Environmental and Social Report 2004

This report is printed on paper partially made from (10% pulp from thinnings; 90% recycled paper) A Message from the President

■ Editorial policy The business of Sumitomo is based on forestry management. Our Contents ● Sumitomo Forestry has acquired corporate-wide general ISO 14001 approach towards environmental preservation, which has been developed through certification, the international standard for environmental management our practices of sustainable forestry for many years, is best expressed through our systems, and pursues sound environmental practices across the A Message from the President 3 entire company. Toward a wider understanding of our efforts, we have Corporate Philosophy. This philosophy has been maintained up to the present as published an annual environmental report since September 2001. the foundation of all Sumitomo Forestry Group housing-related businesses, Principal Activities in FY2003 4 ● Our editorial policy, carried on from last year, is as follows: including timber building materials, building material , housing (1) Environmental activities described in relation to core construction, environmental businesses, and others. business segments Recently, it is pointed out that corporations in Japan and abroad attach too Toward Sustainable Development 6 For clearer understanding of the particular features of our environmental activities, each is described in relation to the much importance to the economic aspects of their activities, and corporate Corporate Philosophy and Sustainability 7 relevant core business segment —timber and building materials responsibilities in regard to the environment and society are the subject of Compliance and Risk Management 8 distribution, building materials manufacturing business, and increased focus. Over the past three centuries since its foundation, Sumitomo housing services - and specific data is provided whenever possible. Customer First 9 Forestry has contributed to the natural environment of the earth. Today, as we (2) Reporting guidelines continue to expand our corporate activities in a variety of fields, we are not only This environmental report was prepared with reference to the Ministry of the Environment’s Environmental Reporting Guidelines, involved in maintaining and enhancing society and the environment, but also Environmental and Social Report 10 2003. However, as the nature of our business makes it difficult to contribute to the formation of a sustainable society. Environmental Vision 11 follow the style prescribed by those Guidelines, this report focuses In the business of housing construction, Sumitomo Forestry promotes the use of mainly on our current efforts, including our philosophical and Sumitomo Forestry Group and the Environment 12 practical approaches to environmental issues. domestic timber. The active use of domestic timber is important, not only in ● securing the sustainability and health of , but also in functioning as a sink Our Environmental Management System 14 With a view to enhanced clarity, this year’s report has been revised as follows: for absorbing CO2. For our GODAI housing series, we have developed our own Green Procurement 16 (1) Our philosophy and activities surrounding sustainability Super Cypress engineered and lattice wall panels. Super Cypress wood is a are introduced at the beginning of the report. Environmental Accounting 17 laminated building material of Japanese cypress, produced by effective use of (2) We have made an effort to make the report more readable, thinned wood and previously unused timber materials. Lattice wall panels are pro- Domestic Forestry based on feedback from readers obtained through questionnaires. 18 duced from domestic cedar. Last year, we succeeded in developing a laminate ● We will work to continuously improve our environmental practices Overseas Projects 20 and environmental reporting, taking comments and feedback from building material of Japanese larch, which was previously very difficult to produce. Using Timber Resources Effectively 21 our readers into consideration. This is used in structural timber products, which are released only in the Sapporo area of northern Japan. Developing Environmental Technologies 24 ■ Reporting period and scope ● Reporting period: April 2003 to March 2004 While developing corporate activities that utilize wood, a renewable natural Working to Prevent Global Warming 26 (Includes some activities in or after April 2004 and future material, we are also engaged in new forms of regeneration in the R&D field, Reducing 28 expectations.) which use the latest biotechnologies. ● Enterprise targeted: Sumitomo Forestry Co., Ltd. Toward Green Office Management 30 The feudal warlord Hideyoshi Toyotomi favored the “Togyu cherry” (Prunus ● Parts of this report also cover the activities of the following pendula Maxim f. ascendens) at the well-known Daigoji Temple in Kyoto, for cher- Environmental Communication 31 Group companies: Sumitomo Forestry Crest Co., Ltd.; Sumitomo Forestry Two-by-Four ry blossom viewing. Sumitomo Forestry has succeeded in the large-scale tissue cul- Community and Social Contributions 32 Homes Co., Ltd.; Sumitomo Forestry Component House Co., Ltd.; ture propagation of clone seedlings of this . The seedlings have subsequently Sumitomo Forestry Home Tech Co., Ltd.; Sumitomo Forestry Home multiplied and thrived, and they finally began flowering in March 2004. This Service Co., Ltd.; Sumitomo Forestry Landscaping Co., Ltd.; Sumitomo weeping cherry tree was thought to be over 150 years old and approaching the end Highlights of our Community and Social Activities 34 Forest Service Co., Ltd.; Sumirin Agro-Products Co., Ltd.; Sumirin Enterprises, Ltd.; Nelson Pine Industries Ltd. (NPIL); P.T. Kutai Timber of its life. People historically wished to preserve the tree for its high cultural value. Activities Planned for 2004 35 Indonesia (KTI); Alpine MDF Industries Pty Limited; P.T. Rimba Partikel In the future, we hope to adopt and utilize this technology in preserving precious Indonesia (RPI); P.T. AST Indonesia (ASTI) Corporate Data 35 weeping cherry in other regions and other trees in danger of extinction. ● Understanding the environmental impact of Group companies and reporting in detail on their environmental activities are issues we are Sumitomo Forestry recognizes anew the role and responsibility, expected by soci- in the process of addressing. ety in all areas of business at home and abroad, with its Corporate Philosophy and Environmental Policy. We will remain actively engaged in business activities that ■ Publication of next report contribute to the formation of a sustainable society in the days to come. ● Next year’s environmental report is scheduled for publication in June 2005. This is the fourth edition of our environmental report. I hope it will provide you with the opportunity to observe our efforts and results in protecting the environ- ■ Inquiries to: Environmental Management Division, Sumitomo Forestry Co., Ltd. ment. Your feedback and comments are most welcome. Ph. 81-3-5322-6669 Fax 81-3-5322-6774 Corporate Communications Group, General Administrative Division Ph. 81-3-5322-6666 Fax 81-3-5322-6766 http://www.sfc.co.jp/e-sumi.html Ryu Yano, President June 2004

2 3 Principal Activities in FY2003

Integration of environmental management Forestry Agency Director-General’s award CO2 emissions caused by housing construction confirmed Sumitomo forest ecosystems

In the past, we have used a different management system for The “twinned post” jointly developed by Sumitomo Forestry, From fiscal 2002, Sumitomo Forestry has been monitoring Aiming to develop new forms of that reflect environmental activities than for our everyday business. To Sumitomo Forest Service Co., Ltd., and Sankei Co., Ltd. of the amount of CO2 generated by its timber house construc- the total forest ecosystem, including flora and fauna, air, water, reinforce the foundation of our environmental management, Hyuga City, Miyazaki Prefecture won the Forestry Agency tion activities. soil and scenery, we are developing forests with an Ecosystems we decided to integrate the system we use for managing every- Director-General’s award. Our twinned post, whose commer- To confirm the tentative results for FY2002, in FY2003 we theme. In 1993, we built House in Besshiyama in cen- day business with the system cialization began two years ago, is a two- carried out surveys at 23 construction sites from Hokkaido to tral Ehime Prefecture, and opened 1,890 hectares of company- for environmental activities. piece laminated pillar created by longitu- Kyushu. These revealed an average emission for the 23 sites owned forest to the public to allow hands-on Our new integrated system dinally slicing the square cores produced surveyed of 1.65 tons of CO2 per house. The average floor contact with forests and forestry to elemen- was devised in FY2003 and from Japanese cedar logs, drying the two area of the houses surveyed was 155.25m2. Converting this to tary school children and others. In 2003, we started operating from resulting halves, then gluing them the floor area used for the FY2002 calculations (147.39m2) encouraged children to participate in char- FY2004. together. This new method will enable returns a figure of 1.56 tons of CO2 per house, thus confirm- coal-making and collaborated in general bent logs, which could not previously be ing the validity of the results for the previous year. educational activities associated with Ehime’s used as pillars, to be used effectively. forests.

See page 14 See page 21 See page 26 See page 33

Three Group companies acquire ISO 14001 certification First weeping cherries flower in Kyoto CDM survey Tropical forest regeneration project completed

We are extending the scope of ISO 14001 certification to The “Togyu cherry” of the well-known Daigoji Temple in On behalf of the Japanese Ministry of the Environment, since The tropical forest regeneration project begun by Sumitomo more Group companies whose management systems meet Kyoto, representing the Shingon sect of Buddhism, was favored 1999 we have been carrying out a Clean Development Forestry in 1991 in Sebulu, East Kalimantan, Indonesia, ISO 14001 criteria. In FY2003, two new Sumitomo Forestry by feudal warlord Hideyoshi Toyotomi for cherry blossom Mechanism (CDM) feasibility study into the amount of CO2 reached completion in March 2004. The main tree species is Group companies obtained ISO 14001 certification: viewing. Sumitomo Forestry set itself the challenge of large- absorbed by an afforestation project in the lauan. To date, 277 hectares of forest Sumitomo Forestry Crest Co., Ltd. and Sumitomo Forestry scale propagation of this venerable weep- Indonesia and the project’s commercial have been restored (aggregate area plant- Two-by-Four Homes Co., Ltd. Overseas, Nelson Pine ing cherry by tissue culture technology. feasibility. In FY2003, the study focused ed: 503 hectares, total number of trees Industries Ltd. (NPIL) of New Zealand became our second Now we have produced over 1,000 thriv- on the quantity of CO2 absorbed by the planted: 738,000). As the forest has foreign subsidiary after P.T. Kutai Timber Indonesia (KTI) to ing seedlings, the largest of which is now afforestation activities of P.T. Kutai recovered, wild animals such as orang- meet the ISO 14001 environmental standards. around five meters tall. The color and Timber Indonesia (KTI) and P.T. Rimba utans, deer, and wild pigs have begun to form of the first blossoms, which Partikel Indonesia (RPI), and the return. appeared in the spring of 2004, match amount of CO2 emissions prevented by those of the original Togyu cherry. the use of energy.

See page 14 See page 24 See page 27 See page 33

Our own larch used in framings and interior fittings CO2 absorbed by our forests in 2003 Mt. Fuji Manabi no Mori natural project Report on KTI’s educational foundation

In May 2003, our Sapporo branch began selling homes using The amount of carbon dioxide (CO2) absorbed by the 40,497 Every year we carry out volunteer afforestation and silvicul- To mark its 30th anniversary, P.T. Kutai Timber Indonesia larch from Sumitomo Forestry forests in Hokkaido. The larch hectares of Sumitomo Forestry Group-owned forests in Japan ture activities at the Mt. Fuji Manabi no Mori forest. To make (KTI) established an educational foundation to provide schol- is processed as a laminate and used in poles, beams, and interi- was 275,525 tons in FY2002 and 248,639 tons in FY2003. sure our afforestation efforts preserve the types of native trees arships for elementary and junior high school students. As of or fittings. Larch makes up roughly one third of Hokkaido’s This is about 2.9 times the amount of growing on Mt. Fuji, we use species that the end of 2003, it had awarded scholar- forested area. The timber is strong and durable, but because it carbon dioxide emitted by the entire seed themselves naturally on the slopes ships to 21 children in the Probolinggo is frequently twisted and not easy to process, Sumitomo Forestry Group in the course of the mountain. These include beech, area, 10 in the Sebulu region, and 10 in new applications needed to be developed. of its business activities. In the future, oak, dogwood, zelkova, stewartia, maple, Krucil. In FY2004, KTI plans to Sumitomo Forestry met this challenge, the Sumitomo Forestry Group will con- magnolia, cork tree, hinoki, and Fuji increase the number of recipients along selecting mature larch with stable properties. tinue forestry management activities in cherry. Thousands of people have partic- with the start of the new July semester. By using improvements in our drying tech- Japan and promote activities to prevent ipated in the program and a total of A fixed proportion of KTI’s profits will nology to control twisting, we succeeded in global warming. 36,369 trees have been planted. be set aside for the educational founda- making larch a viable housing material. tion every year from now on.

See page 21 See page 26 See page 32 See page 33

4 5 Toward Sustainable Development Toward Sustainable Development Corporate Philosophy and Sustainability

Based on a philosophy nurtured and maintained over long decades, Sumitomo Forestry contributes For three centuries, Sumitomo Forestry has planted trees and cultivated forests to a sustainable society and carries out activities aimed at furthering sustainability. as part of its ideal of sustainable forestry. Even though times change and the needs of society alter, the Sumitomo Forestry Group voluntarily acts in accordance with its corporate social responsibilities Sumitomo Forestry’s origins Working toward sustainability Reinforcing compliance based on its Corporate Philosophy of sustainable endeavors, Founded in 1691, Sumitomo Forestry We are maintaining sincere efforts to sat- To strengthen self-regulatory functions, which it has consistently maintained from its inception. has consistently managed forests for more isfy the needs of the times and the com- in December 2002 we established a than three centuries. Over that time, it munities in which we operate. As a result Compliance Counter to offer advice on has built up forests covering one thou- of these efforts, we are able to carry out compliance infringements. The Counter sandth of Japan’s total land area. These sustainable business in relation to the is staffed by the general manager of our forests are eventually harvested, their tim- environment, society, and the economy, General Administrative Division and a ber used, and their revenues returned to and meet our social obligations. consulting lawyer. (See page 8) re-invest in creating new forests. This Personnel system revamped cycle of sustainable forestry has been Some recent examples maintained up to the present day. In April 2003, we revamped our person- Sumitomo Forestry’s Corporate nel system to introduce a performance- Philosophy is manifested domestically Mt. Fuji volunteer reforestation project oriented approach. This reflects a com- and abroad in the fusion of economic As part of our social contribution activi- mitment to move away from a fixed sen- sustainability with the environmental ties, we took the lease of a typhoon-dam- iority-based personnel system to one that sustainability developed through its aged state forest on the slopes of Mt. is fairer and more inclusive. management of forests. Sumitomo Fuji and organized ongoing volunteer Educational foundation established Forestry maintains this fusion as the activities to restore it to its original con- in Indonesia basis of all its activities. dition. (See page 32) P. T. Kutai Timber Indonesia (KTI), which produces and timber Call center established Sumitomo Forestry’s business building materials in east Java, and sustainability In our housing business, we reviewed Indonesia, established an educational our after-sales service system to enable us foundation to provide funding assistance Sumitomo Forestry’s areas of business to promptly respond to customer com- to the region’s poorer children so they have diversified to timber and building plaints and requests. As a result, we can attend school. KTI also provides materials distribution, building materials established the industry’s first 24-hour-a- active recovery support when natural dis- manufacturing, and housing construction, day, 365-day-a-year call center so we can asters strike, and works hard to live in while the scope of its activities has broad- reply directly to customer inquiries. We harmony with the local community. (See ened to include overseas as well as domes- are continuing to work hard to realize page 33) tic operations. Guided by the following the customer-first approach emphasized themes, we are also seeking to apply our in our Action Guidelines. (See page 9) sustainability policy to all areas of business and re-examine the responsibilities Corporate Philosophy and Action Guidelines required to fulfill our expected role. • Conducting environmental protection Corporate philosophy activities • Co-existing harmoniously with the The Sumitomo Forestry Group utilizes timber as a renewable, regions in which we operate healthy and environmentally friendly natural resource, • Providing quality products that and contributes to a prosperous society through all types enhance people’s lives of housing-related services. • Returning profits to society • Complying with laws and regulations • Maintaining fair labor practices Action Guidelines • Other related themes Sumitomo Spirit We conduct business based on principles of integrity and sound management.

