Supply Chain Management

Housing and Construction Business Initiatives

Basic Policy

In the Housing and Construction Business, sustainable materials procurement is positioned as one of our material issues for management. The structural materials and small cross-sectional wood slabs called hagarazai* are procured through our trading arm, the Timber and Building Materials Division, which confirms legality and sustainability of timber and wood products. In addition, we have been responding to the Clean Wood Act, which was effective from May 2017 seeking to promote the distribution and utilization of legally harvested wood and related products. The Housing and Building Materials Division registered as a Type 2 Registered Timber-Related Operator under the Clean Wood Act in March 2018. For housing equipment, insulation, resin parts and other building materials, procurement is conducted in accordance with the Sumitomo Forestry Group Green Procurement Guidelines.

* Structural materials are a wooden house's foundation, posts, beams and other wood materials used for the structure. Hagarazai are materials and base materials used to supplement the structural materials of a wooden house.

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Green Procurement and Sustainable Procurement

The Sumitomo Forestry Group formulated the Green Procurement Guidelines in 2002. The Guidelines establish standards for procuring products from two perspectives: the supplier's stance toward the environment and social issues (corporate activities assessment) and the product's impact on the environment throughout its life cycle (product assessment).

In 2013 and again in 2020, the Group revised the Green Procurement Guidelines and added items to ensure even broader progress of sustainability initiatives concerning occupational health and safety and human rights under "the corporate activity assessment".

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Environmental Consideration and Legal Compliance in Responsible Material Procurement

The Sumitomo Forestry Group procures materials for the Housing and Construction Business in accordance with the Green Procurement Guidelines.

When adopting new products or reforming existing products, we create green procurement ledgers as well as waste disposal confirmation forms (product/packaging) in addition to product specifications which define the specifications, standards and quality criteria of products. Green procurement ledgers confirm aspects of procurement such as verifying the timber procured has been legally logged, confirming the no occurrence no volatile organic compounds (VOCs) as well as use of certified chemicals such as insecticides when adopting new products. Regarding materials made of wood, documentations such as legal certification are confirmed to ensure that procured wood materials comply with the Clean Wood Act. The waste disposal confirmation forms (product/packaging) verify aspects such as the type of offcuts, disposal methods and processing facilities.

We create two copies of each form and suppliers and we each keep a copy.

Communication with Suppliers and Partner Evaluation

Sumitomo Forestry's Housing and Construction Business worksites are found in every region of the country, and they rely on support from the many business partners that the Sumitomo Forestry Group collaborates with. We considers communication with these companies to be vital in order to share with them its philosophy of improving the quality of homes while protecting the environment.

Main Communication Activities with the Business Partners of Sumitomo Forestry's Housing and Construction Division

Name/Scale Description
Evaluation and feedback based on the Supplier Evaluation Standards Implementation rate: 100% (FY2021) Material suppliers of the Housing and Construction Business (suppliers excluding on-site equipment manufacturers, precut factories, building material operators and frame centers) are evaluated every year per type of material based on items including corporate overview, quality, cost, delivery period, environmental response as well as services. We provide feedback from the evaluation results as a way of bettering our procurement.
In fiscal 2021, we provided feedback to 249 suppliers, a 100% implementation rate.
As part of our evaluation, we have been conducting factory audits of our suppliers on a regular basis up to now, but in fiscal year 2021, as in the previous fiscal year, the spread of the coronavirus disease did not end, and visits to our suppliers' factories were conducted after a state of emergency was lifted. We also communicated with our suppliers' factory staff and quality control staff via the web.
If buildings are constructed with materials, which are not confirmed for performance quality, it would pose various risks for the people and the buildings. Therefore, we have formulated methods for auditing plants that focus on quality management to confirm whether material we procure are manufactured based on our quality standards and other aspects.

Responsible Material Procurement

Starting in fiscal 2019, the Housing and Construction Division began subjecting new suppliers to an annual Sustainability Procurement Survey in addition to the Green Procurement Survey that was required in the past. This Sustainability Procurement Survey was originally aimed for existing building materials and housing equipment manufacturers as well as other suppliers. In fiscal 2019, 42 companies participated in the sustainability procurement survey (86.0% of annual purchasing ratio of suppliers for the previous fiscal year). In fiscal 2020, this expanded to a total of 86 companies (97.3%). Each of these suppliers participates in the survey with all 53 items related to the progress of their initiatives on social and environmental aspects as well as the sustainability of their timber procurement.

For the fiscal 2021 survey, we decided to survey the same 86 suppliers as in the previous year (98.5% of the annual purchase amount in the previous year), so we held a sustainability survey briefing session in August 2021 with voluntary participation. Approximately 40 people attended, and we shared with them the Sumitomo Forestry Group Code of Conduct, the Sumitomo Forestry Group Procurement Policy and our thinking regarding responsible procurement to promote mutual understanding.

The survey had a 100% response rate for the second consecutive year. Suppliers were evaluated on a four-scale ranking of S, A, B or C based on their responses. The number of S-ranked companies increased by 8 from last year, accounting for 72% of the total. The number of C-ranked companies decreased by two, and feedback was provided to all eligible suppliers in order to encourage them to improve their efforts.

Through the surveys, we were able to confirm that many suppliers share our own understanding of what responsible procurement means. On the other hand, some suppliers fell short of our expectations and after discussions at our supplier evaluation meetings, we provided feedback, which we will continue to follow up on to ensure ongoing improvement.

A sustainability procurement survey explanatory meeting

A sustainability procurement survey explanatory meeting

Sustainability procurement survey implementation rate in the supply chain of the domestic housing department (%)

98.5%

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Fiscal 2021 Sustainability Procurement Survey Results (100points indicates a perfect score)

Fiscal 2021 Sustainability Procurement Survey Results (100points indicates a perfect score)

Housing and Construction Business Initiatives for Sustainability in Timber and Wood Products

There is increasing concern about deforestation as climate change. The Housing and Construction Division newly set a 100% target for the rate of sustainable timber used as primary building material in the Mid-Term Management Plan announced in May 2019. This target aims to put sustainable timber procurement into practice, including confirmation of legal compliance of timber procurement, compliance with human rights and occupational health and safety, biodiversity conservation, and considerations of the local community, especially for timber used in housing as outlined in the Sumitomo Forestry Group Procurement Policy.

In fiscal 2021, we were able to achieve the said ratio of 100% in primary building materials of Sumitomo Forestry's detached homes.

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  • Percentage of sustainable timber
    used as primary building material
    (%)
    FY2021 result

    100%

  • Percentage of sustainable timber
    used as primary building material
    (%)
    FY2021 target

    100%