• 
• 
• 
• 
• 

Environmental Accounting

As a tool for environmental management

With a view to promoting environmental management, Toshiba Group is working to introduce an environmental accounting approach aimed at collecting accurate data on investments and costs required for its environmental conservation initiatives and analyzing the collected data in order to reflect investment effects and cost-efficiency in managerial decision making.

The figure below shows an outline of the environmental accounting of Toshiba Group. Our environmental accounting assumes four basic concepts: prevention of potential environmental risks, business chances, internal benefits and external benefits. We classify benefits into four categories based on combinations of these concepts to develop a comprehensive approach to environmental accounting: customer benefits resulting from reductions in the power consumption required for the manufacture of products, economic benefits estimated to result from reductions in air pollutant emissions, benefits resulting from preventing potential risks and actual economic benefits resulting from reductions in the amount of waste and energy consumption. These categories provide useful indices of environmental management.

Environmental accounting as a tool for environmental management

Environmental costs and benefits

The environmental accounting for FY2008 covers 538 consolidated subsidiaries and 626 business sites. Environmental costs are categorized and calculated in accordance with the Environmental Accounting Guidelines 2005 of the Ministry of the Environment. Meanwhile, environmental impact reduction benefits are calculated in terms of both physical quantities and monetary values.

Total environmental costs increased by 18% from FY2007 to 60.7 billion yen. Costs required for global warming mitigation measures and the research and development of environmentally conscious products account for a relatively large percentage of total costs. Environmental research and development costs account for 4.1% of the total R&D costs during the fiscal year (2.8% in FY2007). Total investments decreased by 33% from FY2007 to 13.4 billion yen, with environmental investments accounting for 3.1% of total investments (3.3% in FY2007).

The total amount of environmental benefits increased greatly, by 27%, from the previous fiscal year to 42.5 billion yen. This is accounted for mainly by an increase in customer benefits resulting from reductions in environmental impact (including reductions in power consumption), which were in turn made possible by an increase in the sale of eco products.

In addition to the previous 626 business sites, Sigma Power Ariake and Sigma Power Tsuchiura were included in the calculation of environmental benefits starting from FY2008. Accounting results that include these companies are presented in the bottom half of the rows in the tables shown in page 68. Sigma Power Ariake began full-scale operation in December 2007. The actual and assumed environmental benefits of a company are calculated based on decreases in the environmental impact from the previous year. However, due to the fact that Sigma Power Ariake was in operation only for 4 months in FY2007, the calculation of total environmental benefits for the 12 months of FY2008 in comparison with the previous year results in a large negative value (-101.2 billion yean; negative benefits). Its environmental benefits calculated in terms of monetary values are expected to be positive after next year, when power plant data can be compared on a year-on-year basis.

Data on environmental costs and benefits over the past five years shows that there has been an increase in environmental costs as a result of the expansion of the scope of group companies and an increase in costs required for global warming mitigation and the development of environmentally conscious products. There has also been an increase in environmental benefits, especially in customer benefits (environmental impact reduction benefits during the use of products).

Data on environmental costs by business segment shows that the semiconductor segment has the largest share, accounting for 41% of total costs, followed by the social infrastructure segment (25%).

Changes in environmental costs and benefits (FY2004~FY2008)

Breakdown of environmental costs by business segment (FY2008)

To Top

Breakdown of customer benefits by business segment

The figure on the right shows changes in customer benefits over the past three years. In the calculation of customer benefits, environmental impact reduction benefits during the use of products are converted into monetary values. Among Toshiba Group’s business segments included in the calculation, the digital product, home electric appliance and social infrastructure segments are of greatest importance. There was a large increase in customer benefits in the home electric appliance segment in FY2008. This is mainly due to an increase in the sale of bulb-type fluorescent lamps, which greatly contribute to reducing environmental impact.

