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Material ow cost accounting: a review and agenda for future research

Katherine L. Christ a, *, Roger L. Burritt b

Centre for Accounting, Governance and Sustainability, School of Commerce, University of South Australia, GPO Box 2471, Adelaide, SA 5001, Australia
Department of Accounting and Corporate Governance, Macquarie University, Sydney, NSW 2109, Australia

a r t i c l e i n f o

a b s t r a c t

Article history:
Received 28 November 2013
Received in revised form
30 August 2014
Accepted 2 September 2014
Available online xxx

Recent times have seen the business world challenged to improve efciency by reducing its material and
energy usage. Material ow cost accounting has been suggested as a management tool that can assist and
a new international environmental management accounting standard, ISO 14051, has emerged for
consideration by business. This paper presents a review of extant MFCA literature, the purpose being to
develop a research agenda which will provide a foundation for future development of the material ow
cost accounting tool. Concerns are raised about the absence of theorising behind material ow cost
accounting; the lack of knowledge and application of the tool in practice; the need for survey, interview
and statistical research methods to supplement case studies; lack of systematic evidence of the tool's
applicability beyond manufacturing and in different rm sizes; and complementarity with other accounting tools used to improve performance. An agenda identifying promising avenues for research, the
scope of application within companies and broadening of methods for investigation is then outlined.
2014 Elsevier Ltd. All rights reserved.

Material ow cost accounting
Research agenda
ISO 14051
Environmental management accounting

1. Introduction
With increasing pressure to achieve higher productivity with
reduced environmental impacts, business organisations require
access to tools that enable them to account for all inputs and outputs to their operations with a view to supporting eco-efcient
decisions that simultaneously improve economic and environmental performance (Kokubu and Tachikawa, 2013, p. 351). Material ow cost accounting (MFCA) has been suggested as one such
tool that can support eco-efcient decisions. The potential importance of MFCA has been further recognised with the release in
September 2011 by the International Organization for Standardization (ISO) of the ISO 14051 standard for material ow cost
MFCA has been described as among the most basic Environmental Management Accounting (EMA) tools1 (Jasch, 2006;
Schaltegger and Wagner, 2005). The data afforded by MFCA also

* Corresponding author. Tel.: 61 410 468 523; fax: 61 8 830 20992.

E-mail addresses: (K.L. Christ), roger.burritt@ (R.L. Burritt).
Environmental Management Accounting being the term used to describe the
integration of physical environmental information into the management accounting system. EMA incorporates a variety of tools that can be physical or monetary;
past or future-oriented; routinely generated or produced on an ad-hoc basis; and,
nally, they can have either a short or long-term focus. For a comprehensive
coverage of available options readers are advised to consult Burritt et al. (2002).

provides a foundation for the development of further environmental management accounting activities which may include investment appraisal, environmental impact assessment and short
and long term environmental budgeting (Burritt and Schaltegger,
2001; Jasch, 2006; ISO, 2011). Based on these arguments it would
be reasonable to assume knowledge concerning MFCA would (or
should) be among the most developed topics within the EMA
literature. However, a review of available publications suggests that
despite 15 years research in this eld, there remain more questions
than answers.
To date, extant research on MFCA has been predominantly
conceptual. Although limited case studies do exist, these are largely
action-based projects in which experienced researchers played a
central role in facilitating the adoption and implementation process
(Heupel and Wendisch, 2003; Jasch, 2006; Nakano and Hirao, 2011;
Schaltegger et al., 2012). Furthermore, even in the presence of
experienced researchers it may be difcult to convince managers of
the merits associated with MFCA activity. For example, at the
Mackenzie Paper Division paper mill in Canada, Gale (2006) found
that while an MFCA approach revealed environmental expenses to
be more than double what would usually be reported in the
nancial statements, management remained unconvinced of the
merits associated with EMA in general and argued that the organisation was already efcient.
While the normative origins associated with MFCA are not
problematic in and of themselves it can be argued that, if the take
up of MFCA by business is to improve, it is now necessary to
0959-6526/ 2014 Elsevier Ltd. All rights reserved.

Please cite this article in press as: Christ, K.L., Burritt, R.L., Material ow cost accounting: a review and agenda for future research, Journal of
Cleaner Production (2014),

K.L. Christ, R.L. Burritt / Journal of Cleaner Production xxx (2014) 1e12

establish what is currently known about the direction of research

on the topic. This knowledge can then be used to inform the
development of a pragmatic research agenda. With the release of
ISO 14051 the future is likely to see increased interest in
researching MFCA techniques. In order to be effective it is important this research be placed in the context of what is already known
and what needs to be known. Accepting that contemporary organisations require access to management tools that support
improved resource efciency and reduced environmental impact,
this paper utilises a literature review to develop a greater understanding of MFCA, the purpose being to develop a research agenda
by which knowledge can be improved and the implementation of
MFCA activities by organisations further promoted and improved.
The remainder of the paper is arranged as follows. The next
section provides a basic overview of what MFCA is and places it in
the context of more generic EMA knowledge and development.
Section 3 discusses the method used to undertake the literature
review. Section 4 covers the development of MFCA as a management tool. This is followed by section 5 in which the MFCA process
is discussed. Empirical evidence concerning MFCA in practice is
synthesised in Section 6, with Section 7 summarising what is
currently known on the topic with a view to identifying what needs
to be known via the presentation of a research agenda. Section 8
then concludes the paper.
2. What is material ow cost accounting?
The purpose of this section is to provide a basic overview of
material ow cost accounting. The discussion will commence with
brief mention of EMA as the larger discipline from which MFCA
emerged and is closely aligned. This is followed by a basic overview
of MFCA and what the practice entails with the research question
presented towards the end of the section.
2.1. Generic environmental management accounting background
With population growth and increased demand for nite resources in the face of an often limited supply, recent years have
seen mounting interest in developing business tools that support
high levels of productivity while simultaneously minimising
resource use and adverse environmental impacts. The need for a
more integrated approach to corporate economic and environmental management led to the development in the 1990s of
Environmental Management Accounting (EMA) (Christ and Burritt,
2013). EMA provides a starting point to redress the oft cited
shortcomings associated with traditional management accounting
which has been criticised for its failure to explicitly consider
environmental information; a situation which may lead to awed
conclusions (de Beer and Friend, 2006; Godschalk, 2008;
Schaltegger and Burritt, 2000; Tsai et al., 2012). Thus EMA offers
organisations an information system in which physical and monetary data concerning how business activities impact on, and are
impacted by, environmental issues is explicitly considered (Burritt
et al., 2002). The further relevance of EMA to business becomes
clear upon reviewing extant case studies presented in the academic
and professional literature in which the potential for cost savings,
more efcient material use, and increased revenue streams have
been consistently supported (Altham, 2007; Burritt et al., 2009; de
Beer and Friend, 2006; Deegan, 2003; Ditz et al., 1995; Schaltegger
rtner, 2011).
et al., 2012; V
an and Ga
The last two decades have seen the EMA literature develop to
incorporate a number of different tools. Lang et al. (2005) suggest
Material Flow Cost Accounting (MFCA) is among the most fundamental and well-developed of these. The recently released ISO
14051 standard denes MFCA as a tool for quantifying the ows

