Sumitomo Corporation
Green Finance Framework
February 2022

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Table of Contents

1. Introduction
1.1 Sumitomoʼs Business Philosophy
1.2 Corporate Mission Statement
1.3 Sumitomo Corporation Groups Material Issues
1.4 Enhancing sustainability management
1.5 Key social issues and long-term goals for Sumitomo CorporationGroup
1.6 Policies on Climate Change Issues

2. Green Finance Framework
2.1 Use of Proceeds
2.2 Process for Project Evaluation and Selection
2.3 Management of the Proceeds
2.4 Reporting2

Green Finance Framework

1. Introduction
Sumitomo Corporation Group has grown into an integrated trading company overthe past 100 years since it was originally founded as the Osaka North Harbor
Company Limited in 1919. The history of Sumitomo, which formed the basis of
Sumitomo's Business Philosophy, can be traced back to some 430 years ago whenits business focused on copper refining which later advanced to copper mining.
All employees of Sumitomo Corporation learn the history of the Besshi Copper Mines.
Through its modern business management, the Besshi Copper Mines contributed inleading industrial development in Japan, however, there were negative impacts on
local communities including deforestation of nearby forests and damage to
agricultural crops from sulfur dioxide emitted by smelters. Management at that time
took measures including reforestation of the Besshi Copper Mines and relocation of
the smelting plant to an uninhabited island off the coast.
“Benefit for self and others, private and public interests are one and the same”,
which is one of the credos of Sumitomoʼs Business Philosophy, and the actions taken
by our predecessors to prioritize the sustainability of natural environment and the
local community over short-term profit, are deeply rooted in heart of every
employee at Sumitomo Corporation. We are confident that our business serves the
public interest.
Today, after 100 years since the Osaka North Harbor Company Limited has
established, we have 70,000 employees working at more than 900 group companies
in 81 countries and regions and we do our business by engaging with multiple
stakeholders including customers, local communities, business partners andemployees. Our business as well as our relationship with the stakeholders have
expanded to a global scale and we believe that our mission is to protect the planet
and pursuing development for the world and better lives for our stakeholders.
1.1 Sumitomoʼs Business Philosophy
Sumitomoʼs Business Philosophy has been refined through many generations
based on the Founderʼs Precepts “Monjuin Shiigaki,” which Masatomo Sumitomo(1585-1652),the founder of the Sumitomo family, wrote and handed on todescribe how a merchant should conduct business. The basic points of Sumitomoʼs3Business Philosophy have been passed on in the form of the two articles of theBusiness Principles. Article 1 emphasizes the utmost importance of integrity, while
Article 2 advocates the importance of having an enterprising spirit to generate
profits quickly and faithfully while adapting to a changing society, and renovating
business operations while avoiding the pursuit of easy gains or acting carelessly.
Sumitomoʼs Business Philosophy, which has been passed on since the FounderʼsPrecepts was written, still serves as the timeless principles Sumitomo Group
companies follow in their activities.
There are also several other credos that are contained in Sumitomoʼs Business
Philosophy. One example is: “Benefit for self and others, private and public
interests are one and the same.” To put it another way, Sumitomoʼs business,while benefiting Sumitomo, must also benefit the nation and benefit society. This
represents the corporate vision that the Sumitomo Corporation Group as a wholemust pursue at all times.
The second credo is “Grand Design.” This derives from copper mine management,
Sumitomo's core business in its early days, which required long-term vision andcontinuous effort. This attitude of viewing business from a broad and long-term
perspective and working for the benefit of the entire nation and society based onforesight of the future has been inherited from preceding Company operators.
The third credo is “People are our most important asset.” The cultivation anddevelopment of human resources has always been our most important concern
regardless of the times.
Sumitomoʼs Business Philosophy thus stresses the need for an enterprising spirit
to stay a step ahead in dealing with change, while ascribing importance tomaintaining integrity and sound management, avoiding easy gains, and working
for the public interest, without being misled by short-term immediate changes.
This philosophy has continuously formed the basis of Sumitomo Corporation
Groupʼs business for more than 430 years.
1.2 Corporate Mission Statement
Sumitomo Corporation Groupʼs Management Principles are a contemporarytranslation of Sumitomoʼs Business Philosophy, which was devised 430 years ago,
using simplified language and a clear structure, and rewritten from a more global
perspective. The Activity Guidelines provide guidance on how each company as wellas their executives and employees should behave as they conduct daily businessactivities to realize the Management Principles.
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As declared in the Management Principles, our corporate mission is to support ourshareholders, clients, local communities, employees, and everyone else around theworld in their endeavors to achieve economic and spiritual prosperity and realize
their dreams through our sound business activities. We also maintain—throughout
our business practices—a unique management style that respects the personality ofeach Individual and places prime importance on integrity and sound management,
which represent the essence of Sumitomoʼs Business Philosophy, while cherishing a
corporate culture that allows each employee to take the initiative and demonstratecreativity that is conductive to continuous reform and innovation.
By sharing the values presented in the Management Principles and the Activity
Guidelines across the Group to materialize them in specific business activities, we
aim to be a global organization that constantly stays a step ahead in dealing withchange, creates new value, and contributes broadly to society.

