11.isea vol 0004www.iiste.org call for paper no 2 pp. 89-103

Issues in Social and Environmental Accounting
Vol. 4, No. 2 December 2010
Pp 89-103

Environmental Management Accounting
(EMA) Case Studies in Honduras –
an Integrated UNIDO Project
Christine Jasch
Institute for environmental management and economics
IÖW Vienna, Austria

Daniel Ayres
Cleaner Production Centre
Honduras

Ludovic Bernaudat
UNIDO
Abstract

This article describes the outline and main first results of the UNIDO TEST (Transfer of
Proven Practices for Environmentally Sound Technologies) program, which uses Environ-
mental Management Accounting (EMA) for setting the baseline for calculating savings
achieved by the Cleaner Production approach. The project focuses on the Rio Blanco basin in
North Western Honduras and applies an integrated approach for improving industrial water
management, pollution reduction and productivity.

Keywords: Integrated environmental management, industrial water management, environ-
mental management accounting, environmental costs, material flow cost accounting

Background mental management accounting and in-
tegrated environmental management
Industrial pollution and poor water man- approaches like TEST in order to con-
agement are considered key priority vince industries to start-up their path
problems in Honduras. There is limited towards a sustainable industrial develop-
experience in implementation of cleaner ment. Following a scientific study from
production in Honduran industries. The the National Research Institute
UNIDO National Cleaner Production (CESSCO), the Rio Blanco basin has
Centre (NCPC) has conducted most pro- been identified as the best case study for
jects. Therefore, the need exists to dem- implementation in Honduras.
onstrate cleaner production, environ-
Christine Jasch Christine Jasch is Director of the Vienna Institute for Environmental Management and Economics,
IÖW Institute for environmental management and economics, IÖW Vienna, email: Jasch.Christine@ioew.at

90 C. Jasch, D. Ayres, L. Bernaudat / Issues in Social and Environmental Accounting 2 (2010) 89-103

Objective proach integrating the preventive win-
win strategy into enterprise operation.
The overall objective of this UNIDO TEST is building on management of
project is to promote the adoption of change within different levels of the
best practices for industrial water man- management pyramid:
agement and pollution reduction. This is
in line with UNIDO´s holistic approach the operational level
to Cleaner Production (1). Two indus- the management system level
trial sectors, textile and food production, and
have been selected as target for the dem- the strategic level.
onstration activities. The focus of the
project is on integrated water manage- Relevant tools of preventive environ-
ment, but also pollution related aspects mental management or their parts are
are addressed. The project’s objective is applied based on a complex diagnosis of
in line with national priorities. enterprise needs (Initial Review). TEST
is supporting the concept of the learning
The project is expected to deliver the organization starting with the identifica-
following results: tion of potential leverage points and set-
Raised awareness of industries on ting up the relevant baselines, ending
the economical and environmental with a reflection at strategic level of the
benefits of implementing TEST and improvements achieved and of the ex-
EMA perience gained. TEST was already suc-
Enhanced technical skills of indus- cessfully applied within the Danube
tries’ staff to identify best practices River Basin. Its integrated approach has
for water management been tailored for application to pilot
Implementation of demonstration countries within the Mediterranean Re-
solutions for better water manage- gion (Egypt, Morocco and Tunisia)
ment within the framework of the MED-TEST
Identification of demonstration initiative (2008-2011) as well as Hondu-
EST investment projects to achieve ras and Mexico.
national and international standards
for water consumptions and efflu- A TEST project is tailored to the unique
ent release conditions of the industrial sector as well
Established national capacity for as the institutional framework of the
streamlining TEST and EMA in the country where it is implemented. Intro-
industrial sector with the support of duction of the TEST integrated approach
the NCPC. at the enterprise level follows this se-
Wide dissemination of project’s quence: first, the existing situation is
results improved by better management of the
existing processes, then the introduction
of new cleaner technology (or if not suf-
Project outline of the overall UNIDO ficient also of optimized end-of-pipe
TEST approach in Honduras solutions) is considered. Finally, the les-
sons learned from each TEST project’s
The TEST approach developed by implementation is reflected in the re-
UNIDO is a need driven systematic ap- spective company’s business strategy.

