Full Cost Accounting

An assessment method which identifies the direct and indirect costs of a product or service as well as the external costs (which may be harmful emissions to the atmosphere, water or soil) of its production and use. By gaining a more detailed understanding of the impacts of a product or service, the full cost of these impacts can be embedded into either the product or service or applied as a regulatory tax to better serve society. Manufacturers and service providers would be incentivised to improve on reducing the negative environmental and social impacts of their outputs, as this would reflect in lower market costs for their products and services. Customers would also be better informed on purchasing decisions, enabling them to align their decisions to improving sustainable practices.

(Source: Dominik Jasinski, James Meredith, Kerry Kirwan, ‘A comprehensive review of full cost accounting methods and their applicability to the automotive industry', Journal of Cleaner Production, Volume 108, Part A, 2015, Pages 1123-1139, https://doi.org/10.1016/j.jclepro.2015.06.040; https://www.sciencedirect.com/science/article/pii/S0959652615007696, accessed 13th March 2022)