MAF 635 REPORT

ENVIRONMENTAL MANAGEMENT ACCOUNTING

-MAZDALecturers Name: Miss Aieshah Binti Abdullah Sani

Students Name : Nurul Hidayah Bt Mohd Roki

Student ID

: 2012648918

Environmental Management Accounting

Recently, business has become increasingly aware of the significance of
environmental implication of their operation, products and services. Poor environmental
behavior may have a huge impact on the business and its finances. For example, if they
were indifferent towards environmental issues, they could be exposed to punishment
which includes fines, increased liability to environmental taxes, loss in value of land,
destruction of brand values, loss of sales, consumer boycotts, inability to secure finance,
loss of insurance cover, contingent liabilities, law suits, and damage to corporate image.
Most aspects of business are affected by environmental issues, including
accounting. From an accounting perspective, the initial pressures were felt in external
reporting, for example, environmental disclosures in financial reports. They need to
manage environmental issues before they can be reported on, and this requires changes
to management accounting systems.
Environmental Management Accounting (EMA) is an attempt to integrate best
management accounting thinking and practice with best environmental management
thinking and practice.(derived from http://www.accaglobal.com). EMA is the generation

and analysis of both financial and non-financial information in order to support internal
environmental management processes. It is complementary to the conventional financial
management accounting approach, with the aim to develop appropriate mechanisms that
assist in the identification and allocation of environment-related costs (Bennett and James
(1998a), Frost and Wilmhurst (2000)). The major areas for the application for EMA are;
product pricing, budgeting, investment appraisal, calculating costs and savings of
environmental projects, or setting quantified performance targets.
The cost of environmental protection is calculated as the cost of reducing the burden

placed on the environment, the cost of investing in environmental protection benefits for
the future, and includes management costs for projects and product lifecycles in all our
areas of business. By comparing the cost of of Mazda environmental protection work in
year 2004 with the previous year, it showed an increase in research and development
costs, including prototyping of 3,510 million yen, an increase in global environment
protection cost, including switching to alternate fuels and energy-saving measures (890
million yen), increase in social activities costs (610 million yen) and an increase in
environmental recycling costs, such as constructing a new stockyard for industrial waste
(400 million yen). Mazda's calculations are compatible with the environmental
accounting guidelines and guidebook published by the Ministry of the Environment, but
are collated using their own standards.
Mazda has establish three committees under the CSR Management Strategy
Committee, chaired by the president of the Company, to promote environmental
management throughout the Mazda Group. These are the Product Environmental
Committee, the Business Site Environmental Committee, and the Social Contribution
Committee. Each committee set the targets, and monitors the results and progress,
under the Mazda Green Plan 2020 mid-term environmental plan.
The Product Environmental Committee Chairperson is Executive Officer who is in
charge of Research & Development. The monitor the studies and promotes key items
regarding environmental preservation in relation to development, including development
of environmentally friendly products and technologies. Business Site Environmental
Committee Chairperson is the Executive Officer in charge of the Environment while the
Vice Chairperson is the Executive Officer in charge of Production and Logistics. They are
in charge of the studies and promotes key items regarding environmental preservation in
relation to manufacturing and logistics. Studies and promotes methods to reduce
environmental impact throughout the entire supply chain, encompassing sales
companies, suppliers, and others (including the extension of EMS to Group companies).
Social Contribution Committee involves with the studies and promotes key items
regarding environmental protection in the area of social contributions for the Mazda
Group as a whole.

Mazda is carefully assessing the costs and benefits of its environmental activities
and is working constantly to improve their efficiency. The major activities in business
area, for instance, preventing pollution, protecting the global environment, and recycling
resources, they have calculated the environmental protection cost for conforming to legal
limits for air and water pollution, odor abatement, preventing global warming, conserving
energy, preventing destruction of the ozone layer, and other environmental protection
activities, and effective resource use, recycling waste, processing and disposing of
waste.
The direct and indirect benefits are seen as a result of the investment in, and costs
of, environmental protection. During fiscal 2004, the production, logistics and
management divisions is increasingly shows great achievement. By looking at the
improvement ratio of VOC emission reductions, CO2 emission (annual) CO2 emission
per unit sales, no. of damaged bumpers recovered, direct landfill waste, incinerated
waste, waste output per sales revenue for vehicle production and recycling ratio, there
are up to 45% improvement in environmental protection.
Mazda have obtained several economic benefit due to energy saving measures,
efficient resource usage, steam recovery, reductions in packaging, recycling, and income
from sale of marketable substances.The total economic benefit is amounted to 79(unit:
100 million yen) per year.
In the articles, there are also various trends of environmental costs, environmental
investment/ facilities investment, environmental investment / facilities investment,
quantity of CO2 output by automobile manufacturing process and waste products from
automobile manufacturing. Taken waste products from automobile manufacturing as an
example, it shows decreasing trend from the year 2000 to 2004, means that they have
succeeded in reducing the production of waste product over the years.