Sustainability Report 2008

To Achieve Prosperity and Realize
the Dreams of Our Stakeholders

Editorial Policy
The Sumitomo Corporation Group is constantly striving to create new values ahead of thechanging times to achieve prosperity and realize the dreams of stakeholders. Serving as thefoundation for these endeavors is the Sumitomo Business Spirit, which instructs us to place prime
importance on integrity and sound management, and not to pursue easy gains or act
imprudently.
Sumitomo Corporation Sustainability Report 2008 was compiled with the special goal of having
our activities as an integrated trading company better understood by readers. Specifically, the CSR
Performance section introduces the business activities of the Sumitomo Corporation Group thatare carried out in many different corners of the world to contribute to sustainable development of
the global community. The CSR Management section explains our internal management systemand the efforts we are making to facilitate business activities that fulfill our social responsibilities.
For this edition, we invited Professor Scott Davis of Rikkyo University, an expert in CSR, to give us athird-party view on our report.
The Sumitomo Corporation Group considers this report an important medium of communication
with our stakeholders. Feedback from readers that we receive through surveys and by othermeans is an important source of information that will be reflected in future editions. Your
comments on this report would be greatly appreciated. Please email your comments to:environment-and-csr@sumitomocorp.co.jp.

Scope of the Report
Period covered:
April 1, 2007 to March 31, 2008
Organizations covered:
Sumitomo Corporation and the Sumitomo Corporation Group.
In this report, “the Sumitomo Corporation Group” and “the Group” refer to the entire organizationof the Sumitomo Corporation Group. “Sumitomo Corporation” and “the Company” refer to thenon-consolidated organization of Sumitomo Corporation.
Publication Schedule:
Reports on environmental issues have been published annually since 1999, when the first
Environmental Report was published. The title of the report was changed in 2003 to Social andEnvironmental Report, and in 2007 to Sustainability Report.
The previous edition was published in August 2007. The next edition is scheduled for August
2009.

Referenced guidelines
GRI Sustainability Reporting Guidelines 2006. Global Reporting Initiative.
* Please refer to the following site for an index of the content.
http://www.sumitomocorp.co.jp/english/society/report.html

Environmental Reporting Guidelines, “Towards a Sustainable Society” (Fiscal 2007). Ministry of
the Environment.
Environmental Accounting Guidelines 2005. Ministry of the Environment.
Charter of Corporate Behavior (May 18, 2004). Nippon Keidanren (Japan Business Federation).

* Disclaimer

This report describes the activities of the Sumitomo Corporation and its affiliates (i.e., the Sumitomo
Corporation Group) at the current time and in the past, as well as predictions, forecasts and plans for the future.
These predictions, forecasts and plans are hypotheses or decisions made based on the information available
when the article was written, and therefore may include some levels of uncertainty. The results of businessactivities or occurrences in the future may differ from the predictions, forecasts and plans described in thisreport. Readers should recognize that the Sumitomo Corporation Group is not responsible for any suchdifferences.

1 Sustainability Report 2008

Contents
Message from the President and CEO

3

Business Spirit, Management Principles and Activity Guidelines

5

Core Competence

7

Company Information

8

CSR Performance

9

Performance

1 Preventing Global Warming

Sumitomo Corporation’s Approach
to Realizing a Low-Carbon Society
Performance

11

2 Challenges to the Development of
Sustainable Resources

The Madagascar Ambatovy Project – A Venture for the Stable
Supply of Rare Metals and Community Development
Performance17

3 Development of Overseas Industrial Parks
Coexisting and Growing with the Local Community

Industrial Park Business Contributing to
the Development of Southeast Asian Countries
Performance23

4 Optimizing Global Supply Chains

EMS Creates New Value Chainsin the Electronics Industry

27

CSR Management

31

Corporate Governance

33

Risk Management

35

Internal Control Program and Internal Audit

37

Compliance38

Human Resource Management

39

Management of Social Contribution Activities

43

Environmental Management

46

Third-Party Review/Response to the Third-Party Review

49

Sustainability Report 20082

Message from the President and CEO

To Achieve Prosperity and Realize the Dreams of
Our Stakeholders
they need unfaltering and fearless actions by people who liveat this point in time for the sake of the coming generations. In
this regard, the steady development of the frameworks thathave been put in place and the measures that have been takenby the United Nations and other organizations are of greatsignificance for us all.

Achieving a Sustainable Society
The ultimate goal of the Sumitomo Corporation Group is to“achieve prosperity and realize dreams through sound businessactivities.” Thus for the Group, corporate social responsibility(CSR) means to contribute to building a healthy and sustainable
society through the business activities we are carrying out
as an integrated trading company, as well as through thephilanthropic activities we are engaged in as a corporate
citizen.

The global business of the Sumitomo Corporation Group has
been progressing successfully. The financial results for the year
ended March 2008, the first year of the GG Plan (the Group’s
current medium-term management plan), set out record profits
for the fifth consecutive year. We have now entered the second
year of the plan with favorable results.
The first half of fiscal 2008, in which Japan hosted two
important world meetings, signify an important period for thecountry. In May, the Fourth Tokyo International Conferenceon African Development (TICAD IV) was held in Yokohama,and the G8 Hokkaido Toyako Summit was held in Toyako-cho,
Hokkaido, in July. Discussions at these meetings focused onlarge-scale and important topics that all the nations of theworld should address as a whole.
Problems emerging in Africa and other developing areas,
including extreme poverty and the spread of infectious
diseases, are being exacerbated by the recent hikes in foodprices, leading to social disturbance and regional conflicts.
The ever-accelerating changes in the global climate need
immediate attention and action before we reach the point of
no return.
What we can see in common between these issues is that3 Sustainability Report 2008

The nickel mining business in Madagascar, for example, hasbeen developed after extensive assessment of the possible
influence of the mining on the surrounding environment
with business partners. Such cautious arrangements are taken
to comply with the Activity Guidelines of the Sumitomo
Corporation Group, which direct us “to attach great importanceto protecting the global environment.” As a part of the same
project, we started the Sumitomo Corporation Library in local
communities and donated computers and educational books
to teachers’ training schools, as well as books that introduce
Japanese culture. The opening of the library was made possible
only because of the merging of two aspirations—our wish
to directly contribute to the local community in which ourbusinesses take place and the wishes of the Madagascan
people to provide their children, bearers of the future, with agood education.
In our approaches to the issues of global warming, theSumitomo Corporation Group is building new business models
that facilitate the simultaneous achievement of environmental
protection and economic development. In the Spanish CanaryIslands, we will start a photovoltaic power generation project
to respond to the increasing attention being paid to solar
power generation as a mean of protecting the environment.
In the Group, we have started a company-wide task force tofurther leverage the various projects we are taking to reducegreenhouse gas emissions. With this scheme, Sumitomo
Corporation works on businesses that incorporate the Kyoto
Mechanism, an international scheme on which agreement
was reached in the United Nations Framework Convention onClimate Change.
Philanthropic activities of the Sumitomo Corporation Group
include a variety of international cooperation projects inhuman resources development. Since 1996, we have beenrunning a scholarship program for students in China and other
Asian nations. We also provide lectures at Tsinghua University
and Nankai University in China, and Japanese language lessons
in Vietnam. In the U.S., we have been supporting research at theCenter on Japanese Economy and Business at the Columbia
Business School for over 20 years. We will continue these
activities to foster understanding among different cultures andhelp in the development of local communities.
All officers and employees of the Sumitomo Corporation
Group also participate in programs to build a sustainable
society. In order to run worldwide global businesses, we needpeople who can build networks in local communities, exert
leadership with power, and forge ahead with plans whilebuilding consensus. We support such people in their volunteer
activities and their efforts to build friendships through nonbusiness opportunities in many regions and countries of theworld. This is another way for us to contribute to building asustainable society.
All these activities are founded on the Sumitomo BusinessSpirit, the philosophy that has been passed down throughthe 400 years of Sumitomo history. One of the teachings
at Sumitomo: “Profit for self and others, private and public
interests are one and the same,” signifies that in any businessactivities, both private interests and public interests need to
be fulfilled in accord with each other. Our philosophy andprinciple of acting to promote business activities in harmony

with society is exactly what is known today as “CSR.” This spiritof CSR that we have inherited from our predecessors continues
to be passed down today.

Towards a New Stage of Growth
In the GG Plan, our medium-term management plan, we
will accomplish quality improvements in four areas: Earnings
Bases, Operations, Group Management, and Human Resources
and Workstyles. As seen in the price hikes for resources andfoodstuffs that continue from last year as well as in the financial
and capital market disruptions that stem from the subprime
lending crisis in the U.S., the environment surrounding theworld economy has gone through dramatic changes and is
still getting harsher for us. To respond to such changes, we willfurther strengthen our “Integrated Corporate Strength,” thecore competence of the Sumitomo Corporation Group. We willturn these changes into opportunities, and these opportunities
into continuous growth. We will pursue healthy and quality
businesses and use the earnings from those activities to create
new value. Through such a cycle of virtuous actions, we willremain faithful to our mission of “achieving prosperity andrealizing the dreams of our stakeholders.”
Our actions prove our commitment.

Susumu Kato
President and CEO
September 2008

Sustainability Report 2008

4

Business Spirit, Management Principles and Activity Guidelines

Carrying on a Business Spirit cultivated through 400 years
The Sumitomo Business Spirit lays out fundamental and essential values in any period or era. “Integrity
and sound management,” “not pursuing easy gains,” “entrepreneurship” and the other principles of theSumitomo Business Spirit have thus become the foundation for the current Management Principles andActivity Guidelines of the Sumitomo Corporation Group.

The Sumitomo Business Spirit
The Sumitomo Business Spirit grew out of the guiding
principles set down by Masatomo Sumitomo, the founderof the House of Sumitomo, in Monjuin Shiigaki which is thename of a letter addressed to his family. This spirit has beendeveloped, deepened, and handed down over generations in
the Sumitomo Family enterprise, and its essence was distilledin the Rules Governing the House of Sumitomo establishedin 1882, and formulated into three Business Principles in theConstitution in 1891. The first and second principles werechosen and laid out in the Sumitomo business rules in 1928.
Article 1 of the Business Principles identifies “placing prime

importance on integrity and sound management” as thefundamental business value.
Article 2 warns against acting rashly and carelessly bystating: “allowing for the fortunes of the business to bemolded according to the needs of the times and economic
considerations, but under no circumstances allowing for the
pursuit of easy gains.”
Although other important aspects of the Sumitomo BusinessSpirit have never been formerly codified, Sumitomo’s traditional
values such as “Respect for human resources,” “Farsighted
planning” and “Conformity of self-interest and altruism of public
and private affairs,” are united with the business principles
and continuously inherited by each of Sumitomo’s groupcompanies.

Monjuin Shiigaki
Business Principles

5 Sustainability Report 2008

Management Principles andActivity Guidelines
The Management Principles of the Sumitomo Corporation
Group were compiled based on the Sumitomo Business Spirit,and lay down the mission, fundamental policy and corporate
culture we are aiming to achieve while developing businesses
on a global basis. In other words, the Management Principles
provide the reference framework within which we conduct ourbusiness.
The Activity Guidelines are formulated as a guide for day-today business operations by individual members.
All Sumitomo Corporation officers and employees firmly
adhere to the concepts of the Management Principles andActivity Guidelines, putting these precepts into practice in daily
business activities. We aim to be a global organization that
contributes broadly to society.

The Sumitomo Corporation GroupManagement Principles/Activity Guidelines
We aim to be a global organization that constantly stays astep ahead in dealing with change, creates new value, andcontributes broadly to society.

Management Principles
To achieve prosperity and realize dreams through soundbusiness activities.
To place prime importance on integrity and sound managementwith utmost respect for the individual.
To foster a corporate culture full of vitality and conducive toinnovation.

Activity Guidelines
To act with honesty and sincerity on the basis of the Sumitomo
Business Spirit and in keeping with the Management Principles.
To comply with laws and regulations while maintaining thehighest ethical standards.
To set high value on transparency and openness.
To attach great importance to protecting the global
environment.
To contribute to society as a good corporate citizen.
To achieve teamwork and integrated corporate strength
through active communication.
To set clear objectives and achieve them with enthusiasm.

SC VALUESSC VALUES are a more detailed version of the Management
Principles and Activity Guidelines. All officers and employees
carry a wallet-sized card on which the SC VALUES are printed.
Each value isalso respected inwork performance
evaluations and themultidimensional
assessment system(a job performanceassessment ofsupervisors by theirSC VALUES Card
subordinates).

SC VALUES
1. Integrity and Sound
Management:

To comply with laws and regulations,while maintaining the highest ethicalstandards

2. Integrated Corporate
Strength:

To create no boundaries within theorganization; always to act with acompany-wide perspective

3. Vision:

To create a clear vision of the future,and to communicate to share it within
the organization

4. Change andInnovation:

To accept and integrate diversity invalues and behavior, and to embracechange as an opportunity for action

5. Commitment:

To initiate, own, and achieveorganizational objectives

6. Enthusiasm:

To act with enthusiasm and confidence,and to motivate others through suchaction7. Speed:

To make quick decisions and act
promptly

8. Human Development: To fully support the development ofothers’ potential

9. Professionalism:

To achieve and maintain high levels of
expertise and skills

Sustainability Report 2008

6

Core CompetenceWith “Integrated Corporate Strength,” theSumitomo Corporation Group stays a step ahead
in dealing with change and creates new values.
To achieve prosperity and realize dreams through sound business activities, the Sumitomo Corporation Groupmakes full use of its core competence, “Integrated Corporate Strength,” to develop global businesses in a wide
variety of fields.

“Integrated Corporate Strength,”
the core competence of theSumitomo Corporation Group
Our Integrated Corporate Strength is the source of thecompetitive advantage (core competence) of the Sumitomo
Corporation Group as we pursue our businesses in a wide
variety of fields. Our strategic and organic integration of therobust “business foundation” and diverse, high-level “functions”
of Group companies, combined with the efforts of each andevery Group employee, helps us respond to the various needsof our customers. At the same time, we create new value by
always thinking one step ahead of global change. This capacity
is what we call our “Integrated Corporate Strength.”
Bringing our Integrated Corporate Strength to bear andactively building businesses that truly contribute to the growthand progress of a wide range of industries in different regions,
the Sumitomo Corporation Group will continue to make evengreater contributions to the stable and continued growth of
the world economy and global society.
Range of superior functions
A wide range of superior services and capabilities, offered to meet the needsof our customers and business partners across a wide range of applications.
As globalization accelerates, we continue to upgrade our current functions,while working to create a functional revolution embodied in new value.

Creation and Provision of Diversified
Values to Meet Customer Demand

Strategic andOrganic Integration

IT Solutions

Logistical Solutions
Market Intelligence &Information
Gathering and Analysis

Financial Services
Business
Development

Risk
Management

Continual Enhancement of Functions
Integrity

Global NetworkIntellectual Capital

Global Relations

Business Development
We excel in business creation, which involves identifying promising new
products, developing new markets, and organizing appropriate business
operations.
Market Intelligence & Information Gathering and Analysis
This involves the ability to collect a variety of information on every industry andmarket worldwide through a wide range of business activities and to correctly
analyze that information based on the company’s experience and know-how
accumulated over decades of operation.
Logistics Solutions
This involves the ability to arrange many different kinds of distribution systems,
to offer combined multimodal transportation services, and to build and operate
optimal logistics flow systems.
IT Solutions
This involves the ability to build Supply Chain Management (SCM) systems and tosupport network businesses.
Financial Services
This includes fee collection/payment, provision of capital, project financing andadvanced financing services such as securitization of assets.
Risk Management
Only an integrated trading company with decades of business experience canexpertly manage the diverse risks associated with credit standing, markets, andenterprise operations.

Strong Business Foundations
Continual Strengthening of the Business Foundation

The base for our broad growth of businesses as an integrated trading company.
With a history spanning more than 400 years, the Sumitomo Corporation Grouphas built a tremendously strong business foundation, which all our managers
and employees work together to continue to expand and strengthen.
Integrity
Based on the Sumitomo Business Spirit, we have cultivated the integrity of ourcustomers over the years. This is the most fundamental and valued asset of ourbusiness.
Global Network
With around 150 offices and 900 subsidiaries and associated companies
worldwide, our business network provides a basic platform for the prompt andsecure transfer of goods, funds, and information.
Intellectual Capital
The wealth of know-how, experience, and information accumulated by our skilled
personnel in diverse fields is also an important element of our solid businessfoundation.
Global Relations
Our company has established close and multifaceted relations created with over
100,000 business partners around the world across all industries.

