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Supply Chain Management
Distribution Business Initiatives
- Basic Policy
- Structure of Wood Procurement Management
- Sustainable Timber and Wood Products Procurement Initiative
- Assessing Wood Procurement by onsite interviews
- Promoting Certified Timber
- Smooth Response to the Clean Wood Act
- Participation in JBIB (Japan Business Initiative for Biodiversity)
- Communication with Our Business Partners
Basic Policy
Sumitomo Forestry Group strives to contribute to a sustainable and prosperous society through business activities that use wood, a renewable resource. To do so, we engage in responsible wood procurement activities in accordance with our Wood Procurement Basic Policy formulated in 2005 and our Wood Procurement Principles and Policies formulated in 2007. To deliver legal and sustainable wood, we only engage in responsible wood procurement.
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's sustainable wood procurement initiatives have responded to growing concerns about deforestation as a climate change factor with the introduction of its own wood procurement due diligence. In May 2019, we newly implemented an Action Plan that does not contribute to deforestation in order to further reinforce evaluation standards for sustainability.
To confirm the legality as precondition, we define timber and wood products as sustainable if they fulfill one of the following:
Sustainable is Defined as, Environmental: No contribution to deforestation
Social: No violation of human rights such as occupational safety, forced labor, indigenous rights, etc.
Sustainable is Defined as,
Environmental: No contribution to deforestation
Social: No violation of human rights such as occupational safety, forced labor, indigenous rights, etc.
- Certified timber and pre-certified timber: FSC, PEFC, and SGEC
(Regardless of CoC connection, we place emphasis on certification at time of production and promote a shift to certified timber) - Wood from planted forest
- Natural forest wood where forestry management and distribution can be assessed as sustainable.
(this does not include wood from conversion forests = wood harvested from natural forest that were converted to farm land such as oil palm plantations) - Recycled Wood
Structure of Wood Procurement Management
Sumitomo Forestry Group established the Wood Procurement Committee, chaired by the officer in charge of sustainability promotion at Sumitomo Forestry (director and managing executive officer) and comprising managers from departments in charge of wood procurement. The committee discusses issues related to group-wide wood procurement, including procurement standards and risk assessments for illegal logging.
In fiscal 2021, the Wood Procurement Committee met four times to confirm the legality and conduct a "Sustainability Survey" for all 192 directly-imported suppliers subject to screening and suppliers with whom overseas Group companies (distribution) do business. Regularly (once a year or once every two years), we confirm legality and sustainability of both new and ongoing parties we conduct business with.

Wood Procurement Committee meeting
Sustainable Timber and Wood Products Procurement Initiative
Promoting Initiatives Adhering to the Procurement Policy
Procurement Policy
Under the Sumitomo Group Procurement Policy, Sumitomo Forestry Group carries out due diligence on wood procurement to ensure that the procurement is performed in a sustainable manner with consideration of legal compliance, human rights, labor practices, biodiversity conservation, and local communities.
Confirmation of Legality of Wood Procurement
Timber and Building Materials Business, Housing and Construction Business and each of wood procurement division at each Group company confirm that the wood provided by suppliers has been legally harvested, or that the timber and wood products they provide have been made only from legally harvested wood as a raw material. Each person in charge of procurement is required to follow the Wood Procurement Due Diligence Manual, gather the following information, cross-check relevant documents for each location and tree species, and confirm traceability of the entire supply chain all the way to the logging site.
No. | Category name |
---|---|
1 | Supplier name |
2 | Supplier address |
3 | Wood type |
4 | Tree species of timber and wood products |
5 | Country or region of logging of timber and wood products |
6 | Annual procurement volume (weight, area, volume or quantity) |
7 | If sold to a legal entity, the name and address of that legal entity |
8 | Results of supplier surveys and other, inspection records and other |
9 | Documents certifying that harvesting was conducted in accordance with laws and regulations of the logging country |
With these information sorted by country, region, tree species, and wood type, risk assessment on the illegal logging or human rights violation is carried out based on procurement standards stipulated by the Wood Procurement Committee. Risk categories are A (low risk), B (medium risk) and C (high risk). Timber and wood products in the B (medium risk) and C (high risk) categories should not be solely evaluated with documentation to prove that they are legally harvested according to that country’s laws and regulations. In addition, when necessary, company staff are sent for on-site inspections to ensure traceability back to the logging site. In fiscal 2021, we audited 50 companies in Category A, 25 companies in Category B, and 117 companies in Category C.
Status of imported wood, timber and wood products by region in fiscal 2021
(results for January to December 2021)

