...Abstract Environmental costing serves as a mechanism for identifying and measuring the full spectrum of environmental costs of current production processes and the economic benefits of pollution prevention or cleaner processes, and to integrate these costs and benefits into day-to-day business decision-making. For the last decade, environmental accounting has gained increased importance in practice, of which cost accounting receives most attention. This paper gives an overview of the approaches of environmental cost accounting. Key Words: Environmental costing, Environmental costs, Environmental accounting Introduction In recent years, Environmental Costing has been attracting increasing attention throughout the world. There are various definitions of environmental costing, but essentially, an environmental costing system can be thought of as a management accounting system that has been refined so as to enable users of the system to be provided with information that reflects the environmental performance of the organisation. The United Nations Division for Sustainable Development has referred to environmental costing simply as “doing better, more comprehensive management accounting, while wearing an environmental hat that opens the eyes for hidden costs”. The information generated from an environmental management accounting system might be of a financial nature (for example, the quantification of environmental costs), or it might be provided in physical terms (such...
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...(CSR), compliance, reporting, Communication, stakeholders, Organizational change, TRM. Type of paper: conceptual essay 1. Introduction The end of 20th century observed unprecedented prominent changes in corporate strategy and management towards sustainable thinking - the emergence of sustainability as corporate strategy, and making sustainability an integral part of a company’s business strategy in order to obtain the bottom-line benefits .But, this is requires a dramatic changes in the organizations’ performance against the economic, social and environmental (triple) bottom lines , and paying more and more attention to their values and responsibility .Sustainability is also necessitates the transformation of mindset and commitment of the leadership and organizational performance to include key stakeholders. Managing sustainability holistically is challenging and requires a sound management framework that integrates environmental and social performance with economic business performance. 2. Conceptual and theoretical analysis Sustainability performance measurement (SPM) Yet few, if any, companies can respond definitively to the questions, “Which of your products, processes, services, and facilities are really sustainable? Is it a sustainable organization?” Answering these questions is requiring the ability to measure sustainability of economic and non-economic factors in a quantitative or at least qualitative approach. Sustainability has been defined as economic development...
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...Chapter 1: A new framework for implementing corporate sustainability Key points: ▪ Sustainability performance is the effect of corporate activity on the social, environmental, and economic fabric of society. ▪ A balance between economic progress, social responsibility, and environmental protection, sometimes referred to as the triple bottom line, can lead to competitive advantage. ▪ The evaluation of social, economic, and environmental impacts of organizational actions is necessary to make effective operational and capital investment decisions that positively impact organizational objectives and satisfy the objectives of multiple stakeholders. ▪ The financial payoff of a proactive sustainability strategy can be substantial. ▪ To become a leader in sustainability, one needs to articulate what sustainability is, develop processes to promote sustainability throughout the corporation, measure performance on sustainability, and ultimately link this measurement to corporate financial performance. ▪ Corporate citizenship is an important driver for building trust, attracting and retaining employees, and obtaining a “license to operate” within a community. ▪ Corporate citizenship is much more than charitable donations and public relations—it’s the way the company integrates sustainability principles with everyday business operations and policies and then translates all of this into bottom-line results. ▪ For sustainability to be long lasting and useful...
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...Chapter 1: A new framework for implementing corporate sustainability Key points: ▪ Sustainability performance is the effect of corporate activity on the social, environmental, and economic fabric of society. ▪ A balance between economic progress, social responsibility, and environmental protection, sometimes referred to as the triple bottom line, can lead to competitive advantage. ▪ The evaluation of social, economic, and environmental impacts of organizational actions is necessary to make effective operational and capital investment decisions that positively impact organizational objectives and satisfy the objectives of multiple stakeholders. ▪ The financial payoff of a proactive sustainability strategy can be substantial. ▪ To become a leader in sustainability, one needs to articulate what sustainability is, develop processes to promote sustainability throughout the corporation, measure performance on sustainability, and ultimately link this measurement to corporate financial performance. ▪ Corporate citizenship is an important driver for building trust, attracting and retaining employees, and obtaining a “license to operate” within a community. ▪ Corporate citizenship is much more than charitable donations and public relations—it’s the way the company integrates sustainability principles with everyday business operations and policies and then translates all of this into bottom-line results. ▪ For sustainability to be long lasting and useful...