7 Sustainability Report 2008

Company Information

Company Profile (As of March 31, 2008)
Company Name:
Sumitomo Corporation
Establishment:
December 24, 1919
Number of Employees:
4,795 (65,494 including consolidated subsidiaries)
Headquarters:
1-8-11 Harumi, Chuo-ku, Tokyo 104-8610, Japan
URL:
http://www.sumitomocorp.co.jp/english

Consolidate Shareholders’ Equity:
1,493 billion yen
Fiscal Year End:March 31
Number of Consolidated Subsidiaries:
601 (overseas: 424, domestic 177)
Associated Companies (Equity Method):
232 (overseas: 172, domestic: 60)
Total:
833 companies

Organization
General Meeting of Shareholders
Board of Corporate Auditors
Board of Directors (Chairman:
Chairman of the Board of Directors)

Company-wide Committees*

Financial Resources
Management Group

Human Resources,
General Affairs & Legal Group

Corporate Planning &Coordination GroupInternal Auditing Dept.

Domestic Offices andSubsidiaries

Overseas Offices andSubsidiaries

Financial & Logistics
Business Unit

General Products &Real Estate Business Unit

Mineral Resources &Energy Business Unit

Chemical &Electronics Business UnitMedia, Network & Lifestyle
Retail Business Unit

Infrastructure Business Unit

Transportation & Construction
Systems Business Unit

Metal Products Business Unit

President and CEO,
Executive Officers

Corporate Group

Business Units* Company-wide Committees：CSR Committee, Global Environment Committee, Internal Control Committee, Compliance Committee, Information Disclosure Committee, IR Committee,
Human Resources Development Promotion Committee, Work-Life Balance Promotion Project Team, Value Integration Committee, Global Strategy Committee, Loan and Investment Committee,
Medium-term Management Plan Promotion Support Committee, and others.

Financial Highlights

Results ofOperations

Financial positionat year-end

Ratios(Millions of yen)

Fiscal 2004

Fiscal 2005

Fiscal 2006

Gross profit

563,130

706,647

857,689934,542

Financial balance(2,259)(9,530)(22,991)(27,578)

Equity in earnings of associated companies, net

37,38751,37470,30756,942

Net income

85,073

160,237

211,004

238,928

Total assets

5,533,127

6,711,894

8,430,477

7,571,399

934,891

1,303,975

1,473,128

1,492,742

Interest-bearing liabilities (net)2,376,014

2,622,176

2,913,256

3,247,556

Shareholders’ equity ratio (%)

16.9

19.4

17.5

19.7

ROE (%)

10.2

14.3

15.2

16.1

ROA (%)

1.6

2.6

2.8

3.0

Debt to equity ratio (net) (times)

2.5

2.0

2.0

2.2

Shareholders’ equity

Fiscal 2007

Note: For more detailed information on financial issues, please refer to our Annual Report.
http://www.sumitomocorp.co.jp/english/ir/index.html

Sustainability Report 20088

Performance

Preventing Global Warming

1 Sumitomo Corporation’s
Approach to Realizing
a Low-Carbon Society

Performance

Challenges to the Development of Sustainable Resources

2 The Madagascar Ambatovy

Project – A Venture for the
Stable Supply of Rare Metals
and Community Development

To Ac h i eve Pro s p e r i t y a n d
R e a l i ze D re a m s

CSR Performance
A report on the CSR activities of Sumitomo Corporation Group, whose
mission is to achieve greater prosperity and realize the dreams of all
stakeholders based on the Sumitomo Business Spirit

Performance

Development of Overseas Industrial Parks
Coexisting and Growing with the Local Community

3 Industrial Park BusinessContributing to theDevelopment of Southeast
Asian Countries
Performance

Optimizing Global Supply Chains

4 EMS Creates New Value Chainsin the Electronics Industry

9 Sustainability Report 2008

Sustainability Report 200810

Performance

Preventing Global Warming

1 Sumitomo Corporation’s
Approach to Realizing
a Low-Carbon Society

Pursuit of stable procurement andsupply of energy and sustainable development
As global warming caused by greenhouse gases is becoming
increasingly severer year by year, the interest and need foralternative energy sources in place of fossil fuels is growing
around the world.
While fulfilling its vital social responsibility as an integrated
trading company to stably procure and supply energy forJapan, a country with scarce natural resources, Sumitomo
Corporation is also promoting business activities based on theconcept of “sustainable development” because we understandthat global warming and other environmental concerns
are global-scale and long-term issues that will continue toinfluence our succeeding generations.
One example of Sumitomo’s such efforts is the geothermal
power generation project that Sumitomo Corporation has been
undertaking in Indonesia since the mid-1990s. The company
has developed the necessary infrastructure to make the mostof the potential of Indonesia, a country with the world’s largest
geothermal resources, and has supported the sustainable
development of its rapidly expanding economy. On the basis of
this success in Indonesia, the company has also embarked on
similar projects in New Zealand, the Philippines, Latin America
and other countries rich in geothermal resources.
Sumitomo Corporation also established Summit Wind
Power SAKATA Corporation in Sakata City, Yamagata Prefecture,

11 Sustainability Report 2008

in 2002, to launch a wind power generation project. The
company also started another wind power generation projectin Kashima City, Ibaraki Prefecture, in 2003, to promote the useof renewable energy.
In addition, Sumitomo Corporation has established Summit
Myojo Power Corporation to carry out a biomass power
generation project, and in July 2004 began to generate
electricity at Japan’s first major biomass power plant built in
Itoigawa City, Niigata Prefecture by effectively utilizing waste
wood chips.
Sumitomo Corporation is also paying close attention tobusinesses related to photovoltaic power generation, which is
becoming increasingly popularized particularly in EU countries.
In addition to the solar cell material business launched in theearly 1990s, the company began to export photovoltaic power
generation units to Germany in 2001, and started photovoltaic
power generation and solar electricity sales in 2008, to
respond to the demand for photovoltaic power generation in
the European market.
Sumitomo Corporation is thus undertaking various projects
instrumental in reducing greenhouse gas emissions aroundthe world by fully utilizing its integrated corporate strength.

The 3rd Conference of Parties (COP3) of the United Nations
Framework Convention on Climate Change (UNFCCC)
was held in Kyoto, Japan, in December 1997, and the
Kyoto Protocol was adopted by 182 countries and regions
including Japan and the European Union (EU). The Kyoto
Protocol calls for the industrialized countries to reduce theiremissions of CO2 and five other greenhouse gases by about
5% below 1990 levels, and Japan has pledged to reducegreenhouse gas emissions by 6% on average during thefive years from 2008 and 2012 (first commitment period)
compared to the 1990 level. However, as of fiscal 2006,
Japan’s greenhouse gas emissions in fact have increased by
6.2% above the 1990 level, and there is a mounting need forevery organization and individual to take action to reduce
emissions.

In the meantime, negotiations for a post-Kyoto Protocol
framework began at COP13 held in Bali, Indonesia, in
December 2007. Furthermore, at the G8 Hokkaido Toyako
Summit in July 2008, national leaders agreed to “seek toshare with all Parties to the UNFCCC the vision of, andtogether with them to consider and adopt in the UNFCCC
negotiations, the goal of achieving at least 50% reductionof global emissions by 2050.” Through these efforts andother initiatives, a new roadmap of international partnershiptoward global warming mitigation and adaptation is
gradually taking shape.
Under such circumstances, Sumitomo Corporation is
actively promoting projects that will contribute to realizing a
low-carbon society by fully utilizing its integrated corporate
strength built up through experience from a wide varietyof business activities ranging from businesses related to oil,coal, liquefied natural gas (LNG) and other natural resources,
to wind, biomass, geothermal and photovoltaic power
generation and other renewable energy projects.

Formation of an inter-sectional task force toprevent global warming

Jointly with the Power Energy Solution Business Dept., thetask force has tackled reduction of greenhouse gas emissions
from an iron mill in Ukraine by providing a gas turbine
combined-cycle (GTCC) generator*2 to enhance total energy
efficiency at the mill. The task force is also pushing forward
various projects to reduce greenhouse gas emissions in China,
Indonesia and other Asian countries.
Sumitomo Corporation also began to sell emission rights tosmall emitters from April 2008. As greenhouse gas emissions
are increasing, the task force, in cooperation with the AssetManagement Dept., supplies emission credits obtained
through renewable energy projects developed under the Kyoto
Protocol to support small emitters in their efforts to achieve
their reduction targets.
With Sumitomo Corporation's global network and otherbusiness resources as well as its financial and risk management
capabilities, the task force continues to undertake various
GHG reduction activities to build the company’s own businessmodel that will truly contribute to the mitigation of global
warming.

While actively promoting renewable energy businesses that willlead to the reduction of greenhouse gas emissions, Sumitomo
Corporation has also been engaged in businesses based on theemission reduction measures introduced by the Kyoto Protocol
since an early stage.
In March 2005, a project to collect and destroyhydrochlorofluorocarbon (HFC23) carried out in collaboration
with Gujarat Fluorochemicals (GFL), an Indian company,
became the first UN registered Clean Development Mechanism(CDM) project*1 involving a Japanese corporation (officiallyapproved as a CDM project by the United Nations). Since
then, we have succeeded in obtaining United Nations’ CDM
implementation for various projects, including a renewableenergy project in China and a project in Southeast Asia tocollect and utilize methane gas from industrial wastewater.
In November 2007, the Greenhouse Gas Reduction Project
Task Force was formed to execute various global warming
prevention projects that used to be carried out separately byeight divisions until then, and actively promote these projects
in an inter-sectional manner. The formation of this task force
facilitates collaboration of different divisions, and allows
the company to centrally manage related information, andsolidify its system to develop and promote projects even morestrategically and efficiently.

*1 CDM project: One of the Kyoto Mechanisms defined in the Kyoto Protocol. This
arrangement allows industrialized countries with quantitative greenhouse gas
emission targets to participate in projects that reduce GHG emissions in developing
countries with no emission restraints, and use the resulting emission reductions tomeet their targets.
*2 GTCC generator: GTCC generator is electricity generation system consisting of agas turbine and a steam turbine which is driven by waste heat from gas turbine.
The effective use of energy helps reduce CO2 emissions, and greatly contributes toenergy saving and environmental conservation.

Sustainability Report 200812

Performance

1

Preventing Global Warming

Sumitomo Corporation’s Approach to Realizing a Low-Carbon Society

Diversified Projects of Sumitomo
Corporation Worldwide Contributing
to the Prevention of Global Warming
Through the best use of its global network, the Sumitomo Corporation Group is performing
various projects around the world to contribute to the mitigation of global warming.

Russia and CIS
Sustainable forest
management(Russian Far East)

Waste gas-based
generation projectat an iron mill
(Ukraine)

EuropePhotovoltaic power
generation project on
the Canary Islands(Spain)Supply of photovoltaic
panels to Europe(Germany and others)

Middle East
Energy-saving type
district cooling project(UAE)

13 Sustainability Report 2008

Asia
Wind power
generation project(Inner Mongolia, China)

Greenhouse gas
reduction projectthrough collection andutilization of methanegas from wastewaterfrom a tapioca flour plant(Indonesia)

Greenhouse gas
reduction projectthrough collection anddestruction of HFCs
(India)Construction of ageothermal power plant(Indonesia)

Japan
Renewable energy projects

Wind power generation project(Ibaraki Prefecture)

Biomass power generation project(Niigata Prefecture)

Tradable green certificate business

South andNorth America

Oceania
Construction of ageothermal power plant(New Zealand)

Joint venture forthe production andsales of wind power
generation towers(U.S.A.)

Afforestation project(Chile)Sustainability Report 200814

Performance

1

Preventing Global Warming

Sumitomo Corporation’s Approach to Realizing a Low-Carbon Society

As global warming becomes increasingly serious, and oil
prices continue to rise sharply, the demand for renewableenergy is growing in industrialized and other countries
around the world.
The EU in particular is strongly promoting thedissemination of renewable energy with the goal ofcovering 20% of the entire energy consumption in theregion from renewable energy sources by 2020.
Under such circumstances, one of the most attentiongetting forms of renewable energy is photovoltaic power
generation. Photovoltaic power generation is a systemthat directly converts solar energy to electricity. Since
photovoltaic power generation has many advantages,
such as no emissions of CO2 and other greenhousegases, no need for fuels to operate the system, and easy
maintenance, EU governments are actively promoting
its introduction by offering subsidies, preferential tax
treatment, a feed-in tariff scheme that requires powercompanies to buy renewable electricity at a fixed rate, andvarious other incentives.
Sumitomo Corporation started the trade business to
support construction of the necessary infrastructure earlier

than any other companies, and has established a value
chain in this area to promote dissemination of photovoltaic
power generation systems. The company also launched its
solar electricity sales business in 2008. In these and otherways, the company is actively developing the photovoltaic
power generation business.

Growth of Cumulative Photovoltaic Systems Capacity
in the EU
(MWp)
5,000

4,500
4,000

2,971

3,000

1,981

2,000

1,089

1,000
0

90

128

188

266

1998

1999

2000

2001

373
2002

543
2003

Las Palmas deGran Canaria

15 Sustainability Report 20082005

2006 2007 *(Fiscal year)* The figure for 2007 is a projected MW value.
Source: European Photovoltaic Industry Association
Global Market Outlook for Photovoltaics until 2012 – Facing a sunny future

Dissemination of Photovoltaic
Power Generation
Santa Cruz de Tenerife

2004Establishing a global value chain to supply
photovoltaic power generation modules

Participation in photovoltaic power generation
projects—From Spain to Italy and Greece

The key component for photovoltaic power generation is solar
cells.
Sumitomo Corporation started the solar cell business in theearly 1990s when the company took a stake in a manufacturerof monocrystalline silicon ingots, a main material of solar cells.
In 2003, Sumitomo Corporation made a capital participation
in Renewable Energy Corporation, a Norwegian company thatowns the world’s largest value chain for solar cell materials,
and through this strategic partnership, expanded its solar cellmaterials business mainly in Asia.
Sumitomo Corporation also began to trade aluminum andother subsidiary materials for solar cells in the later 1990s, andto export and sell photovoltaic power generation modules toGermany and other European countries in 2001. In 2005, thecompany set about the processing and production of materials
as well, by acquiring a stake in TKX Corporation, the leading
company in the area of wafer slicing.
Through these efforts, Sumitomo Corporation has
established a value chain encompassing both the upstream
and downstream segments of the photovoltaic power
generation business. The value chain enables the company topromote—through the best use of its integrated corporate
strength—activities ranging from the procurement of materials
for solar cells to sales of modules to accelerate the wider use ofphotovoltaic power systems.
On the other hand, however, there is a growing problem
that is hindering the dissemination of photovoltaic power
generation. Solar cells and their materials have been produced
mainly in Japan, Norway, Germany and other industrializedcountries until today, but their supply fails to keep up with the
sharply increased demand, resulting in a shortage of materials
and soaring prices. As a solution to this problem, attention
is now focused on Chinese solar cell manufacturers that are
emerging one after another, and China now becomes animportant solar cell producing country.
Under these circumstances, Sumitomo Corporation took astake in Solargiga Energy Holdings Limited, a pioneer company
in the area of production of silicon ingots and wafers in China,
in August 2007. This allows Sumitomo Corporation to procurematerials even more stably, and thereby to improve thecost performance of its products to give momentum to the
expansion of photovoltaic power generation.

