Key Elements of Environment-Oriented Cost Managament (EoCM) .

Profitable Environmental Management
(PREMA)
Key Elements of
Environment-Oriented Cost
Management
(EoCM)
P3U-Working Paper No. 19e November 2001

Editor:
GTZ Pilot Programme for the Promotion of Environmental
Management in the Private Sector of Developing Countries (P3U)
Tulpenfeld 2, 53113 Bonn, Germany
Tel.: (+49) 228 604710 Fax: (+49) 228 98570-18
E- mail: gtzp3u@aol.com
Homepage: http://www.gtz.de/p3u
Responsible: Dr. Edith Kürzinger
Author: Fritz Kölling
Translation: Inka van Bergen
Layout: Judith Jansen
©GTZ/P3U: This publication may be duplicated with the permission of GTZ/P3U
The Pilot Programme for the Promotion of Environmental Management in the Private Sector of
Developing Countries (P3U) is implemented by the German Agency for Technical Co-operation (GTZ)
on behalf of the Federal Ministry for Economic Co-operation and Development (BMZ).
Key Elements of
Environment-Oriented Cost Management
(EoCM )
Abstract:
EoCM is a Cost Management Instrument which focuses on the efficient use

of those resource flows that are relevant for the environment, such as
material, energy and water. It brings down costs and leads to an
improvement of the environmental performance by reducing “non-product
output” (NPO), i.e. those materials, energy and water which are used in the
production process but do not end up in the final product. E oCM  does not
only identify the costs of treatment and disposal of the NPOs, but also the
hidden costs caused by the generation and processing of these NPOs and
the opportunities of additional saleable product.
The basic assumption of E oCM  is that the knowledge regarding the
production NPOs as well as the capacity to mitigate them exists to a large
extent within the company. Therefore, the “heart” of the E oCM  process is the
innovation team of the company, which is supported by local consultants.
Table of contents:
What is the Principle of EoCM?............................................................................ 4

Why EoCM?............................................................................................................. 5
How was EoCM developed ? ................................................................................ 7
Which benefits can be expected from EoCM?................................................... 8
What are the limitations of EoCM?....................................................................... 9
Where can EoCM be applied? ............................................................................10
What is Non-Product Output (NPO)?...................................................................11
What are potential cost saving effects of NPO reduction? ...............................12
What effects can be expected regarding the environmental
performance?...........................................................................................................14
What other effects are likely to benefit the company? ......................................14
What is the EoCM Cycle?....................................................................................15
The “Cycle of Change” .............................................................................16
Which communicative skills are required during the EoCM process?..........17
Which Actors are Involved in the Application of E oCM ...................................18
What type of Quality Assurance System is applied for the diffusion of
EoCM?....................................................................................................................19
Key elements of EoCM 4
What is the Principle of EoCM ?
EoCM is a cost management instrument which focuses

on the efficient use of those resource flows that are
relevant for the environment, such as materials, energy
and water. It brings down costs and leads to an
improvement of the environmental performance by
reducing “non-product output” (NPO), i.e. those materials,
energy and water which are used in the production
process but do not end up in the final product. EoCM
does not only identify the costs of treatment and disposal
of the NPO, but also the hidden costs caused by the
inputs for and processing of these NPO; if appropriate, it
also shows the untapped opportunities of additional
saleable products.
In order to fully take advantage of these opportunities and
to guarantee the implementation of the developed
The three basic measures, EoCM builds mainly on human resources
principles of which are locally available. As the basic assumption of
EoCM build a EoCM is that the knowledge regarding the production of
NPO as well as the capacity to mitigate them exists to a
triangle which
large extent within the company itself. the motor of the
creates EoCM process is the innovation team of the company,
synergistic whose work is supported by local consultants. Therefore,
effects and the necessary amount of expensive technical expertise
leads to a from abroad is limited, especially to the introductory phase
process of of EoCM. This also avoids the problem of lack of
continuous ownership for the “internal take off” of the change process
within the company, and especially for the proper
improvement in
implementation of the proposed measures.
the company.
Hence, all the tools and training modules used in EoCM
aim at the mobilisation of the knowledge and problem-
solving capacities available within the company. In
addition to the technical knowledge of the methodology,
techniques of effective presentation, moderation and
team-building are applied to assist the EoCM team in
communicating, co-operating, mobilising and
implementing tasks within the team, via management and
colleagues. EoCM therefore is a useful instrument for
cost management, environmental management a nd
organisational change. Only if all three areas are
adequately taken into account, a triple win (economic,
environmental, organi sational) can be achieved and a
successful process of continuous improve ment in the
company be established.
P3U Working Paper No. 19 e (Version 6/2000) © GTZ-P3U

