Creating a Sustainable Society through Environmental Management

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1 Creating a Sustainable Society through Environmental Management Ricoh has been a leading pioneer in sustainable environmental management since the 1990s, striving to balance environmental conservation with business sustainability. By adopting the back-casting method, we set our environmental targets as milestones based on our long-term vision. We also foster technological development and environmental conservation activities at each stage of our products lifecycle. Through these measures, we provide environmentally friendly products and services to our customers and together with our stakeholders. March 26, 2013 Version 1.0.0

2 Table of Contents 1. Ricoh s Concept for a Sustainable Society History of Ricoh s Sustainable Environmental Management Fostering Sustainable Environmental Management from a Longer-Term Viewpoint Generating Profits through Environmental Conservation Formulating a Long-Term Vision and Medium- to Long-Term Targets Environmental Technologies: The Core for Sustainable Management Concept of a Sustainable Society: The Comet Circle TM Effective Use of Resources throughout the Product Lifecycle The Challenge of Sustainable Manufacturing Reduction of Environmental Impact at Every Stage of the Product Lifecycle Developing Materials Through the Use of Recyclable Resources (Resource and Procurement Stage) Use of Recycle Materials and Parts (Design Stage) Developing Environmentally Friendly Production Technologies (Production Stage 1) Minimizing the Impact of Chemical Substances (Production Stage 2) Reducing the Electricity Consumed by Products (Product-Use Stage) Reducing Waste and CO 2 Emissions Resulting from Transportation (Logistics/Transport Stage) Conservation of Biodiversity to Help Increase the Self-Recovery Capabilities of the Earth A Company that Contributes to a Bright Future for All...15 Appendix: Chronology and Award/Recognition...17 For details of Ricoh's sustainable environmental management, please also refer to the following web pages: Ricoh Group Sustainability Report 2012 ( Environment ( Ricoh Company, Ltd.

3 1. Ricoh s Concept for a Sustainable Society We are leading our daily lives and conducting business activities based on established social systems by using natural resources and ecosystem services provided by the Earth. If the Earth loses its vitality, we will no longer be able to receive a sufficient supply of natural resources and ecosystem services, and companies will be unable to continue their regular economic activities. For Ricoh, sustainable society means a society in which the balance of the three Ps (planet, people and profit) is maintained and the environmental impact of human society remains within the self-recovery capabilities of the global environment. For the realization of a sustainable society that conforms to this definition, Ricoh is conducting environmental conservation activities to reduce the environmental impact caused by exploitation of natural resources, consumption of energy and emissions of chemical substances. We are also conducting biodiversity conservation activities to help the Earth improve its self-recovery capabilities. We believe that only companies that have established business models suitable for the creation of a sustainable society, specifically only those that can enrich society and bring about maximum economic value to it while minimizing their own environmental impact, will be able to sustain their own growth toward the future. Environmental impact remains within the self-recovery capabilities of the global environment and good balance is maintained between the planet (environment), people (society) and profit (economy) Figure 1: Pursuing the ideal society (Three Ps Balance) 1 1 For details of Three Ps Balance, please see Pursuing the Ideal Society (Three Ps BalanceTM) Ricoh Company, Ltd.

4 At present, human societies impact the Earth well beyond its self-recovery capabilities. It is necessary to reduce this impact and keep it within its self-recovery capabilities by conducting environmental impact reduction activities while improving the self-recovery capabilities of the global environment. Figure 2: Approach to realizing an ideal society 2. History of Ricoh s Sustainable Environmental Management There are three stages in Ricoh s environmental conservation efforts: the Passive Stage, the Proactive Stage, and the Responsible Stage. In the Passive Stage, we coped with social pressures by dealing with laws and regulations and competing with other companies. In the Proactive Stage, we voluntarily began setting targets and conducting activities with a sense of mission as a global citizen, upon our own initiative. And now, we are in the Responsible Stage. Figure 3: The three stages of environmental conservation: from passive, to proactive to responsible stages Ricoh Company, Ltd.

