Business Strategy

Highlight

Generating "Economic Value"

Creating "Social Value"

Corporate Data

TOP MESSAGE

Top Message
Business Strategy

We will continue to firmly fulfill
the development of Japan’s maintransportation artery and social
infrastructure” into the future.

I am Shunsuke Niwa, the new President of Central Japan Railway
Company as of April 1, 2023. I would like to express my sincere gratitude
for your unwavering support of the management of the JR Central Group.
I would first like to explain my approach to management of JR Central.
As a railway operator, our top priority is safety. Trust in railway
companies is built on the daily continuation of safety. We will constantly
pursue safety in both physical and non-physical terms by steadily
implementing capital investment and enhancing the competence of ouremployees through employee education and training.
The market area of JR Central’s railway business, which is the areaconnecting Tokyo, Nagoya, and Osaka, is Japan’s main transportationartery, which supports its economy and is in very strong demand. We haveaddressed this strong demand and grew our earnings by enhancing thetransportation capacity of the Tokaido Shinkansen on the basic premisethat safety is ensured and working to enhance customer conveniencethrough measures such as improving the EX Service. However, we faceda very challenging business environment during the three years of theCOVID-19 pandemic that began in 2020. In April 2020, under the declaredstate of emergency, the passenger volume of the Tokaido Shinkansen andconventional line express trains dropped by nearly 90% from the previousyear. We felt a great sense of urgency as we posted significant deficits inboth FY2020 and FY2021. Passenger volume and Group company earningshave recovered to a certain extent since FY2022, but the pandemic
drastically changed people’s lifestyles and workstyles, urging us to lookto new directions to earn revenue. This led us to develop a strategy of“Reinforcement of earning power ,”which consists of two pillars:“revenueexpansion”and“reform of business operations .”In October 2022, wepresented our future vision of railways. By making company-wide efforts
to realize this vision and generating cash flow, we will continue to create apositive cycle of investment and service improvement. As our employees,

including those of Group companies, work together to take on thechallenge of the evolution and transformation of“Reinforcement of earningpower,”I hope to build a more resilient management platform for thecompany than before the pandemic.
Reinforcing management resources for a positive investment
and service improvement cycle
Reinforcementof earning
power
Revenue
expansion

Reform ofbusiness
operations

Contribution to society
Cash flow generation

our mission of “contributing toMy approach to management of JR Central

Efficient provisionof safe and goodservice

Company growth

positive cycle
Investment in
human resources,
technology,equipment

Meanwhile, we are vigorously pushing ahead with the Chuo Shinkansen
Project, as nearly 60 years have passed since the launch of the Tokaido
Shinkansen, our revenue pillar, necessitating thorough preparedness
against future aging and potential large-scale disasters. By introducing a
superconducting maglev system to the Chuo Shinkansen, the overwhelming
travel time reduction will turn the three major metropolitan areas into asingle megalopolis, significantly contributing to the revitalization of theJapanese society and economy. We are devoting our full efforts toward
the commencement of service firstly to Nagoya while placing emphasis on
construction safety, environmental protection and coordination with localcommunities.

Creating a positive cycle of “ESG management” to contribute to thedevelopment of Japan’s main transportation artery and social infrastructure
JR Central’s idea of ESG management is a management style ofpursuing growth of the company while simultaneously generating
economic value, such as profits and cash flows, and creating social
value, which is the realization of a sustainable and prosperous society,through business activities. In light of this understanding, we have beenpracticing ESG management by generating economic value and creatingsocial value simultaneously based on solid governance to enhance thetrust of all stakeholders as we aim for long-term development under ourmanagement philosophy of contributing to the development of Japan’s
main transportation artery and social infrastructure while at the same time
establishing a safety-first corporate culture and ensuring soundness ofmanagement.

