CHAPTER ONE
INTRODUCTION
1.1 Background of the study
Despite best efforts in Measuring Environmental Impact, industries continue to generate and discharge enormous amounts of wastes that pollute the natural environment and impose damages on households and other enterprises. Economists call these damages externalities because their costs typically fall not on the firms that discharge the wastes but on those that suffer the damages. Consequently, accounting systems don’t ascribe these costs to their sources or even record them systematically (Ashford, Ayers and Stone,2000).
Increasingly, however, companies are being forced to internalize these environmental costs, either through stricter environmental regulations or through liability for damages caused to others. Accurate measurement of a company’s true environment-related costs now offers a wide range of benefits: It provides management with a benchmark for tracking performance relative to peers or its own past performance. It can also serve as an external benchmark for investors concerned about the environmental performance of companies as well as their finances (Bartik, 2007). This research work therefore examines environmental cost measurement and its effects on investment return in United Cement company, Calabar. This becomes important, because it can serve as a measure of a company’s environmental exposure and the financial risk originating in its environmental performance. True cost estimates the firm’s emissions and wastes by using the firm’s own information sources or others, then assigns each category of emissions a monetary value by multiplying its physical quantity by a notional price based on economic estimates of the marginal damages of an additional ton of emissions (Caves, Christensen, and Diewert ,1982a).
1.2 Statement of the problem
In order to see if a company is viable as a going concern, environmental costs are vital to know for the long-run. The benefits to preserve the environment in terms of investment returns may be surprising. One of the growing global concerns is the issue of lack of awareness among so many business leaders. A private sector solution may be the best solution on a global scale. Other growing issues of concern relates to inability of companies to measure their cost of waste and land-use change. Ecosystems are vital to the performance of most companies, and integrating the true costs of extracting these services could significantly impact bottom lines in the future. Environmental costs are not always easily seen, but in taking a closer look, the results are scary. It is on this note that have prompted this research which focused on “environmental cost measurement and it effect on investment returns in United Cement Company (UNICEM) Calabar”.