The EU is committed to increasing its use of renewable energy
to 20% of its overall energy mix by 2020, and each country
in the region has adopted various policies to achieve thisgoal. In Spain, in particular, photovoltaic power plants havebeen vigorously constructed since the preferential treatment
system for large-scale photovoltaic power generation projects
was introduced in 2006, making the country second only toGermany in Europe in terms of photovoltaic installed capacity.
The number of photovoltaic power generation projects is thusincreasing sharply in Spain.
With this as a background, Sumitomo Corporation began totake part in a photovoltaic power generation project on theisland of Tenerife in the Spanish autonomous community of
the Canary Islands in May 2008.
The Canary Islands, located approx. 1,800 km to the southof the Spanish mainland and close to Africa, are abundant insunlight. The solar radiation on the islands is more than 20%
higher than in southern Spain, which is one of the most sunblessed regions in Europe. In addition, since the Canary Islands
are a popular winter resort among European vacationers,
and tourism is one of their most important revenue sources,
public awareness about the importance of environmental
protection is particularly high, and restrictions are placed on
the construction of large-scale fossil fuel power plants. For
these reasons, renewable energy projects, such as photovoltaic
power generation, are attracting great attention on the islands.
Sumitomo Corporation has acquired a 43% share in
EVM2 Energias Renovables, S.L., the operating company
jointly founded with local capital including the Instituto
Tecnológico y de Energís Renovables (Technological
Institute for the Renewable Energies) (ITER), a subsidiary of
the Tenerife government, to lead the 9,000 kW photovoltaic
power generation project. Operations at the power plant
will commence in late 2008, and the photovoltaic power
generation system is expected to reduce CO2 emissions by
about 7,200 tons per year compared to a coal-fueled thermal
power plant. Electricity generated at this plant will be sold toa wholly-owned subsidiary of Endesa, Spain's largest powercompany, over the next 25 years.
Sumitomo Corporation regards photovoltaic power
generation projects as one of its core environmental businesses.
In addition to further expanding the business in Spain, thecompany will develop new projects in Italy and Greece,
where subsidy systems and other business environments forrenewable power generation are well established, to contributeto the dissemination of photovoltaic power generation.

Sustainability Report 2008

16

Madagascar – a country attracting attention as
an important source of rare metals
The Republic of Madagascar is an island country located off
the southeast coast of Africa in the Indian Ocean. The island isabout 1.6 times as large as Japan, and the population is about
19 million. The main industry is the production of rice, coffee
and other agricultural products. Although there has beensome economic development since a liberalization policy wasstrengthened in the mid-1990s, the gross national income (GNI)

Madagascar Action Plan (MAP)
The government’s five-year plan (2007- 2012) thatdefines the basic direction and priorities of the country
Major points
1) Creation of a strong private sector driven by local
and international investment
2) Infrastructure development
3) Rural development and poverty alleviation
4) Promotion of environmental protection5) Educational system with international norms andstandards
6) Fight against HIV/AIDS, malaria and malnutrition

Performanceper capita in fiscal 2006 was 280 U.S. dollars (World Bank data),
about 1/140 that of Japan.
To improve this economic situation, in 2007 the Madagascar
government put into operation the Madagascar Action Plan
(MAP), a five-year plan aimed at reducing poverty througheconomic growth. Under this plan, the government is working
on various financial reforms, and striving to improve theinvestment environment for foreign investors.
One of the new industries that are currently attracting
attention as a driving force of economic growth is the miningof the country’s rich reserves of mineral resources. The demand
for nickel, cobalt and other rare metals in particular, which areused as high-tech materials for batteries and semiconductors,
is growing sharply along with the rapid emergence of China,
India and other new economic powers. Since these metals
have been mined in only a handful of countries including
Russia and Canada until today, their supply tends to fall shortof demand around the world, making the development of newsources of stable supply an urgent necessity in the market.
It is with this as a background that Sumitomo Corporation
has launched the Madagascar Ambatovy Project, one of theworld’s largest resources development projects, in collaboration
with Canadian and Korean companies.
In addition to providing a stable supply of rare metals to theinternational market, this project is also anticipated by the local
community as bringing about tremendous effects on industrial
development and job creation in the country.

Challenges to the Development of Sustainable Resources

2 The Madagascar Ambatovy

Project – A Venture for the
Stable Supply of Rare Metals
and Community Development
Worldwide growth in the demand for nickel, cobalt and other rare metals is making
these metals extremely difficult to obtain.
Sumitomo Corporation launched the Ambatovy Project in August 2007 to develop
a large mine in the Republic of Madagascar, a country known for its abundance ofrare metals. This project is attracting the world’s attention as a venture that is not
only ensuring a stable supply of rare metals but is also contributing to the economic
development of the community.
17 Sustainability Report 2008

Raising the world’s largest class project financeand creating an integrated project from minedevelopment to metal production
The Madagascar Ambatovy Project is a massive-scale project
to construct all the facilities necessary for the supply of rare
metals, including a mine in an inland area, a refinery plant
for metal production near the coast, pipelines connecting
the mine and refinery plant, roads, railway, port and otherinfrastructure, and a refinery residue treatment plant.
The project obtained official approval from the Madagascar
government under the Loi sur les Grands Investissements
Miniers (Large Mining Investment Act) in February 2007. The
project finance contract was signed in August of the same
year, and the project was put into operation. The construction
inauguration ceremony was held in November with thepresence of the President of Madagascar and major ministers.
Metal production is scheduled to start in late 2010, andwhen the plant operation reaches its full capacity in 2013, itis expected to produce 60,000 tons of nickel and 5,600 tonsof cobalt annually. These figures represent 3.8% and 8.3%of the 2010 projected global demand for nickel and cobalt,
respectively. When this project is right on track, Madagascar is
expected to become an important source of rare metals with astrong influence on the international market.
Sumitomo Corporation is responsible for raising finance forthe project and supporting sales of products in cooperation
with Korea Resources Corporation (Kores). Of the total fundsof about 3.7 billion U.S. dollars, the money invested by theJapan Bank for International Cooperation (JBIC) and otherinternational financial institutions amounts to as much as 2.1
billion U.S. dollars, one of the largest amounts ever raised for amining development project. This project is also expected toincrease Madagascar’s exports by 2.5 times the current level,
accounting for 60% of the country’s gross domestic product(GDP).

Business Scheme
Madagascan local corporations
Miningcompany

Export Development Canada

Senior Loan
Bank for International
US$2.1 billion Japan
Cooperation

Refining
company

Export-Import Bank of Korea
European Investment Bank
African Development Bank

Loan
agreement

Investment, subordinated loan

Consortium

Sherritt

SNC-Lavalin

Know-howon mining
operations

Engineering
Know-how on
construction
and activation

Antananarivo(Capital)

Sumitomo
Corporation

Kores

Raising of project financeand support for product sales

Toamasina
Port

Refinery
Plant

Ambatovy
Mine

Madagascar
Sustainability Report 200818

Performance2

Challenges to the Development of Sustainable Resources

The Madagascar Ambatovy Project – A Venture for the Stable Supply of Rare Metals and Community Development

Creating employment on a massive scale andcontributing to the sustainable development ofMadagascar
The impact of the Ambatovy Project will not be limited tothe economy alone. The project is expected to create jobs
for 12,000 workers in the construction of various facilities
and infrastructure, and after the construction phase, theemployment of 7,300 workers to operate the facilities (Bothfigures include indirect employment.)The project will thus
contribute significantly to the reduction of poverty througheconomic growth, one of the goals of the government’s fiveyear plan.
In addition to the creation of jobs, the project will also be
instrumental in developing human resources in Madagascar.
For this project, workers employed at the Human Resources
Registration Center who have no working experiences otherthan farming will be trained to acquire the skills necessary to
work in construction or in the refinery plant. Local companies
will also be actively used, and necessary technical educationand guidance will be provided to each company.
These efforts will not only ensure that the necessary
workforce can be secured, but also lead to the upgrading of
the labor quality in Madagascar. Local staff will be encouraged
to assume administrative positions in the mine or refinery plantin the future, and it is hoped in the long run that good talents
who will become leaders of Madagascar’s industry will be
nurtured through this project.
In order for Madagascar to become economicallyindependent and push forward the development of asustainable society, the development of human resources
is indispensable. The
project is expected toplay a very important rolein laying the foundation
for developing humanresources, and in building
firm trust between thesehuman resources andJapanese companies.
Human Resources Registration Center

Consideration given to environmental
conservation and the local culture and topromoting coexistence and co-prosperity withthe local community
Since the project will span a long period of 30 years in total –about three years of preparation and 27 years full-out operation
thereafter– it is considered that it will have an impact on thenatural environment around the mine as well as on society. In
carrying out the project, Sumitomo Corporation will give fullconsideration to environmental conservation and the local
culture and customs and pursue coexistence and co-prosperity
with local people.
Madagascar is a country particularly blessed with one of
the world’s most precious natural environments with 1,000
rare species. For this reason, the project is being performed

19 Sustainability Report 2008

under strict environmental management rules in accordancewith the World Bank Safeguard Policies*1, International FinanceCorporation (IFC) Performance Standards*2, World HealthOrganization (WHO) standards*3, Equator Principles*4 and otherstandards.
The project’s own environmental conservation measures
have also been adopted, such as the 305-hectare buffer zone
serving as a forest reserve, as well as the offset zone aimed atmaking up for the environmental impact of the development.
The offset zone is a leased area that is about four times as large
as the development zone, into which rare species from thedevelopment zone are transplanted to minimize the impact on
the fauna and flora.
In areas where the relocation of residents is inevitable,
alternative land and compensation are provided upon
agreement with the residents. For areas to which theseresidents are relocated, water supply, schools, hospitals,
churches and other social infrastructure are constructed toensure that their resettlement goes smoothly in harmony with
the native residents of the areas. In addition, efforts are being
made to overcome problems and obtain the understandingof local residents through dialogue by holding more than 200
public hearings in the affected areas.
Through these efforts, the project obtained an environmental
license from the Madagascan government in December 2006
as a model case of executing detailed environmental protection
measures in accordance with the World Bank Safeguard
Policies. The project was also accredited by the government in
February 2007 as the first project to which the Large Mining
Investment Act (LGIM) was applied, demonstrating that the
government sees the project in the most favorable light.
*1 World Bank Safeguard Policies: Evaluation standards on the executionof environmental assessment for projects that have a possibility of having asevere impact on the environment, as well as on impact alleviation measures*2 IFC Performance Standards: Environmental and social standards used by
the IFC at the time of loan examination to assess projects undertaken by
private companies in developing countries*3 WHO standards: Standards defining the limit of exposure to environmental
pollutants. The limit has been set after studying the relationship between
exposure to environmental pollutants and human health.
*4 Equator Principles: Standards for private financial institutions to assess andmanage environmental and social risks of project financesInternational support through private-public
collaboration to tighten ties with Africa
When the project finances were raised, the project was able
to obtain active support from Japanese public financial
institutions, including JBIC, which together with private banks,
has financed 700 million U.S. dollars, as well as the Nippon
Export and Investment Insurance (NEXI), an independentadministrative institution, which has given consent to covering
the project with the Investment and Loan Insurance for Natural
Resources and Energy. This is not only because the project,which guarantees the long-term supply of rare metals to
the Japanese market, is seen by the Japanese government
as economically beneficial, but also because the projectis believed to contribute to support for Africa, one of thecommon issues among industrialized countries.

Mine camp

(Upper) Madagascan President Ravalomanana talks
with then Sumitomo Corporation President Oka(Lower) Entrance to the Ambatovy Mine

The Japanese government has been stressing theimportance of African ownership of its development andpartnership with the international community at the Tokyo
International Conferences on African Development (TICAD*5).
The basic stance of the project that focuses on supporting the
local society from the aspects of economy, employment andhuman resources development matches those principles, andthis is the very reason why the project is supported strongly byboth the Japanese and Madagascan governments.
To promote the development of Madagascar along with the
project, it is essential to modernize the country with upgradedinfrastructure and medical and educational institutions. The
Japanese government is currently examining the possibility of
supporting the modernization through Overseas Development
Assistance (ODA). With promotion by private companies and(Upper) Construction site
(Lower) Toamasina Port

assistance from the government, the Ambatovy Project has
made possible this kind of private-public collaboration to
expedite the social development of Madagascar and bringabout the coexistence and co-prosperity of both countries. It
is thus an ideal international development project that should
be used as a model for the future. Sumitomo Corporation
continues to play its role to help tighten ties between Japan, acountry with no natural resources, and African countries thathave natural resources but are in need of development power,so that we all can maintain sustainable development in theinternational community.
*5 TICAD: International conference led by the Japanese government and cohosted by the United Nations, the World Bank and other organizations. The
conference has been held every five years since 1993 to discuss African
development. The 4th conference was held in Yokohama in May 2008.

Sumitomo Spirit

Support for education through Sumitomo
Corporation Libraries
In parallel with the Ambatovy Project, Sumitomo
Corporation has been establishing Sumitomo
Corporation Libraries at various locations in Madagascar
to support its teacher training.
The school attendance rate is lower in the higher
grades in Madagascar due partly to the shortage of goodteachers. To help resolve this situation, and to meet the
Madagascan President's desire to upgrade education,
which was expressed to then Sumitomo Corporation
President Oka during his visit to the country in 2006, thecompany has decided to provide support for the cause. A
total of 100,000 U.S. dollars have been set aside to donate
books and PCs to elementary school teacher training
centers in Antananarivo, the capital of the country, and,Moramanga a city near the mine, from 2007 through 2010.

I want to respect local customs, win people’s trust,and contribute to the development of Madagascar.
I belong to the department in charge ofsupervising construction, and I am responsible
for a wide range of duties including personnel
and general affairs, labor management,
supervision of health, safety and security,and improvement of the living environment.
An important thing to observe in executing
this project in Madagascar is to respect
Ryota Shoji
local customs and religious practices at the
Ambatovy Projectcompletion of construction and on other
Department
occasions. Driving the project in line withlocal customs is crucial in obtaining thecooperation of the local people and ensuring the smooth runningof the project. Furthermore, it is also important to express gratitude
for giving us this opportunity to work on this project in Madagascar.
If local people understand our sincere gratitude, it will enable us
to win their trust. Based on the trust earned through these efforts, I
hope that we can succeed in this long-term project in Madagascar,and contribute to the social development of the country.

A plaque that explains
Sumitomo Corporation’s
support
A teacher training center in which a
Sumitomo Corporation Library has been
establishedSustainability Report 200820

Performance2

Challenges to the Development of Sustainable Resources

Special Issue

Reconstruction towardan Affluent Future
Challenges of the Sub-Saharan Africa Market
Development Project Working GroupThe civil wars and regional conflicts that occurred in many regionsin Africa have now been brought to an end, and the countries havebegun working toward economic development under more stable
government systems. However, the income, medical and educational
levels in these countries are still very low, and countries in other partsof the world are actively providing support for economic revival ofpoverty-stricken Africa as one of the priority issues of the international
community. The Japanese government has also been supporting
African countries by providing funds and technologies through theODA (Official Development Assistance) scheme, and calling for othercountries to join its efforts to develop Africa based on ownership andpartnership principles at TICAD.
To contribute to African economic development through the creationof sustainable business, Sumitomo Corporation has established an intersectional special working group and started activities in Angola. In thissection of CSR Performance, two personnel from the company who playa core role in this mission explain how they have become involved in
African development, and express their enthusiasm for this project.

Exploring the possibilities of economic
development in Sub-Saharan Africa
The Sub-Saharan Africa Market Development ProjectWorking Group is an inter-sectional organization to
explore the possibilities of developing business in the
countries of Sub-Saharan Africa lying south of the Sahara
Desert. The idea of establishing this working group wasborn when a subsidiary of our company acquired interests
in an LNG project in Nigeria and our company's staff
visited the country.
What the staff felt while coming in contact with the

21 Sustainability Report 2008

Shinichi Hasegawa

Masaru Yamazaki

Gas Business Department

Gas Business Department

social and economic realities of the African country wasits similarity to Southeast Asia and the Middle East in thepast. These regions are blessed with rich natural resources,
but lacked funds, know-how and infrastructure for theirdevelopment. For these regions, Japanese general trading
companies were raising funds from around the world,
constructing plants for resources development, andupgrading the infrastructure including pipelines, roads andports. The general trading companies also opened up newmarkets, and through these diverse efforts, contributed
to the vitalization and economic development of local

communities.
Current Sub-Saharan Africa is in a similar situation,
and while having rich reserves of natural resources,
the countries in the region are not experiencing muchdevelopment due to the insufficient infrastructure andunstable security and political situations. We therefore
began to think that we can probably create business inthis region by utilizing our expertise and know-how built
up over many years as a general trading company.

