Environmental Management Accounting Procedures and Principles

Environmental Management Accounting
Procedures and Principles
• it is difficult to determine exactly the environmental element of the cleaner technology. 6 “
Cleaner technologies are thereby automatically capitalized over their useful life and do not
need to be expensed immediately. A further incentive may be that, as they do not appear
under the heading of environmental management costs, the belief that environmental
protection is invariably associated with costly investments becomes more and more untenable.
Still, investments in cleaner technologies should be mentioned in the notes to the financial
and/or environmental report, as they are the core element of any solution consisting of
prevention rather than treatment.
4.2.5. Other environmental management costs
Various costs related to environmental protection, e.g., extra costs for ecological procurement
as compared to conventional materials, could be quoted here. Other environmental
management activities like eco-sponsoring are also to be found in this category. A major
portion of costs in this category will most likely be related to external communication such as,
e.g., the publication of the Environmental Report.
4.3. Material purchase value
Whatever has not left the company as a product is a sign of inefficient production and must by
definition be waste and emissions. Determining the material flows for, at least, raw and
auxiliary materials is therefore imperative for environmental cost assessment. The material
purchase cost of wasted materials is the most important environmental cost factor, accounting
for 40 to 90 per cent of total environmental costs, depending on the value of raw materials and
the labour intensity of the sector. In companies with stock management, not the value for
materials purchased, but that consumed for production is used, respectively.
Costs of non-product output in per cent
Material purchase value
60 per cent
Processing costs
20 per cent
Handling and Warehouse
10 per cent
Treatment and Disposal
10 per cent
Total costs of non-product output 100 per cent
Figure 12. Disposal Costs in Relation to Total Costs of Non-Product Output
6 S. Schaltegger et al., 1996, S. 85.
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