The aim of this International Standard is to offer a general framework for material flow cost accounting (MFCA). MFCA is a management tool that can assist organizations to better understand the potential environmental and financial consequences of their material and energy use practices, and seek opportunities to achieve both environmental and financial improvements via changes in those practices.Prof. Katsuhiko Kokubu, Convenor of the working group that developed the standard says, “Many organizations are unaware of the full extent of the cost of their material losses because this data is often difficult to extract from conventional information, accounting and environmental management systems. MFCA produces such precise and clear data that it can motivate managers to enhance material productivity and significantly reduce unnecessary waste far more effectively than through conventional means.”

“The bottom line is that not only do organizations increase profits, but they improve their environmental performance and contribute to sustainable development,” concludes Prof. Kokubu.

MFCA promotes increased transparency of material and energy use practices via development of a material flow model that traces and quantifies the flows and stocks of materials within an organization in physical units. Energy can either be included as a material or quantified separately in MFCA. Any costs that are generated by and/or associated with the material flows and energy use are subsequently quantified and attributed to them. In particular, MFCA highlights the comparison of costs associated with products and costs associated with material losses, e.g. waste, air emissions, wastewater.
Many organizations are unaware of the full extent of the actual cost of material losses in adequate detail because data on material losses and the associated costs are often difficult to extract from conventional information, accounting and environmental management systems. However, once available via MFCA, these data can be used to seek opportunities to reduce material use and/or material losses, improve efficient uses of material and energy, and reduce adverse environmental impacts and associated costs.
MFCA is applicable to all industries that use materials and energy, including extractive, manufacturing, service, and other industries. It can be implemented by organizations of any type and scale, with or without environmental management systems in place, in emerging economies as well as in industrialized countries. MFCA is one of the major tools of environmental management accounting and is primarily designed for use within a single facility or organization. However, MFCA can be extended to multiple organizations within a supply chain, to help them develop an integrated approach to more efficient use of materials and energy.

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