The Panasonic Report for Sustainability 2006 Matsushita Group

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�� green for services promote We purchasing printing Matsushita Group Business Structure (As of April 1. 2006)

Global & Group Head Offi ce

Semiconductors Semiconductor Company PEAKS engine (System LSI for digital TVs) Components & Devices/Production Systems VENUS engine Batteries Matsushita Battery Industrial Co., Ltd. (System LSI for digital cameras)

Electronic components Panasonic Electronic Devices Co., Ltd. Film capacitor for HEV Electric motors Motor Company

Panasonic Factory Solution Co., Ltd. Angular rate sensor Factory automation (FA) Matsushita Welding Systems Co., Ltd. Display devices Panasonic AVC Networks Company

Digital Networks

Plasma TV AVC Panasonic AVC Networks Company

Fixed-line communications Panasonic Communications Co., Ltd.

Mobile communications Panasonic Mobile Communications Co., Ltd.

Automotive electronics Panasonic Automotive Systems Company Digital camera

System solutions Panasonic System Solutions Company

Appliances & Environmental Systems Home Appliances Group Matsushita Home Appliances Company Home appliances and healthcare systems Matsushita Refrigeration Company Air conditioner with a built-in Healthcare Business Company automatic fi lter cleaning system Lighting Lighting Company Tilted drum washer/dryer Environmental systems Matsushita Ecology Systems Co., Ltd.

Corporate eNet Business Division Services & Solutions Matsushita Logistics Co., Ltd. Matsushita Technical Service Co., Ltd.

Panasonic Shikoku Electronics Co., Ltd.

Matsushita Electric Works, Ltd.

PanaHome Corporation Modular kitchen system FiTi Victor Company of Japan, Ltd. (JVC) PanaHome EL SOLANA

Front cover The Eco & Ud HOUSE is a life-size model house that embodies and presents Matsushita’s concept of Creating Value for a New Lifestyle. “Eco” stands for “ecology (Coexistence with the Global Environment)”; “UD” stands for “universal design,” which ensures ease of use for all people, regardless of age or physical ability.

* More details on the “Eco & Ud HOUSE” can be found on page 48.

1 The Panasonic Report for Sustainability 2006 Matsushita Group

Information on Matsushita Group’s Contents CSR management ...... The Matsushita Group provides information on corporate social Message From Management 3 responsibility (CSR) under the reporting system diagrammed Financial Information ...... 7 below, with the aim of accurately representing its corporate activities and seeking public understanding of the initiatives it Management System...... 9 undertakes to help build a sustainable society. Also, Matsushita intends to provide a platform for interactive communication with Achievements and Challenges ...... 11 all stakeholders, which it believes will help improve its corporate management strategies. Environmental Responsibility ...... 13 Aiming to Coexist with the Global Environment through ...... Matsushita Group’s system for CSR Reporting Creating Value for a New Lifestyle 14 Progress of Environmental Sustainability Management ...... 15 1. The Panasonic Report for Sustainability (this booklet) Material themes Material Themes...... 17 Commentary for Matsushita’s EnvironmentalEnvironmental Sustainability Management from Jonathon Porritt...... 18 Details of environmental performance Details of social performance Prevention of Global Warming ...... 19 Minimization of Pollution Risks...... 25 5. The Panasonic Report Effective Utilization of Resources ...... 27 3. Environmental Data 2. Sustainability Data for Global Corporate Independent Review Report ...... 29 Book (booklet)(booklet) File (website) Citizenship Activities (booklet) Social Responsibility ...... 30 Initiatives for our “Customer-Comes-First” Ideal ...... 31 4. Environmental Performance Data Ensuring Information Security...... 35 6. Corporate Citizenship (by business domain company and Fair Business Practices...... 36 manufacturing site) (website) (by region and fi eld) (website) Relationships with our Business Partners...... 37 Corporate Citizenship...... 39 Relationship with Employees...... 41 1. The Panasonic Report for Sustainability (this(this booklet):booklet): Focuses on material themes of CSR management. For the Global Future...... 46 2. Sustainability Data File (website): Detailed reports on Global Issues and Matsushita’s EffortsEfforts ...... 47 environmental and social performance Proposing Value for a New Lifestyle for the Household ̶Achieving Factor 5...... 48 panasonic.net/report/data_fi le/ Lifestyle in 2010 Envisioned by Matsushita ...... 49 Detailed data for fi scal 2006 will be available in October 2006. Offering the Convenience of the Ubiquitous Network Society to 3. Environmental Data Book (booklet):(booklet): DetailedDetailed informationinformation onon All People ...... 51 environmental activities Moving towards a Safe, Comfortable and, Environmentally-conscious Motoring Society...... 53 Detailed data for fi scal 2006 will be available in September 2006. Developing New Services and Advanced Products to Help Create 4. Environmental Performance Data (website): Reports on a Sustainable Society ...... 55 environmental performance at each business domain To Forge a Future Society as a Respected Corporate Citizen company and manufacturing site (Asia, China, Europe,The Americas) ...... 56 panasonic.net/eco/data/ Third Party Opinions...... 61 5. 6. The Panasonic Report for Global Corporate Citizenship ...... Activities (booklet) and Corporate Citizenship (website): Corporate profi le 62 Detailed information on corporate citizenship activities www.panasonic.co.jp/ccd/en/pdf/ccd_e.pdf Reference guidelines • The Japanese Ministry of the Environment’s Environmental Reporting Guidelines 2003 • The Global Reporting Initiative (GRI)’s Sustainability Reporting Guidelines 2002

Scope of this report Reporting period: The performance data are principally from fi scal 2006 (April 1, 2005–March 31, 2006). Some fi scal 2007 activities are also included. The abbreviated year indication in graphs (e.g., “01” for fi scal 2001) means the fi scal year (April 1– Inquiries March 31). CSR Offi ce, Matsushita Electric Industrial Co., Ltd. Organizations covered: Matsushita Electric Industrial Co., Ltd. and 1-1-2 Shiba-koen, Minato-ku, Tokyo 105-8581, Japan affi liated companies inside and outside Japan Tel: +81-3-6403-3126 Fax: +81-3-6403-3427 (Matsushita Group). Target data: Data are mainly from the consolidated group For online inquiries, please go to panasonic.net/csr/enq.html of companies. Environmental performance data are from all manufacturing sites that Date of Issue: July 2006 have established environmental management systems.

The Panasonic Report for Sustainability 2006 2 Message From Management

On the issuance of The Panasonic Report for Sustainability 2006

Our mission – Contributing to Society through Our Business –

In the 21st century, we are witnessing unprecedented changes in our society, most notably the progress of science and technology and the rapid advance of economic globalization. At the same time, we are confronted by various challenges, such as global environmental degradation and the depletion of natural resources. In this context, I believe it is a common mission of all people in the world to realize a sustainable society. At Matsushita, we are committed in our day-to-day activities by consistently recalling this mission. For the early 21st century Matsushita has adopted the following twin business vision: “Realizing a ubiquitous network society” and “Coexistence with the global environment” using our cutting-edge technologies. It is our sincere hope to help resolve some of these global problems through our commitment to our core business as an electronics manufacturer.

Matsushita’s twin business vision Realizing a ubiquitous network society

Coexistence with the global environment

Kunio Nakamura Realizing a ubiquitous network society The term “ubiquitous network society” refers to a society where people will be able to access information anywhere and anytime. The digital consumer electronics business, in which Matsushita is a leading company, is helping realize such a society. In April 2006, for example, one-segment digital TV broadcasting commenced in Japan. It is a new and

3 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 4 promising digital terrestrial broadcasting service Although Japan is a country of mild climate and that is rapidly spreading across Japan. Through this abundant natural blessings with 70% of its national service, Japanese consumers can now enjoy crisp land covered by forest, Japanese people experienced moving digital images on their mobile communications serious pollution, unparalleled in the world during equipment, such as mobilephones, portable DVD the period of high economic growth (mid-1950s to players, and car navigation equipment, as well as on early-1970s). To overcome this pollution, the Japanese plasma and other large-screen digital TVs. To link such government, private enterprises, and a great number digital consumer electronics products, SD memory of people have made concerted efforts, which have cards and other compact recording media are currently resulted in the development of the most advanced in use, which offer ease of use and convenience. environmental technologies in the world. As a In addition, Matsushita will launch a power line Japan-based electronics manufacturer, Matsushita communication (PLC) system, which the company hopes to contribute its expertise in the efforts being has long been studying and developing. Using this made to resolve such environmental challenges. We new PLC system, users will be able to connect various are seeking to develop technologies that enable us to kinds of compatible equipment simply by plugging maintain the present high living standards and even them into power outlets. Moreover, remote control improve the quality of life, while at the same time from a distance will be available via the Internet. To reducing the consumption of both resources and help realize a ubiquitous network society, Matsushita energy. By achieving this goal we hope to contribute intends to develop these advanced networking to people’s lives in both developing and developed technologies together with system LSIs, which are the countries. To this end, we strive to minimize the impact key components of sophisticated digital equipment. that our business activities have on the environment, We also hope to enhance our capacity to implement including physical distribution, marketing, and services, systems for businesses and public facilities. Our as well as the manufacturing activities at our plants, ultimate goal is to benefi t all our customers worldwide which are located all over the world. In manufacturing, through our efforts to offer dreams and excitement we will dynamically promote the development of “Green by providing AV equipment, to ensure people’s safety Products,” products featuring high energy effi ciency, and security by developing effective systems, and to while at the same time thoroughly carrying out the promote wider use of our products in educational and “3Rs”: Reduce, Reuse, and Recycle resources. In medical treatment facilities. addition, we will promote the use of fuel cells, which Matsushita launched in 2005. Since the fuel cell is a Coexistence with the global environment promising candidate as one of the next-generation Our greatest task in the 21st century is to achieve clean energy sources, by extending the cell’s service a coexistence with the global environment, by life and lowering its price, we plan to promote its overcoming various challenges, including global use, thus expanding the scope of our environmental climate change, the depletion of natural resources, commitment to encompass clean energy creation, as and contamination by environment load substances. well as energy conservation. Moreover, Matsushita will

3 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 4 Message From Management To Our Stakeholders On the issuance of The Panasonic Report for Sustainability 2006

strive to promote environmental preservation through products in order to build a universal society where the effective use of ubiquitous network technology. A every community member can live in comfort and with striking example of this commitment is the promotion of an enhanced sense of security. electronic toll collection (ETC) system. Since drivers of In January 2006 Matsushita opened its Eco & Ud vehicles equipped with ETC system need not stop their HOUSE in the Panasonic Center TOKYO, located in cars to pay the toll, the system is effective in reducing Ariake, Tokyo. The Eco & Ud HOUSE is a life-size emissions, as well as gas consumption. futuristic model house that embodies and presents Matsushita’s concept of “Creating Value for a New Promoting universal design Lifestyle.” The house, featuring environment- The introduction of advanced functions and consciousness and universal design, is the cutting-edge IT technologies in home appliances crystallization of technologies developed by each group does not in itself always satisfy customers. Increasing company, including Matsushita Electric Industrial Co., numbers of our customers complain that their home Ltd. Matsushita Electric Works, Ltd., and PanaHome appliances have so many functions that they cannot Corporation. In this house, we intend to ask visitors use them fully. In response, Matsushita is committed to provide their impressions and views of the house to the development of universal design (UD) products, and the products installed there, so that we can which are easy to operate by all people including the develop future products and services by refl ecting their elderly and people with disabilities. In developing such viewpoints. By listening to our customers we hope to UD products, we place priority on making operations offer value to them while staying closely linked to their easily understandable, using easy-to-understand lifestyles. indications and expressions, and providing users with stress-free postures and movements, etc. As Safety examples of such products that have distinguished functions, our tilted-drum washer/dryer, fax machine Sense of Sense of with voice guidance, and air conditioner with automatic security attachment air fi lter cleaning system have been well received by customers. We will continue to develop UD products by considering what is really needed by our customers when they are actually operating them. Since more and more consumer electronics will be networked, I believe Ease of use Excitement that we must develop UD products and systems that incorporate our cutting-edge technologies, and that simultaneously feature user convenience and

ease-of-use. This is vital for realizing a ubiquitous Convenience Dreams network society. Moreover, we believe that our company must take the initiative in promoting such UD

5 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 6 Fulfi lling our social responsibility To carry out these commitments, I believe it with utmost sincerity essential to carefully ponder the key concept of our business philosophy—a company is a public entity of About 25 years ago, our founder, Konosuke society—and to seriously review whether or not our Matsushita, defi ned corporate social responsibility as business activities truly meet the widest social needs. follows: I have taken every possible opportunity to encourage my fellow employees to work to ensure a “super honest 1. Ensure that the main work of the company helps to Matsushita Group.” To this end, senior executives, improve society and contributes to the well-being of including myself, must take the initiative in building a the people. highly ethical corporate culture, further improving the 2. Make a fair profi t from the business activities of the transparency of our business activities, and developing company and make sure that the profi ts, in one form ever closer ties with society. or another, go back to the nation and its people. Lastly, in preparing this report, we have made 3. Always be certain that every process involved in the efforts to honestly present our corporate activities as activities of the company supports the goals of a they really are. We look forward to receiving your frank healthy society. opinions about Matsushita’s business and to refl ecting them in the management of the entire Matsushita Our global brand slogan “Panasonic ideas for life” Group. In closing, I would like to take this opportunity represents the commitment of all our employees to thank you for your interest in Matsushita and for your worldwide to supplying products and services based continued understanding and support. on valuable ideas that can enrich the lives of people around the world—ideas exemplifying “ease-of-use and convenience,” “safety, sense of attachment, and (Kunio Nakamura was elected as Chairman of the sense of security,” and “dreams and excitement.” Board on June 28, 2006) Working alongside our customers around the world, we will strive to make a contribution to society through our business activities. Through these endeavors we intend to develop Matsushita into a globally excellent company by 2010. To date, we have been committed to corporate citizenship activities in various areas, including the environment, education, and welfare. We will continue such activities by constantly identifying a variety of true social needs and considering what we can do as a company, as individual employees, and as responsible global citizens in the 21st century.

5 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 6 Financial Information Financial Performance by Segment

AVC HOME COMPONENTS NETWORKS APPLIANCES AND DEVICES

12% 13% 38%

Business domain companies Business domain companies Business domain companies and group companies and group companies and group companies (as of March 31, 2006) (as of March 31, 2006) (as of March 31, 2006)

Panasonic AVC Networks Company Home Appliances Group Semiconductor Company Panasonic Communications Co., Ltd. Matsushita Home Appliances Company Matsushita Battery Industrial Co., Ltd. Panasonic Mobile Communications Co., Ltd. Matsushita Refrigeration Company Panasonic Electronic Devices Co., Ltd. Panasonic Automotive Systems Company Healthcare Business Company Motor Company Panasonic System Solutions Company Lighting Company Others Panasonic Shikoku Electronics Co., Ltd. Matsushita Ecology Systems Co., Ltd.

