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

In fiscal 2021, the percentage of ZEH orders for new custom-built detached houses increased to 67.4% compared to 38% in fiscal 2018 but fell short of the planned 80.0%. Despite the fact that the target was not reached in fiscal 2021, the indicator was incorporated into employee performance evaluations, and information was shared at meetings to raise employee awareness, resulting in a 15.3% increase over the previous fiscal year. We will continue our initiatives to promote ZEH penetration rate, with a goal of 80.0% for December 31, 2024, the final fiscal year of the Mid-term Sustainability Targets.

Due to stable operation of the Mombetsu Biomass Power Plant and the Kanda Biomass Power Plant starting operation in June 2021, "Amount of Electricity Supplied by the Renewable Energy Business^*" was 335,310 households (1.046,167 MWh), despite falling short of the plan (373,826 households in December of fiscal 2021). In the Mid-term Management Plan (2022-2024), we will change the unit of measurement from household equivalents to electricity supply (MWh), with the goal of supplying electricity of 856,022 MWh in fiscal 2024.

* The calculation method for equity-method affiliated companies will be revised to supply volume in accordance with the equity ratio from fiscal 2022

Increasing Environmentally Conscious Products and Services

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

Specific steps based on issues and strategies	Indicators for Evaluation	Managing department	FY2021	FY2021	FY2021	FY2022
			target	result	value	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	67.4	△	75
	Rate of environmentally-friendly renovation order rate (%)	Housing and Construction Division	60	58.9	×	70
	Sales of sash, glass wool and solar power generation systems (unit: million yen)	Timber and Building Materials Division	24,040	22,987	△	-

Specific steps based on issues and strategies	Indicators for Evaluation	Managing department	FY2021	FY2021	FY2021	FY2022
			target	result	value	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	63.0	58.9	△	60

*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

Specific steps based on issues and strategies	Indicators for Evaluation	Managing department	FY2021	FY2021	FY2021	FY2022*3
			target	result	value	target
Expand renewable energy business	Amount of electricity supplied by renewable energy business (converted to number of households supplied)*1 *2	Environment and Resources Division	373,826	335,310	△	240,740

*1 Power plants included in the count for renewable energy projects are Mombetsu Biomass Power Plant, Hachinohe Biomass Power Plant, Kawasaki Biomass Power Plant, Tomakomai Biomass Power Plant, Kanda Biomass Energy, and Kashima Solar Power Plant.

*2 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.

*3 Figures in fiscal 2022 plan are based on number of households in terms of the amount of electricity supplied according to investment ratio

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

With respect to Greenhouse Gases Emissions, we were able to reduce emissions to 370,772t-CO₂e in fiscal 2021, compared to the planned 402,768t-CO₂e.This was mostly owing to the coal co-firing ratio being reduced at Mombetsu Biomass Power Plant, as well as the suspension of operations at several overseas industrial plants due to impact of novel coronavirus (COVID-19). In the Mid-term Business Plan (2022-2024), we aim to achieve 301,290t-CO₂e in the final fiscal year ending December 31, 2024 (Down 18.5% from March 2018) by further reducing ratio of coal co-firing at the Mombetsu Biomass Power Plant and promoting renewable energy for electricity consumption in order to achieve RE100.

At new construction sites, the recycling rate of industrial waste was 95.1%, falling short of the planned 98.0%. We were unable to meet our target value despite our initiatives to reduce industrial waste emissions and increase recycling rates by converting to pre-cutting of Lattice Panels and slates.In the Mid-term Management Plan (2022-2024), we aim to achieve 98.0% in the final fiscal year ending December 31, 2024, by reducing ratio of mixed waste in conjunction with thorough separation of waste at each site.

