What potentials do manufacturing companies have for identifying inefficiencies in their use of resources? Assessing the products with regard to their durability, functional usefulness, use of materials, etc. is only one aspect of the exercise. The actual production operations and the search for in-plant inefficiencies represent the other. In Germany, the material flow cost accounting (MFCA) method was developed years ago to tackle this requirement. It evaluates material losses in the company in monetary terms and thus points up the economic benefit of resource efficiency. MFCA first achieved practical relevance and large-scale application in Japan. Now there is even an ISO standard on the method. The article outlines the process and presents typical examples. It explains how a methodological bridge can be built to assess the loss of material in ecological terms too.

Environmental management in Japanese companies has rapidly developed during the last decade. The number of sites that have ISO 14001 certification was 8,169 in January 2002. This is the largest number in the world. Many environmental management tools, such as LCA, eco-labelling, design for the environment, environmental reporting and so on, are also becoming popular in Japan. Among these methods environmental accounting has seen the most remarkable development and spread in this country. Kokubu and Nashioka (2002) surveyed environmental reports published by companies listed in the first section of the Tokyo Stock Exchange Market and found that out of 1,430 companies (the total number of all listed companies) 257 published environmental reports in 2000 and 184 disclosed environmental accounting information in the reports. This figure is rather higher than in other industrialised countries, mainly because of the Ministry of the Environment (MOE) initiatives on this issue. MOE released draft guidelines in 1999 (MOE 1999) and published a final version in 2000 (MOE 2000). The guidelines recommend that companies disclose environmental accounting information (environmental conservation costs and benefits) in their environmental reports. According to Kokubu and Nashioka (2002), 106 companies (58% of those disclosing environmental accounting information) conformed their environmental accounting formats to the guidelines. They concluded that the influence of the guidelines on corporate environmental accounting practices was quite strong.

Sustainability management has become an essential issue for society and for business organizations. A number of management tools to resolve sustainability issues have been developed, for example, MFCA（Material Flow Cost Accounting）and LCA（Life Cycle Assessment）. Both, MFCA and LCA, have been published as international standards within the ISO 14000 ff Environmental Management framework（ISO14051/2 and ISO14040）. Both approaches differ though considerably in scope, methodology, objective, and result. MFCA focuses mainly on material efficiency of production processes within an organization. LCA concentrates primarily on the environmental relevance of products considering the entire life cycle “from cradle to grave”. While MFCA is part of the Environmental Management Standard, in practice it has been predominantly used to improve cost efficiency. LCA on the other hand has been used to show the environmental impacts along the life cycle of a product, regarding mainly the amount of Green House Gases, not regarding economic effects. But sustainability requests the consideration of all three “bottom lines” simultaneously: the economic, the environmental, and the social. Even though MFCA and LCA differ in many respects, they are linked to each other by a common core element: material（mass）flows and their transformation. Products（regarded by LCA）are the result of transformation or production process（regarded by MFCA）. In this paper, we show some issues of MFCA as a sustainability management tool, based on the international standardizations of ISO14051 and ISO14052. When we try to integrate MFCA with LCA regarding economic, environmental, and social aspects, we first show some of the methodological differences. The possibilities to integrate MFCA and LCA are explained by the case example of a German Solid Biomass Heat and Power Co-Generation Plant, including the calculation of a corporate Carbon Foot Print. While most MFCA case examples focus on an in-company scope this case study covers a wider boundary, from forest to consumers, embracing the entire life cycle. We discuss possibilities to include economic aspects into LCA as well as putting more emphasis on environmental aspects in MFCA. And we consider the analysis of social aspects within such an integrated approach. This paper shows the possibilities to integrate MFCA and LCA in order to develop a comprehensive and efficient tool of sustainability management, for corporate efficiency and for public information purposes.