Osaka Gas : INTEGRATED REPORT 2021(3/3)

61 ESG Highlights

ESG Highlights

Getting to Know

Daigas Group's

Business Report

ESG Highlights

Corporate Governance

Financial Section

62

the Daigas Group

Co-creation of Value

Please see our website for reports on sustainability activities at the Daigas Group.

Verified by a third party A third-party verification has been conducted by Bureau Veritas Japan Co., Ltd.

Environment	Results and evaluation of former materiality indicators
	(FY2019.3 - FY2021.3)

• Main Materials and Fuels

• Amount of Energy Used

• Sales Volume of Main Products

6,464 thousand tons

City gas	1,753 million m³ (including gas whose calorific
	value has yet to be adjusted)

Gas	7,157 million m³

Harmonizing with the Environment and Contributing to Realizing a Sustainable Society

Fundamental Concept

By responding to environment issues including

Environmental Impact throughout the Daigas Group Value Chain in FY2021.3

The Daigas Group calculated the amount of greenhouse gas (GHG) emissions from companies that constitute the Daigas Group's value chain network, based on the GHG Protocol, an international emission accounting standards. The methodology of the calculation and its results have been certified by an independent organization to verify their reliability and accuracy.

Amount of LNG handled

LPG used for calorific adjustment of city gas

The figure above includes the amounts of the items listed below:

• Materials of city gas
• Fuels at LNG terminals
• Fuels used by Group companies for power generation
  188 thousand tons

Purchased electricity	453 million kWh
Other energy sources	13,465 TJ

• Amount of Vehicle Fuel Used ■ Amount of Water Intake

Gasoline

1,649 kl

General water,

13.807 million m³

industrial water

City gas

45 thousand m³

Underground

3.530 million m³

Diesel

732 kl

water

Seawater

551.419 million m³

LPG

8 thousand m³

Electricity 16,133 million kWh

Customers

City gas

Electricity

climate change, developing and promoting innovative technologies, and providing environmentally friendly products and services including natural gas, the Daigas Group strives to reduce the environmental

Combined GHG emissions by the Daigas Group and value chain companies, measured by CO2, totaled about 27.78 million tons in FY2021.3. The sum breaks down into about 5.51 million tons, or about 20%, for GHG emitted through business activities by the Daigas

Procurement of

materials and fuels

(activities by outside companies)

Business activities by Osaka Gas

LNG

Gas appliances

impact of business activities. By harmonizing its business activities with the environment, the Group will create a sustainable society.

Environmental conservation on a local and a global scale is an extremely important mission for the Daigas Group, whose operations center on the energy business. Greenhouse gases in particular are a leading cause of climate change, which is a global issue with huge impact on society, ecosystems, and the world as a whole. Because emissions of greenhouse gases are a large part of the environmental impact caused by the business activities of the Daigas Group, we actively engage in taking appropriate measures. In accordance with our "Daigas Group Environmental Policy," the Daigas Group makes efforts to lessen the environmental impact of its business activities and customers through the expansion of utilization of natural gas and renewable energies, the provision of environmentally friendly products and services. And through our business activities, we contribute to environmental improvement and the

Group (Scope 1 and Scope 2), and about 22.27 million tons, or about 80%, emitted by others in our value chain (Scope 3).

GHG emissions from city gas combustion on the customer side amounted to 16.39 million tons in the reporting year in terms of CO2, accounting for about 59% of the total. To reduce CO2 emissions in society as a whole, it is important for Osaka Gas to promote energy conservation using natural gas, an energy source with low CO2 emissions, and further popularize high-efficiency equipment and systems such as its "ENE-FARM" and cogeneration systems.

GHG emissions through electricity generation by the Daigas Group, as measured in terms of CO2, came to 5.05 million tons, representing about 18% of the total emissions from the Group's own business activities. With the power generation business expanding, the ratio of CO2 emissions from that business has been increasing. As a way of reducing GHG emissions from power generation, the Group will continue to actively introduce highly advanced energy-efficient power generation facilities and use renewable energy sources.

GHG emissions from material and fuel procurement totaled 5.03 million tons, as measured in terms of CO2 in the year, accounting for about 18% of the total emissions. The procurement of energy sources, especially LNG, accounted for over 70% of that amount. Under these circumstances, we will continue our efforts to improve

LNG, natural gas

City gas use / power generation

use / marketing use

LPG

City gas use / marketing use

Coal, biomass

Power generation use

Other purchased goods

Materials / consumable goods / capital goods / gas equipment for sale / electricity / gasoline and others

City gas production/supply

Power generation

LBS business (Life & Business Solution)

Urban Materials IT development

Business office

Heat supply

Others

• Engineering
• Energy services
• Renovation, maintenance
• R&D etc.

