Sustainability Report 2009

To Achieve Prosperity and Realize
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Sustainability Report 2009 2

Message from the President and CEO

To Achieve Prosperity and Realize the Dreams of
Our Stakeholders
I am pleased to announce the publication of theSumitomo Corporation Sustainability Report 2009.
Since the last issue was published, the world economy
has been swamped by a huge wave. After only a few
years of a “global boom,” the ﬁnancial crisis thatstarted in the U.S. last fall sent adverse impacts on alarge scale to every corner of the globe—to bothdeveloped and emerging or developing countries alike.
This happened over a very short period and moved
the world economy into a global recession.
The crisis signiﬁcantly exceeded early estimationsof its depths and swings, but nations across the world
cooperated in response to the crisis. Gradually, theconcerted ﬁscal and monetary measures that wereintroduced started taking effect, and the global
economy is now leaving the worst behind and has
started moving in the right direction. Although
uncertainty still remains and the current recovery indeveloped countries is limited from many aspects, theglobal economy is expected to get back on track forcontinued growth in the near future.

interests between developed and developing countries
are complex and intertwined, making it very difﬁcult tosketch a scenario for a solution. International
cooperation and the leadership of the UN and otherinternational organizations are needed to solve theconﬂicts. Consequently, measures taken at a national
level will increase in importance. The wisdom of thehuman race is being put on the line.
In response to serious poverty and famine, leaders
at the L’Aquila Summit in July announced theirdecision to mobilize a fund of 20 billion dollars overthe next three years as a ﬁnancial measure to improve
food security in Africa and other developing countries.
In December this year, the 15th Meeting of theUnited Nations Framework Convention on Climate
Change (COP 15) is expected to become a base forheated discussions, highlighting even more clearly thedifferences between the positions of the developed
and developing countries. However, agreement must
be reached over measures to reduce greenhousegasses on a global scale.

Global Issues

Implementing Our Management
Principles

Even before the current ﬁnancial crisis, the driving
force behind the global economy had started shiftingfrom developed countries to the emerging nations.
The presence of the emerging and developing nations
will become even more signiﬁcant in the medium tolong term. This movement, while bringing global
prosperity, may challenge society by generating
income gaps and serious poverty issues in such
emerging and developing countries, as well as waterand food shortages, environmental issues on a global
scale and other problems that may hinder sustained
growth in the global economy.
These issues pose real challenges, not only for
individual nations, but for global society as a whole. In
addition to conﬂicts within nations, conﬂicts of3 Sustainability Report 2009

The responsibility to ﬁnd global solutions to issues
common to all people on the Earth has not been left
to national governments and internationalorganizations alone. Rather, the private sector has
been taking the lead in many areas with the support ofgovernments. The roles of businesses, NPOs andNGOs are becoming ever more important.
In playing its role as a business corporation insolving social issues, the Sumitomo Corporation
Group is reminded that the ultimate goal of ourbusiness activities is to implement the Group’s
Management Principles. Our predecessors have
handed us a credo: “Beneﬁt for self and others, private
and public interests are one and the same.” That is,our corporate activities must beneﬁt not only our own
businesses, but also society and the nation. Thisphilosophy is illustrated in clauses in the Management
Principles such as “To create new value, andcontribute broadly to society,” and “To achieve
prosperity and realize dreams through sound businessactivities,” and it has become deeply rooted as theuniversal and unchanging basis of our businessactivities.
The spirit and views of the Sumitomo Corporation
Group shares the principles of the United Nations
Global Compact, an initiative started in 2000 in
response to a call by then-Secretary-General Koﬁ
Annan to unite the creativity of the private sector in
fulﬁlling the wishes of people in vulnerable positions
and the needs of future generations. In March 2009,
the Sumitomo Corporation Group declared its support
for the Ten Principles of the United Nations Global
Compact.

FOCUS’10: A Growth Scenario on a New
Stage
We are now experiencing a paradigm shift on a
massive scale. The world that awaits us will becompletely different from the one that we have lived inthus far. To prepare ourselves, we have launched a
new medium-term management plan, FOCUS’10,
under the theme, “A Growth Scenario on a New Stage.”This theme will keep us aware of our links with society
during the course of our business activities andincrease our capabilities to create new value to achievesustainable growth in the medium to long term.
The Sumitomo Corporation Group will continue toshow its commitment to achieving prosperity andrealizing the dreams of its stakeholders through its
actions.

Susumu Kato
President and CEO
September 2009

Sustainability Report 2009 4

Message from the Chair of the CSR Promotion Committee

How We See CSR in the Sumitomo
Corporation GroupHow We See CSR in the Sumitomo
Corporation Group“To achieve prosperity and realize dreams through soundbusiness activities” is our corporate mission and amanagement principle of the Sumitomo Corporation Group.
We work on social issues through our business activities andsocial contribution activities with the aim of building asustainable society. For us, this means to achieve prosperity
and realize the dreams of our stakeholders. We recognize
this as the social mission of the Group and the fundamental
basis to CSR.
These two types of activities—business activities andsocial contribution activities—are closely connected, and ourdesire to “increase corporate value by contributing to asolution to social issues from the standpoint of a corporation
while building better relationships with stakeholders” serves
as the foundation of these activities; this is precisely what
CSR means to the Sumitomo Corporation Group.
“To increase corporate value” means more than toincrease the numerical value of the Group. Rather, it means
the total value we receive as approval (“We are glad
Sumitomo Corporation is there.”), trust (“We will leave thematter to Sumitomo Corporation.”), and expectation(“Sumitomo Corporation will do it well for us.”). Increasing
our corporate value will thus support sustainable growth in
the Sumitomo Corporation Group.

Fulﬁlling CSR through Business Activities andSocial Contribution Activities
Taking the global market as the arena for our businessactivities, the Sumitomo Corporation Group develops
businesses that supply a wide variety of goods and services.
As the businesses become more sophisticated, newconnections are developed among individual business lines,
and goods and services carry new added value while going
through expanding value chains and supply chains.
Our business activities thus have many contact points
across a wide area of business, both with our industrial
partners and with local communities. That is, our businessactivities are carried out within complex relationships fromthe economic, social and environmental aspects, which form
the “triple bottom line of CSR.”
That is why we value our relationships with the manydifferent stakeholders we encounter in our corporate
operations. We also examine social issues in detail so that
we can seek strategic solutions in our business activities.

5 Sustainability Report 2009

We recognize that these acts will create new value for thewhole group.
At the same time, it is important to continue our social
contribution activities with modesty and high aspirations,while making closer relationships with all kinds ofstakeholders. It is also essential to try always to improve
the quality of our activities and disclose as muchinformation as possible.
Based on these principles, the Sumitomo Corporation
Group promotes a variety of activities that suit thecharacteristics of an integrated trading company group. We
speciﬁcally focus on developing human resources for the
next generation (i.e., the generation that will achievesustainable development for society), as well as activities
that contribute to local communities wherever in the world
our businesses take place. As a good corporate citizen, we
participate also in many programs and events.
We value these business activities and social contribution
activities because they can help us gain the support andtrust of our stakeholders across a wide range of areas, andthis in turn serves as a catalyst for sustainable growth in our
corporate operations. We believe that is essential to remainaware of this cyclical situation.

Implementing our Management Principles
At the preamble to the Sumitomo Corporation GroupManagement Principles the corporate vision of the group isdescribed by the following: “We aim to be a globalorganization that constantly stays a step ahead in dealing
with change, creates new value, and contributes broadly tosociety.” For us then, promoting CSR activities is simply
implementing the Group’s Management Principles.
The Management Principles of the Sumitomo
Corporation Group were laid down to reﬂect Sumitomo’s
business philosophy, which has been maintained throughout
the 400 years of Sumitomo’s history. The credo, “Beneﬁt for
self and others, private and public interests are one and thesame” means that our corporate activities must beneﬁt not
only our own businesses, but also society and the nation.
The principle that Sumitomo should “act by taking businessactivities within the scope of relationships with society” isno different from the principles behind CSR broadly
discussed today. We will therefore pass on Sumitomo’s
business philosophy as the fundamental value that forms
the basis to all our activities. We will act to achieve thesustainable development of society and our group

companies by implementing the Management Principles of
the Sumitomo Corporation Group.

Sumitomo Corporation Sustainability Report 2009
In the Sumitomo Corporation Sustainability Report 2009 wereport on the latest measures and actions taken by the
Sumitomo Corporation Group in implementing ourManagement Principles. Needless to say, since the employeesof the Group are the major players in our CSR activities, theﬁrst part of the report focuses on our training, through which
we shape our employees into active “CSR players” and theactions taken by them to achieve prosperity and realize our
dreams, as per our Management Principles.

In the following chapter, CSR in our business activities
and social contribution activities is described with examples
that are unique to integrated trading companies with global
business operations such as the Sumitomo Corporation
Group.
We also report on our management schemes that serveas the foundation for our various CSR activities.
We hope that this report will help readers understandmore fully the CSR activities of the Sumitomo Corporation
Group.
September 2009

Initiative for the United Nations Global Compact
In March 2009, the Sumitomo Corporation
Group declared its support for the Ten
Principles of the UN Global Compact (GC).
With our participation in GC, we arecommitted to enhancing our corporate value
by clearly identifying areas of improvement inour business activities in light of the values
advocated by the Ten Principles.
The Global Compact’s 10 Principles
Human Rights
1. Businesses should support and respect the protection ofinternationally proclaimed human rights; and2. make sure that they are not complicit in human rights
abuses.
Labour Standards
3. Businesses should uphold the freedom of associationand the effective recognition of the right to collective
bargaining;
4. the elimination of all forms of forced and compulsory labour;
5. the effective abolition of child labour; and6. the elimination of discrimination in respect of employment
and occupation.
Environment
7. Businesses should support a precautionary approach toenvironmental challenges;
8. undertake initiatives to promote greater environmental
responsibility; and9. encourage the development and diffusion ofenvironmentally friendly technologies.
Anti-Corruption
10. Businesses should work against corruption in all its forms,
including extortion and bribery.

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

Sustainability Report 2009 6

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
to develop 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 Houseof Sumitomo

Business Principles

Monjuin Shiigaki (the Founder’sPrecepts) is a letter sent by Masatomo
Sumitomo (1585–1652), the founderof 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 inall situations, make efforts withdeepest 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
ever purchase such goods, for their
origins are unknown and they areprobably stolen property,” “Never give
shelter to a stranger, no matter who it
might be; also, never take a stranger’s
goods into your custody, no matter how
innocent they might appear” (these acts
were prohibited by the government),
and “No matter what someone might
say to you, never lose your temper or
speak harsh words; politely explain yourposition until an understanding can bereached.” These teachings have been
handed down and form the base of
Sumitomo’s business philosophy. They
are still seen in today’s principles, suchas “no pursuing easy gains” (i.e., only
making a proﬁt on a fairly 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
and modernized 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 businessphilosophy the family had followed
over its 250-year history. The Rules
clearly illustrate Sumitomo’s
corporate philosophy in Article 3 inSection I: “We shall practice soundmanagement in order to cope
effectively with the changing 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 (the principlesof the family head), to distinguishownership from business operations.
On that occasion, the principle of“integrity” was introduced and placed at
the beginning of the Rules Governing theHouse of Sumitomo with the principle in
Article 3, which then together became
the Business Principles. In 1928, while
Sumitomo’s business expanded intoa variety of areas, including the steel,machinery and chemical industries,
Sumitomo’s Business Rules were
established. The two articles of theBusiness Principles have been passed
on for generations and still serve as thecorporate 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 andﬂexibility in order to cope effectively
with the changing times. Under nocircumstances, however, shall it
pursue easy gains or act imprudently.

Monjuin Shiigaki (Source: Sumitomo
Historical Archives)

1600

7 Sustainability Report 20091800

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

Business Principles

1900

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, afterWorld War II, the company changed
its name to Nippon Kensetsu Sangyo
Co, Ltd., starting a new life as a
general trading ﬁrm. In 1952, when thecompany was incorporated with thecurrent name, the Business Principles
were chosen as the management
philosophy for all corporate operations
and the foundation to sustained growth.
While Japan’s economy was
growing rapidly after the war,
environmental pollution, inﬂation andother public issues started to arise.
Business corporations and their codesof conduct were challenged to makeclear the relationship between thenational government and corporations,as well as between citizens andcorporations. To respond to this,Sumitomo Corporation laid down the
Sumitomo Corporation Management
Charter, an original charter that consistsof the Basic Principles of Management
and the Operational Guidelines.

“To achieve prosperity and realize dreams
In the early 1990s, the bubble burst,
drastic appreciation of the yen continued,
through sound business activities” describes
and the Japanese economy entered aour corporate mission, while the second
long period of low growth. Sumitomo
item, “To place prime importance on
Corporation had no choice but to reintegrity and sound management withexamine the status quo of its businessutmost respect for the individual” shows ourtransactions and risk management
management style, and the third item, “To
methods. Against this background, there
foster a corporate culture full of vitality andwas growing management recognition
conducive to innovation” portrays our
corporate culture.
that the company needed to revert to
The Activity Guidelines were generated
Sumitomo’s business philosophy, whichbased on these principles to guide
had served as the base of Sumitomo’s
employees in their daily business operations.
business operations and the driving force
in overcoming many crises
through the last 400 years.
Corporate Mission Statement
This recognition further
heightened in 1996, when
Corporate Vision
the copper incident
occurred, leading to the
We aim to be a global organization that constantly
1998 establishment ofstays a step ahead in dealing with change, creates
new value, and contributes broadly to society.
the Management
Principles and Activity
Guidelines of the Sumitomo
Management Principles
Corporation Group.
<Corporate Mission>
The Management• To achieve prosperity and realize dreams throughPrinciples and Activity
sound business activities
Guidelines were compiled<Management Style>based on Sumitomo’s• To place prime importance on integrity and soundbusiness philosophy,
management with utmost respect for the individual<Corporate Culture>
which has been nurtured• To foster a corporate culture full of vitality and conduthroughout the 400 years
cive to innovationof Sumitomo’s history,
and today’s global
perspective, in a simple
Activity Guidelines
and systematic way.
· To act with honesty and sincerity on the basis of
The preamble to theSumitomo’s business philosophy and in keeping with theManagement Principles
Management Principles· To comply with laws and regulations while maintainingshows the corporate vision:
the highest ethical standards“We aim to be a global· To set high value on transparency and openness
organization that constantly· To attach great importance to protecting the global
stays a step ahead inenvironment
dealing with change, creates· To contribute to society as a good corporate citizen
new value, and contributes· To achieve teamwork and integrated corporate strength
broadly to society.”through active communication
The ﬁrst item in the· To set clear objectives and achieve them with enthusiasm
Management Principles,

Sumitomo Building Annex, where Nippon
Kensetsu Sangyo’s head ofﬁce was located2000
Sustainability Report 2009 8

Core Competence and the New Medium-term Management Plan

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

“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.