and stocks of materials in processes or production lines in both

physical and monetary units (ISO, 2011, p. 3).2 MFCA is underpinned
by the premise that all materials purchased by an organisation must
eventually leave as either product or waste, also referred to as nonproduct output or negative product (Fakoya and van der Poll, 2013;
Jasch, 2009), and Jasch et al. (2010) describe MFCA as the starting
point for the implementation of EMA activities.
2.2. A basic overview of MFCA
MFCA incorporates two distinct elements: physical and monetary. Within the EMA literature, MFCA falls within the group of
tools that come under the umbrella term environmental cost accounting (Papaspyropoulos et al., 2012). As with environmental
cost accounting, although generally classied as a monetary EMA
tool, MFCA relies on access to corresponding physical information
but specically about materials and energy ows and is usually
classied as past-oriented with a focus on short-term management
(although the information provided by MFCA can be used to support the implementation of other future-oriented EMA tools such
as various forms of environmental budgeting) (Bennett et al., 2013,
p. 8; Burritt and Schaltegger, 2001; Wendisch and Heupel, 2005). In
addition, the information made available via implementation of an
MFCA system is expected to be generated on a routine basis (for
further information, please refer to the comprehensive framework
for EMA presented in Burritt et al., 2002).
Jasch (2011, p. 256) submits the reason EMA places especial
emphasis on the use, ows and nal destiny of energy, water,
materials and wastes is because (1) use of energy, water and
materials, as well as the generation of waste and emissions, are
directly related to many of the environmental impacts of organisational operations; and (2) materials purchase costs are a major
driver in many organisations. Thus by focussing on material and
energy ows, as well as their related costs, MFCA provides a
foundation by which opportunities for improved eco-efciency are
able to be more clearly articulated and understood (Scavone, 2006).
In addition, prior research has shown the costs associated with
wasted materials can amount to as much as 40e70% total environmental expenses for individual organisations; environmental
expenses being dened as those business expenses that are associated with impacts on the environment which includes the cost of
environmental protection (Bautista-Lazo and Short, 2013; Jasch,
2009). In consequence, it can be argued the effective management of material and energy ows constitutes an important undertaking for contemporary organisations, both economically and
2.3. Context of the research and research question
Yet despite the arguments presented in the preceding paragraphs, knowledge concerning MFCA in practice remains underdeveloped. Furthermore, a comprehensive agenda to guide current
and future research in this area has yet to be developed. Thus the
purpose of this paper is to provide a synthesis of current knowledge
concerning MFCA and to present a number of directions for future
research by which knowledge can be advanced and the further take
up of MFCA by business promoted and improved. In doing so the
following research question will be addressed: (RQ1) How can academic research be used to further understanding of current MFCA
development? The next section will discuss the method used to
investigate this research question.

Materials in this context is generally held to include energy and water (ISO,
2011, p. 3).

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3. Method
In order to investigate the research question presented in Section 2, this study utilised a review of extant MFCA literature. In
summary, the purpose of the research was to review, critique, and
synthesize representative literature on a topic [] such that new
frameworks and perspectives on the topic are generated (Torraco,
2005, p. 356; Neuman, 2006). Torraco (2005, p. 363) suggests that
among the primary reasons for undertaking a literature review is to
develop and present a research agenda that ows logically from
the critical analysis of the literature and it was with this purpose in
mind that the current study was undertaken (also see Neuman,
Literature for inclusion in the review was sourced from the
following databases: Science Direct, EBSCO, Emerald Management
Plus, JSTOR, ProQuest, SpringerLink, Taylor and Francis and Wiley
Interscience. Given the emerging and contemporary nature of
MFCA as a topic, keyword searches were limited to material ow
cost accounting, ow cost accounting, ISO 14051 material and
energy ow cost accounting, energy ow cost accounting and
MFCA. Database search tools were set to order references based on
relevance to these search terms.
The resources identied via the aforementioned means were
further supplemented with ofcial documents from government
and non-government organisations in which MFCA was among the
primary concerns. These references include resources from The
International Organization for Standardization (ISO), Federal Ministry for the Environment in Germany, Ministry of Economy, Trade
and Industry (METI) in Japan, and the International Federation of
Accountants (IFAC).
Once identied the academic references were subjected to a
preliminary word search in line with the keywords provided above.
This undertaking was used for the purpose of screening and to
ensure reference to MFCA was not limited to a passing comment or
a sole item located within the reference list. Any documents
deemed irrelevant to the topic on this basis were discarded. Upon
completion of this process the remaining resources were read in
full with relevant data documented against individual references in
table format. The information gleaned from this process allowed a
comprehensive understanding of the topic to be developed which
provides the foundation for the information presented in the
remainder of this paper.
In order to appreciate how academic research can be used to aid
understanding of current MFCA development it is necessary to rst
understand what MFCA is, how the practice developed and the
steps involved in the implementation process. This information is
required to contextualise the empirical evidence on the topic which
is addressed later in the paper. Hence the following section will
commence the review by considering the development of MFCA in
greater detail.
4. The development of MFCA as a management tool e a brief
MFCA was developed in the late 1990s by the Institut fr
Management und Umwelt (IMU)3 in Augsburg, Germany, under the
name ow cost accounting (Federal Ministry for the Environment,
2003; METI, 2007). The potential relevance of the practice to
manufacturing concerns attracted the attention of Japanese authorities and in 2000 the Japanese Ministry of Economy, Trade, and
Industry (METI) began promoting a modied version of MFCA to
the Japanese business sector (Kokubu and Tachikawa, 2013). An

Institute of Management and the Environment.

