Enhancing Sustainability Management

Key social issues and long-term and medium-term goals for Sumitomo Corporation Group

As Sumitomo Corporation works to enhance its sustainability management, we have identified six key social issues related to our business that we address through our business and corporate activities, and set out long-term and medium-term targets to address each issue. The six key social issues are: “Mitigation of climate change”, “Circular economy”, “Respect for human rights”, “Development of local society and economy”, “Improvement of living standard” and “Quality education”.

As we pursue these lofty goals, it will be necessary for us to demonstrate our strengths as an integrated trading company. The Group will make use of its human resources, business expertise as well as networks and business relationships. The six social issues will demonstrate our role in the society and become our guideline to the Group’s entire business operations.

The six social issues have two themes: the sustainability of society and development and evolution of society. The sustainability of society is a globally shared goal as well as a major premise of the Group’s business. On the other hand, the solutions for pursuing the sustainability of society will be generated from further social and economic development and therefore, we believe that these two themes are mutually complementary. Also, we will pursue to achieve these goals through business activities, however, we will contribute to providing quality education through our philanthropy as well as human resources development initiatives.

Development and evolution of the society

Development of local society and economy
The Group's business is expanding to countries and regions around the world. Helping to develop the communities where we do business is a common challenge to all our business operations. The Group will contribute to industrial development as well as human resource development in the local communities and will endeavor to provide industrial and social infrastructure.

Improvement of living standard
The world's population continues to grow, and many areas are facing problems such as aging and urbanization. The Group will make effort to provide advanced life-related services that contribute to a better life for all people.

Quality education
Quality education plays an important role in the development of local communities and economies, which enriches people's lives and leads to creation of a sustainable society. The Group will promote various activities, including philanthropy, to contribute to quality education.

Sustainability of the society

Mitigation of climate change
Preventing global warming and mitigating climate change are urgent issues that are indispensable for realizing a sustainable society. The Sumitomo Corporation Group seeks to become carbon neutral in its business by 2050 and develop sustainable energy cycles and create new business.

Circular economy
The circular economy through recycling, reuse, reproduction, resource-saving product development, and sharing is an important element for maintaining social sustainability. The Group will contribute to achieve circular economy by recycling, switching to resource-saving technologies and products, and working on sustainable procurement of natural resources.

Respect for human rights
Respect for human rights is a universal issue that must be achieved in any place and at any time. The Group operates business while engaging with multiple stakeholders including customers, local communities and employees, and we will strive to respect human rights throughout the Group's business and supply chains.

Long-term goals for individual key social issues include, for example, aiming carbon neutrality in 2050, which will be addressed on a long-term basis. Meanwhile, there are goals that we must constantly work on, such as respecting human rights in all businesses and supply chains. We will set specific medium-term targets for achieving these long-term targets, monitor KPI, and take actions while disclosing our progress to stakeholders.

