Hitachi, Ltd. today announced that in fiscal 1999 the company introduced an environmental
accounting system designed to enable continuous improvement of the effectiveness of the
Company's environmental investments and activities. This system provides a quantitative
assessment of the cost-effectiveness of environmental activities. According to the system,
during the first year of implementation, expenditures on environmental activities amounted
to 26.70 billion and investment to 6.76 billion, and the economic effect came to 4.16 billion.
Hitachi has long been an environmentally aware company with respect to its products and
manufacturing activities, and has developed many products and systems for environmental
applications. To strengthen environmental management by the Hitachi Group, in April 1999
an environmental executive council was instituted to formulate environmental top
management policies, and a system, called "GREEN 21," was set up to evaluate the Group's
environmental activities. In accordance with Green 21, a points system is used to rate the
degree of environmental policy development, energy saving, recycling measures, the
implementation of product assessment and other such aspects of corporate environmental
activities, with the aim of improving the environmental management of the Hitachi Group.
For the first year of operation of the environmental accounting system, data was compiled
on an unconsolidated basis.* In addition to plant and equipment investment related to
environmental activities announced since fiscal 1997, costs encompassed ordinary
expenditure items such as R&D expenditure and the cost of operating and managing
environmental conservation plant. The effectiveness was established based on an economic
result, assessed in terms of monetary value, and a quantitative effect, assessed in terms of
the degree of environmental load abatement. The economic effect was based on reliable
grounds. The quantitative effect was calculated not only on the basis of the degree of
environmental load abatement during the manufacture of a product but also during the use
of the product. Eco-efficiency was also assessed, in terms of the decrease in cost per
environmental load item.
Looking to the future, the data used will be drawn from an increasing number of Hitachi
Group companies, and will be made more comprehensive, and more details of the data will
be disclosed. Hitachi intends to use the implementation of the environmental accounting
system to promote eco-efficiency in its environmental activities and contribute to society by
balancing corporate growth with environment protection.
*: Environmental load data includes data from some affiliated companies managed on an
integrated basis in business establishments of the parent company.
1. Environmental endeavors to date
(1) Environmental consciousness in production --- Reducing environmental load during
production
(2) Environmental consciousness in products --- Reducing environmental load resulting
from the use and disposal of products.
(3) Environmental business --- Development and marketing of environmental
conservation products and systems
2. Aim of introducing environmental accounting
(1) To promote improvement and efficiency of environmental investment and
environmental activities
(2) Information disclosure
- Management resources allocated to environmental activities
- Information on environmental technology and products
3. Environmental accounting approach and concept
- Hitachi decided to introduce the environmental accounting system last July.
Environmental accounting items and methods were studied, using projects of the
financial and environmental divisions. During this time, Hitachi also took part in an
environmental accounting study group set up in June last year by the Environment
Agency.
- Hitachi views the environmental accounting system as a means of improving the
company's eco-efficiency and achieving efficient environmental management.
Hitachi intends to use the system to help fulfill its responsibility as a corporate
citizen by balancing corporate growth with environment protection.
4. Scope of cost-effectiveness concerned
(1) Cost:
- Total of investment amounts and expenses (including depreciation) related to
environmental activities.*1
(2) Effect
- The economic effect (in monetary terms) obtained as an enterprise, from the
environmental activities*1
- The environmental load abatement effect (in quantitative terms) during production*1
- The estimated effect (in quantitative terms) of the abatement in the impact that use
of products has on the environment*2
*1: In compiling and classifying data, reference was made to the Environment
Agency guidelines relating to establishing and disclosing environmental
conservation costs (issued March 1999), and to the studies by the
environmental accounting study group.
*2: Hitachi used its own system to estimate the abatement effect under
conditions of standard use.
5. Scope of data
Data was compiled based on the unconsolidated results of Hitachi, Ltd. for the fiscal
years 1998 and 1999. (Environmental impact data includes data from some affiliated
companies managed on an integrated basis in business establishments of the parent
company.)
