG,
sale of industrial gas, power generation and sale of electricity

Domestic Energy

Gas Pipeline Business Company

Osaka Gas Chemicals Co., Ltd.
Osaka Gas Business Create Co., Ltd.
Corporate Planning HQBusiness segments

Business Units/
Core Energy BusinessCompanies/
Overseas Regional
Headquarters

International Energy

Development of and investment regarding natural gas, energy
supplyLife & Business
Solutions (LBS)

Development and leasing of real estate properties, informationprocessing services, sale of fine materials and carbon material
products

New Business Development Dept.
Finance Dept.
Investment Risk Management Office
DX Strategy Dept.
Innovation Headquarters

Innovation Dept.
Energy Technology Laboratories
Secretariat

Corporate Headquarter
Divisions

Corporate Communication Dept.

Net sales by segment (billion yen)
3,000

2,275.1

2,000

Segment profit (billion yen)
150

2,819.5

3,000

72.9

100

Human Resources Dept.

Segment assets (billion yen)

General Affairs Dept.
Property & Urban Development Office

2,000

1,000

50

1,000

0

0

0

Compliance Office
Purchasing Dept.
Tokyo Branch

19.3

20.3

21.3

22.3 *

23.3 (FY)

19.3

20.3

21.3

22.3 *

23.3 (FY)

Auditing Dept.
19.3

20.3

21.3

22.3 *

23.3 (FY)ESG Committee■Domestic Energy/Gas ■Domestic Energy/Electricity ■Domestic Energy ■International Energy ■Life & Business Solutions ■Elimination, etc.

Safety and Disaster Prevention Committee*From FY2022.3, Domestic Energy/Gas and Domestic Energy/Electricity were integrated into Domestic Energy. Osaka Gas International Transport Inc. etc.,
which were previously included in International Energy, were transferred into Domestic Energy. Osaka Gas’ operating expenses for international energy,
which were previously included in Domestic Energy/Gas, were transferred into International Energy.

Investment Evaluation Committee

2

Cyber Security Committee

Corporate Committees

DX Committee
Daigas Group INTEGRATED REPORT 2023

Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Courtesy of Freeport LNG Development, L.P.

Table of Contents
Getting to Know the Daigas Group
Our Commitment
Daigas Group's Values
History of Co-creation of Value
Financial Data
Non-Financial Data

5
6
7
9
10

Business Strategies
Message from the President
Our Financial Strategy
Daigas Group’s Sustainability Promotion
System and Management
Value Creation Process
Daigas Group’s Businesses
Capitals with Strengths
Long-Term Management Vision 2030 andMedium-Term Management Plan 2023
Medium-Term Management Plan 2023
Materiality and Daigas Group Charter ofBusiness Conduct

Corporate GovernanceValue Creation Stories

12
16
20
21
22
23
26
28
29

Ⅰ. Co-create Value for a Sustainable Future
Achieving a Low-Carbon/Carbon-Neutral Society
Energy Transition 2030
Establishing Lifestyles and Businesses
Adjusted to the New Normal
Enhancing Resilience of Customers and Society
Ⅱ. Evolve Our Corporate Group
Enhancing Business Portfolio Management
Domestic Energy Business,
International Energy Business,
Life & Business Solutions Business
Promoting Business Transformation with DX
Maximizing Value for Each Employee
Building Foundations that Support the Realizationof Value for a Sustainable Future
Disclosure based on the TCFD
Recommendations
Environmental Impact throughout
the Daigas Group Value Chain

3

32
33
39
42

65
79

Corporate Governance
Message from Outside Directors

Corporate Data
Summary of Consolidated Operating ResultsGroup Companies
Company Data

83
85
87

45
47
51
53
56
59
62
Daigas Group INTEGRATED REPORT 2023

Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Editorial Policy

Financial Result Figures and Forward-Looking Statements

In Integrated Report 2023, we pay attention to business strategies and value-creation
stories as well as non-financial information in order to present how assets accumulated todate will lead to future value creation and realize sustainable growth to our stakeholders,which include shareholders and investors.

Whereas the Company previously prepared its consolidated financial statements based on the "Gas Industry
Accounting Regulations" (1954, Ministry of Trade and Industry Ordinance No. 15) and the "Regulations Concerning
the Terminology, Forms and Preparation Methods of Consolidated Financial Statements" (1976, Ministry of FinanceOrdinance No. 28; hereinafter referred to as the "Regulations on Consolidated Financial Statements"), it prepares
these statements based only on Regulation on Consolidated Financial Statements from FY2023.3. Figures for
FY2022.3 are on a retrospective basis.
Tax effect accounting calculations as of March 31, 2023 were done on a group tax sharing basis.
These materials include forecasts on future performance, plans, and strategies, which are based on the judgment of
the Group upon currently available information. Please note that actual financial results may differ from forecasts due
to various factors. Factors that can affect actual financial results include economic trends in Japan, sharp
fluctuations in exchange rates and crude oil prices, and extraordinary weather conditions.

Tool Map
The Daigas Group disseminates diverse information with a variety of tools in order topromote communication with stakeholders. The Daigas Group works on proactive
information disclosure for better understanding of the Group.
Leaflets (downloadable from the web)

Financialinformation● Business Report●Integrated Report● Securities Report● Fact Book

Scope of This Report Osaka Gas Co., Ltd. and its group companies*Some information, as noted in this report by phrases such as “Osaka Gas” or“the Company,” refers exclusively to Osaka Gas Co., Ltd.

WEB

Period Covered● Investor Relations

International Integrated Reporting Frameworkof the IFRS Foundation● Guidance for Collaborative Value Creation of the
Ministry of Economy, Trade and Industry● Environmental Reporting Guidelines 2018 of the
Ministry of the Environment● Final Report of the Task Force on Climate-related
Financial Disclosures (TCFD)● Corporate

Governance
Report● Sustainability*Matters on other periods are partially included.

Guidelines Referred tohttps://www.daigasgroup.com/en/ir/●

Nonfinancial
information

April 1, 2022, to March 31, 2023

● Sustainability
https://www.daigasgroup.com/en/sustainability/

Report4

ISO26000 (guidance on social responsibility)of the International Organization forStandardization● Sustainability reporting standards of the
Global Reporting Initiative (GRI Standards)● The United Nations Global Compact COP
Policy●Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Our Commitment
We would like to extend our warmest greetings to all
stakeholders as we issue this Integrated Report.
Our business environment is undergoing significant
changes at an accelerated pace due to Russia’s invasionof Ukraine and increasing geopolitical risks in various
parts of the world. As a responsible energy supplier, wehave renewed our commitment to discharging our duties
to ensure a stable energy supply and its safety.
In this fiscal year marking the final year of the Daigas
Group Medium-Term Management Plan 2023: Creating
Value for a Sustainable Future, we strive to meet thetargets set in the Plan while formulating our next
medium-term management plan to pursue further
creating value for customers, society, shareholders, andemployees. We also aim to achieve sustainable growth as
we evolve into an innovative energy & service company
that continues to be the first choice of customers. We
intend to fulfill the goal by maximizing value for all
stakeholders, including customers and shareholders,
based on the Daigas Group Corporate Principles and thevalues long cherished since our foundation.
As we pursue the goals set in the current
Medium-Term Management Plan, we deeply appreciate
the continued support and encouragement of our
stakeholders.
September 2023

Our Commitment
To be an innovative
energy and service
company that continues
to be the first choice ofcustomers and achievesustainable growth
To maximize value for all
stakeholders

5

Takehiro Honjo

Masataka Fujiwara

Director,
Chairman of the Board

Representative Director
and President

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Daigas Group's Values
The “Daigas Group Corporate Principles” consists of “What We Aim To Be,” “Our Commitment” and “Our Corporate Motto.” The Daigas
Group carries out its business activities based on the “Daigas Group Corporate Principles.”Daigas Group Corporate Principles
What We Aim To Be

A corporate group that powers continuous advancementin customers' lives and businesses.
Our Commitment

Daigas Group Charter of BusinessConduct
Ⅰ. Creating value for customers

We create four types of value.
We create value primarily for customers, as well as for society, shareholders,and employees.

Ⅱ. Contributing to the sustainability of the environmentand society

Ⅴ. Complying with laws and regulations

Service First

Daigas Group Code of Business Conduct[Code of conduct for officers and employees]

Ⅵ. Providing work environment that supports
employees’ personal growth

Daigas Group's Values

Daigas Group Code of Business Conduct
1. Respecting human rights
2. Providing safe and secure workplace
3. Complying with laws and regulations
4. Avoiding use of professional positions andcompany property for personal reasons
5. Complying with laws in each country and region,and respecting international standards including
those on human rights
6. Contributing to the environmental conservation
7. Complying with anti-monopoly laws andregulations, and conducting fair transactions
8. Providing products and services
9. Ensuring safety of products and services

Daigas Group
Charter of Business Conduct[Corporate attitude]

Ⅲ. Engaging with and contributing to society
Ⅳ. Respecting human rights

Our Corporate Motto

DaigasGroup
Corporate Principles

10. Interacting with customers appropriately
11. Engaging with and contributing to society
12. Building and maintaining sound relationships withbusiness partners
13. Engaging business partners in following Daigas Group
Code of Business Conduct
14. Managing proper use of information and systems
15. Disclosing information and engaging with stakeholders
16. Properly handling intellectual property
17. Avoiding association with anti-social groups and individuals
18. Making tax payment and performing accounting practices
properly

6

We have set the Daigas Group Corporate Principles,
Charter of Business Conduct, and Code of BusinessConduct as guidelines for realizing the Daigas Group's
Values including what the Group aims to be, itscommitment, corporate motto, attitude, and standardsof conduct that executives and employees must follow.
We aim to be a corporate group that powers
continuous advancement in customers' lives andbusinesses. And we are committed to creating fourtypes of value to fulfill our social responsibility: wecreate value primarily for customers, as well as forsociety, shareholders, and employees. In order toachieve these, we promote efforts that are in line with
the Daigas Group's Values.

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

History of Co-creation of Value
The Daigas Group’s gas business began with gas supply in 1905. In over 110 years since, the gas business that started with lighting gas lamps has expanded the application of gas tocooking, heating, hot water, and power generation, overcoming many obstacles as society evolved and lifestyles changed. Additionally, founded on the relationships with customers andregions that have been fostered through the energy business, the Daigas Group has expanded its business domains and developed into a corporate group that provides various products,
services, and solutions.

History of Growth in the Daigas Group’s Businesses
1947
Central ResearchInstitute established

1971
Operations
begin atSenboku Plant

1977
Operations begin
at Senboku
LNG Terminal II

1984
Operations begin at Himeji LNG Terminal

2016
Enters low-voltage
electricity supply
business

2021
Osaka Gas
Network Co., Ltd.
establishedEstablishedin 1897
1975
Natural gas conversion
begins2009
Operations begin at Senboku
Natural Gas Power Plant

1990
Natural gas conversion
completed

1972
Importing of LNG from Brunei begins

2004
2013
Participates in IPP* Gas sales inbusiness in the
Singapore begins
United States

2009
Acquires interests of Gorgon LNG
Project in Australia

1949
Kinki Coke Distribution Co., Ltd. established(currently Osaka Gas Chemicals Co., Ltd.)

Domestic
EnergyBusiness

2019
Commercial operationof Freeport LNG
Project in the UnitedStates begins

International
EnergyBusiness* Independent Power Producer

Value Creation Process

Osaka Gas Co., 1905
1945
Ltd. established Gas supply
Performs
with capital of
beginsfirst and¥350,000
second merger

P.21

1989
Urbanex Co., Ltd. established(currently Osaka Gas Urban Development Co., Ltd.)LBS
Business
1965
Osaka Gas Building Co., Ltd. established(currently Osaka Gas Urban Development Co., Ltd.)

1900

1910 1920 1930 1940

1950 1960

1983
OG Information System
Co., Ltd. established(currently OGIS-RI Co., Ltd.)

1970

1991
Osaka Gas
Chemicals Co., Ltd.
established

1980

1990

7

1992
OGIS-RI Co., Ltd.
established

2000

2010

2013
Osaka Gas Urban
Development Co., Ltd.

2020

2023

(year)

Daigas Group INTEGRATED REPORT 2023

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Value Creation Stories

Corporate GovernanceCorporate Data

History of Innovation in Energy Business

Gas cogeneration/fuel cells
Industrial use(boilers/industrial furnaces)

Industrial use (gas burner)
Hot-water supply (water/space heating)/
floor heating/bathroom dryer

Residential/commercial use(kitchen stoves/heating/
hot-water supply)

Heating (gas stove, fan heater)

City gas application development

Gas lamp

Cooking (gas furnace)

Low carbonization of feedstock of city gas

Cooking (gas range)

Cooking (rice cooker, grilling stove)

Coal

Natural gas

OilElectricity Business/International Energy Business
1900

1910

1920

1930 1940

1950

1960

1970

Striving to becomecarbon neutral

Table of Contents Getting to Know the Daigas Group

1980

1990

Power source development

2000 20102020

2023 (year)

Social Background and Daigas Group’s Strategy■ Social Issues and Needs
Life changed by gas

From oil lamp to gas lamp

Improving
regional
safetyGas supply
beginsAt the time, oil lamps whichoccasionally caused fires, andexpensive electrical lighting, werecommonplace, becoming a social
issue in urban areas.

Working to popularize
gas lamps
With the provision of safe andaffordable gas to citizens being set
forth as the purpose of theincorporation of the Company, efforts
were made to popularize gas lamps.

Changesinlifestyle

Proposals of
new lifestyles

Increase in population/

Increase in postwar recovery
It became necessary to addressenergyincreased energy demand and rapid
demand urbanization.

Various lifestyles and people’s
customs were undergoing changes,
and women’s participation in society
also began.

Dissemination of gas to residential
kitchens significantly reduced theburdens of household duties
associated with traditional cooking
stoves.

Introductionof LNG

Transitioning to natural gas was along-term project that required huge
up-front investment, but it resulted in
improving the stability of gas provisionand reducing environmental burdens,
etc.

Growing concern for

Realization of environment
Paris Agreement, and TCFD
sustainable SDGs,
recommendations, etc., have beenpresented
as pressing issues thatsocietymust be tackled on a global scale.

Developmentof advanced
products

By developing advanced devices andsystems that can contribute to energy
conservation and reducing CO2
emissions, we will work to reduce andeliminate carbon emissions alongsidecustomers.

■ Daigas Group’s Co-creation of Value

8

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceFor detailed financial data,
please visit our website.

Financial Data
Net sales

Profit attributable to owners of parent

Ordinary profit
Fiscal year ended March 31, 2023

Fiscal year ended March 31, 2023

(billion yen)(billion yen)

2,500

150

150

2,000

127.7

120
1,591.1
1,371.8 1,368.6 1,364.1

1,000

86.0

30

30

0

0

0

19.3

20.3

21.3

22.3

19.3

23.3 (FY)Fiscal year ended March 31, 2023

(%)

12.0

2.7%

ROE

4.3%

ROIC
ROE

Dividends
per share
(yen)

22.3

23.3 (FY)

60.0

7.8

yen

Payout
ratio

6.0

50
4.2

6.2

50.0

4.3
2.7

0.0
20.3

21.3

22.3

23.3 (FY)

21.3

22.3

23.3 (FY)

46.6

46.8

0.6

23.3 (FY)

0.76

0.73
0.64

0.64

0.71

0.4
20

22.3

22.3

0.71 times

49.3

60.0 30

0
21.3

21.3

As of March 31, 2023

0.8
49.1

0.2

18.3

20.3

20.3

(times)

40

27.0

19.3

19.3

Debt equity ratio

60

43.7

0
19.3

20.3

（%）

(%)

57.5

100

49.3%

Payout ratio (right axis)

192.7

50

43.7%

49.5

52.5

180.9

As of March 31, 2023

49.8

50.0

159.9

0
19.3

60

7.1

33.6

Shareholders’ equity ratio

Dividends per share (left axis)

61.9

57.1

Fiscal year ended March 31, 2023

100

11.0

3.4

21.3

Dividends per share/
Payout ratio

ROIC/ROE
ROIC

20.3

150

41.7

227.5 220.9

200

80.8

60

500

192.7 billion yen
250

130.4

90

75.6

63.1

60

Fiscal year ended March 31, 2023

(billion yen)

120

113.5

90

EBITDA

57.1 billion yen(billion yen)

2,275.1

Fact Book

Fiscal year ended March 31, 2023

75.6 billion yen

2,275.1 billion yen
1,500

Corporate Data0.0

023.3 (FY)

19.3

9

20.3

21.3

22.3

23.3 (FY)

19.3

20.3

21.3

22.3

23.3 (FY)

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

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Value Creation Stories

Corporate GovernanceFor detailed non-financial data,
please visit our website.

Non-Financial Data
Number of employees (Group)

Corporate Data

Job turnover rate

Number of Directors of Osaka Gas

Fiscal year ended March 31, 2023

21,017

Number of the individuals in officer ranks
reflecting the election results at the Annual
Meeting of Shareholders in the year

Sustainability of the Daigas Group

Patent portfolio by business type (Group)
Fiscal year ended March 31, 2023

Fiscal year ended March 31, 2023

2.26%

10

2,885 patents(employees)(number of individuals)

(%)

(%)

(patents)

25,000

15

50

2.5

3,500

40

2.0

20,000 20,224 20,543

5,971

5,925

5,672

5,699

15,00020,941 20,961 21,017
5,936

13

12

40
3

9

23
10,000

33
9 9

5,000

15,016

14,871

14,99015,081

0

10

3

19.3
■Male

20.3

21.3

22.3

23.3 (FY)

1

0

20.3

21.3

10

3

10

1

20 2

3

6

6

22.3

6

10

0.5

0

0.0

(thousand t )40,000

160

96.6

120

121 116

32,907
27,783 26,785 25,976

27,944

22,27010,000
297
5,051

0

19.3
■Scope 1

500
0

19.3

20.3

21.3

22.3

297
5,215

303
4,659

20.3

■Scope 2

21.3

22.3

■Scope 3

21,924

21,246

334
4,526

323
4,405

23.3 (FY)96.5%

Intake(%)(million m³)

100

800

75

600

80

50

400

40

25

200

0

0

96.9

96.5

134 130
115 111

96.6
114
110

96.5
102

99

0

19.3

20.3

■Amount generated (left axis)
Recycling rate (right axis)

2,913

2,885

515

508

678

490

476

708

701

699

725

607

583

508

366

337

301

499

515

547

508

463

291
430

260
418

573

543

534

504

491

19.3

23.3 (FY)

3,015

515

20.3

21.3

22.3

23.3 (FY)■Gas production, distribution, and supply■Residential gas appliances■Commercial and industrial gas equipment■Cogeneration ■Materials technology ■Other

Waste recycling rate229,458

1,500

3,194

Water use (Group)

25,976 thousand t-CO e

20,000

2,000

1.30

Fiscal year ended March 31, 2023

(thousand t-CO2e)

3,286

1,000

24.3 (FY)Fiscal year ended March 31, 2023

30,0001.36
1.05

Waste recycling rate (Group)

Greenhouse gas emissions (Group)

34,8081.42■Internal/male (left axis) ■Outside/male (left axis)■Outside/female (left axis)
Percentage of Outside Directors (right axis)
Percentage of female Directors (right axis)■Female

3,000
2,500

1.0

20

6

23.3

2.26

1.5

30

2

10

10

0

0

10

3

6
14,525

40

40

21.3

22.3

■Amount recycled (left axis)

10

23.3 (FY)

548 million m³
595 585

19.3■Amount of water intake

591 582

20.3

Fiscal year ended March 31, 2023

Discharge

539 million m³

568 558

594 585

21.3

22.3

548 53923.3 (FY)■Amount of water discharge

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Business Strategies

Corporate GovernanceCorporate Data

Message from the President
Our Financial Strategy
Daigas Group’s Sustainability Promotion System and Management
Value Creation Process
Daigas Group’s Businesses
Capitals with Strengths
Long-Term Management Vision 2030 and Medium-Term
Management Plan 2023
Medium-Term Management Plan 2023
Materiality and Daigas Group Charter of Business Conduct

11

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate Governance

Message from the President

Corporate Data

Resolving social issues at the core ofour business since its inception

The Daigas Group continues totake on proactive challenges invarious fields to earn our
stakeholders’ overwhelming
support.
FY2023.3 was a year of intensified change in thesocial and economic environments, where theinternational situation became increasingly
unstable, the exchange rate experienced
heightened volatility, and inflation continued during
the COVID-19 pandemic persisting.
Faced with the accelerating trend of
decarbonization and the growing importance ofenergy security, we recognize the significance offulfilling our role required by society in contributing
significantly to resolving long-term social issues,
such as achieving carbon neutrality, while
discharging our duties to ensure a stable energy
supply.

Masataka Fujiwara
Representative Director andPresident

12

In recent years, companies’ business activities havebeen increasingly scrutinized to see whether they
contribute to resolving social issues, such as
decarbonization to counter climate change. It has
become clear that addressing those challenges tocontribute to society is at the forefront of companies’
purpose today.
At the Daigas Group, we have strived to resolve
social issues through the energy business for over 100
years since the inception of Osaka Gas. One of thecompany’s founding goals was to promote the wideusage of safe and economical gas lamps to replace oillamps, major causes of fires in urban areas in the latenineteenth century. Our company’s business is rooted
in tackling social issues.
While achieving sustained growth by fulfilling our
founding purpose of resolving social challenges, wehave reshaped the Group and reinvented its businesses
in response to changes in the times and the businessenvironment, such as our business diversification in the
1980s, return to natural gas-focused businessdevelopment in the 1990s, expansion into overseas
markets and businesses from the 2000s, andcompetition in the fully deregulated energy markets
from the late 2010s. Throughout our long history, thecompany has evolved and advanced to higher stages
by building new portfolios. Our endeavor continues as
we now face many different social issues, including
those related to the environment, such as climatechange, and those related to society, such as humanrights and human capital.

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Meanwhile, no matter what changes in thetimes and business situations we may face, wehave always aimed at a goal as our unwavering
anchor, which is what we aim to be in the Daigas
Group Corporate Principles, “a corporate groupthat powers continuous advancement incustomers’ lives and businesses.” Under this goal,
we have strived to resolve social issues, with eachand every one of us being mindful of being ofservice to customers and society, our commitmentthat drives and propels our activities. “Being ofservice” to customers is our Corporate Motto,“Service First,” that is, to devote ourselves toputting our customers first. Far and away, themost integral part of that is to practice Sangen
Shugi, or the “Three Actuals Principle,” whichplaces emphasis on genba (the actual site),
genbutsu (the actual article), and genjitsu (theactual situations).
As a member of the Daigas Group, I havevalued the spirit of Service First and Sangen
Shugi, the importance of which I have recognized
firsthand through my experience of intensecompetition with other energy players and close
engagement with customers since I joined thecompany. “We are not supplying gas tocustomers; our customers are choosing to use
our gas.” “To continue to be the first choice ofcustomers, we must seek out our customers’ realissues and resolve them.” These values haveremained unchanged from the past and at present
and will continue into the future.
In resolving social issues, we always adhere
to Service First based on Sangen Shugi. By

Value Creation Stories

Corporate Governanceoffering solutions that exceed the expectations ofcustomers and society, we aim to power
continuous advancement in customers’ lives andbusinesses and evolve the business portfolio of
the Daigas Group.

Corporate Databusiness portfolio management to achieve growth asa group of enterprises consisting of seven business
units and continue evolving our corporate group.

Co-create value for asustainable future

Intentions incorporated in the MediumTerm Management Plan CVS2023
In March 2021, we announced the Daigas Group
Medium-Term Management Plan 2023 Creating
Value for a Sustainable Future (CVS2023) amidbusiness environment changes impacting society’s
sustainability, such as the COVID-19 pandemic, theaccelerating trend of decarbonization, and thegrowing severity of natural disasters.
In CVS2023, we define the Value for a
Sustainable Future as the value we want to create
for resolving social issues, focusing on three
initiatives: 1. Achieving a low carbon/carbon neutral
society, 2. Establishing lifestyles and businesses
adjusted to the new normal, 3. Enhancing resilienceof customers and society. We are proceeding withthese actions to meet lofty targets set as milestones
and working to create and share the Value for a
Sustainable Future with our stakeholders byleveraging our strengths in developing solutions andinnovations.
With uncertainty growing into the future, we aim
to enhance business portfolio management toadvance the business foundations we have built. By
introducing ROIC (Return On Invested Capital) as a
new management indicator, we will further strengthen

13

1. Achieving a low carbon/
carbon neutral society
2. Establishing lifestyles andbusinesses adjusted to the
new normal
3. Enhancing resilience ofcustomers and society

Cooperate with stakeholders globally

Evolve our corporate group

1. Enhancing Business
Portfolio Management
2. Promoting business
transformation with DX
3. Maximizing value for each
employee

Highlights of the past two years inexecuting CVS2023
Over the past two years of the CVS2023 period, we
stepped up our efforts to develop methanation
technologies for producing and introducing
e-methane* and build its supply chains. Despite theincreased volatility in energy procurement and sales
due to growing global instability, such as Russia’s
invasion of Ukraine, we have managed to maintaina stable energy supply to customers through close
cooperation among our Group companies.
*Synthetic methane produced from non-fossil fuel-based feedstocks, such as greenhydrogen

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Business Strategies

In the Domestic Energy segment, the numberof customer accounts, which is the fruit of ourefforts, has reached 10 million, our target for 2030
in the Long-Term Management Vision. In addition,
we have been expanding our business foundations
through various measures; Starting the constructionof the Himeji Natural Gas Power Plant: Introducing
new services into the market, such as Sumai LINK,
a life-service platform business for enhanced
customers’ daily lives, and D-Lineup, which assistscommercial and industrial customers’ emissions
reduction and decarbonization: Entering the fixed-line
telecommunications and other businesses in new
domains. In the International Energy segment,
Sabine Oil & Gas Corporation in the United Stateshas been steadily increasing its shale gas
production, growing into a pillar of revenue for the
Daigas Group. In Life & Business Solutions (LBS)
segment, the three core companies in the realestate, information, and materials fields haveadvanced their performances and expanded theirbusiness domains by leveraging their respective

Value Creation Stories

Corporate Governancestrengths even in an unstable business environment.
While we succeeded in enhancing our businessportfolio last year as described above, we
experienced a major setback when the Freeport
LNG, a natural gas liquefaction business in the
United States, shut down its plant following a firethat broke out in June 2022. This incident at theFreeport LNG, where we participate as an equity
holder and LNG off-taker, posed a serious threat toour LNG procurement amid the growing importanceof energy security. We quickly acted to ensure astable energy supply by seeking alternative sourcesand exploring other options to make up for the LNG
shortfall caused by the plant shutdown. Taking thisevent as a lesson that a single accident could leadto considerable supply disruption and financial
losses, we have been re-examining the risk
management of our entire business to prevent
similar incidents.
In addition, at the Sodegaura Biomass Power
Plant, a fire broke out in a fuel storage silo in
January 2023. This accident at the power plant,
which an affiliate of Osaka Gas had built and was in
the process of commissioning, occurred due to anissue regarding safety, a top priority for an
infrastructure business operator. In the wake of thisincident, we have been undertaking intensive andfull inspections, besides daily checks, of ouroperations and maintenance in all our infrastructurebusinesses to make improvements. We have taken
seriously to heart the great concern andinconvenience these accidents have caused our
stakeholders, and we are determined to ensure no
repeat of similar accidents.

14

Corporate Data

This fiscal year is the final year of CVS2023, when
we finish executing the current medium-term plan toachieve the targets and formulate our next mediumterm management plan. While fulfilling our mission as
an energy business operator to deliver a stable energy
supply, we aim to bring our efforts to date to fruition
and accelerate the growth and evolution of the Groupto reach our targets for 2030, the year we plan toinject our first e-methane into the gas grid, and 2050,
the year we aim to achieve carbon neutrality. As the
top of the Daigas Group, I will steer the management
through deliberations in the Board of Directors andAdvisory Committees, balancing the weight between
addressing immediate changes and taking onchallenges for our future growth.

ESG-focused management
In achieving the targets of CVS2023, it is vital tocreate and share value with our stakeholders. To
maintain our stakeholders’ confidence and execute
our ESG-focused management steadily, we arebuilding a resilient business foundation that will allow
and encourage our members to continue taking on
new challenges even amid growing uncertainty.
For the realization of the Daigas Group
Corporate Principles, we have established the
Daigas Group Charter of Business Conduct, which
presents our corporate stance, and the Daigas
Group Code of Business Conduct, which provides
concrete standards of conduct for the Group’s
officers and employees to adhere to.

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Business Strategies

In 2007, we announced our participation in the
United Nations Global Compact, which is a first fora Japanese public utility enterprise. We fully support
the principles to be followed by companies as
members of the international community.
As President, I have held meetings called “Mirai
Open Talk” with the Group company employees aspart of my workplace visit. In the session, I deliver
my message in person from the perspective of the
Corporate Principles and the Long-termManagement Vision, emphasizing the importance of
creating value for a sustainable future and resolvingsocial issues. These meetings are invaluable
opportunities for me to learn how our employees
approach their daily work and address problems. In
one of the Mirai Open Talks in FY2023.3, I held asession with our young employees, where I was
deeply impressed by their efforts and serious
attitude to improve themselves and serve customers
and society even as they struggle.

Value Creation Stories

Corporate Governance

These conversations help identify key
management issues of enhancing value for
employees, such as creating workplaces thatencourage diverse talent to take on new challenges
to achieve personal growth through them and allow
them to tackle social issues to contribute to society.
One initiative to this end is the full-scale initiation of
the Daigas transformation or Daigas X, in which we
aim to enhance work efficiency within the Group by
sharing the Daigas Group’s ways of productive
working. We will develop a working environment topromote dynamic transformation and encourage
members to challenge themselves.
We are also pursuing initiatives for further
improving corporate governance. In addition to theAdvisory Committees on appointment andremuneration, we established Advisory Committee
on Management in FY2023.3. This new committee
comprises the officer in charge of the Corporate
Planning Headquarters, all Outside Directors, andme as President, with Outside Audit & Supervisory
Board Members participating as observers. In thesecommittees, each chaired by an Outside Director,
members discuss critical issues, making the mostof their respective specializations. In FY2024.3, wewelcomed a new female Outside Director, and thathas made discussions even livelier.
Through the practice of the above ESGfocused management, we intend to build resilientbusiness foundations, aiming to continue earning
the unwavering confidence of our stakeholders.

Corporate Data

Toward the Future
There has been a tremendous shift in the social
paradigm. Even though the COVID-19 pandemic
and the recent instability of social and economic
conditions appear to have settled down somewhat,
the world will not return to the way it was. The trendof decarbonization, digitalization, and thediversification of people’s values will only grow inspeed and scale. To avoid being left behind, we will
shift our efforts into an even higher gear on cocreating value for a sustainable future.
Centering on activities for resolving social
issues, we will devote our every effort to realizing asustainable society by taking on new challenges invarious fields in Japan and overseas to earn the
overwhelming support of our stakeholders. Pleaselook forward to our best results.
September 2023

Discussion on the Group's Future with the President
A video featuring scenes from the Mirai Open Talk with young employees was postedon the in-house company website for employees.

15

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Business Strategies

Value Creation Stories

Corporate Governance

Our Financial Strategy
Striving to achieve the targets inthe final year of our MediumTerm Management Plan with therecovery of our powerful growthcapabilities
Takeshi Matsui
Representative Director andExecutive Vice-President

Major downturn in profits caused byincreased costs of LNG procurement
due to the impact of Freeport LNG’splant shutdown and other factors
In FY2023.3, the second year of the Medium-Term
Management Plan (FY2022.3-FY2024.3), the businessenvironment was extremely harsh due to the impactof the Freeport LNG’s liquefaction facility shutdown,
the increasing instability of the energy supply-demandbalance, and soaring prices, among other things. On
the other hand, soaring energy prices have meant

16

Corporate Data

increased profits from upstream businesses overseas
in the International Energy segment, while we alsosteadily grew our earnings in the Life & Business
Solutions (LBS) segment. These profit increases haveresulted in a partial recovery in the depression of
consolidated profits, and I see this as evidence thatour portfolio management has functioned well to acertain extent.
In the Group’s business results for FY2023.3, net
sales were 2.275 trillion yen, up 683.9 billion yen fromthe last year due to the higher unit selling prices of gas
and LNG in the Domestic Energy Business and theselling price boom in the US and Australian upstream
businesses in the International Energy Business.
Ordinary profit was 75.6 billion yen, down 37.8
billion yen from the last year, due mainly to losses
related to Freeport LNG’s plant shutdown. Profit
attributable to owners of the parent was 57.1 billion
yen, down 73.3 billion yen from the last year for thesame reason as the ordinary profit decline. The
decrease in profit attributable to owners of the parent
was more significant than the ordinary profit decline
due to the absence of the recording of deferred tax
assets and income taxes–deferred (gain), as we hadin the previous fiscal year.

Anticipation of increased profits in
FY2024.3 with the operation resumption
at the Freeport LNG plant andImprovement of time-lag effect
In FY2024.3, the final year of the Medium-Term
Management Plan, net sales are expected to

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Business Strategies

decrease from the FY2023.3 level due to lower LNG
prices reducing gas unit selling prices in the Domestic
Energy Business. However, ordinary profit and profit
attributable to owners of the parent are expected toincrease from the FY2023.3 level with the resumptionof operations at the Freeport LNG plant and theimprovement of the time-lag impact. We anticipate an
ROIC of 5.4%, which exceeds the target of around
5% in the Medium-Term Management Plan.

