Sumitomo Corporation
Sustainable Finance Framework
February 2024

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Table of Contents

1. Use of Proceeds
2. Process for Project Evaluation and Selection
3. Management of Proceeds
4. Reporting2

Introduction
Sumitomo Corporationʼs Sustainable Finance Framework (the “Framework”)
provides policies for four components of Sustainable Finance (Use of Proceeds,
Process for Project Evaluation and Selection, Management of Proceeds, andReporting) as set out in Green Bond Principles 2021, Social Bond Principles 2023
and Sustainability Bond Guidelines 2021 by the International Capital Market
Association (ICMA) and Green Loan Principles 2023 and Social Loan Principles
2023 by the Loan Market Association (LMA), the Asia Pacific Loan MarketAssociation (APLMA) and the Loan Syndications & Trading Association (LSTA).
The Framework constitutes a revision of the Green Finance Framework publishedin February 2022. The proceeds raised under the Green Finance Framework,
namely, those of the 1st Green Bond (May 2022) and 2nd Green Bond (September2023), meet the required eligibility criteria of this Framework and will be managed
under it.

1. Use of Proceeds
The proceeds raised under the Framework will be used to finance or refinancenew or existing projects that meet the following Eligibility Criteria (“EligibleProjects”). In cases where the proceeds are to be used for existing projects, theprojects have been financed within three years prior to the issuance of theSustainable Bond or the procurement of the Sustainable Loan. In cases wherethe projects have been financed more than three years prior to the fundraising,
Sumitomo Corporation will confirm, monitor and explain the social andenvironmental impact of the projects.
[Green Eligibility Criteria]
Eligible Project

Eligibility Criteria

Category
Renewable

Funds to be used for the following renewableenergyenergy projects:(In the case of investments in corporations, onlycorporations that specialize in the renewableenergy/clean energy business or whose sales
related to renewable energy/clean energy are atleast 90% of their total are eligible.)
3SDGs

・

Wind power generation

・

Solar power generation

・

Geothermal power generation (Directemissions less than 100g-CO2/kWh)・Battery storage business with grid stability

EnvironmentallyFunds to be used for acquisition, utilization andsustainable

maintenance of forests based on the Sumitomo

management ofCorporation Group Forest Management Policy

living naturalresources andland use
Clean

Funds to be used for the following railway-relatedtransportation

projects:
・Operation and maintenance of urban
passenger railway projects

Energy efficiency

Funds to be used for the following types of energy
efficiency-related business:
・

Investment in base station construction andoperation necessary for providing base station
sharing services centered on 5G to mobile
network operators (*)

・

Development, construction, renovation,acquisition, etc. of properties which havereceived or are expected to receive BELS 5stars.

* This is expected to have the effect of reducing
environmental load through equipment sharing.

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Sustainable

Funds to be used for water-related business:water andwastewater

・

Water supply

management

・

Sewerage management

・Related equipment and pipes

Green buildings

Funds to be used for properties which havereceived or are expected to receive at least one of
the following building certifications:・

LEED: “Platinum” or “Gold”

・BREEAM: “Outstanding” or “Excellent”

・CASBEE for Buildings (New Construction,
Existing Buildings and Renovation) or CASBEE
for Real Estate: “S” or “A”

・

DBJ Green Building Certification: “5” or “4”・BCA Green Mark Certification: ”Platinum” or“Gold Plus”

・

HQE: “Exceptional” or “Excellent”

・

DGNB: “Platinum” or “Gold”

・Green Star: “6-star” or “5-star”

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[Social Eligibility Criteria]
Eligible Project

