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    environmental-accountingThe International Organization for Standardization (ISO) is responsible for developing the industry standard certification for environmental management - the ISO 14001 standard. It seems they have now focused their attention on going beyond environmental management and begun to focus on standards to improve sustainability. With their latest standard, ISO 14051:2011, also known as Material Flow Cost Accounting, they're looking to drive companies to become further responsible for the waste they generate from their material use. Companies would not only want to pay attention to these sorts of standards for the environmental impact, but also because of the real financial impact they present, as their website www.iso.org explains...

    The New Standard for Enviornmental Management Accounting

    "How to increase productivity while reducing environmental impact?

    A new ISO standard does just that, by helping business cut costs linked to waste and emissions and enhancing their environmental performance.

    The standard, ISO 14051:2011, Environmental management – Material flow cost accounting – General framework, assists organizations to better understand the environmental and financial consequences of their material and energy use practices, so that they can identify opportunities for improvement.

    ISO 14051:2011 establishes a management information system approach called Material Flow Cost Accounting (MFCA), which can be used to trace and quantify material input and output flows and stocks within an organization. The system helps identify material and energy use practices, and understand these in costs and physical terms. The information can then be applied to reduce losses and increase gains.    

    Prof. Katsuhiko Kokubu, Convenor of the working group that developed the standard says, “Many organizations are unaware of the full extent of the cost of their material losses because this data is often difficult to extract from conventional information, accounting and environmental management systems. MFCA produces such precise and clear data that it can motivate managers to enhance material productivity and significantly reduce unnecessary waste far more effectively than through conventional means."

    With this new standard in place, will companies and industries who know they have a substantial amount of money to gain from limiting waste move to implement this standard as a badge of honour? Or will they see it as a means to put a proper standardized environmental management accounting structure in place for real financial savings?

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    Post by Ross O'Lochlainn
    April 5, 2012