Basic Policy

The Sumitomo Forestry Group is expanding its forestry business in consideration of local communities and the environment. The Group contributes to a stable supply of wood and regional economic development while maintaining the wider environment through management of "Economic Forests" which are planted forests for wood production, the preservation of "Protected Forests", which are responsible for ecosystem conservation and CO₂ absorption and fixation, and coexistence with surrounding "Local Communities".

Forestry Business Overseas

The Sumitomo Forestry Group is expanding three approaches to conducting forestry business; industrial tree plantation, environmental reforestation, and social forestry. The purpose of industrial tree plantation is to produce wood and increase the supply of afforestation wood (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 forestry business.

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 afforestation with local communities while enlisting the cooperation of local residents.

Distribution and Area of Overseas Forestry Business Sites (as of end of December 2024)

Forest Certification and Sustainable Forestry Business

Of an approximately 31,000-hectare planted forest owned and managed by Papua New Guinea‘s Open Bay Timber (OBT), about two-thirds, or 20,000 hectares, has received FSC^® forest certification*. After harvest, the company ensures afforestation is carried out, and in fiscal 2024, 362 hectares of trees were planted.

The entire area of approximately 36,000 hectares managed by Tasman Pine Forests Ltd. (TPF) in New Zealand has been FSC^®-FM certified*. In fiscal 2024, TPF implemented 708 hectares of afforestation.

We will continue to practice sustainable forest management that lays basis for communities and environment to function in harmony.

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

Forestry Business in West Kalimantan, Indonesia (Industrial Tree Plantation)

In 2010, Sumitomo Forestry established PT. Mayangkara Tanaman Industri (MTI) and PT. Wana Subur Lestari (WSL) in collaboration with Alas Kusuma Group, an Indonesian forest management and plywood manufacturing company. They have been developing large-scale afforestation projects in West Kalimantan Province under "License for Industrial Afforestation and Timber Product Utilization Project (UPHHK-HTI)*¹" issued by the Indonesian Ministry of Environment and Forestry. Regarding management form, investment ratio was sequentially increased, and WSL and MTI became 100% subsidiaries of the Sumitomo Forestry Group in July 2021.
In addition, since 2020, we have started forestry business at Kubu Mulia Forestry (KMF), which is close to WSL and MTI.
Since 2022, PT. BINA OVIVIPARI SEMESTA (BIOS) (Headquarters: Kubu Raya District, West Kalimantan Province, Indonesia) has been working to create blue carbon credits through conservation of mangrove^*2 forests.

Background

The afforestation sites of WSL, MTI, and KMF 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.
We believe that from a sustainability perspective, it is a very significant business to responsibly conserve forests with high conservation value and provide local residents with an economic foundation through our business, while producing wood as a profit-making activity on these types of lands.

The land used in these operations is located in tropical peatlands which play an extremely vital role in the carbon and water cycle on a global scale.

Sustainable Forest Management

We launched these operations by conducting topographical surveys, and boring tests to understand the peat distribution, over five years. Based on the survey results, sustainable water storage-type peatland management was achieved by creating waterways and dams that were designed with consideration of the terrain. 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)*³, 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 survey report has also undergone peer review by a third-party organization, and the valuable feedback from these stakeholders has contributed to zoning areas for forest conservation and afforestation projects, the creation of management according to each area's role, and the establishment of "green corridors" that allow rare wildlife to move freely. 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.

Our employees' unified and efforts have succeeded in building a unique peatland management model that stabilizes the underground water level throughout one year. Stabilization of the underground water level reduces greenhouse gas emissions and forest fires, while maintaining proper hydrological cycles, thereby making a significant contribution to climate change mitigation. Our peatland management model has been highly praised 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, the Sumitomo Forestry Group works together with neighboring local business proprietors to preserve the entirety of the ecosystem.

The Sumitomo Forestry Group captures 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.

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

*2A generic term for plants that grow in water areas where seawater and freshwater mix in tropical and subtropical regions. It is said that there are 110 or more kinds of constituting plants

*3In 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