Environmental Costing: A path to Implementation

Environmental strategies and their related costs have received little formal attention from Australian accountants. Yet, internationally as well as in Australia, green strategies and their related costs are now being recognised by a range of corporations. In this paper, international corporate examples are reviewed. Environmental cost categories and potential classifications and approaches for decision and control purposes are proposed. The paper offers recommendations for the initial development of environmental costing practices at the corporate level and argues for the importance of developing relevant cost management systems that support environmental strategies and management.     

THE ENVIRONMENTAL REPORTING EXPECTATIONS GAP: AUSTRALIAN EVIDENCE

Recent research of corporate reporting practices has suggested that corporate environmental reporting within Australia, and a number of other countries, is typically deficient and not of a standard to satisfy the information needs of various classes of report readers. This paper explores whether a potential information demand/supply imbalance is due to differing perceptions between report users and report preparers as to the relative importance of various items of environmental performance information to the users’ decision making processes. The paper explores whether an environmental reporting ‘expectations gap’ exists within Australia. The study, sponsored by the Institute of Chartered Accountants in Australia, surveyed the attitudes of senior executives within 462 of the largest companies within Australia (the preparers group), as well as the attitudes of 474 individuals from various categories of annual report users. In comparing the responses, significant differences between the views of users and the preparers were found to exist in relation to various issues associated with corporate environmental performance reporting. The evidence is consistent with the existence of an environmental reporting expectations gap within Australia.     

Bringing the environment into bank lending: implications for environmental reporting

In recent years, it has come to be recognised that banks' lending operations affect, and are affected by, the state of the natural environment. In particular, rising public concern about the state of the natural environment, as reflected in legislation and consumer attitudes, poses risks for the state of a bank's lending portfolio. Even if they are not directly concerned about the environment, banks therefore have an incentive to understand the environmental implications of their lending decisions. This generates a potential demand for environmental information on companies.This paper reports on empirical research conducted to explore the interface between bank lending and the demand for environmental information. Based on a postal questionnaire survey of banks engaged in corporate lending in the UK, supplemented by a programme of semi-structured interviews, it reports on: the extent to which UK banks incorporate environmental considerations into their corporate lending decisions; the sources of information used by banks when making corporate lending decisions which involve environmental considerations; and lending bankers' views on developments in environmental reporting.The results indicate, inter alia, the importance that bankers attach to the annual report, notwithstanding its traditional limitations as a source of information on corporate environmental impact, and some desire for extensions to environmental disclosure. However, those desired developments are relatively narrow in scope, mirroring banks' principal interest in protecting their loans, and tend not to extend to more comprehensive forms of environmental disclosure such as might be expected to be found in a separate corporate environmental report.     

Debate: Society,socialism, sociology

This article investigates the implementation of benchmarking in three large acute NHS trusts. The findings concentrate on the attitudes of professional groups towards the preparation and use of management accounting information for performance measurement and comparison in NHS trusts. The problems revealed in developing appropriate costing information in this organizational context suggest difficulties lie ahead as more far-reaching organizational and financial change permeates the NHS.     

A CONCEPTUAL FRAMEWORK FOR CORPORATE RISK DISCLOSURE EMERGING FROM THE AGENDA FOR CORPORATE GOVERNANCE REFORM

During the last decade an implicit conceptual framework for internal control and corporate risk management has arisen from risk management practice and policy within UK companies. An explicit conceptual framework for risk management is now emerging and is expressed in the Turnbull Report. In this paper, we develop a diagrammatic representation for the conceptual framework for internal control, risk management and risk disclosure. We consider the recent practical and policy developments in the disclosure of risk-related information in order to establish the current state of the art of corporate risk disclosure. Thus, we focus only on the disclosure aspect of the conceptual framework for internal control. We use a questionnaire survey to canvas the attitudes of UK institutional investors towards risk disclosure in relation to their portfolio investment decisions. Our empirical findings indicate that institutional investors do not generally favour a regulated environment for corporate risk disclosure or a general statement of business risk. The respondents agree that increased risk disclosure would help them in their portfolio investment decisions. However, for other aspects of the risk disclosure issue they are more neutral in attitude. Further, we found that the variation in the attitudes of institutional investors appears to be associated with the characteristics of the funds they manage as well as with their investment horizons. Further, we find that institutional investors’ perceptions of corporate governance are related to their investment horizons, among other factors.     

