Corporate Identity through Product Design Applied with Brand Management System

Kim, Eok*

Lim, Chang-Young**
Department of Industrial Design Digital Media & Contents Lab. *billion@korea.com **cylim@kaist.ac.kr
Abstract: Generally, Corporate Identity has been recognized as the integration of only the name and logo of the corporation. However, identity includes both planned and unplanned visual effects composing the whole image of the corporation. Well-refined and harmonious design corporate image can be created by comprehensive holistic approach spanning all the corporate activities such as planning, design, manufacturing and marketing. Product design for corporate identity aims to share corporate spirit and define identity through coordination of images of product and brand. Design concept and its extensive application could be accomplished through the re-interpretation on the needs of a product fitted in with brand image as well as technological review for shape and developing attractive appeals. Brand image is a synthesis of impression: it gives concrete emotional reaction and mental flash of recognition. It also reflects attitudes toward the brand and its perceived benefits. The image of a successful brand means a promise of good function and design when a consumer buys a product. Although brand image is getting more important, many corporations have various branded products, which weaken the continuity of brand identity and strategy and make customers confused in the end. Consequently, implementation of corporate identity through product design should be considered with brand management simultaneously. Based on these situations, product design representing corporate identity should be progressed by not only finding convergent factors resonated with other branded products but also creating divergent factors differentiated from the past models. This study helps understand how brand management affects on the establishment of corporate identity through product design.
1. Introduction Corporate Identity is one of the greatly overused and misused terms. Some executives talk about getting a corporate identity done when they mean commissioning a graphic design firm to develop a new logo. Others refer to their corporate public relations program as a corporate identity program. Some organizations rely on heavily on their corporate image when competing in the marketplace. Even companies with strong brand names will benefit from a strong corporate image. In this way it provides immediate credibility as well as a framework for the further development or brand images. Afterwards, an organization with a poor corporate image is not likely to survive in the long term, and an organization with a low image profile is unlikely ever to realize its corporate potential. Intangible as it may be, a corporations image has a profound impact on the organizations competitive position, its support base and its corporate future. Accordingly, the work presented in here explores the role of brand management, as one of development method, in constructing Corporate Identity through Product Design

2. Corporate Identity through Product Design Corporate Identity through Product Design (below CIPD) has roles of accumulating reliability for customers and enhancing awareness of products, while it has certain power of retaining aesthetic order and sharing vision in terms of the visual coherence. In another perspective of the activism, CIPD is consolidating the corporate harmony among the members of a certain organization, and this is a philosophy system and a strategic activity for corporate image, and a proof-of-corporate and product in socio-scientific respect. That is a public perception by integrated strategic communication. 2.1. Corporate Identity and Corporate Image Corporate Identity is not an isolated design task to address specific current problems or issues and a major asset which needs to be managed on a continuing long term basis. This is expressed in terms of corporate communication-the way the corporation presents itself through corporate design and its corporate personality. Corporate image is the combined impact made on an observer by all of a corporations planned and unplanned visual and verbal communications as well as by outside influences. Its anything and everything that influences how a corporation is perceived by its variation target and is publics or by even a single customer. Obviously, perception and really-image and identity-may differ. In fact, they are likely to differ.
Corporate vision and business strategies

Corporate image audit

Corporate identity audit
Corporate image objectives and identity strategy

Desired corporate image

Changed corporate identity
Figure 1. Corporate Identity programs objectives The scope and scale of a corporate identity program will depend not only on the size and complexity of the organization, but also on the degree of consistency in the organizations current identity and the gap between the desired and actual image profile the organization has with its key target groups. The diagram highlights how a corporation can design its future based on: - The corporate vision and business strategies for the organization - A sound understanding of how the corporation is perceived by its key audiences today, and - An in-depth analysis identity strategy defines how the corporation needs to change its identity to realize the image it wants to create with its target groups. 2.2. Corporate Identity through Product Design Type 1) Convergence type In Sony, Flat TV designs are convergent to the style that is authorized by executive designer and customers. This style emphasizes the screen with separated different color frame and expresses silver metallic front image. This

shows that if one style is evaluated that represent Sony style, the other models are convergent to the style of the model. In this case, consistency is very important factor for creating Sony Design Identity.
KV-21DA1 KV-21DS1 KV-21MF1 KV-25DR1 KV-25DS1 KV-29DS1 KV-34DR1 KV-21MVF1 KV-21SVF1_2 KV-14MVF2
KV-21DA55 KV-21DS55 KV-25DA55 KV-25DS55 KV-29DS55
KV-14DA1 KV-14MF1 KV-14MV

3X4 Series

55 Series

Casual Series

Tele-Video Series

Wide Vision

Series
KV-24DA1 KV-28DA1 KV-28HD700 KV-28HD800 KV-32HD700 KV-32HD800 KV-36HD700 KV-36HD800
KV-28DX550 KV-28DX750 KV-29DX550 KV-32DX550 KV-32DX750 KV-26DX750

KV-32DZ950 KV-36DZ950

DX Series

DZ Series

XGA Liquid Crystal Panel Color TV
BS Digital Hi-vision Projection TV
Flat Panel Wide TV & Home Theater
Figure 2. Example of convergence type 2) Divergence Type Ironically, Identity of Sony is generally known to make innovative products that the other companies dont have developed. The AIBO is the typical model of Sony Identity Philosophy. Creation of innovative design is divergent in comparison with past product models.
Figure 3. Example of divergence type 3) Hybrid Type B&O is famous for unique identity design philosophy. B&O has made all their own special designs for target customers. But once new innovative design is made, they make every effort to maintain consistency of design for building a corporate identity. B&O harmonizes convergent and divergent factors in design activity.
Figure 4. Example of hybrid type Judging From these cases, many companies strive for their own peculiar design identity and take pain that
consistency and variation are very critical issues in design identity activity although there can be different view points. In this thesis, convergence is interpreted as consistency that is not diversity and process of resonance with other models, but divergence is opposite meaning of convergence.
Variation Variety Not Consistency

Divergence

Hybrid

Convergence

Consistency Not diversity
Figure 5. Classification Guide Line of CIPD 2.3. Corporate Identity Through Product Design Review For the sake of investigation of convergence & divergence factors, LG electronics is selected, which has made many branded products and a global leading company. In case of an air-conditioner, before 1998, when CIPD program isnt implemented, there is no consistency of the position of a control button, an overall shape, rounds of corner, but after 1998, air-conditioner designs are convergent to the style that is expressed as vertical lines, metallic color, and thin and slim image. This is a convergent type.

