1991 Environmental accounts
Environmentalaccounts1991 Introduction The economicvalue ofthe environmentremainsa parameterwhich is not easilyquantifiable,giving riseto endlessdiscussionsand conflicting conclusions.One thing is certair5however: if we really wish to lighten the burden on the environment causedby our actions'we shall first haveto gain an understandingofthisburden. To the sameextent that a financial bookkeeping system is of paramount importance for a company's financial affairs,an environmental bookkeeping is crucial for limiting the damage causedto the environment. As last year, BSO/ORIGIN has again tried to quantirythe damageto the environmentin 199I in financial terms,basedon a theoreticalcalculation of the costswhich would be incurred in repairing the damageback to a level where the natural eco system is able to eliminate the residual effects. The'net value withdrawn' thus calculated gives an indication ofthe costsnot taken into accountin the financial statementsand passedon to the next generation. But environmental bookkeeping in itself is not enough.After all, it does not do anything to curb the environmental costs. BSO/ ORIGIN should know: a comparison with last year'sfigures does not exactly present a rosy picture. The net value withdrawn increasedin absolute terms from almostNLG 2.3million in 1990to nearly NLG 3.4 million in 1991, a sizeable increase which can be attributed to two factors. Firstly, the number of employeesrosein 1991by over 50 per cent. And secondlythe total number of kilometers driven increased.Contrary to 199O the use of private cars for businesspurposeswas taken into accountin the complex calculationfor 1991.The l990Iiguresincludedin theseenvironmental accountshave been adiustedaccordingly. If we apply this method for the 1990calculation, we are able to comparethe net value withdrawn per employee. In 1990, this amounted to )t NLG 986 per employee,a figure which decreased in 1991to NLG 954. One striking aspectis that the wasteproduction and the electricityusebarelyincreaseddespitethe growth in the number of locations. BSO/ORI GIN's environmentallydamagingactivities aremainly found inthe areaoftransportation. In absolute terlns, the 'transportation' item amounted to NLG 3.0 million in 1991. Per employee,the number of kilometers coveredfor businesspurposesdecreasedby 8.5 per cent as a consequenceof the reduced mobility related to the nature of the work abroad. The relativelylargeentry for atmosphericemissions can be explained by the circumstancesprevailing at the new locationsabroad wheremost of the staffuse their own car.Most of these carsrun on ordinary gasoline or diesel, without catalytic converters.A large proportion ofthe carsused by the employeesof the Dutch locations have catalytic convertersor run on liquid gas. It is BSO/ ORIGIN's intention to propogate'cleandriving' abroad,too. The transportationquestionis an areato which a companysuchasBSO/ORIGIN,which operates in the servicesector'can increaseits contribution. In that respecta start wasmade in 1990by raising the discussionabout the use of the car.The Central Works Council and the Management Board have appointed a Mobility Committee which is endeavoring to find structural solutions to the 'mobility problem'. One ofthe suggestionsput forwardby this committee encompassesan individually geared arrangementfor traveling expensesoffering a wider range of options to the employees,so that not everyoneby definition has to drive a leased car everyday.V/hether this plan will be implemented and how depends,among others things, on the opinion of the employeesconsulted. Notes to the environmental accounts General Environmental accounts offer a company the opportunity to elaborateon the way in which its activities affect the environment. BSO/ORI GIN made a first tentative attempt to expressthese effectsin figuresin its annualaccountsforthe year 1990. This year,too, certainfrguresconstitutegeneral estimateswhich are of an arbitrary nature, especially since no accuratedata could be obtained from someof the locations,a number of new ones among them. In such casesextrapolations have been used. To facilitate a comparison between 1990and 1991,the variousitemshavebeencalculated in an identical inanner. The ultimate objective of the environmental accountsis to arrive at an estimateof the costsof the environmentaleffectscausedbythe company. The financial statementsshow that the assessments requiredby law areno more than a minimal amount when compared to the actual costs. In 1990 this amountedto 6.7 per cent, in 1991 to 4.8 per cent. The final ligure resulting from the deduction of the assessments required by law and the costs borne by the company in compensationfor the burden on the environment from the costsof environmental effects corresponds with what the organization withdraws from the environment without doing anything in return. This is a method of expressing the consequences of a company's activities in terms of money, which makes it possible to compare the environmental effectswith the operating results and, by offsetting the costs with the results, to form a more realistic picture of the company's profitability. Assessment of environmental effects Corporate activities affect the environment both directly and indirectly: directly in the form of corporate pollution and the effectsof the company's own energy consumption (heating cars,etc.),for example, and indirectly through the environmental burden caused