Contemporary Environmental Accounting: Issues Concepts and Practice

463 Pages·2000·3.466 MB·English

by  Stefan Schaltegger, Roger Burritt

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Contemporary Environmental Accounting:Issues,Concepts and Practice has been written by two of the
world’s leading experts in the field in order to provide the mostcomprehensive and state-of-the-art
textbook on environmental accounting yetattempted.The book is suitable for both undergraduate
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and graduate students and their teachers, professional accountants, and corporate and C
organisational managers.Although no prior knowledge of environmental accounting is necessary to o
understand the critical issues atstake,academic accountants will also find thatthe book provides a n
useful introduction to the topic. t
e
The goals of the book are to discuss and illustrate contemporary conceptual approaches to environ-
m
EEnnvviirroonnmmeennttaall
mental accounting; to make readers aware of crucial controversial topics;and to offer practical
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examples of how the concepts have been applied throughoutEurope,North America and Australia.
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In order to increase the usefulness of the book for relevantcourses,each chapter concludes with a
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setof questions for review.This book is essential reading for all those who are interested in how a
environmental issues influence accounting. r
y AAccccoouunnttiinngg
In this key resource,Stefan Schaltegger and Roger Burrittprovide notonly early elements of a lingua franca butalso
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a clear,professional setof briefings on an extraordinary range of issues,from contingentenvironmental liabilities
and tradable emission allowances to eco-assetsheets and stakeholder involvement...the book as a whole will hand- n
somely repay study both by business people and by the growing range of individuals,organisations and institutions v
who companies are coming to consider as stakeholders.I suspectthatthis will soon be among the best-thumbed i
r
books in my own collection. o
John Elkington,Chairman,SustainAbility Ltd;Chairman,Environmental and Social Accounting Committee,UK Associa- n
tion of Chartered Certified Accountants (ACCA);Member,EU Consultative Forum on Sustainable Development m Issues, Concepts and Practice
Better information flows are essential for supporting companies’total quality management,eco-efficiency,sustain- e
able developmentand environmental reporting initiatives.This book contains extensive discussions of the possibil- n
ities for boosting such initiatives through environmental accounting.Readers will come away with a much better
t
understanding of the myriad of issues and opportunities thatlie in improving the flow of financial and ecological a
information in firms. l

Susan McLaughlin,US Environmental Protection Agency,Environmental Accounting Project A
Schaltegger and Burrittcan be credited with highlighting in their textthe importance for managementof the link c
between value added and environmental impactadded as a general definition of eco-efficiency...This book makes c
a valuable contribution to the corporate sector’s gradual adoption of environmental accounting systems which will o
allow us to measure how heavily we tread on the planetand thus learn to live within the capacity of its ecosystems. u
Claude Martin,Director General,World Wide Fund for Nature n
t
Schaltegger and Burritt’s book is an importantand timely contribution to the ongoing questfor new forms of corporate i
n
disclosure which integrate financial,environmental and social reporting.
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Patrick Ponting,National President,CPA Australia
Itis importantthatenvironmental accounting and environmental reporting are researched and developed to improve
the usefulness of the information supplied to investors.And itis importantthatguidelines of a global nature are
developed and included in future financial reporting.This book addresses how to develop accounting systems and
an accounting model with such aims in mind.
S
Stig Enevoldsen,Chairman,International Accounting Standards Committee;Partner,Deloitte & Touche,Copenhagen c
h
a
The developmentof key performance indicators for sustainable developmentwill provide the logical framework for lt
setting targets and driving continuous improvementacross operations and for developing standards of reporting eg
and verification...Contemporary Environmental Accounting provides an importantlink between environmental g
e
and financial performance and paves the way for the more difficulttask of accounting for social/ethical conduct. r

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Andy Oliver,Vice-President,Health,Safety and Environment,Shell International n
d

