MUNHUMUTAPA SCHOOL OF COMMERCE

NAME: REG NUMBER CELL

GONONDO NEVER M211269 0784102494

PROGRAMME: BCOM HONOURS ACCOUNTING

DEPARTMENT: ACCOUNTING AND INFORMATION SYSTEMS

COURSE NARRATION: ADVANCED ACCOUNTING

COURSE CODE: HACC425

MODE OF STUDY: BLOCK RELEASE

LECTURER’S NAME: MR NYAKUWANIKA

LECTURER’S COMMENT:
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Table of contents

Introduction………………………………………………………………………………………2

Land Degradation………………………………………………………………………………..3

Environmental Management Accounting Practice (EMAPs)…………………………...……4

Introduction

One of the biggest concerns to nations around the world is the ecological disaster. More than
ever, the future of planet Earth presents several developmental challenges for our generation.
Unprecedented environmental degradation is being caused by human activities that influence
every area of land and water, including overpopulation, rapid industrialization, increased
consumption, unrestrained technology, and other human activities. Zimbabwe in particular and
other African nations used Westernized environmental conservation techniques, but these had
little impact. However, in Africa, the entire interaction between people and the natural world,
including practices like land use, is deeply rooted in religion and spirituality.

Zimbabwe is currently suffering from a myriad of environmental conservation problems in

addition to destabilizing economic and political problems. As a result of the growing crisis of
environmental degradation, the government has developed divergent policies, acts, and
resolutions to address the problems. While scholars have emphasized the significance of
environmental legislation, the continual environmental degradation in the country questions the
resource management strategies currently in use.

Environmental Management Accounting (EMA) has taken center stage in companies with high
environmental impacts. The aim of this discussion is to assess how Environmental Management
Accounting (EMAPs) may help alleviate environmental degradation being caused by the
extractive sector in Zimbabwe’s mining sector and extractive industries.

EMAPs allow organizations to implement various practices such as energy accounting (EA),
water management accounting (WMA), material flow accounting, biodiversity accounting, and
carbon management accounting (CMA) for improved financial and environmental performance.
EMAPs help organisations measure their business's environmental impact and allocate related
costs and earnings/savings gained from environmental activities (Javed et al., 2022).
The aim of the discussion is to present corporate greening through the lens of sustainability and
illustrate how EMAPs can assist gold mining organizations to become greener. Gold mining
organizations may have to adhere to a number of environmental regulations, the most
recognized regulation being “The OECD Due Diligence Guidance for Responsible Supply
Chains of Minerals from Conflict-Affected and High-Risk Areas” [World Gold Council]. In
addition, EMAPs could assist these organizations in decreasing their environmental footprint by
following the flow of materials and money through their operations to reduce waste and wasteful
expenditure. The conceptual EMAPs framework developed in this article aims to address some
of these concerns by providing valuable insights to decision-makers on ways of integrating
environmental issues into the core industrial competitiveness.

EMAPs involve conducting comprehensive Environmental Impact Assessments (EIAs) to

identify and evaluate the potential environmental effects of extractive activities. EIAs help in
understanding the specific impacts of these sectors on the environment. (Nyabeze et al., 2019)
By recognizing the specific areas and activities that contribute to degradation, EMAPs enable
targeted interventions and management strategies. Murwendo, T., & Makurira, H. (2019)

Land degradation

Natural resources are the building blocks of life on Earth (we live, produce, survive, and earn
from it). Sub-Saharan Africa is endowed with abundant natural resources such as forests, oil
and gas reserves, mineral deposits, and water resources. Many people in sub-Saharan Africa
depend on natural resources for their livelihood. However, most natural resources (land, air,
minerals, wildlife, forests, and water) are degrading at an alarming rate, raising global concerns
about their long-term management (Herbst 2020; Gogoi 2021). Natural resources in Africa have
been depleted due to abuse and poor management, which has resulted in environmental
problems (Aluu 2019). This has resulted in increased natural resource scarcity and climate
change in some African regions. For example, soil erosion and deforestation decrease the
amount of fertile soil available for agricultural production and endanger biological diversity,
which could affect climate change.

Despite the positive contribution of the mining sector to economic development, the sector has
also brought about hardship in local communities through pollution of water and air; lost grazing
and agricultural land; the creation of unprotected mining pits; exploitation and depletion of
natural resources; as well as forced eviction and relocation of communities without fair
compensation. In light of the importance of sustainability based on the SDGs and Agenda 2063,
it is apparent that the gold mining industry also needs to decrease its environmental footprint. In
adherence, the World Gold Council reported in 2019 that they launched the Responsible Gold
Mining Principles (RGMPs) to ensure all stakeholders are aware of how responsible gold mining
is defined.