Respect for Humanity We create an open and inclusive corporate culture that instills a strong sense of pride and motivation in employees.

Environmental Protection We contribute to the protection of the environment and our fellow beings through responsible business practices.

Putting Customers First We act with customer satisfaction first and foremost in mind.

6 7 Toward Sustainable Development Toward Sustainable Development Compliance and Risk Management Customer First

We have created a Sumitomo Forestry Ethical Charter and are reinforcing compliance practices We were the first in the housing industry to offer a 24-hour-a-day, 365-day-a-year technician response service. while focusing on risk management. Customer satisfaction is our main priority in all business areas.

Sumitomo Forestry Ethical Charter Our Ethical Charter and compliance Putting customer satisfaction first Customer service management ‘Customer first’ video Acknowledging the necessity for a corporate 3. We will act as good employees. We recognize that all the businesses “Putting the customer first” is more than Featuring real Sumitomo Forestry What is compliance? ethical position from an international perspective, Sumitomo Forestry’s employees will act as good throughout the whole Group are society- just an abstract ideal. Sumitomo Forestry employees, this in-house training video We view compliance as far more than aware of our growing corporate responsibility, employees as they strive to increase the satisfac- based. To contribute to society through ensures all its staff take the “customer demonstrates how sales discussions can go and resolved to achieve further development as tion of our customers, perform fair transactions, just observing laws and regulations. True a member of society and to contribute to society, and create safe workplace environments while our businesses, it is vital that each indi- first” approach seriously in the perform- wrong, gives tips, and shows examples of compliance means wholeheartedly and we proclaim the Sumitomo Forestry Ethical obeying company regulations and abstaining vidual staff member takes the needs of ance of their daily duties. To realize this, particularly successful customer relation- from unlawful and anti-company actions. sincerely meeting the expectations of all Charter and will aim to create a new corporate customers to heart and always puts the we introduced customer service manage- ships. The video is used to train new staff our stakeholders, including customers, culture. 4. We will act as good executives. customer first. In our housing and other ment companywide to ensure our and is shown at in-house training sessions. Sumitomo Forestry’s executives will, conscious shareholders, employees, clients, and the of their responsibilities as managers, provide a businesses, we are working on develop- Corporate Philosophy of customer first is 1. We will act as good citizens. local community. We believe that this is good example to improve the ethical conscious- ing specific ways to keep the focus firmly reflected in day-to-day customer service. the basis for gaining the trust of society Sumitomo Forestry’s employees and executives ness within the company, and act as good man- on the customer. We have set specific goals for every will, as good citizens first and members of the agers by improving company systems and and is the true meaning of compliance. corporation second, comply with ethical princi- preparing for unexpected circumstances. part of our organization to improve cus- ples by obeying the law and respecting the 5. Sumitomo Forestry will act tomer service. We use a PDCA (Plan, human rights of others. 24-hour, 365-day technician Sumitomo Forestry Ethical Charter as a good corporate citizen. Do, Check, Action) cycle to carry out 2. We will act as good Sumitomo people. response system In 1998 we prepared the Sumitomo Sumitomo Forestry will act as a good corporate continuous customer service improve- Sumitomo Forestry’s employees and executives citizen by contributing to society as a member Forestry Ethical Charter to enable every will maintain the spirit of Sumitomo that values of that society through its business activities, In our housing business, in addition to ment in an effort to achieve still higher employee to understand the concept of impartiality and trust and whose principle is posi- responding to internationalization by deepening product quality our customers rely on us levels of customer satisfaction. compliance and implement proper deci- tive and trustworthy management, and will act as mutual understanding as a good neighbor to for support after their homes are built. • Draw up plan (Plan) good Sumitomo people who enhance this trust. other countries, and contributing to the conser- Scene from ‘customer first’ video sions and behavior as “good citizens” and vation of the global environment. We provide specialized Customer • Execute plan (Do) “good employees,” guided by a strong Centers for after-sales support at all 50 • Check and evaluate results (Check) commitment to compliance and ethical offices nationwide. These Centers are • Review (Action) Long-term support system principles. We also prepared Ethical issues, details of the Compliance Security Handbook. This was distrib- staffed by full-time technicians who are Action Guidelines as a concrete guide for Counter are also made available through uted to all company employees to make always ready to respond promptly and Customer service management The short lifecycle of Japan’s housing the promotion of compliance. Along an in-house Intranet. Measures are taken them more aware of the demands of the reliably. In combination with our new is severely inhibiting the emergence with our Corporate Philosophy and to protect individual privacy so that no information society. Call Center, we can now offer a 24- Action of a mentality in Japan. Environmental Philosophy, we also hour-a-day, 365-day system able to Lengthening the lifecycle of the nation’s employee is penalized in his or her work Check included the Sumitomo Forestry Ethical as a result of information released Emergency hotline established respond to telephone requests for repair housing has become an urgent social pri- Charter in our Employee Handbook, through the Compliance Counter. To provide a prompt and appropriate work and provide advice. ority, as highlighted in September 2002 which is distributed to all staff members. response in case of an emergency, a dedi- Do by a Ministry of Land, Infrastructure and Transport report entitled “Establish- Strengthening risk management cated telephone hotline was established Plan “Compliance Corner” in Group for staff throughout the entire ment of Guidelines for the Development newsletter To address risk management issues Sumitomo Forestry Group. The hotline of Long-Life Housing.” throughout the Group, we established a ensures that emergency information To address this social need, in April Every month we publish a “Compliance Risk Management Committee headed by reaches the Risk Management ‘Customer first’ training 2002 we launched our Long-Term Corner” in the monthly Sumitomo the general manager of our General Committee day or night, 365 days a Support System to provide a 60-year Forestry Group Newsletter. This clearly Administrative Division. In FY2003, the year. We are determined to maintain and back-up for our homes. The main points explains to employees the meaning of Committee produced an Information intensify the customer-first corporate of the system are: compliance, its importance, and its role Call Center spirit throughout the Sumitomo Forestry • To ensure the principal structural parts in everyday business. The aim is to raise Group. The tools used to build and of the house have a durability of 60 Compliance Counter system staff awareness of compliance. From After-sales follow-up system entrench this spirit include pamphlets years. April 2004, we began circulating the In-house liaison (General Administrative Division Manager) describing the basis of our customer first • To determine a design life for each Group Newsletter on an Intranet and (1) Information provided. So that we can respond promptly to cus- philosophy, newsletters, email, mobile material, and design the home to facili- (2) Confirm authenticity of information and plan to place it on a special compliance (1) In-house liaison tomer queries and complete repair work, phone cards, and other communication tate inspections, repairs, and replace- User consider need for response. (General ( ) ( ) (3) Interview information source and investigate website. (Information Administrative 2 3 we established an after-sales follow-up sys- tools and media. ment. source) the office concerned. (4) Division Manager) Ask the manager of office concerned for tem based on the following detailed data: • To implement regular inspections over remedial instructions and a report on results. Compliance Counter (4) Report results back to information source. • Overviews of completed buildings the 60 years of the home. • Chronology of project • To implement proposals from the External liaison (Consulting lawyer) To promptly identify and correct behav- • Computerized building plans design stage that will accomodate (1) Information provided. ior difficult to rectify by ordinary busi- User (2) Report content to General Administrative Division • Post-construction inspection data changes in the life stages of the occu- ness processes or actions that contravene (Information Manager. Because the Customer Center and pants. source) (3) Confirm authenticity of information and consider corporate ethics, we established the advi- need for response. Call Center staff can refer to this and • To propose maintenance programs that (4) Notify consulting lawyer on whether a response sory Compliance Counter staffed by the (1) (6) is necessary or not. other data when responding to inquiries include maintenance management and (5) Interview information source and investigate the general manager of our General (2) In-house liaison office concerned. from customers, they can make prepara- renovation proposals over the 60 year External liaison Ask the manager of office concerned for remedial Administrative Division and a consulting (General ( ) ( ) tions for repairs and provide on-the-spot life-cycle. (Consulting Administrative 3 5 instructions and a report on results. lawyer. To ensure that all employees lawyer) (4) Division Manager) (6) Report results back to information source. emergency repair advice if necessary. ‘Customer first’ tools • Use materials with a low environmen- thoroughly understand compliance tal impact and recycle.

8 9 Environmental and Social Report Environmental & Social Report 2004 Environmental Vision

300 years of forestry management has taught us the importance of sustainable resources and maintaining the ecosystem. Inspired by the ideal of sustainable forestry, Sumitomo Forestry Group This realization is reflected and furthered in our Environmental Philosophy and Environmental Policy. established our Environmental Philosophy and Environmental Policy. We promote an environmental management style that aims to harmonize the interests of the environment with the needs of business. Harmonizing the environment and the economy Taking seriously our commitment to be a good corporate citizen, we work to maintain the confidence of society, live in harmony with our local communities, During the high-growth period that marked Japan’s postwar recovery, Japan and contribute to society wherever we can. chose a development path that priori- tized economic prosperity. However, the sustainability of a socio-economic system based on mass production, mass con- sumption, and disposal of massive amounts of eventually began to be questioned and calls emerged for a A company-owned forest in Shikoku switch to a sustainable development Reducing environmental impacts tive use of sludge from water purifica- model. Environmentally friendly effi- tion plants and bark. ciencies were promoted, and society While lessening environmental impacts in increasingly indicated a preference for a our own businesses, we are seeking to Our responsibilities as good style of environmental management that contribute to the development of a sus- corporate citizens protects the environment without sacri- tainable society through the following ini- As consumers become increasingly envi- ficing the economy. tiatives that will help reduce environmen- ronmentally aware and the spread of the This stance is closely mirrored in tal impact throughout society in general: Internet makes them better informed, Sumitomo Forestry’s own approach, • Providing low-energy consumption they are tending to communicate with learned from nature through sustainable housing. companies directly and select their own forestry based on a continuously repeat- • Operating a wood chip distribution companies and products. ing cycle of planting seedlings, nurturing business to recycle chips from In this era, we believe companies have them, harvesting, and replanting again mills, joinery factories, and scrapping a responsibility to clearly show their phi- to maintain the functions of the forest plants. losophy and stance on the environment and the ecosystem. • Producing based on the effec- so that they can retain the trust of con- sumers and society. Environmental Philosophy and Policy

Environmental philosophy With many years of practical experience in , Sumitomo Forestry has an appreciation of the wonderful renewable resource that forests represent and the benefits that nature provides. Environmental protection is imperative in the 21st century. As a company with a close affinity with nature, we are aware of potential impact of our activities on the environment, and we contribute to society through the vigorous pursuit of business operations in harmony with conservation principles.