C. Jasch, D. Ayres, L. Bernaudat / Issues in Social and Environmental Accounting 2 (2010) 89-103 91

Implementation of the integrated TEST grated approach in selected industrial
approach is based on three basic princi- sectors and disseminating project’s re-
ples: sults at the national level. The project
targets local industries (large and me-
1. At the level of processes, it gives dium) within selected sub-sectors in in-
priority to the preventive approach dustries located in the catchment area of
of CP (Cleaner Production - sys- the Rio Blanco, one of the affluent of the
tematic preventive actions based on ULUA river the Second´s River in the
pollution prevention techniques country, located in the Sula Valley in the
within the production process) and vicinity of San Pedro Sula, the country’s
considers the transfer of additional industrial area.
technologies for pollution control
(end-of-pipe) only after the feasible The implementation is organised into
cleaner production solutions have three main phases. At project’s start a
been explored. This leads to a consultation process was initiated with
transfer of technologies aimed at key stakeholders, such as governmental
optimizing environmental and fi- institutions and industrial associations,
nancial performance at the same to discuss the project’s implementation
time: bringing desired win-win so- strategy and make the final selection on
lution for both areas. the industries to be targeted. A project
2. At the level of management sys- steering committee was established.
tems, the integrated TEST approach During the first phase a first training
addresses the managerial aspects of session was organized to train the na-
preventive environmental manage- tional counterpart on the TEST inte-
ment. It establishes the necessary grated approach. Awareness raising
information system on relevant ma- meetings were organized for the selected
terial, energy and related financial industries. Formal agreements were
flows necessary for linking the stra- signed with these companies to secure
tegic and operational level within their commitment and co-financing to
an enterprise. This is done by using the project.
the basic elements of an EMS
(Environmental Management Sys- The project has now entered its second
tem) and EMA (Environmental phase, were the environmental manage-
Management Accounting). ment accounting (EMA) tool was used
3. At the strategic level, it puts envi- to establish a baseline of current costs in
ronmental management within the order to be able to calculate savings. The
broader strategy of environmental second phase started with the implemen-
and corporate social business re- tation of an interactive training pro-
sponsibilities (CSR), by leading gramme on the TEST and EMA ap-
companies towards the adoption of proach for the targeting industries, na-
sustainable enterprise strategies. tional EST (environmentally sound tech-
nologies) experts and some municipal,
These objectives will be achieved in industrial association and UN Techni-
Honduras by reinforcing national techni- cians invited to assure the future national
cal capacities, demonstrating the effec- dissemination of the project. The pro-
tiveness of the TEST and EMA inte- gramme consisted of theoretical lectures,


case studies from TEST projects imple- case studies will be prepared and pro-
mented elsewhere and concrete cases moted during technical workshops/
from the participating industries. The seminars targeting other industrial areas.
training programme was organised in An extensive communication campaign
three main modules: in between each will be implemented to target local mu-
session national sectorial experts pro- nicipalities, local communities and
vided guidance and technical assistance NGOs with the aim to raise awareness
to the enterprises’ staff helping them to and stimulate peer-group pressure on the
bridge the gaps between the existing and polluting industries at the local level.
the desired level of knowledge for the
implementation of EMA, sound water
management measures and environmen- Stakeholders and implementation is-
tally sound technology (EST). sues

