GREEN ACCOUNTING – MANAGEMENT INSTRUMENT OF THE ENTERPISE’S SUSTAINABILITY DEVELOPMENT

Abstract

Green accounting (GA) is a complex project who is aimed to report all relations of the enterprise with the environment. Green accounting is a system that presents substantial information linked with the business’s sustainability management. Green accounting in depth is the process of recognition, value measurement, entry in accounting books, consolidation of accounting data, reporting and disclosing information about accounting related objects, transactions, events or the impact of corporate economic, social and environmental activities on society and the environment and also the corporation itself in integrated package of reporting information that can be useful to stakeholders and their financial and non-financial solution making. The new modern type of accounting (GA) integrates in its process financial accounting with the social and environmental accounting in one accumulated goal of representing the complete, insightful and reliable-sourced information, needed in the evaluation of the enterprise’s performance. Firstly, GA in past years was acquainted only with the accounting disclosure of environmental practices of the company. In the present moment given the progression of the „green idea“ evolution, the emphasis is on the specific reflection in the financial statements of the added value generated by the environmental and social activities of the company. There are many directives and recommendations, standards and regulations in favour of sustainable development and corporate social responsibility. They aim to better measure, through reliable and appropriate indicators, the values ​​of the positive and negative impacts of economic activity. The application of these new regulatory and law frameworks modifies the models of socially responsible enterprises and the methods for the evaluation of their performance. Thus, the neoclassical model of the enterprise, which creates financial value, has modified in the direction of building socially responsible and sustainable companies. In order to be responsible, an enterprise must "internalize the external effects” of its activities. These external effects are valued regarding the social and environmental value. Precisely, they cover mainly the negative effects on society and the environment that are generated by economic activity. The literature preview shows the usage of a new approach of the sustainability’s management which manly relays on the capital’s redefinition. In this context, it is proposed the transposition of preservation of financial capital principles, incorporated in the accounting laws and standards of two other types of capital – no other than the natural and human capital. Then for the company emerges the obligation to manage and guard the traditional financial capital, also the mentioned in the previous sentence – natural and human capital. The green accounting has the ambitions to enlarge and refine the traditional accounting principles and to focus over the company’s social and ecological activities. The main accounting procedures are co-dependent and related with the accounting recognition of environmental and social costs in addition with the contingent environmental liabilities.