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Barriers to the development of

environmental management
accounting
An exploratory study of pulp and paper
companies in Thailand

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management
accounting
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Watchaneeporn Setthasakko
Thammasat Business School, Thammasat University, Bangkok, Thailand
Abstract
Purpose The purpose of this study is to attempt to gain an understanding of the root causes of
barriers to the development of environmental management accounting in organizations.
Design/methodology/approach The study employs semi-structured interviews with key
informants accompanied by site observations. Key informants include chief operating officers,
environmental managers and accounting directors of three pulp and paper companies in Thailand.
Findings The study identifies the root causes of the barriers: lack of building organizational
learning, a narrow focus on economic performance and absence of guidance on environmental
management accounting.
Research limitations/implications As an exploratory case study, findings cannot necessarily
be extrapolated to broader populations. To improve the generalization of the findings, future research
should broaden the sample. It would also be beneficial to pursue comparative research between
industries, countries and regions.
Practical implications Developing environmental management accounting requires increasing
green knowledge and generating a wider conception of corporate responsibility throughout an
organization. In addition, government agencies have to play a significant role in promoting
environmental management accounting.
Originality/value This paper contributes to a deeper understanding of the influence of
organizational learning mechanisms and the role of governments in developing environmental
management accounting.
Keywords Economic performance, Environmental management, Workplace training,
Supply chain management, Sustainable development, Thailand
Paper type Research paper

1. Introduction
Companies have begun recently to face increasing stakeholder concerns regarding the
operational impact of the company on the environment and society as individuals
become more aware of the fact that each operational process has the potential of
generating a negative impact on ecological and societal systems (Handfield et al.,
2004; Hopwood, 2009). Governments, consumers, local communities and international
This work was supported by Business Research Center, Thammasat Business School,
Thammasat University, Bangkok, Thailand. The useful comments of two anonymous referees
on an earlier version are also gratefully acknowledged.

EuroMed Journal of Business

Vol. 5 No. 3, 2010
pp. 315-331
q Emerald Group Publishing Limited
1450-2194
DOI 10.1108/14502191011080836

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organizations have begun to embrace the concept of sustainable development

(Warhurst, 2005; Zhu and Sarkis, 2006), with the proposition that economic growth
can occur while simultaneously protecting the environment and natural resources
(World Commission on Environment and Development, 1987). These bodies are
working to push companies to focus on the environment and society rather than
solely on a companys financial success. As a result of pressure by these entities,
environmental technologies and management practices have emerged as effective
management approaches to improve corporate environmental performance (Buhr,
1998; Ren, 1998; Vigneswaran et al., 1999; Dias et al., 2004; Zhu and Sarkis, 2004). In
addition, there has been an increasing trend for companies to provide data concerning
environmental policy, programs and performance in annual reports and stand-alone
environmental reports. Prior studies indicate that comprehensive information
encompassing all aspects of environmental performance, including monetary and
non-monetary value, is essential for sustainability management (Shaltegger and
Burritt, 2000; Koehler, 2001).
Traditional accounting systems and practices have provided incomplete data and
hidden environmental costs in administration and overhead accounts (Epstein and
Young, 1999). The amount of environmental information reported by companies
remains limited and differs widely in terms of quality (Deegan and Gordon, 1996).
The disclosure of corporate environmental performance is brief and mostly
descriptive and narrative with a non-monetary emphasis (Jaggi and Zhao, 1996;
Kuasirikun and Sherer, 2004). It is noted that companies have developed procedures
to gather monetary value of environmental activities only for issues perceived to be
significant (Frost and Wilmshurst, 2000) and underestimated the extent and the
growth of environmental costs (Jasch, 2003). This could limit the opportunities to
prevent emissions and waste at the source. Given the limited monetary value of
environmental performance, it is of interest to obtain an understanding of obstacles to
the development of environmental management accounting. This term is taken to
mean managing environmental and financial performance through the development
and implementation of appropriate accounting systems and practices (IFAC, 2005).
To date, a large body of literature has focused on the forces driving corporate social
responsibility and reporting (Gray et al., 1993; Gray et al., 2001; Adams, 2002; Gao
et al., 2005; Kuasirikun, 2005; Perrini, 2006; Adams and Frost, 2008; Hine and Precuss,
2009; Liu and Anbumozhi, 2009). The forces identified include size, market forces,
government, communities, corporate culture, image, employee involvement and
senior management support. Little is known about the root causes of barriers to the
development of environmental management accounting. This paper aims to at least
in part fill that gap, by exploring why environmental management accounting has
not been widely adopted by industry through investigation into the main problems of
implementing environmental management accounting practices. Pulp and paper
companies in Thailand are used as an exploratory case study. Two key research
questions are addressed:
RQ1.

