Integrated Report 2021

To zero, from zero.
The environment andthe excitement of the future.

Contents
What the Tokyu Construction
Group Aims For

Growth Strategy and Business2

Corporate Philosophy/Vision30

At a Glance (Business Overview)

4

The History of
the Tokyu Construction Group

32

Overview of Each Business

6

CEO Interview

12

CFO Interview

14

External Environment, Risks andOpportunities, Materiality

16

Value Creation Process

18

Explanation of
the Value Creation Process

20

Financial and
Non-Financial Highlights

22

Long-Term Management Plan
“To zero, from zero.”

32

Civil Engineering Business

34

Building Construction Business

36

Real Estate Business

38

International Business40

New BusinessReinforcing the Foundation of
Value Creation for Growth

41

Strengthening Corporate
Governance46

Conversation with External
Directors

48

Board of Directors

50

Compliance and Risk
Management52

Responding to Climate Change

54

Promotion of Environmentally
Conscious Management

Data

64

11-Year Financial Data Summary

66

Company Profile

67

Stock Information

Editorial Policy
Tokyu Construction issues its Integrated Report to further deepen the understanding of
the Group’s value creation in the medium and long term among all stakeholders, particularly shareholders and investors. It compiles not only financial information but also material
non-financial information that impacts our corporate value in an integrated manner. Moredetailed information on construction projects, technical services, and other issues can beviewed on the Company’s website.
https://www.tokyu-cnst.co.jp/en/

Reference sources

58

Occupational Safety Initiatives

59

Enhancement of Quality Control
Infrastructure60

Promotion of CSR Procurement
and Responsibility in the Supply
Chain

62

Strengthening of the Foundationof Human Resources

International Integrated Reporting Council (IIRC)’s “International Integrated Reporting
Framework,” Ministry of Economy, Trade and Industry’s “Guidance for Collaborative Value
Creation,” Ministry of the Environment’s “Environmental Reporting Guidelines 2012,” GRI’s“G4 Sustainability Reporting Guidelines” and Japanese Standards Association’s “ISO
26000: 2010 Guidance on Social Responsibility”

Reporting Period
April 2020 to March 2021
*Part of the report includes information before and after the reporting period

Scope of the Report
TOKYU CONSTRUCTION CO., LTD. and its group companies

Back cover illustration“Moonshot 2050.” This is a world of dreams that we want to realize in 2050 and that is centered on Tokyu Construction’s young employees.
Click here for details
https://www.tokyu-cnst.co.jp/moonshot2050/

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

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What the Tokyu Construction Group Aims For

Corporate Philosophy/Vision
2030 Corporate Vision “VISION 2030”

To zero, from zero.
The environment andthe excitement of the future.
Redefining what it means to build. Reinventing what lies beyond building.
The challenge is immediate and inescapable.
Our intent is to develop entirely new approaches to sustainable urban
development, aiming at zero carbon and zero waste.
Starting from zero, with no preconceptions, we will research new fields to findfresh ways to expand and integrate knowledge to make the living environment
safer, more resilient, and more exciting.
As a construction company, we literally build the future, so it is our duty and our
responsibility to lead in innovating the solutions that society so urgently needs.
We already have the people and the technology to be part of innovation’s leadingedge. Now we must proactively seek out and welcome the wisdom of multiple
specialized disciplines, transcend conventional boundaries, embrace the latest
digital technology and unite as one in our purpose.
By maximizing these potentials, we can completely redefine what it means
to build.
And more than that, we can reinvent the framework of what lies beyond building.
Repeatedly and wholeheartedly taking up this challenge will raise our corporate
value and allow us to offer a new level of prosperity and wellbeing to ourcustomers, business partners, employees and their families, and society at large.
1959 was the year of our establishment, with our first project being developmentof Tama Garden City, aimed at relieving the population pressure on Tokyo.
Today, we are faster and more agile than others as we innovate new value.
The horizon we are advancing spreads to infinity.

2

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

Philosophy System

VISION 2030
Long-Term Management Plan “To zero, from zero.”

VISION
2030

Decarbonization

Disaster Prevention
and Mitigation

Zero Waste

Three Deliverable Values

Delivered Values

Human Resources

Source of Competitive
Advantage

Digital Technologies

Source of Competitive Advantage

Value and Ways

Corporate Philosophy

Management Policy

Principles of Conduct

Seek out new challenges.
Maximize the potential of our human resources.
Place the customer at the center of
our activities.
Be fair and transparent in all our dealings.

Self-reliance
Speed
Teamwork
Reliability

PurposeFulfilling each individual’s dreams through the creation of a reassuring
and comfortable living environment.

Schematic Diagram of Tokyu Construction’s Philosophy
Our purpose, which is drawn from the founding spirit of the Company, and shared values found in theorganization and our conduct (management policy and principles of conduct) are our most important
foundation. In a business environment that is growing more and more uncertain, it is important to adopt avision-driven approach; therefore, we set VISION 2030, the vision the Group aims to achieve in 2030.
We will implement sustainability-oriented corporate management that resolves social issues and creates
economic value centered on “decarbonization,” “zero waste,” and “disaster prevention and mitigation”
using human resources and digital technology as our competitive advantage and provide new affluence tostakeholders (customers, business partners, employees and their families, shareholders, and society). As amember of the Tokyu Group, we will continue to conduct corporate activities and contribute to society
based on the group philosophy.

Tokyu Group Slogan

Toward a Beautiful Age

Tokyu Group Philosophy

We hold the following shared vision as we work together to create andsupport the Tokyu Group.
Mission Statement
We shall strive to create beautiful living environments, in which each person can pursue individual
happiness in a harmonious society.

Management Policy
Work independently and in collaboration to raise Tokyu Group synergies and establish a trusted andbeloved brand.
• Meet current market expectations and develop new ones.
• Manage in harmony with the natural environment.
• Pursue innovative management from a global perspective.
• Value individuality and encourage the best from each employee.
Through these means, we will fulfill our corporate social responsibilities.

Principles of Conduct
Fulfill your responsibilities. Collaborate to enhance each other’s abilities. Reinvent yourself with a
global awareness.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

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What the Tokyu Construction Group Aims For

The History of the Tokyu Construction Group
Postwar reconstruction of the capital was the starting point for Tokyu Construction. Beginning with thedevelopment of Tama Garden City to resolve the social issues of Tokyo’s reconstruction and population
concentration, the Group has grown along with the Tokyu Group and expanded its business to provide
safe and comfortable urban development.

Social needs
1945
End of World War II

1950s

1960s

1970s

1980s

1957
Japan joins United Nations

1964
Tokyo Olympics

1970
Osaka Expo

1985
Tsukuba Expo

1959
Crown Prince’s wedding

1968
Tomei Expressway opening

1973
Oil Crisis

1989
Consumption
tax introduced

1978
New Tokyo International Airport(Narita Airport) opening

Tokyu Construction—Projects and Development

1946

1954

Establishment ofAbsorbed as the Construction
Tokyo Construction Industry Department of TOKYU
Industry Co., Ltd.
LAND CORPORATION

1960

1971

1984

Land readjustment projectat Nogawa First District

Keikyu Hotel (Hotel PacificTokyo)

Palau PacificResortTokyu Construction’s Starting point, Postwar Reconstruction

Courtesy of
Tokyu
Corporation

Tokyu Corporation established the Temporary
Postwar Reconstruction Committee two weeks
after the end of World War II. Tokyu Construction Industry Co., Ltd., the predecessor of
TOKYU CONSTRUCTION CO., LTD., was established based on the reconstruction plan for thecapital, Tokyo. Because of this history, Tokyu
Construction’s mission is to resolve social issues.

1966

1989

Den-en-toshi Line Extension: Mizonokuchi Station to Nagatsuta Station

Completed(Bunkamura)

Tokyu’s founde r Keita Goto

Net sales(million yen)

700,000

1969(fiscal year)

76
19
77
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19

75

19

74

19

73

19

72

19

71

19

70

19

69

19

68

19

67

19

66

19

65

19

64

19

63

19

62

19

61

19

19

19

46

0

54

Net
sales
売上高
Operating
営業利益 income

100,000

19

200,000

60

300,000

19

400,000

19

500,000

59

The “four guidelines” laid out by
Noboru Goto, ourfirst president
The Company
grew rapidly, so
teamwork has always been
1959
considered of the utmost
importance, and it
TOKYU
CONSTRUCTION
remains a fundamental
CO., LTD. Foundedpart of our corporate
DNA today.

600,000

Former Tokyu Construction (TC Properties)
For FY1969–FY1989, the end of the fiscal year was September, but it was changed toMarch starting with FY1990

1959-1995
Tokyu Spirit, the Founding Spirit Expounded by the First
President Noboru Goto in 1959
If business seems 100% safe to anybody, Tokyu
does not need to do it. The business spirit that
we have built up over a long time is not sorelaxed, but rather a brave way of doing things,
carrying a torch ahead of all others.
The first president of Tokyu Construction
Courtesy of
Tokyu
Corporation

Noboru Goto

Establish Business Foundation and Develop
As a member of the Tokyu Group, the Company
played a role in the development of Tama Garden City (town planning including railway construction and residential land development),
built its business foundation by working on anumber of difficult construction projects, andexpanded its business from throughout Japanto overseas. The Company then grew into theone of the leading semi-major general contractors in the second half of the 1980s.
Block #4
Area from Nagatsuta to
Chuo-rinkan, which runs
through the three cities of Yokohama, Machida, and Yamato

4

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

Block #2
Area from Yokohama’s
Tama Plaza to Ichigaowith a quiet residential
area and shopping
centerBlock #3
Area from Yokohama’s Fujigaoka toTana, centered on Aobadai Station
Tokyu Den-en-toshi Line“VISION 2030”
In addition to advancing the technologies and knowledge of the constructionindustry in response to the external environment and market needs, we will
accelerate our efforts to take on new challenges that go beyond the bounds of the
traditional construction industry in VISION 2030, our corporate vision for 2030.

1990s

2000s

2010s

2020s

1991
Economic bubble burst

2001
9/11 terrorist attacks in US

2011
Great East Japan earthquake

1995
Great Hanshin-Awaji Earthquake

2005
Postal Service Privatization Act passed

1998
Financial System Reform Act passed

2006
Revised Antimonopoly Act Enforced

2013
Tokyo is selected as host of 2020
Olympics and Paralympics

2008
Global financial crisis

2020
COVID-19 pandemic

2015
SDGs adopted; Paris Agreement
adopted

1991

2010

2010

2011

Multi-level crossing construction of
Tokyu Ikegami Line (The “STRUM
Method,”our representative
railwaytechnology)

Shibuya station on
the Tokyo Metro
Fukutoshin Line

Tama-plaza
Station area
redevelopment
plan

Futako Tamagawa rise

Redevelopment of
the area around
Shibuya Station

2012
Shibuya Hikarie

2014
Sanriku Railway Kita-Rias Line Restoration Project

2020

2015
1993

1997

SETAGAYA BUSINESS SQUARE

Carrot Tower

Exhibition of Rental
Housing for tomorrow(Large-scale wooden
construction)

GLP Zama (Logistics Facility)

2017
2004
New Tokyu
Construction
Created throughSpinoff

Our brand message continues to be“a company contributing to value
creation in towns.”

PPP/Concession Business
Management of public seweragesystem in Hamamatsu City Our firstwater/sewerage field project in
Japan

2019
Jakarta Mass Rapid Transit ProjectLong-Term Vision
Long-Term
General contractor that continues to Visionembody the idea that “deepening x VISION 2030
evolution = true value”

Operatingincome(million yen)

30,00020,00010,000

4
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23

0

FY1990 was the six month period
from October through March.

Block #1
Area from Kawasaki’s
Kajigaya to Saginuma,
the start of the Tama
Gardens City
development

Present-day Tokyu Construction-10,000

1996-20102011-2020

Challenge During Economic Downturn

Evolving Urban Development Know-how

Despite facing an unprecedented business crises due to the bursting of the bubble economy,
the Company completed numerous difficult
construction projects that would become city
landmarks. We have refined out technologies
and built up trust with customers.

The Company has advanced its technologies in
response to changes in the business environment and market needs. We evolve those invarious regions and use them to create newvalue for sustainable cities demanded by thetimes.

Q FRONTSHIBUYASTREAM

SHIBUYA MARKCITYCERULEAN TOWERBldg.

SHIBUYASCRAMBLESQUARE

Minami-machida Grandberry
Park

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

5

What the Tokyu Construction Group Aims For

CEO Interview

Mitsuhiro Terada
Representative director,
President and CEO

6

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

Tokyu Construction has consistently worked to solve social issues.
We should now place our greatest focus on environmental issues.
As a company that provides excitement, we will contribute to a sustainable future by maintaining the “Tokyu Spirit” we have fosteredsince our founding: “To start a business carrying a torch ahead of allothers and run through the darkness.”

Q. Over the past 10 years, you have set forth a vision of being a general contrac-

tor that continues to embody Shinka - of deepening and evolving in the pursuitof genuine value. Please tell us how you have applied this vision to management, the initiatives you have emphasized in realizing this vision, and theimpact this has had both inside and outside the Company.

A vision, like a corporate philosophy, shows employees
the summit to climb. By presenting a vision and aligning the vectors of the employees, the speed of communication is accelerated throughout the Company. To
date, we have been working to achieve our Mid-Term
Management Plan in order to realize the vision.
After the establishment of our vision “Shinka - deepening and evolving in the pursuit of genuine value” in
2011, our business performance was sluggish the following year, but has since recovered significantly due
to “Abenomics” economic policies, earthquake reconstruction, and the decision to host the Olympics.
For the past ten years, we have been working on“Deepening Shinka,” in other words, increasing thestrength of our core construction business, and“Advancing Shinka” beyond construction contracting.
Through Deepening Shinka, we have been working to
specify and strengthen our problem-solving skills as
part of the Mid-Term Management Plan since 2015.
During this time, we have been involved in the construction of extremely difficult large-scale projects inJapan and overseas, and have achieved significant
results. The first concrete example I can give is the
project to move the Tokyu-Toyoko Line undergroundbetween Shibuya and Daikanyama Stations in March
2013. This has accelerated the redevelopment of thearea around Shibuya Station. We have contributed tothe development of the Shibuya district, which continues to undergo major transformations, by constructing
the infrastructure for the east exit of Shibuya Station,
including the complex underground area beneath the
Shibuya River and the station square, in addition to
Shibuya Stream, Shibuya Scramble Square, andShibuya Station on the Tokyo Metro Ginza Line.
Scramble Square, which has become a new landmark
in Shibuya, is a landmark project in the history of ourcompany. In addition to the redevelopment of Minami-machida Grandberry Park and along the Tokyu
Line, we have also undertaken a road construction in
Vietnam, our first entry into the country, as well as arailyard construction in Bangladesh and a mass rapidtransit project in Jakarta, Indonesia. Many of our projects in Japan and overseas transcended the boundaries between civil engineering and construction, andhave brought these businesses together. Symbolic
construction work has fully demonstrated ourstrengths in teamwork and the Tokyu Group’s comprehensive capabilities to actively cooperate in theachievement of a single goal, and I believe this has
further strengthened cooperation among businesses.
At the same time, we believe that we have greatly
enhanced our own corporate value and contributed inno small way to cementing the value of the Tokyu
brand.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

7

What the Tokyu Construction Group Aims For

CEO Interview

With regards to Advancing Shinka in areas other thanconstruction contracting, we have been more active
than ever in the concession and real estate businesses.
As part of the Tokyu Group’s airport-related concession
projects, we have been participating in the operation of
Sendai Airport since 2016 and Hiroshima Airport since
this fiscal year. Regarding water and sewage projects,
we participated in Japan’s first sewage concession in
Hamamatsu City in 2018, and we plan to work on an
integrated water supply, industrial waterworks, and sewage concession in Miyagi Prefecture. However, we arestill not satisfied with the results of Advancing Shinka.
The origins of Tokyu Construction can be traced

back to the reconstruction of the post-war capital ofTokyo, where we were entrusted with the social mission of creating a safe and secure city against a backdrop of rapid economic growth. Since then, in order tocontinue contributing to society, we have aimed to
become a general contractor with true value by taking
on challenges in new areas beyond construction contracting, and the synergistic effects of these efforts. In
this sense, the newly-formulated VISION 2030, “Tozero, from zero” has continuity with our previous vision,and also inherits the Tokyu spirit since our founding:“To start a business carrying a torch ahead of all others
and run through the darkness.”

Q. Please tell us about the results and challenges of Shinka 2020, the Mid-Term
Management Plan for fiscal 2018-2020.

The Mid-Term Management Plan, Shinka 2020 was
positioned as the first three-year management planwith a view to where we want to be in 2026, nine years
ahead. The plan was based on four basic policies: (1)Bolstering individual capabilities and job satisfaction,(2) Strengthening the domestic construction businessand enhancing on-site capabilities, (3) Taking on challenges in new business fields, and (4) Shoring up ourmanagement and financial foundations. I believe that
we have achieved a certain degree of success in theseareas. On the non-financial front, such as improving
human resource training and job satisfaction, andreducing overtime work, in addition to efforts toincrease employee engagement, we have been able toreduce overtime work, and voluntary improvement
activities in both civil engineering and construction
have been progressing and showing results. On theother hand, in terms of improving productivity, weneed to make further use of digital technology. With
respect to strengthening our construction business,
we have been making progress by completing large
and complex construction projects, mainly in the
Shibuya Station area. Shoring up our financial base,which has been an issue until now, is basically progressing as planned. However, with regard to the

8

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

diversification of earnings, we are only at the halfway
point despite our efforts in concessions, real estatebusiness, and other areas, and we recognize that
responding to rapid changes in the environment anddeclining earnings due to the COVID-19 pandemic is
an urgent and important issue. In light of these changes in the business environment, we have renewed ourideal vision of ourselves in 2026,and formulated a new
Long-Term Management Plan. The most significant
feature of this is the direction that we have set to place
greater emphasis on capital efficiency. Our financial
strategy to date has been to focus on bolstering equity, with stability of our financial foundation as a key
policy. The Long-Term Management Plan sets out apolicy of stable and capital-efficient shareholder
returns, setting a DOE of 4% or more (ROE of 10% ormore and a dividend payout ratio of 40%), with the aimof continuing to serve the interests of shareholders
over the mid to long term. Amid expectations of a
gradual decline in construction investment over the
mid to long term, we will quantitatively expand building renewal and new business areas with the goal ofachieving operating income of at least ¥22 billion andan operating income margin of at least 5.0%.

Q. You have now formulated VISION 2030. Please tell us about the background toits formulation and your thoughts on the vision.

In formulating this vision, the first step in our discussions was to determine what kind of company we wanted to be and what we wanted to offer to whom. Dr.
Martin Luther King Jr.’s famous words were “I have a
dream,” and I would like our vision to mirror that as“We have a dream.” I also wanted the vision to be acompass to keep us looking to the future, in order thatit be a gift to the next generation, exciting and filledwith the thoughts of many of our employees. By
achieving our vision, I hope we provide value to all
stakeholders in the form of products and services thatare exciting and inspirational. To this end, it is important for employees to make the vision their own, and weare continuing to implement a variety of internal initiatives in order to share it.
Ten years from now, and even 30 years into the
future, we want to be a company that provides excitement in a way only possible by humans and not AI or
robots, both in our projects and also in design, operations, and corporate business such as human resources, legal affairs, and finance.

Online dialogue in small groups to share VISION 2030

Video explaining VISION 2030

Q. What do you hope to achieve through the new Long-Term Management Plan
“To zero, from zero,” and what value will you provide to society?

In our corporate philosophy, our mission purpose is“Fulfilling each individual’s dreams through the creation of a reassuring and comfortable living environment,,” and this is the DNA of Tokyu Construction,
which grew through social contribution. What we hopeto achieve through our Long-Term Management Plan is
to balance social value with economic value.
The value we provide to society is based on thethree values defined in our Long-Term Management
Plan: (1) Decarbonization, (2) zero waste, and (3) disaster prevention and mitigation. We will bring together
our human resources, know-how, achievements, management capabilities, and new knowledge to provide
these values to society.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

9

What the Tokyu Construction Group Aims For

CEO Interview

Q. With regard to the new Long-Term Management Plan, what measures will you
promote in the first year, especially with regard to the priority strategy ofstructural reform, as well as human resources and digital transformation (DX),
which are considered to be sources of competitive advantage?

Structural reform began when we realized that weneeded to prepare the foundation and rebuild our
structure in order to implement the Long-Term Management Plan. The most important pillar of these
efforts is to strengthen our problem-solving skills,
which we have continued to refine. We must review
each of the foundations of our construction businesson the axes of quality and safety, and build a culture
ready for the next stage of growth. Similarly, humanresource strategies, such as evaluation and treatment,
will have a significant impact on future growth.
My understanding of DX is that it is the use of Information and Communication Technology (ICT) to revolu-

tionize business models. Therefore, we have identified
human resources and digital technology as sources ofcompetitive advantage in advancing our key strategies.
Improving operational efficiency, centralizing data
management, and company-wide use of digital technology are the minimum that should be done, but
without a customer perspective, they amount to nothing more than self-indulgence, and it is important wefind ways to link them to the value we provide. In addition, it is people who will ultimately utilize all this, andwe believe that it is necessary to raise the level of theCompany as a whole, not just that of human resources
specializing in digital technology.

Q. What is your approach to corporate governance, which is the basis for implementing the Long-Term Management Plan?

I do not disagree that strengthening corporate governance is equivalent to increasing corporate value. However, simply complying with the Corporate Governance
Code is not the same as strengthening governance.

Each company has its own unique external environment, history, and culture, and governance needs to be
based on this. We will continue to work to vitalize our
Board of Directors with greater awareness of diversity.

Q. What impact has the COVID-19 pandemic had on Tokyu Construction’s business
and what is the post-corona outlook?

The business environment became more difficult as
the customers who place construction orders reviewed
and postponed their projects. We are also seeing achange in demand. In particular, our specialty of railroad construction has been greatly affected. The situation also remains uncertain due to the significant
impact on overseas construction. On the other hand,
the market for logistics warehouses is becoming more

10 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

active in this environment. Furthermore, changes in
attitudes toward work styles and working environments have been accelerated by the pandemic. The
use of digital technology has led to an increase inremote work and the diversification of work styles has
become apparent, and we believe that these changes
are irreversible.

Q. What kind of company do you think Tokyu Construction will be in 30 years?
We hope to be a company that contributes to the creation of a safe and comfortable living environment
around the world by striving to protect the global environment, preventing and mitigating disasters, and by
being a carrier in the realization of a sustainable, recycling-oriented society. As a company that develops,
provides, and operates the infrastructure that is essen-tial to our daily lives, including buildings, homes,
roads, and water and sewage systems, I believe that
our field of business will expand from construction
contracting. I cannot imagine what our company will
actually look like 30 years from now, but I would like tomaintain the Tokyu spirit of making challenges in areas
others will not.

Q. Please give a message for our stakeholders.
We have announced VISION 2030, a vision of the futurethat people can relate to and be excited about, and aLong-Term Management Plan, which is the strategy forachieving this vision. In order to realize this, we havebeen continuously creating opportunities for activities
to share the vision within the Company, where groupsof about five employees and management can talkdirectly with each other. We plan to engage in dia-logue with all employees during fiscal 2021. First andforemost, we need our employees to share our vision
and act upon it. I believe that the topmost moral concept in management is sincerity. We will share thevision with our employees and embody our sincere
desire to be a company that helps to make a better
society. I hope that our stakeholders will share in our
vision and witness our growth.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

11

What the Tokyu Construction Group Aims For

CFO Interview

In the Long-Term Management Plan, we shift
course toward management that emphasizes
capital efficiency. In addition to sharing thisapproach with all executives and employees,
we will strive to improve our corporate value inboth financial and non-financial terms by
resolving major social issues such as environmental problems discussed in VISION 2030.

