What Is Environmental Accounting?

Topics: Economics, Sustainability, Cost Pages: 2 (654 words) Published: November 10, 2013
Environmental Management Accounting (EMA) is a cover title used to describe different aspects of this burgeoning field of accounting. The focus of EMA is as a management accounting tool used to make internal business decisions, especially for proactive environmental management activities. EMA was developed to recognize some limitations of conventional management accounting approaches to environmental costs, consequences, and impacts. For example, overhead accounts were the destination of many environmental costs in the past. Cost allocations were inaccurate and could not be traced back to processes, products, or process lines. Wasted raw materials were also inaccurately accounted for during production. Each aspect of EMA has a general accounting type that serves as its foundation, according to the EMA international website. The following examples indicate the general accounting type followed by the environmental accounting parallel: Management Accounting (MA) entails the identification, collection, estimation, analysis, and use of cost, or other information used for organizational decision-making. Environmental Management Accounting (EMA) is Management Accounting with a focus on materials and energy flow information, with environmental cost information. Financial Accounting (FA) comprises the development and organizational reporting of financial information to external parties, such as stockholders and bankers. Environmental Financial Accounting (EFA) builds on Financial Accounting, focusing on the reporting of environmental liability costs with other significant environmental costs. National Accounting (NA) is the development of economic and other information used to describe national income and economic health. Environmental National Accounting (ENA) is National Accounting focusing on the stocks of natural resources, their physical flows, environmental costs, and externality costs. EMA is a broad set of approaches and principles that provide views into the...
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