important element of this process was the Environmental Management Accounting Promotion Project which commenced in 1999
(Onishi et al., 2009). The Japanese effort culminated with the
release of a Guide for Material Flow Cost Accounting published by
METI in March 2007 (METI, 2007). To date, while it can be argued
Germany and Japan have been the prime instigators at the forefront
of global MFCA development, interest in the practice is growing and
emanating from regions as diverse as Europe, Asia, the Middle East
and North America (Jasch and Savage, 2008; Jindrichovska and
rea, 2011; Kokubu and Tachikawa, 2013).
The Japanese and German versions of MFCA are often discussed
separately within extant literature. It is possible this situation is
attributable to the difference in system boundaries recommended
under each approach. The Japanese version, for example, has primarily been concerned with product lines or processes (IFAC,
2005). The German version, on the other hand, is more interested
in facility wide management (IFAC, 2005). Nonetheless, it can be
argued recent years have seen a more pragmatic stance on the part
of MFCA advocates and there is now greater acceptance that the
system boundaries associated with any MFCA experiment will
likely be determined by both organisational circumstance and the
underlying reasons for implementation (Kokubu and Tachikawa,
2013). Furthermore, regardless of the level at which MFCA is
implemented (company, facility, cost centre, process or product),
the underlying principles will remain essentially unchanged (Jasch,
2003b). While MFCA can undoubtedly be implemented at different
organisational levels, it has been suggested that initial adoption is
more usual at the company level given this form of aggregate data is
more readily available in most operations (Jasch, 2003b).
Recent years have seen even further development in MFCA. In
particular the success of the practice when applied to Japanese
companies became the catalyst in 2008 for a submission by the
Japanese Industrial Standards Committee (JISC) to the International
Organization for Standardization. A working group was subsequently created with the culmination of their efforts being the
release in September 2011 of the rst edition of ISO 14051: Material
Flow Cost Accounting (Kokubu et al., 2009; Trappey et al., 2013).
Countries involved with the development of this standard include:
Japan, Germany, Brazil, The United Kingdom, Finland, Malaysia,
Mexico and South Africa (Schmidt and Nakajima, 2013). In line with
the published preamble, the overarching aim of ISO 14051 is to
offer a general framework for material ow cost accounting (ISO,
2011, p. v). In addition, ISO 14051 provides information concerning
common terminologies, objectives and principles, fundamental
elements and an overview of the MFCA implementation process
(ISO, 2011, p. v).
In keeping with more recent publications ISO 14051 places
especial emphasis on the universal applicability of MFCA to business (Kokubu and Tachikawa, 2013). While it can arguably be
contended MFCA is likely to be more useful to organisations
involved with the manufacture of physical products (IFAC, 2005),
there is growing consensus the practice can also be applied in nonmanufacturing settings which include organisations located in
either the service or not-for-prot sectors (Jasch, 2009;
Papaspyropoulos et al., 2012). Indeed, ISO 14051 argues MFCA is
applicable to any organization that uses materials and energy,
regardless of their products, services, size, structure, location, and
existing management and accounting systems (ISO, 2011, p. 1).
Finally, as with EMA, MFCA was developed primarily to evaluate
material ows within individual organisations, the purpose being
to support eco-efcient decisions that enhance resource efciency
and simultaneously improve the economic and environmental
performance of the entity (METI, 2007). However, in more recent
years there has been growing interest in how MFCA techniques can
be extended to assist with supply chain management (Jasch, 2011;

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Cleaner Production (2014),

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Fig. 1. The MFCA process.

rea, 2011; METI, 2007; Schrack and

Jindrichovska and Purca
Prammer, 2013). For example, between 2008 and 2011 the Japanese METI conducted a project examining this potential by introducing MFCA into 50 supply chains (Kokubu and Tachikawa, 2013).
The capacity to extend MFCA to include both up and downstream
supply chain partners has also been explicitly recognised in the
recently released ISO 14051 standard (ISO, 2011).
As can be seen from the preceding paragraphs, the last 15 years
have witnessed the rapid development of MFCA techniques. However, in order to place extant evidence on the topic into context, it is
necessary to rst provide a brief overview of the basic MFCA process. Such an overview is provided in the following section.
5. The MFCA process
Despite minor differences in terminology and the system
boundaries used, the process of implementing MFCA has been
consistently represented in extant literature. For ease of understanding a ow chart displaying the main steps involved in this
process is provided in Fig. 1. Once an appropriate system boundary
has been agreed, it is widely accepted the rst step in implementing
any MFCA experiment is to develop a basic understanding of the
ows of material and energy throughout the organisation. This is
achieved via a visual representation commonly referred to as a
ow model (Kokubu and Tachikawa, 2013; Scavone, 2006; Strobel
and Redmann, 2002). Flow models are essentially a heterogeneous
depiction of organisational processes and, as such, each model will
differ according to the specic activities in which individual organisations are engaged. Furthermore, while ow modelling represents an important step in the implementation of MFCA, Heupel
and Wendisch (2003) suggest the construction of a ow model
may even be a catalyst for organisational improvement when used
in isolation from additional action. Indeed, this information can be
used as the basis for undertaking material or substance ow analysis which, while lacking a monetary element, may assist in
improving the organisation's environmental performance. While
there are numerous software packages that can be used for the
purpose of constructing a ow model, Kokubu and Tachikawa
(2013) suggest computer generated models are not essential with
manual representations assembled using paper or post-it notes
often equally effective.
Once the ow model is complete the next step incorporates
assigning values representing the amount of materials and energy
that pass through or are stored within each step in the ow model.
While it is clearly desirable to use actual gures for this purpose, it

is widely accepted that in cases where tangible quantities are unavailable estimates can provide a suitable proxy provided there is
no reason to suspect excessive inaccuracy (METI, 2007). Regardless
of how these values are obtained, it is important that all items be
converted into comparable measurement units (for example kilograms) necessary for the next step in the MFCA process.
The purpose for assigning values to the ow model is to establish a material balance also referred to as a mass balance,
inputeoutput balance or an eco-balance (IFAC, 2005). As noted in
ISO 14051 (ISO, 2011, p. 5):
Because mass and energy can neither be created nor destroyed,
only transformed, the physical inputs entering a system should
be equal to the physical outputs from the system, taking into
account any inventory changes within the system.
The notion of a balance described above borrows heavily from
the law of conservation in physics (Huang et al., 2012; Victor et al.,
1998). Thus, energy and mass are never lost and there is a wellestablished scientic basis for the development of a materials
balance and it is important that any signicant gaps in this data be
Once the material balance is complete it is necessary to assign
monetary values for every input and output contained for each step
in the ow model. MFCA has come to recognise several categories
of costs. These include: material costs; system costs which incorporate the expense associated with handling materials and energy
in-house and includes labour, depreciation and transport costs; and
nally, waste management costs (Kasemset et al., 2013).4 There is
some debate concerning the best way to account for energy with
some authors advocating recognition within a separate cost category, however, this decision is generally left to the discretion of
individual organisations (Jasch, 2011; METI, 2007). Indeed, a 2005
study by Kokubu and Nashioka reports organisations are more
likely to consider energy costs in their environmental accounting
activities as opposed to generic material costs (Kokubu and
Nashioka, 2005).
Further to the more basic issues associated with material use
and cost allocation, ISO 14051 also includes explicit guidance
concerning how to deal with costs that are carried from one

Readers interested in obtaining a further understanding of these cost categories
are advised to consult ISO 14051 (ISO, 2011), Jasch (2009) and METI (2007).

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Cleaner Production (2014),

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quantity centre5 to another (i.e. when output from one quantity

