Environmental Accounting



Environmental Accounting Dictionary

Carbon offset: This is a reduction in emissions of carbon dioxide or greenhouse gases made in order to compensate for or to offset an emission made elsewhere. Carbon offsets/credits are earned when some emissions are reduced by implementing carbon projects, which reduce the emissions below baseline from projects like wind energy plant, solar plant etc. These credits can be sold in the market.


Climate Change Measures: Government intervention has been the tools to combat climate change through quantity-based measures (regulation) and price-based measures (carbon taxes). The quantity-based measures also called emission and offset trading systems are the most common interventions. In emission trading/ cap and trade: each country/company is assigned fixed amount of carbon emissions which is a cap/limit by government, measured in carbon credits. When a company emits less than permitted emissions, it can sell the rest to companies which are unable to reduce their emissions. In the case of carbon tax: tax is levied on the carbon content of fuels. Carbon tax as tax paid on the emission of carbon (CO2) into the atmosphere. It is a form of carbon pricing that offers “double dividend”- revenue generation and behavioral change


Corporate Social Responsibility: This is defined as achieving corporate success in ways that honor ethical values and respect people, host communities, and the natural environment. CSR involves the way organizations make business and financial decisions, the products and services they offer, their efforts to achieve an open and honest culture, the way they manage the social, environmental and economic impacts of business activities and their relationships with their employees, customers and other key stakeholders having interest in the Business and its operations

Emission Inventory: This is what organisations need to identify their operational boundary. An emission inventory is a listing, by source, of the amounts of pollutants actually or potentially discharged. Such an inventory is used to establish and put forth emission standards.


Environmental Accounting: This to track environmental resource use, including both resource depletion and environmental degradation over a given period of time, the reporting period, which is usually a year. In a narrow sense, environmental accounting is a statistical process of data compilation and dissemination.  It involves identification of data sources and gaps, collection and processing of data, preparation of accounts in physical and monetary terms, computation of environmentally adjusted accounting aggregates, and the dissemination, electronically from a database or as a statistical report.


Environmental Audit: This is an assessment of the extent to which an organization is observing practices which minimize harm to the environment. Environmental audit is a management tool, comprises of a systematic, documented, periodic and objective evaluation of how well environmental organisation, management and equipment are performing, it has the aim of helping to safeguard the environment by facilitating management control of environmental practices and assessing compliance with company policies which would include meeting regulatory requirements


Environmental Cost: This is a cost incurred to measuring the environment and also to take care of the environmental losses. Measuring the environment means to prevent, reduce or repair damage to the environment and to conserve resources while environmental loses are costs which bring no benefit to the business such as fines, penalties, compensation, and disposal loses relating to asset which has to be scrapped or abandoned because they damaged the environment.


Environment Reporting: This is the disclosure of information of the impact that the operations of an organisation has on the natural environment. This disclosure could be in the entity’s published annual financial report or in a separate environmental report. It is expected that the likely areas to be covered in an entity’s environmental report should be the organisation’s environmental policy; environmental management system put in place; company’s target or achievements; amount of money spent ( or provided for) in preserving the environment during the year under review; specific issues of environmental activities such as waste management, pollution control etc; detailed fines, penalties paid during the year under review; the accounting policy relation to the environmental costs, provision and contingencies.

Green Tariffs: We have purchased a green tariff which reduces our GHG emissions by the number of tonnes. We purchased all our electricity from Green Electricity Ltd. We use their Eco + green tariff. Green tariff is a utility program that allows customers to source up to 100 percent of their electricity from renewable sources located on their local grid.


Gross Emissions: These are your total GHG emissions before accounting for any emission reductions that you have purchased or sold.

Sustainability Report: This is an organizational report that gives information about economic, environmental, social and governance performance. Sustainability is rapidly becoming a mainstream component of corporate strategies to support ‘triple bottom line’ results focused on people, planet and profit.

Withholding Tax (WHT): This is deduction at sources or an advance payment of income tax. Withholding tax is not a separate type of tax but a payment on account of income tax and it is available as set-off against future income tax assessments.


Working Capital: This refers to the items that are required for the day to day production of goods to be sold by a company. Or excess of current assets over current liabilities. It also called net current assets. Methods of financing working capital: Overdraft; Factoring; Retained earnings; Equity; Franchising etc.

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