Report on Responsibility & Sustainability 2010

To Achieve Prosperity and Realize
the Dreams of Our Stakeholders

Editorial Policy
The Sumitomo Corporation Group is constantly striving to achieve prosperity andrealize the dreams of its stakeholders by implementing its Management Principles.
Serving as the universal and unchanging value and foundation for such endeavors
is the Sumitomo’s business philosophy, which teaches us to place prime
importance on integrity and sound management, and not to pursue easy gains.
In the Sumitomo Corporation Report on Responsibility & Sustainability 2010, we
present our current activities to realize the Corporate Vision, namely, to become “aglobal organization that constantly stays a step ahead in dealing with change,
creates new value, and contributes broadly to society.”
This year, we placed our editorial focus on two items. First, we take “Future,” which
represents our medium-to long-term perspective described in the medium-term
management plan FOCUS’10, as a keyword and report how we deal with thecurrent paradigm shift, how we see our businesses in relation to society (i.e.,
stakeholders), and what kind of actions we take to create new value over the nextten years. We include as many examples of our actions as possible in the report.
Second, we introduce the activities of our employees throughout the world who
correctly understand and play their role in the Sumitomo Corporation Group’s CSR,
while enjoying their work and lives.
We hope that this report will help readers gain a better understanding of the CSR
activities of the Sumitomo Corporation Group.

Scope of the Report• Period covered: April 1, 2009 to March 31, 2010
(Activities starting on or after April 1, 2010 are included in part.)• Organizations covered: Sumitomo Corporation and the Sumitomo
Corporation GroupIn this report, “Sumitomo Corporation” and “the Company” refer to thenon-consolidated organization of Sumitomo Corporation. “The Sumitomo
Corporation Group” and “the Group” refer to the entire organization of theSumitomo Corporation Group.
• Publication schedule: Reports on environmental issues have been publishedannually since 1999, when the first Environmental Report was published. The
title of the report was changed in 2003 to Social and Environmental Report, in2007 to Sustainability Report, and in 2010 to Report on Responsibility &Sustainability.
The previous issue was published in November 2009. The next issue isscheduled for publication in November 2011.
Referenced Guidelines• GRI Sustainability Reporting Guidelines 2006, Global Reporting Initiative
Please refer to the following site for the content index.
http://www.sumitomocorp.co.jp/english/society/report.html• Environmental Reporting Guidelines, “Toward a Sustainable Society” (fiscal
2007), Ministry of the Environment• Environmental Reporting Guidelines (fiscal 2005), Ministry of the Environment• Charter of Corporate Behavior (May 18, 2004), Nippon Keidanren (Japan
Business Federation)* Disclaimer:This report describes activities of Sumitomo Corporation and its subsidiaries and associatedcompanies (i.e., the Sumitomo Corporation Group) at the current time and in the past, as wellas predictions, forecasts and plans for the future. These predictions, forecasts and plans arehypotheses or decisions made based on the information available when the report was
written, and therefore may include some level of uncertainty. The results of business activities
or occurrences in the future may differ from the predictions, forecasts and plans described inthis report. Hence, readers should recognize that the Sumitomo Corporation Group is not
responsible for such events.

1 Report on Responsibility & Sustainability 2010

CONTENTS
Message from the President and CEO

3

Roundtable Discussion with Young Staff Members

5

Message from the Chair of the CSR Promotion Committee

11

Major CSR Activities

12

Sumitomo's Business Philosophy

13Core Competence and the Medium-term Management Plan

15

CSR in Action

Creating new value and aiming for sustainable growth
together with society
Theme

Prosperity and Realizing Dreams in Indonesia
1 Achievingby Meeting the Rapidly Rising Demand for Electricity

17

Building diverse electricity infrastructure

Theme

World-class Mining Operations and Supporting
2 Achieving
Sustainable Development of the Local Community

21

San Cristobal Mine Project in Bolivia

Theme

3 Creating and Developing New Businesses into the Next Decade

Theme

Our Integrated Corporate Strength to Promote
4 Utilizing
Social Contribution Activities Worldwide

25

Becoming a leading environmental business operator and major
contributor to creating a low-carbon, recycling-oriented society

29

Because of its integrated corporate strength, the Sumitomo
Corporation Group is involved in a wide range of social contribution
activities around the world

Theme

Social Contribution Activities under the
5 Locally-rooted
Initiative of Local Employees

31

CSR activities of the Sumitomo Corporation China GroupStrengthening the Foundations for
CSR Activities
Development of human and organizational dynamism
to enhance value-creation capability

Corporate Governance System
Internal Control and Internal Audit
Risk Management
Compliance
Environmental Management
Human Resources Management

35
38
39
41
42
45

Third-party Review

49

Greater emphasis on human resources development andworkforce diversity

Response to the Third-party Review
Company Information

50
51
Report on Responsibility & Sustainability 2010 2

Message from the President and CEO

To Achieve Prosperity
and Realize the Dreams of Our Stakeholders

3 Report on Responsibility & Sustainability 2010

I am pleased to announce the publication of the Sumitomo
Corporation Report on Responsibility & Sustainability 2010.
The global economy is finally shifting into slow but steadyrecovery. Yet, that recovery is likely to largely depend on
the newly emerging economies in Asia and other partsof the world for some time to come, since the economic
capabilities of developed countries are still not strong enoughto lead recovery. Europe’s “sovereign debt crisis” started in
Greece and its coverage and influence are likely to expand.
The Chinese economy, the most recent driving force forthe global economy, may start slowing down as a result oftightened economic policies. In the U.S., financial restrictions
are getting ever tighter ,which can cause its economic
slowdown. Despite these concerns, the global economy has
regained sufficient vitality to recover on its own, and there
seems only a limited risk of facing more economy downturns.

Global issues and corporate
responsibilities
While the global economy seems to be gaining power,
various issues that threaten the sustainable developmentof global society are becoming more evident than ever.
Global environmental issues, including those associatedwith global climate change, shortages of energy supplies,
water and food resources, and the growing disparities seenin the developing countries are only some examples. As theglobalization of the economy advances, private corporations
should assume greater responsibilities and play a larger rolein finding solutions to the issues shared by all the people of
the Earth.
As members of society, private corporations are expected
to incorporate measures for solving these various issues
into their business strategies and properly implement thosemeasures. Our business activities are supported by society.
If we are to pursue sustainable development in cooperation
with members of society, we must plan our business activities
by focusing more on corporate social responsibility (CSR).

CSR in the Sumitomo Corporation GroupFor the Sumitomo Corporation Group, CSR means simply
following our Management Principles: “To be a globalorganization that constantly stays a step ahead in dealing
with change, creates new value, and contributes broadly
to society,” and “To achieve prosperity and realize dreams
through sound business activities.”
The Sumitomo Corporation Report on Responsibility &Sustainability 2010 features a roundtable discussion I took
part in with young staff members. These young people areworking on the projects included in the report as examplesof CSR activities at the Sumitomo Corporation Group. In
the discussion, we talked about the values we have long
been using as the base for our business activities and ourthoughts on our efforts to achieve prosperity and realize
the dreams of our stakeholders. I am delivering thesevalues and thoughts to all our stakeholders.

Fiscal 2010, the final year for FOCUS’10
and a historically important turning point
for the next 100 years
Fiscal 2010 is the final year of our medium-term management
plan, FOCUS’10. The “10” stands for “2010” and the coming
10 years leading up to the centennial anniversary of thecompany, the 10 years we will spend building the foundations
for the new stage of the next 100 years. Thus, fiscal 2010 willserve as a historically important turning point. We are about tostart a new chapter in our organizational growth. Standing in
the middle of a current paradigm shift, we always stay a stepahead of the changing times and constantly pay attention
to our relationship with society in our business activities.
We will maintain this attitude as we work for the sustainable
development of society and the Group.
The Sumitomo Corporation Group will continue to show
its commitment to achieving prosperity and realizing the
dreams of its stakeholders through its actions.

Susumu Kato
President and CEO
September 2010

Report on Responsibility & Sustainability 2010 4

Message from the President and CEO

Roundtable Discussion
with Young Staff Members
What should we do and what should we keep in mind to achieve prosperity
and realize the dreams of our stakeholders? President Kato and young staff
members, the Group’s driving force in the coming years, exchanged theirthoughts and ideas on their work, corporate activities and society.

Harmonious relationship withthe environment and society
Kato: I have been looking forward
to this opportunity. Please relax andfeel free to share your thoughts andquestions with me.
Morishima: For two years from 2006, I
worked in Sumitomo Corporation India
as a trainee. It was a great experience
to be engaged in the start-up of an
automobile plant, which contributed
to economic development and job
creation. Now I am involved in theenvironmental business that handles
lithium-ion batteries for electric vehicles.

5 Report on Responsibility & Sustainability 2010

Through my experiences, I have learned
that in pursuing sustainable business,coexistence with the environment and agood relationship with nature are no lessimportant than developing a system thatallows proper profits.
Kato: Maintaining a sound relationshipwith nature is an important theme
when considering our social corporate
responsibilities. Even when we knowa specific business can make profits,
we cannot immediately go for it if it
might have a negative influence on
the global environment. Obviously, we
have to make our utmost efforts to
reduce the environmental impact in ourbusiness activities, but we also haveto create businesses that can support
environmental conservation on a global
scale. That is our role as a corporation insolving social issues.
Katagiri: I am involved in a mine
project in Bolivia. When operating abusiness project overseas, coexistence
and a good relationship with the local
community become very important
issues, in addition to coexistence withthe environment. This is true both in myarea, resource development, and Mr.
Morishima’s area, manufacturing.
Kato: The first thing we have to consider
when operating an overseas business is
how we can put down roots in the region
and what kind of contribution we canmake to the local community. In minedevelopment, for example, it is morecost effective if we ship the ore from themining area to another place where therefining and processing can be done
more productively. However, that kindof operation benefits the country only inthe sales of their resource to an overseas

company. It does not lead to technologicalimprovements or job creation. Instead,
if we build a factory in the mining areaand hire local people, we can transfer
technologies from Japan through refining
and processing the mining products. We
can also improve electricity, distribution
and other infrastructures in the region.
The larger the involvement of local
communities in our business is, the larger
contribution we can make to the local
economy and social development. Whenthe new technologies become rooted
in the region and the standard of living
improves, they can serve as a foundation
to develop new industries and tostrengthen the ties between the country
and Japan. In turn, this will give us more
opportunities to start new businesses.
We make various different contributions
to the local community, and in turn thecommunity sees our existence as valuablefor them—we have to take measures tobuild that kind of relationship.

Discussion members
Kazuyuki Morishima

Kohei Saito(Battery Business Development Dept.)(Tanjung Jati B Project Dept.)

Joined Sumitomo Corporation in 2003 andinvolved in the export of equipment andcomponents for automotive manufacturing
to India. After working in India, he waschosen as a member of the project on
second-life business of lithium-ion batteries
for electric vehicles (EVs).

Joined Sumitomo Corporation in2007. Experienced in the infrastructuredevelopment business in Malaysia andSingapore. Currently working on a project
to build a thermal power plant that will
supply power in Indonesia.

My dream: The aim of the battery businessis to develop and promote markets forsecond-life uses of lithium-ion batteries for
EVs and in turn to contribute to society’s
efforts to reduce CO2 emissions. My
dream is to build a society with small
CO2 emissions and leave a better global
environment for the next generation.

My dream: I joined Sumitomo Corporation
because I wanted to be involved in a jobthat would support society at its base.
In Indonesia, the generation of power
cannot catch up with the rapid growthof the economy. I am glad that now I am
involved in a business that helps solvethese social issues.

Nami Katagiri

Katsuhiko Onishi(San Cristobal Project Dept.)(Power & Plant EPC Dept., No.1)

Joined Sumitomo Corporation in 2005.
After working on the import of zinc and leadconcentrates, she joined a mine project andspent two years in Bolivia.

Joined Sumitomo Corporation in2007 and involved in a wide rangeof Corporate Communications work,
including media relations and edit ofcorporate website. Since 2010, he
has been part of a project team in his
current department to build geothermal
power plants outside Japan.

My dream: In the project in Bolivia, we arealways aware that we must offer world classservices not only in our business operations,but also in environmental protection measuresand contribution to local communities, andJapanese staff and local staff work together
under this principle. I hope Sumitomo
Corporation will continue to be involved actively
in resource development, and I want to apply
my experience in Bolivia to businesses in othercountries. That is my dream and my goal.

My dream: Transferring to the current
department was at my request. I want
to use the wide range of knowledge I
gained in Corporate Communications
Department to power infrastructurebusiness.

Report on Responsibility & Sustainability 2010 6

Message from the President and CEO

Roundtable Discussion with Young Staff Members

Partnership and trust
Kato: What pleased me most about
the Bolivian project was the attitudeof the project staff. The members,
including Ms. Katagiri, shared theirpoints of view with the local staff andbuilt a good partnership with them. As
a result, people in Bolivia did not see
us as “foreigners” but as partners who
are working with the local people for thedevelopment of Bolivia.
Katagiri: I think that kind of
relationship was possible because
the people understood the vision of
Sumitomo Corporation, which is to
grow with local communities, and not
simply pursue short-term profit.
Kato: Local people understood our visionbecause each project member showed
it in their daily work. I hope that you will
maintain good communication with local
people in your future work, too.
Katagiri: I learned that meeting andtalking with other people in person ismost important in building trust andgood relationships. While working
in Bolivia, I could see for myself thathonesty and sincerity can be understoodeven when the spoken language and7 Report on Responsibility & Sustainability 2010

culture are different. Without keeping
good communication with people in thelocal area and building trust with them,
we cannot carry on the business itself ormake a contribution in the truest sense.
Saito: I agree with Ms. Katagiri. The
Indonesian power plant project I am
involved in was once on the brink ofcancellation because of the Asiancurrency crisis in 1997. But the projectsurvived the crisis after we talked
patiently with the Indonesian government
and the local power utility company,
which was our client, showing different
proposals with a new operational
scheme. Sumitomo Corporation has long
been helping to develop the Indonesianmarket. It has a historical importance forus. Through these years, we have built
trusted relationships with our clients,
governments and local communities.
That is why the local people listened toour proposals. Now the local people
see the power plant as an indispensablefacility for a stable supply of power inIndonesia, and the plant is undergoing
expansion that will double its capacity.
Onishi: Through my work in projects
to build geothermal power plants inother countries, I learned that building
good cooperative relationships withbusiness partners who are experts inthe field is most important. How doyou see it, Mr. Kato?
Kato: As an integrated trading
company, trusted partners are essential
in developing various types of business.
To maintain a good partnership, we
first have to make the roles on eachside very clear. Then we fulfill our roles
while having a clear understanding ofwhat it takes to accomplish the tasksof our partner. Even when we entrust
a task to an expert, we always have towatch the progress and the outcome,make the necessary decisions andgive appropriate opinions and advice.
We have to be able to lead the expert
in some cases. Otherwise, we cannot
build trust and a good partnership. In
other words, we need to make “broad
and profound” efforts to effectively
cooperate with our partners. What ourpartners want from us is the capability
to procure many different sorts ofequipment and materials or the ability
to negotiate with local communities—functions and knowhow that only
integrated trading companies can offer;that is, integrated corporate strength.
Each party will bring their strengths andsupport the project from their side. Thatis the ideal partnership.
Morishima: I can see how your point
exactly fits in with my work in thebattery business, Mr. Kato. In thecooperative project with automakers todevelop a market for second-life usesof lithium-ion batteries, our partner
expects us to create new value using
the special functions and knowhow
we have developed as an integrated
trading company.
Kato: When executing a cooperative
project with other companies, evaluating
our partner is not enough. We also haveto pay attention to how the partner seesus. In any project, including the project
Mr. Morishima is working on, we haveto have a clear understanding of what
the partner expects from us and work tomeet those expectations. Again, goodcommunication with the partner is themost important factor.
Onishi: Mr. Kato, what do you think ourpartners expect most from the corporate
strength of Sumitomo Corporation when
they consider us as a partner?
Kato: First, our customers expect to seea certain level of expertise in any industrial
field. They know we develop business inalmost all fields as an integrated trading
company. But I believe trust as a company
is more important in a partnership.
Sumitomo Corporation has trust that ourpredecessors have built over our long
history. Each employee who supports
the present Sumitomo Corporation must
absorb this valuable asset fully and add
their own value to it. This will become evenmore important in the coming years inmaintaining our trust as a business partner.

