Basic Policy

Sumitomo Forestry Group strives to contribute to a sustainable and prosperous society through business activities that use wood, a renewable resource. To do so, we engage in responsible timber procurement activities in accordance with our Timber Procurement Basic Policy formulated in 2005 and our Timber Procurement Principles and Policies formulated in 2007. To deliver legal and sustainable timber, we only engage in responsible timber procurement. In 2015 with the Sumitomo Forestry Group Procurement Policy, we expanded our scope beyond timber to include a wide range of other procured products, such as metals, ceramics, resin and other building materials, and based on this policy, are engaged in procurement activities that take into consideration the economy, society and environment.

Page Top

Promotion System of Timber Procurement Management

Sumitomo Forestry Group established the Timber Procurement Committee, chaired by the general manager of the Sustainability Department and comprising managers from departments in charge of timber procurement for the trading and housing operations.(as of the end of March 2019). The committee discusses issues related to group-wide timber procurement, including procurement standards and risk assessments for illegal logging.

In fiscal 2018, the Timber Procurement Committee met three times as stipulated and confirmed legality and conducted the Sustainability Survey for all 109 direct import source companies who are covered in the study and 43 companies that our overseas group companies (distribution) procure from. Regularly (once a year or once every two years), we confirm legality and sustainability of both new and ongoing parties we conduct business with.

Timber Procurement Committee meeting

Timber Procurement Committee meeting

Page Top

Sustainable Timber Procurement Initiatives

Promoting Initiatives Adhering to the Procurement Policy

Procurement Policy
Under the Sumitomo Group Procurement Policy, Sumitomo Forestry Group carries out due diligence on timber procurement to ensure that the procurement is performed in a sustainable manner with consideration of legal compliance, human rights, labor practices, biodiversity conservation, and local communities.

Sumitomo Forestry Group Procurement Policy

The Sumitomo Forestry Group utilizes wood as a renewable natural resource in its business operations. To contribute to a sustainable society, we are committed to procurement activities that take into account economic, environmental and societal interests and comply with the following policy:

  1. Procurement based on legal and highly reliable supply chains
    Our procurement activities will strictly adhere to all relevant laws, regulations and societal norms, and be built on mutual understanding and trust with our business partners. Furthermore, to provide the highest quality products and services, we will work with our business partners to ensure that our procurement takes place within a sound and fair supply chain.
  2. Procurement based on fair opportunity and competition
    We will provide all our suppliers, both Japanese and foreign, a fair opportunity for business. Selection of our business partners will be based on a comprehensive evaluation of the company’s reliability and technological expertise, the product’s quality, economic efficiency, delivery date and environmental performance, and the company’s CSR (Corporate Social Responsibility) initiatives, such as advocacy of basic human and worker rights, anticorruption efforts and so on.
  3. Procurement of sustainable timber and wood products
    Wood is a renewable natural resource. To actively utilize it, we will work with our business partners on the following initiatives related to the procurement of timber and wood products:
    • Procure timber from forests that are sustainably managed
    • Work to improve the traceability of procured timber and wood products
    • Strictly adhere to the laws and regulations of the countries and regions of harvest, protect biodiversity and forests with high conservation value, and respect the cultures, traditions and economies of regions that coexist in harmony with forests.
  4. Communication
    To ensure the transparency of our procurement efforts, we will disclose information appropriately. In addition, we will communicate with our stakeholders to further improve our procurement activities.

Revised July 23, 2015

Compliance
Timber & Building Materials Business, Housing & Construction Business and each of the relevant Group timber procurement divisions confirm that the timber provided by suppliers has been legally harvested, or that the wood products they provide have been made only from legally harvested timber as a raw material. Each person in charge of procurement is required to follow the Timber Procurement Due Diligence Manual, gather the following information, cross-check relevant documents for each location and tree species, and confirm traceability of the entire supply chain all the way to the logging site.

No. Category name
1 Supplier name
2 Supplier address
3 Timber type
4 Tree species of timber type
5 Country or region of logging
6 Annual procurement volume (weight, area, volume or quantity)
7 If sold to a legal entity, the name and address of that legal entity
8 Results of supplier surveys and other, inspection records and other
9 Documents certifying that harvesting was conducted in accordance with laws and regulations of the logging country

With these information sorted by country, region, wood species, and timber type, risk assessment on the illegal logging or human rights violation is carried out based on procurement standards stipulated by the Committee. Risk categories are A (low risk), B (medium risk) and C (high risk). Timber and wood products in the B (medium risk) and C (high risk) categories should not be solely evaluated with documentation to prove that they are legally harvested according to that country’s laws and regulations. In addition, when necessary, company staff are sent for on-site inspections to ensure traceability back to the logging site.

