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 ten regions of six countries outside of Japan. Specifically, we own ~446k ha of production forests, which are mainly for producing wood in consideration of environmental conservation and ~129k ha of environmentally conserved forests, which are primarily for protecting biodiversity and basins. The total area of these forests is ~575k ha. In addition, we participate in forest certification programs¹ to manage forests appropriately for the environment, economy, and society. At the end of FY2021, 91% of overseas forest plantations and 100% of company-owned forests in Japan are certified (the achievement rate: 95%).

• 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. e.g., FSC™ and PEFC.

• 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 the human and labor rights protection, environmental and social risks, which the Oji Group Partnership Procurement Policy states, to reduce risk.

The Forest Resources and Environment Marketing Business Company of the Group is in charge of procuring raw materials for principal mills in Japan and Jiangsu Oji Paper, in addition to the management of the domestic and overseas forest plantation businesses mentioned above. The Forest Resources and Environment Marketing Business Company deliberates on essential issues on the forest plantation, pulp and energy business as well as raw materials procurement, which the Company is in charge of, in line with prescribed procedures e.g. its management meetings and decision/approval regulations. As for more essential ones, the Group Management Meeting deals with them. Further, the Forest Certification System Implementation Committee meets every year in attendance with the procurement departments of Group companies and the Corporate Sustainability Department (in charge of managing Group supplier risks) to share environmental and social issues of the supply chain, 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™ requirements³). Further, the Oji Group ensures the traceability⁴ 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 unique initiative of the Group.

The annual amount of recovered paper procured in Japan by the Forest Resources and Environment Marketing Business Company was 3.80 million tons in FY 2020. The recovered paper utilization ratio was 68.5% in FY2020 which was over 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 ~340 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 the industry organizations.
In fiscal 2020, the Oji Group's Paper and Paperboard production volume in Japan was ~ 5,329 kilotons (Paper: 2,284 kilotons, Paperboard: 3,046 kilotons), and the recovered paper utilization rate* was ~ 65% (Paper: 31%, Paperboard: 95%). As a result, we have confirmed that all of the Oji Group's Paper and Paperboard production volume in Japan meets the Oji Group's raw material procurement standards.

• *Recovered paper utilization rate: The blending ratio of recovered paper and fresh pulp from wood fiber varies depending on the paper variety and application.

• 2FSC™ 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 labor)
  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
• 3Traceability verification items;
  1. County 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 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 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 14,000 local people. Also, we provide owners of small scale forests with skill training, including forest plantation and management skills. (The area planted by owners of small scale forests is ~26,000 ha.) Further, forest plantation companies work with local governments, NGOs, and civic groups of the respective regions 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 which are caused by 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 stock⁴ in living biomass has reached a cumulative total of ~129 million tons CO₂ at the end of FY2020. And then, the net increment in carbon stocks⁴ was 935 kiloton/yr. -CO₂ in FY2020, and an average from FY2018 to FY2020 was 1,625 kiloton/yr.-CO₂.

• 4The actual carbon stock in living biomass was calculated based on the stock change method in the IPCC guidelines. And the net increment in carbon stocks was calculated based on the gain and loss method in the IPCC guidelines (CO₂ absorption by growth - CO₂ emission by felling).