Creation and Provision of Diversiﬁed
Values to Meet Customer Demand
Strategic andOrganic Integration

IT Solutions

Logistics Solutions
Market Intelligence &Information Gatheringand Analysis Business
Development

Cont

inual Enhancement of Functions

IntegrityIntellectual Capital

Global Network

Co

nt i
nua

Financial Services
Risk
Managementl StrenGlobal Relations

ion
dat
n
u
o
gthening of the Business F

New Medium-term Management Plan
FOCUS’10 (medium-term management plan for ﬁscal 2009–2010)
In the new medium-term management plan, FOCUS’10, we
will further pursue management of a risk-adjusted return
ratio based on the results of 10 years of management
reforms. We will create “A Growth Scenario on a New Stage”
to meet the requirements of the next 10 years.

A Medium- to Long-term Perspective
Respect for Individuality and Diversity
Solid Earning Pillars
Leveraging of Our Integrated
Corporate Strength
Reinforcement of Operational
Soundness and Efﬁciency

FOCUS’10 Fundamental Principles andQualitative Targets

FOCUS’10 Quantitative Targets and Plan

Fundamental Principles

Quantitative Targets• Promote medium/long-term growth by enhancing valuecreation capability while reinforcing soundness andefﬁciency• Net income (FY2009)• Risk-adjusted Return (two-year average)• 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 and efﬁciency• Development of human and organizational dynamism toenhance value-creation capability

9 Sustainability Report 2009¥115 billion
Around 10%

Risk Asset Plan (two-year total)
Amount increasing over two years (gross)¥200 billion

Decrease¥100 billion

Amount increasing (net)¥100 billion

Soundness & Efﬁciency• Total Assets: Remains on the same level as of the end of
March 2009
• Free Cash Flow: Positive two-year total

Company Information

Company Proﬁle (As of March 31, 2009)
Company Name:
Sumitomo Corporation
Establishment:
December 24, 1919
Number of Employees:
4,968 (70,755 including consolidated subsidiaries)
Headquarters:
1-8-11 Harumi, Chuo-ku, Tokyo 104-8610, Japan
URL:
http://www.sumitomocorp.co.jp/english

Consolidate Shareholders’ Equity:
1,353 billion yen
Fiscal Year End:March 31
Number of Consolidated Subsidiaries:
557 (overseas: 402, domestic 155)
Associated Companies (Equity Method):229 (overseas: 171, domestic: 58)
Total:
786 companies

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Sustainability Report 2009 12

1

Focus

Instructor System
The values shared in the organization and basic attitude for our work arehanded on from experienced employees to new employees
For more than 40 years, Sumitomo Corporation has been using its
Instructor System as the major scheme for new employee training
and education. We emphasize mutual trust built through honest
communication in daily work as the most important element to betaught to new employees in their training programs. Based on thismutual trust, experienced employees become instructors to teachthe values shared throughout the Company and the Sumitomo
Corporation employee attitude, and to thoroughly prepare new
employees on a one-on-one basis. Sustainable growth in
Sumitomo Corporation depends on its human resources, and thebase for development and training of these human resources is ourInstructor System.

Voice

Conveying how important it is to think
through the purpose of each task
What I was taught and what I have been maintaining

Tsutomu Makino
General Manager
London Line Pipe Department
Tubular Products Unit
Sumitomo Corporation Europe
Group

ProfileTsutomu Makino joined Sumitomo
Corporation in ﬁscal 1988 and worked
in iron and steel trading, including someyears in Vietnam. Became an instructor
for the Tubular Products International
Trading Department No.2 in ﬁscal 1998.
He has been serving as a General
Manager of the London Line Pipe
Department for the Tubular Products
Unit in London since 2008.

Sumitomo’s business philosophy and the Management
Principles of the Sumitomo Corporation Group show us how
we should act—not only as employees but also as people.
When I am not sure how to act, the philosophy and principles
serve as guidelines in deciding whether I am making a decisionthat lives up to my own expectations and those of the people
around me. As an instructor, I endeavor to convey to Mr.
Ishiguro these principles and other principles and ideas I
have learned from more experienced seniors.

What I have tried to pass on
I always tried to emphasize that it is important to think throughthe purpose of each task when making a decision and taking
actions in daily work, as well as to keep a positive curiosity foreverything. I also told him that as long as we are getting paidby the company, we must produce results for the company.
When my knowledge in this on-the-job training was notenough, my supervisors and colleagues always helped me.
This is in fact a typical example of the Sumitomo Corporation
way of solving problems together, and I believe that I
conveyed this company culture clearly to Mr. Ishiguro.

System explained

Instructor System

At Sumitomo Corporation, the Instructor System plays the main role inon-the-job training (OJT) for new employees. An employee with ﬁve to ten
years’ experience at Sumitomo Corporation will be assigned as an instructor
for a new employee in their section (both in career-track group and clericalgroup) and give them training on a one-on-one basis for six months. The
training follows the plan laid down by the instructor with the advice and

13 Sustainability Report 2009

support of the general manager and other managers who are responsible
for human resources development. The training policies and goals are
known to all members of the section so that new employees can receive
training in a supportive environment. To share information on best practices
in training new employees and motivate each other to achieve them,
instructors hold regular business unit-level and group-level meetings.

ChapterI

With the People

Chiaki Oka
Staff of the OCTG Asia Oceania TeamOCTG Business Department

ProfileChiaki Oka started her career at Sumitomo in the Planningand Administration Department, Metal Products Business
Unit in ﬁscal 2006. After two months of training in thesection, she was assigned to a position in the OCTG Europe
Africa CIS Team of the OCTG Business Department. She
received training in the basics of business from Mr. Ishiguro
and other more experienced colleagues as well as throughseminars held by the department, while being engaged inwork exporting pipes for oil wells. Her current responsibility
involves exports to China and Southeast Asia.

Junpei Ishiguro
Deputy General Manager
Tubular Products Department
Sumitomo Corporation Iran, Ltd.

ProfileJunpei Ishiguro joined the Tubular ProductsInternational Trading Department No.2 in ﬁscal
1998 and received training in exports from Mr.
Makino. In April 2006, when working in the OCTG
Business Department, became an instructor for
Chiaki Oka. Since September 2006, he has been
engaged in the sales of OCTG and line pipes foroil and gas wells as a Deputy General Manager of
the Tubular Products Department in Sumitomo
Corporation Iran, Ltd.

Vo i c e
Voice

Wanted to support her in building afoundation for working in the trading business
What I was taught and what I have been maintaining
I am grateful for what I learned from Mr. Makino. He taught mebasic actions, such as how to communicate well with others(e.g., reports, notices, and consultation), how to manage mytime effectively, and how to respond promptly. These basic
skills have been supporting my daily business activities alongwith the other things I learned from Mr. Makino. He repeatedly
told me how important it is to thoroughly understand the
purpose of each task and to have a professional attitude.
Because of what I learned from Mr. Makino, I am able to solve
problems and move things forward, even in a changing
business environment or when starting a new business project.

What I have tried to pass on
When I was acting as an instructor for Ms. Oka, I taught her
the basic actions I learned from Mr. Makino and repeatedly
told her that knowledge of our products and business tasks
are very important. Accumulated knowledge helps us tounderstand the purpose of the task, and in turn to haveconﬁdence and satisfaction in our daily work. Ms. Oka did
not hesitate to ask questions and tried to learn from as many
people as possible. Her positive attitude was very encouraging
for me as her instructor. I was also grateful for our corporate
culture and the high awareness of other staff members, since
it is the task of the whole company to train new employees.

I inherited Sumitomo’s business philosophy andtrust with humility and continuous learning
What I was taught and what I have been maintaining
I was told that “knowledge and experience will become auseful weapon and help you someday in the future.” I was
also told to learn the basics thoroughly. The major focus of
my training was time management, which has become more
important for me as my current responsibilities cover a larger
geographical area and a larger variety of tasks. Working at a
trading company requires you to be always one step aheadof the rapidly changing times and movements in the market.
I am grateful that I was able to learn the most importantprinciples and ideas when I was new to the company.

What I want to pass on
I was very impressed with Mr. Ishiguro and the other people
who never stop learning even though they already haveaccumulated ample experience. This kind of attitude byprofessionals working in the trading industry reﬂects the value
they place on trust, which is based on the idea of not pursuingeasy gains that is part of Sumitomo’s business philosophy. I
would like to pass on the principles I have learned from myinstructor and other people to newer employees so that I
can help maintain and further increase the trust people placein Sumitomo Corporation, and which has been maintained
throughout the long history of the company.

Sustainability Report 2009 14

VoiceVo i c e

A far-sighted view is the key to management
decision-making

Recognizing the DNA of miners that ispassed on

When I was in Besshi, the birthplace andspringhead of Sumitomo’s businessphilosophy, I felt the philosophy seep into
my mind and body.
The Besshi Copper Mine wasdeveloped with a massive investment interms of time and labor. Managing such
Takehiko Araia mine must have come with difﬁculties.
Assistant toGeneral Manager
Yet, the early managers were brave in
Telecommunication,
making radical decisions from the longEnvironment &term view. They started a reforestation
Industrial Infrastructure
Business Division
program to restore the mountain greenery
President of Sumitomoin the devastated area. They moved the
Shoji Machinex Co.,
reﬁnery to Shisaka Island, an uninhabited Ltd.
island, to stop the air pollution at theoriginal site.
After visiting Besshi, I try to remember that a long-term
viewpoint is essential in certain situations for group leaders,
and that I have to put Sumitomo’s business philosophy into
a visible form in my daily work, just as my predecessors did.

As a businessperson working in the mining
industry, I had always wanted to visit Besshi.
I wanted to see with my own eyes themine whose operation has survived forseveral hundreds of years, the will anddetermination of the people engaged inmining, and the techniques and systems Kazuyuki
that supported the operation. I also
Takahashi
wanted to pass on what I would see and General Manager
Coal Department
feel at Besshi to my staff and business
partners outside Japan.
During the program, I was especially impressed with thefact that the managers of the time saw the miners and theirfamilies as team members in developing the mine. I was very
proud to be a member of the Sumitomo family. At the site of
the old mine, I could feel strongly the spirit of the miners who
devoted themselves to mining.
We no longer conduct mining in Japan, or do mining
ourselves. Rather, we invest in mining businesses abroad
through partnerships with local mining companies. I would liketo share what I experienced during the trip, the history of the
Besshi Mine and the sense of the DNA of the Sumitomo
miners, with my partners in other countries. I know they will
be able to appreciate the spirit of those miners.

Focus

2

Site Visits to the Besshi Copper Mine
Visiting the place where Sumitomo’s business philosophy was born
All the business activities of Sumitomo Corporation and our ideas for CSR are based on Sumitomo’s businessphilosophy. Each year, groups of managers from Sumitomo Corporation participate in a site visit program to theBesshi Copper Mine to experience ﬁrsthand the birthplace of the Sumitomo’s business philosophy and DNA,
which have been passed on throughout the long history of the company. Managers renew their recognition of thevalue of the philosophy to follow it in performing their daily tasks and pass it on to younger generation in their division.

System explained

Site Visits to the Besshi Copper Mine

Originally, the site visit program to the Besshi Copper Mine was started asa part of a training program targeting employees who have been promoted
to a corporate ofﬁcer (management position). In ﬁscal 2006, it was
designated as a required program for all general managers in Sumitomo
Corporation in response to a suggestion by the Human Resources
Development Promotion Committee (a company-wide committee that
discusses issues on the broad theme of human resources development
and makes suggestions for policy planning). Since then, the program serves
each year as an opportunity for participants to experience ﬁrsthand the

15 Sustainability Report 2009

birthplace of Sumitomo’s business philosophy, which is our corporate
DNA, renew their recognition of its value, and to exchange ideas beyond
divisional barriers. In 13 visits in ﬁscal 2008, a total of 149 participants
walked the ﬁve hours through the mountain to visit the old mine. They
also learned about the history of the mine and the early managers of
Sumitomo in the Besshi Copper Mine Memorial Museum and Hirose
Memorial Museum. We are planning to develop the program by widening
participation to team leaders (section manager class) in addition tocorporate ofﬁcers and general managers who have not visited the site yet.

ChapterI

With the People

Voice

Vo i c e

Reality found while hiking in the mountains
in Besshi

Providing a good example of following
Sumitomo’s business philosophy andManagement Principles

I climbed up to the Besshi Copper Mine,the “holy ground for the spirit of theSumitomo Group,” when I was assigned
to the position of branch manager at
Niihama, where the mine was located. I
wanted to see the history and businessphilosophy of Sumitomo with my own
Shigeo Kishi
eyes and experience the place ﬁrsthand. Assistant General
Manager
When I visited historical sites in theStrategy &area, I was able to feel the determination Global
Researchof the people who were engaged in the
Department(ex-General Manager
mining business at altitudes of overof both the Shikoku
1,000 m with the mission of bringing
Branch Ofﬁce andthe Niihama Branchprosperity to the country. I was also
Ofﬁce)
impressed with the high ethical standards
and foresight of the managers of the time who involved
themselves in restoring the natural environment in mountains
polluted with smoke. Equally impressive and new to me was
the fact that Sumitomo is still engaged in the treatment ofwater coming from the mine, at which operation has now
been suspended.
The Sumitomo Group runs its businesses in the nation’s
interest and in the interest of conserving the global environment
with a strong sense of responsibility. I believe that if I reﬂect
the business philosophy in my own acts and pass that on to
my staff and customers, it will lead to the growth of theSumitomo Group and social contributions.

Before attending the program, I had only
limited knowledge about the Besshi
Copper Mine and other historical items
that gave rise to Sumitomo’s businessphilosophy. I attended the training
program because acquiring knowledge
about the company and passing it on to Kosuke
team members is an important task for a Okamoto
new team leader.
Manager
Wire Rod & Speciality
I was especially impressed with theTeamfar-sighted view of Teigo Iba, Sumitomo’s Steel
Metal Productsecond Director-General, who wasBusiness Dep.No.2
Nagoyaextremely quick to take environmental
Chubu Regional
measures. This is the origin of what we
Business Unit
call CSR today. Visiting the place where
Sumitomo’s business philosophy that exhorts us “to be abusiness that beneﬁts not only the company but the nationand the whole of society” started meant a lot to me.
Now that I have renewed my knowledge of the history
and tradition that has been passed down throughout thelong history of Sumitomo, I am more determined than everto set a good example to my staff on how to pursue theManagement Principles of the Sumitomo Corporation Groupin my daily business operations.

Mountain greenery restored around the Besshi Copper Mine through reforestation programs (photos provided by Sumitomo Forestry Co. Ltd.)

Sustainability Report 2009 16

At Sumitomo Corporation, the communication between
managers and their staff in each section is the basis of careerdevelopment for employees. The Career Adviser Program wasstarted in April 2007 to facilitate this style of career development.
With the program, employees of Sumitomo Corporation withexperience in career advancement are chosen from eachdivision and designated as career advisors (CAs) to support
the career development of all employees.
These CAs, who serve all employees, have three majorroles to play. They give support to individuals (staff), give
advice to management in their organization (their
managers), and give indirect support by acting as acommunication bridge between individuals and theorganization.
CAs need specialized knowledge and skills in careerdevelopment support in addition to their own experience at

the company. Under the instructions of Professor Mitsuyo
Hanada of the Career Resource Laboratory at the Keio ResearchInstitute at SFC, Sumitomo Corporation organizes training
programs for CAs to give them the required knowledge and skills.
The CAs support career development by facilitating
communication between managers and their staff, so that agood work environment can be built in which employees can
exercise their capabilities and personalities to the maximum.

