Natural Capital
CSR REPORT 2017

SuMi TRUST Group’s Eco-Trustution
The Group has coined the word “Eco-Trustution” to represent its environmental financial business based on theconcept of providing solutions to ecological issues through the use of our trust function. We will continue todevelop and provide solution-based financial instruments and services.
Solutions that use the uniquefunctions of a trust bank

Editorial policy
Our CSR-related reports for fiscal year 2017 consist of our full CSR
report and feature booklets on the themes of Climate Change,
Natural Capital, Stewardship, Environmentally Friendly Property
and a digest report for seniors (available only in Japanese). We
publish these reports so readers can gain a deeper understanding of our Group’s proactive initiatives. You can visit our website
to learn more about our other CSR initiatives.

http://smth.jp/en/csr/index.html* This booklet introduces various initiatives and activities by ourGroup, led by SuMi TRUST Bank.

Investment inEnvironmentally
FriendlyCompanies(Responsible
Investment)

Support forEnergy Efficiency(Renewable
Energy, Energy
Conservation)

Support for
Smart City
Projects

Financing forEnvironmentally
FriendlyCompanies(Environmental
Rating Loans)

Valuation of
Natural Capital(Biodiversity)

Support forEnvironmental
Friendliness inReal Estate

CONTENTS
Natural Capital: Foundation for All Environmental,
Social, and Economic Spheres
2

Contribution to Conserving Japan’s
Bountiful Natural Capital

14

Natural Capital Initiatives and Policies of the SuMi TRUST Group 3

Acquiring Land: Support for National Trusts’ Activities

15

Natural Capital Considerations: A Global Perspective 6

Promoting Activities Fostering Employee Participation

17

Natural Capital Risk Management for Loans

7

Restoring Natural Capital in Cities

18

Evaluating Supply Chain Impacts on Natural Capital8

Support for Citizen Activities through Charitable Trusts

19

Initiatives for Loans

9Natural Capital Risk Management for Investment

10

Educating the Next Generation: Education for Sustainable
Development (ESD) Project
20

Initiatives for Asset Management: Responsible Investment 11
Natural Capital Considerations in Our Supply Chain

12

Natural Capital1

Natural Capital:
Foundation for All
Environmental, Social,
and Economic Spheres
Natural capital is made up of diverse living creatures andthe water, soil, and air that sustain them. These are thefoundation sustaining life on earth and conserving themneeds to be prioritized ahead of everything else.

Natural Capital’s Blessings

The way we live depends on natural capital and the ecosystem services they provide. We thus feel continued wise useof natural resources which constitute natural capital over thelong run goes beyond mere environmental conservation. It
must extend to putting communities on a solid social foundation to enable sustainable economic development.
Five elements of natural capital
Biodiversity

Fauna
Water

Flora
Soil

Regulating services

Regulating climate, controlling
floods, purifying water etc.

Supporting services

Nutrient salts cycle, soil formation,
primary production etc.

Air
Cultural services

Aesthetic, spiritual, educational etc.

Provisioning services

Food, fresh water, wood, fiber,
fuel etc.

Four categories of ecosystem services

22017 CSR ReportNatural Capital Initiatives and Policies of the SuMi TRUST Group
Natural Capital Finance Alliance (formerly the Natural Capital Declaration)
SuMi TRUST Holdings became a signatory to the Natural Capital Declaration (NCD) proposed by
the United Nations Environment Programme Finance Initiative (UNEP FI) at the United Nations
Conference on Sustainable Development “Rio+20” held in Rio de Janeiro in June 2012. SuMi TRUST
Holdings is the only financial institution in Japan to have signed the declaration when it originally promulgated. The initiatives of NCD signatories have been expanded through NCD’s reorganization into Natural Capital Finance Alliance (NCFA).

Commitment of Financial
Institutions under the Natural
Capital Finance Alliance(Excerpt)

We will support the development of methodologies that can integrate natural capital considerations into the decision-making processes for all financial products and services including loans,investment, and insurance policies.
(a) We will apply a holistic approach to the evaluation of bonds and stocks by integrating natural capital considerations inenvironmental, social, and governance (ESG) risk analysis in short-, medium-, and long-term growth forecasts of investee
companies.
(b) We will systematically incorporate the consideration of evaluating natural capital into the credit policies of specific sectors, including commodities, that have a major impact on natural capital, either directly or indirectly through the supply chain.

Sumitomo Mitsui Trust Holdings Action Guidelines for Preserving Biodiversity
1. Implementing Measures and Providing Support for Biodiversity Preservation
We will strive to actively protect rare and native species. In our role
as a corporate citizen, we will work to support activities for the preservation of biodiversity.
2. Providing Products and Services
We will endeavor to develop and provide products and services
that contribute to the preservation of biodiversity, by conducting
appropriate economic and social evaluations of the ecosystem andencouraging the sustainable use of living resources through ourfinancial functions.