AngolaSub-Saharan-Africa

Identifying local needs from various aspects
The activities of the working group started with market
research. We carried out five months of research in eightWest African countries in Sub-Saharan Africa on theircountry risk factors such as internal instability, economic
growth forecast and resource potential. In addition to thisresearch, we also had the opportunity to meet the top
officials of the Angolan government during their visit toJapan. At this meeting, we could actually feel thecountry’s rich experiences of doing business withforeigners and open attitudes toward foreign capital, andthis led us to decide to explore possibilities for business inAngola first.
Although Angola has rich reserves of oil, a civil war thatlasted for many years played havoc with electricity, watersupplies and sewage, and other infrastructure, making it
necessary to support the reconstruction of these facilities
before supporting industrial development. For this reason,
we are currently investigating local needs from various
aspects to see what support we can offer. For example,
Angola used to be an agricultural country with large
plantations for sugar cane and other products, and evenhad sugar factories. But all these were destroyed during
the civil war, and a huge number of land mines—said
to amount to about 50% of all the land mines laid in theworld— are still buried at former plantation and factory
sites, posing a great hindrance to the reconstruction ofelectricity, water supplies and other infrastructure as wellas to the cultivation of farmland. As a way to help resolve
this situation, our company is now supporting activities toremove these land mines.

Long-term total support toestablish solid partnership
Support for the development of African countries
including Angola requires multi-faceted and multilayered efforts, comprising not only reviving industry but
also upgrading roads, ports, electricity, water supplies
and other infrastructure. It is the mission of general
trading companies like Sumitomo Corporation toprovide productive support by utilizing their integrated
corporate strength accumulated through global businessexperiences.
In order for African countries to develop economicallyand socially, they need to become independent as
members of the international community. It is only when
they take the initiative in their own development thatthey can achieve sustainable development. On the partof Sumitomo Corporation, we must all make sure that
we do useful and effective business that will lead to truedevelopment in Africa, rather than basing our activities on“volunteerism.”
We will make our utmost efforts so that the activities of
the working group will bring about tighter relationships with
the African people, and lead to larger business connections
between Japan and Africa.

Sustainability Report 200822

Performance3
VietnamThang Long Industrial Park (TLIP)

The Philippines
First Philippine Industrial Park (FPIP)

Indonesia
East Jakarta Industrial Park (EJIP)

23 Sustainability Report 2008

Development of Overseas Industrial Parks
Coexisting and Growing with the Local Community

Industrial Park BusinessContributing to theDevelopment ofSoutheast
Asian Countries
To avoid the concentration of offshore factories in one country,
Japanese manufacturers are actively looking for other locations, such as
in Southeast Asia, to build new factories.
Sumitomo Corporation is developing industrial parks in Southeast
Asia that will contribute to the development of both Japanesemanufacturers and local communities.

Launch of overseas industrial park business near
Jakarta, Indonesia, in 1990
As the strong yen after the Plaza Accord* in 1985 drove
Japanese manufacturers to advance into Southeast Asia,
Sumitomo Corporation started a sales agency business for anindustrial park developed by a Thai real estate developer. The
company then developed the East Jakarta Industrial Park (EJIP)
on its own account near Jakarta, Indonesia, in 1990, marking
the company’s first full-out overseas industrial park business.
The EJIP, which was Indonesia’s first industrial park developedby private foreign capital, was sold out in six years after
commencement of the project. The comprehensive support
provided by the company, ranging from the development andcreation of the park to its management and operation, wasrated highly by the Indonesian government, local community
and tenants in the park.
* Plaza Accord: An agreement signed by the U.S., the U.K., West Germany, France
and Japan at the meeting of G5 finance ministers and central bank governors
held in the Plaza Hotel in New York in September 1985 to take coordinatedintervention in foreign exchange markets to depreciate the U.S. dollar

Services provided through the Group’s
integrated corporate strength
Since its success in EJIP, Sumitomo Corporation has built up a
track record and experience in the area of overseas industrial
park development by establishing the First Philippine Industrial
Park (FPIP) near Manila in the Philippines in 1996, and theThang Long Industrial Park (TLIP) in Hanoi, Vietnam, in 1997.
One thing to which Sumitomo Corporation has paid
particular attention with its overseas industrial park business isthe provision of a comprehensive range of services to support
Japanese manufacturers’ advances into overseas markets.
Rather than regarding the business simply as real estate
projects as in the ordinary industrial park business, the company
has organized an Overseas Industrial Park Department, a
special team operating in collaboration with various otherdepartments and group companies, to provide consultationand know-how in a wide variety of areas including logistics
and materials procurement. The services provided under
this system are comprehensive, covering the construction of
infrastructure indispensable for production activities, such as
water supplies and roads; a consultancy on compliance withlocal law and regulations as well as on employment; and anintermediary service between manufacturers and suppliers.

Meticulous investigation and analysis at
the planning stage to create carefree andcomfortable business locations

quality and other factors. The company also scrupulously
assesses the impact that the project may have on the living
environment of local residents.
After a site is expropriated, Sumitomo Corporation
undertakes the infrastructure development work necessary
for production activities, such as ground preparation, layingout of trunk roads, and construction of power substations,water purification facilities, wastewater treatment facilities, andelectrical and communication facilities. The company evenprepares rental factories, offices and distribution centers to
help the tenants in the park save on initial investment costs.

TLIP-II in Vietnam currently attracting attention
as an additional “China plus one” production
location
Japanese companies are recently turning their attention toVietnam—a country characterized by internal stability, the thirdlargest labor resource in the ASEAN region, and people who areskillful, diligent and gentle—as an additional “China plus one”
production location.
In addition to the TLIP constructed in Hanoi in 1997, where
many Japanese manufacturers have been invited to set up theirfactories, Sumitomo Corporation also established Thang Long
Industrial Park II (TLIP-II) Corporation in Hung Yen Province,east of Hanoi, in November 2006 to meet the soaring needs of

IN FOCUS

Reduction of environmental impact

Implementing a range of environmental research
projects into soil, water, noise and others
Before proceeding to the construction of industrial parks, Sumitomo
Corporation studies the soil and water quality in collaboration withprofessional environmental consultants, and submits reports totenants. Research projects on noise are also implemented to protect
the quiet living environment around the parks. When embankment
work was conducted at TLIP in Vietnam, sand was sent under pressure
through a pipeline from the Red River, two kilometers away from thepark, where dredgers collected sand from the bottom of the river. The
company chose not to use dump trucks to carry the sand to minimize
the environmental impact on the surrounding areas.

Soil research

Water quality research

It is important for the overseas industrial park business tocreate an environment that is carefree and comfortable forthe tenants in the park and the local community around it.
Sumitomo Corporation investigates each candidate location
carefully before selecting a site after analysis of its access,surrounding environment, ground conditions, soil type, water
Noise research

Sustainability Report 200824

Performance3

Development of Overseas Industrial Parks
Coexisting and Growing with the Local Community

Industrial Park Business Contributing to the Developmentof Southeast Asian Countries

Japanese companies to advance into the country. Sales started
in August 2008.
The project area of TLIP-II is 220 ha, and the park is situated at
a convenient location that can be accessed from central Hanoi
in about 45 minutes by car via National Highway No. 5, and in
about one hour by car from TLIP. The park is also close to the
Noi Bai International Airport

Multi-faceted support for tenants and local
communities by fully utilizing experience andknow-how built up over many years

Thang Long Industrial Park

Hanoi City
Cai Lan Port

Thang Long Industrial Park II

Haiphong and Cai Lan ports, and thanks to this ideal location,
the park has already received inquiries from many companies.
TLIP-II is also unique because—unlike other industrial parks
operated through a joint venture with local companies—
it is funded almost 100% by Sumitomo Corporation, and is
expected to be run based on a more precise understanding of
the needs of Japanese companies.

Haiphong Port

Hung Yen City

Thang Long Industrial Park II

On the basis of good relationships with the Vietnam
government and local society, as well as know-how on landacquisition, development and operation of a site nurtured
through the TLIP project, Sumitomo Corporation will provide acomprehensive range of services for TLIP-II as well. For medium
to small companies in particular, Sumitomo Corporation
will inform them in advance of troubles and problems thatare likely to occur in Vietnam, and offer consultation andsupport services in diverse areas including incorporation ofa local company, labor, taxation and employment. Even after
Sumitomo Spirit

Together with tenants and the government, we
continue to improve the industrial park to make it
an ideal workplace for many Vietnamese people.

Conception of the completed Thang Long Industrial Park II

IN FOCUS

Securing safety for the surrounding areas

Efforts to reduce traffic accidents to zeroTo prevent construction vehicles from causing traffic accidents
in the surrounding areas during construction work, Sumitomo
Corporation provides the necessary education to those involved in
the work, and takes various
measures in cooperation withthe local police to ensure
traffic safety in the areas. In
addition, for TLIP-II, a message
calling for traffic accidents tobe reduced to zero is being
aired on TV to raise local
people’s awareness of traffic
safety.
Thorough traffic control

25 Sustainability Report 2008

When I visited the site 12 years ago to
examine the feasibility of the project, all I
could see was paddy fields. But the site has
now turned into a huge industrial park that, asa symbol of Japanese-Vietnamese economic
codevelopment, houses the largest numberof Japanese companies in the country,
and creates employment for about 40,000
workers. I feel very excited to have become
Akito Shiraishi
the representative of this industrial park andGeneral Director
responsible for its operation.
Thang Long Industrial
What tenants are requesting us to do firstPark Corporationand foremost is to improve the employment
environment. The majority of Japanesecompanies in the park are not well known yet in Vietnam, and findit very difficult to secure a sufficient workforce. In addition, there aremany local people who are concerned that the surge in populationof the local community along with the increased number of tenants
may erode the public peace and destroy the environment. We are
therefore currently working on improving the living environment ofworkers working in the park as well as residents in the neighboringareas in collaboration with the local government.
We have concentrated our efforts rather on development andsales in the park for the past 12 years, but we will now shift our
focus to making the park a more attractive workplace for many
Vietnamese people through cooperation with tenants and the local
government.

these medium to small companies find a factory in the park,
Sumitomo Corporation will also take various measures tofacilitate communication and information-sharing among
tenants. Information-sharing meetings for presidents oftenant companies, which originated in EJIP that commenced
operations in 1990, are one example of these measures.
The meetings are now held in all the industrial parks every
month, and are very popular among tenants. The same type of
meeting will also be introduced at TLIP-II as well.
Efforts will also be made to make TLIP-II a workplace
where local people can work comfortably and an industrial
park favored by the local community by actively working on
education and welfare and conservation of the environment
surrounding the local community.

What Sumitomo Corporation aims at through its
overseas industrial park business is not only support for theestablishment of offshore factories and smooth operations
abroad for Japanese manufacturers, but also contribution to
local development and economic revitalization. This is thereason why the company is so enthusiastic about providing
multi-faceted and comprehensive services.
The demand for new industrial parks is still very highin various countries and regions. While pursuing the ideal
industrial park that best matches each country and region,
Sumitomo Corporation continues to make its utmost efforts
to achieve prosperity and realize dreams for both tenants andlocal communities by fully utilizing its wealth of know-how andexperience accumulated over many years.

ColumnContributions to Local Communities
Achieving prosperity and realizing dreams for tenants and local communities

In order for tenants to develop their businesses withpeace of mind abroad and effectively fulfill their social
responsibility as companies employing local people, it isimportant for both the industrial park and its tenants toencourage co-existence with the local community and tobe accepted by the local community as a good corporate
citizen.
Sumitomo Corporation is actively involved in avariety of activities to help improve education andwelfare in the local communities in cooperation withtenants. These activities include donating stationery
and equipment to kindergartens and elementary
schools in the neighborhood, presenting fire engines tolocal governments, repairing old school buildings, andprofessional training for local residents.
For TLIP, a Local Contributions Committee made up oftenants from the park has been established to listen to
the opinions and requests of the local people, and collect
donations from each tenant, and many unique activities
including donating electronic organs to kindergartensin the vicinity of the park, and scholarships for excellent
students, are carried out under this committee. In
addition, Ekiden marathon relay races by employeesof tenant companies, and other opportunities are alsoorganized to promote exchanges among employees ofdifferent companies.
For TLIP-II currently under development, work to

expand farm roads is also being carried out in response torequests from the local community.
Sumitomo Corporation continues to make a wide
range of local contributions to achieve prosperity andrealize dreams for both tenants and local communities.

Donation of stationery and equipment

A school building after repair

Sustainability Report 200826

Sumitronics provides EMS function to
Japanese manufacturers even for small-lot,
multi-variety production
As the digitization of products accelerates withtechnological innovations in electronic equipment andcomponents, product cycles are becoming shorter, andthe burden of investment in production machinery weighsheavily on manufacturers. With this as a background,a new type of outsourcing business called Electronics
Manufacturing Service (EMS) is currently attracting
attention.
EMS is a service that undertakes the entire process ofplanning, development, design, prototyping, component
procurement and production of products throughcollaboration between various suppliers, each with its own
special expertise.
Appointing an EMS company allows set makers to shift
from the current vertical integration process—which
requires each set maker to undertake all the productcreation operations—to a horizontal specialization process,

Performanceand they are now actively adopting an EMS company as a
new management technique to streamline and enhancethe efficiency of their businesses, and as a strategy to win in
the increasingly intensified competition in the market.
In Japan and other countries where consumer markets
have already matured, consumer values are rapidly
diversifying, product quality and cost competition arevery severe. Japanese set makers are focusing on smalllot, multi-variety production to meet the requirements ofthe market, but there are very few EMS companies that canquickly and flexibly support the development of short-cycle
products and respond to fine specification changes.
However, as a company in the Sumitomo Corporation
Group that has supported Japanese manufacturers ina multi-faceted manner until today, Sumitronics offers
a business model encompassing all the procurement,
logistics and assembly functions required by Japanese set
makers, and provides EMS solutions that realize just-intime (JIT ) delivery based on detailed customer productionplans. In addition to promoting streamlined and efficient

Optimizing Global Supply Chains

4 EMS Creates New Value Chainsin the Electronics Industry
In the electronics industry, the demand for EMS is rising among manufacturers to establish
a horizontal specialization system based on collaboration between various suppliers,
and thereby increase the efficiency of the entire process from design to production.
Sumitronics, a member of the Sumitomo Corporation Group is an EMS company thatprovides total support to customers for their design, procurement and production
operations, and helps them create and optimize global supply chains.

27 Sustainability Report 2008

production processes, Sumitronics also supports customers
in optimizing their global supply chains in Asia andother regions by collaborating with various suppliers toundertake strict quality control, reduce the environmental
impact of their factories, and develop appropriate working
environments, among other operations.

inventories and reductions in the cost of purchased goods by
networking circuit board assembly companies and unit andfinished-goods assembly factories and centrally controllingthe entire process within the network. The company’s own 14
overseas offices also strongly support customers’ advances into
foreign markets.

A worldwide network withmore than 1,000 suppliers

EMS business structure

Sumitronics was established in Singapore in 1988 as thefirst fully-fledged Japanese trading company specializing inelectronic components. Since then, the company has expanded
its group network by opening offices in Thailand, Hong Kong,
Indonesia, China, the Philippines, Vietnam and other Asian
countries, Japan, and North America. In collaboration withnumerous parts suppliers and more than 30 manufacturing
partners responsible for circuit board packaging and finishedgoods assembly, the company has built a value chain that fully
supports customers in their efforts to boost competitiveness.
In addition, the company also promotes optimization of parts

Partners

Sumitronics

Parts suppliers

EMS

Procurement

Manufacturing
partners

Logistics

Provision ofservices from theprocurement ofelectronic
components andmaterials to circuitboard packaging
andfinished-productassembly as
needed bycustomersSetmakersAssembly

Sustainability Report 200828

Performance4

Optimizing Global Supply Chains

EMS Creates New Value Chains in the Electronics Industry

IN FOCUS

Control of quality throughout the entire
supply chain

Thorough quality control in cooperation
with partners
Sumitronics has formed a global network with more than 30
manufacturing partners and more than 1,000 parts suppliers basedin and outside Japan. To support the enhancement of quality
control in these partner companies, Sumitronics established a
Quality Control Division in Shenzhen, China, in 2004, where about
30 staff members are working together with suppliers in eachregion to ensure thorough quality control over the company’s entire
supply chain. In addition, Sumitronics measures the performance ofeach supplier according to the five criteria—quality, cost, delivery,
environment and management (QCDEM)—using its own checklists,and feeds back the results to suppliers to encourage their voluntarycommitment to quality.
To respond to any defects in products quickly and correctly,
Sumitronics has also developed its own traceability system anddatabase of parts lot numbers and inspection data for eachproduction process. The system and database allow the company
to immediately identify
when and where thedefective product was
manufactured, and takecorrective measures.

