Green Accounting: Concepts and Practices
Green Accounting: Concepts and Practices
Research Paper
Responsibility towards environment has become one of the most crucial areas of social responsibility. With the concept of sustainable development catching on rapidly, corporate and industrial houses across the world are increasingly incorporating the environmental element in their day-to-day business operations. They are clear in their perception that along with quality, safety of the environment too, is an important factor in making a business successful. Concern has increased for environmental degradation, which is taking place mainly in the form of pollution of various types, viz. air, water, sound, soil erosion, deforestation, etc. It spoils human health, reduces economic productivity and leads to loss of amenities.
Both environment protection and economic development are matter of great concern now days. Therefore, proper balance is required between the two. For this purpose, careful assessment of benefits and costs of environmental pollution is necessary in order to find the limits of environmental degradation and the required level of development. Green Accounting (also known as Environmental Accounting / Resource Accounting / Integrated Economic and Environmental Accounting / Sustainability Accounting) is an attempt to identify and bring into light the resources utilized and costs imposed on the eco-system by the activities of corporate houses. It is a system of accounting designed to record the benefits and costs rendered by the environment to a business corporation and costs and benefits tended to the environment by the same business corporation.
Thus, green accounting implies a process of economically recognizing the benefits derived by an organization from the environment and initiating remedial measures to reduce the possibility of environmental pollution through its business activities. The cost incurred on such remedial measures is known as shadow pricing, and is recorded in the green
Research Paper
Responsibility towards environment has become one of the most crucial areas of social responsibility. With the concept of sustainable development catching on rapidly, corporate and industrial houses across the world are increasingly incorporating the environmental element in their day-to-day business operations. They are clear in their perception that along with quality, safety of the environment too, is an important factor in making a business successful. Concern has increased for environmental degradation, which is taking place mainly in the form of pollution of various types, viz. air, water, sound, soil erosion, deforestation, etc. It spoils human health, reduces economic productivity and leads to loss of amenities.
Both environment protection and economic development are matter of great concern now days. Therefore, proper balance is required between the two. For this purpose, careful assessment of benefits and costs of environmental pollution is necessary in order to find the limits of environmental degradation and the required level of development. Green Accounting (also known as Environmental Accounting / Resource Accounting / Integrated Economic and Environmental Accounting / Sustainability Accounting) is an attempt to identify and bring into light the resources utilized and costs imposed on the eco-system by the activities of corporate houses. It is a system of accounting designed to record the benefits and costs rendered by the environment to a business corporation and costs and benefits tended to the environment by the same business corporation.
Thus, green accounting implies a process of economically recognizing the benefits derived by an organization from the environment and initiating remedial measures to reduce the possibility of environmental pollution through its business activities. The cost incurred on such remedial measures is known as shadow pricing, and is recorded in the green
References: IUCN, The World Conservation Union, 2009, “Environmental Accounting: What’s It All About?” International Guidance Document, “Environmental Management Accounting”, International Federation of Accountants, August, 2005 Seetharaman, Mahamed Ismail, Saravanan, “Environmental Accounting as a Tool for Environmental Management Systems”, Journal of Applied Sciences Environment Management, 2007, Vol. 11(2), 137-145 Mehenna Yakhou and Vernon P “Environmental Accounting: An Essential Component of Business Strategy”, Business Strategy and the Environment, 2004. Dr. Bhabatosh Banerjee, “Corporate Environmental Accounting and Reporting”, The Chartered Accountant, April, 2006 Dr Radhakrishan Rao, “Environmental Accounting emerges as a necessity”, Indian Express Newspapers (Bombay) Ltd., 1999. Hutchison P.D., “Environmental Accounting: Issues, reporting and disclosure”, Journal of Applied Business Research, Vol.16, Issue 4 Julian Morris, “Sustainable Development: Promoting Progress or Perpetuating Poverty?” publisher: Profile Books, London, August, 2002.