The Advantages And Disadvantages Of Environmental Management Accounting

Businesses who participate in environmentally friendly practices will become more profitable. There are difficulties and costs that a business will face and profit takes time but is proven to positively impact a business. “The reluctance to address the forces that are polluting the planet always comes down to money (Smith, “6 Reasons Nations Don't Go Green.”). Implementing environmentally friendly practices within a company “will win them customers, and increase profits” (McDonald, “Why Do (or Don’t) Companies Go Green?”). Many global companies today carry out environmental management tools to adapt to environmentally friendly practices, which helps gain customers, and in turn becomes more profitable. In this paper, I will go into further detail explaining why businesses should be more environmentally friendly, the benefits to be gained, costs that come with being environmentally friendly, and management ways that help a company become environmentally friendly.

or so many years our society has been thinking of forming new creative and innovative businesses, which would be more environmental and customer friendly. Nowadays a large number of different companies follow the social, ethical, as well as moral consequences when it comes to their decision making. One of the relatively new concepts involving economic and social concerns is Corporate Social Responsibility. Many of us apply this approach not only at work, but also in everyday life without even recognizing.

Financial measures in the Triple Bottom Line accounting framework should follow the common financial accounting guidelines, Generally Accepted Accounting Principle’s, and International Financial Reporting Standard’s. The financial measures in the Triple Bottom Line accounting framework however are not under as much scrutiny as the Environmental and Social measures, though there is debate over certain ethical aspects of Financial Accounting as a well. Financial Accounting in a business is usually not changed in a dramatic way, when a company decides to adopt the TBL framework. Some changes that financial records might reflect include an increase in expenses related to environmental or social care, a decrease in expenses that reflect a detriment to the society or environment (i.e. Transportation Expense), a possible increase in revenues as a result of customer support of the adoption of TBL.

These companies have a legal obligation to follow all the laws set by the environmental authorities, federal state or the local government. Green energy is one of the major ways that the organizations are using to minimize the impact on the environment by reducing waste or minimizing the use of fossil fuels.

Critically examine the above statements by analysing the contribution of traditional management accounting techniques in an organisation, the necessity for modern management accounting techniques and the role of accountants in the implementation of the modern management accounting techniques in an organisation.

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Melting glaciers, depleting water resources and decreasing air quality needs immediate attention. Everyone needs air and water to survive. Business started practicing sustainable accounting in mid-70. This practice discloses non-financial and financial information related to the business activities that has direct impact on society and its environment (air, water, people etc.). Companies use triple bottom line method to calculate the impact of business activities on society and based on these calculation companies makes policies which make its operation more ecologically and socially

environmental awareness training and education for our employees, alongside effective communication with employees and recognition of their initiatives and achievements towards environmental improvement;

Companies today are heavily influenced by the demands of customers and stakeholders. Corporate social responsibility (CSR) refers to the social and environmental responsibility policies and practices developed by an organization to increase its positive influence and reduce its negative activity towards society (Parks, 2008). The business approach and corporate philosophy of an organization is easily altered due to economic pressures, technological improvement and stakeholder needs and demands. "Going green" or being eco-friendly is one such demand. Environmental and sustainability concerns originate most often from governments, consumer activists, and the general public (Schlosser, 2008). Thus, organizations must implement sustainability into daily practices. In addition, sustainability alters the nature of competition and drives companies to think differently about products, processes, and technologies (Parks, 2008).

An example in Brazil would be the Bahia Sul Celulose (BSC) corporation and their use of the quality management system ISO 9001:2000. Employees at BSC, a bleached eucalyptus pulp for uncoated printing and writing paper producer in Brazil, is an example of an organization exercising corporate social responsibility while raising their industry standards. J. E. Cajazeira, the Quality Assurance Officer for BSC, and G. Camargo, the Communications Assistant at BSC (2004), set an example for the pulp and paper production industry by implementing and integrating ISO 9001:2000, 14001 and OHSAS 18001 quality management systems that are recognized worldwide for superior quality standards. BSC found that employing the ISO standards yielded a significant drop in environmental non-conformities and about a 40% fall in water usage; they also discovered that prime pulp quality increased close to 12% (Cajazeira & Camargo, 2004). Results from a recent customer survey reported that over 80% of BSC’s national and international customers were described as “happy” with the company’s performance (Cajazeira & Camargo, 2004). BSC is but one example of Brazilian corporations rising to the level, and above, industry standards. BSC is an example of corporate social

Because human activities and the environment are inter-related, any activity that man does in it’s environment can affect man or the environment in a positive or negative way. Most negative effects on the environment arise from economic or domestic activities, like building homes, businesses, and farms. Traditional farming methods usually give back to the earth what is taken from it. For example, nutrients are placed back into the soil in the form of fertilizers. On most small scale farms, this is what is still practiced. The issue is that industrial agriculture has brought upon methods of farming that are not sustainable. Industrial farming is a way of producing

One positive implication capitalism has to the natural environment is industrial ecology, a system of chain production and consumption, serving to the lowest environmental impacts in a most environmentally sustainable economy as the main goal of operation (Richards & Pearson, 1998). The Companies in a like to operate in such way because of four major reasons. The most important factor is known as the corporate well-being, for it is determined by higher profits and growth provided by innovations in an industry. Profits are increased from recognizing the production ineffiency costs that comes from wasted inputs and energy losses; this allowing cost savings to increase and ineffiency to decrease. compliance with cleaner technology alternatives such as ones that produce less waste and less energy will provide long term savings which are both beneficial to the environment and the business at hand. A real world example freight company changes their salvaged driving equipment to hybrid vehicles. Money is temporarily lost, but the gasoline and maintenances cost savings will compensate in a long run period of time.

ITC Ltd has worked exremly hard to start several procedures that have led to compliance of the standards of social responsibility. ITC’s dealings within the tobacco industry have contributed to the increase in company revenues and the company has worked towards following the triple bottom line and giving back to society. Most, businesses pay little attention to their social responsibilities and make it part of their overall strategy, instead they concentrate more on financial benefits from the sales of products. Consequently, managing business in a socially responsive manner contributes to the best combination of business success and societal acceptance, trust and loyalty. Giving back to the community in ways that benefits only society such as planting trees to curb pollution and help the environment or using biodegradable materials in packaging can reap financial benefits to a company by building loyalty among the community. The notion of business ethics and corporate social responsibility is becoming a defining concept in all industries worldwide. ITC believes in the Triple Bottom Line philosophy where the performance and perception of a corporation should not be judged only on the basis of its financial statements or revenues, but its environmental and social performance as well. ITC is one of the only companies in the world to be carbon positive, water positive, and conduct solid waste recycling. ITC provides water to areas where water is very

* ISO 9001, ISO 20000, ISO 14001 accreditations which indicates high quality establishments. Strengthens their Branding at a global level

‘Corporate social responsibility’ (CSR) means that the firm has wider responsibilities in relation to objectives and people apart from the owners or shareholders (Beal and Goyen 2005). These responsibilities are achieved when the firm adapts all of its practices to ensure that it operates in ways that meet, or exceed, the ethical, legal, commercial and public expectations that society has of business. Objectives often associated with CSR include a responsibility to manage natural assets sustainably and not to pollute by chemical discharge, smell, noise, dust or other irritants; fair treatment of employees and ethical attitude towards clients. The other people include employees, customers, suppliers,