Eco-Management Accounting: Based upon the ECOMAC research project sponsored by the EU’s Environment and Climate Programme (DG XII, Human Dimension of Environmental Change)

277 Pages·1999·7.96 MB·English

by  Matteo Bartolomeo, Martin Bennett, Jan Jaap Bouma, Peter Heydkamp, Peter James, Foppe de Walle, Teun Wolters (auth.)

EGO-MANAGEMENT ACCOUNTING
EGO-EFFICIENCY IN INDUSTRY AND SCIENCE
VOLUME3
The titles published in this series are listed at the end of this volume.
Eco-Management Accounting
Based upon the ECOMAC research project sponsored by the EU's
Environment and Climate Programme (DG XII, Human Dimension of
Environmental Change)
by
Matteo Bartolomeo
Fondazione Eni Enrico Mattei, Milan, Italy
Martin Bennett
University of Wolverhampton, United Kingdom
Jan Jaap Bouma
Erasmus University Rotterdam, The Netherlands
Peter Heydkamp
IBM Germany, Stuttgart, Germany
Peter James
Sustainable Business Centre, Congleton, United Kingdom
Foppe de Walle
ENERO-TNO, Delft, The Netherlands
and
Teun Wolters
ElM Small Business Research and Consultancy, Zoetermeer, The Netherlands
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SPRINGER-SCIENCE+BUSINESS MEDIA, B.V.
A C.I.P. Catalogue record for this book is available from the Library of Congress.
ISBN 978-90-481-5166-0 ISBN 978-94-017-1354-2 (eBook)
DOI 10.1007/978-94-017-1354-2
Printed an acid-free paper
AII Rights Reserved
© 1999 Springer Science+Business Media Dordrecht
Originally published by Kluwer Academic Publishers in 1999
No part of the material protected by this copyright notice may be reproduced or
utilized in any form or by any means, electronic or mechanical,
including photocopying, recording or by any information storage and
retrieval system, without written permission from the copyright owner
Contents
Foreword ....................................................................................................................... 7
Preface ........................................................................................................................... 9
1 The Ecomac Framework ............................................................................................ 13
1.1 Introduction ........................................................................................................ 13
1.2 Environmental management... ............................................................................ 14
1.2.1 Financial costs and benefits of environmental action ............................ 15
1.2.2 Integrating environment into mainstream business ............................... 16
1.2.3 Environmental performance measurement and reporting ..................... 17
1.2.4 Life cycle management... ....................................................................... 18
1.2.5 Sustainable development ...................................................................... 19
1.2.6 Conclusions ........................................................................................... 19
1.3 Overview of accounting and the environment in business ................................. 20
1.3.1 Four approaches .................................................................................... 20
1.3.2 Eco-management accounting ................................................................ 23
1.4 The Ecomac Survey ........................................................................................... 24
1.4.1 Cross-functional goals and procedures ................................................. 25
1.4.2 Some emphasis on pollution prevention ................................................ 25
1.4.3 Moderate but growing importance ......................................................... 25
1.4.4 Diverse sources of information .............................................................. 26
1.4.5 Limited allocation of environmental costs .............................................. 26
1.4.6 Equivalence of environmental investments .......................................... 27
1.4. 7 Short-term decision making perspectives .............................................. 27
1.4.8 Data reliability ........................................................................................ 28
1.5 The Ecomac Cases ............................................................................................ 28
1.5.1 Germany ................................................................................................ 28
1.5.2 Italy ........................................................................................................ 29
1.5.3 The Netherlands .................................................................................... 31
1.5.4 The United Kingdom and Ireland ........................................................... 32
1. 6 Implications for the hypotheses .......................................................................... 34
1.6.1 Hypothesis 1: Establishing logical relationships .................................... 35
1.6.2 Hypothesis 2: Enhancing the financial superiority of pollution-
prevention measures ............................................................................. 35
1.6.3 Hypothesis 3: Identification and allocation of internal environmental
costs ...................................................................................................... 35
1.6.4 Hypothesis 4: Potential of activity-based costing (ABC) ........................ 36
1. 7 The need for a framework .................................................................................. 36
1.8 Accounting .......................................................................................................... 39
1.8.1 Objectives .............................................................................................. 40
1.8.2 Data inventory ........................................................................................ 40
1.8.3 Analysis and decision-making techniques ............................................. 45
