Woodchip procurement volume in FY2019 was 4.83 million BDT (bone dry tons). Of that amount, 85% was imported. The Group obtained a total of 1,105 traceability reports including 492 on the entire volume of domestic woodchips, 217 on imported woodchips covering all ships, and 396 on the entire volume of purchased pulp, verifying that the Group conducted procurement in accordance with the Wood Raw Material Procurement Guidelines.
We explain to all our new suppliers the Oji Group Partnership Procurement Policy, the Wood Raw Material Procurement Guidelines, and that there is an obligation to submit the traceability report, and conduct the risk assessment based on the requirements of the traceability report.

The Oji Group also manufactures FSC™ certified products^*1 using woodchips that meet the requirements of FSC™, such as FSC™ certified wood and controlled wood^*2. Controlled wood must meet five requirements^*3 to be used as FSC™ certified products (such as FSC™ Mix label), which overlap with the Wood Raw Material Procurement Guidelines.
Suppliers with FSC™ CoC certification must be audited by a third party, and by utilizing these certification systems it is possible to ensure wood raw material traceability and the management systems (such as internal training) of suppliers. The results of these audits are available for confirmation on the website.

• *1FSC™ License code: Oji Paper Co., ltd; FSC™ C014119, Oji Nepia Co., ltd: FSC™ C018118
• *2Controlled wood: Controlled wood is not FSC™ certified wood, but can be mixed with FSC™ certified material in products that carry the FSC™ Mix label. Controlled wood be certified by a third-party organization after risk assessment on five requirements^*3 stipulated by FSC™ certification bodies. Organizations (suppliers) that have obtained controlled wood certification are obliged to conduct risk assessment and undergo an audit by a third-party certification body every year.
• *3Five requirements: Meeting these requirements means not coming under, or being confirmed to be unlikely to come under, any one of the five categories below.
  1. Illegally harvested wood
  2. Wood harvested in violation of traditional and human rights
  3. Wood harvested in forests in which high conservation values (HCVs) are threatened by management activities (HCVs are areas particularly worthy of protection.)
  4. Wood harvested in forests being converted to plantations or non-forest use
  5. Wood from forests in which genetically modified trees are planted

The Oji Group visits local suppliers on a timely basis every year to check logging permits and related documents and inspect the actual logging areas and forests. We thus monitor the status of their compliance with the Wood Raw Material Procurement Guidelines and validate the traceability. Through these monitoring activities, we have built good 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 “Green 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.