The business activities of companies and other organizations in the modern socio-economic system have expanded in scale, diversified, and become globalized to a degree not experienced previously. A great number of companies have been established corresponding to each purpose, and group management is practiced. In a group management system, the independent decision-making ability of group companies is limited. At the same time, the primary objective becomes management of the group, limiting the environmental impact of the holding company itself, which essentially consigns functions such as production, sales, and distribution. In such cases it becomes difficult to perceive the actual environmental conservation activities from the data for individual corporate units assembled under a legal structure. Consolidated data reflecting economic activity is already part of the mainstream in financial accounting, but it is also necessary in environmental accounting to focus on environmental impact within the broader scale of the supply chain to the greatest extent possible, so as to make it possible to understand the costs of environmental conservation within business activities and the benefits derived from them. It is therefore necessary in environmental accounting as well to ascertain and evaluate data reflecting the actual business activities of the consolidated group (business group), rather than of each individual unit of the company or other organization, in order to understand the actual situation at the company or other organization.
Scope of Consolidation
The consolidation range for environmental conservation goals has been established corresponding to importance in terms of environmental conservation. The standards for determining importance take into consideration the particular business group’s environmental impact. In particular, this means specifying the significant areas of environmental impact resulting from the kinds of business activities engaged in by the business group, focusing on the organizations listed below:
• Related companies contributing greatly to the volume of environmental impact based upon environmental performance indicators that take into consideration the significant areas of environmental impact; • Related companies participating greatly in the environmental conservation cost for environmental conservation activities, taking into consideration the significant areas of environmental impact; • Related companies that are judged to have a significant qualitative environmental impact, even if the volume of environmental impact is not great.
Determinations about the consolidation scale may also be made in line with that of the consolidated financial statements.
Organization with Significant Qualitative Environmental Impact Organizations that have a significant qualitative environmental impact, even if the volume of impact is not great, the environmental impact of the business group overall include. For example, related companies that handle chemicals with significant environmental impact even if their percentage of the business group’s overall chemical emissions or transport volume is low. Also, companies performing a significant environmental conservation function, such as those dedicated exclusively to the collection of used products from the market, would be included, even if their percentage of the business group’s overall waste emissions volume is low.
Consolidated Environmental Accounting Aggregation
Consolidated environmental accounting treats organizations composed of a number of companies as a single entity and aggregates their results. The typical flow of aggregation proceeds as outlined below:
• The consolidation scope is determined;
• The environmental accounting data for the individual members of the business group is aggregated • The environmental accounting data for the individual members is...