Figure 6. Review of air-conditioner Design The case of Digital TV Design is similar with that of the air-conditioner. After CIPD program is activated, digital TV designs are convergent to using aluminum material, horizontal line that make wide looking, thin and slim image, which is resonated with the air-conditioner design more or less. But innovative designs are created by different way each other as well as detail designs are little varied. This is a Hybrid Type.

Projection TV

Figure 7. Review of digital TV Design
But every design team doesnt manage the CIPD program actively. In case of phone designs, there are no consistency and no philosophy of corporate identity. Furthermore, the problem is no strategy of design identity although this company makes many kinds of models. The target customers of brands are different, and so brand images are various. Counterproposals should be made to cope with this situation.

900MHz

Digital Mobile Phone
Figure 8. Review of Phone Design
3. Brand Experience A product or service is integral to maintaining the brand value of a company. When a company produces products that are consistent with the brand strategy, then all aspects of the brand work in unison to effectively compare in the marketplace. However, the failure of a product to communicate the brand value of a company to a customer can negatively affect the brand image and no other channel can effectively offset that effect. But many companies neglect brand management, and so strategies of product design identity are different with those of brand identity. Brand identity and product design identity should be considered in company with. 3.1. Brand Image Image represents the picture that people have of something or someone, or in a limited meaning, a stereotypical opinion of general public around something or someone. The visualized picture can be based on concrete characteristics of the object or the person in question but also on all sorts of immaterial or even irrelevant aspects. The important aspect of a brand image is the mental picture that consumers have of a brand or branded article. We define a brand image as follows: A brand image is a subjective mental picture of a brand shared by a group of consumers. The image of a successful brand is a promise of performance in the functions for which it is being bought. The promise need not be in terms of superior performance in the core use function but in terms of enhancing self-identity or other intangible benefit. There are good reasons for ensuring a continuity of identity, not only past investments in promotion and the goodwill that results in the brands high familiarity but the good sense of having one and only one essential person/personality that continues to enter into promotion. 3.2. Brand Experience & Promise/Delivery Equation As we look at the range of experiences that a customer has with a product and brand, an interesting equation emerges. The promise made by the brand identity and the product appearance creates a buzz, compels customers to buy, and brings new market segments to the table. The delivery provided by the overall product design, the products performance, and the sustained communication of the brand creates lasting impressions, develops

loyalty, inspires referrals, and empowers the brand/product to extend itself info new areas with ensuring products and sub-brands. Through good design, the promise creates an expectation and the delivery meets and exceeds that expectation. Together, they become the experience of the product and the brand. Unfortunately, in many companies brand management is so far removed from product development that the promise/delivery equation is complicated by disparate goals, disconnected timeless, and competing voices-and further complicated by wildly different procedures, techniques, and technologies. An integrated design requires a unified product and brand design team. This team, composed of product and brand design specialists, served as a liaison between the corporate functions of brand marketing and product development. The experiential integration of product and brand can be useful to organizations of all types, from retail and commercial product manufacturers to service business, Even the medical products industry complicated by heavy regulations and murky customer targets can use design to create integrated customer experiences.
4. Integration of Brand and Product Identity 4.1. Integration of brand & Product Identity A brand that practices integrated design pulls all its values, functions, promises, and processed into a seamless whole. Every brand task feeds on the idea that the customer is not an abstract concept dreamed up by the marketing department.
Identity and brand management

Design Strategy

Internal

Vision and mission

Objectives, Strategy and organization
Management And Organization

Positioning

Communication Strategy

External

Figure 9. The Logic of coherence and integration Brand integration is a company-wide process, not a department. Integrated design is a cross-functional process for managing profitable brand relationships by bringing people and corporate learning together in order to maintain strategic consistency in brand communications, facilitate purposeful dialogue with customers and other stakeholders, and market a corporate mission that increases brand trust. 4.2. Strategies for Designing the Integrated Product + Brand Experience Business managers can create integrated product and brand experiences for their customers using techniques. Following are a few key strategies.
Start with The Big Picture
Like most good ideas in business, the strategies for designing the customer encounter start with a vision. A new corporate identity, brand identity, or product strategy program often provides the impetus for an updated vision and mission statement, or the creation of vision and mission statement for companies that never had one. 6
Once vision and mission are defined and take shape to support them. The product and brand portions of a corporate design strategy drive the first phase of the integrated design process shown below.

Weave The Design Process

Like a woven cord that is stronger than the sum of its threads, the synergy of an integrated development process creates a much more powerful design solution than its separate parts could ever hope for. In the integrated process, the product and brand activities run in parallel, overlapping at key intervals until they reach a single cohesive solution. The cross-functional team includes both product and brand design specialists.
Research: Use it, Dont Abuse it
Market Research relies on interviews, discussions, and surveys and therefore can capture only what customers actually recognize and can articulate. While important, this type of information is often not adequate for an integrated development program. However, when augmented observational research, which looks at actual behavior within the environment of use, the combined data provides a detailed picture of the customer and the user.
Develop a design partnership
Create a partnership with designer, whether they are consultants or in-house staff. Designers are trained to look at problems from various perspectives and to explore multiple solutions and communicate them through illustrations and models. They are also trained to ingest information about customers and culture and then formulate images and ideas. Ask your designers-both product and brand-to envision the total experience for your customer. Feed the process with research and test the ideas with customers, but dont discount the designers intuition. Also ask your designers to build a design ethos within your organization. A design ethos is a corporate culture that includes a system of shared beliefs about design and a design perspective of everything the company does. Any organization can benefit from the key tenets of product and brand design-innovation, customer appeal, aesthetics, and user-friendliness.
Take advantage of your customers intra-sensory perception
Intra-sensory perception is the composite experience of the environment assembled from the various inputs that enter through all the human senses. This amalgamation of sensations and memories influences how a customer experiences a product and brand. Every way a customer encounters a product and brand becomes a part of the intra-sensory experience.
PRODUCT DEVELOPMENT STRATEGY BRAND DEVELOPMENT CONCEPT IMPLEMENTATION

