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                      | HITACHI HOME | UP | SEARCH | HITACHI
                      News Releases Corporate Profiles

                      Apr 27, 2000
                      Introduction of Environmental Accounting System
                      -- Includes evaluation of environmental impact of products during production and use --
                      #
                      Hitachi, Ltd. today announced that in fiscal 1999 the company introduced an environmental 
                      accounting system designed to enable continuous improvement of the effectiveness of the 
                      Company's environmental investments and activities.  This system provides a quantitative 
                      assessment of the cost-effectiveness of environmental activities.  According to the system, 
                      during the first year of implementation, expenditures on environmental activities amounted 
                      to 26.70 billion and investment to 6.76 billion, and the economic effect came to 4.16 billion.
                      
                      Hitachi has long been an environmentally aware company with respect to its products and 
                      manufacturing activities, and has developed many products and systems for environmental 
                      applications.  To strengthen environmental management by the Hitachi Group, in April 1999 
                      an environmental executive council was instituted to formulate environmental top 
                      management policies, and a system, called "GREEN 21," was set up to evaluate the Group's 
                      environmental activities.  In accordance with Green 21, a points system is used to rate the 
                      degree of environmental policy development, energy saving, recycling measures, the 
                      implementation of product assessment and other such aspects of corporate environmental 
                      activities, with the aim of improving the environmental management of the Hitachi Group.
                      
                      For the first year of operation of the environmental accounting system, data was compiled 
                      on an unconsolidated basis.*  In addition to plant and equipment investment related to 
                      environmental activities announced since fiscal 1997, costs encompassed ordinary 
                      expenditure items such as R&D expenditure and the cost of operating and managing 
                      environmental conservation plant.  The effectiveness was established based on an economic 
                      result, assessed in terms of monetary value, and a quantitative effect, assessed in terms of 
                      the degree of environmental load abatement.  The economic effect was based on reliable 
                      grounds.  The quantitative effect was calculated not only on the basis of the degree of 
                      environmental load abatement during the manufacture of a product but also during the use 
                      of the product.  Eco-efficiency was also assessed, in terms of the decrease in cost per 
                      environmental load item.
                      
                      Looking to the future, the data used will be drawn from an increasing number of Hitachi 
                      Group companies, and will be made more comprehensive, and more details of the data will 
                      be disclosed.  Hitachi intends to use the implementation of the environmental accounting 
                      system to promote eco-efficiency in its environmental activities and contribute to society by 
                      balancing corporate growth with environment protection.
                      
                      *: Environmental load data includes data from some affiliated companies managed on an 
                      integrated basis in business establishments of the parent company.
                      
                      
                      1.	Environmental endeavors to date
                      (1)	Environmental consciousness in production --- Reducing environmental load during 
                                production
                      (2)	Environmental consciousness in products --- Reducing environmental load resulting 
                                from the use and disposal of products.
                      (3)	Environmental business --- Development and marketing of environmental 
                                conservation products and systems 
                      
                      2.	Aim of introducing environmental accounting
                      (1)	To promote improvement and efficiency of environmental investment and 
                                environmental activities
                      (2)	Information disclosure
                        -	Management resources allocated to environmental activities
                        -	Information on environmental technology and products
                      
                      3.	Environmental accounting approach and concept
                        -	Hitachi decided to introduce the environmental accounting system last July.  
                                Environmental accounting items and methods were studied, using projects of the 
                                financial and environmental divisions.  During this time, Hitachi also took part in an 
                                environmental accounting study group set up in June last year by the Environment 
                                Agency.
                        -	Hitachi views the environmental accounting system as a means of improving the 
                                company's eco-efficiency and achieving efficient environmental management.  
                                Hitachi intends to use the system to help fulfill its responsibility as a corporate 
                                citizen by balancing corporate growth with environment protection.
                      
                      4.	Scope of cost-effectiveness concerned
                      (1)	Cost:
                        -	Total of investment amounts and expenses (including depreciation) related to 
                                environmental activities.*1
                      (2)	Effect
                        -	The economic effect (in monetary terms) obtained as an enterprise, from the 
                                environmental activities*1
                        -	The environmental load abatement effect (in quantitative terms) during production*1
                        -	The estimated effect (in quantitative terms) of the abatement in the impact that use 
                                of products has on the environment*2
                      
                      *1:     In compiling and classifying data, reference was made to the Environment 
                              Agency guidelines relating to establishing and disclosing environmental 
                              conservation costs (issued March 1999), and to the studies by the 
                              environmental accounting study group.
                      *2:     Hitachi used its own system to estimate the abatement effect under 
                              conditions of standard use.
                      
                      5.	Scope of data
                               Data was compiled based on the unconsolidated results of Hitachi, Ltd. for the fiscal 
                               years 1998 and 1999.  (Environmental impact data includes data from some affiliated 
                               companies managed on an integrated basis in business establishments of the parent 
                               company.)
                      
