The Growth of Environmental Management Accounting

1

• The Growth of Environmental Management
  Accounting
• Tarcisio Alvarez-Rivero
• DSD / UDESA

2

• CSD decision 6/3 (1998)
• Encouraged UNDESA and other organizations to
  study the factors that influence company decision
  making such as economic competitiveness and
  environmental management , including the adoption
  of best practices.

3
Membership

• The members of the working group are from
  national environment agencies and ministries,
  international organizations, industry, accounting
  firms, academia and United Nations agencies. The
  UNDSD has acted as secretariat for the group
• To date the group includes experts from
  government agencies in Argentina, Australia,
  Austria, Brazil, Cambodia, Canada, China (also
  Taiwan-POC), Colombia, Costa Rica, Czech
  Republic, Denmark, Egypt, Finland, Germany,
  Hungary, India, Indonesia, Ireland, Italy, Japan,
  Mexico, Nepal, Netherlands, Norway, Peru,
  Philippines, Poland, Portugal, Republic of Korea,
  Scotland, Slovak Republic, South Africa, Sweden,
  Tanzania, Thailand, United Kingdom, United States
  of America, Vietnam and Zimbabwe

4
Marrakech Process

• The Marrakech process is the worldwide effort to
  implement the mandate on SCP of the Johannesburg
  Plan of Implementation ( World Summit on
  Sustainable Development 2002)
• EMA has been reflected as a priority tool not
  only in the official regional strategies of
  Africa, Latin America Caribbean and Asia
  Pacific but also in the report of the 2nd
  International meeting in Costa Rica in which it
  is recognized as an essential vehicle for
  shifting industry behavior towards pollution
  prevention activities.
• IFACs Guidance Document is mentioned as a
  positive response by the accounting profession
  and as a source of information on EMA

5
EMA for what?

• The first reaction is
• EMA identifies new revenue and cost streams
  related to material flows and thus allows for
  better investment decisions
• But I like to put this differently.
• EMA allows management to realize that the
  current materials flow of the company is too
  expensive and thus must be reduced to improve
  financial performance
• or
• That producing waste / emission up to the level
  allowed by law may be too expensive for the firm
  and that going beyond may be the only financially
  responsible course of action

6

• Environmental Management Systems
• -ISO 140001 and EMAS
• Policy commitments , objectives and targets
• Responsibilities, communication and training
• Procedures, audits and management reviews

• Environmental reporting
• Government general guidelines guidelines for
  waste, energy, water

• Environmental Management Accounting
• Identification and allocation of environmental
  costs
• Targets for resource productivity
• Measuring and monitoring progress

• Resource efficiency
• Incremental improvements

• Cleaner technology
• Step change improvements

• Sustainable design

• Process optimization

• New technology

• Recovery reuse

• Materials

• Energy

• Water

7

• Corporate Management Systems
• -Includes EMS into day to day corporate
  management processes
• Overall Policy commitments , objectives and
  targets
• Responsibilities, communication and training
• Procedures, audits and management reviews

• Environmental / Sustainability reporting
• Internal external reports
• Government general guidelines guidelines

• Financial reports
• Internal external reports

• Improved Corporate Cost Accounting
• Integrated EMA with financial cost allocations
• Targets for resource productivity
• Measuring and monitoring progress

• Resource efficiency
• Incremental improvements

• Cleaner technology
• Step change improvements

• Labor
• Capital
• others

• New technology

• Sustainable design

• Process optimization

• Recovery reuse

• Materials

• Energy

• Water

8

• There is a simple rule about the environment. If
  there is waste or pollution, someone along the
  line pays for it
• Think about it. If we throw it away, we had to
  buy it first. So we pay twice, once to get it,
  once to take it away.
• Lee Scott , Oct 24 , 2005

9

• The accounting system is the basis for decisions
  made by management
• All managerial decisions are based on discretion
• Discretion is
• the capacity to distinguish between what is
  right and what is wrong, lawful and unlawful,
  wise or foolish, sufficiently to render one
  amenable and responsible for his acts
• Blacks Law Dictionary

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So where is the future

• Given the expansion of CSR (et al) activities
• and the real but often ignored potential of
  misuse of managerial discretion in the name of
  CSR
• EMA if of great value in addressing these gaps in
  the business system
• Also in addressing the Volume problem
• Volume Revenues

11
So where do we go (where have we been)

• On EMA its simple
• EMAN
• UNEWGEMA
• IFAC
• Everybody/
• Every business accounting use
• SMA is a new problem
• Are there gaps in the system related to social,
  HS accounts?
• Or as many people imply, those gaps are only
  related to the social impacts of environmental
  issues
• Either way we dont know, but we do need to
  find out

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WEBSITE
www.un.org/esa/sustdev/sdissues/consumption/Marra
kech/conprod10Y.htm

• Contact
• Tarcisio Alvarez-Rivero
• Division for Sustainable Development
• UNDESA
• Email alvarez-rivero_at_un.org