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...Executive Summary Chevron commits huge resources to tackle environmental risks; this report studies the viability of doing so. We find that (1) it is using a right combination of internal and external tools to increase workers’ awareness, diversify environmental risks and mitigate moral hazard at the same time; and (2) the Decision Making (“DEMA”) system is valuable to the company in providing a systematic framework to quantify environmental risks. Introduction Chevron operates in the business of petroleum and natural gas exploration, production, refining and marketing, and as such faces huge environmental risks such as oil spills and exhaust emissions. Throughout the years Chevron has honoured its claim in “Protecting People and the Environment” by committing a higher proportion of revenues to environmental spending than its competitors. However, environmental risks and the benefits of managing them are by nature hard to be quantified, while the costs are obvious and substantial. This report studies the viability of Chevron’s investments in two steps. First, it examines the tools Chevron uses to manage environmental risks, and explains why they are different from those used to manage other risks. Second, the report will analyse the pros and cons of the novel DEMA system, an attempt by Chevron to systematically quantify environmental risks. What tools is Chevron currently using to manage environmental business risk? We have categorized the tools currently adopted by Chevron...
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...source of information, can meet the criteria of sustainability. This article starts out by analysing the different approaches to corporate sustainability, then it proposes the reinterpretation of the most important accounting principle, the ‘going concern’ principle. In the following section it outlines the characteristics of accounting from the point of view of sustainability. Finally, it proposes ways of transforming green accounting, both in name and content, into sustainability accounting. Keywords: corporate sustainability; the ‘going concern’ principle; green accounting (environmental accounting); sustainability accounting Journal of Economic Literature (JEL) code: M41 INTRODUCTION According to the Brundtland Commission (1987, p. 43), “Sustainable development is development that meets the needs of present generations without compromising the similar needs of future generations. The concept interprets sustainable economic, ecological and social development as a unity.” Today’s companies must also comply with the challenges stemming from this approach, and therefore they must also implement economic, social and environmental goals. The reduction of pollution, the equitable distribution of wealth and improved social services pose a challenge to management, as the value of the company has to be increased for the stakeholders in such a manner that social and environmental responsibility should not be neglected. b) CORPORATE SUSTAINABILITY The concept of sustainable development...
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...Saturday, July 24, 2010Environment Environmental accounting A key to sustainable development Environmentally idyllic Bengal. K. M. Nazmul Islam and Dr. Ahmed Kamruzzaman Majumder THE concept that every nation might acknowledge the economic role of the environment in its income accounts is neither a hasty shift nor a quick practice; it has been under discussion globally since the 1960s. Unfortunately in Bangladesh the contribution of the environmental goods and services in the national economy has been ignored for a long time. In the changing circumstances of global climate it is high time that we wake up and recognize the contribution of the environment to sustain our economy. For a long time, conventional indicators like Gross Domestic Product (GDP), Gross National Product (GNP) and Net Domestic Product (NDP) were used around the world to construct national accounts and as a measure of the economic progress of a country and standard of living. However, these traditional measures of economic activity failed to be responsive because of the fact that economy cannot operate without the support of the natural environment. National accounts allow depreciation allowance for manufactured assets, while the contributions of environmental assets to economy are not valued and hence no depreciation allowance is made for these assets. Thus, in Bangladesh, omission of the degradation and depletion of the country's natural capital will lead to over estimation of the national income figures...