More in-depth ROIC-focusedmanagement that responds promptly
to changes in the businessenvironment
The Daigas Group’s business units and corporate
headquarter divisions work closely together tomaintain and improve ROIC to exceed capital costs(WACC). We aim to enhance our agility as a corporategroup where each business unit makes decisions
autonomously in divesting assets, making investments
to improve ROIC, and implementing initiatives toboost asset efficiency. To that end, we intend to make

Growth through investment in new
businesses where we can leverage
our strengths
In FY2023.3, as we had envisaged a significant profit
downturn since Freeport LNG’s plant shutdown, we
pursued investments for business growth having paid
more consideration than usual to the impact onfinancial soundness. We invested 172.2 billion yen(86% of the target) in projects to develop powersources, such as the Himeji Natural Gas Power Plant
and renewables, upstream business in North America,
and real estate development projects.
The Daigas Group plans to execute steadyinvestments in the cumulative amount ofapproximately 500 billion yen for the period up to
March 2024 under the Medium-Term Management
Plan. These investments aim for business growth in
key areas, including decarbonization-related fields
such as renewable energy (about 120 billion yen),International Energy Business, and Life and Business
Solutions (LBS) Business. In our investment forbusiness growth, we focus on ROIC as a target in our■ Ordinary profit(billion yen)

2,500

2,275.1

2,000

1,371.8

1,368.6

1,364.1■ Profit attributable to owners of parent

180

2,017.0

1,591.1

159.0

150

127.7

120
90

1,000

60

500
0

Corporate Data

■ Ordinary profit and profit attributable to owners of parent(billion yen)

1,296.2

Corporate Governancethe business units mindful of the ROIC tree to detect
early signs of changes in performance based on
visualized significant KPIs.
In FY2023.3, our second year using ROIC, weevaluated each business unit against the first-year
ROIC results to establish an ROIC-focusedmanagement culture across the Group. In addition,
we took various measures to raise NOPAT, soldcross-shareholdings, and proceeded with steps tosecuritize Group-owned real estate. Each business
unit has been granted the authority for short-termbusiness operations to speed up its businessdevelopment processes. Meanwhile, the corporate
headquarter divisions have begun work on the regularreview of medium-term business plans and resource
allocation. The plans will be reviewed in light ofchanges in the business environment since the current
Medium-Term Management Plan was formulated,such as the accelerating decarbonization trend,soaring energy prices, and changes in market
competition. Through these endeavors, we aim to
improve our Group’s response speed to changes andenhance our business portfolio’s robustness.

■ Net sales

1,500

Value Creation Stories

86.0

77.0

80.8

63.1
37.7

33.6

130.4
113.5

116.0
75.6

41.7

57.1

30
18.3

19.3

20.3

21.3

22.3

23.3

0

FY24.3 (FY)Forecast

17

18.3

19.3

20.3

21.3

22.3

23.3

FY24.3 (FY)Forecast
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Business Strategies

renewable energy development projects in Japan,
where we invest with strategic partners to minimize
our investment amounts while maximizing our power
offtake in excess of our stakes in the projects. In ourinvestments for quality improvement, we are
increasing investments in digital transformation andresilience enhancement. We aim to bring free cash
flow into the black in FY2024.3 due to the expansionof operating cash flow from the outcomes of ouractivities to date. For the sound and sustained growthof the Daigas Group, we will work to maximize ROIC
from medium- to long-term perspectives while
expanding profits.

Daigas Group’s investment risk
management
In our investments, we aim to maintain a goodbalance between risk and return, not taking high risks
to seek excessively high returns and avoiding
unnecessary risk control. We manage investment risk
by ensuring the following four points.
The first is the investment project’s consistency
with our strategy. Besides evaluating project
profitability, we assess the potential for synergies with
the Group’s other businesses and enhancement ofbusiness execution capabilities.
The second is the evaluation of the inherent risksof the investment project. We make decisions on
investment through strict evaluations and deliberationsof target projects at the Investment Evaluation
Committee based on our group-wide investment
standards, taking into account the evaluation results
made by the Investment Risk Management Office, ourValue Creation Stories

Corporate Governanceinternal organizations for financial and legal affairs, aswell as external consultants when necessary.
The third is the maintenance of a good balancewith financial soundness. We quantitatively assess
potential losses for each risk in investment andbalance risk and return across the entire Group to
make it possible to sustainably conduct investments
for business growth while maintaining a certain level offinancial soundness in the face of the risks.
The fourth is post-investment follow-ups. We
conduct annual follow-ups on investment projects
based on our investment monitoring standards, inwhich we evaluate whether the project satisfies theoriginal purpose of our investment, whether it is
keeping up with the changes in the businessenvironment, and whether it faces any issues in terms
of progress and profitability. Depending on theevaluation results, we take necessary actions such as
improving project profitability and considering
divestiture or withdrawal.

Corporate Data

Utilizing transition finance
Since FY2023.3, the Daigas Group has continued to
procure funds through transition finance to use thefunds for initiatives that align with the company’s longterm transition strategies to reduce greenhouse gas
emissions. In FY2024.3, we have been increasing
funding from corporate bond investors and financial
institutions by deepening their understanding of ourcarbon neutral strategy through our briefings on the
Energy Transition 2030 announced in March 2023.
Our transition loan is the first case in the gas
industry.*1 Utilizing transition finance with loans as wellas corporate bonds will provide an excellent
opportunity to have the Group’s transition strategy
assessed by more financial institutions. In focusing
our efforts on businesses related to carbon emissions
reduction and decarbonization, we see transition
finance as an effective means of procuring funds andhope to make active use of it going forward.
*1 As researched by the Daigas Group based on publicly available
information■ Transition finance conductedTransition finance

Month of issue

AmountUse of funds

1st Transition Bonds

June 2022

10.0 billion yen

Inami Wind Power Plant, Noheji Mutsu Bay Wind Farm,
Yokohama Town Wind Power Plant, Daigas Oita Mirai Solar
Power Plant, projects that contribute to fuel conversion atcustomer facilities to natural gas

2nd Transition Bonds

September 2022

27.0 billion yen

Kuwaharajou Mega Solar (No. 4), the Extra-high-voltage
Power Plant in Isohara-cho, Kitaibaraki City, Ibaraki
Prefecture, Himeji Natural Gas Power Plant

Transition loan

January 2023

35.0 billion yen

Himeji Natural Gas Power Plant

3rd - 5th Transition Bonds

June 2023

35.0 billion yen

Himeji Natural Gas Power Plant

18

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Business Strategies

Shareholder returns according to
profit growth

Value Creation Stories

Corporate Governancedecarbonization trend and intensifying competition
driven by non-energy players’ entry into the gas andpower markets.

As our shareholder return policy, we intend to provide
stable dividends while maintaining a consolidated
dividend payout ratio of 30% or higher, excluding
short-term profit fluctuation factors. We also consider
increasing dividends when we achieve profit growth.
In FY2023.3, despite projections of a downturn inprofit, we issued dividends of 60 yen per share, anincrease of 2.5 yen, as initially planned, in view of theachieved growth and estimated future profits. We also
aim for a further increase of 5 yen to 65 yen per share
in FY2024.3.
Going forward, we will implement an optimal
shareholder-return policy formulated based on acomprehensive evaluation of projected free cash flow,
progress in investments for business growth, businessperformance, and financial situation, taking into
account factors such as the accelerating

Enhancement of corporate value
through dialogue with capital markets
We consider dialogue with capital markets to be highly
important. Through such exchange, we obtain thecapital markets’ understanding and appropriate
evaluation of the Group’s strategies. For example,
with the above transition finance, we gained themarket’s support by carefully explaining ourmanagement plan, which resulted in the increased
number of our corporate bonds purchased byinvestors, including those with a strong interest in
climate change issues. In addition, investors’ frankopinions have helped us learn the capital markets’views on the Group’s circumstances, which gave us
different perspectives in deliberating management

Corporate Data

strategies. Recent investor relations activities have
served as opportunities for us to renew ourrecognition of the importance of addressing ESGrelated issues, including climate change, humancapital, and governance, as we received manyquestions about our ESG strategies besides opinions
about optimal capital composition, free cash flow, andshareholder returns. Through constructive dialogue
with capital markets, we aim to enhance our corporate
value from the financial front so that we will remain
worthy of long-term support from our stakeholders,
including investors and shareholders.

■ Dividend amounts and payout ratios

Note: For the payout ratio, time-lag profit/loss, including those in the power business since FY2021.3, only has been adjusted as a factor in short-term profit fluctuation.

(yen)

Dividends (left axis)

80

(%)

Payout ratio (right axis)

Dividend increases for four consecutive years scheduled
55.7

60
50.0

56.0
50.0

40

60.0

57.5

52.5

80
65.0
60

50.0
48.2

40
26.6*

30.4

20

30.1
20

13.6*
0

0
18.3

19.3

20.3

21.3

22.3

23.3

*The payout ratio fell below 30% in FY2021.3
and FY2022.3 due to short-term causes of
profit fluctuation besides the time-lag
profit/loss.

FY24.3 (FY)Forecas19

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Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Daigas Group’s Sustainability Promotion System and Management
In line with the expansion of the Daigas Group’s business, the range of stakeholders who are affected by our business, including customers, local communities, shareholders,investors, and employees, is also expanding.
We have developed our sustainability promotion system to acknowledge the impacts that our business has on society and the environment and to conduct our business activities
in consideration of those impacts. Through dialogue with internal and external stakeholders, we strive to identify precisely society’s expectations and demands for the Group.
Since 2014, we have been identifying important issues (materiality) while seeking the opinions of external experts, and have been promoting sustainability activities with the aims
of solving social issues and achieving sustainable economic growth.

Sustainability Promotion System and Governance
The Daigas Group has an ESG Committee, chaired by the Head of ESG Promotion(Representative Director and Vice President), who supervises the Group's sustainability
activities. This committee, whose members include the heads of related organizations,coordinates and promotes sustainability activities in a cross-organizational manner. The settingof important issues (materiality), indicators and targets for ESG management, the status ofachievement, and other matters are submitted to and deliberated at the ESG Council(Management Meeting). The Board of Directors is then consulted on important matters related
to sustainability activities and is responsible for decision-making and supervision.
The Group has also established and works closely with an Environment Subcommittee,
Social Contribution Subcommittee, and Compliance/Risk Management Subcommittee.

■ Sustainability Promotion System (As of April 1, 2023)
Board of Directors
Representative Director and President
ESG Council (Management Meeting)
ESG Committee
Chairman: Head of ESG Promotion

Environment Subcommittee

Social Contribution Subcommittee

Compliance / Risk Management Subcommittee

Identiﬁcation of Materiality

STEP 1

STEP 2

STEP 3

STEP 4In terms of global risks, changes
in the business environment,
and contributions to the SDGs
via business activities, we listed
the items of “impacts on society
and the environment” and“future financial impacts on theGroup” for the Daigas Group,
using the GRI Standards, etc. asa reference.

For “future financial impacts on
the group,” we considered what
we aim to be, issues, and risks
for FY2031.3 by eachorganization and business domain
within the Daigas Group. For“impacts on society and theenvironment,” we had deliberations
by taking into account theopinions of external experts.

We considered the impactsof each item in both
“impacts on society andthe environment” and“future financial impacts on
the group” in terms of risks
and opportunities, scoredthe degree of significance,
and identified materiality.

We have revised the Daigas Group
Charter of Business Conduct and otherdocuments based on the identified
materiality. The materiality as indicatorsof efforts to embody the Charter andcontribute to the realization of asustainable society, along with theMedium-Term Management Plan, waspresented to the Board of Directors anddecided with the approval of the Board.

20

Impacts on society and the environment

The Daigas Group newly identified important issues (materiality) for the formulation of the Medium-Term■ Impact Evaluation Chart
Management Plan 2023. This involved identifying items of “impacts on society and the environment”
Most importantand “future financial impacts on the Group” as medium- to long-term impacts based on changes in thebusiness environment and sustainability-related social trends. We considered the impact of each itemand obtained opinions on “impacts on society and the environment” from external experts.
The diagram on the right shows the mapping of the evaluation results. The section of the diagram
marked 1 is the section that is considered particularly important, and items that fall in this section are
2
identified as “materiality.”

Important

1

3

Future financial impacts on the Group

Most important

1

2

・Climate change
・Customer health andsafety・Stable supply of services
・Maintain and expand
customer base・Coexistence withlocal community
・Improvement ofcustomer satisfaction
and quality of services
・Supply chain management
・Compliance・Employee engagement
・Development of
employee skills
・Diversity and inclusion

・Occupational health and safety
・Development of regional economies(in emerging markets)
・Provision of information tocustomers and consumers
・Pollution prevention andchemical materials
・Tax
・Ethical actions
・Securing employment
・Freedom of association andcollective bargaining rights

3・Recycling-oriented economy(use of raw materials)
・Political donation
・Biodiversity
・Appropriate use of water

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Value Creation
Process
We aim to realize sustainable value
creation for stakeholders and society byleveraging our capitals with strengths andfollowing our values that have been longcherished since the company's foundation.

Business
environment Daigas Group's
ValuesP.6
Decarbonization,
climate change

Deregulated energy
markets

Daigas Group
Corporate
Principles
Daigas Group
Charter ofBusiness Conduct

Business Strategies

Value Creation Stories

Corporate Governance– To Be an Innovative Energy and Service Company

What the Daigas Group Aims To Be through Long-Term Management Vision That Continues to Be the First Choice of Customers –Creating Value for a Sustainable Future “CVS 2023”

2020

EvolveOur Corporate Group

P.32

Population decrease,declining birthrate,
aging population

New unexpectedchanges suchas COVID-19

Hopes andanxieties of
stakeholders

Co-createvalue toresolvesocial issues

P.45

Achieving a low carbon/
carbon neutral society– Carbon Neutral Vision –Enhancing businessportfolio management– Introduction of ROIC –Establishing lifestyles
and businesses
adjusted to the new normal

Promoting business
transformation
with DX

Enhancing resilience ofcustomers and society

Maximizing value foreach employee

Capitals with
Strengths INPUT

Realization of
Daigas Group
Corporate
Principles

Approx. 7%

Contribution to developing renewables
capacity on a global basis

5 GW

Percentage of renewables in our
power generation portfolio in Japan

Nearly 50%

Avoided emissions(Baseline: FY2017.3)

Realization ofa sustainable
society

Establishing Lifestyles andBusinesses Adjusted to the
New Normal
P.39

LBS Business

P.48

P.49

4 Energy Resources& International

5 UrbanDevelopment

2 Network

6 IT

3 Energy Solution

7 Materials

We create
four typesof value

Fulfilling theLong-Term
Management
Vision 2030

Creating
Value for
Customers

Achieving
the SDGs

Creating
Value forSociety

10 million tons

Domestic Energy Business International Energy Business

Investment for growth

ROIC

P.27)

P.32

Business units

1 LNG, Power &Engineering(List of KPIs

Achieving a Low-carbon/
Carbon-Neutral Society

Partnership

P.47

2050

Management Goals for FY2031.3

P.20

Co-create Valuefor a Sustainable Future

2030

OUTPUT/OUTCOME

Identification of Materiality

Sustainable growth
Digitization

Corporate Data

Number of customer accounts

10 million or more

Enhancing Resilience ofCustomers and Society

Achievinga carbonneutral society

Creating
Value for
Shareholders

P.42

Number of serious accidents

Investment for quality improvement

Continued zero
serious accident

Creating
Value for
Employees

Build a resilient energy supply facilities

P.23-25

Implementation of
measures for disasterprevention and aging pipes

Business portfolio
Foundations for Value Creation
Corporate Governance

P.65

Sustainability Promotion System and Management

21

P.20

Strengthening capitals

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Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Daigas Group’s Businesses
We aim to create value for a sustainable future and evolve as an aggregate of multiple businesses through expansion into new global fields. We will strive to achieve that by leveraging ourcapital with strengths and our expertise in the three core business segments: the Domestic Energy Business, International Energy Business, and Life & Business Solutions Business (LBS).
Energy resources
International Energy Business Business
unit& international

Courtesy of Freeport LNG Development, L.P.

Upstream Business

Mid- & Downstream
Business in North America

We are expanding upstream businessfields through project participation forgroup-wide steady profit growth.
We are striving to secure stableprofits with the expansion of output andprofits of the shale gas development
company, Sabine Oil & Gas
Corporation, in the United States andthrough the Gorgon LNG Project andIchthys LNG Project in Australia.

We are working to achieve
stable, flexible procurement of
LNG by securing LNG with nodestination restrictions throughthe procurement of LNG fromthe Freeport LNG Project in the
US and by diversifying our
supply sources and priceindices.

IPP in North America

Asia

We are increasing investment inrenewables, which are expected to
expand in the United States, as wellas natural gas-fired power plants,
to accelerate decarbonization.

We are expanding ourbusinesses in renewables and
LNG terminals, as well as
natural gas marketing andenergy services.

Business
unit

Domestic Energy Business

LNG, power &engineering

Network

LNG & Engineering

Network

In addition to ongoing stable gas
manufacturing, we are engaged in
the industrial gas business,engineering business and thedevelopment of technologies forthe realization of alow-carbon/carbon-neutral society.

We provide a safe, securesupply of gas through theconstruction, maintenance, andmanagement of gas distribution
facilities and the construction of
24-hour/365-day security
frameworks.

Energy solution

Residential Market
We provide energy, appliances,home renovations, lifestyleservices, etc. to match therequests of each individual
residential customer.

LNG Trading
By diversifying LNG suppliers,
price indexes and otherfactors, we procure LNG in astable manner and supply it tocustomers in Japan andabroad.

Electricity Transmission
Power Generation
Renewable Energy
We are promoting the power generation
business through ownership of power plants
and operation and maintenance businesses.
We are also proceeding with developing andholding power sources and expanding its
electric power procurement efforts, aiming
for the spread of renewable energies.

Urban

LBS business Business
unit
development

IT

Non-residential Market
For commercial and industrial
customers, we provide one-stop
solutions built by energy andvarious services.

Materials

We actively apply the technologies and know-how we have accumulated in
the energy business to develop businesses that differ from the energy
business, in order to diversify business risk.

22

We supply electricity through thepower grids operated by othercompanies such as Kansai
Transmission and Distribution,
Inc.

Urban development

IT

Materials

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Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Capitals with Strengths (Data as of March 31, 2023 and for the year ended March 31, 2023)
Financial capital

The Daigas Group maintains a strong and sound financial basesupported by disciplined financial strategies, to make sustainablebusiness growth possible.

Financial soundness

Cash flows from operating activities

33.5

D/E ratio:

billion yen

0.71

Manufactured capitalIntellectual capital

Human capitalSocial andrelationship capital

Natural capital

4.58

GW

Approx.

(Of which, renewable energy: 777 MW)

Carriers owned by the Group

9

ships

The Group possesses expertise in diverse technological development,
including technologies related to gas synthesis and catalysts, cultivated in theenergy business, and technologies related to the design and construction of
LNG receiving terminals, etc. We positioned intellectual property rights as animportant management resource and are actively working to secure and utilize
rights in conjunction with our business and technology development strategies.

Number of patents held:

We believe it is important to create disruptive innovation to improve corporate
value over the medium to long term, and that the driving force for suchinnovation is the blend of diverse individuals. We aim to achieve sustainablegrowth by increasing the engagement of each employee.

Number of employees:

The Group has opportunities for contact with stakeholders in a wide rangeof business fields. In addition to building relationships of mutual trust
through dialogue and cooperation with diverse stakeholders, we will further
refine the Group’s solutions and innovation and create value throughco-creation with stakeholders, and share our achievements with them.
Recognizing that natural gas is a finite resource, we are striving for its
efficient and effective use, while also pursuing the diversification of energy
sources for a stable supply of energy and to ensure security. Our aim is torealize S+3E* through the effective use of natural gas and renewable energy.

P.10

2,885

Approx.

1.70

millionpatents

21,017%

9.6

millionP.39

million Approx.

200

storesRenewable energy(LNG handled: 10,608 thousand tons)(Contribution to developing renewables
capacity on a global bases: 2,110 MW)
P.32

23

*Total number of contracts, including
city gas, electricity, LPG,
“ENE-FARM,” “Sumikata Services,”and utility agent contracts.

Service chain partners:

Natural gas resources*S+3E: Safety, Energy security, Economic efficiency, and Environment

billion yen

Four comprehensive indicators
Employeeremained at appropriate levels
attitude survey
P.54

10.02

5.00

km

Central Control Office*R&D expenses:

employees

Gas supply contracts:
Approx.

49.3*Operating 24 hours a day, 365 days a year to ensure stablesupply and safety

locations

Number of customer accounts*: Approx.
Low-voltage electricity
supply contracts:

63,600Gas manufacturing plant

2

Equity ratio:

Total pipeline length

Power generation capacity (in operation)

With the number of customer accounts exceeding 10 million,
the Group recognizes that our greatest mission is to ensure thestable and safe supply of energy, such as gas and electricity, toour customers. Our various facilities for energy supply are
indispensable capital of the Group.

times

Co-creation relationshipwith stakeholders

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Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Overseas Energy Infrastructure
In the International Energy Business, we strive to ensure the stable procurement, supply, and wider use of natural gas, a key transition fuel, and strengthen our efforts in businesses in thefields of renewable energy and new energy and businesses that aim to achieve carbon neutrality.
■ Investments in the International Energy Business (As of March 31, 2023)

Freeport LNG Terminal

CPV Fairview Energy
CenterCourtesy of Freeport LNG
Development, L.P.

Solar power plant in Maine developed bySummit Ridge Energy, LLC (SRE)
Courtesy of SRE

Osaka Gas UK
Summit Ridge Energy, LLC
Osaka Gas India

Osaka Gas
Energy Supply andTrading Pte. Ltd.

Osaka Gas Thailand

Courtesy of INPEX Corporation

Osaka Gas USA (Houston HQ)

Osaka Gas
Headquarters

Osaka Gas USA(New York Office)Sabine Oil & Gas
Corporation

Osaka Gas Singapore,
Manila Representative OfficeOsaka Gas Singapore

Ichthys LNG Project

Osaka Gas USA(Silicon Valley Office)Osaka Gas Indonesia

Major base
IPP
Pipeline
LNG terminal

Osaka Gas
Australia

Upstream project
Carbon neutrality-related business
Renewable energy project

Gorgon LNG Project

Courtesy of Chevron Corporation*Please refer to the

Sabine’s shale gas
drilling site

Other

Fact Book for investments in the International Energy Business.

24

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Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Domestic Energy Infrastructure
The Daigas Group systematically extends and expands the gas pipeline network for wider use and expansion of city gas and improved capacity for stable supply. In addition to the city
gas business centered on the Kansai region, we will work to expand the development and acquisition of renewable energy in all parts of Japan. We will also leverage the strengths that wehave built up to promote the construction of competitive infrastructure and the provision of services nationwide.
■ Gas Service Area of the Daigas Group (As of March 31, 2023)
Nabari Kintetsu Gas Co., Ltd.
Business Area

Toyooka Energy Co., Ltd.
Business Area

Shingu Gas Co., Ltd.
Business Area

■ Major Energy Infrastructure in Japan(As of March 31, 2023)

BIWAKO BLUE ENERGY Co., Ltd.
Business Area

Major renewable energy sources
Thermal power source
CHP (distributed power source)
Power source under planning or study
Major retail and other business

Shiga East Office
Shingu City

Nabari City

Otsu City

Toyooka City

Kinki Trunk LineShiga Line
1km

2km

Service Area: Nabari City,
Mie Prefecture

1kmService Area: Toyooka City,
Hyogo Prefecture

2kmService Area: Shingu City,
Wakayama Prefecture

Service Area: Otsu City,
Shiga Prefecture

Kyoto

Shiga Office
Kinki Trunk LineNo.3 West Line

Himeji Office

Hyogo

Takasago Line

HimejiOkayama Line

Shiga
Mie

Kinki Trunk Line-No.2 West Line

BIWAKO BLUE ENERGY Co., Ltd.
(Gas retail and gas/water maintenanceand services)

Kinki Trunk LineKeiji Line

Headquarters

To Okayama

Mie-ShigaLine

Keiji Office

Kinki Trunk LineNo.2 West Line(Gas, electricity, and services)

North Office6

Himeji LNG
Terminal
Kinki Trunk LineBay Line

Hyogo Office
Hyogo Office(Port Island)

Osaka

East Office8

Nara OfficeOsaka Office5

7

Kinki Trunk Line-No.2 East Line

South Office1

ENEARC Group(LPG, electricity, and services)

Green Power Fuel

(Procurement and sales of domestic
woody biomass fuel)Kinki Trunk Line-No.1 East Line

Senboku LNG Terminal II
Senboku LNG Terminal I

Nara

Total pipeline length
Osaka Gas Network Co., Ltd.:
Approx. 63,100 km
Daigas Group: Approx. 63,600 km
Wakayama Office2

4 3

Keihan Office
Kinki Trunk LineAmagasaki Line

Kinki Trunk LineHimeji Line

CD Energy Direct

Wakayama

LegendService area

Headquarters, officeHigh-pressure trunk line
(owned by Osaka Gas Network Co., Ltd.)
Major pipeline(owned by Osaka Gas Network Co., Ltd.)
High-pressure trunk line
(owned by another company)

Research institute25

LNG terminal
Gas holders

1 Sodegaura Biomass Power Plant(74.9 MW)
Commencement of operation date: TBD

5 Gobo Biomass Power Plant(50 MW)
Scheduled to commence operations in 2025

2 Aichi Tahara Biomass Power Plant(75 MW)
Scheduled to commence operations in 2024

6 Tokushima Tsuda Biomass Power Plantt(74.8 MW)
Scheduled to commence operations in 2024

3 Hirohata Biomass Power Plant(74.9 MW)
Scheduled to commence operations in 2023

7 Hyuga Biomass Power Plant(50 MW)
Scheduled to commence operations in 2024

4 Himeji Natural Gas Power Plant(1,245.2 MW)
Scheduled to commence operations in 2026

8 Goto City, Nagasaki Prefecture

Offshore Wind Power Plant(16.8 MW)
Scheduled to commence operations in 2024

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Long-Term Management Vision 2030 and Medium-Term Management Plan 2023
In 2017, the Daigas Group formulated a Long-Term Management Vision that looks toward FY2031.3, aiming to be “an innovative energy and service company that continues to be the first
choice of customers” and achieve carbon neutrality by 2050.
In our Medium-Term Management Plan 2023, “Creating Value for a Sustainable Future,” announced in 2021, we have adopted a backcasting approach from our long-term vision in
formulating our plan. Our aim is to create “value for a sustainable future” together with our stakeholders and continue to grow as a corporate group that creates value that contributes tosolving social issues, with the goal of achieving a sustainable society.

Medium-Term Management Plan 2023

P.28

「Creating Value for a Sustainable Future」

Long-Term Management Vision 2030
「Going Forward Beyond Borders」

2021〜2023

2030

2050

Growing the Group’s business

What we aim to be
To be an innovative energy andservice company that continues tobe the first choice of customers

Business group which creates value withstakeholders for solving social issues including
decarbonization.

Business development that goes beyond
customer expectations, business boundaries,
and corporate boundaries[Concept]

Creating Value for a Sustainable Future

Value for asustainable
futureCocreation

Society

Customers

Communities/Society

Employees/Partners

Shareholders/Investors

Development of energy marketer
business in a new era
Acceleration of development of theinternational energy business
Expansion of LBS business and developmentof new business fields
Investment for business growth andpromotion of M&As

Realization ofa sustainable
society
Fulfilling theLong-Term Management
Vision 2030
Achieving
the SDGs

Achieving a carbon
neutral society

Innovation that goes beyond customer expectations

Hopes and anxieties in rapidly changing times
Decarbonization,
climate change

Deregulated
energy markets

Digitization

Population decrease, declining
birthrate, aging population

New unexpected changes such as COVID-19

Management that wins the confidence of stakeholders(Management that takes corporate value improvementand ESG aspects into account)
Promotion of work style reform and human resources
development that contributes to productivity improvement

Solving social issues

26

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Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

IIn formulating the Medium-Term Management Plan 2023 (Plan 2023), in addition to introducing ROIC as a management indicator, we newly identified important aspects (materiality) for the acceleration of ESG
P.84 for the results of financial indicators. Please refer to
P.29-30 for the results of the key performance indicators related to materiality.
management and set each indicator. Please refer toMedium- to Long-term Management Indicators
FY2024.3
Targets

FY2031.3
Targets
Nearly 7%*2

Profitability indicators

ROIC*1

Nearly 5%

Financial soundness
indicators

Debt equity ratio

Nearly 0.7%

Shareholders’ equity ratio

Nearly 50%

Shareholder returns

Payout ratio

Striving to achievecarbon neutrality by 2050

30% or higher
500.0 billion yen*3

1,450.0 billion yen*4

Domestic Energy

174.0 billion yen*3

520.0 billion yen*4

International Energy

168.0 billion yen*3

550.0 billion yen*4

LBS

158.0 billion yen*3

380.0 billion yen*4

237.0 billion yen*3

550.0 billion yen*4

Investment for growth

Investment for quality improvement
Materiality key
performanceindicators (KPI)

Establishing lifestyles
and businesses adjusted
to the new normal

Number of customer accounts
Customer satisfaction rate

90%

Enhancing resilience ofcustomers and society

Number of serious accidents

Continued zero serious accident

Achieving a low carbon/
carbon neutral society

CO2 emissions of Daigas Group

Build resilient energy supply facilities

10 million or more

Implementation of measures for disaster prevention and aging pipes*2
27.02 million tons*5 (5 million tons reduction from FY2018.3)

Percentage of renewables in our power generation portfolio in Japan
Contribution to developing renewables capacity on a global basis

Nearly 50%*2
5.0 GW*2

2.5 GW

10.00 million tons*2

Avoided emissions (Baseline: FY2017.3)
Building foundations
that support therealization of value
for a sustainable future

FY2051.3
Targets

Number of our participation in local governments’ activities

14 cases

Number of joint efforts with local communities

170 times

Appropriate new supplier ratio
Number of serious violations of laws and regulations
Employee attitude survey

100%
Continued zero serious violation

CarbonNeutral

In light of the growing demands of society
for responses to climate change, theDaigas Group aims to become carbon
neutral by 2050. We plan to reach thegoal through decarbonization of our gas
and electricity by introducing methanation
technology, which uses hydrogengenerated by renewable energy, and byincreasing the share of renewables in our
power generation portfolio. Further, weannounced our “Carbon Neutral Vision” inJanuary 2021 to indicate our efforts toachieve this goal.
Under that Vision, we released“Energy Transition 2030 (ET2030),” which
outlines the overall path toward a lowcarbon / decarbonized energy transition,in March 2023. In ET2030, we declared
new CO2 emissions reduction targets for
FY2031.3 for the Group.

Maintained and improved employee engagement*2

Annual average hours of training per employee Implementation of human resource development and work environment improvement*2
Percentage of female officers/Percentage of female Directors*6

20% or more*2

Percentage of women in members newly promoted to middle management positions

30% or more*2

Percentage of women in new recruits for career-track positions

Continue 30% or more*2

Please refer toP.33-38
for details of“Energy Transition 2030 (ET2030).”*1 Please see
P.45 for an explanation on ROIC.
*2 Targets for FY2031.3 newly set in the Medium-Term Management Plan 2023
*3 FY2024.3 targets are cumulative for FY2022.3 - FY2024.3.
*4 FY2031.3 targets are cumulative for FY2018.3 - FY2031.3.
*5 Emissions throughout the domestic supply chain (scope 1, 2 & 3). Target newly set in March 2023
*6 Target for percentage of female Directors newly set in March 2023

27

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Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Medium-Term Management Plan 2023
Medium-Term Management Plan
2023 as a Momentum Builder

Under the Medium-Term Management Plan 2023, we strive to build up momentum for a further growth of our business as a corporategroup that provides solutions to achieving a sustainable society, focusing on creating value for a sustainable future with our stakeholders.

Key Strategies and Initiatives
Ⅱ. Evolve Our Corporate GroupⅠ. Co-create Value for a Sustainable Future

Building a robust business portfolio and strengthening
the management foundation to support theenhancement of our business portfolio management.

Pursuing the creation of value for solving social issues
alongside stakeholders.

Achieving a Low Carbon/Carbon Neutral Society

Enhancing Business Portfolio Management

As our contribution to achieving a low carbon/carbon neutral society, we strive to

We plan to evolve into a group of enterprises with a robust business portfolio by promoting

become carbon neutral by 2050 through decarbonization of our gas and electricity

each business unit’s autonomous growth and optimally allocating resources throughout

and through contribution to the reduction of CO2 emissions.

the Group. We strive to improve our business portfolio management and governance while
enhancing profit earning capabilities of each business unit by introducing ROIC.

Establishing Lifestyles and Businesses Adjusted to the New Normal

Promoting Business Transformation with DX

We globally provide services as optimal solutions to each customer’s adjustment

We aim to achieve corporate evolution through business reform and innovation by increasingof their lifestyles and businesses to the new normal.

both quality and speed in customer interaction, digitization, and reform of all operations.

Enhancing Resilience of Customers and Society
We aim to enhance energy resilience for customers and society by reinforcing gas

Maximizing Value for Each Employee

supply chain infrastructure for stable supply and expanding energy network

We intend to build an organization with diverse talent and ways of work wherecombined with distributed power sources.

employees can achieve personal growth through challenging tasks and feel asense of fulfillment through social issue resolution.

