University of Oulu

An environmental management accounting system based on the social cost and the market-based price of carbon

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Author: Breukers, Leonard1
Organizations: 1University of Oulu, Oulu Business School, Department of Accounting, Accounting
Format: ebook
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 2.1 MB)
Pages: 176
Persistent link:
Language: English
Published: Oulu : L. Breukers, 2020
Publish Date: 2020-06-25
Thesis type: Master's thesis
Tutor: Järvinen, Janne
Reviewer: Järvinen, Janne
Kantola, Hannele


Companies are facing increasing pressure from external stakeholders to integrate sustainability as part of the company’s strategy and display their efforts to change social, environmental, and governmental output. Especially the effects from climate-change to business operations has become a popular topic in the business agenda. TCFD has published recommendations for companies to report on their environmental efforts and how those efforts to fight climate-change affect the business. Companies’ external and internal reporting on these issues is becoming increasingly popular as portraited by the World Bank’s 2019 report on internal carbon pricing and the increasing number of frameworks on sustainability reporting (e.g. ISO, GRI, UN SDGs). This research takes a holistic approach to understand, how environmental issues are part of business operations and how a company could report on environmental issues through environmental management accounting. I focus on the reporting and estimation of carbon dioxide emissions from the perspective of elevator manufacturing. Carbon dioxide emissions are chosen as they are the most contributing GHG-emission to the climate-change, and the elevator industry is facing increasing demand for more environmentally healthy products to slow down the increasing impact on climate-change through urbanization.

The study uses Burritt, Schaltegger and Zvezdov’s 2011 framework on carbon management accounting and extend their model on monetary carbon accounting with an environmental profit and loss -statement. The EP&L is based on the PricewaterhouseCooper’s 2015 -report and is implemented into a case company KONE to estimate the environmental impact from an elevator MonoSpace 500. Social cost of carbon, marginal abatement cost of carbon and market-based price of carbon are discussed, and the SCC and the market-based estimates are used to estimate the monetary value of carbon dioxide emissions. I estimate the SCC with a meta-analysis following the 2015 PwC’s report and use the ECX EUA futures’ spot prices to estimate the market-based cost of carbon dioxide emissions. Additional expert interviews are used to decide which pricing method is appropriate considering future expectations, and how carbon pricing is affecting business behavior.

I use an estimate of SCC of USD 40 / tCO2e and a market-based price of carbon of EUR 25.3 / tCO2e to estimate the total emissions from the life cycle of one elevator. However, through expert interviews the study concludes that the recommended method for strategic business planning, budgeting, and reporting on carbon pricing is the marginal abatement costing -method. Additional findings include the implementation methodology of an environmental profit and loss -statement based on seven case companies and how the elevator industry can use carbon pricing as means to manage carbon emission through a bonus-malus system.

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Copyright information: © Leonard Breukers, 2020. This publication is copyrighted. You may download, display and print it for your own personal use. Commercial use is prohibited.