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...Introduction The main problem is the "green accounting and green eyeshades Twenty Years Later" (Thornton, 2013). Green accounting is also referred to as environmental accounting, it is designed to better measure sustainability measures to expand the welfare state and products, investment, including non-market values, and in particular, the environment-related goods and services. In addition, the green accounting is aimed at the cost and benefit of the protection of the environment and resource depletion of natural capital. It is one of two measurement values are usually not included in the national accounting system, such as the gross domestic product (GDP). Although different in view of how the green accounting, and the technology is used worldwide. Green accounting has many purposes. First, the aim is to use an isolated and elaborate on each of the environmental flow and also to the traditional securities account. By doing so, it can provide an estimate of the total expenditures for the protection of the environment, and the gross domestic product can counter with defensive expenditures. The second purpose is the connection between the physical resource accounts and the financial environment. This will cover equity and natural resources, including those of the economic system. The green accounting to increase capital concept, the system environment, economic (SEEA). This will help to improve maintenance of natural capital and human capital. Green accounting is typically use the traditional...
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...Environmental Fundamentals University of Phoenix ENV/100-Principles of Environmental Science Environmental Fundamentals An analysis of the fundamental principles concerning environmental science provides and understanding of the study and also the importance of human behaviors having effects on the natural environment. Principles of science and technology assist with determining how environmental problems occur and also assist with generating solutions to minimize problems from arising. The concept of environmental sustainability surrounds itself with sustainable and unsustainable human interactions dealing with the environment, each of which have affected and also affects natural resources both past and present. Environmental Science Environmental science is an interdisciplinary study that focuses on the manner in which humans interact with the environment. The study also focuses on combining information from many other disciplines to include biology, chemistry, and economics as it is concerned with conditions that may have an effect on the environment and also organisms living within the environment. In addition, environmental science attempts to establish necessary principles that outline and determine how the natural world functions. These principles are used to create practical solutions to issues impacting the environment. Problems concerning the environment are typically very complex hence providing scientific explanations and making scientific evaluations helps...
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...Diagnostic control systems, serving mainly as management by exception tools, are used to monitor organizational outputs and compare them to the preset standards, in order to correct possible deviations and keep the intended strategy on track. --- Beliefs systems: the explicit set of organizational definitions that senior managers communicate formally and reinforce systematically to provide basic values, purpose and direction for the organization; --- Boundary Systems: they delineate the acceptable domain of activity for organisational participants. Unlike belief systems, they do not specify positive ideals. Rather, they establish limits, based on defined business risks, to opportunityseeking. --- Interactive Control Systems: they are the formal information systems that managers use to involve themselves regularly and personally in the decision activities of subordinates. They focus attention and force dialogue throughout the organisation. They provide frameworks, or agendas, for debate, and motivate information gathering outside of routine channels. (b) Belief systems are broad and inspirational in order to appeal to all organizational levels. Thus, they are not specific enough to be used as standards or as a basis for performance evaluation. Since they are highly inspirational and encourage the organization to unfocused search for new opportunities, the organization risks a dispersion of energy and resources. In order to balance the positive effects of belief systems, and focus organizational...
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...limits of the market mechanism in environmental management Bo Gustafsson Swedish Collegium for Ad6anced Study in Social Sciences, SCASSS, Gota6agen 4, S-75236 Uppsala, Sweden ¨ ¨ Abstract This paper tries to evaluate the role of the market mechanism in environmental management and warns against reductionist views on the causes and remedies of environmental damages. According to some of these views, proper pricing of the environment and extensive use of market mechanisms in environmental management would solve environmental problems. But various conditions tell against such simplifications, namely: the complex causality behind environmental damages; the complexity of the functions and values of nature; as well as limitations of the market mechanism in coping with the functions and services of nature. Several of those limitations — the difficulties of defining and enforcing property rights to nature’s functions and services; the pervasiveness of externalities conditioned by the public goods characteristics of many environmental functions and values; the difficulties in enticing, processing and using information about environmental goods; and the high transaction costs caused by all these circumstances—often rule out contracts and trading of environmental services. It is less known that the basic cause of market existence and extension, namely specialization and division of labour, have negative environmental effects. With respect to environmental policy, conceptual problems are analyzed...
