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FY2001 Ricoh Group Environmental Accounting
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| Basic Concept for Environmental Accounting |
| Establishing an Environmental Accounting System |
The Ricoh Group is making continuous efforts to establish a sustainable management that will help it to survive the current prolonged business competition. The Ricoh Group first reorganized and defined its idea of sustainable management and then examined indicators used to evaluate and analyze the level of sustainable management. At present, a new environmental accounting (environmental management accounting) framework is under consideration to be used as a tool to measure and manage environmental management indicators by product unit and function (division). All information obtained is consolidated under this environmental management information system.
- Environmental Management Indicators
- Environmental management indicators are needed to appropriately evaluate the level of sustainable management and facilitate further improvement. To this end, the indicators should be set based on the three factors shown below.
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| (1) |
Economic Benefits of Environmental Conservation Activities |
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This factor shows how economically rational environmental conservation activities are. |
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If the quotient is one or greater (i.e., the economic benefits are equal to or greater than the environmental costs), then sustainable management is considered valid. |
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If the quotient is one or greater (i.e., the sum of economic benefits and social cost reduction is equal to or greater than the environmental conservation costs), then environmental management is considered valid. |
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This equation is used to evaluate improvements in the efficiency of investments and other projects. |
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| (2) |
Environmental Efficiency of Business Activities |
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This factor shows whether the environmental impact of business activities is acceptable and whether those activities respond to social requests. |
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This equation is used to evaluate whether environmental impact corresponds to business size. |
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This equation is used to evaluate whether profit corresponds to environmental impact. |
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| (3) |
Environmental Management |
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This factor is used to determine whether the environmental management process is appropriate. |
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In-house audits, site reports, environmental technology development process, environmental labels, green purchasing, and other aspects are included. |
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- Environmental accounting needs to work as a tool to measure the economic efficiency of environmental conservation activities and the environmental efficiency
of business activities mentioned above.
Corporate environmental accounting works as a tool to measure the economic efficiency of environmental conservation activities and environmental efficiency of business activities of the company as a whole.
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| Indicators of Environmental Accounting |
- Development of Indicators
- The Ricoh Group set indicators to evaluate, analyze, and disclose the environmental conservation efficiency of business activities individually and as a whole.
Such indicators as the eco-efficiency (EE) value and eco-ratio were once used mainly to compare the cost effectiveness of investments and projects. Those indicators are therefore excluded from corporate environmental accounting and used only in segment environmental accounting in this report. The EE value and eco-efficiency index (EEI), which are indicators used to determine any improvements in environmental impact, are now called the eco-improvement (EI) value and ecoimprovement index (EII), respectively, taking into consideration the original meaning of the terms. The definition of EEI was changed from "an index that represents improvements in environmental conservation activities" to "an index that compares the total environmental impact amount with sales." In addition to the indicators mentioned above, new ones were created for this report.
| Indicators |
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Eco-improvement value (EI Value) = Environmental impact reduction amount/environmental conservation costs (ton/hundred million yen) |
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To determine how much environmental impact per ¥100 million in environmental conservation costs is reduced for each environmental impact item |
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Eco-ratio = Gross profit/environmental impact amount (ton/hundred million yen) |
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To determine the amount of value-added from business activities obtained per one-ton equivalent of environmental impact discharged |
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Eco-improvement index (EII) = Total environmental impact reduction amount (1)/Total environmental conservation cost amount (thousands of yen) |
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Improvement ratio of social cost (IRS) = Total social cost reduction amount (2)/Total environmental conservation cost amount (thousands of yen) |
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To determine whether the reduction in ((1) environmental impact/(2) social cost) is efficient |
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Eco-index = Gross profit (thousands of yen)/total environmental impact amount (1) |
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Ratio of profit to social cost (RPS) = Gross profit/total social cost (2) |
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To determine whether any profit is made when a company conducts business activities at the appropriate level((1) environmental impact/(2) social cost) |
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Eco-efficiency index (EEI) = Sales (thousands of yen)/total environmental impact amount (1) |
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Ratio of sales to social cost (RSS) = Sales/total social cost (2) |
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To determine whether a business activity at the appropriate level ((1) environmental impact/(2) social cost) is suitable for its scale |
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Ratio of eco effect (REE) = Environmental effect (total economic benefit + total social cost reduction amount)/total environmental conservation cost |
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Ratio of eco profit (REP) = Total economic benefit/total environmental conservation cost |
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To determine whether an environmental conservation activity is conducted in an economically rational way |
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 Coverage |
Data was collected in fiscal 2001 from the Ricoh Group business sites below:
Ricoh Co., Ltd.
