Climate Change

Policies on Climate Change Issues

We put an importance on the international determinations stipulated in the Paris Agreement, and we set “Policies on Climate Change Issues” in order to contribute to achieve the carbon neutrality goal of society in aligned with the Agreement.
The Board of Directors adopted a resolution concerning the Group's policies on climate change issues in 2019 and we have been regularly reviewing our policies. In May 2024, in response to recent changes in the external environment, including climate change countermeasures and energy security, we have updated our equity generation capacity-based ratio target among the Group's climate-related targets. In addition, we have added a commitment to reduce indirect CO2 emissions from general coal mines to zero by the end of 2020s, and to work on natural gas only in projects that contribute to the realization of a carbon neutral society.

Governance

Governance

Structure for Responding to Climate Change Issues

Overseeing

• The Board of Directors is responsible for making decisions on important management matters based on our Group's climate change-related risks and opportunities, and for supervising the execution of business operations. For decision-making on important management matters regarding climate change, the Board of Directors deliberates and determines on the formulation and revision of climate-related policies, important individual cases, which are submitted to the Board of Directors after review by the Management Council and other bodies.
• Also, the Board of Directors receives reports on macro-environmental analyses and responses to climate change issues several times a year and supervises the efforts of the business execution side.
• In addition, to ensure that the Company's officers, including directors, are more aware of our commitment to the advancement of sustainability management, evaluation based on the non-financial indicators including “climate change” is used to calculate the amount of the remuneration of officers. For more details, please visit our website “Executive Remuneration Plan.”

Execution of Duties

• Management Council and executive management are responsible for decision-making and business execution of important climate-change management matters of our group. The Management Council makes comprehensive decisions after consulting with the Corporate Sustainability Committee and other committees in order to assess and manage climate change-related risks and opportunities and make effective decisions.
• In addition, with regard to sustainability-related initiatives and responding to risks and opportunities, the Corporate Sustainability Department, which is a specialized organization in charge of planning and disseminating measures to promote sustainability within the Company, and related corporate organizations such as the Corporate Planning & Coordination Department, which plans the Company's overall management plan and important measures, as well as and the person in charge of sustainability promotion in each business group, and overseas regional organizations work together. Based on information provided by the Company's internal research organizations, the business groups, overseas regional organizations, etc., we formulate and promote company-wide plans and measures.
• In addition, we have established the Sustainability Advisory Board, which is comprised of outside experts on ESG, to obtain advice and recommendations on our overall sustainability management including response to climate change.

<Climate change governance structure (as of June 2024)>

Strategy: Climate Change-Related Risks and Opportunities

Accelerated new growth driven by GX (Green Transformation)

We have promoted the creation of next-generation businesses that contribute to the realization of a carbon-neutral society under prior Medium-Term Management Plan (FY2021-2023), including the promotion of sustainable management and the establishment of EII (Energy Innovation Initiative), a company-wide cross-functional organization. In the new medium-term management plan started from FY2024, we will further strengthen businesses where they have strengths and competitive advantages through green transformation in the short term. At the same time, we pursue green transformation considering time frame to monetization (including market formation) in various industries fields and create new strengths for the future in the mid- to long-term. To this end, we have begun efforts to visualize GHG emissions throughout our supply chain, including the calculation and analysis of Scope 3 emissions. In addition, in addressing climate change issues, we intend to promote GX while taking into account the impact on human rights and natural capital in an integrated manner.

Steady Advancement of the Business Portfolio SHIFT
（ Achieving Carbon Neutrality across the Group ）

Toward the Group‘s goal of becoming carbon neutral by 2050, we have established specific milestones for CO2 emission reduction as shown in the chart below and are steadily promoting them.

Milestones for CO2 emission reduction toward carbon neutrality of the Group (Millions of t-CO2e)

1. Includes estimated figures after the construction and operation of the businesses for projects still under construction and emissions from equity-method affiliates
2. Indirect CO2 emissions from the use of energy resources produced by fossil energy concession of Sumitomo Corporation, its subsidiaries, and affiliated companies under the equity method
3. Direct CO2 emissions of Sumitomo Corporation and its subsidiaries and indirect CO2 emissions of the generation of energy used by them
4. Through means recognized by international standards such as capture and storage by forests and other technical methods

Coal-fired power generation business

Sumitomo Corporation policy

• No involvement in any new coal-fired power generation business, neither in IPP nor EPC, without any exception
• End all coal-fired power generation business by the late 2040s

Approach to efforts

From the perspective of our social responsibility, including the development of local communities and economies and our obligation to supply, we will pursue every option, not eliminating the possibility of accelerated withdrawal from the business, while implementing the following efforts to accelerate the decarbonization of our Company and society as a whole.

