Environmental Accounting, Managerialism and Sustainability: Is The Planet Safe in The Hands of Business and Accounting?

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Environmental accounting, managerialism and sustainability: Is the planet safe in the

hands of business and accounting?
Article · December 2000
DOI: 10.1016/S1479-3598(00)01004-9
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ENVIRONMENTAL ACCOUNTING,
MANAGERIALISM AND SUSTAINABILITY:
Is the planet safe in the hands of business and
accounting?
Rob Gray
Centre for Social and Environmental Accounting Research
Department of Accounting and Finance
65-73 Southpark Avenue
University of Glasgow
Glasgow, G12 8LE Scotland, UK.
Tel: +44 141 330 5666 Fax: +44 141 330 4442
and
Jan Bebbington
Department of Accountancy
University of Aberdeen
Edward Wright Building
Dunbar Street,
Aberdeen, AB24 3QY
Scotland, UK
Tel: +44 1224 273590 Fax: +44 1224 272214
Running Title: Environmental Accounting, Managerialism and Sustainability
January 2000: a revised version of this paper subsequently appeared in Advances in

Environmental Accounting and Management Vol1 2000, (pp1-44)
ENVIRONMENTAL ACCOUNTING, MANAGERIALISM AND

Environmental Accounting, Managerialism and Sustainability
__________________________________________________________________________________________
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SUSTAINABILITY:
Is the planet safe in the hands of business and accounting?1
ABSTRACT
The growth in environmental accounting research and interest in the last few years has been
little short of phenomenal. For those of us with a long-standing interest in such issues, it is
easy to get swept along in the euphoria of seeing environmental issues brought to centre
stage in business and accounting debates. Despite wishing to encourage this growth in
interest, this paper is by way of a cautionary tale that, within this burgeoning, enthusiastic
and often excellent research, there is a very real danger that environmental accounting may
well end up doing more harm than good. This paper, works from the premises that (a)
accounting (and accounting research) typically adopts a set of implicit assumptions about the
primacy and desirability of the conventional business agenda - and is thus "managerialist" in
focus; and (b) that the conventional business agenda and environmental protection - and,
especially, the pursuit of sustainability - are in fundamental conflict. If this is so then
accounting is contributing to environmental degradation - not environmental protection. The
paper seeks to provide a review of the current state of the art in environmental accounting
research through this "managerialist" lens and then goes on to illustrate the essence of the
problem through the reporting of a new analysis of data from an international study of
accounting, sustainability and transnational corporations. The paper concludes with a call
for more explicit examination of the implicit assumptions held in accounting research
generally and environmental accounting research in particular.
Introduction
Little more than a decade ago, any scholar wishing to review the literature concerned with
accounting and the natural environment would have been faced with a relatively
straightforward task. Beyond the few significant and seminal papers (see, for example, AAA,
1973; Dierkes and Preston, 1977; Ullman, 1976) environmental issues tended only to surface
as one of the themes within the social accounting and reporting literature. (See, Gray et al.,
1996; Mathews, 1997 for summaries). The change in the last ten years has been little short of
phenomenal. Consequently, it would be easy - especially for those of us who have been
involved in the area for some years - to get swept along on a tide of enthusiasm now that
environmental (and, latterly, social) accounting appears to be occupying an increasingly
central place in accounting debate. For years accounting scholars have bemoaned the fact that
accounting (and finance) teaching and research have largely ignored environmental matters.
Now this has changed and there are few aspects of accounting in which environmental
concern is not explicitly recognised as important. Is that a matter for (unqualified)
celebration, (see, for example, Mathews, 1997)? We are not so sure. Our primary purpose in
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writing this paper is to offer a (potentially significant) cautionary note lest, in the atmosphere
of celebration, we overlook the need for a continuing critical appraisal of the subject. Whilst
there is much about recent developments in environmental accounting about which we should
celebrate, the research in the field still has some way to go and some major problems to
overcome before it can confidently claim unqualified success.
The essence of our concern, and the contention that we would like to explore in this paper, is
that the bulk of environmental accounting research is not, strictly, about accounting for the
environment (environment or sustainability-centred) but it is rather driven by an interest in
the extent to which environmental issues are, and can be, reflected in conventional accounting
practice (managerialist or business-centred). Whilst these two positions (environment- and
business-centred) may well be considered as extreme positions, they serve an important
function. That is, it is reasonable to assume that all accounting research which takes
environmental issues as its subject is motivated by a concern for the environment and,
therefore, with a desire to improve the condition of our natural world (or, at least, to reduce
the rate at which it is suffering damage). But is there no evidence which guarantees that such
an outcome will be the result of simply introducing environmental concern to our
wellestablished accounting practices and including the environment as a new and important
factor in our research endeavours? Such evidence as exists suggests that such optimism may
well be misplaced (see, for example, Newton and Harte, 1997). This is because the efficacy
of environmental accounting as an advocate of the natural world, relies upon the use to which
it is put and the systems it supports or challenges. If the bulk of accounting research is
focused upon the business world and most environmental accounting works `with the grain of
business', then only if business is successful in adopting a more environmentally-benign
posture (in part through the application of environmental accounting) can environmental
accounting claim to be acting for the environment and its protection and enhancement. If
environmental accounting works with the grain of business and business continues to
encourage desecration of the planet (albeit at a reduced rate) then, ceteris paribus, we need to
conclude that our environmental accounting may, perhaps, being doing more harm than good.
This is the thesis that this paper seeks to explore.
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We seek to explore this thesis in three stages around which the paper is structured. The first
stage comprises a brief outline of what is meant by managerialism and some of its
implications - first in the context of `conventional' accounting and then in an environmental
(and sustainability) context. In the second stage of our attempts to support our argument we
provide a review of the environmental accounting literature in an attempt to illustrate the
extent to which environmental accountants are (unwittingly?) managerialist in orientation.
The final stage of the argument involves the reporting of an empirical study which acts as a
practical illustration of the dangers of assuming that managerialism can deliver sustainability.
This comprises a report of an international field and questionnaire study of large transnational
corporations (TNCs hereafter) and their activities and attitudes to both sustainability and
accounting. The link between the three elements - TNCs, sustainability and accounting - is a
complex, even tortuous, one because, inevitably, researching something which is not
happening (accounting's support for moves towards sustainability) by reference to a profound
notion which is little understood (sustainability) is less straightforward than one might wish
one's empirical research to be. We deal with - and try to explain - this set of relationships and
implications in the later part of the paper wherein we report on the study. We suggest that the
conclusion, however, is clear:- namely that we would be ill-advised to assume that
sustainability was safe in the hands of business.
Accounting and Managerialism

Whilst accounting might well be designed to serve many purposes - accountability, control,
reification, truth-telling or whatever - it is something of a truism to say that `conventional'
accounting (i.e. accounting as it is typically practised, taught and researched) is
managerialist. We are using the term here to specifically refer to the notion that conventional
accounting is a managerialist practice in that it both supports organisations in their
conventional pursuits and is an essential mechanism in the workings of international financial
capitalism2 in the pursuit of its conventional objectives. The term, thus, is just a shorthand for
the implicit assumptions (see Tinker et al., 1982) about our current systems of economic and
business organisation which are built into conventional accounting practice, policy, teaching
and (largely) research3.
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For many - perhaps the majority - of accounting researchers and teachers this observation that
accounting supports and encourages the status quo is an unexceptionable one. Although
typically held implicitly, the dominant assumption in accounting is that neither the nature of
business nor business' pursuit of its conventional objectives of growth, profit etc., are in any
way contentious. Indeed, business, profits, etc., are all assumed to be incontestably desirable.
This is often captured under the trite - but important - phrase: what is good for business is
good for society. Whilst it may be that business is, in general, "good" for society, it is surely
uncontentious to suggest that this need not necessarily be so. That is, if it is possible to
imagine that our current systems of business and economic organisation are not necessarily
the basis for the best of all possible worlds, one then admits to their imperfection and,
consequently, the desire for improvement. Further, whether the argument is considered
ethically or empirically, it is difficult to demonstrate that our current system of capitalism
does indeed bring the greatest benefit to the greatest number. For the present purposes in this
paper, it is sufficient that such arguments can be recognised as having worth - it is not
necessary to accept them at this stage.
The point is that business (with the help of accounting) in pursuing its own objectives can -
and frequently does - cause "bads" and well as "goods" in society. To the (perhaps implicit)
supporter of modern liberal capitalism, the bads are the eggs one has to break in making the
economic omelette but, it is assumed (typically implicitly), that the goods outweigh the bads.
Whilst we would find it difficult to accept such an interpretation of the relative weights of the
goods and the bads, we recognise that it is virtually impossible to offer any uniquely
persuasive argument for or against such a view and, indeed, the more optimistic view is the
more widely held - especially amongst accountants. At least, the evidence may, indeed, be
apparently equivocal when we are considering social goods and bads. Consequently,
whatever one's own beliefs, it is necessary to recognise that there may well be a (albeit
equivocal) basis on which to justify accounting's support of business and financial systems.
When we turn to environmental goods and bads4 it is, we would argue, much more difficult to
maintain the optimistic view.
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Accounting, the Environment and Sustainability

There is little question that western capitalism has been immensely successful in creating a
higher level of material consumption (perhaps even well-being) for an increasing, but still
relatively small, proportion of the planet's population. But, by the same token, it is not in
question that the planetary environment is declining seriously and rapidly.
The principle employed to articulate this situation is that of sustainability. Sustainability - or

its less threatening sounding analogue "sustainable development" 5 - is defined as relating to
development which:
meets the needs of the present without compromising the ability of future generations to meet
their own needs (WCED, 1987, p. 8).
It is a deeply challenging notion and one which is still little understood. For these reasons,
plus its centrality to the empirical work we will report later in the paper, it is worth spending
a little time examining what it means.
It is definitionally the case that sustainability relates to both present and future generations
and that it requires that the needs of all peoples are met. Those needs are both social and
environmental. It is common to refer to these social and environmental needs as, respectively,
eco-justice and eco-efficiency6 - and of these two, eco-efficiency commands by far the greater
attention, (see below when we review the environmental management accounting literature).
Eco-justice tries to capture the idea of equity between peoples and generations and, in
particular, the equal rights of all peoples to environmental `resources' 7. Eco-efficiency (which
captures the notion of reducing, for example, material and energy inputs per unit of output) 8,
although a useful concept, needs to be distinguished from eco-effectiveness (which captures
the idea of reducing our overall ecological footprints). For sustainability to be achieved we
need to feel confident that all elements: eco-justice, eco-efficiency and eco-effectiveness are
met for both current and future generations. These elements are summarised in Figure 1.
FIGURE 1 ABOUT HERE
Much of the evidence referred to in Figure 1 comes from the United Nations conference
organised 5 years after the Earth Summit (sometime referred to as Rio+5) which concluded
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that all the major sustainability indicators had worsened since the Rio Summit. The only
conditions that might possibly be satisfied - and only then if one was very optimistic - were
those relating to eco-efficiency (and eco-efficiency is irrelevant in the face of declining
ecoeffectiveness). It is a depressing scenario but leads unerringly, we would argue, to the
belief that not only are the world's present methods of business and economic organisation
unsustainable but they are becoming more so.
Figure 1: Do We Currently Satisfy the Conditions for Sustainability?