51.3 Sumitomo Corporation Groups Material Issues
In April 2017, Sumitomo Corporation Group identified its material issues that
illustrate the relationships between its business activities and society. We havedefined the Six Material Issues to achieve Sustainable Growth with Society as animportant factor in developing business strategies and in the decision-making
process for individual businesses. Going forward, we will pursue sustainable growthby resolving these issues through our business activities.
Please refer to Here for details.
Figure: Material Issues for the Sumitomo Corporation Group

1.4 Enhancing sustainability management
Enhancing sustainability management at Sumitomo Corporation goes beyond
identifying issues and setting goals.
In addition to clear commitment to the role we play in achieving a sustainable
society, it is necessary that we focus on the optimal status of companies and theirbusiness that will be needed in a sustainable society, such as carbon neutrality,
circular economy and zero violation of human rights. We need to recognize thepaths to achieve them and the challenges to be overcome and consider the
strategies and allocation of management resources that we should implementfrom a long-term perspective.
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We believe that capturing and pursuing the ideal state of society will bring morebusiness opportunities. The Sumitomo Corporation Group's sustainability
management is about perfectly aligning the vision of a sustainable society with theGroup's value creation and sustainable growth, and we continue to work on
establishing a management framework to achieve the vision.
Figure:Overview of “Enhancing Sustainability Management”

1.5 Key social issues and long-term goals for Sumitomo Corporation GroupAs Sumitomo Corporation works to enhance its sustainability management, wehave identified six key social issues related to our business that we address
through our business and corporate activities. The six key social issues are:
“Mitigation of climate change”, “Circular economy”, “Respect for human rights”,“Development of local society and economy”, “Improvement of living standard”
and “Quality education”.

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As we pursue these lofty goals, it will be necessary for us to demonstrate ourstrengths as an integrated trading company. The Group will make use of its
human resources, business expertise as well as networks and business
relationships. The six social issues will demonstrate our role in the society andbecome our guideline to the Groupʼs entire business operations. The six social
issues have two themes: the sustainability of society and development andadvancement of society.
The sustainability of society is a globally shared goal as well as a major premise of
the Groupʼs business. On the other hand, the solutions for pursuing thesustainability of society will be generated from further social and economic
development and therefore, we believe that these two themes are mutuallycomplementary.
Also, we will pursue to achieve these goals through business activities, however,
we will contribute to providing quality education through our philanthropy as wellas human resources development initiatives.

Figure: Key social issues and long-term goals for Sumitomo Corporation Group8

Sustainability of the SocietyMitigation of climate change
Preventing global warming and mitigating climate change are urgent issues thatare indispensable for realizing a sustainable society. The Sumitomo Corporation
Group seeks to become carbon neutral in its business by 2050 and develop
sustainable energy cycles and create new business.

