Theme 1
SDGs and Sumitomo: Regional Revitalization

 One-point explanation
Established by the Japanese government and consisting of all ministers, the SDGs Promotion Headquarters formulated the SDGs Action Plan 2019 in 2018. This plan has three pillars corresponding to Japan’s SDGs model. Its second pillar is “regional revitalization and circular and ecological spheres.” This highlights the importance that the Japanese government attaches to the provision of support for regional innovation. In line with this trend, there are an increasing number of cases in which companies tie up with local governments and/or universities in the regions. It should be noted that the principal objective of such tie-ups is business acceleration, rather than social contribution.
Sumitomo Group companies’ regional revitalization initiatives are the practical expression of their resolve to address regional issues, such as employment and tourism, by applying their expertise and utilizing their networks, so as to expand regional revitalization through business. This trend is expected to accelerate.

Koichi Kozuka
Director, SDGs Design Center
Nikkei BP Consulting

Sumitomo Metal Mining Co., Ltd.

New plant in Fukushima creates employment opportunities, supporting reconstruction efforts in the disaster-affected areas

The Great East Japan Earthquake struck on March 11, 2011, not long after Nihon Kagaku Sangyo Co., Ltd. had held a ceremony marking completion of the construction of its Fukushima No.2 Plant at Naraha-machi, Futaba-gun, Fukushima Prefecture.

Sumitomo Metal Mining (SMM) wanted to increase production of lithium nickel oxide, a cathode active material used in rechargeable batteries, to meet rising demand. Lithium nickel oxide is a key material of the lithium-ion rechargeable batteries that power electric vehicles. SMM had been producing lithium nickel oxide at its Isoura Plant in Ehime Prefecture but the site was too small to accommodate the expansion plans. The vacant new Fukushima No.2 Plant caught SMM’s eye.

Sumiko Energy Materials Naraha Plant in Fukushima Prefecture.
Lithium nickel oxide manufactured by the new plant.

Not only would an additional production base enable SMM to disperse the supply risk, but its use of the new plant would also spur regeneration of Naraha-machi and the Fukushima Hamadoori area that had been affected by the Fukushima Dai-ichi nuclear accident. SMM established wholly owned subsidiary Sumiko Energy Materials to lease the Fukushima No. 2 Plant and ready it for mass production. The new company’s workforce was mostly recruited locally. SMM’s decision to open a plant in Naraha-machi was a deft move linking business development with regeneration of the stricken area.

Naraha-machi is near the Fukushima Dai-ichi Nuclear Power Station. It was designated an evacuation zone but the order was cancelled in September 2015 in view of the low radiation level. Anticipating this, SMM had been preparing to bring the new plant on stream in December 2015. However, SMM encountered many problems. No one had been to Naraha-machi since the accident at the nuclear plant. There were no shops selling food and public transport services were suspended. At first, it was difficult even to get bento lunches for the employees. But once the Japanese government decided to open an off-site center, which is a key facility in the event of a nuclear disaster, and a mock-up facility for research on decommissioning reactors, the situation changed. The infrastructure necessary for daily life is being deployed. SMM’s expertise in developing mines at overseas sites lacking infrastructure is proving very useful.

Everyone working at the new plant is delighted to be spurring the regeneration of Naraha-machi through the manufacture of environmentally friendly products. SMM’s vision of contributing to the local community, not least by making it possible for people to live their lives free of anxiety, is rapidly becoming reality as the plant continues to flourish.

Meticulous quality & safety management.

Sumitomo Rubber Industries, Ltd.

Protecting Kumamoto Castle far into the future with unique vibration control technology

In the Kumamoto Earthquake of April 14 and 16, 2016, Kumamoto Castle suffered substantial damage, affecting 13 important cultural properties. As befits the symbol of reconstruction, restoration of the keep is progressing rapidly.

In earthquake-prone Japan, the frequent occurrence of destructive earthquakes is a vivid reminder of the country’s seismic vulnerability. How best to prevent the collapse of buildings and infrastructure, and thus ensure the sustainability of communities, is a question that has long exercised the minds of people in Japan.

Commercialization of MIRAIE, a vibration control system for houses, is the fruit of six years of collaborative research with the Research Institute for Sustainable Humanosphere, Kyoto University. No houses equipped with MIRAIE collapsed in the Kumamoto Earthquake of 2016 or the Hokkaido Eastern Iburi Earthquake of 2018.

The head office and the factory of Sumitomo Rubber Industries in Kobe suffered considerable damage in the Great Hanshin-Awaji Earthquake of 1995. This experience strengthened the company’s resolve to contribute to the development of communities resilient to natural disasters. Leveraging the rubber technology the company had cultivated, principally through the development of tires, ever since its establishment, Sumitomo Rubber Industries released MIRAIE, a vibration control system for houses, in March 2012.