Report on Responsibility & Sustainability 2010 8

Message from the President and CEO

Roundtable Discussion with Young Staff Members

Integrated corporate strength(human resources and gobalization)
Saito: Mr. Kato, what kind of personalqualities and competencies do you
expect most from young staff members
like us when you think about sustainablegrowth in Sumitomo Corporation?
Kato: There are many factors, but what
I value most is the capability to adapt
to globalization. In the next 100 or 200
years in the development of Sumitomo
Corporation, our business will be
globalized even further. Then, we will
have more occasions to work together
with staff in many different regions in
the world, and develop our skills whileworking together or competing witheach other. In addition to refining yourskills and knowledge, I want you to get
to know many other staff members
in different regions and build good
relationships with them. I also want you
to take on challenges and try businesses
in new areas using good teamwork.
Saito: What other capabilities do you
want to see in your staff?
Kato: I look for the capability to adapt
flexibly to changes. Today, when asignificant paradigm shift is occurring
across the world, I believe that a “change
in the global power structure” and a“change in the industrial structures” arethe most important factors we have to
pay attention to. By a “change in the
global power structure,” I mean theincreasing presence of the emerging
countries. A “change in the industrial
structures” implies the fact that in

9 Report on Responsibility & Sustainability 2010

various business areas, new systems,
which were unimaginable in the past, areemerging and borderless activities are
increasing mainly due to the limitations
on the world’s resources and theglobalization of society. People who cansee these changes before everybody
else and can find new values in them, or
those who can “create value” are mostneeded by Sumitomo Corporation. These
people must have the ability to adapt
to and deal with change, the attitude
to always see the things in positiveand constructive ways, a never-ending
curiosity, and a number of other qualities.
But most importantly, they must have astrong will to grow, or to increase theircapabilities. Human resources is almost
the only vital asset for integrated trading
companies. That is why we always try
to provide the best human resources
development programs. But you should
not wait for the company to provide
opportunities. Instead, you should
actively seek for opportunities to learn
and improve your own capabilities. You
can use Sumisho Business College andother training systems, or you can gain
new knowledge and skills while working
with your supervisor, senior members
and colleagues, or even with people insuppliers and partner companies, in a
new job rotation, especially when you are
new to your position. You should actively
seek for new knowledge and build yourexpertise. You can grow yourself throughdiverse experiences.
Katagiri: I also believe on-siteexperience is very important. The
experience we can get on the real site

of a project includes valuable lessons
we cannot learn in training. When I wasdoing administrative work in Tokyo for
the San Cristobal Project in my firstyear at Sumitomo, I became interested
in working on site and requested mysupervisor to send me to Bolivia. Once
I started working there, I realized there
were so many things I wouldn’t havenoticed in Tokyo. There were many
moments when I was emotionally
touched. The project had many moredifferent aspects and was much more
profound than I had imagined.
Onishi: I am still new in my department.
I am very interested in working on site
and gaining a range of experience, as
Ms. Katagiri did. I may face difficulties in
performing my jobs and communicatingwith local people, but I hope such
experience will help me expand myoutlook and learn to see things fromdifferent angles.
Kato: I want every employee to have onsite experience. Imagining while sitting
at a desk is totally different from having
real experience. I spent six and half years
working abroad and experienced many
unexpected incidents. Those experiences
have been very valuable and helpful later in
my career. I want you to have a solid planfor your career and have many different
experiences on many different sites andmake them assets for your work and life.
The personal growth of each employee
will become a very valuable asset for thecompany, too.

Prosperity and dreams
Morishima: Our Management
Principles use the terms “achieve
prosperity and realize dreams”. How
do you see “prosperity and dreams” forthe company?
Kato: For the Sumitomo Corporation
Group to realize its own “prosperity
and dreams” means to continue tobe a company that is recognized andrespected by society for its values.
We will be celebrating our centennial
anniversary in 2019. To guarantee thesustainable growth of the company inanother 100 or 200 years, we have to“constantly stay a step ahead in dealing
with change, create new value, andcontribute broadly to society throughvarious sound business activities.”
Also, it is important to be recognized bysociety as a company that is essential
to the industrial, economic and social
development of the world.
When we say “to achieve
prosperity and realize the dreams of
our stakeholders” in our Management
Principles, we also mean the prosperity
and dreams of our employees. Today,
I was reassured that the prosperity anddreams of the company can be realized
only by integrating the prosperity anddreams of all our stakeholders, including
employees. We will strive together torealize our prosperity and dreams and torealize the prosperity and dreams of theSumitomo Corporation Group.
All participants: Thank you very much.

Report on Responsibility & Sustainability 2010 10

Message from the Chair of the CSR Promotion Committee

How We See CSR
in the Sumitomo Corporation Group

Takashi Kano
Director
Senior Managing
Executive Officer,
General Manager
Corporate Planning &Coordination Group

How we see CSR in the Sumitomo
Corporation GroupAt the preamble to the Management Principles, the Sumitomo Corporation Group states its corporate vision as “We
aim to be a global organization that constantly stays a stepahead in dealing with change, creates new value, andcontributes broadly to society.” And the phrase “To achieve
prosperity and realize dreams through sound businessactivities” follows as the corporate mission.
For the Sumitomo Corporation Group, CSR means
simply promoting responsible corporate activities andfulfilling our corporate mission to become the idealorganization set out in the vision; in other words, implementing our Management Principles. We achieve prosperity and realize the dreams of our stakeholders by playing
our role as a corporation in solving social issues throughour business activities and social contribution activities
and ultimately building a sustainable society. That is our
mission in society and the fundamental basis of our CSR.
Underlying that idea is the principle to create new value forthe sustainable growth of society and the Group. We
accomplish this by building closer relationships with various
stakeholders across the whole Group, correctly understanding social issues and strategically planning our corporate
activities to solve those issues. To this end, we must create avirtuous cycle; we fulfill our CSR to create new value, which
will become a resource for the sustainable growth of theGroup and the base for further fulfillment of CSR.
Based on these ideas for CSR, the Sumitomo Corporation
Group will continue pursuing its Management Principles forthe sustainable growth of society and our group companies.

Fulfilling CSR
In order to fulfill our social responsibilities, we plan andexecute a variety of programs to promote further awarenessand understanding in each of our employees—the actual
players in our CSR mission.
Over the last 12 months, we have used many opportunities both in and outside Japan to increase penetration of
the Management Principles among our employees, and weheld a CSR workshop to provide opportunities for each
employee to give careful thought to what fulfilling our CSR
mission means in our business activities. The Sumitomo
Corporation Group declared its support for the Ten
Principles of the UN Global Compact in March 2009, andactively participates in various activities offered by Global
Compact Japan Network, the local network in Japan. In
November 2009, we established the Sumitomo Corporation Group CSR Action Guidelines for Supply Chains to
spread CSR activities throughout our value chains incooperation with our suppliers and business partners.

Sumitomo Corporation Report
on Responsibility & Sustainability 2010
In this Sumitomo Corporation Report on Responsibility &Sustainability 2010, we report on the latest measures andactions taken by the Sumitomo Corporation Group in
implementing our Management Principles. We have placed
special editorial focus on the following two points.
First, we take “Future,” which represents our medium-to
long-term perspective described in our medium-term
management plan FOCUS’10, as a keyword and report how
we deal with the current paradigm shift, how we see ourbusinesses in relation to society (i.e., stakeholders), andwhat kind of actions we take to create new value over the
next ten years. We include as many examples of our actions
as possible in the report. Second, we introduce the activitiesof our employees, who have a good understanding of CSR
in the Sumitomo Corporation Group and play their roles in
our CSR activities, while enjoying their work and lives indifferent parts of the world.
We hope that this report will help readers gain a better
understanding of the CSR activities of the Sumitomo
Corporation Group.
September 2010

11 Report on Responsibility & Sustainability 2010

Major CSR Activities
A variety of programs to spread ourManagement Principles

Sumitomo Corporation Group CSR
Action Guidelines for Supply Chains

As stated in our Management Principles, we aim to bea “value-creating company”; that is an organizationthat takes advantage of changes in the times toachieve corporate growth. The Management Principles
also form the basis of FOCUS’10, our medium-term
management plan established in fiscal 2009, so that
we can further strengthen the foundations for sustainable growth.
In fiscal 2009, we used many opportunities, such as
training sessions for new employees, managers andlocally hired staff as well as lectures held both in Japanand overseas, to explain why and how we set out ourManagement Principles and what we should take fromthe principles to our employees. The Management
Principles were also discussed in the President’s
messages sent to employees, meetings between the
President andemployees and onother occasions.
These occasions
helped further
increase an understanding of theprinciples by our
employees.

In November 2009, we established the Sumitomo
Corporation Group CSR Action Guidelines for Supply
Chains based on our Management Principles, toensure that we fulfill our social responsibilities, strict
compliance with laws and regulations, respect forhuman rights and protection of the environment, with
our suppliers and business partners.

Training session in Japan

CSR Workshop
A series of workshop was held from December 2009
to February 2010 to provide employees with anopportunity to better understand what CSR means to
the Sumitomo Corporation Group. In the workshop,
participants deliberated on the significance of CSR in
our business activities from the viewpoint of a “valuecreating company” as stated in FOCUS’10, our
medium-term management plan.
About 40 participants joined the workshop fromeach business unit and regional business unit andchose a real business project to review the value of
their services fromtheir stakeholders’point of view. In thecase study, they also
examined processes
to develop new
partnerships withstakeholders and toredesign and create
CSR Workshop
new business models.

The Sumitomo Corporation Group CSR
Action Guidelines for Supply Chains
November 2009The Sumitomo Corporation Group aims to be a globalorganization that constantly stays a step ahead in dealing
with change, creates new value, and contributes broadly tosociety. In its Management Principles, the Group sets forth
its mission to achieve prosperity and realize dreams
through sound business activities, and to strictly adhere toa management style which places prime importance on
integrity and sound management with utmost respect for
the individual.
In line with its Management Principles, the Sumitomo
Corporation Group hereby sets down the CSR (corporatesocial responsibility) Action Guidelines for Supply Chains,
aiming to achieve a sustainable and better society. With aview to further strengthening "global relations"_one of theelements of the business foundation that supports our
integrated corporate strength, which is our corecompetence_we will request our suppliers and business
partners to kindly accept, understand, and practice theseguidelines so that together we can fulfill our social responsibilities in the value chain in which we are jointly involved.
Our suppliers and business partners are expected:
1. To respect the human rights of employees and never treat employees
in an inhumane manner
2. To prevent forced labor, child labor and unreasonably cheap labor
3. Not to practice discrimination with respect to employment
4. To respect the rights of employees to associate freely in order toensure smooth negotiation between labor and management
5. To strive to provide employees with a safe and healthy work environment
6. To strive to protect the global environment
7. To ensure the quality and safety of products and services
8. To ensure fair transactions, abiding by all applicable laws, rules andregulations, and to prevent all types of corruption, including
extortion and bribery
9. To disclose information regarding the above in a timely andappropriate mannerSupport for the UN Global Compact
Please refer to the following
website for information on
our support for the UN
Global Compact.

http://www.sumitomocorp.co.jp/english/
society/global_compact/index.html

Report on Responsibility & Sustainability 2010 12

Sumitomo’s Business Philosophy

Management Principles and Activity Guidelines
Founded on the Sumitomo’s Business Philosophy
Sumitomo has always been sincere in conducting its business, contributing to achieving prosperity and realizing the dreamsof our business partners, our society and all other stakeholders. As a result, we have built up trust, and this has helped us todevelop new businesses and create a cycle of positive growth. The Management Principles and Activity Guidelines of theSumitomo Corporation Group are founded on Sumitomo’s business philosophy that has been passed on for 400 years.

Monjuin Shiigaki(the Founder’s Precepts)

Rules Governing the House of
Sumitomo

Business Principles

Monjuin Shiigaki (the Founder’sPrecepts) is a letter sent by Masatomo
Sumitomo (1585–1652), the founder of
Sumitomo and a religious man, to his
family members in his old age. It
succinctly describes the guiding
principles of his business operations.
At the beginning, it urges the reader“Not only in matters of business but in all
situations, make efforts with deepest
gratitude in every aspect.”
The precepts also include suchteachings as “When goods are offered to
you below the normal market price,
under no circumstances should you everpurchase such goods, for their origins
are unknown and they are probably
stolen property,” “Never give shelter to a
stranger, no matter who it might be; also,
never take a stranger’s goods into yourcustody, no matter how innocent theymight appear” (these acts were prohibited by the government), and “No matter
what someone might say to you, neverlose your temper or speak harsh words;
politely explain your position until anunderstanding can be reached.” These
teachings have been handed down andform the base of Sumitomo’s businessphilosophy. They are still seen in today’s
principles, such as “no pursuing easy
gains” (i.e., only making a profit on afairly priced transaction that can be
explained with confidence), “compliance”
and “integrity and sound management.”

The Besshi Copper Mine (opened in1691) encountered many adverse
conditions during the Meiji Restoration(in the late 1860s), when the price ofcopper fell, operating costs increased
sharply due to rising prices of rice andother items, and loans to the feudallords were uncollectable. At one point,
it was almost forced to sell out. Saihei
Hirose (1828–1914), manager of themine who later became Sumitomo’s
first Director-General, acted boldly andmodernized the operation with
Western style technologies. Hirose’s
operational reforms saved the mine
and its community.
In 1882, when serving as DirectorGeneral, Hirose formulated the Rules
Governing the House of Sumitomo,
which consisted of 19 sections and 196
articles, to reflect the business philosophy the family had followed over its
250-year history. The Rules clearly
illustrate Sumitomo’s corporate
philosophy in Article 3 in Section I: “Weshall practice sound management inorder to cope effectively with thechanging times. Under no circumstances, however, shall we pursue easy
gains or act imprudently.”

In 1891, the Rules Governing the Houseof Sumitomo were separated into twoparts, the family code (corporate rules)
and the family constitutions (theprinciples of the family head), todistinguish ownership from business
operations. On that occasion, theprinciple of “integrity” was introduced
and placed at the beginning of the Rules
Governing the House of Sumitomo withthe principle in Article 3, which thentogether became the Business
Principles. In 1928, while Sumitomo’s
business expanded into a variety ofareas, including the steel, machinery andchemical industries, Sumitomo’s
Business Rules were established. The
two articles of the Business Principles
have been passed on for generations
and still serve as the corporate rules of
all group companies.
Article 1. Sumitomo shall achievestrength and prosperity by placing
prime importance on integrity andsound management in the conduct ofits business.
Article 2. Sumitomo shall manage its
activities with foresight and flexibility inorder to cope effectively with thechanging times. Under no circumstances, however, shall it pursue easy
gains or act imprudently.

Monjuin Shiigaki (Source: Sumitomo Historical
Archives)

13 Report on Responsibility & Sustainability 2010

Saihei Hirose, Sumitomo’s
first Director-General(Source: Sumitomo
Historical Archives)

Business Principles

Sumitomo Corporation
Management Charter

Management Principles and Activity Guidelines of theSumitomo Corporation Group

Osaka North Harbour Co, Ltd., thepredecessor of Sumitomo Corporation,
was founded in 1919. Later, after WorldWar II, the company changed its nameto Nippon Kensetsu Sangyo Co, Ltd.,
starting a new life as a general trading
firm. In 1952, when the company wasincorporated with the current name, theBusiness Principles were chosen as the
management philosophy for all corporate operations and the foundation tosustained growth.
While Japan’s economy was growing
rapidly after the war, environmental
pollution, inflation and other public
issues started to arise. Businesscorporations and their codes ofconduct were challenged to make clear
the relationship between the national
government and corporations, as well
as between citizens and corporations.
To respond to this, Sumitomo Corporation laid down the Sumitomo Corporation Management Charter, an original
charter that consists of the Basic
Principles of Management and the
Operational Guidelines.

In the early 1990s, the bubble burst,
The first item in the Management
drastic appreciation of the yen continPrinciples, “To achieve prosperity andued, and the Japanese economy
realize dreams through sound businessentered a long period of low growth.
activities” describes our corporate
Sumitomo Corporation had no choicemission, while the second item, “To
but to re-examine the status quo of its
place prime importance on integrity andbusiness transactions and risk managesound management with utmost respect
ment methods. Against thisfor the individual” shows our managebackground, there was growing
ment style, and the third item, “To foster
management recognition that thea corporate culture full of vitality andcompany needed to revert toconducive to innovation” portrays our
Sumitomo’s business philosophy, which
corporate culture.
had served as the base of Sumitomo’s
The Activity Guidelines werebusiness operations and the driving
generated based on these principles
force in overcoming many crises
to guide employees in their daily
through the last 400 years. Thisbusiness operations.
recognition further heightened in 1996,
when the copper incident occurred,leading to the 1998
establishment of theManagement
Corporate Mission Statement
Principles and Activity
Guidelines of the
Corporate Vision
Sumitomo CorporaWe aim to be a global organization that constantly
tion Group.
stays a step ahead in dealing with change, creates
new value, and contributes broadly to society.
The Management
Principles and Activity
Guidelines wereManagement Principles
compiled based on<Corporate Mission>
Sumitomo’s business• To achieve prosperity and realize dreams throughsound business activities
philosophy, which has<Management Style>been nurtured• To place prime importance on integrity and soundthroughout the 400
management with utmost respect for the individualyears of Sumitomo’s<Corporate Culture>
history, and today’s• To foster a corporate culture full of vitality andglobal perspective, in
conducive to innovationa simple and systematic way.
Activity Guidelines
The preamble to the· To act with honesty and sincerity on the basis ofManagement
Sumitomo’s business philosophy and in keeping with
the Management Principles
Principles shows the· To comply with laws and regulations while maintaining
corporate vision: “We
the highest ethical standards
aim to be a global· To set high value on transparency and openness
organization that· To attach great importance to protecting the global
constantly stays a step
environment· To contribute to society as a good corporate citizen
ahead in dealing with· To achieve teamwork and integrated corporatechange, creates newstrength through active communication
value, and contributes· To set clear objectives and achieve them with enthusiasm
broadly to society.”

Sumitomo Building Annex, where Nippon
Kensetsu Sangyo’s head office was located

Report on Responsibility & Sustainability 2010 14

Core Competence and the Medium-term Management Plan

Establishing “A Growth Scenario on a New Stage”
by Leveraging Our “Integrated Corporate Strength”
With the medium-term management plan, FOCUS’10, we are striving to create “new value”
as stated in our Management Principles by leveraging our integrated corporate strength—our core competence.