• Consensus building based on sincere dialogue with host countries, local communities, and other stakeholders
• Pursuit of consideration and efforts toward the decarbonization and low carbonization of existing facilities
• Maximum support for host countries to shift power sources to renewable energy and other sources

Strategy: Scenario analysis (Climate Change-Related Risks and Opportunities)

Climate scenario selection

• We analyzed the impacts of transition risks and opportunities to our business models toward 2050, using IEA’s and PRI’s scenarios, in order to identify new business opportunities and assess businesses’ resilience in the case of the occurrence of significant changes of our business environment. In terms of the timeframe of the analysis on risks and opportunities, we set mid-term: by 2030 and long-term points: by 2050.
• The scenarios mentioned above are used as references to analyze our business activities and do not prejudge our future management policies and business strategies.

Identifying the Businesses for Which to Perform Scenario Analysis

• Our scenario analysis scope encompasses all of our business sectors which will be highly affected by business environment changes related to climate change mitigation, regardless of the scale of the business.

Identified climate-related risks and opportunities

• The problem of climate change can be broadly classified into two categories: transition risks posed by changes in policies and regulations, technological developments, market trends, and market evaluation, etc., and physical risks posed by an increase in natural disasters and extreme weather conditions due to climate change.
• The Group operates globally in a variety of industries and has identified and analyzed the following climate-related risks and opportunities that could affect the Group's forecasts. For specific details, please see the results of the scenario analysis below.

Results of Scenario Analysis

• The macro environment for the models identified for the scenario analysis is based on a five grade evaluation of future market trends for each sector in 2030 and 2050, as described in the main scenarios presented by the IEA and other organizations. The forecasts for demand trends and the business environment shown by these scenarios include many potential risks and uncertainties.
• Our business environment, policies and initiatives related to each sector describe the policies and initiatives that consider the factors and certainty of various changes in the business environment shown in these scenarios and the circumstances unique to our business. Furthermore, we are working on the premise of carbon neutralization in 2050 for thermal power generation, fossil energy concession, and other business activities by Sumitomo Corporation and its subsidiaries and disclose the related indicators.
• About 70% of the business environment for the analyzed businesses is positioned as neutral or increase in the year 2050 under NZE/APS/STEPS. We then identified risks and opportunities for each of our businesses and confirmed that we are steadily taking steps to mitigate risks and seize opportunities. Below is a summary of the macro environment that the scenarios represent, and please refer to the bottom of the page for a description of our policies and initiatives considering these scenarios.

			Referenced scenarios (Macro Environment)
Sector	Business		2030	2050
Energy	Thermal power generation (coal)
	Thermal power generation (gas)
	Renewable energy power generation
	Next generation energy	Hydrogen, ammonia, synthetic fuels
		Storage battery, energy management
		CCUS
Resources	Thermal coal
	Coking coal
	Iron ore			＊
	Natural gas and LNG
	Nickel
	Copper
Transportation	Vehicles			＊
	Shipping
	Aviation
Material industry sector	Steel	Steel sheets
		Tubular products
	Cement
	Chemicals
	Aluminum
Real estate sector	Office buildings / residential building sales business
Other	Forestry

• No 2050 trend for sectors with “*” because of insufficient data for the scenario

Strategy: Transition Risks and Opportunities Related to Climate Change〈Scenario Analysis〉

Strategy: Physical Risks Related to Climate Change and Countermeasures

Each year, we identify the Group's sectors and businesses affected by physical risks and inspect the status of their response to these risks. In particular, for businesses with large outdoor sites or those that require large amounts of natural resources for operations, we use assessment tools to analyze the degree of impact of physical risks and individually check the status of their response.

