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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. These categories provide useful indices for environmental management.

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 decreased by 21% from the previous year to 43 billion yen. Of the different business sections, the electronic device section accounted for the largest percentage of total environmental costs, followed by the home appliance section.

Total investments decreased by 31% from the previous year to 6.5 billion yen, with environmental investments accounting for 2.7% of total investments.

The total amount of environmental benefits was 83.2 billion yen (almost the same level as the previous year). 9.2 billion yen for actual benefits, 33.1 billion yen for assumed benefits, 40.8 billion yen for customer benefits, and 0.1 billion yen for risk prevention benefits.

Breakdown of environmental costs by business segment (FY2012)
[Image] Breakdown of environmental costs by business segment (FY2012)

Environmental costs and benefits (FY2008 - FY2012)
[Image] Environmental costs and benefits (FY2008 - FY2012)

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Cost benefits of environmental management measures

The figure below 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, costs are expressed as business area costs and benefits as actual benefits.

In FY2012, the costs incurred taking measures to mitigate climate change were more than the reductions in payments related to energy consumption. On the other hand, measures to dispose 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 (FY2012)

Unit: million yen
Category Description Investment Costs
Total 6,523 43,064
Business area costs Reduction in environmental impact 4,507 19,474
Upstream/downstream costs Green procurement, recycling, etc. 1,494 1,155
Administration costs Environmental education, EMS
maintenance, tree planting on
factory grounds, etc.
109 4,787
R&D costs Development of environmentally
conscious products, etc.
379 15,968
Public relations costs Support for local environmental
activities, donations, etc.
11 83
Environmental damage
restoration costs
Restoration of polluted soil, etc. 23 1,597
Total capital investment 239.6 billion yen
Total R&D costs 305.9 billion yen

Environmental benefits (FY2012)

Unit: million yen
Category Reductions in environmental impacts Benefits measured
in monetary values
(millions of yen)
Total 83,175
Actual benefits Energy 237,108 (GJ) 1,105
Waste 10,733 (t) 7,885
Water 901,000 (m³) 223
Assumed benefits Reduction in the amount
of chemicals discharged
690 (t) 33,142
Customer benefits Reductions of CO2
emissions during use
3.69 million (t-CO2) 40,820
Risk prevention
benefits
  77

Reductions in environmental impacts for actual and assumed benefits indicate differences between FY2011 and FY2012. Reductions in environmental impacts for customer benefits are based on comparisons with the benchmark year (in principle FY2000) and FY2012.

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Internalization of external diseconomies

Toshiba's current environmental accounting is basically an initiative aimed at minimizing external diseconomies, in which data on costs required for environmental conservation activities is collected to analyze effects on investments. However, environmental impacts due to business activities cannot be reduced to zero. For this reason, we are considering visualizing external diseconomies by assessing final environmental impacts as monetary values and to recognize (or internalize) them as required costs for environmental renewal.

Perception of external diseconomies
[Image] Perception of external diseconomies

The figure below shows a conversion of environmental impacts caused by industrial waste discharged by Toshiba Group over the past three years into monetary values. The amount of external diseconomies for FY2012 was computed to be 14.8 billion yen. At the same time, the costs required for conservation of biodiversity, afforestation of production sites, and other initiatives having environmentally positive effects totaled 0.78 billion yen*.

Comparing these costs, we are considering a system for off- setting or reducing external diseconomies as well as looking at the changes over the three-year period, which indicate that the reduction rate shifts from 6.1% to 5.2%, and then to 5.3%. In the future, we will continue to further increase the sophistication of our analysis.

*
This amount is the sum of the public costs required for afforestation of production sites, cleaning campaigns, donations, natural restoration, etc. as listed in the table to the right.

Calculation of external diseconomies
[Image] Calculation of external diseconomies

*
Targeted environmental impacts:
  • Total GHGs (CO2, PFC, SF6, HFC, other)
  • Emissions to atmosphere (soot, NOx, SOx)
  • Emissions to hydrosphere (BOD, COD, suspended matter, total nitrogen, other)
  • Final waste disposal amount (scrap metal, cinders, sludge, waste paper, waste acid, waste plastics, other)
  • Chemical substances (covered by PRTR)
*
The Life-cycle Impact assessment Method based on Endpoint modeling (LIME) was used for conversion into monetary values. For more details on LIME, see “Product Eco-efficiency”.

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New attempt: Contribution to the protection of natural capital

In June 2012, UNEP FI* developed the Natural Capital Declaration (NCD). NCD requires signatories to evaluate natural capital, which creates trillions of dollars of value annually, in the same manner as social and financial capital.

Therefore, Toshiba Group recalculated those of its current environmental costs that are highly relevant to the public interest as costs contributing to the protection of natural capital. The recalculation results indicated that Toshiba Group spent 21 billion yen on protection of natural capital.

In the future, the Group will grasp costs contributing to the protection of natural capital and analyze the degree of our contribution to environmental causes.

*
UNEP FI : U.N. Environmental Programme Finance Initiative

Natural capital

  • Ecosystem services provided by the earth's natural assets (e.g., soil, air, water, and flora and fauna)
  • Suppliers of mineral resources (ore) and fossil fuels

Costs that contribute to the protection of natural capital (public interest costs)

Unit: million yen
Cost Costs Public interest costs Remarks
Total 43,064 20,995  
Within
business and
production
sites
19,474 18,621 Costs for measures to cope with climate change and environmental pollution
Upstream and
downstream
processes
1,155 0 Excluded because these are necessary costs
Management
activities
4,787 701 Costs for afforestation of production sites, etc.
R&D 15,968 0 Excluded because these are business-related costs
Activities to
benefit society
83 83 Local cleaning campaigns, donations, etc.
Responses to
environmental
damage
1,597 1,590 Natural restoration costs
  • Recalculation of those current environmental accounting expenditure items that are highly relevant to the public interest as costs contributing to the protection of natural capital
  • These costs cover measures to cope with climate change, management of green zones, etc.
  • They do not cover items that contribute to Toshiba's own business activities (e.g., R&D costs).

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