Mid-Term Sustainability Targets as part of the Mid-Term Management Plan

Material Issue 1
 To enhance the value of forests and wood through sustainable forest management

Material Issue 1

Material Issue 1
 To enhance the value of forests and wood through sustainable forest management

Nurturing forests to enhance and harness the value of wood and other forest resources.

Related SDGs

13.CLIMATE ACTION 15.LIFE ON LAND

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

Material Issue 1 Impact (Opportunities) Impact (Risks)
To enhance the value of forests and wood through sustainable forest management

Nurturing forests to enhance and harness the value of wood and other forest resources.
  1. Contribution to measures against global warming through CO2 fixation
  2. Contributing to the protection of rare species and other biodiversity conservation
  3. Contribution to revitalization of the forestry business and local communities by promoting forest sustainability
  4. Securing seedlings for reforestation and promoting circular use of forest resources from harvesting to replanting
  5. Contribution to greater biomass power generation (renewable energy supply) capacity in Japan
  6. Contribution to revitalization of the forestry business and local communities by utilizing Japanese timber
  7. Enhancing standardization, awareness, and added value of sustainable wood, products and certified wood
  1. Intensification of competition due to entry of different industries into industries that utilize "forests" and "trees"
  2. Decrease in sustainable forests due to overharvesting decrease in reforestation rate, etc. Soil erosion, water pollution, and biodiversity loss

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.

Results

Ratings in the table below
Achieved: ◯ Not achieved but improved from previous year: △ Not achieved and declined compared to previous year: ✕

Indicators for Evaluation Managing department FY2024
target
FY2024
result
FY2024
value
FY2025
target
Domestic and overseas certified forest area (ha) Environment and Resources Division 242,493 227,950 346,152
Area of forest plantation with in-house produced seedlings
Domestic forest (ha)
1,012 708
Seedlings supplied
Domestic forest (unit: 10 Thousand)
253 177 168
Amount of biofuel material used
(such as wood chips and pellets)*1(t)
Environment and Resources Division Timber and Building Materials Division 2,482,964 1,999,602
Percentage of sustainable wood used as primary building material*2(%) Housing Division 100 100
Maintaining of SGEC certified area*3(%) Environment and Resources Division 100 100 100

*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

Results

Ratings in the table below
Achieved: ◯ Not achieved but improved from previous year: △ Not achieved and declined compared to previous year: ✕

Indicators for Evaluation Managing department FY2024
target
FY2024
result
FY2024
value
FY2025
target
Sales of native species logs (unit: thousand trees) Housing Division 500 502
Securing ratio of conservation forests in company-owned forests (%) Environment and Resources Division 30 or more 30 or more
Establishment of evaluation method for biodiversity conservation Establishment of evaluation method Information collection

Mid-Term Sustainability Targets Phase 2 (2025–2027)

Management of Material Issue 1

In "Mid-Term Sustainability Targets Phase 2 (2025–2027)," Material Issue 1 is divided into two main categories, and management is carried out by incorporating them into annual activity policies and measures of the management department.

Utilization of Sustainable Forest Resources

Indicators for Evaluation Managing department FY2024
result
FY2025
target
FY2026
target
FY2027
target
Domestic and overseas certified forest area (ha) Environment and Resources Division 227,950 346,152 420,152 451,152
Maintenance Rate of Forest Certification Area (Domestic and Overseas) (%) Maintaining of SGEC certified area 100 100 100 100
Securing ratio of conservation forests in company-owned forest 30 or more 30 or more 30 or more
Seedlings supplied Domestic forest (unit: 10 Thousand) 177 168 185 207
Volume of Domestic Timber Handled (1,000 m3) Timber and Building Materials Division 2,798 3,205 3,553
Reforestation Projects (ha) 600 800 1,000

Responding to Nature-Related Issues

Indicators for Evaluation Managing department FY2024
result
FY2025
target
FY2026
target
FY2027
target
Implementation and Improvement of Ecosystem Monitoring Monitoring of Flora and Fauna in HCVF*1 Areas
(Domestic Company-Owned Forests and Overseas Afforestation Areas)
Environment and Resources Division Implementation, Reporting, and Disclosure Improvement and Enhancement Setting Numerical Targets
Quantitative Evaluation of Ecosystem Services
(Water Balance Assessment in Domestic and Overseas Areas)
Planning and Implementation Implementation Implementation
Nature / Flora Number of Native Trees Planted in Delivered Residential Lots (Units) (North America) Global Construction and Real Estate Division 4,200 4,300 4,700
Number of Trees Planted through Forest Foundations (Units) (North America) 98,000 113,000 138,000
Nature / Water Implementation Rate of Xeriscaping*2 in Subdivisions (%) 100 100 100
Number of Environmental Certifications Obtained (Asia) (Cases) 1 1 2
Number of Harmonic Plants Sold (Units)
* Target Trees: Tall Trees, Medium Trees, Shrubs

Housing Division 1,400,000 1,500,000 1,600,000

*1Abbreviation for High Conservation Value Forests. High conservation value forests

*2A garden landscaping method that conserves water while maintaining the landscape through appropriate water use

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