Basic Policy

The supply of natural wood is declining as national governments throughout Southeast Asia strengthen restrictions on harvesting and exports of natural timber for the purpose of conserving the logging industry in each country. In addition, as momentum toward SDGs and sustainable development increases, it has become necessary to convert to timber obtained through forest plantation and certified forest management practices that ensure both environmental consciousness and stable supply. The Sumitomo Forestry Group implements forest plantation operations that take local communities and ecosystems into consideration to enable a stable and sustained timber supply while helping to reduce the impact on natural forests.

FY2020 Overseas Managed Plantation Area (Unit: ha)

Country Name of Plantation Business Managed Area Operations Area Planted Area in FY2020 Logged Area in FY2020
Indonesia Industrial tree plantation PT. Mayangkara Tanaman Industri (MTI) 104,664 10,534 1,284 1,464
PT. Wana Subur Lestari (WSL) 40,750 11,451 398 419
PT. Kubu Mulia Forestri (KMF) 9,270 6,300 * *
Kutai Timber Indonesia (KTI) 6,632 6,632 926 167
Social forestry Koperasi Serba Usaha Alas Mandiri (KAM KTI) 1,005 1,005 188 81
Koperasi Bromo Mandiri KTI (KBM KTI) 1,003 1,003 212 67
  Subtotal 163,324 36,925 3,008 2,198
Papua New Guinea Industrial tree plantation Open Bay Timber Ltd. (OBT) 31,260 11,060 367 178
New Zealand Industrial tree plantation Tasman Pine Forests Ltd. (TPF) 36,360 25,972 913 732
Total 230,944 73,957 4,288 3,108

* Acquired the industrial tree plantation assets and business rights of KMF in December 2020.

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Forest Management Overseas

The Sumitomo Forestry Group is expanding three approaches to conducting plantation forest operations; industrial tree plantation, environmental reforestation, and social forestry. The purpose of industrial tree plantation is to produce wood and increase the supply of plantation timber (raw material). By zoning its managed land appropriately, the Group aims to achieve both the conservation of valuable ecosystems and the development of local communities through plantation forest operations.

In addition, the Group also conducts environmental reforestation, planting trees for environmental conservation. It aims to contribute to environmental conservation through the expansion of forested areas and the fulfillment of the ecosystem services function of forests, by actively planting trees on land where natural regeneration would otherwise be difficult. The Group has also been engaged in “social forestry” which shares the economic benefits of forest plantation with local communities while enlisting the cooperation of local residents.

Distribution and Area of Overseas Plantation Forests (as of December 31, 2020)

Distribution and Area of Overseas Plantation Forests (as of December 31, 2020)

Sustainable Plantation Business by Leveraging Forestry Certification System

Of an approximately 30,000-hectare plantation owned and managed by Open Bay Timber (OBT), about two-thirds, or 20,000 hectares, has received FSC® forest certification*. Under the goal to plant on the 400-hectare land a year, OBT practices sustainable forest management that lays basis for communities and environment to function in harmony. The area planted in fiscal 2020 was 367 hectares.

The entire area of approximately 36,000 hectares managed by Tasman Pine Forests Ltd. (TPF) has been FSC®-FM certified. In fiscal 2020, they planted approximately 913 hectares of forest, carrying out sustainable forest management in harmony with the local community and environment.

* OBT: CW certification FSC-C019117, FM certification FSC-C103694, TPF: FM certification FSC-C132002

Plantation Forest Operations in West Kalimantan, Indonesia (Industrial Tree Plantation)

Since 2010, under the license from Indonesian Ministry of Environment and Forestry permitting utilization of timber from commercial forests*1, Sumitomo Forestry has been committed to a large-scale forest plantation business conducted in cooperation with the ALAS Kusuma Group (ALAS), a company involved in forestry management and plywood manufacturing in Indonesia, with whom we jointly established Mayangkara Tanaman Industri (MTI) and Wana Subur Lestari (WSL).

In fiscal 2020, Sumitomo Forestry and the ALAS Group changed the fifty-fifty investment split, and WSL and MTI became Sumitomo Forestry Group companies. We also acquired plantation forests neighboring WSL and MTI and established Kubu Mulia Forestry (KMF) as a wholly-owned subsidiary of Sumitomo Forestry to advance our business operations and environmental protection initiatives.