In terms of seismic countermeasures for houses, the mainstream approach had long been to endow them with “earthquake resistance” by strengthening the building’s structure to make it resistant to tremors. This approach, however, may be ineffective in the event of a powerful earthquake of 7 on the Japanese seismic intensity scale and collapse is a distinct possibility if repeated aftershocks occur. Meanwhile, “seismic isolation,” technology to keep tremors from reaching a building, became a focus of attention in the 1990s, but high cost prevented its widespread application to houses. Rather than earthquake resistance or seismic isolation, Sumitomo Rubber Industries focused on “vibration control” to absorb tremors, developing high-damping rubber that converts the kinetic energy of tremors into thermal energy. Capable of absorbing 95% of the vibration of an earthquake, MIRAIE has already been applied to 44,000 houses across Japan, achieving an outstanding track record of zero collapses due to earthquakes.

The vibration control technology of MIRAIE is also protecting important cultural properties, such as Goei-do (Founder’s Hall) and Otani Mausoleum at Higashi Honganji Temple in Kyoto. For Higashi Honganji, the restoration project’s target is durability for the next 200 years, which Sumitomo Rubber Industries expects its vibration control technology to satisfy.

The vibration control technology of MIRAIE is being used in the restoration of the keep of Kumamoto Castle. The Kumamoto Earthquake of 2016 was the first in Japan for which scale 7 tremors were recorded twice. Despite the earthquake’s destructive power, none of the 132 MIRAIE-equipped houses near the epicenter collapsed or suffered major damage.

Noting the impressive performance of MIRAIE, Obayashi Corporation, the contractor for the Kumamoto Castle keep restoration project, approached Sumitomo Rubber Industries and decided to adopt MIRAIE technology for the castle keep.

For historic buildings such as castles, temples, and shrines, the vibration control structure should be inconspicuous, so as not to compromise the aesthetic appeal of the architecture, and not impede the flow of visitors. In view of these constraints, Sumitomo Rubber Industries’ compact and lightweight vibration control dampers are ideal. They are also low-cost and require no maintenance for a long time. These advantages proved decisive in the decision to install MIRAIE for the top floor of the large keep in 2018 and for that of the small keep in 2019. MIRAIE will continue to support the integrity of Kumamoto Castle, the glorious symbol of the region, far into the future.

Sumitomo Rubber Industries intends to promote the application of vibration control technology for historic structures since if such traditional buildings sustain severe damage, their repair and restoration poses great challenges in terms of both technology and cost. Moreover, the company is receiving an increasing number of inquiries from other earthquake-prone countries. Going forward, Sumitomo Rubber Industries relishes opportunities to endow buildings with resilience to disasters while also contributing to sustainable regional development.

The vibration control systems installed at the small keep. Without compromising spaciousness, four units installed at the top floor of the small keep and twelve units installed at the top floor of the large keep will provide vibration control even in the event of repeated tremors.

Sumitomo Mitsui Card Co., Ltd.

Diffusion of cashless payment system supporting sustainable regional development

Credit cards are the most widely used cashless payment method in Japan. According to the Ministry of Economy, Trade and Industry, credit cards account for 90% of cashless settlement. However, many small businesses, including numerous retailers, have yet to introduce credit card payment services, and this is particularly so in the regions. The Japanese government is promoting cashless payment. For its part, Sumitomo Mitsui Card Company is pursuing an initiative to broaden the base for cashless payment by providing a service that greatly facilitates small and medium-sized businesses’ introduction of credit card payment, which will contribute to regional revitalization.

Far more than a payment device, Square offers a range of services that support small and medium-sized businesses, including POS register and staff management as well as functions utilizing the gathered data.

In March 2019, Sumitomo Mitsui Card Company has announced the strengthening of its partnership with Square, a U.S. payment services provider. Ever since the two companies formed a capital tie-up in 2012, they have been collaborating on provision of payment services in Japan. Conventionally, in Japan it takes about a month for a business to introduce a credit card payment service—from filing of an application to a credit card company, screening, and installation of a payment device to the start of the service. In addition, devices are relatively expensive and the cash conversion cycle is long, making small and medium-sized businesses reluctant to introduce a credit card payment service.

In contrast, with Square, filing an application and screening are completed online, and processing is so fast that a business may even be able to start using the service on the day of submitting the application, and moreover the device is inexpensive. Thus, the burden on enterprises is minimal. Cash is deposited on the next business day at the earliest. In these ways, Square resolves various issues associated with the traditional credit card payment services. Eyeing Square’s potential to trigger broadening of the base for cashless payment because of the ease of introduction, Sumitomo Mitsui Card Company has strengthened the partnership with Square. Moreover, it is working to accelerate the diffusion of Square solutions through a campaign offering the latest device, released in March 2019, free of charge and has been showcasing Square’s capabilities at Sumitomo Mitsui Banking Corporation branches throughout Japan since April 2019.

Stylish design blends with the ambience of bookstores, beauty salons, cafés, or indeed any stores with distinctive décor.

