Environmental Accounting

Environmental accounting
Environmental accounting is a subset of accounting proper, its target being to

incorporate both economic and environmental information. It can be conducted at the
corporate level or at the level of a national economy through the National Accounts of
Countries (among other things, the National Accounts produce the estimates of Gross
Domestic Product otherwise known as GDP).
Environmental accounting is a field that identifies resource use, measures and
communicates costs of a companys or national economic impact on the environment.
Costs include costs to clean up or remediate contaminated sites, environmental fines,
penalties and taxes, purchase of pollution prevention technologies and waste management
costs.
An environmental accounting system consists of environmentally differentiated
conventional accounting and ecological accounting. Environmentally differentiated
accounting measures effects of the natural environment on a company in monetary terms.
Ecological accounting measures the influence a company has on the environment, but in
physical measurements.
Why environmental accounting?
There are several advantages environmental accounting brings to business; notably, the
complete costs, including environmental remediation and long term environmental
consequences and externalities can be quantified and addressed.
Subfields
Environmental accounting is organized in three sub-disciplines: global, national, and
corporate environmental accounting, respectively. Corporate environmental accounting
can be further sub-divided into environmental management accounting and
environmental financial accounting.
Global environmental accounting is an accounting methodology that deals areas
includes energetics, ecology and economics at a worldwide level.
National environmental accounting is an accounting approach that deals with
economics on a country's level.
Internationally, environmental accounting has been formalised into the System of
Integrated Environmental and Economic Accounting, known as SEEA.
[2]
SEEA
grows out of the System of National Accounts. The SEEA records the flows of
raw materials (water, energy, minerals, wood, etc.) from the environment to the
economy, the exchanges of these materials within the economy and the returns of
wastes and pollutants to the environment. Also recorded are the prices or shadow
prices for these materials as are environment protection expenditures. SEEA is
used by 49 countries around the world.
Corporate environmental accounting focuses on the cost structure and
environmental performance of a company.
Environmental management accounting focuses on making internal business
strategy decisions. It can be defined as:
the identification, collection, analysis, and use of two types of information for
internal decision making:
1) Physical information on the use, flows and fates of energy, water and materials
(including wastes) and
2) Monetary information on environmentally related costs, earnings and savings.
As part of an environmental management accounting project in the State of
Victoria, Australia, four case studies were undertaken in 2002 involving a school
(Methodist Ladies College, Perth), plastics manufacturing company (Cormack
Manufacturing Pty Ltd, Sydney), provider of office services (a service division of
AMP, Australia wide) and wool processing (GH Michell & Sons Pty Ltd,
Adelaide). Four major accounting professionals and firms were involved in the
project; KPMG (Melbourne), Price Waterhouse Coopers (Sydney), Professor
Craig Deegan, RMIT University (Melbourne) and BDO Consultants Pty Ltd
(Perth). In February 2003, John Thwaites, The Victorian Minister for the
Environment launched the report which summarised the results of the studies.
These studies were supported by the Department of Environment and Heritage of
the Australian Federal Government, and appear to have applied some of the
principles outlined in the United Nations Division for Sustainable Development
publication, Environmental Management Accounting Procedures and Principles
(2001).
Environmental financial accounting is used to provide information needed by
external stakeholders on a companys financial performance. This type of
accounting allows companies to prepare financial reports for investors, lenders
and other interested parties.

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Environmental accounting

Environmental accounting is a subset of accounting proper, its target being to

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