Republic of the Philippines

CAVITE STATE UNIVERSITY

Cavite, Philippines
(6346) 4150-010/4150-011 (6346) 4150-012
Website: www.cvsu.edu.ph
Email Address: [email protected]

ACTG 99: Accounting Synthesis

Incorporating the Financial Impact of Environmental Issues in Financing, Investing and
Operating of Fuji Xerox Co., Ltd.

KATRINA LUISA M. CAMPOTO

LORIEL A. MACEDA
JANE FRANCES J. MANGROBANG
JUSTIN V. PEREZ
GERWIN RIEGO
A. Environmental Accounting and Reporting Defined
Environmental Accounting

Environmental accounting aims at achieving sustainable development, maintaining a

favorable relationship with the community, and pursuing effective and efficient environmental
conservation activities. These accounting procedures allow a company to identify the cost of
environmental conservation during the normal course of business, identify benefit gained from
such activities, provide the best possible means of quantitative measurement (in monetary value
or physical units) and support the communication of its results.

Functions of Environmental Accounting

Internal Functions

As one step of a company’s environmental information system, internal function makes it

possible to manage environmental conservation cost and analyze the cost of environmental
conservation activities versus the benefit obtained, and promotes effective and efficient
environmental conservation activities through suitable decision-making. It is desirable for
environmental accounting to function as a business management tool for use by managers and
related business units.

External Functions

By disclosing the quantitatively measured results of its environmental conservation

activities, external functions allow a company to influence the decision-making of stakeholders,
such as consumers, business partners, investors, local residents, and administration. It is hoped
that the publication of environmental accounting results will function both as a means for
companies to fulfill their responsibility for accountability to stakeholders and, simultaneously, as
a means for appropriate evaluation of environmental conservation activities.
Environmental Reporting

Environmental reporting is the process by which management reports to the public about
environmental impacts of business activities and environmental initiatives undertaken to mitigate
them by disclosing the environmental information related to those activities. Environmental
reporting allows enterprises to fulfill their accountability to society as businesses that use natural
resources, to provide stakeholders with useful information that may affect their judgement, and
to promote environmental communication with them. Environmental reporting should provide
relevant information systematically and comprehensively and in accordance with the general
principles for environmental reporting specified in the guidelines.

Functions of Environmental Reporting

The Environmental Reporting has two fundamental functions, an external (or social)
function, as a communication tool between an organization and society, and an internal function,
which promotes environmental initiatives in an enterprise’s activities. They play a very
important role in promoting voluntary environmental initiatives in an enterprise’s activities.

The following three are external functions:

(1) Disclose information based on the social accountability of an enterprise

(2) Provide useful information for stakeholders making decision

(3) Promote environmental initiatives by “a pledge and review” between an enterprise

and society

The following two are internal functions:

(4) Establish or revise the environmental policy, objectives and action plans of the
organization

(5) Motivate and encourage the environmental activities of managements and employees
General Principles for Environmental Reporting

Environmental reporting is an environmental communication tool by which an enterprise

makes itself accountable by providing information useful for the decision-making needs of
stakeholders.

The general principles for environmental reporting described below are based on the
basic assumptions of environmental reporting. Environmental reporting’s functions cannot be
fulfilled unless an environmental report is prepared in accordance with these general principles.

The general principles are based on the need for relevance, faithful representation,
comparability, clarity, verifiability, and timeliness. The fundamental principles of relevance and
faithful representation ensure the usefulness of the information, which is enhanced if it complies
with supplementary principles.

Principle 1: Relevance - Environmental reporting must provide information which is

capable of making a difference in users’ decision making. No material information must be
omitted.

Principle 2: Faithful Representation - In its environmental reporting, an enterprise

must faithfully represent the environmental impacts of its business activities, the environmental
initiatives undertaken to mitigate them, and their economic and social implications.

Principle 3: Comparability - An enterprise’s environmental reporting is expected to

provide information that can be compared with similar information about the same entity in
another period or date and about other entities within a given range.

Principle 4: Understandability - A firm’s environmental reporting is expected to

provide concise and clear information by classifying it relevantly, linking it to other information,
and representing it in a way that users can understand without requiring special knowledge.