Consideration for Human Rights, Labor Practices, Biodiversity Conservation and Local Communities
Following items are checked, through Sustainability Procurement Surveys to suppliers and local interviews for the products that are being procured:

  • Whether the rights of workers, local and indigenous community are abused in the area where we procure the products and their raw materials from. If this is the case, whether suppliers check their logging practices take place with consideration for these rights.
  • Whether the high conservation values forests are included in the area where we procure the products and their raw materials from. If this is the case, whether suppliers check their logging practices with consideration to forests with high conservation value.

Review
Each procurement division reports the status and progress of these initiatives to the Timber Procurement Committee, facilitating continuous improvements throughout the supply chain. In fiscal 2018, we strengthened the management system by scoring survey outcomes to improve the visualization of suppliers’ sustainability initiatives. Sumitomo Forestry requested that improvements be made at five suppliers that did not satisfy our standards.

Timber Procurement Management System

Timber Procurement Management System

Page Top

Reinforcing Measures for the Sustainability of Timber Products

There is increasing concern about deforestation as climate change. Our Group’s timber procurement sustainability measures comply with our own Timber Procurement Due Diligence. In May 2019, we newly implemented an Action Plan to further reinforce evaluation standards for sustainability.

Policy on “Sustainable Timber and Wood Products”

We define timber and wood products as sustainable if they fulfill one of the following:

  1. Certified timber and pre-certified timber: FSC, PEFC, and SGEC
    (Regardless of CoC connection, we place emphasis on certification at time of production and promote a shift to certified timber)
  2. Timber from plantation forests
  3. Natural timber where forestry management and distribution can be assessed as sustainable.
    (this does not include timber from conversion forests = timber harvested from natural forests that were converted to farm land such as oil palm plantations)
  4. Recycled wood

In the “Mid-Term Sustainability Targets as part of the 2021 Mid-Term Management Plan” announced in May 2019, Even in situations where legality can be confirmed, we will promote the gradual increased use of alternative wood (natural timber from forest thinning or plantation timber) to stop the handling of items that do not fall under our definition of sustainable timber or wood products. By our target fiscal year of 2021, we strive to achieve our procurement goal of 100% sustainable timber and wood products.

Reinforcing Timber Procurement Due Diligence Through Our Action Plan

The Company engages in responsible timber procurement as a Group in accordance with the Sumitomo Forestry Group Procurement Policy. To respond to recent concerns, in May 2019, we launched an Action Plan to reinforce on a regular basis our timber procurement due diligence. Major areas of reinforcement to further promote responsible procurement include the appointment of the director in charge of sustainability as the chairman of the Timber Procurement Committee, the holding of regular study sessions for persons in charge of procurement、and for suppliers with low scores, a two-year probation period to implement requested improvement measures and the cessation of transactions in the event that no improvement is seen.

Education for Personnel in Charge of Procurement

As concern about deforestation increases worldwide, interest is focusing on efforts by companies with regard to procurement of tropical timber. In this connection, we held a seminar on October 31, 2018 titled “Timber Production in Indonesia and Malaysia and Efforts Toward Sustainable Forest Management.” It was attended by a total of 32 managers and other responsible personnel at international distribution departments handling tropical timber and other imported timber. At the seminar, participants learned the latest information about timber legality certification systems in both countries, the current state of certified timber, and sustainable forest management.

Each year, we keep up with changing circumstances by providing seminars and training sessions on the latest societal and environmental issues. These are separate from the ordinary training provided to all employees by the Personnel Department.

Institute for Global Environmental Strategies (IGES) A lecture by Research Manager Hiromitsu Samejima

Institute for Global Environmental Strategies (IGES)
A lecture by Research Manager Hiromitsu Samejima

Page Top

Reinforcing Engagement with NGOs and Other External Stakeholders

To formulate and implement our Action Plan, to respond sincerely to societal demands and to promote responsible procurement, we organized a stakeholder dialogue with environmental NGOs, ESG specialists and researchers (held in July 2019).

Experts from the certified NPO Sustainable Management Forum of Japan, the World Wildlife Fund (WWF) Japan, FoE Japan, Global Environment Forum、Institute for Global Environmental Strategies, Takasaki City University of Economics and Waseda University participated to discuss various themes, such as the implementation of the Sustainability Procurement Survey, the process and timeframe for demanding improvements, timber from conversion forests and recycled timber.