Consideration for Biodiversity Conservation, Labor Practices and Human Rights, and Local Communities
Following items are checked, through Sustainability Procurement Surveys to suppliers and local interviews for the products that are being procured:
- Whether the rights of workers, local and indigenous community are abused in the area where we procure the products and their raw materials from. If this is the case, whether suppliers check their logging practices take place with consideration for these rights.
- Whether the high conservation values forests are included in the area where we procure the products and their raw materials from. If this is the case, whether suppliers check their logging practices with consideration to forests with high conservation value.
Review
Each procurement division reports the status and progress of these initiatives to the Wood Procurement Committee, facilitating continuous improvements throughout the supply chain. In fiscal 2021, the final year of the Mid-Term Sustainability Targets 2021, we strengthened our examination of suppliers' procurement to achieve 100% sustainable wood procurement, and also developed due diligence on the sustainability of wood and biomass fuels such as PKS and pellets.
Due Diligence in Wood Procurement

Progress of sustainability initiatives in timber and wood products
In the Mid-Term Sustainability Targets, we established a plan to shift to alternative materials (from selective logging of natural forests and planted forests) and gradually stop handling wood products that do not meet the definition of "sustainable timber and wood products" even when their legality can be guaranteed.
The percentage of sustainable timber and wood products handled in fiscal 2021 was 97.8% for the full year. In September 2021, we suspended contracts with suppliers who did not meet our procurement standards and whose sustainability could not be confirmed through repeated dialogues, thereby achieving 100% handling of sustainable timber and wood products on a contract basis. We will continue to thoroughly implement sustainable wood procurement.
Percentage of sustainable timber and wood products handled
FY2021 result
97.8%
Percentage of sustainable timber and wood products handled
FY2021 target
100%
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Education for Personnel in Charge of Procurement
Wood Production and Sustainable Forest Management in Indonesia and Malaysia
As concern about deforestation increases worldwide, interest is focusing on efforts by companies with regard to procurement of tropical wood. In this connection, we held a seminar on October 31, 2018 titled "Wood Production in Indonesia and Malaysia and Efforts Toward Sustainable Forest Management." It was attended by a total of 32 managers and other responsible personnel at international distribution departments handling tropical wood and other imported wood. At the seminar, participants learned the latest information about wood legality certification systems in both countries, the current state of certified timber, and sustainable forest management.

Institute for Global Environmental Strategies (IGES)
A lecture by Research Manager Hiromitsu Samejima
Forest Certification Systems
The Sumitomo Forestry Group operates under a system related to certified timber as one of sustainable timber and wood products defined as the handling of sustainable timber and wood products expands. To share the latest information, we held a Forest Certification Seminar on February 18, 2020 with the participation of 16 people in charge of wood procurement, including Wood Procurement Committee members. This seminar covered the history of the FSC, PEFC, SGEC certification systems and the latest information about the FM and CoC certifications.

Japan Gas Appliances Inspection Association
Forest/EPA Group
FSC-CoC Examiners
Lecture by Kentaro Katase
ESG Investment Trends
In recent years, investors are becoming more focused on ESG investments, which results in high attention on due diligence of the suppliers that we procure timber and wood products from. Therefore, we invited an ESG expert, Dr. Takeshi Mizuguchi, Professor of Takasaki City University of Economics, to conduct a seminar on the recent trends of ESG investments on November, 2020. The seminar taught the audience about the backdrop of the ESG investments, the principles that act as the reason for ESG investments.

