Mathematical model for identifying and quantifying the overall environmental cost
Abstract
The paper deals with the environmental costs (EC) in the electrical equipment industry by using environmental accounting as a strategic instrument for controlling the economic entity (EE). The novelty of the study consists of integrating a mathematical model in environmental management accounting (EMA), starting from the identification of the types of waste generated by the production flow and the interaction between the production activity and the environment, which results in determining the EC per entity. The research also analyzes the dependence between the resulting waste and the volume of production by categories. The usefulness of determining these dependencies leads to the identification of the product categories with a significant influence on the EC. The study is useful for developing an environmentally sustainable accounting system within entities in the electrical equipment industry because based on the mathematical model, products that generate large quantities of waste can be identified, allowing the outline of managerial strategies to reviewing production technologies, in order to optimize the products and reduce the quantities of waste generated.
Keyword : EMA, environmental costs, mathematical model, electronics, electrical waste, aluminium waste
How to Cite
Capusneanu, S., Topor, D. I., Stefan Hint, M., Ionescu, C. A., Coman, M. D., Paschia, L., Gudanescu Nicolau, N. L., & Ivan, O. R. (2020). Mathematical model for identifying and quantifying the overall environmental cost. Journal of Business Economics and Management, 21(5), 1307-1328. https://doi.org/10.3846/jbem.2020.13217
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
Andersen, M. S. (2007). An introductory note on the environmental economics of the circular economy. Sustainability Science, 2(1), 133–140. https://doi.org/10.1007/s11625-006-0013-6
Armas-Cruz, Y., Gil-Soto, E., & Oreja-Rodríguez, J. R. (2017). Environmental management in SMEs: Organizational and sectoral determinants in the context of an Outermost European Region. Journal of Business Economics and Management, 18(5), 935–953. https://doi.org/10.3846/16111699.2017.1373375
Baldarelli, M. G., Del Baldo, M., & Nesheva-Kiosseva, N. (2017). Environmental Accounting and Reporting. CSR, Sustainability, Ethics & Governance. Springer. https://doi.org/10.1007/978-3-319-50918-1
Baumann, H., & Cowell, S. J. (1999). An evaluative framework for conceptual and analytical approaches used in environmental management. Greener Management International, 26, 109–122.
Bebbington, J., & Larrinaga, C. (2014). Accounting and sustainable development: An exploration. Accounting, Organizations and Society, 39(6), 395–413. https://doi.org/10.1016/j.aos.2014.01.003
Burritt, R. L., Herzig, C., Schaltegger, S., & Viere, T. (2019). Diffusion of environmental management accounting for cleaner production: Evidence from some case studies. Journal of Cleaner Production, 224, 479–491. https://doi.org/10.1016/j.jclepro.2019.03.227
Ciambrone, D. F. (2018). Environmental life cycle analysis. CRC Press. https://doi.org/10.1201/9780203757031
Christ, K. L., & Burritt, R. L. (2013). Environmental management accounting: the significance of contingent variables for adoption. Journal of Cleaner Production, 41, 163–173. https://doi.org/10.1016/j.jclepro.2012.10.007
Cucchiella, F., D’Adamo, I., & Gastaldi, M. (2014). Sustainable management of waste-to-energy facilities. Renewable and Sustainable Energy Reviews, 33, 719–728. https://doi.org/10.1016/j.rser.2014.02.015
da Cruz, N. F., Ferreira, S., Cabral, M., Simões, P., & Marques, R. C. (2014). Packaging waste recycling in Europe: is the industry paying for it?. Waste Management, 34(2), 298–308. https://doi.org/10.1016/j.wasman.2013.10.035
de Oliveira Neto, G. C., Vendrametto, O., Naas, I. A., Palmeri, N. L., & Lucato, W. C. (2016). Environmental impact reduction as a result of cleaner production implementation: a case study in the truck industry. Journal of Cleaner Production, 129, 681–692. https://doi.org/10.1016/j.jclepro.2016.03.086
