The social benefit of popularizing environmental accounting is widely known.
The environmental reports of business enterprises reveal their inputs and outputs and the extent of their commitment to environmental protection. Stakeholders normally supervise firms to comply with prevailing environmental protection laws.
They would also be keen to have a comprehensive understanding of the firm in terms of not only the conventional
accounting information, such as the firm’s financial position, but also the wider social, economic and environmental implications of its operation.
All this helps to direct the flow of social capital.
However, it is not so easy to establish a whole set of environmental accounting systems for recognizing, measuring, recording and reporting. First of all, an environmental management system should exist in an enterprise, so that the
objectives of environmental accounting could be incorporated into traditional accounting practices.
Secondly, the internal management accounting system should be transformed into external reporting of
environmental information, so that environmental results could form part of a firm’s annual report in addition to the financial results.