Improving environmental management with full environmental cost accounting

Based on the most comprehensive field research ever conducted in corporate environmental management, this article reports on the integration of environmental impacts into product costing and cost management practices in organizations. It examines approaches for identifying and tracking current environmental costs related to both current and past production. It also develops the need and prospects for a complete analysis of future environmental impacts, including both costs and benefits, and the integration of these elements into a life-cycle costing or full environmental cost accounting model. The prospects for full environmental cost accounting and the related accounting issues are analyzed. Finally, the importance of full environmental cost accounting for improving corporate environmental performance, reducing corporate environmental impacts, and increasing long-term corporate profitability is discussed.     

企业环境管理会计核算框架与方法研究

企业环境管理会计从环境的角度,将企业的环境影响纳入到环境会计的核算范围之内,构建一些实物型或价值型的环境业绩指标,表达企业对环境造成的影响或损害。本文立足于国际环境会计应用案例,结合财务会计特征和我国目前的环境数据基础,研究提出了中国企业环境管理会计的基本内涵和方法框架,并就如何加强企业环境管理会计的应用进行了讨论。     

Expanding the benefits of environmental management systems through DFE

Industry's role in environmental protection is changing and growing. Increasing evidence shows that a corporation's understanding and response to environmental issues and concerns can have strategically important consequences for some kinds of businesses.¹ Focusing on concepts of prevention, industry has developed and struggled with a number of environmental approaches, all of which attempt to link the environment with common business practice. Industry has followed and in some cases embraced concepts and approaches like sustainable development, eco-efficiency, green manufacturing, pollution prevention, and extended product responsibility. A particularly timely and promising strategy to reduce the environmental impact of both manufacturing and product use while enhancing business success is the integration of environmental management systems (EMS) with design for the environment (DFE) efforts. A desirable relationship can and should exist between DFE and EMS. This relationship has not been well understood, but is crucial to fulfill the promise of each. In application, the institutionalization of DFE in an organization is difficult and tenuous at best. Some authors suggest that management issues block the implementation of DFE.² Others say that DFE has not been institutionalized to the extent that pollution prevention has.³ This article suggests that through an explicit connection between an EMS and DFE, DFE can extend the promise of EMS to reduce industry's environmental impact and produce business success, and it can do so in an ongoing way. The authors will show the importance of an EMS/DFE linkage, suggest company types that might benefit from investigating these approaches, and then review a series of DFE tool types.     

Environmental cost accounting: The bottom line for environmental quality management

Recent years have seen the environment emerge as one of the most pressing issues facing American business. Eventually, environmental costs will affect the bottom line of every American company. A recent study in the National Law Journal estimates that cleanup of the nation's known hazardous wastes sites will cost $752 billion over thirty years under current environmental policies. Environmental legislation and regulations impose annual compliance costs estimated by the Environmental Protection Agency at more than $30 billion. In the near future, environmental expenses for cleanup, regulatory compliance, and management are anticipated to grow to between 2.5 and 3 percent of GNP. Corporations that wish to be competitive must successfully manage these costs while maintaining or improving their role as responsible corporate citizens. Implementing a comprehensive system for identifying and managing environmental costs requires a multidisciplinary team effort. Environmental costs impact product selection, design and pricing, capital budgeting, and future strategic direction. In order to make informed and meaningful managerial decisions on environmental programs, real cost data are vital. An environmental management systems (EMS) requires information to set goals and then monitor progress towards those goals over time. This article will discuss the current cost accounting systems (CASs) available to support the myriad goals of environmental management systems. In addition, the article will outline a framework for plotting the location of your current EMS on a matrix of regulatory and information requirements and evaluating whether your corporation's CAS is adequate to support the goals and objectives set by your environmental management program. By anticipating future regulatory and information requirements, flexible systems can be developed to adapt to new and more stringent regulations and more complex information requirements.     

Improving corporate environmental performance through economic value added

These days, corporate annual reports are full of references to shareholder wealth creation. In today's highly competitive capital markets, most chief executives understand that unless they are seen as value creators, investors will place their scarce capital somewhere else. Clear evidence of the growing importance, even dominance, of shareholder wealth creation is the growing use of a performance measure known as economic value added (EVA®).¹ Within ten years, it is almost certain that most large, publicly traded companies in the United States will be using EVA or something like it as a primary performance evaluation tool. Recently, many non-American companies have also adopted it to better align the incentives of managers with shareholders and to signal their commitment to value creation. EVA is not widely known or understood among environmental specialists, and those who have heard about it often fear it. We find this attitude unfortunate. In this article, we discuss EVA and how its use can aid corporate environmental managers in promoting more proactive environmental investments, and in funding capital investments on environmental improvement, waste reduction, and pollution control in their companies. The use of EVA and other shareholder value measures can also improve general capital investment decisions by integrating environmental factors that affect the long-term interests of the corporation into the managerial decision-making process.     