Cost savings and

Increase in
economic productivity
efficiency
Less waste,
environmental air emissions
performance and effluents
organisational Capability to
learning implement
changes
Why EoCM ?
The Pilot Programme for the Promotion of

Environmental Management in the Private Sector of
Developing Countries (P3U), which is implemented by
the German Technical Co-operation Agency (GTZ) on
behalf of the Federal Ministry for Economic Co-operation
and Development (BMZ), is elaborating an integrated
concept for the promotion of environmental management
especially for small- and medium-sized enterprises (SME)
in developing countries. As experiences in similar
programmes have shown it is a difficult task to get the
target group Small and Medium -Sized Enterprises (SME)
interested in environmental management: the main
incentives which exist in industrialised countries regarding
“green” issues are hardly found in developing countries:
A clear • “green” markets or “green” consumer behaviour
economic • awareness or knowledge about environmental issues
benefit by entrepreneurs
encourages • pressure groups of civil society which force the private
companies to sector to adopt a proactive behaviour
reduce their • strict enforcement of ample environmental legislation.
negative Taking into account these disadvantages of developing
environmental countries the P3U-concept uses the experience that
environment-related measures often unveil a considerable
impact.
potential for cost reductions to assist SME in identifying
such win-win options and dispel fears that environmental
measures might involve additional costs. A clear economic
benefit encourages companies to introduce cost-saving

measures which also aim at reducing the negative

environmental impact of their activities.
In the framework of PREMA, four different instruments
have been developed which have in common factors of
being
• simplified,
• low-cost or no-cost,
• applicable by a broad range of enterprises, and
• adjusted to the specific requirements of SMEs in
developing countries.
Like all PREMA-instruments, EoCM combines an

economic benefit with improvements of the environmental
performance. Generally it is more simple and easier to
apply than other approaches.
ISO 14001
Eco-efficiency very
complex
Cleaner
P
EoCM production
„triple win“
r
Life cycle
more
simple
i
complex analysis
o
Priority on the environment

r
i
The third “win” option

EoCM leads
Even by applying and economic approach to
t
companies step environmental management only few strategies are

by step into a
y
adopted by a significant number of companies.

process of Institutional resistance to change and risk avoidance are
organisational the main factors which have not been taken into
change and consideration by most of the approaches. A successful
continuous approach has to include strategies on how to overcome
this resistance and how to obtain more ownership within
improvement. the companies and more support from private sector
promotion institutions. EoCM helps to identify a third
“win” option by leading companies step by step into a
process of organisational change and continuous

improvement, through regular monitoring of the efficiency

and environmental soundness of production processes, by
means of suitable management instruments and adequate
investment in environmentally sound technologies.
This triple win approach developed by GTZ-P3U makes
EoCM a private sector improvement and environmental
management tool which does not depend heavily on the
political framework of the respective country, but also
mobilises the self-interest of the companies in efficient and
environmentally sound production within a given
framework. In countries, however, where there is no
legislation at all and where natural resources are free
goods EoCM will not work.
Improved resource efficiency and pollution prevention are
also key success factors for public health, the long-term
conservation of national resources as well as economic
development and enhanced competitiveness in developing
countries, i.e. for sustainable development.
How was EoCM developed ?
EoCM is based on the Environmental Cost Management

(ECM) methodology developed by Fischer and others in
Germany (Fischer, H., 1997). First applied in the textile
company KUNERT, the approach was used in various
German companies with significant cost savings and
positive environmental results. In 1997 it was applied by
P3U for the first time in a developing country, namely in
the food manufacturing company Cairns Foods in
Zimbabwe. This application showed that
• an environmental cost management approach, in
general, can be also successful under the conditions
prevailing in a developing country, and
• the results can be even more significant there due to
lower overall efficiency and the higher ratio of material
costs as percentage of production costs (in relation to
labour costs).
Nevertheless, quite a few weaknesses in the original
methodology were detected and especially the need to
change from an expert-driven approach (as practised in
Germany) to a company-based process of step-by-step
and, hopefully, continuous improvement was identified.

