Sumitomo Corporation
Type of Engagement: Annual Review
Date: 31 January 2024
Engagement Team:
Akshay Chandrakapure, akshay.chandrakapure@morningstar.com
Nachiket Goli, nachiket.goli@morningstar.com

Introduction
In September 2023 and May 2022, Sumitomo Corporation issued two green bonds (the “Green Bonds”)1 tofinance or refinance projects related to Renewable Energy, Environmentally Sustainable Management of Living
Natural Resources and Land Use, Clean Transportation and Energy Efficiency. In 2024, Sumitomo Corporation
engaged Sustainalytics to review the projects financed with proceeds from the Green Bonds (the “NominatedProjects”) and provide an assessment as to whether the Nominated Projects met the use of proceeds criteria
and the reporting commitments outlined in the Sumitomo Corporation’s Green Finance Framework (the“Framework”).2 Sustainalytics provided a Second-Party Opinion on the Framework in February 2022.3 This is
Sustainalytics’ second annual review of allocation and reporting of the instruments issued under theFramework, following a previous review in February 2023.4

Evaluation Criteria
Sustainalytics evaluated the Nominated Projects based on whether they:1.
2.

Met the use of proceeds and eligibility criteria defined in the Framework; andReported on at least one key performance indicator (KPIs) for each use of proceeds category definedin the Framework.

Table 1: Use of Proceeds Categories, Eligibility Criteria and Associated KPIs
Use ofProceeds
Category

Eligibility Criteria

Impact Indicators

Funds for investment, development,construction, operation, and maintenance of thefollowing renewable energy projects.

Renewable
Energyi.

Wind power generationii.

Solar power generation

iii.

Geothermal power generation (Directemissions less than 100g-CO2/kWh)In the case of investments in corporations, only
corporations that specialize in the renewableenergy/clean energy business or have at least
90% of their sales related to renewableenergy/clean energy are eligible.
EnvironmentallySustainable
Management ofLiving Natural

Acquisition of forests that have obtained thefollowing certifications.

i.

Environmental impact
such as achieved
reduction in CO2emissions (t-CO2)

ii.

Power generation
capacity (MW)i.

Forest area acquired (ha)1 Sumitomo Corporation issued two green bonds i) First in May 2022, Sumitomo Corporation’s 60th unsecured bond and raised JPY 20 billion. ii) Secondin September 2023, Sumitomo Corporation’s 64th unsecured bond raising JPY 10 billion.
2Sumitomo Corporation, “Green Finance Framework”, at: https://www.sumitomocorp.com/jp//media/Files/hq/sustainability/greenfinance/framework.pdf?la=en
3 Sustainalytics, “Second-Party Opinion, Sumitomo Corporation”, (2022), at: https://www.sustainalytics.com/docs/default-source/backend/sumitomocorporation-green-finance-framework-second-party-opinion-(2022)_revised-in-july-2023.pdf?sfvrsn=415a8c5c_1
4 Sustainalytics, “Green Bond Annual Review, Sumitomo Corporation”, (2023), at: https://mstar-sustops-cdn-mainwebsites3.s3.amazonaws.com/docs/default-source/spos/sumitomo-corporation-green-bond-2022-annual-review-(2023).pdf?sfvrsn=fc5d895_1© Sustainalytics 2024

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Resources andLand Usei.

FSC (Forest Stewardship Council)
certification

Funds required for the following railway related
projects.
Clean
Transportationi.

Operation and maintenance of urban
passenger railway projects powered byelectricity or with direct CO2 emission
less than 50g CO2/per passenger-km

Funds required for investment in upgrading
mobile network to 5G from existing 4G or earlier
generation, base station construction andoperation necessary for providing base station
sharing services centered on 5G to mobile
operators.
EnergyEfficiencyi.

It is expected to have the effect of
reducing environmental load throughequipment sharing. In addition,compared to 4G, 5G communication
technology is said to be more energy
efficient, using less energy per traffic
unit.

i.

Number of stationsii.

Route distance (Km)i.

Case study introduction
on 5G base station
installation facility

Issuer’s Responsibility
Sumitomo Corporation is responsible for providing accurate information and documentation relating to thedetails of the funded projects, including description of projects, amounts allocated and project impact.