                      6.	Future approach to environmental accounting
                        -	Environmental accounting will be applied in an increasing number of Hitachi Group 
                                companies.
                        -	There will be increasing disclosure of data relating to the contribution that products 
                                make to the abatement of environmental impact.
                      
                      7.	Environmental accounting results
                      (1)	Fiscal 1999
                        -	In fiscal 1999, expenditures and investment related to environmental activities came 
                                to 26.70 billion yen and 6.76 billion yen, respectively, and the economic effect was 
                                4.16 billion yen.
                                R&D expenditures (11.14 billion yen) accounted for 42% of the total.  The steps 
                                involved in designing a product to reduce its environmental impact are also 
                                calculated for inclusion in the stated R&D expenditures.
                        -	The decrease in energy used (165 million kWh) during the use of products was 
                                nearly twice the amount of the decrease (94 million kWh) during production.
                      
                      (A)      Cost
                      (a) Cost:26,700 (in millions of yen)  
                         1) Environmental impact abatement during production: 9,770
                            Cost of maintaining environment-related equipment; depreciation expenses
                         2) Environmental impact abatement upstream and downstream of production:1,800
                            Cost of green procurements ; Cost of collecting and recycling products and 
                            packaging; 
                         3) Management activities:2,610
                            Environmental management personnel costs; environmental management operating 
                            and maintenance costs
                         4) R&D activities:11,140
                            Cost of R&D, planning and design related to reducing environmental impact of 
                            products and manufacturing processes
                         5) Community-oriented measures:1,060
                            Cost of beautification and other environmental improvements and PR
                         6) Other costs :330
                            Other costs for environmental conservation
                      
                      (b) Investment total:6,760
                       Investment on energy-saving equipment and plant and equipment for reducing the  
                       environmental load
                      
                      (B)      Effect (in millions of yen)
                        (a)  Economic effect: 4,160
                         1) Effect on actual income:1,100
                            Profits on sale of waste and recycled goods
                         2) Cost reduction effect:3,060
                           - Cost reductions from energy savings and reduced cost of waste processing
                        (b)  Quantitative effect (Reduction amount and equivalent number of households)
                         1) Reduction in energy used during production: 94 Million kWh / 27,000 households
                           - Reduction in amount of energy used as result of installing energy-saving equipment
                         2) Reduction in amount of final processing of waste during production: 792t / 3,000 
                            households
                           - Reduction in amount of final processing as a result of sorting and recycling
                         3) Reduction in energy used during use of products: 165 Million kWh / 48,000 
                            households
                           - Reduction in energy used during use of Hitachi products by customers
                      
                             Note 1:	Depreciation of plant and equipment and the effect thereof
                              -	Depreciation of investment in plant and equipment is calculated by 
                                      the straight-line over 5 years.
                              -	The effect of investment in plant and equipment is also calculated  
                                      on a 5-year basis.
                             Note 2:	Economic effect categories/items
                             (1)	Actual income effect:  The effect in the form of actual income from 
                                         sale of assets, environmental technology patents, etc.
                             (2)	Cost reduction effect:  The effect in the form of decreases in
                                         electricity charges, waste disposal expenditures and other such 
                                         expenses resulting from activities to reduce the environmental 
                                         burden.
                      
                      (C)	Eco-efficiency
                        -	This shows the decrease in cost for each environmental load item
                            1)Amount of energy used
                              Amount of decrease: 94 million kWh
                              Reduction in expenses: 1.14 billion yen
                              Environmental burden reduction efficiency: 8.2 million kWh/100 million yen
                            2)Amount of waste processed
                              Amount of decrease: 792 t
                              Reduction in expenses: 1.23 billion yen
                              Environmental burden reduction efficiency: 64 t/100 million yen 
                      
                      (D)	Sales of environmental conservation products and environmental conscious products
                           1) Environmental conservation products:
                              Sales:   8,100 million yen
                              Percentage of total sales:  0.2%
                              -     Products, such as waste disposal systems, produced principally for  
                                    environmental conservation/protection applications.
                      
                           2)Environmental conscious products
                      	Sales:    1,018,700 million yen
                      	Percentage of total sales:  27%
                              -      Products designed to have a reduced impact on the environment such as by 
                                     using less energy (designated based on Hitachi criteria).
                      
                      
                      (2)     Results of environmental accounting (in billions of yen)
                            (a)  FY 1998
                              Cost:28.25     Investment:5.65      Economic effect:3.69
                            (b) FY 1999
                              Cost:26.70     Investment:6.76      Economic effect:4.16
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      
                      




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                      (C) Hitachi, Ltd. 2000. All rights reserved.

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