GOALS ALIGNED

ATTRIBUTE CONNECTED

INTEGRATED SOLUTION

THE PRODUCT AND BRAND DEVELOPMENT PROCESS ARE WOVEN TOGETHER TO CREATE AN INTEGRATED DESIGN
Figure 10. Integrated Development Process Intra-sensory perception goes beyond the store. The annoying squeak of packing material being removed from a new computer creates a negative sensation that is logged in the customers mind. The smell of a new car during

a test drive brings back positive memories that blend with other perceptions to create a story in the mind of the customer that influences the purchase decision. The story is the message the message communicated through the product and brand. Touch the customer at every chance you get. Engage the customer at every opportunity and through all the senses. But engage the customer with clarity. Touch the customer with a clear message-a message that is unified through an integrated product and brand. 4.3. Design and Implementation Guidelines Once the visual identity creation process is complete, a key tool to manage the identity in its use and implementation is to create a set of design standards or guidelines. Depending on the scope of the project and the types of resources your company has, the original external design team may do all of the implementation of your new identity system or hand off the adaptation and mechanical art work for an internal group to complete. This generally depends on resources, budget, and timing. For a smooth internal implementation and for the continuity of ongoing maintenance we recommend the development of design guidelines. These documents can range from simple 10-to 15-page documents, to massive binder based system to online digital database. The guidelines can also combine visual with verbal identity guidelines. The scope will vary with the complexity of the identity program, size of the company, time, and resources. For most companies, there are a set of core guidelines that need to be clearly defined for designers (internal or external) and printers to refer to for consistent application of the new identity system.
5. Application of Integrated Brand Management System for CIPD 5.1. Mission & Key Ideas User First Designleads a design to think user first and satisfy the customers satisfaction, which is enhancing the awareness and positioning of products in the global market. Followings are key ideas of CIPD U.S.E.R U: User Friendly Design which is easy to operate and is pleasing the customer S: Solid Design of immaculate appearance with clean surface or superfluous line E: Experience Design which implies topical shapes with a specific surface finishing, and a smart looking, and superior form R: Reflecting lifestyles Design that provides a fresh functionality reflecting essential needs of customers.

Digital Technology

User Friendl Convergence Solid Divergenc Reflecting Lifestyle

User First Design

Expressiv

Invisible HI/GUI

Mission

Key Ideas

Figure 11. Mission and Key Ideas
5.2. Elements of value chain CIPD is made up of the controllable elements of a value chain that comprise of a visual identity, an interaction identity, culture creation. These are the fundamental elements that are established to stand the course of years, not just the quarterly cycle. A company has greater control over creating and tuning the identity, than over creating or changing an image.

Product Value CIPD

Corporate Identity through Product Design

Value Chain

Visual Identity
Style intended for Visual Identity

Interaction Identity

Culture Creation
Design Concept applied with Strategy
Function considered easy access
Figure 12. Value chain 5.3. Level of evaluation This value chain can be applied to all of product design uniformly. Leading and innovative project model should make new culture creation in comparison with massive producing models to which are adapted general identity rule. This guideline will be used as a CIPD evaluation.
Divergence Innovative Level

Creative

Interaction

General Convergence

Figure 13. Level & value chain 5.4. Harmonization convergence and divergence of product Identity Product design representing corporate identity should be progressed by not only finding convergent factors resonated with other branded products but also creating divergent factors differentiated from the past models.
Figure 14. Convergence & Divergence
5.5. Integrated Brand Management System Integrated Brand Management System for CIPD consists 5 modules that are overview, communication, process, database, image & keywords applied with network technology and HTML language. These modules will be convertible as fitted project situation and will be improved according to developing technology condition.

Main Page

Planning Stage Page
Brand Image & Keywords
Feedback Data of Customer
Figure 15. Integrated Brand Management System
6. Conclusion Products represent the identity of a business. They are the most tangible and enduring presentation of corporate character. Products take on identities that are associated with their brands. Brand recognition and product recognition merge as customers experience the fundamental characteristics of both. A customers total experience with a product creates a mental image, a brand impression as strong as any image. From browsing to purchasing to opening the package, from being delighted (or disappointed) by a products design and performance to being relieved (or peeved) with its maintenance routine, the holistic experience with a product creates an indelible imprint on the users psyche, an imprint that is the brand. Products are, in effect, brands. Major suggestions of the study are as follows: Firstly, it has been identifies the most important factor in CIPD is harmonization of convergence and divergence based on the strategic vision of corporate. It is much different from the conventional metaphor method. Secondly, product design identity implemented in accordance with brand identity strategy, this integrated approach supply consistent and refinement corporate image to the customers. Thirdly, integrated brand management system for CIPD is proposed in order to accomplish effectively unified results of project representing corporate identity.
Reference 1. Alycia Pervy, Before the Brand, McGrow Hill, 5-7, 134-135(2003) 2. Daryl Travis, Emotional Branding, Prima Venture, 189-190(2000) 3. James R. Gregory, Jack G. Wiechmann, Marketing Corporate Image, NTC, 34, 64-65(1999) 4. John OShaughuessy, The Marketing Power of Emotion, Oxford University Press, 179-183(2003) 5. Jonathan Cagan & Craig M. Vogel, Creating Breakthrough Products, Prentice Hall, 86-95(2002) 6. Monty Montague, Integrating the Product + brand Experience. Design Management Journal, 17-23(Spring 1999) 7. Peter Steidl & Garry Emery, Corporate image and identity: strategies for designing the corporate future, Woodslane, 31-33(1997) 8. Thomas Walton, Identity and brand: A broadening spectrum of design challenges and design opportunities. Design Management Journal, 6-8(Winter 2001)

About Data Collection

| Data
Scope, Collection Period and Accuracy of Data Data collection period: From April 2001 to March 2002
Data: Statistical Perspective on Sony and the Environment

