Green Accounting History
David M. Boje
October 23, 1999

There are epistemologies (ways of knowing) of environmental accounting (EA) practice: Functionalist accounting which preserves the separation of hmans and nature treating accounting as an isolated function with agency accountability only to managerial and investor interests --  and Green Accounting that embeds accounting in a wider transorganizational and transpersonal understanding of stakeholder dynamics, including communities and bioics as statkeholders. The functionalist EA is what is taught in managerial accounting courses in the United States and elsewhere. The functionalist focus is on how to minimize environmental legal costs, hide environmental costs in gross abstractions like overhead, and keep managers ignorant about environmental costs and revenues. Whereas Green EA is focused upon multi-constituency accountability, specifically tracing and identify the accumlating green costs and green revenues of products and services both to internal managerial accounting to externalized social and ecological accountability. Green EA is being championed outside the U.S. and is gaining more international acceptance with the rise in popularity of ISO14000. Here is a brief summary of the differences between “Functionalist EA” and “Green EA”.  My viewpoint is ecocentric. I prefer to move from Functional EA for show and spectacle, to Green EA for sustainability of the biotic ecology of which business is one system among many others.

Functionalist Environmental AccountingMakes EA invisible to main accounting process in order to preserve status quo of economic rationality that ignores societal/nature costs. Reduces environmental debate to purely technical (instrumental reasoning) and cost issues (e.g. to ward off litigation/fines).  Functionalist EA separates humans from nature. EA is restricted to compliance with regulations.  Has an ideology that excludes natural resources and any resources that can not be measured numerically with ease (Lehman & Tinker, 1996). Privileges humans over natural resources, profit over equity, corporations over ecosystems and dollars over sense. Displaces EA to marginal discursive spaces (Andrew & Kidonis, 1996). Environmental costs hide out under mainstream accounting categories (Larrinaga-Gonzalez, 1996).   Carries any EA analysis to the top executives.  Nike, for example, worries that their poor environmental and social performance will get reported to the press, consumers, and regulators.  EA is used to justify corporate environmental impacts and avoid legal fines.  Functionalist EA is an obstacle to change.

Green Environmental Accounting - Gives EA visibility in accounting process. Includes “other” stakeholders such as the unborn, animals, plants, and micro-organisms (Andrew & Kidonis, 1996). Look at regenerative life cycle of resources. Green EA practices mobilize organizational changes toward sustainability by creating visibility to environmental aspects of the firm.   Uses EA to prompt an inclusive dialogue among multiple stakeholders.  Green EA challenges the processes of capital accumulation which and environmentally non-sustainable (Lehman & Tinker, 1996: 3). Promotes participatory democratic discourse between corporations, employees, community, and government about effects and benefits of activities.  Explains what is happening to the natural world (Legman & Tinker, 1996:5).

U.S. History of the The Environmental Accounting Project - it began in the United States in 1992, in response to concerns from outside stakeholders. These stakeholders believed that pollution prevention would not be adopted as the first choice of environmental management by industry until the environmental costs of non-prevention approaches and the economic benefits of pollution prevention could be seen by managers making business decisions.  International ISO 14000 since 1995 have also motivated corporations to adopt environmental accounting practices.

Beyond U.S. Functionalist Accounting Praxis - Green Accounting is more widespread and its practices better understood in several European countries.

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Green Accounting Gameboard
or Storytelling Organization Gameboard.
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