EMA - Environmental Management Accounting - Pilot-testing

Training kit for environmental management accounting and investment appraisal

Short Description

In late 1999, the UN Commission for Sustainable Development installed an expert group on environmental management accounting (EMA). For this group, Christine Jasch wrote a book on procedures and metrics for EMA, which was commissioned by the Austrian ministry of transport, innovation and technology (BM VIT), the Austrian ministry of agriculture, forestry, environmental and water management (BM LFUW) and the Austrian chamber of commerce (BWK) and can be downloaded at the United Nations Department for Sustainable Developement or at the The Institute's for Environmental Management and Economics website.

On of the backgrounds for the strong interest in EMA is the growing demand for integrated consideration of financial and physical aspects of environmental management. The concept of sustainable development in addition requires a combined consideration of financial, environmental and social aspects. International rating agencies and award systems for environmental and sustainability reporting also put a strong focus on disclosure of financial aspects in environmental reports.

In addition to this international networking, within the project described, a series of national pilot projects have been performed. Results for the companies included:

  • Total annual environmental costs following the approach developed for UN DSD
  • Investment projects calculated by company and recalculated with research team
  • Improved information for decisions regarding investment appraisal, assessment of the costs of new products and the costs and benefits of projects
  • Identification of improvement potential of the environmental and financial information system
  • Improved consistency of data reported within an organisation
  • "best-practice" example that can be published in the environmental report

Focus of the pilot projects has not been in depth assessment of total environmental cost, but critical review of existing information systems in order to improve the decision basis for material flow management and investment decisions. The company data remain secret, it is up to the company if and to what degree to communicate externally in the environmental report or other media.

This selection of case studies will, together with the EMA methodological book published by the UN DSD and the Austrian BM VIT, provide the basis for a national research programme on EMA. It will be used for dissemination among companies and consultants and for training purposes.

In each company, one or two workshops have been held. The assessment of the environmental costs and the environmental information system was carried out by Dr. Christine Jasch (IÖW) and Hr. Dr. Hans Schnitzer (TU-Graz) and documented by Karin Taferner (JOANNEUM RESEARCH). The company team consisted of at least the environmental manager and the controller/accountant. We were trying to work mostly with companies with existing environmental management systems, as their awareness and data availability is high.

The following aspects have been assessed in the workshops:

  • definition of environmental relevant equipment
  • total annual environmental costs for 2001
  • consistency of material flow recording and possible application of material flow cost accounting
  • recalculation of examples from investment appraisal
  • critical review of existing information systems, discussion of improvement options

All company projects have be compiled and described on the basis of existing data records, balance sheets, lists of accounts, cost centre reports, list of assets etc. Each company example has been transformed into a neutralised description, that allows recalculation of costs from scratch. That way, many toolkits for cost calculation, accounting and preparing a balance sheet are structured, but there is no likely publication in the environmental field.

A toolkit for environmental management accounting, structured that way, will allow environmental managers as well as accountants and controllers to actually trace the relevant costs in different records (which is, what they would have to do in the company as well), to calculate total annual environmental costs and the costs of an investment example, and to compare their solution to the solution provided by the research team with some further remarks in the annex. Each company has been given opportunity to approve the description of their case for publication.

Each pilot project has been transferred into case study for recalculation, that describes

  • the company and its products
  • the main production processes
  • the situation with regard to waste ands emissions
  • the financial information system with the list of accounts, specific print outs of accounts, and, to the degree needed for the calculation example, other records for production planning, stock management, cost centre reports, calculation of prices, example from investment appraisal)
  • the question to be answered
  • the solution with further explanation.

The case studies are part of the toolkit, that describes the methodology and also general results and recommendations. The project results are available in print, on CD-Rom and on the IÖW homepage . The results will also be reported at the UN DSD expert working group on EMA.

It turned out that the methodology can be very well applied in the companies as the annual assessment can be performed in about 1 to 2 days. The workshops produced recommendations for improvement of the informationsystems (cost accounting, material flow recording) but also for improving the efficiency of material conversion into products. The environmental costs exceeded the amounts estimated by the companies by a factor 10 to 30! All companies intend to continue with the tool and the annual assessment.

Project Partners


Univ. Doz. Mag. Dr. Christine Jasch
Institut für ökologische Wirtschaftsforschung
1040 Wien, Rechte Wienzeile 19/5,
Tel.: +43 (1) 5872189
Fax: +43 (1) 5870971
e-mail: info@ioew.at