Environmental accounting: an essential component of business strategy

Business Strategy and the Environment
Bus. Strat. Env. 13, 65–77 (2004)
Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/bse.395
ENVIRONMENTAL
ACCOUNTING: AN ESSENTIAL
COMPONENT OF BUSINESS
STRATEGY
Mehenna Yakhou*1 and Vernon P. Dorweiler2
1 Georgia College and State University, USA
2 Michigan Technological University, USA
Environmental accounting is on an
emphasis of the research is on generation
expansion path. With increasing social
of reports and their standards, for the
focus on the environment, accounting
range of business and regulatory
fills an expectation role, to measure
purposes. Copyright © 2004 John Wiley &
environmental performance. The status of
Sons, Ltd and ERP Environment.
environmental awareness provides a
dynamic for business reporting its
environmental performance. Examining
Received 18 October 2002
the integration of environmental policy
Revised 12 May 2003
with business policy is the focus of this
Accepted 9 July 2003
research. The business firm’s strategy
includes responding to capital and
INTRODUCTION
operating costs of pollution control
equipment. This is caused by increasing
public concerns over environmental
Environmental accounting is an inclusive
field of accounting. It provides reports
issues, and by a recent government-led
for both internal use, generating
trend to incentive-based regulation. This
environmental information to help make
paper describes the environmental
management decisions on pricing, controlling
component of the business strategy,
overhead and capital budgeting, and external
producing the required performance
use, disclosing environmental information of
reports and recognizing the multiple
interest to the public and to the financial com-
skills required to measure, compile and
munity. Internal use is better termed environ-
analyze the requisite data. Special
mental management accounting (Bartolomeo
et al., 2000).
For the purpose of this research, both
* Correspondence to: Dr. M. Yakhou, The J. Whitney Bunting
internal and external uses are considered. The
School of Business, Georgia College and State University,
Campus Box 15, Milledgeville, GA 31061-0490, USA.
contribution of multiple disciplines provides
E-mail: mehenna.yakhou@gcsu.edu
a base for determination of environmental
impacts and related costs. Specific details of that
Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment
determination serve one or both of the uses.

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M. YAKHOU AND V. P. DORWEILER
Impact of business activity on the environ-
• Senior managers at the institutional level
ment is found in several forms.
establish environmental policy and assess
environmental performance.
• Media: air, water, underground pollution.
• Environmental managers at the operational
• Targets: drinking water, land and habitat for
level implement environmental policy.
endangered and threatened species.
• Environmental staff is involved in capital
• Global sites: oceans, atmosphere, land mass.
decision-making for environmental control
An array of pollutants, including toxic,
equipment.
hazardous and ‘warming’, is accountable to
So multiple functional activities are included:
business activities. From this range of
capital budgeting and expense budgeting;
environmental impacts, multiple disciplines
financial and non-financial performance
are needed for analysis of effects, and for
measurements; budget control and product
integration into management decisions and
costing. Multi-disciplinary teams have a clear
accounting reporting.
distribution of tasks and functions, at institu-
Non-accounting disciplines needed include
tional levels and at operational levels.
(i) environmental science,
Note that relationships in environmental
(ii) environmental law and regulation,
reporting are integrated. The data sources are
(iii) finance and risk management and
based in design, engineering and operations
(iv) management policies and control systems.
records, rather than broad areas such as energy
costs and waste minimization. The extensive
The range of environmental costs, energy and
data are converted as input to the accounting
material use and waste disposal, insurance and
system.
fines and penalties, shows participation of
A side benefit is the decreased need for allo-
multiple disciplines, along with accounting
cation of environmental costs to products and
sub-disciplines. The yield of this effort is the
processes. Also, the nature of environmental
decision support system, in which environ-
costs determines the capital investment assess-
mental impact can be determined specifically
ment method. Discounted-cash flow is pre-
in the following terms:
ferred, rather than payback period, given the
longer time horizon for benefits from environ-
• FCA, full cost accounting,
mental capital investment (Grinnell and Hunt,
• TCA, total cost assessment,
2000).
• LCC, life-cycle costs,
• LCCA, life-cycle cost analysis, and
• TQEM, total quality environmental
management.