Financial, tax and legal support for customers
To successfully relocate factories overseas, it is very important
not only to secure parts suppliers and a logistics network,
but also to meet the complicated financial, legal and otherrequirements that vary between regions and countries.
Sumitronics provides a wide range of financial, tax and legal
support services, such as bond and tax exemption schemes,
and complicated foreign exchange and overseas transfer, by
fully utilizing the expansive network, deep knowledge andtechnical expertise that only a general trading company with avariety of overseas business experiences can offer.
Sumitronics also operates bonded warehouses at various
locations around the world, and ensures that electronic
components, mechanical parts and other products procured
from suppliers and imported under bond are stored under
optimum conditions in the fully air-conditioned special
warehouses after completion of acceptance inspections.
By establishing a logistics system that enables the timely
delivery of the necessary quantity of products, the company
helps reduce the workload of customers required for importcustoms clearance and tax exemption procedures.

Reduction of inventories through the operation oftax-exemption and bonded warehouses and theachievement of JIT delivery* QCDEM evaluation results: Quality, Cost, Delivery,
Environment, Management
evaluation results
Feedback of QCDEM evaluation results
Circuit board
assembly
factory

Sumitronics’ own QCDEM evaluation

Circuitboard

Five criteria toevaluate business activities
JIT delivery

Customer’s
factory

Quality
Cost
Sumitronics
Quality
Control Division

Sumitronics
warehouse
DeliveryEnvironment

IN FOCUSManagement

Active recruitment and appointment of local staff

Feed back evaluation results
to suppliers to promotefurther improvement

29 Sustainability Report 2008

Mechanical parts,
pressed/molded parts

Suppliers

Contributing to the local community

Workers in local offices and joint venture circuit board assembly
factories are recruited in accordance with the local laws andregulations to encourage the localization of the subsidiaries
established in each country. These efforts contribute to the creationof employment and vitalization of the local economy. Each overseas
location also has a fair personnel treatment system and a safe andcomfortable working environment in place.

Joint venture factories for high-speed andhigh-density packaging that meet thecomplex needs of customers

Contribution to development of both customers
and suppliers under CSR management of theSumitomo Corporation Group

High-density packaging technology is becoming increasingly
important to meet the high function and downsizing
trends of mobile information terminals and other IT andcommunications devices. In addition to expanding its networkwith manufacturing partners including circuit board assemblyand finished-goods assembly factories, Sumitronics has alsoestablished joint venture circuit board assembly factories in the
U.S., Mexico, Thailand, the Philippines and Indonesia. Throughthese factories,
each with skilful
technicians possessing
sophisticated technicalknow-how, Sumitronics
offers products thatsatisfy the mostdetailed needs ofcustomers.

While engaged in the EMS business globally, Sumitronics is
continuously in pursuit of the ideal value chain that promotes
the development of both customers and local suppliers.
In recent years, the greater commitment of companies tocorporate social responsibility (CSR) throughout their supply
chain—such as reducing the environmental impact of theirproduction activities, and creating safe and comfortableworkplaces for their workers—is becoming indispensable.
Sumitronics has been doing business under the Environmental
Policy and various other CSR management mechanisms of theSumitomo Corporation Group for many years, and continues toensure that the EMS business, which involves many suppliers in
a complex manner, is controlled appropriately to optimize thecompany’s global supply chain.

Pre-work meeting

IN FOCUS

Compliance with the environmental regulations of each country

Reducing the environmental impact of production and logistics
Sumitronics is working in collaboration with set makers andsuppliers to tighten control over the use of chemical substancesin compliance with the Restriction of Hazardous Substances(RoHS) Directive and the Registration, Evaluation, Authorisation
and Restriction of Chemicals (REACH) Regulation enforced by theEuropean Union (EU) in 2006 and 2007, respectively.
In addition, the milk run method of transportation, which makes
one vehicle go around several locations, has been adopted in theway JIT delivery is implemented. With this method, the required
number of transportations by vehicle can be reduced, and theemissions of CO2 at the time of delivery are also expected todecrease accordingly.

Delivery by the milk run method to
reduce CO2 emissions
Going round several locations
Supplier
D’s factory

Supplier
A’s factory
Sumitronics
warehouse

Supplier
C’s factory

Supplier
B’s factory

Sustainability Report 2008

30

33

Corporate Governance

35

Risk Management

37

Internal Control Programand Internal Audit

38

ComplianceAc t i n g R e s p o n s i b l y i n B u s i n e s s

CSR Management
The Sumitomo Corporation Group has established a management system
to achieve prosperity and the dreams of diverse stakeholders such as
shareholders, investors, customers, clients, local and global communities,
and employees, through sound business operations.

31 Sustainability Report 2008

39

Human Resource Management

43

Management of Social
Contribution Activities

46

Environmental Management

Sustainability Report 200832

Corporate Governance

Sumitomo Corporation has established the “Sumitomo
Corporation Corporate Governance Principles,” based on
our view that the ultimate goals of corporate governanceare “improving management efficiency” and “maintaining
sound management,” as well as “ensuring managementtransparency” to secure the first two. Keeping in mind
that our backbone of corporate ethics is in the “Sumitomo
Business Spirit” and the Company’s “Management Principles,”
we are always seeking to establish the most appropriate
managerial system for the Company and are strengthening
our corporate governance to realize management that serves
the interests of shareholders and all other stakeholders.

Features of
Our Corporate Governance System
Under the former Commercial Code, since April 2003, Japanesecompanies have been able to adopt a company with acommittee based system of corporate governance. However
we believe that the best way for us to improve the effectivenessof our corporate governance is to maintain our existing
corporate auditor system while enhancing and reinforcing it
through auditing from diversified external viewpoints and with
opinions and advice from additional external advisors.
We will monitor global trends and legislation concerningcompanies while preserving our corporate culture as aJapanese company. At the same time, we will observe thebenefits of different corporate governance frameworks in othercountries.

Past Initiatives to Strengthen andEnhance Corporate Governance
To date, Sumitomo Corporation has strengthened andimproved our corporate governance system through initiatives
covering many points, such as optimizing the size of the Boardof Directors, setting term limits for the Chairman of the Boardof Directors and the President and CEO, shortening the termsof Directors, establishing advisory bodies, strengthening thecorporate auditors system, introducing the executive officer
system, and appointing external advisors. Our approachto corporate governance is embodied in the “Sumitomo
Corporation Corporate Governance Principles,” which can beaccessed from the following web page.

Directors and the Board of Directors
Optimization of Size of the Board of Directors
We halved the number of Board members from 24 in 2003.
As of July 2008, the Board has 12 members. Through thisoptimized Board of Directors, which oversees the operationsof the business and serves as the Company’s decision-making
body concerning key management matters, we aim to facilitate
substantial and active discussion as well as to promote greater
efficiency and effectiveness in the decision-making process.

For the Sumitomo Corporation Corporate
Governance Principles, please refer to:

Limiting Terms of Directors

http://www.sumitomocorp.co.jp/english/company/governance/index.html

In June 2005, the terms of Directors were reduced fromtwo years to one year. We aim to clarify the responsibility ofmanagement among members of management each fiscal
year. This, in turn, helps ensure fast reaction times to changes inbusiness conditions.

The Company’s Corporate Governance System
General Meeting of Shareholders
Election/
Dismissal
Remuneration
Committee

External Advisors

Deliberation/
ReportingElection/
Dismissal

Consent to submission of proposition
for election of Corporate Auditors
and for election of Accounting Auditors

Directors

Corporate Auditors

Board of Directors(Chairman of the Board of Directors)

Board of Corporate Auditors

Advice/Proposals

Election/Dismissal/
Supervision

Audit(Collaboration)

Audit

Election/
Dismissal

Dismissal(Collaboration)

Accounting Auditors

ReportingAssistance
Corporate Auditor's
Administration
Department

Accounting
Audit

Important Company-wide
Committees
Management Council

Internal Auditing
Department

President and CEO

Internal Audit

Loan and Investment Committee
Compliance Committee

Speak-up System

Internal Control Committee

Internal Control
Risk Management

33 Sustainability Report 2008

Executive Officers

Business Units

Domestic andOverseas Offices

Subsidiaries andAssociatedCompanies

Corporate GroupLimits on Terms of the Chairman of the Board of
Directors and the President and CEO
In principle, the positions of Chairman of the Board of Directors
and the President and CEO are clearly defined and separate
in order to ensure mutual supervision. Both positions cannot
be held simultaneously by the one person. In principle, theChairman of the Board of Directors and the President and CEO
are each limited to terms of six years. These limitations on thetenure of top management help minimize the possibility of
governance problems.

Establishment of the Advisory Body to theBoard of Directors
With the aim of enhancing the transparency and objectivity ofdecision-making processes with regard to the remunerationof Directors and Executive Officers, we established theRemuneration Committee. Functioning as an advisory bodyto the Board of Directors, more than half of the Committee
members are from outside the Company. The Remuneration
Committee is in charge of studying the remuneration andbonuses of directors and executive directors, and reports theresults of its studies to the Board of Directors.

Corporate Auditors and the Board of
Corporate Auditors
Enhancement of the Corporate Auditing
Framework
To further strengthen external views within the corporate
auditing framework, we added one external auditor in June
2003, bringing the number of external auditors to three out of
the five members on the Board of Corporate Auditors. Of thesethree, two are legal experts (a former Public Prosecutor Generaland a former Supreme Court Justice) and one is an accounting
expert—ensuring an auditing system that incorporates adiversity of perspectives.

Ensuring Audit EffectivenessCorporate Auditors attend meetings of the Board of Directors
and all other important internal meetings, to obtain theinformation necessary for proper auditing. Corporate Auditors
also meet the Chairman of the Board of Directors and thePresident and CEO every month to exchange opinions onmaterial issues regarding management policy and auditing.
Moreover, the Corporate Auditor’s Administration Department is
assigned to assist Corporate Auditors so that the auditing system
functions effectively and without hindrance.

monitor the auditing activities of the Accounting Auditors
through regular meetings. By attending audit review meetingsand observing inventory audits with the Accounting Auditors,
the Corporate Auditors constantly work to improve audit
efficiency and quality.

Introduction of
an Executive Officer System
We have introduced an executive officer system with the aimof clarifying the responsibilities and authority for execution
and strengthening of the monitoring function of the Board of
Directors. We currently have 36 Executive Officers selected by
the Board of Directors. Of these, 11 Executive Officers also serve
concurrently as Directors, including eight who are also General
Managers of Business Units. In this way, we aim to prevent gaps
between decisions made at Board of Directors meetings andthe execution of those decisions.

Appointment of External Advisors
Management Council members meet with outside specialists
employed as external advisors to incorporate outside
perspectives into our management. In this way, external
advisors provide us with advice from diverse perspectives
on various themes related to management issues. External
advisors also give speeches and lectures in their respective
areas of expertise, such as leadership and career development,
to employees at various levels within our organization.

Basic Policy on Information Disclosure
To bring an accurate understanding of the Company’s
management policies and business activities to all our
stakeholders, we shall strive to make full disclosure, not limiting
ourselves to disclosure of the information required by law but
also actively pursuing the voluntary disclosure of information.

Disclosing Various Information
The IR section of our corporate website provides various materials.
These materials include financial results, yukashoken houkokusho(Japanese annual securities reports) and other Tokyo Stock
Exchange filings as well as streaming and related documentsof various meetings, and Sustainability Reports. Moreover, we
provide our Annual Report, and SC News, our public relations news
magazine and endeavor to ensure proactive disclosure.

Collaboration between Internal Auditing
Department and Accounting Auditors
To ensure audit efficiency, Corporate Auditors interact closelywith the Internal Auditing Department, receiving reports on
internal audit plans and their results in a timely manner. In
addition, Corporate Auditors exchange information with andSustainability Report 2008

34

Risk Management

In order to cope effectively with the diversifying risk
environment, Sumitomo Corporation has built a risk
management framework, developing our risk management
approach from a micro to a macro perspective, shifting our
focus from “minimizing losses from individual transactions”
to “maximizing corporate value.” This framework is strongly
linked to the management plan, playing a critical role insupporting the efficient management of our corporate
resources.

policy is to maximize the risk-adjusted return while maintaining
risk-adjusted assets within our buffer. Non-quantifiable risk isdefined as “Value breaking risk,” which only generates losses
when it surfaces. We are building a framework that prevents or
minimizes the probability of this risk to materialize.

Risk Management Framework
Managing Quantifiable Risk
Managing Investment Risk

The Purpose of Risk Management

Once an investment is made, it is often difficult to make a
withdrawal decision and the loss impact of the withdrawal isusually significant in scale. To manage the investment risk, wehave in place an integrated framework covering from the entry
process to the exit process. For the entry process, we have set a
hurdle rate, an indicator that returns from the new investments
must overcome. In case of new investments that are large-scale
important projects, the case will be raised before the Loanand Investment Committee for thorough examination. Aftermaking an investment, related business plans are thoroughly
monitored. If the performance of an investment doesn’t meetthe standard, the investment is placed as an “Investment
required to withdraw” according to our Exit Rule.

In response to the shift of our risk management focus from“probability of losses” to “probability of discrepancy between
the plan and the actual results,” we have set the following three
items as the purpose for our risk management activities.
1. Stabilize Performance: Minimize discrepancies between theplan and the actual results
2. Strengthen Financial Base: Maintain risk-adjusted assets
within the buffer (shareholders’ equity)
3. Maintain Corporate Reputation: Fulfill CSR requirements
and preserve corporate reputation

Risk Management Basic Policy

Managing Credit Risks
We have incorporated our original credit rating model, theSumisho Credit Rating (SCR), to assess our customer’s credit
risk. The authority level to provide credit exposure to customers
depends on the assigned credit rating, and the risk weight

We classify our risks into two categories: Quantifiable risk andNon-quantifiable risk. Quantifiable risk is defined as “Value
creating risk,” where we proactively take to gain the return. Our

Risk Management
Quantifiable Risks
Investment risks

Credit risks

Non-Quantifiable Risks
Legal risksMarket risks

Fraud or illegal acts
by management
or employees

IT system
management risks

Risk materialization

Improve
operational
quality

Risk Management Framework
Investment Risks
Group management policy

Qualitative requirements applying to Group companies

ENTRY

MONITORING

Investment entry standards(Hurdle Rate)
Loan and Investment Committee“Value-Up Support” system

EXIT
Investment exit standards(Exit Rule)

Utilize experience

Credit Risks

Market Risks

Concentration Risks

Utilize the Sumisho Credit Rating(SCR) model across the Group
Periodically conduct back testingManage maximum losses based on
Value at Risk (VaR) methodology
Conduct liquidity risk management
Separate and control front, middle
and back office functions

Implement a country risk
management system
Pursue risk-adjusted asset andportfolio management of
individual business lines

35 Sustainability Report 2008

Database on theincident of losses

EDUCATION
Nine rules of trading risk
management
Seven rules of investment
Various training materials/
Review

Internal
Control
Programranging from 1.5% to 50% is set for each rating criteria. Higher
ranked officers’ approval is required to provide credit to lower
credit profile customers, with larger risk-adjusted assets being
calculated. This provides each Business Unit an incentive to
reduce credit extended to customers with lower credit ratings.

the effectiveness of our internal control system over these risks
through our Internal Control Program, which enables us tomonitor the situation on a global and consolidated basis. Basedon the assessment result, we continuously search for a more
efficient and effective organizational structure and procedures
to improve the quality of our business operations.

Managing Market Risks
We use Value at Risk (VaR) methodology to measure thepotential losses related to any market traded products that
we deal in. We set limits on trading positions as well as on the
maximum losses (sums of the VaR amount and revaluation
losses) for the interim and/or full year based on each product.
In addition, we conduct liquidity risk management for eachproduct and market in order to be prepared in the event that
product dealing becomes difficult due to contracting liquidity.
The Financial Resources Management Group undertakes boththe back and middle office functions in order to completely
separate those functions from the Business Units, thereby
enabling us to maintain our sound internal checks.