[Identification of Risks and Status of Response at Sumitomo Corporation]

Since the Group operates in a wide range of sectors around the world, we refer to UNEP FI reports describing the impact of physical risks on major sectors, as well as other reports. We identify the major risk characteristics for each of our sectors that are likely to have a significant impact, as well as the major businesses we are involved in, as shown in the table below. This year, we have added forestry to this list.
Physical risks are largely divided into chronic risks that have continuous and chronic impacts on business activities, (e.g., rise in average temperatures, change in rainfall patterns, rise in sea level, etc.) and acute risks caused by unforeseen damage (e.g., escalation of extreme weather conditions such as huge rainstorms, flooding, drought, and forest fires, etc.). The impact is wide-ranging, including direct impact on production site facilities and working conditions, and indirect impact on a broad range of supply chains of raw materials and products. For our business in a broad range of fields and regions, we manage such risks by assessing the impact of local weather and geographical factors on our business at the time of investment, conducting continued assessments after participation in the business, clarifying the scope of contractual responsibility, and concluding nonlife insurance policies.

[Results of Risk Analysis of Susceptible Businesses and Status of Response]

While physical risk includes a variety of risks, we have conducted a more detailed risk analysis of the sectors and businesses identified on the previous page as being susceptible to physical risk based on the factors such as having large outdoor locations or requiring a large amount of natural resources for operations. 
In addition to power generation, upstream resources and energy, real estate, and agriculture businesses, we also conducted a risk analysis of forestry businesses this year using assessment tools such as the RCP8.5 scenario*1 based on the IPCC*2 scenario of a 4°C rise by 2100, mainly in terms of water stress, flooding and sea level rise, temperature rise, and forest fires, based on information such as the geographical information of major business sites, while considering the actual conditions of the businesses. For these businesses, we also confirmed that risk management was being conducted appropriately by assessing the impact of local weather and geographical factors on our business at the time of investment, conducting continued assessments after participation in the business, clarifying the scope of contractual responsibility, and concluding nonlife insurance policies.

1. Representative Concentration Pathway： A scenario in which the temperature rises by 4°C by 2100
2. Intergovernmental Panel on Climate Change：Intergovernmental Panel on Climate Change
3. Taskforce on Nature-related Financial Disclosures： A global initiative aimed to develop and deliver a risk management and disclosure framework for organizations to report and act on evolving nature-related risks.

Risk Management

• Our business activities are comprised of a broad range of fields and regions and corelated with various social issues. Therefore, we formulated several policies to properly address social and environmental impacts resulting from our business activities and these policies are fully publicized in our group in order to take account of the various social issues.
• In detail, we evaluate social and environmental risks and check each business plan on how to respond to the risks as a part of our deliberation processes when considering and executing new businesses. Especially on climate change, we assess following climate-related risks and opportunities resulting from various adverse effects and business environmental changes from climate transition, which may possibly have negative impacts on our business activities’ feasibility:
  • Impacts of climate change such as the frequent occurrence of natural disasters and extreme weather events
  • Impacts of introduction of regulations
  • Impacts of technology changes, etc.
  • Potentials of business expansion and performance improvement resulting from mitigation and adaptation action in markets
• Regarding our existing business, we regularly monitor both companywide and individual business management status on social and environmental risks in order to make use of such monitoring information for strategic decisions.
• Regarding response to climate-related risks, we regularly report the Board of Directors and the Management Council about the risk information from which each Group collecting climate-related regulations and market’s changes when it expands its businesses and the Corporate Sustainability Department collecting and analyzing global climate trends including specific climate actions and regulations. In case that there are any unacceptable risks from the perspective of risk management for our business portfolio, measures including reduction of exposures may be considered and executed in collaboration with organizations responsible for risk management.

Metrics and Targets

Metrics and Targets

Targets：Effort for carbon neutrality

The Group set “Policies on Climate Change Issues” and long- and medium-term goals for Material Issues, and aim for realizing carbon neutrality by 2050 as well as contributing to carbon neutrality of society. The main points made in the policy and in the long-term and medium-term goals are as follows. Please check “Policies on Climate Change Issues” and “Material Issues” for details.