Masatoshi Shimizu
Director, Senior Managing Executive Officer and CFO,
Corporate Strategy Division

Basic Policies
Through the Mid-Term Management Plan Shinka 2020,
the first year of which was fiscal 2018, we aimed tobuild a firm financial base and were generally able toincrease capital to the desired level. We were successful to a certain degree in enhancing our financial base;
therefore, in the new Long-Term Management Plan, we
shift to a policy that emphasizes capital efficiency andmore actively make growth investments and pay ashareholder return. We will pursue the optimal capital
structure through an appropriate allocation of capitalthat is based on a medium- to long-term financial simulation and comprehensively takes into consideration
factors such as risk management and fundraising.
As for businesses, our goal is to create a competitive
advantage through human resources and digital technology and establish a new Tokyu Construction brandbased on the three values we provide. We will also create new growth opportunities by strengthening our

problem-solving skills, generating innovation in theconstruction and production system, forming alliances,
undertaking M&As, investing in strategic businesses,
and generating synergies between investments in new
businesses and core businesses. By promoting these
efforts, we will not only reform the organization andcorporate culture, generate results, and accelerateinnovation but also achieve a capital efficiency thatexceeds the cost of capital in the medium and longterm. As for particulars, we have set the following KPI
for fiscal 2030—an operating income margin of 5.0% ormore as an indicator of profitability and an ROIC of 7%
or more and ROE of 10% or more as indicators of efficiency. As for business investments during that period,
we plan to invest ¥170.0 billion over ten years and aim
to improve corporate value by resolving social issues inorder to implement VISION 2030.

Shareholder Return and Capital Efficiency
Recognizing the importance of capital efficiency, weemphasize a stable, sustainable return to shareholders
that is not easily impacted by the volatility of shortterm profits. Therefore, we aim to pay a dividend that
achieves a divided on equity (DOE) of 4% or greater,which balances an ROE of 10% or more, our long-term
earnings target, and consolidated dividend payout
ratio of 40% or more. Considering various factors,

12 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

including (1) medium- to long-term results, (2) capitalsituation, (3) growth investment opportunities, and (4)market conditions, etc., including stock prices, we will
also examine flexibly acquiring treasury shares. In fiscal
2021, we plan to pay an annual dividend per share of¥40 (DOE of 4%).
The key to emphasizing capital efficiency is pursuing
profit, but we also aim to shorten the supply chain cash

conversion cycle (SCCC) in order to speed up the flowof funds for the whole supply chain. Therefore, in addition to sharing our thinking regarding emphasizing
capital efficiency with and pursuing profit in each business division, we work to (1) set appropriate construction periods, (2) shorten the contractor payment
collection period, and (3) make appropriate payments

to subcontractors While keenly aware of capital efficiency and profitability at all levels of the Company
and continually striving to do better, we probably also
have to further examine financial measures to establish
the optimal capital structure to raise capital efficiency(ROIC and ROE).

Efforts to Implement VISION 2030
We will take on the challenge presented by vexing
environmental problems, massive social issues that arefacing humanity, by successfully implementing VISION
2030 and the Long-Term Management Plan. To achieve
that, we will conduct business that aims to “Fulfillingeach individual’s dreams through the creation of areassuring and comfortable living environment,,” ourpurpose. Our efforts to implement the five priority
strategies given in the Long-Term Management Plan,
which is centered on these new challenges, will lead to
not only solutions to social issues but also greater sales
and improved profitability for each strategic and corebusiness.

Since the Tokyu Construction Group was founded,
we have continually taken on the challenge of resolvingsocial issues through our business. We will continue todevelop our businesses in order to enhance our businesses and services that contribute to solutions toenvironmental problems. The Group is aiming toestablish businesses that are demanded by society
and that will play an extremely important role inachieving sustainability throughout society. I hope thatall shareholders and stakeholders have great expectations for the Group’s future.

Improvement of capital efficiency

Acceleration of growth investment

Improvement of shareholder returns• Pursuit of profit• Active use of leverage• Reduction of inefficient assets• Innovation in construction business• Diversification of the portfolio• New business investment and M&A• From dividend payout ratio to DOE• Improvement of the level of returns

Profitable real estate
We will manage financial and capital strategies based on capital efficiency and strategic significance(“synergies with construction business,” “securing of stable revenue,” etc.).

Cross-shareholding

Return policy until now

Future return policy

Dividends are influenced by the results of a single fiscal year andamounts are unstable

Stable returns to shareholders aware of capital efficiency

T

T

Easily influenced by results for asingle fiscal year

Dividend payout ratio
standard

DOE standard(dividend on equity ratio)

Emphasizes enhancement of thefinancial base

Dividend payout ratio of
20% or higher

DOE 4% or higher

Divided amounts are stable
Improvement of the level of returns(aware of capital efficiency)

Past results for dividend amounts
DOE(billion yen)

3.3
2.7

3.2

1.4

1.1
0.3
FY11

2.8

4% or more
3.2

FY12

ROE Target

10% or more҂Payout ratio

40% or more

We will establish a return policy that balances medium- to longterm results targets and financial and capital strategies.

1.1

In addition to returns through dividends, we will acquire treasury
stock flexibly while being aware of capital efficiency.
Consideration of (1) medium- to long-term results (2) capitalsituation (3) growth investment opportunities and (4) market
conditions, etc., including stock prices

0
FY13

҃

FY14

FY15

FY16

FY17

FY18

FY19

FY20

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

13

What the Tokyu Construction Group Aims For

External Environment, Risks and Opportunities, Materiality
Since its founding, Tokyu Construction Group has always conducted business with its mission of resolving social issues through urban development in mind.
Taking into consideration the changes in the business environment, we will identify new material management issues (materiality) and work to resolve additional social issues and generate sustainablegrowth with that as our starting point.

Awareness of the External Environment

Risks

Opportunities

Environment• Less accepting of costs for technology that reduces environmental
burden• Leveraging the government’s aggressive
stance and support policies to realize acarbon-free society• Stricter response to sustainablepurchasing• Actively working to establish a circular
economy• Stronger regulation throughout theconstruction business and building/
structure lifecycle• Continuing to request infrastructuredevelopment from the perspective of preventing and mitigating disasters due toclimate change• Delay in responding to structuralchanges• Reforming the construction production
system and creating opportunities to provide new value through DX• Delay in passing on technical abilities
and efforts to ensure supply capacity
in response to shortages of skilledconstruction workers• Promoting solutions through open
innovation• Incomplete compliance and passing
on of abilities and skills that contribute to safety and quality• Stronger need for buildings and structuresto have a lighter environmental burden• Shortage of human resources who
can generate innovation in new business domains• More opportunities to add value to thevalue chain, both upstream or downstream, through DX• Failure of management to continue togenerate innovation• Greater need to resolve social issues andenvironmental problems in the construction market and peripheral fields• Lack of appropriate risk management
related to investing• Quicker economic development in emerging market countries following the COVID19 pandemic• Delay in responding to developmentof smart buildings/cities, etc.

• Stronger trend toward redevelopment andurban development around Shibuya• Delay in responding to greater diversity work styles and lifestyles• Using know-how acquired throughurban-development construction projects
along the Tokyu train lines, including
Shibuya• Delay in introducing systems andresponding to more fully promoteand leverage diversity• More opportunities to take on challenges
related to environmental problems andsocial issues, DX, and new businessdomains• Delay in implementing reskilling for
mid-career employees and above
related to skills that should be adapted, such as digital response• Promoting participation of Millennials andGeneration Z (digital natives)• Stagnant/decline in employee
engagement because D&I does notprogress• Having women actively participate andcapturing and using specialists withadvanced skills and abilities• Failure to train next-generation
managers• Increasing transparency in decision
making• Decline in society’s trust in the Company due to compliance violations, etc.

• Appropriately responding to change andcreating a stable growth foundation

Average global temperature in 2030 will be

1.5˚C higher (compared to before industrial revolution)

1

Progress of global
warming

More powerful natural
disasters

Environmental pollution/
destruction

Loss of biodiversity

Construction industry
Aging social capital
Percentage of buildings that are at least 50 years old[Roads and bridges]
2018[Tunnels]

2033

2018

25% ▸ 63%22033

20% ▸ 42%2

• Contraction in Japaneseconstruction market• Greater expectations of
products and services• Concentration of
population in cities• Large volatility inearnings because it’seasily impacted bybusiness conditions andchanges in orders• Aging infrastructure• More diverse building
needs, such as environment consideration andrenovations

TechnologyAI
By the 2030s, AI and robots could replaceof Japan’s labor force3• Expectation of greater
productivity• Quicker evolution ofdigital technology

49%• Increase in the number ofissues that cannot be
solved by a single
company

Overseas markets
Larger population in developing countries andgreater quality of life
Larger overseas markets

Human resources and work styles
Working-age population
2015

2030

77.28 million ▸ 68.75 million 11% decline• Labor shortages andgreater diversity in values• Greater diversity

4• Decline in number ofskilled construction
worker

1 IPCC
2 Current State and Future of Aging Social Capital issued by Ministryof Land, Infrastructure, Transport and Tourism
3 49% of Japanese Labor Force Could be Replaced by AI, Robots,
Etc. (2015) issued by Nomura Research Institute4 National Institute of Population and Social Security Research

14 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

Process for Identifying and Selecting Materiality
High

Degree of importanceamong stakeholders

6 Materialities

1

Gaining an Awareness of theExternal Environment

Gain an awareness of the future external environment, including uncertainties,
based on scenario planning conducted while 55 people, including young employees in their 20s and the management team, formulated the corporate vision.

2

Ascertaining and Extracting
Risks and Opportunities

Deliberate on risks and opportunities in SDGs and scenario planning and extract
issues that require a response in order to generate sustainable improvements in
the Company’s corporate value taking into consideration the corporate
philosophy.

3

Identifying Materiality

Evaluate on the two axes of importance among stakeholders and impact on
improvement of the Company’s corporate value using several factors, including
evaluation items employed by ESG evaluation institutions and dialogues withstakeholders, and then select six particularly important issues as materiality.

Degree of impact onHighimprovement of the Company’s
When identifying, conduct deliberations at meetings of the CSR Committee chaired by the president; Strategy
corporate value
Meeting, where strategies are debated, Management Meeting, and Board of Directors meetings.

Materiality

Links to the Strategy

Main Initiatives

Tokyu Construction brand

Climatechange(handlingandadaptation)

The Company will establish a
Tokyu Construction leading brandthat develops new technologies
to respond to climate change,
decarbonization, zero waste, anddisaster prevention and mitigation. The brand will serve as anengine for strong business growth
going forward.
details

P24

Core businesses

Structuralchanges intheconstructionindustry

Increase earnings by creating
M&A opportunities and improving
the construction production system through DX
details

P24,32,34

SDGs• Low-carbon concrete CELBIC that reduces CO2
emissionsdetailsP29• ZEB and ZEH-M initiatives (structures to achieve
zero net emissions)details

P56• Using renewable energy for all energy needs

details

P56• Introducing non-fossil fuels for heavy machineryand dump trucks (introduce GTL fuel)details

P56• Introducing and starting to commercialize
construction waste sorting robot

details

P29• Rebuilding the collapsed Uedadentetsu BesshoLine Chikuma River Bridge

details

P29• Disclosure in line with TCFD proposals

details

P52• Verification test of VR to accelerate agreement atconstruction sites

detailsP29• Development of mountain tunnel construction
support tools

details

P33• Tunnel full cross-section inspection system

detailsP33• M&As and alliances to reform the construction
production system

details

P35• Introducing BIM first model into all new
construction work sites

details

P35• Efforts related to safety and health and quality
controls• Efforts related to CSR purchasing and supply chain

details

P58-59details

P60

Strategic businesses

Innovation

Create new growth opportunities
through investment in strategic
businesses and synergies withcore businesses
details

P24• Real estate businessdetails

P36• International businessdetailsP38• PPP/concession businessdetails

P40• Investment in domestic and overseas startup
companies

details

P40• Improvement of employee engagement

details

P63• Promotion of women’s success in the workplaceand employment of persons with disabilities

details

P62• Spreading the vision

details

P9

Tokyu Construction brandTown
planning

Core businesses Strategic businesses• Redevelopment of the area around Shibuya Station

Sustainable urban developmentthat embodies the Tokyu brand• Redevelopment along Tokyu train lines(Shin-tsunashima, Minami-machida, etc.)

DiversityandInclusionAccelerate efforts to diversify andstrengthen human resources suchas promoting digital natives andemployees with advanced specialization. The Company aims togenerate corporate growth andinnovation through the reform of
the organization and corporate
culture.

Human resources and organization

details

Corporate
governance• Work-style reforms and human resources
development

details

P62-63

P26

Reinforce functions to raise theeffectiveness of strategies while
improving the fairness and transparency of management• Strengthening corporate governancedetails

P41• Compliance and risk management

details

P50• Developing human resources for next-generation
management

details

P63

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

15

What the Tokyu Construction Group Aims For

Value Creation Process
The Tokyu Construction Group has worked to solve a variety of social issues through its businesses inorder to help each person realize his or her dream through the creation of a reassuring and comfortableliving environment.
While enhancing synergies between our core domestic businesses and strategic businesses, we aim tosolve social issues and maximize corporate value by realizing VISION 2030: “To zero, from zero. The environment and the excitement of the future.”

External Environment
details

Inputsdetails

P18

Environment• Advancement of global
warming• Pollution and destruction of
the global environment

Business Modeldetails

P18

Human capital• Number of employees(Non-consolidated) 2,617(Consolidated) 3,010

Long-Term
Management Plan
“To zero, from zero.”

Domestic core business
Civil
Engineering
Business• Intensification of natural
disasters

Construction industry• Shrinking domestic
construction market• Population concentrating inurban areas• Increasing awareness ofcompliance• Easily affected by the economy,
with large fluctuations in orders
and performance

P19

Social andrelational capital

Domesticbuilding construction• Tokyu brand
Decarbonation• Group companies
12 subsidiaries
Affiliates 6• Collaborative partners 753• Sales offices

13 branches
7 offices overseas• Institute of technology

Building
renovation

Disaster prevention andmitigation

Zero waste

Technology• Expectations for improvement of productivity• Accelerated evolution ofdigital technology• Increasing number of issues
that cannot be solved by
Tokyu Construction alone

Intellectual capital
Capability enhancement• Number of registered patents
338• Technical personnel

Human
resources

Financial capital• Equity• Population growth andimprovement in quality oflife in developing countries• Expansion of overseas business

Human resources
and work style• Lack of human resources anddiversification of values• Advances in diversityRealestate1,978

Overseas market

Real estate andDX

102.9 billion yen

Planning

DesignConstruction

Digital platform
Acceleration of digital shift• Total capital per share
983.9 yen
• Interest-bearing debt
26.7 billion yen

Natural capital• Water, air, land, trees, seas, andriversOpendetailsP23• Energy consumption 23.64 l/m2

• Decline in skilled workers

Foundation for value

16 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

Corporate Vision for 2030

VISION 2030
Mission Statement (Purpose)
Fulfilling each individual’s dreams through the creation of a reassuring andcomfortable living environment

Management Policy (Value)• Seek out new challenges.
• Maximize the potential of
our human resources.

• Place the customer at the center of
our activities.
• Be fair and transparent in all our
dealings.

Materiality• Climate change (handling and adaptation)• Structural changes in the constructionindustry• Innovation• Town planning• Diversity and Inclusion• Corporate governanceOutputOutcomedetails

details

P19(billion yen / %)231.4
Operating income
3.5
Operating income margin 1.5
Net sales

strategical business
RealEstateBusiness

Human capitalFYE Mar. 2021

● Number of trainees 3,626● Investment in humanresource development
per employee
57,000 yen/year

Civil Engineering Business
Railways, roads, tunnels, bridges, andother construction, reconstruction
work after earthquakes, etc.

Management● Customer satisfaction*
98%* Customer satisfaction: The
level of satisfaction of ourprivate sector customers on a
non-consolidated basis(percentage of respondents“Yes, we are definitely happy toorder/Yes, we can also order.”)

Construction of commercial facilities,
hotels, offices, housing, factories,
hospitals, and distribution centers,renovation and wooden building
construction

Value Chain
Renovation

P63

Social and relationshipcapital
Building Construction Business

Inspectionand examination

details

Decarbonation

New
Businesses

construction

Value shared withstakeholders● Employee engagement
BBB

Services andBusinesses

International
Business

Synergy

Value provided
to society

P19

Dismantling● Safety index

based on BIM/CIM
Real Estate Business

Zero waste

Real estate rental business, equivalent exchange business, etc.

0.19

● Employment rate forpeople with disabilities
2.46%

Intellectual capital● Number of patentapplications 28 (FY2020)● Number of employees who
obtained eco-certification
1,485 (cumulative)

International Business

Innovation Alliance
M&A

Development of railways and roads,
construction of high rise buildings
and factories

New Business
PPP / Concession Business, thepaprika business etc.

Financial capital

Disasterprevention andmitigation● ROIC

3.2%

● ROE

2.6%

Natural capital● GHG emissions
5.0% reduction(compared to FY2018)● Recycling rate

creation

details

P41

93.5%

● Electricity consumption
2.25% increase(compared to FY2019)

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

17

What the Tokyu Construction Group Aims For

Explanation of the Value Creation Process
The value creation process reflects the discussions that took placeover a period of about five months among 55 managers and young
employees involved in the formulation of VISION 2030, as well as
the discussions of the Board of Directors in the formulation of theLong-Term Management Plan “To zero, from zero.”

Recognition of the External Environment  Environment
According to the Intergovernmental Panel on Climate
Change (IPCC), the global average temperature is expected to rise by 1.5ºC compared to pre-industrial times by asearly as 2030. As economic losses from natural disasters
brought about by climate change increase, awareness of
disaster prevention and mitigation is growing. In our massconsumption society, global regulations are acceleratingwith regard to environmental pollution and greenhousegases, which are considered to be the cause of climatechange, and expectations are mounting for companies torealize a decarbonized society. In response to the rapidly
developing decarbonized and recycling-oriented society,
the Tokyu Construction Group has identified decarbonization, zero waste, and disaster prevention and mitigation as
the three values we will deliver to create corporate value by2030. We will practice sustainable management with astrong awareness of solving social issues such as climatechange and creating economic value in the process, andgiving back to our various stakeholders through our business activities.

construction safety and quality, and to pass on skills andtechnology.

  Technology
The declining population is having a ripple effect on the
shortage of labor in the construction industry, making it
necessary to save labor and improve productivity. The useof digital technology to improve productivity will lead to afundamental reform of the construction production process. In order to do this faster and more efficiently, we must
collaborate and form alliances with a variety of companies.

  Overseas market
Developing countries in Asia and elsewhere require railways, transportation systems and other infrastructure tomeet the needs of their growing populations. This is an
attractive market where we can utilize the know-how wehave cultivated in Japan. However, there are risks due todifferences in labor practices and values, which requirepartnerships with local companies and the use of local
human resources.

  Construction industry  Human resources and work style

The construction market itself is expected to gradually
decline over the mid to long term as the population ofJapan declines. On the other hand, infrastructure built
after the war is aging, and infrastructure including roadbridges, tunnels, and water pipes need to be renewed. In
addition, rising environmental awareness is expected tolead to increased demand for buildings with low energy
consumption in the future and for renovations rather than
new construction. As the number of workers in the construction industry declines, there is a need to take appropriate measures throughout the supply chain to ensure

Compared to the homogenous workforce of the past,
there are now more employees with diverse values due tothe influx of women and young people who are digital
natives and have a high level of interest in the environment and SDGs. There is a need for management thatmakes the most of these diverse human resources. In theconstruction industry, a shortage of specialized skilledworkers is becoming apparent, and in addition, laws andregulations regarding working hours are becoming stricter, necessitating a review of work styles.

Inputs  Capital
Human capital: Tokyu Construction, which has its origins
in the resolution of social issues, needs autonomous andco-creative human resources who can solve problems. We
will improve employee engagement, i.e., each employee’s
willingness to contribute by proactively demonstrating his
or her potential through a proper understanding of theCompany’s strategies and goals, through the reform ofleadership and management styles to support autonomy
and make the most of diverse human resources.
Social relationship capital: Under the slogan “Toward a
Beautiful Age,” the Tokyu Group leverages its comprehensive strengths to conduct business together with subsidiaries, affiliates, and various partner companies.
Intellectual capital: We promote the development of
human resources and digital technologies that form the18 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

source of our competitive strength and differentiation. We
proactively develop technologies that meet customer
needs, such as construction technologies for large-scale andhighly difficult projects, and work to resolve technical issues.
Financial capital: We pursue the optimal capital structure, including the use of interest-bearing debt, in orderto respond to the risks and opportunities associated with
future changes in the environment. We will balance thefurther enhancement of our management and financialbase with investment in growth and improvement of capital efficiency.
Natural capital: We work to protect the climate and preserve biodiversity through the use of clean energy andrecycling, and strive to protect the global environment
based on the three values we provide: decarbonization,
zero waste, and disaster prevention and mitigation.

Business model  Tokyu Construction business
As the structure of the construction industry changes, one
key measure is to build a digital platform based on BIM/
CIM and to accelerate DX.
In response to the digital shift in the construction business, we will accelerate digitalization in all aspects ofsales, construction, and business management. By promoting human resource development, reskilling, and theacquisition of new human resources, we will push forwardwith the construction of a digital platform based on BIM/
CIM at a pace that overwhelms our competitors. Furthermore, we will build a new business model through thesynergy of honing our know-how and utilization of digitaltechnology. Through this development of DX, we aim tocreate opportunities to provide new value in upstream
and downstream areas by encouraging the transformationof the construction process in an integrated manner, notonly within the Tokyu Group but also through collaboration with other industries.
In our core businesses (domestic civil engineering business, domestic building construction business, and building renovation business), we will continue to strengthen
our on-site capabilities while promoting the utilization of adigital platform based on BIM/CIM, differentiation
through proposal-based sales based on providing thethree values, and creation of new value by expanding thevalue chain upstream and downstream. We will realize ourstrategy by enhancing our capabilities through open innovation, alliances, and M&As. Based on the results of these
initiatives, in the second half of the plan we aim to moveaway from customer-driven contracting business.
Of our strategic businesses (international business, realestate business, and new businesses), we will aim toestablish a highly profitable model in the international
business that adapts to the market environment of eachcountry by building partnerships with local companies.
On the other hand, we have so far engaged in the realestate business based on the stance that the construction
business is a flow business, so it experiences volatility – ora wide range of fluctuations in performance – and necessitates a certain level of stable earnings from the rental
real estate business, but moving forward, we will pursue
synergy with the construction business in addition tosecuring stable earnings. In addition, BIM will serve as aplatform to connect upstream and downstream in thevalue chain, thereby becoming the springboard for construction business innovation. This will remove barriers in
the construction and real estate value chains and enable
us to aim to deliver value across the entire value chain.
In new businesses, the Value Creation Promotion
Office, which was established in April 2021, will play an
ongoing role in creating new businesses based on thethree values we provide.

Output  Services and businesses
In the fiscal year ended March 2021, the composition of
net sales by segment was 32.7% for the civil engineeringbusiness (including overseas), 66.2% for the construction
business (including overseas), and 1.1% for the real estatebusiness, etc. As the basic policy of our Long-Term Management Plan, we define our core businesses as domestic
civil engineering, domestic construction, and building
renovation businesses, and our strategic businesses asinternational, real estate, and new businesses. We prac-

tice both the evolution of knowledge and the search forknowledge in these areas. We have a proven track recordin the construction of many skyscrapers in Shibuya andother locations, as well as office buildings, schools, government buildings, condominiums, and environmentallyfriendly buildings. In addition to this, we have a wealth ofexperience in highly technical railway construction, androad, water, and sewage construction.

Outcome  Value provided to society and value sharedwith stakeholders
Through these outputs, we will provide society with thethree values of decarbonization, zero waste, and disasterprevention and mitigation. Based on these three values,
we aim to maximize both financial and non-financial corporate value through a strategy that places humanresources and digital technology as sources of competitive advantage. Under VISION 2030, our corporate vision
for 2030, we will strive to achieve zero carbon and zerowaste, and we will be ready to take on new businesses
from first principles to provide our stakeholders with theenvironment and excitement they deserve.

