ResourceResource RecyclingRecycling SystemSystem

The "Resource System" are one of the core elements of our Resource Recycling system environmental preservation activities. Based on Environmental Vision, the aim of Lifecycle planning the system is to conserve energy while introducing minimum fresh resources. Inverse The ultimate goal of such efforts is to achieve Zero , defined as zero net Manufacturing production of materials as landfill waste. Reusable / Recycling designs

Company operations are organized in a Closed-Loop System that makes Environmental impact assessments thoroughly effective use of resources. The guiding principle being that "rather than treating products as waste at the end of their useful life, they should be Closed-Loop System valued as a source of reusable parts and materials."

Two main concepts structure our approach to making the Closed-Loop System Parts / Components of circulating materials a practical reality. One, referred to as "inverse Materials reuse Closed-Loop manufacturing," is the basic way we try to minimize environmental impact. This System means producing parts that can be reused or, if they cannot be reused, Separation of toxic substances designing them to facilitate the separation and reuse of the materials that Materials recycling comprise them. We also use materials that have minimal environmental Thermal recycling impact, and this overlaps with the other concept of "zero emissions," the Zero central intention of which is to completely cut waste. Emissions Running operations according to this system has enabled Fuji Xerox to achieve the target of "zero landfill waste."

Goals Fuji Xerox Environmental Vision : Advance towards complete "Resource Recycling" and "Zero Waste."

. Restrict the input of fresh resources. Through the Closed-Loop System, we promote maximal reuse of components and restrict the input of fresh resources in making new products. . Reduce landfill disposal of used products to zero. Aiming to achieve "Zero Waste," we are developing processes to recover the maximum amount of resources from those that cannot be reused.

(t) With the reuse of parts, we (%) Amount of material input savingsAmount of material 2,000 could reduce 2,750t-c in of waste sent to landfills Proportion 20 CO2 emissions generated at 1,700 the manufacturing stage of new parts in FY 2000. 14.9 14.9 14.9 1,500 1,400 15 1,200 11.7 t-c 1,000 10 800 0 1,000 500 400 5 2,000 1.2 0 3,000 2,750 t-c 0 '96 '97'98 '99 '00 (Year) '96 '97'98 '99 '00 Year Limited introduction of fresh resources Reducing landfill disposal of used products to zero

Awarded the Economy, Trade and Industry Minister's (METI) Prize in the Recycling Technology and Systems category❇1 Awarded the Environment for Tomorrow Prize❇2

❇1, 2 For more information, see page 51.

18 Resource Recycling System

Closed-Loop System

The basic concept behind the Closed-Loop System is to collect used products from the market, and then reuse or recycle all the various parts and components from these products in a closed loop, so that the input of fresh resources is restricted. Used products are collected from the customer, and then disassembled and cleaned at our plants. An integrated selection, repair and quality control inspection system is then used to supply those parts that meet strict QC standards to production lines so that they can be reused. In addition, as much as possible, we try to direct the materials generated from those parts that cannot be reused to the production of new components within the loop. The information gained from these processes provides feedback for our design Recycling line at the Ebina facility: teams to help them create more highly recyclable components, and thereby expand disassembly and screening the use of such parts. By improving designs and developing more advanced technology, we aim to expand production volumes while simultaneously raising the recycling ratio.

Collection Screening Used at Disassemble and the component customer site cleaned at the plant

Fuji Xerox Closed-Loop Automatic shower washer for small items

Recycling System inspection Completion and delivery Decomposing to raw material

Repair Quality Inspection and assurance

Feedback to design for recycle Processing of base materials Integrated production line

http://www.fujixerox.co.jp/arm/index2.html Blast cleaning is used for larger items. Toward a More Effective Collection System The effectiveness of any recycling system depends on the We have tried to improve the rate of truck utilization and make collection of used items and transportation to processing the most efficient use of transportation by maximizing loads and centers. In FY 2000, we retrieved 97% of copiers sold on the other measures. In FY 2000 we managed to reduce truck Fuji Xerox direct sales route and 78% of those sold through journeys to 17% less than the previous year. Furthermore, to agencies. Before we started recycling parts (1995), there was curtail the unnecessary consumption of new resources, when no need for a "reverse distribution system," so we had to used equipment is collected we protect it with used packing develop new logistics in order to organize the movement of materials. used equipment. We've been trying hard to optimize our efficiency while minimizing the environmental impact of trucking and other means of transportation. The first thing we did was to construct an information system to rationalize collection and transfer. Our UNICORN (Used-machine Nice Control Navigator) system divides Japan into ten control blocks. For each block it processes information about used equipment in stock and computes the shortest distance to pick up the amount of used equipment necessary to feed the production of reused parts. Collection of used equipment - reverse distribution 19 Inverse Manufacturing