The Ricoh Group's manufacturing subsidiaries both at home and abroad, namely, Tohoku Ricoh Co., Ltd.; Hasama Ricoh, Inc.; Ricoh Unitechno Co., Ltd.; Ricoh Optical Industries Co. Ltd.; Ricoh Keiki Co., Ltd.; Ricoh Microelectronics Co., Ltd.; Ricoh Elemex Corporation; Ricoh Electronics, Inc. (North America); Ricoh Industrie France S.A. (France); Ricoh UK Products Ltd. (UK); Ricoh Asia Industry Ltd. (China); Taiwan Ricoh Co., Ltd. (Taiwan)
The Ricoh Group's domestic non-manufacturing subsidiaries, namely, Ricoh Logistics System Co., Ltd.; Ricoh Techno Systems Co., Ltd.; and Part Component System Co., Ltd.
The business sites listed below were also added from fiscal year 2001:
51 domestic sales companies, NBS Ricoh Co., Ltd., Ricoh Corporation (USA), Ricoh Europe B.V. (the Netherlands), Ricoh Hong Kong Ltd. (Hong Kong), Ricoh Asia Pacific Pte. Ltd., as well as 7 overseas sales companies. Thus, the total number of the business sites covered is 79. |
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| Costs |
| Environmental conservation costs are comprehensively totaled for such categories associated with environmental conservation as depreciation on facilities, personnel expenses, and overhead expenses. (Cost items are in accordance with the Ministry of the Environment's Guideline for Introducing an Environmental Accounting System (2002 Version)). |
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| Economic Benefits |
In order to compare environmental conservation costs and come up with comprehensive results, economic benefits are calculated in some aspects, not only in terms of substantial effects but also expected and incidental effects. To improve the accuracy of determining expected effects, the "contribution to value-added research and development" item in this report was calculated based on actual sales results, and any profit gained is considered to be the result of environment-friendly functions.
| Economic Benefits |
Economic benefits are calculated as corporate effects (effects within the Ricoh Group) and social effects (effects outside the Ricoh Group). |
| Substantial effect |
:Actual gains from cost and energy reduction as well as sales of recycled products |
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| Expected effect |
:Amount to which environmental measures contributed |
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| Incidental effect |
:Pollution- and lawsuit-related costs avoided |
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| Social effect |
:Reduction in electricity expenses due to the use of energy-saving products or reduction in waste disposal cost (Japan only) |
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| Effect Calculation Method |
| Principal methods for effect calculation are shown below. |
| Substantial Effect
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| Saving Effect |
Amount reduced in electricity, gas, fuel, water and waste disposal costs.
Effect involving investment is taken into account assuming that such effect will last for 3 years.
Changes in production volume and personnel are considered for factories and offices respectively.
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| Recycling Effect |
Value of waste disposal /recycled valuable product sold.
Value of recycled products sold obtained by product recycling.