28

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Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Materiality and Daigas Group Charter of Business Conduct
In light of the process to identify materiality, the Daigas Group has set forth “co-create value for a sustainable future” in its Medium-Term Management Plan, defining the pursuit of thecreation of value for solving social issues alongside stakeholders as one of its key strategies.
Through unified management that integrates corporate principles, the Medium-Term Management Plan, materiality, and key performance indicators (KPIs), we will work to accelerate
ESG management.
Charter of BusinessConduct

Important issues(Materiality)
Maintain and expand customer
base
Improvement of customer
satisfaction and quality ofservices

Ⅰ

Creating value
for customers

Value for asustainable
futureEstablishing
lifestyles andbusinesses
adjusted to the
new normal

Customer health and safety
GRI Standards:
Enhancingresilience ofcustomers andsociety

416-1

Stable supply of services

Fiscal year to FY2023.3 results
be achieved

Initiatives to create value
for a sustainable future

Indicators

Goals

Maintain and expand
customer base

Number of customer
accounts

10 million or more

2031.3

Enhance customer
relationshipmanagement

Customer satisfaction
rate

90%

2024.3

Maintain safety andquality levels

Number of serious
accidents

Continued zero
serious accidents

Strengthen resilience ofenergy supply

Contribution
to SDGs

10.02 million
P.39

90%
P.40

Implementation of
measures fordisaster prevention
and aging pipes

Build resilient energy
supply facilities

2031.3

Zero serious
accidents
P.42

2031.3

Ratio of strengthening ofearthquake resistance:
about 89%
Number of supply area
subdivisions: 713 blocks
P.42

Implement carbonneutral measures

Ⅱ

Contributing to
the sustainabilityof the environmentand society

Climate change
GRI Standards:
302-1

305-5

Achieving a
low-carbon/
carbon-neutral
society

Provide clean energy
and expand renewableenergy value chain

Promote advanced utilizationof natural gas andenvironmental products

Ⅲ

Engaging withand contributing
to society

Coexistence with local
community
GRI Standards:
413-1

Building
foundations
that support therealization of value
for a sustainable
futurePromote communication
with local communities

CO² emissions of
Daigas GroupNet zero emissions

2051.3

P.32

27.02 million tons*¹
5 million tons reduction
from FY2018.3

2031.3

Nearly 50%

2031.3

5 GW

2031.3

2.5 GW

2024.3

P.32

Avoided emissions(Baseline: FY2017.3)

10 million tons

2031.33.86 million tons

Number of our participation in
local governments’ activities(i.e. community development
planning)

14 cases

2024.338 cases

Number of joint efforts
with local communities

170 times

Percentage of renewables
in our power generation
portfolio in Japan*²
Contribution to developing
renewables capacity on a
global basis*²()

25.05 million tons*¹
P.32

13.0%

P.32

2.11 GW

P.32

P.56

*1 Emission throughout the domestic supply chain (Scope 1, 2 & 3) (New targets for FY2031.3 set in Energy Transition 2030)

2925.98 million tons

2024.3326 times

P.56*2 Including power sources under the feed-in tariff (FIT) system.
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Table of Contents Getting to Know the Daigas Group

Charter of BusinessConduct

Ⅳ

Respecting
human rights

Business Strategies

Important issues(Materiality)

Value for asustainable
futureSupply chain management

Initiatives to create value
for a sustainable future

Build a responsible
supply chain

GRI Standards:
308-1

Value Creation Stories

414-1

Corporate GovernanceIndicators

Appropriate new
supplier ratio

Goals

100%

Corporate Data

Fiscal year tobe achieved FY2023.3 results

2024.3Contribution
to SDGs

100%
P.57

Ⅴ

Complying withlaws andregulations

Compliance
GRI Standards:
307-1
418-1

Ⅵ

Number of serious
violations of laws andregulations

Continued zero
serious violation

2024.3

Zero serious
violations of laws
and regulations

2031.3

Four comprehensive
indicators remained at
appropriate levels

419-1

Employee engagement

Providing a work
environment that
supports
employees’
personal growth

Promote the Group’s
compliance

Development of employee skills

Building
foundations
that support therealization ofvalue fora sustainable
futureP.56

Create a workplace
where employees canfeel a sense offulfillment

GRI Standards:
404-1

Diversity and inclusion
GRI Standards:

Promote diversity andinclusion

405-1

Attitude survey(Loyalty Score)

Maintained andimproved employee
engagement

Annual average hoursof training per
employee

Implementation ofhuman resource
development andwork environment
improvement① Percentage of female
executives/Percentage
of female Directors*²② Percentage of women inmembers newly promoted to
middle management positions③ Percentage of women in new
recruits for career-track
positions① 20% or morefor eachcategory② 30% or more
③ Continue 30%
or moreP.54

2031.326.3 hours/person
Hours of e-Learning
courses were taken*¹
5.83 hours/person
P.54

2031.3① 13.3%/10.0%② 14.3%③ 28.1%P.54*1 Includes some temporary employees and part-time workers. Covers e-learning programs on safety, information security, environment, digital transformation, etc. *2 Target for percentage of female Directors newly set in March 2023

30

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Business Strategies

Value Creation Stories

Value Creation Stories

Corporate GovernanceCorporate Data

Ⅰ. Co-create Value for a Sustainable Future
Achieving a Low-Carbon/Carbon-Neutral Society
Energy Transition 2030
Establishing Lifestyles and Businesses Adjusted to the New Normal
Enhancing Resilience of Customers and Society
Ⅱ. Evolve Our Corporate Group
Enhancing Business Portfolio Management
Domestic Energy Business
International Energy BusinessLife & Business Solutions Business
Promoting Business Transformation with DX
Maximizing Value for Each Employee
Building Foundations that Support the Realization of Value for a Sustainable Future
Disclosure based on the TCFD Recommendations
Environmental Impact throughout the Daigas Group Value Chain
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Value Creation Stories

Corporate GovernanceCorporate Data

Ⅰ. Co-create Value for a Sustainable Future

Achieving a Low-Carbon/Carbon-Neutral Society

Materiality

Climate change

Indicators and FY2023.3 Results

25.98 million tons*3
25.05 million tons*4▲

CO₂ emissions across the Group
Recognition of External Environment
As the trend toward decarbonization accelerates even further, global economic stagnation and growing volatility in energy markets are
becoming more apparent. From the perspective of S+3E,*1 the basic policy of the Japanese government’s energy policy, we believe in
the importance of achieving both the stable supply and securing security of energy and carbon neutralization of energy.

Review of FY2023.3 and Future Strategy■ Carbon Neutral Vision and Energy Transition 2030
CarbonNeutralCarbon Neutral Vision (announced in January 2021)
Daigas Group’s approaches to decarbonization

Achieving a carbon-neutral society●

Overall picture of Daigas Group's energy transition●

Daigas Group's initiatives and solutions for a lower carbon society in 2030
2030

FY2031.3
Targets

5 GW
5 million tons

Contribution to developing renewables
capacity on a global basis
Reduction of Daigas GroupCO2 emissions

Percentage of renewables in our power
generation portfolio in Japan
Nearly(relative to FY2018.3)

e-methane

50%

2050
Avoidedemissions

10 million tons
(baseline: FY2017.3)

1% introduction

Renewables development
contribution on a global basis

2.11 GWIn FY2023.3, we promoted the more widespread use ofrenewable energy sources with various initiatives such as thejoint development of solar power projects in Japan andoverseas and the launch of commercial operation of new windfarms in Japan. In doing so, we have steadily increased ourrenewables development contribution toward our FY2024.3
target of 2.50 GW.

Avoided emissions*5 (baseline: FY2017.3)

3.86 million tons

We have taken several initiatives, which included
cryogenic power generation at our LNG terminals, theintroduction of renewable energy sources in Japan andhigh-efficiency thermal power generation both in Japanand overseas, the introduction of fuel cells and gaspowered air conditioning and high-efficiency hot-water
heaters at customer sites, and conversion to the use ofnatural gas as a fuel in Japan and overseas.
*5 Please refer to

32

13.0%

▲

2050

Energy Transition 2030 (announced in March 2023)

Percentage of renewables in our
power generation portfolio in Japan▲*1 S+3E: Safety, Energy security, Economic efficiency, and Environment*2 Methanation is a technology that synthesizes methane, the main component of city gas, from hydrogen and CO₂. “e-methane” refers to methane
synthesized by methanation.

*3 Please refer toP.62 for details of greenhouse gas (GHG) emissions
from the Daigas Group’s value chain (Scope 1, 2 & 3).
*4 Emissions throughout the domestic supply chain (Scope 1, 2 & 3) (Newtargets for FY2031.3 set in ET2030)▲

In FY2023.3, under the Carbon Neutral Vision announced in 2021, the Daigas Group strengthened its efforts to build a supply chain for
e-methane*2 both in Japan and overseas, along with advancing the development of technologies and renewable energy, for the full-scale
introduction of methanation*2 technologies in FY2031.3. With the recognition of the external environment as described above, wereleased Energy Transition 2030 (ET2030) in March 2023 that outlines the overall picture of the Group’s transition to low-carbon andcarbon-neutral energy.

In ET2030, we declared CO₂ emissions reduction targets for
FY2031.3 for the Daigas Group. To achieve these targets, we will
promote initiatives aimed at net zero emissions from fleets, etc.

P.35 for our approach to avoided emissions.

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Achieving a low-carbon/carbon-neutral society

Energy Transition 2030
Under Energy Transition 2030 (ET2030), the Daigas Group outlines the overall picture of its transition to low-carbon and carbon-neutralenergy.
In order to achieve carbon neutrality, a steady transition to low-carbon energy is crucial, as a great deal of time and social cost will
be required for technological innovation and the building of new supply chains. It is also important to choose optimal energies andsupply methods to suit the customer's energy use characteristics, such as the balance of electricity and heat use and their location.
Focusing on the transition to low-carbon energy by 2030 through a shift from coal and oil to natural gas, and the seamless transition tocarbon-neutral energy with the introduction of e-methane and biogas in the future, we will continue to pursue the decarbonization of
power sources in ways that meet customer needs. This will include the use of hydrogen and ammonia, the decarbonisation of powersources, such as renewable energy generation and zero-emission thermal power plants. The following pages present the Daigas
Group’s roadmap for CO2 reduction, along with the background and approach to our major initiatives for decarbonization through① Low carbon transition with the advanced utilization of natural gas, ② Initiatives for the social implementation of e-methane,③ Initiatives in the electricity business to achieve carbon neutrality, and ④ Initiatives concerning the capture, utilization, and storage of CO2.

Present
Daigas Group's energy
conversion① Low carbon transition
with the advanced
utilization of natural gas

Shift to natural gas

Overallpicture oftransition to
low-carbon/
carbon-neutralenergy② Initiatives for the social
implementationof e-methane

Decarbonize
gaseous energy③ Initiatives in theelectricity business toachieve carbon neutrality

2030
Transition to a low carbon society

Coal and oil

Fuel conversion to natural gas

Coal in coastal areas where ammonia can be used

2050
Carbon neutrality with innovation
Transition to e-methane and biogas
Study on ammonia and biomass utilization② eメタンのサプライチェーン構築

Natural gas advanced utilization/CN-LNG*1 utilization

Transition to e-methane and biogas

New utilization near hydrogen power plants in coastal areas

Study on hydrogen utilization

New utilization near ammonia power plants in coastal areas

Study on ammonia utilization

Renewables (PV, wind, biomass, geothermal, etc.)

Gradual expansion
Transition to e-methane and biomass

Decarbonize
power sources④ Initiatives concerning
the capture, utilization,and storage of CO²

CCUS

Natural gas-fired power generation

Study on hydrogen utilization(mixed combustion→single combustion)

Hard-to-abate industries, etc.

Expansion of CCUS*2 (direct CO² reduction)*1 CN-LNG: Carbon Neutral LNG, which is considered to produce no CO2 on a global basis when greenhouse gases emitted in the supply chain from natural gas production to combustion are offset by CO2 absorbed and reduced in a separate process from the value chain.
*2 CCUS: Carbon dioxide Capture, Utilization and Storage

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Value Creation Stories

Corporate GovernanceCorporate Data

Energy Transition 2030

Daigas Group’s CO ₂ Emissions Reduction Roadmap
In Energy Transition 2030, we have declared targets for 2030 and 2050 regarding CO₂ emissions in our domestic supply chain and avoided emissions in the whole society,and presented a CO₂ emissions reduction roadmap. Through such measures as the 1% introduction of e-methane into existing infrastructure, we will aim to reduce the CO₂
emissions of the Daigas Group’s supply chain in Japan by 5 million tons, and 10 million tons of avoided emissions in society as a whole in FY2031.3 through the Group’s
activities. After the introduction of e-methane in FY2031.3, we will pursue decarbonization through its wider use.

Emissions
reduction

CO2 emissions from thedomestic supply chain(Scope1・2・3)

32

-0.6
Avoided emissions
in the whole society

27

Further spreadof e-methane
Use ofhydrogen/ammonia-32

FY2051.3

FY2031.3

Fuelconversion(million tons)-5

Energyconservation
Introductionof e-methane

FY2018.3

Introduction of ICP

Emissions
reduction-10

5 GW of renewables development〜50 % renewable energy in our portfolio in Japan
1% e-methane in gas grid

Joint investment in forest fund establishedby Sumitomo Forestry Group

Further avoided
emissions(million tons)

Decarbonize powerLow-carbon/carbon neutral power (renewables, e-methane, hydrogen, and CCUS)

Decarbonize gas

Low carbon transition with natural gas

Reduce in-houseemissions
Investmentvaluation

Osaka Gas introduced the concept of“Environmental Management Efficiency” in 2003,
which is used to quantify the environmental
impact of business activities by converting
environmental impacts per volume of gas
produced into monetary values.
In addition, from FY2022.3, we haveadopted internal carbon pricing (ICP) to identify
the carbon impact of our invested projects.
From FY2024.3, we also reference ICP
when making decisions on new investments inbusiness fields that have a large carbon impact.

Carbon neutrality with e-methaneNet zero in our office buildings and vehicles
Application of internal carbon pricing (ICP)34

In July 2023, Osaka Gas announced its joint investment,along with nine other Japanese companies, in the
Eastwood Climate Smart Forestry Fund I (“the Fund”)
established by the Sumitomo Forestry Group.
The pooled capital amounts to approximately¥60.0 billion and will be invested over 15 years. By 2027,
the pooled capital will have been invested in theacquisition and management of 130 thousand hectaresof forest, primarily in North America. With a target ofsequestering an additional 1 million tons of carbon
dioxide a year, the Fund will promote the production andtrading of high-integrity carbon credits, which willcontribute to the realization of a decarbonized society.
The Fund will deliver global climate benefits bysupporting responsible forest management at a spatial
and financial scale beyond that which individualcompanies could achieve on their own.

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Energy Transition 2030

❶ Low Carbon Transition with the Advanced Utilization of Natural Gas
The Daigas Group is proceeding with fuel conversion from coal and oil, etc. to natural gas, which emits less CO₂, and with the introduction of energy-saving
technologies (cogeneration, etc.). The Group is thus contributing to CO₂ reduction in society as a whole. We are undertaking the fuel conversion not only in
the Kansai area, but throughout other parts of Japan and in the Asian region, and will expand this activity even further going forward.

Contribution to low carbon transition with the introduction of gas cogeneration systems
The Group is contributing to low carbon transition through the introduction of gas cogeneration systems to customers. Cogeneration systems generate power with city gas
and use the waste heat generated for other applications such as cooling and heating, hot water supply, and steam, thus realizing high overall energy efficiency of 70-90%.
Since the initial introduction in 1982, we have installed systems totaling 1.50 GW. In March 2022, we developed a new and improved gas cogeneration system that offers
even higher power generation efficiency. This new system will also contribute to power security because gas can be used to generate power during blackout.

Approach to Avoided Emissions in Society
The following sums up our approach to avoided emissions in society. For example, we can reduce approximately
45% of CO₂ emissions with the switch from coal to natural gas. However, if we have supplied the natural gas,
our gas sales volumes increase, which means an increase in Scope 3 CO₂ emissions according to the GHG
Protocol*1 that is commonly used by companies to calculate their CO₂ emissions. For this reason, in thetransition phase until 2030, our CO₂ emissions will increase by promoting fuel conversion from oil and coal tonatural gas. On the other hand, by switching to natural gas, CO₂ emissions per the same calorific value will be
reduced, which means that we can contribute to CO₂ emissions reduction in the whole society. However, under
the current GHG Protocol, there is no way of evaluating the CO₂ reduction effect on society as a whole throughcontributions to other parties.
To steadily promote the transition to low-carbon/decarbonization together with our many customers, we
believe that it is important to understand our progress with an indicator that shows the effect of CO₂ emissions
reduction in the whole society (avoided emissions) and to obtain the understanding of our stakeholders.
■ CO2 emissions per same calorific value*2

Coal

Oil

100

75

Avoidedemissions

Naturalgas

55

Reduced by 45%
through conversion to natural gas■ Avoided emissions calculation example
Customer’s CO2 emissions

100+

Before conversion

Natural gas

55

After conversion
Same
55

1,055

Osaka Gas' CO2 emissions
Scope 3 CO2 emissions increase
due to gas sales growth

-45

Coal

Reduced by switchingfrom coal to natural gas

1,000
+
100

(CO2 emitted from combustion by customer)■ What is “avoided emissions”?
Quantified CO2 emissions reduction through products
and services provided to others

Before conversion

After conversion

1,100

1,055
-45

Society-wide CO2 emissions
Calculated based on the “Guidelines for Quantifying GHG emission
reductions of goods or services through Global Value Chain”(Ministry of Economy, Trade and Industry, March 2018)

Indicator of society-wide avoided emissions throughcontribution to other companies' emissions reduction

Afterconversion

Beforeconversion

1,055 − 1,100 ＝

Avoidedemissions-45

Osaka Gas’s Scope 3 emissions increase,but society-wide CO2 emissions decrease

Before conversion

After conversion*1 International standard for calculating and reporting GHG emissions*2 Prepared based on the "Ordinance Concerning Calculation of GHG Emissions from Business Activities of Specified Emitters"
issued by METI and the Ministry of the Environment

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Energy Transition 2030

❷ Initiatives for the Social Implementation of e-methane — Efforts for Transition toward 2030 —The Daigas Group believes that e-methane, which is synthesized from hydrogen produced with renewable energy and CO₂, will be the key to realizing the carbon neutralizationof city gas. The value offered by e-methane includes reducing additional social costs. The Group is implementing various initiatives*1 toward the social implementation of
e-methane.
*1 Please see the next page for details of our initiatives toward the social implementation of e-methane.

Supply Chain and Cost Benefits of the Social Implementation of e-methane“e-methane” is considered as a carbon-neutral energy because it is produced by recycling CO₂ emitted into the atmosphere and synthesizing it with hydrogen, and does notincrease atmospheric CO₂ even when combusted.
Furthermore, since "e-methane" has almost the same composition as city gas, existing city gas infrastructure and customers' combustion equipment can be used without
modification, enabling seamless decarbonization from the transition period. This has the advantage of reducing social implementation costs.
■ e-methane Supply Chain

Four Value Propositions of e-methane

Methanation technologies
New infrastructure

Already established in society as existing LNG/gas infrastructure
City gas
consumers

Hydrogenutilization
Renewable energy

Green hydrogen

Methanation facility

H2
CH4
CO 2

e-methane

Carbon dioxide*2■ Four value propositions
Value proposition ①

Domestic
production

H2 O
Water

Import"e-methane" offers four value propositions that contribute to customers
and society. Based on these values, the Group aims to introduce"e-methane" accounting for 1% of the Group’s gas sales as of FY2031.3.

Decarbonized heat demandGas grid

Value proposition ②(existing infrastructure)

Lower social costs

Decarbonizing heat demand, which accounts for
60% of the energy including high-temperature
heat that cannot be generated by electricity

Significantly reducing social costs by using theexisting gas infrastructure and customers' equipment
without replacement

Methane synthesis fromgreen hydrogen and CO2
Trucks and coastal vessels

Thermal power plants(dispatchable)

Carbon recycling (CCU*3) = No increase in atmospheric CO2*2 Biogenic CO₂ and possibly CO₂ derived from DAC (Direct Air Capture: a technology used to capture and remove CO₂ directly fromthe atmosphere) might be utilized in the future*3 Carbon dioxide Capture and Utilization

36

Value proposition ③

Enhanced energy security

Value proposition ④

Carbon neutral Asia

Mitigating geopolitical risks through diversified
sources of e-methane produced in various locationsin Japan and overseas

Exporting competitive Japanese industries andcontributing to environment conservation andeconomic growth in Asia and Japan

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Energy Transition 2030

❷ Initiatives for the Social Implementation of e-methane — Efforts for Transition toward 2030 —e-methane Supply Chain Development in Japan and Overseas
For the full-scale introduction of e-methane in 2030, the Daigas Group will consider establishing diverse methanation technologies, developing renewable energy sources, andbuilding a supply chain both in Japan and overseas, including the procurement of hydrogen and CO₂ in collaboration with customers.
We will study the introduction of e-methane primarily in the city gas supply area in the Kansai region and comprehensively verify necessary elemental technologies and feasibility of the
supply chain, in our aim to establish the optimal supply model for e-methane. In addition to supply chain development in Japan, we view the building of a supply chain overseas as anotherpromising option for the introduction of e-methane. In collaboration with business operators both in Japan and overseas, we are conducting several feasibility studies and basic design work
regarding the building of such a global supply chain. For stable procurement in the future, we are identifying locations suitable for e-methane production, focusing our consideration on North
America, South America, Australia, the Middle East, and Southeast Asia, where existing natural gas and LNG facilities can be used. We will also promote more widespread use of e-methanein Asia as a new location of use.
■ e-methane Supply Chain Development

Methanation technology
development

Supply Chain Development Overseas❶ Sabatier methanation (existing technology)
Scaled up and implemented in society at an
early stage*1❷ Biomethanation*2 (innovative technology)
Produce and use energy locally for local
consumption❸ SOEC methanation*3 (Innovative technology)
Reduce cost by enhancing energy efficiency

The United StatesA joint study is underway on the production of e-methane using biomass-derived CO2 from abioethanol plant and blue hydrogen derived from natural gas through the reforming process.
(Main operators: Osaka Gas USA Corporation, Tallgrass MLP Operations, LLC, Green Plains Inc.)A joint study is underway on the production of e-methane near the Cameron LNG facility.
(Main operator: Osaka Gas, Tokyo Gas Co., Ltd., Toho Gas Co., Ltd., Mitsubishi Corporation)

Southeast Asia
 A joint study is underway in Malaysia on the production of
e-methane that is not affected by renewable electricity prices,using methanation by converting biomass, such as unutilized
forest resources, into gas.
(Main operator: Osaka Gas, IHI Corporation, PETRONAS Global
Technical Solutions Sdn. Bhd.)

Australia
 A joint study is underway on the production of e-methane using CO2 captured from exhaustgas in industrial areas and natural gas liquefaction plants and green hydrogen generated
through water electrolysis powered by renewable energy.
(Main operator: Osaka Gas Australia Pty. Ltd., Santos Ltd)South America
 A joint study is underway at PERU LNG’s plant on the
production of e-methane using green hydrogen produced
through water electrolysis using renewable energy and CO2.
(Main operator: Osaka Gas, Marubeni Corporation, PERU LNG S.R.L.)■ Roadmap for Social Implementation of Methanation Technology

2020
Timeline

2030

2040

1

Sabatier

400 m3/h

10,000 m3/h

▼ Commercialization (1% in gas grid)2

BioTech. dev.

Demo

▼ Commercialization

3

SOEC

Tech. dev. (0.1 ⇒ 400m3/h)

Acceleration

Large-scale demo (10,000 - 60,000 m3/h)

2050

e-methane commercialization
net zero emissions▼ Commercialization*1 CO₂ conversion by a catalytic reaction with hydrogen derived from renewable energy, etc. to synthesize methane.
*2 Technology that uses biological reactions to synthesize methane from CO₂ and hydrogen*3 Use of SOEC equipment to electrolyze water and CO₂ into hydrogen and carbon monoxide using renewable energy, etc., and then synthesize methane by catalytic reaction of the hydrogen and carbon monoxide.

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Energy Transition 2030

❸ Carbon Neutral Initiatives in the Electricity Business❹ Initiatives Concerning CO₂ Capture, Utilization, and Storage— Efforts for Energy Transition toward 2030 —The Daigas Group aims at contributing to a circular society that reduces customers' CO₂
emissions and environmental burdens by reusing emitted CO₂ in the atmosphere (CCU*2 )and supplying e-methane produced by methanation. We are also pursuing initiatives suchas joint studies in Japan and overseas on establishing a CO₂ value chain and injecting andstoring surplus CO₂ deep underground by CCS.*3

Low-Carbon/Carbon-Neutral Transition of Power Sources
We are promoting the development of a wide range of renewable energy sources such as
wind, solar, and biomass together with various partners nationwide, aiming for 5 GW ofrenewable energy development contribution,*1 one of our targets for FY2031.3.
We are also working on initiatives for storage batteries and VPP utilization, as well as
the low-carbon/carbon-neutral transition of thermal power plants needed as dispatchable
sources.

*2 CCU: Carbon dioxide Capture and Utilization■ Conceptual Diagram of CO₂ Value Chain
Establishment of CO 2 management system

Domestic*1 Including power sources under the feed-in tariff (FIT) system.

H2
CCS

A VPP is a system that uses IoT-based energy management technology tocontrol distributed energy resources remotely and in an integrated manner,
thereby adjusting the supply-demand balance of electricity like a single virtual
power plant.
The Daigas Group is pursuing initiatives to contribute to gird stabilization
in a society with the mass introduction of renewable energy. In June 2022, welaunched a verification project to build a VPP using our residential fuel cell,
ENE-FARM.

City gas user

Ship

(Bunker fuel utilization)

As of March 31, 2023

FY2024.3

RenewableenergySurplus CO2

CO2

CO 2 value chain

e-methane production
Cooperation with
gas-producing countries

Factory(Coal and oil utilization)

e-methane
supplyCH 4Conversion tonatural gas→ e-methane
utilization

e-methane production

H2
Green hydrogen

Cooperation with local
governments and industry

e-methane shipping

e-methanee-methane utilization
Expanded use in Asia

L N G

e-methane supply*4 H-to-A industries: Industries. where CO₂ emissions reduction is difficult (hard-to-abate)

5 GW

Initiatives for CO₂ Value Chain Development

Globally

To develop a CO₂ value chain, Daigas Group commenced a joint study on the capture,transport, utilization, and storage of CO₂ emitted from domestic plants and factories in hardto-abate industries, such as steel, cement, and chemicals.

Development
and ownership

Development
and ownership

Overseas

Surplus
CO2CCS

CO2 shipping

CO2

GloballyPowerpurchase(Steel, cement, etc.)GreenhydrogenRenewable
Energy2.5 GWJapan

H-to-A industry

*4

CO 2

■ Major initiatives to develop and spread renewable energy sources

2.11 GW

Overseas

Energy users, CO2 emitters

Energy conservation and grid stabilization with VPPJapan● Commencement of commercial operation of Noheji Mutsu Bay
Wind Farm and Yokohama Town Wind Power Plant● Investment in mega solar power plants (three solar power
plants in Japan) owned by Sonnedix Power Holdings Ltd.
Overseas● Participation in distributed solar power project inIllinois, United States● Joint development with Oriden LLC of a utility-scalesolar project in the United States*3 CCS: Carbon dioxide Capture and Storage

Powerpurchase

A joint study on CO₂ value
chain development

A joint study on CCS value
chain development with Shell

Osaka Gas and Mitsubishi Heavy
Industries, Ltd. (MHI) have enteredinto an agreement to conduct a
feasibility study on the developmentof an efficient CO₂ value chain,leveraging Osaka Gas’s expertise ine-methane production and CO₂
storage and MHI’s expertise in CO₂
capture, vessel transport of liquefied
CO₂, and CO₂ management.

Osaka Gas and Shell Singapore
Pte. Ltd. have commenced a joint
study on the development of a CCS
v alue chain, in which CO₂ isc a p t u re d f ro m e m i s s i o n s b yindustrial facilities in Japan andinjected into underground storage
overseas.

A joint study on the capture
and utilization of CO₂
emissions from the Senboku
Industrial Complex
Osaka Gas and Mitsui Chemicals,Inc. have commenced a joint study
on a project to capture and utilize
CO₂ emitted from the Senboku
Industrial Complex.

FY2031.3

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Value Creation Stories

Corporate GovernanceCorporate Data

Ⅰ. Co-create Value for a Sustainable Future

Establishing Lifestyles and Businesses Adjusted to
the New Normal

Materiality

Maintain and expand customer base/
Improvement of customer satisfaction
and quality of services

Indicators and FY2023.3 Results

10.02 million▲

Number of customer accounts
Recognition of External Environment
Japan is facing a declining population and other social structure changes. In addition, there have been dramatic changes in the premises
for business activities, such as the advancement of technological innovation and digitalization and diversification of values. In times ofdramatic changes and uncertainty, we are expected to embrace changes of the times and continue creating and providing advanced anddiverse value that meets customers’ needs.

Review of FY2023.3 and Future Strategy
To meet the diverse needs of our customers, we launched new services, such as a life service platform, fixed-line telecommunications,and home renovation. We also deepened initiatives in the Life & Business Solutions (LBS) Business.
We will continue to develop the LBS Business, as well as offer new services for residential customers that are suited to diverse
lifestyles and advanced total solutions for commercial and industrial customers that go beyond the framework of energy. We thus aim toachieve sustainable growth by contributing to the advancement of lifestyles and businesses as a company that continues to be the first
choice of customers.

Provide solutions globally
Achieve 10 million customer accounts

LifestyleBusiness

Offer optimal customer experiencefor each customer

Provide a work environment that
increases business efficiency● Home services and energy that meet

● A comfortable work environment with services

increased and diversified customers’
demands at homeHigh value-added solutions

Digitizationof air conditioning and ventilation● Optimal control and operational efficiency withdigital technology and data utilization

Urban development

×

Environmental solutions

The Daigas Group’s business started more than 100 years
ago from lighting (gas lamps). We have been expanding
the applications of gas ever since to kitchens, hot-watersupply, heating, and power generation, responding tovarious requests from customers. In addition, we havebroadened the scope of our business to include industrial
gas, real estate, telecommunications, new materials, andlife-related fields, based on the relationships with a large
number of customers. The Group’s corporate purpose is
to strive to make a multitude of customers’ businesses
and lifestyles better.
Setting the number of customer accounts, which
represents contracts for gas and power supply, safety andwarranty services, etc., as the indicator, we are working toestablish their lifestyles and businesses adjusted to the
new normal.
In FY2023.3, we launched a new electricity rate andservice “Support Plans” and expanded services offered byour life service platform “Sumai LINK,” thereby working toroll out optimal services and solutions for each customer.
In the International Energy Business, we increased
the number of new contracts through gas supply contracts,
energy service contracts, rooftop solar power generation
projects, and other initiatives.
As a result of developing these new services andtaking other measures, the number of customer accounts
reached 10.02 million, topping the 10 million target for2030 set in the Long-Term Management Vision.

Innovation

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Customer satisfaction rate

Business Strategies

For our customers to be able to use our products andservices more safely and comfortably, the Daigas Group
strives to ensure security and improve service quality. We
also consider it important to appropriately provide
information on safe use.
Since FY1989.3, Osaka Gas has conducted
Customer Satisfaction Survey to improve customer
satisfaction. The survey covers five areas of operationthat have direct interaction with customers (opening gas
valves, appliance repairs, appliance sales with installation,
periodic safety inspections [gas facility surveys], andtelephone support [customer center]). After eachinteraction, customers evaluate their levels of satisfactionin the survey, and the results are aggregated. Overallsatisfaction represents the percentage of evaluations in
the highest two ranks of a six-rank scale regarding
customer satisfaction levels.
To achieve higher service standards, we havecreated a shared manual for each area of operation. We
also raise awareness through training for managers andemployees in charge.
We received 33,400 survey responses in FY2023.3,
and the overall satisfaction level for the five areas ofoperation stood at 90%. This was lower than the result
for the previous fiscal year, which was 92%. We consider
that the prolonged delay in the delivery of some products
to customers, mainly due to the spread of COVID-19 andthe global supply shortage of electronic components,
affected the satisfaction level. In addition to improving the
supply, we strived to improve the touch point operation
based on customer opinions. We will make
improvements to collect feedback from a wider range ofcustomers and increase response rates.
Based on customer feedback, we will continue tooffer services from the customer’s perspective.

Value Creation Stories

Corporate GovernanceCorporate Data

Key Initiatives

Launch of Home Renovation and Other New Services
The Daigas Group rolls out a variety of services, with the aim of offering optimal customer experience for each customer.
Since 2022, we have expanded services offered by our life service platform “Sumai LINK” and launched “Support Plans”
and other services and rates that are attentive to customers’ lifestyles and business styles. In addition, Osaka Gas
subsidiaries Osaka Gas Marketing Co., Ltd. and Global Base Corporation launched a joint business “MyRENO,*” which
satisfies a wide range of requests from customers, from property search targeting pre-owned collective housing torenovation. “MyRENO” materializes ideal renovation for customers by offering a one-stop service that covers property
search, financial planning, design, and construction.
In FY2024.3, we also plan to launch a refrigerated food delivery service, utilizing our culinary business expertise. With
refrigerated foods that are easy to prepare in the microwave oven, we will create satisfying meals and time for customers
who have little time to think of menus.
Taking advantage of these new services as well as digital capabilities and in-person responsiveness the Daigas
Group has cultivated, we aim to support customers’ comfortable living by responding to their diverse needs appropriately.

