Green Accounting: A Conceptual Framework

Tony Greenham, 24 September 2010

Abstract
The origins of the accountancy profession in the 19 th Century were within the context of the
age of empire and boundless economic expansion. The latter part of the 20 th Century brought
an awareness of environmental limits to economic activity and has led to a proliferation of
accounting methodologies designed to measure the impact of human activity on the earth’s
ecological systems and resources. Such methodologies can be collectively described as green
accounting, and categorised in three different ways; first, by whose actions are being
accounted for – households, enterprises or governments; second, by the time period being
considered – past, present or future; third, by how environment impacts are measured – in
parallel with financial results, by valuing them in financial terms, or in ways that avoid
financial measures entirely. Current practice tends to focus on parallel reporting with financial
accounting still having greater importance. Although progress has been made towards
standardising methodologies, green accounting remains largely voluntary and unaudited. The
merits of combining environmental and social impacts in the same metrics are considered, and
although of equal importance the case is made for a separate focus on environmental factors.
The key challenges for green accounting can be summarised as first to determining the scale of
change in human activity required to prevent environmental degradation and incorporating
some reference to these limits within its metrics, and second to be effective in prompting the
necessary behavioural change within the necessary timescale. Ultimately, however, accounting
will reflect the philosophical and cultural values and the economic structures that govern
human activity, and so it can be argued that to be effective green accounting needs green
economics.

Keywords: Green accounting, alternative indicators, sustainability accounting, ecological

footprint, environmental indicators, corporate social responsibility reporting

1 Accountancy in Context
The context of the early development of the accountancy profession was an age of empire in
Europe and of expansion across North America; a world of the constant annexation of new
resources to fuel the economic expansion of the industrialising world. The first recorded
accountancy firm in the UK was established in Bristol in 1780 by Josiah Wade 1 just a few years
after the publication of Adam Smith’s “An Inquiry into the Nature and Causes of the Wealth of
Nations” expounded the economic principles of free trade, competition and choice. The
world’s largest professional services firm, Pricewaterhouse Coopers, was founded on Christmas
Eve 1849 (Jones 1995) at the start of an era described by historian Ashley Jackson as the ‘High
Noon’ of British Empire (Jackson 2009). Other European nations also expanded their control
over territories and their resources to feed their economic growth. In the USA, California
became the 31st state in the union in 1850 and the cities of San Francisco and Los Angeles
were incorporated the same year2.

The development of companies legislation and bankruptcy law also provided abundant sources
of new work for the burgeoning accountancy profession around this time, because the
separation of ownership from management required the external scrutiny of books of account
and financial reporting developed to inform the shareholders how well management were
performing in safeguarding their assets and delivering a return on their capital. Between 1855
and 1864 the foundations of modern company law were laid. One of the key principles was that
the directors of a private company had a duty to act in the best interests of their shareholders

Green Accounting: A Conceptual Framework Page 1

 - in other words to maximise their returns.

How has this context changed since the 19th Century?

For over four decades there has been a growing band of scientists, economists and
environmentalists that have argued not only that ecological limits matter, but that we are
close to exceeding many of them (Meadows et al. 2004) and that market based systems do not
automatically regulate economic activity to stay safely within these systems.

At the UN “Earth Summit” in Rio de Janerio during 1992 the Rio Declaration On Environment
And Development proclaimed that development must “equitably meet developmental and
environmental needs of present and future generations” (Principle 3) and that “environmental
protection shall constitute an integral part of the development process and cannot be
considered in isolation from it” (Principle 4)3. Over 178 governments adopted Agenda 21 – “a
comprehensive plan of action to be taken globally, nationally and locally by organizations of
the United Nations System, Governments, and Major Groups in every area in which human
impacts on the environment”4.

The concept of sustainable development has entered the political and cultural narrative of
many nations and in advance of the 2009 Copenhagen conference to discuss a successor to the
Kyoto Protocol the UK government has committed itself to emission cuts of 18% of 2008 levels
by 2020 (Department of Energy and Climate Change 2009).

However, also over this period, the doctrine of laissez-faire deregulated market economics has
become globally dominant as evidenced by the expansion of the principles of free trade from
trade in manufactured goods into financial services, agricultural goods and intellectual
property with the establishment of the World Trade Organisation in 1995 5.