• Reduce the Group’s CO2 emissions 50% or more by 2035 (compared to 2019) Of which, Reduce CO2 emissions of the power generation business by 40% or more by 2035 (of which reduce 60% or more for coal-fired power generation business)
• For coal-fired power generation business, no further involvement in IPP (Independent Power Producer) nor EPC (Engineering, Procurement, Construction) business and will end all the coal-fired power generation business in the late 2040s
• For thermal coal mine interest, no additional investment and reduce indirect CO2 emissions generated from thermal coal mines to zero by the end of the 2020s
• Increase supply of renewable energy (5GW or more by 2030)

• The scope of business targeted for carbon neutralization is as follows
  
  • Direct CO2 emissions from Sumitomo Corporation and its subsidiaries, as well as indirect emissions from the generation of energy used by each company (however, for power generation businesses, emissions from those affiliated companies under the equity method are also included)
  • Indirect CO2 emissions associated with the use of energy resources produced by fossil energy concession of Sumitomo Corporation Group, its subsidiaries, and affiliated companies under the equity method

Index: Internal carbon pricing utilization index for achieving carbon neutrality

From April 2023, we have been operating an internal carbon pricing (ICP) system to calculate carbon emission costs, environmental values and avoided emissions. We utilize analysis from the system to consider companywide measures to create new climate-related business opportunities and check potential impacts on future businesses for decisions on investment.
In the ICP system, we use the outlook on carbon price of the Net Zero Emission Scenario (NZE) in the World Energy Outlook 2023 published by the IEA.

＜Carbon price in our ICP＞

($/t-CO2)

• Carbon prices in 2035 are average figures of 2030 and 2040 from the NZE in the World Energy Outlook.

Results

CO2 Emissions (*1)

(Thousand t-CO2e)

1. Figures for active power generation projects and fossil energy interests are calculated with the advice of a third party.
2. Direct CO2 emissions from Sumitomo Corporation and its subsidiaries, as well as indirect CO2 emissions from the generation of energy used by each company
3. Includes estimates for projects under construction and emissions from those affiliated companies under the equity method
4. Indirect CO2 emissions associated with the use of energy resources produced by fossil energy concession of Sumitomo Corporation, its subsidiaries, and affiliated companies under the equity method.

Net ownership generation capacity of Renewable energy

(MW)

Index	Result of March 31, 2020 （The base year）	Result of March 31, 2024	Targets of 2030
Renewable energy (*)	1,397	2,075	5,000 or more

• Includes capacity held by a fund whose management company is 51% owned by Sumitomo Corporation.

<Reference> Net ownership generation capacity portfolio

(MW)

	As of March 31, 2024
Coal-fired power generation	5,172
Gas-fired power generation	2,994
Renewable energy (*1)	2,075
Total	10,241

• Includes capacity held by a fund whose management company is 51% owned by Sumitomo Corporation.

Contributing to the sustainable development of local communities and the global environmental protection through the renewable energy business in Japan

Operating six solar and two wind power plants in Japan

Among power stations sourced by renewables such as solar, wind, biomass and geothermal energies, solar (photovoltaic) power plants generate the greatest amount of electricity in Japan. So called "mega-solar (far-over-MW photovoltaic)" power plants started to be constructed across the country in 2012, after the introduction of the Feed-in Tariff system.

In the 1990s, Sumitomo Corporation began importing polysilicon and other materials for Japanese photovoltaic panel manufacturers, while exporting their products to overseas markets. We subsequently started the development of mega-solar power plants in Europe and the United States, and from 2012, in Japan. Today, we own and operate mega-solar projects at six locations nationwide.

Construction of wind power plants came into full swing in Japan in the early 2000s, before mega-solar projects gathered momentum. Sumitomo Corporation started the commercial operation of its first wind power plant in 2004, when wind power generation had just begun to take off. We then launched several projects, including those in Kashima, Ibaraki Prefecture and Oga, Akita Prefecture, which are well into the operational stage today.

Solar power plants in Minamisoma stand as a symbol of restoration from the earthquake disaster

Our latest initiative in solar power generation is the development of a mega-solar power plant with a generation capacity of 92,000 KW in Minamisoma, Fukushima Prefecture, which suffered devastating damage from the Great East Japan Earthquake. In 2012, one year after the earthquake disaster, we began drawing up a plan to build a solar power plant with cooperation from the local municipality with the aim of making use of coastal land that subsided due to the tsunami. After overcoming numerous challenges, commercial operation commenced in March 2018 for the first phase of construction, and in December 2018 for the second phase of construction.

Fukushima Prefecture aims to expand its renewable energy power generation capacity to meet 100% of the prefecture's demand by around 2040. Installed on a vast plot of 150 ha land, which is 32 times the size of the Tokyo Dome stadium, the two solar power plants will not only contribute to achieving this target, but also stand as a symbol of restoration from the disaster for the regional people.

