Sustainable Use of Natural Resources and Circular Economy

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Environment

Sustainable Use of Natural Resources and Circular Economy

View Sumitomo Corporation's Sustainability : Sustainable Use of Natural Resources and Circular Economy

Basic Concept

A variety of issues that threaten the sustainability of society have been brought to the fore, such as the growing world population and the associated increases in demand for resources and energy and in the volume of waste. Instead of continuing the conventional practices of mass production, mass consumption and mass disposal, building circular economy systems through recycling, reuse, reproduction, resource-saving product development, and sharing, to reduce dependence on natural resources is important for maintaining sustainable society.
The Group will make effective use of limited resources and contribute to the realization of sustainable resource recycling by switching to resource-saving technologies and products, and working on sustainable procurement from forests and other natural resources.

ESG Quantitative Data on Resources and Waste

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Effective Use of Forest Resources

Forests are a circulative resource that can be permanently regenerated through continuous planned logging and regrowth. In addition to providing diverse food sources and timber products in each region, appropriate management of these resources contributes to the conservation of biodiversity and mitigation of climate change by capture and storage of CO2. The Sumitomo Corporation Group, conducting business using these precious resources, implements sustainable forest management to maximize the environmental and social value provided by them, while striving to strengthen governance to prevent deforestation, forest degradation, and human rights violations.

We established the Sumitomo Corporation Group Forest Management Policy and Sumitomo Corporation Group Sourcing Policy for Forest Products in March 2022. Furthermore, in order to reinforce due diligence to mitigate risks, we also set Operational Guidelines for putting the policies into actions.

Sumitomo Corporation Group Forest Management Policy

Established in March 2022

Scope of application

Forestry business directly managed by Sumitomo Corporation and its Consolidated subsidiaries. In addition, other forestry business that Sumitomo Corporation and its subsidiaries are involved in management are included if determined to be material.

Governance

This policy was approved by the Management Council and the Board of Directors of Sumitomo Corporation. If any serious issues arise in implementing this policy, measures and corrective action plans will be discussed at the Corporate Sustainability Committee and reported to the Management Council and the Board of Directors.

Commitment

Based on the principles of zero deforestation and respect for human rights, Sumitomo Corporation will strive to implement the following in its sustainable forest management, with the cooperation of its Group companies.

Environmental aspects:

We will not engage in development that leads to gross deforestation, or the conversion of natural forests into plantations for forestry business.
We will not develop forests with high conservation value (HCVF), or forests with high carbon stock (HCSF) such as in peatlands.
We will work to protect endangered species and reduce the impact of our forestry business on ecosystems.
We will conduct thorough management to prevent forest fires and will not conduct any operations which can cause forest fires.
We will engage in forest conservation and reforestation.

Social aspects:

We will conduct our forestry business with consideration for human rights in accordance with the Sumitomo Corporation Group’s Human Rights Policy.
We will respect human rights as stipulated in the “International Bill of Human Rights” and the International Labor Organization’s “Declaration on Fundamental Principles and Rights at Work,” and we will operate in accordance with the “United Nations Guiding Principles on Business and Human Rights.”
We will respect international norms related to the rights of indigenous peoples, such as the “United Nations Declaration on the Rights of Indigenous Peoples” and the “principle of Free, Prior and Informed Consent (FPIC).”
We will support local communities through creating employment and offering educational programs related to forests.

Operational guidelines for Forest Management Policy

To reinforce due diligence to mitigate risks, we have also set operational guidelines for putting the policy into actions.

Risk assessment and monitoring:

We will conduct environmental and social risk assessments in accordance with the Sumitomo Corporation Group Forest Management Policy before starting any new forest management. In addition, we will continue monitoring the status of our environmental and social commitments after the project started.

Certification:

In addition to the above monitoring, we will make effective use of the internationally recognized forest management certification system for the forests managed by the Group and promote obtaining certification.