Environmental policy Founded on our corporate philosophy and environmental philosophy, Sumitomo Forestry Co., Ltd. seeks to make a positive contribution through all its business operations to maintaining and improving the natural environment and the communities in which we live and work. To help create a sustainable society, we will conduct our operations with the following principles in mind:

Engage constructively in business activities Accurately assess the direct and indirect Be thoroughly familiar with the laws and 123that are beneficial to creating a sustainable effects of our housing, products and regulations applicable to our products and society. business activities on the environment, and business activities, and strictly comply 1) Promote forest cultivation at home and abroad, strive to prevent pollution and to minimize with requirements. Where necessary, draft maintain and enhance the multifunctional roles environmental impacts by implementing voluntary standards and ensure that forests play in conserving forest resources the necessary control measures. compliance. and in preventing global warming, and pursue business activities consistent with environmental 1) Strive to minimize the environmental impacts of conservation. our housing, products and business activities at 2) Aim for product handling and procurement that all stages. takes account of the entire life cycle, from 2) Strive to reduce waste, carry out appropriate Establish objectives and targets to resource utilization through manufacture, waste treatment, and increase the ratio of product 4 achieve continual improvement of consumption and disposal. recycling and . environmental management systems, 3) Recognize that reducing environmental impacts 3) Focus on recycling and reuse in the development, and review those targets at least once design and production of housing and products. and promoting environmental responsibility also Endeavor to use resources and materials that translates into greater productivity and reduced a year. provide excellent conservation value, resource production costs, which in turn enhance protection and renewability, while also employing competitiveness. resource utilization technology with excellent This policy is publicly disclosed and communicated energy efficiency and conservation value. to all employees. The weeping cherry tree at Kyoto’s Daigoji Temple

10 11 Environmental and Social Report Sumitomo Forestry Group and the Environment

We seek to identify environmental impact factors in every area of our business and work as a Group to minimize the impact.

land. This initiative was the origin of the manufacture and sales of housing Sumitomo Forestry’s business Overseas operations Environmental impacts of our business Group companies operations Sumitomo Forestry’s stewardship. materials, furnishings and fittings, and activities Today, with 40,497 hectares of forest the provision of eco-friendly housing. We established overseas affiliates in New Each company implements its own poli- Founded in1691, Sumitomo Forestry land holdings in Hokkaido, Wakayama, Zealand, Australia, and Indonesia to cy-based environmental practices to ■ Principal domestic Group companies traces its roots to the management of Shikoku, and Kyushu, Sumitomo manufacture and sell medium-density Direct impacts identify and reduce direct environmental ■ Impact of forestry management woodlands that supplied timber to the Forestry still practices sustainable forest • Sumitomo Forestry Crest Co., Ltd: fiberboard (MDF), plywood, and parti- impacts. Besshi Copper Mine on the island of management founded on ecological Manufacture and sale of plywood and cleboard. Through the process of photosynthesis, Impact of office activities Shikoku. To remedy the degradation principles. In addition, we provide serv- building materials The sustainable management prac- trees absorb and sequester CO2, a major caused by the mine development, the ices across all aspects of the housing sec- • Sumitomo Forestry Two-by-Four Homes tices promoted by these companies cause of global warming, and release In maintaining and running our head mine manager, Teigo Iba, an entrepre- tor, including manufacturing and distri- Co., Ltd: Design, construction, and sale include a silviculture project in oxygen. The timberlands owned by office, branches, and other offices, we neur of the Sumitomo merchant family, bution of timber and building materials, of two-by-four homes Indonesia using the fast-growing tropical Sumitomo Forestry cover approximately use energy and consumables, and these prepared a plan in a spirit of construction and sales of custom-built • Sumitomo Forestry Component House timber Paraserianthes falcataria. one-thousandth of Japan’s landmass and result in general wastes. Co., Ltd: Manufacture, construction, and repaying what had been reaped from the wooden homes, and environmental proj- sale of component homes help absorb CO2 from the atmosphere. ■ Principal overseas Group companies ■ Impact of timber and building materials Indirect impacts ects such as overseas afforestation • Sumitomo Forestry Home Tech Co., Ltd: schemes. Renovation of stand-alone homes and The production of timber and building As well as direct impacts, we are also • Nelson Pine Industries Ltd. (NPIL): apartments materials results in environmental conscious of the indirect, or potential Manufacture and sale of MDF and other Sumitomo Forestry Group operations • Sumitomo Forestry Home Service Co., Ltd: products (New Zealand) impacts in the form of wastes and efflu- downstream, effects of our activities. For Brokering sale and purchase of housing • Alpine MDF Industries Pty Limited: ents input into the atmosphere and example, the extent to which energy and and land Manufacture and sale of MDF and other water system. The distribution of timber resource efficiencies are incorporated Domestic operations • Sumitomo Forestry Landscaping Co., Ltd: products (Australia) and building materials also results in into our housing development concepts Urban greening, residential exterior work • P.T. Kutai Timber Indonesia (KTI): With long experience in growing forests, and landscaping environmental impacts from the vehicles affects the environmental impact when Manufacture and sale of plywood, etc. Sumitomo Forestry is well aware of the • Sumitomo Forest Service Co., Ltd: Sale of used in their transportation. the housing is actually built and occu- • P.T. Rimba Partikel Indonesia (RPI): amazing potential and value of wood as a domestic timber, consigned forestry services ■ Impact of housing business pied. Manufacture and sale of particleboard natural product and building material. • Sumirin Agro-Products Co., Ltd: Production Energy consumption and construction To reduce such indirect effects, we • P.T. AST Indonesia (ASTI): Manufacture Our wealth of knowledge and experi- and sale of soils for seedling cultivation, wastes in housing construction have formulate eco-friendly policies and cir- of wooden audio speaker cabinets, etc. ence, passed on to the Group companies soil conditioning materials, and compost environmental impacts. culate environmental information as part working alongside us, has borne fruit in • Sumirin Enterprises, Ltd: Insurance agency of our day-to-day operations. and other general services Teigo Iba (1847 - 1926)

Business activities of the Sumitomo Forestry Group and their effects on the environment

• Sustainable forest management • Stable supplies of lumber, wood products, building materials, etc. Forestry Timber & Building • Wooden housing construction • Overseas • Factory precutting Housing & Environmental Materials • House renovation and refurbishment Businesses • Construction waste recycling • Manufacture of house timbers, building materials, furnishings, etc. Timber resources, CO uptake, Energy, Products, release Energy, Products, release Energy, water, 2 release to water, raw to atmosphere, water, raw to atmosphere, raw materials, atmosphere, materials, release to materials, release to water subsidiary INPUTS OUTPUTS INPUTS OUTPUTS INPUTS OUTPUTS release to water subsidiary water systems subsidiary systems and soil, materials systems and soil, materials and soil, waste, materials waste, noise waste noise

Resources Raw materials Processing Manufacturing Use Reuse, Recycle, Discard

• Greening of residential and urban spaces Office • Policy decision-making and implementation Other Operations • Plant potting media and other agribusiness Administration • Business planning and implementation Appropriate Disposal • Other lifestyle-related business • Other support tasks

Energy, Products, release Energy, water, raw to atmosphere, water, office materials, INPUTS OUTPUTS release to water INPUTS OUTPUTS Printed matter products and and waste subsidiary systems and soil, consumables materials waste, noise Reuse/Recycle

12 13 Environmental and Social Report Environmental Management System

We have succeeded in constructing an environmental management system (EMS), designed to ISO 14001 standards, to cover the entire Sumitomo Forestry Group, including our landscaping, housing, and housing materials production businesses.

Environmental management system Some examples of Group environmental From March 2003, Sumitomo Environmental audits external certification bodies. In FY2003, management Forestry Crest began shipping JAS stan- we received an interim external audit Sumitomo Forestry regards the environ- dard F✩✩✩✩ products with low- The administration of environmental between August 6 and 8, and were also ment as one of the most vital aspects of formaldehyde emissions. protection activities is verified by: audited at that time in regard to an managing our business. To effectively Sumitomo Forestry Crest Co., Ltd. Sumitomo Forestry Two-by-Four • Internal environmental audits extension of ISO 14001 certification to promote environmental management Sumitomo Forestry Crest had already Homes Co., Ltd. • Audits by an external certification body Sumitomo Forestry Crest and Sumitomo within the company, from 1995 we obtained ISO 9001 quality certification Sumitomo Forestry Two-by-Four Homes Forestry Two-by-Four Homes. began constructing an EMS based on for its five business premises. Now, how- Co., Ltd., which designs, builds, and Internal environmental auditing The regular audit carried out assessed ISO 14001 standards. In August 1997, ever, with its ISO 14001 certification, it sells two-by-four houses, uses external To make environmental activities still us as: “No major (A) or minor (B) indi- we became the first company in Japan’s can claim reliable management systems thermal insulation, which enhances the more efficient, Sumitomo Forestry con- cations; proper systems responding New recruits at a training session. housing industry to obtain ISO 14001 in the environmental area as well. heating and cooling effect, in all its ducts internal environmental audits. appropriately.” The audit for the exten- certification. Subsequently, we steadily Currently, Sumitomo Forestry Crest uses products. This construction method These internal audits, in which different sion of certification found: “No major expanded certification to our forestry coniferous forest products from planta- helps lower the environmental impact at parts of the company audit each other, indications (A). While the extension is Preparedness and training and timber and building materials divi- tion radiata pine and Russian larch the use stage; Sumitomo Forestry Two- focus on the following two key points: judged to be reasonable, one minor indi- for emergency situations sions. In August 2002, the divisional cer- forests. In the future, it will aim at ply- by-Four Homes use less energy and emit • Implementation of the EMS and cation (B) was found.” We took remedial The types of emergencies anticipated at tifications were upgraded to a general using Japanese timber less CO2. • Progress toward achieving environmen- measures to address that indication. Sumitomo Forestry include fire outbreaks certification for the whole company. in an effort to promote sustainable tal aims and objectives. and major disasters. To prevent accidents NPIL Integrating environmental management forestry. These audits are carried out by inter- Environmental education and disasters, employees in all areas with day-to-day business management New Zealand’s Nelson Pine Industries nal environmental auditors. receive regular training to prepare them In FY2003, six years after we first Ltd. (NPIL), which produces and sells ■ Collection of audit findings To ensure that every employee is aware to respond to emergency situations. obtained ISO 14001 certification, we MDF and other products, gained ISO The Green Environmental R&D of environmental procedures and carries ■ Fire training implemented a wide-ranging review of 14001 certification in July 2003. This Division*, which oversees our environ- them out in their daily work, all employ- Compounding the loss of valuable our EMS, which had generally realized was our second overseas subsidiary to be mental preservation activities, collects and ees must clearly understand their roles resources, fire releases CO2 in the com- its initial goals. ISO 14001 certified after P.T. Kutai reports all internal audit results to man- and be able to act responsibly. To this bustion process and causes damage to Up until that time, we had employed Timber Indonesia (KTI). agement. On the basis of the findings, end, we conduct education programs surrounding areas. Measures are devised different types of management systems NPIL has used only tim- management determines if improvements aimed at all employees. to prevent fires occurring and reduce for environmental management and for ber in the manufacture of its products are required, and where necessary, issues damage if a fire does break out. Regular our day-to-day business management. for a long time. Its ISO 14001 certifica- improvement instructions to the section Types of environmental education drills are held on fire prevention and ■ General environmental education However, to further assimilate our envi- Products undergo inspection at a Sumitomo tion will spur an even stronger commit- concerned. Information is shared with damage control procedures. ronmental preservation activities, we Forestry Crest plant. ment to green activities. other sections wherever possible. To fully convey the company’s environ- ■ Earthquake training decided to integrate our business man- *As a result of reforms implemented in April 2004, mental policy, we display posters and We prepared an Earthquake Manual, the Environmental Management Division has issue policy cards to employees. All distributed to all company members, to agement and environmental manage- Environmental management system (implemented from FY2004) inherited the role of the Green Environmental ment systems. In FY2003, environmen- R&D Division. offices nationwide prepare an annual protect their safety and that of their fam- tal management was brought under our Environmental management integrated ■ Training of internal environmental auditors timetable, with training provided ilies in the event of a major earthquake. with day-to-day business management Board of Directors budget control systems and we will begin Internal environmental auditor training through seminars conducted by Green The manual also sets out a company sys- Environmental R&D Division person- tem, including customer support, for applying this approach from fiscal 2004. President courses are held twice a year. Employees who have completed the course are nel. The aim is to raise environmental responding to earthquakes. The manual Group environmental management Management Meeting appointed as internal environmental awareness among all company members. includes: Board of Executives auditors. As of the end of March 2004, a ■ Education of employees engaged • Standards for action in emergencies We expanded the scope of our ISO total of 544 staff had qualified. in designated tasks • Methods of communication in emer- 14001 certification for Group companies Company members engaged in designat- gencies with management systems that meet cer- Indirect business Direct business Auditing by external certification bodies ed tasks (with potentially significant envi- • Leadership systems, crisis management divisions divisions tification criteria. ronmental impacts) receive training in: systems In accordance with our Environmental Policy, In accordance with our Environmental Policy, In addition to internal environmental In FY2002, ISO 14001 certification which seeks the formation of a sustainable society, which seeks the formation of a sustainable society, audits, annual ISO 14001 interim audits • Necessary procedures and • Emergency contact networks. we promote environmentally friendly business we establish a strategy for each division and was extended to Sumitomo Forestry based on the activities of each division. promote environmentally friendly business. (surveillance visits) and three-yearly re- • Environment-related legislation. ■ Education system for new recruits Landscaping Co., Ltd., Sumitomo Corporate Planning General Administrative Forestry Tsukuba Research assessment audits are conducted by Forestry Home Service Co., Ltd., and Division Division Headquarters Institute All new recruits attend induction train- Sumitomo Forestry Component House Personnel Finance and Accounting Business International Business ing at Forester House, located at Co., Ltd., and in September 2003, Division Division Headquarters Headquarters Besshiyama in Niihama City, Ehime Sumitomo Forestry Crest Co., Ltd. and Credit Administration Information Housing Collective Housing Prefecture, Shikoku. The new recruits Division Systems Division Headquarters Headquarters Sumitomo Forestry Two-by-Four Homes study the plantation’s history and Environmental Affiliates Division Co., Ltd. were also recognized as being Management Division forestry skills, and learn conservation ISO 14001 compliant. concepts through practical work. They Customer Service Audit Division Overseas, Nelson Pine Industries Ltd. Division also take part in the Manabi no Mori

(NPIL) of New Zealand received ISO Intellectual Property volunteer tree-planting program on Mt. 14001 certification. Division Audit by external certification body Fuji. The Earthquake Manual

14 15 Environmental and Social Report Environmental and Social Report Green Procurement Environmental Accounting

We have developed our own green procurement standards, which we follow in an effort In the interests of promoting environmentally sound management, to reduce environmental impacts in our housing construction activities. we monitor and publish our environmental conservation costs.

