Aim for Carbon
Neutrality of the
Sumitomo Corporation
Group’s Businesses

Aim for Carbon Neutrality
of the Sumitomo Corporation
Group’s Businesses

In recent years, the GHG Protocol has become the de facto standard for calculating GHG emissions. Against this backdrop, following the completion of calculations for all Scope 3 categories, which cover emissions across the Group’s supply chain, for FY2024 and the obtaining of third-party assurance, we designated FY2024 as a transition year and updated the Group’s carbon neutrality boundary in February 2026 in accordance with the GHG Protocol. This update is a key initiative that contributes to expanding our viewpoint to the entire supply chain and strengthening accountability, both of which are the core of the sustainability management in the Medium-Term Management Plan 2026.

From FY2024 onward, in addition to Scope 1/2, we will include Scope 3 Category 13 (downstream leased assets) and Category 15 (investments) within our carbon neutrality boundary. While we had previously focused on our thermal power generation business and fossil fuel upstream business, the new boundary incorporates certain Scope 3 emissions across our supply chain, thereby expanding the carbon neutrality boundary.

At this time, we are updating the carbon neutrality boundary from a “business unit” approach, which emphasized reduction priorities, to a format in line with the scope under the GHG Protocol.
Regarding Scope 3, while maintaining consistency with the GHG Protocol and premised on including businesses with existing high reduction priorities, we comprehensively considered the extent to which we can engage with emitters in the supply chain and reduction priorities, taking into account the diverse business domains of the Sumitomo Corporation Group, and decided to include Category 13 (downstream leased assets) and Category 15 (investments).
High-emission segments of Scope 3 include Category 1 (purchased goods and services) and Category 11 (use of sold products), but these are emissions from trading such products and services. Considering that there are a few cases where the Group manufactures products, they are not included within the carbon neutrality boundary, but we have started implementing countermeasures by reinforcing engagement with suppliers and ascertaining emissions and reduction measures.
The carbon neutrality boundary since 2020 and the new boundary largely overlap, but the fossil fuel upstream business and part of the thermal power generation business are excluded from the new boundary. This is due to strict adherence to the GHG Protocol’s operational control approach and does not indicate that we are curtailing our emission reduction efforts in the Group’s thermal power generation business and fossil fuel upstream business. For both businesses, we will maintain emissions reduction targets on the individual business level based on the previous boundary and continue to disclose CO₂ emission results on an annual basis. Reduction targets and progress for both businesses can be found here.

A summary of the Sumitomo Corporation Group’s GHG emissions in FY2024 is indicated below. The boundary of aggregation is on a consolidated basis, and Sumitomo Corporation and its consolidated subsidiaries and joint operations are included. The boundary of aggregation was determined by applying the operational control approach under the GHG Protocol since FY2023. Details can be found on our Sustainability Disclosure Site (see here for Scope 1/2, and here for Scope 3).

Scope 1: Mainly direct emissions from power plants owned and operated by our consolidated subsidiaries
Scope 2: Mainly indirect emissions associated with the use of electricity at manufacturing and storage sites and stores owned by our consolidated subsidiaries

Scope 3 comprehensively includes emissions throughout the supply chain in a wide range of the Group’s businesses. The main emission sources by category are indicated below.
Category 1 and 11: Mainly emissions associated with trading of products
Category 13: Mainly emissions from power plants that our consolidated subsidiaries lease out as leased assets
Category 15: Mainly emissions from power plants owned and operated by our affiliated companies under the equity method

In preparation for the application of the Sustainability Standards Board of Japan (SSBJ) standards, the Group has been deliberately assessing and calculating Scope 3 emissions since FY2023. Certain subsidiaries are excluded due to their small business revenue scale and non-compliance with high-emission business criteria. However, the impact of this is limited, accounting for less than 5% of total emissions across all Scope 3 categories. We have obtained third-party certification regarding all Scope 3 categories, and the certificate is available on our Sustainability Disclosure Site.

Within the Group, Business Groups took the initiative in calculating Scope 3 emissions led by sustainability promoting staff within each CFO Office. At each operational level, we concretely identify major emission sources and the potential for reduction and conduct discussions relating to the next actions.