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Voice

Encouraging employees to be brave in taking the next step
I always try to give the support that is best suited to each person so thatthey can enjoy their working life and remain full of energy. When I interview
each person in my division, I listen closely to their concerns on theircareer, job, work environment and subordinate training and on personalmatters. Through the interview, I try to develop a trusting relationshipwith the person I am advising. I ask the person to tell me what they arethinking about in their own words. During that process, they often cometo better understand themselves or ﬁnd a clue to resolving their own
concern. I encourage them to be brave and take the next step.

Focus

A person’s career is something that each of
us develop for ourselves. When an employee isengaged in development of career self-relianceand of their own free will, the organization as awhole will also become invigorated and energized.
I would like to continue supporting my colleagues
in developing their own career self-reliance.

3

Career Adviser Program
Building an environment where every employee
can exercise their potential to the full
Sumitomo Corporation started its Career Adviser Program
as a way to support the career development of each
employee. Career advisors provide support in designing
and achieving the career development plan best suited toeach individual’s situation, so that the capabilities of each
person can be used to the full and further developed.

17 Sustainability Report 2009

Hisafumi
Ejima
Career Adviser
Media, Network& Lifestyle Retail
Business Unit

ChapterI

With the People

Focus

4

Human Resources Development
in Business Units or Divisions
New style of human resources development at actual business sites
The main stage for human resources development at Sumitomo Corporation is the business section. By clearly distinguishing
the role of our business sections and our Human Resources Department in personnel development, Sumitomo Corporationbuilds a stronger system for human resources development to be carried out in each business unit or business division.

Sumitomo Corporation provides training for new employees in
two major programs: on-the-job training (OJT) where training
is given at each business section and off-the-job training(Off-JT) where training is provided in groups by the Human
Resources Dept. New employees learn the knowledge andskills that are needed in common by all who work in the
trading industry (“standard equipment”) in Off-JT. Speciﬁcknowledge and skills that largely vary between the business
units or divisions are given through the OJT provided at eachactual work section, and at Sumitomo Corporation, an
integrated trading company, more emphasis has beenplaced on OJT.
The problem with OJT is that the training content andtiming tend to vary considerably depending on the type or ﬁeldof business new employees are assigned to and how theirinstructors (experienced employees) train them. This tendency
is intensiﬁed by increasingly sophisticated and advanced
business operations and diversiﬁed business domains.
In response to this issue, recognition of the need toprovide systematic training programs speciﬁc to each different
business unit or division has been growing. We have started
to design, and are now expanding, programs that would meetthe needs and conditions in each business domain.
Sumitomo Corporation will review the results of thesemeasures to seek the best combination between systematic
Off-JT programs and OJT on a one-on-one or rotational basis
in human resources development under the leadership of ourbusiness sites themselves.

Voice

Evolving our businesses by passing on our knowledge through training
In 2004, the Construction & Mining Systems Division started to formulate
its own human resources development plan.
We ﬁrst decided to make an inventory of the implicit knowledge on
construction machinery that our members had in their brains. Then weorganized the results in the form of training menus so that the specialized
knowledge could be updated, improved and passed on to new members.
The training menus are incorporated into OJT plans for new employees toprovide more standardized and uniform training content to all trainees andto improve the efﬁciency and effects of the training.
We also have been reviewing training programs designed for different
employee levels to better match their capabilities for changing businessmodels. For example, the mainstream construction machinery business isshifting from the conventional export business to a more locally based sales
dealer business throughout the world. To reﬂect this trend, we started a
new career development plan. New employees ﬁrst learn about
international trading, the base of our business as an integrated trading
company, for the ﬁrst three to ﬁve years through OJT in the section of
our division they are assigned to. Then they work at a subsidiary or an
associated company in or outside Japan as a business trainee or
language trainee. After spending about ten years with our division, theyagain have the opportunity to learn about company management at aJapanese or foreign subsidiary or associatedcompany, or at a local organization overseas.
Speciﬁc training programs include a series ofseminars given to division members inviting
specialist speakers in various areas who work at
construction machinery manufacturers. We also
send young and mid-career members to a
subsidiary or an associated company overseas ona short-term basis to give them the opportunity toexperience frontline operations ﬁrsthand.
And we are always making improvements and Construction &adjustments to our career development programs. Mining Systems
Division
We are aware that training or instruction that isbased on training menus is effective in offering standardized contents.
But if we rely too much on training menus, we are prone to lose thepractical beneﬁts of OJTs, especially when the instructors become too
familiar with the menus. The business carried out by the Construction &Mining Systems Division is changing and evolving all the time, andtraining menus should be modiﬁed accordingly. We who are responsible
for planning and running the training programs must evolve our training
systems as well.

MasatoIshiguri

Sustainability Report 2009 18

Focus5

Training for Locally Hired Employees Overseas
To improve human resources across the whole Sumitomo Corporation GroupAs a globally operating business group, the Sumitomo Corporation Group has many locally hired employees working atoverseas subsidiaries and associated companies. At training programs for locally hired employees, important knowledge andskills are shared while respecting each other’s culture and customs.

Localization of human resources has been promoted in the
Sumitomo Corporation Group to gain an advantage in the global
business scene. We increase the competency of locally hired
employees who work at overseas subsidiaries and associatedcompanies through our training programs, for different careerlevels (staff in charge, managers and senior executives). At thetraining, participants from all over the world get together inJapan to learn more about Sumitomo’s business philosophy,
the Management Principles of the Sumitomo Corporation
Group, as well as the Group’s management directions andstrategies. They attend “skill-up” seminars on a variety ofthemes, such as ﬁnancing, risk management, and compliance,
as well as cultural exchange programs, which are shared with
their Japanese counterparts. Throughout the program, theyshare the DNA that runs through all members of the Sumitomo
Corporation Group and reafﬁrm their sense of unity in the group.

Opportunity to gain new knowledge andskillsThe program was very valuable for me because
I was able to learn more about the company
history, the current strategies and direction for
the future. Also, I learned how to create new
business opportunities, while expanding my
network with my counterparts in Japan. Throughdiscussions with the locally hired employees
working in different parts of the world, I learned
that it is very important to see the issues from a
global perspective.

Vitor Hugo de
Pinho Valente
Commercial Dept.
Sumitomo Corporation
do Brasil S.A.

Vo i c e

Message from a Japanese participant

Recognizing the common values shared by
the Sumitomo Corporation Group employees
At the beginning of the training program, we sometimes found it difﬁcult
to reach a conclusion because there was a big gap in views among
participants with different nationalities and different backgrounds. When
we continued talking, however, we graduallylearned that we all shared the same idea as thebaseline. When we found a direction we all shared,
we were able to come up with many good ideas,
and realized that exchanging different views has agreat synergetic effect. As employees of theSumitomo Corporation Group, we all sharecommon values. During the program, I realized
how important those values are.

Yuri
Takahashi
Tire Dept.

19 Sustainability Report 2009

Vo i c e

Acting with the PDCA cycle is the key
The most important lesson I learned during the
program was the value of following the PDCA (Plan,
Do, Check, Action) cycle in our activities. I realizedthat if we analyze the business environment
quickly, make detailed plans and strategies, andput the exact plans into action, instead of rushingstraight into action without a clear understandingof the situation, we will be able to explore many
more potential business opportunities.

Christine Koh
Risk Management
Dept.
Sumitomo Corporation
Asia Pte. Ltd.

ChapterI

With the People

I want him to feel directly and understandprofoundly the Management Principles of
the Sumitomo Corporation GroupI want to bring a high level of business
transaction skills to use in my ofﬁce backhome

Since October 2007, Tamer Cankardes of Sumitomo
Corporation Dis Ticaret A.S. (Istanbul, Turkey) has beenworking at the Power & Water Investment Dept., No. 2 inTokyo to receive training designed for future executives. I
expect him to learn about our business transactions anddirectly absorb a sense of Sumitomo’s business philosophy
and the Management Principles of the Sumitomo Corporation
Group by working together with other employees at the Head
Ofﬁce of Sumitomo Corporation in Tokyo.
As an on-the-job training (OJT), Tamer is now working ina project team to learn the development procedures for the
IPP/IWPP (IPP: Independent Power
Producer; IWPP: Independent
Water & Power Producer) andwater treatment businesses. In the
IWPP project for Saudi Arabia, heﬁrst learned about the rather
complicated project scheme andthe whole picture of the manydifferent contracts involved whileworking as a team member. Then
he took charge of a contract andlearned the negotiation procedurein more detail. Now I would like him
to learn how to use that
accumulated experience andknowledge and apply it tobecoming a project manager andrealizing a new project.

Since graduating from Istanbul Technical University and living
in Nagasaki for two years (1997 to 1998) as an Ambassadorial
Scholar of Rotary International, I had always wanted to workin Japan someday. Then in1999, I got a position in Sumitomo
Corporation Dis Ticaret A.S., a subsidiary of Sumitomo
Corporation.
Then I had the opportunity to work in the Headquarters
as a trainee. Since joining the Power & Water Investment
Dept., No. 2 in 2007, I have been involved in a project thatmakes investment into electricity wholesales, IPP/IWPP, andwater treatment using global ﬁnancing schemes. Currently, I
am trying to increase the power
generation capacity to achieve
the goal set for the end of 2010.
I am very grateful that I was
given an opportunity to live again
in Japan, especially to work as amember of an enthusiastic groupof professionals. I truly respect
the honesty, dignity and traditionof Japanese members at
Sumitomo Corporation. I will try
to develop as many skills as
possible while supporting othermembers of the Dept. No.2. Then
I will go back to Turkey and use
all the knowledge and skills
learned to work for the Sumitomo
Corporation Dis Ticaret A.S..

Jun Minase

Tamer Cankardes

Power & Water Investment Dept., No. 2

Power & Water Investment Dept., No. 2

Focus

6

Providing Training Programs in Japan for
Locally Hired Employees Overseas
Improving business skills in the actual business scene in JapanThe Sumitomo Corporation Group is operating business globally, and invites locally hired employees to work with
their business counterparts in Japan to experience Sumitomo Corporation’s business operations. This is a way todevelop human resources that will play a major role in each local region in years to come.
Sustainability Report 2009 20

Triton Sukusuku Square, Sumitomo Corporation’s childcare facility, was opened by the company in October 2008 as a part of thework-life balance promotion project.
The nursery is located in Harumi Triton Square, a commercial complex where the Sumitomo Corporation’s Headquarters arehoused. Employees of Sumitomo Corporation and group companies can leave their children up to ﬁve years of age from 8:00 a.m.
to 7:00 p.m. either on a monthly basis or on a needs base with a fee no higher than at other nurseries in the same district. To be ofmore help to parents, the health requirements for the children are set more ﬂexibly than for the regular nursery.

Voice

Vo i c eServices supportive of working parents

It’s a luxury to know he is right there

The largest concern for us when choosing
a nursery was how to deal with the situation
if neither of us are able to get out of workto pick up our child. Both of us work insales departments in Sumitomo Corporationand tend to work late hours. So far, wehave not encountered any serious problems
because my wife is on a system that allows
her to work shorter hours and ourLine Pipe Business Dept.
supervisors and colleagues are supportive.
Also, it is a great help to us that Triton
Leasing Business Dept.
Sukusuku Square accept children evenwhen they have a slight fever (up to 38°C
compared with 37.5°C for regular nurseries) and keep close contact withthe parents regarding the child’s health. If they can take care of children
for longer hours (the latest possible now is 7:30 p.m.), it will become
even easier for working parents like us to use the facility.

For any parent, knowing that their child is near themis very reassuring. Triton Sukusuku Square is theideal place in that sense. We can concentrate on
our job.
Because Triton Sukusuku Square is locatedvery close to work, I can spend all of mycommuting hours with my son. Of course it is noteasy to travel in a train with a small child, but theone hour of commuting has become a very
Global Logistics Dept.
important time together for us. And more
importantly, he seems comfortable at Triton Sukusuku Square. I am very
grateful that Triton Sukusuku Square is there because I could not ﬁnd anursery close to my house. I would not have been able to return to work
were it not for Triton Sukusuku Square.

Satoshi Kitagawa
Arisa Tsukamoto

7

Ikuko Sohma

Focus

Opening a Nursery on Company Premises
Flexible service supports working parents

21 Sustainability Report 2009

ChapterI

With the People

Focus

8

Counseling Center
Supporting mental health care for employees
Sumitomo Corporation opened the SCG Counseling Centerin April 2005 at Harumi Triton Square.
Employees of Sumitomo Corporation and groupcompanies can call upon services for the early detection ofpotential problems either at work or at home, and seek
solutions from one full-time senior occupational counselor
and four part-time occupational counselors. Appointed as
general manager of the center is a long-term sales specialistof Sumitomo Corporation who has a total of 15 years ofexperience working abroad. The center is staffed to provide
support for employees who may encounter problems uniqueto people engaged in complex global work in an integrated
trading company.
The center strictly protects the conﬁdentiality of personal
information to avoid any unnecessary worry by employeesthat using a company-run counseling center could adversely

Focus

9

affect their performance evaluation or promotion. The nameof the client and the content of the counseling are neverdisclosed to their department, the Human Resources
Department, or to any person in the company. Appointments
are arranged so that the client will not be seen by other visitors.
These detailed measures to protect conﬁdentiality are
now well known, andthe center is functioning
as a convenient place
to go for counseling.
Several hundreds of
employees visit thecenter every year.
Providing counseling

10

Focus

“Use Up Your Paid Summer Massage Room
OpenedVacation” Campaign
Managers lead the campaign tochange the work style
Sumitomo Corporation has been encouraging its employees
to take their allotted paid holiday to promote a better worklife balance. In this campaign, each employee sets their own
target number of holidays. Those inmanagerial positions, who tend not totake much of their paid holiday, were thefocus of the campaign in ﬁscal 2008. With
the slogan, “Boss ﬁrst,” the campaign
aimed to encourage employees to use
Sumitomo Corporation
100% of their paid summer vacation. The
was selected as one
campaign ended very successfully. Theof the ten modelcompanies in theratio of summer vacation taken by all its
Work-Life Balance
employees in Japan was 80.3% (13.4%
Promotion Project by
Ministry of
up on last year) and 79.3% (15.7% up) for Japan’s
Health, Labour andWelfare.
managers.

Good for your body, good foryour work
Sumitomo Corporation opened “Koriton,” a massage room,
in April 2008 in Harumi Triton Square to provide employeesof Sumitomo Corporation and group companies withrelaxing and refreshing therapy for their body and mind.
Licensed therapists listen carefully as each visitor describes
how they feel and what
they would like andprovide massage
therapy accordingly. It
has become a popularplace because it
provides a quick
relaxation service
accessible during
working hours.
The “Koriton” massage room

Sustainability Report 2009 22���������������������������
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Sustainability Report 2009 24

1

Theme

Contributing to Solving theFood Problem and Fighting Malaria

Sumitomo Corporation’s agriscience business supports
the development of agriculture and health care
Sumitomo Corporation performs a wide range of business operations that contributeto the development of agriculture and an increase in food production around theworld. These include the supply of high-quality agricultural chemicals, the provisionof agricultural technology and know-how, and the development, popularization andsales of various devices in the ﬁght against malaria.
Nobuhiko Yuki, General Manager, Life Science Division who has been promoting
these activities for many years, talks about Sumitomo Corporation’s agrisciencebusiness, particularly projects to support food production, that the Company had
pushed forward, and malaria control projects currently underway.