* BIM/CIM (Building/Construction Information Modeling, Management): This is a workflow that introduces 3D modeling from the examination and design stage, the goal ofwhich is to ensure quality and improve productivity by offering information on attributes (material, strength, etc.) and using a series of construction, production, and management systems at each stage of construction and maintenance management.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

19

What the Tokyu Construction Group Aims For

Financial and Non-Financial Highlights
Financial Highlights (Consolidated)
Operating income / Operating income margin

Cash flows from operating activities(million yen)(%)(million yen)15

40,00025,00021,41621,98720,00029,694

20,315

12

17,211
15,00020,000

7.1

6.7

6.6

0

6.3
6

5,000

3,549
1.5

0

3
0

FYE Mar.
2017

 Operating income

FYE Mar.
2018

FYE Mar.
2019

FYE Mar.
2020-20,000-23,545

(%)

(%)

50

30

40.1
40

40

31.00

22.8

22.2

30.00

FYE Mar.
2019

FYE Mar.
2020

FYE Mar.
2021

30.00

30

26.00
21.5
20.5

10

0

10
0

FYE Mar.
2019

15.4

20

20.6
10.00

FYE Mar.
2018

18.1

20

10

 Dividends

FYE Mar.
2018

ROE

50

FYE Mar.
2017

FYE Mar.
2017

z Operating income margin

(yen)

20.3

-33,439-40,000

FYE Mar.
2021

Dividends and payout ratio

20

11,629910,00030

16,226FYE Mar.
2020

2.6
0

FYE Mar.
2021

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

FYE Mar.
2020

FYE Mar.
2021

z Payout ratio

Shareholders’ equity

Interest-bearing liabilities and D/E ratio(million yen)(million yen)

100,000

45,00085,860(%)

0.3

83,9930.26

0.26

26,55726,75476,87275,00066,25030,00054,0060.2

50,00015,00025,0004,803
00FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

FYE Mar.
2020

FYE Mar.
2021

0.1

0.07

FYE Mar.
2017

0.02
1,721
FYE Mar.
2018

0.02
1,638
FYE Mar.
2019

0
FYE Mar.
2020

FYE Mar.
2021

 Interest-bearing liabilities (excluding lease obligations)

20 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

z D/E ratioNon-Financial Highlights (Non-Consolidated)
CO2 emissions

Construction by-products* generated(t-CO2)80,000(10,000 t)

100

69,153
1,820
53,3561,754

60,00040,00067,33375

45,73544,47844,329
1,955
2,016
1,657

50

51,602
43,78020,00042,67342,461

0

39.5

41.0

FYE Mar.
2017

FYE Mar.
2018

37.5

34.8

35.5

FYE Mar.
2019

FYE Mar.
2020

FYE Mar.
2021

25

0
FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

FYE Mar.
2020

FYE Mar.
2021

 Workplaces  Office* Consumption by-products are generated during construction work. This
includes recycled resources and waste.

Recycling rate

Energy consumed (Head office, branch offices, laboratories and factories)

(%)

100

98.4

(Fuel oil conversion: ℓ/m2)

99.4

30

25.65
94.0

95

93.3

24.66

25.33

FYE Mar.
2018

FYE Mar.
2019

23.32

23.64

FYE Mar.
2020

FYE Mar.
2021

93.5
20

90
10
85

0

0
FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

FYE Mar.
2020

FYE Mar.
2021

Accident frequency rate*

FYE Mar.
2017

Number of employees

0.60

3,000

0.43
0.40

2,617
287

2,464
215

2,537
234

2,523
248

2,576
268

2,249

2,303

2,275

2,308

2,000

0.20

0.19

0.20

2,330

1,000

0.12
0.09
0

0
FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

FYE Mar.
2020

FYE Mar.
2021

Safety index: √ (Frequency rate x Strength rate)

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

FYE Mar.
2020

FYE Mar.
2021

 Male  Female* The frequency rate is an index that shows the frequency of industrial accidents
that caused injury and/or death per one million total extended working hours.
The Strength rate is an index that shows the scale of industrial accidents thatcaused workdays lost per thousand total extended working hours.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

21

What the Tokyu Construction Group Aims For

Long-Term Management Plan “To zero, from zero.”
Review of Previous Mid-Term Management Plan
By implementing the Mid-Term Management Plan Shinka 2020, a three year plan that started in fiscal
2018, we have worked to reform human resources and the organization, strengthen existing businesses,
diversify earnings, and reinforce our financial base.

Strategy

Results

Transforming our human resources and organization
to elicit employee motivation and capabilities

We completed large-scale projects and difficult
construction projects that we had not experienced in Japan or overseas, including the redevelopment around Shibuya Station.

Reinforcing the domestic construction business with acustomer-centered perspective and problem-solving
skills

The accumulation of owned capital has
advanced and the soundness of the Company’s
finances, which has been an issue since theCompany’s restructuring and rehabilitation, has
improved.

Promoting the diversification of revenue sources by
expanding strategic businesses
Shoring up our management and financial foundations in support of heightened profitability

IssuesChanges to the portfolio of orders due to the completion of large-scale projects such as the Shibuya
redevelopment
Significant decrease in the operating profit margin
Decrease in ROE due to a significant drop in profits
Insufficient expansion of revenue from business other than domestic construction
Changes in employee awareness and work styles due to the COVID-19 pandemic
Fostering of a sense of crisis in response to rapid changes in the situation

Mid-Term Management Plan
Fiscal 2018–Fiscal 2020

Shinka 2020

Becoming a company that can cope with the changing business environment
Targets

Sales(Before revision) 312.0 billion yen(Revised) 244.0 billion yen

231.4 billion yen(Before revision) 6.3%

Operating profit margin

Total owned capital

FY2020 results(Revised) 2.7%

1.5%

(Before revision) 110.0 billion yen

ROE

22 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

(Revised) 104.0 billion yen

102.9 billion yen(Before revision) 13%(Revised) 5%

2.6%

Overall image of “To zero, from zero.”, the Company’s Long-Term Management Plan
Long-Term Management Plan “To zero, from zero” based on the results and issues covered in the previous Mid-Term Management Plan and formulated in response to agreater awareness of accelerating social issues and changes in society

Goal = VISION 2030
To zero, from zero, The environment and the excitement of the future.
Basic policy
We position domestic civil engineering, building construction and building renewal business as “core business,” andinternational, real estate and new business as “strategic business,” practice the “deepening of knowledge” and the“search for knowledge,” and implement five priority strategies based on the three values we provide using humanresources and digital technology as our sources of competitive advantage. By doing so, we aim for the sustainableimprovement of corporate value in both financial and non-financial terms.

Businessstrategy

1

The Tokyu Construction brandEstablishment of the Tokyu Construction brand through thebuilding of competitive advantages in human resources and digital technology and the provision of three values

Core business

Strategic business• Domestic civil engineeringbusiness• Domestic building construction
business• Building renewal businessCore businessBusinessstrategy

2Strengthening of problem-solving skills, construction and production systeminnovation, and growththrough alliances and M&A

Human resource andorganizational strategies
Businessstrategy

4• International business

Decarbonization• Real estate business• New business

Provision of
three values

Zero waste

Disasterprevention andmitigation

Strategic businessBusinessstrategy3
Sources ofcompetitive advantage

Human
resources

Financial and capital
strategies

DX

Creation of results andacceleration of innovation
through the strengtheningof human resources andreform of the organizationand corporate culture

Businessstrategy

5

FY2020 results

FY2021

The creation of new
growth opportunities
through investments instrategic business and synergies with core business

Emphasis on capital efficiency and the construction of stable financial
foundations by pursuing
the optimal capital
structure

FY2023

FY2030

3.5 billion yen

7.0 billion yen

13.0 billion yen

At least 22.0 billion yen

1.5%

2.4%

At least 4.0%

At least 5.0%

3.2%

4.1%

At least 6.0%

At least 7.0%

2.6%

4.8%

At least 8.0%

At least 10.0%

0.26 times

0.5 times or less

0.5 times or less

0.5 times or less

Capital adequacy ratio

45.4%

About 40 to 45%

About 40 to 45%

About 45%

Employee engagement
rating*2

BBB

BBB

A

AAA

5.0% reduction

7.5% reduction

12.5% reduction

30.0% reduction

Operating profit
Profitability

Operating profit margin
ROIC*

1

Efficiency

ROE
Debt-to-equity ratio
Soundness

Non-financial

GHG emissions
FY2018 standard*1 The Company has adopted as ROIC calculation formula as follows in order to reflect appropriately the return on invested capital (dividends, etc.) for the acquisition of shares required in business development.
(NOPAT + non-operating revenue) / (owned capital + interest-bearing debt)*2 Engagement rating using Link and Motivation Inc.’s “Motivation Cloud.” Subjects are employees of the Group as a whole, including subsidiaries. Rating is divided into a total of 11 stages, and the current “BBB” isthe fourth rating from the top after “AAA,” “AA” and “A.”TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

23

What the Tokyu Construction Group Aims For

Long-Term Management Plan “To zero, from zero.”

Promotion and establishment of the Tokyu Construction brandBusinessstrategy

1

We will visualize initiatives and results and promote them internally and externally together
with a new brand message.

Stakeholders

Decarbonization

Facts and results
Disasterprevention andmitigation

Zero waste

Human
resources

Realization of a sustainable society
×
Improvement of corporate value

Customers Cooperating Employees’
companiesfamilies

DX

Awareness andunderstanding

Shareholders

Society

We will create a virtuous cycle of stakeholder awarenessand understanding and improvement of corporate value
Businessstrategy

2Corebusinessstrategies

Deepening of core businessWe will strengthen capabilities through the strengthening of problem-solving skills,
construction and production system innovation, and strategic alliances.
2021~2023

2024~2026

Positive development of business that contributes to theprovision of the three values and creation of successful cases

Shift to proposal-type sales that differentiate us fromcompetitors based on provision of the three values

Maximized use of digital platforms based on
BIM and CIM

Leverage BIM and CIM data to expand business in thevalue chain and maximize synergies between businesses

Domestic civil engineering business

2027~2030
Lead a new construction scheme (IPD,*etc.)
based on accumulated data and results, andaim to break away from the customer-led contracting industry

Domestic building construction business + building renewal business

Decarbonization

Strengthening of capabilities
Zero waste

Human
resources

DX

Disasterprevention andmitigation

Open innovation alliances and M&A* IPD (integrated project delivery): A project method under which various related parties, such as the ordering party, designer, construction companies and specialized construction
companies advance work under a single contract

In addition to creating a BIM/CIM-based digital platform centered on the three values we provide and strengthening
problem-solving skills, we will generate synergies between the civil engineering and construction businesses. This will
occur at the same time we shift to proposal-type sales and break free of the contracting business.

Businessstrategy3Growth of strategic businessWe will create new growth opportunities through initiatives and investments with strong
awareness of synergies with core businesses.

The construction industry is highly volatile because it is strongly
impacted by business conditions. For strategic businesses, we will
operate new businesses while being conscious of synergies between
our core businesses, the civil engineering and building construction
businesses, and strategic businesses, and create new business opportunities. In particular, for the real estate business, we are not only
building a seamless system as part of the platform that links theconstruction business to the value chain while ensuring profitability as
a stock business but also acquiring real estate development businessknow-how and increasing efficiency in the overall value chain.

24 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

The construction and realestate value chain
International
business

Real estatebusinessRealestateDesignConstruction

Building
management

Synergies withconstruction business
Securing of stable revenue

NewbusinessImage of Realization in Long-Term Management Plan, VISION 2030
We will improve corporate value by transforming our construction business model and business portfolio.
Core business•We will establish an industry-leading brand with the three values we provide.
•With BIM and CIM as platforms, we will create various added
value in the value chain and transform the construction business model based on human resources and digitaltechnology.
•We will grow the scale of revenue steadily.

FY2030 revenue structure

Socialvalue

Core business 75%

Strategic business 25%
Strategic
businessCorebusiness

FY2019 revenue structureCore business 94%

Strategic business 6%

FY2020 revenue structureCore business 108%

Strategic business -8%
FY2020

FY2030Strategic business•We will realize the transformation of our business portfolio
through innovation in international, real estate and construction business, and the growth of new business that leads to
the resolution of social issues.
•We will continue efforts towards the resolution of new social
issues without slacking off through the penetration of a corporate culture that creates innovation.
Main KPI•GHG emissions: Reduce Scope 1, 2, and 3 emissions by 30%•Operating profit of at least 22 billion yen•Secure stable ROE of at least 10% and ROIC of at least 7%

Image of Growth in Long-Term Management Plan, VISION 2030
We will achieve growth by investing in core business and strategic business that will not be beaten by reductions inconstruction investment.
Using material such as medium- and long-term forecasts of the Japanese economy developed by think tanks, we madeour own trial calculations and forecasts of domestic construction investment for fiscal 2021 and after. As a result, we
expect domestic construction investment to gradually recover after bottoming out in fiscal 2021 as the COVID-19 pandemic has been under control and then to remain firm through around 2025 because of continued efforts to fortify
national land infrastructure and a recovery in capital investment by companies. After that, we project a gradual falloff
because of the declining population, concerns about Japan’s finances, a shift in focus from flow to stock, and supply
capacity issues. Even as the construction industry trends downward, the Company will continue to invest and work tobuild an appropriate portfolio and grow its various businesses in both core and strategic businesses.
Gross profit on sales

Domestic construction investment

Long-Term
Management Plan(billion yen)(trillion yen)
65

40
60

20
55

0

FY2018FY2021

FY2023

Core business (domestic civil engineering)Core business (construction renewal)
Strategic business (real estate)
Domestic construction investment (forecast)

FY203050Core business (domestic building construction)
Strategic business (international)
Strategic business (new)

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

25

What the Tokyu Construction Group Aims For

Long-Term Management Plan “To zero, from zero.”Businessstrategy4

Human resource and organizational strategies
We will improve employee engagement by promoting human resource strategies to accelerate innovation in construction and production systems and challenges towards new business areas.
Handling of structural changes in theconstruction industry
Innovation in construction and production systems+

Labor-intensive style

Reform of our business portfolio

Knowledge-intensive
style
Capital-intensive style

Challenges towards new business areas

Creation of innovation
Promotion of diversity and inclusion

Reform of leadership and management style

Acquisition and development of highly
specialized human resources

Autonomous and co-creation style
management

Promotion of active female
participation

Leadership that supports autonomy

Improvement

Evolution of succession planning
Promotion of reskillingof employee

Promotion of work style reform

engagement

Promotion of health and productivity
management

We will accelerate the creation of results and innovation through organizational andcorporate culture reforms linked to human resource strategy
Transfer of authority to business divisions andclarification of responsibilities

Management leadership and responsibility

Reform ofStrengthening of corporate functions that support
management

organizational

Shift to a flat and simple organizational structure

cultureBuilding of an autonomous, co-creation-typeorganization

Implementation of employee engagement surveys

New establishment of a Value Creation Promotion
Office responsible for intellectual exploration

Dissemination of the corporate philosophy, visionand strategy through dialogue

Pursuit of an organization that stimulates diversity, inclusion and innovation

Practice of organizational development

Separation of management
and execution

Organizational development: A series of activities
that strengthens employees’ confidence in and willingness to contribute to the organization and relationships within the organization by consciously andsystematically promoting explicit and implicit codesof conduct, values, etc., within the organization

We will establish a new Value Creation Promotion Office responsible for the important strategic
themes of sustainability, new business and DX under the direct control of the President.
President

Value Creation
Promotion Office

The department will promote a sustainability strategy that

Sustainability Department balances social and economic value by disseminating and

26 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

appealing to the three values we provide internally and externally.

Innovation Department

The department will build and establish a system thatcreates new business continuously, including investment
in new business, based on the three values we provide.

Digital Innovation
Department

The department will control the ICT-related divisions of each business
unit and promote the conversion of BIM and CIM into platforms andthe conversion to digital human resources based on DX.

Financial and capital strategies

Businessstrategy

5

We will change our previous way of thinking completely and change direction towards the
improvement of capital efficiency (pursuit of the optimal capital structure).

Based on our own capital acquired to shore up our financial base, we will work to improve capital efficiency and accelerate growth investments in the construction business innovation, DX, new businesses, etc. In addition, we are conscious of
capital efficiency and aim to increase shareholder return.
Improvement of capital efficiency

Acceleration of growth investment

Improvement of shareholder returns• Pursuit of profit• Active use of leveraging• Reduction of inefficient assets• Innovation in construction business• Diversification of the portfolio• New business investment and M&A• From dividend payout ratio to DOE• Improvement of the level of returns

Profitable real estate
We will manage financial and capital strategies based on capital efficiency and strategic significance (“synergies with construction business,” “securing of stable revenue,” etc.).

Cross-shareholdings
Return policy until now

Future return policy

Dividends are influenced by the results for a single fiscal year andamounts are unstable
Easily influenced by results
Dividend payout ratio
for a single fiscal year
standard

Stable returns to shareholders aware of capital efficiency

Emphasizes enhancementof the financial base

Dividend payout ratio of 20%
or higher

DOE standard(Dividend on equity ratio)

Dividend amounts are stable

DOE of 4% or higher

Improvement of the level of returns(Aware of capital efficiency)

Past results for dividend amounts
3.3(billion yen)

2.7

0.3
FY12

DOE

3.2

FY14

FY15

4%

ROE At least
target 10%

Dividend At least
payout%ratio

40

In addition to returns through dividends, we will acquire treasury stock
flexibly with awareness of capital efficiency.

1.1[1] medium- to long-term results [2] Capital situation [3] Growth investment
opportunities [4] Consideration of market conditions, etc., including stock
prices0
FY13

At least

We will establish a return policy that balances medium- to long-term
results targets and financial and capital strategies.

1.4

1.1

FY11

2.8

3.2

FY16

FY17

FY18

FY19

FY20

Introduction of a New Management Cycle
In place of the Mid-Term Management Plan formulated every three years, the Company introduced a new management
cycle based on VISION 2030, a ten-year Long-Term Management Plan to achieve that vision, and a short-term implementation plan.
Our traditional management cycle, which was based on a three-year medium-term period, was problematic because
the short period made it difficult to flexibly respond to major changes in the business environment and resolve complex
management issues.
With the newly introduced management cycle, we formulate single fiscal year strategies that take into consideration
the medium- and long-term while updating our three-year goal each year. While maintaining a strong commitment toour vision for ten years in the future, we will be sure to implement reforms as we approach 2030 through a management
cycle that makes it possible to flexibly revise the strategy whenever to respond to changes in the business environment
and progress in implementing the strategy.

Implementation of structural reform
There is a strong sense of crisis over the sudden change in results. We will implement structural reform with awareness that the recovery of results is an urgent priority.
April 2021

Previous Mid-Term
Management Plan
Management
revival period

March 2023

1st year

2nd year[Structural reform period]

Reform of the personnel system
Structural reform of the organization
Strengthening of problem-solving skills
Penetration of capital efficiency

10th year

Period of change
We will implement a short-term recovery in results and long-term strategies toensure efforts towards reform.

Implementation of the five pillarsof structural reform
Enhancement of corporate governance

Issues of the previous
Mid-Term
Management Plan

March 2031

Long-Term Management Plan

• Separation of the supervision and execution of business and further improvement of the effectiveness of the Board of Directors• Promotion of diversity, inclusion and innovation• Implementation of human resource mobilization measures
Interlocking• Organizational reform premised on streamlining and flattening• Overhaul of QCDSE and sales capabilities and rebuilding of earning capabilities• PL management => penetration of BS management as far as the site level

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

27

What the Tokyu Construction Group Aims For

Long-Term Management Plan “To zero, from zero.”

Source of Competitive Advantage and Three Values We Provide
The Company has set resolving social issues from the SDGs as important management issues. Of those, thethree values we provide—that is, decarbonization, zero waste, and disaster prevention and mitigation—
were used as the foundation for the long-term management strategy. Using “human resources x DX” as
our source of competitive advantage, we will move forward with expanding our businesses, centered on
the three values we provide.

“To zero, from zero.”

Decarbonization

Zero waste

Disasterprevention andmitigation

Strengthening of capabilities

Human
resources

Sources of competitive advantage

Human
resources

DX

DX

Provision of three values:

Decarbonization

We will also take on the challenge of zero carbon
in the overall value chain of construction businessand new business areas, not just construction.

Zero waste

We will contribute to the realization of a circular
economy and take on the challenge of suppressing CO2 emissions due to the incineration of waste.

• Hiring/training employees for the digital age• Building a digital platform based on BIM/CIM andaccelerating the shift to digital technology

Disaster prevention
and mitigation

28 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

We will not only take on the challenge of suppressing the generation of CO2, which is also a cause in
the occurrence of large-scale natural disasters, butwill also contribute through the establishment of
infrastructure.

HumanresourcesDX

Decarbonization

In the Long-Term Management Plan “To zero, from zero”, the Company
has positioned human resources as the source of its competitive advantage
and set the employee engagement score as one of its KPI.
The Company’s efforts have been highly praised, which is evident by thefact that the Company was selected in 2020 as one of the ten top companies in the Best Motivation Company Award 2021 (Major Company Category), which is presented by Link and Motivation Inc. This was the second
consecutive year that the Company was presented the award.
We will continue to promote our human resources strategy to accelerate
efforts to improve the construction production system and take on challenges in new business domains and to work to improve employee engagement.
With construction, there are often situations when decisions have to bemade while communicating with numerous related parties in different
departments and companies, such as the company placing the order,
design company, construction company, and business partners. At thattime, it is important that all related parties share various materials andagree on the construction process and image of the completed project,
and the fact that it takes time to reach agreement is an issue.
Tokyu Construction and Ricoh Co., Ltd. are working to improve productivity through the use of DX, and these efforts have included conducting a verification test related to the use of virtual reality (VR) to hold online
discussions with multiple related parties during the track diversion work for
the Ginza Line Shibuya Station in November 2020.
As for initiatives related to decarbonization, one of the main problems is
reducing CO2 emissions during the construction process, and there aredemands to select construction materials that entail less CO2 emissions.
Therefore, the Company first used CELBIC,* a low-carbon concrete that
reduces CO2 emissions due to concrete material when undertaking new
construction for the Ginza 5-Chome Project (CURA GINZA). Through these
efforts, we can provide customers with new value, environment-friendly
buildings that result in less CO2 emissions due to construction. The Company will continue to take on the challenge of R&D to meet the needs ofcustomers.
*CELBIC: environment friendly concrete that reduces CO2 emissions from the materials used tomake the concrete about 9%–63% by replacing 10%–70% of the cement with fine powder of blast
furnace slag, a by-product of iron manufacturing.

Zero waste

Disaster prevention
and mitigation

We worked with Ishizaka Sangyo Co., Ltd. , to jointly develop a wastesorting robot that automatically sorts construction waste at intermediate
processing plants.
We are moving forward with recycling waste at intermediate processing
plants by classifying and sorting using wind and differences in specificgravity, but there are situations when it is difficult to automatically classify
and sort depending on the type of waste and other factors. The wastesorting robot we developed is based on sorting technology that we havedeveloped over the years and has been automated through the use ofimage processing technology incorporating deep learning. We will continue to develop technology that contributes to zero waste.

Ricoh Virtual Workplace

Envisioned completed CURA GINZA(provided by Grosvenor Limited)

Waste sorting work

In October 2019, Typhoon Hagibis hit Japan and caused major damage to
the Uedadentetsu Bessho Line Chikuma River Bridge. While promptly
restoring the transportation for the local community, we were able tocomplete reconstruction work and restore the Bessho Line Chikuma River
Bridge with no accidents or injuries during the construction period in orderto fulfill the fervent wish of the local community to “keep the red bridge,” alocal symbol. We will maintain and strengthen our civil engineering technology, which is responsible for disaster prevention and mitigation, andcontinue to do all we can to respond to natural disasters.
Restored Chikuma River Bridge and our
Employees

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

29

Growth Strategy and BusinessAt a Glance (Business Overview)
Our Group focuses on civil engineering and building construction as core businesses. We are also working real estate, international business, and new business as strategical businesses to increase competitiveness and diversify revenue sources. We aim to enhance our corporate value in a sustainable manner
through the development of a stable management foundation.

Civil Engineering BusinessWe establish national land
infrastructure that ensuressafety and security in people’s daily lives. Furthermore, we are proactively
engaged in environment-related fields.
Services and Businesses
Railways, roads, tunnels,
bridges, and other construction, reconstruction work after
earthquakes, etc.

