Material Issue 2: The Development and Sale of Reliable and Safe Products and Services that Consider the Environment and Society

• Basic Policy
• Management of Material Issue 2
• Management of Each Target
• Toward the Future

Basic Policy

Sumitomo Forestry Group provides a full complement of products and services related to our customers’ lifestyles, beginning with housings. While it goes without saying that we attend to customer's peace of mind and safety in providing products and services, we also believe that engaging in development and sales mindful of creating a sustainable society is a crucial role that our Group must fulfill.

One of the areas which we can contribute the most in reducing environmental impact is the reduction of greenhouse gases emissions from housings that people live in. Net Zero Energy Houses (ZEH) and other housing measures in Japan offer guidance to creating eco products as well as advocate excellent long-term housing as an asset. Sumitomo Forestry will contribute to a sustainable society by setting ZEH order quotas and other targets for environmentally-friendly products in addition to recommending ZEH housing while tailoring specifications to customer needs in order to reduce the energy consumption of each household.

• Contributions to the SDGs and Material Issues

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Management of Material Issue 2

Within our Mid-Term Sustainability Goals, our Material Issue 2 “the development and sale of reliable and safe products and services that consider the environment and society” is broadly divided into four goals, 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

Increasing Environmentally Conscious Products and Services

Specific steps based on issues and strategies	Indicators for Evaluation	Managing department	FY2019 target	FY2019 result	FY2019 value	FY2020 target	FY2021 target
Promote standards for energy generation and conservation housing	Percentage of orders for ZEH type houses out of new custom-built detached housings（％）	Housing and Construction Division	60.0	48.2	△	80.0	80.0
	Rate of Environmentally-friendly renovation order rate（％）	Housing and Construction Division	50.0	52.4	〇	55.0	60.0
	Sales of sash, glass wool and solar power generation systems (unit: million yen)	Timber and Building Materials Division	23,119	23,227	〇	22,980	24,040
Increase value added by carbon stock from use of timber	Carbon stock in wooden architecture in Japan（t-CO2）	Housing and Construction Division	190,676	193,072	〇	199,417	199,509
Propose products utilizing seedlings and natural cycle	Rate of orders for environmentally-friendly product (%)	Housing and Construction Division	58.0	56.8	△	59.0	63.0

* Environmentally-friendly products consist of the following: (1) local seedlings, (2) permeable paving material, (3) green wall construction, (4) rooftop greening, (5) biotope and (6) use of recycled materials

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

• Home Building That Contributes to a Sustainable Society
• About symbol for Independent assurance

Creating an Environment that Considers Biodiversity

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

• Contributions to Eco Cities Through Greening

Expanding Businesses That Contribute to Resolving Social Issues

Specific steps based on issues and strategies	Indicators for Evaluation	Managing department	FY2019 target	FY2019 result	FY2019 value	FY2020 target	FY2021 target
Number of rooms added through new facilities construction	Number of rooms at private-pay elderly care facilities (rooms)	Lifestyle Services Division	1,457	1,455	✕	1,764	2,014
Expand renewable energy business	Amount of electricity supplied by renewable energy business (converted to number of households supplied)*	Environment and Resources Division	217,768	219,628	〇	220,486	373,826

* The number of households (with an annual electricity use of 3,120kWh per household) to which electricity could be supplied, based on the amount of electricity supplied annually by the renewable energy business.

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

• Business Responding to the Super-Aging Society
• Contributing to the Reduction of Greenhouse Gases Through the Renewable Energy Business
• About symbol for Independent assurance

Promoting Sustainable and Innovative Technological Development

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

• MOCCA (Timber Solutions) Business

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Toward the Future

We were able to confirm progress in improving as a whole compared to fiscal 2018 even though we did not reach some targets in fiscal 2019.

The percentage of orders for ZEH type houses out of new custom-built detached housings increased from 38% in fiscal 2018 to 48.2% in fiscal 2019. However, we did not meet our 60% target. Sumitomo Forestry will promote the economic benefits of ZEH and encourage an even higher number of orders toward achieving a goal of 80% in fiscal 2020.

In terms of the amount of electricity supplied by renewable energy business, we were able to exceed our target by supplying power worth the annual electricity use of 219,628 households through the stable operation of the Mombetsu Biomass Power Generation and other renewable energy plants. We aim to supply power worth the annual electricity use of 373,826 households in fiscal 2021 with the addition of power that will be generated in the Kanda Biomass Power Generation Plant which is scheduled to start operation in fiscal 2021.

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