3. Collaboration with Stakeholders
We will engage in dialogue and cooperation with our stakeholders
while working to preserve biodiversity.
4. Education and Training
We will ensure thorough implementation of these action guidelinesat all Group companies and will work to provide education andtraining aimed at the preservation of biodiversity.
5. Information Disclosure
We will actively disclose information about our efforts to preserve
biodiversity.
Natural Capital3

Natural Capital Initiatives and Policies of the SuMi TRUST Group

Business and Biodiversity Initiative: Our Initiatives as a Leadership Declaration Signatory
SuMi TRUST Holdings signed a leadership declaration under the Business and Biodiversity
Initiative “Biodiversity in Good Company” at the ninth meeting of the Conference of the Parties(COP 9) to the Convention on Biological Diversity held in May 2008 in Germany. Since then, we
have continued to carry out activities in line with the principles of the declaration, which was led
by the German government.

4

Declaration

Status of initiatives during 2016-2017

1. Analyzing corporate activities with regard to their impacts on biologicaldiversity

We continued to provide investment trusts that assess impact on biodiversity and loan
products that include impact on natural capital in their assessment criteria.

2. Including the protection of biological diversity within their environmental
management system

In our CSR promotion system, we draw up a plan for each fiscal year on efforts related
to natural capital and review their performance semiannually.

3. Appointing a person in the company responsible for steering all activities inthe biodiversity sector and reporting to the Management Board

The Chief Sustainability Officer in the Corporate Planning Department supervises all
activities and reports to the Executive Committee.

4. Defining realistic, measurable objectives that are monitored and adjusted every two to three years

We have set objectives in the CSR Midterm Plan for measures including those related tonatural capital, and we review performance at the Executive Committee.

5. Publishing activities and achievements in the biodiversity sector in the company’s annual, environmental, and/or corporate social responsibility report

We publish a yearly Natural Capital feature report. We disclose our biodiversity initiatives in our CSR report and at various events.

6. Informing suppliers about the company’s biodiversity objectives and integrating suppliers accordingly and step by step

We continue to pay attention to procurement of copier paper and office supplies linked
to illegal logging in tropical rain forests, which has large detrimental impacts on biodiversity. In our fiduciary services business, we engage as a shareholder with investee companies on activities that contribute to natural capital destruction and voice our concerns.

7. Exploring the potential for cooperation with scientific institutions, nongovernmental organizations (NGOs) and/or governmental institutions withthe aim of deepening dialogue and continuously improving the corporate
management system vis-à-vis the biodiversity domain.

We continue to be active in the Natural Capital Study Group, which was established in
April 2013. Its participants come from all walks of life, including companies, national andlocal governments, universities, research institutes, and NGOs. The Natural Capital Study
Group works closely with WWF Japan in the Consortium for Sustainable Paper Use.

2017 CSR Report

Business and Biodiversity Initiative: Japan Member Activities based on the Leadership Declaration
The three Japanese corporate signatories to the Leadership Declaration regularly hold teleconferences with theGerman secretariat (‘Biodiversity in Good Company’ Initiative e.V.). The SuMi TRUST Group updates its understanding of the latest trends in Europe on measurement of the economic value of natural capital and green infrastructure
at these teleconferences.

Natural Capital Study GroupThe Natural Capital Study Group, which the SuMi TRUST Group launched in April 2013, is chaired by Masahiro Sato,an associate professor at the Graduate School of International Cultural Studies at Tohoku University. With members
from companies, national and local governments, universities, research institutes, and NGOs, the study group meetsregularly to debate the research themes of each member from a wide array of angles. At the 14th meeting held in
February 2017, the study group met to discuss the themes of natural capital protocols and their application and casestudies of corporate initiatives linked to natural capital, inviting Mr. Mark Gough, an executive director at the Natural
Capital Coalition, and Mr. Baptiste Cassan-Barnel, a sustainability performance manager at Kering, to participate ina lively discussion on how to apply natural capital protocols.

Exhibit at Eco-Products in Japan
Held annually in December at Tokyo Big Sight, “Eco-Products in Japan” is one of the nation’slargest environment-related events.
SuMi TRUST Bank had from 2007-2011 highlighted biodiversity as the main theme of thebooth it opened jointly with the Ecosystem Conservation Society-Japan and the Association of
National Trusts in Japan at the event, but its exhibit theme since 2012 has been natural capital.
The exhibit explains the economic significance of natural capital through displays of the Bank’s
initiatives for investment and loan products and real estate, information disclosure, and support
for activities of the National Trusts.

