Environmental Management Accounting Informational and Institutional Developments (Eco-Efficiency in - ENVIRONMENTAL MANAGEMENT ACCOUNTING INFORMATIONAL

Environmental Management Accounting Informational and Institutional Developments (Eco-Efficiency in

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Unformatted text preview: ENVIRONMENTAL MANAGEMENT ACCOUNTING: INFORMATIONAL AND INSTITUTIONAL DEVELOPMENTS ECO-EFFICIENCY IN INDUSTRY AND SCIENCE VOLUME 9 Series Editor: Arnold Tukker, TNO-STB, Delft, The Netherlands Editorial Advisory Board: Martin Charter, Centre for Sustainable Design, The Surrey Institute of Art & Design, Farnham, United Kingdom John Ehrenfeld, International Society for Industrial Ecology, New Haven, U.S.A. Gjalt Huppes, Centre of Environmental Science, Leiden University, Leiden, The Netherlands Reid Lifset, Yale University School of Forestry and Environmental Studies; New Haven, U.S.A. Theo de Bruijn, Center for Clean Technology and Environmental Policy (CSTM), University of Twente, Enschede, The Netherlands Environmental Management Accounting: Informational and Institutional Developments Edited by Martin Bennett University of Gloucestershire Business School, Cheltenham, U.K. Jan Jaap Bouma Erasmus Centre for Sustainable Development and Management, Erasmus University, Rotterdam, The Netherlands and Economics Faculty of the University of Ghent, Belgium and Teun Wolters ISCOM Institute for Sustainable Commodities, Utrecht, The Netherlands KLUWER ACADEMIC PUBLISHERS NEW YORK, BOSTON, DORDRECHT, LONDON, MOSCOW eBook ISBN: Print ISBN: 0-306-48022-0 1-4020-0552-0 ©2004 Kluwer Academic Publishers New York, Boston, Dordrecht, London, Moscow Print ©2002 Kluwer Academic Publishers Dordrecht All rights reserved No part of this eBook may be reproduced or transmitted in any form or by any means, electronic, mechanical, recording, or otherwise, without written consent from the Publisher Created in the United States of America Visit Kluwer Online at: and Kluwer's eBookstore at: Contents Preface vii–ix 1. The Development of Environmental Management Accounting: General Introduction and Critical Review M. Bennett, J.J. Bouma and T. Wolters 1–18 PART I OVERVIEWS 2. An Integrative Framework of Environmental Management Accounting R.L. Burritt, T. Hahn and S. Schaltegger 21–35 3. Environmental Management Accounting Metrics: Procedures and Principles C. Jasch 37–50 4. A Guideline for the Measurement and Reporting of Environmental Costs J.-D. Kim 51–65 5. Flow Cost Accounting, an Accounting Approach Based on the Actual Flows of Materials M. Strobel and C. Redmann 67–82 6. Resource-Efficiency Accounting T. Orbach and C. Liedtke 83–90 PART II INFORMATION SYSTEMS 7. Efficient Eco-Management Using ECO-lntegral – How to Save Costs and Natural Resources at the Same Time W. Scheide, S. Enzler and G. Dold 8. Materials Flow Management Based on Production Data from ERP Systems G. Jürgens 9. ‘Counting what Counts’ – Raising Transparency through Environmental Management Accounting at Siemens R.A. Thurm 10. The Danish Environmental Management Accounting Project: An Environmental Management Accounting Framework and Possible Integration into Corporate Information Systems P.M. Rikhardsson and L. Vedsø 11. Life Cycle Engineering H. Krasowski 93–111 113–122 123–135 137–151 153–157 v vi Environmental Management Accounting: Information and Institutional Developments PART III EMA POLICIES 12. Corporate Environmental Accounting: A Japanese Perspective K. Kokubu and T. Kurasaka 161–173 13. Environmental Accounting in Korea: Cases and Policy Recommendations B.-W. Lee, S.-T. Jung and Y.-O. Chun 175–186 14. Government Strategies to Promote Corporate Environmental Management Accounting S. Schaltegger, T. Hahn and R.L. Burritt 15. Looking for Knowledge Management in Environmental Accounting D. Osborn 16. The Greening of Accounting: Putting the Environment onto the Agenda of the Accountancy Profession in the Philippines M.F. Reyes 187–198 199–213 215–220 PART IV DIFFERENT EMA PERSPECTIVES 17. Environmental Performance Measurement E. Günther and A. Sturm 223–229 18. Towards Sustainability Indicators for Product Chains. With special reference to an international coffee chain T. Wolters and M. Danse 231–247 19. Towards Transparent Information on the Environmental Quality of Products – LCA-based Data Production for the Finnish Foodstuff Industry T. Loikkanen and J.