Preserving Biodiversity (TNFD)

The Sumitomo Rubber Group recognizes biodiversity as one of our material issues to address in the process of identifying key issues and is working on it.
We have committed to disclosing information based on the TNFD Recommendations issued by the Taskforce on Nature-related Financial Disclosures (TNFD) in September 2023 and registered as a TNFD Adopter in January 2024. We were announced as an Early Adopter at the World Economic Forum Annual Meeting in Davos, Switzerland, in January 2024. We analyzed our nature-related dependencies and the impacts of our operations on nature in accordance with the TNFD recommendations and will also work to actively disclose information on nature-related risks and opportunities.

In December 2020, the Sumitomo Rubber Group established “Our Philosophy,” a new corporate philosophy framework that will serve as a major driving force to propel us forward with ever greater speed toward the accomplishment of our groupwide business strategy while also placing particular emphasis on engaging in sustainable business activities that promote harmonious coexistence with society and with the natural environment. Our Philosophy defines our Purpose (i.e. the very reason for our existence) thusly: “Through innovation we will create a future of joy and well-being for all.” With this Purpose serving as the basis behind our every decision and as the impetus behind our every action, the Sumitomo Rubber Group will continue working to enhance not only our economic value, but also our value to society so that we may contribute to the development of a more sustainable society.
We will also continue to carry out activities for greening and the preservation of endangered species and strive to preserve biodiversity through business activities in collaboration with our stakeholders in areas of biodiversity and nature.

The Group's Sustainability Management Promotion Division plays a central role in promoting biodiversity initiatives in an integrated manner, in cooperation with top management and other departments. In promoting sustainability management, the Sustainability Promotion Committee, chaired by the director in charge of sustainability and including the directors in charge of each division, meets twice a year to ensure thorough implementation of company-wide policies and to confirm progress on important issues. In addition, the committee’s reports and deliberations are reported to the Board of Directors, which oversees sustainability issues, including those related to nature.
The Director in charge of sustainability, serving as the committee chair, is also responsible for nature-related issues including biodiversity. The president participates in discussions and deliberations at meetings of the Sustainability Promotion Committee, and those approved in the deliberations are set out in the entire Group's Policy.

With the approval of the Sustainability Promotion Committee, the Sustainability Working Group (comprising six subcommittees) has been established under the Sustainability Promotion Committee. The Biodiversity Subcommittee is one of these subcommittees, which is a cross-departmental organization promoting initiatives.

In step with advances in the mobility industry around the world, tire demand is expected to grow. Accordingly, demand for natural rubber, the primary tire raw material, is likely to grow even stronger.
This prospect has prompted looming concerns about the impacts on forests and other natural ecosystems and the emergence of human rights and labor rights issues in regions where natural rubber is produced.
As a tire manufacturer, the Sumitomo Rubber Group aims to curb these problems, and to this end has implemented a variety of initiatives to help the entire natural rubber supply chain improve and update itself into a more sustainable industry.

The Sumitomo Rubber Group formulated the Human Rights Policy in December 2023. This policy was established in consultation with the Board of Directors, based on the Universal Declaration of Human Rights, the OECD Guidelines for Multinational Enterprises, the various treaties of the International Labour Organization and the 10 principles of the United Nations Global Compact.
This policy tangibly describes the Sumitomo Rubber Group's concepts on respect for human rights and serves as the highest policy governing all other regulations and guidelines enforced within the Group regarding how we ensure respect for human rights.
In this policy, the Sumitomo Rubber Group highly value the human rights of every stakeholder, and expect our business partners to support this policy, and we also expect that our suppliers understand and comply with this policy.

In August 2021, we updated our SNR Policy to reflect a policy framework approved by the GPSNR, with the aim of gearing up efforts to resolve issues in regions where natural rubber is produced, such as environmental problems caused by the destruction of forests and human rights problems in the working environment.
In line with our updated SNR Policy, we will proactively promote collaborative initiatives with companies in our supply chain to realize a society in which natural rubber is procured in a sustainable manner.

The Sumitomo Rubber Group is in the process of assessing nature-related business risks and opportunities.
First, in identifying nature-related material issues, we used the ENCORE nature risk assessment tool to assess the risks of nature-related issues that are closely related to our tire, sports and industrial products businesses. In addition, by researching risk cases of issues that are highly relevant to the business, potential risks across the entire value chain were identified, and the magnitude of the potential impact on the business was considered and analysed to identify and assess material issues. Furthermore, a locational assessment was also carried out using publicly available tools such as IBAT (Integrated Biodiversity Assessment Tool) and Aqueduct to identify hotspots where there are nearby ecosystems of conservation importance in the vicinity and where future initiatives should be considered as a priority.

The Risk Management Committee, chaired by the President, meets twice a year to oversee risk management activities and check the effectiveness of the risk management system. The long list of risks assessed and managed by the committee includes nature-related risks, which are treated by the committee as management targets if they are assessed as significant risks in the analysis of management risks. The status of the management of nature-related risks is reported regularly and continuously by the Sustainability Promotion Committee, which deliberates on management methods and other matters as necessary.

Management risks involving product quality, law, the environment, credit, accidents, disasters, etc., that may materially and adversely affect our business activities, shall be addressed by the significant division and/or subsidiary in advance, via the analysis of those risks and the planning of countermeasures in accordance with the Regulations Concerning Risk Control, which define risk management methods for the entire Sumitomo Rubber Group.
The Risk Management Committee shall oversee group-wide risk management activities and, on an as necessary basis, investigate and confirm whether the risk management system is functioning effectively. If any material risk affecting the Sumitomo Rubber Group emerges or is expected to emerge, the President shall establish a risk control headquarters pursuant to the Regulations Concerning Risk Control.

