environmental cost The language of business accounting is the balance sheet and income statement.
Do you know that the environment speaks this language too? But environmental costs are usually invisible or hidden because conventional accounting systems do not provide clear environmental cost information, thus distorting the true costs of your products and services. This can seriously impair your business decisions.
You want to make sound decisions for your business. Don’t let hidden costs take you by surprise. Environmental cost accounting can help you identify, compile, estimate, and analyze environmental costs and performance so you can make those right business decisions. On another level, environmental cost accounting is a step in the right direction because of the growing demand for external reporting of your company’s environmental costs. Thus, environmental cost accounting can help you ... reduce costs ... track and report environmental costs ... improve performance evaluation ... improve costing and pricing ... better analyze investments ... support your environmental management system
environmental costaccounting Environmental Cost Accounting comes in ...
What you don’t know can hurt you Costs related to products and processes such as capital equipment, structures, materials, labor, supplies and utilities - all these are the usual costs expected in any business. What is not seen is the slew of hidden environmental costs. By scrutinizing the life cycle of your product from cradle to grave, you can pinpoint potential areas where you could be losing money unnecessarily. Your accounting systems may be hiding: ... The cost of lost manufacturing inputs like materials, energy, capital, and labor. For example, a survey by industry accountants revealed that energy and water costs, the usual manufacturing inputs, are usually aligned to overhead accounts. ... The cost of waste management that spans regulatory compliance, waste handling, treatment and disposal. Are you assigning the cost of environmental management and environmental compliance to overhead accounts rather than to specific products or processes? ... Less tangible costs that lead to benefits of improved corporate image, consumer acceptance and good community relations. Most accounting books do not reflect future costs such as landfill fees or a new wastewater treatment facility. How about lost profits because of reduced production, other regulatory costs, potential liability, or a negative corporate image?
product/service design and mix
process/technology change
budgeting and
Hidden environmental costs Revealed
Up-front costs: planning, feasibility studies, site studies, site preparation, permitting, research and development, engineering and procurement, installation Regulatory costs: notification and reporting costs, monitoring and testing, studies and modelling, remediation, record keeping, training, inspections, manifesting, labeling, emergency preparedness, protective equipment, medical surveillance, environmental insurance, financial assurance, pollution control, spill response, waste management, taxes and fees Image and relationship costs: corporate image; relationship with host communities, regulators, consumers, investors, workers and suppliers; other community relations and outreach. Voluntary environmental costs: monitoring and testing, training, audits, qualifying suppliers, reports (e.g., annual environmental reports), insurance, recycling, environmental studies Contingent costs: penalties and fines, property and personal injury damage, legal expenses, natural resource damages, economic loss damages, future compliance costs, remediation Back-end costs: closure and decommissioning, inventory disposal, postclosure care, site survey Adapted from: U.S. Environmental Protection Agency. 1995. An Introduction to Environmental Accounting as a
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Environmental cost accounting is not an end in itself. It is a crucial step towards making decisions on implementing pollution prevention and cleaner production in your company. The Environmental Management Programme for Industry Competitiveness (EPIC) in partnership with the Philippine Institute of Certified Public Accountants (PICPA) is promoting Environmental Cost Accounting to help you … make the proper investment decisions for your company’s environmental needs … find out how pollution prevention translates to increased profitability ... discover the true cost of your waste … track the potential cost savings of implementing cleaner production in your company
For more information, please contact: EPIC 5/F Industry & Investments Bldg. 385 Senator Gil Puyat Avenue Makati City 1209 Philippines Tel. (63-2) 895.8233/899.5688 Fax (63-2) 899.5688 Email epicpmo@epic.org.ph, jsesguerra@epic.org.ph
PICPA 700 Shaw Boulevard Mandaluyong City Philippines Tel. (63-2) 723.5467 Fax (63-2) 723.6305 Url www.picpa.com Email fmreyes@pacific.net.ph
EPIC is a partnership of the United Nations Development Programme and the Department of Trade and Industry – Board of Investments
environmental cost accounting don’t underestimate your environmental costs
Environmental Cost Accounting is an innovative practice that helps business identify and estimate environmental cost information for business reporting and management decision making functions.
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