Main products Main products Main products

Plasma, LCD and CRT TVs, DVD Refrigerators, room air conditioners, Semiconductors, general components recorders/players, VCRs, camcorders, washing machines, clothes dryers, (capacitors, modules, circuit boards, digital cameras, compact disc (CD), vacuum cleaners, electric irons, microwave power supply and inductive products, Mini Disc (MD) and Secure Digital (SD) ovens, rice cookers, other cooking circuit components, electromechanical players, other personal and home audio appliances, dish washer/dryers, electric components, speakers, etc.), electric equipment, SD Memory Cards and other fans, air puriﬁe rs, electric and gas heating motors, batteries, etc. recordable media, optical pickup and other equipment, electric and gas hot water electro-optic devices, PCs, optical disc supply equipment, sanitary equipment, drives, copiers, printers, telephones, mobile healthcare equipment, electric lamps, phones, facsimile equipment, broadcast- ventilation and air-conditioning equipment, and business-use AV equipment, car air conditioners, compressors, vending communications network-related machines, medical equipment, etc. equipment, trafﬁc -related systems, car AVC equipment, etc.

(Years ended March 31) Sales Sales Sales (Trillions of yen) (Trillions of yen) (Trillions of yen) 4 4 4

3 3 3

2 2 2

1 1 1

0 0 0 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 Segment profit (Loss) Segment profit Segment profit (Loss) (Billions of yen) (%)(Billions of yen) ( %) (Billions of yen) (%)

180 12 180 12 180 12

120 8 120 8 120 8

60 4 60 4 60 4

0 0 0 0 0 0

-60 -4 -60 -4 -100 -7 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 Notes 1. Under the collaboration with MEW, the Company reorganized business and sales channels in such areas as electrical construction materials, building equipment and home appliances. Accordingly sales results of fis cal 2005 for the Home Appliances and MEW and PanaHome categories have been reclassifie d to conform with fis cal 2006 sales results for those product categories.

7 The Panasonic Report for Sustainability 2006 MEW AND JVC OTHER PANAHOME

17% 13% 7%

Matsushita Electric Works, Ltd. Victor Company of Japan, Ltd. Panasonic Factory Solutions Co., Ltd. PanaHome Corporation Matsushita Welding Systems Co., Ltd. Others

Main products Main products Main products

Lighting ﬁ xtures, wiring devices, distribution LCD, rear projection, plasma and CRT TVs, Electronic-components-mounting panelboards, personal-care products, VCRs, camcorders, DVD recorders/players, machines, industrial robots, welding health enhancing products, water-related CD/DVD/MD audio systems and other equipment, bicycles, imported materials products, modular kitchen systems, interior audio equipment, car AV equipment, and components, etc. furnishing materials, exterior ﬁ nishing business-use AV systems, motors and materials, electronic and plastic materials, other components for precision equipment, automation controls, detached housing, recordable media, AV software for DVD, CD rental apartment housing, medical and and video tapes, AV furniture, etc. nursing care facilities, home remodeling, residential real estate, etc

Sales Sales Sales (Trillions of yen) (Trillions of yen) (Trillions of yen) 4 4 4

3 3 3

2 2 2

1 1 1

0 0 0 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 Segment profit Segment profit (Loss) Segment profit (Loss) (Billions of yen) (%)(Billions of yen) ( %) (Billions of yen) (%)

180 12 180 12 180 12

120 8 120 8 120 8

60 4 60 4 60 4

0 0 0 0 0 0

-60 -4 -60 -4 -60 -4 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006

Notes 2. Sales composition for each segment includes intersegment transactions.

The Panasonic Report for Sustainability 2006 8 Management System Corporate Governance Fulfi lling our responsibilities as a Public Entity of Society

Also in the Sustainability Data File: Basic Business Philosophy (Basic Management Objectives, Company Creed, Seven Principles) Code of Conduct Cor porate Governance

Matsushita Group management philosophy Promoting Corporate Social Responsibility (CSR) Basic Business Philosophy In October 2003, the CSR Offi ce was established to promote our Basic Management Objective CSR initiatives. Matsushita’s fundamental policies concerning CSR are as follows: Recognizing our responsibilities as industrialists, we will devote ourselves to the progress and development of society (1) Promotion of CSR is nothing less than the implementation of and the well-being of people through our business activities, our management philosophy. thereby enhancing the quality of life throughout the world. (2) CSR initiatives should be promoted by all divisions and employees under the leadership of top management. Matsushita’s corporate mission is based on the concept of corporate management established by its founder, Konosuke To put these policies into practice, the stances of all divisions Matsushita, “A company is a public entity of society.” More of the group on the promotion of CSR initiatives were unifi ed by precisely, a company belongs not only to specifi c individuals the Matsushita CSR Board, chaired by the President. The CSR or shareholders but also to all of its stakeholders, including Promotion Committee, comprising approximately 30 members, customers; in other words, a company belongs to the whole chaired by the Executive Offi cer in charge of CSR and including of society. As the basis of our corporate activities, we must staff members from each job function and overseas divisions, contribute to society through its business as a public entity. In has monitored the eight major constituents of the company’s 1932, the founder expressed his determination to all employees CSR performance from eight perspectives (Figure 2). Problems that a manufacturer’s true mission is to eliminate poverty by identifi ed from the CSR viewpoint have been resolved through making daily necessities available to everyone, as inexpensively cooperation among the relevant divisions. as possible, based on his perception that human welfare consists of both physical and spiritual affl uence. He continuously called Figure 2: Matsushita’s CSR constituents for us to adhere fi rmly to the “customer-comes-fi rst” principle, to Common Perspectives Major Constituents “start fresh everyday” and to continue to provide value to society. 1. Corporate governance 1. Environment Only in this way can a company conduct sustainable business 2. Global & group 2. Fair business practices activities for the benefi t of society. 3. Compliance 3. Labor, human rights, safety These ideas have been inherited as the Matsushita Group’s 4. Risk management 4. Information security management philosophy and serve as the foundation of all of our 5. Supply chain 5. Corporate citizenship activities activities. 6. Brand management 6. Quality administration 7. Disclosure 7. Customer satisfaction Corporate governance 8. Contribution to public welfare 8. Universal design

In fi scal 2004 Matsushita restructured its business operations to transform itself into a business domain-based organization based Complying with the Matsushita Group on our management philosophy (page 1; for further details, refer Code of Conduct to the Sustainability Data File). Matsushita undertook a second revision of its Code of Conduct in 2005 in order to incorporate a CSR viewpoint into its business operations and to apply this viewpoint more thoroughly to group-wide operations across the world. Currently, the revised Code of Conduct is utilized by approximately 330,000 group Directors, Executive Offi cers, and employees, in 21 different languages. Figure 1: Corporate governance structure Business domain companies and subsidiaries formally adopt Functions of Board of Directors, Executive Offi cers, and Board of Corporate Auditors the Code of Conduct through a resolution by the Board of Board of Directors Directors, then appoint Directors and Executive Offi cers in charge Appoint- Empowerment & Executive Offi cers ment Supervisory functions supervision Execution functions of ensuring observance of the Code, and conduct initiatives to Corporate strategy ensure compliance, such as through systematic training sessions. decision-making functions Integration of group’s Subsidiaries comprehensive strengths (Business domain In December 2005, Matsushita sent out questionnaires to companies) Overseas companies employees in Japan (more than 60,000 replies were received) in Audit order to determine compliance with the Code of Conduct. We are Internal divisional companies Appoint- (Business domain making use of the results of the survey to organize more effective ment Board of Corporate Auditors Audit companies) Shareholders Meeting educational and training programs and to plan specifi c measures Auditing functions Sales divisions Appoint- Overseas divisions for more rigorous compliance and implementation of the Code. ment Accounting audit Other business divisions Accounting Auditor R&D, etc.

9 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 10 Global and group risk management our stakeholders, including customers, local communities, initiatives shareholders, business partners, and employees, as well as to achieve our business objectives and secure stable business Matsushita has consistently implemented risk management growth. programs in day-to-day operations in accordance with its business plan management system. However, with the Implementing Business Continuity enforcement of the Sarbanes-Oxley Act in the U.S., and the Management (BCM) initiatives enactment of the new Corporate Law in Japan, demands for stricter internal control by companies, including risk management, In recent years, large-scale disasters have frequently occurred have been growing. In response, Matsushita has promoted a throughout the world. In response, business continuity guidelines cycle for risk management activities, appropriately geared to were developed by the Central Disaster Prevention Council of the its business operations. This risk management cycle is used Cabinet Offi ce in Japan. Companies are also required to establish to collect and assess risk information gathered through the stronger business infrastructures that can withstand disasters. company’s global network in an integrated and comprehensive Matsushita has promoted Business Continuity Management manner to ensure achievement of its business objectives (Figure not only to promote safety and security for people, but also to 3). fulfi ll its responsibilities in restoring business operations promptly To this end, the company established the Global and Group and providing essential products and services to customers in (G&G) Risk Management Committee in April 2005, consisting the event of a disaster. of Directors and Executive Offi cers representing the related From fi scal 2006, we have been conducting job functions and divisions. The company also established the earthquake-resistance inspections at model business units, in Corporate Risk Management Offi ce under the direct control of anticipation of inland earthquakes caused by fault rupture and the the President to function as the Committee’s secretariat. Similar Tonankai earthquake. Based on survey results, we established committees were also established in business domain companies company-wide guidelines for setting target recovery periods, and and affi liated companies. These arrangements are designed to to promote advance measures to reduce damage and secure establish a global structure capable of responding appropriately alternative facilities and alternative suppliers of materials. to risks in group-wide operations. Specifi cally, risks are assessed by all business domain In-house hotlines companies, affi liated companies and related job functions, in conjunction with the formulation of business plans. In addition, As a system to ensure an open and transparent corporate culture, the G&G Risk Management Committee also assesses risks and Matsushita established a Global Business Ethics Hotline and determines the severity of such risks. Risks that the Committee a Reporting Procedures by the Board of Corporate Auditors in judges as having the higher priority will be dealt with by business July 2005, in addition to the existing Business Ethics, Fair Trade, domain companies and related job functions rapidly and Women’s, and Fair Business hotlines. In total, Matsushita now accurately. In fi scal 2006, the Committee picked out nearly 3,000 operates six hotlines at its head offi ce. Furthermore, business risk scenarios, consolidated them and identifi ed the corporate domain companies, subsidiaries, and regional headquarters in major risks. At business domain companies, development and North America and Europe have established and operate their implementation of this system as well as responses to major risks own hotlines. are monitored to continuously improve the system. These hotlines serve as a means of accepting reports and Matsushita pinpoints risks that might hinder our business providing advice when employees encounter a situation that operations and responds to them appropriately through might pose problems or create questions about the company’s this framework. This is to ensure safety and security for all business activities. The hotlines function beyond the corporate hierarchy and accept reports and requests for advice from various countries and regions in order to resolve problems as Figure 3: Risk management efforts linked with quickly as possible. business management Improve corporate value

Achieve business objectives

Business management Management D C D C Risk management strategies and their implementation P A P A Eliminate and reduce factors Measures to achieve that obstruct objectives and their achievement of objectives implementation Code of Conduct Management philosophy

9 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 10 Achievements and Challenges At a Glance of Fiscal 2006 Fully understanding our actual status to evolve CSR activities

Achievements in ﬁs cal 2006 (summary) Dialogues with stakeholders

Efforts concerning the social aspects of Matsushita’s CSR Matsushita provided wide-ranging opportunities for dialogues activities were previously promoted mainly by the head offic e with stakeholders in order to receive feedback on its CSR divisions, such as the Legal, Personnel, and Information Security activities. Some of our stakeholders’ comments are given below. divisions. In fis cal 2006, however, we established the Matsushita CSR Board, which includes executives of business domain Dialogue with experts with regard to CSR reporting companies, chaired by the President, to launch company-wide We asked for opinions on the last year’s report from experts in various CSR efforts. The Board’s initiatives are developed from a fie lds: viewpoint of promoting advanced programs linked with business activities. • Investors are interested in whether CSR efforts help to boost the As for its environmental responsibility, fis cal 2006 marked the competitiveness of a company. (SRI rating organization) year of the mid-term targets of Matsushita’s Green Plan 2010, This year’s report informs Matsushita’s business operations in relation announced in 2001. In this regard, the year was signific ant also to global issues (pages 46–60). for us in taking a step further towards achieving greenhouse gas • The report should contain levels of achievements in comparison with objectives (an audit corporation). (GHG) Factor 5 for One Household. The table on page 12 shows achievements and challenges of the Matsushita places emphasis on employee education and CSR constituents. dialogues with stakeholders in both social and environmental aspects of CSR activities. Meeting with experts concerning lifestyles for the new age Enlightening activities for all employees We hosted a round table discussion between a total of 23 experts and journalists and top offi cials of Matsushita at the Eco & Ud HOUSE in From April to June 2005, an exhibition, “Matsushita Konosuke November 2005 (see cover and page 48). and CSR,” was held in the House of History of the head offic e. The founder’s ideas on CSR and CSR practices were introduced • A participant wants solutions that use more natural materials and at the exhibition. Subsequently, fi ve exhibitions took place proposals that take into account landscapes and local communities. around the country and approximately 15,000 people visited Matsushita would consider such issues in Factor 5 Project in the fi scal these exhibitions. Many of our employees deepened their 2007. understanding of CSR. Details of these events are reported on the company’s website, both in English and Japanese. Matsushita has been involved in “Team -6% campaign,” Website meeting with readers on Matsushita’s business operations We hosted a trial website meeting over the Internet. For this meeting, launched by the Ministry of the Environment in April 2005. we called for readers of the Panasonic Report for Sustainability 2005, Through participation in the “COOL BIZ” campaign and the “Black selected at random from all over the country, to participate in the Illumination” event (a lights-out campaign on day of summer meeting. solstice), environmental responsibilities could be shared by all employees. We have continued our own lights-out campaigns • It is important for the company to promote awareness of CSR in each since then. employee. Since November 2005, a monthly CSR News (an Matsushita now regularly issues a bulletin, CSR News (both in English awareness-raising publication available both in English and and Japanese). Japanese) has been issued to all employees, based on the concept of “understand CSR and change your behavior.” CSR News has been useful in highlighting the importance of CSR in an Dialogue with labor union offic ials easy-to-understand manner for all employees. We hosted a meeting to read the report with eight labor union offi cials of Panasonic AVC Networks Company to deepen the mutual understanding of Matsushita’s CSR efforts.

• With an accurate understanding of the social signiﬁ cance of company-wide CSR efforts through reading the report, each union member can take pride in their duties. We would like to organize similar events for workplace meetings (labor-management meeting “Team -6% campaign” logo conducted for each section). Labor and management conﬁ rmed that both parties would cooperate in the promotion of CSR initiatives.

“Konosuke Matsushita and CSR” (website) Participation in the Global Reporting Initiative (GRI) http://panasonic.net/csr/matsushita/ In 2004, Matsushita became an organizational stakeholder (OS). During the 2005–2006 term, the company participated in the Advisory Group for the revision process for the G3 Guidelines. In July 2006, one of Matsushita’s employees was appointed as a member of the Stakeholder Council (SC).

