Hitachi Construction Machinery : Environmental accounting for fiscal 2008

Our group performs environmental accounting in accordance with the Environmental Accounting Guidelines 2005 of the Ministry of the Environment to continuously improve environmental activities through a clear understanding of environmental conservation cost and environmental investment.

Environmental conservation cost is the total cost of operating facilities and management, research and development and investment for environmental activities. Environmental conservation effects comprise economic effects in terms of money and quantitative effects evaluated based on the amount of reduction in environmental impact. The latter is divided into two stages: manufacture of the product and use of the product. Concerning quantitative effects in the product use stage, the quantity of goods recycled by products for recycling is calculated to show the contribution towards materialization of a sustainable society.

Nine Group companies in Japan and outside Japan performed environmental accounting in fiscal 2008. Environmental conservation cost was 99% of the previous year, which is almost the same as previous year. The cost inside the premises of conserving the environment, which increased in fiscal 2008 by 4% from the previous year, is increasing every year. This shows that our group lays importance on conserving the environment in their premises. Research and development costs account for 67% of the environmental conservation costs. This is because our group is constantly developing new products to meet exhaust emission regulations that are becoming increasingly stringent. Environmental investment dropped to one-third of that in the previous year because of the recession.

Concerning environmental conservation effects real income effect was 66% of that in the previous year. This was because of a significant reduction in environmental investment due to the rapid recession, which resulted in insufficient effectiveness, and a reduction in sales of scrap metal. Concerning quantitative effects, the quantity of saving energy rose 13% compared to the previous year, which shows that the effect of the measures to save energy have started to materialize. The amount of the reduction in water consumption increased by 35% owing to the efforts at Hitachi Construction Machinery (China) . Our group will continue to constantly promote environmental management.

Environmental conservation cost (unit : million yen)
Classification		FY2007	FY2008	Major points for FY2008
1)Business area cost		2,041	2,114	Maintenance and depreciation costs of facilities to reduce environmental impact
Breakdown	1) Pollution prevention	1,142	1,131	Maintenance and management of drainage and painting facilities
	2) Global environmental conservation	440	497	Changes of fuel and depreciation of energy saving facilities
	3) Resource Circulation	459	487	Reduction in quantity of waste, recycling
2)Upstream and downstream costs		51	38	Recycling management costs of hydraulic equipment, etc.
3)Administration cost		357	376	Operation and personnel costs for the environmental management system and planting, beautification and other environmental improvements
4)Research and development cost		5,346	5,212	Costs of product research, development and design.
5)Social activity cost		1.5	0.3	Membership fees of environmental protection organizations
6)Environmental remediation cost		3.0	1.5	Compensation for suspending cultivation
Total		7,800	7,742	-
Environmental investment		2,467	788	Measures to prevent global warming, improvements in environmental equipment

Environmental conservation effects
Classification			Fiscal 2007	Fiscal 2008	Major points for FY 2008
Economic effects	Net income effect (unit : million yen)		2,066	1,425	Income from sales of recycled scrap metals, recycled hydraulic equipment, etc., and from patents
	Cost reduction effect (unit : million yen)		150	41	Electricity-saving, reduced waste and direct product delivery, etc.
	Total		2,216	1,467	-
Quantitative effects	Production stage	Energy saving amount (kl/year)	783	888	Reduced energy consumption by energy-saving facilities
		NO_X reduction (t/year)	1.3	0.0	Renewal of furnace for dry painting and boiler
		Water use reduction (t/year)	80,901	109,259	Effluent reuse and renewal of painting equipment
		Reduction of disposed waste (t/year)	79	31	Reduction through recycling
	In-use stage	Asphalt, etc., recycled (10,000 t/year)^*	1,250	1,310	Reduction through using products for recycling
		Wood waste recycled (10,000 t/year)^*	766	880
		Soil improved (10,000 t/year)^*	1,277	1,600
		Grease reduction (t/year)	9.6	8.3	Reduction by HN bush
		Lead solder reduction (t/year)	1.2	7.4	For hydraulic excavators and small excavators

* Estimated by operating hours of products.

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