Exhibit at Eco-Products in Japan
Natural Capital5

Natural Capital
Considerations:
A Global Perspective
Importance of Natural
Capital for Japanese Companies

For Japanese companies that procure many resourcesfrom overseas, taking into account natural capital dependence in their supply chains is a risk management issue.
For companies with domestic sales bases as well, bountiful natural capital at home is a necessary condition forthem to grow sustainably, so they will need to actively
contribute to conserving it.

62017 CSR ReportNatural Capital Risk Management for Loans
Equator Principles
Based on its Sustainability Policy, the SuMi TRUST Group has drawn up environmental and human rights policies with theaim of moving toward a sustainable society, and it is working to further strengthen its ESG risk management system in linewith international standards.
As a part of these efforts, we have specified processes for identifying priority issues (materiality) regarding sustainability.
In light of the importance taking into account the environmental and social impacts of investment and loan destinations,
SuMi TRUST Bank in February 2016 integrated use of the Equator Principles, guidelines for private-sector financial institutions, into its decision-making processes for loans in project finance and related fields as a risk management tool.
SuMi TRUST Bank is aware that financing large-scale projects such as mine development, oil and gas development,
power plants, petrochemical plants and infrastructure development may indirectly have an adverse effect on natural capital. It also believes it is the responsibility of a sound financial institution to avert or mitigate risks of deterioration in loan
receivables due to project suspensions as a result of environmental or social problems.

Systems and Processes for Evaluating Environmental
and Social Considerations
Information on
projects subject toEquator Principles

Screening Form
Categorization

BranchClientEnvironmental
Impact Assessment etc.

Covenants
Monitoring

EquatorPrinciples
Department

Environmental and Social
Impact Review

Credit supervision departments

Application processes: Following internal policies based on procedures for evaluating social and environmental considerations, theEquator Principles Department carries out assessments of environmental and social impacts relating to individual projects.
Implementing environmental and social impact reviews: Reviews of
the environmental and social impacts of a project proposed by developers take into account its industry, the country where it is sited, andwhether it meets standards based on the Equator Principles, and fromthere, comprehensive risk is judged.
Monitoring compliance: Compliance with important items concerning
environmental and social impacts have been reflected into loan agreements, and compliance with these is regularly confirmed through suchmethods as reports on project compliance status on these fronts.
Company training programs: Regular training sessions are provided
for employees in departments and sections relating to sales, assessment, and screening to foster a thorough understanding of internal
operations supporting environmental and social impact reviews andraise their awareness about related concepts.

Natural Capital

7

Evaluating Supply Chain Impacts on Natural Capital
Natural Capital Evaluation
Natural capital evaluation is a service that calculates natural capital dependence arising from corporate activities and estimates
the degree of impact for each procured item and for each country and region, tracing back through supply chain.

Example of output from a Natural Capital Evaluation Tool
Breakdown of water usage volume in each region by sector

Ratio of land usage area by region

5%

10%
Japan

25%

18%

20%

18%

15%

China
Asia (ex Japan and China)
Oceania

10%

14%

5%

13%

USA
Americas (ex USA)
Europe0Agriculture, forestry,
and fisheries
Coal, oil, gas, other minerals
Electrical equipment

Service industries
Shipping equipment parts
Industrial products
Heavy industries

Energy7%

15%

AfricaGHG* emissions volume is likewise
calculated by sector and region.
*GHG stands for greenhouse gases

Benefits of Natural Capital Evaluation(1) Gaining quantitative risk data related to the supply chain that can be used for management judgments
Can obtain previously hidden risk data related to environmental impacts and the use of resources that are essential to
global supply chain management(2) Obtaining quantitative data on environmental impacts that can be used for information disclosure
Can use the data for scope 3 responses to surveys such as the Carbon Disclosure Project (CDP) survey and for disclosures in integrated corporate reports
82017 CSR ReportInitiatives for Loans
Environmental Rating Loans with Evaluation of Natural Capital Preservation
The sustainable use of natural capital as resources is vital for a company to continue its business. There is a growing awareness that natural capital-related procurement risk management across the global supply chain is an indispensable part ofmanagement strategy.
In April 2013, SuMi TRUST Bank launched its Environmental Rating Loans with Evaluation of Natural Capital Preservation,
which embed the concept of evaluating impacts on natural capital and a company’s initiatives into the environmental-rating evaluation process that assesses its environmental measures. This is the world’s first attempt to incorporate natural
capital evaluation into loan criteria, and the Bank’s efforts have been cited in Japanese government environmental white
papers and European Commission reports as an example of leading-edge practice.
Environmental rating loans
Evaluation items for environmental rating

Natural capital evaluation (optional)
Five elements of natural capital

Strategy and environmental management

Fauna

Introduction
Climate change/global warming mitigation effortsofResource recycling/pollution countermeasuresqualitativeevaluation
Environmental friendliness of products and environmental business
relatedto natural
Environmentally friendly properties
capitalFlora

Biodiversity

Terms of loan decided based on environmental rating

Water

Soil

Air

Three items targeted in natural capital evaluation
Water usage
volumeLand usage area

GHG emissions
volumeReporting on environmental burden and risk
information in upstream supply chains
Note: “Optional” refers to ESCHER calculations provided by PwC Sustainability LLC thatare not available without loan products.

