Boundaries and Methods of Greenhouse Gas Emissions Calculation

The data collection period for fiscal 2025 is from January to December 2025.

Boundary of Greenhouse Gas Emissions （Organizational Boundary）

Some of our consolidated subsidiaries are excluded from the scope of our greenhouse gas emissions reporting as it is difficult to collect precise data about their emissions for tabulation.

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List of Applicable Companies

Types of Greenhouse Gases Subject to Data Collection

The types of greenhouse gases targeted for calculation in this report are carbon dioxide, methane, dinitrogen oxide, and hydrofluorocarbons. For the calculation, we use the global warming potentials as provided for in the Act on Promotion of Global Warming Countermeasures. However, hydrofluorocarbons are not included in our Scope 1 emissions since the amount is less than 1% of the total and is immaterial.

Scientific Uncertainty in the Quantification of GHG Emissions

GHG emissions quantification is subject to uncertainty when measuring activity data, determining emission factors, and considering scientific uncertainty inherent in the Global Warming Potentials.

Scope 1 Emissions

We calculate our greenhouse gas emissions both inside and outside Japan by using heat conversion factors and carbon dioxide emission coefficients stipulated in the Act on Promotion of Global Warming Countermeasures, as well as the heat conversion factors measured at our biomass power generation facilities.

We calculate the heating value of wood waste and wood pellets used as energy and calculate greenhouse gas emissions (CO₂e) from them by using the CH₄ and N₂O emission coefficients stipulated in the Act on Promotion of Global Warming Countermeasures.

Scope 2 Emissions

We calculate our greenhouse gas emissions from the use of purchased electricity in Japan by using the carbon dioxide emission coefficient for each power provider as stipulated in the Act on Promotion of Global Warming Countermeasures. For the period from January to December 2025, we calculated the emissions by using the “emission coefficient for each power provider for submission in 2026.”

We calculate greenhouse gas emissions from the use of purchased heat by using the emission coefficient as stipulated in the Act on Promotion of Global Warming Countermeasures.

We calculated the greenhouse gas emissions from the use of purchased electricity overseas in fiscal 2025 by using the latest emission coefficient (2023) for each country according to the “IEA Emission Factors 2025” issued by the International Energy Agency (IEA). However, for Canyon Creek Cabinet Company in the United States, we use a market-based emission coefficient.

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Ministry of the Environment Calculation and Reporting of Greenhouse Gases (in Japanese)

