Economic analysis of using green accounting and environmental accounting to identify environmental costs and sustainability indicators

• Published in: Humanomics Vol. 35; no. 4; pp. 504 - 512
• Main Author: Mohammad Mahdi Rounaghi
• Format: Journal Article
• Language: English
• Published: Bingley Emerald Group Publishing Limited 04.11.2019
• Subjects: Capital budgeting; Consumption; Corporate growth; Cost control; Economic analysis; Economic development; Economic growth; Economics; Environmental accounting; Environmental impact; Environmental management; Environmental performance; Environmental protection; Financial services; GDP; Gross Domestic Product; Management accounting; Natural resources; Sustainability; Sustainable development
• ISSN: 2514-9369; 2514-9377
• DOI: 10.1108/IJOES-03-2019-0056

PurposeManufacturing and service companies are likely to make a variety of costs possible. Environmental costs are one of those costs. Environmental performance is one of the most important factors in assessing a company’s success. For environmental accounting, companies need to work together as teams of system designers, chemists, engineers, production managers, operators, employees, purchasing circle and accountants (those who may have never worked together before).Design/methodology/approachNowadays, most of the companies are facing environmental issues and are seeking an appropriate way to report and disclose the information to the public. The environmental pollution issue is among the most important problems of today’s human society. Therefore, this is very important to use environmental accounting as an attempt towards protecting the environment.FindingsGreen accounting is a type of accounting that attempts to factor environmental costs into the financial results of operations. Apart from answering the question whether the economy has performed sustainably during one or more accounting periods, green accounting indicators [green gross domestic product (GDP)] can be used in policy formulation and evaluation. Green GDP calculations can contribute to raise awareness for sustainability concerns among national governments/policy-makers, who tend to concentrate on their countries’ fast economic development.Practical implicationsEnvironmental accounting can be applied to large and small companies in various industries, as well as in manufacturing or service sectors. Environmental accounting can be applied on a large or a smaller scale in a systematic manner for the required bases.Social implicationsEnvironmental accounting requires the collection of information from all the groups. People of various groups need to talk to each other to achieve a common vision and understanding of environmental accounting and to realize this vision.Originality/valueUndoubtedly, to establish an ideal system of environmental accounting in the country, accountants can become a powerful forearm of the government regarding economical and financial controls. To achieve this goal, environmental accounting objectives and tasks should be identified and defined in detail, and the standards, rules and criteria should be grounded and codified based on reasonable and practical principles.