Takasaki City University of Economics Professor
Lecture by Takeshi Mizuguchi
Sustainable Wood Procurement from a Financial Perspective
In recent years, private financial institutions and institutional investors have been incorporating sustainable finance into their portfolio (finance to realize a sustainable society), and the amount of ESG investments and green bonds issued are growing. Their focuses on corporate activities are on land conversion, countermeasures against the reduction of forest area and forest degradation caused by excessive logging, and sustainable wood procurement initiatives.
On December 16, 2021, Sumitomo Forestry held a seminar entitled "Sustainable Wood Procurement from a Financial Perspective" with Mr. Mutai Hashimoto, Lead, Sustainable Finance, World Wide Fund for Nature (WWF) Japan, as a lecturer. The seminar was announced to members of the Wood Procurement Committee as well as to relevant departments within the company, and was attended by a total of 84 people, 64 online in addition to 20 at the venue. At the seminar, participants learned an overview of the main outcomes of COP26, the concept of forests in ESG investment and policies of financial institutions, forest certification from a financial perspective, and the latest information on the TNFD (Task Force on Nature-related Financial Disclosures).
Reinforcing Engagement with NGOs and Other External Stakeholders
To formulate and implement our Action Plan, to respond sincerely to societal demands and to promote responsible procurement, we organized the first stakeholder dialogue with environmental NGOs, ESG specialists and researchers in July 2019.
After about one year and half since beginning our action plan to achieve 100% procurement of sustainable timber and wood products, we organized the second stakeholder dialogue with environmental NGOs, ESG specialists and researchers in December 2020.
Experts from the World Wildlife Fund (WWF) Japan, FoE Japan, Global Environment Forum, Institute for Global Environmental Strategies, the Rainforest Action Network and Takasaki City University of Economics participated on the day of the dialogue. After reflecting on the discussion in the previous dialogue, we debated the implementation level of sustainability procurement surveys and the challenges faced in the progress rate for handling of timber and wood products from forestry management as sustainable with these experts.
We have gained a wide range of feedback; as for there were no suppliers that fell into the category of required corrective actions through the Sustainability Procurement Survey, participants voiced their expectations for Sumitomo Forestry to engage with suppliers whose score are near the lowest-level and aspire further penetration of the required measures. In terms of the progress in the handling of timber and wood products from sustainable forests, feedback included the preference for further disclosure on the process towards the goal, not just the latest percentage, in order to better share the actual state with stakeholders. As the UK and other countries consider legislation such as regulations on the wood from conversion forests to eliminate deforestation due to agricultural production, Sumitomo Forestry received high praise for being a pioneer in committing to eliminate wood from conversion forests within its procurement standards, the discussion indicated the importance of awareness-raising measures to promote initiatives throughout the entire industry.
We will continue to expand our efforts toward achieving a 100% procurement rate of sustainable timber and wood products incorporating the feedback received through the stakeholder dialogue.


The scene at the Dialogue Conference
Assessing Wood Procurement by onsite interviews
Wood Procurement in Romania
Several environmental groups have expressed concerns about forest management and wood production in Romania in terms of whether logging has been appropriately conducted. In April 2017, members of the Wood Procurement Committee conducted on-site inspections, first gathering information through meetings with such organizations as the Ministry of Environment and Forests of the Romanian Government, the Embassy of Japan in Romania, ASFOR (Romanian Forest Association), among others. The members also went to a supplier manufacturing facility and inspected representative logging sites of logs that were transported to the facility. At the manufacturing facility, they confirmed that the supplier properly checks transport permits and the logs bundled on the trailer when receiving raw material logs at the lumber manufacturing plants. For example, the visiting team was able to confirm that the supplier was thorough in segregated management to ensure that logs exceeding the amount permitted were not used and that they engaged in such measures as reporting to forestry authorities. The team received an explanation about forest management from a forest ranger at the logging site and checked the actual hammer stamp mark and process when loading the trailer in the field. In addition, they were able to confirm the dedication to preserving the rare forest ecosystem by observing forest conservation areas under the Romanian government's jurisdiction.

Inspection of harvest land still covered in snow

Check when loading the trailer

Properly checking the delivery at the plant using tablet terminals

Segregated management of round wood beyond the amount on the permit
Concrete Form Plywood from Indonesia
In recent years, several environmental groups have expressed their concerns about the legality of the logs used as raw material for plywood manufactured in Indonesia. In Indonesia, the SVLK timber legality verification system is in place, requiring timber product manufacturers and exporters to register by obtaining SVLK business certification issued by an independent evaluation and certification organization recognized by the National Accreditation Committee. Upon doing so, the business obtains documentation (V-Legal documents) from the independent verification and certification body certifying the timber as legal, and expressly confirming the legality of the entire supply chain, from logging to timber processing at manufacturing plants to export. In July 2018, we conducted an on-site inspection of the concrete formwork paneling plywood manufacturing plant that serves as our supplier. At a wood yard near the harvesting site, we were able to use QR-code labeling on tags attached to logs to confirm the harvesting information at the Indonesian Ministry of the Environment and Forestry website, as well as with V-Legal documentation. After the same logs were transported to the plant, we were once again able to use QR codes at a plant wood yard to access the ministry website and V-Legal documents, successfully tracing them back through the transport process to their harvest location.

