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ACCA PM知识点：Managing environmental costs
文章来源：ACCA全球官网
发布时间：2021-09-01 17:39
阅读：1507次
Managing environmental costs
There are three main reasons why the management of environmental costs is becoming increasingly important in organisations.
First,society as a whole has become more environmentally aware,with people becoming increasingly aware about the‘carbon footprint’and recycling taking place now in many countries.A‘carbon footprint’(as defined by the Carbon Trust)measures the total greenhouse gas emissions caused directly and indirectly by a person,organisation,event or product.Companies are finding that they can increase their appeal to customers by portraying themselves as environmentally responsible.
Second,environmental costs are becoming huge for some companies,particularly those operating in highly industrialised sectors such as oil production.In some cases,these costs can amount to more than 20%of operating costs.Such significant costs need to be managed.【点击免费下载>>>更多ACCA学习相关资料】
Third,regulation is increasing worldwide at a rapid pace,with penalties for non-compliance also increasing accordingly.In the largest ever seizure related to an environmental conviction in the UK,a plant hire firm,John Craxford Plant Hire Ltd,had to not only pay£85,000 in costs and fines but also got£1.2m of its assets seized.This was because it had illegally buried waste and also breached its waste and pollution permits.And it’s not just the companies that need to worry.Officers of the company and even junior employees could find themselves facing criminal prosecution for knowingly breaching environmental regulations.
But the management of environmental costs can be a difficult process.This is because first,just as EMA is difficult to define,so too are the actual costs involved.Second,having defined them,some of the costs are difficult to separate out and identify.Third,the costs can need to be controlled but this can only be done if they have been correctly identified in the first place.Each of these issues is dealt with in turn below.
Defining environmental costs
Many organisations vary in their definition of environmental costs.It is neither possible nor desirable to consider all of the great range of definitions adopted.A useful cost categorisation,however,is that provided by the US Environmental Protection Agency in 1998.They stated that the definition of environmental costs depended on how an organisation intended on using the information.They made a distinction between four types of costs:
conventional costs:raw material and energy costs having environmental relevance
potentially hidden costs:costs captured by accounting systems but then losing their identity in‘general overheads’
contingent costs:costs to be incurred at a future date–for example,clean up costs
image and relationship costs:costs that,by their nature,are intangible,for example,the costs of preparing environmental reports.
The UNDSD,on the other hand,described environmental costs as comprising of:
costs incurred to protect the environment–for example,measures taken to prevent pollution,and
costs of wasted material,capital and labour,ie inefficiencies in the production process.
Neither of these definitions contradict each other;they just look at the costs from slightly different angles.As a Performance Management student,you should be aware that definitions of environmental costs vary greatly,with some being very narrow and some being far wider.
Identifying environmental costs
Much of the information that is needed to prepare environmental management accounts could actually be found in a business’general ledger.A close review of it should reveal the costs of materials,utilities and waste disposal,at the least.The main problem is,however,that most of the costs will have to be found within the category of‘general overheads’if they are to be accurately identified.Identifying them could be a lengthy process,particularly in a large organisation.The fact that environmental costs are often‘hidden’in this way makes it difficult for management to identify opportunities to cut environmental costs and yet it is crucial that they do so in a world which is becoming increasingly regulated and where scarce resources are becoming scarcer.
It is equally important to allocate environmental costs to the processes or products which give rise to them.Only by doing this can an organisation make well-informed business decisions.For example,a pharmaceutical company may be deciding whether to continue with the production of one of its drugs.In order to incorporate environmental aspects into its decision,it needs to know exactly how many products are input into the process compared to its outputs;how much waste is created during the process;how much labour and fuel is used in making the drug;how much packaging the drug uses and what percentage of that is recyclable etc.Only by identifying these costs and allocating them to the product can an informed decision be made about the environmental effects of continued production.
In 2003,the UNDSD identified four management accounting techniques for the identification and allocation of environmental costs:input/outflow analysis,flow cost accounting,activity based costing and lifecycle costing.These are referred to later under‘different methods of accounting for environmental costs’.
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