Policy on Nature-Related Issues

Nature Positive Statement

Sumitomo Forestry established its Nature Positive Statement in 2025. We conduct our business both domestically and internationally based on the concept of sustainable, cyclical forestry by “planting trees, nurturing forests, utilizing them as resources, and replanting what is used.”
At the same time, as environmental issues such as climate change and nature loss intensify worldwide, directly and indirectly impacting local communities and economies, and people's lives, we strive to understand the quantitative relationship between our business and biodiversity, and recognize that it is our corporate responsibility to contribute to solving these challenges.
The Sumitomo Forestry Group is committed to realizing the goal of nature positive, halting and reversing nature loss by 2030, by advancing the wood cycle across forests, timber, construction, and renewable energy. To that end, we plan to integrate existing declarations and action guidelines, establish Nature Positive Goals which set out concrete action targets, and promote their implementation.

Declaration of Biodiversity and Biodiversity Action Guidelines

Sumitomo Forestry established its policy on Biodiversity Conservation in Company-owned Forests in Japan in fiscal 2006, and its Wood Procurement Philosophy and Policy in fiscal 2007. The Company also revised its Environmental Policies in fiscal 2007 to incorporate biodiversity considerations. Then in March 2012, the Sumitomo Forestry Group established its Declaration of Biodiversity, setting out the Sumitomo Forestry Group's understanding of and stance on biodiversity; Biodiversity Action Guidelines, specifying an internal set of guidelines; and Biodiversity Long-Term Targets as specific goals of activity.

In July 2015, the Group initiated the Sumitomo Forestry Group Environmental Policy, bringing together the Environmental Philosophy*, the Environmental Policies, the Sumitomo Forestry Group Declaration of Biodiversity, and the Sumitomo Forestry Group's Biodiversity Action Guidelines. Therefore, the efforts in biodiversity are also operated based on the policies integrated in the Sumitomo Forestry Group Environmental Policy.

*The Sumitomo Forestry Group formulated the Environmental Philosophy in 1994 and the Environmental Policies in 2000

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Sumitomo Forestry Group Environmental Policy

Internal Framework for Realizing Nature Positive Goals

In accordance with our environmental management structure, the Representative Director and President is the person in charge of the Sumitomo Forestry Group's nature-related initiatives, especially biodiversity conservation, and the Executive Officer in charge of the Sustainability and the General Manager of the Sustainability Department manage the Sumitomo Forestry Group company activities.

Nature-related Risks

The Sumitomo Forestry Group conducts sustainable forest management in its company-owned forests in Japan and also manages vast planted forests overseas, carrying out activities that contribute to biodiversity conservation and the development of local communities. In the forests and planted forests owned and managed both in Japan and overseas, the manifestation of following risks could potentially affect the business performance of our Group, such as large-scale forest fires, loss of planted trees due to pests and diseases, overharvesting caused by incorrect estimation of logging volumes, opposition from local residents, or prolonged campaign from environmental organizations.

Actions for Nature-Positive Goals and Related Risks

The Sumitomo Forestry Group is committed to sustainable timber production based on the concept of sustainable forestry, which involves the planned and cyclical planting, nurturing, and harvesting of forests we own and manage. We determine appropriate harvesting timings, formulate operational plans, and conduct forest management in accordance with these plans.

Additionally, to prevent any hindrance to the growth of planted trees, we thoroughly perform routine management of the entire forestation area, including mowing of undergrowth and planned thinning.

Furthermore, we strive to contribute to the local communities adjacent to forests we own and manage, and engage in businesses that support the development of these communities. In particular, in Indonesia and Papua New Guinea, where we operate large-scale planted forests, we are steadily carrying out activities such as creating local employment opportunities, constructing lifeline infrastructure, and providing environmental education in an aim to engage in community-rooted initiatives.

Through actions such as those described above, in order to coexist in harmony with nature, Sumitomo Forestry Group is implementing initiatives to help realize Nature Positive by 2030, which aims to halt and reverse nature loss. With the objective of quantitatively understanding the contribution to nature-positive and setting targets, we have selected relevant initiatives carried out in each divisions as pilot projects and to monitor their progress by incorporating into the Mid-Term Sustainability Targets.