Circular economy
The circular economy through recycling, reuse, reproduction, resource-saving
product development, and sharing is an important element for maintaining
social sustainability. The Group will contribute to achieve circular economy byrecycling, switching to resource-saving technologies and products, and working
on sustainable procurement of natural resources.



Respect for human rights
Respect for human rights is a universal issue that must be achieved in any place
and at any time. The Group operates business while engaging with multiple
stakeholders including customers, local communities and employees, and wewill strive to respect human rights throughout the Group's business and supply
chains.

Development and evolution of the societyDevelopment of local society and economy
The Group's business is expanding to countries and regions around the world.
Helping to develop the communities where we do business is a common
challenge to all our business operations. The Group will contribute to industrial
development as well as human resource development in the local communities
and will endeavor to provide industrial and social infrastructure.

Improvement of living standard
The world's population continues to grow, and many areas are facing problems
such as aging and urbanization. The Group will make effort to provide advanced
life-related services that contribute to a better life for all people.



Quality education
Quality education plays an important role in the development of local
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communities and economies, which enriches people's lives and leads to creationof a sustainable society. The Group will promote various activities, including
philanthropy, to contribute to quality education.
To achieve these long-term goals, we established medium-term goals by indicating
specific action plans for the six key social issues in May 2021. The progress ofachievement of long-term and medium-term goals for each issue and initiatives will
be disclosed in the ESG Communication Book, as well as in the Integrated Reportwhich are revised annually.
Sumitomo Corporation will take a step forward in its sustainability management tosustainably grow together with society by strategically allocating management
resources that capture trends in long-term social issues, and by providing value thatis always required in a sustainable society.
Figure: Sumitomo Corporation Groupʼs Key Social Issues and Medium/Long-term
Goals

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1.6 Policies on Climate Change Issues
The issue of climate change is an important issue that must be overcome to bringabout a sustainable society. Global efforts towards the faster realization of acarbon-neutral society are accelerating. We value the global consensus of the Paris
Agreement, and in order to play a more active role in achieving the carbonneutralization goals of society set forth in the agreement, we reviewed our“Policies on Climate Change Issues” in May 2021. We have set medium-term goals
that show a clearer action plan for “Climate Change Mitigation” and its long-termgoals, one of our six important social issues. See Policies on Climate Change
Issues here.

112. Green Finance Framework
Sumitomo Corporationʼs Green Finance Framework (the "Framework") provides
policies for the following four elements based on Green Bond Principles 2021 by
the International Capital Market Association (ICMA), Green Loan Principles 2021
by the Loan Market Association (LMA), the Asia Pacific Loan Market Association(APLMA) and the Loan Syndications & Trading Association (LSTA).
1.Use of Proceeds
2.Process for project evaluation and selection
3.Management of Proceeds
4.Reporting
2.1 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" (Eligible
Projects). In cases where the proceeds are to be used for existing projects, theprojects must have been financed within 36 months prior to the issuance of theGreen Bond or the procurement of the Green Loan.
【Eligibility Criteria】
Eligible Project

Eligibility Criteria

CategorySCʼs
Materiality

Renewable

Funds for investment, development,

Achieving

Energyconstruction, operation, and maintenanceharmony withof the following renewable energy projects.

the global
environment

・Wind power generation

・

Solar power generation

Contributing・

Geothermal power generation (Direct

to theemissions less than 100g-CO2/kWh)developmentof localIn the case of investments in corporations,communities

only corporations that specialize in theand industries

renewable energy/clean energy business or
have at least 90% of their sales related to

Establishing arenewable energy/clean energy are eligible.

foundation for

12comfortableand enriching
lifestyles
Environmentally

Acquisition of forests that have obtained

Achieving

Sustainable

the following certifications

harmony withManagement of
Living Natural

the global
・Resources andFSC (Forest Stewardship Council®)environment

certification

Land Use
Clean

Funds required for the following railway-

ProvidingTransportation

related projects

Diverse“Accessibility”