Confirming tags attached to the logs at the plant wood yard

Confirming tags at an intermediate wood yard

Confirming the harvest site from tag information at the logging company (1)

Confirming the harvest site from tag information at the logging company (2)
In relation to plywood for concrete formwork used in the construction of Olympic-related facilities, in November 2018, an environmental NGO submitted an allegation to the Reporting Desk established by the Organizing Committee for the Olympic Games that logs used as raw materials by suppliers who have business relationships with Sumitomo Forestry may not conform to the Olympic procurement standards. Sumitomo Forestry responded to the report by presenting relevant documents and explaining to the Organizing Committee that such logs were not included in the supply chain. As a result, the Organizing Committee concluded that the allegations were untrue, and the report was not accepted, and was published on the website of the convention in February 2019.
In November 2021, a similar point was brought to the Tokyo Metropolitan Government's Olympic and Paralympic Preparation Office, which built related facilities. Sumitomo Forestry reiterated to the Tokyo Metropolitan Government that it complies with the Olympic procurement standards.
Plywood from Sarawak, Malaysia
In recent years, as is the case with Indonesia, several environmental groups have expressed their concerns about the legality of the logs used as raw material for plywood manufactured in Sarawak, Malaysia. Sarawak Forest Corporation was established in 2003 for the purpose of eliminating illegal logging in Sarawak, Indonesia. Thereafter, the Sarawak Timber Legality Verification System (STLVS) was created in 2015 to further strengthen efforts to eliminate illegal logging, reflecting the trend of elimination of illegally logged timber in countries such as the United States, the EU, and Australia. Sumitomo Forestry conducted an on-site audit of a plywood production plant of one of its suppliers in September 2019 to primarily confirm whether the STLVS was properly in operation from the logging sites to the plant landing.
We were able to confirm that tracking is possible from logs arriving at the plant to the harvesting district via identification processes such as orange tags proving royalty payments (for processing domestically), white tags (for log production) as well as markings and relevant transfer permits from regional forest offices through the detailed logging plans and tree logging lists required by STLVS. In addition, a signature from a representative in charge of the regional forest office on the back of the export application (K2) necessary to export plywood products confirms the products satisfy all of the STLVS standards.

