Green accounting

Environmental cost accounting is a process developed in the 1990s concept that is used for planning, managing and controlling operations in organizations. Since then, numerous conceptual approaches, eg based on activity-based costing or the concept of " variable costs " have been developed to allow a wider application.

Definition

The conventional cost accounting serves to identify, document and analyze all in a pre-defined system (eg, the entire organization or a department ) costs and the allocation of these to units, activities, processes, and products. It examines margins of individual products and income and expenditure of the entire organization. The environmental cost accounting, however, deals with the detection of direct and indirect costs of corporate environmental impacts at a reasonable cost, the causation and allocation of consideration their impact on the achievement of operational goals. Under corporate environmental costs here costs are understood to be caused by the environmental impacts of the organization. They consist of environmental costs ( aftercare Direction and integrated environmental protection), residue formation costs ( purchase, transport u, processing of problematic substances ) and product costs.

In the environmental costs it includes both internal environmental costs ( within the company ) as well as external environmental costs ( outside the company ), which must have no close temporal relation to the causative activity. Although often only costs are considered incurred internally by the actual, well-known and measurable impact on the environment (eg Wastewater Charges Act ) or the reduction of environmental impacts ( eg CO2 offsetting ), the modern understanding of environmental cost also includes all emissions and waste material- related material flow costs, including purchasing, personnel, depreciation and disposal costs.

Position in Sustainability Management

Due to the environmental cost accounting gain business or individual departments an insight about the exact amount of environmentally induced costs and are thus able to compare these costs with the corresponding income or benefits. Through the approaches of environmental cost accounting cost reduction potential with simultaneous environmental benefits can be determined. This information assists the company management in making decisions about future activities in an enterprise or a department. Furthermore, the eco-effectiveness as well as the eco-efficiency of a company can be increased in many cases.

Limitations and weaknesses

An environmental cost accounting on the basis of traditional cost accounting is historical data and makes no statements about the future development. Like the conventional cost accounting, it also has the problem of plausible allocation of overhead costs to the cost centers and cost units. From an environmental perspective, the lack of consideration of external costs is to complain about. Environmental aspects which have no direct financial consequences for the company, usually disregarded.

Practice examples

Lammsbräu

The Lammsbräu as medium-sized brewery (about 80 employees) created since the early nineties operational material and energy balances for the optimization of operational resource efficiency. 1996 an environmental controlling system was introduced to connect operational material and energy flows with the respective cost streams. The full costs of Lammsbräu were around 8 million euros, of which 5.8 percent "primary environmental costs ". The primary environmental costs costs are referred to their origin directly to the operating company goal of "environmental protection " assign. The " primary environmental costs " are divided into environmental relief costs ( costs incurred for the prevention and / or reduction of operational resources consumption) and environmental impact costs (referred to costs incurred due to the use of the environment for the operational service process). In addition, an approach was developed which will be shown to what extent external costs can be avoided by introducing an environmental company policy. Information on environmental costs in activities Lammsbräu be published annually in the eco-controlling report.

Ontario Hydro

The Ontario Hydro is one of the largest electric utilities in North America with eight power plants using fossil fuels, twelve nuclear power plants and 69 hydroelectric power plants. Since 1974, the company aims to quantify and value externalities. As monetization approaches the " Willingness to pay" and " Willingness to accept" at the center. From 1992 to 1999, translated employees of Ontario Hydro own cost accounting system to incorporate external costs into corporate accounting component: the so-called "full cost accounting" ( FCA).

When FCA internal and external (environmental) costs associated with the environmental effects. Of the possible external effects, the five categories were: mortality, disease episodes, cancer cases, crop failures, damage to buildings for the company classified as relevant to the decision and integrated into the model of the FCA. The Ontario Hydro won the recognition that current potential external costs in the near future may become internal costs. The FCA has been integrated into an overall business plan to consider these aspects in the strategic orientation. However, methodological problems in detection, quantification and economic valuation of environmental damage could not be solved by the FCA.