Business Strategy

Highlight

Generating "Economic Value"

Corporate Data

Creating "Social Value"

JR Central’s “ESG management”

2 S er vic e impr ovement measur es
Since its establishment, JR Central has been working continually to
improve its railway services. For the Tokaido Shinkansen, our main lineof business, we are working to improve our transportation services,focusing on speed and frequency, while introducing new types of rollingstock and improving ground facilities with safety as our top priority. In
2003, with the opening of Shinagawa Station, the maximum speed of
all trains was set at 270 km/h, and we shifted to a timetable centeredon the Nozomi. In 2020, the maximum speed of all trains was set at
285 km/h, and we established a timetable with 12 Nozomi trains. In
addition to increasing the speed and frequency of our services, we arealso working to improve the convenience of our“EX Service”“Express(
Reservation”and“Smart EX”), an online reservation and ticketlessboarding service. We have also been working to improve the servicesof our conventional lines by, for example, launching new types of rollingstock and increasing the frequency of services through such launches.
We are also working to provide barrier-free access and support foroverseas visitors to make it easier for customers to use our services.
On the other hand, in the non-railway business, we are striving tostrengthen our competitiveness and sales capabilities by enhancing ourstore assortments, improving services, renovating commercial facilities
at stations and continuously making effective use of company-owned
land, focusing on areas where synergies with railways can be expected,

JR Central s "ESG Management"

JR Central’s Key Business Activities
JR Central’s basic policy is to carry out the following from a
medium- to long-term perspective, based on its management
philosophy of contributing to the development of Japan’s maintransportation artery and social infrastructure: To maintain anddevelop the Tokaido Shinkansen, Japan’s main transportation artery,
and the conventional line network in the Tokai region in an integrated
manner, ensuring safe and reliable transportation as a top priority;
to operate“three generations of railways”by constructing the Chuo
Shinkansen to make Japan’s main transportation artery a dual system;and to work together with Group companies to develop related
businesses that have synergies with railways.
Through business strategies based on this basic policy, we havebeen practicing ESG management, which is the generation of

13

CENTRAL JAPAN RAILWAY COMPANY Integrated Report 2023

N700S

3 G r eat er ef f ic ienc y
economic value, such as profits and cash flows, and social value,
which is the realization of a sustainable and prosperous society,simultaneously based on solid governance to enhance the trust of all
stakeholders. This has led us to achieve sound management, stabledividends and sustainable growth as a company.
For the JR Central Group, with the railway business as its corebusiness, it is crucial to strengthen its competitiveness by developing
human resources, making capital investments and developing
technologies based on a long-term vision, ensuring safe and reliabletransportation as a top priority. To this end, our business activities
focus on (1) safety measures, (2) service improvement measures, (3)greater efficiency and (4) pursuit of environmental superiority.

1 Saf e ty me asur es
The greatest mission of the railway business is to ensure safety at all
times and in all circumstances. Regardless of past performance, once
a company causes a major accident, trust in the company is lost at
once, and even its very existence may be threatened. With this frameof mind, we have been concentrating our greatest energy into safetyassurance from both physical and non-physical perspectives ever since
our establishment. In terms of non-physical measures, we have been
continually building systems to ensure safety, mainly by establishingrules and regulations. Furthermore, human resource development is
indispensable to put these systems into practice. Therefore, we promote
initiatives to deepen employees’understanding of the nature of duties
and rules by proactively thinking about them, in addition to raising
their awareness of discipline so that they can comply with the rules
themselves. Additionally, we repeatedly perform practical training so
as to be able to respond to various situations expected in the eventof natural disasters, unforeseen circumstances, or other extraordinary
events.
In terms of the physical aspect, capital investment is also important
to ensure safety. The majority of JR Central’s capital investment todate has been safety-related, totaling more than 4.4 trillion yen since
its establishment. For example, for the Tokaido Shinkansen, we haveupgraded the ATC (Automatic Train Control) system, implemented
earthquake countermeasures such as derailment prevention guards
and an earthquake disaster prevention system, and carried out large-such as the integrated management of the JR Central Towers and the
JR Gate Tower. Leveraging fresh perspectives and flexible ideas, we willcontinue to hone our“ability to provide better service”in the railway
and non-railway businesses, including the Chuo Shinkansen, which isunder construction.

scale renovation to maintain and improve the integrity of Shinkansen
infrastructure. For conventional lines, we have introduced ATS (Automatic
Train Stop)-PT in all train lines, made various structures quake-resistant,taken measures against heavy rainfall and falling rocks, and improved
safety devices on grade crossings. In addition, we are working continuallyon security measures at railway stations, on trains and at importantfacilities, and technology development also focuses on safety-related
themes to enable such equipment. Also, the Chuo Shinkansen Project,which we are currently working on, is a project aimed at thoroughly
preparing for the future aging of the Tokaido Shinkansen and potential
large-scale disasters. Looking ahead, we will continue to work on both
physical and non-physical measures to hone our“ability to work safely,”
which is the most important aspect in the railway business.