Creation and Provision of Diversified
Values to Meet Customer Demand“Integrated Corporate Strength,” the core competence of the Sumitomo 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 effortsof each and every Group employee, helps us respond to thevarious needs of our customers. At the same time, wecreate new value by always thinking one step ahead ofglobal 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 thegrowth and progress of a wide range of industries in different
regions, the Sumitomo Corporation Group will continue tomake even greater contributions to the stable and continued
growth of the world economy and global society.

Strategic andOrganic Integration

Logistics Solutions
Market Intelligence &Information Gatheringand Analysis Business
Development

Cont

Global Network

nt i
nu a

Financial Services
Risk
Management

inual Enhancement of Functions

Integrity

Co

IT Solutions

Intellectual Capital
Global Relations

n
ti o
nda
u
l StrenoFgthening of the BusinessMedium-term Management Plan FOCUS’10
A Medium- to Long-term Perspective

In the medium-term management plan FOCUS’10 established in 2009, we aim to create “A Growth Scenario on a
New Stage” to meet the requirements of the next 10 years.

Respect for Individuality and Diversity
Solid Earning Pillars
Leveraging of Our Integrated
Corporate Strength
Reinforcement of Operational
Soundness and Efficiency

FOCUS’10 Fundamental Principles
and Qualitative Targets

FOCUS’10 Quantitative Targets
Targets and Plan(as of April 1,2009)

Fundamental Principles• Promote medium/long-term growth byenhancing value-creation capability while
reinforcing soundness and efficiency• Promote company-wide growth by leveraging
the diversity and strengths of our businesses

Qualitative Targets• Steady execution of selective & focused
growth strategy• Thorough reinforcement of soundness andefficiency• Development of human and organizational dynamism to enhance valuecreation capability• Net income• Risk-adjusted
Return Ratio*(two-year average)¥115.0 billion

Outlook(as of April 1,2010)¥315.2 billion(FY2009)(two-year total)
FY2009:¥155.2 billion(Result)
FY2010:¥160.0 billion

Around 10%

Around 11%¥200.0 billion¥260.0 billion• Risk Asset Plan
(two-year total)
Amount increasingover two years(gross)
Decrease¥100.0 billion¥100.0 billion

Amount increasing(net)¥100.0 billion¥160.0 billion• Total Assets• Free Cash Flow
(two-year total)

As of end of FY2010 are at the same level
as of end of FY2008
Positive* Risk-adjusted Return Ratio = net income/risk-adjusted assets (maximum possible losses).
It is an indicator of profitability against quantified risk.

15 Report on Responsibility & Sustainability 2010

CSR in Action
Creating new value and aiming for sustainablegrowth together with society

Theme

1

Theme

2

Theme

3

Theme

4

Theme

5

Achieving Prosperity and Realizing Dreams in Indonesia
by Meeting the Rapidly Rising Demand for Electricity
Building diverse electricity infrastructure

Achieving World-class Mining Operations and Supporting
Sustainable Development of the Local Community
San Cristobal Mine Project in Bolivia

Creating and Developing New Businesses
into the Next Decade
Becoming a leading environmental business operator and major
contributor to creating a low-carbon, recycling-oriented society

Utilizing Our Integrated Corporate Strength
to Promote Social Contribution Activities Worldwide
Because of its integrated corporate strength, the Sumitomo
Corporation Group is involved in a wide range of social contribution activities around the world

Locally-rooted Social Contribution Activities
under the Initiative of Local Employees
CSR activities of the Sumitomo Corporation China Group

Report on Responsibility & Sustainability 2010 16

1981

Siguragra hydropower plant(73 MW×4)

1992/1995
Muara Karang combined
cycle power plant(100 MW×3/ 185 MW×1)

2006

Tanjung Jati B coal fired
power plant(662 MW×2)

Theme

1

Achieving Prosperity and Realizing Dreams
in Indonesia by Meeting the Rapidly Rising
Demand for Electricity
Building diverse electricity infrastructure
Of all the ASEAN countries, Indonesia, a country with the world’s fourth largest population of approximately
230 million, has achieved significant economic growth. As a long-standing player in the Indonesian market,
Sumitomo Corporation has contributed to meeting the ever-growing demand for electricity in the country
by involving itself in many construction projects for power plants, ranging from large-scale thermal power
plants to hydropower plants, and geothermal power plants that utilize the nation’s abundant geothermal
resources. What kept us motivated to complete these projects were the strong relationships of trustdeveloped over many years with our Indonesian partners and stakeholders, and our passion for contributing
to the development of the Indonesian economy through our business, which is consistent with Sumitomo’s
business philosophy.

Supporting the development of power sources inIndonesia since the early days of economic
development
As part of our overseas operations strategy, Sumitomo
Corporation entered the Indonesian market in the late
1950s, at a time when, except for Japan, which was in the
midst of its rapid growth period, economic development had
just begun in Asian countries.
In the course of exploring business opportunities inIndonesia, the staff in our Jakarta office started to realizethat development of the infrastructure for power generation
was essential to the development of the economy of thecountry. With this realization in mind, we contacted PT.
Perusahaan Listrik Negara ("PLN"), an Indonesian state-

17 Report on Responsibility & Sustainability 2010

owned power company. Initially, we supplied power
station facilities and equipment as well as power cables
to PLN, acting as an export agent for Japanese power
generation equipment manufacturers. From the 1970s,
however, we started to undertake the development ofsmall-scale power stations.
Using these experiences as a stepping stone, from thelate 1970s to the 1980s, Sumitomo Corporation joined the
Asahan Project, led by the Japanese and the Indonesian
governments and a consortium of Japanese corporations,
to construct a large-scale hydropower plant and operate
an aluminum smelting business using the electricity
generated by the new plant. The project is praised as
the foundation stone of the modernization of Indonesia

2000/2009

Wayang Windu geothermal
power plant(Unit 1: 110 MW×1/
Unit 2: 117 MW×1)

SumatraSulawesi
Papua

2007/2009
Lahendong geothermal power plant(Unit 2: 20 MW×1/
Unit 3: 20 MW×1)

Java

1993/1997

Thermal power plant

Tambak Lorok combined
cycle power plant(119 MW×3/ 100 MW×3+200 MW×1; 188 MW×1)

Geothermal power plant
Hydropower plant
The dates indicate the years
construction was completed.

even now, as indicated by the fact that this power plant isfeatured on the country’s paper currency. Our participationin this historic project provided a positive tailwind for us toestablish a strong position in Indonesia’s power generation
infrastructure market. Since then, we have been engaged
in a number of power plant construction projects, manyof which were financed by Japan’s official development
assistance (ODA) loans.
Today’s steadfast trust in the relationship between
Indonesia and Sumitomo Corporation is a result of oursteady and persistent efforts over many years since then.
Electricity demand in Indonesia (GWh)
400,000

300,000

200,000

100,000

0

2008

2009

2010

2014
2017
(Year)
Forecast
Source: Ministry of Energy and Natural Resources

government- and PLN-led scheme for power plant
construction projects was stretched to its limit, given thesize of the national budget. To address these problems, thegovernment decided to use foreign-affiliated Independent
Power Producers (IPPs).
Against this backdrop, Sumitomo Corporation was
selected as a contractor of many power plant construction
projects because of its well-timed project plans leveraged on
its excellence in market/business intelligence and sourcing,the characteristic strengths as a trading company. We also
became one of the pioneers in constructing geothermal
power stations utilizing Indonesia’s abundant geothermal
resource. Starting with the project of Gunung Salak
geothermal power plant in 1995, we have built up a trackrecord of geothermal plant construction projects.
In September 1995, we were also selected as the
successful bidder for a construction project for one of
the world’s largest coal-fired power plant at that time: theTanjung Jati B coal fired power plant (TJB). The project,organized by a Hong Kong-based IPP named CEPA, hadbeen making smooth progress... up until 1997, when atotally unexpected incident occurred.
The currency crisis in Thailand spread widely throughout
Asia. Since the Indonesian economy was hit hard by thecrisis, the project hung on the verge of cancellation.

Overcoming the Asian currency crisis
Becoming a contractor to one of the world’s
largest coal-fired power plant
Due to the Suharto administration’s policy of attracting
foreign investment in the late 1980s, many Japanese andother foreign companies scrambled to set up factories
in Indonesia. Together with the country’s increasing
population, the influx of foreign plants caused a rapid
increase in electricity demand, resulting in a serious power
shortage. Another problem was that the existing Indonesian

Affected by the currency crisis, the value of the Indonesianrupiah plummeted. The lenders joining the syndicate for the
project pulled the plug on the deal altogether; the Indonesian
government decided to freeze this IPP project because of
the remote possibility of the project’s economical viability.
This was due to the terms of the contract in which theprice of electricity was to be contractually set in dollars;and CEPA, the project operator, also decided to withdraw.
Suspending the project seemed the only option.

Report on Responsibility & Sustainability 2010 18

Theme1Achieving Prosperity and Realizing Dreams in Indonesia
by Meeting the Rapidly Rising Demand for Electricity

When construction was halted, two years had alreadypassed since the beginning of the construction process.
Nearly 70 percent of the civil work was already completed
and the equipment and facilities were already ordered.
We did not want to render all that progress futile. More
importantly, we did not want to disappoint the people ofIndonesia, who had been longing for the completion of the
new power plant. Our enthusiasm drove us to repeatedly
call on the government to resume the project.
We initially suggested that PLN purchase the power plant,
which subsequently turned out to be unfeasible because thestate-owned company suffered financially due to the currency
crisis. Then, we came up with a new business scheme for
Scheme for the finance lease of TJB
Indonesian
government

PLN

Support(maintenance, operation,
fuel supply)

Guarantee
Leasing
the power plant

JBIC

Payingthe lease fee

Financing

CJP
Sumitomo Corporation
Construction of the power plant
Turbinegenerators

ColumnBoilers

Chimney

Civil work

the project—a finance lease scheme—in a bid to bring the
project back on track. Under the newly proposed plan,
Sumitomo Corporation would construct the TJB with a loan
from the lenders headed by the Japan Bank for International
Cooperation (JBIC). After construction, we would continue ourinvolvement in TJB through local project company PT. Central
Java Power (CJP) by leasing out the power plant to PLN.

Our new proposal opened a way
to resume the project
Under our new scheme, the lease fee would be collected
every six months, and the fee level would be determinedbased on the prevailing local market rates for electricity
and fuel prices. This meant that PLN did not have to incur
massive initial investment costs and could pay the leasefee from the revenues for the electricity generated at theplant. In addition, the ownership of the power plant facilities
would be transferred to the lessee virtually without charge
after completion of the 20-year lease period. In short,the proposed deal was very attractive to our Indonesianpartners.
The other important feature of the scheme was that,
unlike an IPP project where only electricity is supplied,the power plant itself was on lease. The operation andmaintenance of the power station and the procurementof fuel were done by PLN in cooperation with CJP, which
would gradually transfer know-how to a local power
generation operator.
Having agreed on this “win-win”proposal for both
Sumitomo Corporation and its Indonesian partners,
resumption of the project was agreed among the parties in

Meeting a growing need for geothermal power generation

Using the steam generated by underground heat, geothermal power
generation emits far less CO2 than conventional thermal power
generation, which involves the combustion of fossil fuels. Anotheradvantage of geothermal power generation is that, compared with otherrenewable energy sources such as wind and solar power, it is less likely

Steam-water
separator

Steam

VolcanoTurbine
Steam
well

Water

Steam
condenser

Cooling
tower
Rainwater

Electric
generator

Heated water pump
Heated water
Reinjectionwelland steam
Reinjection well
Undergroundvolcanic layer Indonesia has many volcanic regions, where
Magma reservoir

abundant geothermal energy exists.
High-temperature steam is extracted from a
volcanic layer deep under the ground in theseareas to generate electricity.

19 Report on Responsibility & Sustainability 2010

to be affected by weather conditions. Accordingly, geothermal power isconsidered to be a source of stable electricity supply.
Indonesia has the world’s largest resources of geothermal energy.
Promoting geothermal power generation is expected to contribute to theeffective use of domestic resources. While the nation’s current total power
generation capacity with the existing geothermal power plants isapproximately 1,200 MW, the government announced a plan to increase
this capacity level to 9,500 MW by 2025.
Advanced technologies are required to construct geothermal power
plants, including the development of steam turbines resistant to corrosive
impurities contained in steam drawn from deep in the Earth. Backed by
the technological excellence of Japanese manufacturers, Sumitomo
Corporation has been involved in many geothermal power station projects
around the world. In February 2010 we signed a contract for our eighth
geothermal power plant project in Indonesia: the construction of Ulubelu
geothermal power plant with a total capacity of 110 MW. With this latest
contract, geothermal power stations delivered by Sumitomo Corporationaccount for about 50% of all geothermal power-generating facilities
completed or under construction in Indonesia. We intend to continue topromote the wider availability and greater use of geothermal power, andthereby contribute to sustainable development in Indonesia and in turn,conservation of the global environment.

2001, four years after the project was suspended. We thenwent through a set of complex negotiations and procedures,
exercising our integrated corporate strength, enabled
by mobilizing a wide variety of our skills, including legal,
accounting, tax, finance, and risk management functions. As
a result, construction restarted in 2003 and the project was
successfully completed in 2006.

Sumitomo’s business philosophy propelled us toresolve a quandary
The currency crisis plunged some 30 IPP projects into
suspension. Among them, only just a few projects, including
TJB, were resumed. To bring the TJB project back to life, in
addition to the negotiations described here, we also needed
to maintain the construction site, power generation facilities
and equipment in an appropriate manner during the five-year
interruption period, which entailed significant labor and costs.
If we had focused on short-term profitability, withdrawal
from the project when it was suspended would have been
the sensible option. However, we were not pursuing shortterm profit; we always pursue value, as our businessphilosophy teaches us, not only for our company but also
for society as a whole. Our aspiration was to help achieve
prosperity and realize the dreams of Indonesia through theconstruction of power stations, which are indispensablefor the development of Indonesian society. That passion—
which reached and resonated with the Indonesian people—
and the strong relationship between us and our Indonesianpartners developed over many years through our operationsin the country propelled all stakeholders to work together toovercome the difficulties.

Continuing to support social and economic
development in Indonesia, while keeping an eye
on its future power needs
After recovering from the currency crisis, the Indonesian
economy has been growing constantly. As a result,electricity demand in the country has been increasing by 9%each year, causing a chronic shortage of power.
Meanwhile, in 2008 it was decided to double thecapacity of the TJB power plant, reflecting local recognitionof the power station’s stable power generation capabilities,
and its effective business scheme, as well as Sumitomo
Corporation’s longstanding diligent and sincere commitment.
To fulfill the expectations of the local people, we have been
making our utmost efforts to complete the construction work,
aiming to bring the additional units into operation in 2012.
With its world-class expertise and experience in
geothermal power generation, Sumitomo Corporationis also expected to play an important role in the Second
Crash Program that the Indonesian government announced
in 2009. This program, designed to accelerate thedevelopment of power resources in the country, specifies
that the share of geothermal power in the country’s total

power generation (approximately 10,000 MW) should beraised to around 40 percent.
We have been engaged in developing a range ofpower sources in Indonesia, including thermal, hydro andgeothermal, for more than 30 years. Utilizing our extensive
experience and achievements to date, we will continue
to strive to develop the electricity supply infrastructure forfurther economic and social development in Indonesia.

Stakeholder’s Voice

Looking to Sumitomo Corporation as a very
important partner in achieving a stablesupply of electricity
Due to the high growth of the electricity
demand in Indonesia, electric power
development and improvement in theelectrification rate are very important
especially on Java Island, where thepopulation is concentrated. The Tanjung
Jati B coal fired power plant is a
strategically important power plant on theJava-Bali Grid, which will share more than
11% of the power generation after
Mr. Basuki
completion of Units 3 & 4.
Siswanto
Sumitomo Corporation, the contractor
General Manager
for the plant construction, and CJP, the local
Unit Business TJB
project company who manages this TJB
PT PLN (Persero)
project under a unique finance lease
scheme, are our very important partners and
we are all in the same boat. Over the leasing
period of over 20 years, we would like to contribute to society byproviding a stable supply of electricity.

Sumitomo Spirits
First-hand observation of Indonesia’scontinuous development gives me great pridein my work
I was stationed twice and spent a total of 13
years, more than half of my professional life,
in Indonesia. This is the second time for me
to work in this country. When I started myfirst assignment in Indonesia in 1993, thecountry was still at the early stages of
economic development and the electricity
supply system was not developed enough,with frequent blackouts. In the 17 years
since then, I came back to the country to
see that the many past projects I
participated in are supporting local
economies and society. It gives me a great
sense of pride and a unique pleasure. We
would like to continue operating ourbusiness with integrity in Indonesia to keepa smile on the face of the local people.