-M. Katajajuuri 249–252 20. Prospective Analysis for Implementing an Environmental Management System in Pig Farms: Likely Role of an Environmental Management Accounting System B. Montel 21. Environmental Management Accounting and the Opportunity Cost of Neglecting Environmental Protection S. Schaltegger and R.L. Burritt 22. Wanted: A Theory for Environmental Management Accounting J.J. Bouma and M. van der Veen References 253–263 265–277 279–290 291–302 Preface The Environmental Management Accounting Network (EMAN) first emerged in 1997, not as part of any well-funded major corporate or governmental programme, but from the bottom-up initiative of a small group of like-minded individuals. This group had worked together on a research project into EMA that was then concluding and wished to maintain and continue their association in at least a semi-structured way, and to bring into this network others who might share their interest. From this modest initial ambition EMAN was formed and held its first conference in December 1997. The growth of EMAN since then reflects the increasing level of interest in the application of management accounting in the context of environmental management. Its membership is comprehensive and includes academics, professional researchers, practitioners from industry (in particular environmental managers), governments, NGOs, and consultants. EMAN’s aim is to facilitate an exchange of knowledge and ideas, and the main activity supporting this has been the conference which has been organised annually since 1997, supplemented by special workshops which have been organised by EMAN at other conferences such as those of the Greening of Industry network (GIN). EMAN’s annual conferences offer an opportunity for those interested in the topic, from whatever background, to present and hear papers, to learn of projects in progress and planned, to develop new research projects, and to network with others in the field. Since 2000 these conferences have been supported as a high level scientific conference by a grant from the European Union towards both a part of their direct running costs and the travel and subsistence costs of participants attending. The 2002 conference has the benefit of further financial support from other sponsors. This book of papers from recent EMAN conferences and workshops represents a further stage in the evolution of EMAN, and indicates the recognition by a major publishing house of the increasing interest in EMA and the demand for more information. It provides a unique overview of the state of the art within EMA at this stage. Several contributions refer to the role of stakeholders in the process of integrating EMA into organisations, and EMAN offers a network which can help to disseminate new tools, ideas and new examples of good practice The definition and content of EMA has continued to evolve rapidly over the short life to date of EMAN. From an initial focus exclusively on the environmental issue, the broader issue of sustainability has become increasingly important, and it is likely that EMAN’s focus will evolve to extend to include also the other aspects of the ‘triple bottom-line’ – economic and social, as well as environmental, sustainability. Perhaps the most encouraging aspect of the increasing interest in EMA generally, and of EMAN as a vehicle to advance EMA, is the increasing interest across the globe. When first founded EMAN was inevitably mainly European-centred, since its original members had first met through their partnership in an EU-sponsored research project. Although in close contact with others with well-established expertise and interest, such as the US EPA’s ‘Environmental Accounting’ project and the seminal work of the Tellus Institute, the original EMAN network has tended to remain mainly Europe-centred, with all conferences to date based (for sound practical organisational and economic reasons) in Europe. However we have still been very pleased to welcome to the conferences speakers and participants from other parts of the world, notably from North America and the Asia-Pacific region, vii viii Environmental Management Accounting: Information and Institutional Developments although the time and cost overheads (and environmental impacts) of global travel have necessarily been a deterrent and constraint on this. Prompted in part by discussions at the EMAN conference at Erasmus University, Rotterdam in December 2000, and the EMAN workshop at the GIN conference, Bangkok in January 2001, a group of enthusiasts have recently set up an Asian-Pacific section of EMAN, in parallel to what we have now re-titled ‘EMAN-Europe’. There are also discussions amongst another group in North and South America towards setting up an ‘EMAN-Americas’ section which we are currently hoping will also come to a successful fruition. There are also further moves to develop EMAN-Europe, in particular to develop and extend the EMAN-Europe website. EMAN-Europe would like to take this opportunity to thank all those who have contributed to its development over the period since 1997. Firstly, the work of EMAN is dependent on the research-efforts of individual EMAN-members. Without which the network could not exist. Each paper that is presented at an EMAN conference or workshops demonstrates a variety of financial and institutional support from a large number of organisations and individuals, and many thanks go to all of these supporters. With regard to the organisation of the EMAN-Europe conferences and workshops special thanks go to: the sponsors – firstly the European Union, who are supporting a series of EMAN-Europe conferences. Additional support has come from the Dutch scientific organisation NWO [Nederlandse organisatie voor