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Factor X is an indicator using 'environmental efficiency' to quantify the way in which the product value (the functions offered over its entire life cycle) can be increased while reducing the impact on the environment. By comparing the environmental efficiency of both new and old models of a product, the improvement level is then expressed in how many times more the environmental efficiency of the new model is than that of the old model. Accordingly, higher values show that the environmental efficiency of the new model has been increased in comparison with older models.

Panasonic applies Factor X to two environmental aspects, namely greenhouse gas (GHG) emission reduction and efficient resource use. The GHG Factor and the Resource Factor are defined in the following chart. We express Factor X using simple mathematical values to indicate the level of improvement in these environmental efficiency criteria and utilize these values in subsequent evaluations or as numeric targets in product development.

We independently quantify product value, regarding this as the total of the benefits offered to consumers. In order to prevent analyses from becoming unduly complicated and to maintain the transparency of the calculation processes, we do not take account of differences such as those between individual products or differences in the use environment or the status of use. Instead, we use the values generated when a product is used under normal conditions, as specified in official standards or by the relevant industry, and then calculate product value by multiplying product function (performance of the main function) by product life.

The environmental impact of a product over its entire life cycle corresponds is to the (total) impact imposed on the global environment in exchange for the benefits provided. Since research on life cycle assessment (LCA) is being carried out around the world, we seek to reflect as many of the latest findings as possible in our calculations of the final figure.

We apply these indicators as part of the Green Products Certification Criteria. For example, the value for GHG emissions over the entire product life cycle serves as the denominator when calculating environmental efficiency as part of the measures used in the prevention of global warming. As for efficient resource use, the total mass of non-circulating resources over the entire life cycle of a product (including both newly supplied resources and discarded resources) is used as the denominator. The details will be explained later, but we regard these two denominators as having completely different meanings, properties, and attributes. Accordingly, we have not mathematically integrated these two indicators but, instead, handle two indicators them separately. without mathematically integrating them.

We must consider this important environmental aspect from its property and conformity with its property and future trends regarding bans or restrictions. Accordingly, we do not adopt the 'minimization of environmental pollution risks' as one of the indicators used, but we do conduct evaluations on whether or not adequate efforts are being made to minimize environmental pollution risks.

Panasonic defines GHG Efficiency and the GHG Factor, which expresses the improvement of GHG Efficiency, in the certification criteria for environmentally conscious products (Green Products), as shown in the following diagram.

The denominator used in the GHG Efficiency calculation formula is 'GHG emissions over the entire product life cycle.' The numerator is the result of multiplication of the product function (expressed in the performance or rated value of the main function, etc.) by the product life (over the standard duration or the number of times of use, etc.). This calculation estimates the maximum benefits (for users) gained over the entire life cycle of the product (maximum total expected benefits provided to users). Accordingly, GHG efficiency represents the maximum average lifetime benefits of the product per GHG emissions over its entire life cycle.

GHG Factor calculations are equivalent to comparing the results of LCA on the GHG emissions of the target product with the base product, using the specification ratio. We estimate CO_{2} emissions of a product under defined conditions by totaling the emissions of each type of gas converted into CO_{2} emissions using the GHG emissions coefficient given for each gas. CO_{2} emissions are evaluated without being constraint along a simple axis with no upper limit. Accordingly, we will be able to gain highly reliable evaluation results once high-accuracy GHG emission coefficients have been obtained from scientific investigation.

This approach demonstrates that the use of GHG Efficiency and the GHG Factor as indicators has much development potential. Panasonic has therefore developed these factors into indicators for the comprehensive evaluation of a variety of products, naming them 'Factors for One Household.' We believe that these factors may be used to identify environmental performance over an even wider range of applications in the future.

To evaluate efficient resource use, we need to take a different approach from that used to evaluate GHG emission reduction. We apply the term Resource Efficiency in order to express the environmental efficiency in the Resource Factor. To calculate the denominator for the following calculation formula, we add together the mass of newly supplied resources over the entire product life cycle (subtracting the mass of recycled resources from the total mass of supplied resources) and the mass of discarded resources (subtracting the mass of recyclable resources from the mass of supplied resources) for each material. We then total the results for all materials. We actually calculate the mass of materials used for manufacturing products and the mass of discarded materials independently. We total these values for calculation purposes, so the calculated total mass is not equal to the actual total mass. Since we have yet to find another valid indicator, we have adopted Resource Efficiency as the best available indicator to provide the optimal solution for our calculations so far.

Since resource reserves are limited, individual substances are being depleted at a rate that varies according to the size of reserves, consumption levels, and recycling rates. We do not consider that performing resource evaluations based solely on 'mass' has much validity. Instead, we must perform comprehensive evaluations by applying a suitable resource coefficient, determined for each material separately in consideration of its scarcity, usability, volume of consumption, and how these vary according to the required quality. However, since we have yet to find a resource coefficient that is based on a common, worldwide consensus, we currently perform all evaluations by setting the resource coefficient to '1' for all substances.