Refrigerate foods
home delivery service“FitDish”
Creating satisfying meals andtime, utilizing experience incooking equipment development
and operation of cooking schools

Life service platform① “ Sumai LINK”
Services that provide conveniencein everyday shopping and daily life

“Sasuga Net”

Contribute to low carbon
and decarbonization

Tailored renovation③ “ MyRENO”

Internet service

Rate options for different lifestyles② Gas and electricity rates

Equipment sales
Solar PV

Rate option examples
Gas rates

Electricity rates
Fuel cell"ENE-FARM"* The name and logo of “MyRENO” is a registered trademark or trademark of Global Base Corporation in Japan and other countries.

40

Storagebattery

Please see the next page for the details of services ❶ to ❸.

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Key Initiatives

Overview of Key Services

New Initiatives in Life & Business Solutions (LBS) Business① Digital Service Platform “Sumai LINK”

Osaka Gas Urban Development GroupIn addition to online services, including shopping via the Internet, Sumai LINK willoffer a wide variety of offline services that enrich customers’ time spent at home,including medical care and housekeeping services. From FY 2023.3, we also
started to offer a TV stick exclusively for Osaka Gas customers that allows thewhole family to enjoy online shopping and entertainment content on large screensof their home TV or PC monitor, as well as digital tickets that can be used atmember restaurants in the Kansai region.

—Participating in the Private REIT Business of the Daigas Group—
In June 2023, Osaka Gas Urban Development Co., Ltd. established Osaka Gas
Urban Development Private REIT, Inc., an unlisted open-ended REIT. By
combining the Daigas Group’s accumulated know-how in real estate development
and expertise in real estate securitization and by expanding the private REIT
business through strengthened partnerships with institutional investors, we will
enhance asset efficiency over the medium to long term. We will thus evolve into
an innovative energy and service company that continues to be the first choice ofcustomers while striving to make contributions to realizing a sustainable society.

② New rate and service “Support Plans”
The environment surrounding customers has been changing dramatically, with
fuel prices soaring and inflation accelerating. Considering that this has increased
concerns about energy conservation and utility costs, we launched a newelectricity rate and service “Support Plans” in October 2022, so that customers
can enjoy a comfortable and eco-friendly lifestyle in accordance with life events
that may cause significant changes in energy use.

Osaka Gas Chemicals Group—Making Chuo Silika Co., Ltd. a Group Company for Further Growthof the Silica- and Alumina-Based Materials Business—
In March 2023, Mizusawa Industrial Chemicals, Ltd. made Chuo Silika Co., Ltd. agroup company for the further growth of its silica- and alumina-based materials
business. Chuo Silica manufactures and sells diatomaceous earth, a natural
porous silica material.
By taking advantage of Mizusawa Industrial Chemicals’ technologicalcapabilities, the Group will continue to pursue synergy and aim for further growth.

③ “MyRENO”“MyRENO” is a one-stop renovation service that covers property search, financial
planning, design, and construction.
Customers can search for information on pre-owned properties suitable forrenovation. Based on the understanding of the current lifestyles of customers, theservice takes a customized, customer-centric approach to come up with housing
plans with an eye on the future.
In October 2022, we opened MYRENO OSAKA, one of the largest
showrooms in the Kansai region* dedicated to collective housing renovation.
MYRENO OSAKA is not just a showroom. It also hosts a variety of lifestyle-related
events and consultation sessions. We will continue to work to expand therenovation market in the Kansai region.

OGIS-RI Group—Starting to Offer Electricity Risk Management Solutions—
OGIS-RI Co., Ltd. started to offer electricity risk management solutions. The solutions
apply business knowledge and know-how in finance, energy, AI, data analysis, andother fields, which OGIS-RI has accumulated over the years, to electricity
transactions. Customers can measure their company’s risk quantity by merely
entering such information as transaction and market data and clicking the screen,
without any particular knowledge of financial engineering. By offering these solutions,
the Group strongly supports the visualization of risks in the electricity business anddecision making in electricity transactions, and helps stabilize customers’ businesses.

* One of the largest showrooms in the Kansai region that is specialized in collective housing renovation and is run by aone-stop service operator covering from pre-owned collective housing search to renovation (as of October 2022, basedon research by Osaka Gas)

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Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Ⅰ. Co-create Value for a Sustainable Future

Enhancing Resilience of Customers and Society

Materiality

Customer Health and Safety/
Stable Supply of Services

Indicators and FY2023.3 Results

Zero serious accidents▲

Number of serious accidents

Recognition of External Environment
Heightened global geopolitical risks, changes in the global situation, and accelerating decarbonization trend have resulted
in an unstable energy demand-supply balance, making the world reaffirm the importance of a stable energy supply.
As the Daigas Group is responsible for social infrastructure essential to people’s life and industry, a stable supply ofenergy and maintenance of safety are our most critical missions. To keep supplying energy in a safe and stable manner,
we need to respond promptly and appropriately to incessant changes in the business environment.

Review of FY2023.3 and Future Strategy
In FY2023.3, we worked on further enhancement of safety and stability in securing LNG and electricity, as well as in eachpart of the energy supply chain.
In LNG procurement, we will strive to secure LNG more flexibly to further enhance energy resilience. In electricity
procurement, we will achieve stable power supply through in-house power generation and procurement, and establish aa stable supply by taking advantage of AI and other digital transformation initiatives to upgrade conventional measures.
Gas supply chain

Electricity supply chain

Ensure stable LNG procurement, energy security and stable supply,
early recovery from natural disasters while preventing secondary disasters.

Customers

Build a robust power source portfolio through diversification of powersources and capacity expansion of renewable energy and other sources.

Renewableenergy powersources
Procurement

Production ofcity gas

SupplySmart energy network”ENE-FARM"

Maintenance and monitoring
Enhance safety and security in customers’ use ofenergy, equipment, and services with IoT technologies.

Natural gas-fired
thermal power plants

Gas CHP

Energy network
Storagebatteries

Realize a stable network that is resilient todisasters by providing the best energy mix.

Taking measures against infectious diseases such as COVID-19

42

Build resilient energy supply facilities▲

power source portfolio centered on highly efficient LNG thermal power plants and renewables. In addition, we will maintain

Ensuring the safety of city gas, gas production, and power
generation facilities is our top priority. We therefore consider it
important to work toward better safety.
We achieved continued zero serious accidents for
FY2023.3 by carrying out quality control of city gas in gas
production facilities and safety inspection of gas pipelines andsupply facilities in the gas supply business. The procedures
were conducted based on guidelines in accordance with laws
and regulations as well as in-house rules.
Although it did not lead to a serious accident, a fire
broke out in a fuel storage silo at Sodegaura Biomass Power
Plant, which an affiliate of Osaka Gas had built and was in theprocess of commissioning. The fire neither caused any injuries
nor affected the gas supply.

Ratio of strengthening of earthquake resistance: Approx. 89%
Number of block divisions of supply network: 713 blocks
For a stable gas supply, we consider it important to strive
to conduct scheduled facility updates, extend the pipeline
network, and take disaster prevention measures, thereby
strengthening the base for better supply stability.
Based on the Gas Safety Enhancement Plan by the
Ministry of Economy, Trade and Industry, we have beenworking to increase the ratio of strengthening ofearthquake resistance, which is the percentage ofearthquake-resistant pipelines. We have also been
dividing supply blocks into smaller segments to minimize
the scope of emergency gas suspension (measures toprevent secondary disasters).
We believe that we can improve energy resilienceby enhancing earthquake resistance as precautionary
measures, as well as by minimizing earthquake damage
and achieving early recovery.
Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Key Initiatives

Initiatives to Ensure Energy Security and Enhance Resilience

Initiatives at the Procurement and Transportation Stages

The Daigas Group has established the Safety and Disaster Prevention Committee tounify the management of events related to safety, disaster prevention, and stable gas
supply and promote relevant measures. To fulfill our critical mission of safely and stably
supplying energy to customers, we take measures at each stage of the process, from
LNG procurement to use of gas by customers. We will ensure energy security andenhance the overall resilience of society by stably procuring and flexibly transporting
LNG, taking countermeasures against typhoons, heavy rains, and other natural
disasters to enhance the stability of production and supply, and promoting widespreaduse of products that can be used in times of disasters.

At the procurement stage, we make efforts to secure LNG, and achieve stable and■ Safety Promotion System

LNG, one of our suppliers. We, however, ensured stable supply by increasing theflexible procurement in the volatile market by responding timely in trading.
In procuring LNG, Osaka Gas mainly signs long-term contracts and reduces
procurement risks by diversifying sources (seven countries).
As for transportation, we started to own LNG tankers in 1993. We currently takeadvantage of a fleet of nine ships, which mainly consists of our own tankers. Using
our own carriers for transportation enables a substantial reduction of transportation
costs, timely response, and flexible scheduling.
In FY2023.3, we experienced a shortage of some LNG due to a fire at Freeportvolume we procure from suppliers with long-term contracts and procuring from

Representative Director and President

alternative suppliers. For FY2024.3, we are making room for flexibility in procurement
to prepare for contingencies, thereby creating a system to address the risk of aManagement Meeting

decrease in procurement volume.

Corporate Committee: Safety and Disaster Prevention Committee
Chairman: Head of Safety

Safety Subcommittee

Disaster Prevention
Subcommittee

Initiatives at the Production Stage

Gas Supply Disruption
Countermeasures Subcommittee

To appropriately meet the demand for city gas, the gas production businessprocesses LNG into city gas at Senboku LNG Terminal and Himeji LNG Terminal andstrives to send the gas to customers in a stable manner. Advanced earthquake-proof

Inspection of Operations and Maintenance Worktechnologies are adopted for LNG tanks. Measures are taken to ensure the safety offacilities, such as the installation of dikes to prevent leaked LNG from spilling out of

In the infrastructure business, one accident may affect stable supply in many ways andcause a substantial loss. We therefore conducted not only daily inspections but also aninspection of operations and maintenance work, led by the Safety Subcommittee.
In FY2023.3, we reviewed and improved initiatives and systems that prevent
accidents and ensure stable supply in the energy business essential to people’s life andindustry, including gas, electricity, and heat supply.
We will constantly check the operational status of the work we inspected in
FY2023.3. In FY2024.3., we will expand the scope to the renewable energy businessand roll out good practices learned from inspection results to new businesses.

the premises. Central control rooms at LNG terminals operate and monitor all facilities
24 hours a day, 365 days a year, from LNG receipt to production and sending of citygas. We thus make sure to prevent, detect early, and deter the spread ofabnormalities and accidents.
In FY2023.3, comprehensive disaster-prevention drills for a Nankai Troughearthquake, as well as drills for addressing troubles in LNG terminals, took place.
These practical drills aim to enhance capabilities for initial response to disasters, aswell as to share the flow of response to disasters down to the completion of recovery.

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Daigas Group INTEGRATED REPORT 2023

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Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

■ Progress of Earthquake Countermeasures after the Great Hanshin-Awaji Earthquake

Initiatives at the Supply StageAs preventive measures, Osaka Gas Network Co., Ltd. strives to enhance earthquake resistanceof gas facilities by promoting the introduction of earthquake-proof gas pipes and taking othermeasures to promote the widespread use of earthquake resistant facilities. Aging gas pipelines
are repaired in a planned manner and earthquake- and corrosion-proof polyethylene (PE) pipes
are being introduced. We actively propose the repair of customers’ old underground gas pipesthat are at risk of corrosion. We took care of gray cast iron pipes that required action by
FY2016.3, ahead of the planned FY2021.3. We are still working on gray cast iron pipes that needmaintenance and pipes that need measures against corrosion and deterioration. As emergency
measures to prevent secondary disasters, we have established a system that suspends gas intimes of earthquakes and other natural disasters, preventing secondary disasters caused by gas
leakage. In addition, the Central Control Office of Osaka Gas Network Co., Ltd. has a system inplace for emergencies, accepting gas leakage and other alerts 24 hours a day, 365 days a year.

Initiatives at the Customer Consumption StageTo have customers use gas safely, we not only conduct periodic facility investigations andinspections but also enhance safety to prepare for earthquakes and other disasters. We willdevelop and promote widespread use of "ENE-FARM", gas co-generation systems, andother equipment that allows continued energy use even in times of blackout. We are also
taking measures to reduce risks in procuring components of and producing gas equipment,in response to a prolonged delay in the delivery of some products to customers. The delay
happened from FY2022.3 to FY2023.3, caused mainly by the COVID-19 pandemic.

Focus

Strengthen
information
gathering
function

44

Install additional
seismometers
Introduce earthquake
damage prediction
systemSubdivide supply
blocks into smaller
segments

Establish
supplysuspension
systemStrengthen
emergency
communications

Business Continuity Plan (Measures Against Large-Scale Earthquakes, etc.)
In July 2013, the Daigas Group formulated a Business Continuity Plan (BCP) to be implemented in
the event of a large-scale disaster or accident. This BCP aims to enhance the Group’s capabilities to
respond to disasters and accidents and has been disseminated throughout the Group. In principle,
we review our BCP annually and implement BCP drills and earthquake drills. According to the termsof the “Act on Special Measures for Pandemic Influenza and New Infectious Diseases” (took effect inApril 2013), the Group should respond promptly and appropriately to the outbreak of a new strain of
influenza or other infectious diseases to prevent infection of employees and to protect public health.
We have established company regulations “Pandemic Influenza and New Infectious Diseases
Preparedness Action Plan” in order to ensure the stable supply of gas in such a situation.

Main earthquake
countermeasures

At the time ofGreat Hanshin-Awaji Earthquake(January 1995)
Installed at 34
locations

Present (April 2023)
Installed at approx.
3,300 locations● 

Introduced at theCentral Control Office(head office, back-up
center) and 5 areas● ー55 middle blocks●●

87 middle blocks
713 little blocks
Remote suspension
equipment at approx.
3,600 locations
Earthquake-sensitive
automatic suspension
equipment at approx.
3,000 locations● 

Introduce supply
suspension equipment

Remote suspension
equipment only forsuper blocks (dividing
the supply area into 8)● 

Head office and back-up
center serve as two hubs
6 portable satellite
communications facilities● 

Strengthen wirelesssystemsー

Ratio of strengtheningof earthquake
resistance

Percentage ofearthquake resistantpipes: 68%

Promote widespreaduse of polyethylene(PE) pipes

PE pipeline length:
Approx. 1,200 km● Percentage ofearthquake resistantpipes: Approx. 89%● 

PE pipes used for basicallyall low-pressure pipelines
PE pipeline length:
Approx. 17,900 km

● 

Other

● 

Installation completed
for residential sector
Overall adoption rate
including non-residential
sector: Approx. 99%● Promote widespreaduse of microcomputer
metersBack up important
online information

Overall adoption rate:
Approx. 75%ー● 

Back-up center
opened● Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

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Value Creation Stories

Corporate GovernanceCorporate Data

Ⅱ. Evolve Our Corporate Group

Enhancing Business Portfolio Management
Recognition of External Environment
A sense of uncertainty is growing due to Russia’s prolonged aggression against Ukraine, heightened global geopolitical risks, weaker yen, continued inflation, and expected economic
recession. This has resulted in unstable energy supply-demand balance and surging prices, which has a serious impact on the Daigas Group’s business. We are therefore expected to
improve the robustness of our business portfolio and quickly adapt to change.

Review of FY2023.3 and Future Strategy
In FY2023.3, we evaluated each business unit against the ROIC results in the first year of the Medium-Term Management Plan 2023, with a view to stay focused on ROIC. In addition, we
took various measures to improve NOPAT, sold cross-shareholdings, and worked to securitize Group-owned real estate.
Going forward, we will accelerate business portfolio management by familiarizing and establishing ROIC management and thereby encouraging each business unit’s autonomous
growth. We will thus aim for a sustainable growth and medium- to long-term corporate value improvement.

Business Portfolio Management
Operations with focus on ROIC

Business
Unit

Operations with focus on
both profit and capitalefficiency rather than only on profit

More frequent review of businessportfolio based on ROIC andrisk-management

Accelerating site-based
business development throughdelegation of authority(Core energy business companies,
overseas regional headquarters)

Set, evaluate, and manage an ROIC target for
the entire business portfolio
ROIC target
for FY2031.3:
Approx. 7%

Further promote compliancethroughout the organization

Group
Selection and diversification
through flexible asset replacement
and resource allocation

Enhancement ofautonomous
management andgrowth capabilities

Periodic reviews

Enhance the diversity of theBoard of Directors

Robust businessportfolio
responsive tochangesResource allocation
Assets replacement＜

Capitalcost

Business risk

ROIC target

Financial soundness

Build a business portfolio witha proper balance between risk and return

ROIC = NOPAT*1 / Invested capital*2*1 NOPAT = Ordinary profit + Interest expenses - Interest income - Income taxes● We have introduced ROIC as an indicator of how efficiently we earn profits from assets
associated with our business*2 Invested capital= (Business unit) Working capital + Non-current assets(Group-wide) Interest-bearing debts + Shareholders’ equity(average of the beginning and the end of each fiscal year)
Interest-bearing debts excludes risk-free leased liabilities to us.

● Monitor ROIC as a common indicator for each business unit and the Group as a whole

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Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate Governance■ Main Initiatives under the Medium-Term Management Plan 2023

Enhancing Business Portfolio
In order to create value for a sustainable future, we need
the growth of earnings and capital efficiency of eachbusiness unit and a robust portfolio comprising thosebusinesses. Under CVS 2023, we are improving ourbusiness management through the introduction of ROIC
as a new management indicator, with the aim of boosting
the earning capabilities of each business unit with more
focus on the balance sheet. At the same time, we are
increasing the business control functions of eachbusiness unit, which enhances their flexibility and agility
in business operations. We are also introducing more
frequent review of our business plan and resource
allocation at the group headquarters. These measuresare efficiently improving the robustness of our businessportfolio while enabling it to quickly adapt to change.

Domestic Energy Business

Promote business
units’ autonomous
asset divestment■ Sell overseas assets that have completed their purpose (Idemitsu Snorre, 4 IPP projects)■ For cross-shareholdings, re-examine the significance of holdings for each individual
stock and sell stocks appropriately (divestment of 14 stocks)

Invest in assets withfocus on ROIC target■ In renewable energy development in Japan, maximize investment efficiency through share-out withstrategic partners, offtake in excess of stakes in the project, innovation in finance schemes, etc.

Improve asset
efficiency■ Work on securitization of the Group-owned real estate itigate business risk and improve asset efficiency through leasing in industrial energy services■M

Increase NOPAT■ Take advantage of the market price surge and expand shale gas output■ Optimize LNG trading■ Expand the gas and electricity businesses to a wider area

■ Domestic Energy■ International Energy

International Energy Business■ Life & Business Solutions■ Forecasts for ordinary profit by segment and
ROIC targets

LBS BusinessBusiness Unit

LNG, Power &Engineering

Network

Corporate Data

Energy Solution

Energy Resources&
International

Urban
Development

IT

Materials(billion yen)
200

● ROIC■ LBS■ International Energy■ Domestic Energy

Approximately 7%
5.4%

2.7%

0
FY2023.3
ResultFY2024.3
Forecasts*

FY2031.3
Forecasts*Disclosed in March 2023

*Trading is included in the Domestic Energy Business segment.

Please see

Materials

IT

Real Estate

100

Asia

Mid- & Downstream in North America

Upstream

IPP in North America

Trading*

Residential

Non-residential

Network

Renewable Energy

Power Generation

LNG & Engineering

Main
Business

P.22 for the details of each business.

46

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Domestic Energy Business
Main business lines

Production, supply and sale of city gas, sale of gas appliances, gas pipe installation, sale of LNG, LNG transport, sale of LPG, sale of industrial gas, power generation and sale of electricity

What We Aim to Be in FY2031.3
The Daigas Group is striving to develop its business as an energy marketer in a new era by strengthening each of the three areas in
the Domestic Energy Business; namely, gas manufacturing and sales, gas distribution, and power generation and electricity sales.
In addition to ensuring that customers in the Kansai region use city gas in a stable, safe, and secure manner, we are proceedingwith the comprehensive provision of energy and services by expanding the electric power and LPG businesses and enhancing life
support services and one-stop services as a utility agent. Furthermore, we will expand the know-how and services developed in the
Kansai region to a wide area through alliances.
With these activities going beyond customer expectations, business boundaries, and corporate boundaries, we aim to reachmore than 10 million customer accounts by FY2031.3.

1,971.6 billion yen
Segment Loss* - 27.3 billion yen
Net Sales

FY2023.3
Results*Operating profit (loss) + Share of profit (loss)of entities accounted for using equity method

520.0

Investment
billion yen*for Growth for
FY2031.3*From FY2018.3 to FY2031.3 (Plan)

Key Strategy
We will promote an efficient gas pipeline business that meet the needs of local communities and other stakeholders, while working on the following matters: (1) procure raw materials
stably and economically by diversifying source LNG projects and contract price indicators; (2) establish a competitive power source portfolio by finding new power sources andprocuring from markets and expand the use of renewable energy through development and collaboration; (3) achieve stable gas supply by taking measures against natural disasters
and other contingencies, and ensure safety through emergency response to gas leakage and other accidents; (4) expand marketer businesses that help solve social issues, such as
low-carbon and decarbonization and resilience enhancement, achieve a comfortable life and develop businesses for customers; (5) expand new energy infrastructure development,such as LNG terminals, as well as the engineering business based on solution proposals that take advantage of our know-how; and (6) ensure impartiality and transparency of wheeling.
Net Sales* (billion yen) Segment Profit (Loss)* (billion yen)Domestic gas sales volume (million m3) Domestic electricity sales volume (million kWh)

■ Net Sales* (left axis)■ Segment Profit (Loss) ( ■ Domestic Energy/Gas ■ Domestic Energy/Electricity) (right axis)■ Volume of domestic gas sales (left axis) ■ Volume of domestic electricity sales (right axis)

85.5

1,500

1,196.9
1,000*In FY2021.3, Gas and Power1,971.6
Co., Ltd. (Domestic
120
10,000
Energy/Electricity) was merged into Daigas Gas andPower Solution Co., Ltd. (Domestic Energy/Gas).
Since85.5
FY2022.3, “Domestic 7,935
Energy/Gas” and1,500
90 into8,000
90
1,340.7
7,362
1,340.7“Domestic Energy/Electricity”
have been integrated
1,196.9
1,178.5“Domestic Energy.” Osaka Gas International Transport
1,158.3
61.0
Inc. and its subsidiaries conducting LNG transport,
1,000
60
6,000
60
which belonged
to “International Energy,” have been
44.5
44.1Energy” with the objective of
44.1
transferred to “Domestic
the integrated operation of energy sales and supply/
500
4,000 Osaka Gas’ operating 30 13,189
demand management.
30
11,653 which
expenses for International Energy business,were previously included in Domestic Energy / Gas,0have been transferred
2,000 to International Energy. Results
00
for the FY2021.3 are compiled by segments that reflect
the change.
-27.3
-27.3
0
-30
-30
19.3
20.3
19.323.3 (FY)
20.3
21.3
22.3
23.3 (FY)
22.3
2,000

2,000

1,178.5

61.0

1,158.3

44.5

500

0

19.3

20.3

21.3

1,971.6120

47

10,000

8,000

7,157

7,935
7,096

7,362

32,000
7,157

6,845

6,000

16,133

4,000

0

7,096

32,000

6,845

24,00024,00016,76011,653

15,883

13,189

2,000

21.3

40,00040,000

19.3
22.3

20.3
23.3

(FY)

16,133

16,76015,88316,00016,000

8,000

8,000

21.3

0

22.3

23.3

(FY)

0

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

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Value Creation Stories

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International Energy Business

Courtesy of Freeport LNG Development, L.P.

Development of and investment regarding natural gas, energy supply

Main business lines

What We Aim to Be in FY2031.3
As an energy business operator, the Daigas Group has focused on the natural gas value chain from early on and has madeinvestments abroad accordingly. In the future, we will continue to invest outside of Japan and by FY2031.3 will increase ourinternational-to-domestic business ratio to 1:2. The Group will create a business model capable of generating balanced
earnings streams from North America, Asia, Oceania, and Europe, in addition to Japan.

123.2 billion yen
Segment Profit* 69.7 billion yen
Net Sales

FY2023.3
Results*Operating profit (loss) + Share of profit (loss)of entities accounted for using equity method

550.0

Investment
billion yen*for Growth for
FY2031.3*From FY2018.3 to FY2031.3 (Plan)

Key Strategy

To procure natural gas, etc. in a stable manner and gain profits, we will steadily drive forward ongoing projects, such as production at the Gorgon and Ichthys LNG Projects inAustralia, shale gas development by Sabine Oil & Gas Corporation in the United States, and the liquification business at the Freeport LNG. In the IPP business, we will steadily
work on the gas-fired thermal power generation business, as well as develop and acquire renewable energy. In the marketer business, we will take advantage of the knowledge
cultivated in Japan, based on which we will steadily operate the gas, electricity, and energy service business and develop new projects, as well as gain know-how in new
domains through business participation and other initiatives. In addition, we will expand energy infrastructure development and the engineering business by proposing solutions
that meet customer needs.
Net Sales* (billion yen) Segment Profit* (billion yen)

Sabine Oil & Gas Corporation’s Shale
Gas Production Volume (million tons)■ Net Sales ■ Segment profit
160

160

123.2
120

120

80

69.1 80

40

61.2
40.4

40

80.7

69.7

61.2
40.444.3

5.9

8.1
20.3

21.3

22.3
19.3

3.3
2.8

3

2.2
2

1

8.1

0
19.3

2.8

1

22.1
5.9

4

3.3

44.3

22.1

0

69.1

*Since FY2022.3, Osaka Gas
4 International
Transport Inc., which belongs to “International
Energy” and conducts LNG transport, has been
123.2Energy” with the objective
merged into “Domesticof the integrated operation
3 of energy sales andsupply/demand management, and operating
expenses for international energy included
2.2 inOsaka
80.7Gas (Domestic Energy/Gas) have beentransferred to International
2 Energy.
69.7

23.3
20.3 (FY)

21.3

22.3

0
23.3 (FY)

21.3

22.3

48

0
23.3

(FY)

21.3

22.3

23.3

(FY)

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Life & Business Solutions Business
Main business lines

Development and leasing of real estate properties, information-processing services, sale of fine materials and carbon material products

What We Aim to Be in FY2031.3
The Daigas Group actively applies the technologies and know-how it has accumulated in the energy business, developing
businesses that differ from the energy field in order to diversify business risk. These non-energy businesses are playing a major rolein supporting the Daigas Group’s earnings base as a stable source of earnings, particularly as crude oil prices and foreign exchange
trends remain unclear.
We plan to accelerate growth in three core business areas in Life & Business Solutions (LBS)—Urban Development, Materials
Solutions, and Information Solutions—aiming to consistently increase profits through FY2031.3.

FY2023.3
Results

258.5 billion yen
Segment Profit* 29.2 billion yen
Net Sales*Operating profit (loss) + Share of profit (loss) ofentities accounted for using equity method

380.0

Investment forbillion yen*
Growth for
FY2031.3*From FY2018.3 to FY2031.3 (Plan)

Key Strategy
Based on the technologies and know-how accumulated in the energy business, we provide products and services in such business areas as Urban Development, Materials Solutions, andInformation Solutions. These products and services take advantage of strengths unique to us. We thus help domestic and overseas customers achieve comfort, convenience, and health,as well as enrich lives and develop businesses. Described below are what we aim to be in the three business areas.
⃝Urban Development Business: A corporate group in which employees are actively engaged in various areas including development, operation, and maintenance, and one that meets theneeds of customers and society through diverse solutions that are blended with real estate and services⃝Material Solutions Business: A corporate group that has top class technologies and shares in various business domains in the functional materials market and provides highly functional
materials solutions and adsorption separation solutions to customers across the world.
⃝Information Solutions Business: A corporate group that provides comprehensive IT services ranging from consulting to design, development, and operation of systems and grows
sustainably with customers
Net Sales (billion yen) Segment Profit (billion yen)

Operating Profit of Each Company (billion yen)

■ Net Sales (left axis) ■ Segment Profit (right axis)■ Osaka Gas Urban Development Co., Ltd.

29.2 29.2
30
258.5 258.5

30

12

12

237.0 23.5
237.0 23.5
250
216.5 216.5
210.9 210.9219.4 219.4
19.6 19.6 19.2 19.2
200 17.7 17.7

25

25

10

10

20

20

8

150

150

15

15

6

8
6.5
6

100

100

10

10

4

4

50

50

5

5

2

2

0

0
19.3

0

0

0

300

300

250
200

19.3 20.3

20.3 21.3

21.3 22.3

0
23.3 (FY)22.3 23.3 (FY)

■ Total of Osaka Gas Chemicals Co., Ltd. and Jacobi Carbons AB ■ OGIS-RI Co., Ltd.

9.6 9.6
9.0 9.0
7.7
6.5

6.6

6.6

5.2

5.2

5.1

2.3

2.3

19.3

19.3

7.7

5.1 5.5

4.1

4.1

20.3

20.3

49

7.7

5.8 6.0 5.8 6.0

5.5
3.8

21.3

7.7

5.7

5.7

3.8

21.3

22.3

22.3

23.3 (FY)23.3 (FY)

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Responding to Customer Needs and Expanding Business Domains in the Life & Business Solutions (LBS) BusinessTo further develop the LBS business as our core business, we will promote the growth of existing fields and the expansion of business domains. Described below are major activities
in each business field.

Urban
Urban
Urban
Development
Development
Development
Business
Business
Business

Materials
Materials
Materials
Solutions
Solutions
Solutions
Business
Business
Business

Providing
Providing
Providing
comfortable,
comfortable,
comfortable,
healthy,healthy,healthy,
andandhigh-quality
andhigh-quality
high-quality
livingliving
space
living
space
and
space
and
productivity-boostingandproductivity-boostingproductivity-boosting
officeofficespace
officespace
space

Providing
Providing
Providing
value
value
and
value
and
contributing
andcontributing
contributing
to atosustainable
a tosustainablea sustainable
societysocietysocietythroughthroughthroughhigh-quality
high-quality
high-quality
materials
materials
materials
solutionssolutionssolutions

Osaka
Osaka
Osaka
GasGas
Urban
Gas
Urban
Urban
Development
Development
Development
Group
Group
Group

Osaka
Osaka
GasGasChemicals
Chemicals
Group
Group
Osaka
Gas
Chemicals
Group

Information
Information
Information
Solutions
Solutions
Solutions
Business
Business
Business
Contributing
Contributing
Contributing
to theto theevolution
to theevolution
evolutionof corporationsof corporationsof corporations
andandindividuals
individuals
in thein thedigitaldigitalage
ageageandindividuals
in thedigital
OGIS-RI
OGIS-RI
OGIS-RI
Group
Group
Group

The Urban Development Business rolls out real estatebusiness, which extends widely to include the developmentof properties such as sale and rental apartments, officebuildings, management of buildings and facilities, and so on.
Osaka Gas Urban Development Co., Ltd. has adopted
ZEH-M Oriented*¹ as standard features of its condominiums
planned from April 2022 onward. This facilitates theprovision of condominiums that save and create energy andallow residents to contribute to the environment.
We will continue to aim for sustainable profit growthand improvement of capital efficiency by deepening thestrength of existing businesses, expanding businessdomains, and evolving our business model. Specifically, we
will continue to develop and supply quality housing that
address social issues (SDGs, etc.) and customer needs,
accelerate new businesses such as logistics real estate andprivate-placement REIT, provide comprehensive facility
management services in the building maintenance business,
expand out-of-area projects in the research park business,and provide interaction opportunities and a businessenvironment that triggers the creation of innovations.

The Materials Solutions Business develops,
manufactures, and sells a variety of highly functional
materials based on our own coal chemistry technologies
and pharmaceutical- and agrochemical-related
technologies. Specific business fields include finematerials, carbon fiber materials, activated carbon,
silica- and alumina-based materials, and preservatives. In
2014, we acquired activated carbon producer Jacobi
Carbons AB (Sweden) and are developing our businessglobally.
Frontier Materials Laboratories of Osaka Gas
Chemicals Co., Ltd. develops new materials andtechnologies to create future-oriented materials
conducive to value creation, focusing on the three fieldsof organic synthesis,*² polymerization and compounds,*³
and bioscience.
We will continue to aim to establish a stableearnings base and achieve sustainable growth bydeveloping and expanding sales of products with highadded value in a diverse product offering, while also
pursuing synergies and developing new markets.

OGIS-RI traces its roots back to developing andmanaging systems for the gas business of Osaka Gas
Co., Ltd. It rolls out services for general consumers as
well. Through various acquisitions, the company hasorganized a group of IT companies that offer services tothe manufacturing and financial industries or havestrength in ERP,*4 thereby expanding business domains.
By sharing the expertise within the group, we provide
comprehensive IT services ranging from consulting,design, development, and operation of information
systems to cloud data centers, and security.
In addition, the strength of OGIS-RI Group, which isthe ability to accelerate the evolution of business byasking essential questions and finding answers without
fail, is set as the company’s PURPOSE. We strive tosecure and develop talented human resources to resolve
customers’ issues by using technology.
We will continue to help improve thecompetitiveness of the Daigas Group, responding to new
customer needs in the fields of energy, manufacturing,and finance; ERP; clouds; and digital transformation.

*1 ZEH-M Oriented condominiums aim to reduce primary energy consumption by
20% or more for the entire condominium including communal areas. This ismaterialized by significantly improving outer surface insulation and other functionsof buildings and achieving significant energy saving through the introduction ofhighly efficient facility systems.

*2 New monomers for optoelectronic materials and semiconductors are mainly
developed in the organic synthesis field.
*3 Optoelectronic materials, resin modifiers, and carbon dispersion materials aremainly developed in the polymerization and compounds field.

*4 ERP is the abbreviation for enterprise resource planning. ERP has been adopted ina wide range of industries as a system that centrally manages customers’
corporate activities and contributes to efficient management.

