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Sustainable environmental management indicators -Environmental Accounting FY2000-

Basic Concept for Environmental Accounting

Objectives of Environmental Accounting

Environmental accounting is introduced as a management control tool for properly managed environmental conservation activities; the primary objective is to take its advantage for our business operation. Ricoh recognizes conditions for environmental accounting to be beneficial for its company operation as follows:

Conditions for Environmental Accounting to be Beneficial for Company Operation

  1. Items covered by environmental accounting should conform to substantial business judgment in their entirety and in several (Corporate/Segment)
  2. Thorough comparisons between environmental expenses and economic effects, etc should be made. (Substantial/Expected/Incidental Effects)
  3. It should be descriptive of ecological business efficiency, such as investment efficiency for lower environmental impact and business management with less ecological impact. (EE value, Eco-Ratio, EEI, Eco-Index)


Companies included in the accounting for FY2000 were Ricoh and its manufacturing, sales and service affiliates (Tohoku Ricoh, Hasama Ricoh, Ricoh Optical Industries, Ricoh Unitechno, Ricoh Elemex, Ricoh Microelectronics, Ricoh Keiki, Parts Component System, Ricoh Technosystems, Ricoh Logistic System, Ricoh Electronics Inc, Ricoh Industrie France, Ricoh UK Products, Ricoh Asia Industry, Taiwan Ricoh) Total 16 companies.

We will start applying environmental accounting to group companies which acquired ISO14001 in sequence.


Collected environment conservation cost data covering depreciation allowance for assets, personnel expenses and other expenses spent for the purpose of environmental conservation (cost items are in line with Environment Agency's 2000 guidelines).


Effective from FY2000, the "social effect" concept was introduced in addition to economic and environmental conservation effects.

Ricoh's View on Social Effect

Since industrial firms bear costs paid by the society (costs that companies do not usually compensate for; cost to cleanup waters polluted by discharged soil water or to indemnity asthmatic patients for emission of air-polluting substances, etc) through environmental conservation activities, effects from spending environmental conservation cost should include social effect (e.g. reduction in customers' electricity bills through using energy-saving products) as well as profit-seeking private effect. Though social effect was hardly mentioned in the traditional environmental accounting. As Ricoh Group is trying to reduce the impact of its products on environment in a positive manner, it recognizes reduction in electricity and waste disposal costs through using their products and waste recovery/recycling as social effects and incorporated such effects into environmental accounting.

Economic Effect (in terms of monetary amounts)

To be contrasted with environmental conservation cost.
Not only effects for the accounting purpose but also those calculable by formulated definition shall be covered.
a : Substantial Effect :
Effects including power or water saving, profit on sale of recycled marketable goods, etc
b : Expected Effect :
Expected economic effects by specific definition
c : Incidental Effect :
Effect regarded as possible risk aversion (legal and repair costs, etc)
s : Social Effect :
Effects on the society such as lower electricity cost by using our product, reduced waste disposal cost, etc.

Environmental Conservation Effect (by quantitative standards)

For the following 6 items relating to environmental conservation, reduced and total amounts were calculated respectively: CO2, NOx, SOx, BOD, Final Waste Disposal Amount, PRTR Substances.
Reduction in environmental impact was calculated (for domestic companies only).
Relations between reduction in environmental impact and environmental expenses as well as total environmental impact and business added value.

Corporate Environmental Accounting of the Ricoh Group for FY2000

Effect Calculation Method

Principal methods for effect calculation are shown below.

Substantial Effect

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.

Recycling Effect

Value of waste disposal /recycled valuable product sold.
Value of recycled products sold obtained by product recycling.

Expected Effect

Effect on Production Added Value

(Output - Raw material cost) x Environmental expense / Gross expense

News Report Effect

page space of the featured article/page space x advertising cost per page

Environmental Education Effect

Number of employees who took internal environment education courses x outside course fees

EMS Establishment Effect

Number of newly established offices x outsource consultant fees

R&D Added Value Effect

(sales-sales cost) x environmental R&D cost/total SG&A

Advertisement Effect

Number of access to the Group's website on environment activities x cost of environmental reporting

Incidental Effect

Target Items :
Valuation of ISO14001 impact on environment, matters to be improved relating to pollution control
Basic Amount :
amount required for litigation, closedown and restoration
generation and influence factors depending on frequency and scope of the influence

Amount of Accidental Effect = Basic amount x generation factor x influence factor

Product's Effect of Reducing Environmental Impact

Total Electricity Consumption = electricity consumption per product x products sold

Effect of electricity cost reduction = (former total electricity consumption - current total electricity consumption) x unit electricity cost

Reduction in Waste Disposal = (weight of products recalled - weight of waste for final disposal) x unit cost of outsourced disposal


  1. EE Value
    Eco-efficiency value ("EE value"), which is reduction in environmental impact divided by total environmental cost for the fiscal year in question, in order to efficiently pursue environmental conservation.
  2. Eco-ratio
    The ratio of environmental impact to profits, called the "Eco ratio" (gross profit on sales - corporate added value - divided by total environmental impact) is used to compare total environmental impact to business added value.

