Sumitomo Corporation Receives Best Market Maker Award under the Tokyo Stock Exchange "Market Maker Mechanism"- Contributing to the liquidity of the nascent carbon credit market -

Sumitomo Corporation (Head Office: Chiyoda-ku, Tokyo; Representative Director, President and Chief Executive Officer: Masayuki Hyodo) has been recognized as a Best Market Maker for its contribution to market formation under the Market Maker Mechanism ("MM Mechanism"), which was implemented on a trial basis in the carbon credit market established by the Tokyo Stock Exchange.

Carbon credit market highly promising for Japan's decarbonization

In order to achieve the Japanese government’s goal of carbon neutrality by 2050, "carbon pricing" is poised to assign a cost to CO2 emissions, driving behavioral changes among emitting businesses and beyond. In its "Basic Policy for the Realization of GX" unveiled in 2023, the Japanese government stated that it would introduce an emissions trading system(*1) as part of the carbon pricing initiative, and plans to start full-scale operation in FY2026.

In response to this trend, the Tokyo Stock Exchange established the carbon credit market in October 2023, leveraging knowledge and market operation experience gained through the "Technical Demonstration Project for Carbon Credit Market" commissioned and conducted by the Ministry of Economy, Trade and Industry in FY2022. In November of the same year, the MM Mechanism was introduced on a trial basis with the aim of establishing an appropriate price for carbon credits through market transactions and liquidity improvement.

The MM Mechanism's objective is to maintain stability in financial markets' overall trading volumes by assuring that orders placed by market participants are executed, facilitated by continuous price and volume quotations from market makers authorized by the stock exchange. Sumitomo Corporation was selected as one of the five market makers for the MM Mechanism, and was awarded as Best Market Maker for its contribution to the liquidity and price formation of the carbon credit market by achieving all target criteria during the MM Mechanism period.

Sumitomo Corporation's initiatives in the carbon credit sector

Sumitomo Corporation has set "realization of a sustainable society" as a key management theme. In April 2022, the company established the dedicated Carbon Solution Team to promote our business focused on decarbonization solutions, which is centered on carbon credits, throughout the entire company. By developing and selling carbon credits from projects that significantly reduce greenhouse gas emissions, Sumitomo Corporation is seeking to address important societal issues such as "mitigation of climate change" and "realization of a circular economy," with the goal of achieving a carbon-neutral society.

1. The new mechanism will allow companies, countries and other entities to set the amount of permissible greenhouse gas emissions. This will make it possible for organizations that exceed their emission quotas to buy additional allowances from those that have remained under their limits, thereby effectively reducing their overall emissions.

＜Company representative comments＞

Miharu Nishi

"To facilitate the trading of J-Credits, previously conducted from party to party without mediation, the introduction of market makers to stimulate the market is indispensable. By serving as a market maker, we've increased the J-Credit market's liquidity with daily pricing and transaction execution. While the path to decarbonization remains uncertain, creating a carbon credit market is key to uncovering the actual value of carbon and accelerating the decarbonization business. Sumitomo Corporation will continue to build a market that advances carbon pricing and accelerates society's shift towards decarbonization, all while recognizing the decarbonization movement as a strategic business opportunity."