A comprehensive range of agriscience businesses
from upstream to downstream operations
Sumitomo Corporation’s Life Science Division comprises
three business lines: (1) medical science (pharmaceuticals
and medical care) to promote people’s health, (2) agriscience(agricultural chemicals, countermeasures for communicablediseases) to support food safety and security as well as toexpand food production, and (3) pet-care science (petsupplies, insect control) to offer a comfortable and relaxing
living environment for pets owners. While all these businesslines, which are concerned with health, food, and living
environments, are closely connected with people’s everyday
lives, the agriscience business in particular deals directlywith two global issues that are seriously affecting our lives—
namely, the food problem and environmental problems.
The mission of our agriscience business is to contributeto a stable food supply and to develop
environment-friendly agriculture, andto market on a global scale a variety
of agricultural materials including
agricultural chemicals produced by

Nobuhiko Yuki
Corporate Ofﬁcer
General Manager
Life Science Division
After joining Sumitomo
Corporation in 1976, Yuki wassent to Paris and Abidjan as
an overseas trainee in 1978 for
two years. He has been mainly
involved in the agrisciencebusiness ever since. After working
in France twice (14 and a halfyears in total), and as General
Manager of AgriScience
Department, he was appointed
to his current position in
April 2007.

25 Sustainability Report 2009

Japanese manufacturers
who are known for their highsafety and performance levels, seeds and fertilizers. The
unique point about this business is that it covers all
upstream, midstream and downstream operations.
In upstream businesses, for example, in addition to threeof our own fungicides, we also acquire ownership of, or obtainlicenses to sell products made by major overseas pesticide
manufacturers that are actively looking for business alliances, inorder to expand our lineup. In the midstream area, we act as
the sole export agent for leading Japanese agriculturalchemicals manufacturers in supplying high-quality products tooverseas markets. In downstream businesses, we havedeveloped a direct sales system for end users in 28 countries(as of July 2009) including China and those in Europe andSouth America, and conduct marketing activities in a waythat is appropriate to each market. In the Middle East, Africa
and Central America regions where we do not have direct
sales channels to end users, we have established a strong
relationship of trust—not just a transactional relationship—with local distributors, and supply them with products fromalmost all the Japanese agricultural chemicals manufacturers.
By utilizing a business structure that covers the wholeprocess from the procurement of products to export and local
sales, we can not only supply products but also undertake
testing and registration of agricultural chemicals in each market,
and even give guidance to local farmers and disseminate
information on the safe and effective use of agriculturalchemicals. This, we believe, is one of our greatest strengths.

Contributing to increase of food production in Africa
through both product supply and technical support
Sumitomo Corporation’s integrated corporate strength in theagriscience business had been further reﬁned by the Japanese
government’s “Grant Aid for Increase of Food Production”

ChapterII

Creating
a Better Society(2KR) scheme. 2KR was one of the bilateral grants available
to developing countries under the Ofﬁcial Development
Assistance (ODA) program, which was used to purchaseagricultural chemicals, fertilizers, agricultural machinery andother materials and equipment designed to increase foodproduction. Grants of about 20 billion yen had been provided
to more than 40 countries in Asia, Africa, Latin America andother regions every year since 1977.
Of these countries, Africa in particular often was sufferinglarge-scale famines because priority tends to be placed on
the production of cotton, coffee and other export crops toearn foreign currency, leaving little money to spare for the
production of food for their own people.
In this situation, it became our ﬁrm belief that safe andhigh-quality agricultural chemicals produced by Japanesemanufacturers would work effectively to bring about asuccessful increase in food production in African countries,
and in cooperation with the Japanese government, wemade proposals to and worked with African governments inusing ODA for their plans to increase food production.
As a result of these efforts, in 1979 we were awarded an
aid project for Madagascar, a rice-producing country whose
forms of agriculture and food culture are similar to Japan’s, andbegan supplying Japanese agricultural chemicals to the country.
However, as the project progressed, we realized that
farmers in Madagascar did not have sufﬁcient knowledge orknow-how to use the agricultural chemicals effectively. As amatter of fact, not only in Madagascar but also in other
African countries to which 2KR was provided, agriculturalchemicals were left in warehouses until they exceeded their
expiry dates instead of being used on farmland because
they had been provided before these countries were readyto accept such huge quantities.
So we decided that, along with supplying agriculturalchemicals, it would also be essential to send technical advisers.

This decision led us to establish Sumisho Speciality Chemicals
International Co., Ltd in 1983—in collaboration with anagricultural chemicals manufacturer—to provide agricultural
technical support. The new company recruited people suchas ex-Japan Overseas Cooperation Volunteers, who have agood command of French, Swahili or other languages andhave experience in providing agricultural support, andprovided them with technical training. A technical support
team made up of these people and led by a technicalmanager from an agricultural chemicals manufacturer wasthen sent to Madagascar and other African countries. The
team members visited the villages and provided knowledge
on agricultural chemicals and detailed guidance on how to
use them to local farmers, sometimes using presentation tools
like picture cards in regions where literacy is low.
Since this technical support proved effective in enhancing
agricultural productivity, it was acclaimed by local agriculturalinterests and the government of Madagascar, and continued
for three years. After this success, we were involved in
implementing a business model combining the supply ofagricultural chemicals and technical support for the projects
to increase food production in more than 20 African countries
for about 10 years. In addition to Madagascar in the east, thetechnical support team traveled extensively and visited many
countries including Zambia in the south, and Mali, Senegal,
and Mauritania in the west. The team visited not only thesuburbs in the capitals of each country but also remotevillages to work enthusiastically in providing guidance onsafe and productive agriculture using agricultural chemicals.
In this way, our agriscience business utilized both
“hardware” (agricultural chemicals) and “software” (technicalsupport) to support these countries with a host of 2KR projects,
and played an important role in disseminating Japanese
agricultural chemicals produced under stringent safety
standards, as well as in increasing food production in Africa.

Sustainability Report 2009 26

Fighting malaria with a variety of
insect control devices
While we were conducting activities to support
agriculture in Africa, we felt clearly that there is a need tocontrol malaria, which poses a great obstacle to local foodproduction and other activities. Malaria is an communicabledisease spread by Anopheles spp (plasmodia-carrying
mosquitoes.) According to the World Health Organization(WHO), 350 million to 500 million people are affected by thedisease, and more than one million people die each year
across the world, mainly in tropical regions. Ninety percent
of malarial infections occur in the sub-Saharan region of
Africa, and the majority of fatalities are infants under ﬁve
years old, who will play an important part in the future
workforce, and expectant mothers. Although people otherthan infants and expectant mothers are less likely to die, theincidence rate of malaria is high, and once affected, patientsare conﬁned to a sickbed for many days, and may even die.
Malaria thus hinders mobilization of the workforce necessary
in increasing food production.
Against this background, Sumitomo Corporation beganpromoting agricultural chemicals that were known for theirhigh safety and lasting effects and were recommended by
WHO to eliminate harmful insects, in cooperation with aJapanese agricultural chemicals manufacturer. At about thesame time, we also initiated a Malaria Control Project toapply insecticide to the walls of houses—a method
recommended by WHO—as part of Japanese government
aid to Sudan, Tanzania, and other African countries, as wellas in some countries in otherregions including Pakistan,
Haiti, and Honduras, to help
reduce the transmission ofmalaria.
However, since this insect
control method requires
reapplication of the insecticide
Applying insecticide to the surface of a wall at regular intervals, it istroublesome and costly, and can be adopted only in urban
areas due to problems of transportation and efﬁciency,
neglecting rural areas that need support more than theurban areas.
To solve this problem, we have started a new projectusing an insecticide-incorporated mosquito net developedby a Japanese agricultural chemicals manufacturer. The
ﬁbers are incorporated with an insecticide, and even when
the chemical on the surface of the net gets removed byrepeated washing, the insecticide gradually seeps out of the
ﬁbers to cover the net, so that the net remains effective forup to ﬁve years. The net can be used easily, and once
delivered, it is expected to work effectively even in remoteareas where transportation is difﬁcult.
In one example, we established a communicabledisease control team in 2003 to promote this net throughvarious support projects planned using Japanese
government aid or based on funds from the United Nations
Foundation and the World Bank. Since the ﬁrst delivery of
the net to Senegal in 2002, efforts have been made topopularize it across Africa, and it was supplied to more than
10 locations in inland regions of Democratic Republic of theCongo in 2008.
However, protecting only the inside of the house using a
net is not sufﬁcient to prevent malaria completely. Malaria-

Voice
Pursuing technological innovations to ﬁght malaria in developing countries
Teijin Fibers entered into a technological partnership with Earth Chemicalin 2003 to develop a new type of insect-repellant cloth, and launched
SCORON® with its lasting anti-insect effects in 2005. With SCORON®,
each ﬁber of the cloth (whether woven or knitted) is impregnated with
the insect repellent developed by Earth Chemical using a special binding
agent after the cloth is dyed, and this is very effective in preventing
mosquito and other insect bites, remaining effective even after repeatedwashing.
In Japan, hooded jackets, trousers and other products made fromthis cloth are available through the National Federation of Agricultural
Cooperative Associations (ZEN-NOH) and on the Internet as well as fromclinics for overseas travelers, and they offer an effective means ofrepelling insects. The cloth has also started to be used for outdoor wear

27 Sustainability Report 2009

and ﬁshing wear.
For overseas markets, we are currently
planning to develop a new product that is
expected to be certiﬁed by the World HealthOrganization (WHO) and approved for use invarious projects to ﬁght malaria, Dengue fever, andother communicable diseases. We will continue
working hard to develop various new products totackle global infectious diseases in cooperation
with Sumitomo Corporation’s global network.

Setsuya
Nanba
General Manager
New Business Department
Manager
SCORN Project Team
Teijin Fibers Limited

ChapterII

Creating
a Better Society

carrying mosquitoes are active not only inthe cool morning and evening hours, but also during thedaytime, particularly in the shade. So people may beaffected by the disease while they are outside. To address
this, we have been collaborating with leading manufacturers
in various areas, such as
Mitsui Chemicals Agro, Earth
Chemical, Teijin Fibers, andSDS for the last several years
to develop and commercialize
clothing, tablecloths, curtains,
sheets and other products
made of cloth in which all of
An insect-repellant sheet
the ﬁbers are impregnatedwith an insecticide or insect repellent. We have alreadybegun preparations to acquire WHO approval for this newtechnology, and it is expected that we can start ofﬁcial
negotiations with WHO for approval after the technology had
been proven to be effective in ﬁeld tests in African villages.
As soon as approval is obtained, we are planning to
introduce these new insect control devices in Angola,
Madagascar, and other countries that we are familiar withthrough the Malaria Control Project to support for increasing
food production.
It is already more than 30 years since we began ourassociation with Africa through our agriscience business.
Food production and communicable diseases are serious
social issues hindering efforts of African countries to become
self-supportive. Sumitomo Corporation will continue toexplore solutions to these social issues through its
agriscience business by utilizing various new technologies
and extensive know-how, and to provide products andservices that will support the sustainable development ofagriculture in Africa and across the globe and help toimprove the living environment.

ColumnPromoting pheromone-based pest management globally to support agricultural development thathas a low environmental impact
A new insect control concept called “Integrated Pest Management”(IPM) is becoming common recently, particularly in Europe whereinterest in environmental problems is high. The main idea behind thisconcept is to combine various techniques for pest management,such as the use of chemicals, the introduction of predators, andphysical control, in an optimum manner—rather than relying solely
on agricultural chemicals to exterminate pests—to reduce theenvironmental impact while minimizing the damage caused bypests. The concept is thus expected to help conserve agriculturalenvironments including soil, water, and ecological systems for many
years to come.
One of the new pest control techniques for IPM that is currently
attracting attention is the use of synthetic pheromones. Pheromones
released by female pests are artiﬁcially synthesized and sprayedover farmland so that male pests become unable to locate and matewith the females, thus preventing them from reproducing. Thismethod cannot prevent damage caused by the ﬁrst generation ofpests, and it takes one year until the full effects are displayed.
Nevertheless, since this method works only against the species oftarget pests and does not affect honey bees and other useful
insects, and naturally causes no harm to soil, water, or the
agricultural environment, it is highly rated as a pest control techniquewith an extremely low environmental impact. This method is also
effective for pests hiding in crops that are difﬁcult to eliminate withexisting insecticides, such as leaf miners, which wrap themselves in
tea leaves, and codling moths found in apples and other fruits.
Using synthetic pheromone developed by Shin-Etsu Chemical,
Sumitomo Corporation’s agriscience business has had great
success in demonstrations performed in apple orchard and otherfarms in France. We have actively
promoted the product since it was
registered in 1996, and these
efforts have led us to capture about
a 60% share of the total apple
acreage in France as of 2008. We
will continue promoting synthetic
pheromones in global markets,
such as for peaches in France,
grapes in Spain, tomatoes andgreen peppers in Mexico, andcotton in Brazil, as part of ourcommitment to environmentfriendly, sustainable agricultural
Application of synthetic sex
development.
pheromones

Sustainability Report 2009 28

�������

Theme

2 Developing a Sustainable Business ModelA new model for a timber business achieved through a solid partnership
How can we maintain and develop our business in the global economy?
How can we develop a sustainable business model that is friendly to the environment and local communities?
Under our rock-solid partnership with Terneyles, an integrated forestry company in Russia with which Sumitomo
Corporation shares the same principles, we have taken on the challenge of creating a new timber business modelwith a particular focus on “high added value,” and the business has achieved stable growth. We are also pursuingsustainability for the future.

New model for a Japanese-Russian joint timber business
Terneyles is Russia’s largest integrated forestry company
based in Plastun, a port in the Maritime Province, with forest
holdings of about 2.6 million hectares, an area equivalent to
1.4 times the size of Japan’s Shikoku Island.
Terneyles used to be a state-owned company under thecommunist regime of the former Soviet Union, and business
was based on the national policy. However, after the Soviet
Union was dissolved in 1991, Terneyles was turned into a
private company, and as the country shifted towards
capitalism, they had to ﬁnd new ways to survive. This waswhen the company decided to take advantage of its locationin Plastun, a port on the Sea of Japan close to the Hokkaido
and Hokuriku regions of Japan and with easy maritime
transport routes to these regions, and export its rich forestry
resources to Japanese markets.
However, in order for Terneyles—which was then a newly
privatized company with no experience in international trade—to move into the Japanese market, the company needed apartner well versed in timber trading and with extensive

29 Sustainability Report 2009

knowledge of potential markets and customers in Japan.
Terneyles studied partnerships with several Japanesetrading companies, and ﬁnally selected Sumitomo Corporation
because of its credibility. Sumitomo’s business philosophy
throughout all the years since the start of our relationshipwith the company during the Soviet era has been to attach
importance to sincere and dependable business with thecompany, as well as to compliance with laws. We had also
been pointing out issues surrounding the Japan-USSR
timber trade accurately to the company based on our
extensive experience and know-how on the timber business.
Our basic stance and accurate advice were highly valued by
Mr. Scherbakov, General Director of Terneyles.
On the other hand, when we received an offer ofpartnership from Terneyles, while we were well aware of the highpotential of the company, we thought that there was a needto completely change the company’s USSR-style management
structure if we were to develop an effective partnership.
This led us to propose to Terneyles a shift to a customeroriented business style, and we emphasized that more thanChapterII

Creating
a Better Society

The Sumitomo Spirits

Voice

The same values shared between the twocompanies have made it possible toaccomplish a difﬁcult project

We chose Sumitomo Corporation as our partner
because their honest and sincere attitude wastrustworthy

When I asked Mr. Scherbakov, General Director ofTerneyles, what the company’s most basic
philosophy is, he answered, “Compliance.” Sincecompliance with laws is also something that
Sumitomo Corporation regards as very important,
I have found another common basis between thetwo companies—we share the same values. And I
think this is what allowed us to accomplish thechallenge of establishing a new business in Russia,
a country that is currently undergoing rapid change.

The reason why we chose Sumitomo Corporationas our partner is because we can trust them.
When we were still a state-owned company, only
they pointed out the problems and improvements
necessary in the timber business of the former
Soviet Union. Their advice was sharp-edged attimes, but we thought their honest and sincere
attitude was trustworthy. We are glad we madethe right choice.

HiroshiTomishima
General Manager
Wood Resources
Business
Department

anything else, the ability to stand in the customers’ shoes isimportant to survive in the capitalist system. This is how thetwo companies started their long journey in pursuit of a newmodel of a Japanese-Russian joint timber business.

The keyword is “high added value.”
The qualities of timber most in demand by customers inJapan at that time were “stable strength and shape.” This
reﬂected an increasing demand for earthquake-resistanthouses after the Great Hanshin-Awaji Earthquake of 1995.
Until then, houses usually had wooden frames, built withtimber sawn from logs. But in some cases, the timbers were
not aged properly, and the frames gradually warped as they
dried out after the houses were completed, resulting in
reduced overall strength and badly-ﬁtting doors. Inevitably
this has an adverse effect on the earthquake resistance ofthe houses, and the demand for timber with a higher
strength that does not warp has been mounting.
Our answer to these needs was glue-laminated timber.
Glue-laminated timber are wood-processed products madeVladimirScherbakovGeneral Director
A/O Terneyles

by sawing logs into boards and laminating them after they
have been cured. After this process, the timbers used inhouse frames are highly stable in both strength and shape.
“Even timber sawn from logs prone to warp can be turned
into high added-value products once processed into gluelaminated timber, and this will lead to increased competitivenessfor Terneyles.” This was the main idea—one that General Director
Scherbakov also agreed with—and the two companies decided
to launch Russia’s ﬁrst glue-laminated timber business together.
Sumitomo Corporation and Terneyles established STS
Technowood in 1996, a joint venture for the start-to-ﬁnish
production of glue-laminated conifer posts for single-family
houses. The posts became Russia’s ﬁrst Japan AgriculturalStandard (JAS)-certiﬁed product, and are produced so thatthey are speciﬁcally suitable for the Japanese market. In
2000, we also established PTS Hardwood, another joint
venture for the start-to-ﬁnish production of broadleaf gluelaminated timbers for the interiors of Japanese houses andcondominiums. We have thus developed a glue-laminatedtimber business speciﬁcally for the Japanese market.

Sustainability Report 2009 30

Our shared values: Aiming for steadfast growth
By developing a business model suited to the Japanesemarket, Terneyles grew rapidly.
Although it would have been possible—considering thehigh potential of Terneyles—to further accelerate growth,
General Director Scherbakov stuck to his policy of “annual
growth of around 10%.” This is because he was concernedthat excessive focus on rapid expansion would only put astrain on the company‘s operations, and that thedevelopment of human resources in particular would lag
behind the growth of the company.
Mr. Scherbakov was aware that it would take time toalter the mindset and the working style of employees who
were accustomed to working in a state-owned company
under the communist regime of the former Soviet Union, andbased on this awareness, he chose to grow in a steadfast,sustainable manner.
We respected his ideas, and supported the developmentof Terneyles’ human resources by, for example, inviting
employees in managerial positions to Japan for training.
Terneyles’ stance is similar to Sumitomo’s businessphilosophy that emphasizes the importance of not pursuingeasy gains and growing under sound management while
maintaining an enterprising spirit. It is this shared philosophy
underlying the two companies that has made it possible forthem to build strong ties.

Establishing a sustainable timber business
Sumitomo Corporation and Terneyles also share the samevalues with regard to the environment. Both companies areaware that coexistence with the natural environment andconsideration for biodiversity are indispensable to achieving
expansion and sustainable growth in the timber business.
The forests owned by Terneyles are so vast and the landis so cold that it is extremely difﬁcult to replant trees by hand
after logging. The company therefore decided to adopt a
ribbon cutting (strip felling) method in which logging is donein strips, to allow seeds from surrounding trees to drop in
the logged areas to promote natural growth of new forest.

31 Sustainability Report 2009

Since it usually takes about 100 years for a forest to return
to its original state naturally after being logged, the company
limits their annual logging to an area of 1/150 of their total
holdings to ensure that the volume of trees logged will neverexceed the volume of trees grown.
In addition to compliance with these and other strict
logging rules in Russia, we proposed that Terneyles should
also acquire Forest Stewardship Council (FSC) certiﬁcation,
which is considered the global standard on forestry
accreditation. Although investing to protect the environment
was still unthinkable in Russia at that time, Terneyles
recognized the importance of certiﬁcation, and decided totake on the challenge of acquiring it.
However, in the early 2000s when this challenge began,
there was no precedent for FSC-certiﬁed companies, oreven accreditation bodies in Russia. Terneyles therefore
started by calling on theprovincial government toestablish an inspection
body for FSC
accreditation. Then, thecompany carried out thenecessary inspections
and worked on
developing rules for
optimum forest
Ribbon cutting (strip felling) methodmanagement.
While engaged in these activities, the company was
confronted with an issue regarding the protection of thenative people who live in harmony with forests and rivers in
the Samarga area, in forests owned by the company. The
company decided on their own initiative to freeze thedevelopment plan for the area, which had been approved
legally, for two years, and during those years, conducted
inspections in the area while continuing its dialog with thenative people to formulate a plan friendly to both the native
people and the environment. The company supported theconstruction of public facilities such as a school in the area,
donated funds for education, and left a part of the forest inChapterII

Creating
a Better Society

the area as a forest reserve.
Thanks to those earnest efforts, Terneyles became theﬁrst company to receive FSC certiﬁcation in Far Eastern
Siberia in 2004. Even on a global scale, it is very rare fornatural forests where no tree planting is conducted toreceive this certiﬁcation.
In 2005, Sumitomo Corporation’s Lumber and Building
Materials Dept. (current Wood Resources Business Dept.)
received Chain-of-Custody (CoC) certiﬁcation, which is
granted to processing and distribution businesses that meet
speciﬁc standards in their handling of wood from FSCcertiﬁed forests. This certiﬁcation, which proves that wemanage FSC-certiﬁed wood properly throughout the entire
process from procurement to processing and distribution,completed our system to ensure that FSC-certiﬁed wood isdelivered to end users.
In this way, Sumitomo Corporation and Terneyles are inpursuit of sustainable timber trading in an area ofenvironmental conservation as well. The business should
continue to be maintained and developed for many years tocome through this mutual cooperation.

ColumnConsidering the ecosystem—Protecting Amur tigers—
The natural forests in the Far Eastern region of Russia are home
to Amur tigers, the largest feline in the world. The environmental
destruction caused by large-scale forest development andillegal logging has brought the animal to the brink of extinction
with current numbers being only 400 to 500. However, it wasreported that the number of Amur tigers is increasing in forests
owned by Terneyles thanks to its painstaking efforts to protect
the environment. This achievement was recognized by theWorld Bank, which is taking the initiative in tiger conservation,
and Terneyles was invited
to a memorial forum
organized by theorganization in 2008. The
company is receiving
acclaim for its sustainable
forest management.
Amur tiger

A token of prosperity and a dream realized in Plastun
The environment surrounding the timber business in Russia is
still changing drastically, including revision of tariffs. To respondto these changes quickly, and further promote their highadded-value strategy, Sumitomo Corporation and Terneyles
constructed a huge wood processing complex in Plastun
with a total investment of 18.1 billion yen. The new complex,
where all timber cut by Terneyles is processed into products,
was completed and inaugurated in March 2009.
This complex, as well as the development of Terneyles
over the past many years, has changed the town of Plastun
as well. Of a total population of about 7,000, up to 3,700
people are involved in some way or another in Terneyles’
timber business.
In 1996, when Sumitomo Corporation and Terneyles
established their ﬁrst joint venture, Plastun was, in the eyesof our staff, a quiet village with almost no shops. But the

town has continued to grow since then, and we can now
see restaurants, cafés and supermarkets, and people dress
more smartly.
It has become clear that this new model of a JapaneseRussian joint timber business developed by the solid
partnership between Sumitomo Corporation and Terneyles
has led to prosperity and therealization of their dreams formany stakeholders involved inthis project.

Inauguration ceremony for the newcomplex

Sustainability Report 2009 32

Theme3

Urban Development with Future
Generations in Mind

Creating towns that will be treasured by local communities no matter how
the times change
Harumi Island Triton Square, a front-runner major redevelopment project for the 21st century, wascompleted in April 2001 under the concept of “integration of offices, entertainment and housing.”
One of the features that continue to draw attention is its unique approach to protecting theenvironment, preventing disasters, creating comfort, and growing in harmony with the local
community. We believe this demonstrates a fresh model for new town development.
A complex of this kind is the result of Sumitomo Corporation’s enthusiasm for its construction
and real estate business.

Outline of the complex

Harumi Island Triton Square

Harumi Island Triton Square, located in Harumi 1-chome, Chuo-ku,
Tokyo, three kilometers from Tokyo Station and two kilometers fromthe Ginza district, was built in April 2001 as a forerunner to the entire
Harumi redevelopment project, a project for the 21st century on a
massive scale. Under the concept of “integrating offices,
entertainment and housing,” this new complex consists of high-riseoffice towers, a variety of shopping and cultural facilities, andcomfortable condominiums, which all blend with the lush greenery.
The total area of this large site is around 10 hectares.
Triton was the son of Poseidon, god of the sea in Greek
mythology, and the name suggests a location that is open to the sea.

33 Sustainability Report 2009And because the prefix “tri” means “threefold,” the name alsosuggests the three elements behind the concept of the project—
offices, entertainment and housing—as well as with the threehigh-rise office towers (Office Towers X, Y and Z), which serve as
symbols for the complex.
Sumitomo Corporation led this project, and sited its head officein the complex. Many of its group companies, such as Sumisho
Building Management, Sumisho Urban Kaihatsu, Sumisho Tatemono,
and S.C. Building Service—companies supporting the construction
and real estate business of Sumitomo Corporation—also have theirhead offices in the complex.

ChapterII

Creating
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M e s s a g e

Bringing out the full potential of Harumi, and creating a townthat will function as social capital for the 21st century
Takashi Yamazaki
President, Harumi Corporation

Bringing out the full potential of Harumi
The need to redevelop Harumi was spotlighted in the early
1980s when the apartment complex and warehouses built in
the 1950s became obsolete and in need of renovation.
Harumi Island covers about 100 hectares, larger thanthe Ginza district, and is conveniently located about threekilometers away from Tokyo Station. Momentum wasincreasing toward redeveloping the area with the aim ofutilizing the whole of Harumi Island more effectively to exploit
its potential.
While this kind of redevelopment project is usually led by
local government, the Harumi redevelopment project
adopted a new method in which landowners created theirown master plans based on their vision, and organizations
to promote the project were established for each chome
block. Harumi Corporation was established by this method toundertake redevelopment of the 1-chome block and operationand management of the facility after completion. As one of
the landowners of the 1-chome block, Sumitomo Corporation
took the initiative in establishing Harumi Corporation, andorganized other landowners in promoting the redevelopment
project. Harumi Island Triton Square (or more simply, Harumi
Triton Square) was finally completed in 2001.

embodies that concept. Harumi Triton Square is a complex
where offices, commercial buildings, and housing areintegrated, but efforts were also made to create a different
atmosphere for each area: a lively atmosphere in thecommercial area, and a calm atmosphere in the office area.
The project also puts importance on the environment,
disaster prevention, and comfort from the planning stage.
In environmental planning, we pursued every possible way
to make the complex environmentally friendly, adopting aunique district heating & cooling (DHC) system that
supplies significant volumes of heat using air and water
while reducing CO2 emissions. These efforts have beenhighly praised and the project is known as the “Triton
model.” For disaster prevention, we put particular focus on
anti-earthquake measures, and in the belief that it isimportant not only to minimize the damage caused by anearthquake but also to enable the quick restoration ofpeaceful everyday life, we introduced various “software”
and “hardware” measures.
Harumi Triton Square was thus a project developed
utilizing our unique know-how in making plans around aclear-cut concept together with landowners, andconstructing and operating it. I am confident that Harumi
Triton Square is a complex that will be in use for 50 or even
100 years.
Eight years after its opening, the complex has perfectly
blended into the landscape of Harumi. We will continue
working hard to bring out the potential of Harumi and tosatisfy the needs of all the people who work, visit, and livein the complex.

Harumi before redevelopment

Harumi now

Creating a town with comprehensive functions
based on a long-term vision
The basic concept of Sumitomo Corporation’s construction
and real estate business is “creating towns withcomprehensive functions based on a long-term vision,”
and we have carried out numerous projects using thisconcept up to today.
For the Harumi Triton Square project, we wanted tocreate a new town that would be treasured by the local
community regardless of the age, and that could function
as social capital for the 21st century. To accomplish thisgoal, we adopted “integration of offices, entertainment andhousing” as the development concept, and the project

ProfileYamazaki first took charge of theHarumi redevelopment project in
Sumitomo Corporation in the early
1980s. When Harumi Corporation
was established in December 1988,
he was assigned to the company
as Director. After serving as theGeneral Manager of the Building &Overseas Real Estate Business
Department of Sumitomo
Corporation and the President of
Sumisho Building Management, he
was appointed to his current
position in 2005.

Sustainability Report 2009 34

Environment

環境

The “Triton” model: a very effective energysaving solution

Harumi Triton Square has employed various energysaving systems based on three principles—avoiding
unnecessary use of heat, effective use of electricity, andeffective generation of heat—to significantly reduceenergy consumption.
Of these systems, the one that is attracting particularattention is the high-efficiency district heating & cooling(DHC) system, which supplies heat from the basementof Hall Building to all the buildings on the premises. This
DHC system is one of the largest thermal storage-type
heat pump systems in Japan, combining a heat pumpthat capitalizes on atmospheric heat to enable themaximum possible energy-saving effects and a large
heat storage tank whose volume is equivalent to 12
50-meter swimming pools (19,000 m3). The heat pumpis activated late at night when electricity costs are low to
generate heat from the air and store it in the tank.

防災

Disaster prevention

Stable structure locked on a solid bed

Since Harumi is land reclaimed in 1931 and surroundedby the sea, many people are under the wrong impressionthat the ground is soft. The fact is that Harumi is built ona solid bed about 30 meters below ground, with astrength almost the same as that of the Marunouchi and
Shiodome inner-city districts.
The foundation of Harumi Triton Square was built on
this solid bed, and the three high-rise buildings standdirectly on a massive foundation. This design keeps thecenter of gravity of the buildings low, and makes thewhole complex well-balanced, stable, and secure.

The bed and foundation

Massive foundation
stably supports thethree high-rise buildings.

System Diagram

Continuous
underground wallswith high earthquake
resistance andpressure resistanceFoundation that isaround 30 meters deep
Solid bed
Sectional viewThree-meter thick concrete walls, water tank andother facilities that support the buildings stably

Introduction of a damage control design

Controlling the quantity of garbage to maketenants more aware
Reducing garbage is also an important issue in Harumi
Triton Square. We have developed our original garbage
weighing machines and installed them in the waste
processing rooms of each building. Then for 11 designatedrecyclable items and three designated disposal or
combustible items, we have made it mandatory to weigh
the garbage each tenant disposes of, and charge
tenants according to the volumes they dispose of, justlike electricity and water charges. This has resulted in
effectively raising awareness among tenants of theimportance of reducing unnecessary garbage and using
recyclable garbage as resources, and we have reduced
the total volume of garbage to less than 50% comparedwith other buildings of the same size. In the officebuildings, about 57% of waste is currently recycled.

35 Sustainability Report 2009

Since the Great Hanshin-Awaji Earthquake, earthquake
resistance has become a very important issue for large
buildings.
Harumi Triton Square has adopted a damage control
design with energy absorption devices for the first time inJapanese high-rise buildings. The energy absorption
devices absorb seismic energy during an earthquake toprotect the main structuralmembers and people’s
lives. The energy absorption
devices are replaceable,
and even if the buildings
are damaged, they can berestored relatively easily by
Energy absorption device
replacing the devices.

ChapterII

Creating
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Comfortable

快適

A project aimed at creating an attractive urban
complex

Harumi Triton Square was developed with the basic
concept of “integration of offices, entertainment andhousing.”
The vast site of about 10 hectares is divided into
three well-balanced zones: an office zone centering
around the high-rise office towers, an entertainment zone
comprising shops, restaurants, a day nursery and otherfacilities, and a residential zone consisting of several
apartment buildings. All these zones are connected byroads lined with greenery to give a unity to the town.

Zones in Harumi Triton Square

Three terraces with flowers, greenery and water
themesPeople can relax on benches, or stroll around the threeterraces located at the center of the complex to enjoy
the beauty of the season. These terraces offer a momentof comfort where everyone can forget the hustle andbustle of city life. The Cherry Tree Promenade along thecanal and the two parks in the south and north of thesite are also pleasant and invigorating open spaces.

Flower Terrace

Green Terrace

ColumnDeepening communication with the local
community by focusing on “humanware”
Communities cannot be given life by incorporating sophisticatedfacilities and equipment alone. What they need is the warmth ofpeople—humanware. Harumi Triton Square considers
communication with the local community to be very important.
For example, we organize seasonal events based onJapanese traditions and culture, such as pounding rice cakes
at New Year, carp streamers in May, and a Star Festival in July
every year. Harumi Triton Square is also the venue for theHarumi Harukko Festival in spring, when stalls selling favorite
dishes line the 300-meter long Cherry Tree Promenade, as well
as for the Infiorata (festival of flower carpets) in autumn, an
Italian-inspired festival where works of art made from rose
petals are on display, offering a fun time for everyone, young
and old, men and women, who visit and participate in theevents. We also actively take part in festivals at the local
traditional shrine. In this way, Harumi Triton Square functions as
a lively plaza where local people gather.
Since the buildings in Harumi Triton Square are the tallest
in the area, they also play the role of “fire lookouts” to help
protect the local community from fires. Security cameras
installed on the rooftops help the fire department and police inwide-area video surveillance extending as far as the Tsukiji
district. As a responsible member of the local community, we
have also organized a system that enables us to rescue elderly
people in the nearby special old people’s nursing home in thecase of a disaster orother emergency. In
addition to these, we
also hold a Disaster
Prevention Exhibition
on Disaster Prevention
Day (September 1)
every year to raiseawareness of theimportance of disaster
Infiorata
precautions among
local residents, as wellas an Environmental
Exhibition in July tointroduce the efforts
made by the complex
to protect theenvironment.
With these
activities, Harumi Triton
Square enables deeper Disaster Prevention Exhibition
communication andexchange of opinion
with people who work,
visit, or live in thecomplex and people in
the local community
and it is through these
activities of developing
mutual trust that thecomplex is growing intoa town full of energy.
Environmental Exhibition

Water Terrace

Cherry Tree Promenade

Sustainability Report 2009 36

The world’s ﬁrst BLT-based transportation
infrastructure development projectContinuous expansion of Manila, the capital of thePhilippines, has formed the National Capital Region (NCR) or
Metro Manila, which is made up of 14 cities and threetowns. The size of Metro Manila is approx. 640 km2, about
the same as the total area of Tokyo’s 23 wards (622 km2),
and its population now exceeds 10 million, making the city ahuge and overpopulated city like Tokyo.
This rapid expansion of the city caused serious trafﬁccongestion because the development of the urban railway
network lagged far behind the increase in population androad trafﬁc volumes. Currently three lines with a total lengthof 45 km operate in Metro Manila, but until the opening of
MRT-3 in 2000 and LRT-2 in 2004, the city had only LRT-1(14 km, 18 stations), which opened for service in 1985.
In particular, Epifanio de los Santos Avenue (EDSA),
above which MRT-3 currently runs, is one of the mostimportant arterial roads in Metro Manila. Whilst the road isvery wide, with six lanes in each direction (ﬁve lanes in eachdirection after the completion of MRT-3), it often becomescongested not only during the morning and evening rush
hours but also during the daytime, obstructing the ﬂow of

Theme

4

trafﬁc and logistics and other urban functions.
With this as the background, the Department ofTransportation and Communications (DOTC) planned theconstruction of MRT-3 comprising 13 stations and spanning
17 km above EDSA Avenue to connect the Quezon and
Makati areas in the center of Manila. It was also decided, due
to the tight economic and ﬁnancial situation, that the project
would adopt the Build-Lease-Transfer (BLT)* method, a worldﬁrst for railway projects undertaken by private companies. The
project was commissioned to a private company, Metro RailTransit Corporation (MRTC), who awarded Sumitomo
Corporation the contract for the construction of MRT-3 andmaintenance of the line for 10 years after completion.
* Build-Lease-Transfer (BLT): A project scheme utilizing private resources inwhich, after a project is ﬁnanced and facilities are constructed by privatecompanies, the facilities are leased to the government, and after the lease expires,
they are transferred to the government.

Introduction of the new line alleviates trafﬁccongestion and is revitalizing urban functions.
Sumitomo Corporation has been in the transportation businessfor many years, centering around the export and marketingof Japanese-made axles and rolling stock. However, to meet

Developing Urban Infrastructure
in an Emerging Country

Developing the transportation infrastructure
revitalizes urban functions
Railway systems are currently attracting attention around the world as an efﬁcientmode of transport with a low environmental impact.
Sumitomo Corporation has built an urban railway network in Metro Manila in thePhilippines utilizing Japan’s railway technology, known throughout the world for its
safety and reliability.
We have been supporting the development of local society from various aspects,
including alleviating trafﬁc congestion to revitalize the city, creating employment,
and transferring technology.

37 Sustainability Report 2009

ChapterII

Creating
a Better Society

the increasing demand for new railway systems in Asia andthe global market, we have also begun to focus on morecomprehensive transport system development projects thatinvolve supplying rolling stock, rails, and signal systems, aswell as the civil engineering and construction work forstations, depots, and other facilities. The Metro Manila
MRT-3 project was one such project, and was the ﬁrst fullturnkey transport system project we were awarded.
With strong support from the Philippine government,
MRTC acquired a loan from a syndicate of banks including
the Japan Bank for International Cooperation (JBIC).
Construction started in October 1996, and after a partial
opening in December 1999, MRT-3 came into full service inJuly 2000. The number of passengers has increased steadily
ever since, with the current average number of passengers
per day being 470,000, the greatest of all the three lines in
Manila. In fact, although trains run every three minutes
during the morning and evening rush hours for workers andstudent commuters, the rate of congestion exceeds 200%
at the peak, already making it necessary to consider
increasing the number of rolling stock.
The opening of MRT-3 has led to signiﬁcant alleviation of
the deteriorating congestion on EDSA Avenue, as well as tothe stimulation of various urban functions, such as theconstruction of new shopping facilities and housing along
the line and redevelopment around the stations.
Since MRT-3 has now become an indispensable way ofgoing to work, school, and shopping for the people of
Manila, their daily lives will be greatly affected if service on
the line is suspended due to mechanical troubles with trains
or facilities. We have been responsible for maintaining theline since its opening under a contract that remains valid
until 2010, and there have been almost no serious problems
with malfunctioning of trains or facilities. The stable operatingrecord of the line has been praised by local railway interests.
In addition, about 300 Philippine staff members havebeen recruited by the local maintenance company working
on this project, and Japanese engineers stationed in Manila
are providing guidance on maintenance work. In this way,
we are contributing to the development of society bycreating employment and through technology transfer.
Utilizing the track record and experience accumulated
through the MRT-3 project, Sumitomo Corporation willcontinue to offer safe and reliable transportation infrastructuresdeveloped with Japan’s sophisticated railway technology tocities around the world.

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Sustainability Report 2009 38

Mongolia
PakistanUzbekistan
China

India
ThailandIndonesia

Vietnam
CambodiaTheme

5

Supporting the Development of Human
Resources for the Next Generation

Sumitomo Corporation Scholarships support the development of humanresources in Asia
Sumitomo Corporation Scholarships were established in 1996 as part of Sumitomo Corporation’s 50th anniversary in the
trading business.
The scheme is aimed at nurturing leaders who will shape the future of developing countries in Asia, and has supported
more than 9,000 young people in their studies up to today.
This section introduces our commitment to supporting young students who are the future of Asia.

39 Sustainability Report 2009

ChapterII

Creating
a Better Society

Sumitomo Corporation established Sumitomo Corporation
Scholarships in 1996 as part of its 50th anniversary in the
trading business, and since then it has offered scholarships
to college students in China, Vietnam, Indonesia, Thailand,and other Asian countries. The main objective of the scheme
is to support the nurturing of human resources who will
shape the future of Asian countries currently on the path ofdevelopment. Scholarships were awarded to about 950
students at 42 colleges in 11 countries during fiscal 2008, withthe total number of awardees over the last 13 years exceeding
9,000. Those people who completed their studies with theassistance of our scholarships and graduated from college
are now playing important roles in their respective fields.
The scheme is run in cooperation with our local businesssites (overseas subsidiaries, branches, offices) in the
countries in which the scholarships are offered. This kind of
scheme is only possible for companies like us, with a global
network encompassing Asia, and through this scheme each
local business site has been deepening its relationship withthe community in the country where it is doing business. As
a result of these efforts, in August 2008 our continuous
commitment won an official commendation from Vietnam’s
Ministry of Education and Training (MOET) for ourcontribution to students’ education in the country over many
years, based on a recommendation by Vietnam National
University-Ho Chi Minh City (VNU-HCM), one of theuniversities to which scholarships are offered under thescheme.
Our relationship with the local community is importantfor our business, and we believe that deepening that
relationship and winning further support and trust from awide range of local stakeholders will eventually lead to thesustainable growth of our business. We will continue tocooperate closely with each local organization in further
refining the scheme to ensure that it meets the needs ofeach country and region, and to achieve sustainable growth
together with those local communities.

Vo i c e

Voi ceGaining a foothold in life though university
study

I want to become a person contributing to thedevelopment of Pakistan

Receiving higher education is very important forpeople to grow.
As in Archimedes’ famous saying “Give me afoothold, and I shall move the Earth,” we can also
grow by gaining a foothold in life though university
study. Of course, merely studying at a university is
not sufficient; we cannot acquire any sense or
depth of knowledge without the guidance ofuniversity faculty members. I was able to gain afoothold thanks to the support of Sumitomo
Corporation through the Sumitomo Corporation
Scholarship, and I am now using this to study
The National
hard. For me, the scholarship is like a sweet
University of
Uzbekistan
candy. I was first attracted to the “sweetness” ofthe scholarship, but later I began to graduallyrealize and appreciate its “real taste” or value. I cannot see my future
clearly yet, but I want to open up my future without losing my passion forwriting as a student studying journalism, and by keeping in mind theimportance of being guided by faculty members.
Thank you.

Being the eldest child in a middle-income family, I
knew that I couldn’t burden my parents much. To
support myself with miscellaneous educational
expenses, I applied for Sumitomo Corporation
Scholarship and fortunately I won it. Thisscholarship not only helped me to minimize myparents’ burden but also showed me the possibility
to grow and thrive.
I want to do something for the youth ofPakistan so they are able to improve their standardof living and contribute to the development of ournation. Building a world-class business school for
The University of
the youth of Pakistan is the highest aspiration of
Karachi
my life and to fulfill this dream, I know I need towork hard and prepare myself properly. I need to enhance my personality
and my leadership skills and this is why I joined Institute of Business
Administration (IBA) as I believe education is the first step of the ladder. I
thank Sumitomo Corporation to become part of my dream and help me
move a step towards my goal.

Alina
Dadayeva

The Sumitomo Spirits
I feel rewarded when I read messages fromscholarship students.
I am the manager of both Human Resourse Section
and General Affairs Section of the Planning &Administration Department and responsible forrunning the scholarship scheme.
Sumitomo Corporation (Guangzhou) currently
awards scholarships to 60 students at three
universities. We have maintained close relationships
with these universities through the selection ofscholarship students, symposiums, company tours,
and other activities. Because of these activities,
Planning &awareness of Sumitomo Corporation has been
Administration
enhanced, enabling us to recruit good students.
Department
I have to manage the scholarship scheme in
Sumitomo
addition to my regular job, and to be honest, I
Corporation
sometimes feel that the extra work is tiring. But(Guangzhou) Ltd.
every time I read a message from a scholarshipstudent, I feel rewarded.
To make this scheme even more effective, I’d like to develop asystem that will allow more employees to assist in running the scheme,referring to how similar schemes are run in other countries.

Chen Eve

SummeraAli

Sustainability Report 2009 40

In Europe·Middle East·Africa

In Japan• Support for Shakespeare’s Globe Theatre (UK)• Donations to Centrepoint (UK) 1• Support for children with disabilities to encourage them toattend school (Romania)• Support for the Japanese School and Japan Center(Russia)• Support for students participating in the Arab Robotic
Competition (United Arab Emirates) 2• Support for the reopening of the Japanese School in Doha
(Qatar) 3• Support for mine clearance projects (Angola) 4• Donations of books for teacher training (Madagascar)• Support for the Junior Philharmonic Orchestra 5• Promotion of “barrier-free movies” 6• Support for the Table for Two Meal Program• Company training for junior and senior high school students
and teachers• Organizing events in which local people can participate for
Summit supermarkets and J:COM cable TV company 7 8• Cooperating with vocational training for people withdisabilities, and sales of goods produced by vocational
training center• Participation in and sponsorship for local cleaning activities
and various events• Organizing of events in which local people can participate
in commercial facilities at various business sites operated
by the Sumitomo Corporation Group companies• Tours of the Sumitomo Corporation Group companies’
factories for schoolchildren and local residents• Contributions to the relief fund for the Iwate-Miyagi Nairiku
Earthquake

1

2

5

3
Photographed by Andrew J. Pritchard

6

7
4©2009 “The SUMMIT: A Chronicleof Stones” production committee

8

Theme

6

Our Social Contribution
Activities around the World

Because of its integrated corporate strength, the Sumitomo Corporation Groupis involved in a wide range of social contribution activities around the world
The Sumitomo Corporation Group promotes CSR through sound business activities and diversiﬁed social contributions.
Our social contribution activities are performed globally with particular focus on nurturing human resources for the next
generation and revitalizing local communities.
As a corporate citizen, we are participating in various activities around the world.

