Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

77

Strengthening Governance[Strengthening Governance]

Improving Effectiveness of Corporate Governance
At Kyushu EP, we believe that engaging in operations that are socially meaningful from a longterm perspective leads to sustainable value for all stakeholders. In order to properly carry out thesebusiness activities, we are striving to strengthen our corporate governance system.
In FY2018, we transitioned to a company with an Audit & Supervisory Committee based on ourbelief in the importance of strengthening governance and accelerating decision-making in order to
respond to the rapidly changing business environment with greater flexibility and speed than before.
In addition to implementing an organizational design system, we believe it is important to improvethe effectiveness of actual operations, and are working to further improve operational effectivenessthrough such initiatives as having external directors attend Corporate Management Committee
meetings and instituting Director Roundtables, a forum for all directors to freely exchange opinions.
2015

2016

2017

2018

2019

2020

2021

2022

Total number of directors*

20 (2)

20 (2)

21 (2)

19 (2)

16 (2)

15 (3)

15 (3)

15 (3)of whom are external directors*

5 (2)

5 (2)

5 (2)

5 (2)

5 (2)

5 (3)

5 (3)

5 (3)

(FY)

(Audit Committee through FY2017)

Evaluations of the effectivenessof the Board of Directors

Director Roundtables* Includes corporate auditors through FY2017. Figures in parentheses indicate the number of women■ Promotion Framework
With governance based on the Board of Directors and Audit & Supervisory Committee as its foundation, Kyushu EP
strengthens the supervision of management by appointing highly independent external directors and has the Audit &Supervisory Committee and Internal Auditing Body collaborate to increase the effectiveness of audits. In addition toundertaking such initiatives as clarifying the role of directors and executive officers in supervision and execution andthoroughly implementing compliance management, we continually work to enhance the system by establishing the
Basic Internal Control Policy.
■ Corporate Governance Structure (as of July 2023)
General Meeting of Stockholders
Consult and recommend

Appoint or dismiss

Personnel Advisory
Committee

Appoint or dismiss

Board of Directors

Remuneration Advisory
Committee

ReportAppoint, dismiss, anddelegate businessexecution

ReportMembers of the Board of Directors(Audit & Supervisory Committee members)

Audit

Audit & Supervisory Ofﬁcer

ReportDetermine that
account audits areappropriate

Audit & Supervisory Committee Ofﬁcer

Compliance Committee

Business Execution Structure

LiaisePresident & Chief Executive Ofﬁcer

Implement
monitoring

Corporate Management Committee
Coordinate and instruct

Submit and report on important matters

Headquarters, divisions, branch ofﬁces, Group companies, etc.

InstructInternal audit

ReportInternal Auditing Body

Audit accounts

Accounting Auditor

Supervise

Appoint or dismiss

Audit & Supervisory
Committee

Audit

Members of the Board of Directors(excluding Audit & Supervisory Committee members)

Delegate

As a rule, Kyushu EP’s Board of Directors meet once a month or as needed to make decisions onimportant matters related to corporate management and supervise the execution of those decisions. In
order to properly fulfill their roles and responsibilities, all directors are required, in principle, to attend
at least 75% of the Board of Directors’ meetings. In addition, five highly independent external directors(including three external directors who are Audit & Supervisory Committee members), comprising at least
one-third of the total number of directors, provide necessary advice during Board of Directors’ meetings
based on their insight and experience. They are also appropriately involved in and provide advice
regarding the nomination of candidates for the Board of Directors and their remuneration.
■ Overview of meeting bodies at Kyushu EP■ Changes in governance

Audit & Supervisory Committee■ Characteristics and Activities of the Board of Directors, Etc.

Framework

Members (as of June 30, 2023)

Meetings held
in FY2022

Attendance rateof all directors

Board of Directors

14 (of which 5 are external directors)

23

97.1％

Audit & Supervisory Committee

4 (of which 3 are external committee members)

22

100％

Personnel Advisory Committee

4 (of which 3 are external directors)

2

100％

Remuneration Advisory Committee

4 (of which 3 are external directors)

2

100％

In addition, since FY2021, we have been holding Director Roundtables for all directors to discuss material issues
impacting the entire Group during the policy and strategy-building stages in an effort to further improve theeffectiveness of the Board of Directors.

■ Main discussion topics at Board of Directors’ meetings and Director Roundtables in FY2022

Board of Directors
・ Basic policies on sustainability management
・ FY2023 Medium-term Management Plan
・ Integration of the renewable energy business・ Basic Internal Control Policy
・ Delegation of authority to a part of the Board of Directors

Director Roundtables
・ Direction of initiatives for the utilization of ROIC・ Direction of initiatives for enhancing human capital・ Group-wide risk analysis
・ Issues related to strengthening governance and the direction of actions
・ Evaluation of the effectiveness of the Board of Directors

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

78

Strengthening Governance■ Evaluation of the Effectiveness of the Board of Directors■ Director Skill Matrix

The Kyushu EP Board of Directors has evaluated the effectiveness of the Board since FY2015. In FY2022, we
carried out a survey using a questionnaire on the following topics targeted at all directors. The results of thequestionnaire were analyzed and evaluated at the Directors Roundtable, a forum for deliberation by all directors.

To generate sustainable growth and enhance the Kyuden Group’s corporate value at a time of drastic changes
in the business environment, we identified the skills that Kyushu EP’s Board of Directors should possess inorder to indicate the direction of management from highly insightful and multifaceted perspectives, implement
quick management decision-making, and appropriately fulfill its management supervision function. We thenclarified the areas in which we expect each director to lead based on his or her knowledge and experience.

■ Questionnaire topics(1) Composition and operation of the Board of Directors (2) Management and business strategies(3) Corporate ethics and risks (4) Performance monitoring and evaluation/remuneration of management(5) Dialogue with shareholders, etc.
■ Efforts aimed at improving the effectiveness of the Board of Directors
Tasks for improving
effectivenessFields with Particularly High Expectations*
(1)

Name

Expansion of deliberations on
management strategies and issues
related to overall Group material issues

Delegation of authority from the Board of
Directors to executive officers to speed up
decision-making

Deliberated on a total of seven topics,
including human capital, Group-widerisks, and ROIC utilization, at the Directors
Roundtable, a forum for deliberation by all
directors

Reviewed the criteria for submitting
proposals concerning financing, etc., to theBoard of Directors, and delegated authority
to executive officers provided they aremonitored by the Board of Directors

Position within Kyushu EP

Personnel
Advisory
Committee

(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Legal
Innovation Technology Sales
GlobalRemuneration Corporate Finances
affairs
EnvironHumanandand digital and R&D
Advisoryand business
management accounting
and risk capital ment transformation (including marketing
Committee
management
ICT)○

Chairperson

Kazuhiro Ikebe

President & Chief
Executive Officer

NaoyukiToyoshima

Vice-Presidential
Executive Officer○

NoboruHashimotoVice-Presidential
Executive Officer○

Atsushi Soda

Vice-Presidential
Executive Officer○

Yoshiharu
Senda

Senior Managing
Executive Officer○

Takashi Nakano

Senior Managing
Executive Officer○○

MasaruNishiyama

Senior Managing
Executive Officer○○

Sakie Tachibana
Fukushima

Director■ Policy on Appointing Candidates for the Board of Directors

Junji Tsuda

Director

The Articles of Incorporation stipulate that Kyushu EP’s Board of Directors is to consist of up to 19 directors (of which
up to five are to be directors who are Audit & Supervisory Committee members) from the perspective of achieving
active deliberations and strengthening the supervisory function. Candidates for internal directors are selected bycomprehensively taking into account their personal character, insight, ethics, career background, and capabilities.
For external directors, who account for at least one-third of the directors, we select candidates who meet the decision
criteria for independence and have abundant experience and insight in corporate management and specialized fields.
In addition, the composition of the entire Board of Directors takes overall fields of business into account while
ensuring diversity in terms of gender, international experience, professional background, and age, as well as an
appropriate ratio of Board members, with, for instance, three women among the directors.

