GREEN ACCOUNTING

With the advancement of technology, various software and their hosting methods have evolved over the years. Although the technology has optimized the performance of Accountants and streamlined the accounting process, it has impacted the environment in an unfriendly way. Hence, to mitigate the harmful impact of technology on the environment, more and more emphasis is being laid on the environment surrounding us. Organizations have now started recognizing its importance and formulating steps to promote green and environmental-friendly causes.

Green Accounting is one such term that maps the environmental factors to the business’ plans so that the environment is not ignored in any way.

What is Green Accounting?

Green accounting?or environmental accounting demonstrates an organization’s commitment to the key aspects of our surroundings such as the planet, people, and profitability. Environmental accounting practices are mainly implemented by companies to include environmental costs in the financial strategy. It incorporates the environmental assets and resources into the corporate accounts and Green auditing ultimately. It measures the social, environmental, and economic impact of business. With the implementation of Green Accounting, the corporate sector becomes aware of the environmental parameters and inculcates the costs in their budget.

Types of Green Accounting

Below are three different types of Green Accounting:

1. Environmental Management Accounting (EMA)

This type of green accounting incorporates both environmental and economic information by identifying the resource usage and the expenses involved in a company’s economic impact on the environment.

EMA defines the approach that a business is expected to follow in order to analyze the environmental factors and manage the workflow of the organization accordingly.

2. Environmental Financial Accounting (EFA)

As the name suggests, this type of accounting deals with the financial aspects of the business with respect to the environment. This type of accounting is concerned with accounting for environmental transactions which have an impact or are going to impact the financial performance of an organization. The financial analysts responsible for Environmental Financial Accounting analyze the financial risks as well as profits with respect to the environmental factors specific to the business.

3. Environmental National Accounting

This type of accounting involves national-level accounting with a focus on green costs and natural resources. With Environmental National Accounting, the environmental aspects related to a nation is integrated with the National Accounts (NA).

The infographic below demonstrates the organizations’ commitment to people, planet, and profitability through Green accounting.

How To Implement Green Accounting?

Be it accounting or any other business, everyone is responsible for making business decisions that may help to improve environmental conditions.

Here are some ways to implement green accounting in your office:

1)?Educate Employees?– Train accountants to use eco-friendly methods to work in the office. Assign them training courses, provide them incentives for working green, and make energy management fun with interactive activities.

2)?Minimize Paper?– Try to reduce the use of paper on the office premises. Creating a completely paperless accounting process may not be practical, but the use of paper can be reduced to some extent. Track the number of papers per employee, make printing less convenient, and request a paperless statement from the banks.

3) Implement Green Techniques?– Use techniques in the accounting system to implement a greener solution. Create monthly green challenges, opt for eco-friendly office products, embrace renewable energy, maximize natural light, reuse and recycle.

4) Increase Mobilization?– Encourage accountants to lower commute emissions by biking, walking, carpooling, or working from home. Adopt cloud accounting to reduce the number of people traveling to the office and reduce the company’s carbon footprint.

5) Decrease Energy Consumption?– Reduce the energy consumption of the office, which will not only help to save the environment but also help to reduce energy bills. Use energy-saving bulbs, implement light sensors, turn down AC, and upgrade your appliances.

5 Best ways to practically adopt Green Accounting in your business and contribute to the planet:

1. Identify Accounting Techniques That Cause Environment Damages

Improvement begins with the analysis. Look into the conventional accounting system that you are practicing to look the energy that is being consumed by different segments of the system. Depending on the business that you serve, the segments could vary, such as – PC usage, electricity consumption, paper wastage, etc. This analysis should give a fair idea of the energy inefficient methods and resources that are in action. Once you have identified them, implementing a greener solution will not take much effort.

2. Involve Environment in Your Performance Parameters

One of the basic tasks that every accounting department does is to measure the performance of the organization. Traditionally, such performance is calculated on economic parameters. But with rising concern over the environmental factor, modern systems have started to involve natural assets in the calculations. A prime example of such change in the system is the replacement in NDP calculation suggested by?the System of Environmental-Economic Accounting?(SEEA). The recommended NDP is known as EDP (Environmental Domestic Product). To make your contribution towards the environmental benefits, it is better to switch quickly to such calculations and ensure that it not only the money that you are counting upon.

3. Go Paperless

Invoices, payroll slips, tax forms, payment reminders, and there are a number of other ways in ways paper keeps on contributing to the chunk in the accounting department. Not only the paper creates chaos with maintenance but also hurts the environmental causes dearly. Though immediate elimination of papers from the business is not possible at present, its usage can certainly be reduced significantly in accounting. Adopting advanced software, encouraging e-payments, filing taxes online, etc. are some of the many?methods of doing paperless accounting. When going paperless is not possible, opt for the smaller fonts, both side printing and narrowed margin options.

4. Switch to Green Devices and Solutions

Electronic devices, such as – the accountant’s workstations, servers, printers, etc., have been consuming the energy in your accounting department to keep productivity fast-paced. Replacing them with low-energy-consuming devices is the best option for keeping the same level of productivity going and still reducing electricity consumption. Always check the energy-star rating for the devices that you use for accounting operations. Moreover, move the cloud with as many as possible options. Enriched with amazing performance features,?cloud computing is proven to help with green causes. Another advantage of opting for cloud computing is that it is a cost-effective solution.

5. Stick to the Basics with Green Practices

When we talk about going green with accounting, such basic practices will remain similar to most other business processes and ESG and GRI . Here are some common go-green tips:

• Following the 3R concept of reducing, reusing and recycling should be implemented in all possible ways.
• Don’t waste electricity. Switch off the lights, computers, and other electronic devices when not in use.
• Allowing natural light to lighten up the cabins.
• Encourage public transport or work-from-home among the employees.

Initially, going green may affect a little on the economic grounds but it will ensure a better future along with cost savings in the longer option.

Advantages of Green Accounting over Financial Accounting

In Nutshell Green Accounting is posing challenges to the Accountants for the sustainability of organizations and the need of the day to implement Green Accounting and Green Accounting for the contribution in the Climate Action a Sustainable Development Goal (SDG) among the other Goals of the United Nation to be fulfilled by 2030.

Note: The above-provided information is just for knowledge purposes, please consult a professional practitioner for the services.

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