Facilitating a greener environment through Management Accounting

Abstract

Worldwide natural resources such as coal and water are becoming scarcer each year. Individuals as well as companies need to use natural resources sparingly and responsibly, and decrease waste production. It is not only about the usage of resources, but also about the waste that occurs as a result thereof. Management accounting improves decision-making as it communicates decision-relevant insight and analysis to every decision-maker in a company, focussing on their social and environmental duties. The annual statements on the websites of the Top 10 South African companies in 2014 were analysed and compared to 2012, 2008, and 2003. A „Word cloud‟ was created for each year based on sixteen key words to determine whether awareness grew with regard to for instance sustainability and the environment. This paper is conceptual and exploratory in nature as it highlights the demand on natural resources as well as the steps that can be taken to minimise the impact on natural resources. Companies seem to become more aware of what they do to the environment and would like to take action where ever they can in order to be acceptable to investors. In the early 1980s companies did what is referred to as call “green washing” to comply with legalities. However it seems that this has now changed to a true awareness and “green” companies are becoming more and more competitive due to their truly environmentally friendly activities. In order to assist companies to become even more aware of waste and their environmental responsibility, they may need to be made more aware of the use of management accounting tools such as Activity Based Costing (ABC) and Material Flow Cost Accounting (MFCA) simultaneously.