Establishment and Certification of Science Based Targets (SBT)

As the impact of climate change becomes more apparent globally, companies are being asked to reduce their emissions of greenhouse gases as a measure to counter global warming. The Sumitomo Forestry Group has announced the formulation of SBT and set new greenhouse gases reduction target for the entire Group in June 2017 and was certified as SBT in July 2018. Sumitomo Forestry Group’s new SBT is as follows:

  1. Scope 1 and 2: 21% reduction of greenhouse gas emissions compared to 2017 (base year) by 2030.
  2. Scope 3: 16% reduction of total greenhouse gas emissions from Category 1 and Category 11 compared to 2017 (base year) by 2030.

Sumitomo Forestry Group will further strengthen its energy-saving activities, promote use of renewable energy, and other initiatives to reduce greenhouse gas emissions and mitigate climate change based on the SBT.

* The SBTi was established in 2015 as a collaboration of four organizations - CDP (formerly the Carbon Disclosure Project), the UN Global Compact, the World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). The SBTi defines and promotes best practice in science-based target setting, to help companies determine a pathway for reducing their emissions in line with what is required to keep global temperature increase below 2 degrees Celsius compared to pre-industrial temperatures. In Japan, the Ministry of the Environment has translated this in Japanese as “Corporate 2℃ Target”and is supporting company efforts.

SBT

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Energy Consumption from Business Activities

The Sumitomo Forestry Group consumed 2,418,601 MWh* of energy in fiscal 2017. The energy consumption of the Group increased from fiscal 2016 to 2017 due to the start of trail and full-fledge operations of the Mombetsu Biomass Power Generation and Hachinohe Biomass Power Generation Businesses.

The start of full operations of the Hachinohe Biomass Power Generation Plant in April 2018 prevented significant amount of rise in energy consumption, but this power consumption is forecast to decline from fiscal 2019. The energy consumption in business other than the power generation business has declined due to various energy-saving activities.

* The Balance of Input & Output is calculated according to the TJ unit based on the Environmental Reporting Guidelines issued by the Ministry of the Environment. Both are equivalently calculated for the amount of energy consumption.

Energy Consumption Trends Past Four Years

Energy Consumption Trends Past Four Years

* Data for Alpine MDF Industries Ltd. has been excluded because the company was sold in March 2017.

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Reducing CO2 Emissions from Offices

At offices, the Sumitomo Forestry Group CO2 emissions in fiscal 2017 were 31,871t-CO2, a 2.4% reduction compared to previous fiscal year and 10.1% reduction compared to the base year (fiscal 2013) for the Mid-Term CSR Management Plan.

All business sites of Group companies in Japan are advancing the introduction of fuel-efficient vehicles to make 378 of the 425 company-owned vehicles fuel-efficient vehicles in fiscal 2017 (88.9% adoption rate of fuel-efficient vehicles). In addition, the Group has encouraged employees who drive on the job at offices and business sites of Group companies in Japan to participate in the Eco Training course run by the Japan Automobile Federation (JAF).

The Group has also worked to reduce power consumption. In the Housing and Construction Division, power consumption has been reduced by moving to a “free address” office system (where personnel are not assigned to fixed desks) to make more efficient use of office space. In addition, the division has also proceeded to install solar power generation systems and LED lighting at its model homes and other business sites.

The Group will continue to reduce CO2 emissions, such as by implementing promotion of eco-drive, to raise awareness among employees.

 

Mid-Term CSR Management Plan

Reduce total CO2 emissions from all offices of domestic and overseas consolidated companies by 7% compared to fiscal 2013 by fiscal 2020.

In fiscal 2017, the total amount of CO2 emissions in the office category dropped by 10.1% to 31,871t-CO2 compared to fiscal 2013. The Group will start the eco-drive curriculum in addition to ongoing safe-drive training provided by the Housing and Construction Division with the aim to lower gasoline-derived CO2 emissions towards the following year’s target.

