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Sustainability Report
Sumitomo Forestry Group's Sustainability Management
Corporate Philosophy and Sustainability Management

Sumitomo Forestry Group's
Sustainability Management

Corporate Philosophy and Sustainability Management

Corporate Philosophy and Sustainability Management
Participation and Sponsorship of Initiatives

Corporate Philosophy and Sustainability Management

Corporate Philosophy

The Sumitomo Forestry Group has been operating and engaging in sustainable management based on its Corporate Philosophy of "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".

Code of Conduct

All our efforts are based on Sumitomo Spirit, which places prime importance on fairness and integrity for the good of society. In addition, Sumitomo Forestry Group Code of Conduct has been established to emulate the Sumitomo business spirit that has been passed down since the company's establishment and to meet with global social needs such as international conventions and initiatives. The Sumitomo Forestry Group is seeking to disseminate and implement the Code of Conduct throughout its supply chain as a global standard, including service providers, business partners, and contractors, in addition to the Group and its partners, including suppliers and affiliates. To guarantee that Sumitomo Forestry Group Code of Conduct is widely known, Sumitomo Forestry Group Code of Conduct Guidebook is issued to each employee at the Group companies in Japan, translated into English and other languages, and implemented at abroad affiliates as well as through e-learning. This information has also been disclosed on our website to our business partners and other stakeholders. In addition, we monitor the practice and effectiveness of these principles from our Corporate Philosophy to Our Values and Code of Conduct, etc. at the Sustainability Committee convened four times a year.

Policies and Guidelines

We have also established policies such as "Environmental Policy", "Procurement Policy", and "Occupational Health and Safety Policy", and various guidelines based on our Corporate Philosophy and Code of Conduct. We formulated Mission TREEING 2030 in February 2022, a long-term vision that incorporates the ideal image of Sumitomo Forestry Group into a long-term business concept. The Group aspires to realize a sustainable society by addressing the Nine Material Issues identified and providing values to the global environment, people’s lives and society, and markets and economic activities, etc. We are dealing with ESG-related sustainability targets as a specific practice for the Mid-Term Management Plan.

Sumitomo Forestry Group's Sustainability Management

Theme	Nine Material Issues
Value for our plane	1	To enhance the value of forests and wood through sustainable forest management
	2	To realize carbon neutrality by leveraging forests and wood resources
	3	To realize a circular bioeconomy by leveraging forests and wood resources
Value for people and society	4	To provide comfortable and secure spaces for society at large
	5	To improve the livelihood of the local communities where we operate
	6	To create a vibrant environment for all workers
Value for the market economy	7	To create new markets with forests and wood
	8	To transform markets through DX and innovation
	9	To establish a robust business structure

Corporate Philosophy

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.

Our Value

We provide high-quality products and services that bring joy to our customers.
We create new businesses that lead to happiness for generations to come with a fresh perspective.
We promote a free and open-minded corporate culture that respects diversity.
We set and strive to achieve ambitious goals through ongoing effort.
We do work that wins us the trust of society with fair and honest conduct.

Sumitomo Forestry Group Code of Conduct

Purpose and scope of application

Based on its corporate philosophy and Our Value, the Sumitomo Forestry Group shall manage its operations, including the supply chain, in accordance with this Code of Conduct.

Fair and transparent corporate activities

Strict adherence to laws and regulations
We shall adhere to all domestic and overseas laws and company regulations and respect international norms of behavior.
Prevention of corruption
We shall have absolutely no involvement in corrupt practices, including bribery, embezzlement and money laundering.
Fair business transactions
We shall pursue fair business transactions and refrain from any involvement in cartels, bid rigging or other such activities.
Fair accounting procedures
We shall conduct fair accounting and tax practices based on accurate records.
Communication with stakeholders
In consideration of the interests of our shareholders and other stakeholders, we shall disclose necessary information in a timely and fair manner and promote dialogue.
Maintaining confidentiality
We shall ensure the protection of confidential information, both our own and that of third parties.
Information Security
We shall install appropriate information security measures to prevent information leaks and other breaches.
Relationships with companies we do business with
We shall build and maintain constructive relationships with the parties we do business with and refrain from inappropriate behaviors, such as the abuse of power.
Protection of intellectual property rights
In addition to protecting our own Company's intellectual property rights, we shall not infringe on the intellectual property rights of others.
Protection of personal information
We shall appropriately manage personal information, use it only for authorized purposes and prevent leaks.
Responsible advertising/promotional efforts
We shall engage in accurate and appropriate advertising and promotional efforts that do not cause misunderstanding or offense.
Healthy relationship with the government
We shall maintain a healthy and transparent relationship with the government that is in conformance with all laws.
Stance on organized crime
We shall have absolutely no involvement in organized crime.
Establishment of a whistleblowing mechanism
We shall establish a mechanism for people to report any suspicions of breaches to any laws or this Code of Conduct. By allowing reports to be made anonymously and strictly prohibiting retaliation against informants and other measures, we will actively promote its use.

