ABSTRACT
This chapter explains how the terms that refer to environmental accounting are currently being used, so that confusion about the terms does not impede progress in understanding and applying the core concepts. It focuses on environmental accounting as a management tool for a variety of purposes, such as improving environmental performance, controlling costs, investing in 'cleaner' technologies, developing 'greener' processes and products, and informing decisions related to product mix, product retention and product pricing. The chapter also focuses on the application of environmental accounting as a managerial accounting tool for internal business decisions. It summarises how environmental accounting can be integrated into cost allocation, capital budgeting and process/product design. There are two general approaches to allocating environmental costs: build proper cost allocation directly into cost accounting systems; or handle cost allocation outside of automated accounting systems. Companies may find that the latter approach can serve as an interim measure while the former option is being implemented.