Principle 5: Verifiability - Environmental reporting is expected to clearly state its

assumptions, accounting and reporting methods, calculation bases, and other relevant
information so that users can objectively verify that the information faithfully represents the
original phenomena it purports to represent.

Principle 6: Timeliness - In its environmental reporting, an enterprise is expected to

publish information for decision-makers in time to influence their decisions.
B. Company Profile

Name : Fuji Xerox Co., Ltd.

Headquarters : 9-7-3 Akasaka, Minato-ku, Tokyo 107-0052, JAPAN

Chairman of the Board and Representative Director : Shigetaka Komori

President and Representative Director : Hiroshi Kurihara

Date of establishment : February 20, 1962 - Established as a joint venture between Rank Xerox
Limited (currently Xerox Limited) and Fuji Photo Film Co., Ltd. (currently FUJIFILM Holdings
Corporation)

Mission Statement

A common goal for Fuji Xerox and all Group companies including domestic and
overseas affiliates and sales subsidiaries, as well as all employees.

Build an environment for the creation and

effective utilization of knowledge.

Contribute to the advancement of the global

community by continuously fostering mutual trust
and enriching diverse cultures.

Achieve growth and fulfillment in both our

professional and personal lives.
Shared Values

The Shared Values comprise 10 value statements, each emphasizing our responsibility
and setting forth how we should approach business as members of society and as individuals
based on a fundamental respect for humanity.

Customer
satisfaction
Adventurous
/Pioneer Environmental
Spirit Consciousness

Joy and High Ethical

Fulfillment Standards

Shared
values
Trust and Scientific
Consideration Thinking

Cultural Professionalism
Diversity
Team Split

Business Summary

Office Products & Printers Business

Providing office equipment such as multifunction devices and printers as well as related
solutions.
Production Services Business

Providing digital printers and printing workflow solutions in the commercial printing
segment focusing on graphic communications —from creating contents to processing and
delivery.

Solutions & Services Business

Providing document services— which include system integration, cloud services,

management of multifunction devices, and Business Process Outsourcing of mission-critical
processes—, tailored to various industries or business processes to meet business challenges.
C. Environmental Policy

Fuji Xerox and its affiliates have established an Ecology and Safety Vision which is
based on the Fujifilm Group Green Policy and on “Environmental Consciousness,” one of the
Shared Values of Fuji Xerox and its affiliates. As a policy aimed at actualizing that vision,
moreover, they have formulated an Ecology and Safety Basic Policy and, based on it, are
endeavoring to achieve world-class environmental management.

Fujifilm Group Green Policy

Basic Policy

“Sustainable development” is the most important issue for our planet, the human race, and all
business entities in the 21st century. The Fujifilm Group companies around the world aim to stay
at the forefront of efforts to attain this goal in terms of environmental, economic, and social
terms. We will strive for customer satisfaction as well as our contributions to “sustainable
development” by achieving high environmental quality in products, services, and corporate
activities.

Action Guidelines

1. We will promote environmental burden reduction and product safety assurance with the
following four items in mind:
(1) Our efforts are pursued throughout all corporate activities.
(2) Our efforts are pursued throughout the entire product life cycle.
(3) We give overall consideration to economic and social implications.
(4) Biodiversity conservation
2. We will improve our management of chemical substances and the chemical content of
products to reduce environmental risks.
3. We will comply with legal regulations as well as Fujifilm Group regulations, standards, and
requirements that are individually agreed on.
4. We will strengthen partnerships with our business partners, collaborate in government and
industrial activities, and actively participate in community activities.
5. We will actively give full disclosure of the information regarding our involvement in and
accomplishment of various environmental activities to all associated individuals, including
local communities, governments, and Fujifilm Group company employees, to facilitate open
communication.
6. We will heighten the environmental awareness of every Fujifilm Group employee through
employee education, so that we can fortify our infrastructure to face the challenges posed by
environmental issues in the future.

Fuji Xerox and Its Affiliates Ecology & Safety Vision

“By conducting, in all aspects of our business, activities that maximally value harmony with the
environment, and by providing products, services, and information that are safe and friendly to
the environment, we will achieve the world’s highest level of contributions to the environmental
conservation activities of customers and society.”

