Green Accounting Final

12
Green Accounting The term, green accounting, has been around since the 1980s, and is known as a management tool used for a variety of purposes, such as improving environmental performance, controlling costs, investing in cleaner technologies, developing "greener" processes and products, and forming decisions related to the business activities. GREEN ENVIRONMENTAL ACCOUNTS Green accountants are held responsible to identify and track green costs often times working with site, research and development, and production managers when planning their budgets. In the past, such costs were buried in overhead preventing a clear picture of the cost savings and benefits to the product, process,

Transcript of Green Accounting Final

Page 1: Green Accounting Final

Green AccountingThe term, green accounting, has been around since the 1980s, and is known as a management tool used for a variety of purposes, such as improving environmental performance, controlling costs, investing in cleaner technologies, developing "greener" processes and products, and forming decisions related to the business activities.

GREEN ENVIRONMENTAL ACCOUNTS• Green accountants are held responsible to

identify and track green costs often times working with site, research and development, and production managers when planning their budgets. In the past, such costs were buried in overhead preventing a clear picture of the cost savings and benefits to the product, process, system or facility responsible for the green initiatives.

• Green accountants help management recognize that the tax benefits, rebates and lower costs of being environmentally friendly add up to a real bottom-line reward for doing

Page 2: Green Accounting Final

the right thing. Green accounting is also called ‘sustainable accounting’. Green or sustainable accounting incorporates environmental assets and their source and sink functions into national and corporate accounts. It is the popular term for environmental and natural resource accounting.

A CORPORATE ENVIRONMENTALPOLICY• Develop and use nonpolluting technologies,• Minimizing wastages• Increase recycling• Design products and processes with

environmental impacts as a critical factor.• Raise all employees’ awareness for

environmental responsibilities

Page 3: Green Accounting Final

Green accounting measures

Page 4: Green Accounting Final

The Advantages

Page 5: Green Accounting Final

• Provides useful information regarding decision making for: level and structure of production, value of investment, environmental costs, etc.

• identifies and analyzes the environmental costs and afferent debts; identifies and manages the ratio between the environmental expenses and its afferent debt;

• identifies, collects and analyses data about raw materials, energy and other information about the environmental impact of the business, that will lead to more informed decision-making, with consequent implications for improved profitability and environmental protection;

• contributes to a better management of energy and water costs

• provides information regarding the performance of an economic entity which leads to a better relationship between partners and the external environment (brings new clients, a better image of the society

• Leads the managers to purchase materials that will minimize the costs.

Page 6: Green Accounting Final

Global Environmental AccountingMEANINGGlobal Environmental accounting is an accounting methodology that deals with energetic, ecology and economics at a global scale. It takes into consideration "worldwide" concept.

NEED FOR GLOBAL ENVIRONMENTAL ACCOUNTING

• Where faulty economic treatment of environmental changes is likely to be associated with large-scale misallocation of national resources.

•Ecosystem services, such as water and soil protection, are often under greatest threat in developing countries and countries often have fewer resources to cope with loss of ecosystem services

Page 7: Green Accounting Final

•To support implementation of environmental accounting and to advance environmental accounting in several critical areas such as accounting for ecosystems is necessary if countries are to develop sustainably.The SWOT analysis of the organization of

environmental accounting.STRENGTHS WEAKNESSES

the economic entities are interested in getting involved in activities concerning the environment;

it is a current field which has a special dynamics;

the selective collection of the waste, the prevention of the pollution could create financial resources for the economic entities;

There is a strong competition on the cleanliness (sanitation) services market.

the manager does not understand the importance of the environmental accounting yet;

there are untrained personnel in this field of environmental accounting;

the personnel for the financial - accounting department does not have enough information about the environmental accounting, does not know how the aspects connected to the environment reflect in the environmental accounting and what impact they have upon the economic entity and environmental politics;

there is not a system concerning the environmental accounting which is to be applied at economic entity‘s level;

The technologies that are used to recycle and to take value from waste or to prevent pollution are old.

OPPORTUNITIES THREATS

Page 8: Green Accounting Final

the entire legislation of the European Union concerning the environmental accounting is applicable also in Romania so it can be applied also at the level of economic entities;

the perspective of the need of a greater number of workers in the environmental accounting in a very coming future – recycling, capitalization, and remediation;

the possibilities to bring new and advanced technologies and equipment’s;

The possibility to attract foreign investments.

there are several difficulties in introducing an information system;

is needed a significant budget in order to apply environmental accounting and the benefits are not obtained immediately, which attracts a resistance of the economic entity;

The correspondent legislation is very little and treated tangentially.

GLOBAL INITIATIVE IN GREEN ACCOUNTING

•Support implementation of environmental accounts, and the indicators and policy analyses based on environmental accounts that are comparable across countries.

•An interdisciplinary policy research program to address critical issues in the SEEA.

•Build sufficient awareness and support for environmental accounting so that it is accepted, as it should be, simply as a more thorough way to compile national accounts.

Page 9: Green Accounting Final

GREEN GDP

CONCEPT•Green GDP methodology is an adjustment to traditional measures of a country's output of goods and services taking pollution and waste of resources into account.•the concept of green GDP was raised by the United Nations and the World Bank, which can be traced back to 1970s•Goal-to provide a better measure for guiding public economic policy and thereby contributing to a more welfare rich outcome than could be achieved using traditional measures.

Green GDP

The environmental cost includes theFollowing four aspects• The defensive expenditure in the environmental damage;• The loss in resources environment;

Page 10: Green Accounting Final

• The expenditure expenses of the restoration of the resources environment; and• The expenses of maintaining resources environment.

Types of Green GDP

Divided into three types:➢ Green GDP based on resources depletion,➢ Green GDP based on environment degradation for environment protection,➢ Green GDP based on expenditure for pollution control.

The formula of the Green GDPGreen GDP=Final output of traditional industrial sectors-Damage to the resources and environment cost+ total new value created by environmental protection organizations.

Problems with Green GDP

Page 11: Green Accounting Final

• Lack of Consensus on Component of Green GDP.• Problem in Pricing Natural resources.• Lack of Clarity about Current Stock of Natural Resources.