Managing Concentration Risks
As we are operating globally and engaging in a variety ofbusiness fields, we need to ensure that the risks are notexcessively concentrated in particular areas. In order to avoid
overly concentrated exposure in certain countries and regions,
we have in place a country risk management system. For the
purpose of avoiding risk concentration in particular businessfields and to create a balanced business portfolio, thoroughasset allocation is deliberated at the Strategy Meeting, held
between the President & CEO and the heads of each Business
Unit, and the Loan and Investment Committee.

Managing Non-Quantifiable Risks
Non-quantifiable risks are those that must be borne, but for
which we cannot expect returns. These include litigation andother legal risks, operational risks such as clerical mistakes or
fraud acts, and natural disaster risk. Some of these risks involve
events that rarely occur but could have a critical impact on ouroperations once they arise. Our basic policy is to prevent or
minimize the probability of these risks to materialize. We havebuilt a framework to periodically and comprehensively assess

Embedding the Sense of Risk Management
Although we have been constructing the best possible risk
management framework to cope with diversified risks, wecannot completely prevent the incurrence of loss in the courseof business activities only by the framework itself. We are
putting our efforts into implementing the initiatives that enable
us to quickly identify the occurrence of losses in order tosuppress loss accumulation and prevent the contagion effects
that lead to secondary losses. These initiatives include devising
ways to quickly identify the cause of losses and share suchinformation among top management and related departments.
We have compiled a database of such loss information thatallows for the systematic analysis of the causes of loss-incurring
events. These analyses are used as training materials for
employees as part of various educational programs. Throughthis knowledge feedback process, individual employees can
upgrade their risk management capabilities, supporting theprevention of the same kind of loss events.

Eyeing the Future of Risk Management
Over the past decade, Sumitomo Corporation has createda formidable risk management framework by studying
advanced methods and processes. Our goal was to implement
the best practices in risk management while maintaining theflexibility to adapt to changes in the business environment.
The surrounding environment is continually changing,
however, and new business models that we could never
have imagined are emerging on a daily basis. Responding tochanging circumstances in a timely and effective manner, we
continually upgrade our risk management under the directionof top management.

Sustainability Report 200836

Internal Control Program and Internal Audit

To maintain the trust of all stakeholders, the Sumitomo
Corporation Group has been engaged in strengthening its
internal controls in order to “improve the quality of business
operation” on a global and consolidated basis. To thispurpose, our Internal Control Program and internal audit areused in tandem and we are constructing a stronger internal
control system.

Internal Control Program
We believe that the constant monitoring and upgrading of
the groupwide internal control system is indispensable toour sustained growth and development. Since 2005, we have
expanded our Internal Control Program across the entire
Group, being used as an important management tool.

Thorough Assessment of Our Internal Controls on
a Global Consolidated Basis
The Sumitomo Corporation Group comprises eight Business
Units that encompass domestic and overseas operations andmany Group companies dispersed throughout the world. It isessential that the Sumitomo Corporation Group maintains a
uniform standard for the quality of business operations thatapplies irrespective of the business sector or geographicalregion where they take place. Moreover, such standards mustmeet the expectations of our stakeholders.
From this perspective, in July 2005, we compiled achecklist based on the COSO Framework,* which serves as aninternational standard for internal control. Using this checklist,
we set about making a thorough assessment of the current
status and effectiveness of our internal controls. The checklist
covers 350 points pertaining to general operations that should
be common across the Group, including risk management,
accounting and financial controls and compliance.
We are undertaking assessments of more than 500 domestic
and overseas operations with the aim of covering all Group
operations, irrespective of industry field, region or size. The
Planning and Administration Department in each Business Unit
and other relevant departments are reviewing the assessment
results while supporting the formulation, establishment andimplementation of necessary improvement measures.
* COSO Framework: The COSO Framework defines internal control as aprocess required for the achievement of three objectives: the reliability offinancial reporting; effectiveness and efficiency of operations; and compliancewith applicable laws and regulations. This definition was announced by theCommittee of Sponsoring Organizations of the Treadway Commission (COSO)
in 1992.

37 Sustainability Report 2008

Fulfillment of Legal Requirements
The new Japanese Company Law, which came into effect in
May 2006, calls for companies to establish “systems ensuringthat the execution of duties by directors conforms to legal
regulations and their Articles of Incorporation as well as
systems ensuring that business processes are handledappropriately.” Having previously established various systems
and frameworks, the Sumitomo Corporation Group alreadyfulfills the requirements of the new Company Law.
Our Internal Control Program monitors these systems
periodically and comprehensively to ensure that they
are functioning adequately and makes any necessary
improvements. To comply with the internal control reporting
rules stipulated in the Financial Instruments and Exchange
Law, which took effect on April 1, 2008, we are tracking andevaluating our internal controls with regard to the reliabilityof financial reporting, as required by the law, through theeffective application of Internal Control Program results andits promotion structure. Especially, we are evaluating in detailinternal controls related to individual business processes at theapproximately 30 companies we regard as significant businesslocations with a particularly large impact on our consolidated
financial reporting. Through compliance with the law, we
aim to further improve the quality of business operations
throughout the Sumitomo Corporation Group.

Internal Audit
Operating separately from the Internal Control Program, theInternal Auditing Department monitors Group operations
from an independent third-party standpoint. Internal audits
are constantly being performed at all organizations within
our company and each and every consolidated subsidiary. In
fiscal 2007, we undertook 125 audits in Japan and 45 overseas
operations.

CompliancePositioning legal and regulatory compliance as a basic
premise for all corporate activity, Sumitomo Corporation isbuilding a compliance structure in accordance with clearly
defined policies. In maintaining strict adherence to thiscompliance structure, we are ensuring our existence as agoing concern and securing our credibility and status.

Policies and the Reporting Structure of
Corporate Compliance
To promote compliance, Sumitomo Corporation established
the Compliance Committee in November 2000 under the directsupervision of the President and CEO. Among its various duties,
the Compliance Committee is responsible for the Company’s
Compliance Manual, first issued in April 2001 and revised in
December 2003 and July 2005 and distributing it to all officers
and employees. The Compliance Manual covers the following
19 Guiding Principles to ensure the Company’s bottom line:“If there is even a trace of doubt, don’t do it.” It is our policythat employees should never risk transgression in pursuit ofprofit for the Company. If a potential compliance problem is
detected, we continuously encourage our employees to report
it to their supervisors or the relevant departments immediately,
so that the best countermeasures can be implemented swiftly.

Guiding Principles
I. Business Activities
Observing Antimonopoly Laws
Security Trade Control
Customs/Controlled Items
Compliance with Applicable
Laws
Respecting and ProtectingIntellectual Property Rights

Prohibition of Unfair
Competition
Information Management
Preservation of theEnvironment
Overseas Business Activities

II. Corporate Citizen as a Member of Society
Prohibition on Giving Bribes
Prevention of Unlawful
Payments to Foreign
Governmental Officials

Political Contributions
Confrontation with Antisocial
ForcesIII. Maintenance of a Good Working Environment
Respect for Human Rights*
Prohibition of Sexual
Harassment

Prohibition on Abuse of
Authority

Employees have access to the latest version of the Compliance
Manual and other manuals detailing applicable laws andregulations on the Company’s intranet. We also offer
various training programs and educational activities oncompliance, including: programs for specific groups, such as
new employees, managers and corporate officers; seminars
provided by each Business Unit; seminars targeted at all
officers and employees; and seminars for overseas offices
and Group companies. We also make use of various domestic
and overseas conferences for compliance education. In fiscal
2007, 93 seminars and conferences on compliance were
held for members of the Company and Group companies
that approximately 5,400 people attended. In addition, in
the fiscal years 2006 and 2007, Sumitomo Corporation held
four e-learning compliance seminars which were open to
employees from all levels.

Speak-Up System
The “Speak-Up System” was established at the same time as
the Compliance Committee. If an employee becomes awareof a possible compliance problem, he or she can pass theinformation along the chain of command. In addition, theSpeak-Up System allows an individual to report a potential
problem directly to the Compliance Committee. Outside
legal counsel and our Corporate Auditors were included asadditional points of contact within the Speak-Up System inAugust 2003. Although, in principle, reporting individuals are
asked to identify themselves so that they may be updated on
the outcome of their cases, Company rules state that both theidentity of such individuals and the nature of the information
provided are kept confidential, and that no negative
repercussions will redound on the reporting employees due
to such reporting. The Compliance Committee is responsible
for handling all the information it receives in an appropriatemanner. As of March 2008, similar systems have been
implemented at approximately 130 domestic affiliates.

Speak-Up System Diagram
Speak Up

IV. Personal Interest
Insider Trading
Conflict of Interest

Compliance Training and Education

Proper Use of Information
Systems* Based on the Universal Declaration of Human Rights.

Feedback
Investigation andappropriate
response basedon results

Compliance Committee

Legal Counsel

Corporate Auditors

Reporting Individual

Sustainability Report 200838

Human Resource Management
We are trying to create a quality work environmentthat allows employees to work actively andcomfortably and perform to the best of
their potential in challenging
and rewarding work.

Our Concept of Human Resource
Management
Sumitomo Corporation regards an employee’s first 10 years
after entering the company as an important period for training
and development. This allows new employees to concentrateon learning and building up experience in their special areas
without paying too much attention to short-term success orcompetition amongst themselves. This way, they can gain theknowledge and skills necessary to become a professional in thelong run.
In April 2006, Sumitomo Corporation renovated the
Human Resources Management System with emphaseson the enhancement of the strength of human resources
and activation of all employees. Also, a new qualification
system based on “expected role” was introduced to replace
the seniority-based system. Now employees are promoted
according to the results of an evaluation of their respective“expected roles.”In fiscal 2007, we held general managers meetings aboutthe Human Resources Management System and carried out anemployee survey to make sure that the new Human Resources
Management System is implemented more effectively andlisten to reactions from the workplaces. The results from themeetings and survey were used for operational reviews andIT infrastructure improvement that were needed for more
effective and efficient target-setting and evaluation of “expectedroles”.

Diversity in Employment
Recruitment of New Graduatesand Mid-Career Workers
To attain sustainable growth for the company, it is imperative tosecure excellent and diversified human resources in sufficientnumbers.
Sumitomo Corporation therefore offers diverse employment
opportunities, without discriminating on gender or educational
background, focusing mainly on the applicant’s abilities and

39 Sustainability Report 2008

motivation. As a result, the number of new female employees
has increased substantially.

Re-employment System after Retirement
At Sumitomo Corporation, the retirement age is 60 but a“re-employment system” was introduced in fiscal 2006 for those
who wish to keep working. Under this system, they can re-join
as temporary workers and contribute to the company, utilizing
their rich experience and skills. More than 80% of employees
who reached retirement age in and after fiscal 2006 wished toextend their employment and chose to keep working.

Assigning Responsible Positions
to Locally Hired Staff
As a global business operator, it is essential for the Sumitomo
Corporation Group to enhance individual overseasorganizations and to expand locally planned and organizedbusinesses to strengthen its global earnings capability. As ameans to accomplish this goal, we assign responsible positions
to local staff members who have local business networks andbusiness knowledge. As of April 2008, as many as 13 overseas
offices are managed by locally hired staff and many locally
hired staff are assigned top management positions in overseas
subsidiaries, offices and affiliated companies.
We are planning to promote more local business experts to
responsible positions to achieve a global operation with “theright persons placed in the right positions.”

Human Resource Development andCareer Training
The Sumisho Business College (SBC), the Group-wide Human
Resources Management System, provides programs to teachemployees the knowledge and skills needed to work in the
trading industry. In fiscal 2007, we organized training programsin a variety of fields such as leadership and communication
skills to develop interpersonal skills of all employees.
We invite locally hired staff to our head office in Tokyo fortraining specifically targeted at executives, mangers and staff,
with a particular focus on further improving their business skills,

leadership abilities and common understanding of corporate
management policies and strategies of the Sumitomo
Corporation Group. In fiscal 2007, more than 190 locally hired
staff members participated in these programs, and we areplanning to provide the same kinds of programs for about 230
people in fiscal 2008.
Through the new system launched in fiscal 2007, careeradvisors assigned for each group and business unit havebeen running activities to fulfill the specific needs of thedivision, including staff interviews. In fiscal 2008, more focus
will be placed on suggestions and support for organizational
management.

Career Development Training Reform
We reviewed our career development training programs toprovide employees with opportunities to plan their careerdevelopment based on their own strengths and characteristics.
The contents and targets of each program have been reviewed
from the viewpoint of “simultaneously encouraging young
workers and senior workers. ” The new programs are designed
so that participants can recognize their own strengths andview their career plan more clearly through the “360-degree
feedback” and discussions with other participants.
In fiscal 2007, career development training programs were
provided for employees on the key career track who are in theirfourth and eleventh year at Sumitomo and those aged 45 and50 or older. Training programs for
employees in clerical positions
were provided for those who
passed the A Class exams andthose aged 45. In fiscal 2008,
non-career track employees in
the fourth year will be added tothe participant lists.

Health in the Office” was also held three times. Feedback fromparticipants included “It gave me a good opportunity to planfor stress control management” and “The familiar examples
helped me understand my own mental state as well as that ofthe people around me.”Field Trip to Besshi Copper Mine
Groups of employees visit the Besshi Copper Mine in Ehime
Prefecture, the origin of Sumitomo’s history, for training trips.
The participants experience the Sumitomo Business Spirit—“Sumitomo’s business is for the profit of Sumitomo and at thesame time for the profit of thecommunity and the country”—
firsthand through the trip andstrengthen their determination
to pass on the teachings.
Thirteen field trips to the mine
were held in fiscal 2007 with a
total participation of some 200
Besshi Copper Mine
managers and team leaders.

Promotion of Work-Life Balance
In fiscal 2005, Sumitomo Corporation launched the companywide Work-Life Balance (WLB) Promotion Project Team andlaid down the Work-Life Balance Policy. These are based on ourbelief that employees who lead fulfilling lives both at home
and at work exhibit greater energy to create new value.
Sumitomo Corporation has been providing child-care andfamily-care leave systems beyond the legal requirements. We
are now working on improving the workplace environment
and awareness-raising programs so that more people can use
the systems more comfortably.

Training program

For the Work-Life Balance Policy, please refer to:Interpersonal Management Skills Training
Interpersonal management skills training was provided withthe main goal of leadership development. In fiscal 2007,
training programs with the themes of “human resources andlabor management,” “leadership for team development” and“organizational strategies and leadership” were added to theexisting programs specific to different career levels. Also, a
Leadership Development Seminar was started for new teamleaders and general managers.
In fiscal 2008, leadership development training programfor senior staff will be added to the level-specific seminars
and other interpersonal management skill courses will be
reorganized into five programs.

Mental Health Training
As a part of mental health care for the staff, we provide Mental
Health Training for employees to give them the correctknowledge about and enable them to take preventive measures
for mental heath problems. In fiscal 2007, a training program
titled “Mental Health Management” was held for managers atotal of three times. For others, a training program titled “Mental

http://www.sumitomocorp.co.jp/english/society/wlb/002.html

Achievements in Fiscal 2007
In fiscal 2007, we started the Spouse’s Maternity Leave Programand Baby Sitter Discount System. We lend personal computers
to employees who are taking child-care leave (both female andmale employees) so that they can prepare themselves for thetime when they return to work. Also, WLB (work-life balance)
seminars are held to explain the systems to staff members
and raise their awareness and improve their understanding on
various issues in every workplace.

WLB Awareness-Raising Programs
A series of seminars with distinguished speakers on various
themes have been held regularly to raise awareness of
employees on work-life balance (WLB) issues. Past themes
include family-care, paternal parenting, the fight against
metabolic syndrome, and sex differences in the human brain.
In fiscal 2007, four such seminars were held and about 400
employees attended.

Sustainability Report 200840

Human Resource Management

Opening of the Massage RoomThe SCG Massage Room "Koriton" was opened in April 2008 to
enable employees to maintain their health. Employees receivea relaxing and refreshing remedy from licensed massage
therapists.