Yasuaki Endo

FY2022Michiaki Uriu

Result of efforts

Evaluation

FY2023

Tasks for further
improvement

・Questionnaire data and additional comments confirmed that all topics
showed improvement
・On the other hand, during the Director Roundtable, there was the opinion that it wasnecessaryto continue to expand deliberations at the Board of Directors’ meeting regarding
the overall direction of corporate strategy, etc.,and to consider the delegation of authority
to the executive side

Further invigorate discussions on
management strategies and material issues
for the entire Group, etc.

Further delegate authority to persons
responsible for business execution toaccelerate decision-making

Kazuko Fujita

Yuji Oie
TomokaSugihara

Audit andSupervisory
Committee Member
Audit andSupervisory
Committee Member
Audit andSupervisory
Committee Member
Audit andSupervisory
Committee Member

Member Member

External Woman
Independent
External
Independent○

Member Member○

Chairperson○

Chairperson

○

○

○

○
○
○

○

○

○

○

○

○

○

○

○

○
○

○

External○○
Member Member*This does not indicate all the knowledge and experience possessed by the director.

○
○

○

○

Independent

Independent

○

○

○

○

Independent

External Woman○○○
External Woman

○

○

○

○

○

○

○

○

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

79

Strengthening Governance■ Remuneration System■ Basic remuneration [monetary remuneration, monthly remuneration] (FY2022)

Remuneration for directors (excluding directors who are Audit & Supervisory Committee members) consistsof basic remuneration and performance-linked remuneration. Performance-linked remuneration is based not
only on consolidated ordinary income outlined in the financial objectives of the Management Vision but also
other performance metrics, such as reduction in GHG emissions in order to become carbon neutral anddividends paid to shareholders. Remuneration for external directors, based on their duties, consists only ofbasic remuneration and does not include performance-linked remuneration.
The Remuneration Advisory Committee, chaired by an external director and a majority of whose members
are external directors, deliberates on the amount of remuneration, which may not exceed the total amount of
remuneration and upper limit on the number of shares approved at the General Meeting of Shareholders, thenthe Board of Directors decides on the amount.
In addition, Audit & Supervisory Committee members attend Remuneration Advisory Committee meetingsand confirm the appropriateness of deliberations by the Committee.

Members of the Board of Directors (Internal)

11 directors¥398 million

Members of the Board of Directors (External)

7 directors¥60 million

Total

18 directors¥458 million■ Director remuneration structure
Type of Remuneration(Monthly
remuneration)
Fixed

Basic remuneration(Bonus)Short-term*1:

WeightTiming of Payment

Monetary

Determined according to responsibilities

62–76%

Once a month
Fixed timing

Monetary

A standard amount determined according
to responsibilities is linked to the degree ofachievement of performance indicators (consolidated
ordinary income outlined in the financial objectivesof the Management Vision) by 0% to 120%

12–19%

Once a year
Fixed timing

Members of the Board of Directors (Internal)

9 directors

Stocks*2

Around 20% of a standard number of points
determined according to responsibilities is linked
to the degree of achievement of performanceindicators (consolidated ordinary income outlinedin the financial objectives of the Management
Vision and GHG emissions reduced to achievecarbon neutrality of the Kyuden Group)*3¥0 million■ Performance-linked remuneration [non-monetary remuneration, stock-based remuneration(linked to medium to long-term performance)] (FY2022)
Members of the Board of Directors (Internal)

9 directors¥61 million■ Cross-shareholdings
Every year, the Board of Directors assesses the rationale of holding each cross-shareholding by comprehensively
considering its relationship with business strategies and district symbiosis, such as the stable procurement of
capital and equipment, and its contribution to regional vitalization, and then examining its profitability and future
prospects based on the cost of capital and other factors. Those that are determined to lack sufficient rationale forholding are sold off, though we also sell off those with an accepted rationale for holding as much as possible.

■ Cross-shareholdings over time (listed shares)(Billionsof yen)50(Issues)30

29
28(Stock-based
remuneration)
Medium to long-term

Variable

Performance-linked remuneration

Overview■ Performance-linked remuneration [monetary remuneration, bonus (linked to short-term performance)] (FY2022)

28

40
12–19%On stepping down

*1: In determining the amount of performance-linked remuneration, the Remuneration Advisory Committee deliberates on adjusted evaluations, taking into account thedividend situation and other factors as necessary*2: Since taxes such as income tax are levied when the stock is received, an amount equivalent to the tax amount is also paid in cash
*3: Each reference period is three fiscal years, and evaluations are based on the final day of each reference period

27

26

30
20

25
35.1

10

36.1

35.4

38.8

2020

2021

2022

26.3

0
2018

2019

Value of shares held (based on market value)*

20
(FY)

Number of issues held

* The increase in the value of shares held is due to rising share prices

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

80

Strengthening Governance

Overview of the Dialogue between External Directors and Investors
Aiming to engage in constructive dialogue with our investors, we
held a dialogue between external directors and investors during
the ESG Small Meeting in December 2022.
This was our second dialogue, with the first held the previous
fiscal year, and we strove to improve it further by having two
outside directors attend and dividing dialogue participants into
groups.

Junji Tsuda

Kazuko Fujita

External Director

External Director,
Audit & Supervisory Committee Member

Profile Special Advisor at Yaskawa Electric Corporation
since 2022 (current position). External Director of Kyushu
EP since June 2021. Former Chairman and President of
Yaskawa Electric Corporation and drove its globalization
with over a decade of experience in the U.S.

Profile Founder of Fujita Certified Public Accountants(current position). Possesses extensive knowledge offinance and accounting from many years of experience
as a CPA and certified public tax accountant. Served as
an auditor (part-time) at several educational institutions,
including Kyushu University.

Q1. What do you see as your basic roles as an outside
director?

plants and high ratio of renewable energy sources, its trust from the communityand employees’ dedication to contributing to the community, and its knowledge ofa variety of power generation methods. These strengths are the solid foundation
underpinning its major policies: providing a stable electricity supply and advanced
services, co-creation with the community, and growing earnings through new
businesses.
On the other hand, its challenge is improving profitability. The company isworking on ROIC-based management andoperational reforms through digital transformation so that it can invest its resources ingrowth projects that will lead to the company’s growth, while continuing to improve its
equity ratio.
Ms. Fujita Kyuden Group’s sustainability
management is based on human capital and governance. When I visit thecompany’s worksites, I notice that the people in charge exercise leadershipand hold the sites together through active communication, even with its
affiliates, and this leads to strong governance. The challenge lies in balancing the conflicting needs of “stability, safety, and low cost” with the needto secure profits. This is very difficult to do, which is why it leads to trustfrom society. Going forward, it will be important for the company to firststabilize its profits from the electricity business, then ensure a balance
between investments and earnings, strengthen its financial structure, andstrengthen its earnings from sources other than the electricity businessover the medium to long term.

think it would be better for the Board of Directors to take on the role of thinking
about the big picture, such as the structure of the organization and its strategies. Rather than having the external directors be involved in detailed management, providing their opinions on each individual project, I would like to expand
our role as advisors on the management of the organization, with increased
involvement in decisions regarding the overall direction of management.

