"Whenever possible, environment-driven costs should be allocated directly to the activity that causes the costs and to the respective cost centres and cost drivers. Consequently, the costs of treating, for example, the toxic waste arising from a product should directly and exclusively be allocated to that product. Many terms are used to describe this correct allocation procedure, such as environmentally enlightened cost accounting, full cost accounting or activity-based costing (ABC)."

Environmental Management Accounting Procedures and Principles - United Nations Division for Sustainable Development.

Environmental Management Accounting with ace on-demand

There is currently a large amount of press revolving around Greenhouse Gas Emissions, in particular Carbon Emissions and its impact on the Environment. Whether you agree with the science or not is irrelevant, what is relevant is that Governments around the world are taking action and there is a groundswell of support for organizations that are seen to be "green". There is also scrutiny of, and high penalties for companies that state green credentials but can not back them up, so called "green washing".

At the moment there are so many unknowns, locally in Australia the Government is calling for the introduction of an Emissions Trading Scheme, which has been operating in Europe for a few years now. The impact of this trading scheme is unknown.

• What impact will it have on the bottom line?
• What if I can't pass this increase in cost on to my customers?
• I'm part of a supply chain how much of my emissions do I need to pass onto my customers?
• What if I need to calculate emissions-per-unit-output like they do in the UK, how do I calculate that?
• If we have Carbon permits how do I know if I should use them or sell them on the open market?

There are many unknowns, but an important step that can be taken now is to get your own company in order from a cost and emissions calculation perspective. You can readily calculate your current total Carbon Footprint, there are numerous calculators and companies that can help do this. You can then use this calculation as an input for ace and flow the carbon emissions through the model using its own set of business rules to determine high emissions Activities and therefore products. Then by combining cost and revenue, you end up with an Emissions and Profitability report that will help you to focus on financially responsible ways to reduce carbon emissions.

Good for the planet and good for shareholders. 

A report can be generated inside ace, called the Carbon-Profit Bubble^(tm) Report, as shown below:

 

This report combines Emissions (in this case CO₂ emissions, but it could be any of the identified Greenhouse Gases) with Profitability and Value (or Volume). The benefits of this solution are:

• The report can be created for each individual product or service.
• Can "Drill into" the data to determine which "Activities" contributed to these high carbon emitting products and which Resources (Costs) and/or Energy are consumed.
• Provide Management with the data required to cut emissions in a financially responsible way.
• Provides substantial insight into the "consumers" of your emissions if you have to pass this information onto clients.
• Because it is on-demand the entire supply chain can contribute to the one central model to provide a transparent system for transferring emissions.