by third parties in the production of raw materials purchased by the company(up-streameffects)or through the useof products manufacturedby the company (downstream effects). With the exceptionof energygeneration,BSO/ 58 ORIGIN's environmental accounts have been drawn up based on the direct environmental effectsonly. This meansthat no accounthas been taken ofthe effectsoccurringasa result ofthe production of paper,computers,photocopyingequipment and the like. There are various reasonsfor making an exceptionfor electricitygeneration.Ifit is excluded from the accounts,it becomesall too simple to reduce the company's own environmental costsat the expenseof 'general'electricity generation. BSO/ORIGIN's total environmental burden is calculated from the total of the environmental burden of all operating companiesseparately. The environmentaleffectcan be measuredbefore or after the polluting agentsare reducedby purification and processingequipment.It has been decidedto measureit after reduction ofthe pollution by our own emission-reducing equipment such as catalytic converters for cars, but before reduction by third-party emission-reducing equipment (water pollution and waste). The costsof the direct environmental effectscan be divided into two categories.The first category consists of environmental costs in connection with third-party emission purification and processing(in the public and commercial domain), regardlessof who bearssuch costs.This includes the disposaland treatment of wastewater and the transportationand elimination ofwaste materials. The second category consists of the remaining theoretical costs after completion of all purification and processing activities (the residual effects).Examplesof this arethe pollution caused by dumping incineration residuesof incinerating plants and water treatment sludge. I I wa!,s I I ra w ma t e ri a l s r:";i p r o d u cts l**t l-;il;l I I I I waste Notes to the figures The environmentalaccountsaspresentedheredo not professto present precisevalues.What matters is the order of magnitude. But even though they areestimatesin all cases,an attempt hasbeen made to expressthe separatecostsof the damage in figures.That makesit possiblero comparethe various types of environmental burden, which in its turn permits the setting of policy priorities. BSO/ORIGIN is acutely aware of the fact that theseenvironmentalaccountsarerestrictedto the main emissionflows and that the composition of waste streams,for example,has not been broken down into more detail. Some 80 locations have contributed information for the production ofthe data. As not all of them have supplied identical details, extrapolationshave been carried out on the basisofaverageligures. One of BSO/ORIGIN'sparricularfearuresis that manyofits staffdonot physicallyworkatthecompany's own location but at various clients. The environmental costs causedby them there, such as waste productior5 energy consumption and water pollution, arechargedto the client and consequently not included in BSO/ORIGIN's accounts. No wasteitem has been included in the accounts for the thousands of personal computers owned by the company,astheseareusually not disposed of in the form of wastebut given to third parties, such as schoolsand the like, for furtheruse. They therefore do not form a waste item for BSO/ ORIGIN and arenot accountedforinthe environmental accounts. The same principle applies to leased equipment, such as photocopying equipment and cars. At the end oftheiruseful life, thesecausedamage to the environment.We havehoweverassumedin our calculationsthar this damageis borne by the owner, although naturally this does not apply to the cost of their use. divided into four categories:thoseofthe company itself (including transportation), power stations emissions,wastewater and waste. A pragmatic approachhas been used to estimate the costs,basedon the marginal costsofthe emission reduction measures in 'optimal' environmental circumstances.This means that society takes environmentalmeasuresto the point where the marginal costs of those measuresequal the marginalbenefrts(seeFigure 2). Sadly,we arecurrently still too far removed from this 'optimal' situation. 3 self-clea n ing disi rable .mtntmum s Iluatron With regard to counteracting emissions, these environmental accountsare basedon the following basic assumptions: According to the National Environmental Policy Plan 'Plus', nitrogen oxide emissions must be reducedbetween1985andthe year2000by 56per cent and sulphur dioxide emissionsby 70 per cent. In order to rcalizethis, we areestimatingthe costs at twice the level indicated by the aurhors of NMP-Plus. Carbon dioxide emissionsmust be reduced over the same period by at least 60 per centr according to the recommendations made by the IPCC (Inter-Governmental Panel Climate Change.) Treated waste water must meet drinking water standards. Estimate of costs of residual effects Various residual emissionshave been accounted for in the environmental accounts,the separate components of which are expressedin Dutch guilders.These forms of pollution can be roughly 59 Part of the waste is recycled and the remainder incinerated. With respect to incineration we havebasedour calculationson the costsofatmospheric emissionsand the dumping ofincinerarion ashes. As the real extent of environmental damage caused by emissions is still not clear, we have basedour calculationson the samevalues as last year,thus making a fair comparisonof the ligures