Environmental Sustainability: Tools and Techniques

1 MA NAGEMENT ACCOUNT ING GUI DELIN E (M AG )ByHelenneDoody,BSc (Hons ), ACAEnv iron men talSus tai nab ility :Tool s and Te chn iquesPubl ish edbyTheSociety of ManagementAccountantsofCanada,theAmeric an InstituteofCer tif iedPublicAccountantsandTheCharteredIn st it uteofMan ce to ReadersThemateria l con ta in ed in th e Management Accou nt in g Guide lin e(MAG )EnvironmentalSustainability:ToolsandTec hniquesis designedto pr ovid e illu strati vein fo rmat ionwi th respec t tothesubjectmatter cov ere d.

2 It does not es tabl ish sta ndards orpr eferredpr ac ti ce s. Th is mate ria l hasnotbeenconsi de re d oracteduponbyan y seni or or te chn ic al commit tee s or thebo ar dof di rector s of eith er th e AIC PA, CI MAor CMAC anada anddo esnotrepresentan off ic ia l op in io n or position of ei th er theAI CPA,CIMA or CMA Can ada .Cop yri gh t 20 09 byThe Society of ManagementAccountants of Canada(CMAC anada),theAmericanIn st it ute of Certi fi edPublic Accountants, Inc.

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4 ISBN:1-55 302 -2 52 -1Co nt ..4In ..4A St rategicApproach toEnvironmental oftheManagement Accou ..7 Key Iss in g Regulatory ..9 Reducing ..10 RespondingtoStakeho ..11 AchievingCompetitive ..12 Method s forId ..14 Priorities andPolicies ..17 ActionPlans, ..18 ToolsandTechniquesforStrategy agement .. 22 Informationan d DataCaptu re .. 23 Costing ..28 InvestmentAppraisal ..37 MonitoringandReportingonEnvironmental Susta in Management .. 49 Reporting ..56 AppendixA: Carillion s SustainabilityExc.

5 57 AppendixB: Commonlyused Environmental ..58 AppendixC: TheISO140 ..61 Useful ..66Bi ..73 Environmental Sustainability: To olsandTechniquesExecuti ve Su mmaryMany organ izatio nsfailto se e the rat ionalefor spendinganymoremoneyontheenvi ro nment thanre qui re d, particular ly in ti mesof economicdi ff icu lty. Enli ghtenedorg anization s, though , ar e movi ngfrompurelycomplyingwit h legalrequirementsto realizing that a fo cu s on envir onmental sustainability providesa co mpetit ivead vantage.

6 For the seorg an ization s, environmentalsustainabilit y is (a)anessentialele ment of co rp or atestrategy, and(b ) synonymouswith long-ter mbusinesssu ssleader s sh ou ld be identif ying andun derst an di ngthekeyenvironmentalsu stainab ilit y issues anddri ve rs rele vantto theiror ganizati onan d developing theirstrategyaccord ingly . Environmental sustai nabilit y shouldbeint egratedthr oughoutthe busine ss,in both strategic an d op er ati onaldecisionmaking,andactivi ti essh ou ld be alignedto th e co re gr ating env ir onment al su st ai nabili ty int o thedecisi onsmadethr oughouttheorg anizationreq uire s th e co mbine d skill s of manydi sciplines,includingmanage-ment accoun ement accountants analyticalandfinancialskillsan d th ei r ab il ityto makeobj ect ivedecisions.

7 Theyar e well pl aced to takea pi votalrole in moving th e environ mentalsu st ainability agenda forward. Environmentalsu stainab ilit y nee ds to be factore d into manyof theactivi ti esin whichmanagementaccoun tants arelikely to alr ead y be in volved,suchasplanning andbudgeting,in fo rmat ionan d datacaptu re, co st in g, investmentappraisal, performancemanagement , an d re po rt in environmentalsu st ainabili ty becomesa more signifi cantissue,newtools andtech ni ques areemerg ingto help organizat ionsmakethenecessarych r.

8 Th ere arealsomany traditi onalmanagement accountingtools andtech ni ques th at canbeap pl ie d or ad aptedto assist organizationsin theef fectivemeasurement an d management of Environmental impacts, costs, en , it is a caseof extend ing exi st ingpracticesto takenewissuesint o account,th in king beyondtheboun dariesof the or ganizat ion,andtakinga longertermviewof therisksan d opp ort un iti es th at envir onmental sustai nabili ty pr tr od uctionLeadin g org anizations areacknowl edgi ngthatlong-termeconomicgr owth is notpossibleun le ssth at gr owth is en vi ronmentall y andsociall y sses, environment al su st ainab ili ty hasbecomeanint egralpartof corporatestrategy.

9 Howeve r, manyor gan iz ati onsarejustbeginningto understandtheim por tanceof (a)th is in te rp laybetweenst rategyandenvironmental sustainability ,an d (b) the ef fe ctsof a chang ing andcomplexregional, national, andint ernationalenviro nmentalag end :ToolsandTechniquesOrg an izatio ns sh ould be consi dering Environmental sustai nabilit y wit hinthecontextof meetin g a bro adrange of st rategic objectives,suchas: Ensurin g co mpliancewi th al l le gal andregulat or y requirements; Ach ie ving ef fe ctiveriskmanagementandco nt ingencyplanning; Improving efficiencyandobtaining costsavings; Bett er meet ingtheneed s of cu stomers andinvestors; Attractin g andret aining top talent andimprovingemployee pr oductivi ty; Improving standingin thelocal, financial, andgovernmentcommunity; Positio ni ngtheorg an ization to th rivein a low-carboneconomy.

10 And Ach ie ving competit ivead vantageandlong-termpr ofi tabilit to planfor a futur e in whichenvir onmental sustainabilit y will bea si gnificantfactor mayput the lo ng-t ermvalue andfut ureof anorganization at so,org anization s that basethei r actionssolel y in termsof compliancewil l missoutonthe man y opp ortunities pre se nte d by Environmental sustai gui de lin e pro videsmanag ement accountants with adviceontool s, Techniques ,an d appro achesto assistth emin developing,implementing,monitor ing,andrepor ti ng on a co rp oratestrat egythat encompassesenvironmental su st ai d ef ficient useof resourcesis a keypart of environmentalsustai nabilityan d a maingoal fo r th e management accountant.