Artikel EMA
Artikel EMA
ABSTRACT:
Industries are giving importance to the environmental issues increasingly in the performance evaluation criteria.
Environmental Management Accounting (EMA) provides such combined monetary and physical information aimed at
sustainable development, pollution prevention and cleaner ways of production. This paper presents a guideline of an
accounting framework that an industrial unit can undertake to keep track of its environmental cost, savings and earnings
and for betterment of its environmental management strategy. This paper also focuses on the linking of physical and
monetary information of an Indian paperboard and paper production unit for the year 2011-12 considered as the case
study unit. . The study prepares the eco – balance sheet or average input – output balance sheet for all materials
consumed and wastes generated by the unit. This provides the basis which the unit can use to assess its environmental
performance in detail. It also calculates the environmental cost under heads like Material purchase costs of Non - Product
Output (NPO), Waste & Emission Control Costs, Prevention and other Environmental Management Costs and Research
and Development Costs segregated by environmental domain. Environmental savings and earnings made by production
unit have also been calculated providing an overall picture of the environmental performance and future potential of the
case study unit.
KEYWORDS: Environmental Management Accounting; Paperboard and Paper Production Unit; India
covering specialty papers through one of the best-equipped directly assigning them to the process or products or services
paper laboratories in the country. The operating capacity of that created the cost. By incorporating EMA the most important
the unit is 32000 tonnes per annum (TPA) and is a specialist and unique benefit that an organization derives is that it helps
in the production of fine papers and tissues. The product the management to identify the various ‘hidden’ environmentally
range of this unit comprises a wide variety of paper products induced costs connected to the overall activity. These relates
like opaque papers for fine printing like the Bible, dictionaries, mainly to the costs to account for waste and wasted materials
cigarette tissues, medical grade papers, anti-rust papers, connected to
electrical insulation papers, decor surface, printing and barrier a. Purchase, processing and administration
papers. The Unit is ISO 9001, ISO 14001 and OHSAS 18001 b. Labour employed
certified (Chakraborty& Roy, 2014). The case study unit under c. Energy used
consideration is located in West Bengal, India covering a total d. Machinery abrasion cost resulting from processing wasted
area of 26.31 Acres. [1 Acre = 43,560 square feet(sq.ft)]. The materials
built-up area of the mill is 5,48,296 sq. ft, road area 1, 11,788 e. Additional space required for storing [Sulaiman & Ahmed,
sq. ft and parking area is 32, 503 sq. ft. The unit produced 2006]
25,791 Metric Tons (MT) of output of specialty and tissues
paper in 2011- 12; this is the year in which the survey and Thus, EMA helps towards calculating not only the total
study was made. environmental costs but also towards distribution of
environmental costs under different relevant heads like Material
In this communication the definition and concept of EMA, purchase costs of Non - Product Output (NPO), Waste &
materials and methodology along with details of data collection Emission Control Costs, Prevention and Other Environmental
is discussed in Section 2, Section 3 presents calculations Management Costs and Research and Development Costs.
based on the data collected for evaluating EMA for Paperboard With these types of information, the case study unit was
and Paper production unit in West Bengal, India. Section 4 accessed for EMA.
presents the findings and analysis of the gathered data. The
paper concludes with the future potential of EMA for the case 2.2 Data collection Methodology for the Case Study Unit
study unit which is given in Section 5. Before conducting this case study, the unit under consideration
did not maintain or monitor its environmental costs in an
2.MATERIAL AND METHODS: organized way. After proper identification and quantification of
2.1 Environmental Management Accounting (EMA): environmental costs, these costs were verified in the existing
Definition and Concept system.
