making in complex manufacturing operations, and ways to apply them to subassemblies or completed products. The DFE methodologies can be developed as a module of concurrent engineering practices or the product realization process that can facilitate the integration of environmental objectives and constraints in the design process directly. At the same time, there is a need to improve tangential systems, such as the accounting or supplier management systems, which affect design decisions indirectly.
Existing accounting systems can prevent modern firms from internalizing environmental costs and considerations and can compound difficulties encountered in effecting environmentally preferable changes. Environmental costs that are buried in overhead accounts are hidden from managers. As a result, these costs are not seen and cannot be controlled. The need to improve accounting systems is no trivial matter. Incentives (and disincentives) must be fed back to the appropriate decision makers.
Accounting systems must capture currently hidden and unaccountable costs, such as product-related legal expenses, regulatory costs, public relations expenses, and the opportunity costs of failing to adopt clean technologies (Todd, in this volume). There are, however, severe institutional barriers that prevent managers from getting the information necessary to pursue optimal environmental waste-reduction strategies. First, current accounting systems were not designed to capture much of the engineering and accounting data required for environmental decision making. Second, data that are collected and processed are usually aggregated in such a way that they lose their environmental information content (as well as managerial control). Finally, line managers are rarely made responsible for environmental costs.
If accounting practices are to be changed, important institutional barriers must be removed, and incentives must be provided to motivate aggressive and creative development of solutions to reduce or eliminate wasteful processes and practices. These steps are important because the compensation of managers is frequently based in part on profitability that results from reducing controllable costs. Managers, therefore, have strong disincentives to seek "full environmental costing" within the firm, because this would bring additional costs under their accountability. The paradox is that managers cannot act without adequate information, and yet they will not act voluntarily if the result is not recognized and may in fact hurt the measure of their performance.
From a sustainable development perspective, industrial ecology suggests that the flow rate of materials in the economy may have to be slowed. Stahel (in this