Business Strategy and the Environment
Bus. Strat. Env. 13, 65–77 (2004)
Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/bse.395
ACCOUNTING: AN ESSENTIAL
COMPONENT OF BUSINESS
Mehenna Yakhou*1 and Vernon P. Dorweiler2
Georgia College and State University, USA
Michigan Technological University, USA
Environmental accounting is on an
expansion path. With increasing social
focus on the environment, accounting
ﬁlls an expectation role, to measure
environmental performance. The status of
environmental awareness provides a
dynamic for business reporting its
environmental performance. Examining
the integration of environmental policy
with business policy is the focus of this
research. The business ﬁrm’s strategy
includes responding to capital and
operating costs of pollution control
equipment. This is caused by increasing
public concerns over environmental
issues, and by a recent government-led
trend to incentive-based regulation. This
paper describes the environmental
component of the business strategy,
producing the required performance
reports and recognizing the multiple
skills required to measure, compile and
analyze the requisite data. Special
* Correspondence to: Dr. M. Yakhou, The J. Whitney Bunting
School of Business, Georgia College and State University,
Campus Box 15, Milledgeville, GA 31061-0490, USA.
Copyright © 2004 John Wiley & Sons, Ltd and ERP Environment
emphasis of the research is on generation
of reports and their standards, for the
range of business and regulatory
purposes. Copyright © 2004 John Wiley &
Sons, Ltd and ERP Environment.
Received 18 October 2002
Revised 12 May 2003
Accepted 9 July 2003
nvironmental accounting is an inclusive
ﬁeld of accounting. It provides reports
for both internal use, generating
environmental information to help make
management decisions on pricing, controlling
overhead and capital budgeting, and external
use, disclosing environmental information of
interest to the public and to the ﬁnancial community. Internal use is better termed environmental management accounting (Bartolomeo et al., 2000).
For the purpose of this research, both
internal and external uses are considered. The
contribution of multiple disciplines provides
a base for determination of environmental
impacts and related costs. Speciﬁc details of that
determination serve one or both of the uses.
M. YAKHOU AND V. P. DORWEILER
Impact of business activity on the environment is found in several forms. • Media: air, water, underground pollution.
• Targets: drinking water, land and habitat for
endangered and threatened species.
• Global sites: oceans, atmosphere, land mass.
An array of pollutants, including toxic,
hazardous and ‘warming’, is accountable to
business activities. From this range of
environmental impacts, multiple disciplines
are needed for analysis of effects, and for
integration into management decisions and
Non-accounting disciplines needed include
environmental law and regulation,
ﬁnance and risk management and
management policies and control systems.
The range of environmental costs, energy and
material use and waste disposal, insurance and
ﬁnes and penalties, shows participation of
multiple disciplines, along with accounting
sub-disciplines. The yield of this effort is the
decision support system, in which environmental impact can be determined speciﬁcally in the following terms:
FCA, full cost accounting,
TCA, total cost assessment,
LCC, life-cycle costs,
LCCA, life-cycle cost analysis, and
Results of environmental reporting include
full-cost pricing and ‘eco-accounting’. Also,
an environmental management system, EMS,
provides a databank of...
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Bus. Strat. Env. 13, 65–77 (2004)
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