The recent major revision of UK company law imposed an obligation on large UK companies to
report key environmental indicators but it also retained the legal duty for directors to
maximise returns to shareholders if this is what the shareholders want. The concept of
‘enlightened shareholder value’ is meant to ensure that directors consider a wider range of
factors, however shareholder value is still the trump card, as Lord Goldsmith, the Attorney-
General, put it during debate on the passage of the legislation “For most people who invest in
companies, there is never any doubt about it—money. That is what they want. They want a
long-term increase in the company”6

Finally, after a banking crises caused by the bursting of debt bubble including some
spectacular collapses of so-called ponzi schemes, the response seems to be to try to re-inflate
the bubble in order resume economic growth with political pressure being applied on banks to
boost lending7.

So at best, we have a mixed context for green accounting. There is recognition of

environmental problems and declarations of intent, but little genuine systemic change in the
global economic system and the behaviour of businesses.

2 Defining Green Accounting

To illustrate the potential complexity of green accounting, let’s consider the case of UK
consumption of Kenyan green beans. Over the past decade or so a significant quantity of UK
bean production has been replaced by imports from Kenya. UK production fell by 10,000 tonnes
over a 10 year period to 2005, while over a 15 year period to 2005 imports of green beans rose
by 25,000 tonnes. Of these, 90% are transported by air and 58% are from Kenya (Jones 2006).
According to Tim Lang, each green bean stem consumes 4 litres of water and this in an
officially water stressed country (Lang 2008).

Green Accounting: A Conceptual Framework Page 2

Clearly the trade must be profitable for those participating in it, but it seems self evident that
there are multiple potential environmental negative impacts, chiefly consumption of fossil
fuels and emission of CO2 in transportation and over-consumption of fresh water in Kenya. So
the questions arise:
- are these impacts reflected in the price, in other words are the costs internalised?
- are these harmful impacts described on the packaging?
- are they reported by any of the firms involved in the supply chain?

If the answer to all these questions “No”, would it make any difference if the answers were
‘yes’ and would green accounting prompt a change in this activity?

Green Accounting may be broadly defined as follows:

“Green accounting measures the impact of human activity on the earth’s ecological
systems and resources and not just the financial effects of such activity.”

The purpose of pursuing accounting of this kind is to enable us to assess whether the human
activity being accounted for is sustainable. Within this overarching objective, it may play a
number of different roles which can be summarised under three broad headings (Pastille
Consortium 2002):
1. Policy - setting objectives
2. Management – monitoring progress towards achieving objectives and informing decision-
making
3. Communication – public awareness and education

Consideration of what “sustainable” really means is outside the scope of this paper, but the
definition also begs two further questions.

Financial accounting captures only those transactions which involve a monetary exchange or
can be valued in monetary terms. Does green accounting also need to measure human activity
which does not involve a monetary exchange? In so far as such activity may have harmful
environmental impacts than surely it must.

Second, should green accounting measure the social impacts of human activity as well as the
environmental impacts? This would be consistent with the central proposition of the developing
discipline of green economics: that we need to consider "the complex mesh of social and
environmental justice together." (Kennet and Heinemann 2006) (Kennet 2007). Pavan Sukhdev,
Head of Green Economy for the United Nations, argues that a strong case can be made that
poverty and environmental degradation are inextricably linked (TEEB 2009). The author
strongly supports this view both on the grounds of social justice and of having a complete
picture of the causes and effects of environmental degradation. To ignore the direct impact on
people of economic policy and the actions of organisations and governments and focus wholly
on the impact on the planet is surely to exclude essential information if we are to practice
‘systems thinking’.

