It is now widely realised that the mitigation of environmental risks and liabilities boosts a company's standing in the eyes of investors and consumers. Experience has shown that an increased awareness of environmental responsibility and policy contributes a great deal towards quality performance and a positive corporate culture. On the other hand, the environmental inaction could in all probability prove to be costly. For civil and criminal liabilities, unnecessary remedial costs, plant closures, delay in permission or disruption of business could arise out of the negligence of the environmental factor.

Clearly and apparently, a business house canobtain the best results by scrupulously going in for an environmental management system (EMS) based on the two pillars of environmental impact assessment before the launch of a project and environmental auditing afterwards. If a plan is well researched and implemented systematically right from the beginning, its effect would help a business flourish regardless of its geographical location.

After the Stockholm environmental summit, various countries came out with their own set of rules and regulations aimed at protecting the environment which was under threat from human interference. But while the industrialised countries of the north are stringent and scrupulous in the implementation of environmental regulations, the ground reality in the Third World countries implies that most developing countries half-heartedly implement the regulations. Of course, there has been a realisation in the Third World as much as in the industrialised north that for the sustainable use of finite natural resources, it is vitalfor the corporate and business sector to recognise the importance of environmental accounting. As such, modest efforts are on in the Third World to incorporate the effects of environmental resources in business operations. This has contributed to the growth of a new discipline called `Environmental Accounting'.

Environmental accounting is an attempt to identify and bring to light the resources utilised and costs imposed on the eco-system by the activities of corporate houses. It is also a system of accounting designed to record the benefits and costs rendered by the environment to a business corporation and costs and benefits tended to the environment by the same business corporation.

As it is, changes and metamorphosis in the ecosystem, as a result of business or industrial activities, have hardly any place in conventional accounting. It is exactly to overcome this lacunae that the system of environmental accounting has come into vogue. The human misery and suffering as well as the colossal economic losssustained by a community from the leakage of methyl isocyanate (MIC) gas from Union Carbide's Bhopal plant in December 1984--described as one of the major industrial accidents of recent times--is an example of a corporate culture that fails to take cognisance of the environmental ground reality.

Thus, environmental accounting implies a process of economically recognising the benefits derived by a corporate house from the immediate environment and initiating remedial measures to abate any possibility of environment pollution through its business activities.

As such, pollution control and scientific waste management constitute a major part of the environmental accounting system. Similarly, ensuring the use of raw materials from nature in a sustainable and environment friendly manner is another significant component of the environmental accounting procedure.

The so-called ``shadow pricing'' constitutes the very life-blood of environmental accounting. An organisation makes every effort to keep environmentpollution low, whether it is air, water or land, through appropriate technological interventions. The cost incurred on such a clean industrial process is accounted for under the environmental accounting system. When a water body is despoiled due to industrial waste or urban effluents, the cost incurred on cleaning it is to be regarded as shadow pricing. Thus, shadow pricing is helpful in ascertaining the cost of natural resources consumed by a corporate house.

Production surveillance and technology surveillance are the two other components of environmental accounting. Production surveillance takes a corporate house beyond managing pollution control and waste disposal. The technology surveillance stage involves a thorough technology scanning for identifying areas that require improvement through improved technologies that are eco-friendly and green. An inward looking process, technology surveillance results in the deployment of cost-efficient technological tools that impose little strain on theeco-system.

--WWF-India Features