As per the definition given by the Expert Working Group of EMA of the production unit has been done by adopting two
United Nations Division of Sustainable Development (UNDSD) methods of assessment:
EMA encompasses identification, collection and analysis of 1. Drawing up an eco-balance sheet or average input- output
information for internal decision making. The said information balance sheet [As per the International Guidelines on
is of two types: Environmental Management Accounting, the International
• Physical information about the use, flow and densities of Federation of Accountants, 2005].
resources like energy, water, materials that are being used 2. Assessing the total environment related costs based on cost
and resultant wastes and emissions (as physical information data and subsequently converting them into environmental
is directly related to many of the environmental impacts of performance in the “cost and savings” form, thereby making
organizational information. Also, materials purchase costs them more relevant from the perspective of a business.
are major cost driver in many organizations) The data framework is based on the Environmental cost
• Monetary information on environment related costs, earnings assessment scheme suggested by the UN- DSD EMA
and savings [Jasch, 2010]. working group [Jasch, 2010].
This has been made via
EMA provides a combined approach [IFAC, 2005] so as to
increase material efficiency, reducing environment related • Quantification of the physical information through the
risks and impacts. EMA is mainly applicable for calculating preparation of Eco Balance Sheet using input output data.
internal environmental management initiatives and decision • Providing better understanding of the environmental costs
making in an organization. EMA based information is also in monetary terms thereby helping towards identification of
used for external reporting purposes. EMA based data have opportunities to reduce them. This is also a pre- requirement
vast field of application. These include: for calculating the savings potential.
• Assessment of annual environmental costs or expenditure • Quantifying the financial involvement in undertaking
• Calculating costs, savings and benefits of environmental corporate environmental activities.
activities or projects or projects relating to material and A part of related data was collected from available secondary
energy efficiency sources such as annual reports of the unit. However, a major
• Environmental performance evaluation and relevant source of data was collected through face-to-face interviews
indicators based on a pre–set questionnaire [Annexure A] with the
• Disclosure of environmental expenditures, investments and management personnel who are involved in management
liabilities to external agencies or stakeholders accounting or environmental management accounting.
• External environmental or sustainability reporting
• Monitoring and reporting of emissions [Jasch, 2010] 3. CALCULATIONS
3.1. Eco-Balance Sheet or Average Input- Output Balance
It is a common practice for organizations to hide environment Sheet: Concept and Relevance
related costs by placing them in overhead accounts instead of Systematic maintenance of material flows of input and
output in physical terms can help an organization to improve Sustainable Development (UN – DSD) Working Group.
its environmental performance. “Eco–Balance Sheet” or
“Average Input- Output Balance Sheet” provides an account Environmental costs comprise both internal and external
of inflow of all natural resources (like energy, water, materials) costs encompassing all costs that are incurred in relation with
used by the organization and also outflow of its generated environmental damage and protection. EMA mainly focuses
wastes”. Precisely materials entering a company during a year on corporate environmental costs like costs incurred to deal
should leave its premises either in the form of a productive with contaminated sites, effluent control technologies and
output like final product and materials stored on site or in the waste disposal. It is important to keep a monetary account
form of generated wastes or emissions. Material inputs include of these environmental costs as they have an impact on both
any material (raw materials, by-products and packaging), management accounting (assessing the cost of pollution
energy or water that enters an organization. Outputs are all control equipment, earnings from recycled materials, monetary
products, by–products, wastes and emissions that leave an savings introducing new energy efficient equipments) and
organization. Product outputs are products and by-products financial accounting (evaluation and reporting of the current
including packaging. Non–Product Output (NPO) constitutes environment related liabilities of an organization) [Jasch, 2010].
solid and hazardous wastes, air emissions and waste water.