■ Business area costs (cost of environmental ■ Research and development costs Our approach to green procurement materials and wallpaper glue, has Sumitomo Forestry’s environmental Results and issues in FY2003 protection) Expenditure on environmental-related become a social problem. As a way of accounting At Sumitomo Forestry, we recognize the Conformance to corporate tackling “sick house” syndrome, when Expenditure on environmental manage- research conducted at Tsukuba Research impact of housing construction on the activity assessment standards 82% purchasing such items as construction Environmental costs were first published ment of company-owned forests for sus- Institute. environment. To fulfill our social Conformance to product materials and wallpaper glues, we always in our Environmental Report 2001. We tainable forestry development, expendi- ■ Social contribution costs responsibility in trying to reduce that assessment standards 93% use materials rated F✩✩✩✩ and F✩✩✩, recognized that to further promote envi- ture in Japan and overseas relating to the Our social contribution expenditure was impact, we have prepared original Green Since April 2003, we have been basing ensuring low emissions of formaldehyde. ronmental protection activities within Indonesian reforestation project. spread over the following four areas: Procurement Guidelines and from procurement on the Green Procurement our management framework, it was nec- ■ Business area costs (cost of resource • Expenditure on running the Mt. Fuji FY2003 began applying them to materi- Guidelines, and with the support of sup- Other preventive measures essary to quantitatively assess the costs recycling) Manabi no Mori natural forest regen- als sourcing. pliers, we achieved the following results ■ Vinyl chloride incurred and benefits derived from envi- Expenditure on the operation of our eration project as of March 2004. We no longer use vinyl chloride in inte- ronmental protection, and to disclose waste wood recycling distribution busi- • Expenditure on maintaining and man- Selection of suppliers • 82% of our suppliers meet corporate rior decoration materials such as wallpa- this information to the numerous organ- ness, and sorting, recycling, appropriate aging Forester House When selecting suppliers, we aim to activity assessment standards. per and panels used to dress fittings izations and individuals involved with treatment, transportation, and manage- • Expenditure in Japan and overseas assess them on the following criteria: • 93% of our products meet product because it can release harmful dioxins our company. ment of construction wastes. relating to the Sebulu Experimental • Preventing environmental pollution assessment standards. when incinerated and is suspected of ■ Management activity costs Forest project in Indonesia • Reducing environmental impacts Because JIS standards and green pur- containing endocrine disruptors. Assessment of environmental costs Office expenses and auditing costs relat- • Grant to Keidanren Nature • Building a recycling-oriented economy chasing procurement standards have ■ Asbestos Environmental costs are assessed accord- ing to ISO 14001 certification and Conservation Fund and other contri- and society been revised, we will review our own We have also replaced all light-weight ing to the following conceptual frame- ongoing compliance; expenditure on butions Essentially, our Green Procurement Green Procurement Guidelines during (slate) roofing materials with asbestos- work: publishing environmental information, Guidelines assess potential suppliers 2004. free products. Roofing materials that including advertising and reporting. from two angles: their activities and their contain asbestos are carcinogenic if the products. Creating safe housing environments asbestos particulates are inhaled during FY2003 environmental accounting • Assessing corporate activities: The construction. We have therefore stopped Environmental costs (Unit: Yen millions) company’s stance toward the environ- We are promoting the purchase of raw using asbestos to improve safety during Category Main activities Costs

ment materials and components with lower construction. (1) Business area costs Costs of environmental protection Sustainable forestry 525 • Assessing products: The product’s environmental impacts in an effort to ODA afforestation 45 impact on the environment through- preserve the safety of the customers who Educating suppliers out its life-cycle. buy our houses and the tradespeople Costs of resource recycling Construction waste reduction and recycling 3,768 In assessing a company’s activities, we who construct them. We actively educate our suppliers on Waste wood recycling distribution operations 95 look at its stance on protecting the envi- Measures to prevent “sick house” environmental issues, and hold seminars (2) Management activity costs ISO 14001 compliance and operation 44

ronment, regardless of whether it has syndrome and training sessions for them. Disclosure and administration of environmental information 58 ISO 14001 or other environmental man- “Sick house” syndrome, caused by (3) Research and development costs R&D related to environmental protection 305 agement certification. formaldehyde emitted from construction (4) Social contribution costs Mt. Fuji Manabi no Mori administration 27

Certifying green products Forester House administration 25 A “Healthy house,” down to the last detail In product assessment, we classify prod- Sebulu Experimental Forest regeneration project administration 41 ● ✩✩✩✩ ● ✩✩✩✩ ucts into 11 groups and evaluate them in Bathroom cabinet/basin: F System kitchen: F Grants to the Keidanren Nature Conservation Fund, etc. 2 ● ✩✩✩✩ ● Walls of Japanese-style room: regard to the following seven points. Fittings: F Total 4,935 Products meeting our standards in this Formaldehyde-free new Juraku coating seven-point assessment are certified as ● Box storage: * Compared to the previous fiscal year, costs relating to the treatment of industrial wastes increased by approximately ¥390,000,000. Costs in other areas decreased. F✩✩✩✩ Costs relating to our waste wood recycling distribution operations reflected an increase in staff dealing with wood chips and the inclusion of some costs not included last year. green products, and we actively source ● Wall cloth: Vinyl All chip-related Group costs will be monitored from the current period. these items. The seven points are: chloride-free Glue: F✩✩✩✩

(1) Reduction of the use of substances or Environmental benefits emissions that affect the environment or Category Description Benefit human health ● ✩✩✩✩ Closet shelves: F (1) Business area benefits CO2 sequestered by company-owned forests 248,639 (t-CO2/yr.) (2) Reduced consumption of energy resources Inside walls: Dressed gypsum board or F✩✩✩✩ plywood Seedlings planted in Way Kambas (Indonesia) 130,000 (3) Sustainable use of recyclable natural resources ● Flooring ● Tatami mats: Tatami flooring with no polystyrene Waste wood recycled (volume of chips) 644,487 (t) materials: F✩✩✩✩ foam (4) Usability over the long term Flooring glue: F✩✩✩✩ ● Vestibule cabinet: F✩✩✩✩ (2) Management activity benefits Reduced copy paper usage (Tokyo Head Office only) Reduced 5.1 % from FY2002 (annual reduction of 900 sheets/person) Subflooring: F✩✩✩✩ ● ✩✩✩✩ (5) Suitability for recycling Storage unit: F (3) Social contribution benefits Mt. Fuji (Manabi no Mori) tree- volunteers Held 4 times (6) Use of recyclable materials and reusable ● Soil treatment: Non-organophosphorous insecticide ● Number of visitors to Forester House 6,131 components Wood treatment: Non-organophosphorus anti-rot and insecticide (7) Ease of proper treatment or disposal at end of life cycle

16 17 Environmental and Social Report Domestic Forestry

Based on an ideal of sustainable forestry developed over the years, we work to maintain and develop sound forests, and practice sustainable forestry management.

Environmental strategies Sumitomo Forestry-owned forests Computerized forestry management Forestry management based Using thinnings effectively for forestry management on ISO standards Sumitomo Forestry-owned forests are To streamline the management of our Timber is one of the few renewable Sumitomo Forestry began cultivating located in Hokkaido, Shikoku, Kyushu, forests in different parts of the country, We have constructed an ISO 14001- resources. Based on the ideal of sustain- cedar and cypress seedlings and planting and Wakayama. They cover 40,497 we have established an IT-based manage- based EMS for the environmental man- able forestry, we ensure that and forests in Shikoku in the mid 19th centu- hectares in total, representing about one ment system using a Geographic agement of our forests and were the first planting remain in balance. We also use ry, and in 1894 devised and implemented thousandth of Japan’s land area. Our Information System (GIS) and a Global in the forestry industry in Japan to obtain the thinnings that are an unavoidable a large-scale afforestation plan. In1904 we timberlands comprise 49% plantations Positioning System (GPS). ISO 14001 environmental certification. part of forestry management as construc- drew up the first private-sector forestation and 42% natural forest. Company-owned forest in Kyushu Every year, we evaluate the impact of our tion materials, such as lattice wall panels management plan in Japan. This plan Out of consideration for regional forests on the environment, produce and Super Cypress . We established our sustainable forestry philos- ecosystems, we allow no clear felling in goals for the reduction of environmental make every effort to use valuable timber ophy: successive planting and wood pro- any company-owned forests. Instead, we The public benefits of our forests impacts, and implement these as we con- resources carefully and practice environ- duction, repeated in perpetuity. Today, we practice block-based selective , tinuously manage our forests in an envi- mentally friendly forest management. ensure the amounts of timber we harvest taking only the volume needed within Forests are not just sources of timber, but ronmentally sensitive way. Thinnings used for environmental stay within the annual incremental vol- replacement growth capability. We provide vital functions that benefit us all. For example, when building forestry report paper ume of timber our forests produce. Our remain thoroughly committed to pre- These include: roads, which have a significant impact As part of our policy of promoting the forestry management activities reflect the serving the entire forest ecosystem. • Sequestering of CO2 on surrounding ecosystems, we evaluate use of thinnings, we have developed needs of the environment and are • Prevention of soil erosion the potential environment impacts from printing paper based on a mixture of Identifying location using GPS designed to prevent flooding and erosion. • Conditioning of water resources (miti- the planning stage and carry out regular 10% thinnings pulp and 90% pulp gating floods, purifying water) GIS supports sophisticated analysis site checks during construction to mini- made from recycled paper. This “thin- • Provision of recreational spaces and speedy decision-making by compre- mize the effect of each road on the water Conceptual diagram of eco-friendly forestry (block-based selective logging) nings paper” has received both Eco- If our forests were assigned a mone- hensively managing and processing data system and environment. mark certification and the tary value for these public functions, that 25 years reflecting information related to position When harvesting timber, we check Thinnings mark. We began Tending figure would be around ¥110 billion*. 50 years Block and space (spatial data), and visually dis- for legal restrictions concerning, for using this thinnings paper for Planting Of this, the total amount of CO2, a playing the result. Using spatial analysis example, conservation forests, and make our environmental reports 75 years Mature 100 years trees cause of global warming, absorbed by based on topographic maps and forestry any necessary submissions. from 2004 (this report). Harvest- our forests was estimated at around ing survey records, GIS can be a useful tool 250,000 tons. Our forests make a signifi- for preparing forestry management cant contribution to protecting the envi- plans. ronment. By building a database using GPS *From the Forestry Agency’s FY2001 data added to the GIS data, we can now How do you calculate the amount White Paper on Forests and Forestry manage such information as location, Q: Logging of CO2 absorbed by forests? road area, tree species, and density of standing trees, and control our huge area of com- When we surveyed readers of last year’s environmental report, this was pany-owned woodlands in units of In block-based selective logging, the forest is divided into small areas (blocks) of 0.05 to 0.1 hectares one of the things they most wanted to know. Well, here is the answer. each, and planting, tending, and felling operations are based on these discrete areas. This allows timber “stands.” production to be staggered in successive generations while maintaining the public benefits of a healthy forest. This also increases the amounts of CO2 absorbed and helps prevent global warming. A: Distribution of Sumitomo Forestry timberlands Percentages of plantations and natural forests How we calculate the amount of CO2 forests absorb.

The CO2 absorbed by forests is calculated from the volume of trunk, branches, roots, and leaves Plantation 7% produced by forests (trees) from sunlight, CO2, and water. Natural forest 22% Other 15% After a specified number of years (set by us) have elapsed from planting, we calculate the vol- ume of the trunks of the planted trees. Specifically, we measure the diameter at breast height 23% Other (dbh) and height of the trunks and the number of trees, then apply a specified formula to 62% 71% 9% calculate the total trunk volume (= volume of standing trees). First we carry out a survey, then we apply a growth algorithm to the volume of standing trees Hokkaido 15,314 ha calculated from the results of the survey to work out the volume of growth in a year. The Shikoku 14,710 ha Tree species distribution map based on GIS growth algorithm varies according to such factors as the tree species, the number of years 9% Natural forest Plantation 4% of growth, the region, and whether the forest is natural or a plantation. 42% 49% 21% The published volume of CO2 absorbed in a year is derived by multiplying a coefficient by the volume of trunk growth in a year to seek the amount of growth of the forest (trees), including 70% trunks, branches, roots, and leaves. The amount of CO2 absorbed is calculated from this 35% volume of growth. 61% Kyushu 8,214 ha Total area: 40,497 ha Wakayama 2,260 ha

18 19 Environmental and Social Report Environmental and Social Report Overseas Afforestation Projects Using Timber Resources Effectively

We carry out afforestation activities in Indonesia and New Zealand. We have been involved in wood chip distribution since the second half of the 1950’s. We have also pioneered The Overseas Development Aid (ODA) afforestation program, which started in November 2000 in Indonesia, and developed methods of effectively utilizing thinnings, small logs, and unused materials. was completed successfully in March 2004.