However, it does not follow that it is necessary or even desirable to attempt to capture both
kinds of impact within the same set of metrics. Practicalities must be taken into account, and
broadening the scope of accounting to incorporate environmental factors is a significant task in
itself. It might further be argued that the latter can be grounded in science whereas
accounting for social impacts involves political judgement. The advantage of focusing green
accounting on the environment is that we can hope to achieve some degree of consensus on
what the numbers mean and what they need to be in order to avert environmental
catastrophe. The framework outlined here takes this approach but with two caveats: the
author accepts that a view that green accounting is incomplete without measuring social
impacts is equally valid, and secondly, this approach is not intended to diminish the
importance of the social dimension but merely to argue that different metrics may need to be
developed to address it. Combining social and environmental considerations might work better
at some levels, for example national accounting, than others, such as enterprise accounting.
This framework can therefore perhaps be better seen as a step on the journey to a
comprehensive green accounting framework than as the final destination.

Green Accounting: A Conceptual Framework Page 3

3 Conceptual Framework
The framework proposes categorising green accounting methodologies according to three
dimensions, summarised in figure 1 below:

1. WHO - Whose actions are we accounting for?

2. WHEN - When have the actions and impacts taken place?
3. WHAT - How are we trying to measure these impacts?

Figure 1 – Three dimensions of Green Accounting

Household
WHO Enterprise
State

Parallel
Full cost WHAT
Alternative

Past
WHEN Present
Future

3.1 Accounting for whom? Households, enterprises and governments

We can think about the environmental impacts of our actions as individuals, families, or
households. Ecological and carbon footprints can now be calculated by individuals with tools
readily available on the web, such as UK governments “Act on CO2” carbon calculator.

However, accountancy as a profession is perhaps usually associated with business, or

enterprises. I include here both public sector organisations and those in the third sector,
although the accounting conventions differ between these three. A huge amount of attention
has been given to environmental or sustainability accounting and reporting for enterprises.

Finally, national accounting is still dominated by Gross Domestic Product despite a wealth of
literature highlighting the fallacies of measuring the success of an economy such a narrow way.
At this level, broad sustainability indicators such as ISEW/GPI tend to address both
environmental and social concerns. Green accounting for governments might address key
concerns of green economics such as intergenerational equity and the undervaluation of
women’s work. It also needs to hold governments to account for ensuring that the societies
they represent are not living beyond their ecological means.

3.2 Accounting for what? Different approaches to green accounting

The number of sustainability reporting methodologies proposed may number in the hundreds,
although only a few models have been widely adopted (Hubbard 2008). The methodologies may
be analysed according to three approaches:

1. Parallel reporting

Green Accounting: A Conceptual Framework Page 4

 The most common form of sustainability reporting is to identify environmental key
performance indicators and start to monitor and report on these indicators alongside
traditional financial reporting. Social indicators are usually also included as part of such
reporting with approximately only 1 in 7 focussing exclusively on environmental indicators.
However, common to all parallel reporting is the continued supremacy of financial or economic
reporting. In this sense the environmental impacts are seen as of secondary importance to
maximising financial returns.

2. Full cost accounting

A second approach is based on the concept of externalities in economics. This is the

recognition that the information captured by free markets in the price of goods and services is
only partial, and excludes many environmental and social costs (and indeed benefits) (for
example, Pearce 1995). If only, the theory goes, we could correct the price to reflect these
costs and benefits, the free market would deliver an equilibrium that was sustainable.
Attempts to price negative environmental impacts through tradable permits and eco-taxes fit
within this category

3. Alternative measures

The least explored set of approaches is to try to introduce different criteria for judging the
actions of individuals, enterprises and governments. At the government level there are well
established attempts to measure wellbeing in non-financial terms from the ISEW to NEF’s
Happy Planet Index. Equally, the extent to which individual happiness and success is equated
with the accumulation of wealth is an interested philosophical, psychological and
anthropological question. In terms of the actions of enterprises, there is little to challenge the
primacy of maximising financial returns, or minimising financial costs, but is it conceptually
possible to do so.

3.3 Accounting for when? Past, present and future

The final dimension is the period of time we are accounting for. Financial reporting is mostly
about the past and the present, in other words the profit and loss account and the balance
sheet. However, we can also consider what green accounting would mean for project
appraisal, cost-benefit analysis and risk analysis, in other words for decision-making. Arguably
the lack of attention given to the future impacts of current and past actions is a major defect
in accountancy as much human activity has long term impacts. We need look no further than
the accumulation of greenhouse gases in the atmosphere since the dawn of the industrial
revolution as a stark example of this.