What are the root causes of barriers to the development of environmental

management accounting in organizations?

RQ2.

To what extent do these barriers influence corporate environmental

performance?

2. Environmental management accounting

Environmental management accounting is a business tool that provides data essential
for corporate environmental management. There is no consensus on the scope,
procedures or definitions of environmental management accounting. In the real world,
the implementation of environmental management accounting ranges from simple
methods to more integrated environmental management accounting practices that link
the monetary and non-monetary value of environmental activities. Environmental
management accounting information is broadly useful for many different types of
environmental management practices and reports. Some organizations focus their
environmental management accounting activities on the narrow range of costs and
benefits encompassed under environmental management practices. This may include
reporting and auditing (IFAC, 2005). Others take a broader and more strategic view of
both monetary and non-monetary value of environmental information (UNDSD, 2001).
The systematic use of environmental management accounting assists managers in
identifying environmental costs often hidden in existing accounting systems. Prior
studies indicate that the application of environmental management accounting is likely
to lead to cost savings opportunities (Jasch, 2003; Gale, 2006), the reduction of
environmental and social risks (Burritt et al., 2009), the improvement of quality
performance (Dunk, 2002) and the enhancement of competitive advantage (Dunk,
2007).
Governments can take an active role in promoting environmental management
accounting through regulatory and voluntary policy instruments (United Nations,
2000, 2001; UNDSD, 2001; IFAC, 2005). On the regulatory side, many countries, for
example, Denmark (IFAC, 2005) and Sweden (United Nations, 2000) have accounting
acts that require certain companies to report information regarding environmental
activities. The government of Norway has revised its corporate reporting law to clarify
requirements for environmental reporting (United Nations, 2000). These actions show
that legal obligations have a significant impact on decisions to disclose environmental
information (Wilmshurst and Frost, 2000; Nyquist, 2003; Liu and Anbumozhi, 2009).
On the voluntary side, governments have promoted environmental management
accounting practices in collaboration with many non-government agencies, including
industry and accounting associations. For example, the Japan Ministry of Environment
(IFAC, 2005) and the Japan Ministry of Economy, Trade and Industry (METI, 2002) has
published guidelines on environmental management accounting. This has led to a
number of industry associations publishing similar guidelines for sectors such as gas,
oil, food, chemical, construction and railways (IFAC, 2005). Absence of guidance on
environmental management accounting can make it difficult for companies to
effectively collect, identify, analyze and evaluate environment-related data. For
example, lack of guidelines on recognizing future environmental costs in industries
other than oil, gas, coal and electric utilities leads to the difficult task of measuring and
recognizing future liabilities (Johnson, 1993).
3. Pulp and paper industry in Thailand: impact on environment, economy
and society
The pulp and paper industry is a capital and resource-intensive industry that has a
negative impact on natural resources and the environment that includes extending the
greenhouse effect, human toxicity, ecological toxicity, acidification, wastewater and