Sumitomo Corporation has the vision of operating its plants over the long term, even after the Feed-in Tariff period has ended, to continue supplying environmentally friendly and cost-competitive electricity to society. The prerequisite for fulfilling this vision is to build a relationship of trust with the local communities. The only way our facilities can sustain operations over decades to come is to be accepted and loved by the local people.

Realizing optimal electricity management through Group-wide collaboration

Solar and wind power generation is susceptible to weather conditions. As a means of compensating for this weakness and ensuring stable electricity supply, Sumitomo Corporation is looking to use the storage batteries in its renewable energy business in pursuit of optimal electricity management. Furthermore, we are seeking to supply the electricity continuously and stably to consumers, in cooperation with Summit Energy Corporation, a subsidiary engaged in electricity retail business, who own and operate large-scale biomass power plants within the Group.

Developing new renewable energy power generation projects

The Japanese government has revised upward the 2030 target for the proportion of renewable energy in the domestic energy consumption mix to up to 38%. The Sumitomo Corporaton Group meanwhile, has a medium-term goal of increasing its renewable energy power supply capacity to at least 3 GW in combined total by 2030 and, toward this end, is expanding the development of carbon-free energy projects. These include a number of new projects started in Japan, namely: a biomass energy plant in Sendai, Miyagi Prefecture (March 2021); an onshore wind farm extending across Tamura, Okuma, Namie and Katsurao, Fukushima Prefecture (April 2022); and another onshore wind farm in Tosashimizu and Mihara, Kochi Prefecture.

Also eyed are new business areas such as domestic offshore wind power generation, which is currently the subject of global attention, and district energy management businesses that provide renewable energy for local consumption.

Drawing on our long years of operational experience in solar, wind and biomass power generation, we are confident that we can contribute to the development of Japan's renewable energy power generation industry and the realization of a sustainable society.

Sustaining Indonesia’s power supply with geothermal power generation

Renewable energy that is less susceptible to climate conditions

Geothermal power generation is a method used to generate electricity with a renewable energy source. The mechanism itself is simple: ground water is heated by deep underground magma near volcanoes, and the resulting steam turns the turbine of a generator that produces electricity. As it requires no fossil fuel consumption, geothermal power generation has a low environmental impact. Also, the cost of generating electricity is unaffected by fuel market fluctuations. Compared to other renewable energy sources such as solar and wind power, geothermal energy is undisturbed by climate conditions. Accordingly, this generation method can deliver electricity on a stable basis.

However, geothermal power generation entails some risks. It is unclear to know if enough hot water or steam (i.e. geothermal fluid) can be obtained for power generation until after a deep well has been drilled. In fact, some projects must be aborted as a result of drilling 2,000 to 3,000 meters in depth. Developing geothermal energy projects requires know-how of surface level surveys, ability to fund wells for drilling, ample time, and even a certain amount of luck.

Abundant geothermal resources in Indonesia

Business models for power generation infrastructure are generally grouped into two main categories: EPC and IPP. EPC refers to construction contracts where the Engineering, Procurement, and Construction of a power plant are contracted. Under EPC arrangements, the contract is typically fulfilled when the completed facility is delivered to the local government or company. IPP stands for Independent Power Producer, where the operator becomes the owner of the generating facility and sells electricity on an ongoing basis.

With a view to the diversification of power sources in the future, Sumitomo Corporation has kept a keen eye on geothermal power generation since the early days when these projects were becoming larger in scale and more practical, and began delivering related equipment in the 1970s. Indonesia has the second highest number of geothermal resources in the world. We began our work in geothermal power generation there in 1995, and won our first EPC contract for a geothermal power plant in 1997. To date, we have been involved in a total of 12 projects (17 units totaling approximately 900 megawatts of power generation capacity). This represents 40 percent of the total geothermal capacity in the country and is the highest among Japanese integrated trading and business investment companies.

Our success with numerous geothermal EPC projects has been built on the productive partnerships we have forged. Our partners include Fuji Electric Co., Ltd. the world's leading manufacturer of steam turbines for geothermal power stations, and an Indonesian company PT. Rekayasa Industri, which take charge of civil construction, installation and local procurement. Among our recent geothermal EPC projects are the Lahendong power station in north Sulawesi and the Ulubelu power station in south Sumatra.

Demonstrating persistence in geothermal IPP project development

Our first geothermal IPP project in Indonesia was the Muara Laboh project, launched in west Sumatra in 2011.