4 Green Accounting in Practice

4.1 Households

At the household level the best known indicator of environmental impact is perhaps the carbon
footprint. There are many tools available to help people calculate their personal carbon
emissions, of which one example is the UK governments “act on CO2” calculator. The
individual is encouraged to reduce their emissions, and to compare their footprint with other
individuals, however there is no suggestion of what the ‘right’ amount of emissions might be.

Systems of rationing or allowances are not in use at the personal level, but have been
examined by the UK government in the form of personal carbon allowances (Environmental
Audit Committee 2008). If combined with a system for trading allowances this becomes a form
of full cost accounting for personal greenhouse gas (GHG) emissions. A system of tradable
energy quotas has also been proposed along similar lines (Fleming 2007). What have been
implemented in the UK are various eco-taxes of which the highest profile is the tax on motor
fuel. However, the effectiveness and acceptability of green taxation is necessarily bound up

Green Accounting: A Conceptual Framework Page 5

 with the acceptability of general increases in taxation. Proposals to shift the burden of
taxation to environmental ‘bads’ are therefore often greeting with suspicion 8

Examples of alternative accounting systems at the level of the household are difficult to
identify as opting out of the monetary system is difficult particularly in developed nations. The
closest examples may be communities set up with the avowed goals of self-sufficiency and
minimal ecological harm9.

4.2 Enterprises

Large organisations have voluntarily adopted sustainability reporting in various forms but take-
up among small and medium size enterprises remains low. The leading accounting standard is
the Global Reporting Initiatives guidelines, the third edition of which was released in 2006.
Over 1,500 companies now report against GRI guidelines from a starting point of 20 in 1999
(Hubbard 2008). A similar number of companies report their GHG emissions as part of the
Carbon Disclosure Project which provides information for over 475 institutional investors. In
the UK the Prince of Wales has initiated Accounting for Sustainability, which aims to improve
the financial management and reporting systems of organisations to enable better
environmental and social performance. The Institute of Chartered Accountants in England and
Wales, and other professional bodies, are now offering guidance to enterprises and auditing
firms in implementation of sustainability measurement 10. Similarly the Eco-Management and
Audit Scheme (EMAS) and ISO14001 provide certified models for the internal management
processes of organisations, but being focussed on the processes there is no guarantee about the
environment outcomes of the decisions reached using these processes. Attempts to standardise
the calculation of GHG emissions have been greatly assisted by the GHG protocol jointly
sponsored by the World Resources Institute (WRI) and the World Business Council for
Sustainable Development (WBCSD) which provides standardised carbon calculations and tools
across a range of different industries, products and services. Life cycle assessment attempts to
measure the environmental impacts of a product or service from the extraction of raw
materials through to the disposal of waste. Although best practice guidelines for LCA’s exist
such as the US EPA’s "Life Cycle Assessment: Principles and Practice“ (LCA101), in reality the
number of assumptions usually required to derive quantitative results introduce a significant
degree of subjectivity and the end result can be highly sensitive to these assumptions
(Greenham 2003). Finally, the future environmental impacts of a project can be assessed in a
systematic way using Environmental Impact Assessment, required in many jurisdictions for
major planning decisions.

Examples of full cost accounting with enterprises are somewhat harder to identify, and always
imposed by regulation. The landfill tax in the UK and taxes on fuel in various developed nations
are example of eco-taxes that aim to internalise environmental costs. The other main market
mechanism is the use of tradable permits. The EU Emissions Trading Scheme is now in Phase
Two from 2008 to 2012, and works by distributing emissions permits to major installations
which emit GHG’s and allowing the permits to be traded thereby creating a price for carbon.
An earlier cap and trade scheme was introduced under the US 1990 Clean Air Act to reduce
sulphur dioxide emissions.

Alternative accounting methodologies are even harder to identify, but one intriguing example
is the concept of energy accounting which emerged during the 1970’s energy crisis (Gray and
Bebbington 2001). In essence bookkeeping entries would be denoted in standard energy units,
such as therms or kilowatts instead of financial units of Dollars or Euros. An organisation would
then aim to deliver its products and services with the lowest input of energy units. As many
negative environmental impacts are associated with the extraction, distribution and use of
energy, it may function well as a proxy for general environmental impact.