Crew pointing and calling

Large-scale renovation

In addition to increasing revenue by promoting the use of ourservices through safety measures and service improvement measures,
we have been working to improve efficiency and reduce costs inall aspects of business execution, including capital investment, byutilizing the knowledge and technical capabilities we have cultivatedand thoroughly pursuing rationality in our business practices without
being bound by traditional ways of working. As a result, we havebeen able to steadily improve our operating profit margin by reducing
fixed costs even when operating revenues were increasing, as in thedecade or so before the pandemic.
We are also promoting“reform of business operations”to build themost desirable operational system by making full use of ICT in orderfor the JR Central Group to firmly fulfill its social mission well into
the future. Through this effort, we aim to reduce non-consolidated
recurring expenses related to the Shinkansen and conventional lines
by about 80 billion yen, or approximately 10%, over the next 10

to 15 years. With regard to the Chuo Shinkansen Project, we willcontinue to improve our“ability to work efficiently”by, for example,
continually reducing costs while ensuring safety in all aspects, such as
construction, operation and maintenance.
Pre-pandemic operating revenues and expenses (non-consolidated)(Billion yen)

1,600

1,464.8

1,400
1,200
1,000

1,143.9

869.8

797.1

800
600
400

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (FY)Operating expenses

Operating revenues

4 Pur suit of envir onment al super ior it y
Preservation of the global environmental is an important issue for
JR Central to achieve sustainable growth while earning the trust ofsociety. Inherently, railways have the advantage of being more energy
efficient and having less impact on the global environment than othertransportation modes. In order to further reduce environmental impact,
JR Central is working to further improve the energy efficiency of its
railway operations, such as by making its rolling stock more energy
efficient.
In addition to the above, we are working to reduce CO2 emissions
further to achieve carbon neutrality by 2050. Specifically, we haveintroduced Series HC85 cars with lower environmental impact andconducted biofuel experiments to reduce direct CO 2 emissions
associated with the use of fuel, which account for approximately 5% of
our total emissions. We will also begin simulated driving tests combining
vehicle driving test equipment and hydrogen supply development todevelop hydrogen-powered vehicles. Research and development will
be continued for storage battery vehicles. As for indirect emissions
associated with the use of electricity, which account for the remaining
approximately 95%, we will introduce additional energy-efficient rollingstock, such as N700S and Series 315, in addition to decarbonization

efforts across the entire power source division in Japan. We will also
work to utilize renewable energy. Furthermore, we have expressed ourendorsement of the recommendations of the Task Force on Climaterelated Financial Disclosures (TCFD), which was established by the
Financial Stability Board (FSB). We will identify the financial impact ofrisks brought about by climate change, among others, and promote
information disclosure based on the TCFD recommendations.

Hybrid-powered limited express rolling stock, Series HC85
CENTRAL JAPAN RAILWAY COMPANY Integrated Report 2023

14

Business Strategy

Highlight

Generating "Economic Value"

Creating "Social Value"

Corporate Data

JR Central’s “ESG management”

Positive Cycle of“ESG management”

Creating“Social Value”

JR Central generates both“economic value”and“social value”by

At the same time, improving our business, especially in key

practicing the above key business activities. The generation of thesebusiness activities, is also directly related to the creation of social

two kinds of value is not independent, but rather mutually beneficial,value. Building a resilient infrastructure, with our highest priority

contributing to the virtuous cycle of ESG management.

on ensuring safe and reliable transportation, and supporting

As mentioned earlier, we have been generating economic value

Japan’
s main transportation artery and regional transportation as

in the form of profits and cash flows by striving for efficient businesssocial infrastructure, as well as developing Group businesses, will

operation while significantly increasing revenues as we refine ourcontribute to the sustainable development of Japan’s economy andservices with safety as our top priority.

local communities [S]. In addition, railways have the advantage ofUsing such economic value as a source of funds, we havebeing more energy efficient and having less impact on the global

invested generously in human resource development, technologicalenvironment than other transportation modes. In other words,

development and capital investment from a long-term perspective

we believe that promoting the use of railways while pursuing

to develop our business sustainably, and we have strengthened theenvironmental superiority will greatly contribute to the preservation

foundation for operating our business by enhancing managementof the global environment [E]. In addition, by conducting thesecapital. We use the management capital accumulated to implement

corporate activities under appropriate governance [G], we believe wevarious measures while re-investing it mainly in key business activities

can achieve sustainable growth as a company while increasing theand to continually strengthen three kinds of ability--the ability totrust of all stakeholders by maintaining sound management, returning

work safely, the ability to provide better service and the ability to

profits to shareholders based on our basic policy of maintaining stable

work efficiently--to further improve our business and generate greater

dividends, and building long-term, stable relationships with employees

economic value.

and business partners.

