Green Accounting and Sustainability: Past, Present and Future

Wathana Yeunyong

Introduction
Recent an environment is interested in more people, especially who are affected dealing with
various pollution of around us such as air, water, sound, and disrupted other to influencing human
health and other to be living in this world. Thus, leading to campaign for protection of the
biosphere, the people try to reduce and eliminate everything to be made environment damage. That
is, everybody must to be recognized to habit for protection sustainable environment.
In the world, the natural resources are used in order to environment sustainable that the
resource must to be used efficiency and having careful planning. Occurred wastes are reduces and
recycle it via safe and responsible methods. Energy conservation is conserved energy and
improved the energy efficiency in operation of goods and services. Having to use natural resource
is careful through safe technologies, facilities, operating procedures, and preparing for
emergencies for risk reduction. However, nobody will know all these pollutions of environment,
because something it cannot see by their eye or ear, so information must to be always informed
and presented to people who are affected. In business firms, the manager should be recognized to
environment sustainable and contained in their environment policy in order to social responsible as
well. Moreover, the managers must action following environment policy planning to explicit
disclosure via reports, particularly, financial reports.
Green accounting is using management tools to conduct in various purposes for example,
improving environment performance, controlling costs, investing in cleaner technologies,
developing greener processes, and performing related to product mix, product retention and
product pricing (Boje, 1999)
Green life cycles is a process beginning from raw material procurement, and it moves to
manufacturing, distribution to customer used, when its being post-customer used is recycle process
back to raw material again.
Environmental auditing is contained within the auditing standard of ISO 14000 that is the
principle for environment audits, guideline for auditing environmental management systems, and
qualification criteria for environmental auditors.

History
In former, green accounting is found to knowledge of environment accounting (EA) practices. The
EA is embedded to be function with agency accountability managerial and investor interests. That
is, green accounting is wider organization and individual understanding of stakeholder movement
and including the community, too. The EA was taught in managerial accounting in United States
and elsewhere. The functionalist is a how to minimize environment legal cost, hide this costs to
like abstracts included overhead, the managers ignore to environment cost and revenues (i.e.
benefits of recognized practices). The green EA emphasizes several accountabilities, and then it is
tracked to green costs and green revenues of goods and services influencing to managerial
accounting, social, and economical accountability. When EV shed light more accountability to
environment to be generated ISO 14000 which is accepted popular in international. These may
cloud be argued that EV is contained in ecology, meaning that from functionalist to green EV is
sustainable embedded business and other organizations both in level policy and practices.
Functionalist environment accounting (FEV) is used in EA to be campaigned accounting
process that is contained with human and nature accountability. However, it still is restricted with
regulations likelihood seriously practices. That is, excluding natural resources and resources
cannot be calculated to explicit economic number (Lehman and Tinker, 1996). Due to the human

Green Accounting by Wathana yeunyong ID 48010960110 1

has right to use natural resources, so they think private benefits more than holistic benefits.
Moreover, EA is employed to justifying and investigating to avoid environment legal.
The EA try to explain in accounting process widely including other stakeholders such as
unborn, animals, plants and micro-organisms as well. That is the meaning of green environment
accounting (Adrew and Kidnish, 1996). Green environment accounting focuses on systems to be
life cycle of resource, and it is moved to recognized organization as sustainable. That is to try
campaigning among corporations, employee, community, and government dealing with effects and
benefits of activities to care environment together seriously. Moreover, this can tell the people the
in world that it happened.
EV began in United States in 1992, it emphasized outside stakeholders who were affected of
pollution by industry that would not be adopted EV to business policy to prevent the pollutions. It
may be obtained environment costs and revenues (i.e. no more expenses in the future, imaging
firms to customers satisfactions). Since 1995, international ISO14000 have also motivated firms
to adopted environment accounting practices. From gathering the information of U.S. Environment
Protection Agency found that costs were estimated to clean up sites identifies as dangerous totaled
752 billions U.S. dollars as of 1991 (Russell et al. 1991). A field study of Heller et al. 1995, he
presented that the cost of refinery of Amoco Torktown to good environment about 3% of
operating costs, E.I DuPont De Nemour and Company spent approximately 500 million U.S.
dollars for capital projects related to environment goals (Childs et al. 1995).
In Thailand still has not accounting standard about environment accounting which must be
reported to disclosures with in financial statement, but the U.S. Securities and Exchange
Commission (SEC) has issued Staff Accounting Bulletin 92 (SEC 1993) and American Institute of
Certified Public Accounting (AICPA) has issued Statement of Position 96-1 (AICPA 1996). The
matter of both of these is generated recognition and evaluation of environment liabilities, the
appropriate discount rate, and whether expected insurance proceed may offset the gross cleanup
liabilities.