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Greenleaf Publishing
u
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Aizlewood’s Mill,Nursery Street r
it
Sheffield S3 8GG,UK t
Tel:[phone]
Greenleaf Fax:[phone]
E-mail:[email protected] Stefan Schaltegger and Roger Burritt
PUBLISHING www.greenleaf-publishing.com
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CEA.q 19/9/00 3:51 pm Page 1
contemporary environmental accounting
issues,concepts and practice
Stefan Schaltegger and Roger Burritt
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Dr Stefan Schaltegger was appointed a full Professor of Managementand
Business Economics atthe University of Lüneburg,Germany,in 1999.
Between 1996 and 1998 he was an AssistantProfessor of Economics atthe
Center of Economics and Management(WWZ) atthe University of Basel,
Switzerland,where in 1998 he became an Associate Professor of Business
Administration.His research areas include corporate environmental
accounting and environmental information management,sustainable
finance,sustainable entrepreneurship,stakeholder management,
environmental and spatial economics and the integration of
environmental managementand economics.Stefan is a member of a
number of international editorial boards and committees associated with
business and environmentinterrelationships and has presented papers
and lectured widely throughoutEurope.He also spentone year as Visiting
Research Fellow atthe University of Washington,Seattle,USA.Stefan can
be reached [email protected].
Roger Burritt,BA(JtHons.) (Lancaster,UK),M.Phil.(Oxford,UK),FCPA
(Australia),CA(Australia),ACIB(London,UK),is a Senior Lecturer in the
Departmentof Commerce atThe Australian National University (ANU) in
Canberra,Australia,where environmental and managementaccounting
are his main areas of research and teaching.He is also the International
Co-ordinator of the ANU’s Asia Pacific Centre for Environmental
Accountability (APCEA)—a networking group for people with an interestin
environmental accounting and accountability.APCEAhas branches in
Argentina,Australia,China,Japan and New Zealand.Roger can be
contacted [email protected].
CEA.q 19/9/00 3:51 pm Page 3
Contemporary
Environmental
Accounting
Issues, Concepts and Practice
Stefan Schaltegger and Roger Burritt
2 0 0 0
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© 2000 Greenleaf Publishing Limited
Published by Greenleaf Publishing Limited
Aizlewood’s Mill
Nursery Street
Sheffield S3 8GG
UK
Typesetby Greenleaf Publishing.
Printed and bound,using acid-free paper from managed forests,by
Creative Print& Design (Wales),Ebbw Vale.
All rights reserved.No partof this publication may be reproduced,
stored in a retrieval system,or transmitted,in any form or by any
means,electronic,mechanical,photocopying,recording or otherwise,
withoutthe prior permission in writing of the publishers.
British Library Cataloguing in Publication Data:
A catalogue record for this book is available from the British Library.
ISBN 1874719349 (hbk)
ISBN 1874719357 (pbk)
CEA.q 19/9/00 3:51 pm Page 5
contents
Acknowledgements 9
Preface 10
Forewords
John Elkington,SustainAbility Ltd 11
Susan McLaughlin,US Environmental Protection Agency 13
Patrick Ponting,Australian Society of Certified Practising Accountants 15
Claude Martin,World Wide Fund for Nature 16
Stig Enevoldsen,International Accounting Standards Committee 18
Andy Oliver,Shell International 19
Chapter 1
purpose and structure
21
Questions 27
introduction and framework
Part1: 28
Chapter 2
the emergence of environmental accounting
30
2.1 Reasons for emergence 30
2.2 Stakeholder pressure 31
2.3 Changing costrelations 36
2.4 Poorly co-ordinated collection of environmental data 38
Questions 40
Chapter 3
the purpose of managing environmental information
43
3.1 Environmental information as purpose-oriented knowledge 43
3.2 Necessary objective 45
3.3 Sustainable development 46
3.4 Corporate eco-efficiency 49
3.5 The relation between sustainable developmentand eco-efficiency 52
3.6 Enhancing corporate sustainability and eco-efficiency as the purpose of
environmental accounting 54
3.7 Further goals of environmental accounting 55
3.8 Information requirements to operationalise corporate sustainability and
eco-efficiency 55
Questions 57
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6 contemporary environmental accounting
Chapter 4
the environmental accounting framework
58
4.1 The structural framework 58
4.2 Stakeholders influencing the agenda of environmental accounting 65
Questions 69
environmental issues in conventional accounting
Part2: 72
Chapter 5
overview,criticism and advantages of conventional accounting
76
5.1 Criticism and advantages of conventional accounting 76
5.2 Accounting for environmentally induced financial impacts 84
Questions 87
Chapter 6
environmental management accounting
