Approach to Use 100% Renewable Energy

In order to achieve 100% renewable energy for the electricity for Sumitomo Forestry Group's operations, we are utilizing Sumirin Denki, which we started in 2019. We are also planning to install solar power generation systems in our factories both in Japan and overseas. Furthermore, we will consider a diverse range of procurement methods that take advantage of programs in each country we operate while aiming to use 100% renewable energy.

Utilizing Sumirin Denki Solar Power Generation for Domestic Electricity Use

Sumitomo Forestry started the "Sumirin Denki" service in November 2019 for owners of Sumitomo Forestry and Sumitomo Forestry Home Tech's homes. The service offers surplus electricity purchase and power supply agency sales for owners whose solar power generation purchase period expires under the feed-in tariff (FIT) for renewable energy.

We are working to allocate this "Sumirin Denki" to the electricity used by Sumitomo Forestry Group in Japan. We promote the RE100 initiative by utilizing the surplus solar power purchased from the owners with "Sumirin Denki" at our offices and model homes. As of December 2022, the number of contracts was 3,061, an increase of 1,522 from fiscal 2021. In addition, from 2021, we have been supplying electricity purchased from owners to model homes in Kinki area (38 model homes covered as of December 2022). In the future, we will accelerate the promotion of the "Sumirin Denki" services to the owners and aim to allocate the renewable energy in all areas in 2023.

Expanding the Use of Renewable Energy at Manufacturing Plants

As Sumitomo Forestry Group, our manufacturing facilities account for about 34% of our total greenhouse gas emissions. To achieve RE100, it is vital that we conserve energy and expand the use of renewable energy in our factories.

In September 2020, Sumitomo Forestry Crest Kashima Plant, which manufactures interior materials for houses, introduced solar power generation under the PPA (Power Purchase Agreement) model*. We purchased non-fossil certificates with tracking for electricity not generated by solar power, and Kashima and Imari plants have achieved RE100 and Shizuoka plant RE50 as of December 2022. These initiatives contributed to a reduction of 1,803 t-CO₂ emissions in fiscal 2022. Sumitomo Forestry Group’s overseas factories also promote introduction of the solar power generation, and we plan to procure renewable energy and aim to reduce greenhouse gas emissions.

Both in Japan and overseas, Sumitomo Forestry Group is considering the installation and expansion of solar power panels in our manufacturing sites in an ongoing effort to increase the ratio of renewable energy.

* A system whereby a host loans out factory rooftop space to a power generation company to install solar power generation panels and then purchases the electricity generated from these panels for its own use

Overseas Sites Initiatives

Nelson Pine Industries (NPIL), which manufactures and sells MDF (medium density fiberboard), single plate, and LVL (laminated veneer lumber) in New Zealand uses the most electricity in the Sumitomo Forestry Group. In New Zealand, a high ratio of power composition is from hydropower, geothermal power and other forms of renewable energy, and was approximately 80% as of 2021. The New Zealand government has set out a goal for 100% renewable energy by 2035, and NPIL expects to have 100% renewable energy by that time.

With the momentum for implementing renewable energy growing in Southeast Asia, we are considering the installation of solar power generation systems at our other manufacturing sites in Indonesia and Vietnam. In the United States and Australia where we are primarily involved in the housing business, we plan to steadily transition to renewable energy thanks to the ability to procure renewable energy at low cost and the issuance of sufficient renewable energy certificates.

Promotion of the Renewable Energy Business

Trends in the Amount of Renewable Energy Generation*¹*²

*1 The amount of electricity generated by wood biomass power generation is only from Sumitomo Forestry's consolidated subsidiaries

*2 The aggregation period for fiscal 2021 and onwards is from January to December of each year, the aggregation period for fiscal 2020 is from April to December, and the aggregation period for fiscal 2019 is from April to March 2020

Wood Biomass Power Generation Business

The Sumitomo Forestry Group operates wood biomass power generation facilities that are fueled by recycled chips primarily using leftover from construction as raw materials, wood not suitable as a building material, and thinning leftover in forests and other unused forest resource.

