Environmental Accounting

Calculation method

NEC's view on environmental accounting

Environmental accounting represents the technique for aggregating the costs (expenditures) and the effects (revenues) associated with the environmental activities and evaluating the results from economic viewpoints.

NEC's objectives for implementation of environmental accounting

Environmental accounting is implemented for the following objectives.

1. Enhance cost awareness by evaluating the economic effects of environmental activities.
2. Share the recognition of the importance of sustainable business development and use the results for revitalization and efficiency improvements in environmental activities.
3. Use the information as part of the environmental information that is to be provided to the stakeholders. (IR activity)
4. Use environmental accounting for improvements and reforms in the in-house operations.

History of the introduction of environmental accounting

November 1998

Determined the items to be examined for environmental accounting: Started data collection and aggregation trials.

March 1999

Incorporated the environmental accounting items into the recycling-type environmental auditing system.

June

Announced the environmental accounting trial results in the 1999 annual environmental report.

July

Created the NEC Environmental Accounting Guidelines (Domestic/Overseas)

August

Commenced the collection of data from overseas production companies.

March 2000

Aggregated environmental accounting data by consolidating the data from domestic and overseas NEC companies.

June

Reported the environmental accounting results by business and domestic/overseas companies, and the overall results in the FY2000 Annual Environmental Report.

June 2001

Aggregated the data within the same range as that of the previous year and also aggregated the data by comparing the economic effects and quantitative reduction effects.

June 2002

Added design activities for the environment-oriented products and recovery of used products/3R activities

Basic concept on the implementation of environmental accounting

NEC's environmental accounting recognizes the costs and effects associated with the environmental activities that are defined by NEC.
The basic concept on the implementation of environmental accounting is as follows.

4.1 Scope of aggregation

Domestic production hubs, design and development business sites, and major overseas production hubs

4.2 Concept of cost calculation

(1) Definition of "Cost"

• Investment amount

The amount of cost incurred over several terms for environmental conservation whose effects are sustained during those terms.

• Cost

The following are cost items that are generated for environmental conservation.

• Facility depreciation allowance and rental/lease expenditure
• Personnel expenditure (calculated by "manpower associated with the activities fluctuating loading cost")
• Running cost (energy cost incurred for facility operation and maintenance management, maintenance management costs such as repairs, and so on)
• Other expenditures (payment to third parties)

(2) Handling composite activities

Applied only when the cost for environmental activities can be clearly separated. (Not divided forcibly)

4.3 Concept of economic effects

Only the aggregation results of environmental accounting that are clearly defined are announced externally. Economic effects are classified into the following two categories.

Saving results such as energy savings, resource savings, and waste reduction

In the aggregation table, these items are applicable to the amount of economic effects on "Global warming", "Effective resource utilization", and "Resource recycling measures".

Only the aggregation results of environmental accounting that are clearly defined are announced externally. Economic effects are classified into the following two categories.

Saving effects by reducing the cost while maintaining the quality of the activities

In the aggregation results table, these items are applicable to a part of the amount of economic effects on "Global warming", "Effective resource utilization", "Resource recycling measures", and "ISO conservation and environmental audits" and the amount of environmental effects on the "Personnel costs associated with environmental activities".
The preservation of activity quality is confirmed separately in the environmental audit system.

5. Scope of environmental accounting (Aggregation items and activities targeted for aggregation) and the aggregation method

(1) Prevention of global warming

A measure that enables the clear observation of global warming preventative effects such as energy reduction.

• Cost aggregation method:

Refer to 4.2 (1).

• Effect aggregation method:

Economic effects are calculated using the following methods.

• "Amount of energy purchased before the activity" - "Amount of energy purchased after the activity"
• "Assumed amount of energy purchased without the activity" - "Amount of energy purchased after the activity"

The effect of the impact on reduction associated with the activity is calculated as follows.

• "Amount of CO₂ emitted before the activity" - "Amount of CO₂ emitted after the activity"
• "Assumed amount of CO₂ emitted without the activity" - "Amount of CO₂ emitted after the activity"

(2) Effective resource utilization

A measure that enables the clear observation of the resource reduction effects.

• Cost aggregation method:

Refer to 4.2 (1).

• Effect aggregation method:

The economic effect is calculated using the following methods.