When resources are recycled or discarded from a product, the product must have a 'trace of use' over a certain period of time. Accordingly, the Resource Factor can be regarded as being an evaluation factor that should ideally be expressed as a function of time. It will be easy to identify the influence of product use if we have a continuous function such as time and the environment (temperature, etc.) that applies to the creep phenomena of materials. However, it is highly likely that we will only be able to apply discrete or selective numeric values to the Resource Factor. Each material will therefore have a different value and there may be cases where market conditions or economic factors have a greater influence than scientific knowledge. Accordingly, we must continue our research on efficient resource use indicators.

Basing evaluations and environmental management efforts on Environmental Efficiency or Factor X is not an appropriate way to achieve the target of reducing specified substances as part of the minimization of environmental pollution risks. In chemical risk management, we assess the risk for each chemical substance separately by multiplying the chemical properties, especially the toxicity of the substance, by the amount of exposure to the substance. Setting targets based on a predetermined state of the environment or condition of use may be valid for our internal management, but should be avoided when offering products to consumers.

Measures relevant to specified chemical substances are a key element of our efforts to promote Green Products, and we are doing our utmost to avoid chemical substance risks by never using substances which pose a potentially serious danger to the environment and public health or, where we have no choice but to use such substances due to quality assurance or other unavoidable reasons, by implementing thorough preventive measures. However, we consider that comparative or graduated evaluations using Environmental Efficiency or Factor X are not suitable measures for managing our initiatives to reduce the use of specified chemical substances.

Panasonic deems it necessary to pursue the elimination or non-use of specified chemical substances, and to minimize risks by implementing thorough preventive or management measures. Accordingly, we address the reduction of specified chemical substances by taking a different approach to that involving the GHG Factor or Resource Factor.

Consumers only gain benefits from a product when they use it. In contrast, environmental impacts occur at each stage of the entire product life cycle, ranging from production (including the manufacturing of materials) through to disposal. The objective of environmentally conscious design is to maximize the ratio of the benefits when compared to the total environmental impact (which we define as Environmental Efficiency), and which is equivalent to maximizing Factor X for each product.

We think it possible to estimate the total benefits of a product from a wide range of perspectives, according to the functions provided by the product. One convenient option is to define elements in simple terms. 'Product function' refers to the main function that clearly highlights the key feature of the product which is offered to users when it is used at home, etc. under normal conditions. 'Product life' refers to the period over which the product function can be valid. In our definitions, the term 'total benefits' refers to the benefits gained from the product over its product life when used normally and continuously. Actual benefits gained during product use vary according to the operating and loading rates, the surrounding environment, and other conditions, but we assume that normal conditions of use apply. Accordingly, the multiplication of product function by product life will have a significant meaning.

If we incorporate multiple functions into the numerator used in the calculation formula (to evaluate multiple functions at one time), we must accept that the meaning of the numerator will change accordingly.

In the category of GHG Efficiency, the total impact on the environment is expressed in terms of GHG emissions over the entire product life cycle. Actual CO_{2} emissions during product use vary according to the conditions of use, etc., but we assume that normal conditions of use apply, as is the case with the total benefits (shown by the numerator).

The above charts illustrate the concepts discussed so far. The only case where the total CO_{2} emissions have a mathematical meaning when used as the denominator is when the 'total benefits' refer to the 'total function gained over the entire product life cycle.' If the denominator is expressed by area rather than by a dot or a line on the chart, the numerator should also be expressed in terms of area. This is because a closer correlation between the numerator and denominator defines the requirement for environmentally conscious design more clearly. Longer product life increases the total benefits provided by the product, but also increases the total environmental impact. Therefore, evaluations expressed as fractions (which represent Environmental Efficiency) are valid.

If the numerator and the denominator used in the environmental efficiency calculation formula are divided by 'product life' (one possible mathematical conversion), only 'product function' is left as the numerator and the denominator becomes the 'amount of GHG emissions per unit product life.' It is possible to simply express resource efficiency using 'total mass of non-circulating resources per unit product life (per year, per time of use, etc.).' This simplification can be used to prevent external inconsistency in those cases where the total environmental impact of a product over its entire life cycle increases if we lengthen usable product life as a result of evaluating the total environmental impact over the entire product life cycle in our original calculation formulas.

If we express Factor X as the fraction representing the results of comparisons of the numerator and the denominator of the target model with the base model used in the improvement ratio, Factor X would be an effective method to directly represent the improvement in product functions and any reduction in environmental impact, separately.