These Sumitomo Forestry Group's initiatives are organized in accordance with the framework of actions to realize nature positivity recommended by SBT for Nature, as follows. We minimize environmental impact by organizing business initiatives in accordance with the mitigation hierarchy.

Source: Science Based Targets Network, 2020. "Science-Based Targets for Nature: Initial Guidance for Business Executive Summary"

	Basic Policy	Initiatives and Commitments
Avoidance	The Sumitomo Forestry Group has formulated the Sumitomo Forestry Group Procurement Policy and Wood Procurement Management Regulations, and procures only sustainable timber and wood products that conform to these policies, avoiding the use of problematic timber and wood products. In our forestry business, we manage forests separately as "working forests" for wood production and "environmental forests" for environmental conservation, avoiding business in areas where biodiversity must be preserved. In company-owned forests in Japan, the company has also created the Riparian Forest Management Manual to ensure restricted operations in areas around bodies of water that are rich in biodiversity.	・Annual Sustainability Procurement Survey in supply chain ・Wood Procurement Committees are held four times a year ・Certification acquisition rate of incoming PKS (100% in FY2024 target) ・Securing ratio of conservation forests in company-owned forests (more than 30% in FY2024 target) ・Prepared the Sumitomo Forestry Red Data Book and Riparian Forest Management Manual, and implemented appropriate management and conservation ・Conduct mangrove conservation project in Indonesia (9,738ha) ・Initiatives toward Net Zero Greenhouse Gas Emissions ・Conservation Activities for the National Natural Monument "Tsugazakura (Phyllodoce nipponica) Community of Mt. Dozan", a company-owned Forest in Niihama, Ehime Prefecture, and Registration as a Natural Symbiosis Site in the Ministry of the Environment
Reduction	By promoting the recycling of wood, we aim to reduce resource consumption and increase efficiency, thereby realizing a circular bioeconomy and reducing the burden on nature. In our forestry business, we advance sustainable forest management to ensure that wood resources will be available in perpetuity while preserving public benefits of forests, including biodiversity conservation.	・Development of wood cycle (acceleration of cyclical forest management, promotion of wood change, each business based on standardization of carbon neutral design) Examples: Establishment of forestry fund, NeXT FOREST (an AI model that contributes to CO₂ emissions and forest fire control in tropical peatlands), establishment of timber industrial complex, wood change (replacement of steel, concrete, fossil fuels, etc. with wood), promotion of OneClickLCA and environmental labeling EPD (visualization of CO₂ emissions during construction) ・Launched the Forest Value Creation Platform in Japan in 2024, a GIS-based system that supports three key stakeholders in the creation of forest-derived J-Credits: project developers, Designated Operational Entities, and credit purchasers ・Established a joint venture with Sumitomo Mitsui Trust Bank, Limited—Nihon Shinrin Asset Co., Ltd.—in 2024 to accelerate reforestation of harvested areas and revitalize the domestic forestry industry ・Final disposal of industrial waste (reduction rate compared to FY2021: 5.4%; reduction planned for FY2024) ・Recycling rate at new housing construction sites (FY2021 result: 95.1% against FY2024 plan: 98.0%) ・Recycling rate of waste at manufacturing plants (FY2021 results: overseas 98.5%, domestic 99.1% against FY2024 plan: 99.0%/99.0%) ・Unused resources (biomass use) handling volume (planned for FY2024:19,202 m³) ・Domestic and overseas forest certified area (FY2021 actual 221,971 ha against FY2024 plan 242,493 ha) ・Maintaining 100% SGEC certified area (company-owned forests in Japan)
Restoration and reproduction	We are engaged in activities to restore and regenerate biodiversity that has been lost or threatened with loss, in our core business of urban and residential landscaping business and in social contribution activities that utilize management resources cultivated through our business activities.	・Increase in the number of native tree species sold (465,000 in FY2021 against 500,000 planned for FY2024), and promotion of "Harmonic Plants^®" that sets guidelines for the selection of tree species, mainly native species, according to the target sites for afforestation ・Promote acquisition of ABINC certification for urban landscaping business, etc. ・Mt. Fuji Manabi no Mori project to restore 30ha of typhoon- damaged national forest at the foot of Mt. Fuji. Registered on the Ministry of the Environment’s Natural Symbiosis Site in 2024 ・Carried out the Oku-Matsushima Nature Restoration Volunteer Program, a tree-planting activity to restore the tsunami-devastated coastal area at the time of the Great East Japan Earthquake
Reform	We participate in and communicate our opinions on the activities of domestic and international rulemaking, industry associations, and related organizations regarding nature and biodiversity, and support the activities of NGOs and other organizations.	・Participated in TNFD Forum ・Joined the WBCSD Forest Solutions Group and got involved in the process of developing the Nature Positive Roadmap (to be released in 2022) and the TNFD Forest Sector Guidelines (to be released in 2023) ・Signing of the commitment of Business for Nature's "Call to Action" and "COP15 Business Statement for Mandatory Assessment and Disclosure" ・Participation as a pilot company in the development of new guidelines for GHG protocols to calculate GHG removals and emissions from biological and soil-based sources ・Participation in the 30 by30 Alliance led by the Ministry of the Environment ・Served as vice-chairperson of the Keidanren Nature Conservation Council and joined the Japan Business Initiative for Biodiversity (JBIB)