Yamaguchi Branch Ube Model Homes (Built-in Solar Panels)

Yamaguchi Branch Ube Model Homes (Built-in Solar Panels)

CO2 Emissions (t-CO2) from Offices

Fiscal Year FY 2013 (Baseline) FY 2016 (Results) FY 2017 (Results) FY 2017 (Target) FY 2018 (Target) FY 2020 (Target)
Total CO2 emissions 35,440t-CO2 32,660t-CO2 31,871t-CO2 32,887t-CO2 31,407t-CO2 32,959t-CO2
Compared to 2013 Percentage Change - 7.8% reduction 10.1% reduction 7.2% reduction 11.4% reduction 7.0% reduction

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Reducing CO2 Emissions Outside Offices

To address CO2 emissions collectively, the Group set manufacturing plants of Sumitomo Forestry Crest and Sumirin Agro Products (current: Sumitomo Forestry Landscaping), Tsukuba Research Institute, the Metropolitan Area Recycling Center, Fill Care (current: Sumirin Fill Care Co., Ltd.), Kawanokita Development, and Japan Bio Energy as domestic non-office category constituents, as well as overseas manufacturing plants of RPI, ASTI, KTI,VECO, NPIL, SRP, and CCC in addition to OBT, and Canyon Creek as overseas non-office category constituents with their respective reduction targets.

 

Mid-Term CSR Management Plan

Set company-specific reduction targets for CO2 emissions; i.e. over 1% average percent per-unit emission reduction between fiscal 2015 to 2020

In fiscal 2017, we advanced reductions by improving production efficiency and operational skills such as at manufacturing plants as applicable departments in Japan. In applicable departments overseas, we worked to put in place measures to reduce CO2 for plants impacted by factors such as increased equipment due to changes to methods for electrical use (purchased) and the start of new businesses.

Major Non-Office CO2 Emission Reduction Performance and Targets (Per-unit Emissions)

Company Name FY 2016 (Results) FY 2017 (Target) FY 2017 (Results) FY 2018 (Target)
Sumirin Agro-Products (Current: Sumitomo Forestry Landscaping) 4.5% reduction 1.7% reduction 4.1% reduction 3.0% increase
Sumirin Agro Products (current: Sumitomo Forestry Landscaping) 54.6% increase 16.9% reduction 0.6% reduction 11.7% reduction
PT. Rimba Partikel Indonesia (RPI) 15.8% increase 10.1% reduction 9.6% reduction 0.5% reduction
PT. AST Indonesia (ASTI) 16.0% increase 8.5% reduction 9.0% increase 4.1% reduction
PT. Kutai Timber Indonesia (KTI) 3.1% increase 0.9% reduction 10.8% reduction 0.8% increase
Nelson Pine Industries Ltd. (NPIL) 0.7% reduction 2.7% increase 5.8% reduction 23.7% increase
Vina Eco Board Co., Ltd. (VECO) 5.4% reduction 7.4% reduction 38.0% increase 23.9% reduction

* Increases and decreases are in reference to respective previous years.

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Reducing CO2 Emissions from Transportation

Under the revised Act on the Rational Use of Energy in Japan, consigners*1 are required to reduce per-unit energy consumption by an annual average of 1% or more in the medium to long term in relation to the transportation of goods. Sumitomo Forestry and Sumitomo Forestry Crest fall under the category of “specified consigner” (annual freight transportation volume is 30 million ton-km*2 or more), obligating them to submit reports to the Japanese Government. Sumitomo Forestry therefore sets a target each fiscal year to reduce per-unit energy consumption*3 in transportation by 1% or more compared to the previous year. Sumitomo Forestry Crest also sets targets to reduce per-unit energy consumption compared to the previous year.

In fiscal 2017, Sumitomo Forestry's per-unit energy consumption was 99.6% compared to the previous year and Sumitomo Forestry Crest's was 99.0%.

