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The'net value withdrawn' thus calculated gives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 The net value withdrawn increasedin absolute terms from almostNLG 2.3million in 1990to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we are able to comparethe net value withdrawn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.
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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.