Satisfy the needs of the current Satisfy the needs of future
CONDITIONS generation? generations?
Eco-justice NO - income inequality is growing, NO - present trends will make

many millions live in and die from matters worse, very little evidence
poverty suggests otherwise.
Eco-Efficiency NO but some possibly positive POSSIBLY if one is optimistic

signs if one is optimistic
Eco-Effectiveness NO - all evidence suggests that NO - no evidence to suggest a

global impact of production and change of direction.
consumption is worsening
Adapted from Gray and Bebbington (forthcoming)
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The crux for researchers is that if they adopt a managerialist worldview in environmental and
related research, then they must, by definition, be seeing the world through corporate eyes.
Corporations, for all the obvious and understandable reasons, are pursuing growth, profit and
traditional measures of success. Managerialist research supports and, implicitly at least,
endorses the social, ethical and economic rightness of the corporate perspective. But, the
evidence is that the indisputable desirability of sustainability and the corporate focus are in
fundamental conflict. A researcher who places managerialism at the heart of her/his research
is probably, by default, denying the exigencies of sustainability. On the other hand, by
placing sustainability at the heart of the research one is, in effect, questioning the very core of
current practice in business and accounting - not a comfortable or popular position to take.
The danger is that if, as researchers, we do not make our assumptions explicit, we cannot
carefully examine them. Without careful explicit examination, research (and teaching)
assumptions tend to implicitly assume a pro-managerialist, positivistic and liberal stance.
(This is exactly the same form of argument used about the hidden normative elements in
positive research - see Tinker et al., 1982; - and the hidden conservative agenda in much
social accounting - see Tinker et al., 1991; and see also Arnold and Hammond, 1994).
The essence of the issue, it seems to us, is that (a) mankind needs to order its activities in line
with the principles of sustainability and (b) that it does not currently do so9. The present
economic system, as far as we can assess from current evidence is unsustainable. (For more
detail, see, for example, Beder, 1997; Eden, 1996; Gladwin, 1993; Gladwin et al., 1997;
Korten, 1995; O'Connor, 1997; Redclift, 1992; Welford, 1997; but see also Schmidheiny,
1992; for a contrary view). The question that then follows, it would seem, is whether business
and accounting are important root causes of the problem or, at least, whether they are
importantly implicated in the present acceleration away from sustainability. Equally
contentious, and regardless of one's answer to the first question, can business and accounting
(or at least business and accounting as currently conceived) be part of the solution? - a
solution which is clearly necessary to move our economic organisation back towards less
unsustainable paths.
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These issues are important - and they are complex. They are important because the
consequences of unsustainability - as currently experienced by millions on the planet - are
appalling, grotesque and immoral. At their worst, (and at the most anthropocentric) the
rapidly degrading environment threatens the continued existence of, not just our current ways
of life, but of any way of life.
The issues are complex for a number of reasons. We are not only dealing here with a set of
profound ideas which challenge centuries of western thought but also with a lack of scientific
certainty about the actual state of the planet and the consequences of further planetary
degradation. That complexity is worsened because, whilst some of the links between
economic and business activity and the state of the natural environment are fairly obvious, it
is too complex a link to "prove" uniquely and simply 10. Further, is the responsibility for this
condition one for which we should hold business responsible? - and if not, whose
responsibility is it?
And, then, where do we fit accounting into the picture?
We will not attempt to settle these questions here. We do, however, maintain that any careful
review of the issues and the evidence places business and economic activity at the heart of the
environmental crisis. Business and our systems of economic organisation, whether or not one
wishes to attribute responsibility, are implicated in the current social and environmental
crisis. That, it seems to us, is sufficient reason to wish to examine the issues. Equally
accounting is implicated in the environmental crisis.
More specifically, (returning to our opening comments), accounting serves - and is essential
to - current economic organisation and business. Environmental accounting, if it follows the
pattern of the vast majority of other accounting will, similarly, tend towards servicing and
supporting current business and economic organisation. If that business and economic
organisation is demonstrating a malign consequence - such as environmental degradation -
then it follows that a conventional environmental accounting is supporting and encouraging
that environmental degradation. Thus accounting is equally complicit with business in
environmental degradation.
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This link between accounting and environmental degradation is well-established in the

literature now (for a summary, see, for example, Eden, 1996; Gray et al., 1993; Gray and
Bebbington, forthcoming) and the logic on which it is based is fairly straightforward. We are
aware of no systematic counter-arguments and, indeed, we would actually argue that no
counter argument against accounting's implication can be put - although we would welcome
such argument11. The crucial point is that accounting which takes the business agenda as
given and is thus managerialist (and this includes much environmental and social accounting)
will assume that the arguments above are of no value and therefore fail to address them. To
assume that current business and economic organisation will deliver environmental security
and sustainability does not provide any support for the notion that it can deliver such things.
Thus, central to any discussion of accounting and the environment is a basic, challenging and
deeply unsettling question: do we believe that the organisations which accounting serves and
supports can deliver environmental security and sustainability? 12 This paper seeks to explore
this question in two ways: first by attempting to demonstrate that the majority of
environmental accounting research maintains the implicit assumption that what is good for
business is good for the environment; and then, second, by demonstrating that even large
well-informed businesses are unable to deliver on sustainability because (inter alia) (a) they
frequently have little understanding of the concept and (b) are themselves constrained by,
primarily, accounting and financial systems. Our conclusion is that only a critical, self-
reflective - indeed, challenging - environmental accounting can make any claims to be
supporting sustainability. Such an accounting will, inevitably, be unpopular with
practitioners, businesses and students - and, in a sense, only if such an accounting is
unpopular might we be convinced that it was beginning to challenge current business
hegemony.
In order to reach this conclusion, the paper, first, sets the scene for the later empirical study
by attempting to provide an overview of the burgeoning environmental accounting literature.
It does this by structuring the review with especial reference to support our contention that
the implicit managerialist assumptions of conventional accounting are being (largely)
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reproduced in environmental accounting13. The presence of such implicit managerialist

assumptions is assumed in one of two ways. In many pieces of work it is quite clear that the
efficacy of an accounting is seen in its support of a managerial or financial market role, (see,
for example, Preston, 1981; and Benston, 1982; for especially clear examples of this). For
many pieces of work, however, the objectives - the political intentions if one prefers - are less
clear. Here we rely upon, and adapt, the arguments of Tinker et al., (1982) - namely that as
the (we have argued) the present system of business and economic organisation is more
environmentally malign than environmentally benign, failure to explicitly challenge that
system leads, in effect, to an acceptance of that system and, by implication, a support of it. (A
case especially well demonstrated in Arnold and Hammond, 1994). Thus, for the purposes of
our review, it is the absence of critical moment which we take as determining
managerialism14.
Environmental Accounting in the Literature

Attempting to review all the extant literature on environmental accounting would be
fruitless15. We have therefore concentrated on a selection of more recent publications
restricted to those published in the English Language 16,17. Other such reviews do exist, (see,
for example, Epstein, 1996; Schaltegger, 1996; Gray et al., 1993; Gray and Bebbington,
forthcoming), but these have a greater practitioner, rather than primarily researcher,
emphasis18. Consequently, our coverage emphasises the academic literature with much less
attention on the (now burgeoning) professional literature.
Further, we generally find it convenient to think of environmental accounting as comprising a

number of themes - these are summarised in Figure 219. In order to give the review structure,
we have broadly based our brief overview of the environmental accounting literature around
these themes.
FIGURE 2 ABOUT HERE
*FIGURE 2: Environmental issues as reflected in management
Fgur2:ThsEvirmealAcouting accounting, environmental management and
auditing;
* Environmental issues and financial statements;
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* Impact on and reaction of the statutory audit function;
* Relevance of and reaction by financial institutions and markets;
* Environmental reporting;
* Social accounting, auditing and reporting;
* Sustainability;
* Accounting education;
* Accountants and the accounting profession;
* Theoretical debate;
Management Accounting, Environmental Management and Auditing