Current Research issues of Green Accounting

Boer and Chields (1994) presented paper about environment accounting topics in the Journal of
accounting of accounting public policy, its content deal with reflecting a wide range of
environment accounting issues. Walden and Schwartz (1977) examined four industries: oil,
chemical, consumer products, and forest products related to environmental disclosures, especially
about reaction to public pressure. They used content analysis and found that positive relationship
between externally reported events and the level and quality (voluntary) environmental disclosure
from in companies annual reports.
Lawrence and Khurama (1997) conducted research in Superfund Liabilities and
Governmental Entities: An Empirical Analysis. They investigated financial impact of municipal
government landfill cleanup, and timing and amounts of environmental liability disclosure in
financial report issued by these municipal governments. Then, they found that relatively few
municipalities accrued estimated cleanup costs: disclosed these costs, and one more, these cleanup
costs led to be a serious financial threat for some these municipalities, but less other
municipalities.
Having model is developed an analytic to evaluate firms incentive to increase voluntary
environmental compliance audits. The results found that increasing firms incentive depends on
much more regulations that have ability to access a firms records of environment compliance
audits and penalize the firm for non-compliances, next, they show that a firms incentive for
conducting compliance audits increase when regulators impose a lesser penalty for self-discovered
problem than for non-compliance uncovered by regulators (Mischra et al. 1997). Accordingly,
Kuassirikum (2005) explored attitudes of Thai accounting professional (i.e. perceiving
practitioners) to the development and implication of social and environment accounting in

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Thailand , and found that respondents has positive attitude with social and environmental
accounting amongst the accounting, auditors, and accounting-related professionals in Thailand, but
it still is limited about regulation to control in the practices. Day (2004) presents his finding the
relationship between dealing with the evolution of employees the last century reporting and
mandatory disclosure rule. This research focuses on to investigate the linkage between voluntary
and regulated disclosures. For instance, he examines the relationship between the role of
International Standard such as ISO14000 and repor functions. Then, he finds evidence from UK
that it is disregard for statutory disclosures. In contrast, Cormeir and Magnan (1997) found the
relationship between the level of pollution and the implicit environmental liabilities, measured by
the relationship between market value of firm equity and the degrees of other balance sheet items.

Trend and future research

The prior researches were conducted in EA less than financial accounting research. It may be came
from various such as many people still not recognize to the effects of pollutions caused by no
concentrating environment; theses EA research is more difficult to explicit economic measures; in
former, technologies do not more progress to produce goods and services that demand resources
increasingly (i.e. oil, gas, water, air, ect.) to production process to response for customer needs.
The main issues in previous focus on repots and disclosures in accountabilities to environmental
liabilities, regulations, attitude of accounting practitioners, international standard, measurement of
environment accounting
Future EV research should be explored the structural and social causes of environment
problems which prior research beginning is conducted, and expanded through globalization. It is
pressured increasingly on report of accountants for communities in corpora ting environment
issues. Continuing future researches are presented by Shields and Boer (1997) as follows

Financial Accounting Issues:

How accurately do environmental liability disclosures reflect a firm's real exposure?
Does the market recognize this environmental exposure, and value stocks accordingly?
Is the market sensitive to between-industry differences in environmen- tal exposure?
Does the market respond appropriately to real environmental expo- sure, or is there an
overreaction to news media coverage of dramatic events?
Are liability estimates, as reported in external financial statements, presented on a timely basis, or
does public disclosure significantly lag firm knowledge of the environmental risk?
What role do external social costs play in financial reporting?
Managerial Accounting Issues:
What methods are used by managers to estimate environmental costs?
To what extent is management tracking environmental costs? Has an environmental cost
accounting system been developed?
What classification systems should management accountants develop
to help managers identify and measure the profit impact of environ- mental activities?
Is environmental cost information useful for decision-making? Under what conditions?
What taxonomy of environmental costs will do the most to enable management accountants to
fulfill their obligations to support value- enhancing decisions by management?
Does management view environmental regulation as just an added cost of doing business, or as
an opportunity for re-engineering or redefining the firm's manufacturing or marketing activities?
How do companies need to modify their budgetary processes to effectively incorporate
environmental information into the various processes?

External Auditing Issues:

Green Accounting by Wathana yeunyong ID 48010960110 3

 What effects might environmental liabilities have on going-concern questions?
What audit procedures should independent auditors use to identify
potential environmental liabilities?
To what extent can independent auditors rely on technical guidance from environmental
engineers, etc.?
To what extent should independent auditors insist on timely and accurate recognition of potential
environmental liabilities?
What techniques should independent auditors use to verify manage- ment's estimates of
environmental liability?
Internal Auditing Issues:
What procedures should internal auditors use to identify currently unrecognized environmental
liabilities?
To what extent can internal auditors rely on technical guidance from environmental engineers,
etc.?
To what extent should internal auditors insist on timely and accurate recognition of potential
environmental liabilities?
What techniques should be used to estimate the cost of future en- vironmental treatment?
Tax Issues:
How effective are tax incentives for investment in environmental capital expenditures in reducing
pollution levels?
Do tax incentives for environmental capital expenditures result in reduced investment in
maintenance of existing capital, or in new non-environmental capital investments?
Do tax incentives for environmental capital expenditures result in an undue emphasis on
investments which are intended to contain indus- trial pollution, such as wastewater treatment
plants and incinerators, because these expenditures are obviously for environmental purposes?

Conclusion
Green accounting is using management tools conduct in various purposes for example, improving
environment performance, controlling costs, investing in cleaner technologies, developing greener
processes, and performing related to product mix, product retention and product pricing. To
recognitions are embedded within each components of social: individual, organization,
communities, counties in the globalization that everybody must be participated together seriously
in order to the same goal, that is, protection of the biosphere, sustainable use of the natural
resource, reduction and disposal wastes, energy conservation, risk reduction, safe products and
services, environment restoration, informing the public, management commitment, audits and
reports. Thus, reporting and regulations are controlled to disclosures that are useful to all people
health, animal and affected other beyond participating everybody to good world environment.

Green Accounting by Wathana yeunyong ID 48010960110 4

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