TOKYO GAS GROUP
Integrated Report 2022

AMBITION

Moving on to the nextstage in realizing asustainable society
Today, the Tokyo Gas Group confronts dramatic changes in the business environment, changes that raise many issues related todecarbonization, digitalization, diversification of customers, and deregulation in the energy market.
To meet these changes head-on and remain as a corporate group integral to society, we have delineated a new Group’s Management
Philosophy. Acting as a driving force for achieving a sustainable society, we will constantly strive to build the future of people’s lives,
communities, and our planet under our new Group’s Management Philosophy.

Tokyo Gas Group Integrated Report 2022

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PURPOSE

Guided by our new Group’s Management Philosophy,
we will reinvent ourselves.
Group’s Management Philosophy

PurposeValuesStanding by every person and dedicating
ourselves to the society,we shall be the energy that weaves the future.
Challenge

Responsibility

Respect

Sincerity

We constantly challenge
ourselves and strive to learnsomething new.

We are always proactive andact with responsibility to bringout the best results.

We respect one another andvalue every possibility.

We sincerely care about the
future of our stakeholders andour planet.

Tokyo Gas Group Integrated Report 2022

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PURPOSE

We shall standby every person.
We promise.
We will be mindful of everyone in the world involved in our businesses anddiversify the ways we support and engage with them.

We shall dedicate
ourselves to thesociety.
We promise.
We will provide a more diverse range of value to a larger numberof beneficiaries and areas, so that we can continue to create andresponsibly maintain a better life for everyone.

Tokyo Gas Group Integrated Report 2022

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PURPOSE

We shall be the energy thatweaves the future.
We promise.
We shall contribute to the realization of an exciting,sustainable future for people and society.

“Weaving”“Being the energy”

We shall co-create value withvarious stakeholders to realize thebetter future.

We shall be the driving force insolving social issues throughvarious forms of energy.

Tokyo Gas Group Integrated Report 2022

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SOCIAL IMPACTS

Dedicate ourselves to the society and continue to maintain daily life for everyone.
This is our unchanging social role.

Energytransformation

Introduction andexpansion of LNG

Disaster prevention measures

Since it was founded in 1885, Tokyo Gas has
expanded the use of city gas for cooking, heatingwater and air conditioning for residential use,
as well as for heat, air conditioning and gas
cogeneration systems for commercial and industrialuse. We have also worked at raising efficiency
through area-based energy use, such as district
heating and cooling. These initiatives have been
extended overseas in recent years.

Due to intensifying pollution problems and risingdemand for energy, we introduced to Japan the useof LNG (liquefied natural gas), a clean and highly
efficient energy source, in 1969. The introductionof this sulfur-free, high-calorie energy has since
contributed to the reduction of air pollution and tostronger economic development. In recent years,
we have accelerated efforts related to carbonneutral methane.

We have built an earthquake-resistantinfrastructure, such as by making strong facilities
for the production and supply of city gas. We havealso established SUPREME—a disaster prevention
system to remotely cut off gas supply using seismic
sensors installed in high density. This system
immediately suspends gas supply to prevent
secondary disasters. We are also working on
dividing management of the pipeline networks into
blocks in order to minimize supply cut-off areas.

Tokyo Gas Network

Value created so far

Convenient and comfortable everyday life
Efficient use of energy
1885

Improved air pollution
Stable energy supply to support economic
development
CO2/SOx/NOx emissions from natural gas

2021(Based on coal as 100)

CO2

SOx

NOx

Minimizing supply cut-off areas by dividing
the pipeline networks into blocks
In order to minimize supply disruption, the medium- and low-pressure
pipeline networks are being divided into multiple blocks so that the gas
supply can continue except in severely damaged areas.

How we divide
pipeline networks

Development of disasterprevention blocks(illustration)(low-pressure networks)

Over 300

100
Customers

Customer accounts

Meters installed

343 households

12.48 million

12.2 million

80

100

100
68

57

71

0
Coal

Oil

Natural
gas

Coal

Oil

Natural
gas

Coal

Oil

20
37
Naturalgas

About 100

2009

2022

Tokyo Gas Group Integrated Report 2022

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SOCIAL IMPACTS

Dramatic changes in the business environment in which
the role of an energy company is put to the test
Group’s Management Philosophy

Standing by every person and dedicating ourselves to the society,we shall be the energy that weaves the future.
1

Compass2030

2

3

Lead transition to Net-Zero CO2

Establish a value co-creation ecosystem

Transform the LNG value chain

Responsibly lead the transition with gaseous
and renewable energy

Accelerate value co-creation via digitaltransformation and reinforced face-toface engagement

Improve each business’s earning power andresilience to change

Compass Action
Value to be created

While achieving advances in decarbonization,
we will continue to create and maintaina better daily life for everyone.

Tokyo Gas Group Integrated Report 2022

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SOCIAL IMPACTS

OutcomeCreating social value and economic value

Responsibly lead the transition withgaseous and renewable energy

Value creation via digitalization and faceto-face engagement

P.25

P.30

Transformations for achieving the targeted outcome
Transitioning to a holdings typegroup structure

P.33

Transforming human resources
system to one that encourages
challenge and diversity

P.37

Establishing core technology for
decarbonization of gas
and electricity

P.35

Tokyo Gas Group Integrated Report 2022

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TOKYO GAS GROUP

Integrated Report 2022
Contents
01 Introduction

09 CEO’s Message
13 How We Create Value
14 The Value Creation Process

Editorial Policy
45 Corporate Governance
45
50
52
53
54
55
57

Corporate Governance
Officer Remuneration System
Internal Control System
Compliance
Risk Management System
List of Executives
Messages from Outside Directors

15 Promoting Sustainability andMateriality

19 Overall Strategy
21 CFO’s Message
23 Progress of the Medium-termManagement Plan and KPIs
25 Challenge 1: Lead transition to
Net-Zero CO2
30 Challenge 2: Establish avalue co-creation ecosystem
32 Challenge 3: Transform the
LNG value chain

34 Invisible Assets
35
37
39
40

Technology Development
Diversity of Human resorces
Energy Security
Last Mile Operation of Tokyo Gas

41 Information Disclosure Based on
TCFD Recommendations

Tokyo Gas Co., Ltd. and Tokyo Gas Group companies (subsidiaries and affiliates) inJapan and overseas
Period covered
Fiscal Year 2021 (From April 1, 2021 to March 31, 2022; including information on some
activities prior to and after the period)
Cautionary statement regarding forward-looking statements

58 Business Overview
17 Compass2030

Organizations covered

59
60
61
62
63
64

Asset Optimization & Trading Business
Gaseous Energy Expansion Business
Solutions Business B2C/B2B
Solutions Business B2B
Global Business
Real Estate Business

65 Financial Data
65 10-Year Consolidated Financial Highlights
67 Consolidated Balance Sheets
68 Consolidated Statements of Income/Consolidated Statements ofComprehensive Income
69 Consolidated Statements of Cash Flows
70 Delayed Impact of Gas Rate Adjustment
SystemThe plans, forecasts, strategies, and other non-historical information contained in thisreport are forward-looking statements of the Tokyo Gas Group. These results are basedon the judgment of the management of the Tokyo Gas Group, which was based on
currently available information. Please note that actual results may differ significantly
from these forecasts due to various factors. Important factors that can affect actual
business results include developments in the Japanese economy and crude oil prices,fluctuations in temperature and the yen/U.S. dollar exchange rates, and the Tokyo Gas
Group’s response to rapid technological innovation and deregulation.
The Tokyo Gas Group publishes this report so that all stakeholders, including
shareholders and investors, better understand the feasibility of sustainable management
and increasing corporate value of the Tokyo Gas Group. More detailed information andthe latest information including news releases are available on the corporate website.
Investor Relations Website
https://www.tokyo-gas.co.jp/en/IR/index.html
Investors’ Guide (Financial Data and Industry Data) https://www.tokyo-gas.co.jp/en/IR/library/invguid_j.html
Financial Results Presentation Materials

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

Financial Results Bulletin

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

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

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

Tokyo Gas Group Integrated Report 2022

8

We will responsibly leadthe energy transition withgaseous and renewableenergyRepresentative Corporate Executive Officer,
President and CEO

UCHIDA Takashi

Moving to a holdings type group structure in
the era of VUCA

*VUCA: This acronym stands for volatility,
uncertainty, complexity, and ambiguity,and refers to a state of society in which
tremendous change is occurring andmaking it difficult to forecast the future.

The global economic outlook remains uncertain, clouded
by various factors such as concerns over current
international affairs, the increased volatility of the energy
market, and the lingering impact of the COVID-19
pandemic. Our world has truly entered what many are
calling the era of VUCA.*
Amid this economic environment, the Tokyo Gas
Group is proactively taking diverse actions guided by ourbelief that in a time of change, we must change
ourselves. In November 2019 November 2019, we set
forth the Tokyo Gas Group management vision“Compass2030” to chart the direction we should take inan era where our business environment is rapidlychanging, particularly with regard to trends such as
decarbonization, digitalization, diversification of customer,
and deregulation in the energy market. In June 2021, inorder to strengthen our corporate governance and toenhance our management transparency, we transitioned to
become a Company with a Nominating Committee, etc.
And, in April 2022, to a holdings type group structure
designed to further streamline our management
processes and accelerate our decision-making. One key
benefit of this transformation is that it transfers greater

Tokyo Gas Group Integrated Report 20229

authority to our internal companies and businesscorporations, endowing them with a high level ofautonomy in their management decisions—a step that is
expected to help advance their further growth. While thisstructure allows each business unit to stand on its own
feet and strive toward bigger profits, it also creates acentrifugal force in group management. On the other
hand, we believe that it is also vital to generate acentripetal force that will more firmly implant our sharedvalues in every employee so that we, as a group, canmove forward in the same direction. For this purpose, welaid out a new Management Philosophy for the Tokyo Gas
Group on April 1, 2022.

We will ceaselessly march forward, guided by
our new Group Management Philosophy
The new Management Philosophy consists of our
Purpose, which states who we are and why we exist, and
our Values, which are the priorities that guide our
employees’ actions.
“Standing by every person and dedicating ourselvesto the society, we shall be the energy that weaves the
future.” So declares the statement of our Purpose. But
who is “every person” that we stand by? Until now, wehave seen our customers as the main target of ourservices. What, then, is the “society” to which we
dedicate ourselves? In our traditional thinking, society
has been the communities to which we supply city gas.
However, these definitions have been greatly
expanded by our new Management Philosophy.
Now, “every person” refers to the many different
stakeholders associated with our businesses. It includes,of course, our customers, shareholders, and investors,
but it also comprises everyone across our supply chain—
the workers at our natural gas fields around the globe,
the people who transport liquefied natural gas (LNG), themembers of our partner organizations, and of course all
our Group employees. Moreover, to “every person” notjust in the present, but to encompass all future
generations. We believe that basing our actions on a

conscious awareness of everyone tied to our business
operations helps us to contribute more effectively to theachievement of the SDGs.
Meanwhile, our definition of “society” now includes
not only all of Japan, but also the international community,
as well as the various elements that support these societies.
We are thoroughly explaining this expanded concept toour employees as we endeavor to securely embed the
new Management Philosophy across our organization.
As for “we shall be the energy that weaves the
future,” energy here holds two meanings. One is energy
in the literal sense. Up to now, we have taken that tomean natural gas, but going forward it will also
encompass renewable energies, hydrogen and synthetic
methane, and other forms of energy that we will supply
to support society and to contribute to the realization ofa net-zero carbon society. The other meaning is that weourselves will be “the energy”, a driving force behind thedevelopment of a sustainable society.
Next, I would like to mention the four Values embodiedin our Management Philosophy. The first two, “Challenge”
and “Responsibility” have remained at the forefront of ourminds ever since we became the first company tointroduce LNG to Japan some fifty years ago. Now, weare strengthening our commitment to those values as wetake on the challenge of responsibly leading society andthe world to a net-zero carbon future. These two Values
are underpinned by the other two, “Respect” and“Sincerity,” which we have embraced since our founding.
Positioning these four Values as the mainstay for our
employees’ behavior and guided by our new Management
Philosophy, we will ceaselessly march forward to help bringsustainability to everyday life, communities, and the planet.

We have formulated “Compass Action” forrealizing our management vision
Compass2030, the management vision we announced in
November 2019, lays out three overarching challenges:
Leadership in the effort to achieve Net-Zero CO2,
Establishment of a value co-creation ecosystem, andTransformation of the LNG value chain. In October 2020,
roughly a year later, the Japanese government declaredthat it would seek to make Japan carbon neutral by 2050,
and six months later in the following April, announced thegoal of reducing greenhouse gas emissions by 46% in
FY2030. With these came the launch of sweeping efforts
toward decarbonization that have factored into thegrowing volatility of the energy market. In response to the
big changes in our business environment over the past
two years, we unveiled “Compass Action” in November
2021 to reaffirm the management vision by presenting
the detailed roadmap for its realization.
With regard to “leadership in the effort to achieve
Net-Zero CO2,” Compass Action states that we will
responsibly lead the transition with gaseous andrenewable energy. This means effecting a transition thatmaintains the stable supply of energy while remaining
both environmentally and economically sound. As welead the shift to carbon neutrality, we will uphold ourcommitment to S+3E.*
Compass Action’s plan for “establishing a value
co-creation ecosystem” involves accelerating value
co-creation via digital transformation and reinforced
face-to-face engagement. We will enhance businesses
that contribute to solving social issues by advancing
digital transformation and combining it with our strengths
in face-to-face engagement.
The path toward “transformation of the LNG value
chain” involves improving each business’s earning power
and resilience to change. Specifically, we are seeking toenhance our earning power across each business andbolster their resilience to the dramatic changes in ouroperating environment by carrying out a series oftransformations, such as the aforementioned actions tostrengthen governance and realign our organization.

We will boldly advance toward Net-Zero CO2 byenhancing sophisticated use of natural gas while
decarbonizing our gas and electricity supply
The Tokyo Gas Group is committed to playing its part in*S+3E: This is Japan’s basic energy policy. It envisions giving top priority to safety while working to simultaneously achieve the country’s goals in energy security, economic efficiency, and environment.
Tokyo Gas Group Integrated Report 202210

firmly establishing a net-zero carbon world by 2050. In
order for us to do so, we must pursue diverse forms ofinnovation that enable us to decarbonize our gas andelectricity businesses.
To decarbonize our gas operations, our Group islooking to develop methanation technologies and replace
the gas we supply with synthetic methane. However,given the current level of technology, it will requireconsiderable innovation to conquer the formidable
challenge of replacing a supply that measures tens ofbillions of cubic meters. Nevertheless, we must now
strive to move forward by peering into the future andstarting to develop the technologies we will need to getthere. At the same time, it is vital that we reduce ourcarbon emissions by leveraging existing technologies
and making effective use of natural gas. For example,
one step we can take is to reduce our customers’emissions by switching to natural gas in place of theother fossil fuels. In other words, while we fully exploit
the potential of natural gas utilizing best available
technologies and in doing so steadily reduce carbon
emissions, we also pursue development of forwardlooking technologies. These approaches will enable us tolead the transition to a net-zero carbon society.
Such innovation is also essential for decarbonizing
our electric power business. Since Japan is short on
suitable land for installing solar panels and wind turbines,
it is unlikely that these onshore renewables will beenough to generate the level of power needed to meetthe decarbonization goal. As a last resort in this case, weare currently developing technologies for floating offshore
wind power generations, which are better suited for thiscountry’s marine environment where there are limited
shallow coastal waters. Another challenge is that
renewable energies such as solar and wind power are
significantly affected by weather conditions, whichmeans the amount of electricity generated by them isvery unstable. While it is generally considered that
renewable power cannot be stabilized without
breakthrough innovation in large-scale storage battery

technology, progress can still be made with existing
technologies. Specifically, natural gas fired thermal
power plants and gas engines can act as the balancing
electricity source mitigating the volatility of renewable
powers. The conversion of conventional thermal power
plants to natural gas fired systems would significantly
lower carbon emissions, and thus promises to serve as apivotal solution for the decarbonization transition.
In the coming years, we will step up ourdecarbonization efforts not only on the supply side, butalso on the demand side. In our gas business, as we
pursue the aforementioned switching over to natural gas,
we are taking action to realize methanation that utilizes
the CO2 emitted by customers’ offices and factories. And,in our electricity business we are working to expand thedeployment of renewables on the demand side, including
by offering services that enable customers to efficiently
use electricity supplied from solar panels and storage
batteries that we install at their sites.
As these examples illustrate, we will boldly advancetoward Net-Zero CO2 by maximizing technologies at handand innovating future technologies, on both the supply
and demand sides of our businesses. That is what wecall “responsibly leading the transition.”

Achieving S+3E by supporting society with adecarbonized energy mix
It is widely believed that decarbonization can be achievedby shifting to renewable power and utilizing that electricity
to power everything we use in our daily lives, and putting
more electric vehicles on the roads. However, as I havealready indicated, electricity alone does not make for astable energy system, nor can Japan attain its S+3E vision
with this approach. Moreover, such a strategy prompts acritical concern—what do we do when a disaster or othercontingency causes a major power outage and there areno other energy sources we can rely on? However, if Gas
cogeneration systems that continue to operate at times ofpower outage are installed, we could generate electricity
as long as gas is supplied. Residential fuel cells could also

play a supporting role.
From the standpoint of energy resilience, it is desirable
for communities to have access to diversified sources ofenergy. Accordingly, the Tokyo Gas Group will seek out
decarbonization solutions for different forms of energy.

The Compass2030 management vision isadvancing smoothly and steadily
Let’s take a look at how progress is being made intackling the three challenges laid out by Compass2030.
We have only begun to implement initiatives towarddemonstrating “leadership in the effort to achieve NetZero CO2,” but those actions are firmly moving forward.
Notably, salient advances have been achieved in thedevelopment of methanation technologies. We
established a methanation plant at our Yokohama Techno
Station in Yokohama’s Tsurumi Ward, and have alreadylaunched demonstration testing of the methanation
process. The project will include demonstration testing of
methanation utilizing CO2 emitted from the city’swaterworks and garbage incinerators. In addition, we are
jointly carrying out a project with SCREEN Holdings Co.,
Ltd. to develop technology for rapidly and economicallymass-producing water electrolysis cell stacks, which are
the core component of a hydrogen production system.
Progress is also being seen in initiatives that we arecarrying out with diverse customers to reduce carbon
emissions through the use of natural gas. One example isthe commencement of Niihama LNG Terminal this spring,which we plan to switch the raw fuel to LNG for
Sumitomo Chemical Co., Ltd.’s Ehime Works (Niihama
City, Ehime Prefecture).
As for “transformation of the LNG value chain,” weare implementing various actions to further enhance thevalue of LNG. This includes not only its value as a raw
material for city gas or a fuel for power generation, butalso its value as a commodity to be traded.
The third, and toughest, challenge is “establishmentof a value co-creation ecosystem.” The key to successhere is to combine both digital and face-to-faceTokyo Gas Group Integrated Report 202211

engagement to co-create value with our customers. We
have turned to the UK’s Octopus Energy Group Limited
as an ally in this effort. Octopus Energy, which possesses
keen insights on digital technology and the retailelectricity industry, has attained dramatic growth bycreating new customer experiences through the couplingof digital technologies with expertise in efficient customer
service. In December 2020, we entered into a strategic
partnership with the group and subsequently establishedthe joint venture TG Octopus Energy Co., Ltd. Since then,we have co-developed diverse electricity tariffs cateringto the individual needs of customers across Japan andmade other improvements that we could not do on ourown. The result is that we are truly co-creating value withour customers.
Going forward, we will continue expanding ourportfolio of energy and services to meet the lifestyle andlife stage needs of customers.

Enhancing our long-term corporate value
through targeted investment in growth areas
The Tokyo Gas Group is investing roughly 2 trillion yen in
the growth areas outlined by Compass2030. In addition
to financing renewable energy, methanation, hydrogen,and other elements of Net-Zero CO2 initiatives, this money
will go toward growth areas in overseas projects and thereal estate business, as well as investments that will help
strengthen our risk tolerance vis-à-vis market volatility.
We will consistently evaluate each candidate forinvestment through the lens of our Management
Philosophy’s question: What is our purpose?
Our shift to a Company with a Nominating Committee,etc., which drew a clear line between our oversight andexecutive functions, has empowered the executive
leadership to make decisions on large-scale investments.
Needless to say, those leaders are expected to remain
accountable, as all investment choices will be monitored
to ensure that they are aligned with corporate policy.
Greater authority entails greater responsibility for our
executive officers, but this change will accelerate

decision-making and thus facilitate the investment
process, which is particularly important in overseas
projects, where speed is of the essence.
Meanwhile, we re-examined our policy on shareholder
returns last September and decided to change the total
payout ratio target from 60% to 50%. The resulting 10%
will be applied to growth investments in areas such as
Net-Zero CO2. This outlay promises to help advance ourgrowth over the long run and bear fruit in the lead-up to2030. I see that growth as a vehicle for rewarding ourshareholders, and so I hope that they will lend theirsupport to our long-term growth.
This fiscal year is the last in our current three-year
Medium-term Management Plan, which also means that
it is time to draw up the next plan. In order for us toattain our goals under extremely volatile market
conditions, it is imperative that we optimally leverage ourGroup’s assets to strengthen our resilience to change
and turn change into positive results. This will be a corefocus of our next Medium-term Management Plan.

On a final note about the current state of international
affairs, approximately 10% of our total LNG imports
comes from Sakhalin in Russia. This represents asignificant percentage in terms of our ability to maintainthe stable supply of energy. We will continue to closely
coordinate with the Japanese government and relevantorganizations, while also exploring measures that may
need to be taken in the event of contingencies that
impact supply or demand.
The Tokyo Gas Group’s greatest strength continues tobe its brand value of Safety, Security, and Reliability,
which we have built up over our more than 130-year
history together with our customers and otherstakeholders. The many uncertainties we face today will
not keep us from fulfilling our commitment to ensuringsafety, maintaining the stable supply of energy, andcontributing to the world’s future through our tackling of
new challenges in Net-Zero CO2 and other areas. We
hope that you will continue extending to us yourunderstanding and support.

Tokyo Gas Group Integrated Report 2022

12

How We
Create Value
Tokyo Gas Group Integrated Report 2022

13

The Value Creation Process
Outcome

OutputManagement
Philosophy

Fiscal 2021 results

P.45

0

De

cisio

Co

n-making

mp

as

s

m
Co

re m

E x ec uti on

ut

Sol
Su

tio n

Pr

en

ly

Segment
profit¥102.6 billion

Segment
sales¥467.8 billion

Segment
profit¥11.1 billion

Segment
sales¥85.9 billion

Segment
profit¥28.2 billion

Energy-related
Segment
sales¥331.3 billion

Segment
profit¥12.8 billion

e

t

nag

dgm

od

uc

P.34

um-term Ma(Invisible Assets)

Medi

Core
competencepp¥1,444.0 billion

Overseasent

io

P ro c u
ns

5
P. 2

e chainVa l uSegment
salesElectricity

Ac

n

pa

03

Strategy

7
P.1

me
n

tP

la

n
23
P.

