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ERA's Environmental Compliance Management Blog

How the New ISO Standard Tackles Environmental Cost Management

Posted by Alex Chamberlain

Alex Chamberlain is a writer for ERA Environmental Management Solutions.

Waste management got you baffled?The International Organization for Standardization (ISO) recently published a new environmental management standard, ISO 14051. This new ISO standard is designed to reduce a facility’s environmental impact while increasing profitability through the use of Material Flow Cost Accounting (MFCA). But how does it work?

ISO 14051 aims to carefully quantify material losses/waste that can be difficult to measure using a more macro environmental management system.

The newest ISO standard is not in any way a replacement for the popular ISO 14001. It instead will act as a useful supplement for facilities and businesses looking to increase their corporate sustainability while giving a boost to their bottom lines.

Material Flow Cost Accounting is a different way of looking at your waste management, one that does not necessarily require you to be an expert at environmental management. Instead, it focuses specifically on how and where waste in generated from your raw materials.

It just happens that a useful by-product of waste management is a smaller environmental impact.

How Material Flow Cost Accounting Works

MFCA breaks down your manufacturing process into several sub-processes, including:

  • Storing the raw materials
  • Initial processes
  • Storing work-in-progress products
  • Finishing products
  • Storing completed products

At every step of the way, the MFCA system asks you to quantify waste generation due to factors like natural deterioration, defective processing, accidents, etc.

Afterwards, you take the quantity of waste generated throughout your process and deduct the quantity associated with your recycling or reuse practices. Your final result is your total generated waste.

The strength of the MFCA system is that it puts an emphasis on environmental cost management by connecting the dots between how much waste you produce and how much your raw material cost. Add in costs associated with recycling processes and waste management, and it soon becomes very apparent exactly how much your waste is actually costing you.

And oftentimes, seeing your waste measured out in dollars and cents is exactly what a business needs to change its mind about the importance of corporate sustainability.

Of course we also know that the waste that gets generated on site in the form of air or water emissions have a cost attached to them too. Particularly when it comes down to paying environmental noncompliance fines or costly environmental consultants.

That’s why the MFCA system is a useful way to manage your processes, but it alone does not encompass the full environmental management needs of your business.  However, MFCA is a great way for EH&S managers to introduce the entire business to the concept of waste management.

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ERA Environmental Alex

About the Author: Alex Chamberlain is a writer and blogger who regularly contributes to ERA Environmental Management Solutions' blog. You can find Alex on Google+LinkedIn & ERA's Environmental Compliance Blog

Image credit: JD Hancock

Topics: Environmental Compliance & Data Management