Natural Capital

9Natural Capital Risk Management for Investment
For corporate conduct SuMi TRUST Bank determines is in needs of correction in light of international norms such as the
UN Global Compact and OECD Guidelines for Multinational Enterprises, it collaborates with the responsible investment
team at ISS-Ethix* to engage with investee companies in a discussion toward resolving the issues and verifying their implementation of countermeasures.
*ISS-Ethix is a consultant offering ESG-related advisory services established by proxy voting advisory firm, Institutional Shareholder Services Inc.

CASE 1 Genting(Head office is in Malaysia)
Genting Plantations (GP), a
subsidiary of Genting Berhad, owns palm oil plantations in Malaysia
where water pollution concerns surfaced.
People living in local communities broughtup the issue to the Roundtable on Sustainable Palm Oil (RSPO). While working
to confirm evidence relating to the case,
SuMi TRUST Bank conducted hearings on
the state of initiatives aimed at improving
the situation at relevant sites.

Samarco Mineração S.A., a 50/50 joint venture between Australia’s BHP Billiton Ltd. and Brazil’s Vale S.A.,
operates the Samarco iron ore mine in Brazil, where at least 11 people
died as a result of the collapse of a tailings dam. Samarco has rebuilt
the tailings dam but Brazil’s federal environment agency IBAMA
continues to question whether the tailings dam has been adequately
reinforced. While Samarco has disclosed information about the environmental impact caused by the dam’s bursting, it has not disclosed
its findings on the causes of the dam’s collapse nor whether it had
adequate preventive measures in place, therefore, a hearing has been
convened on the state of initiatives aimed at improving relevant sites.

Genting Plantations
acknowledged its
sites did not satisfy the principles and criteria for sustainable palm oil production
and so it carried out an environmental
assessment aimed at ameliorating the issues raised. The Bank was informed that
Genting had reached an agreement on
its future guidelines with local communities, and with RSPO as a relevant party.

The Bank received from BHP Billiton a reporton the cleanup of environmentally damagedsites prepared by Fundacao Renova, a foundation established withthe aim of restoring sites harmed by the collapsed dam.

Dialogue
overview

The investee
company reaction

10

Billiton
CASE 2 BHP(Head office is in Australia)

2017 CSR Report

Dialogue
overview

The investee
company reaction

While the Fundacao Renova report confirms
some progress has been made in environmental
recovery work, the Bank has mentioned there might be problems in
how BHP Billiton responded to the environmental disaster as it did
not prepare the report. In addition, the Bank also urges BHP Billiton
to remain responsive to the concerns raised by regulator IBAMA, as
BHP Billiton’s response to matters raised remains incomplete.
Post-dialogue
actions

CASE 3 Engaging

Palm Oil Companies

Demand for palm oil is surging owing
to its ease of use and the growing preference for health products but recklessplantation development is contributing
to tropical rainforest destruction and biodiversity loss. The Bank asks major palm
oil companies such as Malaysia’s Sime
Darby Berhad to refrain from development on high conservation value (HCV)
forests, high carbon stock (HCS) forests,
and peat land, abstain from clearing forested land using slash-and-burn method
to prepare sites for development, banpractices that exploit indigenous oraboriginal peoples or laborers, reducegreenhouse gas emissions at existing
plantations in a phased manner, comply
with local and relevant overseas laws andregulations, and adopt best practices.

Initiatives for Asset Management: Responsible Investment
Biodiversity Companies Support Fund
In 2010, the SuMi TRUST Group developed the world’s first Japanese equity fund that evaluates the status of biodiversity
efforts at companies from a global perspective such as sustainable use and conservation of biological diversity, an important component of natural capital, and uses those evaluations to screen and select stocks for investment. According to theresearch of SuMi TRUST Bank, no other Japanese equity fund is designed around such a concept.

