LIFE CYCLE ANALYSIS

Environmental accounting: life Cycle Analysis



Environmental accounting: Life Cycle Analysis

Introduction

The purpose of this study is to expand the boundaries of our knowledge by exploring some relevant facts and figures related to Environmental accounting (also known as green accounting); it is a style of accounting that includes the indirect costs and benefits of economic activity—such as environmental effects and health consequences of business decisions and plans. It is increasingly used by green companies interested in sustainability, ecoeffectiveness, and ecoefficiency, along with direct and more obvious market tools in strategic management. Environmental accounting collects, analyzes, assesses, and prepares reports of both environmental and financial data with a view toward reducing environmental effects and costs (Hecht, 2005, pp. 51-59). This form of accounting is central to many aspects of governmental policy as well. Consequently, environmental accounting has become a key aspect of green business and responsible economic development.

The link between the environment and the economy is an inarguable one. In recent decades, environmental accounting has been taken seriously in the incorporation of environmental impacts into management decisions and strategic planning as well as in the reporting of national accounts. It is important to understand national accounts to give environmental accounting the proper context in a governmental sense (Odum, 2005, pp. 5-12). National accounts present a complete conceptual framework for the economic activity of a country in a given time period, constructed with double-entry accounting. National accounts are concerned with economic factors such as production, expenditure, and household incomes, which are the frameworks from which measures like gross domestic product (GDP) and purchasing power parity are figured. National accounts are generally divided into stocks and flows (sometimes called levels and rates, especially in older texts), assets that are accumulated over time (inventory, stock shares, and money in a bank account), and the changes that occur to those assets (inflows like deposits, interest, and new purchases and outflows like withdrawals, fees, and sales). National income accounts are at the centre of macroeconomic environmental accounting (Aldy, 2007, pp. 154-161). In the next section, we will examine five academic papers relating to one specific aspect of research drawn from the topic of Environmental accounting.

Literature Review

With reference to the importance of Environmental accounting and life cycle analysis, Gray (2002) has claimed that regardless of the governing standards for environmental accounting, all stocks, inflows, and outflows are applicable to environmental concepts such as atmospheric gases, emissions, and sequestrations; species populations, births, and deaths; and landfill volume, growth, and reduction. A truly green, environmentally informed system of accounting would include aggregates that incorporate such environmental data when applicable to management decisions. The GDP measure, for instance, is commonly used as an indicator in policy making, but it does not adequately account for positive or negative environmental consequences. This complaint is similar to others made about such aggregates in that they do not provide a full picture of the possible hidden harms that are being done now and that could be extremely costly in the future (Gray, 2002, ...