Supply Chain Management

Supply Chain Management

Basic Policy

The Sumitomo Forestry Group recognizes its duty to ensuring human rights and addressing environmental issues in the supply chain of its businesses. We are contributing to the realization of a sustainable society throughout the entire supply chain by promoting the standardization of certified wood in the market.
For procurement, our Wood Procurement Philosophy and Policy was revised and renamed to the Sumitomo Forestry Group Procurement Policy in 2015. In 2017, we also drew up the Sumitomo Forestry Group Code of Conduct, which was expanded to include the supply chain. Through this and other measures, we have reinforced our Group-wide efforts.

Sumitomo Forestry Group Procurement Policy

The Sumitomo Forestry Group has been committed to responsible wood procurement activities by establishing Wood Procurement Standard and Wood Procurement Philosophy and Policy in 2005 and 2007 respectively. In 2015, with the Sumitomo Forestry Group Procurement Policy, we expanded our scope beyond wood to include a wide range of other procured products, such as metals, ceramics, resin and other building materials, and based on this policy, are engaged in procurement activities that take into consideration the economy, society and environment.

Sumitomo Forestry Group Procurement Policy

The Sumitomo Forestry Group utilizes wood as a renewable natural resource in its business operations. To contribute to a sustainable society, we are committed to procurement activities that take into account economic, environmental and societal interests and comply with the following policy:

  1. Procurement based on legal and highly reliable supply chains
    Our procurement activities will strictly adhere to all relevant laws, regulations and societal norms, and be built on mutual understanding and trust with our business partners. Furthermore, to provide the highest quality products and services, we will work with our business partners to ensure that our procurement takes place within a sound and fair supply chain.
  2. Procurement based on fair opportunity and competition
    We will provide all our suppliers, both Japanese and foreign, a fair opportunity for business. Selection of our business partners will be based on a comprehensive evaluation of the company's reliability and technological expertise, the product's quality, economic efficiency, delivery date and environmental performance, and the company's CSR (Corporate Social Responsibility) initiatives, such as advocacy of basic human and worker rights, anticorruption efforts and so on.
  3. Procurement of sustainable timber and wood products
    Wood is a renewable natural resource. To actively utilize it, we will work with our business partners on the following initiatives related to the procurement of timber and wood products:
    • Procure timber from forests that are sustainably managed
    • Work to improve the traceability of procured timber and wood products
    • Strictly adhere to the laws and regulations of the countries and regions we log in, protect biodiversity and forests with high conservation value, and respect the cultures, traditions and economies of regions that coexist in harmony with forests.
  4. Communication
    To ensure the transparency of our procurement efforts, we will disclose information appropriately. In addition, we will communicate with our stakeholders to further improve our procurement activities.

President and Representative Director
Toshiro Mitsuyoshi

Green Procurement Guidelines (extract)

Evaluation Items

1. Corporate activity assessment (evaluation of sustainability initiatives)

  • Environmental aspects
    • Formulate policies related to environmental symbiosis.
    • Set up departments to promote environmental symbiosis and appoint managers.
    • Raise awareness of policies related to environmental symbiosis among employees.
    • Confirm understanding of and compliance with environmental laws and regulations related to business operations.
    • Promote proper use of water resources and measure the amount of use.
    • Store, handle and process any hazardous chemical substances (including specified chemical substances, radioactive materials, and biological substances) used by the Group in accordance with a management manual, laws, and any other relevant regulations.
    • Properly manage and process waste in accordance with laws and regulations.
    • Promote proper use of energy and measure greenhouse gas emissions.
    • Formulate greenhouse gas reduction plans.
    • Make every effort to protect biodiversity and the ecosystem.
  • Social aspects
    • Overall Corporate Social Responsibility (CSR)
    • Formulate policies and standards for Corporate Social Responsibility (CSR) initiatives.
    • Establish departments to promote Corporate Social Responsibility (CSR) initiatives and appoint managers.
    • Conduct employee education and training about Corporate Social Responsibility (CSR) policies and standards.
    • Human Rights
    • Formulate policies and standards related to human rights.
    • Establish departments to promote human rights initiatives and appoint managers.
    • Conduct employee education and training about human rights policies.
    • Prohibit all forms of harassment and raise internal awareness.
    • Prohibit forced labor and child labor and raise internal awareness.
    • Properly manage employee work hours regulated by law.
    • Pay adequate wages to employees according to the minimum wages established by law.
    • Establish a system for employees to report any harassment, physical punishment or other abuse anonymously.
    • Prohibit all discrimination whether based on race, age, religion, nationality or gender and fully raise internal awareness.
    • Ensure employees have freedom of association and collective bargaining rights in accordance with laws and regulations.
    • Provide human resource development opportunities fairly to all employees, such as occupational skill development and training.
    • Occupational health and safety
    • Formulate policies and standards related to occupational health and safety.
    • Establish departments to promote occupational health and safety initiatives and appoint managers.
    • Conduct employee education and training about occupational health and safety policies.
    • Strive to maintain a safe and healthy work environment.
    • Properly manage the physical and mental health of employees as well as occupational safety, such as reducing occupational accidents and diseases.
    • Put in place measures to ensure employee safety in anticipation of natural disasters and other emergency situations and fully raise internal awareness.
    • Ethic
    • Prohibit bribery, embezzlement and other acts of corruption and fully raise internal awareness.
    • Raise internal awareness to protect intellectual property in accordance with laws, regulations and international rules.
    • Put in place whistleblowing mechanisms for employees and suppliers to report any legal violations.
    • Formulate responsible procurement policies.
    • Prohibit abuse of superior bargaining positions, encourage fair and free competition, and fully raise internal awareness.
    • Never tolerate influence from anti-social forces with a resolute attitude.
    • Information security
    • Collect and use personal information only within the scope agreed upon in advance and properly manage said personal information to prevent any informational leaks or unauthorized use.
    • Use the utmost caution to properly manage the handling of confidential information received from third-parties.
    • Put in place information security measures on computers and networks.
    • Product safety
    • Strive to ensure and improve quality and safety when supplying products and services to markets.
    • Supply chain
    • Require procurement suppliers to emphasize initiatives related to human rights and other social aspects as well as environmental aspects.
    • Social contributions
    • Build good relationships with and promote activities to contribute to local communities.