Osaka Gas Urban
Development
Asset Management

水澤化学工業株式会社

Osaka Osaka
Gas Urban
Gas Urban
Osaka Gas Urban
Development 水澤化学工業株式会社
Development Development
Mizusawa
Industrial Chemicals, Ltd.
水澤化学工業株式会社
水澤化学工業株式会社
Asset Management
Asset Management
Asset Management

50

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Ⅱ. Evolve Our Corporate Group

Promoting Business Transformation with DX

Daigas Group's Digital Transformation Strategy[ Main initiatives ]Practicing Innovative Service Creation

Recognition of External Environment
In the times when everything is connected via digital technology and evolves rapidly, how we compete to offer services to customers iscompletely different from conventional approaches. Under such circumstances, our business operation needs to respond quickly andflexibly to changes. Operational process innovation increases the productivity of internal operations, which will also enhancecompetitiveness.

Review of FY2023.3 and Future Strategy
In FY2023.3, we launched the DX Strategy Department in the Corporate Planning Headquarters to implement effective and swift digital transformation
under the leadership of top management. We also enhanced the development of digital talent by offering training by job level, group-wide e-learning,and other programs.
Going forward, we will accelerate the Daigas Group’s business activities by taking advantage of digital technologies. Specifically, we will create services
that are ahead of the times, as well as promote innovation in operational processes through the full-scale launch of Daigas X (Daigas Transformation).

What We Aim To Be

Data management evolution

Innovative service creation

Operational process innovation

Enhancing value creation capabilities

Responding quickly and flexibly to changes

Focusing on work that enhances competitive advantage

Creation of surplus capacity

Optimization for each customer

Initiatives during the Current Medium-Term

Full utilization ofdata assets

Group's collective
strengths and alliances

Top-down DX
promotion system

We will offer various services with higher value by incorporating
trends and the diverse needs of customers without delay. This
does not only refer to the development of new businesses andnew services but also leads to increasing sophistication inexisting businesses, resulting in an increase in customer
accounts, business opportunities, and net sales as well as
raising business operations to the next level. In rapidlychanging times, it is important to “accelerate the trial and error
cycle.” We will acquire skills through practice, innovate thesystem itself and foster customs and mindsets across the entire
Group, which enable the Group to move forward with new
initiatives aggressively and quickly.

Operational Process Innovation
We will thoroughly review our internal operations from “theperspective of customers.” We will also focus on merging andabolishing operations as well as standardizing and aggregating
different procedural operations among organizations to broadly
redesign the entire operational process. Furthermore, theworkload for remaining operations will be reduced with digitaltechnologies such as AI and RPA. Through these transformations,
the Group employees will be able to generate extra power towork on more non-routine and discretionary operations as well
as operations that require higher expertise and judgment in apleasant working environment. This will allow employees todevote more energy to providing better value to customers.

Data Management Evolution

Development andSystem renovation,
recruitment of digital talent security enhancement

Present status
Gas business-centric business operations, rules, operational process, and system structure*(*Based on a household, month & fiscal year, fixed operational process)

51

The Group has been leading efforts to utilize data, placing aninternal “Business Analysis Center” at its core. In the future,utilizing valuable assets such as data as our strengths is the
key to value creation and growth strengths. For example, if we
can catch customers’ needs from data, we can offer services
optimized for each customer. We will continue to create newvalue in optimized customer experiences and our supply chain
by developing our initiatives in the past and evolving data
management further.

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Key Initiatives

Transforming Value for Customers

Systems and Structures That Take Advantage of Group’s Collective Strength

We are giving a concrete form to what we aim to be in 2030. To achieve this goal, we
have started to transform our business activities to keep providing value tocustomers. Under the key phrase of “All for everyone’s smile,” Osaka Gas Marketing
Co., Ltd.,*1 which conducts business for residential customers, aims to create afuture where not only customers but also business partners and Group employees
are smiling. The Group will continue to provide optimized experiences tailored toeach customer by taking advantage of digital technologies and transforming services
and communication in accordance with customer and societal needs. Helping
customers achieve a safe and secure, comfortable and convenient, and energysaving and eco-friendly lifestyle, we aim to be a “housing and lifestyle partner.”

Under the DX promotion system built in FY2023.3, we are building group-widesystems and structures from FY2024.3 to accelerate DX promotion, with stronger
collaboration with OGIS-RI Co., Ltd. in charge of the Information Solutions Business.
Specific initiatives include the launch of “DX Practical Training,” a consulting service
that works together with each organization to help resolve their issues. This aims to
support Group employees to improve business operations and take on the challengeof transformation. In collaboration with OGIS-RI Co., Ltd., we are also taking
advantage of the Group’s collective strength in working on Daigas X and thetransformation of customer value in the residential energy business.

*1 Please refer to

P. 40 for examples of FY2023.3 activities in services for residential customers.

Human Resources Development That Aims to Integrate Business with Digital
To focus on the development of human resources who can integrate business with digital anddraw and promote what we aim to be, we are promoting systematic training by job level.
In FY2023.3, we invited external experts for monthly lectures and dialogues for the management,
which featured case studies of corporate reforms, trends in the shift of customers’ values, andother topics. The contents were shared with employees as well. We also develop core humanresources who take advantage of digital technologies for operational reform and new businessplanning. After defining the skills necessary for core human resources, we implemented adevelopment program that includes lectures, OJT, and feedback interviews. As of April 2023, a
total of approximately 120 employees have undergone the development program. For all
employees, we offered e-learning, as well as courses for obtaining qualifications, and enhanced
reskilling support. From FY2024.3, our initiatives will target managers as well. We thus aim tobuild a system where top-down and bottom-up approaches create synergy.

Transforming Employee Value Through Daigas X (Daigas Transformation)
In FY2023.3, we launched an initiative to evolve how we work and operate, sothat we can keep producing a virtuous cycle of employee and company value
creation in unprecedented, rapidly changing times.
In FY2024.3, the initiative was named “Daigas X (Daigas Transformation),” andshared with all employees via the intranet along with specific measures and what we
aim to be. Daigas X rolls out activities that aim to enable diverse human resources totake on challenges, keep learning, and grow, as well as to let us speedily exploreand deepen our understanding of unprecedented changes. Simultaneously, we are
creating environments and systems that support the initiative. Each organizationconsiders what they aim to be and what action they take to that end, based on thereality in the organization and on the■ Offering Information on the Intranet
frontline. In parallel, the company isdeveloping internal mechanisms,
such as the introduction of chat tools
to stimulate communication, and the
expansion of learning opportunities
for employees to encourage
autonomous career development.*2■ Development Program by Job Level
TargetDevelopment program

Management●Managers●Core humanresources●All
employees*2 Please refer toP. 53-55 for measures toencourage autonomous career development.

52

Lectures by and dialogues with external experts held about once a month (approx. 20 participants)
Launch initiatives in FY2024.3
Development program including lectures, OJT, and interviews(targeting approx. 120 employees)

E-learning, courses for obtaining qualifications
Share lectures for the management● Enhance reskilling support●●

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Ⅱ. Evolve Our Corporate Group

Maximizing Value for Each Employee

Daigas Group's Human Resource Strategy
Basic Approach

Recognition of External Environment
Amid a rapidly changing business environment and diversifying mindset toward working, the Daigas Group considers
human capital as a source of value creation. Based on such recognition, we will drive forward initiatives that enhance
employees’ sense of fulfillment and overall Group performance, raising both corporate value and value for employees.

Review of FY2023.3 and Future Strategy
To materialize “diverse talent and ways of work” and an “organization that provides personal growth and a sense offulfillment” stated in the Medium-Term Management Plan 2023, we strengthened the recruitment of highly specialized
human resources. In addition, employee career path was made multi-track, and a talent management system wasintroduced. Furthermore, we constantly supported career development regardless of generation and worked on thecreation of a pleasant working environment.
We also measure employee engagement in the Daigas Group’s Employee Attitude Survey and reflect the results inmeasures we take.
We will continue to deepen communication with each employee and steadily implement a human resource strategy
based on our business strategy.

Human resource strategy based on business strategy• Support for career development
regardless of generation

Revitalization ofindividuals

Maximization of the entire
Group’s performanceby increasing job
satisfaction

by assigning the right people
to the right jobs

(Promotion of reskilling, etc.)• Acceptance of diverse values(Enhancement of women’s empowerment, etc.)• Cultivation of a corporate culture that tolerates
failure through challenges(Education for managers, etc.)

Enhancement of communication
to promote the execution of thehuman resource strategy• Appointment of the right personin the right position through thepractice of talent management• Development and operation of

succession plans

Retention of necessary
personnel
to respond to the evolutionof our business portfolio• Recruitment of highly specialized humanresources(expansion of mid-career recruitment)• Multi-track career path

• Improvement of various training programs

Co-creating value for a sustainable future and evolving our corporate group53

To achieve the Long-Term Management Vision and the MediumTerm Management Plan objectives, it is important to develop andimplement a human resource strategy aligned with our businessstrategy, including initiatives to realize a low-carbon and carbonneutral society and enhance of business portfolio management. To
this end, we recruit and develop human resources important in ourbusiness strategy, let individuals demonstrate the best of theirabilities, and promote diversity, equal opportunity, and inclusion.

[ Main initiatives ]1 Retention of necessary personnel to respond to
the evolution of our business portfolio
We work to secure the quality and quantity of personnel for
portfolio development of the Domestic Energy Business,
International Energy Business, and Life & Business Solutions(LBS) Business, as well as to recruit and develop humanresources who can flexibly respond to changes in the businessenvironment and highly specialized human resources. In
particular, we are committed to working on the urgent issue of
securing human resources who can elevate our business to thenext level. Specifically, our focus is on initiatives to achievecarbon neutrality, acceleration of overseas energy businessdevelopment, and digital transformation.

2 Maximization of the entire Group’s performanceby assigning the right people to the right jobs
We will introduce a talent management system, and create afoundation by reviewing job requirements and centralizing themanagement of human resource information. After defining all
job requirements, we will match them with human resource
information, such as personal characteristics and job transfer
experiences. We thus aim to maximize performance byassigning the right people to the right jobs and empowering
diverse human resources. In addition, we will develop
succession plans mainly for management positions, with aneye to showing sustainable performance as an organization.

3 Revitalization of individuals by increasing
job satisfaction
We consider that taking measures to offer a satisfying andpleasant working environment enables employees todemonstrate their abilities and skills. We aim to achievesustainable growth by helping employees develop their careers
autonomously and take on challenges and grow, thereby
increasing engagement and labor productivity. To this end,
programs are in place to offer diverse experiences.
Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Promote Diversity and Inclusion■ Number of Osaka Gas employees using childcare-related leave systems
FY22.3

FY23.3

111

135

46

172

97

123

39

84.1%

93.1%

93.3%

93.8%

87.8%

35

33

22

26

29

201

201

Of which, male
employees

178

Rate of male
employees
Number of employees who
shortened their working
hours due to childcare

Osaka Gas attaches importance to the development of humanresources who can play an active role in a rapidly changing
business environment. We therefore offer diverse education
programs for each employee’s skills development. Specifically,a variety of training sessions take place according to positions
and job categories, including various training programs by job
level and extensive self-selection style training.
We organized training sessions in a planned manner
throughout FY2023.3. e-learning courses saw 5,264
participants per course.

Osaka Gas promotes initiatives to empower female employees
to achieve the targets for 2030.
In FY2023.3, we strived to respect diverse careers andvalues and roll out measures attentive to individuals’ situations.
We made efforts in multiple areas to achieve our female
advancement goals, including training appropriate to the timingof job responsibilities and life events, dissemination of theimportance of individual-based management in training for
managers, and promotion of male employees to take childcare
leave. As of June 2023, the ratio of female executives was
26.7%, and the ratio of female directors was 20.0%.

*Includes some temporary employees and part-time workers; covers the area ofsafety, information security, environment, digital transformation, etc.

[ Main initiatives ]As the working population is expected to decline in Japan,
Osaka Gas believes it important to accept diverse values
and has been striving to create a work environment where
women can exercise their abilities and play active roles. As
a result of our efforts, many women employees have been
displaying their abilities in various fields.

FY21.3▲▲

Employee engagement was measured based on the following four indicators:
overall satisfaction, which indicates the current level of satisfaction with thecompany; loyalty, which indicates the level of attachment to the company;
intention to continue working, which indicates the intention to continue
working for the company; and intention to recommend, which indicates thelikeliness of recommending the company to friends and acquaintances. The
scores for Osaka Gas and its affiliates were higher than the society average.
The attitude survey results are analyzed by age cohort, organization, andother factors, and measures are taken to address issues found.

FY20.3

Executives/Directors : 13.3% / 10.0%
Newly-promoted to middle management positions : 14.3%
New recruits for career-track positions : 28.1%

Participation in e-Learning program* : 5.83 hours/person

Employee Attitude Survey Remained at appropriate levels

Corporate Data

Percentage of women

26.3 hours/person

Indicators and FY2023.3 Results

FY19.3

Corporate Governance

Annual average hours of training per employee

Employee Engagement
Development of Employee Skills
Diversity and Inclusion

Number of employees
who took childcare
leave/leave forchildcare purposes

Value Creation Stories▲

Materiality

Business Strategies

Recruitment⃝

Strengthen recruitment activities for female students
As a diversity seminar, introduce female employees’ career
paths and workplace environments where they are playing anactive role; Hold seminars for science-major female students⃝ Post career examples of women as part of the information
on recruitment on our website⃝

Development
To support female employees’ career formation, offer
continuous career education, including how they would
balance work and childcare
Transfer and appointment: transfer and appoint based on
individual development plans suited to each employee⃝ Career education: offer the mentoring program, have interviews
with young female employees, and dispatch to external training⃝

54

For supervisors: offer training for newly appointed and existing
managers/supervisors, and hold a Diversity Promotion Forum(lecture by knowledgeable person and workshop)

Work environment
Create a work environment where life events do not disrupt careerChildcare: hold child-rearing luncheon meetings(job networking event)
Hold Childcare Worker + Supervisor Forums
Offer intranet networking opportunities for workers
on leave and returners
Hold roundtable talks for people taking childcare leave
Hold seminars on balancing work and childcare formen (Diversity West Japan Study Group)⃝Corporate culture: provide information through continued distributionof e-mail news and in-house web magazines
Continue to implement measures to promote
efficient working⃝

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Progress of Major Initiatives Based on Human Resource Strategy

1 Retention of necessary personnel to respond to the evolution of our business portfolio (recruitment and development)
Strengthening of mid-career recruitment and multi-track career path after joining the company
We have strengthened mid-career recruitment. Mid-career hires accounted for
16.7% of new employees in FY2023.3, up from roughly 5% in the previous years.
By conducting interviews with mid-career hires, we were able to confirm that a
corporate culture that accepts diverse human resources has been cultivated andemployees are being recognized equally regardless of whether they joined thecompany as new graduates or mid-career hires.
Through interviews with specialist employees whose strengths lie mainly intechnology, we found out that it is difficult to see a career track other than thatleading to managerial human resources. In response to such a concern, we createda new career track applicable from FY2023.3.
ResultHired 29 mid-career employees (16.7% of the total number of new employees)
Appointed 10 Fellows and 4 Authorities

2 Maximization of the entire Group’s performance by assigning the right people to the right jobs
Introduction and utilization of talent management system
We started to consider introducing a talent management system in FY2022.3, and have beenutilizing the system on a trial basis. Our job fields have been classified into 18 domains,
including international business, electricity business, and finance. We reviewed the work
experiences of eligible employees by linking those experiences with the domains, whichenabled us to centrally manage employees’ professional experience at the company.

We will create a foundation by reviewing job requirements and centralizing the management of
human resource information, define clear job requirements, and match them with humanresource information, such as personal characteristics and job transfer experiences. We thus
aim to maximize performance by assigning the right people to the right jobs and empowering
diverse human resources.

3 Revitalization of individuals by increasing job satisfaction
Support for career development regardless of generation
Based on the recognition that each employee needs to develop their careers autonomously
and proactively, we have been reorganizing the conventional system of approaches. In April
2023, we newly established the Career Development Project Team in the Human Resources

Department. Serving as a contact point for employee career development, whose support
extends from young employees to senior employees, the team is restructuring the system fortraining, interviews, and other initiatives that help career development.

Creation of a Pleasant Working Environment
Health promotion was positioned as Osaka Gas’s priority management policy in 1975. Since then, we have been promoting the physical andmental health of employees. We established the Daigas Group Health Management Declaration* in March 2021, and have been taking action according
to the declaration, such as encouraging employees to refrain from smoking during work hours. Our efforts from the past years bore fruit, and in
March 2023, we were recognized under the Health and Productivity Management Stock Selection program for the first time.
*Health and Productivity Management is a registered trademark of the NPO Kenko Keiei Kenkyukai.

55

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Building Foundations that Support the Realization of Value for a Sustainable Future
The Daigas Group aims to realize sustainable value creation for stakeholders and society and strives to establish its management foundation by strengthening capital.
We have set materiality and key performance indicators (KPIs) as foundations that support the realization of value for a sustainable future, and advance initiatives based on them.

Coexistence with Local Community

Compliance

Compliance Desks (Internal Reporting System)

Indicators and FY2023.3 Results

Indicators and FY2023.3 Results

Number of our participations in local governments’ activities(i.e. community development planning) 38 cases

Number of serious violations of laws and regulations“Compliance Desks” have been established within OsakaGas, key affiliates, and an external attorney’s office. The
desks accept consultations and reports about compliancewith laws and regulations, internal regulations, and otherrules in the Group. Not only the Group’s officers,
employees, and temporary employees but also officers
and employees of business partners who constantly
supply goods and services to Group companies canconsult and report by phone, in writing, by email, or byother appropriate means. Consultations and reports canbe made anonymously.
The desks accepted a total of 166 consultations andreports in FY2023.3. We examined the necessity of factual
investigations on these cases and conducted interviews,
evidence checks, etc. Measures to remedy the situationand prevent recurrence were taken as necessary.
When cases are brought to “Compliance Desks,”
violations of laws and regulations, etc. are remedied.
Improvements are made as necessary even if no violations
are found, in order to maintain and improve a sound work
environment.

Materiality

326 times▲▲

Number of joint efforts with local communities

Materiality

Zero serious violations of laws and regulations■ Major activities■ Compliance promotion systems

Theme
Participation in local
governments’ activities
for community
development▲

The Daigas Group operates a business that is rooted in andsupported by local communities. We believe that our various
contributions to local communities will create a virtuous cycle
leading to the development of both the Group and society.
In FY2023.3, we participated in local governments’ activities
for community development including proposals aimed at building
resilient cities and creating attractive communities with added
value, as well as measures against global warming.
Joint efforts with local communities included joint activities
that help solve social issues, tackle the declining birthrate andaging population, and revitalize local communities, as well as
initiatives in collaboration with NPOs and community
organizations. Major activities are shown in the table below.

The Group's view on compliance is that it entails sensible
corporate activities based on sound ethics with a particular focus
on observing laws and regulations. To maintain the trust of
stakeholders, it is essential that officers and employees put
compliance into practice. Recognizing that every management
and employee is the key to ensuring compliance, we arecontinually conducting training sessions and employee surveys toraise awareness.
FY2023.3 saw no serious violations of laws and regulations.
The employee survey conducted in FY2023.3 showed
year-on-year increases in the levels of employee awareness andunderstanding toward the Daigas Group Corporate Principles,
Charter of Business Conduct, and Code of Business Conduct.
We will continue to familiarize employees with compliance andstrive to promote the concept.

Major activities
Support to local governments’ SDGs promotion
activities through community development proposals● Proposals to and participation in councils,
committees, etc. organized by variousorganizations and local governments●

Research activities with third parties on making
cities attractive● Support to elderly people’s activities in cooperation
with local government, NPOs, etc.
● Collaborative activities with NPOs and social
Joint efforts withentrepreneurs
local communities ● Communication related to social issues throughNPO for social designing● Support to NPOs with loyalty program of Osaka Gas● Bazaar held as part of the social contribution program● Community revitalization activities in cooperation
with local governments and third parties●■ Breakdown of report content

Representative Director and President
ESG Council (Management Meeting)Corporate committee: ESG Committee
Chairman: Head of ESG Promotion
Compliance/Risk Management Subcommittee

OthersLack ofmanagement

Compliance Office, General Affairs Dept.

12%
21%

Human rights,
harassment

39%

Coordination, Promotion, etc.
(Each Business Unit, Network Company,
Core Non-Energy Business Company) Head of Compliance(Each organization and affiliate) Compliance coordinators andstaff who serve as key personnel in the compliance efforts

56

Corruption or
misconduct

5%

23%

Labor matters

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Value Creation Stories

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Please refer to P.82-84 of the Sustainability
Report for more information.

Materiality

Supply Chain Management

Indicators and FY2023.3 Results

Human Rights Due Diligence
System for Carrying Out Human Rights Due Diligence

100%

▲

Ratio of new suppliers met the company’s eligibility criteria

The Daigas Group’s broad-based city gas value chain isbuilt on the cooperation of various business partners.
Fulfilling our social responsibility by working with our
suppliers in the value chain builds relationships of trustwith our stakeholders and furthers the development of
the entire value chain.
Based on this belief, we have established the
Daigas Group Procurement Policy. In starting new
business transactions, such as material purchases, we
explain the policy and Daigas Group Procurement Policy
for Suppliers to business partners and ask for theirunderstanding.
A total of 27 suppliers began new business
transactions with us in FY2023.3. No business deals
were barred from being started due to violations ofstandards set in the fields of environmental and social
impacts, human rights and labor practices.
In addition, we conduct questionnaire surveys
targeting major business partners, and take othermeasures to fulfill social responsibility with our business
partners and strive for mutual development across thevalue chain.

The Board of Directors oversees human rights issues throughout the Group. At the "ESG Council (Management
Meeting)," officers deliberate on human rights DD activity plans and activity reports, and submit reports to theRepresentative Director and President. In addition, the ESG Committee, chaired by Head of ESG Promotion(Representative Director and Vice President), oversees the promotion of human rights DD across the organization.
The Human Rights Center in the Human Resources Department, Compliance Office and Internal Control Planning
Team in the General Affairs Department, and the ESG Office in the Corporate Strategy Department work together topromote human rights DD activities. The Human Rights Committee, chaired by the director in charge of the Human
Resources Department (Director and Managing Executive Officer), promotes human rights activities.

Identification of Priority Human Rights Risks (Assessment Results for FY2023.3)
Based on the FY2023.3 investigation results and cases handled by consultation desks, as well as discussions with experts, we identified important
human rights themes that the Daigas Group should consider in the course of its business activities. The themes were classified by stakeholder groupwhose human rights could be violated.
Among the human rights risks that may occur in the course of the Group’s business activities, 14 items were identified as significant human rights
risks. Such risks include lack of consideration for occupational health and safety, infringement of human rights caused by excessive working hours or
unpaid wages, and harassment, as well as forced labor, child labor, and bribery/corruption in the international business, and infringement of the rights offoreign workers or technical interns in the domestic business. We take various measures to prevent and mitigate these risks, under relevant policies andother systems.
In addition, experts we discussed with pointed out that the nature of the chemical and developer industries makes it especially necessary to takeprecautions for human rights risks in those industries. We understand that the chemical industry needs to pay attention to such human rights risks asforced labor and child labor by raw material suppliers in the supply chain, and that the developer industry, which is facing labor shortages, needs to pay
attention to human rights risks in employing foreign workers and accepting technical interns.
We also assess human rights risks in new businesses. For example, we investigate the status of legal compliance concerning labor standards andhealth and safety as part of due diligence for M&A deals. We thus confirm that serious human rights risks do not exist in companies joining the Group.
■ Identified Human Rights Themes and Classification of Entities of Rights■ Questionnaire surveys, etc. regarding sustainability
activities (FY2023.3)
No. of target No. ofcompanies responses

Major material
suppliers

146

146

Gas equipment
manufacturers

36

36Service chain partners
and construction work
contractors
LNG suppliers

205
8

165
6

Other initiatives
Operation of the “Green
Partner Initiative”

Forced labor
Daigas Group's important human rights risks

TargetGroup employees●*1

Entity of rights
Customers
Local residents and others

Suppliers●

Relevant policy
Daigas Group Human Rights Policy

Child labor●*1●

Daigas Group Human Rights Policy

Lack of consideration for occupational health and safety
Infringement of human rights caused by excessive
working hours or unpaid wages
Discrimination on the basis of disability, race,
nationality, gender, etc.
Discrimination based on one’s origin●●

Occupational health and safety●●

Occupational health and safety●●

Daigas Group Diversity Promotion Policy●●

Daigas Group Human Rights Policy

Harassment●●

Infringement of the rights of foreign workers or technical interns●*2

Infringement of rights to privacy●●

Infringement of the rights of indigenous peoples or local residents
Human rights problems caused by environmental pollution
Defective quality of products or services, andinappropriate provision of information
Bribery/corruption
Procurement of conflict minerals

Daigas Group Code of Business Conduct●●

Initiatives to protect personal information●

Daigas Group Code of Business Conduct●

Daigas Group Environmental Policy●●*1

Daigas Group Human Rights Policy

Daigas Group Code of Business Conduct●●

Daigas Group Code of Business Conduct●●

Daigas Group Procurement Policy*1 Overseas subsidiaries, *2 Domestic subsidiaries

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Environmental Conservation Initiatives
Initiatives on Water and Biodiversity
The Daigas Group believes that companies have a responsibility toascertain the environmental impact of their business activities, to takeappropriate steps in compliance with international norms, laws andordinances, and to implement voluntary risk countermeasures.
We use an environmental management system (EMS) to
manage environmental aspects, such as water and biodiversity. For
example, we have obtained the ISO 14001 certification. In water
management, we use an index called “Environmental Management
Efficiency,” which converts environmental impact, including water
withdrawal, into monetary values to quantify the environmental impact.
When launching investment and development projects, whether
in Japan or abroad, we gain understanding from local communities byconducting an environmental impact assessment and disclosing
information.

Appropriate use and discharge of water resources
In the business activities of the Group, water is not a significant
raw material for the products we handle. We therefore recognizethat water does not pose a major business risk for us.
However, the Group controls water discharge after using
drinking water, industrial-use water, groundwater and seawater.
At power plants, core facilities for its electricity business, theGroup uses industrial water as a coolant in a steam turbine
condenser, and vaporizes it inside the cooling tower. Drinking
water, industrial-use water and groundwater are also used at
LNG terminals, power plants and offices, and discharged.
Seawater is mainly used for vaporization of LNG in city gas plants
and for cooling in steam turbine condensers in some power
plants, and is discharged to the sea without being consumed. In
discharging water after it is used in our industrial activities, wehave controlled its quality in line with relevant laws, ordinances
and agreements with local municipalities to ensure that chemical
substances such as COD, pH, phosphorus and nitrogen are notcontained in the water being discharged in excess of the relevant

standards. Thanks to such efforts, there were no violations
regarding the quality of water being discharged.
The Group sees water as a limited natural
resource. We will continue to use water
adequately, control its discharge strictly, andpromote water saving.
■ Amount of water intake in FY2023.3
General water,industrial water
Underground water
Seawater

10,800 thousand m³■ Amount of water
discharge in FY2023.3
Sewer

581 thousand m³

3,463 thousand m³

River3,089 thousand m³

534,660 thousand m³

Sea

536,070 thousand m³

Consideration to biodiversity
The Group will undertake efforts that promote theconservation of biodiversity and sustainable use, basedon the “Daigas Group Biodiversity Promotion Policy.”
Specific initiatives in FY2023.3 are described below.

Certification as Eco-First Company
On April 5, 2023, Osaka Gas was certified as an
Eco-First company by the Minister of theEnvironment.
Under this certification program, companies
declare Eco-First Commitments, which arecommitments to advanced and uniqueenvironmental conservation activities that haveripple effects, and the Minister of the Environment
certifies environmentally advanced companies ineach industry.
We are the first Eco-First
company inthe energy
industry.

■ Main biodiversity initiatives in the value chain
Procurement

Consideration to biodiversity in LNG tanker
transportation●

Production

Ballast water management

Green space management at LNG terminals
using native seeds and seedlings, etc.
Conservation of native seeds and seedlings
and rare species● Network formation with nature in local areas●SupplyReduction in excavated soil from underground gas piping
works and promotion of recycling to reduce pit sand extraction●●

Business offices
Customers

Use of Vermeer method to reduce excavated soil
Recycling of excavated soil and road work waste

Activities to raise awareness toward biodiversityImplementation and dissemination of initiatives atshowrooms and LNG terminals● Use
of native seeds and seedlings in the urban
development businessResponse to the Plastic Resource Circulation Act
To create a recycle-oriented society, the Daigas Groupfacilitates resource circulation by promoting “3Rs
(Reduce, Reuse and Recycle) + Renewable.”
We actively recycle plastic resources in the supply
chain. For example, waste from PE pipes, materials forgas pipelines, is recycled 100%. Resin used for gas
alarm devices is also recycled.
We intend to make effective use of waste from otherproducts that use plastics as well, by processing such
waste into refuse paper & plastic fuel (RPF) for use asheat energy. We thus continue to work to minimize theamount of final landfill disposal.

●

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Disclosure based on the TCFD Recommendations
Recognition of and Actions on Risks and Opportunities
Osaka Gas supported the TCFD recommendations in May 2019 , and utilizes them as indicators to validate its climate change response.
We also participate in the TCFD Consortium,* where discussions take place on efforts toward information disclosure on responses to climate change based on the TCFD recommendations.
*T CFD Consortium: The TCFD Consortium was established on May 27, 2019, whose members from the Japanese private sector discuss how companies can effectively disclose information on tackling climate change and how financial institutions can use the disclosed
information to make appropriate investment decisions. From the Japanese government, the Ministry of Economy, Trade and Industry, the Financial Services Agency, and the Ministry of the Environment participate as observers in the consortium.

■ Governance/Risk Management System for Climate Change

Climate Change Governance
The Daigas Group regards tackling climate change as a key management issue. Just as with otherimportant business activities across the Group, the Board of Directors is responsible for making
decisions on and supervising activities aimed at tackling climate change and other environmental
issues. At the ESG Council (Management Meeting), which is held three times a year, executives discuss
activity plans and activity reports related to ESG issues, including climate change issues, and submit
reports to the President.
The Group also has the ESG Committee, chaired by the Executive in Charge of ESG Promotion(Representative Director and Executive Vice-President), who supervises the Group’s sustainability
activities, and consisting of the heads of related organizations. The ESG Committee meets four times ayear for cross-organizational deliberation, coordination, and supervision of climate-change-related
issues, including the planning and promotion of related business activities, progress in achieving
relevant targets, and risk management and countermeasures. The committee submits to the Board of
Directors deliberation proposals and reports on important agenda items, such as the status ofachievement of sustainability-related ESG management targets and business projects expected tosustain a major financial impact due to climate change.
Directors other than Outside Directors are paid performance-linked remuneration, and thecoefficient of ESG indicators achievement is used as one of the performance indicators. ESG indicators
include CO2 emissions and other climate change-related indicators toward achieving carbon neutrality.

Board of Directors
Reports on important management issues, including climate-related issues, each half-year
Making Important Decisions;Supervision

Proposal and Report

1

Representative Director and President

4

Proposals and reports on important management issues, including climate-related issues
2

Proposal, Report, etc.

Corporate committee: ESG Committee 3
Chairman: Head of ESG Promotion

Report, etc. Environment
Subcommittee 1 3 4Report,Report, Coordination, etc.
Coordination, etc.

3(Secretariat of ESG Committee/Environment Subcommittee)
Report, Coordination, etc.
1

Coordination, Promotion, etc.

Each organization and affiliate of Osaka Gas

1

2

External Verification（ 3 ）★

Checking-Report and follow-up for eachtarget and performance at theEnvironment Subcommittee,
ESG Committee, and ESG
Council (Management Meeting); third
party verification of environmental
performance data

ESG Office, Corporate Strategy Dept. 3

Carbon Neutrality Promotion Office, Corporate Strategy Dept.

Implementation/Operation-Actions for each target-Performance tracking for eachindicator

4

Third party verification of environmental performance data

Strategy-Response to cross-cutting
issues relating to climate change-Formulation of strategies relating toclimate change-Reflection in activities of eachorganization

Submission and Report

ESG Council (Management Meeting) 3

Plan formulation

4

Review-Identification of issues-Evaluation and implementation ofcountermeasures★ Establishment of Carbon
Neutrality Promotion Office (April 2022)
Oversight of establishment and promotionof strategies to achieve carbon neutrality;
coordination, planning promotion andfollow-up with each organization and affiliate.