ENVIRONMENTAL ACCOUNTING
Results of environmental reporting include
Before tracing the role of business strategy and
full-cost pricing and ‘eco-accounting’. Also,
environmental accounting, a base understand-
an environmental management system, EMS,
ing of environmental accounting is useful. This
provides a databank of environmental perfor-
is the purpose of the following.
mance data, from which environmental cost
At the outset, environmental accounting has
accounting, ECA, relating all environmental
proceeded through a period of uncertain
costs, can be directly produced (Lally, 1998).
status. Mathews (1997) describes the develop-
Cross-functional goals and procedures indi-
ment in four phases:
cate that business policy and environmental
policy are intertwined (Dorweiler and Yakhou,
1970s
descriptive, with normative
2002); see Figure 1.
models of conduct;
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ENVIRONMENTAL ACCOUNTING
BUSINESS POLICY
and

ENVIRONMENTAL POLICY
MISSION
Boards of Directors
Constitution
and
Institutional
Investors
Environmental
policy
Corporate sustainability
STATUS-ANALYSIS
Business
purpose
Environmental
protection
GOALS
Use of resources
Responsibility to
environmental
Capital principles*
Workforce
NEPA prevent environmental
Markets
degradation
Media, location
OBJECTIVES
Performance targets
Statutory policy
by location, market
Statutory standards
STRATEGY
Compliance at maximum
Compliance within standards
cost effectiveness
and preserving the
environment
IMPLEMENTATION
Supply chain
Neighbors, community
Manufacturing
sustainability of resource use
Distribution system
TACTICS
Set mode of operations for
Use of resources
maximum productivity
material, energy, other natural
resource ‘greening’ product,
process
OPERATIONS
Optimize production
Avoid violations
Minimize waste
Emissions, discharges of
within operating guidelines
pollutants
Operate within permit
MONITOR & CONTROL
Financial
statements
Environmental
impacts
Operations reports
‘Voluntary Environmental
Reporting Initiative’
Financial and Management
comparability
Accounting
transparency
Environmental Accounting
STRATEGIC ADJUSTMENTS
Redeploy resources
Volunteerism**
Correction tactics
Agreement with agency
Implementation
*environmental principles: Valdez principles.
**Voluntary Environmental Reporting Initiative – VERI.
Figure 1. Integrating business policy and environmental policy (Dorweiler and Yakhou, 2002)
1981–1990
debate on the role of accounting
now
the role of environmental
in disclosing information on
accounting is viewed as
environmental activities;
measuring environmental per-
1991–1995
maturing of environmental
formance exceeding regulatory
accounting, in making en-
standards. This role was
vironmental disclosures, and
initiated in about 1996.
in launching environmental
auditing;
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M. YAKHOU AND V. P. DORWEILER
An environmental accounting framework is
example, incentive-based regulation, are
yet to develop; such a framework would con-
incorporated in analysis and reporting (Fryxell
tribute standards for reporting, and standards
and Vryza, 1999).
for accounting. The state of the regulatory
framework is given by Mathews (1997). The
emphasis of a framework is to provide a
Environmental cost accounting
general fit over the area regulated:
An advanced step of development of environ-
(i) raise awareness of environmental issues;
mental accounting is development of environ-
(ii) develop guidelines to assist identification
mental cost accounting (ECA). Cost accounting
of environmental issues and evaluation
is defined as use of the accounting record to
and reporting of those issues;
directly assess costs to products and processes
(iii) provide education programs across
(Lally, 1998). In this approach, costs are
disciplines focused on environmental
accounted for by their specific causes.
issues and their accounting treatment and
Environmental cost accounting directly
(iv) develop practices of environmental
places a cost on every environmental aspect,
accounting, with recommendations on
and determines the cost of all types of related
best practices.
action. Environmental actions include pollu-
tion prevention, environmental design and
A fifth direction is to link teaching with devel-
environmental management. Past approaches
opments and practices in business.
on environmental impacts were based mainly
Such a framework is to demonstrate that the
on environmental cleanup costs and past
accounting profession is accepting the chal-
product disposal.
lenge of a contemporary issue: environmental
The contribution of ECA is to account for a
impact of business activity (Medley, 1997).
way of doing business; see Box 1. Arbitrary
Accounting professionals appear to focus on
allocation of environmental overhead is elimi-
the role of environmental accounting, under
nated or reduced, and true costs of products
consideration that environmental issues are
are determined. Environmental cost account-
fundamental to human survival. The nature
ing in producing environmental costs is
of environmental accounting practice is
described in two ways (Grinnell and Hunt,
considered next.