KazushiMatsunoki
General Manger
Tanjung Jati B
Project Department

Report on Responsibility & Sustainability 2010 20

After a successful business turnaround using
our expertise as an integrated trading company,
Bolivia’s largest mining company has been
contributing to the nation’s economic
development
The San Cristobal Mine in Bolivia, in operation since August
2007, is one of the largest mines—the sixth largest by zincconcentrate production and the third largest by volumeof trade—in the world. The mine covers 2,024 square
kilometers, an area comparable to the size of Tokyo. We,
Sumitomo Corporation have participated in this mining
project since its planning phase in 2006, and have been
involved in the management of the local mining company
Minera San Cristobal (MSC).
The mining business at San Cristobal faced very difficult
times from the beginning. Ore production at the mine did
not go as smoothly as originally planned, which took its tollon the financial performance. The situation was exacerbatedby the falling metals prices affected by the outbreak of the
global financial crisis in the fall of 2007.
In response, Sumitomo Corporation started tostrengthen its support for the project in the middle of 2008
by injecting funds and assigning additional personnel. We
also acquired all the shares in MSC in March 2009, andhave been striving to rehabilitate the business of this whollyowned subsidiary, making full use of the expertise in runningbusiness enterprises that we have built up as an integrated
trading company.
MSC’s fiscal 2009 exports of zinc and lead concentrates(silver is also included in both concentrates) represent

approximately 50% of the exports of the entire mining sector
in Bolivia, and 11% of all Bolivian exports. The company
has also created some 1,200 jobs in direct employment andabout 3,000 jobs in indirect employment. MSC’s annual
procurement of goods and services from local suppliers in
Bolivia amounts to tens of millions of dollars.
As these statistics demonstrate, MSC plays an importantrole in the Bolivian economy today. Another notable featureof the company is its emphasis on maintaining good
relationships with its stakeholders. To ensure a harmonious
relationship between workers and management, thecompany led the efforts to organize a labor union, andbecame the first Bolivian mining operator to sign a multi-year
union agreement.

Project overview
Department of Potosi, in the southwestern partof Bolivia
At a height of 3,800 to 4,500 m above sea level
224 million tons (as of Dec. 31, 2008)
Mineral resources
Zinc: 3.2 million tons, lead:1.2 million tons,
Proven & Probablereserves
silver:406.9 toz.
Mining concession area 2,024km2
Expected mine life
16 years (until 2023)
Initial production
August 2007
Ore processing capacity 40,000 tons per day (planned processing
capacity)
Open-pit mining
Mining method
Number of employees Approx. 1,200
Approx. 3,000
Number of indirect
employees
Europe, Asia (including Japan)
Major clients
Location

Theme

2

Achieving World-class Mining Operations
and Supporting Sustainable Developmentof the Local Community
San Cristobal Mine Project in Bolivia
During the three years since its launch, our project at the San Cristobal Mine in
Bolivia has grown to boast world-class management quality, a testament to which
includes the recent obtainment of certification for three international management
standards (quality, environmental, and occupational health and safety). Through thisproject, Sumitomo Corporation has been able to make a significant contribution to thedevelopment of the Bolivian economy. At the same time, we have also been actively
supporting the development of the local community toward a sustainable future.
In this section, Takahiro Izuta, General Manager of the San Cristobal Project
Department introduces the journey that the mining project has gone through to date
and where it is heading and how.

Takahiro Izuta
Corporate Officer
General Manager
San Cristobal Project Department

21 Report on Responsibility & Sustainability 2010

World zinc concentrate production(As of 2009; in metallic volume; source: statistics by a UK survey agency)

2nd

Red Dog (USA)7th

Brunswick(Canada)3rd

1st

Antamina(Peru)

Rampura-Agucha(India)5th

Mount Isa
(Australia)

4th

Century (Australia)

6th

San Cristobal (Bolivia)
The world’s third largest
by volume of trade

Report on Responsibility & Sustainability 2010 22

Theme2

Achieving World-class Mining Operations and Supporting
Sustainable Development of the Local Community

Simultaneous obtainment of international
certification for quality, environment, andoccupational health and safety management
systems
As part of its business restructuring, a range ofimprovements were implemented or are in progress,
including a senior management reshuffle with a new CEObrought in from Sumitomo Corporation, strengthening ofmanagement systems and internal control, enhancementof training systems and other employee development
programs, and many more.
In line with Sumitomo’s business philosophy: “People
make the enterprise,” MSC places particular emphasis on
the development of human resources. Indeed, two million
dollars were invested in a wide range of employee training
programs in both fiscal 2009 and 2010. Example training
programs include computer-based training courses for all
plant operators to improve their skills by reaffirming theirunderstanding of the basics of safety and other operational
processes, as well as training courses for operator training,
greater teamwork and more effective leadership, and IT
workshops.
Another notable initiative at MSC is its company-wide
efforts to obtain internationally recognized management
system certification toward achieving its aspiration to
become a “world class Bolivian mining company.” As a resultof careful visualization of the business processes and further
strengthening of management systems and internal control,
MSC obtained ISO 9001 (quality management systems),
ISO 14001 (environmental management systems), and
OHSAS 18001 (occupational health and safety management
systems) certification simultaneously in May 2010.
There are few mining companies which havecertifications for all thethree standards in theworld, let alone in Bolivia.
This fact alone is aneloquent indication of theworld-class management
quality of MSC.

Business operations incorporating full health,safety, and environmental measures
Even before obtaining certification, MSC had been taking
into account worker health and safety, environmental
concerns, and the well-being of local residents andcommunity during its mine development and operational
stage in accordance with the Equator Principles*1 and therelevant national legislation.
For example, MSC assesses the mining site’s impact
on the environment, including air quality, water level andthe quality of the wells, soil quality and noise levels on aregular basis and reports the results of the assessment
to the Bolivian government every six months. In addition,
the company is working to recycle a greater amount of
the water used during its operations, particularly in themineral processing plant, so as to mitigate and reduce theenvironmental impact of this project and achieve sustainable
use of resources.
For occupational safety, a Safety Training Observation
Program*2 has been introduced, in which managers observe
employees while they are working to identify and analyze
unsafe actions and behavior—the cause of 96% of work
injuries. Then the managers and employees discuss thesafety risks and hazards identified and agree on the actions
to be taken to rectify unsafe acts and eliminate unsafe
conditions. The results of implementing those measures areshared among all employees to improve overall safety in theworkplace.
To ensure workers’ health, MSC carries out frequent
health tests, monitors the blood lead levels of its workers
through periodical examinations, and has established a
medical center with emergency care facilities in the San
Cristobal village, which employees and their families canaccess 24 hours a day. The medical center also provides
greater access to enhanced medical service for the local
community, since the clinic located on the medical center’s
premises is open to local residents, who now no longer
need to travel some 100 km to receive medical treatment.

Medical Center

Safety training
ITSC on-sitetraining

Monitoring water level and quality
Simultaneous obtainment ofcertification for threeinternational standards

23 Report on Responsibility & Sustainability 2010

Reverse trade show for suppliers

Dialogue with local residents
Students studying at their elementary school

Aiming at self-driven, sustainable local
community development through active support
for infrastructure improvement and humanresources development
Making positive contributions to sustainable development of
the areas surrounding the mining site and Bolivian society
is one of the main themes that we have been working on inthis project. In addition to economic contributions such as
paying taxes and creating jobs, MSC has been conducting
a variety of support activities so that the neighboring
communities will be able to develop continuously on theirown even after the mine has closed.
Support for sustainable development in the local
community started with building and improving industrial andresidential infrastructures and facilities when developing themining site. Utilizing these social infrastructures, as the next
step, MSC has now started to focus on improving skills,
services and other non-material elements. Through the San
Cristobal Foundation, established with an initial endowmentof two million dollars when the San Cristobal village was
relocated, MSC established an electrical and mechanicalengineering staffing agency, donated greenhouse facilities
for agriculture and buses for commercial sightseeing tours
and opened internet cafes. MSC supports the operation of
the staffing agency it created, including the development oftraining programs for technicians. The manpower agency
has some 80 to 100 registered technicians on a constantbasis, and its client base has expanded to include non-MSC
companies.
MSC also focuses on developing local parts andmaterials vendors by organizing so-called “reverse tradeshows” for local suppliers, which are the opposite to
traditional trade fairs in that MSC exhibits what it wants
to purchase in the hope of sourcing those products fromlocal businesses.
In addition, MSC sits on a local advisory committee
consisting of representatives of four neighboring villages
to provide support for the formulation of community-driven
local development programs, the development of new
project plans, the operations of community associations,and communication between local communities and thegovernment with regard to supplying power and other largescale projects, among others.
Another key focus area in the support activities MSC
provides is education and human resources development,
the driving force for the continuing self-development of local
communities. Representative activities include constructing
a new building for a local elementary school, which has

computer network facilities that offer web-based, distancelearning programs, college scholarships for high-achieving
high school students, and cooperating in corporate training
programs at universities. In addition, MSC establisheda technical training center, the San Cristobal TechnicalInstitute (ITSC), in 2009, the opening ceremony of which
was held, attended by Bolivian President Evo Morales.
ITSC’s curriculum is designed to nurture true professional
technicians with advanced skills, rather than merely teaching
the skills necessary to work at MSC, so that graduates will
also be able to work for other companies after the closureof the MSC mine. MSC would like to contribute to the longterm development of Bolivia by producing high-performing
alumni, who will play an important role in their workplaceand in Bolivian society, making the most of the leading-edge
technologies and engineering they learned at the ITSC.
Moving forward, MSC will continue to strive for greater
value from the mining project by exploring more ore reserves
and improving concentrates’ quality. At the same time, MSC
will intensify its collaborative efforts for sustainable growth in
Bolivia through active dialogue with local communities.
*1 Equator Principles : A set of action principles that financial institutions will
follow when they assess and manage environmental and social risk inproject financing in accordance with relevant IFC and other standards so
as to avoid or reduce any negative impact the project may impose.
*2 Safety Training Observation Program (STOP) : A program originallydeveloped by US-based DuPont.

Stakeholder’s Voice

Becoming a professional with universallyvalued skills
I am taking the Industrial Mechanics Training
Course at the ITSC. The course offers
students the knowledge (e.g., steel material
types and properties) and skills (e.g.,
welding, lathe processing) they need.
On-site training at MSC will be scheduled
later in the course. The cost of studying at
ITSC, including tuition, course fees andon-site training fees, are covered by ascholarship from MSC.
My ambition is to acquire advanced skills
as an industrial mechanic and become a top
professional who can use his skills at any
company. I am confident that studying at the
ITSC will serve as a major stepping stone
towards that goal. I hope that many people
will study at the ITSC and play a major rolein developing a prosperous future for Bolivia.

Mr. Franz
Ramos
Citizen of San
Cristobal village

Report on Responsibility & Sustainability 2010 24

Theme3Creating and Developing New Businesses
into the Next Decade
Becoming a leading environmental business operator and major
contributor to creating a low-carbon, recycling-oriented society
We launched the New Business Development & Promotion Division to create, develop and establish new
business that will help build a low-carbon, recycling-oriented economy and establish a major source ofrevenue for our environmental and new energy operations in the future.
Targeting the sustainable development of society and business, the division aims to create and nurture new
business mainly in the areas of photovoltaic power generation, environmental recycling and next-generation
batteries, which will contribute to both profitability and environmental conservation.

25 Report on Responsibility & Sustainability 2010

Creating new business that will become a major
source of revenue for our environmental and newenergy operations in the future
In FOCUS’10, our medium-term management plan for theperiod starting in fiscal 2009, we have declared that we at
Sumitomo Corporation will draw “A Growth Scenario on
a New Stage” into the next dacade and aim to become
a value-creating company, which can translate changes
in the business climate into opportunities for growth. The
New Business Development & Promotion Division was
created as a specific initiative toward this goal.
The “New Business” in this new division’s name refers
to business areas that have promising potential for future
growth. They are business areas that will help solve thechallenges of environmental and new energy issues, which
are considered essential in building a sustainable, lowcarbon, recycling-oriented society. We believe it is our
mission to establish new business models in these new
business areas and grow them into core businesses thatwill generate strong revenue, and—as Sumitomo’s businessphilosophy teaches us—these activities must benefit not
only our own businesses but also society and the nation.

Consolidating and reorganizing our existing
environment and new energy businesses under a
new division
Environment and new energy business is a growth area,
and the market size is expected to grow several times larger
over the next 10 years. Although we have been involved
with various projects and activities in this area already, we
realized that in order to speed up our activities in this market
effectively, it is important to shift from the previous stylewhere projects and businesses were carried out separately
by each business unit to a consolidated and company-wide
approach. The shift has enabled us to take a bigger viewof the entire value chain in assessing the future and growthpotential of our business, and identify and capture businessand investment opportunities without delay.
For this strategic reason, environment and new energyrelated operations undertaken by various business units
were pulled out and consolidated into a new, crossfunctional, company-wide organization—the New Business
Development & Promotion Division. Under the new division,
the four departments: the Solar Business Department,
Environmental Solution Business Department, Battery
Business Development Department, and Strategic Venture
Investment Department, create and nurture new businessfrom a medium- to long- term perspective by collaboratingclosely with each other and leveraging the experience andexpertise accumulated to date.
The fledging division was assembled by putting together
employees who had been engaged in environment and newenergy-related business in various business units, which has
allowed members of the division to reaffirm the promising
future and growth potential of the target market and sharethe same direction and mission within a short period of time.
The anticipated collaboration among different
departments within the division has started to generatetangible results. For instance, good progress has been

made with the potential integration of the photovoltaic
power generation business and the next-generation
batteries business, and information on leading-edge
technologies originally obtained by the Strategic Venture
Investment Department has provided useful insights forother departments. We will see greater synergies createdin the future as our operations under the new businessstructure move forward.

Developing profitable businesses that are also
good for the environment will bringsustainable growth for both our business andsociety
While many people may tend to associate corporate
environmental activities with social contributions suchas community clean-ups that take place outsideof business, we believe intrinsically that corporate
environmental activities should be carried out through ourbusiness activities, as the Sumitomo Corporation Group
Environmental Policy states. In other words, environmental
activities should be truly sustainable practices which
generate business profits while simultaneously helping tosolve environmental problems in society.
Otherwise, corporations will eventually face difficulty incontinuing their business, which also means they will nolonger be able to contribute to building a sustainable society.
With this recognition in mind and with our unwaveringcommitment to sustainable development with society, eachone of us at the new division will always seek appropriate
solutions rather than an easy response to the issues we may
face. We will work in unison to create and develop businessthat can help create a truly affluent society in a harmonious
relationship with the natural environment.

Hiroaki Mizobuchi
Executive Officer
General Manager
New Business Development &Promotion Division

Report on Responsibility & Sustainability 2010 26

Theme3Creating and Developing New Businesses
into the Next Decade

CASE 1Creating a market for second-life uses of lithium-ion batteries in a lowcarbon society
Striving to create and expand the market forsecond-life uses of EV-mounted lithium-ion
batteries

Expanding the possibilities of lithium-ion
batteries in building a low-carbon society

Expectations for electric vehicles (EVs) powered by electricity
instead of gasoline have been rising. This is because
essentially they are “zero emission” vehicles and cancontribute to solving environmental problems such as global
warming and the depletion of energy resources.
To create greater demand for EVs, effective secondlife uses for lithium-ion batteries mounted on EVs is crucial.
Generally, lithium-ion batteries retain some 80% of their initial
capacity after five years of use under normal conditions.
This means that these used batteries still can be used for avariety of purposes. Given the fact that a lithium-ion battery
is the most expensive of the EV’s components, creating
an actively trading market in used lithium-ion batteries withcapacity remaining for second-life uses will make EVs a
more affordable choice and help increase demand.
To seize this acknowledged business opportunity,
Sumitomo Corporation, together with Nissan Motor which
will launch its EVs on the Japanese and US markets from
December 2010, announced its “4Rs” strategy to reuse,resell, refabricate and recycle batteries from EVs. We aim to
use this strategy to cultivate the second-life use market forused lithium-ion batteries from various angles.

In addition to their uses in EVs, lithium-ion batteries are
expected to play various roles in building a low-carbon
society.
Examples of expected applications include electricity
storage facilities for a smart grid.* This next-generation
power supply system must be able to store excess electricity
in response to fluctuations in power demand. Due to theirlonger life and higher energy density, lithium-ion batteries
are also expected to be used as back-up power supplies,
replacing traditional lead-acid storage batteries. Our mission
is to establish an effective business model where reusable
lithium-ion batteries can be made available for such secondlife use applications.
The Sumitomo Corporation Group has been operatinga wide range of businesses related to lithium-ion batteries,
from the procurement of the raw materials (metal resources),to the manufacturing of the components (e.g., electrolytes,
anode materials), and even to the leasing of EVs. With
this latest addition of our 4Rs strategy, our value chain for
lithium-ion batteries has been expanded and intensified.
Going forward, we intend to cultivate a market forreusable lithium-ion batteries by leveraging the depth of ourconsistent business portfolio in this field and the breadth of
our operations, which are typical of an integrated trading
company. In this way, we would like to promote greater useof EVs and ultimately help build a low-carbon society.
*Smart grid : The next generation power grid that aims at electricity demand/
supply optimization by using information and communications technology(ICT).

4Rs for lithium-ion batteries

Norihiko Nonaka
General Manager
Battery Business Development
Department

27 Report on Responsibility & Sustainability 2010

Reuse

Refabricate

Second-life uses forbatteries with large
remaining capacity

Repackaging to meetclient needs

RecycleResellRecovery of raw
materials

Resale for various purposes
Repair/replacement parts

Stabilizing output levels of
renewable energy

CASE 2

Establishing a waste home appliance recycling business in China to build a

recycling-oriented society
Recycling home appliances is a solution to two
problems—worsening environmental pollution andsoaring metal prices
Spurred by its rapid economic growth, China’s demandfor home appliances has increased to the highest level inthe world. In recent years, consumers actively purchasing
upgraded or newer models to replace existing appliances
have resulted in large volumes of waste home appliances.
These waste home appliances were not necessarily disposedof in the proper way and environmental pollution caused by
the resulting effluent has become a public concern.
Waste home appliances have also been attracting
attention for another reason. Those end-of-life products
contain rich amount of metal resources which can berecovered by appropriate processing. They are so-called“urban mines.”
Reflecting growing environmental awareness andsoaring metal prices, the recovery of metal resources fromwaste home appliances has been growing worldwide lately.
In China, the Regulations on the Collection, Disposal andManagement of Waste Electrical and Electronic Equipment(a Chinese equivalent to WEEE) will come into effect inJanuary 2011 to encourage the proper disposal of waste
home appliances.
To capture this business opportunity, Sumitomo
Corporation has teamed up with Dowa Eco-System. inlaunching a recycling business for consumer electronicand home appliances in China. Our business partner isa member of the DOWA Group, which has abundant
experience in the recovery and recycling of metal resources.

