Sustainability Targets of Our Group 2021 Mid-Term Management Plan and Material Issues

• Formulation of the 2021 Mid-Term Management Plan to Promote Further Integration of ESG initiatives
• Formulation of Mid-Term Sustainability Targets
• Management of Mid-Term Sustainability Targets

Formulation of the 2021 Mid-Term Management Plan to Promote Further Integration of ESG initiatives

In 2015, Sumitomo Forestry Group identified five Material Issues related to sustainability and established a Mid-Term CSR Management Plan that specified strategies and targets for each issue. With fiscal 2020 set as the target year, each company and division within the Group has been working toward achieving those goals.

Interest in ESG is higher than ever from attention to technological innovations driven by the evolution of IT and significant industrial transformation driven by rapid globalization to concerns about climate change and human rights risk measures as well as stronger governance systems. Companies must contribute to the SDGs by addressing these issues in the pursuit of growth.

In response to the changing business environment, the Sumitomo Forestry Group sees a need to promote sustainable management to an even greater extent. We formulated new Mid-Term Sustainability Targets that incorporate the sustainability strategies and material issues within the 2021 Mid-Term Management Plan (FY2019 to FY2021). This plan includes the further promotion of integration between business operations and ESG initiatives as one of the basic policies.

We will strengthen our management platform and further promote future businesses through sustainable management that creates synergy between business and ESG initiatives.

Sumitomo Forestry Group 2021 Medium-Term Management Plan -Four Basic Policies-

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Formulation of Mid-Term Sustainability Targets

“The Mid-Term Sustainability Targets” announced in May 2019 is a revision of our previous Mid-Term CSR Plan based on our contributions to achieving the SDGs and the five material issues related to sustainability. Deliberations have been held in each business division and at management level, resulting in the expansion of our list of qualitative targets from 12 to 15 items.

Incorporating specific non-financial targets into our 2021 Mid-Term Management Plan has enabled us to further strengthen the link between our business and sustainability strategies. Not only does this enable us to meet the expectations of society such as SDGs, we believe it will also lead to an increase in corporate value which cannot be determined from a financial perspective alone.

Identification of Material Issues Related to Sustainability

Following the changes in the economic, environmental and social situation, in March 2015, the Sumitomo Forestry Group identified material issues related to sustainability.

The Group surveyed both internal and external stakeholders as well as outside experts, receiving responses from about 2,700 people. In preparing the questionnaire, 27 issues most closely related to the Sumitomo Forestry Group were specified, based on the Sumitomo Forestry Group’s Corporate Philosophy and Our Values, and taking into account such matters as ISO 26000, the international standard on the social responsibility of organizations, and evaluation points linked to socially responsible investment (SRI).

After incorporating management perspectives, the survey results were mapped out against axes of “management” and “stakeholders,” before determining the materiality of each issue. 12 of these issues were identified as being highly material, and rearranged into 5 issues related to sustainability.

In conjunction with the formulation of Mid-Term Sustainability Targets in 2018, we also revised some of our material issues in light of new demands from the society.

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Management of Mid-Term Sustainability Targets

In Mid-Term Sustainability Targets, we establish 15 qualitative targets based on contributions to achieving SDGs and on our five material issues. In addition, we specified evaluative indexes (quantitative goals) for each qualitative target item, which serve as our targets for fiscal 2021.

Each group company and department has set “Sustainability Budget” with numerical targets set for the fiscal year and commenced initiatives toward achieving these goals.

The Sumitomo Forestry Group fully implements a PDCA cycle for the progress and achievements of each target at the Sustainability Committee convened two times a year in addition to providing reports to the Board of Directors.

• Mid-Term Sustainability Targets Plan and Results

Relationship Between Material Issues and Business

The Sumitomo Forestry Group is building a unique value chain starting from forest management and plantation forest operations worldwide as well as procurement, distribution, manufacturing, and fabrication using a global network up through the provision of all types of housing construction and other lifestyle services. The table below indicates the each business in the value chain and 15 qualitative targets set based on the five material issues. We will promote ESG initiatives unified throughout our businesses.

• Contributions to the SDGs and Material Issues

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