Environmental Management Accounting: Challenges, Barriers, and Opportunities

The study discusses the reason for the companies not introducing the environmental management accounting as a technique of the information system as well as taking advantage of the opportunities that is being provided by EMA. Practically there exist several barriers that protect the implementation process of environmental management accounting in the company’s information system.

Running head: MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student
Name of the University
Author Note

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Executive summary
The Environmental management accounting refers to a vital information source that helps in the
process of decision-making in the company management. In various organisations there exists a
dynamic as well as detailed technique of processing the data related to environmental costs
which the organisation issued mistakenly for the purpose of environmental management
accounting or EMA. At present the various organisations does not utilise an extensive options
range that is been provided by the environmental management accounting. The study in hand
discusses the reason for the companies not introducing the environmental management
accounting as a technique of the information system as well as taking advantage of the
opportunities that is being provided by EMA. Practically there exist several barriers that protect
the implementation process of environmental management accounting in the company’s
information system. There exists barriers that were identified in the context of EMA, the study
discusses the same. In addition to that the opportunities of the implementation of the EMA in the
companies are also discussed.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Concept of EMA..........................................................................................................................3
Challenges faced by EMA...........................................................................................................3
Barriers of EMA..........................................................................................................................3
Opportunities of EMA.................................................................................................................3
Conclusion.......................................................................................................................................3
References........................................................................................................................................3

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Introduction
The environmental Management Accounting or EMA is an accounting technique that is
used for describing the various aspects the accounting field. The primary focus of the EMA is to
act as a tool of management accounting that would help in taking the businesses internal
decisions (Welford 2016). This also initiates the proactive management activities that are related
to environment. The development of EMA was mainly developed for the process of recognizing
the challenges that were being faced by the traditional approach of the management accounting
that used to deal with the environmental costs along with its impacts and consequences (Saeidi et
al. 2018). The challenges that were pointed out were the inaccurate cost allocations that cannot
be found back to process lines, products or processes. There also exists inaccurate accounting of
wasted raw materials during the process of production. The each of the EMA aspect is a general
type of accounting that serve as the foundation.
Discussion
Concept of EMA
The accounting tool of EMA offers prospective advantages to industry, that includes the
capability managing and track the use and flows of energy and materials more accurately. The
international website of EMA reports appropriately the relevant identification, estimation,
allocation, and management or reduction of costs (Bennett and James 2017). The Environmental
performance can be improved and supported with the help of more complete and relevant
information. This information can also improvise the reporting as well as measurement of the
environmental information to the public.

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The Government can make profit by the utilization of these standards as indicated by the
global site of EMA. The expense of environmental protection can be brought down based on
financial self-interest by the industries. The Industry data can be utilized for the process of
estimation and reporting of the environmental performance metrics as well as environmental and
financial benefits to stakeholders of the government. The measurements can likewise be utilized
to viably to influence the environmental directions and arrangements in future. On top of that the
societal advantages additionally exist in the context of EMA. With the usage of these standards,
water, vitality and other characteristic assets can be utilized all the more productively. The EMA
global site reports these standards can help diminish outside societal expenses originating from
mechanical contamination, for instance, checking, natural control, general wellbeing costs and
remediation.
Therefore, it can be said EMA is a developing aspect of bookkeeping with advantages for
industry, government, and society comprehensively. As more organizations come to see the
ecological effects in their basic leadership, the estimation of EMA will keep on developing.
Benefits and challenges of faced by EMA
The EMA is a part of the Management Accounting process that entails the collection,
identification, analysis, estimation and use of cost, or other information that may be utilised for
decision-making of the organizations. The Environmental Management Accounting or EMA
refers to the management accounting that would focus mainly on the energy and materials flow
information, with environmental cost information. The EMA constitutes of a wide range of
principles along with approaches that would provide views into the physical costs and flows
critical to the thriving end of activities of environmental management and increasingly, routine