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...1. Why are markets themselves not able to respond effectively to environmental issues? Is public policy a more useful concept to understand how the commons is managed in our society? Why or why not? Markets are not able to respond effectively to environmental issues because they cannot determine the value of the environment and its elements. It is not a part of the exchange or transaction and market systems were not designed to factor in environmental costs. Public policy is definitely a useful concept in understanding how the commons are managed in our society. It allows citizens to effectively understand the many different rules and regulations that exist in order to protect as well as conserve the environment. It places value upon what markets cannot determine. 2. Which definition of public policy makes the most sense to you personally? What essential elements are there to your definition? How does public policy differ from business policy? Personally, the definition of public policy that makes the most sense is that “…public policy is a specific course of action taken collectively by society or by a legitimate representative of society addressing a specific problem of public concern that reflects the interests of society or particular segments of society.” The essential element to this definition that rings most true to me is the last portion; that public policy is a representation of the interests of society as either a partial or a whole. Public policy differs from...
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...Economy and Environment Program for Southeast Asia ENVIRONMENTAL ECONOMICS A TEACHERS’ MANUAL Undergraduate Level By Herminia A. Francisco Bui Dung The Pham Khanh Nam August 2005 1 PREFACE This manual was written to support the teaching of undergraduate environmental economics course in Vietnam Universities. Some time in 2003, a number of senior researchers of the Economy and Environment Program for Southeast Asia (EEPSEA) requested that EEPSEA offers a 3-week training course for teachers of Environmental Economics in the country. The request in turn was precipitated by the new mandate from the Ministry of Education in Vietnam that makes Environmental Economics a required course in all Bachelors’ Degree in Economics and Management for all colleges and universities. Aware that the capacity of teachers to teach Environmental Economics varies across the country as training of teachers varies also from selfstudy, short-term training, to a formal course in an undergraduate/graduate degree from local universities or abroad, EEPSEA acceded to the request and offered the course in August 2005. The course though can be used also in other colleges and universities in Southeast Asia. The training course was designed to teach both the subject matter contained in an internationally-comparable undergraduate environmental course and to enhance teachers’ skills in teaching this subject. A teachers’ manual was developed to support the teaching of the training ...
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...is an open system. It gets resources from the environment and supplies its goods and services to the environment. There are different levels of environmental forces. Some are close and internal forces whereas others are external forces. External forces may be related to national level, regional level or international level. These environmental forces provide opportunities or threats to the business community. Every business organization tries to grasp the available opportunities and face the threats that emerge from the business environment. The term business ‘typically’ refers to the development and processing of economic values in society. Normally, the term is applied to portion of economic activities whose primary purpose is to provide goods and services for society in an effective manner. It is also applied to economics and commercial activities of institutions which having other purposes. Business may be defined as “the organised effort by individuals to produce goods and services to sell these goods and services in a market place and to reap some reward for this effort.” Functionally, we may define business as “those human activities which involves production or purchase of goods with the object of selling them at a profit margin”. Business organizations cannot change the external environment but they just react. They change their internal business components (internal environment) to grasp the external opportunities and face the external environmental threats. It...
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...Incorporating Environmental and Social Costs into Traditional Business Accounting Systems Noellette Conway-Schempf, Ph.D. Carnegie Mellon University Pittsburgh, PA 15213 1 Overview: This module describes methods for incorporating environmental information into accounting management information systems to allow financial decision makers to include environmental criteria in their decisions. The module is subdivided to permit a progression of detail concerning accounting systems and their role in encouraging the design and development, marketing, and use of more environmentally-conscious products, services, and manufacturing processes. The module is suitable for use as part of an engineering or business environmental management course, at either the undergraduate or graduate level, through the selection of various components of the module. Thus for example, in an MBA course, the early material on types of accounting systems would be unnecessary, or in an engineering environmental management course, more emphasis could be placed on the managerial/cost accounting section than on the national accounting section. The module is subdivided as follows: 1) Introduction What is accounting? Relevance of accounting and capital budgeting to environmental management and engineering issues Types of accounting systems Shortcomings of accounting systems as environmental information systems Full cost accounting 2) Incorporating social and environmental costs into...
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