Making sense of environmental accounting

Much as Total Quality Management (TQM) has helped companies decrease waste and enhance value, environmental accounting offers an approach and a suite of tools that can help organizations improve both environmental quality and bottom-line business performance. Its focus is to bridge the world of finance and economics with the world of environmental management. Companies in all sectors have discovered that they can increase profits by meeting and even surpassing environmental regulations. Through environmental accounting, companies can discover more of these opportunities and, ideally, bring environmental concerns earlier into planning, decision making, and operations. This article introduces environmental accounting and some basic principles that should guide organizations' thinking on environmental accounting and environmental accounting systems. It also describes several different objectives for environmental accounting that imply different requirements and orientations. Although the focus of this article is on environmental accounting as an aspect of forward-looking management and decision making in companies, much of the discussion applies to nonprofits and government units as well.     

Assisting Australian indigenous resource management and sustainable utilization of species through the use of GIS and environmental modeling techniques

Information on distribution and relative abundance of species is integral to sustainable management, especially if they are to be harvested for subsistence or commerce. In northern Australia, natural landscapes are vast, centers of population few, access is difficult, and Aboriginal resource centers and communities have limited funds and infrastructure. Consequently defining distribution and relative abundance by comprehensive ground survey is difficult and expensive. This highlights the need for simple, cheap, automated methodologies to predict the distribution of species in use, or having potential for use, in commercial enterprise. The technique applied here uses a Geographic Information System (GIS) to make predictions of probability of occurrence using an inductive modeling technique based on Bayes' theorem. The study area is in the Maningrida region, central Arnhem Land, in the Northern Territory, Australia. The species examined, Cycas arnhemica and Brachychiton diversifolius, are currently being 'wild harvested' in commercial trials, involving sale of decorative plants and use as carving wood, respectively. This study involved limited and relatively simple ground surveys requiring approximately 7 days of effort for each species. The overall model performance was evaluated using Cohen's kappa statistics. The predictive ability of the model for C. arnhemica was classified as moderate and for B. diversifolius as fair. The difference in model performance can be attributed to the pattern of distribution of these species. C. arnhemica tends to occur in a clumped distribution due to relatively short distance dispersal of its large seeds and vegetative growth from long-lived rhizomes, while B. diversifolius seeds are smaller and more widely dispersed across the landscape. The output from analysis predicts trends in species distribution that are consistent with independent on-site sampling for each species and therefore should prove useful in gauging the extent of resource availability. However, some caution needs to be applied as the models tend to over predict presence which is a function of distribution patterns and of other variables operating in the landscape such as fire histories which were not included in the model due to limited availability of data.     

Getting started with environmental cost accounting

Proactive corporations have been looking at methods to determine the real costs of doing business, including environmental costs using environmental cost accounting (ECA) methodology. Many companies do not track or measure environmental costs and therefore do not know their true environmental costs. Unfortunately, conventional accounting practices rarely tease out environmental costs, and the costs associated with environmental compliance remain hidden in general overhead accounts. ECA can bring the world of business and the environment closer. When we have a better handle on environmental costs, we can use this information to better prioritize environmental projects, identify cost improvement projects, and allocate environmental costs to products. In this article we explore how some companies approach ECA and show how to initiate an ECA program.     

Enhancing environmental equity through decision-making: Learning from waste management

Environmental justice arguments focused on improving the quality of life of the poor contend that environmental 'bads' are more often located in areas of social disadvantage. In relation to waste facilities such claims of distributional outcomes have been enhanced by epidemiological analyses of apparent disease clusters in the vicinity. While politically engaging these arguments have been supported rarely by robust evidence. However, if repositioned in more structural issues related to the unequal societal distribution of power, resources and environmental burdens, they do prompt questions about the processes by which equitable decisions are made in a sustainable waste management context. The paper discusses the scientific and institutional barriers affecting the effective balancing of equity issues, arguing that while deliberative processes potentially challenge 'expert black-boxing' they also challenge current political and regulatory structures for waste management.     