Ethical conduct

Avoidance of a conflict of interest
We shall make a clear distinction between professional and personal matters and refrain from activities that may constitute a conflict of interest with the company.
Prohibition of misappropriation of company assets
We shall not use company funds or assets for personal purposes.
Prohibition of insider tradin
We shall take no part in insider trading, including being complicit with others.
Appropriate gift giving and entertainment
We shall neither accept nor offer gifts or entertainment that would be considered inappropriate according to socially accepted norms.
Prohibition of political or religious activities
During work hours, we shall not recruit or otherwise promote political, religious or other activities based on personal ideology.

A respectful, healthy workplace

Respect for human rights
According to internationally accepted human rights norms, we shall respect the human rights of all individuals, including women, children, indigenous people, minorities and vulnerable people.
Prohibition of discrimination and the promotion of diversity
We shall not discriminate on the basis of race, ethnicity, nationality, gender, religion, ideology, disability, sexual orientation, gender identity or other. In addition, we shall work to secure and promote diversity.
Prohibition of forced labor and child labor
We shall not tolerate forced labor or child labor in any form.
Freedom of association and collective bargaining rights
In accordance with laws, we shall secure workers' rights for freedom of association and collective bargaining.
Appropriate working hours and wages
In accordance with laws, we shall ensure that working hours and wages are appropriate.
Work/life bala
We shall secure the appropriate balance between work and individual commitments, such as caring for children and the elderly.
Occupational health and safety
We shall strive to maintain a safe and healthy work environment. In addition, we shall implement regular educational and training programs to prepare for disasters, accidents and other.
Human resources development
We shall strive to nurture human resources by providing skill enhancement opportunities, such as training seminars.
Prohibition of harassment
We shall not commit or tolerate acts of sexual harassment, power harassment, inhumane punishment or other.
Protection of privacy
We shall respect and protect the individual's right to privacy.

Business activities that respect society and the environment

Customer satisfaction and safety
We shall secure the safety and security of our customers and at the same time, sincerely engage with them and work to improve quality and customer satisfaction.
Coexistence with the environment
We shall strive to reduce the environmental impact of our products and services throughout their entire lifecycle, prevent global warming, recycle resources, prevent pollution and maintain biodiversity.
Contribution to the local community
We shall respect the local region's culture and customs and through dialogue, shall seek to contribute to their sustainable development.

Established July 1, 2017

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Participation and Sponsorship of Initiatives

United Nations Global Compact

In December 2008, Sumitomo Forestry formally signed the United Nations (UN) Global Compact to declare our support for its principles. The ten principles of the UN Global Compact are based on globally established agreements, including the Universal Declaration of Human Rights, and the International Labour Organization's (ILO) Declaration on Fundamental Principles and Rights at Work. They incorporate support of and respect for the protection of human rights and the eradication of forced and child labor.

The Ten Principles of the UN Global Compact

Human Rights
Principle 1: Businesses should support and respect the protection of internationally proclaimed human rights;and
Principle 2: make sure that they are not complicit in human rights abuses.

Labor
Principle 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining;
Principle 4: the elimination of all forms of forced and compulsory labour;
Principle 5: the effective abolition of child labor;and
Principle 6: the elimination of discrimination in respect of employment and occupation.

Environment
Principle 7: Businesses should support a precautionary approach to environmental challenges;
Principle 8: undertake initiatives to promote greater environmental responsibility;and
Principle 9: encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption
Principle 10: Businesses should work against corruption in all its forms, including extortion and bribery.

World Business Council for Sustainable Development (WBCSD)

A group of CEOs over 200 companies committed to sustainable development, are working together to contribute to the transition to a sustainable society.

Sumitomo Forestry joined the Forest Solution Group (FSG), an internal initiative of the WBCSD, in January 2019 and joined the WBCSD in January 2020. In addition, Sumitomo Forestry has participated in the development of the Forest Sector SDG Roadmap (July 2019 ) to achieve the Sustainable Development Goals (SDGs) as well as the Forest Sector Net Zero Roadmap (November 2021) for a low carbon economy. In January 2022, Sumitomo Forestry took part as the only Japanese company in formulating the Forest Sector Nature-Positive Roadmap.

We advance efforts to resolve social issues through business to contribute to the SDGs and build a sustainable society.

Task Force on Climate-related Financial Disclosures (TCFD)

The Task Force on Climate-related Financial Disclosures, formed at the direction of the Financial Stability Board (FSB) in April 2015, provides a framework for companies to voluntarily disclose information on climate-related risks and opportunities.