M o nito rin g

Real estate
Segment
sales¥57.9 billion

Segment
profit¥13.4 billion
Other

P.15

KPI

P.23

P.2

Segment
sales
Segment
profitChanges inthe external
environment

Mid-Term Plan targets
for Fiscal 2022

Compass2030

Gas

tio

s2

S itu atio n al ju

Specifying Materialities (key sustainability issues)Standing by every person and dedicating ourselves to thesociety, we shall be the energy that weaves the future.

s

GovernanceFiscal 2021 results¥107.5 billion¥2.0 billion

Creation of safe living of customers
Reduction in energy cost
Contribution to the global environment
Creation of comfortable living ofcustomers

Contribution to CO2 emissions reduction

5.39

million tons

6.5

million tons

17.0

million tons*1

Renewable power source transaction volume

1.498

million kW

2.0

million kW

6.0

million kW*2

Number of customer accounts

12.48
million

14.80

20.0

millionmillionNatural gas transaction volume

19.18

million tons

17.0

million tons

20.0

million tons

Operating profit + Equity method income¥121.5billion¥140.0billion¥200.0billion*1: The Compass2030 initial target: 10 million tons (Japan only)*2: The Compass2030 initial target: 5 million kW
Decarbonization

Changes andincreased diversity
in customers’
valuesDigitalization

Deregulation inenergy market

Tokyo Gas Group Integrated Report 2022

14

Promoting Sustainability and Materiality
Approach to promoting sustainability
Achievement of asustainable society

Contribution

Business
activities

Social value

Financial value

Value creation

Profit making

High

FY2020-2022 Materiality
Leadership in theeffort to achieve
Net-Zero CO2

Climate change
Access to energy
Safety and disaster
preparedness
Creation of customer valueSound
relationships withsociety esource efficiency andRrecycling society
Establishment of relationships
with communities
Diversity & inclusion
Satisfaction through workand labor productivity

Actions as a
responsible
company

Supply chain management
Information security
Governance and compliance

Enduring corporate management
Provisionof value

Expectations
and requests

Stakeholders

Sustainability Promotion System
As an important management issue,
sustainability is being discussed in acommittee that supports rational
decision-making by Corporate
Executive Officers. In addition, theSustainability Committee, chaired by
the President, has been established toact as a leader in implementing andpromoting sustainability management
across the entire Group, and to reportimportant matters to the Board of
Directors.

With reference to the guidelines,
issues to be considered are assessedby indicators on two axes:“Stakeholder expectations” and“Social impact of organization andbusiness,” and then are specified asmateriality.

Stakeholder expectations

The Tokyo Gas Group’s approach topromoting sustainability is tocontribute to the achievement of asustainable society by creating socialand financial value from the solutionof social issues through our businessactivities, and by engaging in enduringcorporate management. Taking thisapproach, we are working on materiality(key sustainability issues) through ourbusiness activities, in conjunction with
our aim of carrying out ESG-focusedmanagement and broadly contributing
to the realization of the SDGs.

Specifying materialities

Material
issuesRecognized issues
 reatment of emissions,Twater discharge, andtreatment of waste
Biodiversity

Board of Directors, Directors
SuperviseSocial impact of organization andbusiness

ReportRepresentative Corporate Executive Officer, President and CEO
Corporate Executive Officers
Committee supporting rational decisionmaking by Corporate Executive Officers

Oversee

ReportSustainability Committee
Chair President

Departments
ManageReportSubsidiaries

High

Response to water risks
 ccupational health andOsafetyDevelopment of good labormanagement relations

 ppropriate information
A
disclosure roper management ofP
intellectual property rights
Appropriate involvementin public policies
Economic performance

Process for specifying materialities
STEP

Comprehensively extract issues to be addressed,

1

Sort social issues referring to international guidelines.

STEP

Prioritize

Assess and prioritize issues graphically depicted on two axes to identify
important issues.

Confirm Validityand decide

Have experts assess the validity of the identified important issues, andspecify these as materialities.Decide these with the confirmation in internal
meetings.

Review

Conduct activity assessments on the materialities and disclose. Review it
considering the opinions of stakeholders.

2

Themes discussed at the Sustainability
Committee in FY2021

STEP

 hanging trend concerning climate change
CChanging trend concerning biodiversity
Anticipated social trend up to 2050
Values of future generations and their market characteristics
Strengthening of non-financial information disclosure

STEP

3
4

Tokyo Gas Group Integrated Report 2022

15

Relationship between materiality and the SDGs
Materiality

Climate change

Access to energy

Leadership in theeffort to achieve
Net-Zero CO2

Safety anddisaster
preparedness

Relevant SDGs

Case

Resource
efficiency andrecycling societySoundrelationships withsociety

Establishment ofrelationships with
communities

2

Promoting resource efficiency and fostering a
recycling society

In order to foster a recycling society, we are engaged in resource recycling at each stage of ourbusiness activities, including the recycling of gas meters and used gas pipes, and the collection
and recycling of disused gas appliances.
Reuse and recycling of gas meters

Collection and recycling of gas appliances

Gas meters are used for three cycles(two instances of replacement and reexamination of wear parts) for a usefullife of up to 30 years, and then are
recycled as metal materials.

We are working to collect and recycle used
gas appliances and waste materials generated
through customer-induced replacement, gasconstruction and renovation work.

About

400,000
Diversity &inclusion

Preparing for climate change (adaptation)

As part of adaptation to climate change, we are taking
measures against water-related disasters such as torrential
rains and high tides. At LNG terminals, facilities are being
raised and water-tight doors are being installed to protect
electric facilities. Meanwhile, Tokyo Gas Network is dividing
its pipeline network into smaller blocks to minimize gas supply
suspension areas which may get liquefied. In addition, abusiness continuity plan (BCP) on the assumption of wind or
water damage has been prepared to ensure gas supply andsafety.

CaseCreation ofcustomer value

1

Tokyo Gas Network

Collect waste while delivering

Recycling
rate

94.3%

metersRecycling
rate

100%

Satisfaction
through work andlabor productivity
Procurement Manufacturing

Equivalent to approx.
43,000 units
of ENE-FARM

SupplyFinal
disposal

Energy solutions

Supply chain
management

Actions as a
responsible
company

Recycling of gas pipes (polyethylene pipes)
Information
security
Governance andcompliance

Recovered disusedpolyethylene pipes are
reduced to pellets andrecycled as plastic materials,
and then reused for gas
meter instruction cards, etc.

Tokyo Gas Network
Equivalent toapprox.

390 kmof 50mm pipes

Recycling
rate

100%

* Preliminary data for FY2021
Tokyo Gas Group Integrated Report 2022

16

Compass2030
Tokyo Gas Group Management Vision

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

VISION
What we aim to be in 2030

Our goal will be a business group which continues to create
value together with our customers, business partners andsociety as a whole while becoming a leader in the futureenergy systems.

Tokyo Gas Group Integrated Report 202217

Three challenges for achieving the Vision

ge

1:

Le

en

all

nge

Tradingtem

CO 2

C h a ll eneroContribution to CO2 emission
reductions (base year: FY2013)5.39 million tons

17.00 million tons*1

Renewable energy transaction volume

1.498 million kW

Natural gas transaction volume (FY)

v

t-Z

2030
Approx. ¥200.0 billion

No. of customer accounts (FY-end)

ie

ti o

Production
and power
generation

Company portfolio in 2030: Profit level¥121.5 billion(FY-end)ch

Challenge 3:
Transformation of
the LNG value chain
Network

Management guidelines and key figures

Profit level

-cr
ea

ys

CustomersolutionsCompass2030
FY2021 results

the effort to
ip in
a

os

ad

sh
er

e n t o f a v al u e c o

Ne

Ch

t

shm

ec

2

s
:E

li
ab

e

Tokyo Gas has pioneered the era of natural gas for half a century since introducing and spreading
the use of LNG in Japan. We are now in the opening phase of another new era of transformation forJapan—an era of great changes such as associated with decarbonization, digitalization, changing
and diversifying customer values, and regulatory liberalization in the energy market. The years
up to around 2030 will be a period that questions how energy and energy-handling companies
should be. On November 27, 2019 we therefore formulated a management vision Compass2030,
to function as a direction-indicating guide that can show us which roads to follow in this uncertain
era, looking ahead over the next half century.

6.00

Overseas* 3
Solutions, etc.* 4
Energy* 5(Gas + Power)

Approx.

¥200.0 billion
25%
25%

*

million kW 2

12.48 million

20.00 million

19.18 million tons

20.00 million tons

50%
2019

2030

At the time of formulation of
the management vision*1: The Compass2030 initial target: 10 million tons (Japan only) *2: The Compass2030 initial target: 5 million kW *3: Overseas: All overseas businesses*4: Solutions, etc.: Energy-related, real estate, other *5: Energy: Gas and electricity business in JapanTokyo Gas Group Integrated Report 2022

18

For achieving the Vision

Our strategy(Compass action)

Three challenges for achieving the Vision1

Lead transition to
Net-Zero CO2

2

Establish a value
co-creation ecosystem

3

Transform the
LNG value chain

Tokyo Gas Group Integrated Report 2022

19

Challenges to accelerate for achieving the Vision
Accelerate value co-creation via
digitalization and reinforced face-to-faceengagement

Responsibly lead the transition withgaseous & renewable energy

Improve each business’s earning power
and resilience to change

Compass Action (Actions for achieving the Vision: 2020-2030)
Transform into the top leader at theforefront of the transition

Transform into the energy market’s
digital marketing front runnerTransform into corporate culture thatenhances the earning power of each business

Create value chain for
carbon-neutral methane

Evolve into the No. 1 player in customer
satisfaction through value co-creation at the last-mile* 1

Shift to a human resources system that encourages
pursuit of challenges in ways that leverage diversity

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

Transform into a provider of solutions forcommunity challenges

Pivot to a financial strategy that
promotes growth investing

Medium-term Management Plan (FY2020-2022) based on the Vision
Key Strategies
Strengtheningof businessfoundation

Evolution of customer solutions

Expansion of LNG business

Implementation of cost structure reform

Acceleration of overseas businessContinuation of DX * 2

Shaping of Net-Zero CO2

Establishment of flexible organization towards changes

KPI
CO2

No. of customer accounts

Natural gas transaction volume

Segment profit from Overseas
Business

Renewable energy
transaction volume

Contribution to CO2emission reductions

Progress of the Medium-term Management Plan and KPIs

Cost structure reform

P.23*1: Last mile: Site operations that require human intermediation in the final process of the value chain*2: DX: Digital transformation. The use of data and digital technologies to transform products, services and business models based on customer and societal needs,
and also transform work operations themselves as well as organizations, processes, and corporate culture and climate.

Tokyo Gas Group Integrated Report 2022

20

Tokyo Gas will invest in growth areas while
ensuring asset efficiency and financial soundness
We have increased sales and profits by better
procurement of raw materials and expansionof overseas business
In FY2021 (ended March 31, 2022), the businessenvironment was severe especially due to rising raw
material costs. However, we made fastidious adjustments
in supply and demand conditions of LNG, such as
improving the accuracy of demand forecasts and utilizing
the flexibility of the assets we hold, and we were able tocontrol to a high degree the procurement of LNG in the spot
market where prices were rising. As raw material prices
and demand are fluctuating more dramatically at this time,
management of these risks has become a major issue.
We believe that we benefited from our procurement
portfolio being centered on long-term contracts and throughour efforts of the past few years to improve the optimizingof operations through supply and demand adjustments, andthis has led to the superiority of raw material procurement.
In the overseas segment, rising resource prices led tohigher profits from the upstream business in Australia andalso to higher profits from the shale gas business in North
America due to a company that became a consolidated
subsidiary in the 3Q of FY2020. This resulted in asignificantly high increase of 625.2% in profits over theprevious fiscal year.
Consequent to these results, our profits and revenues
in FY2021 increased from the previous fiscal year andfrom the initial plan.

We will consolidate efforts for success of theMedium-term Management Plan, including
optimization of LNG supply and demand, andimplement cost structure reforms, to achieve
our profit targets
In FY2022, the final year of the three-year Medium-termManagement Plan, our latest plan of 143.5 billion yen insegment profit (operating profit + equity method profit)
exceeds the target in our Mid-term Management Plan.
We know that we are facing similar challenges as in theprevious year, such as the rise in crude oil and LNG
prices caused by the destabilization of the internationalsituation. However, we believe that our profit forecast is
sufficiently achievable, given that the efforts over the
Medium-term Management Plan period such as
optimization of LNG supply and demand as well as cost
structure reforms are already bearing fruit.
As a driving factor behind the profit increase, our initial
forecast of 25.3 billion yen in segment profit for the ElectricPower Business exceeds its profit level of the past few
years, due mainly to an increase in wholesale electricity
sales volume. The Overseas Business is also expected toincrease profit to 37.4 billion yen, with a contribution by
an increase in profit from the upstream business inAustralia, mainly due to the rise in crude oil prices.
On the other hand, ROE and ROA—the financial
indicators set forth in our Medium-term Management
Plan, are currently expected to be below our targets. The
main reason for this is the increased size of the assetsthat have been driven by aggressive business
investments over the past few years. As we aim tobalance profit growth and asset efficiency improvement,
we will introduce new management controls at each of
our internal companies and business corporations under
the holdings type group structure, which was launched in
April. In FY2022 we will start using an advanced Profit/
Loss (P/L) management approach designed to improvethe earning power of companies and businesscorporations. From the next fiscal year onwards, we
intend to develop this into a Balance Sheet (B/S)
management arrangement and aim for each company
and business corporation to improve asset efficiency
through changing the makeup of its own business assets
and other means.

Managing Executive Officer and CFO

SATO Hirofumi

Tokyo Gas Group Integrated Report 2022

21

By 2030, we will invest approximately 2 trillion
yen in decarbonization and other growth toraise profits to approximately 200 billion yen
Compass Action, which is a detailed roadmap for achieving
Compass2030, states the plan calls for investing around 2
trillion yen in growth areas by 2030, including approximately
700 billion yen in the decarbonization area, such as forrenewable energy and hydrogen-related technology
development. In order to carry out these investments, wemust simultaneously address many challenges, including
the financial arrangements, ensuring financial soundness,and improving asset and capital efficiency.
Above all, we need to increase operating cash flow, orin other words, earning power. It is essential to nurturebusinesses to compensate for the decrease in gas sales
profits caused by liberalization, and we have made many
strategic moves to achieve this. For example, one move
was to enable the Electric Power Business to reach 30
billion kWh in electricity sales volume and 3 million in thenumber of retail customers. The Overseas Business andthe Urban Development Business have also grown tobecome profit pillars. In addition, the Network Business,
which was spun off in April this year, is expected to makemore bold efforts than ever to improve work efficiency via
DX and to review operations in line with the changing
times, thereby enhancing its earning power. Based onthese initiatives, we will add investment opportunities thatearly contribute to profitability, and aim to achieve the 200
billion yen profit target for 2030.
Some of the investment capital will be externallyfinanced. In recent years, we have been actively making
use of low interest rates but as interest rates have shiftedto a rising phase, we need to devise various newmeasures. We intend to try new methods such as thefurther utilization of transition bonds, which was firstissued in March of this year, and the liquidation of assets
to ensure financial soundness and improve asset efficiency.

We aim to improve corporate value over the
medium to long term by allocating 10% of the
return to investment in the decarbonization area
In response to the Japanese government’s 2050 Carbon
Neutral Declaration in October 2020, we decided to makeTargeted investment in growth areas

Financial strategy supporting investment

Shift investment to decarbonization & other growth areas,and place capital aggressively

 upport growth investing by enhancing investment/capital efficiency and byS
employing effective cash flow management to secure sufficient investment capital(early investments in decarbonization + active investment in other growth areas)

Strengthen business platform by implementing reforms in first half of 2020s,
achieve profit growth from investments in the second half

By 2030:
Invest approx. JPY2 trillion in decarbonization & other growth areas
Targeted investment in growth areas

Profit(JPY100 mln)
2,000

FY2021
profit actual:
JPY121.5 bln

1,000

2021

Implement reforms tostrengthen businessbase

our target year of achieving Net-Zero CO2 earlier, to 2050.
In line with this, we have revised our shareholder return
policy and have lowered our target for total return ratio
from 60% to 50%. The reduction of 10% will be used as
quickly as possible as a source for investment inhydrogen and methanation. We are committed tosustainable development by contributing to therealization of a decarbonized society, and to rewarding
our shareholders through the improvement of medium- tolong-term corporate value. We will continue our efforts togain the understanding of our shareholders.
Going forward, various SDGs beyond the preventionof global warming need to be addressed but what we
think critically important is to align these with thesustainable development and corporate value
improvement of the Tokyo Gas Group. We will further
strengthen the disclosure of non-financial information
through integrated reports, etc., so that our efforts andcorporate value will be properly evaluated.

Gain profits fromgrowth investing

Investment efficiency
1) Disciplined investment: elective investment to maintain financial
Ssoundness
T horoughly evaluate risks and returns in eachproject3) Financing:

FY2030 profit:
approx.
JPY200 bln

M onitor total interest-bearing debt vs. cash flow
 ctively use green financing and other new
Afinancing methods

Financial soundness

2) Business portfolio management:
 ell/replace assets with little prospect for selfSsustained growth
Concentrate resources on targeted business areas

4) Shareholder returns:
 rovide timely returns to shareholders on shortP
term performance rovide returns driven by medium-termP
enterprise value improvements

Capital efficiency

2030

Tokyo Gas Group Integrated Report 2022

22

Progress of the Medium-termManagement Plan and KPIs
Project portfolio
composition: Operating
profits + equity method
incomeOverseas* 1
Solutions, etc.* 2*

Energy 3 (gas + electricity)

Medium-term Management Plan

5%36%

FY2020 results

CO2

KGI

This KPI has been set as an indicator toquantify the expansion of business with LNG
as a commodity, including LNG trading andthe overseas LNG business, in addition todomestic gas sales.

Financial indicators

Natural gas
transaction volume
Segment profit from
Overseas BusinessThis KPI has been set as an indicator tomeasure the growth of our overseas business,
which drives future profit, toward its target.

Contribution to CO 2
emission reductions

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.

Renewable energy
transaction volume

This KPI has been set as an indicator toquantify the increased use of renewable energy
power sources and business expansion.

Cost structure reform

This KPI has been set as an indicator tomeasure the effects of our efforts to drasticallyreview operations and their structure, which
create resources for growth to be allocatedto immediate profit contribution and key
strategies.

Operating profits + equity method
income

25%

23%
23%

28%

54%

60%

50%

FY2021 results

FY2022 Medium-termManagement Plan

Management guidelines
and key figures in
Compass2030

Approx. ¥200.0 billion

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

25%

12%

59%

No. of customer
accounts

Compass2030¥79.1 billion¥121.5 billion¥140.0 billion

ROA

1.9%

3.0%

Approx.4 %

ROE

4.3%

7.5%

Approx.8 %D/E ratio

0.92

0.99

Approx.0.9

12.31 million

12.48 million

14.8 million

20 million

18.20 million tons

19.18 million tons

17.0 million tons

20 million tons—

KPI
No. of customer accounts (as of theend of FY)
Natural gas transaction volume (per FY)
Segment profit from Overseas
Business (per FY)¥3.8 billion¥28.2 billion¥16.0 billion

Contribution to CO2 emission reductions(as compared to FY2013 levels)

6.68 million tons

5.39 million tons

6.5 million tons

17 million tons* 4

Renewable energy transaction volume(as of the end of FY)

1.383 million kW

1.498 million kW

2.0 million kW

6 million kW* 5-¥12.0 billion reduction -¥21.0 billion reduction-¥30.0 billion reduction

Cost structure reform (compared to
FY2019)—*1 Overseas: All overseas business *2 Solutions, etc.: Energy-related, real estate, other *3 Energy: Gas and electricity business in Japan *4: The Compass2030 initial target: 10 million tons (Japan only) *5: The Compass2030 initial target: 5 million kW
Tokyo Gas Group Integrated Report 2022

23

Results to date of the Medium-term Management Plan
Medium-termManagement Plan

Key Strategy (1)Evolution of customer
solutions

Key Strategy (2)Expansion of LNG
business

Key Strategy (3)Acceleration ofoverseas businessPress
releasemonth and
year

Progress in Key Strategies and Enhancement of Business Base

Medium-termManagement PlanPress
releasemonth and
year

Progress in Key Strategies and Enhancement of Business BaseAug. 2020

Tokyo Gas acquisition of wood pellet biomass power generation facilities in Toyama
and Chiba Prefecture

April 2020

Established Ekimachi Energy Create Co.,Ltd. with East Japan Railway Company

June 2020

Tokyo Gas venture Sumilena Co.,Ltd. initiated fixed monthly fees for appliance rental

Oct. 2020

Launched the “Hinatao Solar” solar energy service for condominiums and buildings

Nov. 2020

Tokyo Gas to Join Joint Venture for Offshore Wind Projects in Japan (Chiba
Offshore Wind Inc.)

