Green Accounting Annual Report Abstract for FY 1998 (April 1998 - March 1999)

I. Concerning Green Accounting

1. What is Green Accounting
Businesses receive capital from investors in order to conduct business. The return on this investment is expressed as profits ("black ink") and losses ("red ink"), which is disclosed to investors in the form of an annual report.

But in a larger sense, the production activities of a corporation derive from the energy and other resources furnished by the earth's environment. We have termed the return on those resources "green ink". We disclose our results to the earth -- that is, to the societies that are co-owners of the global environment -- in our "Green Accounting Annual Report".

2. Green Indicators
Taking the effects of corporate activities on the global environment to be "red ink", we've defined "green ink" as the results of efforts to reduce that deficit. More concretely, we've calculated two "green ink" indicators: "Environmental Burden Reduction Green Ink", which evaluates efforts to reduce the burden on the environment, and "Social Contribution Green Ink", which evaluates the portion of profits from corporate activities contributed to social causes such as natural conservation activities. These indicators are useful tools for environmental management within the company, and their yearly disclosure to public scrutiny gives us additional incentive for the continuation of environmental activities.

3. Goals of the Green Ink Indicators

• There are many factors that measure the environmental burden created by corporations, each of which displays a unique rate of improvement. By consolidating the data on environmental impacts and expressing the total environmental burden as a single indicator, the "Environmental Burden Reduction Green Ink" indicator places significance upon the environmental activities of a corporation. While loss of accuracy, loss of objectivity due to individual opinion, and other problems can occur during the process of consolidating various indicators, the ability to express results in an easy-to-understand format makes such an indicator a significant step toward targeted management of environmental activities. Such efforts are already underway in Switzerland and other European countries.
• The "Social Contribution Green Ink" indicator indicates changes in expenditures for natural conservation and environmental education activities. Although the results of social contributions cannot be measured in monetary units alone, we use this as the most objective measurement for creating the indicator.
• The "Environmental Burden Reduction Green Ink" indicator depicts the degree of reduction in the company's total environmental impact. Accordingly, an increase in production volume has a large negative effect on the "Environmental Burden Reduction Green Ink". Green accounting, with its goal of settling accounts between corporations and the global environment, clarifies the total amount.
• There are many ways a corporation can contribute to the global environment. While it goes without saying that lessening environmental impact is the chief among these, contribution to society from the profits of business activities can also be considered a type of contribution to the environment. When a company is doing well and increases production, there is a correspondingly greater impact on the environment. But, the rewards of better business make greater social contribution possible. Our dividing "Green Ink" into two separate measures allows an accounting for diverse forms of contribution to the environment.

• Publicizing the methods of computing the "Environmental Burden Reduction Green Ink" indicator ensures transparency of data.
• The rate of improvement in "Green Ink" for the period from FY 1998 to FY 2000 will be calculated using figures for FY 1997 as a base for comparison. Beginning in FY 2001, figures from FY 2000 will become the base. Computation methods will also be revised in response to changes in environmental issues.

<FY 1998 Report values>
I "Environmental Burden Reduction Green Ink" Indicator Data

	Procurement from the Global Environment					Released into the Global Environment
	raw material procurement		resource and energy procurement			atmospheric emissions, effluent				factory waste	packaging and container waste
	raw materials	virgin materials, packaging	water	electricity	fuel	waste water	CO2	NOx	SOx	waste not recycled during production	waste not recycled after consumption
1998	106	28,000	6,818	38.970	25,400	5,788	47,000	245	296	1,950	29,000
1997	110	36,000	7,251	38.478	27,800	5,833	51,000	289	341	16,462	37,000
(units)	1000t	t	1000m3	1000kwh	kl	1000m3	t-c	t	T	t	t
1998/1997 (%)	96.4	77.8	94.0	101.3	91.4	99.2	92.2	84.8	86.8	11.8	78.4
(1) Improvement (%)	3.6	22.2	6.0	-1.3	8.6	0.8	7.8	15.2	13.2	88.2	21.6
(2) Weight	1	4	1	3	3	1	3	2	2	5	4
(1) x (2)	3.1	88.8	6.0	-3.9	25.8	0.8	23.4	30.4	26.4	441.0	86.4
							(1) x (2) / 3 (average weighting) --> 22.1
						1998 Environmental Burden Reduction Green Ink Indicator: +22 ECO