Chemical products

Services

• GHG (Scope 3*3)

	Emissions
	(1,000 t-CO2)
Combustion	16,390
of city gas
Combustion	753
of LNG
Total	17,143

Sales, waste disposal

(Business activities by companies

outside the Daigas Group)

development of sustainable societies locally, nationally, and internationally by pursuing harmony with the environment and making efficient use of energy and resources.

Materiality

Energy / Emissions

(Contribution to reduction in amount of CO2 emissions)

fuel efficiency regarding the operation of LNG tankers in collaboration with resource suppliers.

Activities that have potential environmental impacts other than GHG emissions include the disposal of waste (general waste and industrial waste), and the disposal of excavated soil and polyethylene pipes associated with gas pipe construction. However, the recycling rates are high for such waste, a situation we will try to maintain in the future. About 97% of water used for our industrial activities is taken from the sea. Such water is mostly used to vaporize LNG at LNG terminals. Seawater is also used as coolant inside the steam turbine

• GHG (Scope 3*1)

	Emissions
	(1,000 t-CO2)
LNG, natural gas	3,680
LPG, coal, biomass	185
Purchased goods	1,165
Total	5,031

• GHG (Scope 1 and 2)

	Emissions (1,000 t-CO2)
City gas production	105
Business office (including supply)	30
Power generation	5,052
Heat supply	91
LBS and others	234
Total	5,513

Commuting, business trips

Product shipment

Outlets providing sales support to Osaka Gas

Waste disposal

Leasing of assets

FY2021.3 target

FY2021.3 result

condenser at some power plants. Once used, the water is discharged into the sea without being consumed under strict control.

• Waste

Generated Recycled

• Chemical Substances and Discharge of Water

Reduction of	Cumulative reduction of
7million tons	5.6million tons

Several initiatives have been taken from FY2018.3 to FY2021.3. The initiatives in Japan include: cryogenic power generation at our city gas production facilities, the introduction of renewable energy sources and high-efficiency thermal power generation, the introduction of fuel cells and gas-powered air conditioning and high-efficiencyhot-water heaters at customer sites, and conversion to the use of natural gas as a fuel. The introduction of high-efficiency thermal power generation and fuel conversion to natural gas were also promoted overseas. These efforts have

Combustion of LNG

Combustion of city gas

Scope 3
Scope	Business activities
1 and 2

LNG, natural gas

LPG, coal, biomass

Other procurement items

City gas production/ supply, business ofce

Power generation

Heat supply

Sources of emission factors used for calculating CO2 emissions

● Production and transmission of city gas:

"Life cycle evaluation of city gas" on the

website of the Japan Gas Association

● Production and shipment of LNG:

Calculation of life cycle greenhouse gas

emissions of LNG and City Gas 13A (papers

presented at research presentation meetings

of the 35th Meeting of the Japan Society

of Energy and Resources, June 2016)

● Production and shipment of LPG and coal:

Future forecast for life cycle greenhouse gas

emissions of LNG and City Gas 13A

(Energy and Resources, Vol. 28, No. 2,

General waste	1,120 tons	94%
Industrial waste	114,436 tons	97%
Excavated soil	701,910 tons	0.3%
PE pipe	146 tons	100%
Used gas	1,703 tons	86%
appliances
recovered
	* At time of city
		gas production

		Amount of
		discharge
NOX		853 tons
SOX		185 tons
Toluene		37.6 tons
Xylene		10.8 tons
COD*		2.9 tons
Discharge	Sewer	1.205 million m³
of	River	3.196 million m³
water	Sea	554.149 million m³

Emissions (1,000 t-CO2)

97

GHG emissions due to energy consumption arising from various activities, including commuting of employees, business trips, transportation of products, business activities at outlets that provide sales support to Osaka Gas, disposal of own waste, disposal of product waste, and leasing of assets.

resulted in a total reduction in CO2 emissions of approximately

5.60 million tons. In FY2021.3, we did not achieve our target,

partly as a result of delayed progress on new projects in previous

fiscal years. We have set new targets for FY2022.3 onward, and

will further promote related initiatives.

GHG emissions:

27.78 million

tons-CO2

Customer side

LBS business and others

Sales, waste disposal (business activities by companies outside the Daigas Group)

March 2007)

● Other main emission factors:

Emission factors for calculating supply-chain

greenhouse gas emissions, etc.