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| Formula of Expected Effects
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Contribution to
value-added
production |
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(Production output - raw material costs) × business area costs/manufacturing costs |
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Effects of
media coverage |
: |
Area of newspaper advertisement/newspaper page area × advertisement cost per page |
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Effects of
environmental
education |
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Number of people attending internal environmental education seminars × seminar fee for outside participants |
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Contribution to
value-added
research
and development |
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Gross profit × contribution rate to gross margin using the green point |
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Publicity from
environmental
advertisements |
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Number of visitors to environmental Web site×unit price of the environmental report |
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| Formula of Incidental Effects
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| Amount of incidental effect |
:Standard amount × occurrence coefficient × impact coefficient |
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| Items to be calculated |
:Areas of improvement to prevent pollution |
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| Standard amount |
:Amount set for lawsuits, suspension of operations, and restoration |
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| Calculation Formula of Social Effect
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| Total Electricity Consumption = electricity consumption per product × products sold |
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| Effect of electricity cost reduction= (former total electricity consumption-current total electricity consumption) × unit electricity cost |
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| Reduction in Waste Disposal = (weight of products recalled-weight of waste for final disposal) × unit cost of outsourced disposal |
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| Environmental Conservation Effects |
| For any given year, the environmental impact reduction amount can be used in calculating environmental conservation effects. There are six environmental impact items: CO2, NOx, SOx, biochemical oxygen demand (BOD), final waste disposal amount, and Pollutant Release and Transfer Register (PRTR) substances. |
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| Calculation of Social Cost |
In the past, environmental conservation effects were calculated in terms of physical amount. For a clearer comparison with environmental conservation costs, environmental impact is now calculated in terms of monetary value. The monetary value of environmental impact is termed "social costs" (costs of external diseconomies).
The conversion coefficient used is based on EPS* Indicator Ver. 2000, which is an impact assessment method in monetary value. The reference figure used is 108/t-CO2 (¥11,945/t-CO2). This figure is almost equal to the Ricoh Group's reference amount (¥16,000/t-CO2), which is calculated from investments to reduce CO2. This system received internal approval.At present, the conversion of environmental impact into monetary value is just one option, and it needs to be examined further in the future.
* EPS: Environmental priority strategies in product design
*What is social cost?
The environmental impact associated with business activities has extensively adverse effects on the global environment. Consequently, society itself causes the costs that it should pay. The costs are called "social costs," and include those to clean polluted rivers, those associated with damage to humankind and ecosystems from air pollutant emissions, and other costs paid by society because there is no way to identify who is responsible for those costs. For the calculation of social costs, the environmental impact is converted into a monetary value by using the life-cycle impact assessment method on the estimated damages. |
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| Fiscal 2001 Ricoh Group Corporate Environmental Accounting |
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| Segment Environmental Accounting |
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Segment Environmental Accounting
Corporate environmental accounting targets corporate environmental activities as a whole but can be used in decision making only in limited cases. However, segment environmental accounting, in which corporate environmental activities are conducted by project, can be used in decision making in many cases. Segment environmental accounting is especially useful in predicting the effects of environmental activities. The Ricoh Group announced its adoption of segment environmental accounting in 1999 and put it into practice by taking various measures. In fiscal 2001, the Group continues its efforts to promote sustainable management by conducting segment environmental accounting at various opportunities. |
| The Ricoh Group's Segment Environmental Accounting for its Environmental Action Plan (fiscal 2002-2004) |
| Estimated Costs and Effects of Reduction in CO2 Emissions at Business Sites |