centre becomes an input for another) (ISO, 2011). This standard
also covers the treatment of internally recycled materials. The last
point is especially pertinent as materials that are recycled or
reused within the system boundary limit the production of waste
as well as reduce the need for virgin resources. Therefore, internally recycled materials can have a positive impact on both the
economic and environmental performance of the entity (Jasch,
2009; Sarkis, 2012). A common example of a material that is
recycled in this way is water which can sometimes be used for
several processes, provided a certain level of quality is maintained,
before leaving the system as wastewater. The above said, ISO 14051
maintains that the fact materials have to be recycled at all represents evidence of inefciency within the original process (ISO,
2011). Nonetheless, it is acknowledged the realisation of zerowaste is not always possible and as such the development of a
closed-loop system that limits demand for resources is likely to
present the most realistic option for many entities (Burritt et al.,
2009; Jasch, 2009; Staniskis, 2012).
While the development of a mass balance ow model and the
allocation of relevant costs are without doubt important steps
within the MFCA process, they are not an end in themselves. Thus it
is necessary for management to summarise, evaluate and interpret
these results. It is also important that this data be communicated to
relevant managers and staff who are likely to be familiar with the
activities undertaken within individual cost/quantity centres. Once
this is done potential improvement opportunities can be identied
and appropriate action taken (ISO, 2011; Schaltegger and Csutora,
2012). It is then necessary to re-evaluate material ows, stocks
and costs on a regular basis as this allows for the comparison of
planned activities to actual results, as well as facilitating a program
for continuous improvement which will improve eco-efciency,
and reduce both costs and adverse environmental impacts (LangKoetz et al., 2006; METI, 2007). This may involve the use of environmental budgeting or environmental key performance indicators
(KPIs) (Burritt and Schaltegger, 2001; Schaltegger et al., 2012). The
aforementioned process is well articulated in ISO 14051 which, like
many other standards within the ISO 14000 and 9000 series, encourages commitment to a PDCA cycle of continuous improvement
(ISO, 2011; Kokubu et al., 2009).6
In summary, when used in conjunction with appropriate planning and a program for continuous improvement, the preparation
of a ow model, quantication of material and energy inputs,
outputs and stocks, and allocation of relevant costs as required
under MFCA seeks to serve several important purposes. These may
 Allowing areas of inefciency to be identied and understood;
 Improved efciency and a reduction in direct material costs;
 A reduction in the amount of waste generated and reduced
ecological impact;
 A reduction in other manufacturing costs (e.g. waste handling,
treatment and associated infrastructure costs);
 More accurate product costing;
 Incentives for innovation;
 Improved inter-departmental communication concerning
resource use; and
 Improved management control.

A quantity centre is dened in the ISO 14051 standard as selected part of parts
of a process for which inputs and outputs are quantied in physical and monetary
units (ISO, 2011, p. 4).
PDCA is an acronym which represents Planning, Doing, Checking and Acting
(ISO, 2011).

(IFAC, 2005; Kokubu and Tachikawa, 2013; METI, 2007; Onishi

et al., 2009; Scavone, 2005; Schaltegger et al., 2002, 2012;
Scheide et al., 2002).
Drawing on the list of potential benets presented above, there
seems ample incentive for business entities to engage with MFCA.
Nonetheless it has also been observed that take up of the tool in
practice has generally been quite limited. In order to understand
this paradox there is a need to consider existing studies and the
results from empirical investigation.
Before proceeding it should be claried that the main purpose of
this section was to provide an overview by which the ensuing
discourse can be more easily understood by those unfamiliar with
MFCA and its development. Readers interested in a more detailed
understanding of the MFCA process than that provided here are
advised to consult one of the many publications available on the
topic (e.g. ISO, 2011; Jasch, 2009; METI, 2007). The following section will now extend the review by considering extant evidence of
MFCA in practice, the purpose being to determine patterns in
adoption, shortcomings in current knowledge and areas in which
further information is required to move the understanding of MFCA
forward. This information will then be used to inform development
of the research agenda which is presented in Section 7.
6. Empirical evidence on MFCA in practice
As previously suggested, thus far empirical evidence concerning
MFCA in practice has primarily centred on action-based projects. In
this context action-based is used to describe study in which the
principal researchers have taken an active role in providing the
expertise and oversight required for the development of MFCA
within the organisation(s) being studied. It can be argued this is not
unexpected given the contemporary and somewhat normative
nature of the MFCA literature. Nonetheless, in order to move the
MFCA agenda forward, organisations need to be sufciently
convinced on the merits of the practice and prepared to pursue
implementation in the absence of academic assistance. In order to
understand how this can be achieved empirical evidence is
required and there remain many questions in need of answers.
Hence this section presents an overview of prior research, which is
predominantly case-based.
Although the purpose of this section was to provide a detailed
overview of current work in the MFCA area, the discussion also
comes with a caveat. The literature reviewed for this paper was
limited to those studies available in English. While acknowledging
additional publications may exist, especially in German and Japanese, these resources were not considered within this review.
6.1. Evidence of low engagement in practice
The rst thing that becomes apparent upon reviewing the
literature is that, thus far, essentially all empirical work has been
conned to action-based case studies. Indeed, the authors were
unable to locate a single survey or interview-based quantitative or
qualitative study in which MFCA was the primary focus. Surveybased research in which MFCA is mentioned has been primarily
concerned with attempts to establish knowledge and the use of
EMA tools in general. For example, a 2005 survey of Japanese
companies conducted by Kokubu and Nashioka (2005) revealed
that, although 73.5% of companies had knowledge of MFCA as an
EMA tool, only 6.5% had partially implemented it in their operations, and none had totally implemented the practice (n 185,
response rate 21.27%). The authors attribute the high awareness
of MFCA among business to publicity efforts in Japan undertaken by
METI. Nonetheless, it is of concern that so few organisations had
started experimenting with MFCA.

Please cite this article in press as: Christ, K.L., Burritt, R.L., Material ow cost accounting: a review and agenda for future research, Journal of
Cleaner Production (2014),

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In contrast, a German study conducted in 2010 by Schaltegger

et al. (2011) revealed that only 51.6% of study respondents reported knowledge of material ow analysis (MFA) and, of these,
only 56.3% actually applied the technique within their business
operations (n 31, response rate 25.8%). Interestingly, these
gures represent a relative decrease of 33% and 32% from a similar
study undertaken in 2002 (n 44, response rate 36.7%). These
ndings may offer support for the observation of Schmidt and
Nakajima (2013) who suggest that since the state promotion of
ow cost accounting was phased out in Germany, the technique has
become obsolete and is hardly used. Furthermore, it is possible MFA
(and subsequently MFCA given MFA constitutes a necessary precursor to MFCA activity) may be less prominent in respondent
companies, not because the technique itself is not useful, but
because organisations do not know it exists. While certainly not
encouraging, the results from the aforementioned studies are also
consistent with Australian evidence collected by Burritt and
Tingey-Holyoak (2012). In reporting on a survey of professional
accounting rms located in South Australia, these researchers
found that while 50% of the sample report using sustainabilityrelated cost accounting, not one used MFCA (Burritt and TingeyHolyoak, 2012) (n 12, response rate 10%). Dobes (2013, p.
255), in discussing a Czech initiative, concurs suggesting few
companies monitor the efciency of energy usage and material
ows within their processes and, as a result, have difculty in
managing their resource efciency.
The evidence presented above suggests MFCA may not be a tool
that is able to sell itself in the manner suggested within the
normative literature. Furthermore, even when organisations know
about MFCA, this does not guarantee they will adopt the practice.
Interestingly, Schaltegger et al. (2011) suggest knowledge and
application may in fact be closely related and present evidence that
the more well-known an environmental accounting tool is, the
greater the likelihood of adoption (i.e. the knowledge-application
gap becomes smaller). This observation is consistent with the
literature on diffusion of innovation (Rogers, 2003). Nonetheless,
the nature of this relationship when applied specically to MFCA
cannot be assumed and further investigation is required.
6.2. Case-based research
Extant survey-based evidence from generic EMA studies does
not present an overly positive picture for those who would advocate for the increased implementation of MFCA by business. Yet
these ndings are in stark contrast to the generally positive results
reported in the action-based case research upon which most of the
MFCA literature is based. Since the early 2000s the literature has
considered case studies in which the integration of cost information with ow management techniques has been examined. These
case studies generally present arguments related to the signicance
of costs associated with residual materials and substances that are
not turned into products (Scheide et al., 2002; Thurm, 2002).
Empirical evidence suggests the monetary cost associated with
non-product output can be as high as 90% of an organisation's total
environmental expense (Gale, 2006; Jasch et al., 2010; Jasch and
Danse, 2005; Jasch and Lavicka, 2006). When taken in light of
previous evidence which has found areas of environmental
expense can be as high as 22% of total operating costs (Ditz et al.,
1995), the potential benet associated with controlling and/or
reducing non-product output is expected to be signicant in many
companies (Burritt, 2004; Jasch and Lavicka, 2006).
Existing case studies demonstrate substantial potential for organisations to reduce their overall environmental expenses via a
more systematic approach to ow cost accounting (Kokubu and
Tachikawa, 2013). While many studies empirically support the

