Guidance Note on Environmental Costing by ICMAI
The “Guidance Note on Environmental Costing” issued by the Institute of Cost Accountants of India (ICMAI) in April 2025 is a timely and comprehensive document aimed at integrating environmental considerations into cost accounting practices. This guidance note responds to the growing need for businesses to measure, manage, and report their environmental impact in a standardized and systematic manner, especially in light of regulatory requirements like SEBI’s BRSR (Business Responsibility and Sustainability Reporting).
Brief Summary
The guidance note introduces the Holistic Environmental Costing (HEC) Framework, which enables organizations to identify, measure, and assign costs to their environmental impacts across the entire value chain. It leverages established cost accounting principles and adapts them for environmental applications, covering key impact categories such as GHG and non-GHG emissions, water, waste, and biodiversity. The framework supports not only regulatory compliance but also internal management, ESG reporting, and strategic decision-making.
Key Highlights and Bullet Points
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Provides a standardized methodology for environmental costing, aligning with cost accounting principles1.
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Introduces the Holistic Environmental Costing (HEC) Framework, mapping environmental costs across operations, management, and reporting layers1.
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Supports compliance with SEBI’s BRSR requirements, especially Principle 6 on environmental responsibility1.
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Details activity-based costing (ABC) and life cycle costing (LCC) as foundational methods for environmental cost allocation1.
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Facilitates data generation for regulatory reporting, ESG ratings, green finance, and internal efficiency improvements1.
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Offers practical guidance for assurance, verification, and digitization of environmental data1.
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Aims to build industry capacity through recommended certification programmes and awareness modules1.
Summary Table
| Feature | Description |
|---|---|
| Framework | Holistic Environmental Costing (HEC) |
| Key Impact Categories | GHG emissions, non-GHG emissions, water, waste, biodiversity |
| Methodologies Used | Activity-based costing, life cycle costing |
| Regulatory Alignment | SEBI BRSR (Principle 6), ESG reporting |
| Benefits | Standardization, assurance, digitization, strategic management, compliance |
For more details, you can access the full Guidance Note on Environmental Costing here.