Dec. 2020

Formed a strategic alliance with Octopus Energy Group Limited (U.K.)
and established TG Octopus Energy Co., Ltd. (February 2021)

Mar. 2021

Establishment of a Carbon Neutral LNG Buyers Alliance

April 2021

Established Tokyo Gas Nomura Real Estate Energy Co.,Ltd., for supplying energy
to the Shibaura 1-Chome Project

April 2021

Acceleration of the Development of Kashima Port Offshore Wind Project

May 2021

Launched “Tokyo Gas Housecleaning” service

May 2021

Tokyo Gas and SCREEN Agree to Jointly Develop a Water Electrolysis Cell Stackfor Low-cost Green Hydrogen Production

July 2021

Reached a basic agreement with JT Group to take over its software business,
which holds the top share of its market segment in Japan

June 2021

Launched “Sasutena Denki,” an electricity rate plan with 100% real renewable energy

Nov. 2021

Launched “EVrest” EV charging service for housing complexes

July 2021

Launch of Commercial Solar Power Operations Begins in Iwakuni, Yamaguchi Prefecture

Nov. 2021

Signed a business alliance agreement with The Kansai Electric Power Co., Inc. for
VPP business using decentralized energy resources

July 2021

World’s 1st! Commence Manufacturing of CO 2 -absorbing Concrete that Uses
Exhaust Gas Emitted During the Use of Cit Gas Devices

Feb. 2022

Full-scale entry into plumbing-related repair!
Launched high-quality, reasonable-price “Tokyo Gas Repair Service”

July 2021

Commencing hydrogen demonstration experiment using megawatt-class waterelectrolyser

Sep. 2021

Produced Japan’s first potassium carbonate using CO2 from city gas devices

April 2022

Tokyo Gas launches Demand Response services and delivers one-day
worth of renewable energy-based electric power-Commemorating about 3 million electric power contracts, Tokyo Gas is weaving asustainable future with customers-

Oct. 2021

Introduced carbon-neutral city gas in Tokyo’s Marunouchi district, as the largest
project of its kind in Japan

Oct. 2021

Jointly implemented the Sakaide biomass power generation project

June 2020

Receiving the First Commingling LNG Cargo at Hatsukaichi LNG Terminal

Sep. 2020

Establishment of the ‘‘TG Global Trading’’

Nov. 2021

Started feasibility study toward creation of carbon-neutral methane supply chain
with Petronas, Sumitomo Corporation and Mitsubishi Corporation

Mar. 2022

Started the supply of LNG from the Niihama LNG terminal
Jan. 2022

May 2020

Tokyo Gas Invests In Principle Power, A Leading Floating Wind Power Technology
Company

Tokyo Gas selected as the prospective recipient in NEDO’s Green Innovation Fund
Project / Offshore Wind Power Cost Reduction Project (for the development of lowcost technology for manufacturing and installing floating foundations)

July 2020

Tokyo Gas Acquires Oil and Gas Assets in Louisiana Through Castleton Resources
and Takes Majority Interest in Castleton Resources

Mar. 2022

Launched demonstration testing of the methanation process toward achievingcarbon neutrality and a decarbonized society by 2050

July 2020

Establishment of a Subsidiary in the United States and the Acquisition of a 500MW
Solar Power Project (Aktina)

Mar. 2022

Participated in the dedicated biomass combustion power generation project in
Sendai City, Miyagi Pref

Oct. 2020

Signing of a Joint Cooperation Agreement with First Gen to Pursue Construction
and Operation of Interim Offshore LNG Terminal in the Philippines

April 2022

Tokyo Gas selected as the prospective recipient in NEDO’s Green Innovation
Fund Project / Development of Fuel Manufacturing Technology using CO2 etc. (forinnovative technology for synthetic methane)

June 2022

MOU Signed with Shell for Joint Exploration of Decarbonization Accelerate various
types of decarbonization solutions, including synthetic gas, hydrogen, and CCUS

June 2021

Transition to a Company with a Nominating Committee, etc

April 2022

Announcement of Group’s Management Philosophy

April 2022

Tokyo Gas Network Co., Ltd. began business operation

Nov. 2020

Investment in gas distribution company in Indonesia

Aug. 2021

The Aktina Solar Power Project in the U.S. began partial operation (150 MW)

Sep. 2021

Tokyo Gas to divest its share in MT Falcon Holdings

Oct. 2021

Establishment of the Joint Venture with the PTT Group Company-Promotion of Decarbonization through On-site Energy Service Businessincluding Improving Efficiency Technology Solutions and Fuel Supply in Thailand -Jan. 2022

Establishment of a subsidiary in Denmark and joint development of renewableenergy in the Nordics through business collaboration with EWII S/IKey Strategy (4)Shaping of Net-Zero CO 2

Key Strategy (5)Strengthening ofbusiness base:
Implementation of cost
structure reform; DX;
and Establishment of aflexible organization

Tokyo Gas Group Integrated Report 2022

24

Challenge

1 Lead transition to Net-Zero CO2Parallel with the strengthening trend toward carbon neutrality,
expectations are increasing for LNG and natural gas as a promisingtransitional energy. As a leading company responsible for the stablesupply of energy, the Tokyo Gas Group recognizes that its social
mission is to meet the expectations and to lead transition to acarbon-neutral society with a down-to-earth sense of reality.
Taking advantage of our Group’s strengths in dealing withmultiple transitional methods and in the Group’s solution capability
on both the supply side and the demand side, we are determined toresponsibly lead the transition with gaseous and renewable energy.

Compass Action

Responsibly lead the transition withgaseous and renewable energy

Goals for 2030 and 2050: Conceptual diagram

Two perspectives toward transition to Net-Zero CO2

CO 2 emissions

Emissions that would have occurred without the intervention of Tokyo Gas Group

Contribute to CO2 emissions reduction ofsociety as a whole.

CO2 reduction
contribution

17 million tons
in 2030(vs. FY2013)

By expanding low-carbon or decarbonized products and services,
we will achieve CO2 reduction contribution of 17 million tons by 2030
(vs. FY 2013)

CO 2 emissions of society as a whole

In order to promote reduction of actual
emissions by society as a whole, theTokyo Gas Group’s emissions (mainly
Scope 3) may temporarily increase
through fuel switching to natural gas, etc.

Reduce CO2 emissions of
the Tokyo Gas GroupWe will achieve Net-Zero CO2 in 2050.
And we will achieve Net-Zero in-house emissions by 2030.

CO2 emissions by the Tokyo Gas Group* (Scope 1, 2 and 3)

Approx. 37.75 million tons
(Figure for FY2021 result)

Net-Zero CO2
in 2050

We promote a transition that maintains
the stable supply of energy whileremaining both environmentally andeconomically sound.
2020

2030

2050

* Including the amount of absorption (CCUS and forests) and offsetting by carbon credits.
Tokyo Gas Group Integrated Report 2022

25

Compass Action Responsibly lead the transition

Roadmap for transitioning to carbon neutrality
We will achieve a carbon reduction contribution of 17 million tons by 2030* across all our business activities worldwide
We will lead the transition to carbon neutrality by developing strengths in gas/electricity decarbonization technologies and expanding the deployment at customer sites*Compass2030’s original target was 10 million tons in Japan only.

2030
Reduction contribution:
17 million tons

Accelerate transition

Growth of the potential and role of LNG/natural gas (Respond to volatility stemmingfrom increased use of solar & other renewables; fuel switching needs to gas)

Sophisticated use

Phase for achieving decarbonized society

Expand deployment ofcarbon-neutral methane

Expand commercial use of CCUS*3

Develop & expand CCU*2

Carbon-neutral methane: Transition to large-scale & high-efficiency methanation and commercial use
Launch small-scale pilot projects

Implement medium-/large-scale pilot projects

Expand commercial use

Hydrogen: Establish practical, affordable hydrogen production technologies
Develop technologies for low-cost hydrogen production

Electricity

Creation of newstrengths

Deployment of decarbonized energy in society.

(Methanation pilot projects, offshore wind farm operation) (Commercial scale methanation ; expand use of renewables)

Increase provision of carbon-neutral LNG (CNL)*1 / Expand use for balancing renewable power

Gas

Decarbonize
gas &electricity

2050

Advance toward carbon neutrality

Switch from coal, oil, etc. to natural gas as fuel, introduce cogeneration systems, develop
smart cities, strengthen resilience in Japan and global markets
Contribute to CO2 reduction at customers

Use natural gas
as low-carbon
solution

2040

Put low-cost hydrogen production technologies into practical use

Expand renewable power sources
Increase solar, wind & biomass power generation
Develop low-cost technologies for constructing floating offshore wind power

Realize practical deployment & increase scale

Achieve zero emissions in our thermal power generation
Explore use of hydrogen & ammonia (including procurement)

Reduce in-house
CO2 emissions

Achieve net-zero CO2 in city gas production
Achieve net-zero CO2 in our buildings, etc.

Thorough elimination

Switch company vehicles to HEV, FCV & EV*4

Implement at our facilities: Ultra high-efficiency fuel cells, Solar power generation (self consumption), CCU, CNL, etc.

Deploy at timing of replacement

Net zeroin houseemissions*1: A type of LNG that is deemed carbon neutral as greenhouse gas emissions generated by the processes from natural gas exploration to combustion are offset with carbon credits received on forest conservation projects, etc.
*2: Carbon capture & utilization*3: Carbon capture, utilization & storage*4: Hybrid electric vehicles, fuel cell vehicles & electric vehicles

Tokyo Gas Group Integrated Report 2022

26

Compass Action Responsibly lead the transition

Sophisticated use of natural gas: Transitioning from low-carbon to decarbonizedDuring the transitional period, we will contribute to reduce CO2 emissions at domestic & overseas customer sites by promoting fuel switching, smart city development,
carbon-neutral LNG, and CCUS
We will firmly lead the transition while containing the social costs of low carbon and decarbonization, responsibly ensuring the stable supply of energy.

Our Group’s strengths: A proven track record in using natural gas for lowcarbon solutions and know-how in optimal energy management
Contributing to CO2 reduction by use of Natural Gas during transition

Expanded deployment ofcarbon-neutral methane(See the next page for details)

CO2 emissions
in society

Decarbonization

Switching to natural gas as a fuelSophisticated smart energy networks

 witch fuels used in manufacturing industries* 1
Sfrom coal, oil, etc. to natural gas (a shift to lowcarbon in a heat use which accounts for approx.
70% of Japan’s final consumption of energy)
Introduce high-efficiency equipment

 tilize digital tools in the use of electricity and heatU
(optimized operation based on collection and analysisof data on heat load, operating condition, etc.)
Establish area-wide optimized operation combining
natural gas cogeneration, renewables, fuel cells,
etc.
Strengthen solutions that support ZEH & ZEB* 2

Build high-efficiency LNG-fired power plants

Carbon-neutral LNG/CCUSExpand the use of carbon-neutral LNG
 stablishment of Buyers Alliance (30 corporateEmembers)
Control of quality
CO2 capture&utilization* 3 at customer sites andCO2 capture utilization & storage (CCUS)

Sophisticated use of natural gas can contribute totremendous reduction of CO2 emissions

Deployment in Japan and global markets cancontribute to energy savings, lower CO2 emissions,and enhanced resilience

Capturing & offsetting natural gas-related CO2
emissions*1: C oal & oil account for approx. 60% of primary energy supply in Japan,*2: Homes and buildings designed to completely offset primary energy*3: Development of on-site CCU technology for producing potassium

and there is strong potential in fuel switching globally, especially in Asia

consumption per year

carbonate using CO2 from city gas equipment, launch of concrete
production utilizing captured CO2

Tokyo Gas Group Integrated Report 2022

27

Compass Action Responsibly lead the transition

Decarbonizing gas: Building a carbon-neutral methane value chain
 e will establish our own core technologies in methanation & hydrogen production as part of our efforts toward decarbonization of gaseous energyW
We will build a carbon-neutral methane value chain to realize deployment in future society through coordination with public-private alliances and global players

Our Group’s strengths: Hydrogen production expertise gained from fuel cell
development, etc., and Japan’s foremost gaseous energy supply infrastructure
Low cost, large-volume production

Transport using existing equipment

Selecting suitable methanation sites

Utilization through existing infrastructure

Leveraging existing infrastructure

As groundwork for large-scale methanation globally, select suitable sites withfirm access to low-cost, large-volume renewable source electricity and CO 2(collaboration with a trading companies, etc.)
Absorbed

CO2
Renewableenergypower

H2

Hydrogenproduction

HydrogenHydrogen is produced
by electrolyzing waterusing renewable powerCore
technology

Methanation

CH4

MethaneLiquefaction &transport

Methane is synthesizedfrom hydrogen and CO 2

Low-cost hydrogen production system*(water electrolysis) evelopment of the membrane that is suited for fast andDcontinuous production
 anufacturing cost will beMdramatically lowered by dramatic
improvement of production speed,
reduction of amount of materials
used, etc.

Achieve hydrogen supply cost of JPY30/m3 or lower in 2030

Core
technology

Achieve global scale carbon
recycling through social
deployment ofcarbon-neutral methane

Innovative methanation technology

Improvement of efficiency through development of innovative
methanation technology, pursuit of cost-reducing efforts

Development of practical methanation equipment
 evelopment of practical / large-scale equipment throughD
methanation pilot projects (collaboration with plant
manufacturers)

Domestic
marketLocal production and consumption model formethanation
 n-site methanation enables local recycling andOutilization of CO 2 (collaboration with customers)*Co-developed with SCREEN Holdings Co., Ltd.
Partnerships at each point of the supply chain
Formulation of rules and global standards for international CO 2 offsetting (Public-Private Council for
Promoting Methanation)

Establish future revenue base by spreading the use of carbon-neutral methane, which
can utilize existing LNG/natural gas transportation and distribution infrastructure

Tokyo Gas Group Integrated Report 2022

28

Compass Action Responsibly lead the transition

Decarbonizing electricity: Building a renewable energy value chain
 e will build a renewable energy value chain leveraging our Group’s unique strengths by engaging in a full spectrum of renewable power business from development ofW
renewable power projects to operation and maintenance(O&M) and to the retailing of the generated green power
We will expand renewable power source transaction volume in Japan and global markets beyond our original vision (5 GW*

6 GW), while maintaining profitability*Compass2030’s original target

Our Group’s strengths: Stable long-term operation of power generation infrastructure, O&M capabilities, customer baseLarge-scale renewable energy development

Utilization of generated power

Expansion of different types of power sources
Solar, onshore wind and biomass
power
Core
technology

2030
Bottom-mounted offshore
wind power

Market trading

Floating offshore wind power

Floating offshore wind power technology, with potential
for early commercialization

 arly deployment of basic technologies and supply chain of Principle Power, aE
global leader in floating wind power platform whose owners include Tokyo Gas
 chieve competitive pricing by developing technologies for low-cost massA
production of floating platforms

Photo courtesy of Principle
Power. Artist : DOCK50

Include generated green power
into power procurement portfolio(power & environmental value)

Steadily expand solar, onshore wind, biomass, offshore (bottom-mounted) power sources
Achieve early deployment in society by focusing on development of floating offshore wind power
Sales to customers(create diverse rate plans)

Development-to-operation revenue model
Development & construction

Ownership

Management (O&M)
Tokyo Gas

Engineering and O&M by Tokyo Gas Engineering Solutions
Engage as a Group in all stages to stand out from the pack and improve profitability

Develop decentralized renewables
 everage experience in behind-the-meter business to spread solar power among residential, commercial, and industrialLcustomers nationwide

TG Octopus
EnergyRevenue sources spanning from power generation to sales

Utilize generated power
Utilization of generated power by customers
Offer our own power purchasing service

Tokyo Gas Group Integrated Report 2022

29

Challenge

2 Value co-creation via digital & face-to-face engagement

Compass Action

Digital & face-to-facesolutions

In order to meet the diverse needs of society, communities and customers in the context ofthe trend of emphasizing ESG and SDGs, and the coexisting needs of digital and face-toface preferences, the Tokyo Gas Group will “accelerate value co-creation via digitalization
and reinforced face-to-face engagement,” taking advantage of the Group’s strong bonds
with customers and communities and of its large customer base.
In addition to selling gas and electricity, we intend to evolve into a corporate groupthat solves customer business and lifestyle challenges and provides valuable energy andservices nationwide and globally.

Digital transformation & strengthening of last-mile services (B2C)
We will expand areas of value provision to customers by leveraging digital marketing and enhance lineup of last-mile services

Our Group’s strengths: Digital expertise of Octopus Energy, last-mile solution capabilities, channel networks of LIFEVAL, etc.
Digital transformation of B2C marketing

Expansion of B2C last-mile services

Launch of Octopus Energy services (Nov. 2021)

Full entry into plumbing repairs& housecleaning business

Founded energy retailing joint venture (TG Octopus Energy) as a new brand,under a strategic partnership with Octopus Energy,* a fast-growing
company in the UK’s energy market

Expand services supported bystrengths in last-mile service*The company acquired over 3 million customers in just 6 years in
the UK’s highly competitive electric power market

Sophisticated operations (call taking, troubleshooting, inventory

Diverse electricity rate plansmanagement, solution proposal)Broadenrange of rate plan choices, including renewable-based, time-based,
market price-linked, commercial (low-voltage power), and other plans

Digital marketing, CRM*
 igital communication focused on customer engagement, active social
D
listening and customer support leveraging social media
 cceleration of marketing cycle and expansion of satisfied customer baseAby offering one-to-one services tailored to customer lifestyles and values*Customer relationship management
Nationwide deployment
P hased expansion of sales areas, with nationwide deployment by first half of FY2022

Increasing customer satisfaction and creating shared value byoffering personalized energy services

Full tap into advantages ofdigital & face-to-faceengagement toincrease no. ofenergy service
accounts

Providing value through combinations of services
Stress-free
Housework support
Monitoring

Home equipment
 pecial support for gas equipment
SPlumbing & air conditioning repairs“Zuttomo Solar,” “Anshin W
Denchi”(solar power + storage
batteries) etc.

Housecleaning
Residential monitoring service
Vacant home management service
Elderly care support, etc.

Reliable

Nationwide deployment
Phased expansion of sales areas through alliances, etc., with eye on nationwide deployment

Contributing to specific lifestyle needs and social
challenges quickly, conveniently, reliably and affordably

Tokyo Gas Group Integrated Report 2022

30

Compass Action Value co-creation via digital & face-to-face engagement

Digital & face-to-face solutions (B2B)
We will nationwide & globally provide packaged solutions that enhance customer convenience, community growth and shift to low-carbon and decarbonization

Our Group’s strengths: Remote monitoring & control technologies that use AI, etc., ability and experience in providing solutions, from proposal to
implementation & facility management
Enhancing convenience with B2B digital solutions

Strengthening total packaged solutions in B2B face-to-face services

Using AI, remote control, etc. to help conserve energy, lower CO2 emissions,and save labor

Offering one-to-one solutions from the customer’s perspectiveInstallation of solar generators without need forcustomers to make initial investment

 I-driven forecasting of electricity & heat demand atA
offices & factories

HelionetAdvanceJoy series

R eduction of energy usage and CO 2 emissions
through automated control of operations hard to
perform manually entral monitoring of customer utility equipment atCfactories, etc.
 esponding to needs for labor-saving throughR
combination with energy services

Evolve into solutions
provider that tackles
customers’ specificneeds and community
challenges

SolarAdvance rovision of total solution including operation &P
maintenance (promotion of local production/local
consumption and self-production/self-consumption ofrenewable energy)

Engineering

 ationwide and global deployment of top-levelNengineering services (design & construction tooperations & maintenance)

Environmental
consultation

 ll-in-one support spanning from CO 2 emissions
Avolume analysis, planning, disclosure to solution
implementation

Nationwide & global
deployment
Virtual power plants(VPP)

Utilize customers’ electricity surplus
Provide customers with new revenue opportunities

Advanced smart energy networks
Traditional
smart energyContributeto urban development by conserving
energy, lowering CO2 emissions, and strengthening
resilience through combination of heat, electricity &renewables

Provider of solutions to community challengesJapan olutions to community challenges such as transitionS
to low-carbon/decarbonization and resilienceenhancement through coordination with local
government & businesses (formation ofcomprehensive partnership agreements)

Global upport for urban development via district heating &S
cooling projects and power distribution projects

Expand range of services
Net Zero CO2 (CNL, renewables)

Advanced smart
energy rovision of BCPaaS* (earthquake proofing + disasterP
mitigation services)Services that improve office and lifestyle comfort*BCP services optimized for each customer’s needs
Packaged offering of optimal solutions to customers for
decarbonization, factory labor-saving, etc.

Contribution to appealing urban development, improvement ofenvironmental sustainability, and other solutions for community challenges

Tokyo Gas Group Integrated Report 2022

31

Challenge

3 Transformation of the LNG value chain

Compass Action

Improvement of eachbusiness’s earning power
and resilience to change

For realizing our vision, the Tokyo Gas Group will change its
business structure and business base with the determination
to reinvent itself, and will transform itself so as to possess
corporate culture within which each business enhances its
earnings power in the market.
In order to turn the progress of energy liberalization andthe increase in market volatility into business opportunities, wewill transform our business structure from earning at the endof the LNG value chain into a business structure that positions
each function of the value chain as a business, to be engaged
with customers and market, and enhance its earning power.

Group human resources reforms
Cost structure reforms & DX
Transitioning to a holdings-type groupstructure
Targeted investment in CFO’s message
growth areas

P.22

Financial strategy
CFO’s message
supporting investment

P.22

Group human resources reformsIn conjunction with the shift to a holdings group type structure, we will transform human resources system to one that encourages challenge and diversity, so as to strengthen ourinternal companies and business subsidiaries
Organization strategy

Grow by taking on challenges

HR reform policy

Empower internal companies & businesssubsidiaries to strengthen their own
businesses

Company-specific hiring standards & personnel rules

Shift to an HR system that facilitates
professionals who create & provide
diverse value ire and cultivate diverse professionally minded talent across all career stages; promote rehiring
HDevelop company-specific rules that support a comfortable working environment, whether in office or home

Encourage taking on challenges and enhance abilities to achieve goals

Internal companies & businesssubsidiaries autonomously run their
HR systems to strengthen theirbusinesses

People strategy
Transform systems and behavior
to develop a culture of challenge
and diversity

Leverage diversity as a strength ire diverse talent (young, mid-career, etc.) for each post, etc.
H
Keep in same post from project launch to finish
Create opportunities to take on challenges andexperience fulfillment from work

Foster professionals in each business
Leverage diverse career experiences and abilities

Cost structure reforms & DX
Strengthen competitiveness by implementing effective cost structure reforms, business process re-engineering (BPR), DX and other approaches
Expand BPR initiatives across the Group to achieve large-scale reduction in workload
Carry out group-wide DX talent training and advance digitalization-driven reforms in domains from service development to internal operations
Indirect costs
Cut indirect costs by reassigning staff to growth areas
 educe rent by using free-address office environments andR
reducing floor space se data analysis to achieve effective and efficient fuelUmanagement of company vehicles

DX
Streamline
meter reading and related processes by
installing smart meters treamline field operations with process/work informationSsharing tools

Service-relatedExpand range of online procedures for greater convenience
Redesign services for greater eco-friendliness and digitalization
Reduce paper use in work processes

Use drones and robots to automate inspection

Tokyo Gas Group Integrated Report 2022

32

Compass Action Improve each business’s earning power and resilience to change

Transitioning to a holdings type group structureWe will transition to a group structure where internal companies (quasi branch companies) and business subsidiaries will stand on their own feet and independently grow as
they engage with their markets and customers
T he internal companies and business subsidiaries will be given greater discretion in order to realize agile decision-making, and we will pursue group synergy throughcollaboration within the Group

Gaseous energy expansion business
Expand use of natural gas
Ensure safety & stable supply

Asset optimization & trading business
Engage in diverse energy trading madeeffective by asset flexibility and demand base

Be a leader in the spread of decarbonizedgaseous energy use

Tokyo Gas Network

Solutions business (B2C & B2B)
Propose & sell gas, electricity & solutions,develop new solutions

Enhance domestic renewable energy source
portfolio, achieve zero emissions in our
LNG-fired power plant operations

 xpand decarbonization products (CNL,E
renewable energy & environmental consulting)

Energy Trading Company

Customer & Business Solutions Company

Internal companies & business subsidiaries
stand on their own feet

Group
HQ

Group synergy

Real estate business

Solutions business (B2B)

Broaden urban development business by
diversifying assets and expanding overseas

Provide corporate customers with energy
solutions and engineering

Expand environmentally minded (ESGfocused) development

Tokyo Gas Real Estate

Global business

Provide customers in Japan and in global
markets with on-site low-carbon anddecarbonization solutions

 nhance value of business through taking
Eleadership role in each business and replacing
asset for effective capital use

Tokyo Gas Engineering Solutions (TGES)

Expand overseas renewable energy & NetZero CO2 businesses** Hydrogen, afforestation, CCS, renewable gas, etc.

