Beruflich Dokumente
Kultur Dokumente
Environment Cost
Management
12 -2
Objectives
Objectives
1. Discuss the importance
After of measuring
After studying this
studying this
environmentchapter,
costs. you should
chapter, you should
2. Explain how environmental
be able to: costs are
be able to:
assigned to products and processes.
3. Describe the life-cycle cost assessment
model.
4. Compare and contrast activity- and strategic-
based environmental control.
12 -3
Ecoefficiency essentially
maintains that organizations
can produce more useful
goods and services while
simultaneously reducing
negative environmental
impacts, resource
consumption, and costs.
12 -4
Causes
Causes and
and
Incentives
Incentives for
for
Ecoefficiency
Ecoefficiency
Customer Demand 12 -7
For Cleaner Products
ECOEFFICENCY
Lower Cost of
Innovations and
Capital and Lower
New Opportunities
Insurance
Environmental Quality
Cost Model
Environmental costs are costs that are incurred
because poor environmental quality exists or may
exist.
Environmental
Environmental costs
costs can
can be
be classified
classified in
in four
four
categories:
categories: prevention
prevention costs,
costs, detection
detection costs,
costs, internal
internal
failure
failure costs,
costs, and
and external
external failure
failure costs.
costs.
12 -9
Classification of Environmental
Costs by Activity
Prevention Activities
Evaluating and selecting suppliers
Evaluating and selecting pollution control equipment
Designing processes
Designing products
Carrying out environmental studies
Auditing environmental risks
Developing environmental management systems
Recycling products
Obtaining ISO 14001 certification
12 -10
Classification of Environmental
Costs by Activity
Detection Activities
Auditing environmental activities
Inspecting products and processes
Developing environmental performance measures
Testing for contamination
Verifying supplier environmental performance
Measuring contamination levels
12 -11
Classification of Environmental
Costs by Activity
Internal Failure Activities
Operating pollution control equipment
Treating and disposing of toxic waste
Maintaining pollution equipment
Licensing facilities for producing contaminants
Recycle scrap
12 -12
Classification of Environmental
Costs by Activity
External Failure Activities
Cleaning up a polluted lake
Cleaning up oil spills
Cleaning up contaminated soil
Settling personal injury claims (environmentally related)
Restoring land to natural state
Losing sales due to poor environmental reputation
Using materials and energy inefficiently
Receiving medical care due to polluted air (S)
Losing employment because of contamination (S)
12 -13
Numade Corporation
Environmental Cost Report
For the Year Ended December 31, 2004
Percentage of
Environmental Costs Operating Costs
Prevention costs:
Training employees $ 60,000
Designing products 180,000
Selecting equipment 40,000 $280,000 1.40%
Detection costs:
Inspecting processes $240,000
Developing measures 80,000 320,000 1.60
Continued
Continued
12 -14
Percentage of
Environmental Costs Operating Costs
Internal failure costs:
Operating pollution
equipment $400,000
Maintaining pollution
equipment 200,000 $ 600,000 3.00%
External failure costs:
Cleaning up lake $900,000
Restoring land 500,000
Incurring property
damage claim 400,000 1,800,000 9.00
Totals $3,000,000 15.00%
12 -15
Numade Corporation
Environmental Financial Statement
For the Year Ended December 31, 2004
Environmental benefits:
Cost reductions, contaminants $ 300,000
Cost reductions, hazardous waste disposal 400,000
Recycling income 200,000
Energy conservation cost savings 100,000
Packaging cost reductions 150,000
Total environmental benefits $1,150,000
Continued
Continued
12 -16
Numade Corporation
Environmental Financial Statement
For the Year Ended December 31, 2004
Environmental costs:
Prevention costs $ 280,000
Detection costs 320,000
Internal failure costs 600,000
External failure costs 100,000
Packaging cost reductions 1,800,000
Total environmental costs $1,150,000
12 -17
Full
Full environmental
environmental
costing
costing isis the
the
assignment
assignment of of all
all
environmental
environmental costs,
costs,
both
both private
private andand
societal,
societal, to
to products.
products.
12 -19
Full
Full private
private
costing
costing isis the
the
assignment
assignment of of
only
only private
private cost
cost
to
to individual
individual
products.
products.
ABC
ABC Environmental
Environmental Costing
Costing
Activities Cleanser A Cleanser B
Evaluate and select suppliers $0.20$ 0.05
Design processes (to reduce pollution) 0.100.10
Inspect processes (for pollution problems) 0.250.15
Capture and treat chlorofluorocarbons 0.051.00
Maintain environmental equipment 0.000.50
Toxic waste disposal 0.101.75
Excessive materials usage 0.08 0.25
Environmental cost per unit $0.78$ 3.80
Other manufacturing costs (nonenvironmental) 9.02 16.20
Unit cost $9.80$20.00
Life-cycle assessment
identifies the
environmental
consequences of a product
through its entire life
cycle, and then searches
for opportunities to obtain
environmental
improvements.
12 -23
Production
Controlled by
Manufacturer
Packaging
Product
Recycling Use and Disposal
Maintenance
Controlled by Customer
12 -25
Assessment Stages
Inventory analysis
Impact analysis
Improvement
analysis
12 -26
Inventory Analysis
Inventory analysis
specifies the types and
quantities of materials
and energy inputs
needed and the resulting
environmental releases
in the form of solid,
liquid, and gaseous
residues.
12 -27
Impact Analysis
Improvement Analysis
Improvement analysis has
the objective of reducing
the environmental impacts
revealed by the inventory
and impact steps.
12 -32
Environmental
Environmental Perspective
Perspective
Five core objectives for the environmental perspectives:
Minimize the use of raw or virgin materials
Minimize the use of hazardous materials
Minimize energy requirements for production and use of
the product
Minimize the release of solid, liquid, and gaseous
residues
Maximize opportunities to recycle
12 -33
NONVALUE-ADDED YEAR
ENVIRONMENTAL ACTIVITY 2004 2003
1 2 3 4 5 6 7 8
Periods
12 -35
Bar Graph for Trend Analysis
CFC Emissions
100
80
60
40
20
0
2001 2002 2003 2004
Pounds emitted
12 -36
Hazardous Waste Pie Chart
Treated 15.0%
Incinerated 35.0%
Recycled 5.0%
Landfilled 25.0%
Deep-well injected
Incinerated 20.0%
Treated
Recycled
Landfilled
Deep-well injected
12 -37
The
The End
End
12 -38