SESSION 4:

Accounting for Sustainability

By

Nuwan Gunarathne

Lecturer, Department of Accounting, University of Sri Jayewardenepura

SESSION 4:

Accounting for Sustainability

Environmental Management Accounting (EMA)

Represents a response of management accounting

Lacks a definite boundary or definition

Has emerged as an interface between management accounting and environmental management

SESSION 4:

Accounting for Sustainability

Environmental Management Accounting (EMA)

Identification, collection, analysis and use of

Physical information on energy, water and materials

(wastes)

Monetary information on environment-related costs,

earnings and savings

Users

SESSION 4:

Accounting for Sustainability

Types of EMA systems

Monetary EMA (MEMA)

expressed in monetary units

Physical EMA (PEMA)

expressed in physical units

SESSION 4:

Accounting for Sustainability

SESSION 4:

Accounting for Sustainability

Dimensions of EMA

Time frame (past, current or future)

Length of time frame (short term vs. long term)

Routineness (ad hoc vs. routine)

SESSION 4:

Accounting for Sustainability

Comprehensive EMA Framework

EMAMonetary EMA Physical EMA

Short term focus Long term focus Short term focus Long term focus

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(2002)

SESSION 4:

Accounting for Sustainability

EMA techniques

Accounting for energy Carbon accounting Accounting for water Waste accounting Material flow cost accounting Environmental capital budgeting Environmental activity based costing Life cycle analysis Sustainability balanced scorecard Environmental impact assessment

SESSION 4:

Accounting for Sustainability

Comprehensive EMA Framework

EMAMonetary EMA Physical EMA

Short term focus Long term focus Short term focus Long term focus

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(2002)

SESSION 4:

Accounting for Sustainability

Comprehensive EMA Framework

EMAMonetary EMA Physical EMA

Short term focus Long term focus Short term focus Long term focus

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(2002)

SESSION 4:

Accounting for Sustainability

Comprehensive EMA Framework

EMAMonetary EMA Physical EMA

Short term focus Long term focus Short term focus Long term focus

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(2002)

SESSION 4:

Accounting for Sustainability

Comprehensive EMA Framework

EMAMonetary EMA Physical EMA

Short term focus Long term focus Short term focus Long term focus

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t o

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rrittetal.

(2002)

SESSION 4:

Accounting for Sustainability

Comprehensive EMA Framework

EMAMonetary EMA Physical EMA

Short term focus Long term focus Short term focus Long term focus

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rrittetal.

(2002)

SESSION 4:

Accounting for Sustainability

Comprehensive EMA Framework

EMAMonetary EMA Physical EMA

Short term focus Long term focus Short term focus Long term focus

Pas

t o

rie

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(2002)

SESSION 4:

Accounting for Sustainability

EMA in context

Not merely an environmental management tool among others

A broad set of accounting principles and approaches that provide information for the successful implementation of environmental strategies

Includes a wide array of accounting practices and acts as the common thread that supports environmental strategies

New practices are being introduced or existing practices adopted day-by-day

SESSION 4:

Accounting for Sustainability

EMA development stages

Stage 1 -Compliance

Stage 2 –Realization

Stage 3 -Environmental

Integration

Compliance Conservation Integration

Focus on main items Key stakeholder engagement Selected EMA practices

Vision

SESSION 4:

Accounting for Sustainability

Compliance Conservation Integration

Focus on main items Key stakeholder engagement Selected EMA practices

Vision

Comprehensive coverage All stakeholder engagement Inclusion in daily management (EKPIs)

SESSION 4:

Accounting for Sustainability

SESSION 4:

Accounting for Sustainability

EMA to Sustainability Management

Accounting (SMA)

When social dimensions are integrated into existing EMA systems there will be SMA

Social side of sustainability is the least developed

Accounting for the social dimension of sustainability is challenging- intangible- qualitative nature- lack of consensus on relevant criteria

SESSION 4:

Accounting for Sustainability

Pathways for professions

At present, the majority of sustainability accounting skills and knowledge comes from external training and in-house training

Universities & PAB should be proactive to cater to new demands of the work place

Incorporate accounting, engineering, architecture, physical sciences, etc

Trans-disciplinary approach for sustainability education(approaching a problem from a number of different perspectives beyond discipline boundaries)

Lighting candles….

At the Department of Accounting, USJ, we have introduced SMA and sustainability reporting

Objective is not to offer these subjects in few years time

Students work on different projects to understand the trans-disciplinary nature of sustainability

SESSION 4:

Accounting for Sustainability

Thank you