Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Initiatives
• Philanthropy
• Corporate Social Responsibility

Environmental Achievements

• Obtained ISO 14001 certification in June 1999 for Tokyo and Osaka offices; by June 2007, the scope of the system included all domestic locations and 40 Group companies.
• Engaged in various environmental businesses, including greenhouse gas emissions reduction projects (India, Indonesia), renewable energy supply projects (wind, solar, geothermal), and water treatment business (Mexico).

Social Achievements

• Established the Sumitomo Corporation Scholarships program in 1996, awarding scholarships to approximately 8,000 students.
• Supported the Junior Philharmonic Orchestra (JPO) since 1992.
• Provided assistance for reconstruction efforts in domestic and overseas disaster sites.
• Endowed a chair at Nankai University in Tianjin City, China, for the study of corporate social responsibility.

Governance Achievements

• Established the Compliance Committee in November 2000.
• Drafted the Company’s Compliance Manual, covering 19 Guiding Principles.
• Implemented the Speak-Up System, allowing employees to report compliance issues directly to the Compliance Committee.
• Established the Remuneration Committee on April 1, 2007 to enhance transparency and objectivity in remuneration decisions.

Climate Goals & Targets

Environmental Challenges

• Disparities in earning power among individual divisions, departments, and Group companies.
• Need to further raise the value of new and existing businesses.
• Need to further strengthen risk management and internal control systems.
• Supply and demand trends in iron and steel, particularly for general-purpose items in China, as well as shifts in raw material and energy prices.
• Severe drilling and extraction conditions for future oil and natural gas projects.
• Keen competition in the automobile consumer finance and airline industries.
• Country risks and construction risks in emerging markets.
• Resource nationalization trends in the mineral resources sector.
• Increasingly diversified risk issues.

Mitigation Strategies

• Upgraded integrated monitoring process from entry to exit for each business.
• Strengthened quantitative and qualitative criteria for investment.
• Introduced the “Value-Up Support System” for Group companies with major impact on consolidated results.
• Improved asset efficiency, operating cash flows, and risk management, including credit exposure control.
• Further strengthened internal controls through the Internal Control Program.
• Implemented business monitoring and selection and concentration for Group companies.
• Strengthened recruitment of new graduates and mid-career hiring.
• Combined promotion of younger employees with activation of senior employees.
• Expanded human resources development programs.
• Reformed workstyles, promoting time management, creating leeway for employees, and striving for work-life balance.
• Introduced the concept of core risk buffer.
• Promoted increasing profitable assets and pursued asset replacement.
• Implemented specific strategies and investments within each business segment.
• Established a new Value Integration Committee (VIC) to create and foster new businesses.
• Set up a Regional Initiative Support System to promote proactive initiative by regional organizations.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Human Resources
• Environmental Management
• Risk Management
• Compliance
• Social Contribution
• Corporate Governance

Environmental Achievements

• 2.5% reduction in electricity consumption from the previous year in fiscal 2008
• Completed 11 capital investment and operation startup projects for greenhouse gas reduction (target: 10)
• Acquired approval from the Japanese government for 12 greenhouse gas reduction projects (target: 10)
• Reduced total volume of garbage to less than 50% compared with other buildings of the same size in Harumi Triton Square
• 57% waste recycling rate in Harumi Triton Square office buildings

Social Achievements

• Opened Triton Sukusuku Square, a company childcare facility
• Opened SCG Counseling Center for employee support
• Successfully implemented the “Use Up Your Paid Summer Vacation” campaign, achieving 80.3% summer vacation usage rate for all employees in Japan and 79.3% for managers
• Opened “Koriton,” a massage room for employee relaxation
• Sumitomo Corporation Scholarships supported over 9,000 students

Governance Achievements

• Halved the number of Board members from 24 in 2003 to 12 in 2009
• Reduced the terms of Directors from two years to one year
• Established the Remuneration Committee with at least half of the members from outside the Company
• Added one external auditor to the Board of Corporate Auditors, bringing the total to three out of five members
• Introduced an executive officer system

Climate Goals & Targets

Environmental Challenges

• Global financial crisis impacting the global economy
• Income gaps and poverty in emerging and developing countries
• Water and food shortages
• Global environmental issues
• Difficulties in reaching agreements on global issues due to conflicts of interests between developed and developing countries
• Varying training content and timing in OJT programs
• Difficulties in replanting trees in vast and cold Russian forests
• Traffic congestion in Metro Manila

