Basic Policy

In the Housing Business, sustainable procurement is positioned as one of its 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 in Japan. The Housing 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 such wood materials as foundation, posts and beam that are used for the structure. Hagarazai are materials and base materials used to supplement the structural materials of a wooden house

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 initiatives 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 initiatives assessment".

Responsible Material Procurement

Checking Environmental Consciousness and Legal Compliance

The Sumitomo Forestry Group procures materials for the Housing 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 Our Procurement Partners

Sumitomo Forestry's Housing 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 consider 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.

Business Partner Evaluation

Material suppliers of the Housing 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 2023, we provided feedback to 225 suppliers, a 100% implementation rate. As part of our evaluation, we have been conducting factory audits of our suppliers on a regular basis previously. 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.

Sustainability Procurement Survey

Starting in fiscal 2019, the Housing Division began subjecting new suppliers to an annual Sustainability Procurement Survey in addition to the Green Procurement Survey that has been required, such as building materials and housing equipment manufacturers. Each of these suppliers participates in the survey with all 53 questionnaires related to the progress of their initiatives on social and environmental aspects as well as the sustainability of their wood procurement.

In fiscal 2019, 42 companies (86% of the previous year's annual purchases) were scoped. The scope of the survey was gradually expanded, and in fiscal 2023, 83 companies (97.0% of the total amount of purchases in the previous fiscal year by the target manufacturers) were scoped. Prior to the survey, a web-based sustainability survey briefing was held in October 2023. Approximately 100 people attended, and we shared with them the Sumitomo Forestry Group Code of Conduct, the Sumitomo Forestry Group Procurement Policy and our views on responsible procurement to promote mutual understanding.

The response rate was 100% as it was in fiscal 2022. Based on the results of the survey, feedback was provided to all targeted suppliers. At the same time, in order to encourage advancement of each company's initiatives, the following steps were taken and recorded: (1) If a company did not respond to a "high-risk" issue, a detailed interview was conducted and the company was asked about its future initiatives; (2) If the company's initiatives had fallen behind last year, the status was interviewed and improvements were encouraged. The records of these interviews are documented.

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.

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

97.0%

Housing Business Initiatives for Sustainability in Timber and Wood Products

There is increasing concern about deforestation as the cause of climate change. Housing Division puts sustainable wood procurement into practice, including confirmation of legal compliance of wood procurement, compliance with human rights and occupational health and safety, biodiversity conservation, and considerations of the local community, especially for wood used in housing as outlined in the Sumitomo Forestry Group Procurement Policy.