Environmental Management Accounting Procedures and Principles

Environmental Management Accounting
Procedures and Principles
and cleaner production. Likewise, calculating the related environmental costs and distributing
them back to the polluting cost centre, process or product (polluter pays principle, also in cost
accounting) has gained importance for the correct calculation of the profitability of products,
processes and production sites.
The material flow balance is an equation based on “what comes in must go out - or be stored”.
In a material flow balance information on both the materials used and the resulting amounts of
product, waste and emissions are stated. All items (materials always comprising materials,
water and energy input) are measured in physical units in terms of mass (kg, t), litres or
energy (MJ, kWh). The purchased input is cross-checked with the amounts produced and sold
as well as the resulting waste and emissions. The goal is to improve efficiency of material
management both economically and environmentally.
A material flow balance can be made for a few selected materials or processes, or for all
materials and wastes of an organization. The aim of process balances is to track materials on
their way through the company. The starting point often is the corporate level, as much
information is available on this system boundary. Also, this level is used for disclosure in
environmental reports.
Ideally, the material flow balance can be summed up to show how much of the purchased
material actually is processed into the sold product and how much is discharged as waste,
wastewater or emissions. It actually consists of a material flow balance in kilograms in
combination with an energy balance in kWh and water balance in cubic meters.
Figure 17 is taken from a PREPARE Pollution Prevention project and shows that only 39 per
cent by material value of the raw materials and auxiliary materials purchased actually left the
company as products. The rest ended up in the environment. As far as the materials inputoutput
statement is concerned, the ratio was even less favourable: only 12 per cent by weight
went into the product; the rest had to be disposed of at high costs or had to be treated with
cleaning technologies. And the disposal costs accounted for only the lowest share in the
environmental costs. It is obvious that this type of production is less than optimal both from an
economic and from an ecological point of view.
In order to be able to aggregate and evaluate the data for such an analysis, the underlying
information system has to provide records on the quantities purchased, produced and
disposed of.
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