TOKYO GASINTEGRATEDREPORT 2021

Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceCorporate Message

Beginning of our challenge to achieve

Net-Zero CO2
We, the Tokyo Gas Group, are the world’s largest city gas operator aswell as an energy group that also sells electricity and provides energy
solutions in Japan and overseas.
We contribute to reduce CO2 emissions by 10 million tons by 2030 andbecome an energy group that is most conscious of people and the earth.

Tokyo Gas Integrated Report 2021
01

Business
Overview

Financial Data

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Contents

Contents
01 Introduction

18 How We Create Value

01 Corporate Message
03 Feature:
Challenge to achieve
Net-Zero CO2
10 Long-Term Performance
11 Our performance

The Value Creation Process
Transformation of the LNG
value chain
20 Sustainability
18
19

21 Compass2030
Vision and Strategy
Tokyo Gas Group Management
Vision Compass2030
25 Medium-Term
Management Plan
29 Invisible Assets
21

30 Personnel Strategy

12 Message
12
16

CEO’s message
CFO’s message

31

Lifeval (the last mile operator)

34 TCFD
34 The Tokyo Gas Group’s
climate-related initiatives

38 Corporate Governance
38 Message from the Director,
Chairperson of the Board
40 Message from an Outside Director
41

Corporate Governance

32 Engineering capability

45 Officer Remuneration System

33 Energy supply infrastructure

47 Internal Control System
48 Compliance
49 Risk Management System
50 Executives

Tokyo Gas Integrated Report 2021
02

52 Business overview
53 City Gas and LNG Sales
Business
54 Electric power Business
55 Overseas Business
56 Energy-related Business
57 Urban Development Service(Real Estate)

58 Financial data
58 10-Year Consolidated Financial
Highlights
60 Consolidated Balance Sheets
61 Consolidated Statements of Income /Consolidated Statements ofComprehensive Income
62 Consolidated Statements ofCash Flows
63 Delayed Impact of Gas Rate
Adjustment System

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Feature:Challenge to achieve Net-Zero CO2

FeatureApril 2021, the government made a further
commitment to raise its reduction target forgreenhouse gas emissions from 26% to 46%
compared to the level in 2013. This is one of many
examples of an accelerating move toward
decarbonization seen in Japan and overseas.
With the aim of achieving our management
vision, we are promoting the effective use of

Adding depth to business management with a further emphasis on ESG

E
Environment

related to the management of hydrogen and CO 2

Tackling social issues throughvalue cocreation
1 Create sustainable communities
2 Provide services that address various urban

lifestyle issues

Challenge 1

Leadership in the effort toachieve Net-Zero CO2

Challenge 2

Establishment of a value cocreation ecosystem

Challenge 3

Transformation of
the LNG value chain2030

l u e cre ate d a n d p r ovi dedalue co - crea
ti o nof a v
ent
ec
m
os
is h
ys
ffort to achieve
bl
te
he e
Ne
ta
m
nt
t-Z
Es
pi
i
er
sh
r
o
e
d

Di

s
ver

e va

2

Social

1 Reduce CO 2 emissions on a global scale
2 Develop and commercialize technologies

Acceleration and achievement of thethree challenges

O
CS

Accelerate initiatives toachieve Net-Zero CO2

natural gas, the expansion of renewable energy
sources, and the development of core element
technologies for decarbonization, as we arecommitted to taking up the challenge to achieve
Net-Zero CO2 and leading the transition to a
decarbonized society.

a

Net-ZeroIn the management vision, Compass2030,
announced in November 2019, the Tokyo Gas
Group declared it would take up three challenges,
including that of “taking a lead in the effort toachieve Net-Zero CO2.” Then, in October 2020,
more than a year later, the Japanese government
declared the goal of realizing a carbon-neutral,
decarbonized society by 2050. Six months later, in

Le

Challenge to achieve

Customersolutions

Transformationof the LNG
value chain

Network

G
GovernanceCarrying out groupformation reforms

Trading

Production andpower
generation

1 Carry out management reforms(Improve management quality and transparency)

2 Reform the Group’s organizational structure(Improve the earning power of each function of the value chain)

Tokyo Gas Integrated Report 2021
03

Utilization of the strengths of the Tokyo
Gas Group in activities both in Japan and inglobal markets

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

Feature:Challenge to achieve Net-Zero CO2

While it is difficult to predict the progress of
future technology in detail at present, we believethat the strength of the Tokyo Gas Group is to
manage the supply side and the demand side ofenergy in an integrated manner. By combining the
supply of decarbonized energy (via the spread ofSupply side

decarbonized gas by methanation, local areahydrogen, and large-scale renewable energy use)with the demand side’s optimal energy
management (via VPP*1 using decentralized powersources including PV generation, storage
batteries, and EV*2), we aim to realize Net-Zero

Demand side

Decarbonized energy supply

CO2 in a way that is unique to the Tokyo Gas
Group.
*1: Virtual Power Plant (VPP) A mechanism that uses IoT to manage andcontrol decentralized power sources, batteries, etc. as if they were asingle power plant.
*2: Electric Vehicle (EV)

Optimal energy management for lower carbon or
decarbonization of demand

Incl. creation of overseas supply chains
PV generation

Tokyo Gas Group’s
Net-Zero CO 2 visionand its technology
development efforts

Decarbonizedgas supply

Methanation

PV generation

Local hydrogen
NW

LNG terminal
HydrogenPV generation
StoragebatteryEV

ENE-FARM

On-site CCU

Residential consumers

Local area hydrogen supply

CO 2

Decarbonized electric
power supply
Onshore/Offshore
wind powerPV

Biomass

Energy business,driven by demand/
supply matching, in
the Net-Zero CO2 era

Fuel cell

Decentralized
resource use and
VPP

Power gridGas pipeline
network

Large-scale renewable energy

Cogeneration

Business-use
consumers

On-site CCU

Including ammonia

Business-use
consumers

CO 2

CO 2

Storagebatteries

CO 2

Cogeneration
Cogeneration

Storagebatteries

Communities

Heat conduits

Thermal power
CCUS, forestation, DACCS, BECCS, etc.

Technology
development
efforts

Storagebatteries

Independent
power lines

On-site CCU

Large-scale CCS

Expansion of renewableenergy power sources

Hydrogen andmethanation

Decentralized resource
use and VPP

On-site CCU

Microbubble technology

Advanced operation of
power generation facilities

Methanation verification test
Low-cost hydrogenproduction

Control of decentralized
resources

CO 2 separation and capture,
and application technology
at customers’ site

P.06

Tokyo Gas Integrated Report 2021
04

P.07

P.08

Back To Contents

Introduction

Management
MessageFeature:Challenge to achieve Net-Zero CO2

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Specific initiatives toward decarbonization
During the transition stage, steady reduction in
CO2 emissions is important. In addition to“expanded use of renewable energy in Japan andoverseas,” we are working on “shifting the energy
source for city gas,” as well as “energy saving
through the use of natural gas, and advanced useof energy” as fast-acting measures to reduce CO 2 ,and “the use of CCU technologies at customers’sites” and “carbon neutral LNG initiatives” asdecarbonization measures for gaseous energy.
Over the medium- to long-term, in addition to“CO2 absorption and offsetting by means such asuse of natural gas and CCUS,” we will combine“initiatives on hydrogen and methanation for zeroCO2 emissions,” which will enable effective use of
our existing city gas infrastructure, in our efforts
to achieve Net-Zero CO2 .

Up to 2030

Transition stage

Up to 2050

Decarbonization

Zero CO2 emissions

Technology development and implementationof hydrogen and methanation
Expanded use of renewable power sources in Japan and overseas

Roadmap towardachieving Net-Zero
CO 2

Natural gas(LNG)

CO2 emissions
reduction

Introduction of ultra-high-efficiency fuel cells
Shift of fuel source to city gas, high-efficiency gas
appliances, and area energy networks

Incorporation of overseas reduction effects

CO2 absorption
and offsetting(energy saving, CCUS, etc.)

Use of CCU technologies at customers’ sites
Expanded use of carbon neutral LNG
Illustration of theTokyo Gas Group’s
CO2 emission trend
toward decarbonization

Thorough CO2 emissions reduction
during the transition periodTokyo Gas Integrated Report 2021
05

Decarbonization

Combining thesemeasures towardachieving
Net-Zero CO2

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

Feature:Challenge to achieve Net-Zero CO2

Challenges facing low-cost greenhydrogen production by the waterelectrolysis method that Tokyo Gas
is working on

within two years low-cost production technology
for a water electrolysis cell stack, which accounts
for a large portion of the production cost in awater electrolysis device. Tokyo Gas will use thetechnologies of material selection andperformance/durability evaluation, accumulated in
the development of residential fuel cells (ENEFARM), and work on reducing the material cost.
SCREEN will be in charge of developing the waterelectrolysis cell stack production technology andproduction equipment that applies continuous
production technology using its proprietary roll-toroll methodology*1. We will thereby work on
drastically reducing the production cost, which had
so far been difficult to achieve. Going forward, in
conjunction with this development project, the twocompanies will undertake technologicaldevelopment for the systematization of this waterelectrolysis device to realize low-cost green

1 Low-cost electric power procurement
2 Reducing cost of hydrogen production

systemReducing cost of water electrolysis
deviceReducing cost of cell stack(material cost and manufacturing cost)

Hydrogen-related
technology development

Joint developmentof water electrolysis
cell stack for lowcost green hydrogenproduction

Joint development with SCREEN
Holdings, utilizing the strengths ofTokyo Gas
Tokyo Gas and SCREEN Holdings Co., Ltd. haveagreed to jointly develop a “water electrolysis cellstack” and a “water electrolysis cell stack
manufacturing device” with the aim of establishing

Concept and basic
composition of a waterelectrolysis cell stack
HydrogenSummary of water electrolysis systemhydrogen production methods (left)
and fuel cell power generation method (right) (illustration)

Cell

Water electroysis

Electrolyte membrane

Renewable energy
source, etc.

Electrode
Electrode

Separate

Hydrogenproductione-Electonse-Electonse-

Oxygene-Parts are now thinned andundergo high-speed
continunous manufacturing
Water

Hydrogen ionsElectric power

What is a water electrolysis
cell stack?

Low-cost production of a waterelectrolysis cell stack (illustration)

OxygenSeparate

Cell Stack

Jointly with SCREEN, we will consider diverse
possibilities to make use of the development
outcome. If lower-cost production for a waterelectrolysis cell stack is realized, Tokyo Gas may
potentially be able to produce low-cost hydrogenby itself, supply hydrogen to local areas, and use it
as a material for methanation. Other possibilities
may include technology licensing to system makers
in Japan and overseas, and systemization and saleby ourselves or in alliance with a manufacturer.

Hydrogen
OxygenWater

Utilization of technology
development

Using conventional technologies, thick parts were made one
by one, after which they werestacked and manufactured

Fuel cellPowergenerationhydrogen production. The goal is to further
alleviate hydrogen production cost by quickly
achieving*2 the hydrogen supply cost goal for 2030
of 30 yen/Nm3-H2, which is being promoted by thegovernment.

Electrode
Electrode
Electrolyte membrane
Electricity (Renewable energy
power souce) + Water

It comprises of multiple stacks of thinparts (cells) that produce hydrogen andoxygen through water electrolysis (fuelcells have a reverse reaction).

Hydrogen +OxygenWater

Hydrogen ionsElectrode
Electrode
Electrolyte membrane

Hydrogen + Oxygen

Electricity +Water

Formidable improvement
in manufacturing speed
Smaller amounts of materials

Owing to these and other factors

Manufacturing cost was
sharply curtailed*1: A low-cost manufacturing process for functional films that consists of the continuous processing of film using a coating and other methods during the rewinding
process of a long film substrate wound in a roll. In the current project, this manufacturing process will be used in the manufacturing of water electrolysis cell stacks.
*2: To achieve this goal, in addition to alleviating hydrogen production system costs through this development project, the realization of low-priced power procurement is also anticipated mainly through the growth of the renewable energy market.

Tokyo Gas Integrated Report 202106

Back To Contents

Introduction

Feature:Challenge to achieve Net-Zero CO2

Management
Message

Compass2030
Vision and Strategy

How We Create Value

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Overview of methanation

Tsurumi District Carbon Neutral Collaboration Plan and future initiatives

Methanation refers to the synthesizing of
methane (CH4): to use CO2-free hydrogen produced
or procured in Japan or from overseas, make itreact with CO2 emitted from power generation
plants and other places, and capture it.
Supply of thermal energy using methanation
has been positioned as one of the priorities inJapan’s green growth strategy.

As the first step to use and adopt hydrogen and methanation, we will conduct a methanation verification
test, using hydrogen produced from electric power by a water electrolysis device, at the Tokyo Gas site in
Tsurumi-ku, Yokohama. We are also considering building a local production for local consumption model incooperation with companies in Suehiro-cho, Tsurumi-ku and the City of Yokohama. Using the knowledge
acquired from the verification test, we aim to potentially conduct a larger-scale verification test at our LNG
terminal for commercialization and to create a supply chain.

Illustration of Tsurumi District Carbon Neutral Collaboration
Hydrogen-related

Oxygen-related

Methane-related

CO 2 -relatedConceptual diagram of methanation
H2

Transportation
H2

CO2
Power generation
plants, etc.

Methanation verification test

OxygenDevices using
oxygenUse

CH4Offsetting CO 2
capture withCO 2 emissions

Combustion
exhaust gas

Steam and heat

Electric power
HydrogenFC

By-producthydrogen source

MethaneStemGas
consumption
devicePreprocessing
Electric power

Electric
power

Hydrogen

Methanationequipment

Hydrogen

CO 2

CO2

Source: Agency for Natural Resources and Energy

Electricity-relatedTokyo Gas

Grid power

Waterelectrolysis
deviceCO 2

Use of city gas pipeline

PV

Steam-using process
Steam-using device

On-site electric
power load
CO 2

On-site load

Tsurumi District
Carbon Neutral
Collaboration Plan

Financial Data

Strengths of Tokyo Gas

CO 2

CO2 usage
applications

Biogas, combustion exhaust gas, etc.

As methane is the largest component of naturalgas, we can use our existing infrastructure,including LNG ships, receiving terminals, pipelines,
and the gas appliances of our customers, for the
supply of decarbonized gas using synthetic
methane. This means that we may not need tomake a large investment.

Schedule of the verification test
Start synthesizing of methane during fiscal 2021.
2 Start full-scale verification testing after the ITM-brand water electrolysis device starts operation (June 2022).
3 After the start of full-scale test operation, consider the introduction of a collaborative
Methanation
Water electrolysis
CO 2 capturesystem with neighbors, using our proprietary water electrolysis device.
1

FY2021April

July

Preparation/
production

October
Installation/
test runFY2022January1

April
Test operation ofequipment

July

April

Full-scale test operation

Challenges involving methanation

2

The biggest challenge facing the use of methanation isto produce and procure hydrogen at a low price and inlarge quantities. Other challenges include securinglow-cost CO2 in large quantities, selection of an
appropriate site, and larger-scale manufacturing.

Period going forward

October

ITM-brand water electrolysis devic
operation (June 2022 onward)
3

Proprietarily development of low cost water electrolysis device

Collaboration with carbon neutral regions(mid-FY2022 onward)
Verification (early 2020s onward)

Consider CO 2 separation method from combustion gas, develop and install CO 2 separation device
Innovative technological development related to methanation

Tokyo Gas Integrated Report 2021
07

Verification(mid-2020s onward)
Verification(late-2020s onward)

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Feature:Challenge to achieve Net-Zero CO2

Overview of CCU

Strengths of Tokyo Gas

Future initiatives

Carbon dioxide capture and utilization (CCU) refers
to technology for separating out and capturing CO2,
which has been a focus of Japan’s green growthstrategy. The Tokyo Gas Group has been working ontechnology development for on-site CCU, meaning
the use of CO2 in gas emitted from a gas applianceat a customer’s site. Major challenges in the practicalapplication of CCU technology include matchingwith gas appliances and minimizing energy for CO2
separation, capture, and utilization.

With an emphasis on “Co-creation with customers,”
the Tokyo Gas Group has been making efforts todesign, build, and operate an energy system thatmeets the needs of customers. We will make use of
our accumulated advanced engineering capabilities
concerning energy systems and users’ know-how inmaking appropriate CCS system proposals to
individual customers.

Our “on-site CCU service,” which effectively uses
emitted gas from gas appliances used at thecustomers’ site, has already attracted a high levelof interest from our customers, such as commercial
facilities and factories. We will speedily develop
technology in cooperation with other companies inJapan and overseas – open innovation. Throughthese efforts, we intend to differentiate ourselves
and enhance our relationship with customers.

Handling of emitted gas

Examples of CO2 applications

CO 2 management technology
development

CCU at customer’s site
Customers

Gas appliances

1

Conversion and absorption to materials

Mineralization

Fuel cell

Commercial
facilities(1) Direct use

Carbonate

CO 2 concentration: 5-10%

Concrete

2 Direct use of CO2
Dissolution

Boiler

Factories
Gas engine

Wastewater
Sterilization
neutralization and disinfection

CO 2
separation (2) Use of concentrated CO2
and capture
CO 2 concentration: 99% or more
deviceTokyo Gas Integrated Report 2021
08

Industrial
gas
Beverages

Welding

Developing technology to
use CO 2 contained in gas
emitted from gas appliancesin production of carbonate,concrete, and othermaterials for products

Developing technology to
use CO 2 contained in gas
emitted from gas appliancesin alkali wastewater
neutralization, sterilizationand disinfection.

Ongoing development ofa technology to provide
highly-concentrated CO 2 asindustrial gas

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Feature:Challenge to achieve Net-Zero CO2

Invisible
Assets

TCFD(Published date of press release)

Business
Overview

Financial Data

(Published date of press release)

Renewable energy development

Decarbonized energy supply

Invested in Principle Power, Inc. in the U.S. (May 2020)

Launched free solar power system provision service “Zuttomo
Solar” (April and Sep. 2020)

Invested in Principle Power, which developed and owns proprietary floating
system technology. The technology has significant offshore stability and is
expected to be widely adopted in floating offshore wind projects around theworld. Tokyo Gas will actively engage in the development of floating offshore
wind projects in and out of Japan by utilizing the technology.

Acquired a large-scale solar power project in the U.S. (July 2020)

P.37

Acquired wood pellet biomass power generation facilities in
Takaoka, Toyama Pref. and Ichikawa, Chiba Pref. (Aug. 2020)

Launched free solar power system provision in collaboration with housing
makers in 2019. The scheme is for a customer to use the electricity generated
by the system, sell unused electricity to an electric power company, and sell
the revenue to Tokyo Gas, based on a contract exchanged by the customer
and Tokyo Gas.

Began handling of the effective renewable energy electricity
using FIT non-fossil fuel energy certificates (July 2020)

Acquired Fushiki Manyofuto Biomass Power GK and Ichihara Yawatafuto
Biomass Power GK (approximately 126,000 kW).

Became Japan’s first electricity retail operator that handles the effective
renewable energy electricity using the FIT non-fossil fuel energy certificateswith tracking information.

Joined a JV for offshore wind power projects in Japan (Nov. 2020)

Launched the “Hinatao Solar” energy service for condominiums
and buildings (Oct. 2020)

Joined Chiba Offshore Wind Inc. – a JV established by Shizen Energy andNorthland Power Inc. – in 2019. With a target to achieve promising area
designation for offshore wind power projects off the coastline of Chiba
Prefecture, the development business is being promoted.

Progress andhighlights of theMedium-termManagement Plan

Corporate
GovernanceLaunched commercial operation of a mega-solar power plant inIwakuni, Yamaguchi Pref. Domestic mega-solar power output
reached 100,000 kW (July 2021)
The Iwakuni-Yu Solar Power Plant (output: 23,490kW) started commercial
operation in July 2021. The acquisition of the plant contributed to the Tokyo
Gas Group’s mega-solar power output reaching 100,000 kW.
(Published date of press release)

Technology development of CCU, hydrogen, and methanation
Released “suidel” small hydrogen generators with Tokyo Gas
Chemical Co., Ltd. and MIURA CO., LTD. (Feb. 2021)
Released “suidel” small hydrogen generators, targeting semiconductor, metal,
chemical manufacturers as potential customers, in March 2021. Tokyo Gas’technologies for ENE-FARM have been utilized.

Tokyo Gas and SCREEN Agree to Jointly Develop a Water
Electrolysis Cell Stack for Low-cost Green Hydrogen Production(May 2021)

P.06

World’s 1st! Commence Manufacturing of CO2 -absorbing Concretethat Uses Exhaust Gas Emitted During the Use of City Gas Devices(July 2021)
Agreed with KAJIMA CORPORATION to jointly develop technology to use CO2 SUICOM®, a CO2 -absorbing concrete developed mainly by KAJIMA, and to absorb
and solidify CO2 contained in exhaust gas released when using city gas equipment.

Plan to launch a methanation verification test within fiscal 2021
(July 2021)

P.07

Tokyo Gas Integrated Report 2021
09

A subsidiary of Tokyo Gas, Hinatao Energy Co., Ltd. launched the “Hinatao
Solar” energy service. The solar power generation system on the rooftops of
our customers’ condominiums and buildings is installed at Hinatao’s expensewith no initial investment by customers.

Formed Strategic Alliance with UK-based Octopus Energy(Dec. 2020)

P.27

Concluded power purchase agreement for non-FIT solar power
plants with Renewable Japan Co., Ltd. (Feb. 2021)
Concluded a power purchase agreement for non-FIT solar power plants withRenewable Japan, with the aim of expanding use of non-FIT renewable energy
power sources. Renewable electricity is provided to environment-conscious
customers, such as those participating in the RE100 global initiative.

Establishment of a Carbon Neutral LNG Buyers Alliance(March 2021)

P.37

Exchanged Japan’s first contract to supply carbon neutral LNG with
Marunouchi Heat Supply Co. in Oct. 2019 and began to supply it to officebuildings owned by Mitsubishi Estate Co. As of July 2021, more than 30
corporate customers have adopted carbon neutral LNG.

