Environmental Accounting

Topics: Environmentalism, Environment, Sustainability Pages: 13 (3563 words) Published: February 16, 2010

Concept of Environmental Accounting and Practice in India
Every business has an overriding responsibility to make the fullest possible use of its resources both human and material. An enterprise is a corporate citizen. Like a citizen it is esteemed and judged by its actions in relation to the community of which it is a member as well as by its economic performance. As far as Indian corporate sector is concerned it is sad, but true that Dr. Mukesh Chauhan

ductivity and leads to loss of amenities. The developing countries like India are facing the twin problem of protecting the environment and promoting economic development. A tradeoff between environmental protection and development is required. A careful assessment of the benefits and costs of environmental damages is necessary to find the

(The author is a Lecturer in Commerce at Mahatma Gandhi, Govt. Arts College, Mahe (Pondicherry). He can be reached at mukesh_ garima@Yahoo. com)

For India, both ‘Environment Protection’ and Economic Development’ are the matters of great importance. However, some sort of tradeoff is needed between the two. For this purpose, Environmental Accounting is required to measure the environmental impact of economic activities by corporate sector. A standard system of this type of accounting is still evolving in India. The article provides an insight into the concept in the Indian perspective.

it has not been performing as a good citizen that’s why there are so many laws that have been laid down and further amended from time to time as and when required to bound the corporate sector to fulfil their social responsibility for better development of Indian Economy. Responsibility towards environment has become one of the most crucial areas of social responsibility. Recent years have witnessed rising concern for environmental degradation, which is taking place mainly in the form of pollution of various types, viz. air, water, sound, soil erosion, deforestation, etc. It is a worldwide phenomenon. It spoils human health, reduces economic pro-

safe limits of environmental degradation and the required level of development. A study on price of pollution in India made by two World Bank officials for 1992 (M. Balachandran 2002) shows the impact of the major problems in terms of cost. They have calculated that damage to environment costs India about Rs. 34,000 cr per year, about 9.5 per cent of gross domestic product. But unless the proper accounting work is done either by the individual firm or by the Government itself, it cannot be determined that both has been fulfilling their responsibilities towards environment or not. Therefore, the need of environmental account-

ing has emerged. The joint workshops organised by the United Nations Environment Programme (UNEP) and the World Bank set out to examine the feasibility of physical and monetary accounting in the area of natural resources and the environment and to develop alternative macro indicators of environmentally adjusted and sustainable income and product. Parallel to this revision, the statistical division of the United Nations (UNSTAT) has developed methodologies for a system of Integrated Environmental and Economic Accounting (SEEA), issued as an SNA handbook on Integrated Environmental and Economic Accounting. Environmental accounting needs to work as a tool to measure the economic efficiency of environmental conservation activities and the environmental efficiency of the business activities of company as a whole. Management seldom tries to make proper arrangement to save the environment unless it is required as per law as there is no direct relationship between investment and benefits. In many contexts environmental accounting is taken to mean the identification and reporting of environment specific cost such as liability cost and waste disposal costs. It is accounting for any costs and benefits that arise from change to a firm’s, products and processes where the...
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