of a sustainable recycling society, we KTI afforestation project grown trees when they are ready to har- hectare. NPIL’s forests currently supply Promoting use of domestic timber framing timbers failing to meet quality developed a molded composite wood vest. The aggregate number of trees just over 10% of its raw timber and the standards. Cedar, in particular, takes material known as “Woody Fit.” This Total number of trees planted up to FY2003 was around company plans to increase this ratio in Rate of use of Hokkaido timber 78% considerable energy to dry because it is new environmentally friendly material is planted by KTI: 2,552,000 430,000; RPI plans to eventually expand the future. In May 2003, our Sapporo office began wetter than other tree species, and its based on wood from construction P. T. Kutai Timber Indonesia (KTI) rec- the planted area to 1,000 hectares. processing larch from our Hokkaido moisture content varies greatly by pro- sites and timber processing plants to ognizes the benefits of forests and takes Because particleboard is made by Completion of ODA afforestation forests into laminated wood and selling duction area and cultivar. which resin is added. In February 2004, the following steps to utilize afforesta- reducing materials to small particles and support project homes using larch poles, beams, and Woody Fit qualified in Ehime Prefecture tion and plantation timber effectively: solidifying them with adhesive, branches interior fittings. Larch, which makes up as an “Excellent Resource Recycling ODA area planted 360 hectares • Develop housing materials based on pruned on city streets and scrap timber roughly 30% of Hokkaido’s plantation Model,” an accolade awarded to superior species considered to have little value from other mills can be used. Trees can ODA trees planted 613,000 trees forest area, is a strong and durable wood. recycling-based products. With a wood in the past. be harvested for particleboard at any age An Overseas Development Aid (ODA) However, its modulus of elasticity, which content of 80%, Woody Fit feels just like • Expand the scale of joint afforestation and as the bark and branches can be grant aid project, started in November indicates the difficulty of flexing in rela- real wood, is highly durable, and has projects with local people, corpora- used as well, there is no waste. 2000 to rehabilitate land devastated by tion to the load, is higher than for cedar consistent quality. Because of these tions, universities, and administrative forest fires in Indonesia’s Way Kambas and cypress. attributes, Woody Fit is being developed bodies. National Park in Lampung Province, Larch was once widely used for the for use in garden decks, balconies, and NPIL sustainable forestry Japanese cedar dried to 15% or less moisture • Consider types of timber that will be Sumatra, has been completed. An area of props needed in coal mines, but with the content in the timber drying system other exterior products. needed in the future and conduct Total area planted by NPIL: 3,500 hectares 360 hectares were planted with 613,000 decline of the coal mining industry, afforestation experiments into new Nelson Pine Industries Ltd. (NPIL) of native trees, and in March 2003, the for- demand rapidly fell away. The develop- To address these problems, Sumitomo fast-growing species. New Zealand carries out sustainable est was handed back to Indonesia’s ment of uses for the younger plantation Forestry’s Tsukuba Research Institute has By FY2003, KTI has planted around forestry aimed at protecting the environ- Ministry of Forestry. trees, which were prone to twisting, was developed a proprietary drying technique 2,550,000 trees. KTI has also conducted ment and securing stable supplies of tim- This national park is well known for particularly slow, but government subsi- with sensors attached to the wood, reduc- conservation planting experiments with ber. NPIL maintains around 3,500 its elephants, rhinoceros, Sumatran dies raised hopes that new uses would be ing the incidence of surface cracking even long-lived species in an effort to protect hectares of forest (around 0.2% of New tigers, and other wild animals. During discovered. with shorter drying times. This efficient the environment by planting in such Zealand’s planted forest area) within a the period of the project, tiger tracks Sumitomo Forestry focused on the new system has achieved excellent pro- places as the banks of rivers, mountain radius of 60km from the mill. By system- were spotted and wild elephants were fact that the properties of this strong but ductivity and energy-saving characteris- ridges, and steep slopes, which were pre- atically planting the same area of forest as frequently seen. We therefore carried out difficult-to-process wood stabilize as the tics: approximately 1/4 the drying time Woody Fit viously rejected as unsuitable for tree it fells, NPIL achieves sustainable forestry. the afforestation in a way that would not tree matures. From among our forests, and 1/2 the energy requirements of con- planting. Around 130 hectares are harvested disturb this valuable wildlife. we chose trees that had been planted ventional kilns, no discoloration or inter- “Twinned post” wins Forestry Agency and planted every year, and NPIL plants Our know-how in such areas as after World War II and were approach- nal cracking, and lower moisture content Director-General’s award KTI’s planting activities 800 to 1,000 radiata pine seedlings per seedling cultivation technology, ing maturity. Taking advantage of (15% or less) after drying. Tests indicate The “twinned post” jointly developed by Year Number of trees afforestation methods, and post-planting improvements in drying technology to that the rate of non-standard square tim- Sumitomo Forestry, Sumitomo Forest To 2000 253,000 maintenance was passed onto the more control twisting, we succeeded in mak- ber can be cut from 20% to 5%. Under Service Co., Ltd., and Sankei Co., Ltd. FY2001 833,000 than 150 park employees and other local ing larch a viable housing material. the Housing Quality Assurance Law, of Hyuga City, Miyazaki Prefecture people who worked on the project, and Among the houses using this larch, strict control of wood quality is a key recently won the Forestry Agency FY2002 535,000 is being used in major greening projects the use rate of Hokkaido-grown trees in issue. With our state-of-the-art drying Director-General’s award. FY2003 931,000 starting from this year. This ODA proj- the main framing is now 78%. The system, we are able to supply dried wood Our twinned post, whose commercial- Total 2,552,000 ect also included forest fire prevention proactive use of Hokkaido timber has with excellent dimensional stability. ization began two years ago, is a two- facilities, fire-fighting equipment and raised the hopes of the local people of Calculated in terms of 3-meter, 105-mm piece laminated cedar post created by RPI afforestation project materials, and fire-fighting drills for park Hokkaido for its timber industry. square posts, in FY2003 we shipped longitudinally slicing the square cores Radiata pine seedlings employees and local people. 10,995 cubic meters of MIZDAS-dried produced from Japanese cedar logs, dry- Total number of trees wood, equivalent to 332,000 posts. ing the two resulting halves, then gluing planted by RPI: 429,000 Afforestation bases in Indonesia and New Zealand them together by machine. This new P. T. Rimba Partikel Indonesia (RPI), a Next-generation eco-material process will enable bent logs, which producer of particleboard, began a joint Kalimantan Island Woody Fit® could not previously be used as posts, to afforestation project with local farmers Sebulu Seeking to contribute to the emergence be used effectively. in 2002 in an effort to further the eco- Sumatra Indonesia Shipments of MIZDAS-dried timber nomic development of the region and to Way Kambas National Park 3 secure a stable supply of materials. RPI Larch forests of Monbetsu, Hokkaido m supplies free seedlings of fast-growing RPI KTI 10,995 9,809 10,000 species and guarantees to buy back the MIZDAS drying system for structural Australia RPI’s planting activities timbers Drying time Reduced by 75% 5,000 Year Number of trees Energy required for drying Reduced by 50% FY2002 188,300 New Zealand Japanese cedar and cypress heartwood FY2003 241,100 NPIL 0 frequently cracks during the drying 2002 2003 Total 429,400 process, resulting in around 20% of Fiscal year Fiscal year Twinned Post

20 21 Environmental and Social Report Using Timber Resources Effectively

ously utilized to any significant extent, Thinned area corresponding to Super Effective use of thinnings and unused Cypress, volume used Wood chip distribution timber materials these lattice panels are helping to boost rates of domestic timber usage. Area (ha) panels We have been involved in the waste In FY2003, we used 643,572 lattice 3,000 30,000 wood chip distribution business since the Lattice panels as wall linings 28,131 28,457 panels. Calculating the total area Thinned area late 1950’s. In producing timber, the Number of lattice panels fitted 643,572 thinned, based on the amount of cedar Number of panels used milling process results in offcuts that rep- 2,000 20,000 Thinned area 920 ha approx. used in the lattice panels and past results 1,800 1,820 resent 20 to 25% of the raw timber, Sumitomo Forestry has developed lattice from company-owned forests, yields an while very bent logs cannot be used at all. panels, made primarily from domestic area of approximately 920 hectares, 1,000 10,000 The demolition of houses also produces cedar, for use as wall linings. Offering roughly equivalent to 196 Tokyo Domes. large volumes of waste timber. In this exceptional strength and ventilation, the form, the waste can only be incinerated, panels are made from 55-mm wide strips Super Cypress Laminate 0 0 but converting it into chips allows it to FY2002 FY2003 of wood glued diagonally at a 45° angle Amount of Super Cypress used 28,457 m3 be efficiently used in paper-making, tim- in a latticework pattern. These airy, load- Thinned area (estimate) 1,820 ha approx. ber fiberboard production, or as a fuel. bearing panels offer some outstanding In FY2002 we led the industry in pro- draws on the technical strengths of the “GODAI One's Story II” features compared with plywood: duction of Super Cypress, an engineered Sumitomo Forestry Group and enables us Scrap wood recycling • Exceptional strength (1.3 times more wood (glued laminated timber) made to utilize even relatively narrow or short Chips for raw materials 545,219 tons Chips for fuel 99,268 tons rigid than 7.5 mm plywood in load- from Japanese cypress (hinoki), the stan- logs effectively. Thinned logs and other Promoting use of plantation timber producing MDF with low formaldehyde bearing wall tests) dard material used nationwide in the previously unusable lumber can now and other volatile organic compounds Sumitomo Forestry uses the network it • Moisture resistance posts and ground sills of our mainstay become useful raw materials. (VOCs) that can cause hypersensitivity has created in its timber distribution • Good airflow and less condensation “GODAI One’s Story” house series. In In FY2003, we used 28,457 cubic Virtually 100% of raw lumber utilized to chemical substances, NPIL con- business to promote a scrap wood recy- within the wall FY2003, we retained Super Cypress as a meters of Super Cypress. In terms of MDF production in FY2003 306,086 m3 tributes to post-construction indoor cling circle that links the timber industry • Very manageable - lightweight, easy standard material in our “GODAI One’s 105-mm, 3-meter square posts, this Nelson Pine Industries Limited (NPIL) environmental safety. with other industries. to work with, and easy to run pipes Story II” series. comes to about 860,000 posts. of New Zealand produces medium-densi- Because of this approach, NPIL’s With the enactment of the Construc- through. The 1,300-year-old Horyuji temple Calculating the total area thinned, based ty fiberboard (MDF), an industrial wood medium-density fiberboard was awarded tion Materials Recycling Law, in recent Derived from milling offcuts, thinned was built from hinoki, traditionally con- on the cypress used in the Super Cypress material that utilizes the characteristics of Japan’s Eco-mark certification and quali- years the volume of waste wood chips lumber, and other small wood not previ- sidered a top-quality structural material engineered wood and past results from timber but offers greatly improved fies as a green purchasing special pro- created from construction-related indus- with superior durability, strength, and company-owned forests, yields an area of processability, strength, and stability. curement item. try waste timber has been increasing, and Thinned area corresponding to lattice panels, resistance to decay and termites. In solid approximately 1,820 hectares, roughly Normally when timber is produced LVL: All the advantages of natural timber the importance of the waste wood chip number of panels used form, however, hinoki has a number of equivalent to 389 Tokyo Domes. from raw lumber, only 65 to 70% of the plus ease of use distribution business is growing. Area (ha) panels drawbacks: it varies in strength and quali- raw lumber is suitable for making into In addition to medium-density fiber- We contribute to the efficient use of 1,500 650,000 ty, tends to bend and warp, and is diffi- Rubber tree wood solid flooring timber product. But with MDF, slender timber resources through our chip distri- Thinned area 643,572 board, NPIL produces laminated veneer Number of cult to dry uniformly. Super Cypress capi- Solid flooring of rubber wood is now in trees and crooked segments not fit for lumber (LVL) , also from radiata pine. bution business. In FY2003, we handled panels used talizes on hinoki’s excellent qualities by standard use in our mainstay “GODAI timber can also be used so that virtually The comparatively thick and straight 545, 219 tons of chips for use as raw 1,000 920 500,000 492,000 using it as the base laminate material, One’s Story II” house series, which went 100% of the raw material can be made parts of plantation radiata pine logs are materials, and 99,268 tons for fuel. If 700 while using lamination technology to on sale from February 2004. into product. In FY2003, NPIL pro- selected as the raw material for LVL, the heat produced by this volume of fuel 500 350,000 achieve greater strength and dimensional This flooring timber is from the rub- duced 306,086 cubic meters of MDF. while crooked, slender, and shorter parts chips was to be generated by gasoline, accuracy than solid hinoki. To produce ber tree, which is widely cultivated in ■ NPIL’s eco-friendly approach are used for MDF. This means that the around 53,000 kiloliters would be Super Cypress, we have developed a high- tropical Asia and other regions. Because NPIL makes effective use of timber and most effective use of timber resources is required. 0 0 ly innovative manufacturing process that rubber trees are grown in plantations to conserves resources. It uses radiata pine FY2002 FY2003 made. To produce LVL, the log is first yield , the use of this tim- from planned plantation forests as its sliced into sheets, 2 - 4mm thick. These Volume of wood chips handled ber is regarded as environmentally friend- raw material and does not throw away are then dried, any flawed parts are Tons (000) ly. The material used for the flooring is bark and defective wood arising from the removed, and the slices are glued togeth- 100 an effective use of the scrap wood that production process but uses them as fuel. er in boards that maintain the same remains after the has been removed. And, through its active commitment to grain direction. These boards are used in 634,000 644,487 610,000 Chips for fuel After the rubber tree has been felled, trims, posts, and beams. 99,268 its wood tends to discolor and lose its While providing all the advantages of 50 Chips for raw shape. For this reason, it has simply been a natural timber material, LVL provides materials used as fuel in the past, but technologi- stable strength and is not susceptible to 545,219 cal innovations now allow it to be used splitting or warping. We also began 0 as a laminate in furniture, plywood using LVL in the rafters of our mainstay FY2001FY2002 FY2003 cores, and building. “GODAI One’s Story II” house series Figures based on data from the Biomass Super Cypress launched in February 2004. We plan to Handbook of the Japan Energy Association rationalize the supply system for LVL in the future and expand its use to other products. Lattice panels Wood chips to be used for MDF (NPIL)

22 23 Environmental and Social Report Developing Environmental Technologies

Seedlings raised by culturing tissue from the famous weeping cherry tree of Kyoto’s Daigoji Temple began to flower in spring 2004. Among the many other environmental technologies we have developed is a mortar wash water treatment system.

