Managing environmental costs
In this lesson, you'll learn how to identify, categorise and manage environmental costs—a growing priority for businesses and increasingly tested in your Performance Management exams.
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In this lesson
- 0:00 Environmental accounting overview
- 0:39 Managing environmental costs explained
- 1:20 Types of environmental costs
- 3:55 Four categories of environmental costs
- 6:22 External failure costs example
About this lesson
Environmental costs span energy consumption, travel emissions, raw materials, water usage and waste treatment, and they're categorised into four types: prevention costs (proactive measures to avoid environmental harm), detection costs (monitoring and compliance testing), internal failure costs (containment and treatment before release), and external failure costs (cleanup and penalties after environmental damage). Understanding these distinctions helps you assess a business's true environmental impact and financial exposure, which is essential for strategic decision-making and regulatory compliance. You'll also explore how management accountants use techniques like input-output flow analysis to track and report environmental costs, positioning you to demonstrate real commercial awareness in case study scenarios and objective tests.
Duration: 7m
Transcript
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