The first module of the training pro- The main counterpart for TEST in Hon-
gramme focussed on EMA and was per- duras are the National Cleaner Produc-
formed in the last week of August 2010. tion Centre (NCPC) based in San Pedro
It is described in more detail further be- Sula, and the National Research and Pol-
low. At the end of the interactive train- lutants Analysis Laboratory, CESSCO,
ing programme, technical solutions for based in Tegucigalpa. The NCPC has
optimising the operation of the existing hands-on experience in implementation
technology with improvements of the of Cleaner Production studies, ISO
water management systems will be iden- 14001 (2) implementations and good
tified and implemented. Moreover the links with relevant stakeholders (local
technical and financial feasibility for authorities, industrial associations, in-
technology up-grade to reach interna- dustries, NGOs). The national counter-
tional standard for the water usage and part is responsible for: overall coordina-
pollution control will be investigated. tion of project’s activities, quality assur-
For each company opportunity studies ance in line with the proposal, identifica-
will be prepared. In order to facilitate tion and engagement of qualified secto-
EST investments, the project shall create rial expertise for activities under phase
a link with financial institutions or na- II.
tional programmes that are offering soft
loans to industries that want to imple- CESCCO is actively involved in each
ment cleaner technology. By the end of phase of the project. Its experience in the
the second phase, the results achieved at areas has been valuable for the selection
each company will be evaluated, dis- of industries and its technical capacity
cussed with top management and pre- will be valuable to confirm the benefits
sented to the local stakeholders. of the promoted techniques through the
The last phase of the project aims at dis- analysis of the pollution level variation
semination of project’s results for further in the Rio Blanco.
replication within the country. A na-
tional conference will be organised in Relevant stakeholders involved in the
order to present project’s results to the project’s advisory board are, in addition
industrial community and institutional to the two stakeholders above-
stakeholders. A guidance document with mentioned, the municipality, industrial


Table 1. Project activities and success indicators
Phase 1 - Outputs: Success indicators:
Secured commitment and active Agreement signed with 3 industries for
participation of major stakeholders participating in TEST demonstration
Local consultants trained activities
Participating industries selected
Phase 2 – outputs Success indicators (at demonstration compa-
Enterprises trained on TEST tools nies):
Enterprises and consultants trained Number of implemented CP measures
in EMA Water savings and pollution reduction
EMA assessments performed in Number of people trained
participating enterprises Savings and improved information sys-
Improved water systems based on tems achieved
existing technology
Identified investment options for
technology up-grade (EST)
National capacity to replicate
TEST and EMA established
Phase 3 – outputs Success indicators:
Project’s results disseminated to Number of demonstration industries
relevant stakeholders at local and willing to continue with TEST and/or
national level EMA activities
Awareness raised at other indus- Number of new industries interested to
trial areas to promote replication start-up TEST replication
activities

associations, NGOs and local industries. cleaner production assessments nomi-
The involvement of the industrial asso- nated by the NCPC, a national account-
ciations within the TEST project is im- ant hired as national consultant for the
portant to ensure enterprises participa- NCPC as well as representatives from
tion and proper dissemination of project the stakeholder groups, e.g. the sector
results within the industrial community. specific industry representatives, the
local International Labor Organisation
(ILO) and the FAO, which are both also
Project outline of the EMA counter- involved with environmental and health
part issues in Honduras. The training was
performed by Ludovic Bernaudat,
The above mentioned second phase UNIDO, Daniel Ayes, technical director
started with the implementation of an of the NCPC in Honduras, and Christine
interactive training programme on the Jasch, Institute for environmental man-
TEST and EMA approach for the target- agement and economics in Vienna, per-
ing industries and national EST experts, forming the EMA training.
as well as the identified stakeholder
groups. A one day seminar was held in The second day, an internal train-the-
San Pedro Sula with the active participa- trainers workshop was held with the en-
tion of 2 representatives of each com- vironmental managers of the companies
pany (the environmental manager and an and the national consultants. The brew-
accountant), the consultants for the later ery case study presented in chapter 8 of