(Database Ver. 3.1) published in March 2021

by the Ministry of Environment

CO2 emission factors used	Breakdown of Scope 3 categories
● Electricity: 0.65 kg-CO2/kWh (2016 anti-global warming	*1 Category 1−4 (purchased products, capital goods, fuel
procurement, upstream transportation)
plan; FY2014.3 average emission factor for fossil-based
*2 Category 5−9, 12−14 (waste, business trips, commuting,
electricity sources)
leased assets, downstream distribution, end-of-life treatment
● City gas: 2.29 kg-CO2/m³ (based on Osaka Gas data)
of sold products, franchises)

Companies subject to the calculation of GHG emissions:

Osaka Gas Co., Ltd. and 56 companies among 154 consolidated subsidiaries are subject to calculation of GHG emissions. Those housed in office buildings as tenants and whose environmental data are difficult to grasp and whose environmental effects are minimal are not subject to such calculation. Also excluded from the calculation are overseas companies, except one company.

● Others: Factors listed under the Law Concerning the

*3 Category 11 (use of sold products)

Promotion of Measures to Cope with Global Warming

63 ESG Highlights

Social	Results and evaluation of former materiality indicators
	(FY2019.3 - FY2021.3)

Creating Value for Customers

The Daigas Group will endeavor to ensure stable procurement, stable supply, and Fundamental Concept security to enable customers to utilize energy safely. In so doing, the Group will

provide products and services of value to its customers.

The Daigas Group is committed to making a positive contribution to realizing a higher level of comfort and development in the business activities of its customers through safe and stable supply of natural gas and other energy sources including electricity and LPG, and by ensuring safe use of gas and equipment with an improved level of services for its customers. We believe that an important foundation in realizing this will be improvement of energy resilience so that customers can use energy without worry. We will endeavor to provide products and services that give utmost reassurance to safety and will take on the challenge of creating value in line with customers' wishes in order to be a corporate group that continually evolves and develops alongside its customers.

				In FY2021.3, all procedures were conducted based on guidelines in
Materiality		FY2021.3 target	FY2021.3 result
		accordance with laws and regulations as well as in-house rules for
		100%	100%
Customer Health	processes such as quality control of gas in LNG terminals, safety
and Safety*	inspection of gas pipelines and supply facilities, and safety
inspection of gas appliances with customer consent.
* Percentage of city gas for which health and safety impacts are assessed for improvement against total city gas provided by Osaka Gas

Being a Good Corporate Citizen Contributing to Society

Fundamental Concept	Through communication with society, we aim to advance the sustainability of local
communities.

Getting to Know

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ESG Highlights

Corporate Governance

Financial Section

64

the Daigas Group

Co-creation of Value

Complying with Laws and Regulations and Respect for Human Rights

The Daigas Group believes that observing compliance and respecting human rights Fundamental Concept are the most important factors for the Group in winning trust from customers and

society, and constitute the basis of business continuity.

Based on our notion that compliance extends beyond just	partners, and all other parties, and to respect human rights.
following laws and regulations to include exhibiting decent	Ensuring compliance is the most important thing we can do to
behavior as a member of society, the Daigas Group recognizes	gain the trust of customers and the society, and is the basis for
fulfilling compliance as continuing to live up to the	expectations	continuing our business. Recognizing that every management
of customers, employees, society and shareholders while	and employee is the key to compliance, we are continually
winning their trust and sympathy. The Group thus endeavors to	conducting training sessions and employee surveys to raise
maintain fair and honest relations with customers, business	awareness.
Materiality		Although there were no substantiated complaints regarding breaches of customer privacy, the Daigas Group will
Customer Privacy	continue endeavoring to ensure complete management of all customer data.
					A total of 41 suppliers began new business transactions with
Materiality		FY2021.3 target	FY2021.3 result
	Osaka Gas in FY2021.3. In the year, no business deals were
		100%	100%
Supplier Assessment*		barred from being started due to violations of standards set in
(Impact on the environment and society,		the fields of environmental and social impacts, human rights
	and labor practices.
human rights and labor practices)

* Percentage of new suppliers that have been screened using criteria regarding environment, social impact, human rights and labor practices

Management Policy for Human Growth

The Daigas Group is working to become a corporate group that promotes the growth of its Fundamental Concept employees through work by employing a personnel management system that promotes an

environment in which individuality and initiative are respected and diverse talent is cultivated.

The Daigas Group strives to secure employment, and aims to be a	the "Daigas Group Diversity Promotion Policy" to ensure that a
corporate group where all employees can achieve personal growth	diverse range of people can play active roles at the Daigas Group.