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solid wastes (Blazejczak and Edler, 2000; Pineda-Henson et al., 2002). The greenhouse
effect is seen in the release of carbon dioxide (CO2) and chloroform into the atmosphere
that is resulting in global warming. Airborne human toxicity is seen in the impact on
health from airborne emissions, specifically sulfur oxides (SOx). Human toxicity from
emissions into water supplies arises from the release of pentachlorophenol. Ecological
toxicity in water supply refers to toxicological damage to aquatic resources by
waterborne emissions in the form of pentachlorophenol. There are five principal steps
in pulp and paper production: wood preparation, pulping, bleaching, chemical recovery
and paper-making. The paper production process requires high levels of energy and
water consumption. It consumes exclusively non-renewable fuels for on-site steam and
electricity production.
The pulp and paper industry in Thailand started in 1923 (DIW, 1999). Since then,
pulp and paper production has expanded massively (Sharma, 2004), particularly after
the Thai government began to promote the industry in 1962. The growth of the
industry drives the economy forward through revenues from exports to China, South
Korea, Hong Kong, Malaysia, the UK, the USA and Australia. It ensures employment
for the local population in the north, central, west, east and northeastern regions of
Thailand.
Pulp production and forest management have become key environmental and social
issues in Thailand. A previous study indicates that the negative impact of pulp
production on local communities is relatively large (Sonenfeld, 2002). For example,
lignin and the organic materials that end up in wastewater contribute to high biological
oxygen demand, a major pollutant produced by pulp and paper mills. In most cases,
this effluent is discharged back into rivers or other bodies of water, negatively
impacting communities both socially and environmentally. Thailand ranked 14th in
the world in terms of industrial organic water pollution in 2000 (World Bank, 2004).
If not properly treated, wastewater causes damage to human health and other living
organisms. For example, wastewater spreads to adjoining rice fields, wetland and
groundwater, destroying rice crops, threatening the health of the local population and
killing thousands of fish (Lang, 2002). Diseases related to contaminated water range
from diarrhea to birth defects.
Pathogenic organisms constitute another important hazard (Economic and Social
Commission for Western Asia, 2000). Preliminary health costs estimated from reported
cases of diarrhea, dysentery and typhoid accounted for US$23 million in 1999 (World
Bank, 2004).
Apart from wastewater, the pulp and paper industry in Thailand is negative to
human health and quality of life through its release of sulfur dioxide (SO2) and carbon
dioxide into local communities (DIW, 1999; Jawit et al., 2006).
It is now clear that the growth of the pulp and paper industry has been accompanied
by substantial negative impact on health, livelihood, food security, the environment
and natural resources. Without a wider conception of corporate responsibility,
economic growth will come at the expense of the environment and society.
4. Research methodology
This study focused on three pulp and paper companies in Thailand. It was carried out
during the spring of 2009. According to Yin (2003), a case study is an empirical inquiry
that investigates a contemporary phenomenon within its real-life contexts, especially

when the boundaries between the phenomenon and the context are not clearly evident;
and in which multiple sources of evidence are used. An exploratory case study is
suitable for investigating answers to what questions by focusing on observing
contemporary events without exercising any control over actual behavioral events. In
this study, the primary question was: What are the root causes of barriers to the
development of environmental management accounting in organizations? This
question provided a rationale for conducting an exploratory study, with the goal of
achieving some level of answer to the what question and to develop pertinent
hypotheses or research propositions to resolve the how question for further enquiries.
The case studys unique strength is its ability to utilize the entire gamut of study
methods, including systematic interviewing and direct observation. As indicated by
Yin (2003), one of the most important sources of case study information is the
interview. Interviewees who have special knowledge on a given topic are characterized
as key informants (Mikkelsen, 1995).
In this study, key informant interviews were conducted with seven senior
managers. They included two chief operating officers of Company A and Company B,
two environmental managers of Company B and Company C, and three accounting
directors of Company A, Company B and Company C. All have worked for the selected
companies for more than five years. They were asked a core set of semi-structured
questions (refer to Appendix) and probed for elaborations and explanations of issues as
they emerged. On average, each interview lasted one hour. Extensive notes were taken
at the time and written up later the same day.
Data was analyzed by using the method suggested by Miles and Huberman (1994)
for qualitative analysis: data reduction, data display matrix, followed by the drawn of a
conclusion and verification. A data matrix is the basis for further conclusion and
verification because it enables data to be organized and summarized. Through the case
study method, the researcher was able to obtain a better understanding of corporate
culture and a holistic perspective on a complex management system that influenced the
development of environmental management accounting in organizations. This study
used a multiple-case design for cross-site comparison and analytic generalization. In
order to increase the trustworthiness of the study, site observations were undertaken,
allowing the researcher to obtain a system view of production processes and
environmental management practices, including wastewater treatment and solid waste
management. To further solidify the study, background information on the companies
and the pulp and paper industry was collected from annual reports and academic
literature, providing an in-depth insight into operational systems, giving the researcher
a better understanding of the root causes of barriers to the development of
environmental management accounting.
5. Profiles of the pulp and paper companies
The companies studied are located in the central, west and northeastern region of
Thailand. The criterion for selecting the three companies was primarily based on the
fact that these are pulp and paper exporters that have adopted some form of corporate
environmental management systems. The chief differences among the three companies
are:
.
annual sales;
.
firm size;

