Tokyo Gas Group has set targets in six key areas of CSR activity, and is working to achieve and exceed these targets in order to improve its CSR practice.
Following the formulation in October 2014 of our "Main Policies FY2015-2017 toward Realizing Challenge 2020 Vision," (hereafter "Main Policies"), we reviewed our key CSR activities in light of social expectations and identified specific issues for each activity that should be addressed as a matter of priority ("material aspects") in accordance with GRI Guidelines.
Key activities and material aspects are revised every year pursuant to review taking into consideration stakeholder opinion. As a result of the latest review, “supply chain management” was added as a material aspect of all six key activities in fiscal 2017. The material aspects of “contribution to local communities” were also revised by dividing “enrichment of society” into “building a society and a way of life that is good for the environment” and “enriching our life and culture,” and action continues to be taken to address these aspects.
Initiatives undertaken to tackle material aspects will continue to be assessed and improved following a PDCA approach.
■Determination and Review of Material Aspects
■The issues to be considered are identified comprehensively based on GRI G4 Guidelines, ISO 26000, and other relevant international guidelines on the social responsibilities of organizations.
■The impacts of these social issues (CSR-related issues) are determined based on the business characteristics, strategies, and scope of impact of each of the Tokyo Gas Group's LNG value chains, then narrowed down to important issues.
■Important issues selected at STEP 1
- Questionnaire findings and other feedback are assessed to provide a stakeholder perspective.
- The issues selected are provisionally ranked by the relevant business departments.
■The results of assessments of material aspects from both stakeholder and Tokyo Gas Group perspectives are mapped.
Important issues to be addressed by the Group on a priority basis are identified through internal consultations.
■The suitability of the important issues is assessed by experts in relevant fields.
■The Group's key CSR activities are reviewed and the important issues defined for each activity as material aspects.
■Material aspects are finalized by approval of the Corporate Communications Promotion Committee (the body driving CSR).
■Targets ("CSR indicators") are set for each material aspect in collaboration with the relevant business departments.
■Activities are assessed based on attainment of CSR indicators for the material aspects identified, and a CSR report published.
■Annual reviews are conducted taking into account the results of internal and external questionnaires, SDGs and other international goals and guidelines, and the views of outside experts.
■This information is used to review the material aspects and CSR indicators and improve report content, and is incorporated into business.
Grounds for Determining Material Aspects
■Opinions from Experts
- Requirements under international guidelines
- Stakeholder feedback
(questionnaires, expert opinion, employee opinion surveys, etc.)
- Questionnaire and assessment items used by finance-related research agencies
- Environmental impact assessment
* Main Policies (evolution of the total energy business, acceleration of global business development, construction of a new group formation)
- Priority vis-a-vis group business strategy* (scale of impact, degree of urgency)
Regarding the Six Key Areas of CSR Activity and 17 Specific Issues (“Material Aspects”)
Director of CSR Asia's Japan office
Although the material aspects and key areas of activity are described comprehensively in just the right amount of detail, it is not sufficiently clear what distinguishes them. In future, greater consideration should be given to describing what is distinctive about “safety,” “disaster response,” and so on at Tokyo Gas.
Themes of interest in the fields of community development and utilities are identified in the SDGs. The 17 goals are informed by a commitment that “no one will be left behind,” and some businesses overseas have committed themselves to pursuing “access to energy” to ensure that no one is left without access to energy. If its domestic operations remain as important to Tokyo Gas as at present, then the possibility that the graying of Japan’s population may result in some people finding themselves without access to energy makes this an opportune time to consider what measures will be required to ensure stable delivery of energy in the future.
Concern for the environment is an important priority for energy companies. Tokyo Gas’s sustainability and forecasts, expansion of clean energy sources, readiness for the scramble for resources, and stance toward alternative energy sources such as bioenergy will also be tested. Tokyo Gas will need to take the lead in putting natural gas’s advantages over other sources of energy front and center.
Action on ESG as a Social Infrastructure Provider
Investors’ concern with sustainability and ESG stems from the fact that they provide an indication of whether a company has a future growth strategy. Asset owners in Japan want to know whether a company will grow and whether it has any sources of growth. Investors will therefore rate a company like Tokyo Gas more highly if they can see that it intends to grow by working in collaboration with consumers and business partners as an energy partner.
Although ESG investors’ demands differ from those of other stakeholders, Japanese investors too probably consider the safety aspects to be a given and there is scope for these aspects to be highlighted more.
Contribution to Regions
Globally, the focus of attention concerning oil and gas companies is firstly on the environment, and secondly on human rights. Overseas where it needs to raise its low profile, Tokyo Gas will find it easier to expand its operations if it conveys the message that it is a company that benefits regions by contributing to local communities (through local investment).
