Environmental Management Accounting Procedures and Principles

Environmental Management Accounting
Procedures and Principles
• Toxicity of emissions or waste treated;
• Environmental impact added (volume is different to impact per unit of volume) of the
emissions;
• Relative costs of treating different kinds of waste or emissions.
One possibility is to allocate the environment-driven costs based on the volume of waste
caused by each cost driver (e.g., volume treated by hour, waste/kg of output, and
emissions/working hour of equipment). This is a rather arbitrary key in cases where the capital
costs (interest and depreciation of construction costs [capital assets]) as well as the variable
costs are not related to the total volume treated. Due to higher safety and technological
requirements, the construction costs and the variable costs often increase substantially with a
higher degree of toxicity of the waste treated. In many cases, these additional costs are due
only to a small percentage of the waste. Thus, the costs of a treatment or prevention facility
are often not clearly related to the overall volume treated, but rather to the relative cleaning
performance required.
Another possibility is to allocate costs according to the potential environmental impact added
of the treated emissions. The environmental impact is calculated by multiplying the volume of
waste by the toxicity of the emissions. However, this allocation key, too, is often inappropriate,
as the costs of treatment do not always relate to the environmental impact added.
Thus the choice of allocation key must be adapted to the specific situation, and the costs
caused by the different kinds of waste and emissions treated should be assessed directly.
Sometimes a volume-related allocation key best reflects the costs caused, while in other cases
a key based on environmental impact is appropriate. The appropriate allocation key depends
on the variety and the kind of waste treated or emissions prevented. Also the time of
occurrence may be relevant (past, current or future costs).
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