Section

Sony collects environmental data from sites and business units worldwide according to various guidelines such as those for data collection and environmental accounting. It is then categorized, analyzed and processed. In this chapter, we explain Sonys approach to data presented in the Data Section of this report, as well as calculation methods. More detailed statistics and the latest data can be viewed http://www.sony.net/eco/ online at
The data collection period for Sony sites outside Japan was the 11-month period from April 1, 2001 to February 28, 2002, with estimates provided for the remaining one month. For chemical substances, most data from Japanese sites was also gathered during the same 11-month period, with estimates provided for the remaining one month. The data collection period for certain data pertaining to greenhouse gases, excluding CO2, was calendar 2001. The collection periods for some data for collected and recycled products in the Americas and Europe were also calendar 2001.
Scope of Data: Sites with ISO 14001 certification as of March 31, 2001
Data was not gathered from some ISO 14001-certified sites. Data was accepted from certain non-ISO-certified sites that provide environmental data on a voluntary basis.
Data accuracy: The chemical substances and environmental cost data collected from certain sites may be slightly less accurate than others. Sites with ISO 14001 Certification
Generally, the number of sites listed represents those that have acquired certification or are eligible for future certification. The number of non-manufacturing sites in the U.S. represents those that have acquired ISO 14001 certification independently in order to reflect the actual status of environmental management activities. U.S. non-manufacturing sites include 73 sites certified collectively. Sites eligible for ISO 14001 certification, in principle, refer to sites that have been operating for at least two years, excluding sites that meet the conditions outlined below. Conditions: Hardware research, development and design sites, and distribution, warehouse and manufacturing sites with less than 50 employees; and hardware sales, software research, production and sales, mail-order sales, insurance and finance sites and sites that serve as corporate headquarters with less than 100 employees. page 17 for more information on ISO 14001 certification status) ( page 55 for a list of sites newly ISO 14001-certified in the year ended March 31, 2002) (
Social & Environmental Report 2002

Sony Corporation

Data |

Environmental Accounting

Sony uses environmental accounting to quantify the effect of its environmental activities. Sony studied the balance between environmental conservation cost for the year ended March 31, 2002 and reductions in environmental impact for the year in comparison with the previous year. The result is effective for evaluating the environmental activities for the current year and can be applied to the planning of future environmental activities. The environmental conservation effect is not limited to the direct impact of Sony business activities but includes the impact Sony products have on the environment while being used by the customer. The cost of environmental conservation measures for the year ended March 31, 2002 came to about 4.2 billion in direct investment (5.5 billion in the previous fiscal year) and about 26.8 billion in expenses (22.7 billion in the previous fiscal year). Direct investment declined approximately 1.3 billion year on year, while expenses climbed about 4.1 billion. Sony placed curbs on direct investments due to the global economic downturn during the fiscal year. Higher expenses were mainly due to the increase in environmental remediation costs, which were 7.1 billion. These costs resulted from two factors: environmental incidents at sites and voluntary environmental surveys at other sites; and page 18 for more information on the environenvironmental incidents of some Sony products. ( mental incidents). The effect of environmental conservation activities was calculated by comparing environmental impact with the year ended March 31, 2001 levels. The amount of energy consumed during product use decreased by roughly the equivalent of 1.25 million tons-CO2. Likewise, energy consumed during production and service activities was reduced to the equivalent of about 180,000 tons-CO2. Sony also reduced product weight by about 180,000 tons. Waste generated was reduced by 12,000 tons, and water consumption decreased by 2.76 million m3. The volume of chemical substances used declined by 557 tons, while environmental risk management improved by 157 points. Converted to monetary terms, the total environmental conservation effect came to approximately 29.2 billion. Environmental Conservation Costs ( Million)

Category Product design Product recycling cost Investment Expenses Main Activities 46 1,871 Design of environmentally conscious products Collection and recycling of discarded home electronics goods, packaging materials and batteries Production and service 2,250 5,129 Pollution prevention activities cost 1,601 5,223 For reducing environmental impact Breakdown of expenses Energy conservation and global warming measures 1,190 Resource conservation and recycling measures 3,118 Water resource measures 302 Reduction of hazardous materials 493 Others 83 Green purchasing Administrative costs 205 5,192 For environmental promotion organizations within Sony and building and maintaining environmental management systems R&D costs 62 1,637 R&D focused on products and manufacturing technologies designed to reduce environmental impact Communication and For site environmental reports and greenification as well as other community activities for Community relations activities environmental conservation Environmental remediation costs 6 7,101 For cleanup of soil contamination and other forms of environmental damage Total 4,186 26,777
Environmental Conservation Effect
Fiscal 2000 (Adjusted Fiscal 2000 computed Fiscal 2001 Category (Results) value) (Results) Greenhouse gases During product use (CO2 conversion of energy 15,772,350 16,340,371 15,093,758 consumed in product use) ton-CO2 During production and service activities 2,249,878 2,330,904 2,146,081 (CO2 conversion of energy consumed by sites) ton-CO2 Resource conservation Product weight 1,508,677 1,563,010 1,358,254 (Excluding those collected/recycled) (ton) Waste from sites (ton) 55,404 57,399 45,146 Water Volume of water consumed at sites (m3) 28,624,900 29,655,789 26,892,506 Hazardous Materials Class-controlled substances (ton) 45,235 46,864 46,307 Environmental risk Improvements at sites (point) Total Environmental Monetary Conversion Conservation of Environmental Effect (Material Conservation volume base) Effect ( Million) 1,246,613 3,865 184,823 573

177,756 12,253 2,763,157

20,620 1,421 1,557 29,150
Social & Environmental Repor t 2002
Calculating Environmental Conservation Costs
Aggregate total direct investments and expenses for environmental conservation activities during the year ended March 31, 2002. Expenses include labor costs, depreciation, leasing fees and other overhead. Main Differences with Data Reported in the Environmental Report 2001 Environmental management and risk management system costs have been reclassified as administrative costs. Restoration costs and expenditures following legal cases concerning environmental pollution, previously classified as environmental risk management costs, have been reclassified under a new category, environmental remediation costs. R&D costs have been newly added.
Calculating Sonys Environmental Conservation Effect

Items Sony uses the following five original Sony indices, greenhouse gases, resources, water, hazardous materials and environmental risks at sites, which are defined in the Sony Environmental Vision, to calculate the environmental conservation effect. The methods for calculating these items are described below. Greenhouse Gases <During product use>
Sony calculates that operating power consumption of products manufactured for a given year during their lifespan = Production volume x (Operating power consumption x Estimated hours of operation per year + Standby power consumption x Estimated standby time per year) x Years used x Global warming coefficient (for each region). * Figures may include estimates or projections.
<Manufacturing and service activities>
Calculated from the energy used by Sony sites ( pages 29 and 52) and the global warming coefficients for each country.
Resources <Product weight>
Total weight of products produced by Sony for a given year weight of products collected from markets and recycled. Reference: The total weight of products collected from markets and recycled was approximately 12,618 tons, which converts to a monetary value of 1,464 million. * Figures may include estimates or projections.

