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How to profit from environmental protection. EMA- environmental management accounting pilot testing. Lord B. The SIGMA guidelines also include the financial aspect as they operate with different definitions of capital — i. The use of EMA was started at the initiative of the managers of the environment department. The EMA process in mainly used to procure data for external reporting. Capital Partners Ethical Index Euro.
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BAA would like to use EMA to a greater extent than today, but there are barriers to this in the form of time consumption in connection with developing the system and the need for expertise to understand the external costs and how the different types of cost are to be treated. EMA has, however, helped systematise the enterprise's environmental costs and has thus made it easier to work with these costs.
There is more focus on reducing environmental effects through the environmental management system, since environmental developments in the enterprise are mainly driven by stakeholders such as local authorities and the government. Wessex Water is a water and sewerage enterprise in south-west UK.
The enterprise treats and supplies drinking water for 1. Wessex Water has worked with environmental management in different forms during the past 30 years, but at a more detailed level for the past 15 years after the enterprise was privatised. The enterprise has published annual environmental reports for the past four years. The motivation for the introduction of EMA arose from the authorities' tightened requirements and a wish to examine the costs incurred by the enterprise because of these requirements.
EMA consists of several dimensions at Wessex Water.
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EMA is included in a supplementary environmental report in the annual report and it contains an overview of the social costs related to the pollution emitted and how much it would cost the enterprise to neutralise this. Moreover, EMA information is included in internal decision-making. Expenses, income and investments within environment are registered, and these items are monitored in the daily environmental work, since environmental costs represent a large part of the enterprise's total costs.
This includes, for example, expenses for wastewater treatment plants and new environment-related projects. A current project focuses on removing phosphates from the water discharged from wastewater treatment plants. This discharge represents a major extra cost and must be included in the EMA process.
Moreover, a lot of money is spent on complying with authority requirements as regards pollution abatement, improvement of water quality, reduction of discharges into rivers and the sea as well as the occurrence of different substances in drinking water. Top management and mid-level managers use EMA information in connection with assessments of environment-related projects such as improvement of sewers so they can live up to water quality requirements in rivers. This means that the costs related to the acquisition, exchange and maintenance of different filter types are calculated over the total life of the filter.
Then the filters with the lowest total lifecycle costs are chosen. Another initiative concerns wastewater treatment plants where different chemicals are used, some of which are harmful to the environment. Wessex Water is trying to replace these with other chemicals that do not affect the environment to the same extent. A new initiative is to replace some chemicals with ultraviolet light and this includes a financial analysis of alternatives. As mentioned, EMA is also used to certain extent in connection with reporting for external stakeholders. The enterprise's annual report contains a separate section about e.
The assessment is that this information does not have a great effect on external decision-making but helps maintain the enterprise's environmental profile.
There were no great barriers to the implementation of EMA, but there was some concern that it would merely be an academic exercise and extra expense that would not yield any benefits. After EMA has been implemented, these concerns have been proved unfounded, however. The educational background of those having worked with EMA is primarily engineering and economics. The environment department was the driving force for the introduction of EMA and the finance department became involved later on in the process. Wessex Water assesses that the EMA process itself has had limited influence on financial performance, environmental effects and the attitude towards the environment.
The reason for this is that the enterprise would still achieve good results because of the existing focus on the environment. EMA is thus an important tool, but the effect of it cannot be separated from the other environment-related tools used at Wessex Water. The enterprise does, however, believe that EMA will be significant as an internal decision-making tool. Through its subsidiary companies, which include Anglian Water and Morrison, the group provides a wide range of services.
For example, the enterprise supplies water to almost 6 million customers in eastern UK, it has retail stores, maintains roads and buildings, performs construction tasks and supplies gas, electricity and telephone services. In order to do this, income and cost accounts are made for the environment. This helps support investments and initiatives within the environment and creates a better understanding of how the environment and finances are related. Anglian Water is the largest division in AWG and has worked with this method since , and the AWG group as a whole began to use the method in The initiative to introduce EMA came from the sustainable development manager, with support from the head of the environment department.
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The project was initiated because AWG needed a better understanding of the financial aspects in environmental work and the financial effects of environmental impacts. Top and middle managers use EMA information in the long-term planning process. To start with, managers assume that the future costs of the enterprise's environmental impacts will be internalised when they are realised, i. Future internalisation of these costs is a direct financial incentive for the enterprise to reduce its environmental impacts.
In this way, middle managers at AWG use EMA information in connection with preventive initiatives to reduce the costs for the enterprise of possible future internalisation.
EMA information is also used for internal evaluation where divisions and managers are benchmarked each year for their own results and performance. To some extent it is also used in communication with stakeholders to show these that the enterprise is taking account of future environmental risks. When EMA was to be implemented, primarily staff with a background in chemistry or natural sciences were responsible for the work.
At this time the enterprise worked mainly with water management, and this was reflected in the choice of personnel to introduce EMA. However, economists were to be responsible for preparing the accounting part of EMA and therefore collaboration was established across the two groups.
At the start there was some resistance to EMA work in the finance department. The department could not see the point of EMA and it involved a lot of extra work on data collection and processing. It took some persuasion to get them on board. Today the finance department have changed their perception and they are now more positive towards EMA.
This is especially because the department has been able to use the EMA information in risk management, for example in assessing future risks and any financial liabilities. EMA is not an integrated part of the IT systems at the enterprise. Excel is used to record environmental data and results for EMA.
As it is still very new in the enterprise, EMA has not yet had any tangible effect on the financial results, but it is expected that these will come in time, especially because there is now focus on new, future financial risks. It has afforded greater awareness and understanding of the financial aspects in the environment.imarroli.tk
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As management are focusing on what they can do today to reduce costs in the future, EMA is also helping improve the environmental results. At the same time EMA has helped internal control and it has provided opportunities to benchmark and compare performances. Apart from this, EMA has not affected the environmental management system at AWG, which concentrates on meeting requirements from the authorities. AWG is currently restructuring the organisation and there will be many changes. EMA has not been used for very long and therefore it does not yet cover all areas.
In addition to water management, last year EMA focussed on energy. Once the restructuring has been completed EMA will be extended to more areas. Schott manufacture a number of products such as fibre optics, flat-screen displays, light components, solar panels, windows, gas-burner systems, laboratory equipment, optical lenses and electronic gaskets.