Mr. Tsuda I see my basic roles as an outside director as 1) participating inshaping the direction of strategy, 2) creating an environment that allows forrisk-taking in order to grow, and 3) raising corporate value over the medium
to long term through objective supervision. Regarding 2) in particular, Kyushu
EP’s “defensive” governance is functioning well, for example, in the way theyexamine risks from various perspectives for all kinds of projects. On the other
hand, in new businesses and other areas, it is also important to take risks,bring in knowledge, and connect that to growth. By creating an environment
conducive to risk-taking, I hope to broaden the scope of their strategies andtactics.
Ms. Fujita Part of my basic role as an outside director is to convey my opinions to the executive side from an independent standpoint. From my perspective as an accountant, I try to judge the financial impact of a proposal byconsidering factors such as how it relates to the company’s strengths andmedium-term plan, and whether or not it will lead to an increase in corporate
value.
In addition, as a member of the Audit & Supervisory Committee, I also visit
worksites and talk with the employees to check not only compliance, but also
whether the employees fully understand and are implementing the Management Vision and policies.

Q2. What are Kyushu EP’s
strengths and challenges?
Mr. Tsuda Kyushu EP’s strengths are its
contribution as a leader in decarbonization
through the operation of four nuclear power

Q3. How effective is the Board of Directors, andwhat is its ideal state?
Mr. Tsuda For a company with a solid internal structure like Kyushu EP, I

Q4. How is ROIC-based management being promoted?
Ms. Fujita When we discussed ROIC at the Directors Roundtable, I expressed
my opinion on the importance of adopting ROIC-based management early on,
and I believe that the implementation of it has sped up. When the results become available in the future, I would like to thoroughly check the causes of any
deviations from targets and offer my opinions on how to improve the situation.

Q5. How can Kyushu EP improve its market valuation and PBR?
Mr. Tsuda The key to improving PBR is to keep improving profitability whileraising investor confidence in the Company’s goals. Kyushu EP has a strong
foundation for growing new businesses based on its Domestic Electricity
Business. I believe that communicating more specific and detailed goals andinitiatives to the market, including its growth businesses, will lead to a higher
valuation.

Feedback from investors after the dialogue
・ I highly appreciate the fact that dialogues with external directors are held
regularly, as doing so is very rare, even among companies in the same ordifferent industries
・ It was helpful to hear the honest opinions of external directors throughdirect interactions with them

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

Strengthening GovernanceMembers of the Board of Directors (Kyushu Electric Power)
Common stock in the company held: 86,111 shares

Overview of career, positions, and responsibilities

1975
2009

1981
2017

1982
2018

2012
2018

Joined Kyushu EP
Member of the Board of Directors, Senior Managing Executive
Officer, Director of Thermal Power Division
Member of the Board of Directors, Vice-Presidential Executive
Officer, Director of Thermal Power Division
Member of the Board of Directors, Vice-Presidential Executive
OfficerMember of the Board of Directors, President & Chief Executive
OfficerMember of the Board of Directors, Chairperson (current position)

Important concurrent positions
External Director, Audit & Supervisory Committee Member, The Nishi-Nippon
City Bank, Ltd.
External Director, RKB Mainichi Holdings Corporation

2018

2022

Joined Kyushu EP
Member of the Board of Directors, Senior Managing Executive
Officer, Director of Nuclear Power Division
Member of the Board of Directors, Vice-Presidential Executive
Officer, Executive Director of Nuclear Power Division (current
position)

Kazuhiro Ikebe

Naoyuki Toyoshima

Member of the Boardof Directors,
President & Chief
Executive Officer

Member of the Boardof Directors,
Vice-Presidential
Executive Officer

Common stock in the company held: 28,301 shares

Common stock in the company held: 34,399 shares

Overview of career, positions, and responsibilities

Overview of career, positions, and responsibilities

Overview of career, positions, and responsibilities

1984
2017
2020

1985
2018
2020

1984
2018

2022
2023

Joined Kyushu EP
Executive Officer, General Manager of Kumamoto Branch Office
Managing Executive Officer, Director of Urban Development
Business Division
Senior Managing Executive Officer, Director of Urban Development
Business Division
Member of the Board of Directors, Vice-Presidential Executive
Officer, Executive Director of Business Solution Headquarters(current position)

2020
2022
2023

Noboru Hashimoto

Atsushi Soda

Member of the Boardof Directors,
Vice-Presidential
Executive Officer

Member of the Boardof Directors,
Vice-Presidential
Executive Officer

Common stock in the company held: 23,037 shares

Joined Kyushu EP
Executive Officer, General Manager of Oita Branch Office
Executive Officer, seconded to the Federation of Electric Power
Companies of Japan
Managing Executive Officer, seconded to the Federation of ElectricPower Companies of Japan
Senior Managing Executive Officer, seconded to the Federation ofElectric Power Companies of Japan
Member of the Board of Directors, Vice-Presidential Executive
Officer, Crisis Management Officer and ESG matters (current
position)

Overview of career, positions, and responsibilities

1985
2018
2021

1986
2017

2023

2019
2020
2022

Yoshiharu Senda

Joined Kyushu EP
Executive Officer, Director of Civil & Architectural Engineering
Division, Technical Solution Headquarters
Managing Executive Officer, Director of Civil & ArchitecturalEngineering Division, Technical Solution Headquarters
Senior Managing Executive Officer, Executive Director of Technical
Solution Headquarters
Member of the Board of Directors, Senior Managing Executive
Officer, Executive Director of Technical Solution Headquarters(current position)

Member of the Board
Important concurrent positionsof Directors,
External Director, FUJI P.S CORPORATION
Senior Managing
Executive Officer

Common stock in the company held: 20,311 shares

Overview of career, positions, and responsibilities

2022

Member of the Boardof Directors,
Senior Managing
Executive Officer

Joined Kyushu EP
Member of the Board of Directors, Senior Managing Executive
Officer, Executive Director of Corporate Strategy Division
Member of the Board of Directors, President & Chief Executive
Officer (current position)

Important concurrent positions
Chairperson, The Federation of Electric Power Companies of Japan

Common stock in the company held: 30,679 shares

Takashi Nakano

Common stock in the company held: 47,867 shares

Overview of career, positions, and responsibilities

2012

Michiaki Uriu

Common stock in the company held: 85,511 shares

Overview of career, positions, and responsibilities

2011

Member of theBoard of Directors,
Chairperson(As of July 1, 2023)

Joined Kyushu EP
Executive Officer, General Manager of Kagoshima Branch Office
Managing Executive Officer,Director of Operation Division, Business
Solution Headquarters
Senior Managing Executive Officer, Director of Operation Division,
Business Solution Headquarters
Member of the Board of Directors, Senior Managing Executive
Officer, Director of Operation Division, Business Solution
Headquarters (current position)