To embark on the TNFD response, we first screened nature-related risks and opportunities in our Tire, Sports, and Industrial Products businesses. Using the Nature Risk Assessment Tool (ENCORE), we assessed the nature-related dependencies and impacts considered significant for each business and created a heat map. The darker the color, the higher the degree of dependency or impact.

The results of the analysis with ENCORE confirmed that the tire business has a significant dependency on and impact on nature. Therefore, in 2023, the first year of the TNFD response, we conducted a risk assessment for the tire business using the LEAP approach, the risk assessment method recommended by the TNFD, followed by a risk assessment for the sports and industrial products businesses in 2024.
In order to concretize the material issues, in addition to the dependency and impact assessment using ENCORE, we investigated cases of business risks that could have a significant impact on the business. We also evaluated the significance of nature-related risks and opportunities by organizing the relationship between the relevant nature-related issues and our value chain.

Based on the results of these analyses, the results of the ENCORE analysis were used as the vertical axis "stakeholder interest" and the results of the case investigation based on the LEAP approach as the horizontal axis "relationship with the company's business". And " infringement of indigenous people's rights" was added as an issue and nature-related risks for the business were organized into a materiality map.

In the tire business, four key nature-related issues were identified: “land use and development (including forests)”, “local ecosystems”, “violation of indigenous peoples' rights”, and “water resource and wastewater”.

In the sports business, “water resource and wastewater” and “local ecosystems” were identified as material issues.

In industrial products business, “water resource and wastewater”, “local ecosystems” and “land use” were identified as material issues.

We have organized the potential impact of each risk and opportunity on the tire business in reference to the TNFD classification of nature-related risks and opportunities.

In order to examine measures to address the identified material issues, a locational assessment of the value chain was carried out to delve deeper into the issues.
In the locational assessment, the identified material issues were first organized by stage of the value chain - upstream, direct operations and downstream. Then, for the material issues related to each stage of the value chain, hotspots were identified by assessing biodiversity risks in business activities using tools such as IBAT, and their impact on our business was investigated and identified. We will continue to study and promote measures to address the material issues identified through this assessment.

The results of the locational assessment are summarized below.

With regard to the procurement of natural rubber, which has a significant impact on our business, we joined the Global Platform for Sustainable Natural Rubber (GPSNR) in September 2018. In November 2018, we formulated the Sumitomo Rubber Group 'Sustainable Natural Rubber (SNR) Policy', which reflects the content of the GPSNR policy framework. This policy was updated in August 2021. Based on this policy, we are actively promoting initiatives in collaboration with stakeholders in the supply chain to achieve sustainable natural rubber sourcing.
The Group is also implementing initiatives to ensure traceability in natural rubber procurement. In 2023, we introduced RubberWay®, a software program that enables mapping of the natural rubber supply chain, and we are promoting the development of a sustainable procurement network through risk assessment and reduction activities. We are also working on resolving issues through collaboration with stakeholders, including support for neighboring farmers and joint research with universities.

For direct operation sites, the Sumitomo Rubber Group identified production sites with high water risk based on the Aqueduct water stress score, past records of water withdrawal restrictions and water consumption at each site, regulatory risks, and the results of interviews with the sites. For the following seven factories assessed as having high water risk, we are implementing measures to reduce water stress, as part of our long-term sustainability policy stipulating that 100% recycling of factory effluent is to be achieved by 2050.

As part of our efforts to reduce nature-related risks during the product use phase, we conducted a proof-of-concept test to reduce microplastic run-off from sports artificial turf, in cooperation with Nishinomiya City in Hyogo Prefecture, which owns and manages the facility. This was the first publicly announced initiative of its kind in Japan. It has been pointed out that long-pile artificial turf for sports may, over time, result in broken artificial turf and rubber chips flowing out of the field, potentially reaching rivers and harbors, and turning into microplastics. Moving forward, we will regularly monitor changes over time and verify the effectiveness of each countermeasure, the suitability and durability of barrier materials, and the need for maintenance. We are committed to developing and promoting the dissemination of runoff control technology.

The Sumitomo Rubber Group aims to establish a recycling-oriented business (circular economy) throughout the entire supply chain, starting from tire products, our core business. We have formulated “TOWANOWA”, our own circular economy concept in tire business, where we work on reducing the generation of waste through the minimum and more efficient use of resources, as well as promoting resource regeneration by expanding reuse and recycling efforts.

The Sumitomo Rubber Group engages in greening activities and the protection of rare plants and animals at our business sites and in the surrounding communities. In 2024, Shirakawa Plant was certified as a 'Sustainably Managed Natural Site' by the Ministry of the Environment of Japan, contributing to the realization of 30by30 (a target to effectively preserve at least 30% of land and sea as healthy ecosystems by 2030).

We will continue to examine and promote measures to address material issues.

The Sumitomo Rubber Group discloses GHG emissions, waste emissions and water consumption among TNFD core global disclosure metrics in our global environmental data. We will continue to prepare for the disclosure of core metrics that are currently not disclosed by collecting data and conducting more detailed analysis.

The Sumitomo Rubber Group aims to achieve 100% sustainable raw materials (biomass and/or recycled raw materials) by 2050. We also aim to achieve 100% recycling of factory effluent by 2050 at its direct operations sites with high water risks.
In the future, we will consider setting metrics and targets in line with the TNFD Recommendation.

Sustainable Raw Material Content Targets

In line with the final TNFD recommendations, we will advance the sophistication of our analysis and enhance our disclosure of information, particularly concerning natural rubber with high nature-related risks.
Specifically, we will examine strategies based on scenario analysis, develop measures to address the risks identified in this analysis, and set performance goals and management indicators.