Conference June 9 – June 13, 2008

I. THE CARBONplus methodology will be based on existing techniques such as environmental management accounting (EMA), full cost accounting (FCA) and activity based costing (ABC)

The main goal of our approach is to find the appropriate methodology to encompass the whole scope of social-environmental impacts of projects. Thus, to assure the legitimacy of our approach, we will assess and use the most relevant procedures of existing methodologies, to create our own methodological scale.

According to the United Nations Division for Sustainable Development (UNDSD) (2001) :
“The general use of environmental management accounting information is for internal organizational calculations and decision-making. EMA (environmental management accounting) procedures for internal decision-making include both physical procedures for material and energy consumption, flows and final disposal, and monetarized procedures for costs, savings and revenues related to activities with a potential environmental impact.”

Although that definition restrains the use of EMA to internal organizational calculations and decision-making, we will promote the EMA principles to reach a better understanding and assessment of the co-benefits linked to Carbon Plus related projects with the intention to guarantee a fair premium price for mitigation credits created by such a projects.

And to broaden the scope of the EMA principles, we will also take into consideration the commentary on EMA formulated by the United States Environment Protection Agency (US EPA):

“With the growing prevalence of environmental (and social) performance indicators being used as a basis for assessing an organisation and its managers (…) there is a need to have a mix of both financial and non-financial indicators to assess an organisation’s environmental performance.”

Therefore, financial and non financial indicators will be taken into consideration to assess the social as well as the environmental costs and benefits created by the activities and develop performance indicators.

The existing methodologies:

Some methodologies have been developed to assess the real impact of activities on environment and social development, making it possible to internalize costs usually considered as external. EMA procedures focusing on the environment will inspire our approach of assessment.

And according to the UNDSD:
“Whenever possible, environment-driven costs should be allocated directly to the activity that causes the costs and to the respective cost centres and cost drivers. Consequently, the costs of treating, for example, the toxic waste arising from a product should directly and exclusively be allocated to that product.

Many terms are used to describe this correct allocation procedure, such as environmentally enlightened cost accounting, full cost accounting (FCA) or activity-based costing (ABC). ABC, activity-based costing, “is a product costing system, … that allocates costs typically allocated to overhead in proportion to the activities associated with a product or product family”.

The three methods, EMA, ABC and FCA present similarities, and for that reason, we will not follow the detail of each method, but will instead limit our conclusions to the common practices implemented by the three accounting system.