Global Business Company

Tokyo Gas Group Integrated Report 2022

33

Invisible Assets

Tokyo Gas Group Integrated Report 2022

34

Technology
Development
Establish core technologies for
decarbonization of gas and electricity
The Tokyo Gas Group, under its management vision
Compass2030, is aiming to establish methanation andhydrogen production as its core technologies to decarbonize
gaseous energy. We are also targeting achievement of arenewable energy transaction volume of 6 million kW as ourcontribution to the decarbonization of electric power. We willdevelop mass-production technologies and low-cost
technologies for floating offshore wind power generation to
become the top runner in this type of power generation.

Innovative methanation technology
Compass Action

P.28

Methanation is a technology to synthesize methane, the main
component of city gas, through the chemical reaction ofhydrogen with CO2. The existing methane producing
technologies present issues concerning equipment costs,
limitation in raising efficiency in methane synthesis via waterelectrolysis, difficulty in increasing production scale, andthermal management. To solve these issues, we are working
to develop innovative methane manufacturing technology* 1,
to reduce cost, improve overall energy conversion efficiency,
increase production scale, and achieve thermal management.
We thereby aim at realizing early implementation in society,while being conscious of how long it takes and where to
widely deploy the technology.

*1: O n April 19, 2022, Tokyo Gas, in a joint proposal with Japan Aerospace

Exploration Agency (JAXA) and IHI Corporation, was selected as the prospective
recipient of the Innovative Technology Development for Synthetic Methane
Production of the Green Innovation Fund Project: CO2 Fuel Production
Technology Development Project (for the development of innovative technology
for synthetic methane production), which is sponsored by the New Energy andIndustrial Technology Development Organization (NEDO).

Existing technology
Sabatier reaction
Raw materials
Characteristics

H2

CO2

Innovative methanation technologies under development by Tokyo Gas
Hybrid Sabatier reaction
H2O

PEMCO2 reduction

CO2

H2O

Bioreactor
H2

CO2

CO2

Reaction

Catalyst

Electrochemistry/Catalyst

Electrochemistry

Microorganisms

Temperature

Up to 500°C

Up to 220°C

Up to 100°C

Up to 100°C

Advantages

 stablished basic
Etechnology

High efficiency

Low cost ow costLEasy to increase scale

Challenges

 arge-scale practicalLapplication (thermal
management)Increase in sizeEnsure durability andreliabilityIncrease in sizeEnsure durability andreliability low reaction speed
SStability and culturabilityof bacteria

H2O

Water
electrolysis

H2O

Water
electrolysis
Overview diagram

H2

Water
Methaneelectrolysis synthesis

CO2

Methanesynthesis

CO2

CH4

CH4

CO2

Electrolysis +synthesis

H2

CO2

CH4
Methanesynthesis

CH4

Tokyo Gas Group Integrated Report 2022

35

Low-price hydrogen manufacturing equipment (water electrolysis)
For the production of low-cost “green” hydrogen, the key
is to reduce the cost of water electrolysis equipment. In
May 2021, Tokyo Gas and SCREEN Holdings Co., Ltd.
(SCREEN) agreed to jointly develop a water electrolysis
cell stack* 1 and its manufacturing equipment with thegoal of establishing low-cost manufacturing technology
in two years. A cell stack accounts for a large portion of
costs of water electrolysis equipment. Tokyo Gas will

Concept and basic compositionof a water electrolysis cell stack
Hydrogen

Oxygenwork on reducing material costs by making use of its
technologies in materials selection and in evaluation of
performance and durability, which have been cultivatedin the development of residential fuel cells (ENE-FARM).
SCREEN will be in charge of developing the manufacturing
technology and a water electrolysis cell stack device,using its proprietary roll-to-roll* 2 continuous production
technology. The two companies will thereby pursue theSummary of water electrolysis system hydrogen production
methods (left) and fuel cell power generation method (right)
Water electrolysis

Cell
Electrode
Electrolyte
membranes
Electrode

Separator

Compass Action

Renewable energy
source, etc.

Hydrogen productione-e-(illustration)e-e-Electrons

Hydrogen

Water

HydrogenionsElectrode Electrolyte Electrodemembranes

Cell stackLow-cost production of a water electrolysis cell stackPower generation
Electrons

OxygenSeparator

Electricity

drastic reduction of manufacturing costs that have so far
been difficult to reduce. In conjunction with thisdevelopment, they will also develop technology for thesystemization of water electrolysis equipment to reducethe cost of green hydrogen production and aim to achieve
the Japanese government’s hydrogen supply cost target* 3of 30 yen/Nm3-H2 by 2030 at the early stage and tofurther reduce the cost of hydrogen production.

Fuel cell

Oxygen

Water

P.28

Electricity (renewable energy, etc.) + Water

Hydrogen +Oxygen

Hydrogen
ions

Water

Electrode Electrolyte Electrodemembranes
Hydrogen+Oxygen

Electricity+Water

Using conventional
technologies, thickparts are made one byone, and then stacked
together.

Materials are made thin and continuously
manufactured at high speed.
Formidable improvement in
manufacturing speed
Significant decline in
manufacturing costs due to smaller
amounts in materials used

*1: Multiple stacks of thin parts (cells) that produce hydrogen and oxygen through water electrolysis (fuel cells have a reverse reaction).
*2: A low-cost manufacturing process for functional films, which are continuously processed using coating and other methods during the rewinding process of a long film substrate wound in a roll. This time, this manufacturing process will be used in
the manufacturing of water electrolysis cell stacks.

*3: To achieve this goal, we expect to reduce the cost of the hydrogen production system through this development, as well as to procure low-priced power mainly through the growth of the renewable energy market.

Floating-type offshore wind power generation technology with the
expected commercial deployment at an early stage
The WindFloat® technology developed and possessed by
Principle Power, Inc. in the U.S. (investment by Tokyo
Gas in May 2020) has significant stability in various
maritime conditions and is expected to be widelyadopted by floating offshore wind projects around theworld. In Europe, it has already been deployed in a
project*4 featuring large wind turbines. In Japan, where

Compass Action

P.29

shallow sea beds are limited, the potential for floating
offshore wind power generation is large and this can bebroadly adopted in the future. Tokyo Gas will promote thedevelopment of floating offshore wind power in domestic
and overseas oceans through research anddevelopment* 5 for mass production and cost reductionof Principle Power’s WindFloat® basic technology.

*4: Demonstration testing (2 MW) was conducted in the offshore of Portugal for 5 years, and commercial deployment (3 units x 8.5 MW) started in 2020.
*5: O n January 21, 2022, Tokyo Gas was selected as the prospective recipient for the development of low-cost technology for manufacturing and installing floating
foundations of the Green Innovation Fund Project: Offshore Wind Power Cost Reduction Project of the New Energy and Industrial Technology Development
Organization (NEDO).

Photo courtesy of Principle Power. Artist: DOCK50Tokyo Gas Group Integrated Report 2022

36

Diversity of Human Resources“Diversity is the Key to Growth”· The new challenges that the Tokyo Gas Group will tackle
require having people from diverse backgrounds to get
together and work diligently, which leads to create new value.
· Particularly in the new areas and strategic areas for therealization of Compass2030, we are fostering andutilizing personnel within the Group, while recruiting
professional—people who have expertise that is difficult
to secure within the Group. We are thereby
strengthening our human resources base to add
strength and capability to our individual businesses.
Reform the human resource system to one thatencourages challenges and diversity· Through the realization of the Three Promises defined inCompass2030, we aim to develop personnel who work
energetically, keep trying to improve themselves, makemaximum effective use of their abilities, and consistently
deliver strong results. We will continue with the HR
system reform to facilitate each individual to grow andbe empowered as a professional in each field.
· We will accept diversity in values, ideas, and workstyles,
and encourage innovation that creates new value.

Our talented people utilize their diverse range of experiences and lead our key
strategic areas with immediate results

FURUKAWA Ken
Chief Manager
Business
Management Sect.
Global Business
Planning Dept.

UEHARA
Shinnosuke
LNG Trading Sect.
LNG Business Dept.

MARUYAMA
HiroshiTeam Leader,
Renewable
Energy Sect.I
Renewable
Energy Business
Development Dept.

2

We will produce
work that will havea major impact onsociety.

We will createa venue forencounterswith diversity
and friendly
competition.

We will emphasize
the self-fulfillmentof each person.

The Tokyo Gas
Group will be agathering place fordiverse thinking andexperience.

We believe in thepotential of eachindividual andwill support each
employee’s activities.

We commend a
spirit of taking onchallenges and theability to learn frommistakes.

3

KPIs related to Key Strategies

FURUKAWA Ken was engaged in international operations at aJapanese mega bank and spent close to 12 years on overseas
assignments. After joining Tokyo Gas in 2017, he was assigned to the
Global Business Division and CP, and was involved in support of new
business investment and development in Asia and the United States,etc. making use of his experience in financial analysis and credit
judgment, which were the core business functions of the bank, and in
finance, legal affairs, marketing, and negotiation in the international
financial field. Currently, as a Chief Manager, his assignment includes
monitoring, accounting management and portfolio review of ouroverseas invested projects.
UEHARA Shinnosuke worked at an oil company as a trader ofnaphtha, a petrochemical raw material, dealing mainly with Middle
Eastern oil countries and petrochemical companies in Singapore,
where many trading companies are located. He joined Tokyo Gas in2020 and since then has been engaged in LNG trading, making fulluse of his trading knowledge and the network he has developed in
his previous job. He believes that the recent volatile environment
in market prices and with various geopolitical risks can be a great
opportunity.

Segment profit from
Overseas Business (per FY)(¥ billion)

YAMAGUCHI
ManabuSales Manager

13.2
3.8
2019

P.32

2020

2021

Natural gas transaction
volume (per FY)(million tons)
18.20 19.18
17.34

2019

MARUYAMA Hiroshi has spent about five years in construction
management at a general contractor and about six years in thedevelopment of solar, wind and biomass power sources at a renewableenergy business company. After joining Tokyo Gas in 2019, he has
been involved in planning work for renewable energy strategy, and has
worked on the development and acquisition of biomass power sources.
In the last three years, he has led the efforts for acquisition of five projects
with equity stakes for a total of approximately 200,000 kW of powersource. As a leader of the development team, he is concentrating onTokyo Gas’s acquisition of more renewable energy sources with a target
set at 6 million kW in renewable energy transaction volume by 2030.

2020

2021

Renewable power source
transaction volume (as ofthe end of FY)(million kW) 1.383

1.498

0.581

2019

TG Octopus Energy

YAMAGUCHI Manabu has about 19 years of experience in retail sales,
mainly in the apparel industry, maximizing the presence and added
value of products, managing and analyzing sales, and conducting
external negotiations centered on events and outlets. He joined TG
Octopus Energy in 2022 as a sales manager and is utilizing his skills
and experience to open a wide variety of channels from scratch andto maximize the brand value of Octopus Energy.

2020

2021

(as of the end of FY)(million)12.11 12.31 12.48

2019
CO2

Compass Action: Human Resources

28.2

No. of customer accounts

Three Promises

1

Reference

Mid-career employees actively dedicated in the key strategic areas

YONEDA
Takayuki
Digital Innovation
Planning Sect.
Digital Innovation
Strategy Dept.

YONEDA Takayuki was engaged in business development using
digital technology for the realization of DX at multiple companies,
and has a track record of building a business ecosystem. After
joining Tokyo Gas in 2020, by utilizing his experience in new businessdevelopment and know-how in open innovation, he has been making
efforts for value co-creation with companies with domestic andoverseas technology seeds that may contribute to the realization of
Net-Zero CO2, and for development of new business and systems thatsolve social problems.

2020

2021

Contribution to CO2emissions reduction (ascompared to FY2013 levels)(million tons)
6.68

5.39

4.88

2019

2020

2021

Tokyo Gas Group Integrated Report 2022

37

Taking up a new challenge on behalf ofthe future of the planet: Renewable energy
business in the Nordics
CFO, TOWII Renewables A/SODATE Yusuke(Assigned from Business Development Sect.III Global Business Development Dept. Tokyo Gas Co., Ltd.)I will make use of my experience in Tokyo Gas
overseas business
The Tokyo Gas Group is making efforts to expand its
renewable energy business in Japan and abroad, with thegoal of achieving Net-Zero CO2.
I joined Tokyo Gas in November 2019 because I wasparticularly attracted to its expansion of the renewableenergy business overseas. Until then, I was engaged mainlyin the development of nuclear power plants at a Japanesemanufacturer, and was involved in contract negotiation for
power plant construction and was involved in contract
negotiation for power plant construction, in financial
arrangements, and in negotiation with the government in
the U.S. and other countries such as the U.K., the Baltic
States, and the United Arab Emirates. The experience of
creating a huge project on the scale of several hundredbillion yen to more than one trillion yen over a lengthy
period, working with many people of different nationalities
and backgrounds brought me a great sense of satisfaction
and achievement.
Then one day, I saw a news report: Tokyo Gas and a
French electric power company ENGIE were to jointly enter
the renewable energy business in Mexico. Learning about
Tokyo Gas plans to expand overseas in this new field, I felt
an urge to use my experience in creating something newfrom scratch, for Tokyo Gas. I thought that my experiencein overseas projects and know-how in negotiations could
be of use and I could contribute to Tokyo Gas’s dealing
with this new challenge.

After being involved in projects in Mexico andthe U.S., Tokyo Gas is now participating in a joint
development project in Europe
In January 2022, Tokyo Gas decided to team up in
renewable energy business in the Nordics with the Danish
energy group EWII.
After joining Tokyo Gas, I had worked on exploring
various projects, especially those in which Tokyo Gas
would directly participate. I was heavily involved in thestart-up negotiations phase of a deal, which has grown to
be a joint company, TOWII Renewables. Subsequently, I
joined the management team as CFO.
Europe is striving to create rules for the environment
and make them a global standard, being highly committed
as environmentally advanced. Having a European basewhere we can keep track of the world’s movements related
to the global environment is extremely valuable to ourGroup, and having Tokyo Gas directly participate inmanagement is a big step toward our further growth inEurope as a whole. We will first focus on growing TOWII
and make it a pillar of Tokyo Gas’s European business.
Press release: Developing a 1GW of renewable energy in
the Nordics with EWII in Denmark
https://www.tokyo-gas.co.jp/Press_e/20220121-01e.pdf

Making the project to be a pillar of the Tokyo
Gas Group’s Compass2030 Management Vision
TOWII’s goal of developing 1GW of renewable energy by2030 can be included in Tokyo Gas’s challenge to lead theeffort to achieve Net-Zero CO2, which is stated as one ofthe pillars of Tokyo Gas’s management vision. TOWII is
striving to expand the business, which includes the use of

Project members from EWII and Tokyo Gas

electricity generated from renewable energy.
For achieving the Compass2030 Vision, including therealization of Net-Zero CO2, we need to attract, hire, anddevelop human resources for work in new fields, and do sowith a sense of speed. Many employees at Tokyo Gas havea strong interest in thinking about what they should do andhow to advance on their own. Among other aspects, this is
an indispensable basic characteristic for working overseas.
I believe it is important to develop human resources with a
global perspective through the frontline experiences ofoverseas business operations and at the same time toflexibly recruit good human resources in overseas countries
where there is high job mobility, and to build relationships
with diverse business partners.

Diversity & Inclusion Achievement
The Tokyo Gas Group has made a primary commitment
to promoting diversity and inclusion, encouraging diverse
workstyles, and empowering diverse workers, with the aim ofcreating a vibrant organization in which all employees can fully
demonstrate their knowledge, ability and experience.
FY2020

FY2021

FY2022

TargetRatio of womenin management

8.7%
251

9.2%
264

9.5%
271

Over 11%by 2025

Male employees’
utilization rate forchildcare leave,
etc.

92.4%

93.9%

–

100%*

Employment rate
for persons withdisabilities

2.55%
172

2.54%
167

2.64%
169

(Reference)
Statutory
employment
rate: 2.3%

Number of midcareer hires

207

159

–

–

Remarks

Nonconsolidated

Consolidated* 100% utilization rate for a system that helps both male and female employees
balance working and taking care of children

Tokyo Gas Group Integrated Report 2022

38

Energy Security
Aiming at stable supply of safe and low-priced energy
For more than 130 years since being founded, Tokyo Gas
has been committed to providing customers safe, reliableenergy through ensuring stable supply and maintenance.
With regard to LNG procurement, our focus has been
to ensure stable, low-priced and flexible procurement bypromoting three types of diversification: Procurement
sources, terms of contracts, and LNG networks. We willcontinue to respond to changing demand by taking

appropriate measures in response to changes in the
procurement environment.
In order to realize a stable supply of energy, we haveworked to strengthen our energy infrastructure in the
Greater Tokyo Area and to enhance resilience by expanding
our decentralized energy system using natural gas.
Furthermore, we have further advanced our disastercountermeasures, given Japan’s history of suffering

Stable procurement

Stable supply

Safety measures

Enhanced natural gas infrastructure

Stable, low-priced and flexible LNG procurement
Since the start of LNG imports in
1969, Tokyo Gas has diversified its
procurement sources to encompass
15 suppliers projects in five countries,
reducing procurement risks. We havealso enhanced procurement flexibility
through diversification of contract
contents, by making contracts based
not only on crude oil price indicators,
but also on U.S. natural gas prices
and coal prices, and making contracts
with no destination restrictions.
Through strategic partnerships withdomestic and overseas companies,
we have established an LNG networkthat connects the Asian, North
American, and European markets,
thereby increasing LNG transport
efficiency and contract flexibility,
and reducing costs. In 2020, weestablished a subsidiary in charge of
LNG trading business to foster more
flexible LNG trading.

damage by major earthquakes.
Despite the uncertain economic outlook driven bydestabilizing international situations and the persistent
COVID-19 infection problems, we will continue to support
our customers’ safe, secure everyday lives and industries
with a strong sense of commitment to “never ever stop theenergy supply.”

Gaseous Energy Expansion Business
SakhalinTokyo

Cove Point

Existing LNG Project
New LNG Project

Malaysia
BruneiDisaster-resilient everyday lives and city
development

We are expanding the introduction of decentralized energy
systems such as ENE-FARM and Gas cogeneration systems,
as well as formation of smart energy networks for heat andelectricity used in the ICT-managed areas. We are thereby
promoting the creation of cities with enhanced disasterprevention functions and assurance of the continual energy
supply even in an emergency.

Pluto
DarwinIchthysNWS

P.60

We have completed a loop of high-pressure gas pipelines in
the northern Kanto region and the mutual backup system offour LNG terminals in order to enhance supply stability andincrease the capacity to transport gaseous energy. In order tolimit damage in case of major earthquakes, our manufacturing
and supply facilities have employed the structural design,materials and safety technology for excellent seismic
resistance. The Supply Command Center of Tokyo Gas
performs 24/7 monitoring and control of the operating statusof city gas production and supply facilities. Replacement ofold gas pipes and regular gas leakage inspections are also
carried out in a planned manner.

CameronMozambique

GorgonCustomers’ safe and reliable use ofenergy services Tokyo Gas Network

Tokyo Gas Network

Queensland Curtis

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

Complete earthquake protection
Tokyo Gas Network

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

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

Imports gas
LNG carrier

Make gas
LNG receiving terminal

LNG tank

Send gasGas diffusion tower

High-pressure
gas pipe

Gas holder

To customers
Radio
tower

Supply Command Center
Mediumpressure gas
pipe

Areal governor(pressure regulator)

Microcomputer
meter (gas meter)

SI sensor (seismometer)Low-pressure gas pipeTokyo Gas Group Integrated Report 2022

39

Last mile operation of Tokyo Gas
Our bonds and relationships of trust with customers are
precious assets
Tokyo Gas LIFEVAL, Enesta, and Enefit have 150 outlets and13,000 employees, mainly in the Greater Tokyo Area. We satisfy
specific needs of customers and serve as a all-in-one provider of
products and services that help improve the quality of everyday
life, and in so doing build close ties with individual customers.
Through our community-based strong bonds with customers,
we have acquired three million* retail electricity contracts as of2022, the seventh year of the full deregulation of the electric power
retail market, putting us in the number one position in electricity
sales among new power suppliers for the sixth consecutive year.

Outlets

150
Employees

13,000
Direct contacts

5.3

millionLast mile of Tokyo Gas
Even with ongoing, accelerated degitalization, now madeパッチョ 水パッチョ
more important by the COVID-19 pandemic, we believe that
services that require direct, personal human intervention continue to be necessary
and vital. LIFEVAL and Enesta are in charge of the last mile operation by Tokyo Gas,
and have the strength required for this by employing many engineers and being
connected with customers and communities. Leveraging these strengths, we aim toperfect repair, installation, and other services at customers’ homes that require
quality and technology and to develop a more satisfying and more trustworthy
relationship with our customers.
Certified holders of gas
equipment repair licenses

Certified holders of water
repair licenses

Registered personnel forequipment installment

As of May 2022

As of April 2022

As of May 2022

2,286

* Actual sales amount of low-voltage electricity by new electricity

retailers other than equivalent electricity retailers operators in thereport Actual Electric Sales as of January 2022, per the Electric Power
Survey Statistics of the Agency for Natural Resources and Energy

876

3,365

(Prefecture)

Gunma

Tochigi

EnestaEnesta6

1

Chiba
LIFEVAL

5

Ibaraki

532

2

Saitama
LIFEVAL

5

EnestaEnefit9

Enefit5

Kanagawa
LIFEVAL

EnefitEnesta5

Tokyo
LIFEVAL37

Service expansion using last mile service as a business advantage
The Tokyo Gas Group had closely served customers’ everyday lives over the years
and will expand services to solve their everyday problems. We intend to work with ourdiverse partners and co-create services that can satisfy customers’ desire to live withpeace of mind and in comfort. We are committed to further strengthen our bonds oftrust with customers by providing more satisfying services and contributing to solving
their everyday problems.
Residences

Enefit38

Home equipment services
Gas equipment special support(optional: plumbing, electric
equipment, and air conditioning
equipment)
Repair service for gas equipment andplumbing

LIFEVAL
The
Enestarepresentative Customers
Enefitof Tokyo Gas incommunity

Supply of gas, electricity and other services; Sales and installationof gas and other residential equipment; Inspection and repairof gas equipment; Water system repair; Opening and closing ofgas fixtures when residents move; Home renovation; Design andinstallation of drainage facilities and air-conditioning equipment;Gas fitting work; Gas meter reading, etc.

* Number of cases of supplies as of April 19, 2022

PeopleStress-free

Solar power generation excess powerpurchase service

Monitoring
services

Elderly care support content

Gas equipment

House cleaning
service

Residential monitoring
service (gas)Household chores

Residential monitoring
service (home andfamily)EnergyHome equipment

Service for centrally managing
instruction manuals of housing
equipments and home appliances
Immediate service for plumbing andelectricity troubles

Housework
services

Child care support
content

ReliableHome delivery laundry
cleaning service

Monitoring support for
emergency
Rental property
management support
Vacant homemanagement* As of July 2022
Tokyo Gas Group Integrated Report 2022

40

Information disclosure
based on TCFD
recommendations
Requireditem

Details

Governance

Disclose the organization’s
governance around climaterelated risks and opportunities.

