Policy on Nature-Related Issues

Nature Positive Statement

Nature plays a vital role in providing us with a diverse range of resources that are critical for food and animal feed, energy, pharmaceuticals, genetic resources, human health and culture. However, deforestation, climate change, soil, water and air pollution, and numerous other human factors are significantly altering nature and threatening biodiversity.

“Nature Positive” means halting and reversing the loss of biodiversity to put nature on a path to recovery. The Nature Positive concept was shared at the 15th meeting of the Conference of the Parties to the Convention on Biological Diversity (CBD-COP15) held in December 2022 and in the G7 2030 Nature Compact.
Sumitomo Forestry announced its Nature Positive Statement to show its approach and commitment to a Nature Positive stance.

Nature Positive Statement

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.

In addition, we have set our policies on nature-related issues as described below:

Fiscal 2006: Formulated the Policy on Biodiversity Conservation in Company-owned Forests in Japan Fiscal 2007: Formulated the Wood Procurement Philosophy and Policy, and revised the Environmental Policies to additionally include our commitment to biodiversity.
Fiscal 2012: Formulated the Declaration of Biodiversity to show the Group’s recognition of and approach to biodiversity. We also set Biodiversity Action Guidelines and Biodiversity Long-Term Targets that show the Group’s specific targets for biodiversity.
Fiscal 2015: Integrated the Environmental Philosophy, * Environmental Policies, Declaration of Biodiversity, and Biodiversity Action Guidelines into the Sumitomo Forestry Group Environmental Policy, and started to conduct activities in line with this policy, including implementing initiatives for biodiversity.

Going forward, we will proceed with discussions to formulate our specific Nature Positive targets.

*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

Under our environmental management system, the President of Sumitomo Forestry is in charge of the Sumitomo Forestry Group's nature-related initiatives, especially those for biodiversity conservation, and the executive officer in charge of sustainability and the general manager of the Sustainability Department manage the related activities of the Sumitomo Forestry Group.

Nature-related Risks

The Sumitomo Forestry Group conducts sustainable forest management in its forests in Japan and also manages vast planted forests overseas, conducting activities that contribute to biodiversity conservation and the development of local communities. In the forests and planted forests owned and managed by the Group in Japan and overseas, the manifestation of following risks could potentially affect the business performance of the Group: large-scale forest fires, loss of planted trees due to pests and diseases, overharvesting caused by the incorrect estimation of logging volumes, opposition from local residents, and prolongation of negative campaigns conducted by environmental organizations.

Implementation of Nature Positive Initiatives

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

Conducting monitoring assessments as a contribution towards Nature Positive goal

Including those described above, the Sumitomo Forestry Group is implementing initiatives aimed at coexisting in harmony with nature. Thereby, we are contributing to the achievement of Nature Positive goal for 2030: to halt and reverse nature loss and put nature on a path to recovery. In order to quantify our contribution to the Nature Positive goal and set effective targets, we have recently designated some of the initiatives at our business divisions as pilot projects for quantification. The pilot quantification projects currently under way include monitoring assessments on forest biodiversity and water resources.

We will refer to the results of the projects when setting quantitative sustainability targets in the next medium-term management plan.

For example, in our forests area located in Mombetsu, Hokkaido, Japan, we started to evaluate the ecosystem services provided by the forests in a quantitative manner. In this initiative, we are making combined use of drone-based remote sensing, AI analysis, environmental DNA, and other new technologies to estimate the amount of carbon stored by broad-leaved tree species in the natural forest area. The estimations also cover the biodiversity of a range of species including vascular plants, fungi, arthropods, birds, and medium and large mammals in both planted and natural forest areas. We are also conducting examinations on biodiversity-friendly forestry (regeneration forestry and retention forestry), and are working to visualize the multifaceted value of forests—including their water source recharge function—by combining model estimation and real-time monitoring.

