Creating Satellite Accounting for Green Initiatives of Companies

Posted: 17 Sep 2009

See all articles by Padma Srinivasan

Padma Srinivasan

Manipal University, Bangalore Campus

Date Written: August 8, 2008

Abstract

Human civilization has evolved using the global natural resources to the economic advantage of its constituent members. The land developers, for instance, convert the fertile and deface wetlands, timber companies wipe out forests, paper mill dumps dioxin laden wastes into the rivers and fishermen go for excessive harvesting of lakes and oceans. In short, the economic activities definitely affect the environmental balance in many ways. The ecosystem degrades with aggressive misuse of the resources.

In production and consumption of goods and services, the society ruins the diversity of flora and fauna inhabiting both land and water. The current accounting system does not account for these environmental issues. The US government took the initiative in 1993 by publishing its first version which was closely related to the structure of SNA (System of National Accounts). To overcome these environmental issues, a new measure of accounting should be followed known as Green accounting. There are two approaches of green accounting i.e. physical and monetary with can be used together preferably. The initial step in this process is creation of a satellite account as a separate entity in the company’s balance sheet and for rest or the period for environmental assets, expenditures and liabilities. The Egyptian Petroleum sector effectively used the concept of green accounting to show greater respect for the environment and the human kind. This paper looks at the planning of green accounting to project the ‘true and fair view’ of organization as responsible members to care for retaining global eco balance.

Keywords: Environment Audit, Internal Audit, Leather industry, Management Control Systems

JEL Classification: M40. M41, M49

Suggested Citation

Srinivasan, Padma, Creating Satellite Accounting for Green Initiatives of Companies (August 8, 2008). Available at SSRN: https://ssrn.com/abstract=1260244

Padma Srinivasan (Contact Author)

Manipal University, Bangalore Campus ( email )

Bangalore, Karnataka
India

HOME PAGE: http://www.manipal.edu

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