Fuji Xerox and Its Affiliates Ecology & Safety Basic Policy

Based on the recognition that environmental conservation and safety preservation are the basis of
corporate existence, Fuji Xerox and its affiliates will, through our entire workforce, strive to
ensure that its business practices progressively reduce environmental impact. We will work to
protect the lives and assets of our customers, citizens, and our employees. We will continue to
maintain and improve our business practices.

This policy shall apply the entire operations of Fuji Xerox and its affiliates in Japan and
overseas.

1. Compliance with legal restrictions and voluntary restraints

In carrying out its business activities, Fuji Xerox and its affiliates will not comply with
laws and regulations and industry standards concerning environmental conservation and
safety, but also abide by its own internal rules and standards.
2. Resource and energy saving efforts
Based on the results of environmental impact assessments, Fuji Xerox and its affiliates
will promote efforts to conserve, recycle, reuse resources and energy, in terms of both
products and business operations.

3. Development and implementation

Fuji Xerox and its affiliates will develop and introduce advanced technologies to further
reduce environmental impact and improve product safety.

4. Improving and strengthening management systems

Fuji Xerox and its affiliates will conduct audits and take other measures to further
improve and strengthen management systems for environmental conservation and
product safety.

5. Enhancing harmony with society

Fuji Xerox and its affiliates will strive to enhance a harmonious relationship with society
by participating in administrative programs, industry efforts, and local community
activities relates to environmental conservation and product safety, and also by positively
engaging in corporate citizenship activities that support voluntary employee participation.

6. Implementation of environmental marketing

Fuji Xerox and its affiliates will identify and share customers’ environmental needs and
utilize knowledge gained through environmental conservation activities to contribute to
improving customers’ level of environmental engagement.

7. Information Disclosure
Fuji Xerox and its affiliates will actively disclose information on its environmental
conservation and product safety activities, both internally and externally, and incorporate
feedbacks into future activities.
 8. Contingency response

In case of a contingency that has or may have an adverse effect on the local environment
or an accident attributable to product safety or other incidents occur, Fuji Xerox and its
affiliates will solve problems sincerely, swiftly, and appropriately, and will make a
concerted effort to prevent the recurrence of similar problems.

9. Training and Education

Fuji Xerox and its affiliates will educate its employees in, and raise awareness of
environmental conservation and product safety, while also urging them to act in
accordance with this policy.

10. Collaboration with business partners

Fuji Xerox and its affiliates will ensure that its cooperative firms and business partners
understand this policy and carry out business activities accordingly.

D. Environmental Management System

The CSR Committee makes decisions on environmental matters. These

environmental matters involve different efforts and initiatives to reduce environmental impact in
business activities, as well as prevention for other possible environmental issues and impacts.

The Environmental Committee, which is chaired by the Executive Officer responsible for
environmental issues and which consists of the management team including the President as well
as the heads of the relevant departments, devises and reviews environmental management plans,
and discusses and approves other important matters.

Furthermore, separate subcommittees organized by function serve to develop, promote,

and review detailed implementation plans for each area that it covers.
Environment-related Committees (Fiscal 2013)

Reducing Environmental Impact from the Business Activities

One of the goals and objectives of CSR committee is to reduce the environmental impact
due to different business activities. Hence, the following efforts and initiatives are being
implemented by the management:

Efforts at Production and Development Sites

Fuji Xerox continually sought to cut electricity use by 15% or more since 2010. Then
aside from that, the firm also develops an energy-conserving manufacturing technique and
consider introducing these into our manufacturing processes. Through these and other efforts, we
will strengthen our activities with medium to long-range perspective in mind.

Efforts in Offices

Since year 2016, the firm continued to conduct activities to conserve the power consumed
for air-conditioning and lighting, make eco-driving efforts, and foster the Cool Biz summer dress
code at the offices of Sales, Services and Administrative Department. This was mandatorily
implemented for all Fuji Xerox Companies world-wide, if applicable.
Initiatives at Product Logistics

Fuji Xerox investigates on how to reduce Carbon Dioxide emissions in its transportation
methods with aim of meeting Fuji Xerox’s 2020 greenhouse gases reduction targets. Specific
activities included transport efficiency and shorten transportation distances and promoting eco-
driving for truck transport.