1.8.4 Performance measurement ................................................................... 45
1.9 Environmental and energy management... ......................................................... 53
1. 9.1 Objectives .............................................................................................. 53
1.9.2 Data inventory ........................................................................................ 54
1.9.3 Analysis and Decision-making Techniques ........................................... 57
1.1 0 Other management.. ........................................................................................... 62
1.10.1 Objectives .............................................................................................. 62
1.10.2 Data Inventory ....................................................................................... 62
1.10.3 Analysis and Decision-making Techniques ........................................... 66
1.11 Organisational structure, culture and processes ................................................ 69
1.12 Sustainable business .......................................................................................... 73
1.13 Conclusions and implications ............................................................................. 75
1.13.1 Conclusions ........................................................................................... 75
1.13.2 Implications ............................................................................................ 78
2 Environmental management and management accounting:
a survey among 84 European companles ................................................................ 81
2.1 lntroduction ......................................................................................................... 81
2.1.1 Overview ................................................................................................ 81
2.2 Problemarea ...................................................................................................... 81
2.3 The survey .......................................................................................................... 83
2.3.1 Hypotheses and approach ..................................................................... 83
2.3.2 The importance of Eco-management accounting .................................. 86
2.4 Different elements of management accounting .................................................. 87
2.4.1 Introduction ............................................................................................ 87
2.4.2 Capital budgeting ................. : ................................................................. 89
2.4.3 The bookkeeping system ....................................................................... 90
2.4.4 The allocation of environmental costs ................................................... 91
2.5 A look into different sectors ................................................................................ 94
2.5.1 Introduction ............................................................................................ 94
2.5.2 The technological nature of environmental measures ........................... 94
2.5.3 Presence of environmental systems ...................................................... 95
2.5.4 Management accounting's importance to environmental
management. ......................................................................................... 97
2.5.5 Allocation of environmental costs .......................................................... 99
2.5.6 Indicators for the selection of environmental projects ......................... 100
2.6 Eco-management accounting and company sizes ........................................... 101
2.6.1 The effect of company size on the usefulness of environmental
management accounting ..................................................................... 101
2.6.2 The technological nature of environmental measures ......................... 103
2.6.3 Presence of environmental management systems ............................. 103
2.6.4 Management accounting's importance to environmental
management ........................................................................................ 105
2.6.5 Allocation of environmental costs ........................................................ 10 6
2.6.6 Indicators for the selection of environmental projects ......................... 107
2.7 Conclusions and recommendations for research ............................................. 108
2. 7.1 Conclusions ......................................................................................... 108
2. 7.2 Recommendations for further research ............................................... 109
3 Developments in eco-management accounting:
an analysis of the case studies ............................................................................... 111
3.1 Introduction ....................................................................................................... 111
3.2 Nature of the companies .................................................................................. 111
3.3 Issues of eco-management accounting ........................................................... 113
3.3.1 The need for cost control. .................................................................... 113
3.3.2 Corporate incentives ........................................................................... 115
3.3.3 Other incentives ................................................................................... 115
3.3.4 Possible barriers .................................................................................. 116
3.4 Eco-management accounting ........................................................................... 121
3.4.1 The context of Eco-management accounting ...................................... 122
3.4.2 The fields requiring eco-management accounting ............................... 124