Water management accounting and the wine supply chain: Empirical evidence from Australia

Sustainable water management in the supply chain is critical to the long term viability of wine producing organisations. Yet despite its potential importance as a link to convert good intentions of managers into sustainable water use, thus far knowledge concerning how environmental management accounting can assist is largely non-existent. Drawing on contingency theory and new institutional sociology a telephone survey was used to investigate the current use of water-related environmental management accounting information (here termed water management accounting) for assessing the long term implications associated with water management in Australian wine supply chains. Organisational size, regulatory pressure and corporate environmental strategy were found to be consistent drivers of water management accounting use. However, other drivers of supply chain-oriented water management accounting differ depending on whether the information considered is monetary or physical. Existence of a certified environmental management system and involvement of managers with industry associations are points of difference. These findings indicate a two-step incentive process for implementation is likely to be the most effective for promoting the collection and use of physical and monetary information for environmental management in the wine industry.     

Environmental management control systems: The role of contextual and strategic factors

This study examines the role of contextual and strategic factors in the development of environmental management control systems in manufacturing companies. In particular, the authors test the roles of perceived ecological environmental uncertainty, perceived stakeholder pressures, and the degree of corporate environmental proactivity on the development of environmental management control systems. The main results from a survey of 256 manufacturing companies suggest that companies that perceive greater ecological environmental uncertainty are less inclined to develop a proactive environmental strategy, environmental information system, or formal environmental management control system. Market, community, and organizational stakeholders motivate environmental proactivity, as well as the development of different environmental management control systems. Regulatory stakeholders only encourage the development of an environmental information system.     

环境信息透明度与企业信用评级——基于债券评级市场的经验证据

基于2008至2015年期间公司债券发行主体的信用评级数据和手工收集的上市公司环境信息数据,本文研究了环境信息透明度对企业信用评级的影响。研究结果显示,公司获得高信用评级的概率与其环境信息透明度显著正相关;环境信息传递出公司的特质风险、盈余持续性以及盈余质量等信息,从而影响评级决策。进一步研究发现,环境信息透明度与企业信用评级之间的正相关关系在内部控制质量高、具有高质量外部审计的公司中更显著。采用工具变量两阶段回归方法、公司固定效应模型以及倾向得分配对方法控制内生性后,上述结论依然成立。此外,本文发现环境信息透明度可通过影响企业信用评级降低公司的债券融资成本,环境信息透明度对企业信用评级和债券融资成本的影响在污染行业中显著更强。上述研究发现有助于拓展环境信息披露对市场中介行为影响的相关研究,对认识非财务信息在资本市场中的作用和推进节能减排提供了重要参考。     

绿色供应链管理对制造企业绩效的影响

运用结构方程模型,依据广州、深圳两地共236家制造企业数据,考量环境协同、环境监督与企业绩效之间的关系。结果表明：绿色供应链管理将社会、环境责任信息公开和公众参与融入链式管理体系中,能协同上、下游企业环境管理活动,监督环境违规行为,实现环境绩效与财务绩效的双赢。     

Sustainability,institutionalization and the duality of structure: Contradiction and unintended consequences in the political context of an Australian water business

This paper presents the results of a longitudinal case study of an Australian public sector water business in order to examine how, and to what extent, did the institutionalization and deinstitutionalization of internal sustainable and environmental management routines, practices and procedures occur over the period 2001 to the start of 2011. It adopts the Dillard et al. framework of institutionalization which incorporates institutional theory, Weber's axes of tension and structuration theory. In 2001, the criteria for costing and financial reporting practices and the criteria for environmental regulation and management practices were competing at the economic and political economic level, the organizational field level and the organizational level. An unintended consequence of this was no accounting for environmental costs. Environmental management criteria and practices were characterized by compliance with EPA regulatory requirements whilst financial management and costing criteria and practices were characterized by New Public Management criteria. Subsequent to 2001, an unintended consequence of the establishment of separate legislative and regulatory bodies has been the institutionalization of competing legitimating criteria with regard to water conservation, externalities, environmental regulation and financial reporting and costing. Within this context, the organizational field and the organizational level of the individual water business has been characterized by the development of new organizational practices and routines with regard to water conservation as well as unintended consequences and decoupling. At all three levels, the ontological security of agents has been evident in the development of new criteria and practices for sustainable development, whilst the routine procedures of the respective management systems were a source of ontological security to the relevant agents.     

