logging in or signing up Environmental Accounting bhanumurthykv Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: Embed: Flash iPad Dynamic Copy Does not support media & animations Automatically changes to Flash or non-Flash embed WordPress Embed Customize Embed URL: Copy Thumbnail: Copy The presentation is successfully added In Your Favorites. Views: 21643 Category: Business & Fin.. License: All Rights Reserved Like it (22) Dislike it (0) Added: December 12, 2007 This Presentation is Public Favorites: 10 Presentation Description This is about Environmental Accountability and Accounting at the global, national and company level. Prof. K.V. Bhanu Murthy, Delhi School of Economics, Delhi 110007, india. firstname.lastname@example.org Comments Posting comment... By: rajarani2 (20 month(s) ago) good presentation Saving..... Post Reply Close Saving..... Edit Comment Close By: Dereklong (24 month(s) ago) ho it works? Saving..... Post Reply Close Saving..... Edit Comment Close By: reetbrar (25 month(s) ago) plz sir forwardme this ppt on my email id email@example.com Saving..... Post Reply Close Saving..... Edit Comment Close By: ashishk3108 (30 month(s) ago) hello sir i m teabhing ina mba college would u plz send me a copy of this nice ppt on my id firstname.lastname@example.org for that i m very thank full to u Saving..... Post Reply Close Saving..... Edit Comment Close By: PPanth (32 month(s) ago) Dear Sir, I am teaching envt ecos at PG level. Would you please send me a copy of your excellent PPT on Envt Accounting to email@example.com. Thank you. PPanth Saving..... Post Reply Close Saving..... Edit Comment Close loading.... See all Premium member Presentation Transcript Slide1: ENVIRONMENTAL ACCOUNTING – AN OVERVIEW Prof. K.V. Bhanu Murthy, Department of Commerce, Delhi School of Economics. Background First and foremost we must understand that to begin with there has been confusion between “Business Environment” and “Natural Environment”. Slide2: The former refers to the environment that is external to the Company, Firm or Business and refers to the pervasive influence of the economy and policies. The latter refers to natural resources like land, forests, air, water, energy sources (non-renewable), and so on.Slide3: Some Definitions An account is a statement or measure that provides an assurance about financial information. The terms derive from the use of financial accounting which in turn reflects the meaning of an account. Slide4: An account is a label used for recording and reporting a quantity of almost anything. Accounting is the discipline of measuring, communicating and interpreting financial activity. Slide5: Environmental Accounting (EA) can be considered either a subset or superset of accounting proper. It aims to incorporate both economic and environmental information. It can operate at the company level or at the level of the national economySlide6: EA is linked to the National Accounts of countries that produce the estimates of Gross Domestic Product (GDP). Environmental Accounting is a growing field that identifies resource use, measures and communicates costs of a company or the national economy actual or potential impact on the environment.Slide7: Environmental Costs Costs can include costs to clean up or remediate contaminated sites, environmental fines, penalties and taxes, purchase of pollution prevention technologies and waste management costs.Slide8: Environmental Accounting is often referred to as Green Accounting which incorporates environmental assets and their source and sink functions into national and corporate accounts. It is the popular term for environment and natural resource accounting. Corporate environmental accounts have not yet found wide application of these concepts.Slide9: Some References [1. Banzhaf, H. Spencer. "Green price indices." Journal of Environmental Economics and Management 49(2), March 2005. 2. Gundimeda, Haripriya; Sanyal, Sanjeev; Sinha, Rajiv; and Sukhdev, Pavan. 2005. "The Value of Timber, Carbon, Fuel wood, and Non-Timber Forest Products in India's Forests". TERI Press.]Slide10: Environmental accounting system An environmental accounting system is composed of environmentally differentiated conventional accounting and ecological accounting. Environmentally differentiated accounting measures impacts of the natural environment on a company in nominal or monetary terms. Slide11: Ecological accounting It measures the impact a company has on the environment, but in physical units (e.g. kilograms of waste produced, kilojoules of energy consumed) rather than in monetary units. It is closely related to sustainability.Slide12: Sustainability It is a characteristic of a process or state that could be afforded to be maintained at a certain level indefinitely. Often it is confused with “Sustained” which means ‘irreversible’ growth. Slide13: Sustainability in its environmental usage, refers to the potential longevity of vital human ecological support systems, such as the planet's climatic system, systems of agriculture, industry, forestry; and fisheries on the one hand; andSlide14: The increasing pressures by human communities, their consumption patterns in general, and their impact on and the various systems on which they depend, on the other hand.Slide15: Rationale for environmental accounting There are several reasons why businesses may consider adopting environmental accounting as part of their accounting system: Possible significant reduction or elimination of environmental costs Environmental costs and benefits may be overlooked or hidden in overhead accounts Slide16: Possible competitive advantages as customers may prefer environmentally friendly products and services. Can support the development and running of an overall environmental management system, which may be required by regulation for some types of businesses. Slide17: Possible revenue generation may offset environmental costs (e.g. transfer of pollution allowances). Improved environmental performance which may have a positive impact on human health and business success. May result in more accurate costing or pricing of products and more environmentally desired processes Slide18: Different