Stakeholder dialogue:

In order to prevent global deforestation and forest degradation, we will promote the sustainable use of forest resources in society through dialogue with our stakeholders in the regions where our forests are located.
We will develop a grievance mechanism* to respond to issues raised by our stakeholders.

Disclosure:

In order to implement forest management with high level of transparency, we will strive to disclose information on our initiatives in accordance with the Sumitomo Corporation Group Forest Management Policy.

Reviewing process of the Guidelines:

The Business Units will annually report on implementation of the policy to the Corporate Sustainability Department.
Based on the report, the Corporate Sustainability Department will annually review the necessity of updating the Operational Guidelines.
If any serious issues arise in implementing this policy, measures and corrective action plans will be reported to the Management Council and the Board of Directors.

A process that employees, local residents or other stakeholders can use to lodge complaints regarding human rights violations and other issues related to enterprise’s business activities including its supply chain, for resolving such issues

Sumitomo Corporation Group Sourcing Policy for Forest Products

Established in March 2022

Scope of application

Logs, wood products (plywood, lumber, veneer, laminated timber), wood chips and wood pellets traded by Sumitomo Corporation and its Consolidated subsidiaries.

Governance

Commitment

In accordance with the principles of zero deforestation and respect for human rights, Sumitomo Corporation will strive together with its Group companies to source products based on this policy while cooperating with suppliers and customers.

Environmental aspects:

We will not procure materials sourced from lands associated with destructive forest use or development which leads to gross deforestation causing significant environmental impacts.
We will not procure materials sourced from lands associated with serious environmental issues including the destruction of forests with high conservation value (HCVF) or high carbon stock (HCSF) such as in peatlands.
We will not procure materials produced from genetically modified wood.
We will procure in compliance with the Washington Convention to protect endangered species.

Social aspects:

We will procure products harvested in forests where human rights are respected in accordance with the Sumitomo Corporation Group’s Human Rights Policy.
We will respect human rights as stipulated in the “International Bill of Human Rights” and the International Labor Organization’s “Declaration on Fundamental Principles and Rights at Work,” and we will operate in accordance with the “United Nations Guiding Principles on Business and Human Rights.”
We will respect international norms related to the rights of indigenous peoples, such as the “United Nations Declaration on the Rights of Indigenous Peoples” and the “principle of Free, Prior and Informed Consent (FPIC).”
We will not procure materials produced from illegally logged wood.

Operational guidelines for Sourcing Policy for Forest Products

To reinforce due diligence to mitigate risks, we have also set operational guidelines for putting the policy into actions.

Monitoring:

In order to procure forest products in accordance with the “Sumitomo Corporation Group Sourcing Policy for Forest Products,” we will promote the use of products that have been certified by reliable international forest management certification systems. Additionally, we will request detailed information from suppliers through audit activities such as questionnaires and on-site visits.
In order to ensure compliance with the Commitment, we will conduct supplier risk assessments and consult with non-compliant suppliers to request improvements. If no improvement is observed, we will consider reviewing the transaction.

Stakeholder dialogue:

In order to prevent global deforestation and forest degradation, we will promote the sustainable use of forest resources in society through dialogue with our stakeholders, including suppliers and customers.
We will develop a grievance mechanism* to respond to issues raised by stakeholders.

Disclosure:

We will strive to disclose the status of our initiatives based on the “Sumitomo Corporation Group Sourcing Policy for Forest Products,” including reporting on monitoring results.

Reviewing process of the Guidelines:

The Business Units will annually report on implementation of the policy to the Corporate Sustainability Department.
Based on the report, the Corporate Sustainability Department will annually review the necessity of updating the Operational Guidelines.
If any serious issues arise in implementing this policy, measures and corrective action plans will be reported to the Management Council and the Board of Directors.

A process that employees, local residents or other stakeholders can use to lodge complaints regarding human rights violations and other issues related to enterprise’s business activities including its supply chain, for resolving such issues

DFF Inc.