potential for signicant cost reductions and environmental improvements through what is commonly referred to as good
housekeeping activities (Jasch and Danse, 2005, p. 362; Scavone,
2006), in certain cases it may also be necessary to consider the
potential benet that may accompany investment in new capital
equipment (Kokubu and Tachikawa, 2013). For example, in a case
study from Argentina, Scavone (2006, p. 1285) shows how MFCA
led a sugar cane company to invest USD 350,000 in new equipment
to improve efciency. As a result of this decision the company was
able to save USD 72,000 each year with the overall payback period
being ve years. Staniskis and Stasiskiene (2006) also offer Lithuanian evidence from a number of case studies in which it is clearly
shown that capital investment in cleaner production generally
resulted in vastly improved economic and environmental performance with all items having payback periods of 3 years or less (also
see Staniskis and Stasiskiene, 2005). Moreover, beyond the mere
 et al. (2011) suggest MFCA
purchase of new equipment, Hyrslova
may even provide a catalyst for the development of new and more
efcient technologies.
As can be gathered from the preceding discussion, much of the
current work investigating MFCA has been concerned with
manufacturing operations and, in cases where ow charts are
provided, these generally represent a simple linear manufacturing
process, i.e. materials in, work in process, waste and product out
(for example, see Heupel and Wendisch, 2003; Staniskis and
Stasiskiene, 2006; Schaltegger et al., 2012). While these studies
are no doubt important, they do little to demonstrate whether
MFCA is useful in non-manufacturing settings and, if so, how MFCA
can best be applied in these organisations. When viewed in light of
arguments that MFCA can be applied in any business that uses energy or materials (ISO, 2011; Jasch, 2009), the lack of data on multiple sectors would appear to represent a major shortfall in current
As discussed in the previous paragraph, to the current time
MFCA has been primarily applied in the manufacturing sector
(Papaspyropoulos et al., 2012). Nevertheless, it has also been suggested MFCA can be applied in both the service and not-for-prot
sectors (Jasch, 2011; Papaspyropoulos et al., 2012). While this
may be true, evidence to support this proposition with regard to
either sector is not well developed. One notable exception is the
study of Papaspyropoulos et al. (2012) which considers the case of
the Hunting Federation of Macedonia and Thrace (HFMT), a not-forprot organisation located in Greece. The authors conclude that
MFCA can support the operation of the sector and provide useful
indications for [] policy decision making (Papaspyropoulos et al.,
2012, p. 141). Recommendations were also made to complement
the use of environmental cost accounting and MFCA in the case
organisation with additional EMA tools, in particular those with a
future-oriented and/or long-term focus.
6.3. How is MFCA implemented in practice?
The actual manner of MFCA implementation is another area
requiring further study. To date, while European studies have
generally advocated company-wide application and the integration
of MFCA data into existing practice via advanced IT options and
Enterprise Resource Planning (ERP) systems (an approach also seen
in select Japanese case studies (Onishi et al., 2009) and more
recently in research to emerge from South Africa (Fakoya and van
der Poll, 2013)), it is accepted not all organisations have access to
such sophisticated systems. For example, Heupel and Wendisch
(2003) discuss the implementation of ow cost accounting in a
group of SMEs (small and medium-sized enterprises) and conclude
the practice can be applied using more simple programming systems. This was noted as being especially important in countries like

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the Czech Republic and Poland where, as of 2003, as few as 15% of

all SMEs had access to ERP technology (Heupel and Wendisch,
Deegan (2003) also observed the potential role for ow cost
accounting in SMEs. This potential was specically demonstrated in
a project undertaken in collaboration with the Institute of Chartered Accountants in Australia and EPA Victoria, in which EMA
practices were introduced in four different case organisations, all of
which included some form of material ow analysis and environmental costing. Like Heupel and Wendisch (2003), Deegan (2003)
advocates the potential importance of ow cost accounting in
SMEs and also makes the following observation:
Existing accounting systems might be well accepted and have
been in place for many years, and therefore it is important that
the strengths and weaknesses of existing systems are known
before suggesting changes. What was found to be useful was to
construct diagrams to understand how costs are currently being
allocated or treated. It was useful to then ask: does what is
currently being done from an accounting perspective actually
make sense if one also considers the physical ow of resources?
In presenting evidence from Costa Rica, Jasch and Danse (2005)
concur with Deegan's observation and Jasch (2003a, p. 76), drawing
on pilot studies from Austria, suggests that a critical review of
existing information systems is an important step at the
commencement of any MFCA pilot study (also see Herzig et al.,
2012; Staniskis and Stasiskiene, 2005).
Recent years have seen further statements suggesting MFCA can
be applied in any organisation irrespective of existing accounting
and/or environmental management systems (ISO, 2011). This position would seem to imply MFCA is a standalone system, however,
it has also been suggested that in many cases the information
required for MFCA may already be available from existing sources
(Scavone, 2005, 2006; Schaltegger et al., 2012).7 Thus the way in
which MFCA information can (or should) be integrated into other
organisational systems remains unclear and offers a potentially
fruitful area for future study (Lang-Koetz et al., 2006; Strobel and
Redmann, 2002).
6.4. Evidence from developing economies
As discussed in Section 4, MFCA is a management innovation
that emanated from projects undertaken primarily in developed
nations. Nonetheless, there is growing interest in how MFCA
techniques can be applied in developing economies. Schaltegger
et al. (2012) explored this potential in the context of a beer brewing facility in Vietnam and were able to demonstrate, via an actionbased case study, that MFCA has enormous potential for identifying
areas of inefciency and to help ensure improvement efforts were
directed towards areas where they would make the greatest
impact. Jasch and Danse (2005) reveal similar ndings in a
comparative study of EMA activity in Austria and Costa Rica and
suggest MFCA may assist in identifying opportunities for good
housekeeping which are more common in emerging economies
given environmental regulations tend to be less stringent in these
settings. Burritt et al. (2009) further demonstrate the potential for
material and energy ow cost assessments as a post-hoc tool for
environmental investment appraisal at a rice mill located in the

Note: while many references suggest much of the data required for MFCA may
already be available, this is not always the case. Gale (2006) for example, found at a
paper mill in Canada that the necessary information from existing accounting
systems was more difcult to obtain than expected, especially in the case of energy
and waste costs (Gale, 2006).

