Cleaner Production Tools -- Environmental Accounting
[ Description | Links ]
Environmental Accounting (EA) is a method for evaluating the true environmental costs of operating a business, so these costs can be considered in business decisions. When a firm understands the financial benefits that can arise by reducing environmental impacts, it is more likely to adopt Cleaner Production practices.
Frequently, firms do not know the environmental costs of their business, because these have been too narrowly defined - only as the costs of complying with environmental regulations. Costs of resources (such as air, water and energy) may be treated as a one-line 'operating cost' or 'administrative cost' that is regarded by management as independent of production. Environmental costs can include
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costs of resources in production
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cost of resources in general business operations
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waste treatment and disposal costs
and in some situations
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cost of a poor environmental reputation
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environmental risk insurance premiums
There are many other possible environmental costs, from production site design to decommissioning, which may be classified as overhead or R&D (research and development). EA is used to find these hidden costs, and classify them correctly.
Environmental Accounting
attempts to help management assess true environmental costs, and also the costs and benefits of alternative actions.
Accounting professionals can be trained in EA methods according to
standard guidelines. There are a number of professional associations (as
well as governmental organizations) which are dedicated to providing the
necessary tools for this.
Links
Environmental Accounting Links
ŠNDRC 2000-2006