the book on Environmental Management ready built in the NCPC, future projects
and Material Flow Cost Accounting by are thus likely.
Christine Jasch (3) (see also book review
in this journal) and the related EMA as- The companies have performed the as-
sessment tool in an Excel-template sessment of EMA for the last business
(available for download at www.ioew.at) year 2008. They will themselves with
were used as a starting point for the assistance of the local national consult-
training. The participants were asked to ants perform likewise in depth investiga-
come up with a structure for the mass tions for the identified most polluting
balance and a process flow chart for processes and an update on the total en-
their operation and discuss where the vironment related costs for 2009. In the
most significant environmental impacts meantime also the cleaner production
occur. This joint training significantly options as described for the project
facilitated the upcoming company on- phase 2 will be implemented. For the
site assessments. year 2010 it is envisaged, that the
cleaner production options will have
In the following days one-day work- been implemented and so for the total
shops to assess the total environment year of 2010 the improvements in envi-
related costs of the previous business ronmental and financial terms should
year were performed at each company. become visible. The current assessment
As described in (4) the first EMA as- of 2008 thus established the baseline in
sessment can be performed in a one to order to be able to actually measure im-
two days workshop in any company provements and at the same time clearly
based on the list of accounts for the pre- focus on the hot spots from an environ-
vious business year. It is essential that mental as well as a financial point of
the accountant is present and has direct view.
access to his files. The assessment is
performed into an assessment template
in Excel format, which automatically Description of the participating com-
aggregates to a one page summary, panies
which is converted into a percentage
distribution of the environment related Between 2005 and 2006, the National
costs by environmental media impacted Research and Pollutants Analysis Labo-
and by the cost categories described be- ratory, CESCCO, conducted a pollution
low. survey of the river basin and concluded
that four large industries were partly
On the last day in Honduras of Mrs. responsible for the pollution observed.
Jasch, the protocols of all companies The level of pollution represents a high
were discussed with the group of con- risk for downstream populations. Since
sultants and recommendations devel- then, one company has closed down and
oped. In addition, an ad hoc presentation the three remaining companies are part
to key executives of local industries had of this project.
been organised, which received high
interest in applying EMA also from 1. Novave s.a.
other companies outside the Rio Blanco
project. With the national capacities al- Farm Villalobos, later renamed the Poul-


try Villalobos, was founded in 1964. In of the fish life cycle. The processes are
1965 Villalobos Farm absorbed a small identical to the ones described for the
chicken operation in Guatemala. This Danish fish processing industry in (5),
poultry operation called Pollo Rey, in and many of the experiences could be
1972 El Salvador, beginning operations transferred, if the economic benefit
and marketing poultry products under would be clearly visible.
the brand Indian Chicken. It is on the
market only recently in Honduras and The water source is actually Lake Yojoa,
Costa Rica, using the prestigious brand but first passes by river and pipeline,
Pollo Rey here. These poultry operations through the turbines of the ENEE
are part of the Animal Industry Division (Empresa Nacional Energia Electrica, in
(DPI) Corporacion Multi-Inversiones. other words the national electric com-
The division has own farms for growing pany), and later arrives at the farm. Ap-
and fattening, hatcheries and chicken proximately 14 cubic meters of water
processing plants, generating more than per second are available to the company.
14,000 jobs in the region.
The farm has the capacity to produce
The company Noraves as a daughter of 8200 metric tons of whole tilapia or
DPI has 400 employees and is process- 5500 pounds of tilapia fillets per year.
ing about 75.000 chickens per day. The Other products generated by the com-
organic wastes (feathers, blood, meat pany include: skins, scales, fishmeal,
and chicken bones) are processed in the and fish oil. The company manages and
flour plant attached to it, which has huge has the facilities for all processed prod-
water consumption and related wastewa- ucts: fillet product plant, fish meal and
ter treatment issues. fish oil plant.

2. Aquacorporacion de Honduras The company exports both fresh fillets
and fresh gutted whole fish to the USA.
Aquacorporacion de Honduras is a fully Skins and scales are also exported.
integrated tilapia fish farm and process- Whole gutted whole fish, fish meal and
ing facility with about 360 employees. fish oil are sold domestically.
The company is located just outside of
the town Rio Lindo, at the base of Also included in the infrastructure of the
mountain range in which Lake Yojoa farm are basic water treatment systems
resides. The farm is approximately 120 (sedimentation ponds and oxidation
hectares in size. ponds) which pre-treat waste waters
prior to their re-entering the natural river
The production of the tilapia occurs in a systems. Probiotic products are also
variety of aquaculture systems ranging regularly added to these oxidation ponds
from moderate density mud bottom in order to more rapidly break down
ponds to high density concrete raceways. solid waste.
All facets of the tilapia life cycle are
managed within the production systems, 3. Caracol Knits and Coral Knits
from reproduction to market. The pro-
duction facets include: reproduction, Caracol and Coral Knits are Textile
larval, nursery, juvenile, and adult stages Plants Located in the municipality of


