Environmental Accounting

"Whenever possible, environment-driven costs should be allocated directly to the activity that causes the costs and to the respective cost centers and cost drivers. Consequently, the costs of treating, for example, the toxic waste arising from a product should directly and exclusively be allocated to that product. Many terms are used to describe this correct allocation procedure, such as environmentally enlightened cost accounting, full cost accounting or activity-based costing (ABC)."

Environmental Management Accounting Procedures and Principles - United Nations Division for Sustainable Development.

There is currently a large amount of press revolving around Greenhouse Gas Emissions, in particular Carbon Emissions and its impact on the Environment. Whether you agree with the science or not is irrelevant, what is relevant is that Governments around the world are taking action and there is a groundswell of support for organizations that are seen to be "green". There is also scrutiny of and high penalties for companies that state green credentials but cannot back them up - so called "green washing".

At the moment there are so many unknowns – both the USA and Australia have an Emissions Trading Scheme or Carbon Tax on the agenda, but it is not known when or if these will ever be implemented, unlike in Europe which has had one in place for a number of years now. The impact of this trading scheme is unknown.
• What impact will it have on the bottom line? 
• What if I can't pass this increase in cost on to my customers? 
• I'm part of a supply chain how much of my emissions do I need to pass onto my customers? 
• What if I need to calculate emissions-per-unit-output like they do in the UK, how do I calculate that? 
• If we have Carbon permits how do I know if I should use them or sell them on the open market?

There are many unknowns, but an important step that can be taken now is to get your own company in order from a cost and emissions calculation perspective.  You can readily calculate your current total Carbon Footprint using ACE on-Demand.  You can use ACE on-Demand for Carbon Accounting and flow carbon emissions through a model using a set of business rules to determine high emissions activities and therefore products.  By including cost and revenue in the same model it is possible to determine an Emissions and Profitability report that will help you to focus on financially responsible ways to reduce carbon emissions.