Message from the President

Introduction

CEO Message
Message from the President

As “a Lifestyle Producer,”we will start a substantial
movement while embracing
Representative Director,President and Chief
Executive Officersustainability

Kohei Tajima

8

Sustainability requires persistence
I often ask myself what defines the essence of sustainability.
Last year alone we had a series of external environmental
changes: the Ukrainian crisis, rising costs, surging energy
prices, and exchange rate fluctuations. Mitsuuroko Groupstrives to incrementally take preemptive action while adapting
to such changes in the external environment. In that regard,
it is of utmost importance that we carry on regardless of any
changes in the business environment, which I feel is whatsustainability is all about. I also believe that persistence is
crucial when it comes to coexisting with members of our
local communities.

Substantial improvement in IT/digital
literacy and environmental literacy
Internally we have adopted new work styles during
the COVID-19 pandemic̶streamlined meetings, started a
new way of customer interaction, and replaced IT tools. It is
unlikely that we will return to work arrangements of the pastwith new work styles becoming more firmly establishedas standard business practices. Throughout these past
few years of living in the pandemic, even people in older
generations have learned how to use personal computersand now bring tablet devices to sales locations. This has

resulted in significant improvements when it comes to IT
and digital literacy. People in the workplace are also clearly
improving their environmental literacy as is evident byconversations increasingly regarding questions of whether
our practices are good for the environment and expressing
enthusiasm in terms of being more economical. In seeking
to maintain this momentum, we have decided to step up ourinvestment toward such ends.

Feedback regarding the Sustainability
ReportWhen it comes to external feedback on our Sustainability
Report, institutional investors have given us high marks forhaving put more effort into communicating our sustainability
management practices. However, what particularly
surprised me was the response from individual investors.
Housewives and seniors have expressed substantial interestin sustainability and seem to be reading the report carefully,
as was evident by several of their questions as to why wehave implemented such initiatives and asking whether wewill adhere to such efforts going forward. I believe that such
feedback indicates that many people are reading the reportand accordingly we hope to further promote sustainability
while actively disseminating such information.
Although the word “sustainability” itself had not previously

been in common use within the company, we have always
harbored a desire for such aims in terms of the importance
we assign to sustainability. By reading the Sustainability
Report and becoming aware of sustainability whileembracing such aims as a shared language, our employees
have come to realize that what they have long been vaguely
thinking about and unconsciously practicing actuallyaligns with the notion of sustainability. Looking back, wehave served as a company with substantial awareness ofsustainability ever since Japanʼs Showa era (1926–1989),
when the notion of eliminating the three Ms of Muda (waste),
Mura (inconsistency), and Muri (overburden) was written in
our corporate notebooks. In those days, we were referredto as “kechi-uroko” (frugal Mitsuuroko) because Mitsuuroko
was frugal to the extent that employees were prompted
to use pencils until there was nothing left of them, and if
two erasers had become small, were even encouraged toglue them together to make a single eraser. Nowadays,
sustainability serves as a prerequisite on which our businessstrategies are based. Thus, I am extremely pleased that wehave published our Sustainability Report.
The Energy Solutions Business is the core business of theGroup. Whereas there is a perception that energy imposes
burdens on the environment, our employees voice a desire
to convey to our customers in simple terms the notion that
it is possible to minimize the environmental impact of energy
by employing creative solutions. Our junior employees inparticular address issues from a long-term point of view
rather than a short-term perspective. The Group has been
serving society through its operations and placing value on
long-term connections with its customers thus far. We arecommitted to accordingly promoting sustainability and willcontinue to do so with heightened awareness going forward.

Key concepts of sustainability for each ofour businesses
In publishing this yearʼs Sustainability Report, we identified
key concepts of sustainability by communicating directlywith people in each of our businesses to find out what theirthoughts are in that regard.
The key concept of the Energy Solutions Business is carbon
neutrality. This entails the aim of achieving a management
approach based on Creating Shared Value (CSV) that strikes abalance between social value and our own profits by enhancing
initiatives looking toward decarbonization and linking suchinitiatives to the growth strategy. In so doing, we will establish
new sources of revenue in our new energy, decarbonization,and city gas businesses while ensuring that the remaining
parties in our existing businesses continue to benefit.
In the Power & Electricity Business, the key concept is
new technologies and new services. Whereas the media
has been covering developments in areas such as offsite

SUSTAINABILITY REPORT 2022

Mitsuuroko Group Holdings Co., Ltd.

