Material Issue 1: Ongoing Timber and Materials Procurement that Considers Sustainability and Biodiversity

• Basic Policy
• Management of Material Issue 1
• Management of Each Target
• Toward the Future

Basic Policy

With businesses centered on wood, Sumitomo Forestry Group promotes sustainable forest management and timber procurement both domestically and abroad. In procuring wood and timber products, we engage in management under specified numerical targets, placing it as an important theme of sustainability that encompasses environmental aspects such as climate change measures and biodiversity conservation as well as social aspects such as human rights.

With increase in concern about forest depletion as one of the causes of climate change, demand for sustainability in procurement is on the rise. Amid these circumstances, Sumitomo Forestry Group has declared the goal of handling all of its timber and timber products to be sustainable by fiscal 2021. We have heightened our evaluation criteria for sustainable timber procurement as we work to step up our confirmation system. As we continue to contribute to solving social issues, we have defined KPI to establish timber procurement that achieves both forest resource utilization and biodiversity conservation.

• Contributions to the SDGs and Material Issues

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Management of Material Issue 1

Material Issue 1 of our Mid-Term Sustainability Targets is “Ongoing timber and materials procurement that considers sustainability and biodiversity.” We have derived three targets from this issue, which we incorporate into our management practices through inclusion in annual activity policy and measures for each department. We also assess the impacts that the material issue has on society and the environment.

Impact on Society and the Environment

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Management of Each Target

Management Forests While Mitigating Climate Change and Protecting Biodiversity

* Rating
Achieved：◯　Not achieved but improved from previous year ：△　Not achieved and declined compared to previous year：✕

• Sustainable Forest Management

Expanding the Utilization of Sustainable Forest Resources

Specific steps based on issues and strategies	Indicators for Evaluation	Managing department	FY2019 target	FY2019 result	FY2019 value	FY2020 target	FY2021 target
Expand domestic and overseas forest plantation area with seedlings produced	Area of forest plantation with in-house produced seedlings (ha)	Environment and Resources Division	6,553	7,770	〇	7,456	7,920
	Seedlings supplied (unit: 10 Thousand)	Environment and Resources Division Timber and Building Materials Division	511	414	△	509	726
Expand the volume of chip and pellet fuel used	Amount of biofuel material used (such as　wood chips and pellets) (t)*	Environment and Resources Division Timber and Building Materials Division	1,188,010	1,112,224	△	1,217,541	1,363,930
Increase quantity of sustainable timber and timber products handled and used	Percentage of sustainable timber and timber products handled (%)	Timber and Building Materials Division	89.0	89.8	〇	93.0	100
	Rate of sustainable timber used as primary building material（％）	Housing and Construction Division	80.0	80.6	〇	100	100

* Includes Japan Bio Energy Co., Ltd., Okhotsk Bio Energy Co. Ltd., Michinoku Bio Energy Co., Ltd., and the Sumitomo Forestry Timber and Building Materials Business.

* Rating
Achieved：◯　Not achieved but improved from previous year ：△　Not achieved and declined compared to previous year：✕

• Protecting and Utilizing Domestic Forest Resources
• Fuel Manufacturing (Chips, Pellets)
• Procurement Initiatives (Distribution Business)
• About symbol for Independent assurance

Building Sustainable Supply Chains

Specific steps based on issues and strategies	Indicators for Evaluation	Managing department	FY2019 target	FY2019 result	FY2019 value	FY2020 target	FY2021 target
Update the Sustainability procurement survey form and formulate survey plan	Sustainability procurement survey implementation rate*1 in the supply chain of the domestic housing department (%)	Housing and Construction Division	65.0	86.0	〇	88.0	80.0
	Sustainability procurement survey implementation rate*2 of suppliers of imported timber (%)	Timber and Building Materials Division	100	100	〇	100	100

*1 Rate accounts for the purchasing ratio of the suppliers surveyed

*2 Rate accounts for the number of suppliers implementing sustainability surveys versus the number of suppliers encompassed in the Timber Procurement Committee timber procurement due diligence for this fiscal year

* Rating
Achieved：◯　Not achieved but improved from previous year ：△　Not achieved and declined compared to previous year：✕

• Procurement Initiatives (Distribution Business)
• Human Rights Initiatives
• About symbol for Independent assurance

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Toward the Future

Sumitomo Forestry conducts periodic reviews to confirm sustainability at all procurement suppliers for timber and timber products we directly import from overseas. The percentage of sustainable timber and timber products handled in fiscal 2019 showed a favorable shift upward to 89.8% against our target of 89.0%. We aim to reach 100% procurement of sustainable timber and timber products by fiscal 2021. The sustainability procurement survey implementation rate in the supply chain of the domestic housing department which was set as a new target in fiscal 2019, was 86% out of the amount of material purchases from suppliers. We aim to build and expand the scope of sustainable supply chains in the future.

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