Community Development in Consideration of the Environment

In its community development business, Sumitomo Forestry provides about 350 high-quality detached houses for sale per year. In the business, aiming for a sustainable and prosperous society, we are working to popularize highly energy-efficient houses that meet the requirements set under the Long-life Quality Housing Certification system and the low-carbon building certification system implemented by the national government and other certification systems.

Performance-Improving Renovation

Sumitomo Forestry Home Tech is proactively proposing renovation for energy conservation, earthquake resistance and vibration control (“performance-improving renovation”) for houses built before the revision of the energy-saving standards in 1999 and the seismic resistance standards in 2000. For the renovation of existing houses to make them more energy-efficient, we made an announcement on the development of an "insulation renovation proposal system" using AI in December 2023. Subsequently, in December 2025, we obtained a patent for the system (Patent No. 7794788: Renovation proposal system, renovation proposal method and renovation proposal program). By encouraging the renovation of houses to increase their insulating performance, we will contribute to the maintenance of a comfortable living environment for a longer period with less primary energy use, thereby helping residents of the houses improve their QOL*¹ and well-being.

To owners of Sumitomo Forestry homes, we recommend the renovation of roofs by the overlay method. Specifically, for energy conservation, we propose to cover the roofs with a material that diffusely reflects the direct sunlight in summer, thereby preventing the rooftop heat from transferring to the rooms below and causing the room temperature to rise.

In recent years, the need for safe and secure housing has been increasing due to concerns over intermittent earthquakes. We are working to increase the safety and security of houses by renovating them for greater earthquake resistance and vibration control mainly by adopting the double method to enhance both earthquake resistance and vibration control using our own developed vibration control dampers*².

Furthermore, in the renovation business, we will make proposals to make maximum use of existing equipment to avoid demolition as much as possible, thereby reducing the generation of waste and extending the life of houses for longer carbon storage.

We will contribute to the realization of a decarbonized society through renovation for energy conservation, earthquake resistance and vibration control, which will help improve the comfort of houses, reduce their primary energy consumption, and extend their lifespan.

*1QOL stands for quality of life and means satisfaction with life.

*2For this method, we have adopted the seismic damper type S, which we developed for two-story traditional timber-framed houses based on the hydraulic seismic dampers used in buildings including skyscrapers. Seismic dampers absorb and reduce earthquake tremors and prevent the deformation of buildings. They are also resistant to repeating aftershocks.

Environmentally Conscious Renovation

In recent years, abnormal weather events and massive earthquakes have become major public concerns. Promoting renovations that improve seismic performance and insulation efficiency contributes to extending a building’s lifespan, leading to long-term carbon storage.
Sumitomo Forestry Home Tech has set the goal of "improving the rate of orders for environmentally conscious renovations" by fiscal 2024 in the Mid-Term Sustainability Targets Phase 1 (2022–2024).

We are working to "productize" our remodeling proposals. Our remodeling plans include three services: space proposals, performance proposals, and safety support. In fiscal 2025, the orders for the four types of work (for seismic reinforcement, structural reinforcement, heat insulation, and installation of smart equipment*³) on general housing (other than Sumitomo Forestry homes) accounted for 77.6% of the total order value, down 1.5 percentage points from 79.1% in fiscal 2024. This decrease was caused by an increase in the order value for the renovation of apartment houses, for which seismic reinforcement was unnecessary.

On the other hand, for Sumitomo Forestry homes, the orders for the four types of work (for seismic reinforcement renovation, exterior work, heat insulation renovation, and smart material installation) accounted for 68.8% of the total order value, increased by 4.7 percentage points from 64.1% in fiscal 2024.

With fiscal 2027 as the target year, we also set a goal to increase the order rate of environmentally conscious renovations in the Mid-Term Sustainability Targets Phase 2 (2025–2027), and we will continue to promote environmentally friendly renovation proposals to achieve this goal.

*3Solar power generation systems, storage batteries, Ene-Farm units, etc.

Development of Environmentally Conscious Housing Overseas

The United States

In the United States, we are working on the provision of highly energy-efficient, heat-insulating and airtight houses with low environmental impact.

Local Sumitomo Forestry Group house builders are working to reduce life cycle CO₂ emissions from the houses built by them by using the equipment and construction methods that meet the local conditions and needs, such as highly insulating windows, highly efficient air conditioning equipment and a construction method that increases air tightness.

