Economic analysis of using green accounting and environmental accounting to identify environmental costs and sustainability indicators

• DOI: https://doi.org/10.1108/IJOES-03-2019-0056
• Pages: 504-512
• Date: 11 November 2019
• Published date: 11 November 2019
• Author: Mohammad Mahdi Rounaghi
• Subject Matter: Economics,Social economics

Economic analysis of using green

accounting and environmental

accounting to identify

environmental costs and

sustainability indicators

Mohammad Mahdi Rounaghi

Department of Accounting, Mashhad Branch, Islamic Azad University,

Mashhad, Iran

Abstract

Purpose –Manufacturing and service companies are likely to make a variety of costs possible.

Environmental costs are one of those costs.Environmental performance is one of the most important factors

in assessing a company’s success.For environmental accounting, companiesneed to work together as teams

of system designers, chemists,engineers, production managers, operators, employees,purchasing circle and

accountants(those who may have never worked together before).

Design/methodology/approach –Nowadays, most of the companies are facing environmental issues

and are seeking an appropriate way to report and disclosethe information to the public. The environmental

pollution issue is among the most important problems of today’s human society. Therefore, this is very

importantto use environmentalaccounting as an attempt towards protecting the environment.

Findings –Green accounting is a type of accountingthat attempts to factor environmental costs into the

financial results of operations. Apart from answering the question whether the economy has performed

sustainably during one or more accounting periods, green accounting indicators [green gross domestic

product (GDP)] can be used inpolicy formulation and evaluation. Green GDP calculations can contribute to

raise awareness for sustainability concerns among national governments/policy-makers, who tend to

concentrateon their countries’fast economic development.

Practical implications –Environmental accounting can be applied to large and small companies in

various industries, as wellas in manufacturing or service sectors. Environmental accountingcan be applied

on a large or a smallerscale in a systematic manner for the required bases.

Social implications –Environmental accounting requires the collection of information from all the

groups. People of variousgroups need to talk to each other to achieve a common vision and understandingof

environmentalaccounting and to realize this vision.

Originality/value –Undoubtedly, to establish an ideal system of environmental accounting in the country,

accountants can become a powerful forearm of the government regarding economical and financial controls. To

achieve this goal, environmental accounting objectives and tasks should be identified and defined in detail, and the

standards, rules and criteria should be grounded and codified based on reasonable and practical principles.

Keywords Sustainability indicators, Green accounting, Environmental cost,

Environmental accounting, Green GDP

Paper type Literature review

1. Introduction

Sustainability contains three pillars; they are environmental, social and economic parts.

These three pillars of sustainability overlap and are interconnected (Hamoud Ismail et al.,

IJOES

35,4

504

Received14 March 2019

Revised11 April 2019

Accepted7 June 2019

InternationalJournal of Ethics and

Systems

Vol.35 No. 4, 2019

pp. 504-512

© Emerald Publishing Limited

2514-9369

DOI 10.1108/IJOES-03-2019-0056

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