2000).
Environmental management accounting
• One is the A–B–C framework, looking for
‘cost drivers’ at organizational levels: unit,
Environmental management accounting
batch, product-sustaining and facility.
(EMA) is defined as the generation, analysis
• The other is a cost-of-quality framework,
and use of financial and related non-financial
which defines environmental costs in pre-
information, to support management within a
vention, appraisal and internal and external
company or business (Bartolomeo et al., 2000).
failure. This cost-of-quality approach sup-
EMA integrates corporate environmental and
ports pollution prevention as an appropriate
business policies, and thereby provides guid-
management strategy.
ance on building a sustainable business.
EMA analyzes environmentally related
Another significant contribution of ECA is its
financial costs and benefits, contributing to
linkage to ISO 14000. The environmental data
recognition of the high and increasing levels of
in an environmental management system
capital and operating expenses, for pollution
(EMS) based on ISO 14000 standards is con-
control equipment, and environmental taxes.
sistent with environmental cost accounting.
Also, possible environmental initiatives, for
Where a company adopts ISO 14000 standards,
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ENVIRONMENTAL ACCOUNTING
Box 1. Environmental accounting practice in Europe
environmental policy has become a proactive
(Bartolomeo et al., 2000). Environmental management
decision of business organizations.
accounting practice in Europe is compared with practice
An alternative view is given as business’s
in the United States.
response to a threat of interventionist regula-
Environmental management is based on management
tion. An organized lobbying effort, to forestall
accounting with activity-based costing as a main
additional, more interventionist regulation,
analytical approach to determining environmental
has been unsuccessful through the history
costs and to quantify cost savings due to environ-
of environmental protection since the 1970s
mental performance.
Environmental effects are established by setting
(Mathews, 1997). Further, the cost of response
hypotheses for whether or not to adopt proactive
to increasing regulation provides a real
practices: pollution prevention and accounting for
incentive to adopt a proactive approach to the
environmental costs-to-causes.
environment.
Environmental policy can be compared between the
The proactive approach is not only more
US and Europe. Environmental management is found
cost-effective, but it also opens new business
to be involved in the same activities with a substan-
tial difference in regulatory enforcement: the US uses
avenues; see Table 1. For new business, world-
liabilities and penalties while the European Union
wide and in ‘green’ markets (eco-labeling
does not. Equivalence is shown by the prominent role
and recycling), opportunities are open to a
of environmental management in European business
company that is expressly environmental, not
organizations and business strategies. European com-
necessarily an extreme ‘green’ company.
panies are adopting ISO 14001 standards at a faster
rate than US companies.
From new avenues, cost savings are
As noted in the body of the paper, the International
achieved through energy conservation and
Standards Organisation develops standards for use
waste minimization. These savings, which
independently or for use within an EMS by an
increase profitability, are generated by produc-
organization.
tion and engineering disciplines. For example,
the contribution from strategic management
specialists and the technical expertise required
to address product problems of recycling and
ECA is a tool, part of a process for treating the
re-engineering will be jointly necessary in the
environment as integrated with (i) business
development of strategies of reducing impacts
strategy and (ii) decision-making (Lally, 1998).
on the environment. In both approaches,
the company’s competitive advantage is
improved.
INTEGRATING ENVIRONMENTAL
POLICY IN BUSINESS STRATEGY
The interdisciplinary approach to
environmental accounting
Development and implementation of new
An inescapable feature of environmental
business strategies for meeting environmental
accounting is the need for multiple disciplines.
challenges will be a central issue for companies
Inescapability is found in several dimensions
in the years ahead. Accounting for environ-
of environmental accounting (Grinnell and
mental costs, and associated accounting edu-
Hunt, 2000).
cation, will play critical supporting roles.
The adoption of environmental policy as a
• First is the need to position environmental
component of business policy is currently con-
policy in the overall business policy and
sidered voluntary (Gallhofer and Haslam,
strategy.
1997). The term adoption implies that busi-
• Second are the disciplines involved in
ness policy was without express concern for
producing environmental accounts and
the environment, and since the mid-1990s
their reporting.
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M. YAKHOU AND V. P. DORWEILER
Table 1. Business uses of environmental accounting data (Gallhofer and Haslam, 1997). The integration of environmen-
tal policy with business policy has been adopted by enterprising business companies; see Figure 1. This action provides
costs savings, avoiding regulatory processes, and finding new business opportunities. Business uses are described in
program terms and the targets for the programs.
