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 products and services related to our customers’ lifestyles center upon wood mainly for housing. 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

Ratings in the table below
Achieved：◯　Not achieved but improved from previous year：△　Not achieved and declined compared to previous year：✕

Increasing Environmentally Conscious Products and Services

Specific steps based on issues and strategies	Indicators for Evaluation	Managing department	FY2020 target	FY2020 result	FY2020 value	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	80.0	52.1*	△	80.0
	Rate of environmentally-friendly renovation order rate (%)	Housing and Construction Division	55.0	62.2*	〇	60.0
	Sales of sash, glass wool and solar power generation systems (unit: million yen)	Timber and Building Materials Division	22,980	21,362	✕	24,040

* The period for FY2020 results is from April 1 to December 31, 2020.

• Promotion of Net Zero Energy House (ZEH) Specifications
• Renovating to Improve Function and Asset Value
• About symbol for Independent assurance

* The period for FY2020 results is from January 1 to December 31, 2020.

• Carbon Stock in the Housing and Construction Business

Specific steps based on issues and strategies	Indicators for Evaluation	Managing department	FY2020 target	FY2020 result	FY2020 value	FY2021 target
Propose products utilizing seedlings and natural cycle	Rate of orders for environmentally-friendly products of the Environmental Landscaping Business*1 (%)	Housing and Construction Division	59.0	56.8*2	△	63.0

*1 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

*2 The period for FY2020 results is from April 1 to December 31, 2020.

• Contributions to Eco Cities Through Greening
• About symbol for Independent assurance

Creating an Environment that Considers Biodiversity

* The period for FY2020 results is from January 1 to December 31, 2020.

• Contributions to Eco Cities Through Greening

Expanding Businesses that Contribute to Resolving Social Issues

*As of December 31, 2020

• Lifestyle Service Business Initiatives

Specific steps based on issues and strategies	Indicators for Evaluation	Managing department	FY2020 target	FY2020 result	FY2020 value	FY2021 target
Expand renewable energy business	Amount of electricity supplied by renewable energy business (converted to number of households supplied)*1	Environment and Resources Division	220,486	215,768*2	✕	373,826

*1 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.

*2 The period for FY2020 results is from January 1 to December 31, 2020.

• Aiming for 100% Renewable Energy and Joining the RE100
• About symbol for Independent assurance

Promoting Sustainable and Innovative Technological Development

• Toward the Future -Aiming for the Timberized Eco Cities with W350 Plan-

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Toward the Future

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 and 52.1% in fiscal 2020. However, we did not meet our 80.0% target. Sumitomo Forestry will continue to promote the economic, disaster prevention and health benefits of ZEH as well as encourage an even higher number of orders toward achieving a target of 80% in fiscal 2021, which is the final year of our mid-term management plan.

In terms of the amount of electricity supplied by renewable energy business, although we were not able to achieve our target, we were able to supply power worth the annual electricity use of 215,768 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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