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

Performance and Risks in the European Economy

545

Environmental Cost Accounting –

Assessing the Environmental Responsibility Effort

Florian Marcel

Nu

1

, Carmen Mihaela

Creu

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.