During the discussions, in addition to considering ways to build capacity, participants agreed on the need for adequate communication with suppliers in implementing Sustainability Procurement Surveys and requesting improvement measures in a manner that would enhance the quality of suppliers and consequently, lead to utilization of sustainable forest resources throughout the industry. For timber from converted forests, while keeping close watch on measures for sustainable commodity production in other industries, it should be confirmed that appropriate assessment, such as for forests with high protection value (HCVA), is being conducted. Participants voiced the opinion that recycled timber should be defined as timber that has been used once by the consumer (building materials, etc.) and that wood waste, old fruit trees and such should undergo the same level of due diligence as regular timber.

With these opinions in mind, the Company revised and is implementing its Timber Procurement Management Regulations and its Timber Procurement Due Diligence Manual to fulfill its goal of 100% sustainable timber and wood materials as outlined in the Management Plan 2021.

The scene at the Dialogue Conference

The scene at the Dialogue Conference

Timber Procurement in Romania

Several environmental groups have expressed concerns about forest management and timber production in Romania in terms of whether or not logging has been appropriately conducted. In April 2017, members of the Timber Procurement Committee conducted on-site inspections, first gathering information through meetings with such organizations as the Ministry of Environment and Forests of the Romanian Government, the Embassy of Japan in Romania, ASFOR (Romanian Forest Association), among others. The members also went to a supplier manufacturing facility and inspected representative logging sites of logs that were transported to the facility. At the manufacturing facility, they confirmed that the supplier properly checks transport permits and the logs bundled on the trailer when receiving raw material logs at the lumber manufacturing plants.

For example, the visiting team was able to confirm that the supplier was thorough in segregated management to ensure that logs exceeding the amount permitted were not used and that they engaged in such measures as reporting to forestry authorities. The team received an explanation about forest management from a forest ranger at the logging site and checked the actual hammer stamp mark and process when loading the trailer in the field. In addition, they were able to confirm the dedication to preserving the rare forest ecosystem by observing forest conservation areas under the Romanian government’s jurisdiction.

The Company regularly meets with environmental groups that we receive concerns from, most recently, in January 2019, where we obtained information and provided the latest on our Group initiatives.

Inspection of harvest land still covered in snow

Inspection of harvest land still covered in snow

Check when loading the trailer

Check when loading the trailer

Properly checking the delivery at the plant using tablet terminals

Properly checking the delivery at the plant using tablet terminals

Segregated management of round wood beyond the amount on the permit

Segregated management of round wood beyond the amount on the permit

Concrete Form Plywood from Indonesia

In recent years, several environmental groups have expressed their concerns about the legality of the logs used as raw material for plywood manufactured in Indonesia. In Indonesia, the SVLK timber legality verification system is in place, requiring timber product manufacturers and exporters to register by obtaining SVLK business certification issued by an independent evaluation and certification organization recognized by the National Accreditation Committee. Upon doing so, the business obtains documentation (V-Legal documents) from the independent verification and certification body certifying the timber as legal, and expressly confirming the legality of the entire supply chain, from logging to timber processing at manufacturing plants to export. In July 2018, we conducted an on-site inspection of the concrete formwork paneling plywood manufacturing plant that serves as our supplier. At a timber yard near the harvesting site, we were able to use QR-code labeling on tags attached to logs to confirm the harvesting information at the Indonesian Ministry of the Environment and Forestry website, as well as with V-Legal documentation. After the same logs were transported to the plant, we were once again able to use QR codes at a plant timber yard to access the ministry website and V-Legal documents, successfully tracing them back through the transport process to their harvest location.

In terms of the procurement of raw material logs used to process plywood, the Company continues to work with suppliers on various initiatives as we strive to fulfill our “Mid-Term Sustainability Targets as part of the 2021 Mid-Term Management Plan” to achieve the targets of 100% procurement of sustainable timber and wood products.