<Sony sites>

The total volume of waste from Sony sites. ( pages 32 and 52)
Water use at Sony sites. ( pages 32 and 52) pages 37, 52 and 53)

Hazardous materials

Totals for Class II, III and IV substances. (

Environmental Risk

Sony Site Environmental Risk Score (calculated based on volumes of hazardous substances handled and costs as well as quality of management of hazardous substances at Sony sites in accordance with Sony risk management guidelines)
Main Differences with Data Reported in the Environmental Report 2001
There has been an increase in product-related data values due to an increase in data collection categories and the use of more sophisticated calculation methods. The switch from using the global warming coefficient for Japan to using local global warming coefficients has led to an increase in calculated emissions of greenhouse gases. Sony has replaced certain estimates of site data used to calculate waste disposal and hazardous materials at sites with actual data, which has yielded different results. Sony has changed its method of calculating quantitative indicators of environmental risk. Accordingly, the score that would have been calculated where no risk management measures are taken was used as the risk management score for the year ended March 31, 2001.

Environmental Impact Adjusted to Equivalent Capacity Utilization
The environmental impact data for the fiscal year ended March 31, 2001 was adjusted by the formula below to facilitate comparison with the fiscal year ended March 31, 2002. The adjustment effectively rescales the environmental impact in the fiscal year ended March 31, 2001, in proportion to the year-on-year change in net sales for the fiscal year ended March 31, 2002 versus the fiscal year ended March 31, 2001, based on the concept of eco-efficiency. Fiscal 2000 Adjusted Environmental Impact = Fiscal 2000 Environmental Impact (Pre-adjusted) x Fiscal 2001 net sales/ Fiscal 2000 net sales (Fiscal 2000 sales: 7,314,824 million, Fiscal 2001: 7,578,258 million)
Monetary Conversion of Environmental Conservation Effect
Greenhouse gas effect: 3,100/ton-CO2 Resources: 116,000/ton Water: 503/m3 Hazardous materials: 1,300,000/ton Environmental risk: 3,550,000/point Price quoted based on the UKs CO2 emissions trading market Calculated from the costs of waste disposal and recycling Calculated from the averaged value of both waterworks and drainage costs Calculated based on environmental incidents at Sony Calculated based on environmental incidents at Sony
Environmental Performance Data
List of Sony Environmental Performance Data (At Sony Sites)
Unit Energy Electricity consumption Gas consumption Oil consumption Total Water Waste Water consumption Waste generated Recycled/compacted Disposal Hazardous materials Class II substances Class III substances Class IV substances Total TJ TJ TJ TJ m3 Tons Tons Tons Tons Tons Tons Fiscal 1997 28,469 6,089 3,211 37,769 24,561,184 223,388 144,395 78,13,106 24,328 37,578 Fiscal 1998 28,458 7,172 3,094 38,724 26,907,650 256,450 180,878 75,10,799 23,162 34,003 Fiscal 1999 30,610 7,376 3,285 41,271 29,420,871 293,652 215,150 78,11,222 28,824 40,Terajoule = 1 trillion Joules Fiscal 2000 30,046 6,287 3,301 39,634 28,624,900 281,450 226,046 55,17,042 27,490 45,235 Fiscal 2001 29,282 5,592 3,357 38,231 26,892,506 257,032 211,887 45,19,212 26,627 46,307
* Figures for electricity, gas and oil consumption are stated on a crude oil-equivalent basis.
Emissions of Greenhouse Gases at Sony Sites (Unit: ton-CO2)
HFCS FY2000 FY2001 8,148 6,444 PFCS 242,203 186,465 SF6 58,535 46,984 NF3 3,182 8,412 Others Energy-derived CO2 1,937,564 1,897,356 Total 2,249,878 2,146,081
* Sony voluntarily discloses information on NF 3 due to the large volumes used, even though it is a substitute gas that can be easily destroyed by abatement tools when compared with PFCS.

Greenhouse Gases and Energy Consumption (Sony Sites)
Energy consumption is measured by converting the electricity, gas and oil consumed at sites into calories. (1kWh = 9.91MJ) Greenhouse gas emissions are reported in accordance with the GHG protocol. Energy-derived CO2 emissions are calculated by first multiplying the energy consumed at each site by the local country or regions CO2 emission coefficient and then subtracting the CO2 offset contribution allowed under the Green Power Certification System. Emissions of non-CO2 greenhouse gases are calculated by multiplying emissions for individual substances by the global warming coefficient. The CO2 emission coefficient used for energy is based on the GHG protocol coefficient and a coefficient developed through studies conducted by the Japan Electric Machine Industry Association. The global warming coefficient is based on a coefficient proposed in the Second Assessment Report of the Intergovernmental Panel on Climate Change (IPCC). The GHG protocol is an international standard proposed by the World Resource Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) and designed to provide corporations with a standard format for reporting greenhouse gas emissions. CO2 emissions are calculated from the lifetime energy consumption of products, similar to energy consumption during product use. As such, CO2 emissions do not represent emissions for the year ended March 31, 2002 only.
Resource Input and Output
Total resource input is calculated on the basis of resource output. Gross material input = Product weight (including packaging) + Waste generated by sites (Waste + Recycled/compacted material) Recycled and Renewable material Product weight represents the combined weight of Sony products in the year ended March 31, 2002 (including some accessories and user manuals) and packaging material and may include estimates and projections. Waste generated at sites consists of recycled waste, compacted waste and discarded waste. Recycled and renewable materials include parts of CRT glass panels, old magazines, cardboard, paper, recycled plastic, limonene-recycled polystyrene foam, organic plastics and other recycled materials. Recycled packaging material includes all recycled cardboard and container packaging (Japan) that make up packaging material for Sony products, in accordance with Japans Containers and Packaging Recycling Law. Cardboard: Sony assumes that all cardboard is collected and recycled, as recycling infrastructure is well developed and cardboard is not subject to Japans Containers and Packaging Recycling Law. End-of-use products collected and recycled is the volume of household appliances, batteries and other products collected and recycled in Japan, the U.S. and Europe, and includes volumes calculated from recycling expenses.