Through business activities rooted in communities, the Daigas Group works to build good relationships with various stakeholders, based on an understanding of changes in the environments and issues faced by local communities. While actively disclosing information to promote better understanding of our business, we are working on creating value with society

through their work. To that end, we have introduced career-course-	Convinced that ensuring employees' safety and maintaining/
specific human resources systems designed to respect and put to	improving their physical and mental well-being are keys to all our
full use the individuality and autonomy of employees, and we have	operations, we are also undertaking efforts to prevent work
been conducting a wide range of training. We have also formulated	accidents and to promote fitness.

(joint efforts with local communities) including the "Small Light Campaign" by our employees, with the focus on five areas which are "Regional Community," "History and Culture," "Sports and Health," "Safety and Security," and "Diet." We are undertaking these activities by making active use of the Daigas Group's business resources. By doing so, we will contribute to the development of sustainable local communities in which people can enrich their lives in comfort.

Materiality		FY2021.3 target	FY2021.3 result
		Development of	■ Average hours of
		training per employee
Training and	human resources,	25.1hours
improvement of
Education
work environment

• e-Learning(safety, information security, environment, human rights) program
• • Includes some temporary employees and part-time workers

No. of 5,411 / course participants:

No. of hours: 3.61hours / person

To help develop employee skills, we conduct assessments through meetings between employees and their superiors based on Management by Objectives (MBO), with periodic follow-up meetings. This mechanism encourages each individual's willingness to grow and helps us formulate a training plan.

Materiality		FY2021.3 target	FY2021.3 result
Communities
	100%	100%
Local

In FY2021.3, all major business offices undertook various activities tailored to their characteristics.

We promoted communication enhancement activities to deepen the public's understanding of business projects run by the Daigas Group. In addition, we filed proposals aimed at building resilient cities and communities while developing programs for making regional communities attractive by adding new value.

					Based on the Act for Measures to Support the
Materiality		FY2021.3 target	FY2021.3 result
		Development of the Next Generation and the Act on the
			■ Percentage of women	■ Percentage of
			Promotion of Women's Participation and Advancement
Diversity and	Promotion of	among personnel	women in	in the Workplace, we have been promoting initiatives
hired for career-track	management
diversity	with the aim of maintaining a 30% or higher female
Equal	positions	positions
	26.8%	5.0%	personnel ratio in career-track positions and achieving
Opportunity		a female manager ratio* of 5% by 2020.
			* Percentage of women in managerial or higher positions

65 ESG Highlights

Information Disclosure to Stakeholders - Responding to TCFD Recommendations -

Fundamental Concept	For the Daigas Group, climate change represents an important management challenge. We support
the TCFD recommendations, and utilize them as indicators to validate our climate change response.

The Daigas Group recognizes that climate change has the	making our responsibility to do so clear to our stakeholders, will
potential to impact business revenue and expenditures. We	lead to the sustainable development of both our business and
understand the business risks and opportunities presented by	local communities.
climate change, and believe that implementing measures, and
		Please refer to "Climate Change Initiatives -Recognition of and Action on Risks and Opportunities-" on P.33 for
Materiality
	recognition of risks and opportunities of climate change and details associated with climate change in the areas of
Economic Performance*	governance, strategy, risk management, and indicators and targets-the core elements recommended by the Task
		Force on Climate-related Financial Disclosures (TCFD). We also report these matters on our sustainability website.

* Financial implications and other risks and opportunities due to climate change

Getting to Know

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Corporate Governance

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66

the Daigas Group

Co-creation of Value

Efforts Under the Spread of COVID-19 Infections

In response to the COVID-19 pandemic, Osaka Gas, Osaka	present, based on the "Act on Special Measures for Pandemic
Gas Marketing Co., Ltd., Daigas Energy Co., Ltd., and Daigas	Influenza and New Infectious Diseases." At the same time, we
Gas and Power Solution Co., Ltd. have all implemented the	are also working together with local communities on social
following initiatives since the COVID-19 pandemic was	contribution activities.
confirmed in Japan and abroad in late January 2020, until the

• Measures to secure a stable supply of gas and electricity and ensure safety

In March 2020, we established a task force to secure a stable supply and transitioned to a system tailored to the circumstances. Through these measures, we have been working to secure a stable supply of gas and electricity and ensure safety.

	In order to secure a stable supply of gas and electricity, we have implemented the following
	initiatives.
Measures at	●At production sites and power plants, we are limiting entry to central control rooms by persons other than operators,
and are also taking measures such as disinfections and measuring temperatures when employees enter central
LNG terminals	control rooms. Additionally, there is no contact between employees when changing shifts, and instead a video

Formulation of Human Rights Policy

In April 2021, the Daigas Group formulated the "Daigas Group Human Rights Policy."