Our concept of inverse manufacturing is composed of 4 main elements: product life cycle planning using LCA methodology; the creation of reusable and recyclable designs; the use of environmental impact assessments; and the Closed-Loop System. The heart of our recycling system is the "Closed-Loop System" that, based on the idea of recycling parts within a closed system, gives priority to the reuse of parts. To realize it, from the planning stage parts are designed to be reusable. Moreover, using environmental impact assessment procedures, we aim to develop excellent green products.

Lifecycle Planning No. of units When new products are planned at Fuji Xerox, the reuse of Production volume: Production volume: Production volume: parts is given the highest priority. First-generation product Second-generation product Third-generation product By the time a copier reaches the end of its working life of three to five years, it is natural to expect that it will be replaced by a Recovery rate: new, succeeding model. This means we have to look ahead to First-generation product ensure that parts are suitable for use in succeeding models. (b) In 1999 we launched the Able Series, in which we ensured that, (a) Time over two generations, about 40% of parts could be reused. Model for three-generation parts reusability Since then we have improved on that figure. In the year 2000 about 75% of all new models had parts that were reusable in the next generation. Second-generation equipment 75% For our main models we will try to increase the number of parts (b) that can be used in the succeeding models and extend reusability beyond the next generation. First-generation equipment (a) 25% Results of production for reuse in the year 2000

Reuse and Recycling Design Design items incorporated in the DocuColor 1250 Recycling design at Fuji Xerox, which aims to make more highly Control panel Counterbalance recyclable parts and components, is carried out based on Carriage pad Flat-spring gasket Recycling Design Guidelines originally formulated jointly by teams Logo plate Labels / Stickers of Xerox Group engineers from Japan, the United States and Fan / Duct Developer housing Aluminum electrolytic condenser Xenon lamp Europe back in 1995. PWBA Interlock switch These guidelines specified 130 separate requirements for good Electromagnetic clutch ROS recycling design, including ease-of-disassembly, the use of Harness Electric discharge lamp Rubber-covered roller common components, and the choice of materials. In addition, to Fan Motor assembly Main frame increase the number of reusable components, we try to design FPC / FFC Corotron them so that they are strong, have a long usable life, and can Drive assembly PWBA . Lithium battery Cover assembly easily be separated. Outer cover Relay Drawer connector These efforts are supplemented by case study manuals that have Low-voltage power supply Circuit breaker been assembled to show designers successful ways of raising High-voltage power supply Current fuse Tray pad recyclability. A database of related information has been compiled, Casters Tray and a system is working to allow designers to share information and reflect the latest technical developments in their designs. Longevity Separability Ease-of-disassembly Redundancy Strength (No. of models) To strengthen our cooperation with parts and materials Reuse/recycling design guidelines 15 manufacturers, we have also formulated specific Recycling Longevity Design long-life parts that can be used again Separability Make it easy to separate short-life Procurement Guidelines. This initiative seeks to help our components 10 Strength Ensure parts suffer minimal damage development partner firms by sharing information on component during use/collection/recycling Ease-of-disassembly Make parts and materials easy to 5 longevity and via the joint development of repair technologies to disassemble make components fit for reuse. We are also helping those firms to Use of reusable Select materials that can be regenerated materials via recycling processes 0 whom we outsource production to benefit from our recycling Standardization Use components that are common to '98 '99 '00 (Year) of parts existing and future models Number of models designed design expertise by assisting them in incorporating to parts reuse reused/recycled parts, components and materials into production. http://www.fujixerox.co.jp/arm/index3.html 20 Resource Recycling System

Environmental Impact Assessment

♦Resource-Recycling Products Using stringent internal criteria, we evaluate the environmental impact of our products throughout the various stages — collection, reuse or raw material conversion of components, manufacturing, and recycling design — of the Closed-Loop System. We have designated those copiers and digital copiers to meet all these criteria as "Resource-Recycling Products," and mark them with the label pictured to the right. ❇ Resource-Recycling Product Eco-Data Booklet Product label ❇Assessment criteria and a list of products that qualify are shown on page 56.