Program
Target
Government directed
Common sense initiatives
Pollution control
Transportation partners
Use of vehicles
Green Lights Program
Energy efficiency
Waste Wise Program
Recycling
Climate Wise Program
Emissions control
Corporate sponsored
Proactive environmental policies
EMS, ISO 14001
Environmental accounting and auditing
Performance
Environmental life-cycle and supply chain management
Products and suppliers
Integrated environmental program
EMS and full-cost accounting
• Third is the audit requirement to assure
consider users of the accounting reports. An
compliance with environmental regulation
array of goals for users is aligned as follows
and appropriate reporting by environmental
(Bebbington, 1997):
accounting.
• to assure compliance with regulations;
• Fourth is education of students, future prac-
• to increase efficiency of resource use energy
titioners, to provide technical and legal
and material, and to decrease waste;
bases in academic preparation and to avoid
• to reduce or minimize damage to the
‘discipline insularity’.
environment over the life-cycle of products
Possible reasons for multiple disciplines
and processes and
given by Mathews (1997) include organiza-
• to continually improve environmental
tional legitimacy and the need to influence the
performance in the above areas.
capital markets. There are other motivating
These goals are direct goals for operational
factors, whose relative importance of any
managers, and are integrated goals for general
particular influence is not known in general.
management and for environmental managers;
The contribution of other disciplines must be
see Figure 1.
recognized. Accounting research will need to
be interdisciplinary in nature. Development
will provide challenges and opportunities
Training environmental auditors
different from those of the past, but, also, will
Environmental auditing is a determinative
lead to a much richer set of data, or more
function (Medley, 1997). Credibility of the envi-
comprehensive set of models for the solution
ronmental audit is crucial. From a discipline
of problems of environmental disclosures
point of view, environmental scientists initially
(Bebbington, 1997).
performed the audit. That audit was to
determine compliance with regulation. It has
since advanced to determine compliance with
Producing environmental accounts
management’s environmental controls, noted
A concise way to view the disciplines involved
above to be higher requirements than
in producing environmental accounts is to
statutory.
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ENVIRONMENTAL ACCOUNTING
A discipline development is to train envi-
products and processes. (See below ‘Environ-
ronmental auditors separately from financial
mental management’.)
auditors (Medley, 1997). This development
again places impetus on standards in
INTEGRATING THE
environmental accounting; these are reliable
ENVIRONMENTAL DEPARTMENT
measures of environmental impact, assets and
WITH BUSINESS FUNCTIONS
liabilities. The audit is thereby based on reli-
able environmental representation in the
An objective of integration of the environmen-
accounting record and performance. The
tal management department with operational
environmental scientists have reduced their
functions is to enhance environmental perfor-
knowledge into the accounting records, along
mance of the organization (Fryxell and Vryza,
with non-environmental accounts (financial
1999). So the levels and the mechanisms of
accounts), to the performance analysis. In this
integration, to achieve improved environmen-
way, accountants are offered environmental
tal performance, are of organizational interest.
opportunity and are prepared to deal with
One level of integration is aimed at involv-
those demands.
ing environmental considerations in every day
It is recognized that the enabling potential of
decisions. That integration is based at the level
environmental accounting arises from its
of adopting a corporate culture into environ-
engagement with practice (Bebbington, 1997).
mental awareness. This crucial approach puts
There are clear examples of business and
the impetus for considering environmental
environmental accounting having beneficial
impacts into business strategy and decisions.
impacts on the environment within business
The other level of integration is organiza-
activity. These areas, and users, identify data
tional, deciding which business functions are
gathered for accounting purposes. Specifically
to be integrated. As functions have a conven-
regarding environmental accounting, quantify-
tional purpose in the hierarchy of the organi-
ing environmental costs is a target within
zation, integration takes the form of
accounting. The extent of disciplines needed is
coordination. Organization theorists identify
seen from generating environmental cost and
such mechanisms as conventional and as
cost savings within complex, interdependent
non-conventional. Non-conventional is in the
processes and facility locations.
context where the environment exerts
The weight of non-accounting disciplines
direct influences on the organization through
is shown in education of accountants on env-
regulations, international standards and
ironmental activities (Gibson, 1997). The multi-
shareholders.
discipline approach is useful as it involves
The two sets of integration mechanisms are
potential users in the same education effort.