Strategy

Disclose the actual and potential
impacts of climate-relatedrisks and opportunities on theorganization’s businesses,
strategy, and financial planningwhere such information ismaterial.

The Tokyo Gas Group regards the Task Force on Climate-Related Financial
Disclosures (TCFD) framework as being an effective way to promote information
disclosure and dialogue with stakeholders on climate-related issues. We therefore
signed the statement of support for the TCFD, in May 2019. We are using the TCFD
recommendations as an indicator to examine our response to climate change, and willcontinue to appropriately disclose information on the impact of climate change on theTokyo Gas Group’s business activities and the measures to be taken.

Disclosures recommended by TCFD
A. Describe the board’s oversight of climate-related risks andopportunities.
B. Describe management’s role in assessing and managing climaterelated risks and opportunities.
A. Describe the climate-related risks and opportunities the organization
has identified over the short, medium, and long term.
B. Describe the impact of climate-related risks and opportunities on theorganization’s businesses, strategy, and financial planning.
C. Describe the resilience of the organization’s strategy, taking into
consideration different climate-related scenarios, including a 2°C or
lower scenario.

Where applicable as per Integrated Report 2022

Promoting Sustainability and Materiality

P.15

Corporate Governance

P.45

Promoting Sustainability and Materiality

P.15

Compass Action Challenge 1: Leadership in the effort

P.25-29

Information disclosure based on the TCFD
proposals

P.42-44

to achieve Net-Zero CO2

A. Describe the organization’s processes for identifying and assessing
climate-related risks.
Risk
management

Disclose how the organization
identifies, assesses, andmanages climate-related risks.

B. Describe the organization’s processes for managing climate-relatedrisks.
C. Describe how processes for identifying, assessing, and managing
climate-related risks are integrated into the organization’s overall risk
management.

Metrics andtargets

Disclose the metrics and targets
used to assess and manage
relevant climate-related risks
and opportunities where suchinformation is material.

A. D
 isclose the metrics used by the organization to assess climate-relatedrisks and opportunities in line with its strategy and risk management
process.
B. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhousegas (GHG) emissions, and the related risks.

Promoting Sustainability and Materiality

P.15

Corporate Governance

P.45

Risk Management SystemP.54

 rogress of the Medium-term Management PlanP
and KPIs

P.23

Compass Action Challenge 1: Leadership in the effort

P.25-29

to achieve Net-Zero CO2

Information disclosure based on the TCFD
proposals

P.44

C. Describe the targets used by the organization to manage climaterelated risks and opportunities and performance against targets.

Tokyo Gas Group Integrated Report 2022

41

Strategy
Risks and
Opportunities

In November 2021, we have formulated “Compass Action” as a detailed roadmap for achieving Compass 2030, and it sets roadmap fortransitioning to carbon neutrality.
P.25-29(Challenge 1: Leadership in the effort to achieve Net-Zero CO2)
In line with this, we reviewed the climate-related risks and opportunities over two phases by adding the 2030-2050 period in addition to the up to 2030.
In reviewing the Tokyo Gas Group’s risks and opportunities, we referred to two representative scenarios of the International Energy Agency andthe Intergovernmental Panel on Climate Change—the below 2°C warming scenario and the 4°C warming scenario, and assumed changes in thebusiness environment.

* Scenarios for reference:Below 2°C warming scenario:

 ustainable Development Scenario (SDS)(IEA WEO 2019); B2DS (IEA ETP 2017); RCP2.6 (IPCC AR5) 4°C warming scenario:S
IEA Stated Policies Scenario (STEPS) (IEA WEO 2019); RTS (IEA ETP 2017); RCP8.5 (IPCC AR5)-2030: Accelerate transition

Classification(Growth of the potential and role of LNG/natural gas)

Details

Opportunities and risks

High financial impact

2030-2050: Advance toward carbon neutrality(Phase for achieving decarbonized society)

Opportunities and risks

Global (including Japan) demand for natural gas and LNG

Opportunities

Opportunities and risks

The global (including Japan) spread of carbon-neutral gaseous energy

Opportunities

Opportunities

The spread of renewable energy

Opportunities

Opportunities

Securing of the balancing renewable power

Opportunities

Opportunities

Risks

Opportunities and risks

Decarbonization technology innovation

Opportunities and risks

Opportunities and risks

Introduction of carbon pricing

Opportunities and risks

Opportunities and risks

Reputation

Focus on low carbon and decarbonization in investment standards

Opportunities and risks

Opportunities and risks

Resilience

Enhancement of resilience through a decentralized energy system

Opportunities

Opportunities

Risks

Risks

Markets andenergy resources
Below
2°C

Conversion to non-fossil energy
Technology
Policies and regal

High financial impact

4°C

Acute

Impact on operations by increasingly severe abnormal weather

Measures taken by the Tokyo Gas Group

Sophisticated use ofnatural gas

Infrastructuredevelopment(resilience) witch from coal, oil, etc. to natural gas as fuel, introduce
Scogeneration systems, develop smart cities, strengthen resiliencein Japan and global markets.
Increase provision of carbon-neutral LNG (CNL)Expand use for balancing renewable powerDevelop & expand CCU, Expand commercial use of CCUS

Decarbonization ofgas and electric arbon-neutral methane: Transition to large-scale & highCefficiency methanation and commercial use
Hydrogen: Establish practical, affordable hydrogen production
technologies
Expand renewable power sources (Increase solar, wind & biomass
power generation)
Achieve zero emissions in our thermal power generation (Explore
use of hydrogen & ammonia)

 nhanced resilience in the natural gas infrastructureEExpanded use of decentralized energy systems that are highly resilient, such as smart energy networks, cogeneration systems, and ENE-FARM (home fuel cells), etcEnhanced establishment of a water hazard-resilient public utilities (i.e., disaster countermeasures for LNG terminals and power stations) and full preparation for BCP

Tokyo Gas Group Integrated Report 2022

42

Major Initiatives Taken in FY2021
Sophisticated use of natural gas

Decarbonizing gas and electricity

CCUS orld’s 1st! Commence Manufacturing of CO2-absorbing Concrete that Uses Exhaust Gas Emitted
W
During the Use of City Gas Devices (July 2021)
Produced Japan’s first potassium carbonate using CO2 from city gas devices (September 2021)
Launch CCU Verification Test Jointly with Yokohama City and MHI Group (February 2022)

CNL eceipt of Third-party Validation Report for Japan’s First Carbon Neutral City Gas Plan (June 2021)
RTokyo Gas to supply carbon neutral city gas to the Tokyo 2020 Summer Olympics athletes’ village (July2021)
Introduced carbon neutral city gas in Tokyo’s Marunouchi district, as the largest project of its kind inJapan (October 2021)

Other

 G Natural Resources: Started a methane leak detection and repair project using a helicopter (NovemberT2020-)
Commencement of verification of virtual power plant using ENE-Farm residential fuel cells andresidential storage batteries group control (June 2021)
Tokyo Gas launches verification of residential demand-response (July 2021)
Establishment of the Joint Venture with the PTT Group Company-Promotion of Decarbonization throughOn-site Energy Service Business including Improving Efficiency Technology Solutions and Fuel Supply in
Thailand (October 2021)
Signed a business alliance agreement with The Kansai Electric Power Company, Inc. for VPP businessusing decentralized energy resources (November 2021)
Joint development of EP420G, full-time gas cogeneration system that achieves world-class power
generation efficiency (January 2022)
Tokyo Gas issues a transition bond for the first time as a city gas supplier (February 2022)
Modification of the power supply equipment of the Sodegaura Power Plant (formerly Tokyo Gas Bay
Power) to gas engine as the balancing power source to renewable energy (scheduled to start operationin 2024)

TOPIC 1

Renewableenergy cceleration of the Development of Kashima Port Offshore Wind Project (April 2021)
ALaunched “Sasutena Denki,” an electricity rate plan with 100% real renewable energy (June 2021)
Launch of Commercial Solar Power Operations Begins in Iwakuni, Yamaguchi Prefecture (July 2021)
The Aktina Solar Power Project in the U.S. began partial operation (150 MW) (August 2021)
Jointly implemented the Sakaide biomass power generation project (October 2021)
Tokyo Gas selected as the prospective recipient in NEDO’s Green Innovation Fund Project / Offshore
Wind Power Cost Reduction Project (for the development of low-cost technology for manufacturing andinstalling floating foundations) (January 2022)
Establishment of a subsidiary in Denmark and joint development of renewable energy in the Nordics
through business collaboration with EWII S/I (January 2022)
Participated in the dedicated biomass combustion power generation project in Sendai City, Miyagi Pref.
(March 2022)

Other


Signingof Comprehensive Agreement for Carbon-neutral Urban Development in local government(November 2021-)
Launched “EVrest” EV charging service for housing complexes (November 2022)

TOPIC 2

Launch of methanation demonstration testing for
supporting achievement of carbon neutrality anddecarbonized society in 2050
Methanation demonstration testing
commenced at Tokyo Gas Yokohama
Techno Station in Tsurumi Ward,
Yokohama City. The purpose ofthis demonstration is to acquire a
range of technologies and knowhow, from the procurement ofelectricity from renewable energy
sources to the production of greenhydrogen by water electrolysis, andthe production and utilization ofsynthetic methane.
In addition, we are collaboratingwith Yokohama City and otherparties* 1,* 2 to consider a localproduction, local-consumption
model for the carbon neutralizationof a community. We will also identify
issues and study solutions for largerscale demonstration testing andestablishment of a supply chain.

Hydrogen
Methanation

 okyo Gas and SCREEN Agree to Jointly Develop a Water Electrolysis Cell Stack for Low-cost GreenT
Hydrogen Production (May 2021)
Started feasibility study toward creation of a carbon-neutral methane supply chain with Petronas,
Sumitomo Corporation and Mitsubishi Corporation (November 2021)
Launch of joint research project with JAXA and Yamaguchi University for demonstrating methanation
technology (December 2021)
The City of Yokohama and Tokyo Gas sign collaboration agreement on methanation demonstration testing(January 2022)
Start of feasibility study for methanation project aimed at city gas pipeline supply of synthetic methanemade with CO2 from cement production (March 2022)
Launched demonstration testing of the methanation process toward achieving carbon neutrality and adecarbonized society by 2050 (March 2022)

Methanation facilities*1: The City of Yokohama andTokyo Gas sign collaborationagreement on methanation
demonstration testing(announced January 18, 2022).
*2: Launch CCU Verification Test
Jointly with Yokohama Cityand MHI Group (announced on
February 24, 2022).

TOPIC 3

Acceleration of the development of Kashima Port
Offshore Wind Project

Reduced methane leakage resulting from a methaneleak detection and repair project using a helicopter

In April 2021, the Company decided
to accelerate the development of theKashima Port Offshore Wind Project,which is located at Kashima Port in
Ibaraki Prefecture, through joint investor
Wind Power Energy Co., Ltd.*3
The Project is located in ‘Kashima
Coastal Industrial Area,’ which isone of the top such areas in Japanand located near Tokyo, a major
Rendering of the Project
consumer of energy. With approvaland certification from Ibaraki*3: In addition to the Company,
joint investors include Wind
Prefecture, we will install 19 newly
Power Group Co., Ltd. andselected wind turbines in ‘areas that
Nippon Wind Energy K.K., autilize renewable energy sources’ (680
wholly owned subsidiary of
hectares) designated in the port area
Vena Energy Holdings Ltd.
of Kashima Port. We will promote
construction of an offshore wind
power plant with a power generation
capacity of approximately 160,000 kW,
equivalent to the annual consumptionof approximately 70,000 households.

TG Natural Resources, a shalegas development and production
company in the United States, has
effectively identified areas where
there were leaks (and later repairedthem) by using a helicopter equippedwith a laser methane detector
to inspect from the air an area
approximately twice the size of the
23 wards in Tokyo. This has resulted
in achieving a 15% reduction inmethane leakage. We will continue
our efforts to reduce methaneleakage, which is a global challenge.

Laser device

Satellite map of detection
Above: BH206 JetRanger helicopter equipped with a laser unit
Below: E xample of methane leakage detection (blue lines indicating
underground integrated pipeline channels)

Tokyo Gas Group Integrated Report 2022

43

Metrics and Targets

The Tokyo Gas Group’s management indicators and key quantities to realize growth are laid out inits management vision statement Compass2030 and FY2020-2022 Mid-term Management Plan.
Progress of the Medium-term Management Plan and KPIs

P.23

A cross-industry climate-related index category
GHG emissions: Figure for FY2021 result

Climate-related opportunities* The sum of individual data may not be equal to the total due to the way figures are round.
Upstream (procurement)
6,229 thousand t-CO2e

Scope1+2
3.362 thousand t-CO2e
Total

Downstream (by customers)
28,153 thousand t-CO2e

37,754 thousand
t-CO2eScope334,392 thousand t-CO2e(thousand t-CO2e)

3,362

Scope1+2

3,126

Scope1

2,922

Scope2

205

Overseas Scope1+2

Natural gas
transaction
volume in 2030

20 million tons

2) Renewable energy

Scope 1 and 2
Target: Consolidated subsidiaries
Japan

1) LNG and natural gas
 atural gas and LNG are important energy sources in the transition phase towardNdecarbonization, globally and particularly in Asia. Further, in Japan, for industries which emithigh amount of GHG but find it difficult to quickly decarbonize due to ongoing need for hightemperature heat, conversion to natural gas and advanced energy usage will be extremely
effective solutions during the transition period. LNG and natural gas are also expected to be
used as balancing force to stabilize energy supply in conjunction with the large-scale relianceon renewable energy.
During the transition period, LNG and natural gas, through fuel conversion, smart city
conversion, and carbon neutral LNG and CCUS, will contribute to CO2 emissions reduction
at domestic and overseas customers’ sites. In the future, the decarbonization of gas itself bymeans of methanation will lead to the realization of a carbon-neutral society with suppressedsocial costs obtained by use of existing infrastructure.

Business activities
3.372 thousand t-CO2e

P.23

Progress of the Medium-term Management Plan and KPIs

(thousand t-CO2e)

Scope3236

34,392
1) P urchased goods and services3) Fuel and energy related
activities not included in Scope
1 and 2

6,229

4) Transportation (upstream)5) Waste generated in operations

56) Business trips

27) Commuting by employees

310) Processing of sold products

2,95711) Use of sold products

25,196

Physical risks
Operational impacts by typhoon and other flood damages
 ith the anticipated increase in typhoons and torrential rains due to climate change, the influx of water and sandW
into gas pipes caused by submerged or buried gas supply facilities, and by collapse of houses may affect the gas
supply.
As a flood prevention measure, measures are implemented based on hazard map information of each region having
gas supply facilities, and equipment are to be raised above the expected flood level and equipped with flood
sensors and other devices as needed. Furthermore, in order to minimize the damage caused by flood, we have beenworking on both hard and soft measures, such as advanced use of weather information and writing of the wind andwater damage section of the Business Continuity Plan (BCP).
Incidentally, the Typhoon No. 19 in 2019 that caused immense damage in various places did not cause any serious
damage to Tokyo Gas Group.

 he introduction and spread of renewable energy is essential in achieving a carbon-neutralT
society, and government policy support is essential. In Japan, which is surrounded by thesea, the potential for offshore wind power is high.
The Tokyo Gas Group is steadily expanding development of solar, land wind, biomass, andoffshore (seabed-fixed) wind power sources. It is also focusing on technology development
for floating offshore wind power, and is working to realize early implementation.
Furthermore, by taking advantage of the Group’s strengths of long-term stable operation of
power generation infrastructure, operation & maintenance (O&M) capability, and the scale ofour customer base, we will build a renewable energy value chain unique to the Tokyo Gas
Group by being engaged in all stages from development to O&M and from power generation
to electricity sales.

Capital allocation

Renewableenergy transaction
volume in 2030

6 million kW

CFO’s message

P.21

Active investment in growth areas, including decarbonization, while leveraging ESG financing
In December 2020, Tokyo Gas issued a green bond (issue amount: 10 billion yen) to financethe renewable energy business. Specifically, it was used for the Aktina Solar Power Project(Wharton County, Texas, 630,000 kW) and the Annaka Solar Power Project (Annaka City,
Gunma Pref., 63,000 kW).
In March 2022, Tokyo Gas issued transition bonds* (71st, 72nd domestic unsecured notes:
20 billion yen in total) through a domestic public offering platform for the first time by a city
gas supplier in Japan. Based on the Ministry of Economy, Trade and Industry’s Technology
Roadmap for Transition Finance in the Gas Sector, the bonds were issued by a new financing
method to promote low-carbon and decarbonization initiatives during the transition period
toward realizing a decarbonized society. The proceeds would be used for investments in threeprojects (Niihama LNG Project, Smart Energy Network Project, and Harumi Hydrogen Project).

2

Approx. trillion
yen investment
by 2030 in growthareas, including
decarbonization* Selected as a model case of the Ministry of Economy, Trade and Industry’s 2021 Climate Transition Finance Model Project.
Remuneration

Officer remuneration

P.50

The bonuses of Corporate Executive Officers reflects the evaluation of the term performanceagainst non-financial indicators related to climate change (contribution to CO2 emissions
reduction; renewable power source transaction volume), in addition to financial indicators.

Tokyo Gas Group Integrated Report 2022

44

Corporate Governance
Basic views on corporate governance

Shareholders Meeting

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

Overall Corporate Governance Structure

Decision-making oncompensation

Supervise

ExecutionsystemReport

Audit
ReportCompensation Committee
Appointment

Adopting a “Company with a Nominating Committee, etc.”
system, Tokyo Gas has the Nominating Committee, Audit
Committee and Compensation Committee, where themajority of the members are outside Directors. The
Nominating Committee determines Director candidates andrecommends Corporate Executive Officer candidates; theAudit Committee audits execution of duties by Directors andCorporate Executive Officers; and the Compensation
Committee determines remuneration for Directors andCorporate Executive Officers.
The Board of Directors determines management policies,
oversees execution of duties by Corporate Executive Officers,delegates decision-making concerning important matters forbusiness execution to Corporate Executive Officers, and asksthem to report the status of the execution, when needed.
Corporate Executive Officers are required to contributeto appropriate, prompt decision-making and to ensure
efficient business operations by taking up in a committee(generally meeting weekly) that supports the Corporate
Executive Officers, reasonable decision-making matters tobe submitted to the Board of Directors and other importantmanagerial matters. Executive Officers are assigned toresponsibility for ensuring prompt business operations by
Corporate Executive Officers. Tokyo Gas has thus adopted
and established a governance structure that ensures highlegality, soundness, and transparency.

Appointment
ReportReportAppointment

Audit Committee
Collaboration
Audit

ReportCorporate Executive Officers
Representative Corporate Executive Officer,
President and CEO

Committee supporting rational
decision-making by Corporate
Executive Officers

Appointment
Oversee

Advisory bodies concerninginvestment, loan, equity investment,
and other important matters *3

ReportCollaboration

Financial
audit

ReportExecutive
Officers

Superintend

Internal Audit
Department

Collaboration

Independent auditor (Auditing corporation)

Decision-making on a
proposal forthe appointment of directors

Ensuring the legality, soundness, and transparency of the
management based on our Management Philosophy, we
strive to clarify responsibilities of management andexecution, enhance supervisory and auditing functions,and promote accurate and prompt decision-making aswell as efficient execution of business operations, inorder to enhance corporate governance systems.

Tokyo Gas Co., Ltd.

Audit

Departments
ManageReportSubsidiaries

Corporate Governance System (As of June 29, 2022)
Number of Directors
Number of Outside Directors (Thosebeing independent officers1)

9
6 (6)

Average age of Directors

65

Term of office of Directors

1 yearParticipation of Outside Directors inselecting director candidates

Yes

Participation of Outside Directors indetermination of remuneration

Yes

Investment Evaluation Committee

Number of Corporate Executive
Officers* 2

4

Number of Executive Officers

23

Performance-linked remuneration(Short-term incentive
remuneration)

Yes

Non-monetary remuneration(Medium- to long-term incentive
remuneration)Yes*1: All six Outside Directors have been notified to the listing stock exchange as independent officers who
satisfy the Company’s “judgment criteria for the independence of Outside Directors.”

An advisory body included in* 3

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

*2: Includes a Corporate Executive Officer who concurrently serves as Director (Representative Corporate
Executive Officer and President).

Tokyo Gas Group Integrated Report 2022

45

Transition to a Company with aNominating Committee, etc.

Beforetransition

Structure of a Company with an Audit &Supervisory Board
Shareholders Meeting

Audit &
Supervisory Board

Board of Directors
Determine and supervise
business execution

Outside Audit &Supervisory Board
Members

Outside Directors
Business execution
Audit

Representative
Directors

Standing Audit &Supervisory Board
Members

Directors

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

Appointment/dismissal of Directors

Board of Directors
Nominating
Committee*

Audit
Committee*

Compensation
Committee*

Determination of
proposal for election of
Directors, etc.

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

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

* Majority of members of each committee are Outside Directors
Appointment/dismissal of Corporate
Executive Officer
Business
executionand transform our business structure from now on.
We believe that driving management reforms will beessential to these tremendous transformation, the largest
since the Company was established. For this reason, in
June 2021 we made a transition to a Company with aNominating Committee, etc.

History of Tokyo Gas in enhancing corporate
governance

Increase in the Ratio of Outside Directors

2002

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)

2021

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

Appointment/dismissal of
Audit & Supervisory Board
Members

Appointment/dismissal of
Directors

Aftertransition

For over 130 years, since its foundation in 1885, theCompany has engaged in city gas business, primarily in
the Tokyo area. However, the world is entering an era ofdramatic changes to the energy field; therefore, based on‘Compass 2030,’ our plan for 2030 and beyond, we must
accelerate our efforts to expand our business domains

Supervise business execution

Representative Corporate
Executive Officers

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

Corporate Executive
Officer

Outside 6

2017

2022

27%

67%

Note
June 2018 3/8 = 38%
June 2019 4/9 = 44%

June 2020 4/9 = 44%
June 2021 6/9 = 67%

Role of the Board of Directors
The Board of Directors meets once a month in principle,
conducts important decision-making of the Company’s
management, such as management policy and plans, andoversees execution of business operations pursuant to theprovisions of the relevant legislation, the Articles ofIncorporation, and the Regulations of the Board of Directors.
The composition and role of the Nominating,
Audit and Compensation Committee

P.48

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

Internal 3
Tokyo Gas Group Integrated Report 2022

46

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

Outside Directors must possess the supervisory
skills necessary for achieving ‘Compass 2030,’ theGroup’s management vision, and supplementaryskills that complement the knowledge andexperience of the Company’s Inside Directors andExecutive Officers.

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

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

SAITO
Hitoshi
TAKAMI
Kazunori
EDAHIRO

1

2

3

EnergySustainability

Digital/Technology

4

Details about Each Skill
5

Marketing/Group
Projectmanagement/
development Governance

6
Globalbusiness

7

8

M&A/
CommuniBusinesscations
restructuring

910

Finance/
Risk
Accounting management

1 Energy
2 Sustainability

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

3 Digital/
Technology

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

Supervise the migration from the city gas business
4 Marketing/Project focused exclusively on the Tokyo area to one thatinvolves multiple businesses and decentralized
development
management by transforming the LNG value chain.