Ease of introduction is just one of the advantages of Square. Staff at stores can operate Square devices via an app on a smartphone or a tablet, and no particular skills are required. The compact, stylish Square devices blend with store décor. The latest device supports contactless payment* by contactless smart cards of major international credit card brands, such as Visa and Mastercard, and will support for domestic electronic money in the future. Customers can pay just by waving their card over the device. In addition to the settlement service, Square is also known for its sales management functions.

It is also noteworthy that Square can make life a lot easier for inbound tourists. In a world where contactless payment by international card brands is becoming mainstream, Square allows foreign tourists to pay in the same way they are familiar with in their own countries, enabling businesses not only in cities but also in the regions to capture the vigorous demand of foreign tourists. In cooperation with regional financial institutions, Sumitomo Mitsui Card Company has also established a system for face-to-face consultation with businesses. The company intends to contribute to sustainable regional development by supporting businesses in the regions with the Square solution meeting the needs of inbound tourists.

Square supports major international credit card brands (magnetic stripe cards, contact smart cards, and contactless smart cards). By responding to the needs of cashless payment users in Japan, including foreign tourists, Sumitomo Mitsui Card Company, through its tie-up with Square, is making a great contribution to the promotion of cashless payment not only in cities but also in the regions.

*Contactless payment services based on ISO 14443 Type A/B international standard communication protocol

Sumitomo Mitsui Finance and Leasing Co., Ltd.

Supporting agriculture-based community development through investment in wineries that create added value

In regions where agriculture is the principal industry, the average age of farmers is rising and their numbers are declining while the area of abandoned farmland is increasing. Even if a region wants to leverage its strengths, such as its pristine natural environment, culture, and notable local products, it is difficult to achieve revitalization by solely relying on agriculture oriented toward local production and local consumption. Like many other communities in rural Japan, the towns of Niki and Yoichi, situated at the base of the Shakotan Peninsula in Hokkaido, are wrestling with these issues. In 2015, a Tokyo-based company established an agricultural corporation and began initiatives to revitalize the region through the “sixth industrialization*” of the agricultural sector centering on wine. Attracted by the potential of these initiatives to lead to a flourishing business, Sumitomo Mitsui Finance and Leasing (SMFL) is participating in this venture as part of its efforts to stimulate regional revitalization.

The NIKI Hills Winery aims to popularize wine tourism among wine lovers in Japan and overseas, envisaging over 100 wineries in the region 20 years from now.
Tipping grapes into a winepress. Equipment for the winery is leased from SMFL.

SMFL has been supporting regional revitalization through leasing, its core business. But breaking new ground, SMFL is involved in this project in Hokkaido as a business partner and investor. As the project is still in its infancy, it is difficult to secure funds from financial institutions. Recognizing the project’s business potential and the value it could deliver to the region, SMFL took an equity stake in NIKI Hills Village (NHV) and became a business partner of NHV, which is championing the Yoichigawa Wine Valley Concept to invigorate the region, with wineries proliferating in and around Niki Town.

NHV has its sights set on the “sixth industrialization” of the agricultural sector not only by viticulture and winemaking but also through production of other agricultural produce, such as apples, food processing, and sales, and seeks comprehensive regional vitalization, also by promoting wine tourism. The NIKI Hills Winery in Niki Town includes a hotel and a restaurant. NHV is already shipping wine, which is on the wine lists of luxury hotels in Japan and on Japanese cruise ships and moreover has won awards at competitions in Japan and overseas. Whereas regional revitalization tends to be oriented toward local production and local consumption, NHV is vigorously pursuing promotion beyond the region, endeavoring to create added value. Sharing NHV’s aspirations, SMFL evaluated the commercial potential of the market for Japanese wine, performed due diligence, reviewed the structure of support by local government and other companies, and decided to invest in the business.

The NIKI Hills Winery held a grand opening in July 2019. Around 10 wineries are already in operation or are about to open in the neighborhood, creating employment, and as the attractiveness of the region gains wider recognition, the number of people relocating from other regions is increasing. Noting the region’s potential to become Japan’s foremost wine producer and for Yoichigawa Wine Valley to gain traction as a powerful brand, SMFL is providing leasing and other financial services not only to NHV but also to other businesses in the area. SMFL’s continuing support reflects its desire to share the delights of wine from Niki and Yoichi with wine lovers throughout the world.

Left: Based on the Yoichigawa Wine Valley Concept, NHV is emphasizing creation of employment and fostering of new farmers while promoting co-prosperity with local agriculture. Two photos on the right: The winery includes a restaurant and accommodation, with much of the equipment leased from SMFL.

* The sixth industrialization is an initiative pursued by the Japanese government for the comprehensive and integrated promotion of agriculture, forestry and fisheries (primary industry); food processing (secondary industry); and food retailing (tertiary industry) (1 x 2 x 3=6). The aim is to create added value by leveraging the abundant local resources of rural communities.
Source: Website of the Ministry of Agriculture, Forestry and Fisheries of Japan