In turn, extreme droughts can hinder people’s ability to raise livestock and grow food crops. That
means farmers and pastoralists must adapt to new water regimes in order to maintain their
livelihoods and well-being (Kabede et al., 2019). Similarly, natural resources are currently under
threat from ever-increasing population and economic growth needs, as well as urbanization,
trade, and industrialization, all of which pollute the environment (Byaro et al. 2022; Opuala et
al. 2022).
THE IMPACT OF MINING ON THE ENVIRONMENT
The increase in production meant that the number and size of mines increased, leading to social
and environmental damage, creating more conflicts and putting pressure on the mining industry
to enhance its performance on both social and environmental fronts (Tost et al., 2018:969). The
social and environmental impact of mineral development could compromise public acceptance
of the social sector, as reflected in the resource curse debate (Mancini & Sala, 2018).

The mining business can be seen as a long-term, networked value chain, starting with the
exploration of mineral resources, continuing with site design, construction, and operation, and
ending with ultimate closure and rehabilitation, lasting anywhere between 10 and 100 years or
more (Syahrir et al., 2020) Compared with underground mining, surface mining can destroy
ecosystems and affect their service values through direct occupation and indirect impact on the
neighbouring ecosystems (Qian et al., 2018:138).

Besides directly destroying the ecosystem, mining development also indirectly impacts the
surrounding ecosystem (Qian et al., 2018:139). After depleting the natural resources, mine sites
are abandoned. In most cases, financial provisions for rehabilitation are not available, resulting
in the sites being abandoned without proper rehabilitation measures being taken ( Matshusa &
Leonard, 2022). Although mining is a vital part of the economies of many countries, particularly
those in the developing world (Schueler et al., 2011:528), local economies rarely benefit from
mining operations, despite the negative consequences on the environment and society as a
whole (Mateus & Martins, 2021).
At most, mining development causes an increase in people from outside the area (Hresc, Riley
& Harris, 2018:64), which increases the demand for housing and raises rentals in communities
with insufficient housing supply (Haslam Mckenzie & Rowley, 26
2013), causing a rise in housing prices and cost of living (Hresc et al., 2018). The need to
increase the provision of a few ecosystem services, like food production, has altered more than
half of the planet's land use (Voinea et al., 2020). Conflicts arise from concerns about livelihood
security and environmental degradation. There is a perception that environmental performance
has not improved in proportion to the profits generated by mining organisations (Church &
Crawford, 2020). This may be due to governments prioritising economic growth and 27

poverty alleviation over the negative impact on local communities in mining areas (Hilson &
Maconachie, 2020). Mining is welcomed in some communities as a source of new jobs and
development opportunities, but in other communities, it has sparked conflicts, especially where
mines compete for land with other stakeholders (Ranängen & Lindman, 2017:43). Lack of
defensive measurement of the effects of mining on host communities may be the cause of the
disregard for the welfare of the host community in the mining areas (Li et al., 2017). Therefore,
having in place a framework that integrates several EMAPs such as MFCA, LCC, and ABC for
the gold mining sector may provide a solution to some of its challenges since MFCA aims to
reduce waste, LCC assesses environmental cost, and ABC is concerned with cost assessment
and environmental cost measurement.

Environmental management accounting practices (EMAPs)

EMA is described as the identification, collection, analysis, and application of physical

information on the usage, flows, and destinations of energy, water, and materials, as well as
financial information on environment-related costs, earnings, and savings for decision-makers
(Javed et al., 2022)

EMA has different practices to measure the flow of material (physical units) as well as money
(monetary units). These are called environmental management accounting practices (EMAPs)
which include, amongst others, activity-based costing (ABC), Life Cycle Costing (LCC), and
material flow cost accounting (MFCA) [United Nations]. These practices may enable the gold
mining industry to identify and decrease waste and, at the same time, decrease costs, thereby
increasing their profitability.