Newly launched “Sasutena Denki,” an electricity rate plan with
100% real renewable energy (June 2021)
Created “Sasutena Denki,” a 100% renewable energy electricity rate menu,
which added a non-fossil certificate designated as renewable energy, forcustomers using low-voltage electricity in the Kanto area. Tokyo Gas will plant
one tree for each customer contract, contributing to further CO 2 reduction.

Back To Contents

Management
Message

Introduction

Compass2030
Vision and Strategy

How We Create Value

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

Long-Term Performance

Tokyo Gas continues togrow as “Energy Frontier”
2019

The Tokyo Gas Group aims to be a true power source for people’s lives and for society.
Over 136 years, our work kept us in a face-to-face relationship with our customers.
Based on the accumulated experience and trust derived from that history, we want tohelp create a bright, safe and pleasant tomorrow.
Number of customers for city gas and electricity retail sales (thousands)
Electric power sales volume (billion kWh)

2019
2016
2010

50th Anniversaryof LNG

Gas sales volume (thousand tons)

2008* The figures for number of customers and gas sales volume are on a non-consolidated
basis up to fiscal 2002 and on a consolidated basis from fiscal 2003 onwards.
* The gas sales volume for fiscal 2011 onwards includes the volume used in-house under
tolling arrangements and the LNG sales volume.
* The number of retail customers up to fiscal 2008 are estimated by multiplying thenumber of gas meters installed by the active account ratio.

Moka Power Station
starts operations.

2006

Hitachi LNG Terminal
starts operations.

2003

Ohgishima Power
Co., Ltd.

1998

11,580(thousands)

Kawasaki Natural
Gas Power
Generation Co., Ltd.

1973

(thousands)

Tokyo Gas Yokosuka
Power Co., Ltd.

1969

24.8

(billion kWh)Tokyo Gas Bay
Power Co., Ltd.

1966

10,00014,062

Ohgishima LNG
Terminal starts
operations.

(thousand tons)

Sodegaura LNG
Terminal starts
operations.
Japan starts LNG
imports.
Negishi LNG Terminal
starts operations.

5,000

0

1970

Era of coaland oil

Era of LNG

1980

1990

1973

1979

1986-1991

First oil crisis

Second oil crisis

Japan’s economic
bubble

2000
1995

1999

Start of theStart of the deregulation
deregulation of the city of the electric powergas market of large- market of large-scale
scale gas customers
electricity customers

2010

2020

2008

2011

2016

GlobalFinancial
CrisisGreat East Japan
Earthquake

Full deregulation of theelectric power retail market

Tokyo Gas Integrated Report 2021

2017

10

Full deregulation of the city
gas retail market

Back To Contents

Management
Message

Introduction

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsBusiness
Overview

Corporate
Governance

TCFD

Financial Data

Our performance

Our performance
Segment profit

ROA(Operating profit + Equity method income)(¥ billion)
120

ROE

(Return on Assets)

118.7

D/E ratio(Return on Equity)

(%)
8

(%)
12

(times)
1.0

6

9

0.75

0.92

106.6

0.79

96.4

90

79.1
60

6.7

61.9

4

3.3

3.6

6

2

0

1.7

1.9

2017

2018

2019

2020

2019

2020

2017

2018

2016

2017

0.25

0

2016

0.64

4.3

3

0

2016

0.65

0.5

4.8
3.8

2.4
30

7.4

0.69

0

2016

2017

2018

2019

2020

2018

2019

2020

KPI
No. of customer accounts(million)
15

14.80

Natural gas transaction
volume(million tons)
20
18.20

12.31

Segment profit from
Overseas Business(¥ billion)
20(million tons)
9

17.00

15

Contribution to CO2emissions reduction

16.0

15

10

6.68
6

10

10

5

5

(million kW)
3

6.50

3

0

2020

2022 KPI

2022 KPI

1

3.8
0

0

2020

2.00

2
1.383

5

0

Renewable power source
transaction volume

2020

2022 KPI

Tokyo Gas Integrated Report 2021
11

0

2020

2022 KPI

2020

2022 KPI

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

CEO’s message

Advancing corporate transformation
toward Net-Zero CO2
Taking up the Challenge of
Net-Zero CO2
The novel coronavirus pandemic has shaken theworld in an unprecedented way, and has
threatened the security and safety that we took
for granted. These circumstances have made us,
as a major energy business operator, even moreaware of our mandate, namely to “never everstop the energy supply.” We have made every
effort to ensure a stable supply of gas andelectricity. At this time of a national crisis, TokyoGas has served its customers as faithfully andreliably as in the past.
The world is steadily moving toward a moresustainable society, despite being shaken by the
COVID-19 pandemic. In particular, the trend
toward decarbonization is accelerating, and sincePrime Minister Suga declared in October 2020
that Japan aims at becoming carbon neutral,widespread efforts to achieve decarbonization
have begun and are gaining momentum. This

trend can be said to be a paradigm shift that will
significantly change the economy and society. It
is incumbent on Tokyo Gas to be alert to this andact accordingly.
In November 2019, Tokyo Gas announced inits statement of its future management vision,Compass2030, a goal of “taking leadership in theeffort to achieve Net-Zero CO2 emissions” as oneof the company’s management issues and has
started to take up this challenge.

Reducing CO2 emissions duringtransition to Net-Zero CO2
We foresee several stages before reaching NetZero CO2. We are now in a transition period
toward full energy transition anddecarbonization, during which an emphasis is
assigned to the reduction of CO2 emissions. Thisis just a beginning; we know it will be a long haulon the road to decarbonization. That journey will
require innovation and large-scale investment
extending across diverse areas and over a long

Representative Corporate Executive Officer,
President and CEO

UCHIDA Takashi

Tokyo Gas Integrated Report 2021
12

Financial Data

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

CEO’s message

time. In the near term, our emphasis is on
reduction of CO2 emissions, and of the amount of
CO2 stored in the atmosphere. Tokyo Gas
considers the transition period to last to around2030, and is working on the following initiatives.
The first is the advanced use of natural gas.
For example, we anticipate use of energy inurban redevelopment areas and industrial parks
will be advanced by adopting smart energy
network technology. We also introduce highefficiency gas equipment, such as our residentialuse fuel cell ENE-FARM and promote replacementof industrial fuels from heavy oil and coal withnatural gas. By doing so, our customers will beable to significantly reduce CO2 emissions.
The second initiative is the separation andrecovery of CO2. Carbon dioxide capture andstorage (CCS) and carbon dioxide capture,utilization and storage (CCUS), which separate,
collect, and bury deep in the ground or reuse
emitted CO2, can effectively reduce CO2 emissions
without them being directly dispersed in the air.
The third is the expanded use of carbon neutral
LNG (CNL). Inevitably, the process from theextraction of natural gas to its burning generates
greenhouse gases, but they will be offset by CO2emissions reduction through support of reforestationand other renewable projects. In March 2021, theTokyo Gas Group established the Carbon Neutral
LNG Buyers Alliance with 14 other companies withthe aim of advancing toward a sustainable societyby this third initiative. Specifically, Tokyo Gas willprocure and supply CNL and the Alliance companies
will purchase and use it as fuel for office buildings
and factories, with the aim of spreading the use of
CNL and increasing its utility value.

What I want to tell you
By positioning a period to around 2030 a transition period, we are promoting (1) advanced use of natural gas, (2) separation andrecovery of CO2, and (3) expanded use of carbon neutral LNG (CNL).
We are also developing the production of hydrogen at an affordable cost by using electricity generated from renewables as well as
energy methanation technology for producing synthetic methane by reacting hydrogen with CO2. Synthetic methane may potentiallyhelp us economically achieve decarbonization through supply using our existing facilities.
Acquisition of overseas large-scale photovoltaic power generation projects and domestic biomass power generation projects
has resulted in increasing our volume of renewable energy power transaction volume to approximately 1.4 million kW. Offshore
wind power generation is another area we seek to promote.
We have moved to a “Company with a Nominating Committee, etc.” and will establish a holding company-type group structure
in order to achieve Group growth even in an uncertain environment.
We are determined to adequately respond to market changes, achieve the Medium-Term Management Plan, and realize our greater vision.
I would like us to become a corporate group that continues to actively contribute to society by supporting individual growth
while emphasizing diversity. While respecting our founder Shibusawa Eiichi’s book, Rongo to Soroban, we aim at becoming a
new type of a public utility business.

has the prospect of substantially reducing
hydrogen prices by manufacturing the cell stack,which is central to the electrolysis process, at anaffordable cost. Based on the assumption thatelectricity generated by renewable energy will be
sufficiently inexpensive, we are currently working
on the development of such a hydrogenproducing device in an alliance with SCREEN
Holdings, Co. We are hoping this will help
achieve the government’s 2030 hydrogen pricetarget by the mid-2020’s.
We are also developing methanation technology
for producing synthetic methane by reactinghydrogen with CO2. The synthetic methane emits
CO2 when burned, but because it takes in a similar

Strengthening the development ofhydrogen technology
The ultimate decarbonization of city gas is zeroCO2 emission when city gas is burned. Hydrogen
has our attention as it can be used as anindustrial fuel, as a power generation fuel, or as atransportation fuel. However, its use is limited atpresent due to high production cost and the factthat its production generates CO2. As such, weare developing a device that produces hydrogenby electrolysis of water, using electricity
generated by sunlight and renewable energy. Thisis a way we can apply fuel cell technology — that
we have developed and applied for years — andTokyo Gas Integrated Report 2021
13

amount of CO2 during manufacturing, this carbon
recycling results in Net-Zero CO2.
The main component of LNG is methane. Thismeans that feasible synthetic methane produced
by using inexpensive renewable energy powersources overseas can potentially be conveyed,
stored, and provided to customers by using ourexisting equipment such as LNG liquefaction
facilities, shipping facilities, LNG tankers,
receiving facilities and pipelines. While hugeinvestment is said to be required for
decarbonization, we can foresee that
decarbonization may potentially be economicallyachieved by replacing some city gas withsynthetic methane.

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

CEO’s message

We established a Hydrogen & Carbon
Management Technology Strategy Dept. in April
2021 to accelerate the development of hydrogenand methanation technologies.

Expanding the use of renewableenergyAugmented promotion of ESG
management
Our initiative on decarbonization is one of the“Three Challenges” of our management vision
Compass2030: “Leadership in the effort toachieve Net-Zero CO2,” “Establishment of a value
co-creation ecosystem,” and “Transformation of
the LNG value chain.” It is also identified as oneof the key components of ESG management.
Acceleration of Net-Zero CO2 efforts is a priority
area for solving not only environment [E] but

Holding company-type group structureengineering and real estate businesses are being
given attention so that they can grow better andat a faster rate. Also important is that we havedecided to significantly expand the range ofdelegation power of the execution, to expedite
decision-making, and to reinforce the supervisory
function of the Board of Directors. In otherwords, these changes mean the establishment ofa holding company-type group structure and thetransition to a “Company with a Nominating
Committee, etc.”
We believe that this will intensify management
and provide a governance system that is easy tounderstand for international investors.

Transition to a Company with a Nominating Committee, etc.

Tokyo Gas

(business holding
company)

Internal
company(Quasi
subsidiary)

Beforetransition

Group Head Office*1
Internal
company(Quasi
subsidiary)Newpipeline
networkcompany

Businesssubsidiary

Utilize connections of the LNG value chain
Exercise Group synergies
Subsidiary

Subsidiary

Subsidiary

Subsidiary

Autonomous growth ofbusiness subsidiaries andinternal companies

Accelerates autonomous growth through the creation and provision ofdiverse value by business subsidiaries and internal companies, and the
expansion of business areas

Structure of a Company with
an Audit & Supervisory Board

Appointment/
dismissal of
Directors

Shareholders
Meeting

Determine andsupervise businessexecution

Representative
Directors
Directors

Achieve Compass2030

Structure of a Company with aNominating Committee, etc.
Shareholders
Meeting

Appointment / dismissalof Directors

Board ofDirectors
Nominating
Committee*

Outside Audit &Supervisory
Board Members

OutsideDirectors
Business
execution

Appointment/
dismissal of Audit& Supervisory
Board Members

Aftertransition

Audit &
Supervisory
Board

Board ofDirectors

Audit

Expansion of renewable energy supply is anotherarea of high concern to us. As an electric powercompany, we own high-efficiency combined cycle
natural gas-fired power stations. We plan toexpand our renewable energy supply to 5 million
kW in sum of Japan and overseas. In 2020, we
acquired full ownership of the Aktina Solar Projectin Texas, U.S.A. which will have a maximum
output of 630,000 kW when development iscompleted. The Tokyo Gas Group will manage theproject from construction to commercial
operation. In Japan, we acquired biomass power
generation projects in Takaoka City, Toyama
Prefecture, and Ichihara City, Chiba Prefecture.
These efforts have resulted in increasing ourvolume of renewable energy power supply
handled to approximately 1.4 million kW.
We will also promote offshore wind power
generation with a particular focus on the floatingtype of installation. This focus was decided upon
because the floating type system can be locatedeven in deep water and have high potential in
Japan, where there are few shallow areas inlittoral locations. In 2020, we invested in
Principal Power, Inc. in the U.S.A. and beganacquiring its technology. We intend to use thatcompany’s technology to develop floating-type

also social [S] problems, such as by improving
resilience. The “Establishment of a value cocreation ecosystem” is also an effort to createsocial value together with our stakeholders.
Further, from the governance [G] perspective, wewill carry out group formation reforms in orderto achieve group growth even in an uncertain
environment. By doing so, we intend to makethe “Transformation of the LNG value chain”
effective and ensure the steady growth of theTokyo Gas Group.
Specifically, all functions, from acceptance of
LNG to its transportation and sales, arepositioned as profit centers. At the same time

offshore wind power generation projects in both
domestic and foreign sea areas.

Audit
Committee*

Compensation
Committee*

Audit of execution
Determination of
Determination of of duties by Directors remuneration for
and Corporate
Directors andproposal for election
Executive Officers, Corporate Executiveof Directors, etc.
etc.
Officers, etc.
* Majority of members of each committee areStanding Audit& Supervisory
Board Members

Outside Directors
Appointment/
dismissal of Executive
Officers

Supervise businessexecution

Business execution*1 The group governance system will be developed by clarifying the roles (formulatingGroup’s management strategies, allocating managerial resources, managing risks,etc.) of the Group Head Office*2 Complies with conduct control of the Gas Business Act

Tokyo Gas Integrated Report 2021
14

Representative
Corporate
Executive Officers

Corporate
Executive
OfficerBack To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

CEO’s message

Seeking growth by incorporating aparadigm shift toward
decarbonization into our business
The business results for fiscal 2020 – the firstyear of the fiscal 2020-22 Medium-Term
Management Plan, were quite disappointing witha year-on-year decrease in ordinary profit. A

decrease in sales volume due to COVID-19
effects, a significant fluctuation in LNG prices inthe spot market, and a surge in prices in thewholesale power trading market during thewinter were main culprits. Since volatility indomestic and overseas markets is expected tostay high, we are determined to adequately
respond to market changes, achieve our Medium-

Term Management Plan, and realize our greater
vision.
Some of our shareholders may ask us “Can
you achieve Net-Zero CO2 and grow at the sametime?” Indeed, various players have entered theenergy business in connection withdecarbonization, and competition in the
renewable energy business is becoming severer
every day. As I said at the beginning, a paradigm
shift toward decarbonization is currently underway, and I believe that only companies that areable to incorporate this paradigm shift into theirbusinesses can grow as energy providers. In order
to become one of them, it is necessary toincrease investment aimed for Net-Zero CO2 while
maintaining financial soundness. In November
2020, we announced that we are considering areview of our shareholder return policy from theviewpoint of raising source funds through allmeans available to us. Please give us a little moretime to make our decision on this matter.

Aiming to become a new utility
business
In our management vision Compass2030 we
make “Three Promises” to our current and futurecolleagues who are and will be working on the“Three Challenges”. The promises are (1) to“produce work that will have a major impact onsociety,” (2) to “create a venue for encounterswith diversity and friendly competition,” and (3)to “emphasize the self-fulfillment of each
person.” I believe the delivery of these promises
would lead to steady implementation of the vision.
The Tokyo Gas Group is indeed in a period ofreforms. It is up to each and every member of theTokyo Gas Integrated Report 2021
15Group to overcome the challenges of this periodof dramatic changes and open the way to the
future. I would like us to become a corporategroup that continues to actively contribute tosociety by supporting individual growth whileemphasizing diversity. To that end, we will also
work to restructure our corporate philosophy.
While respecting our founder Shibusawa Eiichi’sbook, Rongo to Soroban (The Analects and the
Abacus), Tokyo Gas is determined to make a leap
forward, toward becoming a new type of a public
utility business.
We are ahead of other companies indeclaring our position on Net-Zero CO2 and havebegun efforts for decarbonization. We willcontinue to contribute to the future of the Earthand the future of energy, and will do what isnecessary to ensure the company’s sustainablegrowth. I hope that our stakeholders will lookforward to the future development of the Tokyo
Gas Group and continue to support us for years
to come.

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

CFO’s message

Tokyo Gas will make necessary
investments while ensuring a threeway balance of asset efficiency,
financial soundness,and shareholder return

Using my business experience inperforming the duties of CFO
Since I joined Tokyo Gas, I have acquired a wide
range of work experience in the Residential
Services, Energy Solutions, Gas Rates andSchemes, and Electric Power Systems businesses
before becoming the Chief Financial Officer. Now
being in the top financial position, I believe thatmy understanding of cash flow and the left sideof the balance sheet (the asset side) from thebusiness perspective I have become accustomed
to is my great strength, and I intend to make useof it as CFO.
The business results of Tokyo Gas for fiscal
2020 (ended March 31, 2021) were greatly
affected by factors that may be one-off, such as
the impact of the COVID-19 pandemic, thesoaring LNG prices, and prices in the wholesale
power trading market. Apart from these, themain differences from the expected amounts in
the Medium-Term Management Plan (“Mid-termPlan”) were the difference in the anticipatedrange of oil prices and exchange rates in overseas
business and the difference in business profits of
the Solutions and other business areas. In thelatter case, additional profits through M&A andother activities are anticipated in the Mid-term
Plan. We will continue to consider M&A
opportunities during the remaining two years of
the plan.
At present, the Tokyo Gas Group is
implementing a growth strategy throughinvestment, which tends to cause capitalefficiency to decline temporarily. In order toManaging Executive Officer and CFO

SATO Hirofumi

Tokyo Gas Integrated Report 2021
16

prevent this, we will focus on the profit
contribution to be made within a short time inmaking investments. Up to now, we have“accelerated” investment, but I think we will
gradually shift into a cruise speed as we enter aphase of “control” with application of discipline
and with an upper limit.

Continuing growth investment
toward 2030 and further
investment aimed at Net-Zero CO2
We plan to make investments worth 1 trillion yen
within the three-year in the Mid-term Plan.
Investment in the first year amounted toapproximately 330 billion yen, which is roughly inline with the plan. We are expecting the shalebusiness in North America to generate operating
income of several billion yen per year within the
Mid-Term plan period. The photovoltaic power
generation business also in North America ispoised to gradually increase profits from themoment when financing costs drop. The
domestic biomass business is expected tocontribute to operating profit relatively early.
Since it is a business involving a renewableenergy source in Japan, a synergy with existing
businesses is anticipated. We have also invested
in gas distribution companies in Asia, and overall,
we believe that we have made balanced
investments in various growth areas. We will
inform you of progress and outcome of theseinvestments going forward.
In order to achieve our target profit level of
200 billion yen as stated in Compass2030, wemust continue investment in new areas and at

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

CFO’s message

the same time make gas, electricity, and otherexisting businesses generate profits and support
the company. In the past few years, the effects ofliberalization and the deterioration in the market
environment have led to a significant downturnin the return of our existing businesses, and we
intend to enhance the efficiency and profitability ofthese businesses, and to improve ROA and ROE.
In the meantime, we will put more efforts ininvestment toward decarbonization, which
however would not necessarily result in an early
return. It would be a long way off for theinvestment in offshore wind power and hydrogenrelated fields to be profitable and drive growth.
In order to make further investment aimed at
Net-Zero CO2, in addition to the growthinvestment toward 2030, the balance between
asset efficiency and financial soundness will be
crucially important. Regarding financial
soundness, some of our invested businesses
involve various risks in threatening returns, andhaving sufficient capital is important from theviewpoint of risk management. Moreover, acertain amount of equity capital will be
indispensable to continue investment over a long
period of time. We hope that our investors will
understand this.

Making use of sustainability
finance
In 2020, we issued the first green bond in the gas
industry. We received a lot of inquiries frominvestors, and I felt that this type of bond had astrong advantage in terms of conditions for theissuer. As the concept of transition to achieve theCapital expendituresand sales volume ofgas and electricity

sustainable development becomes increasingly
important toward 2030, I believe we need to raise
funds by such means as transition bonds. However,transition financing is in its early days in Japan, andinvestors tend to have diverse opinions andexpectations. We will calmly judge the benefits,
taking into account the fact that the use of thetransition bonds shall be necessarily limited.

Capital expenditures (LH)
Gas sales volume (billion m3)(¥ billion)

300
17.6
24.8

225

Electricity power sales
volume (billion kWh)
*1 Non-consolidated basis up to
fiscal 1998; consolidated basis
from fiscal 1999
*2 Gas sales volumes from fiscal
2011 onwards are the combined
volume from sales and in-houseuse (including LNG sales volume
and city bas gas volume usedin-house under tollingarrangement).

Reviewing cash allocation, while
being mindful of financial
soundness
When we began the current shareholder return
policy of committing to a total payout ratio of
60% to shareholders, the improved capitalefficiency was a challenge and the acquisition
and retirement of treasury stock wasindispensable. In addition, until now, we had
been able to leverage our investments. However,as I stated earlier, we need to be mindful offinancial soundness. Moreover, we are now at apoint for fundamentally reviewing cash allocation
so as to accelerate efforts toward Net-Zero CO2.
We thereby announced last fall that we will
review our shareholder return policy. As we have
not yet reached a final conclusion, I have to ask
you to wait a little longer for official
announcement to be made.
We will continue listening to the opinions of our
stakeholders, adhere to our basic financial policies,
and work toward improving corporate value. I
appreciate for your understanding and support.

