Environmental Cost Accounting - Assessing the Environmental Responsibility Effort

Author:Florian Nuta - Carmen Cretu - Alina Nuta
Position:Senior Lecturer, PhD, 'Danubius' University of Galati, Faculty of Economic Sciences, Romania - Associate Professor, PhD, 'Danubius' University of Galati, Faculty of Economic Sciences, Romania - Senior Lecturer, PhD, 'Danubius' University of Galati, Faculty of Economic Sciences, Romania
Pages:545-550
SUMMARY

The paper’s aim is to evaluate different approaches of environmental cost accounting used around the world. One of the main issues of modern enterprise is to affirm its responsible behavior and to connect it with a positive economic benefit for the shareholders. Practically the management systems must find a way to address all the stakeholders’ interests and needs.

 
FREE EXCERPT
Performance and Risks in the European Economy
545
Environmental Cost Accounting –
Assessing the Environmental Responsibility Effort
Florian Marcel
Nu
1
, Carmen Mihaela
Creu
2
, Alina Cristina
Nu
3
Abstract: The paper’s aim is to evaluate differ ent approaches of environmental cost ac counting used around
the world. One of the main issues of modern enterprise is to affirm its r esponsible behavior and to connect it
with a positive economic benefit for the shareholders. Practically the manageme nt systems must find a way to
address all the stakeholders’ interests and needs.
Keywords: environment; cost; responsibility; stakeholders
1 Introduction
Steele and Powell (2002) define environmental accounting as the identification, allocation and
analysis of material streams and their related money flows by using environmental accounting systems
to provide insight in environmental impacts and associated financial effects.
The internal environmental cost can include those financial efforts engaged for the annual
environmental reports and local community relationship activities and the expenses voluntarily
registered for environmental programs such as tree planting. The costs themselves are not intangible,
but the direct benefits that result from relationship or corporate image expenses often are (de Beer,
Friend, 2006).
The literature documented a number of attempts for full cost environmental accounting and reporting
such as maintenance cost, asset valuation and damage cost (Herbohn, 2005). Maintenance cost
approaches focus on the maintenance of natural capital and have been used in th e Net Value Added
experiment (1990–1994) of BSO/Dutch Origin, and the Sustainable Cost experiments of Landcare
Research New Zealand (Bebbington & Tan, 1996, 1997) and Interface Europe (Howes, 2000). Asset
valuation approaches focus on valuation of environmental assets and changes of them, as in the case
with the Supplementary Economic Accounts experiment (1995–1998) of Earth Sanctuaries. At last
damage cost systems are concerned with estimates of external environmental costs from an
organization’s operations.
The consumption of natural capital is considered to be the depletion of environmental elements,
pollution and deterioration of nature initial conditions (Bartelmus, 2009). Depletion values are in
market prices, calculated as the change in the net present value of a natural resource stock during the
accounting period; it also equals the value of the net rent (profit) from the use of the natural
resource—net of a ‘normal return to natural capital’ (United Nations et al., 2003, ch.10 B). The
maintenance is then strictly related to environmental degradation and has a direct function of growth.
1
Senior L ecturer, PhD, “Danubius” Uni versity of Galati, Faculty of Economic Sciences, Romania, Address: 3 G alati Blvd,
Galati, Romania, tel: +40372 361 102, fax: +40372 361 290, Corresponding author: floriann@univ-danubius.ro.
2
Ass ociate Professor, P hD, “Danubius” University of Galati, Faculty of Economic Sciences, Romania, Address: 3 Galati
Blvd, Galati, Romania, tel: +40372 361 102, fax: +40372 361 290, e-mail: carmencretu@univ-danubius.ro.
3
Senior L ecturer, PhD, “Danubius” Uni versity of Galati, Faculty of Economic Sciences, Romania, Address: 3 G alati Blvd,
Galati, Romania, tel: +40372 361 102, fax: +40372 361 290, e-mail: alinanuta@univ-danubius.ro.

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