Introduction

Sustainable development accounting is an approach to

organizational accounts that encompass global social and

environmental issues, beyond the previous concern with local

stakeholders and the immediate organisational context.

Sustainable development remains the overarching concept under

which an array of research and praxis takes place and as such

remains central to an articulation of various challenges and

views from different field of studies. Environmental and social

accounting suggest a recognition of multiple perspectives and

thus multiple accounts. Crudely one might think, therefore of an

environmental account as an articulation of the economic through

a lens which privileges nature rather than, an articulation of

nature through the lens of the economic. Why accountants might

wish to contemplate accounts of the environment is a question

that the more perceptive critical theorists have asked in the

past.

However, in the excitement of exploring and constructing a new

environmental accounting in order to make new things visible,

open up more interesting possibilities for new accountings,

challenge dominant narratives and develop a new field, the

question has rarely been addressed by those directly involved in

the enterprise. In retrospect, we might be both surprised and

more than a little abashed by this realization. After all, nature

doesn’t need us to offer accounts of it. Our accounting for

nature, for environmental matters, typically speaks of a

separation between humanity and nature and is not something that

nature wants, needs, understands or desires. We account for

humans i.e for ourselves.

Social and Environmental Accounting (eco justice)

Many putative accounts for sustainable development (however

incompletely they have been realized) emerged from environmental

accounting, which itself was an extension of work in social

accounting (see Gray & Rob, 2013). Before the eighties

environmental accounting was not articulated as a distinct

research subject. During this decade, however, there was pressure

for companies to disclose environmental liabilities (often

emerging from litigation) and this led to studies that tried to

explain environmental disclosures in terms of corporate

characteristics (see, for example, Trotman & Bradley, 1981). The

focus of these studies was the disclosure of environmental issues

that were essentially local in nature and which could have a

material impact on corporate accounts. By the end of the 1980s,

however, various developments, perhaps most influentially the

publication of the Brundtland Report (UNWCED, 1987), created the

impetus for an identifiable area of research in this area:

environmental accounting. The Brundtland Report reflected a

concern about the scale of human impact on the global environment

as well as the possibilities for equality in human flourishing

and used the concept of sustainable development to describe the

outcome sought (socially just and ecologically sound

development). The Brundtland Report motivated the UK Department

of the Environment to commission economist David Pearce to write

a report on environmental economics ultimately giving rise to the

influential Blueprint for a Green Economy (Pearce, Markandya, &

Barbier, 1989). In turn, the Chartered Association of Certified

Accountants commissioned Rob Gray to describe how accounting

might contribute in the wake of Pearce et al. (1989). This

resulted in the publication of The Greening of Accountancy. The

Profession After Pearce (Gray, 1990). This report, alongside

special issues of Accounting, Auditing and Accountability Journal

and Accounting, Organizations and Society in 1991 and in 1992

(volume 4, issue 3 and volume 17, issue 5, respectively) created

arguably the base from which environmental accounting emerged as

a distinctive sphere of inquiry.

Environmental accounting in the early nineties was strongly

inspired by ideas imported from both the science and the

economics of sustainable development, creating a fertile ground

for experimentation and for the emergence of a new literature

(Gray & Laughlin, 2012). This new literature was concerned, for

example, with the interplay between accounting and environmental

valuation. As environmental accounting became institutionalized

within accounting departments its focus reoriented to core

accounting concerns including management accounting, financial

auditing, financial accounting, and annual report analysis as

well as emerging practices of environmental audit and stand-alone

reporting (see Thomson, 2007 for an overview). Once this

occurred, this earlier interdisciplinary focus was largely lost.

Some social and methodological reasons could explain this focus.