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Message from the President

Continuing to take up challenges whileemploying a balanced approach to risk
Initiatives of the Group are occasionally too far ahead of theirtime. For instance, we have been researching hydrogen forabout two decades, yet that field of study has only recently
become a topic of discussion among the general public.
Whereas we tend to operate 20 steps ahead of the curve,
I feel that remaining half a step ahead would be the optimalapproach. We have traditionally started with low investment
and a small number of people, however, which helps toprevent major failures. Some of our initiatives do not cometo fruition, but even a failure serves as a valuable experience.
With this in mind, we will continue to take up challenges one
after the other with a positive attitude going forward.
The Energy Solutions Business, which is our main business,makes it possible for us to engage in such initiatives. I feel
we are fortunate to be able to take up challenges withconfidence in diverse fields as we are already in the midstof a period of stability rather than a reform phase, where
we have gained a high level of trust from our customers
and established solid foundations. In taking up challenges,
we invariably consider the balance of risk in a manner thatentails monitoring developments to determine whether or
not our initiatives are capable of contributing to society, eventhough such objectives may not be stated explicitly. I feelthat this approach has enabled us to adeptly strike a properbalance between our future-oriented initiatives and thepractical business at hand.
Mitsuuroko Group may be characterized as a company
with a visible presence given the consistency of our people
over the long term relative to the short-term nature of ourbusiness. This is akin to a long-established Japaneseconfectionery shop whose product lineup gradually changes
over time amid a situation where the shop features standard
items available over many years while occasionally rollingout new items. Customers entering such shops are able tofeel at ease amid the presence of familiar shopkeepers andstaff. The success of such shops derives from the personal
appeal of their people in addition to their traditional Japanese
noren shop curtains and signage. Customers visit such
establishments not only because of the merchandise but
also for the people. Likewise, I stand committed to valuingthe connections we have developed with our customers andlocal communities going forward.

Achieving carbon neutrality enlisting theinvolvement of our stakeholders
In seeking to achieve carbon neutrality, we plan to pursue
a collaborative approach. Given that the Energy Solutions
Business is interconnected from upstream to downstream,
there are many objectives that cannot be accomplishedby our company alone. With CO2 emissions directly linked
to climate change risks, cooperation from many of ourstakeholders is essential when it comes to the prospect of
reducing such emissions, given that approximately 99% of
our value chainʼs CO2 emissions are classified as Scope 3emissions. Although we have not yet taken this option, it
may become necessary for us to heighten awareness among
franchisees by distributing stickers showcasing our carbon
neutrality initiatives. Another option could be displaying
signage promoting the appeal of our recently launchedcarbon neutral LPG in hopes of enticing environmentallyconscious customers to purchase that sort of gas productfrom us. Whereas it is common to encounter PR messages
in the energy industry promoting a companyʼs eco-friendly
products and detailing initiatives of specific companies, it
is not often that I hear calls appealing for collective action
toward a shared objective. Limitations on what is possible
for us to achieve in terms of reducing CO2 emissions
become greater at points progressively further downstream
in the value chain even with awareness of carbon neutrality.
With that in mind, I assume many people would like tobecome involved in such efforts. I accordingly hope to enlist
the involvement of as many people who have substantial
awareness in that regard as possible, and think it would
be intriguing to see Mitsuuroko Group distinguish itself
by assertively and actively engaging in activities that raiseawareness of each and every individual.
We have been implementing in-house measures that entail
leveraging the National Mitsuuroko Associationʼs dealer
network of approximately 1,800 companies in providing
concrete support toward achieving carbon neutrality
through initiatives that include promoting high-efficiency gas
equipment to National Mitsuuroko Association members,
actively promoting liquefied petroleum gas (LPG) conversion,
providing support for sales of new energy products, andsupporting initiatives under the new business model.
Meanwhile, under our external measures, we aim to curb fuelconsumption and reduce CO2 emissions by shortening travel
distances through the promotion of solutions for improving
delivery efficiency among our business partners. Goingforward, we will create a sustainability promotion programin hopes of sparking a substantial sustainability movement
in conjunction with the National Mitsuuroko Association andour numerous partners.