European Commission. (2001). Commission Recommendation of 30 May 2001 on the recognition, measurement and disclosure of environmental issues in the annual accounts and annual reports of EU companies (2001/453/EC). https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2001:156:0033:0042:EN:PDF
Everett, T., Ishwaran, M., Ansaloni, G. P., & Rubin, A. (2010). Economic growth and the environment. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/69195/pb13390-economic-growth-100305.pdf
Ferreira, S., Cabral, M., da Cruz, N. F., Simões, P., & Marques, R. C. (2014). Life cycle assessment of a packaging waste recycling system in Portugal. Waste Management, 34(9), 1725–1735. https://doi.org/10.1016/j.wasman.2014.05.007
Frontline Solvers. (n.d.). Excel solver help. http://www.solver.com/excel-solver-help
Fuzi, N. M., Habidin, N. F., Janudin, S. E., & Ong, S. Y. Y. (2019). Environmental management accounting practices, environmental management system and environmental performance for the Malaysian manufacturing industry. International Journal of Business Excellence, 18(1), 120–136. https://doi.org/10.1504/IJBEX.2019.099452
Gala, A. B., Raugei, M., Ripa, M., & Ulgiati, S. (2015). Dealing with waste products and flows in life cycle assessment and emergy accounting: Methodological overview and synergies. Ecological Modelling, 315, 69–76. https://doi.org/10.1016/j.ecolmodel.2015.03.004
Gale, R. (2006). Environmental management accounting as a reflexive modernization strategy in cleaner production. Journal of Cleaner Production, 14(14), 1228–1236. https://doi.org/10.1016/j.jclepro.2005.08.008
Gerasimova, L., & Silka, D. (2019). Concept of costs management with environmental protection functions. E3S Web of Conferences, 110, 02014. https://doi.org/10.1051/e3sconf/201911002014
Ghaemmaghami, K., Zamani, M., & Shafiei, H. (2018). Investigating environmental accounting and its role in reducing environmental costs (case study: Iran Noubaft textile company). Journal of Accounting, Finance and Auditing Studies, 4(4), 185–202. https://doi.org/10.32602/jafas.2018.012
Gray, R. (2010). Is accounting for sustainability actually accounting for sustainability… and how would we know? An exploration of narratives of organisations and the planet. Accounting, Organizations and Society, 35(1), 47–62. https://doi.org/10.1016/j.aos.2009.04.006
Grubb, M., Koch, M., Thomson, K., Sullivan, F., & Munson, A. (2019). The ‘Earth Summit’ agreements: A guide and assessment. An analysis of the Rio’92 UN Conference on Environment and Development (Vol. 9). Routledge. https://doi.org/10.4324/9780429273964
Harris, J. M., & Codur, A. M. (2004). Macroeconomics and the environment. Global Development and Environment Institute, Universidad de Tufts. http://www.masterhdfs.org/masterHDFS/wp-content/uploads/2014/05/Microeconomics_and_the_Environment.pdf
Henri, J. F., Boiral, O., & Roy, M. J. (2016). Strategic cost management and performance: The case of environmental costs. The British Accounting Review, 48(2), 269–282. https://doi.org/10.1016/j.bar.2015.01.001
Hottenrott, H., Rexhäuser, S., & Veugelers, R. (2016). Organisational change and the productivity effects of green technology adoption. Resource and Energy Economics, 43, 172–194. https://doi.org/10.1016/j.reseneeco.2016.01.004
Hroncová Vicianová, J., Jaďuďová, J., Hronec, M., & Rolíková, S. (2017). Developing eco-innovation in business practice in Slovakia. Journal of Business Economics and Management, 18(5), 1042–1061. https://doi.org/10.3846/16111699.2017.1381146
Iriarte, A., Gabarrell, X., & Rieradevall, J. (2009). LCA of selective waste collection systems in dense urban areas. Waste Management, 29(2), 903–914. https://doi.org/10.1016/j.wasman.2008.06.002
Ionescu, C. A. (2017). Integrating the environmental accounting on the information system of the economic entities. Hyperion Economic Journal, 5(2), 42–48.
Jasch, C. (2009). Environmental and material flow cost accounting: principles and procedures (Vol. 25). Springer Science & Business Media B.V.