environmental accounting disciplines Environmental accounting can be broken down in to three disciplines: Global Environmental Accounting (GEA); National Environmental Accounting (NEA); Corporate Environmental Accounting (CEA). Slide19: Corporate Environmental Accounting can be further sub-divided into: Environmental Management Accounting; Environmental Financial Accounting; Environmental Audit;Slide20: Corporate Environmental Accounting At its simplest, corporate environmental accounting is about making environment related costs more transparent within corporate accounting systems and reports. Slide21: One of the major distinctions within the field is whether the primary focus is to report environment related costs within internal management accounts, or external financial accounts or other public reports.Slide22: Benefits of CEA The benefit of undertaking a corporate environmental accounting initiative is that the identification and greater awareness of environment related costs often provides the opportunity to find ways to reduce or avoid these costs, whilst also improving environmental performance.Slide23: CEA a valuable tool With the pressure on business to improve environmental performance, corporate environmental accounting can provide a valuable tool that enables business to respond to environmental challenges whilst retaining a focus on bottom-line imperatives.Slide24: CEA and emerging feild CEA initiatives are being undertaken by: United Nations Division for Sustainable Development. National governments. Professional accounting bodies. Leading companies. Most of these initiatives have to date looked at the area of Environmental Management Accounting.Slide25: Environmental Management Accounting (EMA) There are various definitions of Environmental Management Accounting (EMA), but essentially it involves refining a management accounting system so that it more tightly and rigorously accounts for environment related costs. Slide26: Purpose of EMA The intention is to identify environmental costs in order to enable more informed decisions about how these costs can be better managed and integrated into operational and strategic decision-making.Slide27: Drivers of EMA The drivers behind why an organisation might consider undertaking an EMA initiative include a mix of external and internal environmental and financial pressures. Slide28: Drivers of EMA These could include increasing community, government and market expectations as to how a business manages its environmental impacts, as well as an organisation seeking out new opportunities to reduce costs.Slide29: The benefits of EMA include: Identifying cost saving opportunities; better decisions with regard to product mix and pricing; avoiding future costs through better investment decisions; and, financial justification for environmental initiatives.Slide30: Transparent accounting EMA involves the more transparent accounting of environment related costs within an organization’s management accounting system. Management accounting systems have the purpose of providing cost information for internal management use in decisions such as cost management, product pricing and investment appraisal. Slide31: EMA mainly focuses on identifying the private environmental costs that would normally be captured within an organisations accounting system. Often these environmental costs are lost in general overhead accounts and therefore not focused on by management.Slide32: EMA is an emerging and dynamic field The environmental costs looked at through EMA would include costs such as those relating to waste management, energy consumption and water usage. Slide33: The United Nations Division for Sustainable Development publication “Environmental Management Accounting Procedures and Principles (2001)” provides a checklist of possible costs to consider when undertaking an EMA initiative.Slide34: Underestimates Interest in EMA is being generated by the growing appreciation of the lack of awareness and understanding that people within an organisation generally have with respect to the magnitude of the environmental costs being generated by their organisation. This in turn can mean that many opportunities for cost savings and environmental improvement are being lost. Slide35: Main objectives One of the main objectives with EMA is to get over the situation whereby conventional management accounting systems have attributed many environmental costs to general overhead accounts. This results in the situation where environmental costs remain hidden from the attention of management. Slide36: HIDDEN COSTS Whilst many environmental costs can be considered hidden, they are also often found to be under-estimated. For example, waste costs are often simply identified as the costs associated with the actual disposal, rather than also including the cost of lost raw materials, licence fees etc.Slide37: Reporting true value Central to many approaches to EMA are the concepts of material tracking, activity based costing (ABC) and full-cost accounting. These concepts all aim to more accurately identify where environmental costs are being incurred as well as report their true value within the accounts.Slide38: As a result, undertaking an EMA initiative often not only leads to a better understanding of environmental costs, but also a much better understanding of the physical process and environmental impacts generated by an organisation.Slide39: References [Environmental Protection Agency (1995). "An introduction to environmental accounting as a business management tool: Key concepts and terms". United States Environmental Protection Agency. Jasch, C. (2006). "How to perform an environmental management cost assessment in one day". Journal of Cleaner Production 14 (14): 1194-1213.] Slide40: Life Cycle Assessment A life cycle assessment ('LCA', also known as life cycle analysis, life cycle costing, eco-balance, cradle-to-grave-analysis, well-to-wheel analysis, and dust-to-dust energy cost) is the assessment of the environmental impact of a given product or service throughout its lifespan.Slide41: Embodied Energy The goal of LCA is to compare the environmental performance of products and services, to