The CO₂ emitted by burning wood does not contribute to CO₂ in the atmosphere as part of the life cycle of the trees because the CO₂ in the atmosphere is absorbed through photosynthesis as the trees grow (concept of carbon neutrality). Therefore, 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 emission and furthermore, the maintenance of local forest environments.

In February 2011, the Sumitomo Forestry Group entered this sector with the operation of the urban-oriented Kawasaki Biomass Electric Power (generation capacity: 33 MW), which primarily uses scrap construction wood as fuel. The Mombetsu Biomass Electric Power Co., Ltd. with a power generation scale of 50 MW utilizing unused wood from domestic forests as its main fuels commenced operation in December 2016, the 6.2 MW Tomakomai Biomass Power Co., Ltd. in April 2017, and 12.4 MW Hachinohe Biomass Electric Power Co., Ltd. in April 2018, and the 75MW Kanda Biomass Energy K.K. in June 2021, respectively.

When the 75 MW Morinomiyako Biomass Energy commences business operation in November 2023, the total power generation scale of the wood biomass power generation plants where the Sumitomo Forestry Group is involved will be approximately 251.6 MW, which is equivalent to electricity supply for approximately 555,000 households.

Drawing on past experience in the wood biomass power generation business, the Group will continue to expand renewable energy business operations suited to local conditions and other requirements.

* A consolidated subsidiary of Sumitomo Forestry

Solar Power Generation Business

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

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

In fiscal 2022, the combined output of power generation was 4,400,000kWh.

Power plant location for renewable energy business

Promoting the Use of Unused Forest Resource

Unused forest resource is left-over wood not suitable as a building material or wood from thinning in forests. Although demand for pulp for papermaking has been sluggish, wood biomass power generation plants are operating in each area and the demand for wood biomass is growing following the adoption of the Feed-in Tariff for Renewable Energy law (FIT). By using unused forest resource, we can expect an effective increase in the value of forests while also promoting renewable energy. In fiscal 2022, the Group used 370,000 tons of unused forest resource at its power plants. We will continue to work on building up systems for the efficient, stable collection of unused forest resource.

Amount of unused forest resource from domestic forest
(2022)

370,000tons

Promotion of Net Zero Energy House (ZEH) Specifications

Wooden Houses with Superior Insulation

If the thermal conductivity of wood is 1, the thermal conductivity of concrete would be almost 13 and steal upwards of 440. Wood as a material is a superior insulator to mitigate the transfer of heat. In addition, Sumitomo Forestry uses high-performance 24K glass wool thermal insulator (high-end product) based on its own unique standards.

Adoption of "360° TRIPLE Insulation Standards"

Sumitomo Forestry has adopted 360° TRIPLE Insulation as a standard that enhances the insulation efficiency of new custom-built detached houses (excluding fireproof specifications). In addition to offering high-performance thermal insulation materials, the standard provides all-around insulation for buildings as a whole from structural members to windows with high thermal performance to realize affordable yet comfortable lifestyles.

360° TRIPLE Insulation creates a living space that stays cool in the summer, warm in the winter and increases energy-saving performance. This insulation option, as a standard, corresponds to 5 stars, which is the highest rank of the Building-Housing Energy-efficiency Labeling System (BELS)* promoted by the government, as a standard.

Sumitomo Forestry applies for BELS for all of new custom-build detached houses. BELS is a labeling system with which a third party evaluation organization evaluates and certifies the energy efficiency of new and existing structures using an index indicating the energy performance and asset value of each building. Our initiative strives to make Sumitomo Forestry the first major housing manufacturer to have every building BELS-certified. In fiscal 2022, the BELS certification rate (at the start of construction of the main unit) was 98.4%. Sumitomo Forestry homes enhancing insulation efficiency deliver assured safety and comfort proven by the BELS certification.