Mitigation Strategies

• Implemented FOCUS’10, a new medium-term management plan
• Developed systematic training programs specific to each business unit or division
• Adopted a ribbon cutting (strip felling) method for logging in Russia
• Acquired FSC certification for Terneyles forests
• Constructed a huge wood processing complex in Plastun, Russia
• Built MRT-3 in Metro Manila to alleviate traffic congestion

Supply Chain Management

Responsible Procurement

• Encouraging suppliers to participate in chemical substance control

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: UN Global Compact

Certifications: ISO 14001

Sustainable Products & Innovation

• SUMI GREEN carpet tiles
• Eco bananas
• Eco-Fleet leased vehicles

Awards & Recognition

• Official commendation from Vietnam’s Ministry of Education and Training

Environmental Metrics

ESG Focus Areas

• Socio-economic development
• Food safety and supply
• Sustainable energy supply
• Human resources development
• Environmental responsibility
• Resource management

Environmental Achievements

• Construction and operation of a 12.6 MW solar power plant in Tenerife, Spain
• Participation in a 9.7 MW solar power generation project in Puglia, Italy
• Participation in a 31 MW solar power generation project in Les Mées, France
• Operation of wind farms in Japan (36 MW total capacity), Texas (120 MW), and Inner Mongolia (50 MW)
• Investment in the Shepherds Flat Wind Farm Project (845 MW) in the U.S.
• Operation of the Summit Myojo Power Itoigawa Biomass Power Plant in Niigata, Japan (reducing annual CO2 emissions by more than 80,000 tons)
• Involvement in geothermal power station projects globally (over 2,000 MW aggregate generation capacity)
• San Cristobal Mine obtained three certifications for quality, environment, and occupational health and safety.

Social Achievements

• Establishment of MobiCom Corporation in Mongolia, significantly improving telecommunications infrastructure
• MobiCom's provision of nutritionally balanced boxed lunches for free at 13 public elementary schools in Mongolia
• Development of Yongenton Silky Pork brand in cooperation with Smithfield Foods
• Investment in Guangzhou Hua Xin Commercial Trading and Shenzhen Hua Xin Chuangzhan Commercial Trading in China
• Comprehensive alliance with Jilin Grain Group Co., Ltd. in China to enhance rice production and export
• Various social contribution activities globally, including supporting education, healthcare, and community development projects

Governance Achievements

• Establishment of a Food Safety Management Team to prevent food-related accidents
• Implementation of the “Aritai” Project to discuss long-term business ideals
• Development of the new medium-term management plan, “f(x)” (f-cross), incorporating the “Aritai” Project's findings
• Third-party review of the report by the President of Japan Philanthropic Association

Climate Goals & Targets

Environmental Challenges

• Uncertainty in the global economy, including budget deficits, resource imbalances, climate change, and political unrest
• Rapid economic growth in emerging countries impacting resource supply and demand
• The Great East Japan Earthquake and its impact on society and the economy
• Competition in the mobile phone market in Mongolia
• Low-price preference among consumers and new supermarket openings in Japan
• Resource nationalism and geopolitical risks in mineral resource development
• Need for sustainable timber business practices in Russia

Mitigation Strategies

• New medium-term management plan, “f(x)” (f-cross), focusing on cross-boundary growth
• Emergency response team and long-term recovery support for the Great East Japan Earthquake
• Aggressive growth strategy for MobiCom, including lowering calling rates and introducing prepaid plans
• Harmonious relationships with local businesses in Mongolia
• Diversification of telecommunications services by MobiCom
• Development of value chains for wheat trading in Australia and Asia
• Investment in high-quality fertilizer production in China
• Development of sustainable timber business practices in Russia, including FSC certification
• Integrated project management and execution in infrastructure projects
• Multichannel retailing strategy integrating media, IT, and retailing

Supply Chain Management

Responsible Procurement

• Buy American provisions for railcar project in the US
• Collaboration with local businesses in Mongolia and other countries
• Sustainable timber sourcing from Terneyles in Russia

Climate-Related Risks & Opportunities

Opportunities

• Development of renewable energy projects

Reporting Standards

Frameworks Used: GRI Sustainability Report Guidelines 2006, ISO 26000, Nippon Keidanren (Japan Business Federation) Charter of Corporate Behavior

Certifications: FSC (Forest Stewardship Council), Chain-of-Custody (CoC)

Sustainable Products & Innovation

• MobiCom's mobile commerce service
• Yongenton Silky Pork
• High-end brand rice and pre-rinsed rice in China
• Second-life uses for lithium-ion batteries

Environmental Metrics

ESG Focus Areas

• Safety
• Environmental Protection
• Community Development
• Sustainable Business Practices

Environmental Achievements

• Reduction of CO2 emissions by up to 70% in Ukraine police vehicle fleet replacement project.
• Initiatives in renewable energy (wind and solar power), and reuse business of lithium-ion batteries.