150

75

0
2000.32005.3

Ohgishima LNG Terminal,
Keihin Line, etc.

Shareholder return(¥ billion)

80

2010.32020.3Chiba-Kashima Line, Hitachi LNG Terminal,
Ibaraki-Tochigi Line, etc.

61.4% 60.7% 60.0% 60.8% 60.1% 60.7% 60.2% 60.3% 61.0% 60.1%

Share repurchases
Dividends
Total payout ratio

61.7

60

67.3

65.1
58.2

50.9
36.0

40

45.1

41.0

40.0
33.8

24.0

32.3
28.3

20

26.4

7.0

5.0

23.3

20.0

25.7

25.1

24.4

26.3

25.3

25.1

26.9

26.4

29.7
3.3

26.4

0
2012.3 2013.3 2014.3 2015.3 2016.3 2017.3

Tokyo Gas Integrated Report 2021
17

2018.3 2019.3 2020.3 2021.3

Back To Contents

Introduction

Management
Message

Invisible
AssetsCompass2030
Vision and Strategy

How We Create Value

Corporate
Governance

TCFD

Business
Overview

Financial Data

The Value Creation Process

The Value Creation Process
P.38

Governance

Changes inthe external
environment

S t ra t e g y

0
s2

30

De

ci s i-T
er

Fiscal 2020 results

m

io

e

ent

on

(Invisible Assets)

me

du

Pr

o

Su

dg

pp

c ti

P.29

P. 2 5E xec u tio n

S ol

Core
competence

Plan

ut

P

em

Co

ag

ns

re m

ly

¥ 1,146.7 billion

Segment
profit¥88.4 billion
Electricityan

Pro cuSegment
sales

m

.19

P.20

m

nt

(key sustainability
issues)on - m aking

diu

e ch aiValun

S itu ati o na l j uSpecifying
Materialities

Me

M

pa

s

Decarbonizationnt

Digitalization

OutcomeFiscal 2020 results

Segment
sales¥395.9 billion

Segment
profit¥8.6 billion

Segment
sales¥45.9 billion

Segment
profit¥3.8 billion

Energy-related
Segment
sales¥339.4 billion

Segment
profit¥ 17.0 billion

P.11

P.26

Tokyo Gas Integrated Report 2021
18

Reduction in energy cost
Contribution to the global
environment
Creation of comfortableliving of customers

6.68

million tons

6.5

million tons

Renewable power source
transaction volume

1.383

million kW

2.0

million kW

Number of customer accounts

Segment
sales¥48.4 billion

Segment
profit¥7.5 billion
Other

KPI

Creation of safe living ofcustomers

Contribution to CO2 emissions reduction

Overseas

Real estate

M o n i to ri n g

Deregulation inenergy market

Mid-Term Plan targets
for Fiscal 2022

Gas

1
P. 2

Changes andincreaseddiversity incustomers’
values

Output by segment

Segmentsales¥ 110.4 billion

Segment
profit¥3.8 billion

12.31
million14.8

millionNatural gas transaction volume

18.2

million tons

17.0

million tons

Operating profit +Equity method income¥79.1
billion¥140.0billionBack To Contents

Introduction

Management
Message

How We Create Value

Invisible
AssetsCompass2030
Vision and Strategy

Corporate
Governance

TCFD

Business
Overview

Financial Data

Transformation of the LNG value chain

Transformation of the LNG value chain
In addition to delivering value in city gas retail sales to customers, we intend to expand the customer base forwhom value is created and provided in each function of the LNG value chain. This will be realized by crystallizing
the business and expertise that have been accumulated in each function of trading, production and power
generation, networks, and customer solutions, and by exploring new domains.
2030

CO

2

Le
a

Conventionally

lue created and pro
e va
vid
s
r
e
ed
Div
e
c
u
o
l
a
c
v
r
e
a
a
f
t
o
i
on
e nt
ec
os
hm
s
i
o
t
t
a
ys
r
c
o
l
f
h
f
i
e
e
b
v
e
te
e
h
a
Ne
t
m
nt
s
i
t-Z
E
p
i
h
e
ro
rs
de

Customersolutions

Trading

Electricity

Procurement
and production

Supply(pipeline network)

City gas retail sales

Transformationof the LNG
value chain

Provisionof value

Network

Production andpower generation

Services

In our conventional business model of selling the value-added LNG to retailcustomers (final function) by enhancing value of LNG through each function,
we have worked on how to enhance that value.

Utilization of the strengths of the Tokyo Gas Groupin activities both in Japan and in global markets

Tokyo Gas Integrated Report 2021
19

Back To Contents

Management
Message

Introduction

Invisible
AssetsCompass2030
Vision and Strategy

How We Create Value

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Sustainability

Promoting sustainability and contributing to the realization of the SDGs
The Tokyo Gas Group’s approach to promoting sustainability is to create social and financial value by solving social issues through our business activities, and to carry out an enduringcorporate management in order to contribute to the sustainable development of society. Taking this approach, we are working on materiality (key sustainability issues) through ourbusiness activities, with the aim of broadly contributing to the realization of the SDGs.
Tokyo Gas Group’s approach topromoting sustainability
Expectations
and requests

Stakeholders

Social value

Business
activities

Provisionof value

Financial value

Value creation

Profit making

Contribution

Sustainable developmentof society

Sustainable development of society

Relationship between materiality (priority issues in terms ofsustainability) and the SDGs

Specifying Materialities
High

Expectations fromstakeholders

Leadership in the effort
to achieve Net-Zero CO2
as a leading company
dealing in natural gas

Material
issuesClimate change
Access to energy
Safety and disaster preparedness
Creation of customer value
Resource efficiency and recycling society

Sound relationships
with society
Social impact of theorganization and business

Diversity
Satisfaction through work and labor productivity

High

With reference to theguidelines, issues to beconsidered are evaluated by
two axes: “Expectations
from stakeholders” and“Social impact of theorganization and business,”
and then specified asmateriality (key sustainability
issues).

Establishment of relationships with communities

Actions as a responsible
company

Supply chain management
Information security
Governance and compliance*The relationships portrayed above are subject to revision, as needed, according to changes in the Tokyo Gas Group’s initiatives.

Examples of initiatives
Establishment of highly-resilient infrastructure

Launch of rental management support
service “Mamo ROOM”

House cleaning service

The gas supply network of Tokyo Gas is very resilient
to disruptive floods and power outages. In fiscal 2019,
when Typhoon No. 15 and No. 19 broadly hit our supply
area with ferocious rain and wind, our supply network
was not severely damaged. Subsequently, in fiscal
2020, we formulated a plan concerning wind and flood
damage in the business continuity plan (BCP).

“Mamo ROOM” is a service to install sensors indoors for bathrooms and other places in rental
housing for the elderly and to notify the rental
management company and the resident’s family
members when doors have not been opened orclosed for a certain period. This contributes tosafer living for single elderly people.

The high-quality cleaning service provided by staff who
have passed a training program conducted by Tokyo Gas
is intended to alleviate customers’ cleaning tasks andhelp create freer time. In Japan, where the houseworkburden is still mainly borne by women, awareness andassessment of housework through this housework
support service will help to contribute to gender equality.

Tokyo Gas Integrated Report 2021
20

Back To Contents

Introduction

Management
Message

How We Create Value

Invisible
AssetsCompass2030
Vision and Strategy

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Compass2030

Compass2030
Tokyo Gas Group Management Vision

Providing energy and solutions for future lifestyles, society and the earth
On November 27, 2019, we announced a new management vision called “Compass2030”, in which we presented what we aim to be in a
decade from now, as a leading domestic company dealing in natural gas (a fossil fuel).

VISION- What we aim to be in 2030 -Our goal will be a businessgroup which continues
to create value together withour customers,
business partners and society
as a whole while
becoming a leader in futureenergy systems.

Management guidelines and key figures
FY2020 results

2030

200.0 billion¥79.1 billion Approx. ¥Profit level

Contribution to CO 2 emissions-6.68 million tons
reduction (base year: FY2013)
Renewable power source
transaction volume (FY-end)

1.383 million kW

No. of customer accounts

12.31 million(FY-end)Natural gas transaction volume(FY)

Company portfolio in 2030: Profit level

18.20 million tons

Overseas* 1
Solutions, etc*2
Energy*3 (Gas + Power)

200.0 billion¥

25%-10.00 million tons

25%

5.00 million kW
20.00 million
20.00 million tons

Approx.

50%
Present

2030*1 Overseas: All overseas businesses *2 Solutions, etc.: Ongoing service agreements, engineering, real estate, etc. *3 Energy: Domestic gas and power businessTokyo Gas Integrated Report 2021
21

Back To Contents

Introduction

Management
Message

How We Create Value

Invisible
AssetsCompass2030
Vision and Strategy

Corporate
Governance

TCFD

Business
Overview

Financial Data

Compass2030

Q

What do you mean by “a businessgroup which continues to create value”?

A

We envision a business group that
establishes a “value co-creation”
ecosystem and provides a variety
of solutions.

We will strive to establish a value co-creation
ecosystem by leveraging the strengths of ourgroup, such as Tokyo Gas Lifeval, which functions
as our last mile*2, and by promoting business
partner participation via alliances with companies
in different industries and other firms, andcooperation with local governments.
Moreover, by having customers participate in theecosystem, we will flexibly combine diverse
products, technologies and services, and provide
a variety of solutions that resolve various issues inareas ranging from individual lifestyles to the
local community.
*1 Ecosystem: Business environment in which many companies combine
their technologies, expertise, and knowledge in their specific areas ofstrength in order to create new value.
*2 Last mile: Site operations that require human intermediation in the final
process of the value chain.

A value co-creation ecosystem*1

Local community

Stable supply

Lifestyle setting

Environmental
awareness

Enhanced resilience

Introduction of
decarbonization
technologies

ComfortEconomic
efficiency

Creation of comfort
tailored to thecustomerBusiness setting

Advanced energy
management

Provision of solutions for the homeExpansion of management service

Comfortable living spaces
Lifestyles solutions that match life cycles

Air conditioning control for office spaces
Inter-area energy exchange between
redeveloped or industrial parks and the
local community

Customer participation

Strengths of the Tokyo Gas Group

Business partner participation

Volume of energy use and equipment
operation
Data on spaces and living environments
Excess energy from prosumers
Life cycle and lifestyle preferences

Data and connections with customers(primarily through Tokyo Gas Lifeval)
Provision of gas, electricity and solutions
Equipment/appliances, construction andmaintenance

Energy technologies (IoT equipment,
storage batteries)
Digital technologies (blockchain)
Data analysis (AI)Connections with individual company
customers

Tokyo Gas Integrated Report 2021
22

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Introduction

Management
Message

How We Create Value

Invisible
AssetsCompass2030
Vision and Strategy

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Compass2030

Q

How do you plan to “lead the futureenergy systems”?

A

We will coordinate
renewable energies andnatural gas.

Coordination of renewable energies and natural gas

Acquisition of renewable power sources

New businesses utilizing decentralized power sources

Expand renewable power source transaction
volumes both at home and abroad

Promote new decentralized businesses utilizing PV* 1,
storage batteries, EV*2, etc. as well as VPP*3

5 millon kW
We will expand the transaction volume ofrenewable energy sources in Japan and abroad. We
are also developing a new business to use PV*1,
storage batteries, and other decentralized powersources for residential customers. Further we arepromoting Virtual power plant (VPP*3). Fluctuationin the generation volume of renewable energy,
which is susceptible to the weather, iscomplemented by easily-controllable natural
gas-fired power generation.
By using digital technology and combining
decentralized power sources with large-scale
power sources, which include renewable energies
and natural gas-fired power plants, we intend toachieve a stable and inexpensive supply of energy.

1.383

Overseas

millon kW
Domestic

2020

2030

Domestic and overseas
renewable energy resource
transaction volume

PV

Onshore/offshore
wind power

Hydroelectric
power

Biomass

Stable supply through the combination of renewableenergies and natural gas, using digital technology

Effective use of natural gas
Adjustment of fluctuating renewable energy output using
gas-fired power generation and gas cogeneration systems*1 PV: Photovoltaic power, *2 EV: Electric vehicles,*3 VPP: Virtual power plant. A mechanism that uses IoT to manage andcontrol decentralized power sources, batteries, etc. as if they were asingle power plant.

Gas-fired power plantTokyo Gas Integrated Report 2021
23

Gas cogeneration systems

ENE-FARM

Back To Contents

Introduction

Management
Message

How We Create Value

Invisible
AssetsCompass2030
Vision and Strategy

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Compass2030

Q
1

Transformation of the LNG
value chain to maximize eachof its functions
We intend to create various types of value
in each of the functions—from trading to
production and power generation,
networks, and customer solutions— so as
to expand our customer base.

A

How do you “continue tocreate value”?

We plan to continue to create value by
taking the following four measures

2

3

4

Solving problems indaily life and businesses

Leading the transition toa decarbonized society

Overseas expansion

We will develop solutions via cooperatingwith business partners at an accelerated
rate so as to confront customers’ needs
and resolve their problems. We will alsoestablish a digital infrastructure for value
co-creation and combine a range of data
and AI predictions, so as to instantly
provide solutions tailored to individual
customers’ needs.

The Tokyo Gas Group is promoting
effective use of natural gas, expansion ofrenewable energy sources, anddevelopment of core element
technologies for decarbonization, as weare taking up the challenge to achieve
Net-Zero CO2 emissions, including
customer emissions, in our overallbusiness activities.

Tokyo Gas Integrated Report 2021
24

We will develop LNG infrastructure, invest
in shale gas and other resource
development, and renewable energy
businesses, and expand LNG transaction
and LNG trading by making use of ourrelated asset holdings. By taking theseactions, we aim to triple overseas profits.

Back To Contents

Introduction

Management
Message

How We Create Value

Invisible
AssetsCompass2030
Vision and Strategy

Corporate
Governance

TCFD

Business
Overview

Financial Data

Medium-Term Management Plan

Tokyo Gas Group FY2020 - 2022

Medium-Term
Management Plan
Overview of the Medium-Term
Management Plan

We will strive to
1 Implement cost structure reform
2 Continue the digital transformation (DX)*
3 Build a flexible organization towards
changesin order to change the revenue andexpenditure structure, create resources for
future growth and also strengthen ourbusiness foundation.

3 challenges ofCompass2030

Key Strategies
Key Strategy 1

Key Strategy 4

Shaping of
Net-Zero CO2Offer solutions that
optimize natural gas
and renewableenergies, and seek
new technologies that
hold promise for the
future.

From the Tokyo metropolitan area to otherparts of Japan and to other countries

In preparation for future growth andexpansion, we will establish thefollowing as key strategies:
1 Evolution of customer solutions
2 Expansion of LNG business3 Acceleration of overseas business4 Shaping of Net-Zero CO 2This Medium-Term Management Plan has been established to enable
us to work to make steady progress and to reinforce the foundationsof our business for future growth and expansion in the three-year
period starting in FY2020, despite the recent difficult circumstances.

Evolution of customer solutions

Provide energy and services based on a businessmodel that fuses digital and physical operations.

Key Strategy 2

Expansion of LNG business

Use assets to provide LNG with increased value as a product toutility and other customers both at home and abroad.

Key Strategy 3

Acceleration of overseas business

Utilize accumulated strengths and achievements to provide
customers in other parts of Asia and elsewhere with solutions
aimed at achieving effective use of natural gas.

Challenge 1

Leadership inthe effort toachieve
Net-Zero CO2

Challenge 2

Establishment of
a valueco-creation
ecosystem

Challenge 3

Strengthening of business foundation* DX: Digital transformation. The use of data and digital technologies totransform products, services and business models based on customer
and societal needs, and also transform work operations themselves aswell as organizations, processes, and corporate culture and climate.

Strengthening of businessfoundation 1

Strengthening of businessfoundation 2

Strengthening of businessfoundation 3

Implementation of cost
structure reform

Continuationof DX*

Establishment of aflexible organization
towards changes

Tokyo Gas Integrated Report 2021
25

Transformation of
the LNG value
chain

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Introduction

Management
Message

How We Create Value

Invisible
AssetsCompass2030
Vision and Strategy

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Medium-Term Management Plan

Key figures

We will achieve operating profits + equity method income of JPY 140.0 billion in FY2022 through a balance between cost
structure reform (primarily in the gas business), the expansion of electricity, solutions, etc., and investment in growth.

Project portfolio composition:
Operating profit + Equity method income
Overseas* 1
Solutions, etc*2
Energy*3 (Gas + Power)

Supplementary reference

25%
5%

12%
36%

28%

25%

59%

60%

50%

FY2020 results

FY2022

Management Guidelines andkey figures in Compass2030

KGI
Operating profit +Equity method income

JPY 79.1 billion

JPY 140.0 billion

1.9%

Approx. 4%

Approx. JPY 200.0 billion

ROA

Approx. 8%

D/E ratio

0.92

Approx. 0.9

12.31 million

14.80 million

20.00 million

18.20 million tons

17.00 million tons

20.00 million tons

JPY 3.8 billion

JPY 16.0 billion-

Contribution to CO 2 emissions reduction-6.68 million tons

-6.50 million tons

-10.00 million tons

Renewable power source transaction
volume (as of the end of FY)

1.383 million kW

2.00 million kW

5.00 million kW

Cost structure reform-JPY 12.0 billion-JPY 30.0 billion(as compared to FY2013 levels)(compared to FY2019)*1 Overseas: All overseas business *2 Solutions, etc.: Energy-related, real estate, other*3 Energy: Gas and electricity business in JapanTokyo Gas Integrated Report 2021
26

All segments
JPY 79.1
billion*2

Gas
JPY 88.4
billionElectricity
JPY 8.6 billion

FY2022targets*3

Real estate
JPY 15.0 billion
Total for segment
JPY 140.0
billion*2

Gas
JPY 108.0
billionElectricity
JPY 20.0 billion

KPI

Segment profit from Overseas Business

Overseas
JPY 3.8 billion

Overseas
JPY 16.0 billion

4.3%

Natural gas transaction volume

Energy-related
JPY 17.0 billion

Energy-related
JPY 16.0 billion

ROE

FY2020results* 1

Real estate
JPY 7.5 billion

OthersJPY 10.0 billion

Financial indicators

No. of customer accounts (as of the end of FY)

OthersJPY 3.8 billion

Profit planning by segment-

Segment

Main activities

Gas

Factor in increased depreciation costs andintensified competition while carrying out
drastic cost structure reform and boosting
LNG sales (trading).

Electricity

Achieve a balance between reducing
marketing costs and increasing the numberof accounts.

Overseas

Growth of upstream, midstream anddownstream projects, primarily in North
America.

Energy-related

Promote cost structure reform including
making services for profit.

Real estate

Take into account the full-fledged start of
the Tamachi Project

OthersPromote cost structure reform and create
profitability of M&A.

1.Frame in FY2020: Oil price $43.35/bbl, Exchange rate ¥106.1/$
2.Including consolidation adjustment
3.Anticipated frame for FY2022: Oil price $60/bbl, Exchange rate ¥110/$

Back To Contents

Introduction

Management
Message

How We Create Value

Invisible
AssetsCompass2030
Vision and Strategy

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Medium-Term Management Plan

UpdateKey Strategy 1

Key Strategy 2

Evolution of customer solutions

Provide solutions for problems incustomers’ daily lives
Improve value of services provided manually
We have expanded the range of services to plumbing,in which customers often experience problems, inaddition to gas equipment. We plan to expand
services to housekeeping and housework support.

Expansion of LNG business

Diversify energy services andexpand service areas

Established a new LNG trading
company (Sep. 2020)
Diversify energy services and expand
service areas
We will offer services that facilitate introduction ofrenewable energy to a broad range of customers,
including factory, detached house, condominium
and building customers through a third-party
ownership model* for solar power generation.

Formed Strategic Alliance with UK-based
Octopus Energy
Tokyo Gas agreed to invest in Octopus Energy
Group Limited, a rapidly growing company in the
U.K. market, and to establish a joint venturecompany in Japan.
We plan to realize a value of new customer
experience by leveraging Octopus Energy’s digitaltechnology and customer service know-how, andproviding electricity rate and service menu tailoredto needs of each customer. A new business model
will be created with customers, regardless of areasfrom fall 2021.

Launched optional services for electricity equipment and plumbing in the“Special Support For Gas Appliances” program (Oct. 2020)

Improve convenience by leveraging digitaltools
We will improve customer satisfaction byaccumulating and analyzing customer data to
improve work quality, reduce customers’ hassle andsave time.
Specific examples

Trials in FY2020

For requests of repairs, we analyze and forecast
the necessary work from the information received
to improve the completion rate in one visit.
We obtain and aggregate the results of service
users’ recommendation assessment (scale of 1 to11) on a timely basis and utilize them to improve
workers’ skills and service specifications.

Tokyo Gas established TG Global Trading Co., Ltd., awholly owned subsidiary engaged in the trading of
LNG.The company aims to expand the LNG tradingbusiness by maximizing and optimizing assets (storage
tanks, LNG vessels and LNG sales and purchaseagreements) owned by the Tokyo Gas Group.

Launched Hinatao Solar, a service for condominiums and buildings(Oct. 2020).
*The Tokyo Gas Group installs solar power generation equipment on the roofof customers’ buildings or in their premises and supplies the generated electricity to those customers

KPI for 2022

KPI for 2022

Total customer accounts

Electricity customer accounts(Gas/electricity/service contracts in total)

12.31 million

3.8 million

14.80 million

2.7 million

FY2022 KPI

FY2020

FY2020

FY2022 KPINatural gas transaction volume
18.2 million tons

17.0 million tons

FY2020

FY2022 KPI

Reason for setting this KPI

Reason for setting this KPIThis KPI has been set as an indicator to measure the effects of our efforts to maximize our customer base at an
early stage in order to ensure stable profit in the gas/electricity/service business.

This KPI has been set as an indicator to quantify the
expansion of business with LNG as a commodity,
including LNG trading and the overseas LNG
business, in addition to domestic gas sales.

