Application of environmental accounting to pollution prevention assessments

Environmental accounting represents a major paradigm shift in the way most companies account for costs and benefits. However, it is a change that must be made if pollution prevention is to become institutionalized into the corporate and government mainstream. Pollution prevention investments must be justified on an economic basis; without environmental accounting tools, pollution prevention investments cannot show their true profitability. This is because traditional accounting methods only track billable costs, thus ignoring some of the major benefits of pollution prevention investments, which are indirect savings resulting from a lessening of a company's regulatory compliance burden and present and future liabilities. This paper discusses how to apply environmental accounting principles to pollution prevention assessments to improve the outcome of profitability analyses