■High Utility Value for Small- and Medium-Sized Supply Chains

GTC-ECO^® is an application service provider (ASP) that provides environmental data on materials used in a wide variety of parts and other items and supports green procurement of parts and other materials.

GTC-ECO^® is based on two core services: chemical information support, which searches and assesses environmental data on materials used in a wide variety of parts; and analytical support, which conducts analysis on behalf of clients on hazardous chemicals included in various parts and equipment and whose use is subject to the Restriction of Hazardous Substances (RoHS) Directive.* Additionally, we provide preparation and input services of green procurement survey response sheets and material composition sheets.

GTC-ECO^® is a one-stop service that taps the combined expertise of professionals from NTT Communications, Japan Chemical Database Ltd., and Sumika Chemical Analysis Service, Ltd. This service enhances usability value not only for large-scale assembled parts manufacturers but also for the many supporting supply chains.

* RoHS Directive: An EU directive restricting the use of certain hazardous substances in electrical and electronic equipment. The objective of the RoHS Directive is to minimize the impact on human health and the environment throughout the product lifecycle from production to disposal.

■Supporting the Establishment of Japan as "Environmental Quality Nation"

Under GTC-ECO^®, all processes involved in green procurement are handled online. Since GTC-ECO^® is a service based on the ASP model, customers do not need to build their own in-house system but can still produce their own highly reliable green procurement survey response sheets at a significantly reduced cost.

At NTT Communications, we consider that Japanese companies should not be merely concerned with production processes but also aim to raise environmental quality across all supply chains and life cycles to create an advanced technology-oriented society proud of its sustainable environment. We have labeled this concept"environmental quality nation" and position GTC-ECO^® as a significant service that will support the establishment of such an environment. We also work continuously to improve the content of GTC-ECO^®.

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At NTT Communications, in addition to making efforts to raise environmental awareness within the Group, we also organize an environmental seminar for people outside the Company as a means of widely disclosing our efforts and approach toward the environment. In the environmental seminar held in June 2006, lectures were given by an official from the Ministry of Economy, Trade and Industry's Industrial Science and Technology Policy and Environment Bureau as well as an NTT Communications staff member. In these lectures, the latest examples of managing hazardous chemical substances were introduced and expert know-how disclosed.

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In January 2006, NTT Communications revised its green purchase guidelines formulated in 1999 to further boost their effectiveness. The adjusted guidelines, which came into effect as of March 2006, include a new evaluation standard for assessing suppliers' awareness and contribution to environmental protection activities. It is hoped the addition of this standard will assist in reducing the overall impact of our activities on the environment through improvements to our supply chain.

Prior to putting the new guidelines into practice, we held a related briefing session for new and existing suppliers. We also encourage suppliers to submit a written pledge to adhere to the new standard and will carry out annual evaluations to ensure the revised conditions are being met.

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We are pursuing the acquisition of ISO 14001 certification in order to further enhance NTT Communications' environmental management.

Following the acquisition of ISO 14001, the international standard for environmental management, in October 1999 by the Materials Office Planning Department in the Network Business Division, which is the predecessor of the current Procurement Office, the office implemented and commenced operation of a comprehensive environmental management system in April 2005 based on the revised ISO 14001:2004. Under this sweeping new arrangement, the office oversees all procurement processes including Company-wide purchase and business consignment. The office also regularly revises its guidelines and oversees a wide range of environmental protection activities from reducing paper and power consumption to recycling wastes.

Meanwhile, the environmental management activities of the Business Development System Engineering Department (previously Solutions Division IT Business Promotion Department), which is in charge of planning and building telecommunications systems including software development, underwent inspection by an outside examiner of its environmental management system based on ISO 14001:1996 and subsequently acquired ISO 14001 certification in March 2004.

In line with the new ISO 14001: 2004 standard that came into effect in November 2004, we updated our environmental management manual and implemented the policies and procedures indicated therein in April 2004. In March 2006, during a regular examination, the operations based on this manual officially acquired the new certification.

After NTT World Engineering Marine Corporation was awarded ISO certification in June 2001 and NTTPC Communications Inc. in November 2003, we inaugurated working groups to promote efforts to acquire ISO 14001 status. As of March 2006, nine departments in three Group companies had gained the certification.

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In fiscal 2005, the total cost of environmental preservation activities amounted to a total of ¥1,433 million, consisting of approximately ¥911 million in environmental investments and ¥522 million in environmental expenses. This figure represented a dramatic ¥304 million increase over the previous year and was mainly due to magnified investments related to global warming prevention.

At the same time, the economic effects of our environmental preservation measures in fiscal 2005 were significant, amounting to ¥2,394 million. In addition to a hefty increase in revenue through sales of cables, among others, NTT Communications was able to reduce costs by utilizing WebBilling, an online billing function, and the continuous reuse of equipment.

Environmental Preservation Costs (by type of operation) (Millions of yen)

Category		Details of key measures	Investment		Expenses
			2004	2005	2004	2005
(1) Business area costs			299.6	911.8	793.7	440.7
Breakdown	(1)-1 Pollution prevention costs	Storage and treatment of PCBs	-	91.0	26.9	44.8
	(1)-2 Global environmental protection costs	Improvement and upgrading of air-conditioning equipment Upgrading of inefficient equipment	299.6	820.7	104.2	89.2
	(1)-3 Resource circulation costs	Switch to recycled photocopy paper Recycling of communications equipment and used optical cable Recycling of construction waste	-	-	662.6	306.6
(2) Upstream/Downstream costs			-	-	8.1	21.1
(3) Administration costs			-	-	28.0	12.8
(4) R&D costs			-	-	-	47.2
(5) Social activities costs			-	-	-	-
(6) Environmental remediation costs			-	-	-	-
Total			299.6	911.8	829.8	522.0

Economic Effects of Environmental-Preservation Measures (Practical Effects) (Millions of yen)

	Details of effects	FY2004	FY2005
Revenues	Revenues from sales (cable, metal, etc.)	43	165
Cost reductions	Reduction in power charge due to measures taken	46	47
	Reductions in cost of new purchases due to reuse of existing equipment	2,619	1,941
	Reductions in mailing and paper costs due to WebBilling	137	239
	Other (green procurement, etc.)	11	0
Total		2,856	2,394

* Tabulation period: Data for fiscal 2005 refers to the period from April 1, 2005 to March 31, 2006

* Scope: NTT Communications Corporation (environmental accounting data from Group companies is not included)

* Tabulation and disclosure methods: Amounts were tabulated according to the Ministry of the Environment's Environmental Accounting Guidelines 2005. Investments and expenses were tabulated separately under environmental preservation costs. Expenses include personnel and labor costs, but do not include depreciation.

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