Accounting for the environment: Towards a theoretical perspective for environmental accounting and reporting

This article develops a multilayered theoretical model to underpin environmental accounting and reporting (severe environmental dangers; corporate responsibility; new relationship between industry and environment; measure industry's impact, and disclose and report impact). This theoretical model has eight premises. It begins with the fundamental premise that environmental change puts the planet at risk. Given that industry has a great impact on the environment and that society legitimates industry it is argued that industry has a duty to act. As the present situation appears to put the planet in jeopardy, there is a need for a new relationship between industry and the environment. It is argued that, although there should be a long-term radical reorientation, in the immediate short-term sustainable development should be the target. There is a need for a measurement system to assess industry's impact, but current accounting is inadequate for a variety of reasons (e.g., monetary dependence, capitalist orientation, business focus, reliance on neoclassical economics, numerical quantification, and technical accounting practices). There is thus a need for a new holistic accounting which captures corporate environmental impacts. Finally, it is argued that companies because of their stewardship function should report their environmental accounting to their stakeholders. There are several implications from the acceptance of this theoretical model for organisations and accountants. First, at the general level, given the severity of the environmental problems which face us, it would seem prudent for managers and accountants to take immediate action to address these threats. Second, the traditional accounting paradigm with its narrow focus on accounting numbers does not capture the environmental consequences of organisational activity. Third, as part of innovation and experimentation there is a continued need to explore potential alternative monetary and non-monetary valuation systems. Finally, the theoretical framework implies that as part of their discharge of their stewardship function organisations should disclose their environmental performance to stakeholders.