Generating“Economic Value”
We have used the economic value generated through our businessand stable dividends and increasing the trust of all stakeholders at

to generate even greater economic value by strengthening our

the same time. We are currently making efforts to reinforce earning

profitability through the continual refining of the Tokaido Shinkansen

power, which consist of the two pillars of revenue expansion andand other businesses while improving our operational efficiency atreform of business operations, in order to continue fulfilling our social

the same time. Comparing FY2002, before the opening of Shinagawa

mission into the future.

Station of the Tokaido Shinkansen, and FY2018, before we wereaffected by the pandemic, operating cash flows (consolidated)

Growth of operating revenues and operating cash flows (consolidated)

increased 57%.

(Billion yen)

The cash flows thus generated have been used to alleviate ourinterest burden by reducing the long-term debt that we have incurredsince our establishment. They have also been used to enhanceinvestment in human resources, technology and equipment and toconstruct the Chuo Shinkansen since FY2014. In the meantime, wehave continued to pay stable dividends as a means of returning profits
to shareholders.
Such ability to generate economic value is a prerequisite for ourability to operate our business, including the Chuo Shinkansen Project,with a long-term outlook while maintaining sound management

15

CENTRAL JAPAN RAILWAY COMPANY Integrated Report 2023

2,500(Billion yen)

FY2002‒2018
Operating revenues: Up 38%●Operating cash ﬂows: Up 57%

750

●

2,000

600

1,500

450

1,000

300

500

150

0

2002
Operating revenues (left scale)

2018

(FY)

Operating cash ﬂows (right scale)

0S

SocialEnvironment

GovernanceS o ci a l

S B uil ding saf e and r esil ient inf r ast r uc t ur e
Since its inauguration in 1964, the Tokaido Shinkansen has
supported the growth of the Japanese economy for more than half acentury, with many people using it as the main transportation artery
connecting Tokyo, Nagoya and Osaka, the three largest metropolitan
areas in Japan. This region is only about 20% of Japan in terms ofarea, but it is an agglomeration unparalleled in the world with a highconcentration of population and generating more than 60% of Japan’s GDP. The Tokaido Shinkansen is indispensable infrastructure thatboasts an overwhelming presence over other modes of transportation,
as it plays a role in providing transportation services, which are thebasic elements of the economy and society. We aim to build safe andresilient infrastructure that can protect Japan’s main transportationartery at all times.
To that end, we have been dedicating our greatest energy inaccident prevention in both physical and non-physical aspects eversince our establishment, developing rules and systems to prevent
accidents, developing employees and improving their skills throughtraining, and continually upgrading various safety devices. As a result,the Tokaido Shinkansen has had no accidents resulting in the deathor injury of passengers on board since its inception, and the numberof rail accidents, including those on conventional lines, has decreased
significantly since our founding.
As Japan is an earthquake-prone country, there is concern in ourmarket area about the imminence of earthquakes occurring directly
beneath the Tokyo metropolitan area and the Nankai Trough. In
recent years, addressing the intensification of natural disasters has
also become a major issue. Since our establishment, we have beenpromoting sufficient earthquake and natural disaster countermeasuresfrom both physical and non-physical perspectives and have built
resilient infrastructure that can withstand large-scale earthquakes
and severe natural disasters by working continually to strengthen ourfacilities as well as conducting timely and appropriate operations.