4.3 Governments

Over 178 governments signed up to sustainability principles at the UN Earth Summit, including
commitments to monitor their progress in taking account of environmental factors. We might
therefore expect systems of parallel reporting of key environmental indicators to be well
developed. The UK Government’s Sustainable Development Strategy tracks and reports on 68

Green Accounting: A Conceptual Framework Page 6

 different indicators. The UN Environmental Programme (UNEP)’s System of Integrated
Environmental & Economic Accounting sets out a common framework for UN member states “to
measure the contribution of the environment to the economy and the impact of the economy
on the environment”. However it is described by UNEP as a ‘satellite system’ of the national
accounts. A green accounting tool used at government level to assess future environmental
impacts is Strategic Environmental Assessment, a version of the Environmental Impact
Assessment methodology applied to policies and strategies instead of projects and individual
developments.

The full cost approach to green accounting at national level is adopted by the Index of
Sustainable Economic Welfare (ISEW) (Anderson 1991) and the closely related Genuine Progress
Indicator (GPI) (Cobb, Halstead and Rowe 1995). These start with GDP time series data and
make various adjustments including for costs of pollution, depletion of non-renewable
resources and costs of carbon emissions. The difficulty of reaching robust valuations for such
environmental ‘bads’ leaves these indices open to criticism and perhaps partly explains why
GDP remains the highest profile measure of national economic performance. The WRI
conducted an attempt to place a financial value on the services provided by earth’s
ecosystems in 1997. This concluded that these services were worth almost double the global
GDP at the time ($33trn vs $18trn).

Finally, alternative approaches to financial measures for economic policy are rare, but Bhutan
is an interesting exception having adopted a measure called Gross National Happiness in 1972
as a replacement for GDP. Based on Buddhist principles, the index is constructed only from
variables which have a positive on negative impact on happiness or well-being. Thus economic
development must explicitly take into account such factors as respect for all living things,
nature, community participation and the balance between work, sleep and meditation 11.

A more generally applicable measure developed by nef (the new economics foundation) is the
‘Happy Planet Index’. This combines composite measures of welfare with calculations of
ecological footprint at national level to produce a ratio of efficiency in translating resource use
(including over-use) into human wellbeing (Abdallah et al 2009).

In terms of other alternative measures, the exploration of energy accounting the 1970’s was in
fact predated by recognition of the importance of energy flows in the early part of the 20th
Century. There were proposals to replace the monetary system with one based on allocating
units of energy. For example, Frederick Soddy arguing that “real” wealth was derived not from
monetary flows but from the use of energy to transform materials into physical goods and
services (Cleveland 2007).

4.4 Assessing Current Practice

How widespread is the adoption of green accounting, and how effective is it? Starting with
enterprises, large organisations have voluntarily adopted sustainability reporting in various
forms but take-up among small and medium size enterprises remains low (Hubbard 2008).
Legislation is gradually driving the incorporation of environmental indicators for example, the
EU Accounts Modernisation Directive.

However, there is no consensus on global green accounting standards for enterprises although
the GRI may develop into a global standard backed by the force of law in time. Standards of
external scrutiny also lag considerably behind the infrastructure both legislative and in best
practice guidelines that lies behind financial auditing. Best practice standards exist, such as
AccountAbility, but external scrutiny of green accounts remains voluntary.

Among the areas in which current green accounting practice may be considered weak, is
agreement on how to apportion responsibility for environment impacts. The World Resources
Institute defines the scope of responsibility for an organisation’s emission as follows:

Scope 1 - The organisation’s direct emissions.

Scope 2 - The organisation’s indirect emissions from purchased electricity, heat, and steam.
Scope 3 - The organisation’s indirect emissions other than those covered in scope 2.

Green Accounting: A Conceptual Framework Page 7

 Scope 3 emissions may be significantly outweigh scope 1 and 2 and therefore it is perhaps not
surprising that enterprises either ignore them completely or are selective about what they
report (Stewart 2009).

Perhaps the key issue with current practice is whether reporting environmental and social
indicators alongside financial accounts provides a sufficient pressure on enterprises to act in
more sustainable ways. The onus is on the customer, employee and institutional shareholder to
demand behavioural change.

