After managing sales, service and production at a German subsidiary, Makoto Umehara became Citizen's director for Precision Machinery Division in 1993. He became an executive director in 1998 and manager of the company's Tokorozawa Works in 2000 before starting in his current position in 2002.

The year 2002 saw a series of scandals in the corporate world that shook people's faith in businesses. Once a company faces such a problem, the impact goes far beyond the company itself. Fully aware of the implications of our corporate name "Citizen," we recognize the importance of disclosing information to the public and building trust in society.In this age of economic globalization, it has become common practice for some corporations to operate factories in developing countries, and concerns have been raised about their labor conditions in some cases. In this context, we were proud when one of our customers, the Walt Disney Company, recently gave Citizen high praise for our advanced technology and fair labor practices. But we will not stop here. Citizen will continue working to share its stance on corporate social responsibility to the entire Citizen corporate group.

A company must earn trust by first setting clear goals and then following through. Citizen is currently revising its medium-range business plan in keeping with the Nippon Keidanren's Charter of Corporate Behavior, revised in October 2002.The important ingredient needed to make a corporate group's overall environmental and social initiatives advance is not that all units be controlled to behave the same way. Rather, what is needed is a philosophy that resonates throughout the group. What makes us a true citizen is that every employee and every group company understands the idea of making products "close to the hearts of people everywhere" and each fulfills his or her responsibilities to that end.

Being sustainable requires having a keen awareness of reality and the ability to adapt flexibly to change. If we trust technology too much and let it run out of control, it will eventually create a new Tower of Babel. Citizen will continue to do business primarily in timepieces but plans to put more focus into information technology (IT). We understand that IT is a mean to a goal, not the goal itself. For people to live happily and for us to contribute to the environment and society, we have to keep asking ourselves how to make our technology useful to humanity.Two goals that Citizen has set and that are directly related to the environment are to bring environmentally friendly products to reality and use green procurement. The popular Eco-Drive series of watches embodies not only the Citizen ideal of Micro Human Tech but also benefits the environment, and even human health. The aim of our activities is to achieve certain environmental goals not only in the products themselves but also in all production processes and materials purchased.

The Citizen of the Year award that we sponsor is now in its thirteenth year of making the community aware of individuals who have benefited society. The award honors Japanese and non-Japanese persons living in Japan who have made an impression on the citizenry. Every year Citizen publishes an Environmental Report and releases relevant information. The company sends this information to stockholders along with our Annual Report and is working to deepen communication with our business partners through our products and with our employees through in-house newsletters.In order to increase business transparency, Citizen not only releases the results of the Citizen Group's environmental accounting but also holds information sharing sessions and hosts factory tours for representatives of environmental groups and local citizens. Even though the feedback we receive may include critical views, we are always happy to receive it. We value such input as something very positive for our corporate growth. We look forward to creating more opportunities to communicate with our many stakeholders and advancing sustainable business practices at Citizen.

My Eco-life

During my time in Germany, I often walked the Philosopher's Path in Heidelberg. Walking this path has an extraordinarily calming effect. Now I sometimes walk the forests and mountain, though less than before. It seems to me that when I am deep in thought in nature, the answers to my business and environmental concerns come to me by themselves.

Citizen's Environmental Policy

1.Fundamental ApproachCitizen's name derives from its corporate philosophy of making products that are "close to the hearts of people everywhere." Citizen is committed to contributing to society through sustainable business practices that are in harmony with the global environment.

2.PoliciesIn the research, development, design, manufacturing and sales of wristwatches, industrial machine tools, information systems and electronic components and parts, Citizen uses resources efficiently and works to preserve the global environment, in accordance with the following policies:

1) Citizen complies with environmental legislation, regulations and conventions, strives to conduct sustainable business activities that contribute positively to the global environment, not just to the environment around our Tanashi and Tokorozawa Works, and works proactively to prevent pollution and reduce the environmental impacts of its activities.