Based on the experience at CAIRNS, a second, largely

modified ECM programme was designed for application in
Zimbabwe which included methodological changes and
focused more on the organisational learning and the
development of communicative skills of the innovation
teams. The ECM process was mainly carried forward by
the company teams themselves. They were supported by
local consultants, who were trained on-the-job to be the
future ECM disseminators. The P3U team's limited role
was to train and coach the teams and consultants and
facilitate the implementation of ECM in any aspect. In
order to guarantee a high quality of ECM in the future,
standards for the training and assessment of consultants
and the evaluation were developed.
Due to the substantial modification and further
development of the methodology and in order to avoid
some confusions caused by the former title, the approach
was renamed “Environment-oriented Cost
Management” (EoCM ).
Which benefits can be expected from EoCM ?
EoCM – like various other environmental management

(EM) tools – aims at identifying and tapping win-win-
situations, i.e. economic benefits and improved
environmental performance.
The difference in comparison to other EM tools: EoCM
initiates (spanisch desencadenar, auslösen) a dynamic
process of continuous improvement within the
company by systematically combining organisational
learning with technical and economic changes. Thus
EoCM incorporates a third dimension, organisational
change or development, to make it a triple win approach.
EoCM provides short term benefits for the company
(cost savings through quickly implemented good
housekeeping type measures, positive environmental
effects and improvements in workplace safety) and mid to
long-term improvements of productivity and
environmental performance through enhanced
motivation of employees and increased efficiency of the
organisation.
EoCM requires the initial support of external experts but
becomes step by step and rather quickly part of the
company's culture and enhance an integrated
management tool.

EoCM can strengthen existing or facilitate the

establishment of new environmental and quality
management systems. It generates basic information,
improves performance and creates structures which can
be used in the company's efforts to achieve ISO 9000,
ISO 14001 or EMAS.
EoCM focuses on material, energy and water flows – not
on labour, e.g. rationalisation, as the latter only
accounts for 30 % of total costs. Unlike most of the other
cost management tools, it does not primarily aim at the
reduction of labour (costs), although these will be taken
into account when assessing measures. EoCM therefore
helps to avoid two kinds of social conflict: problems with
the employees (employment) or trade unions and with
public opinion (environmental impact).
EoCM has a lot in common with quality management.
The application and monitoring of process and product
standards are, at least in the long run, important
conditions for the optimisation of the use of materials,
energy and water streams and the achievement of
sustained competitiveness of industry and sustainable
development.
What are the limitations of EoCM ?
EoCM is not an instrument to primarily assess

environmental impact like Environmental Impact
Assessment (EIA). It is an instrument to reduce those
costs which are arising for the company from inefficient
use of environmentally relevant inputs, such as materials,
energy and water. Externalised or “social” costs, such as
Measures mitigating negative environmental impact caused by
which increase production or the product itself, are not considered as long
the negative as they are not directly included in the company's cost
structure. EoCM may however take these into
environmental
qualitatively into account when assessing.
impact of the
company are EoCM analyses the costs and the environmental impact
against the caused by Non-Product-Output in one company or
production site. It does not take into account the whole
rationale of production chain “from the cradle to the grave” and its full
EoCM. costs. Inefficiency and environmental impacts in raw
material production and product distribution or use are
only subject of this method as long as it is part of the
company's business. The product design is considered
only as far as its influence on the efficiency of production
is concerned. The impact of the product itself (e.g. effect

