Presentation ema cp mfca for scotland conference 2010
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EMA, MFCA and CP – three
facets of the same diamond?
Seakle Godschalk, Don Huisingh,
Christine Jasch, Katsuhiko Kokubu
and Maryna Möhr-Swart
13th
EMAN Conference on Environmental and
Sustainability Management Accounting
1-3 September 2010, St Andrews, Scotland
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Presentation Scope
1. Brief introduction of
• Environmental Management Accounting (EMA)
• Material Flow Cost Accounting (MFCA)
• Cleaner Production (CP)
1. Comparative discussion of EMA, MFCA
and CP
2. Guidelines for integrated application of
EMA, MFCA and CP
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Environmental Management
Accounting
EMA is broadly defined as the identification,
collection, analysis, and use of two types of
information for internal decision making:
– physical information on the use, flows, and fates of
energy, water, and materials (including wastes) and
– monetary information on environment related costs,
earnings, and savings.
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Environmental Management
Accounting
• Environmental accounting and environmental
performance indicators for environmental
management systems > environmental cost
accounting > environmental management accounting
• Drivers – US EPA, UK legislative changes,
international accounting standards and ISO 14 000
series
• UN Expert Working Group [1999-2005] and IFAC
[2005] established EMA as discipline
• IFAC International Guidance Document on
Environmental Management Accounting
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Material Flow Cost Accounting
• Tool for quantifying the flows and stocks of materials
in processes or production lines in both physical and
monetary units
• Originated in Germany
• Strong uptake in Japan
• Being formalised in ISO 14 051: Environmental
management -Material flow cost accounting- General
framework
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Cleaner Production
Cleaner Production is the continuous
application of a preventative strategy to
processes and products to increase
efficiency, prevent the pollution of air, water
and land, reduce waste at source and
minimise risks to humans and the
environment.
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Cleaner Production
• Preceded by Pollution
Prevention Pays [3P]
• 3M company in USA 1975
• Coined Cleaner Production by
UN in 1990
• 1992 UNEP – Cleaner
Production Programme
• National Cleaner Production
Centres in about 45 countries
• Journal for Cleaner Production
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Common Objectives
• Reducing
environmental
impacts
• Reducing costs >
increasing profits
Can we achieve synergy by applying these
approaches in combination?
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Type of Organisation
EMA CP MFCA
All types of
organisations
Mostly
manufacturing but
also production and
service organisations
Mostly
manufacturing
organisations
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Primary level of application
EMA CP MFCA
Organisation, site or
cost centre
Organisation,
production
processes but even
multi-organisation
and regional
Production process
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Scope of issues covered
EMA CP MFCA
Raw, auxiliary,
packaging and
operating materials,
energy, water,
waste, all
environmental costs
- quantitative
Material, energy,
water, health and
safety, waste and
pollution –
quantitative and
qualitative
Raw materials
[Energy, water, and
system costs
allocated
proportionally] -
quantitative
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Solutions
EMA CP MFCA
Quantitative and
financial
Quantitative,
financial, technical
and non-technical,
and qualitative
Quantitative and
financial
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Benefits
EMA CP MFCA
•Reduced costs and
increased profits
•Reduced
environmental
impacts
•Reduced
environmental,
health and safety
impacts
•Secondary –
reduced costs and
improved triple
bottom line
•Reduced material
usage and costs
•Secondary –
reduced
environmental
impacts
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Starting point
EMA CP MFCA
•Mass balance and
distinction of inputs
into Product and
Non-Product Outputs
•“What has gone
where”
•Process
•“What is happening
where”
•Input raw materials
•“What goes where”
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Main methodology used
EMA CP MFCA
•Top down
•Id material, energy
and water inputs and
related costs
•Allocate to Product
and Non-Product
Outputs
•Id all other
environmental costs
•Improve structure
and consistency of
physical and
financial info
systems
•Id processes
•Id energy, water and
material inputs
•Id issues
•Id potential solutions
•Social,
environmental and
economic cost-
benefit
•Recommend
solutions
•Id quantity centre
•Calculate all input
resources
•Allocate material
flows into product
and material loss
•Calculate costs of
these streams
•Allocate all other
costs [energy, water,
operating materials,
labour and
machinery] to
products or material
losses
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Focus of efficiency efforts
EMA CP MFCA
•Whole system
•Information systems
•Physical flow
management
•Material, energy and
water efficiency
•Waste and pollution
reduction
•Health and safety
for workers and
consumers
•Environmental
impacts
•Material efficiency
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External costs
EMA CP MFCA
•Can be included •Increasingly
included
•Supply chain
management
•Industrial ecology
•Not included
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Treatment of energy
EMA CP MFCA
•All energy
considered Non-
Product Output
•Energy consumed >
equipment, lighting,
processes
•Energy allocated
proportionally to
product and material
loss
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Treatment of waste
EMA CP MFCA
•Calculates total cost
of waste
•Quantitative and
qualitative info on
waste and pollution
•Waste and pollution
prevention
emphasised
•Calculates total loss
of material
•Allocates other
costs proportionally
•Waste cost not as
comprehensive as
EMA
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Can synergy be achieved?
• For this presentation – focus on internal synergy
• Combination of the application of EMA, CP and
MFCA can result in significant synergy
• Focus on reduction of environmental impact, wastage
and costs
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Synergy: Role of EMA
• Comprehensive picture of physical flows and all
environmental costs [apparent and hidden]
• Focus on gradually improving consistency of financial
and physical information systems, taking a top down
approach
• Could point to areas for further detailed analysis using
CP or MFCA
• Evaluate savings/cost implications/benefits [physical
quantities and monetary] of CP and MFCA options
• Ongoing management support for efficiency programs
• Link to EMS
• Supports environmental reporting
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Synergy: Role of CP
• Comprehensive picture of
quantitative and qualitative situation
regarding wide range of aspects
including health and safety
• Very strong on waste and pollution
information
• Analyse situations and generate
technical and non-technical solutions
• Suggest process changes and
awareness training
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Synergy: Role of MFCA
• Use for detail analysis where
material efficiency is driving
force
• Identify material flows and
associated system costs
• Generate material related
solutions
• Evaluate material flow benefits
of suggested solutions
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EMA
CP
MFCA
• Material flow analysis
• Overall picture of
physical flows and
env costs
• Info systems
• Cost-benefit
analyses
• Reporting support
• Quantitative and
qualitative picture
• Generate solutions
Internal synergy/integration
between EMA, CP and MFCA