2) In all of its business activities, Citizen strives to reduce industrial waste and works to promote methods of production with the lowest possible environmental impacts.

3) Citizen strives to contribute to society through both environmental and economic effects by conserving resources, saving energy and recycling as a part of efforts to improve production efficiency.

4) Citizen sets environmental objectives and targets, and revises them as it continually strives to improve its environmental performance.

5) To implement its environmental management activities, Citizen works to ensure that all employees are fully familiar with these environmental policies, and strives to improve operations through an emphasis on environmental aspects of day-to-day activities.

6) Citizen communicates its environmental policies to the public through corporate literature. Adopted December 8, 1998

Terms of Use | Privac Policy

While scientific and Technological development have made our lives more convenient, they have also brought with them a host of problems, including more serious environmental issues and moral hazards for corporations and society as a whole. Citizen believes it is crucial to take a long-term perspective of these problems, to have a clear vision for the future and to work to resolve the highest priority issues strategically. Therefore Citizen has begun to formulate a vision toward the year 2025, and in this process we are asking what kind of world we should leave for the next generation and what we can do to make that happen.

Predicting the future of our world with any accuracy is extremely difficult, considering how complex the world is and how quickly it is changing. However, if we pay close attention to the many cause-and-effect relationships impacting society, we can at least make a list of the important factors shaping the world of the future. On this list there will be factors whose trajectory is unknown, and these are the ones that will most greatly affect the society of the future.We at Citizen decided to focus on two factors to help us think about the world of 2025. The first is the impact of the information society. Will the advance of information technology have a good effect on society as a whole, or will it have an unfavorable effect, widening the digital divide? The second factor is our own sense of values. Will we find a sense of prosperity by taking a self-centered approach and meeting our material desires, or will we try to make our lives more prosperous by putting more emphasis on the riches of the heart and striking a balance with nature? We could express these two factors as the x- and y-axes of a diagram that graphically defines four very different views of the future.

The future that Citizen aims for is a "World for the Citizens," where the information society goes in a positive direction and people care more about the riches of the heart. If this vision of the world comes true, we will have no need to worry about global warming because natural energy technologies will have advanced, people around the world will share resources and food fairly, IT technology will allow us to have an electronic government and decentralize power to other regions and everyone will be able to live in safety and peace of mind.

But what must Citizen do, what can it do, to make this world a reality by 2025? The world presently is suffering from a digital divide, unfortunately, and many would say that the world's sense of values is rather on the materialistic side. The world we live in is most like the "Oligopolistic World." Getting from here to a "World for the Citizens" will require making information technology people-friendly, and advancing this technology so that it has a positive effect even on the global environment. At the same time, our own sense of values has to shift from materialism to richness of the heart and care for the global environment.

Citizen has always operated under the ideal of being "close to the hearts of people everywhere." By combining this spirit with the latest information technology and advancing the technology further still, Citizen hopes to offer watches and other common information devices to every citizen so that all will share information universally and we can achieve a citizen-based sustainable society that is peaceful and rich in spirit. Information devices, of which watches are the closest to us in our lives, can help provide peace of mind to people without threatening the natural world. This is Citizen's hope and vision.

*Citizen-based sustainable society: A society that uses renewable resources in sound material cycles, is citizen-centered, and where the citizens can enjoy a good quality of life continuously into the future. To realize such a society it is important to have good balance in all aspects of the economy, society and the environment.

Terms of Use | Privac Policy

In the act of making products, the Citizen Groups uses energy, resources and chemicals and puts out carbon dioxide and waste. Products additionally consume energy when they are used, and once the product's useful life is over, it becomes waste and goes back to the environment. We think it important to track these environmental burdens throughout the product's lifecycle, from development and production to usage and disposal.As production centers have shifted and our entire manufacturing system has evolved in recent years, it has become impossible to know the entirety of products' environmental burden by measuring only that coming from Citizen itself. For that reason, we have expanded the scope of our tracking of environmental burden to include all Citizen Group production companies in Japan in fiscal 2002 and have retroactively investigated environmental burdens caused by us for the past three years. Additionally, we have performed our first assessment of biochemical oxygen demand (BOD) and chemical oxygen demand (COD).We have reduced such inputs as energy and paper, although usage of container and packaging material has risen, a reality against which we are taking measures. Some outputs, such as carbon dioxide and waste, have declined.In the future, we must continue seeking ways to reduce the environmental burden of waste, considering not only the collection, recycling and reuse of our products, but also packaging.

