Accounting Theory & Applications: Social & Environmental Issues

This report delves into the critical role of accounting in addressing social and environmental issues. It begins by highlighting the significance of environmental accounting as a tool for understanding the impact of natural resources on the economy and the costs associated with their degradation. The report then discusses how traditional accounting systems are ill-equipped to handle the complexities of social and environmental activities, emphasizing the need for innovative sustainability initiatives. It explores green accounting, which involves identifying and measuring the costs of environmental activities, and integrating these costs into managerial decisions. The report also examines the importance of corporate social responsibility (CSR) and its role in helping organizations balance environmental, social, and economic imperatives. It concludes by emphasizing the growing attention given to sustainability issues and reporting by various stakeholders, and the indispensable support provided by the accounting profession in ensuring corporate sustainability. The report underscores the positive impact of adequate accounting information disclosure on stakeholder relationships and business performance, highlighting the responsibility of organizations to address their environmental impact.

Running Head: ACCOUNTING THEORY & APPLICTIONS
ACCOUNTING THEORY & APPLICATIONS
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Role of Accounting in Social and Environmental Issues.......................................................2
Conclusion..................................................................................................................................3
Reference....................................................................................................................................5

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Introduction
Accounting of environment is significant tool to understand role played by natural
environment in economy. It helps in providing data that highlights contribution of the natural
resources to the well-being of economy and costs imposed by the resource’s degradation or
pollution. The organization plays significant role in the economic activities. The clear
incorporation of objectives, which is environmental conservation in each of the business
activity becomes powerful motive force for structural transformation of the economic society
(Bebbington and Larrinaga 2014). Hence, this report aims to discuss role of accounting in
environmental and social issues.
Discussion
Role of Accounting in Social and Environmental Issues
Globally, every area of the human endeavors is negatively impacted by the
environmental problems. The global rise in economic activities as well as growing challenges
generated by the environmental activities have made traditional system of accounting ill-
equipped for providing adequate information regarding organizational social and
environmental activities. The avoidance and neglect of environmental costing by corporate
have left financial incompleteness gap and fair view absence of financial information
reporting to the financial statement’s users and the environmental regulatory agencies
(Spence and Rinaldi 2014).
The environmental and social accounting is innovative sustainability initiative that has
to do with identification, analysis and allocation of the material streams as well as their
related flows of money by using systems of environmental accounting for providing insights
in the impacts of environment and associated financial effects. Green accounting involves
identifying and measuring cost of the environmental activities and materials and using this

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information for the environmental managerial decisions. In the real world, accounting of
environment ranges from simply adjusting existing systems of accounting to the more
integrated practice of environmental accounting, which links, which links physical,
conventional and monetary information systems. A successful system of environment
accounting should have the accounting method for full costs of environment and should
integrate the costs of environment into cost allocation, capital budgeting, product or process
design and the other forward decisions. It helps in providing better information with the help
of attaching cost to input, which captures expected cost of the workforce and environmental
hazards (Correa and Larrinaga 2015).
The environmental accounting relevance cannot be overemphasized in the twenty-first
century. It helps in providing the stakeholders and management with the reliable and accurate
environmental information as well as environmental financial estimates, based on which the
informed decisions in relation to the environmental and social problems are made for
resolving the environmental and social challenges (Bebbington, Unerman and O’DWYER
2014).
The corporate social responsibility helps the entities for integrating environmental and
social concerns in their business. It is the way by which an entity achieves a good balance of
the environmental, social and economic imperatives, while at the same time addresses the
stakeholders and shareholder’s expectations. In today’s situation, it is important for the
organization to make disclosure of its CSR activities for surviving in the long-run.
Conclusion
Therefore, this report concludes that the sustainability issues and reporting have
received great attention from the accounting profession, policy makers, media and
corporation and its stakeholders. The accounting profession helps in providing indispensable

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supports towards ensuring that sustainability of corporate through its various functions.
Moreover, it has been analyzed that adequate disclosure of the accounting information has
positive way to drive relationship of stakeholders with an entity, thereby fostering
performance of business through the market stability. Lastly, it can be said that business
organizations are required to take the responsibility for their impact on the environment in
present, future and past.

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Reference
Bebbington, J. and Larrinaga, C., 2014. Accounting and sustainable development: An
exploration. Accounting, organizations and society, 39(6), pp.395-413.
Bebbington, J., Unerman, J. and O’DWYER, B.R.E.N.D.A.N., 2014. Introduction to
sustainability accounting and accountability. In Sustainability accounting and
accountability (pp. 21-32). Routledge.
Correa, C. and Larrinaga, C., 2015. Engagement research in social and environmental
accounting. Sustainability Accounting, Management and Policy Journal.
Spence, L.J. and Rinaldi, L., 2014. Governmentality in accounting and accountability: A case
study of embedding sustainability in a supply chain. Accounting, Organizations and
Society, 39(6), pp.433-452.