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* based on the GHG Protocol, a set of widely used international accounting tools for quantifying GHG emissions. In light of the increasing demand for renewable energy in recent years, the Sumitomo Forestry Group entered the biomass power generation business in 2011. As of fiscal 2020, our Group has invested in six different power generation plants, including several scheduled to begin operation soon, which have a total power generation capacity of roughly 251.6 MW and will supply electricity to approximately 555,000 households. As a consolidated subsidiary company, the Mombetsu Biomass Power Generation Plant has dramatically increased Scope 1 and Scope 2 emissions of the Group since starting operations in 2016 because coal is used as a secondary fuel to ensure smooth operation and maintenance. In fiscal 2020, Scope 1 and Scope 2 emissions declined 2.7% compared to fiscal 2019. Several major factors are a revision to the calculation method of emissions which reduced emissions (8,879t-CO2) from overseas subsidiaries in the Overseas Housing and Real Estate Division as well as the impact of the novel coronavirus pandemic which reduced the production volume at overseas manufacturing plants. When looking by business, our plants in Japan and the power generation business make up 60.1% while our plants overseas compose 27.7%.

We also started to calculate Scope 3 in fiscal 2013 and the targets for this calculation largely expanded in fiscal 2015 and fiscal 2017. Among these results, the impact in category 11, “emissions during use of detached houses sold,” is acknowledged to be a major factor, and the increase in residential and construction operations in fiscal 2020 of Net Zero Energy House (ZEH) projects is expected to reduce CO2 emissions volumes while the homes are in use.

In the future, we will work to meet the SBT in an effort to take greenhouse gas emissions reduction to another level.

* 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.: Emissions from the use of gasoline for company vehicles.
Scope 2: Indirect GHG emissions from the generation of purchased electricity and heating. e.g.: Emissions from the use of electricity by offices.
Scope 3: GHG emissions occurring in the supply chain. e.g.: Emissions generated during the use of products sold.

Scope 1 and Scope 2 CO2 Emission Trends

*1 Electric power generation (Mombetsu Biomass Power Generation, Hachinohe Biomass Power Generation) figures are excluded

*2 The period of data collected for total emissions in fiscal 2020 is from January to December 2020 while the period of data for emissions collected in the previous years was from April to March

Scope 1 and 2 Breakdown by Business (FY2020)

Scope 1 and 2 Breakdown by Business (FY2020)

Scope 3 Emissions by Category

Scope 3 Emissions by Category

Scope 3 Emissions by Category (three years)

(thousand t-CO2e)

Category Boundary of Emissions included in the Category FY2018 FY2019 FY2020*2

1 Purchased products and services*1

Emission from upstream of products and services purchased by Sumitomo Forestry 2,625 1,716 1,731

2 Capital goods*3

Emissions from upstream of purchased equipment 27 35 40

3 Fuels and energy related activities excluded from Scope 1 and 2

Emissions from the upstream of purchased fuels, electricity, heat capacity, and water 20 29 33

4 Transport and deliver (upstream)

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 433 445 410

5 Waste generated through businesses

Emissions from waste treatment and its transport 8 7 6

6 Business trips

Emissions related to business trips of employees such as use of public transportation and accommodation 2 3 3

7 Employee commute

Emissions from employee commuting 5 5 6

8 Leased property (Upstream)

(Emissions from use of upstream leased property such as office building, heavy machinery, vehicles, and facilities are included in Scope 1 or 2) - - -

9 Transport and deliver (downstream)

Emissions during transport of products sold 107 103 99

10 Processing of sold products

Emissions from processing of raw wood into plywood as well as of sold precut processing of sold lumber 54 43 41

11 Use of sold products

Emissions during use of detached houses sold 6,384 6,437 6,580

12 Disposal of sold products

Emissions from demolition and disposal of detached houses sold by the Company 48 50 55

13 Leased property (downstream)

(Tenants must belong to the Group and the figures are included in Scope 1 and 2 of the Group) - - -

14 Franchised

(excluded) - - -

15 Investment

Emissions from the investees (based on the Company's proportional share) 117 114 115

*1 The calculation method for Category 1 emissions of Scope 3 was revised to apply Accounting Standards for Revenue Recognition (Corporate Accounting Standard No. 29) as of fiscal 2019 (retroactively reflected in the values for fiscal 2019).

*2 The period of data collected for total emissions in fiscal 2020 is from January to December 2020 while the period of data for emissions collected in the previous years was from April to March.

*3 The monetary scope for procurement of capital goods was revised alongside emissions going back to 2018.

FY2020 Total Greenhouse Gas Emissions Accrued from Corporate Activities

FY2020 Total Greenhouse Gas Emissions Accrued from Corporate Activities

* Data collection period for the total emissions during fiscal 2020 was from January to December 2020.

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Reducing Greenhouse Gas Emissions

Promoting Adoption of Fuel-efficient Vehicles at Each Office

All business sites of Group companies in Japan disposed of standard settings for gasoline vehicles in fiscal 2019 and have been advancing the introduction of fuel-efficient vehicles. To date, 379 of the 428 company-owned vehicles introduced during 2020 were fuel-efficient vehicles (for an 88.5% 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 greenhouse gas emissions by such means as reducing prolonged working hours and raising awareness among employees.

Reducing greenhouse gas 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, Sumitomo Forestry Crest and Sumitomo Forestry Wood Products 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 and Sumitomo Forestry Wood Products also set targets to reduce per-unit energy consumption compared to the previous year.

In fiscal 2019, Sumitomo Forestry's per-unit energy consumption was 99.7% compared to the previous year and Sumitomo Forestry Crest's was 98.9%. Sumitomo Forestry Wood Products began collecting data as of fiscal 2019.

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 and Sumitomo Forestry Wood Products measure energy consumption per unit of volume handled. Sumitomo Forestry Crest measures energy consumption per unit of net sales.

Energy Consumption, Emissions, and Energy Consumption Per Unit from Transportation (FY2019 Performance)

Energy Use (Crude Oil Equivalent) CO2 Emissions Energy Consumption Per Unit
Sumitomo Forestry 1,988kL 5,305t-CO2 0.00174kL/m³
(Ratio to Previous FY: 99.7%)
Sumitomo Forestry Crest Co., Ltd. 1,896kL 5,035t-CO2 0.0000572kL/1,000 Yen
(Ratio to Previous FY: 98.9%)
Sumitomo Forestry Wood Products Co., Ltd. 1,340kL 3,587t-CO2 0.000613kL/m³
* Data collection began in fiscal 2019

Establishment of an Efficient Delivery

Sumitomo Forestry is reducing the CO2 emissions in its transportation processes by bringing together materials for Sumitomo Forestry Home houses from multiple manufacturers momentarily at relay centers in approximately 30 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 builders, housing construction companies and building material distributors. There are over 60 logistics contractors as of December 2020, excluding the Sumitomo Forestry Group. Furthermore, we are providing consulting for more efficient internal warehousing operations and inventory management rationalization. In fiscal 2020, no new construction materials companies contracted our consulting services during the coronavirus pandemic, but we continue consulting for the two construction material companies who contracted our services during the previous fiscal year.

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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Sustainability Report