2. Calculation of the "Environmental Burden Reduction Green Ink" Indicator
The data for the Improvement Rate for 1998 over 1997 is totaled for each of the 11 categories of environmental impact (total volumes).
(2) Each of the 11 categories of environmental impact is weighted by a measure of its perceived importance to Takara Shuzo in environmental protection.
* Issues were assigned a weight value of 1 to 5 by the company, based upon discussion and voting by a team composed of three environmental issue researchers and five employees from environmental services.
* The values for the weights were decided as follows:

The burden on the environment from the company's raw material use, water use and effluent are relatively low, resulting in a low weight of 1. Reduction of CO2 is a priority for the company. Related categories -- electricity use, fuel use and CO2 emissions -- are given weights of 3. The company's emissions of SOx and NOx fall below standards and are less of an issue than its CO2 emissions. These are given a weight of 2. Factory and other industrial waste is a major social issue, and its reduction is a top priority. Compared with beer brewers, our company is behind in its zero-emission practices and is rushing to catch up. Therefore, this issue receives a weight of 5. Categories related to container waste (containers and packaging that are discarded rather than recycled after the product is consumed) are a major concern for makers of alcoholic beverages, with solutions a high priority. The results of the voting gave a weight of 4.

(3) The improvement rates for the 11 categories of environmental burden data are calculated according to (2) and are then multiplied by the corresponding weight. The average of the resulting figures is divided by 3, the middle value of the weights. Each percentage point of improvement indicated by the result is termed one ECO unit.

3. The 1998 Environmental Burden Reduction Green Ink Indicator: +22 ECO

• Production output for FY 1998 was down 8% from 1997, leading to an expected change of +8 ECO. The difference between this expected value and the actual value of +22 ECO can be attributed to impact reduction efforts.
• Major factors behind the increase include 100% recycling of spent grain from distilled shochu spirits into material for "eco-cement", a reduction in the use of virgin materials, and a decrease in the number of containers not recycled after consumption.

4. "Social Contribution Green Ink" Indicator data

II Social Contribution Green Ink data

	1997	1998
Natural Conservation Activities
Campaign to Protect Shimanto River	active	active
Hokkaido Firefly Plan	active
Hokkaido Wildlife Fund	active
Harmonist Fund	active	active
Campaign to Protect Japanese Pines	active	active
Campaign to Protect Japanese Bamboo	active	active
Environmental Education
Green CAN Working	active	active
Recycle Handbook	active
Factory Event: Recycling Education Expo	active	active
In-house Environmental Education Pamphlet	active
Total	94,252,000 yen	77,831,000 yen

1998 contributions as a percentage 1997 contributions = 83%
FY 1998 Social Contribution Green Ink Indicator: -17 ECO

5. Calculation of the "Social Contribution Green Ink" Indicator
(1) Included social contribution activities are limited to the two categories of natural conservation activities and environmental education activities.
(2) Each percentage point of change in contributions indicated by the result is termed one ECO unit.

6. The 1998 Social Contribution Green Ink Indicator: -17 ECO

• Major reasons for the decrease include the closing of two natural conservation campaigns in Hokkaido and reduced expenses for ongoing campaigns.

<References>

• Reference Data Appendices: Data for Containers and Packaging
• The above data is based on values computed for the report abstract. Detailed data and a comprehensive analysis of the data will be published in the "1999 Annual Green Report" planned for release in September of 1999.
• Opinions or questions regarding the above, as well as requests for the September 1998 "1998 Annual Green Report", can be sent to the following: