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Efficient Green Control (EGC) Encouraging Environmental Investment and Profitability
Efficient Green Control (EGC) Encouraging Environmental Investment and Profitability
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A. Tamas-Szora
1 Decembrie 1918 University Alba Iulia
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Abstract. The purpose of this article is to highlight the efficiency of the control in stimulating green
investment environment, sustainability and profitability of an economic company of aluminum
industry. Based on theoretical and empirical research methodology was conducted presentation of
environmental sustainability in the vision, objectives and strategy of the economic company in the
aluminum industry. It was focused on planning, monitoring and controlling investment activities and
the performance indicators used in highlighting the economic company based aluminum industry
investments. The results of the inspection were presented and analysed the documents synthesis
and reporting of green cost: sustainability balanced scorecard and sustainability dashboard. The
two situations provide a set of financial and non-financial useful economic company management.
The article concludes by emphasising the control efficiency in stimulating green investment activi-
ties of environmental, sustainability and profitability of an economic company aluminum industry.
Keywords: control, management accounting, sustainability balanced scorecard, sustainability dash-
board, aluminum industry.
*
For correspondence.
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The concept of control system for the decision is proposed by Johnson and
Kaplan in 1987. Four years later, Kaplan says that the system of management
control makes it possible to adapt to environmental changes, providing feedback
on performance, enables measurement of profit on products and customers and
helps in decision making capital investments1. During this period debut of the
concept of control, those responsible for inspection were composed of account-
ants or quality controllers who were only simple information about differences in
negative territory and did not provide precise and complete information manage-
ment carefully analysed. These issues had a negative impact on the management
control system. Research conducted subsequently focused on the need to reduce
costs, increase profits and eliminate waste. Thus, emerged methods of costing such
as economic value added2,3, costing activities4 or dashboard balanced containing
non-financial indicators5.
Other specialists project a control lever to highlight the effectiveness of a
company business strategy, providing a complete picture of a wide range of pos-
sible control types. In this regard, they offer two landmarks (interactivity and
diagnostics) underlying the use of management control system. Interactivity is
found especially in the case involving senior management or operational manag-
ers, while the diagnosis rests with accountants or quality controllers who must
provide their information. In other words, operational managers do not engage in
diagnostic component, while accountants and quality controllers takes on the role
of intermediaries managers without increased compensation component necessary
to achieve the goals set by operational managers. These issues leading to better
results, but does not reduce costs or loss. Considering all previous approaches and
Otley6 agrees with the use of non-financial indicators to measure progress to achieve
two goals: to report the company results and to motivate the people involved. In
his opinion, management control system has five main components: key objectives
and strategy plan, the level of performance rewards, feedback and future expecta-
tions7. These components were added other eight criteria that have been linked to
performance management: vision and mission, key success factors, strategies and
plan successful implementation, organisational structure, performance measure-
ment key level of performance, processes performance, financial and non-financial
indicators of performance8. The four remaining components were related to the
environment, context and culture: feedback flows and future expectations, types of
users, performance management and control system, the links between components
of performance management and control system. These issues have contributed
to the development of control system management, but the flow of information
obtained was solid and the report of management was too technical.
192
EXPERIMENTAL
The purpose of the research methodology was to reveal the scientific approach
designed to give an answer to the main question that we decided to go on this
path of knowledge: effective control work is stimulating investment in green
environmental, sustainability and profitability? Entire research process consisted
succession of very strict rules such as objectivity, rigor and probity, who helped
obtain valid results that can be reproduced. In research conducted, methodology
consisted of both theoretical research: (1) on concepts, approaches and existing
regulations in this area so far and customise their level of economic entities in the
aluminum industry and in empirical research (2) on the application of research
methods was done through an inductive approach as a result of deducing some
general conclusions, based on the results recorded by the data provided by the
economic company in the aluminum industry. Document analysis was done through
reading the literature very carefully selected which were based approaches and
fundamental principles of green and sustainability control, and accounting summary
documents provided by business company aluminum industry. Besides research
methods specified was widely used and comparative method to study different
approaches to the concepts and theories in the research area chosen different rules
and provisions of international regulations, to identify similarities and differences
between the analysed elements.
193
Table 1. SWOT analysis of the environmental performance of an economic company in aluminum
industry
Strengths Weaknesses
• System-monitoring of environmental • Reduced number of environmental pro-
factors; tection officers in each sector (section,
• System procedures to prevent or intervene workshop, office) with well-defined tasks
in cases of accidental pollution; in this area;
• Laws and regulations on environmental • Lack of a monitoring program by which
protection require a high level to improve information is transmitted instantaneous
environmental conditions, based on the values of the parameters or block diagram
best available techniques in the aluminum form of charts in real time.
industry.
Opportunities Threats
• Opportunities to bring technology and • Local government tends to destroy the
equipment; activity of the operator control without of-
• The interests of shareholders and local fering and effective support;
governments to solve environmental prob- • Communication with stakeholders, includ-
lems according to local environmental ing claims are intended to be transparent.
action plan that is based on the concept
of sustainable development.