Promoting the use of environmental data collected by concerned citizens through information and communication technologies

Public participation within environmental monitoring may contribute to increasing the knowledge on the state of the environment at the same time it promotes citizens' involvement in environmental protection. However, the use of voluntary collected data is limited due to a lack of confidence in data collection procedures. Additionally, data quality is often unknown and the data are usually dispersed and non-structured. Information and communication technologies (ICT) may promote the use of voluntary collected data through the development of a collaborative system that incorporates tools and methodologies to facilitate data collection, access and validation. Furthermore, the use of ICT may promote public involvement within environmental monitoring, since it facilitates communication among all the stakeholders. This paper analyses the role of ICT in developing a system for environmental collaborative monitoring intending to promote the use of volunteer collected data. It starts by analysing the role of volunteers within environmental monitoring and continues analysing the potential of ICT to take advantage of the benefits of using data collected by citizens. A collaborative system that allows the public to express its knowledge on the state of the environment is described. Special emphasis is given to tools that explore non-traditional types of environmental data such as images, sounds and videos in association with spatial information. To illustrate the above mentioned concepts, a case study for beach quality monitoring developed within the Senses@Watch project, is described.     

Case study: Sonoco's materials reclamation improves environmental performance through quality-based management

Multinational corporations are facing increasing pressures and finding stronger incentives to integrate environmental management into their overall business strategies. National and local environmental regulations are becoming more stringent in Europe, Japan, East and Southeast Asia, Latin America, and many developing countries, and international voluntary standards of environmental management are being endorsed by a growing number of governments. Multinational firms are embracing these standards not only to assure the public of their concern for environmental protection, but also to enhance their competitiveness in international markets. The British Standard 7750, the European Eco-Management and Audit Scheme (EMAS), and the ISO 14000 series are setting new guidelines for effective corporate environmental management. Beyond complying with local and national laws, corporations now have wider latitude in how they adapt their business practices to these emerging environmental management standards. In order to capitalize on that creative latitude, companies must have corporate cultures and internal management systems that allow them to respond quickly and effectively to changing environmental requirements. Exemplary corporate environmental performance is usually related to strong and progressive leadership, a culture that recognizes the importance of environmental protection, and the willingness to operate by quality-based management principles. This article describes how one international corporation, Sonoco, in responding successfully to changing environmental pressures to reclaim and recycle its products in the wake of the solid waste crisis in the United States and more stringent environmental regulations in Europe, used its management competencies and corporate culture to turn what could have been serious barriers to expansion of its core businesses into new opportunities. By adopting a bold materials reclamation program, Sonoco was able to overcome potential limitations on its operations in the United States and abroad and to develop new business segments that benefited the company and the environment.     

Better environmental future in Europe through environmental auditing?

environmental auditing must be rejected if the aim is to make companies introduce a specific management concept. Rather, it is preferable to leave the search for effective environmental protection strategies to the competitive system, especially since the criteria for environment-oriented management in the European Community audit proposal are without substance. Environmental auditing can, however, assume a complementary function in the framework of an overall environmental policy if it is designed as an information tool with which companies provide information on the development of environmental problems deriving from their manufacturing processes and products. However, the model required to establish a framework of quantity and evaluation criteria is not available. Further, auditing does not cover products. Similarly, there are no proposals defining the evaluation procedure for ecological resource scarcity. Thus, the attempt of the Commission of the European Communities to create the elementary prerequisites for consistent and verifiable environmental auditing in the corporate sector has failed.     

Continuous improvement through environmental auditing

Environmental auditing evolved as a means of providing assurance to top management that its health, safety, and environmental responsibilities were being adequately discharged and that no significant noncompliances existed. The author takes an in-depth look at the HSE audit program developed at Allied-Signal to permit continuous improvement of environmental management systems.     

Integrated environmental management: strengthening the conceptualization

Although espoused by many, integrated environmental management (IEM) has been difficult to accomplish in practice. There are many reasons for this shortfall, but certainly a key factor is the lack of agreement among scholars and practitioners regarding the concept and its defining elements. Our purpose here is to sharpen the conceptual basis for IEM by elaborating and pragmatically characterizing a framework for the practice of more integrated environmental management. We outline four fundamental dimensions of IEM: (1) comprehensive, (2) interconnective, (3) strategic, and (4) interactive/coordinative. IEM efforts in the Black Earth Creek watershed in Wisconsin illustrate specific attributes and examples pertaining to our conceptualization of IEM. Acceptance of the conceptual framework elaborated here should alleviate some of the confusion associated with IEM and help move this widely heralded approach from theory into practice.