Tokyo Gas Integrated Report 2021
27

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Introduction

Management
Message

How We Create Value

Invisible
AssetsCompass2030
Vision and Strategy

Corporate
Governance

TCFD

Business
Overview

Financial Data

Medium-Term Management Plan

Key Strategy 3

Strengthening of business foundation 1

Key Strategy 4

Implementation of cost
structure reform

Acceleration of overseas business

Shaping of Net-Zero CO2

Acquired tight sand assets in the U.S.A.
and a majority interest in Castleton
Resources LLC (CR) (July 2020)

Expanded use of renewable energy power sources

CR, an upstream gas company in Texas in which
Tokyo Gas America Ltd. has a stake, has decided toacquire gas assets in Louisiana. Tokyo Gas took amajority interest in CR. (CR was renamed TG
Natural Resources in Nov. 2020.)

KPI for 2022

We have obtained renewable energy power sources
at a speed that outpaces our plan through large
investments in solar power generation in the U.S.A.
and wood pellet biomass power generation in
Japan.
To promote the development of floating
offshore wind power in Japan and abroad, we are
obtaining the necessary technologies, such as byleveraging the floating system technology
developed and owned by Principle Power, Inc. of
the U.S.A. (invested in May 2020).
We will aim to further acquire power sources
and roll out business while assessing energy
policies and economic trends.

In addition to reductions in fees andconsignment fees resulting from a review ofthe business model and in repair and otherexpenses stemming from a review of in-house
criteria, expenses in indirect divisions werereduced by work process reforms, which led tothe improvement in efficiency.

Photo courtesy of Principle Power. Artist: DOCK90

FeatureP.09

Progress and highlights of the Medium-termManagement PlanKPI for 2022

Overseas segment profit¥16.0 billion

CO2

KPI for 2022

Contribution to CO 2 emissions
reduction

6.68 million tons

6.50 million tons

Renewable powersource transaction
volumeNatural gas
transaction volume

2.00 million kW 18.2 million
1.383 million kW

tons

17.0 million tons
¥12.0 billion
reduction¥3.8 billion
FY2020

FY2022 KPI

FY2020

FY2022 KPI

FY2020

FY2022 KPI

Cost structure reform

FY2020

FY2022 KPI

30.0 billion reduction¥

FY2022 KPI* Domestic and international, including
purchases

Reason for setting this KPI

Reason for setting this KPI

Reason for setting this KPI

Reason for setting this KPIThis KPI has been set as an indicator to measure thegrowth of our overseas business, which drives future
profit, toward its target.

This KPI has been set as an indicator tocontinuously measure outcomes from CO 2
emissions reduction contributions, including
those from customers, through expanded
effective use of natural gas, increases in thescale of use of renewable energy, etc.

This KPI has been set as an indicator to quantify the increased
use of renewable energy power sources and businessexpansion.

This KPI has been set as an indicator to measure
the effects of our efforts to drastically review
operations and their structure and create resources
for growth to be allocated to immediate profit
contribution and key strategies.

Tokyo Gas Integrated Report 2021
28

* Including overseas business

FY2020* As compared to FY2013 levels, including contribution atcustomer site

* Compared to FY2019

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Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsInvisible Assets

INVISIBLEASSETSTokyo Gas Integrated Report 2021
29

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

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Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

Personnel Strategy

Personnel
Strategy

Personnel hiring and development

Hiring personnel with highlevels of expertise

Strategic shift to growthdomains

In order to continue to create value withcustomers, business partners, and society while
becoming a leader in the future energy system,
we strive to hire and foster personnel who canflexibly cope with the changing businessenvironment and play a core role in diverse fields.

In addition to hiring new
graduates for specific job types(in humanities, sciences andthe professional domain), we
also engage in flexible hiring ofstudents excelled in certain fields
as well as experienced and highlyspecialized mid-career personnel.

In addition to our gas business,
we also prioritize assignment of
personnel to strategically-importantfields such as our overseas, electric
power, trading and other business
operations. In this way, we arepromoting growth and expansion ina diverse range of fields.

Specific initiatives(Improving productivity and achieving a healthy
work-life balance)

1

We will produce workthat will have a major
impact on society.
We commend a spiritof taking on challenges
and the ability to learn
from mistakes.

2 Three Promises 3

We will create avenue for encounterswith diversity andfriendly competition.

The Tokyo Gas Groupwill be a gathering placefor diverse thinking andexperience.

We will emphasize
the self-fulfillmentof each person.
We believe in thepotentia of eachindividual andwill support each
employees activities.

We train business leaders who willlead the Tokyo Gas Group in the
future, with a training program that
focuses primarily on development
through a wide range of on-the job
training (OJT) experiences gainedby means of transfers and rotations,combined with additional off-thejob education and training (OFF-JT).

Hiring, fostering and placing of personnel who realize “Compass2030”

Workstyle reform

Through the realization of the Three
Promises defined in the Compass2030, we
aim to develop personnel who work
energetically, make maximum effective useof their abilities, and consistently deliver
strong results.
To this end, we are working on
promoting workstyle reforms and diversity& inclusion so that each and every
employee can make maximum use of theirknowledge, ability, and experience.

Developing business leaders

Collaborative work space of a new
office of the Digital Innovation Division

External Evaluation

Promoting workstyles with awareness ofthe value of time

In order to enable each and every one of ouremployees to work energetically and makemaximum effective use of their abilities, we areworking proactively to rectify and reduce long
working hours, and to implement workstylereforms with awareness of “the value of time,”
which we regard as important issues for
management involvement.

Selected
as aNadeshikoBrand

Each workplace to set a day that everyone leaves
office on time, etc.

Environmental improvement to allow diverse personnel todisplay their full potential

GrantedKurumincertification

Introducing a “Work Anywhere” program which eliminates restrictions on working
location (work at home, mobile work)
Improving satellite shared offices
Improving the office environment toward further improvement in productivity
Working to create workplaces that enable innovation to occur
Work in a Free-form Animated Manner (online video conferencing, office reforms, etc.)
Promoting automation / mechanization using ICT, and more sophisticated useof data (utilizing RPA, audio AI, etc.)

Selected asa Health &Productivity
Stock

Promoting diversity & inclusion(Promoting active roles for diverse personnel)

Targets and results

The Tokyo Gas Group has established a basic
policy to promote diversity & inclusion with theaim of becoming a corporate group in which
each and every Group employee can makemaximum effective use of their knowledge, skills
and experience, and play an active role. Based on
the “Diversity Top Management Commitment,”
we are promoting diverse workstyles andempowerment of diverse personnel, including
women’s empowerment, more employment of
disabled people, and support for the careerdevelopment of employees in their 50s and over.

Targets in promoting women’s empowerment

FY2020 results

11% or more for the ratio of women in management by
fiscal 2025

8.7%

100% utilization rate for a system that helps both male andfemale workers balance careers and taking care of children

93.5%

30

(persons)

Women in management
Management
Ratio of women in management

4,000First female
officer
appointed

3,500

Specific initiatives
Promoting
employment ofpeoplewith disabilities

Employment rate of 2.54%, exceeding the
mandatory rate (as of June 2021)
Established a liaison committee to promote
employment of disabled people as a group
Working to create safe and comfortableworking environments

Careerdevelopment
support for
employees in their
50s and overEstablished the “Grand Career System” tosupport career development for employees
in their 50s and over, through training sessions
and interviews with career consultants, etc.

Tokyo Gas Integrated Report 2021

Ratio of women in management at Tokyo Gas

First female
Managing
Executive Officer
appointed

Second female
officer
appointed

9.2%

3,000
2,878
500

264

0
2013

2015

2017

2019

2021

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Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Lifeval (the last mile operator)

Lifeval—the last mile operator of Tokyo Gas
Speedy response to customers
and various efforts made in directcontact with them

Maintenance Group,
Izumi Outlet
Yokohama Totsuka
Tokyo Gas LifevalTokyo Gas Ecomo Co., Ltd.

ABE Masaru

Our bonds and relationships of trust withour customers, developed over the past 136
years, are our greatest strength.
Tokyo Gas Lifeval acts as the face ofTokyo Gas in each community. We precisely
meet customers’ needs and serve as a
one-stop provider of products and services
that help improve the quality of life, in orderto build close ties with individual customers.

associates and learned how to communicate
well with customers. I now can make proper
greetings and explanations to customers bymyself, depending on their situation. I try to
speak slowly and clearly to elderly customers,
while I explain repair details concisely andaccurately with fewer words to customers whoare busy. To every customer, I make sure to say
after the repair, “Please feel free to let meknow if you have any problems related to yourresidence, other than gas appliances.” This has
led to consulting about customers’ plumbing
problems and receiving a designated order forrenovations in many cases. I will continue tomake various improvements so that I canreceive new requests.

I am in charge of repairing gas appliances in anarea of around 150,000 households in Izumiku, Totsuka-ku, and Sakae-ku in the city of
Yokohama and I visit 5-10 customers per day.
When a customer requests a repair, I try mybest to visit the customer as soon as possible
and promptly complete the repair, so as not tocause inconvenience to the customer’s life. I
also have to tailor my visit to the lifestyle ofthe customer who will be present for the repair
and efficiently and safely complete the repair.
In order to accomplish this, I make continuous
efforts to obtain knowledge and know-how
needed for the repair, and to prepare inadvance and bring all parts which may possibly
be needed, depending on the type of repair.

when I am in the neighborhood. Such small
encounters, when they accumulate, enhance
relationships of trust with customers, capture
their needs in a timely manner, and lead tonew business opportunities. I am determined
to continue to enhance my technical skills,
cherish the contacts with customers, and help
them to create a safe, reliable, and pleasant
lifestyle.

As the last mile operator of Tokyo
Gas, we are committed to helping
support customers’ lives

Communication aimed at
obtaining new business
opportunities

Our job is to closely ascertain the needs ofcustomers through direct contact with themand provide solutions that are actuallynecessary. This cannot be possible unless weestablish bonds and relationships of trust withcustomers. In addition to conducting thoroughand reliable repairs, I try to remember thecustomer’s name and the conversation I had in
the past and to show up at their residence

I am in my twelfth year with the company.
When I was assigned to repairs, I had little
specialized knowledge of repairs. I havetherefore absorbed knowledge and knowhow
from my seniors and steadily accumulated
experience. I have also accompanied my sales

Tokyo Gas Integrated Report 2021
31

Bonds with customers*1
Communitybased

Directcontacts

Outlets
Employees
Repairs,
etc.*2 andperiodic safety
inspections*3

156 outlets
13,0005.2
million contacts*1 Including Enesta and Enefit*2 Repairs, etc. include opening/closing of gas fixtures.
*3 FY2020 results

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Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

Engineering capability

LNG infrastructure engineering capability
Accumulated “user know-how”
regarding LNG engineering

pipelines for the stable, safe supply of gas, weare also experienced in a wide range ofengineering services, from feasibility studies andplanning to design, construction, and O&M.

Since 1969, when we first imported LNG in Asia,
Tokyo Gas Engineering Solutions Corporation(TGES) has been engaged in the LNG value chain
from upstream to downstream. The company isaccumulating “user know-how”, thanks to its
technologies, knowledge, and experience,
obtained from design, construction, andconsulting services for close to one half of the
LNG terminals in Japan (20+), including LNG
receiving terminals owned by Tokyo Gas(Sodegaura, Negishi, Ohgishima and Hitachi), andtheir operation and maintenance (O&M).

Overseas achievements
Being accredited for advanced LNG technologies
cultivated in Japan and our abundant experience,
we have been engaged in LNG engineering
services overseas since the late 1970s. Our list ofachievements includes more than 20 LNG

terminals and over 100 projects in 20 countries
and regions. We are further advancing ourengineering capability and know-how by utilizing
our network of engineers and engineering
companies in various countries, which wasestablished through overseas projects. Such abusiness growth spiral has helped us to receive alarge-scale consulting service project that
required about 60 personnel and to acquire an
entire management order for construction of alarge LNG terminal in recent years.

TGES’ Overseas Project Achievements

World top-class LNG engineering
Russiacapability

The Tokyo Gas Group plans to leverage its
LNG infrastructure engineering capacity,
cultivated in the LNG value chain fromupstream to downstream for a half century,
and aims at overseas business expansion
mainly in Asia, where demand for natural
gas is increasing.

We have accumulated “user know-how”
regarding LNG facilities—from tanks and othermain facilities to peripheral ones of LNG
terminals— as we became an expert on various
and numerous LNG facilities in Japan andoverseas and mastered “what works” and “whatdoes not work” through abundant design
experience and O&M practice over many years.
We thus provide numerous engineering solutions
to improve reliability, reduce risks, and raise
efficiency and achieve labor saving in O&M fromthe customer’s viewpoint. With regard to

U.K.
Spain
Portugal
CyprusSouth Korea
China
TaiwanPhilippines
VietnamSingapore
Indonesia

UAE
Pakistan
India
Bangladesh
Myanmar

Australia
ThailandTokyo Gas Integrated Report 2021
32

MexicoBack To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Energy supply infrastructure

Safe and stable energy supply infrastructure
Measures to help customers use gas with ease of mind
Earthquake-resistant production andsupply facilities

Monitoring and control of production
and supply facilities, and safety
inspection of gas facilities

We adopted structural designs with superioranti-seismic properties for LNG terminals, andintroduced materials that are resilient to grounddeformation to our pipeline network. As a result,
our city gas production and supply facilities arehighly resistant to seismic activity, even in thecase of major earthquakes, such as the Great
Hanshin-Awaji (Kobe) Earthquake, or the Great
East Japan Earthquake.

The Supply Command Center performs 24/7
monitoring and control of the status of operationof city gas production and supply facilities. When
the Safety Command Center receives gas leakreports from customers, personnel at Gaslight 24
will immediately visit the reporting customer totake swift action even on holidays or at night.
We conduct inner-pipe leakage testing andperiodic safety inspections of gas appliances for
all customers at least once every four years.

Development of a disaster-readinesssystemIn order to help our customers use gas withease of mind, we are working on various safetymeasures. They include earthquake-resistantmeasures for production and supply facilities,
development of a disaster-readiness system fora large earthquake, and safety inspection ofcustomers’ gas equipment.
In order to fulfill our public duty as an integrated
energy company, we intend to further enhance theresilience of our natural gas infrastructure in theTokyo metropolitan area, which is the center ofpolitics, the economy, and industries.

We have developed a disaster-readiness system,
which subdivides our low-pressure pipeline
network into approximately 300 blocks andremotely stops the supply of gas, in block units,depending on the extent of the damage. This
enables minimization of the impact of supply
stoppages and prevention of secondary damage.
Moreover, in order to resume gas supply to
areas without damage on the day of theearthquake, we have adopted a remote operating
system to resume gas supply to such designatedareas. This system has been in place since fiscal
2014.

Safety know-how and measures toprevent earthquake disasters
Resistance toseismic
activity

Subdivision ofunits for supply
stoppage inthe event of anearthquake orother disasters
Periodic safety
inspection

High level of resistance to seismic
activity, even in the case of major
earthquakes, such as the Great
Hanshin-Awaji (Kobe) Earthquake, or
the Great East Japan Earthquake
Subdivided the medium-pressure
pipeline network into 25 blocks
Subdivided the low-pressure pipeline
network into approx. 300 smaller
blocksInstallation of 4,000 seismometers (SIsensors)
2.66 million (FY2020)

Tokyo Gas Integrated Report 2021
33

Enhancement of resilience functions
We are accelerating enhancement of theresilience of our natural gas infrastructure in theTokyo metropolitan area by creating our second
circular trunk pipeline network through the
opening of the Ibaraki Main Pipeline in March
2021 and by enhancing cooperation with local
governments and other infrastructure companies.
Division of themedium-pressure
pipeline network

Division of the
low-pressure
pipeline network

25 medium-pressure blocks

Approximately 300
low-pressure blocks

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

TCFD

TCFD
The Tokyo Gas
Group’s climaterelated initiatives

We regard the Task Force on Climate-Related Financial Disclosures (TCFD) framework as being aneffective way to promote information disclosure and dialogue with stakeholders on climate-related
issues. We therefore signed the statement of support for the TCFD, in May 2019. We began
information disclosure according to TCFD’s recommendation in fiscal 2020 and will continue toappropriately disclose information on the impact of climate change on the Tokyo Gas Group’sbusiness activities and the measures to be taken.

GovernanceWe strive for appropriate, prompt decision-making and efficient execution of business operations bydiscussing the issue of promoting sustainability as an important matter related to business operation.
This is done by a select committee that supports the Corporate Executive Officers’ rational decisionmaking to help it to be proper and effective. When appropriate, Directors are provided with reportson the status of execution of business operations, which are based on decisions made by the Boardof Directors, and hold discussions on them as needed. Moreover, a Sustainability Committee, which ischaired by the President and aimed at promoting sustainability issues, has been established to reportimportant matters to the Board of Directors.

Tokyo Gas Integrated Report 2021
34

Sustainability promoting structure
Board of Directors
Representative Corporate Executive
Officer, President and CEO
Committee
supporting rational
decision-making
by Corporate
Executive Officers

Sustainability
Committee
Chair:
President

Tokyo Gas Business Departments

Subsidiaries
As of June 29, 2021

Back To Contents

Management
Message

Introduction

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

TCFD

Strategies

Feature: Challenge to achieve Net-Zero CO2

P.03

aimed at achieving Net-Zero CO2 emissions andtake a leading role in the transition to a
decarbonized society.
While realization of a decarbonized society isa global common target, the social
implementation of decarbonization technology,
such as by use of renewable energy, may not be
sufficient to draw a viable roadmap to Net-Zero
CO2 for certain industries, countries, or regions.
The Tokyo Gas Group therefore believes that it isimportant to tailor the efforts of transition
toward decarbonization and lower carbonization,by making adjustments for the situation of each.
1.Conceptual illustration of transition

1. Conceptual illustration of transition
Carbon neutral

In our statement on future management,
Compass2030, announced in November 2019 theTokyo Gas Group declared it was to take up threechallenges, including “Leadership in the effort toachieve Net-Zero CO2.” Since then, the movetoward decarbonization has been gaining
momentum in Japan as the Japanese government
called for the nation to achieve net zero carbon
emissions by 2050 and made a commitment toraise its reduction target in greenhouse gas
emissions to 46% compared to the level in 2013.
Under such circumstances, the Tokyo Gas
Group is working to increase the volume ofnatural gas it handles, by expanding overseas
businesses and other means, expanding
renewable energy sources which have a highaffinity with natural gas, and gaining benefits
from the decarbonization technology
development of gaseous energy, such ashydrogen and methanation. We are dedicated tothereby enhance and increase the initiatives

No

t al

l in

ries
dust

will make the leap to decarbonized so

Examples: Electric vehicles,
renewable energy, carbon
ciety recycling, etc.

Examples: Hybrid vehicles, high-efficiency
power generation facilities, etc.

Examples: inefficient vehicles,
inefficient factories, etc.

Decarbonized society

GAS

Transition stage
Brown Economy
Present(1)Transition technology

2030(2)Non-continuous innovation technology

Japanesecompanies

2050

Prepared by Tokyo Gas based on the Climate Innovation Finance Strategy 2020 by the METI.

2.Global natural gas demand projections(Base year: 2018)

160

155
Global LNG demand(4°C warming scenario)

The International Energy Agency (IEA) is
projecting growth in global LNG demand and innatural gas demand in Asia-Pacific toward 2030
in its multiple forecast scenarios. As we believethat natural gas provides a fast-acting way to
reduce CO2 emissions, we intend to contribute to
the transition in Asia-Pacific via LNG businessdevelopment, making use of our accumulated
strengths and achievements in the LNG business.
2.Global natural gas demand projections

140

Asia-Pacific LNG demand(4°C warming scenario)

145
140
136

Asia-Pacific LNG demand(Below 2°C warming scenario)

120
Global LNG demand(Below 2°C warming scenario)

100
2018 results

2030 forecasts
Source: IEA World Energy Outlook 2020

Tokyo Gas Integrated Report 2021
35

Back To Contents

Management
Message

Introduction

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

TCFD

Major risks and opportunities
driven by climate change, and theTokyo Gas Group’s initiatives

In identifying the Tokyo Gas Group’s risks and opportunities related to climate change, we referred to two representative scenarios*1 of the International
Energy Agency and the Intergovernmental Panel on Climate Change -- the below 2°C warming scenario and the 4°C warming scenario -- summarized
important factors that may affect our group’s business, and evaluated the impacts from two aspects -- magnitude of impact and possibility to be affected-- for both scenarios. We then identified major factors and decided on our initiatives for each factor toward 2030.

Major initiatives taken in FY2020
Opportunities
and risks

Factors

Details ofopportunities
and risksTokyo Gas Group’s initiatives toward 2030

Major initiatives taken in FY2020

1) Signing of a joint cooperation agreement with First Gen Corp. to construct and operate afloating LNG terminal in the Philippines

Opportunities

Markets

Global increasein demand fornatural gas

A)Resources development and expansionof LNG/gas infrastructure and otheroverseas business to increase thenatural gas transaction volume

2) Investment in a gas distribution company in Indonesia

Below 2°C warming scenario

3) Acquisition of gas assets in Louisiana, U.S. and making Castleton Resources a subsidiary

Opportunities

Energyresources

Affinity of
renewableenergy withnatural gas

B) Effective use of natural gas to adjust
fluctuation of output of renewableenergyC)Increase in renewable energy transaction
volume in Japan and overseas
D)Use of PV, storage batteries, EV, etc.
to promote new decentralized powersource business and VPP4) Acquisition of a large-scale solar power generation project in the U.S.
5) Acquisition of biomass power generation business, using wood pellets, in Takaoka, Toyama
Pref. and Ichihara, Chiba Pref.
6) Investment in Principle Power, a floating wind power technology company in the U.S.