1

Evaluation Axis for Selecting Companies for Investment

Risk management

Companies that actively take measures tomitigate the impact their business activities
have on biodiversity*

2

Business opportunities

Companies that provide technologies orservices that preserve biodiversity3

Long-term goals

Companies that have set action plans orother long-term goals for conserving biodiversity

Investment Process
Investment
universe

Listed companies in Japan(including emerging
market)STEP 1: The Japan Research Institute
Surveys and analysis regarding the statusof biodiversity efforts

Evaluation of
the status ofbiodiversity
efforts

List ofcompanies withbiodiversity
commitments

STEP 2: Sumitomo Mitsui Trust Bank
Selection of stocks for investment

Portfolio

STEP 3: Sumitomo Mitsui Trust Asset Management
Creation of portfolio* We use a risk metric to measure the capacity of companies to respond to natural capital risk, referencing the Natural Capital Efficiency Index (NCEI factors in the relationship of net
sales to energy & water use and waste generated). The metric is an index of the magnitude of natural capital risk that could lower NCEI (NCEI/amount of goods or services per unitof natural capital). It draws on material balance reports companies in Japan issue.

Natural Capital

11

Natural Capital Considerations in Our Supply Chain
CSR Procurement Policy

Fair Transactions

With CSR procurement policies in place, SuMi TRUST
Holdings strives to procure products that we regard as environmentally and socially responsible across our supply chain.

Implementation of CSR Procurement
SuMi TRUST Bank is promoting CSR procurement for
the SuMi TRUST Group as a whole. From among products targeted for CSR procurement, we have started toapply environmental and social responsibility criteria for
procuring paper, a product our operations use and dispose in large volumes. With copier paper as a launchingpad, we are implementing such measures, and we plan
to gradually expand our CSR procurement product recommendations to include printed publications, etc.

CSR
Procurement
PolicyConsideration for
the Environment

CSR Procurement Initiative for Paper Products• Commenced surveys of suppliers into the environmental and social responsibility of their paper
products such as copier paper, office supplies, etc.
• All Group companies are prohibited from procuring copier paper with environmental and social
consideration problems, such as illegal logging in tropical rain forests• Procure copier paper, in principle, with a 100% recycled content ratio• Reference the viewpoints of Rainforest Action Network and other domestic and overseas NGOs on
the environmental and social responsibility of products

122017 CSR ReportCompliancewith Laws andRegulations

Cooperation with
Suppliers

Consideration forSocial Challenges

Consortium for Sustainable Paper Use
SuMi TRUST Bank regards destruction of ecosystems andlogging in tropical rainforests to supply raw materials forpaper as a serious issue. Along with other corporate paper
users that share its concern and the World Wide Fund for
Nature Japan (WWF Japan), the Bank has established theConsortium for Sustainable Paper Use. With the aim of promoting the spread of sustainable paper use throughout
society, member companies share how their initiatives areprogressing and ask their suppliers to supply them paper
products that are environmentally and socially sound. The
consortium launched in 2013 with five member companies
has grown to nine companies as of May 2017.

Consortium for Sustainable
Paper Use Policies on Paper Procurement• Prioritize use of recycled paper and reliable verification systems• Do not use paper from sources that destroy forests with highprotection value• Use paper that has been produced through appropriate procedures, from logging of raw wood in compliance with laws in the
country of origin• Do not procure products from business
operators connected to significant environmental or social problems

Debate at the Consortium for Sustainable Paper Use (CSPU)In July 2016, SuMi TRUST Bank hosted a symposium on the theme of “Supply
chain collaboration among companies: Aiming to expand sustainable paper
usage.” Participants, including consortium members, paper product suppliers, and industry organizations, shared problems concerning raw materials procurement, and discussed ways paper users and suppliers could work
together to resolve such problems.
At a July 2017 member’s meeting, after hearing a report from WWF
Japan on the status of initiatives at paper makers and of managing forests
in Southeast Asia, consortium members debated measures and issues foradvancing initiatives such as use of third-party verification systems and dialogue with suppliers over the future activities.
Natural Capital

13

Contribution toConserving Japan’s
Bountiful
Natural Capital

High-value natural
capital areas
Real estate prices: low
Natural capital: abundant

Suburbs
Real estate prices: mid-range
Natural capital: mid-range

CitiesReal estate prices: highNatural capital: scarce

Why Ecological Networks Matter

Our everyday lives and economic activities rely on
abundant biodiversity. Keeping the diverse environments where various living creatures use, andlinking the places via pathways called “corridors”;
this is the idea of ecological networks.
We believe evaluating impacts on regional andbuilding natural capital and developing methods
to manage these as well as constructing ecological networks will help to address natural capital
problems in Japan and lead to the formation of asustainable society.

142017 CSR Report

CASBEE for Properties*
JHEP certification system**
Financial valuation of nature value
Environmentally friendly buildings
Biodiversity offsets (no net losses realized)
National Trust activities

Improving biodiversity
quality

Halting the erosion of Setting aside more land fornature due to development
flora and fauna

Maximize natural capital andbiodiversity via ecological networks*CASBEE for Properties is a simple evaluation system for the environmental performance of buildings (thename of this program was changed from “CASBEE for Market Promotion” in November 2014).
**JHEP is a habitat evaluation certification developed to quantitatively evaluate and certify efforts to contribute to the conservation and restoration of biodiversity.