Response to PRTR LawThe following shows amounts of pollutants released or transferred by the Citizen Group in fiscal 2002. Beginning in fiscal 2003, we will be reporting on chemicals handled in the amount of at least one tonne every year, rather than the five-tonne minimum used until now.

Chemical Releases and Transfers by Citizen Group (tonnes)

Chemical Amount handled Released into atmosphere Released into bodies of water

Released into sewer system Transferred off-site

Trichloroethylene 161.5 73.9 0.0 0.0 80.4

Dichloromethane 80.7 44.3 0.0 0.0 18.7

Nickel compounds 31.8 0.0 0.9 0.4 12.3

Xylene 9.6 1.7 0.0 0.0 4.4

N,N-Dimethylformamide 5.1 4.0 0.0 0.0 1.1

Hydrofluoric acid 4.6 0.0 0.0 0.0 4.6In compliance with a Tokyo municipal ordinance, we have reported on 13 chemicals handled, released and transferred in the amount of at least 100 kg yearly, including sulfuric acid.

Terms of Use | Privac Policy

Eco-Drive works by converting light into electrical energy. Its rechargeable secondary battery eliminates the need for a disposable primary battery.Because they can be used for many years without ever needing a battery change, Eco-Drive watches reduce the impacts on the environment. By working to develop new high-quality products, we create a positive cycle of development, and this we hope will contribute to sustainable development.

BasicThe base model of Eco-Drive. The solar cell rests beneath Citizen's specially-developed dial. This dial transmits light for recharging the cell and provides excellent design flexibility.

VitroVitro uses Citizen's transparent solar cell. The cell consists of slender six-micron amorphous silicon strips that lie below the glass and are invisible to the naked eye. Ref.1

Flexible Solar This series uses the newly developed "flexible solar cell." The film solar cell is shaped as a ring that encircles the dial. The dial itself can be made of non-transparent metal, offering greater design flexibility. Ref.2

StilettoThe movement is placed inside the Stiletto's doughnut-shaped solar cell. Unlimited by the thickness of the solar cell, this allows a thin watch design. Ref.3

Eco-Drive Radio-controlled WatchThe world's first Eco-Drive radio-controlled watch with an antenna inside the full metal case (including the back cover). The antenna picks up standard time from radio signals (in Japan only) and automatically adjusts and displays the time and date. Accuracy is within one second per 100,000 years. This watch combines the environmental advantages of the Eco-Drive line with superior precision, quality and function.

Eco-be!A novel item dreamed up by our technicians, the Eco-Be! uses the Eco-Drive movement and absorbs light, causing the 3 cm cube to move around and change direction. (Not for sale)

Norihisa SuzukiDevelopment Dept.,Movement ProductionDivision

If I had to pick the mechanical device that is the ultimate example of energy and resource savings, it would have to be Eco-Drive. With the energy consumed by a 100-watt light bulb, one could power 100 million Eco-Drive watches. Not only that, but the solar cell from just one Eco-Drive could power the movement for 100 of the same watches. This is the result of taking Citizen technology to the limit to reduce waste and to function with the least amount of power (with improved bearings, lighter hands and components and efficient motor drive). Eco-Drive stands out even among existing industrial products designed to reduce environmental impact.The Eco-Drive technology has made tremendous leaps such that now a few hours of sunlight are enough to power it for six months to a year and three hours under a fluorescent lamp give it enough charge to run for a day. As yet another technological innovation, we are now using a high-efficiency solar cell that absorbs fluorescent light, making this a product for people who have little chance to get out into the sun. The approach that drives us to create the ultimate resource- and energy-saving watch is the goal of being able to fully use whatever light is available.Our future objectives are to make the solar cells even smaller and further improve design and function. By making cell recharging as efficient as possible, we will give ourselves the flexibility to use whatever dial materials we wish. With these watches we balance environmental considerations with function and design, and pursue the highest level of reliability. With Eco-Drive we'll continue to create the watches that people dream about.