Philippines (e.g. material and energy ow cost assessment was

used to evaluate previous investment decisions in retrospect).
Indeed, as developing nations move to compete in a global
marketplace that is demanding increasingly stringent forms of
environmental management, MFCA may offer organisations in
these countries a means of controlling resource use and a way to
demonstrate their commitment to economic and environmental
efciency. With high levels of economic growth in recent years, it
can be argued this is likely to be especially important in countries
like China and India (Xiaomei, 2004).
6.5. How does MFCA relate to other EMA tools?
It is interesting, given the well-cited work of Burritt et al. (2002)
who suggest MFCA is but one in a framework of possible EMA tools,
that there has been scant research investigating the comparability,
and compatibility, of MFCA with alternate EMA tools (Lang-Koetz
et al., 2006). One of the few studies in this area was conducted by
Lang et al. (2005) who, within the context of several pilot studies,
considered the interrelationship between Environmental Performance Indicators (EPIs), inputeoutput balance (otherwise known
as a material or mass balance e see Section 5) and ow cost accounting. The authors conclude that despite being a potentially
powerful instrument, ow cost accounting is also less common
in practice (Lang et al., 2005, p. 148). For example, in the case of
Schott Glass, Lang et al. (2005, p. 161) observe that EPIs were
implemented, and in fact preferred, over ow cost accounting, the
rationale being that the organisation already had a good understanding of material costs and losses, and that the complexity of the
organisation's material ows was not high. Whether this assumption represents an accurate reection of Schott Glass's position may
be questioned, however, it is nonetheless concerning that the
company failed to see the benet associated with MFCA activities.
When combined with other pilot studies, Lang et al. (2005, p. 165)
For many companies, Environmental Performance Indicators
provided regularly and the set up of an inputeoutput balance
every two or three years seems to be a good combination for
ambitious environmental management. For some companies,
ow cost accounting can be an interesting option to improve the
existing cost accounting system.
In a related vein Japanese pharmaceutical company, Tanabe
Seiyaku, offers an example for how MFCA data can be used for
performance evaluation and improvement (Burritt and Saka, 2006;
Onishi et al., 2009), and the potential role for MFCA in investment
appraisal and post-hoc investment evaluation has been observed in
both Schaltegger et al. (2012) and Burritt et al. (2009). In addition to
these studies, Scavone (2006) offers evidence from Argentina to
suggest there may be a role for an environmentally focused
balanced scorecard in material ow cost management. Nonetheless, as with many topics within the MFCA literature, knowledge
concerning this proposal is limited and additional evidence is
required to support these claims.
Drawing on the discussion presented above, MFCA would
appear compatible with a number of supplementary EMA tools
(also see Burritt et al., 2002; Jasch, 2006). Thus it would be interesting to examine the incremental performance benet that is
attained when different tools are used in combination, and within
different contexts (i.e. in large versus small or medium sized organisations). It may be that in certain situations MFCA is useful in
its own right whereas in other contexts a combination of tools is
required to produce equivalent improvements in economic and
environmental performance. Likewise, it may be that in certain

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contexts MFCA is less effective than other EMA tools, or combinations of tools, as was found in the study of Lang et al. (2005).
6.6. Proposed extension of MFCA as a supply chain management
Finally, there has been substantial interest in recent years in
developing a greater understanding of how EMA, and more specically MFCA, can be used to assist with Supply Chain Environmental Management (IFAC, 2005; ISO, 2011; Jindrichovska and
rea, 2011). The METI Guidebook for MFCA describes the
transfer of MFCA data to the supply chain as one of the most
advanced topics in the hierarchy of MFCA activity (METI, 2007). In
addition, if used within the supply chain the data provided by
MFCA could then be used to support further analysis via life cycle
assessment (LCA) (Jasch, 2011; Nakano and Hirao, 2011) and may
help to support the development of closed-loop supply chains
which place less demand on virgin resources as described by
Weigand and Elsas (2013). While limited case studies do support
the potential for MFCA information to assist with environmental
supply chain management (Kokubu and Tachikawa, 2013; Viere
et al., 2007, 2011), problems with the collection of information
and condentiality of data are also acknowledged (Weigand and
Elsas, 2013) and more research on this topic is required.
The above section constitutes a comprehensive coverage of
extant evidence on MFCA in practice. While it can be observed that
the literature in this area is increasing, it could also be argued that
there remain more questions than answers. Hence the need now
exists to move this debate forward. The next section explicitly
considers this need, the purpose being to articulate an agenda for
future research in the MFCA eld.
7. Discussion and the way forward
7.1. Implications from existing research
The previous section clearly demonstrates that while knowledge regarding MFCA is certainly increasing, the overall understanding of the topic remains limited and further research is
required. Numerous studies draw attention to the potential associated with MFCA and a number of action-based case studies have
provided evidence that would seem to suggest it works. Nonetheless these studies are at odds with additional evidence in which
it has been demonstrated MFCA is not well used in practice. Thus, if
we accept the positive results obtained from case-based research,
there would appear to be a role for academic study in seeking to
understand and resolve this paradox. Furthering the understanding
of MFCA in this way is essential to nding ways to encourage
diffusion of the practice in diverse organisations.
Drawing on the discussion presented above the most logical
question with which to commence this agenda would seem to be
When does MFCA work? Are we, as academics, to assume that the
benet associated with MFCA implementation will be equivalent
across all sectors and in organisations of all sizes? Or is this
something that needs to be empirically examined? Who is using
MFCA in different sectors and, more to the point, why are they using
it? What are the key drivers of MFCA implementation? What are
the barriers to MFCA adoption? Are they actual or perceived? Are
barriers to MFCA adoption the same across different organisations?
How well do the realised benets associated with MFCA adoption
reect the benets that were expected? These are just a few of the
questions that extant evidence does not answer (see Table 1). While
normative claims suggest MFCA is useful in all organisations, they
are just that, normative, and without a body of evidence to support
these claims there is ample reason to doubt their validity. Answers