Confirming tags attached to the logs at the plant timber yard

Confirming tags attached to the logs at the plant timber yard

Confirming tags at an intermediate timber yard

Confirming tags at an intermediate timber yard

Confirming the harvest site from tag information at the logging company (1)

Confirming the harvest site from tag information at the logging company (1)

Confirming the harvest site from tag information at the logging company (2)

Confirming the harvest site from tag information at the logging company (2)

In terms of concrete formwork plywood for the construction of sports facilities, in November 2018, environmental NGOs reported to the Organizing Committee their concerns that the Company’s supplier may be using raw material logs that were not appropriately managed or harvested. With this, we responded by submitting relevant documents and explaining to the Olympic Organizing Committee that these types of raw material logs were not part of the Company’s supply chain. As a result, the Olympic Organizing Committee concluded that the concerns were unfounded and not eligible for reporting, which was disclosed in February 2019 on their website.

Page Top

Promoting Certified Timber

Sumitomo Forestry Group works with its procurement partners to build a reliable supply chain and to procure sustainable timber. As an index to confirm whether timber was obtained from forests with sustainable forest management, we support and utilize the Forest Certification System, a third-party certification system.

Furthermore, the Company itself receives the Forest Certification and we believe we can contribute to the system’s wider use by providing the market and consumers certified forest timber.

Sumitomo Forestry Group has obtained FM certification for 221,000 hectares and CoC certification for 10 organizations.

target-result

Status of Sumitomo Forestry Group Forest Certification/ CoC Certification*1 (FSC-C113957)

Organization Certification System Date Certified Certification Number Certification Issuing Body
Sumitomo Forestry Co., Ltd.
Timber and Building Materials Division, International Marketing Department, Branch
FSC® December 14, 2017 CU-COC-823910/CU-CW-823910 Control Union Certifications
PEFC December 14, 2017 CEF1201 Japan Gas Appliances Inspection Association (JIA)
Sumitomo Forestry Co., Ltd.
Timber and Building Materials Department, Timber and Building Materials Division, Hokkaido Branch
MOCCA (Timber Solutions) Department, Housing and Construction Division
SGEC January 24, 2017 JIA-W045 Japan Forest Technology Association (JAFTA)
Sumitomo Forestry Co., Ltd.
Timber and Building Materials Division, Hokkaido Branch
Materials Development Department, Housing and Construction Division
SGEC October 1, 2017 JAFTA-W038*2 Japan Forest Technology Association (JAFTA)
Sumitomo Forestry Wood Products Co., Ltd. SGEC September 25, 2016 JAFTA-W017 Japan Forest Technology Association (JAFTA)
Sumitomo Forestry Crest Co., Ltd. FSC® April 18, 2018 SGSHK-COC-006693 SGS
SGEC December 26, 2017 JAFTA-W041 Japan Forest Technology Association (JAFTA)
Nelson Pine Industries Ltd. (NPIL) (New Zealand) FSC® June 21, 2019 SAI-COC-001290 /
SAI-CW-001290
QMI-SAI CANADA Limited
PT. Kutai Timber Indonesia (KTI) (Indonesia) FSC® January 10, 2015 TT-COC-002009 BM TRADA
PT. Sumitomo Forestry Indonesia FSC® April 26, 2016 TT-COC-005903 PT. Mutuagung Lestari
Sumitomo Forestry (Singapore) Ltd. FSC® December 5, 2018 NC-COC-005542 /
NC-CW-005542
NEP Con

*1 CoC (Chain of Custody) certification is a system that covers the processing and distribution of forest products. In addition to determining whether the forest product was from a certified forest (certified timber) at each stage of processing and distribution, it certifies risk assessments for uncertified timber. When all companies in the entire process obtain CoC certification, a certification mark can be displayed on the product.

*2 Includes operators other than Sumitomo Forestry Group companies due to being a comprehensive certification.

Major Forest Certification Systems

FSC (Forest Stewardship Council®) (FSC-C113957)

FSC is an organization founded in 1993 led by World Wide Fund for Nature (WWF) and consists of representatives from environmental organizations, forest workers, timber users and traders, human rights organizations, and local forestry unions. It is considered a pioneer amongst forest certification system operators.

Adhering to the 10 principles and 56 regulations encompassing environmental impact, local society, and indigenous people's rights, FSC-accredited certification bodies will undertake reviews. Recently, country or regional standards as well as the review procedure for small-scale forest owners have been introduced to provide greater support for diverse forests and owners.

PEFC (Programme for the Endorsement of Forest Certification)

Forestry organizations of 11 European countries established PEFC together in 1999 as an organization to mutually authenticate the system of each country. PEFC does not directly authenticate an individual forest, but when the PEFC's required conditions that adapted “the inter-governmental process” implemented by 149 countries is met, the country's own forest certification system is authenticated by PEFC. Joined by non-European countries in 2003, the organization originally called Pan European Forest Certification Schemes changed its name to Program for the Endorsement of Forest Certification. Since then, PEFC has shown drastic growth, and to date its total certified area is the largest across the world.

