Material Issue 1

Related SDGs

Basic Policy

As global environmental problems, such as climate change, resource depletion, and biodiversity loss, become more serious, expectations for wood and forests that produce natural resources and biological resources to solve these problems are rising. Forests not only have functions of absorbing and fixing CO₂, conserving biodiversity, and producing wood building materials, fuel materials and others, but also have various public benefits such as water source recharge, soil conservation, and sediment disaster prevention. Appropriate management of forests helps prevent global warming, conserve biodiversity and provide essential resources for people's lives. However, if forests are not managed appropriately, and excessive logging is allowed or reforestation efforts are neglected, the sustainability of forests will be threatened, and the global environment and people's lives will be adversely affected.

Sumitomo Forestry Group has developed various businesses centered on wood, such as forestry business, timber and building material distribution and manufacturing business, housing business, global construction and real estate business, and renewable energy business. In our Corporate Philosophy, we state, "The Sumitomo Forestry Group utilizes wood as a healthy and environmentally friendly natural resource to provide a diverse range of lifestyle-related services that contribute to the realization of a sustainable and prosperous society. All our efforts are based on Sumitomo’s Business Spirit, which places prime importance on fairness and integrity for the good of society." In order to realize this philosophy, we intend to enhance the value of forest resources by promoting further integration of business operations and ESG and by managing forests and use wood in a sustainable manner.

Impact on Society and the Environment

Management of Material Issue 1 (FY2025)

In the Mid-term Sustainability Targets Phase 2 (2025 to 2027), Material Issue 1 is roughly divided into the following two categories and managed through the annual action policies and measures adopted by the department in charge.

Utilization of Sustainable Forest Resources

To further enforce sustainable forest management, we proactively obtain and retain international forest certifications for our domestic and overseas forests. In fiscal 2025, the certified forest area was 317,891 hectares against a target of 346,152 hectares, falling short of the goal. Meanwhile, we have obtained Sustainable Green Ecosystem Council (SGEC) certification for 100% of our forests in Japan, and the ratio of environmental conservation forests among our forests was 35.3%, exceeding the target of 30%.

We are working on the Wood Cycle, a form of circular forest management based on the cycle of cutting down trees, using them, planting new trees, and growing them. In fiscal 2025, we supplied 1.424 million seedlings, but were unable to attain the predefined seedling supply target. This was due to the impact of needle blight at the tree nursery in Gifu, a shortage in the number of seedlings transplanted to the nursery in Gunma, and a decrease in the number of orders from a large customer for seedlings grown in the nursery in Minami-Aizu, which resulted in stagnancy in sales. We will work to increase the seedling yield while taking measures against withering and poor growth by species. We will also take countermeasures against weather and pest damage to boost the seedling yield. This will involve providing the staff with highly advanced training on pathology and agricultural chemicals, enhancing collaboration with the Tsukuba Research Institute, and obtaining the latest knowledge in the field.

Our domestic timber transaction volume was 2,395,000 m³, which was below the predefined target. However, we improved year on year, and aim to boost the transaction volume to 3,553,000 m³ by fiscal 2027.

In fiscal 2025, we increased our reforestation area year on year to 496 hectares, although we were unable to achieve the target of 600 hectares. We will further expand the reforestation area by securing reforestation partners while examining the feasibility of new area development.

*1FIT fuel and non-FIT fuel materials handled by Japan Bio Energy, Okhotsk Bio Energy, Sumitomo Forestry Wood Products, and Sumitomo Forestry's Timber and Building Materials Division are included in the calculation target. For Sumitomo Forestry Wood Products, the KPI was changed to include only FIT fuel materials. Accordingly, exceptionally for the company, non-FIT fuel materials have been excluded from the calculation target and instead log-derived FIT fuel materials have been additionally included in the target since fiscal 2022.

*2“Sustainable wood” is defined as certified wood and pre-certified timber, wood from planted forests, wood from natural forests where forestry management and distribution can be assessed as sustainable (excluding wood from conversion forests), and recycled timber.

*3Sustainable Green Ecosystem Council (SGEC)

Responding to Nature-related Issues

We deem it important to conserve biodiversity in our forestry business. Accordingly, we monitor flora and fauna in high conservation value forest (HCVF) areas and publicly disclose the results. We also quantitatively evaluate ecosystem services through water balance assessments in Japan and elsewhere, and have already achieved the predefined numerical targets. In fiscal 2027, as we move toward Mid-term Sustainability Targets Phase 3 (2028 to 2030), we will set more specific numerical targets for our nature positive activities and enhance measures to achieve them.

In the housing business, we are also taking biodiversity-friendly measures. We plant trees in North America, but were unable to achieve the targets for planting native trees in housing lots to be delivered to customers or for activities through forest foundations. However, we achieved a 100% implementation rate for “Xeriscaping” (landscaping for the effective use of water resources) in our subdivisions. In Japan, we have been promoting the sales of “harmonic plants”*1 but did not reach the sales target due to severe heat in summer, which caused a substantial drop in the sales of the plants.

We are seeking to make sustainable, effective use of forest resources while conserving local ecosystems. That’s why we will enhance a range of measures including obtaining forest certification for more forest areas in Japan and elsewhere, promoting reforestation, and encouraging residential greening in consideration of biodiversity. In particular, we will contribute to the revitalization of domestic forestry and to the sustainable use of forests through promoting domestic timber use and expanding seedling supply.

*1Proposal on greening in consideration of biodiversity made by Sumitomo Forestry Landscaping. For details, please refer to the related information.

*1Abbreviation for high conservation value forests

*2A garden landscaping method designed to conserve water through appropriate water use