Appendix 5. Method for Calculating Savings and Cost Avoidance for Baxter's Environmental Financial Statement

• Author: William R. Blackburn
• Pages: 709-712

Appendix 5

Method for Calculating Savings and Cost

Avoidance for Baxter’s Environmental

Financial Statement

The Baxter Environmental Financial Statement is show in Figure 3.7. This

Appendix 5 demonstrates how savings and cost avoidance are usually calcu-

lated for that statement. As used in the statement, savings has its ordinary

meaning: the reduction in actual cost between the report year and the prior

year. When costs go up, savings is negative. Cost avoidance, on the other

hand, is the additional cost, other than the report year’s savings, which was

not incurred but would have been if the waste reduction in material/energy

usage or waste had not taken place. Figure A5.1 below presents a scenario

demonstrating how savings and cost avoidance are computed.

709