Accounting for the Environment

Second Edition

Rob Gray, Jan Bebbington

• Editorial: SAGE Publications Ltd
• Año: 2001
• ISBN:
  9781446222652
• Edición: 2
• Categoría: Business
• Categoría: Accounting

`This book is a good comprehensive text and comes highly recommended to anyone currently involved in, looking to get involved in, or just interested in environmental management, environmental accounting and reporting? - Pacific Accounting Review

This is the long-awaited 2nd edition of the benchmark publication that helped shape the developing agenda of environmental accounting. This excellent new edition provides an overview of the subject ranging from environmental management to sustainability, and integrates the major advancements that have occurred since the first edition - in both research and practice. It introduces and explains environmental issues as they relate to accountants today.

This new work also places an increased emphasis on the emerging research literature in the field and reveals a consciousness of the difficulties of developing an environmental agenda in business. It makes an excellent stand-alone text for lower level students, a firm base from which the advanced student or researcher can explore research and more complex issues, and a useful guide for practitioners seeking to understand and implement environmental practice.

PART B: MANAGEMENT INFORMATION AND ACCOUNTING

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Overview

by Martin Houldin, EMAG Ltd

Given the range of environmental issues covered in Part A and the potential implications for business, especially where we can see the full range of business functions becoming involved, getting started can be a daunting task.

A multitude of different sources of guidance is available to companies, from books to consultancies offering varying degrees of technical and business/management skills. Much of the published material, and even some of the consultancies, tend to give advice on what needs to be looked at rather than how. The solutions offered may at first seem somewhat confusing: ‘Develop an environmental policy, set objectives, carry out an environmental audit, publish a report, appoint somebody senior’, and so on. Key questions such as ‘Do we need to cover all activities/products/services?’, ‘Who in the company should be involved?’, ‘What kind of performance objectives and targets should be set?’, can be answered only by considering each company’s individual situation.

Environmental Management

While there cannot be a panacea, all of these approaches can be fitted into a framework or context of environmental management. This is worth introducing at this point.

Managing the causes of environmental impacts on business activities is for many businesses a relatively new idea, and one which calls for a change both in organization culture and in day-to-day management techniques and systems. Current thinking on environmental management is based on the recognition that it cannot stand alone as a discipline, and that environmental considerations must be integrated with normal business practices. So, environmental management is essentially about changing management practices and systems in response to the business implications of environmental issues, whether they be threats or opportunities. It is in the first stages of this change process that much ‘new’ work must be done. By gathering information and data about the causes of environmental impacts (‘environmental aspects’ – see ISO 14001), businesses will gain a better understanding of environmental performance issues. It is this understanding and information, together with knowledge of available technologies and relevant legislation and regulations, which will provide the direction for change, in terms of policies and objectives.

The starting point is to carry out a review of environmental issues (whatever it ends up being called – environmental review or audit). The aim is to understand enough about the current and planned activities of the business in relation to potential environmental impacts (on air, water, land and nature). This means looking not only at the possible environmental effects of materials and resources used, wastes and emissions, and of products, but also at business issues arising. These are likely to result from legislation and regulatory standards, market activity (such as by customers and/or greener competitors). At this stage, environmental impacts can be looked at on a cradle-to-grave basis by using a life-cycle approach; in other words considering environmental aspects and associated impacts of supplier and customer activities, from raw material to end-of-life disposal.

The results of the environmental review will provide a basis for identifying those areas where the company needs to improve its performance. This will mean forming some ideas of objectives. We will then have identified those key areas, which need to be reflected in policy and in a strategy for action. This process, although sounding simple enough, is more often than not an interactive process of doing enough work at the review stage to identify priority areas then focusing on these for more in-depth review to shape and refine policy and objectives.

Environmental policies and objectives will typically cover a range of key performance areas, and not just those that are prescribed by legislation and regulation. These can include process emissions, wastes, use of natural resources (energy, water, materials), supplier performance, product design effects (on product use and disposal), nature conservation and management systems.

While the policy can be used effectively to demonstrate the company’s intent, the real measure of commitment lies in setting responsibilities and objectives at business unit and department/section levels.

As a consequence of all this there will be increasing demands for information on environmental performance.

Recent Developments

A wide range of organizations that represent, support or regulate businesses have recognized the importance of environmental management. As a result an equally wide range of ‘guidelines’ have been developed for different purposes by, for example, the ICC (International Chamber of Commerce), the World Business Council for Sustainable Development, the CBI and industry associations (such as the Chemical Industries Association’s Responsible Care Programme). There have been similar developments outside the UK through organizations such as BAUM (Germany), GEMI (USA), and UNEP (United Nations). There is no doubt that these initiatives are influencing business awareness and thinking.

There are developments, however, which are having a more direct effect in shaping environmental management practice. At the international level, an ISO Standard for Environmental Management Systems (ISO 14001) was introduced in 1996. Since then other guidelines have been introduced within the ISO 14000 series. As of the beginning of the new millennium, over 10,000 companies, around the world, had been certificated to ISO 14001. At the European level the European Union passed a Regulation in 1993 for member states to introduce a voluntary scheme of Eco Management and Audit. Largely similar in requirements to ISO 14001, the main difference is the requirement for an environmental (performance) statement to be produced, audited (verified) and published. By the year 2000 some 2000 sites had been registered in European Union member states.

It is important to remember, however, that these standards, and other emerging guidelines (at sector level and in different areas of environmental management technique), provide only a generic framework within which companies can develop their own approaches, policies and objectives. The standards for environmental performance will always be set at the legislative or regulatory level, unless voluntarily done so at business or industrial sector levels.

While there has been strong interest in the adoption of environmental management systems, the challenge of better controlling and improving environmental performance remains. Certainly, it will take anything from three to five years for businesses to well establish environmental management so that environmental performance is being systematically and consistently managed across the organization. In addition, positive steps need to be taken for environmental performance management to become fully integrated with other areas of managing business performance.

The next major challenge is now to find ways in which businesses can contribute towards sustainable development. Sustainable development has long been an aspiration of governments; references can be found in both recent and older policy documents. A key feature of the new millennium era will be the development and implementation of policies aimed at achieving sustainability.

In summary, it is now fairly commonly recognized that we will need to achieve enormous advances in technological innovation (anything from a factor of four upwards). Only then might we be able to achieve the kind of economic growth in the world that will be needed to meet the demands of population growth and quality of life expectations, without irreversibly damaging the environment that supports life.

This will put even more demands on environmental management and performance management, as well as require businesses to devote resources (human, financial, technological) to working towards sustainability.

Management Information and Accounting

Success in implementing effective environmental management will depend on the quality of information available to managers. While companies rely on the more traditional types of management information produced on a regular basis, there is a need for new information (such as emissions, regulatory compliance data, waste statistics – including levels of recovery and recycling – and product disposal impacts) and some refocusing of existing systems in areas such as energy and wastes.

There may be practical difficulties, resulting mainly from the lack of raw data, as many companies are thus far developing ad hoc information streams from environmental reviews. As a starting point this is not a bad approach, but one that needs to lead fairly quickly into an analysis of environmental information requirements within the business context. Th...