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.
.

major customers; and

number of employees.

A common industrial context also facilitates control for relevant external influences
such as common practices and the level of environmental laws and regulations. All
have received ISO 14000 certification; however, there is no environmental account
category in their accounting systems. Environmental-related costs are placed into
overhead cost accounts. Confidentiality of the organization was agreed upon as a
condition prior to research access. The companies are referred to here under the
pseudonyms Company A, Company B and Company C. The features of the companies
are given below.
Company A was established about ten years ago. It is a family business. Annual
sales are approximately US$500 million. A total of 60 percent of the companys
products are exported to the European Union countries, the United States, Australia
and Vietnam. At present, this company employs 900 people. Most residues such as
bark and black liquor are consumed in the production of power as biomass substitutes
for fossil fuel. The control of water, air and other pollution lies within all applicable
government requirements. Treated wastewater is used to foster agro-forestry in areas
adjacent to the company.
Company B was founded about 20 years ago. Annual sales are approximately
US$150 million. It employs 400 people. A total of 40 percent of its sales come from
exports to the USA, Vietnam, China, Hong Kong, Singapore and Malaysia. Its
involvement in environmental management systems includes a purchasing policy
requiring green procurement, the development of environmentally friendly products
and the reduction of waste and emissions from production activities and other
processes. All fibrous raw materials in pulp production come from agro-forestry. As at
Company A, bark and black liquor are consumed in the production of power as
biomass substitutes for fossil fuel.
Company C was established about 18 years ago. The parent company is in Japan.
Annual sales are approximately US$220 million. Most of its products are sold on the
domestic market. Only 10 percent of total sales are exported to ASEAN countries such
as Indonesia and Malaysia. It employs 500 people. Top management and the
environmental manager are Japanese. The company produces sanitary paper such as
napkins and diapers, which release no wastewater from operational processes. The
control of pollutants is within all applicable government requirements.
6. The root causes of barriers to the development of environmental
management accounting and the impact on corporate environmental
performance
Developing environmental management accounting in Thailand is in the early stages.
The companies studied are facing barriers to the integration of environmental issues
into accounting systems and practices. Understanding the barriers is critical to
overcoming them. With the application of a holistic perspective coupled with the use of
in-depth interviews with chief operating officers, environmental managers and
accounting directors, the root causes of barriers and the impact on corporate
environmental performance begin to emerge.

