The Chartered Institute of Management Accountants CIMA launched the publication, Environmental Accounting: An Introduction and Practical Guide, to an invited audience of finance directors and other senior financial personnel from the FTSE 100, professional accounting bodies and beyond.
The publication, written by Rupert Howes, Director of the Sustainable Economy Programme at Forum for the Future, is aimed at motivating and enabling companies to develop their own environmental accounting systems. It provides an explanation of what environmental accounting is all about and a detailed step by step guide on how organisations can begin the task of producing their own external cost accounts in an attempt to estimate their ‘environmentally sustainable’ or adjusted profits.
Several leading companies are already using Forum’s methodology. These include AWG (formally Anglian Water), Wessex Water, Bulmers (Herefordshire cider manufacturer), Carillion (construction company), Marks and Spencer, and Interface Europe. Some are also reporting the results – for the second year running Wessex Water have published their full external cost accounts, alongside their conventional financial statements, within their main annual report and accounts. Similarly, AWG have reported the impact of their sustainability cost estimate on their reported profits for the fourth year in a row within their 2002 Sustainability Report. The sustainability cost estimate represents the cost to avoid or restore the damage resulting from a company’s most significant external environmental impacts over a particular accounting period.
Speaking at the launch, Rt Honorable Michael Meacher (MP), Minister for the Environment, reinforced the business benefits outlined in the report of managing and reporting on the environmental risks faced by companies. "Saving money is not the only or even the most important reason to look carefully at how your business interacts with the environment. Your stakeholders are increasingly concerned that environmental and other non-financial considerations are taken into account in the day to day running of the business strategy. Shareholders want to know that youre managing risk and identifying business opportunities. Customers want to know that the products and services they buy from you are not causing irreparable damage to the environment. And your employees want to feel good about what they do and who they work for."
Accountants are in a unique position to review business costs and highlight opportunities to improve resource productivity, They can point the way towards producing more goods and services with fewer inputs of materials and utilities, and with less pollution and waste. Improving resource productivity will increase business efficiency, and hence profits. The CIMA President, Harry Byrne, has described the work as ‘a world class technical report’, it would appear that environmental accounting is now entering the mainstream.