The Group believes that the utmost respect should be given to human rights in all aspects of our operations. As such, when engaging in business activities, we have complied with laws and regulations in different countries and regions, respected international standards, and taken into consideration different cultures, customs, and the interest of stakeholders. In response to the announcement of "Japan's National Action Plan on Business and Human Rights (2020-2025)" by the Japanese government in October 2020, we formulated a human rights policy and at the same time separated the section on "Respect for Human Rights" from the chapter on "Complying with Laws and Regulations and Respect for Human Rights" in the "Daigas Group Charter of Business Conduct*" and made revisions to the

1	Endorsement of international agreements

We support international agreements on human rights, including the International Bill of Human Rights and the Declaration on Fundamental Principles and Rights at Work of the International Labour Organization (ILO). We commit to respect human rights as set out in the United Nations Guiding Principles on Business and Human Rights.

2 Scope of application

This policy applies to all directors, officers, and employees of the Daigas Group.

3 Legal compliance and respect for internationally

recognized human rights

"Daigas Group Code of Business Conduct," in order to demonstrate the Daigas Group's stance toward respecting human rights. Additionally, we revised the "Daigas Group Diversity Promotion Policy," aiming to become a corporate group where a diverse range of personnel respect and accept each other without discrimination, and experience a sense of purpose at work.

As we look to expand the scope of our business fields, the Daigas Group will focus on promoting diversity. At the same time, we will also fulfill our responsibility to respect the human rights of Daigas Group stakeholders in all aspects of our business activities, across the Group as a whole, in accordance with the "Daigas Group Human Rights Policy."

• The "Daigas Group CSR Charter," which was a set of guiding principles for the actions of Directors, Audit & Supervisory Board Members, and employees, was revised to form the "Daigas Group Charter of Business Conduct," which expresses our stance as a company.

5 Human rights due diligence

We conduct human rights due diligence, in which we identify and assess the negative human rights impact of our business activities and take steps to prevent or mitigate such risks.

6 Remedy

If it becomes clear that the Daigas Group's business activities are causing or contributing to negative impacts on human rights, we will work to correct and remedy the situation through appropriate procedures.

7 Stakeholder engagement

conferencing system is used.

●When receiving materials from LNG and LPG ships, our employees do not board the ships. Instead they perform

loading operations on a non-contact basis from land.

	In order to secure a stable supply of gas and ensure the safety of supply facilities (pipelines, etc.), we
Measures to	have implemented the following initiatives.
●We monitor and control the status of the supply of gas in an integrated manner, using a 24-hour system. At the Central
secure supply
Control Office, which issues directions for the prompt dispatch of staff from respective locations in the event of any
and ensure
reports from customers, we have taken measures such as disinfections and measuring temperatures when employees
safety	enter the room, and distributing offices. In September 2020, we held a company-widedisaster-prevention drill under
	the assumption of an ongoing COVID-19 pandemic. Additionally, we have formulated guidelines for the establishment
	and operation of general supervisory headquarters at sites and area task forces in the event of emergency.

• New safety-conscious initiatives at showrooms and events

• In order to assist customers unable to visit showrooms during the COVID-19 pandemic in their consideration of household furnishings and appliances, we are providing online viewings and 3D virtual viewings utilizing a communication app at the "hu+gMUSEUM," a center for providing information about food and living.
• For the "Gas-ten," which previously we held at facilities, etc., we held an online "Tsunagaru Gas-ten" in consideration of customers' safety. (Held from October 1 to December 20, 2020) See P.40 for details.

Image of virtual tour of hu+gMUSEUM

(Users can see explanations by pressing the round orange buttons during virtual tours)

We comply with the applicable laws and regulations of the countries and regions where we operate. In case where there is a conflict between internationally recognized human rights standards and the laws and regulations of each country or region, we will pursue ways to respect international human rights principles.

4 Respect for human rights in all process of

business activities

In all processes of our business activities, we strive to prevent and reduce negative impacts on the human rights of stakeholders involved in the Daigas Group's businesses.

4-1 We respect the human rights of our employees and provide a healthy and comfortable work environment.

4-2 We respect human rights of customers and business partners. In case where negative impacts on human rights by business partners or other related parties are directly linked to the Daigas Group's businesses, products or services, we will demand that such business partners and related parties respect human rights and not infringe upon them.

4-3 We assess and address the impact of our business activities on local communities.

We engage in sincere dialogue and consultation with affected stakeholders on how to address actual or potential impacts on human rights.

8 Education and awareness

We provide education to ensure that all directors, officers, and employees of the Daigas Group understand this Policy and act in accordance with this Policy in our business activities.

9 Reporting

We report the progress on our human rights efforts that we make based on this Policy through our website and other communication channels.

