Sustainability Report

2023

Customers

Local community

Society

For the Changing Future

Challenge 2030
“Building and maintaining good relationships
with customers, the local community, and society”
Obbli is an original name created from the Latin word “obbligare,”which means “making a connection.” Our name embodies the idea
of valuing and strengthening connections with people and society
with gratitude and building a bridge with them to the future.

Inquiry

Sustainability Promotion Department, San-ai Obbli Co., Ltd.
2-3-2 Otemachi, Chiyoda-ku, Tokyo 100-8154 Japan
Phone: +81-3-6880-3812 Fax: +81-3-6880-3033

Websitehttps://www.san-ai-obbli.com/en/

SAN-AI OBBLI GroupMessage from the Chairman

Sustainability Report 2023
Challenge 2030: For the Changing Future

Contents
About San-ai Obbli

Editorial Policy
The purpose of this report is to inform stakeholders of
the San-ai Obbli Group’s sustainability-related initiatives
in FY2022 in an easy-to-understand manner.
Scope of Report

02 Message from the Chairman
03 San-ai Obbli Group until Now
05 Today’s San-ai Obbli Group

This report covers the activities of the San-ai Obbli Group
as a whole, with a focus on San-ai Obbli Co., Ltd.
Reporting Period

07 Process of Creating Value at San-ai Obbli Group

This report covers FY2022 (April 1, 2022–March 31,2023) but also includes some events in FY2023 before
the point of publication.

09 Our Commitment

Date Issued
October 2023
(Next issue scheduled for October 2024)

Highlights in 2022
11

Vol.
01
vol.01

Promoting Sustainability Management

Hosting a Sustainability Forum
13

Vol. 02

Creating Group synergies

Disclaimer
This report includes forward-looking statements. Thesestatements are based on information available at thetime of writing; actual results may differ.
Referenced Guidelines• Environmental Reporting Guidelines (2018 Edition),
Ministry of the Environment, Japan• ISO 26000: 2010 Guidance on Social Responsibility• The United Nations Sustainable Development Goals(SDGs)

Technical meetings to strengtheninter-business collaborations

Providing true value to society based on the San-Ai spirit of“Love People, Love Your Country,
and Love Your Work”
Jun Kaneda
Although the impacts of COVID-19 eased in 2023,

to fully implement our business strategy. We are also

divisions such as the war in Ukraine and the Unitedenhancing productivity by creating a comfortable work

States–China conflicts continue.

environment and continuing our health management

Furthermore, we are faced with many social issues

efforts, linking them to our long-term business growth.

such as global warming and economic disparity, but the

By maximizing the abilities of various human resources,

only way to solve them is through the power of people.

we are fostering an organizational culture that

As can been seen in our disclosure of humancapital, human resources are the source of corporate
value enhancement and future competitiveness. The

Material Issues of San-ai Obbli Group

Chairman of the Board

strengthens our existing business and boldly takes on
new challenges for business opportunities.
We will continue to create new value as a partner

Group constantly reviews the knowledge and skills ofthat supports people’s daily lives and industries based

our human resources and invests funds to ensure thaton our corporate philosophy of San-Ai spirit (Three

we foster the necessary human resources at the rightLoves) and will ask for the continued support andtime, with the right qualities and in the right numbers

guidance of our stakeholders.

15

Sustainability Management17

Response to Climate Change

21

Stable Energy Supply

23

Diversity and Inclusion

27

Corporate Governance

San-Ai Spirit

30

Highlights of FY2022 Activities

The San-ai Obbli Group has established a Charter of Ethical Conduct based on its corporate
philosophy, the San-Ai spirit of “Love People, Love Your Country, and Love Your Work,” aiming
to contribute to the development of a better society.

Cover Story
Data
31

Data Highlights
Overview of San-ai Obbli Group

01 San-ai Obbli Group Sustainability Report 2023

The cover expresses the thinking behind our
medium-term management plan, Challenge 2030:
For the Changing Future, and our hopes for future
generations while also serving as a statement of ourintention of continuing to provide value to ourstakeholders.

• Respect every individual personality with whom we interact with, and develop fair relationships
with everyone.
• Contribute to building a better society through corporate activities.
• Take pride in our work and act autonomously and creatively.

The corporate philosophy of founder
Kiyoshi IchimuraSan-ai Obbli Group Sustainability Report 2023

02

Transition

Transitionof SAN-AI OBBLI
2015

Business

San-ai Obbli Group until Now

Start of sales of our own
ARAWZANS® car coating agent.

Consolidated net sales (millions of yen)
Non-consolidated net sales (millions of yen)

Value Creation

Consolidated net income (millions of yen)

2014

Consolidated net sales /Non-consolidated net sales

2008(millions of yen)

1,000,000

2020

Two additional oil storage tanks are installed atHaneda Airport. San-ai is designated as a
specified business operator under the Act on thePrevention of Disaster in Petroleum Industrial
Complexes and Other Petroleum Facilities.
Consolidated
net income

Fourth solar power
plant (Kazusa)
begins operations.

Start of the San-ai Oil Obbli Forest, a pactwith Kochi Prefectural Government andMotoyama Town, Kochi Prefecture.

(millions of yen)

Record Earnings

10,9012017 - 2021
2004
800,000

Kokusaiyuka Co., Ltd. (now San-ai RetailService Co., Ltd.) joins the Group.
The number of affiliated service stations isincreased for a strengthened sales
network.

2005

Women’s Employee Forum is held topromote women’s advancement.

2011

2008

Kygnus Sekiyu K.K. joins the Group,
stabilizing procurement and expanding
the sales network.

The metal surface treatment technology
of San-ai Plant Industry Co., Ltd. (nowSan-ai Obblitech Co., Ltd.) is chosen for
the national KAGRA project, a large-scale
cryogenic gravitational wave telescope.

10,0008,000

San-ai Oil Co., Ltd. (now San-ai Obbli Co., Ltd.)
becomes a gas pipeline service business withthe deregulation of city gas retailing.

600,000

2002

12,000

7,053

6,462

Start of the Obbli
corporate brand forthe company’s
50th anniversary

6,000

5,340

2022

400,000

Company name is changed toSan-ai Obbli Co., Ltd. for the company’s
70th anniversary.

4,032

4,000

2,755
200,000
2,000

0Medium-Term
Management Plan

2000 2001

2002

Increase competitivenessto achieve the top ROA!

2003

2004

New Foundation 150
Plan for a New
Foundation

Deterioration in earnings
from sluggish market
conditions and losses on
valuation of securities

03 San-ai Obbli Group Sustainability Report 2023

2005

2006

2007

2008

Taking a Leap Forward

Growth in consolidated
net sales

2009

2010

Challenge 2011
Breakthroughs from aGroup-wide Effort

Losses on valuation of
securities recorded as
extraordinary loss

2011

2012

2013

2014

Re: Creation
Creating New Values

2015

2016

2017

Innovation 2017
For New Growthand Ingenuity

2018

2019

2020

Innovation II 2020
For the Coming
Environmental Transition

Improved management
efficiency from businessrestructuring, etc. of theGroup companies

2021

2022

0

Challenge 2030
For the Changing Future

Business effects from COVID-19

San-ai Obbli Group Sustainability Report 2023

04

(As of March 31, 2023)

Transition

Petroleum Related BusinessPetroleum Products Sales
Nationwide supply of petroleum products through the sale of industrial fuels
and lubricants to distributors (wholesale) and corporate customers, and also
through retail sales at service stations to customers.

Major Oil Terminals

4 locations

Storage(oil terminals)

Sales (service stations)

Service Stations

Business

Approx.

Sales

Distribution

1,020 locations nationwide

ordering and delivery,( tradingcompany functions )corporate customers,( tofuel
oil and lubricants )Gas Related Business

LP Gas Sales

Value Creation

54 %

12 %
6%
FY2022
Segment Profits

Natural Gas Sales

Total length of natural gas pipeline network

Sale of natural gas to factories and other facilities nationwide as part ofproposed comprehensive energy supply systems to save energy and reduce
costs. (Saga Gas Co., Ltd. also supplies city gas to households.)

392.7km

Retail26

CO2 reduction in FY2022(by switching fuel to natural gas)

Approx.

Consumers

DeliveryConsumers

City gas business (general customers, etc.)• San-ai Obbli Co., Ltd.: 46.1km• Saga Gas Co., Ltd.: 346.6km

Number of large-volume gas
supplies by San-ai Obbli Co., Ltd.

DeliveryTransport

319 stores nationwide
LNG terminal

City gas
production

Pipeline supply (corporate customers)
Energy services (corporate customers)

26,623 t

Products Manufactured
and Sold

Manufacturer
functions

Product
development

Approx.