Considering that the calculation of Scope 3 for FY2024 was completed, we set FY2024 as the base year for the new carbon neutrality target so that we can base the target on traceable results data for Scope 1/2, and Scope 3. The interim emission reduction target is a 30% reduction by FY2035 compared to the base year (85% reduction in Scope 1/2 and 20% reduction in Scope 3 (Category 13 and 15)), and the long-term target is to achieve the carbon neutrality of the Sumitomo Corporation Group’s businesses by 2050. Carbon neutrality means reducing the GHG emissions of the Sumitomo Corporation Group and neutralizing the residual emissions to net zero through internationally recognized methods such as carbon removal.

Also, the carbon neutrality boundary set in 2020 included only CO₂, but the boundary has been expanded to include all GHGs such as Dinitrogen monoxide. In FY2024, GHG emissions other than CO₂ were 36,000 t-CO₂e, and thus, the impact on total emissions is de minimis.

To achieve these emissions reduction targets, we will continue to make steady efforts to reduce emissions according to the business environment of each sales site including making equipment more energy efficient, replacing equipment, and procuring renewable energy.

Base year: 7.2 million t-CO₂e in FY2024
Interim target: 0.8 million t-CO₂e in FY2035 (85% reduction from the base year)
Long-term target: Carbon neutrality in 2050

• ・The emission reduction target of 0.8 million t-CO₂e for FY2035 is a level that maintains the previous interim target of reducing CO₂ by 50% or more from the total of 1.5 million t-CO₂e for Scope 1/2 in FY2019.
• ・Scope 1/2 emissions in FY2024 increased by approximately 6 million t-CO₂e compared to FY2019 due to the commencement of operations at the Van Phong thermal power plant (100% owned by Sumitomo Corporation) that was under construction in FY2019. We will transfer 50% of our equity interests in the power plant, and after the transfer, we plan to recognize the equity-share emissions under Scope 3 Category 15. Details can be found here.

Base year: 38 million t-CO₂e in FY2024
Interim target: 30 million t-CO₂e in FY2035 (20% reduction from the base year)
Long-term target: Carbon neutrality in 2050

• ・As of FY2024, the majority of Scope 3 emissions were from the thermal power generation business, and our policy is to stably provide the energy that is essential for economic and industrial development in local communities while continuously shifting management resources to a power generation portfolio with low environmental impact.
• ・The projected emissions for FY2035 include emissions following the transfer of the 50% stake in the Van Phong thermal power plant.

The thermal power generation business and fossil fuel upstream business are key focus areas for the Sumitomo Corporation Group in advancing emissions reduction. We believe that emission data for both businesses is important information for conveying to stakeholders our stance on investment and financing. Given that the new carbon neutrality boundary pursuant to the GHG Protocol cannot capture all emissions from these two businesses*, we will continue to disclose emission data for both businesses on an annual basis. The base year continues to be FY2019 from the perspective of continuity. The results up to FY2024 are as follows.
Our targets are to reduce emissions in the thermal power generation business by 40% or more by FY2035 including a reduction 60% or more for coal-fired power generation business by FY2035 (compared with FY2019). In the fossil fuel upstream business, we will not make any further investment in the thermal coal mine development projects and aim to achieve zero production from thermal coal mines by the end of the 2020s.

• * Approximately 70% of the total emissions from the thermal power generation business and fossil fuel upstream business (total emissions of 50 million t-CO₂e in FY2024) are included in the new boundary (Scope 1/2 and Scope 3 (Category 13 and 15)), but approximately 30% is supply chain emissions from businesses in which the Group has invested as a minority shareholder and thus are not included in Scope 1, 2 and Scope 3.

• *1 Figures for active power generation projects and fossil fuel upstream business are calculated with the advice of a third party.
• *2 Includes estimates for projects under construction and emissions from those affiliated companies under the equity method.
• *3 Indirect CO₂ emissions associated with the use of energy resources produced by fossil fuel upstream business of Sumitomo Corporation, its subsidiaries, and affiliated companies under the equity method.