Fiscal 2004 Environmental Accounting Results

The Fujitsu Group began efforts to gauge the costs and benefits of environmental-conservation-related activities from fiscal 1998. We have also implemented an environmental accounting system to evaluate environmental investments and benefits. These results have been evaluated by a third-party organization and issued as part of the fiscal 2004 business results.

Purpose for Launching the Environmental Accounting System

1. To clarify the company's position to stakeholders through information disclosure
2. To carry out long-term and continuous environmental measures
3. To optimize investment in environmental conservation
4. To add fresh energy to environmental conservation activities

Basic Environmental Accounting Elements

• Target Period:
  April 1, 2004 to March 31, 2005 (except for overseas subsidiaries using the fiscal period of January 1 to December 31, 2004)
• Aggregation Scope:
  Fujitsu and its consolidated domestic and overseas subsidiaries are tallied for the purpose of this accounting. Some subsidiary locations handling sales and software services are not included in this scope, however, bringing the total to 73 companies. Subsidiaries of consolidated subsidiaries (grandchild companies) are not included in the scope of coverage except in cases when they work together with their parent companies on environmental conservation activities.
• Computation Criteria for Environmental Conservation Costs:
  
  • Depreciation cost computation: The depreciation cost of an investment amount is calculated on a straight-line basis for a service life of 5 years (no residual value). The period of 5 years is the average period of time during which environmental conservation equipment is repaired or otherwise improved after its initial installation.
  • Composite cost computation: The composite cost, which comprises environmental conservation costs and other costs, is calculated with regard to environmental conservation in accordance with the 2005 Environmental Accounting Guidelines issued by the Ministry of the Environment.
• Computation Criteria for Environmental Conservation Benefits:
  
  • Range of benefits: Coverage extends to all real and estimated benefits (risk avoidance and deemed effects) stemming from reduction of the environmental burden that occurs during usage or disposal of materials and usage of services in business activities.
  • Development period for investment benefits and basis for this period: The calculation period for real benefits is synchronized with the depreciation period (60 months) of an investment. Estimated benefits are calculated on the same schedule as real benefits, during a depreciation period of 60 months. Benefits from environmental conservation activities and operating loss evasion that are complete within a single fiscal year are limited to the fiscal year in which they occur, but other benefits are assumed to develop within a period of 12 months. The following is a description of the basis for the benefits calculation.
  • Amount contributed by environmental conservation activities
    Benefit amount = Added value x Cost of maintaining environmental conservation equipment / Total accrued cost
    Concept: This calculation gauges the value added to production activities by environmental conservation activities as a share of the cost of each business location's environmental conservation and maintenance expenses.
  • Evaded amount of facility operating loss caused by legal noncompliance
    Benefit amount = Added value / Days of operation x Lost operating days
    Concept: This calculation estimates the amount of evaded risk presumed to arise from failure to carry out prior investment in compliance with laws and regulations. Lost operating days are determined according to the scale of environmental investment and set at a maximum of three days.
  • Amount of PR activity benefits
    Benefit amount = Cost of print and televised publicity x Number of media coverage / broadcast instances
    Concept: This calculation measures total coverage of environmental conservation activities in newspapers, magazines, and television in terms of publicity costs.
• Revisions to Significant Items
  
  • Administration benefits were originally defined as the estimated effect of the reduction of worker-hours accompanying the introduction of the environmental management system and environmental management information system. This item is now defined in terms of real effects, in accordance with the 2005 Environmental Accounting Guidelines issued by the Ministry of the Environment.
  • In the category of R&D and solutions business costs and benefits, it was decided to remove the Fujitsu Group's main environmental solutions business costs and related benefits from the targeted solutions business range.
  • Donations to groups conducting environmental conservation activities and any support activities that improve the corporate image have been included in the category of social activities benefits.

Environmental Accounting Overview

1. Trends in Environmental Accounting

Changes in environmental costs and benefits (unit: ¥100 million)

5. Third Party Audit (Environmental Accounting Portion)

The Shin Nihon Environmental and Quality Management Research Institute has completed the auditing procedures for Fujitsu's environmental accounting for fiscal 2004; this auditing is described here. Auditors carried out sampling of numerical data and the evidentiary materials backing it and conducted interviews with responsible persons within the Fujitsu organization. The chart below describes local audits in which auditors visited business locations. Six auditors carried out these inspections, whose main procedures are listed below. Improvement targets and environmental conservation effects showing the relationship between the environmental burden and environmental costs are reported separately. Publication of a full written report is planned for June.