Effective Use of Resources

Effective Use of Water Resources

Good quality and sufficient quantities of fresh water are essential for our business activities, including the manufacturing of pharmaceutical products. As problems related to water resources are becoming increasingly serious worldwide, Sumitomo Pharma has set a Mid- to Long-term Environmental Goals of "reducing water withdrawal by 12% from fiscal 2018 level by fiscal 2030," in order to use water resources in a sustainable manner. Moreover, we believe that reducing water withdrawal leads to the protection of water sources and it is therefore an activity that indirectly contributes to the conservation of biodiversity.

We manage the water withdrawal and discharge at all of our establishments, excluding branches and business offices. In fiscal 2022, in order to reduce and effectively utilize the amount of water required for cooling air conditioners, we have adjusted the operating hours of air conditioners.

For more information on details of the progress of the Mid-term Environmental Goals, please see "Environmental Goals and Performance."

We will continue our efforts to reduce water withdrawal through pursuing greater efficiency in water usage and water saving measures.

Water Withdrawal and Breakdown by Withdrawal Source

Transition of Water Withdrawal

Water Withdrawal by Source

Boundary of calculation: Consolidated basis (Sumitomo Pharma Co., Ltd., consolidated subsidiaries in Japan, overseas consolidated subsidiaries) However, small offices such as branches and business offices are excluded. In addition, overseas consolidated subsidiaries that do not have production sites or major research facilities are excluded from the scope because they have only small offices.

For more information on the details of the calculation criteria, please see "ESG Data Table."

Water Discharged and Breakdown by Discharge Destination

Boundary of calculation: Consolidated basis (Sumitomo Pharma Co., Ltd., consolidated subsidiaries in Japan, overseas consolidated subsidiaries) However, small offices such as branches and business offices are excluded. In addition, overseas consolidated subsidiaries that do not have production sites or major research facilities are excluded from the scope because they have only small offices.

For more information on the details of the calculation criteria, please see "ESG Data Table."

Addressing Water Risks

As concerns about water risks increase worldwide, the Group regularly assesses risks pertaining to current and future water stress, vulnerability of the downstream environment and water disasters at our domestic and overseas production and research sites using databases such as Aqueduct, the water risk assessment tool of the World Resources Institute (WRI), and the Integrated Biodiversity Assessment Tool (IBAT), which measures biodiversity risk. We used the Intergovernmental Panel on Climate Change (IPCC) Representative Concentration Pathways (RCP) 8.5 scenario (the high-level reference scenario) for simulations to predict future river basin water supply volumes. In addition, through interview surveys of staff at our production and research sites and other methods, we have studied water-related problems that have actually occurred at each site in the past as well as future region-specific issues. Based on a comprehensive analysis of these findings, we consider that current water risks at our production and research sites are relatively low.

For water withdrawal from production and some research sites, we are preventing environmental pollution by setting voluntary standards that are even stricter than the environmental standards specified in the Water Pollution Prevention Act.

For water risks and water-related opportunities associated with climate change, conducting detailed analysis and assessments in accordance with the TCFD recommendations, we will pursue specific initiatives to reduce water risks.
For more information on the details of water risks and water-related opportunities associated with climate change, please see "Information Disclosure Based on TCFD Recommendations (Response to Climate Change)."

Also, as part of our supply chain risk management, we have been carrying out water risk assessments using Aqueduct, starting with raw material manufacturers and contract manufacturers for key products. Going forward, we will deepen communication with our suppliers and other business partners based on the "Sustainable Code of Conduct for Business Partners."

Results of water risk assessment using WRI Aqueduct (Target; our group production and research sites)

Water Stress Assessment (Fiscal 2022)

Risks and Opportunities due to Water-related Problems

Risk factor		Details	Impact
Regulatory risks	Restrictions on water withdrawal	Additional expenses to be incurred to secure the various types of water required for our business activities	Increase in capital expenditure and operating costs
	Strengthening of wastewater standards	Additional expenses to be incurred to bring our wastewater up to the water quality that can be safely discharged
Physical risks	Increase and intensification of natural disasters (torrential rain, flooding, etc.)	Suspensions and delays in product supply due to damage at facilities (our own facilities and those in the supply chain) involved in our business activities and changes in water supply and demand. There may also be delays in research and development.	Decrease in revenue Loss of business opportunities
	Reductions in water withdrawal, deterioration in water quality	Additional expenses to be incurred to secure the volume and quality of various types of water required for our business activities	Increase in capital expenditure and operating costs
Reputational risks	External evaluations	Low external evaluations due to lack of water-related activities or information dissemination to lower corporate value	Decline in stock price

Opportunity factors		Details	Impact
Regulatory opportunities	Restrictions on water withdrawal	Realizing effective use of water resources through water recycling and reducing water withdrawal to enable reductions in water-related costs	Reduction in operating costs
Physical opportunities	Increased risk of infectious diseases due to deterioration in quality of water resources	Providing existing pharmaceuticals and developing new drugs and vaccines to contribute to preventing and treating infectious diseases	Increase in business opportunities and revenue
Reputational opportunities	External evaluations	Achieving reduction in water risks to increase our sustainability and corporate value	Rise in stock price

Reduction of Waste

To make effective use of limited resources, Sumitomo Pharma continues to actively practice the "3Rs" of waste management (reduce, reuse, recycle) under the Mid- to Long-term Environmental Goals.