Other Initiatives

For further reduction of greenhouse gases, Fuji Xerox is investigating in overseas

projects for Green House Gases reduction under the Kyoto Mechanism, introducing green
certificates including wind power generation, and promoting efficient use of electric power
installing ice thermal storage system

Domestic and International Facilities Attain ISO 14001 Certification

Fuji Xerox attained certification under the ISO 14001 international standard for
environmental management at sites in Japan and around the world, including affiliates and sales
companies. By obtaining this certification in both production and non-production segments in
Japan and internationally, we are making our everyday environmental management more
efficient while helping people across the organization grasp the importance of environmental
management. In fiscal 2013, Fuji Xerox Hai Phong Co., Ltd., which is a new production site that
began operations in Vietnam in November, acquired the ISO14001 certification very quickly.
Furthermore, aside from ISO certifications, Fuji Xerox’s environmental efforts was recognized
through being named as the Best Green Company of the Year 2016 and received Trust-Eco 1500
award from 3Rs Promotion Council-President.
E. Environmental Accounting of Fuji Xerox Co., Ltd

Environmental accounting is a means of quantitatively evaluating environmental

activities. It expresses changes in revenues and expenditures and in environmental impacts.

Fuji Xerox unconsolidated (million yen)

Fuji Xerox unconsolidated

Categories of (million yen)
Main Initiatives and
Environmental
Benefits
Conservation costs
Investment Costs Benefits

Costs and benefits of

reducing environmental
1. Costs in business areas 110 0 61
impacts generated from
products and services

Activities for preventing

Pollution
pollution of air, water, 0 0 0
prevention
soil, etc.

Activities for preventing

global warming and
Global
protecting the ozone 83 0 40
Breakdown environment
layer (including energy-
conservation activities)

Activities for reducing

Resource resource inputs and
28 0 21
recycling reducing and reusing
waste materials

Costs and benefits of

2. Upstream/downstream green purchasing and 0 6,799 5,927
product recycling

Costs and benefits of

EMS maintenance,
3. Management activities 0 139 0
operation, environmental-
impact measurement, etc.
 Costs and benefits of
creating environmentally
4. Research and development friendly technologies, 0 4,283 0
products, and production
equipment

Costs and benefits of

supporting environmental
5. Social activities groups and of 1 11 0
neighborhood greening
and tree-planting

Costs and benefits of

remediating hazardous
material leaks and other
6. Environmental damage 0 0 0
efforts to restore and
maintain healthy
conditions.

Total 111 11,233 5,988

Method of Calculation

1. The period covered is April 1, 2013 to March 31, 2014.

2. The report applies to Fuji Xerox and its consolidated affiliates.

3. The environmental accounting is based on the Ministry of the Environment's

‘Environmental Accounting Guidelines 2005.’

4. The investment figures cover all depreciable environment related facilities acquired
during the period.

5. Regarding depreciation
 The depreciation of environmental conservation facilities acquired in or before 2002
was calculated using the same accounting method as theretofore, whereas a three-year
straight-line method of depreciation was used for facilities acquired in or after 2003.

 The depreciation for wastewater treatment equipment and other pollution-prevention

facilities covers all such assets that are in operation.
  The deprecation for facilities related to global environment conservation and resource
recycling covers all operating facilities acquired in or after 1995.

6. For compound costs, the portion related to the environment is calculated by subtraction or
proportional division.

7. Only those economic effects that can be measured are included. (Expected effects based
on estimates are not included.)

References

“Environmental Accounting Guidelines”, Ministry of the Environment, 2005

“Environmental Reporting Guidelines”, Ministry of the Environment, 2012

http://www.fujixerox.com/eng/company/sr/2016
https://www.fujixerox.com/eng/company/sr/2014/stakeholder/environment/account.html

http://www.fujixerox.com/eng/company/company_profile/pdf/t01_e01.pdf