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Guest Seminar Lecture – MM CSR University of Trisakti
Friday, 15 May 2009
Material Flow Cost Accounting (MFCA) by Professor Katsuhiko Kokubu, Kobe University, Japan
The issue of Corporate Social Responsibility (CSR) has remarkably developed in recent years. There are getting more and more companies conducting CSR activities, however, very few are applying a waste management. Waste management is important as a real activity in protecting the environment. How this activity can be applied? Material Flow Cost Accounting (MFCA) can be one of the solutions.
Material Flow Cost Accounting (MFCA) has its origin in Germany and this tool has been introduced in major Environmental Management Accounting (EMA) documents in the international context. Japan is one of the countries that show a high concern about the development of EMA through MFCA. Some companies, such as Canon, Sekisui Chemical Co, Tanabe Seiyaku
(Pharmaceutical Company) have implemented MFCA to reduce waste, improving the cost efficiency and protect the environment.
In order to share the implementation and to introduce the important issue of MFCA, Trisakti University, CSR management post graduate program, has taken a step forward by conducting a guest seminar lecture on Friday, 15 May 2009 in Menara Batavia. This seminar was delivered by Professor Dr. Katsuhiko Kokubu, a prominent expert in MFCA, from Kobe University, Japan. Accompanying by his doctoral student; Mr. Kitada Hirotsugu, Professor Katsuhiko shared how MFCA application can create economic benefits, while at the same time improving the quality of environment, as well as a future model for cost accounting system replacing the traditional cost accounting.
Three basic concepts of MFCA can be explained as:
- MFCA traces the flow of materials in the process by monetary term as well as physical quantities and to find the points where material losses (i.e. wastes) occur in the production processes.
- In MFCA the cost of wastes (material losses) is calculated as another product, which is neglected in the traditional cost accounting.
- MFCA information supports managers to make better material-related decisions, with both economic and environmental goals in mind.
The next question is, how basically the above explanations can be a platform for MFCA role? This question can be answered because MFCA focuses on waste and process this waste to be another useful product which generating the hidden profit as a result. This improving profit is considered quite significant as reported by Canon in its 2008 Sustainability Report, that company was successfully reduced US$11.4 million of the cost of production through MFCA.
Further, the benefits of MFCA can be classified into internal and external. The internal benefit includes the increasing profit and improving productivity, while reducing bad environmental impact can be the most important external benefit. The concurrence of these internal and external benefits, then, will contribute to sustainable development. Having explained this, there is a clear link between the successful of MFCA implementation and the environment with the economy at an organization level.
Next, of course, there should be promoting steps for the useful of MFCA to manufacture industries. This action is needed not only to respond the emerging issue of environmental protection, but also an opportunity to improve productivity and profit for the companies. Implementing MFCA may be a great way to maintain a sustainable development during the economic crisis and prepare for the achievement of international standard. Yes, the international standard on MFCA aims to construct a common platform of this tool. The publication of the standard is expected publishing in March 2011 and it will be a strategic plan to introduce ISO in MFCA…….will we be ready?
By: Juniati Gunawan, PhD
Lecturer - CSR Post Graduate Program
Trisakti University - Jakarta
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