5 Since the establishment of the Environmental Promotion Section in 1976, Ricoh has been proactively conducting environmental conservation activities. In 1992, the company formulated the General Principles on the Environment to show its strong commitment to setting ambitious environmental targets and conducting activities to achieve these targets with the participation of all members. Subsequently, Ricoh released the industry s first recycled copier in 1997, announced its commitment to sustainable environmental management ahead of other companies around the world in 1998, published its first environmental report in 1999, and has since been proactively disclosing relevant information to the public. Moreover, in 2001, the imagio Neo 350, which is equipped with Ricoh s proprietary energy conservation technology, became the first copier to win the best prize at the Energy Conservation Grand Prize. Also, by conducting unique activities such as introducing resource-recirculating eco packaging and releasing the world s first multifunctional digital copier equipped with a biomass toner, we have been advancing and accelerating our sustainable environmental management Fostering Sustainable Environmental Management from a Longer-Term Viewpoint 3.1. Generating Profits through Environmental Conservation Now, 15 years after Ricoh first announced its commitment to sustainable environmental management to the public, the term sustainable environmental management is being widely used throughout society. Some seem to interpret sustainable environmental management to mean conducting environmental conservation activities in proportion to the level of business performance, but this is not Ricoh s interpretation of the term. We need to conduct environmental conservation activities on a continual basis from a long-term view if we want to achieve steady results with these activities. We can not achieve any satisfactory results if we only conduct environmental conservation activities proactively while we are making large profits, and then prioritize profits when business performance drops. We therefore believe that the environmental conservation activities themselves must generate profits for companies in order to persist. For Ricoh, sustainable environmental management is not a passive means to conduct business in consideration of the environment, but rather is an aggressive management method to make environmental conservation and profit-making compatible themes. 2 For the history of Ricoh s sustainable environmental management, please refer to the reference materials on page 16 and also to the company s History on the Environment website Ricoh Company, Ltd.

6 3.2. Formulating a Long-Term Vision and Medium- to Long-Term Targets Because environmental conservation activities are irrevocable, we need to conduct them very carefully toward the attainment of predefined goals. Based on this recognition, Ricoh uses the back-casting method to set targets. In this approach, we first set final goals and then determine target values as milestones on the journey to these goals, thereby avoiding the risk of failing to attain the final goals although individual targets have been achieved. This risk might indeed materialize if targets are set by the conventional method (e.g., setting targets one by one). Figure 4: Setting targets by the back-casting method We have set the Year 2050 Long-Term Environmental Vision as our final goals and issued the Mid- and Long-Term Environmental Impact Reduction Goals to describe specific steps to realize this vision. Specifically, we have clearly set the reduction targets in three key areas of energy conservation and global warming prevention, resource conservation and recycling, and pollution prevention to implement advance measures to ensure the reduction of our future environmental impact. Note: For Pollution prevention, only the target for 2020 has been set. Figure 5: Ricoh Group mid- and long-term environmental impact reduction goals Ricoh Company, Ltd.

7 4. Environmental Technologies: the Core for Sustainable Management Companies need to increase their corporate value and make profits as their principal objectives, while fulfilling their social responsibilities. Through their activities, companies must also make contributions to the reform, advancement and improvement of society, which cannot easily be achieved only through the power of individuals. Ricoh aims to establish a business model for a sustainable society by generating profits through environmental conservation in its sustainable environmental management. To this end, it is critical for the company to develop environmental technologies, which provide the basis to supply products that yield a lower environmental impact throughout their lifecycle, including the stages of materials procurement, use by customers and recycling. It can also be said that these technologies represent the only means to help solve a range of problems that are threatening society s sustainability, such as climate change, resource depletion, and environmental pollution. Based on its concept of an ideal sustainable society, Ricoh is proactively implementing measures to develop technologies that are needed by society from a long-term view as well as the technologies that can foster social reforms. Figure 6: Ricoh s approach to environmental technology development Ricoh Company, Ltd.

8 5. Concept of a Sustainable Society: The Comet Circle TM 5.1. Effective Use of Resources throughout the Product Lifecycle Now, many companies are engaged in environmental conservation activities. If, however, a corporation only deals with environmental impact that is directly associated with its own business activities, its environmental conservation activities will never lead to a reduction in the environmental impact to society as a whole. Based on this recognition, Ricoh established the Comet Circle in 1994 as the basis to encourage the creation of a sustainable society. This concept is built upon our awareness that product manufacturers can make the greatest contribution to reducing environmental impact of products in the market because it is manufacturers who determine product designs and specifications. This means that product manufacturers and distributors like Ricoh are responsible for reducing environmental impact across the entire lifecycle of their products, which includes their own business activities as well as upstream and downstream development. To fulfill this responsibility, we are leading the implementation of the Comet Circle 3 in partnership with our materials and component suppliers, transporters and corporate customers at each stage of the product lifecycle. Flow of the Comet Circle Each circle in the chart represents our partners that can help develop a sustainable society. The new resources harvested by the materials supplier from the natural environment (upper right) will be turned into a product through moving from right to left along the upper route, finally reaching the users (customers). The used products will follow the route below from left to right. Figure 7: Concept of a sustainable society: The Comet Circle TM 3 For details, please refer to The Comet CircleTM on the web Ricoh Company, Ltd.