Acquiring Land: Support for National Trusts’ Activities
Acquiring Sites
Land is the foundation of natural capital in terrestrial ecosystems. The formation of ecological networks requires acquiring land that links rich ecosystems together. Not only is development destroying natural habitats but
in the past few years those lands whose succession rights have been relinquished or unregistered have grown sharply due to Japan’s shrinking population. We think retaining and expanding managed natural preserves will
be effective in checking erosion in Japan’s natural capital and forestalling
growth in mountain forests and farmland where land ownership is unclear.

Supporting National Trusts’ Activities through Donations for Acquiring Land

Vending machines that directa percentage of sales to the
National Trusts

SuMi TRUST Bank supports activities to acquire high-value sites and land with bountiful nature
through contributions from citizens and corporations that are promoted by the Association of
National Trusts in Japan. The Bank has donated funds to purchase those lands where endangered species live and of academically important. In 2014, the Bank donated funds toward
the acquisition of forest land (equivalent to 8,000m2) in Amami Oshima to conserve habitat for
the endangered Amami rabbit. In 2015, the Bank donated funds toward the acquisition of the
Utasai bog (equivalent to 1,500m2 of the site), located within Kuromatsunai town, to conserve
the high-elevation wetland, one of the oldest in Hokkaido.
Vending machines that donate a percentage of their sales to the Association of National
Trusts in Japan have been installed in the Nakano Branch, the Tokorozawa Branch, theTokorozawa-Ekimae Branch, and the Omori Branch. Funds equate to the acquisition cost of
2,000m2 of forest land in Chichibu, a source region for water supply to the greater Tokyo metropolitan area, have been donated through October 2017.
Natural Capital

15

Acquiring Land
Donors receive a “Nature’s
Bounty” gift every year

Social Contribution Donation Trusts
SuMi TRUST Bank administers social contribution
donation trusts set up for the purpose of making
donations to public-interest organizations carrying out
social contribution activities. These trusts enable people who would like to contribute to society in someform as a citizen to do so using the trust system. The
selection of Ecosystem Conservation Society-Japan, apublic interest incorporated foundation, as a donation
recipient supports the activities of the Association of
National Trusts in Japan, an organization that aims toprotect nature by purchasing land that forms the natural habitat of endangered species in Japan.

Beech picture
frame

Beech wood
cutlery

National Trusts Re

port on “trust lan

Client•Applies to set up a social
contribution donation trust•Designates recipients

donation
Sumitomo Mitsui • Transfers(each year
Trust Bankin November)
Recipient(trustee)•Sends receipt for donation transfer•Sends activities report

Panel Exhibits in Branch Lobbies across Japan
In fiscal 2016, 73 branches of SuMi TRUST Bank displayed panel exhibits on thetheme of the National Trust, a nature conservation movement that traces its origins toEngland. “Mori-no-boen” (forest cemetery) opened in Chousei-gun, Chiba Prefecture
in February 2016 with Ecosystem Conservation Society-Japan, a public interest incorporated foundation, as its main sponsor and operator. At a site where the forest had
been lost to sand mining, the remains of the deceased are buried, wooden grave
markers are installed, and native tree saplings are planted and cultivated. No manmade items such as gravestones are placed at the site, so it is attracting attention
as a new type of cemetery business where a natural forest will take root on the burial
grounds in the future. In fiscal 2017, starting with six branches in Chiba Prefecture
where the cemetery is located, panel exhibits will circulate among our branch lobbies.
16

2017 CSR Reportds”

How the Social Contribution Trust System Works

A panel exhibit in the Chiba Branch lobby

Promoting Activities Fostering Employee Participation
Activities to Support the Environment and Living Creatures
SuMi TRUST Bank branches nationwide carry out CSR activities (“With You” activities). Embracing
the idea that “we enjoy lives of abundance thanks to the blessings of natural capital,” the branches
promote various activities with local community roots, highlighting “support for the environment andliving creatures,” one of the three major themes defining our “With You” activities. Among these
initiatives are employees joining environmental conservation activities and hosting eco-tours to the
National Trusts-owned lands in the neighborhood as well as employee participation in various events
that partner with local and regional authorities and organizations. In June 2017, the Sapporo andSapporo-Chuo Branches hosted their sixth tour in Kuromatsunai town for restoration and conservation of the National Trusts-owned lands, with participants performing tasks to maintain the Utasai
wetland and joining a learning tour of the native beech forest, the northern-most in Japan.