the following (Fryxell and Vryza, 1999):
The operational managers are shown the need
for data and the nature of environmental
conventional
non-conventional
reports. General management is shown
department schemes
cross-departmental
potential for improvement in environmental
relations
performance.
central decision-making
management
Educating environmental managers repre-
information
senting the multiple disciplines is important
systems
for base line reasons (Wycherley, 1997). Oper-
written policies and
ad hoc group
ational managers consider that accounting
procedures
mechanisms
systems are created for financial purposes and
formal planning
integrator roles
not for the operational needs in their manag-
output and behavior
socialization
ing and controlling environmental impacts of
control
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M. YAKHOU AND V. P. DORWEILER
It is recognized that conventional mechanisms
Box 2. A business environmental management system
exist, and are displaced by non-conventional
(Sutherland, 2002).
ones to cope with time-oriented changes; these
Goal: Shaping environmental success
changes are in the environment or are required
Setting and attaining goals for sustainable
environmental performance.
future responsibility shared by all sectors:
government, industry, environmental
groups and citizens
Environmental management
Goals for 2010
From these needs and mechanisms, the func-
Fully implement globally environmental
tion of an environmental management depart-
policy
ment is to facilitate integrative development.
Promote environmental ethics
Implement principles of sustainable
To achieve this integration, the department
development and eco-efficiency into
is responsible for the following (Wycherley,
business strategies
1997):
Guiding principles and environmental code
• scanning and monitoring the changing
Community awareness and emergency
environmental context of the business;
response
Process safety code
• identifying critical information;
Employee health and safety code
• requiring change to environmental practice
Product stewardship code
and performance;
Distribution code
• validating and channeling the information
Pollution prevention code
to ensure compliance with regulatory
Business principles
mandates.
Company values
Re: people, customers, products and
Note that these functions may constitute both
services, conduct code and guiding
direct influences and contextual change.
Principles
Each function represents a discipline spe-
Auditing performance management
cialization, and hence makes a unique contri-
Auditing program
bution to environmental performance (Fryxell
Business standards
and Vryza, 1999). Resolution of differences is
Government regulation
the clearest for technical functions (production
Industry initiative
Environmental health and safety auditing
and legal), and is most complex for non-
plan
technical functions (marketing and public
Frequency and level
relations). The long-run environmental goal
brings a balanced, optimal level among the
functions.
• energy efficiency and conservation and
The environmental management system
• opportunities to enhance environmental
impacts.
A useful vehicle for integration is the environ-
mental management system (EMS), with ISO
The EMS provides control and coordination by
14001 standards; see Box 2. The EMS integrates
the environmental management department.
functions through each function’s interfacing
The reason is to cover gaps due to functional
with input and output of that system.
differences in departmental roles (Fryxell and
The means toward activating an EMS are
Vryza, 1999):
found in outcomes from the EMS:
(i) bridge differences in basic values, due to
• reduction of emissions and waste,
specialized training;
• product design for the environment
(ii) communicate, avoiding technical jargon;
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ENVIRONMENTAL ACCOUNTING
(iii) recognize separations in organization and
Environmental management should be part
location;
of every corporate business strategy. Not only
(iv) resolve expectations on rewards and
are there specific environmental effects in
conflicts on reward criteria.
strategies and plans, but there are also envi-
ronmental programs to reduce and prevent
These differences are viewed as conflicts. In the
environmental impact.
conflict situation, integration is viewed as a
resolution by alignment of the organization
with the firm’s environmental goal.
Corporate environmental policy and the
The corporate EMS is identified as based in
environmental management system
surpassing environmental obligation under
Benefits of an EMS, utilizing ISO 14000 (see
regulation. The EMS is said to provide specific
Table 1), provide a competitive advantage on a
tools (including life cycle accounting and
worldwide basis. Competitive advantage is
environmental cost accounting), and, also,
over companies that do not have a high level
general practices to evaluate environmental
of environment performance from such an
performance. Environmental auditing is a
EMS.
main evaluation mean.