Geothermal power stations are generally developed and built in untouched mountainous areas near volcanoes. Development of a geothermal project beings with construction works which consists of clearing and leveling the ground at the project site. Muara Laboh is located in a remote area, requiring four to five hours of overland travel from the nearest airport. In March 2012, the Project Company which Sumitomo Corporation along with its partners invests in entered into a long-term power purchase agreement over 30 years with the Indonesian state-owned electricity utility. After obtaining a Government Guarantee Letter from the Ministry of Finance of the Republic of Indonesia, the Project Company embarked on trial well drilling.

However, as a result of drilling exploration wells, the need to downscale power generation capacity became clear. We renegotiated with the Indonesian government and the Indonesian state-owned electricity utility regarding the terms and conditions of the project. It took nearly two years before all parties reached a unanimous agreement. The next step was to make financial arrangements for the actual power station construction. After five years of concluding the initial long-term power purchase agreement, we were able to achieve finance close and start the construction work in March 2017.

We were also contracted to provide EPC services for the construction of this plant. To achieve our goal of completing our first geothermal IPP project in Indonesia on time and contributing to the country's electricity supply, we not only leveraged our expertise as an operator that we have cultivated through other IPP projects, but also our extensive experience in geothermal EPC projects and the comprehensive strengths of our electric power infrastructure business as well. Finally, we were able to commence commercial operation in December 2019.

It was unprecedented for a Japanese company to be involved in the development of an Indonesian geothermal power project from the earliest stage, even prior to test drilling. Systemic difficulties made negotiations on project terms and conditions as well as financial arrangements a prolonged endeavor. Despite this obstacle, the successful completion of the power plant was achieved, helping us build a foothold for our next projects in Indonesia. Our projects currently underway include expansion work for the Muara Laboh power plant and the construction of our next geothermal IPP project, the Rajabasa power plant, on Sumatra Island

Indonesia to increase geothermal power generation capacity by 2.5 times by 2030

With the fourth largest population in the world at more than 270 million people, and an economy that continues to grow at around 5 percent per year, shifting to renewable energy and ensuring a stable supply of electricity have been national challenges for Indonesia. Geothermal power generation, which utilizes Indonesia's abundant geothermal resources, has been recognized as an effective means to simultaneously solve both of these issues, and the Indonesian government plans to increase its geothermal power generation capacity from the current 2,400 megawatts to 5,800 megawatts by 2030. The government is looking to Sumitomo Corporation, with its 20-plus years of experience in the construction of geothermal power plants and its experience in Muara Laboh geothermal IPP project, for support in this endeavor.

Geothermal power projects entail unique risks that other power sources do not. Building on our accumulated knowledge and expertise, we will contribute to the realization of a low-carbon society in Indonesia by managing those risks in cooperation with government agencies and financial institutions.

Participation in European offshore wind power projects

Rapid development of offshore wind power generation in Europe

Four Belgian projects

Sumitomo Corporation entered the offshore wind power business in 2014. Under a strategic partnership with Parkwind, a Belgian offshore wind company, we participated in Belwind, Northwind and Nobelwind wind farm projects, then in operation, under construction or in development in the North Sea.

Since August 2018, Sumitomo Corporation has also participated in Northwester 2, the fourth joint project with Parkwind. Construction was completed in May 2020. Recently, the European offshore wind power market has been shifting toward ever larger turbines driven by technology innovation. Northwester 2 is running the world's largest turbines currently in commercial operation. Constructing and operating these huge wind turbines requires stable funding, management skills to see the project through, and operational expertise. Having already accumulated considerable related experience through building and running conventional power plants and participating in onshore wind power projects in North America, China and South Africa, Sumitomo Corporation has been able to bring about successful outcomes in the Belgian projects.

Participation in projects expanding in Europe: From Belgium to the UK and then to France

Potential in Asia

Establishment of the Fund to Expand the Renewable Energy Business

In April 2018, Sumitomo Corporation integrated its conventional power and renewable energy business segments and established a global system to enable it to work on power generation projects in a seamless fashion. The company's objective in this area is to establish a robust energy business that contributes to society and preserves the global environment for future generations.

