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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 increased by 12% from the previous year to 48.3 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 community solutions section.

Total investments increased by 38% from the previous year to nine billion yen, with environmental investments accounting for 2.7% of total investments.

The total amount of environmental benefits was 147.5 billion yen, a 77% increase compared to the previous year: 10.8 billion yen for actual benefits, 89.2 billion yen for assumed benefits, 47.5 billion yen for customer benefits, and 30 million yen for risk prevention benefits.

Breakdown of environmental costs by business segment (FY2013)
[Image] Breakdown of environmental costs by business segment

Environmental costs and benefits (FY2009 - FY2013)
[Image] Environmental costs and benefits

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

In FY2013, reductions in payments related to energy consumption were negative because electricity charges, fuel expenses, and other payments increased by one billion yen compared to FY2012. 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

Unit: million yen
Category Description Investment Costs
Total 9,027 48,335
Business area costs Reduction in environmental impact 7,891 20,012
Upstream/downstream costs Green procurement, recycling, etc. 570 950
Administration costs Environmental education, EMS
maintenance, tree planting on
factory grounds, etc.
200 4,445
R&D costs Development of environmentally
conscious products, etc.
352 22,335
Public relations costs Support for local environmental
activities, donations, etc.
14 67
Environmental damage
restoration costs
Restoration of polluted soil, etc. 0 527
Total capital investment 340.2 billion yen
Total R&D costs 329.5 billion yen

Environmental benefits

Unit: million yen
Category Reductions in environmental impact Benefits measured
in monetary values
(millions of yen)
Total 147,512
Actual benefits Energy 994,068 (GJ) -1,030
Waste 2,741 (t) 11,747
Water 134,000 (m³) 95
Assumed benefits Reduction in the amount
of chemicals discharged
1,332 (t) 89,167
Customer benefits Reductions of CO2
emissions during use
4.30 million (t-CO2) 47,504
Risk prevention

Reductions in environmental impact for actual and assumed benefits indicate differences between FY2012 and FY2013. Reductions in environmental impact for customer benefits are based on comparisons between the benchmark year (in principle FY2000) and FY2013.

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Attempt at natural capital accounting

In June 2012, UNEP FI* issued the Natural Capital Declaration (NCD). NCD requires that natural capital, which generates value worth several trillion dollars annually, be evaluated as is done for social capital and financial capital. The World Bank and other institutions are discussing natural capital accounting, which includes the value of natural capital in corporate accounting. We are attempting to perform natural capital accounting as part of our environmental initiatives.

At present, environmental accounting is an initiative for aggregating the costs of environmental protection activities and analyzing the benefits obtained from such activities-in other words, measuring the “minimization of external diseconomies.” However, environmental impacts associated with business activities cannot be reduced to zero. Therefore, Toshiba Group is considering viewing final environmental impacts as economic value and making external diseconomies visible, which the Group regards to be a form of natural capital accounting.

Toshiba Group's concept of natural capital accounting can be summarized as shown in the chart below. The chart indicates that reduction of environmental impacts leads to minimization of effects on natural capital. In the future, we will continue to further raise our level of environmental management by effectively using the two tools of environmental accounting and natural capital accounting.

UNEP FI: United Nations Environmental Programme Financial Initiative

Toshiba Group's concept of natural capital accounting
[Image] Toshiba Group's concept of natural capital accounting

Toshiba Group calculated environmental impacts for natural capital during the past three years; the results indicate that in FY2013, such impacts were reduced by 2.7% compared to the previous year to 14.3 billion yen.

On the other hand, the costs required for biodiversity conservation, factory afforestation, and other initiatives that positively affected natural capital totaled 740 million yen. Furthermore, the results of calculations of business activities that were carried out without using natural capital-for which examples include water reuse and recycling as well as effective use of rainwater at business sites-had a worth of 280 million yen in terms of monetary value.

Toshiba Group is considering a system for comparing these results to offset or reduce its environmental impacts for natural capital; we found that the reduction rate changed from 7.3% to 7.4% to 7.1% over the past three years. In the years to come, the Group will strive to improve the reduction rate by reducing environmental impacts for natural capital through reduction of such impacts and expanding business activities that do not affect natural capital as well as those that positively affect natural capital.

Results of natural capital accounting calculations
[Image] Results of natural capital accounting calculations

(a) Environmental impacts covered
  • Greenhouse gases (e.g., CO2, PFC, SF6, and HFC)
  • Environmental impacts on the air (factory dust, NOx, and SOx)
  • Environmental impacts on waters (e.g., COD, all nitrogen, and all phosphorus)
  • Waste (e.g., metal scraps, cinders, sludge, wastepaper, waste acids, and waste plastics)
* LIME is used to calculate impacts as monetary values. For details of LIME, refer to Product Eco-efficiency.
(b) Costs covered
  • Costs of biodiversity conservation activities
  • Nature conservation and afforestation costs
  • Donations and financial support associated with environmental protection
(c) Natural capital covered
  • Reuse and recycling of water as well as effective use of rainwater
* Calculated using the price of one cubic meter of industrial water

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