Potrerillos, Cortés Honduras that started monetary information on environ-
operation in 2001. The Companies are ment-related costs, earnings and
known both locally and internationally savings.
as a leader in the textile sector and are
one of the major employers in northern Simply defined, environmental manage-
Honduras. ment accounting (EMA) is management
accounting (MA) with a focus on physi-
The facilities include warehouses for cal information on the flow of energy,
storing raw materials, finished products, water, products and materials as well as
and spare parts, as well as a steam gen- monetary information on environ-
eration system with boilers operated on mental costs and revenues and projects
bunker and diesel fuel. The project also related to environmental protection.
calls for an untreated sewage water treat- EMA is closely related to process cost-
ment plant and a plant for treating doing as well as to environmental perform-
mestic sewage and industrial wastewater ance and management systems. Well-
from the dyeing process. designed and implemented EMA helps
to ensure better internal management
The Companies are a model in the Hon- and decision-making e.g. for investment
duran textile industry that are adding appraisal, cleaner production, improving
value to traditional maquila operations Eco-efficiency and calculating savings
by making greater industry integration within organizations. EMA also serves
and consolidation possible. as a basis for external reporting and life
cycle assessments of products (1).
Caracol and Coral actively take care of
their environmental responsibility, Starting point for EMA is the assessment
knowing that one of the biggest environ- of a material flow balance, also called
mental aspects related to textile produc- mass balance or input output balance in
tion is waste water treatment that comes volumes and monetary terms on the sys-
from the dyeing process. The sites have tem boundary of the organization for the
two Waste Water Treatment Plants, both complete previous business year, as
based on activated sludge and proudly most data is available only for this sys-
carries an ISO 14.001 certificate. tem boundary (7). This is especially the
case for small and medium sized compa-
nies (SMEs), which often don’t have
EMA Methodology well developed cost accounting struc-
tures. In the first step of developing the
According to the definition developed material flow balance sheet, only a
by the United Nations EMA Expert rough overview analysis may be per-
Working Group (6), Environmental formed, instead of a detailed data collec-
Management Accounting, EMA is the tion.
identification, collection, analysis and
use of two types of information for inter- The upcoming ISO standard on Material
nal decision making: Flow Cost Accounting, ISO 14051:CD,
physical information on the use, 2009 (8), defines MFCA as “a system
flows and destinies of energy, water for measuring the flow and stock of ma-
and materials (including wastes) and terials in processes or production lines in


both physical and monetary units”. All purchased materials must by
MFCA is a tool for improving material physical necessity leave the com-
productivity in order to reduce the rela- pany either as product or waste and
tive consumption of materials, energy emission.
and water and closely linked to EMA. Waste is a material which has been
MFCA is regarded as an effective means purchased and paid for but which
by which organizations can simultane- has not turned into a marketable
ously seek environmental and economic product.
benefits. MFCA improves material pro- Waste is being paid for 3 times: at
ductivity in processes or production purchase, at production and for dis-
lines and may consequently help reduc- posal
ing related environmental impact. In Waste comprises all non-product
MFCA, the flow and amount of the in- output of input materials includ-
ventory of materials used within an or- ing water and energy.
ganization are measured in physical
units (e.g. weight, capacity, and volume) The EMA Assessment Template (in
and subsequently evaluated in monetary Microsoft Excel format, available for
units, which are based on the manufac- download at www.ioew.at) assists at the
turing costs incurred. assessment of total annual environ-
mental and material flows and related
EMA places a particular emphasis on costs and provides the option to distrib-
materials and related costs because (9): ute them to different cost centers, which
should be equivalent to production proc-
1. the use of energy, water and materi- esses and therefore provide good quality
als, as well as the generation of data for investment appraisal of specific
waste and emissions, are directly processes. For material flow cost ac-
related to the environmental impacts counting (MFCA) the system boundary
of organizations and their products for the material flows can focus on more
(10), and detailed processes within a cost centre.
2. material purchase costs and materi-
als lost in waste and emissions are The EMA Excel-template consists of
the most prominent cost drivers in four sheets – Mass balance, Detail, Sum
many organizations. Especially in and Structure. Information is only added
countries with low enforcement of into the Mass balance and the Detail
legal compliance and relatively low sheet.
labor costs, material and energy use
and related losses are a significant The Mass balance records the physical
cost driver (12). and monetary values of material inputs
and product outputs in one work step, as
Both, the EMA and MFCA approach these amounts should be consistent. The
have the underlying assumption, that all excel template contains two columns for
purchased materials must by physical the source of information for both val-
necessity leave the company either as ues. The enterprise resource planning
product or waste and emission. Waste is system and the accounts for materials
thus a sign of inefficient production: used for production should provide this
information in a consistent and detailed


