Environmental Management Accounting Procedures and Principles

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Environmental Management Accounting Procedures and Principles • Image enhancement; • Better relations with authorities, reduced regulatory compliance costs; • Better creditworthiness with banks, reduced insurance rates, good ratings by investment brokers and agencies; • Better public stockholder and community relations; • Increased job motivation and satisfaction, less absenteism and worker illness. 8.3. Calculation sheet for environmental investments and projects The calculation sheet for investments and projects can be used to calculate two alternatives and comparing them, or to estimate resulting cost savings directly. An annual assessment of total environmental expenditures should have been performed beforehand, in order to provide a comparison basis. Depending on the project or investment, only some columns and rows may be filled, but the likelihood of forgetting significant cost factors is decreased. Allocation to the different environmental media will probably not be necessary, so the columns have been modified to time series. Once the total environmental costs of two alternatives have been assessed for one year, they can be extended into time series for capital budgeting. Estimates of monetary inputs and outputs for the first three years should be more detailed. For years 4 to 10 rough annual estimates would be sufficient. The determination of total annual environmental expenditure for the last business year is a prerequisite for calculating options. If the total annual environmental costs have not been assessed, the savings potential cannot be calculated. After the determination of the total annual environmental costs, the calculation can be done for specific cost centres or production processes. Calculating different options is then relatively straightforward. When comparing investment options, it is advisable first to assess the cost of the old equipment with the proposed scheme and then calculate the costs of the new equipment. The so-called soft factors or less tangibles, which are rough estimates, can be added, if necessary. -106-
Environmental Management Accounting Procedures and Principles Calculation sheet Environmental cost/expenditure categories Initial investment Year 1 Year 2 Year 3 Year 4 ff. Future liability Soft factors 1. Waste and emission treatment 1.1. Depreciation for related equipment 1.2. Maintenance, operating materials,services 1.3. Personnel 1.4. Fees, taxes, charges 1.5. Fines and penalties 1.6. Insurance for environmental liabilities 1.7. Provisions for clean-up costs, remediation 2. Prevention and environmental management 2.1. External services for environmental management 2.2. Personnel for general environmental management activities 2.3. Research and development 2.4. Extra expenditure for integrated technologies 2.5. Other environmental management costs 3. Material purchase value of non-product output 3.1. Raw materials 3.2. Packaging 3.3. Auxiliary materials 3.4. Operating materials 3.5. Energy 3.6. Water 4. Processing costs of non-product output ∑ Environmental Expenditure 5. Environmental Revenues 5.1. Subsidies, awards 5.2. Other earnings ∑ Environmental Revenues -107-
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Environmental Management Accounting Procedures and Principles

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