Basic Policy

With growing interest in the SDGs and other sustainable initiatives, Sumitomo Forestry Group is expanding its forestry business in consideration of local communities and the environment. The Group contributes to a stable supply of wood and regional economic development while maintaining the wider environment through management of "Economic Forests" which are planted forests for wood production, the preservation of "Protected Forests", which are responsible for ecosystem conservation and CO₂ absorption and fixation, and coexistence with surrounding "Local Communities".

* Subsidiary of Sumitomo Forestry Group from December 2022

Forest Management Overseas

The Sumitomo Forestry Group is expanding three approaches to conducting forestry business; industrial tree plantation, environmental reforestation, and social forestry. The purpose of industrial tree plantation is to produce wood and increase the supply of afforestation wood (raw material). By zoning its managed land appropriately, the Group aims to achieve both the conservation of valuable ecosystems and the development of local communities through forestry business.

In addition, the Group also conducts environmental reforestation, planting trees for environmental conservation. It aims to contribute to environmental conservation through the expansion of forested areas and the fulfillment of the ecosystem services function of forests, by actively planting trees on land where natural regeneration would otherwise be difficult. The Group has also been engaged in "social forestry" which shares the economic benefits of afforestation with local communities while enlisting the cooperation of local residents.

Distribution and Area of Overseas Planted Forests (as of December 31, 2022)

Forest Certification and Sustainable Forestry Business

Of an approximately 31,000-hectare planted forest owned and managed by Papua New Guinea‘s Open Bay Timber (OBT), about two-thirds, or 20,000 hectares, has received FSC^® forest certification*. After harvest, the company ensures afforestation is carried out, and in fiscal 2022, 415 hectares of trees were planted.

The entire area of approximately 37,000 hectares managed by Tasman Pine Forests Ltd. (TPF) in New Zealand has been FSC^®-FM certified. In fiscal 2022, TPF implemented 839 hectares of afforestation.

We will continue to practice sustainable forest management that lays basis for communities and environment to function in harmony.

* OBT: CW certification FSC-C019117, FM certification FSC-C103694, TPF: FM certification FSC-C132002

Forestry Business in West Kalimantan, Indonesia (Industrial Tree Plantation)

Sumitomo Forestry has been undertaking large-scale forestry business operations at Mayankara Tanaman Industri (MTI) and Wana Subul Lestari (WSL) since 2010, after receiving "Permission to Utilize Industrial Plantation Forest Products*¹" from Indonesia's Ministry of Environment and Forestry.
In addition, since 2020, we have started a reforestation project at Kubu Mulia Forestry (KMF), which is close to WSL and MTI.

Background

The project covers areas in which forest degradation has advanced due to commercial harvesting from the 1960s to the mid-1990s in addition to repeated illegal logging and slash-and-burn farming practices.
In these types of lands, we not only engage in economic forest management but also take responsibility to protect forests with high conservation value. We also believe this business is very significant in providing an economic infrastructure to local communities from the perspective of ESG.

The land used in these operations locates in tropical peatlands which play an extremely vital role in the carbon and water cycle on a global scale.

Sustainable Forest Management

We launched these operations by conducting topographical surveys, and boring tests to understand the peat distribution, over five years. We also entered into an advisory agreement with the International Finance Corporation (IFC), the World Bank's group institute, in 2012. In accordance with the concept of High Conservation Values Forests (HCVF)*², Sumitomo Forestry conducted assessments on its operational properties with the IFC and investigated whether the property use plan is implemented as stated and adequate consideration is made for biodiversity and livelihood of local residents. The reports of the investigation results were audited by a third-party organization, and valuable comments made by stakeholders on the report were adapted in the business plan. Our Group also held public hearings in 2013 where stakeholders such as local residents, companies in the communities, academics, NGOs, and government officers were invited to share the results of the investigations.

Our employees' unified and efforts have succeeded in building a unique peatland management model that stabilizes the underground water level throughout one year. Stabilization of the underground water level reduces greenhouse gas emissions and forest fires, while maintaining proper hydrological cycles, thereby making a significant contribution to climate change mitigation. Our peatland management model has been highly praised worldwide.
These and surrounding areas also isolate ecosystems where rare plant and animal species live in an island-like shape. To prevent this type of isolation, Sumitomo Forestry Group works together with neighboring local business proprietors to preserve the entirety of the ecosystem.