Accountants' Attitudes and Environmentally-sensitive Accounting

Accounting for the environment (ICAEW, 1992) is receiving increasing attention. A series of initial interviews, visits and other contacts with a wide range of organisations and accountants on three continents left us with the impression that accountants and accounting do not appear to be involved in corporate responses to the environmental agenda. This paper is an exploration and examination of that impression. A mail questionnaire survey confirmed that accountants have low levels of involvement in their company's environmental activities and, from responses to personal opinion questions, appear to experience a conflict between their awareness of environmental issues and an inability to translate this into action within their corporate life. These attitudes are explored in the paper and would be a sufficient explanation for the absence of environmental accounting in practice.     

The IPO corporate social responsibility information disclosure: Does the stock market care?

We create textual information indices using corporate social responsibility (CSR) information extracted from IPO prospectuses in China. We use the indices to measure the issuers’ corporate social performance (CSP) and corporate environmental performance (CEP) and assess how the stock market reacts. We find that CSP disclosure is significantly related to the post‐market performance of the firm. Specifically, better CSP disclosure is correlated with higher post‐IPO listing holding period returns among firms that do not disclose donations or environmental expenditures, although the association does not hold for firms that make donations and environmental expenditures. In addition, institutional investors seem to care more about the CEP information for a firm than the CSP information.     

企业环境信息披露影响因素实证分析:2010~2011年A股重污染行业上市公司观察

以2010～2011年A股重污染行业上市公司作为研究对象,从产品市场竞争、公司治理角度考察了企业环境信息披露的影响因素。结果显示：公司治理结构的合理安排能够对提升企业环境信息披露质量产生一定的积极作用,但是产品市场竞争与公司治理机制之间的关系尚不明确。本文的研究结论意味着,在我国当前的制度背景下,要提高企业环境信息披露水平,保护利益相关者利益,有必要继续完善上市公司治理结构;同时,本研究也说明产品市场竞争并不能解释重污染行业企业环境信息披露的动机。     

Differences in environmental reporting practices in the UK and the US: the legal and regulatory context

The paper examines current corporate environmental reporting practices within UK and US annual reports and suggests that elements of the legal and regulatory framework of each country which regulate environmental activity, and so influence environmental performance, determine the types of disclosures made. The environmental management context is examined to present an explanation of recent developments and to suggest what influences on reporting practice may be important. Theoretical considerations are examined to establish whether the types of disclosure arising from regulatory pressures demonstrate that accountability exists in the disclosure of environmental information, and to what extent the disclosure discharges the organisation's accountability to the users of such information.     

Corporate greed: its effect on customer satisfaction,corporate social responsibility and corporate reputation among bank customers

Corporate greed has received increasing attention in recent years with various stories hitting the headlines, particularly after the global financial crisis and the ensuing negative attitudes toward banks. Customer satisfaction and corporate social responsibility are known to have a positive effect on corporate reputation among customers, but perceived corporate greed is likely to impede their effect. Corporate greed, customer satisfaction, corporate social responsibility and corporate reputation are considered, and a research model is proposed. Results indicate that the effect of corporate greed is stronger on corporate social responsibility than on customer satisfaction, implying that corporate social responsibility activities may be futile if the company is perceived to be acting greedily by its customers. Thus, perceptions of corporate greed need to be dealt with swiftly, to enable management to enhance the corporate reputation of the firm.     