to these questions will be required if MFCA is to be successfully

promoted and diffused to a larger population.
It has also been observed, especially in Germany, there are now
organisations that had once engaged with the ow cost accounting
agenda that no longer do so (Schaltegger et al., 2011; Schmidt and
Nakajima, 2013). It would be of interest to investigate one or more
of these organisations and nd out why this decision to withdraw
was made. Was the information provided by MFCA not useful?
Were the costs involved in managing the system in excess of the
benets that were received? Given state promotion of MFCA has
been noted as among the main catalysts of MFCA adoption in
Germany (Schmidt and Nakajima, 2013), can it be that the reason
for initial adoption was in fact institutional pressure as opposed to
the belief that the system would full a valid organisational need?
It might also be interesting within this context to examine the
organisational functions in which MFCA is used and likely to provide the greatest benet. Burritt et al. (2002), for example, suggest
different functions and their managers rely on different types of
environmental accounting information. Furthermore, Kokubu and
Tachikawa (2013) suggest the successful implementation of MFCA
is reliant on expertise being provided by multiple departments
including: accounting, operations, environmental, engineering, and
quality control. Thus it would be interesting to investigate who, in
organisations where MFCA is implemented, actually uses the information provided and who is involved with its preparation. It
may then be that efforts to promote MFCA would be more effective
if targeted towards individual managers engaged in particular
Drawing on the literature analysed for this review, the
manufacturing focus which dominates extant research also presents an area of potential concern. It has sometimes been suggested
that MFCA is likely to be more useful in traditional manufacturing
settings (IFAC, 2005), and in organisations where material ows are
complex and potential costs high (Lang et al., 2005; Loew, 2003).
Nonetheless, we are also led to believe that MFCA can provide
useful information to organisations operating in all sectors;
including both the service and not-for-prots sectors (ISO, 2011;
Jasch, 2009; Papaspyropoulos et al., 2012). The above said there is
little empirical evidence available to support this claim with regard
to either sector. It may be that MFCA is useful in these sectors, but it
may also be that service and not-for-prot organisations each
require different or slightly modied tools. Thus there is a need to
extend the current focus of MFCA research beyond manufacturing
operations in order to examine this potential. Such research may
lead to industry-specic guidance for MFCA being developed. Or,
alternatively, it may support the development of new tools that are
deemed more appropriate for use within these organisations. Potential sectors which may be of interest include: service organisations, not-for-prot concerns, primary production, mining and
resources, and utilities. In addition, research methods that may be
able to provide further insight in this area include: comparative
case studies, interviews and survey-based research in which statistical analysis is employed.
A further avenue for future investigation would be to consider
and compare the usefulness of MFCA as an ad-hoc tool versus one
that involves the routine generation of information. As discussed in
Section 2, MFCA is generally viewed as falling under the umbrella
term environmental cost accounting (Papaspyropoulos et al.,
2012). Burritt et al. (2002) suggest this implies the information
provided should be routinely generated in the manner expected of
most costing systems (Herzig et al., 2012). However, there is some
suggestion that MFCA can still provide valuable information when
used on an ad-hoc basis; that is as a tool that is used either for the
purpose of a one-off decision or from time to time in an irregular
manner that incorporates no set plans for future engagement or

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Table 1
Possible directions for future research.

Table 1 (continued )

Proposed future
research questions

Possible associated
future sub-research

Possible method(s)

Proposed future
research questions

Possible associated
future sub-research

Possible method(s)

When does MFCA


 What are the costs

and benets of
applying MFCA to (i)
not-for-prot, (ii)
service and (iii) SME
 What issues arise
when applying MFCA
across different industry sectors?
 How does national
culture affect the
implementation and
effectiveness of
 What is the current
state of knowledge
concerning MFCA in
organisations across
different settings
(e.g. industries,
countries etc)?
 What are the key
factors or drivers
associated with
 What are the barriers
to MFCA adoption?
 What do organisations see as the
anticipated benets
associated with
MFCA activities?
 To what extent do
institutional pressures inuence the
decision to experiment with MFCA?
 What were the primary factors that
encouraged early
adopters to engage
with MFCA? (E.g.
were they strategically oriented or
 To what extent did
the early adopters of
MFCA experience
benet in the medium and long term?
 Under what conditions will MFCA
result in tangible
economic and environmental

Case studies;
comparative case
study; survey based
statistical research;

To what extent does the

way in which MFCA
data is collected and
used relate to

 How can MFCA data

(which is primarily
past oriented) be
used to support
future oriented
 Under what conditions will the use of
MFCA on an ad-hoc
basis be effective?

Case studies;
comparative case
study; interviews.

 Which functions are

involved in preparing
the data for MFCA?
 How is MFCA data
used by managers
within different
 How is MFCA information communicated between
different organisational departments?

Case studies; survey

based statistical
research; interviews.

How widespread is
MFCA adoption in

Why do organisations
choose to
incorporate MFCA
into their activities?

Why do organisations
choose to abandon
MFCA activities?

To what extent do the

benets associated
with MFCA, as
presented in the
normative literature,
manifest when
applied to actual
Which functions are
involved with MFCA
in actual

Survey based statistical

and qualitative

Case studies; survey

based statistical
research; interviews.

Case studies;

Case studies; survey

based statistical
research; interviews.

adoption. For example, Lang et al. (2005) posit that the use of ow
cost accounting as an isolated analysis will still provide useful information on cost savings and environmental improvement potentials. When used in this way the authors suggest that the
process does not need too much effort (Lang et al., 2005, p. 147).
However, when MFCA is used for the purpose for which it was
designed, as an addendum to the existing cost accounting system,
Lang et al. (2005, p. 147e8) suggest the process becomes much
more difcult requiring a lot of effort and know how.
Many of the case studies that investigate MFCA as discussed in
Section 6 are arguably based on a single cost assessment that is
used to identify opportunities for both economic and environmental improvement (Jasch, 2006). This information is then used
for benchmarking purposes and to initiate changes that improve
both material and energy efciency (Schaltegger et al., 2012). Thus
it may be that the value of MFCA will be realised, not as a routine
tool, but as an ad-hoc process for assessing efciency and cost
savings potentials (Lang-Koetz et al., 2006). This could be undertaken on an annual or bi-annual basis or whenever it was deemed
necessary by management (i.e. when considering investment in
new plant or developing new products). While it can be argued this
would impair the controlling function associated with MFCA (LangKoetz et al., 2006; Schaltegger et al., 2002), a number of benets
would remain intact. This approach may also be useful when
applied to the supply chain as it would remove the need for the
ongoing coordination of information between organisations
(Weigand and Elsas, 2013). In order to understand this potential it
would be useful to conduct comparative, longitudinal casework in
which both approaches are considered.
Finally, it may be useful to consider cross-national differences in
MFCA application. Although limited, the survey-based research
reported in Section 6 suggests there may be differences in MFCA
knowledge and adoption across cultures (Burritt and TingeyHolyoak, 2012; Kokubu and Nashioka, 2005; Schaltegger et al.,
2011), although it can be argued cross-national studies are largely
absent within existing literature. Given that the development of
MFCA has been inuenced by two distinct and disparate cultures in
both Germany and Japan (IFAC, 2005), as discussed in Section 4, it
may be that one size does not in fact t organisations operating in
every country. For example, Section 6 discusses the application of
MFCA in supply chains as being potentially hindered by problems
with the collection of data and condentiality (Weigand and Elsas,
2013). It is possible this may be more problematic in certain cultures (Deegan, 2007). Thus existing guidelines may need to be
amended via the inclusion of appendices targeted towards particular cultures and countries. However, at this time such arguments
are only speculative and additional research is required to ascertain
whether such action would help or hinder the further adoption of
MFCA activities by companies.