manner. ferred to the sheet Sum to have an over-
view and a better presentation layout
The actual cost assessment is performed which shows the aggregated totals by
in the Detail sheet only. It can be done in cost category and calculates the costs
any currency, which should be noted in into percentages to show the most rele-
the heading where EURO stands in the vant environment related costs. This fig-
tool. ure can also be compared to total pro-
duction costs.
All the cost categories are already set
but the several different cost items re- The main EMA cost categories de-
lated to cost accounts or taken from cost scribed in the IFAC EMA guidance
centre reports should be listed with indi- document (10) are shown in Figure 1.
cating the reference.
The program automatically aggregates For company internal calculation of en-
the costs of each cost category, but when vironmental costs, expenditures for envi-
adding lines to fill in more details a last ronmental protection are only one part of
cross check is recommended to make the coin. The costs of waste and emis-
sure all aggregates are complete. sions include much more then the re-
The sum of the costs of all categories in spective treatment facilities and disposal
the sheet Detail is automatically trans- fees. Several EMA and MFCA case

Material Flow related Costs

1. Materials Costs of Product Outputs

2. Materials Costs of Non-Product Outputs

Environmental Protection related Cost

3. Waste and Emission Control Costs

4. Prevention and other Environmental Management Costs

Figure 1: MFCA and EMA cost categories

studies have shown that the costs of ronmental costs in relation to other
waste disposal and emission treatment costs. However, it is not the goal to
are typically 1 – 20 % of total environ- show that environmental protection is
mental costs, while the purchase costs of expensive, but rather to highlight the
the wasted materials represent 40 to 90 scope for savings potentials. It is also
% of environmental costs, depending on not the most important task to spend a
the business sector examined (13), (14), lot of time defining exactly which costs
(15) . are environmental or not, or what per-
centage of something is environmental
Adding the purchase value of non- or not, or if Energy belongs to NPO and
product output to the corporate environ- to what degree. Environmental protec-
mental costs increases the share of envi- tion projects not only have effects on


Environmental protection expenditure (emissions treatment, control and waste pre-
vention costs)
+ Costs of Non Product Output (Costs of unproductive material, capital, and personnel)
= Total corporate environment related costs

Figure 2: Total corporate environment related costs

nature, but also on neighbors (noise, In other words, corporate environmental
odors, pollution) and employees (health and material flow costs are just a subset
and safety), if related to material and of the bigger cost universe that is neces-
energy flows. In addition they result in a sary for good decision-making. Environ-
reduction of risks for employees, nature mental costs are part of an integrated
and neighbors in case of accidents and system of materials, energy and money
other occasional production events. flows through a corporation, and not a
separate type of cost. Doing EMA and
It is often difficult to determine the envi- MFCA is simply doing better, more
ronmental portion of these costs. As comprehensive Management Account-
with integrated cleaner technologies that ing, while wearing an environmental hat
are often more cost and material effi- that opens the eyes to hidden costs.
cient, the environmental portion of Therefore, the focus of MFCA is no
health and safety or risk prevention ac- longer on assessing total environmental
tivities usually cannot be determined costs, but on a revised calculation of
precisely. In general, it may be stated production costs on the basis of material
that assets that are allotted 100% to the flows (including energy and water).
environment are bad for the environment
as they are often end-of-pipe technolo-
gies that do not solve the problem at the Results of the EMA assessments
source, but rather shift it from one envi-
ronmental medium to another (e.g. from Starting point of an EMA project is put-
the air to the soil and then into the wa- ting the right team members together.
ter). These approaches are expensive Experience shows that the environ-
and inefficient. mental manager barely has access to the
actual cost accounting documents of the
The most important task is to make sure company and only is aware of a tiny
that ALL relevant and significant costs fraction of aggregate environmental
are considered when making business costs. On the other hand, the financial
decisions. This is why Figure 2 calls the accountant/controller does have most of
total sum: total environment related the information but is unable to separate
costs. This is the universe of costs, that the environmental part without further
the environmental manager deals with guidance. In addition, he or she is lim-
and that can possibly be reduced by pol- ited to thinking within the framework of
lution prevention and material and en- existing accounts. Also, the two depart-
ergy efficiency projects. ments tend to have a severe language
problem.