11 The Panasonic Report for Sustainability 2006 Fiscal 2006 achievements and challenges concerning priority themes in the CSR constituents This report details achievements and challenges mainly concerning priority themes by classifying ﬁs cal 2006 initiatives into a set of CSR constituents. Based on future challenges, Matsushita focuses on the implementation of speciﬁc CSR efforts in line with these six initiatives. At the beginning of For the Global Future (see pages 46–60), we introduce several of our efforts according to the six initiatives.

CSR constituents Six initiatives in CSR (page) Priority themes Fiscal 2006 achievements Future challenges activities

• T o achieve a GHG Factor 5 • A chieved a GHG Factor 2.3 • T o improve environmental and Resource Factor 3 for One and Resource Factor 1.6 effi ciency in products. through the development of Pursue ecological Environment* Household through Creating Values for a New Lifestyle (fi scal technologies for conserving • T o improve global environmental intelligence both of energy and resource in 2011 target from fi scal 1991). products. performance in production. (pages 13-28) • T o implement an early quality monitoring system on a global • T o establish and set in place a mechanism to monitor signs • T he system was introduced scale. of signifi cant problems and into all business domain Quality respond promptly (Early Quality companies in Japan by • T o accurately identify numbers November 2005. of each model of FF-type Monitoring System). kerosene heaters subject to (pages 31-32) recall.

• T o consolidate customer centers to ensure prompt responses • T o promote a more rigorous • I n April 2006, the Integrated system of incorporating CS • T o reinforce the mechanism of Customer Contact Center customer feedback into refle cting customers voices in (ICCC) was launched. products, centering on ICCC. products. (pages 31-32) Create products of high social value • T o improve customer • R eleased leading products satisfaction and to expand with UD features, such as • T o establish new design Universal design (UD) customer bases through products with voice guides guidelines for voice assistance successive launches of UD and websites. products. and VIERA links. (pages 33-34) • T o establish an organization • G lobal Information Security where information security will • T o realize an organization Management Regulations improve autonomously. where information security were established, applying Information security mechanisms are in place in all to about 330,000 employees • T o reinforce information security business flo ws. across the Group. deserving of manufacturing oriented company, etc. (page 35) • 3 30,000 employees • T o enhance capabilities of • T o establish a corporate culture now comply with the planning, developing rules, that places more emphasis Code of Conduct. promoting, and monitoring Ensure commitment to Fair business practices on compliance for thorough compliance-related issues. fairness and honesty implementation of super-honest • E stablished fair trade offic ers management. at regional headquarters and • T o promote compliance efforts (page 36) sales companies. globally, e.g. trade laws.

• T o stipulate CSR assessment • A new Basic Purchasing as a basic criterion for selecting Agreement, including articles • T o promote re-signing with all suppliers in order to promote on human rights, environment, business partners and auditing Enhance responsible Partnerships with partnership suppliers and retailers CSR-oriented Procurement and information security, was based on the new agreement. globally. laid down. (pages 37-38) • T o make sure that corporate • T o implement activities, making • E xternal stakeholders citizenship policies are shared Corporate citizenship use of the characteristics of feedback was incorporated by all divisions of the group Promote global citizenship activities each locality to empowering in deciding on corporate worldwide, and to develop an activities society, the company, and citizenship policies. effective information collection employees. system. (pages 39-40)

• T o increase diversity in • T o create an organizational the workplace based on • E stablished the Corporate culture where diverse groups Relationships with Diversity Promotion Division Achieve excellent employees “participative management,” of personnel can contribute, “performance management,” and the e-Work Promotion regardless of gender, nationality, workplaces and “respect employees.” Ofﬁ ce (as of April 1, 2006). or age. (pages 41-45) * For details, refer to the Environmental Data Book 2006 (scheduled for release in September).

Other achievements * Listed in the Dow Jones Sustainability Index * Listed in the FTSE4Good Global 100 Index * Listed in the Ethibel Sustainability Index * First place in the 9th Nikkei Environmental Management Survey * F irst place in the Nikkei Worker-friendly Company Ranking

The Panasonic Report for Sustainability 2006 12 Environmental Responsibility

Supplying environmentally-conscious products to our customers and improving their quality of life

Global environmental degradation has become a pressing issue, as indicated by the abnormal weather conditions that are occurring more frequently than ever. To address this challenge, people around the world are focusing on preventing global warming, utilizing limited resources more effectively, and reducing the risks involved in the use of chemicals. The ultimate goal of these efforts is to create truly sustainable societies. In this context, it is essential that ordinary people contribute to reducing the environmental impacts of their day-to-day activities. In 2001 Matsushita reaffi rmed its business vision, Coexistence with the Global Environment; upholding it, we are striving to minimize the environmental impact of our products, while at the same time improving product functions to enhance peoples’ quality of life. As a yardstick to measure the results of these endeavors aimed at Creating Value for a New Lifestyle, Matsushita has developed Factor X, and is developing environmentally-conscious products and services by referring to this indicator. Although Factor X was originally designed for individual home appliances, Matsushita plans to apply Factor X to offi ce equipment, industrial machines, transportation, and other social infrastructures.

Lights-out Campaign As part of an effort to help prevent global warming, all of our 220 business sites in Japan turn off their neon and electric signboards at 8:00 p.m. (page 24).

13 The Panasonic Report for Sustainability 2006 Aiming to Coexist with the Global Environment through Creating Value for a New Lifestyle

Related information: Factor X panasonic.net/eco/factor_x/index.html

Philosophy on Creating Value for a New Lifestyle

Sense of Universal security and Comfort and design and Versatility safety convenience accessibility and fl exibility for all Ripple effect on society Improving the quality of life Value for a New “Value for a New Lifestyle” Minimizing environmental impact Lifestyle we envision will lead towards a sustainable society. Global warming Resources Chemicals

Targets and results of efforts to Create Value for a New Lifestyle (Relative to fi scal 1991) Targets for fi scal 2011 Results in fi scal 2006 Details

Quality of life Total number of functions:* 1.4 times (90 in fi scal 1991 – 127 in fi scal 2006) GHG Factor Factor X for One 5 2.3 Environmental Annual GHG emissions: 0.60 times Household impact (9.1 tons/year in fi scal 1991 – 5.5 tons/year in fi scal 2006) (Approximately 90 items) Quality of life Number of product functions: 1.4 times Resource (90 in fi scal 1991 – 127 in fi scal 2006) Factor 3 1.6 Environmental Non-circulating resources: 0.89 times impact (470 kg/year in fi scal 1991 – 420 kg/year in fi scal 2006)

* Calculating each function of targeted products as one

Improving Factor X for One Household Matsushita has integrated the factors of approximately 90 over product life cycles appliances and systems used in an average Japanese household to strive for improving the results of Factor X for One Household. The concept of Factor X was introduced with the aim of As a yardstick for measuring the quality of peoples’ lives, in fi scal enhancing the quality of peoples’ lives by improving our product 2006 Matsushita began using the number of product functions, functions, while at the same time reducing their environmental instead of the number of products. impact over their life cycles, ranging from the manufacturing of To reinforce our commitment to improving the quality of life components and parts, to the manufacturing of products, their and simultaneously minimizing environmental impact, Matsushita distribution, use by customers, and recycling. Particular focus has incorporated its resolution to realize GHG Factor 5 for One is on preventing global warming, seeking effective utilization of Household by fi scal 2011 into our Management Policy for fi scal resources and minimizing pollution risks involved in the use of 2007. chemicals.

The Panasonic Report for Sustainability 2006 14 Environmental Responsibility Progress of Environmental Sustainability Management Reinforcing efforts in environmental sustainability management, human resource development, and action plan activities

Related information: Basic approach to environmental protection Also in Matsushita’s Sustainability Data File panasonic.net/eco/policy/ Green Plan 2010 Environmental governance

To achieve our goal for Factor X for One Household set for fi scal 2011, it is essential to reinforce our initiatives to reduce the environmental impact of every business process. Accordingly, we must fi rst integrate environmental programs in our Group-wide management strategies, reinforce to develop employees responsible for environmental affairs, and thoroughly promote Plan-Do-Check-Action (PDCA) cycles in Environmental Management System.

Basic approach to environmental to bear on environmental issues. Under the leadership of top sustainability management management, the conferences have adopted various innovative programs over the past eight years, promoting environmental Matsushita’s corporate mission is to contribute to the progress initiatives across the group. Therefore in April 2005 we dissolved and development of society and the well-being of people the Corporate Environmental Conference and transferred its through our business activities, thereby enhancing the quality functions to our Management Conferences (Figure 1). of life throughout the world. Based on our Basic Management Objective, in 1991 Matsushita committed a Basic Environmental Systematically developing employees Management Policy, and subsequently issued an Environmental responsible for environmental activities Statement. In 2001 we further expanded our Environmental Vision, directing our efforts towards resolving environmental To reinforce our environmental activities, it is necessary to problems in seven areas, together with an action plan to be develop staff members who will lead environmental activities achieved in 2010, entitled Green Plan 2010. continuously and systematically. In April 2006 we reorganized In line with these policies and plans, Matsushita will further its our human resource development system and established the environmental sustainability management through the thorough Environmental Human Resource Development Committee which implementing PDCA cycles at all our business sites. is responsible for promoting the new system. The committee will promote the development of the experts and leaders responsible Integrating the environmental for fulfi lling our environmental commitments, by formulating decision-making functions into the training programs for individual members based on quantitative analyses of their skills using our in-house skills evaluation system management conference (page 43). From 1997 to 2004 we have held Corporate Environmental Conferences twice a year, with members comprising all directors Determining priorities and executive offi cers. At the Conference, chaired by the in the new Green Plan 2010 president, the highest-level of decision making power is brought As fi scal 2006 is the middle year of the Green Plan 2010 (concluding in fi scal 2011), we have reviewed the policies and Figure 1 Environmental sustainability management promotion target levels stipulated in the plan. Based on this comprehensive system in fi scal 2007 review, we prepared a new Green Plan 2010 in February 2006

President (Table 1). In the new Green Plan 2010, environmental targets set for Management various areas are ranked in accordance with their priorities. The Conference Operational sites in Japan Business domain utmost priority is placed on Creating Value for a New Lifestyle, companies Operational sites which represents Matsushita’s basic product and business Domain Environmental outside Japan Conference approach. Fundamental to this aim is increasing both the Green Sales companies Products development rate (Graph 1) and the Clean Factory Corporate management Regional outside Japan divisions for regions headquarters accreditation rate. The last two were also selected as priority targets since most of our products has a greater environmental Related functional R&D offi ces divisions outside Japan impact during the stages of product manufacturing and use.

Responsible Corporate Environmental Director Affairs Division Regional Environmental Conference

Environmental Environmental Policy Committee Working Committee

Factor 5 project Promotion systems by issues Green Products Promotion Committee

Clean Factories Promotion Committee

15 The Panasonic Report for Sustainability 2006 16 Raising the criteria of Green Products activities on a global basis. We call factory organizations which have reduced the environmental impact of their manufacturing We have developed Green Products (GP), based on our original processes in a comprehensive manner Clean Factories. environmental criteria throughout the products’ life cycles. Graph To convert all our factories into CFs, in fi scal 2006 Matsushita 1 shows GP development rate (ratio of sales of GPs against sales starting from Japan sites established its CF Accreditation of all products developed in a given year). We set a target rate System (Figure 2), under which the efforts of each factory are for each year; and in fi scal 2006 the actual rate reached 94% quantitatively evaluated. At the same time, we set a basic target (877 models), exceeding the target level for that year (70%). that at least 90% of all Matsushita plants should obtain CF This has resulted from increased speed in the development of Accreditation by fi scal 2011. In our CF Accreditation System, we environmental technology. To supply products with even greater employ various yardsticks to evaluate each factory operation environmental performance, we have also upgraded the criteria including energy-conservation rates and reduction rate of waste for GPs (page 20). emission. To obtain CF Accreditation, the respective plants must steadily improve the levels of these rates; to this end, all our Setting the Clean Factory (CF) plants worldwide must thoroughly implement PDCA. We also Accreditation System evaluate and promote the distinct and original initiatives taken up by individual factories, refl ecting the characteristics of the Since we operate over 300 plants across the world, we must countries and regions where they are located. work to reduce the environmental impact of our industrial

Graph 1 GP Development Rate Figure 2 Clean Factory (CF) Accreditation System CF accreditation criteria （%） 94 Result 85 Energy-conservation 90 Accredited CF plants Target 68 Reduction of waste emission 70 Continuous Developing unique Limitation of chemical discharge Upgraded environmental CF activities 41 56 criteria initiatives 42 Effective use of water resources (optional) 28 Elements for point addition

0 Awards and commendations from external 03 04 05 06 11targets Obtaining ISO 14001 certifi cation organizations, unique CF activities, management and regional characteristic.

Table 1 New "Green Plan 2010" Environmental performance targets (relative to fi scal2001 ) Basic Targets (Relative to fi scal 2001) Indicators for achieving basic and area targets Item Indicator Targets for fi scal 2011 Item Targets for fi scal 2011 Estimation of CO emissions GHG Factor 5 (relative to fi scal 1991) Products 2 Value for a New Lifestyle Factor X for One Household from product use Resource Factor 3 (relative to fi scal 1991) 10% reduction of CO2 emissions Factories per basic unit 2 Green Products Green Products Development Rate 90% or more Preventing * global 4% reduction of CO2 emissions Clean Factory Clean Factory Accreditation Rate 90% or more warming Distribution per basic unit (relative to fi scal 2007)

Area targets (Relative to fi scal 2001) 1% reduction of CO2 emissions Offi ces per basic unit (relative to Item Targets for fi scal 2011 previous year) (under discussion) Product recycling Establishing recycling systems for all home appliance categories Effective Waste 20% reduction per unit of waste Environment/energy business Promoting widespread of household fuel cells, etc. utilization Fact- generation*3 Green marketing and distribution Promoting a modal shift: increasing rail freight to 30,000 (in Japan), etc. of ories 10% reduction per unit of water resources Water consumption*4 Management targets (Relative to fi scal 2001) Limitation 10% reduction of chemicals of chemical Factories released/transferred Item Targets for fi scal 2011 discharge (relative to fi scal 2006) Environmental communication Increasing LE*1 families: to at least 80% of all employee households in Japan, etc. Environmental sustainability management and Promoting visualization of environmental sustainability management, etc. *1 LE: “Love the Earth” (page 24) human resources *2 CO2 emissions / (consolidated sales ÷ Bank of Japan’s corporate goods price index [electrical equipment]) Environmental risk management Remediation of soil contaminated with PCBs, VOCs, and heavy metals, etc. *3 Waste generation volume / (consolidated sales ÷ Bank of Japan’s corporate goods price index [electrical equipment]) *4 Water consumption volume / (consolidated sales ÷ Bank of Japan’s corporate goods price index [electrical equipment])

15 The Panasonic Report for Sustainability 2006 16 Environmental Responsibility Material Themes To reduce environmental impact in three major areas

Matsushita values as its main priorities: reducing CO2 emissions, controlling the use of chemicals, and reducing waste by promoting recycling.