Sumitomo Corporation Group's Key Social Issues and Medium/Long-term Goals

Key social issues		Long-term goals	Medium-term goals
Sustainability of society	Mitigation of climate change	Aim for carbon neutrality by 2050 and challenge to realize sustainable energy cycle	Reduce the Group's CO2 emissions 50% or more by 2035 (compared to 2019) 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); power generation portfolio in 2035 to comprise 20% coal-fired, 50% gas-fired and 30% renewables (1) in terms of net ownership generation capacity. Reduce indirect CO2 emissions (2) associated with the fossil fuel upstream business by 90% or more by 2035. Reduce CO2 emissions in all other businesses (3). Establish businesses that will form the foundation for a sustainable energy cycle in society* Develop hydrogen and other forms of carbon-free energy, increase supply of renewable energy (5GW or more by 2030)(*4), and expand new power and energy services. Expand businesses encouraging electrification, fuel conversion, improved energy and coal efficiency, and energy conservation. Capture, store and utilize CO2 via carbon recycling, forestry business, CCS, and emissions credit trading, etc.
	Circular economy	Shift to recyclable, efficient technologies and products	Use renewable and recyclable raw materials, collect waste, and promote improved efficiency of product usage Expand use of raw materials derived from recycled or renewable resources. Improve efficiency of product usage and expand businesses that promote longer product life (sharing, sales of used items, leasing, rentals, etc.) .
	Circular economy	Sustainable use of natural resources	Reinforce the sustainable procurement system for major natural resources used by the Group Identify major natural resource-related commodities requiring sustainable procurement, establish procurement policy, promote certification, and strengthen voluntary auditing system.
	Respect for human rights	Respect human rights through all of our businesses and supply chains	Promote and ensure respect for human rights in accordance with the United Nations Guiding Principles on Business and Human Rights and Sumitomo Corporation Group’s Human Rights Policy By 2023, achieve 100% participation rate in human rights education based on the Guiding Principles, and 100% implementation rate in regional organizations and subsidiaries. Strengthen risk analysis in human rights due diligence to accurately assess risks in all businesses, including the supply chain, and implement risk mitigation measures by 2025. Establish a more effective grievance mechanism(5) based on assessment results. Ensure a safe workplace environment* Strengthen efforts to achieve zero accidents at major business workplaces, focusing on manufacturing, processing, and projects involving large-scale construction. Achieve a diverse organization grounded in mutual respect Provide a safe working environment that is free from discrimination and harassment. Promote human resource management that enables individuals to demonstrate their abilities regardless of nationality, age, gender, sexual orientation, gender identity, or any other attributes or values.
Development and evolution of society	Development of local society and economy	Contribute to development of local industries and human resources	Develop local industries, create jobs, and develop human resources through the Group’s global business operations Promote sustainable, highly productive and value-added industries, and coexist with local communities through business. Create employment and develop management and highly skilled human resources at the Group's business sites.
	Development of local society and economy	Develop industrial and social infrastructure	Establish industrial and social infrastructure that contributes to the sustainable development of society Promote infrastructure that enables access to high-quality energy, water, transportation, logistics, communications, and financial services, as well as businesses that enhance urban functions.
	Improvement of living standard	Provide advanced lifestyle-related services	Deliver advanced lifestyle services that help to solve social issues such as urbanization and aging populations Provide more advanced services and new functions that improve the standard of living, such as mobility, media and telecommunications, healthcare services, and smart city development, based on new technologies and concepts.
	Quality education	Contribute to quality education	*Provide quality and equal learning opportunities through 100SEED(6) activities** Quantitatively expand the scope of learning opportunities. 100% satisfaction of beneficiaries. Continue to have at least 5% of all employees participate annually (scope is Sumitomo Corporation, regional organizations and Group companies).

(*1) As of 2020：coal 50%, gas 30%, renewables 20% (*2) Indirect CO2 emissions generated by others with the use of fossil fuel (*3) Contribute to CO2 reduction by setting targets for individual businesses (*4) As of 2020：1.5GW (1GW = 1 billion W) (*5) A process that employees, local residents or other stakeholders can use to lodge complaints regarding human rights violations and other issues related to enterprise’s business activities including its supply chain, for resolving such issues (*6) Social contribution activity program with employee participation at Sumitomo Corporation Group

The Enhancement of Sustainability Management that We Seek

Enhancing sustainability management at Sumitomo Corporation goes beyond identifying issues and setting goals.

In addition to clearly commit to the role we play in achieving a sustainable society, it is necessary that we focus on the optimal status of companies and their business that will be needed in a sustainable society, such as carbon neutrality, circular economy and zero violation of human rights. We need to recognize the paths to achieve them and the challenges to be overcome, and consider the strategies and allocation of management resources that we should implement from a long-term perspective.

We believe that capturing and pursuing the ideal state of society will bring more business opportunities. The Sumitomo Corporation Group's sustainability management is about perfectly aligning the vision of a sustainable society with the Group's value creation and sustainable growth, and we continue to work on establishing a management framework to achieve the vision.

Material Issues and Key Social Issues

We have identified its material issues in 2017 which are the Group’s priority issues in order to sustainably grow in harmony with society. Based on Sumitomo’s Business Philosophy and Sumitomo Corporation Group’s Corporate Mission Statement, we organized how each business in our portfolio contributes to society and classified them into four material issues. In addition, two issues were added, which are our important management topics. We have been placing the six material issues at the core of our management to constantly check that the business strategies and each business align with the material issues and making sure that they are contributing to solve the social issues.

On the other hand, with the newly identified key social issues and their long-term goals, Sumitomo Corporation Group will take a step forward in its sustainability management by defining the role it plays in achieving a sustainable society. We believe that both of these initiatives are essential in order to understand how our business relates to social issues and also to make clear commitments to society.