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The paper explains how environmental management accounting improves the company's efficiency by quantifying the total cost of its operations. The paper examines how Baxter has demonstrated the value of environmental management accounting and the savings in taking this long-term approach. The paper does point out the short-term opportunity costs in implementing an environmental management accounting system but highlights the long-term savings that will be realized.
Full Environmental Cost Accounts
Full Environmental Cost Accounts
From the Paper:"The concept of full environmental cost accounting has emerged specifically in response to the rise in the cost of environmental protection. Over the past twenty years, environmental protection costs have risen dramatically, in particular with the increase in environmental regulations (UNSDS, 2001). Because environmental cost accounting takes environmental costs formerly ascribed to general cost accounts and places them in specific environmental cost accounts, companies are better able to determine environment-related inefficiencies. As an example, in many firms waste is charged according to the material cost. What full environmental cost accounting would do in such a scenario would be to drill down and determine all of the costs of that waste. In addition to the materials costs, there are handling costs, storage costs and disposal costs at a minimum. If the waste is improperly disposed of, there could be other costs as well. With full environmental cost accounting, management would be able to identify all of these costs and trace them back to the waste, such that they have a full sense of how much that waste costs, rather than just a sense of the material costs (Horney, Hendrikson, Lave & Matthews, n.d.).
"Another example would be pollution abatement. Under full cost environmental management accounting, the costs of pollution abatement are included in the firm's total costs. Thus, it is not merely the cost of producing a good or service, but the cost of disposal of residual inputs and abatement of pollution that are also factored into the cost equation. While this increases the total cost of producing a given good or service, it can drive the company to find lower cost means of production or disposal. Thus, the cost of the good is now considered to be the cost of restoring the world to the state in which it was before the good was produced."
Sample of Sources Used:
- No author. (2001). Environmental Accounting Procedures and Principles. United Nations Division for Sustainable Development. Retrieved August 10, 2009 from http://www.un.org/esa/sustdev/publications/proceduresandprinciples.pdf
- Schaltegger, Stefan & Burritt, Roger. (2002). Environmental Management Accounting and the Opportunity Cost of Neglecting Environmental Protection. Retrieved August from http://books.google.de/books?id=y4G_Vqy7gYkC&pg=PA265&lpg=PA265&dq=environmental+management+accounting+opportunity+costs&source=bl&ots=9Lp5noVdcr&sig=6Qg7uf6Oj3N2WnVFxMT37OKaa44&hl=en&ei=LSiASvq8JsHDsgb2pr35Ag&sa=X&oi=book_result&ct=result&resnum=1
- Rikhardsson, Pall M.; Bennett, Martin & Bouma, Jan. (2005). Implementing Environmental Management Accounting. Retrieved August 10, 2009 from http://books.google.de/books?id=Tr1l1SqsfecC&pg=PA47&lpg=PA47&dq=environmental+management+accounting+opportunity+cost&source=bl&ots=A0Tq7Ivm8i&sig=-PgBr9uualPyZxo_cwPmrMPNlT4&hl=en&ei=sSiASuSkMtKRsAb5zpjZAg&sa=X&oi=book_result&ct=result&resnum=4
- Horney, Cheryl; Hendrikson, Chris; Lave, Lester & Matthews, H. Scott. (no date). Full Cost Environmental Accounting. Carnegie Mellon University. Retrieved August 10, 2009 from http://gdi.ce.cmu.edu/gd/Research/fca.pdf
- No author. (2003). ecoBudget - A Model of Environmental Budgeting. International Council for Local Environmental Initiatives (ICLEI). Retrieved August 10, 2009 http://www.unon.org/dgefftp/NCSAResources/General%20Reading%20Material/49%20Environment%20Budgeting%20-%20Examples%20Sep04.pdf
Cite this Persuasive Essay:
Environmental Management Accounting (2012, January 30) Retrieved August 13, 2022, from https://www.academon.com/persuasive-essay/environmental-management-accounting-150319/
"Environmental Management Accounting" 30 January 2012. Web. 13 August. 2022. <https://www.academon.com/persuasive-essay/environmental-management-accounting-150319/>