Ongoing efforts will be made to reduce CO2 emissions through cooperation with transportation partners on such measures as improving loading efficiency, shifting from land to sea transportation, and utilizing the return leg of construction material deliveries to transport waste.

*1 Cosigners as defined in the Act on the Rational Use of Energy in Japan is someone who transports cargo to carriers for our businesses

*2 Freight transportation volume (ton-kilometers) = freight weight (tons) × distance travelled (km)

*3 Sumitomo Forestry measures energy consumption per unit of volume handled. Sumitomo Forestry Crest measures energy consumption per unit of net sales

Energy Consumption From Transportation, CO2 Emissions and Energy Consumption Per-Unit (FY2017 Performance)

Energy Use (Crude Oil Equivalent) CO2 Emissions Energy Consumption Per Unit
Sumitomo Forestry 3,113kL 8,352t-CO2 0.00187kL/m³
(Ratio to Previous FY: 99.6%)
Sumitomo Forestry Crest Co., Ltd. 2,009kL 5,336t-CO2 0.0000589kL/1,000 Yen
(Ratio to Previous FY: 99.0%)
 

Establishment of an Efficient Delivery

Sumitomo Forestry is reducing the CO2 emissions in its transportation processes by bringing together Sumitomo Forestry Home houses from multiple manufactures momentarily at relay centers in 28 locations throughout Japan with a system to consolidate and transport shipments. Home Eco Logistics takes on logistics operations for the Sumitomo Forestry Group with the housing business at the core and also actively puts forward proposals for efficient logistics operations to material manufacturers, housing manufacturers, housing construction companies and building material distributors. In the year to fiscal 2017, we asked six construction material operators for consulting focused on more efficient operations in warehouses as well as rational proposals for inventory management. As of March 2018, Home Eco Logistics provided logistics operations to more than 40 companies. In the future, we will actively strive in cooperative distribution through multiple companies because of insufficient shipment capacity forecast due to a decrease in the amount of new housing construction.

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Greenhouse Gas Emissions per Scope Based on the GHG Protocol

Since fiscal 2012, the Sumitomo Forestry Group has ascertained the volume of its CO2 emissions according to different scopes*1 based on the GHG Protocol, a set of widely used international accounting tools for quantifying GHG emissions. In view of the increasing demand of renewable energy in recent years, the Sumitomo Forestry Group entered the biomass power generation business in 2011 and has begun operation of Mombetsu Biomass Power Plant in December 2016 as a consolidated subsidiary. This power plant uses coal as supplemental fuel for smooth operation and maintenance while using wood leftover from logging as the primary fuel. Therefore, the total CO2 emissions in Scope 1 and 2 for fiscal 2017 at the Sumitomo Forestry Group were 369,785t-CO2e, a 10.0% increase compared to the previous year.

In addition, when looking by business, our plants in Japan and the power generation business make up 56.4% while our plants overseas compose 29.7%. We started to calculate Scope 3 in fiscal 2013 and the targets for this calculation largely expanded in fiscal 2015 and fiscal 2017. In the future, we set targets via SBT*2 in an effort to reduce greenhouse gas emissions another level.

*1 The GHG Protocol requires businesses to disclose their greenhouse gas emissions according to the following categories
Scope 1: Direct GHG emissions of a company, including emissions from fuel consumption. E.g. CO2 emissions from the use of gasoline for company vehicles.
Scope 2: Indirect GHG emissions from the generation of purchased electricity and heating. E.g. CO2 emissions from the use of electricity by offices.
Scope 3: GHG emissions occurring in the supply chain. E.g. CO2 emissions generated during the use of products sold.

*2 Science Based Targets. These targets are set for companies to achieve reduction goals in-line with scientific knowledge to limit the raising average temperature around the world to 2°C or less.