• Measures to ensure the safety of employees

• In offices, we are taking measures to prevent the spread of infection, such as providing disinfectants, encouraging handwashing, and setting up partitions in offices and other places.
• In order to prevent infection among employees, we have set up an environment for working from home by developing a remote access environment and introducing online conference systems, internal SNS, etc. Additionally, we are promoting the active utilization of working from home and

staggered shifts by expanding the range of employees eligible for these programs and increasing the frequency of their use. Looking ahead, we will continue actively utilizing working from home and staggered shifts from the perspective of preventing infection and controlling the flow of people.

• We are cancelling and delaying business trips and group training sessions, seminars, etc., or moving these events online, depending on the status of the spread of infection.

67 ESG Highlights

Governance Compliance

Improving Compliance Awareness: In-house Training Efforts, etc.

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Promotion of Global Compliance

We are continually working to improve compliance awareness through such efforts as training sessions and awareness surveys. For example, we conduct case method training to sharpen the ability to think ethically, and offer Compliance Coordinator and Staff Seminars for compliance coordinators and staff who serve as key personnel in the compliance efforts of organizations and affiliated companies (including all subsidiaries), training sessions for organizational heads and higher-ranked managerial personnel featuring outside

instructors, and education arranged by job level for managers and new employees. In addition, we have achieved our goal of 100% for the training participation rate among Daigas Group employees used as an indicator by extending the compliance training directed by individual organizations and affiliate companies. In addition, we undertake educational activities such as soliciting "Compliance Slogans" from employees each year (10,354 submissions were received group-wide in FY2021.3).

In view of expanding business operations abroad, an English	FY2021.3, we utilized the Osaka Gas proprietary risk
version of the leaflet summarizing the "Daigas Group Corporate	management system "G-RIMS," with revisions to certain items
Principles," the "Daigas Group Charter of Business Conduct,"	for overseas subsidiaries, as we endeavored to identify the
the "Daigas Group Code of Business Conduct" and Compliance	status of measures toward risks at 18 key subsidiaries
Desks used for the internal reporting system was posted on the	overseas.
intranet for dissemination to employees. As in FY2020.3, in

Reporting Systems and Compliance Desks

• Compliance Promotion Systems

The Daigas Group has established "Compliance / Risk Management Subcommittees" under the "ESG Committee," in order to consider cross-organizational measures and share information, etc. The Compliance Office in the General Affairs Department promotes compliance across the Daigas Group as a whole, and we have also selected "Heads of Compliance" at each Business Unit, Company, and Core Affiliate, as well as "Compliance coordinators" and "staff who serve as key personnel in the compliance efforts" in each organization of

• Compliance Education

The Daigas Group believes that ensuring compliance is the most important thing we can do to gain the trust of customers and the society, and is the basis for continuing our business. Recognizing that every management and employee is the key to compliance, we are continually conducting training sessions and employee surveys to raise awareness.

The Daigas Group has established "Compliance Desks" as a	related parties. Furthermore, we have also established a
system aimed at quickly identifying cases of violations of laws	"Human Rights Desk" in the Human Resources Department as
and regulations, misconduct, etc., and responding quickly and	a contact point for consultations about the human rights of
appropriately. "Compliance Desks" have been established	employees, as well as "Harassment Desk" within respective
within Osaka Gas, key affiliates, an external attorney's office,	organizations and affiliates as contact points for consultations
and elsewhere, to accept consultations and reports from	about harassment from employees.
employees of the Daigas Group, business partners, and other
■ Number of Consultations / Reports	■ Breakdown of Report Content

Osaka Gas and each affiliate, as part of efforts to enhance compliance across the Daigas Group as a whole.

Representative Director and President

ESG Council

Head of ESG Promotion (Vice President)

ESG Committee

Compliance /

Risk Management Subcommittee

(No.)
200	191
		165
150
112
100
50
0	2020.3
2019.3	2021.3	(FY)

Others		14%
Lack of		Human rights,
management
17%	harassment
	38%
Corruption or	8%
misconduct			23%

Labor matters

Compliance Office, General Affairs Dept. (Secretariat)

Strengthening Information Security Measures

Reception desks for consultations and reports (Compliance Desks)

(Each Business Unit, Company, Core Affiliate, etc.) Head of Compliance

(Each organization and affiliate)

Compliance coordinators and staff who serve as key personnel in the compliance efforts

The evolution of the Internet has led to sharp rises in leaks of confidential information, infections by computer viruses and other serious social issues, and the harm suffered by companies from such incidents increasingly extends beyond direct damage, even resulting in the loss of public trust.

As a business operator responsible for social infrastructure, Osaka Gas recognizes the importance of managing customer information and other data, and has established Cyber Security Committee as a corporate committee in August 2019. Under the leadership of the Information Security Subcommittee, which is placed under the Cyber Security Committee, we have sought to enhance the security measures.