5 Groupmanagement/
GovernanceSupervise the management and operation of
personnel and organizations and administration thatmanages multiple businesses and balances autonomy
and overall optimization.

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

7 M&A/Businessrestructuring

Supervise efforts to integrate and concentratebusinesses, from a multitude of angles, with the aimof achieving noncontinuous, speedy growth, both inJapan and overseas.

8 Communication

Supervise timely, high-impact communications basedon close public hearing activities with stakeholders.

9 Finance/
Accounting
10 Risk Management

In conducting the above business field expansion
and M&A activities, supervise financial discipline andinvestment strategies based on risk balances thatdiffer from those in the past, while at the same timesupervising internal controls and risk management.

Junko

INDO Mami

ONO
Hiromichi
SEKIGUCHI
Hiroyuki

Reason for appointment of eachdirector (outside and internal)

P.55-56

Tokyo Gas Group Integrated Report 2022

47

Activities of the Board of Directors
The Board of Directors discusses business portfolios andother management strategies, makes important decisions*1
on management policies, and is dedicated in supervising (ormonitoring*2) the execution of Corporate Executive Officer.
After the transition to a Company with a Nominating
Committee, etc., most of the matters that can bedelegated to Corporate Executive Officer under the
relevant legislation and the Articles of Incorporation are
delegated to the Representative Corporate Executive
Officer and President in order to speed up execution, andthe status of the execution is reported to the Board of
Directors as necessary.
Clear separation of execution and supervisory
functions and creation of two management entities—the
execution entity and the Board of Directors—haveincreased the depth of management. We aim to improve
corporate value by quickly making decisions onenvironmental changes and expansion of business areas,
and by strengthening the supervisory function of theBoard of Directors.

*1: Revision of the Group Management Philosophy, transition to a holdingstype group structure, etc.

Attendance at the Board of
Directors and Nominating, Audit andCompensation Committees
Number of
directors/
members of eachcommittee

Number ofmeetings*3

Attendance rate*4

Board of Directors

9

12 times

100%

Nominating
Committee

4

8 times

100%

Revision of Group Management Philosophy

P.02

Audit Committee

4

14 times

100%

Transition to a holdings type group structure

P.33

Compensation
Committee

5

5 times100%*2: Public announcement of the Compass Action, evaluation of the performanceof KPIs and of the progress of the Medium-term Management Plan, theoverall picture of Digital Transformation (DX), Diversity & Inclusion (D&I) of theTokyo Gas Group, etc.

Compass Action*3: In total for the June 2021 — May 2022 period*4: Average attendance rate of each member

Reference
The number of meetings of the former Advisory
Committee held in June 2020 — May 2021

https://www.tokyo-gas.co.jp/Press_e/20211126-02e.pdf

4 times

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

Ratio of
OutsideMembers

75%

Chairperson

Ratio of
OutsideMembers

Audit Committee

75%

60%

Chairperson

Chairperson

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

Compensation Committee

Ratio of
OutsideMembers

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

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

Main activities

Main activities

Main activities evelopment of a skill matrix
DElection of candidates for directors, including candidates
for newly-appointing outside directors
Election of candidates for Representative Corporate
Executive Officer and President ormulation of an audit plan of the Audit CommitteeFEstablishment of an internal control system and auditingof its operation status, etc.
Collaboration with the Internal Audit Department,
Independent Auditors and subsidiary auditors

 stablishment of a basic policy for compensation forE
officers
Introduction of a share-based compensation plan using atrustEstablishment of FY2022 performance evaluation
indicators

Outside InternalTokyo Gas Group Integrated Report 2022

48

Effectivenessof Board of
Directors

To maintain and enhance the effectiveness of the Board of Directors, theeffectiveness of the Board of Directors was analyzed and evaluatedthrough discussion on the results of the questionnaire-based selfevaluations of each director and the third-party evaluations at the Boardof Directors meetings. In the third-party evaluation, which was conducted
six months after the transition to a Company with a Nominating
Committee, etc., stated that the effectiveness of the Board of Directors
has been generally maintained at a favorable level.

Process of analysis and evaluation
STEP 1

STEP 2

STEP 3

STEP 4Self-evaluation by each director in
the form of a questionnaire

Aggregation and evaluation by
third parties (external experts)

The Board of Directors’ discussion
on the evaluation results

Promoting future efforts

The questionnaire is composed ofa five-grade quantitative evaluation
and a freely-written qualitativeevaluation, enabling fixed-point
observations.

The results of the questionnaires
submitted by each Director are
aggregated by the third party(external experts) to ensure neutrality
and transparency.
The aggregated results are
combined with the evaluation resultsfrom the third party group (external
experts).

Item rated higher than the previous survey:
Decision making
The evaluation concerning decision making by
the Board of Directors scored higher than theprevious survey conducted before the transition toa Company with a Nominating Committee, etc.
The extensive delegation of authority tocorporate executive officer was highly evaluatedas it has led to their faster decision making.

Survey content

 omposition and management ofCmeetings of the Board of Directors(composition and members,
number of agenda items andtiming, contents and explanation ofmaterials, and frequency and timeof holding a meeting)Functions of meetings of the Boardof Directors (decision making,supervisory function, andcollaboration with the Nominating,
Audit, and Compensation
Committees)
Activities other than the Board of
Directors meetings (offering ofopportunities to understand theoperations, including workshops
and on-site visits for directors)
 roposals for improvement
P
regarding the Board of Directors* Free writing only

Evaluation comments from the third party

 ince the evaluation of theSeffectiveness was carried out six
months after the transition to a
Company with a Nominating
Committee, etc., the results are
considered to be self-assessmentin the midst of trial and error.
Even under such circumstances,the effectiveness of the Board of
Directors has been generally
maintained at a favorable level: Theaverage scores given by all Outside
and Internal Directors exceeded 4
points except that the averagescores of Outside Directors
concerning monitoring was
3.5—3.9.

Item for future improvement: supervisory(monitoring)
The evaluation of the supervisory function of theBoard of Directors stated that further improvement
in monitoring methods is needed. The Boardof Directors is discussing how to enhance thesupervisory function of the Board of Directors.
Opinions on supervisory (monitoring) raised at the Board of
Directors meetings, etc.

 ith the shift to a holdings type group structure,W
the Board needs to be more conscious of groupmanagement and to focus on new areas.
In monitoring of the management, the Board
needs to be more conscious of the linkage withthe corporate goals and to fine-tune thebenchmarks in monitoring.

To realize further improvement in theeffectiveness of the Board of
Directors, it will be necessaryfor efforts to continue without
interruption.
The evaluation confirmed that,going forward, Directors intended toestablish a common recognition on
the way the Board of Directors ought
to be in terms of its monitoringmodel and demonstrate its
recognition, in addition to continuing
to carry out initiatives to promote
understanding of the Company’sbusiness operations.
Examples of specific efforts

 system has been established toAallow directors to view materials of
the committee supporting rational
decision-making by Corporate
Executive Officers (convened
weekly). Also directors received
advance explanation on thematerials of the Board of Directors
meetings.
Lectures by experts, digital
innovation (DI) forums, on-site
inspections including overseas visitswere conducted.

Tokyo Gas Group Integrated Report 2022

49

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 chairpersonfrom 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- andlong-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 andperformance of the officer, and be in consideration of changes in the businessenvironment, and the level of other companies according to the research of an
external specialized institution.
(3) Composition of annual remuneration
Remuneration of officers shall comprise fixed remuneration (basic
remuneration) and incentive remuneration (bonus, share-based
compensation).
Basic remuneration A fixed amount in accordance with the post of eachindividual 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 performanceagainst financial and nonfinancial indicators* beside the basic amount set byeach rank. Indicators are reviewed and selected each year.
Share-based compensation As a medium- to long-term incentive remuneration,
points are provided based on the base amount set by each rank. The stocks
are provided based on the number of points at retirement.
Remuneration for directors is comprised of basic remuneration and sharebased compensation, while remuneration for Corporate Executive Officers(including those who concurrently serve as directors) is comprised of basic
remuneration, bonuses, and stock compensation.
The approximate ratios of each type of remuneration for directors are 90% inbasic 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 non-executive directors (internal and outside)
Composition of remuneration for directors (illustration)

0%

100%

Fixed remuneration

Medium- to long-term incentive
remuneration

Basic remuneration (monthly)

Trust-type share-based compensation

About 90%

About 10%

Remuneration structure of Corporate Executive Officers(including those who concurrently serve as directors)

Composition of remuneration for Corporate Executive Officers (illustration)

100%

0%

Fixed remuneration

Short-term incentive
remuneration

Medium- to long-term
incentive remuneration

Basic remuneration (monthly)

Bonuses

Trust-type share-based
compensation

About 65—70%

About 15—20%

About 10—20%

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

Indicators for bonus evaluation for FY2022
Indicators of profitability: “Consolidated net profit” and “Operating Income + Equity method income”
Financial
Indicators of growth: “Increase in customer accounts”; “Natural gas transaction volume”; and “Increase inindicators
renewable energy power sources”
NonESG-related indicators:“ E Contribution to CO2 emission reduction”“ S Improvement in group employee
financial
indicators engagement” and “ G Start-up and operation of group management”* The Compensation Committee held on May 18, 2022 resolved on the adoption of the above indicators because of
their linkage with the Priority Management Indicators set in the Management Plan for FY2022.

Tokyo Gas Group Integrated Report 202250

2Introduction 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 theenhancement 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, Audit & Supervisory Board Members, andCorporate Executive Officers for FY2021(Results of the Remuneration System before and after the transition to a Company with aNominating Committee, etc.)
Total value of remuneration by type (¥ million)
Fixed
Classification of Total value of remuneration
remuneration
officers(¥ million)(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 shares based on the points when they retire/
resign.
(2) Target persons
Directors (including Outside Directors), Corporate Executive Officers, andExecutive Officers(3) Overview of the trust (at the time of setting up the trust)
Trust period

From August 2021 to August 2024 (tentative)

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

Method to acquire shares for thetrust

Acquisition via disposal of treasury shares

Number of shares for the trust

224,600 sharesPress release on the share-based compensation plan

Basicremuneration

Directors(excluding Outside
Directors)

Audit &
Supervisory
Board Members(excluding outside
Audit & Supervisory
Board members)

Corporate
Executive Officers(including a Director
who is engaged inbusiness execution)

Incentive remuneration
Performance-linked
remuneration
Monthly
remuneration

BonusesNumber of
eligible
officers

Share-based
compensation

279

207

11

42

17

12

(76)

(63)

(-)

(8)

(4)

(6)

27

27

-

-

-

5

(9)

(9)

(-)

(-)

(-)

(3)

158

130

-

-

28

4

Notes:*1. As approved at the 221st Annual Shareholders Meeting held on June 29, 2021, Tokyo Gas has transitioned
from a Company with an Audit & Supervisory Board to a Company with a Nominating Committee, etc. The
remuneration, etc. of Directors includes that for three Directors who retired upon the conclusion of the
221st Annual Shareholders Meeting. Of the retired Directors, for the two who were appointed as Corporate
Executive Officers, their remuneration after the transition is stated as that for Corporate Executive Officers.
*2. Five Audit & Supervisory Board Members retired upon the conclusion of the 221st Annual Shareholders
Meeting. The remuneration, etc. of Audit & Supervisory Board Members is presented for their term of officefrom April 1, 2021 to June 29, 2021. Of the retired Audit & Supervisory Board Members, for the three who
were appointed as Directors, their remuneration, etc. after the transition is stated as that for Directors.
*3. The remuneration, etc. of Corporate Executive Officers is for the four who assumed office after thetransition for their term of office from June 29, 2021 to March 31, 2022. Among them, for the one who
concurrently serves as Director, his remuneration, etc. before the transition is stated as that for Director,
and his remuneration, etc. after the transition is stated as that for Corporate Executive Officer.
*4. The Company has introduced a share-based compensation plan as a non-monetary compensation basedon the resolution of the Compensation Committee held on June 29, 2021. The amount of share-based
compensation is accounted for as the amount expensed from June 29, 2021 to March 31, 2022.

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

Tokyo Gas Group Integrated Report 2022

51

Internal Control System

Response to “Internal Control Reporting System”

Ensuring the legality, soundness, and transparency of the management based on ourManagement Philosophy, we strive to clarify responsibilities of management andexecution, enhance supervising and auditing functions, and promote accurate andprompt decision-making, efficient execution of business operations, in order tosustainable growth and improvement in medium- to long-term corporate value. In
addition, Tokyo Gas and its subsidiaries direct their efforts toward lastingdevelopment by respecting the autonomy 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, theBasic Policy on Development of Internal Control Systems has been adopted by the
Board of Directors and Corporate Executive Officers have accordingly and effectively
established the Internal Control Systems and have been operating them.

To comply with the “Internal Control Reporting System” under the Financial
Instruments and Exchange Act, Tokyo Gas follows the internal control basic
framework presented in Financial Services Agency standards, arranges andadministers internal control related to financial reporting, assesses theireffectiveness, and improves them as necessary. In the internal control report for theprevious consolidated fiscal year prepared following this system, which found ourinternal control regarding financial reporting to be effective, the Auditors expressed
the opinion that all the material points were represented appropriately.

Overview
of Internal
Control
System

1

2

3

4

5

6

7

System to ensurethat officers andemployees performtheir duties inconformance withlaws, the Articles ofIncorporation, etc.

System to store andmanage information
regarding theexecution of 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 operationby the Groupsubsidiaries

Items regarding
employees assistingwith the duties of the
Audit Committee

System concerning
reporting to the Audit
Committee andsystem to ensure
effective auditing by
the Audit Committee

Specific Examples ofInternal Control System

Internal Audit Department
The Internal Audit Department of theTokyo Gas Group has been established toefficiently and effectively audit the statusof execution of business operations. The
Department reports audit results to the
Audit Committee, directors of the audited
subsidiaries, and other parties concerned.
The Internal Audit Department is anorganization for internal audit of theCompany, which is established to conduct
professional audits. Its organizational
structure and number of employees areshown on the right.

Audit Committee
Audit Sect.I
Internal Audit
Department
38 staff members(as of March 31, 2022)

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

In addition to the establishment of an organization that enables the Tokyo Gas Group’s
officers and employees report to the Audit Committee without delay, numerous actions havebeen taken to facilitate effective audit activities, including collaboration of the Audit
Committee, the Internal Audit Department, and Independent Auditors.
Confirmation of appropriatenessof audit method and results
Confirmation of independence

Audit by the
Audit Committee

Reporting of audit plan andresults, and exchange of opinions

Audit by
Independent
Auditors

Confirmation of appropriateness ofinternal control
Conveying of audit plans and results
Reporting of audit plans andresults, and exchange of opinions

Reporting of audit plans and results, and exchange of opinions

Internal audit

Tokyo Gas Group Integrated Report 2022

52

Compliance

Compliance Structure

Compliance Risk Management

Tokyo Gas has established the Management Ethics Committee chaired by the
President and CEO. It discusses at the executive level overall actions for maintaining
and improving compliance awareness, monitors the implementation of compliancerelated 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 up compliance committees to carry out inspections
and improvements suiting their own operations. The Tokyo Gas Group maintains theCode of Conduct as the standard for behavior when carrying out duties. We aremaking 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-specific training sessions on the occasionsof their entry and promotion.

We have formulated and implemented escalation rules that encourage any employee
finding anything unusual to notify the employee’s manager without hesitation and havebeen effectively operating internal and external consultation desks. We are thereby
endeavoring to ensure that compliance-related issues are discovered and resolved at
an early stage and our corporate self-regulatory processes functions effectively.
We monitor the effectiveness of Group compliance promotion activities byconducting regular compliance awareness surveys of all employees. The results ofthese surveys are 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 and regulations, corporate ethics andsocial norms. The status of improvement concerning any recommendations made as aresult of the internal audits is checked in a follow-up audit in the following year toensure steady improvement in risk management.

Compliance Framework

President and CEO

Management Ethics
Committee

Advisory board concerning
important matters of theexecutive structure
A committee body aimed atpromoting management withtransparency through discussion
on overall compliance

Chairperson: President and CEO
Members: Member of the Management
Committee and general managers
concerned

ReportingInstructing, reporting

Instructing, reporting

Audit
Department

Compliance Dept.

Examples of specific actions
Workplacediscussions

Each workplace of the Tokyo Gas Group carries out a workshop, mainly
led by a person in charge of compliance promotion (21,956 participants
in FY2021). Using the awareness building tools based on the Tokyo Gas
Group’s Code of Conduct, participants learn about the recent trend
concerning corporate compliance and discuss how to actually practice
the Code of Conduct, which is intended to lead to taking actions.

Rank-specifictraining

Rank-specific training sessions, including those for new employees,
are carried out for the Group employees, so as to enhance compliancemindedness (1,238 participants in FY2021).

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 (10,404 participants in FY2021).
In addition to checking the objectives of relevant laws and regulations,
we seek to provide during the training sessions practical information
by incorporating interpretation on specific cases disclosed by the Fair
Trade Commission and the Consumer Affairs Agency.

Supporting, reporting

Compliance Committee

Internal audit

Business
Departments

Subsidiaries andTokyo Gas LIFEVAL

Reporting, consulting

Employees

Reporting, consulting

Consulting,notifying

Tokyo Gas Group Integrated Report 2022

53

Risk Management System
In accordance to the Risk Management Regulations which stipulated basic items of theTokyo Gas Group’s risk management, we have established an enterprise risk
management system and are using an “ordinary-time response” (to understand risks andimplement measures against the risks) method, or an “emergency-time response” (toOrdinary-time response
Our Risk Management Regulations have explicitly statedspecific initiatives and major risks at ordinary times and an
enterprise risk management (ERM) system has been
established to undertake them. The Risk Management
Committee was established with the aim of improving themanagement level of the ERM system. The Committee
checks progress regarding the establishment andoperational status of the ERM system, including periodic
risk assessments. It also reports to a committee that
supports the corporate executive officers’ reasonabledecision-making.
Under the framework, around 240 risk management
promotion officers (as of April 1, 2022) are deployed in thebusiness departments of Tokyo Gas and its subsidiaries inorder to promote ERM. Each year, we assess risks and theimplementation and improvement status of countermeasures.
This system facilitates the steady implementation of the
ERM-PDCA (Plan-Do-Check-Act) cycle.

respond when a significant risk emerges) method. The Risk Management Regulations
stipulate that the Board of Directors, taking into account the importance of risk
management, shall always oversee the effectiveness of risk management and takeappropriate action when a significant risk occurs.

Enterprise Risk Management (ERM) System

Emergency-time response

Securities Markets and Other Stakeholders

Because the company provides public services that comprisea lifeline, for many years it has also had a crisis management
system that serves as a response system in case an accident
or other risk-related event actually occurs. Specifically, we
have formulated Emergency Response Organization Regulations.
In case of major crises, including major natural disasters, suchas earthquakes, or production or supply disruptions arisingfrom major accidents at pipelines or LNG terminals, as well as
spread of highly pathogenic or infectious diseases, terrorism,
failures in mission-critical IT systems, and compliance problems,
the Emergency Response Organization has been established
to respond to the situation immediately 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, amajor accident disrupting gas supply, a widespread blackout,highly pathogenic or infectious diseases, etc. This plan is inplace to reinforce the company’s risk management system.

Disclosure of risk information through Securities Report, Financial results andSustainability 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 forassessment of major risks and othernecessary matters

Clear statement of risk
management policies

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

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

Improvement proposals
Convey statementof 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 April 1, 2022)
1.Risks associated with accidents, disasters, etc.

3.Risks associated with business execution(1) Energy resource procurement difficulties(1) Risks related to existing businesses
1. Decrease in demand caused by intensified(2) Natural disasters
competition(3) Accidents and supply impairments accompanying city
2. Fluctuation in material prices
gas production and supply, and power generation
3. Changes in laws, regulations, and national or(4) Spread of a highly virulent or contagious infections
local energy policy(5) Unforeseeable, large-scale power outages
4. Fluctuation in gas sales volume caused by climate(6) P roblems in securing the safety of city gas and inchangequality of gas appliances
5. Decrease in existing demand caused by changes
in the business environment(7) D amage caused by rumors arising from a city gas
accident of another company
6. Interruption of telephone services at call centers
2.Market fluctuation risk
(1) Fluctuation in market prices and interest rates(2) F luctuation of the electric power market
and LNG prices

7. Delay in technology development(2) R isks associated with overseas businessdevelopment(3) Delay in development of new markets(4) Inability to recover investments

4. R isks related to information
management and system operation(1) Leakage of personal information(2) Shutdown or malfunction of IT systems(3) Cyber attacks
5. R isks related to corporate social
responsibility

Emergency Response Organization*
President and CEO (Organization Leader)
Collaboration(1) Compliance violations(2) Response to new environmental regulations(3) Insufficient customer services

Instructions/orders(4) Insufficient response to human rights issues

ReportCorporate
Planning Dept.
(Group-wide coordination)

Business Departments / Subsidiaries* A department in charge of an executive office is predetermined dependingon the type of emergency.

Tokyo Gas Group Integrated Report 2022

54

Directors (as of June 29, 2022)
April 1974

Joined the Company

April 1979

Joined the Company

April 1982

Joined the Company

April 2004

Executive Officer and Assistant to Chief
Executive of Corporate Communication Div.
Executive Officer and General Manager of Corporate
Planning Dept. of Strategic Planning Div.
Senior Executive Officer and in charge of Corporate
Planning Dept., Infrastructure Project Dept., FinanceDept., Accounting Dept. and Affiliated Companies Dept.
Senior Executive Officer and in charge of Corporate
Planning Dept., Investor Relations Dept., Finance Dept.,
Accounting Dept., Affiliated Companies Dept. and Gas
Industry Privatization Research Project Dept.
Senior Executive Officer and in charge of Corporate
Planning Dept. and Affiliated Companies Dept.
Director, Senior Executive Officer and in charge ofCorporate Planning Dept., Corporate Communications
Dept. and Affiliated Companies Dept.
Director, Senior Executive Officer and in charge ofCorporate Planning Dept., Project Management
Dept., Corporate Communications Dept. and AffiliatedCompanies Dept.
Representative Director, Executive Vice President andChief Executive of Living Energy Div.
Representative Director, Executive Vice President andChief Executive of Residential Sales and Service Div.
Representative Director, President
Director, Chairperson of the Board (Current position)

April 2010

Executive Officer and General Manager ofCorporate Planning Dept.
Senior Executive Officer and in charge of
Personnel Dept., Secretary Dept., ComplianceDept. and Internal Audit Dept.
Senior Executive Officer and Chief Executive ofEnergy Resources Business Div.
Director, Senior Executive Officer and Chief
Executive of Energy Resources Business Div.
Representative Director, Executive Vice President
and Chief Executive of Residential Sales andService Div.
Representative Director, Executive Vice President
and Chief Executive of Residential Service Div.
Representative Director, President
Director, Representative Corporate Executive
Officer and President
Director, Representative Corporate Executive
Officer, President and CEO (Current position)

April 2008

General Manager of Finance Dept.