One of the earliest business-orientated manifestations of the growing environmental agenda
of the early 1990s was the development of environmental auditing. Although the term was
used to cover many different activities 20, each of them represented a recognition that one of
the first steps any business needs to take is to assess the extent of its exposure to the
environmental agenda. This interest, in turn, was reflected in the public policy arena where
BS7750, EMAS and, now, the ISO1400021 series of standards expanded the interest in
environmental auditing to the more demanding requirements of environmental management
systems (EMS). Once EMS became established it did not take long before it was recognised
that accounting not only needed to know something of the field but also had a significant role
to play in its development and success. Texts appeared (see, for example, Gray et al., 1993;
Ditz et al., 1995; Epstein, 1996; Bennett and James, 1998b) which drew from practice - often
experimental practice - and provided both investigation and guidance on the ways in which
accountants might adapt, inter alia, their budgeting, investment appraisal, costing and
performance appraisal systems to support and refine the emerging EMS. Neither the
accounting profession (see, for example, AICPA, 1991; CICA, 1992; 1993) nor non-
accounting bodies (see, for example, the US Environmental Protection Agency, the World
Resources Institute, The Tellus Institute, the International Institute for Sustainable
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Development) were slow to recognise the central role that accounting had to play in the
development and monitoring of EMS.
A number of themes were immediately apparent as management accounting was cajoled into
responding to environmental issues. In Northern Europe - and, especially, Germany and
Austria - the central position of EMAS and the ökobilanz 22 were highly influential. When
coupled with (what frequently looks like) the more engineering focus in Northern European
accounting (as opposed to, say, the economics focus of Anglo-American accounting) the
combination led to exploration of how to most accurately and precisely measure the physical
flows - of energy, materials, wastes etc., - and their associated costs. (See, especially,
Schaltegger et al, 1996, but also see, for example, Bouma and Wolters, 1998; White and
Wagner, 1996; Gelber, 1995). Whilst the, almost mechanistic, search for precision does not
sit comfortably with Anglo-American traditions - in either practice or research - there remains
much that can be learnt from both the experiences with EMAS and the importance of the
ökobilanz in both managing and reporting on an organisation's environmental interactions.
For the Anglo-American community, the emphasis is most clearly on seeking ways in which
to exploit the so-called "win-win situations" (Walley and Whitehead, 1994) that could be
derived through "eco-efficiency"23. Central to this, significantly managerialist, literature is the
exploration of how the accounting system could be employed to identify, seek out and exploit
financial savings in, for example, resource usage, wastes, energy and emissions, that would,
of necessity, also lead to reductions in the corporations' environmental impact. (For examples
and illustrations, see Ditz et al, 1995; Epstein, 1996; Bennett and James, 1997a; 1998b).
Following the first wave of publications which, generally speaking, explored the possibilities
and potential for accounting in the early 1990s, the more scholarly and formally-orientated
research literature is only now beginning to emerge with any substance. Several themes are
emerging here. First, it is apparent that accountants have been slow - even reluctant - to
initiate the sorts of changes which EMS requires of the accounting system, (see, for example,
Bebbington et al, 1994; Wang et al., 1997; Guilding and Kirman, 1998). In part, this seems to
be an illustration of some of the failings in accounting education and training (see below).
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However, it also seems to be the case that, in the first flush of enthusiasm for environmental
accounting, it was usually forgotten that change - and, especially, organisational change - is a
complex and little understood process (see, for example, Gray et al, 1995). Indeed Newton
and Harte (1997) accuse both the accounting and management literatures of resorting to
kitsch - assertion, unwarranted optimism, cajolery and aspiration - in place of more critical
analysis of the issues at the heart of accounting's response - or lack of it - to the
environmental agenda.
But deeper issues are also beginning to emerge. Key to the environmental management
literature - and the accounting literature which follows it - is a largely unquestioned
acceptance of EMS. There are two major problems with such simple-minded acceptance 24.
First, ecoefficiency relates to reducing the inputs for a given level of outputs - it is a ratio. If,
however, the organisation's output is rising, its overall environmental impact - its ecological
footprint or eco-effectiveness - will continue to rise. This is, in fact, the case. The
environmental (and social) impact of industrialisation and consumption is rising despite some
significant improvements in eco-efficiency. Second, there must be profound doubts about the
regime of EMS itself. In the first place, the dominance of the ISO14000 series is establishing
EMS at the lowest common denominator (see Krut and Gleckman, 1998, for an especially
good analysis of this). In the second place, the EMS emphasis on monitoring environmental
performance as opposed to actually being concerned by environmental impact largely misses
the crucial point that the environmental crisis is facing us with a fundamental challenge to our
methods of business and economic organisation (see also below). In this, EMS and
environmental audit are especially clear cases of Power's "audit" thesis in which he argues, in
essence, that auditing activity has come to replace undertaking activity, (Power, 1991; 1997a;
1997b). As the evidence continues to emerge, this conclusion seems increasingly plausible
and increasingly concerning. Management accounting research, it would seem to us, has yet
to get to grips with this issue.
Environmental Issues and Financial Statements

There is probably only one line of research which runs unbroken from the early interest in
social accounting through to the current interest in environmental accounting. That line of
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research is that which investigates the statistical relationships of corporate environmental

(and social) disclosures, corporate characteristics, environmental (and social) performance
and financial performance. (See, for example, Freedman and Jaggi, 1986; 1988a; 1988b;
Freedman and Stagliano, 1995; Freedman and Ullmann, 1986; and see Ullmann, 1985 for an
early summary). This, almost uniquely, US research both draws from data which has not,
until recently, been available in other countries and broadly maintains the positivist research
paradigm which has been so influential in both the US and in other non-US schools
influenced by the US traditions25. The growth in both environmental awareness and the impact
of environmental matters on the financial statements has tended to provide further impetus for
research in this mould.
Much is learnt from this literature - most especially, that financial performance is only loosely
linked to environmental performance in all but the most extreme cases and that, on the whole,
investors are interested in environmental issues only to the extent that it affects their financial
well-being. The dominance of a positive focus on, primarily, remediation and liability which
appears to be so dominant in the US (see, for example, Kennedy et al., 1998; and see
Abdolmohammadi et al., 1997; for an overview) is just beginning to carry into research
outside the US. However, given the generally low levels of financial disclosure on
environmental matters in the financial statements in other countries, there is not yet a
substantial body of evidence about such matters outside the US. So, it falls to researchers to
try and abandon the most obvious aspects of positivism and try to research "absence"
(Choudhury, 1988) - whether it be absence of accountants or accounting disclosures, for
instance. But here again, we not only find an unwillingness or inability of accountants to take
the initiative (see Bebbington et al, 1994; Wang et al., 1997; Guilding and Kirman, 1998; and
see also Jaggi and Zhao, 1996) but an overwhelming reluctance in accountants to undertake
actions for which there is no (as yet) formal accounting guidance (see, for example, Gray et
al, 1998). As the regulation of environmental disclosure grows (as it has done in Sweden,
Netherlands, Denmark and Korea, for example) we can hope to see more studies of
environmental accounting in the financial statements and its effects. But this should not blind
us to the peculiarities of a profession which only acts when instructed to do so.
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The other strand of enquiry and experimentation which seems to be growing in popularity in
this area of financial statements echoes the early experiences with social accounting. That is,
there have been examples of organisations attempting to undertake much-needed
experimentation with what financial statements might look like if they were to reflect the
wider environmental issues. Again, in a manner which echoes the social accounting
experience, the value-added statements of BSO/Origin (see, for example, Huizing and
Decker, 1992), the environmental financial statements of Baxter Health Care (see, for
example, Bennet and James, 1997b), Landcare Research's attempts to define sustainable costs
(see, for example, Bebbington and Tan, 1996; 1997; Bebbington and Gray, 1997) and Ontario
Hydro's experiment with incorporating externalities (see, for example, Environmental
Protection Agency, 1996), expose both the limitations of current financial accounting theory
as well as the grave difficulty of seeking to incorporate the full range of environmental issues
into a simple financial statement.
The important issue for us, here, is whether or not the conventional measures of success
(typically profit) are in conflict with environmental protection. As will have been apparent
from the arguments considered above, there seems no doubt in our mind that profit as
currently measured and sustainability are in profound conflict. This does not mean,
necessarily, that all measures of profits need be in conflict or that it would not be possible to
imagine a regulatory and fiscal structure within which profit as currently measured could not
be in keeping with that sustainability. Our view is only that profit as currently measured
demonstrates that conflict. Consequently, any research which appears to take the current form
of financial statements as an unremarkable given, must (from this point of view) be
demonstrating the managerialism which so concerns us.
But there is a further, related issue here. The financial statements have a dominant place in
organisational performance. It is, we would argue, their very primacy as the measure of
organisational success and the way in which that measure is founded upon fundamental
assumptions we accountants make in our calculation of profit that is at the very heart of the
causes (or, at least, implicated in those causes) of environmental degradation, (see, for
example, Gray, 1992; Bebbington and Gray, 1993; Bebbington, 1997; Owen et al, 1997).
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That is, we currently produce as the dominant measure of organisational performance a figure
which inherently discourages environmental (and social) responsibility. Consequently, as
most accounting research inevitably takes the financial statements for granted and examines
the environmental crisis through that lens it offers no substantive challenge to environmental
degradation. If, however, we placed either society or the environment at the heart of our
analysis, we suspect that we would find it difficult to justify the financial statements (as
currently understood) on the grounds of their contribution to environmental and social justice.
This, it seems to us, leads to the conclusion that financial statements are at the heart of the
environmental problem and, under current conventions, cannot be part of the solution. At a
minimum, we would see that their primacy must be, therefore, reduced. In an ìdeal world,
they would probably need to changed in profound and fundamental ways. This, it seems to us,
is a perfectly respectable academic view but it is not one which commands widespread
acceptance amongst accounting researchers, (as yet, see below on sustainability). For very
understandable reasons, accounting academics seem (at best) reluctant to challenge the very
core of financial accounting practice - even if that challenge can be shown to be in the best
interests of the environment and society.
Auditing
Where issues are affecting the financial statements, the statutory financial audit must take
notice. Despite this, researchers have, it would appear, been slow to pick up on the very real
implications that environmental issues can have for the attestation of financial statements.
Whilst professional accountancy bodies are addressing such issues - and even commissioning
research into the area (see, for example, Kamp-Roelands, 1996) we are only aware of
substantial investigation of this area in the UK. In the UK Collison (Collison, 1996; Collison
and Gray, 1997; Collison et al., 1996) has identified a growing concern amongst auditors
about the potential risk exposure they face as a consequence of the environmental impact on
the business. Such concern, however, seems to be largely limited to the larger firms of
auditors and this, in turn, seems to be explained by the firm's own level of awareness of the
issues - the more one is aware of the potential impact of environmental issues the more
anxious one becomes. The majority of audit firms do not yet, it seems, have a very detailed
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understanding of what environmental issues mean for their clients and their financial
statements.
Equally, there are growing demands upon auditors to either include environmental data in
their attestation of the financial statements and/or to attest independently to environmental
data in, for example, an environmental report. These demands place additional strains upon
the auditor and audit function (see, for example, Tozer and Mathews, 1994) and, given the
especially poor quality of (so-called) independent attestation to environmental reports (See
Stephens et al, forthcoming) these pressures seem set to grow. At the same time, we might
begin to ask, yet again, about the purpose of financial statements and the auditors' attestation
thereto. If the statements and audit report are purporting to present a fair picture of the
organisation's performance but omitting one of - if not the - largest potential threat to the
continuance of mankind, we might well be anxious about the claims of the accounting and
audit professions to be, inter alia, serving the public interest.
Environmental Reporting
If there is one area which accounting researchers have embraced with enthusiasm it is the
phenomenal growth in environmental reporting by organisations. The research in this area has
been dominated, initially at any rate, primarily by studies descriptive in orientation. Such
studies typically employ some variant of content analysis, (see, for example, Milne and
Adler, 1999; and Gray et al., 1995b). Both country specific studies 26 and comparative studies27
have recorded an upward trend in environmental disclosure both through the annual report
and through stand-alone environmental reports. However, analyses of the phenomenon (see,
for example, Gray et al., 1995a; Hackston and Milne, 1996; Fekrat et al., 1996; Pava and
Krause, 1996; Adams et al., 1998) confirm that such reporting is principally restricted to the
very largest companies and is, to a degree at least, country and industry variant 28. Research
into environmental disclosure is developing rapidly with examinations of the impact of
pressure groups (Tilt, 1994) and other external forces (Gray et al., 1995; Deegan and Gordon,
1996), exploration of user's needs (Epstein and Freedman, 1994; SustainAbility/UNEP 1996;
Deegan and Rankin, 1997), focus on particular aspects of reporting (such as environmental
policies, see Tilt, 1997), exploration of the truthfulness of environmental disclosure (Deegan
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and Rankin, 1996) and much needed theoretical development (see, for example, Patten,
1992; Roberts, 1992; Gray et al., 1995a; Buhr, 1998; Adams et al., 1998; Brown and Deegan,
1998; Neu et al, 1998).
Environmental reporting takes place in a predominantly voluntary regime 29 and with the
continuing interest in voluntary guidelines for such reporting (see, for example, KPMG,
1997b), such surveys of practice are crucial in keeping attention focused on the doubtful
quality and, especially, the global paucity of such reporting. If environmental reporting is
important (for social accountability reasons even if it is of dubious "financial user need"
value) then the predominant view of business - that environmental reporting is adequate in a
voluntary regime - must be challenged. Whilst the early research into environmental
disclosure appeared to be so delighted that any such disclosure was taking place, this
acquiescence has given way to a more critical analysis of practice. This analysis, primarily
informed by the `critical school' (Laughlin, 1999), comprises three main themes. The first two
of these themes are, in essence, the same critique made of social accounting. First, accounts
of any kind are necessarily partial and biased constructions of a complex world. Not only do
such constructions, by making some things visible, make other things invisible (Broadbent et
al, 1994) but they are most likely to limit and even destroy the essential nature of the thing
accounted for. (See, for example, Maunders and Burritt, 1991; Maunders, 1996; Cooper,
1992; Johnson, 1998a; 1998b). Second, the critical theorists would argue that as
environmental reporting is a voluntary activity it can only reflect those aspects of
environmental performance which organisations are willing to release. It can, therefore, only
be a legitimation device and not an accountability mechanism. Consequently, the critical
theorists argue, environmental accounting - including environmental reporting - is almost
certain to do more environmental harm than it does good. These two themes are now
developing into an important - if, as yet, unresolved - theoretical debate which seeks to
counter the inherent managerialism of most accounting (and environmental accounting)
research30. The final theme in the critique of environmental disclosure develops the issue of
the voluntary nature of environmental disclosure and brings a much-needed re-assessment of
the importance and role of law in the construction of society. Specifically, Gallhofer and
Haslam (1997) could be taken to use researchers' views on the role of regulation in governing
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environmental reporting as an indicator of the researcher's managerialist or alternative

