Background of the Project
It is true that natural resources make humans environment. Contributing to GDP, they have values that people cannot underestimate. Most if not all manufacturing industries get their raw material from the environment, what influences countries economies as well as finances. Some scholars refer to green accounting as environmental accounting. How can an open economy ensure that it is sustainable and taking care of its natural resources as well as the entire environment through environmental conservation policies? The answer to this question is green accounting. A sustainable economy in this context means an economy that will favour subsequent generations. In a perfect economy, consumers pay money with what equals the value of the good they buy. The value of the good includes the cost of production, the cost of raw materials, and other costs that are related to the sales of these goods and services. The relationship between the buyer and seller, however, does not lead to sustainable development. A business organization or a firm may gain more when they release their wastes to the environment without being responsible for the resultant pollution. The gains that these companies get do not contribute to economic growth; however, the resultant pollution worsens with time preventing countries from having sustainable economies. From the above arguments, it is clear that costs on the environment make changes to accounting books, and this motivates me to conduct this research.
Green accounting is an accounting time that considers the environmental costs in financial operations (Fakir et al. 2016). It is used to measure the amount of income that one can earn without damaging or depleting natural resources. The traditional System of National Accounts did not put into account such factors as depletion of natural resources and environmental degradation due to pollution and the costs that the society pays owing to the effects of pollution in calculating the net domestic product (NDP) (Mondal 2016). Yet, the ignored costs have long-term effects on the following NDPs, and this is the problem that this research tries to solve.
The main reason why I am interested in this project is that I am a visionary citizen who would not like to be affected by hardships due to degradation of the environment in future. In addition, green accounting is a new and unpopular field of accounting and finance that everybody should know about.
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Many scholars in the recent past have documented the ideas of green accounting. These documents include journals, books, magazines, and website pages, which I am going to use as sources for this study. Because of the ever-changing nature of knowledge due to time, the books will be those published five years ago or even earlier. These secondary data sources will be imperative while conducting the research owing to the wide knowledge they can offer on the topic of interest.
According to Rahardjo (2013), balancing business performance with business social responsibility has been difficult in the modern society. The scholar argues that the performance and financial operations of business alone do not entirely guarantee businesses to achieve their primary goals, in particular, profit making. However, factors such as environmental and social responsibilities of the business are also equally important for a business organization to achieve its set goals.
According to Abdullah Hamound (2017), accounting is a term that describes both finance and services. The scholar argues that modern accounting has become a means of surviving for the public and the society at large. He adds that the American Accounting Association (AAA) has changed the objectives of accounting by considering its social and environmental responsibilities. The author of the article reveals that some of the major objectives of basic accounting, a committee that was organized by AAA, include the following: accounting is responsible for making decisions that concern the use of limited resources by directing and managing an organizations use of both natural and material resources. The third proposed responsibility of a business organization was to report on the custodianship of resources and finally to empower and control social functions. The author claims that in the past two decades, there has been an increase in the financial data regarding the environment and the use of natural resources. This implies that accounting statements are fundamental in determining the issues that concern the environment. Some of the objectives environmental accounting has promoted include evaluation of the impact of projects and organizations on the environment. The scientist asserts that these objectives have helped information users to decide on the issues affecting the environment. This article goes ahead to state some of the benefits that a company adopting green accounting is likely to accrue. The first advantage according to the scholar is the availability of clear information to present to decision makers regarding the costs on the environment. With this data, the business organization can also identify areas to save on for environmental improvement, and, finally, the manner in which the company can properly use and manage natural resources that freely occur in their environment.
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Mondal (2016) is another scholar supporting green accounting. According to him, the main objective of green accounting is to measure the level of sustainable incomes without decreasing the amount of natural assets. He proposes that there should be an adjustment to the System of National Accounting (SNA) that currently only considers consumption and human-made capital while calculating the net domestic product (NDP). According to SNA, NDP=GDP-depreciation. The scholar goes ahead to reveal that SNA has three defects. The first defect is that it does not consider depreciation on natural resources such as rivers, forests, and minerals. The second is that it does not consider pollution as the main cause of degradation, and, finally, it neglects the expenditure that the general public incurs in facing environmental degradation and pollution. The writer also reveals the general objectives of green accounting, in particular, finding the exact expenditure used to protect the environment, finding a relationship between physical natural resources and financial accounts, determining the importance of costs and benefits of the environment, and, finally, accounting on how to maintain tangible wealth. Despite green accounting being good, there are problems that relate to its implementation. The author argues that despite the System of Environmental-Economic Accounting (SEEA) coming with a scheme of calculating green NDP, their method has problems as follows. The first problem is that the method does not include natural resources accounting in its main accounts, only focusing on natural resources that have monetary values but ignoring the flow and the transformation of these resources. The second problem according to the scholar is that the scheme does not connect environmental pollution loads with specific causes. However, the scientist reveals that green accounting influences the costs of the conventional system of accounting in two ways. The first way is that it includes depletion of the natural environment and its demands while the second way is that it reveals that changes in the environment influence the production and consumption of natural resources.