Some of the builders are offering comfortable houses with high environmental performance by meeting the energy efficient design standards including the criteria for ENERGY STAR certification*¹.

MainVue, operating in Washington State, acquired the certification for almost all (95%) of homes that it had delivered in 2024. Also, in the Alder Grove housing development site located in the city of Kent, MainVue started selling its first all-electric houses equipped with solar panels in 2025.

*1ENERGY STAR is an energy conservation performance evaluation system implemented by the U.S. Environmental Protection Agency (EPA). Under the system, energy conservation performance is evaluated based on the criteria set by climate zone on items such as thermal insulation, heating and cooling performance, airtightness, hot water supply, lighting, and home electric appliances.

Australia

In Australia, where sustainability-related systems have been established, including one that mandates the disclosure of environmental indicators, each of Sumitomo Forestry Group house builders is implementing measures to decarbonize their houses and increase their energy efficiency. As part of these efforts, they are designing and selling houses that meet the Energy Rating*² 7-star standard at each of their bases.

Henley Properties, a Sumitomo Forestry Group home builder operating in the major southeastern states of Australia, has been taking various measures to reduce environmental impact, including developing its first zero emission house*¹ for general consumers. In addition, Henley is promoting the sales of all-electric homes equipped with solar panels, where residents can save utility costs by up to 75% and reduce CO₂ emissions from occupancy by up to 100%. In 2025, the company conducted a campaign for its high-end product “Reserve” and gave away storage batteries to buyers of the product only during the campaign period, aiming to promote the sales of its all-electric homes equipped with solar panels.

Henley also launched a new custom-built detached house brand named "MainVue" in 2023 to provide the houses that meet the Energy Rating*² 7-star standard ahead of competitors, for which the company enhanced the insulation performance and changed the room layout to increase energy efficiency. Presently, the design method and the design adopted for this product are also used for its spec homes. The company will continue to be a leader for the improvement of energy efficiency in the Australian housing industry.

*1Environmentally conscious house expected to save 70% or more of energy consumption relative to a conventional house

*2An evaluation indicator of energy used for heating and cooling inside of a building in Australia. Insulating materials, windows, the type, size and orientation of the building, and the climate zone are included in the evaluation items.

Asia

Sumitomo Forestry strives to standardize decarbonized designs in Indonesia and other Asian countries. In the detached housing business, we are developing environmentally sound houses and working to acquire "EDGE certification*¹,” which evaluates environmental performance of buildings.

Indonesia

In the spec home business in Indonesia, Sumitomo Forestry will provide comfortable and highly safe homes that are resilient against disasters by making use of the design and construction technologies that it has developed in and outside Japan. In some of the projects implemented in the country, we are developing environmentally friendly houses by measures such as installing solar panels as standard equipment.

In the spec home building project that we launched in Makassar, Sulawesi in Indonesia in 2021, we obtained EDGE certification.

We also started a spec home building project in Bogor City and Depok City, respectively, installing solar panels as standard equipment in 2023. Also, in the projects, we adopted autoclaved aerated concrete blocks*² with low environmental impact instead of bricks, which emit a large amount of CO₂ in the manufacturing stage, thereby reducing embodied carbon. In Bogor City, based on the design approach of "Ryouonbou natural heating and cooling system*³,” for which we utilize the knowledge gained in the domestic housing business, we created a comfortable living environment by shielding sunlight with deep canopies and eaves, and adjusting temperature inside the rooms and on the premises by utilizing natural ventilation as well as by planting trees. Moreover, we reduced CO₂ emissions (operational carbon) from houses in occupancy through energy creation by solar panels. These initiatives have led us to obtain EDGE Advanced certification for the projects in Depok City and Bogor City.

In Bogor Regency in 2025, we participated in an urban development project. In this mixed-use development project to develop about 4,100 detached houses and also commercial facilities, we will foster environmentally conscious development to obtain EDGE certification. Moreover, we plan to build some wooden facilities on the development site to reduce embodied carbon. Going forward, we will further accelerate the standardization of decarbonized designs in Indonesia and other Asian countries.

*1Environmental certification for buildings. It was developed by the International Finance Corporation (IFC) and is used mainly in emerging countries. In order to acquire this certification for a building, it is necessary to reduce energy consumption in the construction stage and also energy and water consumption in the use stage by 20% or more compared to buildings that meet local general specifications. If energy consumption is reduced by 40% or more under the same conditions, EDGE Advanced certification will be granted.