From this integrative view of an EMS, major
Rondinelli and Vastag (2000) suggest
components of an EMS are described as an
that a voluntary, above-regulatory-standard
operational approach to its implementation
approach is needed to advance national envi-
(Rondinelli and Vastag, 2000):
ronmental policy. Interdependent principles of
economic viability, energy conservation and
• a senior management commitment to an
environmental quality constitute a compre-
environmental policy;
hensive environmental policy, and are given as
• a planning process that identifies all
the needed impetus. Basing the EMS on ISO
environmental aspects of operations, sets
14001 standards puts the corporation in global
objectives for environmental improvement
markets and provides a competitive advantage
and outlines effective environmental
(Owen and Lehman, 2000).
management programs;
• a structure of responsibility for environmen-
tal management, training, awareness and
The corporate environmental policy
competence, documentation and com-
Rondinelli and Vastag (2000) make the case for
munication, procedures for control of
a corporate environmental management
environmental impacts and preparation
policy. After reviewing the present status of US
for emergency preparedness and response;
environmental regulation, as command and
• a system for monitoring and measurement,
control, Rondinelli and Vastag show that the
for reporting non-conformance and for
proactive approach to environmental manage-
taking preventative and corrective actions
ment consists of
and
• a management review process, to assess the
• life-cycle analysis of products and processes,
effectiveness and adequacy of the EMS.
• environmental policies of companies in the
supply chain,
The design of the EMS is to provide assurance
• recycle, remanufacture and redesign of
of continuous improvement of performance.
products,
• monitoring and auditing environmental
Development of environmental standards
performance and
• accounting for environmental costs and
A main premise of the EMS is use of standards
savings.
of an international nature (ISO 14000); see
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M. YAKHOU AND V. P. DORWEILER
Box 3. This use of internationally based stan-
compliance with their environmental per-
dards provides a comparison to ascertain
formance. The other potential problem is
whether companies are complying with
responding to inquiries based on these
expected environmental performance.
enhanced measures of environmental per-
There are dual problems with this approach.
formance by government agencies, financial
One is the assumption that the company
institutions and shareholders.
is using the standards to go above legal
Role of environmental manager
Box 3. ISO development of environmental standards
The environmental manager is a central
(Lally, 1998).
focus of environmental management in the
company. Key roles of this management
The international environmental management stan-
function are (Wycherley, 1997) to
dards are set in the ISO 14000 process. The resulting
standards are voluntary for a company and are higher
• assess, review and monitor the environmen-
standards of performance than from regulation. The
standard-setting process was set as part of the Global
tal performance of the company,
Environmental Initiative in 1992 in connection with
• monitor legal requirements,
the UN Conference on Environment and Develop-
• implement and manage the EMS and
ment.
• promote better environmental awareness in
Key advantages of ISO 14000 are
the company.
(i) to set environmental performance standards
above regulation and
The function has a wide range of responsibili-
(ii) to set the company as environmentally alert.
ties. The more direct are
The first advantage moves the company above an
• at the base level, systems to ensure
increasingly complex set of regulations, yet in full
compliance. The second advantage puts the company
compliance with environmental standards
into an internationally competitive position in
(regulatory and EMS),
markets. Both are achieved by incentives to adopt pol-
• at an on-going level, increasing efficiency in
lution prevention practices.
use of resources and reduce waste, and
The following are components of the ISO 14000
• at an overall level, avoiding risks of damage
standard-setting process:
to the environment.
• ISO 14001 – the basic framework of an EMS; imple-
ments corporate environmental policy
An integrative view of these responsibilities
• ISO 14004 – a checklist to implement ISO 14001 and
includes involvement in new product and
method to assess environmental impacts
process development, capital project autho-
• ISO 14031 – setting objectives and targets of EMS
• ISO 14010 – guidelines for environmental auditing
rization and an environmental stance with
• ISO 14011 – guidance for audit procedures
shareholders, consumers and employees.
• ISO 14012 – qualification criteria for environmental
From this pivotal location in the organiza-
auditors
tion, the environmental manager’s view of
• ISO 14020 – standards on environmental labeling
environmental accounting is somewhat deter-
• ISO 14040 – guidance for assessment of product
life-cycle environmental impact
minative of effect. Environmental managers
view environmental accounting as providing
Environmental cost accounting (ECA) is the integrat-
the financial data with the technical–functional
ing feature of an EMS. All elements of environmental
measures are brought together in the ECA calculation.
improvements required by the role of the envi-
By recognizing the complete set of environmental
ronmental manager. Areas of conflict are iden-
costs, the company can be both environmentally
tified as accountants’ concern over their own
responsible (for example, Responsible Care program)
costs to the detriment of needs in measuring
and cost-effective in recouping its costs.
performance.
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