Social Achievements

• Delivery of 1,200 Prius vehicles to the Ukraine Police Force as part of a green investment scheme.
• Construction of resettlement villages, houses, schools, and medical facilities in Madagascar for the Ambatovy nickel project.
• Vegetable recycling scheme at Summit Stores, reducing fruit and vegetable waste.

Governance Achievements

• Global Safety Management implemented across Metal Products Business Unit subsidiaries and associated companies.
• Zero Harm target set and global safety network established in Tubular Products Division.

Climate Goals & Targets

Environmental Challenges

• Impact from Chinese economic deceleration and the European financial crisis on overseas steel service center operations.
• Lackluster marine freight market.
• Correction in resource prices due to slowdown in Chinese economic growth.

Mitigation Strategies

• Developing new business models to enhance the metal products business (e.g., expanding tubular products value chain in the energy field).
• Strategic asset replacement and development of selected prime projects in power infrastructure.
• Steady enhancement of resource interests portfolio focusing on key strategic resources and considering time and regional factors.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions
• Reduced water consumption

Social Achievements

• Community investment initiatives
• Employee training programs

Governance Achievements

• Established CSR committee
• Implemented ISO 14001

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: ISO 26000

Certifications: ISO 14001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Climate Change
• Sustainable Forestry
• Biomass Power Generation
• Railway Infrastructure Development
• Social Contribution Activities
• Air Mobility
• Human Rights

Environmental Achievements

• Promoting renewable energy business, advanced energy management business, and development of business models/innovations that contribute to the reduction of energy consumption.
• Shifting management resources to renewables and other energy sources with low environmental burden in the power generation portfolio (aiming for a specific portfolio composition by 2035).
• Limiting equity share coal production to current levels and desisting from new mine development projects in the thermal coal mining business.
• Implementing a human rights audit at three chicken processing plants operated by Thai business partners, finding no human rights issues.

Social Achievements

• Developing railway-related businesses in Southeast Asia, contributing to economic development and improved quality of life.
• Launching 100SEED, a program involving group employees worldwide in planning and implementing social contribution activities.
• Engaging in various social contribution activities in different global regions (e.g., supporting children's hospice, donating bicycles, introducing Japanese culture).

Governance Achievements

• Indicating support for the final recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and addressing further improvement of information disclosure in line with the TCFD framework.
• Establishing a companywide framework for managing social and environmental risks when starting new businesses, including review and periodic monitoring.
• Implementing due diligence on new investments, including environmental and human rights assessments.

Climate Goals & Targets

Environmental Challenges

• Climate change impacts threatening the stability of society and the environment.
• Need to address issues related to climate change mitigation and the realization of a carbon-neutral society.
• Underdeveloped railway infrastructure in Southeast Asia affecting services.

Mitigation Strategies

• Implementing initiatives toward the achievement of climate change mitigation targets set by the Paris Agreement.
• Developing new energy management technologies using storage batteries and other electric power sources, as well as IoT-based virtual power plants (VPPs).
• Developing sharing businesses and other initiatives that help reduce energy consumption and promote renewable energies.
• Participating in rail project contracts in various Southeast Asian countries.

Supply Chain Management

Supplier Audits: Periodic visits to processing plants of business partners to check for compliance with regulations on human rights and other areas.

Responsible Procurement

• CSR Action Guidelines for Supply Chain Management

Climate-Related Risks & Opportunities

Opportunities

• Renewable energy business
• Advanced energy management business
• Development of business models/innovations that contribute to the reduction of energy consumption

Reporting Standards

Frameworks Used: TCFD

Certifications: ISO 14001

UN Sustainable Development Goals

• SDG 4 (Quality Education)
• Various other SDGs mentioned throughout the report

The report highlights how various initiatives contribute to the UN SDGs, particularly SDG 4.

