Environmental Reporting and Environmental Management Accounting for Rational Understanding of Sustai

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Environmental Reporting and Environmental
Management Accountingfor Rational Understanding
of Sustainable Management

• Heinz Karl PrammerJohannes-Kepler-Universität
  Linz

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A) From cost accounting to cost management
Contents
B) Environmental cost management (ECM)
C) Four steps to determine environmental costs
C1) Determining strategies
C3) Determining an environmental cost estimate
Conclusions
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A) From cost accounting to cost management

• Executing management tasks is an essential
  element in cost management
• Cost management aims at long-term changes of the
  origin of costs
• Observed period of time is prolonged and the
  early phases of product life cycle are especially
  reflected

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A) From cost accounting to cost management
supplycost information
Refer toenvironment
strategicalcost management
functional priorities
manage-ment functions
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B) Environmental cost management (ECM)

• ECM supports the same management decisions, they
  have to be put on a (better) basis in the
  frameword of (environmental) cost management
• ECM is an integral part of cost management
• ECM does not focus on monetary magnitudes, but on
  quantity components of costs (consumptionof
  goods, environmental impacts)

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C) Five steps to determine environmental costs

• Based on environmental necessities and demands
  the first step of definition and delimitation of
  environmental costs is to determine goal
  orientation and competitive strategies
• C 1. Determining goal orientation and
  competitive strategiesC 2. Deriving purposes in
  the operational contextC 3. Determining an
  environmental cost estimateC 4. Grasping the
  quantity of consumed goods/ environmental
  impactsC 5. Valuation of consumed
  goods/environmental impacts

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C1) Determining competitive strategies

• ad 1. Determining goal orientation and
  competitive strategies is the first step of
  definition and delimi-tation of environmental
  costs. The determining factors of strategies in
  the environmental context are - STEERING
  SYSTEMS Society or Market- TRIGGERING of
  ENVIRONMENTAL EFFECTS Location or
  Ecological Life Cycle- FOCUS ON BEHAVIOUR
  Offensive Approach or Defensive Approach
  

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C1) Determining competitive strategies
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C1) Determining competitive strategies

• There are two main strategies for enterprises to
  support (ecological) sustainable development
• 1. To improve efficiency of material and energy
  consumption on locations and over the
  environmental product life cycle? the market
  demands more efficiency
• 2. To improve the ecological compatibility of
  locationsand products? the society demands more
  ecological compatibilityTHE ESTIMATE OF
  ENVIRONMENTAL COSTS MUST REFLECT THESE ASPECTS!

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Two options to support (ecological) sustainability
1. EFFICIENCY OF MATERIAL AND ENERGY CONSUMPTION
2. ECOLOGICAL COMPATIBILITY
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C3) Determining an environmental cost estimate

• SOCIETY - INTERNAL COSTS (DEFENSIVE APPROACH)
• Environmental protection costsCosts resulting
  from measures to reduce or prevent or supervise
  environmental impacts of input and output aspects
• Costs of environmental burdens ( environmental
  impact costs) Operating costs of- input
  aspects (environmental exploitation and
  impoverishment),- output aspects
  (environmental pollution and contamination) or -
  structural aspects (e.g. use of areas)

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C3) Determining an environmental cost estimate

• SOCIETY - EXTERNAL COSTS (OFFENSIVE
  APPROACH)External environmental costsCosts
  arising from environmental pollution caused by
  the enterprise which are not yet internalised and
  are therefore not considered in internal cost
  accounting- external costs, ecological
  internalisation pending (reduce, eliminate or
  utilize environmental impacts)- external
  costs, remaining externalised

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C3) Determining an environmental cost estimate

• MARKET - INTERNAL COSTS (DEFENSIVE APPROACH)
• Flow costsCosts arising from the
  target-oriented consumption ofgoods and/or
  services which are in close connectionwith the
  flows of materials and energy. These comprise the
  costs of materials and/or enery inputs (e.g.
  purchase costs of raw) as well as internal flow
  costs (e.g. costs for processing, transporting
  and storaging materials) and output costs (e.g.
  transport products, dispose of sewage). a) Flow
  Costs arising in close connection with
  productsb) Flow Costs arising in close
  connection with waste (waste water, waste
  air, waste disposal)

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C3) Determining an environmental cost estimate

• MARKET - EXTERNAL COSTS (OFFENSIVE
  APPROACH)External environmental costsCosts
  arising from environmental pollution caused by
  the enterprise which are not yet internalised and
  are therefore not considered in internal cost
  accounting- external costs, economic
  internalisation pending (reduce or avoid
  internal costs in the near future) - external
  costs, remaining externalised

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C3) Determining an environmental cost estimate

• TRIGGERING AREA COSTS DIFFERENT STIMULI
• Environmental location costsCosts resulting from
  the target-oriented consumption of goods and/or
  services on a considered business location
• Environmental lifecycle costsCosts arising from
  the target-oriented consumption of goods and/or
  services along the ecological life cycle,usually
  subdivided in 6 main phases1. extraction of raw
  material, 2. generation of energy,3. production,
  4. consumption, 5. recycling/sewageand refuse
  disposal, 6. transport

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C3) Determining an environmental cost estimate
Environmentallocationcosts
Internal environmental lifecycle costs
phases after
phases before
External environmental lifecycle costs
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C3) Determining an environmental cost estimate
Kosten-zuschlägefür inteneSteuerung
Kosten der Verhaltens-änderung von
Anspruchs-gruppen
Kosten nachsorgender UWS
Kosten integrierter UWS
Umwelttwirkungs-kosten i.e.S.(aus trad. KORE)
Flusskosten Produkte
Flusskosten Abprodukte
rein ökonomische Internalisierung von
Umweltwirkungen
ökonomisch-ökologische Internalisierungvon
Umweltwirkungen
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Conclusion Environmental accounting as framework
for better understanding sustainable management