Recommendations
Continuous improvement of activities, processes, products and environmental performance;
Continuous training and development of staff involved in the implementation of environ-
mental issues;
Environmental performance evaluation based on the proposed environmental objectives
and targets, indicators selected for evaluation so as to be relevant;
Participation in the environmental audit scheme (EMAS) which envisages the development
of Environmental Management Systems standards at European level.
194
Fig. 1. Mission and strategic goals of the economic company in aluminum industry
Table 2. State investment expenditures of the economic company in aluminum industry in 2014–2015
Year Gross profit Gross profit percent- Investment expenditure
(thousands RON) age allocated (%) (thousands RON)
provided realised
2014 460725.00 6 27643.50 27643.50
2015 518140.00 5 25907.00 25907.00
Source: Data provided by business company in aluminum industry.
196
Table 3. Development of consumption and costs with methane (CH4) the economic company in
alumina industry in the period 2010–2015 (section anodes)
Explanations Year Deviations
2010 2011 2012 2013 2014 2015 2015/2014
Consumption of CH4, $/t anode 15.4 14.4 19.6 19.6 14.7 18.9 + 4.2
Consumption of N, m³/t anode 190 186 212 159 85 92 + 7.0
Costs of CH4, $/1000 m³ 81 78 92.4 123.4 173.3 205.2 + 31.9
Source: Data provided by business company in aluminum industry.
Table 4. CO2 emissions from natural gas consumption of the economic company in the aluminum
industry in the period 2014–2015 (section anodes)
Environmental Calorific Total consumption Deviations
effect marsh gas (GJ/m³) (thousands nm³)
0.0363 2014 2015
64 350 59 810 –4.540
Greenhouse effect CO2 Pollution (t)
(Pollutant) 2014 2015
131 040 121 800 –9.240
Source: Data provided by business company in aluminum industry.
Table 5. Evolution of fluor total process emissions (mg/m³) the economic company in alumina
industry for the period 2014–2015 (all 3 sections)
Explanations Quarter I Quarter II Quarter III Quarter IV ELV
Section anodes 0.67 0.59 0.54 0.58 5
Section electrolysis 0.37 0.36 0.37 0.39 5
Casting Department 0.06 0.02 0.04 0.03 5
Quarterly average 1.06 0.96 0.92 0.98 5
ELV – emission limit value; Source: Data provided by business company in aluminum industry.
Based on the data in Table 2, ROI and EVA were determined as demonstrated
in Table 6.
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Table 6. Calculations of ROI and EVA for 2014 and 2015
Year
Explanations Deviations
2014 2015
Gross profit (thousands RON) 460725.00 518140.00 57415.00
Profit generated by investments 6225.00 4114.50 –2110.50
(thousands RON)
Assets (thousands RON) (invested 2002840.00 2370138.00 367298.00
capital)
Investments (thousands RON) 27643.50 25907.00 –1736.50
The cost of capital (%) 15.00 15.00 –
ROI (%) 22.99698569 21.79652302 –1.200462673
EVA (residual profit) 160299.00 162619.30 2320.30
ROI (2014) = 460 725 + 6225/2 002 840 + 27 643.50 = 22.996%; ROI (2015) = 518 140 + 4114.50/2
370 138 + 25 907 = 21.796%; EVA (2014) = 460 725.00 – (15% × 2 002 840.00) = 160 299.00
thousands RON; EVA (2015) = 518 140.00 – (15% × 2 370 138.00) = 162 619.30 thousands RON;
Δ EVA = 162 619.30 – 160 299.00 = 2320.30 thousands RON.
198
Fig. 2. Sustainability balanced scorecard of the aluminium company
DISCUSSION
Investments in environmental protection were made in financing its own economic
company aluminum industry in 2015 being 822900 thousands RON, representing
5% of the turnover of 413 214 thousands USD for a production of 218 429 t in
2015 and 2014 is the 1245 thousands RON, representing 6% of the turnover of
500 030 thousands USD, for a production of 240 010 t in 2014.
In all production sections through the equipment and technologies which
allow modern furnaces for automatic control of thermal process and ensure their
optimum thermal insulation it was reduced the specific consumption of gas with at
least 50%. This aspect is exemplified by station modernised anode furnaces where
the specific consumption of methane (CH4) is 642.07 m³/t anodes and upgraded to
the specific consumption of natural gas is 227.43 m³/t anodes.
199
Fig. 3. Sustainability dashboard of the aluminium company
CONCLUSIONS
Protecting the environment is ensured through investments made by companies and
entities interested in promoting compatibility between goods produced and financial
performance, thereby ensuring transparency of the image company and investor
behaviour. Together with organisations dedicated to environmental protection and
ensuring sustainable, economic entities aluminum industry began investing in en-
vironmental remediation and manufacturing greener products. Green controlling
intervenes is a guarantor of efficiency of environmental investments to help verify
green and cost analysis, and proposals for remedial actions necessary at a time.
Support, compliance and corrective measures lead to efficient process control,
quality and environmental investments, including practicing a good management
and obtaining notable financial performance. Reporting tools of sustainability are
key documents to ensure environmental performance, profitability of economic
entities, especially in substantiating the investment decisions of shareholders and
managers of economic entities.
200
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Received 5 December 2016
Revised 26 January 2017
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