Environmental Accounting
Like the way we do Financial Accounting for the production of the products and services offered, growing concerns on Environmental Protection resulted the manufacturers to do “Environmental Accounting” for the products they have manufactured.
German Brand PUMA initiated this Environmental Accounting and published its Environmental P&L account statement in the year 2011. PUMA’s initiative triggered many organizations to explore the EA.
The company which assisted PUMA in E-P&L “TrueCost” says, “Though companies pay fees for services such as water abstraction, energy use, waste disposal and land use, the true costs of these environmental impacts are usually externalized and unaccounted for. An EP&L assesses how much a company would need to pay for the environmental impacts it causes, providing a shadow price for risk and opportunity analysis”.
PUMA’s environmental impacts occur mostly in the Asia / Pacific region, More than 40% of the environmental impact in Asia / Pacific is from water use which is driven by the concentration of cotton farming and fibre, yarn, thread and fabric mills in the Asia / PAcific region. The monetized environmental impacts from Apparel EUR 4.1 and Accessories EUR 2.9 per EUR 100 of sales. It means for the sales of 100 EUR the Environmental Impact costs is 4.1 EUR. (Full Report)
The fashion and textile industry is one of the world’s most polluting, and a new report now shows that clothing consumption in just Denmark costs nature and the environment a little more than DKK 3 Billion. Recently one of the published Danish Environment Ministry’s report claims that the Environmental Cost of a Standard Cotton T Shirt is about €1.60.
The report further details that, Danish Fashion companies are largely sourcing its products from China, India and Turkey, where the real environmental impact happens.
Denmark’s Per Capita Textiles usage is 16 kg of clothing a year, to manufacture 16kg of cloth, the manufacturer in China / India / Turkey uses 50 kg of chemicals. [1]
Environmental Impact of a T-Shirt
This Environmental Cost is an “Eye Opener” for the Manufacturers, to explore opportunities to minimize the resource utilization and reduce the impact on environment. With that the manufacturer gain the benefits and brand their production as sustainable by minimizing their Environmental Cost.
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