Trading company
functions

Product
purchasing

LNG supply (corporate customers)

700

Raw material
procurement

Manufacturing/
quality control

Logistics/
transportation

Sales

Customers

Logistics/
transportation

Sales

Customers

Aviation Related Business

Aviation Fuel Service

San-ai Obbli Group’s Aviation Fuel Service Operations

27 locations nationwide

Number of aircraft fueling flights handled by
San-ai Obbli Co., Ltd. at Haneda Airport

Approx.

Other Businesses
In addition to construction and cleantech businesses, operation of solar
power plants on idle land.

4 locations

Business

1

Fuel receiving/
quality control

Strength3

Inspection/
maintenance

Fuel supply

Metal Surface Treatment Technology for Cleantech Business8 patents

Technical Capabilities

We have expertise in the design and operation of aircraft fuelingfacilities (hydrant systems) and a research laboratory that develops
chemical products. San-ai Obblitech Co., Ltd. also has an establishedreputation for its metal surface treatment technology.

of SAN-AI OBBLI

Quantity control/
inventory control

350 flights/day

San-ai Obbli Co., Ltd. Solar Power Plants

Strength

05 San-ai Obbli Group Sustainability Report 2023

Purchasing

Distributor

Chemical Products Related Business

Fuel services through Haneda Airport's hydrant system (underground fuelsupply pipeline) and fueling services and fueling facility management at
airports around Japan.

Today’s San-ai Obbli Group

Wholesale

Distributors

Development, manufacture and sale of industrial preservative and anti-moldagents, automotive chemical products, etc. and as a trading company, thesale of chemical products that meet customer needs.

7%

10 locations

Sale of liquefied petroleum gas (LP) gas for both household and commercial
use and sale of general high-pressure gas for industrial purposes, deodorizedgas for aerosols and autogas for vehicles.

Manufacture and Sale of Chemical Products

21 %LP Gas Filling Stations (including aerosols)

Solution Proposals

As an independent trading company unaffected by capital influences,
we provide customers with one-stop solutions for optimal products andservices. We have retail divisions within the Group companies, and we
support our distributors enhancing their sales competencies throughsharing the sales know-how we accumulate.

Strength2

Reliability

We have a proven track record of safely operating high-pressure gas
facilities, oil terminals and other hazardous material facilities,
including the management of natural gas pipelines for our city gas
business. In the retail sector, we reliably deliver our services to ourcustomers with high standards of safety.
Strength

4

Customer BaseIn addition to building long-term partnerships with petroleum and LP
gas distributors, we provide services to large-scale customers in thechemicals, lubricants and natural gas industries.

San-ai Obbli Group Sustainability Report 2023

06

Transition

Value Creation

OUTCOME

Businessof SAN-AI OBBLIOUTPUT

Process of Creating Value at San-ai Obbli Group

Value Creation

Business Activities
A partner that
supports industry

Materialities

01

Sale of
Petroleum
Products

Response to Climate Change

Initiatives to realize acarbon-neutral society

Social Issues

Aviation
Fuel Service

Other Typesof
New Energy

P17

Business strategies• Declining birthrate
and aging population

1.

• Labor shortage

02• Regional depopulation

Stable Supply of Energy

Aspiring to be a partnerthat supports people’s
daily lives and industries• Increased number ofnatural disasters• Climate change

P21• Rising energy prices

03

Improve the efficiency ofPetroleum Related Businessand allocate management
resources to other businesses

2.

Invest in businesses withgrowth potential, including
through M&A

3.

Create additional synergies
through collaboration withother businesses

Strengthen the organization to
support our businesses
4.

Evolve the Group management system

5.

Foster a challenging
organizational culture that cancreate change

Diversity and Inclusion

Securing and developing
human resources
P23

Manufactureand Sale ofChemical
Products

LP GasSales

Natural Gas
Sales

Solving a wide range ofcustomer issues
through comprehensive
energy services

A stable supplyof energy

Realization ofa low-carbon society

Responding to diverse
customer needs bydeveloping new
businesses andexpanding businessdomains through M&A

Realization of safe
and secure lifestyles

Sources and Strengths of Value Creation

04

Corporate Governance

Gaining stakeholder trust by
ensuring management
efficiency and transparency
P27

07 San-ai Obbli Group Sustainability Report 2023

Technology Capabilities

Solution Proposals

Reliability

Customer BaseThe San-Ai Spirit of Three Loves:“Love People, Love Your Country, and Love Your Work”

Coexistence withlocal communities

An approach forsustainable growthSan-ai Obbli Group Sustainability Report 2023

08

Commitment
Assuming the Office of President
When I was approached to become thenew president, former President Yukio
Tsukahara left me with following
message: “I want you to make full useof your sales experience and sensibilities
to be a leader in this new era that
requires speed and change.”
I am essentially a sales person,
although I do have experience as thegeneral manager of the Legal & Credit
Department and as an auditor. The basisof sales is people. In an organization,
human resources are also the source ofgrowth. I know from my experience insales that San-ai Obbli Group has many
people with a wide variety of abilities. I
can picture many of those faces. We
need to combine the strengths ofeveryone in the organization andpositively overcome the rapidlychanging business environment, and to
do this, we need to create a strict but

09 San-ai Obbli Group Sustainability Report 2023

or more, and a consolidated dividend
payout ratio of 30% or more. With only
half a year remaining in the third andfinal year of the current plan, we areworking to evolve our business portfolio
by allocating management resources togrowth businesses in order to move as
quickly as possible toward achieving our
vision of a low-carbon, circular society
by 2030.

Advancing Sustainability
Management

Promoting Sustainability
Management and Creating
New Value
Hiroshi Hayata
Representative Director, President and Executive Officer

enjoyable organization. Keeping this inmind, I accepted the offer to become
the new president.

In the Final Year of Our
Medium-term Management Plan
For the current Medium-termManagement Plan, Challenge 2030: For
the Changing Future, which runs fromFY2021 through FY2023, the Group’s
financial results for the fiscal year ended
March 2023 recorded an increase in net
sales of 8.2% over the previous year to¥647.8 billion. Ordinary income
increased by 22.2% over the previous
year to ¥16 billion while profit
attributable to owners of parent
increased by 31.2% to ¥10.9 billion. We
are showing strong businessperformance in moving toward our
Medium-term Management Plan goal of
consolidated ordinary income of ¥14
billion or more, consolidated ROE of 8%

Consolidated Financial Data(billions of yen)

Net sales

473.8

FY2020

598.7

647.8

FY2021

FY2022To the Next Stage of Growth with
Futo Fukutsu (Tenacious) Spirit
History does not move forward in asingle bound. To avoid becoming
preoccupied with change and losing
sight of the essence of our business, wewill efficiently pursue profits in our
existing businesses and establish afinancial foundation that will allow a
flexible response to businessenvironment changes.
Although San-ai Obbli Group is asales company, we are also skilled in thesafe operation of energy facilities, andwe own chemical research facilities. By
refining these advantages, we hope toachieve further growth for the Group asa whole. Our basic management stanceis not one of “select and concentrate”;
rather, we believe that focusing on the“concentrate” part will inevitably lead
us to what we should select.
At the same time, the Business
Development Department is actively
pursuing new businesses that are notnecessarily restricted to the energy field.
Each and every employee embodies the
San-Ai spirit and the Charter of EthicalConduct, so by working autonomously
and creatively toward the new era, wewill be able to provide better value tosociety. We will continue to move
forward at full speed with value creation.

Business Portfolio Evolution

Ordinary income

10.0

The Sustainability Committee andsubordinate committees werereorganized in FY2022 under our Basic
Policy For Sustainability, which wasformulated in December 2021. In
November 2022, we made disclosures
to the Task Force on Climate-related
Financial Disclosure (TCFD), andanalyzed both the risks andopportunities that climate change poses
to the Group’s businesses. Under TCFD,
we set a goal of reducing the Group’s
CO2 emissions by 30% from the
FY2019 level by FY2030, and we will
announce progress toward this goal. In
2022, we also identified materiality
issues related to sustainability andorganized them in relation to the SDGs.
Addressing climate change is achallenge that we must of course takeon, and we will integrate sustainability
into our management by renewing ourawareness of creating shared value(CSV) to help solve social issues throughour businesses and technologies, andwe will include this perspective in ourbusiness strategies.

13.1

16.0

Ordinary income (billions of yen)
City gas
Lubricants
Chemicals

FY2020

FY2021

FY2022

Cleantech

10
LP gasCurrent profit attributableto owners of parent

7.0

Engineering

Natural gas(renewable energy
O&M)

Next-generation
fuels

New
New businessbusinesses
categories forservice stations

8.3

FY2021Petroleum

FY2022

Under the banner of our corporate
philosophy of the San-Ai spirit,“Love People, Love Your Country,
and Love Your Work,” and themeaning of the Obbli brand, we
aim to be a partner that supports
people’s lives and industry, fulfilling
our responsibility to supply energy
as a business that supports social
infrastructure and by evolving ourbusiness portfolio to meet theneeds of a low-carbon,
recycling-oriented society.
The executive officers andemployees of the Group arecommitted to the following fivebasic principles and will work tosolve environmental and social
issues through sound andtransparent management, thereby
contributing to the realization of asustainable society.

