Establishment and Certification of Science Based Targets (SBT)

As the impact of climate change becomes more urgent 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 SBTi* and set new greenhouse gas reduction targets for the entire Group in June 2017 and was certified as SBT in July 2018. Its progress and results are explained below.

  • 1. Scope 1&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°C Target" and is supporting company efforts.

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Toward to SBT Certification Goals

In July 2018, the Sumitomo Forestry Group greenhouse gas emissions reduction targets have been officially approved by international SBT initiative (SBTi). Its progress and results are explained below.

Target Details Base Year
FY2017
t-CO2e
FY2019
t-CO2e
Rate of Change

1. Scope 1&2: 21% reduction of greenhouse gas emissions compared to 2017 (base year) by 2030.

369,785 380,641*1 2.9

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

8,895,066 9,324,602*2 4.8

*1 The fiscal 2019 increase in greenhouse gas emissions was caused by the start of full operations in April 2018 at the Hachinohe Biomass Power Generation plant.

*2 The fiscal 2019 increase in greenhouse gas emissions was caused by the increase in the number of delivered overseas household sales in the Overseas Housing and Real Estate Division.

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Aiming for 100% Renewable Energy and Joining the RE100

The Sumitomo Forestry Group positions reduction of environmental impact of our business activities as one material issue that needs to be addressed and strives to engage in energy-saving activities and use of renewable energy. As part of these initiatives, we joined the international RE100* initiative that aims for 100% of electricity used to be from renewable energy in March 2020 to accelerate our efforts to reduce greenhouse gases.

By 2040, we aim to utilize 100% renewable energy for the electricity used for our Group business activities and for the fuel for our power generation operations.

Sumitomo Forestry Group’s implementation of renewable energy includes solar power generation panels installed at our housing exhibition sites and generated power for our own use (including an adjacent wood fuel chip factory) from our biomass power generation sites. In fiscal 2019, renewable energy accounted for about 16% of our total group electricity usage. The biomass fuel accounted for about 87% on our power generation business fuel usage.
To accelerate the implementation of renewable energy, we plan to have each business division set its own targets and tackle the issue as a company-wide initiative.

For Sumitomo Forestry Group to achieve 100% renewable energy for the electricity for our operations, we are utilizing Sumirin Denki, a service where we purchase surplus power as well as supply electricity generated from solar power systems of Sumitomo Forestry home houses. We are also considering installing solar power generation systems in our factories both in Japan and overseas. Furthermore, we will consider a diverse range of procurement methods that take advantage of programs in each country we operate.

Sumitomo Forestry Group will continue to proactively utilize renewable energies to reduce greenhouse gas emissions and contribute to the realization of a sustainable society.

* RE100 is an international initiative run jointly by The Climate Group, a global environmental NGO, and the CDP. 32 companies in Japan are part of the 229 companies worldwide who are RE100 members as of March 25, 2020.

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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* 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 Okhotsk Bio Energy in December 2016 as a consolidated subsidiary. This power plant uses coal as supplemental fuel for smooth operation and maintenance while using unused wood resources as the primary fuel. Therefore, the total CO2 emissions in Scope 1 and 2 in fiscal 2019 for the Sumitomo Forestry Group were 380,641t-CO2e, up 2.9% compared to fiscal 2017.

In addition, when looking by business, our plants in Japan and the power generation business make up 57.0% while our plants overseas compose 28.5%. We 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 targets via 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. 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.

Scope 1 and Scope 2 CO2 Emission TrendsAbout symbol for Independent assurance

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

Scope 1 and 2 Breakdown by Business (FY2019)

Scope 1 and 2 Breakdown by Business (FY2019)

FY2019 Scope 1 and 2 CO2 Emissions Breakdown

(Thousand t-CO2e)

Domestic and Overseas Office Domestic Non-Office Overseas Non-Office Total
Scope 1 30 213 21 265
Scope 2 16 10 89 115
Total 46 223 111 381

Scope 3 Emissions by CategoryAbout symbol for Independent assurance

Scope 3 Emissions by Category

Scope 3 Emissions by Category (three years)

(thousandt-CO2e)

Category Boundary of Emissions included in the Category FY2017 FY2018 FY2019

1 Purchased products and services

Emission from upstream of products and services purchased by Sumitomo Forestry 2,543 2,625 2,887

2 Capital goods

Emissions from upstream of purchased equipment 71 72 132

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

Emissions from the upstream of purchased fuels, electricity, heat capacity, and water 21 20 29

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 420 433 445

5 Waste generated through businesses

Emissions from waste treatment and its transport 8 8 7

6 Business trips

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

7 Employee commute

Emissions from employee commuting 5 5 5

8 Leased property (Upstream)

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

9 Transport and deliver (downstream)

Emissions during transport of products sold 106 107 103

10 Processing of sold products

Emissions from processing of raw wood into plywood as well as of sold precut processing of sold lumber 52 54 43

11 Use of sold products

Emissions during use of detached houses sold 6,352 6,384 6,437

12 Disposal of sold products

Emissions from demolition and disposal of detached houses sold by the Company 47 48 50

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) 90 117 114

FY2019 Total Greenhouse Gas Emissions Accrued From Corporate ActivitiesAbout symbol for Independent assurance

FY2019 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 domestic scope in Japan to the entire Sumitomo Forestry Group as of fiscal 2017.

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Energy Consumption from Business Activities

The Sumitomo Forestry Group consumed 2,903,124MWh* of energy in fiscal 2019. The energy consumption of the Group increased during 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 at the Hachinohe Biomass Power Generation Plant in April 2018 stopped a dramatic amount of the rise in energy consumption, but this power consumption declined 3.7% in fiscal 2019 compared to the previous fiscal year. The energy consumption in business other than the power generation business has declined by various energy-saving activities. In fiscal 2019, total renewable energy accounted for about 72% of our group energy usage.

* 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 Over Past Four Years

Energy Consumption Trends Over 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

All business sites of Group companies in Japan are advancing the introduction of fuel-efficient vehicles to make 547 of the 616 company-owned vehicles introduced during fiscal 2019 fuel-efficient vehicles (for an 88.8% 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 by such means as reducing prolonged working hours and raising awareness among employees.

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Reducing CO2 Emissions Outside Offices

To address CO2 emissions collectively, the Group set Sumitomo Forestry Crest, manufacturing plants of Agro-Products Division of Sumitomo Forestry Landscaping, as well as power generation businesses, the Tsukuba Research Institute, the Tokyo Metropolitan Area Recycling Center, Sumirin Fill Care, 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 as overseas non-office category constituents with their respective reduction targets.

In fiscal 2019, the start of full operations at Hachinohe Biomass Power Generation caused an increase of 2.0% compared to fiscal 2017, which is the base year.

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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 2019, Sumitomo Forestry's per-unit energy consumption was 99.7% compared to the previous year and Sumitomo Forestry Crest's was 98.9%.

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 (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/thousand yen
(Ratio to Previous FY: 98.9%)

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 March 2020, excluding the Sumitomo Forestry Group. Furthermore, we are providing consulting for more efficient internal warehousing operations and inventory management rationalization. In fiscal 2019, two new construction materials operators contracted our consulting services.

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