Scenario analysis
The Group has been working on climate change scenario analysis using scenarios published by an external organization (International Energy Agency, IEA) with the aim of understanding
the impact of climate change on the Group’s business on a medium- and long-term basis and using its results as reference material for evaluating and preparing countermeasures.
We assessed our energy businesses (gas, electricity and related businesses in Japan and overseas) which are expected to experience the greatest impact from climate change
among the Group’s businesses, assuming the scenarios that take into account the progress of energy conservation and changes in the composition of power sources, etc. (1.5˚C Scenario(NZE2050) and 2.6˚C Scenario (STEPS)*).
We steadily implement initiatives to increase the resilience of the Group's businesses, while applying the suggestions gained from scenario analysis to our evaluation of medium- andlong-term business strategies. Moreover, as the global response to climate change continues to progress, the scenario's preconditions may also change in the future. We will continue todeepen our scenario analysis, renewing our assumptions in line with the latest conditions as necessary, taking into account scenarios established by external authorities.
* Authority: IEA "World Energy Outlook 2021"

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Recognition of risks and opportunities
Using a multi-track scenario analysis, the Daigas Group identified anticipated risks and opportunities, based on the environment surrounding its domestic and overseas energy businesses,
evaluated them, and examined countermeasures in the short- to medium-term toward 2030 and the long-term toward 2050.
The Group is engaged in gas and electricity businesses, primarily in the Kansai region, which use natural gas as their main raw material and fuel. The external environment isundergoing various changes due to climate change. We have classified the major factors associated with these changes into “transition risks” and “physical risks,” and identified the majorrisks and opportunities. Significant risks for the Group related to climate change include the possibility that rising sea levels and natural disasters such as typhoons and torrential rains due
to localized abnormal weather events, etc. may cause damage to our manufacturing equipment. In addition, it is possible that our businesses may be affected by significant increases in
the carbon tax rate in Japan, or an increased desire among our customers to switch to non-fossil fuels. However, promotion of the development and spread of renewable energy anddecarbonization technologies also represents a significant opportunity for the Group.
The Group will respond appropriately to identified risks and opportunities by promoting diverse businesses through portfolio management.
■ Evaluation of Risks and Opportunities
Scenario
Physical

Impact■ Strategies/Countermeasures for Risks and Opportunities

Impact on Business
Short- and Medium-Term

Long-Term

2.6˚C

Damage to facilities arisingfrom meteorological disasters

Increase in capital investment
costs and insurance premiums

Increase in facilities
countermeasure costs

2.6˚C

Switch to natural gas

Increase in prices due to greater
competition in LNG procurement

Further price hikes and impediments
to procurement, due to increasing
competition in LNG procurement

1.5˚C

Switch to non-fossil
fuel energy

Fall in sales of gas and thermal
power

Fall in sales of gas and thermal
power

Reputation

1.5˚C

Focus of investment
criteria on low-carbon or
decarbonized businesses

Diminished capital procurement
power in gas-related businesses

Declining investment in fossil
fuels businesses

Policy andframework

1.5˚C
2.6˚C

Introduction of acarbon tax

Carbon tax burden on gas andthermal power businesses

Increasing burden with risingcarbon tax rates

Physicalopportunity

2.6˚C

Increase in awareness andsupport measures for weather
disaster countermeasures

Increase in sales of products/services with disaster response
function

Expansion of decentralizedenergy systems

Market2.6˚C

Switch to natural gas

Switch to LNG in Japan;
Expansion of LNG business oversea

Switch to LNG and expansion of salesof high-efficiency equipment abroad

Technology

1.5˚C

Development of renewableenergy and CCUS technologies

Expansion of development of
renewable energy sources

Introduction of "e-methane,"
expansion of renewable energy sources,
utilization of thermal power generation with CCS

Implementation of a national
policy for the mass introductionof renewable energy sources

Expansion of sales of electricity
from renewable energy sources

Expansion of sales of electricity
from renewable energy sources

Development of Al/IoT

Participation in decentralized powersources aggregation business

Expansion of decentralized powersources aggregation businessPhysicalrisks

Short- and Medium-Term
PhysicalTransition
Policy andframework

1.5˚C
2.6˚C

Technology

1.5˚C
2.6˚C

Financial impact : Small

Risks

Please see the following material for our major initiatives
Transition▶︎ Carbon Neutral Vision
Investigate, develop, and verify
CCUS/"e-methane"technologies

Physical

Opportunity

Risks
Opportunity

Physical

Implement disaster countermeasures for facilities
Diversify procurement sources
Develop and expand sales of renewable energy power sources in Japan and abroad
Engage in dialogue with investors

MarketTransition

Long-Term

Conduct verification andestablish supply chains toward
the introduction of CCUS/"e-methane," hydrogen, etc.

Development and sale of equipment with disaster response functions
Develop and expand sales of renewable energy power sources in Japan and abroad
Develop and market high efficiency, compact decentralized power sources (CHP, fuel cells)
Expand fuel switching, sales of high efficiency equipment in Japan and abroad
Verify and participate in the decentralized power sources aggregation business
Please see the following material for our major initiatives

Transition▶︎ Carbon Neutral Vision
Further develop energy-saving
technologies

Conduct verification and establish
supply chains toward theintroduction of CCUS/"e-methane,"hydrogen, etc.

Financial impact : Large

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Financial Impact of Climate Change Risks and Opportunities

Risk Management

The Daigas Group's Medium-Term Management Plan has identified “achieving a low

When deciding on the Daigas Group’s business plan and investment plan, the internalcarbon/carbon neutral society” as a priority issue, and expects to spend 150 billion yen

organizations responsible for the gas, electricity and other businesses analyze the risk factors

on decarbonization related investments in the period from 2021 to 2023 as it works

and their impact on each business, distill and identify risks, and submit these together withtoward achieving the goal of carbon neutrality in 2050.

other business risks, etc. to the Executive Board for deliberation. Climate change risks in the

The Daigas Group is actively contributing to the spread of renewable energy, andformulated plans are managed through a PDCA cycle, and are reported and followed up at

estimates that the impact on sales of its renewable energy business expansion will be in

the Environment Subcommittee, ESG Committee, and ESG Council (Management Meeting).

the order of 100 billion yen in fiscal 2031.3.

The PDCA (plan-do-check-act) cycle is used to manage such actions.
Decisions on climate-related risk and sustainability, including investment decisions, are

It should be noted that there are uncertainties and assumptions in the above
estimation of financial impact. In practice, the impact may vary significantly as a result of

made by the Board of Directors and the Management Meeting. Matters related to climatechanges in key factors.

change that were proposed or reported by March 31, 2023, included those listed below.

Initiatives to Reduce Greenhouse Gas Emissions● Resolutions for collaboration and participation in projects for a decarbonized society,

Initiatives to reduce greenhouse gas emissions are a crucial mission for the Daigas● Formulation and disclosure of ET2030

Group. We focus on reducing CO2 emissions, not only from our own business activities,● Monitoring of the results for indicators used to manage climate change response, etc.

based on the Carbon Neutral Vision

but also from customers who use the energy we provide.

*Please see

P.59 for the risk management system for climate change

In the Daigas Group Energy Transition 2030 (ET2030), we have set a target of
reducing CO2 emissions in our domestic supply chain by 5 million tonnes by FY2031.3

Indicators and Targets

compared to FY2018.3, and we are taking various initiatives to reduce CO2 emissions.
Under the Daigas Group Carbon Neutral Vision, we have established the goal of

The Daigas Group will proceed to contribute to radically reducing CO2 emissions andcontributing 10 million tons per year of CO2 emissions reductions by FY 2031.3 This

realizing a decarbonized society, through initiatives such as energy conservation, theadvanced use of natural gas, and the widespread use of renewable energies.

indicator will enable us to contribute to reductions throughout society, and we therefore
use it as a management target linked to the Group’s business initiatives.

Field

Initiatives Ensuring Resiliency for a Decarbonized Society

Indicators

CO2 emissions of Daigas Group

Securing a stable supply of energy, a core social infrastructure, is one of the major
climate change-driven challenges facing society as a whole. By continuing to provide a

Percentage of renewables in our power generation
portfolio in Japan

Climate Change

range of services, including multiple sources of clean energy such as gas and electricity
utilizing decarbonization technologies, disaster response equipment, and thewidespread and advanced use of energy, the Daigas Group will strive to contribute tosociety in terms of stable supply and resilience for a decarbonized society.
Please see

P.32-38 for an overall picture of the Daigas Group's efforts for low

CO2 emissions
reductions fromour own business Contribution to developing renewables capacity
activities
on a global basis

Target FY
2051.327.02 million tons*(5 million tons less than FY18.3)

2031.3

Nearly 50%

2031.3

5 GW

2031.3

2.5 GW

2024.3CO2 emissions⃝ Promote carbon reduction and decarbonization through more widespread use of
reductions athigh efficiency, high value-added equipment with natural gas, renewable energy, etc. Each year
customer sites⃝ Efficient operation of LNG tankers and expanded use of low emission vehicles, etc. until
and through the ⃝ Provide environmental value through the dissemination of high-quality
2031.3value chain
solutions in the fields of information, real estate, and materials
Contribution to CO2
Avoided emissions (t-CO2e) (Including reductions
emissions reductions
contributed at customer sites and overseas)
across society

carbonization and decarbonization of energy.

Targets
Net-zero
CO2 emissions

10 million tons
(baseline: FY2017.3)

2031.3*Emissions in domestic supply chain (Scopes 1, 2 and 3) (Targets for FY2031.3 newly set in the "ET2030")

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Environmental Impact throughout the Daigas Group Value Chain in FY2023.3
Activities that have potential environmental impacts
other than GHG emissions include the disposal of waste(general waste and industrial waste), and the disposal of
excavated soil and polyethylene pipes associated with gas
pipe construction. Regarding these items, we haveachieved a high recycling rate and will continue to strive tomaintain this level. About 97% of water used for ourindustrial activities is taken from the sea. Such water ismostly used to vaporize LNG at LNG terminals. Seawateris also used as coolant inside the steam turbine condenser
at some power plants. Once used, the water is discharged
into the sea without being consumed under strict quality
control.

■ GHG emissions throughout the Daigas Group value chain in FY2023.3 (actual results)
LNG, natural gas
Combustion of LNG

LPG, coal, biomass

Procu
remen
4.61 millio tOther procurement items

n t-C

Scope 3O2 e

City gas production/supply, business office21.25 million t-CO2e

Combustion of city gas

Scope 1
and 2

4.73 million
t-CO 2eBusiness
activities

The Daigas Group calculated the amount of greenhousegas (GHG) emissions from companies that constitute the
Daigas Group’s value chain network, based on the GHG
Protocol, an international emission accounting standards.
The methodology of the calculation and its results havebeen certified by an independent organization to verify
their reliability and accuracy.
Combined GHG emissions by the Daigas Group andvalue chain companies, measured by CO2, totaled about
25.98 million tons in FY2023.3. The sum breaks down into
about 4.73 million tons, or about 18%, for GHG emitted
through business activities by the Daigas Group (Scope 1
and Scope 2), and about 21.25 million tons, or about
82%, emitted by others in our value chain (Scope 3).
GHG emissions from city gas and LNG combustion
on the customer side amounted to 16.54 million tons in
the reporting year in terms of CO2, accounting for about
64% of the total.
GHG emissions through electricity generation, as
measured in terms of CO2 in the year, amounted to 3.89
million tons, accounting for about 15% of the total
emissions, which represented the majority of GHG
emissions from the Group’s own business activities. As away of reducing GHG emissions from power generation,
the Group will continue to actively introduce highly
advanced energy-efficient power generation facilities anduse renewable energy sources.
GHG emissions from material and fuel procurement
totaled 4.61 million tons, as measured in terms of CO2 inthe year, accounting for about 18% of the total emissions.
The procurement of energy sources, especially LNG,
accounted for over 70% of that amount. Under thesecircumstances, we will continue our efforts to improve fuelefficiency regarding the operation of LNG tankers incollaboration with resource suppliers.

Power generation
Heat supply

Customer side

GHG emissions
25.98 million t-CO2e

16.54 million t-CO2e

LBS business and others
Sales, waste disposal (business activities bycompanies outside the Daigas Group)

Companies subject to the calculation of GHG emissions: 6
 3 companies in total, including Osaka Gas Co., Ltd. and 62 companies among 154 consolidated subsidiaries are subject to calculation of
GHG emissions. Those housed in office buildings as tenants and whose environmental data are difficult to grasp and whose environmental
effects are minimal are not subject to such calculation. Also excluded from the calculation are overseas companies, except two companies.
CO2 emission factors used (GHG scopes 1 and 2)● Electricity: 0.65 kg-CO2/kWh (Average emission factor of thermal power plants in FY2014.3, stipulated in the Plan for Global Warming Countermeasures issued by the government in 2021.)● City gas: 2.29 kg-CO2/m³ (based on Osaka Gas data)● Others: Factors listed under the Law Concerning the Promotion of Measures to Cope with Global Warming
Sources of emission factors used for calculating CO2 emissions (GHG scope 3)● Production and transmission of city gas: “Life cycle evaluation of city gas” on the website of the Japan Gas Association● Production and shipment of LNG: Calculation of life cycle greenhouse gas emissions of LNG and City Gas 13A (papers presented at research presentation meetings of the 35th Meetingof the Japan Society of Energy and Resources, June 2016)● Production and shipment of LPG and coal: Future forecast for life cycle greenhouse gas emissions of LNG and City Gas 13A (Energy and Resources, Vol. 28, No. 2, March 2007)● Other main emission factors: Emission factors for calculating supply-chain greenhouse gas emissions, etc. (Database Ver. 3.3) published in March 2023 by the Ministry of Environment

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Verified by a third party

Corporate GovernanceCorporate Data

A third-party verification has been conducted by Bureau Veritas Japan Co., Ltd.

Environmental Impact throughout the Daigas Group Value Chain■ Main materials and fuels■ Amount of energy used

6,488 thousand tons
Amount of LNG
handledThe figure above includes theamounts of the items listed below:● Materials of city gas● Fuels at LNG terminals● Fuels used by Group companies
for power generation

LPG used for calorificadjustment of city gas

210 thousand tons

City gas
Purchased electricity
Other energy sources

Gasoline
City gas
LPG(Business activities by companies outside the Group)

1,232 million m³(including gas whose calorificvalue has yet to be adjusted)

493 million kWh
13,568 TJ

Business office

Waste disposal

City gas use/power
generation use/
marketing use

City gas use/
marketing use

Commuting,business trips

Power generation

Heat supply

Product
shipment

Leasing ofassetsOther purchased goods

LBS business

Others*Coal, biomass

Materials/consumable goods/
capital goods/gas equipment
for sale/electricity/gasoline
and others

Other procurement items
Total

192
1,051

4,606

City gas

Gas appliances

Electricity

Chemical products

Outlets providing sales
support to Osaka Gas

LNG

Services■ GHG (scope 3*2)

■ GHG (scope 3*3)

Emissions (1,000 t-CO2e)

Emissions (1,000 t-CO2e)

LPG, coal, biomass

Use at customer site

* Engineering/energy services/renovation/maintenanceservice/R&D etc.

■ GHG (scope 1 and 2)
3,362

15,883 million kWh(Business activities by companies outside the Group)

City gas production/
supply

LNG, natural gas

Electricity

Sales, waste disposal

Business activities by Osaka Gas

LPG■ GHG (scope 3*1)

6,845 million m³

1,553 kl
31 thousand m³
699 kl4 thousand m³

LNG, natural gas

Power generation use

Gas■ Amount of vehicle fuel used
DieselProcurement of materials and fuels■ Sales volume of main products

Scope 1

Scope 2City gas production

34

82

Business office (including supply)

16

15

3,869

21

Power generation
Heat supply

56

34

LBS and others

431

172

4,406

324

Total

Emissions (1,000 t-CO2e)

99
GHG emissions due to energy consumption arising fromvarious activities, including commuting of employees, businesstrips, transportation of products, business activities at outlets
that provide sales support to Osaka Gas, disposal of own
waste, disposal of product waste, and leasing of assets.

Emissions (1,000 t-CO2e)
Combustion of city gas
Combustion of LNG
Total

15,675867

16,542■ WasteBreakdown of Scope 3 categories*1 Category 1− 4 (purchased products, capital goods, fuelprocurement, upstream transportation)*2 Category 5-7, 9, 12−14 (waste, business trips,
commuting, leased assets, product shipment, end-of-life
treatment of sold products, franchises)*3 Category 11 (use of sold products)

General waste
Industrial waste
Excavated soil
PE pipe
Used gas appliances recovered

Generated
1,103 t101,654 t
580,000 t
137 t
1,569 tRecycled
96%
96%
100%
100%
86%

■ Amount of water intake and water discharge

Stated on

63

P.58

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate GovernanceCorporate Data

Basic Views on Corporate GovernanceCorporate Governance System
Overview of Corporate Governance System
Views on the Composition of the Board of Directors
Advisory Committee
Training Policy for Directors and Audit &Supervisory Board Members, and Succession Plan
Directors and Audit & Supervisory Board Members Remuneration
Evaluation and Analysis of Effectiveness of the Board of Directors as a Whole
Audit & Supervisory Board, Audit & Supervisory Board Members
Risk Management
Directors and Audit & Supervisory Board Members
Message from the Outside Directors
64

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Corporate Governance
Basic Views on Corporate Governance
As a corporate group that powers “continuous advancement” in consumer life and business, our Corporate Principles aim to create four types of value: “Value for Customers,” “Value for Society,”“Value for Shareholders” and “Value for Employees” by providing various products and services relating to not only the energy business, including natural gas, electricity, and LPG, but also its
peripheral services and non-energy businesses, such as urban development, materials and information businesses.
Under these Corporate Principles, the Company and its affiliates (the “Group”) will respond appropriately to the exercising of shareholder rights, and work toward maintaining and increasing a
sense of trust by dialogue and cooperation with its stakeholders. In addition, the Group will continue to enhance and strengthen corporate governance in order to respond quickly and appropriately
to changes in the business environment surrounding the Group, make transparent, fair, and decisive decisions, and execute business efficiently and appropriately.

Corporate Governance System
Osaka Gas has selected to be a company with Audit & Supervisory Board and conducted the introduction of an executive officer system, appointment of multiple Outside Directors, and establishmentof voluntary advisory committees on management, appointment of Directors and Audit & Supervisory Board Members and Director remuneration. The Company considers its current governancesystem best suited for the decision-making and business execution described above.
■ Corporate Governance System (as of June 23, 2023)
General Meeting of Shareholders
ReportAudit and Report
Making Important Decisions; Monitoring and Supervisory Function

Audit and Report

Directors (Board of Directors)

・ESG Committee
・Safety and Disaster Prevention
Committee
・Cyber Security Committee
・Investment Evaluation Committee
・DX Committee

ReportMaking Important
Decisions;Supervision

Representative Director
and President(President and Executive Officer)

Report,etc.

Management
Meeting*4
ProposalDelegating Authority

Corporate Committees

ReportSubmission and Report

Business Execution Function

Delegating
Authority

Consult

Report, etc.

Report, etc.

(Management;
Appointment;
Remuneration)*2

Proposal andReport(including Outside Directors)

Advisory
Committee*1

Appointment andDismissal

Audit & Supervisory Board
Members (Meetings)(including Outside Members)*3

Office of Audit &Supervisory Board

ReportApproval of audit plans, etc./
Report audit results

Internal Audit, etc.

Executive Directors (Vice-Presidents and Executive Officers, Managing Executive Officers)
Osaka Gas: Basic Organization
Affiliates

65

ReportReportAppointment
andDismissal

Accounting
AuditorCooperation(Sharing Information
etc.)

Cooperation(Sharing Information etc.)

Appointment and Dismissal

Cooperation(Sharing Information etc.)

Proposal and Report

Auditing Department*1 Board of Directors: 10 Directors (6 Internal Directors and
4 Outside Directors)*2 Advisory Committee: 4 Outside Directors, Representative Director
and President, and a person appointed by
the President (up to one member who is a
Representative Director)*3 Audit & Supervisory Board: 5 Audit & Supervisory Board Members(2 full-time Audit & Supervisory Board
Members [internal] and 3 Outside Audit &Supervisory Board Members)*4 Management Meeting: 1 President and Executive Officer,
3 Vice-Presidents and Executive Officers,
and 7 Managing Executive Officers

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Overview of Corporate Governance System
Board of Directors, Directors of the Company

Audit & Supervisory Board, Audit & Supervisory Board Members

ESG Committee

The Board of Directors consists of 10 Directors (including four Outside
Directors). Its mission is to formulate the "Regulations of the Boardof Directors" and the "Standards for Voting on Resolutions in the
Board of Directors", make swift and appropriate decisions about
important matters that affect the whole Group including
subsidiaries, and enhance supervisory capabilities. The Articles ofIncorporation stipulate that there shall be no more than 15
Directors. They also direct that the appointment of Directors is totake place with a quorum of shareholders possessing at least
one-third of shareholder voting rights and by a majority of voting
rights held by shareholders present, and that no cumulative voting
may be used for appointing Directors.
In FY2023.3, the Board of Directors held 13 meetings, with
100% attendance by all Directors. Meetings discussed the Group’s
management plans, the establishment of important organizations,
important human resources matters, execution of importantinvestments and agreements greater than a certain amount, andoperational status reports from executive Directors, etc.

The Audit & Supervisory Board consists of five Audit &Supervisory Board Members, of whom three are Outside Audit &Supervisory Board Members and each Audit & Supervisory Board
Member monitors the execution of work duties by the Directors.

The Company has established the ESG Committee to promote
activities relating to the Group's sustainability, including theenvironment, compliance, social contribution, respect for humanrights, and risk management.
(Chairman: Head of ESG Promotion/Representative Director andVice-President)

Executive Officers
The Company has adopted an executive officer system (Executive
Officers consist of President and Executive Officer, Vice-President
and Executive Officers, Managing Executive Officers, andExecutive Officers), which enables the Directors of the Company
to focus on making business decisions and monitoring andsupervisory functions, and worked toward strengthening thebusiness efficiency and the supervisory functions by vitalizing theBoard of Directors. Executive Officers perform duties determinedby the Board of Directors, and some Representative Directors andDirectors concurrently serve as Executive Officers to makemanagement decision-making more accurate and efficient.

Management Meeting
The Company examines basic management policies andimportant management issues at the Management Meeting andfully deliberates the foregoing before decision-making. In
accordance with internal regulations, the Management Meeting
consists of President and Executive Officer, Vice-President andExecutive Officers, and Managing Executive Officers. In principle,
the Management Meeting is held three times per year as the“ESG Council,” which deliberates on activity plans and reports
on activities related to the promotion of ESG management.

Auditing Department
The Company has established the Auditing Department as aninternal audit division. Based on a yearly auditing plan, it audits,from independent and neutral viewpoints, the status of executionof business activities. Audit results are reported regularly at theManagement Meeting and other meetings. In the event that aninternal audit identifies a matter that may have a significant impact
on management, it is reported to the Board of Directors (dualreporting). The Auditing Department evaluates internal control
over financial reporting based on the Financial Instruments andExchange Act. The Head of the Auditing Department regularly
exchanges opinions with Audit & Supervisory Board Members,
the accounting auditor, and outside officers (Outside Audit &Supervisory Board Members and Outside Directors).

Advisory Committee
The Advisory Committee consists of all the Outside Directors(four), the President, and, if necessary, a person appointed by the
President (the President may appoint up to one person fromamong the other Representative Directors). From the perspectiveof corporate value enhancement, ensuring objectivity andtransparency in the decision-making process, the Advisory
Committee deliberates on matters related to key issues such as
medium- to long-term corporate strategy and sustainability,
matters related to the election of candidates for Directors andAudit & Supervisory Board Members, matters related to theselection and dismissal of Representative Directors and other
Executive Directors, and matters related to the remuneration of
Directors. All committees are chaired by Outside Directors(Advisory Committee on Management, Advisory Committee on
Appointment, and Advisory Committee on Remuneration).

66

Safety and Disaster Prevention Committee
In order to take all possible measures to ensure safety, disasterprevention, and gas supply stability after the legal spin-off of thegas pipeline service business, the Company established the
Safety and Disaster Prevention Committee to unify the
management of events related to safety, disaster prevention, andgas supply stability, and to promote measures against them within
the Group.
(Chairman: Head of Safety/Managing Executive Officer)

Cyber Security Committee
The Company has established the Cyber Security Committee toreinforce the cyber security measures of the Group.
(Chairman: Head of Technology/Representative Director and VicePresident)

Investment Evaluation Committee
The Company has established the Investment Evaluation
Committee to examine risk and return and assess investments inexcess of a certain amount, and report findings to theManagement Meeting to help make appropriate investment
decisions.
(Chairman: President of the Corporate Planning HQ/
Representative Director and Vice-President)

DX Committee
The Company has established the DX Committee to promote DX
for the entire group while coordinating the alignment withbusiness, IT, and financial strategies across the organization.
(Chairman: President of the Corporate Planning HQ/
Representative Director and Vice-President)

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Views on the Composition of the Board of Directors
From the perspective of contributing to its sustainable growth and improvement of the medium- to long-term corporate value of the Daigas Group, Osaka Gas has adopted a basic policy of
appointing diverse talent as Directors and Audit & Supervisory Board Members in full consideration of their knowledge, experiences, ability, personality, etc. regardless of gender, nationality, career, orage, etc. The Group positions the advancement of women as a first step for diversity promotion and has set a target of 20% or more in both the ratio of female officers and female directors by
FY2031.3. As of June 2023, the ratio of female officers and directors was 26.7% and 20.0%, respectively.
Moreover, based on medium- and long-term management plans, we have defined the basic qualifications for Internal Directors as having experience and expertise, etc. in corporate
management, marketing, technology/R&D, DX, global management, ESG, finance/accounting, legal/risk management, human resources development of the Group including the energy business, andthose for Outside Directors as having not only independence that enables objective judgment but also extensive knowledge, wealth of experience, great expertise in their specified field, etc. As such,the Board of Directors as a whole has a well-balanced composition.
In addition, we have long since defined the term of Director as one year in order to respond flexibly to changes in our business environment and clarify management responsibility.
Based on the above-mentioned policy, decisions on the selection of candidates for Directors and Audit & Supervisory Board Members and the appointment and dismissal of Representative
Directors and other Executive Directors are made based on deliberations by a voluntarily appointed Advisory Committee made up of a majority of Outside Directors in order to ensure objectivity andtransparency in decision-making.
The following is a list of the expertise and experience that the Board of Directors should possess as identified in light of the medium- to long-term management plan as well as the significant
expertise and experience of each Director and Audit & Supervisory Board Member.
■ Skills Matrix (as of June 23, 2023)
Name

Position

Fields of Significant Expertise and Experience

Age

Years
in
officeInternal/
OutsideIndependence

Attendanceat Board of
Directors
Meetings

Corporate
Management

MarketingTechnology
/R&D

DX

GlobalManagement

ESG

Finance/
Accounting

Legal/Risk
Management

Human
Resources
Development

69

14Internal

―

100%

●

●

●

●

●

●

●

●

●

Takehiro Honjo

Chairman and Director

Masataka Fujiwara

Representative Director andPresident

President and Executive
Officer65

7Internal

―

100%

●

●

●

●

●

●

●

●

●

Tadashi Miyagawa

Representative Director

Vice-President andExecutive Officer

64

7Internal

―

100%

●

●

●

●

●

●

●

●

●

Takeshi Matsui

Representative Director

Vice-President andExecutive Officer

62

6Internal

―

100%

●

●

●

●

●

●

●

●

●

Takayuki Tasaka

Representative Director

Vice-President andExecutive Officer

60

5Internal

―

100%

●

●

●

●

●

●

●

●

●

Managing Executive Officer

61

2Internal

―

100%

●

●

●

●

●

●

●

●

●

Kazutoshi Murao

Director

70

4

Outside

〇

100%

●

●

●

●

●

●

●

●

●

Tatsuo Kijima

Director

68

3

Outside

〇

100%

●

●

●

●

●

●

●

●

●

Yumiko Sato

Director

71

2

Outside

〇

100%

●

●

●

●

●

●

●

●

●

Mikiyo Niizeki

Director

55―

Outside

〇

―

●

●

●

●

●

●

Hisaichi Yoneyama

Audit & Supervisory Board Member

623Internal

―

100%

●

●

●

●

●

●

●

Ichiro Hazama

Audit & Supervisory Board Member

57―

Internal

―

―

●

●

●

●

●

●

Shigemi Sasaki

Audit & Supervisory Board Member

75

7Outside

〇

100%

●

●

●

●

●

●

●

●

Eriko Nashioka

Audit & Supervisory Board Member

561Outside

〇

100%

●

●

●

●

●

Chieko Minami

Audit & Supervisory Board Member

62―

Outside

〇

―

●

●

●

●

●

Fumitoshi Takeguchi Director

67

●

●

●
●

●
●
Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories■ Independence of Directors
Percentage of Non-executive Directors

50%

Corporate Data

■ Diversity of Directors and Audit & Supervisory Board Members
Percentage of Independent Outside Directors

Non-executive
Directors:
5 personsExecutive
Directors:
5 persons
Directors: 10 persons

Corporate Governance

40%

Percentage of Female Executives

OutsideDirectors:
4 persons

26.7%

FemaleExecutives:
4 persons

Directors: 10 persons

20%

FemaleDirectors:
2 personsMale
Directors:
8 personsMale
Executives:
11 persons

Internal
Directors:
6 persons

Percentage of Female Directors

Directors: 10 persons

Audit & Supervisory Board Members: 5 persons■ Corporate Governance Initiatives
2019
Chairperson of the Board
Execution system
Separation ofbusiness execution
and supervision

Diversity

Outside Directors

2020

From 2015: Representative Director and Chairman of the Board

From 2016: 3 persons

From 2021: 4 persons
From 2020: percentage of Outside Directors: 1/3 or more

From 2014: 3 persons

Voluntary advisory committee

In 2013: established (appointment and remuneration)

Remuneration system

2023

From 2021: Director and Chairman of the Board

In 2022: expanded (management, appointment, and remuneration)
From 2021: 2 persons (one Director and one Audit & Supervisory Board Member)

From 2014: one person (one Audit & Supervisory Board Member)

Skills matrix
Linkage between
sustainable growth
and remuneration

2022

From 2009: adoption of an executive officer system

Outside Audit & Supervisory
Board Members

Female officers

2021

From 2023: 4 persons (2 Directors and2 Audit & Supervisory Board Members)

Since 2021: disclosed
In 2013: established performance-linked remuneration system

Since 2022: linked remuneration to ESG indicators achievement
In 2021: established stock-based remuneration system

From 2003: Investment Evaluation Committee
From 2006: CSR Committee*³
Corporate committee*1

From 2020: ESG Committee

From 2019: Cyber Security Committee
From 2021: DX Committee

Internal Control

From 1996: Executive Safety Council
Strengthening risk
management(operation of G-RIMS*²)

From 2017: targeting Osaka Gas, domestic and overseas affiliates

Cross-shareholdings

In 2013: established policies regarding cross-shareholdings*4

From 2022: Safety and Disaster Prevention Committee*1 Established for the purpose of coordinating and promoting matters (important issues for the entire Group) across multiple basic organization*2 Systematized self-assessment of risk management practices (Gas Group Risk Management System)*3 The new “CSR Committee” was established to coordinate and promote the activities of the committees (Compliance Committee and Energy & Global Environment Committee), which had been operating separately by field, as well as community and social contribution, humanrights, employment, and other activities promoted by the organizations in charge, on a cross-organizational basis.
*4 Rules on the purchase and management of third-party stocks were established. The Board of Directors examines the significance of each individual stock holding. If the significance of holding an issue has waned, we sell it sequentially.
With respect to the exercise of voting rights, a standard for exercising voting rights was established (in 2016). We examine the content of proposals through various methods, including dialogue with investees, and decide whether to approve or disapprove.

68

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Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Advisory Committee
The Advisory Committee consists of all the Outside Directors (four), the President and, if necessary, a person appointed by the President (the President may appoint up to one person from among the other
Representative Directors). From the perspective of corporate value enhancement, ensuring objectivity and transparency in the decision-making process, the Advisory Committee deliberates on mattersrelated to key issues such as medium- to long-term corporate strategy and sustainability, matters related to the election of candidates for Directors and Audit & Supervisory Board Members, matters related
to the selection and dismissal of Representative Directors and other Executive Directors, and matters related to the remuneration of Directors. All committees are chaired by Outside Directors.
■ FY2023.3 Results
Name

Composition of eachadvisory committee andpercentage of Outside
Directors

AgendaIssues discussed

Attendance

Number of the
Attendance
meetings heldrate
in FY2023.3

Outside Director

2 out of 2 meetings

100%

Hideo Miyahara*1

Outside Director

2 out of 2 meetings

100%

Kazutoshi Murao

Outside Director

2 out of 2 meetings

100%

Yumiko Sato

Outside Director

2 out of 2 meetings

100%

Masataka Fujiwara

Representative Director, President and Executive Officer 2 out of 2 meetings

100%

Takeshi Matsui

Representative Director, Vice-President and Executive Officer 2 out of 2 meetings

100%

Outside Director

3 out of 3 meetings

100%

Hideo Miyahara*1

Outside Director

3 out of 3 meetings

100%

Tatsuo Kijima

Outside Director

3 out of 3 meetings

100%

Yumiko Sato

Outside Director

3 out of 3 meetings

100%

Representative Director, President and Executive Officer 3 out of 3 meetings

100%

Outside Director

3 out of 3 meetings

100%

Kazutoshi Murao

Outside Director

3 out of 3 meetings

100%

Hideo Miyahara*1

Outside Director

3 out of 3 meetings

100%

Tatsuo Kijima

Outside Director

3 out of 3 meetings

100%

Masataka Fujiwara

Representative Director, President and Executive Officer 3 out of 3 meetings

100%

Takayuki Tasaka

Representative Director, Vice-President and Executive Officer 1 out of 1 meeting*2

100%

Name
Tatsuo Kijima

Advisory
Committee on
Management

Advisory
Committee on
Appointment

Advisory
Committee on
Remuneration(Management)(Management)(Management)
%

67
67%
67%

(Appointment)(Appointment)(Appointment)
%

80
80%
80%

(Remuneration)(Remuneration)(Remuneration)
%

67
67%
67%

Key issues such as
medium- to long-term
corporate strategy andsustainability

Matters related to the election ofcandidates for Directors and Audit &Supervisory Board Members, theselection and dismissal of Representative
Directors and other Executive Directors,
skills matrix, and succession plan, etc.
Policy on determining
remuneration of Directors,
calculation method for the
portion linked to businessperformance of the
remuneration, payment
coefficient, appropriateness of
the remuneration levels, etc.

