ENVIRONMENTAL

ACCOUNTING
FLAWS IN CONVENTIAL
ACCOUNTING SYSTEM

The traditional measures focused mainly on goods and
services that are bought and sold in markets and
ignored the non-marketed services provided by natural
assets.

There is inconsistent treatment of man-made and
natural assets.

These measures like GDP and NDP do not adequately
represent the degradation of environment.


ENVIRONMENTAL ACCOUNTING
Environmental Accounting also referred as green
accounting is defined as an important tool for
understanding the role played by the environment in
the economy as a mutual relationship is identified
between the two.
Environmental accounting prepares accounts that
exhibit the cost of environmental conservation during
the normal course of business Costs can include costs
to clean up or remediate contaminated sites,
environmental fines, penalties and taxes, purchase of
pollution prevention technologies and waste
management costs

FUNCTIONS OF ENV.
ACCOUNTING
Internal Functions
Internal function makes it possible to manage
environmental conservation cost and analyze the cost of
environmental conservation activities versus the benefit
obtained, and promotes effective and efficient
environmental conservation activities through suitable
decision-making.
External Functions
By disclosing the quantitatively measured results of its
environmental conservation activities, external functions
allow a company to influence the decision-making of
stakeholders, such as consumers, investors and local
residents.
FORMS OF ENVIRONMENTAL
ACCOUNTING
Environment
Management
Accounting(EMA)
Management
accounting with a
particular focus on
material and energy
flow information and
environmental cost
information.
Environmental
Financial
Accounting (EFA)
Financial Accounting
with a particular focus
on reporting
environmental liability
costs and other
significant
environmental costs.
Environmental National
Accounting
(ENA)
National Level
Accounting with a
particular focus on
natural resources
stocks & flows,
environmental costs &
externality costs etc.
PRESENCE IN INDIA
HERE ARE A FEW COMPANIES WHICH PRACTICE
ENVIRONMENTAL ACCOUNTING IN INDIA
1. Asian Paints (India) Ltd
Ecology and Safety:
Samples of treated effluents are periodically checked for Compliance
with standards
2. Goodlass Nerolac Paints Limited
Pollution: The company regularly monitors measures in force in
accordance with the Pollution Control Act for the protection of
environment and for ensuring industrial safety. The company carries out
improvements regularly to ensure full compliance with the statutory
requirements.
3. Maruti Udyog Limited:
Environment: Modification of the existing effluent treatment plant was
undertaken to take care of additional effluents generated due to capacity
expansion




BENEFITS
Creation of different indicators of sustainable
economic well being.
Through Green Accounting, nations can observe their
economic growth at a sustainable level.
Firms can also decide how much of an environmental
resource to use and when to use it.
Important to the sustainability of environmental
resources that do not have a market price.

LIMITATIONS
There is no standard accounting method
Input for EA is not easily available because costs
and benefits relevant to the environment are not
easily measurable
EA is a long-term process
Many business and the Government
organizations even large and well managed ones
dont adequately track the use of energy and
material or the cost of inefficient materials use,
waste management and related issue