Since the 1910s, the Oji Group has valued the sustainability of forest resources. We have managed sustainable forests and positioned forest resources at the core of our sustainable business model. We own and manage forest plantations not only in Japan but also in nine regions of six countries outside of Japan . Specifically, we own approximately ~440k ha of production forests, primarily for producing wood in consideration of environmental conservation, and around ~130k ha of conservation forests, which are primarily for protecting biodiversity and basins. The total area of these forests is 570k ha. In addition, we participate in forest certification programs^*1 to manage forests appropriately for the environment, economy, and society. At the end of FY2019, 94% of overseas forest plantations and 100% of company-owned forests in Japan were certified (an achievement rate of 96%). The Oji Group supports the New York Forest Declaration (NYDF)^*2 principle that pledges to end deforestation by 2030 and has adopted a KPI "to expand overseas production forest to 400k ha and actual carbon stock to 170 million CO₂ tons" in our sustainable business model.

• *1Forest certification is aimed at sustainable forest management. An independent, third-party organization examines a forest to ensure that it is well managed by specific standards and then certifies it. The programs include all forests, including production forests and environmentally protected forests.
  Examples include FSC™ and PEFC.
• *2NYDF is a voluntary and non-binding international declaration to halve the rate of deforestation by 2020 and end it by 2030 in collaboration with governments, businesses, civil society organizations and other stakeholders.

• Production forests: Forests aimed mainly at producing wood in consideration of environmental conservation.
• Conservation forests: Forests which are primarily for environmental conservation, including the conservation of biodiversity and basins

Our core products are paper and paperboard. Recovered paper accounts for 60% of raw materials, while the remaining 40% are wood resources such as woodchips and market pulp. The procurement of the raw materials involves many people, from Oji Group employees to local suppliers and communities. For responsible raw materials procurement, we established the Oji Group Partnership Procurement Policy (revised in December 2018) and the Wood Raw Material Procurement Guidelines (established in 2005) for wood raw materials. Going forward, we will further expand the scope of our risk assessment on human and labor rights protection as well as on environmental and social risks, as covered by the Oji Group Partnership Procurement Policy, to reduce risk.

The Forest Resources and Environment Marketing Business Company of the Group is in charge of procuring raw materials for its principal mills in Japan and for Jiangsu Oji Paper, in addition to managing the domestic and overseas forest plantation businesses described above. The Forest Resources and Environment Marketing Business Company examines essential issues in the forest plantation, pulp and energy business as well as in raw materials procurement, which it managers, in line with prescribed procedures such as management meetings and decision/approval regulations. More critical issues are discussed at the Group Management Meeting. Moreover, the Forest Certification System Implementation Committee meets twice a year with the procurement departments of Group companies and the Environmental Management Department (in charge of managing Group supplier risks) to share environmental and social issues of the supply chain and to discuss and implement improvement measures.

The Oji Group also manufactures FSC™ certified products using only woodchips that meet the requirements of FSC™ (FSC™ certified wood and wood that meets FSC™ requirements^*3). Further, the Oji Group ensures the traceability^*4 of all procured wood raw materials such as woodchips and market pulp for principal mills in Japan and Jiangsu Oji Paper in China, which is a initiative unique to the Group.
The annual amount of recovered paper procured in Japan by the Forest Resources and Environment Marketing Business Company was 4.01 million tons in FY 2019. The recovered paper utilization ratio was 65.6% in FY2019, exceeding the target of “65% by 2020” set by the Japan Paper Association. The recovered paper procurement department makes use of the business registration program, which the industry organization recommends, and sources recovered paper from around ~350 registered suppliers . The department strives to ensure the stable quality of the recovered paper and promote paper recycling by working together with individual suppliers and industry organizations.

• *3FSC™ Requirements;
  The FSC™ system defines five categories of unacceptable material:
  1. Illegally harvested wood,
  2. Wood harvested in violation of traditional and human rights (for example forced or child labour)
  3. Wood harvested in forests in which high conservation values are threatened by management activities
  4. Wood harvested in forests being converted to plantations or non-forest use
  5. Wood from forests in which genetically-modified trees are planted
• *4Traceability verification items;
  1. Country where the wood raw material was produced,
  2. Raw material composition (composition by category, such as wood from certified forests, controlled wood based on forest certification programs, plantation wood, natural wood, and sawmill residue),
  3. That the product contains no wood obtained through illegal logging,
  4. That the product contains no genetically modified wood,
  5. That forests that are recognized publicly as forests with a high conservation value were not logged,
  6. Absence of major social conflicts over the raw materials,
  7. That elemental chlorine-free (ECF) or total chlorine-free (TCF) (bleaching methods that do not use chlorine gas) processes were used on the pulp bleaching process

• *Wood raw materials that meet the FSC™ certification standard and wood that meets FSC™ requirements (FSC™ C008495).

A mutual understanding between the forest plantation business operator and the local community and their sharing of environmental, economic, and social benefits are essential for sustainable forest management. To give an example of economic benefits, our overseas forest plantation companies have created jobs for 15,000 local people. We also provide owners of small scale forests with training in skills such as forest plantation and management. (The area planted by owners of small scale forests is around ~27,000 ha.) Further, forest plantation companies work with local governments, NGOs, and civic groups in each region to create and share environmental and social benefits. Their activities include biodiversity conservation programs in environmentally protected forests, job assistance and educational support in local communities, and medical assistance in areas where access to medical services is difficult.

The world faces diverse problems attributable to climate change, such as extreme heat, heat waves, torrential rains, flooding, and reduced agricultural production. These problems are also related closely to the reduction of forested area and forest degradation. Forests absorb and store CO₂ from the atmosphere, so the Oji Group believes that sustainable forest management is an effective means of tackling climate change.
The actual carbon stock in living biomass in remaining production forest 440k ha, CO₂ tons5 has reached a cumulative total of approximately~121 million CO₂ tons at the end of FY2019. The net increment in carbon stocks, CO₂ tons6, has meanwhile reached a cumulative total of approximately ~49 million CO₂ tons since 1990, the base year designated under the Kyoto Protocol. The average annual net increment in carbon stocks from 1990 to 2019 is around ~1.63 million CO₂ tons/yr-1. The Oji Group will address climate change issues aggressively through sustainable forest management.

• *5The actual carbon stocks in living biomass in remaining production forest, CO₂ tons = Actual merchantable volume m³ at the end of FY2019 x Biomass expansion factor (1+ Root shoot ratio) 1.7 x Wood density 0.5 ton/m³ x Carbon fraction of dry matter 0.5 x CO₂ conversion factor 44/12.
  Also, actual merchantable volume m³ at the end of FY2019 includes a biomass loss due to logging in FY2019.
• *6Net increment in carbon stocks, CO₂ tons = actual carbon stock at the end of FY 2019 - actual carbon stock at the end of FY 1989.