7) Evolution into “advanced smart energy”

4°C warming scenario8) Issuance of the Company’s first green bondOpportunities
and risks

Resource
efficiency andtechnology

Decarbonization
technology
innovation

Opportunities
and risksMarkets, andpolicies andlaws

Introduction ofcarbon pricing*2

Opportunities

Resilience

Decentralizedenergy systemusing natural
gas to enhance
resilience

Risks

Acuteness

Impact on
operations, asassociated withseverer abnormal
weatherE) development of decarbonization
technologies for gaseous energy suchas hydrogen and methanation,etc.
F) Introduction and use of CCUS
technologies
G)Fuel conversion, etc. to accelerate shift
to natural gas
Initiatives B) to F)
H)Enhanced resilience in the natural gas
infrastructureI) Expanded use of decentralized energy
system, such as smart energy networks,
co-generation, ENE-FARM, etc. thatare highly resilient and reduce energy
consumptionJ) Disaster countermeasures for LNG
terminals and power stations toenhance establishment of water
hazard-resilient Life Line, and full
preparation for BCP.

9) Supply of carbon neutral LNG and city gas, such as by the establishment of Carbon Neutral
LNG Buyers Alliance10)Accelerated development of CCUS technology and services aimed to be launched in FY2023
11)Accelerated development of a low-cost water electrolyzer, using fuel-cell technologies andknowhow
12)Launch of a methanation verification test and study of a carbon neutral alliance model in
Tsurumi-ku, Yokohama

Promoted construction of a floating LNG terminal that enables use of a
Floating Storage & Regasification Unit (FSRU), with the aim of introducing
LNG to the Philippines as early as in the second half of 2022.
Promoted use of unused gas and shift to natural gas from liquid
fossil fuels with high CO2 emissions, contributing to reduction in CO2emissions in the country.
The acquisition led to an increase by approx. 1.6 times in production
volume from approx. 8 million m3/day, gas equivalent to approx. 13
million m3/day. Increase ownership interest in Castleton from 46% toover 70%.
Details on p. 37 example 1
Details on p. 37 example 1
Promoted floating offshore wind power development in Japan andoverseas by utilizing Principle Power’s technology which excels instability in maritime conditions.
Advanced smart energy by offering new value, such as use of AI and
Big Data, Net-Zero CO2 by using renewable energy facilities, carbon
neutral LNG, etc., and enhanced comfort in offices, in addition tomore energy saving, less CO2 emission, and more resilience.
Plan to fund a renewable energy project with participation by the
Tokyo Gas Group. Total amount: ¥10 billion, term: 10 years
Details on p. 37 example 2
Details on p. 03 Feature: Challenge to achieve Net-Zero CO2
Details on p. 03 Feature: Challenge to achieve Net-Zero CO2
Details on p. 03 Feature: Challenge to achieve Net-Zero CO2

Initiatives 1) to 12)13)Establishment of Ekimachi Energy Create with the JR East Group

Details on p. 37 example 314)Launch of the Ibaraki Line Service and commercial operation of the LNG tank No. 2 at Hitachi
LNG Terminal

Details on p. 37 example 415)Comprehensive disaster-prevention drilling, assuming windstorm and flood damage

Confirmed the initial response, assuming damage caused by riverflooding driven by a typhoon*1: Scenarios, for reference:• Scenario of limiting the global average warming by less than 2°C above pre-industrial levels: Sustainable Development Scenario (SDS)(IEA WEO 2019); B2DS (IEA ETP 2017); RCP2.6 (IPCC AR5)
• Scenario of limiting the global average warming by 4°C above pre-industrial levels: IEA Stated Policies Scenario (STEPS) (IEA WEO 2019); RTS (IEA ETP 2017); RCP8.5 (IPCC AR5)*2 Introduction of appropriately-designed carbon pricing may promote shift to forms of energy with less CO2 emissions but, depending on the scheme design, may negatively affect the company’s business due to a rise in energy cost and other factors.

Tokyo Gas Integrated Report 2021
36

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

TCFD
Example1

Expansion of introduction of renewable power sources

Example 3

Aktina Solar Project (631MWdc)

Fushiki Manyofuto Biomass Power Plant (51MWdc)

The first global solar projectin which Tokyo Gas Groupwill take initiative fromconstruction to commercial
operation (Texas, U.S.)

Wood pellet biomass power
generation facilities in
Takaoka, Toyama Prefecture;
to start commercial operation in October 2021

Example 2

Carbon-neutral LNG and city gas

Carbon neutral LNG (CNL) is the designation production of which is deemed as offsetting greenhousegases, which are generated in the process, from extraction to the burning of natural gas. This offset
is through the CO2 reduction effects of support of forest regeneration and other environmental
conservation projects. We are promoting improvement of the environment by this support.

Establishment of Ekimachi Energy Create Co., Ltd.

Overview of adopted environmental/energy technologies in the Shinagawa Development Project
Electricity

The Carbon Neutral LNG Buyers Alliance was established on
March 9, 2021. The participating companies will work toincrease the recognition of carbon neutral LNG in society
and carry out initiatives to improve evaluation of the effects
of initiatives by investment institutions and thereby
encourage environment-conscious action.

Electricity and heat
Tamachi Station
Block I

Block III

Solar heat
Block IV
North
Tower

Block IV
South
Tower

A solar energy collector converts
sunshine into thermal energy to
be used for heating water

Block II

Biogas system

Example 4

Food waste from the community
is converted into thermal energy
to be used for heating water

Launch of the Ibaraki
Line Service andcommercial operationof the LNG tank No. 2
at Hitachi

Fuel cells
Reaction of hydrogen andoxygen generates power and theheat generated is used forcommunity central heating andair-conditioning.

Wastewater heat

On October 1, 2020, Tokyo Gas changed
its supply of city gas used for thecogeneration system of Hotel New
Otani, Tokyo, to carbon neutral city gas.

Heat

PV and wind power
generation

Difference in temperature
between reclaimed water of thecommunity and the outside air isconverted into thermal energy to
be used for community central
heating and air-conditioning

Connected a loop of
high-pressure gas pipelines in
the North Kanto area andachieved improved supply
stability and enhanced gas
transmission capacity througha mutual backup system offour LNG terminals

Takanawa Gateway Station
Shinagawa Station
Community central heating
and air-conditioning
Cold/hot water needed in thecommunity is manufactured andsupplied

Cogeneration system

Ground source heat

Beside power generation, waste
heat generated is converted into
thermal energy to be used forcommunity central heating andair-conditioning

Difference in temperature between
the ground and the outside air isconverted into thermal energy to
be used for air-conditioning
Courtesy of JR East for the rendering

Energy management with integration of supply and demand
Ensuring highly-reliable electric power supply and business continuity in case of disasters are ensured by use of diverse renewable energy
sources (i.e., PV, wind power generation, wastewater heat, ground source heat, solar heat), multiplexing of power systems, adoption ofcogeneration and emergency power generation facilities, etc.

Risk management

Metrics and Targets

We have established an enterprise risk management (ERM) system, and explicitly stated major risks in
the Risk Control Regulations.
The Risk Management Committee was established to improve the management level of the ERM
system. The Committee regularly reviews the risks, and checks how the ERM system is being
maintained and operated. It reports to a committee that supports Corporate Executive Officers’
decision-making.

The Tokyo Gas Group management vision Compass2030 has set the management guidelines and key
figures for realizing corporate growth.
FY2020 results

FY2022Contribution to CO2emissions reduction-6.68 million tons

Renewable power source
transaction volume1.383 million kW

2.00 million kW

5.00 million kW*2

No. of customer accounts

12.31 million

14.80 million

20.00 million*3

Natural gas transaction
volume18.20 million tons

-6.50 million tons -10.00 million tons*1

17.00 million tons 20.00 million tons*4*1 Base year: fiscal 2013, including contribution of emissions reduction during consumption by customers*2 Domestic and international, including procurement*3 Total no. of gas, power, and service agreements (domestic and international)*4 LNG equivalent Including overseas business and trading

Tokyo Gas Integrated Report 2021
37

FY2030Back To Contents

Introduction

Management
Message

Compass2030
Vision and Strategy

How We Create Value

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Message from the Director, Chairperson of the Board

Corporate Governance
Message from the Director, Chairperson of the Board

Management will propel innovation for
the realization of sustainability
I cherish the phrase “Learn history and usher inthe times.” Looking back at the 136 -year historyof Tokyo Gas, I find that the belief of the founder
Shibusawa Eiichi, that the highest priority should
be “Pursuit of the public interest,” has beensuccessively inherited for generations. More than
50 years ago in 1969, amid the intensifying
severity of urban pollution conditions such as air
pollution, Tokyo Gas introduced use of liquefied
natural gas (LNG), which is both environmentallyfriendly and economical, to Japan as the
optimum solution to social challenges. In the
1980s, the company was also engaged inmecenat (in French, mécénat, meaningsponsorship or patronage) and social contribution
activities as a “corporate citizen.” In the 1990s,
global environmental problems worsened, andTokyo Gas set its sights on becoming a top
runner in the environmental management race.
Since the 2000s, with the increased social
attention given to corporate governance, wehave been striving to be a “leading corporate
governance company.” More recently, ESG and

SDGs have emerged as new key words, but I
would say we have worked on these subjects forthe past few decades.
Regarding governance, Tokyo Gas introduced
an executive officer system in 2002 and began
reducing the number of directors and inviting
outside directors. In 2017, we made significant
revisions to the Board of Directors rules: theauthority to execute was broadened, and the roleof the Board of Directors and the role ofCorporate Executive Officers were clarified. And
in June 2021, we made a transition to a“Company with a Nominating Committee, etc.”
For the past 136 years, the main energy
source in Japan has shifted from coal to oil andgas, all of which, however, are fossil fuels.
Carbon neutral is something totally new anddifferent. Japan’s gas business has beenliberalized and as one result Tokyo Gas will split
off the Gas Pipeline Business in April 2022. I think
this is the first time in its history that the Tokyo
Gas Group is experiencing such drastic change.
Along with this changing external

Director,
Chairperson of the Board

HIROSE Michiaki

Tokyo Gas Integrated Report 2021
38

Financial Data

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Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Message from the Director, Chairperson of the Board

environment, management must also change. We
therefore started working at two reforms:“governance reform” and “group formation reform.”
While the “group formation reform” includes workand human resources and involves each and every
employee, the “governance reform” focuses
primarily on the executives. The Board of Directors
has sent out a message that “The management will
drive innovation” to interested persons both in andoutside the company . This means “we, themanagement, change ourselves.” I have felt strongly
that we must have firm resolve that “Tokyo Gas will
be reborn.”
In Japan there are two types of “companies
with a committee” – a “Company with an Audit
and Supervisory Board” and a “Company with aNominating Committee, etc.” The most significant
difference is that in case of the latter thenominating committee effectively determines the
top management. In our current era of historicaltransition, the CEO must be well accepted in andout of the company group to be entrusted withmanagement authority. I believe that external
recognition will allow the CEO to carry out duties
with greater confidence. That is why the Board of
Directors has decided to adopt the “Company
with a Nominating Committee, etc.” form. In allcases, I think that experiencing scrutiny not only
by internal eyes but also external eyes will
increase transparency as well as the diversity.
I am also hoping that the move to a“Company with a Nominating Committee, etc.”
will make management stronger and deeper. As I

request reporting. I believe that the Chairperson
must lead such operational preparations.
Moreover, in order to conduct a Board of
Directors meeting that serves its purpose in beinga “Company with a Nominating Committee, etc.,”
it is important that the Chairperson understands
the contexts and issues of the execution efforts
and communicates with executives to a certain
extent. Given these considerations, it seems more
important that the Chairperson works on afull-time basis, regardless of being an internal orexternal director.
In order for the 136-year-old Tokyo Gas
Group to become a sustainable company, wemust keep changing as the environment changes.
In my view unless we continue to propel
innovation, we cannot succeed in making lastingdevelopment. Please look forward to Tokyo Gas
as the company which transforms itself to matchthe changing times.

said earlier, Tokyo Gas must transform itself frombeing in the gas business to being engaged in theelectric power business, and much more inoverseas business, as two of the major ongoing
and unprecedented drastic changes thatchallenge us. By creating two management
bodies, the Board of Directors and the
Exectutives, I think we can realize deeper
discussions and deeper decision-making.
The Board of Directors is expected to havesupervisory functions and broader discussion,
while execution requires professionalism anddeeper debate. I believe that we have been able
to create a management system which leads tobring even better solutions, as the Board of
Directors and executives are well balanced,
allowing them to have candid exchange of
opinions or even a conflict of opinions in somecases. As the Chairperson of the Board of
Directors, I understand that it is important thatthe Board and the executives fulfill theirrespective roles and responsibilities. Governancereform never ends.
The role of Chairperson will also become
more important. The post-transition Board of
Directors in addition to making resolutions will
have more matters to be reported from theexecution side and to check. We have to decideeach time what matter should be discussed by
the Board, and what should be reported from theexecution side. I certainly expect executives toproactively report to the Board but I think that
there will be cases where the Board needs toTokyo Gas Integrated Report 2021
39

Financial Data

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Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Message from an Outside Director

Message from an Outside Director

We will enhance thegovernance system by
each and every one ofus playing his or her role
I was strongly impressed with thedetermination of Tokyo Gas in its
decision to move to a “Company
with a Nominating Committee, etc.”
I have attended the Tokyo Gas Board of Directors
as an Outside Audit & Supervisory Board Member

Director

OutsideNOHARA Sawako

Transforming the LNG value chain) in ourmanagement vision, Compass2030. So when we havedecided to consider moving in the direction of a“Company with a Nominating Committee, etc.,” I wasstrongly impressed and very pleased withdetermination of Tokyo Gas to make drastic changes
not only in the vision and Medium-Term Management
Plan, but also in the decision to move to a “Company
with a Nominating Committee, etc.”

for three years. During that period, the governancesystem has steadily evolved and appears to haveshifted to a monitoring-oriented approach. I havefound it easier to check the progress of theMedium-Term Management Plan because theCompany has more specifically set key metrics tomonitor Medium-Term Management Plan whichstarted in fiscal 2020 and the enhanced KPIs havemade it easier to monitor the overall management.
Since fiscal 2019, prompted by the spinoff ofthe Pipeline Network Division resulting from theliberalization of the nation’s gas business, thereform of the group’s organizational structure had
been discussed as an ongoing topic. In the same
year, we also began discussions on the reform of
the corporate governance system.
At first, some members expressed conservative
opinions about the structure of a “Company with aNominating Committee, etc.” However, I thoughtthat the transition to that structure should not besomething to be afraid of as it would not besomething totally different. This was partly because
I have served as an outside director at twocompanies other than Tokyo Gas and bothcompanies have adopted the structure of a“Company with a Nominating Committee, etc.” Infact, I had a real-time experience of the transition
at one of these companies – from a “Company with
Board of Corporate Auditors” to a “Company witha Nominating Committee, etc.”
I also believed that if we were to consider agovernance system, it should be a “Company with aNominating Committee, etc.” as we are in the midstof unprecedented important management reforms by
setting forth the Three Challenges (Leading Net-Zero
CO2, Building a value co-creation ecosystem, andI think the enhanced governancesystem will help make operations
and internal systems moreadvanced
The move to a “Company with a Nominating
Committee, etc.” will bring several changes. First, theauthority to execute will be further expanded, and, as
the Board of Directors changes to a supervisory
function as its main function, the difference in roles
will become clearer, speeding up the execution.
KPIs and other targets should be more directly
linked to individual profit plans, so that executives
regularly report on business progress to the Boardof Directors, and the Board adequately monitors
the progress. When objectives are clearly spelled
out, the roles of each side will be more visible. Thismeans, in my view, that each body and committee
will play its role, leading to the enhancement of thegovernance system.
I have been appointed as an outside director
since this fiscal year, ending March 2022, and am amember of the Nominating Committee andCompensation Committee. The Nominating
Committee, in which outside directors hold the
majority of the seats, is empowered to makedecisions on the personnel change of executives.

Tokyo Gas Integrated Report 2021
40

The Committee is required to listen to how thecandidates were chosen using personnel systems
and evaluation methods that have been chosen to
identify any unclear points, propose improvements,
and draw conclusions. This may also lead toreviewing how to create career paths to the top
management and how to evaluate humanresources. As for the Compensation Committee, it
is responsible for determining the amount of
remuneration for each executive. Here, we will firstneed to sort out why and how the remuneration
has become what it is today. This may also lead toreviewing the compensation system. We see cases
like these at many other companies.
By shifting to a more robust governancesystem, the personnel valuation and compensation
systems, which have been promoted by extending
the existing internal rules, may be reviewed andreplaced with more advanced rules. Putting a
positive, constructive spin to actions being taken,
Tokyo Gas can overhaul its operations and rules,
using the outside directors’ requests andsuggestions to more logically sorting out reasons. I
believe that it will become easier to implement
reforms and make the systems more visible.
It is also crucially important that Tokyo Gas
explains clearly and politely to the shareholders that
the Company is in the midst of a major management
reform undertaking and wants the shareholders’support and understanding in increasing investment
required in the process of this change, as such andunderstanding that its vision extends beyond theinvestment phase. I would also like to welcome newshareholders who will be excited about our new
vision as an energy company, stated inCompass2030.

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Introduction

Management
Message

Compass2030
Vision and Strategy

How We Create Value

Invisible
AssetsBusiness
Overview

Corporate
Governance

TCFD

Financial Data

Corporate Governance

Basic views on corporate governanceTokyo Gas Co., Ltd.
Shareholders Meeting

Basic Policy on Corporate Governancewww.tokyo-gas.co.jp/IR/english/gvnnc/pdf/policy.pdf

ReportAppointment

Decision-making
on a proposal
for theappointment
and/or removalof independent
auditors

Board of Directors, Directors
Appointment

ReportDecision-making on director
candidates
Recommendation on corporate
executive officer candidates

Nominating Committee

Decision-making Appointment
on compensation

ReportAppointment

Report

Audit
ReportCompensation Committee

Audit Committee

Decision-making oncompensation

Appointment

Supervise

Overall Corporate Governance Structure
Following approval of the 221st shareholders meeting, Tokyo Gas
has made a transition to a “Company with a Nominating
Committee, etc.” and has established three committees: aNominating Committee to determine director candidates andrecommend corporate executive officer candidates; an Audit
Committee to audit execution of duties by directors and corporate
executive officers; and a Compensation Committee to determine
remuneration for directors and corporate executive officers.
The Board of Directors determines management policies,
supervises execution of duties by corporate executive officers,delegates decision-making concerning important matters forbusiness execution to corporate executive officers, and asks themto report the status of the execution, when needed.
Corporate executive officers are required to contribute toappropriate, prompt decision-making and to ensure efficientbusiness operations by taking up in a committee (generally
meeting weekly) that supports the corporate executive officers’
reasonable decision-making matters to be submitted to the Boardof Directors and other important managerial matters. Executive
officers are assigned responsibility for ensuring prompt business
operations by corporate executive officers. Tokyo Gas has thus
adopted and established a governance structure that ensureshigh legality, soundness, and transparency.

Appointment
ReportCollaboration
Audit

ReportCorporate Executive Officers
Representative Corporate Executive Officer,
President and CEO

ExecutionsystemCommittee supporting rational
decision-making by Corporate
Executive Officers

Appointment
Oversee

Advisory bodies concerninginvestment, loan, equity investment,
and other important matters *2

ReportCollaboration

Financial
audit

ReportExecutive
Officers

Superintend

Internal Audit
Department

Collaboration

Independent auditor (Auditing corporation)

Decision-making on a
proposal forthe appointment of directors

To realize continuous growth and increase in our medium- tolong-term corporate value, as an “energy frontier corporate group”
that focuses on natural gas, the Tokyo Gas Group aims at therealization of comfortable lifestyles and environmentally friendly
cities and works to ensure continued development while consistently
earning the trust of customers, shareholders, and society.
Based on this philosophy, we aim to clarify management andexecutive responsibilities and strengthen auditing and monitoring
functions with a commitment to management legality, soundness,and transparency.
We endeavor to enhance corporate governance systems bypropelling accurate and prompt decision-making, efficientbusiness executions.

Audit

Departments
ManageReportSubsidiaries

Overview of Corporate Governance System(As of June 29, 2021)

Number of directors

9

Average age of directors

63.8

Number of meetings of Board of
Directors*1
Attendance rate of Outside Directors
at Board of Directors*1 meetings

12
100%

Number of Outside Directors

6 Term of office of directors

Number of independent officers

6 Performance-linked remuneration

Yes

Yes Share purchase system to reflect
the perspective of shareholders in
Yes management

Yes

Participation of Outside Directors in determination of remuneration
Participation of Outside Directors in selecting director candidates

1 year

*1 Total for the period from June 2020 to May 2021

Tokyo Gas Integrated Report 2021
41

Investment Evaluation
Committee An advisory body included in *2

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

Back To Contents

Management
Message

Introduction

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Business
Overview

Corporate
Governance

Financial Data

Corporate GovernanceIn response to perhaps the most drastic changing environment surrounding the Tokyo Gas Group since the company’ foundation, we have decided toenhance corporate governance by transitioning to a Company with a Nominating Committee, etc. This was initiated in order to significantly respond tochallenge and innovation by the management. The transition in corporate structure is intended to enhance the speed of decision-making and improve thesupervisory function of the Board of Directors as it faces the changing environment and tasks of expanding business areas.

Transition to a Company witha Nominating Committee, etc.

Beforetransition

Aftertransition

Structure of a Company with
an Audit & Supervisory Board

Shareholders
Meeting

Shareholders
Meeting
Appointment/ dismissalof Audit & Supervisory
Board Members

Appointment/
dismissal of Directors
Board ofDirectors
Determine andsupervise businessexecution

Representative
Directors

Outside Audit &Supervisory Board
Members

OutsideInternal

Compensation
Committee*

Audit Committee*

Determination of
proposal for election of
Directors, etc.

Audit of execution of
Determination ofduties by Directors and remuneration for Directors
Corporate Executive
and Corporate Executive
Officers, etc.
Officers, etc.
* Majority of members of each committee areStanding Audit &Supervisory Board
Members

Appointment/dismissal of
Corporate Executive Officer

Supervise businessexecution

Business execution
Representative Corporate
Executive Officers

The Nominating Committee
makes decisions on proposals
to the Shareholders Meeting
concerning appointments anddismissal of directors and on
proposals to the Board of
Directors concerning corporate
executive officers, among othermatters.