Sustainable Products & Innovation

• Wood pellets
• Air Mobility services

Environmental Metrics

ESG Focus Areas

• Climate Change
• Circular Economy
• Respect for Human Rights
• Development of Local Society and Economy
• Improvement of Living Standard
• Quality Education

Environmental Achievements

• Reduced CO2 emissions by 7.6% in 2020 compared to 2019 (company-wide)
• Reduced CO2 emissions of the power generation business by 5.9% in 2020 compared to 2019
• Reduced indirect CO2 emissions associated with the fossil fuel upstream business by 12.6% in 2020 compared to 2019
• Increased renewable energy generation capacity to 1,509 MW in 2020 from 1,397 MW in 2019
• Acquired FSC® certification for forest land in Russia and New Zealand
• Obtained RSPO supply chain certification for SCFoods Co., Ltd. and Summit Oil Mill Co., Ltd.

Social Achievements

• Established Sumitomo Corporation Group’s Global HR Management Policy
• Launched 100SEED social contribution activity program
• Implemented job training programs for young internally displaced persons in Iraq
• Developed a MaaS for Business service utilizing electric vehicles
• Completed a corporate-wide Human Rights Impact Assessment at Fyffes

Governance Achievements

• Established the Sumitomo Corporation Corporate Governance Principles
• Established the Nomination and Remuneration Advisory Committee
• Established the Sumitomo Corporation Group Compliance Policy
• Launched a group-based Speak-Up system for reporting compliance-related issues

Climate Goals & Targets

Environmental Challenges

• Climate change risks impacting various business sectors
• Supply chain disruptions due to human rights and environmental issues
• Need to reduce environmental impact of business activities
• Need to improve health and productivity management

Mitigation Strategies

• Scenario analysis based on TCFD recommendations
• Establishment of CSR Action Guidelines for Supply Chain Management
• Implementation of environmental management system (ISO 14001)
• Declaration of Iki-iki Waku-waku Health and Productivity Management

Supply Chain Management

Supplier Audits: Approximately 20% of suppliers audited in 2019

Responsible Procurement

• RSPO and FSC certifications
• Conflict minerals policy
• CSR Action Guidelines for Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather
• Flooding
• Water shortage

Transition Risks

• Regulatory changes
• Market shifts
• Technological changes

Opportunities

• Renewable energy business
• Hydrogen business
• Carbon capture, utilization, and storage (CCUS)

Reporting Standards

Frameworks Used: TCFD

Certifications: ISO 14001, ISO 45001, FSC®, RSPO

Third-party Assurance: Japan Quality Assurance Organization

UN Sustainable Development Goals

• Goal 7 (Affordable and clean energy)
• Goal 13 (Climate action)
• Goal 4 (Quality education)
• Goal 8 (Decent work and economic growth)
• Goal 11 (Sustainable cities and communities)

Initiatives contribute to these goals through various environmental, social, and governance programs

Sustainable Products & Innovation

• Renewable energy projects
• Hydrogen production
• Recycled materials

Awards & Recognition

• GRESB Real Estate Assessment 4 Stars (SOSiLA Logistics REIT, Inc.)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Circular Economy
• Respect for Human Rights
• Development of Local Society and Economy
• Improvement of Living Standard
• Quality Education

Environmental Achievements

• Reduced CO2 emissions of the power generation business by 4.1% (compared to 2019)
• Reduced indirect CO2 emissions associated with the fossil fuel upstream business by 16.7% (compared to 2019)
• Increased resource recovery by 6% (compared to 2020) in PET bottle recycling business
• Completed introduction of compostable, recyclable, and reusable packaging for 98.1% of all products at Fyffes

Social Achievements

• Completed development of content for human rights education tool (e-learning) (commenced rollout from FY2022)
• Commenced human rights due diligence on a business-unit basis with the aim of covering all businesses by 2025
• Increased used car sales by 24% and vehicle service, maintenance and repair by 18% compared with the previous fiscal year
• 93 persons completed job training programs in Iraq

Governance Achievements

• No serious nonconformity found in internal environmental audits in 2021
• Received approval for renewal of ISO 14001 certification in February 2022
• Nomination and Remuneration Advisory Committee met 7 times to deliberate on matters related to appointment and dismissal of executives, remuneration, etc.