6. Future approach to environmental accounting
- Environmental accounting will be applied in an increasing number of Hitachi Group
companies.
- There will be increasing disclosure of data relating to the contribution that products
make to the abatement of environmental impact.
7. Environmental accounting results
(1) Fiscal 1999
- In fiscal 1999, expenditures and investment related to environmental activities came
to 26.70 billion yen and 6.76 billion yen, respectively, and the economic effect was
4.16 billion yen.
R&D expenditures (11.14 billion yen) accounted for 42% of the total. The steps
involved in designing a product to reduce its environmental impact are also
calculated for inclusion in the stated R&D expenditures.
- The decrease in energy used (165 million kWh) during the use of products was
nearly twice the amount of the decrease (94 million kWh) during production.
(A) Cost
(a) Cost:26,700 (in millions of yen)
1) Environmental impact abatement during production: 9,770
Cost of maintaining environment-related equipment; depreciation expenses
2) Environmental impact abatement upstream and downstream of production:1,800
Cost of green procurements ; Cost of collecting and recycling products and
packaging;
3) Management activities:2,610
Environmental management personnel costs; environmental management operating
and maintenance costs
4) R&D activities:11,140
Cost of R&D, planning and design related to reducing environmental impact of
products and manufacturing processes
5) Community-oriented measures:1,060
Cost of beautification and other environmental improvements and PR
6) Other costs :330
Other costs for environmental conservation
(b) Investment total:6,760
Investment on energy-saving equipment and plant and equipment for reducing the
environmental load
(B) Effect (in millions of yen)
(a) Economic effect: 4,160
1) Effect on actual income:1,100
Profits on sale of waste and recycled goods
2) Cost reduction effect:3,060
- Cost reductions from energy savings and reduced cost of waste processing
(b) Quantitative effect (Reduction amount and equivalent number of households)
1) Reduction in energy used during production: 94 Million kWh / 27,000 households
- Reduction in amount of energy used as result of installing energy-saving equipment
2) Reduction in amount of final processing of waste during production: 792t / 3,000
households
- Reduction in amount of final processing as a result of sorting and recycling
3) Reduction in energy used during use of products: 165 Million kWh / 48,000
households
- Reduction in energy used during use of Hitachi products by customers
Note 1: Depreciation of plant and equipment and the effect thereof
- Depreciation of investment in plant and equipment is calculated by
the straight-line over 5 years.
- The effect of investment in plant and equipment is also calculated
on a 5-year basis.
Note 2: Economic effect categories/items
(1) Actual income effect: The effect in the form of actual income from
sale of assets, environmental technology patents, etc.
(2) Cost reduction effect: The effect in the form of decreases in
electricity charges, waste disposal expenditures and other such
expenses resulting from activities to reduce the environmental
burden.
(C) Eco-efficiency
- This shows the decrease in cost for each environmental load item
1)Amount of energy used
Amount of decrease: 94 million kWh
Reduction in expenses: 1.14 billion yen
Environmental burden reduction efficiency: 8.2 million kWh/100 million yen
2)Amount of waste processed
Amount of decrease: 792 t
Reduction in expenses: 1.23 billion yen
Environmental burden reduction efficiency: 64 t/100 million yen
(D) Sales of environmental conservation products and environmental conscious products
1) Environmental conservation products:
Sales: 8,100 million yen
Percentage of total sales: 0.2%
- Products, such as waste disposal systems, produced principally for
environmental conservation/protection applications.
2)Environmental conscious products
Sales: 1,018,700 million yen
Percentage of total sales: 27%
- Products designed to have a reduced impact on the environment such as by
using less energy (designated based on Hitachi criteria).
(2) Results of environmental accounting (in billions of yen)
(a) FY 1998
Cost:28.25 Investment:5.65 Economic effect:3.69
(b) FY 1999
Cost:26.70 Investment:6.76 Economic effect:4.16
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