Business	Target	Location	Collaboration Partner
Forest	（Biodiversity）Vegetation and mammal monitoring	West Kalimantan, Indonesia	Biome Inc.
	(Biodiversity）Monitoring of wildlife habitats	Sumitomo Forestry's forest in Hyuga, Japan	Regional Environmental Planning, Inc.
	（Biodiversity）Flora and fauna monitoring	Sumitomo Forestry's forest in Mombetsu, Japan	The University of Tokyo
	（Water resources）Water volume and quality monitoring	Sumitomo Forestry's forest in Mombetsu, Japan	The University of Tokyo
	（Carbon）Broad-leaved tree identification and broad-scale carbon assessment	Sumitomo Forestry's forest in Mombetsu, Japan	The University of Tokyo
Manufacturing & construction	Analysis of ecosystem-dependent livelihoods in local communities (including sourcing locations)	East Java, Indonesia	The University of Tokyo
	Reduction in the use of timber in the truss and panel manufacturing business	The United States of America	Assessed independently by Sumitomo Forestry
	Evaluation and reduction of environmental impact caused by timber production and construction	Japan	Waseda University
Urban landscaping	Biological monitoring in relation to residential landscaping in Japan	Japan	Biome Inc.
Urban landscaping	Ecosystem monitoring in the land development business in the United States	The United States of America	Nature Metrics Ltd.
All businesses	Assessment and reduction of water consumption across our businesses	All of our business locations	Assessed independently by Sumitomo Forestry

Picture of a red fox captured by a camera trap (in the plant and animal monitoring assessment conducted in Sumitomo Forestry’s forest in Mombetsu)

Picture of a mountain hare captured by a camera trap (in the plant and animal monitoring assessment conducted in Sumitomo Forestry’s forest in Mombetsu)

Relationship between Sumitomo Forestry’s business initiatives and the mitigation hierarchy

In line with the action framework recommended by SBT for Nature, we summarized the Sumitomo Forestry Group’s initiatives as shown below. This summary of our business initiatives in light of the mitigation hierarchy helps us minimize our impact on nature.

Source: “Science-Based Targets for Nature: Initial Guidance for Business,” Science Based Targets Network, 2020

	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 the forests owned by Sumitomo Forestry 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.	Supply Chain Management Biodiversity Conservation in Forests Owned by Sumitomo Forestry in Japan and Forests Planted by the Company Overseas >Mitigation of Climate Change
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 the public benefits of forests, including biodiversity conservation.	Resource Circulation within the Sumitomo Forestry Group Sustainable Forest Management Afforestation Consultancy
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.	>Contributions to Eco-Cities through Greening >Examples of Social Contribution Activities in Japan
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.	>Participation in and Support for Climate Change-Related Initiatives >Participation in and Support for Biodiversity Conservation-Related Initiatives

Commitment to Protected Areas

To secure and produce 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 is a country with a small land area, are managed under the Regional Natural Park System, and many national parks include private property. A portion of Sumitomo Forestry's 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 in 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 the areas deemed 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 own and manage approximately 48,000 hectares of forests in Japan and manage approximately 231,000 hectares of forests overseas. Moreover, we manage approximately 94,000 hectares of forests via the forest fund. These managed forests are categorized into conservation forests and working forests. In both Japan and overseas, conservation forests are, in principle, designated as nature conservation areas where no business operations are carried out.

Forest Management by Zoning

The borders of business sites set by the government do not always match the boundaries of ecosystems. The Indonesian subsidiaries PT. Wana Subur Lestari (WSL), PT. Mayangkara Tanaman Industri (MTI), and Kubu Mulia Forestry (KMF) conducted thorough animal and plant surveys in the forests including the neighboring conservation forests under governmental management before defining “preservation areas” and “business areas.” WSL and MTI also worked with local organizations to build a conservation network of green corridors to prevent the habitats of orangutans, long-nose monkeys and other rare animals from being left like an island.

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 much 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) held in Madrid, Spain in 2019, we made a presentation as a private sector representative at the Indonesia Pavilion, which was highly evaluated 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 meeting of the 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.

Furthermore, in terms of risk assessment, in the areas deemed 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.

Responding to Nature-Related Issues