Logs for Plywood Stacked at a Log Pond

Log Production Tag (White) and Royalty Tag (Orange) at the Log Pond

Logs Stacked at the Landing of the Plywood Production Plant

Confirming the Royalty Number Written on the Log Delivery Ledger
Promoting Certified Timber
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.
Sumitomo Forestry Group has obtained FM certification (forestry certification system) for 229,000 hectares and CoC certification for 9 organizations.
Status of Sumitomo Forestry Group Forest Certification/ CoC Certification* (FSC-C113957)
Organization | Certification System | Date Certified | Certification Number | Certification Issuing Body |
---|---|---|---|---|
Sumitomo Forestry Co., Ltd. Timber and Building Materials Division |
FSC | November 1, 2019 | JIA-COC-190013/ JIA-CW-190013 |
Japan Gas Appliances Inspection Association (JIA) |
PEFC | December 14, 2017 | CEF1201 | Japan Gas Appliances Inspection Association (JIA) | |
Sumitomo Forestry Co., Ltd. Timber and Building Materials Division Housing and Construction Division Construction Department |
SGEC | January 24, 2017 | JIA-W045 | Japan Gas Appliances Inspection Association (JIA) |
Sumitomo Forestry Co., Ltd. Timber and Building Materials Division, Hokkaido Branch Housing and Construction Division Construction Materials Development Department |
SGEC | October 1, 2017 | JAFTA-W038 | Japan Forest Technology Association (JAFTA) |
Sumitomo Forestry Wood Products Co., Ltd. | SGEC | December 1, 2021 | JAFTA-W017 | Japan Forest Technology Association (JAFTA) |
Sumitomo Forestry Crest Co., Ltd. | FSC | March 3, 2020 | SGSHK-COC-006693 | SGS |
Nelson Pine Industries Ltd. (NPIL) (New Zealand) | FSC | June 21, 2019 | SAI-COC-001290/ SAI-CW-001290 |
SAI Global Assurance |
PT. Kutai Timber Indonesia (KTI) (Indonesia) | FSC | December 3, 2021 | TT-COC-002009 | BM TRADA |
PT. Rimba Partikel Indonesia (RPI) (Indonesia) | FSC | April 26, 2016 | TT-COC-005903 | BM TRADA |
Sumitomo Forestry Indonesia | FSC | December 7, 2021 | SA-COC-012757 | Soil Association |
Sumitomo Forestry (Singapore) Ltd. | FSC | January 28, 2018 | NC-COC-005542/ NC-CW-005542 |
Proffered by Nature |
Sumitomo Forestry(Dalian)Ltd. | FSC | January 20, 2021 | SCS-COC-008230 | SCS Global Services |
* 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.
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.
Sustainable Green Ecosystem Council (SGEC)
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.
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.
Registered Wood Related Entity | Type | Registration Date | Registration Number | Agency Issuing Registration |
---|---|---|---|---|
Timber and Building Materials Division | Type 1, Type 2 Wood Related Entity | November 22, 2017 | No. JIA-CLW-Ⅰ Ⅱ 17001 | Japan Gas Appliances Inspection Association |
Construction Materials Development Department, Housing and Construction Division | Type 2 Wood Related Entity Type 2 Wood Related Entity | March 16, 2018 | No. HOWTEC-CLW-II 0001 | Japan Housing and Wood Technology Center |
Sumitomo Forestry Wood Products | Type 1/Type 2 Wood Related Entity | February 20, 2018 | No. JIA-CLW-Ⅰ Ⅱ-3 | Japan Forest Technology Association |
Sumitomo Forestry Crest Co., Ltd. | Type 2 Wood Related Entity | May 9, 2018 | No. JIA-CLW-Ⅱ 18002 | Japan Gas Appliances Inspection Association |
Participation in JBIB (Japan Business Initiative for Biodiversity)
Sumitomo Forestry participated 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. In fiscal 2020, the supply chain working group expanded its knowledge through informational exchanges with the Ministry of Agriculture, Forestry and Fisheries, the Ministry of the Environment and other government agencies as well as the EU.
Communication with Our Business Partners
In the Timber and Building Materials, given that it is characterized as being a regional industry, Sumitomo Forestry maintains close communication with the suppliers and purchasers of timber and building materials in each region.
Communication Activities with the Business Partners of the Timber and Building Materials Division
Name/Scale | Description |
---|---|
The Sumirin club -a membership organization to communicate with regional suppliers of timber and building materials Number of members: 872 companies (as of July 2021) |
Established in different regions around Japan as a forum for communication with business partners for distribution operations of timber and building materials. Training sessions and informational exchange meetings are held two or three times a year in each region, allowing members to deepen mutual friendships, promote product R&D, enhance production and distribution, and support improvements in the industry as a whole. |
Publication of Building Materials Monthly Monthly print run of approximately 4,000 copies |
With a history spanning more than half a century, this monthly magazine publishes timely information and topics regarding timber, building materials and the housing industry from our distinct perspective. |
Dennagon (Digital Delivery Slip and Invoice Transmission Service)
The Timber and Building Materials Division launched the Dennagon service in October 2016 as a website to access and receive digital versions of delivery slips and invoices traditionally exchanged on paper.
Using the Dennagon service provides the benefits below.
- Purchasers can now receive the delivery slips and invoices the morning after they are issued by the Company instead of waiting for them to be delivered at an unknown time several times a week. The service also streamlines the tasks to process delivery slips based on the purchasers.
- The work to check the content of delivery slips is made more efficient as well through a sorting function of the delivery data in Excel, with which the purchasers can easily find desired data.
- The Dennagon service stores delivery slips for ten years and eliminates filing tasks by allowing various searches to help increase efficiency while reducing costs of operations at purchasers.
Another benefit of the service during the coronavirus disease (COVID-19) was the ability for purchasers to verify our delivery data without being in the office. As of fiscal 2021, roughly 680 of our business partners are using this service.
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