Prospects and challenges
for achieving carbon
neutrality, trends in humancapital and the Company's
personnel measures, etc.

Matters to be considered in theselection of candidates for Directors,
the election of candidates for
Directors, selection and dismissal ofRepresentative Directors and other
Executive Directors, skills matrix, etc.
Policy on determining
remuneration of Directors,
appropriateness of the
remuneration levels, calculation
method for the portion linked tobusiness performance, payment
coefficient for the portion linked
to business performance, etc.

Kazutoshi Murao

Position
Chairperson

Chairperson

Masataka Fujiwara
Yumiko Sato

Chairperson*1 Retired as of the close of the Company’s Annual Meeting of Shareholders held in June 2023.
*2 Deliberations on Directors' remuneration levels, etc. are not subject to attendance.

Outside Directors

2 meetings

3 meetings

3 meetings

Internal Directors

Training Policy for Directors and Audit & Supervisory Board Members, and Succession Plan
When appointed, the Company provides internal officers an opportunity to acquire knowledge regarding their roles, legal duties to be complied with, and responsibilities expected of a
Director or Audit & Supervisory Board Member. Subsequently, the Company regularly provides opportunities internally or externally for Officers to receive training regarding legal
affairs, risk management, compliance, and other matters to continue to acquire the knowledge necessary for the comprehension of legal revisions and other latest world trends.
Further, as part of the succession plan for top management, human resources to oversee the Company’s management are fostered through such means as the systematic rotation of
the areas of responsibility of internal Directors and Executive Officers.
As for Outside Officers, the Company provides opportunities for them to deepen their understanding upon appointment, such as by explaining the nature of the Group’sbusinesses, so that they can put to practice their expertise and experience in each of their fields for supervising and auditing the Company’s business. Later, the Company also offers
opportunities as necessary in which the business environment and business trends are explained accurately in a timely manner so that Outside Officers can gain an understanding.

69

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Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Directors and Audit & Supervisory Board Members Remuneration
Remuneration for Directors shall be provided in a remuneration system designed to raise motivation for Directors to achieve sustainable growth and mid- to long-term increase incorporate value. Remuneration for Directors other than Outside Directors shall consist of basic remuneration as fixed remuneration, performance-linked remuneration and stock-based
remuneration, and remuneration for Outside Directors shall only consist of basic remuneration as fixed remuneration, as they have a standpoint independent of business execution.
Remuneration for Directors shall be determined within the total amount of remuneration*1 approved at the Annual Meeting of Shareholders, after deliberation at a voluntarily appointed
Advisory Committee on remuneration made up of a majority of the Outside Directors, from the perspective of ensuring objectivity and seeking transparency in the decision-making process.*2
The Company has established a policy on determining the remuneration of Directors as prescribed by the resolution of the Board of Directors after deliberation at a voluntarily
appointed Advisory Committee made up of a majority of Outside Directors. This policy is summarized as follows.
The system of paying retirement benefits to Directors was abolished in June 2004.
*1 At the 203rd Annual Meeting of Shareholders held on June 25, 2021, it was resolved that the monetary remuneration quota would be up to 57 million yen per month, the stock remuneration quota would be within 72 million yen per year, and the maximum number of shareswould be within 48,000 shares per year. The number of Directors at the end of said Annual Meeting of Shareholders was ten.
*2 The content of monetary remuneration may be determined by the Representative Director and President based on delegation of authority by the resolution of the Board of Directors.

■ Outline of Remuneration
Standard composition*³
Remuneration
items

Fixed/variableBasic
remuneration

Fixed

Internal
Directors

OutsideDirectors

50%

100%

Type ofremuneration

Monetary
remuneration

Outline●●●●Performancelinked
remuneration

Variable(short-term incentive)

40%ーMonetary
remuneration

Monetary remuneration paid on a monthly basis
The amount shall be determined in accordance with the rules prescribed by the resolution of the Board of Directors, whileconsidering such factors as each Director’s position and responsibilities, public standards, and other factors.
Monetary remuneration paid on a monthly basis
The amount shall be determined using the profit attributable to owners of parent for the past three years and the coefficientof ESG indicators achievement in the previous year as the main indicators
Base amount by
position×

Payment coefficient of performancelinked remuneration (indicator: profit
attributable to owners of parent)

×

ESG indicators achievement(indicator: internal ESG
indicators achievement)=

Performancelinked
remuneration

Restricted stock shall be granted at a certain time every year for the purpose of strengthening the linkage between
remuneration and mid- to long-term increase in corporate value and further promoting sharing of value with theshareholders.
● The number of shares to be granted shall be determined with consideration for the positions and responsibilities of each
Director and stock prices, etc.
● A Director shall not transfer, establish a security interest on, or otherwise dispose of the allotted shares during the period
from the date of the allotment of shares to the date of his/her retirement from office.
● Transfer restrictions shall be lifted on the condition that the resignation of a Director is due to reasons deemed justifiable by
the Company or due to the death of the Director.
●In the event that a Director commits an act of misconduct or falls under other certain events stipulated in the restricted stock
allotment agreement, the Company will naturally acquire all or part of the allotted shares without remuneration (malus andclawback provisions).
●

Stock-based
Variable
remuneration (mid- to long-term incentive)

10%ー

Stocks*3 When performance-linked remuneration targets are fully achieved.

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Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Officer Remuneration System Taking into Account ESG Indicators Achievement
At the Board of Directors meeting held on December 23, 2021, Osaka Gas resolved to reflect the coefficient of ESG indicators achievement in the previous year in officer remuneration tocontribute to short-term and mid- to long-term increases in corporate value.
The coefficient of ESG indicators achievement includes the achievement of the following items.
This has been applied from July 2023 onward, when remuneration is paid based on FY2023.3 results.
■ Main ESG Indicators

Please see

P.29-30 for FY2023.3 results.

Charter of Business Conduct

Materiality
Maintain and expand customer base
Improvement of customer satisfaction
and quality of services
Customer health and safety
Stable supply of services

Ⅰ Creating value for customers

Ⅱ Contributing to the sustainability of theenvironment and society

Climate change

Ⅲ Engaging with and contributing to society

Coexistence with local community

Ⅳ Respecting human rights
Ⅴ Complying with laws and regulations

Supply chain management
Compliance
Employee engagement
Development of employee skills

Ⅵ Providing work environment that supports
employees’ personal growthTermProfitPlan
attributable tomillion yen
owners ofResultparentIndicators
Number of customer accounts

Establishing lifestyles and businesses
adjusted to the new normal

Customer satisfaction rate

Enhancing resilience of customers andsociety
Achieving a low-carbon/carbon-neutral
society

Building foundations that support therealization of value for a sustainable future

Diversity and inclusion■ Profit Attributable to Owners of Parent (Consolidated Profit) for the Last Three Years
Fiscal year ended

Value for a sustainable future

202nd

203rd

204th

March 31, 2020

March 31, 2021

March 31, 2022

55,00073,00070,50041,78880,857130,421

Number of serious accidents
Build resilient energy supply facilities
CO2 emissions of Daigas Group
Percentage of renewables in our power generation portfolio in Japan
Contribution to developing renewables capacity on a global basis
Avoided emissions (Baseline: FY2017.3)
Number of our participations in local governments’ activities (i.e.
community development planning)
Number of joint efforts with local communities
Appropriate new supplier ratio
Number of serious violations of laws and regulations
Employee attitude survey (Loyalty Score)
Annual average hours of training per employee
Percentage of female officers/percentage of female Directors
Percentage of women in members newly promoted to middle
management positions
Percentage of women in new recruits for career-track positions■ Total Amount of Remuneration by Officer Classification and by Type of Remuneration, and Number of Eligible Officers (Fiscal year ended March 31, 2023)
Classification

Total amount of
remuneration

Total amount of remuneration by type of
remuneration (million yen)Fixed(million yen)

Performancelinked

Non-monetary
remuneration, etc.

Number ofpayeesDirectors (excluding Outside Directors)

417

183

187

46

6

Audit & Supervisory Board Members(excluding Outside Members)

69

69

ー

ー

2

Outside Directors

48

48

ー

ー

4

Outside Audit & Supervisory Board Members

36

36

ー

ー

4

Note: The number of persons and amounts include one Outside Audit & Supervisory Board Member who retired as of the close of the Company’s 204th Annual Meeting of Shareholders held on June 28, 2022.
*T he total amount of remuneration for each officer is not stated as there is no officer with a total amount of consolidated remuneration of 100 million yen or more.
* There are no employees concurrently serving as officers.

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Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Evaluation and Analysis of Effectiveness of the Board of Directors as a Whole

Audit & Supervisory Board, Audit & Supervisory Board Members

The Board of Directors analyzes and evaluates the effectiveness of the Board of Directors and the Advisory
Committee each fiscal year based on the results of interviews conducted by the Board of Directors Secretariat
with each Director and Audit & Supervisory Board Member. The methods and results of the evaluation of theeffectiveness of the Board of Directors for the fiscal year ended March 31,2023 are summarized below.

■ Percentage of Outside Audit &The Audit & Supervisory Board consists of five Audit & Supervisory Board
Supervisory Board Members
Members, of whom three are Outside Audit & Supervisory Board Members.
The Company has established the Office of Audit & Supervisory Board, which
Outside Audit& Supervisory
is composed of full-time staff operating outside the Executive Directors’ chain
Board Member:
3 personsof command. The Office is designed to support Audit & Supervisory Board％
Internal Audit
Members’ auditing work and thus enhance their auditing function.
& Supervisory
Member:Audit & Supervisory Board Members monitor the execution of duties of Board
2 personsthe Directors from an independent viewpoint and strive to raise the
Audit & Supervisory Board Members: 5 persons
effectiveness and quality of auditing by exchanging information as necessary
on such occasions as regular meetings about annual audit plans and audit
reports. Further, they exchange opinions on the status of internal controls andrisk management with the internal audit division and the accounting auditor.Full-time Audit & Supervisory Board
Members conduct auditing activities on a daily basis and share their findings with Outside Audit & Supervisory Board
Members in a timely manner. Their main activities are as follows.

60

1. Method
Interview
Conducted interviews with all
Directors (10) and all Audit &Supervisory Board Members(5) in March-April 2023
regarding the composition of
the Board of Directors, its
operation, and the content ofdeliberations, etc.*

Discussion
Discussed the effectivenessof the Board of Directors
at the outside officers
meeting held in April 2023
(attended by all Outside
Directors and Outside
Audit & Supervisory
Board Members).

Addressing Key Issues
Promote improvement of key issues

Report to the Board of
Directors and Discussion• At the Board of Directors meeting held in
May 2023, Outside Directors reported theresults of the outside officers meeting,and the Board of Directors confirmed theirassessment of the effectiveness of theBoard of Directors for FY2023.3.
• The Board of Directors discussed andconfirmed the direction of improvement for
the issues identified in the Board effectivenessevaluation, prioritizing them according to theirlevel of importance and the period of timerequired for their consideration.

■ Main Activities of Audit & Supervisory Board Members(a) Businessaudit• Attend important meetings such as Management Meeting and read important documents• Conduct visiting audits at Head Office, major offices, and affiliates• Listen to reports from each organization and affiliate• Exchange opinions with Directors (including Outside Directors)• C ooperate with the internal audit division and Audit & Supervisory Board Members of affiliates(b) A ccounting
audit

•C
 onfirm the independence of the accounting auditor and proper conduct of audits• Confirm accounting audit plans and audit results, etc.

* Based on the evaluation by an external specialist institution, we have established the interview items for the fiscal year ended March 31,2023.

2. Interview Items① Initiatives in response to last year's issues• Establishment of medium- to long-term themes to
examine the direction of the company as a whole• Further enhancement of information
to judge candidates for Directors• Devising ways to deepen discussions at
the Board of Directors meetings② Composition of the Board of Directors•The ideal structure and composition of
the Board of Directors to realize thelong-term management vision andmedium-term management plan
• Ensuring diversity (gender, expertise,
experience, ability, etc.), etc.

③ Operation of the Board of Directors meetings• Frequency and time, proceedings, materials• Development of appropriate
management strategies and plans, thestatus of response to key issues suchas climate change risks and DX, etc.
④ Advisory Committee• Frequency of meetings, content ofdeliberations, method of operation,
topics to be discussed, etc.
⑤ Outside officers' meetings and others•T heme, exchanging opinions for the
purpose of developing management, etc.
⑥ Free opinion

The Audit & Supervisory Board reports on the implementation status of the audit, shares information, andconducts necessary deliberations and resolutions. 14 Audit & Supervisory Board meetings were held in
FY2023.3. The main resolutions of the Audit & Supervisory Board meetings are as follows.
■ Main Resolutions at the Audit & Supervisory Board Meetings• A pproval of proposal for election of•A udit plans by Audit &Audit & Supervisory Board Members
Supervisory Board
Members•S election of full-time Audit &Supervisory Board Members•R eport on audits by the
Audit & Supervisory Board • A ssignment of duties of each Audit& Supervisory Board Member

The amount of remuneration for Audit & Supervisory Board Members was approved at the 176th Annual Meeting of Shareholders
held on June 29, 1994, to be up to 14 million yen per month. The number of Audit & Supervisory Board Members at the end of
said Annual Meeting of Shareholders was five. The amount of remuneration for each Audit & Supervisory Board Member shall be
determined through discussions among Audit & Supervisory Board Members within this amount, and consisting only of fixed
remuneration because they are assigned the role of auditing the execution of duties by Directors from a standpoint independentof the performance of the Company’s businesses, and taking into consideration the position, etc. of each Audit & Supervisory
Board Member. The system of paying retirement benefits to Audit & Supervisory Board Members was abolished in June 2004.

3. E
 valuation Results<Major issues>• Board operations that devote more time to discussion• Expansion of Advisory Committee on Management• Expansion of opportunities to exchange views with internal officers• Cultivate internal officer candidates from a medium- to long-term perspective (especiallywomen and highly specialized personnel)• Evaluation and reappointment/
non-reappointment of theaccounting auditor• Approval of remuneration for
the accounting auditor

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Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Risk Management
Basic Approach and Policy
As the social and economic environment is changing drastically, with the increasingly unstable international situation, exchange rate fluctuations and inflation, the importance of energy security
is rapidly growing, along with the further acceleration of decarbonization. In such an environment, the Daigas Group, which operates a various types of businesses in various regions,recognizes that risks listed on
P.74 may have an impact on its business performance and financial position. We are working on each measure under the risk management
promotion system, and the ESG Committee, the Safety and Disaster Prevention Committee, and other corporate committees are implementing plans and following up on progress.
Matters concerning the future as stated are based on the Group’s judgment and assumptions as of the end of FY2023.3.

Promotion System
Organizational heads of the Company and presidents of the affiliates promote the management of the risk of losses and periodically conduct risk management assessments. Eachbasic organization or affiliate identifies risk items, checks the status of management concerning the risk items, and conducts follow-ups or other measures by using such means
as the “G-RIMS (Gas Group Risk Management System),” which systematizes the self-assessment of risk management practices.

Periodic Reviews and Monitoring
Operating our own self-assessment system G-RIMS
The Group introduced the “G-RIMS,” a system for risk management in routine business operations, in 2006. The manager of each organization and affiliated company checks if
preventive measures have been implemented or if an early-detection system is in place as required, using a checklist comprising about 50 risk items. G-RIMS is also designed toevaluate the magnitude of risks and identify risks to be addressed, before PDCA (plan-do-check-act) is operated for improvement.
■ G-RIMS (Gas Group Risk Management System) Checklist
1.Management environment•D issemination of corporate principles•D ecision-making and follow-up process• Poor maintenance of regulations• Failure to report business information thatshould be reported• Effectiveness of self-audits
2.Human rights, harassment• Violation of human rights(workers, local residents, consumers, etc.)• Harassment(sexual harassment, maternity
harassment, power harassment)
3.Personnel affairs, labor affairs• Inappropriate labor management andincompliance with labor-related laws andregulations• Inappropriate employment contracts with
non-regular employees• Securing human resources•D eveloping human resources
4.Accident prevention, workplace safety• S lack conduct regarding accident
prevention and workplace safety• Vehicles for business use

5.Response to relevant laws
• Violation of applicable laws and regulations
6.Illegal transactions• Violation of the antitrust act• Violation of the subcontract act• Violation of the labeling act
7.Inappropriate relationships• Cozy relationships, bribery, etc. with public
servants; cozy relationships with clients andsuppliers
8.Anti-social forces• Refusal to have a relationship with anti-social forces
9.Insider trading• Practice of insider trading, provision of insider
information
10.Subsidies• Illegal receipt of public funds (subsidies, etc.)
11.Management of seals• Illegal use of seals
12.Purchase, expense-related spending• Inappropriate procedures and illegal practices
concerning purchase and expense-related
spending (accounting spending)
13.Illegal practices concerning moneytransfer• Illegal use of bank accounts• E mbezzlement of cash
• Embezzlement of sales proceeds• Illegal spending• The same person taking a spending-related
post for a long time
14.Accounting, tax-related procedures• Errors, illegal practices, and delays concerning
accounting and tax-related procedures
15.Credit control, loan control• Irrecoverable loans, delays in loan collection• A cceptance and execution of guaranteeddebts
16.Scandals involving suppliers• Compliance problems emerged at corporateclients concerning human rights, labor
practices, environment, and corruption
17.Whistle-blowing system(Compliance Desk)• Insufficient dissemination of a whistleblowing
system• Operational defects of a whistleblowing
system
18.Environment-related• Violation of environment-related laws

73

19.Products, services• Quality of products and services(complaints, defects, recall, productliability, consumer protection, etc.)
20.Business continuity in emergency• Suspension or delay of business activities/
operations in an emergency, such as adisaster
21.Intellectual property• IInsufficient protection of intellectual
property rights owned by Osaka Gas• Infringement of intellectual property rights
owned by third companies
22.Lawsuits• Legal disputes such as lawsuits
23.Information disclosure• Inappropriate information disclosure
procedures and the subsequent erosion of
public trust in Osaka Gas
24.Information control in general• Leakage, loss, and illegal use of information
25.Computer network related(computer networks, business apps related
to computer networks, information used
via such networks and apps)• Illegal use of information, illegal alterationof information, and information leakage, allarising from the lack of security measures
26.Personal information concerning
customers and corporate clients(including customer information)• Leakage, loss, and illegal use of personal
information concerning customers
27.Personal information concerning
employees• Leakage, loss, and illegal use of personal
information concerning employees
28.“My Number” system (individual
identification number andspecified personal information)• Leakage, loss, and illegal use of “My
Number” identification numbers
29.Funds, derivatives• Problematic fund management and fundprocurement• Problematic fund control• Speculative derivative transactions
30.Electronic banking• Illegal and erroneous money transfers
using the electronic banking system

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Recognition of and Countermeasures Against Business Risks
In addition to the measures preparing for the following risks, the Daigas Group aims to mitigate the impact on its business in cases where such risks emerge by appropriately
understanding and supervising the situations of business operations, while considering the degree and time period of the potential for risks to materialize.

Risks Related to All Businesses within the Group
Changes in economic, financial,and social conditions as well as market contraction
Occurrence of catastrophic disasters, accidents, or infectious diseases
Changes in international rules, politics, laws and regulations,and institutional systems
Changes in foreign exchange rates and borrowing rates
Uncollected investments
Climate change and decarbonization

Countermeasures against Risks
The Group is practicing portfolio management that responds to changes in the business environment by growing each of three segments “Domestic
Energy Business,” “International Energy Business,” and “Life & Business Solutions (LBS) Business.”
In preparation for the occurrence of natural disasters, terrorism, accidents, and infectious diseases, we are promoting initiatives including centralized management,
intensive inspections, and continuous improvements of facilities, taking out various types of insurance such as disaster insurance, and formulation and review of a“Business Continuity Plan (BCP)” in the event of a catastrophic disaster or accident and an operational plan for responses to outbreaks of infectious diseases, etc. In
addition, we are striving to build cooperative relationships in projects in which we participate for safe and stable business operations.
We are executing our respective businesses in accordance with international rules on environmental, social and governance issues, as well as otherdomestic and international rules, politics, laws and regulations, and institutional systems.
We are working to minimize the impact of changes in foreign exchange rates and borrowing rates through hedging and foreign currency procurement.
The Board of Directors makes decisions on various types of investments for growth based on comprehensive management decisions by the Investment
Evaluation Committee including projects’ economic and risk evaluation.
In order to respond to changes in regulations due to climate change issues, changes in social trends toward the realization of a carbon-neutral society in the future, andfluctuations in energy demand, etc., we are promoting initiatives for fuel conversion from coal and heavy oil to natural gas, the introduction of renewable energy and highly
efficient products and facilities, and development of technologies and building supply chains related to low-carbon/carbon-neutral transition.

Intensifying competition

In order to increase our market competitiveness in all business segments, we are promoting initiatives to increase added value, reduce raw material costs, develop technologies, etc.

Breakdown or malfunction of critical IT systems, information leaks,
and development delays
Quality issues with products or services

We are promoting and monitoring security measures, ensuring dissemination and education of information management, building information systems, etc.

Non-compliance with laws and regulations

In order to ensure that the products and services we offer are used securely and safely, we are working on thorough quality management and other measures.
To raise awareness of compliance, we are promoting initiatives to prevent problems from occurring through ongoing internal training, periodic risk
identification, and review, follow-up and improvement of response status, etc.

Individual Risks of Each Business Segment●

Domestic Energy Business

Products such as gas equipment and facility issues

In order to respond to the impact of fluctuations in energy demand, we are expanding sales in peripheral energy fields such as gas appliances and energy
services.
We are working to minimize the impact of cash flows through diversifying contract price indices and hedging in the procurement of LNG, and to adjust
unit gas prices under the fuel cost adjustment system.
As most of the raw fuels for gas and electricity, such as LNG, are imported from overseas, we are promoting diversified procurement from numerous producers as well
as utilizing LNG carriers owned by the Group, aiming to ensure stable and flexible raw fuel procurement.
We are working to ensure a stable electricity supply by responding to power demand through procurement from procurement contracts with other companies, and from theJapan Electric Power Exchange and other markets, in addition to procurement from our own power source.
In order to maintain safe and stable city gas production/supply and electricity generation/supply, we are carrying out various drills to prepare for emergencies,
periodic inspections and upgrading of facilities, and measures to prevent accidents and supply disruptions including earthquake and tsunami countermeasures.
We are striving to ensure a stable supply of products, and promoting the use of safe equipment and related inspection and dissemination.

Intensifying competition in the industry and the resulting increase in choices available to consumers

We are working to provide various added values, aiming to be a company that continues to be the first choice of customers.

Impact of fluctuations in temperature/water temperature on energy demand
Changes in raw fuel costs
Difficulty in procuring raw fuels
Changes in electricity procurement costs
Difficulties in gas production/power generation and gas/power supply●

International Energy BusinessChanges in the operating environment, such as decreased profitability or project
delay or cancellation, resulting from the public policies, implementation of orchanges in regulations, deterioration of economic or social conditions, market
fluctuation in areas including crude oil prices and gas prices, technical issues,or damage by natural disasters in the countries in which the Group operates●

We are promoting risk countermeasures such as proactive business operations and strict evaluation of target projects in the decision-making of investment for growth.
In addition, for stable procurement, we are striving to build cooperative relationships that contribute to safe and stable operations in the participating projects.

Life & Business Solutions BusinessChanges in the operating environment, such as soaring material costs,
suspension of material supplies, and worsening economic conditions

We are working on internal growth, investment for growth, and other initiatives based on technologies and knowledge we have cultivated in our energy
business.

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Value Creation Stories

Status of Internal Control

Corporate GovernanceCorporate Dataon a Group-wide basis.
With the legal separation of our gas pipeline division, we established a Security andDisaster Prevention Committee on April 1, 2022, to coordinate and promote crossorganizational measures related to safety and disaster prevention within the Group, andare taking all possible measures to ensure safety and disaster prevention after the legal
separation. We also implemented internal investigations to confirm the status of measures
to block the transfer of information between the Network Company and the Company andits affiliated companies, which are gas retailers, and the status of information management.
To prepare for emergencies, regulations for disaster countermeasures and business
continuity plans are prepared. We carry out company-wide disaster-prevention drills, which
consist of earthquake drills and BCP exercises. During FY2023.3, in addition to drills
assuming disasters occurred amid an epidemic, we also implemented emergency
coordination training and drills, including the use of remote communications, to ensure
coordination between the Network Company and gas retailers.
The Cyber Security Committee has been established to further strengthen
measures against cyberattacks from outside the Group's network such as by carryingout periodic inspections and following up on the Group’s security.

Osaka Gas established systems (internal control systems) to ensure that Directors of
the Company execute the duties in compliance with the laws and regulations andthe Articles of Incorporation and other systems necessary to ensure the propernessof the Daigas Group’s operations at the Board of Directors. The Company confirms
the operating status of the internal control systems periodically by identifying items
to confirm for various matters and receiving reports from the organizational heads
and other persons concerned. At the meeting of the Board of Directors held on
April 26, 2023, it was reported that the internal control systems were operating ina proper manner.

Overview of Operating Status of the Internal Control Systems (FY2023.3)① Matters concerning compliance, etc.
The ESG Committee promotes initiatives in each sector, including sustainability
activities, through the Compliance and Risk Management Subcommittee,
Environment Subcommittee, and Social Contribution Subcommittee. With the
movement toward decarbonization gaining pace globally in response to the issue ofclimate change, the Company formulated and announced Energy Transition 2030
(ET2030) in March 2023, integrating an overall roadmap for the transition to low
carbon and carbon neutral energy, as well as the Group’s specific initiatives and thesolutions it can provide for customers. Educational materials, including a guide to
the Daigas Group Code of Business Conduct, are posted on the intranet at all times
to familiarize Directors and employees of the Group with said Code to promote andensure its understanding.
The consultation and reporting system has been revised in light of the Partial
Amendment of the Whistleblower Protection Act (Act No. 51, 2020), which cameinto effect in June 2022. Effective April 1, 2022, the number of affiliated companies
with whistleblower hotlines was expanded, and measures have been taken to
ensure the independence of whistleblowing processes involving management.
During FY2023.3, the Company implemented measures to improve the operational
quality of whistleblower hotlines at affiliated companies.
On May 10, 2023, CD Energy Direct, Inc. (our stake of 50%) received an orderfrom the Consumer Affairs Agency to suspend its door-to-door sales operations (forsix months) based on the Act on Specified Commercial Transactions, for someinappropriate business practices in door-to-door sales by a subcontractor. In orderto prevent recurrence, the Company is reviewing its compliance system andstrengthening the supervision and education of its contractors.

③ Matters concerning the management of businesses in the GroupThe affiliates to be managed by the core non-energy Business companies, the gas
pipeline business company, the overseas regional headquarters, or the management
support organizations are designated and their managerial tasks are monitored byreceiving periodic reports and reports on important issues from the affiliates. In
addition, day-to-day management of those affiliates is performed by using the
G-RIMS and/or conducting audits.
The Company’s Auditing Department, which conducts internal audits,
implements planned internal audits of the Company’s organizations and affiliates andprovides follow-up audits after a certain period of time.

④ Matters concerning the effectiveness of audits by Audit & Supervisory Board Members
Full-time Audit & Supervisory Board Members have periodic exchanges of opinion
with the Director and Chairman, the Representative Director and President and theaccounting auditor, in which Outside Audit & Supervisory Board Members also
participate as necessary. Partly through the opportunity to exchange opinions withthe accounting auditor, Audit & Supervisory Board Members evaluate thequalifications, expertise and independence of the accounting auditor.
Full-time Audit & Supervisory Board Members attend important meetings suchas the Management Meeting, the ESG Council, the Investment Evaluation
Committee, etc., and read approval documents and other important documents.
Through the Board of Directors’ resolution on the internal control systems, they also
clarify important matters to be reported to Audit & Supervisory Board Members anddisseminate information thereof.
Five assistants to Audit & Supervisory Board Members are in place to engage
solely in assisting Audit & Supervisory Board Members in the performance of theirduties.

② Matters concerning risk management, etc.
We are committed to risk management under the promotion system described on
P.73.
Regarding the management of risks concerning security and disaster prevention which
are common to the Group, the organization in charge is clearly specified, and theorganization supports each basic organization and affiliate to ensure risk management

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Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Directors and Audit & Supervisory Board Members

Directors

Director,
Chairman of the Board

Representative Director
President and Executive Officer

Representative Director
Vice-President and Executive
Officer

Takehiro Honjo

Masataka Fujiwara

Tadashi Miyagawa[Biography][Reason for appointment]

1978. 4 Joined the Company
2003. 4 General Manager of Corporate Strategy Dept.
2007. 6 Executive Officer
2008. 6 Managing Executive Officer
2008. 6 Head of Commercial & Industrial Energy		 Business Unit2009. 6 Director, Managing Executive Officer
2010. 6 Head of Residential Energy Business Unit2013. 4 Representative Director, Vice-President		 and Executive Officer
2015. 4 Representative Director and President,		 President and Executive Officer
2021. 1 Director, Chairman of the Board (current)

He has considerable
experience and extensive
knowledge in corporate andorganizational management,
as well as other expertise,etc. The Company therefore
believes that he is capable ofcontributing to theimprovement of the Group’s
corporate value and has
appointed him as Director.

[Biography][Reason for appointment]
1982. 4 Joined the Company
He has considerable
2009. 6 General Manager of Keiji Energy Sales Dept., experience and extensive
		 Commercial & Industrial Energy Business Unit knowledge in corporate and2012. 4 Executive Officer
organizational management,
2012. 4 General Manager of Energy Businessas well as other expertise.
		 Development Dept., Commercial & Industrial The Company therefore
		 Energy Business Unit
believes that he is capable of2013. 4 Representative Director and President ofcontributing to the		 Osaka Gas Chemicals Co., Ltd.
improvement of the Group’s
2015. 4 Managing Executive Officer
corporate value and has
2016. 4 Vice-President and Executive Officer
appointed him as Director.
2016. 4 President of Corporate Planning HQ2016. 6 Representative Director, Vice-President and		
Executive Officer
2020. 4 Head of Energy Solution Business Unit
2021. 1 Representative Director and President,		 President and Executive Officer (current)

Representative Director
Vice-President and Executive
Officer

Representative Director
Vice-President and Executive
OfficerTakeshi Matsui

Takayuki Tasaka[Biography][Reason for appointment]

1983. 4 Joined the Company
2009. 6 General Manager of Finance Dept.
2013. 4 Executive Officer
2014. 4 General Manager of Human Resources Dept.
2016. 4 Managing Executive Officer
2016. 4 Head of Energy Resources & International
		 Business Unit2017. 6 Director, Managing Executive Officer
2019. 4 President of Corporate Planning HQ
2019. 4 Representative Director, Vice-President		 and Executive Officer (current)
2021. 1 President of Corporate Planning HQ
		(current)

He has considerable
experience and extensive
knowledge in corporate andorganizational management,
as well as other expertise.
The Company therefore
believes that he is capable ofcontributing to theimprovement of the Group’s
corporate value and has
appointed him as Director.

[Biography]
1985. 4 Joined the Company
2011. 4 General Manager of Corporate Strategy Dept.
2015. 4 Executive Officer
2015. 4 General Manager of Planning Dept.,
		 Residential Energy Business Unit2016. 4 Managing Executive Officer
2016. 4 Head of Residential Energy Business Unit2018. 4 Head of Commercial & Industrial Energy		 Business Unit2018. 6 Director, Managing Executive Officer
2020. 4 President of Corporate Planning HQ
2021. 1 Representative Director, Vice-President		 and Executive Officer (current)
		 Head of Energy Solution Business Unit

76

[Biography][Reason for appointment]

1982. 4 Joined Ministry of International Trade and		Industry
2013. 6 Director-General of Manufacturing
		 Industries Bureau, Ministry of Economy,
		 Trade and Industry
2014. 7 Retired from Ministry of Economy, Trade		 and Industry
2015. 1 Joined the Company
2015. 4 Managing Executive Officer
2016. 6 Director, Managing Executive Officer
2018. 4 Representative Director, Vice-President		 and Executive Officer (current)
2020. 4 Head of LNG, Power & Engineering
		 Business Unit

He has considerable
experience and extensive
knowledge in corporate andorganizational management,
as well as other expertise.
The Company therefore
believes that he is capable ofcontributing to theimprovement of the Group’s
corporate value and has
appointed him as Director.

Director
Managing Executive Officer

Fumitoshi Takeguchi[Reason for appointment][Biography][Reason for appointment]

He has considerable
experience and extensive
knowledge in corporate andorganizational management,
as well as other expertise.
The Company therefore
believes that he is capable ofcontributing to theimprovement of the Group’s
corporate value and has
appointed him as Director.

1985. 4 Joined the Company
2011. 4 General Manager of Secretariat
2016. 4 Executive Officer
2016. 4 General Manager of General Affairs Dept.
2018. 4 Managing Executive Office2018. 6 Director, Managing Executive Officer
2020. 6 Managing Executive Officer
2021. 6 Director, Managing Executive Officer		(current)

He has considerable
experience and extensive
knowledge in organizational
management, governanceand risk management, as wellas other expertise.
The Company therefore
believes that he is capable ofcontributing to theimprovement of the Group’s
corporate value and has
appointed him as Director.

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Directors

Outside Director

Outside Director

Kazutoshi Murao

Tatsuo Kijima[Biography]
1976. 4 Joined Nippon Telegraph and Telephone Public Corporation
2009. 6 Representative Director and Senior Executive Vice
		 President of Nippon Telegraph and Telephone West		Corporation
2012. 6 Representative Director and President of Nippon Telegraph		 and Telephone West Corporation
2018. 6 Counselor to the president, Nippon Telegraph and		 Telephone West Corporation (current)
2019. 6 Director of Keihan Holdings Co., Ltd. (current)
2019. 6 Director of the Company (current)[Reason for appointment][Biography][Reason for appointment]

He has the experience of serving
as Representative Director andPresident of Nippon Telegraphand Telephone West Corporationand has not only considerable
experience and extensive
knowledge in corporate andorganizational management but
also other expertise. The
Company therefore has
appointed him as Director.