Construction Sales / Construction Gross Profit / Construction Profit Margin(billion yen)(%)

 Construction Sales

100

15

 Construction Gross
Profit12z Construction Profit
Margin (right axis)

80

14.1
70.3

9.3

9.7

9.9

60

75.5

73.8

69.8

88.0

8.0

40

6

20
0

9

6.9

7.1

FYE Mar.
2017

FYE Mar.
2018

3

9.8

8.2

6.0

FYE Mar.
2019

FYE Mar.
2020

FYE Mar.
2021

0* Non-consolidated (includinginternational business)

Building Construction BusinessWe engage in communitybased urban development
throughout Japan, such as
development of Tama Garden City and redevelopment in Shibuya.

Construction Sales / Construction Gross Profit / Construction Profit Margin(billion yen)(%)

 Construction Sales

300

15

 Construction Gross
Profit13.2

Construction of commercial
facilities, hotels, offices, housing, factories, hospitals, anddistribution centers, renovation and wooden building
construction

z Construction Profit
Margin (right axis)

206.9

11.6

200

10

9.8

160.8

Services and Businesses

11.9

238.2

236.8

138.9

8.5

100

0

5
21.2

27.5

23.4

24.7

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

FYE Mar.
2020

11.8
FYE Mar.
2021

0* Non-consolidated (includinginternational business)

Real Estate BusinessWe are engaged in value-added real estate business such as development
business and rental business by maximizing thesynergy with the construction business.

Net Sales / Gross Profit / Profit Margin(billion yen)6

5.8

 Net Sales80

 Gross Profitz Profit Margin(right axis)

3

28.9

2.0

29.6

1.6

Services and Businesses

(%)

9.1
0.5

0

Real estate rental business,real estate development business, equivalent exchange
business, etc.

40
1.8

0.1

1.6

1.3
10.9
0.1

0
-1.3
-79.4

FYE Mar.
2017

FYE Mar.
2018

FYE Mar.
2019

FYE Mar.
2020

FYE Mar.
2021-80
M Shirokanedai

30 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

Orders received in
Civil Engineering Business /Building Construction Business¥306.6 billion¥63.7
billion

20.8%

Uedadentetsu Bessho Line Chikuma River Bridge
Disaster Restoration

Tokyo Metro Ginza Line Shibuya Station
Improvements

Tokyu Group¥4.4 billion
7.0%
Other
¥59.3 billion
93.0%

Tokyu Group¥25.4 billion
10.5%¥193.3 billion
Tokyu Group¥9.1 billion
14.2%
Other
¥55.5 billion
85.8%

¥64.6
billion33.4%¥242.9billionTokyu Group
¥14.8 billion
11.5%

79.2%

Other
¥217.5 billion
89.5%¥128.7
Other¥113.9 billion
88.5%

billion
66.6%

FYE Mar.
2020

Minami-machida Grandberry Park (photo: Tokyu
Corporation)FYE Mar.
2021

 Civil Engineering Business Building Construction Business* Figures are rounded down to the nearest 10 million yen, so
the breakdown and the total may not match.

Phase I of SHIBUYA SCRAMBLE
SQUARE (East Tower)* Non-consolidated (including international business)

International BusinessNew business

Making the most of the skills and know-how that we havecultivated, we engage in business mainly in Southeast andSouth Asian countries, including Thailand, Singapore, Indonesia, Myanmar, Vietnam, Bangladesh and Philippines.

We are redoubling our efforts in the PPP/concession
business as a new business domain.

Services and Businesses
Railways and roads,
construction of highrise buildings andfactories

Services and Businesses
PPP / Concession
Business such as airports, water and sewage systems, thepaprika business etc.

New Mitsubishi Electric Consumer Products
plantOperation of a public sewage treatment plant(for the Seien area) in Hamamatsu CityTOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

31

Growth Strategy and Business

Overview of Each Business

Civil Engineering Business
Railways, roads, tunnels, bridges, and other construction, reconstruction work after earthquakes, etc.

Mid-Term Management Plan: Shinka 2020—
Results and Issues
The division posted ¥75.5 billion in completed construction sales for the FYE March 2021, thus reaching its target.
It was, however, impossible to avoid the impact of the
COVID-19 pandemic, with the completion dates of projects being pushed back and orders from other Group
companies falling almost in half as a result of Tokyu Railway’s cuts in capital investment in railways. In addition tobenefiting from infrastructure development related to theredevelopment of the Shibuya area and post-earthquake
demand in the Tohoku region, we were able to win various
construction projects, including some large-scale ones.
As for projects related to the central government, we
received several large construction orders, including ones
related to mountain tunnels, which will strengthen our
proposal abilities and result in more orders. In the field ofurban civil engineering, we also gained extensive experience with tunnels, shields, and caisson projects. There
are, however, problems that we must confront. JV sub
projects that offer thin profit margins but are undertaken
to obtain public works project certification account for alarger percentage of civil engineering projects, which has
pushed down the overall profit margin for civil engineering projects.

Construction Sales and Construction Gross Profit(million yen)

75,568redevelopment in Shibuya, and the reconstruction work in
the Tohoku region has settled down, and to make mattersworse, we are in the midst of the COVID-19 pandemic.
One of the Company’s strengths is its advanced construction capabilities related to railway construction, and wemust leverage those capabilities to capture improvement
construction orders from the various railway companies.
We also have to use the construction project experience
we have acquired over the years to further strengthen
sales related to central government and local government
projects. These efforts are slowly bearing fruit related to
local government projects outside of Tokyo, which we
struggled to win in the past.

Risks and Opportunities
Tokyu Railway possesses mature railway infrastructure,
which has resulted in a decline in large-scale improvement
projects and maintenance being the main type of work weundertake. Therefore, fewer engineers have worked on
massive projects that are both complex and difficult, andthere is the risk of a deterioration in our construction skills
related to railway improvement projects, which should be
one of our strengths. In response to that risk, we want topass on sound skills by focusing on non-Tokyu railway
improvement projects and winning more orders.
Furthermore, society’s civil engineering–related needs
are changing. In addition to more construction work related to power generation from renewable energy resources,
such as solar power and wind power, there is greaterawareness of construction work to prevent damage fromtorrential rains. Because areas that we are focusing on now
may quickly change, it is probably even more important toread how the world is changing and appropriately adapt.

Efforts to Achieve VISION 2030
6,031
FYE Mar. 2021

Construction Sales
Construction Gross Profit* Non-consolidated(including overseas)

Business Environment
Over the next couple of years, public works investment
will probably be firm, but the environment that the Company’s civil engineering business operates in is entering a
critical stage because large-scale construction related to

32 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

Decarbonization, zero waste, and disaster prevention andmitigation—that is, the three values we provide—play a
critical role in the civil engineering business, too. Whiletackling these issues faced by society, we aim to leverage
our strengths related to maintenance, and managementof social capital and secure a unique position within theindustry.
This is largely premised on “enhancing problem-solving
skills.” First, our goal is for all frontline workers to be able
to handle 3D data and properly make use of incorporated
ICT tools. Furthermore, in collaboration with Head Officedivisions and branches, we will promote efforts to furtherAs our mission is to develop infrastructure—that is, social capital—we
aim to reinforce problem-solving skills by promoting DX while working to solve problems related to decarbonization, zero waste, anddisaster prevention and mitigation, issues society faces.
Yushi Tsukui
Director, Managing Executive Officer
General Manager, Civil Engineering Division

improve efficiency and productivity and tie that toimproved technical capabilities for each engineer.
Similar efforts based on our success with fully making
use of ICT, including for the January 2020 Tokyo Metro
Ginza Line Shibuya Station railway track diversion project,
have spread throughout the Company. Ensuring that leading efforts are introduced throughout the Company, notsimply end with the development of a good technology, is
why the Civil Engineering Division is promoting DX. Similarly, we will continue to steadily implement humanresource–related efforts. We provide support to eliminate
bottlenecks at work sites, which is based on the theory of

constraints, one management method. A Head Officespecialist team travels throughout Japan and repeatedly
conducts operation analysis and makes work site management visible. Because of this, work sites are graduallylearning to independently review operations themselves
and implement improvements that reduce project timeand increase quality by focusing on operations that theyshould handle. I would like to hone our proposal abilities
using our strengths in digital technology and people, aim
to play a role in various parts of the supply chain, startingwith upstream parts, and contribute to the stable management of the Company.

TOPICS

Tunnel Dust Measuring System, a Mountain Tunnel Construction Support Tool
Tunnel dust generated during the construction of mountain tunnels cancause pneumoconiosis, and many measures to prevent dust have been
implemented over the years. The Ministry of Health, Labour and Welfare
revised its “Guidelines on Preventing Dust at Construction Sites, Including Tunnels” (came into effect April 1, 2021) in order to create a better
work environment into the future.
When these revisions were made, the Company launched developmentof a tunnel dust measuring system, which efficiently manages safety for
mountain tunnel construction, including remotely checking dust measurements and results. We confirmed the usefulness of the system by conducting verification tests at tunnel construction projects currently being
undertaken.
The goal is to further improve safety management during mountaintunnel construction by linking this system with other systems that theCompany has already developed and introduced including its Crisis Monitor Support System and Pit Access Management System.

Measuring dust (panorama view)

Tunnel Full Cross-Section Inspection System iTORELThe tunnel inspection system iTOREL includes an inspection unit that
automatically detects cracks and bubbles in the concrete linings of tunnels. The system also makes it possible to efficiently create inspection
reports using the obtained data. This reduces the manpower required forinspection work and makes it possible to obtain extremely precise information on the location and shape of cracks and bubbles, which areimportant for creating tunnel maintenance cycles. We are actively moving
forward with putting the system to practical use in order to contribute to
the long-life of social infrastructure.

Manage using computer with large touch panel

iTOREL (tunnel inspection work)

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

33

Growth Strategy and Business

Overview of Each Business

Building Construction Business
Construction of commercial facilities, hotels, offices, housing, factories, hospitals, and distribution centers,renovation and wooden building construction

Mid-Term Management Plan: Shinka 2020—
Results and Issues
The division recorded ¥138.9 billion in completed construction sales for the FYE March 2021, a dramatic decline
because of delays in new construction orders due to the
COVID-19 pandemic. Even so, orders have dramaticallyincreased since last fiscal year, and completed construction sales are expected to recover this fiscal year.
As for construction projects, we were involved in several large-scale ones, including high rise buildings, primarily
ones related to the redevelopment of the Shibuya Stationarea, which ran through 2020. This also made it possible
to train employees, another major success. Furthermore,with an eye toward promoting DX to increase productivity,
we transformed a Singapore-based BIM design company
into a consolidated subsidiary in October 2020 andannounced, in March 2021, the establishment of a joint
venture that will manufacture precast concrete products,
which will make it possible to introduce labor-saving construction in Japan. Having actively introduced ICT tools,
we have heard from many people, particularly young
employees, that operations are becoming more efficient.

Construction Sales and Construction Gross Profit(million yen)

138,991

11,822FYE Mar. 2021

Construction Sales
Construction Gross Profit* Non-consolidated(including overseas)

Business Environment
Japan’s construction industry is highly volatile and easily
impacted by business conditions. According to our forecasts, although the market will shrink in the future, theconstruction industry will probably face an even greaterlabor shortage in 2025. Under these conditions, it isimportant not only to increase productivity by promoting
DX in order to increase profit but also to ascertain construction demand.

Risks and Opportunities
Because of the COVID-19 pandemic, lease and renovation
demand for office space in the center of Tokyo is falling,
and we consider this change in demand a risk. Althoughdemand for logistics facilities is firm as a result of growthin e-commerce, some projects, including those related tocommercial complexes and hotels that our subsidiary
TOKYU RENEWAL Co., Ltd. is involved in, have been terminated or postponed.
Even in terms of demand for office space, companies
are examining various issues, including not only the size of
their offices but also if they even need an office, andgradually more and more companies and other entities
will probably revise their leases. For example, there willprobably be greater demand for satellite offices in the
future; therefore, it will be important to meet thesechanging needs.
In addition, we are aware that demand for environment
friendly buildings, primarily ZEB and ZEH ones, is sure toincrease, and being able to propose that to customers ineasy-to-understand terms will probably become one ofthe values we can provide.

Efforts to Achieve VISION 2030
Considering current social trends and the state of rival
companies, we face a major turning point this fiscal year.
Using the successes we have had over the years, we will
do all that we can to promote DX throughout the construction value chain and further raise the added value ofour proposals to customers and increase productivity.
In the future, we will use digital simulations, such as
BIM, and strive to create a new construction scheme
through independent proposals. In order to do that, we
will establish a new Market Development Group and Solution Sales Department and increase our proposal abilities
by melding customer trends and our technology developed. We will also actively propose ZEB and ZEH as
decarbonization and renewable energy efforts, part of thethree values we provide as added value.
Furthermore, in April, we introduced a more detailed
BIM first model 2021, which adds additional data to theBIM first model launched in February 2019, to all worksites in order to further promote the use of BIM at thosework sites. This BIM data, including architectural, structural, and facility designs, can be used for routine manage-* ZEB (net zero energy building) and ZEH (net zero energy house): Structures with an interior environment of the same quality as current buildings but are dramatically moreenergy efficient, the goal of which of which is to have annual net zero energy consumption by introducing renewable energy

34 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

In addition to increasing the number of environmental response–related
proposals, based on the three values we provide, we are introducing a
digital platform based on building information modeling (BIM)
throughout the division and aim to create a new construction scheme
and increase productivity.
Tomoya Masuda
Managing Executive Officer
General Manager, Building Construction Division

ment that extends from pre-construction plans toconstruction plans. This fiscal year, we will launch development of a design BIM platform premised on expanding
it to shop drawings and promote the seamless use of BIM
for design and construction projects, from proposal toconstruction. Both are major challenges, but we will be
sure to follow through with these endeavors with an eye
toward the future so that in 2030, ten years in the future,
we can say “2021 was a turning point, in the good senseof the word.”

Redevelopment of the area around Shibuya Station

TOPICS

Introducing Our Own Integrated BIM Model Into All Work Sites Before the Start of Construction
We started to develop a BIM first model in January 2019 and moved
forward with introducing that model with the aim of revolutionizing
the production system for construction. Since 2021, we have introduced BIM data that includes not only design information, such asthat on exteriors and facilities, but also information that only we possess such as all information related to architecture, structures, andfacilities, to all construction work sites before the start of construction. The use of BIM is expected to be beneficial in many ways,
including increasing productivity through quicker agreements
among related parties and frontloading, ensuring quality, and reducing costs. Our goal is to increase construction productivity 30% in
the future by promoting the use of BIM throughout the value chain.

BIM first model

M&As to Promote BIM
In order to reform the construction production system starting with
BIM, we transformed both Indochine Engineering Limited (Singapore), a BIM facility design company in October 2020 , and the building-cost service provider Kawamura Quantity Surveyor’s Co., LTD. in
January, 2021, into subsidiaries. Furthermore, we will establish thejoint venture Iwase Precast Co., Ltd., which manufactures and sells
precast concrete products; work to introduce labor saving measures,
an urgent issue; and move forward with a seamless construction digital transformation linked to BIM.

Iwase Precast Co., Ltd.

* BIM (Building Information Modeling, Management): This is a workflow that introduces 3D modeling from the examination and design stage, the goal ofwhich is to ensure quality and improve productivity by offering information on attributes (material,
strength, etc.) and using a series of construction, production, and management systems at eachstage of construction and maintenance management.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

35

Growth Strategy and Business

Overview of Each Business

Real Estate Business
Real estate rental business, real estate development business, equivalent exchange business, etc.

Mid-Term Management Plan: Shinka 2020—
Results and Issues
The real estate business is positioned as a strategic business in Shinka 2020, and we have worked to expand thebusiness as a stable profit pillar, a major mission of ours.
As for quantitative aspects, we achieved the target ofacquiring investment properties worth ¥10.0 billion overthree years, a business expansion target. Sales, however,totaled ¥1.6 billion in the FYE March 2021. Although therental business generated a profit, the overall real estatebusiness recorded negative revenue because of a deterioration in profit from long-term large-scale development
projects since the previous fiscal year.
Over the years, we have worked to create a collaborative
system with not only various Tokyu Group companies but
also other companies, including brokerage firms and realestate companies; acquired quality investment properties,
mainly in Tokyo’s five central wards and along Tokyu train
lines, which the Company is particularly strong at; andgained more experience in raising the value of properties
through renovations that make use of the knowledge of
construction companies. As the environment for our rental
income-based business grows harsher, we have steadily
moved to reinforce operation of the business in order tofurther increase profit, and these efforts have included not
only strengthening in-house resources for securing experienced employees through mid-career hires and managing
properties but also increasing efficiency by introducing a
new property management system.

19 pandemic, in terms of financing, there are vast amounts
of investment funds due to loose monetary policy, andreal estate is drawing a lot of attention. In particular, Japanese real estate is relatively inexpensive and stable compared to overseas properties, and there is extremely
strong investment desire among overseas investors.
As for this business field, the Company targets old,
mid-size office buildings worth ¥1.0-3.0 billion, whichlarge real estate companies do not handle. We are awarethat along Tokyu train lines, which we are very knowledgeable about and can leverage our strengths, there aremany old properties whose value can be increased
through renovations, etc.

Risks and Opportunities
There are three main risks. The greatest risk is development risk, such as projects not progressing as planned,
including delays in obtaining approval of building confirmations and similar items or expected construction costs
rising substantially. The next risk is that related to investment decisions, such as interest rate and price trends.
Finally, there is a risk unique to the Company, which deals
with older buildings—that is, ascertaining to what degree
the building has deteriorated.
Regarding investment decisions, we try to reduce risks
using evaluation criteria that incorporate clear indicators.
Further, we conduct comprehensive examinations thatleverage the strengths of the Tokyu Group and construction company and work to more efficiently obtain highly
profitable properties.

Net Sales and Gross Profit (million yen)

Efforts to Achieve VISION 2030
1,684

-1,336FYE Mar. 2021

Net Sales
Gross Profit

Business Environment
Although Japan’s economy is fluid because of the COVID-

36 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

Since we launched the real estate business in 2018, it has
gained greater recognition from outside the Company. In
the future, we will increase not only the replacement ofproperties held by selling ones off but also the number of
independently developed properties and work to establish our own brand.
In the Long-Term Management Plan, the real estatebusiness continues to be positioned as a strategic business. In addition to not only generating stable profit but
also making use of the knowledge of the construction
business throughout the process—from acquiring properties to construction, management, and disposal by sale—we will generate greater synergies between businesses byleveraging both the knowledge of the real estate businessand the sales and technology of the construction

Making the most of the synergies generated with the core construction business, we provide high-added-value real estate that is friendly
to the environment based on the three values we provide and ensureprofit that contributes to long-term stable management.
Junichi Omuro
Executive Officer
General Manager, Real Estate Divisionbusiness.
As for our own brand, we plan to call it TQ, a combination of Tokyu and “top quality.” Through creative construction and design appropriate for the Tokyu
Construction Group brand strength, TQ brand properties
will primarily consist of properties we develop ourselves,

be environmentally friendly, such as ZEB and ZEH, andembody the three values we provide. In this way, bysteadily expanding the scale of our business and scope of
properties handled, we will work to broadly solve theproblems society faces as a support of not only the Company but also society in 2030.

TOPICSM Shirokanedai, Tokyo Construction’s First Rental Apartments
Located five minutes on foot from Takanawadai Station on the Toei
Asakusa Line, the property is the Company’s first rental apartment basedon an equivalent exchange joint project1 with the land owner. Furthermore, this property is the eighth property for the Company’s equivalentexchange business. Completed in February 2021, the building is a
13-floor RC building with 39 units, 25 of which are owned by the Company. In addition to a maisonette-type residence on the top floor, there are
IoT residences that incorporate HEMS2 and 4D-Doctor3 and employ various new systems, including a facial recognition system linked to the elevator and delivery box and physical access controls that make use of IC
cards. In this way, we are trying various ways to develop a richer residential environment.
1. Equivalent exchange system: A scheme in which the land owner provides land, Tokyu Construction
provides the building, and new structure’s floor space and land are held in proportion tocontribution.
2. HEMS (home energy management system): a management system used in homes to conserve
energy.
3. 4D-Doctor: a building protection system jointly developed by Tokyu Construction and Fuji Electricthat forecasts earthquakes and automatically determines the safety of buildings. Sold and operated by TOKYU RENEWAL Co., Ltd.

Higashiazabu Office, Renovation Work
Located four minutes on foot from Akabanebashi Station on the Toei
Oedo Line and six minutes on foot from Azabu-juban Station, the property was built more than fifty years ago. This five-story existing non-conforming building with no elevator has a total floor space of 712 square
meters and was acquired in February 2020. A diagnosis of the deterioration of the structure’s concrete determined that it was fine, but if thebuilding was rebuilt, the floor space would dramatically decline. Therefore, a redevelopment plan using the existing building was selected. At
the end of August 2020, construction was completed, and we started tolease the building. The project was our fifth renovation effort. We reduce
waste, one of the three values we provide, by renovating and reusing
these old properties, which probably also lessens the environmental burden. We will continue to acquire old buildings and renovate real estate.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

37

Growth Strategy and Business

Overview of Each Business

International Business
Railways and roads, construction of high rise buildings and factories

Mid-Term Management Plan: Shinka 2020—
Results and Issues
Over the past three years, the Company’s efforts haveborne fruit, resulting in outstanding performances. At thecurrent time, we conduct business in eight countries,
mainly ones in Southeast Asia and South Asia, and wereinvolved in the Jakarta Mass Rapid Transit Project in Indonesia for five years and four months, from design to completion. The technical skills related to the construction
were highly rated, and our engineers won both the Minister’s Award for Outstanding International Infrastructure
Engineer and Minister’s Encouragement Award for Outstanding International Infrastructure Engineer at the 1stOverseas Infrastructure Project Outstanding Engineer
Recognition and Awards ceremony held on March 2021. In
June, we were also awarded the 4th Japan Construction
International Award (Ministry of Land, Infrastructure,
Transport and Tourism Commendation).
In addition, we were involved in a rail yard expansion
project in Bangladesh, our first ODA construction projectin that country, and a bridge project in Myanmar, our first
ODA construction project in that country. Completing
three large-scale construction projects in countries we
conduct business has also been a success in terms of
training employees. On the other hand, problems havearisen such as delays in construction and few new orders
due to political instability and the COVID-19 pandemic,
which must be dealt with quickly.

Business Environment and Risks andOpportunities
The Company’s business is not as large as that of competitors because we withdrew from the overseas businessduring the recession after the economic bubble burst.
Even so, we have won various ODA-related projects byleveraging our strength as a “general contractor skilled atrailway construction.”In the various countries we conduct business, there ishigh risk related to legal uncertainty, but there is alsourgent risk related to delays in construction due to political upheaval in Myanmar and the COVID-19 pandemic. In
collaboration with the Ministry of Foreign Affairs and local
companies, we work to gather information so that we canquickly respond to developments. Furthermore, there isalso a labor shortage related to unique overseas contracts
and sales, and we want to increase people working on
overseas businesses by assigning the Company’s

38 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

young-employees to that work, hiring experienced
mid-career people, and creating a more attractive environment, such as expanding the human resource systemfor overseas staff.

Efforts to Achieve VISION 2030
Although people often speak of “overseas,” there is nocountry called “overseas.” Japan is only one country in
the world, and it is necessary to break free of the categories of domestic and overseas and examine the market
and future possibilities of each country from a flat perspective. We will work to expand the business in a manner
appropriate for each country by securing outstanding
staff through continual recruitment, establishing local
incorporated companies, and implementing similar measures. Furthermore, we are aiming to establish a schemethat promotes the use of BIM/CIM and achieves overall
project optimization from upstream stages to downstream stages and in which related parties involved inconstruction projects share their knowledge. IPD, which is
widely used in advanced countries other than Japan, is ascheme to achieve that, and we have pivoted to it for thedevelopment business by providing these values.
As we approach 2030, we expect dramatic growth in
the international business, but in order to implement thevision that we see for ourselves in ten years, we need toact with considerable speed. While steadily doing what
we should, the Group will unite to undertake various
efforts and strive to achieve that.
* IPD (integrated project delivery): This is a way to undertake a project in which
the various related parties, including company placing the order, design company, construction company, and specialized construction companies, do thework under a single contract.