The Sumitomo Forestry Group recognizes the risks associated with climate change as serious risks, and announced its support to the TCFD in July 2018. Based on the TCFD recommendations scenario analysis was initiated the same year.

In addition, Sumitomo Forestry also participate in the TCFD Consortium, which discusses effective information disclosure by companies and initiatives to link disclosed information on climate change measures to financial institutions' appropriate investment decisions.

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Responding to TCFD

Science Based Targets (SBT)

The SBTi was established as a collaborative initiative of four organizations – the UN Global Compact, CDP, the World Resources Institute (WRI) and the World Wide Fund for Nature (WWF) in 2015, to promote science-based Greenhouse Gases Emission reduction targets to prevent temperature increases from pre-industrial times.

With respect to SBT Initiative, Sumitomo Forestry Group declared that it would formulate SBT, and established new Greenhouse Gases Emission reduction targets for the entire group in June 2017. The following 2℃ target was certified as an SBT in July 2018.

In addition, in order to accelerate the efforts of the Group, we raised the Greenhouse Gases Emission reduction target of Scope 1&2 in September 2021 from 21% reduction by 2030, to 54.6% reduction in line with the 1.5℃ target of the Paris Agreement to respond to the Glasgow COP26.

2℃ target (SBT approved)

Scope 1&2^*1：21% reduction of greenhouse gas emissions compared to 2017 (base year) by 2030.
Scope 3^*1：16% reduction of total greenhouse gas emissions from Category 1 and Category 11*2 compared to 2017 (base year) by 2030.

1.5℃ target (SBT approval pending)

Scope 1&2: 54.6% reduction of greenhouse gas emissions compared to 2017 (base year) by 2030.
Scope 3: 16% reduction of total greenhouse gas emissions from Category 1 and Category 11 compared to 2017 (base year) by 2030.

*1 Scope 1: Direct GHG emissions of a company, including emissions from fuel consumption. E.g. CO₂ emissions from the use of gasoline for company vehicles.
Scope 2: Indirect GHG emissions including CH₄ and N₂O from the generation of purchased electricity and heating. E.g. CO₂ emissions from the use of electricity by offices.
Scope 3: GHG emissions occurring in the supply chain. E.g. CO₂ emissions generated during the use of products sold.

*2 Category 1: Greenhouse gas emissions during collection, manufacture, and transport of purchased or acquired goods and services included in Scope 3.
Category 11: Greenhouse gas emissions during use of sold products and services included in Scope 3.

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Mitigation of Climate Change

RE100

RE100 is an international initiative run jointly by The Climate Group, a global joint environmental NGO, and the CDP.

Sumitomo Forestry joined the RE100 in March 2020, with the goal of utilizing 100% renewable energy in its operations. Our goal is to transition fuel to generate power to 100% renewable energy in Sumitomo Forestry Group power and power generation businesses by 2040.

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Aiming for 100% Renewable Energy and Joining the RE100

Participation and Sponsorship of Other Initiatives

Organization
United Nations Global Compact　 * Including Global Compact Network Japan and its subcommittees (ESG Subcommittee, HRDD Subcommittee, WEPs Subcommittee, Anti-Corruption Subcommittee, Supply Chain Subcommittee, Circular Economy Subcommittee)
WWF Japan
CDP Japan Club
TCFD Consortium
Network for Promotion of Decarbonized Management (Ministry of the Environment)
COOL CHOICE Campaign (Ministry of the Environment)
Japan Climate Initiative (JCI)
Keidanren Committee on Nature Conservation
Japan Business Initiative for Biodiversity (JBIB), and its Working Groups (Sustainable Supply Chains Working Group, Discovering & Sharing Green Values Working Group, and Impact Assessment of Natural Capital Working Group)
TNFD Forum
30 by 30 Alliance (Ministry of the Environment)
GX League (Ministry of Economy, Trade and Industry)

Name of Declaration	Date of endorsement/signature
Declaration of Biodiversity by Keidanren	December 2009 and December 2019
Nijumaru Declaration (Nijumaru Project)	May 2016
Japan Climate Action Summit Declaration (JCI)	October 2018
JCI Message Calling for Strengthened Climate Change Action (JCI)	February 2020
JCI Message Calling for a 2030 Target to Realize the Paris Agreement (JCI)	April 2021
Call to Action (Business for Nature)	September 2020
Open Letter from companies to G20 Leaders (We Mean Business Coalition)	September 2021
Race to Zero (Business Ambition for 1.5℃)	September 2021
JCI Message: Now is the time to accelerate renewable energy deployment	June 2022
COP15 Business Statement for Mandatory Assessment and Disclosure (Business for Nature)	October 2022

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Sumitomo Forestry Group's Sustainability Management
Corporate Philosophy and Sustainability Management