Regenerating the famous Environmentally friendly termite ding that is essential to their growth Environmentally friendly Group products weeping cherry trees of Kyoto control system (via a chitinous substance inhibiting effect) and eventually wiping out the The Sumitomo Forestry Group develops The “Togyu cherry” of Daigoji Temple Sumitomo Forestry is the first housing entire termite colony. various environmentally friendly prod- in Kyoto was favored by feudal warlord manufacturer to install an environmen- • Even if no termites are found, or after ucts and contributes to the environmen- Hideyoshi Toyotomi for cherry blossom tally friendly termite control system in the colony has been extinguished, regu- tal activities of its customers. viewing. Sumitomo Forestry has now its new homes. Compared to conven- lar checks are maintained to guard ■ Weedy Mats succeeded in the large-scale propagation tional termite control, the Sentricon sys- against re-infestation. Designed to preserve Japan’s disappear- of these venerable trees by tissue culture. tem is safe for humans and pets, and has ing countryside, this is a wild grass mat The weeping cherry of Daigoji a minimal impact on the environment. For safe and healthy living with mainly native field grasses already Temple (Prunus pendula Maxim f.ascen- Sumitomo Forestry and the Tsukuba growing on it. dens (Makino) Ohw) is a particularly Features of Sentricon system Research Institute carried out perform- long-lived type, with many examples Conventional termite control systems ance verification experiments in nine more than one hundred years old. These have generally relied on treating soil, completed Sumitomo Forestry homes in grand old trees have the same cultural foundations, or poles with insecticide. Kyushu and at the Institute to confirm significance as historic buildings, and The Sentricon system, however, protects the efficacy of the Sentricon termite con- their preservation is highly desirable. homes from termites by regular monitor- trol system. These experiments confirmed Weeping cherry trees, cloned with biotechnology, flowered for the first time in spring 2004. However, the older a tree becomes, the ing and cleverly exploiting the biology of that the Sentricon system is effective for harder it is to propagate by conventional the termite colony. eliminating and preventing the common techniques such as taking cuttings or In cloned seedlings, because the par- Morblock mortar wash water • Bait stations (wood) are placed around Yamato and Formosan termite species. grafting, and the development of a prop- ent genes are passed on directly, the treatment system the circumference of the house to Because the Sentricon system uses agation method using biotechnology was characteristics of the more than 150- reveal any termite activity. A Sentricon only trace amounts of the active ingredi- sorely needed. year-old Togyu parent are preserved In the past, there was no effective specialist regularly checks the bait sta- ent hexaflumuron, it is guaranteed highly Example of Weedy Mats along a waterway in intact, and its cloned tissues are rejuve- method for treating water used for wash- tions and confirms whether termites safe for humans, pets, and the surround- Tsurumi, Osaka nated. The development of this efficient ing up after concrete and mortar had are present. ing environment. And because there is no ■ Rooftop greening system weeping cherry propagation technology been poured on construction sites and in • If present, the bait stations are removed longer any need to get under the house We have developed and market a rooftop was a world first. civil engineering projects, and disposing and replaced with very small amounts and spray pesticide, there is very little greening system to effectively grow of this waste water caused considerable of pesticide (hexaflumuron). The ter- danger to the pest control operator. rooftop lawns (Zoysia japonica grass) on First blossoms appear spring 2004 problems. mites that have eaten this transmit it to We hope to spread the use of the the tops of city buildings. Today, four years after the first cloned Sumitomo Forestry Landscaping Co., other members of the colony, and sev- effective Sentricon system nationwide. seedling was planted in the ground, Ltd. developed Morblock, a simple wash eral months later the entire colony is We will continue to develop a range of Waterproof sheet Ceramic Zoysia japonica more than 1,000 clones of the Togyu water treatment system suitable for extinguished. environmental technologies that are glass oasis cherry are developing healthily, with the small-scale sites where mortar or con- • The active ingredient, hexaflumuron, benign to humans and compatible with largest now around 5 meters high. And crete is used, and began selling it from an insect growth regulator, works only the environment so that our customers The “Togyu cherry” of Daigoji Temple in Kyoto this spring, the young trees flowered for December 2002. Morblock consists of a on insects and other creatures that shed can enjoy peace of mind and a safer the first time. All the blossoms of the flocculent, a neutralizer, treatment con- their exoskeletons, disrupting the shed- lifestyle. clones matched the original Togyu cher- tainer, and analysis kit. The mortar in Water-holding Permeable Recycled soil Seedling clones ry in color and shape. the waste water is coagulated by the floc- Sentricon system mat root barrier Sumitomo Forestry Tsukuba Research In the future, this technology will be culent, precipitated out, separated from Water storage/drainage layer applied to help preserve valuable weep- the water, and properly treated as an Institute, and Sumitomo Forestry 1 Monitoring ■ Flameproof board based on recycled Landscaping applied seedling nursery ing cherry trees and other tree species industrial waste. A neutralizer is added A bait station (wood) is set to Special receptacle technology developed through that are in danger of extinction every- to the strongly alkaline waste water that identify any termite activity. materials A special receptacle containing the Bait station Sumitomo Forestry’s tropical rain forest where. We are also analyzing the genes of remains, neutralizing it to a safe level. bait station is buried in the ground. As part of our recycling business, we pro- regeneration project in Indonesia to the weeping cherries in the grounds of When the analysis kit indicates that a In soil duce a flameproof board using wastes directly propagate shoots and produce Daigoji Temple in the hope of discover- safe level is reached, the water can be from other industries and use it in such cloned seedlings. ing more about its lineage and origins. flushed into a sewer or drain. 2 Baiting applications as home exteriors. ■ Tsuchi Taro potting mix Mortar wash water treatment system The pesticide exterminates the termites by using their behavior against them. Bait Sumirin Agro-Products Co., Ltd. pro- containing Part of the bait station is replaced the pesticide duces Tsuchi Taro potting mix from Flocculent Mortar component Treated as industrial waste by the bait containing the pesticide, which is consumed by the termites. sawmilling bark and sediment from water purification plants. Developed 3 Re-monitoring jointly with Chiba, Aichi, and other Mortar wash water Neutralizer The site is regularly checked even local authorities, this venture plays a sig- after eradication to guard against Neutralized to safe level new termite damage. nificant role in recycling sediment gener- Alkaline waste water Flushed down drains The bait station is set in a special ated at water purifying plants. Weeping cherry tree seedlings receptacle and rechecked regularly. Formosan termite

24 25 Environmental and Social Report Mitigating Global Warming

The amount of carbon dioxide (CO2) absorbed by Sumitomo Forestry Group-owned forests is about 2.9 times the amount of carbon dioxide emitted by the Group’s business activities. As part of our efforts to mitigate global warming, we implement life-cycle assessments (LCA) and work to reduce CO2 emissions.

CO2 uptake by company-owned forests vs. CO2 emissions by company businesses CO2 emissions by LCA (life of house = 30 years) that, more than 50% disappears through CDM surveys Repairing windows and doors. Thus, the most effec- Amount of CO2 emitted (reference values) Amount of CO2 absorbed 8.5% Scrapping 0.6% tive way of improving energy efficiency is On behalf of the Japanese Ministry of By business segment (FY2003) Company-owned forests (FY2003) Structural members 19.5% to upgrade the insulation performance of the Environment, since 1999 we have Construction 0.6% the windows and doors. Accordingly, we been carrying out a Clean Development Power Housing production and construction 42,775 12.9% are working to expand use of high-insula- Mechanism (CDM) feasibility study into *4 tion-type Low-E double-paned glass the amount of CO2 absorbed by Housing use, maintenance, and improvement 1,323 Usage 70.8% Sumitomo 248,639 and sashes that provide excellent heat afforestation projects in Indonesia and Forestry Group 84,606 Trading and services 3,110 At time of Fuel 87.1% insulation and prevent condensation, and the projects’ commercial feasibility. construction have begun making these a standard part In FY2003, the study focused on the Sumitomo Environmental businesses 5,724 Forestry of our mainstay housing product, the quantity of CO2 absorbed by the (39,929) heavy machinery. Our assessment alone Manufacture/processing of structural 30,888 “GODAI One’s Story II” series launched afforestation activities of P.T. Kutai members and materials revealed that the amount of CO2 in FY2003. In the future, we will gradual- Timber Indonesia (KTI) and P.T. Rimba Administration 786 expended in actual production and building was relatively small. ly make Low-E double-paned glass a stan- Partikel Indonesia (RPI), and the amount 100,000 0 100,000 200,000 300,000 dard feature of all our housing products. of CO2 emissions prevented by the use of t-CO2 t-CO2 Based on this result, we are working to *4: Double-paned glass which uses a special metal biomass energy. We also studied the reduce the CO2 emitted at the construc- coating to achieve heat-blocking and thermal regional socio-economic impact of CDM tion, we applied Ministry of the tion stage, as well as the amount expend- insulation. During the day, this glass lets the CO2 absorption by Sumitomo Forestry projects and confirmed that the participa- Environment guidelines. These efforts CO2 emissions in sales and administration ed in the process of living in the house. heat and light of the direct sunlight through, Group forests tion of large numbers of people in joint revealed that Sumitomo Forestry itself Referring to the FY2002 Ministry of the *3: Estimation method was based on the but at night reflects the infrared that tries to *2 Construction Life-Cycle Energy Calculation escape from the warm room, preventing the afforestation projects is very positive. CO2 absorbed by Sumitomo was responsible for 39,929 tons of CO2 Environment Guidelines , these calcula- Forestry-owned forests 248,639 tons Program (Building Research Institute, Ministry house from cooling. In summer, this glass emissions in FY2003, while the activities tions cover CO2 emissions relating to of Construction, 1997) reflects back the sunlight so that the infrared Survey of RPI The amount of carbon dioxide (CO2) of the entire Group within Japan generat- city water and sewage for offices, use of rays cannot enter the room. We calculated the effects of P.T. Rimba absorbed by the 40,497 hectares of ed 84,606 tons. power, and fuel expended in sales activi- Reducing CO2 emissions in housing Reducing CO2 emissions Partikel Indonesia’s (RPI) activities in the Sumitomo Forestry Group-owned forests ties. To increase accuracy, we repeated construction CO2 emissions in the housing segment following two areas: in Japan was 275,525 tons in FY2002 the calculations in FY2003. While amounts of CO2 emitted at the CO emitted by • The increase in the amount of scrap and 248,639 tons in FY2003. This is 2 *1: Our own estimates based on Eco-Action 21 Reducing CO2 emissions in house use construction stage are relatively minor housing construction 1.5 tons per house (Japan Prefabricated Construction Suppliers wood purchased for the production of about 2.9 times the amount of CO2 ■ and Manufacturers Association, 2002) Next-generation energy-saving specifications compared to the emissions over the particleboard and the saving in fuel oil emitted by the entire Sumitomo Forestry We began monitoring CO2 emission at We are vigorously promoting the entire life cycle of the house, this is the used for power generation (reduction Group in the course of its business activ- constructuion sites for wooden frame *2: Our own estimates based on Guidelines for Calculating Total Emissions of Greenhouse improvement of thermal insulation per- only part of the life cycle where housing in CO2 emissions) as a result of using ities. In the future, the Sumitomo houses in FY2002. Referring to methods Gases Relating to the Affairs and Business of formance, not only to reduce CO2 emis- manufacturers like us can be directly biomass Group will continue sustainable published by government and industry Local Government Bodies Based on Laws sions but because it also leads to lower involved. Working with our suppliers, • The CO2 absorbed by afforestation forestry management activities in Japan bodies, we estimated emissions at an Concerning the Promotion of Measures to energy consumption and a more com- we are trying to reform systems and Our calculations revealed that RPI is and promote measures to prevent global average 1.5 tons per house. Prevent Global Warming (Environment Agency, fortable living environment. develop construction methods designed curbing its CO2 emissions by around warming. In FY2003, we carried out surveys at 1999) Home with improved energy performance to reduce the volume of CO2 emissions. 21,000 tons a year; in the first ten years, 23 construction sites from Hokkaido to ■ Promoting use of precut structural members Measuring total CO emissions the forests it planted should absorb Kyushu in an effort to verify the results 2 Summer Winter CO2 emissions from business activities and unit technology around 9 tons per hectare. of our FY2002 trial calculations. This in the housing life-cycle Cold air As a way of reducing CO2 emissions on CO2 emitted by our revealed an average emission for the 23 Sun rays business activities 84,606 tons To measure housing-related CO2 emis- (UV and construction sites, we precut all structural Survey of KTI sites surveyed of 1.65 tons of CO2 per heat rays) sions, we have been conducting life-cycle members. Precutting the members in We calculated the effects of P.T. Kutai To control emissions of CO2, which house. The average floor area of the Cooling Heating assessments (LCA) on our houses since batches at highly mechanized factories Timber Indonesia’s (KTI) activities in contribute to global warming, and lessen houses surveyed was 155.25m2. FY2002. In FY2003, we carried out a life- helps cut down work on the construction the following two areas: its impact on the environment, the Converting this to the floor area used for cycle assessment of CO2 emissions on our Cooling Heating site and reduces onsite CO2 emissions. • Conversion to boilers for biomass Sumitomo Forestry Group began moni- the FY2002 calculations (147.39m2) “GODAI One’s Story II” (standard new We have already successfully imple- power generation and the saving in toring CO2 emissions from business returns a figure of 1.56 tons of CO2 per energy-saving specifications) house Under-floor ventilation mented precutting of main structural purchased electricity (reduction in activities since FY2002. While we house, thus confirming the validity of the Reflected from ground surface launched in February 2004. Our LCA members and are currently working to CO2 emissions) as a result of using assume the housing segment is the tentative results for the previous year. Cool air from ground surface revealed that most of the volume of CO2 extend this approach to materials such as scrap timber from own factory Group’s biggest emitter of CO2, we have The input data for our estimates were ■ emitted by a standard household over a Promoting sales of solar power systems eaves, external wall sheathing and other • The CO2 absorbed by afforestation not yet established an authorized calcula- limited to power used on the construc- period of 30 years was emitted in the use The sun is capable of providing unlimit- members. Our calculations revealed that KTI is tion method for identifying CO2 emis- tion site, the fuel for operating construc- ■ Streamlining distribution of the house (70.8%), as against 0.6% in ed energy to support our daily lives. We curbing its CO2 emissions by around sions relating to housing construction. tion machinery, and the transportation its construction*3. This confirmed the are working to promote the use of solar In many cases, the various kinds of build- 43,000 tons a year; in the first ten years, To calculate emissions relating to our costs incurred by workers in traveling to ing materials used on the construction *1 results of the previous year’s LCA. power generating systems so that this the forests it planted should absorb housing construction activities, we there- the site . The CO2 expended in the Most of the CO2 emitted during con- energy can be utilized as electricity. site arrive by truck in separate deliveries. around 10 tons per hectare. fore referred to methods published by production and transportation of the struction related to power used on the ■ Improving the thermal insulation performance To reduce the CO2 emissions that accom- government and industry bodies. To cal- materials used is part of the CO2 emis- construction site and fuel needed to of windows and doors pany these deliveries, we are working with sion calculations of other industries and culate emissions relating to other activi- transport construction workers and run Approximately 65% of the heat lost from suppliers to streamline distribution. ties, such as distribution and administra- was not included in our estimate. a room escapes through the walls, and of

26 27 Environmental and Social Report Waste Reduction

In an attempt to reduce, re-use, and recycle construction wastes, we have built a waste timber recycling system and are promoting other waste reduction strategies such as using precut materials.