Estimated effects of the greenhouse gas emission reduction plan at business sites
Total CO2 emissions generated at production sites and non-production sites will be reduced by 13%, and those in terms of the CO2 emissions per sales unit, by 62%, by fiscal 2010 (Ricoh only, compared with fiscal 1990). Accordingly, the Ricoh Group is planning to reduce its CO2 emissions per sales unit in fiscal 2004 by 20% from that of fiscal 2000. Specific measures include improving processes; introducing highly efficient facilities including cogeneration systems, and using new types of energy. Effects of 105 energy-saving investment projects are estimated by segment environmental accounting. |
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| Costs |
Effects |
EI value
(t/100
million yen) |
| Item |
Amount |
Economic benefits |
Effect on environmental
conservation |
Energy-saving
investments
(105 cases) |
1,608.8 |
Item |
Amount |
Item |
Amount
reduced(t) |
Reduction in
heat and
light expenses |
1,640.8 |
Reduction in
CO2 emissions |
39,019.4 |
2,425.3 |
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| *Costs are calculated from the investment plan. Effects are calculated using the depreciation period for equipment. |
| Estimated Costs and Effects of Reduction in CO2 Emissions from Energy-Saving Products |
Estimated effects for the energy-saving product marketing plan
The Ricoh Group is making sincere efforts to reduce the amount of power the products consume while in operation or on standby. CO2 reduction and marketing contribution to gross profit are estimated by the number of products to be marketed from fiscal 2002 to 2004. |
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| Costs |
Effects |
EI value
(t/100
million yen) |
| Item |
Main costs |
Amount |
Economic benefits |
Effect on
environmental
conservation |
Research
and
development |
Development of energy-saving units |
600 |
Corporate
effect |
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Effect on
gross margin
18,160 |
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Customer
effect |
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Reduced
electricity
expenses
8,908 |
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Molds, jigs,
and parts |
308 |
Reduced
CO2 emissions
138,265t |
15,227 |
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| * |
Costs are estimated from past development costs. Effects are estimated from the number of products scheduled to be marketed between fiscal 2002 and fiscal 2004. Figures for reduction in heat and light expenses and CO2 emissions are estimated from the amount reduced over three years, from fiscal 2002 to fiscal 2004, on the assumption that the machine is used eight hours a day, twenty days a month. |
| Estimated Costs and Effects of Reduction in Chemical Substances at Business Sites |
Estimated effects for the chemical substance reduction plan
How much underground water pollution may be avoided by complete elimination of dichloromethane and other effects was estimated by segment environmental accounting. |
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| Costs |
Effects |
EI value
(t/100
million
yen) |
| Economic benefits |
Effect on environmental
conservation |
| Item |
Amount |
Item |
Amount |
Item |
Amout(t) |
Development
expenses |
294 |
Avoidance of
risk in soil
and
groundwater
contamination |
900 |
Dichloromethane
used |
120.3
0 |
11.8 |
| Investments |
40 |
Personnel
expenses |
684 |
Reduced
production
loss |
5.19 |
| Other costs |
1.5 |
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1,019.5 |
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905.19 |
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| Segment Environmental Accounting in Fiscal 2001 |
| Estimated Costs Efficiency of an Ice Thermal Storage/Chilled Water System in Environmental Conservation |
| To update the air-conditioning systems at its manufacturing plants, Ricoh Microelectronics Co., Ltd., one of the Group companies, conducted segment environmental accounting to compare an ice thermal storage/chilled water system with an absorption-type chilled/hot water generation system and determined which is better for environmental conservation and cost reduction. From its results, Ricoh Microelectronics decided to introduce the ice thermal storage/chilled water system because, although the initial cost of the system was ¥34.45 million more than that of the absorption-type system, it would reduce running costs by 30% and CO2 emissions by 60%. |
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| Costs |
Effects |
EI value
(t/100
million
yen) |
| Economic benefits |
Effect on environmental
conservation |
| Item |
Main costs |
Amount |
Item |
Amount
reduced |
Item |
Amount
reduced |
Business
area costs |
Investment |
34.45
(millions
of yen)
(Difference
from the
conventional
method) |
Heat
and
light
expenses |
146
(millions
of yen) |
CO2
emission |
15,015(t) |
8,884.6* |
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| * |
Effects are calculated using the statutory depreciation period for equipment. |
| * |
Calculated from total investment (¥169 million) |
| Estimated Costs and Effects of Semiconductor plant at the Yashiro Plant in Environmental Conservation |
| In fiscal 2001, the Yashiro Plant, a Ricoh production site, introduced a system that recycles the hydrofluoric acid used in the semiconductor etching process, as well as an inverter control system. The segment environmental accounting shown below reveals that this system significantly contributed to environmental conservation and cost reduction. |