Commitment to Protected Areas

To secure and manufacture wood resources, the Sumitomo Forestry Group owns or manages many forests both in Japan and overseas. None of these forests is located in areas designated as world heritage sites.
Furthermore, we did not and will not operate in areas designated as world natural heritage sites. Regardless of land ownership, national parks in Japan, which has a small land area, operate under the Regional Natural Park System and many national parks include private property. A portion of Sumitomo Forestry's Company-owned forests are located within national park areas, which are vital for biodiversity conservation and environmental protection. We recognize the ecological significance of these areas and, as with other designated protected forests, we conduct our operations with utmost care and in strict compliance with all legal regulations.
Furthermore, in terms of risk assessment, in areas determined as important from a biodiversity perspective, we not only strictly adhere to all legal regulations, but also work to mitigate our impact through reevaluation, minimization, revitalization, offsetting and other efforts.

We manage approximately 48,000 hectares of Company-owned forests in Japan and approximately 237,000 hectares of forests overseas. Moreover, we manage approximately 80,000 hectares of forests via the forest fund. These managed forests are categorized as conservation forests and working forests. In both Japan and overseas, conservation forests are, in principle, designated as nature conservation areas where no operations are carried out.

Zoning Management According to Forest Purpose

The borders of these lands set by the government do not always match the boundaries of the ecosystem. The Indonesian subsidiaries PT. Wana Subur Lestari (WSL), PT. Mayangkara Tanaman Industri (MTI), and Kubu Mulia Forestry (KMF) conducted thorough animal and plant surveys that included conservation forest neighboring areas under governmental management before defining preservation areas and business areas. WSL and MTI also worked with local organizations to build a conservation network that defines a net of green corridors to prevent closed off islands which would isolate the regions where orangutans, long-nose monkeys and other rare flora and fauna live.

Forest Management Area in Indonesia

Conservation Network

Evaluation of Initiatives by Stakeholders

The concept and specific initiatives of the Conservation Network proposed by WSL and MTI are attracting attention at home and abroad. At the 25th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP25) in Madrid, Spain in 2019, we presented as a private sector representative at the Indonesia Pavilion and were highly appreciated by international organization representatives, researchers, and NGOs. We also presented our technical approach to the challenges surrounding tropical forests and our initiatives at COP27, held in Sharm El Sheikh, Egypt, in 2022, and COP28, held in Dubai, United Arab Emirates, in 2023. In 2024, at the 16th Conference of the Parties to the Convention on Biological Diversity (CBD-COP16) held in Cali, Colombia, we emphasized the importance of biodiversity conservation at the landscape level.

In addition, in our urban landscaping business, we are striving to improve the quality of our greening efforts through third-party certification by actively encouraging our clients to register for biodiversity certification set by the Association for Business Innovation in Harmony with Nature and Community (ABINC) or the Social and Environmental Green Evaluation System (SEGES) green certification implemented by the Organization for Landscape and Urban Green Infrastructure.

Responding to Nature-Related Issues