perspective.
In essence, a non-managerialist environmental reporting would have to challenge an

organisation's legitimacy and, in particular, the legitimacy of the means by which it earned
the reported profit and gained its growth. The critical challenges to environmental reporting
are not ill-founded when they remark that too little environmental reporting research
examines this question to any substantial degree.
Social Accounting and Reporting

One of the more inexplicable, although exceptionally welcome, consequences of the growing
environmental agenda has been the re-emergence of a serious interest in social accounting.
This is not the place to try and review, in any detail, the broad social accounting literature
(see, for example, Gray et al., 1996) - although a few general observations seem apposite.
Social accounting had its principal heyday in the 1970s but, although some researchers
maintained an active interest in the field, it virtually disappeared from the popular
consciousness of accounting academe during the 1980s and 1990s. Its re-emergence seems to
be a response to a number of factors. One such factor seems to be the recognition that
separation of environmental from social issues is difficult at best and pernicious at worst. As
environmental issues are explored more carefully, the underlying implications for
employment, communities, health and safety and even the organisation's very posture on
ethics and social responsibility inevitably resurface. Equally, corporate practice has re-
discovered social accounting and when organisations as diverse as Ben and Jerry's, the Body
Shop and Shell commit to social accounting, the wider business community begins to take
notice. Finally, as we shall see below, the environmental debate leads us inexorably towards
discussions of sustainability. Such discussions must, by definition, embrace social accounting
matters.
The recent research literature on social accounting is still a little sparse but examples exist.
The Adams/Roberts project has maintained a focus across both social and environmental
disclosure (see, for example, Adams et al., 1998; and see also Gray et al., 1995a; and
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Hackston and Milne, 1996). Work by Roberts (1992), Pinkston and Carroll (1996), Patten
(1995), Epstein and Freedman (1994), Mathews (1995) and Robertson and Nicholson (1996)
continues to keep the social responsibility/accounting debate moving forward whilst,
simultaneously, we are starting to see a re-emergence of normative work designed to guide
how social accounting might be accomplished and what it might look like. (See, Zadek et al.,
1997; Gray et al., 1997; Gonella et al., 1998).
Accountants and Accounting Education

To see the foregoing developments in environmental and social accounting in a vacuum
would be a mistake. There is still much work to be done on attempting to explain how, if at
all, accounting research and practice in general (and environmental and social accounting
research and practice in particular) reflect changes in broader society - and why they change
in the way they do. Closer to home, however, there has been evidence that (to our mind at
least) suggests a maturing process in the academic accounting profession (even if such a
maturation is less apparent in practice). That is, underpinning much of the work we have so
briefly reviewed above, is a growing - and critical - examination of the characteristics of
accounting education and accountants themselves as well as the link, if any, between these
two. Again this is too complex an area to rehearse in any detail here but it does not seem
unimportant that (a) a significant proportion of research into accounting education and,
especially, the ethical dimension of that education has involved social and/or environmental
accounting in its enquiries; (b) that research into environmental accounting is finding
accountants reluctant - and/or unable - to be innovative in the field; and (c) this has been
accompanied, in turn, by increasingly anxious recognition of the negative role played by
accounting teachers in the area. (For summaries see, for example, Bebbington et al., 1994;
Brown and Goulding, 1993; Francalanza, 1997; Gray et al., 1994; Guilding and Kirman,
1998; Humphrey et al., 1996; Lewis et al., 1992; Loeb, 1988; Mathews, 1995; Owen et al.,
1994; Wang et al., 1997)31. The essence of the literature is that accounting educators
indoctrinate their students through a slavish attachment to the professional syllabus and
thereby produce students who are ethical immature, intellectually passive and largely
incapable of innovation. That practising accountants should then be found to exhibit broadly
similar characteristics comes as little surprise. Such concerns (particularly about education)
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go some way towards explaining why, despite the demands of both the corporate sector and
the environmental movement, accountants' response to the environmental crisis remains fairly
lukewarm and predominantly constrained by GAAP.
Such matters might concern us whatever our views. When faced with the exigencies of
sustainability, such matters become importantly critical.
Sustainability
If there is one area of environmental (and social) accounting where the researchers'
worldview is crucial it is the area of sustainability.
Although accounting and finance research is only just beginning to identify sustainability as
an issue of concern, the literature is already showing a important dualism. On the one hand
there are the explorations - both theoretical and empirical - which set out to try and
understand sustainability from first principles. Maunders and Burritt (1991), Hines (1991),
Gray (1992), Batley and Tozer (1993), Bebbington and Gray (1993), Burritt and Lehman
(1995), Tomimasu (1996), Milne (1996) and Lamberton (1998) all offer analyses which
conclude that accounting is not only implicated in the environmental crisis and the growing
levels of unsustainability but that accounting and business are, in their current form,
fundamentally inimical to any serious attempts to move towards sustainability. Empirical
work in the field is more difficult - another case of researching absence - but empirical
explorations by Rubenstein (1994), Jones (1996), UNCTAD (1996), Bebbington and Tan
(1996; 1997), Bebbington and Thomson (1996) and Bebbington and Gray (1997) all provide
convincing evidence that supports that point of view. And such conclusions are in accord
with the wider, non-accounting, sustainability literature, (see, for example, Redclift, 1992;
Gladwin et al., 1995; 1997; O'Connor, 1997; Welford, 1997).
Such literature, in its explicit recognition of an uncomfortable conflict between current

accounting and business assumptions and the future of the planet contrasts starkly with a
growing literature which is entirely business-centred. This latter literature can be
characterised by appropriation of the term sustainability whereby the term is used, but not
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examined and, typically, is employed as an analogue for eco-efficiency (which it clearly is

not). Unfortunately, perhaps, because such use of sustainability is at the level of implicit
assumption, its influence is more difficult to identify (as yet) in the accounting literature, (but
see, for example, Stone, 1995; Bebbington and Thomson, 1996; and Bebbington and Gray,
1997; for an analysis of this issue). However, the matter is treated in a much more explicit
fashion in the business and management literature where the divergence between fundamental
analysis of sustainability and the "sustainability equals eco-efficiency" split is more apparent,
(see, for example, Eden, 1996; Beder, 1997; Welford, 1997). This latter, managerialist,
stream of the literature, so often underpinned by active business lobbying, seems designed to
convey the message that sustainability is safe in the hands of business. This, in our view, is
one of the most worrying developments in the literature and one in which accounting and
accounting research is very heavily implicated.
The link between accounting and sustainability is not a direct one: it needs the intervening
variable of business and economic organisation. To research such a link is, obviously, not
straightforward. However, given that we know the critical role that accounting plays in
business and economic organisation, if we could demonstrate that (i) business - in some sense
- was taking over the environmental and sustainability agendas; and (ii) that it was doing so in
a way which significantly failed to take full account of the implications of those agendas, then
we would have prima facie evidence of accounting's implication in the process which was
producing the acceleration away from sustainability. Furthermore, if we could show that
"business" was not homogeneous and, even when it sought to pursue (what it thought of as)
sustainability, accounting and financial systems were amongst the principal impediments,
then, we believe, we would have fairly convincing evidence that a managerialist approach to
accounting and accounting research was, indeed, working against sustainability. This is what
we seek to achieve in the last part of the paper.
Background to the Study

