Environmental Accounting

Abstract

The EPA has coined the term Environmental Accounting, but have never put together variables and equations to make it work. Basically my idea is creating another financial statement that deals with each company’s environmental cost. The problem with trying to be more eco-friendly is that it’s costly (it costs more to buy organic), so what environmental accounting will help accomplish, is to allow investors to see how much revenue a company generates in relation to their environmental cost. The equation is very simple, marginal revenue/marginal environmental cost. The part that is not simple, is creating an actual number that represents environmental cost. The goal of environmental accounting is to try and get investors to invest in more environmentally friendly companies, to help raise the capital in those specific companies. This will then increase their ability to generate product, and thus decrease the price of their product.