A combination of methods should be applied in order to measure environmental costs more

accurately [Kokubu, K.; Campos, M.K.S. et al]. According to [Kreuze, J.G. et al.], when, for
example, ABC is used with LCC, it can improve productivity and efficiency, thereby leading to
higher net margins. Therefore, when material flows are traced within organisations and
allocated back to the cost centre responsible for environmental impact [Du Plessis, A. et al.], it
will improve environmental performance and ultimately profitability. According to [Khataie, A.H.;
et al], the contribution of an organisation’s activities to green development and growth need to
be established, as establishing a monetary value for sustainability will assist in the identification
of polluting activities. For example, activity-based management (ABM) identifies activities which
may not be adding value, and which can be reduced or eliminated [Kreuze, J.G.et al].
Organisations are increasingly becoming interested in reducing the environmental footprint of
their activities and products [Moreno, M.L.P. 2021]. ABC can, for example, identify
environmental cost drivers, which in the end allocate environmental costs to certain products,
resulting in correct cost assignment to objects [Khataie, A.H et al]. Therefore, adding ABC to the
set of integrated tools should assist the gold mining sector in the identification of non-value
adding activities, resulting in their elimination and cost saving.

Wassie (2020) argued that urbanization has resulted in uncontrolled degradation of land, forest,
water, air, and minerals. Similarly, Fenta et al. (2020) claimed that countries in sub-Saharan
Africa (SSA) have experienced changes in land cover and land degradation, altering natural
ecosystems as a result of human activities. In developing world, increased carbon dioxide
emissions, oil spills and flaring, massive deforestation, and land degradation are all major
environmental issues (Adedoyin et al. 2021). Furthermore, increased exploration of natural
resources, such as agriculture and mining, could result in higher carbon dioxide emissions and
environmental damage due to deforestation (Nathaniel et al. 2021). Meanwhile, the use of
renewable energy has been more adopted in developed countries compared to sub-Saharan
Africa as an attempt to improve environmental quality (Obiakor et al. 2022).
Environmental responsibility is not only a way to improve an organisation's image, however: it is
also a way to attract Foreign Direct Investment (FDI) and a criterion taken into consideration by
stakeholders (Lee, 2020). Environmental responsibility, part of Corporate Social Responsibility
(CSR), has been observed to communicate between an organisation and its stakeholders. It has
been noted that environmentally responsible organisations tend to obtain unsecured loans
(Yoon& Lee, 2019; Chen et al., 2020). EMAPs help organisations measure their business's
environmental impact and allocate related costs and earnings/savings gained from
environmental activities (Javed et al., 2022).
EMAPs have been observed to be essential in addressing negative ecological burdens from the
production processes (Christine et al., 2019:458). EMAPs have gradationally been examined
and used as a management tool to deal with environmental burdens and orthodox practices
(Qian, Burritt & Monroe, 2018). EMAPs have been recognised to be key in encouraging
environmental redress and enhancing organisational responsiveness (Schaltegger, 2018). In
addition, EMAPs have been argued to have the potential to assist management by providing
information that should address the environmental impacts of organisational activities (Tran et
al., 2020). EMAPs, such as Material Flow Cost Accounting (MFCA), Life Cycle Costing (LCC),
Activity Based Accounting (ABC), the Sustainability Balanced Scorecard (SBSC), and carbon
accounting, have been found by a number of academics to be crucial for determining how an
organization affects ecological conditions (Jasch, 2009; Henri & Journeault, 2018; Lu et al.,
2018; Nouri, Nikabadi & Olfat, 2019).

According to ref. [DiMaggio, P.J.; Powell, W.W. 2020], stakeholders view the adoption of
sustainable practices as being proper and appropriate, and thereby giving legitimacy to the
operations of an organization. Organizations now seek ways to minimize their exposure to
environmental risks and take a proactive approach to environmental management owing to
increased environmental impact of their actions and increased attention [Phan, T.N.; Baird, K
2019].

The ABC method, developed by Cooper and Kaplan, looks at actions pertinent to manufacturing
a product to identify profitable goods, worthwhile clients, processes with or without value
additions, and areas needing improvement (Weygandt et al., 2020). ABC shifts management's
attention away from the customary short-term planning, control, decision-making, and product
costing to a more strategic, integrated, and competitive method of looking at internal structures
(Hansen et al., 2021), which motivated its adoption. Information obtained from ABC has been
used for environmental management (Emblemsvag & Bras, 2012; Jimenez et al., 2020), hence
the need to have it within the integrated framework. Unlike traditional costing, ABC assigns
costs to many cost pools representing the most significant activities in the production process,
resulting in identifying cost drivers suitable for each cost. Costs are assigned from activity pools
to each production job in proportion to the amount of activity used up by that activity (Alsayegh,
2020). ABC, therefore, assigns costs to cost objects based on activity drivers that accurately
measure activity consumption. Mining is naturally capital intensive, and ABC was selected since
it offers more accurate costing measurement, which is essential for decision-making.