6.1 Lack of building organizational learning

Changing corporate culture towards sustainability relies on the ability to manage
human systems. Organizational learning is the process of improving performance by
means of creating, acquiring and transferring knowledge throughout an organization
(Senge, 1994; Burton and Obel, 2004). Long-term introductory training not only
provides sufficient knowledge and skill to fulfill system perspectives but also ensures
that organizational norms and values are integrated into the minds of new members
(Ashforth and Saks, 1996). There is a positive relationship between a high level of skill
training and corporate performance improvement (Gee and Nystrom, 1999). Apart
from training, a cross-functional team plays an important role in expanding
cooperation through organizations. It can enhance knowledge sharing within the work
group for performance improvement (Coyle-Shapiro, 1995) because tacit knowledge
can be converted to explicit knowledge through a team-based approach (Nonaka and
Takeuchi, 1995). It is noted that environmental knowledge and skills of employees as
well as a cross-functional team act as catalysts for improving environmental
performance in Spanish companies (Perez et al., 2007). Moreover, there is a significant
positive relationship between organizational learning mechanisms and the adoption of
green supply chain management practices (Zhu et al., 2008).
In the companies studied, managing directors have a great deal of influence on the
adoption of corporate environmental and social responsibility. They play a major role
in the integration of environmental considerations into corporate strategies and
practices. Key informants reported that their managing directors support
environmental investment projects such as installing systems to control
contaminant emission downstream of the manufacturing processes. Even though
there is a moderate level of organizational response to environmental improvement,
there is a low level of involvement by accountants in environmental management
practices. Accountant involvement tends to be higher in areas involving traditional
accounting skills, such as financial performance reporting, budgetary planning and
investment appraisal. As a result, management accounting for environmental issues is
not as advanced as other monitoring and measuring processes of environmental
management systems and practices. The finding indicates that accountants are
conservative and unable to adjust to new challenges. They are not proactive towards
an environmental agenda. The following statement supports this point:
I think that our accountants are not proactive. They prefer to follow, rather than to lead. In
addition, they have no innovative ideas and are still strongly attached to traditional
accounting rules. I often receive out-of-date performance reports from the accounting
department because accounting systems have traditionally looked to the past. Without
supporting documents from the production and environmental departments, accountants
cannot prepare performance reports. I requested information on future environment-related
costs and revenues from the accounting department two years ago and still have not received
anything from the department. I gave up on waiting for performance reports from them and
instead I, myself, access and retrieve environmental performance information from the
corporate database (Company A).

Accountants of the companies studied perceive their roles as simply number crunchers
and bookkeepers operating within a confined economic focus. They believe that
environmental staffs are more qualified in handling environmental issues. Therefore,
they do not see environmental reporting as part of their jobs. Consideration of the

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wider environmental and social factors does not seem to be compatible with their
traditional skills and qualifications. The statement quoted below reflects this:
Our accountant does not deal with environmental activities. If you want to obtain
environmental management information, please contact the EMS manager. He is a Japanese
person who can speak Thai. He has in-depth knowledge about production processes and
environmental activities. He provides environmental performance reports to top management
both in Thailand and Japan twice a year. I know only two items of environmental costs:
environmental consulting fees and (ii) environmental expenditure (Company C).

The status quo of the development of environmental management accounting is

unsatisfactory due to accountants lack of environmental knowledge and experience,
the lack of which can restrict the integration of environmental issues into existing
accounting practices. One key informant suggested that the accounting role in
corporate environmental improvement should extend beyond traditional accounting
practices. Accountants need to consider some non-traditional activities such as
production process and waste treatment. This implies that accountants and
environmental experts should pool their skills to form a multifaceted team to
address environmental issues of significance to the organization and recommend
appropriate remedial actions. Some of these issues are expressed in the following
comment:
As you know, Thai accountants have never studied accounting for environmental
responsibility. It is a new area of knowledge and a multi-disciplinary approach. It is a
particularly difficult task to record, analyze and report environmental costs and benefits. If
accountants still work in their offices and are reluctant to see the real world, they cannot gain
new knowledge. I had to study operational processes and waste treatment in factories in order
to increase my environmental knowledge and integrate environmental issues into accounting
practices (Company B).

The findings clearly point out that lack of building organizational learning is one of the
root causes of barriers to the development of environmental management accounting in
Thailand. Knowledge and skills of accountants are not utilized in the environmental
management practices of the companies studied. These accountants make minimal
contribution towards environmental issues within their organizations. Consequently,
some environmental costs are not recorded in specific accounts and environmental
issues are not integrated into existing accounting systems and practices. The findings
of this study correlate with the discussion in Bebbington et al. (1994), Davey and
Coombes (1996), Bebbington and Gray (2001), Wilmshurst and Frost (2001) and Adams
(2002), which indicates that accountants do not perceive themselves as leaders in the
creation of environmental management accounting in organizations. Consequently,
limited monetary value of environmental information leads to difficulty in planning
and implementing effective environmental management systems. To develop
environmental management accounting, the pulp and paper companies need to
provide accountants with organizational learning mechanisms, including
environmental training and teamworking. The mechanisms would provide
opportunities for significant interaction and intellectual exchange with other
members of the organization and increase the understanding of the importance of
environmental and social sustainability. This view is consistent with that of Perez et al.
(2007), who find that organizational learning processes are valuable complementary

