MEASURING ECONOMIC AND

SOCIAL IMPACT
PREPARED BY:
No Name Student ID
KIM
KIMKIM
KIMRIVER’S
RIVER’S
1. Amyra binti Ameran 2017639072
POLLUTION
POLLUTION
2. Nik Nor Najwa binti Nik Zainuddin 2017638998
3. Nor Salwani binti Samsudin 2017639284
4. Nurul Farhana binti Zulkifli 2017668544
5. Siti Nurul Ain Sofea binti Mohd Nawi 2017639006

PREPARED FOR : ASSOC. PROF. DR. NORZIATON ISMAIL KHAN

GROUP : AC220 8H
 Environmental Cost Management
A specialised part of the management accounts that focuses on things such as the
cost of energy and water. It is important to control the cost associated with
environmental impacts of company’s big operation.
 Environmental costs
• The costs that an organisation incurs to prevent, monitor and report
environmental impacts.
• It includes the costs an organisation incurs when it does not comply
with environmental regulations, some of which may extend well into
the future.
 Importance of environmental cost management

• Society as a whole has become more environmentally aware about the

carbon footprint and recycling has also taken place in many countries
• Environmental cost is huge for some companies, especially in highly
industrialised sectors
• Regulations are increasing worldwide and penalty is imposed for non-
compliance with environmental issue.
The case of Kim Kim River Pollution

In March 7 2019, it is
reported by The Star
that 2.43 tonnes of
chemical waste were
dumped into Kim Kim
River under a bridge
in Kota Masai, Johor.
Residents and students in
two schools nearby started
vomiting and fainting after
breathing in the strong
smell from the river
A total of 306 victims were admitted to hospitals or health
30 people were admitted to
hospital and the schools
which located 500 metres
from the dumping site were
ordered to close.
In March 14, the
number of victims rose
up to almost 1000
victims. The federal
government has passed
an emergency motion
and declared a state of
emergency over the
situation. The education
The Johor
ministry has also
Sultan has
ordered all 111 schools
pledged a
in and around Pasir
donation of
Gudang to close
RM1 million to
In March 13, the indefinitely.
assist the
number of clean-up.
victims rose to
506 and 34
schools were
ordered to close
One of the arrested
suspects was initially
expected to be
clinics after being affected by the toxic fumes. The two charged, but the
schools which were first affected had initially reopened, prosecution had
but were quickly closed. A total of 13 schools were
postponed the case
instructed to close. A resident in Kampung Bukit Pulai
informed that the river had turned black, with dead fish to collect the
and monitor lizards floating in the sludge, as reported by additional
The Star. information.

Following the police reports in March 9, three men were

arrested in March 11. They are related to the chemical
In March 8, the dumping as the owner of an illegal tyre recycling factory and
number of victims the owner of waste processing factory were among the men
hospitalised rise to 79 arrested.
Economic performance can also include broader measures of economic impact such as the organisation’s impact on the
organisation’s infrastructure and the organisation’s financial relationship with the government.
 The organisational structure determines how the roles, power and
responsibilities are assigned, controlled, and coordinated, and how
information flows between the different levels of management.

Organisation’s financial relationship with the government can be defined as

the main goal of businesses is to make a profit and governments' goal
is to ensure economic stability and growth. Both of them are different but
very co-dependent. For this, the government and organizations
or businesses always try to influence and persuade each other in many
ways for various matters.
 KIM KIM RIVER POLLUTION
The organisational’s structures are not
really efficient and effective because
they could not provide a better
alternative to dispose the chemical
wastage.

“Wang and Yap failed to manage the

company's scheduled waste under Rule
3(1) of the Environment Quality
Regulations (Scheduled Wastes) 2005
under the Environment Quality Act
1974.”
 KIM KIM RIVER POLLUTION

“The two accused were also

alleged to have caused air
pollution for failing to carry
out regular monitoring under
the same rule.” Both of them are directors of the
company but failed to carry out their
duty and have caused huge damage and
bad reputation to the company. Their
action have indirectly impact the
stakeholders.
 KIM KIM RIVER POLLUTION
There is a rules that allows any industrial
business to dispose their wastage in the
river but it has the limitation provided by
Environmental Quality (Industrial Effluent)
Regulations 2009.

They may face difficulties to carry on their They do not follow the regulations and
business as usual in future because they have restrictions, it shows their ineffectiveness
breach the restrictions which can affect their and inefficient in handling their chemical
operation. wastage.

They have breach the trust given by authority

which can make them difficult to operate as
usual.
 SHAREHOLD
ERS

CREDITORS ECONOMY IMPACT (EXTERNAL)

CUSTOMERS

GOVERNMENT
Shareholders: Shareholders will refuse to invest in their company and will
resulting in reduction of capital. It is because the shareholders income and
interest will be impacted due to the problems. The company may face any
legal action that can involve the shareholders. To avoid from it, the
shareholders will invest in other company which is more secure. The company
will have financial problems when the shareholders withdraw their
investments.