Greenhouse Gases and Energy Consumption (Product Use Phase)
The energy used by products during operation is the lifetime energy consumption of products manufactured in the year ended March 31, 2002 given by the following formula: Production volume x (Operating power consumption x Estimated hours of operation per year + Standby power consumption x Estimated standby time per year) x Years used. Note that this does not represent just the energy consumed by products during the year ended March 31, 2002. The average product operating times (standby times) and years used have been calculated on the basis of research data. The figures include estimates based on projections and forecasts. The level of CO2 emissions during product operation has been calculated from the energy consumption of products using the GHG protocol. The conversion coefficients are selected from the standard conversion coefficients (for Japan, the Americas, Germany in the case of Europe, and Singapore in the case of Asia and China) according to the products intended destination.

Water (Sony Sites)

Water includes the water purchased and groundwater drawn in by each site.
Hazardous Materials (Sony Sites)
Data is not provided for certain metals, gases, aerosols and non-identifiable chemicals that are not subject to PRTR requirements in Japan. Hazardous materials refers to those handled at Sony sites. Note that the figures provided on page 53 represent the handling volume, less recycled volume.
Status of Hazardous Materials in Use | Data
Status of Hazardous Materials in Use
Progress is being made in phasing out lead solder by the end of the year ending March 31, 2005 under Green Management 2005. Lead solder (equivalent to lead) was added to the list of Class II substances in the year ended March 31, 2001. Domestic semiconductor manufacturing sites have increased the use of hazardous materials by 20% over the previous year, mainly due to increased production, the startup of new production plants and the construction of a new LCD device plant. The Sony Groups use of substances falling into Classes I through IV declined 2% in the year ended March 31, 2002 to about 46,000 tons. Lower output in Asia and other manufacturing declines offset the impact of higher semiconductor production in Japan. The use of two Class I substances was terminated during the year ended March 31, 2002. Both substances, methyl chloride (for treatment of metal surfaces) and tetra-chloroethylene (for film development), had been used only in limited applications. Sony continues to use mercury as an additive in batteries. During the year ended March 31, 2002, a total of 262 kg of this element were consumed, 20% less than in the previous fiscal year. Consumption of Class II substances fell about 33% from 703 tons to 468 tons. Of the decline, lead-based solder accounted for 211 tons, or 45%. Among Class III substances, the most widely used category of chemicals is volatile organic compounds (VOCs). These compounds accounted for 7,000 tons, or 37%, of the approximately 19,000 tons of Class III substances consumed during the year ended March 31, 2002. The use of Class IV substances declined 3% to about 27,000 tons, compared with the previous fiscal year.

Note: Volumes used are calculated by deducting the volume of a substance sold for recycling from total purchases.

Class II Substances

(Unit: tons)

Class III Substances

(Unit: 1,000 tons)

Class IV Substances

400 200

(Fiscal)

* The volume of lead-based solder use increased in the year ended March 31, 2001 when it was reclassified from a Class III to a Class II substance. ** Class I substances now being almost totally eliminated are no longer included in the graph.

Class I to IV Substances

*Chlorine Solvents Carbon tetrachloride 1,1,1-Trichloroethane 1,1,2-Trichloroethane 1,2-Dichloroethane 1,1-Dichloroethylene *Ozone-Depleting Substances CFCS (non-refrigerant) HCFCS (non-refrigerant) Methyl bromide *Heavy Metal Compounds Cadmium and its compounds Mercury and its compounds *Ozone-Depleting Substances Halon CFCS (used as refrigerant in freezers launched before 1980) *Greenhouse Substances PFC (PRTR controlled) Sulfur hexafluoride HFCS N 2O *Toxic and Deleterious Substances Chlorine Formaldehyde Hydrofluoric acid *Other substances controlled under in individual countries *Carcinogenic Substances Asbestos Vinyl chloride monomers PCBS Benzene

Class I Substances

Prohibited
1,2-Dichloroethylene Methylene chloride Chloroform Trichloroethylene Tetrachloroethylene

Phase Out

*Substances Harmful to Reproductive Functions Methyl cellosolve and its acetate Ethyl cellosolve and its acetate *VOCs Methanol IPA MEK n-Hexane Toluene Xylene Ethyl acetate Butyl acetate
*Endocrine Disruptors Dioxin (substance generated unintentionally)
*Heavy Metal Compounds Lead solder
Class III Substances Reduce
*Heavy Metal Compounds Chromium (VI) compounds Lead and its compounds Antimony and its compounds Arsenic and its compounds Nickel compounds Zinc compounds Cobalt and its compounds Manganese and its compounds

*Air Pollutants NOx SOx

the PRTR system

Control

Acetone Cyclohexanone Ammonia Acids and alkalies
Substances for treating effluent (such as flocculating agents and precipitants) BOD COD

CFCS (used as refrigerant in freezers launched after 1981) HCFCS (refrigerant) HFCS (refrigerant)
*Substances controlled by laws and regulations in individual countries.
Data | Status of Hazardous Materials in Use, Summary of Products With High Environmental Performance
Developments in NOx, SOx, BOD and COD Emissions in Japan Progress made at manufacturing sites in boiler efficiency and switching from fuel oil to natural gas have further curtailed emissions. The total volume of NOx emissions came to 326 tons, down 8% from the previous fiscal year, while SOx emissions fell 1% to 62 tons. Increased load due to introduction of new solvent recovery towers at recording media production sites boosted total BOD emissions by 10% to 150 tons, while total COD emissions fell by 5% to 92 tons due to the reduction of chemical substances and improvements made in semiconductor and printed wiring board production processes. Note that 10 sites now only discharging domestic wastewater were excluded from BOD emission surveys and seven sites now only discharging either domestic wastewater or sewage were excluded from COD emission surveys. Sites totaling three that have either closed down or have changed from boiler-generated to electrical energy have also been excluded from surveys.
Unit: tons (No. of sites) (36) 62 (35) BOD COD
NOx and SOx Emission Volumes (Japan)
1999 NOx SOx 460 (41) 289 (35) (39) 63 (35)