In terms of systems, we are taking measures such as creating dual
systems for equipment and securing backups to ensure that service
provision to customers and the execution of internal operations are
not disrupted in the event of an earthquake or other disaster ordue to system failures. We have also taken all possible measures toprotect against cyber attacks, including setting up systems critical totrain operations as independent systems with no contact with theoutside.
Additionally, we are promoting the Chuo Shinkansen Projectusing the Superconducting Maglev System to make Japan’s maintransportation artery a dual system as a fundamental measure against
the aging of the Tokaido Shinkansen and potential major disasters.
This will allow us to further reduce management risk to stabilize ourmanagement base and continue to fulfill our founding mission ofserving as Japan’s main transportation artery.
Distribution map of the estimated greatest seismic intensity of a huge Nankai
Trough earthquake

Chuo Shinkansen

Nagoya Station

Shinagawa Station

Seismic intensity
class

Shin-Osaka Station

Tokaido Shinkansen

7
Upper 6Lower 6Upper 5Lower 5
4

Source: Prepared by JR Central based on“Countermeasures against a Large Nankai Trough Earthquake(Final Report)”by the Central Disaster Management Council (May 2013)

S Pr oviding ac c essibl e t r anspor t at ion inf r ast r uc t ur e
Based on relevant laws, such as the so-called Barrier-Free Act,
JR Central has been cooperating with the government and relevant
municipalities to jointly develop, maintain and improve rolling stockand facilities to enable all passengers to use railways safely and witha sense of security. We will make continuous efforts to address theever-changing demands of society as appropriate.
We also believe that providing overseas visitors with a chance
to visit the rich tourist attractions along our railway lines is an
important issue from the perspective of increasing railway revenues
and revitalizing local regions along the lines. Therefore, JR Central is
implementing a variety of marketing measures to encourage tourists
to Japan to enjoy the areas along our railway lines casually andconveniently. We are also working on increasing and enhancing
facilities and services to ensure smooth access for overseas visitors
to our stations and railways. We will continue to make every effort toensure that our stations and trains are safe and accessible.

Wheelchair space on N700S

CENTRAL JAPAN RAILWAY COMPANY Integrated Report 2023

16

Business Strategy

Highlight

Generating "Economic Value"

Corporate Data

Creating "Social Value"

JR Central’s “ESG management”

S Local comm uni t y r ev i t al i z at ion
In addition to the Tokaido Shinkansen, which supports Japan’seconomy and society, JR Central operates conventional lines, mainly
in Nagoya and Shizuoka, and develops related businesses mainly inthese areas in an integrated manner, thereby fulfilling its mission associal infrastructure that supports people’s lives. The conventionallines operated by JR Central, encompassing 12 railway sections, cover
approximately 1,400 km in operating kilometers, which is approximately
2.5 times the distance of the Tokaido Shinkansen, and play a role asa means of transportation for daily life, including commuting to andfrom work and school. While increasing the frequency of services andlaunching new types of rolling stock, we have been working to maintainour transport network and provide services that are easy to use,complementing each other in combination with the Tokaido Shinkansen.
We are also working to revitalize local communities through sales andmarketing in coordination with the communities along our railway lines.

Railway stations, where train passengers and many other people
gather, are important hubs for local communities, and at the same time,they are important management resources for JR Central. By making themost of these management resources and operating office, commercial,hotel and other businesses in such excellent locations, stations will
become more lively, leading to increased use of railways. At the sametime, the increase in railway use due to improvements in transportation
services will contribute to the growth of our related businesses that
we operate at stations. We believe that working together with Group
companies to realize such synergies between railway and related
businesses will boost the movement of people and revitalize economic
activities in the region. An example of this is the formation of skyscrapers
around Nagoya Station over the past 15 years and the significant change
in the flow of people in the Nagoya district. Further development is
expected with the launch of the Chuo Shinkansen.

Development of the Nagoya Station area

After the completion of JR Gate Tower

S Hu man r e sour ce dev el opm ent and cr ea ti o n o f a re wa rd i n g wo rk p l a c e
JR Central views its employees as its greatest management resource.
Our management philosophy of“contributing to the development ofJapan’
s main transportation artery and social infrastructure”can berealized at higher levels when the management philosophy and action
guidelines are embodied in the work of each employee and then put
together as teamwork for thorough implementation. Based on thisunderstanding, we strive to improve engagement* and maximize ourcorporate value by actively promoting human resource development
and the creation of a rewarding workplace. We conduct an annual
engagement survey so that the status of engagement can be monitored
regularly and quantitatively.

It is also important for us to maintain and promote the health of
employees in order to make these corporate activities sustainable. We
actively promote initiatives toenhance health and productivity
management by establishing a“Health Promotion Policy,”
which serves as our overall
health policy, and an organization
to support it, which is headed by
the officer in charge of personnel
affairs.