(%) Units made with all new parts Units made with reused parts 120 ♦Product Eco-Data 283kg 49195MJ 695kg-c 6.39kg We evaluate environmental impact over the entire lifecycle of a 100 product, from the manufacturing process and use through to 80 -16.1% -18.3% disposal after its useful life. For each product we have started -25.1% making available, in an easily understandable form, product 60 -30.6% eco-data for each stage: "manufacture," "use," and "after use." 40 By using stringent evaluation methods such as LCA at each 20 stage in order to assess the use of material resources, amount 0 of energy consumed, CO2 emission and use of environmentally Material resources Energy Greenhouse gas Environmentally detrimental substances, we can ascertain when these factors consumed consumed emissions detrimental substances are more prevalent at the manufacturing stage of materials and Eco-data values for the DocuCentre 605 (included in part) parts. The analysis of all these items allows us to reduce environmental impact by designing for the reuse of parts in http://www.fujixerox.co.jp/eco which these factors weigh heaviest during production. http://www.fujixerox.co.jp/arm/index7.html We carry out these investigations of environmental impact http://www.fujixerox.co.jp/arm/index8.html jointly with Mitsubishi Research Institute, Inc.

Results for the Year 2000 (No. of models) (10 thousand units) 25 60 54

50 20 42 40 34 15 14.0 30 27 11.0 10 8.7 20 14 5 4.9 10 1.4 0 0 '96 '97'98 '99 '00 (year) '96 '97'98 '99 '00 (year) Number of models using recycled parts Number of units manufactured using recycled parts (cumulative totals) (cumulative totals) (%) 60 50 50 43 40 40 35 30 30

20

10

0 '96 '97'98 '99 '00 (year) Rate of parts reuse (proportion of parts used) 21 Zero Emissions (Product-Related)

It is "zero emissions" to achive zero waste. That is why, based on a concept of a "Closed-Loop System," we give a high priority to the reuse of parts. Used copiers after the end of their service life, are collected and broken down by hand into 44 different types of parts. To thoroughly recycle resources, parts that cannot be reused are ultimately processed into useful materials. We have even been recycling rubber and glass materials that, until recently, were poorly recycled. In addition, working with materials manufacturers, for the first time in the industry we've developed a way to recycle a particular type of plastic into material that is of equivalent quality to fresh plastic. Endeavoring to minimize the input of new resources, we use these materials in our resource recycling system.

Reuse of Materials Plastics are typically difficult to recycle because the quality of their material has degraded. We have jointly developed with Ube Saikon, a Japanese plastics manufacturer, a system that is the first in the world to be able to recycle the ABS (acrylonitrile butadiene Copier in use Used copier Plastic cover styrene) resin used to make the external covers of copiers. disassembled separated at factory Used covers that have been collected from the market are separated and then pulverized and cleaned to produce fresh Closed-Loop System for Crushing ABS raw material, which is then used to make new copier. Integrated production line ABS Quality control tests have shown that the recycled ABS plastic is Cleaning as good as newly manufactured raw material in terms of its (removal of surface impurities) moldability, physical properties and color tone. These results have Removal of been independently validated in tests conducted by Underwriters internal impurities Molding/assembly Repalletization Laboratories Inc., a safety-testing corporation based in the United Process using Ube Saikon-developed Process using Ube States. technology Saikon/Fuji Xerox-developed technology We now used recycled plastic to make external covers for copiers — one of the parts where the strictest standards for visual appearance apply. Currently, it is being supplied to the production lines for the various DocuCentre 705/605/505 and DocuColor 1250 models.

