The Bhopal disaster, also referred to as the Bhopal gas tragedy, was a gas leak incident on the night of 2–3 December

1984 at the Union Carbide India Limited pesticide plant in Bhopal, Madhya Pradesh, India. It is considered among

the world's worst industrial disasters.

Deaths: At least 3,787; over 16,000 claimed (even more than 25000 if include those who can't sustain injuries or

disorder and died on later date(s). Non-fatal injuries: At least 558,125

Cause: Methyl isocyanate leak from Union Carbide India Limited plant

Start date: 2 December 1984

Location: Bhopal

Court said, Businesses will have absolute liability rather strict liability

In India, when Environment Protection Act 1986 was enacted the absolute liability was imposed on business to

protect the environment

In 1994, for the first time under the Environment Protection Act, 1986, the EIA (Environment Impact Assessment)

notification was formulated in India.

The National Green Tribunal Act, 2010 is an Act of the Parliament of India which enables the creation of a special

tribunal to handle the expeditious disposal of the cases pertaining to environmental issues.

What was ongoing in rest of world

EIA as a mandatory regulatory procedure originated in the early 1970s, with the implementation of the National

Environment Policy Act (NEPA) 1969 in the US. A large part of the initial development took place in a few high-income

countries, like Canada, Australia, and New Zealand (1973-74). However, there were some developing countries as

well, which introduced EIA relatively early - Columbia (1974), Philippines (1978)

US has the Environmental Protection Agency, which is an independent executive agency of the United States federal

government tasked with environmental protection matters. (President Richard Nixon proposed the establishment

of EPA on July 9, 1970; it began operation on December 2, 1970)

But

The Exxon Valdez oil spill occurred when Exxon Valdez, that was bound for Long Beach, California struck Prince

William Sound's Bligh Reef, 1.5 mi (2.4 km) west of Tatitlek, Alaska at 12:04 a.m. and spilled 10.8 million US gallons

of crude oil over the next few days.

Date: 24 March 1989

Location: Prince William Sound, Alaska, United States

Shoreline impacted: 1,300 mi (2,100 km)

Operator: Exxon Shipping Company

Volume: 10.8×10^6 US gal (260,000 bbl; 41,000 m3) (or 37,000 metric tonnes)

US EPA after this issue came-up with series of guidelines and publication to make EMA and EIA reality

UN-DSD

The Division for Sustainable Development (DSD) provides leadership and is an authoritative source of expertise

within the United Nations system on sustainable development. It promotes integration of the social, economic and

environmental dimensions of sustainable development in policy-making at international, regional and national

levels.

Came up with guidelines through multiple publications and conventions to create common understanding among

nations regarding sustainable development goals.

https://sdgs.un.org/

Few questions - you might be considering

Are these laws and regulations really work?

Whether stakeholder (especially policy maker and business) consider them seriously?

Does any penalty actually imposed?

John Craxford and his company John Craxford Plant Hire Ltd (a UK based Company) was also ordered to

pay £86,937 in fines and legal costs in Feb 2008 for being guilty for a string of offences (8) committed at

Yannon Lane landfill site at Kingkerswell in Devon – including the illegal burying of “massive volumes of

unsuitable waste” as well as waste licence and pollution permit breaches since March 2003.

The case marks a major success for the Environment Agency in the South West. The seizure of £1,194,638

million represents the largest ever. Judge Wassell said the company must make a payment of £300,000

by March 31 and the remaining balance will have to be paid by the end of July this year. Mr Craxford faces

a five-year prison sentence if he does not pay up.

In India too,

1. National Green Tribunal Holds Art of Living Responsible for Damage to Yamuna Floodplains. The

Tribunal has also directed that the INRs 5 crore paid by the organisation as a fine be utilised by

the DDA for restoration of the affected area.

2. A $ 31 billion hillside township project of LAVASA Corporation Limited slipped on bumpy path

because environmental clearances was not properly taken and finally land into insolvency (INRs

7700 crores of lenders on stake).

So, the first reason of adopting EMA is regulatory requirement & huge financial cost in form of penalty if

failed to adopt in spirit.

Ranganathan and Ditz wrote an article in 1996

In which they mention pointed out that hidden costs for environment-related activities cannot be

revealed with the use of conventional management accounting.

And further they mentioned that for Amoco at their Yorktown plant the total environmental cost was 22%

of operating cost against estimate of 3%

Since in certain industries environmental cost can be significant % of operating cost, and they can be

identified (in order to manage them) only with EMA, hence this becomes second reason why companies

adopting EMA.

Green Consumerism is buzz now

Customers prefers to purchase the product which has least environment impact (if price of different

alternative is same - even if not same; then also few consumers prefer to buy green product) - This

becomes third major reason.

Defined EMA as Tool,

That use environmental information

In order to assist the business manager

To manage the (a) environment impacts & (b) environment costs

Of their business decision

Environmental information can be classified into

Physical Information - Physical flow of material or product, water, energy and generation of waste

Monetary Information - That result in either environmental costs or savings (such as carbon credit)

Environment costs as per United Nations, are costs connected with the actual or potential deterioration

of natural assets due to economic activities. But we have to see it from accounting point view

So, for us (being an accountant), environmental cost is cost incurred by business to prevent the loss of

environment or paid in form of penalty for failure to prevent the loss of environment

But penalty imposed only if there is violation of law and such violation come into knowledge of law and

proved as well.

And also, in those cases where emission of pollutant is more than a specified limit.

If pollutant emitted are less then threshold or violation not come into knowledge of law then the cost in

form of degraded environment needs to be borne by society.

So environmental cost can be seen into two parts - Inside the business (internal) and outside the business

(external)

EMA only identify, allocate and manage only internal cost (because external environment cost is beyond

control) and this become major shortcoming of EMA.

Input - output analysis

Flow cost accounting