This section of the paper reports selected data and analysis from a wider study whose purpose
- at least superficially - was to explore the extent to which accounting and accounting
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methods were supporting or impeding TNCs in their attempts to embrace sustainability 32.
Such a research purpose inevitably begs the questions - do TNCs know what sustainability
means? and are they, indeed, seeking to embrace the agenda? Such evidence as existed prior
to the study suggested that both questions should attract a negative answer. A brief
introduction to that evidence is provided before we turn to the data itself.
It is well-established that the size and influence of TNCs is enormous, (Feld, 1980; Hamilton,
1984; Bailey et al., 1994a; 1994b; Korten, 1995; Hirst and Thomson, 1996). In accounting,
the TNCs attract a significant proportion of our attention as researchers and, as we have seen
above, they also attract the attentions of environmental accounting researchers - not least
because many of the innovations in the area are undertaken by the world's very largest
companies. We will not attempt to analyse the range and subtlety of influences which these
organisations wield but rather we will focus on just one aspect of their power - that relating to
the sustainability agenda.
The sheer economic size of the TNCs, the range of their products and services, their influence
on consumption, government and international policy and developing countries, amongst
other things, are all sufficient to make a prima facie case that TNCs have very significant
environmental impact and influence, (see, for example, Amba-Rao, 1993).
Environmentalbusiness commentators - most notable Paul Hawken - have gone so far as to
suggest that businesses in general (and TNCs in particular) are the only mechanism powerful
enough to deliver sustainability, (see Hawken, 1992, p94). It is a widely embraced point of
view. This view was most crucially manifested in the run-up to the Rio Earth Summit in 1992
when business - through the machinations of (particularly) the International Chamber of
Commerce (ICC) and the (now) World Business Council for Sustainable Development
(WBCSD) - succeeded in removing business and, especially, TNC and environmental
accounting issues, from the Rio agenda on the grounds that sustainability was "safe in the
hands of business". (For more detail see Gladwin, 1993; Gladwin et al., 1995; 1997; Beder,
1997; Beder et al., 1997; Mayhew, 1997; Welford, 1997) 33. What the ICC and the WBCSD
mean by sustainability and how it might be "safe in the hands of business" has been well and
widely expressed, (see Schmidheiny, 1992; Schmidheiny and Zorraquin, 1996; Willums,
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1998). For ICC and WBCSD, sustainability is to be equated with eco-efficiency and
environmental management systems. For them, the primacy of growth and profitability -
"business as usual" - are not open to question. Their case for sustainability must rest entirely
upon assertion - no substantial evidence is (or can be) offered. (For more detail see Gladwin,
1993; Gladwin et al., 1995; 1997; Beder, 1997; Beder et al., 1997; Eden, 1996; Mayhew,
1997; Welford, 1997). Whilst it should not surprise us that business would wish to be
removed from the searchlight of the Rio Conference, there are, equally, no grounds for being
comforted by this.
The activities of the ICC and WBCSD led us to question (i) to what extent do these bodies
speak for TNCs? and (ii) to what extent do companies - either passively or actively -
acquiesce with the position of the ICC and WBCSD on the (entirely incorrect) meaning and
implications of sustainability? A small, but increasing, number of corporations have publicly
announced their opposition to the notion of "sustainability is safe in the hands of business".
(For examples, see Bebbington and Thomson, 1996; Gray et al, 1995; 1998). Such public
statements from high-profile companies such as Thorn EMI, British Telecom, Ciba-Geigy
and IBM provide a powerful counter-hegemonic challenge to the ICC/WBCSD project.
Whilst such statements may, of course, be treated with cynicism they do, nevertheless,
demonstrate that (some) corporations wish to hand back responsibility for sustainability to
nation states - where, indeed, such responsibility must reside if it is to mean anything.
The Research Study

The results reported here are derived from a research project commissioned by the United
Nations Conference on Trade and Development's (UNCTAD) Intergovernmental Working
Group of Experts on International Accounting Standards and Reporting (ISAR hereafter). The
ISAR project - at least on the surface - sought to establish the role that accounting plays in the
"incentives and disincentives for the adoption of sustainability by transnational corporations".
The project was more subtle than this though. Whilst it is fairly well-established that current
conventional accounting can contribute to a corporations' development of environmental
management (as we have seen above and see, for example, Gray et al 1993; Epstein, 1996),
only imaginative reconstructions of "accounting" into, for example, environmental and social
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reporting, full cost accounting and sustainable cost calculations can begin to identify the very
real conflicts between the exigencies of sustainability and the image of economic success
presented by conventional accounting. If the project could demonstrate the impossibility - or,
at least, extreme unlikelihood - of movements towards sustainability in an accounting-
constrained and accounting-controlled environment then the study would have the political
merit of clarifying that the removal of the TNCs and environmental accounting from Agenda
21 was a mistake and that assertions that sustainability was safe in the hands of business were
incorrect.
The project sought to do this via reporting on case studies 34 from "leading environmental
corporations" in six countries and providing data from postal questionnaires 35 returned by 116
corporate executives in 19 countries36,37. The results, whilst clearly not generalisable, do offer
a persuasive glimpse into the views38 of many of the world's larger39 and "more-
environmentally aware" TNCs.
Before moving to the specifically-relevant data, some descriptive results may be useful in
setting the tone of the results40. Figure 3 reports a selection of questionnaire respondents'
views on the characteristics of sustainability.
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Figure 3: Corporate views on the nature of sustainability(Percentages agreeing with the

statement)
......views not incompatible with sustainability

Business' pursuit of sustainable development....
* requires a partnership of government, business and society (92.2%);
* requires a balance of the needs of the economy with environmental protection (88.8%);
* means tackling both social and environmental problems (86.2%);
* involves fundamental changes in attitudes and values (81.9%);
* will involve all parts of society in discussion and implementation (80.2%);
.......views which are contentious

Business' pursuit of sustainable development....
* is possible (77.6%);
* is compatible with the profit ethic (77.6%)
* is compatible with economic growth (69.8%)
.......views which are incompatible with sustainability Business'

pursuit of sustainable development....
* is already achieved in my organisation (38.8%)
* does not involve future generations (31%)
* is synonymous with environmental management (25%)
* has no implications for wealth distribution between nations (19%)
Breaking these results down into categories which indicate whether or not the statement is
compatible with the sustainable development literature gives a useful insight into the extent
of diversity of views about the subject. For example, whilst a large majority of respondents
appear to be familiar with many of the basic assumptions of sustainability (as suggested by
the large percentages shown in Figure 3 against the first statements), there are significant
minorities of corporations whose views express either a "strong" sense of sustainability 41
(over 22% doubt sustainability's compatibility with the profit ethic and over 30% doubt its
compatibility with economic growth) or who clearly know little or nothing about the concept
(as sustainable development, by definition, involves future generations, 31% of our selected
TNCs clearly have no idea about the concept). What is clear from even this data is that TNCs
do not speak with a single voice and that many TNCs have only the most basic understanding
of sustainability.
This sense of there being three broad groups of views expressed by corporations emerged
from the both the interviews and from other work (see, for example, Gray et al., 1998). That
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is, we might hypothesise that there is a substantial minority of businesses which is fully
committed to the ICC/WBCSD line of reasoning; a smaller minority which fully understands
the issues surrounding sustainability and has severe doubts about business' ability to deliver
it; whilst, in the middle, there is a large group of undecided (and perhaps ignorant)
organisations. It is the hearts and minds of this middle group that are going to determine the
outcome of the sustainability "debate". It is for the hearts and minds of this group that the
battle is being fought and whom the ICC/WBCSD is seeking to inculcate to their point of
view. We return to this below.
With this broad grouping of businesses in mind, we can move to a closer examination of the
respondents' views
Of particular interest are the factors that respondents cited as supporting or impairing the
ability of their company to embrace sustainability (however understood). Taking the results
as average scores across all the respondents, the following influences stood out. Extant law,
market opportunities and national governments were all scored as the most important factors
encouraging the pursuit of sustainable development. Indeed, only two factors were scored as
discouraging sustainable progress and these were, significantly, the financial accounting
system and other parts of the organisation. Relatedly, the three factors which were scored
lowest in terms of the encouragement they provided for adoption of sustainable development
were suppliers, capital markets and financial institutions.
Thus, even from a first, descriptive pass through the data we can conclude that TNCs do not
speak with a single voice, many have little or no depth of understanding of sustainability,
and yet, despite this, TNCs see the crucially important mechanisms of accounting and finance
as offering either the lowest levels of encouragement or actively discouraging moves towards
sustainability.
Respondents were asked a wide range of further questions about accounting and reporting.
The diversity of responses held no surprises in that the sample appears to contain the normal
range of companies - from those organisations in which the accounting and finance function
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dominate through to those where it is relatively passive. There was a substantial majority in
favour of environmental reporting (as should be expected given that it is the large
transnationals which are leading this development) but there was a greater diversity of views
on social reporting. Accounting was seen as principally serving environmental management
and, as previous surveys have shown, (see, for example, Epstein, 1996), there is a diversity in
both the extent to which environmental management systems have been implemented and the
extent to which accounting practices are supporting the development of EMS.
These responses do, at a minimum, demonstrate a diversity of views and practices - a

diversity that we were unable to relate, statistically, to the size, industry, country of origin or
diversity of operations of the respondent corporations. That is, we were unable to reject the
hypotheses of no statistical associations between: (i) views on sustainability, (ii) views on
environmental management, (iii) perceived influences on the company, and (iv) the role of
accounting; with any of variables: turnover; industry; number of countries of operation; or
country of origin; at 5% level of significance or better. The one exception to this related to
opinions relating to "hard sustainability" (see below) which was correlated with country of
origin at 95% confidence (p=0.019).This seems to resonate with something which we
instinctively expected to find. That is, experience here and elsewhere (see, for example, Gray
et al., 1995; Welford, 1997) suggested that a "hard sustainability" response would reflect a
corporate culture which itself would, most likely be the product of one or two senior
executives. Some countries are, we speculate, more likely to throw up such executives - they
certainly exist in Britain, Denmark, the Netherlands and Germany.
However, more relevant to the present paper were the results derived from a more detailed
analysis of the views expressed42. There were six major variables from the study that were of
particular interest to us. These were:
* The level of respondents' agreement with statements associated with "soft" or "hard"
visions of sustainability43. This produced two respondent scores for "soft sustainability" and
for "hard sustainability" respectively. The scores were statistically significantly inversely
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correlated with each other at the 99% confidence level, (p=0.0048) - as should be expected if
the measures are robust.
* The importance which respondents attributed to the work of the ICC, the WBCSD and
their own industry associations on their (and the company's) view on what sustainability
actually meant. This is subsequently referred to as the "ICC/WBCSD score".
* A summation of the importance attached by respondents to the role of accounting in

