Evaluation Methods -Environmental Accounting FY2003-

The ratio of eco effect, an important indicator measuring the effect on cost in environmental conservation activities, was substantially improved in fiscal 2003 (see graph(1)). This improvement is attributable to significant growth in sales of recycled products and other environmentally conscious products. The environmental conservation cost, however, is at the same level as that in fiscal 2002. The ratio of eco profit remained stable, growing 20-30% every year since the current environmental action plan started in fiscal 2002 (see graph(1)). By the end of fiscal 2004 (the year the plan ends), this percentage is predicted to be approximately twice that of when the action plan started. The fiscal 2003 Eco-Index, which indicates the level of sustainable environmental management for the entire business, jumped 46% from that in fiscal 2001 thanks to an approximate 30% reduction in environmental impact through Groupwide zero-waste and chemical substance reducing activities. Gross profit on sales grew approximately 10% from that in fiscal 2001 (see graph(2)). Like the ratio of eco profit, gross profit on sales is predicted to be twice that in fiscal 2001. An overview of the corporate environmental accounting data shows that the Ricoh Group's total environmental conservation cost increased only slightly since the previous year. This proves, however, that more environmental conservation costs were incurred for environmental activities involved in products and social contribution toward environmental conservation than in environmental activities done by business sites because product recycling costs and social activity costs increased while costs from business areas and environmental management activities decreased. The economic benefits on environmental conservation cost improved in almost all items. The effect on cost for product recycling in particular improved significantly, resulting in a surplus. The amount to profit by R&D on products increased to roughly 1.5 times that in fiscal 2002. This is believed to be the result of the emphasis that the Ricoh Group has placed on the development of environmentally conscious products over the past several years. In addition, although environmental conservation effects significantly improved in terms of the amount of final waste disposed and chemical substances emitted, CO₂ emissions fell only slightly and remain a challenging issue in the prevention of global warming in the future.

• *Monetary units are indicated in billions of yen unless otherwise indicated.

• *The reduction in payment for consumed power supply and CO₂ emissions is the annual benefit brought from eight hours of operation per day, 20 days of operation a month. Internal benefits refer to benefits on gross profits in sales results in fiscal 2003.

• *Social effect refers to the cost of waste disposal that customers no longer have to pay.