Environmental Accounting“Environmental accounting” is a tool for ascertaining the cost and effect of a company’s environmental activities for use within the company’s routine operations. At the TEL Group, we have decided toadopt an environmental accounting system to quantitatively ascertain the costs associated with ourenvironmental conservation activities and utilize them as gauges of corporate activities. Although
there are currently no uniform international standard for environmental accounting definitions andclassifications, Japan’s Environment Agency released Developing an Environmental Accounting System (Year 2000 Report) in May 2000.
In January 2000, we established an Environmental Accounting Working Group composed of TEL
Group personnel from throughout Japan. The Environment, Health and Safety Center serves as theWorking Group’s secretariat. At the same time, we also clarified (1) our approach to adopting environmental accounting, (2) the scope of our environmental accounting program, and (3) methods oftabulating environmental accounting data. In fiscal year 1999, we ascertained the cost of our environmental activities and implemented an environmental accounting system on a trial basis atop the foundation of the environmental management system. We intend to maintain such environmental conservation activities in the future as well.

■ Fiscal Year 1999 Results
Our fiscal year 1999 environmental costs (investments and expenses) are tabulated below. The numbers apply to the domestic plants and other facilities of TEL and its affiliates. Environmental conservation costs are classified as cost within the business area, management activity cost, and sosial activity cost. These costs do not include depreciation of capital equipment.

■ Future Issues
During the recent trial, we did not calculate costs such as cost of upper stream/lower stream, R&D
cost, and environmental damage cost, but we consider it necessary to investigate and include suchcosts in the future. From the standpoint of effective utilization of management resources, it is also
necessary to quantify improvements in environmental performance and ascertain their cost and effect. We plan to formulate an approach to ascertaining results and to undertake to quantify resultsin monetary terms based on this approach. We intend to disclose such issues as they are determined.

■ TEL Group’s Environmental CostsEnvironmental Preservation
Cost Classifications(FY1999 results in thousands of yen)

Main Activities

Investments

Expenses

133,114454,598

Itemization

Cost within the business area
(1) Pollution prevention costs

air pollution, water pollution, soil contamination, etc.

76,718142,617(2) Global environmental
conservation costs

climate change prevention, resource conservation,ozone layer depletion prevention , etc.

37,775

24,791(3) Resource circulation costs

efficient use of resource, waste reduction, etc.

18,621

287,190630

49,242

041,487

133,744545,327

Management activity costs

environmental education, monitoring andmeasuring environmental impacts , etc.

Social activity costs

afforestation, support of local environmental
activities, environmental information disclosure, etc.

Total

Tokyo ElectronEnvironmental Report 2000

■ Major Environmental Costs
Below are several examples of the TEL Group’s major environmental costs in the categories of costwithin the business area, management activity cost, and social activity cost. Cost within the business area are further classified as (1) pollution prevention costs, (2) global environmental conservation costs, and (3) resource circulation costs.
• Cost within the business area:(1) Pollution prevention costs: installation of filtering equipment, incinerator dismantlement
and removal expense, construction of storage facilities for special material receptacles, installation of redundant plumbing for pure-water product equipment’s liquid waste, environmental equipment maintenance expense, etc.
(2) Global environmental conservation costs: installation of unit cleaners for turbo freezers, installation of UV-blocking film on windows, rebuilding of vacuum pumps’ cooling water circulation systems, etc.
(3) Resource circulation costs: construction and enlargement of waste storage facilities, recycling expenses, waste processing expenses, etc.
• Management activity costs: environmental education expenses, cost of periodic audits by thirdparty organizations, environmental measurement expenses (e.g., for air/water pollution, soil contamination, noise, vibration, etc.), purchase of LCA software, etc.
• Social activity costs: afforestation expenses, expenses to support environmental activities conducted by local residents, contributions to environmental groups, environmental announcement expenses
Breakdown of Investment Expenditures
Resource circulation costs Management activity costs
13.9%
0.5%

Pollution prevention costs
air pollution, water pollution, soil contamination, etc.

Global environmental conservation costs
Global environmental
conservation costs
28.2%

Pollution prevention
costs
57.4%

climate change prevention, resource conservation,ozone layer depletion prevention, etc.

Resource circulation costs
efficient use of resource, waste reduction, etc.

Management activity costs
environmental education, monitoring/measuring of environmental impacts, etc.

Breakdown of Expenses
Global environmental
Sosial activity costs
conservation costs
7.6%
4.5%
Managementactivity costs
9.0%
Resource circulation
Pollution prevention
costs
costs
52.7%
26.2%

Resource circulation costs
efficient use of resource, waste reduction, etc.

Pollution prevention costs
air pollution, water pollution, soil contamination, etc.

Social activity costs
afforestation, support for local environmentalactivities, environmental information disclosure, etc.

Management activity costs
environmental education, monitoring/measuring of environmental impacts, etc.

Global environmental conservation costs
climate change prevention, resource conservation,ozone layer depletion prevention, etc.

Tokyo Electron

Environmental Report 2000