We also used to remove aluminum copier drums from the used copiers we collected, and they have been used for other aluminum products. However, we standardized the material used in drum cylinders so that no custom additions would be needed. Then, in May 2000, with the cooperation of a materials manufacturer we set up a system for closed-loop recycling of the aluminum used in drum cylinders. Today, with regard to new drums we recycle all the aluminum recovered from the drums in the used copiers we collected. Graded, crushed ABS plastic This ABS recycling technology was awarded the Technology Prize in the 10th Nikkei BP Awards❇

❇For more information, see page 51. http://www.fujixerox.co.jp/arm/index6.html

Reducing the Use of Toxic Chemicals To reduce the use of chemicals that are estimated to be harmful So far, since April of 2000, we have used chrome-free to the environment, we have taken the initiative and formulated galvanized sheet in all our new products. We have been our own internal “Green Procurement Guidelines.” This places us using lead-free wiring in some new products since May of 1999. ahead of Japanese and international legislation on this matter, We also introduced lead-free lenses to some of our new as well as domestic industry standards. We have distributed products in April 2000. Further, we're going ahead with other these guidelines to all our parts suppliers so that we can ensure plans, such as the use of lead-free solder and halogen-free that no harmful substances are used or incorporated in the plastics in all our products. production of parts and materials, starting at the purchasing stage. Our technical development teams are also working to create alternative parts and materials where required. 22 Resource Recycling System

100% Material Recycling Formerly, when used copiers was collected for disposal, the 100% Material Recycling

Iron and non-iron External plastic Other plastic Glass parts CRU• Toner Packing Toxic parts main recycling materials were iron and other metals. But Iron parts combination parts parts parts Rubber parts materials unrecyclable materials were landfilled for disposal. Now, Fuji Xerox is committed to an uncompromising "Zero Landfill Waste" Covers Lenses Electronic boards Housing/Duct DADF belt CRU Expanded policy. Beginning in the autumn of 1998, in cooperation with Frame Motors and trays Platens Drum Toner polystyrene Pallets Lamps Batteries Fuse Breaking Breaking Breaking Breaking Breaking Breaking consolidation Compacting Kneading Breaking Breaking Breaking Batteries best 13 recycling companies all over Japan by using the latest Washing Removal of Removal of Removal of Cullet Breaking Melting Sorting contamination contamination Breaking Melting Forming contamination technologies. After disassembling and sorting 18 t of parts from Melting Kneading Washing Dissolution Baking Refining Refining Repelletization Pulverizing Cullet Aluminum Repelletization Refining 100 used copiers collected at the end of their service life, we confirmed that it was possible to achieve zero waste. Fe Al Cu Glass

Au Sn Ag Pb Blast-furnace Drum Converter PS Plywood Mercury Cadmium Covers/Trays Blast-furnace Rubber Glass reducing agent material pellets chips Then, beginning in February 1999 at the Ebina Facility, as part reducing agent of a systematic process encompassing collection to recycling, Achieving Zero Landfill Waste we made complete recycling a practical reality with a Parts detached from used copiers disassembly line in which parts that could not be reused were Disassembly Quality assurance Use in new copier removed and dismantled for recycling. Reduced environmental impact Sorted into 44 categories Latest recycling processes In addition, to facilitate research and the proving trials needed Recycling efficiency

Material recycling 100% recycling to raise the efficiency of disassembly and material separation, Material Repelletization reuse Quality assurance Mercury we built "Ecoland" at Ebina Facility. This allowed us to process Glass Iron copiers that had reached the end of their service life in the Material Elemented Aluminum Sorting of breakdown breakdown Copper Tokyo, Kanagawa and Yamanashi areas. toxic parts (Crushing) (detoxification) Au Sn Pt Lead Zinc Rubber We expanded this "Zero Landfill Waste" system to cover the Sorting of Material Elemented non-toxic breakdown breakdown whole country. We built a network with 23 recycling companies parts (Crushing) Energy recycling with the same type of technology, which had proved effective. In Detailed results of the effort to achieve 100% August 2000 our recycling system was complete and we resource recycling achieved our goal of zero landfill waste by completely recycling, Previous method Zero-waste processing all the materials except for some process loss in the used Recycled item (process up to 1999) (process in the year 2000) copiers we had collected from customers. Iron 70.95 72.46 Aluminum 0.30 1.18 Copper 0.76 2.29 Lead 0.01 0.02 Gold 0 Minute amount Silver 0 Minute amount Other metals 0 0.37 Plastic (material reuse) 0 3.23 Plastic (material) 1.67 0 Cork substitute (plastic) 0 5.83 Rubber 0 0.31 Glass 0.88 1.31 Material recovery rate 74.57 87.00 For slag 0.33 2.12 For heat (combustion improver, melting enhancer) 4.68 10.85 Recycling rate 79.58 99.97 Incineration 5.48 0 Dust 14.94 0 Disassembly and separation at Ecoland (landfill) Process loss 0.03 Total 100% 100%