be able to choose the least burdensome one. The term 'life cycle' refers to the notion that a fair, holistic assessment requires the assessment of raw material production, manufacture, distribution, use and disposal including all intervening transportation steps. Slide42: Life Cycle Of The Product This is the life cycle of the product. The concept also can be used to optimize the environmental performance of a single product or to optimize the environmental performance of a company. The term 'emergy' is often used as an analysis tool to determine embodied energy. Slide43: Emergy Embodied Energy refers to the quantity of energy required to manufacture, and supply to the point of use, a product, material or service. Traditionally considered, embodied energy is an accounting methodology which aims to find the sum total of the energy necessary -Slide44: Contd….. from the raw material extraction, to transport, manufacturing, assembly, installation as well as the capital and other costs of a specific material - to produce a service or product and finally its disassembly, deconstruction and/or decompostion.Slide45: Environmental financial accounting Environmental financial accounting is used to provide information needed by external stakeholders on a company’s financial status. This type of accounting allows companies to prepare financial reports for investors, lenders and other interested parties.Slide46: Environmental Audit The financial benefits and improved efficiencies from adopting cleaner production and eco-efficiency encourage firms to undertake audits. But EA can also be an effective risk management tool. By compliance with environmental legislation companies avoid the risk of prosecution and fines arising from potential environmental breaches. Slide47: Components of an Audit A good audit will include a number of components, some of which are listed below. Data Collection: to identify and measure all inputs and outputs from the production process and provide a baseline for comparison against targets and a background for improvement. Slide48: Components of an Audit Compliance: to review and compare a company's activities and business targets against all relevant regulations, codes of conduct and government policies to assess compliance. Slide49: Components of an Audit Documentation: to document all aspects of audit to assess progress at a further date and to verify environmental performance to staff, regulators and the general community. Slide50: Components of an Audit Periodic Audits: to assess the impacts of new or changed legislation on operations and to assess whether internal targets for environmental efficiency are being met. Slide51: Benefits of EA An environmental audit can be modified according to the size and complexity of a business. For example, a small business may simply concentrate on such things as paper usage and water and energy consumed, whereas a large organisation may have a broader range of inputs and outputs to be measured.Slide52: Finally An environmental audit can give a company a much clearer understanding of its operations and impacts, and ultimately, provides a starting point for other environmental initiativesSlide53: Global environmental accounting Global environmental accounting is an accounting methodology that deals with energetics, ecology and economics at a global scale. The earth is the system of interest with the input, sequestration, and dissipation of solar energy - which constitute its energy budget (Odum 1996, Tennenbaum 1988).Slide54: References [H.T. Odum (1996) Environmental Accounting: Energy and Environmental Decision Making, Wiley, U.S.A. S.E. Tennenbaum (1988) Network Energy Expenditures for Subsystem Production, MS Thesis. Gainesville, FL: University of FL, 131 pp. (CFW-88-08) Jha R and Bhanumurthy, K.V. Environmental Sustainability – Consumption Approach, Routledge, London, 2006] Slide55: National Environmental Accounting National environmental accounting is an accounting approach that deals with economics on a national level. National environmental accounting is a macroeconomic measure that looks at the use of natural resources and the impacts of national policies on the environment.Slide56: SEEA Internationally environmental accounting has been formalized into the System of Integrated Environmental and Economic Accounting, known as SEEA. SEEA grows out of the System of National Accounts. Slide57: SEEA The SEEA records the flows of raw materials (water, energy, minerals, wood, etc.) from the environment to the economy, the exchanges of these materials within the economy and the returns of wastes and pollutants to the environment. SEEA is used by 49 countries around the world.Slide58: Green Accounting for Indian States During the course of “Phase 1”, GAISP will arrange for the research and publication of eight subject monographs as well as a ‘Phase 1’ Final Report. Each of the subject monographs will evaluate a particular area or related set of areas of adjustments to State Domestic Product (SDP) accounts. Slide59: Green Accounting The final report will summarize and consolidate the work done on these monographs and will include an overall ‘genuine savings’ measure for the States and significant Union Territories comprising the Union of India. Slide60: These are the eight planned monographs: 1. The Value of Timber, Carbon, Fuel wood, & Non-Timber Forest Produce in India's Forests 2. Estimating the Value of Agricultural Cropland and Pasture Land in India 3. The Value of India’s Sub-Soil Assets 4. Eco-Tourism & Biodiversity Values in India Slide61: 5. Estimating the Value of Educational Capital Formation in India 6. Investments in Health and Pollution Control and their Value to India 7. The Environmental Values of Forests : Evaluating Flood Prevention and Drought Control Benefits of India’s Forest Cover 8. Estimating the Value of Freshwater Resources in India Thank you: Thank you Now I will share an audio recording with you. After you hear that we can center our discussion around it.040409Fixing_GDP.mp3: 040409Fixing_GDP.mp3 040409Fixing_GDP.mp3 040409Fixing_GDP.mp3 040409Fixing_GDP.mp3 You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.