Chapter 8 Accounting
Accounting for the sustainable business extends beyond traditional financial and managerial accounting. Rather than externalizing the social and environmental costs of doing business, sustainability accounting seeks to honestly track, measure, and report direct and indirect economic, social, and environmental impacts of the business’s operations. In other words, sustainability accounting seeks to internalize costs that have heretofore been externalized. Sustainability accounting may be known by other terms, such as social accounting, environmental accounting, social and environmental accounting, or social and ethical accounting, auditing, and reporting. Accounting specifically focused on greenhouse gas emissions is referred to as carbon accounting. Furthermore, reporting the results may be termed sustainability reporting, corporate social responsibility reporting, triple bottom line reporting, and nonfinancial reporting.
Prior to beginning any attempt to measure a company’s triple bottom line impact, it should be clear what principles of corporate behavior the company aspires to follow and identify specific standards that support the principles.Landrum, Daily, and Vjin (2009). Principles and standards will be discussed in greater detail in Chapter 9 "Next Steps: Sustainability Strategy", but it is important to understand that identification of principles and standards is a precursor to the selection of tracking, measuring, and reporting tools for sustainability accounting.
Since examining nonfinancial performance of the business is a voluntary initiative, a myriad of options have emerged for sustainability accounting, and the realm of possibilities can be quite overwhelming. In this chapter, we will focus only on areas specific to accounting (measurement and accounting tools, reporting, assurance, and stakeholder engagement) and will address senior-level management issues (principles and standards) in a later discussion (see Chapter 9 "Next Steps: Sustainability Strategy").