2019
2021
2022
2023

Masaru Nishiyama

Joined Kyushu EP
General Manager, Corporate Strategy Division
(Group Management Strategy)
Executive Officer, General Manager of International Business Office
Managing Executive Officer, Executive Director of Corporate
Strategy Division
Senior Managing Executive Officer, Executive Director of Corporate
Strategy Division
Member of the Board of Directors, Senior Managing Executive
Officer, Executive Director of Energy Service Headquarters (current
position)

Member of the Boardof Directors,
Important concurrent positions
Senior Managing
External Director, Nippon Tungsten Co., Ltd.
Executive Officer

Notes: 1. Common stock in the company held as of March 31, 2023
2. Including the individual’s equity in the Board Benefit Trust (BBT), a stock remuneration system

81

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

82

Strengthening GovernanceCommon stock in the company held: 6,100 shares

Sakie Tachibana
FukushimaCommon stock in the company held: 14,700 shares

Overview of career, positions, and responsibilities

Overview of career, positions, and responsibilities

1980
1984
1987
1990
1991
1995

1976

1980
2018

2000
2001
2007
2009

Member of the Boardof Directors (External) 2010
2010

2011
2016
2020
2022

Joined Blackstone International, Ltd.
Left Blackstone International, Ltd.
Joined Bain & Company, Inc.
Left Bain & Company, Inc.
Joined Korn Ferry International-Japan (now Korn Ferry Japan)
Member of the Board of Directors, Korn Ferry International U.S.
Headquarters
President, Korn Ferry International-Japan
President and Representative Director, Korn Ferry International-Japan
Retired as Member of the Board of Directors, Korn Ferry
International U.S. Headquarters
Chairperson and Representative Director, Korn Ferry InternationalJapan
Retired as Chairperson and Representative Director
President and Representative Director, G&S Global Advisors, Inc.
(current position)
Vice Chairperson, Japan Association of Corporate Executives(through 2015)
Member of the Board of Directors, Ushio, Inc. (part-time, current
position)
Member of the Board of Directors, Kyushu EP (current position)
Member of the Board of Directors, Aozora Bank, Ltd. (part-time,current position)

1998
2003
2005
2009
2010
2013

Junji Tsuda

2016

Member of the Board 2017of Directors (External)
2018
2021
2022
2022
2022

2019
2021

Joined Kyushu EP
Managing Executive Officer, Director of District Symbiosis Division,
Business Solution Headquarters
Senior Managing Executive Officer, Director of District Symbiosis
Division, Business Solution Headquarters
Member of the Board of Directors, Audit & Supervisory Committee
Member, Kyushu EP (current position)

Yasuaki Endo
Member of the Boardof Directors,
Audit & Supervisory
Committee Member

Special Advisor, Yaskawa Electric Corporation
Chairman, board of directors, the University of Kitakyushu
External Director, TOTO Ltd.
External Director, NSK Ltd.

Common stock in the company held: 4,000 shares

Common stock in the company held: 900 shares

Common stock in the company held: 900 shares

Overview of career, positions, and responsibilities

Overview of career, positions, and responsibilities

Overview of career, positions, and responsibilities

1971

1990

1999

1975
1983
1989

Kazuko Fujita

Joined Yaskawa Electric Mfg. Co. Ltd. (now Yaskawa Electric
Corporation)
Vice President, Yaskawa America, Inc.
Retired as Vice President, Yaskawa America, Inc.
Member of the Board of Directors, Yaskawa Electric Corporation
Managing Director of the Board, Yaskawa Electric Corporation
President (Representative Director), Yaskawa Electric Corporation
Representative Director, Chairman of the Board, and President,
Yaskawa Electric Corporation
Representative Director, Chairman of the Board, Yaskawa Electric
Corporation
Chairman, board of directors, the University of Kitakyushu (current
position)
External Director, TOTO Ltd. (part-time, current position)
Member of the Board of Directors, Kyushu EP (current position)
Member of the Board of Directors, Yaskawa Electric Corporation
Special Advisor, Yaskawa Electric Corporation (current position)
Member of the Board of Directors, NSK Ltd. (part-time, current
position)

Important concurrent positions

Important concurrent positions
President and Representative Director, G&S Global Advisors, Inc.
External Director, Ushio, Inc.
External Director, Aozora Bank, Ltd.

Member of theBoard of Directors,
Audit & Supervisory
Committee Member(External)

Common stock in the company held: 25,569 shares

Overview of career, positions, and responsibilities

2007
2007
2009
2009
2010
2020

Joined Chuo Accounting Office (Auditing Corporation, subsequently
Misuzu Audit Corporation)
Registered Certified Public Accountant (to present)
Member, Chuo Accounting Office
Representative Member, Chuo Shinko Audit Corporation(subsequently Misuzu Audit Corporation)
Left Misuzu Audit Corporation
Partner, Tohmatsu Auditing (now Deloitte Touche Tohmatsu LLC)
Retired as Partner
Established Fujita Certified Public Accountants
Registered Tax Accountant (to present)
Member of the Board of Directors, Audit & Supervisory Committee
Member, Kyushu EP (current position)

Important concurrent positions
Certified Public Accountant, Tax Accountant (Fujita Certified Public
Accountants)

1995
1997
2008
2009

Yuji Oie
Member of theBoard of Directors,
Audit & Supervisory
Committee Member(External)

2010
2016
2022
2022

Associate Professor, School of Computer Science and Systems
Engineering, Kyushu Institute of Technology
Professor, Information Initiative Center, Nara Institute of Science andTechnology
Professor, School of Computer Science and Systems Engineering,
KyushuResearch Professor, Graduate School of Computer Science andSystems Engineering, Kyushu Institute of Technology
President, Graduate School of Computer Science and Systems
Engineering, Kyushu Institute of Technology
Director, Vice President, Kyushu Institute of Technology
President, Kyushu Institute of Technology
Resigned from Kyushu Institute of Technology
Member of the Board of Directors, Audit & Supervisory Committee
Member, Kyushu EP (current position)

2007
2020
2022

Tomoka Sugihara
Member of theBoard of Directors,
Audit & Supervisory
Committee Member(External)

Registered as an attorney (current position)
Joined Miura Okuda Iwamoto Law Office (now Miura Okuda
Sugihara Law Office)Partner, Miura Okuda Sugihara Law Office (current position)
Director, Audit & Supervisory Committee Member, Nippon Tungsten
Co., Ltd. (part-time, current position)
Member of the Board of Directors, Audit & Supervisory Committee
Member, Kyushu EP (current position)

Important concurrent positions
Attorney (Partner, Miura Okuda Sugihara Law Office)External Director, Audit & Supervisory Committee Member, Nippon
Tungsten Co., Ltd.

Notes: 1. Common stock in the company held as of March 31, 2023
2. Not eligible for the Board Benefit Trust (BBT), a stock remuneration system; no individual equity

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

83

Strengthening Governance

Ensuring Compliance
Based on the recognition that “the Group’s survival depends on the trust of all members of society,”
we promote compliance management to ensure that each and every member of the Group operates
the business with integrity and fairness. In light of the administrative penalties imposed by the Japan
Fair Trade Commission and the incident involving the improper handling of customer data of otherretail electricity companies in FY2022, we will take measures to prevent recurrence and strive as
one Group to ensure that our business activities once again make compliance our top priority.