BOD and COD Emissions

(46) 60 (33) (41) 96 (34)
Unit: tons (No. of sites) (31) 92 (27)
Note: Fiscal 2000 NOx and SOx data for some sites have been revised.
Update on PCB Storage in Japan With the exception of some power condensers for initial power reception equipment, Sony does not use PCBS. Furthermore, electric appliances containing PCBS that are not in use, such as power condensers, fluorescent lighting stabilizers and small, low-voltage condensers for TVs, are carefully stored at sites. The table below shows the storage situation of end-of-use appliances containing PCBS.
Storage Situation of Electric Appliances Containing PCBS (Fiscal 2001) (Number of Units)

Newly Certified Sites: ISO 14001
Japan: Manufacturing sites
Site Sony Semiconductor Kyusyu Corporation *1 ST Liquid Crystal Display Corporation Sony Fukushima Corporation *2 Acquired 2001.12 2002.01 2002.03
Japan: Non-manufacturing sites
Site Sony Assurance Inc. Sony Music Group* 3 Acquired 2001.10 2002.02
Europe: Non-manufacturing sites
Site Sony Music Entertainment (Italy) S.P.A. Sony Overseas S.A. Acquired 2001.07 2001.12
U.S.: Non-manufacturing sites
Site Sony Music Distribution/Illinois Sony Comercio e Industia Ltda., Brazil Sony da Amazonia Ltda-Filial, Brazil Sony Card Administradora Ltda. Sony American Zone *4 Acquired 2001.09 2001.07 2001.07 2001.07 2001.12
*1) Group certification, including Kokubu Technology Center, Nagasaki Technology Center, Oita Technology Center, Sony Computer Entertainment Inc. Fab1, and the Headquarters of Sony Semiconductor Kyusyu Corporation. *2) Group certification of Motomiya plant and Koriyama plant *3) Group certification of 16 Sony Music Group companies: Sony Music Entertainment (Japan) Inc., Sony Music Systems Inc., SME Visual Works, Inc., SME Families Inc., Sony Music House Inc., Defstar Records Inc., Sony Music Japan International Inc., Sony Music Records Inc., EPIC Records Japan Inc., Ki/oon Records Inc., Sony Music Associated Records Inc., Sony Music Distribution (Japan) Inc., Sony Family Club Inc., Sony Creative Products Inc., Sony CP Laboratories Inc., Global Rights Inc. *4) Group certification of 73 non-manufacturing sites in North America Sony Service Center (Irvine, Long Beach, Niles, Westwood, Bristol), Sony Logistics Center (Carson, Fremont, San Ysidro, Roselle, Cranbury), Sony Electronics Inc. (Cypress, San Jose, Boulder, Sunrise, Norcross, Itasca, Lanham, Eden Prarie, Kansas City, Oradell, Park Ridge, Teaneck, Woodcliff Lake, Irving, Richmond), Sony Factory Outlet (Lake Elsinore, Tracy, Castle Rock, Wrentham, Birch Run, Central Valley, Jeffersonville, Grove City, Lancaster, Gaffney, San Marcos, Pleasant Prairie), Sony Electronics Call Center (Ft. Myers), Sony Gallery Store (Farmington Hills), Sony AOEM Div. (Farmington Hills), Sony Repair Parts Center (Kansas City), Sony Design Center (Park Ridge), Sony Consumer Products Center (Laredo), Sony AOEM Div. (McAllen), Sony of Canada LTD. (Coquitlam, Willowdale, Whitby), Sony Pictures Entertainment (Sony Pictures Studios, The Culver Studios), Sony Music Entertainment Inc. (550 & 555 Madison Avenue, New York), Sony Music Distribution (Rolling Meadows, Lexington, Jericho, Atlanta, Dallas, Los Angeles, Novato, Beltsville), Sony Music Regional Sales Office (Edina), Sony Music Marketing & Recording Administration (Nashville), Sony Music Publishing (Nashville), Sony Music Entertainment Inc. (New York, Santa Monica), Sony Discos (Miami Beach 605 & 407 Lincoln Road, New York, San Antonio, California, Puerto Rico), Aiwa America Inc., Aiwa North American Parts Center, Sony Corporation of America

Newly Certified Sites: Occupational Health and Safety Management System
Site Sony Semiconductor Kyusyu Corporation, Oita Technology Center Sony Corporation, Atsugi Technology Center Sony Precision Technology Inc., Isehara Plant Sony Hamamatsu Corporation Sony EMCS Corporation, Senmaya TEC Acquired 2001.04
Asia: Manufacturing sites
Site Sony India Pvt. Ltd. Sony Electronics (Malaysia) Sdn. Bhd 2001.04 Sony Mobile Electronics (Thailand) Co., Ltd. 2001.05 2001.09 Sony Magnetic Products (Thailand) Co., Ltd. 2002.02 Sony Technology Malaysia Sdn. Bhd. Sony Chemicals (Suzhou) Co., Ltd. Sony Siam Industries Co., Ltd. Sony Precision Engineering Center 2002.02 2002.02 2002.02 2002.02 2002.03 Sony Semiconductor (Thailand) Co., Ltd. 2001.09 2001.09 Acquired 2001.05 2001.08
Social & Environmental R eport 2002