Jasch, C. (2003). The use of Environmental Management Accounting (EMA) for identifying environmental costs. Journal of Cleaner Production, 11(6), 667–676. https://doi.org/10.1016/S0959-6526(02)00107-5
Kusch-Brandt, S. (2018). E-waste (waste electrical and electronic equipment) – The other side of rapid technological changes. http://www.sigrid-kusch.de/mediapool/55/553823/data/SciencePolicy_Brief_WEEE_CE_2018_Kusch.pdf
Lauridsen, E. H., & Jørgensen, U. (2010). Sustainable transition of electronic products through waste policy. Research Policy, 39(4), 486–494. https://doi.org/10.1016/j.respol.2010.01.021
Lee, K. H. (2011). Motivations, barriers, and incentives for adopting environmental management (cost) accounting and related guidelines: a study of the republic of Korea. Corporate Social Responsibility and Environmental Management, 18(1), 39–49. https://doi.org/10.1002/csr.239
Mazahrih, B. (2019). Integration of environmental costs into accounting information system. Academy of Accounting and Financial Studies Journal, 23(4). https://www.abacademies.org/articles/Integration-of-Environmental-Costs-into-Accounting-Information-System-1528-2635-23-4-446.pdf
Mazahir, S., Verter, V., Boyaci, T., & Van Wassenhove, L. N. (2019). Did Europe move in the right direction on E‐waste legislation?. Production and Operations Management, 28(1), 121–139. https://doi.org/10.1111/poms.12894
Nistor, C. S., Deaconu, A., & Mare, C. (2015). Influence of environmental factors on the evolution of Romanian public accounting. Journal of Business Economics and Management, 16(6), 1154–1169. https://doi.org/10.3846/16111699.2013.804872
Potocan, V., Nedelko, Z., Peleckienė, V., & Peleckis, K. (2016). Values, environmental concern and economic concern as predictors of enterprise environmental responsiveness. Journal of Business Economics and Management, 17(5), 685–700. https://doi.org/10.3846/16111699.2016.1202315
Rakos, I. S., & Antohe, A. (2014). Environmental cost – an environment management accounting component. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(4), 166–175. https://doi.org/10.6007/IJARAFMS/v4-i4/1302
Rigamonti, L., Grosso, M., & Giugliano, M. (2009). Life cycle assessment for optimising the level of separated collection in integrated MSW management systems. Waste Management, 29(2), 934–944. https://doi.org/10.1016/j.wasman.2008.06.005
Sauvé, S., Bernard, S., & Sloan, P. (2016). Environmental sciences, sustainable development and circular economy: Alternative concepts for trans-disciplinary research. Environmental Development, 17, 48–56. https://doi.org/10.1016/j.envdev.2015.09.002
Schaltegger, S., & Burritt, R. (2017). Contemporary environmental accounting: issues, concepts and practice. Routledge. https://doi.org/10.4324/9781351282529
Smaliukienė, R. (2007). Stakeholders’ impact on the environmental responsibility: Model design and testing. Journal of Business Economics and Management, 8(3), 213–223. https://doi.org/10.3846/16111699.2007.9636171
Sorina-Geanina, M. S., Cornelia, B. S. N., Nicoleta, I. E., & Ileana-Sorina, B. R. (2012). Coverage of environmental information in annual financial statements in a responsible manner. Procedia – Social and Behavioral Sciences, 62, 526–530. https://doi.org/10.1016/j.sbspro.2012.09.086
Topor, D. I., Căpuşneanu, S., Constantin (Oprea), D. M., Barbu, C. M., & Rakos (Boca), I. S. (2017). ABB-ABC-ABE-ABM approach for implementation in the economic entities from energy industry. Business and Management Horizons, 5(2), 36–48. https://doi.org/10.5296/bmh.v5i2.12169
Tsui, C. S. K. (2014). A literature review on environmental management accounting (EMA) adoption. Web Journal of Chinese Management Review, 17(3), 1–19.