In order to evaluate the environmental efficiency of a product, Panasonic divides the total benefits (numerator) by the total environmental impact (denominator). In order to present the improvement in product functions and reduction in environmental impact separately, we divide each numerator and denominator by the product life. These two calculation results will be identical when calculating Factor X in the final stage.

Panasonic conducts Factor X-based evaluations of individual products by comparing them with FY2001 models which are used as benchmark products.

In principle, we express product functions as the numerator in environmental efficiency calculations, using the rated value of the main function of the product. When it is difficult to focus on only one function because the product has a complex of functions, we sometimes establish independent internal standards and carry out evaluations by allocating points to all the functions. Product life is expressed as standard operation hours or the number of times the product is used under normal use conditions. As for the denominators, the amount of green house gas (GHG) emissions over the life cycle of the product is used for calculating the GHG Factor and the total amount of non-circulating resources over the entire life cycle of the product (including both newly supplied resources and discarded resources) is used for calculating the Resource Factor.

In order to evaluate the environmental impact of a product, it is necessary to search for and acquire environmental impact information for each stage in the product life cycle, from extracting resources through to recycling and disposal. To enable product design staff to evaluate the environmental impact of a product in their daily design processes, we conduct detailed evaluations for the stage that has the most impact on the environment and conduct approximate evaluations for all other stages. We categorize product life cycle so that evaluation results are fed back to the product development process. The manufacturing stage is divided into materials, electronic components, packaging materials, operation manual preparation, and assembly to enable staff in charge of mechanical design, electrical design, package design, and operation manual preparation to reflect the evaluation results in their individual operations.

to the attributes, features, or the type of product to be evaluated. When it is difficult to focus on only one function because the product has a complex of functions, we establish independent internal standards and calculate product functions separately.

- Determine a single item that represents the main function of the product to be evaluated, and express its performance using the rated value.
- Enumerate items that express the main function of the product to be evaluated, carry out evaluations by allocating points to each item separately, and express product functions by means of the total score.

As shown below, we designate 'preserving food' as the product function of a refrigerator and select the internal volume (liters) as the figure representing the product function. As for lighting equipment and lamps, we designate 'the provision of light' as the product function and calculate the luminance in terms of total flux (lumens). With regard to PDP TVs, we evaluate their audio and video quality by totaling various factors such as video circuits, sound systems, tuners, etc. Wherever possible, we set criteria that enable objective and precise evaluations to be carried out in accordance with the rules specified below, not only for PDP TVs but also for other products. To calculate product functions, either of the following two methods can be selected according.

As described below, in order to calculate greenhouse gas (GHG) emissions over the entire product life cycle, we identify the types and quantity of materials and energy resources consumed at each stage in the life cycle, including production, transportation, use, recycling, and disposal, and then calculate emissions of GHGs such as CO_{2}

Basically, we use inventory data from the database (JEMAI-LCA) provided by the Japan Environmental Management Association for Industry (JEMAI), but use the data independently developed by Panasonic for electronic components.

To calculate the amount of GHG emissions in the manufacturing stage, the mass of the basic constituent materials of product main bodies, accessories, packages, and operation manuals as well as electronic components, and the energy consumed during assembly processes, are all converted into GHG emissions on a per basic unit basis. Constituent materials and electronic component data are acquired from suppliers or by actual measurements of the mass of each component in a disassembled finished product.

Data accuracy, in some cases, is improved by supplementing supplier data with actual measurements. Energy consumption in the assembly processes is investigated at each factory and then converted into the energy consumption by a product. In the case of single-product manufacturing factories, the value is obtained by dividing the total energy consumption by the production quantity. In the case of multi-product manufacturing factories, the total energy consumption is allocated to individual products using their production quantity, price, mass, etc. Data accuracy is being improved by measuring the power consumption of clean rooms and manufacturing processes, as necessary.

In the transportation stage, the energy consumed during the transport of manufactured and waste products is totaled. As for manufactured products, energy consumption is calculated using the transport of products between the Kinki region, where many Panasonic factories are located, and the Tokyo metropolitan area, the largest market in Japan, as the standard (a 1,000-km round trip by truck between Tokyo and Osaka, assuming that trucks return unloaded). As for waste products, a 100-km round trip by truck (assuming that trucks return unloaded) around the Tokyo metropolitan area is considered the most likely scenario.

In the product use stage, calculations are carried out for the amount of energy consumed during both product operations and stand-by mode, the energy consumed for the manufacturing of the materials (consumables) consumed during product use such as water, detergent, recording media, and remote control batteries. GHG emission calculations are based on these data.

In the recycling and disposal stage, GHG emission calculations are based on the amount of energy required for product disassembly during the recycling processes. As with the calculation of energy consumption during the assembly processes, the consumption by a product is calculated on the basis of the total energy consumption at the recycling factory, handled quantity, mass of each product, etc. and this figure is then converted into GHG emissions of a product.

