Environmental Management Accounting Procedures and Principles

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Environmental Management Accounting Procedures and Principles shares but not total ownership of their reporting entities. Thus, questions of consolidation as in financial reporting arise. Financial accounting standards have defined three methods of consolidation, depending on the share which a company participates in another company. 1. Full consolidation is used by the parent company which controls the majority of the voting rights of a subsidiary (50 to 100 per cent). The parent overtakes the complete profit and loss account by adding together assets, liabilities, equity, earnings and expenses and deletes all internal deliveries within the group. 2. The equity method is used for associates, which are neither a subsidiary nor a joint venture to the parent, but in which it has a significant influence (between 20 to 49 per cent). The equity method considers the actual change in value of the share of the equity, but does not integrate sales, assets or liabilities. All internal deliveries are eliminated. 3. The proportionate method is applied for investments between 1 to 19 per cent of the share capital as well as for joint ventures. Typically, the value of the shares in the books remains unadjusted until significant changes occur. In environmental reports the degree of ownership of sites is hardly ever mentioned. Also the method of consolidation is hardly ever disclosed or even discussed. In practice, many companies fully consolidate subsidiaries of more than 50 per cent, but without adjustment for internal deliveries, and neglecting minority investments. Thus, the consolidating practices and system boundaries for financial and environmental reporting can differ significantly. Comparing and relating financial data like turnover and EBIT to environmental data like energy use or total CO2 emissions is often significantly hampered. Resulting recommendations are: 1. All sites and subsidiaries should apply the same definitions for data collection. 2. All sites and subsidiaries should apply the same input/output chart of accounts for the material flow balance. 3. Before benchmarking sites, process flow charts must be compared and harmonized. 4. All sites and subsidiaries should apply the same consolidation methods. 5. The consolidation principles should be disclosed. 6. Internal deliveries should be adjusted. 7. When calculating key figures, the same consolidating principles should be used as in financial and environmental accounting. 8. In environmental reports, total sales, EBIT and share of each company should be disclosed. -62-
Environmental Management Accounting Procedures and Principles INPUT OUTPUT Raw materials Product Barley Bottled beer Wheat Beer in kegs Malt Canned beer Hops Alcohol-free drinks Brewing water By-products Auxiliary materials Malt Additives (beer) Malt dust Additives (lemonade) Hops Laboratory materials Barley waste Packaging Spent grains Crates (new) Silicic acid Bottles Waste Cans Total waste for recycling Kegs Glass Palettes Metal Labels Etiquettes Foil Plastics Corks Paper, cardboard Caps Total municipal waste Operational materials Total hazardous waste Cleaning materials Fluorescent tubes Disinfecting materials Refrigerators Neutralizers Oils Filters Oil-contaminated materials Oils/grease Used inks Salts Chemical remnants Cooling materials Electrical scrap Repair and maintenance materials Wastewater Canteen Amount in m 3 Office COD Other BOD Energy Phosphates Gas Nitrogen Coal Ammonium Fuel oil Biogas -63-
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Environmental Management Accounting Procedures and Principles

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