activities for the improvement of corporate environmental performance. However,

building organizational learning should be on a continuous basis in order to eliminate
the risk of slipping back to old behaviors.
6.2 A narrow focus on economic performance
Traditionally, the pursuit of profit is seen as the major premise when operating a
business. Thai companies tend to focus more on a short-term than a long-term
perspective and often reject any projects that bring a loss today even though they will
generate profits in the future (Swierczek and Onishi, 2003). They also do not look
beyond their factory walls to see the negative impacts of their activities on
communities. This narrow focus on economic gains is detrimental in the creation of
environmentally responsible organizations and green supply chain management. Prior
studies show that the high cost of implementing an environmental program is the chief
barrier to the adoption of green purchasing and environmental sound practices (Min
and Galle, 1997; Cox et al., 1999; Bergstrom et al., 2005; Setthasakko, 2009).
Key informants revealed that their companies have traditionally been
conceptualized as economic entities with the main responsibility of producing goods
as efficiently as possible. Especially in the global economic crisis, corporate
environmental responsibility is regarded as optional. Companies tend to focus more on
activities that have a positive impact on short-term profit and competitiveness in the
marketplace. The views of key informants clearly pointed to the narrow economic
conception of responsibility:
We have to delay the second step in developing environmental management accounting
because our company is facing losses, both on the domestic and international markets. We
have to place priority on resolving the problem of the reduction of corporate profits. Hence,
we have no time or resources to dedicate to assess the broader range of costs to the
environment (Company B).
Our customers focus more on quality and low prices when they make their purchasing
decisions rather than our environmental responsibility. Therefore, it is not necessary to
incorporate environmental costs and benefits into performance reports (Company C).

Cost concerns are also important barriers to the development of environmental

management accounting. Incurring costs are even more significant for small firms,
who have generally less resources available. Consequently, the implementation of
environmental management accounting is regarded as costly. A key informant stated:
It is appropriate to integrate environmental issues into accounting systems of big firms. They
have enough financial and human resources for environmental management initiatives and
can gain corporate image and other benefits from corporate environmental responsibility. In
contrast, small firms will be burdened with environmental management accounting because
they have to hire new staff and modify accounting systems (Company A).

The interviews with key informants demonstrated that a narrow focus on economic
performance is a common root cause for barriers encountered in the pursuit of
developing environmental management accounting. It brings about a delay in
integrating environmental issues into accounting systems and practices, especially in
times of the global economic crisis. This could in turn limit the opportunities to prevent
emissions and waste at the source. The findings of this study are similar to findings by
Min and Galle (1997), Cox et al. (1999), Zilahy (2004) and Bergstrom et al. (2005) that

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costs can also hinder implementation of environmental responsibility in organizations.