The project covers areas in which forest degradation has advanced due to commercial harvesting from the 1960s to the mid-1990s in addition to repeated illegal logging and slash-and-burn farming practices.

In these types of lands, We not only engage in economic and sustainable plantation forest operations but also take responsibility to protect forests with high conservation value. We also believe this business is very significant in providing an economic infrastructure to local communities from the perspective of ESG.

The land used in these operations exists in tropical peatland which plays an extremely vital role in the carbon and water cycle on a global scale.

We launched these operations by conducting detailed typographical surveys and boring tests over five years to understand the peat distribution and depth. We also entered into an advisory agreement with the International Finance Corporation (IFC), the World Bank’s group institute, in 2012. In accordance with the concept of High Conservation Values Forests (HCVF)*2, Sumitomo Forestry conducted assessments on its operational properties with the IFC and investigated whether the property use plan is implemented as stated and adequate consideration is made for biodiversity and livelihood of local residents. The reports of the investigation results were audited by a third-party organization, and valuable comments made by stakeholders on the report were adapted in the business plan. Our Group also held public hearings in 2013 where stakeholders such as local residents, companies in the communities, academics, NGOs, and government officers were invited to share the results of the investigations. Obtained the PHPL certification, formally called Sertifikat Pengelolaan Hutan Produksi Lestari issued by Ministry of Forestry (Departemen Kehutanan) on sustainable forest management.

Our employees unified and consistent efforts since the start of business have succeeded in building a unique peatland management model that stabilizes the underground water level throughout the year. As a result, it has made great contributions to the measure against climate change on a global scale by mitigating greenhouse gas emissions and forest fires as well as sustaining the proper water cycle. Our management model has been highly praised as a successful example of peatland management worldwide.

These and surrounding areas also isolate ecosystems where rare plant and animal species live in an island-like shape. To prevent this type of isolation, our group works together with neighboring local business proprietors to preserve the entirety of the ecosystem.

We see tropical peatlands and the ecosystems living throughout the peatlands as one type of important natural capital. In the future, businesses achieving a balance between industrial tree plantations and environmental protection will enhance value as natural capital and help resolve global issues.

*1 Issued by the Indonesian government, this is a business license to engage in industrial tree plantation operations in Indonesia.

*2 In considering the value of forests, it goes beyond their value as absorbers of greenhouse gases, outlining methods of extracting each one of the many aspects of value forests contain. These aspects include their value as habitats of rare, endangered animal species, as water resources, as providers of essential natural services such as soil erosion control, and as land that has an intimate relationship with the lifestyles and cultures of local communities.

History of Enhancing the Value of Natural Capital

2017
  • Entered into a Memorandum of Understanding (MOU) with the Indonesian Ministry of Environment and Forestry for a pilot project that aims to examine unique water level management technologies to sustainably manage peatlands and establish peatland management models in Indonesia. The term of this project is set for five years. The project is being conducted with the cooperation of the Ministry of the Environment and Forestry as well as the Peatland Restoration Agency.
  • The peatland management technology from this project was introduced as an example of excellent, leading-edge peat management at the November 2017 United Nations Climate Change Conference (COP23) held in Bonn, Germany.
2018
  • In 2018, the Group formulated a grievance mechanism with the help of the IFC. Together with the University of Indonesia, we also conducted a social survey of operational and surrounding areas on a three-year plan.
  • We reported on peatland management technology at the December 2018 United Nations Climate Change Conference (COP24) held in Poland.
2019
  • We announced initiatives related to WSL peatland management and plantation operations at The Seventh Tokyo International Conference on African Development (TICAD7) held in Yokohama in August. We introduced that tropical peatland forest not only acts as the lungs of the Earth but also a heart that circulates water around the globe.
  • We also announced a peatland management system that prevents fires at a side event of the United Nations Climate Action Summit held in New York in September.
  • At the United Nations Climate Change Conference (COP25) held in Madrid in December, we presented water management technologies and the preservation of rare species.
2020
  • The Global Landscape Forum held by the United Nations Environment Programme introduced the Sumitomo Forestry peatland management concept to not only address the issue of carbon emissions in peatland management but also consider forest, agricultural and food shortage issues as a main theme.
  • We contributed essays about the expertise in peatland management which we have cultivated thus far and took charge of organizing the technical peatland management guidebook published by the International Peat Society (April 2021).
  • Sumitomo Forestry also launched a counsel together with the IDH - The Sustainable Trade Initiative, an international organization, to improve assessment methods of natural capital and enhance added value.