Our Fundamental Stance• We act with integrity andhonesty.
• We comply with laws and rules.

10.9
Development of business categories in linewith the evolution of the mobility sector

FY2020• We value our relationship with
the natural environment and the
local communities.
• We pursue customer satisfaction.

Aviation

FY2020

Basic Policy for Sustainability• We learn, think and act ourselves.
FY2030San-ai Obbli Group Sustainability Report 2023

10

H I G H L I G H T 2 0 2 2 - VO L . 01

For a New Obbli

The Sustainability Promotion Department held its
first sustainability forum on December 16, 2022.
Around 100 managers and employees from thehead office and Kanto-area offices attended.
To strengthen the San-ai Obbli Group’s
sustainability management, we created a Basic Policy
for Sustainability in December 2021 and establishedthe Sustainability Committee in April 2022. With
regard to the sustainability of humanity and society,as a business, this first forum reaffirmed thesignificance and necessity of our CSR and sustainability
efforts by each employee and shared the direction weshould take as an organization. With a keynote
speech and panel discussions by experts, the forum
was a place to exchange opinions about future issues
and outlooks.

Promoting Sustainability Management

Hosting a Sustainability Forum(The titles for each speaker reflect their positions at the time of the forum)

Yukio Tsukahara
Representative Director,
President and Executive Officer

Contributing to sustainable
society by advancing sustainability
management throughout thecompany in line with the SAN-Ai spirit

Naoto Ohnuma
Director,
Senior Managing Executive Officer

Reveal the technologies built up in each division
Become a company that continuallycreates value by maximizing technology
and human resources

Hiroshi Hayata

Masahiko Kawamura

Director,
Managing Executive Officer

Fellow,Business Ethics Research Center

Deconstructing preconceptions is necessary
for major social change
Developing new approaches such as
collaborations in different industries

Various challenges are a sign of a healthy
sense of crisis
Sharing the San-ai Obbli worldview
for further progress

To evolve our business portfolio toward our vision of a

Our Group was founded in 1952 as a refueling business at

Through this forum, we reaffirmed the importance of

It is said that global sustainability, including climate change

low-carbon, circular society, our Group formulated and

Haneda Airport. The hazardous material facility management

understanding our company’s fundamental strengths before

and resource issues, must be addressed by 2030. The San-ai

promotes the Medium-term Management Plan that looks

techniques we cultivated there led to our expansion into

addressing social issues. As interest in ESG has increased in

Obbli Group has grasped the basic issues and is looking ahead

ahead to 2030, and for which we are aggressively making thechemical products, cleantech, and city gas supply—a truerecent years, I sense a major shift in customer awareness andto social and environmental changes on a 2030 timetable,

necessary investments. Each of our businesses are handling an

history of taking on challenges. The starting point for all thisneeds. Because of concerns about climate change, people aresetting out its ideal future image and business direction. This

increasing number of decarbonized products—for example, thegrowth was the Group’s core competency of technicalswitching from fossil fuels to natural gas and using detergents

effort is highly commendable.

Aviation Division’s receiving and refueling of sustainablecapabilities, but as we celebrate our 70th anniversary we havethat have less environmental impact when discharged, andaviation fuel (SAF), but we believe it is essential to take on thefound that our divisional system has resulted in ourthere is growing interest in human rights throughout the

respond to challenges and expectations as the world

challenge of entering new business areas while never forgetting

technologies being scattered throughout the Group. We

supply chain.

continues to move toward a decarbonized society in the

our responsibility to provide stable supplies even during thetherefore hold technical meetings to take stock of technicalIn order to accurately and speedily respond to thesefuture? The key is for all employees to share the worldview

transition from fossil fuels to new energy sources. We aim tocapabilities across the Group and create synergies based onchanges, we should adopt a new style of operating, such asthat the San-ai Obbli Group aspires to and enhances the best

increase both economic and social value through “trade-on,”mutual understanding. If our essential technical capabilities arecollaborating with companies in other industries. There is a lot

strategies and value creation capabilities with a sound sense

which means to gain something without compromise—not

weak, neither people nor business opportunities will come toto be learned, such as different ways to acquire customers, byof urgency. The San-ai Obbli Group is both a trading company“this or that” but “both this and that.” The concept of

us. We are therefore strongly committed to never letting ourworking with partners in other fields. The directions set out inand a company with technical capabilities. I would like to seesustainability management is in line with the San-Ai spirit, andcore technologies decline and will continue to build a

our business strategies in the Medium-term Management

this strength evolve to the next level, creating products andwe will continue to contribute to the development of a better

foundation that allows us to take on new challenges with

Plan are on point, so I hope we can move forward without

new business models that help solve social issues.

society through business by calmly assessing the businessflexible thinking by investing in human resources andbeing bound by preconceived notions and challenge to create

environment.

implementing personnel policies.

new value.

11 San-ai Obbli Group Sustainability Report 2023

As a business that handles energy, how will the Group

San-ai Obbli Group Sustainability Report 2023

12

H I G H L I G H T 2 0 2 2 - VO L . 0 2

For a New Obbli

Creating Group synergies

The San-ai Obbli Group has expanded byapplying its technological capabilities inbusinesses such as the aviation fuelservice, petroleum, chemical products andcleantech. Our technological capabilities
have always been cultivated and utilized
under the banner of "safety, quality andreliability.”
The technical meetings we have held

Technical meetings tostrengthen inter-businesscollaborations

in phases since June 2022 are an attempt
to take stock of the technical capabilities
and know-how cultivated by each division,
to deepen mutual understanding acrossfields and to take aim at new areas byreconsidering them from the viewpoints ofothers, such as the Sales Division. In orderto achieve our current medium-term
management plan, Challenge 2030: For

the Changing Future, what is required
from our technical divisions? We work to
see things from a high perspective in orderto further develop the technicalcapabilities we have fostered since ourfounding and contribute to thebetterment of society.

Main Areas of Contribution
For underground hydrant system operations
at airports• Consulting for the construction of fueling facilities• Operation of large-scale oil storage terminals• Jet fuel quality control

For the analysis chamber and precision cleaningof the semiconductors on the Hayabusa
asteroid explorer

1969
1959

Chemical Products
Business

Petroleum
Business

1952
Aviation
Business

1960• Metal surface treatment technology(chemical/electrolytic polishing)• Precision cleaning technology• Ultra-fine analysis techniques such as ion chromatography

For maintenance and management of theunderground city gas pipes that support
our lives

1978
Engineering Business
Cleantech Business

LP GasBusiness

Natural Gas
Business• Oil trend analysis• Internal checks using borescopes and industrial endoscopes

Contributions through preventive technologies
in wide-ranging fields such as industrial products,
food products, housing and automobiles• Industrial preservative and anti-mold agents to prevent microbial
deterioration• Contract testing for microorganisms and culturing and control technologies• Coatings and anti-contamination technologies

13 San-ai Obbli Group Sustainability Report 2023

Create new value
by leveraging Group synergies

Hold sales
meetings

Createnew value

Mutualunderstanding
Build relationships
for collaborations• Detection technology for identifying gas leaks• Probe technology for buried gas pipes• Pressure analysis technology using conduit analysis software

One-stop preventive maintenance for wind turbine
main shafts and gearboxes

2002

Technical
Meetings

Identify andshare ideas

Share customer
perspectives(understand issues andrequests from
customers and requests
to technical divisions)Buildcross-divisional
relationships

Reducelost
opportunities

Improve technicaldivision skills via
awareness fromtechnology
sharing, etc.

San-ai Obbli Group Sustainability Report 2023

14

Sustainability Management
As environmental and social issues have become more serious on a global scale, the San-ai Obbli Group formulated its
Basic Policy for Sustainability in December 2021, stating that it will further deepen and develop sustainability
initiatives.
The Group will proactively respond to the crises facing society by utilizing its management resources and businesscharacteristics.

Materiality Identification

Materiality Map of San-ai Obbli Group

Importance to Stakeholders

Areas with highest
materiality
Importance

There are many social issues in modern society, but it is
impossible to tackle them all. Therefore, we have sorted out

Most important items
identified• Response to climate change• Stable energy supply• Diversity and inclusion• Corporate governance

List of Materiality Initiatives
SDG Targets

01

Response to Climate Change

Initiatives to realize
a carbon-neutral society
As the duty of a company responsible forsupplying energy, we will pursue the efficient useof resources and energy, and work to curb ourenvironmental burden in order to leave the global
environment in a healthy state for future generations.

addition, the right page shows which targets of the SDGs theidentified issues fall under, along with examples of major
initiatives.