Initiatives for Forest Management and Forest Products Procurement

We spoke to group companies conducting forest management to understand their response to mitigating environmental and social risks, including forest conservation, mitigation of impacts on ecosystems, and consideration of local residents, and we confirmed that activities conducted during FY2023 were in line with our Forest Management Policy. We also confirmed compliance of our forest product suppliers with the commitments of our Sourcing Policy for Forest Products during FY2023, using an annual questionnaire and on-the-spot surveys.

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New Zealand Timber Business

In New Zealand, a sustainable supply of timber resources is provided on a 30-year cycle through a harmonious arrangement with local communities under the environmentally friendly forest management system of planting trees, growing them, cutting them down, and replanting them. In the approximately 66,000 hectares of forest owned by Summit Forests New Zealand Limited., besides protecting water resources, cultural sites, and indigenous biodiversity conservation areas, the company has also forged friendly relationships with the indigenous Māori people in the course of running its business. Moreover, much of the company’s forest holdings are international forest management certified, which offers objective proof that the company is managing the forest appropriately.

Please see here for more details on the Forestry business in New Zealand.

DFF Inc.

Tomra Japan: Creating and Deploying a PET bottle Recycling System in Which Consumers Take Part Actively

Reducing the usage of plastic resources while ensuring its effective consumption - importance of this issue is increasing year by year as a measure for addressing global environmental issues, such as marine litter and global warming. In this context, importance of resource recovery system is increasing, to materialize and enhance sustainable resource recycling. Tomra Japan is a joint venture between TOMRA Systems ASA (Norway) and our company. In addition to selling equipment such as reverse vending machines (RVMs) for the efficient collection of used PET bottles, we have also created and deployed a recycling system whereby we collect PET bottles from RVMs installed at supermarkets and other retail stores and deliver them to recyclers. RVMs only collect PET bottles after their caps and labels are removed by the consumers, this enables us to collect high-quality resources with fewer impurities. Through the supply of high-quality recovered resources, Tomra Japan has been contributing to horizontal recycling, in which fresh PET bottles are made from used PET bottles. In addition to such activities, in 2021 the company launched a new brand named “bottlium” with the aim to contribute to the recycling of PET bottles into polyester clothing. By recycling PET bottles into clothing that can be repeatedly washed, continuing the horizontal recycling of PET bottles, and encouraging consumers to actively take part in collecting and recycling higher-quality resources in an efficient manner, Tomra Japan will continue to contribute to the reduction of environmental burden and the development of a recycling-based society.

Circulation recycling system with RVM as a platform

“bottlium” – New brand of recycled PET bottle by Tomra Japan. Made from the high-quality resources (used PET bottles) collected by Tomra Japan, through chemical agent-free aqueous cleaning process.
The highest quality expands the possibilities for various applications such as hollow fibers.

DFF Inc.

Construction Equipment Rental Business Expanded Globally

In Japan and the United States, which are advanced construction equipment rental countries, we are developing the business through TAIYOKENKI RENTAL CO., LTD., and Sunstate Equipment Co., LLC, respectively. In Southeast Asia where further mechanization and rental demand expansion is expected, we are also operating through Aver Asia (S) Pte Ltd. Because customer needs are growing more diverse with increased awareness of workplace safety and productivity, we aim to provide new value by upgrading services utilizing IT and DX, such as enhancement of rental products and offering of various rental apps. We will take advantage of the knowledge of business operations cultivated in each areas while also efficiently allocating managerial resources between group companies. By providing and promoting the use of highly reliable and economically efficient machinery, we will contribute to the realization of a sustainable circular economy.

Corporate culture of people and teamwork

DFF Inc.

Results

We are working toward our goal of actively promoting the sale of certified timber. The following table shows our actual use of certified timber in New Zealand (Summit Forests New Zealand) during FY2023.

FY2023 Results
Certified log (New Zealand)	168 thousand m³

DFF Inc.