on consumer health, treatment of the used product after

consumption and disposal.) is not part of the cost analysis.
The boundaries of the company at the input and output
side, however, should be taken into consideration
(providers of raw materials, product packaging) and the
environmental impact of inputs and NPO are assessed
with qualitative criteria, although environmental destruction
by the production of purchased raw material, use of
scarce, non-renewable resources and the environmental
impact of transporting and processing of raw material (as
long as it is not part of the company's business) are not
included in terms of costs.
Where can EoCM be applied?
EoCM has its main advantages in industrial production,

but might be a useful tool for service companies as well. It
is applicable in well established small enterprises as well
as medium -sized and large companies, but would not be
recommendable for micro enterprises or companies
without a determined organi sational structure, a separate
accounting department or at least proper book-keeping,
and a layer of middle management or at least some type
EoCM forms of co-managerial function.
part of the The PREMA-programme for micro and less sophisticated
PREMA smaller companies comprises other tools, such as
programme Resource Management (RMM) and Good Housekeeping
which was (GHK) which have recently successfully been combined
designed by with each other and a somewhat modified version of
P3U especially EoCM to the new approach "Profitable Environmental
Management" PREMA. Elements from these tools have
for smaller
however been integrated into EoCM, such as the Good
companies. Housekeeping Guide to identify immediate measures after
the first visit of the company, and the Action Learning Set
(ALS) which provides a useful tool for networking between
the companies and self-counselling of the consultants.
Interested companies and organisations are invited to
contact P3U regarding these other instruments.

What is Non-Product Output (NPO)?
A large part of the materials used ends up in the desired

final product. The other part turns into solid waste, waste
water and air emissions. These outputs are summarised
as “non-product output” (NPO).
Input Process Output
desired final
Raw material product
Energy
generation of NPO di
sp
os
al o
Water fN
PO Non-product
output (NPO)
10-30% of
total cost of
production
Input-costs Processing- Disposal- Total
of NPO + Costs of NPO + Costs of NPO = NPO-costs
Examples for NPO are:

solid waste, waste water and energy losses in the
production process. These outputs contain all auxiliary
materials and part of the raw materials that are inputs
to production;
disposal of raw materials or finished goods that are no
NPO = longer of use or cannot be sold;
Material, semi-finished or finished goods of insufficient quality

which have to be reprocessed;
Energy and
Water which is rejects due to insufficient quality which have to be
eliminated or sold at a low price;
used in the
production heat losses in steam or electricity generation;
process but solid waste and waste water from office buildings;
does not end losses of input materials, energy and finished goods in
up in the final storage, transport and distribution;
product. solid waste from packaging of the materials used in
production
by-products sold at a price which does not cover their
production costs
over-fillings/over-application of inputs, including
packaging, which are not paid by the customer and
sometimes even reduce the quality of the final product.

The generation and disposal of NPO are non value-adding

activities and therefore cause unnecessary costs for the
company. Additionally they can block production capacity
(e.g. in the case of reprocessing), thus resulting in a loss
of production.
Normally, the “mental image” of production does not
include NPO. The whole management and accounting
system is oriented to the output of product. In most of the
companies NPO-related costs are - if known at all - not
allocated to specific production steps, but accounted as a
separate cost centre (energy, water, disposal costs), or
they just disappear amongst other issues. Hence, there is
no exact allocation of where in the production process
NPO are generated. In decision-making processes NPO
are of no relevance, because nobody knows their costs.
Production managers are not interested in reducing costs
for which they are not accountable. The environmental
department, which may be the only division of the
company to deal with some of the NPO, is often isolated
because other divisions are not aware that a lot of money
is going down the drain with the NPO.
What are potential cost saving effects of NPO

reduction?
The results of ECM applications in Germany have shown

a range of a 1 – 5 % cost reduction to be achieved only
by technical or organisational measures with limited
Cost reductions of investment. In Zimbabwe, the participating companies
1-5 % of total could reduce their total annual production costs by (in
average) 3 %, after one year of EoCM, although due to
production costs
the difficult economic situation investment-intensive
can be achieved measures could not yet be implemented.
within one year. Companies with low resource efficiency have a higher
saving potential than companies which have already
undertaken efforts to increase their efficiency. In each
company, the prevention of NPO has a certain optimum
where the economic benefit of measures is highest. The
further the status quo of the company is away from this
optimum, the greater is the saving potential. A complete
prevention of NPO is neither technically nor economically
feasible.