9 5.2. The Challenge of Sustainable Manufacturing The Comet Circle is composed of loops established to reuse and recycle resources repeatedly in an efficient manner. The loops are layered to bestow priority to reusing waste products and parts in a manner that retains their economic value as much as possible. Parts that cannot be reused within the inner loops are recycled for materials in the outer loops, but even in this case, the economic value of the parts is retained to the maximum possible extent through closed-loop materials recycling, specifically by being recycled into high-quality materials and used again within the organization. Under this multitiered recycling system, we can make effective use of recycled resources while reducing the use of virgin resources. It is feared that depletion of mineral resources might occur in the near future, and we are no longer allowed to manufacture products that use resources in large amounts such manufacturing is not sustainable. Ricoh will strive to manufacture products in a manner that maximizes the value of resources used as materials throughout the lifecycle of the products, thereby minimizing the use of virgin resources. 6. Reduction of Environmental Impact at Every Stage of the Product Lifecycle 6.1. Developing Materials Through the Use of Recyclable Resources (Resource and Procurement Stage) In order to reduce the use and exploitation of the Earth s virgin resources as materials for its products, Ricoh has been pressing forward with the development of materials from recycled resources for use in its imaging equipment as well as the development of technologies to make better use of recyclable resources. As an example of the development of materials made from recycled resources, in July 2012, Ricoh developed electric furnace steel sheets using only recycled steel scraps jointly with Tokyo Steel Manufacturing Co., Ltd., and employed them in one of its multifunction printers a first for the industry (Figure 8). 4 Moreover, the company developed biomass toner 5 for multifunction copiers by adopting recyclable plant-based resin for use in toner as the primary element. In November 2009, we released for E toner, the world s first digital multifunction copier featuring biomass toner (with a biomass rate 6 of 25%) (Figure 9). 4 Please also refer to the electric furnace steel sheet development story: Ricoh and Tokyo Steel Score an Industry First. 5 Biomass refers to recyclable organic materials derived from living organisms, but excludes fossil resources. For details, please refer to Biomass Toner Technology 6 Ricoh defines the biomass rate as the percentage (%) of plant-based resin in a product component Ricoh Company, Ltd.

10 Structural part made using an electric furnace steel sheet Quality performance required for multifunction copiers has been met, including thinness (2 mm or thinner), electric conductivity and workability Figure 8: Electric furnace steel sheet processe Figure 9: Recycling Biomass Toner 6.2. Use of Recycle Materials and Parts (Design Stage) Since the early 1990s, Ricoh has regarded resource conservation and recycling as one of the cores of its environmental conservation activities and is working to recycle waste multifunction copiers, laser printers, toner cartridges and consumables collected from the market. The annual quantity of Ricoh-made products recovered as end-of-life products amounts to 200,000 or more in Japan, and at present, all of the recovered products are recycled into resources or reused as recycled copiers. The quality and productivity of recycled copiers is ensured by a recyclable design. To introduce recyclable design, an organization that is now known as the Design for Environment Workshop was established in The workshop formulated the company s first recyclable design policy based on the Comet Circle, and has built up know-how in various areas, such as the grading of plastic mould parts, strength design considering future reuse as well as the reduction of packaging materials, Ricoh Company, Ltd.

