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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 benefits in managerial decision making.

Environmental costs are calculated in accordance with the Ministry of the Environment's Environmental Accounting Guidelines 2005. As for environmental benefits, Toshiba Group's environmental accounting assumes four basic concepts: competitive advantages, prevention of potential environmental risks, 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 due to reduced power consumption of products, actual economic benefits resulting from reductions in the amount of waste and energy consumed, assumed economic benefits estimated to result from reductions in air pollutant emissions, benefits resulting from preventing potential risks. To assess benefits, we show reductions in environmental impact in physical amounts and also calculate benefits on a monetary basis.

Environmental accounting as a tool for environmental management
[Image] Environmental accounting as a tool for environmental management

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Environmental costs and benefits

Total environmental costs increased by 5.6% from the previous year to 51 billion yen. Of the different business sections, the electronic device section, which handles semiconductors, accounted for the largest percentage of total environmental costs, followed by the Energy & Infrastructure Group and the Community Solutions Group. Total investments increased by 3.3% from the previous year to 9.3 billion yen.

Breakdown of environmental costs by business segment (FY2014)
[Image] Breakdown of environmental costs by business segment

The total amount of environmental benefits was 10.9 billion yen, a 92% decrease compared to the previous year. The largest reason behind this decrease was increased environmental impacts resulting from the expansion of Sigma Power Ariake Co., Ltd.'s thermal power generation business, which caused assumed economic benefits to become negative. Compared to other business segments, thermal power generation has an excessively large environmental impact, which caused the decrease in environmental benefits. The amount of assumed economic benefits excluding the effects of the power generation business was 2.8 billion yen. The amount of actual economic benefits was 6.4 billion yen, a 41% decrease compared to the previous year. These results were due to the fact that reductions in environmental impact were smaller in FY2014 compared to the previous year because of an increase in emissions resulting from expansion of production.

Meanwhile, customer benefits increased by 1% to 48 billion yen. This was due largely to expanded sales of products that can greatly reduce power consumption, such as air conditioners and other energy- saving home appliances as well as LED lighting.

We will continue to appropriately analyze environmental costs and develop environmental management measures to further increase environmental benefits.

Environmental costs and benefits
[Image] Environmental costs and benefits

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Cost benefits of environmental management measures

The figure shows the changes in the cost benefits of measures for climate change mitigation and waste disposal over the past three years. We compared the costs incurred in taking measures to mitigate climate change and dispose waste against the total amount of reductions in payments related to energy consumption and waste disposal compared to the previous year as well as sales of valuables during the current year. In the table below, costs are expressed as business area costs and benefits as actual benefits.

In FY2014, reductions in energy costs were much smaller compared to the previous year. This was due to increased expenses for electricity and fuel as a result of increased semiconductor production. On the other hand, measures to dispose of waste brought larger benefits than the costs incurred taking them.

The major issue to be addressed going forward is how to overcome two conflicting problems: an increase in emissions of environmental pollutants as a result of business expansion and the need for cost reductions. Toshiba Group will also analyze the cost benefits and other financial aspects of environmental management measures in more detail.

Cost benefits of measures for climate change mitigation and waste disposal
[Image] Cost benefits of measures for climate change mitigation and waste disposal

Environmental costs (FY2014)

Unit: million yen
Category Description Investment Costs
Total 9,294 50,968
Business area costs Reduction in environmental impact 7,644 19,730
Upstream/downstream costs Green procurement, recycling, etc. 660 971
Administration costs Environmental education, EMS maintenance,
tree planting on factory grounds, etc.
238 4,062
R&D costs Development of environmentally conscious products, etc. 738 25,833
Public relations costs Support for local environmental activities, donations, etc. 14 76
Environmental damage restoration costs Restoration of polluted soil, etc. 0 296

Environmental benefits (FY2014)

Category Description Reductions in environmental impact Benefits measured as a monetary value (million yen) Calculation method
Total monetary benefits 10,888  
(A) Actual benefits Costs that can be measured directly as a monetary value, such as electricity and water charges Energy -1,809,058(GJ) -5,091 Reductions in electricity charges and waste processing costs compared to the previous year, plus sales of valuables
Waste 9,276(t) 9,131
Water 293(1,000m³) 2,352
Total benefits measured as a monetary value 6,392
(B) Assumed benefits Reductions in environmental impacts measured as a monetary value Reduction in the amount of chemicals discharged -836 (t) -43,528 To obtain monetary values, we assessed the impact of different substances by using the equivalent amount of cadmium for each substance, which we calculated based on environmental standards and on threshold limit values for chemical substances specified by the American Conference of Governmental Industrial Hygienists (ACGIH-TLV), and then multiplying such amounts by the damage compensation for cadmium contamination. In order to compare different environmental impacts by the same standard, reductions in environmental impacts on the atmosphere, hydrosphere, and soil compared to the previous year are shown alongside monetary amounts that represent the values of such reductions.
(C) Customer benefits Reductions in environmental impacts during product use measured as a monetary value Reductions of CO2 emissions during use 3.53 (million t-CO2) 47,995 Reductions in environmental impact throughout product life cycles measured in physical and monetary units (monetary amounts) The product life cycle includes (1) material procurement, (2) manufacture, (3) transport, (4) use, (5) collection and transport, (6) recycling, and (7) proper treatment. In this report, we focused on reductions in environmental impacts during product use. We used the following equation to calculate energy-saving benefits:
Benefits (yen) = Σ [(Old model annual power consumption – New model annual power consumption) × Number of units sold annually × Standard unit electricity price]
(D) Risk prevention benefits Reductions in environmental risks before investment 29 Benefits from investments in environmental structures, such as dikes designed to prevent soil and groundwater contamination, evaluated for their effects of hedging against possible future risks We used the following equation to calculate risk avoidance effects per capital investment project: Standard purification and repair costs and the occurrence factor were calculated using values originally estimated by Toshiba to evaluate risks involved in chemical leaks.
Risk avoidance effects = Amount of chemicals, etc. stored or retained × Standard purification/repair costs × Occurrence factor

Reductions in environmental impact for actual and assumed benefits indicate differences between FY2013 and FY2014.
Reductions in environmental impact for customer benefits are based on comparisons between the benchmark year (in principle FY2000) and FY2014.
Negative benefits indicate that the increase in environmental impacts exceeded reductions due to increases in production and other factors.

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