Environmental Management Accounting

Environmental management accounting (EMA) is defined as the

process of identification, collection, calculation (estimation),

analysis, internal reporting and use of information regarding

materials and energy, environmental costs as well as of other

data regarding costs within decisional process in order to adopt

convenient decisions capable to contribute to environment

protection. Accordingly, environmental management accounting has

as a main objective the issuing of data useful for decision

making. Such accounting provides the sustainable development of

the company’s activities and analyzes the costs and benefits

connected with the impact of the environment upon the activity,

the contributions to the acknowledgement of the high level of

environment taxes, of capital expenditures and of exploitation

generated by using certain pollution control equipment. Godschalk

(2008) attempted to offer a more comprehensive definition of EMA

as ‘the identification, collection, analysis and use of two types

of information (i.e., physical and monetary information) for

internal and environmental decision-making’. The physical

information includes the use, flows, and destinies of energy,

water, and materials, and monetary information includes

environment-related costs, earnings, and savings. Furthermore, it

is important that managers understand the scope and boundaries of

EMA. In the same vein, Burritt et al. (2002) provide a

comprehensive framework for EMA based on both monetary and

physical EMA information. The development and adoption of EMA

will help to identify specific issues pertinent to individual

firms, to manage their impact upon the environment, and to report

the results of their performance in financial and environmental

dimensions (Frost and Wilmshurst, 2000). An increasing number of

EMA tools have been developed and applied to different projects

and cases, and general understanding of EMA and related tools is

improving.

Accounting and Sustainable Development

This section seeks to point towards what accounting for

sustainable development might entail by way of a two stage

investigation as reported by Bebbington and Larrinaga (2014).

First, a description of the issues that fall under the ambit of

sustainable development is attempted. Second, a translation of

these concerns into an accounting context is undertaken drawing

from and building on section two. The aim of this approach is to

distinguish social and/or environmental accounting more clearly

from any putative accounting for sustainable development.

Defining sustainable development Sustainable development is most

frequently characterized as ‘‘development that meets the needs of

the present without compromising the ability of future

generations to meet their own needs’’ (UNWCED, 1987). While this

definition is familiar to many, its radical nature can only be

appreciated in the context of the time it was first promulgated.

For example, Cohen, Demeritt, Robinson, and Rothman (1998) note

that in ‘‘adopting the term ‘sustainable development’, the

Brundtland Commission argued that problems of human development

(poverty, inequity, basic human needs) could not be separated

from, indeed were causally connected with environmental problems

of resource depletion, biodiversity, pollution and life support

systems

As a consequence, they argue that sustainable development is not

a scientific concept but a contested term in an essentially

political discourse about human activities and behaviour (Cohen

et al., 1998). At the same time, however, elements of

environmental evaluation, for example, can be scientifically

based. This reasoning raises both ontological and epistemological

questions.

From an ontological perspective, it is argued that a distinction

in conceptualization exists between natural and social systems.

Although there is uncertainty about the natural system aspects of

sustainable development, this uncertainty is of a different kind

than that which exists when it comes to examining social systems

aspect of sustainable development. For example, the politics

involved in the definition of notions of opportunity costs or

hypothetical baselines (Lohmann, 2009) make carbon accounting the

subject of deep controversy. Carbon emissions and the science of

climate change, however, resist a purely narrative approach that

would reduce them solely to social constructions that can be

deconstructed with the purpose of underplaying climate change and

the processes by which physical measurement is sought. At its

most extreme, the physical phenomena could be dismissed as being

‘unreal’ by virtue of a focus on the narratives that surround it.

As Latour (2004) put it, referring to the science of climate

change: ‘‘[m]y argument is that a certain form of critical spirit

has sent us down the wrong path, encouraging us to fight the

wrong enemies and, worst of all, to be considered as friends by

the wrong sort of allies. . .The question was never to get away

from facts but closer to them, not fighting empiricism but, on

the contrary, renewing empiricism.’’

Operationalization of Environmental Management Accounting

Environmental management accounting is employed mainly in order

to emphasize environmental protection costs due to the fact that

other indicators such as: raw materials, waste issuing and

stocking, pollution of environment factors expenditures etc. do

not really show the value society has to bear.