2. Product assessment

  • Common items
    • Requirements
    • Prohibit use of chemical substances restricted in Attachment 1, “Sumitomo Forestry Restricted Chemical Substance List.”
    • Never leach hazardous materials during construction or use.
    • Never produce chemical or other hazardous fine particles during construction or use.
    • Never produce sulfur oxide or other hazardous gases during incineration.
    • Initiatives
    • Prohibit use of vinyl chloride and styrene foam in packaging materials.
    • Limit use of packaging material to the bare minimum (strive to reduce packaging materials).
    • Incorporate measures to sort by material in any composite products for easy waste disposal.
    • Make component and material replacements easy to extend the lifespan of assembled products.
    • Clarify maintenance programs (procedures and periods for inspections, repairs and part replacements).
    • Make reuse or recycling after use possible.
    • Make reuse or recycling of package materials possible.
    • Use processes and materials to lengthen the lifespan of products.

Promoting Certified Timber

The Sumitomo Forestry Group works with its procurement partners to build a reliable supply chain and to procure sustainable wood. As one index to confirm whether wood was obtained from forests with sustainable forest management, we support and utilize the Forest Certification System, a third-party certification system.

Furthermore, the Company itself receives the forest certification and we believe we can contribute to the system's wider use by providing the market and consumers certified timber.

The Sumitomo Forestry Group has obtained FM certification for 228,000 hectares and COC certification for 13 organizations.

Major Forest Certification Systems

FSC (Forest Stewardship Council®) (FSC-C113957)

FSC is an organization founded in 1993 led by World Wide Fund for Nature (WWF) and consists of representatives from environmental organizations, forest workers, wood users and traders, human rights organizations, and local forestry unions. It is considered a pioneer amongst forest certification system operators.

Adhering to the 10 principles and 70 regulations encompassing environmental impact, local society, and indigenous people's rights, FSC-accredited certification bodies will undertake reviews. Recently, country or regional standards as well as the review procedure for small-scale forest owners have been introduced to provide greater support for diverse forests and owners.

PEFC (Programme for the Endorsement of Forest Certification)

Forestry organizations of 11 European countries established PEFC together in 1999 as an organization to mutually authenticate the system of each country. PEFC does not directly authenticate an individual forest, but when the PEFC's required conditions that adapted “the inter-governmental process” implemented by 149 countries is met, the country's own forest certification system is authenticated by PEFC. Joined by non-European countries in 2003, the organization originally called Pan European Forest Certification Schemes changed its name to Program for the Endorsement of Forest Certification. Since then, PEFC has shown drastic growth, and to date its total certified area is the largest across the world.

SGEC(Sustainable Green Ecosystem Council)

SGEC authenticates forest management that demonstrates both rich natural environment and sustainable wood production in Japan. With reverence for Japan's indigenous natural environment, social customs, and culture, the review premises on seven criteria. SGEC can also authenticate forestry operations and distribution systems under COC. SGEC joined PEFC in November 2014 and submitted a mutual authentication application to PEFC in March 2015, which was mutually approved in June 2016.

