Evaluation Methods -Environmental Accounting FY2002-

The environmental conservation cost of the Ricoh Group as a whole increased approximately 17% compared with that in the previous fiscal year due to increases in the recycling-related cost and environmental management system maintenance cost. As for the economic effects of each cost item, the upstream/downstream cost, representing product recycling-related costs, increased 34% year on year, but profit from the sales of recycled products increased roughly 76%, which shows that the recycling business has steadily improved, moving towards the breakeven point. Regarding environmental conservation effects, environmental impact was not reduced much in fiscal 2002 compared with that in the past. However, considering the fact that total environmental impact (expressed in terms of greenhouse gas emissions) was reduced by half compared with that in fiscal 2000, the reduction in fiscal 2002 does not appear too unreasonable. Sustainable management indicators showed satisfactory results. For example, the eco-index increased about 18% compared to the last fiscal year, to 1,423.7, which is 2.6 times that in fiscal 2002. Also in fiscal 2003, the indicator is expected to increase as much as approximately 6%.
The Ricoh Group promotes the establishment of Eco Balance environmental accounting, and it is now possible to calculate sustainable management indicators based on the environmental impact caused by and the cost of environmental measures taken for the domestic image-related product business. We will also examine the introduction of sustainable management indicators based on the evaluation of each product's environmental cost and benefit. Such indicators will be used as numerical targets for each product in the environmental action plan.

Fiscal 2002 Ricoh Group Corporate Environmental Accounting(15.3KB) Change in gross profit and sustainable management indicators in the Ricoh Group

Corporate environmental accounting targets corporate environmental activities as a whole but can be used in decision making only in limited cases. However, segment environmental accounting, in which corporate environmental activities are conducted by project, can be used in decision making in many cases. Segment environmental accounting is especially useful in predicting the effects of environmental activities. The Ricoh Group announced its adoption of segment environmental accounting in 1999 and put it into practice by taking various measures. In fiscal 2002, the Group continues its efforts to promote sustainable management by conducting segment environmental accounting at various opportunities.

We are aggressively introducing our proprietary energy-saving technology QSU to major models in the hope that more customers will use these models and more effectively reduce their environmental impact. The products marketed by the Ricoh Group in fiscal 2002 contributed more to impact reduction than those marketed in fiscal 2001, resulting in an 18,100-ton reduction in CO₂ emissions per year. In terms of electricity fees charged to customers, the reduction is equivalent to ¥1,161.6 million in savings. Also, segment environmental accounting shows that QSU technology brought about a profit of ¥2,305 million to the Ricoh Group.

Costs			Effects
			Economic benefits		Effect on environmental conservation
Item	Main costs	Amount	Corporate effect	Customer effect
Research and development	Development of energy-saving units	¥400 million	Effect on profit ¥2,305.0 million	Reduced electricity expenses ¥1,161.6 million	Reduced CO2 emissions 18,100 tons
	Molds, Jigs, and Parts	¥458 million

• *Figures for reduced electricity expenses and CO₂ emission represent the benefits gained for an entire year if the machines is used eight hours a day, 20 days a month. The figure for corporate effectrepresents the effect on gross margin for fiscal 2002 sales.

Much of the equipment at Ricoh Microelectronics Co., Ltd. plants produces heat, making 24-hour air conditioning indispensable. Air conditioning accounts for more than half the total energy consumption at these plants. In May 2002, the company installed new air-conditioning systems that combine an ice thermal storage system and a chilled water system for improved environmental performance and economic efficiency. The systems enable 24-hour operation by making ice and chilled water at night. Replacement of the heavy oil thermal power generation system has reduced carbon dioxide emissions by 866 tons and electric power and water utility expenses by approximately 14.3 million yen.

Costs			Effects
			Economic benefits		Effect on environmental conservation
Items	Main costs	Amount	Items	Amount reduced	Item	Amount reduced
Business area costs	Investment	34.45 (millions of yen) (Difference from the conventional method)	Reduction in heat and light expenses	12.9 (millions of yen)	CO2 emission	866(t)
			Reduction in water expenses	1.4 (millions of yen)	Water consumption	10.9(t)

• *Effects are calculated through a comparison to fiscal 2000 figures.
• *Calculated from total investment (¥169 million)

Ricoh's Atsugi Plant replaced the runners of the 350-ton injection molding equipment (which are used to align the position of materials in molds) with hot runners. This resulted in a reduced discharge of waste plastic and lower materials costs. The old runners were crushed for recycling, but some parts had to be disposed of due to their composition. Hot runners, by contrast, produce no waste because parts can easily be broken down and reused. From September 2002 through March 2003, the plant reduced waste plastic by 19.2 tons and costs by ¥21 million.

Costs			Effects
			Economic benefits		Effect on environmental conservation
Item	Main cost	Amount	Reduction	Amount	Reduction	Amount
Business area cost	Design and production cost	¥2.56 million	Waste disposal expenses	¥1.86 million	Amount of waste discharged	19.2(t)
			Material cost, etc.	¥21.77 million

• *Effects are calculated for seven months, starting from September 2002.

Ricoh Industrie France S.A. has developed a water-based paint to replace its organic solvent-based paint. The use of the water-based paint reduced emissions of volatile organic compounds into the air by 83%, resulting in total cost savings of ?121,500, since the second half of 1998.

Costs			Effects
			Economic benefits		Effect on environmental conservation
Item	Main costs	Amount	Reduction	Amount	Reduction	Amount
Business area cost	Investment cost	452 EURO	Solvent cost	121,500 EURO	Amount of organic solvent used	1.32(t)

• *Effects are calculated for the period starting from the second half of fiscal 1998.

Aiming to reduce the environmental impact and cost of product transportation, Tohoku Ricoh Co., Ltd., a manufacturing subsidiary, entered into partnership with Japan Freight Railway Company to promote a modal shift from truck to railway transportation. This resulted in a reduction of carbon dioxide emissions of 117 tons and a cut in transport expenses of approximately 57 million yen.

Costs			Effects
			Economic benefits		Effect on environmental conservation
Item	Main costs	Amount	Reduction	Amount	Reduction	Amount
Business area cost	Investment cost	0 yen	Transportation cost	¥57.4 million	CO2 emission	117 (t)

• *Effects are calculated for the period starting from October 2001.
  There was no initial investment.

Efforts made in Japan include improving the collection, recovery, and recycling efficiency by making use of a recycling information-sharing system and nationwide recycling system. Increased profitability will be achieved by significantly reducing the cost of collection and disposal through an advanced venous logistics system and increasing the sales of recovered machines. For regions other than Japan, it was decided that used products will be collected, recovered, and sold within the same region. Efforts are being focused on improving collection rates and the expansion of recycling sites. The Group's recycling activities are thus evolving into a recycling business.

Costs		Effects
		Economic effects		Effects on environmental conservation
Item of cost	Amount	Item	Reduced Amount
Product recycle cost	¥918 million	Sales amount	¥1,421 million	Resources recovered 26,422 t A 498-t increase from the previous year	Final disposal 37 t A 313-t decrease from the previous year
Collection/resource recovery cost	¥2,772 million
		Social effect	¥2,114 million
Total cost	¥3,690 million

• *Data is for Japan only. The figure for "Social effect" is the amount that customers saved on the cost of waste disposal.