At the same time, there was a decrease from last year in customer benefits in the digital product segment. Customer benefits are calculated based on the difference in annual power consumption between previous models and current models. Among some products, improvement in the functions of new product models caused power consumption to increase compared with previous models, resulting in negative customer benefits, which caused a decrease in overall customer benefits. There is a need to restrain increases in power consumption resulting from improvement in functions.

Breakdown of customer benefits by business segment

Environmental costs

Unit: million yen

Category	Description	Investments	Costs
Business area costs	Reduction in the environmental impact	11,807 (6,308)	31,260 (4,701)
Upstream/downstream costs	Green procurement, recycling, etc.	822 (638)	2,326 (755)
Administration costs	Environmental education, EMS maintenance, tree planting on factory grounds, etc.	302 (99)	9,456 (1,079)
R&D costs	Development of environmentally conscious products, etc.	441 (939)	15,650 (4,562)
Public relations costs	Support for local environmental activities, donations, etc.	17 (14)	117 (44)
Environmental damage restoration costs	Restoration of polluted soil, etc.	1 (48)	1,912 (480)
Total		13,389 (6,743)	60,721 (9,463)
		Total investments during the period	4,252 billion yen
		Total R&D costs during the period	3,783 billion yen

Figures in parentheses represent increases or decreases from the previous year

Environmental benefits

Unit: million yen

Category	Description	Amounts	Calculation method
(1) Actual benefits*	Benefits that are represented as monetary values, such as reductions in electricity and water charges	7,128 (2,226) 2,321 (7,223)	The amount of money, such as electricity charges and waste disposal costs, that was saved compared with the previous year, plus earnings from the sale of objects with value
(2) Assumed benefits*	Reductions in environmental impact that are converted into monetary values	9,740 (176) 124,576 (134,492)	The amount of money was calculated by multiplying the cadmium equivalent value of each substance obtained from environmental standards and the ACGIH-TLV (American Conference of Governmental Industrial Hygienists Threshold Limit Value) by damage compensation for cadmium pollution. This method of calculation provides a means of showing year-on-year reductions in the environmental impact on the atmosphere, water and soil and makes it possible to compare the environmental impact of different substances using the same standard by converting the impact into monetary values.
(3) Customer benefits	Reductions in environmental impact during the use of products that are calculated in terms of monetary values	24,447 (6,993)	Environmental impact reduction benefits through the life cycle of products are evaluated in physical quantity units and monetary units (amounts of money). The life cycle of a product includes (1) procurement of materials, (2) manufacturing, (3) transportation, (4) use, (5) shipment, (6) recycling, and (7) proper disposal. Toshiba’s environmental accounting focuses on environmental impact reduction benefits during the use of products. Energy-saving benefits are calculated by using the following equation: Benefits (yen) = Σ [(Annual power consumption of the previous product model - Annual power consumption of the current product model) × Number of products sold annually × Benchmark unit price of electricity]
(4) Risk prevention benefits	Reductions in environmental risks compared with conditions prior to investments that are calculated in terms of monetary values	1,222 (671)	Benefits accruing from investments in environmental structures, such as dikes, designed to prevent the pollution of soil and groundwater are evaluated as benefits of preventing potential risks. Risk prevention benefits are calculated for each capital investment item using the following equation: Risk prevention benefits = Quantity of chemical substances safely stored × Standard amount of money required for purification and restoration × Number of potential accidents. Values calculated using our own standards were used for the calculation of the standard amount of money required for purification and restoration and potential accidents in order to assess risks resulting from chemical leaks.
Total*		42,537 (8,372) 101,228 (135,393)

Figures in parentheses represent increases or decreases from the previous year.

Reductions in the environmental impact represent differences between FY2008 and FY2007.
Negative figures indicate that there were increases in the environmental impact due to circumstances such as increases in production that exceeded the reduction benefits.
Due to rounding errors, sums of individual figures may not equal the totals.

*

Actual and assumed benefits calculated for the same companies as last year are presented in the top half of the rows of the respective tables, while actual and assumed benefits calculated for all companies including Sigma Power Ariake and Sigma Power Tsuchiura are presented in the bottom half of the rows of the tables.