April 2011
April 2012

General Manager of Middle Branch
General Manager of TG-Group Reorganization
Project Dept.
Executive Officer and General Manager ofResidential Sales Planning Dept. of Residential
Sales and Service Div.
Senior Executive Officer, CFO and in charge ofFinance Dept., Accounting Dept., Purchasing
Dept. and Real Estate Management Dept.
Senior Executive Officer, CFO and in charge ofFinance Dept., Accounting Dept. and Personnel
Dept.
Senior Managing Executive Officer, CFO andin charge of Finance Dept., Accounting Dept.,
Personnel Dept. and Purchasing Dept. (Retired in
March 2019)
Standing Audit & Supervisory Board Member
Director (Current position)

April 2006
April 2007
April 2008

April 2009
June 2009

Director, Chairperson of the Board(Nominating Committee Member
January 2010
and Compensation Committee
Member)HIROSE Michiaki

April 2012
April 2013
April 2014
April 2018

Reason forappointment

HIROSE has experience mainly in operation related to corporate planning. He led
efforts to compose the Management Vision and the group formation, and wasengaged in establishing a suitable corporate structure and system for a global
comprehensive energy group. He has been Chairman of the Board since 2018,
bolstering the enhancement of corporate governance.

Role played at the Through his experience as the Company’s Representative Director and President,
Board of Directors HIROSE has in-depth knowledge about all areas of management, provides
appropriate proposals to the Board of Directors as the non-executive Chairmanof the Board, and manages the Board meetings to ensure its proper supervisory
function.
April 1976
April 2000
April 2005
April 2007
April 2015

June 2017

June 2019
June 2019
May 2022

Outside Director

Joined Mitsui Fudosan Co., Ltd.
President and CEO of Mitsui Fudosan America, Inc.
Managing Officer and Deputy Chief Executive of
Office Building Div. of Mitsui Fudosan Co., Ltd.
Managing Officer and General Manager ofInternational Dept. 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. and Honorary
Chairman of Halekulani Corporation (Retired inJune 2020)
Director of the Company (Current position)
Outside Director of GLOBESHIP Corporation(Current position)
Outside Director of Paramount Group, Inc.
(Current position)

April 2012
April 2013
June 2015
April 2016
April 2017

Director, Representative Corporate April 2018
Executive Officer, President and CEO June 2021
(Compensation Committee Member)

UCHIDA Takashi

Reason for appointment Mainly using his experience in planning, energy resources and overseas
business, UCHIDA has been engaged in efforts to address various
as Director

management issues amid changes in the surrounding environment, including
the full deregulation of the electric power and gas retail markets. Currently,
as Representative Corporate Executive Officer, President and CEO, UCHIDA
has been bolstering the Group to take up new challenges toward achieving
the management vision Compass2030, formulated in 2019.

Reason for appointment In FY2022, the year of transition to a new group management structure,as the Representative including the legal separation of the Pipeline Network Division, UCHIDA
has been appointed as the current position with the task of facilitating the
Corporate Executive
transition and achieving further growth.
Officer and President
Role played at theBoard of Directors

Outside Director(Chairperson of theCompensation Committee andNominating Committee Member)

SAITO Hitoshi

TAKAMI Kazunori

Mr. SAITO Hitoshi’s management capabilities, based on the broad visionand in-depth knowledge he developed as as an executive in the real estatebusiness, and especially the global business sense nurtured in overseas
business, will greatly contribute to the promotion and supervision of theCompany’s management strategies.

Important concurrent Outside Director of GLOBESHIP Corporation
Outside Director of Paramount Group, Inc.
positionsReason forappointment

April 2015
April 2017
April 2018

Director (Audit Committee
Member)

NAKAJIMA Isao
Reason forappointment

June 2019
June 2021

NAKAJIMA has experience mainly in finance and accounting and has served as
CFO, working to strengthen the financial structure of the Company and improve
communication with shareholders and investors. Since 2021, he has been afull-time Audit Committee member, and is responsible for auditing to ensure thelegality and soundness of management.

Role played at the As a full-time Audit Committee member, NAKAJIMA strives to provide
Board of Directors information to the Board of Directors and the Audit Committee to improve theireffectiveness. He also attends the Management Committee and other meetings
to capture internal risk information and audit the proper operation of internal
control systems.

As Director who concurrently serves as an Corporate Executive Officer,
UCHIDA is a powerful driver of the management vision. He alsoorganically connects the Corporate Executive Officers and the Board of
Directors, such as by providing timely and appropriate explanations on thestatus of business execution so that the Board can properly oversee it.

(Chairperson of the Nominating
Committee and Compensation
Committee Member)

Reason forappointment

April 2022

April 2013

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

Mr. TAKAMI Kazunori’s management capabilities, based on the broad visionand in-depth knowledge he developed as an executive in the electricalindustry, and especially the marketing sense he acquired from the consumer
perspective in the home appliance business, will greatly contribute to thepromotion and supervision of the Company’s management strategies.

Important concurrent Outside Director of Tokyo FM Broadcasting Co., Ltd.
Outside Director of Nojima Corporation
positions
Outside director of FUJITA KANKO INC.

Outside Director(Nominating Committee Member
and Compensation Committee
Member)EDAHIRO Junko
Reason forappointment

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

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

Important concurrent Representative Director of e’s Inc. / Director and Chairperson of Change
Agent Inc. / Professor of Shizenkan University Graduate School ofpositions

Leadership & Innovation / Representative Director of Shimokawa Seeds K.K.
Representative Director of mirai-sozo.work

Tokyo Gas Group Integrated Report 2022

55

Outside Director(Chairperson of the Audit
Committee)

INDO Mami
Reason forappointment

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

Ms. INDO Mami’s capabilities in advanced and diverse management
analysis and instructions she developed as an analyst and adviser in thefinancial industry, and her management sense from the risk perspective
nurtured by her experience in a surveillance agency, cultivated throughthe experience of monitoring organizations, will greatly contribute to thepromotion and supervision of the Company’s management strategies.

Important concurrent Outside Director of FUJITEC CO., LTD.
Outside Director of Ajinomoto Co., Inc.
positions

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

Outside Director

Outside Director(Audit Committee Member)

Newly appointed

ONO Hiromichi(Audit Committee Member)

Reason forappointment

SEKIGUCHI Hiroyuki

Mr. ONO Hiromichi’s management capabilities, based on the broad
perspective and in-depth knowledge he developed as as an executive inthe food industry, and especially his management sense nurtured fromthe risk perspective at a finance division will greatly contribute to thepromotion and supervision of the Company’s management strategies.

Important concurrent Outside Director of the Mebuki Financial Group, Inc.
positions

Outside Director of AIG Japan Holdings KK

Corporate Executive Officer

Senior Managing
Corporate Executive
Officer

Important concurrent None
positions

KIMOTO
KentaroSAWADA
SatoruGeneral Manager, Customer &Business Solutions Company

SASAYAMA
ShinichiCSO

KASUTANI
Toshihide

General Manager of Overseas
Operations Company

Senior Managing
HIGO
Executive
Takashi
Officers

Managing
Executive
Officers
Forreference

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

Executive Officers

Representative
Corporate Executive
UCHIDA Takashi
Officer, President andCEO
Representative
Corporate Executive
Officers,Vice
Presidents

Reason forappointment

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

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

Executive
Officers

CTO, CDO and Chief Executive of Digital
Innovation Div.
In charge of Secretary Dept., General
Administration Dept., Corporate Communications
Dept., Sustainability Dept., and Internal Audit
Dept.

OGAWA
Shinsuke

CRO, CHRO, and in charge of Corporate
Planning Dept. and Personnel Dept.

SHIGITANI
Ayumi

CIO,President, Representative Director of TOKYOGAS iNET CORP.

HOSOYA
Isao

President, Representative Director of Tokyo Gas
Asia Pte. Ltd.

TANAZAWA
Chief Executive of Energy Trading Company
Satoshi
SAITO
AkihiroCustomer & Business Solutions Company
Chief Executive of Residential Sales and Service
Div.

KONISHI
Yasuhiro

President, Representative Director of Tokyo Gas
Engineering Solutions Corporation

SATO
Hirofumi

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

KADO Masayuki, ENDO Yo, SUGESAWA Nobuhiro,
TSUJI Eito, KURIMOTO Kazuya, KONISHI Masako,
TAKEUCHI Atsunori, MINAMI Taku, YAKABE Hisataka,
OHASHI Taro, NAKAMURA Hajime, MIURA Kazutaka,
MURAKOSHI Masaaki, SHIMIZU Seita

Tokyo Gas Group Integrated Report 2022

56

Messages from Outside Directors

Smooth communication
between Directors andExecutive Officers is
becoming ever more
important
Outside Director

TAKAMI KazunoriNew
appointment

I will be involved in the
Board of Directors’
meetings by keeping the“improvement of mediumto long-term corporate
value” as a criterion for
judging performance
Outside Director

SEKIGUCHI Hiroyuki

Tokyo Gas has transitioned to a Company with a Nominating Committee, etc., drawing

I worked for the Japan Broadcasting Corporation (NHK) for 42 years as a television journalista clear line between its supervisory and executive functions, and making the Board of

mainly in the economic field, and concentrating on covering government agencies, trading

Directors to be mainly responsible for the supervisory functions. At the post-transition Board

companies and the financial industry. In the latter half of my career, as Senior Commentator I wasof Directors meetings, we monitor and oversee the executions, and make sure that eacha news anchor of various TV programs, focusing on private companies. In particular, I interviewed

business is progressing in line with the medium- to long-term management strategy. As an

many guests on the issues related to corporate governance, energy and the environment, andexample, I myself make deliberate efforts, such as changing what to ask. Those in charge

provided comments and proposals from the perspective of corporate management.

of execution also make thorough discussions before submitting the matters to the Board of

Having been appointed as an outside director, I am now in a position to apply thisDirectors meeting, where active, intensive discussions are taking place. We are still goingexperience in management. I feel a great responsibility and brace myself for the challenge.

through a process of trial and error, but I think we are definitely moving in a right direction.

I intend to use my knowledge and experience to fulfill my role as an outside director, while

Since assuming the position of outside director, I have been making a case for theimportance of working with a sense of speed. As we have transitioned to a Company with akeeping my eyes focused on various stakeholders.
Showing a vision is very important in terms of corporate governance. My impression

Nominating Committee, etc., quicker decision-making is becoming possible, followed by greaterof Tokyo Gas from outside through interviews, was a “company close to us” that is directly

authority in execution, accelerating the speed of business development. I also believe thatconnected with customers to support their daily lives and industries, and also a “company

communication between the supervising party and the executing party becomes increasinglythat takes on challenges” that leads the industry with a vision of new policies and newimportant. As an outside director, I intend to carefully communicate with those involved inbusinesses. The Tokyo Gas Group has recently laid out its new Management Philosophy. The

execution and firmly support their efforts while checking the direction they are heading.

importance of this Philosophy needs to be repeatedly promoted until each and every Group

The Board of Directors of Tokyo Gas is well diversified, with six of the nine directors
being outside directors who have a variety of skills and expertise. The Board carries out

employee understands and incorporates it in their daily work.
The energy industry is undergoing a major transition. We are also facing the big challenge

a wide range of deep discussions. This fiscal year, the next medium-term managementof achieving both stable supply of energy and decarbonization. As an outside director, I willplan will be drawn up. Although the business environment is increasingly uncertain, wealways keep the “improvement of medium- to long-term corporate value” as a major criterion

will continue to engage in more active discussion at the Board meetings, with the aim offor gauging my own efforts, and oversee the Group’s efforts to achieve this goal, in addition

making the Tokyo Gas Group get closer to the vision set forth in its management vision

to encouraging those on the execution side to make the right, smart decisions and execute

Compass2030 and its desired future portfolio.

their business with confidence.

Tokyo Gas Group Integrated Report 2022

57

Business
Overview
Tokyo Gas Group Integrated Report 2022

58

Customers

Asset Optimization &Trading Business

Gas and electricity retail companies

Local governments

Provision of stable and economical energy and environmental value
Provision of flexibility and optimized services

Energy Trading Company

Strengths

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

Risks

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

As of March 31 2022

Tokyo Gas

Business Overview
Energy Trading Company includes the Raw Material
Procurement Division engaged in LNG contracts
and transportation, the Electric Power Division
dealing with natural gas fired thermal power plants
and renewable energy, Wholesale & Regional
Service Division providing energy solutions toother gas companies, and the Production Division
engaged in LNG terminal operations.
Redefining LNG, the raw material of city gas, asa commodity and based on our strengths of having
abundant assets and customer connections, we
aim to maximize the value of energy by optimizing
LNG supply and demand while ensuring its stablesupply and by trading and swapping LNG. Amid
increasing volatility in the LNG, electric power, andfinancial markets, we will also work to establish amodel to monetize market volatility.
In this way, we will contribute to the stablesupply of energy through asset optimization andtrading business activities, which will lead tosupporting industries and the everyday lives ofour customers. Moreover, as a leading natural gas
company, we will lead the transition to Net-Zero
CO2 and create environmental value.

Domestic and overseas LNG players

LNG assets
LNG carriers owned andmanaged by the company

LNG terminals

LNG procurement

10 carriers

4 locations

countries

Energy Advance5

15
projects

Hitachi LNG Terminal

13
million tons

Ichthys LNG PJ

Power sources
Renewable energy transaction volumeJapan

391,000kW

Overseas

1,107,000kW

Gas generation
capacity

Total

1,498,000kW

Japan

Total

Overseas2,590,000kW 1,260,000*kW

Annaka Solar Power Plant

3,850,000*kW

Ohgishima Power Plant*Revised on Sept 22nd, 2022

Responding to market volatility

Markets
LNG

Electric power

Finance

Leverage assets to maximize energy value
By utilizing abundant LNG-related assets and renewableenergy transaction volume, the Energy Trading Company
responds to the needs of domestic and overseas LNG
players, gas and electricity retail companies, and local
governments.
After securing a stable supply of LNG, we combine

LNG procurement assets and financial transactions
to expand LNG trading with domestic and overseas
LNG players. In addition to selling gas and electricity
to wholesalers and local governments, we also provide
solutions concerning low carbon, decarbonization, andresilience to solve issues faced by communities.

Tokyo Gas Group Integrated Report 2022

59

Results in FY2021

Gaseous Energy
Expansion BusinessTokyo Gas Network

Business Overview
To date, the Tokyo Gas Group has increased the
spread of natural gas while ensuring safety andstable supply. In recent years, the Tokyo Gas
Pipeline Network Division has completed theconstruction of high-pressure gas pipelines in thenorthern Kanto region in addition to the Tokyo area,and has further enhanced supply stability.
On April 1, 2022, Tokyo Gas Network Co., Ltd.,
which inherited the gas pipeline business from
Tokyo Gas, started operation. We strive to actively
develop city gas customers, contribute to CO2emissions reduction at customer sites, and expand
value added businesses by installing smart meters.
Through efforts to promote the spread ofgaseous energy, Tokyo Gas Network will continue
to maintain the infrastructure for industries,
technological innovation and daily lives. We will
also continue to promote the spread of natural gas
and use of gaseous energy for achieving low carbon
and decarbonization to create environmental value.

2021

Number of installed
meters*12.20 million

Created a circular trunk pipeline networkof four LNG terminals by opening the
Ibaraki Line.

Kiyohara Industrial Park
Hitachi
LNG
Terminal(+0.12 million vs. FY2020)

Total length ofpipeline*

65,562 km(+466 km vs. FY2020)

Koga-Moka Line

City gas supply
volume15.4 billion m

The Ibaraki Trunk Linefurther strengthens
natural gas infrastructure

Ibaraki-Tochigi LineIn March 2021, the Ibaraki Trunk Line, ahigh-pressure gas pipeline built by the
Tokyo Gas Pipeline Network Division
in Ibaraki Prefecture, was opened. This
completed a loop of four LNG terminals
in Negishi, Ohgishima, Sodegaura,and Hitachi, further strengthening the
backup system. By enabling supply ofcity gas from the Hitachi LNG terminal
through the Ibaraki-Tochigi Line and theIbaraki Line, Tokyo Gas Network has
achieved a more stable supply of gas.

Ibaraki Line3(+0.2 billion m 3 vs. FY2020)
LNG terminal
Saito Line
Kashima Coastal
Industrial Zone

Kashima Coastal Line
Chiba-Kashima Line

1999

Ohgishima LNG terminal

Created a circular trunk pipeline networkof three LNG terminals for the spread andexpansion of natural gas.

Negishi LNG Terminal
Sodegaura LNG terminal* The number of installed meters andStrengths

 any years of experience in safe and stableMsupply of gas
Ties with customers and communities that havebeen cultivated through the pipeline business

Risks

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

the total length of pipeline are on aconsolidated basis.

Development of Smart Meter System
Since 2020, the Tokyo Gas Pipeline Network Division has jointly
studied technical specifications for a gas smart meter systemwith Osaka Gas Co., Ltd and Toho Gas Co., Ltd (the gas
pipeline network divisions of both companies), which resulted in
the standardization of the system in Japan and has also worked
on international standardization of a part of the system. The
introduction of smart meters promotes the efficiency of meterreading operations and the improvement of the safety anddisaster resistance of the pipeline network through the use of
remote opening and closing functions. New services using gas
usage data by gas retailers are also expected to be created.

1. Inter-meter communication

2. Cooperation with Tokyo Gas Network

Tokyo Gas Network

Microcomputer meter withradio

Transponder

1. Transmit meter usage via radio.
2. The transponder is to be connected to one microcomputer meter witha radio in dozens of units, and to be installed at the customer’s home.
The transponder has a function to combine usage data sent by radio
and communicate with the system of Tokyo Gas Network.

Tokyo Gas Group Integrated Report 2022

60

Solutions Business

City gas sales volume and number of retailcustomers
Sales volume (LH)
Number of retail customers (RH)

(billion m 3)

18

Electricity sales volume and number of retailcustomers(million)

12(billion kWh)

30

Sales volume (LH)
Number of retail customers (RH)

(million)

3

B2C/B2B
Customer & Business Solutions Company

12

8

6

4

TG Octopus Energy

Business Overview
In the Business to Customer (B2C) area, whileleveraging the strength of contacts for services atcustomers’ homes called “last mile services” centeredon LIFEVAL, we will enhance customer satisfaction bystrengthening digital contacts such as member sites,
and by expanding services that satisfy the needs ofcustomers. In addition, TG Octopus Energy uses its
proprietary system to provide digital marketing tomeet a wide range of customer needs.
In the Business to Business (B2B) area, we will
provide all-in-one services across Japan centeringon Tokyo Gas Engineering Solutions (TGES) basedon its strength in the ability to propose and realize
solutions for energy and other services. In addition
to providing optimal proposals for decarbonizedproducts (i.e., renewable energy and carbon neutral
LNG) and for labor saving at factories, we will strive
to build attractive cities and we will work with local
governments and other parties to solve social issues
in communities, such as building attractive cities andimproving environmental sustainability.
Through the solutions business (B2B and B2C),
we will support our customers’ lives with energy,
and provide comprehensive solutions and services
responding to specific lifestyle needs and social
challenges such as enhancing resilience. We will also
create environmental value by expanding the numberof decarbonized products.

Strengths

 ommunity-based sales network composed ofC
LIFEVAL, Enesta, and other outlets, a customer
base of over 11 million accounts, and relationships
with customers based on mutual trust
Expertise in work requiring technical capability at
customers’ homes (i.e., device installation, repairs,
etc.)Energy solution technology and all-in-one solution
provision

Risks ecrease in demand caused by intensifiedD
competition driven by liberalization and changes inlifestyle and business environmentPolicy changes and acceleration by national andlocal governments, including laws, regulations, andsystems
Delay in technological development required to deal
with competition and alternatives

002018.32019.32020.32021.3

22.5

2.25

15

1.5

7.5

0.75

0

2022.302018.32019.32020.32021.32022.3

Last mile service
expansion

Digital shift in marketing withTG Octopus Energy

LIFEVAL and Enesta have 96
outlets in the Tokyo metropolitan
area and have expanded thenumber of customer accounts
by selling gas and electricity
and providing solutions in the
水パッチョ
local community. In 2022, thecompanies made a full-scale entry into the plumbing
repair business with a target of achieving 100,000 repair
jobs in FY2022. The ultimate aim is to become thenumber one provider in the Tokyo metropolitan area forcustomer satisfaction and the share of comprehensive
repair services for gas, electricity and plumbing.

TG Octopus Energy, a joint venturewith the U.K. energy technology
company Octopus Energy, started
operation in Japan in November 2021.
Since its launch in the U.K. in 2016,
Octopus Energy has provided electricity to more than 3
million customers in just six years, with its unique systemand concierge services that enable flexible change indevelopment policies depending on customer needs.
By taking advantage of Octopus Energy’s strength invarious electricity rate plans, including renewable energy,
and digital marketing, TG Octopus Energy will actively
develop electric power sales throughout Japan.

Last mile operation of Tokyo Gas

P.40

Carbon Neutral LNG (CNL), a decarbonization product
The Tokyo Gas Group was the first to import CNL in
Japan in July 2019 and is supplying CNL to approximately
80 customers as of March 2022. CNL is an LNG thatis considered to generate no CO2 on a global scale byoffsetting greenhouse gases generated in the process fromnatural gas extraction to combustion, using credits (carbon
offsetting).
In March 2021, we established the Carbon Neutral
LNG Buyer’s Alliance with our customers. With the aim ofcontributing to the realization of a carbon-neutral society
in 2050, we are making efforts to promote recognition of
CNL among the public, improve the evaluation of CNL byinvestment institutions, and establish its position in various
domestic systems.

Example of ONO PHARMACEUTICAL Co., Ltd.
ONO PHARMACEUTICAL has switched the total amount of city gas used at the
Tsukuba Research Institute (Tsukuba City, Ibaraki Prefecture) to carbon neutral city gas.

Tokyo Gas Group Integrated Report 2022

61

Solutions Business
B2B
Tokyo Gas Engineering Solutions (TGES)

Solution Business (B2B) Schematic

GenerateenergyWheel the excess
electricity via the gridTransmit

Schools

energyBusiness Overview
Since the introduction of LNG in Japan in 1969,
the Tokyo Gas Group has been providing LNG
terminals, pipelines, district heating and cooling,and energy services to meet customer needs,
utilizing the technology and expertise developedin the process of consistently being responsible
for the entire LNG value chain. In April 2022, theB2B function of Tokyo Gas was transferred to
TGES, which, as a core business company forthe provision of Service (S), Gas (G), Power (P),and Engineering (E) as a all-in-one value offering,has since been accelerating the B2B business tosolve customers’ issues. TGES will further expand
the provision of low-carbon and decarbonization
solutions, combining solar, biomass, and otherrenewable energy, and create environmental value.