* BELS is one third-party evaluation system based on the Building-Housing Energy-Efficiency Labeling Guidelines (evaluation standards on labeling of the energy consumption performance for buildings) defined by the Ministry of Land, Infrastructure, Transport and Tourism. This certification is run by the Association for Housing Performance Evaluation & Labeling. The system objectively evaluates energy efficiency to display a five-tier star rating. BELS stands for the Building-Housing Energy-efficiency Labeling System

Adoption of Glass with Superior Heat Insulation Properties

Windows cause the greatest loss of heat in living spaces. Shielding interior spaces from heat in the summer and preventing heat from escaping in the winter is vital. As windows cause the largest heat loss, Sumitomo Forestry uses low-E multi-layered glass with argon gas inside. Argon gas is injected between the multi-layers of glass to mitigate heat transfer to the air while the panes are coated with special metal film. The superior thermal insulation and insulation properties shield interior spaces from heat in the summer and prevent heat from escaping in the winter.

Double Power Generation

Sumitomo Forestry recommends the installation of storage battery for family use, in addition to solar power generation system. Double power generation can generate the necessary electricity for daily life in the home. Furthermore, Home Energy Management Systems (HEMS) realize zero energy house (ZEH specifications) by proficiently managing energy consumption throughout the home.

*1 The aggregation period of fiscal 2020 is from April 2020 to December 2020

*2 The aggregation period of fiscal 2019 is from April to March of the following year

*3 Hybrid electric and gas hot water and central heating systems

Launched Life Cycle Carbon Minus Housing

In April 2022, we began sales of our environmental flagship model, the "life cycle carbon minus housing," which makes full use of superior insulation efficiency, high-performance equipment, and energy creation devices such as large-capacity solar power generation systems.

LCCM housing is a house that reduces CO₂ emissions during construction, occupancy, and demolition, and also generate renewable energy using solar power generation, etc., to achieve negative CO₂ emissions over their entire life cycle. Sumitomo Forestry's LCCM housing is a wooden house, which has little CO₂ emissions from raw material procurement to construction, and reduces more CO₂ by using domestic timber as the main body of the structural framework that utilizes renewable biomass fuel in the timber drying process. In addition, Sumitomo Forestry's proprietary Big Frame (BF) construction method allows for flexible adaptation to future changes in floor plans, and the building achieves life cycle carbon minus by reducing total CO₂ emissions during construction, renovation, and demolition*, utilizing renewable energy from solar power generation, and devising a design that controls light and heat. The strong structural framework fixes approximately 20% more carbon than traditional construction methods, contributing to a decarbonized society through long-term carbon fixation.

Furthermore, in October 2022, we have started to make proposals based on the "Environmental Contribution Presentation Sheet" for houses that nurture forests. The "amount of carbon storage" and "area equivalent to reforestation" at the design stage can be calculated for each residence to visualize the environmental contribution.

* Calculated using the LCCM housing basic requirement (LCCO₂) compliance assessment tool created by Japan Sustainable Building Consortium

Converting All Apartments to ZEH

Sumitomo Forestry is promoting ZEH-M (“Net Zero Energy Mansion”)*¹ in all of its Forest Maison apartments to achieve a comfortable indoor environments and significant energy efficiency performance. All buildings will be certified as ZEH-M, with specifications corresponding to the highest rank of five stars of the Building-Housing Energy-efficiency Labeling System (BELS) promoted by the Japanese government. We will also promote the installation of solar power generation systems to reduce CO₂ emissions during daily life.

Forest Maison's ZEH Mansion will be designed to meet or exceed the ZEH-M Oriented standard, which aims to reduce primary energy consumption by 20% or more*2 for the entire building, including common areas, by significantly improving the insulation efficiency and maintaining comfortable indoor environments through the introduction of highly efficient equipment systems.