Appropriate treatment Recycling flow for wood scraps of construction wastes Volume of construction waste generated at new building sites New Site construction Waste Intermediate Waste wood recycling rate 82% Reused lumber Recycling Gross weight (t) New building sites Gross weight generated (t) removal treatment Precut mill manufacturers As a means of preventing waste, we are operators plants (79) 10,000 20,000 30,000 40,000 50,000 0 10,000 20,000 30,000 40,000 50,000 60,000 Site committed to reducing, re-using, and Demolition 1,118.4 507.8 1,534.2 2,135.4 recycling construction wastes. Designated demolition firm Promoting use of recycled products: Green procurement 2.8 32,943.8 FY 2001 4,564.6 9,436.9 6,344.0 7,302.5 10,193 FY 2001 • Reducing: To reduce wastes, we have 32,943.8 adopted the practice of factory precut- bolsters and packaging are now regularly 559.6 1, 513.7 3,187.7 ting to avoid bringing potential waste Recycling route for recovered and re-used. FY 2002 onto building sites. FY 2002 3.75 36,815.8 5,882.7 9,679.2 6,015.35,501.6 4,476.0 9,824 Demolition waste recycling rate 78% In FY2002, it was noticed that wastes 36,815.8 • Re-using: We are reviewing the types of For waste from demolition sites, the from construction sites had increased materials that can be recovered and re- 822 2,278 demolition contractor transports the over the previous year. When we investi- FY 2003 FY 2003 3,477 9,783 6,590 5,420 3,880 5,425 used. scrap lumber to an intermediate treat- gated the reason, we discovered that up 3.69 37,675 37,675 10,210 ● • Recycling: We established a ment plant we have nominated. Here, until then, subcontractors had been # of units built Construction By-Products Recycling ● Volume generated per house ■ Plastic ■ Wood ■ Metals ■ Glass/ceramic ■ Gypsum board ■ Concrete rubble the waste is chipped, then delivered to removing a portion of the wastes gener- ● Total ■ Paper ■ Other mixed waste ■ Sludge (gypsum board) Project and initiated a timber waste the proper recycling manufacturer. By ated at construction sites, but from recycling system. 2 4 6 8 10 0 2,000 4,000 6,000 8,000 10,000 12,000 taking an active part in the flow of waste FY2002 we began managing and dispos- Volume generated per unit (t) # of houses built As a result of these efforts, we materials, we are able to control how ing of those wastes ourselves. achieved a wood scrap recycling rate of they are handled and maintain trans- Recycling of construction Plastics Incinerated as heat source RDF* Gypsum board waste from new building sites 78% in FY2003. In the future, by estab- parency. In FY2003, we recycled 78% of Wood Plywood, paper; fuel lishing a recycling route for our con- Demolition sites: Recycling roofing Wood Jan. 2001 Sumitomo Forestry survey our demolition waste through designated Metals Metal materials struction- and demolition-related wastes, tiles, gypsum board, and mixed waste Plastics recycling routes. Glass & ceramics Not used we hope to achieve a recycling rate of Even before the enactment of the Cladding materials 95% by 2005, five years earlier than the Gypsum board Recycled Construction Materials Recycling Law, Empty cans Building sites: Promoting factory Paper Recycled paper 2010 time frame mandated by the gov- we have been promoting dismantling of adhesive precutting and materials reuse Gypsum board ernment. and recycling to effectively reuse Combustible mixed waste Incinerated as heat source Rate of factory precutting Almost 100% waste resources and reduce waste generated at Sorting of *RDF = Refuse Derived Fuel Non-combustible mixed waste Not used Building a wood-waste recycling system Sumitomo Forestry regards waste reduc- demolition sites. construction waste tion at building sites and appropriate • We have generally finished putting in Volume of construction waste generated at demolition sites Wood waste is a designated material treatment of wood waste as important place methods of recycling materials under the Construction Materials Gross weight (t) Demolition sites Gross weight generated (t) concerns. In particular, to limit the such as concrete rubble, scrap timber, 20 30 40 50 60 0 50,000 100,000 150,000 200,000 250,000 300,000350,000 400,000 Recycling Law, but as the law applies amount of waste, we have introduced and scrap metal. only to new construction projects with a factory precutting of a variety of timbers. • However, no effective method has yet 1,039.5 5,760.5 7,294.3 10,305.3 floor area of at least 500m2, the majority Framing, posts, trusses, and interior wall been found to recycle roofing tiles 36.2 FY 2001 35,776.7 121,497.2 5,023 of Sumitomo Forestry building projects FY 2001 182,046.8 trims are now virtually 100% precut. (glass, ceramics, and pottery), gypsum 180.0 193.2 are not subject to legal recycling controls. Precut timber (PC) is normally trans- board, or other mixed waste. 674.6 5,789.7 6,923.2 11,456.8 Though there may be no legal obliga- ported with bolsters and packaging We regard the recycling of these types 33.5 FY 2002 42,057.5 91,888.6 4,846 FY 2002 tion to do so, we have voluntarily estab- materials to raise the timber off the of materials as an important future chal- 162,334.8 lished recycling routes because we recog- 3,464.6 79.7 ground, keeping it from getting soiled lenge in reducing the amount of waste 789.8 2,984.2 18,044.0 nize the importance of wood waste recy- FY 2003 and the stack from collapsing. These going to landfills. 41.3 26,029.6 75,261.3 3,247 cling. FY 2003 134,076.1 8,405.1 1,713.8 92.5 755.8 ● # of units dismantled ■ Plastic ■ Wood ■ Metals ■ Glass/ceramic ■ Gypsum board ■ Concrete rubble Recycling route for construction waste RPI Attuned to the Environment ● Volume generated per house ■ Paper ■ Other mixed waste ■ Sludge (gypsum board) Construction waste recycling rate 91% P.T. Rimba Partikel Indonesia (RPI), a manu- in Semarang City to combine aerobic with 04,2,0002,500 3,000 3,500 4,000 500 5,000 5,500 Volume generated per unit (t) For new construction projects, we have facturer of particleboard, has a factory near anaerobic microorganisms in an effort to # of houses dismantled established a highly transparent recycling the coast on the outskirts of Semarang City create a decomposition tank where microor- route to ensure that offcuts are recycled on the central Indonesian island of Java. ganisms could efficiently break down the Recycling of construction Plastics Incinerated as heat source RDF* waste from demolition sites appropriately. A waste removal contrac- Waste discharged from this factory con- urea and wood powder. As a result of these Wood Plywood, paper; fuel sists mainly of a urea-based adhesive clean- efforts, RPI has built a sedimentation tank for Japan Demolition Contractors tor collects the wood waste and trans- Association survey Metals Metal materials ports it to an intermediate treatment ing liquid mixed with wood powder. The fac- the pretreatment of the effluent before it tory is surrounded by prawn-raising ponds, enters the decomposition tank. By keeping Gypsum board Not used plant to be chip-milled. We will also and of course none of this effluent is allowed the concentration of the effluent to enter the Sorting and dismantling Rubble Roadbed recycle offcuts from precut mills in the to escape and pollute these ponds. As part of decomposition tank constant, RPI succeeded Tiles Not used same manner. In FY2003, we recycled measures to prevent pollution, from FY2001 in improving the efficiency of the breakdown 91% of our construction waste through RPI has been working with the national of the organic matter in the effluent Tatami flooring Not used Diponegoro University a designated recycling route. *RDF = Refuse Derived Fuel Mixed waste, etc. Not used

28 29 Environmental and Social Report Environmental and Social Report Green Office Management Environmental Communication

Identifying areas of priority, Sumitomo Forestry promotes resource reduction and energy saving in its offices. In FY2003 we focused on environmental communication aimed at sharing knowledge We also practice green purchasing for stationery and re-use and recycle our computers. on how to protect forests and the environment with still larger numbers of people.

Environmental conservation This new system was introduced in reduced copy paper usage to 16,536 Mention in Ministry-approved high efforts. Among the responses were: “I in the office October 2003 and already nearly 1,000 sheets per person (94.8% of the figure school textbook was very moved by the traditions of affiliated construction offices are using for the previous year). Sumitomo Forestry” and “it was great to Office work produces paper and other it. From April 2004, around 200 interior One important part of preserving the experience afforestation.” wastes and uses energy, particularly for contractors also switched to the new Green purchasing environment is educating the younger lighting and air-conditioning. We have ordering system. generation, who hold the future in their Environmental advertising campaign identified the following priorities to hands. As part of this environmental edu- encourage resource recycling and conser- In-house information goes online Green purchasing of stationery cation, Sumitomo Forestry’s tropical for- Based on the message: “We go for sus- vation of energy. Our goals are to: To reduce the volume of printed materi- Rate of green purchasing est regeneration project was mentioned tainability,” we are conducting a corpo- for stationery 84.1% • Reduce paper usage al, we set up an in-house intranet website in a high-school textbook approved by Seminar held from November 7 through 9 in the rate advertising campaign to inform the • Promote green purchasing called Inforest. This promotes sharing of In purchasing office equipment and sup- Japan’s Ministry of Education, Culture, mountains of Shikoku public about our efforts to protect the • Reduce electricity usage information within the company, speeds plies, Sumitomo Forestry practices “green Sports, Science and Technology. environment. This series of “green” • Reduce water usage up the communication of information, purchasing,” prioritizing items that are tiful Japanese forest and exploring the advertisements is aimed at raising envi- At our Tokyo Head Office, waste and reduces the use of paper resources. less environmentally harmful. For copy basic layers of culture created by the for- ronmental consciousness and gaining paper is sorted and the office has a cen- The site also enabled us to cut back on paper, from 2002 our domestic offices est.” Sumitomo Forestry assisted with widespread public support. In FY2003, trally managed air-conditioning system. our in-house publications; we now pub- throughout Japan began purchasing only these seminars. the ads ran three times in the Nihon lish our company newsletter Jukai every products that meet our green purchasing The last of the five seminars, entitled Keizai Shimbun newspaper. Reducing paper usage three months instead of monthly. criteria. For other office supplies, we give “Besshi: Sumitomo’s Forest,” was held priority to items that meet the green pur- from November 7 through 9 in one of chasing criteria; this produced a green our forests in the mountains of Shikoku. Paperless documentation purchasing rate of 84.1%. In the future, The seminar was attended by 13 people, In February 2002, the Production & we will continue to promote green pur- mainly from the capital, Tokyo. The Building Materials Procurement chasing at all Group companies. The high school textbook describing our tropical instructors were Sumitomo Forestry Division of Housing Headquarters forest regeneration project staff, and the seminar covered such top- switched to an online system for com- ics as the beautiful old cypress forests of Recycling old posts and beams while protecting the forest’s growth munications to its branches and affiliat- Supporting Forest Culture Association Besshi left by earlier employees of ed construction offices. These communi- seminars Sumitomo, the multi-level forests that cations are mainly essential messages came after those, and the natural regen- relating to matters such as lumber to be Every year, the Forest Culture eration experimental cypress forest. used in Housing Headquarters products, Home page of Inforest intranet website Association holds outdoor seminars for The responses to the questionnaire changes in specifications, and price revi- the general public. In FY2003, the distributed after the seminar showed that sions. Putting these communications Association held a series of five seminars the participants understood what online has sped up the transmission of Using both sides of copy paper Green purchasing (stationery) entitled “Visiting the Forest” based on Sumitomo Forestry and the Sumitomo From a single seedling, the forest makes information, made information easier to Our Tokyo Head Office is actively pro- the theme of “walking in a typical beau- Group was achieving with its forestry a comeback disseminate, and considerably reduced moting the use of both sides of copy Reuse and recycling of personal the amount of paper used. paper and the sorting and recycling of computers From our 2003 Questionnaire ■ Electronic ordering system introduced used paper in an effort to reduce the vol- PC re-use 30% Because numerous construction offices ume of paper used and conserve The questionnaire distributed with the Environmental Performance Report 2003 elicited a range are involved in the construction of our resources. These efforts have successfully PC materials recycling 70% of ideas and opinions, and we aim to modify our environmental activities to reflect this feedback. houses, there is a huge amount of com- Sumitomo Forestry leases the PCs it uses Tokyo Head Office paper usage per person Here is a sample of some of the views expressed by respondents. munications to be processed, generating from Sumirin Enterprises, Ltd. Every a vast amount of paper. To streamline year, 800 to 1,000 of these are returned Feedback on the content of the 2003 Environmental Report Feedback on our environmental activities Sheets per person per year to Sumirin Enterprises when their leases Sheets Number of sheets consumed Sheets expire. Many of these machines, however, • “There were many interesting environmentally friendly products. I’m • “The 21st century is surely the age of the environment. I would like 25,000 8,500,000 hoping for future growth in the use of thinnings, Super Natural Oak, you to provide leadership and encouragement to raise awareness so 8,452,000 are re-usable if serviced. Instead of simply 7,816,000 7,932,000 MIZDAS, flameproof board, Weedy Mat and others.” (50s, male) that everyone concerned, including suppliers, participates in the 20,964 7,626,000 scrapping these returned machines, • “The way you described promoting the use of domestic Japanese tim- environmental projects of the Sumitomo Forestry Group.” (60s, male) 20,000 7,500,000 18,708 Sumirin Enterprises seeks to effectively bers and developing lattice panels was very clear and easy to under- • “While other companies just reduce their CO2 output, you use the 17,436 16,536 utilize them. In FY2003, Sumirin stand. But I wish you would explain the prevention of global warming absorption of CO2 to help prevent global warming as well. You stand in a way that is clearer to ordinary people.” (70s, male) out among many companies in taking a leading role in environmental 15,000 6,500,000 Enterprises managed to give 30% of its returned computers a new lease on life as • “It would be good if you took the lead in the area of afforestation, activities.” (40s, male) second-hand machines (in FY2002 the using the specialized knowledge you have accumulated to work with • “I think it’s important for mankind and the recovery of the natural 10,000 5,500,000 companies in other industries to tackle environmental problems.” environment of the planet that everyone on this Earth is aware of the figure was 15%). Used PCs also contain (20s, male) environmental changes caused by the degradation of nature, and that A screen shot of our new electronic useful metals, and PC’s that cannot be re- we work harder to protect the environment. It would be good if you ordering system 5,000 4,500,000 • “I would have liked to have seen more detailed explanation of recy- used can still be recycled for their materi- cling methods other than waste wood recycling.” (50s, male) could strengthen your PR so that your ideals could be developed on this, we created an electronic system for als. In FY2003 Sumirin Enterprises recy- a worldwide scale.” (20s, male) 0 0 orders-related documentation, invoicing, 20002001 2002 2003 cled 70% of returned computers (82% in and other information. FY FY2002).