Terms of Use | Privac Policy

Ref.1

Ref.2

Ref.3

Five Features of Eco-Drive

Never stops

Eco-Drive has the precision of a quartz watch, and it keeps running simply by being worn.

Consumes almost nothing

The same energy used by one 100-watt light bulb could power more than 100 million Eco-Drive watches, which consume less than 1mW each.

Lives almost forever

Performance of the solar cell and secondary battery declines by only about 20% in 20 years.

High precision

Watches with integrated circuits and high frequency oscillators are accurate to within 10 seconds per year, a vast improvement over the tens of seconds each month as in past products. The radio-controlled Eco-Drive is accurate to within one second every 100,000 years.

Environment-friendly

With no disposable batteries and no harmful substances used in its production, the Eco-Drive is the first watch certified by Japan's Eco Mark.

Ratio of Eco-friendly Citizen Watches to Total Shipments*

Terms of Use | Privac Policy

"Micro Human Tech" is the concept Citizen is putting into play in the act of manufacturing. "Micro" means that we will use the miniaturization and precision technologies Citizen has long fostered to continue manufacturing in the best sense. "Human" indicates that we are mindful of our relationship with our customers and that we will put our hearts into developing products that better fit people's lifestyles. Finally, the word "Tech" is a commitment to use our professional knowledge as well as instincts to establish technologies that create attractive and dependable products. With this idea to guide us, Citizen plans to move forward day by day as a company creating a new sense of values and capable of making a contribution to humankind.

Citizen believes that watches will increasingly have to compete not just on design and accuracy but also on environmental friendliness and ease of use. We aim to create watches for people looking for true fulfillment in their lives.

Security Watch

Citizen created the Security Watch to act like a key, using radio waves to confirm the user's identity. Using a system that periodically transmits and receives weak signals, the watch unlocks the security systems of the user's communication-ready electronic devices like PCs and cells phones when they are within range. These devices automatically lock up again when the Security Watch is out of range and are thus rendered inaccessible. This function prevents unauthorized use of digital media and keeps personal data safe.

In August 2002, Citizen launched a new line of wristwatches bearing the world's smallest movement, measuring just 5 mm x 6 mm x 2.5 mm. Other elements such as crystal oscillators and batteries are also smaller and thinner, thanks to previously-unavailable technology. The new movement, which we call "mim," offers great functionality and design, allowing even five movements to be combined into one timepiece. The use of a nickname for watch movement is a first for Citizen.

Volume Weight Electrical consumption

Typical movement 666mm3 1.97g 1.1µA

World's smallest movement(Reduction achieved)

73mm3

(89%)0.25g(87%)

0.17µA(84%)

Citizen's job does not stop at manufacturing watches, we also want to make them provide service for as long as possible. Using original technology, Citizen has developed a lubricating oil for precision devices. This oil was designed for harsh natural conditions. It is weatherproof, maintaining its lubricating properties in spite of low temperatures or wide temperature fluctuations, and it resists thickening.This oil keeps small motors and other drive systems running smoothly in spite of severe temperature changes and is designed to facilitate steady operating performance. It causes minimal corrosion of materials such as metals and plastics and is highly durable.Thanks to this oil, Citizen can offer more products with low maintenance needs and a promise to keep the time accurately for many years.Citizen is presently offering this oil to other manufacturers and we believe that its use in all kinds of precision equipment, will lead to better product reliability and ultimately reduce impacts on the environment.

