P.41 Sustainability Management (Climate Change Initiatives)

41 02. Foundations for Accelerating Transformation

Climate change｜ https://sumitomocorp.disclosure.site/en/themes/24 ▶

Sustainability Management

Climate change initiatives

The Groupʼs path to carbon neutrality

Attaching importance to the global consensus reflected in the Paris Agreement, we established our Policies on Climate Change Issues to actively promote the Agreementʼs objective of building a carbon-neutral society. Guided by these policies, we are advancing various business activities. The policies clearly state our commitment to an early exit from coal-fired power plants and coal mine development projects in anticipation of energy transition. Regarding natural gas, they also clarify that we will engage only in projects that contribute to societyʼs energy transition. In 2025, we completed the calculation of Scope 3 emissions across all categories of our supply chain and obtained third-party assurance. To prepare for the adoption of the SSBJ Standards, we also updated the scope of the Groupʼs carbon neutrality targets defined in the above policies in February 2026 to align with the GHG Protocol. Under the updated scope, the Groupʼs carbon neutrality target covers Scope 1 and Scope 2 emissions from Sumitomo Corporation and its subsidiaries, together with Scope 3 Category 13 (Downstream Leased Assets) and Category 15 (Investments). Thermal power generation business and fossil fuel upstream business are also included within the target boundary. We also revised the baseline year and the FY2035 interim emission reduction target to reflect the updated scope.

Updated carbon neutrality targets (set in February 2026)

Total: 45 million t-CO2e Reduce 30% or more overall Achieving carbon neutrality

Supporting societyʼs transition to carbon neutrality

Regarding one of its Material Issues, “Overcome climate change,” the Group has established “Contribute to carbon neutrality of society” as a long-term goal. Guided by this goal, we are engaged in a broad range of businesses that support the transition to a decarbonized and low- carbon society. In the short term, we are leveraging green transformation (GX) to further enhance businesses where we already have strengths and competitive advantages. At the same time, we are working across a wide range of industries to build new sources of competitive advantage over the medium to long term. For example, the Energy Innovation Initiative SBU within the Energy Transformation Business Group, which leads our cross-functional efforts to create energy and decarbonization businesses, has identified three strategic focus areas: Developing carbon-free energy, Expanding power and energy services, and Carbon management. Through these initiatives, we are expanding existing businesses and creating new ones across a range of time frames, from those expected to generate returns in the near term to those with medium- to long-term growth potential. In FY2025, we continued to quantify our avoided emissions and disclosed the results for our renewable energy businesses. We use the avoided emissions as a metric to visualize the Groupʼs contribution to societyʼs transition to carbon neutrality. We also utilize it in internal discussions.

Avoided emissions from renewable energy businesses

We set a policy of continuously shifting to a power generation portfolio with lower environmental impact, and since the 2000s we have continuously engaged in the development of renewable energy projects, mainly wind power generation projects. (As of March 31, 2026, our net ownership generation capacity for renewable energy projects was approximately 2 GW). Our avoided emissions (stock basis) from the operation of our renewable energy businesses in FY2025 are shown below.

Photo credit: @EMYN - Christophe Beyssier