Karli's PhD Thesis

Environmental life cycle costs in the Australian food packaging supply chain

By Karli Louise James

School of Accounting and Finance, Victoria University. A thesis submitted to the Faculty of Business and Law, Victoria University in fulfilment of the requirements for the award of Doctor of Philosophy (March 2003).

Abstract

There is increasing evidence that external and internal pressures are being placed upon companies to acknowledge, characterise and analyse environmental issues, impacts and costs. It has been argued that companies will increasingly be faced with responsibilities extending outside the factory gate to point of sale and beyond. Companies will need to adopt a life cycle perspective into the decision-making framework, to support managements' decisions regarding the environmental impacts and costs of activities and products.

The aim of this thesis is to explore the environmental impacts and environmental costs recognition and management within companies in the Australian food packaging supply chain. A grounded theory approach is used to develop propositions from the findings that can be tested in further research. A qualitative case study approach is undertaken using face-to-face interviews with Environmental Managers of twenty-seven companies that operate within the Australian food packaging supply chain.

The findings from the research span a broad range of issues. They demonstrate that the current environmental issues in the Australian food packaging supply chain are legislation (in particular the National Packaging Covenant - NPC), and management and minimisation of solid waste and emissions to air, land and water. The main drivers for companies to sign the NPC are to avoid the alternative (legislation) and to avoid the National Environment Protection Measure for Used Packaging Materials. The management and reduction of greenhouse gas emissions is a current and future issue to be addressed by companies and the main drivers for companies to sign the Greenhouse Challenge Program are to demonstrate public commitment and receive public recognition for reducing greenhouse gas emissions. Compared with voluntary programs such as the NPC and GHCP, the regulatory National Pollutant Inventory (NPI) program is seen to have a minimal effect upon the organisations, being more a compliance issue and part of normal management and reporting. This may be associated with the 'flexibility' that is provided within the frameworks of voluntary programs compared with the 'rigidity' of regulatory frameworks.

Companies generally provide environmental information in the company annual report before implementing an environmental management system and/or a stand-alone environmental report. Life cycle assessment is used by a small number of companies to collect environmental information about products and processes, though the findings of the LCA are not integrated back within the company. The use of environmental accounting techniques is limited and there is no consistent connection between actions taken on environmental issues and allocation of environmental costs. In terms of specific techniques, activity based costing is used more widely than value chain analysis and life cycle costing.

The thesis concludes by synthesising the findings into a series of propositions. These propositions can be used to further research into environmental life cycle costs within the Australian food packaging supply chain which may lead to the refinement of existing theories and generation of new theories.