SCG Counseling Center
The SCG Counseling Center was opened in April 2005 to offer
mental health care for employees of the Sumitomo Corporation
Group. The Center established its existence among employees
as a comfortable place where they can go for counseling. A
total of several hundreds employees visited the Center in fiscal
2007. We are planning to enter into contracts with companies
specialized in employee support to further improve the service
at the Center.

Improving the WLB Systems
In April 2008, we started a program that lets employees
work shorter hours in order to care for their infants or elderly
parents and a personal leave system for those whose spouses
are transferred overseas for work. And a daycare center for
employees is going to be opened in acommercial building adjacent to the head
office building in the fall of 2008.
We also acquired “Kurumin” certificationin 2008, based on the Next Generation
Nursing Support Measures Promotion Law.

Available Support Systems and Their Usage Status
SystemOutline and Special Features

Frequencyof use infiscal 2007

Childcare
leave

Period: Until the child becomes two years old.
Features: Requirements for spouse waseliminated (Now it is applicable tothose whose spouse is a full-timeparent, too. A working couple can takeleave at the same time.)

25 people

Familycare leave

Maximum days:
Up to 365 days for each elderly family
member who must be cared for
Number of times entitled per employee:
Unlimited (applicable every time careof an elderly family member becomes
necessary).

1 personSick-childleave

Applicable employees:
Guardians of a child in elementary
school or younger (coverage expanded
in April 2008)
70 days
Maximum days:
Up to five days per year per childby25 people
Salary and bonus:
Paid in fullSpecial feature:
Leave can be taken in units of half days.

Spouse’smaternity
leave

Applicable employees:
Those whose spouse is pregnant orwithin two weeks of delivery
Maximum days:
128.5 days
A total of five days per one childbirthby 46 people
Salary and bonus:
Paid in fullSpecial feature:
Leave can be taken in units of half days.

New Name to Improve Working Conditions

My Experience with theSpouse’s Maternity Leave
Program

The cooperative organization of the management and labor
union, Overtime Subcommittee, was renamed as the “Working
Style Kaizen Committee” in fiscal 2007 aiming for kaizen(improvement) of working styles. In addition to overtime, paid
leave systems and other issues were discussed based on theactual situation with each system.

Shinji Yokota
Power & Plant EPC Dept. No. 1

When I learned that my wife was pregnant, I immediately
decided to be there at the delivery. I was planning to use mypaid vacation for that purpose. Then in April 2007, the Spouse’sMaternity Leave Program was started, allowing me to take a day
off to be with my wife during the delivery and to run errands
related to the birth of our child.
I used the program three times for a total of 2.5 days leaveto accompany my wife to a checkup, during the delivery andwhen she was discharged from hospital. The day when thebaby was born started with anxiety and I was very nervous,
but the day ended for me with an unspeakable feeling of relief
and excitement. I was deeply moved. I found that this programis proof of the company’s attitude to support the WLB of its
employees. In fact, it was much easier to use the program thanto take a day’s paid vacation.

41 Sustainability Report 2008

Returning to Work afterChildcare Leave
Ayana Hasegawa
Ship & Marine Project Dept. No. 2

After the birth of my first child in July 2006, I took childcare leave
for about one year. But even before the birth, people in mydepartment were very supportive. I did not have to worry about
leaving the office earlier than others in the evenings or taking a
day off.
When I was returning to work after my one year of childcare
leave, I was a little nervous. Then my supervisor invited me alongwith other young members of the department to a dinner. This
helped me a lot to feel comfortable as a member of the groupagain. Now I am trying to balance work and childcare, using asystem that allows employees with young children to choose towork shorter hours.

Column

Voluntary Activities by Employees
to Improve the Workplace

Campaign: “Let’s work together tobring small changes to the Sumitomo
Corporation Group to be even better”

In the Sumitomo Corporation Group, a group of volunteer members is running a campaign
to improve the working environment. They work to encourage voluntary activities by each
employee on various issues in order to make the workplace even better.

Campaign Planners make plans and promote
improvement activities from the employee’s
point of view.
Every office in the Sumitomo Corporation Group has
been carrying out a variety of programs to improve job
efficiency and the working environment. A group-wide
campaign, “Let’s work together to bring small changes
to the Sumitomo Corporation Group to be even better,”
was started in April 2007 to develop the ideas that comeout of such programs into actions taken by the wholeGroup. These “small ideas to make the workplace a little
better” are introduced
as the base for groupwide employee-oriented
activities aimed at
improving the working
environment.
Discussion at
The Campaign is
the Campaign Planners meeting
planned and operated
by the “Campaign Planners,” a group of ten employees
who voluntarily join the team. Members from different
divisions and in different age groups meet every week
and discuss plan to make the Campaign effective.

Using intranet site for exchanging ideas
The first significant achievement of the Campaign was
the launch of a special site on the intranet in December
2007. Ideas for improvements sent by employees are
introduced on the site, and the activities promoted by theCampaign Planners are reported with their results andeffects. In the first four months, more than 50 ideas werecollected, and 22 of them have already put into practice.
The intranet site is also playing an important role inemployee communication. Many people put on thesite not only their ideas for improving the workplace,but also ideas and requests on various other issues.
Through discussion and by sharing common concerns,
the employees of the Sumitomo Corporation Groupnow believe that “if each person takes action, the wholeorganization can change for the better.”
The Campaign Planners are planning ways for more
active participation by employees. A Q&A bulletin board

will be opened on the site, and employees will be invited
to form their own “communities” to start specific actions.
An increasing number of posters and other public media
will be used to improve the visibility and recognition of
the Campaign.
Major ideas for improvements sent to
the intranet site.
To list the telephone numbers of the “service counter” foradministrative work in the company directory.
To show the locations of all meeting rooms on the map
displayed in the elevator hall on the each floor.
To start a bulletin board to list extra items of stationary andequipment that can be used in other departments.

More Voluntary
Participation Awaited
Naoko Makiyama
Environment Business Dept.

I decided to join this Campaign because I was surprised
to witness how the small voice of one person broughta significant change. One day a young member of staff
said she wished she had been able to serve better tea tovisitors, and soon a new tea maker was installed. I realizedthat as long as someone can express their idea to makethings better, many things can be improved. It is importantfor us to speak up.
Many ideas have been collected through the Campaign,
many of which are really impressive. More of these ideas
are being turned into actions recently.
Many of our colleagues have good ideas about everyday
tasks. But they do not try to make their ideas heard simply
because they do not know who to tell, or because they
think their idea is too trivial. I want to encourage thesepeople to try to make things better—even one little step
at a time—so that we can work in a more comfortableenvironment. I am looking forward to seeing more people
participate in this program.

Sustainability Report 200842

Management ofSocial Contribution
Activities
As a good corporate citizen, Sumitomo Corporation
is promoting a variety of social contribution activities
to encourage the healthy growth of young people
and cooperate with local communities.

Principles and Policies of Social
Contributions
The Sumitomo Corporation Group puts forward “contributing
to society as a good corporate citizen” as one of its Activity
Guidelines. In addition, we have set out the Principles andPolicies of Social Contributions outlined below. We not only
contribute to society through our business activities, but also
actively engage in a variety of philanthropic activities in ourcapacity as a corporate citizen.

Sumitomo Corporation Principles
and Policies of Social Contributions
Principles
Corporations and their employees are now required to makepositive contributions to society, if they are to be consideredgood corporate citizens in the global community. Sumitomo
Corporation, as one of its corporate management principles,
promotes social contribution activities at a company level, as
well as at an individual level.

Policies
Fields(1) Supporting lifelong education(2) Supporting the development of a mentally and physicallysound social environments(3) Cooperating with local communities
Action Principles(1) Social contribution activities must be independent frombusiness activities.
(2) Social contribution activities must not support specificindividuals.
(3) Social contribution activities must not involve any religious
activities.
Individual Principles(1) Positively and continuously take part in activities.
(2) Take global-minded actions.
(3) Take actions with a view to touching people’s hearts.

43 Sustainability Report 2008

Structure for Implementing Social
Contribution Activities
On the occasion of its 50th anniversary in January 1996,
Sumitomo Corporation established the company-wide
Philanthropy Committee and the Philanthropy Dept. tofurther promote social contribution activities. The aim of
this was to integrate the activities conducted separately by
individual sections to enable more fulfilling operations. In
April 2008, when the corporate structural review took place,the responsibility for social contribution activities was handed
over to the Environment & CSR Dept. Now the Department isworking on further improving both the quality and quantity of
our activities under this more robust scheme.

Major Social Contribution Activities
Conducted in Fiscal 2007
In fiscal 2007, many social contribution activities were carriedout following the Principles and Policies of Social Contributions.

Field

Major Activities

Supporting
lifelong education

Supporting the activities of the Junior Philharmonic
Orchestra
Inviting junior and senior high school students to
Sumitomo Corporation offices/Providing training forteachers

Supporting thedevelopmentof mentallyand physicallysound social
environments

Adding Japanese subtitles and audio description to
Japanese movie films to make them more accessible
to those with visual or hearing impairments
Cooperating with vocational training for disabled
peopleIn-house sale of goods produced by welfare
workshops

Cooperating withlocal communities

Sumitomo Corporation Scholarship for college
students in Asia
Providing lectures at Tsinghua University and Nankai
University in China
Japanese language lessons and cultural exchange
programs in Da Nang, Vietnam
Donation of books to the Sumitomo Corporation
Library opened for educational institutions in
Madagascar

Pick Up

Promotion of “Barrier-free Movies”

Sumitomo Corporation has participated in numerous movie
production committees, while the Sumitomo Corporation
Group is promoting all stages of the motion picture business,from production to distribution, investing in such companies
as Asmik Ace Entertainment Inc. (movie production/
distribution) and United Cinemas Co., Ltd. (cinema complex
construction/management). Now the group is actively
promoting the creation of a “barrier-free movie experience,”
pursuing the goal of allowing the greatest number of people
possible to enjoy movies.
The kind of barrier-free movie experience promoted
by Sumitomo Corporation involves providing screening
opportunities complete with audio description and Japanesesubtitles, so that visual- or hearing-impaired viewers canBarrier-free movie screenings

Pick Up©2008 “Best Wishes for Tomorrow”
Production Committee

enjoy newly released films with unimpaired people in movie
theaters. In fiscal 2007, three movies—Yunagi no Machi Sakura
no Kuni (Dir. Kiyoshi Sasabe), Our Mother (Dir. Yoji Yamada)and Best Wishes for Tomorrow (Dir. Takashi Koizumi)—werereleased with Japanese subtitles and/or audio description.
Many people with visual or hearing difficulties enjoyed themovies in theaters located in major cities throughout Japan.
No one can claim that barrier-free entertainment in Japanis at the level it should be. At Sumitomo Corporation, we
are working to advance the level of barrier-free facilities inJapan that will allow visual- and hearing-impaired individuals
to enjoy movies together with family and friends while themovie is still in its first run. At the same time, the Company
is collecting feedback from individuals and movie theatersthat have experienced barrier-free screenings. Sumitomo
Corporation incorporates this feedback into subtitle content
and audio description, as well as into the technological meansof providing audio description. The Company continues toseek its goal of offering barrier-free screenings that allow
both physically impaired and the unimpaired to enjoy a highprofile movie and to share emotion through frustration-freeexperience.

Supporting the Junior Philharmonic Orchestra

Based on the principle of contributing to the healthy growthof young people, Sumitomo Corporation has been supporting
the activities of the Junior Philharmonic Orchestra. This youth
orchestra was founded in Tokyo in 1972 by the late composer
Setsuo Tsukahara to put into action his hope of contributing
to the growth of the next generation through the orchestra.
Sumitomo Corporation not only provides direct financial
support to the orchestra, but also sponsors concerts. The
Sumitomo Corporation Young Symphony Concert is held
two or three times every year, providing a grand stage forthe orchestra to showcase the results of their hard work.
The concert scheduled for the fall of 2008 will be its 41st
such concert. We always select one of the best concert halls
in Japan for the concert, giving orchestra members theopportunity to perform on the same stage as professionalmusicians. This experience boosts their motivation to work
harder in pursuit of excellence.
By playing in an orchestra, young people are faced withexcellent opportunities invarious ways. They have thevaluable experience of playing
with many other players tocreate a well harmonizedpiece of music. Throughthe experience of working
The 40th Sumitomo Corporation
with others for a common
Young Symphony Concert(January 2008 at Suntory Hall)goal, they learn how to live

in society, how to cooperate with many others and how to
be responsible for playing their part. And with the storm of
applause at the end of the concert, they can feel a real senseof achievement.
By supporting the Junior Philharmonic Orchestra, Sumitomo
Corporation will continue playing its part in helping young
people to develop their capacities and talents both in music
and as a person.

Stakeholder’s Voice
Witnessing the Growth ofYouth through Music
Yuichi Kobayashi
President
Junior Philharmonic Orchestra

In the last 15 years under the support of Sumitomo Corporation,a total of about 60,000 people have come to listen to theSumitomo Corporation Young Symphony Concerts. This is a big
source of motivation of all our young players.
In March 2008, the Orchestra visited Beijing for its 35th
anniversary. The exchange programs with young people in
Beijing have become another precious event to realize the great
power of music. We will keep building on such experience andworking for the healthy development of young people, both inbody and mind through the activities of the orchestra.

Sustainability Report 200844

Management of Social Contribution Activities

Pick Up

Sumitomo Corporation Scholarship

In 1996, as part of its 50th anniversary project, Sumitomo
Corporation started its Sumitomo Corporation Scholarship.
The program was established to help educate future leaders
in developing countries in Asia, where Sumitomo Corporation
has many offices and operation bases. In response to requests
from various countries, regions and educational institutions,the program has grown to cover an increasing number ofuniversities and graduate schools in more countries. In fiscal
2007, scholarships were granted to about 900 students in
39 universities in 11 countries. The total number of students
receiving scholarships in the last 11 years amounts to morethan 8,000. Those people who completed their education
through the scholarships are now demonstrating theirexpertise and leadership in a wide range of fields in eachcountry.
Sumitomo Corporation staff in local areas regularly visit
the universities where students are studying under thesescholarships and exchange opinions with university staff
and students. When attending the ceremony to present
the scholarship, recipients often express their excitementand determination
with words suchas “Thanks to theSumitomo Corporation
Scholarship, I can now
pursue my educational
goal.” Feedback
from students anduniversities is a very
important source of
Sumitomo Corporation Scholarship award
ceremony
motivation for the

Pick Up

program organizers and local staff at Sumitomo Corporation,
serving as a valuable source of ideas for effective operation of
the scholarship program. Sumitomo Corporation is looking
forward to supporting the education of more young people inthese countries.

Stakeholder’s VoiceA Sumitomo Corporation
Scholarship gave me courage
and opened possibilities forthe future
Fu Liwei
Export Dept. No. 3, Logistics Service Division.
Sumisho Global Logistics Co., Ltd.

I received a Sumitomo Corporation Scholarship in 1998 when
I was a student at Shenzhen University in China. Since then,the fact that I was chosen from a number of applicants for thescholarship has always encouraged me to believe in my own
capabilities and to work to find a solution in difficult times.
The scholarship also gave me valuable opportunities to workat Shenzhen Sumitomo Corporation Ltd., to study in Japan,
and finally to work in my current position at Sumisho Global
Logistics. Thanks to these experiences and the many wonderfulpeople I have met through them, I now feel my possibilities
for the future are wide open. My next goal is to build a global
community with other Sumitomo Corporation Scholarship
alumni and work together in various ways to show our gratitude
to society. I hope that will add another attractive feature to theSumitomo Corporation Scholarship.

Japanese Language Lessons and Cultural Exchange Programs in Da Nang, Vietnam

In 2006, we started a Japanese language class for 12- to
15-year old students in junior high schools in Da Nang, a city
located in the central region of Vietnam. Through the lessons,
we aim to provide children with opportunities to learn about
and develop their interest in Japan and its culture. Japanese
language education has been a focus of the educational
measures by the Vietnamese government, and Japanese
language lesson programs have started in junior high schools
with support from the Japanese government. Sumitomo
Corporation started the program to play its role in thesemeasures by the two nations.
The lessons are taught by an ex-employee of Sumitomo
Corporation who has a national license to teach Japanese
language to a total of 70 students in four classes in two
separate grades. In addition to the language, many aspects ofJapanese culture, including different rituals to cerebrate eachseason, unique customs in daily life, and origami, cat’s cradle
and other traditional children’s games are introduced with

45 Sustainability Report 2008

books and DVDs. The students also experience Japanese foodat a Japanese restaurant in the town and visit Japanese autoparts or food factories on field trips by a chartered microbus.