Independence and Quality Control
Sustainalytics, a leading provider of ESG research and ratings, conducted the verification of the use ofproceeds from the Green Bonds. The work undertaken as part of this engagement included collection of
documentation from Sumitomo Corporation and review of said documentation to assess conformance withthe Framework.
Sustainalytics relied on the information and the facts presented by Sumitomo Corporation. Sustainalytics is
not responsible nor shall it be held liable for any inaccuracies in the opinions, findings or conclusions herein
due to incorrect or incomplete data provided by Sumitomo Corporation.
Sustainalytics made all efforts to ensure the highest quality and rigor during its assessment process andenlisted its Sustainability Bonds Review Committee to provide oversight of the review.

Conclusion
Based on the limited assurance procedures conducted, 5 nothing has come to Sustainalytics’ attention thatcauses us to believe that, in all material respects, the Nominated Projects do not conform with the use ofproceeds criteria and reporting commitments in the Framework. Sumitomo Corporation has disclosed toSustainalytics that the proceeds from the Green Bonds were fully allocated as of December 2023.

5 Sustainalytics limited assurance process includes reviewing the documentation relating to the details of the funded projects, including description ofprojects, their estimated and realized costs and impact, as provided by the issuing entity, which is responsible for providing accurate information.
Sustainalytics has not conducted on-site visits to projects.
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Detailed Findings
Table 2: Detailed Findings
FrameworkRequirements

Procedure Performed

Factual Findings

Error orExceptions
Identified

Use ofProceeds
Criteria

Verification of the Nominated Projects
funded with proceeds from the Green
Bonds to determine if projects alignedwith the use of proceeds criteria outlinedin the Framework.

All projects reviewed
complied with the useof proceeds criteria.

None

ReportingCriteria

Verification of the Nominated Projects
funded with proceeds from the Green
Bonds to determine if impact of projects
was reported in line with the KPIs outlinedin the Framework.

All projects reviewed
reported on at leastone KPI per use ofproceeds category.

None3

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Appendix
Sumitomo Corporation issued two green bonds in May 2022 and September 2023 and raised JPY 20 billion
and JPY 10 billion respectively. As of December 2023, 100% of the proceeds were allocated to finance orrefinance the following projects.
Table 3: Allocation of proceeds from the Green Bonds.
Use ofProceeds
Category

Renewable
EnergyOverview of theProjectsi.

Offshorewind power
generation inEurope.

ii.

Onshorewind power
generation inJapan.

iii.

Geothermal
power
generation inSoutheast
Asia.

iv.

Solar powergeneration inSoutheast
Asia.

Net Proceeds
Allocation From 2022
Green Bond(JPY billions)

Net Proceeds
Allocation From2023 GreenBond(JPY billions)

Total Net
Proceeds
Allocation(JPY billions)

5.2

7.9

13.1

Environmentally
Sustainable
Management ofLiving Natural
Resources andLand Use

Acquisition of forests
with Forest
Stewardship Council®
certification throughwholly owned
subsidiary Summit
Forests New Zealand
Ltd.

5.1

2.1

7.2

Clean
Transportation

Operation andmaintenance of urban
passenger railway
project in southeast
Asia.

8.2

08.2

EnergyEfficiency

Investment in Sharing
Design Inc., whichprovides base station
sharing services
centered on 5G tomobile operators.

1.501.5201030

Total Net Proceeds Allocation

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Table 4: Reported Impact from Green Bonds

Use of Proceeds Category

Reported Impacti.

Environmental impact such as achieved reduction in CO 2emissions (t-CO2): 514,425 tonnes.

ii.

Power generation capacity: 516 MWi.

Forest area acquired: 8,405 hai.

Number of stations: 20ii.

Route distance: Approximately 20 kmi.

Case Study: Provided 5G base station sharing services tomobile carriers. Already launched in areas like Shibuya,
Shimbashi, Shinjuku, Fukuoka and Aichi prefectures and aims
for nationwide expansion.

Renewable Energy
Environmentally Sustainable
Management of Living NaturalResources and Land Use
Clean Transportation

Energy Efficiency

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