possible. The valuesusedin calculatingthe specificcostsof the damageare NLG 10.00per kilogram NO, for stationary sourcesand air traffic and NLG 20.00 for cars.The latter value is higher becauseof the contribution of car traffic to local pollution and higher concentrationsduring peak hours. The total costs of car traffic are estimated at NLG 40.00 per kilogram including the pollution causedby carbon monoxide and hydrocarbons. The value of NLG 14.00 per kilogram for SO2 emissionsis arrived at by assumingthat the environmental effect (the formation of acid rain) is proportional to the number of acid equivalents. There are a number of ways to limit CO2 emissions, varying from energy conservationand reforestation to a lower economic growth. As a resulgthe costestimatesof suchactivitiescanvary substantially.Basedon a number of different investigationsand the basicpremiseof reduction of emissionsto 60 per cent mentioned earlier,we can estimatethe costs of the damageat NLG 100.00 per ton. The carbon dioxide emitted by wasteincineration plant has been valued at nil, as it is derived from bio mass and does not constitute a net emission. Wastewaterproduction is expressedin inhabitant equivalentsbased on the company's water consumption. Averagecostsincurred in The Netherlands areusedto calculatethe costsoftransportation and water treatment per inhabitant equivalent. The damageto the environment causedby the residual waste water is roughly estimated at twice the current water treatment costs. BSO/ORIGIN's waste consistslargely of paper (fanfold forms, writing paper, periodicals and newspapers).The calculation allows for 50 per cent recycling the costsofwhich are not charged to the company. The remainder of the paper is added to the total household waste. Our estimation of the damageto the environment is based on incineration in waste incinera- 60 tion plants. The costs of the damageto the environmentthen consistofthe costsofremoval and incineration plus those of the residual air pollution and the dumping of ash. Removal costs on averageNLG 80.00 per ton in The Netherlands, incineration costs NLG 100.00 per ton. The damage to the environment as a result of heavyast5fly ash and water treatment sludgehas been fixed at NLG 100.00, NLG 200.00 and NLG 500.00per ton of dry matter, respectively. Costs of environmental effects 1991 1990* in thousands ofDutch guilders Atmosphericemissions Emission Natural gas consumption NO, C O, Total 468 kg 496t. Unit cost l0 NLG/kg 100NLG/r. Total 5 50 ) 48 53 'D Electricity consumption S O, NO, Dust C Oz Total Traffic by road NO" HC CO CO z 7.595ks 5.803kg 640 kg 2.342t 14 NLG/kg l0 NLG/kg l0 NLG/kg 100NLG/I. 1 il 62 7 252 AUl 47.486kE 36.600kg 181.436 kg 10.442t. 40 NLG/kg 100NLG/I. Total 1.899 432 1.048 t.0u 764 2.943 Traffrc by air NO* C O, Total 1.409kg 385 t. Waste incineration SO, NO, Dust HCI Coz Total 326k9 401 kg 276k9 753 kg 301 t. l0 NLG/kg 100NLG/I. t4 38 1.8t2 T2 32 52 Sub total atmosphericemissions * The figures shown for road traffic emissions have been recalculated to business kilometers traveled in private cars, in contrast to the figures published in the 1990 annual report. 6l 106 58 6 2U 14 NLG/kg I0NLG/kg l0 NLG/kg 13 NLG/kg 0 NLG/kg 44 4 4 3 9 0 it 4 3 10 0 22 3.476 20 2.361 Emission Unit cost 1991 1990 3.476 2.36t Total Subtotal atmosphericemissions Waste water Water treatment Transportation Residual water pollution 377 inh.eq. 377 inh.eq. 048 NLG/i.e. 12 NLG/i.e. t3 3 27 18 5 36 Total 43 59 Waste Waste produced by company Collection Incineration 409t. 251t. 80NLG/I. 100NLG/r. 33 25 25 t. 8 t. 100NLG/I. 200 NLG/I. 3 2 30 23 Residual wasteafter incineration Heavyash Fly ash Total $7asteproducedby electricity power stations Fly ash Wasteproducedby water treatment Sludge 62 56 60r. 200NLG/I. t2 L3 5 t. 500NLG/t. 3 2 dry matter Total 63 dry matter 3.613 2.475 Environmentalexpenditure 1991 1990 in thousands of Dutch guilders Fuel levy in The Netherlands Natural gas for heating purposes Liquid gas for cars Fuel for electricity 1 20 1 18 8 o Total 26 27 Purification levies, garbage collection rates, seweragetax and other environmental taxes r47 138 Private waste processors 81 51 Total 254 216 Net value withdrawn in thousands of Dutch guilders Costs of environmental effects Environmental expenditure 3.613 (254) Total net value withdrawn 2.475 (2r6) 3.359 2.259 Net added value in thousands of Dutch guilders Value added Value withdrawn Net addedvalue 63 377.298 (3.35e) 373.939 255.6L4 (2.25e) 253.355 Glossarv Value added personnel costs * depreciation,provisions * financial expense * taxation + net profit (or loss) Net value added value added less value lost. Value withdrawn costs of the environmental effectscausedby the company'soperations,less the company'sexpenditure to mitigate these effects. Costs of environmental effects Residual effects Costs of residual effects Environmental expenditure Paymentsto third parties Marginal costs 64 environmental costs relating to the processingor treatment of emissions* costs of residual effects. environmental effectsremaining after completion of all treatment and processingactivities. residual effectsexpressedin monetary tenns. paymentsto third parties * environmental taxes - environmental grants payments for subcontractedenvironmental activities relating to the company'semissions(water removal and treatment, wastecollection and disposal). unit costs of treatment and/or processingof emissions at a given emissionlevel.