ENVIRONMENTAL ACCOUNTING FOR M.COM STUDENTS PREPARED BY AMRITHA K S

1. ENVIRONMENTAL ACCOUNTING
PRESENTED BY /-
AMRITHA K S

2. INTRODUCTION
• Environmental accounting is the practice of incorporating environmental factors
into a company's financial reporting and decision-making processes.
• It involves quantifying and reporting the environmental impact of a company's
operations, including its use of natural resources, generation of waste, and
emissions of pollutants.
• Environmental accounting helps companies understand the costs and benefits of
their environmental impact, both in financial and non-financial terms.
• It also provides information to stakeholders such as investors, regulators, and
customers about a company's environmental performance.
• Environmental accounting includes various techniques and methodologies, such as
life cycle assessment, carbon accounting, water footprinting, and biodiversity
accounting. These tools help companies measure their environmental impact,
identify opportunities for improvement, and develop strategies to reduce their
environmental footprint.

3. Environmental accounting can provide numerous
benefits for companies, as well as the
environment and society as a whole. Some of the
key needs for environmental accounting include:
Cost savings: Environmental accounting can
help companies identify opportunities to reduce
waste, energy consumption, and resource use,
which can result in significant cost savings.
NEEDS

4. Compliance with regulations: Many
governments and regulatory bodies
require companies to report on their
environmental impact and compliance
with environmental regulations.
Environmental accounting can help
companies ensure they meet these
requirements.

5. Risk management: Environmental risks,
such as climate change, water scarcity, and
pollution, can have significant impacts on a
company's operations and reputation.
Environmental accounting can help
companies identify and manage these risks,
reducing potential losses and liabilities.

6. Reputation management: Consumers and
stakeholders are increasingly concerned
about environmental issues, and companies
that demonstrate a commitment to
sustainability can enhance their
reputation and brand value.

7. Long-term sustainability:
Environmental accounting can
help companies develop
sustainable business practices
that balance economic, social,
and environmental
considerations, ensuring long-
term success and viability.

8. BENEFITS
1.Improved environmental performance: By measuring and tracking
environmental impacts, organizations can identify areas where they can reduce
their environmental footprint and take action to improve their environmental
performance.
2.Cost savings: Environmental accounting can help organizations identify
opportunities to reduce energy and resource consumption, which can lead to
cost savings through lower utility bills and reduced waste.
3.Compliance: Environmental accounting can help organizations comply with
environmental regulations and requirements, reducing the risk through fines and
other penalties.
4.Improved stakeholder relations: By reporting on their environmental
performance, organizations can build trust with stakeholders, including customers,
investors, and regulators, who are increasingly concerned about environmental
issues.

9. 5.Competitive advantage: Environmental accounting can help organizations
differentiate themselves from their competitors by demonstrating their
commitment to sustainability and environmental responsibility.
6.Risk management: Environmental accounting can help organizations identify
and manage environmental risks, such as supply chain disruptions or reputational
damage.
7.Innovation: By measuring and reporting on their environmental impact,
organizations can identify opportunities for innovation, such as developing new
products or services that have a lower environmental footprint.

10. Subjectivity: Environmental accounting involves making estimates and
assumptions, which can be subjective and may not accurately reflect the true
environmental impact of an organization's activities.
Lack of standardization: There is no universally accepted framework or set of
standards for environmental accounting. This makes it difficult to compare the
environmental performance of different organizations or to track changes in
performance over time.
Difficulty in measuring intangible benefits: Environmental accounting typically
focuses on tangible benefits, such as reduced energy consumption or greenhouse gas
emissions. It can be difficult to measure intangible benefits, such as improved
reputation or increased employee engagement.
LIMITATIONS

11. Limited scope: Environmental accounting typically focuses on a narrow range of
environmental impacts, such as energy use or greenhouse gas emissions. It may not
capture other important environmental impacts, such as water use or biodiversity
loss.
Resource-intensive: Environmental accounting can be resource-intensive, requiring
significant time and resources to collect and analyze data. This can be a challenge
for small or resource-constrained organizations.
Limited usefulness for decision-making: Environmental accounting may provide
useful information for reporting and disclosure purposes, but it may not provide the
level of detail or insight needed for decision-making.

12. ENVIRONMENTAL ACCOUNTING PRACTICES IN INDIA
Environmental accounting refers to the practice of integrating environmental factors into traditional accounting practices.
In India, environmental accounting practices have gained importance due to the growing concern for environmental
protection and sustainability. Here are some examples of environmental accounting practices in India:
1. Corporate Social Responsibility (CSR) reporting: Under the Companies Act, 2013, companies meeting certain criteria
are required to spend a portion of their profits on CSR activities. Many companies in India have included environmental
initiatives in their CSR reporting.
2. Carbon accounting: Companies are increasingly measuring and reporting their carbon footprint, including emissions
from their operations, supply chain, and products. The government has also introduced regulations such as the National
Action Plan on Climate Change, which encourages companies to report their emissions and take steps to reduce them.
3. Natural resource accounting: India's National Accounting System for Environmental and Natural Resources
(NASENAR) aims to integrate environmental and natural resource accounts into the national accounts. This includes
measuring the economic value of natural resources and tracking changes in their quantity and quality.

13. 5. Environmental cost accounting: Companies are increasingly including environmental costs such as pollution,
waste, and natural resource depletion in their financial statements. This helps to identify the true cost of business
operations and encourages companies to adopt more sustainable practices.
6. Environmental audit: Companies in India are required to conduct environmental audits to ensure compliance
with environmental regulations. These audits help to identify areas of improvement and ensure that companies are
meeting their environmental obligations.

14. THANK YOU