Sustainable Forest Management

Forest Management Overseas

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".

FY2021 Overseas Managed afforestation Area
(Unit: ha)

Country Name of Forestry Business Managed Area Operations Area afforestation Area in FY2021 Logged Area in FY2021
Indonesia PT. Mayangkara Tanaman Industri (MTI) 104,664 10,534 2,238 2,815
PT. Wana Subur Lestari (WSL) 40,750 11,451 1,820 2,311
PT. Kubu Mulia Forestri (KMF) 9,270 5,688 0* 0*
PT. Kutai Timber Indonesia (KTI) 6,384 6,384 1,295 235
Subtotal 161,068 34,057 5,353 5,361
Papua New Guinea Open Bay Timber Ltd. (OBT) 31,260 11,618 370 250
New Zealand Tasman Pine Forests Ltd. (TPF) 36,599 27,922 840 753
Total 228,927 73,597 6,563 6,364

* Harvesting and afforestation to begin in the first half of 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 timber (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, 2021)

Distribution and Area of Overseas Plantation Forests (as of December 31, 2021)

Sustainable Forestry Business by Leveraging Forestry Certification System

Of an approximately 30,000-hectare planted forest owned and managed by Open Bay Timber (OBT), about two-thirds, or 20,000 hectares, has received FSC® forest certification*. Under the goal to plant on the 400-hectare land a year, OBT practices sustainable forest management that lays basis for communities and environment to function in harmony. The area planted in fiscal 2021 was 370 hectares.

The entire area of approximately 37,000 hectares managed by Tasman Pine Forests Ltd. (TPF) has been FSC®-FM certified. In fiscal 2021, they planted approximately 840 hectares of forest, carrying out sustainable forest management in harmony with the local community and environment.

* 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.

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 and sustainable forestry business 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 exists in tropical peatland which plays an extremely vital role in the carbon and water cycle on a global scale.

Sustainable Forest Management

We launched these operations by conducting detailed typographical surveys and boring tests over five years to understand the peat distribution and depth. 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. Obtained the PHPL certification, formally called Sertifikat Pengelolaan Hutan Produksi Lestari issued by Ministry of Forestry (Departemen Kehutanan) on sustainable forest management.

Our employees unified and consistent efforts since the start of business have succeeded in building a unique peatland management model that stabilizes the underground water level throughout the year. As a result, it has made great contributions to the measure against climate change on a global scale by mitigating greenhouse gas emissions and forest fires as well as sustaining the proper water cycle. Our management model has been highly praised as a successful example of peatland management 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 works together with neighboring local business proprietors to preserve the entirety of the ecosystem.

To promote integrated business operations and environmental conservation initiatives with WSL and MTI, Sumitomo Forestry acquired planted forests adjacent to WSL and MTI and established Kubu Mulia Forestry (KMF), a wholly owned subsidiary of Sumitomo Forestry, in fiscal 2020.

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.

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History of Enhancing the Value of Natural Capital

2017
  • Entered into a Memorandum of Understanding (MOU) with the Indonesian Ministry of Environment and Forestry for a pilot project that aims to examine unique water level management technologies to sustainably manage peatlands and establish peatland management models in Indonesia. The term of this project is set for five years. The project is being conducted with the cooperation of the Ministry of the Environment and Forestry as well as the Peatland Restoration Agency.
  • The peatland management technology from this project was introduced as an example of excellent, leading-edge peat management at the November 2017 United Nations Climate Change Conference (COP23) held in Bonn, Germany.
2018
  • In 2018, the Group formulated a grievance mechanism with the help of the IFC. Together with the University of Indonesia, we also conducted a social survey of operational and surrounding areas on a three-year plan.
  • We reported on peatland management technology at the December 2018 United Nations Climate Change Conference (COP24) held in Poland.
2019
  • We announced initiatives related to WSL peatland management and forestry business at The Seventh Tokyo International Conference on African Development (TICAD7) held in Yokohama in August. We introduced that tropical peatland forest not only acts as the lungs of the Earth but also a heart that circulates water around the globe.
  • We also announced a peatland management system that prevents fires at a side event of the United Nations Climate Action Summit held in New York in September.
  • At the United Nations Climate Change Conference (COP25) held in Madrid in December, we presented water management technologies and the preservation of rare species.
2020
  • The Global Landscape Forum held by the United Nations Environment Programme introduced the Sumitomo Forestry peatland management concept to not only address the issue of carbon emissions in peatland management but also consider forest, agricultural and food shortage issues as a main theme.
  • We contributed essays about the expertise in peatland management which we have cultivated thus far and took charge of organizing the technical peatland management guidebook published by the International Peat Society (April 2021).
  • Sumitomo Forestry also launched a counsel together with the IDH - The Sustainable Trade Initiative, an international organization, to improve assessment methods of natural capital and enhance added value.
2021
  • We gave presentations at the Japan Pavilion, Indonesia Pavilion, and Peat Pavilion at the 26th Conference of the Parties (COP26) of the United Nations Framework Convention on Climate Change (UNFCCC) in Glasgow in November, introducing tropical peatland management technologies, as well as the natural capital value of tropical peatlands and their evaluation and monitoring technologies.

Forest Fire Prevention Measures at Each Work Site

Indonesia

Wana Subur Lestari (WSL) and Mayangkara Tanaman Industri (MTI) Conventionally, reforestation in peatlands* was done by managing the water level with drainage to push water out of the soil. This meant digging many drainage routes to rivers in order to dry the land for planting. However, drying-out land results in the decomposition of organic matter in the peat soil and acts to heighten global warming due to the emission of greenhouse gases. Fire in dried peat, once ignited, spreads even underground and is very difficult to extinguish, creating the risk of large-scale peat fires.

To address this issue, WSL and MTI manage the storage water level. These companies first take detailed measurements and peatland survey necessary for zoning and infrastructure construction plans. Using the measurement results, WSL and MTI then (1) zone out protected and riparian forest with rare and highly valuable water storage properties, (2) set buffer zones to prevent any impact of afforestation zones on protected forest and (3) determine afforestation zones.

The success of our work so far since starting real-time measurements of the peat thickness has clearly shown sustained long-term peat thickness even while repeatedly shrinking in the short term from days to weeks and months. 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 when launching Sumitomo Forestry businesses, we are striving to develop technology to collect and analyze data using drones and AI (Artificial Intelligence).

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 tropical forests and peatlands has the potential to act as a necessary water cycle function not only locally but at a continental and 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 recognized this fact in its peatland operations from an early stage and 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.

* Definition of peatlands: 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 takes consideration to minimize greenhouse gas emissions that accrue as the peaty soil dissolves during exploitations.

Landscape management of forestry business designed based on detailed data

Landscape management of forestry business designed based on detailed data

Landscape management of forestry business designed based on detailed data

Monitoring the water level in peatlands

Monitoring the water level in peatlands

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. We have had no cases of forest fires in 2021 thanks to these initiatives.

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.