http://www.fujixerox.co.jp/arm/index5.html 23 Support for Resource Recycling System: Information Systems

The implementation of the Closed-Loop System to promote Zero Waste and resource recycling is dependent on the integration of various types of information. We have developed six major information systems to support our recycling efforts, which we are currently in the process of integrating fully.

Collection unit volume Collection Asset recovery stream simulation system logistics control management system system

Recycled parts QC/QA system

Recycling-production mainframe system

Recycling design database

• Collection unit volume simulation system A special program uses past data to simulate estimated volumes of used and collected products, and their quality. This helps to make collection and recycling production activities planned and efficient.

• Collection logistics control system Products collected at all of our recycling centers in Japan are recorded in a database. This nationwide network helps raise the efficiency of sending collected products to factories, ensuring smooth logistics.

• Recycling-production mainframe system Based on the results of the collection volume simulation and inventory data from the nationwide recycling network, this system determines and plans recycling production volumes several months in advance to help smooth out variations in collection rates.

• Recycled parts QC/QA system Based on technical data on component quality control and longevity, this system, run as a database, sets strict selection criteria for reusable parts. It ensures that machines containing such are of equivalent quality to brand new machines.

• Recycling design database This database, which is accessible via a company intranet, collates all the data and expertise on Resource-Recycling design. It allows all our designers to share information on the best methods in this field.

• Asset recovery stream management system This system manages the recovery of resources from used components that cannot be reused via the disassembly of collected machines on a unit basis. It manages material recycling volumes by category, thereby integrating the Resource-Recycling process to help achieve Zero Landfill Waste.

24 Resource Recycling System

Reuse and Recycling of Toner Cartridges

Goals .Ensure more collection of used toner cartridges and increase the number of reuse.

Results

Closed-Loop System for Toner Cartridges At an early stage we began recycling the photoconductor drums, cartridges and other exhausted consumables used in our main copiers and printers. In 1994 we established a Closed-Loop System for toner cartridges and built a recycling line to detach, disassemble, clean, inspect, process and rebuild cartridges. Recycled items are inspected and packed for reuse. Our efforts have paid off. By 1997, through the reuse of parts and recycling of materials from parts we were unable to use, nothing from our used toner cartridges was ending up in landfill environments. We had achieved zero emissions. Our designers have also been working to create cartridges from parts that can be recycled more effectively. Right from the planning stage, parts are developed for optimal reuse and recycling. In addition to technical efforts, we have implemented a distribution infrastructure created through our rental business. This has enabled us to achieve a high collection rate of 84% for toner cartridges. Moreover, 35% of the units we ship contain recycled parts.

(%) (%) 100 100 84 80 82 Collection rate 80 80 72 Reuse rate 60 60

40 40 34 35 29 30 20 20

0 '97 '98 '99 '00 (Year)0 '97 '98 '99 '00 (Year) Cartridge collection rate* Parts reuse rate (weight) *Cartridge collection rate: Expressed as a percentage, the number of units collected during the current year divided by the number of units shipped from the factory during the previous year.

Production / assembly line Product New component / new materials Conversion to incinerator ash Processing / assembly Sub-assembly Distribution / sale Component components

Inspection Customer Use of energy Recycled materials

Conversion to Conversion to Cleaning materials materials Regional warehouse

Disassembly

Conversion to fuel Collection Goods-in inspection

Materials Landfill separation Disassembly Separation Zero landfill Closed-Loop System for Toner Cartridges

25