The Oji Group requires and verifies that all suppliers produce sustainable wood raw materials. We will implement responsible procurement by surveying wood raw materials from all suppliers to ensure traceability and only purchasing materials from properly managed forests. If the source or forest management status of the purchased wood is unknown or the wood does not conform to the following, we will engage in dialogue with the supplier and request improvements. We will not source from suppliers who do not make improvements.

1. Raw materials production area (logging area, forest ownership form, differentiation between plantation wood and natural forests)
2. Forest management method (applicable forestry laws, forest management regulations)
3. Acquisition status for forest certification
4. Avoidance of illegal logging (verification of forest certification, harvest permits, records of round logs received.)
5. Avoidance of genetically modified (GMO) wood
6. Avoidance of logging in High Conservation Value (HCV) Forests
7. Avoidance of raw materials associated with major social conflicts
8. Ensuring the protection of human rights and labor rights

We will also utilize forest certification systems FSC^™ or PEFC for verification. We will conduct the survey for imported wood chips on a per-ship basis. Domestic woodchips and pulp, which purchasing volume is smaller, will be surveyed once a year.

Under the guidelines for procurement of raw materials, we have established items to check the origin of raw materials, forest management methods, whether there is any illegal logging or mixed input of timber from high conservation value forests, and whether there is any infringement of human rights, among others.

We procure only raw materials from properly managed forests, with a requirement to check for illegal logging, infringement of human rights, and other criteria. Furthermore, we can trace back the origin of wood materials through the entire process from the forest of origin to the chip mill to the pulp and paper mill.

We monitor all suppliers of wood raw materials for compliance violations and disclose the results of our audits. In FY 2023, we procured 4,453 thousand BDT (dry weight tons) of domestic and overseas chips and 146 thousand ADT (wet weight tons) of purchased pulp, and we have received traceability reports (the response rate is 100%) from all suppliers (318 wood chip suppliers / 22 pulp suppliers inside and outside of Japan) to confirm that the procurement is in line with the procurement guidelines for wood raw materials by a third-party organization's audit.

We have representatives in major countries from which it imports wood chips. These representatives inspect shipments, advise suppliers regarding quality, and meet with them. When wood chips are loaded onto a ship, the origins of the raw materials, forest management methods, and other details are confirmed, and a traceability report is prepared. We verify that its suppliers maintain forest certifications, logging licenses, and records of round wood received.

As for domestic wood chips, we have representatives in major cities across Japan who meet with suppliers. The origins of raw materials, forest management methods, and other details are confirmed, and traceability reports are prepared regularly.

If we discover any non-compliance cases with standards such as forest certification or wood raw material procurement guidelines, we will communicate with the supplier and request improvements. We will not source from suppliers who do not make improvements. And we will provide relevant information and best practice examples for such suppliers so that "suppliers are aware of the requirements they must meet and work to comply with certification standards and relevant laws and regulations."

At the Oji Group, we conduct annual visits to our local suppliers to ensure they are adhering to our wood procurement guidelines. During these visits, we verify logging permits, review relevant documents, and inspect the actual logging sites and forests. This monitoring allows us to confirm traceability and maintain compliance. Through these efforts, we also build strong, positive relationships with our suppliers.

In March 2018, the Oji Group completed its registration as a Class-1 and Class-2 Registered Wood-Related Business Operator, which is stipulated in the Act on Promoting the Distribution and Use of Legally Harvested Wood (commonly known as the “Clean Wood Law”)^*1 that came into force in May 2017. When we procure wood raw materials or biomass fuels in the future, we will verify the legality of the procurement by conducting due diligence to prove the legality^*2 by working together with the Japan Paper Association.

• *1Aimed at encouraging the distribution and use of wood harvested in compliance with the laws and regulations of Japan or countries of origin and products made using such wood, this law stipulates the measures to be taken by wood-related business operators and the government of Japan, as well as the scope of the subject wood, etc. and wood-related business operators, method of registration, and other aspects. This law is therefore aimed at controlling the illegal harvesting of wood, which is an international problem.
• *2The due diligence for proving legality refers to minimizing the legal risks involved with wood through the following three processes.
  1. Collecting information about tree species, the country/region where the wood was harvested, and logging certification based on laws/regulations
  2. Risk assessment based on the information collected (initial risk assessment and detailed risk assessment)
  3. Measures for alleviating risk, including on-site investigations and the replacement of suppliers
     Where the risk is deemed high even after measures for alleviating it have been implemented or where it is impossible to take the measures, we refrain from purchasing the wood because there is a high risk that it is illegal wood.