*2Lightweight aerated concrete made by high-temperature, high-pressure and high-humidity curing (“autoclaving”)

*3A design method developed by Sumitomo Forestry by utilizing natural blessings of wind, sun, and greenery to create the comfort of summer breezes and winter sunshine. While considering the surrounding environment of each site, we make effective use of the local wind flow, sunshine and greenery to design and create a comfortable home that does not depend on heating and cooling equipment.

Vietnam

Since 2024, Sumitomo Forestry has been participating in a large township development project in Binh Duong Province in collaboration with Kumagai Gumi Co., Ltd., NTT Urban Development Corporation, and the local real estate developer Kim Oanh Group (KOG).
KOG has extensive experience in the development of spec homes in southern Vietnam and has shown a strong interest in decarbonization technologies and wood construction. Sumitomo Forestry has expertise in the design of buildings and the use of low environmental impact building materials, which it has accumulated through its domestic and international housing business. Kumagai Gumi has knowledge in large-scale construction and civil engineering. NTT Urban Development has diverse real estate development experience both in Japan and abroad and ICT expertise as an NTT Group company. We will combine all these for sustainable community development in Vietnam, thereby contributing to realizing a carbon-neutral society in the country.

Visualization of CO₂

Research & Development

Sumitomo Forestry is working to visualize the environmental contributions of wooden buildings and materials, such as their effectiveness in reducing embodied carbon, in order to clarify and enhance their value and contribute to the realization of a decarbonized society.

In addition, by scientifically elucidating the shared benefit of forests, particularly their life cycle CO₂ absorption and emission functions, Sumitomo Forestry aims to enhance the asset value of the forests owned and managed by the Group, promote decarbonization, and establish a circular bio-economy. To this end, we are conducting research to estimate the amount of carbon storage in forests by tree species, site condition, and forest management method.

Estimating Carbon Storage in Existing Wooden Buildings

In October 2022, Tokyo University of Agriculture and Technology published its research results on a method to estimate the carbon stored in wooden buildings constructed by the private sector over the past 50 years in the open access journal entitled “Scientific Reports.”

At the 17th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP17) held in 2011, it was agreed* that changes in the amount of carbon stored in Harvested Wood Products (HWP) should be recorded as greenhouse gas absorptions or emissions by each country. HWPs are important for climate change mitigation because they continue to store carbon even after they are harvested from the forest.

In order to make effective use of HWPs, it is necessary to accurately calculate their carbon storage amount. In the research conducted with a focus on wooden buildings, which store carbon most among all HWPs, methods for estimating HWP carbon storage in buildings were examined.

Sumitomo Forestry provided building data for the research and verified the estimation method jointly with Tokyo University of Agriculture and Technology. Based on the results of this research, we can now estimate the carbon stored in wooden buildings with greater accuracy.
In the research, wooden houses built by Sumitomo Forestry during the period from 1969 to the present were examined. Based on the number of existing houses by year of construction and the number of houses built each year, the researchers calculated the house retention rate and developed a model that best fit the data.
Using this model, we calculated the amount of carbon stored in the existing wooden houses by subtracting the number of demolished houses from the total number of wooden houses built by our company since the start of the housing business through to fiscal 2025, and their carbon storage amount was estimated to be 8.02 million tons of CO₂. This amount is equivalent to slightly more than half of the amount of carbon stored in the forests owned by Sumitomo Forestry in Japan, which cover about 48,000 hectares (14.05 million tons of CO₂). According to the results, it can be said that Sumitomo Forestry’s wooden houses function as urban forests that store CO₂ for long years.

*In the second commitment period of the Kyoto Protocol, the rule to evaluate and record changes in the carbon content (carbon storage effect) of HWPs was approved. The HWP calculation rules apply to "wood," "wood panels," and "paper" produced from cultivated forests that are under "forest management" in Japan.

Visualization of CO₂ emissions throughout the entire supply chain

Visualization of embodied carbon

It is reported that the construction sector accounts for about 37%* of global greenhouse gas emissions. About 70% of the emissions is operational carbon, with the remaining 30% being embodied carbon. Operational carbon has been reduced through the spread of ZEH and ZEB, and it is urgently required to reduce embodied carbon. In order to calculate embodied carbon, it is necessary to calculate the environmental impact of a building throughout its life cycle.

