Social Issues and Changes in Business Environment
The year 2016 will be remembered as a year during which the international community moved ahead in its efforts to solve global issues, as characterized by the coming into force in November of the Paris Agreement, a U.N. accord on climate change signed at the 21st session of the Conference of the Parties (COP) to the 1992 United Nations Framework Convention on Climate Change, and the formulation in December by the Japanese government of implementation guidelines following the adoption in the previous year by the United Nations General Assembly of the Sustainable Development Goals (SDGs). Efforts to establish a framework for creating a sustainable society gathered impetus across the world, although the international situation has become opaque and uncertain following Britain's decision to leave the European Union (EU) and the United States' announcement that it would withdraw from the Paris Agreement.
Competition has been intensified in the domestic energy market in view of complete liberalization of retail sales of electricity in 2016 and the complete opening of the retail gas market in April 2017.
Since its founding in 1905, the Osaka Gas Group has faced a large number of difficulties. However, the Group has overcome each of them with an undaunted and challenging spirit, while recognizing them as providing opportunities for growth. The Osaka Gas Group aims to become a corporate group that continues to be chosen by customers—by further enhancing the Group's overall CSR standard, promoting fair and transparent business operations and contributing to the development of a sustainable society—at a time when the business environment facing the Group has been changing dramatically.
What the Group Aims to Realize Under the Long-Term Management Vision and Medium-Term Management Plan
In March 2017, the Osaka Group formulated a four-year mediumterm management plan through fiscal 2021, which we call "Going Forward Beyond Borders." The management plan is part of our efforts to realize our long-term management vision toward fiscal 2031. By going beyond three "boundaries," we aim to become an innovative energy service provider that continues to be chosen by customers through successive generations.
The first boundary we will go beyond is expectations of customers. By further improving our service know-how and expertise, which we have accumulated through our operations in the Kansai region in the past 110 years, we will continuously provideservices that exceed the expectations of customers—a task that all of our employees have joined hands with each other to achieve.
The second boundary to be overcome is "business boundaries." We will not limit our operations to existing business fields. Instead, we are ready to branch out into any promising fields where we are competitive—in order to contribute to the development of society, local communities and customers.
The third boundary we are to transcend is "corporate boundaries." We are always receptive of potentially innovative ideas and are ready to team up with other promising companies for business collaboration. We are also prepared to embark on domestic and overseas projects that are even more challenging.
By overcoming these boundaries, we will work on tripling our consolidated ordinary income in fiscal 2031 from the fiscal 2018 plan. On the domestic front, we will step up peripheral energyrelated businesses in broader regions while expanding the electricity generation business, life & business solution (LBS) business and new businesses. In overseas markets, we aim to establish a business structure in which we can expect profitability from operations in strategically important regions. Based on this policy, we intend to raise the share of income from overseas operations to 50% of the income from domestic operations in fiscal 2031. Our major business fields are domestic energy service, overseas energy service and the LBS business. These three fields are subdivided into nine areas. By helping each of the nine areas to grow significantly, we will build a portfolio management system, believed to be effective in dealing with unexpected situations in the future.
Aimed at Contributing to the Sustainable Development of Society and the Sustainable Growth of the Osaka Gas Group
In recent years, increased attention is given to the aspects of ESG (environment, society and governance) from the viewpoint of enhancing corporate values in a sustainable manner. The move has resulted in establishing corporate governance codes and stewardship codes. Furthermore, moves to use ESG performance in investment judgments and monitoring have gathered momentum among global institutional investors. In formulating our long-term management In recent years, increased attention is given to the aspects of ESG (environment, society and governance) from the viewpoint of enhancing corporate values in a sustainable manner. The move has resulted in establishing corporate governance codes and stewardship codes. Furthermore, moves to use ESG performance in investment judgments and monitoring have gathered momentum among global institutional investors. In formulating our long-term management vision and medium-term management plan, "Going Forward Beyond Borders," we committed to improve our ESG aspects to meet the global standards.
In addition, we will raise further the CSR level of the entire Osaka Gas Group while abiding by rules set under the Osaka Gas Group Corporate Principles, the Osaka Gas Group CSR Charter, the Osaka Gas Group Code of Conduct and the Osaka Gas Group Environmental Activities Policy. By doing so, we will carry out ESGoriented management. Furthermore, we will undertake CSR activities in collaboration with companies that constitute the entire value chain network of the Osaka Gas Group—an action we are taking to enhance trust and confidence in us by customers and the general public at a time when we are operating in wider business fields.
On the environmental front, we will further strengthen our efforts to reduce CO2 emissions both from our business activities and at our clients—by diffusing the use of environment-friendly natural gas, installing highly energy-efficient facilities and turning more to renewable energy sources.
On the social front, we will strengthen activities in areas of human rights, labor and occupational health and safety throughout our value chain, in line with international norms and goals, such as the United Nations Global Compact, ISO 26000, Global Reporting Initiative (GRI) standards and Sustainable Development Goals (SDGs).
We will also work with local communities to create mutual values. On the governance front, we will further strengthen the Group's control and supervisory functions both in Japan and overseas including compliance and information security. We are also promoting diversity under the Osaka Gas Group Diversity Policy. Specifically, we are supporting female workers in developing and achieving their career goals while making further efforts to enable employees to work flexibly and efficiently.
The Osaka Gas Group has set indexes of materiality (important aspects of CSR) to evaluate its major CSR activities. Responding to changes in the business environment and social trends, the Group plans to review such indexes in the course of establishing a management framework that gives consideration to ESG.
By strengthening our existing CSR measures based on the Osaka Gas Group CSR Charter, the Group is committed to creating value primarily for customers, as well as for society, shareholders and employees. We will further promote ESG-oriented management to help create a sustainable society and attain the Group's sustainable growth. By doing so, we aim to become a corporate group that continues to be chosen by customers.