Domestic Case Example

Support for the Formulation of a Forest Maintenance Plan in Odate City, Akita Prefecture

Sumitomo Forestry is providing consulting in planning of forest maintenance and forestry development conducted by local municipalities by taking advantage of its wealth of knowledge in forest management cultivated in company-owned forests over a long period of time. As part of these efforts, we supported the creation of a Forest Maintenance Plan in Odate City, Akita Prefecture, starting in fiscal 2022, with a focus on promoting the use of local forest resources and encouraging reforestation.

Background of the Support for Forest Maintenance Plan Development

The Forest Maintenance Plan we supported is a ten-year plan developed by municipalities once every five years, based on national and prefectural forest plans, to outline the direction of forest-related policies within their jurisdiction.

Formulation of the Forest Maintenance Plan

In formulating the Forest Maintenance Plan as a master plan, we first conducted interviews with a wide range of stakeholders involved in forest and timber-related activities — from forest management to wood processing — to assess the current state of forestry in the city. Based on this understanding, we then evaluated the previous plan. The issues and requests identified through the interviews were organized and consolidated into eight priority measures, which formed the basis for drafting the Forest Maintenance Plan.

In 2024, we are responsible for overseeing the implementation of the Forest Maintenance Plan. To advance the priority measures — "Establishing a Stable Supply System for Locally Produced Timber" and "Promoting Reforestation" —we are conducting an estimation of the potential supply volume of local timber and exploring approaches to consolidate forest lands.

Priority Measures and Action Plan in the Odate City Forest Maintenance Plan

Comprehensive Partnership Agreement to Turn Forestry to a Growth Industry with Nagato City, Yamaguchi Prefecture

Sumitomo Forestry entered into a comprehensive partnership agreement to turn forestry and timber industry to a growth industry with Nagato City, Yamaguchi Prefecture in September 2019 for the purpose of promoting development of the forest and timber industry in Nagato City in order to revitalize the local economy.

Past Initiatives

In April 2017, the Forestry Agency selected Nagato City was selected as a region to turn forestry and timber industry to a growth industry by the Forestry Agency and has worked toward that goal. The Nagato City launched a committee to promote turning forestry and timber industry to a growth industry with various subcommittees to conduct repeated assessments through local representatives and experts toward revitalization of forestry. As a result, Nagato City and other local relevant bodies took the lead in establishing Refore Nagato in July 2020 as a general incorporated association to handle local forest management.

Effects of the Comprehensive Partnership Agreement

The partnership agreement between Sumitomo Forestry and Nagato City aims to increase local production of logs, secure and train forestry workers, and expand wood demand. By treating the forests throughout Nagato City as a single entity, we will also execute efficient forest maintenance and promote sustainable forest management to further turn forestry to a growth industry.

In 2024, we conducted on-site proof of concept, surveys, and initiatives to study branding for promoting the utilization of city-grown timber and expansion of forest maintenance efforts in the city, as well as to expand material production, and insuring demand for timber through the use of smart technology and other means, including efforts to expand log sales.

Partnership Agreement Overview

• Promote harvest and replanting
• Stably produce and use container seedlings
• Develop and standardize container seedling production technology and train business operators
• Establish and manage organizations central to forest management
• Identify the quantity of forest resources and the intention of forest owners
• Adopt and effectively utilize ICT in forestry and wood industries
• Adopt and effectively utilize forestry machinery in forest
• Take advantage of business approaches that heighten motivation of forest owners and forestry businesses
• Secure human resources and support their retention in forestry and wood industries
• Build a cooperative supply chain with local city sawmills and other forestry businesses
• Drive demand for locally produced wood both inside and outside of the city

Promotion of Forests and Forestry DX in Maniwa City, Okayama Prefecture

Since June 2023, we have been implementing "Forestry DX Promotion Business" under contract business in Maniwa City, Okayama.

Business Purpose

Our expectation for Maniwa City, a place short of forest management personnel, is that staff of city government and forestry association will be able to autonomously use digital data to promote efficient and systematic forest maintenance. This business aims to systematize a method of creating a forest maintenance plan after setting a model region and maintaining digital data, and to spread the method to respective staffs.

Details of Initiatives

In this project, we selected a model area in Maniwa City and obtained highly accurate forest resources by laser measurement. After utilizing these data and taking disaster resilience and economic efficiency of forestry into consideration, zoning was carried out to classify roles of forests, such as forests recommended for reforestation and forests to be converted into mixed conifer and broadleaf forests. Based on the zoning results, priorities for clearcutting and thinning were set from a long-term perspective and incorporated into specific forest maintenance plans. After discussing this series of works with staff of city government and forestry association, we organized it as a method unique to Maniwa City. We hope that results of this project will accelerate forest maintenance in Maniwa City.