The Mining Association of Canada’s commitment to responsible mining, Towards Sustainable

Mining (TSM) (Mining Association on Canada [MAC], 2021), aims to enhance the sector's
reputation by improving its environmental, social and economic performance while the
International Council on Mining and Metals’ (ICMM) framework promotes basic principles of
good practice, ethical management and sustainable development (International Council on
Mining and Metals [ICMM], 2022).
LCC considers operational costs and investment expenses over the product's expected lifetime
since it adopts a broad view of the lifecycle (Kambanou, 2020). Hence, it is plausible that
through integration, one tool might work on managing material costs, and another would assign
relevant costs. At the same time, another considers investment costs, thereby promoting
greening within the gold mining sector.

Environmental Impact Assessment (EIA)

Environmental Impact Assessments (EIAs) play a crucial role in identifying and evaluating the
potential environmental effects of extractive activities. (Dykes et al 2020) EIAs are systematic
processes that assess the environmental consequences of proposed projects, such as mining
operations, before they are approved and implemented. (Mugabe et al., 2019) By conducting
EIAs, the environmental impacts of extractive activities can be effectively evaluated, and
appropriate mitigation measures can be put in place. (Dykes et al 2020) Here are some key
aspects of the role of EIAs:
1. Identification of Potential Impacts: EIAs help identify and anticipate the potential
environmental impacts of extractive activities. (Mapamula & Kurwakumire 2021) This includes
assessing the direct and indirect effects on various components of the environment, such as air
quality, water resources, soil stability, biodiversity, and socio-economic factor. Wald, D., &
Manly, J. (2020, April 21) The EIA process involves a thorough analysis of the project's scope,
location, and anticipated activities to identify the potential environmental risks and impacts.
(Mapamula et al 2020)

2. Evaluation of Impact Magnitude and Significance: EIAs assess the magnitude and
significance of the identified environmental impacts. This involves evaluating the extent,
duration, and intensity of the potential effects. (Fernando, Jabbour, & Wah, 2019 pp5) It helps
determine the scale of the impact, whether it is local, regional, or global in nature. (El-Korany,
2020) By quantifying and qualifying the impacts, decision-makers can gain a better
understanding of the potential consequences and prioritize appropriate mitigation measures.
(Fernando, Jabbour, & Wah, 2019 pp5).

3. Selection and Design of Mitigation Measures: EIAs provide a basis for selecting and
designing appropriate mitigation measures to minimize or eliminate adverse environmental
impacts. (Jolly, H., 2021) The assessment process helps identify feasible alternatives and
technologies that can reduce the potential harm caused by extractive activities. (Ratti, C. &,
Conesa, 2021) Mitigation measures can include pollution prevention, waste management
plans, reclamation and restoration plans, biodiversity conservation strategies, and community
engagement initiatives. (Hilson & Moonsammy, 2021)

4. Integration of Stakeholder Input: EIAs facilitate the integration of stakeholder input into the
decision-making process.( Hilson & Moonachie, 2020) They provide opportunities for affected
communities, indigenous groups, NGOs, and other stakeholders to voice their concerns, provide
local knowledge, and participate in the evaluation of potential impacts. (Ahmed et al., 2021)
This inclusive approach helps ensure that the EIA process considers a wide range of
perspectives and promotes transparency and accountability. (Hilson & Moonachie, 2020)
5. Compliance and Permitting: EIAs are often required by regulatory bodies as part of the
permitting process for extractive activities. The findings and recommendations of the EIA help
regulatory authorities determine whether a project should be approved, modified, or rejected.
(Atakhanova, 2021 &Hamann, 2020) Compliance with the EIA process and its associated
requirements is essential for obtaining the necessary permits and licenses to commence
extractive operations. (Hilson & Nel, 2019)

Overall, EIAs serve as critical tools in identifying, assessing, and managing the environmental
effects of extractive activities. By providing a systematic framework for evaluation and
mitigation, EIAs contribute to more sustainable decision-making, promoting responsible
resource extraction and minimizing environmental degradation. . (Atakhanova, 2021 &Hamann,
2020)