Adopted an executive officer system and reduced thenumber of directors
Started appointment of outside directors

2005

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

2016

Established the Basic Policy on Corporate GovernanceStarted the evaluation of effectiveness of the Board of
Directors

2017

Revised the the Regulations of the Board of Directors(Orientation toward a monitoring model)

Outside Directors

Directors

Nominating Committee

2002

Board of Directors
Nominating
Committee*

Audit

Business
execution

Appointment / dismissalof Directors

Audit & Supervisory
Board

OutsideDirectors

History of Tokyo Gas in enhancing
corporate governance

Structure of a Company with aNominating Committee, etc.

Committee
members

Nominating Committee
Chairperson

SAITO Hitoshi(Outside)

Committee
members

TAKAMI Kazunori

Committee
members

NOHARA Sawako

Committee
members

HIROSE Michiaki(Outside)(Outside)

Corporate Executive
Officer

Committee
members

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

Audit Committee
Chairperson

INDO Mami(Outside)

Committee
members

EDAHIRO Junko

Committee
members

ONO Hiromichi

Committee
members

NAKAJIMA Isao

(Outside)(Outside)Tokyo Gas Integrated Report 2021
42

2021

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

June 2018 3/8 = 38%

NoteIncrease in the ratio ofJune 2019 4/9 = 44%
outside directors in the Board June 2021 6/9 = 66%

Compensation Committee Committee
members
The Compensation Committee
sets policy related toremuneration of directors andcorporate executive officers,
and makes decisions on
remuneration of each director
and each corporate executive
officer, according to the policy,
among other activities.

Compensation Committee
Chairperson

TAKAMI Kazunori(Outside)

Committee
members

SAITO Hitoshi

Committee
members

NOHARA Sawako

Committee
members

HIROSE Michiaki

Committee
members

UCHIDA Takashi(Outside)(Outside)

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Business
Overview

Corporate
Governance

Financial Data

Corporate Governance

Enhancement of Governance

Composition of the Board of Directors

2002

2020

2021

Directors

Directors

Directors
Internal

9

Outside2

Internal

5

Outside4

Female members 2

Audit & Supervisory Board Members

Audit & Supervisory Board Members

Internal

3

Outside6

Female members 3

Internal

3 Outside 2

Internal

2 Outside 3
Female member 1

Role of the Board of Directors

Management and compositionof the Board of Directors

Appointment of Directors

Pursuant to the provisions of the relevant legislation,
the Articles of Incorporation, and the Regulations of
the Board of Directors, the Board of Directors
conducts important decision-making of the Company’s
management, such as management policy and plans,and supervision of execution of business operations.
In addition, the Board of Directors delegates tocorporate executive officers a large part of its
authority concerning business execution in order tomake decisions in an appropriate, prompt manner.

In principle, the Board of Directors
meets once a month to decide basic
policies of management and tosupervise execution of duties bycorporate executive officers, among
activities. At present, the Board of
Directors comprises 9 directors, 6 ofwhom are outside directors.

To ensure that the Board of Directors conducts appropriate decision-making andmanagement supervision, persons who are selected as directors are deemed to be
individuals who possess abundant experience, in-depth knowledge, and a high level ofexpertise. Outside directors shall be individuals who have perspectives on matters including
corporate management, social and economic trends, and international affairs. They are also
required to meet the Company’s Independence Standards for Outside Officers. Concerning
the selections of nominees for the position of director, the Nominating Committee, amajority of which is comprised of independent outside directors, determines agenda itemsof the Shareholders Meeting and the reasons for election of the nominees are disclosed in
the reference materials for the Shareholders Meeting. Those materials are included in thenotice of convocation of the Shareholders Meeting.

Tokyo Gas Integrated Report 2021
43

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceCorporate Governance

Effectiveness of Board of Directors
Analysis and Evaluation of Effectiveness of Board of
Directors as a Whole
To maintain and enhance the effectiveness of the Board of Directors,
we analyzed and evaluated the Board of Directors’ effectivenessby holding exchanges of opinions at the meetings of the Boardof Directors, using the questionnaire-based self-evaluations
completed by the directors as a point of reference.
The effectiveness of the Board of Directors was confirmed tohave been further enhanced, mainly because questionnaire-based
quantitative evaluations remained satisfactory as before, alongwith the fact that vigorous discussions were being held throughexchanges of opinions at the meetings of the Board of Directors,
and that measures such as on-site inspections facilitated theunderstanding of outside officers on the Company’s business
operations.
To realize further improvement in the effectiveness of theBoard of Directors, it will be necessary for efforts to continue
without interruption. To realize further improvement in theeffectiveness of the Board of Directors, it will be necessary for
efforts to continue without interruption. The evaluation
confirmed that, going forward, Directors intended to establish acommon recognition on the way the Board of Directors ought tobe in terms of its monitoring model and demonstrate its
recognition, in addition to continue to carry out initiatives topromote understanding of the Company’s business operations.

Questionnaire

Evaluation and comments from the third-party
evaluation
Aggregated results of the questionnaire generally showed highscores for each question item for the current fiscal year as in theprevious years. They confirmed that the effectiveness of theBoard of Directors was ensured to be at a high level.
As a company which has made a transition to a Company
with a Nominating Committee, etc., how to preserve theeffectiveness of the monitoring function of the Board of
Directors is important. Directors must establish a common
recognition on the way the Board of Directors ought to be interms of its monitoring model and demonstrate its recognition.

Contents of the questionnaire(quantitative and qualitative evaluation)
Management of meetings of the Board of Directors(composition of members, contents of materials, and time ofholding)Functions of meetings of the Board of Directors (decisionmaking for policies, status of monitoring, status ofestablishment and management of internal control system,
and reporting from the execution side)
Other (offering of workshops, on-site inspections, and otherprograms for outside officers)
Free comments
Examples of free comments of the questionnaire
In addition to setting up and reviewing KPIs that areappropriate for monitoring, risks need to be clearly quantified
and presented.
It is important to further improve the system for enablingcollection of information indispensable for monitoring.
Deeper discussions are needed on strategies for achieving
Net-Zero CO2.

Policy for Training of Directors
When Directors assume their positions, the Company provides
them with training opportunities to help them understand their
responsibilities. The Company also provides training courses andother programs to enable Directors to update their knowledge
while in office.
The Company periodically provides Outside Directors withinformation on the Tokyo Gas Group’s business, finances,organization, and other matters.
Tokyo Gas Integrated Report 2021
44

Business
Overview

Financial Data

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Officer Remuneration System

Officer Remuneration System
The Compensation Committee held on June 29, 2021 resolved a Basic Policy on Officer Remuneration.
1. Basic Policy on Officer Remuneration
As a Company with a Nominating Committee, etc., a Compensation Committee has been
established as stipulated in the Companies Act, and it selects a chairperson from outside directors,
secures objectivity and transparency, and determines remuneration of individual officers (directors
and corporate executive officers).
(1) Role of officers and officer remuneration
The role assigned to officers is to seek to enhance short-term, medium- and long-term corporate
value, and officer remuneration shall serve as an effective incentive for them to perform that role.
(2) Level of officer remuneration
The level of officer remuneration shall be suitable for the role, responsibility and performance ofthe officer, and be in consideration of changes in the business environment, and the level of othercompanies according to the research of an external specialized institution.
(3) Composition of annual remuneration
Remuneration of officers shall comprise fixed remuneration (basic remuneration) andincentive remuneration (bonus, share-based compensation).
Basic remuneration
A fixed amount in accordance with the post of each individual is paid
as monthly remuneration.
Bonuses
As a short-term incentive remuneration, a bonus is paid once a year
and its amount reflects the evaluation of individual performance against financial and nonfinancial indicators* beside the basic amount set by each rank. Indicators are reviewed andselected each year.
share-based compensation As a medium- to long-term incentive remuneration, points areprovided based on the base amount set by each rank. The stocks are provided based on thenumber of points at retirement.
Remuneration for directors is comprised of basic remuneration and share-based
compensation, while remuneration for corporate executive officers (including those who
concurrently serve as directors) is comprised of basic remuneration, bonuses, and stockcompensation
The approximate ratios of each type of remuneration for directors are 90% in basic
remuneration and 10% in share-based compensation. The approximate ratios for corporate
executive officers (including those who concurrently serve as directors) are 65-70% in basic
remuneration, 15-20% in bonuses, and 10-20% in share-based compensation.

Composition of remuneration for directors (internal and outside)

Fixed remuneration

Non-monetary
remuneration

Basic remuneration(monthly)

Trust-type share-based
compensation

About 90%

About 10%

Composition of remuneration for corporate executive officers

Fixed remuneration

Performance-linked
remuneration

Non-monetary
remuneration

Basic remuneration(monthly)

Bonuses

Trust-type share-based
compensation

About 65-70%

About 15-20%

About 10-20%*Adoption of non-financial indicators
The Basic Policy on Officer Remuneration, which was resolved at the Compensation Committee
meeting held on June 29, 2021, has incorporated non-financial indicators, in addition to financial
indicators, in the evaluation of term performance for bonuses of corporate executive officers. The
indicators are to be reviewed each year. The term and those for FY2021 are as follows.
* Indicators for bonus evaluation for FY2021
Financial indicators: Profit attributable to owners of parent; Operating profit + equity method income
Non-financial indicators: Contribution to CO2 emissions reduction; Renewable power source transaction volume; Diversity in human resources; Natural gas transaction volume; Transportation volume; Number of customer accounts

Tokyo Gas Integrated Report 2021
45

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsBusiness
Overview

Corporate
Governance

TCFD

Financial Data

Officer Remuneration System

2. Introduction of a share-based compensation plan using a trust
The Compensation Committee meeting held on June 29, 2021 resolved to introduce a share-based
compensation plan for directors and corporate executive officers with the objective of providing
incentives encouraging the enhancement of corporate value. Separately, an introduction of a similar
share-based compensation plan for executive officers has also been resolved.

3. Total Remuneration for Directors and Audit & Supervisory Board Members for
FY2020 (Reference)(Results of the Remuneration System before transition to a Company with a Nominating Committee, etc.)
Total value of remuneration by type (¥ million)
Fixed
remuneration(Monthly
remuneration)

323

241

74

74

Outside Directors

45

39

Outside Audit &Supervisory Board
Members

35

35

Classification of
officers(1) Overview
The Company has established a share trust (see the “Overview of the trust”). Points are to be
granted to officers each year according to their position, and they shall receive company sharesbased on the points when they retire/resign.

Directors

outsidedirectors(excluding)

Audit &
Supervisory
Board Members(2) Target persons
Directors (including outside directors) and corporate executive officers()

Performance-linked remuneration
Monthly
remuneration

Bonuses49

32

Number of
eligible officers

62

excluding outside
Audit & Supervisory
Board members(3) Overview of the trust(The table below includes executive officers.)

Trust period

Total value of
remuneration(¥ million)

From August 2021 to August 2024 (tentative)

6

5

4

* The number of officers includes one internal director, one outside director, and one outside Audit & Supervisory Board member who retired upon the
conclusion of the 220th Annual Shareholders Meeting.

Amount to be contributed by theCompany as funds foracquiring shares¥461,889,900

Method to acquire sharesfor the trust

Acquisition via disposal of treasury shares

Number of shares for the trust

224,600 shares* It was resolved that the amount of monthly remuneration of all Directors (including Outside Directors) should be under ¥50 million at the 205th Annual
Shareholders Meeting and that the amount of annual bonus for all Directors should be under ¥90 million at the 206th Annual Shareholders Meeting.
* It was resolved that the amount of monthly remuneration of all Audit & Supervisory Board members (including outside members of the Audit &Supervisory Board) should be under ¥12 million at the 190th Annual Shareholders Meeting.

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

Tokyo Gas Integrated Report 202146

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsBusiness
Overview

Corporate
Governance

TCFD

Financial Data

Internal Control System

Internal Control System
Ensuring the legality, soundness, and transparencyof the management based on our Management
Philosophy, we strive to clarify responsibilities ofmanagement and execution, enhance supervisingand auditing functions, and promote accurate
and prompt decision-making, efficient executionof business operations, in order to sustainablegrowth and improvement in medium- to longterm corporate value. In addition, Tokyo Gas
and its subsidiaries direct their efforts toward

Overview
of Internal
Control
SystemResponse to “Internal Controls Reporting System”
To comply with the “Internal Control Reporting
System” under the Financial Instruments andExchange Act, Tokyo Gas follows the internal
control basic framework presented in Financial
Services Agency standards, arranges andadministers internal control related to financial
reporting, assesses their effectiveness, andimproves them as necessary. In the internal
control report for the previous consolidated fiscal
year prepared following this system, which foundlasting development by respecting theautonomy of each and sharing the pursuit of
total optimization as their common cause.
In order to ensure appropriate business
operation of the Tokyo Gas Group, the Basic
Policy on Development of Internal Control Systems
has been adopted by the Board of Directors andcorporate executive officers have accordingly andeffectively established the Internal Control
Systems and have been operating them.

our internal control regarding financial reporting
to be effective, the Auditors expressed theopinion that all the material points wererepresented appropriately.

1

2

3

4

5

6

7

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

System to store andmanage information
regarding the executionof duties by corporate
executive officers

Regulations and othersystems on managing
the risk of loss of theGroup

System to ensure thatthe performance of
duties by corporate
executive officers is
conducted efficiently

System to ensure
appropriateness ofbusiness operation by
the Group subsidiaries

Items regarding
employees assisting withthe duties of the Audit
Committee

System concerning
reporting to the Audit
Committee and system
to ensure effective
auditing by the Audit
Committee

Specific Examples ofInternal Control System

Internal Audit Department
The Internal Audit Department of the Tokyo
Gas Group has been established to efficiently
and effectively audit the status of execution ofbusiness operations. The Department reports audit
results to the Audit Committee, directors of theaudited subsidiaries, and other parties concerned.
The Internal Audit Department, an organization
for internal audit of the Company, has theobjective of conducting effective, expert auditing
with its composition and number of staff as shownon the right (as of June 29, 2021).

Audit Committee
In addition to the establishment of an organization that enables the Tokyo Gas Group’s officers andemployees report to the Audit Committee without delay, numerous actions have been taken to facilitate
effective audit activities, including collaboration of the Audit Committee, the Internal Audit Department,
and Independent Auditors.

Audit Sect.ⅠI

Internal Audit
Department(40 staff members)

Audit Sect.ⅡII

Confirmation of appropriateness of audit method and results
Confirmation of appropriateness of internal control
Confirmation of independence
Conveying of audit plans and results
Audit by the Audit
Committee
Reporting of audit plan and results,
Reporting of audit plans and results,
and exchange of opinions
and exchange of opinions

Audit Sect.ⅢIII
Planning and Internal
Control Sect

Audit by Independent
Auditors

Tokyo Gas Integrated Report 2021
47

Reporting of audit plans and results, and exchange of opinions

Internal audit

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Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

Compliance

Compliance
Compliance Structure
Tokyo Gas has established the Management
Ethics Committee chaired by the President andCEO. It discusses at the executive level overall
actions for maintaining and improving
compliance awareness, monitors theimplementation of compliance-related measures,and checks actions to be taken from the next
year onward. It issues instructions to make
improvement if needed. In response to this,individual divisions and subsidiaries set upcompliance committees to carry out inspections
and improvements suiting their own operations.
The Tokyo Gas Group maintains the Code ofCompliance Structure

President and CEO

Management Ethics
Committee

Workplace discussions
Each workplace of the Tokyo Gas Group carries out a workshop, mainly led by a person in charge ofcompliance promotion (21,966 participants in FY2020). Using the awareness building tools based on the Tokyo
Gas Group’s Code of Conduct, participants learn about the recent trend concerning corporate compliance anddiscuss how to actually practice the Code of Conduct, which is intended to lead to taking actions.

A committee body aimed atpromoting management withtransparency through discussion
on overall complianceRank-specific training
Rank-specific training sessions,
including those for new
employees, are carried out for theGroup employees, so as toenhance compliance mindedness.
(1,322 participants in FY2020).

Instructing, reporting

Instructing, reporting

Internal
Audit Dept.

Compliance Dept.
Supporting, reporting

Internal auditing

Individual Divisions

Compliance Committee

Business Departments

Subsidiaries andTokyo Gas Lifeval

Reporting, consulting

reflected in initiatives for the following years.
Moreover, the Internal Audit Department
conducts internal audits of the Company and its
subsidiaries, focusing on potential risks that may
materialize and their degree of importance fromthe viewpoint of strict compliance with laws andregulations, corporate ethics and social norms.
The status of improvement concerning any
recommendations made as a result of the internal
audits is checked in a follow-up audit in thefollowing year to ensure steady improvement inrisk management.

Examples of specific actions

Advisory board concerning
important matters of theexecutive structure

Chairperson: President and CEO
Members: Chief Executive andOfficer in charge, and generalmanagers concerned

ReportingCompliance Risk Management
We have formulated and implemented escalation
rules that encourage any employee finding
anything unusual to notify the employee’s
manager without hesitation and have beeneffectively operating internal and external
consultation desks. We are thereby endeavoring
to ensure that compliance-related issues are
discovered and resolved at an early stage and our
corporate self-regulatory processes functions
effectively.
We monitor the effectiveness of Group
compliance promotion activities by conducting
regular compliance awareness surveys of all
employees. The results of these surveys are

Conduct as the standard for behavior whencarrying out duties. We are making continued
efforts to ensure the Code of Conduct is known
and observed by employees through workplace
discussions participated by all employees at theirrespective workplaces and through rank-specifictraining sessions on the occasions of their entry
and promotion.

Consulting,notifying

Consulting, notifying

Legal training
Every year, legal training sessions are carried out for all Group
employees with the aim of enhancing understanding of legal
knowledge such as that involving the Anti-Monopoly Act, Act against
Unjustifiable Premiums and Misleading Representations, and the
Subcontract Act, which we are required to comply with (10,600
participants in FY2020). In addition to checking the objectives of laws
and regulations, we seek to provide during the training sessions
practical information by incorporating interpretation on specificcases*1 which were disclosed by the Fair Trade Commission and theConsumer Affairs Agency.

Employees*1: Cartel and abuse of dominant bargaining position (Anti-Monopoly Act), misleading representation and favorable representation(Act against Unjustifiable Premiums and Misleading Representations), etc.

Tokyo Gas Integrated Report 2021
48

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Business
Overview

Corporate
Governance

Financial Data

Risk Management System

Risk Management System
In accordance to the Risk Management Regulations which stipulated basic items of the Tokyo Gas Group’s risk management, we have established an enterprise risk management (ERM) system and areusing an “ordinary-time response” (to understand risks and device and implement measures against the risks) method, or an “emergency-time response” (to respond when a significant risk emerges) method.
Ordinary-time response
Our Risk Management Regulations have explicitly stated specificinitiatives and major risks at ordinary times and an enterpriserisk management (ERM) system has been established toundertake them. The Risk Management Committee wasestablished with the aim of improving the management level ofthe ERM system. The Committee checks progress regarding theestablishment and operational status of the ERM system,
including periodic risk assessments. It also reports to acommittee that supports the corporate executive officers’
reasonable decision-making.
Under the framework, around 150 Risk Management
Promotion Officers are deployed in the business departments ofTokyo Gas and its subsidiaries in order to promote ERM. Each
year, we assess risks and the implementation and improvement
status of countermeasures. This system facilitates the steady
implementation of the ERM-PDCA (Plan-Do-Check-Act) cycle.

Enterprise Risk Management (ERM) System

Securities Markets and Other Stakeholders
Disclosure of risk information through Securities Report,
Financial results and Sustainability Report

Reflection of results of risk assessment

Committee supporting rational decision-making by
Corporate Executive Officers
Confirmation of major risks, etc.

Reporting and proposal of plans for assessmentof major risks and other necessary matters

Clear statement of risk
management policies

Risk Management Committee (Executive Office: Corporate Planning Dept.)
Identifying and confirming Group risk management
Report regarding results of risk assessment,
status of implementation of countermeasures,status of improvement, etc.

Improvement proposals
Convey statement of risk
management policies

Business Departments / Subsidiaries(1) Identifying and evaluating risks, formulating
and implementing risk countermeasures(2) Improvement of risk assessment, countermeasures

Business or other risks which may significantly affect judgment of investors (as of March 31, 2021)
1.Risks associated with accidents, disasters, etc.

3.Risks associated with business execution(1) Energy resource procurement difficulties(2) Natural disasters(3) Accidents and supply impairments accompanying city gas
production and supply, and power generation(4) Spread of a highly virulent or contagious infections(5) Unforeseeable, large-scale power outages(6) Problems in securing the safety of city gas and in quality ofgas appliances(7) Damage caused by rumors arising from a city gas accidentof another company(1) Risks related to existing businessesa) Decrease in demand caused by intensified competitionb) Fluctuation in material pricesc) Changes in laws, regulations, and national or
local energy policyd) Fluctuation in gas sales volume caused by climatechangee) Decrease in existing demand caused by changes
in the business environmentf) Interruption of telephone services at call centersg) Delay in technology development(2) Risks associated with overseas businessdevelopment(3) Delay in development of new markets(4) Inability to recover investments

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

4. Risks related to information
management and system operation(1) Leakage of personal information(2) Shutdown or malfunction of IT systems(3) Cyber attacks

5. Risks related to corporate social
responsibility(1) Compliance violations(2) Response to new environmental regulations(3) Insufficient customer services(4) Insufficient response to human rights issues

Tokyo Gas Integrated Report 2021
49

Emergency-time response
Because the company provides public services that comprise alifeline, for many years it has also had a crisis management
system that serves as a response system in case an accident orother risk-related event actually occurs. Specifically, we haveformulated Emergency Response Organization Regulations. In
case of major crises, including major natural disasters, such as
earthquakes, or production or supply disruptions arising frommajor accidents at pipelines or LNG terminals, as well as spreadof highly pathogenic or infectious diseases, terrorism, failures in
mission-critical IT systems, and compliance problems, theEmergency Response Organization has been established torespond to the situation immediately in accordance with theEmergency Response Organization Regulations. Periodic training
is conducted in relation to response measures against large
earthquakes, cyber terrorism, and other major risks. Moreover,the company has also formulated a business continuity plan
(BCP) outlining its responses in the event of a major earthquakeof the magnitude as assumed by Japan’s Cabinet Office, a major
accident disrupting gas supply, a widespread blackout, highly
pathogenic or infectious diseases, etc. This plan is in place toreinforce the company’s risk management system.
Emergency Response Organization*
President and CEO (Organization Leader)
Collaboration
Instructions / ReportordersCorporate
Planning Dept.
(Group-wide coordination)

Business Departments* A department in charge of an executive office is predetermined depending on thetype of emergency.