United Nations Conference on Trade and Development. (2001). Environment. https://unctad.org/en/Docs/psiteiitd23.en.pdf
United Nations. (1997). Glossary of environment statistics. (Studies in Methods, Series F, No. 67). New York. https://unstats.un.org/unsd/publication/SeriesF/SeriesF_67E.pdf
U.S. Environmental Protection Agency. (2014). An introduction to environmental accounting as a business management tool: Environmental as a business management tool: Key concepts and terms. https://www.epa.gov/sites/production/files/2014-01/documents/busmgt.pdf
U.S. Environmental Protection Agency. (1995). Valuing potential environmental liabilities for managerial decision-making: A review of available techniques. http://www.epa.gov
Zou, T., Zeng, H., Zhou, Z., & Xiao, X. (2019). A three-dimensional model featuring material flow, value flow and organization for environmental management accounting. Journal of Cleaner Production, 228, 619–633. https://doi.org/10.1016/j.jclepro.2019.04.309
Armas-Cruz, Y., Gil-Soto, E., & Oreja-Rodríguez, J. R. (2017). Environmental management in SMEs: Organizational and sectoral determinants in the context of an Outermost European Region. Journal of Business Economics and Management, 18(5), 935–953. https://doi.org/10.3846/16111699.2017.1373375
Baldarelli, M. G., Del Baldo, M., & Nesheva-Kiosseva, N. (2017). Environmental Accounting and Reporting. CSR, Sustainability, Ethics & Governance. Springer. https://doi.org/10.1007/978-3-319-50918-1
Baumann, H., & Cowell, S. J. (1999). An evaluative framework for conceptual and analytical approaches used in environmental management. Greener Management International, 26, 109–122.
Bebbington, J., & Larrinaga, C. (2014). Accounting and sustainable development: An exploration. Accounting, Organizations and Society, 39(6), 395–413. https://doi.org/10.1016/j.aos.2014.01.003
Burritt, R. L., Herzig, C., Schaltegger, S., & Viere, T. (2019). Diffusion of environmental management accounting for cleaner production: Evidence from some case studies. Journal of Cleaner Production, 224, 479–491. https://doi.org/10.1016/j.jclepro.2019.03.227
Ciambrone, D. F. (2018). Environmental life cycle analysis. CRC Press. https://doi.org/10.1201/9780203757031
Christ, K. L., & Burritt, R. L. (2013). Environmental management accounting: the significance of contingent variables for adoption. Journal of Cleaner Production, 41, 163–173. https://doi.org/10.1016/j.jclepro.2012.10.007
Cucchiella, F., D’Adamo, I., & Gastaldi, M. (2014). Sustainable management of waste-to-energy facilities. Renewable and Sustainable Energy Reviews, 33, 719–728. https://doi.org/10.1016/j.rser.2014.02.015
da Cruz, N. F., Ferreira, S., Cabral, M., Simões, P., & Marques, R. C. (2014). Packaging waste recycling in Europe: is the industry paying for it?. Waste Management, 34(2), 298–308. https://doi.org/10.1016/j.wasman.2013.10.035
de Oliveira Neto, G. C., Vendrametto, O., Naas, I. A., Palmeri, N. L., & Lucato, W. C. (2016). Environmental impact reduction as a result of cleaner production implementation: a case study in the truck industry. Journal of Cleaner Production, 129, 681–692. https://doi.org/10.1016/j.jclepro.2016.03.086
European Commission. (2001). Commission Recommendation of 30 May 2001 on the recognition, measurement and disclosure of environmental issues in the annual accounts and annual reports of EU companies (2001/453/EC). https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2001:156:0033:0042:EN:PDF
Everett, T., Ishwaran, M., Ansaloni, G. P., & Rubin, A. (2010). Economic growth and the environment. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/69195/pb13390-economic-growth-100305.pdf