In terms of the impact of current green accounting practices on household behaviour, raising
awareness around the carbon emissions, energy use and water consumption of households may
enable and encourage behavioural change. But although this kind of information is necessary is
it sufficient? In the absence of any sense of what quantum of impact per household is
tolerable, how will people know what needs to be achieved? Without some link to financial
incentives, will change come quick enough?

Turning to green accounting at government, or national, level progress is perhaps more

encouraging. There is a long-established political and academic critique of GDP as a measure
of broader social progress or well-being (for example, Anderson 1991). Robert Kennedy in 1966
argued that GNP was deficient in counting even that economic activity that arises from
environmental destruction and social unrest, while excluding from measurement the benefits
of cultural activities and social wellbeing; “it measures everything, in short, except that which
makes life worthwhile.” (Kennedy 1966).

The then leader of the opposition in the UK, David Cameron, proposed that GWB ‘general well-
being’ should be considered alongside GDP (Cameron 2006). However, there is no reference to
alternative national accounting measures in the Conservative/Liberal-Democrat Coalition
Agreement published in May 2010 on the formation of the coalition government led by David
Cameron (Cabinet Office 2010). In France, President Sarkhozy called for improved measures of
well-being and established a commission to investigate the matter. This highlighted a need to
recognise the structural changes in economies as they develop and the shift in emphasis from
quantity of production to quality, and to the provision of public goods such as health services.
The commission recommended a shift in emphasis from measuring economic production to
measuring people’s well-being and emphasised the importance of sustainability (Stiglitz, Sen
and Fitoussi 2009).

Despite promising rhetoric on green accounting at national level, there has been a lack of
progress in implementation of alternative measures to GDP in policy goals.

5 Conclusions
From this conceptual framework and review of current practice we identify some critical
success factors for green accounting. At the most general level, a successful methodology must
be relevant to both planet and people. Relevance to the planet can be defined as combining
the following elements, summarised in Figure 2, below:
• It recognises environmental limits and is thus grounded in physical science and a factual
analysis of the level of tolerable impact of human activity on the planet
• Variables are measurable in reliable and objective terms to express these limits
• The indicators are comprehensive enough to ensure that key ecological factors are not
omitted
• It should be recognised that multiple variables are interconnected – systems thinking.

Relevance to people can be defined by the following factors:

• The output of green accounting is easy to understand
• It enable comparison between the performance of households, enterprises and
governments
• The information is credible

Green Accounting: A Conceptual Framework Page 8

• The nature of the information is such as to prompt the behavioural change required to
achieve sustainability.

Figure 2 – Critical Success Factors of Green Accounting

Relevant to the planet Relevant to people

Recognises limits Easy to understand

Measurable Comparable
Green
Accounting
Comprehensive Credible

Systems thinking Changes behaviour

We can try to draw out the key challenges facing green accounting by revisiting its definition
and purpose, namely to measure the ecological impact of human activity to ensure that it is
sustainable. Given the extent of environmental degradation of resources, climate and
ecosystems that is apparent in the 21st century, we could reframe the question as

“How can green accounting prompt behavioural change on the scale and speed
necessary to avoid catastrophic environmental damage?”

The first challenge is to define the scale of change necessary, and it is argued here that green
accounting has little traction without a sense of what environmental limits are, and where we
currently stand in relation to these limits. Having defined what is required, green accounting
needs to find consensus on how to apportion responsibility for environmental harm and agree
how to share limited resources so that the degree of change required by each agent can be
defined, be it household, enterprise or government.

With regard to the speed of change required, surely the ability for markets to fail and to
overshoot makes reliance on an unmodified price mechanism a risky strategy. Sustainability
literature may make the business case for corporate social responsibility along the lines that
“basic ecosystem services that are cheap today will be expensive tomorrow” (Bent 2008) but
the nature of environmental degradation may well be that by the time the price has reacted
the damage has already been done. If we know why basic ecosystem services are going to be
expensive tomorrow then surely we need to make them expensive now?