Terms of Use | Privac Policy

The basis of Citizen's concept of universal design is to "design products from the user's point of view." This would seem to go without saying, but it is really not that easy. Citizen is working to achieve usability on a number of fronts.

Citizen has created a series of "universal design" watches meant to be easy for anyone to use. Innovations include an original font that makes even small characters easy to read, large and easy-to-see hands, a highly visible dial and a perpetual calendar that adjusts for months of differing lengths. Moreover, a new clasp "fit adjuster" lets the user easily adjust band length in very small increments, and the hypoallergenic Duratect Titanium coating protects the case and band as well as sensitive skin.

Attesa Eco-Drive universal design model

Push clasp for easy wearing and removal

Fit adjuster feature lets users make fine changes in length of band.

Citizen has compiled guidelines for creating highly usable products and is using these guidebooks for product development.

"Thinking about Wristwatch Usability"

"The Citizen Usability Verification Guidebook"

Comments from Users of the MU model Ease of reading time

• "The numerals are distinct and unlikely to be misread. The hand length is different enough that a quick glance is enough." (Male customer, forties)

• "The contrast is very good, so I can tell the time right away." (Female customer, thirties)

• "The numerals are clear and the design simple. Plus it goes well with whatever I wear." (Female customer, teens)

Balance of body and dial

• "I like the thin body. The dial is large, so it's easy to read." (Male customer, thirties)

Ease of use of push-clasp

• "I'm glad that I can put the watch on without breaking my long nails." (Female customer, teens)

MU universal design watch

Citizen offers a variety of healthcare devices built to the universal design concept.

The CH-483C has the distinction of being an electronic blood pressure meter with an attractive design. With an upright oval shape, it comes with large buttons and display for ease of use.Three types of body-temperature thermometers are available to meet a variety of needs: the CT781B for ordinary use, the waterproof CT782W and the CT783L for women's use. The case is made with antibacterial plastic and shaped to be held and removed easily. The waterproof and women's thermometers are water-washable, making them easy to keep clean.Besides these, the TW260 digital pedometer with body fat meter and display of calories burned uses the latest technology to get readings of body fat. The user simply holds the unit with both thumbs and index fingers.

Terms of Use | Privac Policy

The high-precision CAS-02 combustion pressure sensor mounts directly on the engine cylinders of mass-produced gasoline-powered automobiles. It enables very accurate control over engine operation and could ultimately provide environmental benefits, including reduction of exhaust gases and improved fuel efficiency. Test data show that engines equipped with the sensor are 5% to 20% more fuel-efficient. Attaching the sensor 10 million automobiles each year (about 20% of annual production worldwide) could therefore cut the usage of crude oil by one million kiloliters per year.

The high-precision Assumptions: The sensor boosts fuel efficiency by 10% from 10 km/l, and automobiles are driven 10,000 km/year.

Spectators at marathons and relay races always want to know accurate times for the runners as quickly as possible, and Citizen technology can help here. We developed an automatic measuring system with integrated-circuit sensors to relay data automatically to the broadcasting center from checkpoints along the course . Each competitor's number badge contains a sensor with that person's identification, and an automatic reader picks up the information from this chip. Because the system's clock uses GPS to track times accurately, it is possible to know exactly which runner has passed which point and at what time. The data is instantly available for use in TV broadcasts.

IC sensor chip Automatic tracking of runner times in a relay race

Developed as a light for camera-equipped cell phones, the Citilight CL-590 is a white light-emitting diode (LED). It provides 60% more brightness than conventional LEDs while saving energy, and can capture motion and still images in places once too dark for shooting. It also has the latest in compact, thin design that lets it fit easily on the surface of the cell phone. The use of LEDs sets the Citilight CL590 apart from flash-based light sources, making continuous illumination and good motion shots possible. The user can also switch to pulse lighting for still photography. The LED provides uniform lighting in an arc of 60°.