Ferreira, S., Cabral, M., da Cruz, N. F., Simões, P., & Marques, R. C. (2014). Life cycle assessment of a packaging waste recycling system in Portugal. Waste Management, 34(9), 1725–1735. https://doi.org/10.1016/j.wasman.2014.05.007
Frontline Solvers. (n.d.). Excel solver help. http://www.solver.com/excel-solver-help
Fuzi, N. M., Habidin, N. F., Janudin, S. E., & Ong, S. Y. Y. (2019). Environmental management accounting practices, environmental management system and environmental performance for the Malaysian manufacturing industry. International Journal of Business Excellence, 18(1), 120–136. https://doi.org/10.1504/IJBEX.2019.099452
Gala, A. B., Raugei, M., Ripa, M., & Ulgiati, S. (2015). Dealing with waste products and flows in life cycle assessment and emergy accounting: Methodological overview and synergies. Ecological Modelling, 315, 69–76. https://doi.org/10.1016/j.ecolmodel.2015.03.004
Gale, R. (2006). Environmental management accounting as a reflexive modernization strategy in cleaner production. Journal of Cleaner Production, 14(14), 1228–1236. https://doi.org/10.1016/j.jclepro.2005.08.008
Gerasimova, L., & Silka, D. (2019). Concept of costs management with environmental protection functions. E3S Web of Conferences, 110, 02014. https://doi.org/10.1051/e3sconf/201911002014
Ghaemmaghami, K., Zamani, M., & Shafiei, H. (2018). Investigating environmental accounting and its role in reducing environmental costs (case study: Iran Noubaft textile company). Journal of Accounting, Finance and Auditing Studies, 4(4), 185–202. https://doi.org/10.32602/jafas.2018.012
Gray, R. (2010). Is accounting for sustainability actually accounting for sustainability… and how would we know? An exploration of narratives of organisations and the planet. Accounting, Organizations and Society, 35(1), 47–62. https://doi.org/10.1016/j.aos.2009.04.006
Grubb, M., Koch, M., Thomson, K., Sullivan, F., & Munson, A. (2019). The ‘Earth Summit’ agreements: A guide and assessment. An analysis of the Rio’92 UN Conference on Environment and Development (Vol. 9). Routledge. https://doi.org/10.4324/9780429273964
Harris, J. M., & Codur, A. M. (2004). Macroeconomics and the environment. Global Development and Environment Institute, Universidad de Tufts. http://www.masterhdfs.org/masterHDFS/wp-content/uploads/2014/05/Microeconomics_and_the_Environment.pdf
Henri, J. F., Boiral, O., & Roy, M. J. (2016). Strategic cost management and performance: The case of environmental costs. The British Accounting Review, 48(2), 269–282. https://doi.org/10.1016/j.bar.2015.01.001
Hottenrott, H., Rexhäuser, S., & Veugelers, R. (2016). Organisational change and the productivity effects of green technology adoption. Resource and Energy Economics, 43, 172–194. https://doi.org/10.1016/j.reseneeco.2016.01.004
Hroncová Vicianová, J., Jaďuďová, J., Hronec, M., & Rolíková, S. (2017). Developing eco-innovation in business practice in Slovakia. Journal of Business Economics and Management, 18(5), 1042–1061. https://doi.org/10.3846/16111699.2017.1381146
Iriarte, A., Gabarrell, X., & Rieradevall, J. (2009). LCA of selective waste collection systems in dense urban areas. Waste Management, 29(2), 903–914. https://doi.org/10.1016/j.wasman.2008.06.002
Ionescu, C. A. (2017). Integrating the environmental accounting on the information system of the economic entities. Hyperion Economic Journal, 5(2), 42–48.
Jasch, C. (2009). Environmental and material flow cost accounting: principles and procedures (Vol. 25). Springer Science & Business Media B.V.