Shunsuke Niwa,
President and Representative Director

7

CENTRAL JAPAN RAILWAY COMPANY Integrated Report 2023

At the same time, we have contributed to realizing a more comfortablesociety and developing local communities by pursuing service safety,punctuality, and comfort in our business activities centered on the Tokaido
Shinkansen, our main line of business. We have also continually sought toenhance environmental superiority by incorporating the latest technologies
while promoting the use of railway transportation, which inherently has

Specifically, we have been continually pursuing economic value
by meticulously improving the punctuality and comfort of railway
transportation services of the Tokaido Shinkansen, the main transportationartery of Japan, and conventional lines in the Tokai region, with safety
as our top priority. We have also developed Group businesses with highsynergy with the railway business, worked to reduce costs, improve
efficiency, and Reinforcement of earning power, and secured cash flows bysteadily increasing revenues and profits.

CENTRAL JAPAN RAILWAY COMPANY Integrated Report 20238Business Strategy

Top Message

Using the abovementioned cash flows, i.e., economic value,as the source, we have developed even safer, more resilient andenvironmentally superior infrastructure, improved services, developed
human resources that support the infrastructure and services, andpromoted innovation to create social value. This has led to a positive
cycle of providing better services and attracting more users. This
positive cycle has also made it possible for us to realize the ongoing
Chuo Shinkansen Project.

Enhancing the strengths of human resources to become an organization full of momentum
Since joining JR Central in 1989, I have been long involved in humanresource development and labor affairs in various divisions, fromdepartments close to the front line to the head office. This is why I havea strong desire to maximize and utilize the power of“people.”“People,”“goods,”“money,”and“information”are often cited as the managerial
resources of a company. It is“people”who think of and implement
measures to generate cash flows, and human resources are a company’s
greatest business asset. The basic philosophy of our human capitalmanagement is to invest effectively in the education and training ofrecruited human resources and make the most of their improved abilities.
Many high-potential employees work at JR Central and Group companies.
As I engaged in discussions with numerous employees, including young
and mid-level employees, to overcome the difficult environment brought
about by the pandemic, I met many employees who were full of ideas anda spirit of challenge, which made me convinced that we have the potential
to overcome the difficult situation. I intend to maximize the potentials of ourhuman resources and utilize it in the management of the company.

Based on these values, I will develop a corporate culture of“thinkingfreely, discussing a lot, and tenaciously getting the job done”while at thesame time maintaining discipline and values such as teamwork and unity,
which have sustained JR Central in the past. As the environment around uschanges, I will work to create an organization full of momentum that candevelop and implement various measures despite a difficult environment.
Diversity of discussion is essential to creating a strong organization.
Particularly since we provide rail and other highly public services thatare used by a wide range of customers, I believe it is vital that all of ouremployees from diverse backgrounds fully exercise their skills and play anactive role in the company. By enhancing support systems for balancing
work and life events such as childcare and nursing care and working
on the Women’s Empowerment Project, I will enable all employees,
regardless of gender, to be motivated and fulfilled in their work more thanever for a long time and enrich their professional lives as they contributeto the company’s development.

Fulfilling our role as a railway company rooted in the local community
Our conventional lines centered in the Nagoya and Shizuoka areas
serve as a means of daily transportation, including commuting to and fromwork and school, for local customers. Due to the development of road
networks and the proliferation of telework, the environment surrounding
conventional lines has become difficult. However, JR Central has fulfilled its
role as a local infrastructure provider by improving its operating efficiency
and services. Between 2022 and 2023, we introduced the new limited
express rolling stock Series HC85 for our express trains Hida and Nanki.
We hope that more customers will enjoy a comfortable and joyful trip.
Railway stations, where train passengers and many other people gather,
are important hubs for local communities. JR Central has taken advantage
of such favorable locations to develop offices, commercial facilities, andhotels, significantly enhancing the appeal of railway stations and generating
revenue. In October 2023, we also launched a point service that can beearned and used at the Group’s commercial facilities. We will continue todevise ways to provide services that further enhance the satisfaction of theresidents in local communities around railway stations.

Generating "Economic Value"

Creating "Social Value"

Corporate Data

TOP MESSAGE

Business Strategy

excellent environmental performance. The results of these businessactivities have led to the achievement of the“sustainable development”
goals of the SDGs in the form of building a safe and resilient infrastructure,promoting innovation, and mitigating the impact of climate change.
Furthermore, we have continually created social value by focusing on
developing human resources that support the operation of the railway
business and making daily efforts to achieve the SDGs from the perspectiveof promoting gender equality, creating a motivating workplace, andpromoting employment.

