Sustainable development and environmental accounting: the challenge to the economics and accounting profession

Purpose – The purpose of this paper is to examine the role of natural resources accounting in sustainable development. Natural resource accounting is important because the welfare of a nation measured in terms of gross domestic product (GDP) has several weaknesses. Design/methodology/approach – This paper achieves this objective by identifying the present status, the constraints and the challenges for the economics and accounting professions. Findings – The main weakness of GDP as a measure of development is that it does not take into account damages to environmental resources. However, the improvement of the concept to include environmental resource use is made difficult because of the difficulties of measuring environmental damage. The challenge to the economics and accounting profession is to ensure interdisciplinary collaboration, development of a framework to explicitly include the environment, development of credible valuation procedures for the environment, and inclusion of the various ethical positions advanced by various groups on the value of the environment. Practical implications – Some headway has been made on these issues during the last decade but a major challenge still lies ahead in further improving these approaches so that sustainable development becomes an achievable goal. Originality/value – This paper brings together diverse views and fusing them together providing a future path for research in environmental accounting to achieve sustainable development.

Environmental incidents in a developing country and corporate environmental disclosures : a study of a multinational gas company

Purpose – The purpose of this paper is to examine the environmental disclosure initiatives of Niko Resources Ltd – a Canada-based multinational oil and gas company – following the two major environmental blowouts at a gas field in Bangladesh in 2005. As part of the examination, the authors particularly focus on whether Niko’s disclosure strategy was associated with public concern pertaining to the blowouts.
Design/methodology/approach – The authors reviewed news articles about Niko’s environmental incidents in Bangladesh and Niko’s communication media, including annual reports, press releases and stand-alone social responsibility report over the period 2004-2007, to understand whether news media attention as proxy for public concern has an impact on Niko’s disclosure practices in relation to the affected local community in Bangladesh.
Findings – The findings show that Niko did not provide any non-financial environmental information within its annual reports and press releases as a part of its responsibility to the local community which was affected by the blowouts, but it did produce a stand-alone report to address the issue. However, financial environmental disclosures, such as the environmental contingent liability disclosure, were adequately provided through annual reports to meet the regulatory requirements concerning environmental persecutions. The findings also suggest that Niko’s non-financial disclosure within a stand-alone report was associated with the public pressures as measured by negative media coverage towards the Niko blowouts.
Research limitations/implications – This paper concludes that the motive for Niko’s non-financial environmental disclosure, via a stand-alone report, reflected survival considerations:
the company’s reaction did not suggest any real attempt to hold broader accountability for its activities in a developing country.
Originality/value – This is the first known paper that investigates a multinational company’s disclosure behavior in relation to environmental incidents which occurred in a local community.

Opting only in: Contractarians, waiver of liability provisions, and the race to the bottom

This paper will test the core claim of scholars in the nexus of contracts tradition—that private ordering as a process of bargaining creates optimal rules. We do this by analyzing empirical evidence in the context of waiver of liability provisions. These provisions allow companies to eliminate monetary damages for breach of the duty of care through amendments to the articles of incorporation. With all states allowing some form of these provisions, they represent a good laboratory to examine the bargaining process between management and shareholders. The contractarian approach would suggest that shareholders negotiate with management to obtain agreements that are in their best interests. If a process of bargaining is at work as they claim, the opt-in process for waiver of liability provisions ought to generate a variety of approaches. Shareholders wanting a high degree of accountability would presumably not support a waiver of liability. In other instances, shareholders might favor them in order to attract or retain qualified managers. Still others would presumably want a mix, allowing waiver but only in specified circumstances.Our analysis reveals that the diversity predicted by a private ordering model is not borne out by the evidence with waiver of liability provisions for Fortune 100 companies. All states permit such provisions and in the Fortune 100, all but one company has them. Moreover, they are remarkably similar in effect, waiving liability to the fullest extent permitted by law. In other words, one categorical rule was merely replaced by another, dealing a significant blow to the contractarian thesis.