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 
(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 
  -	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 

6.	Future approach to environmental accounting
  -	Environmental accounting will be applied in an increasing number of Hitachi Group 
  -	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 
   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 
     - 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 
     - 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 

(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

top of this page

WRITTEN BY Secretary's Office
(C) Hitachi, Ltd. 2000. All rights reserved.