Corporate Governance
Our Fundamental Concept of Corporate Governance
As an “energy frontier corporate group” centered on naturalgas, Tokyo Gas has a management philosophy that aims at therealization of comfortable lifestyles and environmentally friendly
cities. We work to ensure continued development while consistently earning the trust of customers, shareholders and society.
Based on this philosophy, our fundamental concept of enhancing corporate governance is intended to achieve a continuous
increase in our corporate value by maximizing the value provided
to all of our stakeholders.

Corporate Governance Structure

We are also endeavoring to develop systems and measures to further augment corporate governance, and we are
implementing them with a commitment to management legality,
soundness and transparency. Tokyo Gas continues to emphasize
the importance of accurate decision-making, clear separation ofmanagement functions and executive functions, efficient business operations, strengthening of auditing and monitoring functions, clarification of management and executive responsibilities.

Stakeholder

Customers

General Shareholders’ Meeting

Tokyo Gas Co., Ltd.

Local Community

Business operations

Shareholders/InvestorsGeneral Shareholders’ Meeting
Appointment
Appointment Report
ReportAudit

Collaboration
Financial audit

ReportInquiry

President (Management Report
Meeting (Note 4))
Approval

Monitor and decide

Audit

Enhancement of IR Activities
IR activities rank alongside internal control, risk management andthe promotion of compliance as some of the most important ways
to ensure management soundness and transparency and earn
the understanding and confidence of all stakeholders, including
shareholders and investors. As distinctive characteristics of theIR activities of Tokyo Gas, our top management diligently participates in our IR activities, and we not only disclose a wide rangeof information, but also engage in interactive communication withinvestors. We believe that through these activities, we can put theexpectations and the opinions of the stock markets to good use in
the management of the company and enhance discussion of thethinking of our management with all of our investors. In so doing,
we eliminate the gap between our true corporate value and themarket assessment of the company. Based on this belief, in Japan,
we launched a specialist IR unit in 1998 and it has maintained ongoing dialogue with investors and analysts since then. Currently,primarily in the period after the announcement of our financial
results, we are engaged in IR activities including visits by top

ReportIn-House Meeting(Note 5)

Management Ethics
Committee

ReportRisk report

Decision Add toRisk
agendamonitoring
Report submission
Strategic Business Units(each unit, subsidiaries & affiliates)

Note 1:	Board of Directors: 11 directors (3 outside directors, and 8internal directors)
Note 2:	Advisory Committee: 2 outside directors, and 1 outside auditor, Chairman,and PresidentNote 3:	Board of Corporate Auditors: 5 corporate auditors(3 outside auditors, and 2 internal auditors)

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ReportBoard of Directors(Note 1)
Monitor Report submission

IR Dept.
Risk reportCompliance Dept.

Collaboration
Collaboration

Internal Audit Dept.

Independent Auditors

Board of CorporateAuditors (Note 3)

Appointment

AnswerAdvisory Committee(Note 2)

Report submission

Promotion/support

Note 4:	Management Report Meeting: President, 2 Executive Vice Presidents, 9senior executive officers (Three of the representative directors also serve
as President and Executive Vice Presidents.)
Note 5:	In-House Meeting: Management Ethics Committee, Safety Committee,
Customer Satisfaction Promotion Committee, CSR Promotion Meeting,
Environmental Meeting, and others

management to institutional investors in Japan and overseas.
They also use briefings and individual meetings as opportunities
for wide-ranging discussions.
Tokyo Gas has always disclosed its short-, medium- and longterm management targets as well as the specific management
strategies and action plans adopted to achieve these targets. We
have also actively shared information about our business performance and progress towards goals. As part of our disclosure
activities, we will continue to improve and expand the contentof our annual report, investors’ guide, IR website and JapaneseBusiness Report.
In April 2008, we newly launched an IR Department, comprising the Investor Relations Section split off from the Corporate
Planning Department. As a result, our IR activities have beengreatly strengthened. The IR Department has combined andenhanced risk management functions that had been dispersed
throughout various departments. We intend to continue increasing
corporate value while also considering risk management.

Internal Governance SystemUnder our internal control system, the Board of Directors, which
includes three independent outside directors, determines thebasic policies for the development of the important business operations plans and the internal control systems and monitors theperformance of the directors. In accordance with the basic policies determined by the Board, the executive officers act to carryout business operations as well as to develop and operate theinternal control system. We have established the Management
Report Meeting as a deliberative body to assist the Board. Thisbody undertakes prior discussions on the agenda for upcoming
meetings of the Board and deliberates on important matters related to management.
The five corporate auditors, three of which are outside auditors, monitor the performance of the directors’ duties. In addition, the Internal Audit Department, which reports directly to thePresident, monitors the business activities in each segment ofTokyo Gas and its consolidated subsidiaries, as well as the stateof the development and operation of internal control and riskmanagement. To implement specialized audits efficiently, the Internal Audit Department, with its 43 staff members (as of April 1,2008), has developed a structure of four groups, specializing in
financial, operational, information system and compliance audits.
In order to meet the requirements of the Internal Control
Reporting System based on the Financial Instruments andExchange Law, we established the Internal Control Promotion
Committee and a project team, which takes charge of actual operations in April 2006. Documentation and evaluation of the stateof development and operation were completed in March 2008,
and Tokyo Gas is ready for the initiation of the Internal Control
Reporting System.
Establishment of the Enterprise
Risk Management System
In fiscal 2003, we established the Enterprise Risk Management(ERM) system, which includes risk management regulations anddocumented rules concerning major risks that require management intervention. To promote ERM, the IR Department’s Risk
Management Group runs the Risk Management Promotion Section, and approximately 100 Risk Management Promotion Officers have been deployed in Tokyo Gas and all of its consolidated
subsidiaries. The Risk Management Group and its Promotion
Section exchange information regularly to promote ERM. The
Promotion Section, which reviews risks, evaluates fluctuations ofthe risk importance, assesses the implementation status of thecountermeasures and the like and reports to the Management
Report Meeting every year. Moreover, the results of the risk revisions are reported to the Board of Directors for approval.
The Risk Management Group is also in charge of development of the internal control system. We have built a system under which ERM and internal control are executed together in an
integrated manner.
In the case that a disaster, an accident or another such
incident actually occurs, the Emergency Response Organization
immediately deals with the situation in accordance with theEmergency Response Organization Regulations.

Major Risks Requiring Management Intervention

Disaster and accident risks

Disruption of production and supply, maintenance problems of gas safety, product quality
problems of gas appliances, etc., reputation damage resulting from other companies’ gasrelated accidents, natural disasters, disruptions to gas resource procurement

Market risksMarket price fluctuations affecting real estate and financial assets, etc.

Business strategy risks

Risks to existing businesses (risks arising from the establishment and commencement ofoperation of new regional energy companies, increased competition, risks of under- orover-recovery of gas resource costs, changes in the gas resource procurement environment, weather changes, declines in existing demand, technology development risks,changes of laws/regulations and regimes), ROI risks

Information risks

Information leaks, failures or malfunctions in mission-critical IT systems, loss of telephoneservices to call centers

Social responsibility risks and other risks

Environmental risks, compliance risks, customer satisfaction and customer service risks

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