Jakarta Mass Rapid Transit Project

Using the construction technology that we have acquired as a construction company and evolving digital technology, we will develop social
infrastructure in countries through the world and conduct sustainableurban development, mainly related to transportation infrastructure network, in collaboration with local companies and local workers.
Shigehiko Shibusawa
Executive Officer
General Manager, International Division

TOPICS

Hanoi City Ring Road No. 3 Opening Ceremony (Vietnam)
On October 11, 2020, the opening ceremony of the Hanoi
City Ring Road No. 3, an elevated bridge and road, was heldin Hanoi, Vietnam, in conjunction with the 1,010th anniversaryof the establishment of the capital Hanoi. Having received anorder for package 2, the Co Nhue–South Thang Long sectionof the Hanoi City Ring Road No. 3 Construction Project (MaiDich - South Thang Long Section), we launched constructionof the elevated bridge and road in April 2018, and construction of the 2.4 km elevated road was completed with no problems two years and four months later. This project is our
second one in Vietnam, following section 3 of the Nhat Tan
Bridge Construction project, which was completed in 2014.

Above: Completion commemorative photo
Below: Full section (fromair)
Left: Opening ceremony

Recognition as Overseas Infrastructure Project Outstanding Engineer
The Overseas Infrastructure Project Outstanding Engineer
Recognition and Awards ceremony was held on March 24,
2021, and two engineers who belong to the Company’s International Division won awards. Launched in fiscal 2020 by the
Ministry of Land, Infrastructure, Transport and Tourism, theprogram recognizes particularly outstanding engineers
involved in overseas infrastructure projects. This was the firsttime an engineer was recognized.
From Tokyu Construction, Yasuyoshi Nomura was awarded
the Minister’s Award for Outstanding International Infrastructure
Engineer, given to particularly outstanding engineers, and Naoki
Nakata was awarded the Minister’s Encouragement Award for
Outstanding International Infrastructure Engineer, given to outstanding engineers expected to make even greater contributions in the future, for their work related to the construction ofsections 101/102 of the Jakarta Mass Rapid Transit Project.

Left: Nomura Yasuyoshi
Right: Naoki Nakata

Jakarta Mass Rapid Transit Project

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

39

Growth Strategy and Business

Overview of Each Business

New Business
PPP / Concession Business, etc.

Our goal is to expand into new business fields, focusing on the PPP/concession(private-public partnership) business, including airport operation and water/sewage, not only
making use of the three values we provide, such as renewable energy, but also digitaltechnology.

Mid-Term Management Plan: Shinka 2020—
Results and Issues
The Company is focusing on the PPP/concession business,
which is not easily impacted by business conditions andthe industry. We are involved in the operation of airports,such as the Sendai Airport and Hiroshima Airport, in partnership with the Tokyu Group and independently operate
a water/sewage plant operation business. We have hadvarious successes including participating in the management of the public sewage treatment plant in Hamamatsu
City (Seien area), the first such project in Japan, in 2018
and then the Miyagi Prefecture integrated water supply,
industrial waterworks, and sewerage public-private partnership management project (Miyagi management/operation method) in 2021.
Furthermore, at a plant farm located in Miho-mura, Inashiki-gun, Ibaraki, we produce and sell quality domestic
paprika.

Office directly under the President in order to create new
businesses that will become core businesses in the future.
Centered on the three values we provide, which are drawing more and more attention—that is, decarbonization,
zero waste, and disaster prevention and mitigation—wewill plan and create new businesses, which has included
establishing a ¥5.0 billion startup investment fund andimplementing investment plans.
We will continue to promote efforts related to the PPP/
concession business and take on challenges in new fields,such as energy, in collaboration with leading local
companies.

Efforts to Achieve VISION 2030
As for new businesses, one of the main themes of ourstrategy, we established the Value Creation Promotion

Operation of a public sewage treatment plant (for the Seien area) in
Hamamatsu City

TOPICS

Investing in the Solar Power Generation–Related Startup
Girasol Energy Inc.
Having established an investment fund of up to ¥5.0 billion
for startup companies in Japan and overseas to create new
growth opportunities, the Company agilely invests in startSolar panel
up companies in fields that could make major contributions
to the three values we provide, which were set in the LongTerm Management Plan, and sources of competitiveness.
The first investment was made on June 11, 2021, and theCompany invested in was Girasol Energy Inc., a company
PPLC sensor
that leverages its proprietary power line transmission technology and has developed an AI/IoT platform for managing
Cloud with Solar AI Engine
solar power facilities down to individual panels. This will
AI/IoT Platformmake it possible to increase system efficiency by remotely
monitoring operation of power generation facilities via a cloud and maximize power generated. We will accelerate movement toward decarbonization by working with entities both in Japan and overseas.

40 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

Reinforcing the Foundation of Value Creation for Growth

Strengthening Corporate Governance
Recent Initiatives for Enhancing Corporate Governance
(FY)

2004

2010

Directors

Directors

Directors

Directors in the
Articles ofIncorporation
No more than 20

Independent outside
director
1

Independent outside
directors
2

Audit &
Supervisory
Board Members

Appointments andRemunerations
Committee

Independent outside
Audit & Supervisory
Board members
2

Establishment ofcommittee

Audit &
Supervisory
Board Members
Audit & Supervisory
Board members in the
Articles ofIncorporation
No more than 5

2015

2016

2017

Audit &
Supervisory
Board Members
Independent outside
Audit & Supervisory
Board members
3

2019

2021

Directors

Directors

Directors

Directors in the
Articles ofIncorporation
No more than 12

Independent outside
directors
3

Independent outside
directors
4

Female officers
Remunerationfor officers
Introduction of astock-based
remuneration plan

1
(Independent outside
director)

GovernanceCommittee
Establishment ofcommittee

Strengthening Corporate Governance

Basic Policies
At Tokyu Construction, we have a Corporate Philosophy that consists of our mission statement, management policy, and Code of Conduct that describe the type of company we seek to become. To make thisvision a reality, we are working to contribute to society through our corporate activities and achieve sustained growth and higher medium- to long-term corporate value. Fostering strong and capable corporate governance is a key management issue in these efforts, and consequently, we are constantly striving
to make improvements that will result in more effective and efficient corporate governance.
Corporate Governance Structure
Shareholder’s Meeting
Appointment / Dismissal

Accounting Auditor

ReportCooperation

Audit / Investigation

Appointment / Dismissal

Board of Corporate Auditor
Auditor’s Office

Audit
ReportCooperation

ReportAppointment / Dismissal

Appointment / Dismissal

Board of Directors
Nomination /Direction<Advisory Committee of the Board of Directors>

Consultation
ReportAppointments and Remunerations Committee
Governance Committee
Direction

Internal Control Office

ReportDirector, PresidentManagement Audit

Supervision

Management Committee

Management Meeting(Operational Decision Making)(Execution Management)

Council of Business
Unit Managers(Business Unit Monitoring)

Venture Investment Committee(deliberate and make decisions on
investments in startup companies)

Audit

Head Office Risk Management Council, Orders Received Council, Overseas Orders Council,
Real Estate Transaction Council, Business Investments Council

Internal Audit

Business Execution
Divisions
Head Office Divisions

Division Management Committee
Branches and Divisions

Subsidiaries

Executive Officers

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

41

Reinforcing the Foundation of Value Creation for Growth

Strengthening Corporate Governance

Composition of Each Body
Title

(The chairperson of each body is indicated byName

Director, Chairman of the Company

Tsuneo Iizuka

Representative Director, President

Mitsuhiro Terada

Representative Director, Executive Vice President

Motoyuki Takagi

Director, Senior Managing Executive Officer

Masatoshi Shimizu

Director, Managing Executive Officer

Yushi Tsukui

Director

Masao Tomoe

External Director

Isao Onda

External Director

Kahori Yoshida

External Director

Kunihiro Koshizuka

External Director

Tsutomu Tsunashima

Full-time Auditor

Satoshi Hashimoto

Full-time Auditor

Masashi Ochiai

Audit & Supervisory Board Member

Youichi Saito

Audit & Supervisory Board Member

Yoshikazu Kato

Audit & Supervisory Board Member

Kazuo Kitamura

Managing Executive Officer

Tomoya Masuda

Board of Directors
The Board of Directors consists of ten directors (including
four outside directors, all of whom are independent officers). Directors serve a one-year term to clarify management responsibilities for each fiscal year and to build adynamic management structure. A business manager
with extensive knowledge as a certified public accountant and certified tax accountant; a lawyer with expert
insights from her profession and work experience in thereal estate industry; an expert with extensive knowledge
related to digital technology and science and knowledgeof technical strategy formulation, new business creation,
large acquisition deals, and similar issues; an expert withmany years of experience at conducting operations at atrust bank and abundant experience and extensive
knowledge acquired at a real estate think tank have been
invited to serve as outside directors. They provide
much-needed perspectives in deliberations on agenda
items and function as a powerful check on directors toensure legality in how their duties are performed.

Executive Officers
To expedite decision-making in business execution
and strengthen the functions of each unit, the Board of
Directors elects 33 full-time executive officers who, likedirectors, serve one-year terms.

Establishment of the Management Meeting
To expedite decision-making concerning importantmanagement policies and issues, the Management
Meeting, composed of four directors and one executive officer centered on representative directors, isconvened as needed (45 times during FY 2020).

Audit & Supervisory Board and Audit &Supervisory Board Members
The Audit & Supervisory Board is composed of five members (all independent officers, including three outside

42 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

Board ofDirectors

Management
Meeting

Audit &
Supervisory
Board

Appointments
andRemunerations
Committee)

GovernanceCommittee

Audit & Supervisory Board members). Working toenhance our operational audit function in line with compliance management, we have invited a lawyer, a former
government agency employee, and a former financial
institution employee to contribute their expert insights
and extensive knowledge and experience as outside
Audit & Supervisory Board members. Each Audit &Supervisory Board member participates in Board of
Directors meetings and other important meetings andchecks over important decision-making documents inorder to understand the process of decision-making onimportant issues and monitor business operations related to the area for which he or she is responsible. Additionally, each member conducts investigations regarding
the business operations of relevant units and, if deemednecessary, receives business reports from subsidiaries
and audits the execution of directors’ duties, reporting
the audit results to the directors. Dedicated staff members are also assigned to the Auditor’s Office to support
the Audit & Supervisory Board members’ duties.

Appointments and Remunerations Committee
The Appointments and Remunerations Committee,
whose key members are independent outside directors,
is as an advisory body to the Board of Directors regarding the appointment and remuneration of directors,
etc., in order to strengthen the independence, objectivity, and accountability of the Board of Directors related
to the appointment and remuneration of directors, etc.
The Committee convened three times in fiscal 2020.

Governance Committee
The Governance Committee is an advisory body to theBoard of Directors on general issues related to corporate
governance. Composed primarily of outside directors
and outside Audit & Supervisory Board members, theCommittee works to continuously enhance the Company’s corporate governance and improve corporate value.

Composition of the Appointments Committee and Remunerations Committee
Committee nameTotal
members

Standing
members

Insidedirectors

Outsidedirectors

Independent
experts

Committeechair(chair)

Other

Discretionary committee equivalent
to Appointments Committee

Appointments andRemunerations Committee

5

0

1

4

0

0

External
directors

Discretionary committee equivalent
to Remunerations Committee

Appointments andRemunerations Committee

5

0

1

4

0

0

External
directors

Analysis and Evaluation of the Board of Directors’ Effectivenesswith the Board of Directors.
The results of the questionnaire were generally positive.
We were able to confirm that our Board of Directors is sufficiently effective and that steady progress is being made in
making improvements to issues identified in the previous
evaluation. On the other hand, some opinions emerged inthis year’s questionnaire regarding the composition of theBoard of Directors and the need for various measures,
including ones to improve the content of discussions andoperation of the Board of Directors, to expand the content
of reports on IR activities, and to further improve the functions of the Appointments and Remunerations Committee.
Therefore, we will continue our efforts to increase theBoard’s effectiveness going forward.

At Tokyu Corporation, our Corporate Governance
Basic Policy stipulates that the Company evaluate
whether the Board of Directors is functioning properly
and disclose a summary of the results every year.
In fiscal 2020, we cooperated with outside consultants
to conduct an evaluation using methods that encouraged
each officer to express their individual opinions, such as
an anonymous questionnaire about the Board of Directors’ effectiveness targeted at all directors and Audit &Supervisory Board members on the Board of Directors.
The Governance Committee, which is composed
mainly of outside officers, then evaluated the Board’s
effectiveness by discussing the issues that were highlighted by the questionnaire and confirmed the results

Skill matrix
Corporate
management

Sales

Tsuneo Iizuka●●

Mitsuhiro Terada●●

Motoyuki Takagi●●

Masatoshi Shimizu●

Yushi Tsukui●

Masao Tomoe

Name

Director

Law andcompliance

Finance andaccounting

Developmentof human
resources

●

●

●

●

●

●

External/independent

Kahori Yoshida

External/independent

Kunihiro Koshizuka

External/independent●

Tsutomu Tsunashima External/independent●

Digitalinnovation●●

Isao Onda

International
mindset

●

●

●

●

●

●

●
●

●

●

Satoshi Hashimoto●

Masashi Ochiai
Audit &
Supervisory
Youichi Saito
Board
memberYoshikazu Kato

External/independent

Kazuo Kitamura

External/independent●●

External/independent●●●

Policy and Procedures When Appointing/Dismissing and Nominating Officers
Directors and Audit & Supervisory Board members must
not only possess outstanding character, knowledge,
capabilities, and abundant experience but also be highly
ethical. Taking into consideration sex, age, skills, anddiversity in the composition of the Board of Directors,
director and Audit & Supervisory Board member candidates are selected based on their performance and execution of duties in previous years. Decisions regarding
director candidates are made by the Board of Directors
after receiving a report by the Appointments and Remu-

nerations Committee, and decisions regarding Audit &Supervisory Board member candidates are made by the
Board of Directors after receiving a report by the
Appointments and Remunerations Committee and consent of the Audit & Supervisory Board.
Furthermore, if a director or similar party causes
substantial damage to the reputation or interests of
the Company, the Appointments and Remunerations
Committee can propose to the Board of Directors disciplinary measures, including removal as director, etc.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

43

Reason for Appointment as Director and Attendance at Board of Directors Meetings
Name

Attendance rate

Independent
officers

TsuneoIizukaMitsuhiro
TeradaMotoyuki
Takagi
Masatoshi
Shimizu
Yushi
Tsukui
Masao
Tomoe

Isao
Onda

●

Kahori
Yoshida●Kunihiro
Koshizuka●

Tsutomu
Tsunashima●

Reason for appointment

Mr. Iizuka has been serving as Representative Director of the Company since 2009. He has abundant experience and extensive expertise as a business manager and has properly performed his
duties for administration and oversight of the overall businesses of the Group. Accordingly, he wasreelected as director.
Mr. Terada has abundant management experience at the Company and strong leadership as theRepresentative Director and President in the Group. Accordingly, he was reelected as director.
Mr. Takagi has served as Representative Director of the Company. He has advanced expertise in
the overall construction business, as well as abundant experience and extensive knowledge as abusiness manager. Accordingly, he was reelected as director.
Mr. Shimizu was reelected director because of his abundant management experience at theCompany and strong insights pertaining to overall business administration.
Mr. Tsukui was reelected as director because of his abundant management experience at theCompany and strong insights pertaining to civil engineering business.
Mr. Tomoe is the Representative Director of Tokyu Corporation, the core company of the Tokyu
Group. He was reelected as director due to his abundant management experience and broad
insights as corporate manager as well as the Company’s expectations that he will contribute to theCompany’s management using his opinions from the viewpoint of one familiar with the overall knowledge of business administration.
Mr. Onda has abundant experience and broad insights as a business manager, as well as his professional expertise as a certified public accountant and certified tax accountant. He was reelected as outside director with the expectation that he will contribute to oversight of overallbusinesses with his beneficial advice and opinions through his expertise and experience.
Ms. Yoshida has professional expertise as a lawyer and work experience in the real estate industry, and was reelected as outside director with the expectation that she will contribute to oversight of overall corporate businesses with her beneficial advice and opinions through her
expertise and experience.
Mr. Koshizuka has professional expertise in digital and science technology with a wealth of experience and broad insights with respect to technical strategy formulation, new business creation, andlarge acquisition deals. He was elected as outside director with the expectation that he will contribute to oversight of the overall businesses with his beneficial advice and opinions through his expertise and experience.
Mr. Tsunashima has gained broad insights through his career with a wealth of experience as a business
manager at a think tank specialized in the real estate business, as well as years of experience as an officer in business execution at a trust bank. He was elected as outside director with the expectation that
he will contribute to oversight of the overall businesses with his beneficial advice and opinions throughhis expertise and experience.

Board ofDirectors

Audit & Supervisory Board

Years
in
office

14/15

−

15

15/15

−

9

15/15

−

5

15/15

−

4

15/15

−

3

15/15

−

3

15/15

−

1

15/15

−

2

−

−

−

−

−

−

Standards Related to Independence of Outside Officers
We judge outside directors and outside Audit & Supervisory Board members to be independent outside
directors and independent outside Audit & Supervisory

Board members that there are no concerns about conflicts of interests with general shareholders.

Support Systems for Outside Officers
Systems have been set up to communicate and share
information with outside officers. For outside directors,
this includes conducting advance briefings on the agenda
items of the Board of Directors in consideration of theirurgency and importance. For outside Audit & Supervisory
Board members, this includes assigning dedicated staff
members to the Auditor’s Office and conducting advancebriefings on the agenda items of the Board of Directors.

Officer Remuneration and Incentive System
Policy for Determining Officer
Remuneration
The remuneration level for the Company’s directors is
decided taking into consideration position, state of executing operations, pay level of employees, and survey of remuneration of managers at Japanese companies by third-party
organizations. The remuneration consists of both monetary
remuneration and stock-based remuneration in order toprovide an incentive to improve short-term performance

44 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

and corporate value in the medium and long term.
Monetary remuneration consists of fixed remuneration according to position and remuneration linked toshort-term performance. For fixed remuneration, a set
amount is paid each month. Remuneration linked toshort-term performance is aimed at incentivizing directors toward better performance in the short term, andthe remuneration amount is calculated by multiplying
the basic amount according to position by a perfor-mance achievement ratio based on performance indicators such as KPI set in the management plan. The annual
amount is paid in two installments. The performanceachievement ratio is calculated based on various factors
from a comprehensive viewpoint, such as non-financial
indicators and performance results by segment, as wellas financial indicators including operating income, net
income, and ROIC. The payment ratio is between 0 and
200 percent and depends on the performance achievement ratio. The remuneration to outside directors anddirectors not engaging in business execution is only
fixed remuneration of the basic remuneration.
Stock-based remuneration, which is aimed at incentivizing directors to improve corporate value in the medium tolong term and to share economic value between directors
and shareholders, is provided as restricted stock to directors excluding outside directors and directors not engaging in business operations. The number of shares granted
is determined based on the basic amount according toposition, at a meeting of the Board of Directors every year.
The allocated ratio of payment to each remuneration
item is set at the approximate level of 60% for fixed
remuneration, 20% for variable remuneration, and 20%
for stock-based remuneration at an average performance level.
Audit & Supervisory Board members’ remuneration consists only of fixed remuneration, monetary remuneration.

Succession Plan
In addition to possessing appropriate knowledge, experience, capabilities, and a good reputation, the Company’s
president should demonstrate leadership to strongly
lead the Group based on the Corporate Philosophy andcorporate vision and make prompt, bold management
decisions based on advanced strategic thinking with aneye on the changes in the business environment anddirection the Company should move. The president
should also be able to generate synergies with the various Tokyu Group companies, raise the value of the Tokyu

brand, and achieve sustainable growth and improvement
in corporate value in the medium to long term.
The current president provides the Appointments
and Remunerations Committee with a summary of successor candidates, and members of the Appointments
and Remunerations Committee work to ascertain thequalities and capabilities of candidates and provide
feedback to the current president through deliberations at Board of Directors meetings, routine communication, and other activities.

Policy Regarding Strategic Shareholdings
The Company acquires and holds shares issued by our partner companies with the aim of contributing to the increase in
the Company’s corporate value by strengthening business
relationships and maintaining good relationships with them.
Meanwhile, with respect to individual shares, each year
we conduct a short-term review using indices for the mostrecent fiscal year to carefully examine whether there aresufficient benefits relative to capital cost, and whether
there are risks that could decrease the share price. We also
conduct a medium to long-term review using indices forseveral fiscal years in the past and future to carefully exam-

ine whether a certain level of profit is obtained from construction projects relative to the holding cost. Based on the
results of these reviews, each year we confirm at the Boardof Directors meeting whether or not there is significance inholding these shares while comprehensively consideringfactors such as economic rationale and future prospects.
In principle, we sell and reduce our holdings ofshares that no longer meet this purpose or are no longer recognized as significant taking into consideration
factors such as the circumstances of the issuing companies as well as market trends.

Dialogue with Shareholders
In addition to always providing shareholders and investors with appropriate information (disclosure), theCompany’s directors strive to improve management
through dialogue with shareholders/investors. The
Board of Directors creates a system to promote constructive dialogue with shareholders and investors andsets and discloses policies related to IR.
When conducting dialogue with shareholders andinvestors, the officer in charge of IR properly manages
insider information in line with the stipulations of

in-house rules, and directors and similar parties receive
regular reports on the composition of shareholders
and use that information for IR activities.
When formulating and releasing management plans,
the cost of capital is accurately ascertained, and thebasic stance on earnings projections and capital policy
is indicated. In addition, targets for earnings capacity,
capital efficiency, and other indicators are provided, andvarious issues, including concrete measures to achieve
those, are explained to shareholders and investors.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

45

Conversation with External Directors
Tokyu Construction has made the enhancement of corporate governance one of its goals for achieving the Long-Term Management Plan, “To zero, from zero.” We asked two external directors to talkabout Tokyu Construction’s corporate governance.

Isao Onda

Joined EIKO Accounting Corporation (current Ernst & Young
ShinNihon LLC.) in 1973. Registered as a certified public

External Director accountant and tax accountant in 1977. Joined GTM Research

Kahori Yoshida
External Director

Joined Yoshiko Takagi Law Firm (current T & T PARTNERS LAW OFFICE) in 2011 and registered as a lawyer(to present). Became an External Director in 2019.

Institute Inc. as Representative Director, President in 2011 (topresent). Became an External Director of the Company in 2020.

Our focus as external directors
Onda: I served as Tokyu Construction’s external auditor
for eight years from 2012 and became an external director in 2020, so I have been a member of the Board of
Directors for 10 years. I accepted the appointment as adirector because I have always been engaged in management consulting where I support business owners
and share their concerns. Currently, in my position as anexternal director, I try to discuss matters that I consider
important for management until I am satisfied.
Yoshida: I was appointed as an external director for
Tokyu Construction in 2019. I had no experience in corporate management and there was an age gap
between me and the other directors, but Chairman
Iizuka impressed on me that he wanted frank opinionsfrom different perspectives, and I accepted the offer
because I felt Tokyu Construction’s strong commitment to seriously tackle diversity.
Onda: I try to keep three things in mind at board meetings. The first is to look at things in the long term. Sec-

ond is to think and judge from a variety ofperspectives, not just one. Third is to be conscious of
discussing the fundamentals and not getting into trifling details. I believe it is important for managers tohave the “boldness” to commit to a task with determination, no matter how difficult the situation is or how
much opposition there may be, and the judgment that
forms the basis for this arises from keeping principles.
As an external director, I would like to make statements in accordance with this principle.
Yoshida: I feel that Mr. Onda always speaks from a
broad perspective. We receive the materials for eachboard meeting about a week before, and I try to submit my questions in advance. In doing so, I am conscious of the need to think not just of my own
questions, but of the perspectives of what the Company will notice from the question, and whether theanswer will enable me to share issues and new insights
with other directors and the executive side.