Climate Goals & Targets

Environmental Challenges

• Decreased demand for coal fuel due to GHG emissions regulations
• Continuity risks for business involving production processes in water shortage areas
• Impact of shortage of raw materials due to destruction of natural ecosystems
• Reputation loss and decreased trust due to the occurrence of environmental problems
• Business continuity risk and reputation loss as a result of the occurrence of problems related to the environment, human resources and labor practices in supply chains
• Hollowing out of human resources, reputation loss and decreased trust as a result of human rights violation

Mitigation Strategies

• Promotion of renewable energy business and environmentally conscious business
• Promotion of water supply and sewerage/freshwater generation business
• Creation and development of business opportunities by maintaining and protecting ecosystems
• Development and stability of business through harmonious coexistence with the global environment
• Development and stability of business by resilient value chains
• Development and stability of local communities and business through harmonious coexistence with local residents

Supply Chain Management

Responsible Procurement

• Sustainable procurement of palm oil (RSPO)
• Procurement of Bird Friendly®-certified coffee
• Procurement of forestry products managed in accordance with internationally recognized certification programs

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather
• Flooding
• Water shortage
• Rise in temperature

Transition Risks

• Changes in technology related to climate change mitigation
• Introduction of regulations
• Changes in supply and demand
• Carbon pricing

Opportunities

• Development of carbon-free energy
• Expansion of power & energy services
• CO2 capture, storage and utilization
• Development of fuel-efficient ships and aircraft
• Energy transition-related businesses

Reporting Standards

Frameworks Used: TCFD, Stakeholder Capitalism Metrics, GRI, ISO26000, Environmental Accounting Guidelines, Calculation and Reporting Manual for Greenhouse Gas Emissions

Certifications: ISO 14001, ISO 45001, RSPO, FSC, ISCC PLUS, PEFC, SBP, ASI

Third-party Assurance: Japan Quality Assurance Organization

Sustainable Products & Innovation

• Recycled PET bottle products
• Biopesticides
• Fuel-efficient ships and aircraft
• Renewable energy projects

Awards & Recognition

• Special “Tanemaki (Seeding) Century Award” for 100SEED at the 19th Corporate Philanthropy Awards
• GRESB 4 Stars for SOSiLA Logistics REIT, Inc.

Environmental Metrics

ESG Focus Areas

• Climate Change
• Circular Economy
• Respect for Human Rights
• Development of Local Society and Economy
• Improvement of Living Standard
• Quality Education

Environmental Achievements

• Reduced indirect CO2 emissions associated with the fossil fuel upstream business by 41.8% (compared to 2019)
• Completed calculations for visualizing Sumitomo Corporation Global Metals Group CO2 emissions (Scope 1, 2 and part of 3) and obtained third-party certification (March 2023)
• Reduced greenhouse gas (Scope 1+2) emissions at SCSK Corporation data centers by 21% in accordance with SBT certification target
• Increased resource recovery by 3% (compared to FY2021) in PET bottle recycling business
• Completed introduction of compostable, recyclable, and reusable packaging for 98.78% of all products at Fyffes plc

Social Achievements

• Achieved 100% participation rate in human rights education
• Completed human rights due diligence for four business units
• Conducted questionnaire surveys on human rights at about 210 overseas plants and farms
• Cumulative value of contracts reached approximately 330 billion yen in FY2022 for sustainability-related businesses in SMFL
• Supported career education for a cumulative total of 10,700 students at 68 high schools across Japan

Governance Achievements

• Established the Sustainability Advisory Board
• Reviewed and updated “Policies on Climate Change Issues”
• Introduced an internal carbon pricing system

Climate Goals & Targets

Environmental Challenges

• Decreased demand for coal fuel due to GHG emissions regulations
• Continuity risks for business involving production processes in water shortage areas
• Impact of shortage of raw materials due to destruction of natural ecosystems
• Reputation loss and decreased trust due to the occurrence of environmental problems
• Business continuity risk and reputation loss as a result of the occurrence of problems related to the environment, human resources and labor practices in supply chains

Mitigation Strategies

• Promotion of renewable energy business and environmentally conscious business
• Promotion of water supply and sewerage/freshwater generation business
• Creation and development of business opportunities by maintaining and protecting ecosystems
• Development and stability of business through harmonious coexistence with the global environment
• Development and stability of business by resilient value chains

Supply Chain Management

Responsible Procurement

• Sustainable procurement of palm oil
• CSR Action Guidelines for Supply Chain Management
• Conflict Minerals Policy

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather
• Flooding
• Water shortage
• Rise in average temperatures
• Change in rainfall patterns
• Rise in sea level
• Forest fires

Transition Risks

• Changes in policies and regulations
• Technological developments
• Market trends
• Market evaluation

Opportunities

• Renewable energy
• Hydrogen
• Ammonia
• Synthetic fuels
• Energy management
• Storage battery
• CCUS
• Decarbonized products

Reporting Standards

Frameworks Used: TCFD, World Economic Forum: Stakeholder Capitalism Metrics, GRI, ISO26000, Ministry of Economy, Trade and Industry: Guidance for Collaborative Value Creation, Ministry of the Environment: Environmental Accounting Guidelines 2005, METI / MOE: Calculation and Reporting Manual for Greenhouse Gas Emissions, TNFD

Certifications: ISO 14001, ISO 45001, RSPO, FSC, PEFC, SBP, ISCC PLUS, ASI

Third-party Assurance: Japan Quality Assurance Organization

UN Sustainable Development Goals

• Various SDGs

The report mentions alignment with various UN SDGs, but doesn't provide specific details.