In 2019, Sumitomo Corporation, Sumitomo Mitsui Banking Corporation and the Development Bank of Japan established the first fund through Spring Infrastructure Capital (SIC), a fund management company jointly established by the three companies. The fund—the first fund in Japan to invest in offshore wind power projects overseas—has acquired the UK-based Race Bank and Galloper offshore wind farm as seed assets (assets for investment by the fund). In 2022, SIC established a second fund to acquire solar power generation projects in Japan as seed assets.

Through SIC, we will provide institutional investors with opportunities to invest in renewable energy assets both in Japan and overseas, and contribute to the development of global infrastructure centered on renewable energy.

To protect our planet while guaranteeing the day-to-day comfort and convenience that electricity provides, Sumitomo Corporation continues to vigorously promote its renewable energy business.

Providing the global market with sustainable wood resources

Managing forests to contribute to carbon neutrality across the globe

Achieving sustainable forest management in New Zealand through forestation

Renewable Energy Related Business

We have entered power generation business using renewable energy, which is expected to grow as a medium- to long-term energy source, contributing to mitigating climate change.

As of March 31, 2023

Green Building Initiatives and Issuance of Green Bonds

In our real estate business, we have formulated and implemented basic policies related to environmental, social and governance (ESG) issues. As a real estate management company, Sumisho Realty Management Co., Ltd. (“SRM”) believes that incorporating ESG elements into investment decisions and　operation processes is essential for maximizing value of medium- to long-term investor. SOSiLA Logistics REIT, Inc. (“SLR”) has obtained real estate environmental certifications such as CASBEE, DBJ Green Building, LEED, BELS. Also, SOSiLA Logistics REIT Inc. has been awarded “5 Stars” in the 2023 GRESB Real Estate Assessment and the highest “A Level” for the GRESB Public Disclosure, which measures the quality of ESG disclosure.
As the first J-REIT to formulate a green finance framework since IPO, SLR has been promoting ESG-oriented asset management through green finance. In June 2023, SLR issued 3.0 billion yen Green Bonds with aims to strengthen the funding platform by expanding the ESG investor base, along with promoting ESG initiatives. Funds procured through Green Finance are used for the acquisition of existing or new assets (including scheduled acquisition) of Eligible Green Assets that satisfy any of the following eligible criteria, used for the renovation of Eligible Green Assets, or repayment and redemption of loans (including Green Loan) and Investment Corporation Bonds (including Green Bonds) required for these.

＜Eligibility Criteria＞

• Green Building
  Any of the following items that have been or will be certified
  • B+ rank, A rank, or S rank in CASBEE certification for new construction or for real estate
  • Three-star, four-star, or five-star DBJ Green Building certification
  • Three-star, four-star, or five-star BELS certification (2016 standard)
    
    • Excluding BEI over 0.75 for logistics facilities
    Level 6, Level 5 or Level 4 in BELS certification (2020 standard)
  • Silver, Gold or Platinum in LEED certification
• Renovation of existing building
  Renovation of the owned assets which meet the following;
  • To aim for improving environmental benefits such as reducing CO2 emission, energy consumption or water consumption (30％ or more decrease in its volume)
  • To improve the certification level by one rank, acquisition or reacquisition of the certifications
• Energy Saving Equipment
  • Costs related to renewal of air-conditioning equipment, conversion of lighting fixtures to LEDs, and introduction of power storage systems (expected energy savings of 30% compared with conventional systems)
• Renewable Energy
  Acquisition or installation of renewable energy power generation facilities (installed on the premises or on the rooftop of the property)

Major environmental certifications obtained by SLR (as of November 2023).

Certifications	Property Name	Evaluation
CASBEE: 11 properties	SOSiLA Yokohama Kohoku	Real estate Rank A
	SOSiLA Sagamihara	Real estate Rank A
	SOSiLA Kasukabe	Real estate Rank A
	SOSiLA Kawagoe	Real estate Rank A
	SOSiLA Nishiyodogawa I	Real estate Rank A
	SOSiLA NishiyodogawaⅡ	Real estate Rank A
	SOSiLA Ebina	Real estate Rank S
	LiCS Narita	Real estate Rank A
	SOSiLA Itabashi	Building (New Building) A Rank
	SOSiLA Amagasaki	Real estate Rank S
	SOSiLA Yashio	Real estate Rank S
LEED: 1 properties	Atlanta Financial Center	SILVER
BELS：11 properties	SOSiLA Yokohama Kohoku	☆☆☆☆☆
	SOSiLA Sagamihara	☆☆☆☆☆
	SOSiLA Kasukabe	☆☆☆☆☆
	SOSiLA Kawagoe	☆☆☆☆☆
	SOSiLA Nishiyodogawa I	☆☆☆☆☆
	SOSiLA Ebina	☆☆☆☆☆
	SOSiLA NishiyodogawaⅡ	☆☆☆☆☆
	LiCS Narita	☆☆☆☆
	SOSiLA Itabashi	☆☆☆☆☆
	SOSiLA Amagasaki	☆☆☆☆☆ ZEB Ready
	SOSiLA Yashio	☆☆☆☆☆ ZEB Ready