Define "EE value" (in tons per 100 million yen)
EE value = Reduction in environmental impact / total environmental cost

Define "Eco ratio" (in 100 million yen per ton)
Eco ratio = Gross profit on sales / total environmental impact

Combined Environmental Index

  1. Eco-efficiency index (EEI)
    The Eco-efficiency index (EEI), which is the ratio of total reduction in environmental impact to total environmental costs
  2. Eco-index
    The Eco-index, which is the ratio of total environmental impact to added value from businesses

Definition of Eco-efficiency index (EEI)
EEI = total reduction in environmental impact (coefficient conversion) / total environmental costs (thousands of yen)

Definition of Eco-index (Ratio of environmental impact to profit)
Eco-index = gross profit on sales (thousands of yen) /Total environmental impact (coefficient conversion)

FY2000 Segment Environmental Accounting

Segment Environmental Accounting
In corporate activities, occasions where Corporate Environmental Accounting (cross-enterprise environmental accounting) are used for decision-making are limited in a way; however, Segment Environmental Accounting processed on various segmental basis, Segment Environmental Accounting for effect projection in particular, can be used on many decision-making occasions. Results of projected environmental conservation evaluated by segmental environment accounting are shown on the following pages.
In any case, they are expected to be contributive to ecological management in the light of economic effect and reduction in environmental impact.

Estimated Effectiveness on Environmental Conservation in Energy-Saving Line
To accommodate large item small scale production, our Group Company, Ricoh Unitechno has developed "Cart Line", a method to tow a chain which combines existing several conveyer lines by connecting carts; though this method needs capital expenditure of approx. 1/20 of the old conveyer line, substantial greenhouse reduction is expected as electric power consumption is reduced to 1/80. We also confirmed that this leads to much better productivity resulting from better space efficiency and improved functionality brought by space-saving and process rearrangement.

Cost Effect
Cost Item Main Costs Amount Economic Effect Environmental Protection Effect
Business Area Cost Facility Investment Setup Cost, etc ¥9.25 million Reduction in Utility Charges
¥4.04 million
Reduction in Personnel / Maintenance Costs
¥15.5 million
Increase in Productive Efficiency
¥89.55 million
Amount of CO2 reduction

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  • *The amounts of expenses and effects are calculated based on the equipment's cumulative statutory depreciation period.

Target Cost: R&D Cost

Estimated Environmental Conservation Cost Effectiveness by Energy-Saving Machines
Not only directly by reducing environmental impact in the offices, corporate environmental conservation activities also contribute indirectly to lower environmental impact through offering eco-friendly products to customers and markets. Therefore, we considered calculation of cost effectiveness of copying machines with newly-developed cost-saving fixing units which can reduce electricity consumption significantly.
For costs, we targeted at environmental conservation costs which include development cost and additional cost required for estimated quantities sold; for effects, economic effect from reduction in electricity consumption upon utilization, environmental conservation effect and private effect which should be obtained by Ricoh.
Private effects are identified by marketing approach called conjoint analysis for consumers' research.
As a result, we could confirm that development of eco-friendly products have a great effect socially and privately.

Cost Effect
Cost Item Main Cost Amount Economic Effect Environmental Conservation Effect
Private Effect Social Effect
R&D Cost Energy-saving unit development cost ¥400 million Total amount customers are likely to pay
¥2,683 million
Reduction in electricity cost
¥2,544 million
Amount of CO2 reduction
Cost of mold, fixture, parts, etc ¥205 million

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  • *Targeting at domestic sales subsidiaries, costs, economic effects, environmental conservation effects are calculated based on estimated unit sales and duration of service for 5 years.

Target Cost: Management Activity Cost

Environmental Conservation Cost Effectiveness for Development of Environmental Impact Information System
Based on the idea of eco-balance, we keep developed a global environmental impact information system for centralized data management for every process as a tool to keep track of environmental impact from entire business activities and to reduce such impact effectively.
As a matter of course, environmental accounting is an indispensable system for calculation.
We calculated cost effectiveness on the assumption that effects including reduction in cost for preparation of Type III eco-labels and personnel for performance control will last for 5 years against system investment and personnel cost required for development. For environmental conservation effect, calculation was made based on amount of CO2 reduction through improved air compressor operation while controlling performance by using system.

Cost Effect
Cost Item Main Cost Amount Economic Effect Environmental Conservation Effect
Management Activity Cost System Spending ¥196 million Reduction in personnel cost for data acquisition, analysis etc
¥1,550 million
Electricity cuts by power monitoring system
¥25.6 million
Amount of CO2 reduction
Administrative and Maintenance Expenses including Personnel & Maintenance Cost ¥361 million

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  • *The amounts of expenses and effects are calculated assuming system depreciation over 5 years.