Incremental Voluntary Disclosure on Corporate Websites,Determinants and Consequences

This study analyses the determinants and consequences of internet financial reporting (IFR). Our evidence indicates that firms use the internet to report complementary information on firm background, management forecasts, intangible assets and on social and environmental issues. Our results indicate that the decision to provide additional voluntary financial disclosures through corporate websites is mostly influenced by share turnover, the future profitability of the firm and the level of competition in the industry. Last, we find that the extent of voluntary disclosure on corporate websites is related positively to forecast accuracy, and negatively to the dispersion of analysts forecasts, suggesting that such disclosures provide useful information to analysts.     

The relevance of environmental disclosures: Are such disclosures incrementally informative?

Establishing the information content of transparent voluntary environmental disclosures and the source of this information content is of fundamental importance for corporate social responsibility (CSR) practitioners. Our results indicate that: (1) incremental to information provided by current Toxics Releases Inventory (TRI) data, voluntary environmental disclosures provide valuation relevant information; (2) the various disclosure categories are similar in value relevance, implying that each category is informative of management’s current environmental strategies; (3) current TRI is positively associated with cost of capital but there is no association between voluntary environmental disclosures and cost of capital; and (4) taken together, the above results point to a signaling role for such disclosures and financial performance prediction as the means by which voluntary environmental disclosures enhance firm value. This advances the literature by pinning down the source of firm value enhancement of such disclosures. Our results suggest that a proactive environmental strategy and the signaling of such a strategy to investors can enhance a firm’s stock price, a finding which will assist CSR practitioners in convincing top management that proactive environmental strategies combined with transparent voluntary environmental disclosures are worthwhile.     

Incorporating environmental factors into a highway maintenance cost model

As infrastructure ages, the maintenance cost of highways is becoming a major international concern that hitherto has been overlooked by public sector researchers. This paper begins to fill this gap by focusing on the nature and extent of the impact of environmental cost drivers on costs of highway maintenance. By linking a cost driver framework with engineering theory, and using geographic information systems methodology, it has been possible to demonstrate that the physical geological environment has a significant effect on the cost of highway maintenance activity. In addition to advancing highway maintenance cost behaviour understanding, the research illustrates that to gain new insights, researchers must be prepared to base causality enquiries on theoretical foundations advanced by other disciplines and to work with data and methods of analysis which are appropriate to each situation. From a strategic cost management perspective, this study elevates environmental factors in importance as major drivers of cost and in particular, highlights their related interaction with management strategy and policy. The paper discusses aspects of the cost driver framework and application to planning and control accountability, describes dynamic inter-relationships between activity-based costing and activity-based management and suggests directions for further research.     

Costing for strategy development and analysis in an emerging industry: The Newcastle Upon Tyne Electric Supply Company, 1889–1914

This article examines the provision of strategic costing information in the context of the emergence and growth of the British electrical power industry and its pre-eminent exemplar, the Newcastle Upon Tyne Electric Supply Company (NESCo). A detailed case study of NESCo's costing for strategy development and analysis is presented. This research finds that NESCo's adoption of systematic, formal considerations of strategy and its use of costing for strategy development and analysis were related to a combination of three factors: first, the novelty and complexity of the electricity supply industry; second, the regulated environment of the electricity supply industry; and third, the ability and drive of key individuals. The implications of this research for contemporary studies of strategic management accounting are considered.     

Management accounting in its social context: Rimailho revisited

The homogeneous sections method prescribed by the Plan comptable general (the French national accounting plan) since its origin is commonly attributed to the influence of the Rimailho Report (1928, in its final version). An in-depth analysis of the processes and management systems Rimailho set up, described in minute detail in his major works, has led to the belief that he was the pioneer of a certain type of the activity-based costing method. But other aspects of his work are far more interesting. With Rimailho, accountancy plays a role which is closely linked to his political and social convictions. Rimailho's management accounting appears as the strategic tool in a type of corporate regulation involving organizational slack, possible in a defender 's strategy deployed in a specific competitive and technological environment. Rimailho's organization does not fit into today's standard typologies (Anthony, Woodward, Ouchi, etc.). It is an appropriate challenge for researchers in accounting and management control.