Expanding our recycling operations throughout
China to other Asian countries to become aJapan-based leading recycling business operator
In May 2010, Sumitomo Corporation, Dowa Eco-System,
and Tianjin City Green Angel Collection and Reuse of

Recyclable Resources (Green Angel) established a new
joint company in Tianjin City, China to recycle consumer
electronic and home appliances.
The new company will take advantage of the respective
strengths of the three participating companies: Dowa EcoSystem’s technologies and know-how in recycling consumer
electronic and home appliances, Green Angel’s network of
waste collection stations and its system for collecting waste
home appliances from electronics retailers in Tianjin City,and Sumitomo’s know-how in business operations in the
Chinese market.
The launch of the new company was agreed in the
fourth Japan-China Energy Conservation Forum held in
Beijing in November 2009, fitting in well with the Japanese
government’s policy of promoting cooperation between China
and Japan on energy saving and other environmental initiatives.
This establishment of the joint company marked the first entry
by a Japanese integrated trading company into the Chinese
consumer electronic and home appliances recycling market.
We have been building a strong partnership with the Cityof Tianjin since we opened our office in the city 30 years ago.
When it comes to environmental efforts, the municipality
and Sumitomo Corporation jointly formed an Environmental
Protection Committee in 2006 to undertake a wide rangeof study projects. This cooperative relationship with the city
government served as the groundwork for the launch of
the new company. As Tianjin is known as one of the mostenvironmentally conscious cities in China, operating anenvironmental and recycling business in the city will give us
a tremendous advantage in expanding operations to manyother locations in the country in the future. Building upon our
successful experience in Tianjin, we would like to make aforay into other locations throughout China and other Asian
countries, and eventually become a Japan-based leading
global recycling business operator.

Business operations leveraging the strengths of three companies

Hideki Kanaoka

Silver, aluminum,
copper, etc.

Deputy General Manger
Environmental Solution
Business Department

Use
Sumitomo Corporation
Know-how on business operationsin the Chinese market

Dowa Eco-System
Technologies andknow-how onrecycling

Recycling

New Company

Green Angel

Local waste
Recycling consumer
electronic and home collection networkand systemappliances

Collection

Report on Responsibility & Sustainability 2010 28

In Europe·CIS·Middle East·Africa

In Japan• Supporting Shakespeare’s Globe Theatre (UK)1
• Supporting Centrepoint to help young homeless people (UK)• Supporting Thames 21 Litter Trap to keep the River Thames
litter-free (UK)2
• Helping children with disabilities to attend school (Romania)• Supporting Japanese speech contests (Russia)• Supporting indigenous people as part of the timber business with
Terneyles (Russia)• Cooperating with the Japanese School in Teheran for its school
festival (Iran)• Supporting improvements to the educational infrastructure forchildren (South Africa)
3• Supporting land mine removal (Angola)• Donating books for teacher training (Madagascar)• Supporting education and health care improvements for the local
community as part of the Ambatovy Nickel Mine project(Madagascar)
4• Supporting the Junior Philharmonic Orchestra
5
6• Promoting “barrier-free” movies• Cooperating in vocational training for people with disabilities• Forest improvement activities by Summit supermarkets• Participation in and sponsorship for local cleaning activities andvarious events
7• Organizing events for local residents hosted by J:COM cable TV
company and many commercial complexes of other Sumitomo
Corporation Group companies across Japan• Apparel trade-in recycling program at Barneys New York
specialty stores
8• Cooperating in workplace tours and work experience programsfor students and local residents• Supporting the Table for Two Meal Program• Donating clothes and other goods to social welfare facilities andbazaars to support international students• Supporting environmental NPOs and NGOs through donations to
Keidanren Nature Conservation Fund and World Wide Fund for
Nature (WWF)• Supporting Japan Platform (JPF), an international humanitarianorganization• Blood donation campaigns to support the Japanese Red
Cross Society• Collection and donation of used stamps, prepaid cards and PET
bottle caps to support philanthropic activities

3

1

4
2

Theme

4

Utilizing Our Integrated Corporate
Strength to Promote Social Contribution
Activities Worldwide
Because of its integrated corporate strength, the Sumitomo
Corporation Group is involved in a wide range of social
contribution activities around the world
As we work to further strengthen our relationships with local stakeholders, the Sumitomo Corporation
Group, a global organization, conducts social contribution activities aimed at addressing these social
issues in many countries and regions around the world, respecting the unique features and conditions
present in different areas.
We view these activities as not limited to social support activities such as volunteer work or offering
charity but as much more diversified.

The Sumitomo Corporation Group’s Basic Principles on Social Contribution Activities
OBJECTIVE We, as a global organization, will work on social issues through our business activities and social contribution activities with the aim of building asustainable society by implementing the Sumitomo Corporation Group’s Management Principles and Activity Guidelines.
ACTIVITIES We will engage in social contribution activities aimed at developing the next generation of human resources who will drive the sustainable
development of society, and contributing to local communities in areas we do business all over the world. We will also take part in various
activities as a good corporate citizen.
APPROACH We will perform and seek to continuously improve our activities with modesty and high aspirations and endeavor to maintain a high level oftransparency while strengthening our relationships with all our stakeholders.

29 Report on Responsibility & Sustainability 2010

6

In Americas• Supporting the Center on Japanese Economy and Business,
Columbia Business School (US)9
• Donations to an organization supporting the development of atreatment for leukemia and other incurable illnesses (US)• Donations to the Lincoln Center (US)• Support for organizing Japan Day, an event to showcase
Japanese culture (US) 10• Donations to the American Museum of Natural History (US)11
• Donations to the Metropolitan Museum of Art (US)• Donations to the Japanese American National Museum (US)• Donations to United Way of New York City (US)• Supporting educational and infrastructure improvements for the
local community as part of the San Cristobal Mine (silver, zinc,lead) project (Bolivia)• Contributions to relief funds for large scale natural disasters(Chile, Haiti)

11
8

10

9
15

7

5

13

12
14

In Asia·Oceania• Sumitomo Corporation Scholarship to help college students in
Asia (various Asian countries) 12• Helping children in poverty-stricken areas in Yunnan and Anhui
provinces finish school (China)• Internship programs for college students in Guangzhou
province (China)• Courses bearing the Sumitomo Corporation name at Tsinghua
University, Nankai University, and Hanoi National Economics
University(China, Vietnam) 13• Supporting programs of study tours to Japan for Chinese
university students (China)• Supporting Japan-Korea Exchange Festival (South Korea)
14• Supporting educational and infrastructure improvements for local
communities as part of overseas industrial park development
projects (the Philippines, Indonesia, Vietnam)• Supporting education and health care improvements for local
communities as part of the Tanjung Jati B coal fired power plant
project and the Batu Hijau Mine (copper, gold) project (Indonesia)• Japanese language education and culture learning for junior highschool students (Vietnam)• Donating school uniforms and school supplies to local elementary
schools (Myanmar) 15• Supporting a local rugby team (New Zealand)• Contributions to relief funds for large scale natural disasters (China,
Taiwan, the Philippines, Indonesia, Pakistan)

Report on Responsibility & Sustainability 2010 30

Beijing
TianjinTheme

5

Locally-rooted Social Contribution
Activities under the Initiativeof Local Employees

Shanghai

Guangzhou

CSR activities of the Sumitomo Corporation China Group
Corporate social responsibility (CSR) has been drawing growing attention in China, a country experiencing
continuous rapid economic development.
Against this background, the Sumitomo Corporation China Group launched its CSR committee dubbed“Virtuous Cycle” in May 2009. The committee formulated the overall policy for the Group’s social contribution
activities, which emphasizes developing the next generation who will shape the future of the country.
Based on this policy, its group companies in China are actively promoting their locally-rooted social
contribution activities, in which locally hired employees are playing leading roles.
This section introduces how they as a good corporate neighbor give back to the local communities inwhich they operate.
CSR Committee members

Fu Xiao Jiong

Chen Eve

Shanghai
General Manager
Administration Department of East China
Administration Unit of East China

Guangzhou
Section Manager
General Affairs & HR Section,
Administration Department of South China
Administration Unit of South China

Han Jian Ping

Ye Peng

Beijing
Section Manager
General Affairs Section,
Administration Department of North China
Administration Unit of North China

Tianjin
Section Manager
Planning & Administration Section,
Administration Unit of North China

The experience of supporting earthquake victims
inspired employees to do more for society
As part of its social contribution activities in Asia, theSumitomo Corporation Group has been supporting
the development of future leaders in Asian countries.
Representative programs include Sumitomo Corporation

Scholarship, which were established in 1996 to provide
financial support for college students in China, Vietnam,
Indonesia, Thailand, and other nations. In conjunction withthese programs led by our Head Office in Japan, locallyrooted social contribution activities have been actively
promoted in China recently on the initiative of locally hired

Educational support for poverty-stricken areas in Anhui

Educational support for poverty-stricken
areas in Yunnan

Educational support for poverty-stricken
areas in Anhui

31 Report on Responsibility & Sustainability 2010

employees of the Sumitomo Corporation China Group
companies.
Such employee-driven activities originated and evolved
from a single event: support for victims in the region hit by
the Great Sichuan Earthquake in May 2008. Wishing to reachout to the victims of this unprecedented disaster, locally
hired employees in the Sumitomo Corporation China Groupsuggested they take their own action to solicit donations
for the quake victims, in addition to the company’s financial
contributions. In response, fund-raising activities were carriedout in their group companies in China, and a larger-thanexpected number of employees made donations. As aresult, donations equivalent of approximately eight million yen
were offered to support the recovery from the catastrophic
earthquake.
“Through that fund-raising activity, we realized that many
employees wanted to help people in need and wanted tocontribute to society. This recognition propelled us to createa mechanism to provide opportunities for more employees
to join social contribution activities. That’s why the Sumitomo
Corporation China Group CSR Committee (CSR Committee)
was established in May 2009,” says Fu Xiao Jiong, deputy
chairman of the CSR Committee and an employee of
Sumitomo Corporation (Shanghai).
The CSR Committee’s Chairman Fuminori Naganuma
follows, “The CSR Committee is mainly comprised of
locally hired employees who have experience in CSR
activities in China, while Japanese expatriates likemyself support their activities. The Committee is asteering committee in nature and therefore its roles andresponsibilities are the development of activity policies
and progress management. Specific programs areplanned and implemented by each group company under
the initiative of its locally hired employees.”
In addition, to raise awareness of the importance of CSR
activities across the Group, the CSR Committee came up
with a nickname for itself: Virtuous Cycle.
“The name ‘Virtuous Cycle’ reflects our commitment tocreating a virtuous cycle where we, as a for-profit corporation
operating in China, not only fulfill our responsibilities to society
by paying taxes and creating employment opportunities, butalso maintain harmonious relationship with Chinese society
and contribute to the sustainable development of society

through a wide range of social contribution activities. And
such interaction with society will help us achieve our own
growth,” said Fu.

Focus on developing future leaders in China
After extensive discussions, the CSR Committee developed
the basic policy of the Sumitomo Corporation China Group’ssocial contribution activities. Specifically, they decided tofocus for the time being on support for human resources
development for future generations, and to ensure that many
employees can participate in these activities.
“Considering the fact that elementary and junior highschool education-related issues in poverty-stricken areas ofChina, such as the inability to cover educational expenses
and the shortage of schools and teachers, has been
worsening, we decided to focus on educational issues first.
It was also suggested and agreed that our activities will
not be completed only by providing support; we should
communicate and interact with support recipients andrelated stakeholders actively, and this in turn will lead toenhancement of our corporate value,” said Fu.

Promoting interaction with local communities in
addition to financial support
Under this basic policy, the Sumitomo Corporation China
Group has stepped up its CSR activities. In addition to theprograms in collaboration with Head Office in Japan, suchas ongoing operation of Sumitomo Corporation Scholarshipand the courses bearing the Sumitomo Corporation nameat Tsinghua University in Beijing and Nankai University in
Tianjin, as well as educational support for poverty-stricken
areas in Yunnan province, the China Group companies
have implemented their own programs, which include
educational support for poverty-stricken areas in Anhui
province by Sumitomo Corporation (Shanghai), and training
programs for college students by Sumitomo Corporation(Guangzhou).
In the efforts to support education in Anhui province,
financial contributions from Sumitomo Corporation(Shanghai) and its employees were offered to elementary,junior high school and high school students in need. In
addition, desks, chairs, lockers, computers and otherequipment were also donated to local schools.

Training program for college students

Course bearing the Sumitomo Corporation
name at Nankai University

Sumitomo Corporation Scholarship

Course bearing the Sumitomo
Corporation name at Tsinghua
University
Report on Responsibility & Sustainability 2010 32

Theme5Locally-rooted Social Contribution Activities
under the Initiative of Local Employees“To make our support relevant and effective, ouremployees visited Anhui province to understand theeducational and living conditions there and identify local
needs. On a later day, we invited local teachers andstudents to visit Shanghai to meet with our employees.
Most of the students had never come to a big city like
Shanghai, one of the fastest growing cities in the world.
I remember they said ‘I want to study hard and work inShanghai’ with their eyes beaming!” said Fu.
Meanwhile, they also received positive feedback fromlocal college students who participated in the internshiptraining program organized by Sumitomo Corporation(Guangzhou), including comments like “I was able to learn
a lot of things which I cannot study at college, which has
broadened my horizon,” and “I was impressed with theenthusiasm of the lecturers and employees, and their highlevel of professionalism.”

Continuing and rooting CSR activities
as an integral part of business

Activity example 1

Activity example 2

Educational support for poverty-stricken areas in Anhui
Many children in poverty-stricken areas in Anhui cannot
afford to go to school. In December 2009, donations from
Sumitomo Corporation (Shanghai). and its employees were
offered to a total of 70 elementary, junior high school andhigh school students with financial difficulties in the province.
In addition, the company’s used desks, chairs, lockers,
computers, and other equipment were also donated to local
schools. In February 2010, teachers and students in Anhui
were invited to their office in Shanghai to attend seminars
and a gathering of its employees.

Training for college students
In Sumitomo Corporation (Guangzhou), 23 college students(including seven Sumitomo Corporation Scholarship
recipients) received a three-day training course in December
2009. Those students were selected from 200 applicants
who were recommended by three target local colleges. Theyobtained a better understanding of the Sumitomo Corporation
Group’s Management Principles and the trading businessthrough many activities such as lectures on the basics ofbusiness and business practices, discussions with Sumitomo
Corporation (Guangzhou) employees in the frontline of the
trading business, a tour of their distribution center.

About one year has passed since the CSR Committee,
Virtuous Cycle, launched its social contribution activities in
China with two key objectives: ensuring active employee
participation and operating locally-rooted activities.
During this period, the circle of employees participatingin these activities has been expanding at a steady pace.
This movement has also helped increase staff motivation.
Many group employees say they are proud to be amember of a company which is actively engaged in social
contribution activities.
Fu says, “The important thing is that we in the
Sumitomo Corporation China Group will continue social
contribution and other CSR activities as an integral
part of our business activities, not as a one-off event or
passing fad. To this end, we would like to create as many
opportunities as possible for active interaction between
our employees and people living in the locations where ouractivities are taking place, so that more employees can join
the activities with a sense of ownership and our network of
CSR activities will expand even further.”

Sumitomo Spirits

Stakeholder’s VoiceFor the sake of children’s innocent smiles

Kick-starting my career with training at
Sumitomo Corporation

I joined the educational support program forpoverty-stricken areas in Anhui in December
2009. It was my first participation in social
contribution activities since I joined thecompany. In that province, there are many
children who have to drop out of school
because of poverty, and I wanted to be ofsome help to them. When we visited thesite, we were deeply impressed with thechildren there, wearing innocent smiles on
their faces while they were struggling indifficult economic conditions. Their smiles
inspired me to support this activity more sothat a greater number of employees join us
in supporting those children.

33 Report on Responsibility & Sustainability 2010

Ding Yan Min
Logistics Departmentof East China
Sumitomo
Corporation(Shanghai) Ltd.

As the saying goes, “A man can show
tremendous growth even within three days”;
the three days at Sumitomo Corporation(Guangzhou). has given me a lot of
inspiration and insight for my future career.
Through the training with nine divisions, I
was able to learn about and was impressedwith the company’s advanced risk
management and performance evaluation
Mr. Luo Xi
systems, and management style placing
Student of Sun Yatutmost respect for the employee, which
sen University
helped me to realize what constitutes thecorporate culture and business philosophyof Sumitomo Corporation. I feel honored and privileged to havemet many talented people through this precious opportunity.

