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The Accounting World Magazine:
E2VA : An Excellent Financial Metric for Environmental Concerns
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Of late, there is a lot of hue and cry about global warming and its impact on the world’s environment. Today’s pollution (in all shapes and forms) has serious impacts on environment and how to do away with it is being discussed at length in cozy board meetings. But these issues are linked to Supply Chain Management. This article elucidates the significance of the financial metric called Environmental Economic Value Addition (E2VA) in demonstrating to the top management that the company’s investment in environmental issues will contribute value to the organizations.

 

 

All those companies that are engaged in chemicals petroleum energy and forestry are bent on implementing Environmental Supply Chain Management (ESCM) by making sure that their production facilities are environment friendly. They choose only those suppliers who show keen interest on environmental issues. They work hand in hand with the suppliers with regard to green design initiatives and will not hesitate in offering training to their suppliers in improving the environmental management capacity.

The success of incorporation of environmental issues within the framework of SCM to a large extent depends on the top management's approach and perception towards them. If top management welcomes such projects and nods its heads with the "go ahead" signal half of the problem is solved from the perspective of the senior managers. It is better to have a separate department for dealing with environmental issues so that the departmental head could constantly report to the top management about its activities. Another equally important step is to involve all the employees in this mission and encourage them to be innovative in adopting environment friendly policies and procedures. Customers should also cooperate with the company in this evergreen environmental journey.

 

 

The Accounting World Magazine, Global Warming, Environmental Supply Chain Management, ESCM, Financial Metrics, Life Cycle Management, Environmental Audit, Economic Value Added, EVA, Weighted Average Cost of Capital, WACC, risk Management, Environmental Management, Environmental Economic Value Addition.