An article by Fakir et al. (2016) is another piece of scientific literature that will be important for this study. The article explores the nature of financial reporting practice followed by Bangladeshi Corporate. This literature refers to green accounting as eco-management. The work under analysis proposes that business organizations should consider environmental issues in their decision-making process. This article analyses annual financial statements of the companies in Bangladesh revealing that their documents show some of the attributes relating to pollution including the sizes of the companies, the highly polluting industries, and the companies environmental performances. However, the article claims that there has been poor disclosure of environmental issues because environmental legislatures compel the companies to disclose their reports. This article, therefore, reveals that environmental legislatures have done little to promote green accounting.
Research Questions (Aims) and Objectives
To accomplish the requirements for this research, I formulated the questions stated below to help me in the study. Various scholars have been discussing the topic of green accounting; however, to many others, this topic is completely new. The questions below are some of the issues touched upon in different scholars works.
i. What is the objective of green accounting?
ii. What are some of the known non-monetary forms of green accounting in societies?
iii. What are some of the examples of green accounting?
iv. How can business organizations evaluate environmental factors monetarily?
v. What are the examples of internal and external environmental costs that business organizations incur?
As the present research conducted in the field of finance and accounting is important and purposeful, it has goals that are to be achieved by the end. The following are the objectives of this research.
i. To introduce the topic of green accounting that is not very popular in finance and accounting.
ii. To review the works of various scholars on the topic of green accounting, analysing their thoughts and realizing knowledge gaps in their literature.
iii. To answer frequently asked questions on the topic of green accounting.
iv. To collect secondary data on green accounting, analyse and present it to come up with a presentable result of this research.
Research Plan/ Methodologies
This research mainly uses secondary data collected from the literature review. The sources of the literature review include journals, books, and magazines among others that are not more than five years old. From these sources, we can formulate questions for the study. Most scholars tend to think from their own perspectives, what brings up questions on the areas they conflict with. In addition, the questions guiding these scholars in conducting their researches provide the basis for the questions of the present study. The sources that I selected for this research are not simply scholars thoughts, they are rather reactions towards international finance and accounting bodies, the international environmental legislature in particular. The scholars have also tried to analyse the perception of green accounting in various regions of the world, what has also helped me to answer the research questions of this study. Moreover, as the sources provide sufficient data, it will help me to achieve the objectives of the present study.
This research is of a descriptive type, meaning that it tries to reveal deep details on green accounting (Neuman & Lawrence 2016). As green accounting remains a not very popular field of finance and accounting, the main purpose of this research is to shed light on those aspects of the subject that are still unfamiliar to people. This study will use secondary data from the literature review to describe the aspects of green accounting in detail thereby expanding its understanding by the public.
The research strategy for this project includes finding, evaluating, and analysing available literature on the topic of green accounting. The literature will include books from the library, journals, magazines, and Internet publications that are no older than five years. The fact that the issues of finance and accounting are sensitive and confidential makes it difficult for students to conduct experiments and interviews (Matthews et al. 2014). Therefore, I will not conduct a case study because green accounting is a universal topic, which is not restricted to any given case.
For this study, I will use secondary data. Some of the ways researchers use to collect this kind of data include Internet or library searches. Using the Internet, in particular such search engines as Google and Bing, one can get access to a large amount of data relating to the topic of interest. I will use Internet search for this research because it is the best method of obtaining recently published magazines, journals and books. In addition, Internet resources are free; hence, no payment is required on my part. The other advantage that comes with the use of this method is that I can do research and collect data irrespective of my physical location (Gordon 2013). This method also exposes me to a variety of sources so that I can compare and select the best for this research.
Other sources of data that will be equally important for this study include the information released by business institutions such as tax records and financial statements. Since this research also deals with legislation, I will also review laws and legal pronouncements of various business organizations available online.