The second challenge is to ensure that green accounting assists in driving behavioural change.
Without this it may achieve little more than simply the accurate measurement of
environmental destruction. Financial incentives communicated by financial accounting provide
clear signals to govern behaviour. Can green accounting achieve a similar impact on behaviour?

These questions of what drives behaviour lead us back to more fundamental questions
addressed by green economics. To the old adage that “What Gets Measured Gets Managed”
could be added an important qualifier that we measure what we feel is important. Is it growth
or prosperity?; well-being or GDP?; wealth distribution or maximisation?; is the use of discount
rates equitable between generations?; is corporate efficiency defined by maximising returns on
capital or minimising environmental impacts for a given output?; can money as a unit of
account be based on interest bearing debt in a finite world?

The lack of progress noted above in introducing green accounting measures as replacements
for GDP highlights this deeper structural issue and leads this author to the following
hypothesis: within our existing economic system and institutions, employment and taxation,

Green Accounting: A Conceptual Framework Page 9

and hence public service delivery and redistribution of income and wealth, are dependent
variables on GDP growth. This dependency ensures that any government whether centre, left
or right, remains similarly dependent on GDP growth as its primary economic policy objective
regardless of however attractive it finds alternative measures in theory. Therefore economic
institutional reforms, for example of the primacy of profit-maximising shareholder-owned
corporations, and also reform of economics as a discipline, are necessary conditions for a
successful revolution in green accounting.

If accountancy merely holds up a mirror to our values, then green accountancy needs green
economics in order to flourish.

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Stewart, E (2009) - ‘The Elephant in the Room: Carving up Scope 3 Emissions across a Value
Chain’, www.environmentalleader.com

Stiglitz J, Sen A and J-P Fitoussi (2009) ‘Report by the Commission on the Measurement of
Economic Performance and Social Progress’ available at http://www.stiglitz-sen-
fitoussi.fr/documents/rapport_anglais.pdf

TEEB (2009) 'The Economics of Ecosystems and Biodiversity for National and International
Policy Makers. Summary: Responding to the Value of Nature’ United Nations Environment
Programme, available at http://www.teebweb.org/LinkClick.aspx?fileticket=I4Y2nqqIiCg
%3d&tabid=1052&language=en-US

Footnotes

Green Accounting: A Conceptual Framework Page 11

1
ICAEW website accessed on 20 September 2010 at
http://www.icaew.com/index.cfm/route/155690/icaew_ga/en/Home/About_us/History_of_accounting/4000
_B_C__1852

2
Wikipedia accessed on 20 September 2010 at http://en.wikipedia.org/wiki/California#History

3
RIO DECLARATION ON ENVIRONMENT AND DEVELOPMENT, The United Nations Conference on Environment and
Development, (Rio de Janeiro, 3-14 June 1992) accessed on 20 September at
http://www.un.org/documents/ga/conf151/aconf15126-1annex1.htm
4
UN Department of Economic and Social Affairs accessed on 20 September at
http://www.un.org/esa/dsd/agenda21/

5
World Trade Organisation www.wto.org
6
Companies Act 2006, Duties of company directors Ministerial statements DTI June 2007, accessed on 20
September 2010 at http://www.berr.gov.uk/files/file40139.pdf

7
“Darling threatens banks with investigation to encourage lending” Guardian 27 July 2009 accessed on 20
September 2010 at http://www.guardian.co.uk/politics/2009/jul/27/darling-threatens-banks-lending
8
See for example “Huhne says yes to £22bn green tax: Petrol could soar under LibDem minister's drive” Daily
Mail 21 September 2010 accessed on 24 September 2010 at http://www.dailymail.co.uk/news/article-
1313786/Huhne-says-yes-22bn-green-tax-Petrol-soar-LibDem-ministers-drive.html

9
http://www.brithdirmawr.co.uk/
10
See for example ‘Ways to measure corporate responsibility performance’ on the ICAEW website, accessed
on 24 September 2010 at
http://www.icaew.com/index.cfm/route/163245/icaew_ga/en/Technical_and_Business_Topics/Topics/Corpo
rate_responsibility/Measuring_and_reporting/Ways_to_measure_corporate_responsibility_performance

11
http://grossnationalhappiness.com/Default.aspx