Typical
total cost
of production cost-savings:
status quo
Increased profit:
1 - 5% of 20 - 100 %
cost total cost of
reduction production
optimized
low prevention high prevention

of NPO of NPO
In general, the resource-efficiency of industrial production

in developing countries is lower than in industrialised
In a company countries. At the same time, the share of material costs is
higher because of relatively low labour costs. In the five
with a profit of companies of the Zimbabwe Programme, labour costs do
5 % return on not exceed 10 % of total costs. The NPO costs which can
sales before be expected in a medium-size company in a developing
taxes, a cost country is likely to be in the range of 10 – 35 % of costs of
reduction of only sales. Even with a modest 10 % reduction in NPO, the
1 % of the total company will reduce its total costs by 1 - 3 % .
cost leads to a Cost savings through NPO reduction represents a full net
20 % increase of profit. In input-limited companies the reduction of NPO can
lead to an increase of output and thus to a considerable
profit. growth of the total turnover and market share. In addition,
the quality of the product can often be improved due to
product and process innovation.

What effects can be expected regarding the

environmental performance?
The reduction of NPO flows has a direct positive impact on

the company's environmental performance. There are less
solid materials, waste water and air emissions released
into the environment. Toxic NPO streams will be reduced.
Measures which generate cost savings but lead to a
negative environmental impact, are not compatible with
the rationale of EoCM and, consequently, have to be
excluded or over-compensated by other measures.
Nevertheless, EoCM does not guarantee the elimination
of all negative environmental impact caused by the
company. It focuses on win-win-situations, where the
reduction of NPO is related to an economic benefit for the
company.
With the results of EoCM, the company is able to
demonstrate concrete efforts to improve its environmental
performance. EoCM can also be used as a tool to
monitor the compliance with environmental regulations. It
can be a steps towards ISO 14000 certification.
What other effects are likely to benefit the company?

EoCM can also improve the workers' health a nd
workplace safety as well as increase the motivation of all
company members to act more consciously with regard to
With E oCM , the the environmental aspects of work. As EoCM makes the
company has a production process more transparent and involves
strong team and different areas of the company, it improves the
system in place communication between the environmental division and
to tackle other the rest of the company. Product quality can often be
challenges, increased due to process and product innovation.
such as quality, During the EoCM process a strong team is built which
marketing and later on is able to tackle other problem areas of the
motivation of company. The personal development of the team
members turned out to be one of the main benefits in the
employees. recent EoCM applications.

What is the EoCM Cycle?

EoCM is not just another “change project”, where an
external consultant comes i nto the company, asks a lot of
questions and after a while delivers a comprehensive final
report full of suggestions that will never be implemented.
EoCM means a change in the culture of the company,
which leads to a process of continuous improvement and
organisational learning.
The EoCM cycle is the adequate instrument to mobilise
the knowledge existing in the company with regard to
inefficient use of materials, energy and water, and the
respective problem-solving capacities.
1 Flow analysis
6 Integration in
company structure Fact Finding
2 Analysis of costs /
environmental impact
Consensus
Evaluation building
Mobilization
Change of Energy
5 Implementation
Action
3 Analysis
of measures
4 Development
of causes
of measures
The first steps are diagnostic activities which aim at

identifying:
where the NPO are generated (flow analysis)
how much they cost (cost allocation)
why they occur (analysis of causes).
In the second part of the EoCM cycle, the energy and
problem-solving capacity of both the team (including the
consultant) and the company have to be mobilised to find
out:

whether, to what extent and how the NPO can be

reduced (development of measures), and
how to implement the carefully selected measures
(action plan).
As a last step of the cycle, the success of the measures
has to be evaluated and made sustainable. As in every
process of change, the organisation needs time to
assimilate structural change and build a common
consensus about it. Showing the benefits of EoCM helps
to convince resisting members of the company of the
benefits of future improvements.
The “Cycle of Change”
These six steps can only be integrated sustainably into the

company with success, if the company is undergoing an
internal change process at the same time EoCM analysis
is undertaken. This "cycle of change" reflects the state of
organisational willingness and ability to implement EoCM
within the company.
For the success of EoCM it is important that the company