■ Compliance Promotion Framework
At Kyushu EP, under the Compliance Committee, which handles issues delegated by and is monitored by the
Board of Directors, we have designated the heads of different business execution units as compliance officers
who formulate and implement action plans. We have also created a framework, which included establishingconsultation desks both within and outside the company. In these ways, we are promoting compliance, including
corruption prevention.
For Group companies, we have a Group General Affairs Subcommittee, which includes members from eachcompany. The subcommittee shares information relating to compliance and acts as a forum where members
can exchange ideas. As well as promoting a Group-wide, unified approach, the subcommittee clearly defines theroles of the management departments that guide and support the Group companies, and strengthens the Kyuden
Group’s compliance promotion framework.
■ Compliance promotion framework

ReportCompliance Committee

LiaiseStructure Chairperson : President
Members : Relevant executive officers, head of labor unioncommittee, and external experts
ReportFormulate and execute action plan

President(Group companies)(ultimately responsible for compliance)
Formulate and execute action plans(Branch ofﬁces)(Head ofﬁce)

Area compliance promoters andbranch ofﬁce compliance ofﬁcers(Branch ofﬁce general managers)

Respective divisions, etc.

Area compliance promotersand branch ofﬁce
compliance ofﬁcers

President (Compliance Committee, etc.)

ReportCompliancebranch areaofﬁcerComplianceofﬁcers (head ofrespective
divisions, etc.)
Compliance ofﬁcers

LiaiseGroup company
management
departments

Compliancepromoters(Senior managing
ofﬁcer level)

ReportComplianceconsultation desks

Consult
Consult
Business
partners
Consult

Compliance ofﬁcers
Compliance ofﬁcers(internal and external)

Executives/
Employees

Promote integrated initiatives atthe branch ofﬁce level(Head of organization, etc.)

Communicate

Complianceconsultation desks

Manage activities and offer guidance/support■ Overview of the Compliance Committee
Roles

Structure
Frequency of
Meetings○Propose and deliberate on compliance-related policies and measures, etc., and monitor
implementation○Provide advice, etc., from external experts in the Compliance Committee in the event of ascandal with significant social impact[Chairperson] President[Members] External experts (3), head of the labor union committee, relevant executive officers
Twice a year, in principle■ Record of FY2022 activities■ Committee meeting in session

Major items for deliberation/reporting by the Compliance
Committee■ Compliance Consultation DesksGroup General Affairs Subcommittee
Suggest and monitor

We have established a Compliance Committee chaired by the President, regularly provide advice and monitor
compliance, and obtain suggestions and other forms of support from outside experts in the event of a scandal
with significant social impact. Advice provided by the Committee is also shared with Group companies andreflected in initiatives throughout the Group.

・Status of initiatives at each site
・Operational status of compliance consultation desks
・Causes of compliance violations and measures to prevent
recurrence

Board of Directors (Kyushu EP)
Delegate■ Compliance Committee

Compliance educationofﬁcers

Executives/
Employees

Business
partners

To prevent actions that violate laws, regulations, and corporate ethics and detect such violations at an earlystage, we have established compliance consultation desks at Kyushu EP and Kyushu T&D. Officers, employees,
and business partners (contractors, etc.) of the Kyuden Group can consult with these desks when they havedoubts about the legality or ethics of our business operations or the behavior of other officers and employees.
We have also established an external consultation desk at a legal office to provide consultation services.
The privacy of users of these services is strictly protected in ac- ■ Consultations and reports over timecordance with laws, regulations, and internal rules, and users will
Kyushu EP
Kyushu T&Dofnot be subjected to any disadvantageous treatment as a result of (No.
cases)
40
consulting with or reporting to these desks.
33
In addition, to create an environment conducive to such con30
26
sultations, we are encouraging employees to use the consulta17
tion desks through documents and on the Intranet. In FY2022, 26 20
20
consultations and reports were received. Appropriate action was
1216
taken in response to the consultations we received, including nec- 10
106essary investigations and consideration of measures to prevent0
2
recurrence.
2020
2021
2022
(FY)

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

84

6 Data Section

Strengthening Governance■ Initiatives to Ensure Compliance
We regret the significant inconvenience and concern caused to our stakeholders as a result of serious complianceviolations, including the administrative penalties imposed by the Japan Fair Trade Commission and the improper
handling of customer data of other retail electricity companies. In order to prevent such situations from everoccurring again, all of our officers and employees will make a concerted effort to ensure thorough complianceand restore the public’s trust.

■ Structure for periodic, multi-tiered verification of compliance with laws and regulations

Give
opinionBoard of Directors
ReportMeasures to prevent recurrence of improper handling of new electricity customer
information, etc.

Compliance Committee (legal compliance system)

Overview

Give
opinion
ReportReportGive
opinionCompliance Sub-committee(special assembly for conduct
regulations)Sub-committee chairperson: External Director
Vice sub-committee chairperson: Vice President
Sub-committee members: people appointed by the sub-committee chairperson** Including external experts

Matters implemented include • Validations of reoccurrence countermeasures• Evaluations of effectiveness, taking into account the progressof reoccurrence countermeasures• Suggestions for improvement in the case that reoccurrence
countermeasures are insufficientetc.

ReportEfforts to Prevent Recurrence

Business execution

Execute in accordance with decisions

Cause(1) Measures for information systems that “prevent” and “do not allow” inappropriate behavior to occur
・Ensure strict management of login IDs, passwords, and terminals(Relevant internal rules were also revised)・Further reinforce system-based measures such as access restrictions on communication channels(2) Developing systems and mechanisms that “prohibit” the behavior and an organizational culture that“discourages” it・Build and reinforce a structure for periodic, multi-tiered verification of compliance with laws andregulations(See diagram on the right for the structure)
・Communicate messages from senior management
・Enhance training and education on conduct restrictions
・Create an environment conducive to the detection of misconduct, including developing an internalreporting system
・Reduce risks in all operations by conducting a comprehensive review of operations, with a focus on
conduct restrictions
・Clarify responsibility for compliance, including conduct restrictions, and rules for disciplinary actions

ReportAudit & Supervisory
Committee

Chairperson: President Vice chairperson: Vice President
Committee members: External experts, external directors (excluding Audit & Supervisory
Committee members), Director of the District Symbiosis Division, Directorof the Human Resource Vitalization Division, Director of the Corporate
Strategy Division (*newly added), President of Kyushu T&D, etc.