Effectiveness of the Board of Directors
Onda: Currently, the Tokyu Construction’s executive
officers explain the agenda. When Ms. Yoshida asks
in-depth questions, the executive officers study andgive an explanation in response, which I think is very

46 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

good from the perspective of human resource training.
Yoshida: At meetings of the Board of Directors, theexecutive officer in charge prepares answers to my questions in advance and then explains the agenda. The

other Directors and Audit & Supervisory Board Members
sometimes delve further into my questions, and I think
we are able to deepen our discussions with a sense ofcooperation and urgency. I may ask questions about
details that are not on the scheduled agenda, but I am
there to learn about Tokyu Construction’s intentions.
Onda: In fiscal 2021, we at Tokyu Construction
announced our Long-Term Management Plan “To zero,from zero.”
As an external director, I was involved in the process
of formulating the plan, including providing written
opinions. I was concerned about how to set the KPIs,
but I think they were discussed well and settled ongood indicators.
Yoshida: The formulation of VISION 2030, which is thepremise of the Long-Term Management Plan, was dis-cussed in a limited period of three months after thepresident reported to the Board of Directors that hewould establish a special project team for the formulation of VISION, but the speedy and intensive discussions during this period were also impressive. In
parallel with the project team’s deliberations, a number of extraordinary discussions were held with external directors and other parties, and we finalized the
VISION while incorporating it into the Long-Term Management Plan.
Onda: In formulating the VISION, I suggested that weshould place importance on what makes Tokyu Construction unique. I said that we should build the
VISION and goals by focusing on our identity, not juston financial indicators.

Aiming to realize VISION 2030 and the Long-Term Management Plan “To zero, from zero”
Onda: What I believe is important for the realization of
the Long-Term Management Plan is to foster a culture
in which our civil engineering, construction andadministrative divisions work in unison at a deeper
level, thereby creating an environment in which
diverse values are more readily accepted. I believethat innovation is not created by diversity alone, but
only by the change that occurs in the process of integrating diversity. I have heard that the approaches andcultures of civil engineering and construction are particularly different, but I believe that if Tokyu Construction first fosters a culture that unifies these twobusinesses, we will be able to create a new “Tokyu
Construction identity” that incorporates outside
knowledge and diverse values, and make further progress toward achieving our goals.

ty. I have the impression that there is still a strong culture in which being humble and obedient are virtues.
This in itself is very commendable, but I feel that weneed to be more proactive in externally communicating our process of embodying and implementing ourLong-Term Management Plan in future. In addition, I
am concerned that this humility may have the adverse
effect of stifling innovation within the Company, as Mr.
Onda said. Although Tokyu Construction’s civil engineering and construction businesses have different
perspectives, I believe that they are very close compared to other general contractors, and I hope that
this will lead to differentiation.
Onda: There is a big difference between knowledge andability to execute, but the people at Tokyu Construction
are really serious, so I believe we can make it happen.

Yoshida: I would like to see us move away from humili-

Improving corporate governanceYoshida: I am very concerned about whether business
operations are being carried out in a manner that canbe properly explained to stakeholders. I check to see
what discussions took place and what proposals arebeing raised at the deliberation stage.
Onda: Compared to the time when I used to participate in board meetings as an auditor, news releases
are issued more frequently, the website is updated
more often, and there are more opportunities for theCompany to disseminate information. There has also
been a significant increase in the time required forboard meetings.
Yoshida: In fiscal 2021, we added two external directors

with experience in new areas of expertise, further
expanding the diversity of our Board of Directors. As
the number of people increases, discussions naturally
become longer. The auditors also ask quite a few questions, and I think that maintaining the current open andlively atmosphere and examining the selection of agenda items for board meetings will lead to efficient discussions and more meaningful management of meetings.
Onda: We hold thorough discussions on whether weare properly hedging risks that could have a serious
impact on management. Another point of discussion iswhether timely disclosures are being made. As an
external director, I pay attention to these two points.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

47

Directors and Audit & Supervisory Board Members (As of June 24, 2021)

1 Tsuneo Iizuka

2 Mitsuhiro Terada

Director, Chairman of the Company

Apr. 1971 Joined TOKYU CONSTRUCTION CO., LTD. (“theCompany”)
Oct. 2003 Executive Officer of the Company
Jun. 2004 Senior Executive Officer of the Company
Jun. 2006 Director, Managing Executive Officer of theCompany
Apr. 2008 General Manager, Civil Engineering Division of
the Company
Jun. 2009 Representative Director, Senior Managing
Executive Officer of the Company
Apr. 2010 Representative Director, President of theCompany
Jun. 2018 Representative Director, Chairman of theCompany
Jun. 2021 Director, Chairman of the Company (to present)

4 Masatoshi Shimizu

Director, Senior Managing Executive Officer

Apr. 1982 Joined TOKYU CONSTRUCTION CO., LTD.
Apr. 2012 Executive Officer of the Company
Apr. 2017 Managing Executive Officer of the Company
General Manager, Business Administration
Division of the Company
Jun. 2017 Director, Managing Executive Officer of theCompany
Apr. 2020 Director, Senior Managing Executive Officer of
the Company (to present)
Apr. 2021 General Manager of Corporate Strategy Division,in charge of Business Administration Division of
the Company (to present)

13

11

9

7

3 Motoyuki Takagi

Representative Director, President

Representative Director, Executive Vice President

Apr. 1979 Joined TOKYU CONSTRUCTION CO., LTD.
Jun. 2010 Executive Officer of the Company
Apr. 2012 Senior Executive Officer of the Company
Jun. 2012 Director, Senior Executive Officer of theCompany
Apr. 2013 General Manager, Civil Engineering Division of
the Company
Apr. 2016 Director, Senior Managing Executive Officer of
the Company
Apr. 2018 Representative Director, Senior Executive Vice
President of the Company
Jun. 2019 Representative Director, President of theCompany (to present)

Apr. 1979 Joined TOKYU CONSTRUCTION CO., LTD.
Apr. 2011 Executive Officer of the Company
Apr. 2016 Senior Executive Officer of the Company
General Manager, Building Construction Divisionof the Company
Jun. 2016 Director, Senior Executive Officer of theCompany
Jun. 2018 Director, Senior Managing Executive Officer of
the Company (to present)
Apr. 2020 Representative Director, Senior Executive Vice
President of the Company (to present)
General Manager of Business Management, incharge of Safety & Environment and International
Business of the Company (to present)

5 Yushi Tsukui

6 Masao Tomoe

Director, Managing Executive Officer

Director

Apr. 1981 Joined TOKYU CONSTRUCTION CO., LTD.
Apr. 2015 Executive Officer of the Company
Apr. 2018 Senior Executive Officer of the Company General
Manager, Civil Engineering Division of theCompany (to present)
Jun. 2018 Director, Senior Executive Officer of theCompany (to present)

6

48 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

3

2

1

4

Apr. 1976 Joined TOKYU CORPORATION (“Tokyu”)
Jun. 2007 Director of Tokyu
Apr. 2011 Managing Executive Director of Tokyu
Apr. 2014 Senior Managing Executive Director of Tokyu
Jul. 2014 Executive General Manager of Human Resources
Headquarters of Tokyu
Jun. 2015 Director & Senior Managing Executive Officer of
Tokyu
Apr. 2017 Representative Director & Vice President of
Tokyu (to present)
Jun. 2018 Director of the Company (to present)
Sep. 2019 Representative Director & Vice President of
Tokyu Corporation (to present)

5

8

10

12

14

15

7 Isao Onda

External Director

Oct. 1973 Joined EIKO Accounting Corporation (current
Ernst & Young ShinNihon LLC)
Jul. 1990 Partner of Century Audit Corporation(“Century”), Manager of Chiba officeJun. 1993 Director and Partner of Century, Manager of business development department, and Manager of
Chiba officeJun. 2002 Executive Director and Partner of Ernst & Young
ShinNihon Audit Corporation, General Manager in chargeof public stock offering business and public accounting
business, Deputy General Manager in charge of general
consulting business, and Manager of Chiba office
Sep. 2008 Executive Director of Ernst & Young ShinNihon
LLC (“EY ShinNihon”), Department Head incharge of oversight of advisory services Ernst &Young Global Japan Area Advisor
Sep. 2010 Advisor of EY ShinNihon
Oct. 2010 Special Advisor of GTM Research Institute Inc.
Apr. 2011 Representative Director, President of GTM
Research Institute Inc. (to present)
Jun. 2012 Auditor of the Company
Jan. 2019 Partner of GTM Tax Co. (to present)
Apr. 2019 Visiting professor of Institute for Technology,
Enterprise and Competitiveness, Doshisha University
Jun. 2020 Director of the Company (to present)

10 Tsutomu Tsunashima
External Director

Apr. 1979 Joined Yasuda Trust And Banking Company,
Limited (current Mizuho Trust & Banking Co., Ltd.)
Apr. 2007 Executive Officer, Manager of Osaka Branch,
Mizuho Trust & Banking Co., Ltd.
Apr. 2008 Managing Executive Officer, Manager of Osaka
Branch, Mizuho Trust & Banking Co., Ltd.
Apr. 2010 President & CEO of Urban Research Institute Corp.
Jun. 2011 Outside Auditor of DYNIC CORPORATION
Jun. 2015 Outside Audit & Supervisory Board Member of
NIPPON SIGNAL CO., LTD.
Jun. 2016 Outside Director of Chuo Warehouse Co., Ltd.
Jun. 2021 Director of the Company (to present)

13 Youichi Saito

Audit & Supervisory Board Member

Oct. 2005 Passed National Bar Examination
Sep. 2007 Completed training of legal apprenticeship andregistered as attorney
Member of Crime Victim Support Center of Daini
Tokyo Bar Association
Sep. 2015 Member of Discipline Committee of Daini Tokyo
Bar Association (to present)
Apr. 2016 Member of Legal Apprenticeship Committee of
Daini Tokyo Bar Association (to present)
Jun. 2016 Auditor of the Company (to present)

8 Kahori Yoshida

9 Kunihiro Koshizuka

External Director

External Director

Apr. 1996 Joined Recruit Cosmos Co., Ltd.
Sep. 2010 Passed the bar examination
Dec. 2011 Joined Yoshiko Takagi Law Firm (current T&T
Partners Law Office) (to present) Registered as
LawyerApr. 2012 Member of the Operation Committee for
Housing Dispute Examination Meeting, Daini
Tokyo Bar Association (to present)
Nov. 2018 Special member of the Chuo Construction
Project Dispute Examination Committee, theMinistry of Land, Infrastructure, Transport, andTourism (to present)
Jun. 2019 Director of the Company (to present)
Aug.2020 Member of the Central Review Council for
Kenchikushi, the Ministry of Land, Infrastructure,
Transport and Tourism (to present)
Professional Member of Architecture
Subcommittee, the Social Infrastructure
Improvement Council, the Ministry of Land,
Infrastructure, Transport and Tourism (Team forpreventive measures for accidents and disastersof buildings) (to present)
Oct. 2020 Temporary Member of the Japanese Industrial
Standards Committee, the Ministry of Land,
Infrastructure, Transport and Tourism (to present)

Apr. 1981 Joined Konishiroku Photo Industry Co., Ltd. (current KONICA MINOLTA, INC.)
Apr. 2012 Executive Officer, Manager in charge ofTechnology Strategy of KONICA MINOLTA, INC.
Apr. 2014 Executive Vice President and Executive Officer,
General Manager in charge of Corporate R&D
Headquarters of KONICA MINOLTA, INC.
Apr. 2015 Executive Vice President and Executive Officer,
General Manager in charge of Business
Development of KONICA MINOLTA, INC.
Jun. 2015 Director, Executive Vice President and Executive
Officer, General Manager in charge of Business
Development of KONICA MINOLTA, INC.
Apr. 2016 Director, Executive Vice President and Executive
Officer of KONICA MINOLTA, INC.
Jun. 2019 Senior Technical Advisor of KONICA MINOLTA,
INC.
May 2020 Outside Director of AEON MALL Co., Ltd. (topresent)
Jun. 2021 Director of the Company (to present)

11 Satoshi Hashimoto

12 Masashi Ochiai

Apr. 1981 Joined TOKYU CONSTRUCTION CO., LTD.
Apr. 2010 General Manager, Internal Control Office of theCompany
Apr. 2012 Executive Officer of the Company
Jun. 2016 Full-time Auditor of the Company (to present)

Apr. 1983 Joined TOKYU CONSTRUCTION CO., LTD.
Jun. 2007 General Manager, Corporate Planning
Department of the Company
Apr. 2008 General Manager, General Affairs Department ofTokyo Branch of the Company
Apr. 2010 General Manager, General Affairs Department of
Building Construction Division of the Company
Apr. 2012 General Manager, Finance & Accounting Department
of Business Administration Division of the Company
Apr. 2020 Full-time General Manager, Finance &Accounting Department of Business
Administration Division of the Company
Jun. 2020 Full-time Auditor of the Company (to present)

14 Yoshikazu Kato

15 Kazuo Kitamura

Apr. 1982 Joined the Science and Technology Agency,
Cabinet Office
Jul. 2001 Director of Research Environment and Industrial
Cooperation Division, Research Promotion
Bureau, Ministry of Education, Culture, Sports,
Science and Technology (“MEXT”)
Jul. 2008 Counselor to Director General for Science,
Technology and Innovation Policy, Cabinet Office
Jul. 2010 Deputy Director-General, Research andDevelopment Bureau, MEXT
Apr. 2012 Vice President of Japan Aerospace Exploration Agency
Apr. 2015 Director of Technology Division, Cabinet SatelliteIntelligence Center, Cabinet Intelligence andResearch Office, Cabinet Secretariat
Nov. 2017 Specially Appointed Counselor, Remote Sensing
Technology Center of Japan (to present)
Jun. 2018 Auditor of the Company (to present)

Apr. 1980 Joined The Chiba Bank, Ltd.
Jun. 2005 Branch Manager of Sakura Branch, The Chiba
Bank, Ltd.
Jun. 2009 General Manager of Operation Planning Division,
The Chiba Bank, Ltd.
Jun. 2010 Auditor of Toho Kogyo Co., Ltd.
Jun. 2012 Director of Chibayaku Groceries, Inc.
Jun. 2014 Managing Executive Director of Chibayaku
Groceries, Inc.
Jun. 2015 Auditor of Chibayaku Groceries, Inc.
Jun. 2020 Auditor of the Company (to present)

Full-time Auditor

Full-time Auditor

Audit & Supervisory Board Member

Audit & Supervisory Board Member

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

49

Reinforcing the Foundation of Value Creation for GrowthCompliance and Risk Management
Basic Stance and Promotion Structure
Compliance management is an essential part of improving corporate value and remaining the trusted brand of choice for our customers. The Company has set independent Guidelines for Action/Compliance Code based on the Group’s Compliance Guidelines and actively works to promotecompliance. In addition, we strive to prevent risks from materializing and quickly respond to risks
that do materialize through the risk management system.

Compliance with Laws and Initiatives
We consider compliance with corporate ethics and laws andregulations to be non-negotiable and the most fundamental
part of compliance. At the same time, we acknowledge that
we must create systems and offer thorough employee training in order to completely eliminate violations caused bylack of knowledge or awareness. In order to make sure that“always doing what should be done” is firmly imprinted in
Tokyu Construction’s corporate DNA, we have created
Guidelines for Action/Compliance Code and are working to
make them known to each and every employee.

Compliance Promotion Structure(1) Compliance Officer

The officer in charge of the Internal Control Office acts
as the compliance officer, and performs the following
roles as the chief officer of “risk management throughcompliance management” at the Company.
(i) Formulating the Compliance Code, etc.
(ii) Establishing the structure for “risk management through compliance management”(iii) Reporting the status of compliance measures to the Board of
Directors, etc.

(2) Internal Control OfficeInternal Control Office plays the following roles related tocompliance.
(i) Spreading knowledge of the Compliance Code, etc., and fostering awareness of compliance(ii) Implementing surveys on adherence to the Compliance Code,etc., and making improvements(iii) Handling consultations regarding and responding to violations of the Compliance Code, etc.

(iv) Planning and implementing training on compliance(v) Understanding the state of practice at each division, branch,business unit and subsidiary, etc. (implementing audits)(3) The Manager in Charge of Compliance/The Person
Responsible for Compliance
In order to ensure the effectiveness of compliance in eachdepartment, the general manager of each division,
branch, and business unit, and other line managers who
directly report to the President, as well as the presidents
of subsidiaries are appointed as the “managers in chargeof compliance,” and the general manager of the generalaffairs at each division, branch, business unit, etc., thegeneral managers of the Corporate Strategy Division andBusiness Administration Division, and the general managers of the general affairs divisions of subsidiaries areappointed as the “persons responsible for compliance.”
The managers in charge of compliance and persons
responsible for compliance cooperate with the Internal Control Office in working to develop and improve the compliancestructure in each department while evaluating the state ofpractice each year and incorporating the results of the evaluation into the improvement plan for the following fiscal year.
(4) Education and Training of Employees
To ensure that our officers and employees fully understandthe importance of “risk management through compliancemanagement,” we will continue to conduct awareness-raising and training programs organized by the Internal Control
Office, Personnel Department, and each department. In
addition, we conduct e-learning programs and training upon
promotion with content that varies according to the position.

Whistleblowing System
Based on our Compliance Consultation and Reporting
Regulations, the Company has a whistleblowing system in place to detect potential compliance violations
early-on and promptly rectify the situation internally.
Whistleblowing contact points have been established both internally and externally through a law firm.

Employees (including temporary staff) can consult withand make reports to these contact points via phone,email, writing, or face-to-face meeting. These consultations and reports can be carried out anonymously,
and we protect whistleblowers from disadvantageous
treatment.

Overseas Compliance
Our Group (including the Company and its subsidiaries) has
established the Overseas Compliance Program with the aim ofpreventing violations such as the bribery of public officials andparticipation in cartels in conducting business abroad. There istraining for local staff working at overseas bases in order to spreadthe program, and in fiscal 2020, in the midst of the COVID-19 pandemic, a total of 563 employees took part in compliance training

50 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

(e-learning). In addition, we have established Overseas Consultation and Reporting Desks at our overseas bases that offer support
in English and the official languages of each country.
Basic Policy Regarding Overseas Compliancehttps://www.tokyu-cnst.co.jp/en/sustainability/foreign_compliance/Violations of Laws
On February 26, 2021, we received a supervisory disposition based on the Construction Business Act (instructions
based on Article 28 Paragraph 1) from the MLIT Kanto
Regional Development Bureau for an industrial accident

at a construction work site in Tokyo that occurred in July
2017. We took the disciplinary action seriously andexpanded our efforts to thoroughly implement safety
management and safety education.

Risk Management System
In addition to preventing risks from materializing, we haveestablished mechanisms to respond when risks do materialize and when changes occur in the business environment. In the newly formulated Long-Term Management
Plan, we analyze the environment the Company operates
in, including the future environment, and the Management Meeting and Board of Directors identify medium- tolong-term risks and opportunities. As for the Council of
Business Unit Managers, which confirms and shares information on the execution of operations, and quarterly
business monitoring conducted by top management,
efforts are made to understand and respond to risk andopportunities throughout the Company.

As for individual cases related to construction orders, realestate transactions, investments in start-ups, and other business investments, the Company established the cross-organizational Head Office Risk Management Council, Orders
Received Council, Overseas Orders Council, Real EstateTransaction Review Board, Business Investments Review
Board, and Venture Investment Committee, creating a mechanism to examine risks in advance and appropriately respond.
Furthermore, we have established a system for comprehensively uncovering risks from phenomenon and factorsthat could impact the promotion of business and impede
management and conducting annual reviews to flexibly
respond to changes in the environment.

Business Continuity Management
In preparation for large-scale disasters that may occur, weformulated a business continuity plan (BCP) in 2008. The
following year, in 2009, we received certification for “Construction Company Continuity Capacity During Disasters”
from the MLIT Kanto Regional Development Bureau, andwe update that certification every two years. Our efforts
in business continuity management (BCM) include conducting drills and other trainings led by the Emergency
Response Department at headquarters that include participation by directors, and repeatedly working to identify
and improve issues with the BCP.
At each of the Group’s bases, we maintain a stockpile ofessential items, including food and beverages, power generators in case of prolonged power outages, and emergency communication equipment, to ensure an operational
environment for a certain amount of time in the event ofvarious types of disasters. In addition, because our head
office is located adjacent to Shibuya Station, one of Japan’smajor transportation hubs, we are a part of a council comprising Shibuya Ward Office staff and local businesses thatis responsible for helping people unable to return home incase of a disaster and regularly participate in drills run by
the Ward and this council to support disaster response
efforts as a member of the community.

Business Continuity During the COVID-19 Pandemic
In addition to allowing remote work for operations thatcan be conducted from home, we continue to undertake
construction projects after giving the greatest consideration to the health of related parties and employees byreinforcing and thoroughly implementing measures toProcess of Discussing Major Risks/Risk Factors

prevent infections by the novel coronavirus at work sites.
We are also moving forward with various efforts, such as
PCR testing for employees and business partners andoffering vaccines for employees, etc.

Risk Factors Considered by the Company
Category

1

Risk models

2

Risks definitions

Ensure the comprehensiveness ofrisks covered by developing ashared language for our risk
models and risk definitions

3

Evaluation criteria

Quantitatively and qualitatively
evaluate the impact of risks on
management

4

Identification ofmajor risks

Identify and prioritize major risks
according to the evaluation

5

Discussion of
response

Discuss measures for responding
to major risks from a long-term,
strategic perspective

Considering theenvironment

Utilization of humanresources
Labor safety and health
Securing a competitiveedge in the construction
business

Response• Responding to climate change
problems• Using resources efficiently andmanaging waste• Conserving biodiversity• Respecting human rights• Retaining and training/developing
employees• Promoting diversity in work styles• Ensuring occupational safety• Eliminating long working hours• Ensuring quality• Reforming construction production
systems• Supply chain management

Promoting the diversification of revenue sources
Corporate GovernanceBusiness ethics (compliance)
TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

51

Reinforcing the Foundation of Value Creation for Growth

Responding to Climate Change
Disclosure in line with TCFD proposals
The Company agreed with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in November 2020. The Long-Term Management Plan includes a scenario analysis of
this, and it forecasts to have a financial impact of ¥12.0–¥16.0 billion.
Following discussions among management regarding future risks and opportunities, its impact
was recognized as material for the Company, making it important to reflect in business measures. In
addition to expanding disclosure in line with TCFD recommendations, we will continue to work toascertain risks and opportunities related to climate change and move forward with efforts that create both social and economic value while working to establish a carbon-free society.

Governance
The process for formulating the Long-Term Management Plan includes deliberations by the Board of
Directors on various issues including the response to
climate change, and those opinions are reflected in theplan.
The Board of Directors will monitor progress in
implementing measures related to the risks andopportunities of climate change identified in the LongTerm Management Plan and those based on the threevalues we provide. In order to regularly check whether
targets were achieved, the former CSR Committee wastransformed into the Sustainability Committee, reinforcing the supervising system.

Board of Directors
Direction
Report (material items)

Management Meeting
Opinion

Report (material items)

Sustainability Committee(former CSR Committee)
Activity
promotion

Cooperation
ReportHead Office Divisions

Divisions and departments
Subsidiaries

Risk Management
Company-wide risks and opportunities based on materiality are incorporated in the annual action plan foreach division. As for the state of these efforts, risks aremanaged through quarterly monitoring and reports to
the Management Meeting.
Risks and opportunities related to climate change

are recognized as important issues for the Company’ssustainability (medium- to long-term sustainability
including ESG elements), and the Sustainability Committee (former CSR Committee), which is chaired by
the president, promotes and monitors company-wide
sustainability activities.

Main Measures and Calculation of Financial Impact (Example)
Introduction of renewable energy

Introduction ofcarbon tax¥10,000/ton

Company’s Scope 2
emissions
About 10,000 tons
(actual for fiscal 2019)

Promotion of ZEB design and construction
Government ZEB
diffusion target“On average 50% of
new buildings
are ZEB”

Fiscal 2030 operating incometarget of ¥14.0 billion forthe building construction
business in the Long-Term
Management Plan

100% use of renewable energy andelimination of all Scope 2 emissions

Committed to achieving government target andhaving 50% of the Company’s new buildings ZEB.

Reduce cost about ¥100 million

Generate about ¥7.0 billion in operating income

52 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

Strategy
since the Industrial Revolution is held down to no morethan 2˚C, the target agreed to in the Paris Accord, thefinancial impact on the Company would be ¥12.0–¥16.0
billion. Therefore, we recognize that reducing climatechange risk as an indispensable element for implementing the Long-Term Management Plan, and various
measures and targets have been set.

