Developments in Environmental Management Accounting between 1996 and 2005

1. GIN, Cardiff 2.-5.7.2006 Developments in Environmental Management Accounting between 1996 and 2005 Anna Kumpulainen, Dr. Tuula Pohjola Helsinki University of Technology / Lahti Centre Department of Industrial Engineering and Management Environmental and Quality Management Unit

2. Agenda • Background • Research questions • Development of EMA requirements and guidelines (literature study) • Introduction to case companies • Development of EMA practices (case studies) • Conclusions

3. Background • Environmental Management Accounting (EMA) = physical + financial environmental information for corporate internal decision-making • Tuula Pohjola’s doctoral dissertation “Environmental Modelling System – A Framework for Cost-Effective Environmental Decision-Making Processes” (1999) • 3 EMA models: transport, energy and logistics • 10 case studies in 6 Finnish companies 1995-1996 • Follow-up study 2005 • 4 companies • Data from interviews and corporate reports

4. Research Questions • How has EMA been developed in the case companies 1996-2005? • How has the world changed over the same period as to EMA?

5. Development of Requirements and Guidelines • Legislation • 1996: Mainly local regulations • 2005: EU’s increasing impact • Stakeholder requirements • 1996: Some legislation • 2005: Customers, environmental organisations etc. • Voluntary guidelines • 1996: Work starting • 2005: GRI, IFAC, EMS standards (ISO 14001, EMAS) etc.

6. Case Companies • Elisa Corp. = telecommunication solutions and services • Fujitsu Services Ltd. = computer system installations and maintenance • Kesko Food Ltd. = groceries trade • VR Group = rail transport and supplementary services (road transport, track construction and maintenance)

7. Case Results: Elisa Corporation • Development work continued • Active role also in ETNO • Information got lost when environmental manager was changed (2001 and 2004) • In 2004 new EMA metrics but management support and resources still lacking • Not yet accurate • Used only for internal reporting

8. Case Results: Fujitsu Services Oy • Development work continued • Environmental management finished along outsourcings but started later again at the logistics and configuration center • ”Not value-adding elsewhere” • ”Not causing but decreasing environmental impacts” • Annual objectives and metrics • Internal reporting • No requirements from Fujitsu Group!

9. Case Results: Kesko Food • Continuous development • Exemplary logistics EMA system • Challenges from changing IT systems • 2005-2006 new CSR accounting system built for the whole group • Internal and external reporting • CSR in the corporate strategy  Best in the retail sector in the world (Dow Jones Sustainability Index 2006)

10. Case Results: VR Group • Pilot models abandoned as too laborious but own practices developed • Pressure from legislation and big customers, lobbying • Internal and external reporting

11. Summary of Case Results

12. Conclusions • Gap between existing know-how and corporate practices • Biggest challenges: • Lacking management support and resources • Changes in IT systems or responsible personnel • Expansion of businesses and globalisation • Added value not found • However, requirements are continuously tightening  sustainable management and accounting

13. Thank you! Anna Kumpulainen (M.Sc) Tel: +358 41 5458859 Tuula Pohjola (Dr.) Tel: +358 50 5113703 firstname.lastname@tkk.fi Helsinki University of Technology Department of Industrial Engineering and Management Environmental and Quality Management Unit P.O. Box 5500, FIN-02015 TKK, Finland http://emu.tkk.fi http://emu.tkk.fi/eman2007 Organiser of the EMAN 2007 Conference!