So combining the competencies for Using the explanations of the EMA
monetary accounting and process engi- books and the Excel Template provided
neering/environmental management and with it, the first EMA assessment for the
gaining support from both sides is vital previous business year for any given
for the success of any EMA project. company should not take longer than a 1
to 2 days workshop with the accountant
Another important guideline on the way and process engineer.
is to focus the assessments on what is
easily available from existing records The cost assessment reveals improve-
and to note, where improvements to the ment options in two areas:
information system would be recom-
1. What always can be found, are op-
mended, so that future assessments will
tions and measures necessary to
provide better data in shorter time. It is
improve the quality and consistency
NOT the goal of an EMA assessment to
of data and information flows in an
come up with “complete data” for the
organisation. This is the starting
past and spend a lot of time tracing old
point of EMA most projects and the
invoices. It is rather the goal to open the
focus of most follow up projects.
eye for improvement necessities and
develop an overview on the most signifi- 2. In companies, that have not done
cant material flows and related costs. environmental management pro-
jects for several years, also techni-
The resulting recommendation for the cal improvement options may im-
assessment is: don’t be shy to use esti- mediately become obvious. What
mates! The people at the production always is made visible, mostly for
processes often can provide very good the first time, are the costs related
estimates for loss percentages, which are to inefficient production, wasting
much more accurate than the figures materials and energy. So even if the
used in the cost accounting department. technical solution might not be
Estimates can at a later stage be im- known at the end of the first assess-
proved by more detailed measurements, ment, the priority areas for deeper
but for the first assessment don’t worry investigation will have been de-
not to be perfect. It is better to have an fined and the total range of environ-
estimate than no figure. But the calcula- ment related costs will be clearer.
tion procedure or the information source
for the estimate should be recorded. The following table shows an aggre-
gated result of the 2 companies in Hon-
The goal of the first assessment is to duras from the food industry. As both
be able to present the entire material companies have not installed an environ-
inputs and total environmental costs mental management system yet, their
of the previous business year to top costs relating to environmental protec-
management, and tion are negligible (2 % for end of pipe
come up with improvement recom- treatment, most related with the waste
mendations and water treatment plant and 0,2 % for in-
gain support to improve the infor- ternal personal dealing with pollution
mation system and technical proc- prevention). In all the EMA case studies,
esses. the actual costs are subject to secrecy.


Figure 3: Average cost distribution in the food industry in the Honduras case
studies

Environment related costs by environ- Air and Water and Solid Waste General Total in %
mental domains and cost categories climate Waste environ-
Water mental
Manage-
ment
1. MATERIALS COSTS OF NON- 20,0% 2,4% 75,3% 0,0% 97,7%
PRODUCT OUTPUTS

1.1. Raw and Auxiliary Materials 0,0% 0,0% 70,0% 0,0% 70,0%
1.2. Packaging Materials 0,0% 0,0% 0,1% 0,0% 0,1%
1.4. Operating Materials 0,0% 2,4% 4,7% 0,0% 7,1%
1.5. Water 0,0% 0,0% 0,0% 0,0% 0,0%
1.6. Energy 20,0% 0,0% 0,0% 0,0% 20,0%
1.7. Processing Costs 0,0% 0,0% 0,5% 0,0% 0,5%
2. END-OF-PIPE 0,0% 1,6% 0,2% 0,2% 2,0%

