Environmental accounting is a subset of

accounting Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "languag ...

proper, its target being to incorporate both economic and environmental information. It can be conducted at the corporate level or at the level of a national economy through the

System of Integrated Environmental and Economic Accounting System of Environmental-Economic Accounting (SEEA)System of Environmental-Economic Accounting 2012: Central Framework – final, official publication 2012, UN, EC, IMF, OECD and World Ban"System of Integrated Environmental and Economic Accounting" ...

, a satellite system to the National Accounts of Countries (among other things, the National Accounts produce the estimates of gross domestic product otherwise known as GDP). Environmental accounting is a field that identifies resource use, measures and communicates costs of a company's or national economic impact on the environment. Costs include costs to clean up or remediate contaminated sites, environmental fines, penalties and taxes, purchase of pollution prevention technologies and waste management costs. An environmental accounting system consists of environmentally differentiated conventional accounting and ecological accounting. Environmentally differentiated accounting measures effects of the

natural environment The natural environment or natural world encompasses all living and non-living things occurring naturally, meaning in this case not artificial. The term is most often applied to the Earth or some parts of Earth. This environment encompasses t ...

on a

company A company, abbreviated as co., is a legal entity representing an association of people, whether natural, legal or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared ...

monetary Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are ...

terms. Ecological accounting measures the influence a company has on the environment, but in physical measurements.

Reasons for use

There are several advantages environmental accounting brings to business; notably, the complete costs, including environmental remediation and long term environmental consequences and externalities can be quantified and addressed. More information about the statistical system of environmental accounts are available here:

Subfields

Environmental accounting is organized in three sub-disciplines: global, national, and corporate environmental accounting, respectively. Corporate environmental accounting can be further sub-divided into environmental management accounting and environmental financial accounting. * Global environmental accounting is an accounting methodology that deals areas includes energetics, ecology and economics at a worldwide level. * National environmental accounting is an accounting approach that deals with economics on a country's level. : Internationally, environmental accounting has been formalised into the System of Integrated Environmental and Economic Accounting, known as SEEA. SEEA grows out of the System of National Accounts. The SEEA records the flows of raw materials (water, energy, minerals, wood, etc.) from the environment to the economy, the exchanges of these materials within the economy and the returns of wastes and pollutants to the environment. Also recorded are the prices or shadow prices for these materials as are environment protection expenditures. SEEA is used by 49 countries around the world. * Corporate environmental accounting focuses on the cost structure and environmental performance of a company. * Environmental management accounting focuses on making internal business strategy decisions. It can be defined as: :"''..the identification, collection, analysis, and use of two types of information for internal decision making:'' :1) Physical information on the use, flows and fates of energy, water and materials (including wastes) and :2) Monetary information on environmentally related costs, earnings and savings."' :As part of an environmental management accounting project in the State of Victoria, Australia, four case studies were undertaken in 2002 involving a school (Methodist Ladies College, Perth), plastics manufacturing company (Cormack Manufacturing Pty Ltd, Sydney), provider of office services (a service division of AMP, Australia wide) and wool processing (GH Michell & Sons Pty Ltd, Adelaide). Four major accounting professionals and firms were involved in the project;

KPMG KPMG International Limited (or simply KPMG) is a multinational professional services network, and one of the Big Four accounting organizations. Headquartered in Amstelveen, Netherlands, although incorporated in London, England, KPMG is a net ...

(Melbourne),

Price Waterhouse Coopers PricewaterhouseCoopers is an international professional services brand of firms, operating as partnerships under the PwC brand. It is the second-largest professional services network in the world and is considered one of the Big Four accounti ...

(Sydney), Professor Craig Deegan,

RMIT University RMIT University, officially the Royal Melbourne Institute of Technology,, section 4(b) is a public research university in Melbourne, Australia. Founded in 1887 by Francis Ormond, RMIT began as a night school offering classes in art, scien ...

(Melbourne) and BDO Consultants Pty Ltd (Perth). In February 2003, John Thwaites, The Victorian Minister for the Environment launched the report which summarised the results of the studies. :These studies were supported by the Department of Environment and Heritage of the Australian Federal Government, and appear to have applied some of the principles outlined in the

United Nations The United Nations (UN) is an intergovernmental organization whose stated purposes are to maintain international peace and security, develop friendly relations among nations, achieve international cooperation, and be a centre for harmoni ...

Division for Sustainable Development publication, ''Environmental Management Accounting Procedures and Principles'' (2001). * Environmental financial accounting is used to provide information needed by external stakeholders on a company's financial performance. This type of accounting allows companies to prepare financial reports for investors, lenders and other interested parties. * Certified emission reductions (CERs) accounting comprises the recognition, the non-monetary and monetary evaluation and the monitoring of Certified emission reductions (CERs) and GHGs (greenhouse gases) emissions on all levels of the value chain and the recognition, evaluation and monitoring of the effects of these emissions credits on the

carbon cycle The carbon cycle is the biogeochemical cycle by which carbon is exchanged among the biosphere, pedosphere, geosphere, hydrosphere, and atmosphere of the Earth. Carbon is the main component of biological compounds as well as a major compon ...

of ecosystems.Kumar, P. and Firoz, M. (2019), "Accounting for certified emission reductions (CERs) in India: An analysis of the disclosure and reporting practices within the financial statements", Meditari Accountancy Research. https://doi.org/10.1108/MEDAR-01-2019-0428