Environmental costs can be described as follows: environmental

costs that include both internal and external costs which are

connected with the environment determination and protection as

well as environmental protection costs that include the costs

required in order to prevent, stock, plan, control, and carry out

activities, to repair the damages that the industrial company may

be charged with but which the government, the local public

administration or the society as a whole pays.

Environment protection expenditures include all the expenditures

required in order to cover the measures meant for environment

protection taken by the economic entity in order to prevent,

produce, control, and register within documents those aspects

regarding the environment, the impact, and the risk; the same is

valid in case of ecological storage, treating or reconstructing.

The first step in administrating waste, namely treating polluting

emissions implies modernizations required in order to treat

emissions and waste (their storage).

Waste, waste costs have double meaning: they represent material

losses of the technological flow and show the efficiency or

inefficiency of the technologies characterized by a productivity

type index. Material flows also include water and energy. There

is a second category of waste; it includes the cost of waste

materials and the equivalent of the capital and labor consumed by

such waste.

When the economic entity’s accounting implements the

environmental management accounting, two groups of experts work

in the field, namely:

The accounting group (accountants) whose responsibility is to

evaluate, to survey, and to register products sales (input-

output), the incomes registered according to cost centers,

acquisition costs (sale prices, internal prices, the calculation

of taxes, etc.); and

The technological group (technologists) whose responsibility is

to elaborate balances for materials, water, energy, waste,

emissions expressed in physical units and as costs, to identify

the costs of emissions catching equipments to implement clean

technologies, to evaluate the number of labor hours, the

operations required in order to distribute costs according to

various levels of environment approaching.

A good knowledge of environmental costs may improve the

efficiency of a waste administration policy. Accordingly, the

economic entity can direct its decision towards an anti-polluting

measure which, at first sight, may seem more expensive, but which

proves to be less onerous when employed. When choosing an anti-

polluting technology, the savings that regard waste

administration should be compared with the whole costs that

emerge from adopting the anti-polluting technology.

According to the principle polluter pays, the cost of environment

protection should be included in the price of the product, which

leads to price increase. If entities in the same field of

activity do not implement the same measures regarding the

environment, the pioneering entity in environment protection is

less favored when compared with its competitors as the sale

prices of its products are higher.

Referring to the quantification of costs in environmental

accounting, contrary to traditional accounting that used to

classify costs according to: materials and direct labor, indirect

production expenditures, distribution costs, administration

general costs, and research/development costs, environmental

accounting identifies hidden costs or improperly allocated ones

due to traditional methods, evaluates them, and distinctly

reports them as being different from the other types of costs.

Such costs are losses determined by the deterioration or the

inefficient use of raw materials and materials, of utilities

(water, energy, natural resources), by the diminished use of non-

regenerating resources, by the decrease of the costs required by

normative documents (costs determined by the publishing of

planning data, taxes, employees training expenditures, etc.).

A major impediment in adopting a vision of surveying a clean

activity is that, most of the time, economic entities do not

consider the costs determined by the environment within which

they carry out their activity nor the benefits that might be

obtained through decreasing the negative impact upon the

environment. Most often, the costs of common natural resources

such as air, water, and energy are summed up and displayed as

data in evaluating certain elements as other exploitation

expenditures or administrative costs being considered as separate

from production. The avoiding of evaluating such costs relies

upon clearly identifiable costs and does not consider the costs

or benefits of certain alternative actions.

Results from the Empirical Studies

Stefea and Pelin (2008) found that Romanian, like many others

European countries has the tendency to reflect a negative

relationship between accounting values and environmental

performance. The explanation consists of the following: the first

obstacle was found in the lack of Romanian regulations regarding

the environmental reporting issues which might be used in order

to reach the aimed value of environmental performance, value that

consequently affects research models outcome on the factors which

influence the market value of the analyzed entities; the time

dimension is also an important variable since Romania is only

beginning its real integration in matters which regard the

European Unions’ structures and systems, this meaning that

environmental legislation has changed and will continue to do so;

