Environmental Management Accounting Procedures and Principles

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Environmental Management Accounting Procedures and Principles aspects. The number of environmental audits, staff training, supplier audits, cases of noncompliance, certified sites, etc. serve as examples. They provide useful information, however, not on the actual external environmental impact or internal environmental aspects. They supply internal quantifiable data on environmental management activities to controlling but no information on environmental performance or impacts. An exclusive use of MPIs for evaluating environmental performance is therefore not recommended in ISO 14031, as they do not reveal the material environmental impacts and may even camouflage them. “ECI, Environmental condition indicator, specific expression that provides information about the local, regional, national or global condition of the environment.” Environmental condition indicators directly measure the quality of the environment. They are used to assess the impact of air emissions on air quality or water quality. The environmental conditions around a company, such as water and air quality, are typically monitored by government authorities. Only if one particular company is the sole or main polluter in a region, monitoring by individual companies may be requested by law or may make sense also voluntarily, e.g., noise for airports, air quality for power stations, water quality for pulp and paper industries. Since the quality of environmental media such as air, water, soil and the impacts of human activities (e.g., overfertilization of water, reduction of biodiversity, greenhouse effect) depend on many factors (emissions of other companies, of power plants, households and traffic), the measurement and recording of ECIs are primarily performed by official institutions. These external environmental indicators, in connection with objectives of environmental policies, assist the company’s determination of priorities and objectives. Global and national indicators for the evaluation of environmental quality are mostly termed “environmental indicators” or “environmental condition indicators” and are not referred to as “performance indicators”. For the assessment of corporate environmental performance and impact the operational indicators, based on the material flow balance, are relevant. The other indicators, for the condition of the environment and the management system, are secondary. ISO 14031 also indicates how information conveyed through indicators can be presented. EPIs may be aggregated or weighted as appropriate to the nature of the information and its intended use. Aggregation and weighting should be done with caution to ensure verifiability, consistency, comparability and understandability. Indicators can be presented in the following ways: • Absolute figures, like tons of waste per year; • Relative figures, compared to another parameter. The most common denominators are production volumes, production hours, sales (turnover) and number of employees; • Percentages or indexed, in relation to a baseline, like hazardous waste as a percentage of total waste, or hazardous waste as a percentage of the previous year; -90-
Environmental Management Accounting Procedures and Principles • Aggregated data, of the same type, but from different sources, expressed as a combined value, such as total tons of SO2 emissions from five production sites, aggregated to the corporate level; • Weighted, data multiplied by a factor related to its significance, prior to aggregating or averaging. 7.2. General requirements for indicator systems Environmental performance indicators (EPIs) monitor a company’s effectiveness and efficiency of resource management. This applies mainly to physical resources like materials, but can also be linked to other resources like personnel and money. Indicators are most useful and meaningful if they are: • monitored over time, • comprised of two variables, an absolute measure and a reference measure, and • comparable across sites and companies. The process for setting up an indicator system has been described in several projects and publications. 18 VDI 4050 distinguishes among the following steps: 1. Initiative: What general aspects are relevant for a successful EPI project? 2. Setting objectives: Who needs what kind of information? 3. State of the art: What are the significant environmental aspects and where in the company do they occur? 4. Installing an EPI system: What kind of data will be collected from where? 5. Implementation and communication: application, calculation, comparison and communication of results. 6. Improvement: Are the results satisfactory? Any modifications to the indicator system needed? The following principles should be applied when installing an indicator system: • Relevance The indicators should adequately reflect the main environmental aspects and impacts of the organization and be selected by the people in charge of controlling, monitoring and target setting. Data should be collected only if it is to be used. 18 See VDI 4050 (2000); C. Jasch and R. Rauberger (1997); and Kottmann et al. (1999). -91-
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