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Expert Working Group Meeting: Third Meeting, Bonn, Germany, 1-3 November 2000
Expert Working Group Meeting on Improving Governments' Role in Promoting Environmental Management Accounting
Report of the meeting
The third meeting of the Expert Working Group on "Improving Government’s Role in Promoting Environmental Management Accounting" was organized by the United Nations Division for Sustainable Development, Department of Economic and Social Affairs, and hosted by the German Federal Ministry for Education and Research and the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety. Participants are listed in Annex 1.
Background
Pressures and incentives for the adoption of cleaner production or pollution prevention processes by business have emerged from both inside and outside enterprises. Internally, the adoption of cleaner technologies may be driven by efforts to avoid the costs of waste management, to bypass the uncertainty of changing regulations, and to position the firm as a "green" enterprise in the local, national, or global marketplace. Externally, corporate environmental performance is increasingly scrutinized by investors, financial analysts, regulatory bodies, host communities, and the public at large.
To satisfy external pressures, enterprises are reviewing and modifying reporting processes in order to measure and report progress in addressing societal environmental and social concerns. To aid in the development of external reporting or financial accounting tools addressing environmental issues, many business, environmental, government and accounting organizations worldwide have launched initiatives to promote aspects of or frameworks for corporate environmental reporting.
To address internal management concerns, companies also need to review management information systems and decision making processes and to develop managerial accounting tools. Managerial accounting is a broad term covering the process of identification, measurement, accumulation, analysis, interpretation, presentation and communication of financial information for use by management for planning, evaluation, and control within an organization, and to assure accountability for use of resources. In this context, environmental management accounting (EMA) serves as a tool for recognizing and understanding the full spectrum of environmental costs of current production systems and alternative approaches and the economic benefits of pollution prevention or cleaner production processes, and to integrate information on these costs and benefits into day-to-day business decisions.
Though managerial accounting systems are traditionally viewed as matters internal to a firm, the potential social benefits resulting from widespread use of environmental management tools justifies active governmental involvement in promoting such systems. Government policies can play an important role in encouraging and motivating businesses to adopt environmental management accounting systems to ensure that all material and production costs, with specific identification of environmental costs, become fully inventoried, properly allocated, and clearly articulated. The purpose of the Expert Working Group on Environmental Management Accounting is to examine how governments can effectively encourage industry to develop and use environmental management accounting systems.
The participants in the Expert Working Group meetings are from national environment agencies and ministries, international organizations, industry, accounting firms, academia, and United Nations agencies, as well as from the United Nations Division for Sustainable Development (UN-DSD). To date the group includes participants from government agencies in Argentina, Australia, Austria, Brazil, Canada, China, Colombia, Czech Republic, Denmark, Egypt, Finland, Germany, Hungary, India, Italy, Japan, Mexico, Nepal, Netherlands, Norway, Philippines, Poland, Portugal, Slovak Republic, Sweden, United Kingdom, United States of America and Zimbabwe.
The first meeting of the Expert Working Group was held in Washington DC in August 1999, hosted by the United States Environmental Protection Agency. This meeting reviewed government activities for the promotion of EMA as well as EMA concepts and the barriers to and goals of government action in this area. Agreement was reached on the objectives of the group and a future work plan. A publication reporting on the results of this meeting is available at the Division for Sustainable Development website
The second meeting of the Expert Working Group was held in Vienna, Austria, 15-16 May 2000. At this meeting, the group reviewed existing programmes for the promotion of EMA from new members of the group as well as progress made by members since the meeting in Washington. Additionally, the group agreed on the outlines for three reports to be produced for the group on the priority issues identified in the first meeting.
The reports are:
1: EMA metrics, guidelines and principles
2: Links between EMA and other management and accounting systems
3: Policy options for the promotion of EMA
The fourth meeting of the Expert Working Group will be held in Tokyo, 5-7 June 2001. The fifth meeting of the Expert Working Group is scheduled for January 2002 in the United Kingdom.
Objectives
At the third meeting, the Expert Working Group reviewed activities reported by new members of the group as well as updates on activities of existing members. The group also discussed the possibility of linking the work of the group to both accounting and management standard-setting organizations. The group participated in an exercise on EMA using a fictitious company in order to clarify concepts and gain a clearer understanding of the types of costs considered in EMA.
The major activity of the group at its third meeting was reviewing the draft reports prepared as agreed at the second meeting. The draft reports had been circulated to participants prior to the meeting.
The group also agreed on a series of activities and areas of work to be pursued and reported on at the fourth meeting in Tokyo, 5-7 June 2001. The fifth meeting of the group was planned for the United Kingdom in early 2002.
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