Sustainable Green Ecosystem Council (SGEC)

SGEC authenticates forest management that demonstrates both rich natural environment and sustainable timber production in Japan. With reverence for Japan's indigenous natural environment, social customs, and culture, the review premises on seven criteria. SGEC can also authenticate forestry operations and distribution systems under CoC. SGEC joined PEFC in November 2014 and submitted a mutual authentication application to PEFC in March 2015, which was mutually approved in June 2016.

Promoting the Use of Certified Timber

The most important aspect of selling certified timber is managing the procurement of certified timber separately from other types of timber. With CoC certification, because we are inspected by a third party, we are able to guarantee that timber and other products are from certified forests and sell them to our customers.

Sumitomo Forestry Group has set a goal to achieve by 2020 at least a 12% sales volume ratio of imported certified timber and other products. In fiscal 2018, the actual figure was 11%Independent assurance.

Furthermore, for sales of SGEC certified timber, Japan’s forest certification system, we have set a sales volume target of 85,000 square meters or more by 2020. In fiscal 2018, the actual figure was 78,000 square meters.

Page Top

Smooth Response to the Clean Wood Act

The Act on the Promotion of Use and Distribution of Legally Harvested Wood and Wood Products (the Clean Wood Act) was enacted in May 2017 to encourage use of timber from trees harvested in compliance with the laws and regulations of Japan and other countries and to create a market where illegally logged timber, which damages the environment, is not made available. Sumitomo Forestry was the first in the country to register the Timber and Building Materials Business, which imports and sells timber, as a Type 1 Wood-Related Entity on November 22, 2017. This same division was registered as a Type 2 Wood-Related Entity on August 1, 2018. Subsequently, Sumitomo Forestry Wood Products was registered as a Type 1 and Type 2 Wood-Related Entity (purchase and sale of timber) on February 20, 2018, and furthermore, the Housing and Construction Business (on March 16, 2018) and Sumitomo Forestry Crest (on May 9, 2018) were registered as Type 2 Wood-Related Entities as part of our efforts to procure legal timber throughout the entire Group.

Registered Wood Related Entity Type Registration Date Registration Number Agency Issuing Registration
Timber and Building Materials Division Type 1, Type 2 Wood Related Entity November 22, 2017 No. JIA-CLW-Ⅰ Ⅱ 17001 Japan Gas Appliances Inspection Association
Building Materials Procurement and Logistics Department, Housing and Construction Division Type 2 Wood Related Entity March 16, 2018 No. HOWTEC-CLW-Ⅱ 0001 Japan Housing and Wood Technology Center
Sumitomo Forestry Wood Products Type 1/Type 2 Wood Related Entity February 20, 2018 No. JAFTA-CLW-Ⅰ Ⅱ-3 Japan Forest Technology Association
Sumitomo Forestry Crest Co., Ltd. Type 2 Wood Related Entity May 9, 2018 No. JIA-CLW-Ⅱ 18002 Japan Gas Appliances Inspection Association

Page Top

Participation in JBIB(Japan Business Initiative for Biodiversity)

Sumitomo Forestry participates as a member of the Japan Business Initiative for Biodiversity (JBIB), made up of companies that engage in activities aimed to conserve biodiversity. In fiscal 2018, the supply chain working group conducted research and worked on creating lists of disclosed information that could be used to assess risk.

Page Top

Communication with Our Business Partners

In the distribution operations of timber and building materials, given that it is characterized as being a regional industry, Sumitomo Forestry maintains close communication with the suppliers and purchasers of timber and building materials in each region.

Main Communication Activities with the Business Partners of the Timber and Building Materials Division

Name/scale Description
The Sumirin club -a membership organization to communicate with regional suppliers of timber and building materials
Number of members: 871 companies (as of July 2018)
Established in different regions around Japan as a forum for communication with business partners for distribution operations of timber and building materials. Training sessions and informational exchange meetings are held two or three times a year in each region, allowing members to deepen mutual friendships, promote product R&D, enhance production and distribution, and support improvements in the industry as a whole.
Publication of Building Materials Monthly
Monthly print run of approximately 4,200 copies
With a history spanning more than half a century, this monthly magazine publishes timely information and topics regarding timber, building materials and the housing industry from a distinctive perspective unique to Sumitomo Forestry.

Page Top

Sustainability Report