a great number of the Romanian entities still only relate

environmental investments to increased costs, without even seeing

a glance of the possible returns and therefore are only

interested to keep themselves at the thickest limit imposed

through laws; a huge problem in approaching this topic is

grounded within the environmental education which spreads both in

the internal structures of ones entity and through the

relationships between different entities; what we want to say

here is that there should be a change in the entities’ attitude

towards environmental responsibility which ought to come out of

common sense since all of us are interested in creating such an

environmental management system which would lead to smaller

quantities of wastes, decreased material consumption and fewer

accidents; investors perceive that environmental performance is

used for the window dressing of book values and financial

performance; rational investors react negatively to environmental

investments since they only look at the expected reduction in

profitability with no corresponding in risk; the estimated costs

of the environmental reports are difficult to measure and the

distribution of costs and benefits are uneven; the return on the

environmental investments can only be evaluated and quantified on

a long term while the market value is often short time oriented;

this way it’s understandable why many only see the aspects

regarding the costs of environmental performance and still remind

blind in front of future benefits that might be involved on the

long run; to conclude we could say that the market is short-term

oriented and investors do not consider longer-term environmental

information when making investment decisions.

Marquet-Pondeville, Swaen, and De Ronge, (2013) use the results

of a survey of 256 Belgian manufacturing firms to identify the

relationship between corporate environmental strategies and

Environmental Management Control Systems (EMCS). Their results

suggest that more proactive environmental companies develop EMCS,

but companies that perceive more ecological environmental

uncertainty are less likely to develop an environmental proactive

strategy or an environmental information system, or a formal

EMCS. This study suggests that integrating environmental factors

into organizational management leads to better control over

corporate environmental objectives. Their research also provides

insights into understanding the composition and nature (formal

and informal) of EMCS in manufacturing firms, including some

suggestions as to which factors lead companies to be more

environmentally proactive, which is a necessary but not

sufficient condition for sustainable transformation. They also

argue that pressures from various stakeholder groups can

positively influence degrees of corporate environmental

proactivity, the development of a corporate environmental

strategy and the nature and composition of an organizational

EMCS.

Contrafatto and Burns (2013) report on a longitudinal case study

of why, and particularly how, an Italian multinational

organisation’s social, environmental accounting and reporting

(SEAR) practices evolved over time, and their effects. Whilst

they use Laughlin (1991) organizational change framework they

also analyze this evolution as a series of interconnected

(change) processes using old Institutional theory, highlighting

the cumulative interplay between accounting tools and

organizational and extra-organizational change. Their case study

highlights the complexity of the development and effects of SEAR

practices over time, and stresses how such complexity needs to be

understood in its broad organizational and external context. They

observe that SEAR practices are becoming more significant in an

organisation’s strategic planning processes, but also identify

limits to such developments.

These limits are associated with the organisation’s requirement

that SEAR techniques are consistent with the dominant corporate

objective to make profits. The authors argue that while they

witnessed technical ‘success’ in terms of implementing new SEAR

practices, they questioned the usefulness, in a sustainable

development context, of extending conventional management

accounting techniques and conclude that developing sustainably

will require radical changes in management accounting practices.

Moore (2013) also reports on a longitudinal case study but a case

study of an Australian public sector water business in order to

analyze how, and to what extent, the institutionalization and

deinstitutionalization of internal sustainable and environmental

management routines, practices and procedures occurred within the

organization. The researcher uses the Dillard et al. (2004)

framework which incorporates institutional and structuration

theories in order to understand the institutions, practices and

processes of change associated with sustainable development. He

argues that the institutionalization of financial and cost

accounting practices and environmental and sustainable management

practices were dependent upon the interrelationships of competing

factors such as external and internal tensions and virtual

structures of signification, legitimation and domination. This

paper provides rich empirical data into the processes by which

the organization developed management accounting practices and

explains the complex process as to how the internal ‘sustainable’

accounting processes became decoupled from other issues for

example, external political discourses, EMS procedures, risk

management systems, regulatory compliance, water conservation

targets and greenhouse emissions. And the research seeks to

develop the theoretical understanding of how and why accounting

routines and practices innovate and evolve within organizations

Figge and Hahn (2013) demonstrate how a widely used management

accounting tool, DuPont analysis, can be adapted to provide an

integrated assessment of corporate environmental and economic

performance to support decision-making for more efficient use of

environmental resources. The authors argue that the principles of

value-based management can be usefully applied to improve

organization’s eco-efficiency. By disaggregating eco-efficiency

into its value components and value drivers a management

accounting tool can be created to provide managerial guidance on

the value-creating use of environmental and economic resources.

