Improving environmental management with full environmental cost accounting

Abstract Based on the most comprehensive field research ever conducted in corporate environmental management, this article reports on the integration of environmental impacts into product costing and cost management practices in organizations. It examines approaches for identifying and tracking current environmental costs related to both current and past production. It also develops the need and prospects for a complete analysis of future environmental impacts, including both costs and benefits, and the integration of these elements into a life‐cycle costing or full environmental cost accounting model. The prospects for full environmental cost accounting and the related accounting issues are analyzed. Finally, the importance of full environmental cost accounting for improving corporate environmental performance, reducing corporate environmental impacts, and increasing long‐term corporate profitability is discussed.