11 the reuse of high value-added parts, recycling of high-quality materials, and improvement in the ease of disassembling and sorting, thereby improving the recyclability of products. 7 Figure 10: Specific example of recyclable design 6.3. Developing Environmentally Friendly Production Technologies (Production Stage 1) To minimize the environmental impact of our production processes, we continuously engage in environmental impact reduction efforts, adopting three approaches: innovation in manufacturing processes, introduction of natural energy and introduction of high-efficiency equipment. In particular, innovation in manufacturing processes brings about compact production lines that will not only contribute to energy savings on the production lines themselves but also to energy saving from ancillary equipment, thus enabling us to significantly reduce energy consumption and production costs. The cart production line, which comprises multiple carts powered by air cylinders (Figure 11), is Ricoh s unique production system. This highly energy-efficient system is suitable for manufacturing various product items in small quantities to meet diversified customer needs, and can also flexibly respond to changes in production amount. Moreover, at Ricoh s production bases around the world, a range of low-cost, environmentally friendly and highly productive production technologies have been sequentially introduced, including 7 For Ricoh s recycling activities, please refer to Recycling Business Ricoh Company, Ltd.

12 the on-demand toner filling machine, which requires only 1/40 the installation space used by conventional machines (Figure 12) and the downsized production line for photoconductors, which helps achieve a substantial reduction in the use of energy for air conditioning (Figure 13). Powered by air cylinders, carts move along the production line carrying products. The use of this system leads to 70-80% reductions in in-process inventory, lead time and also in required space and maintenance work. The reduction in required space in turn helps reduce the use of energy for air conditioning and lighting. Figure 11: Cart production line 8 The compact machine can also be installed at sales companies and logistic bases, which means that toner cartridges can be manufactured at locations that are closer to customers. This leads to a reduction in environmental impact from the transportation of toner bottles and also to a shorter lead time. Figure 12: On-demand toner filling For details, please refer to Cart Production Line. For details, please refer to On-demand Toner Filling Machine Ricoh Company, Ltd.

13 The area requiring clean air conditioning, which consumes much energy, has been reduced to 1/92, and capital investment to 1/3 compared with conventional lines. Figure 13: Downsized production line for photoconductors Minimizing the Impact of Chemical Substances (Production Stage 2) We are exposed to a wide variety of chemical substances on a daily basis. The various impacts of these substances on human health and the environment have not all been identified yet. To minimize chemical substance-related risks, we at Ricoh identify and manage chemical substances contained in our products following the SAICM 11 approach (Figure 14). Ricoh set original standards for environmentally sensitive substances that could be used in its products in 1993 as Figure 14: Framework for chemical substance control 10 For details, please refer to Downsized Production Line for Photoconductors. 11 Strategic Approach to International Chemicals Management (SAICM): a policy framework to promote the sound management of chemicals adopted in February 2006 by the International Conference on Chemicals Management (ICCM) and endorsed by the United Nations Environment Programme (UNEP) Ricoh Company, Ltd.

14 an indication of its determination to reduce these substances. Since then, all the divisions engaged in production have worked together to improve the chemical substance control system. By the end of March 2006, a chemical substance management system (CMS) for suppliers was created on a global basis. At the same time, the CMS within the Ricoh Group was strengthened, completing the management system for chemical substances (MSC) contained in products within and outside of Japan in July 2006 (Figure 14). Ricoh has expanded the list of chemical substances controlled by the Group since We also then started to operate a quantity control system that keeps track of which chemical substances controlled by Ricoh are contained in which part of our equipment and in what quantities. With this quantity control system in place, we are now well-positioned to take prompt action in the event of permission to use currently approved chemical substances being withdrawn due to regulatory change Reducing the Electricity Consumed by Products (Product-Use Stage) Regarding lifecycle CO 2 emissions from Ricoh s products, emissions in the product-use stage are the largest. Figure 15: Ricoh Group lifecycle CO 2 emissions from business activities Ricoh established a technology committee on energy conservation in 1997, recognizing the importance of improving the energy efficiency of its products to reduce their lifecycle environmental impact. 12 In 2001, the company released the imagio Neo 350/450 as its first highly energy-efficient copier, and since then has developed a series of products with high energy performance by adopting unique 12 For measures to increase the energy efficiency of products, please refer to the following: - Evolution of energy-saving technologies - History of Ricoh s Sustainable Environmental Management: The birth of QSU - Color QSU Technology by Direct Heating System - Color PxP-EQ Toner Ricoh Company, Ltd.