Energy-conserving in products and Matsushita provides a wide variety of products to its manufacturing customers worldwide. Since the majority of our products are discharged by customers after their use, it is imperative that

CO2 emissions are the most prominent during the stage of Matsushita curtails use of specifi ed chemical substances in our

product use. In fact, CO2 emissions from use of our products products, thereby reducing the risk of future pollution. Currently are approximately 11 times from their production. Therefore we are concentrating our efforts on ensuring that all Matsushita Matsushita is committed to developing products at the products supplied worldwide comply with the EU RoHS Directive* highest-levels of the industry’s environmental effi ciency (page (page 25). 19) and our energy creation business such as household fuel * Directive on the Restriction of the use of certain Hazardous Substances cells(page 23). in electrical and electronic equipment.

We manage CO2 emissions from manufacturing stage by setting target levels in terms of a basic unit (page 21) and the Promoting effective utilization basic units are steadily decreasing. The total volume of CO 2 of resources worldwide emissions, however, is actually increasing in Japan, China, and other parts of Asia, due to increased production of digital home To avoid resource depletion and the destruction of ecosystems appliances. Manufacturing these digital products entails greater caused by resource extraction, manufacturers must improve their energy consumption. For this reason, we place our utmost resource productivity. Reducing waste is also necessary from the

priority on reducing CO2 emissions in business for components perspective of the limited capacity of landfi lls. Since fi scal 2003 and devices business, and in our operations in China and other Matsushita has been maintaining at least a 98% recycling rate of Asian countries. the waste generated from manufacturing activities in Japan (page 27). The fi nal waste volume in fi scal 2006 amounted to 1,000 Managing the use of chemicals tons. to minimize pollution risks Matsushita’s products annually sold in Japan weigh a total of 392,000 tons. Since 2001 Matsushita has been committed In response to growing concern about the diffusion of chemicals to the recycling of waste electronic products. In fi scal 2006 in the natural environment and their potential impact on local we achieved a recyclability rate of approximately 70% for the ecosystems, Matsushita is committed to the comprehensive collected waste electronic products. Based on our experience of management of chemicals, based on risk assessments of both recycling in Japan, Matsushita also began establishing recycling the chemicals used in our manufacturing activities and those systems in Europe in fi scal 2006. To ensure the effective and contained in our products. Specifi c commitments include effi cient recycling of products that are currently being marketed, remediation of soil and underground water contamination in Matsushita is also committed to developing products that are our facility compounds, and the management of high-risk easy to dismantle and sort by type of materials (page 28). substances, including polychlorinated biphenyl (PCB) and asbestos (page 26).

Environmental impact of Matsushita’s activities in Japan (In Japan, early report of data for fi scal 2006) 162 manufacturing sites

Input: 435,000 tons Electricity: 2.84 billion kWh Thirty major products with the highest energy/resource consumption levels Metals: 209,000 tons Petroleum: 61,000 kl (including products from plants outside Japan) Air conditioners: 14,000 tons Plastics: 117,000 tons City gas: 150 million cubic meters 4 home appliances and PCs TVs: 22,000 tons INPUT Glass: 54,000 tons LPG: 60 million kg Refrigerators/freezers: 35,000 tons Others: 55,000 tons Water: 43 million cubic meters Washing machines: 19,000 tons Vehicle fuels: Electricity: PCs: 69 tons Packaging materials: 134,000 tons 63,000 kl 49.5 billion kWh Chemicals: 90,000 tons Procurement and manufacturing Products Distribution and marketing Use Recycling

Weight of sold products: 392,000 tons Metals: 186,000 tons Plastics: 105,000 tons Glass: 46,000 tons Others: 55,000 tons

Waste generation volume: Waste generation volume: CO : 1.97 million tons CO2: 170,000 tons CO2: OUTPUT 255,000 tons 2 25,000 tons NO : 1,500 tons NOX: 1,200 tons 20.83 million tons (Final waste volume: 1,000 tons) X SOX: 260 tons Chemicals released and Water: 27 million cubic meters Weight of recycled products: 66,000 tons transferred: 792 tons Metals: 45,000 tons Glass: 12,000 tons Others: 9,000 tons Calculation model: Target area: Japan; procurement and manufacturing: [Input items] electricity: amount purchased from power utilities; petroleum: used volume of heavy oil and kerosene; water: used volume of tap

water, industrial water and underground water; packaging materials: corrugated cardboard, polystyrene foam, paper board, etc.(excepting PanaHome) [Output items] CO2: CO2 emissions associated with the use of electricity, city gas, LPG and petroleum; NOX and SOX: emissions from business sites governed by legal regulations; water: discharge to sewage and public water districts; distribution and marketing: transport from manufacturing sites to retail shops (in case of imported items, transport within Japan only); use: CO2 emissions associated with lifetime power consumption of target products. Lifetime power consumption is calculated based on the number of products sold, usage time, and service life (10 years); recycling: the weight of recycled products equals the weight of components and materials that can be either sold or provided free of charge to businesses that use such components and materials.

17 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 18 Commentary for Matsushita’s Environmental Sustainability Management from Jonathon Porritt

One of the things that The Natural Step really admires about Matsushita is its intense passion about matter – about the raw materials, chemicals, water and energy that provide the inputs into all their production processes. It sounds so easy when you hear people talking about “reducing the environmental impact” of everyday electrical and electronic goods, but it’s far from easy. Behind every one of Matsushita’s targets and achievements there lies an extraordinary wealth of data and information, a body of skills and experience in environmental accounting and management that makes it possible, year on year, to improve overall environmental performance. Chairman of The Natural Step U.K. So it is right that a report of this kind explains the company’s internal processes and practices as well Mr. Jonathon Porritt as its external commitments. On the face of it, it may not seem so important that Matsushita is raising the status of all environmental professionals within the company, to help deliver the new Green Plan 2010, or is embedding a new environmental sustainability management system across the company as a whole. But these things matter enormously in terms of corporate culture, changing employee behaviour, and incentivising further improvements.

Meeting new challenges The test of transparency Engaging with society , Any performance report of this kind will Matsushita s commitment to How can the company then reach out contain a combination of achievements transparency, to acting in "a super-honest beyond its customers, into society more and challenges still to be met. The role manner", is highly signifi cant, and we have broadly, to facilitate the transition to a of The Natural Step is to raise those two comments in that regard. low-carbon, resource-effi cient way of challenges, to test for real leadership, First, it would be good to see more life? This will entail re-thinking the skill and to ask some of the really diffi cult discussion in this report and elsewhere of base the company relies on to meet its questions. the huge dilemmas facing a company like sustainability challenges. The upgrading For instance, it’s great that the Matsushita. At the moment, it all seems a of environmental professionals needs to company is now going to toughen up the bit too easy, even though our discussions be matched by investment in expertise criteria which defi nes what it means by a with Matsushita indicate that it is very in behaviour change, communications, Green Product, but what is it going to do well aware of the dilemmas now facing sustainable consumption, and so on. In about absolute increases in CO2 emissions them. Secondly, we are worried about all such matters, Matsushita needs to be (through continuing growth of the the potential for confusion between all even more active over the next few years business), even as relative emissions per the different initiatives going on inside the in making responsible, resource-effi cient unit of product continue to fall? Should it company, and all the different categories citizens not just of its staffs and suppliers, not set both short and long-term targets of Green Products, Super Green but of us all! for absolute reductions, given the growing Products, Superior Green Products, Finally, we would like to see Matsushita concern about climate change? And why V-Products and so on. develop an overarching sustainable is so little happening in the company Simplicity is also crucial, as well development framework, bringing on sourcing more of the energy that it as transparency, to ensure the best together its commitments to society, needs from renewables? Without a bigger possible engagement with consumers. its employees, its shareholders and investment in renewable energy, it will be Customers' use of Matsushita's products suppliers, as well as on the environment. very diffi cult if not impossible to achieve is responsible for emitting nearly11 At the moment, these things all seem to absolute reductions in CO2 emissions. times as much CO2 as is emitted in the be pursued independently, and we believe And as an added benefi t, would this not manufacture of those products. We a more integrated, more comprehensive be one way of getting on top of ever-rising would therefore like to see the company approach will both strengthen emissions from increased production in build on the undoubted success of its overall performance and improve China – where there are still substantial Eco & Ud HOUSE pilot (page 48) to help communications inside the company and challenges to be met in water and waste more people to understand the scale of with all its stakeholders. management as well? the challenge we now face in terms of In our meetings with Matsushita resource effi ciency and climate change. managers, we also challenged them It needs to widen its understanding of to be bolder in driving forward their "quality of life" to ensure that its GHG

innovation process. Though we Factor 5 for One Household commitments Chairman of The Natural Step UK welcome the inclusion of the challenge are genuinely geared to improving Chairman of the UK Sustainable Development to develop more Green Products in their peoples overall wellbeing. Through Commission Business Plans, the process seems initiatives of this kind, the company should Jonathon Porritt geared more incremental, step by step aspire to do as much for its customers as improvements rather than two more it has done for its employees through its , radical breakthroughs. There is so much Love the Earth Citizen s Campaign. more that could be done.

Biographical details of Mr. Jonathon Porritt Jonathon Porritt, Co-Founder of Forum for the Future (FFF) and Chairman of the Natural Step U.K., is an eminent writer, broadcaster and commentator on sustainable development. Established in 1996, FFF is now the UK’s leading sustainable development charity. He was appointed by the Prime Minister as Chairman of the UK Sustainable Development Commission in July 2000. This is the Government's principal source of independent advice across the whole sustainable development agenda. In addition, he has been a member of the Board of the South West Regional Development Agency since December 1999, and is Co-Director of The Prince of Wales's Business and Environment Programme. He was formerly Director of Friends of the Earth (1984-90); co-chair of the Green Party (1980-83) of which he is still a member, Jonathon In London (March 2006) received a CBE in January 2000 for services to environmental protection.

17 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 18 Environmental Responsibility Prevention of Global Warming Making all Matsushita products green

to reduce CO2 emissions from households

, Also in Matsushita s Sustainability Data File Related information: N’s Eco Project Environmentally-conscious design/energy-effi cient products national.jp/2eco (in Japanese only)

To reduce CO2 and other GHG emissions from households, Matsushita is striving to improve product energy effi ciency and promote such product-use. Recently we have upgraded the criteria for the original accreditation system for Green Products.

Concentrating on efforts Enhancing the energy effi ciency of our for energy-effi cient products mainstream products

In fi scal 2004, 25.2 billion tons*1 of greenhouse gases (converted In 1991 Matsushita established the Matsushita Product 2 into CO2) were released worldwide. The IPCC* has estimated that Assessment system, under which the environmental impact of during the 21st century the average global temperature will rise our new products is evaluated during their planning and design by 1.4–5.8 ºC. If this happens, it will cause a signifi cant impact stages by conducting a product life cycle assessment (LCA)*4 for on the global environment. In Japan, although the industrial each product. Based on the results of product LCAs, we accredit

sector is most responsible for CO2 emissions (responsible for environmentally-conscious products in the following three approximately 40% of the total national emissions), increasing categories: Green Products (GP), Superior GPs, and Super GPs rates of the business, household, and transportation sectors are (Figure 2). Matsushita annually reviews and upgrades criteria for relatively higher. Efforts to reduce emissions, therefore, must also accrediting GPs. To better promote the continued development be made in these sectors. of GPs, our GP development plans have been included within the

Measurement of CO2 emissions associated with our company’s business plans since fi scal 2005.

products over their life cycle indicates that CO2 emissions from In fi scal 2006, Matsushita developed and marketed 877 GP product-use stage are the highest. In Japan, 20.83 million tons models. The GP development rate*5 for the year reached 94%,

of CO2 (converted from power consumption) was generated signifi cantly surpassing the target level (70%) (page 16). The through the use of household appliances in fi scal 2006 (Figure Figure 2 Green Products System 1). This amount accounts for 12% of the CO2 emissions from the Japanese household sector. In contrast, CO emitted during the 2 Signifi cant progress in environmental performance manufacturing and distribution stages of our products accounts Super GPs Trend-setting products toward achieving a sustainable society

for 0.4% and 0.2% of the CO2 emissions from the industrial Superior GPs Products that have achieved the industry’s highest level of sector in Japan, respectively. Thus we place particular priority environmental performance Achieve one or more targets listed below on improving product energy effi ciency. We are now striving to 1 Products with GHG effi ciency develop and promote products with higher energy effi ciency. Green Products (GP) * improved 2 environmental Resource effi ciency * performance *1 Source: Handbook of Energy & Economic Statistics in Japan (2006) Non-use of PVC resin *2 IPCC: Intergovernmental Panel on Climate Change Mandatory : non-use of 6 specifi ed chemical substances *3 Calculation based on data supplied by the Ministry of the Environment, Japan (data for fi scal 2005) product lifespan x product functions *1 GHG effi ciency= GHG emissions over the entire life cycle

product lifespan x product functions *2 Resource effi ciency = non-circulating resources over the entire life cycle Figure 1: Matsushita’s CO2 emissions in Japan (fi scal 2006) 1.97 million tons 0.17 million tons 20.83 million tons*1 from manufacturing from distribution from use

2 2 0.4%* of CO 0.2%* of Japan’s 2 2 12%* of Japan’s emissions from Japan’s freight transportation industrial sector (distribution) sector household sector

*1 An in-house calculation, estimated from the annual number of sold units of 30 major products with the highest energy/resource consumption levels, the usage time (based on industry standards or Matsushita’s independent standards), and product service life (10 years). The 30 products mean plasma TVs, LCD TVs, CRT TVs, DVD recorders, SD stereo systems, fax machines, refrigerators, air conditioners, microwave ovens, IH cooking heaters, washing

machines and dryers, fully-automatic washing machines, laundry dryers, rice cookers, dish washer & dryers, natural coolant (CO2) heat pump water heaters, electric thermos pots, electric carpets, vacuum cleaners, heated toilet seats with warm water sprays, electric irons, dehumidifi ers, humidifi ers, ventilators, air purifi ers, bathroom ventilators & dryers, range hoods, fl uorescent lamps, home-use lighting equipment and hair dryers. *2 Calculated from the data of the Ministry of the Environment, Japan (fi scal 2005 data, fi scal 2004 data for distribution)

19 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 20 Digital high-defi nition plasma TV (TH-37PX600) features 37% lower annual power consumption than a conventional model (TH-37PX300), resulting from improved luminous effi ciency. Tilted-drum washer/dryer (NA-VR1000) was accredited as Super GP. It incorporates the world’s fi rst heat pump drying system, features 50% lower power and water consumption than a conventional model (NA-V81, in case of washing and drying 6 kg of laundry).

number of Superior GPs nearly doubled, from 19 in fi scal 2005 Promoting environmentally-conscious to 37 in fi scal 2006. Tilted-drum washer/dryer (NA-VR1000) was products through N’s Eco Project accredited as Super GP. In this environment, by continuing efforts in research and development, Matsushita will continue to aim at Since 2003 we have been committed to N’s Eco Project, a creating Super GPs. campaign designed to promote both greening and green products . *4 Method to quantitatively assess the environmental impact of products In this plan, Matsushita publicized the importance of using at each product life stage. environmentally-conscious products by supplying data indicating *5 Ratio of sales of GPs against sales of all products developed in a given how much users of such models can conserve on their electric year. and water bills compared with users of conventional models. We Enhancing accreditation criteria to improve publicized such data through various media, on our websites, and in retail stores. To promote greening, Matsushita offered the energy effi ciency of all our products fl ower seeds to 3,741 kindergartens nationwide, and planted 4,814 To further enhance Matsushita’s energy conservation cherry seedlings all over Japan. technologies, we have upgraded the accreditation criteria for In 2005 we promoted public awareness of the importance GHG effi ciency in our new Green Plan 2010. The target level set of environmental preservation. As a campaign mascot, we for fi scal 2011, for instance, has been upgraded from 1.5 times to used “Green Santa Claus” (Danish ambassador of goodwill and 2.0 times that of the level in fi scal 2001. By achieving a target GP environmental protection). To involve the public in the campaign, development rate while satisfying such high criteria, we intend we asked the public to draw pictures of natural objects. to improve the environmental performance of all our products, Matsushita promised to plant one seedlings matching for each thereby enhancing their competitiveness. picture drawn and submitted. At the same time, we are committed to developing what we Moreover, we are publicizing product environmental call V-Products, a series of products that create extra value information and introducing energy-effi cient use of products for society and for people’s daily lives, while playing the role of through such means as catalogues and brochures. leading Matsushita’s business growth. Criteria for V-Products accreditation include high levels of [1] black-box technologies, [2] universal designs, and [3] eco-friendly innovations. We aim to integrate the environmentally-sound technologies used in V-Products and Superior GPs, so as to further enhance the value to our customers.