Promoting sustainable practices in the extractive sector

Promoting sustainable practices in the extractive sector is of paramount importance

due to its significant environmental, social, and economic impacts. The extractive
sector, which includes mining, oil, and gas extraction, can have adverse effects on
ecosystems, biodiversity, local communities, and long-term economic development if
not managed sustainably. (Hilson, 2021) Here are some key reasons why promoting
sustainable practices in the extractive sector is crucial, supported by relevant references
and citations:

Environmental Conservation: Unsustainable extractive practices can lead to

deforestation, habitat destruction, soil erosion, and water pollution, among other
environmental issues. (Arthur-Holmes & Abrefa Busia, 2022) Implementing sustainable
practices, such as reducing greenhouse gas emissions, minimizing waste generation,
and implementing land reclamation measures, can help mitigate these impacts.
(Ofosu et al., 2020) According to a report by the United Nations Environment
Programme (UNEP), sustainable mining practices can significantly reduce the sector's
environmental footprint and contribute to environmental conservation (UNEP, 2019).

Biodiversity Protection: Extractive activities often occur in areas of high biodiversity

value, posing a threat to unique and sensitive ecosystems. (Baffour-Kyei et al., 2021)
By adopting sustainable practices, such as conducting biodiversity assessments,
implementing habitat restoration measures, and minimizing the footprint of operations,
the extractive sector can play a vital role in safeguarding biodiversity. (Sovacool, 2021)
The International Council on Mining and Metals (ICMM) emphasizes the importance of
biodiversity conservation in its Sustainable Development Framework (ICMM, 2015).

Social Responsibility and Community Development: Extractive projects can have social
implications for local communities, including displacement, loss of livelihoods, and
social unrest. Promoting sustainable practices involves engaging with local
communities, respecting their rights, and ensuring their meaningful participation
throughout the project lifecycle. (Shen et al., 2020) This approach can contribute to
social license to operate and foster inclusive and equitable development. (Leuenberger
et al., 2019) The International Finance Corporation (IFC) provides guidelines on
stakeholder engagement and community development in the extractive sector (IFC,
2007).

Economic Diversification and Long-Term Benefits: The extractive sector has the
potential to contribute significantly to a country's economic development. However, a
heavy reliance on extractive industries can lead to economic vulnerabilities and a lack of
diversification. (Ahmed et al., 2021) Promoting sustainable practices encourages the
sector to contribute to long-term economic development by investing in local skills
development, supporting local businesses, and promoting value addition and
downstream industries. (Bettinazzi & Zollo, 2020) The World Bank highlights the
importance of economic diversification and sustainable management of extractive
resources (World Bank, 2019).

Climate Change Mitigation: The extractive sector is a significant contributor to

greenhouse gas emissions, primarily through energy use and the release of methane
during extraction and processing. (Polonsky & Ottoman, 2021) By adopting
sustainable practices, such as energy efficiency measures, transitioning to cleaner
energy sources, and implementing carbon capture and storage technologies, the sector
can contribute to global efforts to mitigate climate change. (Crilly & Sloan, 2012) The
Intergovernmental Panel on Climate Change (IPCC) emphasizes the need for
emissions reductions and sustainable practices in the extractive sector.

Overally promoting sustainable practices in the extractive sector is crucial to mitigate

environmental impacts, protect biodiversity, ensure social responsibility, foster long-term
economic development, and contribute to climate change mitigation. (Wushe &
Tawaziwa, 2021) The references and citations provided support the importance of
sustainable practices in the extractive sector and highlight the guidance provided by
reputable organizations and institutions in this regard. (Bridge, 2021)

References:
1. Aigbedo, H. An empirical analysis of the effect of financial performance on
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2. World Gold Council. Responsible Gold Mining. Available online:
https://www.gold.org/about-gold/gold-supply/responsiblegold (accessed on 18 August
2021).

3. Gulley, A.L. Valuing environmental impacts of mercury emissions from gold mining:
Dollar per troy ounce estimates for twelve open-pit, small-scale, and artisanal mining
sites. Resource. Policy 2017, 52, 266–272.

4. World Gold Council. Responsible Gold Mining. Available online:

https://www.gold.org/about-gold/gold-supply/responsiblegold (accessed on 18 August
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5. Phan, T.N.; Baird, K. The comprehensiveness of environmental management systems:

The influence of institutional pressures and the impact on environmental performance. J.
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6. Dubey, R.; Gunasekaran, A.; Childe, S.J.; Papadopoulos, T.; Wamba, S.F.; Song, M.
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