The Business Environment and Future Directions Following Full Liberalization of the Gas and Electricity Retail Sectors
Professor, Graduate School of Business Administration, Kobe University
Contributing to sustainability is a major pillar of CSR for public utilities. Given the changes in the business environment ushered in by full liberalization of the electricity and gas retail sectors, they also need to ensure energy security and fulfill their responsibilities to local communities.
Due to the opacity of differences in the quality of gas and electricity services at the stage of use, utilities need to differentiate themselves through costs and additional services. Although initiatives that contribute to communities and ensure customer satisfaction are therefore important, Tokyo Gas does not appear to place a great deal of emphasis on “creating shared value” (CSV).
The principle that not only financial performance but also shared value for society translates into growth in a company’s value is fundamental to creating shared value. This kind of approach should suit a public utility such as Tokyo Gas. It should compete not only on price, but also in terms of social value.
Regarding the Six Key Areas of CSR Activity and 17 Specific Issues (“Material Aspects”)
Business continuity planning (BCP), business continuity management (BCM), and overseas expansion will become crucial in the gas industry moving forward. It is important that suppliers’ resilience strategies extend beyond BCP to encompass also BCM, and it is hoped that suppliers will not only supply gas in emergencies, but also provide support up to the point where it can be actually used by consumers. Cooperation along supply chains is essential to BCP and BCM, and arrangements will ideally be developed together in coordination with CSR.
The companies that were especially quick to recover in Tohoku after the 2011 earthquake were those that had particularly close relations with their supply chains. Because of the wide geographical area that it serves, Tokyo Gas is well placed to play an important role in assisting the recovery of not only supply chains but entire regions.
Response to the SDGs
The MDGs have transformed into the SDGs, and the cooperation of businesses too is now sought. However, their implementation is still in the process of gaining traction. Awareness of the SDGs could thus be raised by providing information on them as part of Tokyo Gas’s communication activities.
An important first step is to identify how the 17 goals and 169 targets relate to business and to disclose the processes that have already been implemented. The next step should then be to step up those activities found as a result to require more attention.
If companies are to engage in achieving the SDG targets, they will need to adopt an “outside-in” approach so that they can assimilate external objectives. As it is unfeasible for a single company to do everything by itself, it should identify the areas in which it can contribute by identifying material aspects.
The six key activities that were identified should be divided into “issues,” such as energy security, and “themes,” such as human rights and local communities. To tackle the problems faced by local communities, it is necessary first to consider what the issues are.
Response to the SDGs
Professor, Surugadai University Faculty of Economics and Management
Of all the regions where Tokyo Gas does business overseas, it is Asia where SDGs and CSV align most closely. Looking at the region through the lens of CSV may thus reveal new business opportunities.
The action already being taken to raise employee awareness is important. The crucial questions are how employees will be involved in the widening links between the SDGs and CSV, and how awareness can be raised so that they become involved. Education in sustainable development (ESD) is one approach, and as knowledge of the SDGs permeates a workforce as a result of awareness raising and personnel on the front line and at head office work together, views on the front line will begin to emerge. When this happens, it should become possible to contribute to the SDGs by utilizing the know-how of those on the front line.
When personnel on the front line become aware of the SDGs, their frontline knowledge comes into play. At some companies, this has led to new products and new projects, and Tokyo Gas too should be able to use ESD provided through small group activities throughout the Group’s network to assist its response to the SDGs. Projects capable of contributing to the SDGs may emerge as a result of rolling these activities out horizontally among its operating companies.
Regarding CSR and CSV
The conditions that face Tokyo Gas have been transformed by several developments, not least by the full liberalization of the gas and electricity markets. The themes that companies should address as priorities will vary according to social trends, stakeholder demands, and other factors, but CSR itself will be a core concern of universal value, and will continue to be perpetually demanded of companies. At the same time, there is growing interest in the concept of CSV as a means of simultaneously tackling social challenges and enhancing economic value. It is a very contemporary issue, and it is hoped that CSR in the true sense—that is to say, CSR rooted in compliance—will continue to be valued as action is taken to address the challenges faced by today’s world.
Work Style Reform
Cooperation with local communities, human rights, and labor problems are major issues all over the world. In Japan, too, there is interest in the implementation of “work style reforms” in the realm of “labor CSR” in order to, for example, reduce long working hours and improve work-life balance. It is an area in which the Ministry of Labour, Health and Welfare is also interested, and companies are likely to be expected to step up their efforts in this area in the future.
For work style reforms to be successfully implemented, it is important that the barrier of the three monkeys—see no evil, hear no evil, speak no evil—be broken down, and that top managers and leaders see conditions in the workplace, listen to their subordinates, and engage in dialogue; in other words, they must see, hear, and speak.