Figure 3 New criteria for Green Products (fi scal 2011) GHG effi ciency Conventional 1.5 times (relative to the level of fi scal 2001)

2.0 times (relative to the level of fi scal 2001) New or The industry’s top level in terms of energy effi ciency *1 Resource effi ciency Conventional 1.7 times (relative to the level of fi scal 2001) & the industry’s top level

1.7 times (relative to the level of fi scal 2001) or New Within 10% of the industry’s top level or Recycling rate higher than the level of previous year*2 *1 Within the top 10% (or equivalent) in the energy effi cient products list, issued by the Energy Conservation Center, Japan *2 Legally defi ned recycling rate + 25% for the following four appliances specifi ed by the relevant Japanese laws: refrigerators/freezers, air Green Santa Claus conditioners, TVs, and washing machines

19 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 20 Environmental Responsibility Prevention of Global Warming

Managing CO2 emissions from manufacturing by concentrating on our components and device businesses and operations in China

, Also in Matsushita s Sustainability Data File Related information: Improving energy effi ciency at factories Prevention of global warming/Green distribution panasonic.co.jp/eco/cf/senergy.html (in Japanese only)

To achieve the global target of reducing CO2 emissions, all group companies are committed to carrying out our Three-year Energy Conservation Plan.

Particular focus is on controlling CO2 emissions in the business and geographical areas where increased emissions are attributable to the growth of our business activities.

Achieving target for CO2 emissions Measures for the increase per basic unit in actual CO2 emissions Matsushita has set the following targets for fi scal 2011: to reduce Even though achieving the target of basic unit, the absolute 1 CO2 emissions per basic unit* by 10% from the level of fi scal CO2 emissions increased by 400,000 tons compared to fi scal

2001 on a global basis; and to reduce CO2 emissions per unit of 2001.This is attributable to expanded production volume in 2 actual production* by 25% from the level of fi scal 1991 in Japan. China and other parts of Asia. The CO2 emission factor (factors

To promote energy conservation on a global basis, each for calculating CO2 emissions based on energy consumption) manufacturing site worldwide formulates a Three-year Energy for China is higher than those for other countries, due to Conservation Plan, which integrates energy conservation high dependency on coal. Moreover in Japan, demands for initiatives and investment programs, reviewing and updating them digital home appliances are rapidly growing, which entails annually. Specifi c targets for the respective factories are indicated semiconductors and plasma display panels (PDP). Production of by our so-called Energy Conservation Rates.*3 Assembly factories such devices involves signifi cant power consumption, resulting

are expected to annually achieve the Rate of at least 3.5%, while in greater CO2 emissions. Therefore we will take every possible

component and device factories, which manufacture electronic measure to curtail its CO2 emissions associated with our devices components, are expected to achieve a rate of at least 7%. In businesses, and on our operations in China and other Asian fi scal 2006 Matsushita’s assembly factories and component countries.

and device factories achieved an average of 3.5% and 6.2%, At a new PDP plant in Amagasaki in Japan, CO2 emissions

respectively. This means that we reduced CO2 emissions by per unit PDP are approximately 48% lower than those of our 220,000 tons on a global basis. Therefore, in fi scal 2006, global fi rst Ibaraki Plant. This radical reduction has been enabled by

CO2 emissions per basic unit have been cut by 19% from the level increasing the number of panels cut from a single sheet of glass, of fi scal 2001 and we achieved the target for fi scal 2006 (Graph 1). as well as by minimizing the space for heat treatment.

*1 Basic unit = CO2 emissions /(consolidated sales / Bank of Japan’s Graph 2 CO2 emissions per unit of PDP production corporate goods price index [electrical equipment]) Index *2 Actual production = nominal production / Bank of Japan’s corporate goods price index [electrical equipment]) Operation commenced *3 Energy conservation rate = amount of energy consumption reduced in in Sept. 2005 the current fi scal year’s measures (converted to CO2) /amount of energy 100 consumed in the previous fi scal year (converted to CO2) 65 52 0 No.1 plant (Ibaraki) No.2 plant (Ibaraki) No.3 plant (Amagasaki) Graph 1 CO2 emissions per basic unit (Global, manufacturing stage)

CO2emissions Target CO2emissions per basic unit, Graph 3 CO2 emissions per unit of actual production (10,000 tons) compared to fiscal 2001 (%) (Japan, manufacturing stage) 99 98 97 CO2 emissions CO2 emissions per actual 100 (10,000 tons) unit of production, compared 100 96 to fiscal 1991 (%) 95 93 95 100 92 90 87 100 81 82 82 80 81 75 427 422 417 397 China/ 377 366 82 65 84 89 Northeast 191 191 197 54 Asia 179 57 161 Device 92 Asia/ 84 93 92 90 segment 83 Oceania 75 111 120 122 132 14 15 16 15 10 14 48 40 32 50 45 47 Europe Product assembly Americas 86 71 69 65 176 168 179 191 191 197 68 segment Japan 0 91 03 04 05 06 11 targets 0 01 02 03 04 05 06 11targets Note Note: Basis for calculating Matsushita’s CO2 emissions The factors used for purchased electricity were the averages for all power sources at the receiving * The GHG protocol’s CO emissions factors for each country were used for electricity 2 end, as reported by the Federation of Electrical Power Companies of Japan. The CO2 emissions purchased outside Japan. factors for individual fi scal years were: 0.410 kg CO2/kWh (fi scal 1991), 0.407 kg CO2/kWh (fi scal * The factor related to fuels was based on the Guidelines for Calculating Greenhouse 2003), 0.436 kg CO2/kWh (fi scal 2004), 0.421 kg CO2/kWh (fi scal 2005), and the value for fi scal Gas Emissions from Businesses (Draft 1.6) by the Ministry of the Environment, 2005 was used for estimating CO2 for fi scal 2006. Japan.

21 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 22 Amagasaki Plant, a cutting-edge PDP plant in Japan, has adopted a next-generation technology that enables cutting multiple panels (six panels) from a single sheet of glass so as to optimize production yields of display panels. In addition, the exterior walls of the building are covered with a photocatalytic

coating, which has the capacity to remove the NOX equivalent of 1,800 poplar trees. The plant is also equipped with a rainwater recycling system and Matsushita’s original wind/solar hybrid power “Kaze-Kamome” (page 23).

Conserving energy through innovation of Modal shift and the use manufacturing technologies of environmentally-conscious vehicles In the production of semiconductors, tests are conducted in distributional operations

to detect early failures by applying high voltage under high We are also committed to reducing CO2 emissions in the temperature. In the past, tests were conducted at the fi nal distribution sector under the Matsushita Group Green Logistics stage of assembling the semiconductor packages. Detecting Policy, formulated in March 2006. Specifi c measures include such failures at an earlier stage, however, would enable a plant shifting transport modes to more environmentally-conscio to consume less energy by immediately discontinuing the us means (modal shift), introducing eco-conscious trucks, processing the defective products. Accordingly, our Uozu Plant strengthening partnerships with green logistics companies, and developed and introduced new technology that enables the introducing biofuels (page 23). early testing. Since this new technology uses the heat generated In order to shift the primary modes of transport from truck by semiconductors themselves for testing, it can reduce the to rail and ships, we have increased the number of rail freight

energy needed for testing to one-sixth. As a result, annual CO2 containers (calculated on the basis of fi ve-ton containers) from emissions decreased by 1,700 tons in fi scal 2006. 1,735 in fi scal 1999 to 17,595 in fi scal 2006. According to our estimation, this initiative reduced fi scal 2006 transportation Initiatives in China and other Asian countries CO2 emissions by 8,777 tons. In recognition of these efforts, Matsushita Battery Industrial Co., Ltd., Panasonic Storage To promote energy conservation in these countries where our Battery Co., Ltd. and Matsushita Plasma Display Co., Ltd. have production activities are rapidly expanding, it is imperative to been awarded the Eco-Rail Mark certifi cation which is given develop local experts in energy conservation technologies. to enterprises that use rail freight for at least 15% of their land Since February 2005 Matsushita has held seminars on energy transportation of over 500 km distance. conservation technologies in Malaysia, Thailand, Indonesia, the Matsushita Logistics Co., Ltd. was the fi rst in the world Philippines, and China, so as to help develop the specialists. In to introduce small hybrid trucks for delivery. The shift from the seminars trainees review the results of energy consumption conventional trucks to hybrid vehicles was initiated in 2003. By diagnoses and discuss measures to improve energy effi ciency. the end of fi scal 2006, the company had replaced 115 trucks In fi scal 2006 we held three seminars in China. A total of 132 with hybrid vehicles, and plans to complete replacement of engineers participated in the seminars. its entire fl eet (306 small trucks) with hybrid, natural gas and To conserve energy at our plants, steady and persistent other environmentally-conscious vehicles by the end of fi scal efforts are also necessary. For example, many of our plants use 2007. In the Panasonic Leap Ahead Eco Car*4 Plan, formulated compressed air to move products around inside the facilities. in January 2005, Matsushita plans to expand the scope of this It is estimated, however, that approximately 2% of the energy initiative to introduce hybrid vehicles to Group’s sales and service consumed in a plant is lost due to air leakages. During fi scal 2007 companies, as well as distributing companies. We are planning we are promoting campaigns to eliminate air leakage from all our to replace all our 14,000 business vehicles with environmentally- plants, thereby helping to curtail overall power consumption. conscious vehicles by the end of fi scal 2011. Through this vehicle

switchover, by fi scal 2011 we will reduce the CO2 emission from our own vehicles by 8,500 tons, which account for 16% of those in fi scal 2004.

*4 Eco car: the same type of environmentally-conscious vehicles adopted by the Japanese government and that are designated by the government as low-emission vehicles or vehicles that comply with the green tax plan

Exchanging a tube with air leakage

21 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 22 Environmental Responsibility Prevention of Global Warming Promoting the development and effective utilization of new energy sources

Related information: Household Fuel Cell Cogeneration System Related information: Kaze-Kamome panasonic.co.jp/appliance/global/FC/ panasonic.co.jp/mesc/products/en/product/ Biodiesel truck windseagul panasonic.co.jp/ideas/closeup/08fuel/ (in Japanese only)

Worldwide attention is now focused on unused and renewable energy sources, which generate less CO2 and enable effective utilization of our natural resources. To create a sustainable society, Matsushita is promoting utilization of these new energy sources.

Aiming at household fuel cells’ widespread Recycling vegetable cooking oil for usage by fi scal 2009 and onward fueling trucks Fuel cells synthesize water from hydrogen From September 2005 to March 2006 we experimentally recycled and oxygen and use the electricity generated vegetable cooking oil that had been used at a factory canteen in in this process as a household energy Kusatsu (Shiga Prefecture, Japan) as a biodiesel*2 to fuel trucks source. In cogeneration systems, the heat, of Matsushita Logistics Co., Ltd. Because vegetables extract

generated simultaneously with electricity, is CO2 from the atmosphere as they grew, CO2 emitted from the

also used. Since the fuel cell cogeneration biodiesel does not result in a net increase of CO2 in the Earth’s system offers high energy effi ciency, the atmosphere. The canteen generates 7,000 liters of used cooking

system can reduce CO2 emissions by 45%, oil annually. If we refi ned all the oil discharged from the canteen, Household Fuel Cell and primary energy consumption by 32% we could save the light oil equivalent of the annual consumption Cogeneration System from the average level of conventional energy of two trucks. This initiative has also the merit of realizing sources for households (based on research resource recycling locally. We plan to carry out this model project by Matsushita). on a permanent basis, as well as replicating it in other areas. In February 2005 Matsushita delivered the world’s fi rst commercial type of Household Fuel Cell Cogeneration System to *2 Fuels derived from biomass—recently living organisms or their the new offi cial residence of Japan’s prime minister. Since then, metabolic byproducts. we have continued supplying the systems; as of the end of March 2006, approximately 100 Matsushita supplied were in Wind and solar power generation operation. Moreover, we have begun marketing houses system equipped with the systems. If all Japanese households The “Kaze-Kamome (Wind Seagull),” which Matsushita were to employ such the systems, the GHG reduction effect released in 2001, is a standalone hybrid outdoor would be equivalent to the forestation of a land area 30 times lighting system. Electricity generated from wind that of the Tokyo Metropolis.*1 We intend to promote the full - and solar power runs the lights at night. fl edged diffusion of the systems in fi scal 2009 and onward. The system maintains a steady brightness as long as the In fi scal 2006 the system received Good Design Award for wind velocity remains at a minimum of 2.5 meters per second Ecology Design in recognition of its superb design. regardless of wind direction. Many governmental agencies have purchased the Kaze-Kamome system since it can supply *1 Based on annual CO2 emissions from a household (estimated by power in the event of an emergency, in addition to providing Matsushita) and the National Census of fi scal 2006 (by the Ministry light. Moreover, it can be used for crime prevention in parks of Internal Affairs and Communications, Japan). and other public spaces, when equipped with network cameras. Using Green Power in Shanghai

The Green Electricity Scheme has been designed to sell electricity generated by solar, wind, geo-thermal heat and other natural energy sources at prices higher than standard electricity, and to allocate the balance in prices for the development of further natural energy sources. In China, Shanghai City has introduced this scheme to promote the use of natural energy. In June 2005 Panasonic Plasma Display (Shanghai) Co., Ltd. signed an agreement to purchase 600,000 kWh of such Green Power for that year. 624 units As of the end of March 2006, 624 units of the Kaze-Kamome system were in operation worldwide. In addition to being wind-powered, the systems help prevent crime.