The total mass of non-circulating resources over the entire life cycle of a product (including both newly supplied resources and discarded resources) is calculated by analyzing the materials used in each stage of procurement and manufacturing, use, and recycling and disposal, and then calculating their mass.

When calculating the total mass of non-circulating resources in the procurement and manufacturing stage, the calculation of the mass of non-circulating resources used in the basic constituent materials of the product's main bodies, accessories, packages, and operation manuals is used because there is little loss incurred in terms of yield or maintenance, repair, and operations (MROs) supplied during the assembly processes. Normally, out of the total resources supplied for product manufacturing, the mass of recycled materials or reused components actually used in products is measured and then used as the mass of circulating resources. With regard to metals, there are cases where the standard data provided in the 'Materials' category of JEMAI-LCA software, which applies the data of 35% for iron, 12% for copper, and 18% for aluminum are used.

In the product use stage, the mass of the materials (consumables) consumed during product use, such as detergent, recording media, and remote control batteries, are calculated as non-circulating resources, while water is considered a circulating resource.

In the recycling and disposal stage, only the mass of the resources that were already being reused or recycled when the product was designed or those resources for which technical and actual usage evidence is available are calculated as circulating resources. Other resources are calculated as non-circulating resources.

Factor X only presents one available option for product evaluation purposes. The demands imposed on the development of environmentally conscious products are to maximize product value (the benefits obtainable from the product or the functions it offers over its entire life cycle) and to minimize the impact of the product on the global environment. 'Environmental efficiency' is an indicator that specifies this concept. Factor X will therefore reach its full potential after advances are made in environmental efficiency.

The horizontal-axis represents 'environmental impact ratio E (product to be evaluated/benchmark product)' and the vertical-axis represents 'product function ratio P.' Panasonic carries out evaluations of the environmental efficiency of products by comparing their total benefits and total environmental impact. In those cases where we consider product functions and environmental impact separately, we assess improvement of product function and reduction of environmental impact by independently quantifying and comparing the functions provided by the product divided by product life and we likewise assess the environmental impact of the product over its life cycle divided by product life. Accordingly, environmental impact in this graph represents the total impact of a product over its entire life cycle.

Factor X can be expressed by using the 'environmental impact ratio E' and 'product function ratio P.' The upper left, green area above the oblique line at the center of the graph shows that Factor X has a value of one or greater. The green area can be divided into the following three areas, depending on whether E and P are greater than one or less than one.

- Product function improves and environmental impact declines
- Environmental impact declines but product function also declines
- Product function improves but environmental impact increases

Area (1), where product function improves and environmental impact declines, is the level we aim to reach in product development. If a product falls in area (2), its environmental impact declines but its function also declines, it may fail to meet customer requirements. If a product falls in area (3), its product function improves but its environmental impact increases, this is undesirable in terms of environmental conservation. Factor X has a value of one or greater in both (2) and (3), but we must develop technologies aiming to meet the requirements of (1).

This graph provides more concrete guidelines for our product development using Factor X. The horizontal-axis represents the environmental impact ratio and the vertical-axis represents the product function ratio (same as the first graph). If the benchmark product is located at point Z, the line OZ, which connects the origin O and Z, represents Factor 1 (F = 1).

For example, if we set the next model development target to Factor 2 or greater, we must meet the design requirements shown by the upper left area above line L (slope tan ? expresses Factor X), which connects the origin O, point A (0.5, 1) and point B (1, 2). The three small areas (G, H, and K) are enclosed by line L, the line that passes through point Z parallel to the horizontal-axis (extension of line AZ), and the line that passes through point Z parallel to the vertical-axis (extension of line BZ), and each represents different product features.

There are no problems with the hatched area G at the center, where products have higher performance than the benchmark product and less environmental impact. However, products with less environmental impact but reduced performance are placed in the lower left area, H, while those with the opposite features are placed in the upper right area, K. We must continue development processes for products in these areas (H, K) until they can be moved into area G. As shown by the colored tracks on the graph, product functions can gradually improve, aiming at Factor 2 or greater. In this process, the purple or cream-colored tracks are the most desirable, but light blue tracks may also be acceptable. If we lay too much emphasis on the Factor X target, we won't be able to develop products placed in area J, enclosed by points A, B, and Z, even though they are well-balanced products.

The use of Factor X won't be able to provide independent product development guidelines if we fail to establish evaluation standards for environmental impacts or functions. Also, we must set targets based on an accurate understanding of performance improvement processes. In order to efficiently adopt Factor X in design and development processes, we need to be based on practical experiences in design and development departments. We are making ongoing efforts to enable Factor X to be utilized in Green Product development.