15 technologies such as Quick Start-Up (QSU) technology and low-temperature fixing toner. Also, regarding the multifunctional digital color copier released in February 2012, Ricoh used the color QSU technology (direct heating [DH] fixing system), color PxP-EQ toner with a lower melting point and other proprietary technologies to substantially reduce typical electricity consumption (TEC) 13, while also reducing the recovery time to active mode from the energy conservation mode (sleep mode), 14 thereby providing the machine with top-level environmental performance. Typical electricity consumption (TEC) of the imagio MP C5002 SPF has been improved by about 22% compared with conventional models, with the recovery time to active mode from sleep mode reduced to 9.1 seconds. Figure 16: Reduction in typical electricity consumption (TEC) Now, with the expansion of the cloud environment and dissemination of smart phones and tablet terminals, people s lifestyles are changing rapidly. Under these circumstances, Ricoh is proposing more business-efficient and environment-friendly ways of collaboration. 15 Also, by expanding product lineups in new fields, including video-conference systems, projectors, interactive whiteboards and other imaging systems and solutions, we are supporting our customers in reducing the environmental impact of their offices, in response to diversification of their working styles Reducing Waste and CO 2 Emissions Resulting from Transportation (Logistics/Transport Stage) In logistics, focusing on the five areas of packaging, transportation, space, transshipment and storage, Ricoh is globally reducing waste by improving cargo-carrying efficiency, fostering modal shifts and optimizing transportation routes towards the reduction of both its environmental impact and its costs. Regarding packaging, Ricoh has proactively fostered eco packaging to reduce its use of cardboard since the 1990s, and has introduced resource-recirculating eco packaging by using resin materials that can be reused repeatedly (Figure 17). 13 Typical Electricity Consumption: Measured according to the guideline set by the International ENERGY STAR Program 14 In the case of the imagio MP C5002. In the case of imagio MP C4002: 9.3 seconds; imagio MP C3302/C2802: 7.8 seconds 15 Please refer to the white paper Ricoh s Unified Communication brings Renovation to Collaboration (PDF) Ricoh Company, Ltd.

16 During the fiscal year ended March 31, 2012, about 72% of MFPs, or 61 models out of a total of 75, which were shipped within Japan were packaged with resin-based materials. As a result, the use of packaging materials decreased by about 1,451 tons annually, which is equivalent to about 1,900 tons in terms of CO 2 emissions. Figure 17: Resource-recirculating eco packaging Moreover, Ricoh has a product collection network to achieve highly efficient recycling. We have also established a logistics system that integrates both arterial logistics flows that deliver out products to customers and venous logistics flows that collect used products. 7. Conservation of Biodiversity to Help Increase the Self-Recovery Capabilities of the Earth To conserve the global environment, we need to take actions to maintain and improve the self-recovery capabilities of the global environment in addition to reducing the environmental impact of our society. Since the 1990s, Ricoh has conducted activities to conserve local ecosystems in various regions around the world, paying attention to biodiversity, which provides the basis for the Earth s self-recovery capabilities. Ricoh created and uses the Map of Corporate Activities and Biodiversity that shows the relationship between corporate activities, such as product lifecycle and land use, and biodiversity. Figure 18: Map of corporate activities and biodiversity Ricoh Company, Ltd.

17 From the map, we learned that the manufacture of imaging equipment, which represents Ricoh s mainstream products, has a large impact on the ecosystem due to procurement of raw materials (e.g., paper pulp and metals) and manufacturing and consumption of paper. Based on this finding, we established the group-wide Regulations of Ricoh Group Products Made of Wood in 2010 as part of our efforts to conduct our business operations in consideration of their direct impact on biodiversity A Company that Contributes to a Bright Future for All Environmental problems such as global warming, resource depletion and degradation of ecosystems pose a range of risks to the management of our company. Changes in the environment and society, however, can provide new opportunities to companies that have long implemented measures against such risks by regarding them as challenges to meet head-on. Ricoh has steadily advanced its sustainable environmental management through various initiatives, including the development of energy-efficient products and the conservation of energy and resources to reduce costs, development of alternative materials to replace the resources that may become depleted, and the provision of products and solutions that help create a new smart working style towards higher efficiency and lower environmental impact of business operations. Through these activities, we aim to build a new business model to help minimize the environmental impact of society as a whole and make it sustainable, thereby becoming a company that can contribute to people s bright future. Figure 19: Ricoh Industrie France, where green space is managed in consideration of biodiversity 16 For details, please refer to Conservation of Biodiveristy Ricoh Company, Ltd.

18 New York Sydney London Figure 20: Advertisement tower lit 100% by natural energy Ricoh Company, Ltd.

19 Appendix: Chronology and Award/Recognition Ricoh Company, Ltd.

20 Ricoh Company, Ltd.

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