41 Sustainability Report 2009

ChapterII

Creating
a Better Society

In America• Support for the activities of the Center on Japanese
Economy and Business, Columbia Business School (US)• Donations to the Lincoln Center (US)• Donations to the Metropolitan Museum of Art (US)• Support for the launch of Japan Day (US) 9• Support for the construction of the Technology Center at
Arkansas State University (US) 10• Support for and donations to medical institutions (US)• Food and clothing aid for Santa Catarina ﬂood sufferers(Brazil)• Support for educational and infrastructure improvements
for the local community as part of the San Cristobal Mine(silver, zinc, lead) development project (Bolivia) 11

13

9

10

14
11
15

16
12

17

In Asia·Australia• Sumitomo Corporation Scholarships for 42 colleges in 11
countries (various Asian countries)• Courses bearing the Sumitomo Corporation name atTsinghua University and Nankai University (China)• Support for the tours of Japan for Chinese college
students (China)• Donations to IT display sites and IT vocational schools(Mongolia)• Donations of books and stationery to local schools(Thailand, Indonesia, Myanmar)• Support for local medical care and education (ThePhilippines)• Support for educational and infrastructure improvements for
local communities as part of overseas industrial parkdevelopment projects (The Philippines, Indonesia, Vietnam) 12• Support for education and health care improvements forthe local community as part of the Batu Hijau Mine (copper,gold) development project (Indonesia) 13• Donation of a mobile ophthalmologist clinic to a local
foundation (Indonesia) 14• Japanese language education, cultural exchanges(Vietnam) 15• A course bearing the Sumitomo Corporation name at
Hanoi National Economic University (Vietnam)• Donations of picture books for children (Laos) 16• Contributions to the relief funds for the Great Sichuan
Earthquake and Myanmar cyclone (China, Myanmar)• Donations to medical institutions and foundations (Australia)• Support for advanced technology research facilities at the
University of Sydney (Australia)• Contributions to the relief fund for the Victoria bushﬁres(Australia) 17

Sustainability Report 2009 42

Corporate Governance System
We have established the “Sumitomo Corporation Corporate
Governance Principles,” based on our view that theultimate goals of corporate governance are “improving
management efficiency” and “maintaining soundmanagement” as well as “ensuring managementtransparency” to secure the first two. Positioning“Sumitomo’s business philosophy” and the Company’s“Management Principles” as the cornerstones of ourcorporate ethics, we work to establish the mostappropriate managerial system by strengthening ourcorporate governance and to realize management thatserves the interests of shareholders and all otherstakeholders.

Past Initiatives to Strengthen and Enhance
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 andthe President and CEO, shortening the terms of Directors,
establishing advisory bodies, strengthening the corporate
auditors system, introducing the executive officer system,
and appointing 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/index.
html

Features of Our Corporate Governance
SystemUnder the former Commercial Code, since April 2003,
Japanese companies have been able to adopt a company
with 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.
We will monitor global trends and legislation concerningcompanies while preserving our corporate culture as aJapanese company. At the same time, we will observe thebenefits of different corporate governance frameworks inother countries.
Thus, Sumitomo Corporation will continually study themost appropriate corporate governance system.

The Company’s Corporate Governance System(FOFSBM.FFUJOHPG4IBSFIPMEFST&MFDUJPO%JTNJTTBM

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0GàDFT* Management Council: Exchange of opinions and information on basic policy and important matters related to management
Loan and Investment Committee: Deliberation of important matters, such as investment and financing
Compliance Committee: Enhancement of Group compliance focused on “maintaining sound management”
Internal Control Committee: Promotion of efficient and effective Internal Control

43 Sustainability Report 2009

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Framework for “Improving Management
Efficiency” and “Maintaining Sound
Management”
Directors and the Board of Directors

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
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.

Optimization of Size of Board of Directors
We halved the number of Board members from 24 in 2003.
As of July 2009, the Board has 12 members. Through thisoptimized Board of Directors, which oversees the operationsof the business and serves as the Company’s decisionmaking body concerning key management matters, we aim
to facilitate substantial and active discussion as well as topromote greater efficiency and effectiveness in the decisionmaking process.

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 andseparate in order to ensure mutual supervision. Bothpositions cannot be held simultaneously by the 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.

Establishment of the Advisory Body to the Board of
Directors
With the aim of enhancing the transparency and objectivity ofdecision-making processes with regard to the remunerationof Directors and Executive Officers, we established theRemuneration Committee. Functioning as an advisory 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 andbonuses of directors and executive directors, and reports
the results of its studies to the Board of Directors.

Corporate Auditors and the Board of
Corporate Auditors
Enhancement of Corporate Auditing Framework
To further strengthen external views within the corporate
auditing framework, we added one external auditor in June

Ensuring Audit EffectivenessCorporate 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.

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 and observing inventory audits with the Accounting
Auditors, the Corporate Auditors constantly work to improveaudit efficiency and quality.

Introduction of an Executive Officer System
We have introduced an executive officer system with the aimof clarifying the responsibilities and authority for execution
and strengthening the monitoring function of the Board of
Directors. We currently have 33 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.

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

Sustainability Report 2009 44

Corporate Governance System

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 bylaw but also actively pursuing the voluntary disclosure of
information.

Communicating with Shareholders andOther Investors
Encouraging the Execution of Voting Rights at theGeneral 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-language translation of the noticeon our website. We have allowed our shareholders to
exercise their voting rights via the Internet using personal
computers since 2004 and via the Internet using mobile
phones since 2005. In 2007, we introduced the Electronic
Voting Platform operated by Investor Communication Japan,
Inc. (ICJ), a joint venture instituted by Tokyo Stock Exchange,
Inc. and others. The new platform allows institutional
investors sufficient time to thoroughly examine thepropositions to be resolved at the meeting.

Disclosing Various Information
The IR section of 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

45 Sustainability Report 2009

reports), shihanki houkokusho (Japanese quarterly securities
reports) and other Tokyo Stock Exchange filings as well as
streaming and related documents of various meetings, andSustainability Report. Moreover, we provide our Annual
Report, and SC News, our public relations news magazine
and endeavor to ensure proactive disclosure.

Investor Relations
In order to ensure direct communication with shareholders
and other investors, we hold quarterly meetings attended by
top management to provide information on our financial
results for analysts and institutional investors. Also, we
periodically visit the United States, the United Kingdom, andother countries in Europe and Asia to hold one-on-one
meetings with investors in each region. In addition, in fiscal
2004 we began regularly holding meetings with individual
investors in Japan. In fiscal 2008, we held such meetings infive cities, with a total of 1,400 individual investors attending.
In fiscal 2008, the Tokyo Stock Exchange commended
our efforts to actively expand the number of individual
shareholders through nationwide meetings attended by top
management, the upgrade of our Website targeting
individual investors and other initiatives.
While increasing management transparency, we aim tostrengthen our relationships of trust with shareholders andinvestors.

While working to strengthen and enhance our corporate
governance structure and systems, from the perspectives of“improving management efficiency” and “maintaining soundmanagement,” we will continue to further strengthen internal
control programs, internal auditing, risk management,compliance, to further improve the effectiveness of internal
control.

Internal Control Program and Internal Audit
The Sumitomo Corporation Group has strengthened its
internal controls in order to retain the trust of all its
stakeholders. Our Internal Control Program and internal
audits are key components of our internal control system
for monitoring operations.

Internal Control Program
The Sumitomo Corporation Group is formed of seven
Business Units as well as regional organizations in Japanand overseas. The Business Units, organizations and groupcompanies collectively work together in broad businessfields. It is essential that we provide a uniform standard inoperational quality at these businesses, irrespective of theirbusiness sector 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
the status of internal controls using a standards-based
checklist. This Internal Control Program checklist covers 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 controls that must be
verified.
We are undertaking checklist assessments of the Internal
Control Program at more than 500 operations around theworld, including all major business locations, regardless ofindustry field, business model, region or scale. The Planningand Administration Department and other relevant
departments in each Business Unit and region review theassessment results and provide support for the formulationand execution of necessary improvement measures.

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 the JapaneseCompany Law and the Financial Instruments and Exchange

Law. We have treated meeting these legal obligations as anopportunity to further reinforce our internal control program,which we had implemented ahead of the enactment of thislegislation. Our efforts in this area are ongoing and nottransitional.
The Japanese Company Law, which came into effect in
May 2006, calls for companies to establish “systems ensuringthat the execution of duties by directors conforms to legal
regulations and their Articles of Incorporation as well as
systems ensuring that business processes are handledappropriately.” Having previously established various
systems and frameworks, the Sumitomo Corporation Groupfulfills the requirements of this law.
Our Internal Control Program monitors these systems toensure that they are functioning adequately and makes any
necessary improvements.
To comply with the internal control reporting rules
stipulated in the Financial Instruments and Exchange Law,
which took effect on April 1, 2008, we are tracking andevaluating our internal controls with regard to the 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, 2009, the first fiscal
year that the law applies to, as a result of evaluations andsubsequent improvements, we found our internal controls
related to financial 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 Audit
Operating separately from the Internal Control Program, theInternal Auditing Department monitors Group operations
from an independent third-party standpoint. Internal audits
are constantly being performed at all organizations within
Sumitomo Corporation and at each consolidated subsidiary.
In fiscal 2008, we undertook 120 audits in Japan and 50 atoverseas locations.

Sustainability Report 2009 46

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

investments must overcome. In case of new investmentsthat are large-scale important projects, the case will beraised before the Loan and Investment Committee forthorough examination. After making an investment, related
business plans are thoroughly monitored. If the performanceof an investment doesn’t meet the standard, the investment
is placed as an “Investment required to withdraw” according
to our Exit Rule.

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 low-rated 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 enhanceGroupwide 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 Risk-adjusted Assets within our buffer.
Non-quantifiable 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
Managing Quantifiable Risk
Managing Investment Risk
Once an investment is made, it is often difficult to make a
withdrawal decision and the loss impact of the withdrawal isusually significant in scale. To manage the investment risk,
we have in place an integrated framework covering the entry
process to the exit process. For the entry process, we haveset a hurdle rate, an indicator that returns from the new47 Sustainability Report 2009

We set limits on contract balances as well as the maximum
amounts of allowable losses for the interim and/or full year
for commodity and financial instrument transactions. At thesame time, we constantly monitor Value at Risk (VaR)—an
estimate of potential risk. In the event of a periodical loss,
VaR includes accounting loss—to ensure that VaR falls
within the maximum amounts of allowable losses. In
addition, we conduct liquidity risk management for eachproduct on an individual futures market basis in order to beprepared 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 to completely separate thosefunctions from the Business Units, thereby enabling us tomaintain the soundness of internal checks.

Managing Concentration Risks
As we are operating globally and engaging in a variety ofbusiness fields, we need to ensure that the risks are notexcessively concentrated in particular areas. In order toavoid overly concentrated exposure in certain countries andregions, we have in place a country risk management
system. In addition, we refine our business portfolio, in order
to avoid the excessive concentration of resources in any
specific field and maximize our corporate value.

Managing Non-Quantifiable Risks

include devising ways to quickly identify the cause of losses
and share such information among top management andrelated departments. We have compiled a database of suchloss information that allows for the systematic analysis of thecauses of loss-incurring events. These analyses are used astraining materials for employees as part of various educational
programs. Through this knowledge feedback process,individual employees can upgrade their risk management
capabilities, supporting the prevention of the same kind ofloss events.

Non-quantifiable risks are those that must be borne, but for
which we cannot expect returns. These include litigation andother legal risks, operational risks such as clerical mistakes
or fraud acts, and natural disaster risk. Some of these risks
involve events that rarely occur but could have a critical
impact on our operations once they arise. Our basic policy is
to prevent or minimize the probability of these risks tomaterialize. We have built a framework to periodically andcomprehensively assess the effectiveness of our internal
control system over these risks through our Internal Control
Program, which enables us to monitor the situation on a
global and consolidated basis. Based on the assessment
result, we continuously search for a more efficient andeffective organizational structure and procedures to improve
the quality of our business operations.

Eyeing the Future of Risk Management
Over the past decade, Sumitomo Corporation has created aformidable risk management framework by studying
advanced methods and processes. Our goal was toimplement the best practices in risk management while
maintaining the flexibility to adapt to changes in the businessenvironment. The surrounding environment is continuallychanging, however, and new business models that we could
never have imagined are emerging on a daily basis.
Responding to changing circumstances in a timely andeffective 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 thatenable us to quickly identify the occurrence of losses in orderto suppress loss accumulation and prevent the contagion
effects that lead to secondary losses. These initiatives

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Sustainability Report 2009 48

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
order to promote compliance, Sumitomo Corporation
established the Compliance Committee under the directsupervision of the President and CEO. The Compliance
Committee is responsible for preparing the Company’s
Compliance Manual and distributing it to all officers andemployees. The Compliance Manual covers the following 19
Guiding Principles to ensure the Company’s bottom line: “Ifthere 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 their supervisors or the relevant
departments immediately, so that the best countermeasures
can be implemented swiftly.

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 alsooffer various training programs and educational activities oncompliance, including: programs for specific groups, suchas employees, managers and corporate officers new to theCompany; seminars provided by each Business Unit;seminars targeted at all officers and employees; andseminars for overseas offices and Group companies. We
also make use of various domestic and overseas conferences
for compliance education. In fiscal 2008, approximately
2,600 people attended the 57 seminars and conferences oncompliance held for members of the Company and Group
companies. In addition, we hold e-learning complianceseminars open to employees from all levels and plan tocontinue these seminars for new and other employees. Suche-learning is also held at Group companies.

Speak-Up System• Prohibition on Giving Bribes• Prevention of Unlawful Payments to Foreign Governmental
Officials• Political Contributions• Confrontation with Antisocial Forces

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,in principle, 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 ofsuch individuals and the nature of the information provided
are kept confidential, and that no negative repercussions will
redound on the reporting employees due to such reporting.
The Compliance Committee is responsible for handling all
the information it receives in an appropriate manner. As of
March 2009, similar systems have been implemented at
approximately 120 domestic Group companies.

Maintenance of a Good Working Environment

Speak-Up System Diagram

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

Corporate Citizen as a Member of Society• Respect for Human Rights*• Prohibition of Sexual Harassment• Prohibition on Abuse of Authority

Speak-Up

Feedback

Compliance Committee

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

49 Sustainability Report 2009

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, theSumitomo 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 ISO14001 standard, inorder to reduce our environmental impact and improve
environmental conditions through our business activities.

