Integrating financial, social and environmental accounting
Sustainability Accounting, Management and Policy Journal
ISSN: 2040-8021
Article publication date: 5 February 2020
Issue publication date: 21 May 2020
Abstract
Purpose
The purpose of this paper is to propose a public policy solution to updating mainstream financial accounting from its nineteenth century roots and make it more relevant and consistent with public policy, individual investor motivations and global needs as exemplified in the sustainability development goals. Many approaches to integrating social and environmental accounts with financial accounts are additive; the two types of accounting information sit alongside each other. The opportunity to revise the basic building block of financial accounting, information to help investors make economic decisions relating to investments to increase integration and recognition that this is a public policy decision and not an accounting profession decision, is rarely considered.
Design/methodology/approach
The approach is a viewpoint on the opportunities for and benefits of integration of financial, social and environmental accounting.
Findings
The current basis of financial accounting does not reflect private investors’ motivations, and changing the basis of accounting is a public policy issue.
Research limitations/implications
This is a viewpoint paper. The pros and cons of current approaches to valuation of social and environmental outcomes are not explored.
Practical implications
Changing policy would require support from asset managers and owners, accounting bodies, civil society and politicians and would need a plan for transitioning from the existing approach.
Social implications
This is a possible starting point for formal research that could support policy changes that could result in resource allocation decisions taking account of social and environmental impacts.
Originality/value
There are several approaches for integrating social environmental and financial accounting; however, the proposal that integration would result from a change in public policy specifically clarifying and updating investor motivation provides a possible solution to many of the challenges of integration.
Keywords
Citation
Nicholls, J.A. (2020), "Integrating financial, social and environmental accounting", Sustainability Accounting, Management and Policy Journal, Vol. 11 No. 4, pp. 745-769. https://doi.org/10.1108/SAMPJ-01-2019-0030
Publisher
:Emerald Publishing Limited
Copyright © 2020, Emerald Publishing Limited