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, or the like, but also have various public benefits such as water source recharge, soil conservation, and sediment disaster prevention. Appropriate management of forests prevents global warming, conserve biodiversity, and provide essential resources for people's lives. However, if forests are not managed appropriately, such as by excessive logging and neglecting efforts in reforestation, sustainability of forests will be threatened, and 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. "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 our Corporate Philosophy, we intend to enhance value of forest resources by promoting further integration of business and ESG and by conducting sustainable forest management and use of wood.

Impact on Society and the Environment

Management of Material Issue 1 (FY2024)

In Mid-Term Sustainability Targets 2024, Material Issue 1 is divided into 9 evaluation indicators, and management is carried out by incorporating them into annual activity policies and measures of the management department. We also assess the impacts that the material issue has on society and the environment.

Utilization of Sustainable Forest Resources

The Sumitomo Forestry Group produces seedlings needed for reforestation after harvesting (clearcutting) in Japan. In fiscal 2024, actual number of planted trees was 1.77 million, which was less than plan number of 2.53 million. The main factors were the reduction in the planned operational area of company-owned forests due to the revocation of the forest management plan certification, and a decline in sales of seedlings for Fukushima Prefecture, resulting from increased Japanese larch production by other companies. We currently produce and sell seedlings at six cultivation centers. To improve productivity, we are implementing species-specific measures to address declining seedling yield rates caused by withering, poor growth, weather damage, and pest infestations. At the same time, to meet diverse customer needs, we are promoting the sale of high-quality, high value-added products such as male-sterile and low-pollen Japanese cedar, aiming to differentiate our offerings.

With regard to the amount of biofuel material used (such as wood chips and pellets), the exact figure was 2.000 million tons, 483,000 tons less than the planned 2.483 million tons.

The chip manufacturing subsidiaries manufacture and sell fuel chips required for biomass power generation. In fiscal 2024, the handling volume declined due in part to the temporary suspension of operations at some chip mills following occupational injury accidents. However, driven by rising domestic demand for biomass fuel, we were able to increase the handling volume from fiscal 2023 by expanding imports of biomass fuels such as PKS and pellets.

Continuously in 2025, promotion of utilization of domestic timbers, provision of seedlings, and reforestation through utilization of unused forest resource for biomass use are positively advanced, thereby contributing to sustainable forest management.

*1IT fuel material and non-FIT fuel material handled by Japan Bio Energy, Okhotsk Bio Energy, Sumitomo Forestry Wood Products, and Sumitomo Forestry's Timber and Building Materials Division are eligible. For Sumitomo Forestry Wood Products, the KPI has been changed to include only FIT fuel material, and from fiscal 2022, the KPI excludes non-FIT fuel material and adds log-derived FIT fuel material to the total

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

*3Sustainable Green Ecosystem Council (SGEC)

Biodiversity Conservation

We sell native species logs mainly to our detached housing business, to the greening business in urban spaces such as parks, office buildings, and factories, and to general customers such as garden landscapers and plant wholesalers.

In fiscal 2024, our company sold 502,000 native species logs, exceeding our plan of 500,000. On the other hand, the figure declined from 629,000 seedlings in fiscal 2023. In fiscal 2023, sales increased primarily due to a rise in orders for greening projects such as office buildings and parks in central urban areas. However, in fiscal 2024, the volume declined compared to the previous year as orders for large-scale projects began to level off. From fiscal 2025 onward, we will strengthen sales of biodiversity-conscious greening plants (Harmonic Plants*¹), as part of our consulting services aimed at enhancing corporate value by promoting the effective use of corporate green spaces. These services take into account harmony with the surrounding environment and landscape, as well as broader ecosystem conservation. In addition, as part of our efforts toward achieving a nature-positive society by 2030, we will move forward with concrete initiatives such as monitoring flora and fauna and evaluating water balances to help quantify the value of natural capital.

*1A greening plant proposal method developed by Sumitomo Forestry Landscaping with consideration for biodiversity. For details, please refer to the related information