In August 2022, Sumitomo Forestry began selling the Japanese version of One Click LCA, which visualizes CO₂ emissions from buildings and other related data, as the sole distributor of the software in Japan.

One Click LCA is used in 170 countries, mainly in Europe, and supports the ISO standards and more than 80 green building certifications worldwide. It is possible to precisely calculate CO₂ emissions from the procurement of construction materials used for buildings through to transportation, construction, repair, disposal and recycling stages (embodied carbon).

Support for the acquisition of EPD certification

CO₂ emissions from procured building materials have the greatest impact on CO₂ emissions from buildings. As a mechanism for visualizing CO₂ emission from a product, there is an ISO-compliant environmental labeling system called Environmental Product Declaration (EPD), under which the environmental impact of a product is calculated throughout its life cycle from the procurement of raw materials to disposal thereof. It quantitatively indicates the environmental load of the product, including the amount of CO₂ emissions.

In February 2023, Sumitomo Forestry started a project to support lumber and building material manufacturers in acquiring EPD certification. By utilizing the EPD generator provided by One Click LCA, the manufacturers can smoothly obtain EPD certification for all their construction-related products. As of the end of December 2025, the manufacturers obtained EPD certification for a total of more than 60 products with our support.

In addition, for tenants, developers, and construction companies, Sumitomo Forestry has been providing a CO₂ calculation service for buildings by using One Click LCA. In response to increasing demand for LCA in the building industry, we utilize the knowledge of Sumitomo Forestry's LCA experts to make relevant calculations and report the results by project. As of December 31, 2025, we have completed LCA calculations for more than 200 buildings.

Sumitomo Forestry is promoting decarbonized designs in Japan’s construction industry through the spread of One Click LCA and the EPD generator.

*Source: Global Alliance for Building and Construction (2021)

Global CO₂ Emission Rates by Industry

Example of Calculations Made by Using One Click LCA

*Source: The above graph is the result of our own calculations using "One Click LCA" based on the data published in the "Fiscal 2007 Report on the CO₂ Reduction Demonstration Work for the Promotion of Wood Use and Energy Saving" released by the Forestry Agency in March 2008

Promotion of the Renewable Energy Business

Power Generation from Renewable Energy Sources*¹*²

*1The amount of electricity generated by wood biomass power generation was calculated only for Sumitomo Forestry's consolidated subsidiaries.

*2The aggregation period for fiscal 2021 and onwards is from January to December of each year.

Wood Biomass Power Generation Business

The Sumitomo Forestry Group operates wood biomass power generation facilities by using the following as wood chip fuel: wasted building materials, wood not suitable as a building material, and thinned wood from forests and other unused forest resources.

CO₂ emitted by burning wood does not contribute to an increase in CO₂ in the atmosphere in the life cycle of trees, because the amount of CO₂ emitted is equivalent to the amount of CO₂ absorbed through photosynthesis in their growth stage (based on the concept of carbon neutrality). Based on this recognition, the Group has been engaged in wood biomass power generation as a type of business that contributes greatly to the advancement of forestry, such as the effective use of wood, mitigation of CO₂ emissions, and to the maintenance of local forest environments.

In February 2011, the Sumitomo Forestry Group started business in this sector by acquiring a 34% stake in the urban Kawasaki Biomass Power Plant, which primarily uses scrap construction wood as its main fuel. Subsequently, the Mombetsu Biomass Power Plant (with generation capacity of 50 MW), the Tomakomai Biomass Power Plant, the Hachinohe Biomass Power Plant, and the Kanda Biomass Power Plant started operations by mainly using unused wood from forests as fuel.

Subsequently, the Morinomiyako Biomass Power Plant started operations. Then in April 2025, the BPS Ikoma Biomass Power Plant also started operations with the generation capacity of 10 MW, bringing total power generation capacity of the company’s wood biomass power generation plants to approximately 261.5 MW, which is equivalent to the amount of electricity supplied to 578,000 households.

*Consolidated subsidiary of Sumitomo Forestry

Solar Power Generation Business

Sumitomo Forestry owns a solar power generation facility that can generate 3.4 MW of electricity in Kashima City, Ibaraki Prefecture.

For some of solar panel frames, we have adopted original wooden frames mainly made of domestically produced cedar wood to reduce the environmental impact of our power generation facilities and expand the use of wood.

In fiscal 2025, the combined output of power generation was 4,430,000kWh.