Kyushu EP was found to have been using a system owned by Kyushu T&D in business operations otherthan the handling of emergency disasters and incidents, which Kyushu T&D had contracted it to perform, toaccess the customer data of other retail electricity utilities (this was announced in press releases between
January and March 2023). There were no cases in which the accessed information was used in customer
acquisition activities.
To prevent such a situation from happening again, all employees are working together to prevent recurrence
under the leadership of senior management, led by the President, and with the help of external knowledge.
・Lack of sensitivity (literacy) with respect to non-public information (non-publicly disclosed information
regarding operations such as wheeling services that could affect competition in the retail electricity
business, etc.)
・Failure to consider the specific legal risks and business norms that would arise as a result of the spin-off
・Failure to create an organizational climate conductive to consultation

Receive suggestion

Internal system

Second lineof defense

First line ofdefenseManagement departments at the head office
ReportHead office, branch offices, and worksites

ReportReportInternal Auditing Body*(audits conduct regulations)* Directly controlled by
the President
Third line ofdefenseInternal Auditing Body

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value85

6 Data Section

Strengthening Governance

Measures to prevent recurrence in light of administrative penalties imposed by theJapan Fair Trade Commission

Overview

Kyushu EP and Kyuden Mirai Energy received cease and desist orders and a surcharge payment order(Kyuden Mirai Energy received the cease and desist order only) from the Japan Fair Trade Commission
on March 30, 2023, for violating the Antimonopoly Act in connection with the supply of extra highvoltage power and high voltage power.
Due to a difference of opinion with the Commission regarding the facts of the case, Kyushu EP filed alawsuit seeking the revocation of each order. However, to prevent such allegations in the future, we are
implementing measures to ensure compliance with laws and regulations, including the AntimonopolyAct.
To compile these measures, the Compliance Committee, which includes external experts and external
directors, deliberated on the issues while obtaining knowledge from attorneys and other experts.

Cause・W e conducted meetings with a competitor without having a sufficient understanding of the
Antimonopoly Act, including that there was a risk of being suspected of violating the Antimonopoly
Act simply by making contact with a competitor, etc.
(1) Commitment by top management to prevent recurrence and Group-wide attitude andcorporate culture reforms[Measures that “discourage” the behavior]・Issue a declaration by top management
Issued the “President’s Commitment,” which expresses our strong determination not to repeat situations that could
be suspected of violating the Antimonopoly Act・Foster awareness of compliance as our top priority
・Foster an organizational climate that encourages members to point out to each other risks of legal violations
regardless of department or position■ Structure for auditing compliance with the Antimonopoly Act and verifying efforts

Board of Directors
ReportEfforts to Prevent Recurrence(3) Establishment of an Antimonopoly Act compliance structure and reinforcement of checks inthe structure[Measures to “prohibit” the behavior](See diagram on the right for the structure)・Establishment of “Antimonopoly Act Compliance Rules”
Established rules that stipulate initiatives and structures for compliance with the Antimonopoly Act
・Establishment of the “Unreasonable Restraint of Trade (Cartels and Bid Rigging) Prevention Manual”
Established a manual that specifies precautions to be taken when contacting competitors in order to avoid
suspicions of forming a cartel, etc.
・Audits of compliance with the Antimonopoly Act and external verification of efforts to prevent recurrence－ Implemented periodic audits by the legal division and outside counsel
－ Established a Compliance Subcommittee consisting of a majority of external personnel to monitor efforts toprevent recurrence

ReportCompliance Committee (legal compliance system)

Audit & Supervisory
CommitteeGiveopinion
ReportReportCompliance Sub-committee

Sub-committee chairperson: External Director, Audit & Supervisory Committee
Vice sub-committee chairperson: Vice President
Sub-committee members: Executive Officer in Charge of Legal Affairs, Executive
Officer in Charge of Internal Audits, Anti-Monopoly Act experts, etc.
*Structured such that external personnel make up the majority

GiveopinionMatters implemented include • Confirmation of the extent to which compliance awarenesshas permeated throughout the Company• Audits related to the progress of compliance with the AntiMonopoly Act, etc.
• Verifications of initiatives to prevent reoccurrence

ReportReportSecond lineof defense

Audit and verify

District Symbiosis
Division(legal affairs)(2) Improving understanding and awareness of the Antimonopoly Act[Measures that “discourage” the behavior]・Revise Compliance Action Guidelines, etc.
Enhanced the list of points to bear in mind regarding contact with competitors, in order to comply with the
Antimonopoly Act
・Conduct education and trainingImplemented regular training on problematic actions that could constitute cartel behavior and specific standards ofconduct to avoid suspicion

Give
opinionConsult
First line ofdefenseLiaiseLawyers outside
the Company
Support, as well as audit and verify
through surveys

Compliance officers at each of our sites
LiaiseHead office, branch offices, and worksites

Third line ofdefenseInternal
Auditing
Body

Internal Auditing
Body**Directly controlled
by the President

Table ofContents

KYUDEN GROUP INTEGRATED REPORT 2023

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

86

Strengthening Governance

Strengthening Risk Management System
To manage risk, Kyushu EP identifies, categorizes and assesses risks every year based on its risk management
rules, clarifying company-wide and division-specific threats that could affect Kyuden Group management.
Individual divisions and business offices incorporate measures to address significant risks into business planand manage them appropriately.
With regard to risks that relate to multiple departments and risks for which concerns of manifestation are
high, we share information among related departments, clarify response structures, and address these risks
appropriately. For nuclear power in particular, we take external knowledge and opinions into consideration as
we work to identify a broad range of risks, share this information with members of the Board of Directors andexecutive officers, and reduce the risks thoroughly and on an ongoing basis.
In addition, to respond rapidly and appropriately to emergencies and disasters, we have established rules, inadvance, covering response structures and procedures, and we conduct regular drills.
To ensure the adequacy of this risk management system, the Internal Audit Division, which is independent
from business operations, audits the implementation of risk management at individual divisions and Group
companies.

■ Crisis Management System
As the risks that the Kyuden Group faces grow more diverse and complex at an unprecedented scale and speed,
we have created a crisis management system and strive to minimize the impact if they materialize. Specifically,
having installed not only an officer in charge of crisis management (Vice-Presidential Executive Officer, KyushuEP) and the respective division manager responsible for crisis management but also crisis management staff at
such locations as the head office of Kyushu EP and Kyushu T&D, we share information and collaborate in the caseof a crisis. In addition to having established a Risk & Crisis Management Countermeasures Committee, we havebuilt a support system based on outside experts with specialized and advanced knowledge to continually improveand strengthen crisis management functions.

President of
Kyushu EP
Report /Consult

Kyushu EP Vice President(Crisis Management Officer)■ Risk management process (framework)
Commitment

CompileClarify major risks

Commitment

Examine risk
countermeasure• Change in risk awareness

Risk assessmentchanges• Events thatexpectedoccurredin thein thelastbusinessyear
environment
in theconsideration
medium to long-term• Identify risks
taking into
expectedchanges in the business environment in the medium
to long-term• Share information on state of response
to risk with related parties and senior

management• Share information
on state of response to risk
with related parties and senior management

Low

Probability ofmaterialization

Probability of materialization• Identify risks taking into consideration

Examine risk countermeasure

High
Risk assessment
High

Low

Impact Impact

Legalaffairs
Publicrelations

Risk & Crisis Management
Countermeasures
Committee• Clarify major risks through management
discussion• Individual divisions incorporate risk
countermeasures
into businessplans incorporate risk
• Individual
divisionsthen implement
countermeasures into business plans thenOffer guidance oncrisis countermeasuresand support fortraining, etc.