The L32VII compact automatic lathe reduces energy consumption by 35% compared to earlier models. The center is particularly advantageous for machining automotive, medical equipment and IT components. We realized energy saving and quiet operation to reduce environmental impact greatly, replacing all of hydraulic and pneumatic actuators with servo-controlled motors. This system machines metal with diameters of up to 32 mm and is also capable of simultaneous front and back machining. The dramatically higher level of productivity offered by this system has won praise from many customers.

Cincom L32VII

Citizen Watch has converted to the use of environmentally-friendly steel packing containers for the machine tools it exports. As a replacement for older packing materials, especially wood, this method conserves forest resources, and the containers can be used again as a valuable resource in the destination country. Additionally, these containers can be about 20% smaller in volume than wood, thus reducing total freight costs and being better for the environment.For exports of small components, meanwhile, Citizen opts for reusable mini-containers, eliminating the need for individual component packaging for overseas shipments. This has resulted in a big reduction in the amount of packaging materials used, a marked mitigation of environmental burden and cost savings as well. The lid and floor panel are made of plastic-reinforced cardboard. Folded up, six mini-containers can be bundled together to take as little space as one unfolded mini-container, helping to minimize the cost of returning empty containers.

Steel container for a Cincom turning center

Terms of Use | Privac Policy

Hiroyuki HarasakiDirector of Tokyo Works and Personnel DivisionEnvironment Management Dept./ Works Affairs Division

Caring for people and society and living in harmony with the environment are ingrained attitudes at Citizen as if they were in our DNA. It is our desire to keep expressing this attitude through our products as well as our corporate activities.

Citizen's environmental targets and results for fiscal 2002 are listed below. In some areas we did not meet our targets and as a result we will have to step up our efforts in individual activities. But as a whole, we believe this was a year of greater progress than ever before in environmental management at Citizen and the Citizen Group. When we began group-wide environmental activities in fiscal 2001, Citizen was initiating the other companies into the expertise it had acquired up to that point. In fiscal 2002, in contrast, the group as a whole moved to the next stage and became more coordinated in its approach to environmental activities.

Any manufacturer that wants to survive and still be manufacturing 10 or 20 years from now has to have strong environmental awareness. The market will demand more products like Eco-Drive that are environmentally friendly as well as society- and people-friendly. In fiscal 2002 we made progress toward environmentally-conscious manufacturing, starting at the product development phase. Citizen expects to completely eliminate the use of lead solder by December 2003, having given the conversion to alternative materials a top investment priority. We are working to create standards for green procurement, to ensure that future Citizen products will have exceptional environmental performance. Our intention is to use a strategic suggestion-based approach to green procurement.

Environmental initiatives are completely dependent on employee awareness. The experience of small-group activities, such as the QC circles that have boosted quality control, is being put to use for the environment, and small groups are making small steps forward that cumulatively have a big impact. Also in fiscal 2002 Citizen provided environmental management lectures for management-level workers. We intend to expand such top-down environmental activities further.

Ref.4

Although there have been some excellent results (Tokyo Works has eliminated the use of toluene and Tokorozawa Works has cut the use of hydrofluoric acid by 37%), overall the two locations did not meet targets. The major reason is that our plants were unable to make process improvements substantial enough to absorb the impact of increased amounts of 2-amino ethanol and xylene used in development, test production and manufacturing. Two subcommittees will continue to undertake new measures against hazardous chemicals in fiscal 2003.

Terms of Use | Privac Policy

Ref.4

Ref.5

The LSI Development Department has implemented an energy-saving clean room space conditioning system in which the temperature and humidity adjustment is completed just by the external unit and the indoor unit mixes the outside air with air circulating within the clean room, after which a heating unit reheats the air as necessary. This conditioning system has cut electricity usage nearly in half.

Ref.6

Citizen carefully separates waste plastics for recycling rather than disposing of them in incinerators and landfills, as was the practice in the past. Such measures have allowed us to achieve virtually zero waste of industrial waste. We have also reduced industrial waste by making production lines more efficient.

*3 We define “Zero waste ” as disposing of less than 1% of all waste through landfills or incineration.