ABSTRACT
This chapter provides an overview of the dynamic subject of corporate environmental accounting. It outlines the business case and rationale for engaging in environmental accounting and illustrates how leading UK companies are already adding value and reducing risk through the use of innovative environmental accounting techniques and methodologies. The two broad focus areas of environmental accounting are discussed. The first is concerned with accounting for ‘internal’ environmental-related expenditure – expenditure already incurred and captured within a company's accounting system but perhaps lost in general overheads. The misallocation of environmental costs in this way can lead to internal price distortions within companies and can result in sub-optimal decisions: wasted resources and lower profits. The second is concerned with ‘external cost accounting’ (the internalization of environmental externalities).
