What Is Environmental Accounting?

Posted by accountingweb on Jan 6 2006 0 7660printer friendly

Environmental Management Accounting (EMA) is a cover title used to describe different aspects of this

burgeoning field of accounting. The focus of EMA is as a management accounting tool used to make

internal business decisions, especially for proactive environmental management activities.

EMA was developed to recognize some limitations of conventional management accounting approaches

to environmental costs, consequences, and impacts. For example, overhead accounts were the

destination of many environmental costs in the past. Cost allocations were inaccurate and could not be

traced back to processes, products, or process lines. Wasted raw materials were also inaccurately

accounted for during production.

Each aspect of EMA has a general accounting type that serves as its foundation, according to the EMA

international website. The following examples indicate the general accounting type followed by the

environmental accounting parallel:

Management Accounting (MA) entails the identification, collection, estimation, analysis, and use

of cost, or other information used for organizational decision-making. Environmental

Management Accounting (EMA) is Management Accounting with a focus on materials and

energy flow information, with environmental cost information.

Financial Accounting (FA) comprises the development and organizational reporting of financial

information to external parties, such as stockholders and bankers. Environmental Financial

Accounting (EFA) builds on Financial Accounting, focusing on the reporting of environmental

liability costs with other significant environmental costs.

National Accounting (NA) is the development of economic and other information used to describe

national income and economic health. Environmental National Accounting (ENA) is National

Accounting focusing on the stocks of natural resources, their physical flows, environmental

costs, and externality costs.

EMA is a broad set of approaches and principles that provide views into the physical flows and costs

critical to the successful completion of environmental management activities and increasingly, routine

management activities, such as product and process design, capital budgeting, cost control and

allocation, and product pricing, according to the EMA international website.

EMA offers potential benefits to industry, such as the capability track and managing the flows and use of

materials and energy with greater accuracy. The EMA international website reports that accurate

identification, estimation, allocation, and management or reduction of costs is important, too.

Environmental performance can be supported and improved by using more accurate and complete

information. This information will also improve the measurement and reporting of environmental

information to the public.

Government can benefit from the application of these principles according to the EMA international

website. The cost of environmental protection can be lowered on the basis of industries’ financial self-

interest. Industry data can be used to estimate and report environmental performance metrics and

financial and environmental and benefits to government stakeholders. These metrics can also be used to

effectively affect future environmental policies and regulations.

Societal benefits exist also. With the implementation of these principles, energy, water, and other natural

resources can be used more efficiently. The EMA international website reports these principles can help

reduce external societal costs stemming from industrial pollution such as environmental control,

monitoring, remediation, and public health costs.

The nation is divided into 10 Environmental Management System Regions by the U.S. Environmental

Protection Agency. The United Nations Division for Sustainable Development promotes EMA. There are

several U.S. schools that offer courses and degrees in EMA, including the Environmental Management

Systems Institute at the University of Florida and California Polytechnic’s Orfalea College of Business at

San Luis Obispo.

Looking internationally, the St. Andrews Centre for Social and Environmental Accounting Research, at the

University of St. Andrews (Scotland), was established in 1991. The Australian National University offers

EMA courses in its School of Business and Informational Management. Japan’s Osaka City University

and the Chuo Graduate School of International Accounting offer graduate EMA courses. Kobe University,

in Japan, offers undergraduate and graduate EMA courses.

EMA is an emerging facet of accounting with benefits for industry, government, and society globally. As

more companies come to see the environmental impacts in their decision making, the value of EMA will

continue to grow.

Environmental financeFrom Wikipedia, the free encyclopedia

This article does not cite any references or sources. Please help improve this article byadding citations to reliable sources. Unsourced material may be challenged and removed.(February 2011)

Part of a series on

Environmental economics

Concepts

Green accounting

 

Green economy

Green trading

 

Eco commerce

 

Green job

Environmental enterprise

Fiscal environmentalism

Environmental finance

 

Renewable energy

Policies

Sustainable tourism

 

Ecotax

Environmental tariff

 

Net metering

Environmental pricing reform

Dynamics

Renewable energy commercialization

Marginal abatement cost

 

Green paradox

Green politics

 

Pollution haven hypothesis

Carbon related

Low-carbon economy

 

Carbon neutral fuel

Carbon neutrality

 

Carbon pricing

Emissions trading

 

Carbon credit

Carbon offset

 

Carbon emission trading

Personal carbon trading

 

Carbon tax

Carbon finance

 

Feed-in tariff

 

Carbon diet

Food miles

 

2000-watt society

Carbon footprint

V

 

T

 

E

Environmental Finance is the use of various financial instruments (most notably land trusts and Emissions trading) to

protect the environment. The field is part of bothenvironmental economics and the conservation movement.

The field of Environmental Finance was first defined by Richard L. Sandor, American economist and entrepreneur, when

he taught the first ever Environmental Finance course at Columbia University in the fall of 1992.

Dr. Gretchen Daily, of Stanford University has written a book, The New Economy of Naturethat addresses the issue of

financing ecosystem services.

Dr. Jürg P. Blum, defined the term environmental finance (Dissertation: Corporate Environmental Responsibility and

Corporate Economic Performance..... 1994 at USIU)as a fairly new field, "concerned mainly with finance and investment

regarding the ecological environment. The term environment, although frequently used in areas, such as strategic

management (Ansoff, 1968), has been popularized throughout literature synonymously with the term ecological

environment."[citation needed]

[edit]See also

Sustainable development portal

Atmospheric sciences portal

Carbon credit

Carbon Finance

Carbon project

Emission trading

Environmental accounting

Environmental economics

Environmental enterprise

Environmental impact assessment

Environmental pricing reform

Fiscal environmentalism

Kyoto Protocol

[edit]External links

Environmental Finance magazine

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