・Operation and maintenance of urban
passenger railway projects

Contributing
to thedevelopmentof localcommunities
and industries
Achievingharmony withthe global
environment

EnergyFunds required for investment in base

Establishing a

Efficiency

station construction and operation

foundation fornecessary for providing base station

comfortable

sharing services centered on 5G to mobileand enriching

operators

lifestyles※It is expected to have the effect ofContributing

reducing environmental load throughto theequipment sharing. In addition, compareddevelopment13

to 4G, 5G communication technology isof localsaid to be more energy efficient, using lesscommunities

energy per traffic unit.

and industries
ProvidingDiverse“Accessibility”

2.2 Process for Project Evaluation and Selection
The Finance Department, with the support of the Corporate Sustainability
Department, selects projects that meet the Eligibility Criteria to be funded by
Green Finance. The final decision is made by the Chief Financial Officer.
Framework for Social and Environmental Risk Management
The Sumitomo Corporation Group has put in place a companywide framework toapply when starting new businesses, including review and periodic monitoring,in order to appropriately manage the social and environmental impacts from theoverall activities of the Group with its wide-ranging business portfolio. When
implementing due diligence on a new investment, based on the nature of thebusiness, we carry out an environmental assessment through an environmental
consultant, and an assessment of human rights and labor issues through a law
firm or similar. By taking these steps, we ensure that the business is operating
on a sound basis and that business activities are not seriously impacting the
global environment or local communities, employees, and other stakeholders. In
April 2020, in order to enhance the effectiveness of risk management for eachbusiness, taking into account the nature of the business and the characteristicsof the region where it operates, we established a system that considers socialand environmental impacts when making a decision on a new investment, byutilizing an assessment sheet for social and environmental risks and by having
the Corporate Sustainability Department, a specialized organization for socialand environmental issues, participate in deliberations according to the risk. Afterthe investment, we confirm the status of social and environmental risk
management through processes such as periodical monitoring through dialogue
with group companies and internal audits, and if any issues arise, we work
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toward improvements according to the characteristics of the business.
When issues concerning the impact of the Sumitomo Corporation Groupʼsbusiness activities are pointed out by local residents, nongovernmentalorganizations (NGOs), or other stakeholders, we ascertain the facts and respondby planning and implementing corresponding improvements through dialogue
and discussion with them. In addition, following the review and monitoring of
new investments outlined above, the response to any significant social orenvironmental issues for individual cases is referred for further discussion andreported to the Management Council and the Board of Directors through therelated committees. Under the oversight of the Board of Directors, we work toaddress social and environmental risks and strengthen our risk management
system.
2.3 Management of Proceeds
Sumitomo Corporationʼs Finance Department will allocate and manage theproceeds of Green Finance to projects that meet the Eligibility Criteria in thegeneral account. The Finance Department will also track and monitor that thesame amount of Green Finance procured under this Framework is allocated toany of the Eligible Projects and periodically adjusted to match allocations toeligible projects/categories.
The proceeds will be allocated to the 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 unallocatedfunds 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.
2.4 Reporting
Sumitomo Corporation plans to disclose on its website on an annual basis thestatus of allocation of the funds procured and the details of the environment
improvement impact specified by the Company until the full allocation iscompleted.
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① Allocation Reporting
Sumitomo Corporation plans to report on the status of the allocation of funds,
including the following:・・Amount and status of allocation in the following business categories
1.

Renewable energy

2.

Forestry business

3.

Railway-related projects

4.

5G related business

If there are any unallocated funds, the amount, planned timing of
allocation, and investment method until the full allocation is completed.

② Impact Reporting
To the extent reasonably practicable and subject to data availability, Sumitomo
Corporation plans to disclose the following impact reporting annually on its
website regarding the effects of environmental improvements.
Business Categories
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
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