UseenergyHotels andcommercial
properties

Wheel theexcess electricity
from the grid

LNG terminal

Valve station
Governor station

Project Management Consultant(PMC) for an LNG receiving terminalin Thailand
TGES was awarded the contract of ProjectManagement Consultant (PMC) services forconstruction of the Nong Fab LNG Receiving
Terminal by PTT LNG Company Limited
in Thailand and is currently conducting its
operations. TGES received the contract
because of its high technical capability andextensive experience. It is engaged in theoverall management, including the technicaland contract aspects, to ensure that thedesign, procurement, construction, and test
runs conducted by construction contractors
are carried out in accordance with the plan.

EnergycenterEnergy center

Public facilities
and offices

Factory

Kiyohara Industrial Park Smart
Energy Project
A smart energy network with a gas cogeneration system was constructed in the
Kiyohara Industrial Park in Utsunomiya City,
Tochigi Prefecture to supply electricity and heatto three companies and seven offices in thepark. The project achieved energy saving andCO2 emission reduction of approximately 20%*,
improved resilience, and was awarded theMinister of Economy, Trade and Industry Award(Joint Implementation), the highest award underthe 2021 Energy Conservation Grand Prize.

Wheeling

Medicalinstitutions, etc.

District heating and cooling

The excess electricity
generated by gas
cogeneration systems andsolar power generationequipment in customer
facilities can be transmitted toother demand locations of thecustomer via the networks
of general transmission anddistribution companies.

Gas cogeneration systems

Gas network
Heat network

Strengths

 ll-in-one proposal for service, energy andaengineeringInsights accumulated from the user’s perspective
and engineering solutions cultivated through the
management and operation of plants and facilities
Experience in engineering projects related to over
100 LNG terminals in 20 overseas countries

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

Electric power network
Information networkin electricity and heat sent from the co* Reduction
generation-centered energy center (compared to
FY2015, actual values measured in 2020 and 2021)

The Niihama LNG Terminal contributing to the promotion of carbon neutral in Shikoku Area
Niihama LNG Co., Ltd., which TGES established jointly with Shikoku ElectricPower Co., Inc., SUMITOMO CHEMICAL COMPANY, LIMITED, SUMITOMOJOINT ELECTRIC POWER CO.,LTD., and Shikoku-Gas completed constructionof the Niihama LNG terminal and started gas supply in March 2022. In addition
to sequentially converting raw fuel consumed at Sumitomo Chemical’s Ehime
Works to LNG, the Niihama North Thermal Power Plant (scheduled to be
operational in 2022), which is under construction by Sumitomo Joint ElectricPower, plans to use LNG as a fuel with a projected annual reduction of 650,000
tons in CO2 emissions. The Niihama LNG terminal will also supply gas tonearby customers and promote fuel conversion to reduce CO2 emissions in thesurrounding areas, contributing to the development of the Shikoku region.
Tokyo Gas Group Integrated Report 2022

62

Major businesses

Global Business
Global Business Company

North America
UpstreamBusiness

Business Overview
The Global Business Company has expanded
its overseas businesses by developing upstream
businesses in North America and Australia, andby developing midstream/downstream businesses
centered on LNG infrastructure businesses inSoutheast Asia utilizing the expertise accumulated
in Japan. In recent years, we have also focused on
renewable energy businesses such as solar and wind
power projects in North America and the Nordics.
In the future, we will actively participate inprojects in which we can be a leading business
operator, while also conducting asset replacement toimprove global business value.
Through our efforts in global business, we
intend to respond to the vigorous energy demandof emerging countries and supply energy in a stablemanner. In addition, as in Japan, we will continue tocontribute to CO2 emissions reduction by expanding
the use of gas and LNG as alternatives to coaland oil overseas. We also intend to enter the NetZero CO2 business with the aim of further creating
environmental value.

StrengthsRisks table operating capability in LNG terminals, powerS
generation projects, etc.
Expertise in resource development and LNG
infrastructure business that we have cultivated sofar tagnation of business operation, increase inS
expenses, and missing of business opportunities
due to compliance with country-specific laws,
regulations and/or business practices
Impact of fluctuations in crude oil/gas prices
and foreign exchange rates on the revenue andexpenditure of overseas business operations ingeneralMidstreamandDownstream
Business(As of March 31, 2022)

We invest in prime assets by making use of our knowledge andinsights regarding local markets, regulations, and businessstructures. We have acquired these through our experience inbusiness operations and the dispatch of personnel. At the sametime, we monitor commodity price trends and carefully estimate
the productivity and reserves of gas fields.
In addition to the natural gas fired thermal power generation
business, we will also continue to focus on the renewable energy
business. Following collaboration with the French company
ENGIE in Mexico, we are now working on our own solar power
generation project (Aktina) in the U.S.A.

Southeast Asia

(As of March 31, 2022)

 idstream andM
Downstream
GWHAMT
Bang Bo
Business
Business
PVGD
Location
One Bangkok

FGEN LNG

Acario Innovation LLC/
Acario Investment One LLC

Eagle Ford
AktinaSuper Energy
MidstreamandDownstream
Business

In August 2020, we acquired the 630,000 kW Aktina Solar
Power Project in Texas, U.S.A. developed by Hecate Energy,
a U.S. renewable energy developer. In January 2022, we
decided to work with the Danish company EWII S/I on thedevelopment of a land-based wind power business in theNordics.

 idstream andM
Downstream BusinessBusiness Location(As of March 31, 2022)

DarwinPluto
GorgonQueensland Curtis
Tokyo Gas Australia Pty
Ltd. (Perth)Tokyo Gas Indonesia Pte. Ltd.
(Jakarta)

Overseas renewable energy business

Heolios EnTG

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

In addition to the construction of LNG terminals and energy
infrastructure for power generation, we will contribute to theoperation and management of LNG facilities and provide awide range of value in Asian countries where growth isexpected in the future.

Bajio

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

Australia

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

PRA

Birdsboro

TG Natural Resources

UpstreamBusiness

We have invested in five LNG projects in Australia, which has
grown into a major LNG supply base for East Asia. We willcontinue to operate and manage these projects to maximize
the value of our holdings.

Replacement of overseas assets toward2030
The main focus of the global business is to invest in
renewable energy, shale in the United States, and LNG
infrastructure. At the same time, we will gradually sellbusinesses and assets that we cannot take the initiative toraise the value of or those that have fulfilled their strategic
holding significance, thereby improving profitability andcapital efficiency.
Renewableenergy
LNG
Infrastructure
Resource
Development

Aktina Solar Project

2030

Tokyo Gas Group Integrated Report 2022

63

Ikebukuro(planned development site)

Real Estate BusinessResidential leasing businessToshima-ku

Tokyo Gas Real Estate

Bunkyo-ku

Taito-ku
Sumida-ku

Business Overview
Over the course of 137 years in business, the Tokyo
Gas Group has acquired large-scale and mediumscale areas of land with high asset value. We havemade full use of the properties by operating an
office and residential real estate leasing businessmainly in city center areas with the basic conceptof securing stable revenue and improving asset
value. We are also working on joint projects withbusiness partners in an effort to make area-basedenergy proposals and promote urban development.
In addition to office leasing and housing leasing,
we aim to increase business value by expanding
the asset category. We are also looking at overseas
expansion and ESG-focused development.
Through our efforts in the real estate business,
we will solve customers’ social issues and promotesustainable city development. We will also expand
ESG-focused development to create environmental
value.

Shinjuku Park Tower

Gofukubashi

Shinjuku-ku(planned development site)

Chiyoda-ku
Toranomon(planned development site)

Tokyo Station
Koto-kuChuo-ku

Shibuya-ku
Shiba
Minato-ku

Shimbashi Station

We are engaged in the development of “LATIERRA Series,” urban-type
rental housing complexes that offer high-quality and comfortable living.
In January 2022, the construction of “LATIERRA Oji Asukayama” wascompleted. With the completion of “LATIERRA Oji Asukayama”, the total
number of units reached 901. By accelerating acquisition of properties, wewill enhance the value we offer to our customers through the residential
leasing business and to work towards the betterment of society.

Environmentally minded (ESG-focused)
real estate development“Sasutena Denki” provided by Tokyo Gas is being introduced to
all “LATIERRA Series” housing complexes to realize effectively
zero CO2 emissions for the use of electric power in commonuse areas of the complexes.
Moreover, we plan to expand ESGfocused real estate development bymaking “LATIERRA Ueno-Inaricho”(preliminary name), which is underplanning for development, obtain
the ZEH-M (Net Zero Energy HouseMansion) certification for excellent
rental housing in thermal insulationand energy efficiency and install solar
power panels on the roof.

ToyosuTamachi (planned development site)

Meguro-ku

Shinagawa Station
Shinagawa-ku

Office leasing business anddevelopment status

Strengths

Pullman Tokyo
Tamachi*Pedestrian deck

Tamachi
StationTower N

Minato Park
Shibaura

Note: Phase I: Land leasing business, Phase II: Office leasing business(based on capital investment by Tokyo Gas)
msb Tamachi (musubu Tamachi)

NagisaTerrace ecline in business potential due to real estateDmarket conditions, increased competition, orother environmental changes (including infectious
diseases)Damage, malfunction, etc. of owned and managed
properties caused by large-scale disasters(earthquakes, fires, floods, etc.)

We are engaged in the business of leasing high value-added
office space, mainly in city center areas using large properties.
At msb Tamachi, we have introduced a smart energy networkand have enhanced business continuity plan (BCP), contributing
to the creation of an advanced, appealing community. Phase I
of development (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.

JR Tamachi Station

Shibahamaelementary
schoolRisks

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

Tamachi
StationTower S

Shibaura
Nursery
SchoolRedevelopment area
msb Tamachi (musubu Tamachi)

Shibaura Park

Aiiku
Hospital* HotelTokyo Gas Group Integrated Report 2022

64

10-Year Consolidated Financial Highlights* 1

Figures for FY2021 in Financial data are the figures announced on April 27, 2022 (before reflecting the retrospective application).

2013.32014.32015.32016.32017.32018.32019.32020.32021.32022.3

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

2,145,197

Operating Profit (¥ million)

145,633

166,044

171,753

192,008

58,365

116,30293,704

101,418

77,675

117,777

Operating Profit Margin (%)

7.60

7.86

7.49

10.19

3.68

6.54

4.78

5.27

4.40

5.49

Ordinary Profit (¥ million)

147,453

159,613

168,169

188,80955,688111,546

89,386102,645

70,500126,732

Profit attributable to owners of parent (¥ million)

101,678

108,451

95,828111,936

53,13474,98784,55543,29349,50588,745Equity (¥ million)

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

1,227,198

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

3,216,942

Interest-bearing Debt (¥ million)

642,550

713,823

730,739715,769

713,596

724,940

803,216

905,066

1,065,988

1,220,589

Operating Cash Flow (¥ million)

240,448

248,831237,680

257,122

217,439

240,328

246,436

213,171229,315

289,691

Free Cash Flow (¥ million)

56,651827

13,08425,08914,081

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

82,465

EBITDA (¥ million)

284,403

306,424

313,605

337,194

222,670

281,643

255,585

271,296

257,485

318,723

Capital Expenditure (¥ million)

183,797

248,004

224,596

232,033

203,358

208,745

223,781

227,058

246,431207,226

Depreciation (¥ million)* 2

138,770

140,380

141,852

145,187

164,305

165,342

161,881

169,878

179,810

200,946

EPS (Earnings per Share) (¥)

39.52

43.10

39.15

46.68

23.02

164.12* 3

187.6097.86

112.26201.84

BPS (Book Value per Share) (¥)

360.70402.91438.28460.35479.742,487.58* 3

2,575.99

2,602.53

2,616.37

2,791.95

2,577,919

2,517,551

2,446,778

2,396,778

2,302,856

458,073* 3

451,356

442,436

442,436440,997

10

10

10

11

11

55* 3

60

60

60

65

2.91

2.59

2.34

2.42

2.29

2.25

2.35

2.29

2.30

2.40

Net Sales (¥ million)

Total Assets (¥ million)

Number of Issued Shares (Common Stock) (thousands ofshares)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 Group Integrated Report 2022

65

2013.3

2014.32015.32016.32017.32018.32019.32020.32021.32022.3

Payout Ratio (%)

25.3

23.2

25.5

23.6

47.8

33.5

32.0

61.3

53.4

32.2

Total return ratio (%)

60.7

60.0

60.9

60.1

60.7

60.2

60.3

61.0

60.1

50.2

Current Ratio (%)

162.2

156.7

150.6

155.5

142.7

135.6

156.0

152.0

132.7

152.4

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

0.69

0.71

0.68

0.65

0.65

0.64

0.69

0.79

0.92

0.99

Equity Ratio (%)

46.6

46.5

47.4

48.9

49.4

48.7

47.7

45.2

42.1

38.1

ROE (Return on Equity) (%)

11.5

11.2

9.2

10.3

4.8

6.7

7.4

3.8

4.3

7.5

ROA (Return on Assets) (%)

5.3

5.2

4.3

5.0

2.4

3.3

3.6

1.7

1.9

3.0

Total Asset Turnover (times)

0.99

1.01

1.03

0.84

0.71

0.78

0.82

0.78

0.67

0.72

WACC (%)

3.2

3.2

3.6

3.4

3.0

3.1

3.0

2.7

2.6

2.3

Number of city gas retail customers (thousand)

9,721

9,844

9,982

10,125

10,26910,209

9,821

9,129

8,863

8,688

Gas sales volume (million m3)

15,39014,735

15,541

15,436

15,72015,56815,19813,855

12,99013,131

16,741

17,22518,36018,587

19,05319,052

18,397

17,666

17,577

17,087

—

—

—

—

635

1,105

1,742

2,350

2,717

3,014

9.98

9.71

10.61

10.96

12.65

14.66

15.48

20.60

24.76

28.29

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

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

WACC calculation data (fiscal 2021 actual)
Cost of interest-bearing debt: Real interest rate of 0.61% (after tax)
Cost of shareholders’ equity
Risk-free rate: 10-year JGB yield of -0.091%
Risk premium: 5.5%, Beta coefficient of 0.75

Tokyo Gas Group Integrated Report 2022

66

Consolidated Balance Sheets(Million yen)2021.3.31(Million yen)2022.3.31

AssetsLiabilities

Non-current assets

Non-current liabilities

2021.3.31

2022.3.31

Bonds payable

474,998

548,619

Production facilities

231,177

218,956

Long-term borrowings

458,881568,725

Distribution facilities

594,662

578,394

Deferred tax liabilities

24,26929,641Service and maintenance facilities

15,992

15,417Retirement benefit liability

58,416

66,195

Other facilities

564,495

630,786

Provision for share awards for directors (and other officers)

316

316

Property, plant and equipment

Inactive facilities
Construction in progress
Total property, plant and equipment

89,283

125,501

1,495,927

1,569,373

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

Intangible assets
5,320

6,018

Other intangible assets

290,316

294,296

Total intangible assets

295,637

300,315

Goodwill

Provision for gas holder repairs

Investments and other assets

—

84

3,172

3,427

349

637

10,843

—

—

2,620

Provision for point card certificates

1,635

531

Asset retirement obligations

23,313

27,692Other noncurrent liabilities

89,188113,004

Total non-current liabilities

1,145,067

1,361,180

Investment securities

230,782

236,303

Long-term loans receivable

57,27948,653Current portion of non-current liabilities

108,704

49,248114

5,864

Notes and accounts payable-trade84,26576,229Deferred tax assets

47,36844,230

Short-term borrowings

5,706

6,385

Other investments

60,814

100,916

Income taxes payable

11,71033,830433,501

Retirement benefit asset

Current liabilities(301)(1,647)

Other current liabilities

204,623

396,057

434,322

Total current liabilities

415,010599,195

2,187,623

2,304,011

1,560,077

1,960,375

Cash and deposits

157,881

179,769

Notes and accounts receivable-trade

218,985—

Share capital

141,844

141,844

Capital surplus

1,145

846

990,762

1,051,600

Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Current assets—

330,540

Lease receivables and investments in leases

19,61817,824

Securities

1,210

10

Merchandise and finished goods

1,980

3,467

Work in process

11,59512,083

Raw materials and supplies

46,464

67,135

Other current assets

93,848305,814(857)(3,714)

550,725

912,9312,738,348

3,216,942

Notes and accounts receivable-trade, and contract assets

Allowance for doubtful accounts
Total current assets
Total assets

Total liabilities

Net assets
Shareholders’ equity

Retained earnings
Treasury shares
Total shareholders’ equity(3,907)(3,524)

1,129,845

1,190,767

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

22,99018,866

Deferred gains or losses on hedges(11,240)(11,904)

Foreign currency translation adjustment

4,322

32,545Remeasurements of defined benefit plans

7,895(3,076)

Total accumulated other comprehensive income

23,96836,43024,45729,368

Total net assets

1,178,271

1,256,566

Total liabilities and net assets

2,738,348

3,216,942

Non-controlling interests

Tokyo Gas Group Integrated Report 202267

Consolidated Statements of Comprehensive Income

Consolidated Statements of Income(Million yen)

(Million yen)2020.4.1~2021.3.31

2021.4.1~2022.3.31

Net sales

1,765,146

2,145,197

ProfitCost of sales

1,212,624

1,546,590

Other comprehensive income

Gross profit

552,522598,607

Selling, general and administrative expenses

2020.4.1~2021.3.31

2021.4.1~2022.3.31

50,471

90,276

7,178(4,178)Deferred gains or losses on hedges(10,014)(6,841)

Valuation difference on available-for-sale securities

Supply and sales expenses

410,167

415,506

Foreign currency translation adjustment(14,869)

25,006

General and administrative expenses

64,67965,323Remeasurements of defined benefit plans, net of tax

7,751(10,964)

Total selling, general and administrative expenses

474,846

480,829

77,675

117,777

Share of other comprehensive income of entities accounted forusing equity method(6,259)5,560

Total other comprehensive income(16,212)8,583

Interest income

1,586

1,032

Comprehensive income

34,25998,859Dividend income

2,398

1,692

Comprehensive income attributable to

Share of profit of entities accounted for using equity method

1,482

3,725

Comprehensive income attributable to owners of parent

33,480101,241

Comprehensive income attributable to non-controllinginterests

778(2,381)

Operating profit
Non-operating income

Foreign exchange gains

1,619

14,550Gain on derivatives

7,979

13,725—

6,817

Gain on sales of raw materials
Miscellaneous income

6,137

7,855

Total non-operating income

21,20449,399Interest expenses

12,62914,466

Loss on derivatives

9,373

11,864—

4,199

Non-operating expenses

Fair value adjustment of contingent consideration
Miscellaneous expenses

6,376

9,913

Total non-operating expenses

28,37940,44470,500126,732

Gain on sale of non-current assets

3,114

2,226

Gain on sale of investment securities

5,283

4,118

Gain on bargain purchase

2,008

—

Total extraordinary income

10,406

6,344
3,742

Ordinary profit
Extraordinary income

Extraordinary losses
Impairment losses

10,255

Loss on valuation of investment securities

4,466

2,468

Total extraordinary losses

14,722

6,211

Profit before income taxes

66,184

126,865

Income taxes-current

16,88732,865

Income taxes-deferred(1,175)

3,724

Total income taxes

15,71236,589Profit50,471

90,276

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

966

1,530

49,50588,745

Tokyo Gas Group Integrated Report 2022

68Consolidated Statements of Cash Flows(Million yen)

(Million yen)2020.4.1~2021.3.31 2021.4.1~2022.3.31

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) of derivatives
Loss (gain) on sale of investment securities
Loss (gain) on valuation of investment securities
Loss (gain) on charge in the fair value of contingent consideration
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in retirement benefit liability
Decrease (increase) in retirement benefit asset
Increase (decrease) in provision for contract loss in regards toappliance warranties
Interest and dividend income
Interest expenses
Foreign exchange loss (gain)
Share of loss (profit) of entities accounted for using equity
methodDecrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Decrease (increase) in contract assets
Increase (decrease) in contract liabilities
Decrease (increase) in prepaid expenses
Increase (decrease) in long term advances received
Net decrease (increase) in lease receivables and investments in leases
Other, net
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Proceeds from sale 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
Long-term loan advances
Proceeds from collection of long-term loans receivable
Payments of guarantee deposits
Proceeds from refund of guarantee deposits
Purchase of shares of subsidiaries resulting in change in scope of
consolidation
Payments for acquisition of businesses
Other, net
Net cash provided by (used in) investing activities

66,184
176,087
10,255
3,722
3,274(3,102)
1,393(5,283)
4,466—
186(2,918)(84)—

126,865
196,810
3,742
4,136
2,574
(2,214)(15,362)(3,983)
2,468
4,199
4,202
(1,896)(11,312)2,620

2020.4.1~2021.3.31

2021.4.1~2022.3.31

Cash flows from financing activities
Net increase (decrease) in commercial paper
Repayments of lease liabilities—

30,000(2,414)(2,683)

Proceeds from long-term borrowings

51,035

165,014

Repayments of long-term borrowings(35,981)(123,252)

Proceeds from issuance of bonds

90,00073,620

Redemption of bonds
Purchase of shares of subsidiaries not resulting in change inscope of consolidation
Proceeds from share issuance to non-controlling shareholders(20,000)(20,000)(2,275)(3,620)

—

2,654

(32)

(3,326)

Dividends paid

(26,449)(26,424)

Other, net(1,872)(1,490)Net cash provided by (used in) financing activities

52,00990,490Purchase of treasury shares(3,984)
12,629(4)(2,724)
14,466(7,757)

Effect of exchange rate change on cash and cash equivalents(5,088)9,117

Net increase (decrease) in cash and cash equivalents

6,584

20,179

(1,482)(3,725)

Cash and cash equivalents at beginning of period

151,218

157,8118

1,708

157,811

179,699

5,126
18,643
8,080
—
—
41
—
740
(1,127)
292,8447,843(12,630)(32,482)
255,574(113,362)(22,491)
10,132
2,305(12,587)(2,796)
8,835
1,804(18,185)
166,766
9,068(14,483)(16,123)
145,227—(37,467)
16,573(172,652)(35,725)(2,456)
5,151(11,831)
4,037(6,957)
4,916

1,200
(16,214)8,841(167,197)(29,777)(6,584)
6,334(3,180)2,158(13,189)
9,846(32,579)(15,074)(25,208)(1,712)(295,911)(1,418)(399)(224,656)

Increase (decrease) in cash and cash equivalents resulting fromchange in scope of consolidation
Cash and cash equivalents at end of periodTokyo Gas Group Integrated Report 2022

69

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 thissystem, average raw material prices over a three-month period according to trade
statistics are compared with the raw material cost that is used as the standard(standard average raw material cost), and the gas rates are adjusted using a defined
calculation method based on the differences. A time lag of four months on average(called a sliding time lag) exists between the payment of raw material costs and thereflection of such changes in gas rates.
Consequently, fluctuations in crude oil prices and exchange rates may result in theunder recovery 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, thegas rate adjustment system has a neutralizing effect on the income impacts offluctuations 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 recovery

Under recovery

Average 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.

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

FY N

FY N+1

Tokyo Gas Group Integrated Report 202270