Started to Provide Services for a Forest Value Creation Platform

Sumitomo Forestry and NTT Communications Corporation (NTT Com) have launched a comprehensive service platform, called "Morikati," to support the creation, verification, and trading of forest-derived carbon credits under the J-Credit Scheme^*1.
"Morikati" is Japan's first platform^*2 to provide Geographic Information System (GIS^*3) functionality to forest carbon credit creators, verification bodies, and purchasers alike, aiming to streamline the issuance process and enhance the reliability of credits, thereby promoting the creation and active distribution of forest credits.

1. Background

   The J-Credit Scheme is a national government-certified system that recognizes credits for amount of CO₂ emissions reduced through introduction of energy-saving equipment and use of renewable energy, as well as amount of CO₂ absorbed through appropriate forest management. Forest carbon credits are high public-value credits that contribute not only to climate change mitigation but also to water source recharge, prevention of sediment disasters, and biodiversity preservation. However, the volume of their creation remains only about 10% of the reduction credits derived from renewable energy and energy-saving measures. Furthermore, of the forest carbon credits created, the amount actually retired for purposes such as offsetting accounts for only about 5% of reduction credits, indicating that both the volume created and circulated remain low, which is a challenge^*4.
   The following challenges lie in the background.

   Challenges and Needs
   Producers	The credit creation process is complex and difficult to understand Proper data management and reporting are a significant burden There is a lack of connection with potential buyers, making it difficult to find sales opportunities
   Designated Operational Entity	Handling a vast amount of paperwork is a significant burden It is difficult to understand the spatial relationships of the target forests from documents alone, making the review process challenging as it requires comparing multiple maps and drawings
   Purchasers	Information related to credits is limited, making it difficult to easily find the desired credits There are concerns about the reliability of the purchased credits We want to effectively communicate the contributions to local communities and the environment made through credit purchases

   To address these challenges, we jointly developed a service that comprehensively supports the three parties by combining Sumitomo Forestry's extensive expertise in forest management with NTT Com's specialized ICT capabilities.

2. Overview of "Morikati"

   "Morikati" consists of the cloud-based "Morikati" system and the consulting service called "Credit Creation Consulting Service.

   

   (1) "Morikati" System

   It provides functions to efficiently handle various information related to forest carbon credits, as well as their creation and trading.

   ① Landing Page

   It is a promotional website for "Morikati" that is accessible to anyone. It provides the concept and service details of "Morikati," as well as basic knowledge about forest carbon credits, to all those considering credit creation or purchase.

   Click here for related information

   • Morikati

   ② Credit Issuance Support Function

   These are various support functions designed for creators and verification bodies using the Credit Creation Consulting Service.

   • For creators: Provides application preparation support functions, including integrated management of various data on maps using GIS, automatic input of data necessary for credit calculation, and creation guides.
   • For verification bodies: Provides a function to review documents online while confirming the spatial relationships of target forests using GIS.

   ③ Credit Trading Service

   Creators can share various information through the sales page, including the region where the forest carbon credits were issued, the implementers, the natural environment, and innovations in forest operations. By providing abundant information on the regions and environmental values desired by purchasers, smooth transactions are facilitated.

   (2) Credit Creation Consulting Service

   Sumitomo Forestry provides consulting services to support forest carbon credit creation.

   ④ Data Management Support Service

   We digitize map data necessary for credit creation and cross-reference various materials related to the target forests.

   ⑤ Credit Application Support Service

   We assist with the preparation of application documents and support the review process by utilizing the credit issuance support functions of the "Morikati" system.

3. Roles of Each Company

   Sumitomo Forestry: Operation of "Morikati," provision of consulting services, sales and marketing activities, etc.
   NTT Com: Development and operation of the "Morikati" system, sales and marketing activities, etc.

4. Features of "Morikati"

   ■A GIS-based service that reduces the burden on creators and verification bodies

   By linking digitized materials to the forests subject to credit issuance and managing them collectively on maps, the burden on creators and verification bodies is reduced.
   By managing the vast amount of digitized paper documents linked with GIS on the cloud, creators can reduce the burden of data management, such as during personnel handovers or project changes. Verification bodies can prevent double counting, manage large-scale projects with extensive data, and significantly improve operational efficiency by reviewing documents online while confirming location information using GIS. Additionally, purchasers can more easily and accurately verify the location by comparing the approximate position of the project's target forest displayed on the GIS of the sales page with the application documents and other materials. This makes it easier to select forest credits and enables purchasers to buy with confidence.

   

   ■Enhancing information on the sales page for purchasers to promote forest carbon credit transactions

   Forest carbon credit purchasers seek information not only about the location of the forest but also about the status of forest certification, forest maintenance and conservation methods, conservation of specific species of flora and fauna, and quantitative assessments of functions such as landslide prevention and water source recharge, reflecting the environmental contribution. "Morikati" provides a well-equipped sales page to clearly offer the various types of information sought by such purchasers. The sales pages created by the credit creators can include various information about the project and the creators, such as GIS data, photos, maps, website links, and brochures.
   Through detailed sales pages, buyers can clearly understand the environmental values for which they are paying. This makes it easier to select forest carbon credits and promotes transactions, while also supporting companies' GX initiatives through the promotion of forest maintenance and contributions to regional revitalization.

