Proceedings of Eurasia Business Research Conference
4 - 6 June 2015, Nippon Hotel, Istanbul, Turkey, ISBN: 978-1-922069-77-1
Carbon and Material Flow Cost Accounting: Perspectives
of an Integration
Stefan Nertinger
Material and energy costs are the largest costs in German manufacturing firms and
are even rising (Statistisches Bundesamt 2014). Also the physical, market and
regulatory impacts of climate change caused by CO2 equivalent emissions are
increasingly facing challenges. As both costs and emissions have a material base,
innovative instruments to control the emissions, costs, material and energy flows are
necessary (Franchetti/Apul 2012). Here, we focus on providing the link between
methods of management accounting and life cycle assessment.
For the development of such instruments practical methods with high flow-oriented
management reference are especially suitable. For deeper analysis, the integration of
the methods of Carbon Footprinting (CF) in the accounting scheme of Material Flow
Cost Accounting (MFCA) is effective. Both methods can be associated with the cluster
of instruments of sustainability controlling. Product and Corporate Carbon Footprinting
are representative of the ecology-oriented assessment procedures and MFCA for
environmental cost management.
This raises two methodological challenges. First, the allocation of material and cost
flows, in particular the allocation of emissions for both cost units product and nonproduct output of the MFCA. Second, the differentiation and crystallization of the costs
which are caused by the carbon emissions: The relevant cost aspects are Carbon
Management and Handling costs (expenses for the management, detection and
control of CO2-eq emissions, analogous to the concept of waste management costs of
MFCA) as well as regulatory costs e. g. by fines or emission trading scheme. As an
extension in terms of a broader environmental orientation and sensitization external
costs are incorporated in the analysis models of Carbon and material flow cost
accounting.
This paper describes three different models that combine allocation principles and
rules of management accounting and life cycle assessment:
a) Carbon as a Cost Unit
b) Carbon as NPO
c) Hybrid Analysis
Carbon Footprinting is integrated into MFCA`s methodological framework. The three
models provide a consistent methodology for the analysis of the material and
monetary perspective of CO2-eq. in production processes. As a result, it is clear that
emissions and costs are the two sides of the same coin.
Figure 1 shows the application of the model “Carbon as a Cost Unit” on a section of a
real business process. In the context of this application, there is a first evidence for
forcing cost and emission reductions through the application of the method. The
validity is undoubtedly to be tested by in-depth research and application.
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Martin-Luther University Halle-Wittenberg (Germany), School of Economics and Business, Große
Steinstraße 73, 06108 Halle (S), Stefan.nertinger@wiwi.uni-halle.de
Proceedings of Eurasia Business Research Conference
4 - 6 June 2015, Nippon Hotel, Istanbul, Turkey, ISBN: 978-1-922069-77-1
Figure 1: Implementation of the model Carbon as a Cost Unit on a reference process
(source: own)