• Information Security Management Structure

Representative Director	Executive Board
and President
All Company Committee Meetings
ESG Committee	Cyber Security	Investment Evaluation	DX Committee
Committee	Committee
Information Security Subcommittee	Control Security Subcommittee

Monitoring, advice and directions for

improvement pertaining Secretariat to information security

measures

Daigas Group companies (including Osaka Gas)

(As of April 1, 2021)

69 Corporate Governance

Corporate Governance

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Corporate Governance

Financial Section

70

the Daigas Group

Co-creation of Value

Representative	Chairman	Representative	Representative	Representative
Director	of the Board	Director	Director and President	Director
Takeshi Matsui	Takehiro Honjo	Tadashi Miyagawa	Masataka Fujiwara	Takayuki Tasaka

• Basic Views on Corporate Governance

■ 1 Board of Directors, Directors of the Company

The Board of Directors consists of 10 Directors (including four outside Directors). Its mission is to formulate the Board of Directors Regulations and standards for voting on resolutions in the Board of Directors, make swift and appropriate decisions about important matters that affect the whole Group including subsidiaries and to enhance supervisory capabilities. The Articles of Incorporation stipulate that there shall be no more than 15 Directors. They also direct that appointment of Directors is to take place with a quorum of shareholders possessing at least one-third of shareholder voting rights and by a majority of voting rights held by shareholders present, and that no cumulative voting may be used for appointing Directors. 12 Board of Directors meetings were held in the fiscal year ended March 31, 2021. Meetings discussed the Group's management plans, the establishment of important organizations, important human resources matters, execution of important investments and agreements greater than a certain amount, and operational status reports etc. from executive Directors. The rate of attendance at meetings was 100%.

■ 2 Executive Officers

The Company has adopted an executive officer system (Executive Officers consist of Executive President, Executive Vice Presidents, Senior Executive Officers, and Executive Officers), which enables the Directors of the Company to focus on making business decision and monitoring and supervisory functions, and worked toward strengthening the business efficiency and the supervisory functions by vitalizing the Board of Directors. Executive Officers perform duties

■ 5 Auditing Department

The Company established the Auditing Department as an internal audit division. Based on a yearly auditing plan, it evaluates, from independent and neutral viewpoints, the adequacy of business activities in light of in-house standards, their efficiency, and the appropriateness of various systems and standards adopted by the Company. In addition to giving recommendations and conducting follow-ups that lead to business improvements in the organizations subject to audit, the department summarizes the issues and reports its results to the Executive Board. The Auditing Department is subject to periodical evaluation from an outside party to maintain and improve its auditing abilities.

■ 6 Advisory Committee

The Advisory Committee consists of all the outside Directors (four), the President and, if necessary, a person appointed by the President (the President may appoint up to one person from among the other Representative Directors). From the perspective of ensuring objectivity and transparency in the decision- making process, the Advisory Committee deliberates on matters related to the election of candidates for Directors and Audit & Supervisory Board Members, matters related to the selection and dismissal of Representative Directors and other Executive Directors, and matters related to the remuneration of Directors. The committee chairperson is appointed by the committee members.

■ 7 ESG Committee

The Company has established the ESG Committee to coordinate and advance group-wide ESG management, which is chaired by the Head of ESG Promotion, who is the Officer in charge of overseeing the promotion of Group's ESG management, and is composed of the General Managers,

As a corporate group that powers "continuous advancement" in consumer life and business, our Corporate Principles aim to create four types of value: "Value for Customers," "Value for Society," "Value for Shareholders" and "Value for Employees" by providing

(the "Group") will respond appropriately to the exercising of shareholder rights, and work toward maintaining and increasing a sense of trust by dialogue and cooperation with its stakeholders. In addition, the Group will continue to enhance and strengthen

determined by the Board of Directors, and some Representative Directors and Directors concurrently serve as Executive Officers to make management decision-making more accurate and efficient.

etc. of relevant divisions. The ESG Committee promotes activities relating to the Group's sustainability, including the environment, compliance, social contribution, respect for human rights, and risk management.

various products and services relating to not only the energy business, including natural gas, electricity and LPG, but also its peripheral services and non-energy businesses, such as urban development, materials and information businesses.

Under this Corporate Principles, the Company and its affiliates

corporate governance in order to respond quickly and appropriately to changes in the business environment surrounding the Group, make transparent, fair and decisive decisions, and execute business efficiently and appropriately.