Wetenschappelijk Onderzoek] with its research program ‘Environment and Economy’, and in the United Kingdom from the Association of Chartered Certified Accountants and the Environment Agency. those who have been generous with their time and often other resources too in actively organising EMAN-Europe as a network, in particular the members of the Steering Committee. the organisers of the conferences at which the papers in this book were first published: Eberhard Seifert and Martin Kreeb (1999 conference at the Wuppertal Institute, Germany); Jan Jaap Bouma (2000 conference at Erasmus University, Rotterdam); Teun Wolters (special workshop on EMA at the 2001 Greening of Industry Network conference, Thailand); and in particular, all the contributors of papers to this book. We would also like to take this opportunity to invite anyone interested to join the EMAN network. Further information can be obtained from the EMAN-Europe Co-ordinator Jan Jaap Bouma ([email protected]), the Chairperson Martin Bennett ([email protected]), or directly from the EMAN-Europe website ( ). Further information on EMAN Asia-Pacific can be obtained from Katsushiko Kokubu at [email protected] u.ac.jp; further information on EMAN-Americas can be obtained from Deborah Savage at [email protected] or Terri Goldberg at [email protected] EMAN-Europe Steering Committee The steering committee of EMAN-Europe consists of the following members: Martin Bennett, University of Gloucestershire, Business School, Cheltenham, UK (Chairperson) Preface ix Jan Jaap Bouma, Erasmus University, Rotterdam, Netherlands and Ghent University, Belgium (Co-ordinator) Martin Kreeb, University of Hohenheim, Germany Torsti Loikkanen, VTT, Espoo, Finland Pall Rikhardsson, Aarhus School of Business, Denmark Stefan Schaltegger, University of Lueneburg, Germany Eberhard Seifert, Wuppertal Institute for Climate, Environment and Energy, Wuppertal, Germany Giorgio Vicini, Fondazione Eni Enrico Mattei (FEEM), Milan, Italy Teun Wolters, Institute for Sustainable Commodities (ISCOM), Utrecht, The Netherlands (Immediate Past Chairperson). We hope that this book, whose various contributions introduce the reader to individual researchers, governmental organisations and representatives from industry, will encourage both individuals and organisations to become interested and involved in EMA; the Steering Committee is open to all suggestions. “Supported by the European Commission, Research DG, Human Potential Programme, High-Level Scientific Conferences, Contract No. HPCF-CT-1999-00102”. “The papers which have been collected together in this publication were first presented annual EMAN-Europe at various EMAN conferences and workshops. These include the conference at Erasmus University, Rotterdam, 13–14 December 2000, which was generously supported by the European Commission, Research DG, Human Potential Programme, High-Level Scientific Conferences, Contract No. HPCF-CT-1999-00102”. The editors: Martin Bennett Jan Jaap Bouma Teun Wolters This page intentionally left blank 1. The Development of Environmental Management Accounting: General Introduction and Critical Review Martin Bennett, Jan Jaap Bouma and Teun Wolters 1.1. Introduction This volume represents a further stage in the development of Environmental Management Accounting (EMA). It brings together a selection of papers from recent EMAN and other conferences by an international range of authors in the vanguard of the development and promotion of EMA, and represents some of the leading thinking and practice in what is still a very young and developing area. The papers which are collected here reflect both new informational developments, in that environmental costs are increasingly becoming integrated into corporate information systems; and institutional developments, in particular in respect of programs by governments and international organisations to promote EMA as a means to help to integrate environmental management into the decision-making structures of companies and other organisations.1 1.2. The rise of EMA and key issues Environmental Management Accounting (EMA) can be defined as the generation, analysis and use of financial and non-financial information in order to optimise corporate environmental and economic performance and to achieve sustainable business (Bennett and James, 1998). Like conventional management accounting, EMA defines itself primarily in terms of its main audience, its main purpose being to provide relevant and useful information to the management of the organisation, as distinct from external stakeholders, in order to support the various responsibilities of management – planning, decision-making, controlling, etc. The breadth of the information encompassed by EMA and conventional management accounting is less clear, though it is generally accepted that this is not restricted solely to financial (i.e. monetary) information but includes also relevant nonfinancial data and information. Although EMA has attracted increasing interest and recognition in recent years, it is still far from having achieved the