Accountancy Practice
The logic of an environmental information systems has, in turn, provided another
driver towards standardization from the perspective of accounting. Accounting
has played a significant role in the development of environmental measures and
reports. These accounting approaches propose an equivalence between the
procedures for developing financial and environmental information for firms.
Know-how and conventions in accounting could be transferred to the
environmental field, as could the rigour and credibility of financial accounting.
Moreover, accountancy could come to occupy new and potentially lucrative
territory. Accountants have also identified a need for financial and environmental
information to be integrated in the definition of ‘eco-efficiency’ (i.e. environmental—financial ratios) indicators. It is argued that this form of information
would improve management decision-making by linking efficiency and impact
indicators to cost. Investors and shareholders would then have information
directly linked to firms’ general report and accounts. As environmental
information becomes richer, more reliable, more timely and more accessible, the
expectation is that the investment community will increasingly take account of
this information in their decisions. This argument rests on the proposition that
firms with higher environmental performance may also demonstrate higher
financial performance. Advocates of eco-efficiency argue for this link primarily on
the grounds of financial savings due to lower resource costs and lower financial
risks due to decreased environmental liabilities.
‘Right to Know’
Advocates of information as an instrument in environmental improvement have
argued strongly for standardization. Here the argument is made that in
developed countries traditional standards-based regulations are being complemented by investor and public pressure as a driver of environmental progress in
industry. These new ‘market-based’ pressures demand a much richer set of
information flows between the firm and the decision-maker. Similarly, in
developing countries elaborate regulatory systems that are enforceable cannot be
erected. Here too, progress will be achieved primarily through social and
competitive pressures. Disclosure of information to investors and the general
public is a key feature of this newly emerging form of governance. Standardized,
validated and comparable environmental information about firms is an essential
prerequisite for environmental information to become a complement to
regulation.
Given the environmental management, accountancy and ‘right to know’
contexts within which the case for standardization has been made it is not
surprising that in this area, as with other aspects of the environmental
R. Gray, D. Owen, et al., Accounting and Accountability: Changes and Challenges in Corporate
Social and Environmental Reporting, Prentice-Hall, Hemel Hempstead, 1996.
S. Schaltegger, Corporate Environmental Accounting, John Wiley, Chichester, 1996.
K. Muller and A. Sturm, Standardised Eco-efficiency Indicators, Ellipson AG, Basel, 2000.
T. Tietenberg, 1997, Information Strategies for Pollution Control, Eighth Annual Conference
EARE, Tilburg, NL, 1997.
F. Berkhout
168
The logic of an environmental information systems has, in turn, provided another
driver towards standardization from the perspective of accounting. Accounting
has played a significant role in the development of environmental measures and
reports. These accounting approaches propose an equivalence between the
procedures for developing financial and environmental information for firms.
Know-how and conventions in accounting could be transferred to the
environmental field, as could the rigour and credibility of financial accounting.
Moreover, accountancy could come to occupy new and potentially lucrative
territory. Accountants have also identified a need for financial and environmental
information to be integrated in the definition of ‘eco-efficiency’ (i.e. environmental—financial ratios) indicators. It is argued that this form of information
would improve management decision-making by linking efficiency and impact
indicators to cost. Investors and shareholders would then have information
directly linked to firms’ general report and accounts. As environmental
information becomes richer, more reliable, more timely and more accessible, the
expectation is that the investment community will increasingly take account of
this information in their decisions. This argument rests on the proposition that
firms with higher environmental performance may also demonstrate higher
financial performance. Advocates of eco-efficiency argue for this link primarily on
the grounds of financial savings due to lower resource costs and lower financial
risks due to decreased environmental liabilities.
‘Right to Know’
Advocates of information as an instrument in environmental improvement have
argued strongly for standardization. Here the argument is made that in
developed countries traditional standards-based regulations are being complemented by investor and public pressure as a driver of environmental progress in
industry. These new ‘market-based’ pressures demand a much richer set of
information flows between the firm and the decision-maker. Similarly, in
developing countries elaborate regulatory systems that are enforceable cannot be
erected. Here too, progress will be achieved primarily through social and
competitive pressures. Disclosure of information to investors and the general
public is a key feature of this newly emerging form of governance. Standardized,
validated and comparable environmental information about firms is an essential
prerequisite for environmental information to become a complement to
regulation.
Given the environmental management, accountancy and ‘right to know’
contexts within which the case for standardization has been made it is not
surprising that in this area, as with other aspects of the environmental
R. Gray, D. Owen, et al., Accounting and Accountability: Changes and Challenges in Corporate
Social and Environmental Reporting, Prentice-Hall, Hemel Hempstead, 1996.
S. Schaltegger, Corporate Environmental Accounting, John Wiley, Chichester, 1996.
K. Muller and A. Sturm, Standardised Eco-efficiency Indicators, Ellipson AG, Basel, 2000.
T. Tietenberg, 1997, Information Strategies for Pollution Control, Eighth Annual Conference
EARE, Tilburg, NL, 1997.
F. Berkhout
168