Undertakes supervisory deliberations on
subjects related to risk and crisis
management

Head office departments at Kyushu EP andKyushu T&D

CrisisManagement
Supervisor

CrisisManagement
Supervisor(alongsideother duties)(alongsideother duties)

CrisisManagement
Supervisor …

Execute• Assess risks based on their probabilityof materialization and potential impact• Clarify majorrisks through• Assessrisksmanagement
based on their probability of
discussion materialization and potential impact

implement

District Symbiosis
Division

External experts(think tanks)Power System
Operation &Engineering
Division• Newly materialized risks• Change in risk awareness

ExecuteExecuteGeneralaffairs

・Installed as a general manager dedicated tocrisis management
・During emergencies, helps enhance speedof response under the direct control of theVice President (after the establishment of
the Headquarters Division, acts as asupervisory team leader to assist the Chief ofHeadquarters and Crisis Management Officer)

Information andCommunication
DivisionGroupcompanies

Examine risk
countermeasure・Installed as the executive in charge of crisis
management
・During emergencies, supervises operations as aproxy for the Chief of the Headquarters(President of Kyushu EP)

Marketing
Division

Examine risk countermeasure• Newly materialized risks• Change in risk awareness• Newly materialized risks• Change in risk awareness• Events that occurredin the last year
process■Risk management

CompileExecuteInternal Auditing Body

Individual
divisions• Newlymaterializedrisks risks
Identify,
categorize,
assessMonitorInternal Auditing Organizations(Internal Audit Office & Nuclear Power Audit Office)

Risk
Management
Division

Risk Management
Division divisions
Group companies
Senior management
Individual

Identify, categorize,
and assess risks

MonitorReportSeniormanagement

Clarify major risks

Crisis Management
Supervisor Group

Crisis Management
Administrator(alongsideother duties)…

Appointed to oversee
crisis management ineach head office
department (alongsideother duties) andstrengthen cooperation

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

87

Strengthening Governance

Strengthening Supply Chain Management■ Business risks announced by Kyushu EP
The main risks that have the potential to affect the Group’s business performance, financial situation, etc.,
include, but are not limited to, the following.
Risk Category

Content

Countermeasures

Changes in the competitive environment
Domestic Electricity Business

Other businesses(Overseas Business, etc.)

Impact of temperature rises, economic trends, etc.
Fiercer competition due to full deregulation of retail electricity
sectorTrends in the fuel market and wholesale electricity
transactions
Country risk
Fiercer competition
Changes in systems
Changes in prices, interest rates, and exchange rates

Provide competitive products and services
Secure supply capacity and reduce costs
Assess potential profitability and risks
Establish a risk management framework
Optimize our business portfolio
Reduce costs and implement initiatives related to new technology

Status of the situation surrounding nuclear power
Stable operation of nuclear
power
Atomic fuel cyclic and backend of nuclear operations

Restrictions on operations due to new regulatory standards
Unsuccessful litigation over nuclear power

Respond to new regulatory standards (bolster safety)
Implement appropriate countermeasures to such litigation

Uncertainty accompanying extremely long-term projects

Alleviate impact through government measures

Fluctuations in market prices
Fluctuations in fuel prices
Interest rate fluctuations
Wholesale electricity market
pricesChanging conditions in international fuel markets andfluctuations in foreign currency rates
Changes in procurement conditions (difficulties meeting
demand)Macroeconomic conditions
Dramatic price increase due to gap in supply and demand
Increase in cost of purchasing renewable energy linked tothe market

Procure capital through long-term borrowings with fixed interest
Optimize our energy source portfolio
Use derivatives

Changes in systems related to energy policy
Development of the energy market

Gather information on the system and respond appropriately

Environmental regulations
Procurement needs from decarbonized power sources
Changes in actions by investors concerning ESG
Insufficient initiatives and information disclosures

Promote electrification and low- or zero-carbon energy sources
Establish an ESG promotion framework
Disclose information on low-carbon and decarbonization initiatives(information disclosure and dialogue, etc., based on TCFD
recommendations)

Climate change
Climate change

Facility accidents/failures and system failures
Large-scale natural disasters
Breakdown of equipment due to age
System failures
Cyber-attacks

Formulate business continuity plans (BCP)
Cooperate with relevant organizations and local governments
Carry out priority inspections and repairs, improve maintenanceefforts, etc.
Constantly monitor system operations and update systematically
Maintain and raise our information security level

Professional negligence(employee accidents, etc.)

Personal injury such as electric shock
Large-scale or long-term blackouts

Establish detailed plans in advance and put in place a work task
management framework
Conduct job training and drills
Put in place an in-house safety promotion framework

Violation of laws andregulations

Violations resulting from insufficient understanding of laws
and regulations
Inadequate response to system changes
Dishonest practices

Thoroughly implement compliance with laws and regulations(education, cultural awareness, systems)
Establish a compliance promotion framework

Lack of human capital andskillsInability to secure and train human capital or exodus ofexisting personnel

Systematically hire human capital
Educate and train personnel so as to develop human capital
Put in place a better working environment

Natural disasters
System failures, etc.

■ Sustainable Procurement Guidelines■ Basic Policy for Procuring Materials

Diversify procurement sources and ensure we remain flexible
Make use of foreign exchange forwards and fuel price swaps

Changes in systems related to the power industry
Basic Energy Plan
Electricity system reforms

To provide products and services that are valuable to customers, it is necessary to procure safe, quality materials
and parts in an economic and safe manner. In the process of procurement, we recognize the importance of contributing to the realization of a sustainable society by fulfilling our social responsibilities throughout the supply chains
involved.
At Kyushu EP and Kyushu T&D, we have established a Basic Policy for Procuring Materials, which outlines ourbasic approach to procurement, and the Sustainable Procurement Guidelines, which summarizes our “requests
to suppliers,” a list of matters that we would like our suppliers to comply and cooperate with in order to conduct
procurement activities based on the aforementioned policy. We will continue striving to promote understanding ofthese guidelines among all stakeholders in the supply chain, and also plan to conduct in-house training to deepen
employee understanding of these guidelines.
In order to continue our efforts to realize a sustainable society throughout the supply chain in the future, we willrevise these guidelines as necessary to keep up with changes in social conditions and new insights.

Operational risks

１
2
3
4
5
6

Open procurement
Fair and equitable business activities
Adhering to laws, regulations, and social norms
Rejection of all relations with antisocial forces
Taking into consideration the environment
Ensuring safety

7
8
9
10
11

Ensuring information security and protecting personal information
Adhering to and faithfully executing contracts
Promotion of communication to establish mutual trust
Creation of value
Contribution to society and the regional community

7
8
9
10
11
12

Fair and equitable transactions and ethics
Quality and safety
Information security
Business continuity plan
Establishment of a management structure
Promoting good communication■ Requests to suppliers
１
2
3
4
5
6

Adhering to laws, regulations, and social norms
Adhering to and faithfully executing contracts
Reduced procurement costs and stable delivery
Human rights and labor
Safety and healthPreserving the environment and biodiversity■ Conducting Questionnaires Targeting Business Partners
We conduct a questionnaire on sustainability initiatives targeting our major suppliers* and survey the extent
to which they are addressing social issues such as the SDGs and carbon neutrality. From the results of thequestionnaire, we summarize examples of initiatives that help to improve sustainability, and strive to share thefindings with our suppliers through briefings and other opportunities.
* Suppliers with whom we place consistent orders, etc.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

88

Strengthening Governance

Ensuring Information Security
We are working to ensure appropriate information security and protect personal information by
setting a fundamental approach to information security and the protection of personal informationand ensuring officers and employees are well aware of the approach. In addition, we will strive
to strengthen information security measures across our entire supply chain, including suppliers
outside of the Group, to improve the overall level of information security.

