Approach to Use 100% Renewable Energy

In order to achieve 100% renewable energy for the electricity for Sumitomo Forestry Group's operations, we are planning to utilize Sumirin Denki, which we started in 2019, and install solar power generation systems at our domestic and overseas plants. 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 homes and owners who have solar power installed by 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 2023, the number of contracts was 4,891, an increase of 1,830 from fiscal 2022. Furthermore, we have been supplying renewable energy electricity purchased from owners to exhibition halls and some sales offices nationwide (217 exhibition halls and 7 sales offices as of December 2023) since 2023. In the future, we will accelerate the promotion of the "Sumirin Denki" services to the owners and strive to increase the availability of renewable energy.

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 2023. These initiatives contributed to a reduction of 1,969 t-CO₂ emissions in fiscal 2023. We are also promoting introduction of renewable energy at our overseas manufacturing sites. AST Indonesia, our manufacturing sites in Indonesia, has completed installation of a “2.2 MW roof-mounted solar power generation system.” It was selected as a JCM model project by Ministry of the Environment in fiscal 2021, and started to operate in March 2024. It covers 20% of power consumption of the plant and allows for a reduction in greenhouse gases of 1,600t CO₂/year.

Both in Japan and overseas, the 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.

Other manufacturing sites in Southeast Asia are also seeing a growing trend toward introduction of renewable energy, and we are promoting introduction of solar power generation systems at our own plants 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 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 specification corresponds to ZEH level of BELS* (Building Energy Saving Performance Labelling System) promoted by the government.

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 2023, the BELS certification rate (at the start of construction of the main unit) was 99.0%. Sumitomo Forestry homes enhancing insulation efficiency deliver assured safety and comfort proven by the BELS certification.

*One of the third party certification systems based on "Guidelines for energy efficiency Labeling System for Sales and Rental of Buildings under building section of Act on the Rational Use of Energy" established by Ministry of Land, Infrastructure, Transport and Tourism. The system is operated by the Association for Evaluating and Labeling Housing Performance. This system objectively evaluates energy efficiency to label 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.

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

*2From fiscal 2023, combined installation rate of Ene-Farm and Eco One is shown.

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, we have started to make proposals based on the "Environmental Contribution Presentation Sheet" for houses that nurture forests. By making it possible to easily calculate "carbon storage" and "area equivalent to reforestation" at design stage, we aim to visualization of "environmental contribution."
In order to advocate these initiatives, "environmental contribution" is posted at each exhibition hall.

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

Converting rental apartment house to ZEH and sales of wooden apartments started

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. ZEH-M with improved energy efficiency based on specifications for the ZEH level of BELS promoted by the government will be acquired for all buildings. We will also promote the installation of solar power generation systems to reduce CO₂ emissions during daily life.

In May 2023, Forest Maison, a commercial real estate development, adopted 360° triple insulation, which is the same as that of detached houses products. It achieves performance that exceeds ZEH-M Oriented standard, which significantly improves the insulation performance of the home, maintains a comfortable indoor environment by installing highly efficient equipment, and reduces the primary energy consumption of the entire building, including common areas, by 20% or more*². Furthermore, a rental wooden apartment "Forest Maison GRANDE" equipped with solar power generation panels which promotes zero energy for each dwelling unit, was released in November, 2023. With less CO₂ emissions (embodied carbon) at the time of manufacturing and construction than RC and steel apartments, and carbon storage effect of wood, wooden apartments reduce burden on environment.

*1Acronym 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”

*2Comparison 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 energy-saving, vibration control and seismic renovation (performance-improving renovation) mainly for houses before the revision of seismic resistance standards in 1981. Regarding energy-saving renovation, we announced development of an "insulation renovation work proposal system" using AI to improve energy efficiency of existing houses in December 2023. We aim to improve residents' quality of life and realize well-being by improving living environment such as maintaining a comfortable state for a longer period with less primary energy by promoting insulation renovation work.

In recent years, the need for safe and secure housing has been increasing due to concerns over intermittent earthquakes. We will provide safe and secure housing by actively promoting vibration control and seismic renovation centered on "dual construction method for vibration control and seismic resistance"* using original seismic damper.

We will contribute to realization of a decarbonized society by promoting renovation with improved performance that combines energy conservation, vibration control and seismic technology to improve comfort of houses, reduce primary energy consumption, and extend lifespan of buildings.

*This is a construction method using damping devices with hydraulic dampers which are also used in high-rise buildings, and a "seismic damper model S " developed for 2-story houses using conventional post-and-beam construction method. It absorbs and reduces shaking of earthquakes, prevents deformation of buildings and is also strong against repeated aftershock vibrations

Environmentally conscious renovation

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 2023, 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 total order ratio of 75.2%, compared to 64.6% in the previous fiscal year.
On the other hand, the four works of seismic construction, exterior work, heat insulation renovations, and smart material installation on Sumitomo Forestry homes, and the total oder ratio of 61.8%, up from 60.7% in the previous fiscal year.

*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 2023 reached 197,000 t-CO₂. Sumitomo Forestry Group is contributing to a decarbonized society by increasing carbon stock in forests and cities.

