Transcript Chemical management services:

International Guidance on Environmental
Management Accounting (EMA)
Background information for the EMFACT Advisory
Committee Conference Call - 12/16/05
Deborah Savage, Ph.D.
Director
EMA Research & Information Center (EMARIC)
[email protected] www.EMAwebsite.org
What is EMA?
There are many alternative definitions, but
broadly defined…
EMA is the identification, collection, analysis, and use
of two types of information for internal decisionmaking:
 Physical information on the use, flows, and fates of
energy, water, and materials (including wastes)
 Monetary information on environment-related costs,
earnings, and savings
EMA Expert Working Group of the
United Nations Division for Sustainable Development
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Why was EMA Developed?
EMA was conceived in recognition of some of the
limitations of conventional practices for informing
environmental management decisions
insufficient tracking of energy, materials, and
wastes
“hiding” of costs in overhead accounts and
elsewhere in the accounting records
lack of data on future and less tangible costs in the
accounting records at all
Insufficient communications between the
accounting and other departments/staff, e.g.,
production, environmental, research…
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Potential Benefits of EMA…
Compliance
EMA supports environmental
protection via cost-efficient
compliance with environmental
regulation and self-imposed
environmental policies
Examples…
Eco-Efficiency
EMA supports the simultaneous
reduction of costs and environmental
impacts via more efficient use of
energy, water and materials in internal
operations and final products
Examples…
Strategic
Position
EMA supports the evaluation and
implementation of cost-effective
and environmentally sensitive
programs for ensuring the
organization’s long-term strategic
position
Examples…
Planning and
implementing pollution
control investments
More accurately tracking
the flow of energy, water,
materials and wastes
Working with suppliers to
design products &
services for “green”
markets
Investigating and
purchasing cost-effective
substitutes for toxic
materials
Planning and
implementing energy,
water and materials
efficiency projects
Estimating the internal
costs of likely future
regulations
Reporting environmental
waste and emissions to
regulatory authorities
Assessing the total
annual return on
investment in ecoefficiency activities
Reporting to stakeholders
such as customers,
investors and local
communities
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The Globalization of EMA…
 1992: US Environmental Protection Agency was
first national government agency to establish a
formal EMA program
 1998: EMA Networks (EMAN) in Europe, AsiaPacific, the Americas
 1999: Expert Working Group on EMA convened by
the United Nations Division for Sustainable
Development (UNDSD)
 2002: International EMA Website
 2004: EMA activities in over 30 countries
 2005: International Guidance Document
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EMA Around the World…
THE AMERICAS
Argentina
Brazil
Canada
Colombia
Guatemala
Nicaragua
Peru
USA
These lists are not
comprehensive…
EUROPE
Austria Czech Rep. Finland Germany
Italy Netherlands Portugal Spain
Slovak Rep. Sweden UK
AFRICA
Egypt
South Africa
Tanzania
Zimbabwe
ASIA-PACIFIC
Australia
Japan
Philippines
Rep. of Korea
Singapore
Taiwan
Thailand
Vietnam
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UNDSD Expert Working Group on EMA…
UNDSD = United Nations Division
for Sustainable Development
 EMA Working Group established in 1999
 Core members are government representatives from
30+ countries
 Other members include invited representatives of
accounting associations, academia, business, etc.
 Group has met 8 times, each time in a different country
 Group has discussed many international topics of
debate surrounding EMA
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International Consensus (1)
What kind of information does EMA include?
Only monetary information?
Physical information also?
Growing international consensus – both
It is difficult to do good cost accounting
without doing good materials accounting first
(especially in manufacturing)
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International Consensus (2)
Which environment-related costs?
Growing international consensus – be
comprehensive
Do not leave out any potentially significant
costs, earnings, or savings – especially the
costs associated with wasted raw materials
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International Consensus (3)
How can or should EMA information be used?
Primarily for internal management?
For external reporting also?
Growing international consensus – both
EMA information can/does inform:
 Internal management decision-making (e.g.,
CP, SCEM, EMS, etc.)
 External reporting (e.g., financial,
environmental, sustainability, statistical)
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International Consensus (4)
What are the best EMA implementation
methodologies?
Growing international consensus – will
vary from case to case, but some best
practices can probably be identified
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EMA Guidance Document for the International
Accounting Community…
 Facilitator – UNDSD Expert Working Group
 Funders – UNDSD as well as governments of
US, UK, Japan, Germany, Austria
 Authors – EMARIC (USA) and IOEW (Austria)
 Reviewers – nominated experts, the UNDSD
group, the public…
 Organizer of Public Review Process and
Publication – International Federation of
Accountants (IFAC) Board of Directors
 Published Aug 24, 2005
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Why More Guidance Now?
