There are many challenges to implementing this idea. It is difficult to identify all the costs that apply to a particular operation or project. A judgment must be made about how to apportion these costs, an effort that cost accountants are experienced in doing. Uniformity among all company operational units and among companies in an industry is important to help management make good business decisions. Since the benefits can take many forms, some of which have no dollars naturally attached to them, there is a challenge in identifying the benefit, assigning a value, and then apportioning the value to the various projects.
Consistency is vital here, too.
An excellent example of a high level environmental management report is that of Baxter International . While top management can manage using high level information, the tough issues of cost and benefit allocation must be worked through at very low levels to have the maximum effect on the organization. Another recommendation is to report the Environmental Income Statement to investors and the public. The amount of information reported is best answered by each company depending upon their own competitive situation. Certainly the high level reporting typified by Baxter poses no competitive risk and provides assurance to investors that the company is managing this category of costs in a responsible and aggressive manner.