In fiscal 2022, we achieved the target of maintaining the final amount of waste disposed of in landfills at less than 0.5% of the generated amount under the Mid-term Environmental Goals. However, we were unable to achieve the Mid-term Environmental Goals' targets for recycling rates due to the impact of a decrease in the generation of waste oil with a high recycling rate caused by fluctuations in production volume.

For more information on details of the progress of the Mid-term Environmental Goals, please see "Environmental Goals and Performance."

Going forward, we will actively pursue recycling through thorough waste separation, conversion of waste into valuable resources and outsourcing to waste disposal companies who are capable of recycling.
We also promote the following actions:

• Elimination of plastic bottles from all vending machines in all business sites as part of our effort to do away with plastic bottles
• Sale of lab equipment no longer in use due to obsolescence for the purpose of reusing it
• Participation in a recycling initiative using the material recycling platform operated by Askul Corporation in which used plastic folders are collected at all business sites for recycling

Waste-related Indicators

Boundary of calculation: Sumitomo Pharma Co., Ltd. only (branches and business offices are excluded)

Compliance with Japanese PCB Law

We sequentially dispose of polychlorinated biphenyls (PCB) waste from equipment such as transformers, capacitors and fluorescent lamp ballasts that use PCBs at each workplace in accordance with the Act on Special Measures concerning Promotion of Proper Treatment of PCB Wastes. All disposal of high concentration PCB waste has been completed.

We will continue to perform proper management and storage of low levels of PCB-containing waste until such time that they can be processed by specialized contractors under the law.

PCB management status	As of September 2023
Waste containing high levels of PCB in storage	0 units
Waste containing low levels of PCB in storage or in use	4 units

Recycling of Product Containers and Packaging Materials

In accordance with the Containers and Packaging Recycling Act, Sumitomo Pharma recycles some of the containers and packaging materials used for our products.
Going forward, we will also fulfill our obligation to recycle containers and packaging, and actively work on reducing the amount of packaging materials used and replacing them with renewable resources.

Product Packaging Material Usage, Outsourced Recycling Amounts^* (Fiscal 2021 results)

Product packaging materials	Usage (t)	Outsourced recycling amount (t)
Plastic	354	107
Glass (brown)	38	14
Paper	234	4

Total cost of outsourced recycling: 6,422,000 yen

• *Outsourced recycling amounts are calculated based on coefficients for calculating mandatory recycling amounts determined by the Japanese Government.

Reduction of Chemical Substance Emissions

Chemical substances frequently handled in Sumitomo Pharma include toluene, methanol and acetone. These chemical substances are used primarily as solvents and in almost all cases are ultimately disposed of as waste oil or other waste products. We are taking proactive measures to deal with volatile solvents, such as dichloromethane, by installing recovery equipment to prevent leakage into the atmosphere. All of our workplaces subject to reporting under Japanese Act on Confirmation, etc. of Release Amounts of Specific Chemical Substances in the environment and Promotion of Improvements to the Management Thereof (PRTR Law) submitted appropriate reports based on results in fiscal 2022.

Sumitomo Pharma reports properly in accordance with Japan's Water Pollution Control Act and other laws and regulations. We continuously monitor wastewater through routine inspections and other means, while also working to strengthen our monitoring system by formulating measures to prevent pollution caused by toxic substances.

For more information on details of the progress of the Mid-term Environmental Goals, please see "Environmental Goals and Performance."

Chemical Substance Emission Related Indicators

Development of Environmental Conservation Systems

Green Procurement

Green Logistics

Green Product Development

The Company has set out Green Product Development Rules and Manuals, and our Technology Research and Development Division and Manufacturing Division promote green product development accordingly.
In fiscal 2022, we implemented 37 initiatives, including transitioning to use of continuous flow chemistry for manufacturing and the application of a high-speed method for LC analysis to reduce the impact on the environment, prevention of NOx gas generation (the Technology Research & Development Division), streamlining test method development processes and establishing effective test methods, reduction of helium gas, and diversion of organic solvents (Suzuka Plant).

Green Facilities Design

Our Manufacturing Division, research laboratories and Osaka Head Office are engaged in the promotion of green facilities design.
In fiscal 2022, we implemented 16 initiatives, including introducing automatic powder characteristics analyzers, updating hot water piping (Suzuka Plant), updating air conditioners (Central Research Laboratories), and switching to LED lights (Oita Plant, Central Research Laboratories).