* Meaning a state in which an employee is proud of being a member of the company and is happy to work
for itEnvironment

GovernanceE n vi r o n m e n t

E G l obal envir onment pr eser vat ion
We believe that having as many passengers as possible opt to use
railway services, which have a smaller environmental impact thanother modes of transport, will reduce the environmental impact of theentire transportation sector and lead to conservation of the global
environment. Railways account for only 7% of Japan’s CO2 emissions
despite providing 25% of Japan’s overall passenger transport volume.
JR Central has been working to introduce energy-efficient rollingstock to enhance these characteristics. The latest N700S Shinkansenrolling stock consumes 28% less energy when operating from Tokyo
to Shin-Osaka at a maximum speed of 285 km/h compared to
the Series 300 (in commercial service from March 1992 to March2012) when running at a maximum speed of 270 km/h. In addition,compared to an aircraft (B777-200), the Tokaido Shinkansen (Series
N700“Nozomi”) consumes approximately one-eighth of the amountof energy per seat when traveling between Tokyo and Osaka anddischarges about one-twelfth of the CO2 emissions. We will continue
to improve our transportation services while contributing to global
environmental conservation as a corporate responsibility. We will
also make efforts to reduce CO2 emissions further, in line with theGgovernment’s 2050 carbon neutrality goal, and improve railway’senvironmental superiority.
Other measures we carry out to mitigate environmental impact
include promoting the effective use of resources through the 3R’s(Reduce, Reuse and Recycle) and other initiatives, reducing the releaseof chemical substances and waste, reducing food loss and recycling
materials.
Tokaido Shinkansen’s rolling stock ratios and unit energy consumption（%）
100

Increase in maximum speed of all trains (to 270 km/h)

60(to 285 km/h)

80

Series 0 & 100

60

Series 300 & 700

40

Series N700 & N700A

20

0

（%）
100

Approx. 32％ improvement
vs FY1990

80
Rolling stock ratio

Immediately after JR Central’s establishment

E

Social

40

20

N700S
’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22

0

(FY)

SocialEnvironment

Governance

Go ve r n a n ce

G Appr opr iat e gover nanc e
In the railway business, which is the mainstay of our management,
our basic management concept is to steadily implement initiatives
necessary to ensure safe and stable transportation, which is our mostimportant issue. We also intend to further reduce our management
risks, stabilize management, and secure the interests of all
stakeholders, including shareholders, through the Chuo Shinkansen, alarge-scale, long-term project we are working on. Since such initiatives
require massive long-term capital investment and technologicaldevelopment, we believe it is vital to manage our business based on along-term outlook rather than pursuing short-term profitability.
As such, we will engage in our business activities under solid
governance that increases the trust of all stakeholders by establishinga corporate culture that places the highest priority on safety andensures the soundness and transparency of management while at thesame time aiming for long-term development as a company.

G Rel at ionships w it h st ak ehol der s
S In n ovation adv ancem ent
In order for JR Central to fulfill its mission and develop in the
future, it is essential to build systems and hardware that will serveas the foundation to support daily safe, reliable and comfortabletransportation services through technological development. Thus, withthe aim of addressing various technological issues in an integrated
and comprehensive manner, we have been engaged in systematic
technological development at the Komaki Research Center, which
was established in 2002, by setting issues that contribute to company
policies, such as ensuring safe and reliable transportation, from a

17

CENTRAL JAPAN RAILWAY COMPANY Integrated Report 2023

medium- to long-term perspective. These approaches have resulted
in many advanced achievements, such as safety measures against
earthquakes and natural disasters, improved services throughenhancement of the functions of rolling stock and other equipment,
and enhanced environmental performance. In addition, the Chuo
Shinkansen Project, as a fundamental measure to strengthen the maintransportation artery, is being promoted through the accumulation oftechnological development at the Komaki Research Center as well as
the Yamanashi Maglev Line.

JR Central’s railway business is highly public and has a multifaceted
array of stakeholders, including customers, shareholders, employees,
business partners and local communities. Therefore, we believe it isimportant to maintain an overall balance in our relationships with our
stakeholders, rather than focusing on just one facet.
We believe that improving the convenience of many users,
contributing to the economic and social development of the region
and Japan, securing stable profits, returning profits to shareholders,and building long-term stable relationships with employees andbusiness partners will increase the trust of all stakeholders and leadto our sustainable growth as a company.
Stakeholders
Customers

Safe and comfortable service for everyone
Groundbreaking reduction of travel time by the Chuo Shinkansen

Shareholders

Sustained increase of cash ﬂows

Employees

Long-term stable employment environment

Business partners

Building long-term, stable, fair and equitable business relationships

Local
communities

Development of the Japanese economy
Building a resilient society

Globalenvironment

Conservation of the global environment by expanding the use ofenvironmentally friendly railways

Continuation of stable dividends
Active and rewarding workplace

Revitalization of local communities

CENTRAL JAPAN RAILWAY COMPANY Integrated Report 2023

18