 Some of the existing guidance is
• Focused on a particular national audience (with
•
•
national case studies)
Focused on a particular end-use of EMA
information (e.g., solid waste management, P2/CP,
external reporting, supply chain management)
Outdated (because the field is evolving so quickly)
 Still considerable confusion on definitions and
language
 There are no international standards or guidance
endorsed by an international accounting organization
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Important to note…
 An introductory guidance document, not a day-to-day
implementation manual
 Primary audience is accountants, but because EMA
is so interdisciplinary, document was also written
with other audiences in mind, e.g., technical
experts, environmental managers, production
supervisors, etc.
 Manufacturing focus, because the most EMA
experience to date available there, but also relevant to
other sectors (e.g., service sector, government)
 Written for an international audience (with varying
practices and language)
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Chapters 1 & 2
CHAPTER 1 – INTRODUCTION & CONTEXT
 Why Care about Environmental Issues?
 Accounting Concepts and Language
 Environmental Accounting Context, Concepts, and
Language
CHAPTER 2 – EMA DEFINITION(S), USES,
BENEFITS, AND CHALLENGES
 What is EMA?
 Types of Information included under EMA
 Uses and Benefits of EMA
 EMA Challenges - Current Accounting Practices
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Chapter 3
PHYSICAL INFORMATION: FLOW OF ENERGY,
WATER, MATERIALS, AND WASTES
 Physical Information
• Materials Inputs
• Product Outputs
• Non-Product Outputs (Waste and Emissions)
 Materials/Mass Balances
 Physical Environmental Performance Indicators
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Chapter 4
MONETARY INFORMATION: ENVIRONMENT-RELATED
COSTS AND EARNINGS
 Cost Categories
• Waste & Emission Control Costs
• Prevention & Other Environmental Management Costs
• Research & Development Costs
• Materials Costs of Non-Product Outputs
• Materials Costs of Product Outputs
• Less Tangible Costs
 Monetary Environmental Performance Indicators
 Environment-related Earnings and Savings
 Distribution of Costs by Environmental Domain
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Chapter 5
SELECTED EXAMPLES OF EMA APPLICATIONS FOR
INTERNAL MANAGEMENT
 Examples of Applications at
• The Site & Organization Level
• The Materials Level
• The Project Level
 Examples from Argentina, Austria, Germany, Japan, the
Netherlands, the UK, and the USA.
 Illustrate the use of EMA to support supply chain
management, logistics management, investment
appraisal, development of environmental performance
indicators, environmental cost tracking, etc.
 Illustrate the efficiency benefits of EMA for both business
and government, and the links between physical and
monetary information
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Chapter 6
SELECTED EXAMPLES OF EMA APPLICATIONS AND
LINKS TO OTHER TYPES OF ACCOUNTING AND
REPORTING
 Examples of Links to
• National Accounting & Reporting
• Financial Accounting & Reporting
• Corporate Environmental Performance Reporting
 Examples from Australia, Denmark, Japan, the UK, the
European Commission, and the United Nations
 Illustrate similarities and differences between the
types of information collected under these schemes
compared to EMA
 illustrate the potential for EMA to inform these
schemes, and vice-versa
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For More Information…
The International Guidance Document on EMA is
available on the IFAC website:
http://www.ifac.org/News/LastestReleases.tmpl?NID=1124902574170148
Introductory Brochures on EMA for business or
government are available on the UN website:
http://www.un.org/esa/sustdev/publications/EMABusiness.pdf
http://www.un.org/esa/sustdev/publications/EMAGovernment.pdf
Many other resources are available on the
International EMA website:
http://www.EMAWebsite.org
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EMA vs. GRI vs. FRP (1)
 Differences in scope
• GRI & FRP focus primarily on external reporting, while EMA
•
•
provides data for many internal management purposes as well
as for external reporting
GRI & FRP focus on organization-level and facility-level
indicators, respectively. EMA data can be collected, analyzed
and used at many different levels: organization, facility,
material, product, process, etc.
GRI & FRP focus on the sustainability triangle (economics,
environment, and social), while EMA focuses on economics
and environment only – there are no social indicators under
EMA (although some researchers are starting to investigate
“Sustainability Management Accounting”)
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Comparing the Indicators (1)
 Economic vs. Monetary Indicators
• GRI & FRP economic indicators are very broad (e.g., total
•
•
payroll) compared to the monetary information under EMA,
which focuses specifically on “environment-related” costs
(e.g., labor costs for pollution control and prevention
initiatives)
There are a multitude of potential monetary indicators
under EMA – many fewer under GRI & FRP as they
currently stand
In sum – there is really almost no useful overlap between
the economic indicators of GRI & FRP and the monetary
indicators of EMA
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Comparing the Indicators (2)
 Environmental vs. Physical Indicators
• There is much more useful overlap between the
•
•
environmental indicators of GRI & FRP and the physical
indicators under EMA
The most overlap is in the measurement/reporting of
materials, water, and energy used by organizations as well
as waste and emissions generated.
One major difference – GRI & FRP include indicators on
actual environmental impacts (e.g., biodiversity impacts) –
EMA (as defined in the IFAC guidance document) does not
explicitly include such information, although such impacts
are often considered in determining EMA data priorities.
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