■ Promotion Framework
Kyushu EP has created a framework under which the President is ultimately responsible and where thedirector of the IT and Telecommunications Division acts as the Chief Information Security Officer (CICO). The
Cyber Security Control Office, which is part of the framework, is the heart of Group-wide efforts to promote
the security PDCA cycle and works to guarantee information security.

■Information Security Promotion Framework

PDCA for entire Kyuden Group

Organizational measures
Under the framework detailed above, we promote the use of the PDCA cycle throughout the entire Group, checkon progress in implementing information security efforts at each workplace, and make continuous improvements.
Human resource measures
All employees undergo information security training and take part in drills related to targeted cyber-attacks via
email. Through this and other types of training, we raise awareness and understanding of information security
and improving employees’ ability to respond.
Physical measures
As well as introducing security gates and electronic locks, we implement necessary measures at facilities tocontrol who can enter our buildings and offices.
Technical measures
In preparation for cyber-attacks, which are growing more sophisticated and ingenious, we are strengthening
our security countermeasures by utilizing antivirus software and introducing security firewalls.
Examples of recent information security measures[Measures related to the use of generative AI (promotion of DX)]
When we began using generative AI in July 2023, we prepared a secure environment to protect our information
assets, summarized the important precautions to keep in mind, and informed all employees of those precautions.

President of Kyushu EP
Chief Information Security Officer (CICO)(Director of the IT and Telecommunications Division)

Deputy Chief Information Security Officer (Director of the District Symbiosis Division)

Information security promotion manager(General Manager of Cyber Security Control Office, IT and Telecommunications Division)■ Protecting Personal Information

Deputy information security promotion manager (General Manager of the District Symbiosis Division (responsible for crisis management))

We have put in place various internal regulations, and strive to use and manage personal information appropriately
within the scope of specific usage purposes. However, in FY2022, improper viewing and handling of new electricity
customer information was discovered and reported to the Personal Information Protection Committee.
In order to prevent such a situation from happening again in the future, we will strive to prevent recurrence andproperly and strictly manage personal information in accordance with relevant laws and regulations.

Individual headquarters,
business offices, etc.

Kyushu Transmission
and Distribution

Kyuden Group
companies

PDCA

PDCA

PDCA

■ Information Security Measures
To prevent information security incidents, we implement multi-faceted initiatives that include
organizational, human resource, physical, and technical measures. These efforts are centered on the
Cyber Security Control Office, and involve cooperation among those responsible for information security
at each of our sites, including Group companies.

■ Individual Number (My Number) System
In accordance with the purposes and requirements of relevant laws and regulations, we make sure to confirm
individuals’ identities when we are required to submit their personal individual number. When it is no longer
necessary, we handle the information appropriately by promptly disposing of or deleting it or taking other steps.
Moreover, when a customer contracts with us for electricity, we do not require them to provide their personal
individual number.

KYUDEN GROUP INTEGRATED REPORT 2023

Table ofContents

1 Overview of the Kyuden Group

2 Value Creation Story

3 Strategy and Performance

4 Creating Value through Business

5 Foundation for Creating Value

6 Data Section

89

Strengthening Governance

Enhancing Stakeholder Engagement
The Kyuden Group has relations with a wide range of stakeholders through its business activities.
To build better relationships with our stakeholders, we engage in two-way communication such as
dialogue activities, and conduct community and social coexistence activities.

■ Promoting Two-way Communication with Stakeholders
The Kyuden Group utilizes a variety of opportunities to promote two-way communication, including dialogue activities
in which we explain our business activities to stakeholders and listen to their opinions and requests, press releases andother channels through which we actively disclose and disseminate information, and visiting lectures and facility tours.

Face-to-face dialogue activities
We utilize various opportunities for communication to promote face-to-facedialogue with stakeholders, such as onsite visits and dialogue sessions. To further
promote these activities, we actively undertake initiatives such as preparing original
explanatory materials and conducting activities via our dialogue promotion teams.
Onsite visits for local residents

Active disclosure and dissemination of information
In order to gain the understanding and trust of our customers and the local community by increasing the transparencyof our corporate activities, we have established the Disclosure Commitment*, which outlines our basic stance on thedisclosure of information.
Based on this commitment, we proactively disclose and disseminate information on all aspects of our corporate
activities, including management information, problems at power stations, safety measures at nuclear power plants,
and corporate PR. To do so, we utilize various media, such as press releases, websites, social media, and pamphlets.

■ Promotion of Community and Social Coexistence Activities
The Kyuden Group conducts a variety of community and social coexistence activities under our Basic Policy for
Community and Social Coexistence*, with the aim of fulfilling our role as a member of the local community anddeepening communication with local residents to build strong relationships of trust. In FY2022, a cumulative
total of about 34,000 employees participated in volunteer activities such as Korabora-Q-den and various othercommunity initiatives.
* Posted on Kyushu EP’s website

Korabora-Q-den
In collaboration with NPOs and other community members, we are rolling out
Korabora-Q-den (collaboration + volunteer) activities across the Kyushu region,
aiming to find solutions to local issues.
Korabora-Q-den activities in the environmental arena, such as efforts to protect
biodiversity and preserve natural landscapes, are called Korabora-Q-den Eco
initiatives. Through these initiatives, we are working together with community
members across the Kyushu region to protect the environment.
Kyuden Play Forest
We host Kyuden Play Forest events, which are experiential learning events forelementary school students held in forests throughout the Kyushu region, withthe aim of nurturing children’s respect for the environment.

* Published in the Kyuden Group ESG Data Book 2023 (p. 45)

Utilization of diverse opportunities for communication

Activities to create a society that is friendly to elderly people and children
We are working with local communities to create a societythat is friendly to elderly people and children through various
activities, such as the inspection of wiring in the homes of
elderly people living alone, food drives*, and the provision ofsites to hold children’s cafeterias.

Besides onsite visits, we utilize diverse opportunities for communication,such as visiting lectures and facilities tours. To complement existing face-toface activities, we are expanding communication opportunities through theuse of digital technology, such as online classes and virtual power station
tours that make use of VR, computer graphics, video, and other technologies.
Virtual power station tour

■ Business Operations That Value Stakeholder Feedback
In FY2022, Kyushu EP and Kyushu T&D received about 2,000 pieces of feedback from stakeholders throughday-to-day business activities, dialogues, and other activities. Using internal systems and other means, weshare the feedback we receive from stakeholders with the entire company, including those at the top levelof management. We also examine suggested countermeasures from a cross-divisional perspective andreflect them in the operating plans of each division, branch, office, etc., to lead to better management. We
will continue to listen carefully to stakeholder feedback and strive to respond promptly to their needs.

Releasing salmon fry (Iizuka Power Distribution
Office)* Food that cannot be consumed by the best before date is brought to food bank organizations
to be donated to welfare facilities

A walk rally activity held during the Kyuden
Play Forest at the Saga Prefectural Hokuzan
Youth Retreat (Saga Branch)

Indoor wiring inspection (Kumage
Distribution Office)

Food drive (Kumamoto Branch)Participation in local festivals
Employees from various offices and Group companies participate in and help
to run local festivals to revitalize the local community and deepen ties withlocal residents.
Satsumasendai Hanya Festival(Sendai Nuclear Power Plant)