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Dilfraz Singh, Lovely Professional University
Unit 3: Environmental Accounting

Unit 3: Environmental Accounting Notes

CONTENTS
Objectives
Introduction
3.1 Methodology of Environmental Accounting
3.2 Objectives of Environmental Accounting
3.3 Observations
3.4 Summary

3.5 Keywords
3.6 Review Questions
3.7 Further Readings

Objectives

After studying this unit, you will be able to:
Describe the methodology of environmental accounting
State the objectives of environmental accounting
Identify the key observations of environmental accounting

Introduction

The increasing importance of considering environmental aspects within a company’s decisions
demands a broader scope in management accounting. Eco-management accounting should enable
management to integrate environmental issues into the decision-making process.

—Thomas Orbach and Chrisa Liedtke (1998)
Environmental accounting is defined as the accountants’ contribution towards environmental
sensitivity in organizations. It gained prominence in the 1990s. The emphasis on the social
responsibilities of the accountancy profession is not new, having been led to prominence by the
social accounting debate of the 1970s. The social consciousness of the accountancy profession
was started to receive its attention. It focused on extending accountability to numerous
stakeholders by necessitating disclosure of social information in corporate annual reports.

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Caution The accountability function of accounting was believed to be fulfilled by reporting
(financial and social) information that stakeholders would find useful in their decision
making process.

3.1 Methodology of Environmental Accounting

The preparation of environmental accounting is affected by a number of factors such as the
magnitude of the investment required, the objectivity of the data, the ability to compare different
kinds of environmental impacts, and the kinds of policy purposes to which they may be applied.

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