GX Concierge, Providing Side-by-Side Support for Decarbonized Management

To realize carbon neutrality, companies need to develop a green transformation (GX) management cycle for the ongoing process of assessing their current GHG emissions, formulating GX strategies and measures, adopting GX solutions, and evaluating and revising the process. Sumitomo Corporation and ABeam Consulting have established a new joint-company called "GX Concierge Inc." to mitigate climate change to carbon neutrality for society. Specifically, GX Concierge provides various GX-related consulting services, including support for measuring GHG emissions, developing a GHG reduction roadmap, and making disclosures under the TCFD. It acts as a one-stop service for all the customer’s needs, from adoption of various Sumitomo Corporation Group’s GX solutions, such as solar power generation and EV leasing businesses, to GHG emission management cloud services for visualizing GHG emissions. With climate change disclosures in line with TCFD recommendations becoming mandatory from FY2022 for companies listed on the Prime Market of the Tokyo Stock Exchange, we have already been providing GX consulting and other support services to our suppliers.

Sumitomo Corporation Group is deeply involved in the supply chains of a wide range of industries, so we aim to work with our suppliers and business partners to tackle climate change mitigation head-on and help realize a carbon neutral society through GX Concierge.

ZEB Ready Certification for Yaesu Avenue Project (tentative title)

Using GX Concierge to Visualize GHG Emissions from Logistics Facilities (SOSiLA)

Operating an Environmentally Friendly Data Center

SCSK Group plays a central role in the IT business of Sumitomo Corporation Group. SCSK conduct management aimed at resolving social issues through business and achieving sustainable growth together with society.
Serving as an IT infrastructure platform to support the accelerating digitalization of customers, SCSK’s data centers are also positioned as an important business in achieving our materiality of "contributing to the global environment."
SCSK Group is working on follow two measures: "mitigation" measures to reduce suppress the progress of global warming by reducing greenhouse gas emissions, such as CO2, and "adaption" measures to prepare for natural disasters associated with climate change.

Contribution to Reducing Environmental Impact - Promotion of Green IT

In the data center business, SCSK Group is reducing greenhouse gas emissions. This includes adopting energy-saving IT equipment, implementing highly efficient cooling and air conditioning systems, and providing services that contribute to power saving, such as server virtualization and cloud services.

Contributing to Building Resilient Society Against Natural Disasters

SCSK’s data centers are certified as robust facilities resilient to natural disasters, ensuring business continuity for customers who utilize the data centers and contributing to strengthening resilience. SCSK group also support customers' business continuity by, for example, preparing some of the rooms in the facility for customers to use as a disaster recovery room in the case of a disaster.

Going forward, the SCSK Group will continue its ambitious efforts to reduce greenhouse gas emissions by promoting further power conservation and the use of natural energy. And will contribute to the realization of a decarbonized society and the development of a sustainable society through the practice of environmentally friendly business activities and the creation of business opportunities.

Retrofitted EV Bus Business with Nishitetsu Group

Hakobune Established to Provide a Service Combining EVs with Energy Management

Hakobune Inc., Sumitomo Corporation established in April 2023, provides “EV x energy management” services. Hakobune provide companies with commuter EVs for employees and workplace charging (WPC) facilities on a monthly subscription basis. If required by the companies, solar power generation equipment can be added to the package. To help employees update their commuting options and help companies decarbonize, Hakobune will provide commuter EV vehicles and WPC equipment for solar charging at workplaces to companies and their employees in areas where cars are critical for commuting. Sumitomo Corporation will make full use of its experience in the automotive and electric power businesses to accelerate its efforts to become carbon neutral through Hakobune's business while providing workers with a comfortable mobility lifestyle, thereby realizing the development of local communities and economies.