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

Executives

Board of Directors (As of June 29, 2021)

Director, Chairperson of the Board

HIROSE Michiaki

Director

Director
Representative Corporate Executive
Officer, President and CEO

NAKAJIMA Isao

UCHIDA Takashi
April 1974
June 2009

April 2012
April 2014
April 2018
Reason forappointment

Joined the Company
Director, Managing Executive Officer and in charge ofCorporate Planning Dept., Corporate Communications Dept.andAffiliated Companies Dept.
Representative Director, Executive Vice President and Chief
Executive of Living Energy Div.
Representative Director, President
Director, Chairperson of the Board
Over the course of his career, HIROSE Michiaki has engaged mainly
in planning-related work duties. For four years, from April 2014 until
March 2018, he served as President. Since April 2018, as Director andChairman, he has served as chairman of the Board of Directors. He is highly
knowledgeable, and has extensive work experience with the Company.

Director

OutsideSAITO Hitoshi

April 1976
June 2011

June 2017
June 2019

Joined Mitsui Fudosan Co., Ltd.
Executive Managing Director and Executive Managing Officerof Mitsui Fudosan Co., Ltd.
Managing Director and Senior Executive Managing Officer of
Mitsui Fudosan Co., Ltd.
Managing Director, Senior Executive Managing Officer and Chief
Executive of International Div. of Mitsui Fudosan Co., Ltd.
Advisor of Mitsui Fudosan Co., Ltd.
Director of the Company

June 2020

Retired from Advisor of Mitsui Fudosan Co., Ltd.

April 2013
April 2015

Reason forappointment

Significant
joint
responsibilities

Mr. SAITO Hitoshi is expected to use his international perspective
acquired from overseas businesses in the real estate industry, as well as
his management capabilities, broad outlook and in-depth knowledge
gained through a wide range of business development for theCompany’s management.
Outside Director of GLOBESHIP Corporation

April 1979
June 2015
April 2016
April 2018
June 2021

Reason forappointment

Joined the Company
Director, Managing Executive Officer and Chief Executive ofEnergy Resources Business Div.
Representative Director, Executive Vice President and Chief
Executive of Residential Sales and Service Div.
Representative Director, President and CEO
Director
Representative Corporate Executive Officer, President and CEO
In his career, UCHIDA Takashi has engaged mainly in planning,
resources and overseas business-related work duties.Since April 2018,he has served as President and CEO, with ultimate responsibility for the
execution of duties within the company. He is highly knowledgeable,
and has extensive work experience with the Company.

Director

Outside

TAKAMI Kazunori

April 1978
June 2009
April 2012
April 2015

June 2017
March 2018
June 2019
Reason forappointment

Significant
joint
responsibilities

Joined Matsushita Electric Industrial Co., Ltd. (Current
Panasonic Corporation)
Managing Director of Panasonic Corporation
Representative Director, Senior Managing Executive officer andPresident of Appliances Company of Panasonic Corporation
Representative Director, Executive Vice President and in
charge of Japan region, Customer Satisfaction, and Design ofPanasonic Corporation
Corporate Advisor of Panasonic Corporation
Retired from Corporate Advisor of Panasonic Corporation
Director of the Company
Mr. TAKAMI Kazunori is expected to use his
management capabilities, broad outlook and in-depth knowledge
acquired through a wide range of business development in the electricalindustry for the Company’s management.
Outside Director of Tokyo FM Broadcasting Co., Ltd.
Outside Director of Nojima Corporation
Outside Director of FUJITA KANKO INC.

Tokyo Gas Integrated Report 2021
50

April 1982
April 2015

April 2018

March 2019
June 2019
June 2021
June 2021
Reason forappointment

Joined the Company
Senior Executive Officer, CFO and in charge of Finance Dept.,
Accounting Dept., Purchasing Dept. and Real EstateManagement Dept.
Senior Managing Executive Officer, CFO and in charge ofFinance Dept., Accounting Dept., Personnel Dept. andPurchasing Dept.
Retired as Senior Managing Executive Officer
Audit & Supervisory Board Member of the Company
Retired from Audit & Supervisory Board Member of the Company
Director of the Company
NAKAJIMA Isao is highly knowledgeable in financial affairs andaccounting, and has extensive work experience with the Company. He
has carried out financial and accounting operations and has served as
Senior Managing Executive Officer.

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Business
Overview

Corporate
Governance

Financial Data

Executives

Corporate Executive Officers

Director

OutsideEDAHIRO Junko

Director

Representative
Corporate Executive UCHIDA
Officer, President and Takashi
CEO

OutsideINDO Mami
Representative
Corporate Executive
Officers,Vice
Presidents

April 2003
May 2006
August 2018

Representative Director of Edahiroba Inc. (Current e’s Inc.)
Director and Chairperson of Change Agent Inc.
Professor of Shizenkan University Graduate School of
Leadership & Innovation
June 2019
Director of the Company
October 2019
Representative Director of Shimokawa Seeds K.K.
September 2020 President of For Future Company ( Miraisozobu in Japanese)
Reason forappointment

Significant
joint
responsibilities

Ms. EDAHIRO Junko is expected to use her experience as a corporate
manager, advanced specialization related to the environment and in-depth
knowledge as an environmental journalist for the Company’s management.
Representative Director of e’s Inc.
Director and Chairperson of Change Agent Inc.
Professor of Shizenkan University Graduate School of Leadership & Innovation
Representative Director of Shimokawa Seeds K.K.
President of For Future Company ( Miraisozobu in Japanese)

Director

OutsideNOHARA Sawako

December 1988
July 1995
December 2001
June 2018
April 2020
June 2021

Joined Life Science Institute Co., Ltd.
Joined InfoCom Research, Inc.
President and Representative Director of IPSe Marketing. Inc.
Audit & Supervisory Board Member of the Company
Project Professor, Graduate School of Media and Governance,
Keio University
Retired from Audit & Supervisory Board Member of the Company

June 2021

Director of the Company

Reason forappointment

Significant
joint
responsibilities

Ms. NOHARA Sawako is highly knowledgeable,and possesses corporate management experience and high-level
IT-related expertise. We hope that she will make use of these qualities
for the Company's management.
President and Representative Director of IPSe Marketing. Inc.
Outside Director of DAIICHI SANKYO COMPANY, LIMITED
Outside Director of Keikyu Corporation

April 1985
Joined Daiwa Securities Co. Ltd.
April 2016
Senior Managing Director of Daiwa Institute of Research Ltd.
December 2016 Retired from Senior Managing Director of Daiwa Institute of
Research Ltd.
December 2016 Commissioner of Securities and Exchange Surveillance Commission
December 2019 Retired from Commissioner of Securities and Exchange SurveillanceCommission
June 2020
Director of the Company
Reason forappointment

Significant
joint
responsibilities

Ms. INDO Mami is expected to use her in-depth
experience as analyst and consultant and in other areas related tocorporate management in the financial sector as well as her extensive
perspectives and advanced knowledge for the Company’s management.
External Audit & Supervisory Board Member of AIG Japan Holdings KK
Outside Director of FUJITEC CO., LTD.
Outside Director of Ajinomoto Co., Inc.

Director

Senior Managing
Corporate Executive
Officer

April 2013
June 2017
June 2017
June 2020
June 2021
June 2021
Reason forappointment

Significant
joint
responsibilities

Chief Executive of Pipeline Network Company

SAWADA
SatoruChief Executive of Residential Sales and Service Div.
In charge of Tokyo 2020 Olympic and Paralympic Dept.

SASAYAMA
ShinichiChief Executive of Asset Optimization & Trading Div.

Executive Officers
HAYAKAWA
The Japan Gas Association
Koki
Senior Managing
Executive Officers

KISHINO
Hiroshi

In charge of Corporate Planning Dept., Group
Formation Reforms Project Dept., and Business
Development Project Dept.

KIMOTO
KentaroChief Executive of Digital Innovation Div.

SHIGITANI
Ayumi

President, Representative Director of TOKYO GAS iNET
CORP.

HIGO
TakashiChief Executive of Energy Solution Div.

HOSOYA
Isao

Chief Executive of Gas & Power Div., in charge of
Sustainability Dept.

OutsideONO Hiromichi

April 1979
June 2011

NOHATA
Kunio

Joined Ajinomoto Co., Inc.
Member of the Board & Corporate Vice President in charge of Financeand Purchasing
Member of the Investment Committee of Government Pension Investment Fund
Retired from Member of the Board of Ajinomoto Co., Inc.
Retired from Member of the Investment Committee ofGovernment Pension Investment Fund
Audit & Supervisory Board Member of the Company
Retired from Audit & Supervisory Board Member of the Company
Director of the Company

TANAZAWA Chief Executive of Global Business Div.
SatoshiManaging
Executive Officers

Mr. ONO Hiromichi possesses a high level of experience in businessadministration and knowledge in finance and accounting. We hope that
he will make use of these qualities for the Company's management.
Outside Director of Mebuki Financial Group, Inc.

Tokyo Gas Integrated Report 2021
51

Executive Officers

OGAWA
Shinsuke

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

SAITO
AkihiroChief Executive of Administration Div., Pipeline
Network Company.

KONISHI
Yasuhiro

President, Representative Director of Tokyo Gas
Engineering Solutions Corporation

SATO
Hirofumi

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

YOSHIOKA Tomoyuki, KADO Masayuki, ENDO Yo, SUGESAWA
Nobuhiro, TSUJI Eito, KURIMOTO Kazuya, IMAI Tomoo, KONISHI
Masako, TAKEUCHI Atsunori, OKUMURA Eigo, MINAMI Taku,
YAKABE Hisataka, OHASHI Taro, NAKAMURA Hajime

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Business overview

BUSINESSOVERVIEWTokyo Gas Integrated Report 2021
52

Financial Data

Back To Contents

Management
Message

Introduction

Compass2030
Vision and Strategy

How We Create Value

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

City Gas and LNG Sales Business

Strengths

City Gas and LNG
Sales Business

Risks

A customer base of over 11 million customers and a relationship oftrust with customers based on close ties with local communities
A proven track record of providing a safe and reliable supply ofgas to customers
The Kanto region centered around Tokyo, with its high concentrationof production and consumption, as our primary sales area
Safety-related know-how and energy solution technologicalcapabilities

Difficulties in LNG procurement due to geopolitical risks, etc.,
related to raw material imports
Supply troubles caused by damage to production and supply
facilities, stemming from a large-scale disasterIntensified competition driven by market deregulation;
decline in demand caused by changing lifestyles(¥ billion)(¥ billion)

Segment profit (RH)

Net sales (LH)

(million)

Number of retail customers (RH)

18

1,000

80

12

8

500

40

6

4

0

0

0
2017.32018.32019.32020.32021.3

City gas sales volume

FY2020(billion m3 )Sales volume (LH)

As of March 31, 2021

3

120

1,500

8.863 million

12.99 billion m 35

City gas sales volume and numberof retail customers

Net sales and segment profit

Outline By promoting electricity and services, weare seeking to expand the service area of our city
gas business, which has so far been operating in the
Greater Tokyo Area, by expanding its application tohousehold, commercial and industrial use as well asuse for power generation and other purposes. By
taking redefining LNG, which is a raw material for citygas, as a commodity, we will also strive to increase
the purchasing flexibility and price competitivenessof LNG and expand our LNG business into assetbacked trading and other operations.

Number of retail customers

12

Equivalent to approximately% of total nationwide gas
sales volume in Japan

Segment profit¥88.4 billion
FY202002017.32018.32019.32020.32021.3

Japan relies heavily on LNG imports for procuring natural gas. Most LNG imports are long-term contract based and linked to crude oil prices. With the aim of achieving stable, affordable, andflexible LNG procurement under these conditions, the Tokyo Gas Group is striving to achieve diversification in three areas: supply sources, contract terms and conditions, and the LNG network.
Diversification 1

Diversification 2

Diversification 3

Supply sources

Contract terms and conditions

LNG Network

We are diversifying price indices by adding
contracts based on U.S. natural gas prices andcoal prices in addition to conventional
contracts based on crude oil prices. We arealso making procurement more flexible byadding contracts without restrictions onshipping destinations and those with a morediversified contract period, which may include
medium-term, short-term or spot procurement.

We form strategic alliances with various
companies in Japan and abroad to establish an
LNG network that links the Asian, North
American and European markets. In this way,
we aim to improve LNG transport efficiency,
reduce costs, and increase the flexibility ofprocurement and sales contracts.

In 2018, we started to procure LNG from the
U.S.A., in addition to supplies procured fromexisting sources, including Southeast Asia,
Australia and Sakhalin. In 2020, the portfolio
agreement with Shell Eastern Trading, underwhich multiple sources supply us with LNG,

came into effect, increasing our supply sources
to 16 projects. In the future, we will work tofurther diversify our procurement sources,
including a Mozambique LNG project whereby
we will jointly purchase LNG with Centrica, in aneffort to improve supply stability.

Main supply sources of Tokyo Gas (long-term contract-based)
Sakhalin ■
Tokyo

Tokyo

Cove Point

Present■■■

Qatar ■

Linked to crude
oil prices
Long-term
contract periods
Restrictions
on shipping
destinations

Cameron■Brunei ブルネイ
B■■

Malaysia マレーシア■ Mozambique■ New LNG Project

Brunei■■Malaysia
Pluto■

Gorgon■ Existing LNG Project■ Queensland Curtis

Diversificationof price indicesDiversification ofcontract periods
Destination freeclausesTokyo Gas Integrated Report 2021
53

FutureWe mainly trade between
Japan and its export
market countries

Network connecting
Asian, North Americanand European markets

Future■ ■DarwinIchthys
NWS■■

Present

Competitive
procurementof LNG

Back To Contents

Introduction

Management
Message

Compass2030
Vision and Strategy

How We Create Value

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

Electric Power Business

Strengths

Electric PowerBusiness

Risks

Owning one of the largest high-efficiency power plants
among new power suppliers in the Greater Tokyo Area
A community-based sales network composed of Lifeval,
Enesta and other outlets, and a customer base of more than
11 million customers

Impact on revenue and expenditure of fluctuations in prices
on the wholesale power trading market and raw materials andfuel costs
Damage to power generation facilities and supply troubles
involving raw materials and fuels, stemming from a largescale disaster

Number of retail customers

2.717 million
As of March 31, 2021

Electricity sales volume
Outline We are engaged in a comprehensive
electric power business that extends from fuelprocurement to power generation and sales. As
a new power supplier, we own one of the largest
power plants in the Greater Tokyo Area. In addition
to electricity wholesaling and sales to largevolume consumers, we have been making efforts
to capture retail customers. In the future, with theaim of achieving Net-Zero CO 2 , we will also focus
on acquiring renewable power sources and deliverelectricity tailored to customer needs.

Achievements over the past five
years since the full deregulationof the electric power retail market
In the electric power retail business, we offer a
one-stop service providing gas, electricity andservices. We were supplying electric power to
2,717,000 customers as of March 31, 2021 andhold the largest market share for the fifth
consecutive year in the low voltage category
among new power suppliers.

Net sales and segment profit(¥ billion)

Net sales (LH)400

24.76 billion kWh

Electricity sales volume and number of retailcustomers(¥ billion)

Segment profit (RH)

(billion kWh)

Sales volume (LH)

Number of retail customers (RH) 3.00

12

30.0

300

9

22.5

2.25

200

6

15.0

1.50

100

3

7.5

0.75

0

0

0

2017.32018.32019.32020.32021.32018.32019.32020.3(photovoltaic, wind
power, and biomass)

Natural gas fired
power generation

Domestic

28

Acquisition of renewable energy sources
The Tokyo Gas Group has been working on photovoltaic, onshore wind power, and biomass power
generation, and has made progress in the provision of electricity generated from renewable energy. We
will continue to promote the development and purchase of renewable energy sources in collaboration
with business partners.

Overseas

108

Total

136

Domestic

287

Overseas

123

Total

410

Wind power generation
By making use of our experience in onshore wind power
generation, following the construction of a station on our own site
in 2005, we have participated in Shonai Wind-Power Generation,
which operates the Yuza Wind Power Station in Yamagata
Prefecture. At the same time, we are purchasing power from two
wind power stations operated by Kuroshio Wind Power Generationin Chiba Prefecture. Going forward, we will promote thedevelopment of bottom-mounted offshore wind power generationin Kashima Port, Ibaraki Prefecture, and also work on floating-typeoffshore wind power generation, which is anticipated to grow.

FY2020Recent major development related
to renewable energy
April
2011

Invested in Shonai Wind-Power Generation (30.2% equity
stake; 14,560kW output), which operates the Yuza Wind
Power Station, etc.

Feb.
2017

Entered into a capital alliance with Shizen Energy Inc.,
which is engaged in the energy business centering on
photovoltaic power generation.

April
2018

Invested in the Kashima Port Offshore Wind Project being
promoted by Wind Power Energy Co., Ltd.

May
2018

Prominet Power Co., Ltd. (a wholly-owned subsidiary ofTokyo Gas) acquired part of Tokyo Century Corporation’s
stake in its wholly-owned company, SFK Power LLC (39%equity stake; 9,717kW output), jointly with Kyudenko
Corporation.

Dec.
2019

Acquired an equity interest in a renewable energy joint
venture company in Mexico which was established by
ENGIE in France (50% equity stake; 900MW output) .

Overseas renewable energy initiative:
Photovoltaic power generation

May
2020

In August 2020, Tokyo Gas America Ltd. acquired the 631MWdc
Aktina Solar Project in Texas, U.S.A. developed by Hecate Energy,
a U.S. renewable energy developer. We intend to expand the scaleof overseas renewable energy sources.

Invested in Principle Power, Inc., which develops andpossesses wind float technology for floating-typeoffshore wind power generation.

Aug.
2020

Acquired the 631MWdc Aktina Solar Project in Texas,
U.S.A. developed by Hecate Energy.

Nov.
2020

Invested in Chiba Offshore Wind Inc., established by
Northland Power Inc. and Shizen Energy Inc.

July
2021

Constructed and started commercial solar power
operation of the Iwakuni-Yu Solar Power Plant (23,490kW
output) in Yamaguchi Prefecture.

Tokyo Gas Integrated Report 2021
54¥8.6 billion

2021.3

Owned power

Renewable energy

Segment profit0
2017.3

Progress in the development ofenergy power sources (as of March 31, 2021)(rounded off to 10,000 kW )FY2020(million)

Back To Contents

Introduction

Management
Message

Compass2030
Vision and Strategy

How We Create Value

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

Overseas Business

Strengths

Overseas
Business

Risks

Know-how in the midstream and downstream businesses
accumulated in Japan
Global network established through activities such as raw
material procurement and business participation

Net sales

Stagnation of business operation, increase in expenses, andmissing of business opportunities due to compliance withcountry-specific laws, regulations and/or business practices
Impact of fluctuations in crude oil/gas prices and foreignexchange rates on the revenue and expenditure of overseas
business operations in general¥45.9 billion
FY2020

Segment profit

Net sales and segment profit

Outline Toward realizing the targets set inCompass2030, the Tokyo Gas Group is expanding
its overseas business by engaging mainly inresource development, renewable energy, and
LNG infrastructure businesses in North America,
Australia, Southeast Asia, and Europe.

(¥ billion)

Net sales (LH)

60

Segment profit (RH)($/bbl)

90

20

45

15

30

10

15

5

0

0
2017.32018.32019.3¥3.8 billion

Crude oil price and foreign exchange rate(¥ billion)

2020.3

Crude oil price (LH)

Foreign exchange rate (RH)

(¥/$)

60

80

30

40

0

0
2017.32021.3

North America

2018.32019.32020.32021.3

Southeast Asia

Bang BoOne Bangkok

Birdsboro

TG Natural Resources
Barnett
Eagle Ford

Resource Development BusinessWe invest in prime assets by making use of ourknowledge and insights regarding local markets,regulations, and business structures. We haveacquired these through our experience inbusiness operations and the dispatch of
personnel. At the same time, We monitor
commodity price trends and carefully estimate
the productivity and reserves of gas fields.

Ichthys

PVGD

Pluto
GorgonTokyo Gas Indonesia Pte. Ltd.
(Jakarta)(As of March 31, 2021)

Midstream and Downstream Business(As of March 31, 2021)

Midstream and Downstream BusinessIn addition to the natural gas-fired power
generation business, we will also continue tofocus on the renewable energy business.
Following collaboration with the French company
ENGIE in Mexico, we are now working on ourown solar power generation project (Aktina) in
the U.S.A.

We have taken part in the construction of LNG
terminals, power plants, and other energy
infrastructure and facilities. We also provide
support for demand development, LNG terminal
operations, LNG procurement and otheractivities. We thus offer a broad array of value
across the entire value chain.

Tokyo Gas Integrated Report 2021
55

Queensland Curtis

Tokyo Gas Australia Pty Ltd. (Perth)

PRA
Super Energy

Heolios EnTG

Participating Project
Business Location
DarwinTokyo Gas Asia Pte. Ltd.
(Singapore)(and four other bases)

TGES America
Tokyo Gas America Ltd. (Houston)
MT Falcon

AktinaFGEN LNG

GWHAMT

Gas Malaysia Bhd.
Gas Malaysia Energy
Advance Sdn. Bhd.

Acario Innovation LLC/
Acario Investment One LLC

Bajio

Australia

Midstream- and Downstream
Business
Business Location

Upstream Business
Midstream- and Downstream BusinessBusiness Location

FY2020120(As of March 31, 2021)

Resource Development BusinessWe have invested in five LNG projects inAustralia, which has grown into a major LNG
supply base for East Asia. We will continue tooperate and manage these projects to maximize
the value of our holdings.

