What Is Environmental Accounting?

What Is Environmental Accounting?

Environmental Management Accounting (EMMA) is a cover title used to describe different aspects of this burgeoning field of accounting. The focus of EMMA is as a management accounting tool used to make internal business decisions, especially for proactive environmental management activities. EMMA was developed to recognize some limitations of conventional management accounting approaches to environmental costs, consequences, and impacts. For example, overhead accounts were the destination of many environmental costs in the past. Cost allocations were inaccurate and could not be traced jack to processes, products, or process lines.

Wasted raw materials were also inaccurately accounted for during production. Each aspect of EMMA has a general accounting type that serves as its foundation, according to the EMMA international website. The following examples indicate the general accounting type followed by the environmental accounting parallel: Management Accounting (MA) entails the identification, collection, estimation, analysis, and use of cost, or other information used for organizational decision-making. Environmental Management Accounting (EMMA) is Management Accounting tit a focus on materials and energy flow information, with environmental cost information.

Financial Accounting (FAA) comprises the development and organizational reporting of financial information to external parties, such as stockholders and bankers. Environmental Financial Accounting (PEA) builds on Financial Accounting, focusing on the reporting of environmental liability costs with other significant environmental costs. National Accounting (AN) is the development of economic and other information used to describe national income and economic health. Environmental National Accounting ANA) is National Accounting focusing on the stocks of natural resources, their physical flows, environmental costs, and externalities costs.

EMMA is a broad set of approaches and principles that provide views into the physical flows and costs critical to the successful completion of environmental management activities and increasingly, routine management activities, such as product and process design, capital budgeting, cost control and allocation, and product pricing, according to the EMMA international website. EMMA offers potential benefits to industry, such as the capability track and managing the lows and use of materials and energy with greater accuracy.

The EMMA international website reports that accurate identification, estimation, allocation, and management or reduction of costs is important, too. Environmental performance can be supported and improved by using more accurate and complete information. This information will also improve the measurement and reporting of environmental information to the public. Government can benefit from the application of these principles according to the EMMA international website. The cost of environmental protection can be ordered on the basis Of industries’ financial self-interest.

Industry data can be used to estimate and report environmental performance metrics and financial and environmental and benefits to government stakeholders. These metrics can also be used to effectively affect future environmental policies and regulations. Societal benefits exist also. With the implementation of these principles, energy, water, and other natural resources can be used more efficiently. The EMMA international website reports these principles can help reduce external societal costs stemming from industrial pollution such as environmental control, monitoring, remediation, and public health costs.

The nation is divided into 10 Environmental Management System Regions by the U. S. Environmental Protection Agency. The United Nations Division for Sustainable Development promotes EMMA. There are several U. S. Schools that offer courses and degrees in EMMA, including the Environmental Management Systems Institute at the University of Florida and California Polytechnic’s Arboreal College of Business at San Luis Obis. Looking internationally, the SST. Andrews Centre for Social and Environmental Accounting Research, at the University of SST.

Andrews (Scotland), was established in 1991. The Australian National university offers EMMA courses in its School of Business and Informational Management. Japan’s Osaka City University and the Chou Graduate School of International Accounting offer graduate EMMA Courses. Kobo university, in Japan, offers undergraduate and graduate EMMA courses. EMMA is an emerging facet of accounting with benefits for industry, government, and society globally. As more companies come to see the environmental impacts in their decision making, the value of EMMA will continue to grow.

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