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This research will use secondary data, which I will analyse by employing two methods. The first method is the question-driven approach that will attempt to answer the research questions already formulated in my proposal (McMillan et al. 2014). I obtained these questions from literature, particularly concentrating on the knowledge gaps identified for this study. The research questions are objective; the main aim of this research is to answer them.
The other method that I will use to analyse the available data is the data driven approach. With the help of this method, I will try to analyse the methods that scholars used to collect data for their articles, books, or Internet publications (Cheng et al. 2014). For a comprehensive study, we have to use relevant data from credible sources. These data must aim at answering the research questions of this project. The data provided by different scholars must also correlate to enable me to come up with appropriate conclusions relating to the conflicting concepts introduced by other scholarly works.
Limitations of Secondary Data
Although the methods for collecting secondary data have advantages, they also have disadvantages. Let me begin by looking at the limitations of secondary data. Some of the known limitations of secondary data include availabilities of unsolved problems in the data (Patton et al. 2016). As I have introduced it earlier, the works of various scholars pose dilemmas and issues that I included in my research questions, what is a disadvantage of using secondary data.
The second disadvantage is the use of insufficient samples for studies. The research of some scholars may be narrow in scope, and their conclusions may come from primitive sources of data (Patton et al. 2016). When such sources are used, scientists tend fail to meet the objectives of their studies. In addition, one might be tempted to generalize concepts that are closely related, yet very different, what makes scholarly works erroneous and insufficient for learning.
The third disadvantage is that large volumes of secondary data can overwhelm the researcher. This large volume may make the researcher not traverse over all the sources of data thereby leaving out other important information that might be more reliable than the data from the selected sources. Another disadvantage relating to this one is that it is difficult to determine the quality of data from the secondary sources due to their large volumes. The authors of the sources might as well collide with each other in thoughts.
One more disadvantage of using secondary data is that most researchers may not collect it for the same purposes. When these data do not conform to the objectives of the study, they are likely to bias the findings. Besides, such data may not reflect the researchers beliefs, group values, and cultures relating to the current and modern research trends.
Handling Limitations of Using Secondary Data
The first thing I will do is data correlation. Using this method, I will select articles that demonstrate similar thoughts on the research topic. When four or more sources touch upon similar concepts, they are likely to be relevant to a study.
The second thing I will do is choosing the authors selectively. There are works that have been used and reviewed by many scholars; thus, these authors tend to have considerable experience in specific disciplines. To select credible sources, one has to be selective about the scholars he or she refers to in the study.
Several ethical considerations are relevant to this research. Ethics entails rules that express differences between wrong and right (Brewis 2014). Some of the ethical issues that I may face when conducting this research include overestimating data to enhance their significance to the research, using others works unrightfully by plagiarizing, failing to acknowledge the authors of the sources where I have obtained some ideas, and abuse of the environment. Other issues encompass submitting this research for academic purposes to other learning institutions, selecting samples for the study racially, and, finally, sharing confidential data on this research with other students who should not access it.
To make sure that this research is free from ethical issues, first, I have decided to be open in revealing new ideas and tools as well as criticizing the thoughts of various scholars. I will also respect the intellectual property by avoiding plagiarism including citations for the thoughts that explicitly do not belong to me. Furthermore, in this study, I will show respect for natural resources and the environment at large. The sources that I will use for this research will be rightfully obtained and have no association with theft.
Timetable and Special Resources Required
To meet the objectives of this research, I will have to follow a definite plan such as given below:
i. To state the title of the research.
ii. To formulate questions that relate to the topic of the research.
iii. To review the literature published by various scholars on the topic.
iv. To describe a procedure that will be used to collect, analyse, and present data for answering research questions.
Some of the resources that will be relevant for this study include:
i. An Internet enabled computer.
ii. Books and magazines.
iii. Word document editor.
Some of the problems that I am likely to face in this research include:
i. Low speed of Internet connectivity.
ii. Budget inflation in terms of time and monetary resources.
iii. Inability to convince various business organizations to give their financial statements.
iv. Irrelevant literature.
Availability of extensive literature on the Internet makes me sure of accessing samples for this research. In addition, the fact that green accounting is a topic in accounting and finance that is still under research, only serious scholars have documented on it. In case there is lack of available data necessary for meeting the objectives of this study, I will change the data collection methods but not the topic of research.