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management activities, that includes product and capital budgeting, process design, cost
allocation and control as well as product pricing as per the international website of EMA.
EMA is especially significant for internal administration activities with a particular focus
on the environment, for instance it can used for the cleaner generation, administration of supply
chain, "green" item or administration structure, organic transaction administration frameworks
that are favourable environmentally and so on. In addition to that the concept of EMA is
progressively being utilized with the end goal of external reporting. Therefore it can be said that
the EMA is not simply one of the environmental friendly management instrument. EMA is a
wide arrangement of standards and methodologies that gives the information fundamental to the
accomplishment of numerous other environmental administration activities. In addition to that,
since the decisions in the businesses at present are being influenced by the natural issues, the
concept of EMA is ending up to be more vital, for only for the ecological administration choices,
but also for expanding into a wide range of administration activities. However, a few limitations
of regular administration of bookkeeping frameworks and practices can make it hard to
successfully gather and assess environment related information. These limitations can prompt the
management decision making on the basis of wrong, missing, or confused information
(Schaltegger, Burritt and Petersen 2017). Therefore, as a result the management of the business
may misunderstand the negative financial results of unfavourable environmental performance
and the potential costs and benefits of improved environmental performance. Hence the general
management accounting limitations can be pointed out as the primary limitations that are more
specific to the environment related information.

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Barriers of future development of EMA
The few weaknesses of the EMA that deals with the environmental administration frameworks
can originate from staff negativity and cost:
 Cost - the costs that are associated with the EMA may lead to fluctuations impressively.
However, the manager needs to have the capacity to find out the minimal effort openings
that would provide the critical funds of cost reserve along with the balance expense of
actualizing and working on the implementation of the EMA (Jamil et al. 2015). In
Addition to that, since the accounting tool of EMA is a new concept, it requires various
training and development of the employees that would lead to high cost for the
organisations.
 Time and resources - The new accounting concept of EMA shall assist the business in
becoming more beneficial by decreasing consumption of energy that would lead to
reduction of cost as a consequence saving of costs (Sands, J. and Lee 2015). The EMA is
a part of the Management Accounting process that entails the collection, identification,
analysis, estimation and use of cost, or other information that may be utilised for
decision-making of the organizations. However, the venture of EMA implementation
needs the business commit a great deal of investments and time.
 Involves excessive burden– EMA is a wide arrangement of standards and methodologies
that gives the information fundamental to the accomplishment of numerous other
environmental administration activities. The few organizations might have the capacity to
understand the advantages of an EMA that would lead to efficiency of asset and cost
saving (Maas, Schaltegger and Crutzen 2016). However with working in EMA it leads a
lot of cumbersomeness and critical dealing of the environment accounts.

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 Administration or staff resistance – The environmental management accounting can be
viewed as pointless by many business organisations, therefore, the manger need to clarify
the fundamental points and advantages at an early stage of adaptation of the same (Christ,
Burritt and Varsei 2016). It may be done by presenting to the management boards
trough presentation of the critical evaluation of the EMA.
 Costs of training - Since the accounting tool of EMA is a new concept, it requires
various training and development of the employees that would lead to high cost for the
organisations. Some members of the business need to have a knowledge of implementing
the EMA (Chan, Wang and Raffoni 2014). By the following and guidance of the
standards requirements of such like the ISO 14001. Therefore an EMA can be
implemented needs the 'expert' training for its adaptation.
Opportunities of future development EMA
The primary opportunities of the EMA deals with increasing consistency of the business
and reducing the environmental waste:
The EMA has the motive and opportunities of improvising the revenues of the business
along with prevention of sales erosion. The accounting tool of EMA offers prospective
advantages to industry, that includes the capability managing and track the use and flows of
energy and materials more accurately. The implementation would take place with the process of
consumer awareness of products and services that would have an environmental effect. This
would increasingly influence the buying preferences behaviours more sustainably. In addition to
that the implementation of the EMA would also enable the organisations to reduce and sustain
the associated costs (Schaltegger, Burritt and Petersen 2017). The reduction process of the
consumption of input of the resourses has an impact on cost reduction. In addition to this also,