The authors also demonstrate the feasibility of this tool with an

analysis of the carbon-efficiency of international car

manufacturers. They argue that this tool is one step towards more

sustainable decision making as it challenges the logic that

considers environmental resources as a means to economic returns.

Their conclusion (similar to Contrafatto and Burns, 2013) is that

more radical reforms to management accounting are necessary if

businesses wish to contribute to developing sustainability, in

particular the inclusion of qualitative, social aspects and the

need to integrate sustainable development in absolute rather

relative terms.

Kuasirikun (2005) revealed from the blended approach of

questionnaire and interview, several question were raised to

addressed three (3) aspects, the general perception of Thailand

accounting practice, exploring the respondents’ opinion on the

broader forms of accountings , and finally assessing the

respondents’ believes on the type/classes of accounting that have

significance to them. The journey was started with the

respondents’ believes on the profit maximization, well-being and

societal economy, where it was reveal the conventional economic

aspect of business remained the principal goal, though believes

all are important, then ,moving to the respondents’ perception on

the purposes of preparing accounting information reports, which

the result shows, it is provided for financial purposes

(investment and legal), this result tend to be confirmed by the

10th interview, which believes accounting information is prepared

for management control and decision making. Moreover towards

exploring respondents opinion on the broader forms of accounting

as well as assessing their believes on the accounting

significance, at the first step, the study confront the broader

vision of business responsibility and accounting in order to

assess the viability of wider forms of disclosure by exploring

how companies recognizes wider social responsibility in future as

their conventional financial vision, where the result appeared

that companies to be responsible for non-financial performance

also, most of the interviewees agreed that businesses should be

responsible for the societal problems, since they have conducted

the business and ending up with profit, as such they should be

responsible to the negatives consequences they engender for the

people in the society, such as consumers, workers and physical

environment, though some opine no relationship between accounting

and corporate social responsibility for social and environmental

welfare

Furthermore it was agreed by both respondents and interviewees

that environmental accounting/report seem to favored government

and employees by given rooms in job decision, such as disclosure

of wage levels, facilities provided at work, etc, also with

regards to company’s responsibility towards the community at

large, the overall result shows the support for accounting

reports reflecting company’s business activities in relation to

their concern for the community, some interviewees suggested that

the company should contribute to the betterment of the community

in which it operates by stating the degree of its contribution to

the society, which might vary depending on the corporate size,

also an academic accountant concluded that frequent Thailand

community involvement in the activities is effective, but

accounting lecturer argued that leaving the selection of

environmental disclosure to corporate management’s discretion, to

serve their marketing propaganda.

Virtanen et al. (2013) provide a number of insights into the

problems (and benefits) of developing performance measurement

practices to direct managers to improve energy efficiency and

integrate environmental matters into management control systems.

Their cross-disciplinary analysis focused on an energy efficiency

indicator in a Finnish petrochemical firm and demonstrates how

this indicator did not allow proper energy efficiency performance

management. The paper examined how complexities in the

measurement and management of energy efficiency may impede

effective use of management control systems to affect the ability

and motivation of employees to work towards the goals of

sustainable development. In addition to technical difficulties in

constructing an effective indicator for energy efficiency other

factors are necessary to improve energy efficiency in

organizations. These include, widening the span of

accountability, greater interaction between organizational levels

and stimulating learning by employees in order to enable and

motivate them to undertake initiatives to make the organization

more sustainable. They conclude that the future challenge for

researchers is to develop pragmatic accounting tools for

integrating sustainability targets with performance management.

