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  Environmental Accounting was introduced in FY2000 to periodically evaluate the activity results and environmental costs of business activities. The results were then applied in an effort to practice more effective and efficient environmental management. We will continue to use this as a tool for the public to gain further understanding of the environmental aspects of our business. In addition, Mie factory held a study meeting on material flow cost accounting* and discussed potential benefits of its introduction.

1. Aggregation Procedures and Guidelines

• The following Guidelines are employed as we emphasize reliability, comparability and verifiability; "Environmental Accounting Guideline FY2005" published by the Ministry of Environment, "2003 Environmental Conservation Cost Category Handbook" by the Ministry of Environment, "Environmental Accounting Guideline for Chemical Industries" by JCIA (Japan Chemical Industry Association) and JRCC (Japan Responsible Care Council).
• "Deemed Effect" and "Risk Avoidance" were not taken into consideration. However, we do plan to incorporate these items when the standardized guidelines are set in the future.
• Depreciation has been calculated by legal straight-line depreciation, even though the depreciation period tends to vary by facility. The economic effect includes the 5-year depreciation effect during the depreciation period.

2. Aggregation Scope and Period

  We employ consolidated environmental accounting that aggregates accounting of Asahi Denka Co., Ltd. and domestic group companies, since FY2003.

3. Environmental Investments and Economic Effects

  Among \9.06 billion gross investment in facilities for FY 2004, environmental investment was \1.39 billion, 15.3% of the total. The ratio increased greatly because of our proactive investment on countermeasures for global warming. Among the environmental conservation cost of \1.68 billion, the economic effect of the environmental conservation measures amounted to \600 million, 35.7% of the total cost.

  Environmental investment increased by \760 million and environmental conservation cost decreased by \100 million over the previous FY. Profit generated by environmental investment increased \40 million.

4. Cost required for GHGs emission reduction

  Cost required for 1t GHGs emission reduction was \38,000, \31,000 decrease over \69,000 of FY2003. GHGs emission was greatly reduced as a result of energy conservation efforts in FY2004.

5. Environmental Accounting Results

※Aggregation Scope: Asahi Denka Co., Ltd. and domestic group companies
  Period: 2004 April 1- 2005 March 31

Environmental Protection Cost（unit: 1 million yen）
Categories		Purpose of Cost	Investment	Cost
Cost in Business Area		Environmental conservation cost to reduce environmental burden	1,379	1,534
breakdown	Pollution Control	Maintenance and management of facilities to prevent air pollution, water and soil contamination, and noise pollution. Levy	288	813
	Global Environment	Maintenance and management of facilities to control greenhouse gas emissions (energy conservation) and prevent ozone layer depletion.	1,049	243
	Resource Recycling	Resource conservation, i.e. waste reduction and recycling promotion	42	478
Up/downstream Environmental Burden Reduction		Collect and recycle packages/containers and promote green procurement	0	14
Environmental Management Activities		Environmental education, ISO compliance, environmental impact analysis/measurement of business activities, and greenery and herbicide works of factories and offices.	0	96
R&D		R&D related to environmental protection (environmentally sound products and technologies)	8	24
Social Activities		Green procurement, herbicidal works, information disclosure, and association participation fees.	0	3
Environmental Damage Compensations		Restore soil contamination and other damage to nature	0	9
Total			1,387	1,680

Environmental Protection Effect
Categories of Environmental Protection Effect	Environmental Performance Index	Unit	FY2003	FY2004	Difference from the previous FY
Resource Input	Gross Energy Input (crude oil equivalent)	(kl)	71,839	73,301	1,462
	Electric Power Purchased	(kl)	23,716	25,505	1,789
	Steam/ Fuel Purchased	(kl)	48,123	47,796	▲327
	Gross Water Input	(1,000t)	13,397	14,508	1,111
	Industrial Water	(1,000t)	5,935	6,039	104
	Water Supply, Purified Water, Groundwater and Other	(1,000t)	7,462	8,469	1,007
Waste and Environmental Burden Discharged	Greenhouse Gases (GHGs) Emission	(t)	182,294	183,307	1,013
	CO2	(t)	182,185	183,198	1,013
	Other GHGs	(t)	109	109	0
	Chemical Substances Discharge/ Transportation	(1,000t)	453	418	▲35
	Discharge to Air, Water, and Soil	(t)	10	9	▲1
	Discharge as Waste	(t)	443	409	▲34
	Amount of Industrial Waste Generated	(t)	34,340	38,043	3,703
	Waste Disposal by Commissioned Subcontractor	(t)	13,442	15,575	2,133
	Final Landfill Amount	(t)	1,281	782	▲499
	Gross Water Discharge	(1,000t)	2,004	2,140	136
	BOD	(t)	43	56	13
	COD	(t)	56	52	▲4
	Other Emission	(t)	148	63	▲85
	NOx	(t)	54	51	▲3
	SOx	(t)	94	12	▲82
Goods and Services Calculated	CO2 Emission from Transportation	(1,000t)	5,022	5,144	122
	Amount of Products Transported	(kt)	178	208	30
	Transportation Efficiency and Other	(t)	4,890	6,803	1,913

6. Economic Effect of Environmental Protection, Environmental Investment, and Change of Environmental Protection Investment

Economic Effects Associated with the Environmental Protection Measures （unit: 1 million yen）
Contents of Effect	Amount
Income from Recycling	32
Cost Reduction by Energy Conservation	287
Waste Disposal Cost Reduction Associated with Recycling	42
Reduction in Raw Materials Used	190
Logistics Cost Reduction due to Better Transport Efficiency	50
Total	601

7. Future Direction

  We seek to improve data accuracy of each factory through internal verification based on “Environmental Accounting Calculation Guideline”. We are planning to introduce environmental accounting in factories overseas.

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