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

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

Specific steps based on issues and strategies	Indicators for Evaluation	Managing department	FY2021	FY2021	FY2021	FY2022
			target	result	value	target
Reduce greenhouse gas emissions	Greenhouse gas emissions (t-CO2e)* Percentage change from fiscal 2017	Each department	402,768	370,772	○	354,368
			+8.9%	+0.3%	○	▲4.2%
	Carbon efficiency (t-CO2e/million yen)	Sustainability Department	0.318	0.268	○	-

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

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

Specific steps based on issues and strategies	Indicators for Evaluation	Managing department	FY2021	FY2021	FY2021	FY2022
			target	result	value	target
Promotion of industrial waste separation	Recycling rate at new housing construction sites (%)*1	Housing and Construction Division	98.0	95.1	×	96.0
	Recycling rate at housing demolition sites (%)*2 (as of start of demolition work on main structure)		98.0	94.6	-	100.0
	Recycling rate at the work sites of the renovation business unit*3 (%)		84.0	79.7	△	84.5
	Recycling rate at the work sites of the power generation business unit	Environment and Resources Division	56.5	99.3	○	98.0
	Recycling rate at overseas manufacturing plants (%)	Timber and Building Materials Division	98.0	98.5	○	99.0
	Recycling rate at domestic manufacturing plants (%)	Timber and Building Materials Division	99.5	99.1	×	99.0
		Housing and Construction Division
		Environment and Resources Division
	Recycling rate of Lifestyle Service Business, etc.*4 (%)	Lifestyle Services Division, etc.	98.0	80.6	×	84.0

*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.

Material Issue 4: A Vibrant Work Environment Where a Diverse Workforce can Unharness their Skills and Individuality

Due to requests from national and local governments to refrain from going out amid the reaction to the novel coronavirus infection, Sumitomo Forestry employees took an average of 12.3 days of paid leave in fiscal 2021, up slightly from 11.6 days in the previous fiscal year. Similar results were obtained at affiliated companies.

Sumitomo Forestry was able to cut overtime work down 33.3% compared to the planned 32.0% in fiscal 2013.Similar reductions were achieved at affiliated companies. We will continue to improve the number of paid holidays taken and reduce overtime work by introducing telework and promoting flexible and efficient ways of working through the flextime system.

Despite our goal of zero occupational accidents, they occurred in each of our business areas in fiscal 2021. In particular, heat stroke and accidents involving crashes and falls have surged at new construction sites in Japan, resulting in 24 occurrences of serious occupational accidents lasting four days or longer. In addition, there were 9 accidents involving forklifts and other equipment at overseas manufacturing companies.

A total of 37 employees attended the ISO 45001 internal auditor training course, 51 employees attended the ISO 9001 internal auditor training course, both held by the Quality Control and Worker Safety Management Department which was newly founded in April 2020, and all participants were certified as internal auditors. Sumitomo Forestry Group will continue to improve its initiatives to attain zero occupational accidents by managing Group-wide occupational accident cases, strengthening safety education in each division and affiliated company, and offering horizontal support, etc.

*1 Calculated based on enrolment as of December 31

*2 Employee satisfaction rate for the plan in FY2022 (%)

* The utilization rate of employee paid leave in FY 2022 (%)

* Overtime working hour reduction rate compared to FY2017 for the plan in FY2022 (%)

Eliminating Occupational Injuries

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

Specific steps based on issues and strategies	Indicators for Evaluation		Managing department	FY2021	FY2021	FY2021	FY2022
				target	result	value	target
Implement reciprocal safety audits and manufacturing department safety audits Share case studies and implement risk assessments	Number of serious occupational injuries (incidents) (four or more days of lost worktime)	Manufacturing sites occurring inside and outside of Japan (contractors and subcontractors)*1	Timber and Building Materials Division	0	8	△	0
		Plantation sites occurring inside and outside of Japan (contractors)	Environment and Resources Division	0	17	×	0
		New housing construction sites in Japan (contractors)*2	Housing and Construction Division	0	24	×	0
		New housing construction sites outside Japan (contractors)	Overseas Housing and Real Estate Division	0	9	×	0
	Number of occupational injuries (incidents) (requiring one to three days of lost worktime)	New housing construction sites in Japan (contractors)	Housing and Construction Division	0	13	△	18

*1 Overseas manufacturing sites consist of six consolidated group companies: Nelson Pine Industries (NPIL), PT. Kutai Timber Indonesia (KTI), PT. AST Indonesia, PT. Sinar Rimba Pasifik (SRP), Canyon Creek Cabinet (CCC), and Vina Eco Board (VECO).

*2 Includes sole proprietorships