02

Stable Supply of Energy

Aspiring to be a partnerthat supports people’s
daily lives and industries

1. Issue Extraction

2. Priority Setting

3. Materiality Identification

Identification of social issues withreference to GRI, TCFD recommendations,
SDGs, ISO 26000, etc.

Priority setting based on two evaluation
axes: stakeholders and our business

Confirmation by Sustainability
Committee of four particularly
important themes and approval by
Board of Directors

We contribute to the development of society as apartner that supports people’s lives and industries
by supplying energy safely and stably. As acompany that handles hazardous materials, wewill strive to strengthen our crisis management
and business continuity plans.

03

Diversity and Inclusion

Securing and developing
human resources

through its business activities. In the Sustainability
Promotion System, which consists of the
Sustainability Committee and four subcommittees,

Initiatives to Incorporate Sustainability into Our BusinessCommittee
examines andproposes initiatives
related tosustainability

Integrating climatechange measures into
strategies and planning
Preventing all kinds ofmarine pollutionsocial issues, and identified priority issues (materiality). In

Process of Identifying Key Issues

The Group is working to resolve sustainability issues• Shifting to a new service station businessmodel• Support for electric vehicles, etc.
• Developing hydrogen fuel infrastructure• Sale of carbon offset products such as green
LPG• Sale of carbon offset products such as green
LPG• Information disclosure based on TCFD
recommendations• Reducing Group greenhouse gas emissions• Expanding sale of biodegradable plastic• Purifying wastewater from car wash machines

Increasing substantiallythe share of renewableenergy in the global
energy mix

the relationship between the Group’s business activities andImportance to Our Business

Sustainability Governance

Main Initiatives

Sustainability
Committee holds
deliberations

Moves to eachdepartment

Implementation• Strengthening of procurement channels• Enhancing service station emergency facilities• Safe operation of hazardous material
facilities, and inheritance of technology• Promotion of digital transformation• Dialogs with local communities (social studies
field trips for local elementary school
students, etc.)• Business succession from distributors(securing energy access in relevant areas)• Alternative use of oil terminals• Emergency response at hazardous material
facilities

Ensuring universal
access to affordable
and reliable modern
energy services
Holistic disaster risk
management

Encouraging andpromoting effective
partnerships based ondiverse experiences
and resource strategies

Ensuring women’s effective
participation at all levels ofdecision-making
Assurance of equal
opportunities for leadership
Human resource
development tosupport innovation

We will work on human resource development,
promotion of diversity, and health management inorder to harmonize the development of the Group
with the happiness of individual employees. We
will create new value for society by creating
innovation based on diverse values.

Ensuring healthy lives andpromoting well-being for
all at all ages

04

Reporting on corporate
sustainability initiatives• Promotion of diversity• Responding to Women’s Participation
Promotion Act• Employment of people with disabilities• Improvement of the work-life balance support
system• Encouragement of flexible work styles• Enhancement of human resource
development and training• Initiatives to improve engagement• Mutual praise and visualization throughShare Obbli• Promotion of health management

we have established a framework in which
initiatives related to materiality and environmental
issues are discussed, and the content of these

Sustainability Promotion System

discussions is subject to decision-making by

Gaining stakeholder trust
by ensuring management
efficiency and transparency

Management Committee

management to improve its effectiveness.
In addition, we will disclose activity reports

Sustainability Committee

related to materiality in this report and on our
website to promote stakeholder communication.
Risk
Management
Committee

15 San-ai Obbli Group Sustainability Report 2023

Compliance
Committee

Environmental
and Social
Contribution
Committee

Corporate Governance

Quality
Assurance
Committee

We will strive to improve the efficiency andtransparency of management, and be committed
to compliance-oriented management. Also, we will
establish a highly effective corporate governancesystem and ensure the appropriateness ofbusiness operations by operating the systemwith multiple layers.

• Strengthening of governance through outside
directors• Securing decision making and transparency• Promoting compliance-oriented management• Regular reporting of sustainability initiatives

Strengthening ofpartnerships withstakeholders
possessing expertiseand knowledge

San-ai Obbli Group Sustainability Report 2023

16

Materiality Report01

Response to Climate Change

Initiatives to realize
a carbon-neutral society
001

002

003

Reduction of Group
Greenhouse Gas Emissions

Cooperation in SAF reception
and refueling

The Group is promoting initiatives at each site to achieve the CO2
reduction target by 2030, disclosed in line with the TCFD. In
addition, in order to reduce CO2 emissions from our company cars,
we will gradually switch to hybrid vehicles (HVs) from FY2023.

The Aviation Division cooperates with sustainableaviation fuel (SAF) reception and refueling. SAF is jet
fuel produced from asource with low CO2
emissions during theprocess from production
to consumption, and it
can reduce CO2 emissions
by up to 80% compared
to fossil fuels. In FY2022,
tankers transported
three loads (approx.
5,400 kl in total) andapprox. 10 kl were
supplied directly by
fuelers (tank trucks).

Main Initiatives

Information disclosure based on the TCFD recommendations• Corporate Planning Department
Operation of four solar power plants (Narita, Kazusa,
Utsunomiya and Kumamoto)

We analyzed the impact of climate change on the Group’s finances and disclosed information in line with the TCFD
recommendations in November 2022. The main items are as follows.

• Human Resources & General Affairs Department
Oimachi Office: Renewable electricity

GovernanceIndicators and Goals

The San-ai Obbli Group Sustainability
Committee deliberates on the extractionand evaluation of risks and opportunities
related to climate change, and reports
the results of the deliberations to theBoard of Directors. The Board of Directors
manages and supervises the report basedon its content.

Based on FY2019, the San-ai Obbli Group aims to reduce CO2 emissions by 30%
by FY2030 and achieve carbon neutrality by FY2050. CO2 emissions are the totalof Scope 1 and Scope 2.

Energy conservation and introductionof renewable energy at business sites(t-CO2)20,00016,76015,911
11,732

Risk Management

Progress in technology
development and social
implementation

004

Compared to FY2019-30% (down 5,028 t)

5,000

The Aviation Division uses non-fossil fuel (renewable diesel*) for five vehicles
such as refueling vehicles. In fiscal 2022, 13,521 liters were used, and CO2
was reduced by 35 tons compared to normal diesel fuel use.

Carbon neutrality

0

FY2019 Results FY2022 Results

FY2030 Target

Aviation Division

Reduction of CO2 through use ofrenewable diesel

10,000The Sustainability Promotion Department
and the Corporate Planning Department
serve as the secretariat for the Group's
risks and opportunities related to climatechange. The Sustainability Committee
evaluates these risks and opportunities andreviews their impact and countermeasuresin the PDCA cycle.

FY2050 Target(FY)* Renewable diesel: A fuel made from waste cooking oil that does not compete with food products.
Unlike conventional biodiesel, it can be used on its own without mixing it with diesel oil. It provides ahigh level of environmental friendliness.

In FY2020, San Ai Obbli Gas Bansyu Co., Ltd. and Kafco Co., Ltd. joined the Group, and Chuosangyohanbai
Co., Ltd. left the Group in FY2021.

Pick Up

Strategy
We analyze the specific risks and opportunities that climate change poses toour business, divide the temperature rise into 4°C and 2°C scenarios, andreflect them in our strategy.

Prerequisites

Development Department• Estimated period: 2030-2040• Scope: Entire San-ai Obbli Group• Adoption scenario:
Intergovernmental Panel on Climate Change (IPCC)
Working Group I Contribution to the Sixth Assessment Report

Small wind power generators using
cylindrical blade wind turbines

Main Risks and Opportunities
Category

Migration
risk• San-ai Retail Service Co., Ltd.
27 service stations: Renewable electricity

Transporting fuel by ship

15,000Physicalrisk• Aviation Division
Installation of solar panels on sites and use of electricvehiclesAviation Division

Risks/
Opportunities

Main response strategy

Damage caused by flooding of facilities due to torrential
rains and river flooding

Risk• Preparation of business continuity plan (BCP)

Oil terminal malfunctions due to rising sea andgroundwater levels

Risk• Alternative uses of oil terminals• Measures against storm surges (elevated)• Enhanced drainage functions

Stricter regulations on gasoline-powered vehicles

Risks /
Opportunities• Low-cost operation• Reallocation of management resources• Transition to new service station business model• Support for electric vehicles (EVs)

Widespread use of renewable energy
Spread of sustainable aviation fuel (SAF) andhydrogen fuelRisks /
Opportunities• Changes to existing facilities• Construction orders for hydrogen stations• Expansion of wind turbine business• Increased demand for on-site energy services

17 San-ai Obbli Group Sustainability Report 2023

Cylindrical blade+
Ring

San-ai Obbli Co., Ltd. has entered into a joint research
agreement with Panta Rhei Co., Ltd., a startup company
established by the Nagaoka University of Technology andprofessors at the university. Research focuses on small
wind power generators using cylindrical blade windturbines, and we are working to solve problems fordemonstration experiments and commercialization.