■ 3 Executive Board

The Company examines basic management policies and important management issues at the Executive Board and fully deliberates the foregoing before decision-making. In accordance with internal regulations, the Executive Board consists of the Executive President, Executive Vice President, Senior Executive Officer, Head of Corporate

■ 8 Cyber Security Committee

The Company has established the Cyber Security Committee to reinforce the cyber security measures of the Group, which is chaired by the Officer in charge of the Information/Communication Systems Department, and is composed of the General Managers, etc. of relevant divisions.

• Corporate Governance Organization Chart (as of June 25, 2021)

The Company has selected to be a company with Audit &	and Director remuneration. The Company considers its current
Supervisory Board and conducted the introduction of an executive	governance system best suited in order for responding swiftly to
officer system, appointment of multiple Outside Directors, and	changes in the business environment, ensuring transparency,
establishment of voluntary advisory committees corresponding to	fairness and boldness in decision-making, and implement efficient
appointment of Directors and Audit & Supervisory Board Members	and appropriate actions.

General Meeting of Shareholders

Appointment

Proposal and Report

Appointment

Report

Appointment

Report

Executive

Audit,

4

Audit

*1 Board of Directors: 10 Directors

Agency

1

1

etc.

Audit & Supervisory

Agency

(6 Internal Directors and 4

Directors (Board of Directors)*

Board Members*3

Accounting

Outside Directors)

Making Important

(including Outside Directors)

(Including Outside Members)

Auditor

Cooperation

*2 Advisory Committee: 4 Outside

Decisions; Monitoring

Ofce of Audit &

Delegating

Proposal

Making Important

(Sharing Information, etc.)

Directors, Representative

and Supervisory

Authority

and Report

Decisions; Supervision

Supervisory Board

Director and President and a

Function

Audit

person appointed by the

Consult

2

Representative

Function

President (up to one member

6

Approval of Audit Plans, etc. / Report Audit Results

who is a Representative Director)

Advisory

Director and President

Cooperation

(Executive President)

Corporate Committees

Committee*2

3

Report,

(Sharing

*3 Audit & Supervisory Board: 5

(Nomination and

Delegating

Executive

etc.

・ESG Committee

7

Information, etc.)

Audit & Supervisory Board

Remuneration)

Board*

4

・Cyber Security

8

Cooperation

Members (2 full-time Audit &

Authority

Committee

・DX Committee

9

(Sharing

Supervisory Board Members, 3

Outside Audit & Supervisory

Submission

・Investment Evaluation

Information, etc.)

and Report

Proposal

Committee

10

Audit,

Board Members)

Business

Execution

Coordination,

etc.

*4 Executive Board: 1 Executive

Function

Facilitation, etc.

President, 3 Executive Vice

Executive Directors

Executive Directors

Presidents and 6 Senior

Executive Ofcers

(Executive Vice Presidents, Senior Executive Ofcers) 2

Internal

(Executive Vice Presidents, Senior Executive Ofcers)

2

(In principle, it is held three times

Osaka Gas: Basic Organization

Audit

per year as "ESG Council.")

Auditing Dept.

5

Affiliates

Internal

Audit

Headquarters, and Head of Business Unit (including the President of Network Company). In principle, the Executive Board is held three times per year as "ESG Council," which deliberates on activity plans for reports on activities related to promotion of ESG management.

■ 4 Audit & Supervisory Board,

Audit & Supervisory Board Members

The Audit & Supervisory Board consists of five Audit & Supervisory Board Members, of whom three are Outside Auditors and each Audit & Supervisory Board Member monitors the execution of work duties by the Directors.

Board of Directors

Percentage of Non-executive Directors	Percentage of Independent Outside Directors
				Non-executive					Outside
				Directors:					Directors:
50%		5 persons		40%		4 persons
		Internal
Executive	Directors:
Directors:
				6 persons
5 persons
Directors: 10 persons	Directors: 10 persons

■ 9 DX Committee

In April 2021, the Company established the DX Committee chaired by the President of the Corporate Planning Headquarters and consisting of the General Managers of relevant divisions, etc. The Committee promotes DX (Digital Transformation: a business transformation by utilizing digital technology) for the entire group while coordinating the alignment with business, IT, and financial strategies across the organization.

10■ Investment Evaluation Committee

The Committee is chaired by the President of the Corporate Planning Headquarters and composed of the General Managers of relevant divisions, etc. It examines risk and return and assesses investments in excess of a certain amount, and it reports findings to the Executive Board to help make appropriate investment decisions.

Advisory Committee

		(Nomination)			(Remuneration)
Internal					Internal
Director:						Directors:
1 person	80%		Outside	2 persons	67%		Outside
					Directors:					Directors:
					4 persons					4 persons
		Directors: 5 persons		Directors: 6 persons