2.1. Equipment Depreciation 0,0% 0,4% 0,0% 0,2% 0,6%

2.2. Operating Materials 0,0% 0,4% 0,0% 0,0% 0,4%
2.3. Water and Energy 0,0% 0,0% 0,0% 0,0% 0,0%
2.4. Internal Personnel 0,0% 0,4% 0,1% 0,0% 0,5%
2.5. External Services 0,0% 0,3% 0,0% 0,0% 0,3%
2.6. Fees, Taxes and Permits 0,0% 0,1% 0,1% 0,0% 0,2%
2.7. Insurance 0,0% 0,0% 0,0% 0,0% 0,0%
2.8. Remediation and Compensation 0,0% 0,0% 0,0% 0,0% 0,0%
3. INTEGRATED PREVENTION 0,0% 0,0% 0,1% 0,1% 0,2%
3.1. Equipment Depreciation 0,0% 0,0% 0,0% 0,0% 0,0%

3.2. Operating Materials, Water, Energy 0,0% 0,0% 0,0% 0,0% 0,0%
3.3. Internal Personnel 0,0% 0,0% 0,1% 0,1% 0,2%
3.4. External Services 0,0% 0,0% 0,0% 0,0% 0,0%
3.5. Other 0,0% 0,0% 0,0% 0,0% 0,0%
4. RESEARCH and DEVELOPMENT 0,0% 0,0% 0,0% 0,0% 0,0%
COSTS
5. FINES 0,0% 0,2% 0,0% 0,0% 0,2%
TOTAL ENVIRONMENT-RELATED
COSTS (1. + 2. + 3. + 4. + 5. + 6.)
20,0% 4,2% 75,6% 0,3% 100,1%
7. ENVIRONMENT-RELATED
EARNINGS

7.1. Other Earnings 0,0% 0,0% -0,1% 0,0% -0,1%
7.2. Subsidies 0,0% 0,0% 0,0% 0,0% 0,0%
EARNINGS 0,0% 0,0% -0,1% 0,0% -0,1%
COSTS & EARNINGS
20,0% 4,2% 75,5% 0,3% 100,0%


Therefore the table shows the average Jasch C., (2009) “Environmental and
percentage distribution, which allows Material Flow Cost Accounting -
interpretation of the most significant Principles and Procedures”, Eco-
cost carriers. Efficiency in Industry and Sci-
ence, Vol. 25, Vienna: Institut für
As energy is not regarded as a product in Ökologische Wirtschaftsfor-
the food industry, the 20 % costs for en- schung.
ergy can be taken as a reference point. Jasch Ch., (2006) “How to perform an
The by far most significant costs are re- environmental cost assessment in
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% of the total environment related costs. (2009) “Cleaner Production in
Even though part of the skin, blood, etc. Danish fsih processing – experi-
are being processes into animals feed, ences, status and possible future
the related income of 0,1 % is negligible strategies”, Journal of cleaner Pro-
in relation to the material input costs duction, Vol. 17, No 3, pp. 380 –
lost. Any improvement of the raw mate- 390.
rial processing efficiency would thus United Nations Division for sustainable
significantly reduce costs and environ- Development, “Department of
mental impact, as most of the organic Economic and Social Affairs”,
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nor the waste volumes discharged into e s a/ s us t d e v/ e s t e ma 1. ht m ,
the river. www.ioew.at
Jasch Ch., (2003) “The use of environ-
By installing an environmental manage- mental management accounting
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external people working on integrated mental costs”, Journal of Cleaner
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they would be working on reducing the ISO (2009) “ISO:CD 14051, Material
material costs of non-product outputs. Flow Cost Accounting, Geneva:
Case studies in Austria from the brewery International Organization for
industry have seen a reduction in the Standardization.
relative costs of non-product outputs to Jasch Ch., (2006) “Environmental man-
as low as 55 %. agement accounting (EMA) as the
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