In May 2021, we announced a Long-Term Management
Plan centered on the three values we provide to
reduce climate change risk. When the plan was
released, risks and opportunities related to mediumand long-term sustainability were identified using various scenario analysis. The actual impact of these risks
and opportunities on our businesses were verified.
As a result, if the increase in average temperatures

Risks and Opportunities in the Company’s Medium- and Long-term Sustainability and Response Measures
Risks and opportunities

Transition

MeasuresScope Value we provide

Increase in the price of carbon(introduction of carbon tax)

Use of renewable energy for business activities (See page 52 for example)

2

Decarbonization

Use of non-fossil fuels for heavy machinery and dump trucks

1

Decarbonization

Stricter response to sustainablepurchasing

Promotion of wooden building construction business3

Decarbonization

Reduction in CO2 emissions related to construction materials, such as ready mixed concrete

3

Decarbonization

Increase in cost of waste

Reduction in final disposal amounts of waste by reducing waste plastics, etc.
Promotion of the use of recycled materials

3

Zero waste

Stricter response to ecosystem
destruction

Promotion of the introduction of green infrastructure3

Decarbonization
Disaster prevention
and mitigation

Thorough implementation of measures to fight heat stroke
Greater work efficiency by promoting DX at work sites based on introduction of BIM/CIM
and PCa—

Disaster prevention
and mitigation

Termination of construction due tostronger disasters

Implementation of BCM through strong relationships in the supply chain—

Disaster prevention
and mitigation

Greater need for energy-saving buildings

Promotion of ZEB design and construction (see page. 52 for example)

3

Decarbonization

Greater demand for construction basedon energy-saving technology

Development and use of innovative technologies that contribute to decarbonization

1·2·3

Decarbonization

Greater demand for renewable energy

Launch of renewable energy–related new businesses

2·3

Decarbonization

Government’s aggressive stance toward
circular economy

Development and use of innovative technologies that contribute to waste recycling

3

Zero waste

Use of waste sorting robot that automatically sorts construction waste

3

Zero waste

Promotion of infrastructure construction, maintenance, and repairs
Promotion of infrastructure operation (PPP/concession, etc.)—

Disaster prevention
and mitigation

Contributions to longer life of buildings based on the promotion of infrastructure asset
management—

Disaster prevention
and mitigation

Longer life of buildings based on the use of building health diagnosis technology and torrential rain damage prediction technology—

Disaster prevention
and mitigation

Building of disaster simulation tools based on digital twins—

Disaster prevention
and mitigation

Risks

Physical Deterioration in work environment due toincrease in temperatures

Transition

Opportunities

Continual importance of developing
infrastructure
PhysicalGreater demand for buildings made tocope with stronger disasters¥12.0–¥16.0 billion (impact on operating income in fiscal 2030)

Financial
impact of a 2˚Cincrease intemperature

We will calculate the financial impact using multiple scenario analysis and then reflect it in
the strategy.
*IEA/WEO2019 used as reference for scenario analysis.

Indicators and Targets
We will promote the development of new technologies and expansion of new businesses to achieve these targets,assuming targets given in SBT and RE100.
Item
Greenhouse gas
emissions
Renewable energy

Reference year
2018–

Target2030

2050

Scope 1·2

Cut 30%

Cut 100%

Scope 3Cut 30%–

Renewable energy
use rate

100%–

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

53

Reinforcing the Foundation of Value Creation for Growth

Promotion of Environmentally Conscious Management
Basic Approach/Policy
Tokyu Construction declared in the Environmental Charter enacted in 1997 that we would make every
effort to protect the global environment. Further, with interest in the SDGs adopted in 2015 and in corporate ESG increasing, we revised our existing Environmental Policy in 2019 to “promoting environment-friendly management in order to realize a sustainable society that achieves a harmonious balance
between the environment and the economy.”
In March 2021, we established VISION 2030, which places the environment at the center of our corporate vision, and focuses on realizing a decarbonized society, realizing a recycling-oriented society, promoting initiatives to preserve biodiversity, and enhancing environmental education, and promoting initiatives
in the supply chain to maintain a good environment. At the same time, we are further strengthening ourefforts, including the review of our management system and the enhancement of information disclosure.
Our Environmental Charter and Environmental Policies

https://www.tokyu-cnst.co.jp/en/sustainability/environment/

Environmental Management
Management System

External certification of environment management system

1. Central Environment Committee meeting

In 1999, we introduced an environment management system and obtained certification (ISO 14001). We have maintained the certification by updating it seven times to date
and will continue to do so in the future.

With the Representative Director, Executive Vice President
as the chairman and with the participation of the General
Manager (GM) of each division in the head office, discussions are held twice a year on the feasibility and directionof initiatives related to major matters on environment ingeneral. The results are reported to the Board of Directors.

2. Management review of the whole company
With the Representative Director, Executive Vice President as the head and with the participation of the General
Manager of each division in the head office, discussions
are held twice a year on operational status of, issues inand corrective measures for environment management
system of the whole company. The results are reported to
the Central Environment Committee.

Process of evaluating and managing environmental risk
Climate change is a pressing issue today. We approve of
the TCFD and are working to identify the business risks
and opportunities from the perspectives of transition andphysical. We have specified matters important to the environment in general and consider their impact on the environment and the Company’s sustainable development interms of both risks and opportunities. We then adopt theresults as significant environmental aspects, incorporate
them into everyday work as targets, and implement
improvements within the ISO 14001 system.

Initiatives for Improving Environment Awareness in the Company
Environmental lectures and educational
programs by outside lecturers
Environmental lectures by outside lecturers are held twice ayear for all employees. In fiscal 2020, Koichi Goka, Section
Head at the National Institute for Environmental Studies(NIES), gave a lecture on how humans and nature can coexist in harmony in the context of the novel coronavirus fromthe perspective of biodiversity, and Masahide Kimoto, Professor Emeritus of the Atmosphere and Ocean ResearchInstitute (AORI) of the University of Tokyo gave a lecture on
extreme weather, global warming and facing changing natural conditions. In addition, we have educated all employees
about climate change prevention through in-house newsletters and e-learning to raise environmental awareness.

Promotion of the Eco Test
In order to improve employees’ environmental knowledge
and awareness, from fiscal 2019, we have set a target of
100% pass rate of the Eco Test by fiscal 2021 for office
employees and 100% by fiscal 2026 for site employees.
Progress through fiscal 2020 is shown in the figure below.
Number of employees who passed the Eco Test
(cumulative)
(%)

1,600

1,485

1,400

68.7%

1,200

42.1%

800

18.8%

0

13.7%
26 3 292017 and earlier

Environmental lecture (July 7, 2020)

54 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

z Internal employees

197
2.0%

8.7%
219
22

2018
z External employees

70
60
50

846
32.9%

654

600
400
200

56.8%

1,111

1,000

80

37.5%

40
30

374

192

20
10
0

2019
z Total

2020

(FY)

We are a member of the following initiatives etc. to promote efforts to prevent climate change.

CDP
CDP evaluation: B- (FY2020)

TCFD

SBT

RE100

JCLP
(Japan Climate Leaders’Partnership)

Quantitative Information
FY2020 Unconsolidated Targets and Performance
PurposePreventing
climate change

Effective use ofresources

Items

Category

Unit

Tunnels
Civil
t-CO2/100 million
works Otheryen
Construction
2 Energy consumed
All office work
kWh/m2
m3/100 million yen
Amount of wastes (excluding blocks of con- Civil works
3
crete, blocks of asphalt concrete, sludge)
Construction
m3/m2
Civil works
4 Ratio of different types of wastes%
Construction
1 CO2 emission

FY2021targetFY2020FY2019FY2018Target value Performance Evaluation Performance Performance{
131.7 or less
111.3
100.6
121.2
36.2 or less
27.4
24.3
29.3
12.9 or less
9.4
7.0
8.5
39.48 or less
40.37
×
39.48
43.0
{
25.7 or less
20.6
19.4
23.4
0.082 or less
0.113
×
0.068
0.079
84.5 or more
74.9
×
71.7
78.5
{
69.9 or more
74.4
73.4
72.0

• Greenhouse gas target changed from basic unit and set as total amount(See List of Waste Amounts, Including Supply Chain below).
• For waste, we set the recycling rate and the reduction of waste plastics andmixed waste emissions in total.

List of Waste Amounts, Including Supply Chain
Items

Details

Unit

Mainmaterials

Energyconsumed

Emission of greenhousegases

Scope 1*2
Scope 2*3
Total(Scope 1+2)
Reduction rate compared to base year
Scope 3
Excluding Category 11
Category 11
Reduction rate compared to base year
Total emissions
Fossil fuel
Gas
Electric power(Purchased renewable electricity)*4(Self-generated renewable energy)
Ready-mixed concrete
Reinforcing bar
Iron frame
Amount of industrial waste (including non-industrial waste)

t-CO2
t-CO2
t-CO2
t-CO2
t-CO2
t-CO2
t-CO2
KL
t
kWh
kWh
kWh
m3
t
t
t

TargetTokyu Construction Group
Tokyu Construction
Subsidiaries*1(compared to FY2018)
FY2030 FY2021 FY2020 FY2019 FY2018 FY2020 FY2019 FY2018 FY2020 FY2019 FY2018
23,19930,65535,69436,54933,14133,36434,35533,084
2,330
2,194
57
9,088
12,00910,782
11,002
12,983
10,293
10,122
12,652488
880
331
32,286
42,664
46,47547,551
46,12343,65744,47845,735
2,818
3,073
388
30.0%
7.5%
-0.76%-3.10%
4.54%
2.75%
8%
3,946,674 5,215,248 2,141,275 4,601,192 5,638,106 2,131,498 4,514,368 5,599,983
9,777
86,824
38,123603,179
498,810557,429594,373
487,159
525,683
8,806
11,652
31,746
1,538,096 4,102,382 5,080,677 1,537,126 4,027,210 5,074,300
970
75,172
6,377
30.0%
7.5%
62.02%
18.39%
61.94%
19.39%
88.7%
3,978,961 5,257,912 2,187,751 4,648,743 5,684,230 2,175,156 4,558,846 5,645,718
12,59589,89738,512
13,526
14,05014,975
12,645
13,217
14,961
881
834
14
247
103
106
247
103
106
0
0
0
26,234,537 23,654,017 25,467,344 25,263,558 21,884,499 25,012,445
970,979 1,769,518
454,900
2,243,492
00 2,243,492
0
0
0
0
0
124,411
124,072
122,149
124,411
124,072
122,149000535,280
148,181
237,512519,720
127,012
237,512
15,56021,16938,916
14,42021,171
37,771
12,68821,171
1,145
1,732
62,35017,25519,851
61,466
15,532
19,851884
1,723
369,385
365,473404,462355,361
348,827
375,815
14,024
16,64628,646*1 Emissions by subsidiaries in FY2018 have been calculated by multiplying with Tokyu Construction’s net sales ratio. From FY2019 onwards, assessment figures for five subsidiaries have been applied.
*2 Emissions at the time of transporting earth dug out at a construction site have been added to Scope 1 as direct business activity from FY2019 onward. (In FY2018, 5,069
t-CO2 of emissions during transportation of earth dug out at a construction site have not been considered).
*3 Due to the introduction of renewable electricity from FY2020, the calculation of Scope 2 emissions is based on the market standard (figures for FY2018 and FY2019 are also
revised to reflect the market standard).
*4 Purchased renewable electricity includes J-credits derived from renewable electricity generation.
Calculation of greenhouse gas emissions: The emissions intensity database for calculating greenhouse gas emissions of organizations through the supply chain presented
annually by the Ministry of the Environment has been applied.
Assessment of on-site emissions: Actual data obtained for civil engineering and construction is extrapolated to the annual sales for civil engineering and construction, andthe total is calculated.
Scope 3 Category 11: 15 Buildings [Energy] of the above emission intensity database presented annually by the Ministry of the Environment is applied
Energy consumption intensity by building use: The annual Building Energy Consumption Survey Report (The Building-Energy Manager’s Association of Japan) is applied,
and the useful life of buildings is calculated as 30 years for stores, restaurants, and factories, and 60 years for others.
Figures in the table are rounded to the nearest whole number.
City gas: Converted at 0.714 kg/m3

FY2020 contribution to emission reductions during use through in-house architectural design (effect)
Unit (t-CO2: for service life)

Design part
Design completion part

Number19
7

Design emissions
664,528
200,801

Standard emissions
1,092,771
239,024

Emissions Reduction
428,243
38,223

Reduction rate
39.2%
16.0%

Upper: Properties designed in FY2020
Lower: Properties designed in-house in previous years and completed in FY2020

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

55

Efforts to Reduce the Environmental Impact of Our Business Activities
Efforts Toward ZEB and ZEH-M
With the aim of promoting energy-efficient buildings,
we have been promoting ZEB and ZEH-M initiatives forour own design properties since fiscal 2016. Since therenovation of the Institute of Technology to make it a
ZEB, we have been actively proposing ZEB and ZEH-M,
and have realized this in 10 out of 15 proposals so far.
Of these, two have been completed, three are currently
under construction, and five are scheduled to be constructed in FY2021 and beyond. Construction is also
underway on two energy-efficient design properties
that are approaching the ZEB level. Our efforts for the
ZEB renovation of the Institute of Technology received
the fiscal 2019 Kanagawa Global Environment Awardand the fiscal 2020 Demand Side Management Award.

About ZEB and ZEH-M proposal tools
We are developing and operating a simulation toolthat will serve as a trigger for customers to engage in
ZEB and ZEH-M. We released a demo version for officebuildings at the Construction Technology Expo 2020
held in November that year, and have since been working to expand its functions by adding functionality toselect applications and energy-saving technologies.
Aiming to become a leading ZEB and ZEH-M company,
we are developing specific ZEB and ZEH-M design proposal tools through the use of digital technology.

Enter building specification information

ZM2021-00097-DC

Obtained certification andregistered as a ZEB Planner, an expert in ZEB planning operations

Obtained certification andregistered as a ZEH Developer to provide total support from proposal toapplication for introductionof ZEH-M

Use of Electricity from Renewable Energy
Tokyu Construction joined RE100 in March 2021 and has
set a goal of converting all electricity used in our business activities, including construction and offices, toelectricity from renewable energy by 2030.
In order to make this switch, we have decided to apply
renewable electricity to all new constructions from fiscal
2021. To this end, we began studying the introduction ofrenewable energy at sites and offices in the second halfof fiscal 2020, and as of the end of the fiscal year, wehave applied to receive electricity at two new construction sites and completed the procedures for switchingfrom conventional to renewable energy at seven existing
construction sites. In parallel with this, we concluded

Introduction of GTL FuelAs a measure to reduce emissions from the use of gasoil, which accounts for the majority of Scope 1 emissions (approximately 75% of greenhouse gas emissions
from construction sites), we will introduce gas-to-liquids(GTL), which are liquid fuels derived from natural gas
and have the same properties as gas oil. In July 2021,
we concluded a basic agreement with ITOCHU ENEX
CO., LTD. for the introduction of GTL in fiscal 2021, andwill sequentially roll it out to work sites nationwide.

56 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

basic contracts for electricity supply with several retailelectricity providers in July 2021 in order to ensure thestable supply of renewable energy power generation in
the future.*3
In addition, we are applying J-credits derived fromrenewable energy power generation to all businesssites, including the head office and branch offices, toachieve the conversion to renewable energy for approximately 2.3 million kWh of electricity used in fiscal 2020.
*3 Retail electricity providers with which we have concluded basic contracts• Tokyu Power Supply• ORIX Corporation

Development of Technology to Support “MOC+” Brand Wooden Construction
The use of carbon-absorbing wood in buildings andfurniture is expected to contribute to the realization ofa decarbonized society because the carbon in wood
can be stored for a long time. At the Tokyu Construction Institute of Technology, we are developing several
technologies to support our “MOC+” brand wooden
construction.
One example of such is our development of woodclad wooden pillars with quasi-fireproof performance,
for which we have obtained certification from the Ministry of Land, Infrastructure, Transport and Tourism(60-minute quasi-fireproof structure). These wooden
pillars can be used for independent pillars with four visi-

ble sides, enabling a presentation that engenders thewarmth of wood. In addition, SQ Silence 50, a highsound insulation double floor system developed jointlywith Nice Corporation and Awaji Giken Co. Ltd., hasreceived high praise, including an award in the Social
Design Category (Architecture, Space, Building Materials, and Components) of the Wood Design Awards
2020. In addition, we have earned a high reputation
among our customers through our construction
achievements in medium- to large-scale wooden buildings, such as the ROOFLAG Exhibition of Rental Housing for Tomorrow, which uses CLT members.

Wooden load bearing member
fastening
Adhesive

Wood covering
material(wood
presentation)

Diagram of a wooden
post with woodcovering
Combustion experiment

SQ Silence 50

ROOFLAG Exhibition of Rental Housing
for Tomorrow

Biodiversity Initiatives
Tree-planting activities
From 2019, we have participated in the Shonan Kokusaimura Meguri no Mori tree-planting event (Yokosuka
City, Kanagawa Prefecture), which has been run by theSilva Association since 2009 and aims to regenerate
woodland that has been abandoned due to the cessationof golf course development by planting trees that are
native to the land. In addition to tree planting activities,
we also engage in forest maintenance work. In fiscal 2020,
a total of 41 people participated in six sessions, with thenumber of participants limited by the COVID-19 pandemic. As part of our efforts toconserve biodiversity, we will
promote participation insuch volunteer tree-planting
activities as a company initiative, and set this as a target
from fiscal 2021.

fiscal 2021 as an educational opportunity for employees
to recognize the relationship between ecosystems andtheir own work through environmental conservation
activities. We have also set up a green infrastructure
demonstration
facility in our
Institute of Technology, where weare conducting
demonstration
research onwaterfront habitats that use rainwater effectively.

Environmental Conservation Activities and Employee
Education with Consideration for Living Creatures
As part of our efforts to preserve the natural environment at the planned development site in Kamigocho,
Sakae Ward, Yokohama, our employees participated inclearing branches and weeds around the river to create
a nurturing environment for Genji fireflies twice in February 2021. We will continue to engage in this project in

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

57

Reinforcing the Foundation of Value Creation for Growth

Occupational Safety Initiatives
Safety and Health Policies
Under the strong leadership of top management, we will cooperate with all members involved in theconstruction business, in order to realize safe, healthy and comfortable work environments, byimplementing a PDCA cycle through the united efforts of the head office, branches and work sites.
1 Identifying Risk
We work to prevent accidents, by identifying dangerous
and injurious factors that may be hazardous sources fromthe standpoint of work-related safety and health.

2 Setting Priority Implementation Activities(1) Eradication of public accidents, fatal accidents andmajor accidents(2) Reduction of accidents due to crash and fall(3) Reduction of accidents involving construction machinery and cranes, etc.
(4) Reduction of accidents due to collapse

3 Maintaining and Enhancing Physical and Mental
HealthWe promote the health of all our employees and those
involved in construction work to create a stress-free workplace.

4 Compliance with Laws and Regulations
We clarify laws and regulations related to industrial safety
and health and internal regulations and comply therewith.

5 Systems Operation/Improvements
We operate the established Health and Safety management systems, and continuously make improvements.

6 We take initiatives regarding all of our employees
and workers involved in construction work.

The Health and Safety Management System and Its Evolution
Under the Construction Occupational Health and Safety Management Systems (COHSMS) operated by theCompany, our head office, branches, and work sites
cooperate in implementing a Plan – Do – Check – Act(PDCA) cycle to promote continuous safety and healthactivities. Through the implementation of this cycle, we
aim to prevent occupational accidents, improve thehealth of workers, promote the formation of a comfortable working environment, and raise the level of safety
and health.
We have been working on the evolution of safety
management since fiscal 2019 with the aim of further
ensuring safety and creating a comfortable work environment at construction sites. In particular, we areworking to strengthen communication in various situations and stages at workplaces, such as by enhancing
the existing safety and health patrols conducted bymanagement at workplaces, and by establishing a new
body for safety measures to stimulate the exchange of
opinions between top management and staff at workplaces, and between foremen and safety and healthmanagers at partner companies.

Efforts and Training System to Prevent Industrial
Accidents
We have established a Safety and Health training system and provide lectures on health and safety management, in which employees are grouped into ninelevels, from new employees to those in their 30th year,with the view to continue improving health and safety
management capabilities and maintaining the safety
construction work cycle. Rather than focusing on classroom lectures, these lectures feature expanded practical training, with the aim of raising awareness of safety,
and incorporate many group discussions along withgroup work called “buzz sessions.” We also provide
more practical education by adopting training for
employees handling asbestos, training for employees
handling dust and special education for persons
responsible for handling low voltage electricity or oxygen deficiency and the like, that can help in acquiring
qualifications necessary for worksite management.
Trends in occurrence of accidents
FY
Safety index

Evolution of Safety Management
1 Strengthen the safety management system byincreasing top management’s participation
2 Review the safety construction work cycle
3 Strengthen communication
4 Comply with the latest management systems suchas the NEW COHSMS and new risk assessments, asother revisions

58 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

2016
0.12

2017

2018

0.20

0.43

2019
0.09

2020
0.19

*Safety index: √ (Frequency rate x Strength rate)

Our Health and Safety Initiatives
https://www.tokyu-cnst.co.jp/en/sustainability/safety/
We have adopted a “safety index” as a KPI for our occupational safety initiatives. In order to realize a safe and healthy
work environment, we will continue to strive to improve oursafety performance through the Evolution of Safety Management initiative, which is being promoted by top
management.

Reinforcing the Foundation of Value Creation for Growth

Enhancement of Quality Control Infrastructure
Responsibility for Quality Control
The products provided by the construction industry are social infrastructure that are used not onlyby the direct client but also by many other people over several decades. To fulfill this social responsibility, Tokyu Construction has introduced and is operating a quality management system.

Quality Policies
In order to assure the quality of our products (civil engineering structures and buildings), with theaim of improving customer satisfaction, we carry out the following activities when undertaking
design, construction supervision and construction work.
1 Initiatives for Risks and Opportunities
We identify risks and opportunities that may exert an influence on the assurance of product quality and improvement of customer satisfaction and consider the extent of
their potential influence in order to respond accordingly.
2 Understanding Needs and Expectations
To meet customer needs and expectations as well as
applicable regulatory requirements, we explore, clarify
and understand such needs and expectations.
3 Setting Quality Targets
We set effective quality targets for the following business divisions, for the purpose of assuring productquality and increasing customer satisfaction, while supporting our management policies.
▪ Civil Engineering Business Division▪ Building Construction Business Division
The support division for management establishes targets related to the effective utilization of resources(human resources, information and communication technology and other infrastructure, employee work environments, know-how, etc.), in order to assist the businessdivisions in achieving the above-mentioned targets.
4 System Operations and Improvements
We operate the quality management system and makecontinuous improvements.

Quality Control System and Status of Its Operation
By October 2000, all of our branches and headquarters
nationwide had acquired the international standard of
ISO 9001 certification. In April 2004, we completely shifted to a company-wide integrated quality management
system (QMS), and in September that year, we registeredunder the company-wide integrated QMS. Since 2005,
we have also conducted annual external audits combinedwith our environmental management system (EMS). Our
company implements PDCA cycle activities in line with
the quality management system in cooperation with therelevant departments at the head office and branch offic-

es, according to the stages of sales, design, and construction. In this way, we aim to improve quality, reduce
defect events, and prevent recurrence, and provide products and services that satisfy our customers.