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EMA improves the process to cut down the cost. The EMA also helps in reducing the cost of
failure, this includes investing in the processes that would lead to reduction of cost effect of
failure, such as the need to process waste or clean up environmental effects. The concept of
EMA also helps in improvising the goodwill of the businesses as this procedure may be able to
attract better talent, reduce talent attrition and charge more prices. The opportunity of EMA
development in future has proposed to deliver many advantages to the users (Gunarathne and
Lee 2015). This includes better product pricing, cost saving, optimal resources utilisation,
cleaner production, innovation, increased value of shareholder and enhanced reputation. The
EMA also includes a green public profile in the business organisations.
Conclusion
In various organisations there exists a dynamic as well as detailed technique of
processing the data related to environmental costs which the organisation issued mistakenly for
the purpose of environmental management accounting or EMA. At present the various
organisations does not utilise an extensive options range that is been provided by the
environmental management accounting. The EMA also initiates the proactive management
activities that are related to environment. The development of EMA was mainly developed for
the process of recognizing the challenges that were being faced by the traditional approach of the
management accounting that used to deal with the environmental costs along with its impacts
and consequences. The challenges that were pointed out were the inaccurate cost allocations that
cannot be found back to process lines, products or processes. However there are several
weaknesses of the EMA that includes more cist in implementing the process, more time and
resources, burden for the business and training for employees. The primary opportunities of the

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EMA deals with increasing consistency of the business and reducing the environmental waste.
The concept of EMA also helps in improvising the goodwill of the businesses as this procedure
may be able to attract better talent, reduce talent attrition and charge more prices.

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References
Bennett, M. and James, P., 2017. The Green bottom line: environmental accounting for
management: current practice and future trends. Routledge.
Chan, H.K., Wang, X. and Raffoni, A., 2014. An integrated approach for green design: life-
cycle, fuzzy AHP and environmental management accounting. The British Accounting
Review, 46(4), pp.344-360.
Christ, K.L., Burritt, R. and Varsei, M., 2016. Towards environmental management accounting
for trade-offs. Sustainability Accounting, Management and Policy Journal, 7(3), pp.428-448.
Gunarathne, N. and Lee, K.H., 2015. Environmental Management Accounting (EMA) for
environmental management and organizational change: An eco-control approach. Journal of
Accounting & Organizational Change, 11(3), pp.362-383.
Jamil, C.Z.M., Mohamed, R., Muhammad, F. and Ali, A., 2015. Environmental management
accounting practices in small medium manufacturing firms. Procedia-Social and Behavioral
Sciences, 172, pp.619-626.
Johnstone, L., 2018. Environmental management decisions in CSR‐based accounting
research. Corporate Social Responsibility and Environmental Management.
Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.
Maas, K., Schaltegger, S. and Crutzen, N., 2016. Integrating corporate sustainability assessment,
management accounting, control, and reporting. Journal of Cleaner Production, 136, pp.237-248.

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Saeidi, S.P., Othman, M.S.H., Saeidi, P. and Saeidi, S.P., 2018. The moderating role of
environmental management accounting between environmental innovation and firm financial
performance. International Journal of Business Performance Management, 19(3), pp.326-348.
Sands, J. and Lee, K.H., 2015. Environmental and sustainability management accounting (EMA)
for the development of sustainability management and accountability [Guest editorial]. Issues in
Social and Environmental Accounting, 9(1), pp.1-4.
Schaltegger, S., Burritt, R. and Petersen, H., 2017. An introduction to corporate environmental
management: Striving for sustainability. Routledge.
Schaltegger, S., Burritt, R. and Petersen, H., 2017. An introduction to corporate environmental
management: Striving for sustainability. Routledge.
Welford, R., 2016. Corporate environmental management 1: systems and strategies. Routledge.