each of a range of general business decisions. (These included such matters as strategy,
investment decisions and performance appraisal). This variable is subsequently referred to as
"the importance of accounting"44.
* A summation score of respondents' professed familiarity with newer "environmental

and social accounting" methods that can, we might claim, offer some challenge to the way in
which conventional accounting inevitably tends to ignore - or at least down play - the
exigencies of sustainability. These methods included such issues as full cost accounting and
social auditing.
This variable is referred to as "accounting knowledge".
* A summation of respondents' views on the extent to which a range of accounting -

including more conventional environmental accounting - and financially-related techniques
and activities contribute towards helping the organisation move towards sustainability. (This
included such matters as environmentally-screening investments, identifying contingent
liabilities and financial risk assessment). This variable is referred to as "accounting help".
From the themes discussed in the paper, there are a number of relationships between these
variables that we would expect to find45. The most important relationship we expected to find
was that positive views on "soft sustainability" would be highly related to the ICC/WBCSD
score. That is, respondents subscribing to a soft sustainability point of view would be more
likely to be in accord with and, probably, more influenced by the ICC and WBCSD. Initial
analysis did not reveal such a relationship but, considering the data more carefully, if the
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ICC/WBCSD scores were grouped into "high", "medium" and "low", ANOVA allowed us to
reject the hypothesis that the ICC/WBCSD score is unrelated to soft sustainability (p = 0.006).
ANOVA did not, however, allow us to reject the hypothesis that the ICC/WBCSD score is
unrelated to hard sustainability (p = 0.563). Further analysis suggest that this is a highly
robust conclusion. For example, if the medium and low ICC/WBCSD scores are combined,
regression shows soft sustainability significantly correlated with that score (p= 0.0013).
This important and robust conclusion (especially given the doubts one might have about the
data) gives a great deal of confidence with which to support suspicions about the influence of
the ICC and WBCSD. There seems to be little doubt that amongst a significant number of
TNCs, attachment to a business-as-usual "sustainability" owes much to the ICC and WBCSD
activities.
The potential role of the accounting variables is now relevant. It seems highly likely (see, for
example, Gray et al, 1995; 1998) that organisations within which accounting is dominant
("the importance of accounting") are less likely to be able to conceive of sustainability in
other than financial (i.e. ICC/WBCSD) terms. Similarly, we expect that organisations which
see accounting as helping ("accounting help") moves towards sustainability will, equally, be
of a more accounting orientation and more likely to be see sustainability in exclusively "soft"
terms.
This is, largely, what the respondents' views demonstrate.
Whilst the importance of accounting is not, as far we can assess, correlated with soft
sustainability (a result for which we are unable to offer a robust explanation) it is highly
correlated with the ICC/WBCSD score. A multiple regression with the importance of
accounting as the dependent variable and soft sustainability and ICC/WBCSD as the
explanatory variables shows that ICC/WBCSD "explains" 57% of variability in the
importance of accounting (regression coefficient has p = 0.0009). A simple regression,
omitting soft sustainability increases the explanatory power to 58% (regression coefficient
has p = 0.0006)46. Relatedly, accounting help "explains" 26% of the variability in soft
sustainability with a significant regression coefficient (p= 0.0155), while ICC/WBCSD
31
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"explains" 79% of the variability in accounting help with a significant regression coefficient
(p = 0.0045).
As we explained above, we have restricted ourselves to reporting only the persuasive results.
With data such as this, less persuasive results are as likely to be the result of "noise" in the
data. By corollary, to have results of such persuasiveness in the circumstances is quite
compelling to our mind. What seems apparent from this brief report of the data is that there
is a very clear and significant interplay - even if we have not succeeded in fully modelling it
from the data - between accounting orientation, soft sustainability and the influence of the
ICC/WBCSD. That such a relationship exists and can be demonstrated lends relatively
compelling support to our initial conjectures that the role of accounting and the lobbying and
propaganda activities of the ICC and WBCSD are strongly implicated in pursuit of "soft
sustainability" by business. That such an implication can be demonstrated seems to us,
sufficient for our purposes here.
However, it is appropriate to note that we were unable to identify any influence of the
variable accounting knowledge. Whether organisations know about the newer and/or more
sophisticated accounting methods for introducing the harsh realities of sustainability into
organisational information systems seems, as far as we can tell, to be an irrelevant factor in
influencing TNCs' responses to the sustainability agenda. We have no wholly convincing
explanation for this47.
The survey demonstrates that amongst the better informed TNCs (we have to maintain that
the sample shows this) there are a significant proportion who do not, cannot or will not accept
the principal exigencies of sustainability. Even amongst those who would appear to recognise
these exigencies, there would not appear to be - at least systematically - any willingness to
follow through on those views in a manner which would threaten the conventional, financial
and economic existence of the organisation. This is unsurprising, of course: as several of our
interview respondents suggested, how can they as individuals, embrace a sustainability
which, whilst they know it to be correct, threatens the organisation for which they work?
32
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These individuals must exist in a situation of cognitive dissonance and - as several senior
company employees have expressed it to us - what can they do even if they wish to?
For the majority of, even relatively well-informed, companies the sustainability agenda
remains a comfortable, business-as-usual experience of environmental management and
accounting success. For a minority it is an uncomfortable world where financial success and
environmental (and social) degradation meet in conflict. But even here, where the conflict is
recognised, the sheer overwhelming dominance of the business and economic organisation of
financial capitalism does not offer many strategies for well-informed individuals (or
organisations) to act in accordance with their beliefs. Indeed, the very dominance of business
thinking makes it virtually impossible to even engage with the issues in a business context.
So, we have to conclude that the sustainability agenda is anything but safe in the hands of the
TNCs. From the point of view taken throughout this paper how could it be otherwise?
Similarly, of course, the rare individuals who can recognise the essential conflict between
economic success and environmental degradation can make little headway in the face of a
business and economic organisation which refuses to admit to the possibilities of such
conflict. In this, the status quo is so expensively and successfully defended by such eloquent
champions as ICC and WBCSD and is ably assisted by accounting and finance - and an
accounting profession which seems unaware of these life-threatening issues and which, one
may reluctantly conclude is really both entirely ignorant and indoctrinated.
Concluding Comments
Our primary purpose in this paper has been to provide a brief introduction and review of the
burgeoning environmental accounting literature. We have sought to give this review a focus
by exploring the extent to which this new literature adopts - albeit implicitly - the traditional
concerns of accounting and thereby adjudges its efficacy by the extent to which it is
successful in aiding the pursuit of the traditional goals of business and economic organisation.
For many, perhaps the majority, of academic accountants there is little or no conflict between
an accounting which serves business and an accounting which serves the public interest. To
justify this position, we need to demonstrate that business and economic organisation
33
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successfully serves that public interest. We find this difficult to justify. Such a difficulty is
more difficult still when one considers environmental issues and, most particularly, if (as do
most environmentalists) we consider environmental degradation to be a systemic matter - the
inevitable consequence of our system of organisation. If that is the case then it becomes very
difficult indeed to demonstrate that our current systems of business and economic
organisation are capable of delivering more environmentally (and socially) benign outcomes.
To develop this thesis, the paper employed the lens of managerialism, sought to demonstrate
the problems that may arise through a managerialist orientation and reviewed the
environmental accounting literature in order to illustrate its managerialist - or at least
managerialist by default - orientation. The final part of the paper sought to illustrate the
consequences of this orientation by demonstrating that TNCs are, in all probability, incapable
of delivering sustainability. The conclusion we draw is that if business cannot deliver
sustainability and accounting - including environmental accounting - seeks to serve business
then accounting (including environmental accounting) is almost certainly acting against the
interests of a sustainable future.
This is not, however, intended as a counsel of despair, far from it. In the first place there is
not any theoretical closure here. Whilst it seems to us that conventional accounting and
business are essentially environmentally inimical (albeit, perhaps, systemically and
unintentionally) this does not mean that accounting need act in this way. There are a number
of positive messages to be taken from the environmental accounting literature. In the first
place, it is almost certainly the case that reducing environmental impact and, in the longer
term, ecological footprint, is a highly desirable activity. Accounting systems can help here but
- and it is a major `but' - accounting researchers must beware of believing that that alone can
deliver sustainability. It almost certainly cannot. Secondly, it is almost certainly the case that
environmental reporting has been especially successful in opening up new areas of discourse
and, together with the newer approaches to social accounting, begun to change the terms of
the debate between business and society. Central to much environmental concern is the need
for new discourse ethics and new terms of the `social contract'. This is a new and difficult
area - not least because it still doesn't get around the major power differences between the
organisations and the public. Nevertheless, it seems that environmental (and social)
34
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____
accounting has a subversive, developmental, discourse role to play here. This, in very
different ways, is the essence of the arguments of, for example, Lehman (1995; 1999) and
Arnold and Hammond (1994). Arnold and Hammond demonstrate the way in which different
interest groups employ "social accountings" to bolster their ideological position. Thus social
(and thus environmental) accounting can be deployed in support of or in opposition to
corporate interest. The key point is that hegemony is never complete and, carefully applied,
environmental and social accounting has the potential to disrupt and change discourse in the
public interest. From a different, communitarian, point of view, Lehman has explored the way
in which the newer accountings - like social and environmental accounting - can be
potentially crucial in the development of a more democratic civil society but that, again, the
deployment of these accountings must be undertaken with an explicit recognition that its
function must be society- (or environment-) centred, not implicitly and unconsciously
business-centred.
Thus, environmental accounting has the potential to act as a legitimating device, bolstering
extant business and economic organisation in the pursuit of the traditional goals - goals
which, we believe, can all too easily be environmentally malign. However, this need not be
the case. An environmental (or a social) accounting has a counter-hegemonic potential but
that is a potential which can only be exploited if researchers and others involved in the
development and deployment of the accounting act in a way which pays explicit attention to
challenging potential of the accounting. Environmental accounting has considerable potential
to open up new discourses around the business-society-environment boundaries and to
renegotiate those boundaries (Power, 1994; Gray et al., 1995b). It is our contention that
environmental accounting research has yet to fully appreciate - and rise to - this challenge. If
it does not do so, then environmental accounting may - despite its honourable intentions - be
encouraging environmental desecration. If environmental accounting is not to become an
"environmentally destructive accounting" - as opposed to an environmentally-benign
accounting - it must pay serious attention to its fundamental assumptions and be more self-
consciously aware of its radicalizing and challenging potential.
35
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1. We would like to express our gratitude to Lorraine Ruffing and the United Nations Conference on Trade and
Development who encouraged and supported the work on which this paper is based. We also wish to
acknowledge a considerable debt to those who helped in the field work and the application of the questionnaire:
Matteo Bartolomeo (Italy); Jong-Seo Choi (Korea); Bernarde Christophe (France); Kathy Gibson (Australia);
Chris Hibbit and Mark Gijtebeck (Netherlands); Christina Jasch (Austria); Helle Bank Jorgensen (Denmark);
Katsuhiko Kokubu and Katsuhiko Tomimasu (Japan); Carlos Larrinaga (Spain); Fredrik Ljungdahl (Sweden);
Murray Lynn (Hong Kong); Mikael Niskala (Finland); Don Stone (USA); Quintus Vorster (South Africa) as
well as the companies who gave their time and help on both the field work and the postal questionnaires. In
addition we would wish to express our gratitude to Donald Sinclair without whose statistical expertise and effort
the data analysis would have been far less penetrating or convincing. Further, we are grateful for comments
received on earlier drafts of the paper from attendees at a seminar at Leeds University (UK), from David Owen,
from Marty Freedman and two anonymous referees. The work of CSEAR - from which the opening parts of the
paper are drawn - is financially supported by the Institute of Chartered Accountants of Scotland whose support
is very gratefully acknowledged.
2.An important caveat in what follows is that `capitalism' is used to refer to the world's dominant system of
economic and business organisation which, in the so-called western developed nations we take as the norm. Not
discussed here is either the different forms that capitalism does and could take, nor the sometimes-voiced
argument that many of the symptoms (especially environmental ills) attributed to capitalism apply even more so
the excommunist countries and particularly those of the old Soviet bloc. There is nothing intended in this, these
omissions are simply for matters of simplicity and the omission of either does not, as far as we can assess,
weaken the essence of the arguments we consider.
3.Our use of the term, managerial, might also lead the reader to infer that what follows is a Marxist - or at least
Marxian - analysis and critique. This would be incorrect in that although the themes we explore and the
arguments we consider are significantly informed by the Marxist and neo-Marxist literature - especially that
which has appeared in accounting - they also draw more widely from the broad alternative/critical debate. We
would not wish to suggest that we could, in any way, consider ourselves Marxist scholars.
4.If, indeed, the `social' and the ènvironmental' can be separated in this way.
5.We will tend to use the term "sustainability" here. Increasingly, however, the term "sustainable development"
is replacing sustainability as the preferred term. One of the dangers of the term "sustainable development" arises
from the negative connotations of "development" - to mean growth, exploitation and all the things that have led
to the environmental crisis itself. This, in turn, can lead to a state of mind in which sustainable development is
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viewed entirely from a "business as usual" point of view. This need not be the case of course. We tend to think
of
