Greenhouse Gas Emissions per Scope Based on the GHG Protocol

Since fiscal 2012, the Sumitomo Forestry Group has ascertained the volume of its CO₂ emissions according to different scopes^* based on the GHG Protocol, a set of widely used international accounting tools for quantifying GHG emissions. In light of the increasing demand for renewable energy in recent years, the Sumitomo Forestry Group entered the biomass power generation business in 2011. As a consolidated subsidiary company, the Mombetsu Biomass Electric Power has dramatically increased Scope 1 and Scope 2 emissions of the Group since starting operations in 2016 because coal is used as a secondary fuel to ensure smooth operation and maintenance. Scope 1 and 2 emissions in fiscal 2021 are on a par with fiscal 2020. When looking by business, our plants in Japan and the power generation business make up 56.7% while our plants overseas compose 30.8%.

We also started to calculate Scope 3 in fiscal 2013 and the targets for this calculation largely expanded in fiscal 2015 and fiscal 2017. We are aware that the impact of category 11 "Emissions during occupancy of sold detached houses" is particularly significant, and we are working to reduce CO₂ emissions during occupancy by promoting ZEH (Net Zero Energy House) in our housing and building business.

In the future, we will work to meet the SBT in an effort to take greenhouse gas emissions reduction to another level.

* The GHG Protocol requires businesses to disclose their greenhouse gas emissions according to the following categories.
Scope 1: Direct GHG emissions of a company, including emissions from fuel consumption. e.g.: Emissions from the use of gasoline for company vehicles.
Scope 2: Indirect GHG emissions from the generation of purchased electricity and heating. e.g.: Emissions from the use of electricity by offices
Scope 3: GHG emissions occurring in the supply chain. e.g.: Emissions generated during the use of products sold.

Scope 1 and Scope 2 CO₂ Emission Trends^*1

*1 Assured Scope 1 and Scope 2 emissions including power generation projects.

*2 Electric power generation (Mombetsu Biomass Electric Power, Hachinohe Biomass Electric Power) figures are excluded.

*3 Data collection period for total emissions from fiscal 2020 is January to December of each year, while data collection period for emissions before fiscal 2019 is April of each year to March of the following year.

Scope 1 and 2 Breakdown by Business (FY2021)

Scope 3 Emissions by Category

*1 The calculation method for Category 1 emissions of Scope 3 was revised to apply Accounting Standards for Revenue Recognition (Corporate Accounting Standard No. 29) as of fiscal 2019 (retroactively reflected in the values for fiscal 2019). In fiscal 2021, the scope of application of the Accounting Standard for Revenue Recognition was reviewed and the method of calculating Scope 3 Category 1 was revised again (values for fiscal 2019 and 2020 were retrospectively adjusted).

*2 Data collection period for total emissions from fiscal 2020 is January to December of each year, while data collection period for emissions before fiscal 2019 is April of each year to March of the following year.

*3 In fiscal 2021, a percentage decrease in travel costs was applied to reflect the impact of coronavirus disease (COVID-19) in the calculation.

*4 In fiscal 2021, a percentage decrease in attendance was applied to reflect the impact of the COVID-19 in the calculation.

FY2021 Total Greenhouse Gas Emissions Accrued from Corporate Activities

* Data collection period for the total emissions during fiscal 2021 is from January to December 2021.

Reducing Greenhouse Gas Emissions

Promoting Adoption of Fuel-efficient Vehicles at Each Office

All business sites of Group companies in Japan disposed of standard settings for gasoline vehicles in fiscal 2019 and have been advancing the introduction of fuel-efficient vehicles. To date, 362 of the 383 company-owned vehicles introduced during 2021 were fuel-efficient vehicles (for an 94.5% adoption rate of fuel-efficient vehicles). In addition, the Group has encouraged employees who drive on the job at offices and business sites of Group companies in Japan to participate in the Eco Training course run by the Japan Automobile Federation (JAF).

The Group has also worked to reduce power consumption. In the Housing and Construction Division, power consumption has been reduced by moving to a "free address" office system (where personnel are not assigned to fixed desks) to make more efficient use of office space. In addition, the division has also proceeded to install solar power generation systems and LED lighting at its model homes and other business sites.

The Group will continue to reduce greenhouse gas emissions by such means as reducing prolonged working hours and raising awareness among employees.

Reducing greenhouse gas emissions from transportation

Under the revised Act on the Rational Use of Energy in Japan, consigners^*1 are required to reduce per-unit energy consumption by an annual average of 1% or more in the medium to long term in relation to the transportation of goods. Sumitomo Forestry, Sumitomo Forestry Crest and Sumitomo Forestry Wood Products fall under the category of "specified consigner" (annual freight transportation volume is 30 million ton-km^*2 or more), obligating them to submit reports to the Japanese Government. Sumitomo Forestry therefore sets a target each fiscal year to reduce per-unit energy consumption^*3 in transportation by 1% or more compared to the previous year. Sumitomo Forestry Crest and Sumitomo Forestry Wood Products also set targets to reduce per-unit energy consumption compared to the previous year.

In fiscal 2020, Sumitomo Forestry's per-unit energy consumption was 110.4% compared to the previous year and Sumitomo Forestry Crest's was 110.1%. Sumitomo Forestry Wood Products was 109.5%.

In the future, we will work with transporters to further reduce CO₂ emissions by improving loading efficiency, modal shift from trucks to rail and ship transport, and waste transport using return trips for building material deliveries.

*1 Cosigners as defined in the Act on the Rational Use of Energy in Japan is someone who transports cargo to carriers for our businesses.

*2 Freight transportation volume (ton-kilometers) = freight weight (tons) × distance travelled (km)

*3 Sumitomo Forestry and Sumitomo Forestry Wood Products measure energy consumption per unit of volume handled. Sumitomo Forestry Crest measures energy consumption per unit of net sales.

Establishment of an Efficient Delivery

Sumitomo Forestry is reducing the CO₂ emissions in its transportation processes by bringing together materials for Sumitomo Forestry Homes from multiple manufacturers momentarily at relay centers in approximately 30 locations throughout Japan with a system to consolidate and transport shipments.

Home Eco Logistics takes on logistics operations for the Sumitomo Forestry Group with the housing business at the core and also actively puts forward proposals for efficient logistics operations to material manufacturers, housing builders, housing construction companies and building material distributors. There are over 70 logistics contractors as of December 2021, excluding the Sumitomo Forestry Group. Furthermore, we are providing consulting for more efficient internal warehousing operations and inventory management rationalization. In fiscal 2021, no new construction materials companies contracted our consulting services during the COVID-19 pandemic, but we continue consulting for the two construction material companies who contracted our services during the previous fiscal year.

In the future, we will actively strive in cooperative distribution through multiple companies because of insufficient shipment capacity forecast due to a decrease in the amount of new housing construction.