To begin overcoming the narrow focus on economic performance, all employees need
to understand the interconnection between economic growth and environmental
sustainability. In addition, companies have to change their corporate culture from one
that focuses on an economic-driven goal to one that integrates environmental concerns
into business plans and practices. Otherwise, the narrow focus on economic
performance will be a shortcoming in the creation of environmental management
accounting and environmentally responsible organizations.
6.3 Absence of guidance on environmental management accounting
In the presence of rising concerns over global environmental problems, governments
have a key role in setting up laws and regulations to enhance sustainable development
in their society. In developed countries, the regulatory power of governments has the
ability to force corporate strategies that are purely economic-driven to change into
strategies that serve the environment and society (Warhurst, 2005). This has given
corporations a more active role in developing environmental management accounting
via the Green Accounting Act and the publication of guidelines on environmental
management accounting (United Nations, 2000; IFAC, 2005). In contrast, governments
in Southeast Asia have little impact on corporate environmental responsibility due to
weak law enforcement, inconsistent regulations, lack of political will and lack of
cooperation among involved parties (Huong, 1999; Mitchell, 2006). Consequently, there
is no Green Accounting Act or environmental management accounting guidelines
published to encourage accountants to integrate environmental issues into existing
accounting systems and practices; this is most notable in Thailand.
Even though the three pulp and paper companies in Thailand have some sort of
environmental management practices in place, the implementation of environmental
management accounting is limited. Key informants were asked to express their
opinions on problems that they encountered during the development of environmental
management accounting. They revealed that the definition and procedures for
implementing environmental management accounting are quite flexible and even
ambiguous. The following statements illustrate lack of guidance on environmental
management accounting:
The Thai government passed the Factories Act of 1992 that covered standards and
procedures for controlling waste, pollution and any other activities that may harm the
environment. The government has still not required the Federation of Accounting Profession
to set environmental accounting standards. We need the standards because they are
guidelines and rules for collecting, identifying, recording and reporting monetary values of
environmental activities. A lack of government role in the promotion of environmental
management accounting is the primary barrier to the implementation of environmental
management accounting in Thailand (Company A).
One of the barriers to the adoption of environmental management accounting comes from the
variety of definitions of EMA and a lack of environmental accounting standards. Different
staff members have different ideas on how to classify and record environmental costs. We
have to change the database for environmental accounting information every time we change
the staff member in charge (Company B).

In the Thai case, there is no Green Accounting Act to regulate accounting practices in
professional arenas to deal with environmental issues. In addition, corporate

accountants perceive their roles as simply that defined by the profession. This could
result in a limited vision about the importance of environmental management
accounting and the adverse environmental effect on society. The following statement
highlights this issue:
Our department is not responsible for CSR. It is not our duty to record environmental
activities. If you want to know about environmental performance, please ask our
environmental manager. In general, accountants have to comply with the Accounting Act,
which is administered by the Thai government. To date, we lack environmental accounting
standards. As a result, our accountants have not separated environmental costs from
overhead cost accounts (Company C).

The view of the informants shows that absence of guidance on environmental

management accounting is one of the root causes of barriers to the integration of
environmental issues into accounting systems in Thailand. Lack of a common
framework creates difficulties in effectively collecting, identifying and evaluating
environment-related data, especially in pollution prevention, waste management
decisions and performance evaluation. The finding of this study is consistent with that
of Johnson (1993), who indicates that lack of guidance on environmental management
accounting, in particular recognizing future environmental costs, leads to difficulty in
measuring and recognizing future liabilities ( Johnson, 1993). The Thai case suggests
that government agencies should play a crucial role in the successful implementation
of environmental management accounting through issuing accounting guidelines. This
view is consistent with that of Monetiro and Guzman (2010), who find that the
Portuguese government has played an important role in the development of
environmental management accounting through issuing the accounting legislation and
standard on the recognition, measurement and disclosure of environmental
performance.
7. Discussion and conclusions
At present, sustainability is forcing companies to find ways to improve environmental
performance in parallel with economic growth. Environmental management
accounting is a tool designed to trace and track monetary and non-monetary value
of environmental activities in organizations. It is becoming more important for
environmental management initiatives and routine management activities such as
product and process design, cost control and allocation, product pricing and
performance evaluation. In Thailand, environmental management accounting is a new
concept and practice. It is not an easy task to integrate environmental issues into
traditional accounting systems. There are three root causes of the barriers to the
development of environmental management accounting.
The findings show that lack of building organizational learning is a main cause of
barrier to the development of environmental management accounting in the pulp and
paper companies. Insufficient environmental knowledge and skill can restrict the
integration of environmental issues into accounting systems and practices. The true
costs and benefits of environmental management practices are not clearly understood.
Management cannot use the information regarding the physical use and cost of
resources to take the most appropriate financial and environmental decisions. This
could lead to adverse effects on managing environmental performance and put at risk
the path to environmental and social sustainability. In light of this, pulp and paper