Japanese language lessons at a juniorhigh school

Having fun learning about JapanesecultureExperiencing their first Japanese meal

Environmental Management
The Sumitomo Corporation Group is committed to contributing to
the sustainable development of the world through sound businessactivities that take into account global environmental issues.

The former site of the Besshi Copper Mine on Shikoku island is today covered with abundant vegetation as a result of reforestation efforts (Photo: Sumitomo Forestry Co., Ltd.)

Environmental Policy
Recognizing that environmental issues are long-term concernsthat all people and organizations must address, the Sumitomo
Corporation Group has established an Environmental Policy,
described below, and has been contributing to environmental

conservation through its business activities.
The Sumitomo Corporation Group companies share thispolicy and are all implementing environmental improvement
activities in their business operations based on the ISO14001
environmental management system, which help to reduce
the environmental burden that accompanies their businessactivities.

Sumitomo Corporation Group Environmental Policy
The Sumitomo Corporation Group recognizes that environmental
issues are global in scale and are long-term matters affecting
future generations. As a global organization, the Sumitomo
Corporation Group, through sound business activities, will strive
to achieve sustainable development aimed at symbiosis betweensocial and economic progress and environmental preservation.
With this as its basic policy, the Sumitomo Corporation Group
strives to achieve environmental management in its commercial
trading, business development, and investment, etc., based on
the guidelines stated below.

2. Compliance with environmental legislation:
To strictly observe legislation related to environmental matters
not only in Japan but also overseas and abide by any agreements
undertaken by Group companies.

I. Basic Policy

5. Contributing to building a recycling-oriented society:To endeavor to help build a recycling-oriented society by
reducing waste and reusing and recycling resources.

The Sumitomo Corporation Group recognizes that environmental
issues are global in scale and are long-term matters affecting
future generations. As a global organization, the Sumitomo
Corporation Group, through sound business activities, will strive
to achieve sustainable development aimed at symbiosis betweensocial and economic progress and environmental preservation.

II. Basic Guidelines
In pursuing its diversified business activities both within Japanand overseas, the Sumitomo Corporation Group shall comply
with the following guidelines, and, through cooperation between
its Group companies, work to achieve the aims of its basic
environmental policy
1. Basic stance with regard to the environment:
To attach great importance to protecting the global environment
as a good corporate citizen in keeping with the Sumitomo
Corporation’s Activity Guidelines.

3. Caring for the natural environment:
To protect the natural environment and preserve biodiversity.
4. Efficient use of resources and energy:
To be mindful of the finite availability of resources and energy
and strive to use them both efficiently and effectively.

6. Promotion of business that contributes toenvironmental preservation:
To utilize our integrated corporate strength to promotebusinesses and projects that contribute to environmental
preservation and to reduce the impact of society on the naturalenvironment.
7. Establishment of environmental management:
To use an environmental management system to prevent
environmental pollution and to set environmental objectives andtargets which are regularly reviewed and continuously upgraded.
8. Disclosure of the Environmental Policy :To communicate this Environmental Policy to all people who are
working for or on behalf of the Sumitomo Corporation Group, as
well as disclosing it externally.
June 22, 2007
President and CEO, Sumitomo Corporation Susumu Kato

Sustainability Report 2008

46

Environmental Management

Environmental Management
Structure
Environmental management activities of the Sumitomo
Corporation Group are conducted under the management
structure led by Sumitomo Corporation’s President and CEO
as shown in the chart below. These activities are carried out
in compliance with an ISO14001 environmental management
system (EMS). We employ a multiple-site system to allow
management of many different offices and organizations
under one environmental policy. Since the Group’s first

ISO14001 certification was acquired in June 1999 by
Sumitomo Corporation’s Tokyo and Osaka offices, the scopeof the system has been continuously growing. In fiscal 2007,
Sumisho Materials Corporation and 30 Group sites in domestic
locations were added to the scope of the certificate. As of June
2008, a total of 12,000 employees in all domestic locationsof Sumitomo Corporation and 35 Group companies are
participating in the environmental management activities.
The list of group companies certificated to
ISO14001 is accessible at:
http://www.sumitomocorp.co.jp/english/society/report.html

Environmental Management Structure
President and CEO
Global Environment Committee
Environmental Management
Representative
Environment & CSR Dept.
Sumitomo Corporation

Group Companies
EMS Officers

EMS Promoters

EMS Promoters
Eco Leaders

Eco Leaders
All employees working in each office

Global Environment Committee
The Sumitomo Corporation Group holds Global Environment
Committee meetings twice a year to discuss various measuresfor environmental issues common throughout the Group.
The chairman, who is appointed by the President and CEOof Sumitomo Corporation, and committee members—EMS
officers, the General Managers of Departments in the Corporate
Group of Sumitomo Corporation, General Managers ofPlanning & Administration Dept. in Business Units and Regional
Business Units, and EMS officers of the Group companies—
review the Environmental Policy, make necessary revision
to the Environmental Objectives and Targets, and assess theEnvironmental Management System.

Setting Environmental Objectives andTargets
To reduce any adverse impacts and promote environmental
improvement, the Sumitomo Corporation Group sets annual
environmental objectives and targets on a calendar-year basis.
At Sumitomo Corporation, the Eco Leader of each Business
Unit identifies the environmental aspects of each department
and evaluates the seriousness of these aspects on theenvironment every October and November, before setting
each year’s objectives and targets. Based on the results, EMS

47 Sustainability Report 2008

Promoters specify significant environmental aspects for eachBusiness Unit and the Environment & CSR Department reviews
these aspects for the entire company. Significant environmental
aspects for the entire company identified in this review are
discussed at the Global Environment Committee meeting held
every December, and after reviewing the achievement level ofthe current year, new environmental objectives and targets forthe following year are discussed and resolved.

Internal Environmental Audits
Sumitomo Corporation conducts internal environmental
audits in all domestic departments every year in October andNovember to ensure the proper operation of the environmental
management system.
In 2007, audits were conducted in 170 domestic
departments of Sumitomo Corporation and 338 departmentsin the Group companies on the focus items designated forthe year, with specific emphases on proper selection of theenvironmental aspects, management of the progress of theplan, and evaluation of compliance with legal requirements.
Minor noncompliance was found in items related to the Waste
Management and Public Cleaning Law (Waste Disposal Law)
and High Pressure Gas Safety Law, and these were promptly
corrected and necessary preventive measures were taken
immediately.

Principal Activities in 2007 andEnvironmental Targets for 2008
In 2007, the environmental objectives and targets listed below
were set and achieved. For 2008, the following three items areadded to the existing targets.

1. Leverage global warming measures in offices, including
energy conservation.
2. Prepare for REACH pre-registration.
3. Report the status of the submission of “manifests” to local
governments.

Achievement of Environmental Objectives and Targets for 2007
Management area

Objective

TargetAchievement level (January to December 2007)

Environmental
business

Improve the environment
through business
operations and expand
environmental business.

(1) Promote projects to reducegreenhouse gases.
(2) Expand business utilizing renewableenergy sources.

Acquired approval from the Japanese governments for 14 cases, seven out of which
are registered with the UN.
Promoted wind power generation in China, expanded trade in solar power generationequipment, and implemented the contract for geothermal power plant EPC.

Assessment ofEnvironmental
ImpactReduce environmental
impacts of business
operations.

Carry out environmental impact
assessment and soil pollution surveys.

Carried out environmental assessment before the start of construction for all
locations. Completed a historical survey for 136 out of 250 locations required.

Hazardous
substance
management(1) Prevent spills or
leakages of hazardous
substances duringtransport or storage.
(2) Comply with chemical
substance regulationsin the EU, China, etc.

(1) Conform that safe transportation
and appropriate education are being
carried out in transportation andstorage companies.
(2) Communicate the content ofregulations to all staff members of
the group and establish systems toensure compliance.

A total of six seminars on chemical substance safety were held for Sumitomo
Corporation and Group companies, and comprehensive lectures were given
on legal compliance for chemical substance management for every process,including during transportation and storage (participation: about 500).
Held a seminar on REACH Regulation with invited lecturers in July(participation: 165) and a seminar on China’s RoHS system in February(participation: about 140).

Logistics
management

Promote energy
conservation in logistics.

(1) As a cargo owner, establish an energy
conservation plan for domestictransportation.
(2) Improve energy consumption efficiency
compared to the previous fiscal year.

Sumitomo Corporation, Sumitomo Shoji Chemicals Co., Ltd. and Sumisho Paper Co., Ltd.
were designated as shippers in the revised Energy Conservation Law, and their domestictransportation and energy consumption reduction plans were reported in September.
Continued the measures taken in cooperation with transporters as an
essential approach for promoting energy conservation in logistics.

Proper disposal of waste
in accordance with Waste
Management Law(1) Review waste disposal contracts andcontrol manifests for waste more strictly.
(2) Improve training on Waste
Management Law.
(3) Improve management systems
within group companies often
disposing of waste materials anddevelop waste disposal manuals.

We have been assessing compliance with the Waste Management Law as afocus item in the internal environmental audit program.
Sumitomo Corporation organized five workshops (participation: about 200),
as well as a seminar with an external lecturer and an on-site seminar at awaste treatment facility (total participation for the two events: about 140).
Supported Group companies to compile waste management manuals.

Legal compliance

Data on environmental impact for offices and environmental accounting can be accessed at:
http://www.sumitomocorp.co.jp/english/society/report.html

Pick Up

REACH Seminar

Pre-registration for REACH, the EU's chemical substancemanagement regulations, started on June 1,2008.
To prepare for it, about 200 staff members of the Sumitomo
Corporation Group who are responsible for trading with EU
member states attended a seminar in February 2008. The
participants learned about the general procedures, preregistration, examples of expected cases, and some specificpoints to note at that point. Given that the REACH Regulation
has not been fully disclosed, we are ensuring complete
understanding of the rules and are building a system to ensurecompliance.

REACH seminar

Pick Up

On-site Waste Management
Seminar

To prevent illegal dumping of waste as a result of carelessoutsourcing, an increasing number of local governments
have been obliging the waste generators to verify thequalifications of the transporter and waste treatmentcompanies. For areas where such a legal mandate has notbeen established, waste generators are requested to verify
the actual capabilities of the consigned companies before
making a contract. To respond to this movement, Sumitomo
Corporation held an on-site seminar on industrial waste
management in October 2007 in cooperation with waste
management companies. Including 27 who participatedin the workshop at an actual site, a total of 137 people
attended the seminar fromGroup companies. We willcontinue seminars of thiskind to let all staff members
know that they need toverify the qualificationsof the company before acontract is made.
On-site waste management seminar

Sustainability Report 200848

Third-Party Review

Professor Scott Davis
Professor of Rikkyo University

As one of the oldest, most well-known and respected ofillustrate Sumitomo’s contributions in the fields of energy,

Japan’s major corporations, the Sumitomo Corporation’smaterials, regional industrial development and supply chaincommitment to CSR as outlined in this report serves not only

management. These cases are well chosen and presented. The

as an account of its own achievements, but also as a model

first-hand reports contained within them by employees arefor many other corporations. Sumitomo, with its ability toparticularly insightful. However, while overcoming the problem

shape whole industries and regions, is uniquely positionedof reporting on the widely diverse activities of the company,

to provide a considerable impetus for the promotion of

by concentrating the reporting on performance to these four

responsible business by its own example. However, this very

cases, the report does not explain the goals for each of its areas

extent of its activities poses a considerable hurdle for reportingof activity, the indices upon which performance is evaluatedon Sumitomo’s principles, plans and accomplishments as a

across these activities, nor does it give an appraisal of the

responsible business. Ranging from the mining and smelting

performance levels in each activity.

of metals to the transport and retailing of groceries, there is

Processes

simply too much variety to be covered in one report.

The third section gives an overview of how Sumitomo

Sumitomo overcomes this hurdle by dividing its report into

achieves its responsibility. The importance of, and means

three sections: a presentation of its principles and mission, aby which, Sumitomo achieves a high degree of external

series of four cases of business activities where Sumitomo has

objectivity in its corporate governance is well presented. The

realized its goals of social contribution and lived out its values,

explanation of Sumitomo’s approach to and management ofand a description of the internal systems and logistics whereby

risk is particularly insightful. Inclusion of examples of importantit ensures the responsibility of its management.

issues in Sumitomo’s corporate governance and the directions

Principles

and innovations being applied to strengthen its governanceIn his top message President Kato states that for Sumitomo,mechanism, a time-framed risk matrix ranking key issues, andCSR means to make a contribution to the creation of a sounda portrayal of the skills and aptitudes needed for the ideal

and sustainable society through the conduct of its business

Sumitomo employee, would have further helped explain how

as a trading company and by its actions as a responsible

Sumitomo creates the means to realize its social contribution

corporate citizen. CSR is explained in Section one as being

through business.

the very essence of Sumitomo - which is founded upon a

In Conclusion

four hundred year tradition of equating public with private

Sumitomo has presented a substantial and highly refined

gain - each being indispensable to the other. An integrated

report of its social contribution in this sustainability report for

exposition of how its values, strategy and core competencies

2008. In the next phases of Sumitomo’s CSR reporting I lookserve Sumitomo to create public value in this section would

forward to learning more about how Sumitomo strategicallyhave further assisted the reader’s understanding of the extent

integrates its business and social goals, how it measures its

and nature of Sumitomo’s unique capacity to contribute toprogress in accomplishing them and, most importantly, howsocial well-being.

it enhances its ability as a business and as an organization to

Performance

constantly reposition itself as an evermore-valuable member ofComprising the bulk of the report, the exposition of the four

its many communities.

cases (special features) in section two serves admirably to

49 Sustainability Report 2008

Response to the Third-Party Review

Nobuhide Nakaido
Chairman of the CSR Committee
Director and Executive Vice President

We thank Professor Scott Davis for his valuable review of our

Guidelines, the Sumitomo Corporation Group aims to be a

Sumitomo Corporation Sustainability Report 2008.

global organization that constantly stays a step head in dealing

We have always been seeking the best ways to present

with change, creates new value and contribute broadly to

our basic concepts of the CSR operation, our diverse businesssociety. We are carrying out business operations everyday by

activities over a wide range of fields, and our management

faithfully following these principles and guidelines so that we

structure, which ensures sound business activities. The points

can create new value and contribute broadly to society, and toProfessor Davis made in the review will certainly help us tobecome an organization that is indispensable to society.

improve our communication with various stakeholders in

We recognize that the mission of the Sumitomo

our operation fields. As the CSR operations of Sumitomo

Corporation Group is to gain the unshakable trust of our

Corporation grow qualitatively as well as quantitatively, we

diverse stakeholders. We aim to accomplish this mission by

will be required to present more detailed information to ourfulfilling our corporate social responsibilities through soundstakeholders. The advice from Professor Davis will be adopted

business activities, and at the same time, by further improving

positively to improve the Report in that respect.

a wide range of operational schemes to ensure sound business

As Professor Davis pointed out at the end of the review,
we will continue pursuing our aim to be valuable andactivities.
We will continue our efforts to fulfill our social

indispensable to society. We believe that these acts themselves

responsibilities through sound business operations following

are the very measures we need to take to enhance our ability

the Management Principles and Activity Guidelines. The

as a business and an organization to constantly reposition

advice from Professor Davis will guide us to more properly andourselves as an ever more valuable member of the manyeffectively report this strong commitment to every stakeholder

communities in which we are involved.

in society.

As stated in the Management Principles and Activity

For any Inquiries or comments regarding this report, please contact:

Sumitomo Corporation
Environment & CSR Department
1-8-11, Harumi, Chuo-ku, Tokyo 104-8610, Japan
Phone : +81-3-5166-3092 Fax:+81-3-5166-6310
Email : environment-and-csr@sumitomocorp.co.jp
URL : http://www.sumitomocorp.co.jp/english/

Sustainability Report 200850

This report is printed on paper madein part of domestic pulp (70%),
including pulp from thinned wood (10%).
Published in November 2008
Printed in Japan