Green Accounting often known as environmental accounting is the accounting that permits computation of income of nation by taking into account the economic damage and depletion in the natural resource. It motivates adoption of methods that do not hamper the environment while balancing the performance.
In short, Green accounting includes environmental cost into the financial results of operation so that not only profits but also the environmental stock of assets are also sustained.
India, being a rich country in diversity, has been habitat of several unique animals and plantation. Environment provides everything from food ,fuel to services such as soil fertility, pollination of crops leading success of several business.
Green Accounting has come up as a savior as environmentalists realized that immense utilization of resources not only reduces the availability but also invites side effects. It is an initiative to raise concern over degrading environmental situation.
How is India responding to this global concern?
India has learned about the need to respond towards the environmental status and protect its stock of environmental asset. It recognizes that protecting biodiversity and ecosystem is a critical national priority.
Following that perception, India took initiatives like principle of sustainability, set up of National Clean Energy Fund imposing cess on coal, created Compensatory Afforestation Fund.
In addition, it also hosted meeting relating to United Nations Convention on Biological Diversity held from 8th to 19th Oct 2012. The ministers and PM also advocate greening India’s national accounts and encourages policymakers to recognize it.
How to practice Green Accounting?
It includes :-
a. Paperless Accounting:-
Eliminating papers and adoption of advanced accounting software, encouraging e-payments, e-filing of taxes would definitely support green accounting.
b. Involves Natural Asset in calculating Performances
Inclusion of environment while calculating the performance would be a great idea. An example of such change may be calculating EDP (Environmental Domestic Product) rather than NDP as suggested by SEEA (System of Environmental Economic Accounting).
c. A greener solution for accounting technique
Conventional accounting techniques involves more paper wastage, electricity consumption, PC usage which need to be replaced by a greener solution like using low energy consuming devices, cloud computing etc.
Reporting under Green Accounting
Disclosure of information about the relationship of operation of entities and environment has potential advantages, presents the organization socially responsible.
Reporting can be in the form of:
- Presenting selected information on environmental issues in financial statements & reports on operations – pursuant to the balance sheet law,
- Voluntary reports on environmental impact called corporate Environmental Reports (ER),
- Listing which are obligation pursuant to other regulation than the provision of balance sheet law.
- Economic growth of country is curtailed with the increase in limitation on pollution
- Consequences of pollution become visible after long time. Estimating only the immediate consequences will lead to wrong decision.
- Double digit GDP Fixation
Organization now are not only concerned about generating profits for themselves but seek those development model that takes into account environmental interests. Green accounting uses “System of Environmental Economic Accounting (SEEA) which focuses on depletion of scarce natural resources and measures the cost of environmental degradation along with prevention. Green accounting is the need of the hour and should be recognized soon.
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