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7.2. Recommendations for future research

As can be seen from the preceding discussion, there are many
areas in which the MFCA literature needs to be developed and
many questions that still need to be addressed. In order to do this,
there are two primary recommendations that can be made by
drawing on the literature presented in Section 6.
First, it is evident that to the present time the research methods
used to investigate MFCA in practice have been extremely limited.
While the focus on action-based case work is no doubt important, it
overlooks the vast array of methodological approaches and tools
that are available to the contemporary researcher. In summary,
survey-based research is scarce, interview based research nonexistent, and the use of statistical analysis beyond basic percentage counts of relatively small samples virtually absent. As may be
expected, the current one dimensional mindset severely limits the
generalizability of research ndings and may have contributed to
the rut in which the MFCA literature now nds itself.
Neuman (2006) argues that different research methods, as well
as qualitative and quantitative research designs, should not be
viewed as being in competition with each other but rather as
different tools that complement each other. By observing MFCA
from different research perspectives it is likely that a more accurate
picture of current development will be able to be ascertained; this
may include the identication of barriers and enablers to implementation (Neuman, 2006). Survey-based statistical research in
particular may allow for more generalized ndings as well as recommendations for the use and promotion of MFCA within different
settings. Thus, it is the recommendation of the authors that researchers in this eld consider alternate research methods and
research processes to complement existing approaches as this will
ultimately result in a more diverse and complete understanding of
MFCA as a topic.
Second, thus far theoretically informed research is virtually nonexistent within the MFCA literature. Indeed, the authors could not
locate one theoretically informed study in which MFCA was the
primary focus. This situation is not unique to MFCA as theoretical
studies are scarce across the entire EMA discipline (Burritt, 2005;
Jalaludin et al., 2011) which raises the question for future
research of why this might be so. Parker (2005, p. 849), in discussing the state of environmental accounting research, notes that
theory and practice are interrelated and arguably have the potential to be mutually contributing, whereas in contrast Thomas
(1997) argues that theoretical perspectives can constrain rather
than enlighten further enquiry.
There are several reasons why development of a theoretical
foundation for MFCA might be of use in this applied science. Given
its role in providing structure and a way to organise knowledge,
theory can assist in answering many of the questions identied
within this literature review. For example, it has been suggested a
logical progression at this point in the development of MFCA as a
management tool is to understand when MFCA works. Drawing on
extant management and environmental accounting knowledge
contingency theory may provide a foundation by which the circumstances under which MFCA is used and found to enhance
economic and environmental performance will be able to be
identied (Bouma and van der Veen, 2002; Christ and Burritt, 2013;
Qian et al., 2011). Research drawing on diffusion of innovation can
then be used to understand how MFCA can be promoted to different
organisations and business segments (Rogers, 2003). Diffusion of
innovation can also be used to identify potential barriers to MFCA
adoption as well as variables that may facilitate the implementation process. Theory can then be used to answer why organisations
are or are not using MFCA. Potential frameworks that might be
useful in this regard include new institutional sociology (Bouma

and van der Veen, 2002; Qian and Burritt, 2008), legitimacy theory and stakeholder theory (Deegan, 2007). While this list is not
exhaustive and there are other theoretical approaches and paradigms that may be able to contribute to the further development of
this eld, it does offer a starting point based on established research
on related topics.
The information presented in this review would seem to suggest
there is much that is not known about MFCA in practice. Yet in what
could be described as an interesting development, there has also
been increased work in recent years seeking to develop the tool
beyond its original purpose i.e. to incorporate a life cycle perspecrea, 2011; Nakano
tive (for example, see: Jindrichovska and Purca
and Hirao, 2011; Schrack and Prammer, 2013). Nonetheless it can
be argued these efforts may be premature. While it is important, as
noted in Section 6, to further the current understanding of how
MFCA information interacts with other EMA tools and information
systems (Lang-Koetz et al., 2006; Strobel and Redmann, 2002), this
does not mean it is necessary to reinvent the wheel; especially
when our understanding of MFCA in its original form is so limited,
due in part to the narrow and underdeveloped nature of extant
empirical evidence in this eld. Thus it is the authors' belief that it
is now necessary to consolidate what is already known about MFCA
and what needs to be known before seeking to develop the tool
As it is, the recent release of ISO 14051 may represent a gamechanging event in the MFCA eld. Observation of how (or indeed
if) this event alters perceptions and the overall take-up of MFCA by
business in both the short and long-terms is likely to become a focal
point. The following section will now conclude the paper.
8. Conclusion
MFCA is a relatively new tool designed to support decisions that
will lead to improved economic and environmental performance
via the explicit recognition of material and energy ows within
business operations, as well as a greater understanding of how
these ows relate to different areas of business expense. The potential importance of MFCA as a business tool has recently been
recognised with the release of ISO 14051: Material Flow Cost Accounting. Given this development it was suggested that the future
will see increased interest given to MFCA by both academics and
organisations from around the world. Thus, this article takes stock
of what is currently known about MFCA, and what needs to be
known, in order to ensure promotional and research efforts are
directed towards the areas where they will make the greatest
The review covered several areas. These include: a basic overview of what MFCA is in the context of more generic EMA knowledge and development; the development of MFCA as a
management tool; the MFCA process; and a review and synthesis of
empirical evidence concerning MFCA in practice. Finally, suggestions for a research agenda for the future were derived based on the
current state of play of evidence about the usefulness of the MFCA
While every effort has been made within this review to provide
a comprehensive and balanced synthesis of available MFCA literature, the observations made herein should be viewed in light of
several limitations. As noted in Section 4, MFCA was originally
developed in Germany and Japan. As a result much of the early
work to emanate from these countries was designed for use by
domestic organisations. Thus it is acknowledged there are publications, especially from the late 1990s and early 2000s, that are
only available in German or Japanese. These papers were not
considered within this composition which, as noted in Section 6,
was limited to publications available in English. While it is not

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believed the decision to exclude these papers would be sufcient to

undermine the value of this review, it is possible some of the areas
discussed, and some of the research questions that are proposed,
may have been covered elsewhere.
The extant literature that was analysed within this review
revealed a sub-discipline of EMA that has been largely driven by
normative arguments and attempts to appeal to common sense.
The review nds empirical evidence concerning MFCA in practice is
underdeveloped and existing knowledge has been curtailed by
what could almost be described as a one-dimensional mindset on
the part of MFCA researchers. It was not the purpose of this review
to either discourage action-based research or to impugn its value,
however there would seem to be an unwillingness by researchers
to move beyond action-based case studies in the further development of this eld. In addition, there is a noticeable lack of theoretical explanations for MFCA development and implementation.
MFCA research to date has made substantial inroads to justifying additional investment in the development of MFCA as an
economic and environmental management tool. Indeed, there are
numerous case studies in which the value of MFCA to business
organisations has been empirically supported. Nonetheless, it
would appear the time has come to complement and enhance
existing knowledge with new perspectives and approaches. This
undertaking should include, not only new research methods and
theories, but also asking different types of research questions as
developed in the paper.
The authors would like to thank participants at a workshop on
Material Flow Cost Accounting held at the School of Commerce,
University of South Australia, for their very useful comments. In
addition, the authors are grateful to three anonymous reviewers for
their constructive feedback which greatly improved the quality of
the paper.

Environmental Management Accounting

Environmental Performance Indicators
Enterprise Resource Planning
Hunting Federation of Macedonia and Thrace
International Federation of Accountants
Institut fr Management und Umwelt (Institute of
Management and the Environment (Germany))
International Organization for Standardization
Japanese Industrial Standards Committee
Key Performance Indicator
Life Cycle Assessment
Ministry of Economy, Trade and Industry (Japan)
Material Flow Analysis
Material Flow Cost Accounting
Plan, Do, Check, Act (from ISO 14051)
Small and Medium-sized Enterprises
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