Case studies and report
As part of the Environmental Management Accounting (EMA) Project, four case studies were undertaken in 2002 involving a school (Methodist Ladies College, Perth), plastics manufacturing company (Cormack Manufacturing Pty Ltd, Sydney), provider of office services (a service division of AMP, Australia wide) and wool processing (GH Michell & Sons Pty Ltd, Adelaide).
The objective was to obtain insight into what environmental management accounting procedures can be used by industry and businesses.
| Participating organisation | Consultant or investigator | Brief description of organisation (as at 2002) |
|---|---|---|
| Services@AMP, a shared services division of AMP in Australia | KPMG, Melbourne | Provides shared services to AMP operations throughout Australia which employs 5000 staff |
| Cormack Manufacturing Pty Ltd | PriceWaterhouse Coopers, Sydney | Manufacturer of plastic caps and bottle tops; located in Sydney and employs 90 staff |
| GH Michell & Sons Pty Ltd | Professor Craig Deegan, RMIT University, Melbourne | Australia's largest processor of wool with operations in various states of Australia and employs approximately 800 staff |
| Methodist Ladies College, Perth | BDO Consultants Pty Ltd, Perth | Perth school with more than 1000 students and 240 employees |
Report
 John Thwaites, former Minister for the Environment, launching the publication 'Environmental Management Accounting: An Introduction and Case Studies for Australia'. |
In February 2003, The former Victorian Minister for the Environment, John Thwaites, launched Environmental Management Accounting: An Introduction and Case Studies for Australia (Adobe PDF file, 446KB). The report, which summarises the results of the case studies, found businesses improve profitability by altering their internal accounting procedures to take into consideration environmental costs.
Information about the specific case studies is also available:
- AMP (Adobe PDF file, 532KB)
- Methodist Ladies College (Adobe PDF file, 357KB)
- Cormack Manufacturing (Adobe PDF file, 692KB)
- GH Michell & Sons (Adobe PDF file, 217KB)
The report, the first of its kind to be released in Australia, also found that there were many similarities across these case studies and improvements that could be made to accounting systems. It found businesses are keen to adopt better environmental practices, but need guidance on how this can be achieved without impacting negatively on their books.
The report demonstrated the need for businesses and industry to seriously consider reforming their internal accounting systems so that environmental costs are articulated correctly.
At the moment many environment related costs are hidden. For example, in many cases waste costs were found hidden within other accounts. At AMP these were often part of the rental charge paid by the company and it was therefore difficult to monitor and manage them. At Methodist Ladies College waste costs were buried within administrative and general overheads, which also made them hard to find.
Mr Craig Deegan noted that GH Michell & Sons Pty Ltd found that all types of wool were being allocated the same processing costs, until further investigation confirmed "dirtier wools" consumed more resources in processing. As a result the "cleaner wools" were subsidising the "dirtier wools", which are more expensive to process.
Other speakers at the launch included Mr Bruce Billson, Federal Member for Dunkley; Mr David Smith, ICAA Vice President, and Mathew Cormack, CEO, Cormack Manufacturing.
Speakers at the launch of the publication Environmental Management Accounting: An Introduction and Case Studies for Australia. |
At the launch Matthew Cormack said that "the new cost and revenue information generated by the EMA Project helped management identify opportunities to save costs and improve its environmental performance".
The case studies demonstrate that environmental management accounting gives the company accountant a valuable tool that can be used to deliver good environmental outcomes and savings. It contributes to good management and without it suboptimal business decisions will be made. Green can be good for business, whether you're big or small.
ICAA agreed that it makes good financial sense to adopt cleaner production processes and become more efficient in using resources. But unless these opportunities are identified in the accounting system it's hard to build the business case for change.
In summary, environmental management accounting is a good starting point for developing a more effective and transparent internal accounting system for environmental costs.