Establishing a hands-on learning programthat enables participants to gain firsthandexperience regarding sustainabilityWhereas we have been implementing training thus far aspart of our human resources development efforts, including
profession-specific training, diversity training, compliancetraining, and human rights training, there is no substitutefor firsthand experience. Therefore, I would like for us toestablish a hands-on learning program that enables ouremployees to gain firsthand experience by sending themto countries and regions where they can be exposed tosustainability practices.

Replacing the majority of existing
businesses with new businesses within
three decades
The Group will mark the 100th anniversary of foundationand 140 years since its establishment in 2026. The next
four years will be a period during which we reflect on thepath we have taken thus far and furthermore articulate oursentiments both as to what we must proudly pass on to
the next generation and as to what we would like to cherish
going forward. We uphold the concept of “SOLA” (Simple,Organic, Live, Advanced) under our code of conduct that
we value as a company, and accordingly aspire to serve as
an enterprise that is relevant to the times while valuing theseideals.
One decade from now, I envision a scenario where eachof our businesses, particularly those in the energy sector,
has been extended to the limit in terms of having reachedthe ultimate manifestation of our current trajectory. Our
goal is to serve as a leader in the industry, whereby each of
our businesses holds a major position within its respective
industry. At the same time, we are bound to encounter new
business opportunities to which we will assign fresh talent.
Three decades from now, I expect that a majority of
our existing businesses will have been replaced by newbusinesses. With that in mind, I advocate for “changing thecompany by 3% yearly,” thereby giving rise to a completely
new company in 30 years. Such renewal of the company
will likewise coincide with the notion that the products andservices we deliver to our customers will also be new. We
will accordingly strive to serve as a company that takes avisionary approach as a challenger, while remaining relevant
and useful to our customers.
A century from now, nobody knows what is in store when it
comes to the global environment. Assuming that humanity
is then thriving amidst that eraʼs new normal, we at
Mitsuuroko Group hope to be playing an active role incontinuing to serve as “a Lifestyle Producer.” It would indeed
be fascinating if humanity were to have left the Earth by thattime with Mitsuuroko operating colonies under a name suchas “Mitsuuroko Planet.” Given that our currently youngest
employees may still be alive in 100 years, I hope they willcontinue to watch and support Mitsuuroko Group a century
from now.
As such, Mitsuuroko Group will remain committed to helping
each and every customer lead more fulfilling lifestyles as it
engages in sustainability initiatives with its stakeholders.

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9corporate power purchase agreements (PPA), storage
batteries, electricity supply and demand adjustment, demand
response, and electric vehicles (EVs), we will seek expansion
in the new renewable energy aggregation business in part byextending sales from our environmentally friendly electricityoptions.
For the Foods Business, the key concept is ethicalconsumption and food loss reduction. We accordingly
promote manufacturing and selling products that takeenvironmental impact into account in part by using lessexcessive packaging, and initiatives looking toward reducing
food loss through so-called “Save Bread” sales of imperfectproducts. Additionally, given the labor-intensive nature ofmany workplaces in this sector, we are striving to create
stores that are economically efficient while also serving as
comfortable working environments.
The Living & Wellness Business focuses on the key conceptof health, sports and well-being. This involves developing
more opportunities and environments that enable peopleto engage in sports, including our hosting of health bowlingclasses based on Learn-to-Bowl (LTB) programs. We will
accordingly find ways for people to achieve the physical,
mental and social states that are ultimately best for them byproviding tangible and intangible solutions oriented to wellbeing through both facilities and programs.
The key concept of the Others segment is an environmentally
adaptive enterprise and eliminating the three Ms of Muda
(waste), Mura (inconsistency), and Muri (overburden). This
involves providing optimal solutions while adapting to thesocial environment. We will accordingly seek to eliminate
the three Ms to the extent possible, including streamlining
delivery operations, shortening travel distances, and reducing
environmental impact.

Introduction