   

5. Future Developments

   We will enhance the platform's functions, including simplified simulations of forest carbon credit issuance volumes and AI-assisted support for creating sales pages. We will collaborate with partners such as local governments and financial institutions to expand the value provided by "Morikati," and also advance partnerships with consulting firms that support creators and buyers. In the future, we plan to expand the service to include the crediting of various shared benefits provided by forests, in addition to CO₂ absorption.

*1A scheme in which national government certifies amount of CO₂ emissions reduced through introduction of energy-saving equipment and use of renewable energy, as well as amount of CO₂ absorbed through appropriate forest management as credits

*2According to research conducted by Sumitomo Forestry and NTT Communications

*3Geographic Information System. It visualizes geographic information on a computer map (digital map) and uses it to derive information relationships, patterns, and trends in an easy-to-understand manner

*4Based on statistical data from the J-Credit Scheme Secretariat website: "Status of J-Credit Utilization (Invalidation and Retirement Volume)"

Overseas Case Example

Corporate needs for forest management are diverse. In recent years, a considerable number of companies have been conducting forest conservation and planting activities in developing countries to mitigate the impact on forests in overseas countries and regions where they engage in business activities, and to otherwise fulfill their corporate social responsibilities.

Drawing on its knowledge of forest management in Japan and overseas, Sumitomo Forestry implements its consulting business for the restoration of degraded forests in tropical regions, the rehabilitation of biodiversity, and for the protection and cultivation of forests that takes into account local communities.

Wildlife Conservation Forest Restoration and Regeneration Business

Sumitomo Forestry has been providing consulting services for the restoration of degraded forests in the Paliyan Wildlife Reserve (Gunung Kidul Regency, Special Region of Yogyakarta) in Indonesia, a project initiated by Mitsui Sumitomo Insurance Co., Ltd. in 2005.

During the first phase of activities to March 2011, around 300,000 trees were planted on 350 hectares of land. As a second phase of activities since April 2011, Sumitomo Forestry has been organizing agricultural societies to improve the livelihoods of the local people, providing support for an agricultural guidance program aimed at improving the livelihoods of local residents, the establishment of an inclusive organization to examine ways of managing protected forests, and an environmental education program in cooperation with local schools. As a third phase of activities since April 2016, we have been supporting additional planting in areas with few trees in protected forests as well as social forestry through local communities around protected forests. We also cultivated seedlings to be distributed as social forestry. As part of the Phase 4 activities starting in April 2021, we built upon the projects implemented in Phase 3 by continuing efforts to maintain conservation forests and further enhancing the achievements of the previous phase, such as support for agricultural cooperatives and the promotion of social forestry.
We are currently in Phase 5, during which we are building on past activities while also undertaking new initiatives aimed at enhancing the project's value in alignment with Nature Positive goals. These include: (1) establishing a transition model toward a more biodiverse ecosystem using native species, (2) developing a community-based forest management model, and (3) creating a karst ecosystem restoration model in anticipation of future Nature Positive requirements.

As part of this project, the Company has also opened the doors to its planted forest, seminar house and other related facilities in a positive effort to make information on its experiences and know-how on forest restoration available to the public.

Toward the Commercialization of "Tropical Peatland Consulting" and "High-Quality Carbon Credits Generation"

Sumitomo Forestry and IHI Corporation established NeXT FOREST in February 2023 to provide consulting services for appropriate management of tropical peatlands and to create high-quality carbon credits*¹ by appropriately evaluating value of natural capital, such as amount of carbon accumulated in forests and soils.

Sumitomo Forestry has developed management technologies and ground-based measurement data for forests in Japan and overseas, as well as tropical peatlands in Indonesia. IHI Corporation has developed technologies for the use of satellite data and weather observation and prediction technologies through its long experience in space development. Combining these strengths, Sumitomo Forestry and IHI have launched a consulting business to promote appropriate management technologies for tropical peatlands worldwide. We will also develop a method for precisely evaluating and monitoring amount of CO₂ absorbed by vast forests. In 2023, we developed the sPOTEKA, real-time weather observation device for tropical peatlands, and an initial AI model for groundwater level management. By introducing this technology, groundwater level management —which previously could only be carried out by experienced Sumitomo Forestry engineers —can now be performed based on objective data such as weather information. Going forward, by utilizing the sPOTEKA weather monitoring device and AI model to promote appropriate groundwater level management methods, we aim to contribute to reducing CO₂ emissions and preventing forest fires in tropical peatlands such as those in Indonesia.

In addition to the value of carbon absorption as a measure against climate change, we will also aim to create "High-Quality Carbon Credits" by adding value as "Natural Capital*²" such as biodiversity and water cycle conservation, as well as contribute to local communities.

*1A tradable Greenhouse Gases Emissions Reduction Certificate. Emissions are considered as credits when dispersed within enterprises or globally, and the trade unit is 1t-CO₂

*2For example, trees absorb CO₂ and provide clean water, and nature as a stock (capital) that provides valuable services