Protection of Endangered Species

Participants prune trees and vegetation for wetland conservationin keeping with expert advice

SuMi TRUST Fish Project

Ro

s

ng
Some branches are actively engaged in activities to conserve species
terli
bit
y
unique to Japan as a part of the “support for the environment and living
creatures” initiatives. The Ichinomiya Branch commenced an exhibit on the
Deepbody Bitterling, an endangered fish species, with an approval from
the Ministry of the Environment, a first of its kind as a private-sector company. The exhibit arose from our participation in the environment and ecosystem conservation activities for the Kisogawa
River watershed that we have promoted in conRosy Bitterling
Yao Branchcert with local organizations. In addition, SuMi
TRUST Bank implements “SuMi TRUST Fish
Project” at its branches nationwide. The project includes the breeding of endangered fish
species such as the Rosy Bitterling and Medaka
Deepbody Bitterling
rice fish indigenous to their region in fish tanks
kept in a fish tankin their lobbies.

Deepbody Bitterling
Ichinomiya Branch

Raising JapaneseMedakaSendai Branch andSendai-Aoba Branch

Raising JapaneseMedakaAobadai Branch

M e d a ka

be

fo

l
re
a yi ng eg g s

Japnese Medaka
Odawara Branch

Natural Capital

17

Restoring Natural Capital in Cities
Construction Consulting on How to Foster Biodiversity and Ecosystems
Through the use of CASBEE for Real Estate*1 andJHEP*2 together, the environmental performanceof properties can be improved across many dimensions, helping to increase overall property value.
At SuMi TRUST Bank, biodiversity considerations are included in our menu of construction
consulting services.
*1 CASBEE for Real Estate: The comprehensive assessment system for built environment efficiency (CASBEE) certification is an environmental performance
evaluation system for buildings being developed and promoted in Japan
under the guidance of the Ministry of Land, Infrastructure, Transport andTourism (MLIT). SuMi TRUST Bank is involved in the establishment of criteria.
*2 JHEP: Japan Habitat Evaluation and Certification Program is a system is a system developed by the Ecosystem Conservation SocietyJapan to quantitatively evaluate and certify efforts to contribute to the conservation and restoration of biodiversity.

Change in Property Value withAge (image)
Property value
Property value

Biodiversity value
Building value
Time

18

2017 CSR Report

CASBEE for Real Estate

JHEP(CASBEE: the comprehensive assessment systemfor built environment efficiency)(JHEP: Japan Habitat Evaluation andCertification Program)

Key focus points for evaluation certification• Better energy efficiency and environmental sustainability• Better intellectual and labor productivity, better indoor environments

Key focus points for evaluation certification• Improve natural value of biodiversity
versus pre-project situation• Habitat well suited to native flora/fauna

Evaluation items in CASBEE for Real Estate
1 Energy/greenhouse gases
2 Water
3 Use of resources/safety
4 Biodiversity/sustainable site
5 Indoor environment

JHEP certification requirements for
new evaluations
1 No net loss in natural value of biodiversity
2 Quality of biodiversity exceeds theminimum specified level
3 No use of specified foreign invasive
species

Increases Overall Property Value

A building’s environmental performance is evaluated on many dimensions
such as energy savings, global warming mitigation measures, biodiversity,
durability, and resource efficiency.
The value of buildings decline with age but the biodiversity value increases
every year as the ecosystem surrounding it forms. These offsetting lifecycle
patterns can maintain the combined value of the building and site together
as a whole. Ecological networks can be created through the connection of
local communities, neighboring buildings and green nature reserves.

Support for Citizen Activities through Charitable Trusts
Support for Various Charitable Trusts
The charitable trust system is one where individuals or corporations donate assets that are administered and managed by a trustbank in accordance with predetermined objectives. For example, in this system, a trust awards funds for charitable activities
from the interest income as well as principle of its endowment assets.
SuMi TRUST Bank first received a mandate as a trustee for a charitable trust in 1977. Since then, the number of trusts under
its management has steadily risen, and projects in various charitable fields have received trust grants. Among these are contributions for domestic nature conservation and ecological network building.

Keidanren Nature Conservation FundThe Suntory Fund for Bird Conservation

The Keidanren Nature Conservation Fund (KNCF), a public charitable trust set up in 2000 by
the Keidanren Committee on Nature Conservation, has used the trust system to supply funds
to support nature conservation activities. Collecting donations from Keidanren member corporations, other private-sector companies, and individuals, KNCF provides grants for nature conservation activities in Japan and developing countries carried out by NPOs, NGOs and others.
Since the Keidanren Committee on Nature Conservation’s establishment in fiscal year 1992
through 2017, a total of 3.7 billion yen has been granted to over 1,287 activities. In addition
to tree planting and environmental education initiatives, the Keidanren has supported a wide
range of projects involving biodiversity conservation, including natural resource management
and rare species protection, around the world, especially in Asia and Japan.