23 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 24 Prevention of Global Warming Eco lifestyles make a great difference

, Also in Matsushita s Sustainability Data File: Related information: Love the Earth Citizens’ Campaign Social contribution/ Environmental awareness panasonic.co.jp/eco/le/ (in Japanese only) Matsushita Green Volunteer Club meu.or.jp/ippa/frame/frame_mgr.html (in Japanese only)

Matsushita promotes eco lifestyles for its employees and their families. Down-to-earth activities to develop environmental consciousness among employees have gained participation of local communities

Progress of the Love the Earth Citizens’ Participation in “Team -6%” program Campaign over the past nine years – Nationwide Lights-out campaign – In 1998 Matsushita embarked on its Love the Earth Citizens’ As an initiative to meet the Campaign for its employees and their families. The Campaign requirements of the Kyoto was initiated by the then-president of the company, who believed Protocol, which took effect in that to produce Green Products, all employees should have 2005, the Japanese government Green Minds. To fulfi ll Matsushita’s vision of Coexistence with the launched a national program titled Global Environment, we believe that we must strive to preserve “Team -6%,” designed to help the the environment not only at our workplaces, but also at our country achieve its greenhouse homes and communities. gases reduction target of 6% The Campaign comprises: [1] keeping Household below 1990 levels by 2012. As a Eco-account Books, [2] using our own shopping bags instead of team member of this program, free plastic bags provided at supermarkets, and [3] participating Neon lights are switched off. we promoted “COOL BIZ” and in environmental volunteer activities. Users of our original “WARM BIZ” campaigns (a no-tie and no-jacket fashion for

Household Eco-account Books can easily calculate the CO2 business wear during summer to save on air conditioning and emissions they generate at home, based on their gas and electric casual warm clothing during winter). Moreover we voluntarily power consumption levels. The Books also introduce various continued our Lights-out Campaign to help prevent global ideas to lead eco lifestyles. The number of households that used warming. As of July 2005 to the end of March 2006, all of our the Books has increased to approximately 37,000 in fi scal 2006 220 business sites in Japan turned off their neon and electric from approximately 3,300 in fi scal 1999 when the Campaign signboards at 8:00 p.m. for a total of 254 days. This was effective

commenced. Matsushita received the Environmental Minister’s in reducing approximately 384 tons of CO2 emissions, and Award for Prevention of Global Warming Activities, in recognition approximately 10.55 million yen (US$92,067) in electricity costs. of our long-standing efforts. The Campaign, which was begun We are continuing the Light-out Campaign in fi scal 2007. by Matsushita’s employees and their families, is growing steadily, with increasing numbers of people with Green Minds joining the campaign from nearby communities. In addition to the LE Campaign, we implement the greening campaigns, so called Forest of Co-existence, and Matsushita Green Volunteer (MGV) Club established in 1993, through collaboration with local community members. 13,450 trees Over the three years up to March 2006, Matsushita planted a total of 13,450 seedlings at 13 sites so called Forest of Co-existence in various parts of Japan.

Household Eco-account Book

23 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 24 Environmental Responsibility Minimization of Pollution Risks Comprehensive management of chemicals to prevent their diffusion into the natural environment

Also in Matsushita,s Sustainability Data File: Related information: The Matsushita Electric Group Chemical Chemical substance reduction in products/ Chemical Substances Management Rank Guidelines substance management/ Factory environment preservation/ panasonic.net/eco/suppliers/ Measures against environmental risks Environment-conscious materials panasonic.co.jp/eco/gp/catalog/gp01.html (in Japanese only)

With the issuance of the EU’s RoHS Directive*1, we began reinforcing efforts to avoid the use of specifi ed chemical substances in our products and achieved the target level set forth by the Directive at the end of October 2005. Further, we are committed to reducing the volume of chemical substances released/transferred during the production stage. We also place pollution of soil and groundwater at our facility locations under management supervision and take appropriate countermeasures concerned about polychlorinated biphenyl (PCB) and asbestos.

Initiatives on the non-use of Reinforcing the green procurement system specifi ed chemicals in all our products In implementing the initiative, it is essential to strengthen our on a global basis green procurement system. We purchase parts and materials In July 2006 the RoHS Directive*1 will take effects in the EU. The from approximately 9,500 suppliers from all over the world. Directive bans marketing of electrical and electronic equipment To seek their cooperation, we held meetings around the containing any of the specifi ed chemical substances (lead, world, explained our green procurement policies, and asked mercury, cadmium, hexavalent chromium, and two specifi ed suppliers to survey the chemical compositions of their products brominated fl ame retardants). Similar regulations are being and provide Non-Use Warranty Certifi cates for the Specifi ed imposed in an increasing number of countries. Chemical Substances and Content Survey Sheets for Managed In June 2003 Matsushita revised its Green Plan 2010 and Substances. launched a group-wide program to abandon usage of specifi ed To consolidate data management regarding the Sheets chemical substances in our products destined not only for the provided by suppliers, we have developed an original database— EU market but also for the rest of the world’s market, established the GP-Web system. In fi scal 2005 the majority of our suppliers April 2005 as our target deadline. We voluntarily analyzed the in the world began using this system. As a result, we can now chemical composition of all 1.32 million components incorporated monitor and confi rm whether or not the components we purchase in Matsushita’s products. Out of the 1.27 million applicable in the global market contain specifi ed chemical substances. To components, approximately 280,000 components contained assist suppliers in reinforcing their environmental management the specifi ed chemical substances. Matsushita completed systems, we have dispatched auditors and monitored our substitution of the specifi ed chemicals contained in 240,000 suppliers’ environmental quality assurance systems. components with alternative substances by the target date (end of March 2005). For the remaining 40,000 components we Never to supply products containing need a longer time horizon for conducting component quality specifi ed chemical substances evaluations and acquisition of safety standards. However, by the end of October 2005 we completed the switchover for Since the switchover initiative has been completed, we are all specifi ed chemical substances that had been used in all currently committed to steady and thorough implementation applicable products (approximately 31,400 products) (Graph 1). of the following three principles: not to contain, not to use, and not to discharge specifi ed chemical substances at any of our manufacturing sites. To confi rm that our purchasing components *1 Directive on the Restriction of the use of certain Hazardous Substances contain no specifi ed chemical substances, we have developed in electrical and electronic equipment an original and simple technique to detect hexavalent chromium and a high-speed, high-accuracy harmful substance analyzing Graph 1 Efforts for non-use of specifi ed chemical substances in system. Moreover, we have recently installed 360 new analyzers. products(as of the end of October 2005) We have also developed and introduced systems to prevent Exemption*1 Exemption*2 Exemption*1 contamination with specifi ed chemical substances throughout our production processes, ranging from product design to Substitution shipping inspections at all our business sites. To thoroughly completed: 280,000 establish such systems in our operations worldwide, we have Components: organized our own Techno-school, offering a total of 57 courses 1.32 million (parts) Products: in 19 countries to share relevant information and provide practical 48,300 (models) (Applicable components: training. To date, the number of participants in the courses has 1.27 million) reached approximately 4,000. Containing no specified Substitution completed: chemical substances: 31,400 990,000

*1 Components and materials with no feasible alternatives or suppliers, for example those commonly used in other industries, or those with components and materials specifi ed by customers. *2 Models for which Matsushita has applied for exemption from the RoHS Directive.

25 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 26 Cr6+

Cd Cr6+ Pb To produce our DVD recorder (DMR-EX350) without using specifi ed chemical substances, Matsushita had to develop many components using 6+ alternative materials, establish related technologies, conduct reliability tests, Cr and retrain engineers. Pb 1,270,000 parts 9,500 suppliers

Reduction of release and transfer of Management of soil and groundwater chemical substances from factories During the latter half of the 1980s, soil and groundwater In the Matsushita Electric Group Chemical Substances contaminated by a chlorinated organic solvent was detected Management Rank Guidelines (for Factories), chemical in some of our sites. Since then we have been committed substances are classifi ed into three categories: Prohibition, to the survey and remediation of polluted sites, as well as Reduction, and Adequate Management. Since 1998 we had preventing any recurrence, in compliance with our Manual for implemented the “33/50 Reduction Plan” for reducing both the use Preventing Pollution of Soil and Groundwater and the Guidelines of Reduction substances and the release/transfer of Adequate for Preventive Management of Environmental Pollution, both Management substances by 33% in three years, and by 50% in prepared in response to the pollution incident. six years in each region. In fi scal 2004 we have placed all 143 manufacturing As 33/50 Reduction Plan achieved its goal in Japan, we sites in Japan under management supervision*4. Regarding set a new global goal aimed for fi scal 2011: To reduce the manufacturing sites outside Japan, in fi scal 2006 we placed all release/transfer of 368 chemical substances by 10% compared 152 manufacturing sites under management supervision. We to fi scal 2006. While the previous reduction activity targeted 3,486 conducted soil sampling at 57 sites outside Japan, nine of which chemical substances, we will concentrate our efforts on the 368 were detected to have soil pollution exceeding the allowed level. substances*2 accounting for at least 80% of the volume released Matsushita will remediate each of these sites. and transferred from our factories. In fi scal 2007 we will prepare reduction schedules up to fi scal 2011 for manufacturing sites that *4 Completing surveys, starting remediation, installing inspection wells, use the designated substances. preventing outfl ow, and thorough operational management.

*2 Each ten groups of substances recorded the highest levels of release /transfer in the Pollutant Release and Transfer Register survey (Japan), First success in Japan by the private sector conducted in 2002 and in our chemical substance survey, fi ve groups – Remediation test of soil contaminated of substances specifi ed by the Law Concerning the Promotion of the Measures to Cope with Global Warming, and twenty VOCs recorded by PCB – the highest levels of release in the survey by the electrical and electronic In January 2003 Matsushita voluntarily disclosed that it had industry buried capacitors containing polychlorinated biphenyl (PCB) in four plants and one former plant site. We have implemented Three approaches to control asbestos emergency safety measures, excavation of the buried materials, and measurement of adequate management, excluding those still We have established a company-wide countermeasures buried at the Panasonic Electronic Devices Matsue compound, committee, which surveys risks connected with asbestos and where excavation is planned to be completed by 2008. takes appropriate measures across the Matsushita group under When we self-disclosed these facts, we promised to remediate the following three approaches: occupational safety and health; the polluted soil. We successfully completed demonstration facilities (buildings, plants); and products*3. All our products soil remediation tests, which took place over a period of about currently on the market are free from asbestos (page 44). fi ve months from May 2005. With cooperation of Nippon Steel Corporation, Mitsubishi Heavy Industries, Ltd. and Nippon Steel *3 For details please refer to the following web pages (in Japanese only): Transportation, Co., Ltd., we transported the polluted soil from Matsushita Electric Industrial Co., Ltd.: our plants to Kitakyushu Eco-Town, where it was cleaned using panasonic.co.jp/eco/users/info1.html Matsushita Electric Works, Ltd.: a solvent extraction method. The demonstration test was the fi rst www.mew.co.jp/corp/oshirase/050721/index.html such test in Japan conducted by the private sector. Based on the PanaHome: panahome.jp/ test results, we plan to initiate full-fl edged soil remediation.

25 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 26 Environmental Responsibility Effective Utilization of Resources Global development of recycling management

Also in Matsushita,s Sustainability Data File: Related information: product recycling Recycling of waste electronic products/ Products resource panasonic.net/eco/recycle/ conserving/ Waste reduction Ecology Net Europe GmbH www.ecologynet-europe.com

Product recycling promotes not only effi cient utilization of limited resources, but also innovations. Taking advantage of our wealth of experience in recycling, Matsushita has begun establishing and developing recycling management systems on a global basis.

Promoting recycling to fulfi ll the Creating an effi cient recycling society responsibilities of a manufacturer through effective use of existing Today, the volume capacity of landfi lls everywhere is being infrastructures strained and there is concern that our living environment will In 2001, the Japanese government enacted the Law for Recycling be ruined if society as a whole does not reduce the amount of of Specifi ed Home Appliances. The law targets refrigerators waste. There are also concern of depleting natural resources and (including freezers), washing machines, air conditioners, and TVs, endangering ecosystems as a result of resource exploitation. since these products which account for approximately 80% by With this view, it is needed to seek greater utilization of precious weight of waste electronic equipment in Japan. resources. Matsushita actively reduces the waste volume In Japan, to encourage free market competition, waste from manufacturing sites, and promotes the recycling of collection and recycling are conducted by two groups of waste electronic products as part of our responsibilities as a manufacturers. We have built an effi cient geographically manufacturer. dispersed network through the effi cient use of existing recycling Concerning waste reduction from our production stage, since facilities nationwide. Ecology Net Co., Ltd., jointly established fi scal 2003 we have consistently achieved what we call “zero by Matsushita and other leading company, totally manages emissions”*1 in Japan. Our waste recycling rate on a global basis and operates the recycling scheme, including 190 designated was 85.5% in fi scal 2001, which increased to 93% in fi scal 2006. collection sites and 35 recycling facilities, on behalf of manufacturers which concluded contracts. *1 At least 99% of waste recycling rate (mass of recycled resource ÷ [mass In 2001 we further established Matsushita Eco Technology of recycled resource + mass of fi nal disposal]) since fi scal 2006 and at Center Co., Ltd. (METEC), our own recycling facility under the least 98% up to fi scal 2005. concept “from products to products.” In fi scal 2006 METEC recycled 700,000 units. In addition to recycling waste electronic products, development of recycling technologies and products that are easy to recycle is implemented at METEC. The dismantling technologies developed by METEC are shared with other recycling facilities within the group, thus contributing to enhancing recycling effi ciency across the entire group. Moreover, the facility is open to the public giving educational opportunities to society and publicizing its initiatives to the world. Over the fi ve years since its foundation, a total of 48,000 people have visited METEC from around the world.

Graph 1 Number of products Graph 2 Recovered Figure 1 Matsushita’s home appliance recycling system recycled (Japan) materials by weight in Japan (fi scal 2006) (1,000 units, rounded to nearest 1,000) Disposers (consumers) 2,228 2,251 2,138 2,116 Copper 3% Aluminum 2% 1,759 575 594 Washing Other resources 497 546 machines 14% Municipalities Retailers Matsushita Company A Importers 386 Refrige- rators 1 598 596 605 585 * 520 Mixed 190 designated collection sites metals Iron 50% 14% Consignment 751 740 766 765 TVs 635 CRT glass Contract 18% Ecology Net Co., Ltd. Air 35 recycling facilities 218 270 256 282 307 conditioners (Matsushita Eco Technology Center, (Recycling management company) 0 etc.) 02 03 04 05 06 *1 including freezers since fi scal 2005

27 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 28 In response to the Directive on Waste Electrical and Electronic Equipment (WEEE), Ecology Net Europe GmbH collects various kinds of waste electronic products, and analyzes them to determine optimal recycling process.