Back To Contents

Introduction

Management
Message

Compass2030
Vision and Strategy

How We Create Value

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Energy-related Business

Energy-related
Business
Outline Since 1969, when we introduced LNG
for the first time to Japan, we have consistently
handled processes across the entire LNG value
chain. Utilizing the technological capabilities andknow-how developed through these processes,
we provide one-stop solutions, including LNG
terminals, pipelines, district heating and cooling,and energy services, to match the needs ofcustomers both in Japan and overseas.

FY2020

FY2020¥17.0 billion

Net sales and segment profit(¥ billion)

Net sales (LH)

600

Segment profit (RH)(¥ billion)

40

450

30

300

20

150

10
0
2017.3

During our half-century operations across theentire LNG value chain that extends fromupstream processes to downstream processes,
we have designed and built LNG terminals,
pipelines, district heating and cooling centersand various other facilities and equipment.
Based on the strength of our “user’s knowhow,” which we have cultivated through ourown use, we provide engineering solutions toclients both in Japan and overseas.

Segment profit¥339.4 billion

0

Providing engineering solutions
leveraging technologicalcapabilities and know-how
developed over a half century

Net sales

2018.32019.32020.32021.3

One of the world’s largest district heating/cooling
centers celebrated its 50th anniversary- The Shinjuku District Heating and Cooling Center -The Shinjuku District Heating and Cooling Center, the first of its kind in the
Greater Tokyo Area to provide cold/hot heat to a district in 1971, celebrated its
50th anniversary. The Center is one of the world’s largest systems of its kind,serving 22 buildings, mostly hotels and offices with a total floor area of 2.27
million m2, in the Shinjuku area. It also distributes electricity to the Tokyo
Metropolitan Government Buildings. We have evolved technologies to meetthe needs of the times, from measures to combat air pollution to energy
saving, the reduction of CO2 emissions, and the enhancement of resilience.

Tokyo Gas Integrated Report 2021
56

Thailand: LNG receiving terminal PMC(Project Management Consultation)

We are involved in project management for the construction of the NongFab LNG Terminal commissioned by PTT LNG Co., Ltd., based in Thailand.
We received this order in recognition of the advanced technical capabilities
and the extensive experience accumulated by Tokyo Gas Engineering
Solutions Corporation through the construction and operation of LNG
terminals in Japan and overseas. We are managing the entire project,including technological and contractual aspects, in order to ensure that thedesign, procurement, construction and trial operation performed by theconstruction contractor proceed smoothly as planned.

Back To Contents

Introduction

Management
Message

Compass2030
Vision and Strategy

How We Create Value

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Urban Development Service

Urban Development Service

Office leasing business(¥ billion)

FY2020¥7.5 billion(¥ billion)

Segment profit (RH)

Net sales (LH)

60

20

45

15

30

10

15

5

0

0
2017.32018.32019.32020.32021.3

Gofukubashi (completion

Residential leasing businessscheduled in fiscal 2030)

Ikebukuro (completion

Chiyoda-ku

We are also engaged in the development of urban-type rental housing
complexes “La Tierra Series.” In January 2021, the LaTierra Itabashi of 843
units in 22 apartment buildings was completed. By accelerating acquisition ofproperties, we will enhance the value we offer to our customers through theresidential leasing business and to work towards the betterment of society.

Tokyo Station

Toranomon

Koto-kuChuo-kuToshima-ku

Shimbashi Station
Shiba
Minato-ku
TamachiToyosuToyosu area property development

Meguro-ku
Shinagawa-ku Shinagawa Station

JR Tamachi Station

Pullman Tokyo
Tamachi*1
Tamachi
StationPedestrian deck Tower N

Note: Phase I: Land leasing business, Phase II: Office leasing business(based on capital investment by Tokyo Gas)
Nagisa Terrace

msb Tamachi (musubu Tamachi)

FY2020Net sales and segment profit

scheduled in fiscal 2025)

msb Tamachi (musubu Tamachi)
We are engaged in the business of leasing highvalue-added office space, mainly in city center
areas using large properties. At msb Tamachi, we
have introduced a smart energy network andhave enhanced business continuity planning(BCP), contributing to the creation of anadvanced, appealing community. Phase I ofdevelopment (Tamachi Station Tower S and
Pullman Tokyo Tamachi) was completed in May
2018, and Phase II (Tamachi Station Tower N)
was completed in July 2020.

Segment profit¥48.4 billion(Real Estate)

Outline Over the course of 136 years in business,
the Tokyo Gas Group has acquired large-scale
and medium-scale areas of land with high asset
value. We have made full use of the properties
by operating an office and residential real estateleasing business mainly in city center areas withthe basic concept of securing stable revenue andimproving asset value. We are also working on
joint projects with business partners in an effort tomake area-based energy proposals and promoteurban development.

Net sales

Tamachi
StationTower S

*2Shibaura
Nursery
SchoolMinato Park Shibaura

Shibaura Park

Aiiku
Hospital

Redevelopment area

msb Tamachi(musubu Tamachi)*1 Hotel*2 Commercial Building

Tokyo Gas Integrated Report 2021
57

The Toyosu area is now
attracting even greaterattention as a waterfront
blessed with greenery,
despite being situatedin a prime location,
approximately 4 km awayfrom Tokyo Station. The
Tokyo Gas Group owns
approximately 18 ha ofland at the Toyosu Wharf
and aims to contributeto the ESG management
and prime, charming
urban development froma long-term perspective.

Toyosu-ohashi Bridge

Harumi-ohashi
BridgeTokyo Gas
Group site

ToyosuMarketToyosuMarketFujimi Bridge
Ariake Tennis noMori Station

Shijoumae
Shintoyosu
StationStationToyosuMarketToyosu Smart Energy Center
Ariake North
BridgeKiyari Bridge

ToyosuStationYurikamome

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

10-Year Consolidated
Financial Highlights

10-Year Consolidated Financial Highlights*1

2012.32013.32014.32015.32016.32017.32018.32019.32020.32021.3

1,754,257

1,915,639

2,112,117

2,292,548

1,884,656

1,587,085

1,777,344

1,962,308

1,925,235

1,765,146

Operating Profit (¥ million)

77,075

145,633

166,044

171,753

192,008

58,365

116,30293,704

101,418

77,675

Operating Profit Margin (%)

4.39

7.60

7.86

7.49

10.19

3.68

6.54

4.78

5.27

4.40

Ordinary Profit (¥ million)

75,620147,453

159,613

168,169

188,80955,688111,546

89,386102,645

70,500

Profit attributable to owners of parent (¥ million)

46,060101,678

108,451

95,828111,936

53,13474,98784,55543,29349,505Equity (¥ million)

839,166

927,634

1,011,787

1,069,515

1,100,271

1,101,498

1,136,027

1,159,055

1,147,747

1,153,813

1,863,885

1,992,403

2,176,816

2,257,662

2,251,518

2,230,269

2,334,316

2,428,149

2,539,919

2,738,348

Interest-bearing Debt (¥ million)

625,830

642,550

713,823

730,739715,769

713,596

724,940

803,216

905,066

1,065,988

Operating Cash Flow (¥ million)

194,565

240,448

248,831237,680

257,122

217,439

240,328

246,436

213,171229,315

Free Cash Flow (¥ million)

48,15256,651827

13,08425,08914,081

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

EBITDA (¥ million)

225,580

284,403

306,424

313,605

337,194

222,670

281,643

255,585

271,296

257,485

Capital Expenditure (¥ million)

146,413

183,797

248,004

224,596

232,033

203,358

208,745

223,781

227,058

246,431

Depreciation (¥ million)*2

148,505

138,770

140,380

141,852

145,187

164,305

165,342

161,881

169,878

179,810

EPS (Earnings per Share) (¥)

17.70

39.52

43.10

39.15

46.68

23.02

164.12*3

187.6097.86

112.26

BPS (Book Value per Share) (¥)

324.67360.70402.91438.28460.35479.742,487.58*3

2,575.99

2,602.53

2,616.37

2,590,715

2,577,919

2,517,551

2,446,778

2,396,778

2,302,856

458,073*3

451,356

442,436

442,436

9

10

10

10

11

11

55*3

60

60

60

2.74

2.91

2.59

2.34

2.42

2.29

2.25

2.35

2.29

2.30

Net Sales (¥ million)

Total Assets (¥ million)

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

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

Tokyo Gas Integrated Report 2021
58

Back To Contents

Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsCorporate
Governance

TCFD

Business
Overview

Financial Data

10-Year Consolidated
Financial Highlights

2012.32013.32014.32015.32016.32017.32018.32019.32020.32021.3

Payout Ratio (%)

50.85

25.30

23.20

25.55

23.57

47.79

33.51

31.98

61.31

53.45

Total Payout Ratio (%)

61.36

60.70

60.00

60.80

60.10

60.71

60.17

60.31

61.00

60.12

Current Ratio (%)

156.9

162.2

156.7

150.6

155.5

142.7

135.6

156.0

152.0

132.7

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

0.75

0.69

0.71

0.68

0.65

0.65

0.64

0.69

0.79

0.92

Equity Ratio (%)

45.0

46.6

46.5

47.4

48.9

49.4

48.7

47.7

45.2

42.1

ROE (Return on Equity) (%)

5.4

11.5

11.2

9.2

10.3

4.8

6.7

7.4

3.8

4.3

ROA (Return on Assets) (%)

2.5

5.3

5.2

4.3

5.0

2.4

3.3

3.6

1.7

1.9

Total Asset Turnover (times)

0.95

0.99

1.01

1.03

0.84

0.71

0.78

0.82

0.78

0.67

WACC (%)

3.1

3.2

3.2

3.6

3.4

3.0

3.1

3.0

2.7

2.6

Number of city gas retail customers (thousand)

9,615.4

9,721.1

9,844.8

9,982.3

10,125.7

10,269.4

10,209.0

9,821.0

9,129.0

8,863.0

Gas sales volume (million m3)

15,19015,39014,735

15,541

15,436

15,72015,56815,19813,855

12,99015,833

16,741

17,22518,36018,587

19,05319,052

18,397

17,666

17,577

-

-

-

-

-

635

1,105

1,742

2,350

2,717

8.27

9.98

9.71

10.61

10.96

12.65

14.66

15.48

20.60

24.76

Gas Sales Volume, Gas Volume used in-house*4
Number of electricity retail customers (thousand)Electric power sales volume (billion kWh)

*4: It is the amount that added self-consuming volume (excluded volume for Nijio) to a Consolidated gas sales volume

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

WACC calculation data (fiscal 2020 actual)
Cost of interest-bearing debt: Real interest rate of 0.75% (after tax)
Cost of shareholders’ equity
Risk-free rate: 10-year JGB yield of -0.035%
Risk premium: 5.5%, Beta coefficient of 0.75

Equity Ratio = Equity (year-end) / Total Assets (year-end) x 100
Total Asset Turnover = Net Sales / Total Assets (average)

Tokyo Gas Integrated Report 2021
59

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Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Consolidated Balance Sheets

Consolidated Balance sheets(Million yen)2020.3.31(Million yen)2021.3.31

2020.3.31

AssetsLiabilities

Non-current assets

Non-current liabilities

Property, plant and equipment

2021.3.31

Bonds payable

404,998474,998

Production facilities

224,515

231,177

Long-term borrowings

429,541

458,881Distribution facilities

548,095

594,662

Deferred tax liabilities

18,531

24,269Service and maintenance facilities

48,492

15,992Retirement benefit liability

71,97658,416

Other facilities

475,249

564,495

Provision for gas holder repairs

3,122

3,172

316

316

Provision for safety measures

593

349

162,862

89,283

Provision for appliance warranties

12,985

10,843

1,459,532

1,495,927

Provision for point card certificates

1,000

1,635

Asset retirement obligations

14,424

23,313Inactive facilities
Construction in progress
Total property, plant and equipment
Intangible assets

2,056

5,320

Other noncurrent liabilities

53,501

89,188Other intangible assets

154,066

290,316

Total non-current liabilities

1,010,676

1,145,067

Total intangible assets

156,123

295,637

Current portion of non-current liabilities

54,428

108,704

Investment securities

216,052

230,782

Notes and accounts payable-trade78,59384,265Long-term loans receivable

50,61557,279

Short-term borrowings

6,507

5,706

29

114

Income taxes payable

29,708

11,710

Deferred tax assets

49,13247,368Other current liabilities

200,865

204,623

Other investments

46,40760,814

Total current liabilities

370,104

415,010

(405)

(301)

1,380,780

1,560,077

141,844

Goodwill

Current liabilities

Investments and other assets

Retirement benefit asset

Allowance for doubtful accounts
Total investments and other assets

Total liabilities

361,831

396,057

1,977,487

2,187,623

Shareholders’ equity
Share capital

141,844

Cash and deposits

151,288

157,881

Capital surplus

2,067

1,145

Notes and accounts receivable-trade

221,123

218,985

Retained earnings

967,718

990,762

Lease receivables and investments in leases

20,363

19,618Treasury shares

–

1,210

Total shareholders’ equity

Total non-current assets

Net assets

Current assets

Securities(3,875)(3,907)

1,107,754

1,129,845

Merchandise and finished goods

1,905

1,980

Work in process

11,868

11,595

Valuation difference on available-for-sale securities

15,84322,990Raw materials and supplies

64,703

46,464

Deferred gains or losses on hedges

1,444(11,240)

Other current assets

91,74893,848Foreign currency translation adjustment

22,412

4,322

(570)

(857)

Remeasurements of defined benefit plans

562,431550,725

2,539,919

2,738,348

Allowance for doubtful accounts
Total current assets
Total assets

Accumulated other comprehensive income

Total accumulated other comprehensive income
Non-controlling interests

7,895

39,992

23,968

11,391

24,457

Total net assets

1,159,138

1,178,271

Total liabilities and net assets

2,539,919

2,738,348

Tokyo Gas Integrated Report 2021
60

292

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Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
AssetsConsolidated Statements of Income

Corporate
GovernanceBusiness
Overview(Million yen)

2019.4.1-2020.3.31

2020.4.1-2021.3.31

Net sales

1,925,235

1,765,146

ProfitCost of sales

1,344,171

1,212,624

Other comprehensive income

Gross profit

581,064552,522

Valuation difference on available-for-sale securities

Selling, general and administrative expenses

Deferred gains or losses on hedges

Financial Data

Consolidated Statements of Income
Consolidated Statements ofComprehensive Income

Consolidated Statements ofComprehensive Income(Million yen)

2019.4.1-2020.3.31

TCFD

43,4772020.4.1-2021.3.31

50,471(6,878)

7,178

(850)

(10,014)

Supply and sales expenses

408,730

410,167

Foreign currency translation adjustment(1,916)(14,869)

General and administrative expenses

70,91564,679Total selling, general and administrative expenses

479,645474,846

Remeasurements of defined benefit plans, net of tax

6,150

7,751

101,418

77,675178(6,259)Interest income

2,330

1,586

Comprehensive income

Dividend income

5,433

2,398

Comprehensive income attributable to

Share of profit of entities accounted for using equity method

5,211

1,482

Comprehensive income attributable to owners of parent

100

7,979

Miscellaneous income

7,352

7,757

Comprehensive income attributable to non-controllinginterests

Total non-operating income

20,42921,204

Interest expenses

11,412

12,629Loss on derivatives

1,174

9,373

Miscellaneous expenses

6,614

6,376

Total non-operating expenses

19,202

28,379102,645

70,500Operating profit

Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income

Non-operating income

Gain on derivatives

Non-operating expenses

Ordinary profit
Extraordinary income
Gain on sale of non-current assets

–

3,114

Gain on sale of investment securities

–

5,283

Gain on bargain purchase

–

2,008

Gain on settlement of contract

11,627–

Total extraordinary income

11,627

10,406

Impairment losses

28,152

10,255

Loss on valuation of investment securities

18,643

4,466

Total extraordinary losses

46,796

14,722

Profit before income taxes

67,476

66,184

Income taxes-current

31,196

16,887

Income taxes-deferred(7,197)(1,175)

Total income taxes

23,99915,712

Profit43,47750,471

Extraordinary losses

Profit attributable to non-controlling interests
Profit attributable to owners of parent

184

966

43,29349,505

Tokyo Gas Integrated Report 2021
61

(3,316)(16,212)

40,161

34,25940,14833,48012778

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Introduction

Management
Message

How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Consolidated Statementsof Cash Flows

Consolidated Statements of Cash Flows(Million yen)

2019.4.1-2020.3.31

Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment losses
Amortization of long-term prepaid expenses
Loss on retirement of property, plant and equipment
Loss (gain) on sale of non-current assets
Loss (gain) on sale of investment securities
Loss (gain) on valuation of investment securities
Loss (gain) of derivatives
Gain on bargain purchase
Increase (decrease) in retirement benefit liability
Increase (decrease) in provision for appliance warranties
Interest and dividend income
Interest expenses
Share of loss (profit) of entities accounted for using
equity method
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Increase (decrease) in accrued consumption taxes
Decrease (increase) in accounts receivable-other
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Purchase of securities
Purchase of investment securities
Proceeds from sale and redemption of investment
securities
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of long-term prepaid expenses
Proceeds from sale of non-current assets
Payments for retirement of property, plant andequipment
Long-term loan advances
Proceeds from collection of long-term loans receivable
Net decrease (increase) in short-term loans receivable
Payments of guarantee deposits
Proceeds from refund of guarantee deposits
Purchase of shares of subsidiaries resulting in change
in scope of consolidation
Proceeds from purchase of shares of subsidiaries
resulting in change in scope of consolidation
Payments for acquisition of businesses
Other, net
Net cash provided by (used in) investing activities

Financial Data

(Million yen)2020.4.1-2021.3.31

67,476
165,615
28,152
4,263
2,164
244
(108)
18,643
1,073
–
5,206
(1,072)(7,763)
11,412

66,184
176,087
10,255
3,722
3,274(3,102)(5,283)
4,466
1,393(2,008)(2,918)(2,141)(3,984)
12,629(5,211)(1,482)

52,646
172
8,952
7,979
(1,619)(23,678)
334,549
14,510(11,087)(31,676)
306,296

5,126
18,6438,080(1,072)(6,242)
11,217
292,8447,843(12,630)(32,482)
255,574(55)–(23,989)(4,287)(1,200)(37,467)

1,916

16,573(177,664)(41,908)(2,183)282(172,652)(35,725)(2,456)
5,151

(36)

(1,043)(16,989)
4,853
530(2,709)1,855(11,831)
4,037(2,854)(6,957)
4,916(17,908)(32,579)

–

7,006

(393)
3,601
(270,798)(25,208)
667(295,911)2019.4.1-2020.3.31

Cash flows from financing activities
Repayments of lease obligations
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of bonds
Redemption of bonds
Purchase of shares of subsidiaries not resulting inchange in scope of consolidation
Dividends paid
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash
equivalents(2,414)51,035(35,981)
90,000(20,000)(131)(2,275)(27,839)(34,362)
23,171(26,449)(1,905)52,009(489)(5,088)Net increase (decrease) in cash and cash equivalents

58,1796,584

Cash and cash equivalents at beginning of period

93,032

151,2186

8151,218

157,811

Increase (decrease) in cash and cash equivalents resulting
from change in scope of consolidation
Cash and cash equivalents at end of periodTokyo Gas Integrated Report 2021
62

(2,646)
71,542(43,390)
90,000(30,000)

2020.4.1-2021.3.31

Management
Message

Introduction

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How We Create Value

Compass2030
Vision and Strategy

Invisible
Assets

TCFD

Corporate
GovernanceBusiness
Overview

Financial Data

Delayed Impact of Gas
Rate Adjustment System

Delayed Impact of Gas Rate Adjustment System
Gas Rate Adjustment System’s Medium- to Long-Term Neutralizing Effect on
Crude Oil Price and Exchange Rate Formation
Gas prices are determined using the gas rate adjustment system. Through this system, average
raw material prices over a three-month period according to trade statistics are compared withthe raw material cost that is used as the standard (standard average raw material cost), and thegas rates are adjusted using a defined calculation method based on the differences. A time lagof four months on average (called a sliding time lag) exists between the payment of raw material

costs and the reflection of such changes in gas rates.
Consequently, fluctuations in crude oil prices and exchange rates may result in the underrecovery or over recovery of raw material costs if this lag cuts across a fiscal year, thereby
affecting income. Looking at the medium- to long-term, however, the gas rate adjustment
system has a neutralizing effect on the income impacts of fluctuations in raw material costs.

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

How the Sliding Time Lag in Rates Works

Timing of standard average raw material cost calculation

Jan.

Feb.

Mar.

Apr.

May

Jun.

Jul.

Aug.

Sep.

Dec.

Average raw
material priceOver
recoveryUnder
recoveryAverage raw
material price

Average raw
material price

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

Jun.

Jul.

Aug.

FY N

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

Tokyo Gas Integrated Report 2021
63

FY N+1

Financial and Industry Data (EXCEL Spreadsheet Data Available)

Investors’ Guide
www.tokyo-gas.co.jp/IR/english/library/invguid_e.html

Quarterly Financial Results

Earnings Announcements
www.tokyo-gas.co.jp/IR/english/event/earn_e.html

Consolidated Financial Results Bulletin
www.tokyo-gas.co.jp/IR/english/library/earn_e.html

Tokyo Gas Co., Ltd.
INTEGRATED REPORT 2021
1-5-20 Kaigan, Minato-ku, Tokyo 105-8527, Japan
https://www.tokyo-gas.co.jp/en/index.html

Stock Code 9531
IR Contact E-mail:tgir@tokyo-gas.co.jp
Published on August, 2021
For inquiries regarding planning and editing of this report:
Investor Relations Sect., Finansial Management Dept.,
Tokyo Gas Co., Ltd.

Details of Corporate GovernanceCorporate Governance Reportwww.tokyo-gas.co.jp/IR/english/gvnnc/index_e.html

Sustainability activities

Tokyo Gas Group Sustainability Reporthttps://tokyo-gas.disclosure.site/en