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Method of
conserving
energy or
resources |
Costs |
Effects |
EI value
(t/100
million
yen) |
| Economic benefits |
Effect
on
environmental
conservation |
Invest-
ment |
Mainte-
nance |
Reduced heat
and light
expenses |
Subsidies |
Reduced
CO2
emissions
(t) |
Reduced
discharged
waste
(t) |
Inverter
control
system |
131.5 |
1.5 |
177.5 |
100.0 |
5,762 |
- |
3,807.8
(CO2) |
Hydrofluoric
acid
recycling |
120.0 |
33.5 |
97.8 |
6,324 |
1,500 |
Filtration
device |
26.5 |
5.6 |
4.6 |
148 |
- |
Free-cooling
system |
25.8 |
0.6 |
27.1 |
904 |
- |
| Total |
303.8 |
41.2 |
307.0 |
100.0 |
13,137 |
1,500 |
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| *Effects are calculated using the statutory depreciation period for equipment. |
| Environmental Conservation Costs and Effects of a Cleaning Process in Ricoh Industrie France |
| In fiscal 2000, Ricoh Industrie France S.A. switched from water to air pressure to clean its thermal paper production line. Along with water recycling by steam collection, the switch reduced the company's annual water consumption by 43.4%, down from 25,353 m3 per year. Ricoh Industrie France saved on the cost of wastewater disposal using this system. |
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| Costs |
Effects* |
EI value
(m3/100
million yen
t/100
million yen) |
| Economic benefits |
Effect on
environmental
conservation |
| Item |
Main costs |
Amount |
Item |
Amount |
Item |
Amout |
Business
area cost |
Investment |
34.8 |
Industrial
water |
1.6 |
Industrial
water |
21,601(m3) |
62,072
(Industrial
water)
17,486
(Waste) |
| Maintenance |
0.0 |
Waste
disposal
expense |
98.2 |
Waste
disposal
amount |
6,085(t) |
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| * Effects are calculated for three years, starting from fiscal 1999. |
| Environmental Conservation Costs and Effects in Developing QSU Products |
| In fiscal 2001, Ricoh reduced CO2 emissions of the products marketed by the Ricoh Group worldwide by approximately 16,000 tons through incorporating QSU technology into its digital multifunctional copiers, the Aficio 1035/1045 and 1022/1027 series (imagio Neo 350/450 and 220/270 series, respectively). The reduction is equal to ¥1,040 million in electricity bills. It was discovered in segment environmental accounting that Ricoh's development of energy-saving products roughly corresponds to a cost reduction of ¥1,048 million. |
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| Costs |
Effects |
EI value
(t/100
million
yen) |
| Economic benefits |
Effect on
environmental
conservation |
| Item |
Main costs |
Amount |
Corporate effect |
Customer effect |
Research
and
development |
Development of
energysaving
units |
400
(millions
of
yen) |
Effect on
gross
benefit
1,048
(millions of
yen) |
Reduced
electricity
expenses*
1,041
(millions of
yen) |
Reduced CO2
emissions*
16,161(t) |
2,671.2 |
Molds,jigs.
and parts |
205
(millions
of
yen) |
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| * |
Annual "Reduced electricity expenses" and annual "Reduced CO2 emissions" are calculated on the assumption that the machine is used eight hours a day, twenty days a month.
Contribution amount to gross margin = gross margin amount × contribution rates to gross margin by environmental efficiency |
| Environmental Conservation Costs and Effects in the Recycling Business in 2001* |
| Efforts made in Japan include improving the collection, recovery, and recycling efficiency by making use of a recycling information-sharing system and nationwide recycling system. Increased profitability will be achieved by significantly reducing the cost of collection and disposal through an advanced venous logistics system and increasing the sales of recovered machines. For regions other than Japan, it was decided that used products will be collected, recovered, and sold within the same region. Efforts are being focused on improving collection rates and the expansion of recycling sites. The Group's recycling activities are thus evolving into a recycling business. |
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| Costs |
Effects |
| Economic benefits |
Effect on environmental
conservation |
| Item of cost |
Amount |
Item |
Amount |
| Product recycle cost |
572 |
Sales amount |
937 |
Resources recovered
26,920t
A 4,537-t increase
from the
previous year |
Final disposal 350t
A 497-t decrease
from the
previous year |
Collection/resource
recovery cost |
2,802 |
| Sales Effects |
2,150 |
Resource recovery rate
96.3% (FY 2000) 98.7% (FY 2001) |
| Total cost |
3,374 |
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| *Data is for Japan only. The figure for "Social effect" is the amount that customers saved on the cost of waste disposal. |
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| New Framework for Internal Environmental Accounting |
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| In the past, environmental accounting systems were used as tools to evaluate and disclose environmental impact reduction effects and environmental conservation costs. For the purpose of supporting decision-making processes in environmental management, however, we need something more. The Ricoh Group measures and evaluates the environmental impact generated in all relevant processes (environmental impact potential) as one of the approaches for a new environmental accounting taking the eco-balance into consideration. |
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