RotatesWind direction
Prototype cylindrical blade wind turbine

San-ai Obbli Group Sustainability Report 2023

18

Materiality Report01

Response to Climate Change

007

009

LPG Division

Sustainability Promotion Department

Efficient calculation of CO2 emissions

Signing of sales agreement for
carbon-neutral LP gas
The LPG Division has entered into a sales agreement with ENEOSGLOBE Corporation to sell carbon-neutral LP gas that offsets CO2
emissions throughout the entire life cycle (from mining to combustion).
We will contribute to the realization of a decarbonized society throughproposals to customers.

The Sustainability Promotion Department introduced Sustana, a cloud service that
supports calculations, and started operations in FY2022 in order to visualize CO2
emissions (Scope 1 and 2) across the Group in a timely manner. The staff at eachbranch and Group company are able to grasp the status of activities in real time,and use it to consider necessary measures.

Kyushu Branch, Ajinomoto Co., Inc. © Ajinomoto Co., Inc.

005

Natural Gas Department,
Energy Solution Division

Kochi Hydrogen Station © Tosa Sanso Company

Reduction of CO2 throughnatural gas

010(Kyushu Branch, Ajinomoto Co., Inc.)
Our Kyusyu District Office Natural Gas Department
proposed to Kyushu Branch of Ajinomoto Co., Inc.,
which produces amino acids and seasonings used as
raw materials for pharmaceuticals and foods, toconvert fuel used at the plant from heavy oil tonatural gas. After May 2023, when the plant began
full-scale operation, the branch’ s annual CO2
emissions are expected to be reduced byapproximately 30% compared to FY2018.

006

Lubricants Sales Department,
Energy Solution Division

Contribution to wind power
generation systems
The Lubricants Sales Department conducts endoscopic
surveys and various lubricating management toprevent failures in the main bearings and gearboxes ofwind power generators. With a track record of doing
business with approximately 40% of the wind power
producers in Japan, engineers who are familiar withthe equipment of each wind turbine manufacturer
propose preventive maintenance that eliminates thecauses of issues and contributes to wind power
generation.

011

Human Resources & General Affairs Department

Construction ofhydrogen station

Promoting Sustainability
across the Group008

Saga-Gas Co., Ltd.

Sale of carbon-neutral gas using
J-Credit scheme
Saga-Gas Co., Ltd., which supplies natural gas in Saga City, has started
selling carbon-neutral gas that adds value to gas by purchasing the CO2
absorption amount generated by properly managing prefectural forestsfrom Saga Prefecture as J-Credits. The credit costs purchased by thecompany are allocated to forest maintenance in the prefecture,contributing to the cycle of environmental conservation.

Structure of carbon-neutral gas

Saga
Prefecture
Prefectural forest
management

When evaluating corporate value from a long-term perspective, environmental,social, and governance (ESG) initiatives are emphasized, and in recent years,
non-financial information has been disclosed to stakeholders.
In response to this trend, on June 16, 2023, the department gathered thepresidents of affiliated companies to hold training sessions on sustainability issues
such as the TCFD recommendations and human capital. We will reaffirm thedemands of society and promote specific initiatives throughout the Group.

San-ai Obblitech Co., Ltd. has constructeda hydrogen station (Kochi City, Kochi
Prefecture) managed by Tosa Sanso
Company. The station, the first of its kindin the prefecture, is the first step toward
the spread of fuel cell vehicles (FCV) andthe realization of a hydrogen society in theregion. So far, San-ai Obblitech Co., Ltd.
has built eight hydrogen stations in Japan.

Pick Up
San-ai Obbli Forest Hands-on Environmental Training

Carbon-neutral anddecarbonizedrecycling within
prefecture

Local governments
and companies
Offsetting ofgenerated CO2

CO2 absorption amountconverted to J-Credits

The San-ai Obbli Group is committed to protecting the natural environment
as the corporate responsibility of a company that handles fossil fuels, and iscooperating with reforestation projects. On April 27, 2023, a partnershipagreement was concluded with the Kochi Prefectural Government,
Motoyama Town in Kochi Prefecture, and the Motoyama Town Forest Union
for the next three years, marking the start of the sixth term since theinception of the pact in 2008.

Signing of Cooperative Forest Partners Agreement with the Kochi Prefectural Government,
Motoyama Town in Kochi Prefecture, and Motoyama Town Forest Union

Saga-Gas Co., Ltd.
Purchase and saleof J-Credits(forest conservation support)

San-ai Obblitech Co., Ltd.

Sale of carbon-neutral gas with J-Credits
granted to natural gas(virtually zero CO2 generated due to offsetting)Since 2008

16 th year

People with forest thinning
experience

418 people

Partner forests

232.08 ha

CO2 absorbed by forests
regenerated through thinning

4,728 tUsing an endoscope to examine the inside of equipment

19 San-ai Obbli Group Sustainability Report 2023

San-ai Obbli Group Sustainability Report 2023

20

Materiality Report

02

Stable Energy Supply

004

Aspiring to be a partner that supports
people’s daily lives and industries

Comprehensive Collaboration
with Local Communities

005

Resolution of service station
management instability due
to labor shortages

In the event that a large amount of fuel is used during a large-scaledisaster, the Group has concluded an agreement to secure andsupply the necessary amount of fuel in response to requests fromlocal governments and public institutions, thereby contributing toregional disaster prevention.

In 2020, the Petroleum Division developed an app called“Mantan” to streamline sales promotions, customer
management, and reservation reception at service
stations amid a growing labor shortage in theemployment market. As of June 2023, the number ofdownloads exceeded 200,000. We will solve the labor
shortage at service stations with digital technology.

Business sites with concluded local comprehensive
partnerships

001

002

Business Continuity Plan
(BCP)

San-ai Retail Service Co., Ltd.

Installation of
EV charging spot

The Group has formulated a business continuity plan
(BCP) to prepare for all risks, including major earthquakes,
torrential rains and floods caused by climate change, theexpansion of emerging infectious diseases, and businessinterruptions caused by cyberattacks. Each department
has its own system, from initial response in the event of acrisis to receiving and ordering work on behalf of thebusiness in the event of an emergency, and supply
control. To enhance effectiveness, the plan is reviewed
every year, and response training based on the plan isconducted.

San-ai Retail Service Co., Ltd. installed andstarted the operation of a high-speed
charger for EVs at Obbli Station
Sayama-chuo. The charger has a display
with a universal design for easy operation,and the maximum charge time is 30
minutes a charge. We will continue tobuild energy infrastructure in an effort toenable diverse energy access in the region.

• Tokyo Oil Terminal, San-ai Obbli Co., Ltd.
• Ibaraki Airport Office, Kansai Airport Office, and Saga
Airport Office: San-ai Aviation Service Co., Ltd.
• Kitakyushu Airport Office: Kafco Co., Ltd.
• San-ai Obbli Gas Sanshin Co., Ltd.
• Kygnus Sekiyu K.K.
* Comprehensive agreement through Petroleum Association of Japan006

Firefighting vehicles operating in contest
Emergency response training for oil leak incidents

Earthquake Response
Service Stations

The Group has 112 emergency power generators installed
throughout Japan to supply oil even under power outages andother conditions. We have established a system that enables thestable supply of petroleum products even in the event of alarge-scale disaster and are working to help with early recovery.
Emergency response training for fire extinguishing* In the event of a disaster, they may be closed due to restricted refueling or equipment
failure, depending on the situation.

Aviation Division

Received Excellence Award in Skills
Contest of Self-Defense Disaster
Management Organization

Received Excellence
Award

003

Petroleum Division

007

The aircraft refueling facility at Haneda Airport is the only
business site in Tokyo that is subject to the Act on thePrevention of Disaster in Petroleum Industrial Complexes
and Other Petroleum Facilities. Under this Act, it ismandatory to set up self-defense disaster management
organizations such as disaster prevention personnel andfire fighting vehicles. The self-defense disastermanagement organization received the Excellence Awardin the Skills Contest for the 2022 Self-Defense Disaster
Management Organizations at Petroleum Industrial
Complexes, etc., and the award ceremony was held at theCentral Joint Government Building of the Ministry ofInternal Affairs and Communications.

Kygnus Sekiyu K.K.

Implementation of SDG training
Kygnus Sekiyu K.K. held three sessions of the SDGs Basic Training and theSDGs Promotion Training to promote company-wide understanding of the
SDGs. In the group work, specific initiatives were discussed under thethemes of “SDGs to be implemented as a wholesale petroleum company,”“supporting the lives of local communities and people,” and “co-creating
new value with special distributors.”
Training session

21 San-ai Obbli Group Sustainability Report 2023

San-ai Obbli Group Sustainability Report 2023

22

Materiality Report

03

D&I in San-ai Obbli Group

Diversity and Inclusion

Securing and developing human resources003

In order to respond to structural changes in the business environment and continue to create value
sustainably, it is essential that each and every employee has a desire for growth and takes onchallenges. In addition to developing human resources so that employees, who are the main actors ofaction, can play an active role on the front line, we are implementing various measures to foster achallenging corporate culture that generates change.