Launching a new business based on Sharing our original expertise in Europe in-house recycling efforts In Europe, the EU’s Directive on Waste Electrical and Electronic Iron, copper, and other metals recovered from waste electronic Equipment (WEEE) came into effect in August 2005. It stipulates products are transferred to material manufacturers and refi ned that manufacturers are responsible for collecting and recycling for their reuse as raw materials. On the other hand, we recycle over 90 types of electrical and electronic equipment. plastic in-house and reuse as materials for our own products. According to the WEEE Directive, manufacturers or the This has become possible with the cooperation of the recycling industry as a whole are primarily responsible for building recycling facilities, as we have promoted collecting high-quality plastics. systems. In Germany, to promote free market competition, In 2003 we established Environmental Technology Solutions an industry collective system is not allowed, and individual Co., Ltd., which applies our recycling know-how to recycled manufacturers must build such systems. Accordingly, Matsushita plastics business. In fi scal 2006, the company marketed established Ecology Net Europe GmbH (ENE) in April, 2005, with approximately 10,000 tons of recycled plastics, including an the view that our expertise accumulated in Japan would be useful amount sold to other companies. Moreover, the company in Germany as well. operates ET manifest systems that enables companies which To confi rm technological levels of local recyclers, ENE has discard industrial waste to monitor transportation of waste repeatedly visited, together with engineers from Japan, to major properly done using GPS*2, and also confi rm the state of waste recyclers in Germany and other European countries. Given the through digital images via the Internet. commencement of collection and recycling of waste electronic products in Germany on March 24, 2006, we intend to strengthen *2 GPS: Global Positioning System our partnerships with local recyclers to further improve recycling technologies and systems. Promoting product recycling systems according to the law Dismantling 100 models to evaluate the ease of recycling To build an effective recycling system for home appliances, it is imperative to ensure that they are defi nitely collected, which To achieve a high recycling rate*3 effectively, it is essential that entails cooperation from both consumers and retailers. Since products are designed with suffi cient consideration given to 2001 Matsushita had meetings with retailers and distributors recycling. In April 2005 we launched the group-wide “3R Eco to raise awareness of the importance of recycling systems and Project”*4, where product designers conduct dismantling tests the obedience to the law. During fi scal 2006 we strengthened to identify recycling-related problems concerned with product these efforts, holding seminars for approximately 11,000 retailers. design. We believe that developing designs that ensure ease In these seminars, we used our original educational tools to of recycling is also effective in augmenting our manufacturing promote everyone’s understanding of the vital importance of legal capability. compliance. We plan to introduce our own recycling expertise We have tested approximately 100 product models, and we worldwide, exerting leadership in the promotion of recycling. prepared a database of recycling know-how for each model.

*3 According to the Law of Recycling of Specifi ed Home Appliances, the recycling rate is defi ned as follows: weight of components and materials that can be sold or transferred free of charge ÷ product weight (in Japan) *4 3Rs: Reduce generation of waste, Reuse materials, and Recycle materials into new products

Educational tools for retailers to raise awareness of legal compliance

27 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 28 Independent Review Report

The guidelines for calculating CO2 emissions Item Applicable Area Calculation Standard

CO2 emissions relating to fuel consumption Global Guidelines for Calculating Greenhouse Gas Emissions from Businesses (Draft 1.6) by the Ministry of the Environment, Japan

CO2 emissions per basic unit for power sources at the receiving end, listed in the Environmental Action Plan of the Electric Industry Japan issued by the Federation of Electric Power Companies of Japan in September 2005. The level for fiscal 2006 has been estimated at 0.421 kg CO /kWh, the same level as in fiscal 2005. CO2 emissions factor relating to purchased 2 electricity Numerical values for respective countries listed on the Calculation Tools in GHG Protocol website by World Business Council for Outside Japan Sustainable Development (WBCSD) and World Resource Institute (WRI) Levels for 2002 (ElectricityHeatStreamPurchase_tool1.0_final) has been used for all years. CO emissions ÷ (nominal production ÷ corporate goods price index*) Japan 2 * Average corporate goods price index (electrical equipment), announced by the Bank of Japan for the period April 2005 to March 2006 CO2 emissions per basic unit CO2 emissions ÷ (consolidated sales ÷ corporate goods price index*) Global * Average corporate goods price index (electrical equipment), announced by the Bank of Japan for the period April 2005 to March 2006 Energy-conservation rate Global Amount of energy consumption reduced through the current fiscal year’s measures

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(( I]ZEVcVhdc^XGZedgi[dgHjhiV^cVWâîn'%%+ Two IR transmitters are placed on the top and the reverse of the remote control. This enables a user to transmit a signal When a user has a question about the from the remote control while holding it operational information displayed on vertically and looking straight at the buttons the TV screen, simply pressing the “?” on the front. button displays a helpful explanation. Remote control of the VIERA fl at-panel TV 2 Applying UD concepts to our website Working on UD right from the component development phase The Internet eliminates barriers in society and offers new possibilities to the physically challenged. Efforts for universal design begin Matsushita has introduced universal designs into its website. with considerations about a single Our web accessibility and usability guidelines stipulate that text component. Panasonic Electronic and background colors must make an easy-to-read contrast. Devices Co., Ltd. (PED) has taken It also specifie s a notation system for accurate reading when up “the pursuit of human interface using screen-reading software. In addition, assessments based technology devices” as its theme on the guidelines were conducted at about 100 business units and develops and produces that provide contents to the website. Based on the results, we ergonomically designed switches for defin ed our top priorities and other priority issues for website automobiles, key buttons for mobile improvement. phones, and remote controls for AV equipment. For example, a multi-jog button (rotating button) developed by Custom-made hearing aids created PED is used on the remote controls of our DVD recorders. These through a fusion of advanced technologies controls are not only full of useful functions, but everyone will fi nd and manufacturing capabilities these controls easy to use. Custom-made, in-the-ear hearing “Portable voice output communication aid,” aids are being made through a fusion providing the joy of conversation for people of state-of-the-art electronics and the techniques of our skilled workers. In-the-ear with diminished verbal skills hearing aids incorporate a microphone, People who have a speech amplifi er, and receiver in a case fit ted impediment, who experience exactly to the shape of the user’s ear canal. dysfunction of their upper body, Matsushita has developed a “digital hearing aid” and a who suffer from amyotrophic “fi tting controller” capable of fin ely adjusting the frequency and lateral sclerosis (ALS), or other sound pressure depending on a person’s acoustic transmission incurable diseases cannot easily characteristics within the ear. put their thoughts into in words. The expertise of skilled workers and craftspeople is required Mitsuharu Matsuo lost his father to ALS. His father died as he to make a product tailored to an individual ear canal. Toshio was trying to communicate something. Matsuo was devastated Watabe, in charge of custom-made hearing aids at Matsushita’s by the loss of his father, and established Funcom Co., Ltd. using Healthcare Business Company, received the 1st Japan an intra-company venture fund program and then began to Manufacturing Grand Prix from the Prime Minister. He was also develop his “Let’s Chat” portable voice output communication commended by the Minister of Health, Labor and Welfare as a aid. Characters in hiragana (Japanese phonetic characters) are Contemporary Master Craftsman. emitted in sequential order along with a voice guide. By pressing a switch, that can be customized according to the degree of New “Bone conduction system” introduced disability, hiragana characters are specifi ed and then displayed into handset of personal fax machines on the liquid crystal screen. Often-used phrases, such as various greetings, can be easily registered. Bone-conduction type cordless The utmost emphasis is placed on stability in use and the handsets are available as auxiliary equipment has a simple design. This is based on the belief equipment for our personal fax that nothing gives people more security than communicating in machine. words. “Let’s Chat” provides us with an important lesson when Bone conduction is an auditory we consider just how technology should really work for everyone. mechanism that converts sound into vibrations and conducts them through the bones of the skull directly to the inner ear without passing through the outer and middle ear. Bone-conduction type handsets enable people with weaker eardrums and those who have diffic ulty in hearing voices on the phone to get much more enjoyment from their conversations.

The Panasonic Report for Sustainability 2006 34 Social Responsibility Ensuring Information Security Keeping pace with the progress of the digital network society

One of the seminars held all over the world. The number of information security guidebooks distributed to employees stands at more than 650,000 issues worldwide. 655,100 guidebooks

It has become increasingly important to ensure information security in parallel with social changes, the progress of digitalization, and the network society. Matsushita has built comprehensive information security systems in our endeavors to protect personal information and other information.

Matsushita’s policy on information security (2) Information security management audit Based on the above rules, the company conducts internal audit of Matsushita stores a great deal of information, including its information management. Audit items include comprehensive information about consumers, as well as our own corporate basic management measures and also more specifi c issues information. We take maximum care to prevent any leakage of characteristic of the individual division being audited. Qualifie d personal and other information. personnel who have completed the appropriate information Matsushita has established and globally applied an security training programs conduct this audit. “Information Security Policy” and a “Privacy Policy.” In both personnel and organizational terms, we provide educational and (3) Acquiring Privacy Mark certific ation awareness-raising programs and conduct appropriate auditing. In response to full-fle dged enforcement of the Act on the We use both IT and physical control tools to actively ensure safe Protection of Personal Information in April information management and utilization. At this point, we have 2005 in Japan, Matsushita aims to obtain still not completely eradicated information security incidents, such Privacy Mark certifi cation by all 36 group as loss of employees’ personal computers, or sending Faxes companies. Privacy Mark certifi cation is granted or e-mails to wrong addresses. When such an incident occurs, to businesses that conduct proper handling however, we will notify customers, disclose relevant incident of personal information. Matsushita Electric information, report this to competent government organs and Industrial Co., Ltd. and seven other group take other appropriate measures to prevent recurrence by giving companies were granted certifi cates by the end the highest priority to the safety of customers. of March 2006. Privacy Mark logo Matsushita aims at creating an organization in which information security measures are in place throughout its Plans for fis cal 2007 business flo ws. We will continue to reinforce our efforts to establish a corporate culture conducive to thorough and effective At Matsushita, we regard information security as an important information management. part of reinforcing our business base and are endeavoring to create a corporate culture that facilitates scrupulous information Building information security arrangements management. In fis cal 2007, the company will place an emphasis on the following three objectives: Matsushita has stipulated the “Matsushita Group Global ISM Standards” in compliance with the ISO/IEC 27001 standards and (1) Creating an organization that sustains autonomous information fully enforces these rules for Directors, Executive Offic ers, and security enhancements on a global scale; all employees of the group (about 330,000 persons) as globally (2) Reinforcing information security in manufacturing, such as unifie d rules. We have also formulated separate guidelines protection of technical information, and enhanced supervision designed to accommodate regional characteristics and the of business partners; nature of each division to ensure the most effective information (3) Implementing programs to acquire information security security management. certific ation by improving our auditing systems.

(1) Education and awareness-raising for employees In addition to enhanced training programs for new employees and newly-promoted employees, we distribute introductory guidebooks on information security and conduct e-learning programs. We also provide explanatory pamphlets on our globally uniﬁe d rules in Japanese, English, and Chinese. We are striving to effectively educate all employees by means of awareness posters, events conducted during special focus periods, and other educational tools.

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** I]ZEVcVhdc^XGZedgi[dgHjhiV^cVW^a^in'%%+ To Forge a Future Society as a Respected Corporate Citizen

Matsushita has been committed to its businesses outside Japan, maintaining its basic policy of contributing to the development of each host country by considering our group companies as local enterprises. We hope to serve each host country as a respected corporate citizen, since this is crucial for developing our business outside Japan, the business area that is expected to be Matsushita’s growth engine.

Users of a well water pump, and Koichi Mizuno (left), a water pump designer

Sales by region Percentage of employees (100 million yen; ﬁ scal 2006) by region Asia (end of ﬁ scal 2006)

Matsushita fi rst launched its business outside Japan in 1935, when Asia 11,065 Asia the company dispatched its representative to Manila, the Philippines. (12%) (28%) His mission was to develop a market outside Japan through basic legwork. In 1961 Matsushita established National Thai Co., Ltd. (now Panasonic (Thailand) Co., Ltd.), the fir st manufacturing company outside Japan founded after World War II. Since then, Matsushita has established a number of subsidiaries in Asia, particularly in Southeast Asian countries, such as Malaysia and Indonesia, and promoted the localization of these enterprises. Today, Matsushita group companies in this region are committed to production, marketing, and procurement under the leadership of Panasonic Asia Pacific Pte. Ltd., our regional headquarters located in Singapore.

Indonesia Indonesia Water pumps release people from Matsushita Gobel Education Foundation heavy labor contributes to developing engineers and Water is essential not only for our survival, but also for maintaining local industries hygiene. In Indonesia, which has the fourth largest population in Matsushita Gobel Education Foundation offers young Indonesians the world, many of the 220 million people living on the country’s opportunities to learn new technologies. In Indonesia, 18,000 islands do not have access to clean water supply approximately 60% of households monthly spend 110 dollars or systems. So, many people draw water for washing and bathing less, so providing scholarship is essential for developing young from shallow wells of about 10 meters in depth. In most cases engineers, who will underpin national development in the future. this is the task of women and children, and it is heavy labor for The Foundation was established in 1978 with a fund of one them—even though the wells are relatively shallow. million dollars donated by the founder, Konosuke Matsushita, PT Panasonic Manufacturing Indonesia (PMI), Matsushita’s who was deeply impressed by the enthusiasm of Dr. Th. manufacturing subsidiary in Indonesia, commenced Mohammad Gobel in fostering young engineers to help promote manufacturing water pumps in 1988. Today, about half of the the country’s industrial development. Dr. Th. Mohammad Gobel households using pumps employ PMI’s products, which are was Matsushita’s business partner with whom we established our affordable and of good, stable quality. Since 55% of Indonesian ﬁ rst joint venture in Indonesia, PT. National Gobel (now PMI). The households have access to a power supply of not more than Matsushita Gobel Education Foundation operates the Matsushita 450 W, the water pumps are designed to consume little power. Gobel Institute, which is dedicated to nurturing young engineers. Moreover, PMI has built a nationwide marketing and distribution The Institute operates three educational programs: network to supply its products to those who need pumps on “Management School,” “Techno-School,” and “Mold and Die almost all the islands. This is why so many households use PMI’s School.” In addition, there is a department dedicated to analyzing pumps throughout the country. management activities. The Institute annually holds 40 to 50 seminars, including those held under contract with the Japan International Cooperation Agency (JICA), and other organizations outside Indonesia. A total of 1,500 people annually participate in these courses. To date, the institute has received a total of 57,663 people from 233 companies, including small and medium-sized local businesses. Currently, the institute plans to receive even more trainees from local businesses.