*1CO₂ 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

Development of Environmentally-conscious Housing Overseas

Australia

Henry Properties, as a major home builder company in Australia engages with a variety of initiatives to reduce environmental impact, including development of the first zero emission house*¹ for general consumer. Furthermore, in an all-electric house equipped with solar panels whose sales are promoted by Henry, heating and lighting expenses can be saved by up to 75%, and "amount of CO₂ emission when living" can be reduced by up to 100%.

It was also the first company that launched a new residential product, "Mainvue," that complies with the Energy Rating*² 7-star standard. Mainvue achieves a 7-star by allowing changes to floor plan that maximize energy efficiency. Henley will continue to be a driving force to improve energy efficiency of country's housing industry.

*1Environmentally-conscious housing expected to have an energy-saving effect of more than 70% compared to conventional housing.

*2An 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.

Indonesia

Sumitomo Forestry strives to standardize decarbonized designs in Indonesia and other Asian countries. In detached housing business, we are developing environmentally sound houses and working to acquire “EDGE certification*¹,” which evaluates environmental performance of buildings.
Sumitomo Forestry has introduced design and construction technologies cultivated in Japan and overseas to spec homes in Depok City near Jakarta, Indonesia, to provide a comfortable and safe house that is resistant to disasters. We are proceeding with environmentally sound development, including decision to install solar panels as standard equipment.

Besides, we launched a spec home business in Bogor City of India that uses solar panels as standard equipment in 2023. In spec home business in Bogor City, based on design approach of "Ryouonbou natural heating and cooling system*²" which utilizes knowledge of Japan's housing business, we create a comfortable living environment by shielding sunlight with deep canopies and eaves, and adjusting temperature inside and on the premises by utilizing natural ventilation and planting. In addition, we will reduce CO₂ emissions (operational carbon) during living by creating energy with solar panels. Furthermore, instead of bricks, which emit a large amount of CO₂ during manufacturing, we use autoclaved aerated concrete blocks*³, which have a low environmental impact, to reduce CO₂ emissions (embodied carbon) during construction. These initiatives have accelerated decarbonization in Asian businesses.

*1A building environment certification developed by the World Bank's IFC and used mainly in developing countries. It is necessary to reduce energy consumption during construction, energy and water consumption in life by 20% or more compared to buildings with local general specifications.

*2A design method developed by Sumitomo Forestry that utilizes natural blessings of wind, sun, and greenery to create comfort of summer breezes and winter sunshine. While considering surrounding environment of each site, the design leverages characteristics of wind flow, sunshine and greenery to create a comfortable home that does not depend on heating and cooling equipment.

*3Autoclaved lightweight aerated concrete refers to high-temperature, high-pressure and high-humidity curing.

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 developing One Click LCA, software that efficiently visualizes CO₂ emissions (embodied carbon) when building. We are working on development to optimize operation of One Click LCA in Japan.

In addition, we have realized a reduction in CO₂ emissions during operation by energy creation through solar panels on rooftop, using an air conditioning system that uses wood pellets, which are renewable energy fuel, and using natural energy such as daylight and natural ventilation，at New Research Building of Tsukuba Research Laboratories, which was completed in 2019. Based on actual operation data, we have improved various control algorithms to make more efficient use of natural ventilation and wood pellets, and are promoting further reductions in energy consumption.

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.
We have used the results to update carbon storage from housing starts in fiscal 2023.

*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 throughout the entire supply chain

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 140 countries, mainly in Europe, and is compatible with international ISO standards and more than 60 green building certifications worldwide. It is possible to precisely calculate CO₂ emissions (embodied carbon) from procurement of construction materials used for buildings, transportation, construction, repair, disposal to recycling.

It is reported that the construction sector accounts for about 37%* 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. When calculating CO₂ emissions during construction, it is necessary to calculate environmental impact throughout the entire life cycle of building. Sumitomo Forestry contributes to visualization and reduction of CO₂ emissions in construction industry through spread of "One Click LCA".

CO₂ emissions from products at stage of procurement of building materials have the greatest impact on CO₂ emissions from buildings. As a mechanism for visualizing CO₂ emission amount of a product, there is an environmental labeling system EPD (Environmental Product Declaration). EPD is an abbreviation of Environmental Product Declaration, which is an ISO-compliant environmental certification label for calculating environmental impact of the entire life cycle of a product from procurement of raw materials to disposal thereof, and quantitatively indicating environmental load of the product, including amount of CO₂ emissions.

EPD acquisition support

In February 2023, Sumitomo Forestry started a business of acquiring and supporting an environmental labeling system EPD*² for lumber and building material manufacturers. By utilizing the "EPD generator" provided by One Click LCA, EPDs of all products related to construction can be smoothly acquired.

In addition, Sumitomo Forestry has started a CO₂ calculation service for buildings by "One Click LCA" for tenants, developers, and construction companies. In response to increasing demand for LCA in building industry, we utilize knowledge of Sumitomo Forestry's LCA experts to calculate and report the calculation results for each project. Currently, we have received many requests for calculation from customers.

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

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.

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 invested 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.