What is environmental accounting?

Environmental accounting extends traditional financial accounting to capture environmental costs and impacts that are often left out of standard financial statements — such as the cost of environmental compliance, resource depletion, or pollution. It's the broader discipline that carbon accounting sits within, specifically focused on greenhouse gas emissions.

Types of environmental accounting

  • Environmental management accounting — internal tracking of environmental costs to support business decisions
  • Environmental financial accounting — external disclosure of environmental liabilities and costs in financial statements
  • National environmental accounting — government-level accounting of natural resource stocks and flows, alongside GDP

Why it matters

Environmental accounting makes environmental impact visible in financial and operational terms — turning something often treated as external to the business (an "externality") into a cost or risk that's actually tracked and managed, which is increasingly what regulators and investors expect through frameworks like CSRD and ESRS.

References