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Environmental Accounting Systems

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Environmental Accounting Systems Arturo A. Keller Bren School of Environmental Science & Management University of California, Santa Barbara ESM 595F – PowerPoint PPT presentation

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Title: Environmental Accounting Systems


1
Environmental Accounting Systems
  • Arturo A. Keller
  • Bren School of Environmental Science Management
  • University of California, Santa Barbara

ESM 595F
2
Environmental Accounting Systems
  • You cant manage what you dont see - and with
    todays managerial accounting systems, managers
    dont see most environmental costs, from R. Todd
    (Greening of Industrial Ecosystems, 1994)

3
Objective of Env. Account. System
  • Record monitor flow and disposition of all
    inputs
  • waste disposal
  • reprocessing
  • recycling

4
Objective of Env. Account. System
  • Processing costs involving environmental impact
  • pretreatment
  • emissions control costs
  • air emissions
  • water treatment
  • solids reduction
  • packaging disposal/return costs

5
Hidden costs
  • Site remediation costs
  • Product-related legal expenses
  • Regulatory costs
  • PR expenses
  • Opportunity cost of clean technologies not
    adopted
  • DfE, PP engineering costs

6
Institutional Impediments
  • Traditional accounting doesnt capture
    engineering accounting data needed for decision
    making
  • Data collected is aggregated in wrong format,
    losing environmental context
  • Line managers not responsible for most
    environmental costs

7
How to present the information?
  • Corporate level
  • Facility level
  • Product line
  • By department or section

8
To Whom it May Concern...
  • Internal accounting
  • Financial reporting
  • Regulatory agencies
  • Others ?
  • Bren School students doing GPs?

9
Managerial Information
  • Detailed cost breakdown
  • Joint costs
  • expense of tracking costs on individual product
    line basis
  • technical difficulties of measuring
    product-specific material flows and emissions
  • negative incentive to collect detailed info

10
Unprofitable products?
  • Internal External Costs gt Price
  • Competitive market
  • Market leader
  • Large portion of current revenue

11
Dont Look, Dont Tell...
  • Confidentiality of Sensitive Info
  • Costly contingent liability
  • Legal liability
  • Public perception

12
Role of Mgmt Accounting Systems
  • Direct managerial attention to problem areas
  • Provide informational support for managerial
    decisions
  • Promote harmonized goals throughout the
    organization

13
Traditional Env. Accounting
14
Traditional Env. Accounting
15
Enlightened Cost Accounting
16
Bottom Line
  • Need to restructure incentive compensation system
    (multi-objective)
  • Establish priorities
  • Tailor to individual firm
  • Adapt to changing social climate
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