Customers : Due to their action, it shows that they are not aware with the public
health and safety. Customer will boycott their product to show their support
toward the community and this will affect the income of the company. The main
goal of businesses is to make a profit but by ignoring the community will be a loss
to company.
Government : A legal action has been taken by government where the
company need to be closed for temporary, the directors and company
has been charged to pay fine. It has caused a bad reputation and may
impact the economy stability and growth of Malaysia.

Creditors: Company will have problems to pay for the loan or to apply for
financial assistance because the financial performance of the company is
not good. Creditors feel risky that the company may not able to pay the
loan. The same goes for suppliers to provide raw materials.
ECONOMIC IMPACT (INTERNAL)

LOGISTIC

COST OF
INVESTOR LEGAL
MATTERS
 LOGISTIC

• When the case of Sungai Kim Kim toxic pollution was cover almost on the electronic platform and
social media, the image of the said to be company was damaged. The company no longer gain the
trust from the public. This can lead to the closure of the factory. When the factory is close, the
owner need to find new places far away from the residency place and from the public in order to
minimize the risk of toxic pollution.
• Logistics can increased costs attached. Since most citizens don't want landfills, incinerators,
recycling yards or other trash facilities right next door - the "Not in my back yard," sentiment -
waste companies often have to site landfills a long distance from the areas they serve, which can
translate into sharply higher fuel costs when oil prices rise as they have lately.
• Some communities even refuse to allow waste companies to build landfills, meaning they have to
haul their trash to landfills owned by other cities or companies and pay so-called "tipping fees" to
dump there.
 INVESTOR

• A crisis in investor confidence means that the very people who support the
corporate system become disillusioned with the system. These attitudes are bad
news for the company economy because the wealthy are likely to reduce their
spending as a response to their drop in wealth and mistrust of the corporate
system.
• Company that said to be the caused of toxic pollution will face with stock prices
falls that can impact their existed investor decisions and finally will effect
company’s financial performance.
 COST OF LEGAL MATTERS

• As we know, victims of the Sungai Kim Kim toxic pollution, which include
fisherman and Pasir Gudang residents, have filed civil suits to seek compensation
amounting to RM30mil against 12 parties which includes the company accused of
causing the pollution and two of its director, Yap Yoke Liang and Singaporean
Wang Jing Choa, as well as a lorry driver of the company, N Maridass who was
charged with illegally disposing scheduled waste into Sungai Kim Kim.
• Since pollution are incurred by the firms who disposed the toxic waste and the
victims had to bare with the consequences. Company need to be ready to bare
with all the legal fees and court fees to encounter toward defendants that file the
lawsuits. At this rate, the cashflow of the company will decrease that will affect
company’s financial performance.
 WHAT IS SOCIAL IMPACT?

THE IMPACT OF AN ORGANIZATION ACTIVITIES ON

SOCIETY, INCLUDING THE BROADER COMMUNITY,

EMPLOYEES, CUSTOMERS & SUPPLIERS.

 Social Impact (Internal)
Social Impact (Internal)
●
The Kim Kim River’s pollution has negative social impact to the business practices and policies
related to working conditions, diversity in hiring and opportunities for advancement.
Business practices ●
P Tech Resources that were alleged to have caused the pollution in Kim Kim river will faced
lack of diversity in hiring because job seekers prefer to choose companies with the clean
and policies ●
image.
The opportunity for advancement for the company also will be decrease due to company
images that already have bad reputations.

●
Social impact can includes wages, adherence to employment laws, safety, training and
numerous labor practices.
●
The employees of P Tech Resources will be affected because the company will have
Employees financial crisis due to this issue and will have problem in paying employees wages.
●
Employees safety also will be affected as they are more exposed to the chemical due
to company ineffectiveness in managing the chemical wastage.
 Social Impact (External)
• The affected society could be
• Taking Kim Kim River’s case as a reference, the
organization’s activity has impacted the health one of the firm’s product
consumers and the immoral

Consumers
Community

of society negatively.
• For example, students and the residents nearby
the river had breathing difficulties and some activities done will tarnish
were even admitted into the emergency unit. their image as a whole.
• The second wave of air poisoning was aided by
hot weather combined with strong wind has • Consumers will feel devastated
made more people become sick and admitted
to the hospital. and betrayed by the firm’s
• People have to limit or even cease their daily action and thus stopped
activities due to the polluted air and water supporting their products.
resources.
 Conclusion
By adopting the Environmental Cost Management, it can help the
organization in:
• Identifying the cost-reduction model and to preserve or only launch
the product that is beneficial to the environment
• Determining the production cost that is related to the environmental
aspects
• Offering competitive advantages