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sustainable development as the process by which we move away from unsustainability - an idea we gratefully
borrow from Ian Thompson and Olwen Duncan.
6. We have been unable to isolate the first coining of these terms but their provenance is usually attributed to the
WBCSD.
7.If accounting is to respond to the sustainability challenge (see later) then it falls to social accounting to seek to
address the eco-justice ideas. It has, largely, failed to rise to this challenge so far.
8.And is sometimes trivialised by the phrase "doing more with less".
9.At least there are very few public statements to this effect. There may well be commentators who either do not
believe this to be the case or do not care whether or not this case obtains. Public utterances along such lines are
currently scarce.
10.That is, on the one hand it is pretty difficult - perhaps impossible - to make any substantial case against the
argument that levels of western `success' - growth, production, consumption, profit, GDP or whatever - are
broadly correlated with the decline in indicators about the environmental and social health of the planet. On the
other hand, however, well-being in the west has largely risen through this success, non-capitalist economies
have, it is claimed, suffered greater devastation that western nations, there is an optimism that the ingenuity of
business will find the requisite technical fixes and, finally, causality (between organisational behaviour and
environmental and social dislocation) are not unambiguously `provable'. There is, therefore, a degree of `faith'
in beliefs in this area. The direction of our beliefs is towards the more pessimistic, systemic end of the spectrum.
11. There is no necessity for environmental accounting to be managerialist. Considerations such as these and
discussions about the political orientation of social and environmental accounting are dealt with in more
detail in Owen et al (1997) and Bebbington (1997).
12. The only circumstance under which such a question is not crucial is if it can be unequivocally shown that
the best solution for environmental and social degradation is to encourage more economic growth, more
consumption etc.. This has not been shown and probably cannot be shown to be true (see e.g. Ayres, 1998).
By contrast, all the evidence of which we are aware suggests exactly the opposite.
13. The consequences of that, we hope we have shown, depend upon the likelihood that companies understand
and can deliver sustainability.
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14. Such a point of view could, obviously, be challenged. We have chosen not to develop this argument any
further here as to do so would lengthen and already lengthy paper.
15. There are over 200 accounting and finance journals in the English language alone. There are likely to be at
least as many in other areas such as management, business and environmental issues. Whilst the bulk of the
development of environmental (as with social) accounting has taken place in a selection of these journals
(most obviously Accounting Organisations and Society, Accounting, Auditing and Accountability Journal,
Advances in Public Interest Accounting, Critical Perspectives on Accounting, Accounting Forum and, in
management and business: Business and Society Review, Business Strategy and the Environment, Journal of
Business Ethics and such like) more is appearing in both the mainstream and other `specialist' journals all
the time.
16. Other material has been published in many languages. In addition to direct translations of extant English
language material (into, for example, Japanese, Polish, Spanish etc.,) some examples of original non-English
language material include publications in French (e.g. Christophe, 1996), Japanese (e.g. Yamagami and
Kikuya, 1995), Slovenian (Vezjal, 1998), Russian (e.g. Ruffing, 1997), Finnish (e.g. Niskala and Matasaho,
1996) and Danish (e.g. Ulhoi and Rikhardsson, 1997).
17. We are also aware that we may have a tendency to place more emphasis on European publications. We
believe that our coverage of Australasian and South African publications is reasonable but we are conscious
that our coverage of North America may seem incomplete.
18. However, there are special issues of journals which provide a taste of the area - these include special issues
of Accounting Organisations and Society (17.5, 1992); Accounting Auditing and Accountability Journal
(4.3, 1991 and 10.4, 1997); Accounting Forum (19.2/3, 1995 and forthcoming); Journal of Cost
Management (9.2, 1995); Journal of Accounting and Public Policy (16.2, 1997); Greener Management
International (17, Spring, 1997); European Accounting Review (forthcoming). In addition see also the
newsletter Social and Environmental Accounting which carries regular reviews of publications across the
spectrum of social and environmental accounting.
19. Figure 2 is, inevitably, over-simplified. Consequently, this review will also be oversimplified - and, indeed,
will not give equal attention to each element in the Figure. Other matters - such as taxation (see for example
O'Riordan, 1997; Lockhart, 1997; and the journal Environmental Accounting and Taxation) or tradable
pollution licences (see, for example, Wambsganss & Sandford, 1996; - and the commentaries on this article
in Critical Perspectives on Accounting 7(6) 1996;) - could easily be overlooked by such a structure to the
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review. Furthermore, it would be easy to overlook areas of cross-over between the categories - such issues
will be touched upon as appropriate on the way through.
20. See, for example, Gray et al. (1993) and Gray and Bebbington (forthcoming) for a summary.
21. These refer to: the British Standards Institution which identifies its standards with the prefix BS (as in
BS5750 - the quality management standard); the European Union's Eco-Management and Audit Scheme
(EMAS); and the International Standards Organisation (ISO) whose standards on environmental issues and
management are a series of standards in which, for example, ISO14001 relates to environmental
management systems.
22. The ökobilanz is more typically known in English as the eco-balance or mass-balance (or even the
environmental balance sheet). The ökobilanz, at its most developed, seeks to capture all physical inputs to
the organisation and to "balance" these with all emissions, wastes, leakages and final products which leave
the organisation and, through this process, to identify all physical throughputs which can then, in turn, be
controlled by the organisation.
23. The "win-win" term is based on the idea that reductions in material usage (for example) will both reduce
environmental impact and organisational costs - hence both the economic organisation and the environment
`win'. 24. See especially Weizsäcker et al, (1997) for a careful and subtle exploration of these (and related)
issues.
25. See Tinker and Puxty (1995) for one exploration of this. Other critiques can be found in, for example,
Cooper (1988).
26. Examples include: Australia (Gibson and Guthrie, 1995); Finland (Niskala and Pretes, 1995); Japan
(Kokubu et al., 1994); Korea (Choi, 1998); New Zealand (Hackston and Milne, 1996); South Africa (de
Villiers, 1995; 1998; Savage, 1994); Spain (Carrasco and Larrinaga, 1994); Sweden (Ljungdahl, 1994); the
UK (Gray et al., 1995a; Jupe, 1997; KPMG, 1996); and the USA (Gamble et al., 1995; Lober et al., 1997).
27. Examples include pan European studies such as Adams et al. (1995; 1998); Azzone et al. (1996); Roberts
(1991) and broadly international studies such as Gamble et al. (1996); SustainAbility/UNEP (1997; 1998)
and KPMG (1997).
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28. As with the many studies of social disclosure, any statistically sound and stable relationship with financial
performance continues to prove elusive. See, for example, Belkaoui and Karpik (1989), Ullmann (1985),
Freedman and Ullmann (1986), Freedman and Jaggi (1988), Jaggi and Freedman (1992), Roberts (1992).
29. Although this is changing notably in, for example, Denmark, Sweden, Netherlands and Korea.
30. Some of the principal elements of this debate can be found in Tinker et al (1991), Puxty (1986; 1991),
Arnold and Hammond, 1994; Gray et al, (1996), Owen et al (1997), Bebbington (1997), Power (1991; 1994;
1997), Lehman (1995; 1999).
31. Such anxieties are not new, see, for example, Bedford (1969), Estes (1975), Brummett (1975).
32. Descriptive data from part of this study and more detail about the method and approach of the research have
been previously reported in UNCTAD (1996) and Bebbington and Gray (1996). These reports were
descriptive in orientation. The data reported here is from the full study and is subject to statistical analysis -
neither of which have been reported previously.
33. Such examples of business lobbying activity so clearly against the public interest is not, of course, new. We
saw such activity widely reported for the Kyoto conference on global warming and Rahman (1998) provides
an excellent insight into such activities on a wider time-scale.
34. These were a cosmetics company in the UK (Case-1 plc), a food manufacturer in the Netherlands (Case-2
NV), a chemicals company in Italy (Case-3 SpA), a chemicals company in Switzerland (Case-4 SA), an
electrical/electronic manufacturer in Austria (Case-5 AG) and an energy utility in Spain (Case-6 SA).
Interviews were held with the environmental manager (in all six cases), the accountant (in three cases) and a
senior board member with environmental responsibilities (in two cases). Interviews were held in native
English in one case, in second-language English in one case and in a mixture of English and mother tongue
with an International Associate of The Centre for Social and Environmental Accounting Research acting as
translator in four cases.
35. The questionnaire concentrated on 6 key areas: understanding of the terms "sustainability" and "sustainable
development"; influences on understanding of these terms; the groups and organisations exercising
influence on companies towards/away from sustainability; the importance, in terms of contribution to
sustainability, of a range of activities to the organisation; identification of constraints on sustainable
development; and then three questions on accounting, accounting-related issues and sustainability in the
respondent company. This questionnaire was then field-tested with 3 UK TNCs. It was found to be mostly
very straightforward. Copies of the questionnaire can be obtained from the authors.
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36. ISAR required as great an emphasis as possible on companies based in non-Anglophone countries. As a
consequence the research drew very heavily from the International Associate network of the Centre for
Social and Environmental Accounting Research (CSEAR) based in Scotland, UK. The Centre, at that time,
had Associates in 21 countries - 14 of whom were non-Anglophone. 19 of the 21 - including 13 non-
Anglophone Associates - were able to assist to assist with both the case studies and the survey. Each
CSEAR Associate was asked to identify the 10 leading companies in their countries which were associated
with - or were known to be - at a relatively advanced stage in responding to environmental issues and/or
developing its response to sustainability. They contacted their chosen companies to establish willingness to
participate, their willingness to partake in an interview-based case study and the company preference for the
questionnaire in English or mother-tongue. 10 copies of the printed questionnaire were then dispatched to
the Associates in each of 18 countries. Questionnaires were dispatched from the UK to each of 10
companies in a further three countries (one of which was the UK itself). Any subsequent translation was
conducted by the Associate. The results were translated back into English (where appropriate) before being
returned to the UK for analysis. Two country Associates were unable to partake in the survey in the end and
so we end up with 116 responses from 19 countries (including the UK) - a response rate of 62%
37. Response rates varied across countries: 5 from the UK, 7 from Italy, 5 from Austria, 2 from Denmark, 6
from Sweden, 9 from the Netherlands, 8 from Finland, 5 from Korea, 8 from Japan, 3 from Switzerland, 10
from South Africa, 4 from France, 3 from Hong Kong, 6 from Spain, 5 from Germany, 6 from Poland, 7
from Australia, 8 from USA and 9 from Canada. In percentage terms, the response rates varied from 20% to
100%.
38. Of the 116 questionnaires returned, 31% were completed by a board member with environmental
responsibility, 56% by a manager with environmental responsibilities, 6% by financial directors or
accountants and 7% were unidentified. Respondents were employed in companies whose industry emphasis
covered a wide range: 43% from manufacturing, processing and engineering; 32% from chemicals and
pharmaceutical, 10% from utilities; 7% from services and 8% from other industries.
39. Average turnover of the companies was £7.2bn and half had operations in more than 10 countries.
40. More descriptive data from a proportion of the final respondents, more detail on the cases plus more detail
on the research method are reported in UNCTAD (1996).
41. "Strong" sustainability - also referred to as "hard" or "deep green" sustainability - relates to the view of
sustainability which dominates the development literature and which, placing planetary health at the heart of
54
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____
the analysis, sees the concept as fundamentally at variance with most of the success indicators of modernity
(most notably, growth, profit, levels of consumption, material well-being as currently measured and so on).
We return to this matter below when explain how our questions on sustainability were categorised.
42. We are conscious that the data reported here must be treated with caution. Consequently we have
maintained, throughout, a stringent significance level - preferably 1% - to compensate, somewhat, for the
inevitable doubt that there must be over the research design of the questionnaires arising, not least, from the
range of countries and languages involved.
43. The questions relating to views on sustainability had been deliberately framed so that a number of the
questions (8) produced higher scores if respondents' views were in line with the environmental and
development literature on the issues of sustainability, whilst others (5 questions) were explicitly resonating
with the WBCSD line on sustainability. The "hard sustainability" questions recognised that business cannot
achieve sustainability, that it involved fundamental, complex and expensive change, could only be
conceived as un-sustainability and involved, Third World nations, both social and environmental issues,
future generations and wealth distribution. The "soft sustainability" questions reflected the assumptions that
sustainability was already achieved in the organisation, was compatible with pursuit of profit and economic
growth, involved a balance between economics and environmental issues and was synonymous with
environmental management. The summative scores of respondents to these question allowed us to categorise
- quite simply - respondents into hard and soft sustainability.
(See Bebbington and Thomson, 1996; for more detail on this distinction).
44. A factor analysis identified a number of the principal components of this score. Whilst use of this
information would have made the statistics more robust, we were reluctant to screen out any "noise" for fear
of piling conjecture upon supposition. Pertinently, though, all scores to the individual questions contributed
in the same direction thus suggesting that the measure was a not unreasonable one.
45. As we have no firm theory about the directions of causality - and, indeed, suspect that the relationships are
both reflexive and highly likely to be influenced by other factors of which we are unaware as yet - we have
explored relationship in both directions. As our concern here is to establish if relationships exist at all, the
direction seems to us to be a less important factor.
46. Somewhat counter-intuitively, a simple regression with importance of accounting as the explanatory
variable and ICC/WBCSD as the dependent variable did not produce a significant relationship. Our inference
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from this is that some intervening variable - perhaps an analogue of culture or organisation style - is at work
in the data. We were unable to identify such a variable from this analysis.
47. We do know that very few of the sample have any detailed knowledge of the techniques and, whilst a
significant minority claim some awareness of the methods, few have applied them in the detail which is
necessary to bring the realities of sustainability into conflict with business objectives. We also know, from
other work, that many companies have started to undertake experimentation with the methods and have
pulled back out of concern, inter alia, that the "answers" would be unacceptable to a traditional organisation
- that is, a formal "measure" of the organisation's degree of unsustainability poses a threat to the legitimacy
of the organisation which, not surprisingly, organisations would prefer to ignore.
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Rob Gra y Jan Bebbington

