Emergence of social and environmental accounting and reporting

Social and environment accounting has been defined as the process of communicating the social and environmental effects of an organizational economic activities to particular interest groups within society at large.

As such it involves extending the accountability of organizations beyond the traditional role of providing a financial account to the owners of capital in particular shareholders. Such an extension is predicted upon the assumption that companies do have wider responsibilities than simply to make money for their shareholders.

Social and environment reporting is gaining in importance politically. Most environmental reporting tends to be narrative and descriptive with entities using the document as a public relations exercise rather than as true measure of the environmental risks and liabilities they carry.

This is due to the inherent difficulties of measurement of environmental factors and of applying accounting concepts to these factors.

Environmental information is however becoming essential for many businesses and their users.

Indeed some organizations which see environmental issues as important are becoming market leaders in this area. Businesses are becoming „greener‟ and we must develop accounting systems to enable environmental performance reporting to take place.

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