A note on the scope of environmental management accounting: for advanced management accounting students

A note on the scope of environmental management accounting: for advanced management accounting students

 

Regarding the subject of environmental management accounting EMA) scope, highlight briefly the 4 EMA reporting items under the following 2 domains:

1. Monetary/ Financial domain

2. Physical/ non-financial domain

Environmental management accounting (EMA) reports both monetary/financial and physical/non-financial information to support internal environmental and business decisions. The standard framework distinguishes environment-related costs, earnings and savings from physical flows of energy, water, materials and waste.

Monetary/financial domain

Four EMA reporting items are:

1.    Environment-related costs — Costs of waste and emissions control, treatment, disposal, remediation, environmental monitoring, compliance, prevention and environmental management activities.

2.    Environment-related earnings/revenues — Income generated from environmental activities, such as sale of recyclable materials, by-products, recovered energy or environmental services.

3.    Environment-related savings — Cost savings arising from reduced material use, lower energy and water consumption, waste minimisation, recycling and improved process efficiency.

4.    Material and energy costs — Purchase and processing costs of raw materials, packaging, operating materials, water and energy, including the cost of materials that become waste or emissions rather than saleable products.

Physical/non-financial domain

Four EMA reporting items are:

1.    Energy use and flows — Quantities of electricity, fuel and other energy inputs consumed, and energy losses or emissions arising from operations.

2.    Water use and wastewater flows — Water withdrawn or consumed, wastewater generated, and the treatment, discharge or reuse of wastewater.

3.    Materials use and product outputs — Quantities of raw, auxiliary and packaging materials used; products and by-products produced; and materials incorporated into final products.

4.    Waste and emissions outputs — Quantities of solid waste, hazardous waste, wastewater and air emissions generated, treated, recycled, disposed of or released.

Source of information

The classification follows the United Nations Division for Sustainable Development (UNDSD) and the International Federation of Accountants (IFAC), which define EMA as the collection and use of physical information on energy, water, materials and waste, together with monetary information on environment-related costs, earnings and savings.

 

References

International Federation of Accountants (IFAC) (2005) International Guidance Document: Environmental Management Accounting. New York: IFAC. Available at: https://www.ifac.org/knowledge-gateway/professional-accountants-business-paib/publications/international-guidance-document-environmental-management-accounting (Accessed: 7 November 2026).ifac

United Nations Division for Sustainable Development (UNDSD) (2001) Environmental Management Accounting: Procedures and Principles. New York: United Nations. Available at: https://www.un.org/esa/dsd/dsd_aofw_tec/tec_ewgm0899.shtml (Accessed: 7 November 2026).un

Association of Chartered Certified Accountants (ACCA) (2024) Environmental management accounting. Available at: https://www.accaglobal.com/gb/en/student/exam-support-resources/prodipsust-study-resources/technical-articles/environmental-management-accounting.html (Accessed: 7 November 2026)