• "Amount of materials purchased, such as chemicals and paper, before the activity" - "Amount of materials purchased, such as chemicals and paper, after the activity"
• "Assumed amount of materials purchased, such as chemicals and paper, without the activity" - "Amount of materials purchased, such as chemicals and paper, after the activity"

The reduction in the amount of materials associated with the activity is calculated using the following methods.

• "Amount of materials used, such as chemicals and paper, before the activity" - "Amount of materials used, such as chemicals and paper, after the activity"
• "Assumed amount of materials used, such as chemicals and paper, without the activity" - "Amount of materials used, such as chemicals and paper, after the activity"

(3) Resource recycling activity

• Resource recycling activity

A measure that enables the clear observation of the waste reduction effects.

• Cost aggregation method:

Refer to 4.2 (1).

• Effect aggregation method:

The economic effect is calculated using the following methods.

• "Waste treatment subcontract costs before the activity" - "Waste treatment subcontract costs after the activity"
• "Waste treatment subcontract costs without the activity" - "Waste treatment subcontract costs after the activity"

The reduction in the amount of waste due to the waste reduction measure is calculated as follows.

• "Amount of waste without the activity" - "Amount of waste after the activity"
• "Assumed amount of waste before the activity" - "Amount of waste after the activity"

(4) Handling risks

• Pollution prevention measure

A risk minimization measure such as the pollution prevention measure includes the acquisition of legal licenses and training for emergency measures.

• Cost aggregation method:

Refer to 4.2 (1).

• Effect aggregation method:

For the cost effect, the reduction in the cost while maintaining the quality of the existing activity is recorded.
The maintenance of the quality of the activity is separately secured by internal auditing and second-party auditing.

(5) Handling compliance with law

Activities involving applications based on environmental laws and logical regulations such as dangerous substances and high-pressure gases, submission for special facilities, analysis measurements for the prevention of pollution, and work environment measurements.

• Cost aggregation method:

Refer to 4.2 (1).

• Effect aggregation method:

For the cost effect, the reduction in the cost while maintaining the quality of the existing activity is recorded.
The maintenance of the quality of the activity is separately secured by internal auditing and second-party auditing.

(6) Designing environment-oriented products

Designing environment-oriented products and the recovery of used products and 3R activities

• Cost aggregation method:

Refer to 4.2 (1).

• Effect aggregation method:

The cost that is reduced by reusing the components obtained by recovering and dismantling used products is recorded.

(7) Management activities

• Personnel cost associated with the environmental activities

A personnel costs in the department that control the entire business offices and production companies regarding the environmental management activities.
However, the personnel costs of the engineering sector for management targets such as power usage are not included.
Adjustments are made with the personnel costs that are recorded for each activity to avoid duplicate counting.

• Cost aggregation method:

"Manpower in the environmental control department" × "Fluctuating loading costs"

(8) ISO reservation and environmental audit

Activities for developing or improving the environmental management system, including the internal audit, that are conducted independently by the site and the "Recycling Environmental Activity Promotion Conference (Second-Party Auditing System in NEC)" that is conducted across the NEC board.

• Cost aggregation method:

Refer to 4.2 (1).

• Effect aggregation method:

For the cost effect, the reduction in the cost while maintaining the quality of the existing activity is recorded.
The maintenance of the quality of the activity is separately secured by internal auditing and second-party auditing.

(9) Human resource development

Environmental education generally provided to employees, education and in-service practice for the employees who are in charge of the services that may impose serious impacts on the environment, seminars relating to the environment that are held internally and externally, lecture presentations, forums, education, and training

• Cost aggregation method:

Refer to 4.2 (1).

• Effect aggregation method:

For the cost effect, the reduction in the cost while maintaining the quality of the existing activity is recorded.
The maintenance of the quality of the activity is separately secured by internal auditing and second-party auditing.

(10) Research and development

The total annual cost of the research laboratory specializing in the environment.

(11) Social activity

• Contribution to society

Activities involving cooperation with the neighboring beautification movements, participation in regional events, cooperation with the government, and provision of environmental conservation activity know-how

• Cost aggregation method:

Refer to 4.2 (1).

(12) Information disclosure

• Contribution to society

Information distribution activities such as environmental reports, Internet homepages, answering questions from outside of the company, and newsletters.

• Cost aggregation method:

Refer to 4.2 (1).

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