1978. 4 Joined Japanese National Railways
2012. 6 Vice President, Representative Director of West Japan
		 Railway Company
2016. 6 President, Representative Director of West Japan
		 Railway Company
2019. 12 Vice Chairman and Director of West Japan Railway Company
2020. 6 Director of the Company (current)
2021. 6 Advisor of West Japan Railway Company (current)
2021. 6 Audit & Supervisory Board Member of Sumitomo Electric		 Industries, Ltd. (current)

He has the experience of servingas President, Representative
Director of West Japan Railway
Company and has not only
considerable experience andextensive knowledge expertise incorporate and organizational
management but also otherexpertise and experience, etc.
The Company therefore has
appointed him as Director.

Outside Director

Outside Director

Yumiko Sato

Mikiyo Niizeki[Biography]
1975. 4 Joined Suntory Co., Ltd.
2008. 4 Senior Research Fellow of Suntory Foundation (incorporated foundation)2013. 10 Specially-appointed Professor of Otemon Gakuin University,
		 Special Professor of Institute for Creating Local Culture of		 Otemon Gakuin University
2014. 5 Director of Mature Society Research Institute, Otemon
		 Gakuin Educational Foundation
2015. 4 Professor of Faculty of Regional Development Studies,		 Otemon Gakuin University
2016. 4 Director of Mature Society Research Institute, Otemon
		 Gakuin University
2020. 6 Trustee of Otemon Gakuin Educational Foundation (current)
2021. 6 Director of the Company (current)[Reason for appointment]
She has made considerable
achievements in the field ofsocial studies related to life andculture. In addition, she held
positions as General Manager ofSuntory Research Institute on
Continuity and Change in Life(currently Next Generation
Institute of Suntory Co., Ltd.)and Trustee of Otemon Gakuin
Educational Foundation, and has
deep insight into life and culture
as well as other expertise, etc.
The Company therefore has
appointed her as Director.

[Biography]
2006. 4 Professor of Faculty of Economics, Doshisha University
2010. 4 Professor of Master’s Program, Graduate School of		 Economics, Doshisha University
2014. 4 Professor of Doctoral Program, Graduate School of		 Economics, Doshisha University (current)
2016. 4 Dean of Faculty of Economics and Graduate School of		 Economics, Doshisha University
2019. 4 Head of Research Promotion Division, Doshisha University
		 Organization for Research Initiatives and Development
2020. 4 Vice President and Head of Center for Learning Support
		 and Faculty Development, Doshisha University
2023. 4 Assistant to the President of Doshisha University (current)
2023. 6 Director of the Company (current)

77[Reason for appointment]
She has made numerous
considerable achievements inresearch activities in the field of
economics related to financeand investment, and has deep
insight into the field of economics
and abundant experience andother expertise in organizational
management, including serving
as Vice President and Head of
the Center for Learning Supportand Faculty Development ofDoshisha University but also
other expertise and experience,etc. The Company therefore has
appointed her as Director.

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Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Audit & Supervisory Board Members

Audit & Supervisory
Board Member (full time)

Audit & Supervisory
Board Member (full time)

Outside Audit & Supervisory
Board Member

Hisaichi Yoneyama

Ichiro Hazama

Shigemi Sasaki[Biography][Biography][Biography]

1986. 4 Joined the Company
2013. 4 General Manager of Technology Planning Dept.
2014. 4 Executive Officer
2014. 8 President of Osaka Gas USA Corporation2017. 4 Managing Executive Officer
2017. 4 Head of LNG Terminal & Power Generation Business Unit2018. 4 Head of LNG, Power & Engineering Business Unit2018. 6 Director, Managing Executive Officer
2020. 6 Audit & Supervisory Board Member (current)

1989. 4 Joined the Company
2016. 4 General Manager of Planning Division, Japan Gas Association
2018. 4 General Manager of Planning Dept., Residential Energy Business		 Unit of the Company
2019. 4 General Manager of Human Resources Dept.
2020. 4 Executive Officer, General Manager of Human Resources Dept.
2023. 4 Advisor
2023. 6 Audit & Supervisory Board Member (current)

1974. 4 Appointed as judge
2011. 5 Chief Judge, Takamatsu High Court
2012. 3 Chief Judge, Osaka High Court
2013. 3 Retired from judgeship2013. 4 Professor, Graduate School of Law, Kyoto University
2016. 6 Audit & Supervisory Board Member of the Company (current)
2021. 5 General Manager of Kinki Branch, Japan Bar Association (current)
2021. 6 Governor, Japan Bar Association (current)

Outside Audit & Supervisory
Board Member

Outside Audit & Supervisory
Board Member

Eriko Nashioka

Chieko Minami[Biography][Biography]

1991. 10 Joined Ota Showa Audit Corporation
1995. 4 Registered as a Certified Public Accountant
2004. 4 Director, Institute for Environmental Management Accounting
2004. 7 Registered as a Licensed Tax Accountant
		 Director, Nashioka Accounting Office (current)
2006. 4 Part-time Instructor, Faculty of Commerce, Doshisha University
2013. 4 Representative Director, Institute for Environmental Management Accounting
		(current)
2020. 6 Audit & Supervisory Board Member, Sansha Electric Manufacturing Co.,		 Ltd. (current)
2022. 6 Director, Fukushima Galilei Co., Ltd. (current)
2022. 6 Audit & Supervisory Board Member of the Company (current)

2004. 12 Professor of Graduate School of Business Administration,
		
Kobe University (current)
2020. 4 Head of Business Administration, Dean of Graduate School of Business
		 Administration and School of Business Administration, Kobe University
2022. 4 Executive Assistant to the President of Kobe University
2023. 1 Head of Recurrent Education Promotion Office, Kobe University (current)
2023. 4 Vice President of Kobe University (current)
2023. 6 Audit & Supervisory Board Member of the Company (current)

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Value Creation Stories

Corporate GovernanceCorporate Data

Message from the Outside Directors

Message from newly
appointed Director
Mikiyo Niizeki
Outside Director

I will leverage my experience andexpertise to enhance the Daigas
Group’s corporate value.

Kazutoshi Murao

Yumiko Sato

Tatsuo Kijima

Outside Director

Outside Director

Outside Director

Companies are increasingly required
to contribute to the sustainability of
the global environment and provide
safe and secure social infrastructure
as the challenges in these current
times, known as the VUCA* era when
we face sudden and unforeseenchanges in the business environment.
I will leverage my experience inorganizational management and myknowledge of corporate analysis andfinance, my areas of expertise, toboost the Daigas Group’s corporate
value for a sustainable future throughthe Group’s resilience enhancement
and co-creation with stakeholders.
* Short for Volatility, Uncertainty, Complexity, andAmbiguity, referring to a state of unpredictability that ischanging at a bewildering pace.

The Daigas Group is working to strengthen its corporate governance system to sustain growth and enhance medium- and long-term
corporate value. Since the second half of FY2023.3, our Outside Directors have chaired our management, appointment, andremuneration advisory committees. As we enter the final year of the Medium-Term Management Plan 2023, our Outside Directors
shared their opinions on the progress of the Plan, the effectiveness of the Board of Directors and the advisory committees, and theissues the Group faces in enhancing value sustainably.

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Aim to be a leading
company in tackling global
challenges as a key
energy player in Japan
Kazutoshi Murao Outside Director

Formulating long-term-focused management
strategies, which is a Major Challenge
While the execution of the Medium-Term Management
Plan has been progressing steadily, the Group has faced
unforeseen issues in FY2023.3 caused by skyrocketing
energy prices and Freeport LNG’s plant shutdown in the
United States, among others. I conveyed my opinion that
the Group needed to review its risk hedging measurestaken for LNG procurement in light of unforeseen
situations. And I have acknowledged that the Daigas
Group has already taken action in this regard. Overcoming
these challenges should be viewed as an opportunity toboost the Group’s robustness against the unexpected.
Now is the time to consolidate the Group’s
foundations, focusing on business strategies for the next
twenty or thirty years. Currently, the Group is putting
efforts into decarbonizing gaseous energy carriers, suchas introducing renewable energy and developing
methanation technologies. In the coming years, theGroup needs to formulate long-term focusedmanagement strategies, which is a major challenge.

Board of Directors with an atmosphere conducive
to free and open debate
At the Osaka Gas Board of Directors, there is anatmosphere conducive to free and open debate, and theOutside Directors speak frankly from their respective
areas of expertise. I have made recommendations for

Value Creation Stories

Corporate Governancepromoting digital transformation (DX) and Diversity &Inclusion. Board meetings are run flexibly to allow
sufficient time to debate proposals that are deemed torequire deeper consideration.
Debate in the Advisory Committee on Appointment,
which I chair, is lively, and governance is functioning
properly. Whenever a point of improvement occurs to us,
we put requests to the Board. I see no areas that requiresignificant improvement in the running of either the Boardof Directors or the Advisory Committee on Appointment.

Aim to be a leading company in tackling social issues
I would like Osaka Gas to engage in the initiatives of anadvanced DX company. DX is not just about digitalizationor computerization. It also involves management reforms
and business reforms. Top management needs to clarify
the direction of those reforms and drive them forward. Inthat respect, I have high hopes for Osaka Gas’s DX
implementation in a top-down style, with the DX Strategy
Department established in April 2022. I haverecommended three objectives in implementing DX: First
is to expedite the company’s business development;
Second is to offer new lifestyles to customers; Third is toimprove how employees work. I will be checking the
progress in all these areas.
I also hope to see Osaka Gas continue supplying
energy safely, securely, and stably, responsibility as a key
energy business operator in Japan, which continues inperpetuity, and the company’s most important mission in
the medium to long term. In resolving global
environmental issues, Osaka Gas must remain at theforefront of industry-wide initiatives, including achievingcarbon neutrality. It is also vital that Osaka Gas pursues
basic research to support the business for the next
twenty or thirty years while aiming to be a leading
company in tackling global challenges, such as climatechange. Osaka Gas’s abilities are being tested to see
how many effective forward-looking measures thecompany can develop to resolve social issues.
Succeeding in those initiatives will enhance our corporate
value in the medium- to long term.

80

Corporate Data

Never forget the Group origins
and strive to enhance further
the corporate value neededby society
Tatsuo Kijima Outside Director

Apply lessons from Freeport LNG’s fire incident
to the Group’s all business fields
Osaka Gas has steadily executed the Medium-Term
Management Plan toward 2023 and the Long-Term
Management Vision toward 2030, both of which are
well-formulated frameworks for the Group’s overallbusiness strategy, demonstrating Osaka Gas’s serious
stance as a responsible energy company on resolvingsocial issues, such as energy transition to carbon
neutrality.
On the other hand, the Group’s financial results for
FY2023.3 did not reach the planned figures, with profits
falling far short of the targets, due mainly to the impact
of Freeport LNG’s plant shutdown. I have shared myview with the Board that this incident is relevant not only
to directly related divisions but to all as an importantlesson that similar incidents could happen to any
business field of the Group.

Recommendation that Management Advisory Committee meetings
be held more frequently to complement the Board of Directors
In the Board of Directors’ discussions about investing in
renewable energy development and other projects, it is
crucial to deepen debate about each project’s positionin terms of the company’s medium- to long-term visionand the progress of their execution.
At the three Advisory Committees, all attendees
express their opinions from various standpoints,

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Business Strategies

including Outside Directors’ perspectives, on the issues
the company faces. It is important to have multiple
opportunities to hold that kind of debate. The
Management Advisory Committee has met twice todiscuss carbon neutrality and human capital since its
launch in FY2023.3. I will work with other Committee
members to increase follow-ups on previous subjects tocheck the progress and identify new issues, in addition
to proactively discussing the Group-wide issues and theMedium-Term Management Plan-related challenges. I
would like the Advisory Committees to meet more
frequently to complement the Board of Directors.

Re-acknowledge and rediscover the Daigas
Group’s identity
Besides the Medium-Term Management Plan andcorporate governance, a corporate culture honoring thecompany’s origins is integral in driving growth andenhancing corporate value. The Daigas Group plays aunique role in the energy space as a utility company
that supplies gas and electricity, making it irreplaceable
by any other competitors. As the Group continues
expanding into new fields, we should embrace ourorigins and pursue safety and quality. In executing ourstrategic transformation following the Long-termManagement Vision and Medium-Term Management
Plan, each member and each division need to keep inmind what should be changed and what should bemaintained. The Daigas Group’s strength lies in thecapabilities possessed by each of its employees. We
intend to continue enhancing their capabilities andunlocking their potential in their current department andother divisions to inspire them with strategic personnel
placements and career paths as needed. As were-acknowledge and rediscover our Group’s identity,
we aim to enhance our corporate value and remain acompany always required by society.

Value Creation Stories

Corporate GovernanceEfforts are needed to promote
the Daigas Group’s appeal as acorporate group that offers
diverse experiences and value
Yumiko Sato Outside Director

Diversity is a key issue in the Medium-Term
Management PlanIn FY2023.3, the Daigas Group devoted the entire year
to securing a stable energy supply due to the impact of
the fire-caused shutdown at the Freeport LNG, one ofour major procurement sources. By responding
appropriately to such difficult circumstances, we fulfilled
our responsibility for energy supply stability.
Regarding the execution of the Medium-Term
Management Plan, while value enhancement forcustomers has progressed through various measures,value enhancement for employees has remained an
item we need to accelerate. To that end, we need toboost measures, in particular, to provide opportunities
for women to demonstrate their abilities in broader
fields by adopting the best practices of leading
companies in this area. My recent conversations with
mid-ranking female employees gave me the sense that
Osaka Gas has many highly motivated female
employees. As a good working environment for womenis also suitable for men, we will promote initiatives toincrease women’s perspectives in improving theGroup’s career assistance program and re-examining
the Group’s work, which I hope will lead to thetransformation of the entire Group. We will also support
efforts to promote job-based and mid-career
recruitment. In response to significant social change
since the full deregulation of the power and gas retailmarkets, we will tackle the challenge of balancing
promoting our creative workforce to demonstrate their81

Corporate Dataabilities and leveraging our corporate DNA that has
driven our social mission of energy supply.

Briefing from relevant teams before the Board
meetings help the members make informed decisions.
In the Board of Directors meetings, we discuss various
topics, such as risk diversification and ROIC
management. Thanks to the briefings on complex
matters given prior to the Board meetings by the relevant
teams, the discussion points sink in, and the Board
members can make informed decisions. Additional
information is also provided so that the members learn
what was discussed on the executive side about
particular issues before discussing the topic at the Board
meeting. Regarding the Advisory Committee on
Remuneration where a highly transparent remuneration
rule has been established, I will promote more lively
discussions as the chair to encourage members to
exchange views frankly for effective decision-making.

Present value for a sustainable future from long-term
perspectives and promote the Company’s appeal
I have deepened my understanding of the Daigas Groupthrough site visits, conversations with employees, andthe company newsletters. I have gained a true sense of avery energetic Group, whose strengths lie in its
employees’ high caliber and excellent corporate
atmosphere. The Daigas Group has a history of
constantly responding to business environment changes
while maintaining a stable energy supply. We need tocommunicate more that we are a company full of energy
and change. We also should promote our appeal tostudents searching for employment after graduation, as acorporate group that offers diverse experiences andvalue to its employees. It is important for us to gain
empathy from stakeholders about our business andvision by presenting value for a sustainable future withdreams from a long-term, not short-term, perspective.

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Business Strategies

Value Creation Stories

Corporate Data

Corporate GovernanceCorporate Data

Summary of Consolidated Operating ResultsGroup Companies
Company Data

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Value Creation Stories

Corporate GovernanceCorporate Data

Summary of Consolidated Operating Results(FY)2013.32014.32015.32016.32017.32018.32019.32020.32021.32022.3*¹

2023.3*¹

Net sales

million yen

1,380,060

1,512,581

1,528,164

1,322,012

1,183,846

1,296,238

1,371,863

1,368,689

1,364,106

1,591,120

2,275,113

Operating profit

million yen

84,77399,381

105,065

146,674

97,25078,11867,977

83,792

112,491

99,20160,001

Ordinary profit

million yen

90,125106,044

108,173

134,986

96,27677,087

63,10386,018

127,752

113,525

75,649Profit attributable to owners of parent

million yen

52,467

41,72576,70984,324

61,27137,72433,601

41,78880,857130,42157,110Comprehensive income

million yen

83,84480,850106,084

38,25678,02960,59027,96614,996

108,723

210,905

146,373

Capital expenditures for quality improvement

million yen

44,50741,082

44,69856,051

48,25342,191

44,20557,49868,87367,93165,019Depreciation + amortization of goodwill

million yen

82,81883,80687,78586,747

86,20688,72399,74591,925

101,444108,902

119,823

R&D expenses

million yen

10,875

11,793

11,434

11,34010,374

9,708

10,961

10,174

9,440

9,500

9,627

Total assets*²

million yen

1,566,899

1,668,317

1,862,201

1,829,756

1,886,577

1,897,230

2,029,722

2,140,482

2,313,357

2,588,086

2,819,589

Net assets

million yen

774,317

828,565

918,869

935,786

991,870

1,028,799

1,035,044

1,027,667

1,114,597

1,296,089

1,417,178

Shareholders’ equity

million yen

747,802798,964

888,496906,623

961,905

999,569

1,004,340

997,492

1,081,881

1,271,617

1,391,421

Balance of interest-bearing debts

million yen

540,199573,586

633,923

567,164

540,668

503,789

647,465754,006

785,383

815,079

981,556

Cash flows from operating activities

million yen

129,597

154,225

156,908

281,819

148,801

168,731

65,116

182,892

219,797

145,350

33,572

Cash flows from investing activities

million yen(116,791)(175,591)(110,704)(144,198)(137,527)(110,456)(204,192)(232,266)(198,354)(152,163)(203,938)

Cash flows from financing activities

million yen(27,897)

4,163

22,892(90,716)(50,530)(51,591)

85,262

79,272(1,636)(30,479)

119,617

Cash and cash equivalents at end of period

million yen

109,456

90,359

162,793

209,367

166,912

171,061

115,769

146,813

166,762

130,769

84,793(Cash flows from operating activities+ Cash flows from investing activities)

million yen

12,805(21,365)

46,204

137,620

11,27458,274(139,076)(49,374)

21,443(6,813)(170,365)

Capital expenditures

million yen

112,987

124,146

119,398

114,418

88,657

81,716107,259

131,010

189,454

189,317

195,330

Financial Information

Free cash flow

*1 Prepared under the "Regulations Concerning the Terminology, Forms and Preparation Methods of Consolidated Financial Statements" (1976, Ministry of Finance Ordinance No. 28) since the year ended March 31, 2023. Figures for FY2022.3 are on a retrospective basis. Tax
effect accounting calculations for FY2023.3 were done on a group tax sharing basis.
*2 “Partial Amendments to Accounting Standard for Tax Effect Accounting” (Accounting Standards Board of Japan (ASBJ) Statement No.28, February 16, 2018) have been applied from the beginning of FY2019.3. Key management indicators for FY2018.3 are calculated byretroactively applying the above accounting standard.

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Corporate GovernanceCorporate Data

(FY)2013.32014.32015.32016.32017.32018.32019.32020.32021.32022.32023.3

Earnings per share (EPS)yen

125.99100.21

184.31202.64147.29

90.71

80.80

100.50194.48313.69137.39Net assets per share (BPS)yen

1,795.79

1,919.49

2,134.92

2,179.23

2,312.68

2,403.68

2,415.37

2,399.06

2,602.18

3,059.40

3,347.34

Dividends

yen

42.5

45.0

47.5

50.0

50.0

50.0

50.0

50.0

52.5

57.5

60.0

million yen

173,927

191,105

199,840

228,883

188,403

167,100

159,916

180,943

227,554

220,946

192,754

％

47.7

47.9

47.7

49.5

51.0

52.7

49.5

46.6

46.8

49.1

49.3

0.72

0.72

0.71

0.63

0.56

0.50

0.64

0.76

0.73

0.64

0.71

Per Share Information*³

Key Ratios
EBITDA(Operating profit + Depreciation + Amortization of goodwill +Share of profit of entities accounted for using equity method)

Shareholders’ equity ratio(Shareholders’ equity / Total assets (as of the end of the fiscal year))

D/E ratio(Interest-bearing debts / Shareholders’ equity (as of theend of the fiscal year))

Return on equity (ROE)(Profit attributable to owners of parent / Average
shareholders’ equity during the fiscal year)

％

7.3

5.4

9.1

9.4

6.6

3.8

3.4

4.2

7.8

11.0

4.3

Return on invested capital (ROIC)*4

％

ー

ー

ー

ー

ー

ー

ー

ー

6.2

7.1

2.7

％

33.7

44.9

25.8

24.7

33.9

55.1

61.9

49.8

27.0

18.3

43.7

million m³

8,534

8,554

8,290

8,052

8,694

8,580

7,935

7,362

7,157

7,090

6,845

employees

19,87021,25020,982

20,844

20,762

19,997

20,224

20,543

20,941

20,96121,017

Payout ratio（(Interim dividends + Annual dividends) / Earnings per share (EPS))

Gas Sales Volume

Number of Employees*3 Calculated in consideration of share consolidation.
*4 Please see
P.45 for an explanation on ROIC.

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Corporate GovernanceCorporate Data

Group Companies As of March 31, 2023
Consolidated Subsidiaries

International Energy

Domestic Energy

Name of subsidiary

Main business

Capital (million yen)

Osaka Gas shareholding(indirect shareholding thereof) (%)

6,000

100.0

Sales of gas and electricity for residential customers, maintenance,
sales of appliances, home renovation, and others

100

100.0

Daigas Energy Co., Ltd.

Sales and maintenance of gas and electricity for commercial
customers; sales of appliances, engineering, and construction; energy
service; sales of LNG and LPG; heat supply; and others

310

100.0

Daigas Gas and Power Solution Co., Ltd.

Operation and maintenance of LNG terminals and power plants;
power generation and sales of electricity; engineering; and others

100

100.0

Senboku Power Fuel Co., Ltd.

Purchase and sale of LNG for Senboku Natural Gas Power Plant

120

100.0

Osaka Gas Energy Supply and Trading Pte. Ltd.

LNG trading

US$40 million

100.0

Shiribetsu Wind Development Co., Ltd.

Electric power supply

598

100.0 (100.0)

Senboku Natural Gas Power Generation Co., Ltd.

Electric power supply

2,000

90.0

Nakayama Joint Power Generation Co., Ltd.

Electric power supply

300

95.0 (95.0)

Nakayama Nagoya Joint Power Generation Co., Ltd.

Electric power supply

450

95.0 (95.0)

Hirogawa Myojin-yama Wind Power
Generation Co., Ltd.

Electric power supply

490

100.0 (100.0)

Daigas Oita Mirai Solar Co., Ltd.

Electric power supply

8

100.0 (100.0)

Osaka Gas USA Corporation*

Investment in natural gas projects, energy supply business, and others

US$1

100.0

Osaka Gas Australia Pty. Ltd.*

Development of and investment in natural gas, and others

US$1,327 million

100.0

Osaka Gas Crux Pty. Ltd.*

Development of and investment in natural gas, and others

US$107 million

100.0 (100.0)

Osaka Gas Gorgon Pty. Ltd.*

Development of and investment in natural gas, and others

US$322 million

100.0 (100.0)

Osaka Gas Ichthys Pty. Ltd.*

Development of and investment in natural gas, and others

US$152 million

100.0 (100.0)

Osaka Gas Ichthys Development Pty. Ltd.*

Development of and investment in natural gas, and others

US$149 million

100.0 (100.0)

Osaka Gas Singapore Pte. Ltd.*

Research, development, investment and others relating to energy-related business

284 million Singapore dollars

100.0

Osaka Gas UK, Ltd.*

Investment relating to energy supply business, and others€134 million

100.0

Osaka Gas Network Co., Ltd.*

General gas pipeline service businessOsaka Gas Marketing Co., Ltd.

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Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Capital (million yen)

Osaka Gas shareholding(indirect shareholding thereof) (%)

Name of subsidiary

Main businessOsaka Gas Urban Development Co., Ltd.

Development, leasing, management, sales of real estate, and others

1,570

100.0

Osaka Gas Facilities Corporation

Operation, management, maintenance of buildings and facilities, and others

100

94.4 (94.4)

OGIS-RI Co., Ltd.

Development of computer software/Computer-based data processing
services, and others

440

100.0

Sakura Information Systems Co., Ltd.

Software development/Computer-based data processing services, and others

600

51.0 (51.0)

Osaka Gas Chemicals Co., Ltd.*

Manufacture and sales of fine materials, carbon material products,
activated carbon, and wood protective coating

14,231

100.0

Mizusawa Industrial Chemicals, Ltd.

Manufacture and sales of absorbent functional materials and resin
additives, and others

1,519

100.0 (100.0)

Jacobi Carbons AB

Manufacture and sales of activated carbon, and others

549,000 Swedish Kronor

100.0 (100.0)

and others, totaling 154 companies*Specified subsidiary

Equity Method Affiliates
Name of affiliate

Main business

Capital (million yen)

Osaka Gas shareholding(indirect shareholding thereof) (%)

Enearc Co., Ltd.

Domestic Energy

1,040

50.0

CD Energy Direct Co., Ltd.

Domestic Energy

1,750

50.0

FLIQ1 Holdings, LLC

International Energy―

25.0 (25.0)

and others, totaling 32 companies
Note: The column “Main business” shows segment names listed on

P.2 in this report.

86

Daigas Group INTEGRATED REPORT 2023

Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Company Data As of June 30, 2023
Directory
Head Office
4-1-2, Hiranomachi, Chuo-ku, Osaka
541-0046, Japan(IR Team, Corporate Strategy Dept.)

United States
Osaka Gas USA Corporation (Houston Office)1330 Post Oak Blvd,
Suite 1900 Houston, TX 77056, USA

Australia
Osaka Gas Australia Pty Ltd
Level 22, 108 St Georges Terrace Perth, Western Australia
6000, Australia

Indonesia
PT OSAKA GAS INDONESIA
Summitmas 1, lantai 9 Jl. Jend. Sudirman Kav 61-62
Jakarta-12190, Indonesia

Tokyo Office
Shin-Otemachi Building 6F, 2-2-1,
Otemachi, Chiyoda-ku, Tokyo
100-0004, Japan

Osaka Gas USA Corporation (New York Office)1 North Lexington Ave, Suite 1400, White Plains,
NY 10601, USA

Singapore
Osaka Gas Singapore Pte. Ltd.
Osaka Gas Energy Supply and Trading Pte. Ltd.
182 Cecil Street #30-02 Fraser Tower Singapore 069547,
Singapore

Philippines
Osaka Gas Singapore Pte. Ltd. Manila
Representative Office
37F, LKG Tower, 6801 Ayala Ave, Makati, 1226 Metro
Manila, Philippines

ThailandOSAKA GAS (THAILAND) CO., LTD.
55 Wave Place Building 10th Floor, Unit 10.04, Wireless
Road, Lumpini, Pathumwan, Bangkok 10330, Thailand

India
Osaka Gas India Private Limited
Room No. 517, 5th Floor, Caddie Commercial Tower,
Aerocity, New Delhi 110037, India

United Kingdom
Osaka Gas UK, Ltd.
1st Floor, Carrington House
126-130 Regent Street,
London W1B 5SE, UK

Osaka Gas USA Corporation (Silicon Valley Office)440 North Wolfe Rd, Sunnyvale, CA 94085, USA
Sabine Oil & Gas Corporation
1415 Louisiana Street, Suite 1600 Houston,
TX 77002, USA

Investor Information
Date of Establishment

April 10, 1897

Annual Meeting of Shareholders Held in June each year
(In 2023, the Annual Meeting of
Shareholders was held on June 23.)
Common Stock

Authorized: 700,000,000 shares
Issued: 416,680,000 shares

Listing of Shares

Tokyo Stock Exchange

Number of Shareholders(As of March 31, 2022)

93,657

Stock Transaction Units

100 shares

Independent Certified
Public Accountants

KPMG AZSA LLC

Transfer Agent

Sumitomo Mitsui Trust Bank, Limited

Contact

Sumitomo Mitsui Trust Bank, Limited
Stock Transfer Agency Business Planning Department
Tel: (+81) 120-782-031 (Toll-free in Japan)

Major Shareholders (As of March 31, 2023)
Shareholder

Number of Shareholding
ratio
shares(%)(Thousands)

Stock Price Range
(yen)

(yen)

3,500

35,0003,000

30,000The Master Trust Bank of Japan, Ltd. (Trust a/c)

67,279

16.19

Custody Bank of Japan, Ltd. (Trust a/c)

25,601

6.16

Nippon Life Insurance Company

13,469

3.24

2,500

25,000MUFG Bank, Ltd.

11,188

2.69

2,000

20,000Resona Bank, Ltd.

10,555

2.54

1,500

15,000

STATE STREET BANK WEST CLIENT‒TREATY 505234

9,296

2.24

Aioi Nissay Dowa Insurance Co., Ltd.

5,973

1.44

1,000

10,000Meiji Yasuda Life Insurance Company

5,838

1.40

500

5,000

0

JP MORGAN CHASE BANK 385781

5,204

1.25

STATE STREET BANK AND TRUST COMPANY 505103

5,200

1.25

18.4

18.10

19.4

19.10

20.4

20.10

21.4

21.10

Osaka Gas (left)

22.4

22.10

23.3

0

Nikkei Stock Average (right)

Note: The share ratio is the percentage with respect to the number of shares issued andoutstanding.

For inquiries about this report or requests for other materials, please contact:●

We have created a page for investors on our website, which is updated in a timely manner.

Daigas Group investor relations web page: https://www.daigasgroup.com/en/ir/

Please note that we do not accept files attached to e-mails, such as image files.

●

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Table of Contents Getting to Know the Daigas Group

Business Strategies

Value Creation Stories

Corporate GovernanceCorporate Data

Unit Conversion List
Weightkg
1
1,000
1,016.0
907.19Metric ton
1×10 -3
1
1.01600.9072Imperial (short) ton
0.984×10 -3
0.9842
1
0.8927

U.S. (long) ton
1.102×10 -3
1.10231.12001ft
3.2808
1
3
5,280

yard
1.0936
0.333
1
1,760

mile
0.622×10 -3
0.189×10 -3
0.568×10 -3
1Lengthm
10.30480.9144
1,609

Volume (Liquid)

Energym³ (kl)ft³
Imperial gallon
U.S. gallon
1
35.315219.97264.17
1
6.288
7.481
28.32×10 -30.160611.2011
4.55×10 -3
0.13370.83271
3.78×10 -3
1 kl = 6.29 barrels, 1 barrel (42 U.S. gallons) = 0.159 kl

kcal
10.2520238.9
860.1

Volume (Gas)

Heating Value (Gas)m³ (N)
m³ (S)
SCF
1
1.055
37.33
0.9476135.37
0.02680.0283
1
N: 0°C, S: 15°C, SCF: 101.33 kPa, 15.5°C (60°F)

kcal/m³ (N)
1
9.406

Btu
3.969
1
948.2
3,414

Btu/SCF0.1063
1

MJ
4.186×10 -3
1.055×10 -3
1
3.600

kWh
1.162×10 -3
0.2929×10 -3
0.27781

MJ/m³ (S)
3.97×10 -3
3.73×10 -2

252.1
26.81
1
1 ton of LNG = 13×106 kcal = 52×106 Btu

Inclusion in SRI Indices
Osaka Gas was included in the following socially responsible investment (SRI) indices and an investment universe (candidates for inclusion in indices) as of June 30,
2023. Osaka Gas has been selected as a constituent of all six ESG indices for Japanese equities used by the Government Pension Investment Fund (GPIF).

FTSE Blossom Japan Sector
Relative Index*1

FTSE Blossom Japan Index

Morningstar Japan ex-REIT
Gender Diversity Tilt Index

Dow Jones Sustainability Indexes

MSCI Japan ESG SelectLeaders Index*2

S&P/JPX Carbon Efficient Index

ECPI World ESG Equity

MSCI Japan Empowering
Women Index*2

MSCI ESG Leaders*2

Sompo Sustainability Index

Ethibel Excellence

FTSE4Good Index Series

EuroNext Vigeo World 120 Index*1 FTSE Russell (the trading name of FTSE International Limited and Frank Russell Company) confirms that Osaka Gas has been independently
assessed according to the FTSE4Good criteria, and has satisfied the requirements to become a constituent of the FTSE Blossom Japan Sector
Relative Index. Created by the global index provider FTSE Russell, the FTSE4Good Index Series is designed to measure the performance ofcompanies demonstrating strong Environmental, Social and Governance (ESG) practices.
The FTSE4Good indices are used by a wide variety of market participants to create and assess responsible investment funds and otherproducts.
*2 T he inclusion of Osaka Gas Co., Ltd. in any MSCI Index, and the use of MSCI logos, trademarks, service marks or index names herein, do notconstitute a sponsorship, endorsement or promotion of Osaka Gas Co., Ltd. by MSCI or any of its affiliates. The MSCI Indexes are the exclusive
property of MSCI.
MSCI and the MSCI Indexes names and logos are trademarks or service marks of MSCI or its affiliates.

88

Daigas Group INTEGRATED REPORT 2023

Osaka Gas Co., Ltd.
4-1-2, Hiranomachi, Chuo-ku, Osaka 541-0046, Japan
https://www.daigasgroup.com/en/

Published in 2023