89
6.1 Consideration of benefits and costs with regard to sustainable
developmentand eco-efficiency 93
6.2 Currentmethods of environmental costaccounting 109
6.3 The tracking and tracing of environmental costs 118
6.4 Allocation of environmentally induced costs 127
6.5 Consideration of environmentally induced financial effects
in investmentappraisal 138
6.6 The balanced scorecard 151
6.7 Summary 157
Questions 159
Chapter 7
environmental issues in financial accounting and reporting
161
7.1 Stakeholders’influence on financial accounting 162
7.2 Environmentally induced costs:assets or expenses? 171
7.3 Treatmentof environmentally induced expenses 175
7.4 Treatmentof environmentally induced financial impacts on assets 177
7.5 Treatmentof liabilities 180
7.6 Treatmentof tradable emission allowances 193
7.7 Managementdiscussion and analysis 197
7.8 Summary 200
Questions 202
Chapter 8
environmental shareholder value and
environmental issues in other accounting systems
204
8.1 Standardisation of financial reporting and the value of
information for investors 205
8.2 Approach,advantages and disadvantages of the shareholder value concept 211
8.3 How does environmental managementinfluence shareholder value? 214
8.4 Consequences for environmental management 222
8.5 Summary 225
Questions 226
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contents 7
ecological accounting
Part3: 228
Chapter 9
overview and emergence of life-cycle
assessment and ecological accounting
232
Questions 234
Chapter 10
the efficiency of approaches to environmental
information management
235
10.1 Environmental information as subjectmatter of measurement 235
10.2 General considerations and model 238
10.3 Evaluation of the eco-efficiency of the presentapproach to
productlife-cycle assessment 240
Questions 257
Chapter 11
internal ecological accounting
260
11.1 Basic procedures and their historical development 263
11.2 Definition of accounts and recording 264
11.3 Aggregation 273
11.4 Impactassessment 275
11.5 Allocation 288
11.6 Ecological indicators 299
11.7 Ecological investmentappraisal 306
11.8 Netpresentfuture environmental impactadded 309
11.9 From internal to external ecological accounting 312
Questions 313
Chapter 12
external ecological accounting and reporting of
environmental impacts
315
12.1 Stakeholders regulations,and incentives 315
12.2 Effects of currentregulations thatrequire the reporting of
environmental impacts 332
12.3 Conventions of ecological accounting 337
12.4 Consolidation 347
12.5 Summary 351
Questions 352
integration
Part4: 354
Chapter 13
integration with eco-efficiency indicators
357
13.1 Convergence of economic and environmental interests 357
13.2 Integration of information managementsystems 358
13.3 Developing eco-efficiency indicators 361
13.4 Benchmarking 366
13.5 Limits and importantcriteria 369
13.6 Summary and implications 371
Questions 372
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8 contemporary environmental accounting
Chapter 14
integrating eco-efficiency-oriented information management
into the corporate environmental management system
374
14.1 Standards of corporate environmental management 374
14.2 Methods of corporate environmental management 379
14.3 Managementeco-control 383
14.4 Summary 398
Questions 402
Chapter 15
summary
404
Bibliography 409
Listof Abbreviations 437
Index 441
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acknowledgements
This book is partially based on an earlier book,Corporate Environmental Accounting,which
has been received very well in business.The co-authors of that first version,Kaspar Müller
and Henriette Hindrichsen, have decided to concentrate on consulting. Contemporary
Environmental Accountingis substantially revised and updated and contains various new
chapters dealing with emerging issues of environmental accounting.We would neverthe-
less like to thank Kaspar and Henriette for their contribution to the earlier text.
We offer special thanks to Matthias Blom,Thomas Braun,Eric Ohlund,Ruedi Kubat
and two anonymous reviewers for their valuable comments which helped to improve
earlier drafts of the first edition.The second edition has profited substantially from
comments by Frank Figge,for whose contribution we are grateful.This book is dedicated
to our patient families in Europe (Vivian,Oliver,Gregory and Carolyn) and Australia
(Patricia and Christopher).
The manuscript of this book is literally global.It has been transferred numerous times
between Europe (Stefan) and Australia (Roger) and back by e-mail.This has allowed us
to enjoy various positive and negative effects of computer technology.In this respect we
are thankful to the computer assistants who fought against electronic viruses and bugs,
repaired files and helped us to concentrate on writing.
2000
Stefan Schaltegger and Roger Burritt,May