Environmental Management System in the
Sumitomo Corporation GroupThe Sumitomo Corporation Group has established anenvironmental management system that adheres to theISO14001 standard. With the president of Sumitomo
Corporation at the top, activities at multiple sites andorganizations are centrally managed under our “multiple-site
system.” As of June 2009, more than 14,000 employees at
all Sumitomo Corporation business sites in Japan as well as
at 34 group companies have participated in theseenvironmental management activities.
Data on the environmental impact of office activities,
environmental accounting, a list of ISO14001-certified
group companies, the ISO14001 system in the
Sumitomo Corporation Group, and internal andexternal environmental audits are accessible at:www.sumitomocorp.co.jp/english/environmental

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.

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.

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

7. Establishment of environmental management:
To use an environmental management system to prevent
environmental pollution and to set environmental objectives andtargets which are regularly reviewed and continuously upgraded.
8. Disclosure of the Environmental Policy:
To communicate this Environmental Policy to all people who are
working for or on behalf of the Sumitomo Corporation Group, as
well as disclosing it externally.

June 22, 2007
President and CEO, Sumitomo Corporation Susumu Kato

Sustainability Report 2009 50

Environmental Management

Major Activities in 2008 and Environmental
Targets for 2009
Environmental objectives, targets and achievements for2008 are listed below. In addition to the existing targets, thefollowing three targets are chosen for 2009.

1. Promote efficient use of electricity and gas in all offices inJapan.
2. Increase the level of chemical substance control. Moreactively encourage suppliers and other partner companies
to participate.
3. Encourage domestic carriers to achieve efficienttransportation and evaluate their performance.

Environmental Objectives, Targets and Achievements for 2008
Management
Area

Environmental
business

Assessmentofenvironmental
impactHazardous
substance
management

Logistics
management

LegalcomplianceObjective

TargetAchievement Level (January to December 2008)

Improve the environment
through business operations.

(1) Promote projects to reduce greenhouse gases.

(1) Completed 11 capital investment and operation startup projects (target: 10).
Acquired approval from the Japanese government for 12 cases (target: 10).

Expand environmental
business.

(2) Expand businesses utilizing renewable energy
sources.

(2) Achievements in promoting geothermal and hydroelectric power generation in
Asia and Oceania; sales of solar power generation equipment, materials, rawmaterials, and manufacturing equipment; startup solar power generation businessin Spain; sales of green electricity.

(1) Carry out environmental impact assessment and soil
pollution surveys.

(1) Reviewed the environmental assessment reports for overseas minedevelopments. Completed historical reviews of 63 sites (out of 114 sites) thatare subjects of soil pollution surveys.

(2) Strengthen global warming countermeasures,
including energy-saving practices at offices, andestablish (review) targets for 2010.

(2) For the specific goal set in 2002 to reduce electricity consumption (the largest
percentage of energy used at offices) by 1% from the previous year level
annually, a 2.5% reduction from the previous year was achieved in fiscal 2008.

Reduce environmental
impacts of business
operations.

Prevent accidental spills or(1) Confirm that safe transportation and appropriate
leakages of hazardous
education are conducted by transportation andsubstances during transport orstorage companies.
storage.

(1) Confirmed safe transportation and appropriate education. Ensured proper
management of the hazardous substance ledgers. Confirmed that MSDSs
are being issued.

Comply with chemical
substance regulations in the
EU, China, etc.

(2) Communicate the content of regulations to all staff
members of the Sumitomo Corporation Group.
Prepare for REACH preregistration.

(2) A seminar was held on REACH preregistration with 277 participants.
Completed preregistration for 504 substances.

(1) Establish and implement a specific energy
conservation plan for transportation as a cargo owner.

(1) The internal working group worked on improvements to energy efficiency foreach of the designated sales divisions.

(2) Improve energy consumption efficiency compared tothe previous fiscal year.

(2) The goal for 2008 (1% improvement) was reached by using larger trucks andcargo vessels for domestic shipments.

(1) Increase the level of review and control practices for
waste disposal contracts with collection, transportand disposal companies, as well as for industrial
waste management books (“manifests”). Submit
reports to local governments on issuance of manifests.

(1) Contracts and manifests were checked during internal environmental audits.
Reports on waste disposals, including issuing of manifests were submitted to a
total of 26 local governments.

(2) Improve employees training on the Waste Disposal
and Public Cleaning Act. Improve management
systems within group companies often disposing ofwaste materials. Carry out stricter site inspections,and share information with other group companies.

(2) Employees received training through seminars (161 participated in seminars
on site inspection, and 39 of these also attended a workshop on the actual
site; 220 participated in in-house seminars on issuing manifests; 280
participated in a seminar jointly organized with group companies on waste
management).

Promote energy conservation
in logistics.

Proper disposal of waste inaccordance with the Waste
Disposal and Public Cleaning
Act.

Pick Up Seminar on biodiversity

Pick Up On-Site Waste Management Seminar

Biodiversity is one of the most important aspects we have to focus
on in order to create a sustainable society. In order to further familiarize
ourselves as a corporation with the issues and take proper measuresfor conservation, the Sumitomo Corporation Group held a seminarin July 2009 with guest lecturer Mr. Hiroshi Ishihara, Chairman of
The Planning Section, Nippon Keidanren Committee on Nature
Conservation, and Councilor of the Sumitomo Trust & Banking Co.,
Ltd. This was considered especially important because the 10th
Conference of the Parties to the Convention on Biological Diversity(COP 10) is scheduled for the fallof 2010 in Nagoya, Japan. About
90 employees and officers of theGroup attended the seminar andlearned about international
movement on biodiversity issues
and what specific actions
corporations should take. The
seminar deepened theirunderstanding of the issues.
Seminar on biodiversity

An increasing number of local governments in Japan have beenlegally requiring waste generators to verify the qualifications of thetransport and waste treatment companies in order to ensure lawful
and proper management of industrial waste. In 2007, in responseto this movement and in cooperation with waste managementcompanies, Sumitomo Corporation started seminars with guest
lecturers on the on-site verification of industrial waste management.
The seminar in November 2008 was attended by 161 people fromgroup companies, including 39 who also
participated in the program held at an
actual waste treatment site to learn how
to verify that treatment procedures
comply with legal regulations. We willcontinue to hold seminars of this kind toensure that all staff members recognize
how important it is to verify thequalifications of the waste treatmentcompanies and to promote proper
On-site waste
management of industrial waste treatment. management seminar

51 Sustainability Report 2009

Developing Carbon Offset Products andServices
The Sumitomo Corporation Group takes a wide range ofapproaches to global warming issues through soundbusiness activities by using its core competence—ourintegrated corporate strength made up of a global
network and other business foundation combined withfunctions of many different kinds.
For example, we carry out greenhouse gas reduction
projects in nations outside Japan, including in Asia and CIS,
to generate carbon credits and offer them to customers inJapan. We also develop carbon offset products* that are
offered in smaller volumes of carbon credits to accommodate
the needs of consumers who seek environmentally friendly
lifestyles. The Sumitomo Corporation Group can offer theseunique products and businesses, including the creation ofcarbon credits through various overseas sources, carbon
credits separated into smaller volumes and carbon offset
products, because of our ability to create new value.
As examples of the carbon offset products of theSumitomo Corporation Group, carbon offset carpets,bananas and car lease are shown on this page.

Sumifru Corporation—Part of the proceeds from banana sales is used
for CO2 reduction activities
Sumifru Corporation has been engaged in the sale of “Ecobananas,” a line of environmentally friendly bananas
produced using mainly organic fertilizer and reduced
chemicals, use of biofuels for some tractors in the banana
fields, and recycling of washing water. In response to higher
awareness in consumers on environmental issues, in
September 2008 Sumifru started sales of “Shizen-ohkoku
Eco bananas,” which incorporates a carbon offsetting
program. Part of the proceeds from consumers purchasing
the bananas will be used for CO2 reduction activities. Thismeans that for each bunch of “Shizen-ohkoku Eco bananas”
they buy, consumers can contribute to a one-kilogram
reduction in CO2 emissions. In addition to the current
carbon offsetting programs, Sumifru is planning to startsales of bananas that are labeled with their carbon footprint
shown in the total amount of CO2 emissions from production
and distribution to consumption and disposal.

* Carbon offsetting: Although we make the utmost efforts to reduce greenhousegases, they are emitted through our daily life and economic activities. The thinking
behind carbon offsetting is to estimate the emissions and offset the amount byinvesting in greenhouse gas reduction activities.

Sumisho Interior International Inc.
—Carpet tiles with “zero CO2 emissions”
SUMI GREEN from Sumisho Interior International is a line ofcarpet tiles that are backed with recyclable materials to
reduce the waste that is created in tile replacement process.
The upper layer is made from fiber recycled from used PET
bottles. Thus, both sides are either recyclable or recycled.
Calculated on a lifecycle assessment (LCA) basis, SUMI
GREEN causes 19% less CO2 emissions than the mostpopular type of carpet tile products in the Japanese market.
The other 81% of emissions is offset with carbon credits
preliminarily obtained by Sumitomo Corporation.

Flooring with SUMI GREEN
carpet tiles

Label on SUMI GREEN
SG-400Bananas with carbon credits (On purchasing a bunch, one kilogram of carbon
credits is bought and donated to the national government.)

Sumitomo Mitsui Auto Service Co., Ltd.
—Offset CO2 emissions from leased vehicles
Starting in April 2008, Sumitomo Mitsui Auto Service(SMAS) offers an “Eco-Fleet” of leased vehicles thatprovide carbon credits to corporate customers. Basedon individual customers’ monthly fuel consumption data,
SMAS offsets the CO2 emitted by the automobile using
carbon credits preliminarily obtained by Sumitomo
Corporation.
SMAS also offers hybrid vehicles and electric vehicles,
the type of vehicle with a small environmental impact, to its
lease customers. With “Safety & Ecology” as keywords,
SMAS works on preventing and reducing accidents involving
customers and promoting “ecological driving.”

Sustainability Report 2009 52

Third-Party Review

Processes

Professor Scott Davis
Professor of College of Business,
Rikkyo University

Divided into four parts—a value statement, an exposition of
the strategy and processes for instilling Sumitomo’s valuesin employees and further developing their social awareness,a series of examples of the design and implementation ofsocially beneﬁcial business, and an overview of the
management structures in place to ensure effective
governance and overall transparency—Sumitomo Corporation’s
Sustainability Report for 2009 gives the reader a unique viewof the way in which it perceives the meaning of its businessand of the processes by which its businesses are operated.
As an example of process-based reporting this report has
been very well designed and executed with great effect.

Principles
The current economic crisis has given many corporations
both within Japan and overseas a convenient excuse to cut
back on their social initiatives—and in some cases even to
renege on their social responsibilities—in order to preserve“business as usual.” In marked contrast, President Kato in
his introductory message states that the global economy is
not simply faced with an economic downturn but with whatamounts to a paradigm shift. Far from taking the defensive
stance of many corporations, Mr. Kato clearly maintains thata sound and prosperous business is no longer possible
without ﬁrst resolving the global problems of environmental
degradation, and shortages of food and water as developing
nations come to play an increasing role in the world
economy. The signiﬁcance of this statement cannot be
overemphasized. Sumitomo—a major corporation with over
400 years of tradition and operations spanning the globe—ispublically stating that good business is impossible withoutsocial responsibility. Sumitomo Corporation interprets thisparadigm shift as representing both a challenge to overcome
and an opportunity to further enhance its value as abusiness. This report explains how a new medium-term
management plan—FOCUS’10—has been formulated to
face this challenge, and how the current crisis is being taken
as an opportunity to reafﬁrm its founding principle thatbusiness activities must contribute to social and national
welfare in order that they may truly beneﬁt the corporation.

53 Sustainability Report 2009

In section one the report outlines several of the processes
whereby Sumitomo Corporation nurtures and supports
employees both within Japan and overseas. The importanceattributed to this topic shows a clear understanding that
simply announcing strategies and plans alone is insufﬁcient
for achieving social betterment or strengthening acommitment to values, and that in the end it is the people
who comprise the organization that must embody its values
in order to realize corporate objectives and create a businesscapable of contributing to the betterment of society. The
processes introduced here are presented in a clear andobjective manner. It is interesting to note that of thesesystems only half have been designed and initiated bycorporate management. Half have in fact resulted from thesuggestions of employees or programs initiated by individual
business divisions or departments within the organization.

Partnership and Social Contribution
In section two the report gives a detailed account of four
examples of how the company plans and operates its
business for the betterment of society, and two examples of
how Sumitomo leverages its corporate resources to support
worthy causes such as promoting the education of future
generations of entrepreneurs. Theme six is a list of social
support initiatives organized by region—the overwhelming
majority of which have been planned and implemented at
the initiative of overseas subsidiary and partner organizations.

In Conclusion
Although facing the same severe economic downturn which
has even led some corporations to abandon their CSR
reporting entirely, Sumitomo Corporation has instead
reconﬁrmed its social commitment and in fact strengthened its
reporting by declaring social betterment to be a precondition
for strong business, demonstrating the depth and breadth ofthe processes by which it develops social awareness andsensitivity among its employees, and the methods which it
employs in order to leverage its corporate abilities anddevelop partnerships which reﬂect and promote the interestsof the communities involved in its business activities aroundthe globe. This is an excellent report—it provides a valuable
foundation for further promoting greater understanding
between Sumitomo Corporation and its many stakeholders.
I look forward to reading in the next report about how
Sumitomo sets its strategic social goals for the developmentof both its employees and its business operations, how it
evaluates and measures the effectiveness of its processes
for developing social awareness among its employees andthe social value created by its operations, and the processes
by which it promotes social responsibility and awarenessamong its many partners.

Response to the Third-Party Review

We thank Professor Scott Davis for his valuable review of
our Sumitomo Corporation Sustainability Report 2009.
This year’s report reﬂects the review of the last issue we
received from Professor Davis, along with opinions andadvice we have received from various stakeholders throughsurveys and by other means. To compile this issue, we
speciﬁcally paid more attention to how to describe the latest
results of our measures to implement the Management
Principles of the Sumitomo Corporation Group and to gain
further understanding of our CSR measures from ourreaders. Still, there is always room for improvement, andProfessor Davis’s precise advice has certainly helped us torecognize the issues.
We are well aware that the contents of the report must
keep changing in depth and range in order to best describe
the progress of our CSR measures and activities. The
speciﬁc items Professor Davis pointed out in his Third-Party
Review, including the ways we set strategic social goals andmeasure our achievements and evaluate the performance of
our CSR activities, will be fully examined and used for our
future activities as well as in the next issue of the report.
The Sumitomo Corporation Group will continue topromote CSR measures through business activities that
follow the group vision described at the preamble to ourManagement Principles: “We aim to be a global organizationthat constantly stays a step ahead in dealing with change,
creates new value, and contributes broadly to society.” Also,
we will do this by turning the big changes brought by thecurrent paradigm shift into business opportunities and by
ﬁnding solutions to social problems through sound businessactivities. Sumitomo Corporation’s Sustainability Report andother media reports will act as tools to clearly inform ourstakeholders of our strong determination to maintain theperformance of the Group.

Takashi Kano
Chair of the CSR Promotion Committee
Representative Director, Senior Managing Executive Ofﬁcer
General Manager, Corporate Planning & Coordination GroupFor 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/

Sustainability Report 2009 54

This report is printed on paper madein part of domestic pulp (70%),
including pulp from thinned wood (10%).
Published in November 2009
Printed in Japan