Social And Environmental Accounting

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Social and Environmental Accounting

Social and Environmental Accounting

Environmental Accounting and Auditing

Environmental accounting and auditing integrates consideration of the environment within decision making that historically valued only financial and technical feasibility and property rights. (Hussey, Kirsop and Meissen, 2001) Because the world's supply of natural resources is diminishing while the human population and its needs for those natural resources is increasing, most developed countries have established laws requiring some examination of a desired action's impact on the environment. Attention to environmental consequences before a project is implemented allows the public, and governmental agencies charged with the responsibility of ensuring environmental protection, a voice in decision making about the use of finite natural capital. As such, environmental assessment becomes an important tool in achieving the goal of sustainable development.

Advantages and Disadvantages

Environmental accounting does not necessarily stop the depletion of natural resources, but it is an extremely important practice. (Raar, 2002) Property rights and the privileges of ownership even national boundaries are no longer the sole determinants of whether or not a project is undertaken. Rather, with environmental accounting, the value of the natural world is acknowledged.

Most developed countries and governing agencies such as the United Nations, the European Union, and the World Bank have modelled their environmental policies after the United States' National Environmental Policy Act (NEPA), enacted in 1969. NEPA requires that any action by a federal agency must be examined for its impact on the environment; in practice, many state and local government agencies also perform similar examinations. Originally, NEPA was administered by the Council on Environmental Quality, which reports directly to the president of the United States; over time, the Environmental Protection Agency (EPA) became the primary reviewer for environmental impact statements (EISs) prepared by other federal agencies. The EPA also maintains a national filing system for all EISs, now available on its Web site. NEPA law seeks to encourage “productive and enjoyable harmony” between humans and their environment. Indeed, NEPA is often referred to as the environment's Magna Carta, ensuring a more balanced relationship by integrating environmental considerations with economic and individual interests.

Today, more than 80 organizations stand behind the Coalition for Environmentally Responsible Economies (CERES) principles. These firms include labour unions, environmental groups, public interest organizations, and investors. The coalition of investors is critical, as these firms explicitly consider environmental criteria in investment decisions. In addition, CERES partners with more than 70 corporations that have a significant commitment to the principles.

Over the years, the coalition has promoted greater corporate responsibility toward the environment and taken a leadership role in standardizing environmental reporting by organizations. CERES was founded with the belief that businesses should take a proactive stance on environmental issues, because their influence over human decisions and behaviours often surpasses that of governments, schools, or religious organizations. To control and provide accountability for environmental performance, however, companies need effective measurement and communication tools. This need brought about initiatives to establish benchmarks for environmental performance and to provide an easier way to report information about case like Revisit ...
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