Strengthening theFoundations for
CSR Activities
Development of human and organizational dynamism
to enhance value-creation capability

Corporate Governance System
Internal Control and Internal Audit
Risk Management
Compliance
Environmental Management
Human Resources Management
Greater emphasis on human resources development and workforce diversity

Report on Responsibility & Sustainability 2010 34

Corporate Governance Systemwith a committee based system of corporate governance.
However we believe that the best way for us to improve theeffectiveness of our corporate governance is to maintain our
existing corporate auditor system while enhancing andreinforcing it through auditing from diversified external
viewpoints and with opinions and advice from additional
external advisors. Based on “Sumitomo’s businessphilosophy,” we have established the Sumitomo
Corporation Group’s Management Principles and Activity
Guidelines, and work to enforce these principles andguidelines among all officers and employees, in order toshare the basic values that must be respected by the
Sumitomo Corporation Group, including compliance withlaws and regulations. From the perspective of maintaining
sound management, we have developed a system forensuring compliance with laws and regulations by
establishing a Compliance Committee and introducing a“Speak-Up System” for internal reporting, among othermeasures. Guided by the belief that management itself must
conduct its duties with high ethical standards, we haveclearly stated in the “Sumitomo Corporation Corporate
Governance Principles” that in principle, the Chairman of theBoard of Directors and the President are each limited toterms of up to six years.
In 2009, we established the Sumitomo Corporation
Corporate Governance Principles Reform Review
Committee, including members from outside the company,and discussed a range of topics such as the appointment of
external directors. Nonetheless, we determined that at thistime, our current management structure is the most
reasonable system from the standpoints of further
strengthening and enhancing corporate governance.

We believe that the ultimate goals of corporate governanceare “improving management efficiency” and “maintaining
sound management” as well as “ensuring managementtransparency” to achieve the first two goals. Based on thisbelief, we are working to establish a corporate governancesystem that serves the interests of shareholders and allother stakeholders.

Past Initiatives to Strengthen andEnhance Corporate Governance
To date, we have strengthened and improved our corporate
governance system through initiatives covering many points,
such as optimizing the size of the Board of Directors, setting
term limits for the Chairman of the Board of Directors and thePresident and CEO, shortening the terms of Directors,
establishing advisory bodies, strengthening the corporate
auditors system, introducing the executive officer system, andappointing external advisors.
Our approach to corporate governance is embodied in
the “Sumitomo Corporation Corporate Governance Principles,”which can be accessed from the following web page.
http://www.sumitomocorp.co.jp/english/company/
governance/detail01.html

Features of Our Corporate Governance
SystemUnder the former Commercial Code, since April 2003,
Japanese companies have been able to adopt a company

The Company’s corporate governance system
General Meeting of Shareholders
Election/
Dismissal

Remuneration
Committee

Deliberation/
ReportingConsent to a submission of proposition for election of
Corporate Auditors and for election of Accounting Auditors

Directors
Board of Directors (Chairmanof the Board of Directors)

Election/
Dismissal

Corporate Auditors
Audit(Collaboration)

Board of Corporate Auditors
Assistance

External Advisors

Advice/Proposals

Election/Dismissal/
Supervision(Collaboration)

Audit

Election/
Dismissal

Dismissal

Accounting Auditors

ReportCorporate Auditor’s
Administration Department

Accounting
Audit

Important Company-wide Committees*

Management Council

President and CEO

Internal Auditing Department
Internal Audit

Internal Control Committee
Loan and Investment Committee
Compliance Committee
Information Disclosure Committee

Corporate Group

Business Units
Domestic andOverseas Offices
Subsidiaries andAssociated Companies

CSR Promotion Committee* Management Council: Exchange of opinions and information on basic policy and important matters related to management
Internal Control Committee: Management and assessment of overall Internal Control, and planning, implementation and promotion of basic policies related to Internal Control
Loan and Investment Committee: Deliberation of important matters, such as investment and financing
Compliance Committee: Enhancement of Group compliance focused on “maintaining sound management”

35 Report on Responsibility & Sustainability 2010

However, we will continue to study the most appropriate
corporate governance system for Sumitomo Corporation.

Framework for “Improving Management
Efficiency” and “Maintaining Sound
Management”

Prosecutor General and a former President of the Tokyo
High Court) and one is an accounting expert—ensuring anauditing system that incorporates a diversity of perspectives.
The three external auditors possess a high degree of
independence, such as by satisfying the conditions forindependent officers stipulated by the listing rules ofJapanese stock exchanges.

Directors and the Board of Directors
Optimization of Size of Board of Directors

Ensuring Audit EffectivenessWe halved the number of Board members from 24 in 2003. Asof July 2010, the Board has 12 members. Through thisoptimized Board of Directors, which oversees the operations of
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.

Corporate Auditors attend meetings of the Board of
Directors and all other important internal meetings, to obtain
the information necessary for proper auditing. Corporate
Auditors also meet the Chairman of the Board of Directors
and the President and CEO every month to exchange
opinions on material 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.

Limiting Terms of Directors
In June 2005, the terms of Directors were reduced from two
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 tochanges in business conditions.

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 andseparated in order to ensure mutual supervision and both
positions cannot be held simultaneously by one person. In
principle, the Chairman of the Board of Directors and thePresident and CEO are each limited to terms of six years.
These limitations on the tenure of top management help
minimize the possibility of governance problems.

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 andmonitor the auditing activities of the Accounting Auditors
through regular meetings. By attending audit review
meetings with the Accounting Auditors and observing
inventory audits, the Corporate Auditors constantly work to
improve audit efficiency and quality. Furthermore, Corporate
Auditors attend meetings of the Internal Control Committee,
and request reports on the status of internal control systems
from other departments responsible for internal control,
along with their cooperation on audits.

Establishment of the Advisory Body to the Board of
Directors

Introduction of an Executive Officer System

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 body to
the Board of Directors, no fewer than half of the Committee
members are from outside the Company. The Remuneration
Committee is in charge of studying remuneration and bonusesof directors and executive officers, and reports the results of
its studies to the Board of Directors.

We have introduced an executive officer system with the aimof clarifying the responsibilities and authority for execution
and strengthening the monitoring function of the Board of
Directors. We currently have 39 Executive Officers selectedby the Board of Directors. Of these, 11 Executive Officers
also serve concurrently as Directors, including seven who
are also General Managers of Business Units. In this way,
we aim to prevent gaps between decisions made at Boardof Directors meetings and the execution of those decisions.

Corporate Auditors and the Board of
Corporate Auditors

Appointment of External Advisors

Enhancement of 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 outof the five members on the Board of Corporate Auditors. Of
these three, two are legal experts (a former Public

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 lecturesin their respective areas of expertise, such as leadership

Report on Responsibility & Sustainability 2010 36

Corporate Governance Systemand career development, to employees at various levels
within our organization.

System for Ensuring Management
Transparency
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, notlimiting ourselves to the disclosure of information
required by law but also actively pursuing the voluntary
disclosure of information.

Communicating with Shareholders and Other
Investors
Encouraging the Execution of Voting Rights
at the General Meeting of Shareholders
We send out a Notice of Convocation to shareholders
three weeks prior to each regularly scheduled General
Meeting of Shareholders. For the convenience of overseas
shareholders, we also provide an English-languagetranslation of the notice on our website. We have allowed
our shareholders to exercise their voting rights via theInternet using personal computers since 2004 and via theInternet using mobile phones since 2005. In 2007, weintroduced the Electronic Voting Platform operated by
Investor Communications Japan, Inc. (ICJ), a joint venture
instituted by Tokyo Stock Exchange, Inc. and others. The
new platform allows institutional investors sufficient timeto thoroughly examine the propositions to be resolved at
the meeting.

Disclosing Various Information
Our corporate website provides various materials that may
be useful in making investment decisions in a timely manner.
These materials include financial results, yukashoken
houkokusho (Japanese annual securities reports), Tokyo
Stock Exchange filings and related documents of various
meetings. We also disclose information on a broad range ofGroup-wide topics through such means as feature articles
on projects that we operate around the world. Moreover, weissue an Annual Report, Report on Responsibility andSustainability and SC News, our public relations news
magazine, and endeavor to ensure proactive disclosure.

Investor Relations
In addition to working to enhance the disclosure of
information on our website, in order to ensure directcommunication with shareholders and other investors, wehold quarterly meetings attended by management to provide
information on our financial results for analysts andinstitutional investors. For overseas investors, we periodically
visit the United States, the United Kingdom, and othercountries in Europe and Asia to hold one-on-one meetings
with investors in each region. In addition, in fiscal 2004 webegan regularly holding meetings with individual investors inJapan. In fiscal 2009, we held such meetings in five cities,
with a total of 1,350 individual investors attending.
While increasing management transparency, we aim
to strengthen our relationships of trust with shareholders
and investors.
While working to strengthen and enhance our corporate
governance structure and systems, from the perspectivesof “improving management efficiency” and “maintaining
sound management,” we will continue to further
strengthen internal auditing, risk management andcompliance, to further improve the effectiveness ofinternal control.

Message from an Outside Corporate Auditor
I have observed corporations from many different angles through my 30 years of experience in judicial circles.
At the same time, I have increased my understanding of not only the economic roles of corporations, but also
the extent of their social roles. Sumitomo Corporation conducts a diverse array of businesses globally, and has
provided me with an opportunity to make practical use of my experience in this regard.
Sumitomo’s business philosophy, which has been handed down the generations within the Sumitomo
Group for more than 400 years, states the following: “Always practice sound management; never pursue easy
gains.” I believe that this principle has become Sumitomo Corporation’s greatest support when conducting
business. I participate in meetings of the Board of Directors, where I ask questions and raise various points
from an external perspective. For example, I might ask about the status of compliance or whether necessary
information is being provided to stakeholders. Sumitomo Corporation welcomes the fresh perspectives thatare introduced by being questioned about matters that, in its view, may be obvious, and always replies
sincerely. In addition, the willingness to point out issues and hold active discussions has been enhanced, evenamong directors. As an outside corporate auditor, I would like to influence management from a broad
perspective that encompasses the social role of corporations, in order to support the sustained growth of
Sumitomo Corporation going forward.

37 Report on Responsibility & Sustainability 2010

Akio Harada
Lawyer
Appointed as outside
corporate auditor in2005

Internal Control and Internal Audit
The Sumitomo Corporation Group has strengthened its
internal controls in order to retain the trust of all its
stakeholders.

Internal Control
The Sumitomo Corporation Group is formed of seven
Business Units as well as regional organizations in Japan andoverseas. The Business Units, organizations and groupcompanies collectively work together in broad business fields.
It is essential that we provide a uniform standard in operational
quality at these businesses, irrespective of their businesssector or region. This standard must also meet the
expectations of our stakeholders.
From this perspective, we launched our Internal Control
Program in 2005 to perform a comprehensive evaluation of thestatus of internal controls using a standards-based checklist.
This Internal Control Program checklist covers approximately
350 points pertaining to general operations that should becommon across the Group, including risk management,
accounting and financial controls and compliance.
To ensure that this checklist assessment is conductedeffectively, we make concerted efforts to educate all ourofficers and employees, including those at Group
companies, on the essential fine points of internal controlsthat must be verified.
In August 2010, we launched a fully redesigned Internal
Control Committee. The new committee is responsible for the
management and evaluation of overall internal control acrossthe entire Sumitomo Corporation Group and the development
and implementation of basic policies on internal control. Whilethe committee promotes group-wide activities, business units
and regional organizations in Japan and overseas are
implementing their own internal control activities in place of theprevious group-wide, comprehensive checklist assessment .
These “Internal control activities” specifically refer to theplanning, implementation, evaluation and improvement of ourinternal control systems and processes. Each organizational
unit carries on these activities continuously on a daily basiswith timely and optimal support from its Planning &Administration Department, contributing to the sustainablegrowth and development of the Group.

Fulfillment of Legal Requirements
In recent years, due to social demands, legislation
requiring companies to constantly improve and monitor
their internal control systems has been passed under theJapanese Company Law and the Financial Instruments
and Exchange Law. We have treated meeting these legal
obligations as an opportunity to further reinforce ourinternal control program, which we had implemented
ahead of the enactment of this legislation. Our efforts inthis area are ongoing and not transitional.
The Japanese Company Law, which came into effect in
May 2006, calls for companies to establish “systems
ensuring that 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 Groupfulfills the requirements of this law.
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 reliability offinancial reporting, as required by the law, through theeffective application of Internal Control Program results andits promotion structure. For the fiscal year ended March 31,
2010, the second fiscal year that the law applies to, as aresult of evaluations and subsequent improvements, as in
the first fiscal year, we found our internal controls related tofinancial reporting to be effective and received an unqualified
opinion from the accounting auditor upholding the results of
our assessment.
Through the aforementioned efforts and measures, theSumitomo Corporation Group aims to continuously improve
the quality of its operations.

Internal Audits
The Internal Auditing Department, which reports directly to
the President, was established as an independent
organization to monitor company-wide operations. Internal
audits are performed at all organizations within the
Company and Group companies. The internal audit results
are reported directly to the President every month, andreported regularly to the Board of Directors. The Internal
Auditing Department helps to raise the quality oforganizational management by evaluating the effectivenessof risk management, controls and organizational
governance processes.

Report on Responsibility & Sustainability 2010 38

Risk Management
In order to cope effectively with the diversifying risk
environment, we have built a risk management
framework by developing our risk management
approach from a micro to a macro perspective, andshifting our focus from “minimizing losses fromindividual transactions” to “maximizing corporate
value.” This framework is strongly linked to the
management plan, playing a critical role in supporting
the efficient management of our corporate resources.

the Loan and Investment Committee for thoroughexamination, and if such investments significantly
underperform the original business plans, Value-Up plans
shall be formulated and executed with the support of theCommittee. When the performance of investments fallshort of required standards after a certain period from their
inception, we have an Exit Rule that shall designate thoseinvestments as “Investments to withdraw from.”

Managing Credit Risks

The Purpose of Risk Management
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 the planand the actual results
2. Strengthen Financial Base: Maintain Risk-adjusted Assets within
the buffer (shareholders’ equity)
3. Maintain Corporate Reputation: Fulfill CSR requirements andpreserve corporate reputation

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 tocustomers depends on the assigned credit rating, and therisk weight ranging from 1.5% to 50% is set for each rating
criteria. A higher ranked officer’s approval is required toprovide credit to lowrated customers, with larger Riskadjusted Assets being calculated. This consideration
provides each Business Unit with an incentive to reduce theamount of credit extended to customers with low credit
ratings. We are expanding the scope of the SCR system tosubsidiaries and associated companies to enhance Groupwide credit risk management.

Managing Market Risks

Risk Management Basic Policy
We classify our risks into two categories: Quantifiable risk
and Non-quantifiable risk. Quantifiable risk is defined as“Value creating risk,” where we proactively take to gain the
return. Our policy is to maximize the risk-adjusted return
while maintaining Riskadjusted Assets within our buffer. Nonquantifiable risk is defined as “Value breaking risk,” which
only generates losses when it surfaces. We are building aframework that prevents or minimizes the probability of thisrisk to materialize.

Risk Management Framework

We set limits on contract balances as well as the maximum
amounts of allowable losses for six months or a full year forcommodity and financial instrument transactions. At thesame time, we constantly monitor the potential amount ofloss, (Value at Risk (VaR)—an estimate of potential risk or incase the total figures of realized and unrealized gain/loss arenegative at the time of monitoring, the total of VaR and therelevant negative figures), to ensure that the potential
amount of loss falls within the maximum amounts ofallowable losses. In addition, we conduct liquidity risk
management for each product on an individual futures
market basis in order to be prepared in the event that it
becomes difficult to close positions due to shrinking liquidity.
The Financial Resources Management Group undertakes
both the back and middle office functions in order tocompletely separate those functions from the Business
Units, thereby enabling us to maintain the soundness ofinternal checks.

Managing Quantifiable Risks
Managing Investment Risks

Managing Concentration Risks

Once an investment is made, it is often difficult to make a
withdrawal decision and the loss impact is usuallysignificant in scale. To manage the investment risk, wehave in place an integrated framework covering the entry
process to the exit process. For the entry process, we
carefully select investments that exceed the hurdle rate, athreshold for the rates of return on new investments relative
to the cost of capital. In case of new investments forlarge-scale, important projects, cases are put forward to

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 toavoid overly concentrated exposure in certain countries andregions, we have in place a country risk management
system. In addition, in order to avoid the excessive
concentration of resources in any specific field and maximize
our corporate value, we refine our business portfolio at a
meeting held in December each year.

39 Report on Responsibility & Sustainability 2010

Managing Non-Quantifiable Risks

enable us to quickly identify the occurrence of losses inorder to suppress loss accumulation and prevent thecontagion effects that lead to secondary losses. These
initiatives include devising ways to quickly identify the causeof losses and share such information among top
management and related departments. We have compiled a
database of such loss information that allows for thesystematic analysis of the causes of loss-incurring events.
These analyses are used as training materials for employees
as part of various educational programs. Through thisknowledge feedback process, individual employees can
upgrade their risk management capabilities, supporting theprevention of the same kind of loss events.

Non-quantifiable risks are those that must be borne, but
for which we cannot expect returns. These include
litigation and other 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 our operations once theyarise. Our basic policy is to prevent or minimize theprobability of these risks to materialize. Accordingly, we
periodically assess non-quantifiable risks on a global andconsolidated basis. We do this through a range ofinitiatives to strengthen our internal control across theGroup under the leadership of the Internal Control
Committee as well as through independent activities by
our business units and regional organizations in Japanand overseas. Based on the assessment result, we
continuously search for a more efficient and effective
organizational structure and procedures to improve thequality of our business operations.

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 is toimplement the best practices in risk management while
maintaining the flexibility to adapt to changes in thebusiness 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 to changing circumstances in a timely
and effective manner, we continually upgrade our risk
management under the direction of top management.