The Panasonic Report for Sustainability 2006 56 For the Global Future To Forge a Future Society as a Respected Corporate Citizen

Training at Matsushita Gobel Institute

Malaysia Promoting energy conservation at factories as CDM projects CDM* is a method authorized by the Kyoto Protocol, whereby industrialized nations undertake initiatives to reduce GHG emissions in developing countries, aiming at helping to achieve sustainable progress in developing countries and acquiring Eco-Products International Fair 2005 (Thailand)

emission credits towards the industrialized nations’ CO2 reduction targets. To introduce global warming prevention technologies developed in Japan to our factories in developing countries, we plan to register energy conservation initiatives to be taken at our 11 Malaysian factories as CDM projects and to acquire 16,000 tons of annual emission credits. In February 2006 Matsushita received certiﬁ cation for this project from the Japanese government. Currently, we are working to receive certiﬁ cation from the Malaysian government and to register this project with the United Nations.

* CDM: Clean Development Mechanism Building a bridge between Indonesia and Thailand Demonstrating the value of Green Products Japan Since the founding of PMI in 1970, PMI has been helping improve Matsushita participated in the Eco-Products International Indonesians’ standard of living through our commitment to Fair 2005, held in October 2005 by the Asian Productivity the production and marketing of electrical appliances. Our Organization (APO) and the Federation of Thai Industries, with company has received high acclaim as a model company for the aim of promoting environmentally-conscious designs and Indonesia-Japan partnerships. I am determined to continue products in Thailand. Visitors to the Fair paid keen attention to my efforts to further promote our environmentally-conscious AV products, hydroﬂu orocarbon friendship between our two (HFC)-free refrigerators, tilted-drum washers/dryers, and countries through my activities wind/solar hybrid power, Kaze-Kamome. These products were at PMI, Indonesia-Japan also introduced by the local media. Friendship Association, and the Indonesia-Japan Economic Committee, for which I am serving as the secretary-general.

Heru Santoso, Director, PT Panasonic Manufacturing Indonesia

57 The Panasonic Report for Sustainability 2006 Sales by region Percentage of employees (100 million yen; ﬁ scal 2006) by region (end of ﬁ scal 2006) China China 6,754 China (8%) (17%)

Matsushita embarked on its business in China in 1978, when our founder, Konosuke Matsushita, promised China’s then-Deputy Prime Minister, Deng Xiaoping, who was on a visit to Japan, that Matsushita would help develop the electronics industry in China. Since then, China has consistently been a key region in our global business strategy. In November 2005, the Chinese government honored Panasonic Corporation of China, our regional headquarters, with the “China Best Corporate Citizen Prize,” in recognition of the company’s long-standing corporate citizenship activities.

Technological and management support to In China, approximately 10% of power is consumed by Chinese service stations lighting. To establish energy effic ient lamp standards and to promote the use of such lamps, in 1996, the Chinese government Matsushita offers technological and managerial support to launched the China Green Lights Project. In the same year, approximately 700 home appliance service stations in China. Panasonic Lighting (Beijing) Co., Ltd. (PLBC) began participating When consumers ask Matsushita to repair their home appliances in this project, in which PLBC installed 150,000 energy-effi cient via the Internet or call centers, we dispatch service staff members fl uorescent lamps in subways and other facilities. In fis cal 1996, across the country to support the entire repair processes. Our PLBC built the fir st plant in China to treat discarded lamps. In efforts have been highly appraised by Chinese customers; in fis cal 2006, the plant treated approximately 300,000 fl uorescent our survey, almost all respondents answered that they were well lamps after the end of their service lives. satisfie d with our services. Regarding water conservation, the production of cathode ray tubes (CRTs) entails particularly large volumes of water. Promoting employment of disabled workers, For example, Beijing Matsushita Color CRT Co., Ltd. (BMCC) under the slogan “Equality, Participation, consumes approximately 30% of all the water used in our factories in China. In December 2005 BMCC introduced a and Sharing” cutting-edge facility to recover wastewater and recycle it into pure In collaboration with disabled people’s associations, Matsushita water. The facility is expected to annually recycle approximately organized explanatory meetings to recruit disabled workers in 34% of all wastewater. In fis cal 2007 BMCC plans to introduce various cities, including Beijing, Shanghai, Zhuhai, Wuxi, and another water-recycling facility. Suzhou. As of March 2006 approximately 150 disabled workers are serving at group companies in China. Such employees are actively committed to their individual tasks, ranging from production to quality control, and fi nancial administration.

Building an outstanding corporate culture through human resource development BMCC was founded in 1987, as Matsushita’s fir st joint venture in China, based on the proposal of our founder, Konosuke An employee with an auditory disability (left) working at Matsushita’s battery Matsushita, and China’s then-Deputy Prime Minister, Deng production company Xiaoping. At BMCC, which produces cathode ray tubes, we fi rmly believe that excellent technologies and marketing performance can only stem from a healthy corporate culture. Keeping this Focusing on reducing CO2 emissions and in mind, we are committed to water consumption developing a corporate culture As a result of the rapid growth of the Chinese economy, the that places priority on friendly country is currently confronted with serious power and water human relations and mutual shortage. Energy and water conservation, therefore, are pressing respect. I believe that our issues. excellent teamwork is one of the In China, Matsushita operates approximately 60 plants. In most valuable assets that we possess. fis cal 2006, these plants emitted 790,000 tons of CO2; this amount being 81% higher than the level in fis cal 2001. Since

CO2 emissions are predicted to increase in coming years, Fan Wenqiang, Matsushita took initiatives in ﬁs cal 2006 to curtail CO2 emissions Vice President, by approximately 50,000 tons in line with the Three Year Energy Beijing Matsushita Color CRT Co., Ltd. Conservation Plan (pages 21–22).

The Panasonic Report for Sustainability 2006 58 For the Global Future To Forge a Future Society as a Respected Corporate Citizen Sales by region Percentage of employees (100 million yen; ﬁ scal 2006) by region (end of ﬁ scal 2006) Europe Europe (4%) Europe 11,136 (12%)

In 1962, Matsushita established its ﬁ rst sales company in Hamburg , Germany. During the 1970s, Matsushita launched fully-ﬂe dged production activities in Europe. Recent years have seen growth in production activities in East European countries, such as in the Czech Republic and Poland. Under the leadership of Panasonic Europe, Ltd., our regional headquarters in the U.K., Matsushita commenced corporate social responsibility (CSR) activities in Europe earlier than in other regions.

Czech Republic European initiatives to promote the Enhancing the professional levels of Matsushita Group Code of Conduct employees in the electronics industry In January 2005 Matsushita revised its Code of Conduct, to Panasonic AVC Networks Czech, s.r.o (PAVCCZ) commenced refl ect the advancing concepts of CSR. During fis cal 2006, the its operations in 1997, manufacturing CRT TVs for the European company took various proactive initiatives to promote the revised market. Over the past fiv e years, however, mainstream production Code of Conduct among its employees throughout the world. In has rapidly shifted from CRT to plasma and LCD televisions. Europe, Matsushita has operations in 15 countries where a total Improving the technical skills of its employees has therefore been of 11 languages are spoken, and so the company translated the an urgent task. Code of Conduct into each respective language, promoting its In response to this situation, PAVCCZ established the message using e-learning systems, and so forth. Panasonic School in October 2005, with assistance from the Czech government and the European Social Fund (ESF), which is dedicated to promoting employment opportunities across Europe. With support from the University of West Bohemia (Pilsen, Czech Republic), which prepares curricula and provides lecturers, the Panasonic School offers programs designed to enhance the professional levels and expertise of employees. In addition to PAVCCZ employees, the Panasonic School is also open to employees of other companies. In the fir st term, over 200 candidates applied to the school, which has a capacity of E-learning program in Europe 115. Enrolled applicants, who usually work in a two-shift system, attend school during their time off over a period of two years (four terms). In each term, which comprises 20 weeks, students study subjects such as electronics, basic economics, quality control, or work safety. Students can also take optional courses, including computing and English. To help busy students who cannot attend as many classes as they would like, the PAVCCZ Personnel Department, which also carries out administrative work for the school, is helping to increase home study hours by developing an e-learning system. Disseminating European trends, Sponsoring Torino 2006 Paralympic Winter an advanced region in terms of CSR Games as an offic ial partner To share the latest information with Matsushita Group's staff members who are committed to promoting CSR activities Matsushita has been serving worldwide, I monitor and report on any CSR developments in the as one of the Offic ial EU, where people take a particular interest in CSR. To collect this Worldwide Olympic Partners information, I attend specialized since 1988 (Calgary and EU workshops, and develop Seoul Games), Matsushita contact with EU decision makers provides high-end AV and other companies involved in equipment and broadcast CSR. I am very glad to see that systems, enabling a a real CSR culture is developing worldwide audience to Professional-use broadcasting equipment within Matsushita. used at the Paralympics in Torino experience these impressive and exciting scenes. In 2006, Matsushita also sponsored Paralympic Winter Games held in Torino, as an offic ial partner. Marie – Hélène Dubray, European Legal & International Affairs, Panasonic Europe, Ltd.

59 The Panasonic Report for Sustainability 2006 Sales by region Percentage of employees (100 million yen; ﬁ scal 2006) by region (end of ﬁ scal 2006) The Americas The Americas 13,874 (16%) The Americas (8%)

In 1951, our founder, Konosuke Matsushita, embarked for the U.S., as his fi rst overseas inspection tour, with his fi rm belief in the importance of managing business from a global perspective and his great ambition to forge new business. His trip marked an important milestone for Matsushita’s business expansion on a global basis. Today, in both North and Latin America, Matsushita carries out its extensive business under the leadership of its regional headquarters, Panasonic Corporation of North America and Panasonic Corporation of Latin America. Matsushita is also committed to its corporate citizenship activities in these regions. For example, our “Kid Witness News” (a program to support video production by elementary and junior-high school students), initiated in the U.S. in 1988, has expanded to 14 countries around the world. United States Mexico Collection of waste electronic products and Promoting children’s awareness of the promotion of energy-effi cient products importance of environmental protection at The United States Environment Protection Agency is promoting exhibitions “Plug-In To eCycling,” a program whereby consumers, local In 2005, Panasonic Communications de Mexico, S.A. de governments, retailers, and manufacturers of consumer C.V. participated in two exhibitions, Expoambiente and Eco electronics share responsibility for the recycling of waste Tijuana, both under the theme of the environment. At these two electronic products. The objectives of this program are to exhibitions, we promoted improve the recycling rate of waste electronics, advance recycling children’s awareness of technologies, develop markets for recycled materials, and environmental protection enhance consumer awareness of the importance of recycling. through illustrations, Matsushita joined this program in 2002, and through 2005, games, and eco-goods. has sponsored 1,070 events for collecting waste products in 27 At Expoambiente, the states across the U.S. Through these events, we have helped company received an collect approximately 10,100 tons of items for recycling. award in recognition of its Matsushita also participates in Energy Star*, a program excellent displays. Matsushita’s display at Expoambiente designed to promote energy-effic ient products so as to reduce

CO2 emissions, under the leadership of the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Energy (DOE). In ﬁs cal 2006, we launched 376 models that were certiﬁ ed as Energy Star products.

* A program for promoting energy-efﬁc ient products, led by the U.S. EPA and DOE (www.energystar.gov/)

Brazil Enhancing customer satisfaction by improving service at repair stations Panasonic do Brasil Ltda., which produces consumer electronics Vision and leadership for environmental and batteries, is committed to improving customer satisfaction, sustainability management based on the recognition that many of our customers select Investments in environmental improvements require vision and brands in accordance with the levels of service quality. To improve leadership: They do not always pay. Despite intensifying global our repair services, Matsushita ranks individual service shops in competition and signifi cant product price erosion, I have seen four levels according to their speed and quality of service, while this leadership repeatedly demonstrated, particularly in the at the same time supporting their technical improvement. achievement of our lead-free solder project well in advance of To improve the technological levels of our service shops and adoption of RoHS directive (page 17). to enable repair of new products, such as DVD recorders etc., In North America, we played a we have developed e-learning programs and holds technical leading role in establishing the contests. As a result, the ratio of service shops that can complete Rechargeable Battery Recycling repair work within 48 hours increased from 60% in fis cal 2004 to Corporation (RBRC), and are 80% in fis cal 2006. currently expanding this voluntary At the same time, Matsushita is committed to its early-stage program to Canada. quality control system to improve new products in their early stages by strengthening prototype fi eld tests.

David A. Thompson, Senior Group Manager, Corporate Environmental Department, Panasonic Corporation of North America

The Panasonic Report for Sustainability 2006 60 Third Party Opinions

* Manfred Max-Neef: A founder of the NGO, the Center for Development Alternatives, which promotes the economic advancement of developing countries.

61 The Panasonic Report for Sustainability 2006 The Panasonic Report for Sustainability 2006 62 Partnership with the International NGO, the Natural Step The Natural Step Matsushita entered into partnership with the Natural Step, an international NGO, in 2001, and has enhanced initiatives to establish a sustainable society The international NGO having branches in 12 and promoted operations to this end. We select the Natural Step as a partner countries was established in 1989 by a Swedish because it provides clear-cut guidelines to realize a sustainable society, and it specialist in infant cancer, Dr. Karl-Henrik Robèrt. also maintains a positive stance toward social revolution being achieved through The Natural Step identified, in consensus with corporate activities. scientists, the key requirements for a sustainable society, which are defined as the “Four System * Refer to page 18 for a message on environmental sustainability management from the Conditions.” Many environmentally-advanced Natural Step U.K. countries and international business corporations utilize these conditions since they give insight Sustainability Analysis Using the Natural Step Framework and guidance in how to formulate sustainability By Backcasting, a methodology for assessing current performance with regard to strategies. a desired future outcome in a sustainable society, the Natural Step analyzes the implementation of plans by the organization under review, based on the principles The Natural Step’s Four System Conditions of a sustainable society (the Four System Conditions). In a sustainable society, nature is not subject to systematically increasing: Analysis Process 1. Collect information from Matsushita’s reply to questionnaires on social and 1. Concentrations of substances extracted from environmental vision and activities, and (disclosed and undisclosed) support the Earth’s crust documentation. 2. Concentrations of substances produced by 2. Collect further information, through dialogues, on the major directions and society categories of Matsushita’s social and environmental performance and on its 3. Degradation by physical means relationships with suppliers. and in that society… 3. From the above information, flows of resources and processes are identified. 4. People are not subject to conditions that Based on the above, Matsushita’s sustainability can be analyzed. systematically undermine their capacity to 4. Feedback is then provided to Matsushita from a comprehensive viewpoint meet their needs. concerning the opportunities and risks for the company in the process of shifting towards a sustainable society. Website: www.naturalstep.org/

In Stockholm (March 2006)

Corporate profile (As of June 28, 2006)

Matsushita Electric Industrial Co., Ltd. Head office: 1006 Kadoma, Kadoma City, Osaka 571-8501, Japan Tel: +81-6-6908-1121 Date of incorporation: December 15, 1935 Date of foundation: March 7, 1918 Representative: Fumio Ohtsubo, President Number of employees (consolidated): 334, 402 (as of March 31, 2006)

Fiscal 2006 consolidated performance Net sales: JPY 8,894.3 billion Operating profit: JPY 414.3 billion Net income: JPY 154.4 billion Matsushita website: Panasonic.net More information on financial performance is available at our IR info website at: ir-site.panasonic.com/

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