Improvement of Employees’ Quality Control Skills

Tokyu Construction provides continuous education
using quality control and after-sales service examples intraining after joining the Company. We use the OJTmaster card as a training record to visually represent thestatus of necessary basic knowledge and skill acquisition. In addition, we are implementing a variety of initiatives, including Site-Learning,
ACT
PLAN
which is a study session at
事務支援(総務・事務）
マネジメントレビュー ( 指示 )
品質方針
each work site, and Rolling● 再発防止のための処置● MR 対応計画
Back, in which work planning is
施工支援
設計支援
営業支援
● 継続的改善● 品質目標● 品質マニュアル
・仮設計画
・見積
・設計知識
visually presented to pass on
・調達
・技術提案
管理
品質保証
計画
改善の機会
・検査
・・・他
・・・他
the experience of veteran
顧客満足向上
へ
・工事監理
の達成
・・・他
employees and the like.
監視・測定・分析・評価
支援
支援
内部監査
We conduct annual training
資源
for
quality management system
実施結果
施工
マネジメントレビュー ( 評価 )
運用
運用
設計
営業
より
アフター含む(QMS)
internal auditors andCheckDOencourage them to acquire
qualifications. We also provide
顧客
顧客満足
要求事項
土木構造物・建築物
follow-up training for internal
要求事項
品質ＭＳに密接に関連する利害関係者
auditors to improve their skills
and management systems.
PDCA of Quality Management System (QMS)

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

59

Reinforcing the Foundation of Value Creation for Growth

Promotion of CSR Procurement and Responsibility in the Supply Chain
Procurement Policy and Promotion Structure
Attention and demand for corporate social responsibility (CSR) is continually increasing. To realize Tokyu
Construction’s Purpose, creating a reassuring and comfortable living environment, we have drawn up a
procurement policy that focuses on CSR and are building a structure to promote it.

Formulation and Sharing of Our Procurement Policy
We have always collaborated with subcontractors and vendors, complied with regulations, and paid attention to
reducing environmental impact and respecting humanrights in our procurement activities. To respond to risingsocietal awareness in recent years, such as the SDGs and

ESG, we have clearly stated in our procurement policy theactivities we have always taken and have shared ourthoughts broadly both inside and outside of the Company.
This procurement policy will strengthen our initiatives fromthe perspective of supply chain management going forward.

Procurement Policy
Tokyu Construction will contribute to creating sustainable society and community by valuing mutual respect
offering equal business opportunities, thoroughly
Outline1 Securing compliance and fair trade
We will understand the laws and regulations, and we will not
conduct any illegal transaction or unfair trading.
2 Ensuring quality
We will select the best vendor for ensuring that we canprovide construction products and offer products andservices that can gain our customers’ trust and satisfaction.
3 Securing Safety and CleanlinessWe will select the best vendor for ensuring that we canprovide construction products and offer products andservices that are safe and clean for our customers and every
person who uses our products and services.
4 Consideration for the environment
We will give priority to procuring construction products andservices that give consideration to reducing environmental
impact through measures such as controlling the emission ofwastes, noises and vibrations, greenhouse gases, pollutants,

complying with regulations, and making fair selection
based on partnership of mutual development with
subcontractors and other vendors.
and dangerous items, and implement measures for securing
proper management conditions.
5 Respect for human rights and creation of comfortable
work environment
We will respect human rights and select vendors on thecondition of securing a comfortable work environment
where there is no discrimination or harassment due togender, age, place of birth, nationality, and other factors.
6 Thorough information security
We will select vendors on the condition of securing information
security by paying due consideration to the protection of confidential information, personal information and customer information.
7 Refusal of Relationship with Antisocial Forces
We will sever transactional or any other relationship with
antisocial forces.
8 Creation of a procurement system
We will create a system for continuously implementing suchprocurement.

TOPICS
Monitoring of Subcontractors
In addition to supporting our partner subcontractors in dealing withlabor shortages and business succession issues, since July 2020, theProcurement Department General Manager has been working with
Tokyu Insurance Consulting Co., Ltd. to directly visit subcontractors’
workplaces as part of communicating our procurement and management policies. We ask them to recognize the importance of the environment, human rights, labor issues, and the like by encouraging them totake the Eco Test and to engage in on-site activities related to the threevalues we deliver. Currently, we have already completed more than 70
Pledge on the Three Values we deliver
visits and have received positive feedback from our subcontractors. Our
goal is to visit 100 companies by the end of fiscal 2021, and we plan tocontinue to operate this system. “The first step to changing perception is to declare what you can do and get to work on it –even if it’s something simple. We hope to build partnerships for mutual development.”(Kento Takeuchi, General Manager of Procurement, Cost Planning Department, Building Construction Division)

60 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

Collaboration with Subcontractors
The Tokyu Group aims to enhance its corporate value by solving social issues such as climate change
and creating economic value through these solutions. Cooperation with our subcontractors is very
important in promoting these activities. We will further enhance our partnerships for mutual development and continue to contribute to society across our whole supply chain.

Declaration on Partnership Building
In March 2021, Tokyu Construction announced the Declaration on Partnership Building. The Declaration on
Partnership Building is a mechanism established by theCouncil on Promoting Partnership Building for Cultivating the Future, whose members include the Chairman of
Keidanren, the President of the Japan Chamber of Commerce and Industry, the President of The JapaneseTrade Union Confederation, and relevant ministers(Cabinet Office; Ministry of Economy, Trade and Industry; Ministry of Health, Labour and Welfare; Ministry ofAgriculture, Forestry and Fisheries; and Ministry ofLand, Infrastructure, Transport and Tourism). It is a declaration made in the name of the representative of acompany that it will build new partnerships by promoting cooperation, coexistence and mutual prosperity
with suppliers and value-creating
g businesses in the supp
ply chain. Based on the
Declaration on Partnership Building, we will
aim for co-existence

and mutual prosperity across our entire supply chain,
and will not only strive to optimize subcontracting transactions, but will also work together to resolve issues facing the construction industry, such as securing the next
generation of workers and improving productivity.

Construction Career Up System (CCUS)
Tokyu Construction is putting in place an environment
in order that our skilled workers, who play a key roleon-site, receive proper evaluation and treatment inaccordance with their skills and experience. As part ofthis effort, we are actively cooperating in the promotion of the Construction Career Up System as a managing company of the Construction Career Up System
Headquarters established by theJapan Federation of Construction
Contractors, in which IC cards are
distributed to individual skilledworkers and their work histories
and qualifications are stored in a
unified industry system.

Logo of the declaration

Occupational Safety and Health & BCP
We have organized an Accident Prevention Cooperative Association with subcontractors engaged in construction and are promoting the smooth progress ofconstruction work through cooperation. In addition,
we are promoting a variety of activities to eliminate
accidents and disasters, including the operation of a
“Meister” certification system for excellent foremen.

In the event that infrastructure is damaged by a disaster,
we also work with our partner companies to ensure theearly restoration of infrastructure by laying out disaster
relief roads and other measures. We have concluded
cooperation agreements in the event of disasters with thenational government, local governments, and other organizations, as well as with infrastructure-related companies.

TOPICS
Support for Incoming Employees at Subcontractors
We collaborated with the YouTube channel “Kocchi no Kento” by popular YouTuber Kento Sugo, the younger brother of actor/singer Masaki
Suda, to deliver a series that conveys the appeal of civil engineering
called “Learn About Civil Engineering with Kento Sugo,” from November 2020. To date, 20 episodes have been broadcasted, including projects to improve the image ofthe construction industry and interviews with subcontractors, in the hope that they will provide an
opportunity to find employment at our subcontractor partners in construction.

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

61

Reinforcing the Foundation of Value Creation for Growth

Strengthening of the Foundation of Human Resources
Our Approach to Human Resources
As stated in our VISION 2030, human resources are the source of our competitive advantage. We will
work to enhance human resource training such that all employees can improve their abilities andfully demonstrate their individual strengths. We will also create a pleasant working environment bypromoting reforms in personnel systems and work styles.

Work-style Reform
In line with the promotion of work style reforms, anupper limit on overtime will be applied to the construction industry from April 2024. In May 2019, we established the Tokyu Construction Health Declaration, andare taking steps to maintain the health of employees
and their families by improving health checks, promot-

ing cancer prevention, and promoting mental healthcare. Going forward, we will work to maintain the healthof our employees and the families who support them, inline with our management policy that makes the bestuse of employees in order to create a vibrant corporate
culture and achieve sustainable growth.

Diversity and Inclusion
Tokyu Construction is working to create a workplace inwhich a diverse range of human resources can demonstrate their full potential, transcending the boundaries
of work category, generation, and gender. By effectively
utilizing the various perspectives and values arising fromindividual differences, we are striving to create an environment in which we can respond quickly to changes in
economic conditions and the demands of our customers and all other stakeholders, and to foster a corporate
culture in which diversity is a strength.

Promoting Women’s Success in the Workplace
Based on the results of an assessment of the present
conditions and an analysis of issues under the Act on
the Promotion of Female Participation and Career
Advancement in the Workplace, we have formulated
an action plan (implementation period: From April 1,
2020, to March 31, 2023) and set targets accordingly.
By carrying out recruitment of women along with new
graduate and mid-career recruitment in line with theplan, we have increased the number of women
employees to 287 in fiscal 2021, 1.4 times that of four
years ago.

We are working to create systems andimprove the workplaceenvironment so thatfemale employees canfully demonstrate theirabilities and play anactive role in their professional lives. In training for female employees, we
provide opportunities for growth that correspond toeach stage of their careers, such as training to motivatethem to take on challenges and give a concrete imageof themselves 10 years in the future when they are proactively building their careers, external exchange-type
training that supports a step-up to leadership in anticipation of promotion to management positions, and1-on-1 coaching by specialized coaches.

Employment of persons with disabilities
We continue to employ people with disabilities under
the philosophy of creating an “inclusive society” whereanyone can participate in society through work. Our
employment rate of persons with disabilities in fiscal
2020 is 2.46%. We have continuously exceeded thestatutory employment rate for persons with disabilities
since fiscal 2015.

Human Resource Training and Personnel System
Human Resource Development According to
Our Master Plan
We aim to develop human resources with a high level ofexpertise and professionalism, pride, passion, ambition,and perseverance. By creating a human resource training master plan based on this and comprehensively
combining programs such as on-the-job training, group

62 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

training, self-development support, and career development support according to each individual’s career
stage, we are supporting skill development and theenhancement of an environment.
Master Plan씮 https://www.tokyu-cnst.co.jp/en/sustainability/
employees/#development

Education and Training Programs for Engineers
In order to raise the technological level of the Company,
we provide various opportunities such as on-the-job training and off-the-job training to improve the skills of ourengineers. In addition, we also actively support employees
in the acquisition of qualifications such as architect andmanagement engineer certifications in order to meet participation criteria in tenders, etc., and enhance our corporate evaluation (business evaluation points).
In the Civil Engineering Division, new employees in thefield of civil engineering take part in a 10-month long training program based on a practical curriculum that aims tocultivate their ability to respond to work site situations
before they are assigned to a work site. In the Building
Construction Division, the first year in which new employees are assigned to a work site is defined as a training period. During this period, new employees are assigned towork in pairs in order to create an environment where they
can improve by learning from each other. In addition, we
have established a First-class Registered Architects School
within the Company to provide support to employees who
are aiming to acquire this qualification.

Developing Human Resources for Management
In order to improve each of the organizational issues
identified in the Employee Engagement Survey we havebeen conducting since 2018 (see below), we provide
management skills training for managers and provide
support for organizational improvement activities. In
addition, the activities of the Shinka Management
School, the Company’s own initiative targeted at inexperienced to veteran employees in various positions,has been ongoing since 2017. This initiative consists of aseries of self-participatory trainings on topics such as
finance and organizational theory with the objective of
acquiring the necessary knowledge and a higher, broader perspective for positions in management and administration. As of FY 2020, over 10 percent of employees
have already voluntarily participated in this initiative.

Developing Human Resources for Next-Generation Management
Since FY 2019, we have launched the selective Next
Generation Management Academy for candidates forpromotion to general manager and executive officer
positions. The Academy provides internal and external
training and opportunities for interaction with current
management in order to produce human resources
with the skills and high perspective necessary to fulfill
the duties of management. Through this initiative, weare laying the groundwork for the consistent andappropriate selection of management personnel.

2020 results
Number of training programs

99

Training hours

3,607 hours

Number of participants

3,626 people

Amount invested per person¥57,000/year* T he number of training programs includes group training as well as measures
such as online English conversation classes and e-learning.

Improvement of Employee Engagement
Since 2018, we have been conducting an Employee
Engagement Survey for all employees of the Group. The
visualized strengths and weaknesses of our organizationand the respective organizational issues were fed back to
management and the persons responsible for each organization, such as general managers and work site managers.
Since then, we have been conducting regular surveys andproviding management skills training for managers toresolve their respective organizational issues, which has
resulted in improved conditions in several organizations.
This initiative was recognized and among the 1,308
companies conducting the employee engagement survey by Link and Motivation Inc. in 2020, Tokyu Construction received the eighth highest engagementscore in the major corporation category of the Best
Motivation Company Award 2021 for which the top 10
companies are selected.
See here for other initiatives
 https://www.tokyu-cnst.co.jp/en/sustainability/employees/

Engagement rating*
FY2018FY2019FY2020

FY2030 target

BB

BB

BBB

AAA

* Evaluation based on Link and Motivation Inc.’s Motivation Cloud. BB is the 5th highest rating out of 11, BBB is the 4th highest rating, and AAA is the highest rating.

Trends and Strengths of the Entire Tokyu
Construction Group• High level of satisfaction toward contributing tosociety and having rewarding work
• A large number of employees feel a sense of unity withshared goals at the workplace

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

63

Data

11-Year Financial Data SummaryFYE Mar. 2011

For the fiscal year

FYE Mar. 2012

FYE Mar. 2013

FYE Mar. 2014

Operating Results
Orders received(Millions of yen)

205,726

212,410

210,933

290,647

Net sales(Millions of yen)

244,974

227,843

228,570

226,164

Operating income(Millions of yen)

7,584

1,572

1,154

2,630

Ordinary income(Millions of yen)

7,811

1,884

2,301

3,559

Profit or loss attributable to owners of parent(Millions of yen)

4,087

1,799

(566)

2,685

Total assets(Millions of yen)

146,781

154,442

154,195

169,685

Total capital(Millions of yen)

30,28731,39032,48735,258Cash flows from operating activities(Millions of yen)

20,540(11,486)

14,264(9,302)

Cash flows from investing activities(Millions of yen)

481

20

(619)

(2,072)

Cash flows from financing activities(Millions of yen)

(9,813)

4,704(8,569)6,476

Cash and cash equivalents at end of year

(Millions of yen)

24,663

17,881

23,097

18,215

Financial Position

Cash Flow

Per Share Data
Net income or loss

(Yen)

38.29

16.86

(5.31)

25.16

Total net assets(Yen)

283.29293.46

303.61

329.35

Cash dividends

(Yen)

10.00

3.00

0.00

5.00

(%)

26.1

17.8

—

19.9

Equity ratio

(%)

20.6

20.3

21.0

20.7

ROE

(%)

14.1

5.8

(1.8)

7.9

PER

(Times)

6.5

12.6

—

17.4

(People)

2,460

2,446

2,403

2,313

2,302 / 158

2,285 / 161

2,231 / 172

2,148 / 165

(%)

1.94

1.81

2.16

2.07

Office(t-CO2)

1,387

1,060

1,370

1,607

Workplaces(t-CO2)40,00837,26051,06944,397

Construction by-products generated(t)

350,320

361,347

451,353490,293

Recycling rate

(%)

94.4

93.3

94.7

96.8

Accident frequency rate

(%)

0.53

1.07

1.02

1.04

—

—

—

—

Payout ratio

Financial Indicators

Non-Financial Indicators (Non-Consolidated)
Number of employees at end of year

(Male/

Gender breakdown

Female)(People)Employment rate for persons with disabilities
CO2 emissions

Employee engagement rating *²*1 Tokyu Construction has adopted the Partial Amendments to Accounting Standard for Tax Effect Accounting, etc. (“the Standard”) from the start of the current fiscal year,
and the Standard has been retroactively applied to the figures as of March 31, 2018.
*2 Engagement rating using Link and Motivation Inc.’s “Motivation Cloud.” Subjects are employees of the Group as a whole, including subsidiaries. Rating is divided into
a total of 11 stages, and the current “BBB” is the fourth rating from the top after “AAA,” “AA” and “A.”64 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

FYE Mar. 2015

FYE Mar. 2016

FYE Mar. 2017

FYE Mar. 2018

FYE Mar. 2019

FYE Mar. 2020

FYE Mar. 2021

341,992

303,758

293,539

299,436

285,476

215,109

320,916

262,815

296,393

243,618

320,711331,437

322,170

231,483

6,009

18,17817,211

21,41621,987

20,315

3,549

8,024

19,76818,83922,12822,932

21,969

4,891

5,805

13,34013,691

16,11815,504

14,903

2,647

192,226

214,526

204,813249,756

264,996

235,897

226,568

44,861

54,23866,38079,17592,981

101,703

103,509

2,111

39,003(23,545)

16,226

29,694(33,439)

11,629(1,525)(334)(1,717)(3,383)(5,786)(7,488)(3,753)*(675)(6,035)(2,788)(6,457)(3,575)

21,604(3,308)18,31850,674

22,582

28,86549,14529,54934,17354.40

125.00128.30151.05145.37139.7924.95

418.59506.04619.91739.87868.87949.39983.90

13.00

25.00

26.00

31.00

30.00

30.00

10.00

23.9

20.0

20.3

20.5

20.6

21.5

40.1

23.2

25.2

32.3

31.6

*

35.0

42.9

45.4

14.5

27.0

22.8

22.2

18.1

15.4

2.6

12.5

7.4

6.8

7.6

5.7

4.1

24.1

2,340

2,412

2,464

2,537

2,523

2,576

2,617

2,161 / 179

2,219 / 193

2,249 / 215

2,303 / 234

2,275 / 248

2,308 / 268

2,330 / 287

1.84

2.22

2.26

2.30

2.46

2.52

2.46

1,841

1,913

1,820

1,754

1,955

2,016

1,657

59,394

66,112

67,33351,602

43,78042,461

42,673403,918

473,004

395,309410,245

375,815

348,812355,349

96.1

95.9

98.4

99.4

94.0

93.3

93.5

0.84

0.73

0.70

0.79

0.58

0.39

0.19

—

—

—

—

BB

BB

BBB

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

65

Data

Company Profile(as of March 31, 2021)

Company NameTOKYU CONSTRUCTION CO., LTD.

Founded on

Tokyo Construction Industry Co., Ltd., was founded on March 12, 1946.(TOKYU CONSTRUCTION
CO., LTD. Founded on November 11, 1959)

Date of Establishment

April 10, 2003

Capital¥16,354.44 million

Head Office

1-16-14, Shibuya, Shibuya-ku, Tokyo

Representative

Mitsuhiro Terada, Representative Director, President

Number of employees

3,010 (consolidated), 2,617 (unconsolidated)

Construction License(TOKU-29) No. 20220 by Minister of Land, Infrastructure, Transport and Tourism

Main Business

Civil engineering and building construction Investigation, construction plan, geological survey,
measurement, design and others for civil engineering and building construction
Head Office, 13 branches, 11 sales offices and others

Offices

Branches
Sapporo Branch, Tohoku Branch (Sendai city), Hokuriku Branch (Niigata city), Chiba Branch, Civil
Projects East Japan Branch (Shibuya, Tokyo), Building Projects East Japan Branch (Shibuya, Tokyo),
Urban Development Branch (Shibuya, Tokyo), Building Projects Metropolitan Branch (Shibuya,
Tokyo), Nagoya Branch, Kansai Branch, Hiroshima Branch, Shikoku Branch (Takamatsu city), Kyushu
Branch (Fukuoka city)
Laboratories
Institute of Technology (Sagamihara city, Kanagawa)Overseas offices
Bangkok, Yangon, Dhaka, Hanoi, Jakarta, Manila, Singapore

Group Companies

Tokyu Renewal Co., Ltd. (Shibuya, Tokyo)
Token Industry Co., Ltd. (Shibuya, Tokyo)
Plantaardig Farm Co., Ltd. (Miho-mura, Inashiki-gun, Ibaraki)
Ch. Karnachang-Tokyu Construction Co., Ltd. (Thailand)
Pt. Tokyu Construction Indonesia (Indonesia)
Golden Tokyu Construction Co., Ltd. (Myanmar)
Indochine Engineering Limited (Vietnam, Australia)

Our company has been selected as a constituent stock in the JPX-Nikkei Index 400 and JPX-Nikkei Mid and Small Cap
Index brand. We will continue to work to improve our corporate value and meet the expectations of our investors.

JPX-NIKKEI 400

JPX- NIKKEI Mid Small

The JPX-Nikkei 400 index is composed of companies
with high appeal for investors, which meet requirementsof global investment standards, such as efficient use ofcapital and investor-focused management perspectives.
Companies are chosen by the Tokyo Stock Exchange
and the Nikkei Inc.

The JPX-Nikkei Mid and Small Cap Index applies the concept of the JPX-Nikkei Index 400, which is an index composed of highly attractive listed companies, to mid andsmall cap equities by selecting companies that focus on
capital efficiency and investor-orientated management,
and aim to foster greater awareness of such issues amongcorporate executives. Companies are chosen by the
Tokyo Stock Exchange and the Nikkei Inc.

Of the various companies that participate in
Link and Motivation’s
Employee Engagement
Survey , the ten companies with the highest
engagement score arepresented an award.

Independent Evaluations and the Company’s initiatives

ZM2021-00097-DC

The Company
acquired SBT certification for its
greenhouse gas
reduction target.

Responses were
submitted to CDP,
and we received aB- rating (eight ratings from A–D).

The Company
agrees with TCFD
proposals and ismoving forwardwith initiatives
related todisclosure.

66 TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

We participate in
RE100, an initiative
whose goal is forall energy used inbusiness activities
to come fromrenewable energy
sources.

We are a registered ZEB planner,an expert in ZEB
planning
operations.

We are a registered ZEH developer, a provider of
total support fromproposals related
to introducing
ZEH-M to completing application
procedures.

Data

Stock Information(as of March 31, 2021)
Treasury shares

Total number of sharesauthorized to be issued

400,000,000 shares

Outstanding stock

106,761,205 shares (Including 2,028,606 treasury
shares)Financial institutions

1.90%

37.66%

Individuals
and others

15.21%

Distribution of
Shareholders

Foreigncompanies, etc.

Number of shareholders

32,353

Listed stock exchangeFirst section of the Tokyo Stock Exchange

Securities code

1720

Shareholder registryadministrator

Sumitomo Mitsui Trust Bank, Limited
1-4-1, Marunouchi, Chiyoda-ku, Tokyo, Japan

14.98%
Other
companies

Financial
instruments dealers

26.67%

3.58%

Major Shareholders (Top 10)
No. of shares held(Thousands)

Percentage of total
shares issued (%)

TOKYU CORPORATION

15,362

14.67

The Master Trust Bank of Japan, Ltd. (Trust Account)

5,583

5.33

Mizuho Trust & Banking Co., Ltd. TAISEI CORPORATION retirement benefits
trust account re-trust trustee Trust & Custody Services Bank, Ltd.

4,000

3.82

Custody Bank of Japan, Ltd. (Sumitomo Mitsu Trust Bank, Ltd. Re-trust - Tokyu
Corporation retirement benefits trust account)

3,520

3.36

SHIMIZU CORPORATION

3,000

2.86

Custody Bank of Japan, Ltd. (Trust Account)

2,950

2.82

MSIP CLIENT SECURITIES

2,918

2.79

CITY INDEX ELEVENTH CO., Ltd

2,807

2.68

Morgan Stanley MUFG Securities Co., Ltd.

2,590

2.47

MUFG Bank, LTD.

2,550

2.43

Name

Note: 1. Percentage of total shares issued has been calculated after deducting treasury shares (2,028,606 shares).
2. Tokyu Corporation has contributed 7.5 million shares to retirement benefit trust accounts, including 3.52 million shares to the Custody Bank of Japan (Sumitomo Mitsui Trust Bank, Ltd. Re-trust - Tokyu Corporation retirement benefits trust account).

Stock Price Information
High/Low (yen)1,500High/Low

1,200
900
600
300
0

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2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

TOKYU CONSTRUCTION CO., LTD. Integrated Report 2021

67

MOONSHOT 2050

Corporate Communication Group, Corporate Planning Department,
Corporate Strategy Division
1-16-14 Shibuya, Shibuya-ku, Tokyo 150-8340, Japan
TEL: +81-3-5466-5008 FAX: +81-3-5466-5069
E-mail: webmaster@tokyu-cnst.co.jp
www.tokyu-cnst.co.jp/en/