Third Party Observations

* Meaning of the Green Ink Balance Report
Social awareness of environmental conservation changed dramatically after the 1997 Kyoto Convention on Climate Control (COP3). Corporations also gave serious consideration to the environment and became involved in various ways, including the publication of environmental reports. But our Green Balance Annual Report does not simply report on individual environmental policies; it connects the corporation to the environment and clearly explains how the environment is being preserved and what contributions are being made to society. The report also aims to make this information easily accessible by the public.
This report differs from other environmental reports by its inclusion of "green ink", a unique balance sheet expressed in terms of the environment. The green ink is expressed in ECO units, with the basis for the calculation of the ECO values and the meaning of the numbers explained in the text. Instead of appealing to vague goals and initiatives, the report offers uniquely calculated indicators that make it concrete and objective.
Including the observations of a third party (such as an environmental NGO holding views that are often in opposition to those of corporations) demonstrates respect for diversity and a pioneering effort to include a wide range of opinions. We hope that the ideas and opinions of concerned parties will be reflected in future reports. Third party observations should become a requirement in the environmental reports of all companies.

* Issues and Results from the Report
The FY 2000 report has grown from the previous year to accommodate more information. Another point is the addition of valuable related information. From these additions, we can see that in addition to reporting environmental involvement, the company has given serious consideration to cooperation with consumers and society.
We can also give high marks for the consideration of cooperation among consumers, government and corporations, and the importance of public disclosure of information. These are important items in efforts for environmental conservation and prevention of global warming, yet have been excluded until now. We have high hopes for further concrete development in this area. The data for environmental impact of containers and packaging using LCA (Life Cycle Assessment) and the discussion of factors behind the decline of returnable use are valuable additions to the report, and are important issues to be explored to reduce environmental impact. Takara Shuzo began bulk sales in response to the issues and has introduced the method to 100 stores.
On one hand, the use of ECO units increases the report's objectivity, but on the other hand, relations among numbers and comparisons to previous years can be difficult to understand. Work is needed on placement of tables and presentation of figures. Last year, the Green Ink Balance overview and contents on pages 2- 6 were easy to understand, but this year's report may be a little too complicated for readers.
Green ink calculation methods and product information related to environmental accounting are excluded for outsourced products. It may be difficult to include information on outside companies and their consignment work, but it would be preferable to clearly report on issues such as the environmental standards applied to these. Furthermore, while the report touches upon green procurement, a more detailed account of content and procurement figures would be preferable. As much as possible, Takara Shuzo should not only procure green products but also promote its environmental ideals and efforts to the companies and localities with which it works.

* Efforts to Reduce Environmental Impact
Results for FY 1999 showed +25 ECO for the Environmental Impact Reduction Green Ink indicator, a 3 ECO increase over last year. Results of measures are seen in the reduction of water and fuel consumption, increase in recycling rates, and reduction in total emissions of CO2, NOx, and SOx. However, some areas were not improved by the company's measures. Increased electrical use, regardless of the temporary stoppage of in-house generation given as an explanation, and increased CO2 output in the distribution stage are issues that need to be addressed immediately.
The Social Contribution Green Ink indicator was a -20 ECO, a 3 ECO decrease from last year, explained as the result of a decrease in expenditures for social contributions. Considering the difficulty of increasing funds for social contributions, we suggest improvement in the quality of the social contributions. The support for research and activities for the themes of 'water' and 'greenery' are worthwhile, but Takara Shuzo should consider supporting research and activities for issues that they are currently tackling to promote effective involvement. For example, the company points to research showing returnable bottles to be environmentally friendly, yet its use of these bottles declined. As the company recognizes the need for social systems to expand the use of returnable bottles, it should consider supporting research and activities to create those systems.
The report offers a simple explanation of the environmental education provided for employees, but this education seems to stop at motivational initiatives and information sharing. Initiatives allowing hands-on participation by employees are necessary, and environmental education for the public should also be considered. We are in an era that demands cooperation among businesses, educational institutions, and non-profit organizations to expand their points of contact with society, and a broadening of the targets of environmental education.

* Goal Attainment and Social Responsibility
We have listed some areas of improvement and new items that we would like to see included. However, this report clearly divides its environmental activity goals into five areas in which we expect efforts toward attaining goals can proceed. We believe this Green Balance Report will be used year after year for checking progress and making improvements, helping Takara Shuzo to advance its environmental efforts and to fulfill its social responsibilities. We also hope to see future reports paint a vision aimed at the prevention of global warming and the creation of a sustainable society.

Note: Kiko Network is a non-profit, nation-wide network organization working to prevent global warming. The Network participates in international cooperation, monitoring and reporting national policy, sponsorship of seminars and symposiums, investigation and research, collection and dissemination of information, and support for and communication with other domestic NGOs.