Status of Sumitomo Forestry Group Forest Certification/ COC Certification*

Organization Certification System
Date Certified
Certification Number Certification Issuing Body
Sumitomo Forestry Co., Ltd.
Timber and Building Materials Division
FSC December 14, 2022 JIA-COC-190013/
Japan Gas Appliances Inspection Association
PEFC December 14, 2022 JIA-PEFC-COC-1201 Japan Gas Appliances Inspection Association
Sumitomo Forestry Co., Ltd.
Timber and Building Materials Division
Global Construction and Real Estate Division
Construction Department
SGEC January 24, 2022 JIA-SGEC-COC-045 Japan Gas Appliances Inspection Association
Sumitomo Forestry Group
Sumitomo Forestry headquarters and branches
Cooperating precut factories of Housing and Construction Division
SGEC October 1, 2022 JAFTA-SGEC-COC-038 Japan Forest Technology Association
Sumitomo Forestry Wood Products Co., Ltd. SGEC December 25, 2021 JAFTA-SGEC-COC-017 Japan Forest Technology Association
Sumitomo Forestry Crest Co., Ltd. FSC September 15, 2020 SGSHK-COC-006693 SGS Japan
Nelson Pine Industries Ltd. (NPIL) (New Zealand) FSC June 21, 2019 SAI-COC-001290/
SAI Global Assurance
PT. Kutai Timber Indonesia (KTI) (Indonesia) FSC December 3, 2021 SA-COC-012758 Soil Association
PT. Rimba Partikel Indonesia (RPI) (Indonesia) FSC February 20, 2020 SA-COC-007620/
Soil Association
PT.Sumitomo Forestry Indonesia FSC December 7, 2021 SA-COC-012757 Soil Association
Sumitomo Forestry (Singapore) Ltd. FSC January 28, 2023 NC-COC-005542/
Prefferd by Nature
Sumitomo Forestry (Dalian) Ltd. FSC January 20, 2021 SCS-COC-008230 SCS Global Services
Vina Eco Board Co.,Ltd.(VECO)(Vietnam) FSC October 15, 2021 BV-COC-132458/
Bureau Veritas
PAN ASIA PACKING LTD.(PAP)(Thailand) FSC January 16, 2023 SGSHK-COC-470150 SGS Hong Kong

*COC (Chain of Custody) certification is a system that covers the processing and distribution of forest products. In addition to determining whether the forest product was from a certified forest (certified timber) at each stage of processing and distribution, it certifies risk assessments for uncertified timber. When all companies in the entire process obtain COC certification, a certification mark can be displayed on the product

*SGEC-COC (Trademark License No. SGEC/31-32-86), PEFC-COC (Trademark License No. PEFC/31-32-86)

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Smooth Response to the Clean Wood Act

The Act on Promotion of Use and Distribution of Legally-Harvested Wood and Wood Products (the Clean Wood Act) was enacted in May 2017 to encourage use of wood from trees harvested in compliance with the laws and regulations of Japan and other countries and to create a market where illegally logged wood, which damages the environment, is not made available. Sumitomo Forestry was the first in the country to register the Timber and Building Materials Business, which imports and sells wood, as a Type 1 Wood-Related Entity on November 22, 2017. This same division was registered as a Type 2 Wood-Related Entity on August 1, 2018. Subsequently, Sumitomo Forestry Wood Products was registered as a Type 1 and Type 2 Wood-Related Entity on February 20, 2018. We have also registered the Housing and Construction Division (March 16, 2018) and Sumitomo Forestry Crest (May 9, 2018) as Type 2 Wood Related Entities as part of our efforts to procure legal wood throughout the entire Group.
The revised Clean Wood Act, which was approved by the Diet in May 2023 and is scheduled to take effect in fiscal 2025, will be more stringent, including mandatory confirmation of legal compliance by businesses and penalties. The Sumitomo Forestry Group's due diligence is already in full compliance with the revised Clean Wood Act.

Status of Registered Timber-Related Businesses

Registered Wood Related Entity Type Registration Date Registration Number Agency Issuing Registration
Timber and Building Materials Division Type 1, Type 2
Wood Related Entity
Timber-Related Operator
November 22, 2022 JIA-CLW-Ⅰ Ⅱ 17001 Japan Gas Appliances Inspection Association
Construction Materials Development Department, Housing Division Construction Materials Development Department
Type 2
Wood Related Entity
March 14, 2023 HOWTEC-CLW-II 0001 Japan Housing and Wood Technology Center
Sumitomo Forestry Wood Products Type 1/Type 2
Wood Related Entity
February 20, 2023 JIA-CLW-Ⅰ Ⅱ-3 Japan Forest Technology Association
Sumitomo Forestry Crest Co., Ltd. Type 2
Wood Related Entity
May 9, 2023 JIA-CLW-Ⅱ 18002 Japan Gas Appliances Inspection Association
Nihei Type 2
Wood Related Entity
Timber-Related Operator

Participation in JBIB (Japan Business Initiative for Biodiversity)

Sumitomo Forestry participates in the Japan Business Initiative for Biodiversity (JBIB) as a member company. JBIB is made up of companies that engage in activities aimed to conserve biodiversity. The supply chain working group enhanced its knowledge by exchanging information on member companies' biodiversity-friendly supply chain initiatives and by gathering information on COP15.

Partnership Building Declaration

Sumitomo Forestry has endorsed the aims of the Council on Promoting Partnership Building for Cultivating the Future, promoted by the Cabinet Office and the Small and Medium Enterprise Agency of Japan, and has announced a "Declaration of Partnership Building". Based on the Corporate Philosophy and Our Value, the Sumitomo Forestry Group manages its operations, including the supply chain, in accordance with Sumitomo Forestry Group Code of Conduct. We build sustainable relationships of co-existence and co-prosperity with our business partners through participation in the "Declaration of Partnership Building".

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