Data | Glossary

Glossary
Glossary Cogeneration system Environmental accounting Remarks An energy-efficient system providing both heat and power. Compares between the cost of environmental protection programs and corresponding reductions in the environmental impact (the combined burden on the environment caused by Sonys business activities and the use of its products). An index obtained by dividing sales by an environmental impact figure. This index is used to manage five items: greenhouse gas emissions, resources input, resources output, water and chemicals. Training and other educational programs provided over the Internet or an intranet. As no classrooms is needed, e-learning allows individuals to study at any time and place. The funnel-shaped portion of a cathode ray tube behind the picture surface. Gases that absorb solar infrared radiation reflected from the Earths surface, raising air temperature. This category of gases typically refers to the following six compounds: CO2, methane, nitrous oxides, hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). Products and services are selected by taking into account their environmental impacts. Chlorine, fluorine and other halogen elements added to plastics to make them fire resistant. A shipping carton for large-screen televisions that is shaped to match the profile of the television. A law enacted in April 2001 to promote the reuse of resources. Other laws apply to efficient use of resources and green purchasing. An international standard for environmental management systems. Certified systems must use a plan-do-check-act (PDCA) structure in which environmental management is conducted and inspected in a consistent manner based on policies and reviewed by management. Solder that replaces lead-based solder formulations that could be harmful to the environment by releasing lead if disposed of improperly. A method for determining environmental impact of a product or service beginning with the sourcing of raw materials and ending with recycling. Oil obtained from the peels of citrus fruit. Used mainly for fragrances in food products and cosmetics. Obtaining materials by breaking down or melting a discarded product. The shift of cargo transportation from trucks and other relatively inefficient means to ships, railroads and other means of transportation that use less energy per unit of cargo transported. Sony businesses formed by creating independent units from what had been the Electronics Business. There are currently five network companies. An occupational health and safety management system framework using the same PDCA structure as ISO 14001. A widely used plastic that has fire and electrical resistance. Improper disposal of this compound can be harmful to the environment and there are environmental concerns regarding the plasticizers used in polyvinyl chloride resin. A cushioning component for packaging made from old newsprint or other reused materials. A battery that can be recharged and reused. Materials produced from discarded products for the purpose of their reuse. The reuse of a product or internal component without making any alterations. Analyzing potential sources of risk prior to the occurrence of a problem and taking preventive measures. A figure obtained by dividing sales by a figure related to environmental impact. For example, if Sony had 500 tons of CO 2 emissions per 10 million in sales during fiscal 2000, the sales unit volume would be 50 tons per 1 million. If CO 2 emissions were then 800 tons in fiscal 2001 and sales were 20 million, the sales unit volume would be 40 tons per 1 million, a decline of 20 percent. Refers to manufacturing and non-manufacturing sites. Any party that associates with Sony. Examples include but are not limited to shareholders, other investors, suppliers, government agencies, mass media, research institutions, non-government organizations, customers, local communities, employees and children. Power consumption of a product while power is switched off but it remains capable of receiving a power-on command from a remote control unit. Reusing the thermal energy of discarded products through their incineration. Paper obtained from magazines and other printed materials for the purpose of recycling. The recycling rate of this type of paper is low due to the much greater difficulty of their breakdown compared with newsprint and cardboard. Volatile organic compounds, substances that have been used as solvents in ink and other products but contribute to air pollution and acid rain. At Sony, this is defined as reducing to less than 5 percent the amount of waste sent to landfills through waste reduction, reuse and recycling programs.

Eco-efficiency

e-learning
Funnel glass Greenhouse gases (GHG)
Green purchasing Halogenated flame retardants Hexagonal carton Home Appliances Recycling Law ISO 14001

Lead-free solder

Life cycle assessment (LCA)
Limonene Material recycling Modal shift

Network Companies

OHSMS Polyvinyl chloride
Pulp mold Rechargeable battery Recycled materials Reuse Risk management Sales unit volume

Site Stakeholder

Standby power consumption
Thermal recycling Used magazine paper

Zero landfill waste

Note: This glossary explains the meaning of terms used within the context of this publication. As Sony has its own uses for some of these terms, these explanations may not match the generally accepted definitions in some cases.
Fostering Trust and Dreams
Seiichi Watanabe Corporate Executive Vice President Chairman, Sony Environmental Conservation Committee
In the 20th century, industrial societies championed mass production, mass consumption, and mass waste disposal. By contrast, the 21st century has forced us to rethink our values, demanding that we transform into a society that is responsive to environmental concerns. That entails harnessing new technologies that benefit, rather than hurt, the environment. Global environmental conservation is one of the most pressing issues for Sony today. We have formulated an environmental vision that seeks to double eco-efficiency by the year ending March 31, 2011. This years report tracks Sonys progress against various milestones along the way, and sets forth specific targets for the year ending March 31, 2006, the halfway point of our journey. Sonys business activities and products touch every corner of the world. Conscious of this fact, Sony has advanced standardized environmental activities on a global scale. However, several environmental incidents and problems relating to products did occur in the year ended March 31, 2002. Learning from the experience, Sony will reinforce its efforts to be a reliable, trustworthy, and leading company on all fronts, including environmental issues. We will pursue environmental activities that match the expectations of shareholders, customers and other stakeholders. Furthermore, Sony will vigorously pursue breakthroughs in environmentally beneficial technologies and innovative business models that make an essential contribution to building sustainable societies. I hope this report serves to deepen your understanding of Sonys social and environmental activities. We welcome your opinions and comments on this report, which will be applied to continuing improvements in the future. Sony welcomes questions, comments and suggestions regarding the content of this Social & Environmental Report and the Sony Groups activities. Please contact us at one of the following five Environmental Conservation Committee offices. Inquiries

Japan Corporate Environmental Affairs Sony Corporation 6-7-35, Kita-Shinagawa Shinagawa-ku, Tokyo 141-0001 TEL: +81-3-5448-3533 FAX: +81-3-5448-7838 E-Mail: eco@jp.sony.com URL: http://www.sony.net/eco/ U.S. Corporate Environment, Safety and Health Sony Electronics Inc. 16450 West Bernardo Drive San Diego, California 92127-1898, USA TEL: 1-858-942-2716 FAX: 1-858-942-9181 E-Mail: Mark.Small@am.sony.com URL: http://www.sel.sony.com/SEL/esh/ Europe Environmental Center Europe Sony International (Europe) GmbH Advanced Technology Center Stuttgart Heinrich-Hertz-Strasse 1, D-70327 Stuttgart, Germany TEL: 49-7-11/58 58-308 FAX: 49-7-11/E-Mail: environment@sony.de URL: http://www.sony-europe.com/eco/ Asia Environment, Safety & Health Asia Sony Electronics (Singapore) Pte. Ltd. 2 International Business Park #01-10 Tower One The Strategy, Singapore 609930 TEL: 65-65447750 FAX: 65-65447755 E-Mail: Ses.Esha@ap.sony.com URL: http://www.sony-asia.com/corporate/env/ China Sony (China) Limited Shanghai Branch 101 Yin Cheng East Rd., Pudong New Area Shanghai 2001220 P.R.C. TEL: 86-21-68412203 FAX: 86-21-68415757 E-Mail: c-eco@sony.com.cn
For up-to-date information concerning Sonys environmental conservation activities, please visit the following site: Sony environmental conservation activities homepage URL: http://www.sony.net/eco/ For Sonys latest business results and other information, please visit the following site: Sony homepage URL: http://www.sony.net Environmental exhibition room: Sony Eco Plaza Learn about Sonys environmental activities through visuals and demonstrations. We look forward to seeing you. Reservations/Inquiries: TEL: +81-3-5448-4455 FAX: +81-3-5448-2560