Waste Costing as a Catalyst in Pollution Prevention Investment Decisions

Abstract

This article presents a case study in a Nigerian firm of how waste costing can be applied to pollution prevention (P2) investment decisions. This case is informed by the priority accorded to P2 as a preferred alternative to end-of-pipe pollution control. It demonstrates that even in the absence of effective regulations in a developing country, cost accounting can spur P2 decisions by management through the system of waste cost allocation. The case used standard cost data from the Wonder Beauty Care Company and applied the activity-based costing (ABC) system to waste cost allocation using waste cost drivers, which yielded another genre of waste costs-waste-induced overhead. Subsequently, the waste-induced overhead was applied to P2 investment analysis. This analysis indicated that the P2 investment alternative that incorporates the waste-induced overhead produced a preferred alternative choice. The case further revealed that managers' knowledge of waste costs in a Nigerian firm may influence their P2 decisions. The case illustrates practically a possible dual advantage of an improved costing system for Nigerian firms-cost reduction and cleaner production.

Promoting sustainable development through strategies, environmental management accounting and environmental performance

“…Ngwakwe (2011) discovered a relationship between pollution prevention investment and waste costing in Nigerian firms. Similarly, Agustia et al (2019) found a link between the prevention strategy on firm value with EMA as an intervening variable in Indonesian manufacturing firms.…”

Corporate greening in a large developing economy: pollution prevention strategies

“…In response to growing public attitude towards environmental issues, the organisations are working alongside environmental experts to find solution for pollution abatement and achieve success (Clarke and Fuller 2010). Adoption of green practices restores natural balance, protects health of workers and consumers, enhances operational efficiencies, improves financial performance of firms and helps in gaining competitive strength (Ngwakwe 2011). As a strategic business issue, corporate greening operations are based on 3R principles-reduce, recycle and reutilisation to gain competitive strength in manufacturing (Hoque and Clarke 2013;Jabbour et al 2012;Kopnina 2017).…”

“…Pollution denotes evidence of inefficient use of resources enhancing waste and resource depletion. Pollution prevention is one of the foremost challenges to manufacturing organisations to reduce or eliminate the waste at the source (Freeman et al 1992;Ngwakwe 2011;Pollution Prevention report 1992). Pollution prevention eliminates waste at the source by bringing some alterations in the existing process, encouraging usage of non-hazardous materials.…”

Επιχειρηματικές Στρατηγικές Και Απόκτηση Ανταγωνιστικού Πλεονεκτήματος Μέσω Της Πράσινης Επιχειρηματικότητας Και Της Βιώσιμης Διαχείρισης Του Περιβάλλοντος

“…Η ρύπανση και η υποβάθμιση του φυσικού περιβάλλοντος υποδηλώνουν αναποτελεσματική χρήση πόρων. Η πρόληψη της ρύπανσης είναι επομένως μία από τις πρωταρχικές προκλήσεις για τις επιχειρήσεις προκειμένου να αντιμετωπιστεί εν τη γενέσει της η επιβάρυνση του περιβάλλοντος από τις δραστηριότητές τους (Ngwakwe, 2011). Η πρόληψη της ρύπανσης καταπολεμά την επιβάρυνση του περιβάλλοντος επιφέροντας αλλαγές στις υφιστάμενες διαδικασίες και ενθαρρύνοντας τη χρήση μη επιβλαβών για το περιβάλλον υλικών (Rehman & Shrivastava, 2013).…”