The Suntory Fund for Bird Conservation was established in 1990 bySuntory Holdings Limited to promote better, more extensive protection of birds. Since its inception 28 years ago, it has supported birdconservation activities in Japan and overseas. The fund has been
accepting grant applications in three areas in the past few years:
grant for bird conservation group activities, grant for community bird
activities, and grant for riparian large bird conservation. Every year itawards grants totaling more than 40 million yen to organizations such
as NGOs in Japan and overseas.

Committee support
2.2%

Other 6.2%

Natural resource
management

Surveys 11.0%

Rare species
12.3%
Tree planting
16.0%

Breakdownof Projects
Supported byCategory

35.9%
Environmental
education 16.4%
A pair of Blakiston’s Fish Owls that have been observed formany years
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Educating the Next Generation: Education for Sustainable Development (ESD) Project
To realize a sustainable society, each and every one of us must recognize that we are all living in an irreplaceable environment and must change our behaviors. The United Nationspromoted ESD is an education that fosters leaders in creating a sustainable society.
SuMi TRUST Bank has since 2012 strived to educate school students, the next-generation of environmental leaders, across Japan about nature conservation through the useof video in ESD project.

Scan this QR
code to see
details on thecase examples

Flow of ESD Project Featuring Precious Nature across Japan

Green TV Japan records video
footage of featured sites

Teaching materials are preparedusing recorded video footage

Initiatives over the Past Years
Nov. 2012

Sept. 2013

Sept. 2014

Jan. 2015

Students watch video teachingmaterials in a class led by the ESDinvited professional instructor

June 2015

Wakayama Prefecture Kanagawa Prefecture Okayama Prefecture Kanagawa Prefecture Osaka Prefecture
Tenjinzaki
Koajiro Forest
Waterhead Forest in Oyatsu Forest in Ka- Nippon Rosy
Mimasaka
makura City
Bitterlings

20

2017 CSR Report

A master video about theentire project is produced

Jan. 2016

July 2016

Fukui Prefecture
Nakaikemi Wetlands

Aichi Prefecture
Kisogawa River
Deepbody Bitterlings• Shibayama Wetlands - Vital for Ecosystem Conservation
At Funabashi Shibayama High School in Chiba Prefecture, students venture outdoors to learn about theenvironment in the Shibayama Wetlands, the school-run biotope. With 740 confirmed species, including
endangered ones, the biotope is highly regarded for its high quality, winning gold prizes in competitions.
Mr. Domoto, secretary general of the Ecosystem Conservation Society - Saitama, a public interest
incorporated foundation, explained on the links with natural environment of the peripheral areas andthe initiatives of Kanto Ecological Network in a February 2017 class. Students learned how essential
their daily conservation activities focused on rivers are in forming ecosystem networks and how large
the contribution of their activities are in terms of regional ecosystem conservation, and they shared
their opinions on the importance of continuing on their activities.

A school-run biotope, Shibayama
Wetlands• Seeking the Sight of Crested Ibises in the Skies above Sakata Lagoon
Akatsuka Junior High School in Niigata Prefecture has been offering students opportunities to go
outdoors to learn about the environment at the nearby Sakata lagoon, which is registered under theRamsar Convention. In addition to lagoon conservation activities, students have been tracking thenumber of inbound swans flying over the sea to the lagoon. Students have been passionate about
conserving the Sakata lagoon as conversion of surrounding land into residential tracts has mademaintenance of the lagoon environment more challenging.
Mr. Seki, secretary general of the Ecosystem Conservation Society - Japan, explained using video
teaching materials shot at Sakata lagoon and Sado Island on farming methods that foster living creatures such as the crested ibises of Sado City and how people and bountiful ecosystems can co-exist in
a July 2017 class. Students learned conserving the Sakata lagoon would lead to creating a sustainableregion and came across the questions such as “What is necessary for crested ibises to soar in theskies above Sakata?” and “What is necessary for regional revitalization?” For students, the class wascertainly a good opportunity to rethink issues related to their activities from a broader perspective.

A class at Akatsuka Junior HighSchool in Niigata Prefecture

Sakata lagoon registered under theRamsar Convention

Sumitomo Mitsui Trust Bank, Limited Corporate Planning Department, CSR Promotion Office
1-4-1 Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan
Tel: +81 (3) 6256 6251 Facsimile: +81 (3) 3286 8741 URL (only Japanese is available): http://smtb.jp/csr/• Companies are requested to use their own judgment whether or not to adopt proposals made by Sumitomo Mitsui Trust Bank, Limited based on this document.
• Companies that do not adopt the proposals made by Sumitomo Mitsui Trust Bank, Limited in this document will not be subject to disadvantageous treatment with regard to other transactions with
Sumitomo Mitsui Trust Bank, Limited, nor is adoption of the proposals made by Sumitomo Mitsui Trust Bank, Limited in this document a condition for other transactions with a company.

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