Material Issue 3: The Reduction of the Environmental Impact of Our Business Activities

• Basic Policy
• Management of Material Issue 3
• Management of Each Target
• Toward the Future

Basic Policy

With the impact of climate change becoming increasingly problematic on a global scale, companies are being asked to reduce emission of greenhouse gas that cause global warming and to implement energy saving initiatives.

In consideration of the environmental impact of these operations, the Sumitomo Forestry Group fully recognizes the importance of reducing greenhouse emissions and taking other measures to combat climate change through the promotion of strict energy-saving activities, renewable energy use and other efforts. With a mid- to long-term perspective of the future, in 2018, we established greenhouse gas emission reduction goals for 2030, and were certified as SBT* in July 2018. Furthermore, we joined the RE100 international initiative with the goal of transition of power generation fuel to 100% renewable energy for power used in business activities of Sumitomo Forestry Group and power generation business by 2040.

In addition, to reduce environmental burden and more effectively utilize natural resources, we are promoting the reduction, reuse and recycling of industrial waste.

* Science Based Targets. These targets are set for companies to achieve reduction goals in-line with scientific knowledge to limit the raising average temperature around the world to less than 2°C.

• Contributions to the SDGs and Material Issues

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Management of Material Issue 3

Within our Mid-Term Sustainability Targets, our Material Issue 3 “the reduction of the environmental impact of our business activities” is broadly divided into three 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

Reducing Greenhouse Gas Emissions Toward Creating a Decarbonized Society (SBT: Scope 1 & 2)

Specific steps based on issues and strategies	Indicators for Evaluation	Managing department	FY2019 target	FY2019 result	FY2019 value	FY2020 target	FY2021 target
Reduce greenhouse gas emissions	Greenhouse gas emissions （t-CO2e） Percentage change from fiscal 2017	Each department	380,356 ＋2.9％	380,641 ＋2.9％	△	371,855 ＋0.6％	402,768 ＋8.9％
	Carbon efficiency （t-CO2e/million yen）	Sustainability Department	0.341 （0.275）*	0.345 （0.283）	△	0.331 （0.279）	0.318 （0.264）

* Figures in parenthesis are sales before applying accounting standards related to revenue recognition

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

• Saving of Energy and Reduction of Greenhouse Gas Emissions from Business Activities
• Boundaries and Methods of CO₂ Emissions Calculation
• About symbol for Independent assurance

Protecting Resources, Reducing the Generation of Waste and Achieving Zero Emissions

Specific steps based on issues and strategies	Indicators for Evaluation	Managing department	FY2019 target	FY2019 result	FY2019 value	FY2020 target	FY2021 target
Promotion of industrial waste separation	Recycling rate at new housing construction sites（％）*1	Housing and Construction Division	96.1	94.3	△	97.7	98.0
	Recycling rate at housing demolition sites (%)*2 (as of start of demolition work on main structure)		98.0	99.9	〇	98.0	98.0
	Recycling rate at the work sites of the renovation business unit*3 (%)		80.0	74.2	△	82.0	84.0
	Recycling rate at the work sites of the power generation business unit	Environment and Resources Division	52.5	81.6	〇	79.3	56.5
	Recycling rate at overseas manufacturing plants (%)	Timber and Building Materials Division	97.9	97.5	✕	98.2	98.0
	Recycling rate at domestic manufacturing plants (%)	Timber and Building Materials Division Housing and Construction Division Environment and Resources Division	99.5	99.0	✕	99.2	99.5
	Recycling rate of Lifestyle Service Business, etc.*4 (%)	Lifestyle Services Division, etc.	95.2	90.8	✕	93.1	98.0
Waste reduction Promote zero-emissions	Industrial waste final disposal amount (t) (Compared to 2017 Percentage Change)	Sustainability Department	58,860 （▲7.5％）	55,515 （▲12.8％）	〇	56,632 （▲11.0％）	54,087 （▲15.0％）
	Total industrial waste generated (waste generated per detached house) (kg/structure) (Compared to 2017 Percentage Change)	Housing and Construction Division	3,020 （▲9％）	3,002 （▲10％）	〇	2,950 （▲11％）	2,730 （▲18％）

*1 Includes new housing construction sites of the Housing and Construction Division, Sumitomo Forestry Landscaping, as well as Sumitomo Forestry Home Engineering.

*2 Includes construction materials specified under the Construction Material Recycling Law (concrete, asphalt-concrete, and wood waste)

*3 Includes Sumitomo Forestry Home Tech renovation sites but excludes hard-to-recycle debris and asbestos

*4 Includes emissions associated with Lifestyle Service Business, housing-related materials sales, and other operational locations.

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

• Promotion of Waste Reduction and Recycling
• About symbol for Independent assurance

Conserving and Effectively Utilizing Water Resources

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

• Efficient Use of Water Resources

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Toward the Future

Sumitomo Forestry Group had 380,641t-CO₂e in total greenhouse gas emissions, which did not reach our target of 380,356t-CO₂e. However, we were able to reduce emissions 972t-CO₂e compared to fiscal 2018. Mombetsu Biomass Power Generation in particular contributed greatly to the reduction of greenhouse gas emissions overall by bringing down the mixed fuel burning ratio of coal used as a raw material to 16% from 20% in fiscal 2017.

Our recycling rate of industrial waste in the domestic housing department was 94.3%, which did not achieve our 96.1% target. However, this recycling rate did improve from 94.2% in fiscal 2018. In fiscal 2020, we will further reduce industrial waste emissions and improve our recycling rate by advancing precut Kizure Panels, roofing, and external wall materials.

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