goes through each and every step of the cycle: that the
organisation is observing the problems (“scanning”), is
aware of the consequences and can be mobilised to
prepare action to tackle the problems. Without this
process of communication and consensus building as well
as the mobilisation of relevant parts and members of the
company, there will be a high resistance to develop and
implement the measures into the daily business.
The internal change process will not necessarily take

place at the same time of the steps of EoCM. There will
always be parts of the company which are not following
this process. The task of the Innovation-Team is to
convince and integrate a “critical mass” within the
company, applying communicative skills which are trained
during the EoCM-programme. In this way, EoCM will
become part of the company culture and structure – the
internal “take off” of the process.
EoCM can also be applied step-by-step: After completion

of flow and cost analysis elaboration of measures can be
started for selected divisions of the company or NPO, and
followed by additional sequences on other areas or NPO
over a determined period of time A comprehensive

approach, however, is preferable in order not to duplicate

work or reduce one NPO by increasing another and to
produce tangible impact quickly. The best approach is to
select for development of measures three types of NPO:
• the NPO with the highest cost-saving potential,
• one NPO with high environmental relevance,
• one with good chances to be quickly or easily
implemented.
EoCM can also can be applied in parallel at different
production sites of the company, provided intensive
exchange of experiences and results between the
participants. Of crucial importance is that the technical and
communicative skills trained during the EoCM process
are available within the company, so the EoCM approach
is already institutionalised even before it is reflected in the
organisational structure of the company.
Which communicative skills are required during the

EoCM process?
A main factor of success in the EoCM application is the

building of consensus and ownership for the programme
within the company. Without the support of the different
levels of decision-making, production and support
activities the methodology will not lead to a continuous
process of improvement. Therefore, communication is
crucial for the implementation and sustainability of EoCM.
This includes the clear and concise presentation of the
methodology, the tasks as well as the results, by using an
understandable, common language and effective
visualisation. Commitment can only be achieved by
information and motivation and tangible success and
A main factor of benefits as soon as possible. Therefore, in all five
success is the Zimbabwean companies some form of in-house training
and discussions regarding a reward sys tem were held.
building of
consensus and Like in any process of change, there are obstacles to
ownership within overcome. The forces of change have to find arguments
and strategies to convince the resisting members of the
the company. organisation. EoCM offers a common language to
facilitate communication between the relevant company
members: the flow chart and cost analysis are instruments
for fact-finding and understanding the problem of NPO
from an innovative perspective. By translating NPO into
costs, accountants, production managers, machine

operators and top managers can communicate in the

"language" of costs and prepare the ground for more
effective co-operation.
The heart of an EoCM implementation in a company is
the EoCM team. Team-building, moderation skills,
efficient communication, distribution of work as well as
conflict and time management are crucial for the
successful analysis of NPO and the development and
sustainable implementation of measures in the company.
Which Actors are Involved in the Application

of E oCM
EoCM is not only an accounting method. For a company,
it is also a strategic instrument to increase productivity and
reduce costs, leading to a change process of continuous
improvement. For a country or region, it is an instrument to
increase productivity and competitiveness of the private
sector. Many different actors participate in the EoCM
application:
• The innovation teams in the company, which are
composed by persons from different professional
disciplines and working areas (production, accounting,
quality and environmental management, eventually
maintenance)
• The local consultants which are trained on-the-job
and form part of the innovation teams
• The network of innovation teams of the participating
companies as well as relevant local institutions
interested in the dissemination of E oCM
• The local counterpart institution which should be
related to the private sector, have an interest in
promoting EoCM in a sustainable manner and
guarantee the quality of E oCM application
• The external team of facilitators which initialises the
EoCM dissemination by building up knowledge and
strengthening supportive structures in the country. It
should combine economic and environmental know-
how with the capacity of moderating innovation-
processes. Its input is becoming less important during
the process of E oCM application and diffusion.