Highlightthe Linear Chuo Shinkansen Shizuoka Section of the Construction Site,organized by the Ministry of Land, Infrastructure, Transport and Tourism.
With regard to the impact on the use of water resources of the Oi
River, we have been working to provide clear-cut explanations to local
communities, flesh out ways to address and monitor risks, and realize
methods to return to the Oi River the same amount of water as the amountof spring water flowing out from the tunnel to outside Shizuoka Prefecture
on an exceptional basis during certain periods of construction, basedon the interim report on the Oi River water resource issues prepared in
December 2021 by the Expert Conference.

Promoting the use of environmentally friendly railways to contribute to global
environment conservation
Railways have the excellent characteristic of higher energy
efficiency and lower impact on the global environment than othermeans of transportation. I believe that railways can play a significant
role in realizing a sustainable society. In order to further enhance
this characteristic of railways, we have been implementing various
measures, such as introducing energy-efficient rolling stock. Given thegovernment’s 2050 carbon neutrality goal, we aim to reduce CO2
emissions to substantially zero to further increase the environmental
superiority of railways. We will also reduce the impact on the global
environment by reducing waste and recycling resources, including theeffective use of“Tokaido Shinkansen recycled aluminum.”

announced in November 2023. We believe this is a social contributionthat is possible only for a railway company, utilizing previously unused
assets to generate renewable energy.

Recent initiatives include the commencement of solar power
generation using the Tokaido Shinkansen’s trackside slopes, which we*TCFD stands for Task Force on Climate-related Financial Disclosure.

In addition, we endorsed the recommendations of the TCFD* inMay 2021 and in April 2022 conducted and disclosed the results of aquantitative analysis on facility damage of the Tokaido Shinkansen due
to the increase in floods. This time, we have expanded our disclosure
since we have completed our analysis of profit loss caused by heavy
rain. We will continue to identify the risks and opportunities related toclimate change and promote information disclosure.

Governance with an awareness of the balance among stakeholders
The railway business serves the public good and is supported byvarious stakeholders. We will enhance the trust of all stakeholders without
focusing on certain interested parties and sustainably grow as a company
to continue fulfilling our mission of“contributing to the development ofJapan’s main transportation artery and social infrastructure.”Based on
this stance, our basic policy for shareholder return is to maintain soundmanagement while securing internal reserves to steadily promote variousprojects, including the Chuo Shinkansen Project, and to maintain stabledividends. Based on this policy, we continued to pay a certain amountof dividends even in periods when we posted a net loss due to thepandemic. We will first make efforts to quickly restore the business to its
pre-pandemic state and then vigorously promote the various initiatives
mentioned earlier to exceed our previous state of business.

Through long-term capital investments and human resource
development, we will refine the characteristics of the Tokaido Shinkansen,
Japan’s main transportation artery, which are safety, punctuality, highspeed, and frequency, and continue to strengthen the conventional lines
in the Tokai region that form a network with the Tokaido Shinkansen, aswell as Group businesses. In this context, we are promoting the ChuoShinkansen Project to continue fulfilling our mission. I believe that theproject will stabilize the company’s management into the future andsecure profits for all stakeholders, including our shareholders. I would
like to thank all of our stakeholders for their continued support andunderstanding of the JR Central Group.

Meanwhile, the Chuo Shinkansen faces the issue of not being able tostart construction in the Southern Alps Tunnel Shizuoka construction area
due in part to the concerns of local residents regarding the impact on thewater resources of the Oi River and the environment of the Southern Alps.
However, we have been committed to detailed two-way communication
to resolve the concerns and anxieties of the local residents in light ofthe scientific and engineering discussions at the Expert Conference on

9

CENTRAL JAPAN RAILWAY COMPANY Integrated Report 2023

CENTRAL JAPAN RAILWAY COMPANY Integrated Report 2023

10