Jasch, C. (2003). The use of Environmental Management Accounting (EMA) for identifying environmental costs. Journal of Cleaner Production, 11(6), 667–676. https://doi.org/10.1016/S0959-6526(02)00107-5
Kusch-Brandt, S. (2018). E-waste (waste electrical and electronic equipment) – The other side of rapid technological changes. http://www.sigrid-kusch.de/mediapool/55/553823/data/SciencePolicy_Brief_WEEE_CE_2018_Kusch.pdf
Lauridsen, E. H., & Jørgensen, U. (2010). Sustainable transition of electronic products through waste policy. Research Policy, 39(4), 486–494. https://doi.org/10.1016/j.respol.2010.01.021
Lee, K. H. (2011). Motivations, barriers, and incentives for adopting environmental management (cost) accounting and related guidelines: a study of the republic of Korea. Corporate Social Responsibility and Environmental Management, 18(1), 39–49. https://doi.org/10.1002/csr.239
Mazahrih, B. (2019). Integration of environmental costs into accounting information system. Academy of Accounting and Financial Studies Journal, 23(4). https://www.abacademies.org/articles/Integration-of-Environmental-Costs-into-Accounting-Information-System-1528-2635-23-4-446.pdf
Mazahir, S., Verter, V., Boyaci, T., & Van Wassenhove, L. N. (2019). Did Europe move in the right direction on E‐waste legislation?. Production and Operations Management, 28(1), 121–139. https://doi.org/10.1111/poms.12894
Nistor, C. S., Deaconu, A., & Mare, C. (2015). Influence of environmental factors on the evolution of Romanian public accounting. Journal of Business Economics and Management, 16(6), 1154–1169. https://doi.org/10.3846/16111699.2013.804872
Potocan, V., Nedelko, Z., Peleckienė, V., & Peleckis, K. (2016). Values, environmental concern and economic concern as predictors of enterprise environmental responsiveness. Journal of Business Economics and Management, 17(5), 685–700. https://doi.org/10.3846/16111699.2016.1202315
Rakos, I. S., & Antohe, A. (2014). Environmental cost – an environment management accounting component. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(4), 166–175. https://doi.org/10.6007/IJARAFMS/v4-i4/1302
Rigamonti, L., Grosso, M., & Giugliano, M. (2009). Life cycle assessment for optimising the level of separated collection in integrated MSW management systems. Waste Management, 29(2), 934–944. https://doi.org/10.1016/j.wasman.2008.06.005
Sauvé, S., Bernard, S., & Sloan, P. (2016). Environmental sciences, sustainable development and circular economy: Alternative concepts for trans-disciplinary research. Environmental Development, 17, 48–56. https://doi.org/10.1016/j.envdev.2015.09.002
Schaltegger, S., & Burritt, R. (2017). Contemporary environmental accounting: issues, concepts and practice. Routledge. https://doi.org/10.4324/9781351282529
Smaliukienė, R. (2007). Stakeholders’ impact on the environmental responsibility: Model design and testing. Journal of Business Economics and Management, 8(3), 213–223. https://doi.org/10.3846/16111699.2007.9636171
Sorina-Geanina, M. S., Cornelia, B. S. N., Nicoleta, I. E., & Ileana-Sorina, B. R. (2012). Coverage of environmental information in annual financial statements in a responsible manner. Procedia – Social and Behavioral Sciences, 62, 526–530. https://doi.org/10.1016/j.sbspro.2012.09.086
Topor, D. I., Căpuşneanu, S., Constantin (Oprea), D. M., Barbu, C. M., & Rakos (Boca), I. S. (2017). ABB-ABC-ABE-ABM approach for implementation in the economic entities from energy industry. Business and Management Horizons, 5(2), 36–48. https://doi.org/10.5296/bmh.v5i2.12169
Tsui, C. S. K. (2014). A literature review on environmental management accounting (EMA) adoption. Web Journal of Chinese Management Review, 17(3), 1–19.
United Nations Conference on Trade and Development. (2001). Environment. https://unctad.org/en/Docs/psiteiitd23.en.pdf
United Nations. (1997). Glossary of environment statistics. (Studies in Methods, Series F, No. 67). New York. https://unstats.un.org/unsd/publication/SeriesF/SeriesF_67E.pdf
U.S. Environmental Protection Agency. (2014). An introduction to environmental accounting as a business management tool: Environmental as a business management tool: Key concepts and terms. https://www.epa.gov/sites/production/files/2014-01/documents/busmgt.pdf
U.S. Environmental Protection Agency. (1995). Valuing potential environmental liabilities for managerial decision-making: A review of available techniques. http://www.epa.gov
Zou, T., Zeng, H., Zhou, Z., & Xiao, X. (2019). A three-dimensional model featuring material flow, value flow and organization for environmental management accounting. Journal of Cleaner Production, 228, 619–633. https://doi.org/10.1016/j.jclepro.2019.04.309