*1 Acronym for Net Zero Energy House Mansion. An apartment house that improves the insulation and energy efficiency performance, generates energy through solar power generation, etc., and achieve a "zero" balance of primary energy consumption (air conditioning, hot water supply, lighting, ventilation) per year.
ZEH standards for multi-family housing set by the government, which are classified into four categories according to the primary energy consumption reduction rate: "ZEH-M," "Nearly ZEH-M," "ZEH-M Ready," and "ZEH-M Oriented”

*2 Comparison with the standard primary energy consumption for "heating," "cooling," "ventilation," "lighting," and "hot water" according to the 2016 Energy Efficiency Standards

Renovating to Improve Function and Asset Value

Sumitomo Forestry Home Tech promotes renovations from energy-saving point of view. We propose the installation of energy-efficient equipment alongside better insulation efficiency as well as new life styles that decrease the energy consumed in daily life, realize reductions to the environmental impact, and decrease lifetime heating and lighting costs. The insulation renovations can also mitigate health risks from heat shock.

In recent years, the need for safe and secure housing has been increasing due to concerns over intermittent earthquakes, and we are actively promoting seismic resistance and structural reinforcement work.

We actively strive to bring about excellent long-term housing in existing properties as well as long-term excellent extension and alteration standards by improving the performance in thermal efficiency, energy-savings and seismic retrofitting.

FY2022 result

Sumitomo Forestry Home Tech has set the goal of "improving the rate of orders for environmentally conscious renovations" in Mid-Term Sustainability Targets 2024 with fiscal 2024 as target year.

In fiscal 2022, we aimed for a total order ratio of 70 % for the four works of seismic construction, structural reinforcement work, heat insulation renovations, and smart material installation on general housing (other than owners of Sumitomo Forestry homes), and the actual result was 64.6%.
On the other hand, we aimed for a total order ratio of 65% for the four works of seismic construction, exterior work, heat insulation renovations, and smart material installation on Sumitomo Forestry homes, and the actual result was 60.7%.

In addition to actively proposing these types of work through the seismic damper campaign and other means, we have been sharing the benefits of resilience renovation using solar power plus battery storage (iedenchi-NX) with owners of Sumitomo Forestry homes equipped with solar power generation systems in terms of smart material*. We are also proposing environmentally conscious products from the viewpoint of in-house power generation and consumption to owners who are facing the termination of FIT duration with the rising cost of utilities.

Needs for Environmentally-conscious renovations will continue to grow in the future in order to ready properties for potential natural disasters.

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

Carbon Stock in the Housing and Construction Business

Trees retain CO₂ as carbon even after they are turned into products. Constructing wooden houses can therefore be likened to building forests in the city. The total domestic carbon stocks* in timber that was used in the housing and construction business in fiscal 2022 reached 197,000 t-CO₂. Sumitomo Forestry Group is contributing to a decarbonized society by increasing carbon stock in forests and cities.

* CO₂ fixation is calculated by categorizing the actual amounts of timber used per tree species for custom-built detached house, rental housing, spec homes, Construction Business, and calculating carbon content from the specific gravity of each tree species

Sales of Environmentally-conscious Housing Overseas

Henry Properties of Australia has been a driving force in efforts to improve energy-saving performance in the Australian housing industry, such as setting the five stars of the energy-saving performance standard Energy Rating*¹ as its own standard specifications ahead of other companies. Efforts toward the environment accelerated further after joining the Sumitomo Forestry Group in 2008. Henley Properties conducted a variety of initiatives to reduce the environmental impact, including the development of the first zero emission house*² for the general consumer as a major home builder company in the country.

In August 2022, we became the first major Australian builder to install solar panels as standard equipment on all custom-built detached houses. The energy generated by solar power generation will be used to meet the energy needs of daily life, and all-electric appliances is standard, enabling up to 75% reduction in utility costs, thus reducing "CO₂ emissions in life" by up to 100%.

*1 An evaluation metric of the energy burden for heating and cooling the inside of a building in Australia. Insulation, windows, the type, size and orientation of the building, and the climatic zone are all items included in this metric. Currently, a six-star rating is the standard specification.

*2 Environmentally-conscious housing expected to have an energy-saving effect of more than 70% compared to conventional housing.