All items are measured in physical units; in terms of mass in The four categories of environment related costs namely
kilogram (kg) and tons (t) or energy in terms of Mega-joule 1. Material purchase costs of non - product output
(Mj) and Kilo-watt (KWh). The term output however does not 2. Waste & emission control costs
include capital items like equipment, buildings, land etc. as 3. Prevention and other environmental management costs
these items do not enter or leave the organization as frequently and
as other physical materials. The input–output balance sheet is 4. Research and development costs are considered.
maintained by organizations at annual or a monthly basis and
should be linked to the bookkeeping, cost accounting, storage These four categories of environment related costs are further
and purchase system. Quantitative data can be converted classified according to eight environmental domains. These
into an Eco–Balance Sheet with the help of a simple equation include
[Sulaiman& Ahmed, 2006] as stated below in equation [1.1]: A) Protection of
1. Air Quality and Climate
Material Inputs = Product Outputs (goods produced in units) + 2. Biodiversity and Landscape
Non-product Outputs 3. Soil and Groundwater
(waste + emissions)………………………………………….1.1 B) Management of
4. Waste
This information relating to resources consumption and 5. Wastewater
wastes generation can help to create awareness amongst the C) Protection against
employees leading towards better monitoring and control of 6. Radiation
resources. Table 1 provides an account of the types of input 7. Noise and Vibration
and output to be incorporated in an eco-balance sheet using 8.Others
equation [1.1].
Distribution of environmental costs by environmental domain
On the basis of the data gathered from the case study categories is useful for complying with external reporting
production unit, using a preset questionnaire, the eco–balance requirement and also for showing interesting and useful results
sheet or average input–output balance sheet has been and trends for internal management and decision-making
constructed and presented in Table.2 below based on the purposes. The most widely used application is benchmarking
format given in Table 1. environmental costs of the same organization by domain from
year to year.
3.2 Environment - Related Costs and Earnings: Information
in Monetary terms The total environment related costs of an organization can be
The categories of relevant monetary information relating to accessed on the basis of the collected environmental data and
EMA are dependent on the purpose for which it is to be used. then segregating the environmental cost, savings and earnings
These may be linked to investment appraisal, assessment of thereby giving a more clear picture of the environmental
total costs or budgeting decisions. The data relating to this performance.
monetary information can be collected for an organization as a
whole, or for particular sites, product or service lines etc. The Environmental Earnings are derived from sales of by– products,
data gathered should be able maintain a co-relation between sale of scrap or waste (for reuse by another organization),
inputs and outputs (in physical units) classified according to subsidies for environment related research projects, sale of
appropriate cost categories. excess capacity of waste treatment facilities, revenues from
insurance for environment related claims, investment grants
Table 3 shows the categories of environmental costs segregated for equipment etc. For example, the wastes generated by the
by environmental domain of the paperboard & paper production unit are being taken care of by environment friendly ways that
unit for the year 2011-12. This was collected from the case in turn helps towards earning of revenues.
study unit after multiple follow up and interactions. In the case
study of paperboard & paper production unit an attempt is • All hazardous chemical containers are de-contaminated,
made to ascertain the total amount of the environment related and effluent is treated through effluent treatment plant.
costs and earnings based on the ideal framework prescribed Decontaminated bags, jars / containers are sold to recyclers.
for this purpose by Euro-Stat United Nations Division on • Boiler cinders generated in production process are sold off
to the local municipality at regular intervals and are used waste sold off to local board mills (2%). Along with solid wastes
in land filling. hazardous wastes generated includes Effluent Treatment Plant
• Fly ash which is also generated as a waste in the [ETP] waste like sludge (94%) etc. which are sold off to the
production process are sold off to the cement and brick local authorized board mills. Non – product output includes
manufacturing companies that are used for manufacturing CO2 emissions of 2,57,273 tons. Out of the total waste water
bricks. At present 70% of the generated fly ash is used in discharged, 94.51% is recycled in the effluent treatment plant
the manufacturing of fly ash bricks and clay bricks and the and rest 5.49 % of polluted water is included in the waste –
balance quantity is in land filling / road construction. sludge, generated through production process.
