The Fuji Electric Group introduced environmental accounting in fiscal 2000 as a key means of assessing environmental management performance. The costs and benefits of environmental preservation measures are analyzed and estimated in quantitative terms for annual public disclosure. Environmental accounting methods take into account some of the recommendations in the 2005 guidelines released by Japan's Ministry of the Environment. They also include "estimated benefits" accruing to customers due to energy savings generated by the use of eco-friendly products. This practice is in line with the Group's general aim to expand the adoption of such products.

Fiscal 2005 Results

Environmental preservation costs totaled 5.63 billion, comprised of 1.16 billion in investment and 4.47 billion in expenses. Total environmental preservation benefits amounted to 1.85 billion, comprised of 0.82 billion in income arising from sales of valuable items, 0.26 billion in energy savings and other reductions in costs, and 0.77 billion in estimated benefits.

  These figures show that the major issue for the Fuji Electric Group is that the amounts of environmental investment and R&D expenses that accrue due to eco-friendly ("eco-products") are low in relative terms. Environmental investments are ongoing, based on current plans. The Group is actively developing an internal Group-wide accreditation scheme for eco-products in an effort to promote significant expansion of the range of such products. Ongoing energy savings accruing to customers during product use are measured in terms of the proxy indicator of estimated benefits. The aim is to increase this figure substantially by expanding the range of eco-products sold by Fuji Electric Group companies.

Notes:
1. Data apply to fiscal 2005 (April 1, 2005 to March 31, 2006).
2. Data compiled for all consolidated production subsidiaries.

(million)

Category		Details	Total (year-on-year change)	Breakdown
				Investment	Expenses *1
1.	Business Areas		1,695 (+643)	987	708
	Pollution prevention	Maintenance, control and upgrade costs for air/wastewater treatment and noise prevention facilities	799 (+459)	557	242
	Global environmental preservation	Installation, maintenance and control costs for energysaving equipment	456 (+201)	353	103
	Resource circulations	Costs for maintenance, control and reduction of industrial waste	440 (17)	77	363
2.	Upstream / downstream	Waste product disposal costs	35 (+16)	6	29
3.	Administrative operations	Costs of employee environmental education programs, EMS operation, monitoring and measurement of ecoimpact, and environmental preservation measures	550 (7)	35	515
4.	R&D	Cost of energy conservation and other environmental R&D programs	3,278 (1,058)	128	3,150
5.	Social activities	Costs of site conservation/greenery programs and environmental assistance	6 (+1)		6
6.	Environmental restoration	Contaminated soil removal/treatment costs and soil decontamination levies	61 (187)		61
Total			5,625 (597)	1,156	4,469

*1.	Expenses include depreciation, annual leasing charges, R&D and other costs (including maintenance and control cost

(million)

Category	Details	Total (year-on-year change)
Income*1	Proceeds from sale of valuable recycled items	822 (+100)
Cost reductions*2	Savings due to lower energy consumption and reduced treatment costs for waste and sewage	264 (+49)
Estimated benefits*3	Energy saving accruing to customers from eco-friendly products	772 (+20)
Total		1,858 (+169)

*1	Income refers to actual revenues generated by sale of valuable items.
*2	Cost reductions refer to savings from lower charges for electricity and waste treatment services.
*3	Estimated benefits refer to economic benefits for customers from savings due to reduced power consumption of more energy-efficient products. Benefits (in yen) are calculated as differences in annual power consumption between old and new product versions, multiplied by standard unit power costs, multiplied by annual product shipment volumes, aggregated over all eco-friendly products. The standard unit power cost is estimated at 10/kWh (based on data from Tokyo Electric Power and Kansai Electric Power).

Fuji Electric Group environmental accounting procedures use inhouse calculation formulae for environmental preservation costs and benefits, based on environmental accounting guidelines issued by the Ministry of the Environment of Japan.

Economic benefits (monetary units) derived from environmental preservation measures comprise direct economic benefits calculated from tangible evidence whose benefit is realized fully within the fiscal year, plus estimated economic benefits that are based on monetary savings by customers due to lower energy consumption by eco-friendly products. In fiscal 2005, these products were expanded to include certain models of can vending machines, cup vending machines, mini-UPS products, gas detectors and inverters.

Capital investment depreciation is computed using the straight-line method with a residual value of zero, based on the statutory useful live of products. Benefits of capital investments are also computed over statutory useful product life, with the exception that no benefit is included for any capital investments with environmental preservation aims made prior to fiscal 2000.