Based on the recognition that it is extremely important to ensure gender andother forms of diversity and for core human resources to be appointed based on
experience, the Group as a whole has set a target for the ratio of women in
managerial positions.

Overall Human Resources Strategy

004

We will create a working environment in which each and every employee can demonstrate their full potential and lead to a
virtuous cycle of growth.

Achievement of Medium-term Management Plan
Realization of Sustainable Value Creation

Employee motivation
and willingness to contribute
Improvement in Corporate
Participation Awareness●●Dialogs with management
Management Forum
Recognition of shareholder value
Employee Stockholding Association

Assurance of Competent
Human Resources●

Active mid-career recruitment●

Fair compensation according to outcomes●

Base pay increases through revision ofcompensation rules and bonuses

Creating a Comfortable Work Environment●

Childcare and nursing care
Enhancement of support for work-life balance●

New work styles (telecommuting system and staggered work hours)

001

San-ai Obbli Group Management ForumThe 22nd Management
Forum was held on July 21,2022. This forum ispositioned as a general
meeting of shareholders for
employees and is held
recurrently as an important
opportunity for dialog
between employees andmanagement.

Engagement survey
implementation

Results(FY2022)

Target(FY2023)

4.9%

At least

6%

Diversity Management Training

In order to promote diversity by acquiring
perspectives and skills to strategicallyutilize diverse human resources, San-ai
Obbli Co., Ltd. conducted diversity
management training for all employees
11 times at five venues in Tokyo(Otemachi, Oimachi, and Haneda),
Osaka, and Fukuoka.

Human Resource Cultivation andCareer Development●

Job rotations without restrictions on job
types or occupation●

Growth support such as stratified training andthe corporate-supported educational program

Promotion of Health Management
Improvement of employee disease prevention and health literacy●

Improvement of convenience of medical leave

San-ai Obbli Co., Ltd. has established asystem to support the development of skills
such as the fostering of long-term andstrategic work perspectives and the
management skills of female employees.

002

Enrollment in Employee
Shareholding Association
The San-ai Obbli Group encourages
employees to enroll in the Employee
Shareholding Association and is working toraise their awareness of participating inmanagement.
Not enrolled:

31%●“Risshijuku” cram school-styleseminar for women●

Meiji University’s Smart Career
Program for Women(persons)

10

9
5

69%

0

2021

Results(FY2022)

Target(FY2023)

63.2%

Maintainsame levelin future

Action Plan based on the
Women's Participation
Promotion Act*1 and the
Next Generation Act*2
San-ai Obbli Co., Ltd. has implemented
the following action plan during theperiod from April 1, 2022 to March 31,
2023.

6

Enrolled:

2020

006

007

Employees Using Career Advancement
Support System*

5

FY2022
Association
Membership
Rate*

Ratio of Mid-career Hires toTotal Recruitment (Group-wide)

005

Career Advancement
Support System●* San-ai Obbli Co., Ltd. (non-consolidated)

23 San-ai Obbli Group Sustainability Report 2023

Ratio of Women in Managerial Positions(Group-wide)

Ratio of Women in Managerial Positions

2022* Total number of employees each fiscal year

*1 The Act on Promotion of Women’s Participation
and Advancement in the Workplace*2 The Act on Advancement of Measures to
Support Raising Next-Generation Children

Active Mid-career
Recruitment
By recruiting human resources withspecialized skills for mid-careerhires, we create diversity in theorganization and lead to thecreation of innovation.

Target ratio of women to
new graduates incareer-track positions: 30% or more
FY2020

FY2021

FY2022

26.3% 31.3% 16.7%
Target rate of spouses taking leave
for childbirth*: 80% or more
FY2020

FY2021

FY2022

69.2% 90.9% 84.6%* Including leave taken within 10 days before
and after spouse's due dateSan-ai Obbli Group Sustainability Report 2023

24

Materiality Report

03

Diversity and Inclusion

Human Resource Cultivation and Challenge-taking Organizational Culture008

Based on its management philosophy of San-Ai spirit, San-ai Obbli Co., Ltd. has established a wide range of training systems tofoster independent and autonomous human resource cultivation to support the growth of its employees.
FY2022 Training System Diagram
Selective training for skill
development andskill improvements

New employee follow-up training

Employeeeducation(Employees at Head Office)Trainer development training

Class 3 auto
mechanic
training

On-the-job leadership training

Debt management training

New employee training

Safe driving training

EnglishSelective business class (online)

2nd year employee training

0

20

40

60

80

100

120

140 (persons)

Can get latest information
Can choose from practical and rich options
Can understand necessary skills to master

In FY2022, San-ai Obbli Co., Ltd.
conducted an awareness survey on
self-development for all employees.
We will provide useful selfdevelopment tools as a whole bypromoting dialog based on employee
requests and issues that need to beresolved.

Available at low cost
Can be taken quickly
Can have cross-industry exchanges
Can be used online
Can be used for group training
Other(Respondents: 314 people)

Creating a Comfortable Work Environment

Presentation skills
improvement training

General Employees

New Employees to 3rd Year

3rd year employee training

Employeeeducation(Self-improvement)

Corporate-supported Educational Program /"Risshijuku" cram school-style seminar for women /Distance learning / e-learning

Midcareer

Mid-career hire training

Section chief training

Training for employees
seconded to Group companies

Employeeeducation(DX-related)

E-learning

Training
based on Position

Assistant manager training

New manager training

Senior career training

General Employees /Managers

Personnel evaluation andoperation training for supervisors

SeniorOfficers /Managers

Diversity and inclusion training

Certification
training

Q. What are your expectations and priorities for the self-development system?

Awareness Survey on
Self-development

Training System to Realize Long-term Vision

Stratified training

010

High pressure
gas salestype 2
qualification
training

011

Maternity Leave, Childcare Leave, and Nursing Care System Workshop

The Compensation and Welfare Section of the Human Resources and General Affairs
Department held a training session on March 23, 2023 for employees in charge of work ataffiliated companies in order to deepen their understanding of the maternity, childcare, andnursing care leave systems, which have become more complicated due to repeated legal
revisions. On the day of the event, a lecturer from a specified social insurance labor counsel was
invited to give a detailed explanation of the understanding and response to diversifying work
styles and the childcare leave system that male employees take, and 34 people participated.

012

Enhanced Support for Balancing Childcare and Nursing Care

San-ai Obbli Co., Ltd. is working to enhance support for balancing work so that employees responsible for childcare and nursing carecan continue their careers. Since a childcare leave system that exceeds the statutory requirements has been established, an increasing
number of employees continue to be active even after returning from childcare leave.
No. of Balance Support System Users (San-ai Obbli Co., Ltd. on a Stand-alone Basis)

Feedback from Users of the Corporate-supported
Educational Program
I entered the Meiji University Professional Graduate School in April 2023, where I can obtain an MBA
using the corporate-supported educational program. My motivation for entering the university was
my transfer to the Development Department in April last year. I believe that I need to have new
insights in order to create new businesses. Currently, I am systematically studying basic academic
theories. The students are diverse in nationality, gender, and age, and even many entrepreneurs arebeing inspired. I will make every effort to contribute to the future development of the company byutilizing the learning and personal connections that I have gained at graduate school.

009

No. of childcare balancing
support system users(childcare leave, shortened hours for childcare)No. of nursing careleave system users

Ippei Nakajima

FY2020

FY2021

FY20229

10

16

Can be used by employees until children turn 3 years old.
Allows employees to shorten their work hours by two hours a day untilchildren finish their second year of elementary school.

0

Allows employees to take up to 93 days of leave per year when family
members are in need of constant nursing care.
If a family member needs constant nursing care, allows employees to reduce
their work hours by two hours a day for three years from the start of use.

10

System overview

Development Department

Digital Transformation (DX) Education

San-ai Obbli Co., Ltd. provides e-learning about DX to all employees in an effort to improve IT literacy. We are promoting
employee learning to develop future DX human resources in preparation for the full-scale launch of business reforms.