3.5 Some conclusions ............................................................................................ 128
4 Summaries ofthe case studies ............................................................................... 129
4.1 Company-based experience in eco-management accounting:
three case studies in Germany ......................................................................... 129
4.1.1 Defining environmental costs for the Philips Glass factory
in Aachen ............................................................................................. 129
4.1.2 Defining environmental costs for Sony Deutschland ........................... 143
4.1.3 Relevant environmental cost information concerning IBM's
Logistics Center in Germany ............................................................... 158
4.2 Company-based experience in eco-management accounting:
four case studies in Italy ................................................................................... 165
4.2.1 Environmental liability costs and risk management at ltaliana
PetroliSPA .......................................................................................... 165
4 2.2 The allocation of environmental costs at SGS-Thomson
Microelectronics ................................................................................... 172
4.2.3 Towards a better insight into environmental costs at AGIP S.P.A. ...... 179
4.2.4 Identification of environmental costs at Cartiera Favini SPA ............... 185
4.3 Company-based experience in eco-management accounting:
four case studies in the Netherlands ................................................................ 191
4.3.1 Environmental accounting at Meerssen papier. ................................... 191
4.3.2 Environmental costs at a chemical Company ...................................... 199
4.3.3 Environmental costs at a furniture Company ....................................... 205
4.3.4 Environmental costs and the reuse of consumer replaceable
units by Xerox in Venray ...................................................................... 211
4.4 Company-based experience in eco-management accounting:
four case studies in the UK and Ireland................................................ .. .... 218
4.4.1 Developing an environmental financial statement at Baxter
International's Irish Manufacturing Operations facility ......................... 218
4.4.2 Life cycle costing and packaging at Xerox UK .................................... 228
4.4.3 Cost of waste at Zeneca ...................................................................... 236
4.4.4 Evaluation of the environmental performance of products
at XYZ pic ............................................................................................ 241
Bibliography .............................................................................................................. 253
Annex: Questionnaire .............................................................................................. 259
Biographies ..............................................................................................................2 77
Foreword
The ECOMAC project (Eco-management Accounting as a Tool of Environmental Man
agement) has provided a framework for linking environmental management with man
agement accounting. It was funded in Theme 4, 'Human Dimensions of Environmental
Change' in the EU Environment and Climate Research Programme.
The project is of high policy relevance by contributing to the on-going debate on eco
management accounting, reporting and indicators. It is also an area needing further re
search.
I would like to thank the research team, companies that participated as associated con
tractors, and the advisory panel.
Jonathan Parker
DG XII/D-5, European Commission
Theme on Human Dimensions of Environmental Change
7
Preface
The ECOMAC project
This document is the final report on the project 'Eco-management accounting as a tool of
environmental managemenf (ECOMAC). This research project was conducted under the
Environment and Climate Programme (Human Dimension of Environmental Change) of
the European Commission (DG XII).
The ECOMAC project investigated how companies are using or intend to use environ
mental costs and benefits figures in support of their decisions, and what they have been
doing to remedy the limitations of conventional management accounting in this area. The
research was largely explorative in nature, but the project also produced a structured
overview of the subject and made suggestions and recommendations as to how compa
nies could improve their own environmental accounting.
The contents of this report
The fieldwork was mostly done in 1996 and 1997. This report deals with the results of this
fieldwork, and comprises a survey of 84 European companies - both small and medium
sized enterprises (SMEs) and large corporations-and 15 company case studies (most of
them large international enterprises), which provided illuminating empirical materials, in
terms of problems and solutions.
Before going on to chapters specifically devoted to the survey and the case studies, the
report presents the Ecomac Framework, which relates results from the literature to the
project's fieldwork, producing a consistent and illuminating overall picture of eco
management accounting in relation to management in general and environmental man
agement in particular.
The partners
The successful execution of the ECOMAC project has been accomplished by a consider
able number of people and companies. The Project Management Board - the project's
board of contractors and steering committee - consisted of one representative of each of
the following partners:
1. Fondazione ENI Enrico Mattei (Italy);
2. IBM Deutschland (Germany);
3. Erasmus Centre for Environmental Studies (the Netherlands);
4. United Kingdom Centre for Economic and Environmental Development (UK Ceed) (the
United Kingdom); and
5. TNO Centre for Technology and Policy Studies (the Netherlands).
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