Eligibility Criteria

Category
Access toFunds required for the following businesses inessential

geographically and socio-economicallyservices

disadvantaged areas (developing countries in

SDGs

Asia, Africa, etc.)
・Telecommunications business with solution ofdigital divide

・

Financial services to enhance financial
resilience/stability

2. Process for Project Evaluation and Selection
The Finance Department, with the cooperation of the Corporate Sustainability
Department, selects candidate projects meeting the Eligibility Criteria to receive
funding under the Sustainable Finance Framework. The final decision is made by
the Chief Financial Officer.
The projects must align with the Sumitomo Corporation Groupʼs Management
Principles, which are based on Sumitomoʼs Business Philosophy. SumitomoʼsBusiness Philosophy contains the words: “Benefit for self and others, private andpublic interests are one and the same.” To put it another way, Sumitomoʼsbusiness, while benefiting Sumitomo, must also benefit the nation and society.
Framework for Social and Environmental Risk Management
The Sumitomo Corporation Group has established a companywide framework
perform appropriate monitoring of the social and environmental impact of theGroupʼs entire business activities. We have prepared a self-assessment sheet on
relevant social and environmental risks to be used at the time of investment
application to identify anticipated risks and opportunities in terms of the natureand regional characteristics of each business. Decision-making is then carried
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out considering impacts on society and the environment. This includes having
the Corporate Sustainability Department participate in discussions as a specialist
organization that addresses social issues depending on the risk. We also engage
outside experts to check that the business is soundly managed and does nothave serious impacts on stakeholders by using environmental assessment by anenvironmental consultant and assessment of human rights and labor issues by alaw firm, considering the specifics of each business. As follow-up to theinvestment, the responsible business department and related corporate
departments work together through dialogue with group companies to carry out
regular monitoring from the viewpoint of the environment, human rights, labor
management, the supply chain, and other aspects. If an issue arises, remedialaction is taken in line with the specifics of the case. Internal audits that take into
account special characteristics of the business are used to confirm thatmanagement operations are legally compliant and meet international standards
on social and environmental issues. When a case relating to the impact of theSumitomo Corporation Groupʼs business activities are referred to by a local
community, a non-governmental organization (NGO), or another stakeholder,we ascertain the facts and engage in dialogue and discussion toward
improvement. If, as a result of this process of revies and monitoring ofinvestments, an important social or environmental risk is confirmed, theindividual response is reported or referred for further discussion to theManagement Council and the Board of Directors through the relevant internalcommittees.
3. Management of Proceeds
Sumitomo Corporationʼs Finance Department will manage the proceeds of funds
raised under the Sustainable Finance Framework and allocate them to projects
that meet the Eligibility Criteria. The Finance Department will also ensure
through monitoring that funding procured under the Framework is correctly
allocated to each of the Eligible Projects and that the amount is periodicallyadjusted to match determined allocations for Eligible Projects/categories.
The proceeds will be allocated to projects that meet the Eligibility Criteria,
generally within three years. Any unallocated funds generated from the sale ofassets will be reallocated to other projects that meet the Eligibility Criteria.
Sumitomo Corporation intends to maintain an amount equal to the unallocated7

funds in cash or cash equivalents until allocation is determined.
If there is any significant change in allocation status, even after the full amountof the procured funds has been allocated, we will disclose it on our website asnecessary.
4. Reporting
Sumitomo Corporation plans to disclose the status of allocation of the funds
procured and the details of the environment improvement impact specified by
the Company on its website within one year after providing the funding.
① Allocation Reporting
Sumitomo Corporation plans to report on the status of the allocation of funds
as follows, provided such information is disclosable in light of confidentiality
and non-disclosure obligations.
・・

Amount and status of allocation in the following business categories:
1.

Renewable energy

2.

Forestry business

3.

Railway-related projects

4.

5G-related business5.

Properties with BELS certification

6.

Water-related projects

7.

Green buildings

8.

Telecommunications business

9.

Financial services

For any unallocated funds: the amount, planned timing of allocation andinvestment method on an annual basis until the full allocation iscompleted.

② Impact Reporting
Sumitomo Corporation plans to disclose the following impact reporting
annually on its website regarding the effects of environmental improvements,
provided such information is disclosable in light of confidentiality and nondisclosure obligations.
8[Green Eligibility Criteria]Business Categories

Reporting Items

Renewable energy

・Environmental impact such as achieved
reduction in CO2 emissions (t-CO2)

・Power generation capacity (MW)Forestry business・

Forest area acquired (ha)Railway-related projects

・

Number of stations

・Route distance (km)・Case study introduction on 5G base station

5G-related businessinstallation facility
Properties with BELS・

Level of BELS rating

Water-related projects

・Water management capacity (m3)Green buildings

・Type and level of certification

Business Categories

OutputOutcome (sample)

Telecommunications

Business

・ Population

businessoverview

coveragecertification[Social Eligibility Criteria]

・ Number of basestations

Impact・ Economic growthand social progresswith solution ofdigital divide

・ Number ofsubscribers
Financial services

Business・ Number ofoverview

customers, service
coverage ratio
・ Amount of financial

・ Enhanced financial
resilience/stability
・ Expansion offinancialservice (creditaccessibility foramount)

low-income
population

The above outcomes are indicated as an example of the type of selected
information that will be disclosed.
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