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 thecourse of business activities only by the framework itself. We
are putting our efforts into implementing the initiatives that

Quantifiable Risks

Investment risks

Credit risks

Non-Quantifiable Risks

Market risks

Legal risks

Risk Management Framework• Group management policy• Qualitative requirements applying to Group companies• Investment entry standards(Hurdle Rate)• Loan and Investment
Committee

MONITORING

IT system
management risks

Riskmaterialization

Investment Risks

ENTRY

Fraud or illegal
acts by management
or employees

EXIT

Improve
operational
quality

Database on theincidence of loss

• Investment exit standards(Exit Rule)“Value-Up Support” system

Utilizeexperience

Credit Risks

Market Risks

Concentration Risks• Utilize the Sumisho Credit
Rating (SCR) model acrossthe Group• Periodically conduct back testing• Manage 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
and portfolio management of
individual business lines

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

Planning,
implementation,
evaluation andimprovement ofinternal control

Report on Responsibility & Sustainability 2010 40

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
It is our policy that both officers and employees should neverrisk transgression in pursuit of profit for the Company. In orderto promote compliance, Sumitomo Corporation established
the Compliance Committee under the direct supervision of the
President and CEO. The Compliance Committee is responsible
for preparing the Company’s Compliance Manual anddistributing 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.” If a potential compliance problem is detected, we
continuously encourage our employees to report it to theirsupervisors or the relevant departments immediately, so thatthe best countermeasures can be implemented swiftly.

Guiding Principles
Business Activities• Observing Antimonopoly Laws
• Security Trade Control• Customs/Controlled Items• Compliance with Applicable Laws
• Respecting and Protecting Intellectual Property Rights• Prohibition of Unfair Competition• Information Management• Preservation of the Environment• Overseas Business Activities

Compliance Training and Education
Employees have access to the latest version of theCompliance Manual and other manuals detailing applicablelaws and regulations on the Company’s intranet. We also offer
various training programs and educational activities oncompliance, including: programs for specific groups, such as
employees, managers and corporate officers new to theCompany; seminars provided by each Business Unit; seminars
targeted at all officers and employees; and seminars foroverseas offices and Group companies. We also make use ofvarious domestic and overseas conferences for complianceeducation. In addition, we hold e-learning compliance seminars
open to employees from all levels and plan to continue theseseminars for new and other employees. Such e-learning is
also held at Group companies.

Speak-Up System
If an employee becomes aware of a possible complianceproblem, he or she can pass the information along the chainof command. In addition, the “Speak-Up System” wasintroduced to allow individuals to report a potential problem
directly to the Compliance Committee. Outside legal counsel
and our Corporate Auditors have been included as additional
points of contact to further augment the system. Although, inprinciple, reporting individuals are asked to identify themselves
so that they can be updated on the outcome of their cases,
Company rules state that both the identity of such individuals
and the nature of the information provided are kept
confidential, and that no negative repercussions will redoundon the reporting employees due to such reporting. The
Compliance Committee is responsible for handling all theinformation it receives in an appropriate manner.

Corporate Citizen as a Member of Society• Prohibition on Giving Bribes• Prevention of Unlawful Payments to Foreign Governmental
Officials• Political Contributions• Confrontation with Antisocial Forces

Speak-Up System Diagram
Speak-Up

Feedback

Compliance Committee

Maintenance of a Good Working Environment• Respect for Human Rights*• Prohibition of Sexual Harassment• Prohibition on Abuse of Authority

Personal Interest• Insider Trading• Conflict of Interest• Proper Use of Information Systems* Based on the Universal Declaration of Human Rights.

41 Report on Responsibility & Sustainability 2010

Legal Counsel Corporate Auditors

Reporting Individual

Investigation andappropriate
response basedon results

Environmental Management
The Sumitomo Corporation Group is committed tocontributing to the sustainable development of the world
through sound business activities that take into accountglobal environmental issues.

Environmental Policy
Throughout its 400-year history, the Sumitomo Group has
pursued industrial development that co-exists with local
communities and the natural environment. Using theexperience it has built up over this long period, the Sumitomo
Corporation Group has been working on environmental
preservation through its business activities.
All group companies carry out environmentally soundmanagement under a common environmental policy, including
those participating in the Group’s environmental management
system based on the ISO 14001 standard, in order to reduce
our environmental impact and improve environmental
conditions through our business activities.

Environmental Management System in
the Sumitomo Corporation GroupThe Group has obtained certification for the ISO 14001
standard and has been promoting environmental management
activities in accordance with this standard.
We have also introduced a “multiple-site system,” underwhich activities at multiple sites and organizations are centrally
managed in accordance with a single set of environmental
policies, with the president of Sumitomo Corporation at the
top. As of June 2010, more than 15,000 employees at all
Sumitomo Corporation business sites in Japan as well as 31
group companies have participated in these environmental
management activities.
Our environmental policy, environmental management
system, targets and achievements, internal andexternal environmental audits, environmental
accounting, data on the environmental impact of officeactivities are accessible at:

http://www.sumitomocorp.co.jp/english/
society/environment/

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.

I. Basic 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.

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.
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.
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.
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.
6. Promotion of business that contributes to environmental
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

Report on Responsibility & Sustainability 2010 42

Environmental Management

Major Activities in 2009 andEnvironmental Targets for 2010
Environmental objectives, targets and achievements for 2009
are listed below. In addition to the existing targets, thefollowing four targets are chosen for 2010.

1. Promote business operations that help create a recyclingoriented society.
2. Monitor and reduce the electricity and gas consumption
in all offices in Japan.
3. Raise employees’ environmental awareness through seminars on environmental conservation and other programs.
4. Disseminate related information by the ISO Office(Environment & CSR Department).

Environmental objectives, targets and achievements for 2009Management
Area

Environmental
business

Assessment ofenvironmental
impactHazardous
substance
management

Logistics
management

LegalcomplianceObjective

TargetAchievement Level (January to December 2009)

Improve the environment
through business operations.

Promote projects to reducegreenhouse gases.

· Acquisition of carbon credits under the Kyoto Mechanisms:
Reached the targets in terms of approval from the Japanese government but failed to meet thetargets in terms of UN registration due to their longer-than-expected verification processes.
· Gathered information on the post-Kyoto framework through participation in COP15, etc.
· Held explanatory meetings for group companies including overseas offices (four times).

Expand environmental
business.

Expand businesses utilizing renewableenergy sources.

· Started commercial operation of solar power generation business in Spain and wind power
generation business in China.

Carry out environmental impact
assessment and soil pollution surveys.

· Continuously assessed the environmental impact of overseas mine developments anddomestic regional development projects.
· Completed historical review or soil survey of 67 sites (out of 100 sites) that are subject to soil
pollution surveys.

Reduce electricity and gas consumption in
all offices in Japan.

· Reduced electricity consumption of Head Office by 1.4% from the previous year by using theenergy-saving mode of the air conditioning systems and other energy-saving efforts.

Reduce environmental
impacts of business
operations.

Prevent accidental spills or
Confirm that safe transportation andleakages of hazardous
appropriate education are conducted bysubstances during transport ortransportation and storage companies.
storage.
Comply with chemical
substance regulations.

Promote energy conservation
in logistics.

Proper disposal of waste
in accordance with the
Waste Disposal and Public
Cleaning Act

Increase the level of chemical substancecontrol. More actively encourage
consignees and suppliers to participate.

· Confirmed that transportation and storage companies are conducting appropriate safety
training. Ensured proper management of ledgers on the transportation and storage of
poisonous and hazardous materials and items. Confirmed the receipt of MSDSs. Confirmed
the occurrence of zero accidents.
· Conducted monitoring activities in accordance with applicable laws, such as the Chemical
Substance Control Law and the PRTR Act.

Establish and implement a specific energy
conservation plan for transportation as acargo owner.

· Continuously worked to improve energy consumption efficiency, which is required by law inour capacity as a “specified consigner.” We fell under this category because our total
domestic cargo transportation in fiscal 2009 amounted to 375 million ton-kilometers.

Encourage domestic carriers to achieve
efficient transportation and evaluate
their performance.

· Our energy consumption efficiency during fiscal 2009 was 2.51 kl / thousand tons (crude oil
equivalent), a 0.2% improvement from the average of the last four years.

Improve employee training on the Waste
Disposal and Public Cleaning Act.

· Held a seminar on waste disposal contracts with external lecturers in November, which wasattended by 117 participants (29 people of them also attended an on-site workshop at thewaste disposal facilities).

Improve management systems withingroup companies often disposing of wastematerials. Carry out stricter site
inspections, and share information withother group companies.

· Held a joint waste management seminar with Sumisho Global Logistics Co., Ltd. in January (inwhich over 500 people participated). Held a waste management seminar for employees ofMetal Products Business Unit in November (in which some 90 employees participated).
· Improved each department’s waste management system by preparing/upgrading theirrespective waste management manuals and taking other actions.

PI CK U PPI CK U P

Recycling vegetable and fruit waste

Promoting energy conservation in Harumi
Triton Square

Summit collects and recycles vegetable and fruit waste
generated by its supermarket stores.
In this initiative that was introduced in 2002,
waste produce is picked up by dedicated garbage
trucks and composted at a recycling center near the farm.
The resulting compost is used to grow vegetables,
which are sold at a Summit supermarket.
Some of the waste collected is also processed into
lightweight soil alternatives, and some is fermented andthe gas emitted is used to generate electricity.
As of August 31, 2010, 66
stores participated in thisrecycling program.
We will continue to work toachieve further waste reduction.

Recycling truck

43 Report on Responsibility & Sustainability 2010

Harumi Triton Square is an office, commercial and residential
complex, which is the location of many business offices including ourhead office. As the primary manager of energy consumption in thecomplex, our group company Harumi Corporation is working to
make Harumi Triton Square a sustainable community by monitoring
the complex’s total environmental impact and introducing energy
conservation activities. In response to the enforcement of the Revised
Tokyo Metropolitan Ordinance on Environmental Preservation in fiscal
2010, Harumi Corporation organized a task force jointly with facility
management companies in thecomplex and building design
consultants. Under the initiative ofthe task force, owners, tenants
and management service
companies are working together toreduce greenhouse gas emission
The first corporate tenant meetingfrom the complex.
to improve energy conservation

Initiatives for
Biodiversity

In its Environmental Policy established in 1999, the Sumitomo Corporation Group
adopted the following basic policy: “The Sumitomo Corporation Group, through soundbusiness activities, will strive to achieve sustainable development aimed at symbiosis
between social and economic progress and environmental preservation,” and included
the following principle of caring for the natural environment in the basic guidelines of thepolicy: “To protect the natural environment and preserve biodiversity.” Accordingly, we
are working to maintain and preserve biodiversity in the course of our business activities.

Batu Hijau Copper and Gold Mine Project
Sumitomo Corporation and its business partners have been
carrying out the Batu Hijau mine project (Indonesia), one of
the world’s largest copper and gold mines. We havepositioned the following four priorities as social responsibilities
that must be fulfilled by business operators in the course ofcore business activities: (1) minimize impact on the naturalenvironment and ecosystems, (2) eliminate the negative
impacts at an early stage, (3) make dedicated efforts
towards ecological improvement and conservation, and (4)provide dedicated support for community development.
While communicating and cooperating closely with the local
government, communities and NGOs, we are working topreserve the natural environment and ecosystem, alongside
our mine development and mining operations.
Examples of Activities• We minimized the development area, and achieved “zero”
wastewater emissions to rivers through the installation offacilities for recycling wastewater from the mine.
• In an effort to achieve the early natural restoration ofexisting indigenous species in the mine area, we developed
our own land preparation and reforestation technology
optimal for local conditions through a large-scale, eightyear study, and are conducting immediate restoration andreforestation work even before the closure of the mine.
• In order to protect a rare species of parrot that lives aroundthe mine area, we took steps to prevent poaching (throughpublic relations and educational activities, as well as
blocking access roads, etc.) and to plant nesting trees,
based on a mutual understanding with the local
government and community that was established throughdialogue and cooperation.
• In order to protect the environment of neighboring regions,
we conducted programs including the protection of thespawning of endangered marine turtles and restoration ofcoral reefs, based on a mutual understanding with the local

The yellow-crested cockatoo, a rare species of parrot, is being protected

community and NGOs that was established throughdialogue and cooperation.
Terneyles Timber Project
Sumitomo Corporation has built strong bonds of trust withOAO Terneyles, an integrated forestry company in Russia.
Based on the shared belief that sustained businessdevelopment is not possible without considering the naturalenvironment, the two companies are working together todevelop a sustainable timber business.
Forest Protection Activities
The forest areas owned by Terneyles in the far eastern
Russian Maritime Province are among the rarest in the world.
This is because both softwoods and hardwoods grow in thesame area, and many of the trees are more than 100 years
old. In order to sustain business far into the future without
depleting these precious resources, we have adopted alogging method called “ribbon cutting” or “strip felling,” inwhich parent trees left intact on both sides of the logged
area can drop seeds to promote the natural regrowth offorests. In addition, because it takes approximately 100 years
to restore logged land to its natural state, we limit the annual
amount of harvested timber to approximately 1:150 of total
forest reserves in order to ensure that the amount of forest
growth exceeds that of the harvested timber.
Boosting the Population of Amur Tigers
In recent years, Russia has seen a dramatic decline in thenumber of endangered Amur tigers due to large-scale forest
development and illegal logging. However, the WWF (World
Wide Fund for Nature) has reported that the number of Amurtigers is increasing in forest areas owned by Terneyles thanks
to its strict self-regulation on the logging of Korean Pine,
which is considered to be at the bottom of the food chain of
the Amur tigers.

Protecting the forest habitats of endangered Amur tigers

Report on Responsibility & Sustainability 2010 44

Human Resources Management
Greater emphasis on human resources development and workforce diversity
At Sumitomo Corporation, we are working on thedevelopment of human and organizational dynamism toenhance our value-creation capabilities as a qualitative target
under our current medium-term management plan, FOCUS’10.
As part of this HR strategy, we are aiming to develop ourhuman resources and to allocate the diverse talents of ouremployees, with four key objectives: further development of
individual capabilities, enhancement of organizational humanresources management, group-wide human resources
development, and further focus on the development of global
talent. This fiscal 2010 report features our new HR
programs—selected under the key themes of “medium- andlong-term” and “global”—which are the strategic and wellplanned measures to attract, retain, develop and utilize
human resources, the players in our CSR activities.

Further Strengthening Human Resources
Development Programs
To Practice Our Management Principles Basedon Sumitomo’s Business Philosophy in the
Course of Day-to-day Operations
Employees at Sumitomo Corporation are expected to have agood understanding of our Group’s Management Principles
and Activity Guidelines, and practice the SC Values.* To
help employees renew their recognition of the underlying
business philosophy of our company through their hands-on
experience, and practice our Management Principles in their
daily operations, we are working to develop and improve
related systems and measures.
* SC Values: Nine specific requirements to ensure all employees share thevalues set out in the Management Principles and Activity Guidelines.

Visits to the Besshi Copper Mine to Experience
Sumitomo’s Business Philosophy Firsthand
Visiting the Besshi Copper Mine, the origin of the Sumitomo
Corporation Group, has been a regular training event since
fiscal 2006. It aims to provide participants with an opportunity
to realize one of the teachings of Sumitomo’s businessphilosophy: “Benefit for self and others, private and public
interests are one and the same” and to ensure that thebusiness philosophy is passed on to younger employees.

Facilitating an Understanding of the Management
Principles by Offering Training Programs Specific to
Career Levels
To ensure the professionalism of Sumitomo Corporation
employees and their DNA are inherited by, and embodied inour employees, special sessions designed to give a deeper
understanding of the Management Principles are offered aspart of career-level-specific training programs at Sumisho
Business College (SBC), together with talks and lectures by
our senior management.

Strategic and Systematic Human Resources
Development of Management Candidates
For the sustainable growth of our Group, it is important todevelop and implement human resources strategies andmeasures that are consistent with the latest management
strategy in place. To this end, our Human Resources
Department and business units work in tandem to attract,
retain, develop, and utilize appropriate human resources
to execute specific business strategies in a strategic andwell-planned manner based on our medium- and long-term
objectives. We aim to increase the diversity of our personnel
in terms of their experience and personal values, and to
focus on the development of young employees to improvethe capabilities of the future mainstay of our workforce.

Job Rotation to Give Greater Diversity to Employees’
Experience and Values
From fiscal 2009, job rotation training has been introduced
as part of company-wide human resource development
programs. This training allows employees up to middle
management level to rotate between business units andcorporate group functions and interact with staff members inother business units and departments. These employees canexperience different assignments in different departments,
covering both front office and back office operations. The
purpose of this training is to develop employees who havewide business experience in a strategic and well-planned
manner and thereby further increase the number of highcaliber employees who are qualified to fulfill management
positions. This is an immediate priority for us as we areshifting toward a groupwide management focusing on ouroperational performance on a global consolidated basis.

Strengthening Human Resources Managementin each Business Unit
At Sumitomo Corporation, under the company’s overriding
principles of self-management and self-responsibility, eachbusiness unit implements its own strategic human resourcesmanagement programs, such as job rotations between
different business units within the same division and its own
training programs tailored to its business characteristics.
Business units conduct their own staff training and educationin order to ensure their medium- and long-term strategic
HR needs will be fully satisfied. We also promote strategic
Visit to the Besshi Copper Mine

45 Report on Responsibility & Sustainability 2010

personnel allocation and training across the company. For
example, each business unit formulates its succession
plan to systematically train a new generation of mainstay
workforce for consistent future growth. In addition, we work
to ensure the best person is appointed to the right position
globally. Accordingly, key positions at overseas subsidiaries
and associated companies are assumed by qualified
locally-hired employees, who we believe will facilitate theexpansion of business projects under the initiative of localorganizations, and this turn will strengthen our capabilities
for revenue generation on a global scale.