• Biomedical wastes (after sterilization) are transferred to
hospitals and local municipality who are authorized for So long the evaluation of environmental performances has been
handling biomedical wastes. discussed based on physical information relating to input and
output. Another common approach of presenting environmental
Environmental Savings: These kinds of savings are realized performance is by showcasing the monetary value of NPO and
or earned from reduction in use of materials, energy use and other hidden costs and the resultant environment-related costs
waste generation because of improvements in efficiency; in- and earnings.
site recycling, cleaner production; green purchasing, green Here the environmental costs of the production unit have been
research and design; environmental planning and systems assessed by the environmental domain (to the extent data was
(for e.g. by implementing EMA systems). These types of available). The environmental costs are also maintained by the
savings are earned through implementation of preventive said unit but not by following the cost categories segregated by
environmental management activities. The resultant monetary environmental domain in detail. This can be comprehended from
savings is calculated by comparing reduced costs to the Table 3. The said Table 3 reveals that the total environmental
previous higher costs. costs for the year 2010 - 11 was Rs.261 lakhs as compared
to 239 lakhs in 2011 -12.The percentage of environmental
The detailed discussion of the results from the gathered data costs in the total sales revenue (net) of the unit is 1.2% for the
as exhibited in Table 2 and 3 is done in Section 4 i.e. Results year 2011-12. The environmental earnings by selling of scrap,
and Discussion section. wastes etc. for the year amounted to Rs.7,43,37,347/-.
4. RESULTS & DISCUSSION Category wise distribution of environmental costs shows that
The eco-balance sheet or average input–output balance sheet materials purchase and processing costs of Non – Product
(Table 2) showcasing the resources consumed and wastes Output (NPO) is responsible for 28.63% (Rs.68, 40, 112) of
generated (in physical terms) by the unit could be constructed the total environmental costs (Rs.239 lakhs). Analysis of
based on the gathered data. It was understood that though the environmental costs by cost categories further reveals that
unit keeps an account of the environment related data (both in contributing share of wastes and emission control costs in
physical and monetary terms) but they are not maintained in the total environmental cost is 47.34% (Rs.113, 15, 700) for
an organized way. Again, managerial personnel are not much 2011- 12.Prevention and other Environmental management
aware regarding the nuances of preparing of eco balance sheet costs accounts for 13.75% (Rs.32,86,898) whereas research
and preparation of environment related costs and earnings and development costs accounts for the rest 10.28 %
as per the format of Table 3. However, through constant (Rs.24,57,209) in the total environmental costs of the production
persuasion with managerial personnel of the case study unit. However, the information relating to NPO of raw material
unit, environmental cost and savings information in monetary purchased was not available. Availability of which could have
terms could be gathered which were assigned to the four increased the percentage contribution under this category to
environmental cost categories; Material purchase costs of Non more than 28.63%. Depreciation amount(Rs. 6,12,700) of the
- Product Output (NPO), Control Costs of Waste & Emissions, equipment controlling air emission has been categorized under
Prevention and related Environmental Management Costs and waste and emission control cost head and categorized under
finally Research and Development Costs. However, domain air plus climate domain. The annual depreciation is recorded
wise distribution of environmental costs could not be made as 100% on environment related equipments (Annexure B).
due to non- availability of such information. Likewise cost of operating materials (Rs. 45, 03,000) like
chemicals used in maintaining wastewater treatment plant
Input - output balance sheet (Table 2) reveal that input has been categorized under waste and emission control cost
constitutes materials, energy and water. Materials include and has been placed under the domain of waste water. For
60.20% raw materials (wood, pulp etc.), 17.09% auxiliary all other environmental cost categories, the sum total of the
materials and 22.34 % operating materials (chemicals, costs has been given but segregation under different domain
lubricant etc.). Energy used includes electricity partly (58.29%) could not be made due to unavailability of detailed data as
purchased from the state grid (consumed in production process it is not maintained by the case study unit. Table3 exhibits
and in wastewater treatment plants) and 41.70% of energy information of environmental costs classified according to its
is derived from the captive plant owned by the unit (which is domain. Detailed classification of this kind proves to be useful
consumed in production process and generating steam). Of to production units in complying with environmental reporting
the total water used by the plant, 93.01% is recycled and the requirements to the external stakeholders. Again, interesting
rest 6.99% is the extracted groundwater. and useful results can be identified for initiating internal
decision making and management purposes. It is evident that
On the other hand, output includes both product and non – some benefits have been derived as a result of keeping track
product output. Product output constitutes 67% primary product of environmental information and activities as given in Table 4.