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companies in Thailand need to provide organizational learning mechanisms that

include environmental training and a cross-functional team for all employees. The
mechanisms would enable accounting staff and other employees to see the importance
of interconnection between the sustainability of the environment and economic growth
along the entire length of supply chain.
This study gives further support to the claim that a narrow focus on economic
performance is at the root of the barrier to developing environmental management
accounting, especially in the global economic crisis. The companies studied tend to
focus more on short-term economic gains than on long-term environmental and social
sustainability. This could limit the opportunities to prevent emissions and waste at the
source and an inability to identify environmental risk. Social costs are still
externalized. This puts human health at high risk, as well as ecosystem services. In this
regards, a paradigm shift in an organization must necessarily start with changing the
mindsets of all employees. It is, however, an immense challenge to change the
worldview of companies from an economic-driven goal to a wider conception of
corporate responsibility.
Finally, the case in Thailand indicates that absence of guidance on environmental
management accounting is a root barrier to the integration of environmental issues into
existing accounting systems and practices. A lack of guidance on environmental
management accounting causes difficulties in effectively collecting, identifying,
analyzing and evaluating environment-related data. Environmental costs, revenues,
assets and liabilities are often incorrectly assessed or allocated resulting in a risk for
sub-optimization. This poses a challenge to environmental performance evaluation and
benchmarking, especially in waste management and pollution prevention. The
government of Thailand, therefore, has to play a significant role in promoting
environmental management accounting practices through issuing guidelines. It will
result in cooperation with industry and accounting associations.
In conclusion, the pursuit of integrating environmental issues into existing
accounting systems and practices requires:
.
organizational learning mechanisms;
.
a wider conception of corporate responsibility; and
.
guidance on environmental management accounting.
A deeper understanding of the barriers derived from this exploratory case study done
with the use of in-depth interviews and site observations will assist in successful
development of environmental management accounting and improvement in
environmental performance.
Although the samples are taken from companies in Thailand, firms in other region
of the world may gain benefit from this study. The barriers found in these
organizations are probably similar to those that may be found throughout the world.
Understanding the barriers is critical overcoming them. This in turn, contributes to
various actions towards the success of the implementation of environmental
management accounting and the reduction of negative impacts on the environment.
For example, in accordance with the Kyoto Protocol, the European Community has
committed to reducing its emissions of greenhouse gases to a level which is 8 percent
below 1990 levels between the years 2008-2012. In order to meet the Kyoto targets,
there are a variety of policy mechanisms being used such as emissions trading and

mandated energy efficiency standards in products. The implementation of

environmental management accounting enables companies to make and measure
their emissions reductions, disclose more environmental information and participate in
greenhouse gas markets. In the light of this, the European Community has the
possibility of fulfilling objectives of greenhouse gas reductions within the framework
of the Kyoto Protocol.

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Appendix: Summarized semi-structured themes of interviews

(1) Background of companies:
.
How many employees work within your company?
.
How would you describe the general attitude of your company towards
environmental management practices?
.
Does your company have a written environmental policy that states goals for
improving environmental performance?
(2) Developing environmental management accounting:
.
How do you define the term of environmental management accounting?
.
What is the main purpose of developing environmental management accounting in
your company?
.
What other departments or functional areas are involved in the development of
environmental management accounting?
(3) Barriers to the development of environmental management accounting:
.
What are the barriers to the development of environmental management accounting
in your company?
.
Should accountants limit their roles in preparing financial data?
.
Does your company provide environmental training to all employees?
(4) Impact on corporate environmental performance:
.
To what extend do the barriers influence corporate environmental performance?
.
How much environmental information was disclosed in your organizations latest
financial statements?
.
Is there anything else you would like to say about corporate environmental
performance or your organization?
About the author
Watchaneeporn Setthasakko is currently an Associate Professor at Thammasat Business School,
Thammasat University, Thailand. She has a PhD in Environment and Resource Studies from
Mahidol University, Thailand and holds an MA in Business and Commerce from Keio
University, Japan. She researches in the field of environmental management accounting and
corporate environmental management. Her research papers have been published in British Food
Journal and International Journal of Organizational Analysis. She can be contacted at:
watchaneeporn.tbs@gmail.com

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