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Running Title: Environmental Accounting, Managerialism and Sustainability

January 2000: a revised version of this paper subsequently appeared in Advances in

ENVIRONMENTAL ACCOUNTING, MANAGERIALISM AND

Accounting and Managerialism

Accounting, the Environment and Sustainability

The principle employed to articulate this situation is that of sustainability. Sustainability - or

Figure 1: Do We Currently Satisfy the Conditions for Sustainability?

Eco-justice NO - income inequality is growing, NO - present trends will make

Eco-Efficiency NO but some possibly positive POSSIBLY if one is optimistic

Eco-Effectiveness NO - all evidence suggests that NO - no evidence to suggest a

This link between accounting and environmental degradation is well-established in the

reproduced in environmental accounting13. The presence of such implicit managerialist

Environmental Accounting in the Literature

Further, we generally find it convenient to think of environmental accounting as comprising a

* Environmental issues and financial statements;

* Impact on and reaction of the statutory audit function;

* Relevance of and reaction by financial institutions and markets;

* Social accounting, auditing and reporting;

* Accountants and the accounting profession;

Management Accounting, Environmental Management and Auditing

Environmental Issues and Financial Statements

research is that which investigates the statistical relationships of corporate environmental

environmental reporting as an indicator of the researcher's managerialist or alternative

In essence, a non-managerialist environmental reporting would have to challenge an

Social Accounting and Reporting

Accountants and Accounting Education

Such literature, in its explicit recognition of an uncomfortable conflict between current

examined and, typically, is employed as an analogue for eco-efficiency (which it clearly is

Background to the Study

The Research Study

Figure 3: Corporate views on the nature of sustainability(Percentages agreeing with the

......views not incompatible with sustainability

.......views which are contentious

.......views which are incompatible with sustainability Business'

These responses do, at a minimum, demonstrate a diversity of views and practices - a

* A summation of the importance attached by respondents to the role of accounting in

* A summation score of respondents' professed familiarity with newer "environmental

* A summation of respondents' views on the extent to which a range of accounting -

Interdisciplinary Perspectives on Accounting Conference Proceedings Vol 1. (University of Manchester) 1997

Canadian Institute of Chartered Accountants (1993) Environmental Stewardship: Management accountability

Christophe B. (1996) La comptabilite verte: De la politique environnementale à l'écobilan (Brussels: De Boeck

Hirst P & G.Thompson (1996) Globalization in Question (Cambridge: Polity)

International Journal of Strategic Cost Management, 1(1), Summer pp1-6

Kamp-Roelands N. (1996) Expert Statements in Environmental Reports (Bruxelles: FEE)

KPMG (1996) UK Environmental Reporting Survey 1996 (London: KPMG)

KPMG (1997) Survey of Environmental Reporting 1997 (London: KPMG)

KPMG International Environmental Network (1997) Environmental Reporting (Copenhagen: KPMG)

Niskala M. & R.Matasaho (1996) Environmental accounting (Helsinki: WSOY, Ekonomia)

O'Riordan T (ed) (1997) Ecotaxation (London: Earthscan)

Society 17(6) (pp595-612)

Schmidheiny S. (1992) Changing Course New York: MIT Press.