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Environmental Management Accounting

If you are in business when was the last time your Health, Safety and Environment Manager spoke with your accountant about the company's raw material, operating, production and pollution prevention costs? Did they understand each other?

A report on Environmental Management Accounting will be provided here in the near future. In the meantime, the attached report on Environmental Cost Accounting and Business Strategy provides some insights germane to proactive companies.

Environmental Cost Accounting
and Business Strategy

(PDFs require Adobe Reader. Click here to download.)

The management response to many environmental issues is to place them within a risk framework and hence part of an occupational health and safety responsibility. This has led to a trend that began in the late 1990s to transform Occupational Health and Safety (OH&S) personnel into Health, Safety and Environment (HS&E) personnel. There are many instances where this change is a positive step. Overall, however, it is a very restrictive approach to the green agenda of the 21st century. Confining environmental issues to technical, health and risk issues overlooks the pressing need to develop policies and strategies that link environmental issues to accounting and other corporate management systems.

To make informed decisions about performance management in a sustainability framework, companies must understand their raw material, operating, production and pollution prevention costs from an environmental perspective. To this end there is a pressing need to link environmental issues to accounting issues. The challenge, however, is to find ways in which environmental managers and accountants can communicate effectively given differences in operating cultures and professional interests. One approach now under active exploration is Environmental Management Accounting (EMA). The growing interest in environmental accounting, auditing and reporting is based on increasing pressures for corporate environmental disclosure through transparent and publicly accessible information.