Uncovering the hidden costs by evaluating ecological costs
This study aims to calculate the environmental costs of a sugar cane producer. Worsening environmental problems have required the company to implement environmental management practices. Nevertheless, the results of these environmental management practices need to be evaluated by comparing its ecological costs (eco-costs) as the external costs with costs allocated by the company to manage the environment. Accordingly, this study employs the case study at a cane sugar producing company located in Yogyakarta Specific Region Province. Furthermore, we combine two environmental cost calculation methods, namely the Environmental Management Accounting (EMA) and Life Cycle Assessment (LCA) methods. The EMA approach seeks to identify prevention and compensation costs. Meanwhile, the LCA approach is used to calculate eco-costs. We convert the eco-cost values based on the values from the table of ecological cost values at www.ecocostsvalue.com. The results of this study show that the company incur environmental impact costs much greater than its prevention and compensation costs. These findings indicate that the company has not incorporated hidden environmental costs in its environmental management.
Anacleto, A., Melani, A., Ramos, C., Picon, M., Maciel, P., & Cella, S. (2017). Environmental sustainability in the production of artisanal sugar cane spirit in Paraná © Society for Business and Management Dynamics © Society for Business and Management Dynamics. 6(9), 1–6.
Arora, R., & Aggarwal, G. (2012). Environmental accounting and its endeavor In India. International Journal of Management Research and Reviews, 2(8), 1361–1368.
Astuti, F. (2016). Valuasi ekonomi limbah cair industri gula dan spiritus di Kecamatan Kasihan, Kabupaten Bantul, Propinsi DIY. Jurnal Sains & Teknologi Lingkungan, 8(November 2015), 21–35.
Balasbaneh, A. T., Marsono, A. K. Bin, & Kermanshahi, E. K. (2018). Balancing of life cycle carbon and cost appraisal on alternative wall and roof design verification for residential building. Construction Innovation, 18(3), 274–300. https://doi.org/10.1108/CI-03-2017-0024
Bantacut, T. (2010). Swasembada gula : Prospek dan strategi pencapaiannya. Jurnal Pangan, 19(3), 245–256.
Bernier, E., Maréchal, F., & Samson, R. (2013). Life cycle optimization of energy-intensive processes using eco-costs. The International Journal of Life Cycle Assessment, 18(9), 1747–1761.
Brad, S., Mocan, B., Brad, E., & Fulea, M. (2016). Environmentally sustainable economic growth. Amfiteatru Economic, 18(42), 446–460.
Buhr, N., & Gray, R. (2012). Environmental management, measurement, and accounting: Information for decision and control? In In The Oxford Handbook of Business and the Natural Environment, edited by P. Bansal, and A. J. Hoffman (pp. 425–443). Oxford, U.K.: Oxford University Press.
Christine, D., Yadiati, W., Afiah, N. N., & Fitrijanti, T. (2019). The relationship of environmental management accounting, environmental strategy and managerial commitment with environmental performance and economic performance. International Journal of Energy Economics and Policy, 9(5), 458–464. https://doi.org/10.32479/ijeep.8284
Corson, W. H. (2002). Recognizing hidden environmental and social costs and reducing ecological and societal damage through tax, price, and subsidy reform. Environmentalist, 22(1), 67–82.
Doody, H. (2010). Environmental sustainability: Tools and techniques, the society of management accountants of Canada. The American Institute of Certified Public Accountants and the Chartered Institute of Management Accountants.
Doorasamy, M. (2015). Theoretical developments in environmental management accounting and the role and importance of MFCA. Foundations of Management, 7(1), 37–52. https://doi.org/10.1515/fman-2015-0024
Ferreira, A., Moulang, C., & Hendro, B. (2010). Environmental management accounting and innovation: An exploratory analysis. Accounting, Auditing & Accountability Journal, 23(11), 920–948.