Developing Future Executives at Sumisho
Business College
Offering long-term training programs for selectedparticipants, such as the training courses for future
executives, for business leaders, and for business creators,
SBC supports each organization’s efforts for the strategic
and systematic development of its future management
and business leader candidates, who are expected todemonstrate strong leadership in achieving sustainablegrowth of our company.

Training future executives

Developing a Wide Variety of Human Resources
Worldwide to Adopt to Shifting Paradigms
To operate a successful global business in a wide variety ofbusiness areas today when a major paradigm shift is taking
place in terms of the global power structure, and industrial
structures, we must train and develop our employees
worldwide in a way that ensures they have the diverse set ofvalues and professional expertise for their business area andmarket location.

Promoting Human Resources Development acrossthe Entire GroupIn line with the major objectives of our HR strategy: groupwide human resources development, and further focus on

Training for locally hired employees overseas

the development of global taleat, we are encouraging the
localization of human resources to strengthen our global
operations. As part of this effort, we conduct training
programs for our locally-hired employees working atoverseas subsidiaries and associated companies. Each year,
approximately 200 overseas employees take training courses
designed specifically for their career levels (staff in charge,
managers and senior executives) at Head Office in Japan.
At the training, participants learn more about Sumitomo’s
business philosophy and the Management Principles of
the Sumitomo Corporation Group, in order to pass on thecorporate DNA and strengthen their sense of unity. They
also receive information on the Group's management
directions and strategies, and attend “skill-up” seminars on
a variety of themes and attend joint programs with Head
Office employees. Going forward, in addition to refining andexpanding these training courses at Head Office, we will
implement more regional-based training courses in orderto strengthen our human resources capabilities across theentire Group worldwide. We will also develop a mechanism
for global, group-wide staff allocation based on our mediumand long-term strategy.

Human Resources Development Fund for Developing
Future Global Business Capabilities
In fiscal 2010, a new fund for human resources development
was established in a bid to facilitate our efforts to attract,
retain and develop talents who will play vital roles inachieving our medium- and long-term growth strategies
of business units and divisions. The fund is used for our
strategic and systematic HR training programs to develop
talents with excellent global business capabilities, by sending
many employees overseas. We place particular emphasison the training of Chinese, Russian, Spanish, Portuguese
and other languages, because seizing opportunities in
the growth markets of emerging countries will become
important business objectives of our Group in the future.

Report on Responsibility & Sustainability 2010 46

Human Resources Management Greater emphasis on human resources development and workforce diversity

In addition, we are also planning to invest aggressively inhuman resources development from medium- and longterm perspectives, including sending employees, primarily
those in managerial positions, to business schools abroadto acquire the latest management literacy and build a
network with international executives, bringing locallyhired employees of overseas subsidiaries and associatedcompanies to Head Office, and implementing international
exchange programs for young employees.

Developing Global Business Capabilities at Sumisho
Business College
To facilitate further development of individual capabilities
through off-the-job training, SBC offers a variety of training
programs—300 courses annually—ranging from mandatory
basic courses for all employees to seminars on moreadvanced technical topics and leadership development.
SBC supports employees in improving their language
and communication skills to function on the international
business scene. For example, it offers intensive English
courses, newly introduced in fiscal 2009, and follow-up
online English conversation courses for young employees.

in our talented personnel. The facility will also provide a
multipurpose and versatile space, supplementing Head
Office functions. In the building, we expect to see ourGroup employees from around the world, irrespective oforganization or country, meeting for detailed discussions on
the future visions and strategies of our Group.

Promoting Workplace Diversity
Creating New Value through Employee Diversity
Sumitomo Corporation has always been proactive andresponsive to society’s and employees’ employment-related
needs, including diversifying workers’ needs and preferences
across society, shortening overtime hours, empowering
female workers, extending employment periods,
encouraging a work-life balance, and employing othernationalities. We will continue to build a culture and systems
that encourage workforce diversity so that employees withdifferent background can deliver their best performance andbring new value to their respective workplace and contributeto the sustainable growth of our Group.

Attracting, Retaining, Developing and Utilizing
Diversified Human Resources

Intensive English course

Online English conversation course

New Training Center for the Development of Global
Business Capabilities
In 2012, a new training
center will be establishedin Ginza, Tokyo. The
new building will serve
as a training center todevelop global talented
personnel and as a strategic
multipurpose facility. As a
training center, we will use
the building to strengthen
our human resources
development across theentire Group worldwide
and to encourage diversity

47 Report on Responsibility & Sustainability 2010

Our recruitment policy focuses on the applicants’ abilities andmotivation without discriminating on gender or educational
background. We also welcome many mid-career workers,
as well as new graduates, in our company every year. The
numbers of female and international employees have also
been increasing. Employees who wish to keep working
even after reaching the retirement age of 60 can use the
Re-Employment Program to extend their employment.
Workplace diversity has also been promoted on a global
scale; for instance, executives of our overseas subsidiaries
and associated companies are appointed to responsible
positions in the Group and locally-hired overseas employees
have come to Japan to work at Head Office. In addition, theCareers Advisor Program has started to help all employees
realize their full potential. In each business unit, a careeradvisor (CA) who has extensive experience in the company isassigned to support each employee’s career development.

Encouraging a Diversity of Working Styles
We believe that supporting each and every employee tohave a fulfilling professional and personal life will drive thecompany forward and create new value.
Encouraging our employees to have a good work-lifebalance also means respecting various values and lifestyles.
In turn this has actually contributed to enhancing thecompany’s value-creation capabilities and allowing individual
employees to achieve prosperity and realize their dreams.
New training center in Ginza(rendering)Activities that Enable a Good Work-life Balance
At Sumitomo Corporation, various measures to enable agood work-life balance have been discussed, developed andimplemented on an ongoing basis under the leadership ofthe Work-Life Balance Promotion Project Team, a companywide committee. These measures aim to remove or mitigate
employees’ concerns and difficulties, creating a vigorousand comfortable workplace, and to raise employees’
awareness through training programs and other tools. In
spring 2010, all employees received a copy of a pamphlet on
work-life balance, which introduces what kind of programs
are available in the company and how our employees aretrying to achievea balanced life.
We will continue
to take additional
steps to help each
workplace andemployee achievea better work-lifebalance which initself will lead to thesustainable growth
Triton Sukusuku Square, childcare facility onof the company.
company premises

ColumnLaunching the KENPOS website to support
employees’ health
In March 2010, we opened a new intranet website, KENPOS, toencourage our employees to take action to keep healthy and tokeep doing it.
Through the website, employees can use points awarded tothem for walking or doing other exercise to win health gadgets or
make donations for the fight against cancer and other purposes.
On the “diary” section of the website, participants can share
their experiences and keep each other motivated. The program
has inspired employees to become more health-conscious. Justfour months after the website was launched, membership ofthe KENPOS program has grown to more than 60 percent of
employees and the number of monthly steps participants have
logged on their pedometers has increased on average by morethan 1,000 steps.

Safeguarding Employees’ Physical and Mental Well-being
Staying healthy both physically and mentally is a prerequisite
to a good work-life balance. We opened the Koriton
massage room in 2008 to provide employees of Sumitomo
Corporation Group companies with a relaxing and refreshingtherapy for their body and mind. We also opened the
SCG Counseling Center in 2005 to support employees’
mental health management. The center is functioning asa convenient place to receive counseling, with several
hundreds of visits by employees every year. The center
provides mental health care for employees on overseas
assignments and their accompanying families throughcounseling and other services, thereby helping them stayhealthy physically and mentally in unfamiliar environments.

KENPOS website

Work-life balance support systems
TargetChanges to working
stylesSystems and actions
Leave

Annual leave, refresher leave, special leave for overseas assignments, volunteer leave

Time management

Flextime, ban on late night work, time management training sessions

Health management (mental and physical)

SCG Counseling Center, Koriton massage room

Support for pregnant and parenting employees

Matrimonial leave, spouse’s maternity leave, maternity leave, sick-child leave, childcare leave, shorter working hours for employeeswith young children, Triton Sukusuku Square (childcare facility on company premises), discounted baby-sitting services

Support for employees with family care needs

Leave to look after a sick family member, family care leave, shorter working hours for employees with family care needs

Career support

Career Adviser Program, personal leave system for employees whose spouses are transferred overseas for work

Awareness-raising

WLB seminars, WLB help desk, pamphlet on WLB, mental health seminars

Report on Responsibility & Sustainability 2010 48

Third-party Review

Professor Scott Davis
Professor of College of Business
Rikkyo University

This report represents the latest stage in the Sumitomo
Corporation’s (hereafter Sumitomo) steadily developing
strategy for implementing CSR management andenhancing communication with stakeholders. In previous
reports Sumitomo has outlined its conceptualization of its
responsibilities to society as a business based upon closely
defined values (report for 2008), and stated its strategic plans
for the betterment of society by developing opportunities forcreating economic and social value (report for 2009). Goingfurther, this report introduces the reader to the systems andprocesses by which Sumitomo translates its values into
ongoing business concerns designed for the bettermentof society.
In the report for 2009 President Kato stated that thesocial and economic changes we currently face represent
a paradigm shift under which further economic growth andprosperity will only be possible if industry develops the abilities
needed to resolve the environmental degradation, resource
shortages and social problems facing us on a global scale.
In this report he explains what these abilities are and how
Sumitomo is developing them as an organization working
in collaboration with its partners around the world. Going
beyond a unilateral statement of values and goals, President
Kato uses his dialogue with young Sumitomo employees to
explain these abilities, illustrate the importance ofsharing Sumitomo's values in their development andlocate them within the ongoing process of business innovationand change.

49 Report on Responsibility & Sustainability 2010

In essence the main processes introduced in the dialogue
are: kyosei *, creating opportunities to achieve long-term
and mutual prosperity, partnership, building relationships oftrust based upon a clear understanding of the values andgoals and the ability to make oneself understood in turn, andglobal perspective, grasping the wider picture from a varietyof perspectives and taking the initiative to learn, change andgrow. The dialogue sets the direction of the overall report andalso provides a framework by which it can be evaluated.

Kyosei, partnership and global
perspective
The five themes introduced in the report are well designed,balanced and highly legible yet given in great detail. The
first three are clear examples of the remarkable extent towhich Sumitomo integrates local and social goals into thedesign of its operations. In each of the first three themes the
exposition of how kyosei, trust based partnership and a global
perspective is built into the long-term design, operation andevaluation of each of these very different business initiatives
is clearly explained and well presented. What is even more
remarkable here is that these three examples of Sumitomo’s
implementation of business for the benefit of society are also
three of the most vital business initiatives for ensuring
the future of Sumitomo itself as a business. This clearly showsthe extent to which Sumitomo's contribution to the wellbeingof society is defined in and achieved through its corebusiness activities.
Of all the themes, however, the most remarkable is thefifth wherein the activities of the CSR Committee establishedby Sumitomo employees in China are described. The work
being done by the members of Sumitomo in China deserves
special praise. Few Japanese corporations can boast of CSR
initiatives of this quality within their national headquarters –let alone in one of their overseas operations. I look forward
to reading in future reports of the unique initiatives being
developed in China and of how these achievements are being
used to promote other inter-regional CSR initiatives.

The next ten years
When compared to many other firms, trading companies often
seem to require greater degrees of trust from a wider rangeof partners in more divergent regions in order to succeed.
Perhaps this is because corporations like Sumitomo are
essentially engaged in creating whole markets – in changing
the way resources are utilized, knowledge is generated andapplied, and partners interact in order to enhance value
creation, productivity, and promote further development.
Sumitomo is in the business of innovation. As shown in theexamples from its businesses in Indonesia, Bolivia and Japan,
Sumitomo brings together partners to work to create better

futures and realize what they each call “dreams.”
Sumitomo has produced yet another excellent CSR report
this year. This report will surely enhance the understandingof Sumitomo as a responsible business and the extent of
its commitment to contributing to its many stakeholders. In
the next CSR report I look forward to reading an outline of
Sumitomo's own dreams for the future – an exposition of its
vision for the next ten years, its goals for contributing to theregions in which it will operate, the changes that it will strive
to implement, the partners who will collaborate with it, theabilities it must develop, and the milestones by which it willmeasure its progress.

* In this context “kyosei” refers to an ongoing and sustained relationship of interdependence and co-prosperity between two or more parties. Going beyond theconcept of a “win-win” relationship, kyosei includes an emphasis on long-term and inclusive development to the benefit of all.

Response to the Third-party Review
We thank Professor Scott Davis for his important
review of Sumitomo Corporation Report on
Responsibility & Sustainability 2010. This is the third
issue for which we have received a review of our reportfrom Professor Davis.
This year’s report reflects his review of the lastissue, along with opinions and advice we have received
from various stakeholders through surveys and by othermeans. To compile this issue, we focused on reporting
specific examples of our measures to implement theManagement Principles of the Sumitomo Corporation
Group so that we can spread a deeper understandingof our ideas and activities on CSR to our readers. For
the Group, CSR means implementing our Management
Principles. The three items mentioned in the review:“kyosei”, “partnership” and “global perspective” are themost important elements in our CSR measures. Eachand every employee must always keep these ideas inmind when they are working on their projects across awide range of fields.
As Professor Davis correctly points out, “trust” isthe most important keyword in pursuing our businessactivities globally and in a variety of fields. With thattrust, we can build partnerships and create newvalue to offer to society, gain more trust and keep

growing together with society. We recognize that thisis the ideal pattern for the operation of the Sumitomo
Corporation Group.
Professor Davis also advised us to include the
dreams that the Sumitomo Corporation Groupenvisions for the next 10 years. We are well aware thatthe contents of this report must keep changing both indepth and range in order to best describe the progressof our CSR measures and activities. The specific items
Professor Davis pointed out in his Third-party Review
will be fully examined and incorporated into our future
activities as well as used in compiling the next issue of
this report.
The Sumitomo Corporation Group will continue topromote CSR, always keeping our corporate vision in
the forefront of our minds, and report our activities toour stakeholders through the Sumitomo Corporation
Report on Responsibility & Sustainability.

Takashi Kano
Chair of the CSR Promotion Committee
Director, Senior Managing Executive Officer,
General Manger, Corporate Planning & Coordination Group

Report on Responsibility & Sustainability 2010 50

Company Information

Company Profile (As of March 31, 2010)
Consolidated Shareholders’ Equity: 1,583.7 billion yen
Fiscal Year End: March 31
Number of Consolidated Subsidiaries: 566 (overseas: 420, domestic 146)
Associated Companies (Equity Method):221 (overseas: 168, domestic: 53)
Total: 787 companies

Company Name: Sumitomo Corporation
Establishment: December 24, 1919
Number of Employees:
5,100 (72,030 including consolidated subsidiaries)
Headquarters: 1-8-11 Harumi, Chuo-ku, Tokyo 104-8610, Japan
URL: http://www.sumitomocorp.co.jp/english/

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

Business Units

Company-wide Committees*

Internal Auditing Dept.

Corporate Planning &Coordination Group

Human Resources,
General Affairs & Legal Group

Financial Resources
Management Group

Metal Products Business Unit

Transportation & Construction
Systems Business Unit

Infrastructure Business UnitMedia, Network & Lifestyle
Retail Business Unit

Mineral Resources, Energy,
Chemical & Electronics
Business Unit

General Products &Real Estate Business Unit

New Industry Development &Cross-function Business Unit

Domestic Subsidiaries andOffices

Overseas Subsidiaries andOfficesPresident and CEO,
Executive Officers

Corporate Group* Company-wide Committees: CSR Promotion 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, Loan and
Investment Committee, Medium-term Management Plan Promotion Support Committee, and others.

Financial Highlights(Billions of yen)

Results ofOperations

Financial Positionat Year End

RatiosFiscal 2006

Fiscal 2007

Fiscal 2008

Fiscal 2009

Gross Profit

857.7

934.5

935.2

779.5

Net Financial Income(23.0)(27.6)(21.5)(12.8)

Equity in Earnings of Associated Companies, net

70.3

56.9

90.0

76.1

Net Income

211.0

238.9

215.1

155.2

Total Assets

8,430.5

7,571.4

7,018.2

7,137.8

Shareholders’ Equity

1,473.1

1,492.7

1,353.1

1,583.7

Interest-Bearing Liabilities (net)2,913.3

3,247.6

3,186.8

2,781.8

Shareholders’ Equity Ratio (%)

17.5

19.7

19.3

22.2

ROE (%)

15.2

16.1

15.1

10.6

ROA (%)

2.8

3.0

2.9

2.2

Debt-Equity Ratio (net) (times)

2.0

2.2

2.4

1.8

Note: For more detailed information on financial issues, please refer to our Annual Report.

http://www.sumitomocorp.co.jp/english/ir/

51 Report on Responsibility & Sustainability 2010

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: +81-3-5166-8691 Fax: +81-3-5166-6310
Email: environment-and-csr@sumitomocorp.co.jp
URL: http://www.sumitomocorp.co.jp/english/

Report on Responsibility & Sustainability 2010 52

This report is printed on paper made in part fromdomestic pulp (70%), including pulp from thinned
wood and domestic conifer wood (at least 15%).
Published in November 2010

Printed in Japan