013

Recognition as “White 500” Organization under 2023 Certified Health & Productivity
Management* Outstanding Organizations Recognition Program (Large Enterprise Category)

San-ai Obbli Co., Ltd. has been recognized as a “White 500” organization withexcellent health and productivity management practices by the Ministry of Economy,
Trade and Industry and other organizations. In addition, San-ai Obbli Customer
Service Co., Ltd., San-ai Obbli Gas Chugoku Co., Ltd., and San-ai Obbli Gas Service
Chugoku Co., Ltd. have continued to be recognized in the small- and medium-sizedenterprises category.
* Registered trademark of Non-Profit Organization Kenkokeiei

25 San-ai Obbli Group Sustainability Report 2023

San-ai Obbli Group Sustainability Report 2023

26

Materiality Report

04

Corporate Governance004

Gaining stakeholder trust by
ensuring management efficiency
and transparency

In order to facilitate swift management decision-making, the Board of Directors is composed of a small number of members. In order tostrengthen the supervisory function of management, at least one-third of the directors are independent outside directors with noconflicts of interest.
Outside Directors and Outside Auditors

Outside directors utilize their diverse knowledge and experience toexpress their opinions on the execution of business operations and are
involved in important decision-making processes. In addition, outside
Audit & Supervisory Board members assess the execution status of theduties of directors and investigate the legality of accounting audits andthe status of their assets from a fair standpoint. All outside directors andAudit & Supervisory Board members are designated as independent
directors and Audit & Supervisory Board members pursuant to theregulations of the Tokyo Stock Exchange.

Corporate Governance001

Corporate Governance System

Important Meetings Held in FY2022

The Group has established a highly effective corporate governancesystem and is implementing it in multiple layers to ensure theappropriateness of business operations.

Board of Directors

9

Audit & Supervisory Board

9

Corporate Governance System (as of April 1, 2023)

Management Meeting

42

Nomination and Remuneration Advisory Committee

4Internal Control Committee

5San-ai Obbli Group Sustainability Committee

5

Risk Management Committee

5Compliance Committee

12

Environmental and Social Contribution Committee

5

Quality Assurance Committee

6Appointment/Dismissal

General Meeting of
Shareholders

Appointment/Dismissal

Appointment/Dismissal
Audit

Audit &
Supervisory Board

Board of Directors

Accounting Auditor
ReportAuditor’s
OfficeSupervision
Audit

Determination ofaudit appropriatenessNomination andRemuneration
Advisory Committee

Accounting
audit

Coordination

President &Representative Director
Management Meeting

Risk Management
Committee

Feb. 2017

Conducted first evaluation of effectiveness ofBoard of Directors

Compliance Committee

Jun. 2019

Invited first female (outside) director

Apr. 2020

Established Nomination and Remuneration
Advisory Committee

Jun. 2020

More than one-third of directors are independent
outside directors
Faster business execution with introduction of
executive officer system

Internal
Control Committee
Audit / Internal
Control Department

History of Reform

San-ai Obbli Group
Sustainability Committee

Direction / Order /Supervision

Environmental and Social
Contribution Committee

Corporate Officers(Divisions, Headquarters Divisions)(Group Companies)

Quality AssuranceCommittee

Please refer to our website for the Internal Control Basic Policy.
https://www.san-ai-obbli.com/csr/governance/002

Accounting Auditor

While maintaining an independent position with thecompany, the accounting auditor strives to improvethe effectiveness and efficiency of audits in order toensure the reliability of financial reporting in a tensecooperative relationship with Audit & Supervisory
Board members.

27 San-ai Obbli Group Sustainability Report 2023

003

Strengthening of Board of Directors Monitoring Function

Content of Nomination andRemuneration Advisory Committee
Deliberations

The Committee deliberates on remuneration for officers, personnel
changes for directors and executive officers, etc., and enhances theobjectivity and transparency of the decision-making process.

Evaluation of Effectiveness of Board of Directors

Details of Board of Directors Meeting
Deliberation Items
Capital policy, etc.
●

General Meeting of
Shareholders-related●

SharesInvestor-related●

Business strategy

40 %Medium-term Management Plan
● Business Execution Report● Annual report and financial statement● Investment- and loan-related●

Governance

The Group regularly verifies whether the Board of Directors isfunctioning properly, and strives to identify and improve issues. Details
are disclosed in the Corporate Governance Report.

17 %

43 %

Evaluation of effectiveness of Board of Directors● Payment of remuneration● Internal control evaluation results● Sustainability Committee report●

Risk Management/Compliance005

Risk Selection

The San-ai Obbli Group Sustainability Committee
selects risks that may have a significant impact on ourbusiness and considers countermeasures andpreventive measures. The table on the right is an
example of the risks determined based on information
available to the company as of June 2023.

006

1. Changes in market environment
2. Large-scale pandemics
3. Disasters, etc.
4. Investments, etc.
5. Information security risks

Environmental Safety Audit

6. Product quality and safety risks
7. Securities held
8. Geopolitical risks
9. Legal and regulatory relationships
10. Personal information risks

007

The Group, which owns many hazardous material facilities such as service
stations and LP gas filling stations, conducts its own environmental safety
audits every year using voluntary standards that are stricter than laws andregulations, and it operates a PDCA cycle.
Environmental Safety Audit Implementation
FY2020

FY2021

FY2022

No. of offices audited

228

272

249

No. of issues

215

147

113

Corrections completed

215

147

111

Compliance Awareness andConduct Survey
The Compliance Awareness and Conduct Survey isconducted annually throughout the Group as anopportunity to compare the Charter of EthicalConduct with one's own conduct. Complianceofficers use the candid opinions about theirorganizations and work environments in the survey
results to address various issues.

San-ai Obbli Group Sustainability Report 2023

28

Company Officers (as of October 1, 2023)

Highlights of FY2022 Activities

Directors

In addition to initiatives for materiality (important issues), the San-ai Obbli Group promotes CSR activities inrelationships with local communities and stakeholders.

Jun Kaneda

Hiroshi Hayata

Naoto Ohnuma

Takashi SatohRepresentative Director,
Chairman of the Board

Representative Director,
President and Executive Officer

Director,
Senior Managing Executive Officer

Director, Executive Officer

Director, Executive Officer

In charge of Human Resources &General Affairs Department, Legal &Credit Department, and Sustainability
Promotion Department

In charge of LPG Division

In charge of General Accounting
Department, Corporate Planning
Department, and Information
Technologies Department

Keiko Unotoro

Yoji Ninomiya

Hisayasu Suzuki

Outside Director

Outside Director

Outside Director

Kohichiroh Ishii

Audit & Supervisory Board Member

Atsushi Ueno

Junichi Matsumura

Kantaro Toyoizumi

Hidetoshi Watanabe

Fumihiko Kato

Full-time Audit &Supervisory Board Member

Full-time Audit &Supervisory Board Member

Outside Audit &Supervisory Board Member

Outside Audit &Supervisory Board Member

Outside Audit &Supervisory Board Member

Donations to Scholarship Foundation
for Traffic Accident Orphans

Saving water resources by using
rainwater

Donations of hot air balloons to
Saga University

Sustainability Promotion Department

Aviation Division

Human Resources &General Affairs Department

The Group has business characteristics thatare closely related to the automobile society,and the people living in the local community
are important stakeholders. By donating partof our proceeds to Scholarship Foundation
for Traffic Accident Orphans, we contributeto maintaining educational opportunities forchildren and fostering the next generation.

The Aviation Division is working to savewater by using rainwater for fire drills
conducted at oil storage bases. Recognizingthat water resources are limited, we areworking to reduce our environmental impact
by promoting the use of appropriate
amounts and the efficient use of water.

Start of vegetable donations tovolunteer-run cafeteria providing
free or low-cost meals to children

Invitation to Voreas Hokkaido
home game

Since 1990, the Human Resources & General
Affairs Department has donated hot air
balloons to the Hot Air Balloon Club of Saga
University in order to support its activities. A
ceremony was held to present the 12th hot
air balloon on January 27, 2023. Students
participate in various hot air balloon
competitions under the Obbli corporate
brand.

Skills Matrix of Directors and Audit & Supervisory Board Members
Position

Corporate
Management

Jun Kaneda

Representative Director,
Chairman of the Board

Hiroshi Hayata

Representative Director,
President and Executive Officer

Naoto Ohnuma

Director, Senior Managing
Executive Officer

Takashi SatohDirector, Executive Officer

Kohichiroh Ishii

Director, Executive Officer

Keiko Unotoro

Outside Director

Yoji Ninomiya

Outside Director

Hisayasu Suzuki

Outside Director

Atsushi Ueno

Full-time Audit &Supervisory Board Member

Junichi Matsumura

Full-time Audit &Supervisory Board Member

Kantaro Toyoizumi

Outside Audit &Supervisory Board Member

Hidetoshi Watanabe

Outside Audit &Supervisory Board Member

Fumihiko Kato

Outside Audit &Supervisory Board Member

Legal andRisk Management

Finance,
Accounting
and Money

Sales andMarketing

Personnel, Labor andHuman Resource
Development

ESG

Human Resources &General Affairs Department
In December 2022, we started donating someof the vegetables grown at Work Happiness
Farm, which helps people with disabilities
with their employment, to Smile Kodomo
Shokudo Urayasu in Urayasu City, Chiba
Prefecture. The staff of the cafeteria thanked
us for the fresh and delicious vegetables, andsaid that it was very helpful.