Scope 1 and Scope 2 CO2 Emission Trends

* Data for the power generation business (Mombetsu Biomass Power Generation and the Hachinohe Biomass Power Generation Businesses) and Alpine due to sale of the company has been excluded.

Scope 1 and 2 Breakdown by Business (FY 2017)

Scope 1 and 2 Breakdown by Business (FY 2017)

FY 2017 Scope 1 and 2 CO2 Emissions Breakdown

(Thousand t-CO2e)

Domestic and Overseas Office Domestic Non-Office Overseas Non-Office Total
Scope 1 27 204 19 250
Scope 2 16 12 93 120
Total 43 216 112 370

Scope 3 Emissions by Category

Scope 3 Emissions by Category

Scope 3 Three-year Emissions by Category

(t-CO2e)

Category Boundary of Emissions included in the Category FY 2015 FY 2016 FY 2017
1. Purchased goods and services Emission from upstream of products and services purchased by Sumitomo Forestry 1,187,600 1,227,877 2,543,092
2. Capital goods Emissions from upstream of purchased equipment 42,323 61,411 70,514
3. Fuel- and energy-related activities (not included in scope 1 or scope 2) Emissions from the upstream of purchased fuels, electricity, heat capacity, and water 4,393 8,518*2 20,580*2
4. Upstream transportation and distribution Emissions from Sumitomo Forestry distribution from suppliers of purchased products and services in (1) and emissions due to logistics services other than (1) for costs incurred by Sumitomo Forestry. 264,736 268,114 419,874
5. Waste generated in operations Emissions from waste treatment and its transport 10,839 9,682 8,438
6. Business travel Emissions related to business trips of employees such as use of public transportation and accommodation 1,393 1,429 2,365
7. Employee commuting Emissions from employee commuting 1,476 3,122*3 4,804*3
8. Upstream leased assets (Emissions from use of upstream leased property such as office buildings, heavy machinery, vehicles, and facilities are included in Scope 1 or 2) - - -
9. Downstream transportation and distribution Emissions during transport of products sold 11,717 6,781*2 105,503*2
10. Processing of sold products Emissions from processing of raw wood into plywood as well as of sold precut processing of sold lumber 51,733 50,410 51,561
11. Use of sold products Emissions during use of homes sold 2,015,591 2,054,110 6,351,974
12. End-of-life treatment of sold products Emissions from demolition and disposal of homes sold by the Company 48,435 42,279 47,318
13. Downstream leased assets (Tenants must belong to the Group and the figures are included in Scope 1 and 2 of the Group) - - -
14. Franchises (excluded) - - -
15. Investments Emissions from the investees (based on the Company's proportional share) 94,671 91,279 89,985

*1 Figures are calculated for Group companies in Japan up to fiscal 2016 and the entire Group from fiscal 2017. Some of the numerical values that are used are data such as that from the database published by the Ministry of the Environment. The data with greater accuracy will be obtained progressively in the future by requesting the provision of primary data.

*2 The estimated transport distance changed as follows as of fiscal 2016.
City: Revised from 50 km to 20 km; Prefecture: Did not change from 100 km; Between Prefectures: Revised from 500 km to 300 km. In addition, the estimated overseas transport distances have been set as follows as of fiscal 2017. Short distance: 20 km; Medium distance: 500 km; Long distance: 1,000 km

*3 Train and bus commuting was calculated in fiscal 2015 and commuting by motor vehicle was added as of fiscal 2016.

FY2017 Total Greenhouse Gas Emissions Accrued From Corporate Activities

FY2017 Total Greenhouse Gas Emissions Accrued From Corporate Activities

Emission Trends in Scope 1, 2, and 3

Emission Trends in Scope 1, 2, and 3

* The scope of calculation of Scope 3 expanded from the traditional three categories to 15 categories as of fiscal 2015.

* The scope of calculation of Scope 3 expanded from the traditional domestic scope in Japan to the entire Sumitomo Forestry Group as of fiscal 2017.

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CSR