Sumitomo Forestry Group captures tropical peatlands and the ecosystems living throughout the peatlands as one type of important natural capital. In the future, businesses achieving a balance between industrial tree plantations and environmental protection will enhance value as natural capital and help resolve global issues.

*1 Issued by the Indonesian government, this is a business license to engage in industrial tree plantation operations in Indonesia.

*2 In considering the value of forests, it goes beyond their value as absorbers of greenhouse gases, outlining methods of extracting each one of the many aspects of value forests contain. These aspects include their value as habitats of rare, endangered animal species, as water resources, as providers of essential natural services such as soil erosion control, and as land that has an intimate relationship with the lifestyles and cultures of local communities.

Forest Fire Prevention Measures at Each Work Site

Indonesia

Conventionally, reforestation in peatlands* was done by managing the water level with drainage to push water out of the soil. However, while drainage-type water level management works well for plants, it has dried out the land, decomposing organic matter in peat soils and releasing greenhouse gases, as well as leading to large peat fires that are difficult to extinguish.

WSL and MTI, on the other hand, manage stored water levels based on precise surveys and peat studies. This maintains a water level that allows plants to grow and also prevents the land from drying out.

Real-time measurements of peat thickness have shown that peat thickness has not decreased in the long term as a result of previous efforts. In other words, it reduces peat-related greenhouse gas emissions while also helping to avoid fires.

The Sumitomo Forestry Group has also continued to develop the infrastructure technology necessary to manage peatlands since launching the business. The concept is simple, low cost and easy maintainability, which aims to establish management technology that can be broadly expanded in rainforest peatlands throughout Indonesia and the rest of the world. As an alternative means to carry out massive amounts of surveys, we are striving to develop technology using drones and AI.

Regions where peatlands thrive, such as the Amazon, the Congo Basin, and Indonesia, have the most rainfall throughout the world. The soil of peatlands is made up of 80% to 90% water. Tropical forests and peatlands act as a pipeline dispersing water into the air from a large amount of rainwater accumulated in the ground during the monsoon season through evaporation. The tremendous evaporation from these rainforests and peatlands has the potential to act as a necessary water cycle function at global scale. The collapse of the world's water cycle will result in abnormal weather and adversely impact agriculture, which will cause even greater food shortage issues. Sumitomo Forestry advocated the importance of proper tropical forest and peatland management because these regions act as the heart of the Earth circulating water throughout the planet at our presentation at The Seventh Tokyo International Conference on African Development (TICAD7) held in Yokohama in August 2019.

* Characteristics of the peat soil found in the peat swamps is known to emit enormous amounts of greenhouse gases, typically carbon dioxide and methane gas, if the soil was inappropriately exploited. Owing to joint researches by Japanese and Indonesian academic institutes, our operations take into consideration minimizing greenhouse gas emissions that accrue as the peaty soil dissolves during exploitations.

Papua New Guinea

Open Bay Timber (OBT) keeps track of the fire hazard levels by analyzing temperature, rainfall, and humidity every day, as well as by preparing firebreaks and organizing forest residues to prevent the spread of fire on the planted forest. In areas with a high risk of fire, patrols of work sites are increased from once to twice a day to meticulously check for signs of fire. In 2022, there was one incident caused by a fire that jumped from an adjacent property, but countermeasures were strengthened by conducting educational activities for local residents regarding fire handling. We will work together with the community to reduce the number of fires to zero.

New Zealand

TPF is working with Fire and Emergency New Zealand (FENZ), local municipalities, neighboring forestry associations and other relevant agencies to continuously conduct awareness-raising activities about fire in the local community in addition to taking other proactive fire prevention measures. Specific measures include setting up a Fire Index bulletin board that shows the fire risk level, distribution of leaflets to evoke caution in the local community, the creation of a system to always have fire-fighting helicopters on standby when the risk of fire is high, stockpiling of fire extinguishing agent, appropriate placement and management of water ponds, focused pruning of wood edges to prevent the spread of fires, fire-fighting equipment acquisition and training, conducting patrols, and preparation of forest roads. On days with a significantly high risk of fire, we also implement a wide range of regulations from time restrictions for harvesting work to rules on when people have recreational access to the mountains. We have had no cases of forest fires under our management in 2022 thanks to these initiatives.