What type of Quality Assurance System is applied for

the diffusion of EoCM ?
P3U is interested in diffusing its instruments as fast and

extensively as possible. However, aspects of quality
assurance for the product EoCM, authorisation by P3U
due to copyright questions, an appropriate feedback of
experiences with the application of the current concept as
well as the communication of the results of the
implementation of EoCM for monitoring and evaluation
purposes have to be ensured. A degraded product
provided through lousy training by mediocre trainers and
consultants would be no good publicity for the product and
for German development co-operation.
Therefore, the instruments can at present only be applied
by trainers and consultants who are duly qualified and
authorised or licensed by P3U. A list of these trainers
and consultants can be obtained from P3U.
The responsibility for quality assurance - as well as the
copyright - are with GTZ-P3U. A licence for using EoCM
may be negotiated by interested and trained institutions
with P3U.
Since the trainers will also be ambassadors for
environmental management and the P3U approach, a
minimum of environment-oriented behaviour and the
respective know-how are considered indispensable. We
expressly do encourage the qualification of female
trainers. For these reasons, any participation in training
measures on P3U concepts is subject to the approval by
P3U or its partner organisation.

Key Elements of Environment-Oriented Cost Managament (EoCM) .

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Key Elements of Environment-Oriented Cost Managament (EoCM) .

Uploaded by

Copyright:

Available Formats

Profitable Environmental Management

P3U-Working Paper No. 19e November 2001

©GTZ/P3U: This publication may be duplicated with the permission of GTZ/P3U

EoCM is a Cost Management Instrument which focuses on the efficient use

What is the Principle of EoCM?............................................................................ 4

What is the Principle of EoCM ?

EoCM is a cost management instrument which focuses

P3U Working Paper No. 19 e (Version 6/2000) © GTZ-P3U

Cost savings and

The Pilot Programme for the Promotion of

P3U Working Paper No. 19 e (Version 11/2001) © GTZ-P3U

measures which also aim at reducing the negative

Like all PREMA-instruments, EoCM combines an

Priority on the environment

The third “win” option

companies step environmental management only few strategies are

adopted by a significant number of companies.

P3U Working Paper No. 19 e (Version 11/2001) © GTZ-P3U

improvement, through regular monitoring of the efficiency

How was EoCM developed ?

EoCM is based on the Environmental Cost Management

P3U Working Paper No. 19 e (Version 11/2001) © GTZ-P3U

Based on the experience at CAIRNS, a second, largely

Which benefits can be expected from EoCM ?

EoCM – like various other environmental management

P3U Working Paper No. 19 e (Version 11/2001) © GTZ-P3U

EoCM can strengthen existing or facilitate the

What are the limitations of EoCM ?

EoCM is not an instrument to primarily assess

P3U Working Paper No. 19 e (Version 11/2001) © GTZ-P3U

on consumer health, treatment of the used product after

Where can EoCM be applied?

EoCM has its main advantages in industrial production,

P3U Working Paper No. 19 e (Version 11/2001) © GTZ-P3U

What is Non-Product Output (NPO)?

A large part of the materials used ends up in the desired

Input Process Output

Examples for NPO are:

Material, semi-finished or finished goods of insufficient quality

P3U Working Paper No. 19 e (Version 11/2001) © GTZ-P3U

The generation and disposal of NPO are non value-adding

What are potential cost saving effects of NPO

The results of ECM applications in Germany have shown

P3U Working Paper No. 19 e (Version 11/2001) © GTZ-P3U

low prevention high prevention

In general, the resource-efficiency of industrial production

P3U Working Paper No. 19 e (Version 11/2001) © GTZ-P3U

What effects can be expected regarding the

The reduction of NPO flows has a direct positive impact on

What other effects are likely to benefit the company?

P3U Working Paper No. 19 e (Version 11/2001) © GTZ-P3U

What is the EoCM Cycle?

The first steps are diagnostic activities which aim at

P3U Working Paper No. 19 e (Version 11/2001) © GTZ-P3U

whether, to what extent and how the NPO can be

The “Cycle of Change”

These six steps can only be integrated sustainably into the

For the success of EoCM it is important that the company

The internal change process will not necessarily take

EoCM can also be applied step-by-step: After completion

P3U Working Paper No. 19 e (Version 11/2001) © GTZ-P3U

approach, however, is preferable in order not to duplicate