Visualization of CO₂

Research & Development

In order to clarify the value of wood constructions and wood materials, and to contribute to the realization of a decarbonized society by further enhancing their value, Sumitomo Forestry is engaged in research and development to establish data preparation and calculation methods that will make it easier to compare CO₂ emissions by building structure type and evaluate the carbon storage capacity of wood at the building planning stage.

In addition, "Tsukuba Research Institute New Research Building" was completed in 2019. By using an air conditioning system that uses wood pellets, which are renewable energy fuel and energy creation using solar panels on the roof and natural energy such as daylight and natural ventilation, we have achieved a reduction in CO₂ emissions during operation and aim to further reduction by continuing to verify the effectiveness.

Estimating Carbon Storage in Wooden Buildings

Tokyo University of Agriculture and Technology has published a study in the open access journal Scientific Reports on a method for estimating carbon storage in wooden buildings constructed by the private sector over the past 50 years.

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 carbon stocks within Harvested Wood Products (HWP) should be accounted for as greenhouse gases absorption or emissions by each country. HWP are important for climate change mitigation because they continue to store carbon after they are harvested from the forest.

In order to make effective use of HWP, it is first necessary to accurately determine their carbon storage. This study focused on wooden buildings, which store the most carbon of all HWP applications, and examined methods for estimating HWP carbon storage in buildings constructed by companies.

Building data was provided by Sumitomo Forestry, and both parties jointly verified the estimation method. The results of this research will allow us to understand and estimate the carbon storage capacity of wooden buildings with greater accuracy. In addition, Sumitomo Forestry's wooden houses have been shown to store carbon over the long period of time.

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

Visualization of CO₂ Emissions During Construction

In August 2022, Sumitomo Forestry began selling the Japanese language “One Click LCA”, software that visualizes CO₂ emissions and other data from buildings, as the sole distributor in Japan.

“One Click LCA" is used in 130 countries, mainly in Europe, and is compatible with international ISO standards and more than 50 green building certifications worldwide. CO₂ emissions during procurement of materials for construction, processing, transportation, construction work, renovation, and disposal (CO₂ emissions during construction) can be calculated precisely.

It is reported that the construction sector accounts for about 37%*¹ of global CO₂ emissions. About 70% of these are CO₂ emissions from living (operational carbon) and the remaining 30% are CO₂ emissions from building (embodied carbon). CO₂ emissions from living spaces have been reduced through the spread of ZEH and ZEB, and the urgent issue going forward is to reduce CO₂ emissions from construction.

In February 2023, Sumitomo Forestry launched a project to promote acquisition of the environmental labeling system EPD*² for timber and building materials manufacturers and a "One Click LCA" calculation contract business for developers, general contractors, and design firms.

Through the promotion of One Click LCA, we will continue to promote carbon neutral design in the Japanese construction industry.

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

*2 ISO-compliant environmental labeling system that visualizes CO₂ emissions over the entire product life cycle, from resource extraction to disposal.

Global CO₂ Emission Rates by Industry

Example of calculation with "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.

Visualization in Investment

Sumitomo Forestry is considering the introduction of internal carbon pricing in order to use greenhouse gas emissions as one of the criteria when deciding whether or not to invest in a project. We aim to begin operations in July 2023.

Investment in Japan Green Investment Corp. for Carbon Neutrality

Sumitomo Forestry has invested in Japan Green Investment Corp. for Carbon Neutrality (JICN), which was established in October 2022 based on the Act on Promotion of Global Warming Countermeasures.

JICN develops fund business with capital from government fiscal investment and loans and private investment, and encourages private companies to invest in decarbonization by investing in and financing projects that contribute to decarbonization. The Sumitomo Forestry Group supports the purpose of JICN's activities and has decided to invest in JICN because the Group believes that the growth of the decarbonization-related market will lead to expanded business opportunities. We will also accumulate information and knowledge on advanced cases in the decarbonization field supported by JICN in order to create future business opportunities for our Group.