i.e. paper and rest 33% by- products. Non – product output
includes solid wastes disposed of as landfill (98%) and solid Table 5 reveals the gaps in data collected from the case study
unit, which could not be filled up based on the information 2. Burritt, R. L., Hahn, T., & Schaltegger, S. (2002).
available. The table shows the monetary environmental cost Towards a comprehensive framework for environmental
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Annexure – B
Workings Note 1: Calculation of Environmental costs
Table 2: Eco – Balance Sheet or Average Input – Output Balance Sheet of the Case Study Paperboard and Production Unit (2011- 12)
Input Products Contribution Product Output + Non – Product Output Contribution
Materials
60.20% Product Output
Raw Material : 67%
17.09% i) Primary Product( Paper)
Auxiliary Materials 33%
22.34% ii) By – products (Scraper)
Operating Materials
(chemicals)
Non - Product Output
( Wastes & Emissions)
Wastes :
a) Solid wastes disposed off ( as Landfill)
b) Solid wastes sold out
Hazardous wastes
a) Sold off (Effluent Treatment Plant [ETP] waste like sludge,
used by local authorized board mills)
b) Reclaimed ( Used oil, by Pollution Control Board)
Energy Air Emission
i) Purchased from Grid 58.29% Sulpher-di-oxide (SO2)
386 mg/ Nm3
ii) Generated from Steam Turbine using coal 41.70% (Highest contribution amongst all air emissions)
CO2 emissions 2,57,273 tons
Water
Groundwater 6.99% Wastewater 5.49%
Recycled 93.01% Recycled 94.51%
Source: Primary Data collected from face – face interview
Table 3: Environmental Costs & Earnings of the Case Study Paperboard and Production Unit (2011-12)
Waste Soil + Ground
Air + Climate Waste Others Sum
Environmental Domain Water Water
(in Rs.) (in Rs.) (in Rs.) (in Rs.)
(in Rs.) (in Rs.)
Environment related Cost Categories
I .Material purchase costs of
Non - Product Output
Raw Materials
Packaging 3,74,270
Auxiliary materials -
Operating materials 14,505
31,18,916*[W.N.1,
Energy
Annexure2]]
Water -
Processing Costs of Non - Product
-
Output
Subtotal 68, 40, 112
II. Waste & Emission Control Costs
6,12,700 * *[W.N.1,
Equipment depreciation 6,12,700
Annexure2]
Operating materials and services 45, 03,000 45, 03,000
Internal Personnel 20,00,000
Fees, Taxes and fines 42,00,000
Subtotal 113, 15, 700
III. Prevention and Other
Environmental Management Costs
External Services for environmental.
10,00,000
management
Internal personnel for environmental
22,86,898
protection
Subtotal 32,86, 898
IV. Research and Development Costs 24,57,209
I - IV. Environment -related Cost total 239,00,000
Environment - related Earnings Total 743,37,347
Total Environment - related Costs
& Earnings
Note : 1. Noise + Vibration and Biodiversity + Landscape has not been considered in this case stud
Note : 2. For detail workings please refer to Annexure 2, working note 1
Source : Data collected from face to face interview from personal communication with the management and
assumptions as below :
Assumptions made:
1. NPO of Packaging ( 1% of the reported purchase cost of packaging of Rs. 3,74,27,053) = Rs. 3,74,270 /-
2. NPO of Operating Material ( 1% of the reported purchase cost of packaging of Rs. 14, 50, 499) = Rs. 14,505 /-
3. Internal personnel for environmental costs ( 1% of the reported salary of Rs. . 22, 86, 89, 813 ) = Rs. 22, 86, 898 /-
4. Research & Development ( 57..39% of the reported cost of Rs. 42, 81, 598) = Rs. 24, 57, 290 /-
Subtotal