Scope 3 Emissions

Category	Calculation method
Category 1. Purchased goods and services	Outsourced portion in the construction of wooden detached houses Σ (Energy use during on-site construction per home × Emission coefficient by energy source) × Outsourced portion for houses completed in the fiscal year Purchased products Σ (Procurement quantity/cost (excluding tax) of products procured for sale or net sales of procured products × Emissions per unit of weight or per unit of price^) Overseas housing companies: Emissions per unit of sales are calculated for domestic housings and then the amount of emissions from each overseas housing company is calculated by multiplying the calculated per-unit emissions by the sales of the company. Domestic and overseas affiliates handling timber and building materials under the Timber & Building Materials Division: Emissions per unit of sales of timber and emissions per unit of sales of building materials are calculated and then emissions from each of companies is calculated by multiplying the calculated per-unit emissions by the sales of the company. Concerning the sales of the Timber & Building Materials Division, sales recognized as those gained solely from the arrangement fees for the goods or services provided by other parties are excluded from the scope of emissions calculation. Products purchased for rental apartments and medium- to large-scale buildings, and outsourced portion in the construction of the buildings* Σ (Total floor area of the rental apartments and medium/large-scale buildings x Emissions per unit of floor area) Products purchased for spec-built detached houses Σ (Procurement quantity/cost (excluding tax) of products procured for sale or net sales of procured products × Emissions per unit of weight or per unit of cost) Outsourced portion in the construction work for renovation, housing exteriors, and others Σ (Outsourcing cost (excluding tax) x Emissions per unit of cost) Outsourced portion in the forestry business Σ (Domestic harvest volume x Emissions per unit of harvest volume) + Σ (Overseas harvest volume x Emissions per unit of harvest volume by country) *For the items in the Input Out Table for which emissions per unit of cost are adopted, we multiply the amount of emissions by 1.05.
Category 2. Capital goods	Σ (Capital goods procurement cost (excluding tax) by Group company × Per-unit emissions by industrial sector x 1.05)
Category 3. Fuel- and energy-related activities (not included in scope 1 or scope 2)	Procurement Σ (Energy × Per-unit emissions by energy source) Transportation from retailers Σ (Energy use (converted into weight) × Estimated transportation distance × Per-unit use of fuel in ton-kilometers × Emission coefficient) Calculated targeting operational sites such as plants. Calculation based on transportation scenario
Category 4. Upstream transportation and distribution	Transportation in Japan Σ (Amount procured by each plant × Estimated transportation distance × Per-unit use of fuel in ton-kilometers × Emission coefficient) Emissions related to transportation for shippers (report value based on the Act on the Rational Use of Energy excluding the transportation of waste) Emissions from transportation of waste are included in Category 5 emissions. Transportation by sea* Σ (Imported product procurement quantity × Transportation distance by sea from the country of origin × Per-unit emissions from marine transportation) Transportation of products purchased for custom-built detached houses and detached houses for sale Σ (Procurement quantity for each house x Estimated transportation distance x Per-unit emissions from road transportation)
Category 5. Waste generated in operations	Σ (Amount of emissions by type of waste × Per-unit emissions by type of waste or by treatment method)
Category 6. Business travel	Number of employees of all Group companies × Per-unit emissions from their business trips
Category 7. Employee commuting	Type of transportation: Train/bus Number of employees of all Group companies × Per-unit emissions from commuting Per-unit emissions from commuting: Calculated based on emissions from commuting by employees of domestic Group companies Type of transportation: Automobile* Number of employees of all Group companies × Per-unit emissions from commuting by car Per-unit emissions from commuting by car: Calculated by dividing the cost of commuting by car by the average unit price of gasoline of that fiscal year, and then multiplying it by the emission coefficient for burning gasoline Emissions from commuting by private car are included in Scope 1 emissions.
Category 9. Downstream transportation and distribution	Delivery of plywood, fiberboards and others sold to the designated spots Σ (Sales quantity × Estimated transportation distance × Per-unit fuel use in ton-kilometer × Emission coefficient) Calculated based on transportation scenario Free on Truck for materials and lumber sold* Σ (Sales quantity x Estimated transportation distance x Per-unit emissions from road transportation)
Category 10. Processing of sold products	Processing into plywood and precutting Σ (Sales quantity of logs and timber × Per-unit emissions from processing) Per-unit emissions calculated based on the results of the LCA survey carried out by the company Processing into plywood and precutting of logs and lumber sold by affiliates* Σ (Sales quantity of logs and timber × Per-unit emissions from processing)
Category 11. Use of sold products	Emissions from the occupancy of houses sold Emissions in Japan: Σ (Annual energy use per household × Emission coefficient by energy source) × Expected years of occupancy × Number of houses completed by construction method and by region for the fiscal year Emissions in the United States of America and Australia: Σ（Annual energy use per square meter of a house × Emission coefficient by energy source）×Expected years of occupancy x Total floor area by construction method and by region for the fiscal year (Reference) The average value calculated by dividing the fuel and electricity consumption announced for each state by the government by the number of households in the state had been used for the calculation of emissions in the United States and Australia until the previous fiscal year. Emissions related to renovations are omitted to prevent double counting, as there is a possibility that these emissions are included in the Scope 1 and Scope 2 emissions calculated by the affiliate company engaged in the renovations business (Sumitomo Forestry Home Tech). Energy use per household (electricity/city gas) In Japan: Calculated by using the Building Research Institute's energy consumption performance calculator program (for houses) United States: Calculated by using Ekotrope, a calculation tool provided by the Home Energy Rating System (HERS) Australia: Calculated by using Whole of Home, an evaluation approach provided under the Nationwide House Energy Rating Scheme (NatHERS). * Expected years of occupancy In Japan: 60 years based on the planned maintenance period set for Sumitomo Forestry's Long Support System Overseas: 55 years in reference to the results of the American Housing Survey (conducted in 2001 and 2005) * Emission coefficient: Japan: Coefficients adopted by the Electric Power Council for a Low Carbon Society in its emissions calculation, reporting and announcing system. United States: Coefficients announced by the Environmental Protection Agency (EPA) Australia: Coefficients announced by the Department of Climate Change, Energy, the Environment and Water (Reference) Until the previous fiscal year, we had been using the average value calculated by dividing the fuel and electric energy consumption amount announced for each state by the government by the number of households in the state. Σ (Total floor area of medium/large scale buildings x Expected years of occupancy x Emissions per unit of floor area) Σ (Total floor area per apartment x Emission coefficient per unit of floor area) x Expected years of occupancy x Number of houses completed in the fiscal year by type) Σ (Annual energy use per detached house × Emission coefficient by energy source) × Expected years of occupancy × Number of houses completed in the fiscal year by region) Σ (Annual energy consumption by gas appliances installed in remodeling work x Emission coefficient x Their useful life) Σ (Annual volume of CFCs leaked from air conditions per house x Global warming coefficient x Expected years of occupancy) x Number of houses completed in the fiscal year Use of biomass fuel sold Σ (Biomass fuel sold x Emission coefficient)
Category 12. End-of-life treatment of sold products	Emissions from demolition Σ (Fuel use for the demolition of a house × Emission coefficient by fuel type) × Number of houses completed in the fiscal year Fuel use for the demolition of a house (diesel/gasoline): Estimated based on the sampling surveys conducted by Sumitomo Forestry on the fuel used for the demolition of model houses in 2006 Emissions from disposal (including the transportation of waste)* Σ(Amount of waste generated from the demolition of a house × Waste reduction rate/Final landfill rate/Recycling rate for each type of waste × Per-unit emissions by type of waste or treatment method) × Number of houses completed in the fiscal year Amount of waste generated from the demolition of a house: The weight of waste generated from the demolition of a standard Sumitomo Forestry home (floor area: 147 m2) for fiscal 2010 was calculated based on the annual amount of waste generated from demolition in fiscal 2006. Emissions from the demolition and disposal of spec-built detached houses and rental houses* Σ (Emission coefficient for demolition or disposal per unit of floor area × total floor area in the fiscal year) Emissions from demolition of medium- to large-scale buildings Σ (Emission coefficient at the time of demolition per unit of floor area x total floor area for the fiscal year) Emissions from the disposal of medium- to large-scale buildings Σ (Amount of waste from the demolition of a building x Per-unit emissions by type of waste) x Number of houses completed in the fiscal year
Category 13. Downstream leased assets	Emissions from rental properties in operation Σ (Floor area of rental properties × Per-unit emissions by usage of building or per unit of area) Emissions from the occupancy of rooms at elderly care facilities Σ (Floor area of general residential rooms at elderly care facilities × Per-unit emissions by usage of building or per unit of area)
Category 15. Investments	Σ (Scope 1 and 2 emissions from investee companies × Equity interest of Sumitomo Forestry) *Scope 1 and 2 emissions: Amounts disclosed by investee companies or the amounts announced based on the Act on Promotion of Global Warming Countermeasures.

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