Gunarathne, N., & Lee, K. (2015). Environmental management accounting (EMA) for environmental management and organizational change. Journal of Accounting & Organizational Change, 11(3), 362–383.
Hansen, D. R., & Mowen, M. M. (1999). Management Accounting (8th ed.). South-Western.
Herzig, C., Viere, T., Schaltegger, S., & Burritt, R. L. (2012). Environmental management accounting: Case studies of South-East Asian companies. Routledge.
Ibáñez-Forés, V., & Bovea, M. D. (2016). A decision support tool for communicating the environmental performance of products and organisations from the ceramic sector. Clean Technologies and Environmental Policy, 18(1), 123–138. https://doi.org/10.1007/s10098-015-0999-5
Ismiyanto, A. (2016). Pemdes Guwosari minta limbah madukismo tak mengalir di sungai Bedog. Jogja.Tribunnews.Com.
Li, S., Feliachi, Y., Agbleze, S., Ruiz-Mercado, G. J., Smith, R. L., Meyer, D. E., Gonzalez, M. A., & Lima, F. V. (2018). A process systems framework for rapid generation of life cycle inventories for pollution control and sustainability evaluation. Clean Technologies and Environmental Policy, 20(7), 1543–1561. https://doi.org/10.1007/s10098-018-1530-6
Liapis, K. J., Kantianis, D. D., & Galanos, C. L. (2014). Commercial property whole-life costing and the taxation environment. Journal of Property Investment and Finance, 32(1), 56–77. https://doi.org/10.1108/JPIF-08-2013-0049
Matsumoto, S. (2018). Time allocation and recycling activities. Journal of Material Cycles and Waste Management, 20(4), 2062–2067. https://doi.org/10.1007/s10163-018-0759-9
McConnell, C., & Bertolin, C. (2019). Quantifying environmental impacts of temporary housing at the urban scale: intersection of vulnerability and post-hurricane relief in New Orleans. International Journal of Disaster Risk Science, 10(4), 478–492. https://doi.org/10.1007/s13753-019-00244-y
Nielsen, M. P., Yoshida, H., Raji, S. G., Scheutz, C., Jensen, L. S., Christensen, T. H., & Bruun, S. (2019). Deriving environmental life cycle inventory factors for land application of garden waste products under northern European conditions. Environmental Modeling and Assessment, 24(1), 21–35. https://doi.org/10.1007/s10666-018-9591-9
Petcharat, N. ., & Mula, N. J. M. (2012). Towards a conceptual design for environmental and social cost identification and measurement system. Journal of Financial Reporting and Accounting, 10(1), 34–54.
Production Department. (2014). Company’s environmental management report.
Solovida, G. T., & Latan, H. (2017). Linking environmental strategy to environmental performance: Mediation role of environmental management accounting. Sustainability Accounting, Management and Policy Journal, 8(5), 595–619. https://doi.org/10.1108/SAMPJ-08-2016-0046
Vogtländer, J., Brezet, H., & Hendriks, C. (2001). The virtual eco-costs ‘99, a single LCA-based indicator for sustainability and the ecocosts - value ratio (EVR) model for economic allocation. A new LCA-based calculation model to determine the sustainability of products and services. International Journal Life Cycle Assess, 6(3), 157–166.
Yahya, K., Boussabaine, H., & Alzaed, A. N. (2016). Using life cycle assessment for estimating environmental impacts and eco-costs from the metal waste in the construction industry. Management of Environmental Quality: An International Journal, 27(2), 227–244. https://doi.org/10.1108/MEQ-09-2014-0137
Zaman, K., Shamsuddin, S., & Ahmad, M. (2017). Energy-water-food nexus under financial constraint environment: good, the bad, and the ugly sustainability reforms in sub-Saharan African countries. Environmental Science and Pollution Research, 24(15), 13358–13372. https://doi.org/10.1007/s11356-017-8961-1
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Jurnal Ekonomi dan Bisnis is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License