Page 197 - APM Integrated Workbook STUDENT S18-J19

Environmental management accounting

What is environmental management

accounting (EMA)?

Organisations are becoming increasingly aware of the environmental impacts of their
actions.

EMA:

Is concerned with the accounting information needs of managers;
1 identifying and estimating the cost of environment-related activities
and seeking control of these costs.

Types of environmental cost Comment

Conventional costs, e.g.  Traditional management accounting
energy, raw material. systems would have hidden these in
overheads hindering identification and
control.

 EMA identifies and separately monitors the
usage of, say, energy and material.

Contingent costs, e.g. future  In the past these were ignored by
compliance or decommissioning managers, who tended to focus on the
costs. short-term.

 EMA estimates these costs, builds them into
project appraisal and seeks to reduce them,
e.g. through process redesign.

Relationship costs, e.g. image  Traditionally ignored by managers who
costs relating to production of were unaware of existence.
environmental information for the
public.  EMA makes managers aware of these costs
in order to focus their attention on managing
the risk of them occurring.

Reputational costs, e.g. lost As for relationship costs.
sales due to failure to address
environmental issues.

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