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Joint Media Release
Federal Minister for the Environment and Heritage
The Hon Dr David Kemp, MP
Victorian Minister for Environment and Conservation
The Hon Sherryl Garbutt
14 March 2002
What is a cost and what is a benefit when a company improves its environmental performance?
How can businesses reflect this in their accounts?
These are among the questions that the Institute of Chartered Accountants will attempt to answer through an innovative new research project jointly funded by the Commonwealth and the Victorian State Government.
Over $160,000 has been made available for the project, which will provide Australian business with a tangible demonstration of the financial benefits of improving their environmental performance.
Announced today by the Federal Minister for the Environment and Heritage, Dr David Kemp, and the Victorian Minister for the Environment and Conservation, Sherryl Garbutt, Australia's first Environmental Management Accounting Project for business will involve a diverse range of companies and accounting consultancies in five case studies.
The companies range from a small manufacturing firm, a large financial services company and Australia's largest telco to an export-oriented agribusiness and a private girls' school.
"The dramatic expansion in socially responsible investment in Australia - assets of SRI managed funds grew by 86 per cent between 2000 and 2001 to $1.3 billion - is just one example of how green business practice can reap economic rewards," Dr Kemp said.
"This project will help Australian businesses large and small - and across a range of sectors - to use management accounting techniques to improve both their environmental performance and profitability. Applying business tools such as this generate win-wins for both the environment and a company's bottom line."
This new project will complement a range of initiatives that the Victorian and Commonwealth governments have introduced to encourage the finance sector to contribute to sustainable development.
Ms Garbutt said accountants played a key role in corporate decision-making.
"It can make financial sense for organisations to adopt cleaner production processes or be more resource efficient, but unless these opportunities are identified in the accounting system, it's hard to build the business case for change," said Ms Garbutt.
"EPA Victoria has found, for example, that some companies choose waste disposal over waste reduction because their accounting system records disposal as a cheaper option. Disposal might appear cheaper because most environmental costs are placed in overhead accounts and therefore not properly allocated.
"Environmental management accounting assists companies to identify the full range of environmental costs and benefits within traditional accounting systems and may, in some cases, lead to improved decision making."
The results will be used by the Institute, EPA Victoria and Environment Australia to increase business' understanding and appreciation of the environmental cost and revenue implications of their operations.
The case studies:
Catherine Job, Dr Kemp's Office: 02 6277 7640; 0408 648 400
Mat Dunckley, Mrs Garbutt's Office: 03 9651 5799; 0408 325 277