30 31 Environmental and Social Report Community and Social Contributions

Using our knowledge and experience as forestry professionals, we carry out activities that contribute to the regional community. Aiming to be a good corporate citizen, we implement projects at home and abroad.

Activities on Mt. Fuji species and populations, territories of the relationship between plants and the Sumitomo forest ecosystems the Imabari Local Affairs Bureau of individual species, and types of mammals. soil and how potting mix is made. At the Ehime Prefecture. Twenty-five fifth- and In September 1996, a typhoon swept end of the class, the children were pre- To develop new forms of forest manage- sixth-year pupils of Kitaura Elementary across central Japan, devastating a swathe Forest Ark sented with a reminder of what they had ment that reflect the entire ecosystem, School in Hakata-cho visited Forester of 50- to 60-year-old Japanese cypress In October 1999, we set up Forest Ark, a learned in the form of packs of Tsuchi including flora and fauna, air, water, soil House to learn about the history of (hinoki) trees in a planted national forest volunteer activities support center within Taro potting mix, made by Sumirin and scenery, we are approaching our forestry and how forests develop. on the southern slopes of Mt. Fuji. As part Manabi no Mori based on the ideal of Agro-Products Co., Ltd. for use in forestry with an Ecosystem theme. In of our commitment to contribute to the co-existence with nature. In building the schools as educational materials. 1993, we built Forester House in Tropical forest regeneration project Sebulu “social forestry” (cultivating durians) local community, Sumitomo Forestry ini- center, we recycled some demolition Besshiyama in central Ehime Prefecture, completed in Sebulu, Indonesia tiated the Mt. Fuji Manabi no Mori natu- materials from old houses, established a opening 1,890 hectares of company- allows the local people to earn a liveli- ral project. To help gov- bio-toilet (using microorganisms to owned forest to the public and providing We have now completed a 13-year rain hood without excessive slash-and-burn ern the restoration activities, we set up a break down excrement), a solar power a place for elementary school children forest regeneration project begun in 1991 farming. steering committee composed of represen- generator, and a rainwater tank system. and others to learn about forests and at Sebulu in East Kalimantan, Indonesia. tatives from local government (Shizuoka We also created a biotope* in the forestry activities. The project is located in a huge 3,000- Sebulu project’s research results Prefecture and Fujinomiya City), environ- vicinity, and use Forest Ark as an educa- hectare experimental forest and has been The results of the Sebulu project, which mental volunteer groups, universities, tional center to raise awareness of the -making led by the Silviculture Laboratory of the reached completion in FY2003, were media representatives and others, and importance of environmental conserva- In October 2003, we invited elementary University of Tokyo’s Faculty of utilized in the Daigoji Temple weeping sought their input for the project. We also tion among large numbers of people. As An instructor teaches the children about school children from schools on Agriculture. With full support from P.T. cherry tree regeneration project in Japan the environment utilized the network we gained through part of their induction training, new Ohshima Island in the Seto Inland Sea and in a grant aid ODA project. In the this project to carry out a range of other to learn about charcoal-making. The future, Sumitomo Forestry will continue environmental activities as well. Neighborhood cleanup campaigns children placed wood in a coal-burning to fully support tropical forest restora- kiln, prepared mud to seal up the kiln’s tion projects. Mt. Fuji natural forest restoration activities The head office factory of Sumitomo entrance, and experienced the whole Every year, volunteers plant seedlings Forestry Component House Co., Ltd. is process up to the emergence of the char- Report on KTI Educational Foundation and nurture the young trees as part of situated in an industrial park on the coal. For the children, the experience the Mt. Fuji Manabi no Mori project. south side of the Watarase River. This was an enjoyable opportunity to learn The Sebulu forest, devastated by fire in 1992 To mark its 30th anniversary, P.T. Kutai To make sure our afforestation efforts industrial park is now an attractive envi- many new things. The charcoal they Timber Indonesia (KTI) established the preserve the types of native trees growing ronment as a result of greening and pol- helped make was later sent to the Kutai Timber Indonesia (KTI) and the KTI Educational Foundation to provide on Mt. Fuji, we use species that seed lution prevention arrangements with schools. Forest Research and Development scholarships for elementary and middle themselves naturally on the slopes of the Afforestation activities under the Manabi Tatebayashi City. Agency of the Indonesian Ministry of school students. In 2000, the first year of mountain. These include beech, oak, no Mori project In 2002, the factory shut down and Forestry, we took advantage of the proj- the foundation, scholarships were award- dogwood, zelkova, stewartia, maple, Sumitomo Forestry staff members take dismantled its incinerator, which had ect to carry out joint R&D into rain for- ed to children in the Sebulu area of East magnolia, cork tree, hinoki, and Fuji part in afforestation and silviculture been fueled by waste wood, and is now est regeneration techniques. Kalimantan where KTI originated, and cherry. Thousands of people have partic- activities here and learn much about the working toward achieving zero emissions. The main tree species planted was the Probolinggo area of East Java where ipated in the program and a total of natural flora and fauna of Mt. Fuji. Every year since 1998, we have car- Dipterocarp (Lauan). To date, we have KTI’s factory is located. From 2002, ele- 36,369 trees have been planted. * Biotope: A habitat in which all life forms in an ried out social activities within this managed to restore 277 hectares of forest mentary and middle school students of area live in inter-relationship. industrial park and held clean-up cam- (aggregate area planted: 503 hectares, the Krucil area of East Java were also Vegetation monitoring program paigns with staff volunteers. In FY2003, total number of trees planted: 738,000). included. Children learning charcoal-making To watch over the Manabi no Mori proj- Environmental education we organized clean-up days in June, As the forest has recovered, wild animals As at the end of 2003, KTI had ect, we requested the Tokyo University of at elementary schools October, and March. Honoring our such as orangutans, deer, and wild pigs awarded scholarships to 21 children in Agriculture and Technology to run a veg- commitment to maintain close ties to Integrated learning promotion activities have begun to return. the Probolinggo area, 10 in the Sebulu etation-monitoring program. One objec- New education curriculum guidelines, the region, we also organize family facto- In November 2003, we organized inte- region, and 10 in Krucil. In FY2004, tive was to monitor the growth of trees introduced in stages from FY2000 to ry tours and tours for the elderly people grated learning activities with a forestry KTI plans to increase the number of planted in groups and study changes in FY2003, established “integrated learning of the region. These are sponsored by theme in Forester House under the recipients. A fixed proportion of KTI’s rates in which trees formed stands. A sec- time” with the aim of instilling a robust Tatebayashi City. sponsorship of the Forestry Section of profits will be earmarked for the educa- ond was to survey the process of recovery reverence for life in children. Under the the Trade and Industry Department of tional foundation every year. by natural replacement (recovery by the new guidelines, schools have adopted new forces of nature without human interven- and creative approaches to education. As part of this program, a researcher tion). The project is helping manage the The Sebulu forest after restoration (2002) swift natural recovery of the forest and is from our Tsukuba Research Institute was collecting data on how the eco-system is sent to Ozato-Higashi Elementary recovering. School in Shizuoka City to offer inte- Social forestry contributes to area grated education instruction in response A further goal of the Sebulu project is to Wildlife habitat survey to a request received in November 2003 contribute to the region by establishing We requested the Wild Bird Society of from the school. Using slides and videos, “social forestry” in the area. By establish- Japan to monitor the fauna in the area by the researcher gave a general talk about Clean-up campaign around factory ing a harmonious mix of farming and A school supported by the KTI Educational conducting ongoing surveys of bird environmental problems and described by staff volunteers Learning how forests grow forestry, we aim to create a system that Foundation

32 33 Highlights of Our Environmental and Social Activities Activities Planned for FY2004

March April Business activities ● Tropical forest regeneration project completed ● Environmental Business Promotion Division established (East Kalimantan, Indonesia) Priority Methodology 2004 Prevention of global warming ･ Promote sustainable management of forests �･ Expand sale and use of products using sustainable forest resources as raw materials July Sept. �･ Expand handling of fuel chips as a biomass energy source ● ISO 14001 certification obtained for Nelson ● ISO 14001 certification obtained for Sumitomo Forestry Crest Co., Ltd. Pine Industries Ltd. (NPIL) in New Zealand and Sumitomo Forestry Two-by-Four Homes Co., Ltd �･ Contribute to the reduction of CO2 emissions of occupied houses by developing energy saving products 2003 �･ Try to reduce number of delivery vehicle trips �･ Promote planting of trees for exterior work (Sumitomo Forestry Landscaping Co., Ltd.) Aug. Nov. �･ Reduce factory production-related CO2 emissions (Sumitomo Forestry Crest Co., Ltd.) ● ISO 14001 company-wide certification ● Group companies Sumitomo Forestry Landscaping Co., Ltd. Reduction of wastes ･ Reduction of waste emissions obtained (excluding overseas affiliates) obtain ISO 14001 Sumitomo Forestry Home Service Co., Ltd. 2002 certification Sumitomo Forestry Component House Industry Co., Ltd. �� Minimize by-products from new building sites (Housing Construction, Maintenance & Management Group) Sumirin Component House Co., Ltd. Minimize by-products from demolition sites (Housing Construction, Maintenance & Management Group) July Aug. �･ Recycling of wastes ● ISO 14001 certification obtained for ● ISO 14001 certification completed for all divisions Recyling of water purification plant sediments (Sumirin Agro-Products Co., Ltd.) P.T. Kutai Timber Indonesia (KTI) of Sumitomo Forestry Co., Ltd. (excluding overseas affiliates) �･ Improve rate of wood scrap recycling 2001 ● Joint afforestation project initiated by KTI with city of Probolinggo, Indonesia �･ Extend life-cycle of houses

Oct. Dec. Reduction of harmful substances ･ Prevent pollution of inside air ● Company-wide Environmental Policy instituted ● Reforestation project started in Way Kambas National Park, Indonesia �･ Prevent air pollution, soil contamination, and water pollution ● EMS implemented at all divisions �･ Prevent contamination by agro-chemicals (Sumitomo Forestry Landscaping Co., Ltd.) 2000 ● Bisphenol A (endocrine disruptor)-degrading �･ Prevent mixing of harmful substances with products (Sumirin Agro-Products Co., Ltd.) bacterium discovered by Tsukuba Research Institute �･ Reduce usage of designated chemical substances (Sumitomo Forestry Crest Co., Ltd.) July Aug. Oct. Green procurement ･ Promote green practices among our product manufacturers ● ISO 14001 certification obtained for the ● All Sumitomo Forestry houses certified ● "Forest Ark" volunteers' Promote green procurement Forest Management Division as environmentally sound activity center completed ･ 1999 ● CDM feasibility study commissioned by the Japanese Ministry at the Mt. Fuji Manabi no of the Environment began in East Kalimantan, Indonesia Mori project June Aug. Oct. Sumitomo Forestry Group activities ● Environmental Business Division established ● Successful tissue culture of ● ISO 14001 certification Priority Methodology species by Tsukuba Research Institute obtained for the Housing 1998 Headquarters' Eastern Better communication ･ Promote Group-wide and external environmental information activities (Manabi no Mori activities, use of Forester House, Japan Housing Division environmental advertising, environmental activities based on Sumitomo Forestry's Housing Fair) Aug. Sept. ･ Utilize Risk Management Committee and emergency hotline and manage information through emergency situation reports ● ISO 14001 certification obtained for five Housing ● Mt. Fuji Manabi no Mori initiative began to restore state-owned forest ･ Improve communication with suppliers Headquarters divisions and for the Northern destroyed by a typhoon Kanto Regional Division Reduction of environmental impact ･ Alleviate environmental impacts by reducing lighting and heating costs, etc. 1997 caused by office activities ･ Promote green purchasing

April Education activities ･ Raise environmental awareness ● Sumitomo Forestry EMS implemented company-wide 1996

Jan. April ● Environmental Management Committee ● Sumitomo Forestry EMS implemented at all Headquarters divisions established Corporate Data Net sales 1995 ● Sumitomo Forestry's Environmental Guidelines (Sumitomo Forestry Co., Ltd: non-consolidated) instituted Sumitomo Forestry Co., Ltd. Yen millions Dec. 800,000 ● Sumitomo Forestry's Environmental Philosophy formulated Head Office (Tokyo) Shinjuku Green Tower Bldg., 6-14-1, Nishi-Shinjuku, 1994 Shinjuku-ku, Tokyo 160-8360, Japan Head Office (Osaka) 604,252 Oct. 600,000 565,201 564,487 571,275 ● Sumitomo Forest Ecosystems' Memorial Square and Forester House Sumitomo Building No.2, 4-7-28 Kitahama, Chuo-ku, opened to commemorate the centennial of the large-scale reforestation Osaka 541-0041, Japan project in Shikoku 1993 Paid-in capital: 27,672 million Incorporated: February 20, 1948 Jan. 400,000 Founded: 1691 ● MDF from Nelson Pine Industries Ltd. (NPIL) qualified for the "Eco Mark" Employees: 4,762 (as of March 31, 2004) 1992 Operations: Forest management; purchase and sale of products including logs, timber, wood chips, plywood for general use, Jan. Dec. post-processed plywood, fiberboard, metal building materials, 200,000 ● Green Environmental R&D Division established ● Tropical rain forest regeneration project began in East Kalimantan, Indonesia housing systems and fixtures, and concrete and ceramic building materials; construction and sale of custom-built housing; 1991 purchase and sale of developed housing and housing lots; purchase and sale of interior products; construction, purchase, ● In Japan ● Overseas 0 sale, and rental of multi-unit residential and office buildings 2000 2001 2002 2003 FY

34 35