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Forest Fire Prevention Measures at Each Work Site

Wana Subur Lestari (WSL) and Mayangkara Tanaman Industri (MTI)

Conventionally, reforestation in peatlands* was done by managing the water level with drainage to push water out of the soil. This meant digging many drainage routes to rivers in order to dry the land for planting. However, drying-out land results in the decomposition of organic matter in the peat soil and acts to heighten global warming due to the emission of greenhouse gases. Fire in dried peat, once ignited, spreads even underground and is very difficult to extinguish, creating the risk of large-scale peat fires.

To address this issue, WSL and MTI manage the storage water level. These companies first take detailed measurements and peatland survey necessary for zoning and infrastructure construction plans. Using the measurement results, WSL and MTI then (1) zone out protected and riparian forest with rare and highly valuable water storage properties, (2) set buffer zones to prevent any impact of plantation zones on protected forest and (3) determine plantation forest zones.

The success of our work so far since starting real-time measurements of the peat thickness has clearly shown sustained long-term peat thickness even while repeatedly shrinking in the short term from days to weeks and months. In other words, this indicates the peatland management is able to mitigate greenhouse gas emissions from peat.

The Sumitomo Forestry Group has also continued to develop the infrastructure technology necessary to manage peatlands since launching the business. The concept is simple, low cost and easy maintainability, which aims to establish management technology that can be broadly expanded in rainforest peatlands throughout Indonesia and the rest of the world. As an alternative means to carry out massive amounts of surveys when launching Sumitomo Forestry businesses, we are striving to develop technology to collect and analyze data using drones and AI (Artificial Intelligence).

Regions where peatlands thrive, such as the Amazon, the Congo Basin, and Indonesia, have the most rainfall throughout the world. The soil of peatlands is made up of 80% to 90% water. Tropical forests and peatlands act as a pipeline dispersing water into the air from a large amount of rainwater accumulated in the ground during the monsoon season through evaporation. The tremendous evaporation from these tropical forests and peatlands has the potential to act as a necessary water cycle function not only locally but at a continental and global scale. The collapse of the world’s water cycle will result in abnormal weather and adversely impact agriculture, which will cause even greater food shortage issues. Sumitomo Forestry recognized this fact in its peatland operations from an early stage and advocated the importance of proper tropical forest and peatland management because these regions act as the heart of the Earth circulating water throughout the planet at our presentation at The Seventh Tokyo International Conference on African Development (TICAD7) held in Yokohama in August 2019.

* Definition of peatlands: Characteristics of the peat soil found in the peat swamps is known to emit enormous amounts of greenhouse gases, typically carbon dioxide and methane gas, if the soil was inappropriately exploited. Owing to joint researches by Japanese and Indonesian academic institutes, our operations takes consideration to minimize greenhouse gas emissions that accrue as the peaty soil dissolves during exploitations.

Landscape management of plantation forest operation designed based on detailed data

Landscape management of plantation forest operation designed based on detailed data

Monitoring the water level in peatlands

Monitoring the water level in peatlands

Open Bay Timber Ltd. (OBT)

In addition to measures to prevent accidental fires in plantation forests by preparing fire belts and organizing left-over timber, we monitor the danger of fire occurrences through daily measurements of the air temperature and rainfall. In areas with a high risk of fire, patrols of work sites are increased from once to twice a day to meticulously check for signs of fire. We have had no cases of forest fires in 2020 thanks to these initiatives.

Tasman Pine Forests Ltd. (TPF)

TPF is working with Fire and Emergency New Zealand (FENZ), local municipalities, neighboring forestry associations and other relevant agencies to continuously conduct awareness-raising activities about fire in the local community in addition to taking other proactive fire prevention measures. Specific measures include setting up a Fire Index bulletin board that shows the fire risk level, distribution of leaflets to evoke caution in the local community, the creation of a system to always have fire-fighting helicopters on standby when the risk of fire is high, stockpiling of fire extinguishing agent, appropriate placement and management of water ponds, focused pruning of wood edges to prevent the spread of fires, fire-fighting equipment acquisition and training, conducting patrols, and preparation of forest roads. On days with a significantly high risk of fire, we also implement a wide range of regulations from time restrictions for harvesting work to rules on when people have recreational access to the mountains.

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Sustainability Report