Executive Officers

Akira Sudoh

Katsunori Sugiura

Executive Officer

Executive Officer

Executive Officer

In charge of Aviation Division

In charge of Petroleum Division

In charge of Energy Solutions Division
and Chemical Products Division

29 San-ai Obbli Group Sustainability Report 2023

Industry
Knowledge

Shinichi Nagamatsu

Human Resources &General Affairs Department
Since 2022, the Human Resources & General
Affairs Department has been co-sponsoring
the V-League team Voreas Hokkaido based in
Asahikawa City, Hokkaido Prefecture. On
February 25, 2023, with the cooperation of
999AC Asahikawa, an athletic club also basedin Asahikawa City, we invited young
wheelchair users who enjoy para-sports to a
Voreas Hokkaido home game. On the day ofthe event, some of the first floor seats werechanged into a wheelchair area, and 21
children and their families watched the gamefrom courtside.

Donation to “more trees”
Kygnus Sekiyu K.K.
Kygnus Sekiyu K.K. conducted a campaign
where customers who purchased eligible
products during the Autumn Customer
Appreciation Fair were eligible to win a
special prize. For each application, 10 yen was
donated to the forest conservation
organization “more trees,” resulting in a
total donation of 356,480 yen.

San-ai Obbli Group Sustainability Report 2023

30

Data Highlights

Financial Data (Consolidated)

Environmental Impact Data

Assets and profit and loss

Greenhouse gas (GHG) emissions (FY2022)
Fiscal year ended
March 31, 2019

Fiscal year ended
March 31, 2020

Fiscal year ended
March 31, 2021

Fiscal year ended
March 31, 2022

Fiscal year ended
March 31, 2023

GHG emissions

GHG emissions by segment (FY2022)
CO2 emissions(t-CO2)

Activity level

Net sales(millions of yen)

726,918

667,929473,899598,731647,833

Gasoline (kl)

676

1,571

Ordinary profit(millions of yen)

12,00011,94010,001

13,12016,038

Diesel (kl)

1,396

3,610

Profit attributable to owners of parent(millions of yen)

7,260

8,164

7,053

8,308

10,901

Kerosene (kl)

180

450

(yen)

103.61117.02101.57120.66160.20LPG (t)239

718

Total assets(millions of yen)

221,638

179,224

187,245

197,887

201,244

City gas (1,000m3)

206

464

Net assets(millions of yen)

96,941

98,786

106,468

112,358

117,424

Other (kl)Earnings per share

Scope 1336

880Power (1,000kWh)

19,545

8,217

Heat and steam (GJ)

1,177

(Note) Earnings per share is calculated based on the average number of shares held during the fiscal year after deducting treasury stock and adopting the Accounting Standard for Earnings per
Share (ASBJ Statement No. 2) and the Guidance on Accounting Standard for Earnings per Share (ASBJ Guidance No. 4).

Scope 2Business results by segment (fiscal year ended March 31, 2023)

Total CO2 emissions

Gas
Petroleum
Chemical Products
Related Business Related Business Related BusinessNet sales
Segment profit(millions of yen)

Aviation
Related Business

Otherbusinesses

Adjustment

Total

Amount recordedin consolidated
financial statements

554,745

12,21061,015

13,491

6,370

647,833−

647,833

9,587

1,138

2,197

3,766

1,152

17,841(1,803)

16,038Petroleum
Related Business

6,082

Gas
Related Business

0

4,847

Other
businesses

2,391

Aviation
Related Business

2,253

Chemical Products
Related Business

15,911

271

Sharedoffice(Note) 1. Amounts are rounded to the nearest whole number.
2. “Other” in Scope 1 refers to the Kawasaki Energy Center’s in-house use (crude oil
equivalent).
3. CO2 emissions are calculated using the "List of Calculation Methods and Emission
Factors in the Calculation, Reporting, and Publication System,” and electricity is
calculated using the “Emission Factors by Electric Utility (Ministry of theEnvironment and Ministry of Economy, Trade and Industry)” for FY2022.

67
0

1,000

2,000

3,000

4,000

5,000

6,000

7,000
(t-CO2)(Note) 1. From the fiscal year ended March 31, 2023, “Aviation Related Business, etc.” has been reclassified into “Aviation Related Business” and “Other businesses” due to a review of segmentclassifications.

Trend in GHG emissions

2. Segment income is adjusted with ordinary profit in consolidated income statements.

Details of waste (FY2022)(t-CO2)

16,760Status of Group employees (as of March 31, 2023)
Gas
Petroleum
Chemical Products
Related Business Related Business Related Business(people)Bottom: Scope 2

20,000

Employment Data

Number of
employees

Top: Scope 1

559（1,171）

85（19）

Aviation
Related Business

588
（115）

Company-wide(shared)Otherbusinesses

388
（37）

114
（41）

66
（19）

16,00015,605

15,423

15,911

Total

1,800
（1,402）(Note) 1. The number of employees is the number of full-time employees, and the number of temporary employees in parentheses is the average number of employees for the fiscal year
under review.
2. The number of employees indicated for company-wide (shared) refers to those who belong to administrative departments that cannot be classified into specific segments.

7,070

6,923

12,000

7,694

7,177

Trend in number of occupational accidents

366 people
13 fewer people

Average age

40.7 years old

Average years of employment

Debris2%17.0 years

NumberOf which,number of absences

10

FY2020
FY20210

0

FY202200Acquisition rate
FY202050.5%

FY2021

55.3%

FY202262.4%(Note) The number of employees includes one employeetransferred to the company but does not include
seconded employees, temporary employees, full-time
non-regular employees, part-time non-regular
employees, full-time advisors, and part-time advisors.

Scrap metal

5%

Waste oil

366 (as of March 31, 2023)

Representative Representative Director,
Directors
Chairman of the Board:
Jun Kaneda

Main Office

5-22-5 Higashioi, Shinagawa-ku,
Tokyo 140-8539 Japan

June 9, 1952

Capital10,127 million yen

31 San-ai Obbli Group Sustainability Report 2023

Stock Listing

10 %

18 %

Plastics

27 %

8,217

8,246

Annual water usage and copy paper usage
0

FY2019FY2020

FY2021

FY2022

Water usage (1,000m3)

Copy paper usage (t)FY2020227

46

FY2021

269

51

FY2022

289

46

SAN-AI OBBLI CO., LTD.

Employees

Head Office

4,084 t6%

List of San-ai Obbli Group Companies (Consolidated)

Company Name SAN-AI OBBLI CO., LTD.

Established

8,682

4,000

Note: In FY2020, San-ai Obbli Gas Banshu Co., Ltd. and KAFCO Co., Ltd. were added
to the total, and Chuosangyohanbai Co., Ltd. left the Group in FY2021.

Overview of San-ai Obbli Group (as of April 1, 2023)

Representative Director,
President and Executive Officer:
Hiroshi Hayata

9,690

27

3%

Waste acid

Trend in paid leave acquisition rate

General industrial
waste%

Waste alkali

SludgeStatus of employees (as of March 31, 2023)
Change compared to the endof the previous fiscal year

2%

8,000

SAN-AI OBBLI CO., LTD.
Number of employees

Other

Petroleum Product Sales
and Ordering Business

Liquefied Petroleum Gas Sales
and Distribution Business

Kygnus Sekiyu K.K.

SAN-AI OBBLI GAS EAST JAPAN CO., LTD.

2-3-2 Otemachi, Chiyoda-ku,
Tokyo 100-8154 Japan

Kygnus Kosan K.K.

SAN-AI OBBLI GAS BANSHU CO., LTD.

SAN-AI RETAIL SERVICE CO., LTD.

SAN-AI OBBLI GAS CHUGOKU CO., LTD.

Tokyo Stock Exchange Prime market

SAN-AI OBBLI EAST JAPAN CO., LTD.
SAN-AI OBBLI HOKURIKU CO., LTD.
SAN-AI OBBLI CUSTOMER SERVICE CO., LTD.

SAN-AI OBBLI GAS SERVICE KYUSHU CO., LTD.

City Gas Business

SAN-AI OBBLI LPG TRANSPORT CO., LTD.

SAGA-GAS CO., LTD.

Chemical Manufacturing Business

Construction Business

SAN-AI RIKEN CO., LTD.

SAN-AI OBBLITECH CO., LTD.

SAN-AI OBBLI GAS KYUSHU CO., LTD.

Aviation Fuel Service BusinessInsurance Agency

SAN-AI OBBLI GAS SANSHIN CO., LTD.

SAN-AI AVIATION SERVICE CO., LTD.

T&P CO., LTD.

Kygnus Ekika Gas K.K.

KOBE AIRPORT FUEL FACILITIES Inc.

SAN-AI OBBLI GAS SERVICE CHUGOKU CO., LTD.

KAFCO CO., LTD.

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