position of conventional management accounting as a well-established function in business and management. The evident value of accounting in supporting management generally has however stimulated interest, particularly from environmental managers and professionals, in its potential to support environmental management in a similar way. At the same time, some accountants have recognised that if the environment is likely to become an increasingly important issue for their organisa- 1 Like conventional management accounting, EMA can be relevant for not only private-sector profit-seeking companies but also other types of entity including government agencies and other not-for-profit organisations – any organisation for whom its environmental performance, and how best to manage this, matters. The term 'organisations' is, therefore, used here in order to indicate this wide applicability, except in those particular places where it is specifically commercial companies that are being referred to. 1 M. Bennett et al. (eds.), Environmental Management Accounting: Informational and Institutional Developments, 1–18. © 2002 Kluwer Academic Publishers. Printed in the Netherlands. 2 Environmental Management Accounting: Information and Institutional Developments tions, this will need to be managed and that their own expertise may be able to make a contribution to this. EMA as interface One function of EMA is therefore to link together for their mutual benefit two organisational functions and areas of expertise which conventionally and historically are distinct and may initially not seem to have much natural interface: environmental management (in its broadest sense), and management accounting. The latter is better established, and with more consensus on what it encompasses and on the competencies needed to be an effective practitioner. The former is more general and less well-defined, and can range from organisations which set up specialist environmental management functions (these are usually in larger organisations, with environmental management set up as a staff function at corporate level) to those who simply recognise that their environmental performance and management may be a significant issue in the future success of their businesses, and take positive steps towards managing this. The most obvious use of EMA is to support organisations' environmental management, but it is also an important issue for accounting and finance professionals, because, if the case for environmental concern is accepted, environment is likely also to become an increasingly impact factor in the business context2 as a major strategic variable for businesses to recognise and respond to. The adequacy of an organisation's response will therefore be a major factor in its long-term survival and prosperity in conventional business terms too, and for accounting and finance functions to overlook environment would be to overlook a key factor. The twin premises on which EMA depends are therefore: that environment is important and will gain in importance over time; in the first place for society as a whole, and therefore for governments and organisations too; Management accounting techniques and approaches are potentially one of a number of tools which organisations can apply in order to manage better their environmental performance. Sustainability In the broader public debate, concern for business and the environment has rapidly developed recently into a wider concern for sustainability generally, encompassing the three elements of the ' triple bottom line' – environmental, social, and economic. EMA inherently encompasses the environmental and economic aspects of this, though the concept of sustainability does raise challenges for how these are defined and dealt with. How to bring the social aspect within the remit of EMA (which might then become Sustainability Management Accounting) is less obvious, partly because there is less consensus on what is represented by good corporate social performance, even before going on to raise the questions of how best to achieve and measure this. This is a live issue amongst those active in EMA, who are watching with interest the sustainability debate and looking for ways in which management accounting may best contribute. 2 The term 'business context' is used instead of the more usual term amongst business strategists of ' business environment' to avoid the obvious ambiguity and potential confusion of the latter in a discussion of business and the (natural) environment. The Development of Environmental Management Accounting 3 Reporting Although some seminal publications can be traced back to the 1960s and 1970s it was only in the 1990s that concern for the relationship between business and the environment became generally recognised in most countries, at least in the developed world, as a mainstream issue for business. Initially the main concern was for compliance with a rapidly increasing body of 'command-and-control' environmental legislation and regula...
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