Conclusion

The recurring theme of the papers in this special issue is that

significant changes are occurring in organizational management

accounting processes but they fall short of what is necessary if

organizations are to develop sustainably and contribute to wider

societal sustainable development. We identifies what might lie

beyond the particular papers in this special issue, which we now

explore in more detail as we explore sustainable development

framing, literature and thinking that has not yet been fully

embraced within the accounting literature. It is important to

note that these special issue papers all make important

contributions to thinking about sustainable development and

accounting, but there is more that future research must address

if it can be legitimately described as being about sustainable

development.

References

Bebbington, J., & Larrinaga, C. (2014). Accounting ,

Organizations and Society Accounting and sustainable

development : An exploration. Accounting, organizations &

society. doi:10.1016/j.aos.2014.01.003

Burritt R, Hahn T, Schaltegger S. (2002). Towards a comprehensive

framework for environmental management accounting: links

between business actors and environmental management

accounting tools. Australian Accounting Review 12(2): 39–50.

Cohen, S., Demeritt, D., Robinson, J., & Rothman, D. (1998).

Climate change and sustainable development: Towards dialogue.

Global Environmental Change, 8(4), 341–371.

Contrafatto, M., Burns, J., 2013. Social and environmental

accounting, organisational change and management accounting:

A processual view. Management Accounting Research 24 (4),

349–366.

Figge, F., & Hahn, T. (2013). Sustainable value added—Measuring

corporate contributions to sustainability beyond eco-

efficiency. Ecological Economics, 48(2), 173–187.

http://dx.doi.org/10.1016/ j.ecolecon.2003.08.005.

Frost G, Wilmshurst T. 2000. The adoption of environment-related

management accounting: an analysis of corporate environmental

sensitivity. Accounting Forum 24(4): 344–365.

Godschalk S. 2008. Does Corporate Environmental Accounting Make

Business Sense?

Gray, R., & Laughlin, R. (2012). It was 20 years ago today: Sgt

Pepper, Accounting, Auditing & Accountability Journal, green

accounting and the Blue Meanies. Accounting, Auditing and

Accountability Journal, 25(2), 228–255.

Gray, R. (1990). The greening of accountancy: The profession

after Pearce. London: ACCA.

Kuasirikun, N. (2005). Attitudes to the development and

implementation of social and environmental accounting in

Thailand, 16, 1035–1057. doi:10.1016/j.cpa.2004.02.004

Latour, B. (2004). Why has critique run out of steam? From

matters of fact to matters of concern. Critical Inquiry,

30(2), 225–248.

Lehman G. 2009. Global accountability and sustainability:

research prospects. Accounting Forum 26(3): 219–232.

Marquet-Pondeville, S., Swaen, V., De Ronge, Y., 2013.

Environmental management control systems: The role of

contextual and strategic factors. Management Accounting

Research 24 (4), 317–332.

Moore, D., 2013. Sustainability, institutionalization and the

duality of structure: contradiction and unintended

consequences in the political context of an Australian water

business. Management Accounting Research 24 (4), 367–387.

Pearce, D., Markandya, A., & Barbier, E. B. (1989). Blueprint for

a green economy. London: Earthscan.

Thomson, I. (2007). Mapping the terrain of sustainability

accounting. In J. Unerman, B. O’Dwyer, & J. Bebbington

(Eds.), Sustainability accounting and accountability. Oxon:

Routledge.

Trotman, K. T., & Bradley, G. W. (1981). Associations between

social responsibility disclosure and characteristics of

companies. Accounting, Organizations and Society, 6(4), 355–

362. http://dx.doi.org/10.1016/ 0361-3682(81)90014-3.

United Nations World Commission on Environment and Development

(WCED), 1987. Our Common Future. Oxford University Press,

Oxford.

Virtanen, T., Tuomaala, M., Pentti, E., 2013. Controllability in

a search for sustainability case: energy efficiency in

process industry. Management Accounting Research.