Sustainable Products & Innovation

• Recycled PET bottle products
• Compostable packaging
• Green aluminum
• Low-carbon steel
• Bird Friendly® coffee
• MSC and ASC certified marine products

Awards & Recognition

• Special award at the 19th Corporate Philanthropy Award for 100SEED

Environmental Metrics

ESG Focus Areas

• Build resilient and prosperous society
• Overcome climate change
• Preserve and regenerate natural capital
• Respect human rights
• Develop talent and promote DE&I
• Maintain and strengthen governance

Environmental Achievements

• Reduced CO2 emissions by 13.9% compared to the base year (FY2019). Note: This includes Scope 1, 2, and 3 emissions, with a breakdown provided in the report. Specific figures are preliminary and will be updated.
• Reduced CO2 emissions from fossil energy concessions by 29.2% compared to the base year (FY2019). Note: This includes thermal coal mine business emissions.
• Aiming to achieve zero production from thermal coal mines by the end of the 2020s.

Social Achievements

• Established “Sumitomo Corporation Group’s Human Rights Policy” and “Sumitomo Corporation Group's CSR Action Guidelines for Supply Chains”.
• Implemented human rights due diligence across all business units.
• Improved employee engagement index and employee enablement index compared to FY2022.
• Increased female manager ratio from 8.4% to 9.6%.

Governance Achievements

• Updated material issues to reflect climate change, biodiversity loss, and stakeholder expectations.
• Implemented an internal carbon pricing (ICP) system.
• Established a Sustainability Advisory Board comprised of outside ESG experts.
• Executive compensation linked to ESG performance (non-financial indicators).

Climate Goals & Targets

Environmental Challenges

• Rising prices and financial tightening impacting personal consumption and capital investment.
• Economic slowdown due to monetary policy and high interest rates.
• Geopolitical risks impacting supply chains and economic growth.
• Downturn in the U.S. office building rental market.
• Sluggish demand for semiconductors.
• Deteriorating market conditions and weather factors in the agribusiness field.
• Climate change, biodiversity loss, and human rights issues throughout the value chain.

Mitigation Strategies

• Restructuring low-profitability businesses and allocating resources to competitive businesses and regions.
• Accelerating business portfolio transformation through digital and green transformation (GX).
• Improving profitability and expanding the foundation of core businesses.
• Strengthening market fluctuation risk management.
• Promoting the commercialization of new power and energy services.
• Implementing human rights due diligence and grievance mechanisms.
• Strengthening risk analysis in human rights due diligence.
• Establishing a companywide framework for assessing social and environmental risks and opportunities.

Supply Chain Management

Responsible Procurement

• Sumitomo Corporation Group’s Human Rights Policy
• Sumitomo Corporation Group's CSR Action Guidelines for Supply Chains
• Sumitomo Corporation Group Forest Management Policy
• Sumitomo Corporation Group Sourcing Policy for Forest Products

Climate-Related Risks & Opportunities

Physical Risks

• Natural disasters (storms, floods, droughts, forest fires)
• Average temperature increase, precipitation pattern change, sea level rise

Transition Risks

• Regulations for reducing GHG emissions or decarbonization
• Strengthening international climate actions
• Changes in technologies and market trends

Opportunities

• Increased societal needs for low-carbon and energy-saving products and services
• Creation of new climate-favored markets
• Investing in next-generation energy

Reporting Standards

Frameworks Used: TCFD

Certifications: Platinum “Kurumin” certification, “Eruboshi” company certification, “Next Nadeshiko” certification

UN Sustainable Development Goals

• Goal 7 (Affordable and clean energy)
• Goal 13 (Climate action)

Initiatives related to renewable energy and carbon neutrality contribute to these goals.

Sustainable Products & Innovation

• Steel products and services aiding in carbon neutralization
• Eco-friendly vehicles
• Next-generation energy (hydrogen, ammonia, synthetic fuels, energy management, storage battery, CCUS)

Awards & Recognition

• Platinum “Kurumin” certification
• “Eruboshi” company certification
• “Next Nadeshiko” certification