Creating New Businesses to Realize a Carbon-Neutral Future: Challenges Addressed by the Energy Innovation Initiative

What prompted the establishment of EII?

Sumitomo Corporation has long pursued the realization of a carbon-neutral society through the construction of decarbonized and circular energy systems, with each business division (now Business Group) advancing its own initiatives. However, this field involves many shared challenges and tackling them independently was often inefficient. With this in mind, we decided to move beyond existing organizational frameworks and strategically deploy the company's specialized intellectual assets and human capital to create new businesses that contribute to decarbonization, while also generating new earnings pillars for Sumitomo Corporation. EII was established in April 2021 to serve this purpose.

What kinds of new businesses has EII created so far?

One example is a project to install solar carports, simple roof structures fitted with solar panels, in the parking lots of AEON Malls. By enabling solar panels to be installed in parking areas rather than only on rooftops, available installation space increased dramatically, accelerating decarbonization. At the same time, the addition of covered parking provides added value, such as increased customer comfort on rainy days and during peak summer heat. Large-scale deployment across multiple sites has also driven down costs. These benefits have been highly valued by AEON Mall, and as of the end of January 2026, the system has been introduced at nine locations, with further expansion planned. While installing solar power equipment is in itself a simple, long-established business, EII's strength lies in carefully considering customer needs and applying ingenuity to create new business models.

You are also pursuing the social implementation of fusion energy.

Yes. We are working toward establishing a fusion-energy* supply chain and realizing commercial power plants, in collaboration with companies in Japan and overseas, including investment in a U.S. startup in 2022. Fusion energy is a completely different technology from conventional nuclear power generation, which relies on chain reactions of nuclear fission. If fusion technology can be fully developed, it will be a gamechanger, marking a major turning point in the global energy landscape. Although commercialization was long thought to be more than 50 years away, growing government support in Europe and the U.S., along with large inflows of private capital, has raised expectations that pathways toward practical usage may emerge in the 2030s.

It has also become clear that the fusion-energy development process generates a wide range of derivative technologies. While keeping long-term fusion power generation in view, we have started to identify several areas where these derivative technologies could be monetized, allowing us to pursue business opportunities over the short to medium term as well. At the Japan Fusion Energy Industry Council (J-Fusion), I currently serve as Vice Chair, following a request from the government to have companies capable of overseeing the entire value chain play a leading role.

What strengths enable EII to create diverse new businesses with different paths to profitability?

Collaboration with external partners and public institutions is indispensable when creating new businesses. Not only in launching "zero-to-one" ventures, but also in scaling established business models horizontally, the networks of each SBU play a critical role. All of this begins on the front lines: understanding customer needs from a market-in perspective, grasping how different industries approach climate-change measures and identifying their specific challenges. The key is how effectively we can leverage Sumitomo Corporation's comprehensive capabilities, which span a wide range of sectors.

Access to new technologies that serve as seeds for business development is another area where our strengths as an integrated trading company come into play. Within EII's Incubation Team, we work closely with the Sumitomo Corporation Group's corporate venture capital (CVC) arms in Japan and overseas, keeping an early watch on innovative startups and ventures that may become future gamechangers. We then share this information with relevant SBUs and jointly explore commercialization potential.

Rule-making also seems crucial in creating new businesses and industries.

In areas related to climate change and decarbonization, institutional frameworks are often underdeveloped. To create new businesses, it is sometimes necessary to tighten or relax regulations, to change the rules themselves. For example, in the early stages of launching battery-storage businesses, transmission and distribution fees* were charged both when electricity was stored and when it was discharged, resulting in double charging that hindered adoption. We persistently explained to government ministries and agencies, including METI, that reducing the burden would promote battery-storage deployment and offer long-term benefits to power companies as well, and this led to actual change.

Rule-making inevitably creates winners and losers. It cannot be driven by self-interest alone. Ultimately, the guiding principle must be what brings the greatest benefit to society as a whole. This aligns closely with one credo of Sumitomo's business philosophy: "benefit for self and others, private and public interests are one and the same." By creating systems that allow new market entries to earn appropriate returns and transition to a sustainable, self-supporting state without relying on subsidies, we believe we are fulfilling one of our roles.

Learn more about our storage battery business:

How does EII promote cross-organizational collaboration in practice?

For each theme, we form cross-organizational collaboration platforms that bring together internal and external organizations. Through repeated hypothesis testing and validation, these platforms have given rise to sales organizations pursuing concrete businesses such as carbon credits, CCUS and bioenergy.

One current focus (being addressed by the cross-organizational collaboration platforms) is the carbon-neutralization of real estate. Working with SBUs involved in materials such as real estate and steel, we are actively developing businesses aimed at decarbonizing construction materials like steel frames and cement, as well as commercializing services such as AI smart air conditioning system, which optimizes HVAC operations using AI to reduce emissions and energy consumption.

What measures have you taken to energize cross-organizational collaboration?

Given the wide range of industries and products we handle, integrated trading companies tend to become siloed. Because EII is a sales organization, we wanted to avoid debates over which group should book results when projects are jointly undertaken. From the outset, we decided that projects conducted together with other sales groups would be double counted for performance evaluation, regardless of which group formally owned the results. This approach, proposed by our founding EII leader and current President and CEO, Shingo Ueno, helps avoid the pitfalls of siloed structures while maintaining motivation among EII members. Through such measures, we aim to build (cross-organizational collaboration) platforms that fully leverage Sumitomo Corporation's comprehensive strengths and enable the creation of highly differentiated, innovative businesses.

What are your future plans for these cross-organizational collaboration platforms?

These platforms are effective precisely because of the diverse expertise and customer networks held by Sumitomo Corporation's 43 SBUs. Awareness across the company of "what might happen if we employ a decarbonization mindset here" has grown significantly, but there is still much more to unearth. We intend to continue establishing platforms that allow the company's collective strengths to shine, while identifying seeds worthy of the "Innovation" in EII's name and turning them into truly differentiated businesses through cross-organizational collaboration.

Finally, what are EII's aspirations going forward?